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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 8, 1995 (July 27, 1995)
Gundle/SLT Environmental, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-9307 22-2731074
(Commission File Number) (IRS Employer Identification No.)
19103 Gundle Road, Houston, Texas 77073
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 443-8564
Not Applicable
(Former name or former address, if changed since last report.)
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ITEM 2.
On July 27, 1995, Gundle Environmental Systems, Inc., a Delaware
corporation ("Gundle") consummated a merger with SLT Environmental, Inc., a
Delaware corporation ("SLT"), pursuant to which SLT was merged into Gundle with
Gundle being the surviving corporation, pursuant to a Plan and Agreement of
Merger dated March 28, 1995 between Gundle and SLT (the "Merger Agreement").
Pursuant to the Merger Agreement, all of the issued and outstanding common
stock, par value $1.00 per share, of SLT was canceled and exchanged for
7,000,000 shares of the common stock, par value $.01 per share ("Common Stock")
of Gundle. Upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, Gundle's name was changed to Gundle/SLT
Environmental, Inc. (the "Company").
The description herein of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement,
a copy of which is attached hereto as Exhibit 1.1.
In connection with the Merger, (i) the certificate of incorporation of
the Company was amended and restated to (a) increase the authorized number of
shares of preferred stock from 1,000 shares, no par value, to 1,000,000 shares,
par value $1.00 per share, undesignated as to series and (b) increase the
authorized number of shares of the Company's Common Stock from 15,000,000 shares
to 30,000,000 shares, (ii) the persons named in the Merger Agreement became the
directors of the Company, and (iii) the Company's Bylaws were amended and
restated to fix the number of directors of the Company at no less than five and
no more than seven and to require the affirmative vote of 60% of the entire
board of directors to expand or contract the board beyond the prescribed limits.
The increase in the authorized shares of Common Stock was necessary for the
Company to have a sufficient number of shares of Common Stock to issue pursuant
to the Merger Agreement.
The Company also entered into a registration rights agreement dated as
of July 27, 1995, (the "Registration Rights Agreement") with Odyssey Partners,
L.P., a Delaware limited partnership ("Odyssey") and Wembley, Ltd., a British
Virgin Islands corporation ("Wembley"). Odyssey was the Company's largest
shareholder before the Merger and Wembley is the sole shareholder of SLT. In
general, the Registration Right Agreement gives Odyssey one demand registration
right with respect to all of its Common Stock exercisable at any time after the
Effective Date of the Merger (the "Effective Date") through the seventh
anniversary of the Effective Date and grants Wembley three demand registration
rights exercisable at any time beginning one year after the Effective Date
through the seventh anniversary of the Effective Date. Wembley's demand
registration rights are limited to specified numbers of shares through the
second anniversary of the Effective Date. The Registration Rights Agreement also
allows Odyssey and Wembley the right to participate in registrations conducted
by the Company or the other party under certain terms and conditions set forth
in the Registration Rights Agreement.
In connection with the Merger, the Company entered into an unsecured
$35 million multi-currency, revolving credit facility with a commercial bank.
The credit is for an initial term of two years but may be renewed from time to
time with the lender's consent. In addition, the Company
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issued $25 million of unsecured 7.34% Senior Notes due 2005 to two institutional
lenders, and the Company's existing agreements pursuant to which its 11.17%
Senior Notes due 2000 were issued were amended to take into account changes
related to the merger. A portion of the proceeds of the new credit facilities
were used to repay existing debt of the Company. The remainder will be used to
provide working capital and for other corporate purposes. The obligations under
the new credit facilities will be guarantied by the Company's principal U.S.
subsidiaries.
ITEM 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(a) Financial Statements and Pro Forma Financial Statements.
(1) Financial Statements specified in Rule 3-05(b) of
Regulation S-X for the business acquired are hereby
incorporated by reference to the Definitive Proxy Materials on
Schedule 14A filed by the Company on June 26, 1995 (the "1995
Proxy Materials").
(2) Pro forma financial information required pursuant to
Article 11 of Regulation S-X is hereby incorporated by
reference to the 1995 Proxy Materials.
(b) Exhibits.
The following exhibits, from which schedules and attachments
have been omitted and will be furnished to the Commission upon its request, are
filed with this report on Form 8-K:
1.1 - Plan and Agreement of Merger dated March 28,
1995, between Gundle and SLT (the "Merger
Agreement"). The Merger Agreement is
incorporated by reference to Exhibit A of the
1995 Proxy Materials.
1.2 - Registration Rights Agreement dated July 27,
1995, between the Company, Odyssey and Wembley.
1.3 - Note Agreement dated as of June 15, 1995,
between Gundle and Principal Mutual Life
Insurance Company.
1.4 - Note Agreement dated as of June 15, 1995,
between Gundle and Jefferson-Pilot Life
Insurance Company.
1.5 - Amendment No. 4 to Note Agreement dated as of
June 15, 1995, among Gundle, Principal Mutual
Life Insurance Company and Jefferson-Pilot Life
Insurance Company, amending the Note Agreements
dated as of June 15, 1990.
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1.6 - Credit Agreement dated July 27, 1995, among the
Company, as Borrower, the financial
institutions named therein, as Banks, and
NationsBank of Texas, N.A., as Agent for the
Banks.
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SIGNATURES
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 hereunto duly authorized.
GUNDLE/SLT ENVIRONMENTAL, INC.
By: \s\ Keith St. Clair
--------------------------------
Keith St. Clair
Controller
Assistant Secretary and
Assistant Treasurer
August 8, 1995
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EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Numbered Page
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<S> <C>
1.1 Plan and Agreement of Merger dated March 28, 1995,
between Gundle and SLT (the "Merger Agreement"). The Merger
Agreement is incorporated by reference to Exhibit A of the
1995 Proxy Materials.
1.2 Registration Rights Agreement dated July 27, 1995, between the
Company, Odyssey and Wembley.
1.3 Note Agreement dated as of June 15, 1995, between Gundle and
Principal Mutual Life Insurance Company.
1.4 Note Agreement dated as of June 15, 1995, between Gundle and
Jefferson-Pilot Life Insurance Company.
1.5 Amendment No. 4 to Note Agreement dated as of June 15, 1995,
among Gundle, Principal Mutual Life Insurance Company and
Jefferson-Pilot Life Insurance Company, amending the Note
Agreements dated as of June 15, 1990.
1.6 Credit Agreement dated July 27, 1995, among the Company, as
Borrower, the financial institutions named therein, as Banks,
and NationsBank of Texas, N.A., as Agent for the Banks.
</TABLE>
The exhibits, as filed, omit certain exhibits and schedules. The Company will
provide a copy of any omitted exhibit or schedule upon request of the Securities
and Exchange Commission, subject to the Company's right to request confidential
treatment of any requested schedule.
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EXHIBIT 1.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") dated as of the 27th
day of July, 1995, is by and among Gundle Environmental Systems, a Delaware
corporation (the "Company"), and each of the holders of common stock, par value
$.01 per share, of the Company, listed on SCHEDULE A attached hereto (the
"Stockholders").
W I T N E S S E T H:
WHEREAS, the Stockholders are owners of issued and outstanding shares
of Common Stock of the Company, which shares, as of the date hereof, are owned
in the respective amounts set forth on SCHEDULE A hereto; and
WHEREAS, Odyssey (defined below) previously was granted registration
rights in exchange for good and valuable consideration, the sufficiency of
which is hereby acknowledged, which registration rights are being memorialized
in this written Agreement; and
WHEREAS, Wembley (defined below) was the former sole stockholder of
SLT Environmental, Inc. ("SLT"); and
WHEREAS, Wembley was issued the number of shares of Common Stock set
forth opposite its name on SCHEDULE A hereto pursuant to the Plan and Agreement
of Merger of Gundle Environmental Systems, Inc. and SLT Environmental, Inc.,
dated as of March __, 1995 (the "Merger Agreement"), pursuant to which SLT was
merged with and into the Company; and
WHEREAS, the execution and delivery of this Agreement by parties
hereto is a condition precedent to the closing of the merger contemplated by
the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual agreements and promises
herein contained and other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the Stockholders and the Company, each with the
other, do hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following respective meanings:
"COMMON STOCK" means the Common Stock, par value $.01 per share, of
the Company.
"COMMISSION" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
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"DEMAND NOTICE" means a notice by a Stockholder pursuant to Section
2.1 demanding that the Company register all or a portion of such Stockholder's
Registrable Securities in either an Underwritten Public Offering or a Shelf
Registration.
"DEMAND REGISTRATION" means a registration that is an Underwritten
Public Offering or Shelf Registration which the Company is required to effect
on behalf of a Stockholder pursuant to Section 2.1.
"DEMANDING STOCKHOLDER" means a Stockholder demanding registration
pursuant to Section 2.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar Federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"NOTICE OF REGISTRATION" means a notice by the Company to the
Stockholders that the Company has either determined to conduct a Primary
Offering or that Company has received a Demand Notice from a Stockholder.
"ODYSSEY" means Odyssey Partners, L.P., a Delaware limited
partnership.
"PERSON" means any natural person or any corporation, partnership,
trust or other legal entity.
"PIGGYBACK REGISTRATION" means a registration of shares of Registrable
Securities owned by a Stockholder who is participating in a Primary Offering or
Demand Registration under the terms and conditions set forth in Section 2.2.
"PRIMARY OFFERING" means an Underwritten Public Offering pursuant to
which the Company receives net proceeds of at least $5,000,000 in cash.
"REGISTRABLE SECURITIES" means the shares of Common Stock set forth
opposite the name of each Stockholder on SCHEDULE A hereto.
The terms "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering by the
Commission of the effectiveness of such registration statement under the
Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
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"SHELF REGISTRATION" means a registration meeting the requirements of
Rule 415 under the Securities Act or any similar rule in effect under the
Securities Act.
"STOCKHOLDER" means each holder of shares of Common Stock listed on
SCHEDULE A.
"UNDERWRITTEN PUBLIC OFFERING" means a public offering (including a
Shelf Registration) of Common Stock for cash which is offered and sold in a
registered transaction on a firm commitment underwritten basis through one or
more underwriters, all pursuant to an underwriting agreement between the
Company or a Stockholder and such underwriters.
"WEMBLEY" means Wembley, Ltd., a British Virgin Islands company.
ARTICLE II
REGISTRATION RIGHTS
2.1 DEMAND REGISTRATION RIGHTS. Subject to Section 2.1.1, (a) beginning on
the date hereof, upon receipt by the Company of a Demand Notice from Odyssey
requesting registration of all or part of the Registrable Securities owned by
Odyssey and (b) beginning on the first anniversary of the date hereof, upon
receipt by the Company of a Demand Notice from Wembley requesting registration
of all or part of the registerable securities owned by Wembley, the Company
agrees to use its best efforts to effect, as soon as practicable, all
registrations, qualifications and compliances (including, without limitation,
the execution of an undertaking to file post-effective amendments, appropriate
qualifications under the applicable blue sky or other state securities laws and
appropriate compliance with exemptive regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of the Registrable Securities owned by the Stockholder giving such
Demand Notice as is specified in such Demand Notice; provided that the Company
shall not be obligated to take any action to effect any such registration,
qualification or compliance pursuant to this Section 2.1 in any jurisdiction in
which the Company would be required to execute a general consent to service of
process or to register as a dealer or to cause any officer or employee of the
Company to register as a salesman in effecting such registration, qualification
or compliance. The Company shall use its best efforts to prepare and file a
registration statement covering the Registrable Securities so requested to be
registered pursuant to this Section 2.1 within 45 days after such request is
received.
2.1.1 LIMITATIONS ON DEMANDS. Odyssey may make one request
for a Demand Registration and Wembley may make up to three requests
for Demand Registration under this Agreement. Odyssey may make its
request for a Demand Registration requesting the registration of all
or any portion of its Registrable Securities at any time after the
date hereof through the seventh anniversary of the date hereof under
the procedures set forth in Section 2.1. Wembley may make its
requests for Demand Registrations at any time
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after the first anniversary of the date hereof through the seventh
anniversary of the date hereof, in each case, under the procedures set
forth in Section 2.1. From the first anniversary of the date hereof
until the second anniversary hereof, Wembley's demand Registration
Rights shall be limited to up to 1,400,000 shares of its Registrable
Securities. At any time after the second anniversary of the date of
this Agreement, Wembley may make a request for a Demand Registration
with respect to up to 3.5 million shares of its Registrable
Securities, or for such greater number of its Registrable Securities
as the board of directors of the Company may authorize by action of a
majority of the entire board. If all of the Registrable Securities
requested to be registered pursuant to Section 2.1 by a Stockholder
are not so included in a Demand Registration, then such request shall
not count as a requested Demand Registration hereunder provided,
however, if Wembley makes a request for a Demand Registration with
respect to more than 3.5 million shares of its Registrable Securities,
and a majority of the entire board does not approve the registration
of the shares requested to be registered in excess of 3.5 million,
then such a request shall count as a requested Demand Registration
hereunder provided such registration statement includes at least 3.5
million shares of Registrable Securities for Wembley.
2.1.2 UNDERWRITING. (a) If a Demand Registration
requested by a Stockholder pursuant to Section 2.1 is for a Shelf
Registration, then the Company will use its best efforts to effect
such registration on Form S-3 or any successor form thereto and to
keep such registration statement effective under the Securities Act
until the first to occur of the expiration of two years from the date
of effectiveness or the date upon which all such Registrable
Securities have been sold.
(b) If the Demand Registration requested by a Stockholder
pursuant to Section 2.1 is for an Underwritten Public Offering, the
Demanding Stockholder shall include in its request made pursuant to
Section 2.1 the name of the managing underwriter or underwriters that
such Stockholder proposes to employ in connection with the public
offering proposed to be made pursuant to the registration requested;
provided that if the Company reasonably objects to any managing
underwriter or underwriters proposed by the Demanding Stockholder, the
Demanding Stockholder shall propose another managing underwriter or
underwriters that is or are acceptable to the Company. The Company
shall use its best efforts to enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting in the manner set forth above. The Company will take
such customary actions as are necessary to comply with the terms and
obligations of such underwriting agreement and will furnish such
underwriters and their respective representatives full access to all
information reasonably requested in connection with their "due
diligence" review of the Company and its operations. If the Demanding
Stockholder disapproves of the terms of its Underwritten Public
Offering, such Demanding Stockholder may elect to withdraw therefrom
by written notice to the Company and the managing underwriter. The
withdrawal pursuant to this Section 2.1.2 of a portion of the shares
of Registrable Securities from a registration effected pursuant to
Section 2.1 that is declared effective by the Commission shall not
give rise to any
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additional demand registration right with respect to the Registrable
Securities so withdrawn.
2.2 PIGGYBACK REGISTRATION. If at any time or from time to time
after the date hereof (a) the Company shall determine to make a Primary
Offering or Shelf Offering for its own account (but not including an offering
that is registered on Commission Forms S-4, S-8 or any successor forms thereto)
or (b) a Stockholder shall request that the Company effect a Demand
Registration, then the Company will:
(i) promptly give to each Stockholder a Notice of
Registration (which shall include a list of the jurisdictions in which
the Company or the Demanding Stockholder intends to attempt to qualify
the offer and sale of such securities under the applicable blue sky or
other state securities laws); and
(ii) use its best efforts to include in such registration
(and any related qualification or compliance under blue sky laws), and
in any Underwritten Public Offering or Shelf Offering involved
therein, all the Registrable Securities specified in any written
request or requests by any Stockholder received by the Company within
10 days after such Notice of Registration is given.
2.2.1 LIMITATIONS ON PIGGYBACK REGISTRATIONS. Odyssey may
make a request for the inclusion of all or any portion of its
Registrable Securities in any registration effected pursuant to
Section 2.2 at any time after the date hereof through the seventh
anniversary of the date hereof under the procedures set forth in
Section 2.2. Wembley may make a request for the inclusion of its
Registrable Securities in any registration effected pursuant to
Section 2.2 at any time after the first anniversary of the date hereof
through the seventh anniversary of the date hereof under the
procedures set forth under Section 2.2, provided that, Wembley may not
register more than an aggregate of 1,400,000 shares of its Registrable
Securities under Section 2.2 until after the second anniversary of the
date hereof. Wembley may make a request for the inclusion of all or
any portion of its Registrable Securities in any registration effected
pursuant to Section 2.2 at any time after the second anniversary of
the date hereof through the seventh anniversary of the date hereof
under the procedures set forth under Section 2.2. In addition to the
foregoing limitations, the number of Registrable Securities that may
be included in any registration effected pursuant to Section 2.2 shall
be further limited as provided in Section 2.2.2.
2.2.2. UNDERWRITING. (a) If the Primary Offering or Demand
Registration through which a Stockholder desires to register
Registrable Securities pursuant to Section 2.2 is for a Shelf
Registration, then the Company will use its best efforts to effect
such registration on Form S-3 or any successor form thereof and to
keep such registration statement effective under the Securities Act
until the first to occur of the expiration of two years from the date
of effectiveness or the date upon which all such Registrable
Securities have been sold.
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(b) If the registration to be effected is an Underwritten
Public Offering, the right of any Stockholder to registration pursuant
to Section 2.2 shall be conditioned upon such Stockholder's
participation in the Underwritten Public Offering and the inclusion of
such Stockholder's Registrable Securities in the Underwritten Public
Offering to the extent provided herein. All Stockholders proposing to
distribute Registrable Securities through such Underwritten Public
Offering, together with the Company, shall enter into an underwriting
agreement in customary form with the underwriter or underwriters
selected for such Underwritten Public Offering by the Company, unless
the registration is effected pursuant to Section 2.1, in which event
the underwriter or underwriters shall be selected as provided in
Section 2.1.2(b).
(c) Notwithstanding any other provisions of Section 2.2, if
the managing underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, the managing
underwriter and the Company or Demanding Stockholder, as the case may
be, may limit the Registrable Securities to be included in any
registration of an Underwritten Public Offering as set forth below.
In such event, the Company shall so advise all Stockholders owning
Registrable Securities which otherwise would be registered and
underwritten pursuant thereto, and the number of shares of Registrable
Securities that will be included in the registration and Underwritten
Public Offering shall be allocated as follows:
(i) In the case of a Primary Offering in which
Stockholders are participating pursuant to Section
2.2, the shares of Common Stock and Registrable
Securities included in the registration shall be
allocated first 100% to the Company and then pro rata
to each Stockholder participating in such offering
based on the proportions of Registrable Securities
each Stockholder has requested to be included in such
registration. For instance, if the Company desires
to register 3,000,000 shares of Common Stock, Wembley
desires to register 3,000,000 shares of Common Stock,
and Odyssey desires to register 1,500,000 shares of
Common Stock, but the managing underwriter informs
the Company that only 6,000,000 shares of Common
Stock can be sold in the offering, then such
registration statement shall include 3,000,000 shares
for the Company, 2,000,000 shares for Wembley and
1,000,000 shares for Odyssey.
(ii) In the case of a Demand Registration, such
registration statement shall include first all of the
shares requested to be registered by the Demanding
Stockholder, and to the extent the underwriters can
sell additional shares, such registration shall
include Registrable Securities requested to be
registered by the other Stockholder. For instance,
if after the third anniversary of the date hereof,
Wembley makes a request for a Demand Registration of
3,000,000 shares of its Registrable Securities, and
Odyssey, pursuant to Section 2.2, requests the
registration of 1,000,000 shares of its Registrable
Securities, but the managing underwriter informs
Wembley that
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only 3,500,000 shares can be sold in the offering,
then such registration statement shall include
3,000,000 shares for Wembley and 500,000 shares for
Odyssey.
(d) No Registrable Securities excluded from the
Underwritten Public Offering by reason of the managing underwriter's
marketing limitation shall be included in such registration. If any
Stockholder disapproves of the terms of the Underwritten Public
Offering, such Stockholder may elect to withdraw therefrom by written
notice to the Company and the managing underwriter. The Registrable
Securities so withdrawn also shall be withdrawn from registration;
provided, however, that, if by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other
Stockholders may, in the opinion of the managing underwriter, be
included in such registration (subject to any limitation imposed by
the underwriters), then the Company or the Demanding Stockholder, as
the case may be, shall offer to the other Stockholder the right to
include additional Registrable Securities in the registration.
2.3 TERMINATION OF REGISTRATION. Notwithstanding any other
provision of this Agreement, at any time before or after the filing of a
registration statement that is subject to Section 2.2., the Company may, in its
sole discretion, abandon or terminate a Primary Offering without the consent of
any Stockholder, and a Demanding Stockholder may, in its sole discretion,
abandon or terminate a Demand Registration without the consent of the Company
or the other Stockholder.
2.4 REGISTRATION EXPENSES. All expenses (except for costs of any
underwriting and selling discounts and commissions) of any registrations
permitted pursuant to this Agreement and of all other offerings by the Company
(including, but not limited to, the expenses of any interim audit required by
any underwriters in the event of an offering requested pursuant to Section 2.1,
any qualifications under the blue-sky or other state securities laws,
compliance with governmental requirements of preparing and filing any
post-effective amendments required for the lawful distribution of any
securities to the public in connection with a registration and of supplying
prospectuses, offering circulars or other documents), will be paid by the
Company provided, however, that the Stockholders shall be responsible for their
fees and expenses of their counsel.
2.5 REGISTRATION PROCEDURES. In the case of such registration,
qualification or compliance effected by the Company pursuant to Article II in
which any Stockholder's Registrable Securities are included, the Company will,
at its expense:
(a) prepare and file with the Commission a registration
statement with respect to the Common Stock to be registered, and use
its best efforts to cause such registration statement to become and
remain effective for such period as may be reasonably necessary to
effect the sale of the Common Stock, not to exceed nine months in the
case of an Underwritten Public Offering, and not to exceed two years
in the case of a Shelf Registration;
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(b) prepare and file with the Commission such amendments
to such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration
statement effective for such period as may be reasonably necessary to
effect the sale of such Common Stock, not to exceed nine months in the
case of an Underwritten Public Offering, and not to exceed two years
in the case of a Shelf Registration;
(c) furnish to the Stockholders participating in such
registration and to the underwriters, if any, of the Common Stock
being registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other
documents as such underwriters may reasonably request in order to
facilitate the public offering of such Common Stock;
(d) use its diligent good faith efforts to register or
qualify the Common Stock covered by such registration statement under
such state securities or blue sky laws of such jurisdictions as such
participating Stockholders may reasonably request in writing within 20
days following the original filing of such registration statement;
provided, however, that in the case of an Underwritten Public
Offering, the managing underwriter shall advise the Company with
respect to blue sky qualification and related matters;
(e) notify counsel for the Stockholders participating in
such registration, promptly after it shall receive notice thereof, of
the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration
statement has been filed;
(f) notify counsel for the Stockholders promptly of any
request by the Commission for the amending or supplementing of such
registration statement or prospectus or for additional information;
(g) prepare and file with the Commission, promptly upon
the request of any Stockholder, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel
for such Stockholder (and concurred in by counsel for the Company), is
required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of the Common Stock;
(h) prepare and promptly file with the Commission and
promptly notify counsel for the Stockholders of the filing of such
amendment or supplement to such registration statement or prospectus
as may be necessary to correct any statements or omissions if, at the
time when a prospectus relating to such Common Stock is required to be
delivered under the Securities Act, any event shall have occurred as
the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances in which they were made,
not misleading;
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(i) advise counsel for the Stockholders, promptly after
it shall receive notice or obtain knowledge thereof, of the issuance
of any stop order by the Commission suspending the effectiveness of
such registration statement or the initiation or threatening of any
proceeding for such purpose, and promptly use its best efforts to
prevent the issuance of any stop order or to obtain its withdrawal if
such stop order should be issued; and
(j) not file any amendment or supplement to such
registration statement or prospectus if, in the opinion of counsel for
the Stockholders, such amendment or supplement does not comply in all
material respects with the requirements of the Securities Act or the
rules and regulations thereunder, after having been furnished with a
copy substantially in the form thereof at least two business days
before the filing thereof; provided, however, that if in the opinion
of counsel for the Company, the filing of such amendment or supplement
is reasonably necessary to protect the Company from any liabilities
under any applicable federal or state law and such filing will not
violate applicable law, the Company may make such filing.
2.6 RELATED REGISTRATION MATTERS. (a) The Company will use its
reasonable efforts to enter into an underwriting agreement in connection with
any Underwritten Public Offering subject to the provisions of Sections 2.1 and
2.2 hereof in which any Stockholder's Registrable Securities are included,
which agreement shall contain such terms, provisions and agreements as are
customary and appropriate for such registration. In connection with any
Underwritten Public Offering or Shelf Registration in which any Stockholder's
Registrable Securities are included, to the extent not provided in the
underwriting agreement, if any, related to such offering, the Company also
shall use its reasonable efforts to:
(1) List the shares of Common Stock included in such
offering on any national securities exchange on which the Common Stock
is approved for listing;
(2) Cause customary opinions of counsel, comfort letters
of accountants and other appropriate documents to be delivered by
representatives of the Company; and
(3) As soon as practicable after the effective date of
the registration statement, and, in any event, within 16 months
thereafter, make "generally available to its securities holders"
(within the meaning of Rule 158 under the Securities Act) an earnings
statement (which need not be audited ) complying with Section 11(a) of
the Securities Act and covering a period of at least 12 consecutive
months beginning after the effective date of the registration
statement.
(b) The Company shall be entitled to postpone the filing of any
registration statement under this Agreement for up to 45 days or require that
the parties refrain from effecting any public sales or distributions of the
Registrable Securities, pursuant to a Shelf Registration that has been declared
effective by the Commission or otherwise, if the board of directors of the
Company in good faith determines in its sole discretion that such registration,
public sales, or distributions
9
<PAGE> 10
would interfere in any material respect with any transaction involving the
Company that in the sole discretion of the board of directors is material to
the Company. The board of directors shall, as promptly as practicable, give
the Stockholders written notice of any such development. In the event of a
postponement of the filing of a registration statement required to be filed
under this Agreement, or a request by the board of directors that the
Stockholders refrain from effecting any public sales or distributions of the
Registrable Securities, the Company shall be required to file such registration
statement or lift such restrictions regarding effecting public sales or
distributions of the Registrable Securities, as the case may be, as soon as
reasonably practicable after the board of directors shall determine, in its
sole discretion, that the filing of such registration statement and the
offering thereunder or the public sales or distributions by the Stockholders of
the Registrable Securities, as the case may be, shall not interfere with such
transaction, provided, that in any event no postponement of the filing of a
registration statement required under this Agreement or a requirement that the
Stockholders refrain from effecting public sales or distributions in the
Registrable Securities extend for more than 45 days.
(c) If the Company or any subsidiary of the Company plans to
repurchase or bid for securities of the Company in the open market, and the
board of directors of the Company determines in its sole discretion that any
such repurchase or bid may not under Rule 10b-6 ("Rule 10b-6") under the
Exchange Act, be commenced or consummated, the Company shall be entitled, for a
period not to exceed 20 days (subject to extension as described herein), to
require that any Stockholder suspend or postpone any distribution of securities
of the Company (a "Rule 10b-6 Election"). The Company shall, as promptly
practicable, give the Stockholders written notice of any Rule 10b-6 Election,
stating the basis for the Rule 10b-6 Election and specifying the securities and
the distribution of which is required to be suspended or postponed. As
promptly as practicable following the determination by the board of directors
that the Stockholders may recommence their distribution without causing the
Company or a subsidiary of the Company to be in violation of Rule 10b-6, the
Company shall give the Stockholders written notice of such determination. If
the board of directors has not permitted the Stockholders to recommence their
distribution by the 20th day following such suspension and on such 20th day
delivers written evidence to the Stockholder subject to suspension that during
such period the Company or subsidiary repurchased at least 50,000 shares of
Common Stock of the Company, then the board of directors shall be entitled to
extend the suspension of such distribution by up to another 20 days. The board
of directors may exercise a Rule 10b-6 Election in respect to up to two
additional 20 day extension periods after the first, provided that the volume
and notice provisions required herein are complied with in respect to each such
additional extension period.
(d) If the Company shall have given any Stockholder at least 10
business days prior written notice of any proposed distribution within the
meaning of Rule 10b-6 of any securities of the Company, describing in
reasonable detail the type and number of securities proposed to be distributed,
the intended method of distribution, and any other material information
regarding the distribution, such Stockholders may only bid for or purchase
securities of the Company in accordance with Rule 10b-6. The Company shall
notify each Stockholder in writing as promptly as practicable following the
completion or abandonment of such proposed distribution period.
10
<PAGE> 11
(e) If the Company shall register any Underwritten Public Offering
(other than a registration on Form S-8 of (i) an employee stock option, stock
purchase or compensation plan or of securities issued or issuable pursuant to
such plan, or (ii) a dividend reinvestment plan) or any underwritten Demand
Registration initiated at the request of a holder of Registrable Securities,
each Stockholder agrees, to the extent requested in writing by the managing
underwriter administering such offering as reasonably practicable before the
commencement of the 10 day period referred below, not to effect any public sale
or distribution of securities of the Company other than as part of such
underwritten offering during the 10 day period before the effective date of the
registration statement covering such Underwritten Public Offering or Demand
Registration and during the period ending on the earlier of (i) the date such
sale or distribution is permitted by such managing underwriter and (ii) 45 days
after such effective date.
2.7 INDEMNIFICATION.
(a) In the case of each registration effected by the
Company pursuant to this Agreement in which any Stockholder's
Registrable Securities are included, the Company agrees to indemnify,
defend and hold harmless such Stockholder, its officers and directors,
each underwriter of the shares of Common Stock so registered and each
person who controls any such underwriter within the meaning of Section
15 of the Securities Act, against any and all losses, claims, damages
or liabilities (including reasonable attorneys' fees) to which they or
any of them may become subject under the Securities Act or any other
statute or common law, including any amount paid in settlement of any
litigation, commenced or threatened, if such settlement is effected
with the written consent of the Company (subject to subsection (c) of
this Section 2.7), insofar as any such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the registration statement, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto,
or in any Blue Sky application, or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that, notwithstanding the foregoing, the Company may agree to
indemnify each such underwriter and person who so controls such
underwriter to such other extent as the Company and such underwriter
shall agree; and provided further, that the indemnification agreement
contained in this subsection (a) shall not (i) apply to such losses,
claims, damages, liabilities or actions arising out of, or based upon,
any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission was made
in reliance upon and in conformity with information furnished to the
Company in writing by a Stockholder or such underwriter claiming
rights of indemnification pursuant to this Section 2.7 for use in
connection with the preparation of the registration statement or any
preliminary prospectus or prospectus contained in the registration
statement or any such amendment thereof or supplement thereto; (ii)
inure to the benefit of any underwriter (or to the benefit of any
person controlling such underwriter) from whom the person asserting
any such losses, claims, damages, expenses or liabilities purchased
the securities which are the subject thereof, if such underwriter
failed to send or give a copy of the final prospectus, as then
11
<PAGE> 12
amended or supplemented, to such person and if the untrue statement or
omission alleged had been corrected in such final prospectus; or (iii)
inure to the benefit of any person to the extent such person's claim
for indemnification hereunder arises out of or is based on any
violation by such person of applicable law, as determined by a final,
unappealable decision of a court of competent jurisdiction.
(b) In the case of each registration effected by the
Company pursuant to this Agreement in which any Stockholder's
Registrable Securities are included, such Stockholder (the
"indemnifying person") shall be obligated, in the same manner and to
the same extent as set forth in subsection (a) of this Section 2.7, to
indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the
Securities Act, its directors and officers, with respect to any
statement or alleged untrue statement in, or omission or alleged
omission from, such registration statement or any post-effective
amendment thereof or any preliminary prospectus or final prospectus
(as amended or supplemented, if amended or supplemented as aforesaid)
contained in such registration statement, if such statement or
omission was made in reliance upon and in conformity with information
furnished in writing to the Company by such indemnifying person for
use in connection with the preparation of such registration statement
or any preliminary prospectus or final prospectus contained in such
registration statement or any such amendment thereof or supplement
thereto; provided, however, that the liability of each Stockholder
hereunder shall be limited to the proceeds received by each
Stockholder from the sale of Registrable Securities covered by such
registration statement, amendment, supplement, prospectus or Blue Sky
application, as the case may be.
(c) Each person to be indemnified pursuant to this
Section 2.7 will, promptly after its receipt of written notice of the
commencement of any action against such indemnified person in respect
of which indemnity may be sought from an indemnifying person under
this Section 2.7, notify the indemnifying person in writing of the
commencement thereof, provided, however that the failure of any person
to give notice as provided herein shall not relieve the indemnifying
party of its obligations under this Agreement except to the extent
that such indemnifying party is actually prejudiced by such failure to
give notice. If any such action shall be brought against any
indemnified person and it shall notify an indemnifying person of the
commencement thereof, the indemnifying person will be entitled to
participate therein and, to the extent it may desire, jointly with any
other indemnifying person similarly notified, to assume the defense
thereof with counsel satisfactory to such indemnified person, and
after notice from the indemnifying person to such indemnified person
of its election so to assume the defense thereof, the indemnifying
person will not be liable to such indemnified person under this
Section 2.7 for any legal or other expenses subsequently incurred by
such indemnified person in connection with the defense thereof other
than reasonable costs of investigation unless (i) the indemnified
person shall have employed counsel in an action in which the
indemnified person and indemnifying person are both defendants and
there is a conflict of interest between such parties that would
prevent counsel from adequately representing both parties,
12
<PAGE> 13
(ii) the indemnifying person shall not have employed counsel
satisfactory within the exercise of reasonable judgment of the
indemnified person to represent the indemnified person within a
reasonable time after the notice of the commencement of the action or
(iii) the indemnifying person has authorized the employment of counsel
for the indemnified person at the expense of the indemnifying person.
The undertaking contained in this Section 2.7 shall be in addition to
any liabilities which the indemnifying person may have pursuant to
law.
2.8 INFORMATION BY STOCKHOLDERS. Each Stockholder requesting to
be included in any registration shall furnish to the Company such information
regarding such Stockholder and the distribution proposed by such Stockholder as
the Company may request and as shall be reasonably required in connection with
any registration, qualification or compliance referred to in Article II.
2.9 RULE 144 REPORTING. With a view to making available to the
Stockholders the benefits of certain rules and regulations of the Commission
which may permit the sale of the Registrable Securities to the public without
registration, the Company agrees to:
(a) COMMISSION REPORTS. File with the Commission in a
timely manner all reports and other documents required of the Company
under Sections 13 or 15(d) of the Exchange Act; and
(b) OTHER INFORMATION. Furnish to each Stockholder
forthwith upon its request (i) a written statement by the Company as
to the Company's compliance with the public information requirements
of Commission Rule 144, (ii) a copy of the most recent annual or
quarterly report of the Company, and (iii) such other reports and
documents as may be reasonably requested in availing any Stockholder
of any rule or regulation of the Commission permitting the sale of any
such securities without registration.
2.10 RIGHTS NON-TRANSFERABLE. The registration rights provided by
this Agreement are for the sole benefit of the Stockholders, are personal in
nature, and shall not be available to any subsequent holder of the Registrable
Securities.
2.11 LIMITATION ON THIRD PARTY PIGGYBACK REGISTRATIONS. Without
the consent of both Odyssey and Wembley, the Company will not enter into any
agreement that permits any Person not a party to this Agreement to participate
in any Demand Registration or Piggyback Registration under this Agreement.
13
<PAGE> 14
ARTICLE III
MISCELLANEOUS
3.1 REMEDIES. Each party hereto acknowledges that a remedy at
law for any breach or attempted breach of this Agreement will be inadequate,
agrees that each other party hereto shall be entitled to specific performance
and injunctive and other equitable relief in case of any such breach or
attempted breach, and further agrees to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any such injunctive
or any other equitable relief.
3.2 EFFECT OF SALE. Any Stockholder who sells all of his
Registrable Securities pursuant to the terms of this Agreement shall cease to
be a party to this Agreement and shall have no further rights or obligations
hereunder.
3.3 AMENDMENT. This Agreement may be amended from time to time by
an instrument in writing signed by all Persons who are parties to this
Agreement.
3.4 NOTICES. Any notice, request, reply instruction or other
communication (herein severally and collectively called "notice") in this
Agreement provided or permitted to be given to the Company or to any
Stockholder must be given in writing and may be given or served by depositing
the same in the United States mail, in certified or registered form, postage
fully prepaid, addressed to the party or parties to be notified, with return
postage fully requested, or by delivering the same in person to such party or
parties. Notice deposited in the United States mail, mailed in the manner
hereinabove described, shall be effective upon deposit. Notice given in any
other manner shall be effective only if and when received by the party to be
notified. For purpose of notice hereunder, the address of the Company shall be
19103 Gundle Road, Houston, Texas 77073 and the respective addresses of the
Stockholders shall be the addresses hereinafter set forth on SCHEDULE A hereto.
3.5 GOVERNING LAW. This Agreement shall be subject to and
governed by the laws of the State of Texas.
3.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the parties to this Agreement alone and no implication that any
other person has any rights under this Agreement shall be made from the
provisions hereof, provided, however, that the obligations of the Company
pursuant to this Agreement shall be binding upon the Company's successors.
3.7 INVALID PROVISIONS. Should any portion of this Agreement be
adjudged or held to be invalid, unenforceable or void, such holding shall not
have the effect of invalidating or voiding the remainder of this Agreement and
the parties hereby agree that the portion so held invalid, unenforceable or
void shall, if possible, be deemed amended or reduced in scope, or to otherwise
14
<PAGE> 15
be stricken from this Agreement to the extent required for the purposes of
validity and enforcement thereof.
3.8 SECTION HEADINGS. The section headings contained herein are
for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement.
3.9 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed an original, and such counterparts together shall constitute only one
instrument.
15
<PAGE> 16
SIGNATURE PAGE - REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by themselves or by their respective duly authorized
representatives as of the date first above set forth.
COMPANY:
GUNDLE ENVIRONMENTAL SYSTEMS, INC.
By:________________________________________
Thomas L. Caltrider, President
STOCKHOLDERS:
ODYSSEY PARTNERS, L.P.
By:________________________________________
Jack Nash, General Partner
WEMBLEY, LTD.
By:________________________________________
Samir Badawi, Authorized Officer
<PAGE> 17
SCHEDULE A TO
REGISTRATION RIGHTS AGREEMENT
HOLDERS OF REGISTRABLE SECURITIES
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES OF REGISTRABLE SECURITIES OWNED
---------------- --------------------------------------
<S> <C>
Odyssey Partners, L.P. 2,071,656
31 West 52nd Street
New York, NY 10019
Wembley, Ltd.
Columbus Centre Building 7,000,000
Post Office Box 659
Road Town
Tortola
British Virgin Islands
</TABLE>
17
<PAGE> 1
EXHIBIT 1.3
================================================================================
GUNDLE ENVIRONMENTAL SYSTEMS, INC.
NOTE AGREEMENT
Dated as of June 15, 1995
Re: $25,000,000 7.34% Senior Notes
Due August 1, 2005
================================================================================
<PAGE> 2
TABLE OF CONTENTS
(Not a part of the Agreement)
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT . . . . . . . . . . . . . . . . . 1
Section 1.1. Description of Notes . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Commitment, Closing Date . . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Guaranty of Notes . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4. Other Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1. Required Prepayments . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2. Optional Prepayment with Premium . . . . . . . . . . . . . . . . 3
Section 2.3. Notice of Prepayments . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.4. Allocation of Prepayments . . . . . . . . . . . . . . . . . . . . 4
Section 2.5. Direct Payment . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.1. Representations of the Company . . . . . . . . . . . . . . . . . 4
Section 3.2. Representations of the Purchaser . . . . . . . . . . . . . . . . 4
SECTION 4. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.1. Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.2. Waiver of Conditions . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 5. COMPANY COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.1. Corporate Existence, Etc . . . . . . . . . . . . . . . . . . . . 7
Section 5.2. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with Laws . . . 8
Section 5.4. Maintenance, Etc . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.5. Nature of Business . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.6. Current Ratio; Interest Coverage Ratio . . . . . . . . . . . . . 8
Section 5.7. Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . 8
Section 5.8. Limitations on Indebtedness for Borrowed Money and Priority
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.9. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.10. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.11. Limitation on Operating Leases . . . . . . . . . . . . . . . . . 12
Section 5.12. Mergers, Consolidations and Sales of Assets . . . . . . . . . . . 12
Section 5.13. Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 5.14. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.15. Repurchase of Notes . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.16. Transactions with Affiliates . . . . . . . . . . . . . . . . . . 14
Section 5.17. ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.18. Reports and Rights of Inspection . . . . . . . . . . . . . . . . 15
Section 5.19. New Domestic Subsidiaries; Execution of Credit Agreement . . . . 18
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . . . . . . . . . . . . . 18
Section 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.2. Notice to Holders . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.3. Acceleration of Maturities . . . . . . . . . . . . . . . . . . . 20
Section 6.4. Rescission of Acceleration . . . . . . . . . . . . . . . . . . . 21
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS . . . . . . . . . . . . . . . . . . . 21
Section 7.1. Consent Required . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.2. Solicitation of Holders . . . . . . . . . . . . . . . . . . . . . 22
Section 7.3. Effect of Amendment or Waiver . . . . . . . . . . . . . . . . . . 22
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS . . . . . . . . . . . . . . . 22
Section 8.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 8.2. Accounting Principles . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.3. Directly or Indirectly . . . . . . . . . . . . . . . . . . . . . 32
SECTION 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.1. Registered Notes . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.2. Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.3. Loss, Theft, Etc. of Notes . . . . . . . . . . . . . . . . . . . 33
Section 9.4. Expenses, Stamp Tax Indemnity . . . . . . . . . . . . . . . . . . 34
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative . . . . . . . . 34
Section 9.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.7. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 34
Section 9.8. Survival of Covenants and Representations . . . . . . . . . . . . 35
Section 9.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.10. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.11. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
-ii-
<PAGE> 4
ATTACHMENTS TO NOTE AGREEMENT:
<TABLE>
<S> <C>
Schedule I _ Names and Addresses of Purchasers and Amounts of Commitments
Schedule II _ Liens Securing Funded Debt (including Capitalized Leases) as of June 15, 1995
Exhibit A _ Form of 7.34% Senior Note due August 1, 2005
Exhibit B _ Form of Guaranty Agreement
Exhibit C _ Representations and Warranties of the Company
Exhibit D _ Description of Special Counsel's Closing Opinion
Exhibit E _ Description of Closing Opinion of Counsel to the Company
Exhibit F _ Subordination Provisions Applicable to Subordinated Indebtedness for Borrowed Money
</TABLE>
-iii-
<PAGE> 5
GUNDLE ENVIRONMENTAL SYSTEMS, INC.
19103 Gundle Road
Houston, Texas 77073
NOTE AGREEMENT
Re: $25,000,000 7.34% Senior Notes
Due August 1, 2005
Dated as of
June 15, 1995
To the Purchaser named in Schedule I
hereto which is a signatory of this
Agreement
Gentlemen:
The undersigned, GUNDLE ENVIRONMENTAL SYSTEMS, INC., a Delaware corporation
(the "Company"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1. Description of Notes. (a) The Company will authorize the
issue and sale of $25,000,000 aggregate principal amount of its 7.34% Senior
Notes (the "Notes") to be dated the date of issue, to bear interest from such
date at the rate of 7.34% per annum, payable semiannually on the first day of
each February and August in each year (commencing February 1, 1996) and at
maturity and to bear interest on overdue principal (including any overdue
required or optional prepayment of principal) and Make-Whole Amount, if any,
and (to the extent legally enforceable) on any overdue installment of interest
at the rate of 9.34% per annum after maturity, whether by acceleration or
otherwise, until paid, to be expressed to mature on August 1, 2005, and to be
substantially in the form attached hereto as Exhibit A. Interest on the Notes
shall be computed on the basis of a 360-day year of twelve 30-day months. The
Notes are not subject to prepayment or redemption at the option of the Company
prior to their expressed maturity dates except on the terms and conditions and
in the amounts and with the premium, if any, set forth in SECTION 2 of this
Agreement. The term "Notes" as used herein shall include each Note delivered
pursuant to this Agreement and the separate agreements with the other purchaser
named in Schedule I. You and the other purchaser named in Schedule I are
hereinafter sometimes referred to as the "Purchasers".
(b) Concurrently with the Merger, the Company will amend its Certificate
of Incorporation to provide for, among other things, a change in its name to
Gundle/SLT Environmental, Inc. ("GSE"). As the Notes are to be issued
concurrently with the Merger,
<PAGE> 6
Gundle Environmental Systems, Inc. Note Agreement
they shall be issued and delivered on the Closing Date by the Company under the
then name of GSE.
Section 1.2. Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you, and you
agree to purchase from the Company, Notes in the principal amount set forth
opposite your name on Schedule I hereto at a price of 100% of the principal
amount thereof on the Closing Date hereafter mentioned.
Delivery of the Notes will be made at the offices of Chapman and Cutler,
111 W. Monroe Street, Chicago, Illinois, 60603, against payment therefor in
Federal Reserve or other funds current and immediately available at the
principal office of NationsBank of Texas, N.A., ABA No. 111000025, for credit
to the Company's Account No. 4140260363 in the amount of the purchase price at
10:00 A.M., Chicago time, on July 27, 1995 or such other date (not later than
August 15, 1995) as shall mutually be agreed upon by the Company and the
Purchasers (the "Closing Date"). The Notes delivered to you on the Closing Date
will be delivered to you in the form of a single registered Note for the full
amount of your purchase (unless different denominations are specified by you),
registered in your name or in the name of such nominee as you may specify and
in substantially the form attached hereto as Exhibit A, all as you may specify
at any time prior to the date fixed for delivery.
Section 1.3. Guaranty of Notes. Pursuant to those certain separate
Guaranty Agreements each dated as of the Closing Date (individually, a
"Guaranty Agreement" and collectively, the "Guaranty Agreements"), each
Domestic Subsidiary will guarantee, so long as the Indebtedness under the
Credit Agreement remains outstanding and is guaranteed by such Domestic
Subsidiary (i) the due and punctual payment of the principal of and interest
and Make-Whole Amount, if any, on the Notes from time to time outstanding, as
and when such payments become due and payable (including interest on overdue
payments of principal, Make-Whole Amount, if any, or interest at the rate set
forth in the Notes) and (ii) the prompt performance and compliance by the
Company with each of its other obligations under this Agreement. The Guaranty
Agreements will be in the form attached hereto as Exhibit B.
Section 1.4. Other Agreement. Simultaneously with the execution and
delivery of this Agreement, the Company is entering into a similar agreement
with the other Purchaser under which such other Purchaser agrees to purchase
from the Company the principal amount of Notes set opposite such Purchaser's
name in Schedule I, and your obligation and the obligations of the Company
hereunder are subject to the execution and delivery of the similar agreement by
the other Purchaser. The obligations of each Purchaser shall be several and
not joint and no Purchaser shall be liable or responsible for the acts of any
other Purchaser.
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Gundle Environmental Systems, Inc. Note Agreement
SECTION 2. PREPAYMENT OF NOTES.
Section 2.1. Required Prepayments. The Company agrees that on the
first day of August in each year, commencing August 1, 2001 and ending August
1, 2004, both inclusive, it will prepay and apply and there shall become due
and payable on the principal indebtedness evidenced by the Notes an amount
equal to the lesser of (i) $5,000,000 or (ii) the principal amount of the Notes
then outstanding. The entire principal amount of the Notes shall become due
and payable on August 1, 2005. No premium shall be payable in connection with
any required prepayment made pursuant to this SECTION 2.1. For purposes of
this SECTION 2.1, any prepayment of less than all of the outstanding Notes made
pursuant to SECTION 2.2 shall be deemed to be applied to the payment at
maturity and at each other payment pursuant to this SECTION 2.1 in an amount
which bears the same relationship to such payment as the aggregate being so
applied bears to the unpaid principal amount of the Notes outstanding
immediately prior to such application, such that the remaining prepayments
required to be made pursuant to this SECTION 2.1 on each of the Notes remaining
outstanding will result in the same proportionate rate of prepayment as if
Notes had not been prepaid pursuant to SECTION 2.2.
In the event of any purchase or other acquisition by the Company of less
than all of the Notes pursuant to SECTION 5.15, the amount of the payment
required at maturity and each prepayment required to be made pursuant to this
SECTION 2.1 shall be reduced in the proportion that the principal amount of
such purchase or other acquisition bears to the unpaid principal amount of the
Notes immediately prior to such purchase or other acquisition (after giving
effect to any prepayment made pursuant to this SECTION 2.1 on the date of such
purchase or other acquisition).
Section 2.2. Optional Prepayment with Premium. In addition to the
payments required by SECTION 2.1, the Company shall have the privilege, at any
time and from time to time, of prepaying the outstanding Notes, either in whole
or in part (but if in part then in a minimum principal amount of $100,000) by
payment of the principal amount of the Notes, or portion thereof to be prepaid,
and accrued interest thereon to the date of such prepayment, together with the
Make-Whole Amount.
Section 2.3. Notice of Prepayments. The Company will give notice of
any prepayment of the Notes pursuant to SECTION 2.2 to each holder thereof not
less than 30 days nor more than 60 days before the date fixed for such optional
prepayment specifying (i) such date, (ii) the principal amount of the holder's
Notes to be prepaid on such date, (iii) that a Make-Whole Amount may be
payable, (iv) the date when such Make-Whole Amount will be calculated, (v) the
estimated Make-Whole Amount, and (vi) the accrued interest applicable to the
prepayment. Such notice of prepayment shall also certify all facts, if any,
which are conditions precedent to any such prepayment. Notice of prepayment
having been so given, the aggregate principal amount of the Notes specified in
such notice, together with accrued interest thereon and the Make-Whole Amount,
if any, payable with respect thereto shall become due and payable on the
prepayment date specified in said notice. Not later than two Business Days
prior to the prepayment date specified in such notice, the Company shall
provide each holder of a Note written notice of the Make-Whole Amount payable
in
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Gundle Environmental Systems, Inc. Note Agreement
connection with such prepayment, whether or not any Make-Whole Amount is
payable, together with a reasonably detailed computation thereof.
Section 2.4. Allocation of Prepayments. All partial prepayments shall
be applied on all outstanding Notes ratably in accordance with the unpaid
principal amounts thereof.
Section 2.5. Direct Payment. Notwithstanding anything to the contrary
contained in this Agreement or the Notes, in the case of any Note owned by you
or your nominee or owned by any subsequent Institutional Holder which has given
written notice to the Company requesting that the provisions of this SECTION
2.5 shall apply, the Company will punctually pay when due the principal
thereof, interest thereon and Make-Whole Amount, if any, due with respect to
said principal, without any presentment thereof, directly to you, to your
nominee or to such subsequent Institutional Holder at your address or your
nominee's address set forth in Schedule I hereto or such other address as you,
your nominee or such subsequent Institutional Holder may from time to time
designate in writing to the Company or, if a bank account with a United States
bank is designated for you or your nominee on Schedule I hereto or in any
written notice to the Company from you, from your nominee or from any such
subsequent Institutional Holder, the Company will make such payments in
immediately available funds not later than 10:00 A.M. (Chicago time) to such
bank account, marked for attention as indicated, or in such other manner or to
such other account in any bank in the United States as you, your nominee or any
such subsequent Institutional Holder may from time to time direct in writing.
You and any subsequent Institutional Holder of any Notes to which this SECTION
2.5 applies agree that in the event that you or it shall sell or transfer any
such Notes you or it will, prior to the delivery of such Notes (unless you or
it have already done so), make a notation thereon of all principal, if any,
prepaid on such Notes and will also note thereon the date to which interest has
been paid on such Notes. With respect to any Notes to which this SECTION 2.5
applies, the Company shall be entitled to presume conclusively that you or any
subsequent Institutional Holder as shall have requested the provisions of this
SECTION 2.5 to apply to its Notes remains the holder of such Notes until such
Notes shall have been presented to the Company as evidence of the transfer of
such Notes.
SECTION 3. REPRESENTATIONS.
Section 3.1. Representations of the Company. The Company represents
and warrants that all representations and warranties set forth in Exhibit C are
true and correct as of the date hereof, and are incorporated herein by
reference with the same force and effect as though herein set forth in full.
Section 3.2. Representations of the Purchaser. You represent, and in
entering into this Agreement the Company understands, that you are acquiring
the Notes for the purpose of investment and not with a view to the resale or
distribution thereof, and that you have no present intention of selling,
negotiating or otherwise disposing of the Notes; it being understood, however,
that the disposition of your property shall at all times be and remain within
your control.
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Gundle Environmental Systems, Inc. Note Agreement
You acknowledge that the Notes have not been registered under the
Securities Act of 1933, as amended, and that any subsequent transfer of the
Notes shall be made only in compliance with the requirements of the Securities
Act of 1933, as amended. You represent that you have not engaged any
investment banker or other broker in connection with the transactions
contemplated by this Agreement.
You further represent that at least one of the following statements is an
accurate representation as to the source of funds to be used by you to pay the
purchase price of the Notes purchased by you hereunder:
(a) if you are an insurance company, no part of such funds constitutes
assets allocated to any separate account maintained by you in which any
employee benefit plan (or its related trust) has any interest; or
(b) if you are an insurance company, to the extent that any part of
such funds constitutes assets allocated to any separate account maintained
by you in which any employee benefit plan (or its related trust) has any
interest such separate account is a "pooled separate account" within the
meaning of Prohibited Transaction Class Exemption 90-1, as amended, in
which case you have disclosed to the Company the name of each employee
benefit plan whose assets in such separate account exceed 10% of the total
assets or are expected to exceed 10% of the total assets of such account as
of the date of such purchase (and for the purposes of this paragraph (b),
all employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan).
As used in this SECTION 3.2, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA and the term "plan assets" shall have the meaning specified in
Department of Labor Regulation Section 2510.3-101.
SECTION 4. CLOSING CONDITIONS.
Section 4.1. Conditions. Your obligation to purchase the Notes on the
Closing Date shall be subject to the performance by the Company of its
agreements hereunder which by the terms hereof are to be performed at or prior
to the time of delivery of the Notes and to the following further conditions
precedent:
(a) Closing Certificate. You shall have received a certificate dated
the Closing Date, signed by the President or a Vice President of the
Company and a President or a Vice President of each Domestic Subsidiary,
the truth and accuracy of which shall be a condition to your obligation to
purchase the Notes proposed to be sold to you and to the effect that (i)
the representations and warranties of the Company set forth in Exhibit C
hereto are true and correct on and with respect to the Closing Date, (ii)
the Company and each Domestic Subsidiary has performed all of its
obligations hereunder and under the Guaranty Agreements which are to be
performed on or prior to the Closing Date, (iii) no Default or Event of
Default has occurred and is continuing, (iv) the Merger has been duly
consummated in a manner consistent in all
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Gundle Environmental Systems, Inc. Note Agreement
material respects with the terms of the documents relating to the Merger
and in accordance with all applicable law, (v) the documents relating to
the Merger are in full force and effect and no terms or provisions thereof
have been amended or waived except as disclosed to the Purchasers, (vi) all
actions pursuant to or in furtherance of the Merger have been taken in
compliance with all applicable law, (vii) the execution of a Guaranty
Agreement by each Domestic Subsidiary will result in a financial benefit to
such Domestic Subsidiary and (viii) the related Guaranty Agreement has been
executed by such Domestic Subsidiary in good faith.
(b) Guaranty Agreements. A Guaranty Agreement shall have been duly
executed and delivered by each Domestic Subsidiary.
(c) Legal Opinions. You shall have received from Chapman and Cutler,
who are acting as your special counsel in this transaction, and from Porter
& Hedges, L.L.P., counsel for the Company and its Subsidiaries, their
respective opinions dated the Closing Date, in form and substance
satisfactory to you, and covering the matters set forth in Exhibits D and
E, respectively, hereto.
(d) Related Transactions. The Company shall have (i) consummated the
sale of the entire principal amount of the Notes scheduled to be sold on
the Closing Date pursuant to this Agreement and the other agreements
referred to in SECTION 1.3, and (ii), together with the banks party
thereto, executed and delivered the Credit Agreement and shall have
consummated the transactions contemplated for the first draw-down date
thereunder.
(e) Legality. The Notes shall qualify as a legal investment for you
under the laws and regulations of each jurisdiction to which you are
subject (without reference to any so-called "basket" provision which
permits the making of an investment without restrictions to the character
of the particular investment being made) and you shall have received such
information as you shall reasonably request from the Company to establish
such fact.
(f) Satisfactory Proceedings. All proceedings taken in connection
with the transactions contemplated by this Agreement, and all documents
necessary to the consummation thereof, shall be satisfactory in form and
substance to you and your special counsel, and you shall have received a
copy (executed or certified as may be appropriate) of all legal documents
or proceedings taken in connection with the consummation of said
transactions.
Section 4.2. Waiver of Conditions. If on the Closing Date the Company
fails to tender to you the Notes to be issued to you on such date or if the
conditions specified in SECTION 4.1 have not been fulfilled, you may thereupon
elect to be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in SECTION 4.1 have not
been fulfilled, you may waive compliance by the Company with any such condition
to such extent as you may in your sole discretion determine. Nothing in this
SECTION 4.2 shall
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Gundle Environmental Systems, Inc. Note Agreement
operate to relieve the Company of any of its obligations hereunder or to waive
any of your rights against the Company.
SECTION 5. COMPANY COVENANTS.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
Section 5.1. Corporate Existence, Etc. The Company will preserve and
keep in full force and effect, and will cause each Subsidiary to preserve and
keep in full force and effect, its corporate existence and all licenses and
permits necessary to the proper conduct of its business, provided that the
foregoing shall not prevent any transaction permitted by SECTION 5.12.
Section 5.2. Insurance. The Company will maintain, and will cause each
Subsidiary to maintain, insurance coverage by financially sound and reputable
insurers (i) with respect to domestic United States coverages, accorded a
rating by A.M. Best Company, Inc. of (x) A-XII or better in the case of
products liability coverages and (y) A-VI or better in the case of all other
coverages, in each case at the time of the issuance of any such policy and in
such forms and amounts and against such risks as are customary for corporations
of established reputation engaged in the same or a similar business and owning
and operating similar properties, except that if, during the term of any such
insurance policy, the rating accorded the insurer shall be less than A-XII or
A-VI, as the case may be, the Company will, on the date of renewal of any such
policy (or, if such change in rating shall occur within 90 days prior to such
renewal date, within 90 days of the date of such change in rating), obtain such
insurance policy from an insurer so rated, and (ii) with respect to foreign
coverages, accorded a rating of A or better by Standard and Poor's Ratings
Group at the time of the issuance of any such policy and in such forms and
amounts and against such risks as are customary for corporations of established
reputation engaged in the same or a similar business and owning and operating
similar properties, except that, in the event that coverages are not reasonably
available in any foreign jurisdiction from insurers with an A rating or better
from Standard and Poor's Ratings Group or such insurers are not rated, such
coverages may be placed with insurers deemed financially sound and reputable by
the Company and not reasonably objected to by any holder or group of holders
holding 33-1/3% in aggregate principal amount of outstanding Notes. It is
understood and agreed that if any holder or group of holders holding more than
33-1/3% in aggregate principal amount of outstanding Notes shall reasonably
object to such insurers, it shall be deemed to be an objection hereunder
irrespective of any non-objection on the part of any other holder or holders of
outstanding Notes. Nothing contained in this SECTION 5.2 shall prevent the
Company from maintaining in lieu, in whole or in part, of such insurance
coverage a self-insurance program in an amount not to exceed $2,000,000 on an
annual basis if and to the extent that such self-insurance program is
consistent with sound and prudent business practices or is determined to be
appropriate or in the best interests of the Company by its Board of Directors.
Notwithstanding the insurance company size and credit quality standards set
forth in clause (y) of this Section 5.2, the Company may purchase property,
boiler and machinery insurance coverage from Industrial Risk Insurers.
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Gundle Environmental Systems, Inc. Note Agreement
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with
Laws. The Company will promptly pay and discharge, and will cause each
Subsidiary promptly to pay and discharge, all lawful taxes, assessments and
governmental charges or levies imposed upon the Company or such Subsidiary,
respectively, or upon or in respect of all or any part of the Property or
business of the Company or such Subsidiary, all trade accounts payable in
accordance with usual and customary business terms, and all claims for work,
labor or materials, which if unpaid might become a Lien upon any Property of
the Company or such Subsidiary; provided the Company or such Subsidiary shall
not be required to pay any such tax, assessment, charge, levy, account payable
or claim if (i) the validity, applicability or amount thereof is being
contested in good faith by appropriate actions or proceedings which will
prevent the forfeiture or sale of any Property of the Company or such
Subsidiary or any material interference with the use thereof by the Company or
such Subsidiary, and (ii) the Company or such Subsidiary shall set aside on its
books, reserves deemed by it to be adequate with respect thereto. The Company
will promptly comply and will cause each Subsidiary to comply with all laws,
ordinances or governmental rules and regulations to which it is subject
including, without limitation, the Occupational Safety and Health Act of 1970,
as amended, ERISA and all laws, ordinances, governmental rules and regulations
relating to environmental protection in all applicable jurisdictions, the
violation of which would materially and adversely affect the properties,
business, prospects, profits or condition of the Company and its Subsidiaries
or would result in any Lien not permitted under SECTION 5.9.
Section 5.4. Maintenance, Etc. The Company will maintain, preserve and
keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order (subject
to ordinary wear and tear) and from time to time will make all necessary
repairs, replacements, renewals and additions so that at all times the
efficiency thereof shall be maintained.
Section 5.5. Nature of Business. Neither the Company nor any
Subsidiary will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Company and its Subsidiaries would be substantially changed from the
business of manufacturing, distributing and installing Environmental and
Containment Systems, which is the general nature of the business engaged in by
the Company and its Subsidiaries on the date of this Agreement.
Section 5.6. Current Ratio; Interest Coverage Ratio. (a) The Company
will at all times keep and maintain the ratio of Consolidated Current Assets to
Consolidated Current Liabilities at not less than 1.1 to 1.
(b) The Company will at all times keep and maintain the ratio of the Net
Income Available for Interest Charges for the four immediately preceding fiscal
quarters to the Interest Charges for such four fiscal quarters at not less than
2 to 1.
Section 5.7. Consolidated Net Worth. The Company will at all times
keep and maintain Consolidated Net Worth at an amount not less than (i) during
its fiscal year ending
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Gundle Environmental Systems, Inc. Note Agreement
December 31, 1995, $60,000,000, and (ii) during each fiscal year thereafter, an
amount equal to the sum of the amount that was required to be maintained during
the previous fiscal year plus an amount equal to 25% of Consolidated Net Income
for such previous fiscal year (but without deduction in the event of a deficit
in such Consolidated Net Income).
Section 5.8. Limitations on Indebtedness for Borrowed Money and
Priority Obligations. (a) The Company will not, and will not permit any
Subsidiary to, create, assume or incur or in any manner be or become liable in
respect of any Indebtedness for Borrowed Money or other Priority Obligations,
except:
(1) Indebtedness for Borrowed Money evidenced by the Notes;
(2) Indebtedness for Borrowed Money of the Company and its
Subsidiaries outstanding as of the date of this Agreement and reflected on
Annex B to Exhibit C hereto;
(3) additional Indebtedness for Borrowed Money of the Company and its
Subsidiaries and other Priority Obligations, provided that at the time of
issuance thereof and after giving effect thereto and to the application of
the proceeds thereof:
(i) in the case of the incurrence of Senior Indebtedness for
Borrowed Money, Senior Indebtedness for Borrowed Money shall not
exceed 50% of Consolidated Total Capitalization,
(ii) in the case of the incurrence of Indebtedness for Borrowed
Money, Consolidated Indebtedness for Borrowed Money shall not exceed
60% of Consolidated Total Capitalization, and
(iii) in the case of the incurrence of any Priority Obligations,
the aggregate amount of all Priority Obligations shall not exceed 20%
of Consolidated Total Capitalization; and
(4) Indebtedness for Borrowed Money of a Subsidiary to the Company or
to a Wholly-owned Subsidiary and preferred stock of a Subsidiary held by
the Company or a Wholly-owned Subsidiary.
(b) Any corporation which becomes a Subsidiary after the date hereof shall
for all purposes of this SECTION 5.8 be deemed to have created, assumed or
incurred at the time it becomes a Subsidiary all Indebtedness for Borrowed
Money of such corporation existing immediately after it becomes a Subsidiary.
Section 5.9. Limitation on Liens. The Company will not, and will not
permit any Subsidiary to, create or incur, or suffer to be incurred or to
exist, any Lien on its or their Property, whether now owned or hereafter
acquired, or upon any income or profits therefrom, or transfer any property for
the purpose of subjecting the same to the payment of obligations in priority to
the payment of its or their general creditors, or acquire or agree to
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Gundle Environmental Systems, Inc. Note Agreement
acquire, or permit any Subsidiary to acquire, any property or assets upon
conditional sales agreements or other title retention devices unless, in the
case of any Lien securing Indebtedness, the Notes shall be secured equally and
ratably with, or prior to, any such Indebtedness in a manner reasonably
satisfactory to the holders of at least 66-2/3% in aggregate principal amount
of the outstanding Notes, provided, however, that the foregoing restrictions
shall not apply to the following Liens which are permitted:
(a) Liens for property taxes and assessments or governmental charges
or levies and Liens securing claims or demands of mechanics and
materialmen, provided that payment thereof is not at the time required by
Section 5.3;
(b) Liens of or resulting from any judgment or award, the time for the
appeal or petition for rehearing of which shall not have expired, or in
respect of which the Company or a Subsidiary shall at any time in good
faith be prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or proceeding for review
shall have been secured;
(c) Liens incidental to the conduct of business or the ownership of
properties and assets (including warehousemen's and attorneys' liens and
statutory landlords' liens) and Liens to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety or
appeal bonds or other liens of like general nature incurred in the ordinary
course of business and not in connection with the borrowing of money,
provided in each case, the obligation secured is not overdue or, if
overdue, is being contested in good faith by appropriate actions or
proceedings;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Company and its Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and which
do not in any event materially impair their use in the operation of the
business of the Company and its Subsidiaries taken as a whole;
(e) Liens securing Indebtedness of a Subsidiary to the Company or to
another Subsidiary;
(f) Liens existing as of the date of this Agreement and reflected in
Schedule II hereto, securing Funded Debt of (i) the Company or any
Subsidiary or (ii) SLT or any subsidiary outstanding on such date;
(g) Liens incurred after the date of this Agreement given to secure
the payment of the purchase price incurred in connection with the
acquisition or construction of fixed assets useful and intended to be used
in carrying on the business of the Company or a Subsidiary, including Liens
existing on such fixed assets at the time of acquisition thereof or at the
time of acquisition by the Company or a Subsidiary of any business entity
then owning such fixed assets which becomes a
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Gundle Environmental Systems, Inc. Note Agreement
Subsidiary concurrently with such acquisition, whether or not such existing
Liens were given to secure the payment of the purchase price of the fixed
assets to which they attach so long as they were not incurred, extended or
renewed in contemplation of such acquisition, provided that (i) the Lien
shall attach solely to the fixed assets acquired or purchased and the
proceeds thereof and such Lien shall attach within 365 days of the
completion of such acquisition or purchase, (ii) at the time of acquisition
of such fixed assets, the aggregate amount remaining unpaid on all
Indebtedness secured by Liens on such fixed assets whether or not assumed
by the Company or a Subsidiary shall not exceed an amount equal to 100% of
the lesser of the total purchase price or fair market value at the time of
acquisition of such fixed assets (as determined in good faith by the Board
of Directors of the Company), and (iii) all such Indebtedness shall have
been incurred within the applicable limitations provided in SECTION 5.8;
(h) Liens not otherwise permitted by the preceding clauses (a) through
(g), inclusive, securing Funded Debt of the Company or any Subsidiary,
provided that no such Lien shall be created to secure preexisting Funded
Debt, any extension, renewal or replacement of such Funded Debt, or any
Funded Debt (whether or not preexisting Funded Debt) under any preexisting
agreement providing for unsecured Funded Debt or under any extension,
renewal or replacement of such an agreement unless the Notes shall be
secured equally and ratably with, or prior to, any such Funded Debt in a
manner reasonably satisfactory to the holders of at least 66-2/3% in
aggregate principal amount of the outstanding Notes and provided further
that all Funded Debt secured by such liens shall be permitted by the
provisions of SECTION 5.8(a)(3)(iii); and
(i) any extension, renewal or replacement of any lien permitted by the
preceding SECTION 5.9(g) or SECTION 5.9(h), in respect of the same property
theretofore subject to such lien, incurred in connection with the
extension, renewal or refunding of the Indebtedness secured thereby
(without increase in principal amount) which is permitted by the
limitations contained in SECTION 5.8(a).
Section 5.10. Restricted Payments. The Company will not except as
hereinafter provided:
(a) Declare any dividends, either in cash or Property, on any shares
of its capital stock of any class (except dividends or other distributions
payable solely in shares of capital stock of the Company);
(b) Directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any shares of its
capital stock (other than in exchange for or out of the net cash proceeds
to the Company from the substantially concurrent issue or sale of other
shares of capital stock of the Company or warrants, rights or options to
purchase or acquire any shares of its capital stock);
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Gundle Environmental Systems, Inc. Note Agreement
(c) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock; or
(d) Make any payment or distribution, either directly or indirectly or
through any Subsidiary, of principal of any Subordinated Indebtedness for
Borrowed Money prior to the date such payment shall be due;
(such declarations of dividends, purchases, redemptions or retirements of
capital stock and warrants, rights or options and all such other distributions
being herein collectively called "Restricted Payments"), if after giving effect
thereto an Event of Default shall have occurred and be continuing or the
aggregate amount of Restricted Payments made during the period from and after
December 31, 1994 to and including the date of the making of the Restricted
Payment in question, would exceed the sum of (i) $16,000,000 plus (ii) 50% of
Consolidated Net Income for such period, computed on a cumulative basis for
said entire period (or if such Consolidated Net Income is a deficit figure,
then minus 100% of such deficit).
The Company will not declare any dividend which constitutes a Restricted
Payment payable more than 60 days after the date of declaration thereof. The
Company may make any Restricted Payment declared in compliance with the
provisions of this SECTION 5.10 regardless of its capacity to declare
additional Restricted Payments or lack thereof under this SECTION 5.10 at the
time of the payment of such Restricted Payment.
For the purposes of this SECTION 5.10 the amount of any Restricted Payment
declared, paid or distributed in Property shall be deemed to be the greater of
the book value or fair market value (as determined in good faith by the Board
of Directors of the Company) of such property at the time of the making of the
Restricted Payment in question.
Section 5.11. Limitation on Operating Leases. The Company will not, and
will not permit any Subsidiary to, become obligated, as lessee, under any
Operating Lease or Non-Capitalized Lease if at the time of entering into such
Operating Lease or Non-Capitalized Lease and after giving effect thereto, the
aggregate Rentals payable by the Company and all of its Subsidiaries on a
consolidated basis in any one fiscal year thereafter under all Operating Leases
and all Non-Capitalized Leases would exceed 10% of Consolidated Total
Capitalization.
Section 5.12. Mergers, Consolidations and Sales of Assets. (a) The
Company will not, and will not permit any Subsidiary to, (i) consolidate with
or be a party to a merger with any other corporation or (ii) sell, lease or
otherwise dispose of all or any substantial part (as defined in paragraph (d)
of this SECTION 5.12) of the assets of the Company and its Subsidiaries,
provided, however, that:
(1) any Subsidiary may merge or consolidate with or into the Company
or any Wholly-owned Subsidiary so long as in any merger or consolidation
involving the Company, the Company shall be the surviving or continuing
corporation;
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Gundle Environmental Systems, Inc. Note Agreement
(2) the Company may consolidate or merge with any other corporation if
(i) the Company shall be the surviving or continuing corporation, (ii) at
the time of such consolidation or merger and after giving effect thereto no
Default or Event of Default shall have occurred and be continuing, and
(iii) after giving effect to such consolidation or merger the Company would
be permitted to incur at least $1.00 of additional Senior Indebtedness for
Borrowed Money under the provisions of SECTION 5.8(a);
(3) the Company may consolidate or merge with any other corporation
organized under the laws of the United States or any State thereof (any
such corporation resulting from such consolidation or merger being
hereinafter referred to as the "surviving corporation") if (i) the due and
punctual payment of the principal of, premium, if any, and interest on all
of the Notes, according to their tenor and the due and punctual performance
and observance of all of the covenants in the Notes and this Agreement to
be performed and observed by the Company are expressly assumed in writing
by the surviving corporation (if other than the Company), (ii) at the time
of such consolidation or merger and after giving effect thereto, no Default
or Event of Default shall have occurred and be continuing, (iii) after
giving effect to such consolidation or merger, the surviving corporation
would be permitted to incur at least $1.00 of additional Senior
Indebtedness for Borrowed Money under the provisions of SECTION 5.8(a) and
(iv) at the time such merger or consolidation is effected, the Company
shall deliver to each holder of the then outstanding Notes a certificate
indicating that after giving effect to such merger or consolidation there
shall have been no violation of SECTION 5.5 or this SECTION 5.12; and
(4) any Subsidiary may sell, lease or otherwise dispose of all or any
substantial part of its assets to the Company or any Wholly-owned
Subsidiary.
(b) The Company will not permit any Subsidiary to issue or sell any shares
of stock of any class (including as "stock" for the purposes of this SECTION
5.12, any warrants, rights or options to purchase or otherwise acquire stock or
other Securities exchangeable for or convertible into stock) of such Subsidiary
to any Person other than the Company or a Wholly-owned Subsidiary, except for
the purpose of qualifying directors, or except in satisfaction of the validly
pre-existing preemptive rights of minority shareholders in connection with the
simultaneous issuance of stock to the Company and/or a Subsidiary whereby the
Company and/or such Subsidiary maintain their same proportionate interest in
such Subsidiary.
(c) The Company will not sell, transfer or otherwise dispose of any shares
of stock of any Subsidiary (except to qualify directors) or any Indebtedness of
any Subsidiary, and will not permit any Subsidiary to sell, transfer or
otherwise dispose of (except to the Company or a Wholly-owned Subsidiary) any
shares of stock or any Indebtedness of any other Subsidiary, unless:
(1) simultaneously with such sale, transfer, or disposition, all
shares of stock and all Indebtedness of such Subsidiary at the time owned
by the Company and by every other Subsidiary shall be sold, transferred or
disposed of as an entirety;
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Gundle Environmental Systems, Inc. Note Agreement
(2) the Board of Directors of the Company shall have determined, as
evidenced by a resolution thereof, that the proposed sale, transfer or
disposition of said shares of stock and Indebtedness is in the best
interests of the Company;
(3) said shares of stock and Indebtedness are sold, transferred or
otherwise disposed of to a Person, for a consideration and on terms
reasonably deemed by the Board of Directors to be adequate and
satisfactory; provided that any Securities received by the Company in
connection with such sale, transfer or disposition shall qualify as a
Permitted Investment;
(4) the Subsidiary being disposed of shall not have any continuing
investment in the Company or any other Subsidiary not being simultaneously
disposed of; and
(5) such sale or other disposition does not involve a substantial part
(as hereinafter defined) of the assets of the Company and its Subsidiaries.
(d) As used in this SECTION 5.12, a sale, lease or other disposition of
assets shall be deemed to be a "substantial part" of the assets of the Company
and its Subsidiaries only if (1) the book value of such assets, when added to
the book value of all other assets sold, leased or otherwise disposed of by the
Company and its Subsidiaries (other than in the ordinary course of business)
during the same fiscal year, exceeds 10% of Consolidated Total Capitalization,
determined as of the end of the immediately preceding fiscal year or (2) such
assets produced, or were needed in the production of, in excess of 10% of
Consolidated Net Income (before deductions for interest expense, depreciation
and taxes on income) for the immediately preceding twelve-month period.
Section 5.13. Guaranties. The Company will not, and will not permit any
Subsidiary to, become or be liable in respect of any Guaranty except:
(a) Guaranties of the Company which are limited in amount to a stated
maximum dollar exposure, and
(b) the Permitted Subsidiary Guaranties.
Section 5.14. Investments. The Company will not, and will not permit
any Subsidiary to, make any Investments in any Person, except Permitted
Investments.
Section 5.15. Repurchase of Notes. Neither the Company nor any
Subsidiary or Affiliate, directly or indirectly, may repurchase or make any
offer to repurchase any Notes unless an offer has been made to repurchase
Notes, pro rata, from all holders of the Notes at the same time and upon the
same terms. In case the Company repurchases any Notes, such Notes shall
thereafter be cancelled and no Notes shall be issued in substitution therefor.
Section 5.16. Transactions with Affiliates. The Company will not, and
will not permit any Subsidiary to, enter into or be a party to any transaction
or arrangement with any Affiliate (including, without limitation, the purchase
from, sale to or exchange of
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property with, or the rendering of any service by or for, any Affiliate),
except in the ordinary course of and pursuant to the reasonable requirements of
the Company's or such Subsidiary's business and upon fair and reasonable terms
no less favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person other than an Affiliate.
Section 5.17. ERISA Compliance. (a) The Company will not, and will not
permit any Subsidiary to, permit any Plans at any time maintained by the
Company or any Subsidiary to have any Unfunded Vested Pension Liabilities. As
used herein "Unfunded Vested Pension Liability" shall mean an excess of the
actuarial present value of accumulated vested Plan benefits as at the end of
the immediately preceding Plan year of such Plans (or as of any more recent
valuation date) over the net assets allocated to such Plans which are available
for benefits, all as determined and disclosed in the most recent actuarial
valuation report for such Plans.
(b) All assumptions and methods used to determine the actuarial valuation
of vested employee benefits under all Plans at any time maintained by the
Company or any Subsidiary and the present value of assets of such Plans shall
be reasonable in the good faith judgment of the Company and shall comply with
all requirements of law.
(c) The Company will not, and will not permit any Subsidiary to, cause any
Plan which it maintains or in which it participates at any time to:
(1) engage in any "prohibited transaction" (as such term is defined in
ERISA);
(2) incur any "accumulated funding deficiency" (as such term is
defined in ERISA), whether or not waived; or
(3) terminate any such Plan in a manner which could result in the
imposition of a lien on any Property of the Company or any of its
Subsidiaries pursuant to ERISA.
(d) The Company will not, and will not permit any Subsidiary to, permit
any condition to exist in connection with any Plan which might constitute
grounds for the PBGC to institute proceedings to have such Plan terminated or a
trustee appointed to administer such Plan.
(e) The Company will not, and will not permit any Subsidiary to, withdraw
from any Multiemployer Plan if such withdrawal shall subject the Company or any
Subsidiary to withdrawal liability (as described under Part 1 of Subtitle E of
Title IV of ERISA).
Section 5.18. Reports and Rights of Inspection. The Company will keep,
and will cause each Subsidiary to keep, proper books of record and account in
which full and correct entries will be made of all dealings or transactions of
or in relation to the business and affairs of the Company or such Subsidiary,
in accordance with GAAP consistently applied
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Gundle Environmental Systems, Inc. Note Agreement
(except for changes disclosed in the financial statements furnished to you
pursuant to this Section 5.18 and concurred in by the independent public
accountants referred to in Section 5.18(b) hereof), and will furnish to you so
long as you are the holder of any Note and to each other Institutional Holder
of the then outstanding Notes (in duplicate if so specified below or otherwise
requested):
(a) Quarterly Statements. As soon as available and in any event
within 60 days after the end of each quarterly fiscal period (except the
last) of each fiscal year, copies of:
(1) consolidated and consolidating balance sheets of the Company
and its Subsidiaries as of the close of such quarterly fiscal period,
setting forth in comparative form the consolidated figures for the
fiscal year then most recently ended,
(2) consolidated and consolidating statements of income and
retained earnings of the Company and its Subsidiaries for such
quarterly fiscal period and for the portion of the fiscal year ending
with such period, in each case setting forth in comparative form the
consolidated figures for the corresponding periods of the preceding
fiscal year, and
(3) consolidated statements of cash flows of the Company and its
Subsidiaries for the portion of the fiscal year ending with such
quarterly fiscal period, setting forth in comparative form the
consolidated figures for the corresponding period of the preceding
fiscal year,
all in reasonable detail and certified as complete and correct by an
authorized financial officer of the Company;
(b) Annual Statements. As soon as available and in any event within
100 days after the close of each fiscal year of the Company, copies of:
(1) consolidated and consolidating balance sheets of the Company
and its Subsidiaries as of the close of such fiscal year, and
(2) consolidated and consolidating statements of income and
retained earnings and consolidated statements of cash flows of the
Company and its Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consolidated figures for
the preceding fiscal year, all in reasonable detail and accompanied by a
report thereon of a firm of independent public accountants of recognized
national standing selected by the Company to the effect that the
consolidated financial statements have been prepared in conformity with
GAAP and present fairly, in all material respects, the financial condition
of the Company and its Subsidiaries and that the examination of
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Gundle Environmental Systems, Inc. Note Agreement
such accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards;
(c) Audit Reports. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of
the Company or any Subsidiary and any management letter received from such
accountants;
(d) SEC and Other Reports. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by the Company to stockholders generally and of each regular or
periodic report, and any registration statement or prospectus filed by the
Company or any Subsidiary with any securities exchange or the Securities
and Exchange Commission or any successor agency, and copies of any orders
in any proceedings to which the Company or any of its Subsidiaries is a
party, issued by any governmental agency, Federal or state, having
jurisdiction over the Company or any of its Subsidiaries;
(e) ERISA Reports. Promptly upon the occurrence thereof, written
notice of (i) a Reportable Event with respect to any Plan; (ii) the
institution of any steps by the Company, any ERISA Affiliate, the PBGC or
any other person to terminate any Plan; (iii) the institution of any steps
by the Company or any ERISA Affiliate to withdraw from any Plan; (iv) a
"prohibited transaction" within the meaning of Section 406 of ERISA in
connection with any Plan; (v) any material increase in the contingent
liability of the Company or any Subsidiary with respect to any
post-retirement welfare liability; or (vi) the taking of any action by, or
the threatening of the taking of any action by, the Internal Revenue
Service, the Department of Labor or the PBGC with respect to any of the
foregoing;
(f) Officers' Certificates. Within the periods provided in paragraphs
(a) and (b) above, a certificate of an authorized financial officer of the
Company stating that such officer has reviewed the provisions of this
Agreement and setting forth: (i) the information and computations (in
sufficient detail) required in order to establish whether the Company was
in compliance with the requirements of SECTION 5.6 through SECTION 5.17,
inclusive, at the end of the period covered by the financial statements
then being furnished, and (ii) whether there existed as of the date of such
financial statements and whether, to the best of such officer's knowledge,
there exists on the date of the certificate or existed at any time during
the period covered by such financial statements any Default or Event of
Default and, if any such condition or event exists on the date of the
certificate, specifying the nature and period of existence thereof and the
action the Company is taking and proposes to take with respect thereto; and
(g) Requested Information. With reasonable promptness, such other
data and information as you or any such Institutional Holder may reasonably
request.
Without limiting the foregoing, the Company will permit you, so long as you
are the holder of any Note, and each Institutional Holder of the then
outstanding Notes (or such
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Gundle Environmental Systems, Inc. Note Agreement
Persons as either you or such Institutional Holder may designate), to visit and
inspect, under the Company's guidance, any of the properties of the Company or
any Subsidiary, to examine all of their books of account, records, reports and
other papers, to make copies and extracts therefrom and to discuss their
respective affairs, finances and accounts with their respective officers,
employees, and independent public accountants (and by this provision the
Company authorizes said accountants to discuss with you the finances and
affairs of the Company and its Subsidiaries) all at such reasonable times and
as often as may be reasonably requested. The Company shall not be required to
pay or reimburse you or any such holder for expenses which you or any such
holder may incur in connection with any such visitation or inspection,
provided, however, as long as one or more Defaults has happened and is
continuing the Company agrees to pay the expenses incurred by you or any such
holder in connection with any such visitation or inspection up to a maximum
amount of (i) $5,000 per month and (ii) $15,000 in the aggregate (all such
payments or reimbursement to be shared equally by all holders of Notes which
have incurred any such expenses). The limitation on expenses provided in the
immediately preceding sentence shall be applied separately for each period
during which one or more Defaults has occurred and is continuing.
Section 5.19. New Domestic Subsidiaries; Execution of Credit Agreement.
(a) So long as the Indebtedness of the Company under the Credit Agreement
remains outstanding and is guaranteed by the Domestic Subsidiaries, the Company
shall cause any entity which becomes a Domestic Subsidiary from and after the
Closing Date to execute and deliver a Guaranty Agreement in the form attached
as Exhibit B hereto, together with a certificate dated the date of execution
and delivery of such Guaranty Agreement signed by the President, a Vice
President or Chief Financial Officer of such Domestic Subsidiary to the effect
that such Guaranty Agreement has been duly authorized, executed and delivered
by such Domestic Subsidiary and such Guaranty Agreement constitutes the legal,
valid and binding obligation, contract and agreement of such Domestic
Subsidiary enforceable in accordance with its terms.
(b) No Domestic Subsidiary shall, at any time, become a party to the
Credit Agreement.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 6.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" as such term is used herein:
(a) Default shall occur in the payment of interest on any Note when
the same shall have become due and such default shall continue for more
than five days; or
(b) Default shall occur in the making of any required prepayment on
any of the Notes as provided in SECTION 2.1; or
(c) Default shall occur in the making of any other payment of the
principal of any Note or Make-Whole Amount thereon at the expressed or any
accelerated maturity date or at any date fixed for prepayment; or
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Gundle Environmental Systems, Inc. Note Agreement
(d) Default shall be made in the payment when due (whether by lapse of
time, by declaration, by call for redemption or otherwise) of the principal
of or interest on any Indebtedness for Borrowed Money (other than the
Indebtedness for Borrowed Money evidenced by the Notes) of the Company or
any Subsidiary having an aggregate principal amount in excess of 5% of
Consolidated Net Worth and such default shall continue beyond the period of
grace, if any, allowed with respect thereto; or
(e) Default or the happening of any event shall occur under any
indenture, agreement or other instrument under which any Indebtedness for
Borrowed Money of the Company or any Subsidiary having an aggregate
principal amount in excess of 5% of Consolidated Net Worth may be issued
and such default or event shall continue for a period of time sufficient to
permit the acceleration of the maturity of any Indebtedness for Borrowed
Money of the Company or any Subsidiary outstanding thereunder; or
(f) Default shall occur in the observance or performance of any
covenant or agreement contained in SECTION 5.8 through SECTION 5.12; or
(g) Default shall occur in the observance or performance of any
provision of this Agreement, other than the provisions referred to in
SECTION 6.1(f), which is not remedied within 45 days after the earlier of
(i) notice thereof to the Company by the holder of any Note or (ii) the
date on which such Default first becomes known to any officer of the
Company; or
(h) Any representation or warranty made by the Company herein, or made
by the Company in any statement or certificate furnished by the Company in
connection with the consummation of the issuance and delivery of the Notes
or furnished by the Company pursuant hereto, is untrue in any material
respect as of the date of the issuance or making thereof; or
(i) Any representation or warranty made by any Domestic Subsidiary in
any Guaranty Agreement, or made by any Domestic Subsidiary in any statement
or certificate furnished by any Domestic Subsidiary in connection with the
consummation of the issuance and delivery of the Notes or furnished by any
Domestic Subsidiary pursuant hereto or to any Guaranty Agreement, is untrue
in any material respect as of the date of the issuance or making thereof;
or
(j) The obligations of any Domestic Subsidiary contained in any
Guaranty Agreement shall cease to be in full force and effect for any
reason whatsoever, including, without limitation, the determination by any
governmental body or court that any Guaranty Agreement is invalid, void or
unenforceable or any Domestic Subsidiary shall contest or deny in writing
the validity or enforceability of any Guaranty Agreement; or
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Gundle Environmental Systems, Inc. Note Agreement
(k) Final judgment or judgments for the payment of money aggregating
in excess of $2,000,000 in excess of applicable insurance coverage is or
are outstanding against the Company or any Subsidiary or against any
property or assets of either and any one of such judgments has remained
unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period
of 60 days from the date of its entry; or
(l) A custodian, liquidator, trustee or receiver is appointed for the
Company or any Subsidiary or for the major part of the property of either
and is not discharged within 30 days after such appointment; or
(m) The Company or any Subsidiary becomes insolvent or bankrupt, is
generally not paying its debts as they become due or makes an assignment
for the benefit of creditors, or the Company or any Subsidiary causes or
suffers an order for relief to be entered with respect to it under
applicable Federal bankruptcy law or applies for or consents to the
appointment of a custodian, liquidator, trustee or receiver for the Company
or such Subsidiary or for the major part of the property of either; or
(n) Bankruptcy, reorganization, arrangement or insolvency proceedings,
or other proceedings for relief under any bankruptcy or similar law or laws
for the relief of debtors, are instituted by or against the Company or any
Subsidiary and, if instituted against the Company or any Subsidiary, are
consented to or are not dismissed within 90 days after such institution.
Section 6.2. Notice to Holders. When any Event of Default described in
the foregoing SECTION 6.1 has occurred, or if the holder of any Note or of any
other evidence of Indebtedness for Borrowed Money of the Company gives any
notice or takes any other action with respect to a claimed default, the Company
agrees to give notice within three Business Days of such event to all holders
of the Notes then outstanding, such notice to be in writing and sent by
registered or certified mail or by telegram.
Section 6.3. Acceleration of Maturities. When any Event of Default
described in paragraph (a), (b) or (c) of Section 6.1 has happened and is
continuing, any holder of any Note may, and when any Event of Default described
in paragraphs (d) through (k), inclusive, of said Section 6.1 has happened and
is continuing, the holder or holders of 33-1/3% or more of the principal amount
of Notes at the time outstanding may, by notice in writing sent by registered
or certified mail to the Company, declare the entire principal and all interest
accrued on all Notes to be, and all Notes shall thereupon become, forthwith due
and payable, without any presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived. When any Event of Default
described in paragraph (l), (m) or (n) of SECTION 6.1 has occurred, then all
outstanding Notes shall immediately become due and payable without presentment,
demand or notice of any kind. Upon the Notes becoming due and payable as a
result of any Event of Default as aforesaid, the Company will forthwith pay to
the holders of the Notes the entire principal and interest accrued on the Notes
and, to the extent permitted by law, liquidated damages for the loss of the
bargain evidenced hereby (and not as a penalty) in an amount equal to the
Make-Whole Amount which would be
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Gundle Environmental Systems, Inc. Note Agreement
payable if the Company then had elected to prepay (and was permitted to prepay)
the Notes with the Make-Whole Amount pursuant to SECTION 2.2 (determined as of
the date of declaration of an acceleration or, in the case of an Event of
Default described in paragraph (l), (m) or (n) of SECTION 6.1, the date of
acceleration). No course of dealing on the part of the holder or holders of
any Notes nor any delay or failure on the part of any Noteholder to exercise
any right shall operate as a waiver of such right or otherwise prejudice such
holder's rights, powers and remedies. The Company further agrees, to the
extent permitted by law, to pay to the holder or holders of the Notes all costs
and expenses incurred by them in the collection of any Notes upon any default
hereunder or thereon, including reasonable compensation to such holder's or
holders' attorneys for all services rendered in connection therewith.
Section 6.4. Rescission of Acceleration. The provisions of SECTION 6.3
are subject to the condition that if the principal of and accrued interest on
all or any outstanding Notes have been declared immediately due and payable by
reason of the occurrence of any Event of Default described in paragraphs (a)
through (k), inclusive, of SECTION 6.1, the holders of 66-2/3% in aggregate
principal amount of the Notes then outstanding may, by written instrument filed
with the Company, rescind and annul such declaration and the consequences
thereof, provided that at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal,
interest or premium on the Notes which has become due and payable solely by
reason of such declaration under SECTION 6.3) shall have been duly paid;
and
(c) each and every other Default and Event of Default shall have been
made good, cured or waived pursuant to SECTION 7.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
Section 7.1. Consent Required. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular
instance and either retroactively or prospectively), if the Company shall have
obtained the consent in writing of the holders of at least 66-2/3% in aggregate
principal amount of outstanding Notes; provided that without the written
consent of the holders of all of the Notes then outstanding, no such amendment
or waiver shall be effective (i) which will change the time of payment
(including any prepayment required by SECTION 2.1) of the principal of or the
interest on any Note or change the principal amount thereof or change the rate
of interest thereon, or (ii) which will change any of the provisions with
respect to optional prepayments, or (iii) which will change the
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Gundle Environmental Systems, Inc. Note Agreement
percentage of holders of the Notes required to consent to any such amendment or
waiver of any of the provisions of this SECTION 7 or SECTION 6.
Section 7.2. Solicitation of Holders. So long as there are any Notes
outstanding, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each Noteholder (irrespective of the amount of
Notes then owned by it) shall 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. The Company will not, 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 entering into by any Noteholder of any waiver or amendment of any
of the terms and provisions of this Agreement or the Notes unless such
remuneration is concurrently offered, on the same terms, ratably to the holders
of all Notes then outstanding.
Section 7.3. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation
not expressly amended or waived or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 8.1. Definitions. Unless the context otherwise requires, the
terms hereinafter set forth when used herein shall have the following meanings
and the following definitions shall be equally applicable to both the singular
and plural forms of any of the terms herein defined:
"Affiliate" shall mean any Person (other than a Subsidiary) (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or (iii) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Business Day" shall mean any day on which commercial banks are generally
open for business in New York, New York and Houston, Texas.
"Capitalized Lease" shall mean any lease the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance sheet
of the lessee and its subsidiaries in accordance with GAAP.
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Gundle Environmental Systems, Inc. Note Agreement
"Capitalized Rentals" of any Person and as of the date of any determination
thereof shall mean the amount at which the aggregate Rentals due and to become
due under all Capitalized Leases under which such Person is a lessee would be
reflected as a liability on a consolidated balance sheet of such Person.
"Company" shall mean Gundle Environmental Systems, Inc., a Delaware
corporation and its permitted successors and assigns including, without
limitation, Gundle/SLT Environmental, Inc.
"Consolidated Current Assets" and "Consolidated Current Liabilities" shall
mean as of the date of any determination thereof such assets and liabilities of
the Company and its Subsidiaries on a consolidated basis as shall be determined
in accordance with GAAP to constitute current assets and current liabilities,
respectively.
"Consolidated Indebtedness for Borrowed Money" shall mean all Indebtedness
for Borrowed Money of the Company and its Subsidiaries, determined on a
consolidated basis eliminating intercompany items.
"Consolidated Net Assets" shall mean as of the date of any determination
thereof, the total amount of all assets of the Company and its Subsidiaries
after deducting all depreciation, depletion and other properly deductible
valuation reserves and all items which in accordance with GAAP would be
included on the liability side of a consolidated balance sheet, except deferred
income taxes, deferred investment tax credits, capital stock of any class,
surplus and Indebtedness for Borrowed Money.
"Consolidated Net Income" for any period shall mean the gross revenues of
the Company and its Subsidiaries for such period less all expenses and other
proper charges (including taxes on income), determined on a consolidated basis
after eliminating earnings or losses attributable to outstanding Minority
Interests, but excluding in any event:
(a) any gains or losses on the sale or other disposition of
investments or fixed or capital assets, and any taxes on such excluded
gains and any tax deductions or credits on account of any such excluded
losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Subsidiary accrued prior to the
date it became a Subsidiary;
(d) net earnings and losses of any corporation (other than a
Subsidiary), substantially all the assets of which have been acquired in
any manner by the Company or any Subsidiary, realized by such corporation
prior to the date of such acquisition;
(e) net earnings and losses of any corporation (other than a
Subsidiary) with which the Company or a Subsidiary shall have consolidated
or which shall have
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Gundle Environmental Systems, Inc. Note Agreement
merged into or with the Company or a Subsidiary prior to the date of such
consolidation or merger;
(f) net earnings of any business entity (other than a Subsidiary) in
which the Company or any Subsidiary has an ownership interest unless such
net earnings shall have actually been received by the Company or such
Subsidiary in the form of cash distributions;
(g) any portion of the net earnings of any Subsidiary which for any
reason is unavailable for payment of dividends to the Company or any other
Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or write-up
of assets;
(i) any deferred or other credit representing any excess of the equity
in any Subsidiary at the date of acquisition thereof over the amount
invested in such Subsidiary;
(j) any gain arising from the acquisition of any Securities of the
Company or any Subsidiary;
(k) any reversal of any contingency reserve, except to the extent that
provision for such contingency reserve shall have been made from income
arising during such period; and
(l) any portion of net earnings not readily convertible into U.S.
dollars and available for payment of the Company's or a Subsidiary's
liabilities in the United States.
"Consolidated Net Worth" shall mean as of the date of any determination
thereof Consolidated Net Assets less (1) all outstanding Indebtedness for
Borrowed Money, deferred income taxes and deferred investment tax credits,
consolidating the Company and its Subsidiaries, and (2) all Intangible Assets
acquired by the Company after December 31, 1994.
"Consolidated Total Capitalization" shall mean, as of the date of any
determination thereof, the sum of (i) Consolidated Net Worth plus (ii)
Consolidated Indebtedness for Borrowed Money.
"Credit Agreement" shall mean that certain Credit Agreement dated as of the
effective date of the Merger among the Company, certain of its Subsidiaries
which may join the Credit Agreement, NationsBank of Texas, N.A., as agent and
the banks and other financial institutions from time to time parties thereto,
as the same may be amended, modified, waived or supplemented from time to time,
and any extension, renewal or replacement thereof.
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Gundle Environmental Systems, Inc. Note Agreement
"Current Debt" of any Person and as of the date of any determination
thereof shall mean (i) all Indebtedness of such Person for borrowed money other
than Funded Debt of such Person and (ii) Guaranties by such Person of Current
Debt of others.
"Default" shall mean any event or condition, the occurrence of which would,
with the lapse of time or the giving of notice, or both, constitute an Event of
Default.
"Domestic Subsidiary" shall mean GSE Lining Technology, Inc., a Delaware
corporation, GSE International, Inc., a Delaware corporation and each other
Subsidiary now existing or hereafter created or acquired, which is organized
under the laws of the United States or any State thereof and which is required
to guarantee Indebtedness for Borrowed Money pursuant to the Credit Agreement.
"Environmental and Containment Systems" shall mean products used in the
waterproofing of roofing systems, buildings and other structures and
enclosures, designed to exclude water from the premises, and/or products used
in the protection of soil and groundwater from seepage from landfills,
wastepits, leach pads, storage tanks and similar contrivances for the capture,
containment or retention of liquid and solid materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA Affiliate" means any corporation, trade or business that is, along
with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code of Section 4001 of ERISA.
"Event of Default" shall have the meaning set forth in SECTION 6.1.
"Funded Debt" of any Person shall mean (i) all Indebtedness of such Person
for borrowed money or which has been incurred in connection with the
acquisition of assets in each case having a final maturity of one or more than
one year from the date of origin thereof (or which is renewable or extendible
at the option of the obligor for a period or periods more than one year from
the date of origin), including all payments in respect thereof that are
required to be made within one year from the date of any determination of
Funded Debt, whether or not the obligation to make such payments shall
constitute a current liability of the obligor under GAAP, (ii) all Capitalized
Rentals of such Person, and (iii) all Guaranties by such Person of Funded Debt
of others.
"GAAP" shall mean generally accepted accounting principles at the time.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
any Indebtedness, dividend or other
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Gundle Environmental Systems, Inc. Note Agreement
obligation, of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, all obligations incurred
through an agreement, contingent or otherwise, by such Person: (i) to purchase
such Indebtedness or obligation or any property or assets constituting security
therefor, (ii) to advance or supply funds (x) for the purchase or payment of
such Indebtedness or obligation, (y) to maintain working capital or other
balance sheet condition or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation, or (iii) to lease
property or to purchase Securities or other Property or services primarily for
the purpose of assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of the Indebtedness or
obligation, or (iv) otherwise to assure the owner of the Indebtedness or
obligation of the primary obligor against loss in respect thereof. For the
purposes of all computations made under this Agreement, a Guaranty in respect
of any Indebtedness for borrowed money shall be deemed to be Indebtedness equal
to the principal amount of such Indebtedness for borrowed money which has been
guaranteed, and a Guaranty in respect of any other obligation or liability or
any dividend shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.
"Indebtedness" of any Person shall mean and include all obligations of such
Person which in accordance with GAAP shall be classified upon a balance sheet
of such Person as liabilities of such Person, and in any event shall include
all (i) obligations of such Person for borrowed money or which has been
incurred in connection with the acquisition of property or assets, (ii)
obligations secured by any Lien upon property or assets owned by such Person,
even though such Person has not assumed or become liable for the payment of
such obligations, (iii) obligations created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person, notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property, (iv) Capitalized Rentals under any
Capitalized Lease and (v) Guaranties of Indebtedness of others.
"Indebtedness for Borrowed Money" of any Person shall mean the sum of
Current Debt and Funded Debt of such Person.
"Institutional Holder" shall mean any bank, trust company, insurance
company, fraternal benefit society, pension fund, mutual fund or other similar
institutional investor which shall hold any Notes.
"Intangible Assets" shall mean goodwill, patents, trade names, trade marks,
copyrights, franchises, experimental expense, organization expense, unamortized
debt discount and expense, deferred assets other than prepaid insurance and
prepaid taxes, the excess of cost of shares acquired over book value of related
assets and such other assets as are properly classified as "intangible assets"
in accordance with generally accepted accounting principles.
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Gundle Environmental Systems, Inc. Note Agreement
"Interest Charges" for any period shall mean all interest and all
amortization of debt discount and expense on any particular Indebtedness for
which such calculations are being made.
"Investments" shall mean all investments, in cash or by delivery of
Property made, directly or indirectly in any Person, whether by acquisition of
shares of capital stock, indebtedness or other obligations or Security or by
loan, advance, capital contribution or otherwise; provided, however, that
"Investments" shall not mean or include routine investments in Property to be
used or consumed in the ordinary course of business or investments in accounts
receivable or notes receivable arising in the ordinary course of business.
"Lien" shall mean any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting Property. For the purposes of this
Agreement, the Company or a Subsidiary 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.
"Make-Whole Amount" shall mean, in connection with any prepayment, the
excess, if any, of (i) the aggregate present value as of the date of such
prepayment of each dollar of principal being prepaid (taking into account the
application of such prepayment required by SECTION 2.1) and the amount of
interest (exclusive of interest accrued to the date of prepayment) that would
have been payable in respect of such dollar if such prepayment had not been
made, determined by discounting such amounts at the Reinvestment Rate from the
respective dates on which they would have been payable, over (ii) 100% of the
principal amount of the outstanding Notes being prepaid. If the Reinvestment
Rate is equal to or higher than 7.34%, the Make-Whole Amount shall be zero.
For purposes of any determination of the Make-Whole Amount:
"Reinvestment Rate" shall mean 50 basis points plus the arithmetic
mean of the yields for the two columns under the heading "Week Ending"
published in the Statistical Release under the caption "Treasury Constant
Maturities" for the maturity (rounded to the nearest month) corresponding
to the Weighted Average Life to Maturity of the principal being prepaid
(taking into account the application of such prepayment required by SECTION
2.1). If no maturity exactly corresponds to such Weighted Average Life to
Maturity, yields for the two published maturities most closely
corresponding to such Weighted Average Life to Maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate
shall be interpolated
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Gundle Environmental Systems, Inc. Note Agreement
or extrapolated from such yields on a straight-line basis, rounding in each
of such relevant periods to the nearest month. For the purposes of
calculating the Reinvestment Rate, the most recent Statistical Release
published prior to the date of determination of the Make-Whole Amount shall
be used.
"Statistical Release" shall mean the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded U.S.
Government Securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination
hereunder, then such other reasonably comparable index which shall be
designated by the holders of 66-2/3% in aggregate principal amount of the
outstanding Notes.
"Weighted Average Life to Maturity" of the principal amount of the
Notes being prepaid shall mean, as of the time of any determination
thereof, the number of years obtained by dividing the then Remaining
Dollar-Years of such principal by the aggregate amount of such principal.
The term "Remaining Dollar-Years" of such principal shall mean the amount
obtained by (i) multiplying (x) the remainder of (1) the amount of
principal that would have become due on each scheduled payment date if such
prepayment had not been made, less (2) the amount of principal on the Notes
scheduled to become due on such date after giving effect to such prepayment
and the application thereof in accordance with the provisions of SECTION
2.1, by (y) the number of years (calculated to the nearest one-twelfth)
which will elapse between the date of determination and such scheduled
payment date, and (ii) totalling the products obtained in (i).
"Merger" shall mean the merger of SLT into the Company.
"Minority Interests" shall mean any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law) that
are not owned by the Company and/or one or more of its Subsidiaries. Minority
Interests shall be valued by valuing Minority Interests constituting preferred
stock at the voluntary or involuntary liquidating value of such preferred
stock, whichever is greater, and by valuing Minority Interests constituting
common stock at the book value of capital and surplus applicable thereto
adjusted, if necessary, to reflect any changes from the book value of such
common stock required by the foregoing method of valuing Minority Interests in
preferred stock.
"Multiemployer Plan" shall have the same meaning as in ERISA.
"Net Income Available for Interest Charges" for any period shall mean the
sum of (i) Consolidated Net Income during such period plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for any
Federal, state or other income taxes made by the Company and its Subsidiaries
during such period, (iii) amortization of goodwill, and (iv) Interest Charges
of the Company and its Subsidiaries during such period.
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Gundle Environmental Systems, Inc. Note Agreement
"Non-Capitalized Lease" and "Operating Lease" shall mean any lease of real
or personal property (other than a Capitalized Lease) having an original term,
including any period for which the lease may be renewed or extended at the
option of the lessor, of more than three years.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Foreign Country" shall mean each of France, Italy, Canada,
Germany, Singapore, Australia, Japan and each of the countries comprising the
United Kingdom, so long as the rating on such country's senior unsecured
long-term debt is rated AA or better by Standard and Poor's Ratings Group or Aa
or better by Moody's Investors Services, Inc.
"Permitted Investments" shall mean one of the following:
(a) Investments by the Company and its Subsidiaries in and to
Subsidiaries, including any investment in a corporation which, after giving
effect to such investment, will become a Subsidiary;
(b) Investments in commercial paper and bankers' acceptances maturing
in twelve months or less from the date of issuance and which, at the time
of acquisition by the Company or any Subsidiary, is accorded the highest
rating by Standard & Poor's Ratings Group or Moody's Investors Services,
Inc.;
(c) Investments in direct obligations of the United States of America,
or Investments in any Person, which Investments are guaranteed by the full
faith and credit of the United States of America, in either case maturing
in twelve months or less from the date of acquisition thereof by the
Company or any Subsidiary and repurchase agreements having a term of less
than one year and fully collateralized by such obligations which are
entered into with banks or trust companies described in clause (e) below or
brokerage companies having a net worth in excess of $100,000,000;
(d) Investments in direct obligations of Permitted Foreign Countries
(or central banks thereof), in any case maturing in twelve months or less
from the date of acquisition thereof by the Company or any Subsidiary and
repurchase agreements having a term of less than one year relating to and
fully collateralized by such obligations, which repurchase agreements are
entered into with banks or trust companies described in clauses (e) and (f)
below or brokerage companies having a net worth in excess of $250,000,000;
provided, that the aggregate amount of Investments in direct obligations of
any Permitted Foreign Country (or central bank thereof) permitted in this
clause (d) shall not exceed $1,000,000;
(e) Investments in time deposits, certificates of deposit or
Eurodollar certificates of deposit maturing within one year from the date
such investment is made, issued by a bank or trust company organized under
the laws of the United States
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Gundle Environmental Systems, Inc. Note Agreement
or any state thereof, having capital, surplus and undivided profits
aggregating at least $100,000,000 or a foreign branch thereof located in
the United Kingdom, France, Canada, Italy, Singapore, Germany, Australia,
Japan or the Cayman Islands and whose long-term certificates of deposit
are, at the time of acquisition thereof by the Company or Subsidiary, rated
A by Standard & Poor's Ratings Group or A-2 by Moody's Investors Services,
Inc.;
(f) Investments in time deposits or certificates of deposit maturing
within one year from the date such investment is made, issued by a bank
organized under the laws of any Permitted Foreign Country or any political
subdivision thereof, having capital, surplus and undivided profits
aggregating at least $500,000,000 and whose senior unsecured long-term debt
(or if not available, such bank's holding company's senior unsecured
long-term debt) is, at the time of acquisition thereof by the Company or
Subsidiary, rated A by Standard & Poor's Ratings Group or A-2 by Moody's
Investors Services, Inc.; provided, that the aggregate amount of
Investments in any bank organized under the laws of any Permitted Foreign
Country or any political subdivision thereof permitted in this clause (f)
shall not exceed $5,000,000;
(g) loans or advances in the usual and ordinary course of business to
officers, directors and employees for expenses (including moving expenses
related to a transfer) incidental to carrying on the business of the
Company or any Subsidiary;
(h) receivables arising from the sale of goods and services in the
ordinary course of business of the Company and its Subsidiaries;
(i) Investments in companies which are engaged in the same general
nature of business as the Company (assuming compliance with SECTION 5.5)
and which do not result in such company being a Subsidiary;
(j) Investments in corporations constituting the payment for or
settlement of a claim owed to the Company or any Subsidiary received by the
Company or such Subsidiary pursuant to a bankruptcy, reorganization,
arrangement or insolvency proceeding, or other proceedings for relief under
any bankruptcy or similar law or laws for the relief of debtors, instituted
by or against such corporation;
(k) short-term securities backed by letters of credit from banks or
trust companies described in clause (e) above and other short-term
tax-exempt securities with minimum quality ratings of A- by Standard &
Poor's Ratings Group or A-3 by Moody's Investors Services, Inc.; or
(l) Investments not otherwise qualifying as a Permitted Investment so
long as the aggregate thereof does not exceed 5% of Consolidated Total
Capitalization.
In valuing any Investments for the purpose of applying the limitations set
forth in this Agreement, such investments, loans and advances shall be taken at
the original cost thereof,
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Gundle Environmental Systems, Inc. Note Agreement
without allowance for any subsequent write-offs or appreciation or depreciation
therein, but less any amount repaid or recovered on account of capital or
principal.
For purposes of this Agreement, at any time when a corporation becomes a
Subsidiary, all Investments of such corporation at such time shall be deemed to
have been made by such corporation, as a Subsidiary, at such time.
"Permitted Subsidiary Guaranties" shall mean collectively, the Guaranty
Agreements executed and delivered by the Domestic Subsidiaries in connection
with this Agreement, the separate Note Agreements each dated as of June 15,
1990 between the Company and the purchaser party thereto and the Credit
Agreement.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political
subdivision thereof.
"Plan" means a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Priority Obligations" shall mean and include (i) all Indebtedness for
Borrowed Money of Subsidiaries (other than the Permitted Subsidiary Guaranties
and Indebtedness for Borrowed Money of Subsidiaries to the Company or a
Wholly-owned Subsidiary), (ii) all Funded Debt of the Company secured by Liens
referred to in SECTION 5.9(g) or SECTION 5.9(h) and (iii) preferred stock of
Subsidiaries held by any other Person other than the Company and its
Wholly-owned Subsidiaries. The amount of Priority Obligations outstanding as
at any date of determination thereof shall mean the sum, without duplication,
of the aggregate unpaid principal amount of all Indebtedness for Borrowed Money
constituting Priority Obligations and the voluntary or involuntary liquidating
value, whichever is greater, of preferred stock constituting Priority
Obligations.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"Purchaser(s)" shall have the meaning set forth in SECTION 1.1.
"Rentals" shall mean and include as of the date of any determination
thereof, all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
Property) payable by the Company or a Subsidiary, as lessee or sublessee under
a lease of real or personal property, but shall be exclusive of any amounts
required to be paid by the Company or a Subsidiary (whether or not designated
as rents or additional rents) on account of maintenance, repairs, insurance,
taxes and similar charges. Fixed rents under any so-called "percentage leases"
shall be computed solely on the basis of the minimum rents, if any, required to
be paid by the lessee regardless of sales volume or gross revenues.
"Reportable Event" shall have the same meaning as in ERISA.
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Gundle Environmental Systems, Inc. Note Agreement
"Security" shall have the same meaning as in Section 2(1) of the Securities
Act of 1933, as amended.
"Senior Indebtedness for Borrowed Money" shall mean all Consolidated
Indebtedness for Borrowed Money, other than Subordinated Indebtedness for
Borrowed Money.
"SLT" shall mean SLT Environmental, Inc., a Delaware corporation.
"Subordinated Indebtedness for Borrowed Money" shall mean all unsecured
Indebtedness for Borrowed Money of the Company which shall contain or have
applicable thereto subordination provisions substantially in the form set forth
in Exhibit F attached hereto providing for the subordination thereof to other
Indebtedness for Borrowed Money of the Company, including, without limitation,
the Notes, or such other provisions as may be approved in writing by the
holders of not less than 66-2/3% in aggregate principal amount of the
outstanding Notes.
The term "subsidiary" shall mean, as to any particular parent corporation,
any corporation of which more than 50% (by number of votes) of the Voting Stock
shall be owned by such parent corporation and/or one or more corporations which
are themselves subsidiaries of such parent corporation. The term "Subsidiary"
shall mean a subsidiary of the Company, which shall include subsidiaries of SLT
which will become subsidiaries of the Company on the Closing Date.
"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).
"Wholly-owned" when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) and all Indebtedness for
Borrowed Money shall be owned by the Company and/or one or more of its
Wholly-owned Subsidiaries.
Section 8.2. Accounting Principles. Where the character or amount of
any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in
accordance with GAAP, to the extent applicable, except where such principles
are inconsistent with the requirements of this Agreement.
Section 8.3. Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action
in question is taken directly or indirectly by such Person.
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Gundle Environmental Systems, Inc. Note Agreement
SECTION 9. MISCELLANEOUS.
Section 9.1. Registered Notes. The Company shall cause to be kept at
its principal office a register for the registration and transfer of the Notes
(hereinafter called the "Note Register"), and the Company will register or
transfer or cause to be registered or transferred, as hereinafter provided and
under such reasonable regulations as it may prescribe, any Note issued pursuant
to this Agreement.
At any time and from time to time the registered holder of any Note which
has been duly registered as hereinabove provided may transfer such Note upon
surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or its attorney duly authorized in writing.
The Person in whose name any registered Note shall be registered shall be
deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal, Make-Whole Amount, if
any, and interest on any registered Note shall be made to or upon the written
order of such registered holder.
Section 9.2. Exchange of Notes. At any time and from time to time,
upon not less than ten days' notice to that effect given by the holder of any
Note initially delivered or of any Note substituted therefor pursuant to
SECTION 9.1, this SECTION 9.2 or SECTION 9.3, and, upon surrender of such Note
at its office, the Company will deliver in exchange therefor, without expense
to such holder, except as set forth below, Notes for the same aggregate
principal amount as the then unpaid principal amount of the Note so
surrendered, in the denomination of $100,000 or any amount in excess thereof as
such holder shall specify, dated as of the date to which interest has been paid
on the Note so surrendered or, if such surrender is prior to the payment of any
interest thereon, then dated as of the date of issue, payable to such Person or
Persons, or order, as may be designated by such holder, and otherwise of the
same form and tenor as the Notes so surrendered for exchange. The Company may
require the payment of a sum sufficient to cover any stamp tax or governmental
charge imposed upon such exchange or transfer.
Section 9.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
any Note, and in the case of any such loss, theft or destruction upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of the Note, the Company will make and deliver without expense
to the holder thereof, a new Note, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Note. If the Purchaser or any subsequent Institutional
Holder is the owner of any such lost, stolen or destroyed Note, then the
affidavit of an authorized officer of such owner, setting forth the fact of
loss, theft or destruction and of its ownership of such Note at the time of
such loss, theft or destruction shall be accepted as satisfactory evidence
thereof and no further indemnity shall be required as a condition to the
execution and delivery of a new Note other than the written agreement of such
owner to indemnify the Company.
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Gundle Environmental Systems, Inc. Note Agreement
Section 9.4. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to
pay directly all of your out-of-pocket expenses in connection with the
preparation, execution and delivery of this Agreement and the transactions
contemplated hereby, including but not limited to the reasonable charges and
disbursements of Chapman and Cutler, your special counsel, duplicating and
printing costs and charges for shipping the Notes, adequately insured to you at
your home office or at such other place as you may designate, and all such
expenses relating to any amendment, waivers or consents pursuant to the
provisions hereof, including, without limitation, any amendments, waivers, or
consents resulting from any work-out renegotiation or restructuring relating to
the performance by the Company of its obligations under this Agreement and the
Notes. The Company also agrees that it will pay and save you harmless against
any and all liability with respect to stamp and other taxes, if any, which may
be payable or which may be determined to be payable in connection with the
execution and delivery of this Agreement or the Notes, whether or not any Notes
are then outstanding. The Company agrees to protect and indemnify you against
any liability for any and all brokerage fees and commissions payable or claimed
to be payable to any Person in connection with the transactions contemplated by
this Agreement.
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative. No
delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to, and are not exclusive of, any rights or
remedies any such holder would otherwise have.
Section 9.6. Notices. All communications provided for hereunder shall
be in writing and, if to you, delivered or mailed prepaid by registered or
certified mail or overnight air courier, or by facsimile communication
confirmed by registered or certified mail or overnight air carrier, addressed
to you at your address appearing on Schedule I to this Agreement or such other
address as you or the subsequent holder of any Note initially issued to you,
may designate to the Company in writing, and if to the Company, delivered or
mailed by registered or certified mail or overnight air courier, or by
facsimile communication confirmed by registered or certified mail or overnight
air courier, to the Company at 19103 Gundle Road, Houston, Texas 77073,
Attention: Vice President - Finance or to such other address as the Company
may in writing designate to you or to a subsequent holder of the Note initially
issued to you; provided, however, that a notice to you by overnight air courier
shall only be effective if delivered to you at a street address designated for
such purpose in Schedule I, and a notice to you by facsimile communication
shall only be effective if made by confirmed transmission to you at a telephone
number designated for purpose in Schedule I, or, in either case, as you or a
subsequent holder of any Note initially issued to you may designate to the
Company in writing.
Section 9.7. Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to your benefit
and to the benefit of your successors and assigns, including each successive
holder or holders of any Notes.
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Gundle Environmental Systems, Inc. Note Agreement
Section 9.8. Survival of Covenants and Representations. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of this Agreement and
the Notes.
Section 9.9. Severability. Should any part of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any remaining portion, which remaining portion
shall remain in force and effect as if this Agreement had been executed with
the invalid portion or unenforceable portion thereof eliminated and it is
hereby declared the intention of the parties hereto that they would have
executed the remaining portion of this Agreement without including therein any
such part, parts, or portion which may, for any reason, be hereafter declared
invalid or unenforceable.
Section 9.10. Governing Law. This Agreement and the Notes issued and
sold hereunder shall be governed by and construed in accordance with Texas law.
Section 9.11. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
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<PAGE> 40
Gundle Environmental Systems, Inc. Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
GUNDLE ENVIRONMENTAL SYSTEMS, INC.
By /s/ Roger J. Klatt
-------------------------------------
Its Senior Vice President/
Chief Financial Officer
Accepted as of June 15, 1995
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By /s/ James C. Fifield
-------------------------------------
Its Counsel
By /s/ Jon C. Heiny
-------------------------------------
Its Counsel
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<PAGE> 1
EXHIBIT 1.4
================================================================================
GUNDLE ENVIRONMENTAL SYSTEMS, INC.
NOTE AGREEMENT
Dated as of June 15, 1995
Re: $25,000,000 7.34% Senior Notes
Due August 1, 2005
================================================================================
<PAGE> 2
TABLE OF CONTENTS
(Not a part of the Agreement)
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT . . . . . . . . . . . . . . . . . 1
Section 1.1. Description of Notes . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Commitment, Closing Date . . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Guaranty of Notes . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4. Other Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1. Required Prepayments . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2. Optional Prepayment with Premium . . . . . . . . . . . . . . . . 3
Section 2.3. Notice of Prepayments . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.4. Allocation of Prepayments . . . . . . . . . . . . . . . . . . . . 4
Section 2.5. Direct Payment . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.1. Representations of the Company . . . . . . . . . . . . . . . . . 4
Section 3.2. Representations of the Purchaser . . . . . . . . . . . . . . . . 4
SECTION 4. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.1. Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.2. Waiver of Conditions . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 5. COMPANY COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.1. Corporate Existence, Etc . . . . . . . . . . . . . . . . . . . . 7
Section 5.2. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with Laws . . . 8
Section 5.4. Maintenance, Etc . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.5. Nature of Business . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.6. Current Ratio; Interest Coverage Ratio . . . . . . . . . . . . . 8
Section 5.7. Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . 8
Section 5.8. Limitations on Indebtedness for Borrowed Money and Priority
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.9. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.10. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.11. Limitation on Operating Leases . . . . . . . . . . . . . . . . . 12
Section 5.12. Mergers, Consolidations and Sales of Assets . . . . . . . . . . . 12
Section 5.13. Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 5.14. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.15. Repurchase of Notes . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.16. Transactions with Affiliates . . . . . . . . . . . . . . . . . . 14
Section 5.17. ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.18. Reports and Rights of Inspection . . . . . . . . . . . . . . . . 15
Section 5.19. New Domestic Subsidiaries; Execution of Credit Agreement . . . . 18
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . . . . . . . . . . . . . 18
Section 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.2. Notice to Holders . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.3. Acceleration of Maturities . . . . . . . . . . . . . . . . . . . 20
Section 6.4. Rescission of Acceleration . . . . . . . . . . . . . . . . . . . 21
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS . . . . . . . . . . . . . . . . . . . 21
Section 7.1. Consent Required . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.2. Solicitation of Holders . . . . . . . . . . . . . . . . . . . . . 22
Section 7.3. Effect of Amendment or Waiver . . . . . . . . . . . . . . . . . . 22
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS . . . . . . . . . . . . . . . 22
Section 8.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 8.2. Accounting Principles . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.3. Directly or Indirectly . . . . . . . . . . . . . . . . . . . . . 32
SECTION 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.1. Registered Notes . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.2. Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.3. Loss, Theft, Etc. of Notes . . . . . . . . . . . . . . . . . . . 33
Section 9.4. Expenses, Stamp Tax Indemnity . . . . . . . . . . . . . . . . . . 34
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative . . . . . . . . 34
Section 9.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.7. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 34
Section 9.8. Survival of Covenants and Representations . . . . . . . . . . . . 35
Section 9.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.10. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.11. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
-ii-
<PAGE> 4
ATTACHMENTS TO NOTE AGREEMENT:
<TABLE>
<S> <C>
Schedule I _ Names and Addresses of Purchasers and Amounts of Commitments
Schedule II _ Liens Securing Funded Debt (including Capitalized Leases) as of June 15, 1995
Exhibit A _ Form of 7.34% Senior Note due August 1, 2005
Exhibit B _ Form of Guaranty Agreement
Exhibit C _ Representations and Warranties of the Company
Exhibit D _ Description of Special Counsel's Closing Opinion
Exhibit E _ Description of Closing Opinion of Counsel to the Company
Exhibit F _ Subordination Provisions Applicable to Subordinated Indebtedness for Borrowed Money
</TABLE>
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<PAGE> 5
GUNDLE ENVIRONMENTAL SYSTEMS, INC.
19103 Gundle Road
Houston, Texas 77073
NOTE AGREEMENT
Re: $25,000,000 7.34% Senior Notes
Due August 1, 2005
Dated as of
June 15, 1995
To the Purchaser named in Schedule I
hereto which is a signatory of this
Agreement
Gentlemen:
The undersigned, GUNDLE ENVIRONMENTAL SYSTEMS, INC., a Delaware corporation
(the "Company"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1. Description of Notes. (a) The Company will authorize the
issue and sale of $25,000,000 aggregate principal amount of its 7.34% Senior
Notes (the "Notes") to be dated the date of issue, to bear interest from such
date at the rate of 7.34% per annum, payable semiannually on the first day of
each February and August in each year (commencing February 1, 1996) and at
maturity and to bear interest on overdue principal (including any overdue
required or optional prepayment of principal) and Make-Whole Amount, if any,
and (to the extent legally enforceable) on any overdue installment of interest
at the rate of 9.34% per annum after maturity, whether by acceleration or
otherwise, until paid, to be expressed to mature on August 1, 2005, and to be
substantially in the form attached hereto as Exhibit A. Interest on the Notes
shall be computed on the basis of a 360-day year of twelve 30-day months. The
Notes are not subject to prepayment or redemption at the option of the Company
prior to their expressed maturity dates except on the terms and conditions and
in the amounts and with the premium, if any, set forth in SECTION 2 of this
Agreement. The term "Notes" as used herein shall include each Note delivered
pursuant to this Agreement and the separate agreements with the other purchaser
named in Schedule I. You and the other purchaser named in Schedule I are
hereinafter sometimes referred to as the "Purchasers".
(b) Concurrently with the Merger, the Company will amend its Certificate
of Incorporation to provide for, among other things, a change in its name to
Gundle/SLT Environmental, Inc. ("GSE"). As the Notes are to be issued
concurrently with the Merger,
<PAGE> 6
Gundle Environmental Systems, Inc. Note Agreement
they shall be issued and delivered on the Closing Date by the Company under the
then name of GSE.
Section 1.2. Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you, and you
agree to purchase from the Company, Notes in the principal amount set forth
opposite your name on Schedule I hereto at a price of 100% of the principal
amount thereof on the Closing Date hereafter mentioned.
Delivery of the Notes will be made at the offices of Chapman and Cutler,
111 W. Monroe Street, Chicago, Illinois, 60603, against payment therefor in
Federal Reserve or other funds current and immediately available at the
principal office of NationsBank of Texas, N.A., ABA No. 111000025, for credit
to the Company's Account No. 4140260363 in the amount of the purchase price at
10:00 A.M., Chicago time, on July 27, 1995 or such other date (not later than
August 15, 1995) as shall mutually be agreed upon by the Company and the
Purchasers (the "Closing Date"). The Notes delivered to you on the Closing Date
will be delivered to you in the form of a single registered Note for the full
amount of your purchase (unless different denominations are specified by you),
registered in your name or in the name of such nominee as you may specify and
in substantially the form attached hereto as Exhibit A, all as you may specify
at any time prior to the date fixed for delivery.
Section 1.3. Guaranty of Notes. Pursuant to those certain separate
Guaranty Agreements each dated as of the Closing Date (individually, a
"Guaranty Agreement" and collectively, the "Guaranty Agreements"), each
Domestic Subsidiary will guarantee, so long as the Indebtedness under the
Credit Agreement remains outstanding and is guaranteed by such Domestic
Subsidiary (i) the due and punctual payment of the principal of and interest
and Make-Whole Amount, if any, on the Notes from time to time outstanding, as
and when such payments become due and payable (including interest on overdue
payments of principal, Make-Whole Amount, if any, or interest at the rate set
forth in the Notes) and (ii) the prompt performance and compliance by the
Company with each of its other obligations under this Agreement. The Guaranty
Agreements will be in the form attached hereto as Exhibit B.
Section 1.4. Other Agreement. Simultaneously with the execution and
delivery of this Agreement, the Company is entering into a similar agreement
with the other Purchaser under which such other Purchaser agrees to purchase
from the Company the principal amount of Notes set opposite such Purchaser's
name in Schedule I, and your obligation and the obligations of the Company
hereunder are subject to the execution and delivery of the similar agreement by
the other Purchaser. The obligations of each Purchaser shall be several and
not joint and no Purchaser shall be liable or responsible for the acts of any
other Purchaser.
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<PAGE> 7
Gundle Environmental Systems, Inc. Note Agreement
SECTION 2. PREPAYMENT OF NOTES.
Section 2.1. Required Prepayments. The Company agrees that on the
first day of August in each year, commencing August 1, 2001 and ending August
1, 2004, both inclusive, it will prepay and apply and there shall become due
and payable on the principal indebtedness evidenced by the Notes an amount
equal to the lesser of (i) $5,000,000 or (ii) the principal amount of the Notes
then outstanding. The entire principal amount of the Notes shall become due
and payable on August 1, 2005. No premium shall be payable in connection with
any required prepayment made pursuant to this SECTION 2.1. For purposes of
this SECTION 2.1, any prepayment of less than all of the outstanding Notes made
pursuant to SECTION 2.2 shall be deemed to be applied to the payment at
maturity and at each other payment pursuant to this SECTION 2.1 in an amount
which bears the same relationship to such payment as the aggregate being so
applied bears to the unpaid principal amount of the Notes outstanding
immediately prior to such application, such that the remaining prepayments
required to be made pursuant to this SECTION 2.1 on each of the Notes remaining
outstanding will result in the same proportionate rate of prepayment as if
Notes had not been prepaid pursuant to SECTION 2.2.
In the event of any purchase or other acquisition by the Company of less
than all of the Notes pursuant to SECTION 5.15, the amount of the payment
required at maturity and each prepayment required to be made pursuant to this
SECTION 2.1 shall be reduced in the proportion that the principal amount of
such purchase or other acquisition bears to the unpaid principal amount of the
Notes immediately prior to such purchase or other acquisition (after giving
effect to any prepayment made pursuant to this SECTION 2.1 on the date of such
purchase or other acquisition).
Section 2.2. Optional Prepayment with Premium. In addition to the
payments required by SECTION 2.1, the Company shall have the privilege, at any
time and from time to time, of prepaying the outstanding Notes, either in whole
or in part (but if in part then in a minimum principal amount of $100,000) by
payment of the principal amount of the Notes, or portion thereof to be prepaid,
and accrued interest thereon to the date of such prepayment, together with the
Make-Whole Amount.
Section 2.3. Notice of Prepayments. The Company will give notice of
any prepayment of the Notes pursuant to SECTION 2.2 to each holder thereof not
less than 30 days nor more than 60 days before the date fixed for such optional
prepayment specifying (i) such date, (ii) the principal amount of the holder's
Notes to be prepaid on such date, (iii) that a Make-Whole Amount may be
payable, (iv) the date when such Make-Whole Amount will be calculated, (v) the
estimated Make-Whole Amount, and (vi) the accrued interest applicable to the
prepayment. Such notice of prepayment shall also certify all facts, if any,
which are conditions precedent to any such prepayment. Notice of prepayment
having been so given, the aggregate principal amount of the Notes specified in
such notice, together with accrued interest thereon and the Make-Whole Amount,
if any, payable with respect thereto shall become due and payable on the
prepayment date specified in said notice. Not later than two Business Days
prior to the prepayment date specified in such notice, the Company shall
provide each holder of a Note written notice of the Make-Whole Amount payable
in
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<PAGE> 8
Gundle Environmental Systems, Inc. Note Agreement
connection with such prepayment, whether or not any Make-Whole Amount is
payable, together with a reasonably detailed computation thereof.
Section 2.4. Allocation of Prepayments. All partial prepayments shall
be applied on all outstanding Notes ratably in accordance with the unpaid
principal amounts thereof.
Section 2.5. Direct Payment. Notwithstanding anything to the contrary
contained in this Agreement or the Notes, in the case of any Note owned by you
or your nominee or owned by any subsequent Institutional Holder which has given
written notice to the Company requesting that the provisions of this SECTION
2.5 shall apply, the Company will punctually pay when due the principal
thereof, interest thereon and Make-Whole Amount, if any, due with respect to
said principal, without any presentment thereof, directly to you, to your
nominee or to such subsequent Institutional Holder at your address or your
nominee's address set forth in Schedule I hereto or such other address as you,
your nominee or such subsequent Institutional Holder may from time to time
designate in writing to the Company or, if a bank account with a United States
bank is designated for you or your nominee on Schedule I hereto or in any
written notice to the Company from you, from your nominee or from any such
subsequent Institutional Holder, the Company will make such payments in
immediately available funds not later than 10:00 A.M. (Chicago time) to such
bank account, marked for attention as indicated, or in such other manner or to
such other account in any bank in the United States as you, your nominee or any
such subsequent Institutional Holder may from time to time direct in writing.
You and any subsequent Institutional Holder of any Notes to which this SECTION
2.5 applies agree that in the event that you or it shall sell or transfer any
such Notes you or it will, prior to the delivery of such Notes (unless you or
it have already done so), make a notation thereon of all principal, if any,
prepaid on such Notes and will also note thereon the date to which interest has
been paid on such Notes. With respect to any Notes to which this SECTION 2.5
applies, the Company shall be entitled to presume conclusively that you or any
subsequent Institutional Holder as shall have requested the provisions of this
SECTION 2.5 to apply to its Notes remains the holder of such Notes until such
Notes shall have been presented to the Company as evidence of the transfer of
such Notes.
SECTION 3. REPRESENTATIONS.
Section 3.1. Representations of the Company. The Company represents
and warrants that all representations and warranties set forth in Exhibit C are
true and correct as of the date hereof, and are incorporated herein by
reference with the same force and effect as though herein set forth in full.
Section 3.2. Representations of the Purchaser. You represent, and in
entering into this Agreement the Company understands, that you are acquiring
the Notes for the purpose of investment and not with a view to the resale or
distribution thereof, and that you have no present intention of selling,
negotiating or otherwise disposing of the Notes; it being understood, however,
that the disposition of your property shall at all times be and remain within
your control.
-4-
<PAGE> 9
Gundle Environmental Systems, Inc. Note Agreement
You acknowledge that the Notes have not been registered under the
Securities Act of 1933, as amended, and that any subsequent transfer of the
Notes shall be made only in compliance with the requirements of the Securities
Act of 1933, as amended. You represent that you have not engaged any
investment banker or other broker in connection with the transactions
contemplated by this Agreement.
You further represent that at least one of the following statements is an
accurate representation as to the source of funds to be used by you to pay the
purchase price of the Notes purchased by you hereunder:
(a) if you are an insurance company, no part of such funds constitutes
assets allocated to any separate account maintained by you in which any
employee benefit plan (or its related trust) has any interest; or
(b) if you are an insurance company, to the extent that any part of
such funds constitutes assets allocated to any separate account maintained
by you in which any employee benefit plan (or its related trust) has any
interest such separate account is a "pooled separate account" within the
meaning of Prohibited Transaction Class Exemption 90-1, as amended, in
which case you have disclosed to the Company the name of each employee
benefit plan whose assets in such separate account exceed 10% of the total
assets or are expected to exceed 10% of the total assets of such account as
of the date of such purchase (and for the purposes of this paragraph (b),
all employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan).
As used in this SECTION 3.2, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA and the term "plan assets" shall have the meaning specified in
Department of Labor Regulation Section 2510.3-101.
SECTION 4. CLOSING CONDITIONS.
Section 4.1. Conditions. Your obligation to purchase the Notes on the
Closing Date shall be subject to the performance by the Company of its
agreements hereunder which by the terms hereof are to be performed at or prior
to the time of delivery of the Notes and to the following further conditions
precedent:
(a) Closing Certificate. You shall have received a certificate dated
the Closing Date, signed by the President or a Vice President of the
Company and a President or a Vice President of each Domestic Subsidiary,
the truth and accuracy of which shall be a condition to your obligation to
purchase the Notes proposed to be sold to you and to the effect that (i)
the representations and warranties of the Company set forth in Exhibit C
hereto are true and correct on and with respect to the Closing Date, (ii)
the Company and each Domestic Subsidiary has performed all of its
obligations hereunder and under the Guaranty Agreements which are to be
performed on or prior to the Closing Date, (iii) no Default or Event of
Default has occurred and is continuing, (iv) the Merger has been duly
consummated in a manner consistent in all
-5-
<PAGE> 10
Gundle Environmental Systems, Inc. Note Agreement
material respects with the terms of the documents relating to the Merger
and in accordance with all applicable law, (v) the documents relating to
the Merger are in full force and effect and no terms or provisions thereof
have been amended or waived except as disclosed to the Purchasers, (vi) all
actions pursuant to or in furtherance of the Merger have been taken in
compliance with all applicable law, (vii) the execution of a Guaranty
Agreement by each Domestic Subsidiary will result in a financial benefit to
such Domestic Subsidiary and (viii) the related Guaranty Agreement has been
executed by such Domestic Subsidiary in good faith.
(b) Guaranty Agreements. A Guaranty Agreement shall have been duly
executed and delivered by each Domestic Subsidiary.
(c) Legal Opinions. You shall have received from Chapman and Cutler,
who are acting as your special counsel in this transaction, and from Porter
& Hedges, L.L.P., counsel for the Company and its Subsidiaries, their
respective opinions dated the Closing Date, in form and substance
satisfactory to you, and covering the matters set forth in Exhibits D and
E, respectively, hereto.
(d) Related Transactions. The Company shall have (i) consummated the
sale of the entire principal amount of the Notes scheduled to be sold on
the Closing Date pursuant to this Agreement and the other agreements
referred to in SECTION 1.3, and (ii), together with the banks party
thereto, executed and delivered the Credit Agreement and shall have
consummated the transactions contemplated for the first draw-down date
thereunder.
(e) Legality. The Notes shall qualify as a legal investment for you
under the laws and regulations of each jurisdiction to which you are
subject (without reference to any so-called "basket" provision which
permits the making of an investment without restrictions to the character
of the particular investment being made) and you shall have received such
information as you shall reasonably request from the Company to establish
such fact.
(f) Satisfactory Proceedings. All proceedings taken in connection
with the transactions contemplated by this Agreement, and all documents
necessary to the consummation thereof, shall be satisfactory in form and
substance to you and your special counsel, and you shall have received a
copy (executed or certified as may be appropriate) of all legal documents
or proceedings taken in connection with the consummation of said
transactions.
Section 4.2. Waiver of Conditions. If on the Closing Date the Company
fails to tender to you the Notes to be issued to you on such date or if the
conditions specified in SECTION 4.1 have not been fulfilled, you may thereupon
elect to be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in SECTION 4.1 have not
been fulfilled, you may waive compliance by the Company with any such condition
to such extent as you may in your sole discretion determine. Nothing in this
SECTION 4.2 shall
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<PAGE> 11
Gundle Environmental Systems, Inc. Note Agreement
operate to relieve the Company of any of its obligations hereunder or to waive
any of your rights against the Company.
SECTION 5. COMPANY COVENANTS.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
Section 5.1. Corporate Existence, Etc. The Company will preserve and
keep in full force and effect, and will cause each Subsidiary to preserve and
keep in full force and effect, its corporate existence and all licenses and
permits necessary to the proper conduct of its business, provided that the
foregoing shall not prevent any transaction permitted by SECTION 5.12.
Section 5.2. Insurance. The Company will maintain, and will cause each
Subsidiary to maintain, insurance coverage by financially sound and reputable
insurers (i) with respect to domestic United States coverages, accorded a
rating by A.M. Best Company, Inc. of (x) A-XII or better in the case of
products liability coverages and (y) A-VI or better in the case of all other
coverages, in each case at the time of the issuance of any such policy and in
such forms and amounts and against such risks as are customary for corporations
of established reputation engaged in the same or a similar business and owning
and operating similar properties, except that if, during the term of any such
insurance policy, the rating accorded the insurer shall be less than A-XII or
A-VI, as the case may be, the Company will, on the date of renewal of any such
policy (or, if such change in rating shall occur within 90 days prior to such
renewal date, within 90 days of the date of such change in rating), obtain such
insurance policy from an insurer so rated, and (ii) with respect to foreign
coverages, accorded a rating of A or better by Standard and Poor's Ratings
Group at the time of the issuance of any such policy and in such forms and
amounts and against such risks as are customary for corporations of established
reputation engaged in the same or a similar business and owning and operating
similar properties, except that, in the event that coverages are not reasonably
available in any foreign jurisdiction from insurers with an A rating or better
from Standard and Poor's Ratings Group or such insurers are not rated, such
coverages may be placed with insurers deemed financially sound and reputable by
the Company and not reasonably objected to by any holder or group of holders
holding 33-1/3% in aggregate principal amount of outstanding Notes. It is
understood and agreed that if any holder or group of holders holding more than
33-1/3% in aggregate principal amount of outstanding Notes shall reasonably
object to such insurers, it shall be deemed to be an objection hereunder
irrespective of any non-objection on the part of any other holder or holders of
outstanding Notes. Nothing contained in this SECTION 5.2 shall prevent the
Company from maintaining in lieu, in whole or in part, of such insurance
coverage a self-insurance program in an amount not to exceed $2,000,000 on an
annual basis if and to the extent that such self-insurance program is
consistent with sound and prudent business practices or is determined to be
appropriate or in the best interests of the Company by its Board of Directors.
Notwithstanding the insurance company size and credit quality standards set
forth in clause (y) of this Section 5.2, the Company may purchase property,
boiler and machinery insurance coverage from Industrial Risk Insurers.
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Gundle Environmental Systems, Inc. Note Agreement
Section 5.3. Taxes, Claims for Labor and Materials, Compliance with
Laws. The Company will promptly pay and discharge, and will cause each
Subsidiary promptly to pay and discharge, all lawful taxes, assessments and
governmental charges or levies imposed upon the Company or such Subsidiary,
respectively, or upon or in respect of all or any part of the Property or
business of the Company or such Subsidiary, all trade accounts payable in
accordance with usual and customary business terms, and all claims for work,
labor or materials, which if unpaid might become a Lien upon any Property of
the Company or such Subsidiary; provided the Company or such Subsidiary shall
not be required to pay any such tax, assessment, charge, levy, account payable
or claim if (i) the validity, applicability or amount thereof is being
contested in good faith by appropriate actions or proceedings which will
prevent the forfeiture or sale of any Property of the Company or such
Subsidiary or any material interference with the use thereof by the Company or
such Subsidiary, and (ii) the Company or such Subsidiary shall set aside on its
books, reserves deemed by it to be adequate with respect thereto. The Company
will promptly comply and will cause each Subsidiary to comply with all laws,
ordinances or governmental rules and regulations to which it is subject
including, without limitation, the Occupational Safety and Health Act of 1970,
as amended, ERISA and all laws, ordinances, governmental rules and regulations
relating to environmental protection in all applicable jurisdictions, the
violation of which would materially and adversely affect the properties,
business, prospects, profits or condition of the Company and its Subsidiaries
or would result in any Lien not permitted under SECTION 5.9.
Section 5.4. Maintenance, Etc. The Company will maintain, preserve and
keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order (subject
to ordinary wear and tear) and from time to time will make all necessary
repairs, replacements, renewals and additions so that at all times the
efficiency thereof shall be maintained.
Section 5.5. Nature of Business. Neither the Company nor any
Subsidiary will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Company and its Subsidiaries would be substantially changed from the
business of manufacturing, distributing and installing Environmental and
Containment Systems, which is the general nature of the business engaged in by
the Company and its Subsidiaries on the date of this Agreement.
Section 5.6. Current Ratio; Interest Coverage Ratio. (a) The Company
will at all times keep and maintain the ratio of Consolidated Current Assets to
Consolidated Current Liabilities at not less than 1.1 to 1.
(b) The Company will at all times keep and maintain the ratio of the Net
Income Available for Interest Charges for the four immediately preceding fiscal
quarters to the Interest Charges for such four fiscal quarters at not less than
2 to 1.
Section 5.7. Consolidated Net Worth. The Company will at all times
keep and maintain Consolidated Net Worth at an amount not less than (i) during
its fiscal year ending
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Gundle Environmental Systems, Inc. Note Agreement
December 31, 1995, $60,000,000, and (ii) during each fiscal year thereafter, an
amount equal to the sum of the amount that was required to be maintained during
the previous fiscal year plus an amount equal to 25% of Consolidated Net Income
for such previous fiscal year (but without deduction in the event of a deficit
in such Consolidated Net Income).
Section 5.8. Limitations on Indebtedness for Borrowed Money and
Priority Obligations. (a) The Company will not, and will not permit any
Subsidiary to, create, assume or incur or in any manner be or become liable in
respect of any Indebtedness for Borrowed Money or other Priority Obligations,
except:
(1) Indebtedness for Borrowed Money evidenced by the Notes;
(2) Indebtedness for Borrowed Money of the Company and its
Subsidiaries outstanding as of the date of this Agreement and reflected on
Annex B to Exhibit C hereto;
(3) additional Indebtedness for Borrowed Money of the Company and its
Subsidiaries and other Priority Obligations, provided that at the time of
issuance thereof and after giving effect thereto and to the application of
the proceeds thereof:
(i) in the case of the incurrence of Senior Indebtedness for
Borrowed Money, Senior Indebtedness for Borrowed Money shall not
exceed 50% of Consolidated Total Capitalization,
(ii) in the case of the incurrence of Indebtedness for Borrowed
Money, Consolidated Indebtedness for Borrowed Money shall not exceed
60% of Consolidated Total Capitalization, and
(iii) in the case of the incurrence of any Priority Obligations,
the aggregate amount of all Priority Obligations shall not exceed 20%
of Consolidated Total Capitalization; and
(4) Indebtedness for Borrowed Money of a Subsidiary to the Company or
to a Wholly-owned Subsidiary and preferred stock of a Subsidiary held by
the Company or a Wholly-owned Subsidiary.
(b) Any corporation which becomes a Subsidiary after the date hereof shall
for all purposes of this SECTION 5.8 be deemed to have created, assumed or
incurred at the time it becomes a Subsidiary all Indebtedness for Borrowed
Money of such corporation existing immediately after it becomes a Subsidiary.
Section 5.9. Limitation on Liens. The Company will not, and will not
permit any Subsidiary to, create or incur, or suffer to be incurred or to
exist, any Lien on its or their Property, whether now owned or hereafter
acquired, or upon any income or profits therefrom, or transfer any property for
the purpose of subjecting the same to the payment of obligations in priority to
the payment of its or their general creditors, or acquire or agree to
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Gundle Environmental Systems, Inc. Note Agreement
acquire, or permit any Subsidiary to acquire, any property or assets upon
conditional sales agreements or other title retention devices unless, in the
case of any Lien securing Indebtedness, the Notes shall be secured equally and
ratably with, or prior to, any such Indebtedness in a manner reasonably
satisfactory to the holders of at least 66-2/3% in aggregate principal amount
of the outstanding Notes, provided, however, that the foregoing restrictions
shall not apply to the following Liens which are permitted:
(a) Liens for property taxes and assessments or governmental charges
or levies and Liens securing claims or demands of mechanics and
materialmen, provided that payment thereof is not at the time required by
Section 5.3;
(b) Liens of or resulting from any judgment or award, the time for the
appeal or petition for rehearing of which shall not have expired, or in
respect of which the Company or a Subsidiary shall at any time in good
faith be prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or proceeding for review
shall have been secured;
(c) Liens incidental to the conduct of business or the ownership of
properties and assets (including warehousemen's and attorneys' liens and
statutory landlords' liens) and Liens to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety or
appeal bonds or other liens of like general nature incurred in the ordinary
course of business and not in connection with the borrowing of money,
provided in each case, the obligation secured is not overdue or, if
overdue, is being contested in good faith by appropriate actions or
proceedings;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Company and its Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly situated and which
do not in any event materially impair their use in the operation of the
business of the Company and its Subsidiaries taken as a whole;
(e) Liens securing Indebtedness of a Subsidiary to the Company or to
another Subsidiary;
(f) Liens existing as of the date of this Agreement and reflected in
Schedule II hereto, securing Funded Debt of (i) the Company or any
Subsidiary or (ii) SLT or any subsidiary outstanding on such date;
(g) Liens incurred after the date of this Agreement given to secure
the payment of the purchase price incurred in connection with the
acquisition or construction of fixed assets useful and intended to be used
in carrying on the business of the Company or a Subsidiary, including Liens
existing on such fixed assets at the time of acquisition thereof or at the
time of acquisition by the Company or a Subsidiary of any business entity
then owning such fixed assets which becomes a
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Gundle Environmental Systems, Inc. Note Agreement
Subsidiary concurrently with such acquisition, whether or not such existing
Liens were given to secure the payment of the purchase price of the fixed
assets to which they attach so long as they were not incurred, extended or
renewed in contemplation of such acquisition, provided that (i) the Lien
shall attach solely to the fixed assets acquired or purchased and the
proceeds thereof and such Lien shall attach within 365 days of the
completion of such acquisition or purchase, (ii) at the time of acquisition
of such fixed assets, the aggregate amount remaining unpaid on all
Indebtedness secured by Liens on such fixed assets whether or not assumed
by the Company or a Subsidiary shall not exceed an amount equal to 100% of
the lesser of the total purchase price or fair market value at the time of
acquisition of such fixed assets (as determined in good faith by the Board
of Directors of the Company), and (iii) all such Indebtedness shall have
been incurred within the applicable limitations provided in SECTION 5.8;
(h) Liens not otherwise permitted by the preceding clauses (a) through
(g), inclusive, securing Funded Debt of the Company or any Subsidiary,
provided that no such Lien shall be created to secure preexisting Funded
Debt, any extension, renewal or replacement of such Funded Debt, or any
Funded Debt (whether or not preexisting Funded Debt) under any preexisting
agreement providing for unsecured Funded Debt or under any extension,
renewal or replacement of such an agreement unless the Notes shall be
secured equally and ratably with, or prior to, any such Funded Debt in a
manner reasonably satisfactory to the holders of at least 66-2/3% in
aggregate principal amount of the outstanding Notes and provided further
that all Funded Debt secured by such liens shall be permitted by the
provisions of SECTION 5.8(a)(3)(iii); and
(i) any extension, renewal or replacement of any lien permitted by the
preceding SECTION 5.9(g) or SECTION 5.9(h), in respect of the same property
theretofore subject to such lien, incurred in connection with the
extension, renewal or refunding of the Indebtedness secured thereby
(without increase in principal amount) which is permitted by the
limitations contained in SECTION 5.8(a).
Section 5.10. Restricted Payments. The Company will not except as
hereinafter provided:
(a) Declare any dividends, either in cash or Property, on any shares
of its capital stock of any class (except dividends or other distributions
payable solely in shares of capital stock of the Company);
(b) Directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any shares of its
capital stock (other than in exchange for or out of the net cash proceeds
to the Company from the substantially concurrent issue or sale of other
shares of capital stock of the Company or warrants, rights or options to
purchase or acquire any shares of its capital stock);
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Gundle Environmental Systems, Inc. Note Agreement
(c) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock; or
(d) Make any payment or distribution, either directly or indirectly or
through any Subsidiary, of principal of any Subordinated Indebtedness for
Borrowed Money prior to the date such payment shall be due;
(such declarations of dividends, purchases, redemptions or retirements of
capital stock and warrants, rights or options and all such other distributions
being herein collectively called "Restricted Payments"), if after giving effect
thereto an Event of Default shall have occurred and be continuing or the
aggregate amount of Restricted Payments made during the period from and after
December 31, 1994 to and including the date of the making of the Restricted
Payment in question, would exceed the sum of (i) $16,000,000 plus (ii) 50% of
Consolidated Net Income for such period, computed on a cumulative basis for
said entire period (or if such Consolidated Net Income is a deficit figure,
then minus 100% of such deficit).
The Company will not declare any dividend which constitutes a Restricted
Payment payable more than 60 days after the date of declaration thereof. The
Company may make any Restricted Payment declared in compliance with the
provisions of this SECTION 5.10 regardless of its capacity to declare
additional Restricted Payments or lack thereof under this SECTION 5.10 at the
time of the payment of such Restricted Payment.
For the purposes of this SECTION 5.10 the amount of any Restricted Payment
declared, paid or distributed in Property shall be deemed to be the greater of
the book value or fair market value (as determined in good faith by the Board
of Directors of the Company) of such property at the time of the making of the
Restricted Payment in question.
Section 5.11. Limitation on Operating Leases. The Company will not, and
will not permit any Subsidiary to, become obligated, as lessee, under any
Operating Lease or Non-Capitalized Lease if at the time of entering into such
Operating Lease or Non-Capitalized Lease and after giving effect thereto, the
aggregate Rentals payable by the Company and all of its Subsidiaries on a
consolidated basis in any one fiscal year thereafter under all Operating Leases
and all Non-Capitalized Leases would exceed 10% of Consolidated Total
Capitalization.
Section 5.12. Mergers, Consolidations and Sales of Assets. (a) The
Company will not, and will not permit any Subsidiary to, (i) consolidate with
or be a party to a merger with any other corporation or (ii) sell, lease or
otherwise dispose of all or any substantial part (as defined in paragraph (d)
of this SECTION 5.12) of the assets of the Company and its Subsidiaries,
provided, however, that:
(1) any Subsidiary may merge or consolidate with or into the Company
or any Wholly-owned Subsidiary so long as in any merger or consolidation
involving the Company, the Company shall be the surviving or continuing
corporation;
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Gundle Environmental Systems, Inc. Note Agreement
(2) the Company may consolidate or merge with any other corporation if
(i) the Company shall be the surviving or continuing corporation, (ii) at
the time of such consolidation or merger and after giving effect thereto no
Default or Event of Default shall have occurred and be continuing, and
(iii) after giving effect to such consolidation or merger the Company would
be permitted to incur at least $1.00 of additional Senior Indebtedness for
Borrowed Money under the provisions of SECTION 5.8(a);
(3) the Company may consolidate or merge with any other corporation
organized under the laws of the United States or any State thereof (any
such corporation resulting from such consolidation or merger being
hereinafter referred to as the "surviving corporation") if (i) the due and
punctual payment of the principal of, premium, if any, and interest on all
of the Notes, according to their tenor and the due and punctual performance
and observance of all of the covenants in the Notes and this Agreement to
be performed and observed by the Company are expressly assumed in writing
by the surviving corporation (if other than the Company), (ii) at the time
of such consolidation or merger and after giving effect thereto, no Default
or Event of Default shall have occurred and be continuing, (iii) after
giving effect to such consolidation or merger, the surviving corporation
would be permitted to incur at least $1.00 of additional Senior
Indebtedness for Borrowed Money under the provisions of SECTION 5.8(a) and
(iv) at the time such merger or consolidation is effected, the Company
shall deliver to each holder of the then outstanding Notes a certificate
indicating that after giving effect to such merger or consolidation there
shall have been no violation of SECTION 5.5 or this SECTION 5.12; and
(4) any Subsidiary may sell, lease or otherwise dispose of all or any
substantial part of its assets to the Company or any Wholly-owned
Subsidiary.
(b) The Company will not permit any Subsidiary to issue or sell any shares
of stock of any class (including as "stock" for the purposes of this SECTION
5.12, any warrants, rights or options to purchase or otherwise acquire stock or
other Securities exchangeable for or convertible into stock) of such Subsidiary
to any Person other than the Company or a Wholly-owned Subsidiary, except for
the purpose of qualifying directors, or except in satisfaction of the validly
pre-existing preemptive rights of minority shareholders in connection with the
simultaneous issuance of stock to the Company and/or a Subsidiary whereby the
Company and/or such Subsidiary maintain their same proportionate interest in
such Subsidiary.
(c) The Company will not sell, transfer or otherwise dispose of any shares
of stock of any Subsidiary (except to qualify directors) or any Indebtedness of
any Subsidiary, and will not permit any Subsidiary to sell, transfer or
otherwise dispose of (except to the Company or a Wholly-owned Subsidiary) any
shares of stock or any Indebtedness of any other Subsidiary, unless:
(1) simultaneously with such sale, transfer, or disposition, all
shares of stock and all Indebtedness of such Subsidiary at the time owned
by the Company and by every other Subsidiary shall be sold, transferred or
disposed of as an entirety;
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Gundle Environmental Systems, Inc. Note Agreement
(2) the Board of Directors of the Company shall have determined, as
evidenced by a resolution thereof, that the proposed sale, transfer or
disposition of said shares of stock and Indebtedness is in the best
interests of the Company;
(3) said shares of stock and Indebtedness are sold, transferred or
otherwise disposed of to a Person, for a consideration and on terms
reasonably deemed by the Board of Directors to be adequate and
satisfactory; provided that any Securities received by the Company in
connection with such sale, transfer or disposition shall qualify as a
Permitted Investment;
(4) the Subsidiary being disposed of shall not have any continuing
investment in the Company or any other Subsidiary not being simultaneously
disposed of; and
(5) such sale or other disposition does not involve a substantial part
(as hereinafter defined) of the assets of the Company and its Subsidiaries.
(d) As used in this SECTION 5.12, a sale, lease or other disposition of
assets shall be deemed to be a "substantial part" of the assets of the Company
and its Subsidiaries only if (1) the book value of such assets, when added to
the book value of all other assets sold, leased or otherwise disposed of by the
Company and its Subsidiaries (other than in the ordinary course of business)
during the same fiscal year, exceeds 10% of Consolidated Total Capitalization,
determined as of the end of the immediately preceding fiscal year or (2) such
assets produced, or were needed in the production of, in excess of 10% of
Consolidated Net Income (before deductions for interest expense, depreciation
and taxes on income) for the immediately preceding twelve-month period.
Section 5.13. Guaranties. The Company will not, and will not permit any
Subsidiary to, become or be liable in respect of any Guaranty except:
(a) Guaranties of the Company which are limited in amount to a stated
maximum dollar exposure, and
(b) the Permitted Subsidiary Guaranties.
Section 5.14. Investments. The Company will not, and will not permit
any Subsidiary to, make any Investments in any Person, except Permitted
Investments.
Section 5.15. Repurchase of Notes. Neither the Company nor any
Subsidiary or Affiliate, directly or indirectly, may repurchase or make any
offer to repurchase any Notes unless an offer has been made to repurchase
Notes, pro rata, from all holders of the Notes at the same time and upon the
same terms. In case the Company repurchases any Notes, such Notes shall
thereafter be cancelled and no Notes shall be issued in substitution therefor.
Section 5.16. Transactions with Affiliates. The Company will not, and
will not permit any Subsidiary to, enter into or be a party to any transaction
or arrangement with any Affiliate (including, without limitation, the purchase
from, sale to or exchange of
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Gundle Environmental Systems, Inc. Note Agreement
property with, or the rendering of any service by or for, any Affiliate),
except in the ordinary course of and pursuant to the reasonable requirements of
the Company's or such Subsidiary's business and upon fair and reasonable terms
no less favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person other than an Affiliate.
Section 5.17. ERISA Compliance. (a) The Company will not, and will not
permit any Subsidiary to, permit any Plans at any time maintained by the
Company or any Subsidiary to have any Unfunded Vested Pension Liabilities. As
used herein "Unfunded Vested Pension Liability" shall mean an excess of the
actuarial present value of accumulated vested Plan benefits as at the end of
the immediately preceding Plan year of such Plans (or as of any more recent
valuation date) over the net assets allocated to such Plans which are available
for benefits, all as determined and disclosed in the most recent actuarial
valuation report for such Plans.
(b) All assumptions and methods used to determine the actuarial valuation
of vested employee benefits under all Plans at any time maintained by the
Company or any Subsidiary and the present value of assets of such Plans shall
be reasonable in the good faith judgment of the Company and shall comply with
all requirements of law.
(c) The Company will not, and will not permit any Subsidiary to, cause any
Plan which it maintains or in which it participates at any time to:
(1) engage in any "prohibited transaction" (as such term is defined in
ERISA);
(2) incur any "accumulated funding deficiency" (as such term is
defined in ERISA), whether or not waived; or
(3) terminate any such Plan in a manner which could result in the
imposition of a lien on any Property of the Company or any of its
Subsidiaries pursuant to ERISA.
(d) The Company will not, and will not permit any Subsidiary to, permit
any condition to exist in connection with any Plan which might constitute
grounds for the PBGC to institute proceedings to have such Plan terminated or a
trustee appointed to administer such Plan.
(e) The Company will not, and will not permit any Subsidiary to, withdraw
from any Multiemployer Plan if such withdrawal shall subject the Company or any
Subsidiary to withdrawal liability (as described under Part 1 of Subtitle E of
Title IV of ERISA).
Section 5.18. Reports and Rights of Inspection. The Company will keep,
and will cause each Subsidiary to keep, proper books of record and account in
which full and correct entries will be made of all dealings or transactions of
or in relation to the business and affairs of the Company or such Subsidiary,
in accordance with GAAP consistently applied
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Gundle Environmental Systems, Inc. Note Agreement
(except for changes disclosed in the financial statements furnished to you
pursuant to this Section 5.18 and concurred in by the independent public
accountants referred to in Section 5.18(b) hereof), and will furnish to you so
long as you are the holder of any Note and to each other Institutional Holder
of the then outstanding Notes (in duplicate if so specified below or otherwise
requested):
(a) Quarterly Statements. As soon as available and in any event
within 60 days after the end of each quarterly fiscal period (except the
last) of each fiscal year, copies of:
(1) consolidated and consolidating balance sheets of the Company
and its Subsidiaries as of the close of such quarterly fiscal period,
setting forth in comparative form the consolidated figures for the
fiscal year then most recently ended,
(2) consolidated and consolidating statements of income and
retained earnings of the Company and its Subsidiaries for such
quarterly fiscal period and for the portion of the fiscal year ending
with such period, in each case setting forth in comparative form the
consolidated figures for the corresponding periods of the preceding
fiscal year, and
(3) consolidated statements of cash flows of the Company and its
Subsidiaries for the portion of the fiscal year ending with such
quarterly fiscal period, setting forth in comparative form the
consolidated figures for the corresponding period of the preceding
fiscal year,
all in reasonable detail and certified as complete and correct by an
authorized financial officer of the Company;
(b) Annual Statements. As soon as available and in any event within
100 days after the close of each fiscal year of the Company, copies of:
(1) consolidated and consolidating balance sheets of the Company
and its Subsidiaries as of the close of such fiscal year, and
(2) consolidated and consolidating statements of income and
retained earnings and consolidated statements of cash flows of the
Company and its Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consolidated figures for
the preceding fiscal year, all in reasonable detail and accompanied by a
report thereon of a firm of independent public accountants of recognized
national standing selected by the Company to the effect that the
consolidated financial statements have been prepared in conformity with
GAAP and present fairly, in all material respects, the financial condition
of the Company and its Subsidiaries and that the examination of
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Gundle Environmental Systems, Inc. Note Agreement
such accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards;
(c) Audit Reports. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of
the Company or any Subsidiary and any management letter received from such
accountants;
(d) SEC and Other Reports. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by the Company to stockholders generally and of each regular or
periodic report, and any registration statement or prospectus filed by the
Company or any Subsidiary with any securities exchange or the Securities
and Exchange Commission or any successor agency, and copies of any orders
in any proceedings to which the Company or any of its Subsidiaries is a
party, issued by any governmental agency, Federal or state, having
jurisdiction over the Company or any of its Subsidiaries;
(e) ERISA Reports. Promptly upon the occurrence thereof, written
notice of (i) a Reportable Event with respect to any Plan; (ii) the
institution of any steps by the Company, any ERISA Affiliate, the PBGC or
any other person to terminate any Plan; (iii) the institution of any steps
by the Company or any ERISA Affiliate to withdraw from any Plan; (iv) a
"prohibited transaction" within the meaning of Section 406 of ERISA in
connection with any Plan; (v) any material increase in the contingent
liability of the Company or any Subsidiary with respect to any
post-retirement welfare liability; or (vi) the taking of any action by, or
the threatening of the taking of any action by, the Internal Revenue
Service, the Department of Labor or the PBGC with respect to any of the
foregoing;
(f) Officers' Certificates. Within the periods provided in paragraphs
(a) and (b) above, a certificate of an authorized financial officer of the
Company stating that such officer has reviewed the provisions of this
Agreement and setting forth: (i) the information and computations (in
sufficient detail) required in order to establish whether the Company was
in compliance with the requirements of SECTION 5.6 through SECTION 5.17,
inclusive, at the end of the period covered by the financial statements
then being furnished, and (ii) whether there existed as of the date of such
financial statements and whether, to the best of such officer's knowledge,
there exists on the date of the certificate or existed at any time during
the period covered by such financial statements any Default or Event of
Default and, if any such condition or event exists on the date of the
certificate, specifying the nature and period of existence thereof and the
action the Company is taking and proposes to take with respect thereto; and
(g) Requested Information. With reasonable promptness, such other
data and information as you or any such Institutional Holder may reasonably
request.
Without limiting the foregoing, the Company will permit you, so long as you
are the holder of any Note, and each Institutional Holder of the then
outstanding Notes (or such
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Gundle Environmental Systems, Inc. Note Agreement
Persons as either you or such Institutional Holder may designate), to visit and
inspect, under the Company's guidance, any of the properties of the Company or
any Subsidiary, to examine all of their books of account, records, reports and
other papers, to make copies and extracts therefrom and to discuss their
respective affairs, finances and accounts with their respective officers,
employees, and independent public accountants (and by this provision the
Company authorizes said accountants to discuss with you the finances and
affairs of the Company and its Subsidiaries) all at such reasonable times and
as often as may be reasonably requested. The Company shall not be required to
pay or reimburse you or any such holder for expenses which you or any such
holder may incur in connection with any such visitation or inspection,
provided, however, as long as one or more Defaults has happened and is
continuing the Company agrees to pay the expenses incurred by you or any such
holder in connection with any such visitation or inspection up to a maximum
amount of (i) $5,000 per month and (ii) $15,000 in the aggregate (all such
payments or reimbursement to be shared equally by all holders of Notes which
have incurred any such expenses). The limitation on expenses provided in the
immediately preceding sentence shall be applied separately for each period
during which one or more Defaults has occurred and is continuing.
Section 5.19. New Domestic Subsidiaries; Execution of Credit Agreement.
(a) So long as the Indebtedness of the Company under the Credit Agreement
remains outstanding and is guaranteed by the Domestic Subsidiaries, the Company
shall cause any entity which becomes a Domestic Subsidiary from and after the
Closing Date to execute and deliver a Guaranty Agreement in the form attached
as Exhibit B hereto, together with a certificate dated the date of execution
and delivery of such Guaranty Agreement signed by the President, a Vice
President or Chief Financial Officer of such Domestic Subsidiary to the effect
that such Guaranty Agreement has been duly authorized, executed and delivered
by such Domestic Subsidiary and such Guaranty Agreement constitutes the legal,
valid and binding obligation, contract and agreement of such Domestic
Subsidiary enforceable in accordance with its terms.
(b) No Domestic Subsidiary shall, at any time, become a party to the
Credit Agreement.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 6.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" as such term is used herein:
(a) Default shall occur in the payment of interest on any Note when
the same shall have become due and such default shall continue for more
than five days; or
(b) Default shall occur in the making of any required prepayment on
any of the Notes as provided in SECTION 2.1; or
(c) Default shall occur in the making of any other payment of the
principal of any Note or Make-Whole Amount thereon at the expressed or any
accelerated maturity date or at any date fixed for prepayment; or
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(d) Default shall be made in the payment when due (whether by lapse of
time, by declaration, by call for redemption or otherwise) of the principal
of or interest on any Indebtedness for Borrowed Money (other than the
Indebtedness for Borrowed Money evidenced by the Notes) of the Company or
any Subsidiary having an aggregate principal amount in excess of 5% of
Consolidated Net Worth and such default shall continue beyond the period of
grace, if any, allowed with respect thereto; or
(e) Default or the happening of any event shall occur under any
indenture, agreement or other instrument under which any Indebtedness for
Borrowed Money of the Company or any Subsidiary having an aggregate
principal amount in excess of 5% of Consolidated Net Worth may be issued
and such default or event shall continue for a period of time sufficient to
permit the acceleration of the maturity of any Indebtedness for Borrowed
Money of the Company or any Subsidiary outstanding thereunder; or
(f) Default shall occur in the observance or performance of any
covenant or agreement contained in SECTION 5.8 through SECTION 5.12; or
(g) Default shall occur in the observance or performance of any
provision of this Agreement, other than the provisions referred to in
SECTION 6.1(f), which is not remedied within 45 days after the earlier of
(i) notice thereof to the Company by the holder of any Note or (ii) the
date on which such Default first becomes known to any officer of the
Company; or
(h) Any representation or warranty made by the Company herein, or made
by the Company in any statement or certificate furnished by the Company in
connection with the consummation of the issuance and delivery of the Notes
or furnished by the Company pursuant hereto, is untrue in any material
respect as of the date of the issuance or making thereof; or
(i) Any representation or warranty made by any Domestic Subsidiary in
any Guaranty Agreement, or made by any Domestic Subsidiary in any statement
or certificate furnished by any Domestic Subsidiary in connection with the
consummation of the issuance and delivery of the Notes or furnished by any
Domestic Subsidiary pursuant hereto or to any Guaranty Agreement, is untrue
in any material respect as of the date of the issuance or making thereof;
or
(j) The obligations of any Domestic Subsidiary contained in any
Guaranty Agreement shall cease to be in full force and effect for any
reason whatsoever, including, without limitation, the determination by any
governmental body or court that any Guaranty Agreement is invalid, void or
unenforceable or any Domestic Subsidiary shall contest or deny in writing
the validity or enforceability of any Guaranty Agreement; or
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Gundle Environmental Systems, Inc. Note Agreement
(k) Final judgment or judgments for the payment of money aggregating
in excess of $2,000,000 in excess of applicable insurance coverage is or
are outstanding against the Company or any Subsidiary or against any
property or assets of either and any one of such judgments has remained
unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period
of 60 days from the date of its entry; or
(l) A custodian, liquidator, trustee or receiver is appointed for the
Company or any Subsidiary or for the major part of the property of either
and is not discharged within 30 days after such appointment; or
(m) The Company or any Subsidiary becomes insolvent or bankrupt, is
generally not paying its debts as they become due or makes an assignment
for the benefit of creditors, or the Company or any Subsidiary causes or
suffers an order for relief to be entered with respect to it under
applicable Federal bankruptcy law or applies for or consents to the
appointment of a custodian, liquidator, trustee or receiver for the Company
or such Subsidiary or for the major part of the property of either; or
(n) Bankruptcy, reorganization, arrangement or insolvency proceedings,
or other proceedings for relief under any bankruptcy or similar law or laws
for the relief of debtors, are instituted by or against the Company or any
Subsidiary and, if instituted against the Company or any Subsidiary, are
consented to or are not dismissed within 90 days after such institution.
Section 6.2. Notice to Holders. When any Event of Default described in
the foregoing SECTION 6.1 has occurred, or if the holder of any Note or of any
other evidence of Indebtedness for Borrowed Money of the Company gives any
notice or takes any other action with respect to a claimed default, the Company
agrees to give notice within three Business Days of such event to all holders
of the Notes then outstanding, such notice to be in writing and sent by
registered or certified mail or by telegram.
Section 6.3. Acceleration of Maturities. When any Event of Default
described in paragraph (a), (b) or (c) of Section 6.1 has happened and is
continuing, any holder of any Note may, and when any Event of Default described
in paragraphs (d) through (k), inclusive, of said Section 6.1 has happened and
is continuing, the holder or holders of 33-1/3% or more of the principal amount
of Notes at the time outstanding may, by notice in writing sent by registered
or certified mail to the Company, declare the entire principal and all interest
accrued on all Notes to be, and all Notes shall thereupon become, forthwith due
and payable, without any presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived. When any Event of Default
described in paragraph (l), (m) or (n) of SECTION 6.1 has occurred, then all
outstanding Notes shall immediately become due and payable without presentment,
demand or notice of any kind. Upon the Notes becoming due and payable as a
result of any Event of Default as aforesaid, the Company will forthwith pay to
the holders of the Notes the entire principal and interest accrued on the Notes
and, to the extent permitted by law, liquidated damages for the loss of the
bargain evidenced hereby (and not as a penalty) in an amount equal to the
Make-Whole Amount which would be
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Gundle Environmental Systems, Inc. Note Agreement
payable if the Company then had elected to prepay (and was permitted to prepay)
the Notes with the Make-Whole Amount pursuant to SECTION 2.2 (determined as of
the date of declaration of an acceleration or, in the case of an Event of
Default described in paragraph (l), (m) or (n) of SECTION 6.1, the date of
acceleration). No course of dealing on the part of the holder or holders of
any Notes nor any delay or failure on the part of any Noteholder to exercise
any right shall operate as a waiver of such right or otherwise prejudice such
holder's rights, powers and remedies. The Company further agrees, to the
extent permitted by law, to pay to the holder or holders of the Notes all costs
and expenses incurred by them in the collection of any Notes upon any default
hereunder or thereon, including reasonable compensation to such holder's or
holders' attorneys for all services rendered in connection therewith.
Section 6.4. Rescission of Acceleration. The provisions of SECTION 6.3
are subject to the condition that if the principal of and accrued interest on
all or any outstanding Notes have been declared immediately due and payable by
reason of the occurrence of any Event of Default described in paragraphs (a)
through (k), inclusive, of SECTION 6.1, the holders of 66-2/3% in aggregate
principal amount of the Notes then outstanding may, by written instrument filed
with the Company, rescind and annul such declaration and the consequences
thereof, provided that at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal,
interest or premium on the Notes which has become due and payable solely by
reason of such declaration under SECTION 6.3) shall have been duly paid;
and
(c) each and every other Default and Event of Default shall have been
made good, cured or waived pursuant to SECTION 7.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
Section 7.1. Consent Required. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular
instance and either retroactively or prospectively), if the Company shall have
obtained the consent in writing of the holders of at least 66-2/3% in aggregate
principal amount of outstanding Notes; provided that without the written
consent of the holders of all of the Notes then outstanding, no such amendment
or waiver shall be effective (i) which will change the time of payment
(including any prepayment required by SECTION 2.1) of the principal of or the
interest on any Note or change the principal amount thereof or change the rate
of interest thereon, or (ii) which will change any of the provisions with
respect to optional prepayments, or (iii) which will change the
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Gundle Environmental Systems, Inc. Note Agreement
percentage of holders of the Notes required to consent to any such amendment or
waiver of any of the provisions of this SECTION 7 or SECTION 6.
Section 7.2. Solicitation of Holders. So long as there are any Notes
outstanding, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each Noteholder (irrespective of the amount of
Notes then owned by it) shall 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. The Company will not, 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 entering into by any Noteholder of any waiver or amendment of any
of the terms and provisions of this Agreement or the Notes unless such
remuneration is concurrently offered, on the same terms, ratably to the holders
of all Notes then outstanding.
Section 7.3. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation
not expressly amended or waived or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 8.1. Definitions. Unless the context otherwise requires, the
terms hereinafter set forth when used herein shall have the following meanings
and the following definitions shall be equally applicable to both the singular
and plural forms of any of the terms herein defined:
"Affiliate" shall mean any Person (other than a Subsidiary) (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or (iii) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Business Day" shall mean any day on which commercial banks are generally
open for business in New York, New York and Houston, Texas.
"Capitalized Lease" shall mean any lease the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance sheet
of the lessee and its subsidiaries in accordance with GAAP.
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Gundle Environmental Systems, Inc. Note Agreement
"Capitalized Rentals" of any Person and as of the date of any determination
thereof shall mean the amount at which the aggregate Rentals due and to become
due under all Capitalized Leases under which such Person is a lessee would be
reflected as a liability on a consolidated balance sheet of such Person.
"Company" shall mean Gundle Environmental Systems, Inc., a Delaware
corporation and its permitted successors and assigns including, without
limitation, Gundle/SLT Environmental, Inc.
"Consolidated Current Assets" and "Consolidated Current Liabilities" shall
mean as of the date of any determination thereof such assets and liabilities of
the Company and its Subsidiaries on a consolidated basis as shall be determined
in accordance with GAAP to constitute current assets and current liabilities,
respectively.
"Consolidated Indebtedness for Borrowed Money" shall mean all Indebtedness
for Borrowed Money of the Company and its Subsidiaries, determined on a
consolidated basis eliminating intercompany items.
"Consolidated Net Assets" shall mean as of the date of any determination
thereof, the total amount of all assets of the Company and its Subsidiaries
after deducting all depreciation, depletion and other properly deductible
valuation reserves and all items which in accordance with GAAP would be
included on the liability side of a consolidated balance sheet, except deferred
income taxes, deferred investment tax credits, capital stock of any class,
surplus and Indebtedness for Borrowed Money.
"Consolidated Net Income" for any period shall mean the gross revenues of
the Company and its Subsidiaries for such period less all expenses and other
proper charges (including taxes on income), determined on a consolidated basis
after eliminating earnings or losses attributable to outstanding Minority
Interests, but excluding in any event:
(a) any gains or losses on the sale or other disposition of
investments or fixed or capital assets, and any taxes on such excluded
gains and any tax deductions or credits on account of any such excluded
losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Subsidiary accrued prior to the
date it became a Subsidiary;
(d) net earnings and losses of any corporation (other than a
Subsidiary), substantially all the assets of which have been acquired in
any manner by the Company or any Subsidiary, realized by such corporation
prior to the date of such acquisition;
(e) net earnings and losses of any corporation (other than a
Subsidiary) with which the Company or a Subsidiary shall have consolidated
or which shall have
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Gundle Environmental Systems, Inc. Note Agreement
merged into or with the Company or a Subsidiary prior to the date of such
consolidation or merger;
(f) net earnings of any business entity (other than a Subsidiary) in
which the Company or any Subsidiary has an ownership interest unless such
net earnings shall have actually been received by the Company or such
Subsidiary in the form of cash distributions;
(g) any portion of the net earnings of any Subsidiary which for any
reason is unavailable for payment of dividends to the Company or any other
Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or write-up
of assets;
(i) any deferred or other credit representing any excess of the equity
in any Subsidiary at the date of acquisition thereof over the amount
invested in such Subsidiary;
(j) any gain arising from the acquisition of any Securities of the
Company or any Subsidiary;
(k) any reversal of any contingency reserve, except to the extent that
provision for such contingency reserve shall have been made from income
arising during such period; and
(l) any portion of net earnings not readily convertible into U.S.
dollars and available for payment of the Company's or a Subsidiary's
liabilities in the United States.
"Consolidated Net Worth" shall mean as of the date of any determination
thereof Consolidated Net Assets less (1) all outstanding Indebtedness for
Borrowed Money, deferred income taxes and deferred investment tax credits,
consolidating the Company and its Subsidiaries, and (2) all Intangible Assets
acquired by the Company after December 31, 1994.
"Consolidated Total Capitalization" shall mean, as of the date of any
determination thereof, the sum of (i) Consolidated Net Worth plus (ii)
Consolidated Indebtedness for Borrowed Money.
"Credit Agreement" shall mean that certain Credit Agreement dated as of the
effective date of the Merger among the Company, certain of its Subsidiaries
which may join the Credit Agreement, NationsBank of Texas, N.A., as agent and
the banks and other financial institutions from time to time parties thereto,
as the same may be amended, modified, waived or supplemented from time to time,
and any extension, renewal or replacement thereof.
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Gundle Environmental Systems, Inc. Note Agreement
"Current Debt" of any Person and as of the date of any determination
thereof shall mean (i) all Indebtedness of such Person for borrowed money other
than Funded Debt of such Person and (ii) Guaranties by such Person of Current
Debt of others.
"Default" shall mean any event or condition, the occurrence of which would,
with the lapse of time or the giving of notice, or both, constitute an Event of
Default.
"Domestic Subsidiary" shall mean GSE Lining Technology, Inc., a Delaware
corporation, GSE International, Inc., a Delaware corporation and each other
Subsidiary now existing or hereafter created or acquired, which is organized
under the laws of the United States or any State thereof and which is required
to guarantee Indebtedness for Borrowed Money pursuant to the Credit Agreement.
"Environmental and Containment Systems" shall mean products used in the
waterproofing of roofing systems, buildings and other structures and
enclosures, designed to exclude water from the premises, and/or products used
in the protection of soil and groundwater from seepage from landfills,
wastepits, leach pads, storage tanks and similar contrivances for the capture,
containment or retention of liquid and solid materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA Affiliate" means any corporation, trade or business that is, along
with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code of Section 4001 of ERISA.
"Event of Default" shall have the meaning set forth in SECTION 6.1.
"Funded Debt" of any Person shall mean (i) all Indebtedness of such Person
for borrowed money or which has been incurred in connection with the
acquisition of assets in each case having a final maturity of one or more than
one year from the date of origin thereof (or which is renewable or extendible
at the option of the obligor for a period or periods more than one year from
the date of origin), including all payments in respect thereof that are
required to be made within one year from the date of any determination of
Funded Debt, whether or not the obligation to make such payments shall
constitute a current liability of the obligor under GAAP, (ii) all Capitalized
Rentals of such Person, and (iii) all Guaranties by such Person of Funded Debt
of others.
"GAAP" shall mean generally accepted accounting principles at the time.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
any Indebtedness, dividend or other
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Gundle Environmental Systems, Inc. Note Agreement
obligation, of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, all obligations incurred
through an agreement, contingent or otherwise, by such Person: (i) to purchase
such Indebtedness or obligation or any property or assets constituting security
therefor, (ii) to advance or supply funds (x) for the purchase or payment of
such Indebtedness or obligation, (y) to maintain working capital or other
balance sheet condition or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation, or (iii) to lease
property or to purchase Securities or other Property or services primarily for
the purpose of assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of the Indebtedness or
obligation, or (iv) otherwise to assure the owner of the Indebtedness or
obligation of the primary obligor against loss in respect thereof. For the
purposes of all computations made under this Agreement, a Guaranty in respect
of any Indebtedness for borrowed money shall be deemed to be Indebtedness equal
to the principal amount of such Indebtedness for borrowed money which has been
guaranteed, and a Guaranty in respect of any other obligation or liability or
any dividend shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.
"Indebtedness" of any Person shall mean and include all obligations of such
Person which in accordance with GAAP shall be classified upon a balance sheet
of such Person as liabilities of such Person, and in any event shall include
all (i) obligations of such Person for borrowed money or which has been
incurred in connection with the acquisition of property or assets, (ii)
obligations secured by any Lien upon property or assets owned by such Person,
even though such Person has not assumed or become liable for the payment of
such obligations, (iii) obligations created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person, notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property, (iv) Capitalized Rentals under any
Capitalized Lease and (v) Guaranties of Indebtedness of others.
"Indebtedness for Borrowed Money" of any Person shall mean the sum of
Current Debt and Funded Debt of such Person.
"Institutional Holder" shall mean any bank, trust company, insurance
company, fraternal benefit society, pension fund, mutual fund or other similar
institutional investor which shall hold any Notes.
"Intangible Assets" shall mean goodwill, patents, trade names, trade marks,
copyrights, franchises, experimental expense, organization expense, unamortized
debt discount and expense, deferred assets other than prepaid insurance and
prepaid taxes, the excess of cost of shares acquired over book value of related
assets and such other assets as are properly classified as "intangible assets"
in accordance with generally accepted accounting principles.
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Gundle Environmental Systems, Inc. Note Agreement
"Interest Charges" for any period shall mean all interest and all
amortization of debt discount and expense on any particular Indebtedness for
which such calculations are being made.
"Investments" shall mean all investments, in cash or by delivery of
Property made, directly or indirectly in any Person, whether by acquisition of
shares of capital stock, indebtedness or other obligations or Security or by
loan, advance, capital contribution or otherwise; provided, however, that
"Investments" shall not mean or include routine investments in Property to be
used or consumed in the ordinary course of business or investments in accounts
receivable or notes receivable arising in the ordinary course of business.
"Lien" shall mean any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting Property. For the purposes of this
Agreement, the Company or a Subsidiary 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.
"Make-Whole Amount" shall mean, in connection with any prepayment, the
excess, if any, of (i) the aggregate present value as of the date of such
prepayment of each dollar of principal being prepaid (taking into account the
application of such prepayment required by SECTION 2.1) and the amount of
interest (exclusive of interest accrued to the date of prepayment) that would
have been payable in respect of such dollar if such prepayment had not been
made, determined by discounting such amounts at the Reinvestment Rate from the
respective dates on which they would have been payable, over (ii) 100% of the
principal amount of the outstanding Notes being prepaid. If the Reinvestment
Rate is equal to or higher than 7.34%, the Make-Whole Amount shall be zero.
For purposes of any determination of the Make-Whole Amount:
"Reinvestment Rate" shall mean 50 basis points plus the arithmetic
mean of the yields for the two columns under the heading "Week Ending"
published in the Statistical Release under the caption "Treasury Constant
Maturities" for the maturity (rounded to the nearest month) corresponding
to the Weighted Average Life to Maturity of the principal being prepaid
(taking into account the application of such prepayment required by SECTION
2.1). If no maturity exactly corresponds to such Weighted Average Life to
Maturity, yields for the two published maturities most closely
corresponding to such Weighted Average Life to Maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate
shall be interpolated
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Gundle Environmental Systems, Inc. Note Agreement
or extrapolated from such yields on a straight-line basis, rounding in each
of such relevant periods to the nearest month. For the purposes of
calculating the Reinvestment Rate, the most recent Statistical Release
published prior to the date of determination of the Make-Whole Amount shall
be used.
"Statistical Release" shall mean the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded U.S.
Government Securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination
hereunder, then such other reasonably comparable index which shall be
designated by the holders of 66-2/3% in aggregate principal amount of the
outstanding Notes.
"Weighted Average Life to Maturity" of the principal amount of the
Notes being prepaid shall mean, as of the time of any determination
thereof, the number of years obtained by dividing the then Remaining
Dollar-Years of such principal by the aggregate amount of such principal.
The term "Remaining Dollar-Years" of such principal shall mean the amount
obtained by (i) multiplying (x) the remainder of (1) the amount of
principal that would have become due on each scheduled payment date if such
prepayment had not been made, less (2) the amount of principal on the Notes
scheduled to become due on such date after giving effect to such prepayment
and the application thereof in accordance with the provisions of SECTION
2.1, by (y) the number of years (calculated to the nearest one-twelfth)
which will elapse between the date of determination and such scheduled
payment date, and (ii) totalling the products obtained in (i).
"Merger" shall mean the merger of SLT into the Company.
"Minority Interests" shall mean any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law) that
are not owned by the Company and/or one or more of its Subsidiaries. Minority
Interests shall be valued by valuing Minority Interests constituting preferred
stock at the voluntary or involuntary liquidating value of such preferred
stock, whichever is greater, and by valuing Minority Interests constituting
common stock at the book value of capital and surplus applicable thereto
adjusted, if necessary, to reflect any changes from the book value of such
common stock required by the foregoing method of valuing Minority Interests in
preferred stock.
"Multiemployer Plan" shall have the same meaning as in ERISA.
"Net Income Available for Interest Charges" for any period shall mean the
sum of (i) Consolidated Net Income during such period plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for any
Federal, state or other income taxes made by the Company and its Subsidiaries
during such period, (iii) amortization of goodwill, and (iv) Interest Charges
of the Company and its Subsidiaries during such period.
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Gundle Environmental Systems, Inc. Note Agreement
"Non-Capitalized Lease" and "Operating Lease" shall mean any lease of real
or personal property (other than a Capitalized Lease) having an original term,
including any period for which the lease may be renewed or extended at the
option of the lessor, of more than three years.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Foreign Country" shall mean each of France, Italy, Canada,
Germany, Singapore, Australia, Japan and each of the countries comprising the
United Kingdom, so long as the rating on such country's senior unsecured
long-term debt is rated AA or better by Standard and Poor's Ratings Group or Aa
or better by Moody's Investors Services, Inc.
"Permitted Investments" shall mean one of the following:
(a) Investments by the Company and its Subsidiaries in and to
Subsidiaries, including any investment in a corporation which, after giving
effect to such investment, will become a Subsidiary;
(b) Investments in commercial paper and bankers' acceptances maturing
in twelve months or less from the date of issuance and which, at the time
of acquisition by the Company or any Subsidiary, is accorded the highest
rating by Standard & Poor's Ratings Group or Moody's Investors Services,
Inc.;
(c) Investments in direct obligations of the United States of America,
or Investments in any Person, which Investments are guaranteed by the full
faith and credit of the United States of America, in either case maturing
in twelve months or less from the date of acquisition thereof by the
Company or any Subsidiary and repurchase agreements having a term of less
than one year and fully collateralized by such obligations which are
entered into with banks or trust companies described in clause (e) below or
brokerage companies having a net worth in excess of $100,000,000;
(d) Investments in direct obligations of Permitted Foreign Countries
(or central banks thereof), in any case maturing in twelve months or less
from the date of acquisition thereof by the Company or any Subsidiary and
repurchase agreements having a term of less than one year relating to and
fully collateralized by such obligations, which repurchase agreements are
entered into with banks or trust companies described in clauses (e) and (f)
below or brokerage companies having a net worth in excess of $250,000,000;
provided, that the aggregate amount of Investments in direct obligations of
any Permitted Foreign Country (or central bank thereof) permitted in this
clause (d) shall not exceed $1,000,000;
(e) Investments in time deposits, certificates of deposit or
Eurodollar certificates of deposit maturing within one year from the date
such investment is made, issued by a bank or trust company organized under
the laws of the United States
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Gundle Environmental Systems, Inc. Note Agreement
or any state thereof, having capital, surplus and undivided profits
aggregating at least $100,000,000 or a foreign branch thereof located in
the United Kingdom, France, Canada, Italy, Singapore, Germany, Australia,
Japan or the Cayman Islands and whose long-term certificates of deposit
are, at the time of acquisition thereof by the Company or Subsidiary, rated
A by Standard & Poor's Ratings Group or A-2 by Moody's Investors Services,
Inc.;
(f) Investments in time deposits or certificates of deposit maturing
within one year from the date such investment is made, issued by a bank
organized under the laws of any Permitted Foreign Country or any political
subdivision thereof, having capital, surplus and undivided profits
aggregating at least $500,000,000 and whose senior unsecured long-term debt
(or if not available, such bank's holding company's senior unsecured
long-term debt) is, at the time of acquisition thereof by the Company or
Subsidiary, rated A by Standard & Poor's Ratings Group or A-2 by Moody's
Investors Services, Inc.; provided, that the aggregate amount of
Investments in any bank organized under the laws of any Permitted Foreign
Country or any political subdivision thereof permitted in this clause (f)
shall not exceed $5,000,000;
(g) loans or advances in the usual and ordinary course of business to
officers, directors and employees for expenses (including moving expenses
related to a transfer) incidental to carrying on the business of the
Company or any Subsidiary;
(h) receivables arising from the sale of goods and services in the
ordinary course of business of the Company and its Subsidiaries;
(i) Investments in companies which are engaged in the same general
nature of business as the Company (assuming compliance with SECTION 5.5)
and which do not result in such company being a Subsidiary;
(j) Investments in corporations constituting the payment for or
settlement of a claim owed to the Company or any Subsidiary received by the
Company or such Subsidiary pursuant to a bankruptcy, reorganization,
arrangement or insolvency proceeding, or other proceedings for relief under
any bankruptcy or similar law or laws for the relief of debtors, instituted
by or against such corporation;
(k) short-term securities backed by letters of credit from banks or
trust companies described in clause (e) above and other short-term
tax-exempt securities with minimum quality ratings of A- by Standard &
Poor's Ratings Group or A-3 by Moody's Investors Services, Inc.; or
(l) Investments not otherwise qualifying as a Permitted Investment so
long as the aggregate thereof does not exceed 5% of Consolidated Total
Capitalization.
In valuing any Investments for the purpose of applying the limitations set
forth in this Agreement, such investments, loans and advances shall be taken at
the original cost thereof,
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Gundle Environmental Systems, Inc. Note Agreement
without allowance for any subsequent write-offs or appreciation or depreciation
therein, but less any amount repaid or recovered on account of capital or
principal.
For purposes of this Agreement, at any time when a corporation becomes a
Subsidiary, all Investments of such corporation at such time shall be deemed to
have been made by such corporation, as a Subsidiary, at such time.
"Permitted Subsidiary Guaranties" shall mean collectively, the Guaranty
Agreements executed and delivered by the Domestic Subsidiaries in connection
with this Agreement, the separate Note Agreements each dated as of June 15,
1990 between the Company and the purchaser party thereto and the Credit
Agreement.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political
subdivision thereof.
"Plan" means a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Priority Obligations" shall mean and include (i) all Indebtedness for
Borrowed Money of Subsidiaries (other than the Permitted Subsidiary Guaranties
and Indebtedness for Borrowed Money of Subsidiaries to the Company or a
Wholly-owned Subsidiary), (ii) all Funded Debt of the Company secured by Liens
referred to in SECTION 5.9(g) or SECTION 5.9(h) and (iii) preferred stock of
Subsidiaries held by any other Person other than the Company and its
Wholly-owned Subsidiaries. The amount of Priority Obligations outstanding as
at any date of determination thereof shall mean the sum, without duplication,
of the aggregate unpaid principal amount of all Indebtedness for Borrowed Money
constituting Priority Obligations and the voluntary or involuntary liquidating
value, whichever is greater, of preferred stock constituting Priority
Obligations.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"Purchaser(s)" shall have the meaning set forth in SECTION 1.1.
"Rentals" shall mean and include as of the date of any determination
thereof, all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
Property) payable by the Company or a Subsidiary, as lessee or sublessee under
a lease of real or personal property, but shall be exclusive of any amounts
required to be paid by the Company or a Subsidiary (whether or not designated
as rents or additional rents) on account of maintenance, repairs, insurance,
taxes and similar charges. Fixed rents under any so-called "percentage leases"
shall be computed solely on the basis of the minimum rents, if any, required to
be paid by the lessee regardless of sales volume or gross revenues.
"Reportable Event" shall have the same meaning as in ERISA.
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Gundle Environmental Systems, Inc. Note Agreement
"Security" shall have the same meaning as in Section 2(1) of the Securities
Act of 1933, as amended.
"Senior Indebtedness for Borrowed Money" shall mean all Consolidated
Indebtedness for Borrowed Money, other than Subordinated Indebtedness for
Borrowed Money.
"SLT" shall mean SLT Environmental, Inc., a Delaware corporation.
"Subordinated Indebtedness for Borrowed Money" shall mean all unsecured
Indebtedness for Borrowed Money of the Company which shall contain or have
applicable thereto subordination provisions substantially in the form set forth
in Exhibit F attached hereto providing for the subordination thereof to other
Indebtedness for Borrowed Money of the Company, including, without limitation,
the Notes, or such other provisions as may be approved in writing by the
holders of not less than 66-2/3% in aggregate principal amount of the
outstanding Notes.
The term "subsidiary" shall mean, as to any particular parent corporation,
any corporation of which more than 50% (by number of votes) of the Voting Stock
shall be owned by such parent corporation and/or one or more corporations which
are themselves subsidiaries of such parent corporation. The term "Subsidiary"
shall mean a subsidiary of the Company, which shall include subsidiaries of SLT
which will become subsidiaries of the Company on the Closing Date.
"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).
"Wholly-owned" when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) and all Indebtedness for
Borrowed Money shall be owned by the Company and/or one or more of its
Wholly-owned Subsidiaries.
Section 8.2. Accounting Principles. Where the character or amount of
any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in
accordance with GAAP, to the extent applicable, except where such principles
are inconsistent with the requirements of this Agreement.
Section 8.3. Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action
in question is taken directly or indirectly by such Person.
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Gundle Environmental Systems, Inc. Note Agreement
SECTION 9. MISCELLANEOUS.
Section 9.1. Registered Notes. The Company shall cause to be kept at
its principal office a register for the registration and transfer of the Notes
(hereinafter called the "Note Register"), and the Company will register or
transfer or cause to be registered or transferred, as hereinafter provided and
under such reasonable regulations as it may prescribe, any Note issued pursuant
to this Agreement.
At any time and from time to time the registered holder of any Note which
has been duly registered as hereinabove provided may transfer such Note upon
surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or its attorney duly authorized in writing.
The Person in whose name any registered Note shall be registered shall be
deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal, Make-Whole Amount, if
any, and interest on any registered Note shall be made to or upon the written
order of such registered holder.
Section 9.2. Exchange of Notes. At any time and from time to time,
upon not less than ten days' notice to that effect given by the holder of any
Note initially delivered or of any Note substituted therefor pursuant to
SECTION 9.1, this SECTION 9.2 or SECTION 9.3, and, upon surrender of such Note
at its office, the Company will deliver in exchange therefor, without expense
to such holder, except as set forth below, Notes for the same aggregate
principal amount as the then unpaid principal amount of the Note so
surrendered, in the denomination of $100,000 or any amount in excess thereof as
such holder shall specify, dated as of the date to which interest has been paid
on the Note so surrendered or, if such surrender is prior to the payment of any
interest thereon, then dated as of the date of issue, payable to such Person or
Persons, or order, as may be designated by such holder, and otherwise of the
same form and tenor as the Notes so surrendered for exchange. The Company may
require the payment of a sum sufficient to cover any stamp tax or governmental
charge imposed upon such exchange or transfer.
Section 9.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
any Note, and in the case of any such loss, theft or destruction upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of the Note, the Company will make and deliver without expense
to the holder thereof, a new Note, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Note. If the Purchaser or any subsequent Institutional
Holder is the owner of any such lost, stolen or destroyed Note, then the
affidavit of an authorized officer of such owner, setting forth the fact of
loss, theft or destruction and of its ownership of such Note at the time of
such loss, theft or destruction shall be accepted as satisfactory evidence
thereof and no further indemnity shall be required as a condition to the
execution and delivery of a new Note other than the written agreement of such
owner to indemnify the Company.
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Gundle Environmental Systems, Inc. Note Agreement
Section 9.4. Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to
pay directly all of your out-of-pocket expenses in connection with the
preparation, execution and delivery of this Agreement and the transactions
contemplated hereby, including but not limited to the reasonable charges and
disbursements of Chapman and Cutler, your special counsel, duplicating and
printing costs and charges for shipping the Notes, adequately insured to you at
your home office or at such other place as you may designate, and all such
expenses relating to any amendment, waivers or consents pursuant to the
provisions hereof, including, without limitation, any amendments, waivers, or
consents resulting from any work-out renegotiation or restructuring relating to
the performance by the Company of its obligations under this Agreement and the
Notes. The Company also agrees that it will pay and save you harmless against
any and all liability with respect to stamp and other taxes, if any, which may
be payable or which may be determined to be payable in connection with the
execution and delivery of this Agreement or the Notes, whether or not any Notes
are then outstanding. The Company agrees to protect and indemnify you against
any liability for any and all brokerage fees and commissions payable or claimed
to be payable to any Person in connection with the transactions contemplated by
this Agreement.
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative. No
delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to, and are not exclusive of, any rights or
remedies any such holder would otherwise have.
Section 9.6. Notices. All communications provided for hereunder shall
be in writing and, if to you, delivered or mailed prepaid by registered or
certified mail or overnight air courier, or by facsimile communication
confirmed by registered or certified mail or overnight air carrier, addressed
to you at your address appearing on Schedule I to this Agreement or such other
address as you or the subsequent holder of any Note initially issued to you,
may designate to the Company in writing, and if to the Company, delivered or
mailed by registered or certified mail or overnight air courier, or by
facsimile communication confirmed by registered or certified mail or overnight
air courier, to the Company at 19103 Gundle Road, Houston, Texas 77073,
Attention: Vice President - Finance or to such other address as the Company
may in writing designate to you or to a subsequent holder of the Note initially
issued to you; provided, however, that a notice to you by overnight air courier
shall only be effective if delivered to you at a street address designated for
such purpose in Schedule I, and a notice to you by facsimile communication
shall only be effective if made by confirmed transmission to you at a telephone
number designated for purpose in Schedule I, or, in either case, as you or a
subsequent holder of any Note initially issued to you may designate to the
Company in writing.
Section 9.7. Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to your benefit
and to the benefit of your successors and assigns, including each successive
holder or holders of any Notes.
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Gundle Environmental Systems, Inc. Note Agreement
Section 9.8. Survival of Covenants and Representations. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of this Agreement and
the Notes.
Section 9.9. Severability. Should any part of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any remaining portion, which remaining portion
shall remain in force and effect as if this Agreement had been executed with
the invalid portion or unenforceable portion thereof eliminated and it is
hereby declared the intention of the parties hereto that they would have
executed the remaining portion of this Agreement without including therein any
such part, parts, or portion which may, for any reason, be hereafter declared
invalid or unenforceable.
Section 9.10. Governing Law. This Agreement and the Notes issued and
sold hereunder shall be governed by and construed in accordance with Texas law.
Section 9.11. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
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<PAGE> 40
Gundle Environmental Systems, Inc. Note Agreement
The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
GUNDLE ENVIRONMENTAL SYSTEMS, INC.
By /s/ Roger J. Klatt
------------------------------------
Its Senior Vice President/
Chief Financial Officer
Accepted as of June 15, 1995
JEFFERSON-PILOT LIFE INSURANCE COMPANY
By /s/ Robert E. Whalend
------------------------------------
Its Second Vice President
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<PAGE> 1
EXHIBIT 1.5
GUNDLE ENVIRONMENTAL SYSTEMS, INC.
19103 GUNDLE ROAD
HOUSTON, TEXAS 77073
AMENDMENT NO. 4 TO NOTE AGREEMENT
Re: Note Agreements dated as of June 15, 1990
relating to the issue and sale of
$25,000,000 11.17% Senior Notes
Due June 15, 2000
Dated as of
June 15, 1995
To the Holder named In Schedule I
hereto which is a signatory of this
Agreement
Ladies and Gentlemen:
Reference is hereby made to (a) the separate Note Agreements dated as of
June 15, 1990 (the "1990 Note Agreements"), between Gundle Environmental
Systems, Inc., a Delaware corporation (the "Company"), and the Purchasers named
in Schedule I thereto (the "Original Purchasers") respectively, under and
pursuant to which $25,000,000 principal amount of the 11.17% Senior Notes of
the Company due June 15, 2000 (the "Notes") were originally issued, as amended
by (i) that certain Amendment No. 1 to Note Agreement dated as of July 15, 1991
among the Company and the Original Purchasers ("Amendment No. 1"), (ii) that
certain Amendment No. 2 to Note Agreement dated as of July 17, 1992 among the
Company, Principal Mutual Life Insurance Company ("Principal") and
Jefferson-Pilot Life Insurance Company ("Jefferson-Pilot", which together with
Principal are herein collectively referred to as the "Holders") ("Amendment No.
2"), (iii) that certain Third Amendment to Note Agreement, effective as of ,
1993 among the Company and the Holders ("Amendment No. 3", which together with
Amendment No. 1, Amendment No. 2 and the 1990 Note Agreements are collectively
referred to herein as the "Original Note Agreements") and (b) the separate Note
Agreements dated as of June 15, 1995 (the "1995 Note Agreements"), to be
executed by, and to be between, the Company and each Purchaser signatory
thereto, respectively, under and pursuant to which $25,000,000 aggregate
principal amount of the 7.34% Senior Notes of the Company due August 1, 2005
will be issued.
In connection with the execution and delivery of the 1995 Note Agreements,
the Company desires to amend certain provisions of the Original Note Agreements
to conform to those provisions contained in the 1995 Note Agreements by
entering into separate counterparts of this Amendment No. 4 to Note Agreement
("Amendment No. 4") with each of the Holders, respectively. Pursuant to SECTION
7.1 of the Original Note Agreements, holders of at least 66-2/3% in aggregate
principal amount of the outstanding Notes must consent to all such amendments.
As you are the holder of the aggregate principal amount of outstanding
<PAGE> 2
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
Notes set forth opposite your name on Schedule I hereto, the Company hereby
requests that you accept each of the amendments as set forth below in the
manner herein provided. The Company now wishes to amend the Original Note
Agreements in the respects, but only in the respects, hereinafter set forth,
and, by your execution hereof, you hereby agree to such amendments on the terms
herinafter set forth:
SECTION 1. AMENDMENT OF ORIGINAL NOTE AGREEMENTS.
Section 1.1. Amendment to Section 2.1. Section 2.1 of the Original Note
Agreements shall be, and the same is hereby amended by adding the following
paragraph at the end of such Section:
"In the event of any purchase or other acquisition by the Company
of less than all of the Notes pursuant to SECTION 5.15, the amount of
the payment required at maturity and each prepayment required to be
made pursuant to this SECTION 2.1 shall be reduced in the proportion
that the principal amount of such purchase or other acquisition bears
to the unpaid principal amount of the Notes immediately prior to such
purchase or other acquisition (after giving effect to any prepayment
made pursuant to this SECTION 2.1 on the date of such purchase or
other acquisition)."
Section 1.2. Amendment to Section 5.2. Section 5.2 of the Original Note
Agreements shall be, and the same is hereby amended in its entirety as follows:
"Section 5.2. Insurance. The Company will maintain, and will
cause each Subsidiary to maintain, insurance coverage by financially
sound and reputable insurers (i) with respect to domestic United
States coverages, accorded a rating by A.M. Best Company, Inc. of (x)
A-XII or better in the case of products liability coverages and (y)
A-VI or better in the case of all other coverages, in each case at the
time of the issuance of any such policy and in such forms and amounts
and against such risks as are customary for corporations of
established reputation engaged in the same or a
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Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
similar business and owning and operating similar properties, except
that if, during the term of any such insurance policy, the rating
accorded the insurer shall be less than A-XII or A-VI, as the case may
be, the Company will, on the date of renewal of any such policy (or,
if such change in rating shall occur within 90 days prior to such
renewal date, within 90 days of the date of such such insurance policy
from an insurer so rated, and (ii) with respect to foreign coverages,
accorded a rating of A or better by Standard and Poor's Ratings Group
at the time of the issuance of any such policy and in such forms and
amounts and against such risks as are customary for corporations of
established reputation engaged in the same or a similar business and
owning and operating similar properties, except that, in the event
that coverages are not reasonably available in any foreign
jurisdiction from insurers with an A rating or better from Standard
and Poor's Ratings Group or such insurers are not rated, such
coverages may be placed with insurers deemed financially sound and
reputable by the Company and not reasonably objected to by any holder
or group of holders holding 33-1/3% in aggregate principal amount of
outstanding Notes. It is understood and agreed that if any holder or
group of holders holding more than 33-1/3% in aggregate principal
amount of outstand reasonably object to such insurers, it shall be
deemed to be an objection hereunder irrespective of any non-objection
on the part of any other holder or holders of outstanding Notes.
Nothing contained in this SECTION 5.2 shall prevent the Company from
maintaining in lieu, in whole or in part, of such insurance coverage a
self-insurance program in an amount not to exceed $2,000,000 on an
annual basis if and to the extent that such self-insurance program is
consistent with sound and prudent business practices or is determined
to be appropriate or in the best interests of the Company by its Board
of Directors. Notwithstanding the insurance company size and credit
quality standards set forth in clause (y) of this SECTION 5.2, the
Company may purchase property, boiler and machinery insurance coverage
from Industrial Risk Insurers."
Section 1.3. Amendment to Section 5.7. Section 5.7 of the Original Note
Agreements shall be, and the same is hereby amended in its entirety as follows:
"Section 5.7. Consolidated Net Worth. The Company will at all
times keep and maintain Consolidated Net Worth at an amount not less
than (i) during its fiscal year ending December 31, 1995, $60,000,000,
and (ii) during each fiscal year thereafter, an amount equal to the
sum of the amount that was required to be maintained during the
previous fiscal year plus an amount equal to 25% of Consolidated Net
Income for such previous fiscal year (but without deduction in the
event of a deficit in such Consolidated Net Income)."
Section 1.4. Amendment to Section 5.8. Section 5.8 of the Original Note
Agreements shall be, and the same is hereby amended in its entirety as follows:
"Section 5.8. Limitations on Current Debt and Funded Debt. (a)
The Company will not, and will not permit any Subsidiary to, create,
assume or incur or in any manner be or become liable in respect of any
Indebtedness for Borrowed Money or other Priority Obligations, except:
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Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
"(1) Indebtedness for Borrowed Money evidenced by the
Notes;
"(2) Indebtedness for Borrowed Money of the Company and
its Subsidiaries outstanding as of June 15, 1995 and reflected on
Annex B to Exhibit B hereto;
"(3) additional Indebtedness for Borrowed Money of the
Company and its Subsidiaries and other Priority Obligations,
provided that at the time of issuance thereof and after giving
effect thereto and to the application of the proceeds thereof:
"(i) in the case of the incurrence of Senior
Indebtedness for Borrowed Money, Senior Indebtedness for
Borrowed Money shall not exceed 50% of Consolidated Total
Capitalization,
"(ii) in the case of the incurrence of Indebtedness for
Borrowed Money, Consolidated Indebtedness for Borrowed Money
shall not exceed 60% of Consolidated Total Capitalization, and
"(iii) in the case of the incurrence of any Priority
Obligations, the aggregate amount of all Priority Obligations
shall not exceed 20% of Consolidated Total Capitalization; and
"(4) Indebtedness for Borrowed Money of a Subsidiary to
the Company or to a Wholly-owned Subsidiary and preferred stock of
a Subsidiary held by the Company or a Wholly-owned Subsidiary.
"(b) Any corporation which becomes a Subsidiary after the date
hereof shall for all purposes of this SECTION 5.8 be deemed to have
created, assumed or incurred at the time it becomes a Subsidiary all
Indebtedness for Borrowed Money of such corporation existing
immediately after it becomes a Subsidiary."
Section 1.5. Amendment to Section 5.9. Clauses (f), (g) and (h) of
Section 5.9 of the Original Note Agreements shall be, and the same are hereby
amended in their respective entireties as follows:
"(f) Liens existing as of June 15, 1995 and reflected in
Schedule II hereto, securing Funded Debt of (i) the Company or
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<PAGE> 5
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
any Subsidiary or (ii) SLT or any subsidiary outstanding on such date;
"(g) Liens incurred after June 15, 1995 given to secure the
payment of the purchase price incurred in connection with the
acquisition or construction of fixed assets useful and intended to be
used in carrying on the business of the Company or a Subsidiary,
including Liens existing on such fixed assets at the time of
acquisition thereof or at the time of acquisition by the Company or a
Subsidiary of any business entity then owning such fixed assets which
becomes a Subsidiary concurrently with such acquisition, whether or
not such existing Liens were given to secure the payment of the
purchase price of the fixed assets to which they attach so long as
they were not incurred, extended or renewed in contemplation of such
acquisition, provided that (i) the Lien shall attach solely to the
fixed assets acquired or purchased and the proceeds thereof and such
Lien shall attach within 365 days of the completion of such
acquisition or purchase, (ii) at the time of acquisition of such fixed
assets, the aggregate amount remaining unpaid on all Indebtedness
secured by Liens on such fixed assets whether or not assumed by the
Company or a Subsidiary shall not exceed an amount equal to 100% of
the lesser of the total purchase price or fair market value at the
time of acquisition of such fixed assets (as determined in good faith
by the Board of Directors of the Company), and (iii) all such
Indebtedness shall have been incurred within the applicable
limitations provided in SECTION 5.8;
"(h) Liens not otherwise permitted by the preceding clauses (a)
through (g), inclusive, securing Funded Debt of the Company or any
Subsidiary, provided that no such Lien shall be created to secure
preexisting Funded Debt, any extension, renewal or replacement of such
Funded Debt, or any Funded Debt (whether or not preexisting Funded
Debt) under any preexisting agreement providing for unsecured Funded
Debt or under any extension, renewal or replacement of such an
agreement unless the Notes shall be secured equally and ratably with,
or prior to, any such Funded Debt in a manner reasonably satisfactory
to the holders of at least 66-2/3% in aggregate principal amount of
the outstanding Notes and provided further that all Funded Debt
secured by such liens shall be permitted by the provisions of SECTION
5.8(a)(3)(iii); and"
Section 1.6. Amendment to Section 5.10. Section 5.10 of the Original
ote Agreements shall be, and the same is hereby amended in its entirety as
follows:
"Section 5.10. Restricted Payments. The Company will not except as
hereinafter provided:
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Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
"(a) Declare any dividends, either in cash or Property, on
any shares of its capital stock of any class (except dividends or
other distributions payable solely in shares of capital stock of
the Company);
"(b) Directly or indirectly, or through any Subsidiary,
purchase, redeem or retire any shares of its capital stock of any
class or any warrants, rights or options to purchase or acquire
any shares of its capital stock (other than in exchange for or out
of the net cash proceeds to the Company from the substantially
concurrent issue or sale of other shares of capital stock of the
Company or warrants, rights or options to purchase or acquire any
shares of its capital stock);
"(c) Make any other payment or distribution, either
directly or indirectly or through any Subsidiary, in respect of
its capital stock; or
"(d) Make any payment or distribution, either directly or
indirectly or through any Subsidiary, of principal of any
Subordinated Indebtedness for Borrowed Money prior to the date
such payment shall be due;
"(such declarations of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options and all
such other distributions being herein collectively called 'Restricted
Payments'), if after giving effect thereto an Event of Default shall
have occurred and be continuing or the aggregate amount of Restricted
Payments made during the period from and after December 31, 1994 to
and including the date of the making of the Restricted Payment in
question, would exceed the sum of (i) $16,000,000 plus (ii) 50% of
Consolidated Net Income for such period, computed on a cumulative
basis for said entire period (or if such Consolidated Net Income is a
deficit figure, then minus 100% of such deficit).
"The Company will not declare any dividend which constitutes a
Restricted Payment payable more than 60 days after the date of
declaration thereof. The Company may make any Restricted Payment
declared in compliance with the provisions of this SECTION 5.10
regardless of its capacity to d eclare additional Restricted Payments
or lack thereof under this SECTION 5.10 at the time of the payment of
such Restricted Payment.
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Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
"For the purposes of this SECTION 5.10 the amount of any
Restricted Payment declared, paid or distributed in Property shall be
deemed to be the greater of the book value or fair market value (as
determined in good faith by the Board of Directors of the Company) of
such property at the time of the making of the Restricted Payment in
question."
Section 1.7. Amendment to Section 5.12. Clauses (a)(2) and (a)(3) of
Section 5.12 of the Original Note Agreements shall, in each case, be amended by
replacing the words "Funded Debt" located therein with the words "Indebtedness
for Borrowed Money".
Section 1.8. Amendment to Section 5.13. Section 5.13 of the Original
Note Agreements shall be, and the same is hereby amended in its entirety as
follows:
"Section 5.13. Guaranties. The Company will not, and will not
permit any Subsidiary to, become or be liable in respect of any
Guaranty except:
(a) Guaranties of the Company which are limited in amount to a
stated maximum dollar exposure, and
(b) the Permitted Subsidiary Guaranties."
Section 1.9. Addition of Section 5.19. Section 5.19 shall be added to
the Original Note Agreements immediately following Section 5.18, to read in its
entirety as follows:
"Section 5.19. New Domestic Subsidiaries; Execution of Credit
Agreement. (a) So long as the Indebtedness of the Company under the
Credit Agreement remains outstanding and is guaranteed by the Domestic
Subsidiaries, the Company shall cause any entity which becomes a
Domestic Subsidiary from and after the 1995 Closing Date to execute
and deliver a Guaranty Agreement in the form attached as Exhibit F
hereto, together with a certificate dated the date of execution and
delivery of such Guaranty Agreement signed by the President, a Vice
President or Chief Financial Officer of such Domestic Subsidiary to
the effect that such Guaranty Agreement has been duly authorized,
executed and delivered by such Domestic Subsidiary and such Guaranty
Agreement constitutes the legal, valid and binding obligation,
contract and agreement of such Domestic Subsidiary enforceable in
accor dance with its terms."
(b) No Domestic Subsidiary shall, at any time, become a party to the
Credit Agreement.
-7-
<PAGE> 8
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
Section 1.10. Amendment to Section 6. Section 6 of the Original Note
Agreements shall be, and the same is hereby amended in its entirety as follows:
"Section 6.1. Events of Default. Any one or more of the
following shall constitute an 'Event of Default' as such term is used
herein:
"(a) Default shall occur in the payment of interest on any
Note when the same shall have become due and such default shall
continue for more than five days; or
"(b) Default shall occur in the making of any required
prepayment on any of the Notes as provided in SECTION 2.1; or
"(c) Default shall occur in the making of any other
payment of the principal of any Note or Make-Whole Amount thereon
at the expressed or any accelerated maturity date or at any date
fixed for prepayment; or
"(d) Default shall be made in the payment when due
(whether by lapse of time, by declaration, by call for redemption
or otherwise) of the principal of or interest on any Indebtedness
for Borrowed Money (other than the Indebtedness for Borrowed Money
evidenced by the Notes) of the Company or any Subsidiary having an
aggregate principal amount in excess of 5% of Consolidated Net
Worth and such default shall continue beyond the period of grace,
if any, allowed with respect thereto; or
"(e) Default or the happening of any event shall occur
under any indenture, agreement or other instrument under which any
Indebtedness for Borrowed Money of the Company or any Subsidiary
having an aggregate principal amount in excess of 5% of
Consolidated Net Worth may be issued and such default or event
shall continue for a period of time sufficient to permit the
acceleration of the maturity of any Indebtedness for Borrowed
Money of the Company or any Subsidiary outstanding thereunder; or
"(f) Default shall occur in the observance or performance
of any covenant or agreement contained in SECTION 5.8 through
SECTION 5.12; or
"(g) Default shall occur in the observance or performance
of any provision of this Agreement, other than
-8-
<PAGE> 9
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
the provisions referred to in SECTION 6.1(f), which is not
remedied within 45 days after the earlier of (i) notice thereof to
the Company by the holder of any Note or (ii) the date on which
such Default first becomes known to any officer of the Company; or
"(h) Any representation or warranty made by the Company
herein, or made by the Company in any statement or certificate
furnished by the Company in connection with the consummation of
the issuance and delivery of the Notes or furnished by the Company
pursuant hereto, is untrue in any material respect as of the date
of the issuance or making thereof; or
"(i) Any representation or warranty made by any Domestic
Subsidiary in any Guaranty Agreement, or made by any Domestic
Subsidiary in any statement or certificate furnished by any
Domestic Subsidiary in connection with the consummation of the
issuance and delivery of the Notes or furnished by any Domestic
Subsidiary pursuant hereto or to any Guaranty Agreement, is untrue
in any material respect as of the date of the issuance or making
thereof; or
"(j) The obligations of any Domestic Subsidiary contained
in any Guaranty Agreement shall cease to be in full force and
effect for any reason whatsoever, including, without limitation,
the determination by any governmental body or court that any
Guaranty Agreement is invalid, void or unenforceable or any
Domestic Subsidiary shall contest or deny in writing the validity
or enforceability of any Guaranty Agreement; or
"(k) Final judgment or judgments for the payment of money
aggregating in excess of $2,000,000 in excess of applicable
insurance coverage is or are outstanding against the Company or
any Subsidiary or against any property or assets of either and any
one of such judgments has remai ned unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of 60 days from the
date of its entry; or
"(l) A custodian, liquidator, trustee or receiver is
appointed for the Company or any Subsidiary or for the major part
of the property of either and is not discharged within 30 days
after such appointment; or
-9-
<PAGE> 10
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
"(m) The Company or any Subsidiary becomes insolvent or
bankrupt, is generally not paying its debts as they become due or
makes an assignment for the benefit of creditors, or the Company
or any Subsidiary causes or suffers an order for relief to be
entered with respect to it under applicable Federal bankruptcy
law or applies for or consents to the appointment of a custodian,
liquidator, trustee or receiver for the Company or such Subsidiary
or for the major part of the property of either; or
"(n) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy
or similar law or laws for the relief of debtors, are instituted
by or against the Company or any Subsidiary and, if instituted
against the Company or any Subsidiary, are consented to or are not
dismissed within 90 days after such institution.
"Section 6.2. Notice to Holders. When any Event of Default
described in the foregoing SECTION 6.1 has occurred, or if the holder
of any Note or of any other evidence of Indebtedness for Borrowed
Money of the Company gives any notice or takes any other action with
respect to a claimed default, the Company agrees to give notice within
three Business Days of such event to all holders of the Notes then
outstanding, such notice to be in writing and sent by registered or
certified mail or by telegram.
"Section 6.3. Acceleration of Maturities. When any Event of
Default described in paragraph (a), (b) or (c) of SECTION 6.1 has
happened and is continuing, any holder of any Note may, and when any
Event of Default described in paragraphs (d) through (k), inclusive,
of said SECTION 6.1 has happened and is continuing, the holder or
holders of 33-1/3% or more of the principal amount of Notes at the
time outstanding may, by notice in writing sent by registered or
certified mail to the Company, declare the entire principal and all
interest accrued on all Notes to be, and all Notes shall thereupon
become, forthwith due and payable, without any presentment, demand,
protest or other notice of any kind, all of which are hereby expressly
waived. When any Event of Default described in paragraph (l), (m) or
(n) of SECTION 6.1 has occurred, then all outstanding Notes shall i
mmediately become due and payable without presentment, demand or
notice of any kind. Upon the Notes becoming due and payable as a
result of any Event of Default as aforesaid, the Company will
forthwith pay to the holders of the Notes the entire principal and
interest accrued on the Notes and, to the extent permitted by law,
liquidated damages for the loss of the
-10-
<PAGE> 11
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
bargain evidenced hereby (and not as a penalty) in an amount equal to
the Make-Whole Amount which would be payable if the Company then had
elected to prepay (and was permitted to prepay) the Notes with the
Make-Whole Amount pursuant to SECTION 2.2 (determined as of the date
of declaration of an acceleration or, in the case of an Event of
Default described in paragraph (l), (m) or (n) of SECTION 6.1, the
date of acceleration). No course of dealing on the part of the holder
or holders of any Notes nor any delay or failure on the part of any
Noteholder to exercise any right shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers and r
emedies. The Company further agrees, to the extent permitted by law,
to pay to the holder or holders of the Notes all costs and expenses
incurred by them in the collection of any Notes upon any default
hereunder or thereon, including reasonable compensation to such
holder's or holders' attorneys for all services rendered in
connection therewith.
"Section 6.4. Rescission of Acceleration. The provisions of
SECTION 6.3 are subject to the condition that if the principal of and
accrued interest on all or any outstanding Notes have been declared
immediately due and payable by reason of the occurrence of any Event
of Default described in paragraphs (a) through (k), inclusive, of
SECTION 6.1, the holders of 66-2/3% in aggregate principal amount of
the Notes then outstanding may, by written instrument filed with the
Company, rescind and annul such declaration and the consequences
thereof, provided that at the time such declaration is annulled and
rescinded:
"(a) no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes or this Agreement;
"(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement
(except any principal, interest or premium on the Notes which has
become due and payable solely by reason of such declaration under
SECTION 6.3) shall have been duly paid; and
"(c) each and every other Default and Event of Default
shall have been made good, cured or waived pursuant to SECTION
7.1;
"and provided further, that no such rescission and annulment shall
extend to or affect any subsequent Default or Event of Default or
impair any right consequent thereto.
-11-
<PAGE> 12
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
Section 1.11. Amendments to Section 8.1. (a) The following definitions
shall be added to Section 8.1 of the Original Note Agreements in alphabetical
order and shall read as follows:
"'Company' shall mean Gundle Environmental Systems, Inc., a
Delaware corporation and its permitted successors and assigns
including, without limitation, Gundle/SLT Environmental, Inc.
"'Credit Agreement' shall mean that certain Credit Agreement dated
as of the 1995 Closing Date among the Company, certain of its
Subsidiaries which may join the Credit Agreement, NationsBank of
Texas, N.A., as agent and the banks and other financial institutions
from time to time parties thereto, as the same may be amended,
modified, waived or supplemented from time to time, and any extension,
renewal or replacement thereof.
"'Domestic Subsidiary' shall mean GSE Lining Technology, Inc., a
Delaware corporation, GSE International, Inc., a Delaware corporation
and each other Subsidiary now existing or hereafter created or
acquired, which is organized under the laws of the United States or
any State thereof and which is required to guarantee Indebtedness for
Borrowed Money pursuant to the Credit Agreement.
"'Indebtedness for Borrowed Money' of any Person shall mean the
sum of Current Debt and Funded Debt of such Person.
"'Merger' shall mean the merger of SLT into the Company.
"'1995 Closing Date' shall mean the effective date of the Merger.
"'1995 Note Agreements' shall mean the separate Note Agreements
dated as of June 15, 1995 between the Company and each of the
purchasers party thereto.
"'Permitted Foreign Country' shall mean each of France, Italy,
Canada, Germany, Singapore, Australia, Japan and each of the countries
comprising the United Kingdom, so long as the rating on such country's
senior unsecured long-term debt is rated AA or better by Standard and
Poor's Ratings Group or Aa or better by Moody's Investors Services,
Inc.
"'Permitted Subsidiary Guaranties' shall mean collectively, the
Guaranty Agreements executed and delivered by the Domestic
-12-
<PAGE> 13
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
Subsidiaries in connection with this Agreement, the 1995 Note
Agreements and the Credit Agreement.
"'Priority Obligations' shall mean and include (i) all
Indebtedness for Borrowed Money of Subsidiaries (other than the
Permitted Subsidiary Guaranties and Indebtedness for Borrowed Money of
Subsidiaries to the Company or a Wholly-owned Subsidiary), (ii) all
Funded Debt of the Company secured by Liens referred to in SECTION
5.9(g) or SECTION 5.9(h) and (iii) preferred stock of Subsidiaries
held by any other Person other than the Company and its Wholly-owned
Subsidiaries. The amount of Priority Obligations outstanding as at any
date of determination thereof shall mean the sum, without
duplication, of the aggregate unpaid principal amount of all
Indebtedness for Borrowed Money constituting Priority Obligations and
the voluntary or involuntary liquidating value, whichever is greater,
of preferred stock constituting Priority Obligations.
"'SLT' shall mean SLT Environmental, Inc., a Delaware corporation."
(b) The definitions of "Consolidated Current Assets" and "Consolidated
Current Liabilities", "Consolidated Funded Debt", "Consolidated Net Assets",
"Consolidated Net Worth", "Consolidated Total Capitalization", "Funded Debt",
"Reinvestment Rate" (set forth in the definition of " Make-Whole Amount"),
"Permitted Investments", "Senior Funded Debt", "Subordinated Funded Debt",
"subsidiary", and "Wholly-owned" set forth in Section 8.1 of the Original Note
Agreements shall be, and the same are hereby amended in their respective
entireties as follows:
"'Consolidated Current Assets' and 'Consolidated Current
Liabilities' shall mean as of the date of any determination thereof
such assets and liabilities of the Company and its Subsidiaries on a
consolidated basis as shall be determined in accordance with GAAP to
constitute current asset s and current liabilities, respectively.
"'Consolidated Indebtedness for Borrowed Money' shall mean all
Indebtedness for Borrowed Money of the Company and its Subsidiaries,
determined on a consolidated basis eliminating intercompany items.
"'Consolidated Net Assets' shall mean as of the date of any
determination thereof, the total amount of all assets of the Company
and its Subsidiaries after deducting all depreciation, depletion and
other properly deductible valuation reserves and all items which in
accordance with GAAP would be included on the liability side of a
consolidated balance sheet, except deferred
-13-
<PAGE> 14
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
income taxes, deferred investment tax credits, capital stock of any
class, surplus and Indebtedness for Borrowed Money.
"'Consolidated Net Worth' shall mean as of the date of any
determination thereof Consolidated Net Assets less (1) all outstanding
Indebtedness for Borrowed Money, deferred income taxes and deferred
investment tax credits, consolidating the Company and its
Subsidiaries, and (2) all Intangible Assets acquired by the Company
after December 31, 1994.
"'Consolidated Total Capitalization' shall mean, as of the date of
any determination thereof, the sum of (i) Consolidated Net Worth plus
(ii) Consolidated Indebtedness for Borrowed Money.
"'Funded Debt' of any Person shall mean (i) all Indebtedness of
such Person for borrowed money or which has been incurred in
connection with the acquisition of assets in each case having a final
maturity of one or more than one year from the date of origin thereof
(or which is renewable or extendible at the option of the obligor for
a period or periods more than one year from the date of origin),
including all payments in respect thereof that are required to be made
within one year from the date of any determination of Funded Debt,
whether or not the obligation to make such payments shall constitute
a current liability of the obligor under GAAP, (ii) all Capitalized
Rentals of such Person, and (iii) all Guaranties by such Person of
Funded Debt of others.
"'Reinvestment Rate' shall mean 50 basis points plus the
arithmetic mean of the yields for the two columns under the heading
'Week Ending' published in the Statistical Release under the caption
'Treasury Constant Maturities' for the maturity (rounded to the
nearest month) corresponding to the Weighted Average Life to Maturity
of the principal being prepaid (taking into account the application of
such prepayment required by SECTION 2.1). If no maturity exactly
corresponds to such Weighted Average Life to Maturity, yields for the
two published maturities most closely corresponding to such Weighted
Average Life to Maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be
interpolated or extrapolated from such yields on a straight-line
basis, rounding in each of such relevant periods to the nearest month.
For the purposes of calculating the Reinvestment Rate, the most recent
Statistical Release published prior to the date of the Make-Whole
Amount shall be used.
"'Permitted Investments' shall mean one of the following:
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<PAGE> 15
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
"(a) Investments by the Company and its Subsidiaries in
and to Subsidiaries, including any investment in a corporation
which, after giving effect to such investment, will become a
Subsidiary;
"(b) Investments in commercial paper and bankers'
acceptances maturing in twelve months or less from the date of
issuance and which, at the time of acquisition by the Company or
any Subsidiary, is accorded the highest rating by Standard &
Poor's Ratings Group or Moody's Investors Services, Inc.;
"(c) Investments in direct obligations of the United
States of America, or Investments in any Person, which Investments
are guaranteed by the full faith and credit of the United States
of America, in either case maturing in twelve months or less from
the date of acquisition there of by the Company or any Subsidiary
and repurchase agreements having a term of less than one year and
fully collateralized by such obligations which are entered into
with banks or trust companies described in clause (e) below or
brokerage companies having a net worth in excess of $100,000,000;
"(d) Investments in direct obligations of Permitted
Foreign Countries (or central banks thereof), in any case maturing
in twelve months or less from the date of acquisition thereof by
the Company or any Subsidiary and repurchase agreements having a
term of less than one year relating to and fully collateralized
by such obligations, which repurchase agreements are entered into
with banks or trust companies described in clauses (e) and (f)
below or brokerage companies having a net worth in excess of
$250,000,000; provided, that the aggregate amount of Investments
in direct obligations of any Permitted Foreign Country (or
central bank thereof) permitted in this clause (d) shall not
exceed $1,000,000;
"(e) Investments in time deposits, certificates of deposit
or Eurodollar certificates of deposit maturing within one year
from the date such investment is made, issued by a bank or trust
company organized under the laws of the United States or any state
thereof, having capital, surplus and undivided profits
aggregating at least $100,000,000 or a foreign branch thereof
located in the United Kingdom, France, Canada, Italy, Singapore,
Germany, Australia, Japan or the Cayman Islands and whose
long-term certificates of
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<PAGE> 16
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
deposit are, at the time of acquisition thereof by the Company or
Subsidiary, rated A by Standard & Poor's Ratings Group or A-2 by
Moody's Investors Services, Inc.;
"(f) Investments in time deposits or certificates of
deposit maturing within one year from the date such investment is
made, issued by a bank organized under the laws of any Permitted
Foreign Country or any political subdivision thereof, having
capital, surplus and undivided prof its aggregating at least
$500,000,000 and whose senior unsecured long-term debt (or if not
available, such bank's holding company's senior unsecured
long-term debt) is, at the time of acquisition thereof by the
Company or Subsidiary, rated A by Standard & Poor's Ratings Group
or A-2 by Moody's Investors Services, Inc.; provided, that the
aggregate amount of Investments in any bank organized under the
laws of any Permitted Foreign Country or any political subdivision
thereof permitted in this clause (f) shall not exceed $5,000,000;
"(g) loans or advances in the usual and ordinary course of
business to officers, directors and employees for expenses
(including moving expenses related to a transfer) incidental to
carrying on the business of the Company or any Subsidiary;
"(h) receivables arising from the sale of goods and
services in the ordinary course of business of the Company and its
Subsidiaries;
"(i) Investments in companies which are engaged in the
same general nature of business as the Company (assuming
compliance with SECTION 5.5) and which do not result in such
company being a Subsidiary;
"(j) Investments in corporations constituting the payment
for or settlement of a claim owed to the Company or any Subsidiary
received by the Company or such Subsidiary pursuant to a
bankruptcy, reorganization, arrangement or insolvency proceeding,
or other proceedings for relief under any bankruptcy or similar
law or laws for the relief of debtors, instituted by or against
such corporation; or
"(k) short-term securities backed by letters of credit
from banks or trust companies described in clause (e) above
-16-
<PAGE> 17
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
and other short-term tax-exempt securities with minimum quality
ratings of A- by Standard & Poor's Ratings Group or A-3 by Moody's
Investors Services, Inc.; or
"(l) Investments not otherwise qualifying as a Permitted
Investment so long as the aggregate thereof does not exceed 5% of
Consolidated Total Capitalization.
"In valuing any Investments for the purpose of applying the
limitations set forth in this Agreement, such investments, loans and
advances shall be taken at the original cost thereof, without
allowance for any subsequent write-offs or appreciation or
depreciation therein, but less any amount repaid or recovered on
account of capital or principal.
"For purposes of this Agreement, at any time when a corporation
becomes a Subsidiary, all Investments of such corporation at such time
shall be deemed to have been made by such corporation, as a
Subsidiary, at such time.
"'Senior Indebtedness for Borrowed Money' shall mean all
Consolidated Indebtedness for Borrowed Money, other than Subordinated
Indebtedness for Borrowed Money.
"'Subordinated Indebtedness for Borrowed Money' shall mean all
unsecured Indebtedness for Borrowed Money of the Company which shall
contain or have applicable thereto subordination provisions
substantially in the form set forth in Exhibit E attached hereto
providing for the subordination thereof to other Indebtedness for
Borrowed Money of the Company, including, without limitation, the
Notes, or such other provisions as may be approved in writing by the
holders of not less than 66-2/3% in aggregate principal amount of the
outstanding Notes.
"The term 'subsidiary' shall mean, as to any particular parent
corporation, any corporation of which more than 50% (by number of
votes) of the Voting Stock shall be owned by such parent corporation
and/or one or more corporations which are themselves subsidiaries of
such parent corporation. The term 'Subsidiary' shall mean a
subsidiary of the Company, which shall include subsidiaries of SLT
which will become subsidiaries of the Company on the 1995 Closing
Date.
"'Wholly-owned' when used in connection with any Subsidiary shall
mean a Subsidiary of which all of the issued and outstanding shares of
stock (except shares required as directors'
-17-
<PAGE> 18
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
qualifying shares) and all Indebtedness for Borrowed Money shall be
owned by the Company and/or one or more of its Wholly-owned
Subsidiaries."
(c) The definitions of "PG Technology" and "Total Capitalization" set
forth in Section 8.1 of the Original Note Agreements shall be deleted in their
respective entireties.
Section 1.12. Amendment to Schedule I. Schedule I to the Original Note
Agreements is hereby amended in its entirety so that the same shall henceforth
read as provided in Exhibit 1 attached hereto.
Section 1.13. Amendment to Schedule II. Schedule II to the Original Note
Agreements is hereby amended in its entirety so that the same shall henceforth
read as provided in Exhibit 2 attached hereto.
Section 1.14. Amendment to Exhibit A. Exhibit A to the Original Note
Agreements is hereby amended in its entirety so that the same shall henceforth
read as provided in Exhibit 3 attached hereto.
Section 1.15. Amendment to Exhibit B. Annex B to Exhibit B to the
Original Note Agreements is hereby amended in its entirety so that the same
shall henceforth read as provided in Exhibit 4 attached hereto.
Section 1.16. Amendment to Exhibit E. Exhibit E to the Original Note
Agreements is hereby amended in its entirety so that the same shall henceforth
read as provided in Exhibit 5 attached hereto.
Section 1.17. Addition of Exhibit F. Exhibit F shall be added to the
Original Note Agreements immediately following Exhibit E, to read in its
entirety as provided in Exhibit 6 attached hereto.
SECTION 2. MISCELLANEOUS.
Section 2.1. Ratification of Original Note Agreements; Condition
Precedent'. Except as amended and restated herein, the terms and provisions of
the Original Note Agreements and the Notes are hereby ratified, confirmed and
approved in all respects. If the 1995 Note Agreements and the 7.34% Senior
Notes due June 15, 2005 are not executed and delivered as set forth above, this
Amendment No. 4 shall be null and void.
Section 2.2. Counterparts. This Amendment No. 4 may be executed in any
number of counterparts, each executed counterpart constituting an original but
altogether one and the same instrument.
Section 2.3. Fees and Expenses. The Company agrees to pay all
reasonable fees and expenses of you and your special counsel connected with the
preparation of this Amendment No. 4
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<PAGE> 19
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
Section 2.4. References to Original Note Agreements. Any and all
notices, requests, certificates and any other instruments, including the Notes,
may refer to the Original Note Agreements or the Note Agreements dated as of
June 15, 1990 without making specific reference to this Amendment No. 4, but
nevertheless all such references shall be deemed to include this Amendment No.
4 unless the context shall otherwise require.
Section 2.5. Governing Law. This Amendment No. 4 shall be construed in
accordance with and governed by the laws of the State of Texas.
-19-
<PAGE> 20
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
Upon the acceptance of this Amendment No. 4 by Holders holding at least
66-2/3% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of June 15,
1995.
GUNDLE ENVIRONMENTAL SYSTEMS, INC.
By /s/ Roger J. Klatt
-----------------------------------
Its Senior Vice President/
Chief Financial Officer
Accepted as of June 15, 1995
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By /s/ James C. Fifield
-----------------------------------
Its Counsel
By /s/ Jon C. Heiny
-----------------------------------
Its Counsel
Holding the unpaid principal amount of
the Notes set out opposite its name in
Schedule I hereto
<PAGE> 21
Gundle Environmental Systems, Inc. Amendment No. 4 to Note Agreement
Upon the acceptance of this Amendment No. 4 by Holders holding at least
66-2/3% in aggregate unpaid principal amount of all outstanding Notes, this
agreement shall become effective and the Original Note Agreements shall be
amended as herein set forth, such amendment to be effective as of June 15,
1995.
GUNDLE ENVIRONMENTAL SYSTEMS, INC.
By /s/ Roger J. Klatt
------------------------------------
Its Senior Vice President/
Chief Financial Officer
Accepted as of June 15, 1995
JEFFERSON-PILOT LIFE INSURANCE
COMPANY
By /s/ Robert E. Whalend
------------------------------------
Its Second Vice President
Holding the unpaid principal amount of
the Notes set out opposite its name in
Schedule I hereto
<PAGE> 1
EXHIBIT 1.6
CREDIT AGREEMENT
Among
GUNDLE/SLT ENVIRONMENTAL, INC.
AND ITS SUBSIDIARIES
WHICH JOIN THIS AGREEMENT
as Borrowers,
THE FINANCIAL INSTITUTIONS
NAMED IN THIS CREDIT AGREEMENT
as Banks,
and
NATIONSBANK OF TEXAS, N.A.,
as Agent for the Banks
$35,000,000
July 27, 1995
<PAGE> 2
<TABLE>
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<S> <C>
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.3 Accounting Terms; Changes in Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.4 Types of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 2. CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1 Revolving Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.2 Letter of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.4 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.5 Breakage Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.6 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.7 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.8 Market Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.9 Payment Procedures and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.11 Replacement Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.12 Additional Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.13 Company Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.1 Conditions Precedent to Initial Extensions of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.2 Conditions Precedent to Each Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.3 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.4 Absence of Conflicts and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.5 Investment Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.6 Public Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.7 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.8 Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.10 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.11 Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
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4.12 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.15 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.2 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.3 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.5 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.6 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.7 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.8 Subsidiary Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.9 Corporate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.10 Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.11 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.12 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.14 Investments; Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.15 Lines of Business; Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.17 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.18 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.19 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 6. DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.2 Termination of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.3 Acceleration of Credit Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.4 Cash Collateralization of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.5 Default Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.6 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.7 Actions Under Credit Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.8 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.9 Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 7. THE AGENT AND THE ISSUING BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.1 Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.2 Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.3 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
</TABLE>
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7.4 Bank Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.7 Successor Agent and Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 8. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.3 Modifications, Waivers, and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.4 Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.5 Assignment and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.6 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.7 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.8 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.10 Termination of Existing Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.11 No Further Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
</TABLE>
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EXHIBITS
Exhibit A - Form of Compliance Certificate
Exhibit B - Form of Borrowing Request
Exhibit C - Form of Continuation/Conversion Request
Exhibit D - Form of Note
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Closing Documents List
Exhibit G - Form of Guaranty
Exhibit H - Form of Joinder Agreement
SCHEDULES
Schedule I - Administrative Information
Schedule II - Disclosures
</TABLE>
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<PAGE> 6
CREDIT AGREEMENT
This Credit Agreement dated as of July 27, 1995, is among Gundle/SLT
Environmental, Inc., a Delaware corporation, and its Subsidiaries which join
this Agreement, as Borrowers, the Banks, and NationsBank of Texas, N.A., as
Agent for the Banks.
The parties hereto agree as follows:
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS.
1.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (unless otherwise indicated,
such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Adjusted Prime Rate" means, for any day, the fluctuating per annum
interest rate equal to the greater of (a) the Prime Rate in effect on such day
and (b) the Federal Funds Rate in effect on such day plus 0.50%.
"Advance" means an outstanding advance of principal from a Bank which
represents such Bank's ratable share of a Borrowing.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such Person or any Subsidiary of such Person.
The term "control" (including the terms "controlled by" or "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership, by contract, or otherwise.
"Agent" means NationsBank in its capacity as an agent pursuant to
Article 7 and any successor agent pursuant to Section 7.7.
"Agreement" means this Credit Agreement.
"Applicable Commitment Fee" means, as of any date of its determination:
(a) as of the date of this Agreement through the time when the
Applicable Commitment Fee may be calculated by the Agent pursuant to paragraph
(b) below from the September 30, 1995, financial statements of the Company,
0.250%; and
(b) thereafter, the percentage amount set forth in the table below
opposite the applicable ratio of (i) the consolidated Debt of the Company as of
the end of the fiscal
<PAGE> 7
quarter then most recently ended to (ii) the consolidated Total Capital of the
Company as of the end of the fiscal quarter then most recently ended.
<TABLE>
<CAPTION>
Debt to
Total Capital Applicable Commitment Fee
------------- -------------------------
<S> <C>
> 0.40 0.375%
<= 0.40 but > 0.30 0.250%
<= 0.30 0.250%
</TABLE>
The Agent shall determine the Applicable Commitment Fee based upon the most
recent financial statements dated as of the end of a fiscal quarter delivered
to the Agent pursuant to Section 5.2(b). Any adjustments to the Applicable
Commitment Fee shall become effective three Business Days following the date of
delivery of such financial statements to the Agent; provided, however, that if
such financial statements are not delivered when required hereunder, the
Applicable Commitment Fee shall increase to the maximum percentage amount set
forth in the table above from date when such financial statements were required
to be delivered to the Agent hereunder until received by the Agent. Upon any
change in the Applicable Commitment Fee, the Agent shall promptly notify the
Company and the Banks of the new Applicable Commitment Fee.
"Applicable Currency" means, as to any particular Borrowing or Advance
or payment of principal or interest thereon, the Available Currency in which it
is denominated, made, and payable.
"Applicable Interest Margin" means, for any LIBOR Borrowing or Prime
Rate Borrowing and as of any date of its determination:
(a) as of the date of this Agreement through the time when the
Applicable Interest Margin may be calculated by the Agent pursuant to paragraph
(b) below from the September 30, 1995, financial statements of the Company,
1.000% for LIBOR Borrowings and 0.00% for Prime Rate Borrowings; and
(b) thereafter, an amount equal to the percentage amount for LIBOR
Borrowings or Prime Rate Borrowings set forth in the table below opposite the
applicable ratio of (i) the consolidated Debt of the Company as of the end of
the fiscal quarter then most recently ended to (ii) the consolidated Total
Capital of the Company as of the end of the fiscal quarter then most recently
ended.
<TABLE>
<CAPTION>
Applicable Interest Margin Applicable Interest Margin
Debt to -------------------------- --------------------------
Total Capital LIBOR Borrowing Prime Rate Borrowing
------------- --------------- --------------------
<S> <C> <C>
> 0.40 1.375% 0.000%
<= 0.40 but > 0.30 1.000% 0.000%
<= 0.30 0.875% 0.000%
</TABLE>
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The Agent shall determine the Applicable Interest Margin based upon the most
recent financial statements dated as of the end of a fiscal quarter delivered
to the Agent pursuant to Section 5.2(b). Any adjustments to the Applicable
Interest Margin shall become effective three Business Days following the date
of delivery of such financial statements to the Agent; provided, however, that
if such financial statements are not delivered when required hereunder, the
Applicable Interest Margin shall increase to the maximum percentage amount set
forth in the table above from date when such financial statements were required
to be delivered to the Agent hereunder until received by the Agent. Upon any
change in the Applicable Interest Margin, the Agent shall promptly notify the
Company and the Banks of the new Applicable Interest Margin.
"Applicable Lending Office" means, with respect to each Bank and for
any particular type of transaction, the office of such Bank set forth in
Schedule I to this Agreement (or in the applicable Assignment and Acceptance by
which such Bank joined this Agreement) as its applicable lending office for
such type of transaction or such other office of such Bank as such Bank may
from time to time specify to the Company and the Agent for such particular type
of transaction.
"Applicable Payment Office" means, with respect to the Agent and for
any particular type of transaction, the office of the Agent set forth in
Schedule I to this Agreement as its applicable payment office for such type of
transaction or such other office of the Agent as the Agent may from time to
time specify to the Company for such particular type of transaction.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and an Eligible Assignee, and accepted by the Agent, in
substantially the form of the attached Exhibit E.
"Available Currencies" means Dollars, Pounds Sterling, German Marks,
French Francs, Italian Lira, Dutch Guilders, Japanese Yen, Canadian Dollars,
Australian Dollars, Singapore Dollars, and any other currency approved by the
Banks which is freely transferable and convertible into Dollars and in which
dealings in deposits are carried out in the London interbank market.
"Banks" means the lenders listed on the signature pages of this
Agreement and each Eligible Assignee that shall become a party to this
Agreement pursuant to Section 8.5(b).
"Borrowers" means the Company and any Subsidiary of the Company
joining this Agreement as a Borrower pursuant to Section 2.12.
"Borrower Account" means, with respect to any Borrower, the principal
operating account of such
-3-
<PAGE> 9
Borrower with the Agent or any other account of such Borrower with the Agent
which is designated as such Borrower's "Borrower Account" in writing by such
Borrower.
"Borrowing" means any outstanding borrowing of principal under this
Agreement accruing interest on the same basis, whether created by new advances
of principal under the revolving credit facility created under Section 2.1 or
by the continuation or conversion of existing borrowings of principal under
Section 2.4(a).
"Borrowing Request" means a Borrowing Request in substantially the
form of Exhibit B executed by a Responsible Officer of the applicable Borrower
and delivered to the Agent.
"Business Day" means any Monday through Friday during which commercial
banks are open for business in Dallas, Texas, and, if the applicable Business
Day relates to any LIBOR Borrowing, on which dealings in the Applicable
Currency for such LIBOR Borrowing are carried on in the London interbank market
in such Applicable Currency.
"Capital Leases" means, for any Person, any lease of any property by
such Person which would, in accordance with generally accepted accounting
principles, be required to be classified and accounted for as a capital lease
on the balance sheet of such Person.
"Change of Control" means, with respect to the Company, the direct or
indirect acquisition by any person (as such term is used in Section 13(d) and
Section 14(d)(2) of the Securities and Exchange Act of 1933) or related persons
constituting a group (as such term is used in Rule 13d-5 under the Exchange
Act) other than Wembley, Ltd., a British Virgin Islands corporation, or any of
its Affiliates, of (a) beneficial ownership of issued and outstanding shares of
voting stock of the Company, the result of which acquisition is that such
person or such group possesses in excess of 50% of the combined voting power of
all then-issued and outstanding Voting Securities of the Company, or (b) the
power to elect, appoint, or cause the election or appointment of at least a
majority of the members of the board of directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Commitment" means, for any Bank, the amount set opposite such Bank's
name on the signature pages hereof as its Commitment, or if such Bank has
entered into any Assignment and Acceptance, as set forth for such Bank as its
Commitment in the Register maintained by the Agent pursuant to Section 8.5(c),
as such amount may be reduced or terminated pursuant to Section 2.1(a)(ii) or
Section 6.2.
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<PAGE> 10
"Commitment Letter" means the letter commitment agreement dated as of
June 15, 1995, between NationsBank and the Company regarding the commitment to
provide for this Agreement and certain fees payable to NationsBank thereunder.
"Company" means Gundle/SLT Environmental, Inc., a Delaware corporation.
"Compliance Certificate" means a compliance certificate executed by a
Responsible Officer of the Company in substantially the form of Exhibit A.
"Continuation/Conversion Request" means a Continuation/Conversion
Request in substantially the form of Exhibit C executed by a Responsible
Officer of the applicable Borrower and delivered to the Agent.
"Credit Documents" means this Agreement, the Notes, the Letter of
Credit Documents, the Guaranties, and each other agreement, instrument, or
document executed at any time in connection with this Agreement.
"Credit Obligations" means all principal, interest, fees,
reimbursements, indemnifications, and other amounts now or hereafter owed by
the Company and/or the other Borrowers to the Agent and/or the Banks under this
Agreement, the Notes, and the other Credit Documents and any increases,
extensions, and rearrangements of those obligations under any amendments,
supplements, and other modifications of the documents and agreements creating
those obligations.
"Credit Parties" means the Company, the other Borrowers, and the
Guarantors.
"Debt" means, with respect to any Person and as of any date of its
determination, without duplication (a) indebtedness of such Person for borrowed
money, (b) obligations of such Person evidenced by notes, bonds, debentures, or
other similar instruments, (c) obligations of such Person as lessee under
Capital Leases, (d) obligations of such Person to pay the deferred purchase
price of property or services, other than current trade debt incurred in the
ordinary course of business and not in connection with the borrowing of money,
(e) obligations of such Person under or relating to letters of credit,
guaranties, note purchase agreements, investment agreements, and other
obligations of such Person which support the repayment of the types of
indebtedness and obligations of others referred to in parts (a) through (d) of
this definition, and (f) nonrecourse indebtedness or obligations of others of
the kinds referred to in parts (a) through (e) of this definition secured by
any Lien on or in respect of any property of such Person. For the purposes of
determining the amount of any Debt, the amount of any Debt described in clause
(e) of the definition of Debt shall be valued at the full amount of the
contingent liability thereunder and the amount of any Debt described in clause
(f) shall be valued at the lesser of the amount of the Debt secured or the
value of the property securing such Debt.
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"Default" means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
"Default Rate" means, with respect to any amount due hereunder, a per
annum interest rate equal to (a) if such amount is either outstanding principal
accruing interest based upon a rate established elsewhere in this Agreement or
accrued but unpaid interest thereon, the sum of (i) the interest rate
established elsewhere in this Agreement from time to time for such principal
amount, including any applicable margin, plus (ii) 2.00% per annum or (b) in
all other cases, the Adjusted Prime Rate in effect from time to time plus the
Applicable Interest Margin for Prime Rate Borrowings in effect from time to
time plus 2.00% per annum.
"Derivatives" means any swap, hedge, cap, collar, or similar
arrangement providing for the exchange of risks related to price changes in any
commodity, including money.
"Dollars or $" means lawful money of the United States of America.
"Dollar Equivalent" means, with respect to any Applicable Currency and
as of any date of its determination, (a) if such Applicable Currency is other
than Dollars, the amount of Dollars which the stated amount of such Applicable
Currency could purchase at the Exchange Rate on the date of determination, or
(b) if such Applicable Currency is Dollars, the amount thereof.
"EBITDA" means, with respect to any Person and for any period of its
determination, the consolidated net income of such Person for such period, plus
the consolidated interest expense, taxes, and depreciation and amortization of
such Person for such period.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Eligible Assignee" means any commercial bank organized under the laws
of the United States, any of the countries comprising the United Kingdom,
France, Germany, Japan, Italy, or Canada, or any political subdivision of any
thereof, and having Dollar Equivalent primary capital (or its equivalent) of
not less than $500,000,000 and approved by the Agent and, if the proposed
assignee is not an Affiliate of a Bank, approved by the Company.
"Environmental Law" means all federal, state, and local laws, rules,
regulations, ordinances, orders, decisions, agreements, and other requirements
now or hereafter in effect relating to the pollution, destruction, loss, or
injury of the environment, the
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<PAGE> 12
presence of any contaminant in the environment, the protection, cleanup,
remediation, or restoration of the environment, the creation, handling,
transportation, use, or disposal of any waste product in the environment,
exposure of persons to any contaminant, waste, or hazardous substance in the
environment, and the health and safety of employees in relation to their
environment.
"Event of Default" has the meaning specified in Section 6.1.
"Exchange Rate" means, in relation to the exchange of an amount of
Dollars with another Applicable Currency and as of any date of its
determination, the rate of exchange offered by the Agent as its exchange rate
on the date of determination for the exchange of the applicable amount of
Dollars with such other Applicable Currency.
"Existing Letters of Credit" means the commercial and standby letters
of credit issued by the Issuing Bank for the account of the Company prior to
the date of this Agreement and listed in the attached Schedule II under
Existing Letters of Credit.
"Federal Funds Rate" means, for any period, a fluctuating per annum
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for any such day
on such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any of its successors.
"Financial Statements" means the audited financial statements of the
Company and SLT Environmental, Inc., referred to in Section 4.7(a).
"Guaranties" means the Guaranties in substantially the form of Exhibit
G dated as of July 27, 1995, made by GSE Lining Technology, Inc., a Delaware
corporation, and GSE International, Inc., a Delaware corporation, any
Guaranties executed pursuant to Section 5.8, and any other guaranty of the
Credit Obligations now or hereafter executed.
"Guarantors" means GSE Lining Technology, Inc., a Delaware
corporation, GSE International, Inc., a Delaware corporation, any Subsidiary of
the Company which executes a Guaranty pursuant to Section 5.8, and any other
Person now or hereafter obligated to the Agent or the Banks under a Guaranty.
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"Hazardous Materials" means any substance or material identified as a
hazardous substance pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended and as now or hereafter in
effect; any substance or material regulated as a hazardous waste pursuant to
the Resource Conservation and Recovery Act of 1976, as amended and as now or
hereafter in effect; and any substance or material designated as a hazardous
substance or hazardous waste pursuant to any Environmental Law. "Hazardous
Materials" shall include, without limitation, pollutants, contaminants,
flammable substances and materials, explosives, radioactive materials, oil,
petroleum and petroleum products, chemical liquids and solids, polychlorinated
biphenyls, asbestos, toxic substances, and similar substances and materials.
"Highest Lawful Rate" means the maximum lawful interest rate, if any,
that at any time or from time to time may be contracted for, charged, or
received under the laws applicable to the relevant Bank which are presently in
effect or, to the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws now allow. The maximum lawful rate under this
Agreement shall be the weekly indicated rate ceiling under Article 5069-1.04 of
the Texas Revised Civil Statutes, unless any other lawful rate ceiling exceeds
the rate ceiling so determined, and then the higher rate ceiling shall apply.
"Intangible Assets" means, with respect to any Person and as of any
date of its determination, the goodwill, patents, trade names, trade marks,
copyrights, franchises, experimental expense, organization expense, unamortized
debt discount and expense, deferred assets (other than prepaid insurance and
prepaid taxes), the excess of cost of shares acquired over book value of
related assets, and such other assets of such Person as are properly classified
as "intangible assets" in accordance with generally accepted accounting
principles.
"Interest Period" means, with respect to each LIBOR Borrowing, the
period commencing on the date of such LIBOR Borrowing and ending on the last
day of the period selected by the applicable Borrower pursuant to the
provisions below (under Section 2.4(a)(ii), each continuation or conversion
creates a new Borrowing). The duration of each such Interest Period shall be
one, two, three, or six months, in each case as the applicable Borrower may
select in the applicable Borrowing Request or Continuation/Conversion Request
(unless there shall exist any Default or Event of Default, in which case the
Borrower may only select one month Interest Periods); provided, however, that:
(a) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day; provided that
if such extension would
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<PAGE> 14
cause the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the next
preceding Business Day;
(b) any Interest Period which begins on the last Business Day of
the 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 the calendar month in which it would have ended if there
were a numerically corresponding day in such calendar month; and
(c) the applicable Borrower may not select an Interest Period for
any LIBOR Borrowing which ends after any date when outstanding Borrowings must
be repaid unless, after giving effect to such selection, the aggregate
outstanding Dollar Equivalent principal amount of Borrowings made to such
Borrower that are Prime Rate Borrowings and Borrowings made to such Borrower
that are LIBOR Borrowings having Interest Periods which end on or before such
repayment date shall be at least equal to or greater than the Dollar Equivalent
principal amount of the Borrowings due and payable on or before such date (and
therefore in no event shall any Interest Periods extend beyond the Maturity
Date).
"Interim Financial Statements" means the quarter end financial
statements of SLT Environmental, Inc., referred to in Section 4.7(b).
"Issuing Bank" means NationsBank and any successor issuing bank
pursuant to Section 7.7.
"Joinder Agreement" a Joinder Agreement in substantially the form of
Exhibit H executed by a Responsible Officer of the relevant Subsidiary of the
Company joining this Agreement as a Borrower pursuant to Section 2.12 and each
other Borrower and delivered to the Agent.
"LIBOR" means, with respect to any Borrowing, the per annum interest
rate quoted to the Agent by the funding affiliate of the Agent in London,
England, at which deposits, in the Applicable Currency, in an amount
substantially equal to the amount of the LIBOR Rate Advance of the Agent
comprising part of such Borrowing, and for a duration substantially equal to
the Interest Period for such Borrowing, are offered to the principal office of
such funding affiliate of the Agent in London, England, by such funding
affiliate's correspondent banks in the London interbank market two Business
Days before the date of such Borrowing.
"LIBOR Advance" means any Advance which is part of a LIBOR Borrowing.
"LIBOR Borrowing" means any Borrowing which bears interest based upon
the LIBOR, as determined in accordance with Section 2.4.
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"Letter of Credit" means any commercial or standby letter of credit
issued by the Issuing Bank for the account of a Borrower pursuant to the terms
of this Agreement, including the Existing Letters of Credit.
"Letter of Credit Application" means the Issuing Bank's standard form
letter of credit application for either a commercial or standby letter of
credit, as the case may be, which has been executed by a Borrower and accepted
by the Issuing Bank in connection with the issuance of a Letter of Credit.
"Letter of Credit Application Amendment" means the Issuing Bank's
standard form application to amend letter of credit for either a commercial or
standby letter of credit, as the case may be, which has been executed by a
Borrower and accepted by the Issuing Bank in connection with the increase or
extension of a Letter of Credit.
"Letter of Credit Collateral Account" means a special cash collateral
account pledged to the Agent containing cash deposited pursuant to Section
2.2(c) and 6.4 to be maintained with the Agent in accordance with Section
2.2(g).
"Letter of Credit Documents" means all Letters of Credit, Letter of
Credit Applications, Letter of Credit Application Amendments, and agreements,
documents, and instruments entered into in connection with or relating thereto.
"Letter of Credit Exposure" means, as of any date of its
determination, the aggregate outstanding undrawn amount of Letters of Credit
plus the aggregate of the reimbursement obligations of the Borrowers under the
Letter of Credit Applications and this Agreement.
"Letter of Credit Sublimit" means $15,000,000, or such greater amount
as may be agreed to in writing by the Issuing Bank, the Agent, and the Majority
Banks from time to time.
"Lien" means any mortgage, lien, pledge, charge, deed of trust,
security interest, encumbrance, or other type of preferential arrangement to
secure or provide for the payment of any obligation of any Person, whether
arising by contract, operation of law, or otherwise (including any title
retention for such purposes under any conditional sale agreement, any Capital
Lease, or any other title transfer or retention agreement).
"Majority Banks" means, at any time, Banks holding at least 66-2/3% of
the then aggregate unpaid Dollar Equivalent principal amount of the Notes held
by the Banks and the Letter of Credit Exposure of the Banks at such time;
provided that if no such principal amount or Letter of Credit Exposure is then
outstanding, "Majority Banks" shall mean Banks having at least 66-2/3% of the
aggregate amount of the Commitments at such time.
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"Material Adverse Change" means any material adverse change in the
business, operations, or financial condition of the Company and its
Subsidiaries, taken as a whole, since the date of the Financial Statements or
Interim Financial Statements or since the date of this Agreement.
"Material Subsidiary" means, as of any date of its determination, GSE
Lining Technology, Inc., a Delaware corporation, GSE International, Inc., a
Delaware corporation, and each other Subsidiary of the Company organized under
the laws of the United States of America or any political subdivision thereof
other than such domestic Subsidiaries of the Company which do not (a) have
aggregate assets in excess of 5% of the consolidated assets of the Company as
of the end of the most recently ended fiscal year of the Company or (b) have
aggregate annual revenues as of the end of the most recent fiscal year of the
Company which exceed 5% of the consolidated total revenues of the Company for
such fiscal year (or if any such Subsidiaries are acquired during any fiscal
year, on a pro forma basis, such Subsidiaries would have had aggregate annual
revenues in excess of such amount during such fiscal year of the Company).
"Maturity Date" means September 30, 2000, as such date may be extended
pursuant to Section 2.1(a)(iii).
"Minimum Borrowing Amount" means, with respect to any Borrowing,
$1,000,000 or such lesser amount as may be agreed to by the Agent with respect
to such Borrowing.
"Minimum Borrowing Multiple" means (a) $100,000, with respect to any
Borrowing comprised of Dollars, (b) an amount sufficient to make the amount of
each Bank's Advance which is part of the Borrowing greater than the minimum
standard trading amount for the Applicable Currency in the London interbank
market, with respect to any Borrowing denominated in any Applicable Currency
other than Dollars, or (c) or such lesser amount as may be agreed to by the
Borrowers and the Agent with respect to any Borrowing.
"NationsBank" means NationsBank of Texas, N.A., in its individual
capacity.
"Net Worth" means, with respect to any Person and as of any date of
its determination, the excess of the assets of such Person over the liabilities
of such Person.
"Note" means a promissory note of a Borrower payable to the order of a
Bank, in substantially the form of the attached Exhibit D, evidencing
indebtedness of such Borrower to such Bank resulting from Advances made by such
Bank to such Borrower.
"PBGC" means Pension Benefit Guaranty Corporation or its successor.
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<PAGE> 17
"Permitted Debt" means all of the following Debt:
(a) the Credit Obligations;
(b) unsecured Debt of the Company and its Subsidiaries provided
that at the time of incurrence thereof and after giving effect thereto and to
the application of the proceeds thereof the Company is in compliance and would
remain in compliance with the terms of this Agreement, including Section 5.5 of
this Agreement;
(c) secured Debt of the Company and its Subsidiaries for the
purposes described in clause (g) of the definition of Permitted Liens which is
secured only by the Liens described in clause (g) of the definition of
Permitted Liens provided that the aggregate outstanding Dollar Equivalent
principal amount of such Debt plus the secured Debt permitted by clause (d)
below does not exceed 5% of the consolidated Total Capital of the Company as of
the end of the most recently ended fiscal year of the Company;
(d) secured Debt of any Subsidiary of the Company organized under
the laws of any jurisdiction other than the United States or any political
subdivision thereof secured only by the Liens described in clause (h) of the
definition of Permitted Liens provided that the aggregate outstanding Dollar
Equivalent principal amount of such Debt plus the secured Debt permitted by
clause (c) above does not exceed 5% of the consolidated Total Capital of the
Company as of the end of the most recently ended fiscal year of the Company;
(e) secured long-term Debt of GSE Lining Technology GmbH under
financing provided by Dresdner Bank AG and by Commerzbank AG in October 1992 in
the original aggregate principal amount of DM 6,300,000, and any renewals and
extensions thereof which do not increase the principal amount thereof;
(f) secured revolving Debt of GSE Lining Technology GmbH reflected in
the Interim Financial Statements and any renewals and extensions thereof which
do not increase the principal amount thereof provided that the same has been
fully repaid and all Liens securing the same have been released on or before
December 31, 1995; and
(g) Debt owed by any Subsidiary of the Company to the Company or
any other Subsidiary of the Company.
"Permitted Derivatives" means (a) any Derivative used by the Company
or any of its Subsidiaries in such Person's respective business operations in
aggregate notional quantities not to exceed the reasonably anticipated
consumption of such Person of the underlying commodity for the relevant period,
but no Derivatives which are speculative in nature and (b) any other
Derivatives obtained by the Company or any of its
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<PAGE> 18
Subsidiaries pursuant to a plan or policy approved by the Board of Directors of
the Company.
"Permitted Foreign Country" shall mean each of Germany, Singapore,
Australia, Japan, France, Italy, Canada, and each of the countries comprising
the United Kingdom, so long as the rating on such country's long-term debt is
rated AA or better by Standard and Poor's Ratings Group or Aa or better by
Moody's Investors Services, Inc.
"Permitted Investments" means all of the following investments:
(a) investments by the Company and its Subsidiaries in
Subsidiaries, including any investment in a corporation which, after giving
effect to such investment, will become a Subsidiary of the Company;
(b) investments by the Company and its Subsidiaries in other
Persons which are engaged in the same general nature of business as the
Company;
(c) investments in commercial paper and bankers' acceptances
maturing in twelve months or less from the date of issuance and which, at the
time of acquisition by the Company or any Subsidiary of the Company, is
accorded the highest rating by Standard & Poors Corporation or Moody's
Investors Services, Inc;
(d) investments in direct obligations of the United States of
America, or investments in any Person which investments are guaranteed by the
full faith and credit of the United States of America, in either case maturing
in twelve months or less from the date of acquisition thereof by the Company or
any Subsidiary of the Company and repurchase agreements having a term of less
than one year and fully collateralized by such obligations which are entered
into with banks or trust companies described in clause (d) below or brokerage
companies having a Dollar Equivalent net worth in excess of $100,000,000;
(e) investments in direct obligations of Permitted Foreign
Countries (or central banks thereof), in any case maturing in twelve months or
less from the date of acquisition thereof by the Company or any Subsidiary and
repurchase agreements having a term of less than one year relating to and fully
collateralized by such obligations, which repurchase agreements are entered
into with banks or trust companies described in clauses (f) or (g) below or
brokerage companies having a net worth in excess of $250,000,000; provided that
the aggregate Dollar Equivalent amount of such investments in obligations of
any Permitted Foreign Country (or central bank thereof) does not exceed
$1,000,000;
(f) investments in time deposits, certificates of deposit, or
Eurodollar certificates of deposit maturing within one year from the date such
investment is made,
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<PAGE> 19
issued by a bank or trust company organized under the laws of the United States
or any state thereof having Dollar Equivalent capital, surplus, and undivided
profits aggregating at least $100,000,000 or a foreign branch thereof and whose
long-term certificates of deposit are, at the time of acquisition thereof by
the Company or Subsidiary of the Company, rated A by Standard & Poor's
Corporation or A-2 by Moody's Investors Services, Inc.;
(g) investments in time deposits or certificates maturing within
one year from the date such investment is made, issued by a bank or trust
company organized under the laws of any Permitted Foreign Country or any
political subdivision thereof, having capital, surplus, and undivided profits
aggregating at least $500,000,000 and whose holding company's long-term debt
is, at the time of acquisition thereof by the Company or any of its
Subsidiaries, rated A by Standard & Poor's Ratings Group or A-2 by Moody's
Investors Services, Inc.; provided that the aggregate Dollar Equivalent amount
of such investments in any such bank or trust company does not exceed
$5,000,000;
(h) investments in the form of loans or advances in the usual and
ordinary course of business to officers, directors, and employees of the
Company or its Subsidiaries for expenses (including moving expenses related to
a transfer) incidental to carrying on the business of the Company and its
Subsidiaries provided that the Dollar Equivalent principle amount of such
investments does not exceed 2% of the consolidated Total Capital of the Company
as of the end of the most recently ended fiscal year of the Company;
(i) investments in the form of receivables arising from the sale
of goods and services in the ordinary course of business of the Company and its
Subsidiaries;
(j) investments in corporations constituting the payment for or
settlement of a claim owed to the Company or any Subsidiary of the Company
received by the Company or such Subsidiary of the Company pursuant to a
bankruptcy, reorganization, arrangement, or insolvency proceeding, or other
proceedings for relief under any bankruptcy or similar law or laws for the
relief of debtors, instituted by or against such corporation; and
(k) investments not otherwise qualifying as a Permitted Investment
provided that the Dollar Equivalent principle amount of such investments does
not exceed 3% of the consolidated Total Capital of the Company as of the end of
the most recently ended fiscal year of the Company.
In valuing any investments for the purpose of applying the limitations set
forth in this Agreement, such investments shall be taken at the original cost
thereof, without allowance for any subsequent write-offs or appreciation or
depreciation therein, but less any amount repaid or recovered on account of
capital or principal. For purposes of this
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<PAGE> 20
Agreement, at any time when a corporation becomes a Subsidiary of the Company,
all investments of such corporation at such time shall he deemed to have been
made by such corporation, as a Subsidiary of the Company, at such time.
"Permitted Liens" means all of the following Liens:
(a) Liens securing the Credit Obligations;
(b) Liens for property taxes and assessments or governmental
charges or levies and Liens securing claims or demands of mechanics and
materialmen, provided that payment thereof is made in accordance with Section
5.19;
(c) Liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired, or in
respect of which the Company or any Subsidiary shall at any time in good faith
be prosecuting an appeal or proceeding for a review and in respect of which a
stay of execution pending such appeal or proceeding for review shall have been
secured;
(d) Liens incidental to the conduct of business or the ownership
of properties and assets (including warehousemen's and attorneys' liens and
statutory landlords' liens) and Liens to secure the performance of bids,
tenders, or trade contracts, or to secure statutory obligations, surety or
appeal bonds, or other liens of like general nature incurred in the ordinary
course of business and not in connection with the borrowing of money, provided
in each case, the obligation secured is not overdue or, if overdue, is being
contested in good faith by appropriate actions or proceedings and for which
adequate reserves have been established in accordance with generally accepted
accounting principles;
(e) Liens in the form of minor survey exceptions or minor
encumbrances, easements, or reservations, or rights of others for
rights-of-way, utilities, and other similar purposes, or zoning or other
restrictions as to the use of real properties, which are necessary for the
conduct of the activities of the Company and its Subsidiaries or which
customarily exist on properties of corporations engaged in similar activities
and similarly situated and which do not in any event materially impair their
use in the operation of the business of the Company and its Subsidiaries taken
as a whole;
(f) Liens securing the Debt of any Subsidiary of the Company to
the Company or to another Subsidiary of the Company;
(g) Liens (i) existing on the date of this Agreement and described
in Schedule II provided that such Liens shall cover solely the property
described in such Schedule and shall secure only the Debt described as secured
by such Liens in such Schedule and (ii) given to secure the payment of the
purchase price incurred in
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<PAGE> 21
connection with the acquisition or construction of fixed assets useful and
intended to be used in carrying on the business of the Company or any of its
Subsidiaries, including Liens existing on such fixed assets at the time of
acquisition thereof or at the time of acquisition by the Company or any of its
Subsidiaries of any business entity then owning such fixed assets which becomes
a Subsidiary concurrently with such acquisition whether or not such existing
Liens were given to secure the payment of the purchase price of the fixed
assets to which they attach so long as they were not incurred, extended, or
renewed in contemplation of such acquisition, provided that in each case such
Liens shall attach solely to the fixed assets acquired or purchased and the
proceeds thereof and such Liens shall attach within 365 days of the completion
of such acquisition or purchase; and
(h) Liens on assets outside of the United States granted by any
Subsidiary of the Company which is organized under the laws of any jurisdiction
other than the United States or any political subdivision thereof given to
secure Debt described in clause (d) of the definition of Permitted Debt; and
(i) any extension, renewal, or replacement of any Lien permitted
by the preceding clauses (a) through (h) covering the same property theretofore
subject to such Lien incurred in connection with the extension, renewal, or
refunding of the Debt secured thereby (without increase in principal amount) so
long as such Debt is otherwise permitted by the terms of this Agreement.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, or other entity, or a government or any political subdivision or
agency thereof, or any trustee, receiver, custodian, or similar official.
"Plan" means any (a) employee medical benefit plan under Section 3(1)
of ERISA, (b) employee pension benefit plan under Section 3(2) of ERISA, (c)
multiemployer plan under Section 4001(a)(3) of ERISA, and (d) employee account
benefit plan under Section 3(2) of ERISA.
"Prime Rate" means a fluctuating per annum interest rate in effect
from time to time equal to the rate of interest publicly announced by the Agent
as its prime rate, whether or not any Borrower has notice thereof.
"Prime Rate Advance" means any Advance which is part of a Prime Rate
Borrowing.
"Prime Rate Borrowing" means any Borrowing which bears interest based
upon the Adjusted Prime Rate, as determined in accordance with Section 2.4.
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"ratable share" or "pro rata share" means, with respect to any Bank
and as of any date of its determination, either (a) the ratio of such Bank's
Commitment at such time to the aggregate Commitments at such time or (b) if the
Commitments have been terminated, the ratio of such Bank's aggregate
outstanding Advances and share of the Letter of Credit Exposure at such time to
the aggregate outstanding Advances and Letter of Credit Exposure at such time.
"Related Parties" means, with respect to any Person, such Person's
stockholders, directors, officers, employees, agents, Affiliates, successors,
and assigns, and their respective stockholders, directors, officers, employees,
and agents, and, with respect to any Person that is an individual, such
Person's family relations and heirs.
"Responsible Officer" means, with respect to any Person, such Person's
Chief Executive Officer, President, Chief Financial Officer, Vice Presidents,
Secretary, and Treasurer.
"Revolving Credit Commitment Termination Date" means September 30,
1997, as such date may be extended pursuant to Section 2.1(a)(iii).
"Subsidiary" means, with respect to any Person, any other Person, a
majority of whose outstanding Voting Securities (other than directors'
qualifying shares) shall at any time be owned by such Person or one or more
Subsidiaries of such person.
"Tangible Assets" means, with respect to any Person and as of any date
of its determination, the assets of such Person less the Intangible Assets of
such Person.
"Tangible Net Worth" means, with respect to any Person and as of any
date of its determination, the Net Worth of such Person less the Intangible
Assets of such Person.
"Total Capital" means, with respect to any Person and as of any date
of its determination, the Debt of such Person plus the Net Worth of such
Person.
"Type" has the meaning set forth in Section 1.4.
"Voting Securities" means (a) with respect to any corporation, any
capital stock of the corporation having general voting power under ordinary
circumstances to elect directors of such corporation (irrespective of whether
at the time stock of any other class or classes shall have or might have
special voting power or rights by reason of the happening of any contingency),
and (b) with respect to any partnership, any partnership interest or other
ownership interest having general voting power to elect the general partner or
other management of the partnership or other Person.
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1.2 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding."
1.3 Accounting Terms; Changes in Accounting. All accounting
terms, definitions, ratios, and other tests described herein, except as
expressly set forth in this Agreement, shall be construed in accordance with
generally accepted accounting principles applied on a consistent basis with
those applied in the preparation of the Financial Statements of the Company.
The Company and its Subsidiaries shall prepare their financial statements in
accordance with generally accepted accounting principles unless otherwise
approved in writing by the Agent. When the term "consolidated" is used with
respect to financial statements of the Company, or with respect to any ratio,
calculation, or amount regarding the Company, such term means the consolidated
financial statements, ratios, calculations, or amounts of the Company and its
consolidated subsidiaries.
1.4 Types of Advances. The "Type" of a Borrowing or related
Advance refers to the determination whether such Borrowing or related Advance
is an LIBOR Borrowing or LIBOR Advance or a Prime Rate Borrowing or Prime Rate
Advance, respectively.
1.5 Interpretation. Article, Section, Schedule, and Exhibit
references are to this Agreement, unless otherwise specified. All references
to instruments, documents, contracts, and agreements are references to such
instruments, documents, contracts, and agreements as the same may be amended,
supplemented, and otherwise modified from time to time, unless otherwise
specified. The word "including" shall mean "including but not limited to."
The word "or" shall mean "and/or" wherever necessary to prevent interpretation
of any provision against the Agent or the Banks. Whenever any Borrower has an
obligation under this Agreement and the Credit Documents the expense of
complying with that obligation shall be an expense of such Borrower unless
otherwise specified. Whenever any determination is to be made by the Agent or
any Bank, such determination shall be in such Person's sole discretion unless
otherwise specified in this Agreement. If any provision in this Agreement and
the Credit Documents is held to be illegal, invalid, not binding, or
unenforceable, such provision shall be fully severable and this Agreement and
the Credit Documents shall be construed and enforced as if such illegal,
invalid, not binding, or unenforceable provision had never comprised a part of
this Agreement and the Credit Documents, and the remaining provisions shall
remain in full force and effect. This Agreement and the Credit Documents have
been reviewed and negotiated by sophisticated parties with access to legal
counsel and shall not be construed against the drafter. In the event of a
conflict between this Agreement and the Credit Documents, this Agreement shall
control.
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ARTICLE 2. CREDIT FACILITIES.
2.1 Revolving Credit Facility.
(a) Commitment.
(i) Each Bank severally agrees, on the terms and
conditions set forth in this Agreement and for the purposes set forth in
Section 5.4, to make Advances to each Borrower requesting Borrowings under this
Agreement as such Bank's ratable share of such Borrowings requested by such
Borrower from time to time on any Business Day during the period from the date
of this Agreement until the Revolving Credit Commitment Termination Date
provided that the aggregate outstanding Dollar Equivalent principal amount of
Advances made by such Bank plus such Bank's ratable share of the Letter of
Credit Exposure shall not exceed such Bank's Commitment. Borrowings may be
made in any Available Currency. Borrowings must be made in an amount equal to
or greater than the Dollar Equivalent of the Minimum Borrowing Amount and be
made in multiples of the Minimum Borrowing Multiple for the Applicable
Currency. Within the limits expressed in this Agreement, each Borrower may
from time to time borrow, prepay, and reborrow Borrowings. The indebtedness of
each Borrower to the Banks resulting from the Advances made by the Banks shall
be evidenced by Notes made by such Borrower.
(ii) The Borrowers shall have the right, upon at
least five Business Days' advance notice to the Agent, to reduce ratably in
part or terminate in whole the Commitments. Each such notice shall specify the
amount of the reduction or the termination and shall be irrevocable and binding
on the Borrowers. Partial reductions shall be in a minimum amount of
$5,000,000 and be made in integral multiples of $1,000,000. The Commitments
cannot be reduced below the aggregate outstanding Dollar Equivalent principal
amount of Borrowings plus the Letter of Credit Exposure. Any reduction or
termination of the Commitments pursuant to this Section 2.1(a)(ii) shall be
permanent, with no obligation of the Banks to reinstate such Commitments.
(iii) Not earlier than 365 days prior but not later
than 90 days prior to the then current Revolving Credit Commitment Termination
Date, the Borrowers may by written notice to the Agent request the Banks to
extend the then current Revolving Credit Commitment Termination Date and
Maturity Date by one year each. Each Bank's determination whether or not to
extend shall be in such Bank's sole discretion. If the Borrowers provide such
notice to the Agent, the Agent shall consult with the Banks and notify the
Borrowers in writing not later than 60 days after such request whether the
Banks have elected to extend such dates for such additional periods. If the
Agent does not notify the Borrowers, the Banks shall be deemed to have elected
not to extend such dates. If the Banks elect to extend such dates, the Agent's
notice
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to the Borrowers to such effect shall automatically constitute an extension of
such dates without any further action by any Person.
(b) Method of Advancing.
(i) Each Borrowing shall be made pursuant to a
Borrowing Request given by the Borrower requesting the Borrowing to the Agent
in writing or by telecopy not later than the time required pursuant to Section
2.4(a)(i) to select the interest rate basis for the Borrowing. Each Borrowing
Request shall be fully completed and shall specify the information required
therein, and shall be irrevocable and binding on such Borrower unless such
Borrowing Request is rejected by the Agent as incomplete or improper. If the
Borrowing Request is accepted by the Agent, the Agent shall promptly forward
notice of the Borrowing to the Banks. Each Bank shall, before 2:00 p.m. (local
time at the Applicable Payment Office) on the date of the requested Borrowing,
make available from its Applicable Lending Office to the Agent at the Agent's
Applicable Lending Office, in immediately available funds, such Bank's ratable
share of such Borrowing. Subject to the satisfaction of all applicable
conditions precedent, after receipt by the Agent of such funds, the Agent shall
before close of business on the date requested for such Borrowing make such
Borrowing available to such Borrower in immediately available funds at the
Borrower Account of such Borrower.
(ii) Unless the Agent shall have received notice
from a Bank before the date of any Borrowing that such Bank shall not make
available to the Agent such Bank's ratable share of such Borrowing, the Agent
may assume that such Bank has made its ratable share of such Borrowing
available to the Agent on the date of such Borrowing in accordance with
paragraph (i) above and the Agent may, in reliance upon such assumption, make
available to the applicable Borrower on such date a corresponding amount. If
and to the extent that such Bank shall not have so made its ratable share of
such Borrowing available to the Agent, such Bank agrees that it shall pay
interest on such amount for each day from the date such amount is made
available to such Borrower by the Agent until the date such amount is paid to
the Agent by such Bank at, for Prime Rate Borrowings or LIBOR Borrowings
comprised of Dollars, the Federal Funds Rate in effect from time to time, or
for LIBOR Borrowings comprised of any Applicable Currency other than Dollars,
the LIBOR applicable to the Borrowing, provided that with respect to such Bank
in either case if such amount is not paid by such Bank by the end of the second
day after the Agent makes such amount available to such Borrower, the interest
rates specified above shall be increased by a per annum amount equal to 2.00%
on the third day and shall remain at such increased rate thereafter. Interest
on such amount shall be due and payable by such Bank upon demand by the Agent.
If such Bank shall pay to the Agent such amount and interest as provided above,
such amount so paid shall constitute such Bank's Advance as part of such
Borrowing for all purposes of this Agreement even though not made on the
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same day as the other Advances comprising such Borrowing. In the event that
such Bank has not repaid such amount by the end of the fifth day after such
amount was made available to such Borrower, such Borrower agrees to repay to
the Agent on demand such amount, together with interest on such amount for each
day from the date such amount was made available to such Borrower until the
date such amount is repaid to the Agent at the interest rate charged to such
Borrower for such Borrowing under the terms of this Agreement.
(iii) The failure of any Bank to make available its
ratable share of any Borrowing shall not relieve any other Bank of its
obligation, if any, to make available its ratable share of such Borrowing. No
Bank shall be responsible for the failure of any other Bank to honor such other
Bank's obligations hereunder, including any failure to make available any funds
as part of any Borrowing.
(c) Prepayment.
(i) Each Borrower may prepay the outstanding
principal amount of Borrowings made to such Borrower pursuant to written notice
given by such Borrower to the Agent in writing or by telecopy not later than
(A) 2:00 p.m. (Dallas, Texas time) on the fourth Business Day before the date
of the proposed prepayment, in the case of the prepayment of any LIBOR
Borrowing, or (B) 12:00 noon (Dallas, Texas time) on the same Business Day of
the proposed prepayment, in the case of the prepayment of any Prime Rate
Borrowing. Each such notice shall specify the Borrowing to be prepaid, the
amount of the prepayment, and the date of the prepayment and shall be
irrevocable and binding on such Borrower. Prepayments of Borrowings shall be
made in integral multiples of the Minimum Borrowing Multiple of the Applicable
Currency. If the prepayment would cause the aggregate outstanding Dollar
Equivalent principal amount of the LIBOR Borrowing being prepaid or the
aggregate outstanding principal amount of all Prime Rate Borrowings to be less
than the Minimum Borrowing Amount, the prepayment must be in the entire
outstanding principal amount of such LIBOR Borrowing or the entire outstanding
principal amount of all Prime Rate Borrowings, as the case may be. Upon
receipt of any notice of prepayment, the Agent shall give prompt notice of the
intended prepayment to the Banks. For each such notice given by such Borrower,
such Borrower shall prepay the specified Borrowing in the specified amount on
the specified date as set forth in such notice. The Borrowers shall have no
right to prepay any principal amount of any Borrowing except as provided in
this Section 2.1(c)(i).
(ii) Each prepayment of principal on any LIBOR
Borrowing pursuant to this Section 2.1(c) shall be accompanied by payment of
all accrued but unpaid interest on the principal amount prepaid and any amounts
required to be paid pursuant to Section 2.5 as a result of such prepayment.
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(iii) Following the Revolving Credit Commitment
Termination Date, all prepayments shall be applied to the required payments of
principal in the inverse order of maturity.
(d) Repayment. Each Borrower shall pay to the Agent for
the ratable benefit of the Banks the outstanding principal amount of the
Borrowings made to such Borrower which are outstanding on the Revolving Credit
Commitment Termination Date in equal quarterly installments of 1/12th of the
outstanding Dollar Equivalent principal amount of such Borrowings. The first
such equal quarterly installment shall be due and payable on the last day of
the first calendar quarter ending after the Revolving Credit Commitment
Termination Date, with subsequent equal quarterly installments due and payable
on the last day of each calendar quarter thereafter until the Maturity Date,
when the aggregate outstanding principal amount of all Borrowings shall become
due and payable. With respect to the equal quarterly installments, each
Borrower may select which Borrowings of such Borrower to repay in making the
equal quarterly installments, so long as the Dollar Equivalent amount of each
equal quarterly installment is equal to the required amount.
2.2 Letter of Credit Facility.
(a) Commitment for Letters of Credit. The Issuing Bank
shall, on the terms and conditions set forth in this Agreement and for the
purposes set forth in Section 5.4, issue, increase, and extend Letters of
Credit payable in any Available Currency at the request of any Borrower from
time to time on any Business Day during the period from the date of this
Agreement until the Revolving Credit Commitment Termination Date provided that
(i) the outstanding Dollar Equivalent amount of the Letter of Credit Exposure
shall not exceed the Letter of Credit Sublimit and (ii) the aggregate
outstanding Dollar Equivalent principal amount of Borrowings plus the Letter of
Credit Exposure shall not exceed the aggregate amount of the Commitments. No
Letter of Credit may have an expiration date later than 13 months after its
issuance date, and each Letter of Credit which is self-extending beyond its
expiration date must be cancelable upon at least 30 days notice given by the
Issuing Bank to the beneficiary of such Letter of Credit. No Letter of Credit
may have an expiration date later than 13 months after the Revolving Credit
Commitment Termination Date unless approved by the Issuing Bank, the Agent, and
the Banks. Each Letter of Credit must be in form and substance acceptable to
the Issuing Bank. The indebtedness of each Borrower to the Issuing Bank
resulting from Letters of Credit requested by such Borrower shall be evidenced
by the Letter of Credit Applications made by such Borrower.
(b) Requesting Letters of Credit. Each Letter of Credit
shall be issued, increased, or extended pursuant to a Letter of Credit
Application or Letter of Credit Application Amendment, as applicable, given by
the Borrower requesting the Letter of Credit to the Issuing Bank in writing or
by telecopy promptly confirmed in
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writing, such Letter of Credit Application or Letter of Credit Application
Amendment being given not later than 2:00 p.m. (Dallas, Texas, time) on the
second Business Day before the date of the proposed issuance, increase, or
extension of the Letter of Credit. Each Letter of Credit Application or Letter
of Credit Application Amendment shall be fully completed and shall specify the
information required therein (including the proposed form of the Letter of
Credit or change thereto), and shall be irrevocable and binding on such
Borrower unless such Letter of Credit Application or Letter of Credit
Application Amendment is rejected by the Issuing Bank as incomplete or
improper. If the Issuing Bank accepts the Letter of Credit Application or
Letter of Credit Application Amendment, the Issuing Bank shall give prompt
notice thereof to the Agent, and the Agent shall promptly inform the Banks of
the proposed Letter of Credit or change thereto. Subject to the satisfaction
of all applicable conditions precedent, the Issuing Bank shall before close of
business on the date requested by such Borrower for the issuance, increase, or
extension of such Letter of Credit issue, increase, or extend such Letter of
Credit to the specified beneficiary. Upon the date of the issuance, increase,
or extension of a Letter of Credit, the Issuing Bank shall be deemed to have
sold to each other Bank and each other Bank shall be deemed to have purchased
from the Issuing Bank a ratable participation in the related Letter of Credit.
The Issuing Bank shall notify the Agent of each Letter of Credit issued,
increased, or extended and the date and amount of each Bank's participation in
such Letter of Credit, and the Agent shall in turn notify the Banks.
(c) Prepayments of Letters of Credit. In the event that
any Letters of Credit shall be outstanding according to their terms after the
Revolving Credit Commitment Termination Date, upon request of the Agent each
Borrower which requested any such Letter of Credit shall pay to the Agent an
amount equal to the Letter of Credit Exposure allocable to such Letters of
Credit requested by such Borrower to be held in the Letter of Credit Collateral
Account. At any time, at the request of the Issuing Bank, the Agent shall
apply such cash collateral to any reimbursement obligation or other obligation
of such Borrower to the Issuing Bank under any Letter of Credit Application
related to such Letters of Credit.
(d) Reimbursements for Letters of Credit. With respect
to any Letter of Credit and in accordance with the related Letter of Credit
Application, the Borrower which requested such Letter of Credit agrees to pay
to the Issuing Bank on demand of the Issuing Bank any amount due to the Issuing
Bank under such Letter of Credit Application. If such Borrower does not pay
upon demand of the Issuing Bank any amount due to the Issuing Bank under any
Letter of Credit Application, in addition to any rights the Issuing Bank may
have under such Letter of Credit Application, the Issuing Bank may upon written
notice to the Agent request the satisfaction of such obligation by the making
of a Borrowing in the Applicable Currency. Upon such request, such Borrower
shall be deemed to have requested the making of a Borrowing in the Applicable
Currency in the amount of such obligation and the transfer of the
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proceeds thereof to the Issuing Bank. If the Applicable Currency is Dollars,
then the Issuing Bank may select the Borrowing to be a Prime Rate Borrowing or
a LIBOR Borrowing. The Agent shall promptly forward notice of such Borrowing
to such Borrower and the Banks, and each Bank shall, in accordance with the
procedures of Section 2.1(b), other than limitations on the size of Borrowings,
and notwithstanding the failure of any conditions precedent, make available
such Bank's ratable share of such Borrowing to the Agent, and the Agent shall
promptly deliver the proceeds thereof to the Issuing Bank for application to
such Bank's share of the obligations under such Letter of Credit. Each
Borrower hereby unconditionally and irrevocably authorizes, empowers, and
directs the Issuing Bank to make such requests for Borrowings on behalf of such
Borrower, and the Banks to make Advances to the Agent for the benefit of the
Issuing Bank in satisfaction of such obligations. The Agent and each Bank may
record and otherwise treat the making of such Borrowings as the making of a
Borrowing to such Borrower under this Agreement as if requested by such
Borrower. Nothing herein is intended to release any Borrower's obligations
under any Letter of Credit Application, but only to provide an additional
method of payment therefor. The making of any Borrowing under this Section
2.2(d) shall not constitute a cure or waiver of any Default or Event of Default
caused by any Borrower's failure to comply with the provisions of this
Agreement or any Letter of Credit Application.
(e) Obligations Unconditional. The obligations of each
Borrower and each Bank under this Agreement and the Letter of Credit
Applications to reimburse the Issuing Bank for draws under Letters of Credit
and to make other payments due in respect of Letters of Credit shall be
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement and the Letter of Credit Applications under all
circumstances, including: (i) any lack of validity or enforceability of any
Letter of Credit Document; (ii) any amendment, waiver, or consent to departure
from any Letter of Credit Document; (iii) the existence of any claim, set-off,
defense, or other right which any Borrower or any Bank may have at any time
against any beneficiary or transferee of any Letter of Credit (or any Persons
for whom any such beneficiary or any such transferee may be acting), the
Issuing Bank, or any other person or entity, whether in connection with the
transactions contemplated in this Agreement or any unrelated transaction; (iv)
any statement or any other document presented under such Letter of Credit
proving to be forged, fraudulent, invalid, or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect; or (v) payment
by the Issuing Bank under any Letter of Credit against presentation of a draft
or certificate which does not comply with the terms of such Letter of Credit;
provided, however, that nothing contained in this paragraph (e) shall be deemed
to constitute a waiver of any remedies of any Borrower or any Bank in
connection with the Letters of Credit or such Borrower's or such Bank's rights
under paragraph (f) below.
(f) Liability of Issuing Bank. The Issuing Bank shall
not be liable or responsible for, and each Borrower and each Bank assumes full
responsibility for:
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(i) the use which may be made of any Letter of Credit or any acts or omissions
of any beneficiary or transferee in connection therewith; (ii) the validity,
sufficiency, or genuineness of documents related to Letters of Credit, or of
any endorsement thereon, even if such documents should prove to be in any or
all respects invalid, insufficient, fraudulent, or forged; (iii) payment by the
Issuing Bank against presentation of documents which do not comply with the
terms of a Letter of Credit, including failure of any documents to bear any
reference or adequate reference to the relevant Letter of Credit; or (iv) any
other circumstances whatsoever in making or failing to make payment under any
Letter of Credit (INCLUDING THE ISSUING BANK'S OWN NEGLIGENCE); except that the
Issuing Bank shall be liable to any Borrower or any Bank to the extent of any
direct, as opposed to consequential, damages suffered by such Borrower or such
Bank which such Borrower or such Bank proves were caused by (A) the Issuing
Bank's gross negligence or willful misconduct in determining whether documents
presented under a Letter of Credit comply with the terms of such Letter of
Credit or (B) the Issuing Bank's willful failure to make or delay in making
lawful payment under any Letter of Credit after the presentation to it of
documentation strictly complying with the terms and conditions of such Letter
of Credit or the Issuing Bank's payment of greater than the maximum amount
permitted under any Letter of Credit. In furtherance and not in limitation of
the foregoing, the Issuing Bank may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary.
(g) Letter of Credit Collateral Account.
(i) If any Borrower is required to deposit funds
in the Letter of Credit Collateral Account pursuant to Section 2.2(c) or 6.4,
then the Borrowers and the Agent shall establish the Letter of Credit
Collateral Account and each Borrower shall execute any documents and
agreements, including the Agent's standard form assignment of deposit accounts,
that the Agent requests in connection therewith to establish the Letter of
Credit Collateral Account and grant the Agent a first priority security
interest in such account and the funds therein. Each Borrower hereby pledges
to the Agent and grants the Agent a security interest in the Letter of Credit
Collateral Account, whenever established, all funds held in the Letter of
Credit Collateral Account from time to time, and all proceeds thereof as
security for the payment of the Obligations.
(ii) So long as no Event of Default exists, (A)
the Agent may apply the funds held in the Letter of Credit Collateral Account
only to the reimbursement of any reimbursement obligations and other
obligations under Letter of Credit Documents, and (B) the Agent shall release
to each Borrower at such Borrower's written request any funds held in the
Letter of Credit Collateral Account allocable to the Letters of Credit
requested by such Borrower in an amount up to but not exceeding the excess, if
any (immediately prior to the release of any such funds), of the total
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amount of funds held in the Letter of Credit Collateral Account provided by
such Borrower over the Letter of Credit Exposure allocable to the Letters of
Credit requested by such Borrower. During the existence of any Event of
Default, the Agent may apply any funds held in the Letter of Credit Collateral
Account to any Credit Obligations in any order determined by the Agent,
regardless of any Letter of Credit Exposure which may remain outstanding. The
Agent may in its sole discretion at any time release to any Borrower any funds
held in the Letter of Credit Collateral Account allocable to the Letters of
Credit of such Borrower.
(iii) Funds held in the Letter of Credit Collateral
Account shall be invested in money market funds of the Agent or in another
investment if mutually agreed upon by each Borrower with funds held in the
Letter of Credit Collateral Account and the Agent, but the Agent shall have no
other obligation to make any other investment of the funds therein. The Agent
shall exercise reasonable care in the custody and preservation of any funds
held in the Letter of Credit Collateral Account and shall be deemed to have
exercised such care if such funds are accorded treatment substantially
equivalent to that which the Agent accords its own property, it being
understood that the Agent shall not have any responsibility for taking any
necessary steps to preserve rights against any parties with respect to any such
funds.
(h) Existing Letters of Credit. Upon the date of the
execution of this Agreement, the Issuing Bank shall be deemed to have sold to
each other Bank and each other Bank shall be deemed to have purchased from the
Issuing Bank a ratable participation in each Existing Letter of Credit. The
Issuing Bank shall arrange with the Agent and the Banks to prorate and ratably
distribute to the Banks the fees previously paid to the Issuing Bank with
respect to such Existing Letters of Credit.
2.3 Fees.
(a) Agent Fees. The Company shall pay to the Agent for
the benefit of the Agent the fees specified in the Commitment Letter in
accordance with the confidential terms of the Commitment Letter.
(b) Commitment Fee. The Company shall pay to the Agent
for the ratable benefit of the Banks a commitment fee equal to the Applicable
Commitment Fee per annum on the average daily amount by which (i) the aggregate
amount of the Commitments exceeds (ii) the aggregate outstanding Dollar
Equivalent principal amount of the Borrowings plus the Letter of Credit
Exposure, from the date of this Agreement until the termination of the
Commitments under this Agreement, whether by agreement, maturity, under Section
2.1(a)(ii), under Section 6.2, or otherwise. The commitment fee shall be due
and payable in arrears following the last day of each calendar quarter and the
Revolving Credit Commitment Termination Date or any earlier date any of the
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Commitments hereunder are terminated, in each case within ten days after demand
for payment by the Agent.
(c) Amendment Fee. The Company shall pay to the Agent
for the ratable benefit of the Banks a minimum amendment fee equal to $3,000
per Bank prior to the effectiveness of any amendment of this Agreement. This
fee is in addition to any third party, out-of-pocket expenses incurred by the
Agent and the Banks in connection with the amendment, and is not intended to
imply any agreement of the Agent or the Banks to amend this Agreement or any
Credit Document.
(d) Fees for Letters of Credit.
(i) For each Letter of Credit issued by the Issuing
Bank, the Borrower requesting the Letter of Credit shall pay to the Agent for
the ratable benefit of the Banks a letter of credit fee equal to the Applicable
Interest Margin for LIBOR Borrowings in effect at the time of determination
less 0.125% per annum on the face amount of such Letter of Credit for the
stated term of such Letter of Credit. Such Borrower shall pay the letter of
credit fee for such Letter of Credit, including any increased amount due in
respect of any increase or extension of such Letter of Credit, in advance
within ten days after demand for payment by the Agent.
(ii) For each Letter of Credit issued by the Issuing
Bank, the Borrower requesting the Letter of Credit shall pay to the Agent for
the benefit of the Issuing Bank a letter of credit fee equal to 0.125% per
annum on the face amount of such Letter of Credit for the stated term of such
Letter of Credit, with a minimum fee of $150. Such Borrower shall pay such
letter of credit fee for the Issuing Bank for such Letter of Credit, including
any increased amount due in respect of any increase or extension of such Letter
of Credit in advance within ten days after demand for payment by the Agent.
(iii) In the event any Borrower which has
established any Letter of Credit and the beneficiary thereof reduce the amount
of such Letter of Credit or cancel such Letter of Credit prior to its
expiration date, each Bank and the Issuing Bank shall refund to such Borrower
the unearned portion of the letter of credit fees paid pursuant to Sections
2.3(d)(i) and (ii) above with respect to such Letter of Credit. Each such
refund shall be made within ten days after demand for payment by such Borrower.
2.4 Interest.
(a) Election of Interest Rate Basis. Each Borrower may
select the interest rate basis for Borrowings made to such Borrower in
accordance with the terms of this Section 2.4(a):
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(i) Under the Borrowing Request provided to the
Agent in connection with the making of each Borrowing, if such Borrowing is
comprised of Dollars the Borrower requesting the Borrowing shall select such
Borrowing to accrue interest as a LIBOR Borrowing with any permitted Interest
Period or as a Prime Rate Borrowing, or if such Borrowing is comprised of
another Applicable Currency, such Borrower shall select such Borrowing to
accrue interest as a LIBOR Borrowing with any permitted Interest Period,
provided that at no time shall there be more than fifteen separate LIBOR
Borrowings outstanding. Such interest rate elections must be provided to the
Agent in writing or by telecopy not later than 2:00 p.m. (Dallas, Texas, time)
on the fourth Business Day before the date of any proposed LIBOR Borrowing or
12:00 noon (Dallas, Texas, time) on the same day of any proposed Prime Rate
Borrowing. In the case of each LIBOR Borrowing, upon determination by the
Agent, the Agent shall promptly notify such Borrower and the Banks of the
applicable interest rate.
(ii) With respect to the Borrowings requested by
each Borrower, such Borrower may continue or convert any portion of any LIBOR
Borrowing comprised of Dollars or Prime Rate Borrowing comprised of Dollars to
form new LIBOR Borrowings comprised of Dollars or Prime Rate Borrowings
comprised of Dollars and may continue or convert any portion of any LIBOR
Borrowing comprised of any Applicable Currency to form new LIBOR Borrowings
comprised of the same Applicable Currency in accordance with this paragraph.
Each such continuation or conversion shall be deemed to create a new Borrowing
for all purposes of this Agreement. Each such continuation or conversion shall
be made pursuant to a Continuation/Conversion Request given by such Borrower to
the Agent in writing or by telecopy not later than 2:00 p.m. (Dallas, Texas,
time) on the fourth Business Day before the date of the proposed continuation
or conversion. Each Continuation/Conversion Request shall be fully completed
and shall specify the information required therein, and shall be irrevocable
and binding on such Borrower. If the Continuation/Conversion Request is
accepted by the Agent, the Agent shall promptly forward notice of the
continuation or conversion to the Banks. In the case of any continuation or
conversion into LIBOR Borrowings, upon determination by the Agent, the Agent
shall notify such Borrower and the Banks of the applicable interest rate.
Continuations and conversions of Borrowings shall be made in integral multiples
of the Minimum Borrowing Multiple of the Applicable Currency. No continuation
or conversion shall be permitted if such continuation or conversion would cause
the aggregate outstanding Dollar Equivalent principal amount of any LIBOR
Borrowing which would remain outstanding or the aggregate outstanding principal
amount of all Prime Rate Borrowings which would remain outstanding to be less
than the Minimum Borrowing Amount. At no time shall there be more than fifteen
separate LIBOR Borrowings outstanding. Any conversion of an existing LIBOR
Borrowing is subject to Section 2.5. Subject to the satisfaction of all
applicable conditions precedent, the Agent and the Banks shall before close of
business on the date requested by such Borrower for the continuation or
conversion, make such continuation or conversion.
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(iii) At the end of the Interest Period for any
LIBOR Borrowing if the Borrower which requested such Borrowing has not
continued or converted such LIBOR Borrowing into new Borrowings as provided for
in paragraph (ii) above, or any Default or Event of Default exists, such
Borrower shall be deemed to have continued such LIBOR Borrowing as a new LIBOR
Borrowing with an Interest Period of one month. Each Prime Rate Borrowing
shall continue as a Prime Rate Borrowing unless the Borrower which requested
such Borrowing converts such Prime Rate Borrowing as provided for in paragraph
(ii) above.
(b) LIBOR Borrowings. Each LIBOR Borrowing shall bear
interest during its Interest Period at a per annum interest rate equal to the
sum of the LIBOR for such Borrowing plus the Applicable Interest Margin in
effect from time to time. Each Borrower shall pay to the Agent for the ratable
benefit of the Banks all accrued but unpaid interest on each LIBOR Borrowing
made to such Borrower on the last day of the applicable Interest Period for
such LIBOR Borrowing (and with respect to LIBOR Borrowings with Interest
Periods of greater than three months, on the date which is three months after
the first date of the Interest Period for such LIBOR Borrowing), on any date
when such LIBOR Borrowing is prepaid in full, and on the Maturity Date.
(c) Prime Rate Borrowings. Each Prime Rate Borrowing
shall bear interest at a per annum interest rate equal to the Adjusted Prime
Rate in effect from time to time plus the Applicable Interest Margin in effect
from time to time. Each Borrower shall pay to the Agent for the ratable
benefit of the Banks all accrued but unpaid interest on outstanding Prime Rate
Borrowings made to such Borrower on the last day of each calendar quarter, on
any date all Prime Rate Borrowings are prepaid in full, and on the Maturity
Date.
(d) Usury.
(i) If, with respect to any Bank and any
Borrower, the effective rate of interest contracted for by such Bank with such
Borrower under the Credit Documents, including the stated rates of interest and
fees contracted for hereunder and any other amounts contracted for under the
Credit Documents which are deemed to be interest, at any time exceeds the
Highest Lawful Rate, then the outstanding principal amount of the loans made by
such Bank to such Borrower hereunder shall bear interest at a rate which would
make the effective rate of interest on the loans made by such Bank to such
Borrower under the Credit Documents equal the Highest Lawful Rate until the
difference between the amounts which would have been due by such Borrower to
such Bank at the stated rates and the amounts which were due by such Borrower
to such Bank at the Highest Lawful Rate (the "Lost Interest") has been
recaptured by such Bank. If, when the loans made hereunder are repaid in full,
the Lost Interest has not been fully recaptured by such Bank pursuant to
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the preceding paragraph, then, to the extent permitted by law, the interest
rates charged by such Bank to such Borrower under Sections 2.4 and 6.5
hereunder shall be retroactively increased such that the effective rate of
interest on the loans made by such Bank to such Borrower under the Credit
Documents was at the Highest Lawful Rate since the effectiveness of this
Agreement to the extent necessary to recapture the Lost Interest not recaptured
pursuant to the preceding sentence and, to the extent allowed by law, such
Borrower shall pay to such Bank the amount of the Lost Interest remaining to be
recaptured by such Bank.
(ii) In calculating all sums paid or agreed to be
paid to any Bank by any Borrower for the use, forbearance, or detention of
money under the Credit Documents, such amounts shall, to the extent permitted
by applicable law, be amortized, prorated, allocated, and spread in equal parts
throughout the term of the Credit Documents.
(iii) If the Agent determines that as a result of
the LIBOR for any Applicable Currency that the effective rate of interest
contracted for by any Bank with any Borrower under the Credit Documents,
including the stated rates of interest and fees contracted for hereunder and
any other amounts contracted for under the Credit Documents which are deemed to
be interest, could exceed the Highest Lawful Rate, then, if the Agent so
notifies the Borrowers, the commitment of the Banks to make LIBOR Borrowings in
such Applicable Currency shall be suspended until such condition has passed and
all LIBOR Borrowings in such Applicable Currency shall be repaid as of the end
of each applicable Interest Period.
(iv) NOTWITHSTANDING THE FOREGOING OR ANY OTHER
TERM IN THIS AGREEMENT AND THE CREDIT DOCUMENTS TO THE CONTRARY, it is the
intention of each Bank and each Borrower to conform strictly to any applicable
usury laws. Accordingly, if any Bank contracts for, charges, or receives any
consideration from any Borrower which constitutes interest in excess of the
Highest Lawful Rate, then any such excess shall be cancelled automatically and,
if previously paid, shall at such Bank's option be applied to the outstanding
amount of the loans made hereunder by such Bank to such Borrower or be refunded
to such Borrower.
2.5 Breakage Costs. If (i) any payment of principal on or any
conversion of any LIBOR Borrowing is made on any date other than the last day
of the Interest Period for such LIBOR Borrowing, whether as a result of any
voluntary or mandatory prepayment, any acceleration of maturity, or any other
cause, (ii) any payment of principal on any LIBOR Borrowing is not made when
due, or (iii) any LIBOR Borrowing is not borrowed, converted, or prepaid in
accordance with the respective notice thereof provided by the applicable
Borrower to the Agent, whether as a result of any failure to meet any
applicable conditions precedent for borrowing, conversion, or prepayment, the
permitted cancellation of any request for borrowing, conversion, or
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prepayment, the failure of such Borrower to provide the respective notice of
borrowing, conversion, or prepayment, or any other cause, then such Borrower
shall pay to each Bank upon demand any amounts required to compensate such Bank
for any losses, costs, or expenses, including lost profits and administrative
expenses, which are reasonably allocable to such action, including losses,
costs, and expenses related to the liquidation or redeployment of funds
acquired or designated by such Bank to fund or maintain such Bank's LIBOR
Advance for such LIBOR Borrowing or related to the reacquisition or
redesignation of funds by such Bank to fund or maintain such Bank's LIBOR
Advance for such LIBOR Borrowing following any liquidation or redeployment of
such funds caused by such action. A certificate as to the amount of such loss,
cost, or expense detailing the calculation thereof submitted by such Bank to
such Borrower shall be conclusive and binding for all purposes, absent manifest
error.
2.6 Increased Costs.
(a) Cost of Funds. If due to either (i) any introduction
of, change in, or change in the interpretation of any law or regulation after
the date of this Agreement or (ii) compliance with any guideline or request
from any central bank or other governmental authority (whether or not having
the force of law) given after the date of this Agreement, there shall be any
increase in the costs of any Bank allocable to (x) committing to make Advances
or obtaining funds for the making, funding, or maintaining of LIBOR Advances in
the relevant interbank market or other funds market or source of funds used by
such Bank to fund LIBOR Advances in the Applicable Currency or (y) committing to
make Letters of Credit or issuing, funding, or maintaining Letters of Credit
(including any increase in any applicable reserve requirement specified by the
Federal Reserve Board, including those for emergency, marginal, supplemental, or
other reserves), then the Borrowers shall pay to such Bank upon demand any
amounts required to compensate such Bank for such increased costs, such amounts
being due and payable upon demand by such Bank. A certificate as to the cause
and amount of such increased cost detailing the calculation of such cost
submitted by such Bank to the Borrowers shall be conclusive and binding for all
purposes, absent manifest error. No Bank may make any claim for compensation
under this Section 2.6(a) for increased costs incurred before 60 days prior to
the delivery of any such certificate.
(b) Capital Adequacy. If, due to either (i) any
introduction of, change in, or change in the interpretation of any law or
regulation after the date of this Agreement or (ii) compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) given after the date of this
Agreement, there shall be any increase in the capital requirements of any Bank
or its parent or holding company allocable to (x) committing to make Advances
in any Applicable Currency or making, funding, or maintaining Advances in any
Applicable Currency or (y) committing to make Letters of Credit or issuing,
funding,
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or maintaining Letters of Credit, as such capital requirements are allocated by
such Bank, then the Borrowers shall pay to such Bank upon demand any amounts
required to compensate such Bank or its parent or holding company for such
increase in costs (including an amount equal to any reduction in the rate of
return on assets or equity of such Bank or its parent or holding company), such
amounts being due and payable upon demand by such Bank. A certificate as to the
cause and amounts detailing the calculation of such amounts submitted by such
Bank to the Borrowers shall be conclusive and binding for all purposes, absent
manifest error. No Bank may make any claim for compensation under this Section
2.6(b) for increased costs incurred before 60 days prior to the delivery of any
such certificate.
2.7 Illegality. Notwithstanding any other provision in this
Agreement, if it becomes unlawful for any Bank to obtain deposits or other
funds for making or funding LIBOR Advances in any Applicable Currency in the
relevant interbank market or other funds market or source of funds used by such
Bank for the Applicable Currency, such Bank shall so notify the Borrowers and
the Agent and such Bank's commitment to make LIBOR Advances in such Applicable
Currency as part of any LIBOR Borrowings in such Applicable Currency shall be
suspended until such condition has passed, all LIBOR Advances of such Bank in
such Applicable Currency shall be repaid as of the end of each applicable
Interest Period or earlier if necessary, and all subsequent requests for LIBOR
Borrowings in such Applicable Currency shall be deemed to exclude such Bank.
2.8 Market Failure. Notwithstanding any other provision in this
Agreement, if the Agent determines that: (a) quotations of interest rates for
the relevant deposits referred to in the definition of "LIBOR" are not being
provided in the relevant Applicable Currency, amounts, or maturities for
purposes of determining the rate of interest referred to in the definition of
"LIBOR" or (b) the relevant rates of interest referred to in the definition of
"LIBOR" which are used as the basis to determine the rate of interest for LIBOR
Borrowings are not likely adequately to cover the cost to any Bank of making or
maintaining LIBOR Advances in the relevant Applicable Currency, then if the
Agent so notifies the Borrowers, the commitment of the Banks to make LIBOR
Borrowings in such Applicable Currency shall be suspended until such condition
has passed and all LIBOR Borrowings in such Applicable Currency shall be repaid
as of the end of each applicable Interest Period.
2.9 Payment Procedures and Computations.
(a) Payment Procedures. Time is of the essence in
this Agreement and the Credit Documents. Each Borrower shall make each payment
under this Agreement and under the Notes not later than 12:00 noon (local time
at the Applicable Payment Office) on the day when due in the Applicable
Currency to the Agent at the Agent's Applicable Lending Office in immediately
available funds. All
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payments by any Borrower hereunder shall be made without any offset, abatement,
withholding, or reduction. Upon receipt of payment from any Borrower of any
principal, interest, or fees due to the Banks, the Agent shall promptly after
receipt thereof distribute to the Banks their ratable share of such payments
for the account of their respective Applicable Lending Offices. Upon receipt
of other amounts due solely to the Agent, the Issuing Bank, or a specific Bank,
the Agent shall distribute such amounts to the appropriate party to be applied
in accordance with the terms of this Agreement.
(b) Agent Reliance. Unless the Agent shall have received
written notice from the applicable Borrower prior to any date on which any
payment is due to the Banks that such Borrower shall not make such payment in
full, the Agent may assume that such Borrower has made such payment in full to
the Agent on such date and the Agent may, in reliance upon such assumption,
cause to be distributed to each Bank on such date an amount equal to the amount
then due such Bank. If and to the extent such Borrower shall not have so made
such payment in full to the Agent, each Bank shall repay to the Agent forthwith
on demand such amount distributed to such Bank, together with interest thereon
from the date such amount is distributed to such Bank until the date such Bank
repays such amount to the Agent, at an interest rate equal to, for payments due
in Dollars, the Federal Funds Rate in effect from time to time or, for payments
due in any other Applicable Currency, the LIBOR for a deemed Borrowing in an
amount similar to the payment amount due and for a duration of one month,
provided that with respect to such Bank, if such amount is not repaid by such
Bank by the end of the second day after the date of the Agent's demand, the
interest rates specified above shall be increased by a per annum amount equal
to 2.00% on the third day after the date of the Agent's demand and shall remain
at such increased rate thereafter.
(c) Sharing of Payments. Each Bank agrees that if it
should receive any payment (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the Credit
Documents, or otherwise) in respect of any obligation of any Borrower to pay
principal, interest, fees, or any other obligation incurred under the Credit
Documents in a proportion greater than the total amount of such principal,
interest, fees, or other obligation then owed and due by such Borrower to such
Bank bears to the total amount of principal, interest, fees, or other
obligation then owed and due by such Borrower to all of the Banks immediately
prior to such receipt, then such Bank receiving such excess payment shall
purchase for cash without recourse from the other Banks an interest in the
obligations of such Borrower to such Banks in such amount as shall result in a
proportional participation by all of the Banks in the aggregate unpaid amount
of principal, interest, fees, or any such other obligation, as the case may be,
owed by such Borrower to all of the Banks; provided that if all or any portion
of such excess payment is thereafter recovered from such Bank, such
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purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
(d) Authority to Charge Accounts. The Agent, if and to
the extent payment owed to the Agent or any Bank is not made when due, may
charge from time to time against any account of any Borrower with the Agent any
amount so due. The Agent agrees promptly to notify such Borrower after any
such charge and application made by the Agent provided that the failure to give
such notice shall not affect the validity of such charge and application.
(e) Applicable Currency. The Applicable Currency for
payments of principal and interest hereunder is the Applicable Currency in
which the related Borrowing was made. The Applicable Currency for all other
payments hereunder shall be Dollars. For purposes of determining the amount of
any payment made by any Borrower, payments made in currencies other than
Dollars shall be valued at the Dollar Equivalent amount thereof.
(f) Exchange Risk Indemnity. If any sum due from any
Borrower under this Agreement or any order or judgment given in relation hereto
has to be converted from the currency (the "first currency") in which the same
is payable hereunder or under such order or judgment into another currency (the
"second currency") for the purpose of (i) making or filing a claim or proof
against such Borrower with any governmental authority or in any court or
tribunal or (ii) enforcing any order or judgment given in relation hereto, such
Borrower shall indemnify each of the Persons to whom such sum is due against
any loss incurred as a result of any discrepancy between (A) the rate of
exchange used when restating the amount in question from the first currency
into the second currency and (B) the rate or rates of exchange at which such
Person, acting in good faith in a commercially reasonable manner, purchased the
first currency with the second currency after receipt of a sum paid to it in
the second currency in satisfaction, in whole or in part, of any such order,
judgment, claim, or proof. The foregoing indemnity shall constitute a separate
obligation of such Borrower distinct from its other obligations hereunder and
shall survive the giving or making of any judgment or order in relation to all
or any of such other obligations.
(g) Interest and Fees. Unless expressly provided for in
this Agreement, (i) all computations of interest based on the Prime Rate shall
be made on the basis of a 365/366 day year, as the case may be, (ii) all
computations of interest based on the Federal Funds Rate shall be made on the
basis of a 360 day year, (iii) all computations of interest based upon the
LIBOR shall be made on the basis of a 360 day year if the Applicable Currency
is Dollars or on the basis of such other year as is customary for the
Applicable Currency in the reference market for the Applicable Currency if the
Applicable Currency is other than Dollars, and (iv) all computations of
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fees shall be made on the basis of a 360 day year, in each case for the actual
number of days (including the first day, but excluding the last day) occurring
in the period for which such interest or fees are payable. Each determination
by the Agent of an interest rate or fee shall be conclusive and binding for all
purposes, absent manifest error.
(h) Payment Dates. Whenever any payment shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be.
If the time for payment for an amount payable is not specified in this
Agreement or in any other Credit Document, the payment shall be due and payable
on demand by the Agent.
(i) Determination Dates. Whenever the Dollar Equivalent
of any amount must be determined under this Agreement, such determination shall
be made in accordance with this paragraph unless otherwise specified in this
Agreement. Whenever the Dollar Equivalent amount of any Borrowing shall be
used in any computation under this Agreement, the Dollar Equivalent amount of
such Borrowing for such computation shall be determined as of the date of the
determination of the LIBOR for such Borrowing (under Section 2.4(a)(ii), each
continuation or conversion creates a new Borrowing). Whenever the Dollar
Equivalent amount of any Letter of Credit shall be used in any computation
under this Agreement, the Dollar Equivalent amount of such Letter of Credit for
such computation shall be determined as of the date of the most recent
issuance, increase, or extension of such Letter of Credit.
2.10 Taxes.
(a) No Deduction for Certain Taxes. Any and all payments
by each Borrower shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges, or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Bank and the Agent, taxes imposed on its income and franchise taxes
imposed on it by any jurisdiction of which such Bank is a citizen or resident
or any political subdivision of such jurisdiction (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings, and liabilities being
hereinafter referred to as "Taxes") and, in the case of each Bank and the
Agent, Taxes by the jurisdiction of such Bank's Applicable Lending Office or
any political subdivision of such jurisdiction. If any Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable to
each Bank and the Agent, (i) the sum payable shall be increased as may be
necessary so that, after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.10), such Bank
receives an amount equal to the sum it would have received had no such
deductions been made; (ii) such Borrower shall make such deductions; and (iii)
such Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
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(b) Other Taxes. Each Borrower agrees to pay any present
or future stamp or documentary taxes or any other excise or property taxes,
charges, or similar levies which arise from any payment made or from the
execution, delivery, or registration of, or otherwise with respect to, this
Agreement or the other Credit Documents (other than those which become due as a
result of any Bank joining this Agreement as a result of any Assignment and
Acceptance, which shall be paid by the Bank which becomes a Bank hereunder as a
result of such Assignment and Acceptance).
(c) Foreign Bank Withholding Exemption. Each Bank and
Issuing Bank that is not incorporated under the laws of the United States of
America or a state thereof agrees that it shall deliver to each Borrower and
the Agent (i) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor applicable form, as the case may be,
certifying in each case that such Bank is entitled to receive payments under
this Agreement and the Notes payable to it, without deduction or withholding of
any United States federal income taxes, (ii) if applicable, an Internal Revenue
Service Form W-8 or W-9 or successor applicable form, as the case may be, to
establish an exemption from United States backup withholding tax, and (iii) any
other governmental forms which are necessary or required under an applicable
tax treaty or otherwise by law to reduce or eliminate any withholding tax,
which have been reasonably requested by such Borrower. Each Bank which
delivers to such Borrower and the Agent a Form 1001 or 4224 and Form W-8 or W-9
pursuant to the next preceding sentence further undertakes to deliver to such
Borrower and the Agent two further copies of the said letter and Form 1001 or
4224 and Form W-8 or W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such letter
or form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent letter and form previously delivered by
it to such Borrower and the Agent, and such extensions or renewals thereof as
may reasonably be requested by such Borrower and the Agent certifying in the
case of a Form 1001 or 4224 that such Bank is entitled to receive payments
under this Agreement without deduction or withholding of any United States
federal income taxes. If an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which any delivery
required by the preceding sentence would otherwise be required which renders
all such forms inapplicable or which would prevent any Bank from duly
completing and delivering any such letter or form with respect to it and such
Bank advises such Borrower and the Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal income
tax, and in the case of a Form W-8 or W-9, establishing an exemption from
United States backup withholding tax, such Bank shall not be required to
deliver such letter or forms. Such Borrower shall withhold tax at the rate and
in the manner required by the laws of the United States with respect to
payments made to a Bank failing to provide the requisite Internal Revenue
Service forms in a timely manner. Each Bank which fails to provide to such
Borrower in a timely manner
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such forms shall reimburse such Borrower upon demand for any penalties paid by
such Borrower as a result of any failure of such Borrower to withhold the
required amounts that are caused by such Bank's failure to provide the required
forms in a timely manner.
2.11 Replacement Banks. In the event that any Bank makes a demand
for payment under Sections 2.5, 2.6, or 2.10 or has suspended its funding of
LIBOR Advances pursuant to Section 2.7 or 2.8 and such Bank has not promptly
taken all reasonable actions to avoid the circumstances permitting such Bank to
exercise its rights under such Sections, then the Borrowers may replace such
Bank with an Eligible Assignee selected by the Borrowers and approved by the
Agent, which approval may not be unreasonably withheld, and such Bank being
replaced agrees to execute an appropriate Assignment and Acceptance specifying
the full transfer of all of such Bank's rights and obligations hereunder,
return all of its Notes, and otherwise take such actions as necessary to comply
with the provisions of Section 8.5 such that the effect of the transfer under
Section 8.5 is to make the replacement Eligible Assignee a Bank hereunder with
the same rights and obligations as the Bank being replaced, provided that in
connection with such transfer all obligations of the Bank being replaced to
lend hereunder shall be terminated and the obligations of the Borrowers to pay
principal, interest, and all other obligations owed to such Bank hereunder
shall be purchased by the replacement Eligible Assignee in full without
recourse at par.
2.12 Additional Borrowers. Any Subsidiary of the Company may
become a Borrower hereunder by delivering a fully executed Joinder Agreement
and appropriate Notes in favor of each Bank to the Agent together with:
(a) a certificate of a Responsible Officer of the
Subsidiary certifying to the Agent accurate and complete copies of recent
certificates of existence and good standing for the Subsidiary, the articles of
incorporation and bylaws or other organizational documents of the Subsidiary,
the resolutions passed by the board of directors of the Subsidiary in
connection with the Joinder Agreement or similar proof of authorization, the
authorized officers for the Subsidiary, and such other corporate matters
regarding the Subsidiary as requested by the Agent, each in a form and with
substance satisfactory to the Agent; and
(b) an opinion of counsel for the Subsidiary satisfactory
to the Agent regarding the organization of the Subsidiary, the enforceability
of the Joinder Agreement, this Agreement, the Notes, and the other Credit
Documents executed by the Subsidiary, and such other matters as requested by
the Agent.
2.13 Company Guaranty.
(a) The Company irrevocably guarantees to the Agent for
the benefit of the Agent and the Banks the full payment when due of (a) all
principal, interest, fees,
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reimbursements, indemnifications, and other amounts now or hereafter owed by
any other Borrower to the Agent and/or the Banks under the terms of this
Agreement and the other Credit Documents, including amounts owed under the
terms of this Agreement and the other Credit Documents for which any Borrower
has obtained relief under bankruptcy or other laws providing for relief from
creditors, and (b) any increases, extensions, and rearrangements of the
foregoing obligations under any amendments, supplements, and other
modifications of the documents and agreements creating the foregoing
obligations (collectively, the "Guaranteed Obligations"). This is a guaranty
of payment and not merely a guaranty of collection, and the Company is liable
as a primary obligor. If any of the Guaranteed Obligations are not punctually
paid when due, whether by maturity, acceleration, or otherwise, and the Agent
shall notify the Company of such default and make demand for payment hereunder,
the Company shall immediately pay to the Agent the full amount of the
Guaranteed Obligations which are due and payable.
(b) The Company's obligations under this guaranty are
continuing and cover all Guaranteed Obligations arising prior to and after the
date hereof. This guaranty may not be revoked by the Company and shall
continue to be effective with respect to Guaranteed Obligations arising or
created after any attempted revocation by the Company.
(c) The Company guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of this
Agreement and the other Credit Documents, regardless of any law, regulation, or
order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Agent or the Banks with respect thereto. The
Company agrees that the Company's obligations under this guaranty shall not be
released, diminished, or impaired by, and waives any rights which the Company
might otherwise have which relate to:
(i) Any lack of validity or enforceability of the
Guaranteed Obligations, any Credit Document, or any other agreement or
instrument relating thereto;
(ii) Any increase, reduction, extension, or
rearrangement of the Guaranteed Obligations, any amendment,
supplement, or other modification of the Credit Documents, or any
waiver or consent granted under the Credit Documents, including
waivers of the payment and performance of the Guaranteed Obligations;
(iii) Any grant of any security or support for the
Guaranteed Obligations, including any pledge of collateral for the
Guaranteed Obligations or any person guaranteeing or otherwise
becoming liable for the payment or performance of the Guaranteed
Obligations;
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(iv) Any impairment of any security or support for
the Guaranteed Obligations, including any full or partial release,
exchange, subordination, or waste of any collateral for the Guaranteed
Obligations or any full or partial release of any Borrower, any
Guarantor, or any other person liable for the payment of the
Guaranteed Obligations;
(v) Any change in the organization or structure
of any Borrower, any Guarantor, or any other person liable for the
payment of the Guaranteed Obligations; or the insolvency, bankruptcy,
liquidation, or dissolution of any Borrower or any other person liable
for the payment of the Guaranteed Obligations;
(vi) The failure to apply or any manner of
applying payments or the proceeds of any collateral against the
Guaranteed Obligations;
(vii) The failure to give notice of the occurrence
of any of the events or actions referred to in this Section 2.13,
notice of any default or event of default, however denominated, under
the Credit Documents, notice of intent to demand, notice of demand,
notice of presentment for payment, notice of nonpayment, notice of
intent to protest, notice of protest, notice of grace, notice of
dishonor, notice of intent to accelerate, notice of acceleration,
notice of bringing of suit, notice of sale or foreclosure of any
collateral for the Guaranteed Obligations, notice of the Agent's or
any Bank's transfer of the Guaranteed Obligations, notice of the
financial condition of or other circumstances regarding any Borrower
or any other person liable for the Guaranteed Obligations, or any
other notice of any kind relating to the Guaranteed Obligations (and
the parties intend that the Company shall not be considered a "Debtor"
as defined in Section 9.105 of the Texas Business and Commerce Code
for the purpose of notices required to be given to a Debtor
thereunder); or
(viii) Any other action taken or omitted which
affects the Guaranteed Obligations, whether or not such action or
omission prejudices the Company or increases the likelihood that the
Company will be required to pay the Guaranteed Obligations pursuant to
the terms hereof--it is the unambiguous and unequivocal intention of
the Company that the Company shall be obligated to pay the Guaranteed
Obligations when due, notwithstanding any occurrence, circumstance,
event, action, or omission whatsoever, whether contemplated or
uncontemplated, and whether or not particularly described herein.
(d) This guaranty shall continue to be effective or be
reinstated, as the case may be, if any payment on the Guaranteed Obligations
must be refunded for any reason including any bankruptcy proceeding. In the
event that the Agent must refund any payment received against the Guaranteed
Obligations, any prior release from the
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terms of this guaranty given to the Company by the Agent shall be without
effect, and this guaranty shall be reinstated in full force and effect. It is
the intention of the Company that the Company's obligations hereunder shall not
be discharged except by final payment of the Guaranteed Obligations.
(e) There are no conditions precedent to the enforcement
of this guaranty. It shall not be necessary for the Agent, in order to enforce
payment by the Company under this guaranty, to exhaust the Agent's remedies
against any Borrower or any other person liable for the payment of the
Guaranteed Obligations, to enforce any support for the payment of the
Guaranteed Obligations, or to enforce any other means of obtaining payment of
the Guaranteed Obligations. The Company waives any rights under Chapter 34 of
the Texas Business and Commerce Code, Section 17.001 of the Texas Civil
Practice and Remedies Code, and Rule 31 of the Texas Rules of Civil Procedure
related to the foregoing. Neither the Agent nor the Banks shall be required
to mitigate damages or take any other action to reduce, collect, or enforce the
Guaranteed Obligations.
(f) Until all Guaranteed Obligations have been
irrevocably paid in full (and therefore the payment thereof is no longer
subject to being set aside or returned under the law), the Company agrees not
to take any action pursuant to any rights which it may acquire against any
Borrower or any other person liable for the payment of the Guaranteed
Obligations under this guaranty, including any right of subrogation (including
any statutory rights of subrogation under Section 509 of the Bankruptcy Code,
11 U.S.C. Section 509, or under Chapter 34 of the Texas Business and Commerce
Code), contribution, indemnification, reimbursement, exoneration, or any right
to participate in any claim or remedy of the Agent against any Borrower or any
collateral which the Agent now has or may acquire. If any amount shall be paid
to the Company in violation of the preceding sentence, such amount shall be
held in trust for the benefit of the Agent and immediately turned over to the
Agent, with any necessary endorsement, to be applied to the Guaranteed
Obligations. This paragraph (f) is not intended to be a permanent waiver of
any right of the Company.
ARTICLE 3. CONDITIONS PRECEDENT.
3.1 Conditions Precedent to Initial Extensions of Credit. The
obligation of each Bank to make the initial extension of credit under this
Agreement, including the making of any Advances and the issuance of any Letters
of Credit, shall be subject to the conditions precedent that:
(a) Documents. The Borrowers shall have delivered or
shall have caused to be delivered the documents and other items listed on
Exhibit F, together with any other documents requested by the Agent to document
the agreements and intent of the Credit Documents, each in form and with
substance satisfactory to the Agent;
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(b) Termination of Facilities. The existing credit
facilities provided by NationsBank to the Company and to SLT North America,
Inc., shall be terminated in accordance with Section 8.10 and the outstanding
indebtedness thereunder repaid;
(c) Merger. The merger of SLT Environmental, Inc., into
the Company substantially on the terms described in the Proxy Statement of the
Company dated June 27, 1995, and the Plan and Agreement of Merger attached
thereto; and
(d) Long-Term Debt Placement. The placement of
$25,000,000 in senior long-term debt on terms and conditions satisfactory to
the Agent.
3.2 Conditions Precedent to Each Extension of Credit. The
obligation of each Bank to make any extension of credit under this Agreement,
including the making of any Advances and the issuance, increase, or extension
of any Letters of Credit, shall be subject to the further conditions precedent
that on the date of such extension of credit:
(a) Representations and Warranties. As of the date of
the making of any extension of credit hereunder, the representations and
warranties contained in each Credit Document shall be true and correct in all
material respects as of such date and each Borrower's request for the making of
any extension of credit hereunder shall be deemed to be a restatement,
representation, and additional warranty of the representations and warranties
contained in each Credit Document as of such date;
(b) Default. As of the date of the making of any
extension of credit hereunder, there shall exist no Default or Event of
Default, and the making of the extension of credit would not cause or be
reasonably expected to cause a Default or Event of Default;
(c) Material Adverse Change. There shall not have
occurred any Material Adverse Change;
(d) Maximum Amount. Following the making of such
Borrowing, the aggregate outstanding Dollar Equivalent principal amount of
Borrowings shall not exceed the aggregate amount of the Commitments.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES. Each Borrower represents and
warrants to the Agent and each Bank, and with each request for any extension of
credit hereunder, including the making of any Advances and the issuance,
increase, or extension of any Letters of Credit, again represents and warrants
to the Agent and each Bank, as follows:
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4.1 Organization. As of the date of this Agreement, the Company,
each Material Subsidiary, and each Credit Party (a) is a corporation duly
organized, validly existing, and in good standing under the laws of such
Person's respective jurisdiction of incorporation and (b) is duly licensed,
qualified to do business, and in good standing in each jurisdiction in which
such Person owns property or conducts operations and which requires such
licensing or qualification and where failure to be so licensed, qualified, or
in good standing could reasonably be expected to cause a Material Adverse
Change.
4.2 Authorization. The execution, delivery, and performance by
each Credit Party of the Credit Documents to which such Credit Party is a party
and the consummation of the transactions contemplated thereby (a) do not
contravene the organizational documents of such Credit Party, (b) have been
duly authorized by all necessary corporate or partnership action of each Credit
Party, and (c) are within each Credit Party's corporate or partnership powers.
4.3 Enforceability. Each Credit Document to which any Credit
Party is a party has been duly executed and delivered by each Credit Party
which is a party to such Credit Document and constitutes the legal, valid, and
binding obligation of each such Credit Party, enforceable against each such
Credit Party in accordance with such Credit Document's terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws at the time in effect affecting the rights of creditors generally and
subject to the availability of equitable remedies.
4.4 Absence of Conflicts and Approvals. The execution, delivery,
and performance by each Credit Party of the Credit Documents to which such
Credit Party is a party and the consummation of the transactions contemplated
thereby, (a) do not result in any violation or breach of any provisions of, or
constitute a default under, any note, indenture, credit agreement, security
agreement, credit support agreement, or other similar agreement to which such
Credit Party is a party or any other material contract or agreement to which
such Credit Party is a party, (b) do not violate any law or regulation binding
on or affecting such Credit Party the violation of which could reasonably be
expected to cause a Material Adverse Change, (c) do not require any
authorization, approval, or other action by, or any notice to or filing with,
any governmental authority, and (d) do not result in or require the creation or
imposition of any Lien prohibited by this Agreement.
4.5 Investment Companies. Neither the Company nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
4.6 Public Utilities. Neither the Company nor any of its
Subsidiaries is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate"
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of a "holding company" or of a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended. Neither the Company nor any of its Subsidiaries is a regulated public
utility.
4.7 Financial Condition.
(a) The Company has delivered to the Agent (i) the annual
audited financial statements of the Company dated as of March 31, 1995,
including therein the balance sheet of the Company as of such date and the
statements of income, stockholders' equity, and cash flows for the Company for
the fiscal year ending on such date and (ii) the annual audited financial
statements of SLT Environmental, Inc., dated as of December 31, 1994, including
therein the balance sheet of SLT Environmental, Inc., as of such date and the
statements of operations, changes in stockholder's equity, and cash flows for
SLT Environmental, Inc., for the fiscal year ending on such date. Each of
these financial statements are accurate and complete in all material respects
and present fairly the financial condition of the Company and SLT
Environmental, Inc., respectively, as of such date in accordance with generally
accepted accounting principles.
(b) The Company has delivered to the Agent the unaudited
financial statements of SLT Environmental, Inc., dated as of March 31, 1995,
including therein the balance sheet of SLT Environmental, Inc., as of such date
and the statements of operations, changes in stockholder's equity, and cash
flows for SLT Environmental, Inc., for the fiscal quarter ending on such date.
Each of these financial statements are accurate and complete in all material
respects and present fairly the financial condition of SLT Environmental, Inc.,
as of such date in accordance with generally accepted accounting principles,
except that such financial statements may lack the complete financial notes
required by generally accepted accounting principles.
(c) As of the respective dates of the Financial
Statements and the Interim Financial Statements, there were no material
contingent obligations, liabilities for taxes, unusual forward or long-term
commitments, or unrealized or anticipated losses of the Company or any of its
Subsidiaries, except as disclosed in the Financial Statements or the Interim
Financial Statements, and adequate reserves for such items have been made in
accordance with generally accepted accounting principles. No Material Adverse
Change has occurred. No Default exists.
4.8 Condition of Assets. The Company and each of its Subsidiaries
has good and indefeasible title to all of its owned property and valid
leasehold rights in all of its leased property, free and clear of all Liens
except Permitted Liens. The Company and each of its Subsidiaries possesses all
permits, licenses, patents, patent rights or licenses, trademarks, trademark
rights, trade names rights, and copyrights which are useful in the conduct of
its business to the extent the failure to possess such rights could reasonably
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be expected to cause a Material Adverse Change. The material properties used
or to be used in the continuing operations of the Company and each of its
Subsidiaries are in good repair, working order, and condition, normal wear and
tear excepted to the extent the failure to comply with such matters could
reasonably be expected to cause a Material Adverse Change. The properties of
the Company and each of its Subsidiaries have not been adversely affected as a
result of any fire, explosion, earthquake, flood, drought, windstorm, accident,
strike or other labor disturbance, embargo, requisition or taking of property
or cancellation of contracts, permits, or concessions by a governmental
authority, riot, activities of armed forces, or acts of God or of any public
enemy in such a manner which could reasonably be expected to cause a Material
Adverse Change.
4.9 Litigation. There are no actions, suits, or proceedings
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries at law, in equity, or in admiralty, or by or before any
governmental department, commission, board, bureau, agency, or instrumentality,
domestic or foreign, or any arbitrator, which could reasonably be expected to
cause a Material Adverse Change.
4.10 Subsidiaries. As of the date of this Agreement, the Company
has no Subsidiaries except as disclosed in Schedule II. All subsidiaries of
the Company required to execute Guaranties pursuant to Section 5.8 have
executed the required Guaranties.
4.11 Laws and Regulations. The Company and each of its
Subsidiaries have been and are in compliance with all federal, state, and local
laws and regulations which are applicable to the operations and property of
such Persons where the failure to comply could reasonably be expected to cause
a Material Adverse Change, except where such Persons are contesting the
validity or application of any such laws or regulations in good faith by
appropriate legal proceedings for which adequate reserves have been established
in accordance with generally accepted accounting principles.
4.12 Environmental Compliance. The Company and each of its
Subsidiaries have been and are in compliance with all Environmental Laws and
have obtained and are in compliance with all related permits necessary for the
ownership and operation of any such Person's properties, except where such
matters could not reasonably be expected to cause a Material Adverse Change.
The Company and each of its Subsidiaries have never received notice of and have
never been investigated for any violation or alleged violation of any
Environmental Law in connection with any such Person's presently or previously
owned properties which threaten action or suggest liabilities which could
reasonably be expected to cause a Material Adverse Change. The Company and
each of its Subsidiaries do not and have not created, handled, transported,
used, or disposed of any Hazardous Materials on or about any such Person's
properties (nor has any such Person's properties been used for those purposes),
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except in compliance with all Environmental Laws and related permits; have
never been responsible for the release of any Hazardous Materials into the
environment in connection with any such Person's operations and have not
contaminated any properties with Hazardous Materials; do not and have not owned
any properties contaminated by any Hazardous Materials, except in each case
where such matters could not reasonably be expected to cause a Material Adverse
Change.
4.13 ERISA. The Company and each of its Subsidiaries are in
compliance in all material respects with the applicable provisions of ERISA and
no "reportable event," as such term is defined in Section 4043 of ERISA, has
occurred with respect to any Plan of the Company or any of its Subsidiaries.
4.14 Taxes. The Company and its Subsidiaries have filed all United
States federal, state, and local income tax returns and all other domestic and
foreign tax returns which are required to be filed by such Persons and have
paid, or provided for the payment before the same became delinquent of, all
taxes due pursuant to such returns or pursuant to any assessment received by
the such Persons where the failure to comply with such matters could reasonably
be expected to cause a Material Adverse Change. The charges, accruals, and
reserves on the books of such Persons in respect of taxes are adequate in
accordance with generally accepted accounting principles.
4.15 True and Complete Disclosure. All factual information
furnished by or on behalf of any Credit Party in writing to the Agent or any
Bank in connection with the Credit Documents and the transactions contemplated
thereby is true and accurate in all material respects on the date as of which
such information was dated or certified and does not contain any untrue
statement of material fact or omit to state any material fact necessary to make
the statements contained therein not misleading. All projections, estimates,
and pro forma financial information furnished by any Credit Party were prepared
on the basis of assumptions, data, information, tests, or conditions believed
to be reasonable at the time such projections, estimates, and pro forma
financial information were furnished.
ARTICLE 5. COVENANTS. Until the Agent and the Banks receive irrevocable
payment of the Credit Obligations and have terminated this Agreement and each
other Credit Document, each Borrower shall comply with and cause compliance
with the following covenants:
5.1 Organization. Except as necessary in any action permitted
under Section 5.9, the Company shall and shall cause each Material Subsidiary
and each Credit Party to (a) maintain itself as an entity duly organized,
validly existing, and in good standing under the laws of each such Person's
respective jurisdiction of organization and (b) duly licensed, qualified to do
business, and in good standing in each jurisdiction in which such Person owns
property or conducts operations and which requires such licensing
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or qualification, except where the failure to be so licenses, qualified, or in
good standing could not reasonably be expected to cause a Material Adverse
Change.
5.2 Reporting. The Company shall furnish to the Agent all of the
following:
(a) Annual Financial Reports. As soon as available and
in any event not later than 120 days after the end of each fiscal year of the
Company, (i) a copy of the annual audit report for such fiscal year for the
Company, including therein the consolidated balance sheets of the Company as of
the end of such fiscal year and the consolidated statements of income,
stockholders' equity, and cash flows for the Company for such fiscal year,
setting forth the consolidated financial position and results of the Company
for such fiscal year and certified, without any qualification or limit of the
scope of the examination of matters relevant to the financial statements, by a
nationally recognized certified public accounting firm; (ii) the consolidating
schedules used to prepare the financial statements described in clause (i)
above; and (iii) a completed Compliance Certificate duly certified by a
Responsible Officer of the Company;
(b) Quarterly Financial Reports. As soon as available
and in any event not later than 60 days after the end of each fiscal quarter,
(i) a copy of the internally prepared and, if available, reviewed consolidated
financial statements of the Company for such fiscal quarter and for the fiscal
year to date period ending on the last day of such fiscal quarter, including
therein the consolidated balance sheets of the Company as of the end of such
fiscal quarter and the consolidated statements of income, and cash flows for
such fiscal quarter and for such fiscal year to date period, setting forth the
consolidated financial position and results of the Company for such fiscal
quarter and fiscal year to date period, all in reasonable detail and duly
certified by a Responsible Officer of the Company as having been prepared in
accordance with generally accepted accounting principles (except as to the
provision for complete financial notes); (ii) the consolidating schedules used
to prepare the financial statements described in clause (i) above; and (iii) a
completed Compliance Certificate duly certified by a Responsible Officer of the
Company;
(c) SEC Filings. As soon as available and in any event
not later than thirty days after the filing or delivery thereof, copies of all
financial statements, reports, and proxy statements which the Company or any of
its Subsidiaries shall have sent to its stockholders generally (other than the
Company or other Subsidiaries) and copies of all regular and periodic reports,
if any, which the Company or any of its Subsidiaries shall have filed with the
Securities and Exchange Commission;
(d) Defaults. Promptly, but in any event within five
Business Days after the discovery thereof, a notice of any facts known to the
Company which constitute a Default, together with a statement of a Responsible
Officer of the Company
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setting forth the details of such facts and the actions which the Company has
taken and proposes to take with respect thereto;
(e) Litigation. Promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting the Company or any of its Subsidiaries which, if determined
adversely, could reasonably be expected to cause a Material Adverse Change,
including any lawsuit which represents a claim which could result in any
liability in excess of 5% of the consolidated Total Capital of the Company as
of the end of the most recently ended fiscal year of the Company;
(f) Material Changes. Prompt written notice of any
condition or event of which the Company or any of its Subsidiaries has
knowledge, which condition or event has resulted or could reasonably be
expected to cause a Material Adverse Change, including any event which
represents a contingent liability in excess of 5% of the consolidated Total
Capital of the Company as of the end of the most recently ended fiscal year of
the Company (other than a lawsuit); and
(g) Other Information. Such other information respecting
the business operations or property of the Company and its Subsidiaries,
financial or otherwise, as the Agent or the Majority Banks may from time to
time reasonably request.
5.3 Inspection. The Company shall permit the Agent and the Banks
to visit and inspect, under the Company's guidance, any of the properties of
the Company or any of its Subsidiaries, to examine all of such Person's books
of account, records, reports, and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances, and accounts with
their respective officers, employees, and independent public accountants (and
by this provision the Company authorizes said accountants to discuss with the
Agent and the Banks the finances and affairs of the Company and its
Subsidiaries) all at such reasonable times and as often as may be reasonably
requested. The Company shall not be required to pay or reimburse the Agent or
the Banks for expenses incurred in connection with any such visitation or
inspection unless a Default or Event of Default exists when they are incurred.
5.4 Use of Proceeds. The proceeds of the Advances shall be used
by the Borrowers only for the general corporate and working capital needs of
such Borrower and its Subsidiaries, including the refinancing of existing
indebtedness. No Borrower shall, directly or indirectly, use any part of such
proceeds for any purpose which violates, or is inconsistent with, Regulations
G, T, U, or X of the Board of Governors of the Federal Reserve System.
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5.5 Financial Covenants.
(a) Debt to EBITDA Ratio. As of the last day of each
fiscal quarter, the Company shall not permit the ratio of (i) the consolidated
Debt of the Company as of end of the fiscal quarter then ended to (ii) the
consolidated EBITDA of the Company for the preceding four fiscal quarters then
ended, to be greater than 4.00 to 1.00.
(b) Tangible Net Worth. The Company shall not permit
the consolidated Tangible Net Worth of the Company (i) during its fiscal year
ending December 31, 1995, to be less than $60,000,000, and (ii) during any
fiscal year thereafter, to be less than an amount equal to the sum of the
amount that was required to be maintained during the previous fiscal year plus
an amount equal to 25% of consolidated net income of the Company for such
previous fiscal year (excluding consolidated net income for any fiscal year
during which consolidated net income is not a positive number), plus (iii) 50%
of the net proceeds of any sale of equity interests in the Company after the
closing date and the stock merger in connection therewith.
(c) Debt to Total Capital Ratio. As of the last day of
each fiscal quarter, the Company shall not permit the ratio of (i) the
consolidated Debt of the Company as of end of the quarter then ended to (ii)
the consolidated Total Capital of the Company as of the end of such fiscal
quarter, to be greater than 0.50 to 1.00.
(d) Fixed Charge Coverage Ratio. As of the last day of
each fiscal quarter, the Company shall not permit the ratio of (i) the
consolidated EBITDA of the Company for the preceding four fiscal quarters then
ended, less consolidated cash taxes paid by the Company during such period, to
(ii) the scheduled payments of principal and interest which were due and
payable on the consolidated Debt of the Company during such period (other than
principal payments due under revolving credit facilities which were extended,
renewed, rearranged, or refinanced under revolving credit facilities maturing
beyond such period), to be less than 1.40 to 1.00.
(e) Current Ratio. As of the last day of each fiscal
quarter, the Company shall not permit the ratio of (i) the consolidated current
assets of the Company to (ii) the consolidated current liabilities of the
Company, to be less than 1.10 to 1.00.
5.6 Debt. The Company shall not and shall not permit any of its
Subsidiaries to create, assume, incur, suffer to exist, or in any manner become
liable, directly, indirectly, or contingently in respect of, any Debt other
than Permitted Debt.
5.7 Liens. The Company shall not and shall not permit any of it
Subsidiaries to create, assume, incur, or suffer to exist any Lien on any of
its real or personal
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property whether now owned or hereafter acquired, or assign any right to
receive its income, except for Permitted Liens.
5.8 Subsidiary Guaranties. At the request of the Agent, the
Company shall cause each of its Material Subsidiaries to execute a Guaranty in
substantially the form of Exhibit G with such changes thereto as the Agent may
reasonably request.
5.9 Corporate Transactions.
(a) The Company shall not and shall not permit any of its
Subsidiaries to (1) merge or consolidate with or be a party to a merger or
consolidation with any other Person or (2) assign, sell, lease, dispose of, or
otherwise transfer any assets of the Company and its Subsidiaries outside of
the ordinary course of business, provided, however, that:
(i) any Subsidiary of the Company may merge or
consolidate with or into the Company or any Subsidiary of the Company so long
as in any merger or consolidation involving the Company, the Company shall be
the surviving or continuing corporation;
(ii) any Subsidiary of the Company may sell,
lease, or otherwise dispose of its assets to the Company or any Subsidiary of
the Company; and
(iii) any Subsidiary of the Company may sell, lease,
or otherwise dispose of its assets outside of the ordinary course of business
if the aggregate value of the assets so transferred by the Company and its
Subsidiaries during any fiscal year of the Company does not exceed an amount
equal to 5% of the consolidated Total Capital of the Company as of the end of
the most recently ended fiscal year of the Company.
(b) The Company will not permit any Subsidiary of the
Company to issue or sell any shares of stock of any class (including as "stock"
for the purposes of this Section 5.9, any warrants, rights, or options to
purchase or otherwise acquire stock or other Securities exchangeable for or
convertible into stock) of such Subsidiary of the Company to any Person other
than the Company or a wholly-owned Subsidiary of the Company, except for the
purpose of qualifying directors, or except in satisfaction of the validly
pre-existing preemptive rights of minority shareholders in connection with the
simultaneous issuance of stock to the Company or a Subsidiary of the Company
whereby the Company or such Subsidiary of the Company maintains their same
proportionate interest in such Subsidiary of the Company.
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5.10 Derivatives. The Company shall not and shall not permit any
of it Subsidiaries to enter into or assume any obligations with respect to any
Derivatives except for Permitted Derivatives.
5.11 Distributions. The Company will not:
(a) declare or pay any dividends, either in cash or
property, on any shares of its capital stock of any class (except dividends or
other distributions payable solely in shares of capital stock of the Company);
(b) directly or indirectly, or through any Subsidiary,
purchase, redeem, or retire any shares of its capital stock of any class or any
warrants, rights, or options to purchase or acquire any shares of its capital
stock (other than in exchange for or out of the net cash proceeds to the
Company from the substantially concurrent issue or sale of other shares of
capital stock of the Company or warrants, rights, or options to purchase or
acquire any shares of its capital stock);
(c) make any other payment or distribution, either
directly or indirectly or through any Subsidiary of the Company, in respect of
its capital stock; or
(d) make any payment or distribution, either directly or
indirectly or through any Subsidiary of the Company, of principal of any
subordinated Debt prior to the date such payment shall be due;
(such declarations or payments of dividends, purchases, redemptions, or
retirements of capital stock and warrants, rights, or options and all such
other distributions being herein collectively called "Restricted Payments"), if
any Default or Event of Default exists or if after giving effect thereto any
such Restricted Payment could cause a Default or Event of Default. The Company
will not declare any dividend which constitutes a Restricted Payment payable
more than 60 days after the date of declaration thereof. The Company may make
any Restricted Payment declared in compliance with the provisions of this
Section 5.11 regardless of its capacity to declare additional Restricted
Payments or lack thereof under this Section 5.11 at the time of the payment of
such Restricted Payment. For the purposes of this Section 5.11, the amount of
any Restricted Payment declared, paid, or distributed in property other than
cash shall be deemed to be the greater of the book value or fair market value
(as determined in good faith by the Board of Directors of the Company) of such
property at the time of the making of the Restricted Payment in question.
5.12 Transactions with Affiliates. The Company shall not and shall
not permit any of its Subsidiaries to enter into or be a party to any
transaction or arrangement with any Affiliate (including, without limitation,
the purchase from, sale to, or exchange of property with, or the rendering of
any service by or for, any Affiliate), except in the
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ordinary course of and pursuant to the reasonable requirements of the Company's
or such Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person other than an Affiliate.
5.13 Insurance. The Company shall and shall cause each of its
Subsidiaries to maintain insurance coverage by financially sound and reputable
insurers and in such forms and amounts and against such risks as are customary
for corporations of established reputation engaged in the same or a similar
business and owning and operating similar properties; provided, however, that
nothing contained in this Section 5.13 shall prevent the Company from
maintaining in lieu, in whole or in part, of such insurance coverage a
self-insurance program in an amount not to exceed $2,000,000 on an annual basis
if and to the extent that such self-insurance program is consistent with sound
and prudent business practices or is determined to be appropriate or in the
best interests of the Company by its Board of Directors.
5.14 Investments; Acquisitions.
(a) Without the prior written consent of the Agent, the
Company shall not and shall not permit any of its Subsidiaries to make or hold
any direct or indirect investment in any Person, including capital
contributions to the Person, investments in the debt or equity securities of
the Person, and loans, guaranties, trade credit, or other extensions of credit
to the Person, except for Permitted Investments.
(b) Without the prior written consent of the Agent, the
Company shall not and shall not permit any of its Subsidiaries to make any
direct or indirect acquisition, for cash or other consideration, including
stock issued and assumed debt, whether in one or more related transactions, of
all or substantially all of the assets, liabilities, or Voting Securities of a
Person, a division or business unit of a Person, or any related group of the
foregoing if the aggregate amount of all such acquisitions by the Company and
its Subsidiaries during any fiscal year of the Company exceeds 10% of the
consolidated Total Capital of the Company as of the end of the prior fiscal
year of the Company.
5.15 Lines of Business; Distribution. Neither the Company nor any
Subsidiary of the Company will engage in any business if, as a result, the
general nature of the business, taken on a consolidated basis, which would then
be engaged in by the Company and its Subsidiaries would be substantially
changed from the business of manufacturing, distributing, and installing
environmental and containment systems, which is the general nature of the
business engaged in by the Company and its Subsidiaries on the date of this
Agreement.
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5.16 Compliance with Laws. The Company shall and shall cause each
of its Subsidiaries to comply with all federal, state, and local laws and
regulations which are applicable to the operations and property of such Persons
where the failure to so comply could reasonably be expected to cause a Material
Adverse Change; provided, however, that this Section 5.16 shall not prevent any
such Person from contesting the validity or application of any such laws or
regulations in good faith by appropriate legal proceedings for which adequate
reserves have been established in accordance with generally accepted accounting
principles.
5.17 Environmental Compliance. The Company shall and shall cause
each of its Subsidiaries to comply with all Environmental Laws and obtain and
comply with all related permits necessary for the ownership and operation of
any such Person's properties except where such matters could not reasonably be
expected to cause a Material Adverse Change. The Company shall and shall cause
each of its Subsidiaries to promptly disclose to the Agent any notice to or
investigation of such Persons for any violation or alleged violation of any
Environmental Law in connection with any such Person's presently or previously
owned properties which threaten action or suggest liabilities which could
reasonably be expected to cause a Material Adverse Change. The Company shall
not and shall not permit any of its Subsidiaries to create, handle, transport,
use, or dispose of any Hazardous Materials on or about any such Person's
properties except in compliance with all Environmental Laws and related
permits; release any Hazardous Materials into the environment in connection
with any such Person's operations or contaminate any properties with Hazardous
Materials; own properties contaminated by any Hazardous Materials, except in
each case where such matters could not reasonably be expected to cause a
Material Adverse Change.
5.18 ERISA Compliance.
(a) The Company shall not and shall not permit any of its
Subsidiaries to permit any Plan of the Company or any of its Subsidiaries
organized under the laws of the United States of America or any political
subdivision thereof at any time maintained by such Person to have any Unfunded
Vested Pension Liabilities. As used herein "Unfunded Vested Pension Liability"
shall mean an excess of the actuarial present value of accumulated vested Plan
benefits as at the end of the immediately preceding Plan year of such Plans (or
as of any more recent valuation date) over the net assets allocated to such
Plans which are available for benefits, all as determined and disclosed in the
most recent actuarial valuation report for such Plans.
(b) All assumptions and methods used to determine the
actuarial valuation of vested employee benefits under all Plans at any time
maintained by the Company or any of its Subsidiaries and the present value of
assets of such Plans shall be reasonable in the good faith judgment of the
Company and shall comply with all requirements of law and all requirements of
generally accepted accounting principals.
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(c) The Company shall not and shall not permit any of its
Subsidiaries to cause any Plan maintained by or participated in by the Company
or any of its Subsidiaries at any time to:
(i) engage in any "prohibited transaction" (as
such term is defined in ERISA);
(ii) incur any "accumulated funding deficiency"
(as such term is defined in ERISA), whether or not waived; or
(iii) terminate any such Plan in a manner which
could result in the imposition of any Lien on any property of the
Company or any of its Subsidiaries pursuant to ERISA.
(d) The Company shall not and shall not permit any of its
Subsidiaries to permit any condition to exist in connection with any Plan of
the Company or any Subsidiary of the Company which might constitute grounds for
the Pension Benefit Guaranty Corporation to institute proceedings to have such
Plan terminated or a trustee appointed to administer such Plan.
(e) The Company shall not and shall not permit any of its
Subsidiaries to withdraw from any Multiemployer Plan, as such term is defined
in ERISA, if such withdrawal shall subject the Company or any of its
Subsidiaries to withdrawal liability (as described under Part 1 of Subtitle E
of Title IV of ERISA).
5.19 Payment of Taxes and Claims. The Company shall and shall
cause each Subsidiary of the Company to pay and discharge, before the same
shall become delinquent, (a) all taxes, assessments, levies, and like charges
imposed upon any such Person or upon any such Person's income, profits, or
property prior to the date on which penalties attach thereto which could
reasonably be expected to cause a Material Adverse Change, and (b) all lawful
claims which, if unpaid, would by law become a Lien upon any such Person's
property unless such claim is being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with generally
accepted accounting principles have been established.
ARTICLE 6. DEFAULT AND REMEDIES.
6.1 Events of Default. Each of the following shall be an "Event
of Default" for the purposes of this Agreement and for each of the Credit
Documents:
(a) Payment Failure. Any Borrower fails to pay when due
(i) any principal, interest, or fees, or reimbursement obligations under
Letters of Credit, due under this Agreement or any other Credit Document and
such failure has not been cured
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within five Business Days following written notice thereof from the Agent or
(ii) any other reimbursements, any indemnifications, or any other amounts due
under this Agreement or any other Credit Document and such failure has not been
cured within 30 days following written notice thereof from the Agent;
(b) False Representation. Any written representation or
warranty made by any Credit Party or any Responsible Officer thereof in this
Agreement or in any other Credit Document proves to have been materially false
or erroneous at the time it was made or deemed made;
(c) Breach of Covenant. (i) Any breach by any Borrower
of any of the covenants contained in Sections 5.2(a), 5.2(b), 5.5, 5.12, 5.13,
5.15, 5.16, 5.17, 5.18, or 5.19 and such breach is not cured within 30 days
following the earlier of knowledge of such breach by any Borrower or the
receipt of written notice thereof from the Agent, (ii) any breach by any
Borrower of any other covenants contained in this Agreement, or (iii) any
breach by any Borrower or any other Credit Party of any covenant in any Credit
Document other than this Agreement;
(d) Guaranties. Any Guaranty shall at any time and for
any reason cease to be in full force and effect or shall be contested by any
party thereto, or any party thereto shall deny it has any further liability or
obligation thereunder, or any provision of any Guaranty shall be breached by
any party thereto;
(e) Material Debt Default. (i) Any principal, interest,
fees, or other amounts due on any Debt of the Company, any of its Subsidiaries,
or any Credit Party is not paid when due, whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise, and such failure is
not cured within the applicable grace period, if any, and the aggregate Dollar
Equivalent amount of all Debt of such Persons so in default exceeds $2,000,000;
(ii) any other event shall occur or condition shall exist under any agreement
or instrument relating to any Debt of any such Person the effect of which is to
accelerate or to permit the acceleration of the maturity of any such Debt,
whether or not any such Debt is actually accelerated, and such event or
condition shall not be cured within the applicable grace period, if any, and
the aggregate Dollar Equivalent amount of all Debt of such Persons so in
default exceeds $2,000,000; or (iii) any Debt of any such Person shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled prepayment) prior to the stated maturity thereof, and the
aggregate Dollar Equivalent amount of all Debt of such Persons so accelerated
exceeds $2,000,000;
(f) Material Agreement Default. There shall occur any
breach by the Company or any of its Subsidiaries of any contract or agreement
which breach could reasonably be expected to cause a Material Adverse Change
and such breach is not cured within the applicable grace period, if any;
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(g) Bankruptcy and Insolvency. (i) there shall have been
filed against the Company, any of its Subsidiaries, or any Credit Party or any
such Person's properties, without such Person's consent, any petition seeking
any arrangement, receivership, reorganization, liquidation, or similar relief
under bankruptcy or other laws for the relief of debtors and such petition
remains in effect for 60 or more days, whether or not consecutive, or any court
shall approve any such petition or (ii) any such Person consents to or files
any petition of the type described in clause (i) above seeking relief from
creditors, makes any assignment for the benefit of creditors or other
arrangement with creditors, or admits in writing such Person's inability to pay
such Persons's debts as they become due;
(h) Adverse Judgment. A judgment in excess of $500,000
is rendered against the Company, any of its Subsidiaries, or any Credit Party
and such judgment is not discharged or stayed pending appeal or other court
action within 30 days following its entry; or
(i) Ownership. The occurrence of any Change of Control
of the Company after the date of this Agreement.
6.2 Termination of Commitments. Upon the occurrence of any Event
of Default under Section 6.1(g), all of the commitments of the Agent and the
Banks hereunder shall terminate. During the existence of any Event of Default
other than an Event of Default under Section 6.1(g), the Agent may, or shall at
the request of the Majority Banks, declare by written notice to the Borrowers
all of the commitments of the Agent and the Banks hereunder terminated,
whereupon the same shall immediately terminate.
6.3 Acceleration of Credit Obligations. Upon the occurrence of
any Event of Default under Section 6.1(g), the aggregate outstanding Dollar
Equivalent principal amount of all loans made hereunder, all accrued interest
thereon, and all other Credit Obligations shall immediately and automatically
become due and payable. During the existence of any Event of Default other
than an Event of Default under Section 6.1(g), the Agent may, or shall at the
request of the Majority Banks, declare by written notice to the Borrowers the
aggregate outstanding Dollar Equivalent principal amount of all loans made
hereunder, all accrued interest thereon, and all other Credit Obligations to be
immediately due and payable. In connection with the foregoing, except for the
notice provided for above, each Borrower waives notice of intent to demand,
demand, presentment for payment, notice of nonpayment, protest, notice of
protest, grace, notice of dishonor, notice of intent to accelerate, notice of
acceleration, and all other notices.
6.4 Cash Collateralization of Letters of Credit. Upon the
occurrence of any Event of Default under Section 6.1(g), each Borrower shall
pay to the Agent an amount equal to the Letter of Credit Exposure allocable to
the Letters of Credit requested by
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such Borrower to be held in the Letter of Credit Collateral Account for
disposition in accordance with Section 2.2(g). During the existence of any
Event of Default other than an Event of Default under Section 6.1(g), the Agent
may, or shall at the request of the Majority Banks, require by written notice
to the Borrowers that each Borrower pay to the Agent an amount equal to the
Letter of Credit Exposure allocable to the Letters of Credit requested by such
Borrower to be held in the Letter of Credit Collateral Account for disposition
in accordance with Section 2.2(g).
6.5 Default Interest. If any Event of Default exists, the Agent
may, or shall at the request of the Majority Banks, declare by written notice
to the applicable Borrower that the Credit Obligations specified in such notice
shall bear interest beginning on the date specified in such notice until paid
in full at the applicable Default Rate for such Credit Obligations.
6.6 Right of Setoff. During the existence of an Event of Default,
the Agent and each Bank is hereby authorized at any time, to the fullest extent
permitted by law, to set off and apply any indebtedness owed by the Agent or
such Bank to any Borrower against any and all of the obligations of such
Borrower under this Agreement and the Credit Documents, irrespective of whether
or not the Agent or such Bank shall have made any demand under this Agreement
or the Credit Documents and although such obligations may be contingent and
unmatured. The Agent and each Bank, as the case may be, agrees promptly to
notify the applicable Borrower after any such setoff and application made by
such party provided that the failure to give such notice shall not affect the
validity of such setoff and application.
6.7 Actions Under Credit Documents. Following an Event of
Default, the Agent may, or shall at the request of the Majority Banks, take any
and all actions permitted under the other Credit Documents, including the
Guaranties.
6.8 Remedies Cumulative. No right, power, or remedy conferred to
the Agent or the Banks in this Agreement and the Credit Documents, or now or
hereafter existing at law, in equity, by statute, or otherwise, shall be
exclusive, and each such right, power, or remedy shall to the full extent
permitted by law be cumulative and in addition to every other such right,
power, or remedy. No course of dealing and no delay in exercising any right,
power, or remedy conferred to the Agent or the Banks in this Agreement and the
Credit Documents, or now or hereafter existing at law, in equity, by statute,
or otherwise, shall operate as a waiver of or otherwise prejudice any such
right, power, or remedy.
6.9 Application of Payments. When an Event of Default exists, all
payments shall be applied to the outstanding Credit Obligations in the order
determined by the Agent. All applications shall be distributed in accordance
with Section 2.9(a).
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ARTICLE 7. THE AGENT AND THE ISSUING BANK
7.1 Authorization and Action. Each Bank hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof and of the other Credit Documents, together with such powers as are
reasonably incidental thereto. Statements under the Credit Documents that the
Agent may take certain actions, without further qualification, means that the
Agent may take such actions with or without the consent of the Majority Banks.
The Agent shall not, however, release any Guaranty without the prior written
consent of the Banks. As to any matters not expressly provided for by this
Agreement or any other Credit Document (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Banks, and such instructions
shall be binding upon all Banks and all holders of Notes; provided, however,
that the Agent shall not be required to take any action which exposes the Agent
to personal liability or which is contrary to this Agreement, any other Credit
Document, or applicable law.
7.2 Reliance, Etc. Neither the Agent, the Issuing Bank, nor any
of their respective Related Parties (for the purposes of this Section 7.2,
collectively, the "Indemnified Parties") shall be liable for any action taken
or omitted to be taken by any Indemnified Party under or in connection with
this Agreement or the other Credit Documents, INCLUDING ANY INDEMNIFIED PARTY'S
OWN NEGLIGENCE) except for any Indemnified Party's gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent
and the Issuing Bank: (a) may treat the payee of any Note as the holder
thereof until the Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the Agent; (b) may
consult with legal counsel (including counsel for any Borrower), independent
public accountants, and other experts selected by it and shall not be liable
for any action taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, accountants, or experts; (c) makes no warranty
or representation to any Bank and shall not be responsible to any Bank for any
statements, warranties, or representations made in or in connection with this
Agreement or the other Credit Documents; (d) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the
terms, covenants, or conditions of this Agreement or any other Credit Document
on the part of the Credit Parties or to inspect the property (including the
books and records) of the Credit Parties; (e) shall not be responsible to any
Bank for the due execution, legality, validity, enforceability, genuineness,
sufficiency, or value of this Agreement or any other Credit Document; and (f)
shall incur no liability under or in respect of this Agreement or any other
Credit Document by acting upon any notice, consent, certificate, or other
instrument or writing (which
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may be by telecopier or telex) believed by it to be genuine and signed or sent
by the proper party or parties.
7.3 Affiliates. With respect to its Commitment, the Advances made
by it, its interests in the Letters of Credit, and the Notes issued to it, the
Agent and the Issuing Bank shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not the
Agent. The term "Bank" or "Banks" shall, unless otherwise expressly indicated,
include the Agent and the Issuing Bank in their individual capacity. The
Agent, the Issuing Bank, and their respective Affiliates may accept deposits
from, lend money to, act as trustee under indentures of, and generally engage in
any kind of business with, any Credit Party, and any Person who may do business
with or own securities of any Credit Party, all as if the Agent were not an
agent hereunder and the Issuing Bank were not the issuer of Letters of Credit
hereunder and without any duty to account therefor to the Banks.
7.4 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based
on the Financial Statements and the Interim Financial Statements and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it shall, independently and without reliance upon the Agent
or any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
7.5 Expenses. To the extent not paid by the Borrowers, each Bank
severally agrees to pay to the Agent and the Issuing Bank on demand such Bank's
ratable share of the following: (a) all reasonable third party, out-of-pocket
costs and expenses of the Agent and the Issuing Bank in connection with the
preparation, execution, delivery, administration, modification, and amendment
of this Agreement and the other Credit Documents, including the reasonable fees
and out-of-pocket expenses of outside counsel for the Agent and the Issuing
Bank with respect to advising the Agent and the Issuing Bank as to their
respective rights and responsibilities under this Agreement and the Credit
Documents, and (b) all costs and expenses of the Agent and the Issuing Bank in
connection with the preservation or enforcement of the rights of the Agent, the
Issuing Bank, and the Banks under this Agreement and the other Credit
Documents, whether through negotiations, legal proceedings, or otherwise,
including fees and expenses of counsel for the Agent and the Issuing Bank. The
provisions of this paragraph shall survive the repayment and termination of the
credit provided for under this Agreement and any purported termination of this
Agreement which does not expressly refer to this paragraph.
7.6 Indemnification. To the extent not reimbursed by the
Borrowers, each Bank severally agrees to protect, defend, indemnify, and hold
harmless the Agent, the
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Issuing Bank, and each of their respective Related Parties (for the purposes of
this Section 7.6, collectively, the "Indemnified Parties"), from and against all
demands, claims, actions, suits, damages, judgments, fines, penalties,
liabilities, and costs and expenses, including reasonable costs of attorneys and
related costs of experts such as accountants (collectively, the "Indemnified
Liabilities"), actually incurred by any Indemnified Party which are related to
any litigation or proceeding relating to this Agreement, the Credit Documents,
or the transactions contemplated thereunder, INCLUDING ANY INDEMNIFIED
LIABILITIES CAUSED BY ANY INDEMNIFIED PARTY'S OWN NEGLIGENCE, but not
Indemnified Liabilities which are a result of any Indemnified Party's gross
negligence or willful misconduct. The provisions of this paragraph shall
survive the repayment and termination of the credit provided for under this
Agreement and any purported termination of this Agreement which does not
expressly refer to this paragraph.
7.7 Successor Agent and Issuing Bank. The Agent or the Issuing
Bank may resign at any time by giving written notice thereof to the Banks and
the Borrowers and may be removed at any time with or without cause by the
Majority Banks upon receipt of written notice from the Majority Banks to such
effect. Upon receipt of notice of any such resignation or removal, the
Majority Banks shall have the right to appoint a successor Agent or Issuing
Bank with the consent of the Borrowers, which consent shall not be unreasonably
withheld. If no successor Agent or Issuing Bank shall have been so appointed
by the Majority Banks with the consent of the Borrowers, and shall have
accepted such appointment, within 30 days after the retiring Agent's or Issuing
Bank's giving of notice of resignation or the Majority Banks' removal of the
retiring Agent or Issuing Bank, then the retiring Agent or Issuing Bank may, on
behalf of the Banks and the Borrowers, appoint a successor Agent or Issuing
Bank, which shall be, in the case of a successor agent, a commercial bank
organized under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $500,000,000 and,
in the case of the Issuing Bank, a Bank. Upon the acceptance of any
appointment as Agent or Issuing Bank by a successor Agent or Issuing Bank, such
successor Agent or Issuing Bank shall thereupon succeed to and become vested
with all the rights, powers, privileges, and duties of the retiring Agent or
Issuing Bank, and the retiring Agent or Issuing Bank shall be discharged from
any duties and obligations under this Agreement and the other Credit Documents
after such acceptance, except that the retiring Issuing Bank shall remain the
Issuing Bank with respect to any Letters of Credit outstanding on the effective
date of its resignation or removal and the provisions affecting the Issuing
Bank with respect to such Letters of Credit shall inure to the benefit of the
retiring Issuing Bank until the termination of all such Letters of Credit.
After any retiring Agent's or Issuing Bank's resignation or removal hereunder
as Agent or Issuing Bank, the provisions of this Article 7 shall inure to such
Person's benefit as to any actions taken or omitted to be taken by such Person
while such Person was Agent or Issuing Bank under this Agreement and the other
Credit Documents.
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ARTICLE 8. MISCELLANEOUS.
8.1 Expenses. The Borrowers shall pay on demand of the applicable
party specified herein (a) all reasonable third- party, out-of-pocket costs and
expenses of the Agent and the Issuing Bank in connection with the preparation,
execution, delivery, administration, modification, and amendment of this
Agreement and the other Credit Documents, including the reasonable fees and
out-of-pocket expenses of outside counsel for the Agent and the Issuing Bank,
and (b) all costs and expenses of the Agent, the Issuing Bank, and each Bank in
connection with the preservation or enforcement of their respective rights
under this Agreement and the other Credit Documents, whether through
negotiations, legal proceedings, or otherwise, including fees and expenses of
counsel for the Agent, the Issuing Bank, and each Bank. The provisions of this
paragraph shall survive the repayment and termination of the credit provided
for under this Agreement and any purported termination of this Agreement which
does not expressly refer to this paragraph.
8.2 Indemnification. The Borrowers agree to protect, defend,
indemnify, and hold harmless the Agent, the Issuing Bank, each Bank, and each
of their respective Related Parties (for the purposes of this Section 8.2,
collectively, the "Indemnified Parties"), from and against all demands, claims,
actions, suits, damages, judgments, fines, penalties, liabilities, and costs
and expenses, including reasonable costs of attorneys and related costs of
experts such as accountants (collectively, the "Indemnified Liabilities"),
actually incurred by any Indemnified Party which are related to any litigation
or proceeding relating to this Agreement, the Credit Documents, or the
transactions contemplated thereunder, INCLUDING ANY INDEMNIFIED LIABILITIES
CAUSED BY ANY INDEMNIFIED PARTY'S OWN NEGLIGENCE, but not Indemnified
Liabilities which are a result of any Indemnified Party's gross negligence or
willful misconduct. The provisions of this paragraph shall survive the
repayment and termination of the credit provided for under this Agreement and
any purported termination of this Agreement which does not expressly refer to
this paragraph.
8.3 Modifications, Waivers, and Consents. No modification or
waiver of any provision of this Agreement or the Notes, nor any consent
required under this Agreement or the Notes, shall be effective unless the same
shall be in writing and signed by the Agent and Majority Banks and the
Borrowers, and then such modification, waiver, or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided, however, that no modification, waiver, or consent shall, unless in
writing and signed by all the Banks, do any of the following: (a) waive any of
the conditions specified in Section 3.1 or 3.2, (b) increase the Commitments of
the Banks, (c) reduce the amount of principal, interest, or fees payable under
the Credit Documents, or postpone the payment thereof, or (d) change the
percentage of Banks required to take any action under this Agreement or the
Notes,
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including any amendment of the definition of "Majority Banks" or this Section
8.3. No modification, waiver, or consent shall, unless in writing and signed
by the Agent or the Issuing Bank affect the rights or obligations of the Agent
or the Issuing Bank, as the case may be, under the Credit Documents.
8.4 Survival of Agreements. All representations, warranties, and
covenants of the Borrowers in this Agreement and the Credit Documents shall
survive the execution of this Agreement and the Credit Documents and any other
document or agreement.
8.5 Assignment and Participation. This Agreement and the Credit
Documents shall bind and inure to the benefit of the Borrowers and their
respective successors and assigns and the Agent and the Banks and their
respective successors and assigns. No Borrower may not assign its rights or
delegate its duties under this Agreement or any Credit Document.
(a) Assignments. Any Bank may assign to one or more
financial institutions or other entities all or any portion of its rights and
obligations under this Agreement and the Notes (including its Commitment,
Advances, and interest in the Letters of Credit); provided, however, that (i)
each such assignment shall be of a constant, and not a varying, percentage of
all of such Bank's rights and obligations under this Agreement, (ii)
assignments of Commitments shall be made in minimum amounts of $5,000,000 and
be made in integral multiples of $5,000,000 and the assigning Bank shall
maintain at least $5,000,000 in Commitments, (iii) each such assignment shall
be to an Eligible Assignee, (iv) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with the Notes subject to such
assignment, (v) each Eligible Assignee (other than the Eligible Assignee of the
Agent) shall pay to the Agent a $2,500 administrative fee, and (vi) the Agent
shall maintain at least 50% of the outstanding Commitments. Upon such
execution, delivery, acceptance, and recording, from and after the effective
date specified in each Assignment and Acceptance (which effective date shall be
at least three Business Days after the execution thereof): (A) the assignee
thereunder shall be a party hereto for all purposes and, to the extent that
rights and obligations hereunder have been assigned to the assignee pursuant to
such Assignment and Acceptance, have the rights and obligations of a Bank
hereunder and (B) the assignor Bank thereunder shall, to the extent that rights
and obligations hereunder have been assigned by the assignor Bank pursuant to
such Assignment and Acceptance, relinquish the assignor Bank's rights and be
released from the assignor Bank's obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of
such assignor Bank's rights and obligations under this Agreement, such assignor
Bank shall cease to be a party hereto).
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(b) Term of Assignments. By executing and delivering an
Assignment and Acceptance, the assignor Bank thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Acceptance, the
assignor Bank makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties, or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement or any
other instrument or document furnished pursuant hereto; (ii) the assignor Bank
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Credit Party or the performance or observance
by any Credit Party of any of their obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the Financial Statements and Interim Financial Statements and such other
documents and information as such assignee has deemed appropriate to make such
assignee's own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee shall, independently and without reliance upon
the Agent, such Bank, or any other Bank and based on such documents and
information as such assignee shall deem appropriate at the time, continue to
make such assignee's own credit decisions in taking or not taking action under
this Agreement; (v) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it shall perform as a Bank under the Credit Documents.
(c) The Register. The Agent shall maintain a copy of
each Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of the Banks and the Commitments
of each Bank from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
the Borrowers, the Agent, the Issuing Bank, and the Banks may treat each Person
whose name is recorded in the Register as a Bank as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers, the Issuing Bank, or any Bank at any reasonable time and from
time to time upon reasonable prior notice.
(d) Procedures. Upon its receipt of an Assignment and
Acceptance executed by a Bank and an Eligible Assignee, together with the Notes
subject to such assignment, the Agent shall, if such Assignment and Acceptance
has been completed in the appropriate form, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register, and
(iii) give prompt notice thereof to the Borrowers. Within five Business Days
after its receipt of such notice, the Borrowers shall execute and deliver to
the Agent in exchange for the surrendered Notes new Notes to the order of such
Eligible Assignee in an amount equal to the Commitment assumed
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by it pursuant to such Assignment and Acceptance and, if such Bank has retained
any Commitment hereunder, new Notes to the order of such Bank in an amount
equal to the Commitment retained by it hereunder. Such new Notes shall be
dated the effective date of such Assignment and Acceptance and shall be in the
appropriate form.
(e) Participations. Each Bank may sell participations to
one or more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement and the Notes (including its Commitment,
Advances, and interest in the Letters of Credit); provided, however, that (i)
such Bank's obligations under this Agreement (including its Commitments to the
Borrowers hereunder) shall remain unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) such Bank shall remain the holder of its Notes for all
purposes of this Agreement, (iv) the Borrowers, the Agent, the Issuing Bank,
and the other Banks shall continue to deal solely and directly with such Bank
in connection with such Bank's rights and obligations under this Agreement, and
(v) such Bank shall not require the participant's consent to any matter under
this Agreement, except for changes in the matters covered by Sections 8.3(b)
and (c). Each Borrower hereby agrees that participants shall have the same
rights as a Bank under Sections 2.5, 2.6, 2.7, 2.8, 2.10, 6.6, and 8.2 to the
extent of their respective participations.
8.6 Notice. All notices and other communications under this
Agreement and the Notes shall be in writing and mailed by certified mail
(return receipt requested), telecopied, telexed, hand delivered, or delivered
by a nationally recognized overnight courier, to the address for the
appropriate party specified in Schedule I or at such other address as shall be
designated by such party in a written notice to the other parties. Mailed
notices shall be effective when received. Telecopied or telexed notices shall
be effective when transmission is completed or confirmed by telex answerback.
Delivered notices shall be effective when delivered by messenger or courier.
Notwithstanding the foregoing, notices and communications to the Agent pursuant
to Article 2 or 7 shall not be effective until received by the Agent.
8.7 Choice of Law. This Agreement and the Notes have been
prepared, are being executed and delivered, and are intended to be performed in
the State of Texas, and the substantive laws of the State of Texas and the
applicable federal laws of the United States shall govern the validity,
construction, enforcement, and interpretation of this Agreement and the Notes;
provided however, Chapter 15 of the Texas Credit Code does not apply to this
Agreement or the Notes. Each Letter of Credit shall be governed by the Uniform
Customs and Practice for Documentary Credits, International Chamber of Commerce
Publication No. 500 (1993 version).
8.8 Confidentiality. The Agent and each Bank acknowledges that
they shall receive information regarding the Credit Parties' business
operations and financial condition which is not available to the public. The
Agent and each Bank agrees to
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maintain the confidentiality of such nonpublic information except in the
ordinary course of business with their respective auditors, accountants, and
legal advisors, and as required by law. The Agent and each Bank may share such
information with potential participants and assigns of its interests under the
Credit Documents if such transferees agree to maintain the confidentiality of
such information.
8.9 Counterparts. This Agreement may be executed in multiple
counterparts which together shall constitute one and the same instrument.
8.10 Termination of Existing Facilities. The existing credit
facilities provided by NationsBank to the Company pursuant to the Loan
Agreement dated October 31, 1991, between Nationsbank and the Company and to
SLT North America, Inc., pursuant to the Loan Agreement dated December 29,
1989, between NationsBank and SLT North America, Inc., are hereby terminated by
NationsBank and by the Company (acting for itself and for SLT North America,
Inc.), such termination being without premium or penalty. In connection with
the initial Borrowings hereunder, the Company shall repay all outstanding
indebtedness under such credit facilities, and upon such repayment, NationsBank
agrees that all Liens securing such credit facilities shall be released and
forever discharged. NationsBank hereby agrees to execute at the Company's
expense any termination statements, releases, or other documents as the Company
may reasonably request to evidence such termination and release.
8.11 No Further Agreements. THIS WRITTEN AGREEMENT AND THE CREDIT
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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EXECUTED as of the date first above written.
COMPANY:
GUNDLE/SLT ENVIRONMENTAL, INC.
By: /s/ Roger Klatt
--------------------------------------
Name: Roger Klatt
Title: Chief Financial Officer
AGENT:
NATIONSBANK OF TEXAS, N.A., as Agent
By: /s/ C. Todd Kulp
--------------------------------------
Name: C. Todd Kulp
Title: Vice President
BANKS:
COMMITMENT NATIONSBANK OF TEXAS, N.A.
$35,000,000
By: /s/ C. Todd Kulp
--------------------------------------
Name: C. Todd Kulp
Title: Vice President
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