<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-9859
PIONEER COMPANIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 06-1215192
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4300 NATIONSBANK CENTER, 700 LOUISIANA STREET, HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(713) 570-3200
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
On July 27, 1998, there were outstanding 9,259,969 shares of the Company's
Class A Common Stock and 750,136 shares of Class B Common Stock.
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TABLE OF CONTENTS
PART I--FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
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<S> <C>
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets--June 30, 1998 and December 31, 1997 3
Consolidated Statements of Operations--Three Months Ended June 30, 1998 and 1997 and
Six Months Ended June 30, 1998 and 1997 4
Consolidated Statements of Cash Flows--Six Months Ended June 30, 1998 and 1997 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8
Item 4. Submission of Matters to a Vote of Security Holders 11
PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
Certain statements in this Form 10-Q regarding future expectations of the
Company's business and the Company's results of operations may be regarded as
"forward looking statements" within the meaning of the Securities Litigation
Reform Act. Such statements are subject to various risks, including the
Company's high financial leverage, the cyclical nature of the markets for many
of the Company's products and raw materials and other risks. Actual outcomes may
vary materially.
2
<PAGE> 3
PART I --FINANCIAL INFORMATION
PIONEER COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
--------- ---------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 51,819 $ 51,887
Accounts receivable, less allowance for doubtful accounts of $3,346 at
June 30, 1998 and $3,602 at December 31, 1997 60,613 68,942
Inventories 28,748 25,379
Prepaid expenses 1,836 1,831
--------- ---------
Total current assets 143,016 148,039
Property, plant and equipment:
Land 10,726 10,726
Buildings and improvements 59,955 59,625
Machinery and equipment 284,708 274,267
Construction in progress 40,364 32,309
--------- ---------
395,753 376,927
Less accumulated depreciation (59,250) (36,503)
--------- ---------
336,503 340,424
Other assets, net of accumulated amortization of $5,887 at June 30, 1998
and $4,649 at December 31, 1997 54,207 59,302
Excess cost over fair value of net assets acquired, net of accumulated
amortization of $18,598 at June 30, 1998 and $14,095 at December 31, 1997 203,837 205,907
--------- ---------
Total assets $ 737,563 $ 753,672
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 30,713 $ 47,784
Accrued liabilities 31,080 36,372
Current portion of long-term debt 2,626 2,598
--------- ---------
Total current liabilities 64,419 86,754
Long-term debt, less current portion 585,530 586,866
Accrued pension and other employee benefits 24,658 21,068
Other long-term liabilities 19,152 17,263
Commitments and contingencies
Redeemable preferred stock: $.01 par value, authorized 10,000 shares,
55 issued and outstanding 5,500 5,500
Stockholders' equity:
Common stock:
Class A, $.01 par value, authorized 46,000 shares, issued and
outstanding: 9,260 at June 30, 1998 and 9,227 at December 31, 1997 92 92
Class B, $.01 par value, authorized 4,000 shares, issued and outstanding:
750 at June 30, 1998 and December 31, 1997, convertible
share-for-share into Class A shares 8 8
Additional paid-in capital 54,958 54,713
Retained deficit (16,754) (18,592)
--------- ---------
Total stockholders' equity 38,304 36,221
--------- ---------
Total liabilities and stockholders' equity $ 737,563 $ 753,672
========= =========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
PIONEER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 102,939 $ 53,987 $ 204,264 $ 100,033
Cost of sales 77,914 44,419 149,888 80,758
--------- --------- --------- ---------
Gross profit 25,025 9,568 54,376 19,275
Selling, general and administrative expenses 13,968 7,771 28,054 16,176
Unusual charges 507 -- 507 --
--------- --------- --------- ---------
Operating income 10,550 1,797 25,815 3,099
Interest expense, net (12,194) (5,366) (25,108) (10,140)
Other income (expense), net (326) 198 2,762 427
--------- --------- --------- ---------
Income (loss) before taxes (1,970) (3,371) 3,469 (6,614)
Income tax provision (benefit) (1,032) (1,311) 1,631 (2,100)
--------- --------- --------- ---------
Income (loss) before extraordinary item (938) (2,060) 1,838 (4,514)
Extraordinary item from early extinguishment of
debt (net of income tax benefit of $12,439) -- (18,658) -- (18,658)
--------- --------- --------- ---------
Net income (loss) $ (938) $ (20,718) $ 1,838 $ (23,172)
========= ========= ========= =========
Per Share Information:
Basic:
Income (loss) before extraordinary item $ (0.09) $ (0.21) $ 0.18 $ (0.45)
Extraordinary item, net of income tax -- (1.87) -- (1.88)
--------- --------- --------- ---------
Net income (loss) $ (0.09) $ (2.08) $ 0.18 $ (2.33)
========= ========= ========= =========
Diluted:
Income (loss) before extraordinary item $ (0.09) $ (0.21) $ 0.17 $ (0.45)
Extraordinary item, net of income tax -- (1.87) -- (1.88)
--------- --------- --------- ---------
Net income (loss) $ (0.09) $ (2.08) $ 0.17 $ (2.33)
========= ========= ========= =========
Weighted average number of common shares outstanding:
Basic 10,001 9,977 9,993 9,940
Diluted 10,001 9,977 11,054 9,940
</TABLE>
See notes to consolidated financial statements.
4
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PIONEER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1998 1997
--------- ---------
<S> <C> <C>
Operating activities:
Net income (loss) $ 1,838 $ (23,172)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Extraordinary item (net of income tax) -- 18,658
Depreciation and amortization 24,631 9,712
Net change in deferred taxes 1,114 (975)
Foreign exchange loss 597 --
Net effect of changes in operating assets and liabilities (12,804) (5,963)
--------- ---------
Net cash flows from operating activities 15,376 (1,740)
--------- ---------
Investing activities:
Acquisition of business -- (97,000)
Capital expenditures (13,624) (6,164)
--------- ---------
Net cash flows from investing activities (13,624) (103,164)
--------- ---------
Financing activities:
Payments on long-term debt (1,308) (162,092)
Proceeds from long-term debt -- 300,000
Debt issuance and related costs -- (13,387)
Proceeds from issuance of Class A common stock 244 874
--------- ---------
Net cash flows from financing activities (1,064) 125,395
--------- ---------
Effect of exchange rate changes on cash (756) --
--------- ---------
Net increase (decrease) in cash (68) 20,491
Cash at beginning of period 51,887 15,754
--------- ---------
Cash at end of period $ 51,819 $ 36,245
========= =========
</TABLE>
See notes to consolidated financial statements.
5
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PIONEER COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1. ORGANIZATION AND BASIS OF PRESENTATION
The consolidated balance sheet at June 30, 1998 and the consolidated
statements of operations and cash flows for the periods presented are unaudited
and reflect all adjustments, consisting of normal recurring items, which
management considers necessary for a fair presentation. Operating results for
the first six months of 1998 are not necessarily indicative of results to be
expected for the year ending December 31, 1998. The consolidated financial
statements include the accounts of Pioneer Companies, Inc. ("PCI") and its
subsidiaries (collectively referred to as the "Company"). All significant
intercompany balances and transactions have been eliminated in consolidation.
All dollar amounts in the tabulations in the notes to the consolidated financial
statements are stated in thousands of dollars unless otherwise indicated.
The consolidated balance sheet at December 31, 1997 is derived from the
December 31, 1997 audited consolidated financial statements, but does not
include all disclosures required by generally accepted accounting principles,
since certain information and disclosures normally included in the notes to the
financial statements have been condensed or omitted as permitted by the rules
and regulations of the Securities and Exchange Commission. The accompanying
unaudited financial statements should be read in conjunction with the financial
statements contained in the Annual Report on Form 10-K for the year ended
December 31, 1997.
Income (loss) per common share is computed using the weighted average
number of common shares outstanding during the period. 1997 per share
information has been computed after giving retroactive effect to a 7% stock
dividend on Class A and Class B Common Stock to stockholders of record in
December 1997.
2. SUPPLEMENTAL CASH FLOW INFORMATION
Net effect of changes in operating assets and liabilities are as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1998 1997
-------- --------
<S> <C> <C>
Accounts receivable $ 7,808 $ (4,782)
Inventories (3,523) (635)
Prepaid expenses (15) 790
Other assets (3,916) (3,315)
Accounts payable (16,706) 490
Accrued liabilities 310 (651)
Other long-term liabilities 3,238 2,140
-------- --------
Net change in operating assets and liabilities $(12,804) $ (5,963)
======== ========
</TABLE>
Following are supplemental disclosures of cash flow information:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1998 1997
-------- --------
<S> <C> <C>
Cash payments for:
Interest $ 25,708 $ 4,373
Income taxes 128 543
Investing activities of acquisition during the period:
Cash paid for acquisition $ -- $ 97,000
Preferred stock issued -- 5,500
Liabilities assumed -- 2,955
-------- --------
Fair value of assets acquired $ -- $105,455
======== ========
</TABLE>
6
<PAGE> 7
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------- ------------
<S> <C> <C>
Raw materials, supplies and parts $ 20,433 $ 21,068
Finished goods and work-in-process 9,245 7,188
Inventories under exchange agreements (930) (2,877)
-------- ------------
$ 28,748 $ 25,379
======== ============
</TABLE>
4. COMMITMENTS AND CONTINGENCIES
The Company and its operations are subject to extensive United States and
Canadian federal, state, provincial and local laws, regulations, rules and
ordinances relating to pollution, the protection of the environment and the
release or disposal of regulated materials. The operation of any chemical
manufacturing plant and the distribution of chemical products entail obligations
under current environmental laws. Present or future laws may affect the
Company's capital and operating costs relating to compliance, may impose cleanup
requirements with respect to site contamination resulting from past, present or
future spills and releases and may affect the markets for the Company's
products. The Company believes that its operations are currently in general
compliance with environmental laws and regulations, the violation of which could
result in a material adverse effect on the Company's business, properties or
results of operations on a consolidated basis. There can be no assurance,
however, that material costs will not be incurred as a result of instances of
noncompliance or new regulatory requirements.
The Company relies on indemnification from the previous owners in
connection with certain environmental liabilities at its chlor-alkali plants and
other facilities. There can be no assurance, however, that such indemnification
arrangements will be adequate to protect the Company from environmental
liabilities at these sites or that such third parties will perform their
obligations under the respective indemnification arrangements, in which case the
Company would be required to incur significant expenses for environmental
liabilities, which would have a material adverse effect on the Company.
The Company is subject to various legal proceedings and potential claims
arising in the ordinary course of its business. In the opinion of management,
the Company has adequate legal defenses and/or insurance coverage with respect
to these matters and management does not believe that they will materially
affect the Company's operations or financial position.
5. EARNINGS PER SHARE
Computational amounts for earnings per share are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income (loss) before extraordinary item $ (938) $ (2,060) $ 1,838 $ (4,514)
============ ============ ============ ============
Basic Earnings per Share:
Weighted average number of common shares
outstanding
10,001 9,977 9,993 9,940
============ ============ ============ ============
Income (loss) before extraordinary item per share $ (0.09) $ (0.21) $ 0.18 $ (0.45)
============ ============ ============ ============
Diluted Earnings per Share:
Weighted average number of common shares
outstanding 10,001 9,977 9,993 9,940
Effective of dilutive securities:
Preferred stock -- -- 471 --
Stock options
-- -- 590 --
------------ ------------ ------------ ------------
Weighted average number of common shares
outstanding, including dilutive securities 10,001 9,977 11,054 9,940
============ ============ ============ ============
Income (loss) before extraordinary item per share $ (0.09) $ (0.21) $ 0.17 $ (0.45)
============ ============ ============ ============
</TABLE>
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the consolidated financial statements and the related notes thereto.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
Revenues
Revenues increased by $49.0 million during the three months ended June 30,
1998, when compared to the three months ended June 30, 1997. The increase in
revenues was primarily attributable to additional sales volumes from the Pioneer
Chlor Alkali Co., Inc. ("PCAC") acquisition of a chlor-alkali plant in Tacoma,
Washington in June 1997 and the acquisition of the business of PCI Chemicals
Canada Inc. and PCI Carolina, Inc. (together "PCI Canada") in October 1997.
Electrochemical unit ("ECU") prices in the second quarter of 1998 were
approximately the same as the comparable period in 1997 as lower chlorine prices
in 1998 were offset by higher caustic soda prices. Revenues at All-Pure Chemical
Company, Inc. ("All-Pure") decreased approximately 19% in the second quarter of
1998, compared to 1997 as a result of reduced bulk high strength bleach sales
and adverse weather conditions on the West Coast. Revenues at Kemwater North
America Company ("Kemwater") fell approximately 21% due to continued competitive
conditions.
Cost of Sales
Cost of sales increased $33.5 million, or approximately 75%, primarily as a
result of the sales volumes of the acquired operations of the Tacoma plant and
of the business of PCI Canada. Offsetting this increase were decreased cost of
sales at All-Pure and Kemwater, resulting from decreased sales volumes.
Gross Profit
Gross profit margin increased to 24% in the second quarter of 1998 from 18%
in the same period of 1997, primarily due to the profitability of the acquired
operations.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $6.2 million,
primarily as a result of the acquisition of PCI Canada.
Unusual Charges
Unusual charges totaling $0.5 million in 1998 relate to the
consolidation and downsizing of certain administrative functions of All-Pure and
Kemwater.
Interest Expense, Net
Interest expense, net increased $6.8 million as a result of the debt
incurred for the acquisitions of the Tacoma plant and the business of PCI
Canada, partially offset by lower interest expense from refinancing $135.0
million of 13 3/8% First Mortgage Notes at substantially lower interest rates.
Extraordinary Item from Early Extinguishment of Debt
During 1997, the Company recognized an $18.7 million extraordinary loss as
a result of the early extinguishment of the 13 3/8% First Mortgage Notes. The
extraordinary loss consisted primarily of the 20% premium paid on the face value
of the notes and the write-off of debt placement fees related to the notes (net
of tax benefit of $12.4 million).
Net Loss
Due to the factors described above the net loss during the three months
ended June 30, 1998 was $0.9 million, compared to a net loss of $20.7 million
during the same period in 1997.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Revenues
Revenues increased by $104.2 million or approximately 104% for the six
months ended June 30,1998, as compared to the same period in 1997. The acquired
operations provided the majority of this increase. In addition, PCAC average ECU
prices increased during this period, as compared to the same six-month period in
1997. Partially offsetting these price increases were decreased sales due to
lower production volumes at PCAC's Henderson plant in 1998, because of a failed
transformer, which
8
<PAGE> 9
is now fully operational. Also, production at Henderson and Tacoma declined due
to a lack of railcar availability in the western United States due to Union
Pacific rail transportation problems. Revenues at All-Pure decreased
approximately 14%, due to reduced bulk high strength bleach sales and adverse
weather conditions on the West Coast, which reduced demand. Revenues at Kemwater
decreased approximately 17%, due to competitive conditions in the iron chlorides
business.
Cost of Sales
Cost of sales increased approximately $69.1 million, or 86% for the six
months ended June 30, 1998, as compared to the six months ended June 30, 1997.
The primary factor for this increase was the sales volumes of the acquired
operations. Offsetting this increase was the lower cost of sales at All-Pure and
Kemwater due to lower sales volumes.
Gross Profit
Gross profit margin increased to approximately 27% from 19%, primarily
due to the profitability of the acquired businesses.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $11.9 million
for the period ended June 30, 1998, primarily as a result of the acquisition of
the business of PCI Canada.
Unusual Charges
Unusual charges totaling $0.5 million in 1998 relate to the
consolidation and downsizing of certain administrative functions of All-Pure and
Kemwater.
Interest Expense, Net
Interest expense, net increased $15.0 million to $25.1 million during
the first six months of 1998. This increase was the result of the debt incurred
for the acquisitions of the Tacoma plant and the business of PCI Canada,
partially offset by lower interest expense from refinancing $135.0 million of
the 13 3/8% First Mortgage Notes at substantially lower interest rates.
Other Income, Net
Other income, net in 1998 includes a gain from the settlement of a lawsuit
of approximately $0.9 million, an accrual for a business interruption insurance
claim at PCAC's Henderson plant related to the failed transformer and a state
franchise tax refund.
Extraordinary Item from Early Extinguishment of Debt
As mentioned above, during 1997 the Company recognized an $18.7 million
extraordinary item from early extinguishment of debt.
Net Income
Net income for the first six months of 1998 was $1.8 million, compared to
the $23.2 million loss for the same period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Financial Leverage and Covenants. As of June 30, 1998, the Company had
outstanding $588.2 million of long-term debt. While the majority of the
Company's debt is due in 2006 and 2007, the Company is required to make certain
scheduled payments each year. The degree to which the Company is indebted could
have important consequences including, but not limited to: (i) limitations on
the ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, general corporate purposes and other
purposes, if needed; (ii) the allocation of a substantial portion of cash flow
from operations to cover cash interest requirements, thereby limiting the funds
available for operations and any future business opportunities; and (iii)
increasing the Company's vulnerability to a downturn in its business or the
economy.
However, the Company believes that existing cash balances, cash flow from
current and anticipated future levels of operations and, to a lesser extent, the
availability under its revolving credit facility, will be adequate to make the
required payments of principal and interest on outstanding indebtedness, as well
as to fund its future capital expenditures and working capital requirements.
Annualized cash interest of approximately $53.3 million will be payable on its
long-term debt. To the extent that the Company were to draw upon the commitments
under the revolving credit facility, due to adverse business conditions or to
finance acquisitions or for other corporate purposes, the Company's aggregate
interest expense would be increased.
9
<PAGE> 10
The Company's belief that it will generate sufficient cash flow for its
requirements is based, among other things, on the assumptions that: (i) the
Company's cash flow will be positive as a result of the continuing operating
activities; (ii) the Company will invest in working capital in accordance with
prior practices; and (iii) the Company will not incur any material capital
expenditures in excess of its business plan.
Revolving Facility. In November 1997, the Company reached agreement with
respect to an amended $65.0 million credit agreement that provides for a
five-year revolving loan and letter of credit facility (subject to borrowing
base limitations that relate to the level of accounts receivable and inventory)
(the "Revolving Facility").
The Revolving Facility provides for revolving loans (the "Revolving
Loans") and letters of credit in an aggregate principal amount up to $65.0
million and also includes a US$30.0 million Canadian sub-facility, which is also
subject to borrowing base limitations. As of June 30, 1998, the Company had
letters of credit outstanding of approximately $2.4 million and had the ability
to draw up to $62.6 million of additional indebtedness, subject to borrowing
base limitations. The Company had no Revolving Loans outstanding at June 30,
1998 and no amounts outstanding under the Canadian sub-facility.
Foreign Operations and Exchange Rate Fluctuations. The Company has
operating activities in Canada and engages in export sales to various countries.
International operations and exports to foreign markets are subject to a number
of risks, including currency exchange rate fluctuations, trade barriers,
exchange controls, political risks and risks of increases in duties, taxes and
governmental royalties, as well as changes in laws and policies governing
foreign-based companies. In addition, earnings of foreign subsidiaries and
intracompany payments are subject to foreign taxation rules.
A portion of the Company's sales and expenditures are denominated in
Canadian dollars and, accordingly, the Company's results of operations and cash
flows may be affected by fluctuations in the exchange rate between the United
States dollar and the Canadian dollar. Currently, the Company is not engaged in
forward foreign exchange contracts, but may enter into such hedging activities
in the future.
Net Cash Flows from Operating Activities. During the first six months of
1998, the Company generated $15.4 million in cash from operating activities,
attributable to the net income for the period plus the impact of deferred taxes
and depreciation and amortization, partially offset by an increase in working
capital.
Net Cash Flows from Investing Activities. Cash used in investing activities
during the first six months of 1998 totaled $13.7 million, which was due to
capital expenditures related to property, plant and equipment.
Net Cash Flows from Financing Activities. Cash used in financing activities
during the first three months of 1998 totaled $1.1 million due to debt payments,
offset partially by proceeds from issuances of common stock.
ACCOUNTING CHANGES
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting
and reporting standards for derivative instruments and for hedging activities.
The Company is required to adopt the provisions of SFAS No. 133 in the third
quarter of 1999. Management is currently evaluating the impact of SFAS No. 133
on its financial statements and related disclosures.
10
<PAGE> 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the stockholders of the Company was held on May 19,
1998. At the meeting Donald J. Donahue, Richard C. Kellogg, Jr. and Jack H.
Nusbaum were re-elected as directors of the Company, with terms of office ending
at the annual meeting of stockholders to be held in 2001, and John H. Kennedy
was elected as a director of the Company, with a term of office ending at the
annual meeting of stockholders to be held in 1999. A total of 8,348,432,
8,368,956, 8,375,252 and 8,375,140 shares, respectively, were voted in favor of
the election of Messrs. Donahue, Kellogg, Nusbaum and Kennedy.
At the annual meeting the stockholders also approved the adoption of the
Pioneer Companies, Inc. 1998 Stock Plan, providing for the issuance of up to
500,000 shares of the Company's Class A Common Stock in accordance with the
terms of the Plan. A total of 7,048,895 shares were voted in favor of approval
of the plan and 254,011 shares were voted against approval of the plan.
The stockholders also ratified the grant of a stock option to Andrew M.
Bursky, a director of the Company, providing for the purchase of up to 107,000
shares of the Company's Class A Common Stock at a price of $5.20 per share. A
total of 6,933,031 shares were voted in favor of ratification of the option
grant and 313,938 shares were voted against ratification of the option grant.
The stockholders also ratified the selection of Deloitte & Touche LLP
as independent certified public accountants to audit the financial statements of
the Company and its subsidiaries for the fiscal year ending December 31, 1998. A
total of 8,368,217 shares were voted in favor of ratification and 5,225 shares
were voted against ratification.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10 Amended and Restated Loan and Security Agreement,
dated as of May 29, 1998, among Pioneer Americas
Acquisition Corp. and PCI Chemicals Canada Inc. as
borrowers, various financial institutions as lenders,
Bank of America National Trust and Savings
Association as Administrative Agent and U.S. Funding
Agent, Bank of America Canada as Canadian Funding
Agent, and Bank America Robertson Stephens as
Arranger.
27 Financial Data Schedule.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
quarter ended June 30, 1998.
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.
PIONEER COMPANIES, INC.
July 30, 1998 By: /s/ Philip J. Ablove
--------------------------
Philip J. Ablove
Vice President and
Chief Financial Officer
(Principal Financial Officer)
12
<PAGE> 13
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
- ------- -----------
10 Amended and Restated Loan and Security Agreement, dated as
of May 29, 1998, among Pioneer Americas Acquisition Corp.
and PCI Chemicals Canada Inc. as borrowers, various
financial institutions as lenders, Bank of America National
Trust and Savings Association as Administrative Agent and
U.S. Funding Agent, Bank of America Canada as Canadian
Funding Agent, and Bank America Robertson Stephens as
Arranger.
27 Financial Data Schedule.
<PAGE> 1
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
DATED AS OF MAY 29, 1998
AMONG PIONEER AMERICAS ACQUISITION CORP. AND
PCI CHEMICALS CANADA INC./PCI CHIMIE CANADA INC., AS BORROWERS,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
F/K/A BANK OF AMERICA ILLINOIS, AS ADMINISTRATIVE AGENT,
AS U.S. FUNDING AGENT AND AS A LENDER,
BANK OF AMERICA CANADA, AS CANADIAN FUNDING AGENT
AND AS A LENDER,
BANK AMERICA ROBERTSON STEPHENS, AS ARRANGER,
AND
THE OTHER LENDERS FROM TIME TO TIME PARTY HERETO
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TABLE OF CONTENTS
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1. DEFINITIONS AND OTHER TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Other Definitional Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1.3. Interpretation of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1.4. Compliance with Financial Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1.5. Currency Equivalents Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1.6. Effect of Amendment and Restatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2. LOANS; LETTERS OF CREDIT; OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.1. Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.2. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.3. Bankers' Acceptances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.4. Loan Accounts; Demand Deposit Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.5. Interest and Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.6. Requests for Loans; Borrowing Base Certificates; Other Information. . . . . . . . . . . . . . 45
2.7. Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
2.8. Overdraft Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.9. Over Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.10. Agents' and Lenders' Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
2.11. Making of Payments; Application of Collections; Charging of Accounts. . . . . . . . . . . . 48
2.12. Agents' Election Not to Enforce. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2.13. Reaffirmation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2.14. Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2.15. Fee Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
2.16. Settlements, Distributions and Apportionment of Payments. . . . . . . . . . . . . . . . . . 51
2.17. Canadian or U.S. Dollar Loans Unavailable. . . . . . . . . . . . . . . . . . . . . . . . . . 52
2.18. Reserves on Canadian Dollar Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
2.19. Unavailability of Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
2.20. Participation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
2.21. Income Tax Act (Canada). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
2.22. Payments in Applicable Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
3. COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
3.1. Grant of Security Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
3.2. Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
3.3. Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
3.4. Supplemental Documentation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
3.5. Collateral for the Benefit of Agents and Lenders. . . . . . . . . . . . . . . . . . . . . . . 61
3.6. Certain Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
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3.7. Landlord's Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
3.8. Canadian Bank Act Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
4. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.1. Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
4.2. Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
4.3. No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
4.4. Validity and Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.5. No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.6. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.7. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.8. Litigation; Contingent Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.9. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.10. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.11. Partnerships; Joint Ventures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.12. Business and Collateral Locations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
4.13. Senior Secured Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
4.14. Term Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
4.15. Eligibility of Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.16. Patents, Trademarks, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.17. Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.18. Contracts; Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.19. Pension and Welfare Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
4.20. Regulations G, U and X. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
4.21. Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
4.22. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
4.23. Investment Company Act Representation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
4.24. Public Utility Holding Company Act Representation. . . . . . . . . . . . . . . . . . . . . . 72
4.25. Environmental and Safety and Health Matters. . . . . . . . . . . . . . . . . . . . . . . . . 72
4.26. Related Agreements and Transaction Documents. . . . . . . . . . . . . . . . . . . . . . . . 73
4.27. Capitalized Lease Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
4.28. Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
4.29. Holding Companies; Licensing Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . 74
4.30. Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
5. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
5.1. Financial Statements and Other Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
5.2. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
5.3. Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
5.4. Nature of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
5.5. Books, Records and Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
5.6. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
5.7. Repair. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
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5.8. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
5.9. Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
5.10. Pension Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
5.11. Merger, Purchase and Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
5.12. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.13. Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
5.14. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.15. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.16. Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
5.17. Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
5.18. Designated Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.19. Loans to Designated Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.20. Change in Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.21. Environmental Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5.22. Related Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5.23. Unconditional Purchase Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5.24. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5.25. Transactions with Related Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5.26. Amendment of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
5.27. Designated Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
5.28. Limitation on Applicability of Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . 91
5.29. Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
5.30. Holding Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
5.31. Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
5.32. Interest Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
6. DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
6.1. Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
6.2. Effect of Event of Default; Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND ADMINISTRATIVE AGENT'S RIGHTS. . . . . . . . . . . . . . 96
7.1. Notice of Disposition of Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
7.2. Application of Proceeds of Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
7.3. Care of Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
7.4. Performance of Borrowers' Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
7.5. Agents' and Lenders' Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . 97
8.1. Conditions Precedent to Initial Loans and Letters of Credit. . . . . . . . . . . . . . . . . 97
8.2. Continuing Conditions Precedent to all Loans; Certification. . . . . . . . . . . . . . . . . 99
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9. INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
9.1. Environmental and Safety and Health Indemnity. . . . . . . . . . . . . . . . . . . . . . . 99
9.2. General Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
9.3. Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
9.4. Tax Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
9.5. Currency Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
9.6. Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
10. AGENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
10.1. Appointments of Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
10.2. Nature of Duties of each Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
10.3. Each Agent in its Capacity as Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . 103
10.4. Independent Credit Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
10.5. General Immunity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
10.6. Action by Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
10.7. Right to Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
10.8. Exercise of Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
10.9. Each Agent's Resignation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
10.10. Disbursement of Proceeds of Loans and Other Advances. . . . . . . . . . . . . . . . . . . 107
10.11. Release of Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
10.12. Agreement to Cooperate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
10.13. Sharing of Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
10.14. Agents and Lenders to Act as Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . 108
11. GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
11.1. Borrowers' Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
11.2. Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
11.3. Expenses; Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
11.4. BOA's and BAC's Fees and Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.5. Lawful Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.6. No Waiver by Agent or any Lender; Amendments. . . . . . . . . . . . . . . . . . . . . . . 112
11.7. Termination of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
11.8. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
11.9. Assignments and Participations; Information. . . . . . . . . . . . . . . . . . . . . . . . 113
11.10. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
11.11. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
11.12. Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
11.13. Consent to Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
11.14. Subsidiary Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
11.15. Borrowers' Documentation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
11.16. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
11.17. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
11.18. Language. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
("Agreement") is made as of this 29th day of May, 1998 by and among BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, successor by merger to BANK OF
AMERICA ILLINOIS (in its individual capacity, "BOA"), having an office at 231
South LaSalle Street, Chicago, Illinois 60697, as Administrative Agent, U.S.
Funding Agent and a Lender hereunder, BANK OF AMERICA CANADA (in its individual
capacity ("BAC")), having an office at 200 Front Street West, Toronto, Ontario,
Canada M5V 3L2, as Canadian Funding Agent and a Lender hereunder, BANK AMERICA
ROBERTSON STEPHENS, as Arranger, having an office at 231 South LaSalle Street,
Chicago, Illinois 60697, the other Lenders from time to time party hereto,
PIONEER AMERICAS ACQUISITION CORP. ("PAAC"), a Delaware corporation, having its
principal office at 700 Louisiana Street, Suite 4300, Houston, Texas 77002 and
PCI CHEMICALS CANADA INC./PCI CHIMIE CANADA INC., a New Brunswick corporation,
having its principal office at 630 Rene-Levesque Boulevard West, 31st Floor,
Montreal, Quebec, Canada H3B 1S6 ("PCI Canada") (PAAC and PCI Canada being
collectively referred to herein as "Borrowers").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Original Loan Agreement,
Original Lender made available certain loans and other financial accommodations
to or for the benefit of each of PAAC and PCI Canada; and
WHEREAS, the parties hereto desire to amend and restate the
Original Loan Agreement to (a) provide for separate Lender groups to make
available loans and other financial accommodations to PAAC, on the one hand,
and PCI Canada, on the other, (b) appoint Bank of America National Trust and
Savings Association, successor by merger to Bank of America Illinois, as
Administrative Agent and U.S. Funding Agent thereunder and appoint Bank of
America Canada as Canadian Funding Agent thereunder and (c) otherwise revise
the terms of the Original Loan Agreement in various respects;
NOW, THEREFORE, in consideration of any loan or advance or
grant of credit (including any loan or advance or grant of credit by renewal or
extension) now or hereafter made to each Borrower by, or on behalf of, Lenders,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. DEFINITIONS AND OTHER TERMS.
1.1. Definitions.
In addition to terms defined elsewhere in this Agreement or
any Schedule or Exhibit hereto, when used herein, the following terms shall
have the following meanings (such meanings shall be equally applicable to the
singular and plural forms of the terms used, as the context requires):
<PAGE> 7
"1995 Closing Date" means April 12, 1995.
"Account Debtor" means any Person who is or who may become
obligated to either Borrower or any Designated Subsidiary under, with respect
to, or on account of an Account Receivable, Contract Right or other Collateral.
"Account Receivable" means any account of, or any monetary
obligations owed to, either Borrower or any Designated Subsidiary and any other
right of either Borrower or any Designated Subsidiary to payment for goods sold
or leased or for services rendered, whether or not evidenced by an instrument
or chattel paper and whether or not yet earned by performance.
"Adjusted Reference Rate" means, at any time, the Reference
Rate plus one-half of one percent (0.50%). Each change in the interest rate on
any Adjusted Reference Rate Loan shall take effect on the effective date of the
change in the Adjusted Reference Rate.
"Adjusted Reference Rate Loan" means any Canadian Dollar
portion of the Revolving Loan which bears interest at a Floating Rate
determined with reference to the Adjusted Reference Rate.
"Administrative Agent" means Bank of America National Trust
and Savings Association in its capacity as administrative agent for Lenders
hereunder and under the Related Agreements, or any successor administrative
agent pursuant to Section 10.
"Affected Lender" has the meaning ascribed to such term in
Section 2.19.
"After-Tax Basis" means, in the case of any amount paid or
payable to any Agent or any Lender, a basis such that any payment received or
deemed to have been received shall be forthwith supplemented by a further
supplemental payment to such Agent or such Lender, so that after taking into
account all federal, state, provincial or local income Taxes, such Agent or
such Lender receives an amount equal to the original payment received or deemed
to have been received.
"Agents" means, collectively, Administrative Agent and Funding
Agents.
"Agreement" means this Amended and Restated Loan and Security
Agreement, as the same may be amended, modified or supplemented from time to
time.
"Applicable Currency" means, as to any particular payment or
Loan, Canadian Dollars or U.S. Dollars.
"Applicable Margin" means, at any time, a percentage
determined with reference to the Interest Coverage Ratio for the twelve month
period ending on the last day of PAAC's most recent fiscal quarter, as set
forth below for the applicable interest rate or fee:
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<PAGE> 8
<TABLE>
<CAPTION>
Applicable
Applicable Applicable Applicable Margin for
Margin for Margin for Floating Margin for Letter of Credit
Interest Coverage Ratio Fixed Rate Loans Rate Loans Non-Use Fee Commissions
----------------------- ---------------- ------------------- ----------- ----------------
<S> <C> <C> <C> <C>
Greater than or equal 1.75% 0.75% 0.35% 1.50%
to 3.5:1.0
Less than 3.5:1.0 and 2.00% 1.00% 0.40% 1.75%
greater than or equal
to 3.0:1.0
Less than 3.0:1.0 and 2.25% 1.25% 0.45% 2.00%
greater than or equal
to 2.5:1.0
Less than 2.5:1.0 2.50% 1.50% 0.50% 2.25%
</TABLE>
The Interest Coverage Ratio for any fiscal quarter shall be determined pursuant
to PAAC's monthly financial statements for the last month in such quarter
delivered pursuant to Section 5.1.1(b) or, with respect to the last fiscal
quarter in any Fiscal Year, PAAC's annual audited financial statements for such
Fiscal Year delivered pursuant to Section 5.1.1(a). Changes in the Applicable
Margin shall become prospectively effective five (5) days after receipt by
Administrative Agent of the applicable financial statements, accompanied by a
calculation of the Interest Coverage Ratio. The Applicable Margin for the
period from the Closing Date until five (5) days after receipt by
Administrative Agent of PAAC's financial statements for December 31, 1997,
shall be set at the level that would be applicable if the Interest Coverage
Ratio were less than 2.50:1.0.
"Application" means an application by a Borrower, in a form
and containing terms and provisions acceptable to Administrative Agent and the
applicable Issuing Bank, for the issuance by such Issuing Bank of a Letter of
Credit.
"Assignee Deposit Accounts" has the meaning ascribed to such
term in Section 3.2(d).
"Assignment and Acceptance Agreement" means an agreement in
the form of Exhibit D pursuant to which a Lender assigns all or a portion of
its rights, and delegates all or such portion of its obligations, under this
Agreement and the Related Agreements, to another Person.
"Attorneys' Fees" has the meaning ascribed to such term in
Section 11.3.
"BA Availment" means that portion of the Revolving Loan which
has been used by PCI Canada (or, as the context may require, is available for
use by PCI Canada) by way of issuance of Bankers' Acceptances.
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<PAGE> 9
"BA Discount Proceeds" means, in respect of any Bankers'
Acceptance, an amount calculated on the applicable date of advance which is
equal to the face amount of such Bankers' Acceptance accepted by a BA Lender
multiplied by the price, where the price is calculated by dividing one by the
sum of one plus the product of (a) the BA Discount Rate applicable thereto
expressed as a decimal fraction multiplied by (b) a fraction, the numerator of
which is the term of such Bankers' Acceptance accepted by a BA Lender and the
denominator of which is 365, which calculated price will be rounded to the
nearest multiple of 0.001%.
"BA Discount Rate" means, with respect to a Bankers'
Acceptance accepted by a BA Lender, the discount rate, calculated on the basis
of a year of 365 days and determined in accordance with normal market practice
at or about 10:00 a.m. (Toronto time) on the applicable date of advance, for
bankers' acceptances of BAC having a comparable face amount and identical
maturity date to the face amount and maturity date of Bankers' Acceptance
accepted by such BA Lender.
"BAC" has the meaning ascribed to such term in the Preamble.
"BA Lenders" means Bank of America Canada, Credit Lyonnais
Canada, and any other Canadian Lender who becomes a BA Lender pursuant to the
terms of this Agreement from time to time.
"Bankers' Acceptances" means those drafts or bills of exchange
in Canadian Dollars issued by PCI Canada and accepted by a BA Lender pursuant
to this Agreement.
"Bankers' Acceptance Fee" means a fee, if any, expressed as a
percentage per annum determined and adjusted by BAC from time to time as a
reference rate for determining fees to be charged to its corporate customers
for the acceptance by BAC at its main branch in Toronto, Ontario of drafts or
bills of exchange in Canadian Dollars issued by such corporate customers, plus
the Applicable Margin for Fixed Rate Loans.
"Bankers' Acceptance Obligations" means at any time an amount
equal to the U.S. Dollar Equivalent of the aggregate of the principal face
amount of all outstanding Bankers' Acceptances.
"Banking Day" means any day other than a Saturday, Sunday or
legal holiday on which banks are authorized or required to be closed for the
conduct of commercial banking business in Chicago, Illinois, San Francisco,
California or Toronto, Canada; provided, with respect to (a) LIBO Rate Loans,
Banking Days shall not include a day on which dealings in U.S. Dollars may not
be carried on by U.S. Funding Agent in the London interbank LIBO market, (b)
U.S. Dollar Loans made or to be made by Canadian Lenders, Banking Days shall
not include a day on which dealings in U.S. Dollars may not be carried on by
Canadian Funding Agent in the applicable foreign exchange market and (c) BA
Availments shall not include a day on which banks are authorized or required to
be closed for the conduct of commercial banking business in Toronto or
Montreal, Canada.
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<PAGE> 10
"BMPC" means Black Mountain Power Company, a Subsidiary of
PCAC.
"BOA" has the meaning ascribed to such term in the Preamble.
"Borrower Collateral" has the meaning ascribed to such term in
Section 3.1.
"Borrowers" has the meaning ascribed to such term in the
Preamble.
"Borrowing Base" means the sum of:
(a) an amount equal to 85% of the U.S. Dollar
Equivalent of the net amount (after deduction of such reserves and
allowances as Administrative Agent deems proper and necessary in its
reasonable business judgment) of Eligible Account Receivable of each
Borrower and each Designated Subsidiary; plus
(b) an amount equal to the least of (i) the
Inventory Sublimit, (ii) 50% of the U.S. Dollar Equivalent of the net
value (after deduction of such reserves as Administrative Agent deems
proper and necessary in its reasonable business judgment) of Eligible
Inventory and (iii) an amount equal to 35% of the amount in clause
(a)(i) hereof; and
"Borrowing Base Certificate" means a certificate in the form
of Exhibit A attached hereto, executed and certified as accurate by an officer
of a Borrower designated in writing from time to time by such Borrower to
Administrative Agent pursuant to resolutions of the Board of Directors of such
Borrower.
"Canadian Bank Act Security" means all security under the Bank
Act (Canada) granted by PCI Canada to BAC to be held and dealt with by the
Canadian Funding Agent pursuant to Section 3.8 and the other applicable terms
of this Agreement.
"Canadian Dollar Loans" means Loans denominated in Canadian
Dollars.
"Canadian Dollars" and "C$" each mean lawful money of Canada.
"Canadian Funding Agent" means BAC in its capacity as funding
agent for Canadian Lenders hereunder and under the Related Agreements, or any
successor funding agent that is a resident of Canada under the Income Tax Act
(Canada) or is entitled to complete exemption from Canadian withholding tax
imposed on or with respect to any payments to be made to it pursuant to this
Agreement, for Canadian Lenders pursuant to Section 10.
"Canadian Issuing Bank" means BAC or any other Canadian Lender
selected by Canadian Funding Agent with PCI Canada's consent (which will not be
unreasonably withheld) to issue Letters of Credit under this Agreement for the
account of PCI Canada.
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<PAGE> 11
"Canadian Lenders" means, collectively, BAC and any other
Person that becomes a Canadian Lender under this Agreement and each of their
respective successors and assigns as provided in this Agreement.
"Canadian Pension Laws" has the meaning ascribed to such term
in Section 4.19(b).
"Canadian Pension Plan" means any plan, program or arrangement
that is a pension plan for the purposes of any applicable pension benefits
legislation or any tax laws of Canada or a province thereof, whether or not
registered under any such laws, which is maintained or contributed to by, or to
which there is or may be an obligation to contribute by, either Borrower in
respect of any Person's employment in Canada with such Borrower.
"Canadian Prime Rate" means, at any time, the higher of (i)
the rate per annum which the Canadian Funding Agent announces as its prime rate
for Canadian Dollar commercial loans made in Canada, effective as of the date
announced and (ii) the average rate for 30 day Canadian Dollar bankers'
acceptances that appear on the Reuters Screen CDOR Page at 10:00 a.m. (Toronto
time) on the applicable day plus 0.50% per annum. Each change in the interest
rate on any Canadian Prime Rate Loan shall take effect on the effective date of
the change in the Canadian Prime Rate.
"Canadian Prime Rate Loan" means any Canadian Dollar portion
of the Revolving Loan which bears interest at a Floating Rate determined with
reference to the Canadian Prime Rate.
"Capitalized Lease" means any lease which is or should be
capitalized on the balance sheet of the lessee in accordance with GAAP.
"Closing Date" means the first date on which Loans are made,
or Letters of Credit are issued, under this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time.
"Collateral" means, collectively, (a) the Borrower Collateral
and (b) the Obligor Collateral.
"Companies" means, collectively, the Borrowers and the
Designated Subsidiaries.
"Contingent Payment Agreement" shall mean that certain
Contingent Payment Agreement dated on or about the 1995 Closing Date among
Parent, PAAC and Sellers.
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<PAGE> 12
"Contract Right" means any right of either Borrower or any
Designated Subsidiary to payment under a contract for the sale or lease of
goods or the rendering of services, which right is not yet earned by
performance.
"Credit" means the facility established under this Agreement
pursuant to which U.S. Lenders will make Revolving Loans to PAAC and/or cause
U.S. Issuing Bank to issue Letters of Credit for the account of PAAC and
Canadian Lenders will make Revolving Loans to PCI Canada (including Bankers'
Acceptances issued by PCI Canada), and/or cause Canadian Issuing Bank to issue
Letters of Credit for the account of PCI Canada.
"Default Rate" means, with respect to a Loan, the rate of
interest which is applicable to such Loan after the occurrence of an Event of
Default, as determined pursuant to Section 2.5.1(d).
"Demand Deposit Account" has the meaning ascribed to such term
in Section 2.3.
"Depository Accounts" has the meaning ascribed to such term in
Section 3.2(d).
"Designated Subsidiary" means any Subsidiary of PAAC (other
than PCI Canada) so designated by PAAC from time to time, with Administrative
Agent's written consent, which shall not be unreasonably withheld; provided,
that neither Kemwater nor any Subsidiary of Kemwater shall be a Designated
Subsidiary unless otherwise agreed in writing by all Lenders. The Designated
Subsidiaries existing on the Closing Date are designated as such on Schedule
4.10.
"Disproportionate Advance" has the meaning ascribed to such
term in Section 2.1.1(b).
"East" means Pioneer (East), Inc., a Subsidiary of PAI.
"EBITDA" for any period means net earnings (excluding interest
income) before interest expense, tax expense, depreciation and amortization,
all determined for PAAC and its Subsidiaries on a consolidated basis and in
accordance with GAAP; provided, that for purposes hereof (a) net earnings shall
not include any gains or losses on the sale or other disposition of Investments
or fixed assets or any other extraordinary or unusual items of income or loss,
(b) net earnings for periods that include any portion of the 1997 Fiscal Year
shall exclude up to US$31,000,000 related to prepayment premiums paid or
incurred by PAAC in connection with the refinancing of some or all of PAAC's 13
3/8% First Mortgage Notes due 2005 on or about the OCC Closing Date and (c) net
earnings shall not include any gains or losses of unconsolidated Subsidiaries,
except where reflected in cash dividends.
-7-
<PAGE> 13
"Eligible Account Receivable" means an Account Receivable
owing to a Borrower or a Designated Subsidiary which meets the following
requirements:
(a) it is genuine and in all respects what it purports to
be;
(b) it arises from either (i) the performance of services
by such Borrower or such Designated Subsidiary, which services have been fully
performed and, if applicable, acknowledged and/or accepted by the Account
Debtor with respect thereto or (ii) the sale or lease of goods by such Borrower
or such Designated Subsidiary; and if it arises from the sale or lease of
goods, (A) such goods comply with such Account Debtor's specifications (if any)
and have been shipped to, or delivered to and accepted by, such Account Debtor
and neither such Borrower nor such Designated Subsidiary has knowledge that the
Account Debtor has failed to accept delivery of all or a portion of such goods,
and (B) such Borrower or such Designated Subsidiary has possession of shipping
and delivery receipts evidencing such shipment, delivery and acceptance;
(c) it (i) is evidenced by an invoice rendered to the
Account Debtor with respect thereto which (A) is dated not earlier than the
date of shipment or performance and (B) if the Account Receivable is a "Foreign
Account" (as defined below) it is payable within one hundred twenty (120) days
after the applicable invoice date and (ii) is not unpaid on the date that is
(A) sixty (60) days after the applicable invoice date if the Account Receivable
is a "Domestic Account" (as defined below) and (B) one hundred twenty (120)
days after the applicable invoice date if the Account Receivable is a Foreign
Account;
(d) it is not owing by an Account Debtor with respect to
which invoices representing 15% or more of the unpaid net amount of all Account
Receivables owing by such Account Debtor are unpaid more than sixty (60) days
after the applicable invoice date;
(e) it is not subject to any assignment, claim or Lien
(including without limitation Priority Payables), other than (i) a Lien in
favor of Administrative Agent, for the benefit of Agents and Lenders, and (ii)
Liens consented to by Administrative Agent in writing;
(f) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor with respect thereto, and is not subject to
setoff, counterclaim, credit or allowance (except any credit or allowance which
has been deducted in computing the net amount of the applicable invoice as
shown in the original schedule or Borrowing Base Certificate furnished to
Administrative Agent identifying or including such Account Receivable) or
adjustment by the Account Debtor with respect thereto, or to any claim by such
Account Debtor denying liability thereunder in whole or in part, and such
Account Debtor has not refused to accept any of the goods or services which are
the subject of such Account Receivable or offered or attempted to return any of
such goods;
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<PAGE> 14
(g) there are no proceedings or actions which to the
knowledge of either Borrower are then threatened or pending against the Account
Debtor with respect thereto or to which such Account Debtor is a party which
are reasonably likely to materially impair its ability to pay any Account
Receivable in full when due;
(h) it does not arise out of a contract which, by its
terms, forbids, restricts or makes void or unenforceable the assignment by such
Borrower or such Designated Subsidiary to Administrative Agent, for the benefit
of Agents and Lenders, of the Account Receivable arising with respect thereto;
(i) the Account Debtor with respect thereto is not a
Borrower, a Subsidiary, a Related Party (other than Saguaro Power Company L.P.)
or an Obligor, or a director, officer, employee or agent of a Borrower, a
Subsidiary, a Related Party or an Obligor;
(j) the Account Debtor with respect thereto is a resident
or citizen of, and is located within, the United States of America or Canada (a
"Domestic Account");
(k) it is not a Domestic Account (a "Foreign Account"),
but only to the extent that the aggregate amount of all Foreign Accounts does
not exceed the U.S. Dollar Equivalent of $3,000,000 (the "Foreign Account
Limit");
(l) it is not an Account Receivable arising from a "sale
on approval," "sale or return" or "consignment," or subject to any other
repurchase or return agreement;
(m) it is not an Account Receivable with respect to which
possession and/or control of the goods sold giving rise thereto is held,
maintained or retained by such Borrower or such Designated Subsidiary or any
Subsidiary, Related Party or other Obligor (or by any agent or custodian of
such Borrower or such Designated Subsidiary, or any Subsidiary, Related Party
or Obligor) for the account of or subject to further and/or future direction
from the Account Debtor thereof;
(n) it is not an Account Receivable which in any way
fails to meet or violates any warranty, representation or covenant contained in
this Agreement or any Related Agreement relating directly or indirectly to
Accounts Receivable;
(o) it arises in the ordinary course of such Borrower's
or such Designated Subsidiary's business;
(p) if (i) the Account Debtor is the United States of
America or any state or local governmental entity, or any department, agency or
instrumentality thereof, such Borrower or such Designated Subsidiary has
assigned its rights to payment of such Account Receivable to Administrative
Agent, for the benefit of Agents and Lenders, pursuant to the Assignment of
Claims Act of 1940, as amended, or pursuant to any similar state or local law,
regulation or requirement or (ii) the Account Debtor is Her Majesty in right of
Canada or any provincial or local government entity, or any ministry,
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<PAGE> 15
department, agency or instrumentality thereof, such Borrower or such Designated
Subsidiary has assigned its rights to payment of such Account Receivable to
Administrative Agent, for the benefit of Agents and Lenders, pursuant to the
Financial Administration Act, R.S.C. 1985, c.F-11, as amended, or any similar
applicable provincial or local law, regulation or requirement, but in each case
only to the extent that the aggregate amount of such government Accounts
exceeds the U.S. Dollar Equivalent of $10,000,000 or the amount of any
individual government Accounts exceeds the U.S. Dollar Equivalent of
$2,000,000;
(q) if Administrative Agent in its reasonable business
judgment has established a credit limit for an Account Debtor, the aggregate
dollar amount of Accounts Receivable in the Applicable Currency due from such
Account Debtor, including such Account Receivable, does not exceed such credit
limit; provided, however, that Administrative Agent may not reduce any credit
limit with respect to any Account Debtor except upon forty-five (45) days'
prior notice to Borrowers;
(r) if the Account Receivable is evidenced by chattel
paper or an instrument, (i) Administrative Agent shall have specifically agreed
in writing to include such Account Receivable as an Eligible Account
Receivable, (ii) only payments then due and payable under such chattel paper or
instrument shall be included as an Eligible Account Receivable and (iii) the
originals of such chattel paper or instruments have been endorsed and/or
assigned and delivered to Administrative Agent, for the benefit of Agents and
Lenders, in a manner satisfactory to Administrative Agent;
(s) it is an Account Receivable with respect to which
Administrative Agent, for the benefit of Agents and Lenders, has a valid, first
priority and fully perfected Lien, other than Foreign Accounts with an
aggregate value less than or equal to the Foreign Account Limit; and
(t) it is an Account Receivable that Administrative Agent
in its reasonable business judgment deems to be acceptable.
Administrative Agent further reserves the right in its reasonable business
judgment, from time to time hereafter, to designate upon ten (10) Banking Days'
prior notice to Borrowers as ineligible specific Accounts Receivable that meet
the aforementioned criteria for Eligible Account Receivable, including without
limitation if Administrative Agent in its reasonable business judgment
determines that the prospect of payment or performance of the Account Debtor
with respect to such Account Receivable is or will be materially impaired for
any reason whatsoever. An Account Receivable which is at any time an Eligible
Account Receivable, but which subsequently fails to meet any of the foregoing
requirements, shall forthwith cease to be an Eligible Account Receivable.
"Eligible Inventory" means Inventory of a Borrower or any
Designated Subsidiary, which meets the following requirements:
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<PAGE> 16
(a) it is owned by a Borrower or a Designated Subsidiary
and is not subject to any prior assignment, claim or Lien (including without
limitation Priority Payables), other than (i) a Lien in favor of Administrative
Agent, for the benefit of Agents and Lenders, and (ii) Liens consented to by
Administrative Agent in writing;
(b) if it is a hard good held for sale or lease or
furnishing under contracts of service, it is (except as Administrative Agent
may otherwise consent in writing) new and unused;
(c) except as Administrative Agent may otherwise consent,
it is in the possession and control of a Borrower, a Designated Subsidiary or
their respective agents;
(d) if it is in the possession or control of a bailee,
warehouseman, processor or other Person other than a Borrower or a Designated
Subsidiary, Administrative Agent is in possession of such agreements,
instruments and documents as Administrative Agent may require (each in form and
content acceptable to Administrative Agent and duly executed, as appropriate,
by the bailee, warehouseman, processor or other Person in possession or control
of such Inventory, as applicable), including but not limited to warehouse
receipts in Administrative Agent's name, for the benefit of Agents and Lenders,
covering such Inventory;
(e) it is not Inventory which is dedicated to,
identifiable with, or is otherwise specifically to be used in the manufacture
of, goods which are to be sold or leased to the United States of America or any
department, agency or instrumentality thereof and in respect of which Inventory
a Borrower or a Designated Subsidiary shall have received any progress or other
advance payment which is or may be credited against any Account Receivable
generated upon the sale or lease of any such goods;
(f) it is not Inventory produced in violation of the Fair
Labor Standards Act and subject to the "hot goods" provisions contained in
Title 29 U.S.C. Section 215 or any successor statute or section;
(g) it is not (i) packaging or shipping materials, (ii)
goods used in connection with maintenance or repair of a Borrower's or a
Designated Subsidiary's business, properties or assets, (iii) work-in-process,
(iv) parts supplies or (v) general supplies;
(h) it is not Inventory which in any way fails to meet or
violates any warranty, representation or covenant contained in this Agreement
or any Related Agreement relating directly or indirectly to Inventory;
(i) Administrative Agent has not determined in its
reasonable business judgment and after ten (10) Banking Days' prior notice to
Borrowers that it is unacceptable due to age, type, category, quality and/or
quantity;
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<PAGE> 17
(j) it is Inventory with respect to which Administrative
Agent, for the benefit of Agents and Lenders, has a valid, first priority and
fully perfected Lien;
(k) it is not Inventory the use of which by a Borrower or
a Designated Subsidiary or the manufacture or sale thereof by a Borrower or a
Designated Subsidiary, is subject to any licensing, patent, royalty, trademark,
tradename or copyright agreement of any other Person, other than Inventory
subject to the two certain DSA Anode Lease Agreements dated January 1, 1987
between Electrode Corporation and Stauffer Chemical Company; and
(l) it is not Inventory which may become subject to the
claims of a supplier pursuant to Section 81.1 of the Bankruptcy and Insolvency
Act, R.S.C. 1985, c.B-3, as amended, or any applicable provincial laws granting
revendication or similar rights to unpaid suppliers.
Notwithstanding anything to the contrary contained herein, up to an aggregate
amount equal to the U.S. Dollar Equivalent of $1,000,000 of Inventory located
at leased locations of Borrowers and the Designated Subsidiaries and listed on
schedules provided to Administrative Agent by Borrowers from time to time,
shall at all times deemed to be Eligible Inventory hereunder, despite the fact
that the lessors of the applicable leased locations have not executed and
delivered to Administrative Agent landlord's waivers in form and substance
reasonably satisfactory to Administrative Agent, so long as such Inventory
would be classified as Eligible Inventory except for the failure to deliver
such landlord's waivers.
Administrative Agent further reserves the right in its reasonable business
judgment, from time to time hereafter, to designate upon ten (10) Banking Days'
prior notice to Borrowers as ineligible specific items of Inventory that meet
the aforementioned criteria for Eligible Inventory. Inventory which is at any
time Eligible Inventory but which subsequently fails to meet any of the
foregoing requirements shall forthwith cease to be Eligible Inventory.
"Environmental Laws" means the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response, Compensation and
Liability Act, the Canadian Environmental Protection Act, any so-called
"Superfund" or "Superlien" law, the Toxic Substances Control Act, and any other
federal, state, provincial or local statute, law, ordinance, code, rule,
regulation, order, guideline, policy or decree, common law obligation or
requirement or other requirement regulating, relating to, or imposing liability
or standards of conduct (including but not limited to permit requirements, and
emission or effluent restrictions) with respect to protection or conservation
of the environment concerning any Hazardous Materials or any hazardous, toxic
or dangerous waste, substance or constituent, or any pollutant or contaminant
or other substance, whether solid, liquid or gas, as now or at any time
hereafter in effect in any applicable jurisdiction.
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<PAGE> 18
"Environmental Lien" means a Lien in favor of any governmental
entity for (a) any liability under any Environmental Law or (b) damages arising
from or costs incurred by such governmental entity in response to a Release of
any Hazardous Material or the spillage, disposal or release into the
environment of any other hazardous, toxic or dangerous waste, substance or
constituent, or other substance.
"Equipment" means all equipment of either Borrower or any
Designated Subsidiary of every description, including without limitation
fixtures, furniture, vehicles and trade fixtures, together with any and all
accessions, parts and equipment attached thereto or used in connection
therewith, and any substitutions therefor and replacements thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with
the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA Affiliate" means any corporation, partnership, or other
trade or business (whether or not incorporated) that is, along with either
Borrower, a member of a controlled group of corporations or a controlled group
of trades or businesses, as described in Sections 414(b) and 414(c),
respectively, of the Code or Section 4001 of ERISA, or a member of the same
affiliated service group within the meaning of Section 414(m) of the Code.
"Eurocurrency Reserve Requirement" means, with respect to any
LIBO Rate Loan for any Interest Rate Period, a percentage equal to the daily
average during such Interest Rate Period of the percentages in effect on each
day of such Interest Rate Period, as prescribed by the Federal Reserve Board,
for determining the aggregate maximum reserve requirements (including all
basic, supplemental, marginal and other reserves) applicable to "Eurocurrency
liabilities" pursuant to Regulation D or any other then applicable regulation
of the Federal Reserve Board which prescribes reserve requirements applicable
to "Eurocurrency liabilities," as presently defined in Regulation D. Without
limiting the effect of the foregoing, the Eurocurrency Reserve Requirement
shall reflect any other reserves required to be maintained by BOA against (i)
any category of liabilities that includes deposits by reference to which the
LIBO Rate is to be determined, or (ii) any category of extensions of credit or
other assets that includes LIBO Rate Loans. For purposes of this Agreement,
any LIBO Rate Loan hereunder shall be deemed to be "Eurocurrency liabilities,"
as defined in Regulation D, and, as such, shall be deemed to be subject to such
reserve requirements without the benefit of, or credit for, proration,
exceptions or offsets which may be available to BOA from time to time under
Regulation D.
"Event of Default" has the meaning ascribed to such term in
Section 6.1.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal, for each day during such period, to the weighted
average of the rates on
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overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if such day
is not a Banking Day, for the next preceding Banking Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Banking Day, the average of the quotations for such day on such
transactions received by BOA from three federal funds brokers of recognized
standing selected by it.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"Fiscal Year" means any period of twelve (12) consecutive
calendar months ending on December 31. References to a Fiscal Year with a
number corresponding to any calendar year (e.g. "Fiscal Year 1997") refer to
the Fiscal Year ending on the thirty-first (31st) day of December occurring
during such calendar year.
"Fixed Rate" means the BA Discount Rate or the LIBO Rate.
"Fixed Rate Loan" means a BA Availment or a LIBO Rate Loan.
"Floating Rate" means the Canadian Prime Rate, the Reference
Rate or the Adjusted Reference Rate.
"Floating Rate Loan" means a Canadian Prime Rate Loan, a
Reference Rate Loan or an Adjusted Reference Rate Loan.
"Funding Agents" means, collectively, U.S. Funding Agent and
Canadian Funding Agent.
"FX Trading Office" means such office as a Funding Agent may
from time to time designate as its office for foreign exchange trading.
"GAAP" means generally accepted accounting principles as in
effect from time to time (except as otherwise provided in Section 1.4), in the
United States, as applied in the preparation of the audited financial
statements referred to in Section 4.6.
"General Intangibles" means all general intangibles now owned
or hereafter acquired by either Borrower or any Designated Subsidiary, to the
extent that any of the foregoing arises out of or relates to Accounts
Receivable or Inventory, including without limitation all right, title and
interest of such Borrower or such Designated Subsidiary in and to: (a) all tax
refunds and tax refund claims; (b) registered and unregistered patents, service
marks, copyrights, applications for any of the foregoing and (c) all trade
secrets and other confidential information relating to the business of such
Borrower or such Designated Subsidiary, in each case to the extent that any of
the foregoing arises out of or relates to Accounts Receivable or Inventory.
"Hazardous Materials" means any toxic substance, hazardous
substance, hazardous material, hazardous chemical or hazardous waste defined or
qualifying as such
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in any Environmental Law, and shall include, but not be limited to, petroleum,
including crude oil, any radioactive material, including but not limited to any
source, special nuclear or by-product material as defined at 42 U.S.C. Section
2011 et seq., as amended or hereafter amended, polychlorinated biphenyls and
asbestos in any form or condition.
"ICI Agreement" means the Asset Purchase Agreement dated as of
September 22, 1997 among PCI Canada, PCI Carolina, Parent, ICI Sellers and
Imperial Chemical Industries PLC, as amended through the ICI Closing Date.
"ICI Closing Date" means November 5, 1997.
"ICI Sellers" means ICI Canada Inc. and ICI Americas Inc.
"Imperial" means Imperial West Chemical Co., an indirect
Subsidiary of PAAC.
"Income Tax Act (Canada)" means the Income Tax Act of Canada,
R.S.C., 1985, C.1 (5th Supp.), as amended.
"Indebtedness" of any Person means, without duplication, (a)
the principal portion of any obligation of such Person for borrowed money,
including without limitation (i) any obligation of such Person evidenced by
bonds, debentures, notes or other similar debt instruments and (ii) any
obligation for borrowed money which is non-recourse to the credit of such
Person but which is secured by a Lien on any asset of such Person, (b) the
principal component of any obligation of such Person on account of deposits or
advances, (c) any obligation of such Person for the deferred purchase price of
any property or services, except Trade Accounts Payable, (d) any obligation of
such Person as lessee under a Capitalized Lease, (e) any net obligation of such
Person with respect to interest rate swaps, interest rate caps, interest rate
collars or other interest hedging agreements, (f) any net obligation of such
Person in respect of foreign exchange contracts, (g) any obligation of such
Person with respect to letters of credit, acceptances, guarantees or similar
obligations of another Person issued for the account of such Person and (h) any
Indebtedness of another Person secured by a Lien on any asset of such first
Person, whether or not such Indebtedness is assumed by such first Person. For
all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or joint venturer and such Indebtedness is recourse to some or
all of the assets of such Person.
"Interest Coverage Ratio" means the ratio of (a) EBITDA for
any period to (b) interest expense (net of interest income not otherwise
included in the calculation of earnings) for such period, each determined for
PAAC and its Subsidiaries on a consolidated basis and in accordance with GAAP.
"Interest Coverage Sale Threshold" means with respect to any
sale, transfer, conveyance, lease or other disposition of assets otherwise
permitted under Section 5.11,
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that the Interest Coverage Ratio after such transaction, calculated in the
manner set forth in Section 5.32, but using the financial results most recently
reported by Borrowers to Administrative Agent (whether monthly, quarterly or
annual), adjusted to reflect the pro forma effect of such transaction, is at
least 1.1:1.0.
"Interest Rate Period" means with respect to any portion of
the Revolving Loans, the period commencing on the date on which a LIBO Rate is
deemed applicable to such portion of the Revolving Loans or a LIBO Rate Loan
commences, and ending on the numerically corresponding day one (1), two (2),
three (3) or six (6) months thereafter, as selected by a Borrower pursuant to
Section 2.5.1(b); provided, however, that:
(a) any Interest Rate Period which would otherwise end on
a day which is not a Banking Day shall end on the next succeeding Banking Day
unless such next succeeding Banking Day falls in another calendar month, in
which case such Interest Rate Period shall end on the next preceding Banking
Day;
(b) any Interest Rate Period which begins on the last
Banking Day of a calendar month, or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Rate
Period, shall end on the last Banking Day of the calendar month at the end of
such Interest Rate Period; and
(c) no Interest Rate Period shall extend beyond the
Termination Date.
"Inventory" means any and all of each Borrower's and each
Designated Subsidiary's goods (including without limitation goods in transit)
wheresoever located, which are held for sale or lease, furnished or to be
furnished under any contract of service or lease or consignment, or held as raw
materials, work in process, or supplies or materials used or consumed in such
Borrower's or such Designated Subsidiary's business (other than parts
supplies), or which are held for use in connection with the manufacture,
packing, shipping, advertising, selling or finishing of such goods, and any and
all goods the sale or other disposition of which has given rise to an Account
Receivable, Contract Right or any other property described in Section 3.1(a),
which are returned to and/or repossessed and/or stopped in transit by, or at
any time hereafter are in the possession or under the control of, either
Borrower, any Designated Subsidiary, any Agent or any Lender or any agent or
bailee of any of them, and all documents of title or other documents
representing the same.
"Inventory Sublimit" means the U.S. Dollar Equivalent of (a)
$15,000,000, during the period commencing on the date hereof and ending on the
day before the second anniversary of the date hereof, (b) $12,500,000, during
the period commencing on the second anniversary of the date hereof and ending
on the day before the third anniversary of the date hereof and (c) $10,000,000,
at all times on and after the third anniversary of the date hereof.
"Investment" of any Person means any investment, made in cash
or by delivery of any kind of property or asset, in any other Person, whether
by acquisition of
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shares of stock or similar interest, Indebtedness or other obligation or
security, or by loan, advance or capital contribution, or otherwise.
"Issuing Banks" means, collectively, U.S. Issuing Bank and
Canadian Issuing Bank.
"Kemwater" means Kemwater North America Company, a Delaware
corporation and a Subsidiary of Parent.
"L/C Draft" means a draft drawn on an Issuing Bank pursuant to
a Letter of Credit issued by such Issuing Bank.
"Lenders" means, collectively, U.S. Lenders and Canadian
Lenders.
"Letter of Credit" means a standby letter of credit issued by
an Issuing Bank hereunder on the Application of a Borrower.
"Letter of Credit Obligations" of either Borrower means at any
time an amount equal to the sum of (a) the U.S. Dollar Equivalent of the
aggregate outstanding undrawn face amount of all Letters of Credit issued on
the Application of such Borrower plus (b) the U.S. Dollar Equivalent of the
aggregate outstanding face amount of all accepted but unpaid L/C Drafts
relating to Letters of Credit issued on the Application of such Borrower.
"Liabilities" means all of the liabilities, obligations
(including obligations of performance) and indebtedness of each Borrower to any
Agent or any Lender of any kind or nature, however created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing or due or to become due, and arising under, or in connection with,
this Agreement, any Note, any Related Agreement, any Bankers' Acceptance, any
Letter of Credit or any Application therefor, including without limitation all
Overdraft Loans, interest, charges, expenses, Attorneys' Fees and other sums
chargeable to such Borrower by any Agent or any Lender hereunder or thereunder.
"Liabilities" shall also include any and all amendments, extensions, renewals,
refundings or refinancings of any of the foregoing.
"LIBO Base Rate" means, with respect to each Interest Rate
Period for a LIBO Rate Loan, the rate per annum (rounded upward, if necessary,
to the nearest one hundredth of one percent (1/100%)) at which U.S. Dollar
deposits in immediately available funds are offered to the LIBO Office of BOA
two (2) Banking Days prior to the beginning of such Interest Rate Period by
major banks in the applicable interbank eurodollar market as at or about the
relevant local time of such LIBO Office, for delivery on the first (1st) day of
such Interest Rate Period, for the number of days comprised therein and in an
amount equal to the amount of the LIBO Rate Loan to be outstanding during such
Interest Rate Period. As used herein, "relevant local time" as to any LIBO
Office means 11:00 a.m. (London time), when such LIBO Office is located in
Europe or the Middle East, and 10:00 a.m. (Chicago time), when such LIBO Office
is located in North America or the Caribbean.
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<PAGE> 23
"LIBO Office" means with respect to any Lender the office or
offices of such Lender which shall be making or maintaining the LIBO Rate Loans
of such Lender hereunder or such other office or offices through which such
Lender determines its LIBO Base Rate. A LIBO Office of any Lender may be, at
the option of such Lender, either a domestic or foreign office.
"LIBO Rate" means, with respect to each Interest Rate Period
for a LIBO Rate Loan, a rate per annum (rounded upward, if necessary, to the
nearest one hundredth of one percent (1/100th of 1%)) determined pursuant to
the following formula:
LIBO Rate = LIBO Base Rate
--------------------------------------------
1-Eurocurrency Reserve Requirement
"LIBO Rate Loan" means any U.S. Dollar portion of the
Revolving Loan which bears interest at a Fixed Rate determined with reference
to the LIBO Rate.
"Lien" means any security interest, mortgage, pledge,
hypothecation, judgment lien or similar legal process, title retention lien, or
other lien or encumbrance, including without limitation the interest of a
vendor under any conditional sale or other title retention agreement and the
interest of a lessor under any Capitalized Lease.
"Loan" means (a) any Revolving Loan made pursuant to Section
2.1.1 and (b) any other loan, advance or other availment made to either
Borrower by any Agent or any Lender under or pursuant to this Agreement.
"Loan Account" has the meaning ascribed to such term in
Section 2.4.
"Loan Limit" at any time means with respect to (a) PAAC, an
amount equal to US$35,000,000 (the "PAAC Maximum") and (b) PCI Canada, an
amount equal to the U.S. Dollar Equivalent of $30,000,000 (the "PCI Canada
Maximum"), in each case, minus any permanent reductions in such amounts made
pursuant to Section 2.1.2, provided, that the PAAC Maximum and the PCI Canada
Maximum may be reallocated by Borrowers two times during each 12 month period
hereafter, by means of a written notice executed by Borrowers and received by
Administrative Agent at least thirty (30) days prior to the effective date of
such reallocation, so long as (i) the aggregate amount of the PAAC Maximum and
the PCI Maximum does not at any time exceed the U.S. Dollar Equivalent of
$65,000,000 minus any permanent reductions in such amounts made pursuant to
Section 2.1.2, (ii) the PAAC Maximum is not at any time less than US$25,000,000
or greater than the sum of the Maximum Loan Amounts of the U.S. Lenders, (iii)
the PCI Canada Maximum is not at any time greater than the U.S. Dollar
Equivalent of the sum of the Maximum Loan Amounts of the Canadian Lenders and
(iv) at the effective date of each reallocation, Borrowers deliver to
Administrative Agent
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such amended and restated Notes as Administrative Agent shall reasonably
request in order to evidence the reallocated Loan Limits.
"Margin Stock" has the meaning ascribed to such term in
Regulation U of the Federal Reserve Board or any regulation substituted
therefor, as in effect from time to time.
"Material Adverse Change" means (a) a material adverse change
in the condition (financial or otherwise), operations, performance, prospects,
properties or affairs, of either Borrower or in the ability of either Borrower
to perform its obligations under any material agreement to which such Borrower
is a party, (b) a material adverse change in the condition (financial or
otherwise), operations, performance, prospects, properties or affairs of
Borrowers and the Designated Subsidiaries taken as a whole or in the ability of
Borrowers and the Designated Subsidiaries taken as a whole to perform their
obligations under any material agreements to which they are parties, or (c) an
impairment of Administrative Agent's interest, for the benefit of Agents and
Lenders, in any material portion of the Collateral or the material diminution
in value of the Collateral.
"Material Adverse Effect" means (a) a material adverse effect
upon the condition (financial or otherwise), operations, performance,
prospects, properties or affairs, of either Borrower or upon the ability of
either Borrower to perform its obligations under any material agreement to
which such Borrower is a party, (b) a material adverse effect upon the
condition (financial or otherwise), operations, performance, prospects,
properties or affairs of Borrowers and the Designated Subsidiaries taken as a
whole or upon the ability of Borrowers and the Designated Subsidiaries taken as
a whole to perform their obligations under any material agreements to which
they are parties, or (c) an impairment of Administrative Agent's interest, for
the benefit of Agents and Lenders, in any material portion of the Collateral or
the material diminution in value of the Collateral.
"Maximum Loan Amount" means, with respect to any Lender, the
aggregate maximum amount of Loans which such Lender has agreed, pursuant to the
terms and conditions of this Agreement, to make available to Borrowers, as set
forth on the signature page hereto or in an Assignment and Acceptance Agreement
executed by such Lender.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA that is maintained for employees of either
Borrower or any ERISA Affiliate.
"Note" means any promissory note of a Borrower evidencing any
loan or advance made by any Lender to such Borrower pursuant to this Agreement,
as the same may be amended, modified or supplemented from time to time.
"Obligor" means each Borrower and each other Person (including
without limitation each Designated Subsidiary) who is or shall become primarily
or secondarily
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liable on any of the Liabilities, or who grants to Administrative Agent, for
the benefit of Agents and Lenders, a Lien on any property of such Person as
security for any of the Liabilities.
"Obligor Collateral" means any real or personal property of
any Obligor on which a Lien has been granted to Administrative Agent, for the
benefit of Agents and Lenders, in order to secure the Liabilities and/or such
Obligor's guaranty of the Liabilities.
"OCC" means OCC Tacoma, Inc., a Delaware corporation.
"OCC Closing Date" means June 17, 1997.
"Occupational Safety and Health Law" means the Occupational
Safety and Health Act of 1970 and any other federal, state, provincial or local
statute, law, ordinance, code, rule, regulation, order, policy, guideline or
decree regulating, relating to or imposing liability or standards of conduct
concerning employee health and/or safety, as in effect from time to time in any
applicable jurisdiction.
"Original Lender" means BOA in its capacity as a "Lender"
under the Original Loan Agreement.
"Original Loan Agreement" means the Loan and Security
Agreement dated as of the OCC Closing Date among BOA, as Agent, Original
Lender, and PAAC, as amended, supplemented and modified to the Closing Date,
including without limitation by means of a certain Consent and Amendment No. 1
to Loan and Security Agreement dated the ICI Closing Date among BOA, as Agent,
Original Lender, PAAC and PCI Canada ("Amendment No. 1").
"Over Advance" has the meaning ascribed to such term in
Section 2.9.
"Overall Share" means, with respect to any Lender, a fraction
(expressed as a percentage in nine (9) decimal places), the numerator of which
shall be the Maximum Loan Amount of such Lender and the denominator of which
shall be the aggregate amount of the Maximum Loan Amounts of all Lenders.
"Overdraft Loan" has the meaning ascribed to such term in
Section 2.8.
"PAAC" has the meaning ascribed to such term in the Preamble.
"PAAC Offering Memorandum" means that certain Offering
Memorandum relating to the issuance of the PAAC Senior Secured Notes dated June
11, 1997.
"PAAC Senior Secured Loans" means, collectively, all
Indebtedness of PAAC represented by the PAAC Senior Secured Notes.
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<PAGE> 26
"PAAC Senior Secured Note Documents" means, collectively, the
agreements, instruments and documents evidencing and governing the PAAC Senior
Secured Notes, including the PAAC Senior Secured Note Indenture, as each of the
same has been and may hereafter be amended, modified or supplemented from time
to time in compliance with Section 5.26 hereof.
"PAAC Senior Secured Note Indenture" means the Indenture dated
as of the OCC Closing Date among PAAC, the Subsidiary Guarantors (as defined
therein) and United States Trust Company of New York as Trustee for the PAAC
Senior Secured Notes.
"PAAC Senior Secured Notes" means, collectively, PAAC's 9 1/4%
Senior Secured Notes due 2007, Series B, in the aggregate principal amount due
upon maturity of not more than US$200,000,000.
"PAAC Term Lenders" means the lenders of the PAAC Term Loans
pursuant to the PAAC Term Loan Documents.
"PAAC Term Loan Agreement" means the Term Loan Agreement dated
as of the OCC Closing Date among PAAC, the PAAC Term Lenders, DLJ Capital
Funding, Inc., as Syndication Agent for the PAAC Term Lenders, Salomon Brothers
Holding Company, Inc., as Documentation Agent for the PAAC Term Lenders and
Bank of America National Trust and Savings Association, formerly known as Bank
of America Illinois, as Administrative Agent for the PAAC Term Lenders.
"PAAC Term Loan Documents" means, collectively, the
agreements, instruments and documents evidencing and governing the PAAC Term
Loans, including the PAAC Term Loan Agreement, as each of the same has been and
may hereafter be amended, modified or supplemented from time to time in
compliance with Section 5.26 hereof.
"PAAC Term Loans" means, collectively, all indebtedness of
PAAC under the PAAC Term Loan Documents, in the aggregate principal amount due
upon maturity of not more than US$100,000,000.
"PAI" means Pioneer Americas, Inc., a Subsidiary of PAAC.
"PAI Term Lenders" means the lenders of the PAI Term Loans
pursuant to the PAI Term Loan Documents.
"PAI Term Loan Agreement" means that Term Loan Agreement dated
as of October 30, 1997 among PAI, PAAC, the PAI Term Lenders, DLJ Capital
Funding, Inc., as Syndication Agent for the PAI Term Lenders, Salomon Brothers
Holding Company Inc., as Documentation Agent for the PAI Term Lenders, Bank of
America National Trust and Savings Association, formerly known as Bank of
America Illinois, as Administrative
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<PAGE> 27
Agent for the PAI Term Lenders and United States Trust Company of New York, as
Collateral Agent for the PAI Term Lenders.
"PAI Term Loan Documents" means, collectively, the agreements,
instruments and documents evidencing and governing the PAI Term Loans,
including the PAI Term Loan Agreement, as each of the same has been or may
hereafter be amended, modified or supplemented from time to time in compliance
with Section 5.26 hereof.
"PAI Term Loans" means, collectively, all indebtedness of PAI
under the PAI Term Loan Documents, in the aggregate principal amount due upon
maturity of not more than US$83,000,000.
"Parent" means Pioneer Companies, Inc., (formerly known as GEV
Corporation), a Delaware corporation.
"Participant" means any Person, now or at any time or times
hereafter, participating with any Lender, pursuant to the provisions of Section
11.9, in any of the Loans made (including, without limitation, Bankers'
Acceptances accepted) or Letters of Credit issued, pursuant to this Agreement
or any Related Agreement.
"Payment Liabilities" means all Liabilities (other than
contingent obligations of a Borrower with respect to which neither any Agent
nor any Lender has asserted a claim against such Borrower or against which such
Borrower has provided reserves or Collateral satisfactory to such Agent or such
Lender); provided, that Payment Liabilities shall include the Bankers'
Acceptance Obligations and the Letter of Credit Obligations.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"PCAC" means Pioneer Chlor Alkali Company, Inc., an indirect
Subsidiary of PAAC.
"PCI Canada" has the meaning ascribed to such term in the
Preamble.
"PCI Canada Offering Memorandum" means that certain Offering
Memorandum relating to the issuance of the PCI Canada Senior Secured Notes
dated October 22, 1997.
"PCI Canada Senior Secured Loans" means, collectively, all
Indebtedness of PCI Canada represented by the PCI Canada Senior Secured Notes.
"PCI Canada Senior Secured Note Documents" means,
collectively, the agreements, instruments and documents evidencing and
governing the PCI Canada Senior Secured Notes, including the PCI Canada Senior
Secured Note Indenture, as each of the same has been or may hereafter be
amended, modified or supplemented from time to time in compliance with Section
5.26 hereof.
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<PAGE> 28
"PCI Canada Senior Secured Note Indenture" means, the
Indenture dated as of October 30, 1997 among PCI Canada, the Subsidiary
Guarantors (as defined therein) and United States Trust Company of New York as
Trustee for the PCI Canada Senior Secured Notes.
"PCI Canada Senior Secured Notes" means, collectively, PCI
Canada's 9 1/4% Senior Secured Notes due 2007, Series B, in the aggregate
principal amount due upon maturity of not more than US$175,000,000.
"PCI Carolina" means PCI Carolina, Inc., a Subsidiary of PAI.
"Pension Plan" means a "pension plan," as such term is defined
in Section 3(2) of ERISA, that is subject to the provisions of Title IV of
ERISA (other than a Multiemployer Plan) and to which any Borrower or any ERISA
Affiliate may have any liability, including any liability by reason of being
deemed to be a contributing sponsor under Section 4069 of ERISA.
"Permitted Intercompany Indebtedness" shall mean Indebtedness
of a Designated Subsidiary to PAAC as permitted pursuant to Section 5.19.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, or government (whether national, federal,
provincial, state, county, city, municipal or otherwise, including without
limitation any instrumentality, division, agency, body or department thereof).
"PPSA" means the Personal Property Security Act as in effect
in the Province of Ontario, or any other Canadian federal or provincial statute
pertaining to the granting, perfecting or priority of Liens on personal
property, and any successor statutes, together with any regulations thereunder,
in each case as in effect from time to time. References to sections of the
PPSA shall be construed to also refer to any successor sections.
"Pre-Settlement Determination Date" has the meaning ascribed
to such term in Section 2.16.
"Priority Payables" means, with respect to any Person, any
amount payable by such Person which is secured by a Lien in favor of a
governmental authority or other regulatory body which ranks or is capable of
ranking prior to or pari passu with the Liens held or to be held by the
Administrative Agent hereunder, for the benefit of Agents and Lenders, in
respect of any Eligible Account Receivable or Eligible Inventory, including,
without limiting the generality of the foregoing, amounts owing for wages,
vacation pay, severance pay, employee deductions, sales tax, excise tax, tax
payable pursuant to Part IX of the Excise Tax Act (Canada) (net of GST input
credits), income tax, withholding tax, workers compensation, government
royalties, pension fund obligations, overdue rents or
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<PAGE> 29
taxes, and other statutory or other claims that have or may have priority over
such Liens held by the Administrative Agent, for the benefit of Agents and
Lenders.
"Pro Rata Share" means, with respect to any Lender, a fraction
(expressed as a percentage in nine (9) decimal places), the numerator of which
shall be the Maximum Loan Amount of such Lender and the denominator of which
shall be the aggregate amount of the Maximum Loan Amounts of (a) if such Lender
is a U.S. Lender, all U.S. Lenders or (b) if such Lender is a Canadian Lender,
all Canadian Lenders, as applicable.
"Reference Rate" means, at any time, the higher of (a) the
rate of interest then most recently announced by BOA at Chicago, Illinois as
its reference rate and (b) the then applicable Federal Funds Rate plus one-half
of one percent (0.50%). Each change in the interest rate on any Reference Rate
Loan shall take effect on the effective date of the change in the Reference
Rate.
"Reference Rate Loan" means any U.S. Dollar portion of the
Revolving Loan which bears interest at a Floating Rate determined with
reference to the Reference Rate.
"Register" has the meaning ascribed to such term in Section
11.9(d).
"Related Agreement" means any agreement, instrument or
document (including without limitation notes, guarantees, chattel mortgages,
pledges, powers of attorney, consents, assignments, contracts, notices,
security agreements, leases, financing statements, subordination agreements,
intercreditor agreements, trust account agreements and all other written
matter) heretofore, now, or hereafter delivered to any Agent or any Lender with
respect to or in connection with or pursuant to this Agreement or any of the
Liabilities, and executed by or on behalf of either Borrower, any Designated
Subsidiary or any other Obligor, as each of the same may be amended, modified
or supplemented from time to time and shall specifically include any Notes and
any Supplemental Documentation. The Related Agreements shall specifically
exclude the Transaction Documents.
"Related Party" means, with respect to any Person, any other
Person (a) that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such first
Person or a subsidiary of such first Person, (b) that beneficially owns or
holds ten percent (10%) or more of the equity interest of such first Person or
a subsidiary of such first Person or (c) ten percent (10%) or more of the
equity interest of which is beneficially owned or held by such first Person or
a subsidiary of such first Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
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"Release" means any actual or threatened spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of Hazardous Materials into the environment.
"Reportable Event" has the meaning given to such term in
ERISA.
"Requisite Lenders" means Lenders having, in the aggregate,
Overall Shares that represent at least sixty-six and two-thirds percent (66
2/3%) of the aggregate Overall Shares of all Lenders; provided, that during any
time that there are only two Lenders, "Requisite Lenders" shall mean both
Lenders.
"Revolving Credit Amount" means an amount equal to
US$65,000,000, as such amount may be reduced from time to time pursuant to this
Agreement.
"Revolving Loan" means the loans made pursuant to Section
2.1.1, including without limitation BA Availments.
"Revolving Loan Availability" means, for each Borrower, (a)
the lesser of (i) such Borrower's Loan Limit and (ii) the Borrowing Base minus
the outstanding Liabilities of the other Borrower, minus (b) the Letter of
Credit Obligations of such Borrower.
"Seller Notes" means, collectively, the subordinated
promissory notes issued by Parent to the Sellers in the original aggregate
principal amount of US$10,000,000, as adjusted.
"Sellers" means the "Sellers" as defined in the Stock Purchase
Agreement.
"Senior Secured Loans" means, collectively, the PAAC Senior
Secured Loans and the PCI Canada Senior Secured Loans.
"Senior Secured Note Documents" means, collectively, the PAAC
Senior Secured Note Documents and the PCI Canada Senior Secured Note Documents.
"Settlement Date" has the meaning ascribed to such term in
Section 2.16.
"Spot Rate" for a currency means the rate quoted by the
applicable Funding Agent as the spot rate for the purchase of such currency
with another currency through its FX Trading Office at approximately 10:30 a.m.
(local time) on the date two (2) Banking Days prior to the date as of which the
foreign exchange computation is made.
"Stock Purchase Agreement" means that certain Stock Purchase
Agreement, dated as of March 24, 1995, by and among PAAC and Parent, as
purchasers, and Richard C. Kellogg, Jr., Frans G.J. Speets, D.A. Huckabay, and
all common shareholders, warrant holders and option holders of PAI, as sellers.
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"Subordinated Debt" means, collectively, that portion of any
liabilities, obligations or Indebtedness of either Borrower or any Designated
Subsidiary which is subordinated as to right and time of payment of principal
and interest thereon, to all of the Liabilities.
"Subordinated Debt Documents" means, collectively, the
agreements, instruments and documents evidencing or otherwise pertaining to any
Subordinated Debt, as each of the same may be amended, modified or supplemented
from time to time in compliance with Section 5.26.
"Subsidiary" means any Person of which or in which either
Borrower and its other Subsidiaries own directly or indirectly fifty percent
(50%) or more of (a) the combined voting power of all classes of stock having
general voting power under ordinary circumstances to elect a majority of the
board of directors of such Person, if it is a corporation, (b) the capital
interest or profits interest of such Person, if it is a partnership, joint
venture or similar entity or (c) the beneficial interest of such Person, if it
is a trust, association or other unincorporated organization.
"Supplemental Documentation" has the meaning ascribed to such
term in Section 3.4.
"Taxes" with respect to any Person means taxes, assessments or
other governmental charges or levies imposed upon such Person, its income or
any of its properties, franchises or assets or required to be collected or
withheld by such Person.
"TC Notes" means, collectively, the subordinated promissory
notes issued by All-Pure Chemical Co. on July 31, 1996 to the sellers of the
stock of T.C. Holdings, Inc., in the original aggregate principal amount of
US$4,500,000.
"TCH" means T.C. Holdings, Inc., a Subsidiary of All Pure
Chemical Co.
"Term Loan Documents" means, collectively, the PAAC Term Loan
Documents and the PAI Term Loan Documents.
"Term Loans" means, collectively, the PAAC Term Loans and the
PAI Term Loans.
"Termination Date" means June 17, 2002.
"Trade Accounts Payable" of any Person means trade accounts
payable of such Person with a maturity of not greater than two hundred seventy
(270) days incurred in the ordinary course of such Person's business.
"Transaction Documents" means, collectively, the agreements,
instruments and documents evidencing and governing the Transactions, as each of
the same has been or may hereafter be amended, modified or supplemented from
time to time in compliance with Section 5.26 hereof.
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"Transactions" means, collectively, (a) the financing pursuant
to the Senior Secured Note Documents, (b) the financing pursuant to the Term
Loans, (c) the acquisition on the OCC Closing Date by PCAC of certain assets of
OCC Tacoma, Inc. and certain transactions consummated in connection therewith,
(d) the acquisition on the ICI Closing Date by PCI Canada and PCI Carolina of
certain assets of the ICI Sellers and certain transactions consummated in
connection therewith.
"UCC" means the Uniform Commercial Code as in effect in the
State of Illinois, and any successor statute, together with any regulations
thereunder, in each case as in effect from time to time. References to
sections of the UCC shall be construed to also refer to any successor sections.
"Unmatured Event of Default" means any event or condition
which, with the lapse of time or giving of notice to Borrowers or both, would
constitute an Event of Default.
"U.S. Dollar Equivalent" means at any time (a) as to any
amount denominated in U.S. Dollars, the amount thereof at such time, and (b) as
to any amount denominated in Canadian Dollars, the equivalent amount in U.S.
Dollars as determined by Administrative Agent at such time on the basis of the
Spot Rate for the purchase of U.S. Dollars with Canadian Dollars.
"U.S. Dollar Loan" means any Loans denominated in U.S.
Dollars.
"U.S. Dollars" and "US$" each mean lawful money of the United
States.
"U.S. Funding Agent" means BOA in its capacity as funding
agent for U.S. Lenders hereunder and under the Related Agreements, or any
successor funding agent for U.S. Lenders that is a corporation organized under
the laws of the United States (or a state thereof) or is entitled to complete
exemption from United States withholding tax imposed on or with respect to any
payments to be made to it pursuant to this Agreement, pursuant to Section 10.
"U.S. Issuing Bank" means BOA or any other U.S. Lender
selected by U.S. Funding Agent with the consent of PAAC (which will not be
unreasonably withheld) to issue Letters of Credit under this Agreement for the
account of PAAC.
"U.S. Lenders" means, collectively, BOA and any other Person
that becomes a U.S. Lender under this Agreement and each of their respective
successors and assigns as provided in this Agreement.
"ZENECA Indemnity" means the indemnity in favor of PAI by
ZENECA Delaware Holdings, Inc. and ZENECA, Inc. (as successors to ICI Delaware
Holdings, Inc. and ICI Americas, Inc., respectively) in respect of certain
environmental matters, issued in connection with the purchase by PAI in
October, 1988 of PCAC.
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1.2. Other Definitional Provisions.
Unless otherwise defined or the context otherwise requires,
all financial and accounting terms used herein or in any certificate or other
document made or delivered pursuant hereto shall be defined in accordance with
GAAP. Unless otherwise defined therein, all terms defined in this Agreement
shall have such defined meanings when used in any Related Agreement or
Supplemental Documentation. Terms used in this Agreement which are defined in
any Exhibit hereto shall, unless the context otherwise indicates, have the
meanings given them in such Exhibit. Other terms used in this Agreement shall,
unless the context indicates otherwise, have the meanings provided for by the
UCC or the PPSA (Ontario), as the context may indicate, to the extent the same
are used or defined therein.
1.3. Interpretation of Agreement.
A Section, an Exhibit or a Schedule is, unless otherwise
stated, a reference to a section hereof, an exhibit hereto or a schedule
hereto, as the case may be. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement. The
words "hereof," "herein," "hereto" and "hereunder" and words of similar import
when used in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement.
1.4. Compliance with Financial Restrictions.
Compliance with each of the financial ratios and restrictions
contained in Section 5 shall, except as otherwise provided herein, be
determined in accordance with GAAP consistently followed.
1.5. Currency Equivalents Generally.
For all purposes of this Agreement (but not for purposes of
the preparation of any financial statements delivered pursuant hereto), the
equivalent in Canadian Dollars or other currency of an amount in U.S. Dollars,
and the equivalent in U.S. Dollars of an amount in Canadian Dollars or other
currency, shall be determined at the Spot Rate. All references in this
Agreement to dollar amounts or "$" which do not specify a currency shall be
deemed to mean U.S. Dollars.
1.6. Effect of Amendment and Restatement.
Upon the Closing Date, the Original Loan Agreement (and,
except as otherwise set forth in the following proviso, all obligations and
rights of any party thereunder), shall be amended and restated by this
Agreement; provided, however, that the obligations to repay the loans and
advances arising under the Original Loan Agreement shall continue in full force
and effect and the liens and security interests securing payment thereof shall
be continuing but shall now be governed by the terms of this Agreement and the
Related Agreements.
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2. LOANS; LETTERS OF CREDIT; OTHER MATTERS.
2.1. Loans.
2.1.1. Revolving Loans.
(a) Subject to the terms and conditions of this Agreement
and the Related Agreements, and in reliance upon the warranties and
representations of each Borrower set forth herein and the warranties and
representations of each Borrower and each other Obligor set forth in the
Related Agreements, (i) each U.S. Lender, severally and not jointly, agrees to
make its Pro Rata Share of such Revolving Loans from time to time before the
Termination Date to PAAC as PAAC may from time to time request and (ii) each
Canadian Lender, severally and not jointly, agrees to make its Pro Rata Share
of such Revolving Loans from time to time before the Termination Date to PCI
Canada as PCI Canada may from time to time request; provided, that, except as
provided in Section 2.9, the U.S. Dollar Equivalent of the aggregate
outstanding principal amount of the Revolving Loans made by or on behalf of
Lenders to each Borrower shall not at any time exceed the U.S. Dollar
Equivalent of such Borrower's Revolving Loan Availability; and provided
further, that, the U.S. Dollar Equivalent of the aggregate outstanding
principal balance of the Loans plus the aggregate Letter of Credit Obligations
shall not exceed the Revolving Credit Amount. Revolving Loans made by or on
behalf of Lenders may be repaid and, subject to the terms and conditions
hereof, reborrowed to but not including the Termination Date unless the Credit
extended under this Agreement is otherwise terminated as provided in this
Agreement. No Lender shall be obligated at any time to make available to
either Borrower its Pro Rata Share of any requested Revolving Loan if the U.S.
Dollar Equivalent of such amount, plus such Lender's Pro Rata Share of the U.S.
Dollar Equivalent of the sum of (x) all Revolving Loans then outstanding and
(y) all Letter of Credit Obligations, would exceed such Lender's Maximum Loan
Amount at such time. No Lender shall be obligated to make available its Pro
Rata Share of any Revolving Loans during the existence of any Event of Default
or Unmatured Event of Default; provided that notwithstanding the foregoing or
anything contained herein to the contrary, each applicable Lender shall, at the
request of Administrative Agent, continue to be obligated to make its Pro Rata
Share of the Revolving Loans available to each Borrower for a period of up to
five (5) Banking Days after the occurrence and during the continuance of an
Event of Default or an Unmatured Event of Default, but in any event, (y) the
aggregate amount of such Revolving Loans outstanding at any time for all
Lenders shall not exceed the U.S. Dollar Equivalent of $3,250,000 and (z) no
Lender shall be obligated at any time to make available to either Borrower its
Pro Rata Share of any such requested Revolving Loan if the U.S. Dollar
Equivalent of such amount, plus its Pro Rata Share of the U.S. Dollar
Equivalent of the sum of (x) all Revolving Loans then outstanding and (y) all
Letter of Credit Obligations, would exceed such Lender's Maximum Loan Amount at
such time. Neither any Agent nor any Lender shall be responsible for any
failure by any other Lender to perform its obligations to make advances
hereunder, and the failure of any Lender to make its Pro Rata Share of any
advance hereunder shall not relieve any other Lender of its obligation, if any,
to make its Pro Rata Share of Loans hereunder, nor require such other Lender to
make more than its Pro Rata Share of any Loans hereunder.
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(b) Subject to the terms and conditions of this Agreement
and the Related Agreements, Revolving Loans to be made to PAAC shall be
advanced by U.S. Funding Agent, on behalf of U.S. Lenders, as set forth herein,
and Revolving Loans to be made to PCI Canada shall be advanced by Canadian
Funding Agent, on behalf of Canadian Lenders, as set forth herein. Revolving
Loans shall be directly advanced to PCI Canada only from Canadian Lenders and
not from any Lender who is a non-resident person for purposes of the Income Tax
Act (Canada). If either Borrower makes a request for a Revolving Loan as
provided herein (except for BA Availments), or if Administrative Agent informs
the applicable Funding Agent that Administrative Agent desires to make a
Revolving Loan (except for BA Availments) pursuant to any other provision of
this Agreement or any Related Agreement that permits Administrative Agent to
advance or cause to be advanced Revolving Loans (except for BA Availments) to a
Borrower, the applicable Funding Agent, at its option and in its sole and
absolute discretion, shall do either of the following:
(i) Advance the amount of the proposed Revolving Loan to
such Borrower disproportionately (a "Disproportionate Advance") out of
such Funding Agent's own funds on behalf of the applicable Lenders,
and request settlement in accordance with Section 2.16, such that,
upon such settlement, each applicable Lender's share of the
outstanding Revolving Loans (including, without limitation, the amount
of any Disproportionate Advance) equals its Pro Rata Share and such
Disproportionate Advance shall be deemed to be repaid to such Funding
Agent; or
(ii) Notify each applicable Lender and the applicable
Borrower by telecopy or other similar form of teletransmission of the
proposed advance on the same day such Funding Agent is notified by
such Borrower of such Borrower's request for an advance hereunder or
the same day such Funding Agent has been informed of Administrative
Agent's desire to make a Revolving Loan for the benefit of such
Borrower (to the extent permitted hereunder or under any Related
Agreement). Each applicable Lender shall remit, to the applicable
Demand Deposit Account, on or prior to twelve o'clock noon, local
time, on the Banking Day immediately succeeding the date of such
notification, immediately available funds in an amount equal to such
Lender's Pro Rata Share of such proposed advance.
Subject to Section 2.19, if and to the extent that a Lender does not settle
with the applicable Funding Agent as required under clause (i), the applicable
Borrower agrees to repay to such Funding Agent forthwith on demand such amount
required to be paid by such Lender to such Funding Agent, together with
interest thereon, for each day from the date such amount is made available to
such Borrower until the date such amount is repaid to such Funding Agent, at
the interest rate applicable at such time for such Revolving Loans; provided,
that such Borrower's obligation to repay such advance to such Funding Agent
shall not relieve each Lender of its liability to such Funding Agent or such
Borrower for failure to settle as provided in clause (i).
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(c) In the event the U.S. Dollar Equivalent of the sum of
the aggregate outstanding principal balance of the Revolving Loans of either
Borrower and the Letter of Credit Obligations of such Borrower exceeds such
Borrower's Revolving Loan Availability, such Borrower shall, unless
Administrative Agent permits such Over Advance as provided in Section 2.8 or
Requisite Lenders shall otherwise consent, without notice or demand of any
kind, immediately make such repayments of the Revolving Loans or take such
other actions as shall be necessary to eliminate such excess.
(d) Each Revolving Loan (except for BA Availments) made
to (i) PCI Canada may be denominated, at PCI Canada's option, in either U.S.
Dollars or Canadian Dollars and (ii) PAAC shall be denominated in U.S. Dollars.
If no Applicable Currency is specified by PCI Canada, Agents and Lenders may
assume that the request is for a Revolving Loan (except for BA Availments)
denominated in U.S. Dollars. Each U.S. Dollar Revolving Loan shall be in an
amount equal to US$500,000 or an integral multiple thereof. Each Canadian
Dollar Revolving Loan shall be in an amount equal to C$500,000 and in integral
multiples of C$100,000 thereafter. All BA Availments shall be denominated in
Canadian Dollars.
(e) Each Revolving Loan hereunder shall be paid by the
applicable Borrower on the Termination Date, unless payable sooner pursuant to
the provisions of this Agreement, but may, at the applicable Borrower's
election, and in the manner set forth in Section 2.1.2, be repaid in whole or
in part at any time prior to such date without premium or penalty (other than
as expressly provided in Section 2.5.6 with respect to Fixed Rate Loans repaid
prior to the end of the applicable Interest Rate Period or maturity date of a
Bankers' Acceptance, as the case may be).
2.1.2. Prepayment of Liabilities; Reduction of Revolving
Credit Amount. Borrowers may prepay all of the Liabilities in full at any
time, without premium or penalty (other than as expressly provided in Section
2.5.6 with respect to Fixed Rate Loans repaid prior to the end of the
applicable Interest Rate Period or maturity date of a Bankers' Acceptance, as
the case may be), by delivering to Administrative Agent a written notice
specifying the date of such prepayment (which shall be no less than three (3)
Banking Days after receipt by Administrative Agent of such notice) and by
prepaying the outstanding principal balance of the Revolving Loans, together
with (a) all accrued and unpaid interest on the Liabilities, (b) all other
outstanding Liabilities and (c) cash in the amount of, or adequate (in
Administrative Agent's determination) cash collateral for, the aggregate Letter
of Credit Obligations and Bankers' Acceptance Obligations. Each Borrower may
repay its Liabilities in part at any time, without premium or penalty (other
than as expressly provided in Section 2.5.6 with respect to Fixed Rate Loans
repaid prior to the end of the applicable Interest Rate Period) by delivering
to Administrative Agent a written notice specifying (i) the aggregate amount of
such prepayment, (ii) the amount of such prepayment that is to be applied to
LIBO Rate Loans, BA Availments, Canadian Prime Rate Loans, Adjusted Reference
Rate Loans and Reference Rate Loans, respectively, (iii) the date of such
prepayment (which shall be no less than three (3) Banking Days after receipt by
Administrative Agent of such notice, in the case of repayment of Fixed Rate
Loans and no less than one (1) Banking Day after receipt by Administrative
Agent of such notice, in the case of repayment of Floating Rate Loans) and by
prepaying such principal amount, together with (in the case of Fixed Rate
Loans) all accrued and unpaid interest thereon. Borrowers may, without
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premium or penalty (other than as expressly provided in Section 2.5.6 with
respect to Fixed Rate Loans repaid prior to the end of the applicable Interest
Rate Period or the maturity date of a Bankers' Acceptance, as the case may be)
permanently reduce the Revolving Credit Amount and the individual Loan Limits of
either or both Borrowers (including without limitation the PAAC Maximum and the
PCI Canada Maximum, as applicable), by integral multiples of the U.S. Dollar
Equivalent of $1,000,000, by delivering to Administrative Agent a written notice
specifying (A) the amount of the reduction in the Revolving Credit Amount, (B)
the amount of each resulting reduction in a Borrower's Loan Limit (the aggregate
amount of which reductions must equal the amount of the reduction in the
Revolving Credit Amount) and the PAAC Maximum and/or the PCI Canada Maximum, as
applicable and (C) the effective date of such reductions (which shall be no less
than three (3) Banking Days after receipt by Administrative Agent for such
notice), provided that (I) after giving effect to each such reduction, the
Revolving Credit Amount equals or exceeds the U.S. Dollar Equivalent of the
aggregate outstanding amount of the Loans plus the aggregate Letter of Credit
Obligations then outstanding and each Borrower's Loan Limit equals or exceeds
the U.S. Dollar Equivalent of the aggregate outstanding amount of such
Borrower's Loans plus such Borrower's Letter of Credit Obligations then
outstanding and (II) the Revolving Credit Amount may not be reduced below
US$40,000,000 and the Loan Limit of PAAC may not be reduced below the U.S.
Dollar Equivalent of $25,000,000. Each notice sent pursuant to this Section
2.1.2 shall be irrevocable. Notwithstanding any other provision hereof, the
effective date of prepayment of BA Availments shall be deemed to be the latest
date of maturity of any applicable Bankers' Acceptance toward which the
prepayment relates.
2.1.3. Maximum Outstanding Liabilities. Notwithstanding any
other provision of this Agreement, the U.S. Dollar Equivalent of the aggregate
outstanding principal balance of the Loans plus the aggregate Letter of Credit
Obligations shall not exceed the Revolving Credit Amount, and the U.S. Dollar
Equivalent of the aggregate outstanding principal balance of the Loans to each
Borrower plus the Letter of Credit Obligations of such Borrower shall not
exceed such Borrower's Loan Limit; provided, however, that the foregoing shall
not limit the right of Administrative Agent to direct each Funding Agent to
advance Revolving Loans to the applicable Borrower pursuant to any other
provision of this Agreement or any Related Agreement that permits
Administrative Agent to so direct a Funding Agent; provided that, no deemed
Revolving Loan shall be deemed to be a Revolving Loan by way of BA Availment.
Any Revolving Loan advanced by Administrative Agent to a Borrower under any of
the foregoing provisions shall be deemed to be a Revolving Loan made by the
applicable Funding Agent on behalf of the applicable Lenders; provided that, no
deemed Revolving Loan shall be deemed to be a Revolving Loan by way of BA
Availment.
2.1.4. Direction by Administrative Agent. Subject to
Section 2.3, each Funding Agent agrees to promptly act upon any direction by
Administrative Agent to advance Revolving Loans to the applicable Borrower
pursuant to any provision of this Agreement that permits Administrative Agent
to so direct such Funding Agent. Each applicable Lender agrees to fund or
reimburse such Funding Agent pursuant to Section 2.1.1(b).
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2.2. Letters of Credit.
(a) In addition to Loans made pursuant to Section 2.1,
Administrative Agent will, upon receipt of duly executed Applications and such
other documents, instruments and/or agreements as Administrative Agent may
require, request, on a Borrower's behalf, that the applicable Issuing Bank
issue Letters of Credit on such terms as are satisfactory to Administrative
Agent and such Issuing Bank, provided, however that no Letter of Credit will be
issued if, before or after taking such Letter of Credit into account, (i) the
U.S. Dollar Equivalent of the aggregate Letter of Credit Obligations exceed
$20,000,000, (ii) the U.S. Dollar Equivalent of the aggregate Letter of Credit
Obligations exceeds the lesser of (A) the Revolving Credit Amount minus the
U.S. Dollar Equivalent of the aggregate outstanding principal balance of the
Revolving Loans and (B) the aggregate Borrowing Base of all Borrowers minus the
U.S. Dollar Equivalent of the aggregate outstanding principal balance of the
Revolving Loans and (iii) the U.S. Dollar Equivalent of either Borrower's
Letter of Credit Obligations exceeds the lesser of (A) such Borrower's Loan
Limit minus the U.S. Dollar Equivalent of the aggregate outstanding principal
balance of such Borrower's Revolving Loans and (B) such Borrower's Borrowing
Base minus the U.S. Dollar Equivalent of the aggregate outstanding principal
balance of such Borrower's Revolving Loans. If any such excess shall at any
time exist, the applicable Borrower shall, unless Requisite Lenders shall
otherwise consent, promptly make such payments as are necessary to eliminate
such excess or shall promptly post cash collateral in the amount of such
excess. No letter of Credit shall have a term of more than one year and no
Letter of Credit shall have an expiry date after the Termination Date. Prior
to the Closing Date, Original Lender issued certain letters of credit for the
account of PAI under a certain Loan and Security Agreement dated the 1995
Closing Date and issued certain Letters of Credit for the account of PAAC under
the Original Loan Agreement (collectively, the "Existing Letters of Credit").
All Existing Letters of Credit still outstanding on the date hereof are listed
on Exhibit G. Agents, Issuing Banks, Lenders and Borrowers hereby agree that
the Existing Letters of Credit shall be deemed to be Letters of Credit issued
under this Agreement by US Issuing Bank for the account of PAAC and the Letter
of Credit Obligations in respect thereof shall be primary obligations of PAAC.
Letters of Credit to be issued on the Application of PAAC shall be issued by
U.S. Issuing Bank and shall be denominated in U.S. Dollars. Letters of Credit
to be issued on the Application of PCI Canada shall be issued by Canadian
Issuing Bank and may be denominated, at PCI Canada's option, in either U.S.
Dollars or Canadian Dollars. If no Applicable Currency is specified by PCI
Canada, Administrative Agent and Canadian Issuing Bank may each assume that the
request is for a Letter of Credit denominated in U.S. Dollars.
(b) Each Borrower agrees to pay to the applicable Issuing
Bank, on demand, such Issuing Bank's standard issuance, negotiation and
administrative operating fees and charges in effect from time to time for
issuing and administering any Letters of Credit for such Borrower and if not so
paid, each applicable Lender shall, without regard to any other provision of
this Agreement or any other Related Agreement, any defense that such Borrower
may have to its obligation to pay such Issuing Bank in connection with such
fees and charges or any defense that any Lender may have in connection with the
participation described in Section 2.2(e) in connection with any Letter of
Credit or L/C Draft, pay such Issuing Bank for such Lender's Pro Rata Share of
such fees and charges, and any payments so made by such Lenders to such Issuing
Bank shall be
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deemed to be Revolving Loans. Each Lender (other than a Lender that is an
Issuing Bank) acknowledges and agrees that it shall not be entitled to any of
the fees and charges of either Issuing Bank. Each Borrower further agrees to
pay the applicable Funding Agent, for the benefit of each Lender that is a
participant in a Letter of Credit pursuant to Section 2.2(e), a commission
equal to the Applicable Margin at such time for Letter of Credit commissions
(calculated on the basis of a year consisting of three hundred sixty (360) days
and paid for actual days elapsed) of the daily average of the undrawn amount of
each Letter of Credit issued on the Application of such Borrower and on each
L/C Draft accepted (but not yet paid) in connection therewith. Such Letter of
Credit commissions shall be paid in arrears on the last day of each quarter
hereafter, commencing June 30, 1998. At all times that any Default Rate is
being charged under this Agreement, the Letter of Credit commission shall be
equal to the otherwise applicable commission (i.e. the Applicable Margin at
such time for Letter of Credit commissions) plus two percent (2%) per annum.
Administrative Agent may provide for the payment of any fees, charges or
commissions due hereunder by directing the applicable Funding Agent to advance
the amount thereof to the applicable Borrower as a Revolving Loan. Each
Borrower agrees to pay the applicable Issuing Bank a Letter of Credit fronting
fee in an amount equal to 1/8% per annum of the amount of each Letter of
Credit, which fronting fees shall be payable at the same times as the Letter of
Credit commissions payable hereunder in respect of such Letter of Credit.
(c) Subject to the remaining sentences of this clause
(c), each Borrower agrees to reimburse the applicable Issuing Bank, on demand,
for each payment made by such Issuing Bank under or pursuant to any Letter of
Credit issued on such Borrower's Application or L/C Draft thereunder and if not
so reimbursed, each Lender that has purchased a participation in such Letter of
Credit or L/C Draft pursuant to Section 2.2(e), shall, without regard to any
other provision of this Agreement or any other Related Agreement, any defense
that such Borrower may have to its obligation to reimburse such Issuing Bank in
connection with such payment or any defense that any Lender may have in
connection with the participation described in Section 2.2(e) in connection
with any Letter of Credit or L/C Draft, reimburse such Issuing Bank for such
Lender's Pro Rata Share of such payment, and any payments so made by such
Lenders to such Issuing Bank shall be deemed to be Revolving Loans. Agents and
Lenders agree that so long as such Borrower has sufficient Revolving Loan
Availability and provided that no Event of Default is then in existence or
would be caused thereby, Administrative Agent will provide for the payment of
any reimbursement obligations and any interest accrued thereon by directing the
applicable Funding Agent to advance the amount thereof to such Borrower as a
Revolving Loan as soon as reasonably practicable. Prior to such advance, the
amount of such reimbursement obligations shall bear interest at the interest
rate then applicable to (i) Reference Rate Loans, if such reimbursement
obligations are owed by PAAC, (ii) Canadian Prime Rate Loans, if such
reimbursement obligations are owed by PCI Canada in respect of a Canadian
Dollar denominated Letter of Credit or (iii) Adjusted Reference Rate Loans, if
such reimbursement obligations are owed by PCI Canada in respect of a U.S.
Dollar denominated Letter of Credit. Administrative Agent shall have the
option to so provide for such payments pursuant to Section 2.9, even if a
Borrower does not have sufficient Revolving Loan Availability or pursuant to
Section 2.1.1(a), if an Event of Default is then in existence or would be
caused thereby and such amounts will bear interest at the rate set forth in
Section 2.9. In the event a Letter of Credit or L/C Draft is not reimbursed
from a Revolving Loan as provided herein, each applicable Borrower agrees to
pay the applicable
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Funding Agent, for the benefit of Lenders, on demand, interest at the Default
Rate on any amounts paid by the applicable Issuing Bank in respect of a Letter
of Credit or an L/C Draft until the reimbursement of such Issuing Bank by such
Borrower of such payment.
(d) Notwithstanding anything to the contrary herein or in
any Application, upon the occurrence of an Event of Default, an amount equal to
the aggregate amount of the outstanding Letter of Credit Obligations of each
Borrower shall, at Administrative Agent's option and without demand upon or
further notice to either Borrower, be deemed (as between Lenders and Borrowers)
to have been paid or disbursed by the applicable Issuing Bank under the Letters
of Credit and accepted L/C Drafts (notwithstanding that such amounts may not in
fact have been so paid or disbursed), and a Revolving Loan to the applicable
Borrower in the amount of such Letter of Credit Obligations to have been made
and accepted, which Loan shall be immediately due and payable. In lieu of the
foregoing, at the election of Administrative Agent at any time after an Event
of Default has occurred, the applicable Borrower shall, upon Administrative
Agent's demand, deliver to the applicable Funding Agent cash collateral equal
to the aggregate Letter of Credit Obligations of such Borrower. Any such cash
collateral and/or any amounts received by a Funding Agent in payment of the
Loan made pursuant to this paragraph (d) shall be held by such Funding Agent,
for the benefit of Agents and Lenders, in the applicable Assignee Deposit
Account or a separate account appropriately designated as a cash collateral
account in relation to this Agreement and the Letters of Credit and shall be
retained by a Funding Agent, for the benefit of Agents and Lenders, as
collateral security in respect of, first, the Liabilities under or in
connection with the Letters of Credit and L/C Drafts issued on the Application
of the applicable Borrower and then, all other Liabilities of such Borrower.
Such amounts shall not be used by such Funding Agent to pay any amounts drawn
or paid under or pursuant to any Letter of Credit or L/C Draft, but may be
applied to reimburse the applicable Issuing Bank for drawings or payments under
or pursuant to Letters of Credit or L/C Drafts which such Issuing Bank has
paid, or if no such reimbursement is required, to payment of such other
Liabilities of such Borrower as Administrative Agent shall determine and
direct. Any amounts remaining in any cash collateral account established
pursuant to this paragraph (d) following payment in full of all Liabilities
shall be returned to the applicable Borrower.
(e) Immediately upon the issuance of a Letter of Credit
upon the Application of PAAC in accordance with this Agreement, each U.S.
Lender shall be deemed to have irrevocably and unconditionally purchased and
received from U.S. Issuing Bank, without recourse or warranty, an undivided
interest and participation therein to the extent of such Lender's Pro Rata
Share (including without limitation all obligations of PAAC with respect
thereto). Immediately upon the issuance of a Letter of Credit upon the
Application of PCI Canada in accordance with this Agreement, each Canadian
Lender shall be deemed to have irrevocably and unconditionally purchased and
received from Canadian Issuing Bank, without recourse or warranty, an undivided
interest and participation therein to the extent of such Lender's Pro Rata
Share (including without limitation all obligations of PCI Canada with respect
thereto). Each Borrower hereby indemnifies each Agent, each Lender and each
Issuing Bank against any and all liability and expense it may incur in
connection with any Letter of Credit or L/C Draft issued upon such Borrower's
Application and agrees to reimburse each Agent and each Lender for any payment
made by such Agent or such Lender to an Issuing Bank, except for any liability
incurred or payment made as a result of such Agent's, such Lender's or such
Issuing Bank's gross negligence or willful misconduct.
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2.3. Bankers' Acceptances.
2.3.1. Form of Bankers' Acceptances.
All drafts presented by PCI Canada for acceptance by a BA
Lender pursuant to this Agreement shall be properly executed and drawn by PCI
Canada and shall be in the form used by such BA Lender from time to time in the
normal course of its business. PCI Canada shall deposit with Canadian Funding
Agent for distribution to each BA Lender a sufficient number of pre-signed and
endorsed blank forms of drafts, in a form used by each BA Lender from time to
time in its normal course of business. The receipt by the Canadian Funding
Agent of a request for an advance by way of a BA Availment shall be each BA
Lender's sufficient authority to complete, and each BA Lender shall, subject to
the terms and conditions of this Agreement, complete the pre-signed forms of
drafts in accordance with such request and the drafts so completed shall
thereupon be deemed to have been presented for acceptance.
Unless Canadian Funding Agent elects otherwise upon ten (10)
days' written notice to PCI Canada, PCI Canada may, at its option, execute any
draft by facsimile signature of any authorized signing officer of PCI Canada,
and the BA Lenders are hereby authorized to accept or pay, as the case may be,
any draft of PCI Canada which purports to bear such facsimile signature
notwithstanding that any such individual has ceased to be an authorized signing
officer of PCI Canada. Any such draft or Bankers' Acceptance shall bind PCI
Canada as if duly signed in the signing officer's own handwriting and issued by
PCI Canada. No BA Lender shall be liable for its failure to accept a Bankers'
Acceptance as required hereunder if the cause of such failure is, in whole or
in part, due to the failure of PCI Canada to provide executed drafts to
Canadian Funding Agent on a timely basis.
2.3.2. Payment of Bankers' Acceptance Fee.
Upon the presentation by PCI Canada of any draft for
acceptance by any BA Lender as a Bankers' Acceptance, PCI Canada shall pay to
Canadian Funding Agent the Bankers' Acceptance Fee upon the principal amount of
each Bankers' Acceptance for the duration of its term on the basis of the
actual number of days to elapse from and including the date of acceptance by
each such BA Lender up to but excluding the maturity date of the Bankers'
Acceptance, calculated on the basis of a calendar year.
Upon timely fulfillment of all applicable conditions set forth
in this Agreement, and in accordance with the procedures set out in Section
2.3.5, each BA Lender will accept the drafts or bills of exchange presented by
PCI Canada as Bankers' Acceptances and will make an amount equal to the BA
Discount Proceeds less the applicable Bankers' Acceptance Fee (if not paid by
PCI Canada) on the drawdown date requested by PCI Canada by crediting the
applicable Demand Deposit Account of PCI Canada.
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2.3.3. Sale of Bankers' Acceptances.
It shall be the responsibility of each BA Lender to arrange,
in accordance with normal market practice, for the sale on each drawdown date
of the Bankers' Acceptances issued by PCI Canada and to be accepted by that BA
Lender, failing which each BA Lender shall purchase such Bankers' Acceptances
at the BA Discount Rate. Notwithstanding any other provision hereof, if in the
determination of the Canadian Funding Agent, acting reasonably, a market for
Bankers' Acceptances does not exist at any time, or the BA Lenders cannot for
other reasons, after reasonable efforts, readily sell Bankers' Acceptances or
perform their other obligations under this Agreement with respect to Bankers'
Acceptances, then upon at least four (4) days' written notice by the Canadian
Funding Agent to PCI Canada, PCI Canada's right to request advances by way of
Bankers' Acceptances shall be and remain suspended until the Canadian Funding
Agent notifies PCI Canada that any condition causing such determination no
longer exists.
2.3.4. Size and Maturity of Bankers' Acceptances and
Rollovers.
Each advance of Bankers' Acceptances shall be in a whole
multiple of C$500,000 and in integral multiples of C$100,000 thereafter. The
principal face amount at maturity of a Bankers' Acceptance may be renewed as a
Bankers' Acceptance or converted into another form of Loan permitted by this
Agreement. Each Bankers' Acceptance shall have a term which is not less than
thirty (30) days nor more than one hundred eighty (180) days after the date of
acceptance of the draft by a BA Lender, but no Bankers' Acceptance may mature
on a date which is not a Business Day or on a date which is later than the date
on which the principal amount of the Credit is required to be reduced (in whole
or in part) if that would adversely affect PCI Canada's ability to cause the
reduction of the Credit.
2.3.5. Co-ordination of BA Availments.
Each BA Lender shall advance its Pro Rata Share of each
Revolving Loan by way of Bankers' Acceptances in accordance with the provisions
set forth below:
(a) The Canadian Funding Agent, promptly following
receipt of a notice from PCI Canada pursuant to Section 2.6 requesting an
advance by way of Bankers' Acceptances, shall advise each BA Lender of the
aggregate face amount and term(s) of the Bankers' Acceptances to be accepted by
it (which term(s) shall be identical for all BA Lenders). The aggregate face
amount of Bankers' Acceptances to be accepted by a BA Lender shall be
determined by the Canadian Funding Agent by reference to the Pro Rata Share of
the BA Lenders, except that, if the face amount of a Bankers' Acceptance in the
case of a BA Lender would not be a whole multiple of C$100,000, the face amount
shall be increased or reduced by the Canadian Funding Agent in its sole and
unfettered discretion to the nearest whole multiple of C$100,000.
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(b) Notwithstanding any other provision hereof, for the
purpose of determining the amount to be transferred by a BA Lender to the
Canadian Funding Agent for the account of PCI Canada in respect of the sale of
any Bankers' Acceptance issued by PCI Canada and accepted by such BA Lender,
the proceeds of sale thereof shall be deemed to be an amount equal to the BA
Discount Proceeds calculated with respect thereto. Accordingly, in respect of
any Bankers' Acceptance accepted by it, a BA Lender, in addition to its
entitlement to retain the applicable Bankers' Acceptance Fee for its own
account, shall be entitled to retain for its own account the amount, if any, by
which the actual proceeds of sale thereof exceed the BA Discount Proceeds
calculated with respect thereto.
(c) Each BA Lender shall transfer to the Canadian Funding
Agent for value, on each date of advance, immediately available Canadian
Dollars in an aggregate amount equal to, in the case of Bankers' Acceptances
accepted and sold or purchased by a BA Lender on such date of advance, the BA
Discount Proceeds thereof, net of the applicable Bankers' Acceptance Fee in
respect of such Bankers' Acceptances and net of the amount required to pay any
of its previously accepted Bankers' Acceptances that are maturing on the
applicable date of advance.
(d) If the Canadian Funding Agent determines that all the
conditions precedent to an advance specified in this Agreement have been met,
it shall advance to PCI Canada the amount delivered by each BA Lender by
crediting the applicable Demand Deposit Account of PCI Canada prior to 3:00
p.m. (Toronto time) on the date of advance, but if the conditions precedent to
such advance are not met by 3:00 p.m. (Toronto time) on such date, the Canadian
Funding Agent shall return the funds to the BA Lenders or invest them in an
overnight investment as orally instructed by each BA Lender until such time as
the advance is made.
2.3.6. Payment of Bankers' Acceptances.
PCI Canada shall provide for the payment to Canadian Funding
Agent for the account of the applicable BA Lender the full principal face
amount of each Bankers' Acceptance on the earlier of (a) its date of maturity;
and (b) the date on which an Event of Default occurs. Notwithstanding anything
to the contrary herein or in any Related Agreement, upon the occurrence of an
Event of Default, an amount equal to the Bankers' Acceptance Obligations shall,
at Administrative Agent's option and without demand upon or further notice to
PCI Canada, be deemed to have been paid or disbursed by the BA Lenders under
the applicable Bankers' Acceptances (notwithstanding that such amounts may not
in fact have been so paid or disbursed), and a Revolving Loan to PCI Canada in
the amount of such payment or disbursement to have been made and accepted,
which Revolving Loan shall be immediately due and payable. In lieu of the
foregoing, at the election of Administrative Agent or Canadian Funding Agent at
any time after an Event of Default has occurred, PCI Canada, upon
Administrative Agent's or Canadian Funding Agent's demand, shall deliver to
Canadian Funding Agent cash collateral equal to the Bankers' Acceptance
Obligations at such time. Any such cash collateral and/or any amounts received
by Administrative Agent or Canadian Funding Agent in payment of the Loan made
pursuant to this Section 2.3.6 shall be held by Canadian Funding Agent or
Administrative Agent, as applicable, for the benefit of the BA Lenders, in the
applicable
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Assignee Deposit Account or a separate account appropriately designated as a
cash collateral account in relation to this Agreement and the Bankers'
Acceptances and shall be retained by the Canadian Funding Agent or
Administrative Agent, as applicable, for the benefit of the BA Lenders, as
collateral security in respect of, first, the Liabilities under or in
connection with the BA Availments and then, all other Liabilities of PCI
Canada. Such amounts may be applied to reimburse the BA Lenders for drawings or
payments under or pursuant to Bankers' Acceptances which have been paid (or to
reimburse any BA Lender if any Bankers' Acceptances have been purchased by a BA
Lender), or if no such drawings, payments or purchases have been made, to
payment of such other Liabilities of PCI Canada as Administrative Agent shall
determine and direct. Any amounts remaining in any cash collateral account
established pursuant to this Section 2.3.6 following payment in full of all
Liabilities shall be returned to PCI Canada.
2.3.7. Deemed Advances.
Except for amounts which are paid from the proceeds of
rollovers of a Bankers' Acceptance, or for which payment has otherwise been
funded by PCI Canada, any amount which a BA Lender pays to any third party on
or after the date of maturity of a Bankers' Acceptance in satisfaction thereof
or which is owing to such BA Lender in respect of such a Bankers' Acceptance on
or after the date of maturity of such a Bankers' Acceptance, shall at the
option of Canadian Funding Agent, be deemed to be a Revolving Loan to PCI
Canada under this Agreement.
2.3.8. Degree of Care.
Any executed drafts to be used as Bankers' Acceptances which
are delivered to Canadian Funding Agent or a BA Lender shall be held in
safekeeping with the same degree of care as if they were Canadian Funding
Agent's or a BA Lender's own property, and shall be kept at the place at which
such drafts are ordinarily held by Canadian Funding Agent or BA Lender, as
applicable.
2.3.9. Indemnity.
In addition to, and not by way of limitation of, all other
indemnities in this Agreement, PCI Canada shall indemnify and hold Canadian
Funding Agent and the BA Lenders harmless from any loss, cost, damage or
expense with respect to any Bankers' Acceptance dealt with by Canadian Funding
Agent or the BA Lender but shall not be obliged to indemnify Canadian Funding
Agent or the BA Lenders for any loss, cost, damage or expense caused by the
gross negligence or willful misconduct of Canadian Funding Agent or the BA
Lenders.
2.3.10. Waiver.
PCI Canada shall not claim from Canadian Funding Agent or any
BA Lender any days of grace for the payment at maturity of any Bankers'
Acceptances presented and accepted by a BA Lender pursuant to this Agreement.
PCI Canada waives
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any defense to payment which might otherwise exist if for any reason a Bankers'
Acceptance shall be held by a BA Lender in its own right at the maturity
thereof, and the doctrine of merger shall not apply to any Bankers' Acceptance
that is at any time held by a BA Lender in its own right.
2.3.11. Obligations Absolute.
The obligations of PCI Canada with respect to Bankers'
Acceptances under this Agreement shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of any draft
issued by PCI Canada and accepted by a BA Lender as a Bankers'
Acceptance; or
(b) the existence of any claim, set-off, defense or other
right which PCI Canada may have at any time against the holder of a
Bankers' Acceptance, a BA Lender or any other person or entity,
whether in connection with this Agreement or otherwise.
2.3.12. Shortfall on Drawdowns, Rollovers and Conversions.
PCI Canada agrees that:
(a) the difference between the amount of an advance
requested by PCI Canada by way of Bankers' Acceptances and the actual
proceeds of such Bankers' Acceptances;
(b) the difference between the actual proceeds of a
Bankers' Acceptance and the amount required to pay a maturing Bankers'
Acceptance, if a Bankers' Acceptance is being rolled over; and
(c) the difference between the actual proceeds of a
Bankers' Acceptance and the amount required to repay any advance which
is being converted to such Bankers' Acceptance;
shall be funded by PCI Canada from its own resources by 11:00 a.m. on the day
of the advance or may be advanced by Canadian Funding Agent as a Revolving
Loan.
2.3.13. Prohibited Use of Bankers' Acceptances.
PCI Canada shall not enter into any agreement or arrangement
of any kind with any person to whom Bankers' Acceptances have been delivered
whereby it undertakes to replace such Bankers' Acceptances on a continuing
basis with other Bankers' Acceptances, nor shall PCI Canada directly or
indirectly take, use or provide Bankers' Acceptances as security for loans or
advances from any other Person.
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2.3.14. Proposed Depository Bills and Notes Act.
If the proposed Depository Bills and Notes Act (Canada) is
enacted in substantially the terms of Bill C-90 to which first reading was
given in the House of Commons of Canada on 13 March 1997 (reintroduced as Bill
S-9 on December 3, 1997), all Bankers' Acceptances accepted by a BA Lender
under this Agreement after the effective date of that Act and after clearing
services acceptable to PCI Canada and Canadian Funding Agent are available,
shall be issued in the form of a "depository bill" and deposited with a
"clearing house," as those terms are defined in Bill C-90. At that time,
Canadian Funding Agent shall, in consultation with PCI Canada, establish and
notify PCI Canada of such procedures, consistent with the terms of this
Agreement and the requirements of such Act, as are reasonably necessary to
accomplish the parties' intention.
2.3.15. Bankers' Acceptance Obligations.
For all purposes of this Agreement, the outstanding amount of
any Loan consisting of a BA Availment shall mean the Bankers' Acceptance
Obligations at the applicable time.
2.4. Loan Accounts; Demand Deposit Accounts.
Each Funding Agent shall establish or cause to be established
on its books in the applicable Borrower's name one or more accounts (each a
"Loan Account") to evidence Loans made to such Borrower. Each Funding Agent,
as appropriate, will credit or cause to be credited to a commercial account
(each, a "Demand Deposit Account") maintained by (a) PAAC at BOA's 231 South
LaSalle Street, Chicago, Illinois office or (b) PCI Canada at BAC's 200 Front
Street West, Toronto, Ontario, Canada office, the amount of any sums advanced
to such Borrower as Loans hereunder, which shall be disbursed at such
Borrower's direction. Any amounts advanced as Loans hereunder which are
credited to a Borrower's Demand Deposit Account, together with any other
amounts advanced to such Borrower as a Loan pursuant to this Agreement, will be
debited to the applicable Loan Account and result in an increase in the
principal balance outstanding in such Loan Account in the amount thereof.
2.5. Interest and Fees.
2.5.1. Interest.
(a) Interest to Maturity. The unpaid principal balance
of the Revolving Loans (other than BA Availments, Overdraft Loans and Over
Advances) shall bear interest to maturity at the applicable per annum rate set
forth below:
(i) Revolving Loans made to PAAC shall bear interest at a
per annum rate equal to (A) the Reference Rate plus the Applicable
Margin or (B) at PAAC's option as set forth in Section 2.5.1(b) below,
the LIBO Rate plus the Applicable Margin.
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(ii) Canadian Dollar Loans (other than BA Availments) made
to PCI Canada shall bear interest at a per annum rate equal to the
Canadian Prime Rate plus the Applicable Margin.
(iii) U.S. Dollar Loans made to PCI Canada shall bear
interest at a per annum rate equal to (A) the Adjusted Reference Rate
plus the Applicable Margin, or (B) at PCI Canada's option as set forth
in Section 2.5.1(b) below, the LIBO Rate plus the Applicable Margin.
Amounts payable in respect of BA Availments shall be paid as set forth in
Section 2.3.
(b) LIBO Rate Option. Each Borrower shall have the
right, from time to time, to designate certain portions of the Revolving Loans
made to such Borrower as bearing interest with reference to the then applicable
LIBO Rate, by means of a written notice to Administrative Agent specifying (i)
the amount of such Revolving Loans that will bear interest with reference to a
LIBO Rate (provided, that such LIBO Rate Loans shall be in a minimum amount of
US$500,000 and integral multiples of US$500,000), (ii) the date on which the
applicable Interest Rate Period shall begin, and (iii) the Interest Rate Period
applicable thereto. All designations of Revolving Loans as LIBO Rate Loans
must be received by Administrative Agent not later than 10:00 a.m. (Chicago
time), three (3) Banking Days prior to the date the applicable Interest Rate
Period is to begin (or is to be continued). Notwithstanding the foregoing, (x)
all undesignated portions of the Revolving Loans shall bear interest at a
Floating Rate, (y) no Interest Rate Period may commence or be continued at any
time that an Event of Default is in existence under Section 6.1(a), 6.1 (e) or
Section 6.1(h) (solely because of a breach of Section 5.32) and in each case,
Administrative Agent has determined in good faith that such a commencement or
continuation is not appropriate, in any case notwithstanding a contrary
designation by a Borrower, and (z) in no event may more than eight (8) LIBO
Rate Loans having different Interest Rate Periods be outstanding at any one
time. Each designation by a Borrower of a LIBO Rate Loan shall be irrevocable.
(c) BA Option. PCI Canada shall have the right, from
time to time, to borrow certain portions of the Revolving Loans made to PCI
Canada by way of BA Availments in accordance with the terms and procedures set
forth in Section 2.3. No BA Availments may commence or be continued at any
time that an Event of Default is in existence under Section 6.1(a), 6.1 (e) or
Section 6.1(h) (solely because of a breach of Section 5.32) and in each case,
Administrative Agent has determined in good faith that such a commencement or
continuation is not appropriate, in any case notwithstanding a contrary request
by PCI Canada, and in no event may more than eight (8) BA Availments be
outstanding at any one time. Each request by PCI Canada of a BA Availment
shall be irrevocable.
(d) Default Rate. If any principal amount of the Loans
is not paid when due, at the option of Requisite Lenders, the entire unpaid
principal balance of the Revolving Loans shall bear interest until paid at a
rate per annum (the "Default Rate") equal to the greater of (i) the
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applicable interest rate from time to time in effect plus 2.00% and (ii) 2.00%
above the applicable interest rate in effect at the time of such Event of
Default.
(e) Overdraft Loans; Over Advances. Overdraft Loans and
Over Advances shall bear interest at the rate(s) determined pursuant to Section
2.8 or Section 2.9, as applicable.
2.5.2. Non-Use Fee. Each Borrower agrees to pay to the
applicable Funding Agent, for the benefit of all Lenders, a fee equal to the
Applicable Margin for non-use fees per annum on the daily average amount by
which the Loan Limit of such Borrower exceeds the aggregate outstanding
principal balance of the Revolving Loans of such Borrower plus the Letter of
Credit Obligations of such Borrower. The fees provided for in this Section
2.5.2 shall be payable in U.S. Dollars quarterly in arrears on the last day of
each quarter commencing June 30, 1998, and on the date the Credit terminates
for the period then ended.
2.5.3. Method of Calculating Interest and Fees. Interest on
the unpaid principal amount of each Loan (other than BA Availments) shall
accrue from and including the date such Loan is made to, but not including, the
date such Loan is paid; provided, that the computation of interest on LIBO Rate
Loans shall include the date on which the applicable Interest Rate Period
began, but shall exclude the last day of the applicable Interest Rate Period.
LIBO Rate Loans not repaid on the last day of the Interest Rate Period
applicable thereto shall be continued or converted into Floating Rate Loans, as
applicable, and bear interest as provided herein, from and including the last
day of such Interest Rate Period. Changes in any Floating Rate provided for
herein which are due to changes in an underlying interest rate reference shall
take effect on the date of the change in such underlying interest rate
reference. Interest determined at a Floating Rate or at a BA Rate shall be
calculated on the basis of a year consisting of three hundred sixty-five (365)
or three hundred sixty-six (366) days, as applicable, and paid for actual days
elapsed; and interest determined with reference to a LIBO Rate and any fees
payable under this Agreement shall be calculated on the basis of a year
consisting of three hundred sixty (360) days and paid for actual days elapsed.
For the purposes of the Interest Act (Canada) and disclosure thereunder,
whenever interest to be paid hereunder or in connection herewith is to be
calculated on the basis of a year of three hundred sixty (360) days or any
other period of time that is less than a calendar year, the yearly rate of
interest to which the rate determined pursuant to such calculation is
equivalent is the rate so determined, multiplied by the actual number of days
in the calendar year in which the same is to be ascertained, and divided by
either three hundred sixty (360) days or such other period of time, as the case
may be. The rates of interest under this Agreement are nominal rates, and not
effective rates of yields. The principal of deemed reinvestment of interest
does not apply to any interest calculation under this Agreement.
2.5.4. Payment. Until maturity, interest on the Floating
Rate Loans shall be payable in arrears on the last day of each calendar
quarter, commencing on June 30, 1998, and at maturity; provided, that during
any period that a Borrower is required to provide monthly Borrowing Base
Certificates pursuant to Section 2.6(c), interest on Floating Rate Loans of
such Borrower shall be payable monthly in arrears on the last day of each
calendar month, and at maturity. Interest on LIBO Rate Loans shall be payable
in arrears on the last day of the Interest Rate Period applicable thereto and
at maturity; provided, that if the applicable Interest Rate Period
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is in excess of ninety (90) days, Interest on such LIBO Rate Loans shall also
be payable on the three month anniversary of the first (1st) day of such
Interest Rate Period. After maturity, whether by acceleration or otherwise,
accrued interest shall be payable on demand. All interest hereunder shall be
paid to the applicable Funding Agent for the benefit of, and as agent for, the
applicable Lenders and not on its own behalf.
2.5.5. Payment by Administrative Agent. Administrative
Agent may provide for the payment of any unpaid accrued interest and any fees
by charging the applicable Demand Deposit Account or any bank account
maintained by either Borrower with Administrative Agent or by directing the
applicable Funding Agent to so charge the applicable Demand Deposit Account or
to advance the amount thereof to the applicable Borrower as a Revolving Loan.
2.5.6. Funding Indemnification. If any payment of a Fixed
Rate Loan occurs on a date which is not the last day of the applicable Interest
Rate Period or term (if with respect to a BA Availment), whether because of
acceleration, prepayment, mandatory conversion or otherwise, the applicable
Borrower will indemnify each applicable Lender and each applicable Agent for
any loss or cost incurred by it resulting therefrom, including without
limitation any loss or cost in liquidating or employing deposits acquired to
fund or maintain such Loan. Administrative Agent shall deliver a written
statement as to the amount due, if any, under this Section 2.4.6, after
consultation with each Lender and each Agent so affected. Such written
statement shall set forth in reasonable detail the calculations upon which such
Agent or such Lender determined such amount and shall be final, conclusive and
binding on the applicable Borrower in the absence of manifest error.
Determination of amounts payable under this Section shall be calculated as
though each affected Lender funded its Fixed Rate Loans through the purchase of
a deposit of the type and maturity corresponding to the applicable Fixed Rate
Loan and applicable Interest Rate Period bearing interest at the applicable
Fixed Rate less the Applicable Margin at such time, whether or not such Lender
actually funded the Loan in that manner. The amount specified in the written
statement shall be payable on demand after receipt by the applicable Borrower
of the written statement. This Section 2.5.6 shall apply to all payments of
Fixed Rate Loans prior to the last day of the applicable Interest Rate Period
or term (if with respect to a BA Availment).
2.5.7. Availability of Interest Rate Options. If either
Funding Agent determines that maintenance of any of Fixed Rate Loans would
violate any applicable law, rule, regulation or directive, whether or not
having the force of law, such Funding Agent shall immediately notify
Administrative Agent and the other Funding Agent thereof and Agents shall
suspend the availability of such Fixed Rate Loans and require any such Fixed
Rate Loans outstanding and so affected to be repaid or, in the case of BA
Availments, provided for by way of cash collateral in the amount of the
Bankers' Acceptance Obligations at such time; or if the Funding Agent
determines that (i) deposits or instruments of a type or maturity appropriate
to match fund any Fixed Rate Loans are not available, (ii) the applicable Fixed
Rate does not accurately reflect the cost of making such Loans, (iii) such
Funding Agent's ability to make or maintain any Fixed Rate Loans has been
materially adversely affected by the occurrence of any event after the date
hereof, or (iv) adequate and reasonable means do not exist for determining any
Fixed Rate for any requested Interest Rate Period or term (if with respect to a
BA Availment) with respect to any proposed Fixed Rate Loan, then such Funding
Agent shall immediately notify Administrative Agent and the other Funding Agent
thereof and Agents shall suspend the availability of such Fixed Rate Loans, as
applicable, after the date of any such determination.
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2.5.8. Lenders' Obligation to Mitigate. (i) Each Funding
Agent agrees that if it becomes aware of the occurrence of an event or the
existence of a condition described in Section 2.5.7 that would cause such
Funding Agent to make a determination of the nature described therein, and (ii)
each Funding Agent and each Lender agrees that if it becomes aware of either
(a) the occurrence of an event or the existence of a condition described in
Section 9.3 that would cause such Funding Agent or such Lender to make a
determination of the nature described therein or (b) the imposition, assessment
or collection of any taxes on or in respect of any Loan or Letter of Credit,
such Agent or such Lender will, to the extent consistent with its internal
policies, use reasonable efforts to issue, make, fund or maintain the affected
Letters of Credit or Loans through another lending office of such Agent or such
Lender, if any, if, as a result thereof, the additional amounts that would
otherwise be required to be paid to such Agent or such Lender in respect
thereof, would be reduced, or the applicable Fixed Rate Loans could be
maintained, as the case may be, and if, as determined by such Agent or such
Lender in its reasonable discretion, the issuing, making, funding or
maintaining of such Letters of Credit or Loans through such other lending
office would not adversely affect such Agent or such Lender or such Letters of
Credit or Loans. Each Borrower hereby agrees to pay all reasonable expenses
incurred by any Agent or any Lender in using another lending office in relation
to such Borrower pursuant to this Section 2.5.8.
2.6. Requests for Loans; Borrowing Base Certificates;
Other Information.
(a) Loans and Letters of Credit shall be requested as
follows: (i) in the case of Reference Rate Loans, in writing or by telephone
to U.S. Funding Agent by 10:00 a.m., Chicago time, on the requested borrowing
date thereof, (ii) in the case of Adjusted Reference Rate Loans and Canadian
Prime Rate Loans, in writing or by telephone to Canadian Funding Agent by 11:00
a.m. (Toronto time), one (1) Banking Day prior to the requested borrowing date
thereof, (iii) in the case of LIBO Rate Loans to PAAC, in writing to U.S.
Funding Agent, by 10:00 a.m. (Chicago time), three (3) Banking Days prior to
the date the applicable Interest Rate Period is to begin (or is to be
continued), (iv) in the case of LIBO Rate Loans to PCI Canada, in writing to
Canadian Funding Agent, by 11:00 a.m. (Toronto time), three (3) Banking Days
prior to the date the applicable Interest Rate Period is the begin (or is to be
continued), (v) in the case of BA Availments, in writing to Canadian Funding
Agent by 11:00 a.m. (Toronto time), two (2) Banking Days prior to the date the
applicable advance or conversion is to occur, and (vi) in the case of Letters
of Credit, in writing (by means of an Application) to the applicable Funding
Agent by 10:00 a.m. (local time), five (5) Banking Days prior to the date the
applicable Letter of Credit is to be issued. Each such request shall be
irrevocable. No request need be made for Overdraft Loans and Revolving Loans
made pursuant to any provision of this Agreement or any Related Agreement that
permits Administrative Agent to direct a Funding Agent to advance Revolving
Loans to either Borrower.
(b) In the event that either Borrower shall at any time,
or from time to time, (i) make a request for a Loan hereunder or (ii) be deemed
to have requested an Overdraft Loan, such Borrower agrees to forthwith provide
Agents and Lenders with such information, at such
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frequency and in such format, as is reasonably required by Administrative
Agent, such information to be current as of the time of such request.
(c) Each Borrower further agrees to provide to Agents and
Lenders a current Borrowing Base Certificate, on the last day of each month for
the preceding month, if the outstanding principal balance of the Loans to such
Borrower during such month at any time exceeded the U.S. Dollar Equivalent of
$5,000,000, (y) thirty (30) days after the last day of each calendar quarter
for such quarter and (z) at such other times as Administrative Agent may
request. Each such Borrowing Base Certificate shall be in substantially the
same form as that attached hereto as Exhibit A, shall, (i) separately list
Eligible Inventory located in the United States and Canada, respectively, (ii)
separately list Eligible Account Receivable billed and to be paid in U.S.
Dollars and Canadian Dollars, respectively, (iii) show the comparable U.S.
Dollar Equivalents for all amounts listed thereon, determined by such Borrower
in accordance with GAAP, and (iv) be executed and certified as accurate by such
officers or employees of the applicable Borrower as such Borrower designates
from time to time in writing to Administrative Agent pursuant to duly adopted
resolutions of such Borrower's Board of Directors authorizing such action.
(d) Each Borrower shall provide Administrative Agent and
the applicable Funding Agent with documentation satisfactory to such Agents
indicating the names of those officers or employees of such Borrower authorized
by such Borrower to sign Borrowing Base Certificates and/or to make telephonic
requests for Loans, and/or to authorize disbursement of the proceeds of Loans
by wire transfer or otherwise, and Agents and Lenders shall be entitled to rely
upon such documentation until notified in writing by such Borrower of any
change(s) in the names of the officers or employees so authorized. Agents and
Lenders shall be entitled to act on the instructions of anyone identifying
himself as one of the persons authorized by a Borrower to request Loans and
Letters of Credit, or disbursements of Loan proceeds by telephone and such
Borrower shall be bound thereby in the same manner as if the person were
actually so authorized. Each Borrower agrees to indemnify and hold each Agent
and each Lender harmless from any and all claims, damages, liabilities, losses,
costs and expenses (including Attorneys' Fees) which may arise or be created by
the acceptance of instructions for making or paying Loans to such Borrower in
writing or by telephone.
2.7. Statements.
All Loans and payments hereunder shall be recorded on the
books of the applicable Funding Agent, which shall be rebuttably presumptive
evidence of the amount of such Loans outstanding at any time hereunder. Each
Funding Agent will account monthly as to all Loans and payments hereunder and,
absent demonstrable error, each monthly accounting will be fully binding on
each Borrower unless, within thirty (30) days of such Borrower's receipt
thereof, such Borrower shall provide Administrative Agent and such Funding
Agent with a specific listing of exceptions. Notwithstanding any term or
condition of this Agreement to the contrary, however, the failure of a Funding
Agent to record the date and amount of any Loan hereunder shall not limit or
otherwise affect the obligation of each Borrower to repay any such Loan.
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2.8. Overdraft Loans.
Administrative Agent, in its sole and absolute discretion, and
subject to the terms hereof, may direct the applicable Funding Agent to make a
Revolving Loan to each applicable Borrower in an amount equal to the amount of
any overdraft which may from time to time exist with respect to the Demand
Deposit Account of such Borrower or charge such overdraft to any bank account
which such Borrower may now or hereafter have with Administrative Agent or such
Funding Agent. The existence of any such overdraft shall be deemed to be a
request by the applicable Borrower for such Loan. Each Borrower acknowledges
that Administrative Agent is under no duty or obligation to direct a Funding
Agent to make any Loan to such Borrower, or to charge such account, to cover
any overdraft. Each Borrower further agrees that if the making of a Loan to
cover any Overdraft would result in an Over Advance, such overdraft shall
constitute a separate Loan under this Agreement (an "Overdraft Loan"), which
shall bear, from the date on which the overdraft occurred until paid, interest
in an amount equal to the greater of one hundred thirty percent (130%) of the
highest rate of interest then actually being charged for Revolving Loans (other
than Overdraft Loans) made hereunder to such Borrower, and US$50 per day. If
Administrative Agent, in its sole and absolute discretion, decides not to
direct a Funding Agent to make a Loan, or charge such account, to cover part or
all of any overdraft, Administrative Agent may return any check(s) which
created such overdraft.
2.9. Over Advances.
If the U.S. Dollar Equivalent of the aggregate outstanding
Revolving Loans and Letter of Credit Obligations of either Borrower exceeds
such Borrower's Revolving Loan Availability (such excess Liabilities are herein
referred to as "Over Advances"), Administrative Agent, in its sole and absolute
discretion, may, for a period of five (5) Banking Days, to the extent such Over
Advance arises as a result of a reduction in such Borrower's Borrowing Base,
permit such Over Advance to exist without the consent of any Funding Agent or
any Lender (but subject to Section 2.1.1(a)) and continue to direct the
applicable Funding Agent to make Revolving Loans to such Borrower on behalf of
all applicable Lenders, and after the expiration of such five (5) Banking Day
period, no such event or occurrence shall cause or constitute a waiver by any
Lender of its right to refuse to make any further Revolving Loans at any time
that an Over Advance exists or would result therefrom; provided, that
Administrative Agent may not so direct a Funding Agent to (i) make Revolving
Loans on behalf of Lenders under this Section 2.9 to the extent such Revolving
Loans would cause a Lender's Overall Share of the aggregate Revolving Loans and
Letter of Credit Obligations to exceed such Lender's Maximum Loan Amount or
(ii) make Revolving Loans on behalf of Lenders under this Section 2.9 to the
extent such Revolving Loans would cause the sum of the U.S. Dollar Equivalent
of the then outstanding Revolving Loans and Letter of Credit Obligations of
either Borrower to exceed the sum of US$3,250,000 and the U.S. Dollar
Equivalent of the amount of the outstanding Revolving Loans and Letter of
Credit Obligations of such Borrower as of the date Administrative Agent became
aware of the Over Advance. During any period in
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which an Over Advance exists, the amount of Over Advances shall bear interest
at a rate equal to one hundred thirty percent (130%) of the highest rate of
interest then actually being charged for Revolving Loans made hereunder to such
Borrower.
2.10. Agents' and Lenders' Rights.
Each Borrower agrees that all of the rights of Agents and
Lenders set forth in this Agreement shall apply to any modification of this
Agreement, any Exhibits hereto, and the Related Agreements, unless otherwise
agreed in writing. Each Borrower agrees that nothing contained in this
Agreement shall be construed as any Agent's or any Lender's agreement to resort
or look to a particular type or item of Collateral as security for any specific
Loan or portion of the Liabilities or advance or in any way limit any Agent's
or any Lender's right to resort to any or all of the Collateral as security for
any of the Liabilities or shall be deemed to limit or reduce any Lien upon any
portion of the Collateral or other security for the Liabilities.
2.11. Making of Payments; Application of Collections;
Charging of Accounts.
(a) All payments hereunder (including payment of Letter
of Credit Obligations and Bankers' Acceptance Obligations and payments with
respect to any Notes) shall be made without set-off or counterclaim and shall
be made in immediately available funds on the date due (i) in the case of Loans
advanced by U.S. Funding Agent, and any other amounts specifically identified
in this Agreement as being payable to U.S. Funding Agent, to U.S. Funding Agent
at BOA's office at 231 South LaSalle Street, Chicago, Illinois 60697, or at
such other place as may be designated by U.S. Funding Agent to Borrowers in
writing; (ii) in the case of Loans advanced by Canadian Funding Agent, and any
other amounts specifically identified in this Agreement as being payable to
Canadian Funding Agent, to Canadian Funding Agent at BAC's office at 200 Front
Street West, Toronto, Ontario, Canada M5V 3L2, or at such other place as may be
designated by Canadian Funding Agent to Borrowers in writing, (iii) in the case
of payments to be made to an Issuing Bank as provided in Section 2.2, to such
Issuing Bank at such place as may be designated by such Issuing Bank to
Borrowers in writing and (iv) in the case of all other payments under this
Agreement, to Administrative Agent at BOA's office at 231 South LaSalle Street,
Chicago, Illinois 60697, or at such other place as may be designated by
Administrative Agent to Borrowers in writing from time to time. Except as
otherwise expressly provided herein, all such payments with respect to
principal of, interest on, and any other amounts relating to, any Canadian
Dollar Loan, shall be made in Canadian Dollars and, with respect to all other
amounts payable hereunder, shall be made in U.S. Dollars. Such payments shall
be made in same day funds, and (i) in the case of Canadian Dollar payments to
any Agent and U.S. Dollar payments to Canadian Funding Agent, no later than
such time on the dates specified herein as may be determined by such Agent to
be necessary for such payment to be credited on such date in accordance with
normal banking procedures in the place of payment and (ii) in the case of U.S.
Dollar payments to U.S. Funding Agent or Administrative Agent, no later than
12:30 p.m. (Chicago time) on the date specified herein. Any payments received
after such time on such day shall be deemed received on the next Banking Day.
Whenever any payment to be made hereunder or under any Note shall be stated to
be due on a date other than a Banking Day, such payment may be made on the next
succeeding Banking Day, and such extension of time shall be included in the
calculation of interest and any fees.
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(b) (i) Each Borrower authorizes each Agent, and such
Agent will, subject to the provisions of this paragraph (b), apply the whole or
any part of any amounts received by such Agent (whether deposited in an
Assignee Deposit Account or otherwise received by such Agent) from the
collection of items of payment and proceeds of any Collateral (including
without limitation proceeds of insurance), against the principal and/or
interest of any Loans made hereunder and/or any other Liabilities, whether or
not then due, in such order of application as Administrative Agent may
determine and direct; provided, however, that prior to the occurrence of an
Event of Default, any such amounts received by each Agent shall, at the
applicable Borrower's option, (y) be transferred to the applicable Borrower's
Demand Deposit Account or other operating account in accordance with written
instructions provided by such Borrower, or (z) be applied in the manner, if
any, specifically set forth in this Agreement with respect to such payment and
if no such manner is specifically set out, then as follows: first, to payment
of amounts then due with respect to fees (including Attorneys' Fees), charges
and expenses for which such Borrower is liable pursuant to this Agreement and
the Related Agreements; second, to payment of amounts then due with respect to
interest on the Loans to such Borrower; third, to payment of the principal of
the Loans to such Borrower and fourth, to any other Liabilities of such
Borrower.
(ii) Notwithstanding anything to the contrary
herein, (i) all cash, checks, instruments and other items of payment, solely
for purposes of determining the occurrence of an Event of Default, shall be
deemed received upon actual receipt by the applicable Agent, unless the same is
subsequently dishonored for any reason whatsoever, (ii) for purposes of
determining whether, under Sections 2.1 and 2.2, there is availability for
Loans or Letters of Credit, all cash, checks, instruments and other items of
payment shall be applied against the Liabilities when received by the
applicable Agent and (iii) solely for purposes of interest calculation
hereunder, all cash, checks, instruments and other items of payment shall be
deemed to have been applied against the Liabilities on the first (1st) Banking
Day after receipt by the applicable Agent of collected funds with respect
thereto; further provided, that any amounts earned on such funds during the
period after receipt thereof by an Agent and prior to application thereof
against the Liabilities as provided herein, shall be retained by such Agent for
such Agent's own account. Notwithstanding the foregoing, no checks, drafts or
other instruments received by any Agent shall constitute final payment with
respect to any Liabilities unless and until such item of payment has actually
been collected.
(c) Each Borrower hereby authorizes Administrative Agent,
and Administrative Agent may, in its sole and absolute discretion, charge to
such Borrower at any time when due all or any portion of any of the Liabilities
consisting of principal or interest and, after three (3) Banking Days' prior
notice, any other Liabilities including but not limited to any Attorneys' Fees
and other costs and expenses of Agents and Lenders for which such Borrower is
liable pursuant to the terms of this Agreement or any Related Agreement, or for
which any other Obligor is liable pursuant to the terms of any Related
Agreement, by charging such Borrower's Demand Deposit Account or any bank
account of such Borrower with Administrative Agent or by directing the
applicable Funding Agent to charge such Borrower's Demand Deposit Account or
advance the amount
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thereof to such Borrower as a Revolving Loan; provided, however that the
provisions of this Section 2.11(c) shall not affect either Borrower's
obligation to pay when due all amounts payable by such Borrower under this
Agreement, any Note or any Related Agreement, whether or not there are
sufficient funds therefor in such Borrower's Demand Deposit Account or any such
other bank account of such Borrower.
2.12. Agents' Election Not to Enforce.
Notwithstanding any term or condition of this Agreement to the
contrary, each Agent, in the sole and absolute discretion of Requisite Lenders,
at any time and from time to time, may suspend or refrain from enforcing any or
all of the restrictions imposed in this Section 2, but no such suspension or
failure to enforce shall impair any right or power of any Agent or any Lender
under this Agreement, including without limitation any right of each Agent and
each Lender to refrain from making a Loan or each Issuing Bank to refrain from
issuing a Letter of Credit if all conditions precedent to such Agent's or such
Lender's obligation to make such Loan or such Issuing Bank's obligation to
issue such Letter of Credit have not been satisfied.
2.13. Reaffirmation.
Each Loan or Letter of Credit, or designation or continuation
of a Fixed Rate Loan, in each case requested by a Borrower pursuant to this
Agreement, shall constitute an automatic certification by such Borrower to
Agents and Lenders that (a) all of the representations and warranties of each
Borrower in this Agreement and each of the Related Agreements are true and
correct on the date of such request to the same extent as if made on such date,
except for such changes as are specifically permitted hereunder (or under such
Related Agreement) and except for those representations and warranties made
solely as of the date hereof or the Closing Date and (b) immediately before and
after making the requested Loan or issuing the requested Letter of Credit, no
Event of Default or Unmatured Event of Default, then exists or would result
therefrom.
2.14. Setoff.
In addition to and not in limitation of all other rights and
remedies (including other rights of offset or banker's lien) that Agents and
Lenders may have under applicable law, each Agent and each Lender shall, upon
the occurrence of any Event of Default described in Section 6.1, or any
Unmatured Event of Default described in Section 6.1(e), have the right to
appropriate and apply to the payment of the Liabilities (whether or not then
due), in such order of application as Administrative Agent may elect, any and
all balances, credits, deposits (general or special, time or demand,
provisional or final), accounts or moneys of each Borrower then or thereafter
with any Agent or any Lender. Each Agent and each Lender shall promptly advise
the applicable Borrower of any such setoff and application but failure to do so
shall not affect the validity of such setoff and application.
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2.15. Fee Letter.
Borrowers, on the ICI Closing Date, paid Administrative Agent,
for its own account, the closing fees and other amounts set forth in the First
Amendment and identified as payable on the ICI Closing Date. Borrowers jointly
and severally agree to pay Administrative Agent for its own account, the
ongoing agency fees set forth in the Fee Letter of even date herewith executed
by Borrowers and Administrative Agent, in the amounts, and at the times,
specified therein. With Administrative Agent's consent, the amount of such
fees may be advanced to the applicable Borrower as a Revolving Loan.
2.16. Settlements, Distributions and Apportionment of
Payments.
On a weekly basis (or more frequently if required by
Administrative Agent) (a "Settlement Date"), each Funding Agent shall provide
each applicable Lender with a statement of the outstanding balances of each of
the Liabilities, the Revolving Loans made to each applicable Borrower and, the
Letter of Credit Obligations of each applicable Borrower, in each case as of
the end of the Banking Day preceding the Settlement Date (the "Pre-Settlement
Determination Date") and the current balance of the Revolving Loans to each
applicable Borrower funded by each Lender (whether made directly by such Lender
to a Borrower or constituting a settlement by such Lender of a previous
Disproportionate Advance made by a Funding Agent or Administrative Agent on
behalf of such Lender to a Borrower). If such statement discloses that such
Lender's current balance of the Revolving Loans to either Borrower as of the
Pre-Settlement Determination Date exceeds such Lender's Pro Rata Share of the
Revolving Loans to such Borrower outstanding as of the Pre-Settlement
Determination Date, then the applicable Funding Agent shall, one (1) Banking
Day after the Settlement Date, transfer to such Lender, by wire transfer, the
net amount due to such Lender in accordance with such Lender's instructions,
and if such statement discloses that such Lender's current balance of the
Revolving Loans to either Borrower as of the Pre-Settlement Determination Date
is less than such Lender's Pro Rata Share of the Revolving Loans to such
Borrower outstanding as of the Pre-Settlement Determination Date, then such
Lender shall, one (1) Banking Day after the Settlement Date, transfer to the
applicable Funding Agent, by wire transfer the net amount due to the applicable
Funding Agent in accordance with the applicable Funding Agent's instructions.
In addition, payments actually received by Administrative Agent or a Funding
Agent with respect to the following items shall be distributed by
Administrative Agent or such Funding Agent to Lenders as follows:
(a) Within one (1) Banking Day of receipt thereof by
Administrative Agent or such Funding Agent, payments to be applied to interest
on the Loans to either Borrower shall be paid to each Lender in proportion to
its applicable Pro Rata Share, subject to any adjustments for any
Disproportionate Advances to such Borrower, so that the applicable Funding
Agent shall receive interest on the Disproportionate Advances and each Lender
shall only receive interest on the amount of funds actually advanced by such
Lender; and
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(b) Within one (1) Banking Day of receipt thereof by
Administrative Agent or such Funding Agent, payments to be applied to the
unused line fee set forth in Section 2.5.2 owed by either Borrower, the Letter
of Credit commission set forth in Section 2.2(b) owed by such Borrower, and any
other fees payable under this Agreement, shall each be paid to each Lender in
proportion to its applicable Pro Rata Share.
Notwithstanding the foregoing, if a Lender has failed to remit its applicable
Pro Rata Share of any Loans required to be made pursuant to Section 2.1.1 or
has failed to make a settlement payment to the applicable Funding Agent
pursuant to this Section 2.16, no payment shall be made to such Lender by
Administrative Agent or the applicable Funding Agent at any time such Lender's
share of the outstanding Loans to the applicable Borrower is less than such
Lender's applicable Pro Rata Share. If any Agent or any Lender fails to pay
the other any payment due under this Agreement on its due date, the party to
whom such payment is due shall be entitled to recover interest from the party
obligated to make such payment at a rate per annum equal to the overnight
Federal Funds Rate.
2.17. Canadian or U.S. Dollar Loans Unavailable.
Neither U.S. Funding Agent nor any U.S. Lender shall be under
any obligation to make Canadian Dollar Loans. Neither Canadian Funding Agent
nor any Canadian Lender shall be under any obligation to make U.S. Dollar Loans
(or continue LIBO Loans that are also U.S. Dollar Loans) if Canadian Funding
Agent or such Canadian Lender is unable to provide Loans in U.S. Dollars, in
which case Canadian Funding Agent shall give notice to PCI Canada thereof as
soon as reasonably practicable. After receipt of such notice by PCI Canada,
the applicable borrowing (or continuation) request shall be deemed to have been
withdrawn and PCI Canada may make a new request for such Loans denominated in
Canadian Dollars.
2.18. Reserves on Canadian Dollar Loans.
PCI Canada shall pay to Administrative Agent, as long as any
Agent or any Lender shall be required under regulations of the Federal Reserve
Board to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), and to Canadian Funding Agent, as long as any Agent or any
Lender shall be required, under any applicable regulations of the central bank
or other relevant governmental authority in Canada to maintain reserves with
respect to Canadian Dollar Loans, additional costs on the unpaid principal
amount of each such Loan equal to the actual costs of such reserves allocated
to such Loan by such Agent or such Lender (as determined by such Agent or such
Lender in good faith, which determination shall be conclusive), payable on each
date on which interest is payable on such Loan, provided PCI Canada shall have
received at least fifteen (15) days' period written notice of such additional
costs from Administrative Agent. Notwithstanding the foregoing, PCI Canada
shall not be required to pay any such amount to the extent that such additional
costs are reflected in the interest rates applicable to the Loans hereunder.
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2.19. Unavailability of Loans.
If (i) any Canadian Lender is unable to provide Loans in U.S.
Dollars, (ii) any Lender is unable to obtain deposits of the Applicable
Currency for a Loan in the applicable interbank currency deposits market (and
with respect to a LIBO Rate Loan, in the applicable amount and for the
requested Interest Rate Period), (iii) any Lender is unable to fund its portion
of any Loan through the purchase of deposits of the Applicable Currency for any
LIBO Rate Loan or (iv) any legal requirement shall impose on any Lender any
restrictions (not already taken into account under statutory reserves) on the
amount of a category of deposits or other liabilities of such Lender which
includes deposits by reference to which the applicable Fixed Rate is determined
as provided herein or a category of extensions of credit or other assets of
such Lender which includes any Fixed Rate Loan, which such Lender may hold (in
each such case, an "Affected Lender"), unless any of the foregoing restrictions
also apply to the applicable Funding Agent such Affected Lender shall provide
prompt written notice thereof to Agents and Borrowers and, effective upon
receipt of such notice by the applicable Funding Agent, such applicable Funding
Agent shall make all requested Loans in the Applicable Currency and for the
appropriate Interest Rate Period, if applicable, on behalf of the Affected
Lender, in such applicable Funding Agent's capacity as a Lender hereunder.
Immediately upon the making of each such Loan, the Affected Lender shall be
deemed to have purchased irrevocably, and hereby severally and not jointly
agrees to purchase irrevocably from the applicable Funding Agent, a
participation in each such Loan in the Applicable Currency in an amount equal
to such Affected Lender's Pro Rata Share of the amount of such Loan (which will
be an amount equal to the amount advanced by the applicable Funding Agent of
behalf of the Affected Lender as provided herein). Such applicable Funding
Agent shall have no obligation to so advance such portion of a Loan if such
Affected Lender has no obligation to participate in such Loan. Notwithstanding
anything to the contrary contained herein, no Affected Lender shall receive
interest in respect of its participation in any Loan made for its benefit under
this Section 2.19, but instead, shall receive a per annum fee equal to the
outstanding amount of the Loans so advanced by the applicable Funding Agent for
the benefit of such Affected Lender, multiplied by the (i) 2.00% in the case of
the Floating Rate Loans so advanced by such Funding Agent and (ii) the
Applicable Margin for Fixed Rate Loans in the case of Fixed Rate Loans so
advanced by such Funding Agent. Such fees shall be calculated in the same
manner as the interest on the underlying Loan itself is calculated, shall be
payable in arrears at each time that interest on the Liabilities is due and
payable under this Agreement and shall be payable to such Affected Lender only
to the extent that Borrowers have actually made such interest payments to the
applicable Funding Agent. Each Affected Lender shall pay to the applicable
Funding Agent, at each time that interest on the Liabilities so advanced by the
applicable Funding Agent for the benefit of such Affected Lender is due and
payable under this Agreement, a fronting fee equal to 1/8% per annum of the
outstanding amount of the Loans so advanced by the applicable Funding Agent for
the benefit of such Affected Lender during the period since the last interest
payment date through such date, which fronting fee, at the option of the
applicable Funding Agent, may be payable by offset against the fee, if any,
otherwise payable to such Affected Lender at such time
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pursuant to the immediately preceding sentence. Such fronting fees shall be
calculated in the same manner as the interest on the underlying Loan itself is
calculated.
2.20. Participation.
Immediately upon the making of any Loan to PAAC hereunder or
the issuance of any Letter of Credit hereunder on the Application of PAAC, each
Canadian Lender shall be deemed to have irrevocably and unconditionally
purchased and received from U.S. Lenders and U.S. Issuing Bank, as applicable,
without recourse or warranty, an undivided interest and participation therein
to the extent of such Lender's Overall Share (including without limitation all
obligations of the applicable Borrower with respect thereto). Immediately upon
the making of any Loan to PCI Canada hereunder or the issuance of any Letter of
Credit hereunder on the Application of PCI Canada, each U.S. Lender shall be
deemed to have irrevocably and unconditionally purchased and received from
Canadian Lenders and Canadian Issuing Bank, as applicable, without recourse or
warranty, an undivided interest and participation therein to the extent of such
Lender's Overall Share (including without limitation all obligations of PCI
Canada with respect thereto). Within three (3) Banking Days after demand is
made by Administrative Agent during the continuance of an Event of Default,
each Canadian Lender agrees to settle the purchase of such participation
interests from each U.S. Lender, and each U.S. Lender agrees to settle the
purchase of such participation interests from each Canadian Lender, in each
case by paying to the applicable Lender, in same day funds in the Applicable
Currency, an amount equal to such Lender's Overall Share of all such Loans then
outstanding. If any Lender fails to timely make payment of such amount, such
amount shall bear interest until paid, at the rate or rates applicable at such
time for such Revolving Loans. Thereafter, so long as an Event of Default
remains in existence, unless otherwise directed by Administrative Agent, such
participations will be settled in the same manner and at the same time as
settlement of Loans between each Funding Agent and the applicable Lenders under
Sections 2.1.1(a) and 2.16. Notwithstanding any such participation, all
interest and fees accruing with respect to Loans and Letters of Credit
hereunder shall be for the sole account of the funding Lenders until such time,
if ever, that purchase of such participations are actually settled as provided
herein. Moveover, until such time, if ever, that purchase of such
participations are actually settled as provided herein, only the funding
Lenders shall be entitled to any interest and fees accruing with respect to
Loans and Letters of Credit hereunder. Interest and fees accruing after such
settlement of purchase of participations shall be for the account of each
funding Lender and each Lender who has so purchased its participation interest,
in accordance with their respective Overall Shares.
2.21. Income Tax Act (Canada).
Notwithstanding anything contained in this Agreement to the
contrary, if any Agent or any Lender receives notice under subsection 224(1.1)
of the Income Tax Act (Canada) or any successor provision thereto or any
comparable provision of any other taxing statute in respect of either Borrower,
then so long as such notice is effective, Lenders shall not be obligated to
make any further Revolving Loans hereunder to such Borrower.
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2.22. Payments in Applicable Currency.
All payments with respect to the Liabilities hereunder and
under the Related Agreements shall be made in the Applicable Currency in which
such Liabilities were originally incurred or accrued. Neither any Agent nor
any Lender shall have any obligation to accept any payments in respect of the
Liabilities in any currency other than as specified above. If any Agent or any
Lender does at any time, in its discretion, agree to accept payments in any
other currency, (a) the applicable amounts will be converted by Administrative
Agent or the applicable Funding Agent to the appropriate currency at the Spot
Rate, (b) Borrowers shall bear all costs and expenses associated with such
conversion, (c) Borrowers shall not for any purpose receive credit for any
amount tendered in such other currency until such conversion has been completed
and (d) Borrowers will bear all risks of currency fluctuations during the
settlement period of any such conversion.
3. COLLATERAL.
3.1. Grant of Security Interest.
(a) As security for (i) the payment of all Loans now or
hereafter made by, or on behalf of, any Agent or any Lender to PAAC hereunder
or under any Note, (ii) the payment of all Loans now or hereafter made by, or
on behalf of any Agent or any Lender to PCI Canada hereunder or under any Note,
and (iii) the payment or other satisfaction of all other Liabilities (including
without limitation all reimbursement obligations under any Letters of Credit)
of each Borrower, each Borrower hereby grants to Administrative Agent, for the
benefit of Agents and Lenders, a security interest in and to the following
property of such Borrower, whether now owned or existing, or hereafter acquired
or coming into existence, wherever now or hereafter located:
(A) Accounts Receivable (whether or not
Eligible Account Receivable); Contract Rights; any
and all security deposits and other security held by
or granted to such Borrower to secure payments from
any and all persons who are or may become obligated
to such Borrower under, with respect to, or on
account of any Account Receivable or Contract Right;
and all chattel paper and instruments evidencing,
arising out of or relating to any obligations to such
Borrower for goods sold or leased or services
rendered, or otherwise arising out of or relating to
any property described in this Section 3.1(a);
(B) Inventory (whether or not Eligible
Inventory);
(C) General Intangibles;
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(D) Any and all balances, credits,
deposits (general or special, time or demand,
provisional or final), accounts or monies of or in
the name of such Borrower now or hereafter with any
Agent, any Lender or any Participant and any and all
personal property of every kind or description of or
in the name of such Borrower now or hereafter, for
any reason or purpose whatsoever, in the possession
or control of, or in transit to, or standing to such
Borrower's credit on the books of, any Agent, any
agent or bailee for any Agent, any Lender, or any
Participant;
(E) To the extent related to the
property described in clauses (A) through (D) above,
all books, correspondence, credit files, records,
invoices and other papers and documents, including
without limitation, to the extent so related, all
tapes, cards, computer runs, computer programs and
other papers and documents in the possession or
control of such Borrower or any computer bureau from
time to time acting for such Borrower, and, to the
extent so related, all rights in, to and under all
policies of insurance, including claims of rights to
payments thereunder and proceeds therefrom, including
business interruption insurance and any credit
insurance; and
(F) All products and proceeds (including
but not limited to any Accounts Receivable or other
proceeds arising from the sale or other disposition
of any property described above, any returns of
Inventory sold by such Borrower, and the proceeds of
any insurance covering any of the property described
above) of any of the foregoing.
(b) All of the property described in Section 3.1(a) above
is hereafter collectively referred to as the "Borrower Collateral". It is
expressly understood and agreed that in no event shall the Borrower Collateral
include any goods other than Inventory.
3.2. Accounts Receivable.
(a) If requested by Administrative Agent, each Borrower
shall notify Administrative Agent immediately of all material disputes and
claims by any Account Debtor of such Borrower or any Designated Subsidiary of
such Borrower and, if reasonably requested by Administrative Agent after the
occurrence and during the continuance of an Event of Default, settle or adjust
them, or cause them to be settled or adjusted, at no expense to Agents or
Lenders. If Administrative Agent directs after the occurrence and during the
continuance of an Event of Default, no discount or credit allowance shall be
granted thereafter by either Borrower or any Designated Subsidiary to any
Account Debtor, other than discounts and trade allowances offered in the
ordinary course of a Borrower's or a Designated Subsidiary's business. All
Account Debtor payments and all net amounts received by any Agent in
settlement, adjustment or liquidation of any Account Receivable may be applied
by such Agent to the Liabilities or credited to the applicable
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Demand Deposit Account (subject to collection), as more fully described in
Section 2.11. If requested by Administrative Agent, each Borrower will, and
will cause each Designated Subsidiary to, make proper entries in its books and
records, disclosing the assignment of Accounts Receivable to Administrative
Agent, for the benefit of Agents and Lenders.
(b) Each Borrower warrants and covenants that: (i) all
of its Accounts Receivable are and will continue to be bona fide existing
obligations created by the sale of goods, the rendering of services, or the
furnishing of other good and sufficient consideration to Account Debtors in the
regular course of business; (ii) all shipping or delivery receipts and other
documents furnished or to be furnished to Administrative Agent in connection
therewith are and will be genuine; and (iii) none of the Accounts Receivable
identified or included on any schedule, Borrowing Base Certificate or report as
Eligible Account Receivable fail at the time so identified or included to
satisfy any of the requirements for eligibility set forth in the definition of
Eligible Account Receivable.
(c) Administrative Agent and, at the direction of
Administrative Agent, each applicable Funding Agent, is hereby authorized and
empowered (which authorization and power, being coupled with an interest, is
irrevocable until the last to occur of termination of this Agreement and
payment and performance in full of all of the Payment Liabilities under this
Agreement) at any time in its sole and absolute discretion:
(i) To request, in the name of such Agent, in a
Borrower's or a Designated Subsidiary's name or the name of a third
party, confirmation from any Account Debtor or party obligated under
or with respect to any Collateral of the amount shown by the Accounts
Receivable or other Collateral to be payable, or any other matter
stated therein;
(ii) To endorse in a Borrower's or a Designated
Subsidiary's name and to collect any chattel paper, checks, notes,
drafts, instruments or other items of payment tendered to or received
by such Agent in payment of any Account Receivable or other obligation
owing to such Borrower or such Designated Subsidiary;
(iii) After the occurrence and during the continuance of an
Event of Default, to notify, either in such Agent's name or a
Borrower's or a Designated Subsidiary's name, and/or to require such
Borrower or such Designated Subsidiary to notify, any Account Debtor
or other Person obligated under or in respect of any Collateral, of
the fact of Administrative Agent's Lien thereon, for the benefit of
Agents and Lenders, and of the collateral assignment thereof to
Administrative Agent, for the benefit of Agents and Lenders;
(iv) After the occurrence and during the continuance of an
Event of Default, to direct, either in a Borrower's or a Designated
Subsidiary's name or such Agent's name, and/or to require such
Borrower or such Designated Subsidiary to direct, any Account Debtor
or other Person obligated under or in
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respect of any Collateral to make payment directly to such Agent of
any amounts due or to become due thereunder or with respect thereto;
and
(v) After the occurrence and during the continuance of an
Event of Default, to demand, collect, surrender, release or exchange
all or any part of any Collateral or any amounts due thereunder or
with respect thereto, or compromise or extend or renew for any period
(whether or not longer than the initial period) any and all sums which
are now or may hereafter become due or owing upon or with respect to
any of the Collateral, or enforce, by suit or otherwise, payment or
performance of any of the Collateral either in such Agent's own name
or in the name of a Borrower or a Designated Subsidiary.
Under no circumstances shall any Agent be under any duty to act in regard to
any of the foregoing matters. The costs relating to any of the foregoing
matters, including Attorneys' Fees and out-of-pocket expenses, and the cost of
any Depository Account, Assignee Deposit Account, or other bank account or
accounts which may be required hereunder, shall be borne solely by the
applicable Borrower whether the same are incurred by any Agent or such
Borrower, and Administrative Agent may after three (3) Banking Days' prior to
notice to such Borrower direct the applicable Funding Agent to advance same to
such Borrower as a Revolving Loan.
(d) PAAC will notify its Account Debtors to make all
payments in respect of such Borrower's Accounts Receivable directly to one or
more lockbox accounts evidenced by agreements in form and substance
satisfactory to Administrative Agent. At the request of Administrative Agent,
PCI Canada will also notify its Account Debtors to make all payments in respect
of PCI Canada's Accounts Receivable directly to one or more lockbox accounts
evidenced by agreements in form and substance satisfactory to Administrative
Agent. All deposits to such lockbox accounts, and all of the checks, drafts,
cash and other remittances received by each Borrower in payment or as proceeds
of, or on account of, any of the Accounts Receivable or other Collateral, shall
be deposited in special bank accounts (the "Depository Accounts") of such
Borrower at such banks or financial institutions as Administrative Agent shall
consent. Said proceeds shall be deposited in precisely the form received
except for such Borrower's endorsement where necessary to permit collection of
items, which endorsement such Borrower agrees to make. Pending such deposit,
each Borrower agrees not to commingle any such checks, drafts, cash and other
remittances received by it with any of its funds or property, but will hold
them separate and apart therefrom and upon an express trust for Administrative
Agent, for the benefit of Agents and Lenders, until deposit thereof is made in
the applicable Depository Accounts. All funds in the Depository Accounts of a
Borrower at the end of each Banking Day will be wire transferred or otherwise
transferred as directed by such Borrower; provided, that at Administrative
Agent's option at any time after the outstanding principal balance of the Loans
to either Borrower exceeds the U.S. Dollar Equivalent of $5,000,000 (whether or
not the outstanding principal balance of such Loans subsequently falls below
such amount), all such funds in the Depository Accounts of such Borrower at the
end of each Banking Day will be wire transferred or transferred by other means
acceptable to Administrative Agent to a special bank account (collectively, the
"Assignee Deposit Accounts") relating to such Borrower and (i) in the case of
PAAC, located at BOA, and (ii) in the
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case of PCI Canada, located at BAC, in each case over which Administrative
Agent and the applicable Funding Agent alone has power of withdrawal. Each
Borrower acknowledges that the maintenance of the Assignee Deposit Accounts
will be solely for the convenience of Agents in facilitating their own
operations, and such Borrower does not and shall not have any right, title or
interest in any Assignee Deposit Account or in the amounts at any time
appearing to the credit thereof, except to the extent that such amounts are
transferred to such Borrower's Demand Deposit Account or operating account in
accordance with Section 2.11(b)(i). Each Borrower agrees not to maintain any
depository accounts other than accounts provided for under the Contingent
Payment Agreement, Depository Accounts, the Demand Deposit Account and the
Assignee Deposit Accounts established pursuant to this Section 3.2(d). Upon
the full and final liquidation of all Payment Liabilities, each Agent will pay
over to Borrowers any excess amounts received by such Agent as payment or
proceeds of Collateral, whether received by such Agent as a deposit in an
Assignee Deposit Account, contained in a lockbox account or any Depository
Account or received by such Agent as a direct payment on any of the sums due
hereunder. Each Borrower will cause each of its Designated Subsidiaries to
establish accounts comparable to those set forth above for the collection of
the proceeds of their Accounts Receivable, and such Borrower shall cause each
such Designated Subsidiary to take all other actions to implement the
collection mechanism set forth in this Section 3.2(d).
(e) Each Borrower appoints Administrative Agent, or any
Person whom Administrative Agent may from time to time designate (including
without limitation the applicable Funding Agent), as such Borrower's attorney
and agent-in-fact with power: (i) after the occurrence and during the
continuance of an Event of Default to notify the post office authorities to
change the address for delivery of such Borrower's mail to an address
designated by Administrative Agent or such other Person; (ii) to receive, open
and dispose of all mail addressed to such Borrower, but received by
Administrative Agent or such other Person; (iii) to send requests for
verification of Accounts Receivable or other Collateral to Account Debtors;
(iv) to open an Assignee Deposit Account, Depository Accounts, lockbox accounts
or other accounts under Administrative Agent's or such other Person's sole
control for the collection of Accounts Receivable or other Collateral, if not
required contemporaneously with the execution hereof; and (v) to do all other
things which any Agent is permitted to do under this Agreement or any Related
Agreement or which are reasonably necessary to carry out this Agreement and the
Related Agreements. Neither any Agent nor any of its directors, officers,
employees or agents will be liable for any acts of commission or omission nor
for any error in judgment or mistake of fact or law, unless the same shall have
resulted from gross negligence or willful misconduct. The foregoing
appointment and power, being coupled with an interest, is irrevocable until all
Payment Liabilities under this Agreement are paid and performed in full and
this Agreement is terminated. Each Borrower expressly waives presentment,
demand, notice of dishonor and protest of all instruments and any other notice
to which it might otherwise be entitled.
(f) If any Account Receivable or Contract Right, in
either case in excess of the U.S. Dollar Equivalent of $2,000,000, and
designated by a Borrower as an Eligible Account Receivable, arises out of a
contract with the United States or any state or local governmental entity, or
any department, agency, or instrumentality of any thereof or Her Majesty in
right of Canada or any provincial or local governmental entity, or any
ministry, department, agency or instrumentality
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of any thereof, or if such Accounts Receivable and Contract Rights so
designated as Eligible Accounts Receivable are in an aggregate amount in excess
of the U.S. Dollar Equivalent of $10,000,000, the applicable Borrower will, or
will cause the applicable Designated Subsidiary to, immediately notify
Administrative Agent in writing and execute any instruments and take any steps
reasonably required by Administrative Agent in order that all monies due and to
become due under such contract shall be assigned to Administrative Agent or its
agent, for the benefit of Agents and Lenders, and notice thereof given to the
applicable government under the Federal Assignment of Claims Act of 1940, as
amended, the Financial Administration Act, as amended or other applicable laws
or regulations, and any other applicable requirements thereof shall be
satisfied. The failure of a Borrower or a Designated Subsidiary to comply with
this clause (f) shall not by itself constitute an Event of Default; rather,
such failure will cause the applicable Account Receivable or Contract Right to
be deemed not to be an Eligible Account under this Agreement.
(g) If any Account Receivable or Contract Right is
evidenced by chattel paper or promissory notes, trade acceptances, or other
instruments for the payment of money, the applicable Borrower will or will
cause its Designated Subsidiary to, unless Administrative Agent shall otherwise
agree, deliver the originals of same to Administrative Agent or its agent,
appropriately endorsed to Administrative Agent's (or such agent's) order and,
regardless of the form of such endorsement, such Borrower hereby expressly
waives presentment, demand, notice of dishonor, protest and notice of protest
and all other notices with respect thereto.
3.3. Inventory.
(a) Each Borrower warrants and covenants that: (i) all
of the Inventory is, and at all times shall be, owned by a Borrower or a
Designated Subsidiary free of all claims and Liens (except as set forth in
Section 5.15); and (ii) neither a Borrower nor any Designated Subsidiary will
make any further assignment of any thereof or create or permit to exist any
further Lien thereon, unless approved in writing by Requisite Lenders, nor
permit any of Administrative Agent's rights therein to be affected by any
attachment, levy, garnishment or other judicial process.
(b) Neither any Agent nor any Lender shall be liable or
responsible in any way for the safekeeping of any Inventory delivered to it, to
any bailee appointed by or for it, to any warehouseman, or under any other
circumstances, other than for losses caused by its gross negligence or willful
misconduct. Neither any Agent nor any Lender shall be responsible for
collection of any proceeds or for losses in collected proceeds held by either
Borrower or any Designated Subsidiary in trust for any Agent. Any and all risk
of loss for any or all of the foregoing shall be upon Borrowers and the
Designated Subsidiaries.
(c) Any material change in the value, or condition of any
Inventory, and any errors discovered in any monthly inventory certificate under
Section 5.1.3 or any other inventory schedule delivered to any Agent or any
Lender, shall be reported to Administrative Agent promptly. Each Borrower
represents and warrants that, as to each schedule of Inventory delivered to any
Agent or any Lender:
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(i) The descriptions, origins, sizes, qualities,
quantities, weights, and markings of all goods stated thereon, or on
any attachment thereto, are true and correct in all respects;
(ii) None of the goods are defective, of second quality,
used, or goods returned after shipment, except where described as
such; and
(iii) All Inventory not included on such schedule has been
previously scheduled.
3.4. Supplemental Documentation.
At Administrative Agent's request, each Borrower shall execute
and deliver, or cause to be executed and delivered, to Administrative Agent,
now or at any time or times hereafter, such agreements, documents, UCC and PPSA
financing statements, Quebec hypothecs, any other form of security required in
Quebec, including registrations in respect thereof, warehouse receipts, bills
of lading, notices of assignment of Accounts Receivable, schedules of Accounts
Receivable assigned, and other written matter necessary or reasonably requested
by Administrative Agent to perfect and maintain perfected Administrative
Agent's Lien on the Collateral, for the benefit of Agents and Lenders (all the
above hereinafter referred to as "Supplemental Documentation"), in form and
substance acceptable to Administrative Agent, and pay all taxes, fees and other
costs and expenses associated with any recording or filing of the Supplemental
Documentation. Each Borrower hereby irrevocably makes, constitutes and
appoints Administrative Agent (and all Persons designated by Administrative
Agent for that purpose) as such Borrower's true and lawful attorney (and
agent-in-fact) (which appointment and power, being coupled with an interest, is
irrevocable until the last to occur of termination of this Agreement and
payment and performance in full of all of the Payment Liabilities under this
Agreement) to sign the name of such Borrower on any of the Supplemental
Documentation and to deliver any of the Supplemental Documentation to such
Persons as Administrative Agent in its sole and absolute discretion, may elect.
Each Borrower agrees that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is sufficient as a
UCC financing statement. Each Borrower consents to the filing of such PPSA
registrations and such registrations in Quebec as Administrative Agent deems
reasonably necessary in connection herewith in order to evidence and perfect
Administrative Agent's Lien on the Collateral for the benefit of Agents and
Lenders. PCI consents to the filing of the applicable Canadian Bank Act
Security.
3.5. Collateral for the Benefit of Agents and Lenders.
Subject to Section 3.8, all Liens granted to Administrative
Agent hereunder and under the Related Agreements and all Collateral delivered
to Administrative Agent hereunder and under the Related Agreements shall be
deemed to have been granted and delivered to Administrative Agent, for the
benefit of Agents and Lenders, to secure the Liabilities in the manner set
forth in Section 3.1.
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3.6. Certain Intellectual Property.
Each Borrower hereby grants Administrative Agent, for the
benefit of Agents and Lenders, a world-wide irrevocable license or other right
to use, without charge, such Borrower's labels, rights of use of any name,
tradenames, trademarks and advertising matter, or any assets and property of a
similar nature (collectively, the "Intangible Rights"), to the extent of such
Borrower's rights in such Intangible Rights, as they pertain to the Collateral,
in advertising for sale and selling any Collateral and such Borrower's rights
under all applicable licenses and license agreements related to the foregoing
shall inure to Administrative Agent's benefit. Such license shall remain in
full force and effect until this Agreement has been terminated and all of the
Payment Liabilities have been repaid in full. Any transfer of or Lien on the
Intangible Rights granted by a Borrower to any other Person shall be subject in
all respects to Administrative Agent's rights granted hereunder.
3.7. Landlord's Agreements.
In the event that a Borrower shall at any time, or from time
to time (a) make a request for a Loan hereunder or (b) be deemed to have
requested an Overdraft Loan, such Borrower shall, at Administrative Agent's
request, promptly deliver to Administrative Agent such landlord's agreements
with respect to leased locations of such Borrower and any Designated
Subsidiaries as Administrative Agent shall request; provided, that until such
time as such landlord's agreements are delivered, Administrative Agent shall
have the right, in its reasonable business judgment, to establish reserves
against the Borrowing Base of such Borrower in the amount of three (3) month's
rent for each leased location for which Administrative Agent has requested but
not received such a Landlord's Agreement.
3.8. Canadian Bank Act Security.
Each Canadian Lender which is a bank incorporated under the
Bank Act (Canada) hereby irrevocably designates and appoints the Canadian
Funding Agent as the collateral agent of such Canadian Lender under this
Agreement in respect of Canadian Bank Act Security, and each such Canadian
Lender irrevocably authorizes Canadian Funding Agent, in such capacity, to take
such action on its behalf under the Canadian Bank Act Security and to exercise
such powers and perform such duties as are expressly delegated to the Canadian
Funding Agent by the terms of this Agreement and such Canadian Bank Act
Security, together with such other powers that are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement or the Canadian Bank Act Security, the Canadian Funding Agent shall
not have any duties or responsibilities except those expressly set forth herein
or therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or the Canadian Bank Act Security or
otherwise exist against the Canadian Funding Agent in such capacity. The
provisions set out in this paragraph are solely for the benefit of
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Canadian Funding Agent and the Canadian Lenders, and no Borrower and no Obligor
shall have any rights as a third party beneficiary in respect thereof.
The parties acknowledge that the Canadian Bank Act Security
shall, to the maximum extent permitted by law, secure all Loans, including all
money loaned and advances made, by the Canadian Lenders and that all payments
or other recoveries under the Canadian Bank Act Security shall be shared by the
Canadian Lenders proportionately in accordance with their Pro Rata Share. To
the extent practicable, the Administrative Agent will make every reasonable
effort to, and the Canadian Funding Agent and each other party hereto shall
permit Administrative Agent to, realize on all security granted by either
Borrower to Administrative Agent pursuant to this Agreement or any Related
Agreement (the "Other Security") prior to the Canadian Funding Agent realizing
on the Canadian Bank Act Security. Notwithstanding the foregoing, each
Borrower acknowledges that any security granted by or pursuant to this
Agreement may be enforced or realized on in any order, whether sequentially,
concurrently or otherwise, and each Borrower waives any defense it may have in
respect thereof. If the Canadian Bank Act Security is enforced concurrently
with the Other Security, any recoveries or payments thereon which are not
specifically realized from the Canadian Bank Act Security and identified as
such shall be deemed to have been realized under the Other Security. Nothing
contained herein shall prohibit or restrict the right or ability of the
Canadian Funding Agent or the Canadian Lenders to take at any time such actions
as are necessary or desirable to preserve or protect the Canadian Bank Act
Security or to realize thereon in respect of assets not effectively charged
under the Other Security or in the event that the Other Security is determined
to be invalid or unenforceable or to not constitute a valid prior charge on all
or any of the assets of PCI Canada which are subject to the Canadian Bank Act
Security.
To the extent permitted by applicable law, proceeds of the
Canadian Bank Act Security shall be shared among the Lenders on a Pro Rata
Basis. In the event that it shall not be lawful for amounts realized on the
Canadian Bank Act Security to be shared among all the Lenders, then, to the
extent permitted by applicable law, the amounts the Canadian Lenders receive
from the Other Security shall be reduced to the extent of amounts received by
the Canadian Lenders from the Canadian Bank Act Security.
4. REPRESENTATIONS AND WARRANTIES.
To induce Agents and Lenders to make Loans to, and issue
Letters of Credit for the account of, each Borrower under this Agreement, each
Borrower, as to itself and each of its Subsidiaries that are Designated
Subsidiaries, makes the following representations and warranties to Agents and
Lenders, all of which shall be true and correct as of the date the initial Loan
is made or the initial Letter of Credit is issued and shall survive the
execution of this Agreement and the making of the initial Loan and the issuance
of the initial Letter of Credit:
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4.1. Organization.
Each Borrower and each Designated Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its respective incorporation. Each Borrower and each
Designated Subsidiary is in good standing and is duly qualified to do business
in each jurisdiction where, because of the nature of its activities or
properties, such qualification is required, except for those jurisdictions in
which its failure to qualify to do business would not be reasonably likely to
have a Material Adverse Effect. Except as set forth on Schedule 4.1 (with
respect to each Borrower) or Schedule 4.10 (with respect to each Designated
Subsidiary), on the date hereof, each Borrower and each Designated Subsidiary
conducts business in its own name exclusively. Schedule 4.1 sets forth a
complete and accurate list, as of the date of this Agreement, of (a) the
jurisdiction of incorporation of each Borrower, (b) each jurisdiction in which
each Borrower is qualified to do business and (c) all of each Borrower's
tradenames, trade styles or doing business forms.
4.2. Authorization.
Each Borrower is duly authorized to execute and deliver this
Agreement, any Notes, and any Related Agreements or Supplemental Documentation
contemplated by this Agreement to which it is a party, and is and will continue
to be duly authorized to borrow monies hereunder and to perform its obligations
under this Agreement, any Notes and any such Related Agreements and
Supplemental Documentation. Each Designated Subsidiary is duly authorized to
execute and deliver any Related Agreements or Supplemental Documentation
contemplated to be delivered by such Designated Subsidiary, and is and will
continue to be duly authorized to perform its obligations thereunder. The
execution, delivery and performance by (a) each Borrower of this Agreement, any
Notes, and any Related Agreements or Supplemental Documentation contemplated by
this Agreement to which it is a party, and the borrowings hereunder and (b)
each Designated Subsidiary of any Related Agreements or Supplemental
Documentation to which it is a party, do not and will not require any consent
or approval of any governmental agency or authority.
4.3. No Conflicts.
The execution, delivery and performance by (a) each Borrower
of this Agreement, any Notes, and any Related Agreements or Supplemental
Documentation contemplated by this Agreement to which it is a party and (b)
each Designated Subsidiary of any Related Agreements or Supplemental
Documentation to which it is a party, do not and will not conflict with (i) any
provision of law, (ii) the Certificate or Articles of Incorporation, as
applicable, or by-laws, of such Borrower or such Designated Subsidiary, (iii)
any agreement binding upon such Borrower or such Designated Subsidiary which
conflict is reasonably likely to have a Material Adverse Effect or (iv) any
court or administrative order or decree applicable to such Borrower or such
Designated Subsidiary which conflict is reasonably likely to have a Material
Adverse Effect, and do not and will
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not require, or result in, the creation or imposition of any Lien on any asset
of either Borrower or any Designated Subsidiary, except as provided herein.
4.4. Validity and Binding Effect.
This Agreement, any Notes, and any Related Agreements or
Supplemental Documentation contemplated by this Agreement, when duly executed
and delivered, will be legal, valid and binding obligations of each Borrower
and each Designated Subsidiary party thereto, as applicable, enforceable
against each such Borrower and each such Designated Subsidiary in accordance
with their respective terms.
4.5. No Default.
Neither either Borrower nor any Designated Subsidiary is in
default under any agreement or instrument to which such Borrower or such
Designated Subsidiary is a party or by which any of their respective properties
or assets is bound or affected, which default is reasonably likely to have a
Material Adverse Effect. No Event of Default or Unmatured Event of Default has
occurred and is continuing.
4.6. Financial Statements.
PAAC's consolidated audited financial statements as of
December 31, 1997 and PAAC's consolidated and consolidating unaudited financial
statements as of March 31, 1998, copies of which have been furnished to
Administrative Agent, have been prepared in conformity with GAAP applied on a
basis consistent with that of the preceding Fiscal Year and period and present
fairly the financial condition of PAAC and its Subsidiaries as of such dates
and the results of their operations for the periods then ended, subject (in the
case of the interim financial statement) to year-end audit adjustments. Since
December 31, 1997, there has been no Material Adverse Change with respect to
Borrowers and the Designated Subsidiaries. PAAC's consolidated and
consolidating unaudited pro forma balance sheets as of the Closing Date reflect
pro forma changes in PAAC's financial condition since December 31, 1997 and
have been prepared in conformity with GAAP and present fairly the financial
condition of PAAC and its Subsidiaries as of such date.
4.7. Insurance.
Schedule 4.7 hereto is a complete and accurate summary of the
property and casualty insurance program carried by Borrowers and the Designated
Subsidiaries on the date hereof. Schedule 4.7 includes the insurer's(s')
name(s), policy number(s), expiration date(s), amount(s) of coverage, type(s)
of coverage, the annual premium(s), deductibles and self-insured retention and
describes any retrospective rating plan, fronting arrangement or any other
self-insurance or risk assumption agreed to by either Borrower or any
Designated Subsidiary or imposed upon either Borrower or any Designated
Subsidiary by any such insurer. This summary also includes any self-insurance
program that is in effect.
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4.8. Litigation; Contingent Liabilities.
(a) As of the date hereof, except for those referred to
in Schedule 4.8, there are no claims, litigation, arbitration proceedings or
governmental proceedings pending or threatened against or affecting either
Borrower, any Designated Subsidiary or any Related Party, the results of which
are reasonably likely to have a Material Adverse Effect.
(b) As of the date hereof, other than any liability
incident to the claims, litigation or proceedings disclosed in Schedule 4.8 or
Schedule 4.19, or provided for or disclosed in the financial statements
referred to in Section 4.6, neither either Borrower nor any of the Designated
Subsidiaries has any contingent liabilities which are reasonably likely to have
a Material Adverse Effect.
4.9. Liens.
None of the Collateral or other property, revenues or assets
of either Borrower or any Designated Subsidiary is subject to any Lien
(including but not limited to Liens pursuant to Capitalized Leases under which
a Borrower or a Designated Subsidiary is a lessee) except: (a) Liens in favor
of Administrative Agent, for the benefit of Agents and Lenders; (b) Liens for
current Taxes not delinquent or Taxes being contested in good faith and by
appropriate proceedings and as to which such reserves or other appropriate
provisions as may be required by GAAP are being maintained; (c) carriers',
warehousemen's, mechanics', materialmen's and other like statutory Liens
arising in the ordinary course of business securing obligations which are not
overdue or which are being contested in good faith and by appropriate
proceedings and as to which such reserves or other appropriate provisions as
may be required by GAAP are being maintained; (d) Liens listed on Schedule 4.9
and Liens permitted by Section 5.15; and (e) Liens consented to in writing by
Requisite Lenders.
4.10. Subsidiaries.
As of the date hereof, all of each Borrower's Subsidiaries are
listed on Schedule 4.10. Schedule 4.10 sets forth, for each such Subsidiary, a
complete and accurate statement of (a) the ownership of each of the
Subsidiaries, (b) the jurisdiction or other jurisdiction of formation or
incorporation of each Subsidiary, (c) each jurisdiction in which each
Subsidiary is qualified to do business and (d) all of each Subsidiary's trade
names, trade styles or doing business forms. Except as otherwise noted on
Schedule 4.10, all of the Subsidiaries listed on Schedule 4.10 are Designated
Subsidiaries.
4.11. Partnerships; Joint Ventures.
As of the date hereof, neither either Borrower nor any of the
Designated Subsidiaries is a partner or joint venturer in any partnership or
joint venture other than the partnerships and joint ventures listed on Schedule
4.11. Schedule 4.11 sets forth, for each such partnership or joint venture, a
complete and accurate statement of (a) each Borrower's and each Designated
Subsidiary's percentage ownership of each such
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partnership or joint venture, (b) the state, province or other jurisdiction of
formation or incorporation, as appropriate, of each such partnership or joint
venture, (c) each jurisdiction in which each such partnership or joint venture
is qualified to do business and (d) all of each such partnership's or joint
venture's trade names, trade styles or doing business forms on the date of this
Agreement.
4.12. Business and Collateral Locations.
(a) On the date hereof, the office where each Borrower
keeps its books and records concerning its Accounts Receivable and other
Collateral, and such Borrower's chief place of business and chief executive
office, is located at the address of such Borrower set forth on the signature
pages of this Agreement. Schedule 4.12 accurately identifies the office where
each Designated Subsidiary keeps its books and records concerning its Accounts
Receivable and other Collateral. Schedule 4.12 contains a complete and
accurate list, as of the date of this Agreement, of all of each Borrower's and
each Designated Subsidiary's places of business other than that referred to in
the first two sentences of this paragraph (a).
(b) Schedule 4.12 contains a complete and accurate list,
as of the date of this Agreement, of the locations of all Inventory and other
tangible Collateral and if any Inventory or other Collateral is not in the
possession or control of a Borrower, a Designated Subsidiary or the owner of
such Collateral, the name and mailing address of each bailee, processor,
warehouseman or other Person in possession or control thereof.
4.13. Senior Secured Notes.
(a) The PAAC Senior Secured Notes were issued on or prior
to the OCC Closing Date in the original principal amount of US$200,000,000, in
accordance with and pursuant to the terms of the PAAC Offering Memorandum and
in compliance with all laws, including without limitation Rule 144A of the
Securities Act of 1933, as amended and all other applicable federal and state
securities laws. The principal balance of the PAAC Senior Secured Notes as of
the Closing Date is US$200,000,000. The issuance of the PAAC Senior Secured
Notes and the execution of the PAAC Senior Secured Note Documents were duly
authorized by all necessary corporate action on the part of PAAC and each other
Company party thereto and did not require any consent or approval of any
governmental agency or authority that was not obtained prior to the OCC Closing
Date. The issuance of the PAAC Senior Secured Notes and the execution of the
PAAC Senior Secured Note Documents did not conflict with (i) any provision of
law, (ii) the Certificate or Articles of Incorporation or by-laws of PAAC or
any other Company party thereto, (iii) any agreement binding upon PAAC or any
other Company party thereto which conflict was or is reasonably likely to have
a Material Adverse Effect, or (iv) any court or administrative order or decree
applicable to PAAC or any other Company party thereto, in either case in
existence on the OCC Closing Date, which conflict was or is reasonably likely
to have a Material Adverse Effect. The PAAC Senior Secured Note Documents are
legal, valid and binding obligations of PAAC and each other Company party
thereto, enforceable against PAAC and each other such Company in accordance
with their respective terms.
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(b) The PCI Canada Senior Secured Notes were issued on or
prior to the ICI Closing Date in the original principal amount of
US$175,000,000, in accordance with and pursuant to the terms of the PCI Canada
Offering Memorandum and in compliance with all laws, including without
limitation Rule 144A of the Securities Act of 1933, as amended and all other
applicable securities laws. The principal balance of the PCI Canada Senior
Secured Notes as of the Closing Date is US$175,000,000. The issuance of the
PCI Canada Senior Secured Notes and the execution of the PCI Canada Senior
Secured Note Documents were duly authorized by all necessary corporate action
on the part of PCI Canada and each other Company party thereto and did not
require any consent or approval of any governmental agency or authority that
was not obtained prior to the ICI Closing Date. The issuance of the PCI Canada
Senior Secured Notes and the execution of the PCI Canada Senior Secured Note
Documents did not conflict with (i) any provision of law, (ii) the
organizational documents or by-laws of PCI Canada or any other Company party
thereto, (iii) any agreement binding upon PCI Canada or any other Company party
thereto which conflict was or is reasonably likely to have a Material Adverse
Effect, or (iv) any court or administrative order or decree applicable to PCI
Canada or any other such Company, in either case in existence on the ICI
Closing Date, which conflict was or is reasonably likely to have a Material
Adverse Effect. The PCI Canada Senior Secured Note Documents are legal, valid
and binding obligations of PCI Canada and each other Company party thereto,
enforceable against PCI Canada and each other such Company in accordance with
their respective terms.
4.14. Term Loans.
(a) The PAAC Term Loans were consummated on or prior to
the OCC Closing Date in accordance with and pursuant to the terms of the PAAC
Term Loan Documents and in compliance with all laws and in connection
therewith, the PAAC Term Lenders advanced term loans to PAAC in the aggregate
amount of US$100,000,000. The principal balance of the PAAC Term Loans as of
the Closing Date is US$100,000,000. The execution of the PAAC Term Loan
Documents were duly authorized by all necessary corporate action on the part of
PAAC and each other Company party thereto and did not require any consent or
approval of any governmental agency or authority that was not waived by the
PAAC Term Lenders or obtained prior to the OCC Closing Date. The execution of
the PAAC Term Loan Documents did not conflict with (i) any provision of law,
(ii) the Certificate or Articles of Incorporation or by-laws of PAAC or any
other Company party thereto, (iii) any agreement binding upon PAAC or any other
Company party thereto which conflict was or is reasonably likely to have a
Material Adverse Effect or (iv) any court or administrative order or decree
applicable to PAAC or any other Company party thereto, in either case in
existence on the OCC Closing Date, which conflict was or is reasonably likely
to have a Material Adverse Effect. The PAAC Term Loan Documents are legal,
valid and binding obligations of PAAC and each other Company party thereto,
enforceable against PAAC and each other such Company in accordance with their
respective terms.
(b) The PAI Term Loans were consummated on or prior to
the ICI Closing Date in accordance with and pursuant to the terms of the PAI
Term Loan Documents and in compliance with all laws and in connection
therewith, the PAI Term Lenders advanced term loans to PAI in the aggregate
amount of US$100,000,000. The principal balance of the PAI Term Loans as of
the Closing Date is US$83,000,000. The execution of the PAI Term Loan
Documents
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were duly authorized by all necessary corporate action on the part of PAI and
each other Company party thereto and did not require any consent or approval of
any governmental agency or authority that was not waived by the PAI Term
Lenders or obtained prior to the ICI Closing Date. The execution of the PAI
Term Loan Documents did not conflict with (i) any provision of law, (ii) the
organization documents or by-laws of PAI or any other Company party thereto,
(iii) any agreement binding upon PAI or any other Company party thereto which
conflict was or is reasonably likely to have a Material Adverse Effect or (iv)
any court or administrative order or decree applicable to PAI or any other
Company party thereto, in either case in existence on the ICI Closing Date,
which conflict was or is reasonably likely to have a Material Adverse Effect.
The PAI Term Loan Documents are legal, valid and binding obligations of PAI and
each other Company party thereto, enforceable against PAI and each other such
Company in accordance with their respective terms.
4.15. Eligibility of Collateral.
Each Account Receivable or item of Inventory which a Borrower
shall, expressly or by implication (by inclusion on a Borrowing Base
Certificate or otherwise), request Administrative Agent to classify as an
Eligible Account Receivable or as Eligible Inventory, respectively, will, as of
the time when such request is made, conform in all respects to the requirements
of such classification set forth in the respective definitions of "Eligible
Account Receivable" and "Eligible Inventory" set forth herein.
4.16. Patents, Trademarks, etc.
Each Borrower and each of the Designated Subsidiaries
possesses adequate licenses, patents, patent applications, copyrights,
trademarks, trademark applications, trade styles, and tradenames to continue to
conduct its respective business as heretofore conducted by it, and all such
licenses, patents, patent applications, copyrights, trademarks, trademark
applications, trade styles, and tradenames existing on the date hereof of
either Borrower or any Designated Subsidiary are listed on Schedule 4.16.
4.17. Solvency.
Each of (i) each Borrower and each Designated Subsidiary and
(ii) Borrowers and the Designated Subsidiaries, taken as a whole, now have
capital sufficient to carry on their businesses and transactions and all
businesses and transactions in which any of them is about to engage, and are
able to pay their debts as they mature. Each of (i) each Borrower and each
Designated Subsidiary, and (ii) Borrowers and the Designated Subsidiaries,
taken as a whole, are now solvent and now own property having a value, both at
fair valuation and at present fair salable value, greater than the amount
required to pay its debts.
4.18. Contracts; Labor Matters.
Except as disclosed on Schedule 4.18: (a) neither either
Borrower nor any Designated Subsidiary is a party to any contract or agreement,
or is subject to any charge, corporate restriction, judgment, decree or order,
which is reasonably likely to have a
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Material Adverse Effect; (b) as of the date hereof, no labor contract to which
either Borrower or any Designated Subsidiary is a party or is otherwise subject
is scheduled to expire prior to the Termination Date; (c) neither either
Borrower nor any Designated Subsidiary has, within the two (2)-year period
preceding the date of this Agreement, taken any action which would have
constituted or resulted in a "plant closing" or "mass layoff" within the
meaning of the Federal Worker Adjustment and Retraining Notification Act of
1988 or having the same or similar designation under any similar applicable
federal, state, provincial or local law, and neither Borrower has a reasonable
expectation that any such action is or will be required at any time prior to
the Termination Date and (d) on the date of this Agreement (i) neither either
Borrower nor any Designated Subsidiary is a party to any labor dispute and (ii)
there are no strikes or walkouts relating to any labor contracts to which
either Borrower or any Designated Subsidiary is a party or is otherwise
subject.
4.19. Pension and Welfare Plans.
(a) Each Pension Plan complies, and has been administered
in compliance, in all material respects, with all applicable statutes and
governmental rules and regulations; no Reportable Event has occurred and is
continuing with respect to any Pension Plan; neither either Borrower nor any
ERISA Affiliate has withdrawn from any Multiemployer Plan in a "complete
withdrawal" or a "partial withdrawal" as defined in Section 4203 or 4205 of
ERISA, respectively, with respect to which either Borrower or any ERISA
Affiliate has any unsatisfied liability; no steps have been instituted to
terminate any Pension Plan; no contribution failure has occurred with respect
to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA; no condition exists or event or transaction has occurred in connection
with any Pension Plan or Multiemployer Plan that is reasonably likely to have a
Material Adverse Effect; and neither either Borrower nor any ERISA Affiliate is
a "contributing sponsor" as defined in Section 4001(a)(13) of ERISA of a
"single-employer plan" as defined in Section 4001(a)(15) of ERISA that has two
or more contributing sponsors at least two of whom are not under common
control. Except as listed in Schedule 4.19, neither either Borrower nor any
ERISA Affiliate, to the extent there is joint and several liability with either
Borrower to pay such benefits, has any liability to pay any welfare benefits
under any employee welfare benefit plan within the meaning of Section 3(l) of
ERISA to former employees thereof or to current employees with respect to
claims incurred after the termination of their employment other than as
required by Section 4980B of the Code or Part 6 of Subtitle B of Title 1 of
ERISA.
(b) Each Canadian Pension Plan is ongoing and complies,
and has been administered in compliance, in all material respects, with all
applicable legislation and governmental rules and regulations (collectively,
"Canadian Pension Laws") including, without limitation, pension benefits
standards legislation and the Income Tax Act (Canada) and any applicable
provincial legislation. Each Canadian Pension Plan is in good standing under
Canadian Pension Laws, and no events have occurred which would reasonably be
expected to impair such status. There has been no payment out of the pension
fund held in respect of any Canadian Pension Plan except for the purpose of
paying or arranging for the payment of authorized benefits or the proper
expenses of any Canadian Pension Plan in accordance with its terms and Canadian
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Pension Laws. Except as listed in Schedule 4.19, no steps have been instituted
by a Borrower and neither Borrower has acquiesced in any action by another
Person which could result in the termination, in whole or in part, of any
Canadian Pension Plan, whether by declaration by any governmental authority or
otherwise. All contributions have been made to each Canadian Pension Plan in
accordance with the terms of such Canadian Pension Plan and the recommended
funding requirements disclosed in any actuarial valuations or reports
pertaining to such Canadian Pension Plan and no contribution failure has
occurred with respect to any Canadian Pension Plan sufficient to give rise to
any liability, to constitute an offense or to jeopardize the registration of
any Canadian Pension Plan under any Canadian Pension Laws. As of October 31,
1997, no Canadian Pension Plan which is required to be registered under
Canadian Pension Laws had a "solvency deficiency" as defined and determined in
accordance with any Canadian Pension Laws. No material actions, suits, claims
or proceedings are pending or, to the knowledge of either Borrower, threatened
in respect of any Canadian Pension Plan, other than routine uncontested claims
for benefits. No condition exists or transaction has occurred in connection
with any Canadian Pension Plan which could result in the incurrence by either
Borrower or any other Obligor of any material liability, fine or penalty.
Where a Canadian Pension Plan is required to be registered under applicable
Canadian Pension Law, either such Canadian Pension Plan is duly registered or
timely application for such registration has been made.
4.20. Regulations G, U and X.
Neither either Borrower nor any Designated Subsidiary is
engaged in the business of purchasing or selling Margin Stock or extending
credit to others for the purpose of purchasing or carrying Margin Stock, and no
part of the proceeds of any Senior Secured Loans, any Term Loans or any
borrowing under the Original Loan Agreement or hereunder has been or will be
used to purchase or carry any Margin Stock or for any other purpose which would
violate any of the margin regulations of the Federal Reserve Board.
4.21. Compliance.
Except as described on Schedule 4.21 or Schedule 4.25, each
Borrower and each Designated Subsidiary is in compliance with all statutes and
governmental rules and regulations applicable to it, the noncompliance with
which is reasonably likely to have a Material Adverse Effect.
4.22. Taxes.
Each Borrower and each Designated Subsidiary has (a) filed all
material tax returns which are required to have been filed, (b) collected and
remitted all Taxes which are due and payable, except such Taxes, if any, as are
being contested in good faith and by appropriate proceedings and as to which
such reserves or other appropriate provisions as may be required by GAAP have
been maintained and (c) made adequate provision for all Taxes payable by it for
the current period and any previous periods for which tax returns are not yet
required to be filed. The U.S. federal income tax liability of PAI and its
Subsidiaries has been audited by the Internal Revenue Service and has been
finally
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determined and satisfied (or the time for audit has expired) for all tax years
up to and including the tax year ended December 31, 1992. Other than PAI and
such Subsidiaries, no other Company has been the subject of a tax audit. Since
PAAC utilizes its operating loss carry-forward, its audit periods remain open
for all tax years. Except as described on Schedule 4.22, as updated from time
to time, neither Borrower is aware of any proposed assessment against either
Borrower or any Designated Subsidiary for additional Taxes (or any basis for
any such assessment). Each Borrower and each Designated Subsidiary has (i)
withheld from each payment made to any of its past or present employees,
officers or directors, and to any non-resident of the country in which it is
resident, the amount of all material Taxes and other deductions required to be
withheld therefrom and has paid the same to the proper tax authority or other
receiving officers within the time required under any applicable legislation,
and (ii) collected and remitted to the appropriate tax authority when required
by law to do so all material amounts collectible and remittable in respect of
sales, goods and services Taxes and similar provincial or state Taxes, and has
paid all such material amounts payable by it on account of sales Taxes
including goods and services and value-added Taxes.
4.23. Investment Company Act Representation.
Neither either Borrower nor any Designated Subsidiary is an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
4.24. Public Utility Holding Company Act Representation.
Neither either Borrower nor any Designated Subsidiary is a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
4.25. Environmental and Safety and Health Matters.
Except as disclosed on Schedule 4.25, each Borrower and each
of the Designated Subsidiaries and/or each property, operations and facility
that either Borrower or any Designated Subsidiary owns, operates or controls
(a) complies in all respects with (i) all applicable Environmental Laws, except
for those laws the failure with which to comply is not reasonably likely to
have a Material Adverse Effect and (ii) all applicable Occupational Safety and
Health Laws, except for those laws the failure with which to comply is not
reasonably likely to have a Material Adverse Effect; (b) is not subject to any
judicial or administrative proceeding alleging the violation of any
Environmental Law or Occupational Safety and Health Law which is reasonably
likely to have a Material Adverse Effect; (c) has not received any notice (i)
that it may be in violation of any Environmental Law or Occupational Safety and
Health Law which is reasonably likely to have a Material Adverse Effect, (ii)
threatening the commencement of any proceeding under Environmental Law or
Occupational Safety and Health Law, which is reasonably likely to have a
Material Adverse Effect, or (iii) alleging that it is or may be responsible
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for any response, cleanup, or corrective action, including but not limited to
any remedial investigation/feasibility studies, under any Environmental Law or
Occupational Safety and Health Law, which, is reasonably likely to have a
Material Adverse Effect; (d) to the knowledge of each Borrower, is not the
subject of federal, state or provincial investigation evaluating whether any
investigation, remedial action or other response is needed to respond to (i) a
Release or threatened Release of any Hazardous Material or the spillage,
disposal or release or threatened release into the environment of any other
hazardous, toxic or dangerous waste, substance or constituent, or other
substance regulated under Environmental Law which is reasonably likely to have
a Material Adverse Effect or (ii) any allegedly unsafe or unhealthful condition
regulated under Environmental Law which is reasonably likely to have a Material
Adverse Effect; and (e) has not filed any notice under or relating to any
Environmental Law or Occupational Safety and Health Law indicating or reporting
(i) any past or present Release of, or treatment, storage or disposal of, any
Hazardous Material or spillage, disposal or release into the environment of any
other hazardous, toxic or dangerous waste, substance or constituent, or other
substance regulated under Environmental Law or (ii) any unsafe or unhealthful
condition, in either case, which is reasonably likely to have a Material
Adverse Effect. Except as disclosed on Schedule 4.25, there are no Hazardous
Materials on, in or under any property or facilities owned, operated or
controlled by either Borrower or any Designated Subsidiary the presence of
which is reasonably likely to have a Material Adverse Effect, including but not
limited to such Hazardous Materials that may be contained in underground
storage tanks, but excepting such Hazardous Materials used, produced or
otherwise present in accordance with all applicable laws and such Hazardous
Materials used in the same manner as an ordinary consumer (e.g., gasoline in
tanks of motor vehicles, small amounts of cosmetic cleaners, etc.) in the
business of each Borrower and the Designated Subsidiaries. Except with respect
to the termination of its term on April 12, 1999, to the best of the knowledge
of PAAC, the ZENECA Indemnity remains in full force and effect in accordance
with its terms.
4.26. Related Agreements and Transaction Documents.
As of the date hereof, all representations and warranties of
each Borrower and each Designated Subsidiary contained in any Related
Agreements and all representations and warranties of Parent, each Borrower and
each Designated Subsidiary contained in any Transaction Document (whether such
representations and warranties were made to any Agent or any Lender or to
another Person), are true and correct as if made on the date hereof (except for
those representations and warranties which are expressly made as of another
specified date) and each Borrower hereby adopts and affirms all such
representations and warranties which such Borrower agrees shall be incorporated
by reference herein and made a part hereof.
4.27. Capitalized Lease Obligations.
As of the date hereof, the Indebtedness of each Borrower and
each Designated Subsidiary under Capitalized Leases is as set forth on Schedule
4.27.
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4.28. Ownership.
The capitalization of each Borrower and each Designated
Subsidiary is as set forth on Schedule 4.28.
4.29. Holding Companies; Licensing Companies.
As of the Closing Date, each of Parent, PAAC, PAI, BMPC, TCH
and Imperial is a holding company without material assets, operations or
business, other than the ownership by (a) Parent of the common stock of PAAC
and Pioneer Water Technologies, Inc., (b) PAAC of the common stock of PAI, PCI
Canada, PCI Carolina and Pioneer Licensing, Inc., (c) PAI of the common stock
of its Subsidiaries, (d) TCH of the common stock of T.C. Products, Inc. and (e)
Imperial of 50% of the common stock of Kemwater. As of the Closing Date,
neither of East and Pioneer Licensing, Inc. has any material assets, operations
or business, other than the ownership of certain intellectual property held for
license to the other Companies in the ordinary course of business. As of the
Closing Date, none of Parent, PAAC, PAI, BMPC, East, TCH, Imperial or Pioneer
Licensing, Inc. has any Indebtedness or other obligations other than
Indebtedness of each of them in respect of the Seller Notes, the Senior Secured
Loans, the Term Loans and this Agreement.
4.30. Year 2000 Compliance.
Each Borrower and each Designated Subsidiary has implemented a
comprehensive program to address the "year 2000 problem" (that is, the risk
that computer applications may not be able to properly perform date-sensitive
functions after December 31, 1999) and expects to resolve on a timely basis any
material year 2000 problem. Each Borrower and each Designated Subsidiary has
also made such inquiry as it deems necessary of each supplier, vendor and
customer of such Company that is of material importance to the financial
well-being of such Company with respect to the year 2000 problem and has
received assurances from such Person that it believes that it will be able to
resolve any material year 2000 problem on a timely basis, should such a problem
arise.
5. COVENANTS.
From the date of this Agreement and thereafter until the
Credit is terminated and all Payment Liabilities of each Borrower hereunder are
paid in full, each Borrower agrees that unless Administrative Agent, at the
written direction of Requisite Lenders, shall otherwise consent in writing, it
will:
5.1. Financial Statements and Other Reports.
Furnish to each Agent and each Lender, in form satisfactory to
Administrative Agent:
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5.1.1. Financial Reports:
(a) Annual Financial Statements. Within ninety (90) days
after each Fiscal Year, a copy of the annual audited financial statements of
PAAC and its Subsidiaries prepared on a consolidated basis and in conformity
with GAAP, showing all amounts in U.S. Dollars and certified by an independent
certified public accountant who shall be satisfactory to Administrative Agent,
together with (i) a certificate from such accountant, (x) containing an
examination of the computation of the financial covenant set forth in Section
5.32, and (y) to the effect that, in making the examination necessary for the
signing of such annual audit report, such accountant has not become aware of
any Event of Default or Unmatured Event of Default that has occurred and is
continuing and that relates to financial or other accounting matters or the
financial covenants set forth in Section 5.32, or, if such accountant has
become aware of any such event, describing it and (ii) the annual operating
statements of PAAC and its Subsidiaries prepared on a consolidating basis and
in conformity with GAAP applied in a manner consistent with the audit report
referred to in preceding clauses (a)(i), signed by PAAC's chief financial
officer or treasurer.
(b) Quarterly Financial Statement. Within forty-five
(45) days after the end of each quarter of each Fiscal Year, except ninety (90)
days after the end of each quarter closing a Fiscal Year, a copy of the
financial statement of PAAC and its Subsidiaries prepared on a consolidated and
consolidating basis and in conformity with GAAP applied in a manner consistent
with the audit report referred to in preceding clause (a), and consisting of at
least a balance sheet as at the close of such quarter and an income statement
and cash flow statement for such quarter and for the period from the beginning
of such Fiscal Year to the close of such quarter, compared, in the case of the
consolidated statements only, to the actual results for the same period during
the prior Fiscal Year and to Borrowers' budget (delivered pursuant to Section
5.1.1(d)) for the current Fiscal Year. Each such financial statement delivered
with respect to a quarter which is not closing a Fiscal Year shall be signed by
the chief financial officer or treasurer of PAAC.
(c) Monthly Financial Statement. Within thirty (30) days
after the end of each month of each Fiscal Year during which month the
aggregate outstanding balance of the Loans at any time exceeded the U.S. Dollar
Equivalent of $5,000,000, except (i) forty-five (45) days after the end of each
such month closing a fiscal quarter and (ii) ninety (90) days after the end of
each such month closing a Fiscal Year, a copy of the unaudited financial
statement of PAAC and its Subsidiaries prepared on a consolidated and
consolidating basis and in conformity with GAAP applied in a manner consistent
with the audit report referred to in preceding clause (a), and consisting of at
least a balance sheet as at the close of such month and an income statement and
cash flow statement for such month and for the period from the beginning of
such Fiscal Year to the close of such month, compared, in the case of the
consolidated statements only, to the actual results for the same period during
the prior Fiscal Year and to Borrowers' budget (delivered pursuant to Section
5.1.1(d)), for the current Fiscal Year. Each such financial statement
delivered with respect to a month which is not closing a Fiscal Year shall be
signed by the chief financial officer or treasurer of PAAC.
(d) Annual Budgets. Within thirty (30) days after the
end of each Fiscal Year, a copy of an annual budget of Parent for the current
Fiscal Year, prepared on a consolidated and
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consolidating basis and in conformity with GAAP applied in a manner consistent
with the prior Fiscal Year's budget, signed by Parent's chief financial officer
or treasurer and consisting of at least a balance sheet, an income statement
and a cash flow statement, each calculated on a quarter by quarter basis.
(e) Officer's Certificate. Together with the financial
statements furnished by Borrowers under the preceding clauses (a), (b) and (c),
a certificate of PAAC's chief financial officer or treasurer in the form of
Exhibit C, dated the date of such annual audit report or such monthly financial
statement, as the case may be, containing a statement that no Event of Default
or Unmatured Event of Default has occurred and is continuing, or, if there is
any such event, describing it and the steps, if any, being taken to cure it,
and containing a computation of, and showing compliance with, each of the
financial ratios and restrictions contained in this Section 5.
5.1.2. Agings. If so requested by Administrative Agent, an
aging of all Accounts Receivable of each Borrower and the Designated
Subsidiaries as of the end of such month, in the form provided in the Borrowing
Base Certificate attached hereto as Exhibit A.
5.1.3. Inventory Certification. If so requested by
Administrative Agent, an Inventory certification report as of the end of the
month for all Inventory locations of each Borrower and the Designated
Subsidiaries as of the end of such month, in the form provided in the Borrowing
Base Certificate attached hereto as Exhibit A.
5.1.4. Other Reports and Information:
(a) SEC and Other Reports. Copies of each filing and
report made by Parent, either Borrower or any Designated Subsidiary with or to
any securities exchange or the Securities and Exchange Commission, promptly
upon the filing or making thereof;
(b) Intercompany Loans. Upon request therefor by
Administrative Agent and, even if no such request has been received, within
thirty (30) days after the end of each month after either Borrower has
requested the initial disbursement of Revolving Loans hereunder, a list of all
outstanding balances of the Permitted Intercompany Indebtedness of each
Designated Subsidiary owing to PAAC as of the end of such month, together with
a list of all debits and credits with respect thereto, in form and content
acceptable to Administrative Agent; and
(c) Other Reports. Any information required to be
provided pursuant to other provisions of this Agreement, and such other reports
or information from time to time reasonably requested by Administrative Agent
on behalf of any Agent or any Lender.
5.1.5. Canadian Withholding Tax. Subject to changes in
applicable Canadian income tax laws, PCI Canada shall prepare and timely file
its annual Form NR4 Return (NR4 Summary and related Supplementary (or any
successor form)) with Revenue Canada and forward copies of such form to
Administrative Agent on or before March 31 of each year in respect of amounts
paid to Agents and Lenders and Canadian income Taxes withheld during the
immediately preceding calendar year. PCI Canada shall provide to
Administrative Agent on a monthly basis copies of any Form NR76 (or any
successor form) used by it in remitting Canadian income Taxes
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withheld pursuant to Part XIII of the Income Tax Act (Canada) (or any successor
statute or part) on any payments made by PCI Canada to any Agent or any Lender
pursuant to this Agreement and shall forward to Administrative Agent, within
ten (10) days of receipt, copies of any statement of account received from
Revenue Canada recording receipt of or the amount of such Taxes remitted by PCI
Canada from time to time. Within ten (10) days of receipt, PCI Canada shall
forward to Administrative Agent copies of any notice of assessment or
reassessment issued by Revenue Canada which relates to or is in respect of any
such Taxes.
5.2. Notices.
Notify Administrative Agent in writing of any of the following
promptly upon learning of the occurrence thereof (or, in the case of clauses
(e) and (f) (other than clause (e)(iii)) of this Section 5.2, at least thirty
(30) days prior to the occurrence thereof to the extent applicable to either
Borrower, any Designated Subsidiary or any other Obligor), describing the same
and, if applicable, the steps being taken by the Person(s) affected with
respect thereto:
(a) Default. The occurrence of (i) an Event of Default
or Unmatured Event of Default and (ii) to the extent not included in clause (i)
of this Section 5.2(a), the default by Parent, either Borrower, any other
Obligor or any Designated Subsidiary under any material note, indenture, loan
agreement, mortgage, lease, guarantee, deed or other material similar agreement
to which Parent, either Borrower, any other Obligor or any Designated
Subsidiary, as appropriate, is a party or by which it is bound (including
without limitation any Senior Secured Note Document, Term Loan Document, the
Seller Notes, the TC Notes or any Subordinated Debt Document);
(b) Intentionally Omitted.
(c) Judgment. The entry of any judgment or decree
against either Borrower, any other Obligor or any Designated Subsidiary, if the
amount of such judgment exceeds the U.S. Dollar Equivalent of $500,000;
(d) Pension Plans and Welfare Plans.
(i) The occurrence of a Reportable Event with respect to
any Pension Plan; the filing of a notice of intent to terminate a
Pension Plan by either Borrower, any ERISA Affiliate, or any other
Obligor; the institution of proceedings to terminate a Pension Plan by
the PBGC or any other Person; the withdrawal in a "complete
withdrawal" or a "partial withdrawal" as defined in Sections 4203 and
4205, respectively, of ERISA by either Borrower, any ERISA Affiliate
or any other Obligor from any Multiemployer Plan, which complete or
partial withdrawal results in a liability to such Multiemployer Plan
in excess of US$1,000,000; the failure of either Borrower, any other
Obligor or any ERISA Affiliate to make a required contribution to any
Pension Plan, including but not limited to any failure to pay an
amount sufficient to give rise to a Lien under Section 302(f) of
ERISA; the taking of any action with respect to a Pension Plan which
could result in the requirement that either Borrower,
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any other Obligor or any ERISA Affiliate furnish a bond or other
security to the PBGC or such Pension Plan; the occurrence of any other
event with respect to any Pension Plan which could result in the
incurrence by either Borrower, any other Obligor or any ERISA
Affiliate of any material liability, fine or penalty; or the
establishment of a new plan subject to ERISA or an amendment to any
existing plan which will result in a material increase in
contributions or benefits under such plan or the incurrence of any
material increase in the liability of either Borrower, any other
Obligor (or an ERISA Affiliate to the extent there is joint and
several liability with either Borrower or any other Obligor) or any
Designated Subsidiary, with respect to any "employee welfare benefit
plan" as defined in Section 3(l) of ERISA which covers former
employees thereof or current employees and their beneficiaries with
respect to claims incurred after the termination of their employment;
(ii) The filing of a notice of intent to terminate or
wind-up any Canadian Pension Plan by either Borrower or other Obligor;
the institution of proceedings to terminate, in whole or in part, a
Canadian Pension Plan by the Quebec Pension Board or any other
applicable governmental authority; the failure of either Borrower or
any other Obligor to make a required contribution to any Canadian
Pension Plan, including, but not limited to, any failure to pay any
amount sufficient to give rise to liability or constitute a material
offense under any Canadian Pension Law; the occurrence of any other
event with respect to any Canadian Pension Plan which could result in
the incurrence by either Borrower or other Obligor of any material
liability, fine or penalty, including, but not limited to, liability
pursuant to any Canadian Pension Law; the establishment of a new
Canadian Pension Plan or an amendment to any existing Canadian Pension
Plan which will result in a material increase in contributions or
benefits under such Canadian Pension Plan or the incurrence of any
material increase in the liability of either Borrower or any other
Obligor with respect to any Canadian Pension Plan; or the occurrence
of any event that constitutes a material breach of the terms of any
Canadian Pension Plan or a material breach of any Canadian Pension Law
with respect to any Canadian Pension Plan;
(e) Business and Collateral Information. Any change or
proposed change in any of the information set forth on Schedule 4.12, including
but not limited to (i) any change in the location of any Inventory, (ii) the
identity of any new bailee, processor, warehouseman or other Person in
possession or control of any Inventory or other Collateral, (iii) any change in
the name or address of the lessor or owner of any real property leased to
either Borrower, any Designated Subsidiary or any other Obligor, (iv) any
proposed change in the location of either Borrower's or any Designated
Subsidiary's chief executive office or chief place of business, (v) any
proposed opening, closing or other change in the list of offices and other
places of business of either Borrower or any Designated Subsidiary and (vi) any
opening, closing or other change in the offices and other places of business of
each other Obligor;
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(f) Change of Name or Status. Any change in the name or
address of either Borrower, any Designated Subsidiary, or any other Obligor;
(g) Insurance Information. Any material change in the
information set forth in Schedule 4.7;
(h) Environmental and Safety and Health Matters. The
occurrence of any event, or the acquisition of any information which, if it had
occurred or was true on or before the Closing Date, would have been required to
have been disclosed and included on Schedule 4.25, including but not limited to
existence of any Environmental Lien and receipt of any notice from any federal,
state, provincial or local government or agency alleging violation of any
Environmental Law or any Occupational Safety and Health Law which violation is
reasonably likely to have a Material Adverse Effect;
(i) Material Adverse Change or Effect. The occurrence of
a Material Adverse Change or the occurrence of any event that is reasonably
likely to have a Material Adverse Effect;
(j) Default by Others. Any material default by any
Account Debtor or other Person obligated to either Borrower, any other Obligor,
or any Designated Subsidiary, under any contract, chattel paper, note or other
evidence of amounts payable or due or to become due to either Borrower, such
Obligor or Designated Subsidiary if the amount payable under such contract,
chattel paper, note or other evidence of amounts payable or due or to become
due is reasonably likely to have a Material Adverse Effect;
(k) Change in Management or Line(s) of Business. Any
substantial change in the senior management of either Borrower or any
Designated Subsidiary, or any change in either Borrower's or any Designated
Subsidiary's line(s) of business;
(l) Transaction Documents. The existence or assertion of
any claim or possible claim in excess of the U.S. Dollar Equivalent of $100,000
or that is reasonably likely to have a Material Adverse Effect by or against
either Borrower, any Designated Subsidiary or any Obligor under any Transaction
Document.
(m) Other Indebtedness Notices. Copies of any material
amendments, waivers or consents, notices of breach or default, notices relating
to the exercise or nonexercise of any remedy available to any Person, notices
of indemnity or other claims, written materials relating to any dispute,
written materials relating to the exercise of any rights derived from or
arising in connection with any Indebtedness and other written communications of
a material nature, including any communications by Parent, either Borrower or
any Designated Subsidiary in connection with the Senior Secured Loans, the Term
Loans, the Seller Notes or the TC Notes, other than any such notice or other
written materials already sent to Administrative Agent pursuant to any other
Section of this Agreement; and
(n) Patents, Etc. Any change to the list of patents,
trademarks, copyrights and other information set forth in Schedule 4.16;
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(o) Litigation. An update of any changes to Schedule
4.8, disclosing all newly instituted claims, litigation, arbitration
proceedings or governmental proceedings against or affecting either Borrower or
any Designated Subsidiary or any Collateral which involves an amount in
controversy in excess of the U.S. Dollar Equivalent of $500,000 or which
requests injunctive or other equitable relief, and which discloses any
significant events or occurrences in any of the matters set forth on Schedule
4.8 or any updates previously provided thereto;
(p) Certain Changes. Any change in the information set
forth in Schedule 4.1, Schedule 4.10 or Schedule 4.11 concerning either
Borrower, any Designated Subsidiary or any partnership or joint venture of any
of the foregoing; and
(q) Other Notices. Notice of the occurrence of such
other event as Administrative Agent may reasonably from time to time specify,
and any notices required to be provided pursuant to any Related Agreement or
the other provisions of this Agreement.
5.3. Existence.
Except as permitted under Section 5.11, and as required under
Section 5.29, maintain and preserve, and cause each Designated Subsidiary to
maintain and preserve, its respective existence as a corporation or other form
of business organization, as the case may be, and all rights, privileges,
licenses, patents, patent rights, copyrights, trademarks, trade names, trade
styles, franchises and other authority to the extent material and necessary for
the conduct of its respective business in the ordinary course as conducted from
time to time.
5.4. Nature of Business.
Engage in, and cause each Designated Subsidiary to engage in,
substantially the same fields of business as it is engaged in on the date
hereof or reasonably incidental thereto.
5.5. Books, Records and Access.
Maintain, and cause each Designated Subsidiary to maintain,
complete and accurate books and records (including but not limited to records
relating to Accounts Receivable, Inventory, and other Collateral and property),
in which full and correct entries in conformity with GAAP shall be made of all
dealings and transactions in relation to its respective business and
activities. Cause the books and records of each Borrower and each Designated
Subsidiary as at the end of any calendar month to be posted and closed not more
than thirty (30) days after the last business day of such month except (i)
forty-five (45) days after the end of each month closing a fiscal quarter and
(ii) ninety (90) days after the end of each month closing a fiscal year.
Permit, and cause each Designated Subsidiary to permit, access by
Administrative Agent and its agents and employees to the books and records of
such Borrower and such Designated Subsidiary at such Borrower's or such
Designated Subsidiary's place or places of business at intervals to be
determined by Administrative Agent upon reasonable prior notice and during
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normal business hours and without hindrance or delay, and permit and cause each
Designated Subsidiary to permit Administrative Agent and its agents and
employees to inspect the books and records and location of such Designated
Subsidiary, as applicable, and to inspect, audit, check and make copies and/or
extracts from the books, records, computer data and records, computer programs,
journals, orders, receipts, correspondence and other data relating to
Inventory, Accounts Receivable, and, any other Collateral and property, or
relating to any other transactions between the parties hereto; provided, that
each Borrower shall permit each Agent, each Lender and their respective agents
and employees to accompany Administrative Agent on each such visit; and
provided further, that after the occurrence of an Event of Default, Agents and
Lenders may have access to such premises at such times as they desire, without
having given prior notice. Any and all such inspections, appraisals and/or
audits by Administrative Agent and its agents and employees relating to either
Borrower's or any Designated Subsidiary's books and records and locations shall
be at Borrowers' joint and several expense, no matter when the same shall
occur. Administrative Agent may direct the applicable Funding Agent to advance
such costs for which a Borrower is responsible to such Borrower as a Revolving
Loan.
5.6. Insurance.
Maintain, and cause each Designated Subsidiary to maintain,
insurance to such extent and against such hazards and liabilities as is
commonly maintained by companies similarly situated. Keep the Collateral
properly housed and insured for its full insurable value (subject to customary
deductibles) against loss or damage by fire, theft, explosion, sprinklers and
such other risks as are customarily insured against by Persons engaged in
business similar to that of such Borrower or such Designated Subsidiary, as
applicable, with such companies, in such amounts and under policies in such
form as shall be reasonably satisfactory to Administrative Agent. Certificates
of such policies of insurance in form and substance satisfactory to
Administrative Agent have been delivered to Administrative Agent prior to the
date hereof together with evidence of payment of all premiums therefor then
due. Each Borrower hereby directs all insurers under such Borrower's policies
of insurance to pay all proceeds payable thereunder after the occurrence and
during the continuance of an Event of Default in respect of the Collateral
directly to Administrative Agent, as its interest may appear. Each Borrower
appoints Administrative Agent and any Person whom Administrative Agent may from
time to time designate (and all officers, employees or agents designated by
Administrative Agent or such Person) after the occurrence and during the
continuance of an Event of Default as such Borrower's true and lawful attorney
and agent in fact with power to make, settle and adjust claims under such
policies of insurance, endorse the name of such Borrower on any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance which are payable to any Agent or any Lender hereunder and make all
determinations and decisions with respect to such policies of insurance. The
foregoing appointment and power, being coupled with an interest, is irrevocable
until all Payment Liabilities under this Agreement are paid and performed in
full and this Agreement is terminated. In the event either Borrower or any
Designated Subsidiary at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required
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herein or to pay any premium in whole or in part relating thereto when due,
then Administrative Agent, without waiving or releasing any obligation of or
default by either Borrower hereunder, may at any time or times thereafter (but
shall be under no obligation to do so) obtain and maintain such policies of
insurance and pay such premiums and take any other action with respect thereto
which Administrative Agent deems advisable. All sums so disbursed by
Administrative Agent, including reasonable Attorneys' Fees, court costs,
expenses and other charges relating thereto, shall be jointly and severally
payable on demand by Borrowers to Administrative Agent, and Administrative
Agent may, in its sole and absolute discretion, after three (3) Banking Days'
prior notice to such Borrower to direct the applicable Funding Agent to advance
such sums to the applicable Borrower as a Revolving Loan. Each Borrower shall
cause each Designated Subsidiary to grant to Administrative Agent rights
identical to those granted by such Borrower to Administrative Agent in respect
of its insurance.
5.7. Repair.
Maintain, preserve and keep, and cause each Designated
Subsidiary to maintain, preserve and keep, its Equipment and other properties
in good operating condition and repair, ordinary wear and tear excepted, and
from time to time make, and cause each Designated Subsidiary to make, all
necessary and proper repairs, renewals, replacements, additions, betterments
and improvements thereto so that at all times the efficiency thereof shall be
fully preserved and maintained.
5.8. Taxes.
(a) (i) Pay, and cause each Designated Subsidiary to pay,
when due, all of its Taxes, unless and only to the extent that such Borrower or
such Designated Subsidiary is contesting such Taxes in good faith and by
appropriate proceedings and such Borrower or such Designated Subsidiary has set
aside on its books such reserves or other appropriate provisions therefor as
may be required by GAAP; (ii) not file a consolidated tax return together with
any other Person, unless consented to in writing by Administrative Agent,
except that Borrowers and the Designated Subsidiaries may file consolidated
returns with Parent pursuant to that certain Tax Sharing Agreement dated on or
about 1995 Closing Date; (iii) not amend or modify such Tax Sharing Agreement,
except such amendments or modifications that would not be reasonably likely to
have a Material Adverse Effect; (iv) not change its Fiscal Year or tax year
without Administrative Agent's prior written consent; (v) withhold from each
payment made to or ratable benefit conferred upon, any of its past or present
employees, officers, directors, or any non-resident of the country in which it
is resident, the amount of all Taxes required to be withheld therefrom and pay
the same to the proper tax authority or other receiving officers within the
time required under applicable legislation; and (vi) collect from all Persons
the amount of all Taxes required to be collected from them and remit the same
to the proper tax authority or other receiving officers within the time
required under any applicable legislation.
(b) Make all payments to each Agent and each Lender of
principal of, and interest on, Loans and fees payable to each Agent and each
Lender pursuant to this Agreement, free and clear of and without deduction for
any and all present or future Taxes, withholdings and
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all liabilities (including fines, penalties, interest and expenses) in lieu
thereof or for non-collection on or in respect thereof (collectively,
"Withholding Taxes") unless any such withholding or deduction is required by
law. If either Borrower is required by law to withhold or deduct any Taxes
from or in respect of any sum payable hereunder to any Agent or any Lender,
such Borrower shall forthwith pay a supplemental payment on an After-Tax Basis,
after making all required withholdings or deductions (including withholdings or
deductions applicable to additional sums payable under this Section 5.8(b)),
such that such Agent or such Lender (as the case may be) shall receive an
amount equal to the sum it would have received had no such withholdings or
deductions been made, and such Borrower shall make such withholdings or
deductions and such Borrower shall pay the full amount withheld or deducted to
the relevant taxing authority in accordance with applicable law.
(c) Pay on an After-Tax Basis any present or future stamp
or documentary taxes, any excise or property taxes, or other charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, or
any Related Agreement ("Other Taxes").
(d) Within thirty (30) days after the date of any payment
of Withholding Taxes or Other Taxes withheld by either Borrower in respect of
any payment to any Agent or any Lender, furnish to Administrative Agent the
original or a certified copy of a receipt evidencing payment thereof.
(e) File with Revenue Canada on a timely basis, and no
less frequently than once in each calendar month, Form NR76 (or any successor
form) with respect to Canadian income Taxes withheld pursuant to Part XIII of
the Income Tax Act (Canada) (or any successor statute or section).
Without prejudice to the survival of any other agreement contained herein, the
agreements and obligations contained in this Section 5.8 shall survive the
payment in full of principal and interest hereunder.
5.9. Compliance.
Comply, and cause each Designated Subsidiary to comply, with
all statutes and governmental rules and regulations applicable to it, except
where the failure to so comply would not be reasonably likely to have a
Material Adverse Effect.
5.10. Pension Plans.
(a) Not permit, and not permit any Designated Subsidiary
to permit, any condition to exist in connection with any Pension Plan that
would constitute grounds for the PBGC to institute proceedings to have such
Pension Plan terminated or a trustee appointed to administer such Pension Plan;
not fail, and not permit any Designated Subsidiary to fail, to make a required
contribution to any Pension Plan if such failure is sufficient to give rise to
a Lien under Section 302(f) of ERISA; and not engage in, or permit to exist or
occur, or permit any of the Designated Subsidiaries to engage in, or permit to
exist or occur, any other condition, event or transaction with respect to any
Pension Plan that is reasonably likely to result in a Material Adverse Effect.
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(b) Not permit, and not permit any Designated Subsidiary
to permit, any condition to exist in connection with any Canadian Pension Plan
which might constitute grounds for proceedings to have such Canadian Pension
Plan terminated or a trustee appointed to administer such Canadian Pension Plan
or to be deregistered under any Canadian Pension Law; not fail, and not permit
any such Designated Subsidiary to fail, to make a required contribution to any
Canadian Pension Plan if such failure is sufficient to give rise to liability
or constitute a material offense under any Canadian Pension Law; and not engage
in, or permit to exist or occur, or permit any Designated Subsidiary to engage
in, or permit to exist or occur, any other condition, event or transaction with
respect to any Canadian Pension Plan which could result in the incurrence by
such Borrower or any Designated Subsidiary of any material liability, fine or
penalty.
5.11. Merger, Purchase and Sale.
Not, and not permit any Designated Subsidiary to: (a) be a
party to any merger, liquidation, amalgamation or consolidation, except with or
into another Company; (b) except for sales of Inventory in the normal course of
its business and as permitted otherwise in this Agreement, sell, transfer,
convey, lease or otherwise dispose of its assets, including without limitation
any Accounts Receivable, Contract Rights, notes receivable or chattel paper;
provided, however, that (i) if no Event of Default has occurred and is
continuing or would be caused thereby, (ii) to the extent permitted by the
terms of the PAAC Senior Secured Note Indenture, as amended through the Closing
Date, and (iii) after such transaction, the Interest Coverage Sale Threshold
has been met, any or all of the assets of or capital stock in any Company may
be sold, transferred, conveyed, leased or otherwise disposed of, on such terms
as such Company determines to be commercially reasonable, in each case as long
as the cash proceeds (net of taxes, expenses of sale and repayment of any
Indebtedness secured thereby) of any of the foregoing transactions are applied
to (A) repay the Liabilities, (B) repay Indebtedness in respect of the Senior
Secured Notes and the Term Loans, in accordance with their respective terms, or
(C) purchase replacement assets, all as provided in the PAAC Senior Secured
Note Indenture, as amended through the Closing Date, and, if the assets sold,
transferred, conveyed, leased or otherwise disposed of include Eligible
Accounts or Eligible Inventory, Liabilities in an amount equal to the Borrowing
Base generated by such assets are immediately repaid in full out of the
proceeds of such transaction; or (c) purchase or otherwise acquire all or
substantially all of the assets of any Person, except, if no Event of Default
has occurred and is continuing or would be caused thereby, (i) the purchase of
the assets of or capital stock in any Designated Subsidiary by either Borrower
or another Designated Subsidiary and (ii) any such purchase or acquisition by
either Borrower or any Designated Subsidiary, so long as (A) such purchase or
acquisition does not create Indebtedness or Liens not otherwise permitted by
this Agreement, (B) such purchase or acquisition is permitted by the terms of
the PAAC Senior Secured Note Indenture, as amended through the Closing Date,
and (C) total consideration (including cash purchase price, liabilities assumed
by any Company and
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deferred purchase price and related payments, including current and future
payments in respect of covenants not to compete, consulting agreements and the
like) (I) for any such purchase or acquisition does not exceed the U.S. Dollar
Equivalent of $15,000,000 and (II) for all such purchases and acquisitions
prior to the Termination Date does not exceed the U.S. Dollar Equivalent of
$20,000,000.
5.12. Restricted Payments.
Not, and not permit any Designated Subsidiary to, (a) purchase
or redeem any shares of its stock or any options or warrants therefor, other
than the purchase of capital stock held by employees of either Borrower or any
Designated Subsidiary pursuant to any employee stock ownership plan thereof
upon the termination, retirement or death of any employee in accordance with
the provisions of any such plan in an amount not greater than the U.S. Dollar
Equivalent of $500,000 in any calendar year, plus the portion of any such
amounts that remain unused at the end of the two prior calendar years, but in
no event shall the total thereof in any calendar year exceed the U.S. Dollar
Equivalent of $1,500,000; (b) except as provided below in this Section 5.12,
declare or pay any dividends on any of its stock (other than dividends payable
in non-redeemable capital stock) or make any distribution to stockholders as
such or set aside any funds for any such purpose (collectively, "Upstream
Payments"); (c) make any prepayment, purchase, defeasance or redemption of any
Senior Secured Loans or Term Loans (including without limitation any mandatory
prepayment required by the terms of the Senior Secured Note Documents or Term
Loan Documents upon a change of control or an asset sale, or any optional
prepayment, redemption or defeasance allowed by the terms of the Senior Secured
Note Documents or Term Loan Documents) at any time that an Event of Default is
in existence or to the extent an Event of Default would be caused thereby; or
(d) except as permitted in any applicable subordination or intercreditor
agreements or any subordination terms contained within the applicable
Subordinated Debt Documents, pay any Subordinated Debt. Notwithstanding the
foregoing, (x) (i) each of PCI Canada and each Designated Subsidiary may make
direct or indirect Upstream Payments to PAAC at any time, and (ii) PAAC may
make Upstream Payments to Parent to the extent permitted under the terms of the
PAAC Senior Secured Note Indenture, as amended through the Closing Date; and
(y) payments by PAAC or any Designated Subsidiary may be made at any time
pursuant to the Contingent Payment Agreement as it existed on the 1995 Closing
Date, to the extent permitted in the PAAC Senior Secured Note Indenture, as
amended through the Closing Date.
5.13. Stock.
Except as permitted under Section 5.11, not permit any
Designated Subsidiary to purchase or otherwise acquire any shares of the stock
of either Borrower, and not take any action, or permit any Designated
Subsidiary to take any action, which will result in a decrease in PAAC's direct
or indirect ownership interest in any Designated Subsidiary.
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5.14. Indebtedness.
Not, and not permit any Designated Subsidiary to, incur or
permit to exist any Indebtedness (including but not limited to Indebtedness as
lessee under Capitalized Leases), except: (a) Indebtedness under the terms of
this Agreement; (b) Indebtedness of PAAC and the other Companies in respect of
the PAAC Senior Secured Notes in an aggregate principal amount of not more than
US$200,000,000; (c) Indebtedness of PCI Canada and the other Companies in
respect of the PCI Canada Senior Secured Notes in an aggregate principal amount
of not more than US$175,000,000; (d) Indebtedness of PAAC and the other
Companies in respect of the PAAC Term Loans in an aggregate principal amount of
not more than US$100,000,000; (e) Indebtedness of PAI and the other Companies
in respect of the PAI Term Loans in an aggregate principal amount of not more
than US$83,000,000; (f) other Indebtedness outstanding on the date hereof and
listed on Schedule 5.14; (g) Indebtedness as lessee under Capitalized Leases
plus Indebtedness secured by Liens securing the payment of all or part of the
purchase price of assets acquired after the 1995 Closing Date, which
Indebtedness does not exceed the U.S. Dollar Equivalent of $10,000,000 in the
aggregate for Borrowers and the Designated Subsidiaries on a consolidated basis
at any time, and any refinancing of any of the foregoing; (h) Permitted
Intercompany Indebtedness and Indebtedness of PAAC to the Designated
Subsidiaries; (i) Indebtedness under Hedging Obligations (as defined in the
PAAC Senior Secured Note Indenture, as amended through the Closing Date), to
the extent permitted in the PAAC Senior Secured Note Indenture, as amended
through the Closing Date; (j) Indebtedness in respect of performance,
completion, guarantee, surety and similar bonds, banker's acceptances or
letters of credit provided by either Borrower or any Designated Subsidiary in
the ordinary course of business; (k) Indebtedness permitted pursuant to the
first paragraph of Section 1008 of the PAAC Senior Secured Note Indenture, as
amended through the Closing Date; (l) in addition to any other Indebtedness
permitted hereunder, up to the U.S. Dollar Equivalent of $10,000,000 aggregate
principal amount of Indebtedness at any one time outstanding; and (m) other
Indebtedness approved in writing by Requisite Lenders.
5.15. Liens.
Not, and not permit any Designated Subsidiary to, create or
permit to exist any Lien with respect to any property, revenue or assets now
owned or hereafter acquired, except: (a) Liens in favor of Administrative
Agent, for the benefit of Agents and Lenders; (b) Liens securing Permitted
Intercompany Indebtedness; (c) without duplication, Liens referred to in
Section 4.9; (d) Liens permitted under clause (b) of the definition of
"Permitted Liens" in the PAAC Senior Secured Note Indenture, as amended through
the Closing Date, in an aggregate amount of up to the U.S. Dollar Equivalent of
$5,000,000 at any one time outstanding; (e) other than in connection with
Indebtedness, Liens arising in the ordinary course of business (i) to secure
payments of workers' compensation, unemployment insurance, pension or other
social security or retirement benefits, or to secure the performance of bids,
tenders, leases, progress payments, contracts (other than for the payment of
money) or to secure public or statutory obligations of either Borrower
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or any Designated Subsidiary, or to secure surety or appeal bonds to which
either Borrower or any Designated Subsidiary is a party and (ii) for rights of
financial institutions to setoff and chargeback arising by operation of law;
(f) Liens permitted under clauses (d) and (e) of the definition of "Permitted
Liens" in the PAAC Senior Secured Note Indenture, as amended through the
Closing Date; (g) Liens permitted under clause (f) of the definition of
"Permitted Liens" or clauses (c), (d) and (e) of Section 1012 of the PAAC
Senior Secured Note Indenture, as amended through the Closing Date; (h) Liens
permitted under clauses (f), (g), (j) and (k) of Section 1012 of the PAAC
Senior Secured Note Indenture, as amended through the Closing Date; (i) Liens
on certain equipment, real property and stock securing the obligations of the
Term Loans and the Senior Secured Loans; and (j) Liens consented to in writing
by Requisite Lenders.
5.16. Guaranties.
Not, and not permit any Designated Subsidiary to, become or be
a guarantor or surety of, or otherwise become or be responsible in any manner
(whether by agreement to purchase any obligations, stock, assets, goods or
services, or to supply or advance any funds, assets, goods or services, or
otherwise) with respect to, any undertaking of any other Person, except for (a)
the endorsement, in the ordinary course of collection, of instruments payable
to it or its order; (b) any guaranty of the Liabilities in favor of
Administrative Agent, for the benefit of Agents and Lenders; (c) any guaranty
of the Senior Secured Notes or the Term Loans, (d) any guaranty of any
Indebtedness or other obligations permitted under this Agreement and (e) any
guaranty of leases and other ordinary course obligations (other than
Indebtedness for borrowed money) of either Borrower or any Designated
Subsidiary.
5.17. Investments.
Except as provided in Section 5.19 or Section 5.11, not, and
not permit any Designated Subsidiary to, make or permit to exist any Investment
in any Person, except for: (a) advances to employees of either Borrower or any
of the Designated Subsidiaries for travel or other ordinary business expenses
provided that the aggregate amount outstanding at any one time shall not exceed
the U.S. Dollar Equivalent of $500,000 in the aggregate for all employees; (b)
Eligible Investments (as defined in PAAC Senior Secured Note Indenture, as
amended through the Closing Date); (c) Investments consisting of Indebtedness
permitted under Section 5.14 (g); (d) Investments (other than loans) by any
Company in any other Company; (e) extensions of credit in the nature of
Accounts Receivable or notes receivable arising from the sale of goods and
services in the ordinary course of business; (f) shares of stock, obligations
or other securities received in settlement of claims arising in the ordinary
course of business; (g) other Investments outstanding on the date hereof and
listed on Schedule 5.17 and any reclassification or conversion thereof into an
alternate form of Investment in the same or a successor entity; (h) Investments
consisting of bank accounts permitted under this Agreement; (i) other
Investments that are permitted pursuant to clause (vi) of the definition of the
term "Permitted Investment" contained in Section 101 of the PAAC
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Senior Secured Note Indenture, as amended through the Closing Date; (j)
Investments by any Company in Kemwater to the extent permitted by Section 1011
of the PAAC Senior Secured Note Indenture, as amended through the Closing Date;
and (k) other Investments consented to by Requisite Lenders in writing.
5.18. Designated Subsidiaries.
Except as permitted in Section 5.11 or Section 5.17, not, and
not permit any Designated Subsidiary to, acquire any stock or similar interest
in any Person and not create, establish or acquire any Subsidiaries; not change
the status of a Subsidiary to or from a Designated Subsidiary.
5.19. Loans to Designated Subsidiaries.
Not make or extend any loan or advance to any Designated
Subsidiary not designated as such on the Closing Date, or the other Borrower,
except that PAAC may make or extend loans to (a) any Designated Subsidiary not
designated as such on the Closing Date, so long as (i) PAAC provides prior
written notice of such loan or advance to Administrative Agent and (ii)
Administrative Agent has received resolutions of such Designated Subsidiary's
board of directors authorizing or ratifying the execution, delivery and
performance of all Related Agreements executed by such Designated Subsidiary,
in form and substance satisfactory to Administrative Agent, and (b) any
Designated Subsidiary designated as such on the Closing Date; and not permit
(I) any Designated Subsidiary to make or extend any loan or advance to another
Designated Subsidiary or (II) PCI Canada to make or extend any loan or advance
to any Company. Upon Administrative Agent's request, prior to any such loan or
advance from PAAC to a Designated Subsidiary not designated as such on the
Closing Date, such Designated Subsidiary shall execute and deliver agreements
in the same form as those delivered to Administrative Agent on the Closing Date
by the currently existing Designated Subsidiaries in order to evidence such
loans and advances and to grant PAAC a first priority perfected Lien on such
Designated Subsidiary's property of the types described in Section 3.1 as
collateral therefor. PAAC shall assign the proceeds of such loans, all of the
foregoing agreements, documents and instruments and its Lien related thereto,
to Administrative Agent, in each case in a manner, and pursuant to agreements,
satisfactory to Administrative Agent.
5.20. Change in Accounts Receivable.
After the occurrence and during the continuance of an Event of
Default, not permit or agree to, or permit any Designated Subsidiary to permit
or agree to, any extension, compromise or settlement or make any change or
modification of any kind or nature with respect to any Account Receivable,
including any of the terms relating thereto.
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5.21. Environmental Issues.
Provide such information that is or becomes available (unless
subject to confidentiality restrictions in existence on the Closing Date) to
either Borrower or any Designated Subsidiary which Administrative Agent may
reasonably request from time to time pertaining to the environmental aspects of
Borrowers and the Designated Subsidiaries and any property owned, operated or
controlled by either Borrower or any Designated Subsidiary. Nothing in this
Section 5.21, and no actions taken by any Agent or any Lender pursuant thereto,
shall give, or be construed as controlling, or giving to any Agent or any
Lender the right or obligation to direct or control, the conduct or action or
inaction of either Borrower or any Designated Subsidiary with respect to any
environmental matters, including but not limited to those pertaining to
compliance with any Environmental Laws. Each Borrower shall also maintain, and
cause each Designated Subsidiary to maintain, in full force and effect, all
third-party indemnities in favor of either Borrower or any Designated
Subsidiary with respect to any of the foregoing.
5.22. Related Agreements.
After the date hereof, not enter into, or permit any
Designated Subsidiary to enter into, any agreement containing any provision
which would be violated or breached by the performance by such Borrower or such
Designated Subsidiary of its obligations hereunder or under any Related
Agreement or any instrument or document delivered or to be delivered by such
Borrower or such Designated Subsidiary in connection herewith.
5.23. Unconditional Purchase Options.
Except in the ordinary course of business, not enter into or
be a party to, or permit any Designated Subsidiary to enter into or be a party
to any contract for the purchase of materials, supplies or other property or
services, if such contract requires that payment be made by it regardless of
whether or not delivery is ever made of such materials, supplies or other
property or services.
5.24. Use of Proceeds.
Not use or permit, and not permit any Designated Subsidiary to
use or permit, any proceeds of the Senior Secured Loans, the Term Loans, the
Loans or the Letters of Credit to be used, either directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of "purchasing or
carrying" any Margin Stock, and furnish to Administrative Agent upon request, a
statement in conformity with the requirements of Federal Reserve Form U-l
referred to in Regulation U of the Board of Governors of the Federal Reserve
System.
5.25. Transactions with Related Parties.
Except as set forth on Schedule 5.25, not, and not permit any
Designated Subsidiary to, (a) pay any management, consulting or similar fees to
any Related Party,
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whether for services rendered to either Borrower or any Designated Subsidiary,
or otherwise, or (b) enter into or be a party to any other transaction or
arrangement, including without limitation the purchase, sale, lease or exchange
of property or the rendering of any service, with any Related Party, except (i)
in the ordinary course of and pursuant to the reasonable requirements of such
Borrower's or such Designated Subsidiary's business and upon fair and
reasonable terms no less favorable to such Borrower or such Designated
Subsidiary than would obtain in a comparable arm's-length transaction with a
Person not a Related Party and unless such transaction or arrangement is
permitted by the terms of the PAAC Senior Secured Note Indenture, as amended
through the Closing Date and (ii) as permitted by Section 5.17.
5.26. Amendment of Documents.
Not, and not permit Parent or any Designated Subsidiary to,
amend, modify or alter, or permit to be amended, modified or altered, (a) any
Senior Secured Note Document or any Term Loan Document, (b) any other
Transaction Document, or (c) any agreement, instrument or document evidencing
any of the Indebtedness listed on Schedule 5.14 if the effect of such amendment
or modification is to (i) increase the interest rate payable thereunder more
than 200 basis points in excess of the highest interest rate applicable under
the Senior Secured Note Documents or the Term Loan Documents, as applicable
(including application of any "default rate" thereunder), in each case as they
exist on the date hereof, (ii) with respect to the Senior Secured Note
Documents, alter the timing or amount of any payment terms thereunder, if
applicable, or with respect to the Term Loan Documents only, alter the timing
or amount of any payment terms at any time prior to the Termination Date, (iii)
increase the aggregate amount of Indebtedness thereunder, if applicable, or
(iv) materially adversely affect the interest of Agents or Lenders. Agents and
Lenders hereby agree that their consent to any of the foregoing will not be
unreasonably withheld or delayed.
5.27. Designated Subsidiary.
Cause each Designated Subsidiary to execute and deliver to
Administrative Agent, in form and substance satisfactory to Administrative
Agent in its sole discretion, the following (a) a guaranty in favor of
Administrative Agent, for the benefit of Agents and Lenders, pursuant to which
such Designated Subsidiary has unconditionally guarantied the Liabilities; (b)
a security agreement with Administrative Agent, for the benefit of Agents and
Lenders, pursuant to which such Designated Subsidiary has granted to
Administrative Agent, for the benefit of Agents and Lenders, a Lien on its
assets of the types described in Section 3.1, as collateral for the guaranty
described in clause (i) above, (c) such UCC and PPSA financing statements or
other registration documents as Administrative Agent shall reasonably require
in order to perfect such Lien and (d) appropriate evidence of such Designated
Subsidiary's corporate authority for the foregoing. No otherwise Eligible
Inventory or Eligible Account Receivable of any Designated Subsidiary shall be
included in any Borrowing Base unless (i) such Designated Subsidiary has
complied in all respects with this Section 5.27, to
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Administrative Agent's reasonable satisfaction, (ii) Administrative Agent has
satisfied itself that Administrative Agent's Liens on the Collateral of such
Designated Subsidiary, for the benefit of Agents and Lenders, are fully
perfected senior Liens thereon, (iii) Borrowers have demonstrated to
Administrative Agent that such Collateral is insured in compliance with Section
5.6 and (iv) Administrative Agent has received such landlord's and bailee's
agreements with respect to such Collateral as Administrative Agent shall
reasonably request.
5.28. Limitation on Applicability of Covenants.
Notwithstanding the covenants contained in this Agreement,
PAAC and any Designated Subsidiary may engage in any transactions contemplated
by and effected in accordance with the terms of the Contingent Payment
Agreement as it existed on the 1995 Closing Date. The consummation of any such
transaction shall not constitute a breach of the otherwise applicable
covenants, contained in this Agreement.
5.29. Merger.
Complete the merger of PAAC and PAI, pursuant to agreements
reasonably acceptable to Administrative Agent, on or before October 31, 1998.
5.30. Holding Companies.
Not permit any of PAAC, PAI, East, TCH, BMPC, Imperial or
Pioneer Licensing, Inc. to conduct any material business or have any material
operations, assets or liabilities, other than as set forth in Section 4.29.
5.31. Intentionally Omitted.
5.32. Interest Coverage Ratio.
Not permit the "Interest Coverage Ratio" to be less than
1.1:1.0 at the end of any calendar (i) month during which the aggregate
outstanding balance of the Loans at any time exceeded the U.S. Dollar
Equivalent of $5,000,000, for the preceding twelve (12) month period or (ii)
quarter for the preceding twelve (12) month period. For purposes of this
Section 5.32, interest expense shall include, without limitation, implicit
interest expense on Capitalized Leases.
6. DEFAULT.
6.1. Event of Default.
Each of the following shall constitute an Event of Default
under this Agreement:
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(a) Non-Payment. Default in the payment of the principal
of the Liabilities when due or declared due or the payment of any of the other
Liabilities other than principal within five (5) Banking Days of the date due
or declared due.
(b) Non-Payment of Other Indebtedness. Default in the
payment when due, whether by acceleration or otherwise (subject to any
applicable grace period), of any Indebtedness of, or guaranteed by, either
Borrower, any other Obligor or any Designated Subsidiary with a principal
balance in excess of the U.S. Dollar Equivalent of $5,000,000 (other than any
Indebtedness under this Agreement and any Notes), including without limitation
the Senior Secured Loans and the Term Loans.
(c) Acceleration of Other Indebtedness. Any event or
condition shall occur which results in the acceleration of the maturity of any
Indebtedness of, or guaranteed by, either Borrower, any other Obligor or any
Designated Subsidiary with a principal balance in excess of the U.S. Dollar
Equivalent of $5,000,000 (other than the Indebtedness under this Agreement and
any Notes), including without limitation the Senior Secured Loans and the Term
Loans, or enables the holder or holders of such other Indebtedness or any
trustee or agent for such holders to accelerate the maturity of such other
Indebtedness.
(d) Other Obligations. Default in the performance or
observance (subject to any applicable grace period or waiver of such default)
of (i) any obligation or agreement of either Borrower, any other Obligor or any
Designated Subsidiary to or with any Agent or any Lender (other than any
obligation or agreement of either Borrower hereunder and under any Notes) or
(ii) any obligation or agreement of either Borrower, any other Obligor or any
Designated Subsidiary to or with any other Person (other than (x) any such
obligation or agreement constituting or related to Indebtedness, or (y) Trade
Accounts Payable), in any case if the existence of any such default is not
being contested by such Borrower, such other Obligor or such Designated
Subsidiary, as the case may be, in good faith and by appropriate proceedings,
such Borrower, such other Obligor or such Designated Subsidiary, as applicable,
shall not have set aside on its books such reserves or other appropriate
provisions therefor as may be required by GAAP and such obligation is not for
an amount less than or equal to the U.S. Dollar Equivalent of $5,000,000.
(e) Bankruptcy. Either Borrower, any other Obligor or
any Designated Subsidiary applies for, consents to, or acquiesces in the
appointment of a trustee, receiver or other custodian for such Borrower, such
other Obligor or such Designated Subsidiary, or for a substantial part of the
property of such Borrower, such other Obligor or such Designated Subsidiary, or
makes a general assignment for the benefit of creditors; or, in the absence of
such application, consent or acquiescence, a trustee, receiver or other
custodian is appointed for either Borrower, any other Obligor or any Designated
Subsidiary, or for a substantial part of the property of either Borrower, any
other Obligor or any Designated Subsidiary and is not discharged or dismissed
within sixty (60) days; or any bankruptcy, reorganization, debt arrangement or
other proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is instituted by or against either Borrower, any other
Obligor or any Designated Subsidiary; or any
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warrant of attachment or similar legal process is issued against any
substantial part of the property of either Borrower, any other Obligor or any
Designated Subsidiary.
(f) Insolvency. Either Borrower, any other Obligor or
any Designated Subsidiary becomes insolvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they mature.
(g) ERISA Liabilities. Any of the following events shall
have occurred, if such event is reasonably likely to have a Material Adverse
Effect: (i) the existence of a Reportable Event, (ii) the withdrawal of either
Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which
it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA,
(iii) the occurrence of an obligation to provide affected parties with a
written notice of intent to terminate a Pension Plan in a distress termination
under Section 4041 of ERISA, (iv) the institution by PBGC of proceedings to
terminate any Pension Plan, (v) any event or condition that would require the
appointment of a trustee to administer a Pension Plan, (vi) the withdrawal of
either Borrower or any ERISA Affiliate from a Multiemployer Plan, and (vii) any
event that would give rise to a Lien under Section 302(f) of ERISA.
(h) Non-Compliance With This Agreement. Default in the
performance of any of either Borrower's agreements set forth in Section 3.2,
3.3, 5.5, 5.6 or 5.11 through 5.32 (and not constituting an Event of Default
under any of the other subsections of this Section 6.1); or default in the
performance of any of either Borrower's agreements set forth in Section 5.1.1,
5.1.2, 5.1.3, 5.1.4 or 5.2 (and not constituting an Event of Default under any
of the other subsections of this Section 6.1), and continuance of such default
for five (5) days after the occurrence thereof; or default in the performance
of any of either Borrower's other agreements herein set forth (and not
constituting an Event of Default under any of the other subsections of this
Section 6.1), and continuance of such default for thirty (30) days after the
occurrence thereof.
(i) Non-Compliance With Related Agreements. Default in
the performance by either Borrower, any other Obligor or any Designated
Subsidiary of any of its agreements set forth in any Related Agreement (and not
constituting an Event of Default under any of the other subsections of this
Section 6.1), and continuance of such default after notice from Administrative
Agent and the expiration of the grace or cure period (if any) set forth
therein.
(j) Representations and Warranties. Any representation
or warranty made by either Borrower or any other Obligor herein (including
without limitation any representation or warranty contained in Section 3.2 or
3.3) or in any Related Agreement is untrue or misleading in any material
respect when made or deemed made; or any schedule, statement, report, notice,
certificate or other writing furnished by either Borrower, any Designated
Subsidiary or any other Obligor to any Agent or any Lender is untrue or
misleading in any material respect on the date as of which the facts set forth
therein are stated or certified; or any certification made or deemed made by
either Borrower, any Designated Subsidiary or any other Obligor to any Agent or
any Lender is untrue or misleading in any material respect on or as of the date
made or deemed made.
(k) Litigation. There shall be entered against any one
of either Borrower, any other Obligor or any Designated Subsidiary one or more
judgments or decrees in excess of the
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U.S. Dollar Equivalent of $5,000,000 in the aggregate at any one time
outstanding, excluding those judgments or decrees (i) that shall have been
outstanding less than thirty (30) calendar days from the entry thereof, (ii)
for and to the extent which such Borrower, such Obligor or such Designated
Subsidiary, as applicable, is insured and with respect to which the insurer has
assumed responsibility in writing or for and to the extent to which such
Borrower, such Obligor or such Designated Subsidiary, as applicable, is
otherwise indemnified if the terms of such indemnification are satisfactory to
Administrative Agent or (iii) which have been stayed pending appeal and with
respect to which such Borrower, such Obligor or such Designated Subsidiary has
posted any required bond or letter of credit.
(l) Termination of Obligations. If any Obligor shall
terminate any of its obligations to any Agent or any Lender in respect of the
Liabilities.
(m) Validity. If the validity or enforceability of this
Agreement or any Related Agreement shall be challenged by either Borrower, any
Designated Subsidiary or any other Obligor, or if this Agreement or any Related
Agreement shall fail to remain in full force and effect.
(n) Change of Control. If (i) any Person and its Related
Parties (other than William R. Berkley and his Related Parties and Interlaken
Capital, Inc. and its Related Parties (collectively, the "Investor Parties"))
among them have record and beneficial ownership of more than 25% of the
outstanding voting power of either Borrower or Parent on a fully diluted basis,
in any case at any time that the Investor Parties among them have record and
beneficial ownership of less than 30% of the outstanding voting power of either
Borrower or Parent on a fully diluted basis; or (ii) if any Change of Control
(as defined in the PAAC Senior Secured Note Indenture, as amended through the
Closing Date) occurs; or (iii) if PAAC ceases to retain record and beneficial
ownership of 100% of the issued and outstanding stock of PAI; or (iv) if PAI
ceases to retain record and beneficial ownership of 100% of the issued and
outstanding stock of PCI Canada.
(o) Canadian Pension Plan Liabilities. Any of the
following events shall have occurred, if such event would have a Material
Adverse Effect: (i) the withdrawal of either Borrower or any Designated
Subsidiary from a Canadian Pension Plan; (ii) the occurrence of any obligation
to provide affected parties with written notice of intention to terminate or
wind-up a Canadian Pension Plan in whole or in part, whether voluntarily or by
order of any applicable pension regulatory authorities, in accordance with
Canadian Pension Laws; (iii) the institution by the applicable pension
regulatory authorities of action to terminate, in whole or in part, any
Canadian Pension Plan; (iv) any event or condition which would require the
appointment of a trustee to administer a Canadian Pension Plan; or (v) any
event that would give rise to any liability or material offense under any
Canadian Pension Law or that could jeopardize the registration of any Canadian
Pension Plan.
6.2. Effect of Event of Default; Remedies.
(a) In the event that one or more Events of Default
described in Section 6.1(e) shall occur, then each Lender's commitment and the
Credit extended under this Agreement shall terminate and all Liabilities
hereunder and under any Notes shall be immediately due and payable without
demand, notice or declaration of any kind whatsoever.
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(b) In the event an Event of Default other than one
described in Section 6.1(e) shall occur, at the option of Administrative Agent
or Requisite Lenders, each Lender's commitment shall terminate and all
Liabilities hereunder and under any Notes shall immediately be due and payable
without demand or notice of any kind whatsoever, whereupon the Credit extended
under this Agreement shall terminate. Administrative Agent shall promptly
advise Borrowers of any such declaration, but failure to do so shall not impair
the effect of such declaration.
(c) In the event of the occurrence of any Event of
Default, Administrative Agent (or any other Person appointed by Administrative
Agent) may exercise any one or more or all of the following remedies, all of
which are cumulative and non-exclusive:
(i) Any remedy contained in this Agreement or in any of
the Related Agreements or any Supplemental Documentation;
(ii) Any rights and remedies available to any Agent or any
Lender under the UCC, the PPSA and any other applicable law;
(iii) To the extent permitted by applicable law,
Administrative Agent (or such other Person) may, without notice,
demand or legal process of any kind, take possession of any or all of
the Collateral (in addition to Collateral which it may already have in
its possession), wherever it may be found, and for that purpose may
pursue the same wherever it may be found, and may enter into any
premises where any of the Collateral may be or is supposed to be, and
search for, take possession of, remove, keep and store any of the
Collateral until the same shall be sold or otherwise disposed of, and
Administrative Agent (or such other Person) shall have the right to
store the same in any of either Borrower's premises without cost to
Administrative Agent (or such other Person);
(iv) At Administrative Agent's (or such other Person's)
request, each Borrower will, at such Borrower's expense, assemble the
Collateral and make it available to Administrative Agent (or such
other Person) at a place or places to be designated by Administrative
Agent (or such other Person) which is reasonably convenient to
Administrative Agent (or such other Person) and such Borrower; and
(v) Administrative Agent (or such other Person) at its
option, and pursuant to notification given to Borrowers as provided
for below, may sell any Collateral actually or constructively in its
possession at public or private sale and apply the proceeds thereof as
provided below.
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7. ADDITIONAL PROVISIONS REGARDING COLLATERAL AND ADMINISTRATIVE AGENT'S
RIGHTS.
7.1. Notice of Disposition of Collateral.
Any notification of intended disposition of any of the
Collateral required by law shall, to the maximum extent permitted by law, be
deemed reasonably and properly given if given at least ten (10) calendar days
before such disposition.
7.2. Application of Proceeds of Collateral.
Any proceeds of any disposition by Administrative Agent (or
such other Person appointed by Administrative Agent) of any of the Collateral
may be applied by Administrative Agent to the payment of expenses in connection
with the enforcement of rights and remedies hereunder, including the taking
possession of, storing, preparing for sale, and disposition of Collateral,
including Attorneys' Fees and legal expenses, and any balance of such proceeds
may be applied by Administrative Agent toward the payment of such of the
Liabilities, and in such order of application, as Administrative Agent may from
time to time elect.
7.3. Care of Collateral.
Each Agent shall be deemed to have exercised reasonable care
in the custody and preservation of any Collateral in its possession if it takes
such action for that purpose as a Borrower requests in writing, but failure of
any Agent to comply with such request shall not, of itself, be deemed a failure
to exercise reasonable care, and no failure of any Agent to preserve or protect
any rights with respect to such Collateral against prior parties, or to do any
act with respect to the preservation of such Collateral not so requested by a
Borrower, shall be deemed a failure to exercise reasonable care in the custody
or preservation of such Collateral.
7.4. Performance of Borrowers' Obligations.
Administrative Agent shall have the right, but shall not be
obligated, to discharge any claims or Liens against, and any Taxes at any time
levied or placed upon any or all Collateral, including without limitation those
arising under statute or in favor of landlords, taxing authorities, government,
public and/or private warehousemen, common and/or private carriers, processors,
finishers, draymen, coopers, dryers, mechanics, artisans, laborers, attorneys,
courts, or others. Administrative Agent (or such other Person appointed by
Administrative Agent) may also pay for maintenance and preservation of
Collateral. Administrative Agent (or such other Person appointed by
Administrative Agent) may, but is not obligated to, perform or fulfill any of
either Borrower's responsibilities under this Agreement which such Borrower has
failed to perform or fulfill. Administrative Agent may after three (3) Banking
Days' notice to a Borrower direct the applicable Funding Agent to advance to
such Borrower as a Revolving Loan any payment made or expense incurred under
this Section 7.4.
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7.5. Agents' and Lenders' Rights.
None of the following shall affect the obligations of either
Borrower or any Designated Subsidiary to any Agent or any Lender under this
Agreement or any Agent's right with respect to the remaining Collateral (any or
all of which actions may be taken by Administrative Agent (or another Person
acting at the direction of the Administrative Agent) at any time, whether
before or after an Event of Default, in its sole and absolute discretion and
without notice to either Borrower):
(a) acceptance or retention by any Agent or any Lender of
other property or interests in property as security for the Liabilities, or
acceptance or retention of any property or other interest in property of any
Obligor(s), in addition to that of Borrowers, with respect to any of the
Liabilities;
(b) release of its Lien on, or surrender or release of,
or the substitution or exchange of or for, all or any part of the Collateral or
any other property securing any of the Liabilities (including but not limited
to any property of any Obligor other than Borrowers), or any extension or
renewal for one or more periods (whether or not longer than the original
period), or release, compromise, alteration or exchange, of any obligations of
any guarantor or other Obligor with respect to any Collateral or any such
property;
(c) extension or renewal for one or more periods (whether
or not longer than the original period), or release, compromise, alteration or
exchange of any of the Liabilities, or release or compromise of any obligation
of any Obligor with respect to any of the liabilities; or
(d) failure by any Agent or any Lender to resort to other
security or pursue any Person liable for any of the Liabilities before
resorting to the Collateral.
8. CONDITIONS PRECEDENT; DELIVERY OF DOCUMENTS AND OTHER MATTERS.
8.1. Conditions Precedent to Initial Loans and Letters of
Credit.
The obligation of each Lender that is a party to this
Agreement on the date hereof to make the initial Loans and for each Issuing
Bank to issue the initial Letters of Credit is subject to satisfaction of the
following conditions precedent (in addition to those provided in Section 8.2):
8.1.1. Liens. The Liens on the Collateral granted under
this Agreement and the Related Agreements and all other Liens granted to
Administrative Agent, for the benefit of Agents and Lenders, to secure the
Liabilities, shall be senior, first priority perfected Liens, except as
otherwise agreed by Agents and Lenders, and all UCC and PPSA financing
statements and other documents relating to Collateral shall have been filed or
recorded, as appropriate. Administrative Agent shall have received such
consents and waivers with respect to the Collateral as Administrative Agent
shall request, in form and substance satisfactory to Administrative Agent.
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8.1.2. Solvency. Each Agent and each Lender shall be
satisfied that, after giving effect to the initial Loans and Letters of Credit,
each Borrower, each Designated Subsidiary and each other Obligor shall have
assets (excluding goodwill and other intangible assets not capable of
valuation) having a value, both at fair salable value and at fair valuation,
greater than the amount of such Person's liabilities (including trade debt and
Indebtedness to Agents and Lenders). Each Agent and each Lender shall be
satisfied that all of the assets supporting the Loans and Letters of Credit
under this Agreement shall be sufficient in value to provide each Borrower and
each Designated Subsidiary with sufficient cash flow and working capital to
enable it to thereafter profitably operate its business and to meet its
obligations as they become due. Each Agent and each Lender shall be satisfied
that each Borrower and each Designated Subsidiary has adequate capital for the
business in which it is about to engage. In connection with the foregoing,
each Agent and each Lender shall have received such written appraisals, balance
sheets, solvency certificates or other materials as Administrative Agent shall
reasonably request.
8.1.3. Effect of Law. No law or regulation affecting any
Agent's or any Lender's entering into the secured financing transaction
contemplated by this Agreement shall impose upon such Agent or such Lender any
material obligation, fee, liability, loss, penalty, cost, expense or damage.
8.1.4. Exhibits; Schedules. All Exhibits and Schedules to
this Agreement shall have been completed and submitted to each Agent and each
Lender, shall be in form and substance satisfactory to such Agent and such
Lender and shall contain no facts or information which such Agent and such
Lender, in its sole judgment, determines to be unacceptable.
8.1.5. Material Adverse Change; Litigation. No Material
Adverse Change, as determined by each Agent and each Lender, shall have
occurred from December 31, 1997 through the Closing Date and no Material
Adverse Change, as determined by such Agent and such Lender, shall have
occurred in the facts and information disclosed to such Agent or such Lender or
otherwise relied upon by such Agent or such Lender in making its decision to
enter into this Agreement, and neither any Agent nor any Lender shall have
become newly aware of any material adverse facts or information, as reasonably
determined by such Agent or such Lender, with respect to Parent, either
Borrower or any Designated Subsidiary or the business, operations or prospects
thereof. In addition, there shall not have been instituted or threatened any
litigation or proceedings in any court or administrative forum which would have
a Material Adverse Effect, in each case as determined by each Agent and each
Lender.
8.1.6. Documents. In addition to this Agreement, each Agent
and each Lender shall have received the agreements, documents and instruments
listed in the Closing Checklist attached hereto as Exhibit F, each duly
executed where appropriate and dated as of the Closing Date (or such other date
as shall be satisfactory to Administrative Agent), in form, and containing
terms and provisions, acceptable to such Agent and such Lender.
8.1.7. Default. No Event of Default or Unmatured Event of
Default shall have occurred and be continuing or would be caused thereby.
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8.1.8. Resolutions. Administrative Agent shall have
received resolutions of each Borrower's board of directors authorizing or
ratifying the execution, delivery and performance of this Agreement and all
Related Agreements executed by such Borrower, in form and substance
satisfactory to Administrative Agent.
8.1.9. Environmental and Litigation Schedules. Each Agent
and each Lender shall be satisfied and approve the environmental and litigation
disclosures made by Borrowers hereunder.
8.2. Continuing Conditions Precedent to all Loans;
Certification.
The obligation of each Lender to make the initial Loans and
each subsequent Loan and for each Issuing Bank to issue the initial Letters of
Credit and each subsequent Letter of Credit, is subject to satisfaction of the
following conditions precedent in addition to those provided in Section 8.1:
(a) No Change in Condition. No change in the condition
or operations, financial or otherwise, of either Borrower, any Designated
Subsidiary or any other Obligor, shall have occurred which change, in the
reasonable credit judgment of Requisite Lenders, is reasonably likely to have a
Material Adverse Effect;
(b) Default. Before and after giving effect to such Loan
and/or Letter of Credit, no Event of Default or Unmatured Event of Default
shall have occurred and be continuing; and
(c) Representations and Warranties. Before and after
giving effect to such Loan and/or Letter of Credit, the representations and
warranties in Section 4 shall be true and correct in all material respects as
though made on the date of such Loan and/or Letter of Credit, except for those
representations and warranties which are expressly made as of the date hereof.
Each request for a Loan or a Letter of Credit hereunder made or deemed to have
been made by a Borrower shall be deemed to be a certificate of such Borrower as
to the matters set out in the foregoing provisions of this Section 8.2.
9. INDEMNITY.
9.1. Environmental and Safety and Health Indemnity.
Each Borrower hereby indemnifies each Agent and each Lender
and agrees to hold each Agent and each Lender harmless from and against any and
all losses, liabilities, damages, injuries, costs, expenses and claims of any
and every kind whatsoever (including without limitation court costs and
Attorneys' Fees) which at any time or from time to time may be paid, incurred
or suffered by, or asserted against, any Agent or any Lender for, with respect
to, or as a direct or indirect result of the violation by either Borrower or
any Designated Subsidiary of any Environmental Law or Occupational Safety and
Health Law, or with respect to, or as a direct or indirect result of (a) the
presence on or under, or the Release from, properties utilized by either
Borrower and/or any Designated Subsidiary in the conduct of its business into
or upon any land, the
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atmosphere, or any watercourse, body of water or wetland, of any Hazardous
Material or the escape, seepage, leakage, spillage, disposal, discharge,
emission or release of any other hazardous or toxic waste, substance or
constituent, or other substance (including without limitation any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or arising
under any Environmental Law) or (b) the existence of any unsafe or unhealthful
condition on or at any premises utilized by either Borrower and/or any
Designated Subsidiary in the conduct of its business except, with respect to
any of the foregoing, to the extent arising out of the gross negligence or
willful misconduct of any Agent or any Lender.
9.2. General Indemnity.
In addition to the payment of expenses pursuant to Section
11.3, whether or not the transactions contemplated hereby shall be consummated,
each Borrower agrees to indemnify, pay and hold each Agent and each Lender, and
the officers, directors, employees, agents, and affiliates of each of each
Agent and each Lender (collectively, the "Indemnitees") harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any
kind or nature whatsoever (including without limitation the reasonable fees and
disbursements of counsel for any of such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not any of such Indemnitees shall be designated a party thereto)
that may be imposed on, incurred by, or asserted against any Indemnitee, in any
manner relating to or arising out of this Agreement or any Related Agreement as
it relates to either Borrower or any Designated Subsidiary, the statements
contained in any commitment letter delivered by any Agent or any Lender, any
Agent's or any Lender's agreement to make the Loans or to issue Letters of
Credit hereunder to or for the benefit of either Borrower, the use or intended
use of any Letters of Credit issued on the Application of either Borrower, or
the use or intended use of the proceeds of any of the Loans hereunder by either
Borrower (the "indemnified liabilities"); provided that neither Borrower shall
have any obligation to an Indemnitee hereunder with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of such
Indemnitee. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it
violates any law or public policy, each applicable Borrower shall contribute
the maximum portion that it is permitted to pay under applicable law to the
payment and satisfaction of all indemnified liabilities.
9.3. Capital Adequacy.
If any Agent or any Lender shall reasonably determine that the
application or adoption of any law, rule, regulation, directive,
interpretation, treaty or guideline regarding capital adequacy, or any change
therein or in the interpretation or administration thereof, whether or not
having the force or law (including without limitation application of changes to
Regulation H and Regulation Y of the Federal Reserve Board issued by the
Federal Reserve Board on January 19, 1989 and regulations
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of the Comptroller of the Currency, Department of the Treasury, 12 CFR Part 3,
Appendix A, issued by the Comptroller of the Currency on January 27, 1989)
increases the amount of capital required or expected to be maintained by such
Agent or such Lender or any Person controlling such Agent or such Lender in
excess of any such amounts affecting such Agent or such Lender as of the date
hereof, and such increase is based upon the existence of such Agent's or such
Lender's obligations hereunder and other commitments of this type, then from
time to time, within ten (10) days after demand from such Agent or such Lender,
each Borrower shall pay to such Agent or such Lender, as applicable, such
amount or amounts as will compensate such Agent or such Lender or such
controlling Person, as the case may be, for such increased capital requirement.
The determination of any amount to be paid by Borrowers under this Section 9.3
shall take into consideration the policies of such Agent or such Lender or any
Person controlling such Agent or such Lender with respect to capital adequacy
and shall be based upon any reasonable averaging, attribution and allocation
methods. A certificate of such Agent or such Lender, as applicable, setting
forth the amount or amounts as shall be necessary to compensate such Agent or
such Lender as specified in this Section 9.3 shall be delivered to Borrowers
and shall be conclusive in the absence of manifest error. Any demand to be
given by an Agent or a Lender under this Section 9.3 shall be effective only if
given within one hundred twenty (120) days after such Agent or such Lender
became aware or should have become aware of the events giving rise to such
notice.
9.4. Tax Indemnification.
Each Borrower hereby indemnifies each Agent and each Lender on
an After-Tax Basis for the full amount of Withholding Taxes and Other Taxes
(including, but not limited to, any Withholding Taxes and Other Taxes imposed
by any jurisdiction on amounts payable under Section 5.8) paid by such Agent or
such Lender in respect of its relationship with Borrowers, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Withholding Taxes or Other Taxes were correctly or
legally asserted. Any payment pursuant to such indemnification shall be made
within thirty (30) days after the date any Agent or any Lender makes written
demand therefor. If an Agent or a Lender becomes aware that it is entitled to
claim a refund from a governmental authority in respect of Withholding Taxes or
Other Taxes as to which it has been indemnified by Borrowers, or with respect
to which Borrowers have paid additional amounts pursuant to this Section 9.4,
it shall promptly notify Borrowers of the availability of such claim and shall,
within thirty (30) days after receipt of a request by Borrowers, make a claim
to such governmental authority for such refund at the expense of Borrowers. If
an Agent or a Lender receives a refund in respect if any Withholding Taxes or
Other Taxes with respect to which Borrowers have paid additional amounts
pursuant to this Section 9.4, it shall within thirty (30) days from the date of
such receipt pay over such refund to Borrowers (but only to the extent of
indemnity payments made, or additional amounts paid, by Borrowers under this
Section 9.4 with respect to the Withholding Taxes or Other Taxes giving rise to
such refund), together with any supplemental payments previously made hereunder
to ensure payments were made on an After-Tax Basis, net of all out-of-pocket
expenses of such
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Agent or such Lender and without interest (other than interest paid by the
relevant governmental authority with respect to such refund); provided,
however, that Borrowers, upon the request of such Agent or such Lender, agree
to repay the amount so paid over to them (plus penalties, interest or other
charges payable to the relevant governmental authority) to such Agent or such
Lender in the event such Agent or such Lender is required to repay such refund
to such governmental authority.
9.5. Currency Indemnity.
If, for the purposes of obtaining judgment in any court in any
jurisdiction with respect to this Agreement or any other Related Agreement, it
becomes necessary to convert into the currency of such jurisdiction (the
"Judgment Currency") any amount due under this Agreement or under any Related
Agreement in any currency other than the Judgment Currency (the "Currency
Due"), then conversion shall be made at the rate of exchange prevailing on the
Banking Day before the day on which judgment is given. For this purpose, "rate
of exchange" means the rate at which Administrative Agent is able, on the
relevant date, to purchase the Currency Due with the Judgment Currency in
accordance with its normal practice. In the event that there is a change in
the rate of exchange prevailing between the Banking Day before the day on which
the judgment is given and the date of receipt by Administrative Agent of the
amount due, Borrowers will, on the date of receipt by the Administrative Agent,
pay such additional amounts, if any, or be entitled to receive reimbursement of
such amount, if any, as may be necessary to ensure that the amount received by
Administrative Agent on such date is the amount in the Judgment Currency which
when converted at the rate of exchange prevailing on the date of receipt by
Administrative Agent is the amount then due under this Agreement or such
Related Agreements in the Currency Due. If the amount of the Currency Due
which Administrative Agent is so able to purchase is less than the amount of
the Currency Due originally due to it, Borrowers shall indemnify and save
Agents and the Lenders harmless from and against loss or damage arising as a
result of such deficiency. The indemnity contained herein shall constitute an
obligation separate and independent from the other obligations contained in
this Agreement and the Related Agreements, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted
by Administrative Agent from time to time and shall continue in full force and
effect notwithstanding any judgment or order for a liquidated sum in respect of
an amount due under this Agreement or any Related Agreement or under any
judgment or order.
9.6. Survival.
The provisions of and undertakings and indemnification set out
in Sections 9.1, 9.2, 9.4, and 9.5 shall survive satisfaction and payment of
the Liabilities and termination of this Agreement.
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10. AGENTS.
10.1. Appointments of Agents.
Each Lender hereby irrevocably appoints and authorizes (a) BOA
to act as the Administrative Agent under this Agreement and the Related
Agreements, (b) BOA to act as the U.S. Funding Agent under this Agreement and
the Related Agreements and (c) BAC to act as the Canadian Funding Agent under
this Agreement and the Related Agreements. Each Lender hereby irrevocably
appoints and authorizes each such Agent to take such action on such Lender's
behalf under the provisions of this Agreement and the Related Agreements and to
exercise such powers and perform such duties under this Agreement and the
Related Agreements as are specifically delegated to such Agent by the terms
hereof and thereof, together with such other powers as are reasonably
incidental hereto and thereto. Each Agent may perform any of its duties
hereunder or under the Related Agreements by or through its agents or
employees. The provisions of this Section 10 are solely for the benefit of
Agents and Lenders, and neither either Borrower nor any Obligor shall have any
rights as a third party beneficiary of any of the provisions hereof other than
Section 10.9. In performing its functions and duties under this Agreement and
the Related Agreements, each Agent shall act solely as agent of Lenders and
does not assume and shall not be deemed to have assumed any obligation toward
or relationship of agency or trust with or for either Borrower or any Obligor.
10.2. Nature of Duties of each Agent.
No Agent shall have any duties, obligations or
responsibilities except those expressly set forth in this Agreement and the
Related Agreements. Neither any Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted by it as
such hereunder or under the Related Agreements or in connection herewith or
therewith, unless caused by its or their gross negligence or willful
misconduct. The duties of each Agent shall be mechanical and administrative in
nature; no Agent shall have by reason of this Agreement or the Related
Agreements a fiduciary relationship in respect of any Lender or any other
Agent; and nothing in this Agreement or the Related Agreements, expressed or
implied, is intended to or shall be so construed as to impose upon any Agent
any obligations in respect of this Agreement or the Related Agreements except
as expressly set forth herein or therein. No duty to act, or refrain from
acting, and no other obligation whatsoever, shall be implied on the basis of or
imputed in respect of any right, power or authority granted to any Agent or
shall become effective in the event of any temporary or partial exercise of
such rights, power or authority. The Arranger has functioned solely as an
arranger of the syndication of the facility described herein and has no
obligations, duties, liabilities or rights to any Agent, any Lender or either
Borrower under this Agreement by virtue of its capacity as Arranger.
10.3. Each Agent in its Capacity as Lender.
With respect to its obligation to lend under this Agreement
and the Related Agreements, the Loans made by it and its participation in
Letters of Credit, each Agent
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shall have the same rights and powers under this Agreement and the Related
Agreements as any Lender and may exercise the same as though it were not an
Agent, and the terms "Lender" or "Lenders" shall, unless the context otherwise
indicates, include each Agent in its capacity as a Lender hereunder. Any
Agent, any Lender and their respective affiliates may accept deposits from,
lend money to, and generally engage in any kind of banking or trust business
with either Borrower, or Related Parties of either Borrower, as if it were not
an Agent or as if it or they were not a Lender hereunder and without any duty
to account therefor to the other parties to this Agreement; provided, that none
of the obligations of either Borrower under such transactions shall be deemed
to be Liabilities or secured by any Collateral without the prior written
agreement of the Requisite Lenders; provided, further that Lenders acknowledge
and agree that the obligations of each Borrower to BOA, BAC or any other Lender
as an Issuing Bank and with respect to any lockbox or bank account maintained
by or for the benefit of either Borrower, including the Demand Deposit
Accounts, the Depository Accounts, and the Assignee Deposit Accounts, shall be
deemed to be Liabilities secured by the Collateral.
10.4. Independent Credit Analysis.
Each Agent and each Lender agrees that it has, independently
and without reliance upon any Agent, any other Lender, or the directors,
officers, agents, attorneys or employees of any Agent or of any other Lender,
and instead in reliance upon information supplied to it by or on behalf of
Parent, each Borrower and/or each Designated Subsidiary, made its own
independent credit analysis and decision to enter into this Agreement and the
Related Agreements to which it is a party, and that it shall independently and
without reliance upon any Agent, any other Lender, or the directors, officers,
agents, attorneys or employees of any Agent or of any other Lender, continue to
make its own independent credit analysis and decisions in acting or not acting
under this Agreement and the Related Agreements. Except as otherwise expressly
provided herein, no Agent shall have any duty or responsibility, either
initially or on a continuing basis, to provide any other Agent or any Lender
with any credit or other information concerning the affairs, financial
condition, litigation, liabilities, or business of Parent, either Borrower, any
Designated Subsidiary or any other Obligor which may at any time come into the
possession of such Agent (or any of its affiliates). In the event such
information is furnished to any Agent or any Lender by any Agent, such Agent
shall have no duty to confirm or verify its accuracy or completeness and shall
have no liability whatsoever with respect thereto.
10.5. General Immunity.
Neither any Agent nor any of its directors, officers, agents,
attorneys or employees shall be liable to any other Agent or any Lender for any
action taken or omitted to be taken by it or them under this Agreement or the
Related Agreements or in connection herewith or therewith except for its or
their own willful misconduct or gross negligence. Without limiting the
generality of the foregoing, no Agent: (i) shall be responsible to any other
Agent or any Lender for any recitals, statements, warranties or
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representations under this Agreement or the Related Agreements or any agreement
or document relative hereto or thereto or for the financial or other condition
of any Obligor, (ii) shall be responsible for the authenticity, accuracy,
completeness, value, validity, effectiveness, due execution, legality,
genuineness, enforceability, collectibility or sufficiency of this Agreement or
the Related Agreements or any other agreements or any assignments,
certificates, requests, financial statements, projections, notices, schedules
or opinions of counsel executed and delivered pursuant hereto or thereto, (iii)
shall be bound to ascertain or inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement or the Related
Agreements on the part of Obligors or of any of the terms of any such agreement
by any party hereto or thereto and shall have no duty to inspect the property
(including the books and records) of any Obligor, (iv) shall have any
obligation whatsoever to any other Agent or any Lender or to any other Person
to assure that the Collateral exists or is owned by a Borrower or another
Obligor or is cared for, protected or insured or that the Liens granted to
Administrative Agent herein or in Related Agreements or pursuant hereto or
thereto have been properly or sufficiently or lawfully created, perfected,
protected, enforced, realized upon or are entitled to any particular priority,
and (v) shall incur any liability under or in respect of this Agreement or the
Related Agreements or any other document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram, cable,
telex, telecopier or similar form of facsimile transmission) believed by such
Agent to be genuine and signed or sent by the proper party. Each Agent may
consult with legal counsel (including counsel for either Borrower), independent
public accountants, auditors and other experts selected by such Agent and shall
not be liable for any action taken or omitted to be taken in good faith in
accordance with the advice of such counsel, accountants or experts.
10.6. Action by Agents.
(a) Actual Knowledge. Agents may assume that no Event of
Default has occurred and is continuing, unless such Agent has actual knowledge
of the Event of Default, has received notice from a Borrower or a Borrower's
independent certified public accountants or auditors stating the nature of the
Event of Default, or has received notice from another Agent or a Lender stating
the nature of the Event of Default and that such Agent or such Lender considers
the Event of Default to have occurred and to be continuing.
(b) Discretion to Act. Each Agent shall have the right
to request instructions from Requisite Lenders by notice to each Lender. If an
Agent shall request instructions from Requisite Lenders with respect to any act
or action (including the failure to act) in connection with this Agreement or
any Related Agreement, such Agent shall be entitled to refrain from such act or
taking such action unless and until such Agent shall have received instructions
from Requisite Lenders, and such Agent shall not incur liability to any Person
by reason of so refraining. Without limiting the foregoing, no Lender shall
have any right of action whatsoever against any Agent as a result of such Agent
acting or refraining from acting hereunder or under any Related Agreement in
accordance with the instructions of Requisite Lenders. Each Agent may give any
notice required under Section 6 hereof without the consent of any of Lenders
unless otherwise directed by
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Requisite Lenders in writing and will, at the direction of Requisite Lenders,
give any such notice required under Section 6. Except for any obligation
expressly set forth in this Agreement or the Related Agreements, each Agent
may, but shall not be required to, exercise its discretion to act or not act,
except that such Agent shall be required to act or not act upon the
instructions of Requisite Lenders (unless all of Lenders are required to
provide such instructions as provided in Section 11.6) and those instructions
shall be binding upon all Agents and all Lenders; provided that no Agent shall
be required to act or not act if to do so would expose such Agent to liability
or would be contrary to this Agreement or any Related Agreements or to
applicable law.
10.7. Right to Indemnity.
Each Agent shall be fully justified in failing or refusing to
take any action under this Agreement or the Related Agreements or in relation
hereto or thereto unless it shall first be indemnified (upon requesting such
indemnification) to its satisfaction by Lenders against any and all liability
and expense which it may incur by reason of taking or continuing to take any
such action. Lenders further agree to indemnify each Agent ratably in
accordance with their Overall Shares for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against such Agent in any way relating to or arising
out of this Agreement or the other Related Agreements or the transactions
contemplated hereby or thereby, or the enforcement of any of the terms hereof
or thereof or of any other documents; provided no such liability, obligation,
loss, damage, penalty, action, judgment, suit, cost, expense or disbursement
results from such Agent's gross negligence or willful misconduct. Each Lender
agrees to reimburse each Agent in the amount of its Overall Share of any
out-of-pocket expenses for which such Agent is entitled to receive, but has not
received, reimbursement pursuant to this Agreement. The agreements in this
Section 10.7 shall survive the payment and fulfillment of the Liabilities and
termination of this Agreement.
10.8. Exercise of Rights and Remedies.
In the event any remedy may be exercised with respect to this
Agreement or the Related Agreements or the Collateral, Administrative Agent
(or, if so delegated by Administrative Agent, a Funding Agent) shall pursue
remedies designated by Requisite Lenders subject to the proviso set forth in
Section 10.6(b) and, with respect to the Canadian Bank Act Security, Canadian
Funding Agent may, at the direction of the Administrative Agent, pursue rights
and remedies subject to the provisions set forth in Section 3.8. Each Agent
and each Lender agrees that no Agent other than Administrative Agent or, with
respect to the Canadian Bank Act Security, Canadian Funding Agent, acting at
the direction of the Administration Agent, and no Lender shall have any right
individually (a) to realize upon the security created by this Agreement or the
Related Agreements, (b) enforce any provision of this Agreement or the Related
Agreements, or (c) make demand under this Agreement or the Related Agreements;
provided, that any Lender that is an Issuing Bank may make demand upon
Borrowers as an Issuing Bank pursuant to Sections 2.2(b) and 2.2(c), BA Lenders
may make demands upon PCI Canada pursuant to Section 2.3.9 and each of BOA and
BAC may make demand upon Borrowers pursuant to Section 11.4.
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10.9. Each Agent's Resignation.
Each Agent may resign at any time after giving at least thirty
(30) days' prior written notice of its intention to do so to each other Agent,
each Lender and to each Borrower. Upon satisfaction of the foregoing
condition, Requisite Lenders shall have the right to appoint a successor to
such resigning Agent (such appointment to be subject to the consent of each
Borrower (which consent of each Borrower shall not be unreasonably withheld or
delayed); provided, that neither Borrower's consent shall be required if a
Lender is appointed as such Agent). If no successor such Agent shall have been
so appointed and shall have accepted such appointment within twenty (20) days
after an Agent's giving of such notice of resignation, then the resigning Agent
may appoint a successor such Agent. After any resigning Agent's resignation
hereunder as an Agent, it shall be discharged from its duties and obligations
under this Agreement but the provisions of this Section 10 shall continue to
bind such Agent and inure to such Agent's benefit as to any actions taken or
omitted to be taken by it while it was an Agent hereunder.
10.10. Disbursement of Proceeds of Loans and Other Advances.
Administrative Agent may (and is hereby irrevocably authorized
by Lenders), but shall have no duty to make such other disbursements and
advances as Revolving Loans on behalf of Lenders, including without limitation
the making of advances for the expenditures described in Section 7.4 of this
Agreement, which Administrative Agent, in its sole discretion, deems necessary
or desirable to preserve or protect the Collateral, or any portion thereof.
Administrative Agent's use of its own checks upon its funds or Administrative
Agent's transfer of its own funds, by wire or otherwise, to an account of
either Borrower or any other Obligor shall be deemed to be disbursements made
by each Lender under this Agreement and pursuant to the Related Agreements.
10.11. Release of Collateral.
Each Agent and each Lender hereby irrevocably authorizes
Administrative Agent, at its option and in its discretion, to release any and
all guaranties of the Liabilities and any Lien granted to or held by
Administrative Agent upon any Collateral (i) upon termination of Lenders'
obligations to make Loans and payment and satisfaction of all Loans, Letter of
Credit reimbursement obligations and all other Payment Liabilities and which
Administrative Agent has been notified in writing are then due and payable;
(ii) constituting Collateral being sold or disposed of if Borrowers certify to
Administrative Agent that the sale or disposition is made in compliance with
the terms of this Agreement (and, absent any actual knowledge of Administrative
Agent to the contrary, Administrative Agent may rely conclusively on any such
certificate, without further inquiry); (iii) constituting property in which
either Borrower or any other Obligor
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owned no interest at the time the Lien was granted and at all times thereafter;
or (iv) if approved, authorized or ratified in writing by Administrative Agent
at the direction of all Lenders. Upon request by Administrative Agent at any
time, each Lender will confirm in writing Administrative Agent's authority to
release particular types or items of Collateral pursuant to this Section 10.11.
10.12. Agreement to Cooperate.
Each Agent and each Lender agrees to cooperate to the end that
the terms and provisions of this Agreement may be promptly and fully carried
out. Agents and Lenders also agree, from time to time, at the request of
Administrative Agent, to execute and deliver any and all other agreements,
documents or instruments and to take such other actions, all as may be
reasonably necessary or desirable to effectuate the terms, provisions and
intent of this Agreement and the Related Agreements.
10.13. Sharing of Collateral.
If any Lender shall obtain any payment (whether voluntary,
involuntary, through exercise of any right of set off, or otherwise) on account
of the Liabilities in excess of the amount to which it is entitled pursuant to
this Agreement, such Lender shall forthwith purchase from the other Lenders
such participations in such other Lenders' claims against Borrowers as shall be
necessary to cause such purchasing Lender to share the excess payment with the
other Lenders in accordance with the provisions of this Agreement; provided,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from such other Lender shall be rescinded
and such other Lenders shall repay to the purchasing Lender the purchase price
to the extent of their portion of such recovery together with an amount equal
to the share (according to the proportion of (i) the amount of such other
Lenders' required repayment, to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by
purchasing Lender in respect of the total amount recovered.
10.14. Agents and Lenders to Act as Agents.
If any Collateral or proceeds thereof at any time comes into
the possession or under the control of any Agent (other than Administrative
Agent) or any Lender, such Agent or such Lender shall hold such Collateral or
proceeds thereof as agent for the joint benefit of Agents and Lenders, and
will, upon receipt therefor, deliver such Collateral or proceeds thereof to
Administrative Agent.
11. GENERAL.
11.1. Borrowers' Waivers.
Except as otherwise provided for in this Agreement, each
Borrower waives (a) presentment, demand and protest and notice of presentment,
protest, default, non-payment, maturity, release, compromise, settlement, one
or more extensions or renewals
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of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by any Agent or any
Lender on which such Borrower may in any way be liable and hereby ratifies and
confirms whatever any Agent or any Lender may do in this regard; (b) all rights
to notice and a hearing prior to any Agent's or any Lender's taking possession
or control of, or any Agent's or any Lender's replevy, attachment or levy on or
of, the Collateral or any bond or security which might be required by any court
prior to allowing any Agent or any Lender to exercise any of any Agent's or any
Lender's remedies; and (c) the benefit of all valuation, appraisement and
exemption laws. Each Borrower acknowledges that it has been advised by counsel
of its choice with respect to this Agreement and the transactions evidenced by
this Agreement.
11.2. Power of Attorney.
Each Borrower appoints Administrative Agent, or any Person
whom Administrative Agent may from time to time designate, as such Borrower's
attorney and agent-in-fact with power (which appointment and power, being
coupled with an interest, is irrevocable until all Payment Liabilities under
this Agreement are paid and performed in full and this Agreement is
terminated), without notice to such Borrower, to:
(a) At such time or times hereafter as Administrative
Agent or said agent, in its sole and absolute discretion, may determine in such
Borrower's or Administrative Agent's name (i) endorse such Borrower's name on
any checks, notes, drafts or any other items of payment relating to and/or
proceeds of the Collateral which come into the possession of Administrative
Agent or under Administrative Agent's control and apply such payment or
proceeds to the Liabilities; (ii) endorse such Borrower's name on any chattel
paper, document, instrument, invoice, freight bill, bill of lading or similar
document or agreement in Administrative Agent's possession relating to Accounts
Receivable, Inventory or any other Collateral; (iii) use the information
recorded on or contained in any data processing equipment and computer hardware
and software to which such Borrower has access relating to Accounts Receivable,
Inventory and/or other Collateral; (iv) use such Borrower's stationery and sign
the name of such Borrower to verification of Accounts Receivable and notices
thereof to Account Debtors; and (v) if not done by such Borrower, do all acts
and things determined by Administrative Agent to be necessary, to fulfill such
Borrower's obligations under this Agreement; and
(b) At such time or times after the occurrence and during
the continuance of an Event of Default, as Administrative Agent or said agent,
in its sole and absolute discretion, may determine, in such Borrower's or
Administrative Agent's name: (i) demand payment of the Accounts Receivable;
(ii) enforce payment of the Accounts Receivable, by legal proceedings or
otherwise; (iii) exercise all of such Borrower's rights and remedies with
respect to the collection of the Accounts Receivable and other Collateral; (iv)
settle, adjust, compromise, extend or renew the Accounts Receivable; (v)
settle, adjust or compromise any legal proceedings brought to collect the
Accounts Receivable; (vi) if permitted by applicable law, sell or assign the
Accounts Receivable and/or other Collateral upon such terms for such amounts
and at such time or times as Administrative Agent may deem advisable; (vii)
discharge and release the Accounts Receivable and/or other Collateral; (viii)
prepare, file and sign such Borrower's name on any proof of claim in
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bankruptcy or similar document against any Account Debtor; (ix) prepare, file
and sign such Borrower's name on any notice of lien, assignment or satisfaction
of lien or similar document in connection with the Accounts Receivable and/or
other Collateral; and (x) do all acts and things necessary, in Administrative
Agent's sole and absolute discretion, to obtain repayment of the Liabilities
and to fulfill such Borrower's other obligations under this Agreement.
11.3. Expenses; Attorneys' Fees.
Borrowers jointly and severally agree, whether or not any Loan
is made or Letter of Credit is issued hereunder, to pay upon demand all
Attorneys' Fees and all other reasonable expenses incurred by any Agent and (to
the extent specifically referred to below, any Lender), at any time, including
fees, costs and expenses incurred in connection with Collateral field audits or
other due diligence investigations by such Agent (subject to the limits
contained in Section 5.5). For purposes of this Agreement, "Attorneys' Fees"
means the reasonable value of the services (and costs, charges and expenses
related thereto) of the attorneys (and all paralegals and any outside
consultants employed by such attorneys) employed by any Agent or, to the extent
specifically referred to below, any Lender (including but not limited to
attorneys and paralegals who are employees of any Agent or any Lender) from
time to time (a) in connection with the negotiation, preparation, execution,
delivery, administration and, in the case of any Agent or any Lender,
enforcement of this Agreement, any Related Agreement, any Supplemental
Documentation and all other documents or instruments provided for herein or in
any thereof or delivered or to be delivered hereunder or under any thereof or
in connection herewith or with any thereof, (b) to prepare documentation
related to the Loans made and other Liabilities incurred hereunder, (c) to
prepare any amendment to or waiver under this Agreement or any Related
Agreement and any documents or instruments related thereto, (d) to represent
any Agent or any Lender in any litigation, contest, dispute, suit or proceeding
or to commence, defend or intervene in any litigation, contest, dispute, suit
or proceeding or to file a petition, complaint, answer, motion or other
pleading, or to take any other action in or with respect to, any litigation,
contest, dispute, suit or proceeding (whether instituted by any Agent or any
Lender, either Borrower or any other Person and whether in bankruptcy or
otherwise) in any way or respect relating to the Collateral, this Agreement or
any Related Agreement (other than any litigation, contest, dispute, suit or
proceedings involving a dispute between any Agent and any Lender, any Agent and
any other Agent or any Lender and any other Lender), or either Borrower's or
any other Obligor's or any Designated Subsidiary's affairs, (e) to protect,
collect, lease, sell, take possession of, or liquidate any of the Collateral,
(f) to perfect or attempt to enforce any security interest in any of the
Collateral or to give any advice with respect to such enforcement and (g) to
enforce any of any Agent's or any Lender's rights to collect any of the
Liabilities. Administrative Agent may after three (3) Banking Days' notice to
either Borrower direct the applicable Funding Agent to advance all such amounts
to the applicable Borrower as a Revolving Loan. Borrowers also jointly and
severally agree (y) to indemnify and hold each Agent and each Lender harmless
from any loss or expense which may arise or be created by the acceptance of
telephonic or other instructions for making Loans or issuing Letters of Credit
and (z) to pay, and save each Agent and each
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Lender harmless from all liability for, any stamp or other taxes which may be
payable with respect to the execution or delivery of this Agreement, or any
Related Agreement or Supplemental Documentation, or the issuance of any Note or
of any other instruments or documents provided for herein or to be delivered
hereunder or in connection herewith. In addition to the foregoing, "Attorneys'
Fees" shall include each Agent's fees and expenses of the types described in
the preceding sentence incurred in connection with the syndication,
participation and assignment of this Agreement, any Related Agreement and any
Supplemental Documentation. Each Borrower's foregoing obligations shall
survive any termination of this Agreement.
11.4. BOA's and BAC's Fees and Charges.
To the extent not already covered by Section 11.3, each
Borrower agrees to pay each of BOA and BAC on demand the respective customary
fees and charges of BOA and BAC for maintenance of accounts with it or for
providing other services to such Borrower and if not so paid, each Lender
shall, without regard to any other provision of this Agreement or any other
Related Agreement or any defense that such Borrower may have to its obligation
to pay BOA or BAC in connection with such fees and charges, pay BOA or BAC for
such Lender's Overall Share of such fees and charges, and any payments so made
by Lenders to BOA or BAC shall be deemed to be Revolving Loans. Each Lender
(other than BOA and BAC) acknowledges and agrees that it shall not be entitled
to any of the fees and charges of BOA or BAC as provided in the immediately
preceding sentence. Administrative Agent may, in its sole and absolute
discretion, provide for such payment by directing the applicable Funding Agent
to advance the amount thereof to the applicable Borrower as a Revolving Loan
after three (3) Banking Days' notice to such Borrower.
11.5. Lawful Interest.
In no contingency or event whatsoever shall the interest rate
charged pursuant to the terms of this Agreement exceed the highest rate
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that such a court
determines that any Lender has received interest hereunder in excess of the
highest applicable rate, such Lender shall promptly refund such excess interest
to the applicable Borrower. Without limiting the foregoing, if any provision
of this Agreement would oblige either Borrower to make any payment of interest
or other amount payable to any Agent or any Lender in an amount or calculated
at a rate which would be prohibited by law or would result in a receipt by that
Agent or any Lender of "interest" at a "criminal rate" (as such terms are
construed under the Criminal Code (Canada)), then notwithstanding such
provision, such amount or rate of interest shall be deemed to have been
readjusted with retroactive effect to the maximum amount or rate of interest,
as the case may be, as would not be so prohibited by law or so result in a
receipt by such Agent or such Lender of "interest" at a "criminal rate", such
adjustment to be effected, to the extent necessary, as follows:
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(a) first, by reducing the amount or rate of interest or
the amount or rate of any fee required to be paid to
the affected Agent or Lender; and
(b) thereafter, by reducing any fees, commissions,
premiums and other amounts required to be paid to the
affected Agent or Lender which would constitute
interest for purposes of Section 347 of the Criminal
Code (Canada).
To the extent lawful, the interest and charges that would have been payable in
respect of any Loan but were not payable as a result of the operation of this
Section 11.5 shall be cumulated and the interest and charges payable to such
Agent or such Lender in respect of other Loans or periods shall be increased
(but not above the maximum lawful rate therefor) until such cumulated amount,
together with interest thereon at the applicable Floating Rate for Loans in the
Applicable Currency to the date of repayment, shall have been received by such
Agent or such Lender.
11.6. No Waiver by Agent or any Lender; Amendments.
No failure or delay on the part of any Agent or any Lender in
the exercise of any power or right, and no course of dealing between either
Borrower and any Agent or any Lender shall operate as a waiver of such power or
right, nor shall any single or partial exercise of any power or right preclude
other or further exercise thereof or the exercise of any other power or right.
The remedies provided for herein are cumulative and not exclusive of any
remedies which may be available to any Agent or any Lender at law or in equity.
No notice to or demand on either Borrower not required hereunder shall in any
event entitle either Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the right of any Agent
or any Lender to any other or further action in any circumstances without
notice or demand. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement or any Related Agreement shall in
any event be effective unless the same shall be in writing and signed and
delivered by Requisite Lenders. Notwithstanding the foregoing, any amendment,
modification, termination, waiver or consent with respect to any of the
following provisions of this Agreement shall be effective only by a written
agreement, signed by each Lender affected thereby: (a) increase in the amount
of the Maximum Loan Amount of such Lender, (b) reduction of the principal of,
rate or amount of interest on the Revolving Loans or any fees or charges
(including, without limitation, any Letter of Credit fees or charges) payable
to such Lender (other than by the payment or prepayment thereof), (c)
postponement of the date fixed for any payment of principal of, or interest on,
the Loans or any fees or charges) (including, without limitation, any Letter of
Credit fees or charges) or other amounts payable to such Lender, (d) change in
the aggregate Pro Rata Share or Overall Share of Lenders which shall be
required for Lenders or any of them to take action hereunder or amend the
definition of "Requisite Lenders," (e) amendment of Section 10.11, (f) release
of any Obligor from its obligations hereunder or under any applicable Related
Agreement, except in connection with the release pursuant to Section 10.11 of
all Collateral of such Obligor, or (g) amendment of this Section 11.6. In
addition, no amendment (i) affecting the rights or duties of any
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Agent shall be effective without the written agreement of such Agent or (ii)
affecting the rights and duties of any Issuing Bank shall be effective without
the written agreement of such Issuing Bank. Administrative Agent may, but
shall have no obligation to, with the written concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that
Lender. Any waiver of any provision of this Agreement, and any consent to any
departure by Borrowers from the terms of any provision of this Agreement, shall
be effective only in the specific instance and for the specific purpose for
which given.
11.7. Termination of Credit.
Borrowers may terminate the Credit at any time upon notice to
Administrative Agent and payment in full of the outstanding principal balance
of the Loans and all other Payment Liabilities under this Agreement and the
Related Agreements, as provided in Section 2.1.2. All of each Agent's and each
Lender's rights and remedies, the Liens of Administrative Agent on the
Collateral, for the benefit of Agents and Lenders, and all of each Borrower's
duties and obligations under this Agreement shall survive termination of the
Credit extended to Borrowers hereunder until all of the Payment Liabilities
hereunder have been finally paid and performed in full and this Agreement has
been terminated. The termination or cancellation of the Credit shall not
affect or impair the liabilities and obligations of either Borrower or any one
or more of the Obligors to Agents and Lenders or each Agent's and each Lender's
rights with respect to any Loans and advances made and other Liabilities
incurred prior to such termination or with respect to the Collateral.
11.8. Notices.
Except as otherwise expressly provided herein, any notice
hereunder to either Borrower, any Agent or any Lender shall be in writing
(including facsimile communication) and shall be given to such Borrower, such
Agent or such Lender at its address or facsimile number set forth on the
signature pages hereof or at such other address or facsimile number as such
Borrower, such Agent or such Lender may, by written notice, designate as its
address or facsimile number for purposes of notices hereunder. All such
notices shall be deemed to be given when transmitted by facsimile, delivered by
courier, personally delivered or, in the case of notice by mail, five (5)
Banking Days following deposit in the United States or Canadian mails, properly
addressed as herein provided, with proper postage prepaid; provided, however,
that notice to Administrative Agent of Borrowers' intent to terminate the
Credit shall not be effective until actually received by Administrative Agent.
11.9. Assignments and Participations; Information.
(a) This Agreement may not be assigned by either Borrower
without the prior written consent of Agents and Lenders. Whenever in this
Agreement reference is made to any of the parties hereto, such reference shall
be deemed to include, wherever applicable, a reference to the successors and
permitted assigns of each Borrower and the successors and assigns of each Agent
and each Lender.
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(b) Each Borrower, each Agent and each Lender hereby
agree that on or after the date hereof, each of BOA and BAC may, in its
discretion, without either Borrower's, any Agent's or any other Lender's
consent, sell one or more assignments of portions of its interest in the
Credit. Each sale described in the preceding sentence shall be to a
creditworthy financial institution satisfactory to BOA or BAC, as applicable,
in its discretion, and on such terms and conditions as BOA or BAC, as
applicable may determine. No other Lender may sell any portion of its interest
in the Credit without the consent of Borrowers and Agents, which consent will
not be unreasonably withheld.
(c) Each assignment of an interest hereunder shall be
subject to the following conditions: (i) each assignment shall be of a
constant, and not a varying, ratable percentage of all of the assigning
Lender's rights and obligations under this Agreement, and (ii) the parties to
each such assignment shall execute and deliver to Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance
Agreement, with a copy to Borrowers. Upon such execution, delivery, acceptance
and recording in the Register, from and after the effective date specified in
each Assignment and Acceptance Agreement and agreed to by Administrative Agent,
(x) the assignee thereunder shall, in addition to any rights and obligations
hereunder held by it immediately prior to such effective date, if any, have the
rights and obligations hereunder that have been assigned to it pursuant to such
Assignment and Acceptance Agreement and shall, to the fullest extent permitted
by law, have the same rights and benefits hereunder as if it were an original
Lender hereunder and (y) the assigning Lender shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance Agreement, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance Agreement covering all or the remaining portion of such assigning
Lender's rights and obligations under this Agreement, the assigning Lender
shall cease to be a party hereto).
(d) Administrative Agent shall maintain a copy of each
Assignment and Acceptance Agreement delivered to and accepted by it and a
register (the "Register") for the recordation of the names and addresses of
Lenders and the Maximum Loan Amount and principal amount of the Loans owing to
each Lender from time to time. The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and Borrowers, Agents and
Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by either Borrower, any Agent or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance
Agreement executed by the assigning Lender and the assignee and a processing
and recordation fee of US$3,500 (payable by the assigning Lender or the
assignee, as shall be agreed between them), Administrative Agent shall, if such
Assignment and Acceptance Agreement has been completed and is in compliance
with this Agreement and in substantially the form of Exhibit D and
Administrative Agent and each other Person required hereunder has consented to
the assignment evidenced thereby, (i) accept
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such Assignment and Acceptance Agreement, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to Borrowers.
(f) Each Lender may sell participations to one or more
other financial institutions in or to all or a portion of its rights and
obligations under and in respect of any and all facilities under this
Agreement; provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) Borrowers, Agents and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and (iv) such participant's rights
to agree or to restrict such Lender's ability to agree to the modification,
waiver or release of any of the terms of this Agreement or the Related
Agreements or to the release of any Collateral covered by this Agreement or the
Related Agreements, to consent to any action or failure to act by any party to
this Agreement or any of the Related Agreements, or to exercise or refrain from
exercising any powers or rights which any Lender may have under or in respect
of this Agreement or the Related Agreements or any Collateral, shall be limited
to the right to consent to (A) an increase in the Maximum Loan Amount of the
Lender from whom such participant purchased a participation, (B) reduction of
the principal of, or rate or amount of interest on the Loans subject to such
participation (other than by the payment or prepayment thereof) or (C)
postponement of any date fixed for any payment of principal of, or interest on,
the Loans subject to such participation.
(g) Any Agent or any Lender may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 11.9, disclose to the assignee or participant or proposed assignee
or participant, any information relating to Parent, either Borrower or any of
Borrower's Subsidiaries furnished to such Lender by or on behalf of Borrowers;
provided that, prior to any such disclosure, such assignee or participant, or
proposed assignee or participant, shall agree to preserve the confidentiality
of any confidential information described therein and such Lender shall notify
Borrowers of the assignee or participant, or proposed assignee or participant.
(h) Anything in this Agreement to the contrary
notwithstanding, in the case of any participation granted under this Section
11.9, all amounts payable by Borrowers under this Agreement or the Related
Agreements shall be calculated and made in the manner and to the parties
required hereby as if no such participation had been sold.
(i) Administrative Agent agrees to promptly notify
Borrowers of each sale of a participation or permitted assignment hereunder.
Each Borrower agrees to use its best efforts to assist Lenders in their efforts
to sell assignments and participations hereunder. In addition, each Borrower
agrees to execute new Notes in favor of each of the selling and purchasing
Lender, upon each sale of an assignment hereunder, provided that the existing
Notes in favor of the selling Lender are simultaneously therewith returned to
the applicable Borrower.
(j) Notwithstanding anything to the contrary contained
herein, but subject to no Event of Default having occurred and continuing,
without the prior written consent of Agents and Borrowers, in no event shall
any assignee of (i) any Canadian Lender hereunder be a Person that is not a
resident of Canada under the Income Tax Act (Canada) or is not entitled to
complete
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exemption from Canadian withholding tax imposed on or with respect to any
payments to be made to it pursuant to this Agreement or (ii) any U.S. Lender
hereunder be a Person that is not a corporation organized under the laws of the
United States (or a state thereof) or is not entitled to complete exemption
from United States withholding tax imposed on or with respect to any payments
to be made to it pursuant to this Agreement.
11.10. Severability.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
11.11. Successors.
This Agreement shall be binding upon each of each Borrower,
each Agent and each Lender and their respective successors and permitted
assigns, and shall inure to the benefit of each of each Borrower, each Agent
and each Lender and their respective successors and permitted assigns.
11.12. Construction.
EACH BORROWER ACKNOWLEDGES THAT THIS AGREEMENT SHALL NOT BE
BINDING UPON ANY AGENT OR ANY LENDER OR BECOME EFFECTIVE UNTIL FULLY EXECUTED
COUNTERPARTS HAVE BEEN EXECUTED AND DELIVERED TO ADMINISTRATIVE AGENT AND EACH
BORROWER. ONCE EFFECTIVE, THIS AGREEMENT AND THE RELATED AGREEMENTS AND
SUPPLEMENTAL DOCUMENTS SHALL, UNLESS OTHERWISE EXPRESSLY PROVIDED THEREIN, BE
DEEMED TO HAVE BEEN NEGOTIATED AND ENTERED INTO IN, AND SHALL BE GOVERNED AND
CONTROLLED BY THE LAWS OF, THE STATE OF ILLINOIS AS TO INTERPRETATION,
ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, CHOICE OF LAW, AND IN ALL OTHER
RESPECTS, INCLUDING BUT NOT LIMITED TO THE LEGALITY OF THE INTEREST RATE AND
OTHER CHARGES, BUT EXCLUDING PERFECTION OF SECURITY INTERESTS AND LIENS WHICH
SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE RELEVANT JURISDICTION.
11.13. Consent to Jurisdiction.
To induce each Agent and each Lender to accept this Agreement,
each Borrower irrevocably agrees that, subject to Administrative Agent's sole
and absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR
RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE RELATED
AGREEMENTS, OR THE SUPPLEMENTAL DOCUMENTATION OR THE COLLATERAL SHALL BE
LITIGATED IN COURTS HAVING SITUS
-116-
<PAGE> 122
WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. EACH BORROWER HEREBY CONSENTS
AND SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL
COURT LOCATED WITHIN SAID CITY AND STATE AND WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON SUCH BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY
BE MADE BY REGISTERED MAIL DIRECTED TO SUCH BORROWER AT THE ADDRESS STATED ON
THE SIGNATURE PAGE HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
UPON ACTUAL RECEIPT THEREOF.
11.14. Subsidiary Reference.
Any reference herein to a Subsidiary or Subsidiaries of either
Borrower, and any financial definition, ratio, restriction or other provision
of this Agreement which is stated to be applicable to either Borrower and its
Subsidiaries or either Borrower and the Designated Subsidiaries, or which is to
be determined on a "consolidated" or "consolidating" basis, shall apply only to
the extent such Borrower has any Subsidiaries.
11.15. Borrowers' Documentation.
Each Borrower hereby acknowledges and agrees that Agents and
Lenders shall have no obligation to return any due diligence reports,
schedules, financial statements or any other disclosure documents furnished to
any Agent or any Lender by either Borrower, any other Company or any third
party in connection with the Credit.
11.16. Waiver of Jury Trial.
EACH BORROWER, EACH AGENT AND EACH LENDER EACH WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS (A) UNDER THIS AGREEMENT OR ANY RELATED AGREEMENT OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR (B) ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
11.17. Counterparts.
This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument.
-117-
<PAGE> 123
11.18. Language.
The undersigned have expressly requested that this agreement
be drawn up in the English language. Les soussignes ont expressement demande
que ce document soit redige en langue anglaise.
-118-
<PAGE> 124
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first written above.
PIONEER AMERICAS ACQUISITION CORP.
By /s/ Kent R. Stephenson
--------------------------------------
Title Vice President
-----------------------------------
Address: 700 Louisiana Street
Suite 4300
Houston, Texas 77002
Telecopier Number: (713) 225-4426
Attention: Chief Financial Officer
and Corporate Secretary
PCI CHEMICALS CANADA INC./PCI CHIMIE
CANADA INC.
By /s/ Kent R. Stephenson
--------------------------------------
Title Vice President
-----------------------------------
Address: 630 Rene-Levesque
Boulevard West
31st Floor
Montreal, Quebec
Canada H3B 1S6
Telecopier Number: (504) 397-6109
Attention: Vice President and Controller
-----------------------------
-119-
<PAGE> 125
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, FORMERLY
KNOWN AS BANK OF AMERICA ILLINOIS,
as Administrative Agent and as U.S.
Funding Agent
By /s/ DAVID A. JOHANSON
--------------------------------------
Title Vice President
-----------------------------------
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Telecopier Number: (312) 974-9102
Attention: Agency Management Services
BANK OF AMERICA CANADA,
as Canadian Funding Agent
By /s/ RICHARD J. HALL
--------------------------------------
Title Vice President
-----------------------------------
Address: 200 Front Street West,
Toronto, Ontario,
Canada M5V 3L2
Telecopier Number: (416) 349-4282
Attention: Nelson Lam
----------------------------
BANK AMERICA ROBERTSON STEPHENS,
as Arranger
By /s/ COLLEEN KRAMER
--------------------------------------
Title Managing Director
-----------------------------------
Address: 231 South LaSalle Street
Chicago, Illinois 60697
-120-
<PAGE> 126
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, FORMERLY
KNOWN AS BANK OF AMERICA ILLINOIS,
as a U.S. Lender
By /s/ RICHARD A. BEUTEL
--------------------------------------
Title Managing Director
-----------------------------------
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Telecopier Number: (312) 974-0761
Attention: Richard Beutel
Maximum Loan Amount: US$5,000,000
-121-
<PAGE> 127
TRANSAMERICA BUSINESS
CREDIT CORPORATION,
as a U.S. Lender
By /s/ MICHAEL W. KEMPEL
--------------------------------------
Title Senior Account Executive
-----------------------------------
Address: 8750 West Bryn Mawr Ave.,
Suite 720
---------------------------
Chicago, IL 60631
---------------------------
Telecopier Number: (773) 380-6179
Attention: Michael Kempel
----------------------------
Maximum Loan Amount: US$15,000,000
-122-
<PAGE> 128
SANWA BUSINESS CREDIT CORPORATION,
as a U.S. Lender
By /s/ STANLEY KAMINSKI
--------------------------------------
Title Vice President
-----------------------------------
Address: One South Wacker
Chicago, IL 60606
Telecopier Number: (312) 853-1410
Attention: Stan Kaminski
----------------------------
Maximum Loan Amount: US$15,000,000
-123-
<PAGE> 129
BANK OF AMERICA CANADA,
as a Canadian Lender
By /s/ RICHARD J. HALL
--------------------------------------
Title Vice President
-----------------------------------
Address: 200 Front Street West,
Toronto, Ontario,
Canada M5V 3L2
Telecopier Number: (416) 349-4282
Attention: Nelson Lam
----------------------------
Maximum Loan Amount:
U.S. Dollar Equivalent of $20,000,000
-124-
<PAGE> 130
CREDIT LYONNAIS CANADA
as a Canadian Lender
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: First Vice-President and
Manager, Eastern Region
By: /s/ CYNTHIA HANSEN
-------------------------------------
Title: Assistant Vice-President
Corporate Banking
Address: 2000 Mansfield Street
Suite 1610
Montreal, Quebec H3A 3A4
Telecopier Number: (514) 288-9683
Attention: Cynthia Hansen
----------------------------
Maximum Loan Amount:
U.S. Dollar Equivalent of $10,000,000
-125-
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<ARTICLE> 5
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 51,819
<SECURITIES> 0
<RECEIVABLES> 63,959
<ALLOWANCES> 3,346
<INVENTORY> 28,748
<CURRENT-ASSETS> 143,016
<PP&E> 395,753
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<TOTAL-ASSETS> 737,563
<CURRENT-LIABILITIES> 64,419
<BONDS> 585,530
5,500
0
<COMMON> 100
<OTHER-SE> 38,204
<TOTAL-LIABILITY-AND-EQUITY> 737,563
<SALES> 204,264
<TOTAL-REVENUES> 204,264
<CGS> 149,888
<TOTAL-COSTS> 149,888
<OTHER-EXPENSES> 28,561
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,108
<INCOME-PRETAX> 3,469
<INCOME-TAX> 1,631
<INCOME-CONTINUING> 1,838
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<EXTRAORDINARY> 0
<CHANGES> 0
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</TABLE>
