<PAGE>
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, 1996 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 1-10490
SANIFILL, INC.
(exact name of Registrant as specified in its charter)
Delaware 76-0279492
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2777 Allen Parkway, Suite 700, Houston, Texas 77019
(address of principal executive offices) (zip code)
Registrant's telephone number, including area code (713) 942-6200
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 and 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
----- -----
The number of shares of Common Stock of the registrant, par value $.01 per
share, outstanding at August 9, 1996 was 25,440,331.
This report contains 18 pages.
<PAGE>
FORM 10-Q REPORT INDEX
10-Q PART AND ITEM NO.
- ----------------------
Page
----
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<S> <C>
Item 1. Financial Statements................................. 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.................................... 16
Item 4. Submission of Matters to a Vote of Security Holders.. 16
Item 6. Exhibits and Reports on Form 8-K..................... 16
</TABLE>
2
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
SANIFILL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,364 $ 2,835
Accounts receivable, net 66,464 47,019
Prepaid expenses 9,793 4,604
Other current assets 6,176 3,015
---------- --------
Total current assets 86,797 57,473
Property and equipment, net 757,577 572,329
Goodwill, net 143,654 97,974
Other assets 52,124 48,153
---------- --------
Total assets $1,040,152 $775,929
========== ========
LIABILITIES AND
STOCKHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt $ 12,101 $ 13,359
Accounts payable 28,473 22,419
Accrued liabilities and other 42,828 25,111
---------- --------
Total current liabilities 83,402 60,889
Long-term debt, net of current maturities 257,522 209,329
Convertible subordinated debentures, net 112,035 58,213
Environmental reserves 52,209 43,339
Deferred income taxes, net 68,252 64,662
Other long-term obligations 27,946 23,906
---------- --------
Total liabilities 601,366 460,338
---------- --------
Commitments and contingencies
Stockholders' investment:
Preferred stock -- --
Common stock 250 217
Additional paid-in capital 349,557 245,490
Retained earnings 103,625 84,661
Foreign currency translation (14,646) (14,777)
adjustment ---------- --------
Total stockholders' investment 438,786 315,591
---------- --------
Total liabilities and $1,040,152 $775,929
stockholders' investment ========== ========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
SANIFILL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts; unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
---------------------------- -------------------------
1996 1995 1996 1995
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $181,406 $115,120 $100,406 $61,056
Cost of operations 115,747 72,979 63,852 37,941
-------- -------- -------- -------
Gross Profit 65,659 42,141 36,554 23,115
Selling, general and administrative
expenses 27,384 17,723 15,137 9,605
Pooling costs -- 566 -- 566
-------- -------- -------- -------
Operating income 38,275 23,852 21,417 12,944
Interest expense 8,007 6,273 3,545 3,370
Interest income (418) (514) (209) (288)
Other income, net (920) (791) (272) (463)
-------- -------- -------- -------
Income before income taxes 31,606 18,884 18,353 10,325
Income taxes 12,642 7,478 7,341 4,091
-------- -------- -------- -------
Net income $ 18,964 $ 11,406 $ 11,012 $ 6,234
======== ======== ======== =======
Earnings per common and common
equivalent share $ 0.78 $ 0.60 $ 0.43 $ 0.32
======= ======== ======== =======
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
SANIFILL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------
1996 1995
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 18,964 $ 11,406
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 25,980 18,389
Deferred income taxes 2,146 523
Provision for environmental reserves 2,159 671
Provision for doubtful accounts 467 276
Gain on sale of assets (373) (469)
Changes in assets and liabilities, excluding effects
of acquisitions:
Accounts receivable (18,471) (8,786)
Prepaid expenses (5,530) 414
Other current assets (2,745) (3,177)
Accounts payable and accrued liabilities and other 2,179 (4,398)
Other, net (414) (1,100)
--------- --------
Net cash provided by operating activities 24,362 13,749
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (77,064) (38,845)
Payments for acquisitions accounted for as purchases, net
of cash received of $696 in 1996 and $110 in 1995 (90,559) (4,235)
Additions to other noncurrent assets, net (1,902) (4,058)
Proceeds from sale of property and equipment 1,287 1,132
--------- --------
Net cash used in investing activities (168,238) (46,006)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 149,235 85,990
Repayments of borrowings (6,915) (57,759)
Proceeds from issuances of common stock, net 2,033 2,984
Other, net 1,051 (74)
--------- --------
Net cash provided by financing activities 145,404 31,141
--------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1 (74)
--------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,529 (1,190)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 2,835 3,322
--------- --------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 4,364 $ 2,132
========= ========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
SANIFILL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
Sanifill, Inc. and subsidiaries ("Sanifill" or the "Company") own, operate,
acquire and develop nonhazardous waste disposal, waste treatment, waste
collection, recycling, waste transfer and complementary businesses located in
the United States, the Commonwealth of Puerto Rico, Mexico and Canada. The
nonhazardous waste industry is highly competitive and fragmented. Additionally,
this industry is subject to various foreign, federal, state and local laws and
substantial regulation under these laws. The Company's waste collection and
waste transfer businesses will from time to time also involve the collection,
transportation or transfer of relatively small quantities of materials that are
classified and regulated as hazardous substances or hazardous wastes under
federal or state environmental laws and regulations, as an ancillary service for
our nonhazardous solid waste customers.
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries. Intercompany balances and transactions have
been eliminated for all periods presented. The accounts of the one business
acquired on May 31, 1995 in a transaction accounted for as a pooling-of-
interests have been included as if the business had always been a member of the
same operating group. The accounts of the businesses acquired in transactions
accounted for as purchases have been included from their respective acquisition
dates.
The condensed consolidated financial statements included herein have been
prepared by the Company without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission (the "SEC"). As applicable under such
regulations, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The Company believes that the
presentations and disclosures herein are adequate to make the information
presented not misleading. The financial statements reflect all elimination
entries and normal adjustments that are necessary for a fair statement of the
results for the interim periods.
Operating results for interim periods are not necessarily indicative of the
results for full years. It is suggested that these condensed consolidated
financial statements be read in conjunction with the consolidated financial
statements of Sanifill, Inc. and subsidiaries for the year ended December 31,
1995 and the related notes thereto (the "Financial Statements") included in the
Company's Annual Report on Form 10-K filed with the SEC on March 27, 1996.
2. SIGNIFICANT ACCOUNTING POLICIES
Goodwill
Effective January 1, 1996, the Company changed its estimate of the useful
life of its goodwill from 25 to 40 years. The effects of this change will be
accounted for prospectively in the financial statements. The effect of this
change in estimate was to increase net income by $.2 million or $.009 per share
and $.4 million or $.018 per share in the three and six month periods ended June
30, 1996.
The Company changed its estimated goodwill life due to changes in facts and
circumstances that have occurred over time. Goodwill arises only in non-landfill
acquisitions at Sanifill. Prior to 1992, all of the Company's acquisitions were
landfill acquisitions, and the Company had no goodwill on its balance sheet. In
1992, Sanifill began the evolution from its disposal-only strategy to
a disposal-based strategy which involved the acquisition of collection and
transfer businesses to vertically integrate around its existing landfills. The
Company chose a relatively short 25-year goodwill life when it made its first
collection acquisitions in 1992 because the new strategy was unproven at
Sanifill and because the remaining life of the permitted airspace at the
landfills fed by these early collection acquisitions was relatively short
(approximately 10 years). Today, the disposal-based strategy is in place in the
majority of Sanifill's markets. It has been proven to be a viable, profitable
strategy, and the average remaining life of the permitted airspace at the
Company's landfills has grown to 32 years, with additional expansion
opportunities available. Similarly, without regard to Sanifill's average site
life, the collection operations which have been acquired or developed are
important in size and can operate indefinitely and independently of Sanifill's
6
<PAGE>
SANIFILL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
landfilling operations. Management believes that these changes in fact support
a longer goodwill life. In addition, the Company has conducted a survey of the
practices of other major public solid waste companies and found that a
substantial majority of them use a 40-year goodwill life.
There have been no other significant additions to or changes in accounting
policies of the Company since December 31, 1995.
For a description of these policies, see Note 2 of Notes to Consolidated
Financial Statements for the year ended December 31, 1995 in the Company's
Annual Report on Form 10-K.
3. BUSINESS COMBINATIONS
The Company's acquisitions in transactions accounted for as purchases are
summarized as follows (dollar amounts in thousands):
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------
1996 1995
------- -------
<S> <C> <C>
Acquisitions consummated
Collection businesses 23 10
Solid waste transfer stations 2 1
Municipal solid waste disposal facilities -- 2
Dry waste disposal facilities 2 2
Materials recovery facilities -- 1
-------- -------
Total 27 16
======== =======
Consideration
Cash $ 84,817 $ 4,345
Notes 11,511 5,187
Common stock 35,457 16,341
-------- -------
Total $131,785 $25,873
======== =======
</TABLE>
The $131.8 million of consideration during the 1996 period includes $41.1
million related to a landfill and transfer station development project in the
Baltimore-Washington area.
Pro forma results of operations are not presented as the amounts do not
significantly differ from historical Company results.
In addition, the Company has agreed, in connection with certain transactions
which occurred during 1995, to pay additional amounts to the sellers upon the
achievement by the acquired businesses of certain negotiated goals, such as
targeted revenue levels, targeted disposal volumes or the issuance of permits
for expanded landfill airspace. The contingent consideration is payable in
cash, stock, or, in some instances, in cash or stock, at the Company's option.
Although the amount and timing of any payments of additional contingent
consideration necessarily depend on whether and when these goals are met, the
maximum aggregate amount of contingent consideration potentially payable if all
payment goals are met would be $70.5 million, $12.9 million of which was paid
half in cash and half in stock in March 1996. Of the remaining unpaid
contingent consideration of $57.6 million, $49.6 million relates to revenue and
volume targets. The remainder relates to permit expansions. Of the $57.6
million, $30.6 million relates to a single performance based contingent
liability which, once the applicable performance goal is met, is payable in
equal annual installments over five years. In June 1996, the applicable
performance goal was met and the first annual payment of $6.1 million will be
paid out in cash on September 30, 1996. The $6.1 million is
7
<PAGE>
SANIFILL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
reflected on the June 30, 1996 balance sheet as a current liability under
accrued liabilities and other. The remaining amount of $24.5 million has been
discounted to net present value and is reflected in the balance sheet at June
30, 1996 as a long-term liability under other long-term obligations. In
addition, consistent with industry practice, the Company regularly agrees to
provide royalties based on revenue generated at the applicable disposal site to
sellers of waste disposal businesses that it acquires. The foregoing
quantification of contingent consideration does not include potential royalty
payments.
On May 31, 1995, the Company acquired Metropolitan Disposal and Recycling
Corporation, Energy Reclamation, Inc., and E. E. Equipment, Inc. (collectively,
"MDC") in a transaction accounted for as a pooling-of-interests. MDC conducts
collection and materials recovery facility activities. Aggregate consideration
consisted of approximately 1.1 million shares of the Company's common stock.
Revenues and net income of MDC were $8.9 million and $0.8 million, respectively,
for the period from January 1, 1995 through the acquisition date. These amounts
reflect estimated pooling adjustments to (i) eliminate intercompany transactions
with Sanifill, (ii) conform MDC to Sanifill's policy for amortization of
intangible assets and (iii) reflect income tax expense.
Since June 30, 1996, the Company has acquired 2 collection businesses, 1
transfer station and 1 special waste disposal facility for aggregate
consideration of $17.5 million.
4. PROPERTY AND EQUIPMENT
A summary of property and equipment is as follows (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Property and equipment $879,634 $675,332
Less: Accumulated depreciation, 122,057 103,003
depletion and amortization -------- --------
Net property and equipment $757,577 $572,329
======== ========
</TABLE>
Property and equipment includes the following permit-related items (in
thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Permitting projects in process
Greenfield sites $ -- $ --
Nonoperating sites 376 153
Operating sites 8,440 12,861
Permitted land at nonoperating sites 25,620 24,416
Permitted land with construction in
process 79,296 35,281
-------- -------
Total $113,732 $ 72,711
======== =======
</TABLE>
The increase in permitted land with construction in process during the six
months ended June 30, 1996 was primarily attributable to the first quarter 1996
acquisition of a development project consisting of a landfill and transfer
station in the Baltimore-Washington area.
8
<PAGE>
SANIFILL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. EARNINGS PER SHARE
Earnings per common and common equivalent share have been computed based on
the weighted average number of shares outstanding. The following table
reconciles the number of common shares outstanding with the number of common
shares used in computing earnings per share (in thousands):
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
----------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Common shares outstanding 25,067 18,756 25,067 18,756
Effect of using weighted average common shares
outstanding during the period (1,433) (331) (212) (155)
Effect of shares issuable under stock option plan
and stock warrants based on the treasury stock method 830 558 926 620
------ ------ ------ ------
Common and common equivalent shares used in
computing earnings per share 24,464 18,983 25,781 19,221
====== ====== ====== ======
</TABLE>
6. MERGER WITH USA WASTE SERVICES, INC.
On June 24, 1996, the Company entered into a definitive merger agreement
with USA Waste Services, Inc. (USA). The merger is subject to stockholder
approval, the Hart-Scott-Rodino antitrust review process and other customary
closing conditions. The Company currently expects that the merger will be
completed in the third quarter of 1996 and that it will be accounted for as a
pooling-of-interests. The merger agreement provides that on the effective date
of the merger, USA will issue 1.70 shares of its common stock for each share of
the Company's outstanding common stock. Following the merger, Rod Proto,
President, Chief Operating Officer and Director of Sanifill will assume these
positions at USA. USA's Board of Directors will remain at 12 members and will
include Mr. Proto and two additional designees from the Company's board. Messrs.
Ralph Cox and Larry Martin have been designated by the Company to join Mr. Proto
on the USA Board of Directors.
7. SALE OF MARINE NONHAZARDOUS OILFIELD WASTE COLLECTION OPERATIONS
On June 5, 1996, the Company executed definitive agreements for the purchase
by Newpark Resources, Inc. of the marine-related nonhazardous oilfield waste
collection operations of Campbell Wells, Ltd., a Sanifill subsidiary, for a
purchase price of $70.5 million. This transaction closed on August 12, 1996 and
will not have a material impact on the results of the Company's operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Revenues in the quarter increased by $39.4 million (64%) over prior
year levels, due to a combination of acquisition and internal development
activities. Gross profit as a percentage of revenues decreased by 2%, while
selling, general, and administrative expenses as a percentage of revenues
decreased by 1% This resulted in operating income of 21% of revenues and net
income of 11% of revenues. Net income increased by 77% to $11.0 million, and
earnings per share increased by 34% to $0.43.
9
<PAGE>
RESULTS OF OPERATIONS FOR THE INTERIM PERIODS ENDED JUNE 30, 1996 AND 1995
Revenues
The components of revenues are summarized as follows (dollar amounts in
thousands):
<TABLE>
<CAPTION>
Components of Revenue
------------------------------------------------------------------------------
Six Months Ended Three Months Ended
June 30, June 30,
---------------------------------- ---------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Municipal solid waste disposal $ 37,529 21% $ 28,476 25% $ 20,258 20% $15,826 26%
Dry waste disposal 28,356 16 17,999 15 17,198 17 9,181 15
Special waste disposal 15,827 9 10,941 9 8,831 9 5,614 9
Collection/transfer 78,303 43 38,597 34 42,954 43 20,700 34
Nonhazardous oilfield waste 15,156 8 12,422 11 7,900 8 5,925 10
Recycling 6,235 3 6,685 6 3,265 3 3,810 6
-------- --- -------- --- -------- --- ------- ---
Total revenues $181,406 100% $115,120 100% $100,406 100% $61,056 100%
======== === ======== === ======== === ======= ===
</TABLE>
Intercompany disposal transactions are eliminated from the
collection/transfer component in the previous analysis. The recycling category
includes revenue generated from the sale of recycled commodities, which for the
three and six month periods ended June 30, 1996 was approximately 1% of total
company revenues. The factors impacting the year-to-year change in total
revenues are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Change in 1996 vs. 1995 Total Revenues
-------------------------------------------------------------------
Six Months Ended June 30, Three Months Ended June 30,
-------------------------------------- ---------------------------
<S> <C> <C>
Domestic disposal operations
Existing: Price/mix $ 2,001 $ 896
Volume 9,459 7,031
New: Acquired 13,966 8,588
Domestic collection operations 37,969 20,856
Mexico operations 1,929 1,017
Canada operations 962 962
------- -------
Total change $66,286 $39,350
======= =======
</TABLE>
With regard to the revenue trends in existing operations for the three
months ended June 30, 1996, the Company's solid waste landfill operations
reported a 10% "same-store" revenue increase versus the same period last year,
of which approximately 9% related to volume increases and 1% to increases in
price/mix. The Company's nonhazardous oilfield waste (NOW) operations reported a
33% "same-store" revenue increase in the quarter versus the same period last
year. The increase in the NOW operations was primarily attributable to the
higher level of drilling activity in Southern Louisiana and the Gulf of Mexico
and an increase in pit remediation business.
10
<PAGE>
The following table presents, for the periods indicated, the percentage
relationship which the captioned items in the Company's Condensed Consolidated
Statements of Operations bear to total revenues.
<TABLE>
<CAPTION>
Percentage Relationship to Total Revenues
---------------------------------------------------------
Six Months Ended Three Months Ended
---------------- ------------------
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues 100% 100% 100% 100%
Cost of operations 64 63 64 62
---- ---- ---- ----
Gross profit 36 37 36 38
Selling, general and administrative expenses 15 15 15 16
Pooling costs -- 1 -- 1
---- ---- ---- ----
Operating income 21 21 21 21
Interest expense 4 5 4 5
Other income, net ( 1) -- (1) (1)
---- ---- ---- ----
Income before income taxes 18 16 18 17
Income taxes 7 6 7 7
---- ---- ---- ----
Net income 11% 10% 11% 10%
==== ==== ==== ====
</TABLE>
Cost of Operations and Gross Profit
Cost of operations increased $25.9 million (68%) and $42.8 million (59%)
for the three and six month periods ended June 30, 1996, as compared with 1995.
This increase was due primarily to costs associated with facilities and
operations opened or acquired since June 30, 1995.
Gross profit increased $13.4 million (58%) and $23.5 million (56%) for the
three and six month periods ended June 30, 1996, as compared with 1995. Gross
profit decreased as a percent of revenues from 38% to 36% and 37% to 36% for the
three and six month period respectively. The decrease in gross profit as a
percentage of revenue was primarily attributable to the decline in prices for
recycled fiber commodities and the fact that the Company was temporarily not
internalizing certain waste volumes in two of its new market areas.
Selling, General and Administrative Expenses ("SG&A")
SG&A increased $5.5 million (58%) and $9.7 million (55%) for the three and
six month periods ended June 30, 1996, as compared with 1995. SG&A decreased as
a percent of revenues from 16% to 15% in the three month period and remained
constant as a percent of revenues at 15% for the six month period. The absolute
increase in SG&A was due primarily to costs associated with facilities opened or
acquired since June 30, 1995.
Pooling Costs
The Company incurred pooling costs of $0.6 million during the second
quarter of 1995. These costs consisted primarily of legal and accounting fees
and other costs related to the pooling-of-interests transaction discussed
previously in Note 3.
Operating Income
Operating income increased $8.5 million (65%) and $14.4 million (60%) for
the three and six month periods ended June 30, 1996, as compared with 1995.
Operating income as a percent of revenues remained constant at 21% for the three
and six month periods. The increase in operating income in absolute dollars for
each period reflected the factors discussed in Cost of Operations and Gross
Profit above, plus the Company's success in implementing its sales program, the
favorable economic conditions at certain sites, the Company's broad strategy of
vertical integration through collection business acquisitions and the
contribution from acquisitions since June 30, 1995.
11
<PAGE>
Interest Expense
Interest expense is summarized as follows (in thousands):
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
----------------- -------------------
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ----- ---- ----
<S> <C> <C> <C> <C>
Gross interest $12,109 $ 8,891 $ 5,962 $ 4,620
Less: capitalized interest (4,102) (2,618) (2,417) (1,250)
------- ------- ------- -------
Interest expense $ 8,007 $ 6,273 $ 3,545 $ 3,370
======= ======= ======= =======
</TABLE>
Interest expense increased $0.2 million (5%) and $1.7 million (28%) for the
three and six month periods ended June 30, 1996, as compared with 1995. The
increase in gross interest was due primarily to higher average debt levels,
partially offset by a decrease in average interest rates. The increase in
capitalized interest was primarily due to a development project in the
Baltimore-Washington area.
Interest and Other Income, Net
Interest and other income decreased $0.3 million (36%) for the three month
period and remained constant for the six month period ended June 30, 1996, as
compared with 1995. The decrease for the three month period was due primarily to
decreased gains on the sales of fixed assets and interest income earned on
financial assurance trust funds. In the six month period ended June 30, 1996,
interest and other income, net remained constant due to the fact that the
decreases in the second quarter of 1996 were offset by an increased contribution
from a joint venture equity interest in a landfill operation earned in the first
quarter of 1996.
Income Taxes
The effective income tax rates for the three and six months ended June 30,
1996 was 40.0% as compared with 39.6% for 1995. The effective rates for all
quarters were higher than the statutory federal rate of 35% due primarily to the
effect of state income taxes and nondeductible expenses.
Net Income
Net income increased $4.8 million (77%) and $7.6 million (66%) for the
three and six month periods ended June 30, 1996, as compared with 1995. Net
income increased as a percent of revenues from 10% to 11% for the three and six
month periods, respectively. The absolute increase in net income for both
periods of 1996 resulted from the same factors discussed in Operating Income
above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's key working capital data are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------- -------------
<S> <C> <C>
Working capital (in thousands) $ 3,395 $ (3,416)
Ratio of current assets to current liabilities 1.04:1.0 0.94:1.0
</TABLE>
The Company's strategy in controlling working capital is to maintain
sufficient availability under its bank credit facility to finance short-term
capital needs in excess of internally generated funds with the goal of
minimizing working capital.
Financing Activities
Historically, the Company has financed its capital requirements from
internally generated funds, borrowings from banks, issuances of securities,
loans from sellers of businesses acquired and loans from other commercial
lenders. To date, the Company has been able to obtain satisfactory financing
for the operation of its businesses and
12
<PAGE>
believes that it will be able to obtain such financing as required in the
future. On July 16, 1996, the Company amended its unsecured Revolving Credit
Facility to increase its size from $225 million to $350 million, consisting of a
$320 million United States credit facility and a $30 million Canadian credit
facility, and to increase its bank group from nine to seventeen banks. The
Revolving Credit Facility provides for a revolving credit period expiring on
June 30, 1999, at which time it converts to a term facility with a final
maturity date of June 30, 2003. Availability under this facility is tied to the
Company's cash flow and liquidity. Advances bear interest, at the Company's
option, at the prime rate or LIBOR, in each case plus a margin which is
calculated quarterly based upon the Company's ratio of indebtedness to cash
flow, or, in an amount not to exceed $250 million, at a rate negotiated between
the Company and certain banks party to the Revolving Credit Facility. At June
30, 1996, the Company had $95.2 million of cash borrowings and $56.4 million of
letters of credit issued under this facility for a total utilization of $151.6
million.
On March 4, 1996, the Company issued $115 million of 5% Convertible
Subordinated Debentures, due on March 1, 2006. Interest is payable semiannually
in March and September. The debentures are convertible into shares of the
Company's common stock at a conversion price of $48.13 per share. The debentures
are subordinated in right of payment to all existing and future senior
indebtedness, as defined. The debentures are redeemable after March 15, 1999 at
the option of the Company at 102.5% of the principal amount, declining annually
to par on March 1, 2002, plus accrued interest. Deferred offering costs of
approximately $2.9 million were incurred and are being amortized ratably over
the life of the debentures. The proceeds were used to repay debt under the
Company's Revolving Credit Facility.
On March 18, 1996, the Company called for redemption all of its $60 million
series of 7 1/2% Convertible Subordinated Debentures due June 1, 2006 at a
redemption price of 104.5% of their face amount plus accrued interest from
December 1, 1995 to, and including, the redemption date. The redemption date was
April 17, 1996. Alternatively, holders of these debentures could convert their
debentures into Company common stock at any time prior to the close of business
on April 10, 1996, at a conversion price equal to $28.82 per share. Holders who
elected to convert received 34.70 shares of the Company's common stock for each
$1,000 principal amount of debentures surrendered. When the transaction closed
on April 10, 1996, $59.8 million or 99.7% had been converted into approximately
2.1 million shares of the Company's common stock. The remaining $.2 million was
paid to the holders in cash.
Total long-term debt increased from $267.5 million at December 31, 1995, to
$369.6 million at June 30, 1996. The increase was attributable to borrowings for
the acquisition of waste disposal and collection businesses, the purchase of
property and equipment and working capital needs.
Balance Sheet Management
Management's long-term objectives regarding its outstanding debt are to
match the term of its debt with the economic life of its assets, structure debt
with staged maturity schedules, limit floating rate debt to no more than 40% of
total debt and to manage the Company's long-term debt to capitalization ratio,
for which a general upper limit of 53% has been established, subject to revision
from time to time as circumstances or opportunities dictate. Long-term debt as a
percentage of total capitalization was 46% at both December 31, 1995 and June
30, 1996. The Company's weighted average cost of indebtedness decreased to 6.3%
for the second quarter of 1996 from 8.1% for the second quarter of 1995. As of
June 30, 1996, 28% of the Company's debt was subject to floating interest rates.
Capital Expenditures
Capital expenditures are expected to approximate $150 million in 1996 for
routine purchases of property and equipment, engineering, design and
construction costs associated with the development of existing landfills,
regulatory compliance and implementation costs and the completion of new
revenue-generating projects, including construction costs associated with new
landfill and transfer station development projects in Denver and the Baltimore-
Washington area. Further, the Company may also be required to make significant
expenditures to bring additional acquired disposal facilities into compliance
with applicable regulatory requirements, permit new disposal facilities, expand
permitted areas of existing disposal sites or in connection with certain
acquisition agreements, provide additional consideration, as defined, if
expansions of permitted airspace are obtained. The amount of these future
expenditures cannot be determined as they will depend upon the condition of the
disposal facilities acquired, the condition of any sites to be permitted and
when the terms of certain acquisition agreements are met.
13
<PAGE>
In order to carry out its acquisition program and development strategy, the
Company will have significant capital requirements. The Company disbursed cash
of $71.1 million, $16.1 million and $31.0 million in 1995 through 1993,
respectively, in order to fund its acquisition program. In the first six months
of 1996, the Company had disbursed $84.8 million on this year's acquisition
program. The Company could potentially make acquisitions involving cash
consideration of up to $125 million or more in 1996 in connection with the
acquisition of waste disposal and collection businesses. The Company is
opportunistic in evaluating acquisitions, however, and may seek to effect
acquisitions involving consideration in excess of this range. The Company
anticipates the use of a combination of cash, notes, and shares of its common
stock to fund the purchase price for acquisitions. In order to fund such
acquisitions, the Company may seek to raise capital through additional bank
borrowings and public or private debt or equity markets. The availability of
these capital sources will depend upon prevailing market conditions, interest
rates and the then existing financial condition of the Company. In the event
that the Company's common stock does not maintain a sufficient market value, or
if potential acquisition candidates are unwilling to accept common stock as part
of the consideration for the sale of their businesses, the Company would be
required to utilize a greater amount of cash to continue its acquisition
program. If the Company were unable to secure the capital necessary to carry
out its acquisition program, the implementation of that portion of the Company's
growth strategy would be adversely affected.
Landfill Financial Obligations
The Company has material financial obligations relating to the closure of the
filled areas of landfill sites during their operating lives and the final
closure and post-closure care of facilities at the end of their operating lives.
These obligations apply to each disposal facility the Company operates or for
which it is otherwise responsible. Landfills are typically developed in a
series of cells, each of which is constructed, filled, and capped in sequence
over the operating life of the landfill. When the final cell is filled and the
operating life of the landfill is over, the final cell must be capped, the
entire site must be closed and post-closure care and monitoring activities
begin. The Company has estimated as of December 31, 1995 that total costs for
final closure and post-closure activities, including cap maintenance,
groundwater monitoring, methane gas monitoring and leachate treatment/disposal
for up to 30 years after closure in the majority of the cases, will approximate
$63.1 million. The Company has estimated as of December 31, 1995 that capping
costs expected to be incurred during the operating lives of its facilities and
expensed over the facilities' useful lives will approximate $142.5 million. In
addition, the Company has also acquired certain facilities where the potential
for minor remediation might exist. In such situations, the Company's engineers
estimate the total cost of remediation, which was estimated at June 30, 1996 to
be approximately $16.4 million.
The Company's environmental reserve reconciliation is summarized as follows
(in thousands):
<TABLE>
<CAPTION>
Environmental Reserves
Six Months Ended June 30, 1996
------------------------------------------------------
Closure/Post-
Closure/Capping Remediation Total
------------------------------ ----------- -------
<S> <C> <C> <C>
Reserve balance, beginning of period $31,852 $12,140 $43,992
Accrual charged to operations 2,159 -- 2,159
Reserves established in acquisitions 3,552 4,950 8,502
Costs incurred (262) (683) (945)
Other (1,191) -- (1,191)
------- ------- -------
Reserve balance, end of period $36,110 $16,407 $52,517
======= ======= =======
</TABLE>
The Company will accrue the remainder of the difference between the
closure/post-closure and capping components of the reserve balance at June 30,
1996 and the total estimated closure/post-closure and capping cost of its
facilities based on engineering estimates over the useful lives of those
facilities.
14
<PAGE>
The Company is required to provide financial assurance to various
regulatory agencies for certain of its estimated closure/post-closure,
remediation and capping obligations (the "Obligations"). Accordingly,
irrevocable trust funds have been established for six of its landfills.
Contributions to the trust funds have been invested by the trustees, all of
which are federally insured banks, primarily in United States government
obligations, municipal bonds and interest-bearing demand deposits. The
investments of five of the trust funds are recorded by the Company at cost,
which approximates market. The investments in the remaining trust fund, which
amount to $5.6 million, as well as the related Obligations, have not been
recorded by the Company due to certain provisions of the trust agreement
regarding the ultimate disposition of any excess funds remaining after all
Obligations have been satisfied. The investments held in this trust fund exceed
the Obligations that would have been accrued at June 30, 1996. In addition to
irrevocable trust funds, the Company also provides financial assurance for
certain of its facilities by the issuance of letters of credit, surety bonds,
insurance policies, and corporate guarantees. The Company has established a
wholly-owned captive insurance subsidiary to provide financial assurance at
selected sites through the issuance of insurance policies and surety bonds. The
Company's total financial assurance for the Obligations is summarized as follows
(in thousands):
<TABLE>
<CAPTION>
Summary of Financial Assurance
June 30, 1996
------------------------------
<S> <C>
Irrevocable trust funds $11,731
Outstanding letters of credit 31,029
Third party surety bonds 16,018
Captive insurance subsidiary 33,667
Corporate guarantees 4,905
-------
Total financial assurance provided $97,350
=======
</TABLE>
INTERNATIONAL OPERATIONS
Sanifill currently provides waste collection, disposal, or both, services in
six Mexican cities. These include four cities located near the border with the
United States (Tijuana, Mexicali, Ensenada and Ciudad Juarez), Naucalpan, which
is a suburb of Mexico City, and Acapulco. In the first quarter of 1996, the
Company entered the Canadian solid waste market through its purchase of two
transfer stations and a collection operation located near Toronto, Canada. The
Company subsequently purchased an additional collection operation in Toronto,
Canada and a special waste disposal facility located in Sarnia, Canada.
In addition to being subject to similar business risks as the Company's
domestic operations, the Company's Mexican and Canadian operations are subject
to other risks such as currency fluctuations, political instability, currency
control regulations, changes in foreign law, the recruitment of labor,
compliance with foreign immigration laws, and import and export restrictions.
SEASONALITY AND INFLATION
The volume of waste received by the Company at its landfills generally
varies with the level of economic activity. In addition, construction and
demolition activity is typically highest in the spring and summer months,
decreases in the fall and is at its lowest during the winter. The level of
construction and demolition activity also varies generally with the level of
economic activity in the region in which a facility is located. The Company's
MSW landfill operations experience somewhat similar, though less pronounced,
seasonal variations. The Company's NOW operations volumes also vary partially
with the level of oil and gas exploration and production activity.
The Company believes that inflation and changing prices have not had, and
are not expected in the near term to have, any material adverse effect on its
domestic results of operations.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This "Management's Discussion and Analysis of Financial Condition and Results
of Operations" includes "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included in this section, including without
limitation (a) the statement in the paragraph under "--Results of Operations for
the Interim Periods Ended June 30, 1996 and 1995 -- Operating Income" regarding
the reasons for the absolute increase
15
<PAGE>
in operating income for the three months and six months ended June 30, 1996, (b)
the statement in the paragraph under "--Results of Operations for the Interim
Periods Ended June 30, 1996 and 1995 --Net Income" regarding the reasons for the
absolute increase in net income for the three months and six months ended June
30, 1996, (c) the statement in the first textual paragraph under "--Liquidity
and Capital Resources" regarding the Company's strategy in controlling working
capital, (d) the statement in the first paragraph under "--Liquidity and Capital
Resources--Financing Activities" of the Company's belief as to its future
ability to obtain financing, (e) the statement under "--Liquidity and Capital
Resources--Balance Sheet Management," regarding Management's long-term
objectives regarding the Company's outstanding debt, (f) the statements under
"--Liquidity and Capital Resources--Capital Expenditures" regarding the
possibility that the Company may be required to make significant additional
expenditures for certain purposes, the inability to determine the amount of such
expenditures and the reasons for such inability, (g) all of the statements in
the first two textual paragraphs under "--Liquidity and Capital Resources--
Landfill Financial Obligations," and the table appearing between such
paragraphs, (h) all of the statements in the final paragraph under "--Liquidity
and Capital Resources--Landfill Financial Obligations," (i) the statements under
"--International Operations" regarding the additional risks to which the
Company's Mexican and Canadian operations are subject and (j) all of the
statements under "--Seasonality and Inflation," are forward looking statements.
Although the Company believes that the expectations reflected in such forward
looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from the Company's expectations ("Cautionary
Statements") are disclosed in this section and elsewhere in this Report,
including without limitation in conjunction with the forward looking statements
included in this section. All subsequent written and oral forward looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the Cautionary Statements.
PART II
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company becomes a party to litigation involving claims
of personal injury arising out of its collection and disposal businesses,
workers' compensation claims and related employee-relations disputes, commercial
disputes with vendors, claims arising out of the Company's efforts to permit
facilities and claims arising out of the competition for collection and disposal
contracts. These suits arise in the ordinary course of the Company's business
and are not, in the judgment of the Company's management, material to the
condition or prospects of the Company.
The Company's operations are subject to the risk of private actions for
damages should it intentionally or unintentionally injure the environment,
property or persons. The amount of damages to which the Company might be
exposed for any such injury would, of course, depend on the facts specific to
the particular case, but could be substantial.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 14, 1996, the Company held its annual meeting of stockholders. In
addition to the election of the three directors listed in the Company's proxy
materials, the Company's stockholders voted on the following matter:
1. Selection of Arthur Andersen LLP as the Company's independent auditors for
the 1996 fiscal year. The stockholders approved this proposal by a vote of
19,630,824 to 9,968 with 6,125 abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are included herein:
10.1 Amendment to Employment Agreement, dated June 21, 1996 between
Sanifill, Inc. and J. Chris Brewster.
10.2 Second Amended and Restated Credit Agreement, dated as of July 16,
1996, among Sanifill, Inc., Sanifill Canada, Inc., certain of the
Company's subsidiaries, Texas Commerce Bank National Association, as
Agent, Chemical Bank of Canada, as Canadian Agent, and certain U.S.
and Canadian banks.
16
<PAGE>
27 Financial Data Schedule (Filed only electronically with SEC)
99 Press release, dated August 12, 1996, announcing the close of the
Company's sale of its marine nonhazardous oilfield waste collection
operations to Newpark Resources.
(b) Reports on Form 8-K.
A report on Form 8-K was filed June 5, 1996. The Company filed information
with respect to the announcement that it had executed definitive agreements for
the purchase by Newpark Resources, Inc. of the marine-related nonhazardous
oilfield waste collection operations of Campbell Wells, Ltd., a Sanifill
subsidiary.
A report on Form 8-K was filed June 22, 1996. The Company filed information
with respect to the announcement that it had entered into a definitive agreement
for the merger of a special purpose subsidiary of USA Waste Services, Inc. with
and into Sanifill, which, subject to stockholder approval and other conditions,
will result in Sanifill's becoming a wholly owned subsidiary of USA Waste
Services, Inc.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant, Sanifill, Inc., has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SANIFILL, INC.
Dated: August 13, 1996 By: /s/ JAMES S. ENG
------------------------------
James S. Eng
Controller
18
<PAGE>
Exhibit 10.1
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of this 21st day of June,
1996, by and between Sanifill, Inc., a Delaware corporation (the "Company"), and
J. Chris Brewster (the "Executive").
R E C I T A L S:
Company and Executive have previously entered into that certain
Employment Agreement dated as of April 3, 1992, which is presently in full force
and effect; and
Company and Executive desire to both modify the Employment Agreement
and to clarify the provisions thereof.
NOW, THEREFORE, it is hereby covenanted and agreed by and between the
Company and Executive as follows:
1. Section 6(a) of the Employment Agreement is hereby amended to read
hereafter as follows:
(a) In the event that this Agreement is terminated pursuant to the
death or disability of the Executive, or pursuant to Section 5(a)(4) of
this Agreement, or the Company does not exercise its rights to renew or
extend this Agreement pursuant to the provisions of Section 2 hereof, the
Company shall continue to pay to the Executive (or in the event of his
death, to the Executive's surviving spouse or to the executor or
administrator of the Executive's estate), his Base Salary then payable
pursuant to Section 3(a) on a monthly basis for the greater of (i) the
balance of the term remaining under this Agreement, or (ii) three years.
The executive and/or his surviving spouse shall also be allowed to continue
to participate in the Company's health insurance plan, at the same level as
provided while he was employed for the balance of the term remaining under
this Agreement, or 36 months, whichever is greater.
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
and its corporate seal to be hereunto affixed, all as of the day and year first
above written.
SANIFILL, INC.
By
_____________________________
ATTEST:
________________________
EXECUTIVE
By
_____________________________
J. Chris Brewster
2
<PAGE>
EXHIBIT 10.2
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
$320,000,000.00 U.S. LOANS
$30,000,000.00 CANADIAN LOANS
AMONG
SANIFILL, INC. AS THE COMPANY,
SANIFILL CANADA, INC. AS THE CANADIAN BORROWER
CERTAIN SUBSIDIARIES OF THE COMPANY,
AS GUARANTORS
THE U.S. BANKS AND THE CANADIAN BANKS DEFINED HEREIN
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
AS AGENT,
AND
CHEMICAL BANK OF CANADA,
AS CANADIAN AGENT
DATED AS OF JULY 16, 1996
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TABLE OF CONTENTS
PAGE
---
ARTICLE I DEFINITIONS; ACCOUNTING TERMS; INTERPRETATION........... 2
Section 1.01 Definitions.............................................. 2
Section 1.02 Types of Loans........................................... 24
Section 1.03 Accounting Terms......................................... 24
ARTICLE II LOANS.................................................... 24
Section 2.01 Loans.................................................... 24
Section 2.02 Minimum Amount of Each Borrowing......................... 26
Section 2.03 Notice of Borrowing...................................... 26
Section 2.04 Bankers' Acceptances..................................... 26
Section 2.05 Disbursement of Funds.................................... 29
Section 2.06 Notes.................................................... 30
Section 2.07 Conversions and Continuances............................. 31
Section 2.08 Pro Rata Borrowings...................................... 31
Section 2.09 Interest................................................. 32
Section 2.10 Interest Periods......................................... 34
Section 2.11 Interest Rate Not Ascertainable.......................... 35
Section 2.12 Reserve Requirements; Change in Circumstances............ 35
Section 2.13 Change in Legality....................................... 37
Section 2.14 Indemnity................................................ 38
Section 2.15 Interest Act (Canada).................................... 39
Section 2.16 Reductions of Commitment and Reallocation Procedures..... 39
ARTICLE III LETTERS OF CREDIT........................................ 42
Section 3.01 Letters of Credit........................................ 42
Section 3.02 Letter of Credit Requests................................ 43
Section 3.03 Letter of Credit Participations.......................... 44
Section 3.04 Agreement to Repay Letter of Credit Drawings............. 46
Section 3.05 Increased Costs.......................................... 47
Section 3.06 Conflict between Applications and Agreement.............. 47
ARTICLE IV FEES; CURRENCY FLUCTUATIONS;
COMMITMENTS; PAYMENTS.................................... 48
Section 4.01 Fees..................................................... 48
Section 4.02 Currency Fluctuations.................................... 49
Section 4.03 Mandatory Reduction of Commitment........................ 50
Section 4.04 Voluntary Prepayments.................................... 50
Section 4.05 Mandatory Repayments..................................... 50
Section 4.06 Method and Place of Payment.............................. 51
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <C> <C>
Section 4.07 Net Payments............................................. 51
Section 4.08 Tax Forms................................................ 52
ARTICLE V CONDITIONS PRECEDENT..................................... 52
Section 5.01 Conditions Precedent to the Initial Borrowing of Loans... 52
Section 5.02 Conditions Precedent to All Credit Events................ 54
Section 5.03 Conditions Precedent to Conversions...................... 54
Section 5.04 Delivery of Documents.................................... 55
ARTICLE VI REPRESENTATIONS AND WARRANTIES........................... 55
Section 6.01 Organization and Qualification........................... 55
Section 6.02 Authorization and Validity............................... 55
Section 6.03 Governmental Consents.................................... 55
Section 6.04 Conflicting or Adverse Agreements or Restrictions........ 56
Section 6.05 Title to Assets.......................................... 56
Section 6.06 Litigation; Arbitration.................................. 56
Section 6.07 Financial Statements..................................... 56
Section 6.08 Default.................................................. 56
Section 6.09 Investment Company Act................................... 57
Section 6.10 Public Utility Holding Company Act....................... 57
Section 6.11 ERISA.................................................... 57
Section 6.12 Tax Returns and Payments................................. 57
Section 6.13 Environmental Matters.................................... 57
Section 6.14 Purpose of Loans......................................... 58
Section 6.15 Franchises and Other Rights.............................. 58
Section 6.16 Subsidiaries............................................. 58
ARTICLE VII AFFIRMATIVE COVENANTS.................................... 58
Section 7.01 Information Covenants.................................... 59
Section 7.02 Books, Records and Inspections........................... 61
Section 7.03 Insurance and Maintenance of Properties.................. 61
Section 7.04 Payment of Taxes......................................... 61
Section 7.05 Corporate Existence...................................... 62
Section 7.06 Compliance with Statutes................................. 62
Section 7.07 ERISA.................................................... 62
Section 7.08 Additional Guaranties................................... 62
Section 7.09 Solvency................................................. 64
ARTICLE VIII NEGATIVE COVENANTS....................................... 64
Section 8.01 Change in Business....................................... 64
Section 8.02 Consolidation, Merger or Sale Assets..................... 65
Section 8.03 Liens.................................................... 65
Section 8.04 Indebtedness............................................. 66
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <C> <C>
Section 8.05 Investments.............................................. 67
Section 8.06 Restricted Payments...................................... 68
Section 8.07 Change in Accounting; Fiscal Year........................ 69
Section 8.08 Minimum Consolidated Net Worth........................... 69
Section 8.09 Minimum Consolidated Tangible Net Worth.................. 69
Section 8.10 Fixed Charge Coverage Ratio.............................. 69
Section 8.11 Funded Indebtedness Limitation........................... 69
Section 8.12 Guaranteed Value Contracts............................... 69
Section 8.13 Assurances............................................... 69
Section 8.14 Transactions with Affiliates............................. 70
Section 8.15 Change of Certain Indebtedness........................... 70
ARTICLE IX GUARANTY................................................. 70
Section 9.01 Guaranty................................................. 70
Section 9.02 Continuing Guaranty...................................... 71
Section 9.03 Effect of Debtor Relief Laws............................. 72
Section 9.04 Waiver of Subrogation.................................... 72
Section 9.05 Subordination............................................ 73
Section 9.06 Waiver................................................... 73
Section 9.07 Full Force and Effect.................................... 73
ARTICLE X CANADIAN GUARANTY........................................ 74
Section 10.01 Guaranty................................................. 74
Section 10.02 Continuing Guaranty...................................... 74
Section 10.03 Effect of Debtor Relief Laws............................. 75
Section 10.04 Waiver of Subrogation.................................... 76
Section 10.05 Subordination............................................ 76
Section 10.06 Waiver................................................... 76
Section 10.07 Full Force and Effect.................................... 77
Section 10.08 Withholding Taxes........................................ 77
Section 10.09 Judgment Currency........................................ 79
Section 10.10 Joint and Several Obligations............................ 80
ARTICLE XI EVENTS OF DEFAULT AND REMEDIES........................... 80
Section 11.01 Events of Default and Remedies........................... 80
Section 11.02 Other Remedies........................................... 83
Section 11.03 Currency Conversion After Maturity....................... 83
ARTICLE XII THE AGENTS.............................................. 83
Section 12.01 Authorization and Action................................. 83
Section 12.02 Agent's Reliance......................................... 84
Section 12.03 Agents and Affiliates.................................... 85
Section 12.04 Bank Credit Decision..................................... 85
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <C> <C>
Section 12.05 Agents' Indemnity......................................... 85
Section 12.06 Successor Agent........................................... 86
Section 12.07 Notice of Default......................................... 87
ARTICLE XIII MISCELLANEOUS............................................. 87
Section 13.01 Amendments................................................ 87
Section 13.02 Notices................................................... 88
Section 13.03 No Waiver; Remedies....................................... 89
Section 13.04 Costs, Expenses and Taxes................................. 89
Section 13.05 Indemnity................................................. 90
Section 13.06 Right of Setoff........................................... 90
Section 13.07 Governing Law............................................. 91
Section 13.08 Interest.................................................. 91
Section 13.09 Survival of Representations and Warranties................ 92
Section 13.10 Binding Effect............................................ 92
Section 13.11 Successors and Assigns; Participations.................... 93
Section 13.12 Confidentiality........................................... 96
Section 13.13 Pro Rata Treatment........................................ 97
Section 13.14 Independence of Covenants................................. 97
Section 13.15 Separability.............................................. 98
Section 13.16 Limited Recourse.......................................... 98
Section 13.17 Execution in Counterparts................................. 98
Section 13.18 Interpretation............................................ 98
Section 13.19 Submission to jurisdiction................................ 99
Section 13.20 Final Agreement of The Parties............................ 100
</TABLE>
-iv-
<PAGE>
EXHIBITS
Exhibit 1.01A Administrative Questionnaire (U.S. Banks)
Exhibit 1.01B Administrative Questionnaire (Canadian Banks)
Exhibit 2.03A Form of Notice of U. S. Borrowing
Exhibit 2.03B Form of Notice of Canadian Borrowing
Exhibit 2.04A Form of Bankers' Acceptance Notice
Exhibit 2.06A Form of Committed Notes
Exhibit 3.02 Letter of Credit Request
Exhibit 5.01A Form of Opinion of Baker & Botts, L.L.P.
Exhibit 5.01B Form of Opinion of H. Steven Walton, Esq. (Company's
General Counsel)
Exhibit 5.01C Form of Opinion of Stikeman & Elliott
Exhibit 8.04 Form of Subordinated Indebtedness
Exhibit 13.11A Form of Assignment and Acceptance (U.S. Banks)
Exhibit 13.11B Form of Assignment and Acceptance (Canadian Banks)
SCHEDULES
Schedule 5.01(h) Loan Parties
Schedule 6.08 Outstanding Indebtedness in Excess of $500,000.00
Schedule 6.13 Environmental Noncompliance
Schedule 8.01 Change in Business
Schedule 8.03 Liens
Schedule 8.03(g) Liens on Fixed Assets
Schedule 8.04(c) Indebtedness in Excess of $1,000,000.00
Schedule 8.05 Investments Owned
Schedule 8.13 Assurances
-v-
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 16,
1996 (this "Agreement") is among Sanifill, Inc., a Delaware corporation (the
Company"), the subsidiaries of the Company listed on the signature pages hereof
under the caption "Guarantors", Sanifill Canada, Inc., a wholly-owned subsidiary
of the Company as the borrower under the Canadian Facility (the Canadian
Borrower"), the banks and other financial institutions listed on the signature
pages hereof under the caption Banks" (together with each other Person who
becomes a Bank pursuant to Section 13.11, collectively, the Banks" which term
shall include U.S. Banks and Canadian Banks) and Texas Commerce Bank National
Association, individually as a Bank and as administrative agent for the U.S.
Banks (in such capacity together with any other Person who becomes the Agent
pursuant to Section 12.06, the U.S. "Agent" or the "Agent") and Chemical Bank of
Canada, individually as a Bank and as agent for the Canadian Banks (in such
capacity together with any other Person who becomes the Canadian Agent pursuant
to Section 12.06, the "Canadian Agent" and together with the Agent, the
"Agents").
R E C I T A L S
The Company, the Agent, certain of the Banks, and certain of the
Guarantors previously executed that certain Amended and Restated Credit
Agreement dated as of September 9, 1994, as amended by that certain Amendment to
Amended and Restated Credit Agreement dated as of April 17, 1995, by that
certain Second Amendment to Amended and Restated Credit Agreement dated as of
May 22, 1995, by that certain Third Amendment to Amended and Restated Credit
Agreement dated as of December 29, 1995, by that certain Fourth Amendment to
Amended and Restated Credit Agreement dated as of January 8, 1996, and by that
certain Fifth Amendment to Amended and Restated Credit Agreement dated as of
March 1, 1996 (said Amended and Restated Credit Agreement, as amended, the
"Prior Agreement"), relating to the extension of certain loans and the issuance
of certain letters of credit by the Banks signatory thereto and the U.S. Agent
to or for the benefit of the Company and the Guarantors. The parties to the
Prior Agreement wish to make certain modifications thereto to be effective on
the Effective Date of this Agreement. Such changes include, inter alia, an
increase in the maximum amount of said loan and said letters of credit, a change
in the maturity dates thereof and the addition of terms for a Canadian Facility.
In evidence thereof, and in complete restatement of the Prior Agreement and any
Guaranty Agreements executed therewith or subsequent thereto but not effective
until the Effective Date, the Company, the Guarantors, the Agent and the Banks
now enter into this Agreement.
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ARTICLE I
DEFINITIONS; ACCOUNTING TERMS; INTERPRETATION
SECTION I.1 Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Acceptance Fee" means the fee payable in Canadian Dollars to each
Canadian Bank in respect of Bankers' Acceptances computed in accordance with
Section 2.04(c).
"Additional Guaranties" has the meaning specified in Section 7.08.
"Administrative Questionnaire" means an Administrative Questionnaire
in the form of Exhibit 1.01A for the U.S. Banks and Exhibit 1.01B for Canadian
Banks, which each Bank shall complete and provide to the Agent, the Company and
the Canadian Borrower.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling (including all directors and officers of such
Person), controlled by, or under direct or indirect common control with such
Person, and any other Person in which such Person's direct or indirect equity
interest is 10% or more of the total outstanding equity interests of such
Person.
"Agent" and "Agents" have the meaning specified in the introduction to
this Agreement.
"Aggregate Canadian Extensions of Credit" means with respect to any
Canadian Bank, at any time, the US Dollar Equivalent of the aggregate principal
amount of all Canadian Loans made, the aggregate face amount of all Bankers'
Acceptances accepted and purchased, and the then aggregate undrawn amount of all
Canadian Letters of Credit issued or participated in by such Bank that are then
outstanding.
"Aggregate U.S. Extensions of Credit"means with respect to any U.S.
Bank, at any time, the aggregate principal amount of all U.S. Loans made and the
then aggregate undrawn amount of all U.S. Letters of Credit issued or
participated in by such Bank that are then outstanding.
"Agreement" has the meaning specified in the introduction to this
Agreement.
"Alternate Base Rate" means, for any date, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof, the term "Prime Rate"
as used in this definition shall mean, as of a particular date, the prime rate
most recently determined by the U.S. Agent, automatically fluctuating upward and
downward with and at the time specified in each such determination without
notice to the Company, the Canadian Borrower or any other Person, which prime
rate may not necessarily represent the lowest or best rate actually charged to a
customer. "Federal Funds Effective Rate" as used in this definition means, for
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any day, the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the
Agent from three federal funds brokers of recognized standing selected by it.
If for any reason the Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability or failure of the
Agent to obtain sufficient quotations in accordance with the terms hereof, the
Alternate Base Rate shall be determined without regard to clause (b) of the
first sentence of this definition until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be effective
on the effective date of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively, without any notice to or consent of the Company,
the Canadian Borrower or any other Person.
"Alternate Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Alternate Canadian Base Rate" shall mean for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1%. "Prime Rate" as used in this
definition shall mean, in respect of Alternate Base Rate Loans provided by
Canadian Banks, the rate per annum announced from time to time by the Canadian
Agent as its U.S. base rate in effect at its Payment Office, being the reference
rate used by the Canadian Agent for determining interest rates on U.S.$
denominated commercial loans to borrowers in Canada, automatically fluctuating
as of each such announcement without notice to any Person, which rate is not
necessarily the lowest rate charged to any customer. "Federal Funds Effective
Rate" shall have the meaning specified in the definition of Alternate Base Rate.
If for any reason the U.S. Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to ascertain
Federal Funds Effective Rate for any reason, including the inability or failure
of the U.S. Agent to obtain sufficient quotations in accordance with the terms
hereof, the Alternate Canadian Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate
Canadian Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively without any notice
to or consent from, any Person.
"Applicable BA Discount Rate" means, as applicable to a Bankers'
Acceptance being purchased by any Canadian Bank on any day, the average (as
determined by the Canadian Agent) of the respective percentage discount rates
(expressed to two decimal places and rounded upward, if necessary, to the
nearest 1/100th of 1%) quoted by the Canadian Agent as the percentage discount
rate at which the Canadian Agent would, in accordance with normal practice, at
or about 10:00 a.m. (Toronto, Ontario time), on such day, be prepared to
purchase bankers' acceptances accepted by such
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Canadian Banks in an amount and having a maturity date comparable to the amount
and maturity date of such Bankers' Acceptance.
"Applicable Canadian Pension Legislation" means, at any time, any
pension legislation then applicable to the Canadian Borrower, including the
Pension Benefits Act (Ontario), including all regulations made thereunder.
"Applicable Lending Office" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of an Alternate Base Rate Loan, a
Canadian Base Rate Loan or a Canadian Prime Loan and such Bank's Eurodollar
Lending Office in the case of a Eurodollar Loan.
"Application" means an application for issuance of a Letter of Credit
in form satisfactory to the Issuing Bank requested to open such Letter of
Credit.
"Assignment and Acceptance" has the meaning specified in Section
13.11(c).
"Assurance" means, as to any Person, any guaranty or other contingent
liability of such Person (other than any endorsement for collection or deposit
in the ordinary course of business) or obligations as an account party in
respect of letters of credit, direct or indirect, with respect to any obligation
of another Person with respect to any Indebtedness, lease or dividend or other
obligations for borrowed money or for the deferred purchase price of goods or
services, through an agreement or otherwise, including (a) any other endorsement
or discount with recourse or undertaking substantially equivalent to or having
economic effect similar to a guarantee in respect of any such obligation and (b)
any agreement (i) to purchase, or to advance or supply funds for the payment or
purchase of, any such obligation, (ii) to purchase securities or to purchase,
sell or lease property (whether as lessee or lessor), products, materials or
supplies, or transportation or services, in respect of enabling such other
Person to pay any such obligation or to assure the owner thereof against loss
regardless of the delivery or non-delivery of the securities, property,
products, materials or supplies or transportation or services or (iii) to make
any loan, advance or capital contribution to or other investment in, or to
otherwise provide funds to or for, such other Person in respect of enabling such
Person to satisfy any obligation (including any liability for a dividend, stock
liquidation payment or expense) or to assure a minimum equity, working capital
or other balance sheet condition in respect of any such obligation. The amount
of any Assurance shall be an amount equal to the lesser of the stated or
determinable amount of the primary obligation in respect of which such Assurance
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to perform
thereunder) as determined by such Person in good faith.
"Available Canadian Commitment" means as to any Canadian Bank, at a
particular time, an amount equal to the excess, if any, of (a) the amount of
such Bank's Canadian Commitment at such time over (b) the Aggregate Canadian
Extensions of Credit of such Bank at such time.
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"Available U.S. Commitment" means as to any U.S. Bank, at a particular
time, an amount equal to the excess, if any, of (a) the amount of such Bank's
U.S. Commitment at such time over (b) the Aggregate U.S. Extensions of Credit of
such Bank at such time.
"BA Discount Proceeds" means in respect of any Bankers' Acceptance to
be accepted and purchased by a Canadian Bank on any day under Section 2.04, an
amount (rounded to the nearest whole Canadian cent, and with one-half of one
Canadian cent being rounded up) calculated on such day by multiplying:
(A) the face amount of such Bankers' Acceptance; by
(B) the quotient equal to one divided by the sum of one plus the
product of:
(i) the Applicable BA Discount Rate (expressed as a decimal)
applicable to such Bankers' Acceptance; and
(ii) a fraction, the numerator of which is the number of days
remaining in the term of such Bankers' Acceptance and the
denominator of which is the number of days in the calendar
year in which such Bankers' Acceptance is to mature;
with such quotient being rounded up or down to the nearest
fifth decimal place and .000005 being rounded up.
"Bank" has the meaning provided in the introduction to this Agreement
and shall include all Persons who become Banks pursuant to Section 13.11.
"Bankers' Acceptance" or "BAs'" means a bill of exchange denominated
in Canadian Dollars drawn by the Canadian Borrower on and accepted by a Canadian
Bank pursuant to Section 2.04 hereof.
"Bankers' Acceptance Notice" has the meaning specified in Section
2.04(a).
"Bankruptcy Code" has the meaning specified in Section 11.01(e).
"Board" means the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"Borrowing" means a borrowing: (a) pursuant to a Notice of U.S.
Borrowing comprised of a single Type of Loan from all the U.S. Banks (or
resulting from a conversion or conversions) on the same date having in the case
of Eurodollar Rate Loans the same Interest Period made by all of the U.S. Banks
concurrently to the Company, or (b) with respect to Negotiated Rate Loans,
pursuant to Section 2.01(b), or (c) pursuant to a Notice of Canadian Borrowing
comprised
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of a single Type of Loan from all the Canadian Banks (or resulting
from a conversion or conversions) on the same date having in the case of
Eurodollar Rate Loans the same Interest Period made by all the Canadian Banks
concurrently to the Canadian Borrower, or (d) pursuant to a Bankers' Acceptance
Notice, comprised of the acceptance and purchase of Bankers' Acceptances by all
Canadian Banks, pursuant to Section 2.04(a).
"Borrowing Date" means, with respect to each Borrowing, the Business
Day upon which the proceeds of such Borrowing are to be made available to the
Company or the Canadian Borrower, as applicable.
"Business Day" means any day (other than a day which is a Saturday,
Sunday or legal holiday) on which banks are open for business (i) in the city in
which the applicable Agent's Payment Office is situated; and (ii) when used in
connection with Eurodollar Rate Loans, in London, England.
"CDOR Rate" means, on any day, an annual rate of interest equal to the
average 30 day rate applicable to Canadian bankers' acceptances appearing on the
"Reuters Screen CDOR Page" (as defined in the International Swap Dealer
Association, Inc. (1991 ISDA) definitions, as modified and amended from time to
time) as of 10:00 a.m. (Toronto, Ontario time) on such day, or if such day is
not a Business Day, then on the immediately preceding Business Day; provided,
however, if such rate does not appear on the Reuters Screen CDOR Page as
contemplated, then the CDOR Rate on any day shall be calculated as the
arithmetic mean of the 30 day rates applicable to Canadian bankers' acceptances
quoted by the Canadian Banks which are listed in Schedule I to the Bank Act
(Canada) as of 10:00 a.m. (Toronto, Ontario time) on such day, or if such day is
not a Business Day, then on the immediately preceding business Day.
"Calculation Date" means the last Business Day of each month during
the term hereof.
"Canadian Agent" has the meaning specified in the Introduction to this
Agreement.
"Canadian Bank" and "Canadian Banks" means each Bank agreeing to
participate in the Canadian Facility as shown on the signature page hereto for
such Bank and each Eligible Assignee to which a portion of any such Bank's
interests, rights and obligations under this Agreement are assigned in
accordance with Section 13.11, and collectively, all of the foregoing.
"Canadian Base Rate Loans" means, at any time, Canadian Loans which,
at such time, bear interest at a rate based upon the Alternate Canadian Base
Rate.
"Canadian Borrower" has the meaning specified in the Introduction to
this Agreement.
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"Canadian Commitment" means, in the case of each Canadian Bank, the
commitment of such Canadian Bank to participate in the Canadian Facility up to
the maximum amount specified for such Canadian Bank as shown on the signature
page for such Canadian Bank hereto, or in the case of any Person who becomes a
Canadian Bank after the Execution Date on the signature page of the Assignment
and Acceptance executed by such Person, in each case as the same may be amended
from time to time pursuant Section 4.02 or 4.03 or Article XI.
"Canadian Credit Event" means the acceptance and purchase of any
Bankers' Acceptance, the issuance of any Canadian Letter of Credit by the
Canadian Issuer or the making of any Canadian Loan.
"Canadian Default Rate" has the meaning specified in Section
2.09(d)(ii).
"Canadian Dollar Equivalent" means, with respect to an amount of U.S.
Dollars on any date, the amount of Canadian Dollars that may be purchased with
such amount of U.S. Dollars at the Exchange Rate with respect to U.S. Dollars on
such date.
"Canadian Dollars" or "C$" means dollars designated as lawful currency
in Canada.
"Canadian Facility" means the Canadian Loans, the Bankers' Acceptances
and the Canadian Letters of Credit to be made, accepted, purchased and issued,
as the case may be, by the Canadian Banks up to the maximum amount of the Total
Canadian Commitment.
"Canadian Guaranteed Obligations" has the meaning specified in Section
10.01.
"Canadian Issuer" means Chemical Bank of Canada.
"Canadian Letter of Credit" means a Letter of Credit issued by the
Canadian Issuer in either Canadian Dollars or U.S. Dollars.
"Canadian Letter of Credit Limit" means, at any time,
U.S.$15,000,000.00.
"Canadian Letter of Credit Outstandings" means Letter of Credit
Outstandings with respect to Canadian Letters of Credit.
"Canadian Loans" means Canadian Prime Loans and Canadian Base Rate
Loans or any of them as the context may require.
"Canadian Prime Loans" means, at any time, Canadian Loans which at
such time as they bear interest at a rate based upon the Canadian Prime Rate.
"Canadian Prime Rate" means with respect to a Canadian Prime Loan, on
any day, a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of
1%) equal to the greater of (a)
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the annual rate of interest announced from time to time by the Canadian Agent as
its prime rate then in effect at its Payment Office, being the reference rate
used by the Canadian Agent for determining interest rates on C$ denominated
commercial loans to borrowers in Canada, and (b) an annual rate of interest
equal to the sum of (i) the CDOR Rate and (ii) 0.75% per annum.
"Capital Lease" means, as to any Person, any lease in respect of which
the rental obligations of such Person constitute Capitalized Lease Obligations.
"Capitalized Lease Obligations" means, as to any Person, all rental
obligations of such Person which, in accordance with GAAP, are or will be
required to be capitalized on the books of such Person.
"Code" means U.S. Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated thereunder.
"Committed Loan" and "Committed Loans" has the meaning
specified in Section 2.01(a).
"Committed Notes" has the meaning specified in Section 2.06(a).
"Commitment Fee" has the meaning specified in Section
4.01(a).
"Commitments" means the Canadian Commitments and the U.S.
Commitments.
"Company" has the meaning specified in the Introduction to
this Agreement.
"Consolidated EBITDA" means, for any period, the Consolidated Net
Income for such period, plus Consolidated Interest Expense actually deducted in
arriving at Consolidated Net Income, depreciation, depletion, amortization and
provision for taxes and without giving effect to any extraordinary gains or
gains from sales of assets or write downs in the value of assets owned by the
Company or any of its Subsidiaries.
"Consolidated Fixed Charges" means, as to the Company and its
Subsidiaries and for any period, Consolidated Interest Expense, plus the total
aggregate scheduled principal payments for the next twelve-month period
(including the principal portion of payments made in respect of obligations
under Capital Leases), plus payments made in respect of taxes paid or required
to be paid for such period, plus payments of Operating Lease Obligations for
such period determined on a consolidated basis.
"Consolidated Funded Indebtedness" means the Funded Indebtedness of
the Company and its Subsidiaries determined on a consolidated basis.
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"Consolidated Indebtedness" means Indebtedness of the Company and its
Subsidiaries determined on a consolidated basis.
"Consolidated Intangibles" means as to the Company and its
Subsidiaries, any items which are treated as intangibles in conformity with GAAP
determined on a consolidated basis
"Consolidated Interest Expense" means, as to the Company and its
Subsidiaries and for any period, the total consolidated gross interest expense
(including all amortization of debt discount, imputed interest and capitalized
interest) of the Company and its Subsidiaries for such period determined on a
consolidated basis.
"Consolidated Maintenance Capital Expenditures" means, as to the
Company and its Subsidiaries, two-thirds of the total provision for depreciation
and depletion for such period determined on a consolidated basis.
"Consolidated Net Income" means, for any period, the net income (or
loss) of the Company and its Subsidiaries for such period determined on a
consolidated basis.
"Consolidated Net Worth" means, the sum of the par value or stated
value of the capital stock, (excluding treasury stock) capital in excess of par
or stated value of shares of capital stock, retained earnings (or minus
accumulated deficit) and any other account which, in accordance with GAAP,
constitute stockholders' equity, of the Company and its Subsidiaries determined
on a consolidated basis, excluding any effect of foreign currency translation
computed pursuant to Financial Accounting Standards Board Statement No. 52, as
amended, supplemented or modified from time to time, or otherwise in accordance
with GAAP.
"Consolidated Tangible Assets" means, as at any date of determination,
the excess of (a) the total assets of the Company and its Subsidiaries appearing
on a consolidated balance sheet prepared under GAAP as of the date of
determination, after deducting any reserves applicable thereto and after
eliminating all intercompany transactions and all amounts properly attributable
to minority interests, if any, in the stock and surplus of Subsidiaries, over
(b) the net book value of all Consolidated Intangibles at such time.
"Consolidated Tangible Net Worth" means, as to the Company and its
Subsidiaries, the Consolidated Net Worth of the Company and its Subsidiaries
less Consolidated Intangibles.
"Coverage Ratio" means, for any Financial Statement Delivery Date, the
ratio of (a) Consolidated Funded Indebtedness to (b) Consolidated EBITDA.
"Credit Event" means any U.S. Credit Event or any Canadian
Credit Event.
"Default" means the occurrence of any event which with the giving of
notice or the passage of time or both could become an Event of Default.
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"Default Rate" means the U.S. Default Rate or the Canadian
Default Rate.
"Designated Payment Date" means December 31, March 30, June 30 and
September 30 in any year; provided, however, if in any such year a Designated
Payment Date shall be a day which is not a Business Day, such Designated Payment
Date shall be the next succeeding Business Day, and such extension of time shall
be included in determining the amount to be paid on such date.
"Dollars", "US$" or "$" means dollars designated as lawful
currency in the United States of America.
"Domestic Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" on such Bank's signature
page to this Agreement or, as to any Person who becomes a Bank after the date
hereof, on the signature page of the Assignment and Acceptance executed by such
Person, in the Administrative Questionnaire delivered by such Person or such
other office of such Bank as such Bank may hereinafter designate from time to
time its "Domestic Lending Office" by notice to the Company and the Agent.
"Drawing" has the meaning specified in Section 3.04(b).
"Effective Date" means the date on which all conditions to borrowing
set forth in Article V are first met or waived in accordance with Section 13.01
hereof.
"Eligible Assignee" means (a) in the case of the U.S. Facility, (i)
any U.S. Bank, (ii) a commercial bank or any similar financial institution
having total assets in excess of $1,000,000,000.00 and (iii) any other bank or
financial institution approved by the Agent, the Majority Banks and the Company,
which approval shall not be unreasonably withheld and (b) in the case of the
Canadian Facility, (i) any Canadian Bank, (ii) any chartered bank of Canada
having total assets in excess of C$500,000,000.00 and (iii) any other bank or
financial institution approved by the Canadian Agent, the Company and the
Canadian Borrower, which approval shall not be unreasonably withheld.
"Environmental Laws" means (a) applicable United States and Canadian
federal, state, provincial or local laws pertaining to conservation or
protection of the environment in effect at the time in question, including the
Clean Air Act, as amended, the Comprehensive Environmental Response Compensation
and Liability Act, as amended ("CERCLA"), the Federal Water Pollution Control
Act, as amended, the Occupational Safety and Health Act, as amended, the
Resource Conservation and Recovery Act, as amended, the Safe Drinking Water Act,
as amended, the Toxic Substances Control Act, as amended, the Superfund
Amendment and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, and comparable state, provincial and local laws
(U.S. or Canadian), and other environmental conservation and protection laws (b)
applicable final rules or regulations of any governmental regulatory agency (or
interim or temporary rules or regulations in respect of which the issuing agency
has appropriately indicated their present applicability pending the finalization
process) adopted pursuant to authority granted
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pursuant to any law listed in (a) above, and (c) any judicial, arbitral or
administrative interpretation or administrative order, judgment, permit,
approval, decision or determination of any law listed in (a) or rule or
regulation listed in (b), to the extent that such interpretation, order,
judgment, permit approval, decision or determination is binding upon a Loan
Party or its property or assets.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder and, as the context may
require, any Applicable Canadian Pension Legislation.
"ERISA Affiliate" means (a) any trade or business (whether or not
incorporated) which is either a member of the same "controlled group" or under
"common control," within the meaning of Section 414 of the Code and the
regulations thereunder or Applicable Canadian Pension Legislation, with a Loan
Party and (b) any Subsidiary.
"Eurocurrency Liabilities" has the meaning specified in Regulation D
as in effect from time to time.
"Eurodollar Lending Office" means, with respect to each Bank, the
branches or affiliates of such Bank which such Bank has designated as its
"Eurodollar Lending Office" on such Bank's signature page to this Agreement or,
as to any Person who becomes a Bank after the date hereof, on the signature page
of the Assignment and Acceptance executed by such Person, in the Administrative
Questionnaire delivered by such Person or such other office of such Bank as such
Bank may hereafter designate from time to time as its "Eurodollar Lending
Office" by notice to the Company and the Agent.
"Eurodollar Rate" means with respect to any Borrowing of Eurodollar
Rate Loans for any Interest Period, the rate (rounded to 1/16 of 1%) at which
dollar deposits approximately equal in principal amount to the entire portion of
such Borrowing and for a maturity equal to the applicable Interest Period are
offered in immediately available funds to the relevant Agent by prime banks in
whatever Eurodollar interbank market may be selected by such Agent in its sole
and absolute discretion, acting in good faith, at the time of determination and
in accordance with the then usual practice in such market at approximately 10:00
a.m. local time of such Agent (at its Payment Office) two (2) Business Days
prior to the commencement of such Interest Period.
"Eurodollar Rate Loan" means any Loan in Dollars bearing interest at a
rate determined by reference to the Eurodollar Rate in accordance with the
provisions of Article II.
"Events of Default" has the meaning specified in Section 11.01.
"Exchange of Assets" has the meaning specified in Section 8.02.
"Exchange Rate" means, on any day, (a) with respect to Canadian
Dollars in relation to U.S. Dollars, the spot rate as quoted by the Bank of
Canada as its noon spot rate at which U.S.
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Dollars are offered on such day for Canadian Dollars, and (b) with respect to
U.S. Dollars in relation to Canadian Dollars, the spot rate as quoted by the
Bank of Canada as its noon spot rate at which Canadian Dollars are offered on
such day for U.S. Dollars.
"Execution Date" means the earliest date upon which all of the
following shall have occurred: counterparts of this Agreement shall have been
executed by the Loan Parties, by each Bank listed on the signature pages hereof
and by the Agents, each of which shall have received executed counterparts
hereof.
"Existing Letters of Credit" means all Letters of Credit issued by the
U.S. Agent outstanding for the account of the Company as of the Effective Date.
"FDIC" means the Federal Deposit Insurance Corporation (or any
successor).
"Facility Borrower" means the Company under the U.S. Facility or the
Canadian Borrower under the Canadian Facility.
"Federal Funds Effective Rate" has the meaning specified in the
definition of the term "Alternate Base Rate."
"Fees" means all amounts payable pursuant to Section 4.01.
"Financial Statement Delivery Date" means the date on which the
quarterly or annual financial statements of the Company are to be delivered
pursuant to Section 7.01(a) or Section 7.01(b), as the case may be.
"Financials" has the meaning specified in Section 6.07.
"Form 4224" has the meaning specified in Section 4.08.
"Form 1001" has the meaning specified in Section 4.08.
"Funded Indebtedness" means, as to any Person, the Indebtedness of
such Person excluding (a) accounts payable and accrued expenses and liabilities
in the ordinary course of business of such Person which are not accruing
interest and (b) Assurances of such Person.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States as set forth in the opinions, statements
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants, the Financial Accounting Standards Board and
such other Persons who shall be approved by a significant segment of the
accounting profession and concurred in by the independent certified public
accountants certifying any audited financial statements of the Company.
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"Guaranteed Obligations" has the meaning specified in Section 9.01.
"Guaranteed Value Contract" means the amount in the aggregate of any
Loan Party's contingent obligation with respect to such Loan Party's acquisition
of issued and outstanding shares of a Person or assets owned by a Person through
an exchange or issuance of the Company's common stock therefor, an undertaking
by the Company to the recipient of the Company's common stock that (i) during a
specified time period or on a future date certain, the Company's publicly traded
common stock will have an agreed upon minimum closing price per share or
equivalent value determination and (ii) at such date, should the Company's per
share price not meet or exceed such minimum price or value determination, the
Company, in order to satisfy such difference, may (A) cause a cash payment to be
made to such recipient in the amount of such difference, (B) issue to such
recipient the Company's preferred shares (upon terms satisfactory to the Company
and such recipient) that have a value equivalent to such difference or (C) issue
to such recipient the Company's publicly traded common stock in an amount that
has a value equivalent to such difference.
"Guarantors" and "Guarantor" means collectively, the Subsidiaries of
the Company (other than the Canadian Borrower) parties to this Agreement and,
individually, any of the foregoing and excluding any Subsidiary organized
outside of the United States.
"Guaranty" means (a) the guaranty of the Guarantors contained in
Article IX and shall include any Additional Guaranty and (b) the Guaranty of the
Company and the Guarantors contained in Article X.
"Hazardous Materials" means (a) hazardous waste as defined in the
Resource Conservation and Recovery Act of 1976, or in any applicable (U.S. or
Canadian) federal, state, provincial or local law or regulation, (b) hazardous
substances, as defined in CERCLA, or in any applicable (U.S. or Canadian) state,
provincial or local law or regulation, (c) gasoline, or any other petroleum
product or by-product, (d) toxic substances, as defined in the Toxic Substances
Control Act of 1976, or in any applicable (U.S. or Canadian) federal, state,
provincial or local law or regulation, or (e) insecticides, fungicides, or
rodenticides, as defined in the Federal Insecticide, Fungicide, and Rodenticide
Act of 1975, or in any applicable (U.S. or Canadian) federal, state, provincial
or local law or regulation, as each such Act, statute or regulation may be
amended from time to time.
"Highest Lawful Rate" means, as to any Bank, the maximum nonusurious
rate of interest that, under applicable law, may be contracted for, taken,
reserved, charged or received by such Bank on the Loans or under the Loan
Documents at any time or from time to time. If the maximum rate of interest
which, under applicable law, the Banks are permitted to charge the Company, or
the Canadian Borrower, as applicable, on the Loans shall change after the date
hereof, to the extent permitted by applicable law, the Highest Lawful Rate shall
be automatically increased or decreased, as the case may be, as of the effective
time of such change without notice to the Company, the Canadian Borrower or any
other Person.
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<PAGE>
"Increased Banks" has the meaning specified in Section 2.16(d).
"Indebtedness" means, when used with respect to any Person, without
duplication (a) all indebtedness of such Person for borrowed money (whether by
loan or the issuance of letters of credit or the purchase and sale of debt
securities or bankers acceptances) or for the deferred purchase price of
property or services (excluding, however, accounts payable and other accrued
liabilities arising in the ordinary course of such Person's business that is a
current liability under GAAP and payments or benefits in the nature of
compensation for services of employees, officers and directors), (b) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (c) all
Capitalized Lease Obligations of such Person, (d) all Assurances of such Person
of the Indebtedness of any other Person of the type referred to in clause (a),
(b) or (c) above and (e) all Indebtedness of the type referred to in clause (a),
(b) or (c) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise to be secured by) any Lien upon or
interest in property owned by such Person, even though such Person has not
assumed or become liable for the payment of such indebtedness, to the extent any
of the foregoing described in clauses (a) through (e) above constitute a
liability on such Person's balance sheet prepared in accordance with GAAP or
would be disclosed as an Assurance in a footnote to financial statements of such
Person prepared in accordance with GAAP, but in any event shall exclude all
Guaranteed Value Contracts which the Company has the option, in its sole
discretion, to fully discharge by delivery of its common stock only.
"Interest Period" has the meaning specified in Section 2.10.
"Investment" means, as applied to any Person, any direct or indirect
purchase or other acquisition by such Person of stock or other securities of any
other Person, or any direct or indirect loan, advance or capital contribution by
such Person to any other Person, and any other item which would be classified as
an "investment" on a balance sheet of such Person, including any direct or
indirect contribution by such Person of property or assets to a joint venture,
partnership or other business entity in which such Person retains an interest.
"Issuing Bank" means, TCB, in respect of U.S. Letters of Credit and
Chemical Bank of Canada in respect of any Canadian Letter of Credit or as
otherwise agreed between the Company and the Canadian Borrower, as applicable,
and said Issuing Bank.
"Letter of Credit Fee" has the meaning specified in Section 4.01(b).
"Letter of Credit Outstandings" means, at any time, the sum of (a) the
aggregate Stated Amount of all outstanding U.S. Letters of Credit and Canadian
Letters of Credit and (b) the amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" has the meaning specified in Section 3.02.
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<PAGE>
"Letter of Credit Termination Date" means the date that is (a) one
year prior to the Termination Date or (b) the earlier acceleration of the
Obligations pursuant to Section 11.01.
"Letters of Credit" has the meaning provided in Section 3.01.
"Lien" means, when used with respect to any Person, any mortgage,
lien, charge, pledge, security interest or encumbrance of any kind (whether
voluntary or involuntary and whether imposed or created by operation of law or
otherwise) upon, or pledge of, any of its property or assets, whether now owned
or hereafter acquired, or any lease intended as security, any Capital Lease in
the nature of the foregoing, any conditional sale agreement or other title
retention agreement, in each case, for the purpose, or having the effect, of
protecting a creditor against loss or securing the payment or performance of an
obligation to a creditor.
"Loan" and "Loans" means collectively, the U.S. Loans and the Canadian
Loans and individually, any one of the foregoing.
"Loan Documents" means this Agreement (including the Guaranty), the
Notes, the Letter of Credit Requests, the Applications, the Agent's Letter
referenced in Section 4.01(c) and any other document or instrument executed in
connection therewith.
"Loan Party" means the Company, the Canadian Borrower or any Guarantor
and "Loan Parties" means the Company, the Canadian Borrower and the Guarantors.
"Majority Banks" means Banks holding at least 66 2/3% of the Total
Commitment.
"Margin" means, with respect to any Loan for any Margin Period, the
rate of interest or Acceptance Fee per annum determined as set forth below as a
function of the type of such Loan:
(a) during any period between any two successive Financial Statement
Delivery Dates during the Revolving Period:
15
<PAGE>
During the Revolving Period
---------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
Canadian
Coverage Eurodollar Alternate Base Canadian Base Rate Bankers'
Ratio Rate Loan Rate Loan Prime Loan Loan Acceptances
-------- ---------- -------------- ---------- --------- -----------
Less than 1.0 to 1.0 1/2% 0% 0% 0% 1/2%
Greater than or equal to
1.0 to 1.0 but Less than
2.00 to 1.0 3/4% 0% 0% 0% 3/4%
Greater than or equal to
2.00 to 1.0 but Less than
2.50 to 1.0 7/8% 0% 0% 0% 7/8%
Greater than or equal to
2.50 to 1.0 but Less than
3.0 to 1.0 1% 0% 0% 0% 1%
Greater than or equal to
3.0 to 1.0 but Less than
3.5 to 1.0 1-1/4% 0% 0% 0% 1-1/4%
Greater than or equal to
3.5 to 1.0 1-1/2% 1/4% 1/4% 1/4% 1-1/2%
</TABLE>
16
<PAGE>
(b) during any period between any two successive Financial Statement
Delivery Dates after the Termination Date:
<TABLE>
<CAPTION>
After the Termination Date
--------------------------
Canadian
Coverage Eurodollar Alternate Base Canadian Base Rate Bankers'
Ratio Rate Loan Rate Loan Prime Loan Loan Acceptances
- -------- ------------ ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Less than 1.0 to 1.0 3/4% 0% 0% 0% 3/4%
Greater than or equal to
1.0 to 1.0 but Less than 1% 0% 0% 0% 1%
2.00 to 1.0
Greater than or equal to
2.00 to 1.0 but Less than
2.50 to 1.0 1-1/8% 0% 0% 0% 1-1/8%
Greater than or equal to
2.50 to 1.0 but Less than
3.0 to 1.0 1-1/4% 0% 0% 0% 1-1/4%
Greater than or equal to
3.0 to 1.0 but Less than
3.5 to 1.0 1-1/2% 1/4% 1/4% 1/4% 1-1/2%
Greater than or equal to
3.5 to 1.0 1-3/4% 1/2% 1/2% 1/2% 1-3/4%
</TABLE>
(c) during any period during the Revolving Period that the Margin cannot
be determined for failure by the Company or Canadian Borrower to deliver the
financial information pursuant to Section 7.01(a) and (b) above:
<TABLE>
<CAPTION>
Eurodollar Alternate Base Canadian Canadian Base Bankers'
Rate Loan Rate Loan Prime Loan Rate Loan Acceptances
--------- ----------- ----------- -------------- ------------
<S> <C> <C> <C> <C>
1-3/4% 1/2% 1/2% 1/2% 1-3/4%
</TABLE>
"Margin Period" means a period commencing on a Financial Statement
Delivery Date ending on the next succeeding Financial Statement Delivery Date.
"Material Adverse Effect" means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding) and after taking into
account actual insurance coverage and effective indemnification with respect to
such occurrence, (a) a material adverse effect on the financial condition,
business or operations of the Company and its Subsidiaries, taken as a whole, or
(b) materially impairs the collective ability of the Loan Parties, taken as a
whole, to make payment hereunder or under the Notes or the right of the
17
<PAGE>
Agents or the Banks or any of them to enforce any of their remedies to collect
any material amounts owing under the Loan Documents.
"Material Subsidiary" means the Canadian Borrower and any other
Subsidiary of the Company (or of one of the Company's Subsidiaries), except
Universal Assurance Corporation for purposes of Section 7.08 only, with assets
having a value of $1,000,000.00 or greater, based on the greater of book value
or fair market value.
"Maturity Date" means June 30, 2003 or the earlier date of the
acceleration of the maturity of the Obligations pursuant to Section 10.01.
"Maximum Guaranteed Amount" for each Guarantor shall mean the greater
of (a) the value received by such Guarantor in respect of such Guaranty or (b)
$1,000.00 less than the maximum amount that would render such Guaranty subject
to avoidance under Section 548 of the Bankruptcy Code or comparable state law or
comparable Canadian federal or provincial law, all determined as of the date
required by the appropriate federal, state or provincial law.
"Maximum Permissible Rate" has the meaning specified in Section 13.08.
"Multiemployer Plan" means any plan which is a "multiemployer plan"
(as such term is defined in Section 4001(a)(3) of ERISA or any Applicable
Canadian Pension Legislation).
"Negotiated Rate Loan" shall mean Loans made pursuant to Section
2.01(b).
"Negotiated Rate Loan Notes" has the meaning specified in Section
2.01(b).
"Notes" and "Note" means collectively, the Committed Notes and the
Negotiated Rate Notes.
"Notice of Borrowing" means a Notice of U.S. Borrowing or Notice of
Canadian Borrowing, as the case may be.
"Notice of U.S. Borrowing" has the meaning specified in Section
2.03(a).
"Notice of Canadian Borrowing" has the meaning specified in Section
2.03(b).
"Notice of Conversion" has the meaning provided in Section 2.07.
"Notice of Default" has the meaning specified in Section 11.01.
"Obligations" means all the obligations of the Company, the Canadian
Borrower and the other Loan Parties now or hereafter existing under the Loan
Documents, whether for principal, Unpaid Drawings, interest, Acceptance Fees,
Fees, expenses, indemnification or otherwise.
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<PAGE>
"Operating Lease Obligations" means all payment obligations of the
Company and its Subsidiaries due under any operating lease agreement.
"Operating Rights" has the meaning specified in Section 6.15.
"Payment Office" means the office of the relevant Agent, or such other
office as such Agent may hereafter designate in writing as such to the other
parties hereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA and any pension commission
or similar body constituted under any Applicable Canadian Pension Legislation.
"Percentage Participation" means, (a) for each U.S. Bank at any time,
that percentage obtained when dividing the amount of such Bank's U.S. Commitment
by the Total U.S. Commitment at such time and (b) for each Canadian Bank at any
time, that percentage obtained when dividing the amount of such Bank's Canadian
Commitment by the Total Canadian Commitment at such time.
"Permitted Investments" means, as to any Person,
(a) securities issued or directly and fully guaranteed or insured by
the United States or Canada or any agency or instrumentality thereof (provided
that the full faith and credit of the United States or Canada, as the case may
be, is pledged in support thereof) having maturities of not more than twelve
months from the date of acquisition thereof,
(b) time deposits and certificates of deposit with maturities of not
more than twelve months from the date of acquisition by such Person in any Bank
or other commercial bank incorporated in the United States or Canada or any U.S.
branch of any other commercial bank, in each case (or the holding company
controlling such entity) having capital, surplus and undivided profits
aggregating $100,000,000 or more with a long-term unsecured debt rating of at
least A- from Standard & Poor's Rating Group or A3 from Moody's Investors
Service, Inc. or A(low) from Dominion Bond Rating Service Limited.
(c) commercial paper issued by any Person incorporated in the United
States or Canada rated at least A-1 or the equivalent thereof by Standard &
Poor's Ratings Group or at least P-1 or the equivalent thereof by Moody's
Investors Services, Inc. or R-1 (low) or the equivalent thereof by Dominion Bond
Rating Service Limited and, in each case, maturing not more than 270 days after
the date of issuance,
(d) investments in money market mutual funds having assets in excess
of $2,000,000,000 substantially all of whose assets are comprised of securities
of the types described in clauses (a) through (c) above,
19
<PAGE>
(e) repurchase or reverse purchase agreements respecting obligations
with a term of not more than seven days for underlying securities of the types
described in clause (a) above entered into with any bank listed in or meeting
the qualifications specified in clause (b) above, and
(f) banker's acceptances maturing within one year from the date of
origin issued by a bank or trust company organized under the law of the United
States or Canada having capital, surplus and undivided profits aggregating at
least $100,000,000.00 and a long-term deposit rating of A- or higher by Standard
& Poor's Ratings Group or A (low) or higher by Dominion Bond Rating Service
Limited.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, any government or
governmental entities or a foreign or domestic state or political subdivision
thereof or any agency of such state or subdivision thereof.
"Plan" means any employee pension benefit plan (as defined in Section
3(2) of ERISA or in any Applicable Canadian Pension Legislation), subject to
Title IV of ERISA or Section 412 of the Code or any Applicable Canadian Pension
Legislation, other than a Multiemployer Plan, with respect to which a Loan Party
or an ERISA Affiliate contributes or has an obligation or liability to
contribute, including any such plan that may have been terminated.
"Prior Agreement" means the Credit Agreement described in the
Recitals.
"Reduced Banks" has the meaning specified in Section 2.16(d).
"Refunding Bankers' Acceptance" has the meaning specified in Section
2.04(b) hereof.
"Register" has the meaning specified in Section 13.11(e).
"Regulation A" means Regulation A of the Board (respecting loans to
depository institutions), as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"Regulation D" means Regulation D of the Board (respecting reserve
requirements), as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Board (respecting margin
credit extended by banks), as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board (respecting borrowers
who obtain margin credit), as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
20
<PAGE>
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment (including the abandonment or discarding of barrels, containers
and other closed receptacles).
"Reportable Event" means an event described in Section 4043(b) of
ERISA or in any Applicable Canadian Pension Legislation with respect to a Plan
as to which the 30-day notice requirement has not been waived by the PBGC.
"Requirements of Environmental Laws" means, as to any Person, the
requirements of any applicable Environmental Law relating to or affecting such
Person or the condition or operation of such Person's business or its
properties, both real and personal.
"Reserve Percentage" means, for any Bank and for any Interest Period,
the reserve percentage applicable during such Interest Period under regulations
issued from time to time by the Board (or if more than one such percentage is so
applicable, the daily average for such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) for
determining the maximum reserve requirement (including any marginal,
supplemental or emergency reserves) for such Bank in respect of liabilities or
assets consisting of or including Eurocurrency Liabilities.
"Reset Date" has the meaning set forth in Section 4.02(a).
"Responsible Officer" means, with respect to any Loan Party, the
president, chief executive officer, chief operating officer, treasurer or chief
financial officer of such Loan Party.
"Restricted Payment" means (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of the
Company now or hereafter outstanding, except a dividend payable solely in shares
of stock or warrants, rights or options to acquire shares of stock of the
Company and (b) any redemption, retirement, purchase or other acquisition,
direct or indirect, of any shares of any class of stock of the Company, now or
hereafter outstanding, or of any warrants, rights or options to acquire any such
shares, except to the extent that the consideration therefor consists of shares
of stock (including warrants, rights or options relating thereto) of the
Company; provided, Restricted Payments shall exclude stock redemptions or
repurchases of any capital stock of the Company or dividends payable on any
preferred stock of the Company up to a maximum of a total of $20,000,000.00 plus
(minus) 50% of Consolidated Net Income (Loss) during the term hereof.
"Revolving Period" means the period commencing on the Effective Date
to and including the Termination Date.
"Stated Amount" means, with respect to each Letter of Credit, at any
time, the maximum amount then available to be drawn thereunder (without regard
to whether any condition to drawing thereon could be met).
21
<PAGE>
"Subsidiary" means and includes, with respect to any Person, (a) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person, directly
or indirectly and (b) any partnership, association, joint venture or other
entity in which such Person, directly or indirectly, (i) has the voting power to
elect more than 50% of the directors (or Persons performing similar functions)
thereof or (ii) owns more than 50% of the equity interest therein.
"TCB" means Texas Commerce Bank National Association, a national
banking association.
"Termination Date" means, subject to Section 11.01, the date on which
the Revolving Period shall terminate being June 30, 1999.
"Total Canadian Commitment" means the sum of the Canadian Commitments
of each of the Canadian Banks, which as of the Effective Date is
U.S.$30,000,000.00 (or its Canadian Dollar Equivalent) as adjusted from time to
time pursuant to Section 2.16(d) pursuant to the terms hereof never to exceed
U.S. $100,000,000.00 or its Canadian Dollar Equivalent in the aggregate.
"Total Commitment" means the aggregate of the Total U.S. Commitment
and the Total Canadian Commitment, never to exceed $350,000,000.00 in the
aggregate as reduced from time to time pursuant to the terms hereof.
"Total U.S. Commitment" means the sum of U.S. Commitments of each of
the Banks which, as of the Effective Date is $320,000,000.00 as adjusted from
time to time pursuant to Section 2.16(d), never to exceed $350,000,000.00.
"Total U.S. Exposure" means the sum of the aggregate principal amounts
of outstanding U.S. Loans, and U.S. Letter of Credit Outstandings at such time.
"Total Canadian Exposure" means the sum of the aggregate principal
amounts of outstanding Canadian Loans, the aggregate face amount of all
outstanding Bankers' Acceptances, and the Canadian Letter of Credit Outstandings
at such time.
"U.S. Agent" has the meaning specified in the Introduction to this
Agreement.
"U.S. Bank" and "U.S. Banks" means each Bank agreeing to participate
in the U.S. Facility as shown on the signature page hereto for such Bank or each
Eligible Assignee to which a portion of any Bank's interests, rights and
obligations under this Agreement, is assigned in accordance with Section 13.11
and collectively, all of the foregoing.
22
<PAGE>
"U.S. Commitment" means, with respect to each Bank, the amount to be
lent by such Bank set forth opposite the name of such Bank under the heading
"U.S. Commitment" on the signature page for such Bank, or, in the case of any
Person who becomes a Bank after the Execution Date, on the signature page of the
Assignment and Acceptance executed by such Person, in each case, as the same may
be amended from time to time or terminated pursuant to Section 4.03 or Article
XI.
"U.S. Credit Event" means the making of a U.S. Loan or the issuance of
a U.S. Letter of Credit.
"U.S. Default Rate" has the meaning defined in Section 2.09(d)(i).
"U.S. Dollar Equivalent" means, with respect to an amount of Canadian
Dollars, on any date, the amount of U.S. Dollars that may be purchased with such
amount of Canadian Dollars at the Exchange Rate with respect to Canadian Dollars
on such date.
"U.S. Facility" means the U.S. Loans made and the U.S. Letters of
Credit issued by the U.S. Banks up to the maximum amount of the Total U.S.
Commitment.
"U.S. Issuer" means the U. S. Agent.
"U.S. Letter of Credit" means a Letter of Credit issued by the U.S.
Issuer.
"U.S. Letter of Credit Limit" means $150,000,000.00.
"U.S. Letter of Credit Outstandings" means Letter of Credit
Outstandings with respect to U.S. Letters of Credit.
"U.S. Loans" and "U.S. Loan" means collectively, the Committed Loans
and the Negotiated Rate Loans and individually, any one of the foregoing.
"U.S. Notes" and "U.S. Note" means collectively, the Committed Notes
and the Negotiated Rate Notes and individually, any one of the foregoing.
"Unfunded Current Liability" means, with respect to any Plan, the
amount, if any, by which the present value of the accrued benefits under the
Plan as of the close of its most recent Plan year exceeds the fair market value
of the assets allocable thereto, determined in accordance with Section 412 of
the Code or Applicable Canadian Pension Legislation, as the case may be.
"Unpaid Drawing" has the meaning specified in Section 3.04(a).
"Unutilized Canadian Commitment" for any Canadian Bank, at any time,
means (a) such Canadian Bank's Commitment at such time less (b) the sum of (i)
the outstanding Loans made by such Canadian Bank at such time, (ii) the
aggregate face amount of all Bankers' Acceptances accepted by
23
<PAGE>
such Canadian Bank outstanding at such time, and (iii) the product of (A) the
Canadian Letters of Credit Outstandings at such time multiplied by (B) such
Canadian Bank's Percentage Participation at such time.
"Unutilized U.S. Commitment" for any U.S. Bank, at any time, means (a)
such U.S. Bank's Commitment at such time less (b) the sum of (i) the outstanding
Loans (exclusive of Negotiated Rate Loans) made by such U.S. Bank at such time
and (ii) the product of (A) the U.S. Letter of Credit Outstandings at such time
multiplied by (B) such U.S. Bank's Percentage Participation at such time.
SECTION 1.02 Types of Loans. Loans hereunder are distinguished by
"Type". The Type of a Loan refers to the determination whether such Loan is a
Eurodollar Rate Loan, an Alternate Base Rate Loan, a Canadian Base Rate Loan or
a Canadian Prime Loan.
SECTION 1.03 Accounting Terms. All accounting terms not otherwise
defined herein shall be construed in accordance with GAAP.
ARTICLE II
LOANS
SECTION 2.01 Loans. (a) Committed Loans. Subject to and upon the terms
and conditions herein set forth, each U.S. Bank severally agrees at any time and
from time to time during the Revolving Period to make and maintain a loan or
loans (each a "Committed Loan" and collectively, the "Committed Loans") to the
Company, which Committed Loans (i) shall be made and maintained in Dollars
pursuant to one or more Borrowings comprised of Alternate Base Rate Loans or
Eurodollar Rate Loans; provided that, except as otherwise specifically provided
herein, all Committed Loans comprising all or a portion of the same Borrowing
shall at all times be of the same Type, (ii) may be repaid and reborrowed in
accordance with the provisions hereof and (iii) shall, in the aggregate, not
exceed the total principal amount at any time outstanding which, when added to
the product of such U.S. Bank's Percentage Participation of the U.S. Letter of
Credit Outstandings at such time, equals the U.S. Commitment of such Bank.
Notwithstanding the foregoing, (y) the sum of (A) the aggregate outstanding
principal amount of the U.S. Loans of all U.S. Banks plus the U.S. Letter of
Credit Outstandings plus the U.S. Dollar Equivalent of (B) the aggregate
outstanding principal amount of the Canadian Loans plus the aggregate face
amount of all Bankers' Acceptance (less the amount of any amortized discount on
such U.S. Dollar Equivalent of the Bankers' Acceptances) plus the Canadian
Letter of Credit Outstandings shall at no time exceed the Total Commitment, and
(z) the sum of the unutilized portion of the Total Commitment of all Banks must
at all times equal or exceed the sum of all Negotiated Rate Loans then
outstanding. There shall be no further advances of any Loans and no additional
Borrowings after the Termination Date. The U.S. Agent shall promptly give the
U.S. Banks written notice or telephonic notice (promptly confirmed in writing)
of each proposed Borrowing from the U.S. Banks, of each of such U.S. Bank's
proportionate share thereof and of the other matters covered by each Notice of
U. S. Borrowing.
24
<PAGE>
(b) Negotiated Rate Loans. (i) The Company may, from time to time,
request any one or more of the U.S. Banks to make a Negotiated Rate Loan to
which request such Banks may, but are not obligated to, respond. Negotiated Rate
Loans shall be negotiated between the Company and any one or more U.S. Banks on
such terms and conditions as are mutually acceptable to those parties, subject
to the terms of this Agreement. Negotiated Rate Loans shall be made and
maintained in Dollars and shall be allowed to a total maximum principal amount
of $250,000,000.00; provided no U.S. Bank may agree to a Negotiated Rate Loan in
a greater amount than the dollar value of its Percentage Participation in the
Total U.S. Commitment, plus the dollar value of its Canadian Bank Affiliate's
Percentage Participation in the Total Canadian Commitment Negotiated Rate Loans
shall have no effect on the Total U.S. Commitment or the calculation of the sums
due under Section 4.01(a) and said calculation shall be made as if said
Negotiated Rate Loans had not occurred. All Negotiated Rate Loans shall be
evidenced by a promissory note or notes (a "Negotiated Rate Loan Note") executed
by the Company payable to the order of any U.S. Bank making a Negotiated Rate
Loan and containing such terms and conditions as may be agreed to between said
Persons.
(ii) Negotiated Rate Loans shall be considered U.S. Loans hereunder
(except as affects the computation of the commitment fee set forth in Section
4.01(a)) and shall be subject to the general requirements of this Agreement;
provided that, subject to the limitations of this Section, any U.S. Bank making
a Negotiated Rate Loan may agree with the Company to modify or waive the terms
and requirements of such Negotiated Rate Loan other than those governed by this
Section 2.01(b).
(iii) The Company agrees to notify the Agent by telephone (followed by
a confirmation in writing), of any Negotiated Rate Loan, including the amount
and the scheduled repayment thereof, and to keep the Agent continually informed
of the amount of Negotiated Rate Loans from each U.S. Bank, including any
changes therein immediately as they occur.
(c) Canadian Loans. Subject to the terms and conditions hereof, each
Canadian Bank severally agrees to make revolving credit loans which shall be
Canadian Prime Loans or Canadian Base Rate Loans or Eurodollar Rate Loans (each
a "Canadian Loan" and collectively, the "Canadian Loans") to, accept and
purchase Bankers' Acceptances drawn on it by, and issue or purchase
participations in Canadian Letters of Credit for the account of, the Canadian
Borrower from time to time during the Revolving Period. Subject to the terms and
conditions hereof, during the Revolving Period, the Canadian Borrower may use
the Canadian Commitment of each Canadian Bank by borrowing, prepaying or
repaying the Canadian Loans from or issuing Bankers' Acceptances drawn on or
requesting the issuance of Canadian Letters of Credit by such Canadian Bank, all
in accordance with the terms and conditions hereof; provided that (subject to
Sections 2.07 and 2.04(b), respectively) no Canadian Loan or Bankers' Acceptance
may be made or accepted on or after the Termination Date and no Canadian Letter
of Credit can be issued after the Letter of Credit Termination Date.
Notwithstanding anything to the contrary contained in this Agreement, in no
event may Canadian Loans be borrowed or Bankers' Acceptances be drawn or
Canadian Letters of Credit be requested by the Canadian Borrower if, after
giving effect thereto and the application of the proceeds thereof, the Aggregate
Canadian Extensions of
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Credit of any Canadian Bank then outstanding would exceed such Canadian Bank's
Canadian Commitment.
SECTION 2.02 Minimum Amount of Each Borrowing. (a) The aggregate
principal amount of each Committed Loan made by the U.S. Banks shall not be less
than the lesser of (i) $1,000,000.00 and, if greater, shall be an integral
multiple of $100,000.00 and (ii) the then unutilized portion of the Total U.S.
Commitment. More than one such Borrowing may occur on the same day but at no
time shall there be outstanding more than ten Borrowings of Eurodollar Rate
Loans.
(b) The aggregate principal amount of each Canadian Loan made by the
Canadian Banks shall not be less than the lesser of (i) C$500,000.00 or
$500,000.00, as the case may be, or, if greater, an integral multiple of
C$100,000.00 or $100,000.00, as the case may be, in excess thereof and (ii) the
then unutilized portion of the Total Canadian Commitment.
SECTION 2.03 Notice of Borrowing. (a) Whenever the Company desires to
make a Borrowing under the U.S. Facility, the Company shall give written notice
(a "Notice of U.S. Borrowing") (or telephonic notice promptly confirmed in
writing) to the U.S. Agent (i) in the case of a Borrowing to be comprised of
Alternate Base Rate Loans, not later than 11:00 a.m. (Houston, Texas time) on
the Borrowing Date for such Borrowing and (ii) in the case of a Borrowing
comprised of Eurodollar Rate Loans, not later than 11:00 a.m. (Houston, Texas
time) three (3) Business Days prior to the Borrowing Date for such Borrowing.
Each Notice of U.S. Borrowing shall be irrevocable and shall be in the form of
Exhibit 2.03A specifying (A) the aggregate principal amount of the Loans to be
made pursuant to such Borrowing, (B) the Borrowing Date (which shall be a
Business Day), (C) whether such Loans are to be initially maintained as
Alternate Base Rate Loans or Eurodollar Rate Loans and (D) if the proposed
Borrowing is to be comprised of Eurodollar Rate Loans, the initial Interest
Period to be applicable thereto. The Company may submit one or more Notices of
U.S. Borrowing on any Business Day.
(b) The Canadian Borrower may borrow Canadian Loans during the
Revolving Period on any Business Day, provided that it shall give written notice
(a "Notice of Canadian Borrowing") to the Canadian Agent not later than 12:00
noon (Toronto, Ontario time) on the day of the requested Borrowing Date, in the
case of Canadian Prime Loans or Canadian Base Rate Loans and three (3) Business
Days in advance of the requested Borrowing Date for Eurodollar Rate Loans,
specifying (a) the amount to be borrowed, (b) the requested Borrowing Date, (c)
whether such Loans are to be Canadian Prime Loans, Canadian Base Rate Loans or
Eurodollar Rate Loans, and (d) if applicable, the Interest Period. Each Notice
of Canadian Borrowing shall be irrevocable and shall be in the form of Exhibit
2.03B. Upon receipt of such notice, the Canadian Agent shall promptly notify
each Canadian Bank thereof.
(c) The Canadian Borrower may request the acceptance of Bankers'
Acceptances pursuant to Section 2.04(a).
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SECTION 2.04 Bankers' Acceptances. (a) Subject to the terms and
conditions hereof, each Canadian Bank severally agrees to accept and purchase
Bankers' Acceptances drawn upon it by the Canadian Borrower denominated in
Canadian Dollars. The Canadian Borrower shall notify the Canadian Agent by
irrevocable written notice (each a "Bankers' Acceptance Notice") by 10:00 a.m.
(Toronto, Ontario time) two (2) Business Days prior to the Borrowing Date in
respect of any Borrowing by way of Bankers' Acceptances. Each Borrowing by way
of Bankers' Acceptances shall be in a minimum aggregate face amount of
C$1,000,000.00 and integral multiples of C$100,000.00 in excess thereof. The
face amount of each Bankers' Acceptance shall be C$100,000.00 or any integral
multiple thereof. Each Bankers' Acceptance Notice shall be in the form of
Exhibit 2.04A.
(i) Term. Bankers' Acceptances shall be issued and shall mature on a
Business Day. Each Bankers' Acceptance shall have a term of 30, 60, 90 or 180
days excluding days of grace and shall mature on or before the Maturity Date and
shall be in form and substance reasonably satisfactory to each Canadian Bank.
(ii) Bankers' Acceptances in Blank. To facilitate the acceptance of
Bankers' Acceptances under this Agreement, the Canadian Borrower shall, upon
execution of this Agreement and from time to time as required, provide to the
Canadian Agent drafts, in form satisfactory to the Canadian Agent, duly executed
and endorsed in blank by the Canadian Borrower in quantities sufficient for each
Canadian Bank to fulfill its obligations hereunder. In addition, the Canadian
Borrower hereby appoints each Canadian Bank as its attorney to sign and endorse
on its behalf, in handwriting or by facsimile or mechanical signature as and
when deemed necessary by such Canadian Bank, blank forms of Bankers'
Acceptances. The Canadian Borrower recognizes and agrees that all Bankers'
Acceptances signed and/or endorsed on its behalf by a Canadian Bank shall bind
the Canadian Borrower as fully and effectually as if signed in the handwriting
of and duly issued by the proper signing officers of the Canadian Borrower. Each
Canadian Bank is hereby authorized to issue such Bankers' Acceptances endorsed
in blank in such face amounts as may be determined by such Bank provided that
the aggregate amount thereof is equal to the aggregate amount of Bankers'
Acceptances required to be accepted by such Bank. No Canadian Bank shall be
responsible or liable for its failure to accept a Bankers' Acceptance if the
cause of such failure is, in whole or in part, due to the failure of the
Canadian Borrower to provide duly executed and endorsed drafts to the Canadian
Agent on a timely basis nor shall any Canadian Bank be liable for any damage,
loss or other claim arising by reason of any loss or improper use of any such
instrument except loss or improper use arising by reason of the gross negligence
or willful misconduct of such Bank, its officers, employees, agents or
representatives. Each Canadian Bank shall maintain a record with respect to
Bankers' Acceptances (i) received by it from the Canadian Agent in blank
hereunder, (ii) voided by it for any reason, (iii) accepted by it hereunder,
(iv) purchased by it hereunder and (v) canceled at their respective maturities.
Each Canadian Bank further agrees to retain such records in the manner and for
the statutory periods provided in the various Canadian provincial or federal
statutes and regulations which apply to such Bank.
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(iii) Execution of Bankers' Acceptances. Drafts of the Canadian
Borrower to be accepted as Bankers' Acceptances hereunder shall be duly executed
by one or more Responsible Officers on behalf of the Canadian Borrower.
Notwithstanding that any person whose signature appears on any Bankers'
Acceptance as a signatory for the Canadian Borrower may no longer be an
authorized signatory for the Canadian Borrower at the date of issuance of a
Bankers' Acceptance, such signature shall nevertheless be valid and sufficient
for all purposes as if such authority had remained in force at the time of such
issuance and any such Bankers' Acceptance so signed shall be binding on the
Canadian Borrower.
(iv) Issuance of Bankers' Acceptances. Promptly following receipt of a
Bankers' Acceptance Notice, the Canadian Agent shall so advise the Canadian
Banks and shall advise each Canadian Bank of the face amount of each Bankers'
Acceptance to be accepted by it and the term thereof. The aggregate face amount
of Bankers' Acceptances to be accepted by a Canadian Bank shall be determined by
the Canadian Agent by reference to the respective Canadian Commitments of the
Canadian Banks, except that, if the face amount of a Bankers' Acceptance, which
would otherwise be accepted by a Canadian Bank, would not be C$100,000.00 or an
integral multiple thereof, such face amount shall be increased or reduced by the
Canadian Agent in its sole and unfettered discretion to the nearest integral
multiple of C$100,000.00.
(v) Acceptance of Bankers' Acceptances. Each Bankers' Acceptance to be
accepted by a Canadian Bank shall be accepted at such Bank's office shown on the
signature page hereof or as otherwise designated by said Canadian Bank from time
to time.
(vi) Purchase of Bankers' Acceptances. On the relevant Borrowing Date,
each Canadian Bank severally agrees to purchase from the Canadian Borrower, at
the face amount thereof discounted by the Applicable BA Discount Rate, any
Bankers' Acceptance accepted by it and provide to the Canadian Agent, for the
account of the Canadian Borrower, the BA Discount Proceeds in respect thereof
after deducting therefrom the amount of the Acceptance Fee payable by the
Canadian Borrower to such Bank under Section 2.04(c) in respect of such Bankers'
Acceptance.
(vii) Sale of Bankers' Acceptances. Each Canadian Bank may at any time
and from time to time hold, sell, rediscount or otherwise dispose of any or all
Bankers' Acceptances accepted and purchased by it.
(viii) Waiver of Presentment and Other Conditions. The Canadian
Borrower waives presentment for payment and any other defense to payment of any
amounts due to a Canadian Bank in respect of a Bankers' Acceptance accepted by
it pursuant to this Agreement which might exist solely by reason of such
Bankers' Acceptance being held, at the maturity thereof, by such Bank in its own
right and the Canadian Borrower agrees not to claim any days of grace if such
Bank as holder sues the Canadian Borrower on the Bankers' Acceptances for
payment of the amount payable by the Canadian Borrower thereunder.
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(b) With respect to each Bankers' Acceptance, the Canadian Borrower,
prior to the occurrence and continuation of a Default, may give irrevocable
telephone or written notice (or such other method of notification as may be
agreed upon between the Canadian Agent and the Canadian Borrower) to the
Canadian Agent at or before 2:00 p.m. (Toronto, Ontario time) two (2) Business
Days prior to the maturity date of such Bankers' Acceptance followed by written
confirmation electronically transmitted to the Canadian Agent on the same day,
of the Canadian Borrower's intention to issue one or more Bankers' Acceptances
on such maturity date (each a "Refunding Bankers' Acceptance") to provide for
the payment of such maturing Bankers' Acceptance (it being understood that
payments by the Canadian Borrower and fundings by the Canadian Banks in respect
of each maturing Bankers' Acceptance and each related Refunding Bankers'
Acceptance shall be made on a net basis reflecting the difference between the
face amount of such maturing Bankers' Acceptance and the BA Discount Proceeds
(net of the applicable Acceptance Fee) of such Refunding Bankers' Acceptance).
Any funding on account of any maturing Bankers' Acceptance must be made at or
before 12:00 noon (Toronto, Ontario time) on the maturity date of such Bankers'
Acceptance. If the Canadian Borrower fails to give such notice, the Canadian
Borrower shall be irrevocably deemed to have requested and to have been advanced
a Canadian Prime Loan in the face amount of such maturing Bankers' Acceptance on
the maturity date of such maturing Bankers' Acceptance from the Canadian Bank
which accepted such maturing Bankers' Acceptance, which Canadian Prime Loan
shall thereafter bear interest as such in accordance with the provisions hereof
until paid in full.
(c) An Acceptance Fee shall be payable by the Canadian Borrower to
each Canadian Bank in advance (in the manner specified in Section 2.04(a)(vi))
in respect of, and as a condition precedent to the acceptance of such Canadian
Bank of, a Bankers' Acceptance to be accepted by such Canadian Bank calculated
at the rate per annum equal to the applicable Margin, calculated on the face
amount of such Bankers' Acceptance and computed on the basis of the number of
days in the term of such Bankers' Acceptance and a year of 365 days.
(d) Upon the occurrence and during the continuance of any Event of
Default, and in addition to any other rights or remedies of any Canadian Bank
and the Canadian Agent hereunder, any Canadian Bank or the Canadian Agent as and
by way of collateral security (or such alternate arrangement as may be agreed
upon by the Canadian Borrower and such Canadian Bank or the Canadian Agent, as
applicable) shall be entitled to deposit and retain in an account to be
maintained by the Canadian Agent (bearing interest at the Canadian Agent's rates
as may be applicable in respect of other deposits of similar amounts for similar
terms) amounts which are received by such Canadian Bank or the Canadian Agent
from the Canadian Borrower hereunder or as proceeds of the exercise of any
rights or remedies of any Canadian Bank or the Canadian Agent hereunder against
the Canadian Borrower, to the extent such amounts may be required to satisfy any
contingent or unmatured obligations or liabilities of the Canadian Borrower to
the Canadian Banks or the Canadian Agent, or any of them hereunder.
SECTION 2.05 Disbursement of Funds. (a) With respect to Borrowings
made under the U.S. Facility, no later than 1:00 p.m. (Houston, Texas time) on
the Borrowing Date each U.S. Bank will make available its pro rata portion of
the amount of such Borrowing in Dollars and in immediately available funds at
the U.S. Agent's Payment Office and the U.S. Agent will credit the amounts so
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received to the general deposit account of the Company with the U.S. Agent.
With respect to Borrowings under the Canadian Facility, no later than 1:00 p.m.
(Toronto, Ontario time) on the Borrowing Date each Canadian Bank will make
available its pro rata portion of the amount of such Borrowing in Canadian
Dollars or U.S. Dollars as may be required and in immediately available funds at
the Canadian Agent's Payment Office, and the Canadian Agent will credit the
amounts so received to the deposit account of the Canadian Borrower specified by
it in writing to the Canadian Agent.
(b) Unless the relevant Agent shall have been notified by any Bank
prior to the Borrowing Date that such Bank does not intend to make available to
such Agent such Bank's portion of the Borrowing to be made on such date, such
Agent may assume that such Bank has made such amount available to such Agent on
such date of Borrowing and such Agent may, in reliance upon such assumption,
make available to the Company or the Canadian Borrower, as appropriate, a
corresponding amount. If such corresponding amount is not in fact made available
to the relevant Agent by such Bank and the relevant Agent has made available
same to the Company or the Canadian Borrower, as appropriate, the relevant Agent
shall be entitled to recover such corresponding amount on demand from such Bank.
If such Bank does not pay such corresponding amount forthwith upon such Agent's
demand therefor, such Agent shall promptly notify the Company or the Canadian
Borrower, as appropriate, and the Company or the Canadian Borrower, as
appropriate, shall pay such corresponding amount to such Agent within two (2)
Business Days after demand therefor. The relevant Agent shall also be entitled
to recover from either such Bank or the Company or the Canadian Borrower, as
applicable, interest on such corresponding amount from the date such
corresponding amount was made available by the relevant Agent to the Company or
the Canadian Borrower, as applicable, to the date such corresponding amount is
recovered by such Agent, at a rate per annum equal to the lesser of (i) the
Highest Lawful Rate or (ii) (A) as to any Loan under the U.S. Facility, the
Federal Funds Effective Rate per annum from time to time, (B) as to any Loan
under the Canadian Facility (y) denominated in U.S. Dollars , the Federal Funds
Effective Rate per annum from time to time plus 1% or (z) as to any Loan,
denominated in Canadian Dollars, the CDOR Rate per annum from time to time, as
applicable. Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Company or the Canadian Borrower, as applicable, may have against any such
Bank as a result of any default by such Bank hereunder.
SECTION 2.06 Notes. (a) The Company's obligation to pay the principal
of, and interest on, all the Committed Loans made by each U.S. Bank shall be
evidenced by: (i) in the case of U.S. Loans made pursuant to any section other
than Section 2.01(b), the notes duly executed and delivered by the Company
substantially in the form of Exhibit 2.06A hereto with blanks appropriately
completed in conformity herewith (each a "Committed Note" and collectively, the
"Committed Notes"), which Committed Notes shall be payable on or before the
Maturity Date as provided in Article IV and mature, with respect to the
Committed Loans evidenced thereby, on the Maturity Date, and shall bear interest
as provided in the appropriate clause of Section 2.08 in respect of the
Alternate Base Rate Loans and Eurodollar Rate Loans, as the case may be, and
(ii) in the case of Negotiated Rate Loans made pursuant to Section 2.01(b),
Negotiated Rate Loan Notes which shall be payable and bear interest pursuant to
the procedures established under Section 2.01(b).
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(b) The Canadian Borrower's obligation to pay the principal of, and
interest on, all the Canadian Loans made by each Canadian Bank shall be
evidenced by this Agreement and the terms hereof, which obligations shall be
payable on or before the Maturity Date as provided in Article IV and shall
mature, with respect to the Canadian Loans evidenced thereby, on the Maturity
Date, and shall bear interest as provided in the appropriate clause of Section
2.09 in respect of Canadian Prime Loans, Canadian Base Rate Loans and Eurodollar
Rate Loans, as the case may be.
(c) Each Bank will note on its internal records, to the extent
applicable, the date, amount, Type and Interest Period for each Loan made by
such Bank hereunder, the date, amount and term of each Bankers' Acceptance
accepted by it, and the date, amount, beneficiary and expiration date of each
Letter of Credit issued by it, and in each case the amount of each payment in
respect thereof and will, prior to any transfer of any of its Notes, endorse on
the reverse side thereof the outstanding principal amount of Loans evidenced
thereby. Failure to make any such notation shall not affect the Company's or the
Canadian Borrower's obligations, as the case may be, in respect of such Loans,
Bankers' Acceptances or Letters of Credit. Absent manifest error, each Bank's
records, and each U.S. Bank's notations on any Note held by it, as to the
outstanding Obligations owed to it shall be conclusive and binding on the
Company, the Canadian Borrower, each Guarantor and all other Persons.
SECTION 2.07 Conversions and Continuances. The Company under the U.S.
Facility and the Canadian Borrower under the Canadian Facility shall have the
option to convert on any Business Day all or a portion of the outstanding
principal amount of one Type of its Loans made pursuant to one or more
Borrowings into a Borrowing or Borrowings of the other Type of Loans provided,
that (i) except as otherwise provided in Section 2.13, no partial conversion of
Eurodollar Rate Loans shall reduce the outstanding principal amount of
Eurodollar Rate Loans made pursuant to any single Borrowing to less than
$5,000,000.00; (ii) Alternate Base Rate Loans or Canadian Base Rate Loans may
only be converted into Eurodollar Rate Loans, and Eurodollar Rate Loans may only
be continued as further Eurodollar Rate Loans, if and only if, in either case no
Default or Event of Default is in existence on the date of the conversion; (iii)
after the Termination Date, an outstanding Canadian Loan denominated in U.S.
Dollars or Canadian Dollars, as the case may be, may not be converted into or
continued as a Canadian Loan denominated in the other of such currencies, except
with the prior written consent of each of the Canadian Banks and except at the
option of any Canadian Bank pursuant to Section 11.03; and (iv) after the
Termination Date, an outstanding Canadian Letter of Credit denominated in U.S.
Dollars or Canadian Dollars, as the case may be, may not be renewed, replaced,
re-issued or extended as a Canadian Letter of Credit denominated in the other of
such currencies, except with the prior written consent of the Issuing Bank and
each of the Canadian Banks. Each such conversion shall be effected by the
Company or the Canadian Borrower, as applicable, giving the relevant Agent
notice (each a "Notice of Conversion") prior to 11:00 a.m. (Houston, Texas time)
or 12:00 noon (Toronto, Ontario time) at least (a) three (3) Business Days prior
to the date of such conversion in the case of a conversion into or continued as
Eurodollar Rate Loans and (b) one Business Day in the case of a conversion into
or continued as Alternate Base Rate Loans or Canadian Base Rate Loans or
Canadian Prime Loans, specifying each Type of Borrowing (or portions thereof) to
be so converted and, if to be converted into or continued as Eurodollar Rate
Loans, the Interest Period to be
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initially applicable thereto. The applicable Agent shall promptly give the Banks
written or telephonic notice (promptly confirmed in writing) of any such
proposed conversion affecting any of its Loans.
SECTION 2.08 Pro Rata Borrowings. (a) Except as otherwise provided in
Section 2.16(d) or Section 2.01(b), all Borrowings under this Agreement shall be
incurred from the Banks pro rata on the basis of their respective Percentage
Participations. It is understood that no Bank shall be responsible for any
default by any other Bank in its obligation to make Loans hereunder and that
each Bank shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Bank to fulfill its
commitments hereunder.
SECTION 2.09 Interest. (a) (i) Subject to Section 13.08, the Company
agrees to pay interest in respect of the unpaid principal amount of each
Alternate Base Rate Loan from the date of the respective Borrowing to maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be equal to the lesser of (i) the Highest Lawful Rate and (ii) the
applicable Margin plus the Alternate Base Rate in effect from time to time. If
the Alternate Base Rate is based on the Prime Rate, interest shall be computed
on the basis of the actual number of days elapsed over a year of 365 or 366
days, as the case may be. If the Alternate Base Rate is based on the Federal
Funds Effective Rate, interest shall be computed on the basis of the actual
number of days elapsed over a year of 360 days.
(ii) Subject to Section 13.08, the Canadian Borrower agrees to pay
interest in respect of the unpaid principal amount of each Canadian Prime Loan
from the date of the respective Borrowing to maturity (whether by acceleration
or otherwise) at a rate per annum which shall at all times be equal to the
lesser of (x) the Highest Lawful Rate and (y) the applicable Margin plus the
Canadian Prime Rate in effect from time to time. Interest shall be computed on
each Canadian Prime Loan on the basis of the actual number of days elapsed over
a year of 365 or 366 days, as the case may be.
(iii) Subject to Section 13.08, the Canadian Borrower agrees to pay
interest in respect of the unpaid principal amount of each Canadian Base Rate
Loan from the date of the respective Borrowing to maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be equal
to the lesser of (x) the Highest Lawful Rate and (y) the applicable Margin plus
the Alternate Canadian Base Rate in effect from time to time. Interest shall be
computed on each Canadian Base Rate Loan on the basis of the actual number of
days elapsed over a year of 360 days.
(b) (i) Subject to Section 13.08, the Company agrees to pay interest
in respect of the unpaid principal amount of each Eurodollar Rate Loan from the
date of the respective Borrowing to maturity (whether by acceleration or
otherwise) at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 360 days) which shall, during each Interest Period
applicable thereto, be equal to the lesser of (x) the Highest Lawful Rate and
(y) the applicable Margin plus the relevant Eurodollar Rate for such Interest
Period.
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(ii) Subject to Section 13.08, the Canadian Borrower agrees to pay
interest in respect of the unpaid principal amount of each Eurodollar Rate Loan
from the date of the respective Borrowing to maturity (whether by acceleration
or otherwise) at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 360 days) which shall, during each Interest Period
applicable thereto, be equal to the lesser of (x) the Highest Lawful Rate and
(y) the applicable Margin plus the relevant Eurodollar Rate for such Interest
Period.
(c) Subject to Section 13.08, the Canadian Borrower agrees to pay, in
respect of each Bankers' Acceptance which it requests be accepted and purchased
by a Canadian Bank, the Acceptance Fee provided for in Section 2.04.
(d) (i) Subject to Section 13.08, overdue principal and, to the extent
permitted by law, overdue interest in respect of each U.S. Loan and all other
overdue amounts owing hereunder shall bear interest for each day that such
amounts are overdue at a rate per annum equal to the lesser of (i) the Highest
Lawful Rate and (ii) the Alternate Base Rate plus 2% per annum in effect from
time to time (such lesser rate of interest being the "U.S. Default Rate");
provided, that no Loan shall bear interest after maturity (whether by
acceleration or otherwise) at a rate per annum less than the lesser of (i) rate
of interest applicable thereto at maturity and (ii) the Highest Lawful Rate.
(ii) Subject to Section 13.08, overdue principal and, to the extent
permitted by law, overdue interest in respect of each Canadian Loan and all
other overdue amounts owing hereunder shall bear interest for each day that such
amounts are overdue at a rate per annum equal to the lesser of (i) the Highest
Lawful Rate and (ii) (A) in the case of Canadian Prime Loans, the Canadian Prime
Rate in effect from time to time plus 2% per annum, and (B) in the case of
Canadian Base Rate Loans, the Alternate Canadian Base Rate in effect from time
to time plus 2% per annum (such lesser rate of interest being the "Canadian
Default Rate"); provided, that no Loan shall bear interest after maturity
(whether by acceleration or otherwise) at a rate per annum less than the lesser
of (i) rate of interest applicable thereto at maturity and (ii) the Highest
Lawful Rate.
(e) Interest on each Loan shall accrue from and including the date of
such Loan to but excluding the date of any repayment thereof and shall be
payable (i) in respect of Eurodollar Rate Loans (A) on the last day of the
Interest Period applicable thereto and in the case of any Interest Period in
excess of three months on each Designated Payment Date commencing on September
30, 1996 occurring during such Interest Period and (B) on the date of any
voluntary or mandatory prepayment or any conversion, (ii) in respect of each
Alternate Base Rate Loan or Canadian Prime Loan or Canadian Base Rate Loan (A)
on each Designated Payment Date commencing on September 30, 1996 and (B) on the
date of any voluntary or mandatory prepayment and (iii) in respect of each Loan,
at maturity (whether by acceleration or otherwise) and, after maturity, on
demand.
(f) The relevant Agent, upon determining the Eurodollar Rate for any
Interest Period, shall notify the Company or the Canadian Borrower, as
applicable and the relevant Banks thereof. Each such determination shall, absent
manifest error, be final and conclusive and binding on all parties hereto.
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In addition, prior to the due date for the payment of interest on any Loans set
forth in Section 2.08(d) the relevant Agent shall notify the Company or the
Canadian Borrower, as applicable, by telecopy of the amount of interest due by
the Company or the Canadian Borrower, as applicable, on all outstanding Loans on
the applicable due date.
(g) The Company or the Canadian Borrower, as applicable, shall pay to
the relevant Agent for the account of each relevant Bank that has made a
Eurodollar Rate Loan, so long as such Bank shall be required under regulations
of the Board to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities, additional interest on the
unpaid principal amount of each such Eurodollar Rate Loan of such Bank, from the
date of such Loan until such principal amount is paid in full, at an interest
rate per annum equal at all times during the Interest Period for such Loan to
the lesser of (i) the Highest Lawful Rate and (ii) the remainder obtained by
subtracting (A) the Eurodollar Rate for such Interest Period from (B) the rate
obtained by dividing such Eurodollar Rate referred to in clause (A) above by
that percentage equal to 100% minus the Reserve Percentage of such Bank for such
Interest Period. Such additional interest shall be determined by such Bank as
incurred and shall be payable five calendar days after demand therefor by such
Bank to the Company or the Canadian Borrower, as applicable through the relevant
Agent. In no event shall the amounts payable under this Section (to the extent,
if any, constituting interest under applicable laws), together with all amounts
constituting interest under applicable laws and payable in connection with this
Agreement, the Notes and the other Loan Documents, exceed the Highest Lawful
Rate. Each determination by a Bank of additional interest under this Section
shall be conclusive and binding for all purposes in the absence of manifest
error.
SECTION 2.10 Interest Periods. (a) At the time the Company or the
Canadian Borrower, as applicable, gives any Notice of Borrowing or Notice of
Conversion in respect of the making of, or conversion into, a Eurodollar Rate
Borrowing, the Company or the Canadian Borrower, as applicable, shall have the
right to elect, by giving the applicable Agent on the dates and at the times
specified in Section 2.03 or Section 2.07, as the case may be, notice of the
interest period (each an "Interest Period") applicable to such Eurodollar Rate
Borrowing, which Interest Period shall be either a one, two, three or six month
period; provided, that:
(i) all Loans comprising a Eurodollar Rate Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Rate Borrowing
shall commence on the date of such Eurodollar Rate Borrowing (including the date
of any conversion thereto pursuant to Section 2.07) and each Interest Period
occurring thereafter in respect of such Eurodollar Rate Borrowing shall commence
on the day on which the next preceding Interest Period expires;
(iii) if any Interest Period relating to a Borrowing of Eurodollar
Rate Loans begins on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period, such Interest Period
shall end on the last Business Day of such calendar month;
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(iv) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided, however, that if any Interest Period in respect of a
Borrowing of Eurodollar Rate Loans would otherwise expire on a day which is not
a Business Day, but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the next preceding
Business Day;
(v) no Interest Period shall extend beyond the Maturity Date; and
(vi) at no time shall there be more than ten Interest Periods in
effect under this Agreement.
(b) If upon the expiration of any Interest Period applicable to a
Eurodollar Rate Borrowing, the Company or the Canadian Borrower has failed to
elect a new Interest Period to be applicable to such Borrowing as provided
above, such party shall be deemed to have elected to convert such Borrowing into
Alternate Base Rate Loans or Canadian Base Rate Loans, as applicable, effective
as of the expiration date of such current Interest Period.
SECTION 2.11 Interest Rate Not Ascertainable. In the event that either
Agent shall have reasonably determined (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties) that on any
date for determining the Eurodollar Rate for any Interest Period, by reason of
any changes arising after the date of this Agreement affecting the Eurodollar
interbank market or any Bank's position in such market, adequate and fair means
do not exist for ascertaining the applicable interest rate on the basis provided
for in the definition of Eurodollar Rate, then, and in any such event, the
applicable Agent shall forthwith give notice to the Company and to the Banks of
such determination. Until such Agent notifies the Company or the Canadian
Borrower, as appropriate, that the circumstances giving rise to the suspension
described herein no longer exist, the obligations of the Banks to make
Eurodollar Rate Loans shall be suspended.
SECTION 2.12 Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, but subject to Section 13.08, if
after the Execution Date the application or effectiveness of any applicable law
or regulation or any change in applicable law or regulation or in the
interpretation or administration thereof, or compliance by any Bank with any
applicable guideline or request from any central bank or governmental authority
(whether or not having the force of law) (i) shall change the basis of taxation
of payments to any Bank of the principal of or interest on any Eurodollar Rate
Loan made by such Bank or any other fees or amounts payable hereunder (other
than (x) taxes imposed on the overall net income of such Bank or its Applicable
Lending Office or franchise taxes imposed upon it by the jurisdiction in which
such Bank or its Applicable Lending Office has an office or by any political
subdivision or taxing authority therein (or any tax which is enacted or adopted
by such jurisdiction, political subdivision or taxing authority as a direct
substitute for any such taxes) or (y) any tax, assessment, or other governmental
charge that would not have been imposed but for the failure of any Bank to
comply with any certification, information, documentation, or other reporting
requirement), (ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or
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credit extended by, such Bank (without duplication of any amounts paid pursuant
to Section 2.09(f)) or (iii) shall impose on such Bank or the London Interbank
Market any other condition affecting this Agreement or any Eurodollar Rate Loan
made by such Bank, and the result of any of the foregoing shall be to increase
the cost to such Bank of maintaining its Commitment or of making or maintaining
any Eurodollar Rate Loan or to reduce the amount of any sum received or
receivable by such Bank hereunder (whether of principal, interest or otherwise)
in respect thereof by an amount deemed in good faith by such Bank to be
material, then the Company or the Canadian Borrower, as appropriate, shall pay
to the appropriate Agent for the account of such Bank such additional amount or
amounts as will compensate such Bank for such increase or reduction to such Bank
upon demand by such Bank (through the applicable Agent). Notwithstanding the
foregoing, in no event shall the compensation payable under this paragraph (to
the extent, if any, constituting interest under applicable laws), together with
all amounts constituting interest under applicable laws and payable in
connection with this Agreement, the Notes and the other Loan Documents, exceed
the Highest Lawful Rate.
(b) If any Bank shall have determined in good faith that any law,
rule, regulation or guideline regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof or compliance by
any Bank (or any lending office of such Bank) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency has or would have the effect of
reducing the rate of return on the capital of such Bank as a consequence of, or
with reference to, such Bank's obligations hereunder to a level below that which
such Bank could have achieved but for such adoption, change or compliance by an
amount deemed by such Bank to be material, then, from time to time, the Company
or the Canadian Borrower, as appropriate, shall pay to the appropriate Agent for
the account of such Bank such additional amount or amounts as will reasonably
compensate such Bank for such reduction. Notwithstanding the foregoing, in no
event shall the compensation payable under this paragraph (to the extent, if
any, constituting interest under applicable laws) together with all amounts
constituting interest under applicable laws and payable in connection with this
Agreement, the Notes or the other Loan Documents, exceed the Highest Lawful
Rate.
(c) Each Bank will notify the Company or the Canadian Borrower, as
appropriate, through the appropriate Agent of any event occurring after the date
of this Agreement which will entitle such Bank to compensation pursuant to this
Section, as promptly as practicable, and in any event within 120 days after it
becomes aware thereof. A certificate of a Bank setting forth in reasonable
detail (i) such amount or amounts as shall be necessary to compensate such Bank
as specified in paragraph (a) or (b) above, as the case may be and (ii) the
calculation of such amount or amounts under clause (a)(i), shall be delivered to
the Company or the Canadian Borrower, as appropriate, (with a copy to the
appropriate Agent) and shall be conclusive absent manifest error. The Company
or the Canadian Borrower, as appropriate, shall pay to the appropriate Agent for
the account of such Bank the amount shown as due on any such certificate will
reasonably compensate such Bank for such matters within 30 days after its
receipt of the same. Upon the request of the Company or the Canadian Borrower,
as appropriate, each Bank agrees that it will use reasonable efforts to
designate a different Applicable Lending Office for the Loans due to it affected
by the matters described in subsection (a) and (b)above, if such designation
will avoid or reduce the liability of the Company to such Bank under this
Section
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so long as such designation is not disadvantageous to such Bank as determined by
such Bank in its sole discretion.
(d) Except as expressly provided in subsection (c) above, failure on
the part of any Bank to demand compensation for any increased costs or reduction
in amounts received or receivable or reduction in return on capital with respect
to any Interest Period shall not constitute a waiver of such Bank's rights to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to such Interest
Period or any other Interest Period.
(e) In the event any Bank shall seek compensation pursuant to this
Section, the Company or the Canadian Borrower, as appropriate, may give notice
to such Bank (with copies to the appropriate Agent) that it wishes to seek one
or more Eligible Assignees to assume the Commitment of such Bank and to purchase
its outstanding Loans, other Obligations and Notes. Each Bank requesting
compensation pursuant to this Section agrees to sell its Commitment, Loans,
other Obligations, Notes and interest in this Agreement and the other Loan
Documents pursuant to subsection (c) above to any such Eligible Assignee for an
amount equal to the sum of the outstanding unpaid principal of and accrued
interest on such Loans, such other Obligations and Notes plus all other fees,
amounts and compensation due such Bank hereunder calculated, in each case, to
the date such Commitment, Loans, other Obligations, Notes and interest are
purchased, whereupon such Bank shall have no further Commitment or other
obligation to the Company hereunder or under any Note.
SECTION 2.13 Change in Legality. (a) Notwithstanding anything to the
contrary herein contained, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Bank or
its Eurodollar Lending Office to make or maintain any Eurodollar Rate Loan or to
give effect to its obligations as contemplated hereby, then, by prompt written
notice to the Company or the Canadian Borrower, as appropriate, and to the
appropriate Agent, such Bank may:
(i) declare that Eurodollar Rate Loans will not thereafter be made by
such Bank hereunder, whereupon the Company or the Canadian Borrower, as
appropriate, shall be prohibited from requesting Eurodollar Rate Loans from such
Bank hereunder unless such declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Rate Loans made by it be
converted to Alternate Base Rate Loans or Canadian Base Rate Loans, as
appropriate, in which event (A) all such Eurodollar Rate Loans shall be
automatically converted to Alternate Base Rate Loans or Canadian Base Rate
Loans, as appropriate, as of the effective date of such notice as provided in
paragraph (b) below and (B) all payments and prepayments of principal which
would otherwise have been applied to repay the converted Eurodollar Rate Loans
shall instead be applied to repay the Alternate Base Rate Loans or Canadian Base
Rate Loans, as appropriate, resulting from the conversion of such Eurodollar
Rate Loans.
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Each Bank agrees that it will use reasonable efforts to designate a
different Applicable Lending Office for the Eurodollar Rate Loans due to it
affected by this Section, if such designation will avoid the illegality
described in this Section so long as such designation will not be
disadvantageous to such Bank as determined by such Bank in its sole discretion.
(b) For purposes of this Section, a notice to the Company or the
Canadian Borrower, as appropriate, (with a copy to the applicable Agent) by any
Bank pursuant to paragraph (a) above shall be effective on the date of receipt
thereof by the Company.
(c) In the event any Bank shall give a notice to the Company or the
Canadian Borrower, as appropriate, pursuant to this Section, the Company or the
Canadian Borrower may give notice to such Bank (with copies to the applicable
Agent) that it wishes to seek one or more Eligible Assignees to assume the
Commitment of such Bank and to purchase its outstanding Loans, Obligations and
Notes, if any. Each Bank giving a notice to the Company or the Canadian Borrower
pursuant to this Section agrees to sell its Commitment, Loans, Obligations,
Notes, if any and interest in this Agreement and the other Loan Documents to any
such Eligible Assignee for an amount equal to the sum of the outstanding unpaid
principal of and accrued interest on such Loans, Obligations and Notes plus all
other fees, amounts and compensation due such Bank hereunder calculated, in each
case, to the date such Commitment, Loans, Obligations, Notes and interest are
purchased, whereupon such Bank shall have no further Commitment or other
obligation to the Company or the Canadian Borrower hereunder or under any such
Note.
SECTION 2.14 INDEMNITY. THE COMPANY, IN RESPECT TO THE U.S. FACILITY
AND THE CANADIAN BORROWER IN RESPECT OF THE CANADIAN FACILITY, SHALL INDEMNIFY
EACH BANK AGAINST ANY LOSS (PROVIDED THAT ANY SUCH LOSS WITH RESPECT TO
ANTICIPATED PROFITS SHALL BE LIMITED AS EXPRESSLY PROVIDED IN CLAUSES (I) AND
(II) BELOW) OR REASONABLE EXPENSE WHICH SUCH BANK MAY SUSTAIN OR INCUR AS A
CONSEQUENCE OF (A) ANY FAILURE BY THE COMPANY OR THE CANADIAN BORROWER TO
FULFILL ON THE DATE OF ANY BORROWING HEREUNDER THE APPLICABLE CONDITIONS SET
FORTH IN ARTICLE V, (B) IF, FOR ANY REASON, A BORROWING OF OR A CONVERSION FROM
OR INTO EURODOLLAR RATE LOANS DOES NOT OCCUR ON THE DATE SPECIFIED THEREFOR IN A
NOTICE OF BORROWING OR NOTICE OF CONVERSION, (C) ANY PAYMENT, PREPAYMENT OR
CONVERSION OF A EURODOLLAR RATE LOAN REQUIRED BY ANY OTHER PROVISION OF THIS
AGREEMENT OR OTHERWISE MADE ON A DATE OTHER THAN THE LAST DAY OF THE APPLICABLE
INTEREST PERIOD, (D) ANY DEFAULT IN THE PAYMENT OR PREPAYMENT OF THE PRINCIPAL
AMOUNT OF ANY LOAN OR ANY PART THEREOF OR INTEREST ACCRUED THEREON, AS AND WHEN
DUE AND PAYABLE (AT THE DUE DATE THEREOF, BY NOTICE OF PREPAYMENT OR OTHERWISE)
OR (E) THE OCCURRENCE OF ANY EVENT OF DEFAULT, INCLUDING, IN THE CASE OF ANY OF
THE EVENTS SET FORTH IN CLAUSES (A) THROUGH (D) OF THIS SECTION, ANY LOSS OR
REASONABLE EXPENSE SUSTAINED OR INCURRED OR TO BE SUSTAINED OR INCURRED IN
LIQUIDATING OR EMPLOYING DEPOSITS FROM THIRD PARTIES ACQUIRED TO EFFECT OR
MAINTAIN SUCH LOAN OR ANY PART THEREOF AS A EURODOLLAR RATE LOAN. SUCH LOSS OR
REASONABLE EXPENSE SHALL INCLUDE AN AMOUNT EQUAL TO THE EXCESS, IF ANY, AS
REASONABLY DETERMINED BY EACH BANK OF (I) ITS COST OF OBTAINING THE FUNDS FOR
THE LOAN BEING PAID, PREPAID OR CONVERTED OR NOT BORROWED (BASED ON THE
EURODOLLAR RATE) FOR THE PERIOD FROM THE DATE OF SUCH PAYMENT, PREPAYMENT OR
CONVERSION OR FAILURE TO BORROW TO THE LAST DAY OF THE INTEREST PERIOD FOR SUCH
LOAN (OR, IN THE CASE OF A FAILURE TO BORROW, THE INTEREST PERIOD FOR THE
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LOAN WHICH WOULD HAVE COMMENCED ON THE DATE OF SUCH FAILURE TO BORROW) OVER (II)
THE AMOUNT OF INTEREST (AS REASONABLY DETERMINED BY SUCH BANK) THAT WOULD BE
REALIZED BY SUCH BANK IN REEMPLOYING THE FUNDS SO PAID, PREPAID OR CONVERTED OR
NOT BORROWED FOR SUCH PERIOD OR INTEREST PERIOD, AS THE CASE MAY BE. EACH BANK
WILL NOTIFY THE COMPANY OR THE CANADIAN BORROWER THROUGH THE APPLICABLE AGENT OF
ANY LOSS OR EXPENSE WHICH WILL ENTITLE SUCH BANK TO COMPENSATION PURSUANT TO
THIS SECTION, AS PROMPTLY AS POSSIBLE AND IN ANY EVENT WITHIN 120 DAYS AFTER IT
BECOMES AWARE THEREOF. A CERTIFICATE OF EACH BANK SETTING FORTH ANY AMOUNT OR
AMOUNTS WHICH SUCH BANK IS ENTITLED TO RECEIVE PURSUANT TO THIS SECTION SHALL BE
DELIVERED TO THE COMPANY OR THE CANADIAN BORROWER, (WITH A COPY TO THE
APPLICABLE AGENT) AND SHALL BE CONCLUSIVE, IF MADE IN GOOD FAITH, ABSENT
MANIFEST ERROR. THE COMPANY OR THE CANADIAN BORROWER SHALL PAY TO THE APPLICABLE
AGENT FOR THE ACCOUNT OF EACH BANK THE AMOUNT SHOWN AS DUE ON ANY CERTIFICATE
WITHIN 30 DAYS AFTER ITS RECEIPT OF THE SAME. NOTWITHSTANDING THE FOREGOING, IN
NO EVENT SHALL THE COMPENSATION PAYABLE UNDER THIS SECTION (TO THE EXTENT, IF
ANY, CONSTITUTING INTEREST UNDER APPLICABLE LAWS) TOGETHER WITH ALL AMOUNTS
CONSTITUTING INTEREST UNDER APPLICABLE LAWS AND PAYABLE IN CONNECTION WITH THIS
AGREEMENT OR THE NOTES, EXCEED THE HIGHEST LAWFUL RATE. WITHOUT PREJUDICE TO THE
SURVIVAL OF ANY OTHER OBLIGATIONS OF THE COMPANY OR THE CANADIAN BORROWER
HEREUNDER, THE OBLIGATIONS OF THE COMPANY OR THE CANADIAN BORROWER UNDER THIS
SECTION SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT, THE PAYMENT OF THE
OBLIGATIONS AND THE ASSIGNMENT OF ANY OF THE NOTES.
SECTION 2.15 Interest Act (Canada). Whenever interest is calculated on
the basis of a year of 360 days, for the purposes of the Interest Act (Canada),
the yearly rate of interest which is equivalent to the rate payable hereunder is
the rate payable multiplied by the actual number of days in the year and divided
by 360. All interest will be calculated using the nominal rate method and not
the effective rate method and the deemed reinvestment principle shall not apply
to such calculations.
SECTION 2.16 Reductions of Commitment and Reallocation Procedures. (a)
The Company may in full permanently terminate, or from time to time in part
permanently reduce, the Total U.S. Commitment, in each case upon at least three
Business Days' irrevocable written or telecopy notice to the U.S. Agent;
provided, however, that (i) the Company may not terminate or partially reduce
the Total U.S. Commitment to an amount less than the sum of all U.S. Loans then
outstanding plus the then U.S. Letter of Credit Outstandings and (ii) if the
Total U.S. Commitment is terminated or reduced to an amount less than the sum of
all U.S. Loans then outstanding plus the then U.S. Letter of Credit
Outstandings, then the Company shall, as a condition to such termination or
reduction, provide cash collateral in an amount equal to the shortfall. Each
partial reduction of the Total U.S. Commitment shall be in a minimum aggregate
principal amount of U.S.$5,000,000.00 and in integral multiples of
U.S.$1,000,000.00. Each reduction in the Total U.S. Commitment pursuant to this
section shall be made ratably among the U.S. Banks in accordance with each U.S.
Bank's Percentage Participation of the Total U.S. Commitment.
(b) The Canadian Borrower may in full permanently terminate, or from
time to time in part permanently reduce, the Total Canadian Commitment, in each
case upon at least three Business Days' irrevocable written or telecopy notice
to the Canadian Agent; provided, however, that (i) if the Total Canadian
Commitment is terminated or reduced to an amount less than the sum of the
Canadian
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Loans then outstanding (including the aggregate face amount of all outstanding
Bankers' Acceptances) plus the Canadian Letter of Credit Outstandings, then the
Canadian Borrower shall, as a condition precedent to such termination or
reduction, provide cash collateral in an amount equal to the shortfall. Each
reduction in the Total Canadian Commitment pursuant to this paragraph shall be
made ratably among the Canadian Banks in accordance with each Canadian Bank's
Percentage Participation of the Total Canadian Commitment.
(c) The Company or the Canadian Borrower shall pay to the applicable
Agent for the account of the applicable Banks, on the date of each termination
or reduction (and such Agent shall notify such Banks of such termination or
reduction), the Commitment Fees on the amount of the Commitments so terminated
or reduced accrued to the date of such termination or reduction.
(d) In addition to the Company's and the Canadian Borrower's ability
to reduce the Total U.S. Commitment or the Total Canadian Commitment, as the
case may be, and subject to the satisfaction of the conditions precedent set
forth in paragraph (e) below, the Company and the Canadian Borrower may
reallocate all or a portion of the Commitment of the Banks in accordance with
the following procedures; provided that no such reallocation shall be permitted
unless the Increased Bank shall have agreed to such reallocation in writing and
such reallocation would not have the effect, together with any previous
reallocations hereunder, of increasing the Total Canadian Commitment to an
amount greater than U.S.$100,000,000.00, or the Total U.S. Commitment to an
amount greater than $350,000,000.00. In the case of any such reallocation, the
Total U.S. Commitment (in the case of a reallocation of a U.S. Commitment) or
the Total Canadian Commitment (in the case of a reallocation of a Canadian
Commitment), as the case may be, shall be reduced by the amount of the
reallocated Commitment (the "Reallocated Commitment") and the Total Canadian
Commitment (if the Reallocated Commitment was a U.S. Commitment) or the Total
U.S. Commitment (if the Reallocated Commitment was a Canadian Commitment) shall
be increased by an amount in U.S. Dollars equal to (i) in the case of an
increase in the Total U.S. Commitment, the U.S. Dollar Equivalent (calculated on
the basis of the Exchange Rate determined by the Agent on the most recent Reset
Date) of the Reallocated Commitment and (ii) in the case of an increase in the
Total Canadian Commitment, the amount of the Reallocated Commitment. Any such
reallocation shall be subject to execution of appropriate documentation with
respect thereto by the Borrowers, the Agents, the Banks whose Commitments are
reduced pursuant to such reallocation (the "Reduced Banks") and the Banks that
will assume the increased Commitment resulting from such reallocation, which
shall be either the Reduced Bank or an affiliate thereof (the "Increased
Banks"). The Agents shall notify the Banks of any such reallocation. Any such
reallocation shall not require any consent or approval of any Bank other than
the Increased Banks, and the amounts of the respective Commitments of such other
Banks in the Increased Facility (as hereinafter defined) shall not be changed by
any such reallocation. All reallocations among the Reduced Banks shall be made
pro rata unless otherwise agreed. In the event of any such reallocation (i) the
credit facility comprised of the Reallocated Commitment, the other Commitments
to the Company and the Canadian Borrower, as the case may be, and the Loans and
other extensions of credit hereunder to the Company and the Canadian Borrower,
as the case may be, in respect of such Commitments is referred to herein as the
"Reduced Facility," and (ii) the credit facility comprised of the Commitment of
the Increased Banks, the other Commitments to the Company and the Canadian
Borrower, as the case may be, and the Loans and other
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extensions of credit hereunder in respect of such Commitments is referred to
herein as the "Increased Facility."
(e) The consummation of any reallocation pursuant to paragraph (d)
above shall be subject to satisfaction of the following conditions on the date
of such consummation:
(i) the conditions to borrowing set forth in Section 5.02 shall
be satisfied at the time;
(ii) the Company and the Canadian Borrower shall have given
notice of such proposed reallocation to both Agents at least ten (10) Business
Days in advance of the requested date therefor and each of the Agents, each of
the Issuing Banks, and each of the Increased Banks shall have consented in
writing to such reallocation;
(iii) the Company or the Canadian Borrower, in respect of the
Reduced Facility, will prepay (together with any costs payable pursuant of
Section 4.04) outstanding Loans, as applicable, or (in the case of the Canadian
Borrower) will pay cash to the Canadian Agent to be held by it in an interest
bearing account as security for the Obligations of the Canadian Borrower in
excess of the Total Canadian Commitment under the Reduced Facility, in such
amounts as shall be necessary in order that, after giving effect to the
reallocation of Commitments and to such prepayments and cash collateral, the
aggregate outstanding principal amount of such Loans (US$ or C$) are held by the
Banks ratably in accordance with their Commitments in respect of the Reduced
Facility;
(iv) the participations in U.S. Letter of Credit Outstandings and
Canadian Letter of Credit Outstandings represented thereby shall be adjusted so
that, after giving effect to the reallocation of Commitments, the Canadian
Letter of Credit Outstandings of each Canadian Bank shall equal its Percentage
Participation of the aggregate Canadian Letter of Credit Outstandings at the
time and the U.S. Letter of Credit Outstandings of each U.S. Bank shall equal
its Percentage Participation of the aggregate U.S. Letter of Credit Outstandings
at the time; and, if there are any Unpaid Drawings at the time, the Company or
the Canadian Borrower, as the case may be, shall pay the same in full together
with accrued interest, if any, thereon;
(v) such reallocation shall not result in the prepayment of any
Negotiated Rate Loan and after giving effect to such reallocation and the
satisfaction of the conditions specified above, (A) the aggregate principal
amount of all U.S. Loans then outstanding (including Negotiated Rate Loans then
outstanding) plus the then U.S. Letter of Credit Outstandings and Unpaid
Drawings shall not exceed the Total U.S. Commitment, (B) the Total Canadian
Loans then outstanding plus the then Canadian Letter of Credit Outstandings and
the aggregate face amount of all Bankers' Acceptances (in each case expressed in
U.S. Dollars) shall not exceed the Total Canadian Commitment, (C) the sum of the
total of A and B (expressed in U.S. Dollars) plus the aggregate principal amount
of all outstanding Negotiated Rate Loans shall not exceed the
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Total Commitment, and (D) the aggregate principal amount of all Negotiated Rate
Loans shall not exceed the unutilized portion of the Total U.S. Commitment; and
(vi) each Increased Bank shall have received from the Company or
the Canadian Borrower an applicable Reallocation Fee equal to the greater of
$3,000.00 or 1/16% of the amount of the increase in its U.S. or Canadian
Commitment, as applicable.
(f) The U.S. Agent or the Canadian Agent, as the case may be, shall
adjust the respective proportions of one or more of the Borrowings funded by the
U.S. Banks or the Canadian Banks, as the case may be, under the Increased
Facility on or after the date of consummation of any such reallocation in such a
manner so that the outstanding principal amount of all Loans made by each such
Bank plus each such Bank's share of the U.S. Letter of Credit Outstandings or
Canadian Letter of Credit Outstandings, as the case may be, plus (in the event
the Increased Facility is the Canadian Facility) the aggregate face amount of
all outstanding Bankers' Acceptances accepted by each such Canadian Bank shall
equal, in each case, as a percentage of the then Total U.S. Exposure or Total
Canadian Exposure, as the case may be, each such Bank's Percentage Participation
under the Increased Facility; provided that if the U. S. Agent or the Canadian
Agent, as the case may be, shall not have been able to achieve such equality
within six months of the said date of consummation of any such reallocation for
any reason, the Company or the Canadian Borrower, as the case may be, shall
forthwith prepay one or more U.S. Loans or Canadian Loans, as the case may be
(together with any costs payable pursuant to Section 2.14) and reborrow by way
of one or more U.S.Loans or Canadian Loans, as the case may be, so as to
immediately achieve such equality.
ARTICLE III
LETTERS OF CREDIT
SECTION 3.01 Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, the relevant Issuing Bank agrees that it will, at
any time and from time to time on or after the Effective Date and prior to the
Letter of Credit Termination Date, following its receipt of a Letter of Credit
Request, issue for the account of the Company or the Canadian Borrower, as
appropriate, and in support of the obligations of the Company or the Canadian
Borrower, as appropriate, issue one or more irrevocable letters of credit (all
such letters of credit together with the Existing Letters of Credit
collectively, the "Letters of Credit"), provided that no Issuing Bank shall
issue any Letter of Credit if at the time of such issuance:
(i) the Stated Amount of such Letter of Credit shall be greater than
an amount which when added to the relevant U.S. Letter of Credit Outstandings or
Canadian Letter of Credit Outstandings and the aggregate principal amount of all
outstanding U.S. Loans or Canadian Loans, as applicable, would exceed the Total
U.S. Commitment or Canadian Commitment, as applicable; or
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(ii) the Stated Amount of such Letter of Credit shall be greater than
an amount which when added to the relevant Letter of Credit Outstandings at such
time, would exceed the U.S. Letter of Credit Limit or Canadian Letter of Credit
Limit, as applicable; or
(iii) the expiry date or, in the case of any Letter of Credit
containing an expiry date that is extendible at the option of the Issuing Bank,
the initial expiry date of such Letter of Credit, is a date that is later than
the Termination Date.
(b) The Issuing Bank shall neither renew nor permit the renewal of any
Letter of Credit if any of the conditions precedent to such renewal set forth in
Section 5.02 are not satisfied or, after giving effect to such renewal, the
expiry date of such Letter of Credit would be a date that is later than the
Termination Date.
(c) The Company, the Agent and the Banks acknowledge that the U.S.
Agent, pursuant to the terms of the Prior Agreement, has issued for the account
of the Company, the Existing Letters of Credit. Upon the Effective Date, (i) the
Letter of Credit Outstandings shall be that amount equal to the aggregate Stated
Amount of the Existing Letters of Credit, (ii) the amount available for Loans
and Letters of Credit under the Total U.S. Commitment shall be reduced by such
amount and (iii) the amount available under each Bank's U.S. Commitment shall be
reduced by such Bank's Percentage Participation of such amount. If the Company
desires to extend the existing expiry date of any Existing Letter of Credit, or
request a substitute letter of credit be issued for any reason in respect of any
Existing Letter of Credit, the Company shall submit to the Issuing Bank a Letter
of Credit Request as provided in this Section 3.01.
SECTION 3.02 Letter of Credit Requests. (a) Whenever the Company or
the Canadian Borrower desires that a Letter of Credit be issued for its account
or that the existing expiry date shall be extended, it shall give the
appropriate Issuing Bank (with copies to be sent to the Agents and each other
Bank) (i) in the case of a Letter of Credit to be issued, at least two (2)
Business Days' prior written request therefor and (ii) in the case of the
extension of the existing expiry date of any Letter of Credit, at least five (5)
days prior to the date on which the Issuing Bank must notify the beneficiary
thereof that the Issuing Bank does not intend to extend such existing expiry
date. Each such request shall be executed by the Company or the Canadian
Borrower and shall be in the form of Exhibit 3.02 attached hereto (each a
"Letter of Credit Request") and, in the case of the issuance of each Letter of
Credit, shall be accompanied by an Application therefor, completed to the
satisfaction of the Issuing Bank, and such other certificates, documents and
other papers and information as the Issuing Bank or any Bank (through the
relevant Agent) may reasonably request. Following receipt of such notice and
prior to the issuance of the requested Letter of Credit or the applicable
amendment, renewal or extension, the applicable Agent shall calculate (if the
Letter of Credit is a Canadian Letter of Credit denominated in Canadian Dollars)
its U.S. Dollar Equivalent and, after consulting with the other Agent, shall
notify the Canadian Borrower, the Company and the Issuing Bank of the results of
the calculations in respect of Section 3.01. Each U.S. Letter of Credit shall be
denominated in U.S. Dollars, and each Canadian Letter of Credit shall be
denominated in Canadian Dollars or U.S. Dollars, at the option of the Canadian
Borrower, each shall expire no later than the date specified in Section 3.01,
shall not be in an amount
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greater than is permitted under clauses (ii) or (iii) of Section 3.01(a) and
shall be in such form as may be reasonably approved from time to time by the
Issuing Bank and the Company or the Canadian Borrower, as the case may be.
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Company or the Canadian Borrower, as
applicable, that such Letter of Credit may be issued in accordance with, and
will not violate the requirements of this Agreement. Unless the Issuing Bank has
received notice from any Bank before it issues the respective Letter of Credit
or extends the existing expiry date of a Letter of Credit that one or more of
the conditions specified in Article VII are not then satisfied, or that the
issuance of such Letter of Credit would violate this Agreement, then the Issuing
Bank may issue the requested Letter of Credit for the account of the Company in
accordance with the Issuing Bank's usual and customary practices. Upon its
issuance of any Letter of Credit or the extension of the existing expiry date of
any Letter of Credit, as the case may be, the Issuing Bank shall promptly notify
the Company or the Canadian Borrower, as applicable, the applicable Agent and
each applicable Bank of such issuance or extension, which notice shall be
accompanied by a copy of the Letter of Credit actually issued or a copy of any
amendment extending the existing expiry date of any Letter of Credit, as the
case may be.
SECTION 3.03 Letter of Credit Participations. (a) All Existing Letters
of Credit and all U.S. Letters of Credit issued subsequent hereto shall be
deemed to have been sold and transferred by the Issuing Bank to each U.S. Bank,
and all Canadian Letters of Credit shall be deemed to have been sold and
transferred to each Canadian Bank, and each such Bank shall be deemed
irrevocably and unconditionally to have purchased and received from the relevant
Issuing Bank, without recourse or warranty, an undivided interest and
participation, to the extent of such Bank's Percentage Participation in each
such Letter of Credit (including extensions of the expiry date thereof), each
substitute letter of credit, each drawing made thereunder and the obligations of
the Company or the Canadian Borrower, as applicable, under this Agreement and
the other Loan Documents with respect thereto, and any security therefor or
guaranty pertaining thereto including the Guaranty.
(b) In determining whether to pay under any Letter of Credit, the
Issuing Bank shall have no obligation relative to the Banks other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered and that they appear to comply on their face with
the requirements of such Letter of Credit.
(c) In the event that an Issuing Bank makes any payment under any
Letter of Credit and the Company or the Canadian Borrower, as applicable, shall
not have reimbursed such amount in full to such Issuing Bank pursuant to Section
3.04(a), such Issuing Bank shall promptly notify the U. S. Agent, or the
Canadian Agent, as appropriate, which shall promptly notify each Canadian or
U.S. Bank, as appropriate, of such failure, and each such Bank shall promptly
and unconditionally pay to the Agent or the Canadian Agent for the account of
such Issuing Bank the amount of such Bank's Percentage Participation of such
unreimbursed payment in U. S. or Canadian Dollars, as appropriate, and in same
day funds. If the Agent or the Canadian Agent so notifies, prior to 11:00 a.m.
of the local time of the Issuing Bank on any Business Day, any Bank required to
fund a payment under a Letter of Credit, such
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Bank shall make available to said Agent for the account of such Issuing Bank
such Bank's Percentage Participation of the amount of such payment on such
Business Day in same day funds. If and to the extent such Bank shall not have so
made its Percentage Participation of the amount of such payment available to the
appropriate Agent for the account of such Issuing Bank, such Bank agrees to pay
forthwith on demand such amount, together with interest thereon, for each day
from such date until the date such amount is paid to the appropriate Agent at
the lesser of: (i) the Highest Lawful Rate, or (ii)(A) as to any Letter of
Credit under the U.S. Facility, the Federal Funds Effective Rate,(B) (y) as to
any Letter of Credit under the Canadian Facility in U. S. Dollars, the Federal
Funds Effective Rate plus 1%, and (z) as to any Letter of Credit under the
Canadian Facility in Canadian Dollars, the Canadian Prime Rate. The failure of
any Bank to make available to the appropriate Agent for the account of such
Issuing Bank, its Percentage Participation of any payment under any Letter of
Credit shall not relieve any other Bank of its obligation hereunder to pay its
Percentage Participation of any payment under any Letter of Credit on the date
required, as specified above, but no Bank shall be responsible for the failure
of any other Bank to make available to the appropriate Agent such other Bank's
Percentage Participation of any such payment.
(d) Whenever an Issuing Bank receives a payment of a reimbursement
obligation pursuant to clause (b) above, such Issuing Bank shall pay to the
appropriate Agent and such Agent shall promptly pay to each Bank which has paid
its Percentage Participation thereof, in U.S. or Canadian Dollars and in same
day funds, an amount equal to such Bank's Percentage Participation thereof
together with any interest on such reimbursement obligation allocable to such
Bank's Percentage Participation paid by the Company or the Canadian Borrower, as
applicable, to such Issuing Bank pursuant to Section 3.04(a) and received by
said Agent.
(e) The obligations of the Banks to make payments to an Agent for the
account of an Issuing Bank with respect to Letters of Credit shall be
irrevocable and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or any of
the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right which
the Company, Canadian Borrower, or any other Loan Party may have at any time
against a beneficiary named in a Letter of Credit, any transferee of any Letter
of Credit, any Agent, any Issuing Bank, any Bank, or any other Person, whether
in connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any underlying
transaction between the Company or any other Loan Party and the beneficiary
named in any such letter of credit);
(iii) any draft, certificate or any other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
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(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Loan Documents; or
(v) the occurrence of any Default or Event of Default.
SECTION 3.04 Agreement to Repay Letter of Credit Drawings. (a) Upon
the receipt by an Issuing Bank of any Drawing from a beneficiary under a Letter
of Credit, such Issuing Bank promptly will provide the appropriate Agent and
Banks and the Company or the Canadian Borrower, as appropriate, with telecopy
notice thereof. The Company or the Canadian Borrower in the case of Canadian
Letters of Credit, hereby agrees to reimburse such Issuing Bank by making
payment to the appropriate Agent in immediately available funds in which the
Letter of Credit was paid at the Payment Office, for any payment made by such
Issuing Bank under any Letter of Credit issued by it (each such amount so paid
until reimbursed, an "Unpaid Drawing") immediately after, and in any event on
the date of, such payment, with interest on the amount so paid by such Issuing
Bank, to the extent not reimbursed prior to 2:00 p.m., local time of said Agent
at its Payment Office, on the date of such payment, from and including the date
paid to but excluding the date reimbursement is made as provided above, at a
rate per annum equal to the Default Rate, such interest to be payable on demand.
(b) The Company's and the Canadian Borrower's obligations under this
Section to reimburse any Issuing Bank with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Company may have or have had against any Bank
(including such Issuing Bank in its capacity as the issuer of a Letter of Credit
or any Bank as a participant therein), including any defense based upon the
failure of any drawing under a Letter of Credit (each a "Drawing") to conform to
the terms of the Letter of Credit or any non-application or misapplication by
the beneficiary of the proceeds of such Drawing, unless such matter arises out
of the gross negligence or willful misconduct of any Issuing Bank in paying such
Drawing.
(c) The Company and the Canadian Borrower also agree with the Issuing
Banks and the Banks that the Issuing Banks shall not be responsible for, and the
reimbursement obligations under subsection (a) above shall not be affected by,
among other things, the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Company, the
Canadian Borrower or any other Loan Party and the beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
any claims whatsoever of the Company, the Canadian Borrower or any other Loan
Party against any beneficiary of such Letter of Credit or any such transferee
other than the gross negligence or willful misconduct of any Issuing Bank in
paying such Drawing.
(d) NO ISSUING BANK SHALL BE LIABLE FOR ANY ERROR OR OMISSION OF ANY
KIND, OR FOR ANY INTERRUPTION OR DELAY IN TRANSMISSION, DISPATCH OR DELIVERY OF
ANY MESSAGE OR ADVICE, HOWEVER TRANSMITTED, IN CONNECTION WITH ANY LETTER OF
CREDIT ISSUED BY SUCH ISSUING BANK, EXCEPT FOR ERRORS OR OMISSIONS CAUSED BY
SUCH ISSUING BANK'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IT IS THE
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EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH ISSUING BANK, ITS OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS SHALL BE INDEMNIFIED AND HELD HARMLESS FROM ANY
ACTION TAKEN OR OMITTED BY SUCH PERSON UNDER OR IN CONNECTION WITH ANY LETTER OF
CREDIT ISSUED BY SUCH ISSUING BANK OR ANY RELATED DRAFT OR DOCUMENT ARISING OUT
OF OR RESULTING FROM SUCH PERSON'S SOLE OR CONTRIBUTORY NEGLIGENCE. THE COMPANY
AND THE CANADIAN BORROWER AGREE THAT ANY ACTION TAKEN OR OMITTED BY AN ISSUING
BANK UNDER OR IN CONNECTION WITH ANY LETTER OF CREDIT OR THE RELATED DRAFTS OR
DOCUMENTS, IF DONE IN ACCORDANCE WITH THE STANDARDS OF CARE SPECIFIED IN THE
UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION),
INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (AND ANY SUBSEQUENT
REVISIONS THEREOF APPROVED BY A CONGRESS OF THE INTERNATIONAL CHAMBER OF
COMMERCE AND ADHERED TO BY THE ISSUING BANKS) (AND, IN THE CASE OF ANY U.S.
LETTER OF CREDIT AND, TO THE EXTENT NOT INCONSISTENT THEREWITH, THE UNIFORM
COMMERCIAL CODE OF THE STATE OF TEXAS) SHALL NOT RESULT IN ANY LIABILITY OF AN
ISSUING BANK TO THE COMPANY OR ANY OTHER LOAN PARTY.
SECTION 3.05 Increased Costs. (a) Notwithstanding any other provision
herein, but subject to Section 13.08, if any Bank shall have determined in good
faith that any law, rule, regulation or guideline or the application or
effectiveness of any applicable law or regulation or any change in applicable
law or regulation or any change after the Execution Date in the interpretation
or administration thereof, or compliance by any Bank (or any lending office of
such Bank) with any applicable guideline or request from any central bank or
governmental authority (whether or not having the force of law) either (i) shall
impose, modify or make applicable any reserve, deposit, capital adequacy or
similar requirement against letters of credit issued, or participated in, by any
Bank or (ii) shall impose on any Bank any other conditions affecting this
Agreement or any Letter of Credit; and the result of any of the foregoing is to
increase the cost to any Bank of issuing, maintaining or participating in any
Letter of Credit, or reduce the amount received or receivable by any Bank
hereunder with respect to Letters of Credit, by an amount deemed by such Bank to
be material, then, from time to time, the Company or the Canadian Borrower, as
appropriate, shall pay to the appropriate Agent for the account of such Bank
such additional amount or amounts as will reasonably compensate such Bank for
such increased cost or reduction by such Bank. Notwithstanding the foregoing,
in no event shall the compensation payable under this paragraph (to the extent,
if any, constituting interest under applicable laws) together with all amounts
constituting interest under applicable laws and payable in connection with this
Agreement, the Notes or the other Loan Documents, exceed the Highest Lawful
Rate.
(b) Each Bank will notify the Company or the Canadian Borrower, as
appropriate, through the appropriate Agent of any event occurring after the date
of this Agreement which will entitle such Bank to compensation pursuant to this
subsection (a) above, as promptly as practicable, and in any event within 120
days after it becomes aware thereof. A certificate of a Bank setting forth in
reasonable detail such amount or amounts as shall be necessary to compensate
such Bank as specified in subsection (a) above may be delivered to the Company
or the Canadian Borrower, as appropriate, (with a copy to the Agent) and shall
be conclusive absent manifest error and the liable party shall pay to the Agent
for the account of such Bank the amount shown as due on any such certificate
within 30 days after its receipt of the same.
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SECTION 3.06 Conflict between Applications and Agreement. To the
extent that any provision of any Application related to any Letter of Credit is
inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall control.
ARTICLE IV
FEES; CURRENCY FLUCTUATIONS; COMMITMENTS; PAYMENTS
SECTION 4.01 Fees. (a) The Company agrees to pay the U.S. Agent for
the account of each U.S. Bank, and the Canadian Borrower agrees to pay to the
Canadian Agent for the account of each Canadian Bank, a commitment fee (the
"Commitment Fee") for the period from and including the Execution Date, to but
excluding the date upon which the Total Commitment shall have been terminated,
computed at a rate equal to 1/4 of 1% per annum on the daily average Unutilized
U.S. Commitment or the Unutilized Canadian Commitment, as appropriate of such
Bank, (computed without regard to any outstanding Negotiated Rate Loans as
provided in Section 2.01(b)); provided, that if any two of Duff & Phelps Credit
Rating Co., Standard & Poors Ratings Group and Moody's Investor Service, Inc.,
or their successors, issue an actual or implied rating of the general, long
term, senior unsecured debt of the Company of BBB- (or the equivalent thereof)
or higher, such rate shall change to 3/16 of 1% effective as of the next date
payment of such fee is due. Accrued Commitment Fees shall be calculated to the
day immediately preceding each Designated Payment Date and to the date
immediately preceding such date upon which the Total Commitment is terminated
and shall be due and payable in arrears on each Designated Payment Date
commencing September 30, 1996 and on the date upon which the Total Commitment is
terminated. The Commitment Fee (i) shall be paid in immediately available funds
and (ii) shall be calculated on the basis of a 360-day year.
(b) Each of the Company and the Canadian Borrower, as applicable,
agrees to pay the appropriate Agent for pro rata distribution to the U.S. or
Canadian Banks, as appropriate, (based upon their respective Percentage
Participations) a fee in respect of each Letter of Credit issued for the account
of the Company (the "Letter of Credit Fee"), for the period from the date of
issuance of such Letter of Credit to the expiry date of such Letter of Credit,
computed at the rate of 1% per annum on the daily average stated amount of each
Letter of Credit, which fees shall be payable in the currency in which such
Letter of Credit is denominated. The Company and the Canadian Borrower, as
applicable, agrees to pay to each Issuing Bank, for its own account, a fee in
respect of each Letter of Credit issued for the account of the Company or the
Canadian Borrower, as applicable, for the period from the date of issuance of
such Letter of Credit to the expiry date of such Letter of Credit, computed at
the rate of 1/8 of 1% per annum on the daily average stated amount of such
Letter of Credit. Accrued Letter of Credit Fees and fees due to each Issuing
Bank pursuant to this Section shall be due and payable in arrears on each
Designated Payment Date commencing September 30, 1996, and on the Termination
Date or, if earlier, on the date upon which the Total Commitment is terminated.
The Letter of Credit Fees (i) will be in lieu of all commissions and fees for
the Letters of Credit other than customary administrative, issuance, amendment,
payment and negotiation charges, (ii) shall be paid in immediately available
funds and (iii) shall be calculated on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be.
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(c) The Company agrees to pay all fees described in that one certain
fee letter dated July 1, 1996 between the Company, on the one hand, and the
Agent and Chase Securities, Inc., on the other hand, in connection with this
Agreement.
(d) In no event shall the Fees payable under this Section (to the
extent, if any, constituting interest under applicable laws) together with all
amounts constituting interest under applicable laws and payable in connection
with this Agreement, the Notes and the other Loan Documents exceed the Highest
Lawful Rate.
SECTION 4.02 Currency Fluctuations. (a) Not later than 1:00 p.m.
(Houston, Texas time) on each Calculation Date, the U.S. Agent shall determine
the Exchange Rate as of such Calculation Date. The Exchange Rate so determined
shall become effective on the first Business Day immediately following the
relevant Calculation Date (a "Reset Date") and shall remain effective until the
next succeeding Calculation Date.
(b) Not later than 4:00 p.m. (Houston, Texas time) on each Reset Date,
the U.S. Agent shall consult with the Canadian Agent and the Agents shall
determine the Total Canadian Exposure (in U.S. Dollars) and the Total U.S.
Exposure.
(c) If, on any Reset Date, the sum of the Total U.S. Exposure and the
Total Canadian Exposure (expressed in U.S. Dollars) exceeds the Total
Commitment, then (i) the Agents shall give notice thereof to the Banks, the
Company and the Canadian Borrower and (ii) the Company and the Canadian Borrower
shall within two (2) Business Days thereafter, repay or prepay Loans (other than
Negotiated Rate Loans) in accordance with this Agreement in an aggregate
principal amount sufficient to reduce the sum of the Total U.S. Exposure and the
Total Canadian Exposure to the Total Commitment.
(d) If, at the end of any Interest Period and up to and including the
Termination Date, the Total Canadian Exposure (expressed in U.S. Dollars)
exceeds the Total Canadian Commitment, then (i) the Canadian Agent shall give
notice thereof to the Canadian Borrower and the Canadian Banks and (ii) within
two (2) Business Days thereafter, the Canadian Borrower shall repay or prepay
Canadian Loans in accordance with this Agreement in an aggregate principal
amount such that, after giving effect thereto, the Total Canadian Exposure
(expressed in U.S. Dollars) shall not exceed the Total Canadian Commitment.
(e) Without limiting Paragraph (d), above if, on any day prior to the
Termination Date, the Total Canadian Exposure (expressed in U.S. Dollars)
exceeds the Total Canadian Commitment by five percent (5%) or more, then (i) the
Canadian Agent shall give notice thereof to the Canadian Borrower and the
Canadian Banks and (ii) within two (2) Business Days thereafter, the Canadian
Borrower shall repay or prepay Canadian Loans in accordance with the Agreement
in an aggregate principal amount such that, after giving effect thereto, the
Total Canadian Exposure (expressed in U.S. Dollars) shall not exceed the Total
Canadian Commitment.
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(f) To the extent the repayments and prepayments referenced in
paragraph (c) do not result in a sum of the Total U.S. Exposure and the Total
Canadian Exposure (expressed in U.S. Dollars) that is less than or equal to the
Total Commitment and/or the repayments and prepayments referenced in paragraph
(d) do not result in a Total Canadian Exposure (expressed in U.S. Dollars) that
is less than or equal to the Total Canadian Commitment, then the Company and the
Canadian Borrower shall immediately upon demand provide cash collateral required
to obtain such results.
SECTION 4.03 Mandatory Reduction of Commitment. The Total Commitment,
if not sooner terminated, shall terminate on the Maturity Date on which date the
Obligations shall be paid in full.
SECTION 4.04 Voluntary Prepayments. The Company or the Canadian
Borrower shall have the right to voluntarily prepay the Loans in whole or in
part from time to time on the following terms and conditions: (a) no Eurodollar
Rate Loan may be prepaid prior to the last day of its Interest Period unless,
simultaneously therewith, the Company, or the Canadian Borrower, as appropriate,
pays to the applicable Agent for the benefit of the applicable Banks, all sums
necessary to compensate such Banks for all costs and expenses resulting from
such prepayment, as reasonably determined by the applicable Agent, including but
not limited to those costs described in Sections 2.12 and 2.14 hereof; (b) each
partial prepayment shall be in an initial aggregate principal amount of
$1,000,000.00 and, if greater, an integral multiple of $100,000.00; (c)
outstanding Bankers' Acceptances may not be prepaid but may be secured in
accordance with the provision of Section 2.04(c) and (d) each prepayment
pursuant to this Section shall be applied pro rata among the designated
outstanding Loans of each of the Banks, first, to the payment of accrued and
unpaid interest, then, to the outstanding principal of such Loans in the inverse
order of maturity thereof.
SECTION 4.05 Mandatory Repayments. (a) The aggregate amount of the
Loans outstanding on the Termination Date shall convert to amortizing loans,
and, if not sooner paid, shall be due and payable as follows: subject to Section
2.13, on each Designated Payment Date in each year commencing September 30,
1999, (i) the Company shall repay the outstanding principal amount of the
Committed Loans in an amount equal to 1/16th of the principal amount outstanding
on such Loans outstanding on the Termination Date; provided, however, on the
Maturity Date the Company shall pay the aggregate principal amount of all Loans
outstanding on such date, together with all accrued, unpaid interest due
thereon, and shall deposit with the U.S. Agent the cash required by Section
11.01, and (ii) the Canadian Borrower shall repay the outstanding principal
balance of the Canadian Loans (A) in an amount equal to 1/16th of the sum of the
aggregate principal amount of all Canadian Loans denominated in Canadian Dollars
(plus the aggregate face principal amount of all Bankers' Acceptances) in each
case outstanding on the Termination Date, and (B) in an amount equal to 1/16th
of the sum of the aggregate principal amount of all Canadian Loans denominated
in U.S. Dollars and the aggregate Stated Amount of all Canadian Letters of
Credit denominated in U.S. Dollars, in each case outstanding on the Termination
Date; provided, however on the Maturity Date the Canadian Borrower shall pay the
aggregate principal amount of all Canadian Loans outstanding on such date,
together with all accrued, unpaid interest due thereon and shall deposit with
the Canadian Agent the cash required by Section 11.01(vi).
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(b) Subject to Section 2.13, the Company shall repay the outstanding
principal amount of any Loans on any day on which the aggregate outstanding
principal amount of such Loans, when added to the applicable Letter of Credit
Outstandings, exceeds the Total Commitment, in the amount of such excess. If,
after giving effect to the prepayment of all outstanding Loans, the Letter of
Credit Outstandings exceed the Total Commitment, the Company shall pay an amount
of cash equal to such excess Letter of Credit Outstandings to the applicable
Agent, such cash to be held as security for all obligations of the Company
hereunder and under the other Loan Documents. If the amount of all such Canadian
Loans, Bankers Acceptance and Canadian Letters of Credit Outstanding exceeds the
Total Canadian Commitment, or the amount of all such U.S. Loans and U.S. Letters
of Credit Outstanding exceed the Total U.S. Commitment the Company or the
Canadian Borrower, as applicable, shall immediately repay such excess.
(c) The Canadian Borrower shall pay the principal face amount of each
Bankers' Acceptance on the maturity date thereof, either, if no Default has
occurred and is continuing, by means of the proceeds of a Refunding Bankers'
Acceptance or in readily available funds, or after the occurrence of an uncured
Default, in readily available funds in each case to the Canadian Bank which
issued such Bankers' Acceptance.
(d) Each repayment pursuant to this Section shall be applied pro rata
among the designated outstanding Loans of each of the Banks, first, to the
payment of accrued and unpaid interest, then, in the case of all Loans, to the
outstanding principal of such Loans.
SECTION 4.06 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement shall be made to
the appropriate Agent for the account of the Bank or Banks entitled thereto not
later than 11:00 a.m. (local time of the Agent) on the date when due and shall
be made in immediately available funds at the Payment Office. If such Agent
fails to send to any Bank its portion of any payment timely received by the
Agent by the close of business on the day such payment was received, the Agent
shall pay such Bank interest on its portion of such payment at the lesser of (i)
the Federal Funds Rate or the CDOR Rate, as appropriate and (ii) the Highest
Lawful Rate for the period from the day such payment was timely received by such
Agent to the date such Bank's portion of such payment is sent to such Bank.
Whenever any payment to be made hereunder or under any Note shall be stated to
be due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and, with respect to payments of
principal, interest shall be payable at the applicable rate during such
extension.
SECTION 4.07 Net Payments. Except with respect to withholdings of
United States taxes, as provided in Section 4.08, all payments (whether of
principal, interest, Fees, reimbursements or otherwise) by the Company or the
Canadian Borrower, as applicable, under this Agreement shall be made without
set-off or counterclaim and shall be made free and clear of and without
deduction for any present or future tax, levy, impost or any other charge,
if any, of any nature whatsoever now or hereafter imposed by any taxing
authority. Except with respect to withholdings of United States or Canadian
taxes as provided in Section 4.08, if the making of such payments by the
Company or the Canadian
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Borrower, as applicable, is prohibited by law unless such a tax, levy, impost or
other charge is deducted or withheld therefrom, the Company or the Canadian
Borrower, as applicable, shall pay to the relevant Agent, on the date of each
such payment, such additional amounts (without duplication of any amounts
required to be paid by the Company or the Canadian Borrower, as applicable,
pursuant to Section 2.12 or Section 3.05) as may be necessary in order that the
net amounts received by the Banks after such deduction or withholding shall
equal the amounts which would have been received if such deduction or
withholding were not required. The Company or the Canadian Borrower, as
applicable, shall confirm that all applicable taxes, if any, imposed on this
Agreement or transactions hereunder shall have been properly and legally paid by
it to the appropriate taxing authorities by sending official tax receipts or
notarized copies of such receipts to the relevant Agent within 30 days after
payment of any applicable tax. Notwithstanding the foregoing, in no event shall
the compensation payable under this Section 4.07 (to the extent, if any,
constituting interest under applicable laws) together with all amounts
constituting interest under applicable laws and payable in connection with this
Agreement, the Notes and the other Loan Documents exceed the Highest Lawful
Rate.
SECTION 4.08 Tax Forms. With respect to each U.S. Bank that is
organized under the laws of a jurisdiction outside the United States, on the
date of the initial Borrowing hereunder, and from time to time thereafter if
requested by the Company or the Canadian Borrower, as applicable, or the U.S.
Agent, each such Bank shall provide such Agent and the Company two duly
completed copies of the United States Internal Revenue Service Form 1001 (or
such other documentation or information as may, under applicable United States
federal income tax statutes or regulations, be required in order to claim an
exemption or reduction from United States income tax withholding by reason of an
applicable treaty with the United States, such documentation or other
information being hereafter referred to as "Form 1001") or 4224 (or such other
documentation or information as may, under applicable United States federal
income tax statutes or regulations, be required in order to claim an exemption
from United States income tax withholding for income that is effectively
connected with the conduct of a trade or business within the United States, such
documentation or other information being hereafter referred to as "Form 4224"),
as the case may be, indicating in each case that such Bank is either entitled to
receive payments in respect of Loans to the Company under this Agreement and the
Notes without deduction or withholding of any United States federal income taxes
or, as the case may be, is subject to such limited deduction or withholding as
it is capable of recovering in full from a source other than the Company. Each
U.S. Bank which delivers to the Company and the Agent a Form 1001 or 4224
pursuant to the next preceding sentence further undertakes to deliver to the
Company and the Agent two further copies of the said Form 1001 or 4224, or
successor applicable form or certificate, as the case may be, as and when the
previous form filed by it hereunder shall expire or shall become incomplete or
inaccurate in any respect, unless in any of such cases an event has occurred
prior to the date on which any such delivery would otherwise be required which
renders such form inapplicable.
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ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions Precedent to the Initial Borrowing of Loans.
The obligation of each Bank to make its initial Loan or issue a Letter of Credit
at the request of the Company or of the Canadian Borrower is subject to the
following conditions:
The Agent shall have received the following:
(a) this Agreement executed by each party hereto;
(b) a Note executed by the Company and payable to the order of each
U.S. Bank in the amount of its U.S. Commitment;
(c) a Notice of Borrowing with respect to the Loans, if any, to be
borrowed on the initial Borrowing Date meeting the requirements of Section 2.03;
(d) a certificate of an officer and of the secretary or an assistant
secretary of each Loan Party certifying, inter alia, (A) true and complete
copies of each of the articles or certificate of incorporation, as amended and
in effect, of the Company, the bylaws, as amended and in effect, of the Company
and the resolutions adopted by the Board of Directors of each Loan Party (1)
authorizing the execution, delivery and performance by such Person of this
Agreement and the other Loan Documents to which it is or will be a party and, in
the case of the Company and the Canadian Borrower, the Borrowings to be made and
the Letters of Credit to be issued hereunder, (2) approving the forms of the
Loan Documents to which it is a party and which will be delivered at or prior to
the initial Borrowing Date and (3) authorizing officers of such Person to
execute and deliver the Loan Documents to which it is or will be a party and any
related documents, including, any agreement contemplated by this Agreement, (B)
the incumbency and specimen signatures of the officers of such Person executing
any documents on its behalf and (C) (1) that the representations and warranties
made by such Loan Party in any Loan Document to which such Person is a party and
which will be delivered at or prior to the date of the initial Borrowing Date
are true and correct in all material respects, (2) the absence of any
proceedings for the dissolution or liquidation of such Person and (3) the
absence of the occurrence of any Material Adverse Effect or the occurrence and
continuance of any Default or Event of Default;
(e) favorable, signed opinions addressed to the U.S. Agent and the
U.S. Banks from Baker & Botts, L.L.P., counsel to the Loan Parties, and H.
Steven Walton, Esquire, the Company's General Counsel, in substantially the
forms attached hereto as Exhibit 5.01-A and Exhibit 5.01-B, respectively;
(f) favorable, signed opinions addressed to the Canadian Agent and the
Canadian Banks from Stikeman & Elliott, counsel to the Canadian Borrower, in
substantially the form attached hereto as Exhibit 5.01-C;
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(g) the payment to the Agents and the Banks, as applicable, of all
fees then due under Section 4.01 hereof and all other reasonable fees and
expenses (including the reasonable fees and disbursements of Andrews & Kurth
L.L.P. and Fraser & Beatty pursuant to Section 13.04) agreed upon by such
parties to be paid on or prior to the Execution Date; and
(h) certificates of appropriate public officials as to the existence
and good standing of each Loan Party listed on Schedule 5.01(h) hereto in the
jurisdiction of its incorporation.
The acceptance of the benefits of the initial Credit Event shall
constitute a representation and warranty by the Loan Parties, to the Agents and
each of the relevant Banks that all of the conditions specified in this Section
above shall have been satisfied or waived as of that time.
SECTION 5.02 Conditions Precedent to All Credit Events. The obligation
of any Banks to make any Loan or to issue or extend any Letter of Credit is
subject to the further conditions precedent that on the date of such Credit
Event or purchase of any Bankers Acceptance (other than any conversion of
existing Loans into Alternate Base Rate Loans or Canadian Prime Loans, as
appropriate):
(a) The conditions precedent set forth in Section 5.01 shall have
theretofore been satisfied or waived.
(b) The representations and warranties set forth in Article VI shall
be true and correct in all material respects as of, and as if such
representations and warranties were made on, the date of the proposed Loan or
Letter of Credit, as the case may be (unless such representation and warranty
expressly relates to an earlier date or are no longer true and correct solely as
a result of transactions permitted by the Loan Documents), and the Company and
the Canadian Borrower shall be deemed to have certified to the Agents and the
Banks that such representations and warranties are true and correct in all
material respects by submitting a Notice of Borrowing or a Letter of Credit
Request, as the case may be.
(c) The Company and the Canadian Borrower shall have complied with the
provisions of Section 2.03 or Section 3.02, as applicable.
(d) No Default or Event of Default shall have occurred and be
continuing or would result from such Credit Event.
(e) No Material Adverse Effect shall have occurred since the delivery
of the Financials.
(f) The Agents and the Banks shall have received such other approvals,
opinions or documents as the Agents or the Majority Banks may reasonably
request.
The acceptance of the benefits of each such Credit Event by either the
Company or the Canadian Borrower shall constitute a representation and warranty
by the Company and the Canadian Borrower, to each of the relevant Banks that all
of the conditions specified in this Section above exist as of that time.
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SECTION 5.03 Conditions Precedent to Conversions. The obligation of
the Banks to convert any existing Borrowing into a Borrowing consisting of
Eurodollar Rate Loans is subject to the condition precedent that on the date of
such conversion no Default or Event of Default shall have occurred and be
continuing or would result from the making of such conversion. The acceptance of
the benefits of each such conversion shall constitute a representation and
warranty by the Company to each of the Banks that no Default or Event of Default
shall have occurred and be continuing or would result from the making of such
conversion.
SECTION 5.04 Delivery of Documents. All of the Notes, certificates,
legal opinions and other documents and papers referred to in this Article V,
unless otherwise specified, shall be delivered to the Agent for the account of
each of the Banks and, except for the Notes, in sufficient counterparts for each
of the Banks and shall be reasonably satisfactory in form and substance to the
Banks.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Agreement and to make
the Loans provided for herein and issue Letters of Credit, each Loan Party
makes, on or as of the Effective Date and the occurrence of each Credit Event
(other than any conversion of an existing Loan into an Alternate Base Rate Loan
or Canadian Prime Loan, as the case may be, and except to the extent such
representations or warranties relate to an earlier date or are no longer true
and correct in all material respects solely as a result of transactions
permitted by the Loan Documents), the following representations and warranties
to the Agents and the Banks:
SECTION 6.01 Organization and Qualification. Each Loan Party (a) is a
corporation, partnership, limited liability company or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has the corporate,
partnership, limited liability company or other power to own its property and to
carry on its business as now conducted and (c) is duly qualified to do business
and is in good standing in every jurisdiction in which the failure to be so
qualified would, have a Material Adverse Effect.
SECTION 6.02 Authorization and Validity. Each Loan Party has the
corporate partnership, limited liability company or other power and authority to
execute, deliver and perform its obligations hereunder and under the other Loan
Documents, and all such action has been duly authorized by all necessary
corporate, partnership, limited liability company or other proceedings on its
part. This Agreement has been duly and validly executed and delivered by each of
the Loan Parties and constitutes a valid and legally binding agreement of such
Loan Party enforceable in accordance with its terms. The Notes and the other
Loan Documents to which such Loan Party is a party, when duly executed and
delivered by such Loan Party, will constitute valid and legally binding
obligations of such Loan Party enforceable in accordance with the respective
terms thereof and of this Agreement, except, in each case, as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or affecting
the enforcement of creditors' rights generally, and
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by general principles of equity (regardless of whether such enforceability is a
proceeding in equity or at law).
SECTION 6.03 Governmental Consents. No authorization, consent,
approval, license or exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is necessary for the valid execution, delivery or
performance by any Loan Party of any Loan Document.
SECTION 6.04 Conflicting or Adverse Agreements or Restrictions. No
Loan Party nor any of its Subsidiaries is a party to any contract or agreement
or subject to any restriction which would reasonably be expected to have a
Material Adverse Effect. Neither the execution nor delivery of the Loan
Documents nor compliance with the terms and provisions hereof or thereof will be
contrary to the provisions of, or constitute a default under (a) the charter or
bylaws of the Company or any of its Subsidiaries or (b) any applicable law
(including Regulation U) or any applicable regulation, order, writ, injunction
or decree of any court or governmental instrumentality or (c) any material
agreement to which the Company or any of its Subsidiaries is a party or by which
it is bound or to which it is subject.
SECTION 6.05 Title to Assets. Each of the Company and its Subsidiaries
has good and indefeasible title to all of its material assets, subject to no
Liens, except those permitted hereunder. All of such assets have been and are
being maintained by the appropriate Person in good working condition in
accordance with industry standards, subject to force majeure and ordinary wear
and tear excepted.
SECTION 6.06 Litigation; Arbitration. No proceedings against or
affecting the Company or any Subsidiary are pending or, to the knowledge of any
Loan Party, threatened before any court, arbitrator or governmental agency or
department which involve a reasonable material risk of having a Material Adverse
Effect.
SECTION 6.07 Financial Statements. The Company has furnished to each
Bank its audited consolidated balance sheet, income statement and statement of
cash flow for itself and its consolidated Subsidiaries as of December 31, 1995,
and the unaudited consolidated balance sheet and income statement of the
Canadian Borrower and its consolidated Subsidiaries as of May 31, 1996
(collectively, the "Financials"). The Financials of the Company have been
prepared in conformity with GAAP consistently applied (except as otherwise
disclosed in such financial statements) throughout the periods involved and
present fairly, in all material respects, the consolidated financial condition
of the Company and its consolidated Subsidiaries as of December 31, 1995 and the
results of their operations for the period then ended. As of the Effective Date,
no Material Adverse Effect has occurred in the consolidated financial condition
of the Company and its consolidated Subsidiaries since the date of said
Financials.
SECTION 6.08 Default. Neither the Company nor any Subsidiary is in
default under the provisions of any instrument evidencing any Indebtedness or of
any agreement relating thereto, or in default in any respect under any order,
writ, injunction or decree of any court, or in default in any
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respect under or in violation of any order, injunction or decree of any
governmental instrumentality, which defaults or violations would reasonably be
expected to have a Material Adverse Effect. Except as disclosed on Schedule
6.08, neither the Company nor any Subsidiary is a party to any material
agreement evidencing any Indebtedness of such Person with an outstanding
principal amount in excess of $500,000.00 on the date of the execution of this
Agreement.
SECTION 6.09 Investment Company Act. Neither the Company nor any
any Person which is, an "investment company," as such term is defined in the
Investment Company Act of 1940, as amended.
SECTION 6.10 Public Utility Holding Company Act. Neither the Company
nor any Subsidiary is a non-exempt "holding company," or subject to regulation
as such, or, to the knowledge of any Loan Party's officers, an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 6.11 ERISA. No accumulated funding deficiency (as defined in
Section 412 of the Code or Section 302 of ERISA or under any Applicable Canadian
Pension Legislation), whether or not waived, exists or is expected to be
incurred with respect to any Plan(s). No liability to the PBGC (other than
required premium payments) has been or is expected by the Loan Parties to be
incurred with respect to any Plan(s) by the Loan Parties or any ERISA Affiliate
which would reasonably be expected to have a Material Adverse Effect. Neither
the Company or any ERISA Affiliate has incurred any withdrawal liability under
Title IV of ERISA or under any Applicable Canadian Pension Legislation with
respect to any Multi-Employer Plans which would reasonably be expected to have a
Material Adverse Effect.
SECTION 6.12 Tax Returns and Payments. Each of the Company and its
Subsidiaries has filed all federal income tax returns and other material tax
returns, statements and reports (or obtained extensions with respect thereto)
which, are required to be filed and have paid or deposited or made adequate
provision in accordance with GAAP for the payment of all taxes (including
estimated taxes shown on such returns, statements and reports) which are shown
to be due pursuant to such returns, except for such taxes as are being contested
in good faith and by appropriate proceedings or which is not reasonably expected
to have a Material Adverse Effect.
SECTION 6.13 Environmental Matters. Each Loan Party and each of its
Subsidiaries (a) possesses all environmental, health and safety licenses,
permits, authorizations, registrations, approvals and similar rights necessary
under law or otherwise for such Loan Party or such Subsidiary to conduct its
operations as now being conducted (other than those with respect to which the
failure to possess or maintain would not have a Material Adverse Effect) and (b)
each of such licenses, permits, authorizations, registrations, approvals and
similar rights is valid and subsisting, in full force and effect and enforceable
by such Loan Party or such Subsidiary, and each Loan Party and each of its
Subsidiaries is in compliance with all terms, conditions or other provisions of
such permits, authorizations, registrations, approvals and similar rights except
for such failure or noncompliance that would not have
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a Material Adverse Effect. Except as disclosed on Schedule 6.13, no Loan Party
nor any of its Subsidiaries has received any notices of any violation of,
noncompliance with, or remedial obligation under, Requirements of Environmental
Laws (which violation or non-compliance has not been cured, and there are no
writs, injunctions, decrees, orders or judgments outstanding, or lawsuits,
claims, proceedings, investigations or inquiries pending or, to the knowledge of
such Loan Party, threatened, relating to the ownership, use, condition,
maintenance or operation of, or conduct of business related to, any property
owned, leased or operated by such Loan Party or such Subsidiary or other assets
of such Loan Party or such Subsidiary, other than those violations, instances of
noncompliance, obligations, writs, injunctions, decrees, orders, judgments,
lawsuits, claims, proceedings, investigations or inquiries that would not have a
Material Adverse Effect. Except as disclosed on Schedule 6.13, there are no
material obligations, undertakings or liabilities arising out of or relating to
Environmental Laws to which any Loan Party or any of its Subsidiaries has
agreed, assumed or retained, or by which any Loan Party or any of its
Subsidiaries is adversely affected, by contract or otherwise, which would have a
Material Adverse Effect. Except as disclosed on Schedule 6.13, no Loan Party or
any of its Subsidiaries has received a written notice or claim to the effect
that such Person is or may be liable to any other Person as the result of a
Release or threatened Release of a Hazardous Material, which liability would
have a Material Adverse Effect.
SECTION 6.14 Purpose of Loans. (a) The proceeds of the Loans will be
used for general corporate purposes and the making of acquisitions by the
Company and the Canadian Borrower.
(b) None of the proceeds of the Loans will be used directly or
indirectly for the purpose of purchasing or carrying any "margin stock" within
the meaning of Regulation U (herein called "margin stock") or for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry a margin stock, or for any other purpose which might constitute this
transaction a "purpose" credit within the meaning of Regulation U. Neither any
Loan Party nor any agent acting on its behalf has taken or will take any action
which might cause this Agreement or any other Loan Document to violate
Regulation U, Regulation X, or any other regulation of the Board or to violate
the Securities Exchange Act of 1934.
SECTION 6.15 Franchises and Other Rights. Each Loan Party and each
of its Subsidiaries have all franchises, permits, licenses and other authority
(collectively, the "Operating Rights") and all patents, trademarks and other
intangibles as are necessary to enable them to carry on their respective
businesses as now being conducted, except to the extent that the failure to do
so would not reasonably be expected to have a Material Adverse Effect.
SECTION 6.16 Subsidiaries. The Subsidiaries executing this Agreement
are all Material Subsidiaries of the Company that are required to guarantee the
Obligations as of the Effective Date.
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ARTICLE VII
AFFIRMATIVE COVENANTS
Each Loan Party covenants and agrees for itself, that on and after the
date hereof and for so long as this Agreement is in effect and until the
Commitments and each Letter of Credit have terminated, and the Obligations are
paid in full:
SECTION 7.01 Information Covenants. The Company will furnish or cause
to be furnished to each Bank:
(a) As soon as available, and in any event within 45 days after the
close of each of the first three quarterly accounting periods in each fiscal
year of the Company, the consolidated balance sheet of the Company and its
consolidated Subsidiaries and the consolidated balance sheet of the Canadian
Borrower and its consolidated Subsidiaries, as the case may be, as of the end of
such quarterly period and the related consolidated statements of income and
retained earnings (excluding statements of retained earnings as to the Canadian
Borrower and its consolidated Subsidiaries) for such quarterly period and
statement of cash flows (excluding statements of cash flows as to the Canadian
Borrower and its consolidated Subsidiaries) for the elapsed portion of the
fiscal year ended with the last day of such quarterly period, setting forth, in
each case, comparative consolidated figures for the related periods in the prior
fiscal year, together with a schedule of all Indebtedness in an outstanding
principal amount in excess of $500,000.00 owed to a third party incurred by any
Loan Party during the preceding fiscal quarter and a statement of any Persons
which became Material Subsidiaries that are required to guarantee the
Obligations during said quarter, all of which shall be certified by the chief
financial officer or chief executive officer of the Company, as fairly
presenting in all material respects, the financial position of the Company and
its consolidated Subsidiaries or the Canadian Borrower and its consolidated
Subsidiaries, as the case may be, as of the end of such period and the results
of their operation for the period then ended in accordance with GAAP, subject to
changes resulting from normal year-end audit adjustments and the inclusion of
abbreviated footnotes; provided, however, that delivery of copies of the
Quarterly Report on Form 10-Q of the Company for such quarterly period filed
with the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.01(a), provided further, that the Company shall,
nonetheless, still separately deliver the required list of new Material
Subsidiaries for which no Guaranty has yet been delivered.
(b) As soon as available, and in any event within 90 days after the
close of each fiscal year of the Company, the consolidated balance sheet of the
Company and its consolidated Subsidiaries and the consolidated balance sheet of
the Canadian Borrower and its consolidated Subsidiaries, as the case may be, as
at the end of such fiscal year and the related consolidated statement of income
for such fiscal year, setting forth, in each case, comparative figures for the
preceding fiscal year and, in the case of the Company, certified by Arthur
Andersen & Co. or other independent certified public accountants of recognized
national standing reasonably acceptable to the Agent, whose report shall be
without limitation as to the scope of the audit and reasonably satisfactory in
substance to the Majority Banks and a statement of any Persons which became
Material Subsidiaries during the fourth fiscal quarter; provided, however, that
delivery of the Annual Report on Form 10-K of the Company for such year filed
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with the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.01(b), provided further that the Company shall,
nonetheless, still separately deliver the required list of new Material
Subsidiaries for which no Guaranty has yet been delivered.
(c) Immediately after any Responsible Officer of any Loan Party
obtains knowledge thereof, notice of
(i) any material violation of, noncompliance with, or remedial
obligations under, Requirements of Environmental Laws,
(ii) any material Release or threatened material Release of Hazardous
Materials affecting any property owned, leased or operated by such Loan Party or
any of its Subsidiaries,
(iii) any event or condition that constitutes a Default or an Event of
Default,
(iv) any condition or event that, in the opinion of management of the
Company, would reasonably be expected to have a Material Adverse Effect,
(v) any Person having given any written notice to any Loan Party or
taken any other action with respect to a claimed material default or event under
any material instrument or material agreement,
(vi) the institution of any litigation or arbitration which might
reasonably be expected either to have a Material Adverse Effect or result in a
final, non-appealable judgment or award in excess of $10,000,000.00 with respect
to any single cause of action, or
(vii) any Person which has become a Material Subsidiary and which has
assets equal to or greater than 10% of Consolidated Tangible Assets;
a notice of such event or condition will be delivered to each Bank specifying
the nature and period of existence thereof and specifying the notice given or
action taken by such Person and the nature of any such claimed default, event or
condition and, in the case of an Event of Default or Default, what action has
been taken, is being taken or is proposed to be taken with respect thereto.
(d) At the time of the delivery of the financial statement provided
for in Sections 7.01(a) and (b), a certificate of the chief financial officer,
treasurer or the controller of the Company to the effect that no Default or
Event of Default exists or, if any Default or Event of Default does exist,
specifying the nature and extent thereof and the action that is being taken or
that is proposed to be taken with respect thereto, which certificate shall set
forth (i) the name of each Subsidiary that is not a Loan Party and (ii) the
calculations required to establish whether the Company was in compliance with
the provisions of Sections 8.08 through 8.12 as at the end of such fiscal period
or year, as the case may be.
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(e) Upon request by the U.S. Agent, but not more often than semi-
annually, such environmental reports, studies and audits (all of which shall be
reasonable in scope) of the Loan Parties' procedures and policies, assets and
operations in respect of Environmental Laws as the U.S. Agent may request, which
requests shall not materially expand the scope or cost of prior reports, studies
or audits unless the information available to the Banks indicates a need for
such expansion, in the complete discretion of the U.S. Agent or the Majority
Banks.
(f) Promptly upon transmission thereof, copies of any filings and
registrations with, and reports to, the SEC other than reports delivered
pursuant to Section 16 of the Securities and Exchange Act of 1934, which will be
delivered only upon request by the U.S. Agent, and copies of all financial
statements, proxy statements, notices and reports as the Company shall send to
its public shareholder.
(g) From time to time and with reasonable promptness, such other
information or documents as the Agents or any Bank through the U.S. Agent may
reasonably request, including, without limitation, notice of any Persons which
have become Material Subsidiaries.
(h) As soon as available and no more often than annually, statutory
statements of Universal Assurance Corporation.
SECTION 7.02 Books, Records and Inspections. The Company and its
Subsidiaries will maintain, and will permit, or cause to be permitted, any
Person designated by any Bank or the Banks in writing upon one Business Day's
notice and without materially disrupting the operations of the Company or any of
its Subsidiaries to visit and inspect any of the properties of the Company and
its Subsidiaries, to examine the corporate books and financial records of the
Company and its Subsidiaries and make copies thereof or extracts therefrom and
to discuss the affairs, finances and accounts of any such corporations with the
officers, employees and agents of the Company and its Subsidiaries and with
their independent public accountants, all at such reasonable times and as often
as the U.S. Agent or such Bank may reasonably request.
SECTION 7.03 Insurance and Maintenance of Properties. (a) Each of the
Company and its Subsidiaries will keep adequately insured by financially sound
and reputable insurers all of its property of a character, and in amounts and
against such risks, usually insured by similar Persons engaged in the same or
similar businesses, including, without limitation, insurance against fire,
casualty and any other hazards normally insured against. Each of the Company
and its Subsidiaries will at all times maintain insurance against its liability
for injury to Persons or property, which insurance shall be by financially sound
and reputable insurers and in such amounts and form as are customary for
corporations of established reputation engaged in the same or a similar business
and owning and operating similar properties.
(b) Subject to force majeure and ordinary wear and tear, each of the
Company and its Subsidiaries will cause all of its material properties used or
useful in the conduct of its business to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals and replacements
thereof, all as in
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the judgment of such Person may be reasonably necessary so that the business
carried on in connection therewith may be properly conducted without the
occurrence of a Material Adverse Effect.
SECTION 7.04 Payment of Taxes. Each of the Company and its
Subsidiaries will pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which penalties attach thereto,
except for such amounts that are being contested in good faith and by
appropriate proceedings.
SECTION 7.05 Corporate Existence. Subject to Section 8.02, each of the
Company and its Subsidiaries will do all things necessary to preserve and keep
in full force and effect (a) the corporate or partnership existence of such
Person, and (b) unless the failure to do so would not have a Material Adverse
Effect, the rights, privileges, permits, licenses and franchises of such of the
Company and its Subsidiaries.
SECTION 7.06 Compliance with Statutes. Each of the Company and its
Subsidiaries will comply with all applicable statutes, regulations and orders
of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except to the extent the failure to do so would not reasonably
be expected to have a Material Adverse Effect.
SECTION 7.07 ERISA. As soon as possible and, in any event, within ten
days after any Responsible Officer of any Loan Party knows or has reason to know
any of the following items is true and is reasonably expected to have a Material
Adverse Effect, such Loan Party will deliver or cause to be delivered to each of
the Banks a certificate of the chief financial officer of the Company setting
forth details as to such occurrence and such action, if any, which the Loan
Party or its ERISA Affiliate is required or proposes to take, together with any
notices required or proposed to be given to or filed with or by such Loan Party
or ERISA Affiliate with respect thereto: that a Reportable Event has occurred or
that an application may be or has been made to the Secretary of the Treasury or
to any pension commission or like body appointed under any Applicable Canadian
Pension Legislation for a waiver or modification of the minimum funding
standard; that a Multiemployer Plan has been or may be terminated, reorganized,
partitioned or declared insolvent under Title IV of ERISA or under any
Applicable Canadian Pension Legislation; that any required contribution to a
Plan or Multiemployer Plan has not been or may not be timely made; that
proceedings may be or have been instituted under Section 4069(a) of ERISA or
under any Applicable Canadian Pension Legislation to impose liability on a Loan
Party or an ERISA Affiliate or under Section 4042 of ERISA or under any
Applicable Canadian Pension Legislation to terminate a Plan or appoint a trustee
to administer a Plan; that a Loan Party or any ERISA Affiliate has incurred or
may incur any liability (including any contingent or secondary liability) on
account of the termination of or withdrawal from a Plan or a Multiemployer Plan;
and that a Loan Party or an ERISA Affiliate may be required to provide security
to a Plan under Section 401(a)(29) of the Code or under any Applicable Canadian
Pension Legislation; or any other condition(s) exist(s) or may occur with
respect to one or more Plans and/or Multiemployer Plans.
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SECTION 7.08 Additional Guaranties. (a) Whenever the Company acquires
any new Material Subsidiary incorporated under the laws of any of the United
States or any of its territories, or any Subsidiary of the Company incorporated
under the laws of any of the United States or any of its territories becomes a
Material Subsidiary, the Company shall cause such Material Subsidiary to deliver
to each Agent, with sufficient counterparts for each Bank within (i) 30 days
after any such Material Subsidiary incorporated under the laws of any of the
United States or any of its territories is acquired which owns assets
constituting at least 10% of Consolidated Tangible Assets at such time or (ii)
45 days after the end of the fiscal quarter in which any other Subsidiary
incorporated under the laws of any of the United States or any of its
territories becomes a Material Subsidiary or (iii) immediately upon request of
the Agent (A) a guaranty agreement in form and substance reasonably satisfactory
to such Agent (an "Additional Guaranty") and (B) a certificate of an officer and
of the secretary or an assistant secretary of such Material Subsidiary
certifying a true and correct copy of each of the articles or certificate of
incorporation, as amended and in effect of such Material Subsidiary, the bylaws,
as amended and in effect of such Material Subsidiary and the resolutions adopted
by the Board of Directors of such Material Subsidiary (or a duly authorized
committee thereof) authorizing the execution, delivery and performance by such
Material Subsidiary of the Additional Guaranty, provided, no Additional Guaranty
shall be required if such Material Subsidiary is a partnership, association or
joint venture created in connection with the acquisition or development of a
collection site, processing plant, landfill or similar facility used in the
ordinary course of the Company's business in which (a) a Guarantor is the
managing partner or venturer of such Material Subsidiary, (b) the equity
interest of any partner or joint venturer which is not an Affiliate of the
Company does not entitle such Person to participate in the control of such
business and (c) no Funded Indebtedness exists in such Material Subsidiary.
(b) Subject to the provisions of Section 8.02 hereof, the Agent and
each Bank agree that in the case of:
(i) a sale, transfer or other disposition (whether in a single
transaction or a series of related transactions and whether by merger,
consolidation, amalgamation or otherwise) permitted by this Agreement of all of
the issued and outstanding capital stock of any Subsidiary of the Company to any
Person that is not, at the time of such sale, transfer or other disposition, the
Company or a Subsidiary of the Company; or
(ii) the dissolution of any Subsidiary of the Company permitted by
this Agreement and, in either event, following written notice from the Company
to the Agent of such sale or dissolution, without further action upon an event
described in clause (i) or (ii) above:
(x) the Guaranty of such Subsidiary (each such Subsidiary a "Released
Subsidiary") shall be deemed terminated and of no further force and effect; and
(y) no holder of any Obligations shall have any claim against such
Released Subsidiary under such Guaranty.
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(c) The Agent and each Bank agree that the Company may, on behalf of
any Released Subsidiary, require the Agent, at the expense of the Company, to
execute and deliver to the Company, for the benefit of any Person, a written
release, disclaimer, termination or quitclaim, and such other release documents
as the Company may reasonably request to evidence such termination.
(d) Notwithstanding the terms of this Section 7.08, Cougar Holdings,
Inc., a Texas corporation, shall not be required to guarantee the Obligations
unless (i) the amount of the total Investment of the Company and its
Subsidiaries in Cougar Holdings, Inc. exceeds $5,000,000.00 (excluding any
amount paid to acquire Cougar Holdings, Inc.).
SECTION 7.09 Solvency. As of the Effective Date, each of the Loan
Parties warrants and represents that:
(i) the present fair salable value of its respective assets is not
less than its probable liability on its existing debts, and the sum of its debts
is not greater than all of its property, at a fair valuation;
(ii) it is able to pay its respective debts as they mature and has not
incurred any debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be received by it from any source
and the amounts to be payable on or in respect of its debts); and
(iii) it has sufficient capital with which to conduct its respective
businesses (whether currently being conducted or proposed to be conducted).
ARTICLE VIII
NEGATIVE COVENANTS
Each Loan Party covenants and agrees for itself, that on and after the
date hereof and for so long as this Agreement is in effect and until the
Commitments and each Letter of Credit have terminated, and the Obligations are
paid in full:
SECTION 8.01 Change in Business. Except as described in this Section
8.01, the Company will not, and will not permit any of its Subsidiaries to,
engage in any business not of the same general type as that conducted by the
Company and its Subsidiaries on the Execution Date. Specifically, the Company
will not, and will not permit any of its Subsidiaries to, engage in any line of
business involving the handling, transportation, storage, remediation or
disposition of Hazardous Materials, except (a) where such activity is not deemed
to be hazardous under federal, state or provincial law or applicable court
ruling or administrative rule or regulation, or (b) that the Company, through a
Subsidiary, may handle, transport and temporarily store Hazardous Materials so
long as (i) such short term storage, handling and transportation (but not long
term storage or disposal) is conducted (x) by a Subsidiary (other than those
described on Schedule 8.01 or a Subsidiary created after the date hereof)
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engaged principally in such activities, or (y) through any Subsidiary that was
engaged in such activities at the time of its acquisition by the Company or any
of its Subsidiaries, and (z) in accordance with all laws, regulations, rulings,
ordinances and similar items applicable thereto, (ii) the consolidated gross
revenues of the Company and all of its Subsidiaries for such activities do not
exceed in the aggregate for any fiscal year 2.5% of the consolidated gross
revenues of the Company and all its Subsidiaries for such fiscal year, and
(iii) the Subsidiaries engaged in such activities maintain insurance in respect
of such activities as required by applicable state or provincial law and as is
standard and customary in the industry.
SECTION 8.02 Consolidation, Merger or Sale Assets. No Loan Party will
wind up, liquidate or dissolve its affairs, or enter into any transaction of
merger, amalgamation or consolidation, unless a Loan Party is the surviving
entity, or sell or otherwise dispose of all or any part of its property or
assets (other than sales of inventory or surplus or obsolete assets in the
ordinary course of business or transfers to the Company or any of its Material
Subsidiaries), including the stock of any Subsidiary, having a market value in
excess of, in the aggregate, 2.5% of Consolidated Tangible Assets or 5% of
Consolidated Tangible Assets in the case of an Exchange of Assets during any
twelve-month period during the term hereof (other than sales of inventory or
surplus or obsolete equipment in the ordinary course of business or transfers to
the Company or any of its Material Subsidiaries), or agree to do any of the
foregoing at any future time, other than the disposition to Newpark Resources,
Inc., or its Affiliates, of assets used in connection with the collection,
transfer and treatment of non-hazardous oil field wastes in the State of
Louisiana and related transactions described in that one certain letter dated
May 3, 1996 among the Agent, the Banks and the Company under the Prior
Agreement. "Exchange of Assets" shall mean an exchange or trade, sale or other
disposal of assets or stock, or a replacement of assets or stock with other
assets or stock (whether with the same parties or other third parties) in one or
more substantially related transactions occurring within a generally
contemporaneous (but not necessarily simultaneous) time frame.
SECTION 8.03 Liens. Neither the Company nor any Subsidiary will
create, incur, assume or suffer to exist any Lien upon or with respect to any of
its property or assets of any kind whether now owned or hereafter acquired,
except:
(a) Liens for taxes or assessments or other governmental charges or
levies, either not yet due and payable or being contested in good faith and by
appropriate proceedings for which adequate reserves have been established;
(b) Liens in respect of property or assets of such Person imposed by
law such as carriers', landlords', warehousemen's, materialmen's and mechanics'
Liens and other similar Liens arising in the ordinary course of business, and
(i) which do not in the aggregate materially detract from the value of such
property or assets or materially impair the use or value thereof in the
operation of the business of such Person or (ii) which, if any material amount
secured thereby is past due, are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture or
sale of the property or asset subject to such Lien;
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(c) deposits made in connection with bids, tenders, contracts,
statutory obligations, surety or appeal bonds and similar obligations (all other
than for the purpose of borrowing money);
(d) Liens arising under workers' compensation laws, unemployment
insurance laws or similar legislation;
(e) minor defects, irregularities and deficiencies in title to, and
easements, rights-of-way, zoning restrictions and other similar restrictions,
charges or encumbrances on, real property of such Person which do not interfere
with the ordinary conduct of the business of the Company and which do not
materially detract from the value of the real property which they affect;
(f) Liens existing on the Execution Date and described in the
Financials or listed on Schedule 8.03;
(g) other Liens on fixed assets (excluding stock, accounts, inventory,
cash, general intangibles and other current assets other than as listed on
Schedule 8.03(g)) securing Indebtedness permitted under Section 8.04, which
shall not exceed an aggregate of 7 1/2% of Consolidated Tangible Assets measured
by the principal amount of the Indebtedness secured thereby;
(h) Liens securing any royalty or other contingent obligation incurred
in connection with any permitted acquisition covering the property acquired (but
no other property) provided the holder of such Lien may exercise its remedies
against the specific asset secured by such Lien only in the event of nonpayment
of such royalty or contingent obligations;
(i) any right of set off arising under common law or by statute;
(j) Liens created by, resulting from or arising in connection with any
litigation or legal proceeding involving the Company or any of its Subsidiaries,
excluding any judgment Liens or Liens in the form of attachments in aid of
execution on a judgment to the extent the aggregate amount of all such judgments
does not exceed $3,000,000.00 (to the extent not covered by insurance as to
which the respective insurer has acknowledged coverage);
(k) Liens for the benefit of the Agent and the Banks; and
(l) any renewal, extension or replacement of any Lien referred to in
the foregoing clauses; provided however, that no Lien arising or existing as a
result of such extension, renewal or replacement shall be extended to cover any
property not theretofore subject to the Lien being extended, renewed or replaced
and provided further that the principal amount of the Indebtedness secured
thereby shall not exceed the principal amount of the Indebtedness so secured at
the time of such extension, renewal or replacement.
SECTION 8.04 Indebtedness. Neither the Company nor any Subsidiary will
create, incur, assume or permit to exist any Indebtedness or undertake any
Assurance of Indebtedness, other
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than Indebtedness created hereby, including renewals and extensions thereof (in
the same amounts or less), except:
(a) Indebtedness of the Company or its Subsidiaries of up to
$200,000,000.00 in principal, with a scheduled final maturity of such principal
and an average life of no sooner than the Maturity Date and containing terms and
provisions no more restrictive to the Company or any other Loan Party than the
terms and provisions of this Agreement;
(b) Subordinated Indebtedness of the Company or any of its
Subsidiaries on subordination terms and provisions no more favorable to the
holder of such subordinated Indebtedness than the terms and provisions described
on Exhibit 8.04 attached hereto, or as otherwise approved in writing by the
Majority Banks;
(c) Other Indebtedness of the Company or its Subsidiaries; provided,
that the principal amount of such Indebtedness incurred in any one calendar year
shall not exceed ten percent (10%) of Consolidated Net Worth of the Company,
measured as of the end of the preceding fiscal quarter as shown by the most
recently delivered report provided pursuant to Section 7.01(a) or (b) hereof;
provided, further, that all such Indebtedness in excess of $1,000,000.00 shall
be shown on Schedule 8.04(c) hereto, which schedule the Company is obligated to
update annually as of the end of the Company's fiscal year, commencing with the
fiscal year ending December 31, 1996 with the delivery of its report delivered
pursuant to Section 7.01(b) hereof;
(d) Indebtedness of any Subsidiary of the Company to the Company or
any Subsidiary of the Company;
(e) Indebtedness of any Material Subsidiary of the Company under the
Guaranty;
(f) Indebtedness of any Subsidiary to any other Material Subsidiary
under any contribution agreement between or among such Subsidiaries;
(g) Indebtedness of the Company owed to a Material Subsidiary so long
as such Indebtedness is effectively subordinated to the Obligations by written
instruments containing subordination terms and no less favorable to the Banks
than those contained in Section 9.05 hereof;
(h) Indebtedness owing hereunder, including that contemplated by
Section 2.14;
(i) Indebtedness of any Loan Party existing as of the date hereof, all
of which Indebtedness in excess of $500,000.00 is described on Schedule 6.08;
and
(j) Amendments, modifications, renewals and extensions (in the same or
lesser principal amount on similar terms and conditions) of any Indebtedness
described in this Section 8.04.
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SECTION 8.05 Investments. No Loan Party will, directly or indirectly,
make or own any Investment in any Person, except:
(a) The Company and its Subsidiaries may make and own Permitted
Investments;
(b) The Company and its Subsidiaries may continue to own Investments
owned by them on the date hereof as set forth on Schedule 8.05;
(c) The Company and its Subsidiaries may make and own Investments (i)
arising out of loans and advances in the ordinary course of business to
officers, directors and employees; provided, however, the aggregate outstanding
amount of all such loans and advances shall not exceed $3,000,000.00 at any time
outstanding, (ii) arising out of advances made in the ordinary course of
business to contract or perform services for the Company or any of its
Subsidiaries, (iii) constituting accounts receivable arising in the ordinary
course of business and payable within 60 days, (iv) arising out of deposits with
any bank and (v) acquired by reason of the exercise of customary creditors'
rights upon default or pursuant to the bankruptcy, insolvency or reorganization
of a debtor;
(d) Any Loan Party may endorse negotiable instruments for collection
in the ordinary course of business;
(e) Subject to the limitations of Section 8.04, any Loan Party may
acquire new Subsidiaries or substantially all of the assets of any entity
engaged generally in the same or related industries as the Company and its
Subsidiaries; provided, that no single acquisition of assets or capital stock
shall have a total consideration in the form of cash or assumed Indebtedness
calculated in accordance with GAAP, but excluding the stock of the Company or
any Subsidiary, in excess of $75,000,000.00;
(f) Subject to the limitations of Sections 8.04 and 8.05(e), the
Company may make Investments; provided, that such Investments or purchases do
not exceed in the aggregate, at any time, 5% of Consolidated Tangible Assets;
(g) Subject to the limitations of Section 8.04 and 8.05(e), the
Company may make Investments in, or purchase, Subsidiaries which make the major
portion of their sales to Persons located outside the United States; provided,
that no Investment may be made pursuant to this subsection if, after giving
effect to such Investment, the aggregate amount of assets located, and notes and
accounts due from obligors located, outside the United States would exceed 17.5%
of Consolidated Tangible Assets;
(h) Any Loan Party may establish such trust funds and escrow accounts
as are required by law or regulation regarding the operation and closure of such
Loan Party's landfills, provided that the contents of such funds or accounts, to
the extent same is controlled by said Loan Party, shall be deposited in
Permitted Investments or in such other investment as the Company, in its good
faith determination, finds to be reasonable under the circumstances and in
accordance with applicable law and standard industry practice; and
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(i) Any Loan Party may make and own Investments permitted under
Sections 8.04(c), (e), (f) and (g) above.
SECTION 8.06 Restricted Payments. The Company will not make or declare
any Restricted Payment.
SECTION 8.07 Change in Accounting; Fiscal Year. The Company will not
and will not permit any Subsidiary to, change its method of accounting except
for immaterial changes in methods, changes permitted by GAAP in which the
Company' auditors concur and changes required by GAAP. The Company shall advise
the Agent in writing promptly upon making any such change to the extent same is
not disclosed in the financial statements required under Section 7.01 hereof.
SECTION 8.08 Minimum Consolidated Net Worth. The Company will not
permit Consolidated Net Worth plus Guaranteed Value Contracts at any time during
the term hereof to be less than $350,000,000.00, plus (a) if positive, fifty
percent (50%) of Consolidated Net Income after March 31, 1996 to the date of
determination, plus (b) one hundred percent (100%) of the net proceeds received
in consideration for the issuance of any capital stock by the Company subsequent
to March 31, 1996 and during the term hereof, minus (c) the cash amounts paid in
respect of Guaranteed Value Contracts during the term hereof and plus (d) one
hundred percent (100%) of the net proceeds of any other capital contribution or
paid in equity received after March 31, 1996 and during the term hereof.
SECTION 8.09 Minimum Consolidated Tangible Net Worth. The Company will
not permit Consolidated Tangible Net Worth plus Guaranteed Value Contracts at
any time during the term hereof to be less than $150,000,000.00.
SECTION 8.10 Fixed Charge Coverage Ratio. The Company will not permit
the ratio of (a) Consolidated EBITDA, plus Operating Lease Obligations, less
Consolidated Maintenance Capital Expenditures to (b) Consolidated Fixed Charges,
computed quarterly on a rolling four quarters basis, to be less than 1.25 to
1.0.
SECTION 8.11 Funded Indebtedness Limitation. The Company will not
permit the ratio of (a) Consolidated Funded Indebtedness to (b) Consolidated
EBITDA for the previous rolling twelve months, to be greater than (i) 3.75 to
1.0 for the period from the Effective Date until the Termination Date, and (ii)
3.25 to 1.0 for the period from the Termination Date to the Maturity Date.
SECTION 8.12 Guaranteed Value Contracts. Neither the Company nor any
Subsidiary shall make any distributions of cash or preferred stock which exceed,
in the aggregate, $7,500,000.00 during the term hereof, in respect of any
Guaranteed Value Contracts without the prior written consent of the Agent and
the Majority Banks.
SECTION 8.13 Assurances. The Loan Parties will not execute or
undertake any Assurances during the term hereof, except:
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(a) endorsements of instruments for deposit or collection in the
ordinary course of business;
(b) indemnities, warranties and other contingent obligations arising
in the ordinary course of business in connection with the purchase, sale or
other disposition assets or properties or delivery of services;
(c) indemnity obligations arising by operation of law;
(d) existing Assurances described on Schedule 8.13;
(e) the obligations under the Loan Documents;
(f) any Assurances permitted under Sections 8.03 or 8.04 and
Guaranteed Value Contracts permitted hereunder; and
(g) any renewal, extension, refundings, refinancings, amendments or
modifications of any of the foregoing.
SECTION 8.14 Transactions with Affiliates. No Loan Party will,
directly or indirectly, engage in any transaction with any Affiliate of such
Loan Party, including the purchase, sale or exchange of assets or the rendering
of any service, except in the ordinary course of business or pursuant to the
reasonable requirements of such Loan Party's business and, in each case, upon
terms that are no less favorable to such Loan Party than those which might be
obtained in an arm's-length transaction at the time from non-Affiliates.
SECTION 8.15 Change of Certain Indebtedness. The Company will not, and
will not permit any of its Subsidiaries to, after the occurrence and during the
continuance of any Event of Default, (i) make any voluntary prepayments of
principal of or interest on any Consolidated Funded Indebtedness (whether or not
subordinated) or (ii) alter, amend, modify or otherwise change the terms,
conditions and provisions of any Consolidated Funded Indebtedness to accelerate
the scheduled payments of principal of such Indebtedness.
SECTION 8.16 Ownership of the Canadian Borrower. The Company will not
convey any share of or any other equity interest in the Canadian Borrower, or
grant any lien upon, or any option, right or warrant to acquire any share of or
any other equity interest in the Canadian Borrower, to any other Person other
than a wholly-owned subsidiary of the Company.
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ARTICLE IX
GUARANTY
SECTION 9.01 Guaranty. In consideration of, and in order to induce the
U.S. Banks to make the U.S. Loans and the appropriate Issuing Bank to issue U.S.
Letters of Credit hereunder, the Guarantors hereby absolutely, unconditionally
and irrevocably, jointly and severally guarantee the punctual payment and
performance when due, whether at stated maturity, by acceleration or otherwise,
of the Obligations, and all other obligations and covenants of the Company now
or hereafter existing under this Agreement, the Notes and the other Loan
Documents whether for principal, interest (including interest accruing or
becoming owing both prior to and subsequent to the commencement of any
proceeding against or with respect to the Company under any chapter of the
Bankruptcy Code), fees, commissions, expenses (including reasonable attorneys'
fees and expenses) or otherwise, and all reasonable costs and expenses, if any,
incurred by the U.S. Agent or any U.S. Bank in connection with enforcing any
rights under this Guaranty (all such obligations being the "Guaranteed
Obligations"), and agree to pay any and all reasonable expenses incurred by each
U.S. Bank and the U.S. Agent in enforcing this Guaranty; provided, however,
that, anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed such Guarantor's Maximum
Guaranteed Amount as and when determined in accordance with applicable state or
federal law. This Guaranty is an absolute, unconditional, present and
continuing guaranty of payment and not of collectibility and is in no way
conditioned upon any attempt to collect from the Company or any other action,
occurrence or circumstance whatsoever. Each Guarantor agrees that the
Guaranteed Obligations may at any time and from time to time exceed the Maximum
Guaranteed Amount of such Guarantor without impairing this Guaranty or affecting
the rights and remedies of the U.S. Banks hereunder.
SECTION 9.02 Continuing Guaranty. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of
this Agreement, the Notes and the other Loan Documents. Each Guarantor agrees
that the Guaranteed Obligations and Loan Documents may be extended or renewed,
and Loans repaid and reborrowed in whole or in part, without notice to or assent
by such Guarantor, and that it will remain bound upon this Guaranty
notwithstanding any extension, renewal or other alteration of any Guaranteed
Obligations or Loan Documents, or any repayment and reborrowing of Loans. To
the maximum extent permitted by applicable law, the obligations of each
Guarantor under this Guaranty shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms hereof under any
circumstances whatsoever, including:
(a) any extension, renewal, modification, settlement, compromise,
waiver or release in respect of any Guaranteed Obligations;
(b) any extension, renewal, amendment, modification, rescission,
waiver or release in respect of any Loan Documents;
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(c) any release, exchange, substitution, non-perfection or invalidity
of, or failure to exercise rights or remedies with respect to, any direct or
indirect security for any Guaranteed Obligations, including the release of any
Guarantor or other Person liable on any Guaranteed Obligations;
(d) any change in the corporate existence, structure or ownership of
the Company, any Guarantor, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting the Company, such Guarantor, any other
Guarantor or any of their respective assets;
(e) the existence of any claim, defense, set-off or other rights or
remedies which such Guarantor at any time may have against the Company, or the
Company or such Guarantor may have at any time against the U.S. Agent, any U.S.
Bank, any other Guarantor or any other Person, whether in connection with this
Guaranty, the Loan Documents, the transactions contemplated thereby or any other
transaction other than by the payment in full by the Company of the Guaranteed
Obligations after the termination of the Commitments of the Banks and the
expiration or termination of all Letters of Credit;
(f) any invalidity or unenforceability for any reason of this
Agreement or other Loan Documents, or any provision of law purporting to
prohibit the payment or performance by the Company, such Guarantor or any other
Guarantor of the Guaranteed Obligations or Loan Documents, or of any other
obligation to the U.S. Agent or any U.S. Bank; or
(g) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing.
SECTION 9.03 Effect of Debtor Relief Laws. If after receipt of any
payment of, or proceeds of any security applied (or intended to be applied) to
the payment of all or any part of the Guaranteed Obligations, the U.S. Agent or
any U.S. Bank is for any reason compelled to surrender or voluntarily
surrenders, such payment or proceeds to any Person (a) because such payment or
application of proceeds is or may be avoided, invalidated, declared fraudulent,
set aside, determined to be void or voidable as a preference, fraudulent
conveyance, fraudulent transfer, impermissible set-off or a diversion of trust
funds or (b) for any other reason, including (i) any judgment, decree or order
of any court or administrative body having jurisdiction over the U.S. Agent, any
U.S. Bank or any of their respective properties or (ii) any settlement or
compromise of any such claim effected by the U.S. Agent or any U.S. Bank with
any such claimant (including the Company), then the Guaranteed Obligations or
part thereof intended to be satisfied shall be reinstated and continue, and this
Guaranty shall continue in full force as if such payment or proceeds have not
been received, notwithstanding any revocation thereof or the cancellation of any
Note or any other instrument evidencing any Guaranteed Obligations or otherwise;
and the Guarantors, jointly and severally, shall be liable to pay the U.S. Agent
and the U.S. Banks, and hereby do indemnify the U.S. Agent and the U.S. Banks
and hold them harmless for the amount of such payment or proceeds so surrendered
and all expenses (including reasonable attorneys' fees, court costs and expenses
attributable thereto) incurred by the U.S. Agent or any U.S. Bank in the defense
of any claim made against it that any payment or proceeds received by the U.S.
Agent or any U.S. Bank in respect of all or part of the Guaranteed Obligations
must be surrendered. The provisions of this
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paragraph shall survive the termination of this Guaranty, and any satisfaction
and discharge of the Company by virtue of any payment, court order or any
federal or state law.
SECTION 9.04 Waiver of Subrogation. Notwithstanding any payment or
payments made by any Guarantor hereunder, or any set-off or application by the
U.S. Agent or any U.S. Bank of any security or of any credits or claims, no
Guarantor will assert or exercise any rights of the U.S. Agent or any U.S. Bank
or of such Guarantor against the Company to recover the amount of any payment
made by such Guarantor to the U.S. Agent or any U.S. Bank hereunder by way of
any claim, remedy or subrogation, reimbursement, exoneration, contribution,
indemnity, participation or otherwise arising by contract, by statute, under
common law or otherwise, and such Guarantor shall not have any right of recourse
to or any claim against assets or property of the Company until the full and
final repayment of the Obligations, the expiration or other termination of all
Letters of Credit and the termination of the Commitments.
SECTION 9.05 Subordination. If any Guarantor becomes the holder of any
indebtedness payable by the Company or another Guarantor, each Guarantor hereby
subordinates all indebtedness owing to it from the Company to all indebtedness
of the Company to the Agent and the Banks, and agrees that during the
continuance of any Default or Event of Default it shall not accept any payment
on the same until payment in full of the Obligations of the Company under this
Agreement and the other Loan Documents after the termination of the Commitments
of the Banks and the termination or expiration of the Letters of Credit, the
Notes and all other Loan Documents, and shall in no circumstance whatsoever
attempt to set-off or reduce any obligations hereunder because of such
indebtedness. If any amount shall nevertheless be paid to a Guarantor by the
Company or another Guarantor prior to payment in full of the Guaranteed
Obligations, such amount shall be held in trust for the benefit of the U.S.
Agent and the U.S. Banks and shall forthwith be paid by the Company to the U.S.
Agent to be credited and applied to the Guaranteed Obligations, whether matured
or unmatured.
SECTION 9.06 Waiver. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and waives presentment, demand of
payment, notice of intent to accelerate, notice of dishonor or nonpayment and
any requirement that the U.S. Agent or any U.S. Bank institute suit, collection
proceedings or take any other action to collect the Guaranteed Obligations,
including any requirement that the U.S. Agent or any U.S. Bank protect, secure,
perfect or insure any Lien against any property subject thereto or exhaust any
right or take any action against the Company or any other Person or any
collateral (it being the intention of the Agent, the Banks and each Guarantor
that this Guaranty is to be a guaranty of payment and not of collection). It
shall not be necessary for the U.S. Agent or any U.S. Bank, in order to enforce
any payment by any Guarantor hereunder, to institute suit or exhaust its rights
and remedies against the Company, any other Guarantor or any other Person,
including others liable to pay any Guaranteed Obligations, or to enforce its
rights against any security ever given to secure payment thereof. Each Guarantor
hereby expressly waives to the maximum extent permitted by applicable law each
and every right to which it may be entitled by virtue of the suretyship laws of
the State of Texas, including any and all rights it may have pursuant to Rule
31, Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil Practice
and Remedies Code and Chapter 34 of the Texas
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Business and Commerce Code. Each Guarantor hereby waives marshaling of assets
and liabilities, notice by the Agent or any Bank of any indebtedness or
liability to which such Bank applies or may apply any amounts received by such
Bank, and of the creation, advancement, increase, existence, extension, renewal,
rearrangement or modification of the Guaranteed Obligations. Each Guarantor
expressly waives, to the extent permitted by applicable law, the benefit of any
and all laws providing for exemption of property from execution or for valuation
and appraisal upon foreclosure.
SECTION 9.07 Full Force and Effect. This Guaranty is a continuing
guaranty and shall remain in full force and effect until all of the Obligations
of the Company under this Agreement and the other Loan Documents and all other
amounts payable under this Guaranty have been paid in full (after the
termination of the Commitments of the Banks and the termination or expiration of
the Letters of Credit). All rights, remedies and powers provided in this
Guaranty may be exercised, and all waivers contained in this Guaranty may be
enforced, only to the extent that the exercise or enforcement thereof does not
violate any provisions of applicable law which may not be waived.
ARTICLE X
CANADIAN GUARANTY
SECTION 10.01 Guaranty. In consideration of, and in order to induce
the Canadian Banks to make the Canadian Loans and the appropriate Issuing Bank
to issue Canadian Letters of Credit hereunder, the Company and each Guarantor
hereby absolutely, unconditionally, irrevocably, jointly and severally guaranty
the punctual payment and performance when due, whether at stated maturity, by
acceleration or otherwise, of the Obligations, and all other obligations and
covenants of the Canadian Borrower now or hereafter existing under this
Agreement and the other Loan Documents whether for principal, interest
(including interest accruing or becoming owing both prior to and subsequent to
the commencement of any proceeding against or with respect to the Canadian
Borrower under the Bankruptcy and Insolvency Act (Canada) or the Companies'
Creditors Arrangement Act (Canada)), Acceptance Fees, fees, commissions,
expenses (including reasonable legal fees and disbursements) or otherwise, and
all reasonable costs and expenses, if any, incurred by the Canadian Agent or any
Canadian Bank in connection with enforcing any rights under this Guaranty (all
such obligations being the "Canadian Guaranteed Obligations"), and agrees to pay
any and all reasonable expenses incurred by each Canadian Bank and the Canadian
Agent in enforcing this Guaranty; provided, however, that, anything herein or in
any other Loan Document to the contrary notwithstanding, the maximum liability
of each Guarantor hereunder and under the other Loan Documents shall in no event
exceed such Guarantor's Maximum Guaranteed Amount as and when determined in
accordance with applicable state or federal law. This Guaranty is an absolute,
unconditional, present and continuing guaranty of payment and not of
collectibility and is in no way conditioned upon any attempt to collect from the
Canadian Borrower or any other action, occurrence or circumstance whatsoever.
SECTION 10.02 Continuing Guaranty. The Company and each Guarantor
jointly and severally guarantee that the Canadian Guaranteed Obligations will be
paid strictly in accordance with the terms of this Agreement, the Notes and the
other Loan Documents. The Company and each Guarantor agree that the Canadian
Guaranteed Obligations and Loan Documents may be extended or
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renewed, and Canadian Loans repaid and reborrowed in whole or in part, and
Canadian Letters of Credit issued, re-issued, extended and renewed, in whole or
in part, without notice to or assent by any of the Company or any Guarantor, and
that it will remain bound upon this Guaranty notwithstanding any extension,
renewal or other alteration of any Canadian Guaranteed Obligations or Loan
Documents, or any repayment and reborrowing of the Canadian Facility. To the
maximum extent permitted by applicable law, the obligations of the Company and
each Guarantor under this Guaranty shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms hereof
under any circumstances whatsoever, including:
(a) any extension, renewal, modification, settlement, compromise,
waiver or release in respect of any Canadian Guaranteed Obligations;
(b) any extension, renewal, amendment, modification, rescission,
waiver or release in respect of any Loan Documents;
(c) any release, exchange, substitution, non-perfection or invalidity
of, or failure to exercise rights or remedies with respect to, any direct or
indirect security for any Canadian Guaranteed Obligations, including the release
of the Company or any Guarantor or any other Person liable on any Canadian
Guaranteed Obligations;
(d) any change in the corporate existence, structure or ownership of
the Canadian Borrower, the Company, any Guarantor or any other Person, or any
insolvency, bankruptcy, reorganization or other similar proceeding affecting the
Canadian Borrower, the Company, any other Guarantor or any other Person or any
of their respective assets;
(e) the existence of any claim, defense, set-off or other rights or
remedies which the Company or any Guarantor at any time may have against the
Canadian Borrower, the Canadian Agent, any Canadian Bank, any other Guarantor or
any other Person, whether in connection with this Guaranty, the Loan Documents,
the transactions contemplated thereby or any other transaction other than by the
payment in full by the Canadian Borrower of the Canadian Guaranteed Obligations
after the termination of the Canadian Commitments of the Canadian Banks and the
expiration or termination of all Canadian Letters of Credit;
(f) any invalidity or unenforceability for any reason of this
Agreement or other Loan Documents, or any provision of law purporting to
prohibit the payment or performance by the Company, such Guarantor or any other
Guarantor of the Canadian Guaranteed Obligations or Loan Documents, or of any
other obligation to the Agent or any Bank; or
(g) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing.
SECTION 10.3 Effect of Debtor Relief Laws. If after receipt of any
payment of, or proceeds of any security applied (or intended to be applied) to
the payment of all or any part of the
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Canadian Guaranteed Obligations, the Canadian Agent or any Canadian Bank is for
any reason compelled to surrender or voluntarily surrenders, such payment or
proceeds to any Person (a) because such payment or application of proceeds is or
may be avoided, invalidated, declared fraudulent, set aside, determined to be
void or voidable as a preference, fraudulent conveyance, fraudulent transfer,
impermissible set-off or a diversion of trust funds or (b) for any other reason,
including (i) any judgment, decree or order of any court or administrative body
having jurisdiction over the Canadian Agent, any Canadian Bank or any of their
respective properties or (ii) any settlement or compromise of any such claim
effected by the Canadian Agent or any Canadian Bank with any such claimant
(including the Canadian Borrower), then the Canadian Guaranteed Obligations or
part thereof intended to be satisfied shall be reinstated and continue, and this
Guaranty shall continue in full force as if such payment or proceeds have not
been received, notwithstanding any revocation thereof or the cancellation of
other instrument evidencing any Canadian Guaranteed Obligations or otherwise;
and the Company and each Guarantor shall be liable to pay the Canadian Agent and
the Canadian Banks, and hereby does indemnify the Canadian Agent and the
Canadian Banks and hold them harmless for the amount of such payment or proceeds
so surrendered and all expenses (including reasonable legal fees and
disbursements on a solicitor and his own client basis, court costs and expenses
attributable thereto) incurred by the Canadian Agent or any Canadian Bank in the
defense of any claim made against it that any payment or proceeds received by
the Canadian Agent or any Canadian Bank in respect of all or part of the
Canadian Guaranteed Obligations must be surrendered. The provisions of this
paragraph shall survive the termination of this Guaranty, and any satisfaction
and discharge of the Canadian Borrower by virtue of any payment, court order or
any federal, state, provincial or other law.
SECTION 10.04 Waiver of Subrogation. Notwithstanding any payment or
payments made by the Company or any Guarantor hereunder, or any set-off or
application by the Canadian Agent or any Canadian Bank of any security or of any
credits or claims, neither the Canadian Borrower, the Company nor such Guarantor
will assert or exercise any rights of the Canadian Agent or any Canadian Bank or
of the Company or such Guarantor against the Canadian Borrower to recover the
amount of any payment made by the Company or such Guarantor to the Canadian
Agent or any Canadian Bank hereunder by way of any claim, remedy or subrogation,
reimbursement, exoneration, contribution, indemnity, participation or otherwise
arising by contract, by statute, under common law or otherwise, and the Company
shall not have any right of recourse to or any claim against assets or property
of the Canadian Borrower, until the full and final payment of the Canadian
Facility guaranteed hereby has been satisfied, any Letters of Credit issued
under the Canadian Facility have expired or been terminated and the Commitments
have been terminated.
SECTION 10.05 Subordination. If the Company or any Guarantor becomes
the holder of any indebtedness payable by the Canadian Borrower or by the
Company or by another Guarantor, such Person hereby subordinates all
indebtedness owing to it from the Canadian Borrower or from the Company or from
another Guarantor to all indebtedness of the Canadian Borrower or the Company or
such other Guarantor, as the case may be, to the Canadian Agent and the Canadian
Banks, and agrees that during the continuance of any Default or Event of Default
it shall not accept any payment on the same until payment in full of the
Obligations of the Canadian Borrower under this Agreement and the other Loan
Documents after the termination of the Commitments of the Canadian Banks and the
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termination or expiration of the Canadian Letters of Credit, the maturity of all
outstanding Bankers' Acceptances and all other Loan Documents, and shall in no
circumstance whatsoever attempt to set-off or reduce any obligations hereunder
because of such indebtedness. If any amount shall nevertheless be paid to the
Company or any Guarantor by the Canadian Borrower or by the Company or by
another Guarantor prior to payment in full of the Canadian Guaranteed
Obligations, such amount shall be held in trust for the benefit of the Canadian
Agent and the Canadian Banks and shall forthwith be paid to the Canadian Agent
to be credited and applied to the Canadian Guaranteed Obligations, whether
matured or unmatured.
SECTION 10.06 Waiver. The Company and each Guarantor hereby waive
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Canadian Guaranteed Obligations and this Guaranty and waives
presentment, demand of payment, notice of intent to accelerate, notice of
dishonor or nonpayment and any requirement that the Canadian Agent or any
Canadian Bank institute suit, collection proceedings or take any other action to
collect the Canadian Guaranteed Obligations, including any requirement that the
Canadian Agent or any Canadian Bank protect, secure, perfect or insure any Lien
against any property subject thereto or exhaust any right or take any action
against the Canadian Borrower or any other Person or any collateral (it being
the intention of all parties hereto that this Guaranty is to be a guaranty of
payment and not of collection). It shall not be necessary for the Canadian
Agent or any Canadian Bank, in order to enforce any payment by the Company or
any Guarantor hereunder, to institute suit or, pursue or exhaust its rights and
remedies against the Canadian Borrower, any other Person, including others
liable to pay any Canadian Guaranteed Obligations, or to enforce its rights
against any security ever given to secure payment thereof. The Company and each
Guarantor hereby expressly waive to the maximum extent permitted by applicable
law each and every right to which any of them may be entitled by virtue of the
suretyship laws of the State of Texas, including any and all rights it may have
pursuant to Rule 31, Texas Rules of Civil Procedure, Section 17.001 of the Texas
Civil Practice and Remedies Code and Chapter 34 of the Texas Business and
Commerce Code. The Company and each Guarantor hereby waives marshaling of
assets and liabilities, notice by the Canadian Agent or any Canadian Bank of any
indebtedness or liability to which such Canadian Bank applies or may apply any
amounts received by such Canadian Bank, and of the creation, advancement,
increase, existence, extension, renewal, rearrangement or modification of the
Canadian Guaranteed Obligations. The Company and each Guarantor expressly
waives, to the extent permitted by applicable law, the benefit of any and all
laws providing for exemption of property from execution or for valuation and
appraisal upon foreclosure.
SECTION 10.07 Full Force and Effect. This Guaranty is a continuing
guaranty and shall remain in full force and effect until all of the Obligations
of the Canadian Borrower under this Agreement and the other Loan Documents and
all other amounts payable under this Guaranty have been paid in full (after the
termination of the Commitments of the Canadian Banks and the termination or
expiration of the Canadian Letters of Credit). All rights, remedies and powers
provided in this Guaranty may be exercised, and all waivers contained in this
Guaranty may be enforced, only to the extent that the exercise or enforcement
thereof does not violate any provisions of applicable law which may not be
waived.
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SECTION 10.08 Withholding Taxes. The Company and each Guarantor hereby
agrees that:
(a) Any and all payments made by the Company or any Guarantor
hereunder shall be made free and clear of, and without deduction for, any and
all present or future taxes, levies, fees, duties, imposts, deductions, charges
or withholdings of any nature whatsoever (hereinafter referred to as "Taxes"),
and all liabilities with respect thereto, excluding, in the case of the Canadian
Agent, any Canadian Banks or any holder of a Note, (i) Taxes imposed on or
measured by its net income or profits, (ii) franchise Taxes imposed on it, (iii)
Taxes imposed by any jurisdiction as a direct consequence of it, or any of its
Affiliates, having a present or former connection with such jurisdiction,
including, without limitation, being organized, existing or qualified to do
business, doing business or maintaining a permanent establishment or office in
such jurisdiction or (iv) Taxes imposed by reason of its failure to comply with
any applicable certification, identification, information, documentation or
other reporting requirement (all such non-excluded Taxes being hereinafter
referred to as "Indemnifiable Taxes"). In the event that any withholding or
deduction from any payment to be made by the Company or any Guarantor hereunder
is required in respect of any Indemnifiable Taxes pursuant to any applicable
law, or governmental rule or regulation, then the Company or such Guarantor will
(i) direct to the relevant taxing authority the full amount required to be so
withheld or deducted, (ii) forward to the Canadian Agent an official receipt or
other documentation satisfactory to the Canadian Agent evidencing such payment
to such taxing authority, and (iii) direct to the Canadian Agent for the account
of the relevant Canadian Banks such additional amount or amounts as is necessary
to ensure that the net amount actually received by each relevant Canadian Bank
will equal the full amount such Canadian Bank would have received had no such
withholding or deduction (including any Indemnifiable Taxes on such additional
amounts) been required.
Moreover, if any Indemnifiable Taxes are directly asserted against the
Canadian Agent or any Canadian Bank with respect to any payment received by the
Canadian Agent or such Canadian Bank by reason of the Company's or any
Guarantor's failure to properly deduct and withhold such Indemnifiable Taxes
from such payment, the Canadian Agent or such Canadian Bank may pay such
Indemnifiable Taxes and the Company or such Guarantor will promptly pay all such
additional amounts (including any penalties, interest or reasonable expenses) as
is necessary in order that the net amount received by such Person after the
payment of such Indemnifiable Taxes (including any Indemnifiable Taxes on such
additional amount) shall equal the amount such Person would have received had
not such Indemnifiable Taxes been asserted. Any such payment shall be made
promptly after the receipt by the Company or any such Guarantor from the
Canadian Agent or such Canadian Bank, as the case may be, of a written statement
setting forth in reasonable detail the amount of the Indemnifiable Taxes and the
basis of the claim.
(b) The Company and each Guarantor shall pay any present or future
stamp or documentary taxes or any other excise or any other similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement (hereinafter
referred to as "Other Taxes").
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(c) The Company and each Guarantor hereby indemnifies and holds
harmless the Canadian Agent and each Canadian Bank for the full amount of
Indemnifiable Taxes or Other Taxes (including, without limitation, any
Indemnifiable Taxes or Other Taxes imposed on amounts payable under this Section
10.08) paid by the Canadian Agent or such Canadian Bank, as the case may be, and
any liability (including penalties, interest and reasonable expenses) arising
therefrom or with respect thereto, by reason of the Company's or any Guarantor's
failure to properly deduct and withhold Indemnifiable Taxes pursuant to
paragraph (a) above or to properly pay Other Taxes pursuant to paragraph (b)
above. Any indemnification payment from the Company or any Guarantor under the
preceding sentence shall be made promptly after receipt by the Company or any
such Guarantor from the Canadian Agent of a written statement setting forth in
reasonable detail the amount of such Indemnifiable Taxes or such Other Taxes, as
the case may be, and the basis of the claim.
(d) If the Company or any Guarantor pays any amount under this Section
10.08 to the Canadian Agent or any Canadian Bank and such payee receives a
refund of any Taxes with respect to which such amount was paid, the Canadian
Agent or such Canadian Bank, as the case may be, shall pay to the Company or
such Guarantor the amount of such refund promptly following the receipt thereof
by such payee.
(e) In the event that any taxing authority notifies the Company or any
Guarantor that it has improperly failed to deduct or withhold any Taxes (other
than Indemnifiable Taxes) from a payment made hereunder to the Canadian Agent or
any Canadian Bank, the Company or such Guarantor shall timely and fully pay such
Taxes to such taxing authority and the Canadian Agent or such Canadian Bank, as
the case may be, shall pay such amount to the Company or such Guarantor promptly
following the receipt of written demand therefor.
(f) The Canadian Agent or any Canadian Bank shall, upon the request of
the Company or any Guarantor, take reasonable measures to avoid or mitigate the
amount of Indemnifiable Taxes required to be deducted or withheld from any
payment made hereunder if such measures can be taken without such person
suffering any material legal, regulatory or economic disadvantage.
(g) Without prejudice to the survival of any other agreement of the
parties hereunder, the agreements and obligations of the Company and each
Guarantor contained in this Section 10.08 shall survive the payment in full of
the Obligations.
SECTION 10.09 Judgment Currency. The Company and each Guarantor hereby
agrees that:
(a) If, for the purposes of obtaining or enforcing a judgment in any
court in any jurisdiction, it is necessary to convert a sum due hereunder from
one currency into another currency, the rate of exchange used shall be that at
which in accordance with normal banking procedures the Canadian Agent or the
relevant Canadian Bank, as the case may be, could purchase such currency with
such other currency on the Business Day preceding that on which final judgment
is given.
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(b) The obligation of the Company and each Guarantor in respect of any
sum due from it to the Canadian Agent or any Canadian Bank shall,
notwithstanding any judgment in any particular currency, be discharged only to
the extent that on the Business Day following receipt by the Canadian Agent or
such Canadian Bank, as the case may be, of any sum adjudged to be so due in such
other currency the Canadian Agent or such Canadian Bank, as the case may be,
may, in accordance with normal banking procedures, purchase the relevant
currency with such other currency; in the event that the currency so purchased
is less than the sum originally due to the Canadian Agent or such Canadian Bank
in such currency, the Company and each Guarantor, as a separate obligation and
notwithstanding any such judgment, hereby indemnifies and holds harmless the
Canadian Agent and such Canadian Bank against such loss, and if the currency so
purchased exceeds the sum originally due to the Canadian Agent or such Canadian
Bank in the relevant currency, the Canadian Agent or such Canadian Bank, as the
case may be, shall remit to the Company or such Guarantor such excess.
SECTION 10.10 Joint and Several Obligations. The covenants, agreements
and obligations of the Company and the Guarantors set forth in this Article X
are, in each and every respect, joint and several; provided, however, that,
anything herein or in any other Loan Document to the contrary notwithstanding,
the maximum liability of each Guarantor hereunder and under the other Loan
Documents shall in no event exceed such Guarantor's Maximum Guaranteed Amount as
and when determined in accordance with applicable state or federal law. Each
Guarantor agrees that the Guaranteed Obligations may at any time and from time
to time exceed the Maximum Guaranteed Amount of such Guarantor without impairing
this Guaranty or affecting the rights and remedies of the Banks hereunder.
ARTICLE XI
EVENTS OF DEFAULT AND REMEDIES
SECTION 11.01 Events of Default and Remedies. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) any installment of principal or payment of interest on any of the
Obligations including, without limitation, any Note, any Bankers' Acceptances or
any Unpaid Drawing shall not be paid on the date on which such payment is due as
required under this Agreement; or
(b) any representation or warranty made or, for purposes of Article
VI, deemed made by or on behalf of any Loan Party herein or in any of the Loan
Documents or other document, certificate or financial statement delivered in
connection with this Agreement or any other Loan Document shall prove to have
been incorrect in any material respect when made or deemed made or reaffirmed,
as the case may be; or
(c) any Loan Party shall fail to perform or observe or fail to cause
any Subsidiary of the Company to perform or observe any duty or covenant
contained in Article VII of this Agreement and
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said failure shall continue for a period of thirty (30) days or shall fail to
perform or observe any other duty or covenant contained in this Agreement; or
(d) the Company, the Canadian Borrower, or any other Subsidiary fails
to make (whether as primary obligor or as guarantor or other surety) any
principal payment of or interest or premium, if any, on any Indebtedness (other
than the Notes or the Guaranty) with an aggregate principal amount in excess of
$3,000,000.00 outstanding beyond any period of grace provided with respect
thereto or fails to duly observe, perform or comply with any agreement with any
Person or any term or condition of any such instrument, if the effect of such
failure is to cause, or to permit the holder or holders to cause, such
obligations to become due prior to any stated maturity; or
(e) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Company, the Canadian Borrower, or any other Subsidiary, or of
a substantial part of the property or assets of the Company, the Canadian
Borrower, or any other Subsidiary, under Title 11 of the United States Code, as
now or hereafter in effect, or any successor thereto (the "Bankruptcy Code") or
under the Bankruptcy and Insolvency Act (Canada) or the Companies' Creditors
Arrangement Act (Canada) or any other federal or state bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Company, the
Canadian Borrower, or any other Subsidiary or for a substantial part of the
property or assets of the Company, the Canadian Borrower, or any other
Subsidiary or (iii) the winding-up or liquidation of the Company, the Canadian
Borrower, or any other Subsidiary; and such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered; or
(f) the Company, the Canadian Borrower, or any other Subsidiary shall
(i) voluntarily commence any proceeding or file any petition seeking relief
under the Bankruptcy Code or under the Bankruptcy and Insolvency Act (Canada) or
the Companies' Creditors Arrangement Act (Canada), or any other federal or state
bankruptcy, insolvency, receivership or similar law, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in clause (e) above, (iii)
apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Company, the Canadian
Borrower, or any other Subsidiary or for a substantial part of the property or
assets of the Company, the Canadian Borrower, or any other Subsidiary, (iv) file
an answer admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of effecting
any of the foregoing; or
(g) any Plan shall incur an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA or in any Applicable
Canadian Pension Legislation), whether or not waived, or a waiver of the minimum
funding standard or extension of any amortization period is sought or granted
under Section 412 of the Code or under any Applicable Canadian Pension
Legislation with respect to a Plan; any proceeding shall have occurred or is
reasonably likely to occur by the PBGC under Section 4069(a) of ERISA or any
Applicable Canadian Pension Legislation to impose liability on
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the Company, the Canadian Borrower, any other Subsidiary or an ERISA Affiliate;
any Plan shall have an Unfunded Current Liability; any required contribution to
a Plan or Multiemployer Plan shall not have been timely made; or the Company,
the Canadian Borrower, any other Subsidiary or any ERISA Affiliate has incurred
or is reasonably likely to incur a liability to or on account of a Plan or
Multiemployer Plan under Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA or
any Applicable Canadian Pension Legislation, and there shall result
(individually or collectively) from any such event or events a material risk of
either (i) the imposition of a Lien(s) upon, or the granting of a security
interest(s) in, the assets of the Company, the Canadian Borrower, any other
Subsidiary and/or an ERISA Affiliate in an amount(s) equal to or exceeding
$1,000,000.00 or (ii) the Company, the Canadian Borrower, any other Subsidiary
and/or an ERISA Affiliate incurring a liability(ies) or obligation(s) with
respect thereto equal to or exceeding $ 1,000,000.00; or
(h) a judgment or order, which with other outstanding judgments and
orders against the Company, the Canadian Borrower, and its other Subsidiaries,
or any of them, equals or exceeds $3,000,000.00 in the aggregate (to the extent
not covered by insurance as to which the respective insurer has acknowledged
coverage), shall be entered against the Company, the Canadian Borrower, or any
other Subsidiary and (i) within 30 days after entry thereof such judgment shall
not have been discharged or execution thereof stayed pending appeal or, within
30 days after the expiration of any such stay, such judgment shall not have been
discharged or (ii) any enforcement proceeding shall have been commenced (and not
stayed) by any creditor upon such judgment;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, either Agent may, and upon the written request
of the Majority Banks shall, by written notice to the Company and the Canadian
Borrower, (a "Notice of Default") take any or all of the following actions,
without prejudice to the rights of such Agent, any Bank or other holder of any
of the Obligations to enforce its claims against any Loan Party (provided that,
if an Event of Default specified in Section 11.01(e) or Section 11.01(f) shall
occur with respect to any Loan Party, the result of which would occur upon the
giving of a Notice of Default as specified in clauses (i), (ii), (v) and (vi)
below, shall occur automatically without the giving of any Notice of Default):
(i) declare the Total Commitment terminated, whereupon the Commitments of the
Banks shall forthwith terminate immediately and any Commitment Fee shall
forthwith become due and payable without any other notice of any kind; (ii)
declare the principal of and any accrued and unpaid interest in respect of all
Loans and Bankers' Acceptance, and all Obligations owing hereunder, to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, notice of demand or of dishonor and non-payment, protest, notice of
protest, notice of intent to accelerate, declaration or notice of acceleration
or any other notice of any kind, all of which are hereby waived by each Loan
Party; (iii) exercise any rights or remedies under any document securing any of
the Obligations; (iv) terminate any Letter of Credit which may be terminated in
accordance with its terms (whether by the giving of written notice to the
beneficiary or otherwise); (v) direct the Company to pay, and the Company agrees
that upon receipt of such notice (or upon the occurrence of an Event of Default
specified in Section 11.01(e) or Section 11.01(f)), it will pay to the U.S.
Agent, to the extent permitted by law, such additional amount of cash as is
equal to the aggregate Stated Amount of all U.S. Letters of Credit then
outstanding to be held in an interest bearing account with the U.S. Agent as
security for the Obligations and the other
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obligations of the Loan Parties hereunder and under the Notes and the other Loan
Documents, and (vi) direct the Company and the Canadian Borrower to pay, and the
Company and the Canadian Borrower agree than upon receipt of such notice (or
upon the occurrence of an Event of Default specified in Section 11.01(e) or
Section 11.01(f)) they and each of them will pay to the Canadian Agent, to the
extent permitted by law, such additional amount of cash as is equal to the
aggregate Stated Value of all Canadian Letters of Credit then outstanding and
the aggregate face amount of all Bankers' Acceptances then outstanding, to be
held in an interest bearing account with the Canadian Agent as security for the
Obligations and the other obligations of the Loan Parties hereunder and under
the Notes and the other Loan Documents.
SECTION 11.02 Other Remedies. Upon the occurrence and during the
continuance of any Event of Default, the Agents, acting at the request of the
Majority Banks, may proceed to protect and enforce its rights, either by suit in
equity or by action at law or both, whether for the specific performance of any
covenant or agreement contained in this Agreement or in any other Loan Document
or in aid of the exercise of any power granted in this Agreement or in any other
Loan Document; or may proceed to enforce the payment of all amounts owing to the
Agents and the Banks under the Loan Documents and any accrued and unpaid
interest thereon in the manner set forth herein or therein; it being intended
that no remedy conferred herein or in any of the other Loan Documents is to be
exclusive of any other remedy, and each and every remedy contained herein or in
any other Loan Document shall be cumulative and shall be in addition to every
other remedy given hereunder and under the other Loan Documents now or hereafter
existing at law or in equity or by statute or otherwise.
SECTION 11.03 Currency Conversion After Maturity. At any time
following the occurrence of an Event of Default and the acceleration of the
maturity of the Obligations owed to the Banks hereunder, the Canadian Banks
shall be entitled to convert, with two (2) Business Days' prior notice to the
Company and the Canadian Borrower, any and all then unpaid and outstanding
Eurodollar Rate Loans of the Canadian Borrower and Alternate Canadian Base Rate
Loans or any of them to Canadian Prime Loans. Any such conversion shall be
calculated so that the resulting Canadian Prime Loans shall be the equivalent on
the date of conversion of the amount of United States Dollars so converted. Any
accrued and unpaid interest denominated in United States Dollars at the time of
any such conversion shall be similarly converted to Canadian Dollars, and such
Canadian Prime Loans and accrued and unpaid interest thereon shall thereafter
bear interest in accordance with Section 2.09(a)(ii).
SECTION 11.04 Judgment Currency. The obligation of the Company or the
Canadian Borrower, as the case may be, to make payments on any Obligation to the
Banks or to any Agent hereunder in any currency (the "first currency") shall not
be discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any other currency (the "second currency") except
to the extent to which such tender or recovery shall result in the effective
receipt by the Bank, Banks or any Agent concerned of the full amount of the
first currency payable, and accordingly the primary obligation of the Company or
the Canadian Borrower, as the case may be, shall be enforceable as an
alternative or additional cause of action for the purpose of recovery in the
second currency of the amount (if any) by which such effective receipt shall
fall short of the full amount of the
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first currency payable and shall not be affected by a judgment being obtained
for any other sum due hereunder.
ARTICLE XII
THE AGENTS
SECTION 12.01 Authorization and Action. Each U.S. Bank hereby
irrevocably appoints and authorizes the U.S. Agent to act on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
specifically delegated to or required of the U.S. Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. Each Canadian
Bank hereby irrevocably appoints and authorizes the Canadian Agent to act on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are specifically delegated to or required of the Canadian Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. Each Agent may perform any of its duties hereunder by or through its
agents and employees. The duties of each Agent shall be mechanical and
administrative in nature; no Agent shall have by reason of this Agreement or any
other Loan Documents a fiduciary relationship in respect of any Bank; and
nothing in this Agreement or any other Loan Document, expressed or implied, is
intended to, or shall be so construed as to, impose upon either Agent any
obligations in respect of this Agreement or any other Loan Document except as
expressly set forth herein or therein. As to any matters not expressly provided
for by this Agreement, the Notes or the other Loan Documents (including
enforcement or collection of the Notes), neither Agent shall be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Banks, and such instructions
shall be binding upon all Banks and all holders of Notes and the Obligations;
provided, however, that neither Agent shall be required to take any action which
exposes such Agent to personal liability or which is contrary to this Agreement
or applicable law.
SECTION 12.02 AGENT'S RELIANCE. (A) NEITHER AGENT NOR ANY OF THEIR
DIRECTORS, OFFICERS, AGENTS OR EMPLOYEES SHALL BE LIABLE FOR ANY ACTION TAKEN OR
OMITTED TO BE TAKEN BY IT OR THEM UNDER OR IN CONNECTION WITH THIS AGREEMENT,
THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS (I) WITH THE CONSENT OR AT THE
REQUEST OF THE MAJORITY BANKS OR (II) IN THE ABSENCE OF ITS OR THEIR OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT (IT BEING THE EXPRESS INTENTION OF THE PARTIES
HERETO THAT AN AGENT AND ITS DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES SHALL
HAVE NO LIABILITY FOR ACTIONS AND OMISSIONS UNDER THIS SECTION RESULTING FROM
THEIR SOLE ORDINARY OR CONTRIBUTORY NEGLIGENCE).
(B) WITHOUT LIMITATION OF THE GENERALITY OF THE FOREGOING, EACH AGENT:
(I) MAY TREAT THE PAYEE OF EACH NOTE AND THE OBLIGATIONS AS THE HOLDER THEREOF
UNTIL SUCH AGENT RECEIVES WRITTEN NOTICE OF THE ASSIGNMENT OR TRANSFER THEREOF
SIGNED BY SUCH PAYEE AND IN FORM SATISFACTORY TO THE SUCH AGENT; (II) MAY
CONSULT WITH LEGAL COUNSEL (INCLUDING COUNSEL FOR ANY LOAN PARTY), INDEPENDENT
PUBLIC ACCOUNTANTS AND OTHER EXPERTS SELECTED BY IT AND SHALL NOT BE LIABLE FOR
ANY ACTION TAKEN OR OMITTED TO BE TAKEN IN GOOD FAITH BY IT IN ACCORDANCE WITH
THE ADVICE OF SUCH COUNSEL, ACCOUNTANTS OR EXPERTS; (III) MAKES NO WARRANTY OR
REPRESENTATION TO ANY BANK AND SHALL
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NOT BE RESPONSIBLE TO ANY BANK FOR ANY STATEMENTS, WARRANTIES OR REPRESENTATIONS
MADE IN OR IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OTHER LOAN
DOCUMENT; (IV) EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, SHALL NOT HAVE ANY
DUTY TO ASCERTAIN OR TO INQUIRE AS TO THE PERFORMANCE OR OBSERVANCE OF ANY OF
THE TERMS, COVENANTS OR CONDITIONS OF THIS AGREEMENT, ANY NOTE OR ANY OTHER LOAN
DOCUMENT OR TO INSPECT THE PROPERTY (INCLUDING THE BOOKS AND RECORDS) OF ANY
LOAN PARTY; (V) SHALL NOT BE RESPONSIBLE TO ANY BANK FOR THE DUE EXECUTION,
LEGALITY, VALIDITY, ENFORCEABILITY, COLLECTIBILITY, GENUINENESS, SUFFICIENCY OR
VALUE OF THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT OR ANY OTHER
INSTRUMENT OR DOCUMENT FURNISHED PURSUANT HERETO OR THERETO; (VI) SHALL NOT BE
RESPONSIBLE TO ANY BANK FOR THE PERFECTION OR PRIORITY OF ANY LIEN SECURING THE
OBLIGATIONS; AND (VII) SHALL INCUR NO LIABILITY UNDER OR IN RESPECT OF THIS
AGREEMENT, ANY NOTE OR ANY OTHER LOAN DOCUMENT BY ACTING UPON ANY NOTICE,
CONSENT, CERTIFICATE OR OTHER INSTRUMENT OR WRITING (WHICH MAY BE BY TELEGRAM,
TELECOPIER, CABLE OR TELEX) REASONABLY BELIEVED BY IT TO BE GENUINE AND SIGNED
OR SENT BY THE PROPER PARTY OR PARTIES.
SECTION 12.03 Agents and Affiliates. Without limiting the right of any
other Bank to engage in any business transactions with any Loan Party or any of
its Affiliates, with respect to their commitments, the Loans made by them and
the Notes issued to them, each of the Agents and each other Bank who may become
an Agent shall have the same rights and powers under this Agreement and its
Notes as any other Bank and may exercise the same as though it was not an Agent;
and the term "Bank" or "Banks" shall, unless otherwise expressly indicated,
include the U.S. Agent and Canadian Agent and any such other Bank, in their
individual capacities. The U.S. Agent and the Canadian Agent, each other Person
who becomes the Agent and their respective Affiliates may be engaged in, or may
hereafter engage in, one or more loan, letter of credit, leasing or other
financing activities not the subject of this Agreement (collectively, the "Other
Financings") with the Company, the Canadian Borrower, any other Loan Party, any
Subsidiary or any of its Affiliates, or may act as trustee on behalf of, or
depositary for, or otherwise engage in other business transactions with the
Company, the Canadian Borrower, any other Loan Party, any Subsidiary or any of
its Affiliates (all Other Financings and other such business transactions being
collectively, the "Other Activities") with no responsibility to account therefor
to the Banks. Without limiting the rights and remedies of the Banks specifically
set forth herein, no other Bank by virtue of being a Bank hereunder shall have
any interest in (a) any Other Activities, (b) any present or future guaranty by
or for the account of the Company or the Canadian Borrower in respect of such
Other Financings or Other Activities, (c) any present or future offset exercised
by the respective Agent in respect of any such Other Activities, (d) any present
or future property taken as security for any such Other Activities or (e) any
property now or hereafter in the possession or control of the respective Agent
which may be or become security for the obligations of the Company, the Canadian
Borrower, any other Loan Party, any Subsidiary or any of its Affiliates
hereunder and under the Notes by reason of the general description of
indebtedness secured, or of property contained in any other agreements,
documents or instruments related to such Other Activities; provided, however,
that if any payment in respect of such guaranties or such property or the
proceeds thereof shall be applied to reduction of the obligations evidenced
hereunder and by the Notes, then each Bank shall be entitled to share in such
application according to its pro rata portion of such obligations.
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SECTION 12.04 Bank Credit Decision. Each Bank acknowledges and agrees
that it has, independently and without reliance upon the appropriate Agent or
any other Bank and based on the financial statements referred to in Section 6.07
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges and agrees that it will, independently and without reliance upon
the respective Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
SECTION 12.05 AGENTS' INDEMNITY. (A) THE AGENTS SHALL NOT BE REQUIRED
TO TAKE ANY ACTION HEREUNDER OR TO PROSECUTE OR DEFEND ANY SUIT IN RESPECT OF
THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT UNLESS INDEMNIFIED TO THE
RESPECTIVE AGENT'S SATISFACTION BY THE BANKS AGAINST LOSS, COST, LIABILITY AND
EXPENSE. IF ANY INDEMNITY FURNISHED TO THE PARTICULAR AGENT SHALL BECOME
IMPAIRED, IT MAY CALL FOR ADDITIONAL INDEMNITY AND CEASE TO DO THE ACTS
INDEMNIFIED AGAINST UNTIL SUCH ADDITIONAL INDEMNITY IS GIVEN. IN ADDITION, THE
BANKS AGREE TO INDEMNIFY THE APPROPRIATE AGENT (TO THE EXTENT NOT REIMBURSED BY
THE COMPANY OR ANY OTHER LOAN PARTY), RATABLY ACCORDING TO THE RESPECTIVE
AGGREGATE PRINCIPAL AMOUNTS OF THE NOTES THEN HELD BY EACH OF THEM (OR IF NO
NOTES ARE AT THE TIME OUTSTANDING, RATABLY ACCORDING TO THE RESPECTIVE AMOUNTS
OF THEIR COMMITMENTS, OR IF NO COMMITMENTS ARE OUTSTANDING, THE RESPECTIVE
AMOUNTS OF THE COMMITMENTS IMMEDIATELY PRIOR TO THE TIME THE COMMITMENTS CEASED
TO BE OUTSTANDING), FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED
BY, OR ASSERTED AGAINST THE APPROPRIATE AGENT IN ANY WAY RELATING TO OR ARISING
OUT OF THIS AGREEMENT OR ANY ACTION TAKEN OR OMITTED BY THE APPROPRIATE AGENT
UNDER THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS (INCLUDING ANY
ACTION TAKEN OR OMITTED UNDER ARTICLE II, ARTICLE III OR ARTICLE IV OF THIS
AGREEMENT). WITHOUT LIMITATION OF THE FOREGOING, EACH BANK AGREES TO REIMBURSE
THE APPROPRIATE AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE OF ANY OUT-OF-
POCKET EXPENSES (INCLUDING REASONABLE COUNSEL FEES) INCURRED BY SUCH AGENT IN
CONNECTION WITH THE PREPARATION, EXECUTION, ADMINISTRATION, OR ENFORCEMENT OF,
OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT,
THE NOTES AND THE OTHER LOAN DOCUMENTS TO THE EXTENT THAT SUCH AGENT IS NOT
REIMBURSED FOR SUCH EXPENSES BY A LOAN PARTY. THE PROVISIONS OF THIS SECTION
SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT, THE PAYMENT OF THE OBLIGATIONS
AND/OR THE ASSIGNMENT OF ANY OF THE NOTES.
(B) NOTWITHSTANDING THE FOREGOING, NO BANK SHALL BE LIABLE UNDER THIS
SECTION TO ITS RESPECTIVE AGENT FOR ANY PORTION OF SUCH LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES OR DISBURSEMENTS DUE TO SUCH AGENT RESULTING FROM SUCH AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. EACH BANK AGREES, HOWEVER, THAT IT EXPRESSLY
INTENDS, UNDER THIS SECTION, TO INDEMNIFY ITS RESPECTIVE AGENT RATABLY AS
AFORESAID FOR ALL SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS ARISING OUT OF OR
RESULTING FROM SUCH AGENT'S SOLE ORDINARY OR CONTRIBUTORY NEGLIGENCE.
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SECTION 12.06 Successor Agent. Either of the Agents may resign at any
time by giving written notice thereof to the appropriate Banks, the Canadian
Borrower and the Company, as appropriate, and may be removed as an Agent under
this Agreement, the Notes and the other Loan Documents at any time with or
without cause by the respective Majority Banks. Upon any such resignation or
removal, the respective Majority Banks shall have the right to appoint a
successor Agent, subject to the approval of the Company or the Canadian
Borrower, as applicable. If no successor Agent shall have been so appointed by
the respective Majority Banks, and shall have accepted such appointment, within
30 calendar days after the retiring Agent's giving of notice of resignation or
the respective Majority Banks' removal of the retiring Agent, then the retiring
Agent may, subject to the approval of the Company or the Canadian Borrower,
respectively, on behalf of the Banks, appoint a successor Agent, which shall be
a commercial bank organized under the laws of the United States of America or a
state thereof, in case of the U.S. Agent, or Canada, or any province thereof, in
the case of the Canadian Agent, and having a combined capital and surplus of at
least $50,000,000.00. Upon the acceptance of any appointment as Agent hereunder
and under the Notes and the other Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to, and become vested with, all the
rights, powers, privileges and duties of the respective retiring Agent, and the
respective retiring Agent shall be discharged from its duties and obligations
under this Agreement, the Notes and the other Loan Documents. After any retiring
Agent's resignation or removal as Agent hereunder and under the Notes and the
other Loan Documents, the provisions of this Article XII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement, the Notes and the other Loan Documents.
SECTION 12.07 Notice of Default. Neither of the Agents shall be deemed
to have any knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the such Agent shall have received express notice
thereof from a Bank, the Canadian Borrower or the Company referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." If either Agent receives such notice, such
Agent shall give notice thereof to the Banks; provided, however, if such notice
is received from a Bank, such Agent also shall give notice thereof to the
Company and the Canadian Borrower. Such Agent shall be entitled to take action
or refrain from taking action with respect to such Default or Event of Default
as provided in Section 11.01 and Section 11.02.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01 Amendments. No amendment or waiver of any provision of
this Agreement, any Note or any other Loan Document, nor consent to any
departure by any Loan Party herefrom or therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Company, as to
amendments, and by the Majority Banks in all cases, and then, in any case, such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, unless in writing and signed by 100% of the Banks, do any of
the following: (a) change the definition of "Majority Banks," "Total
Commitment," "Total Canadian Commitment," "Total U.S. Commitment," "Percentage
Participation,"
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(except as otherwise provided in Section 4.03 hereof) "Termination Date,"
"Maturity Date" or "Letter of Credit Termination Date," (b) except as provided
in Section 2.16(d) reduce or increase the amount or alter the terms of the
Commitment of any Bank or subject any Bank to any additional obligations, (c)
reduce the principal of, or rate or amount of interest applicable to, any Loan
or the reimbursement obligations of the Company under the Letters of Credit
other than as provided in this Agreement, or any Acceptance Fee, any Letter of
Credit Fees, or any Fees (d) postpone any date fixed for any payment of
principal of, or interest on, the Notes or the reimbursement obligations of the
Company or Canadian Borrower under any Letter of Credit, or Bankers' Acceptance,
(e) change this Section, (f) change the aggregate unpaid principal amount of the
Notes, or the number of Banks, which shall be required for the Banks or any of
them to take any action hereunder or (g) except as provided in Section 7.08(b),
release any Guarantor; and provided further that no amendment to or waiver of
any provision of Article IX or Article X hereof shall be effective without the
prior consent in writing of 100% of the U.S. Banks or the Canadian Banks,
respectively, the Company and any Material Subsidiary, provided further that no
amendment, waiver or consent shall, unless in writing and signed by the Agents
in addition to the Banks required above to take such action, affect the rights
or duties of the Agents under this Agreement, any Note or any other Loan
Document.
SECTION 13.02 Notices. The appropriate Agent, any Bank or the holder
of any of the Obligations, giving consent or notice or making any request of any
Loan Party provided for hereunder, shall notify each Bank and the appropriate
Agent thereof. In the event that the holder of any Note or any of the
Obligations (including any Bank) shall transfer such Note or Obligations, it
shall promptly so advise the appropriate Agent which shall be entitled to assume
conclusively that no transfer of any Note or any of the Obligations has been
made by any holder (including any Bank) unless and until the appropriate Agent
receives written notice to the contrary. Except with respect to telephone
notifications specifically permitted pursuant to Article II and Article IV, all
notices, consents, requests, approvals, demands and other communications
provided for herein shall be in writing (including telecopy communications) and
mailed, telecopied, sent by overnight courier or delivered:
(a) If to the Loan Parties, to them at:
2777 Allen Parkway
Suite 700
Houston, Texas 770019-2155
Attention: J. Chris Brewster
Michael W. Harlan
Telecopy No: (713) 942-1547
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(b) If to the U. S. Agent, to it at:
712 Main Street, 8 TCBN 96
Houston, Texas 77002
Telecopy No.: (713) 216-6004
Telephone No: (713) 216-5929
Attention: Mr. Curtis D. Karges
(c) If to the Canadian Agent, to it at:
Chemical Bank of Canada
100 Yonge Street
Suite 900
Toronto, Ontario M5C 2W1
CANADA
Telecopy No.: (416) 594-2240
Telephone No: (416) 594-9800
Attention: Mr. Owen G. Roberts
(d) If to any Bank, as specified on the signature page for such Bank
hereto or, in the case of any Person who becomes a Bank after the date hereof,
as specified on the Assignment and Acceptance executed by such Person or in the
Administrative Questionnaire delivered by such Person or, in the case of any
party hereto, such other address or telecopy number as such party may hereafter
specify for such purpose by notice to the other parties.
All communications shall, when mailed, telecopied or delivered, be
effective when mailed by certified mail, return receipt requested to any party
at its address specified above, on the signature page hereof or on the signature
page of such Assignment and Acceptance (or other address designated by such
party in a communication to the other parties hereto), or telecopied to any
party to the telecopy number set forth above, on the signature page hereof or on
the signature page of such Assignment and Acceptance (or other telecopy number
designated by such party in a communication to the other parties hereto), or
delivered personally to any party at its address specified above, on the
signature page hereof or on the signature page of such Assignment and Acceptance
(or other address designated by such party in a Communication to the other
parties hereto); provided, that communications to the Agent pursuant to Article
II, Article IV or Article XIII shall not be effective until received by the
Agent.
SECTION 13.03 No Waiver; Remedies. No failure on the part of any Bank
or the Agent to exercise, and no delay in exercising, any right hereunder, under
any Note or under any other Loan Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, or any abandonment or
discontinuance of any steps to enforce such right, preclude any other or further
exercise thereof or the exercise of any other right. No notice to or demand on
any Loan Party in any case shall entitle such Loan Party to any other or further
notice or demand in similar or other
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circumstances. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
SECTION 13.04 Costs, Expenses and Taxes. The Company and the Canadian
Borrower agree to pay on demand: (a) all reasonable out-of-pocket costs and
expenses of the Agents in connection with the preparation, execution, delivery
and administration of this Agreement, the Notes, the other Loan Documents and
the other documents to be delivered hereunder, including the reasonable fees and
out-of-pocket expenses of counsel for the Agents with respect thereto and with
respect to advising the Agent as to its rights and responsibilities under this
Agreement, the Notes and the other Loan Documents, and any modification,
supplement or waiver of any of the terms of this Agreement or any other Loan
Document, (b) all reasonable out-of-pocket costs and expenses of the Agents in
connection with the syndication of the credit evidenced by this Agreement and
the other Loan Documents, (c) all reasonable costs and expenses of each of the
Agents, the Banks and any other holder of an interest in the Notes, and the
Obligations of the Loan Parties hereunder and under the Loan Documents,
including reasonable legal fees (including the allocated cost of in-house
counsel) and expenses, in connection with a default or the enforcement of this
Agreement, the Notes and the other Loan Documents and (d) reasonable costs and
expenses incurred in connection with third party professional services required
by the Agents or the Banks. In addition, the Company and the Canadian Borrower
shall pay any and all stamp and similar taxes payable or determined to be
payable in connection with the execution and delivery of this Agreement, the
Notes, the other Loan Documents and the other documents to be delivered
hereunder, and agrees to save the Agents and each Bank harmless from and against
any and all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of this Agreement, any
Note or any other Loan Document. Without prejudice to the survival of any other
obligations of the Company hereunder and under the Notes, the obligations of the
Company and/or the Canadian Borrower, under this Section shall survive the
termination of this Agreement and the payment of the Obligations or the
assignment of the Notes.
SECTION 13.05 INDEMNITY. (A) THE LOAN PARTIES JOINTLY AND SEVERALLY
SHALL INDEMNIFY THE AGENTS, THE BANKS AND EACH AFFILIATE THEREOF AND THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS FROM, AND HOLD EACH OF THEM
HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS OR DAMAGES (INCLUDING
REASONABLE LEGAL FEES AND EXPENSES) TO WHICH ANY OF THEM MAY BECOME SUBJECT,
INSOFAR AS SUCH LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISE OUT OF OR RESULT
FROM THIS AGREEMENT OR ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY INCLUDING (I) ANY ACTUAL OR PROPOSED USE BY THE COMPANY OR THE
CANADIAN BORROWER OF THE PROCEEDS OF ANY EXTENSION OF CREDIT BY ANY BANK
HEREUNDER OR (II) ANY INVESTIGATION, LITIGATION OR OTHER PROCEEDING (INCLUDING
ANY THREATENED INVESTIGATION OR PROCEEDING) RELATING TO THE FOREGOING OR ANY OF
THE OTHER LOAN DOCUMENTS, AND THE LOAN PARTIES JOINTLY AND SEVERALLY SHALL
REIMBURSE THE AGENTS, EACH BANK AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS, UPON DEMAND FOR ANY EXPENSES
(INCLUDING LEGAL FEES) REASONABLY INCURRED IN CONNECTION WITH ANY SUCH
INVESTIGATION OR PROCEEDING; BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS,
DAMAGES OR EXPENSES INCURRED BY REASON OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE PERSON TO BE INDEMNIFIED.
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(B) WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT, IT IS THE
EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED
HEREUNDER OR THEREUNDER SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND
ALL LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISING OUT OF OR RESULTING FROM THE
ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON. WITHOUT PREJUDICE TO
THE SURVIVAL OF ANY OTHER OBLIGATIONS OF THE LOAN PARTIES HEREUNDER AND UNDER
THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS OF THE LOAN PARTIES UNDER THIS SECTION
SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
THE PAYMENT OF THE OBLIGATIONS OR THE ASSIGNMENT OF THE NOTES.
SECTION 13.06 Right of Setoff. If any Event of Default shall have
occurred and be continuing, each Bank is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank, or any branch, subsidiary or
Affiliate of such Bank, to or for the credit or the account of any Loan Party
against any and all the Obligations of the Loan Parties now or hereafter
existing under this Agreement and the other Loan Documents and other obligations
of the Loan Parties held by such Bank, irrespective of whether or not such Bank
or either Agent shall have made any demand under this Agreement, such Note, the
Obligations or such other obligations and although the Obligations or such other
obligations may be unmatured. Each Bank agrees promptly to notify the Company
and the Canadian Borrower, as applicable, after any such setoff and application
made by such Bank, but the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Bank under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Bank may have.
SECTION 13.07 Governing Law. This Agreement, all Notes, the other Loan
Documents and all other documents executed in connection herewith and therewith,
shall be deemed to be contracts and agreements executed by the Loan Parties, the
Agents and the Banks under the laws of the State of Texas and of the United
States of America and for all purposes shall be construed in accordance with,
and governed by, the laws of said state and of the United States of America.
Without limitation of the foregoing, nothing in this Agreement, or in the Notes
or in any other Loan Document shall be deemed to constitute a waiver of any
rights which any Bank may have under applicable federal legislation relating to
the amount of interest which such Bank may contract for, take, receive or charge
in respect of any Loans or other Obligations to such Bank hereunder and under
the other Loan Documents, including any right to take, receive, reserve and
charge interest at the rate allowed by the law of the state where such Bank is
located. The Agents, the Banks and the Loan Parties further agree that insofar
as the provisions of Article 1.04, Subtitle 1, Title 79, of the Revised Civil
Statutes of Texas, 1925, as amended, are applicable to the determination of the
Highest Lawful Rate with respect to the Notes and the Obligations hereunder and
under the other Loan Documents, the indicated rate ceiling computed from time to
time pursuant to Section (a)(1) and Section (b) of such Article shall be
applicable; provided, however, that to the extent permitted by such Article, the
Agents may from time to time by notice to the Company and the Canadian Borrower,
as applicable, revise the election of such interest rate ceiling as such ceiling
affects the then current or future balances of the Loans outstanding under the
Notes and the Obligations hereunder and under the other Loan Documents. The
provisions
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of Chapter 15 of Subtitle 3 of the said Title 79 do not apply to this Agreement,
any Note issued hereunder or the Obligations hereunder and under the other Loan
Documents.
SECTION 13.08 Interest. Each provision in this Agreement and each
other Loan Document is expressly limited so that in no event whatsoever shall
the amount paid, or otherwise agreed to be paid, to the Agents or any Bank, or
charged, contracted for, reserved, taken or received by the Agents or any Bank,
for the use, forbearance or detention of the money to be loaned under this
Agreement or any Loan Document or otherwise (including any sums paid as required
by any covenant or obligation contained herein or in any other Loan Document
which is for the use, forbearance or detention of such money), exceed that
amount of money which would cause the effective rate of interest to exceed the
Highest Lawful Rate, and all amounts owed under this Agreement and each other
Loan Document shall be held to be subject to reduction to the effect that such
amounts so paid or agreed to be paid, charged, contracted for, reserved, taken
or received which are for the use, forbearance or detention of money under this
Agreement or such Loan Document shall in no event exceed that amount of money
which would cause the effective rate of interest to exceed the Highest Lawful
Rate. Anything in any Note or any other Loan Document to the contrary
notwithstanding, neither the Company nor the Canadian Borrower shall not be
required to pay unearned interest on any Note and no Loan Party shall be
required to pay interest on its Obligations hereunder and under the other Loan
Documents to which it is a party at a rate in excess of the Highest Lawful Rate,
and if the effective rate of interest which would otherwise be payable under
such Note, such Obligations and such other Loan Documents would exceed the
Highest Lawful Rate, or if the holder of such Note or such Obligations shall
receive any unearned interest or shall receive monies that are deemed to
constitute interest which would increase the effective rate of interest payable
by the Company or the Canadian Borrower, as applicable, under such Note and the
Loan Parties under such Obligations and the Loan Documents to which it is a
party to a rate in excess of the Highest Lawful Rate, then (a) the amount of
interest which would otherwise be payable by such Loan Party under such
Obligations and such Loan Documents shall be reduced to the amount allowed under
applicable law and (b) any unearned interest paid by such Loan Party or any
interest paid by such Loan Party in excess of the Highest Lawful Rate shall in
the first instance be credited on the principal of the Obligations of such Loan
Party (or if all such Obligations shall have been paid in full, refunded to the
Loan Party paying such unearned interest). It is further agreed that, without
limitation of the foregoing, all calculations of the rate of interest contracted
for, reserved, taken, charged or received by any Bank under the Notes and the
Obligations of the Loan Parties hereunder and under this Agreement and the other
Loan Documents held by it are made for the purpose of determining whether such
rate exceeds the Highest Lawful Rate applicable to such Bank (such Highest
Lawful Rate being such Bank's "Maximum Permissible Rate"), and shall be made, to
the extent permitted by usury laws applicable to such Bank (now or hereafter
enacted), by amortizing, prorating and spreading in equal parts during the
period of the full stated term of the Loans evidenced by said Notes and the
other Obligations all interest at any time contracted for, charged or received
by such Bank in connection therewith. If at any time and from time to time (y)
the amount of interest payable to any Bank on any date shall be computed at such
Bank's Maximum Permissible Rate pursuant to this Section and (z) in respect of
any subsequent interest computation period the amount of interest otherwise
payable to such Bank would be less than the amount of interest payable to such
Bank computed at such Bank's Maximum Permissible Rate, then the amount of
interest payable to such Bank in respect of such
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subsequent interest computation period shall continue to be computed at such
Bank's Maximum Permissible Rate until the total amount of interest payable to
such Bank shall equal the total amount of interest which would have been payable
to such Bank if the total amount of interest had been computed without giving
effect to this Section.
SECTION 13.09 Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by the Loan
Parties in connection herewith and the other Loan Documents shall survive the
execution and delivery of this Agreement, the Notes and the other Loan Documents
until two years and one day after payment in full of the Obligations, the
termination of the Commitments of the Banks and the termination or expiration of
the Letters of Credit, and will bind and inure to the benefit of the respective
successors and assigns of the parties hereto, whether so expressed or not,
provided, that the undertaking of the Banks to make Loans and extend credit to
the Company and the Canadian Borrower, as applicable, and the undertaking of the
relevant Issuing Bank to issue Letters of Credit for the account of the Company
and the Canadian Borrower, as applicable, shall not inure to the benefit of any
successor or assign of the Company or the Canadian Borrower, as the case may be.
SECTION 13.10 Binding Effect. This Agreement shall become effective
when it shall have been executed by the Loan Parties and the Agents and when the
Agents shall have been notified by each Bank that such Bank has executed it and
thereafter shall be binding upon and inure to the benefit of the Loan Parties,
the Agents and each Bank and their respective permitted successors and assigns.
SECTION 13.11 Successors and Assigns; Participations. (a) All
covenants, promises and agreements by or on behalf of the Loan Parties, the
Agents or the Banks that are contained in this Agreement shall bind and inure to
the benefit of their respective permitted successors and assigns. The Loan
Parties may not assign or transfer any of their rights or obligations hereunder
without the written consent of all the Banks.
(b) Each Bank may, without the consent of any Loan Party, sell
participations to one or more banks in all or a portion of its rights and
obligations under this Agreement and the other Loan Documents (including all or
a portion of its Commitment, the Loans and the Obligations of the Loan Parties
owing to it and the Notes and participations in Letters of Credit held by it);
provided, however, that (i) the selling Bank's obligations under this Agreement
shall remain unchanged, (ii) such Bank shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participating banks shall be entitled to the cost protection provisions
contained in Article II, Article IV and Section 13.04; provided, however, the
costs to which a participant shall be entitled to obtain pursuant to Articles II
and IV shall be determined by reference to such participant's selling Bank and
shall be recoverable solely from such selling Bank (without increasing the
Company's or the Canadian Borrower's obligation to reimburse such Bank
thereunder) and (iv) the Loan Parties, the Agents and the other Banks shall
continue to deal solely and directly with the selling Bank in connection with
such Bank's rights and obligations under this Agreement and the other Loan
Documents; provided, however, the selling Bank may grant such a participant
rights with respect to amendments, modifications or waivers only with respect to
the amount of principal or the rate of interest payable on, or the dates fixed
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for any payment of principal of or interest on, the Loans. Except with respect
to cost protections contained in Section 13.04 provided to a participant
pursuant to clause (iii) of this paragraph, no participant shall be a third
party beneficiary of this Agreement and shall not be entitled to enforce any
rights provided to its selling Bank against the Company or the Canadian
Borrower, as applicable, under this Agreement. The relevant Agent or any Bank
selling any participation shall provide to the Company or the Canadian Borrower,
as applicable, the name of any Bank selling a participation pursuant to this
Section and the name of any bank purchasing such participation.
(c) A U.S. Bank may assign to any other U.S. Bank or U.S. Banks or to
any Affiliate of a U.S. Bank (which parties shall be deemed to be Eligible
Assignees hereunder) and, with the prior written consent of the Company and the
U.S. Agent (which consent shall not be unreasonably withheld), a U.S. Bank may
assign to one or more other Eligible Assignees all or a portion of (but if a
portion of, not less than $10,000,000.00 of) its interests, rights, and
obligations under this Agreement and the other Loan Documents (including all or
a portion of its U.S. Commitment and the same portion of the Loans and other
Obligations of the Loan Parties at the time owing to it and the Note held by it,
including its participation in the U.S. Letters of Credit); provided, however,
that (i) each such assignment shall be in a minimum principal amount of not less
than $10,000,000.00 (unless such assignment shall be to another Bank) and shall
be of a constant, and not a varying, percentage of all the assigning Bank's U.S.
Commitment, rights and obligations under this Agreement and (ii) the parties to
each such assignment shall execute and deliver to the U.S. Agent, for its
acceptance and recording in the Register (as defined below), an Assignment and
Acceptance substantially in the form of Exhibit 13.11 hereto (an "Assignment and
Acceptance"), any Note subject to such assignment and, in the case of the
Eligible Assignee, an Administrative Questionnaire. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof unless otherwise agreed to by the
assigning Bank, the Eligible Assignee thereunder and the U.S. Agent (x) the
Eligible Assignee thereunder shall be a party hereto and to the other Loan
Documents and, to the extent provided in such Assignment and Acceptance, have
the rights and obligations of a Bank hereunder and under the other Loan
Documents and (y) the assignor Bank thereunder shall, to the extent provided in
such Assignment and Acceptance, be released from its obligations under this
Agreement and the other Loan Documents (and, in the case of an Assignment and
Acceptance covering all of the remaining portion of an assigning Bank's rights
and obligations under this Agreement and the other Loan Documents, such Bank
shall cease to be a party hereto).
(d) A Canadian Bank may assign to any other Canadian Bank or Canadian
Banks or to any Affiliate of a Canadian Bank domiciled in Canada (which parties
shall be deemed to be Eligible Assignees hereunder) and, with the prior written
consent of the Company and the Canadian Agent (which consent shall not be
unreasonably withheld), a Canadian Bank may assign to one or more other Eligible
Assignees domiciled in Canada all or a portion of (but if a portion of, not less
than $5,000,000.00 of) its interests, rights, and obligations under this
Agreement and the other Loan Documents (including all or a portion of its
Canadian Commitment and the same portion of the Loans and other Obligations of
the Loan Parties at the time owing to it, including its participation in the
Canadian Letters of Credit); provided, however, that (i) each such assignment
shall be in the minimum
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principal amount of not less than $5,000,000.00 (unless such assignment shall be
to another Bank) and shall be of a constant, and not a varying, percentage of
all the assigning Bank's Canadian Commitment, rights and obligations under this
Agreement and (ii) the parties to each such assignment shall execute and deliver
to the Canadian Agent, for its acceptance and recording in the Register (as
defined below), an Assignment and Acceptance substantially in the form of
Exhibit 13.11 hereto (an "Assignment and Acceptance") and, in the case of the
Eligible Assignee, an Administrative Questionnaire. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof unless otherwise agreed to by the
assigning Bank, the Eligible Assignee thereunder and the Canadian Agent (x) the
Eligible Assignee thereunder shall be a party hereto and to the other Loan
Documents and, to the extent provided in such Assignment and Acceptance, have
the rights and obligations of a Bank hereunder and under the other Loan
Documents and (y) the assignor Bank thereunder shall, to the extent provided in
such Assignment and Acceptance, be released from its obligations under this
Agreement and the other Loan Documents (and, in the case of an Assignment and
Acceptance covering all of the remaining portion of an assigning Bank's rights
and obligations under this Agreement and the other Loan Documents, such Bank
shall cease to be a party hereto).
(e) By executing and delivering an Assignment and Acceptance, the Bank
assignor thereunder and the Eligible Assignee confirm to and agree with each
other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim known to
such Bank assignor, such Bank assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (ii) such Bank assignor makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or the performance or observance of its
respective obligations under this Agreement or any other instrument or document
furnished pursuant hereto or thereto; (iii) such Eligible Assignee confirms that
it has received a copy of this Agreement together with copies of the most recent
financial statements delivered pursuant to Section 6.07 or Section 7.01 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such Eligible Assignee will, independently and without reliance upon the Agents,
such Bank assignor or any other Bank and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement and the other Loan
Documents; (v) such Eligible Assignee appoints and authorizes the U.S. Agent or
the Canadian Agent, as the case may be, to take such action on behalf of such
Eligible Assignee and to exercise such powers under this Agreement and the other
Loan Documents as are delegated to the U.S. Agent or the Canadian Agent, as the
case may be, by the terms hereof, together with such powers as are reasonably
incidental thereto; (vi) such Eligible Assignee agrees that it will perform in
accordance with its terms all of the obligations which by the terms of this
Agreement and the other Loan Documents are required to be performed by it as a
Bank and (vii) such Eligible Assignee confirms that it is an Eligible Assignee
as defined herein.
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(f) The Agents shall each maintain at its Payment Office a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Banks and the U.S. Commitment or
the Canadian Commitment, as the case may be, of, and principal amount of the
Loans and other Obligations owing to, each Bank from time to time (the
"Register"). The entries in such Register shall be conclusive, in the absence of
manifest error, and the Loan Parties, the Agents and the Banks may treat each
Person whose name is recorded in such Register as a Bank hereunder for all
purposes of this Agreement and the other Loan Documents. Each such Register
shall be available for inspection by the Loan Parties, any Bank or the Agents at
any reasonable time and from time to time upon reasonable prior notice.
(g) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an Eligible Assignee together with the Note subject to such
assignment, a service fee payable by the assigning Bank payable to the U.S.
Agent or the Canadian Agent, as the case may be, not to exceed $2,000.00 and the
written consent to such assignment, the relevant Agent shall, if such Assignment
and Acceptance has been completed and is substantially in the form of Exhibit
13.11A if a U.S. Bank or Exhibit 13.11B if a Canadian Bank hereto, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register maintained by such Agent and (iii) give prompt notice thereof to
the U.S. Banks or Canadian Banks, as applicable and the Company or the Canadian
Borrower, as applicable. Within five (5) Business Days after receipt of such
notice, the Company or the Canadian Borrower, as the case may be, shall, at its
own expense, execute and deliver to the Agent in exchange for the surrendered
Note, a new Note to the order of such Eligible Assignee in an amount
respectively equal to their portion of the U.S. Commitment or the Canadian
Commitment, as the case may be, of the assigning Bank assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Bank has retained any of
its U.S. Commitment or the Canadian Commitment, as the case may be, hereunder, a
new Note to the order of the assigning Bank in an amount equal to the U.S.
Commitment (which must be in an amount not less than $10,000,000.00) or the
Canadian Commitment (which must be in an amount not less than $5,000,000.00), as
the case may be, retained by it hereunder. Such new Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibit 13.11A or
B, as applicable, hereto. Any cancelled Note shall be returned to the Company.
(h) Notwithstanding any other provision herein, any Bank may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section disclose to the assignee or participant
or proposed assignee or participant, any information relating to the Loan
Parties furnished to such Bank by or on behalf of any Loan Party, subject,
however to the provisions of Section 13.12.
(i) Anything in this Section to the contrary notwithstanding, any U.S.
Bank may at any time, without the consent of the Company or the Agent, assign
and pledge all or any portion of its U.S. Commitment and the Loans owing to it
to any Federal Reserve Bank (and its transferees) as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Bank from its
obligations hereunder.
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(j) All transfers of any interest in any Note hereunder shall be in
compliance with all federal and state securities laws, if applicable.
Notwithstanding the foregoing sentence, however, the parties to this Agreement
do not intend that any transfer under this Section be construed as a "purchase"
or "sale" of a "security" within the meaning of any applicable federal or state
securities laws.
SECTION 13.12 Confidentiality. Each Bank agrees to exercise its best
efforts to keep any information delivered or made available by any Loan Party to
it (including any information obtained pursuant to Section 7.01) which is
clearly indicated to be confidential information, confidential from anyone other
than Persons employed or retained by such Bank who are or are expected to become
engaged in evaluating, approving, structuring or administering the Loans, the
Bankers' Acceptances and the Letters of Credit; provided that nothing herein
shall prevent any Bank from disclosing such information (a) to any other Bank,
(b) pursuant to subpoena or upon the order of any court or administrative
agency, (c) upon the request or demand of any regulatory agency or authority
having jurisdiction over such Bank, (d) which has been publicly disclosed, (e)
to the extent reasonably required in connection with any litigation to which
either Agent, any Bank, any Loan Party or their respective Affiliates may be a
party, (f) to the extent reasonably required in connection with the exercise of
any remedy hereunder, (g) to such Bank's legal counsel and independent auditors
to the extent such persons are involved in evaluating, approving, structuring,
administering or enforcing payment of any of the Loans, and to the extent of
such activity, and (h) to any actual or proposed participant or assignee of all
or part of its rights hereunder which has agreed in writing to be bound by the
provisions of this Section. Each Bank will promptly notify the Company or the
Canadian Borrower, as applicable, of any information that it is required or
requested to deliver pursuant to clause (b) or (c) of this Section and, if no
Loan Party is a party to any such litigation, clause (e) of this Section,
provided further that the Company, or the Canadian Borrower, as applicable, may,
at its sole expense, move to quash or remove any subpoena or otherwise contest
any demand for such documents arising in items (b), (c) and (e) above.
SECTION 13.13 Pro Rata Treatment. (a) Except as otherwise specifically
permitted hereunder, each payment or prepayment of principal, if permitted under
this Agreement, and each payment of interest with respect to a Borrowing shall
be made pro rata among the Banks in accordance with the respective principal
amounts of the Loans extended by each Bank with respect to such Borrowing.
(b) Each Bank agrees that if it shall, through the exercise of a right
of banker's lien, setoff or counterclaim against any Loan Party (pursuant to
Section 13.06 or otherwise), including a secured claim under Section 506 of the
Bankruptcy Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Bank under any applicable bankruptcy, insolvency
or other similar law or otherwise, obtain payment (voluntary or involuntary) in
respect of the Notes, Loans, Unpaid Drawings and other Obligations held by it
(other than pursuant to Section 2.01(b) Section 2.09(f), Section 2.12, Section
2.14, Section 2.16(b) and Section 3.05) as a result of which the unpaid
principal portion of the Notes and the Obligations held by it shall be
proportionately less than the unpaid principal portion of the Notes and
Obligations held by any other Bank, it shall be deemed to have simultaneously
purchased from such other Bank a participation in the Notes and Obligations held
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by such other Bank, so that the aggregate unpaid principal amount of the Notes,
Obligations and participations in Notes held by each Bank shall be in the same
proportion to the aggregate unpaid principal amount of the Notes and Obligations
then outstanding as the principal amount of the Notes and other Obligations held
by it prior to such exercise of banker's lien, setoff or counterclaim was to the
principal amount of all Notes and other Obligations outstanding prior to such
exercise of banker's lien, setoff or counterclaim; provided, however, that if
any such purchase or purchases or adjustments shall be made pursuant to this
Section and the payment giving rise thereto shall thereafter be recovered, such
purchase or purchases or adjustments shall be rescinded to the extent of such
recovery and the purchase price or prices or adjustments restored without
interest. Each Loan Party expressly consents to the foregoing arrangements and
agrees that any Person holding such a participation in the Notes and the
Obligations deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by such Loan Party to such Person as fully as if such Person had made a Loan
directly to the Company in the amount of such participation.
SECTION 13.14 Independence of Covenants. All covenants contained in
this Agreement and in the other Loan Documents shall be given independent effect
so that if a particular action or condition is not permitted by any of such
covenants, the fact that such action or condition would be permitted by an
exception to, or otherwise be within the limitations of, another covenant, shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
SECTION 13.15 Separability. Should any clause, sentence, paragraph or
Section of this Agreement be judicially declared to be invalid, unenforceable or
void, such decision will not have the effect of invalidating or voiding the
remainder of this Agreement, and the parties hereto agree that the part or parts
of this Agreement so held to be invalid, unenforceable or void will be deemed to
have been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
SECTION 13.16 Limited Recourse. No shareholder, officer, director or
officer of the Company, the Canadian Borrower, or any other Subsidiary shall
have any liability under this Agreement, any Guaranty, the Notes or under any
Loan Document except to the extent such Person is a party thereto or has
otherwise, pursuant to written agreement, expressly assumed such liability. To
be effective, such agreement must refer to this Agreement and contain an
unequivocal undertaking to assume liability hereunder. Each of the Agents, the
Banks and the participants in the Loans hereby waives and releases such
liability.
SECTION 13.17 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 13.18 Interpretation. (a) In this Agreement, unless a clear
contrary intention appears:
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(i) the singular number includes the plural number and vice versa;
(ii) reference to any gender includes each other gender;
(iii) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision;
(iv) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are permitted by
this Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually, provided that nothing in this
clause (iv) is intended to authorize any assignment not otherwise permitted by
this Agreement;
(v) except as expressly provided to the contrary herein, reference to
any agreement, document or instrument (including this Agreement) means such
agreement, document or instrument as amended, supplemented or modified and in
effect from time to time in accordance with the terms thereof and, if
applicable, the terms hereof, and reference to any Note or other note includes
any note issued pursuant hereto in extension or renewal thereof and in
substitution or replacement therefor;
(vi) unless the context indicates otherwise, reference to any Article,
Section, Schedule or Exhibit means such Article or Section hereof or such
Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative meaning "include")
means including, without limiting the generality of any description preceding
such term;
(viii) with respect to the determination of any period of time, except
as expressly provided to the contrary, the word "from" means "from and
including" and the word "to" means "to but excluding"; and
(ix) reference to any law, rule or regulation means such as amended,
modified, codified or reenacted, in whole or in part, and in effect from time to
time.
(b) The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted or construed
against any Person solely because that Person or its legal representative
drafted such provision.
SECTION 13.19 SUBMISSION TO JURISDICTION. (A) ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF TEXAS AND, BY EXECUTION
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AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR
PROCEEDING. EACH LOAN PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO IT AT ITS ADDRESS PROVIDED IN SECTION 13.02, SUCH SERVICE TO BECOME
EFFECTIVE THIRTY DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT
OF EITHER OF THE AGENTS OR ANY BANK TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
ANY LOAN PARTY IN ANY OTHER JURISDICTION.
(B) EACH OF THE LOAN PARTIES HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT BROUGHT IN THE COURTS REFERRED TO
The remainder of this page intentionally left blank.
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IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION XIII.20 FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT
(INCLUDING THE SCHEDULES AND EXHIBITS HERETO), THE NOTES AND THE OTHER LOAN
DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE
TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
// 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 above written.
COMPANY:
SANIFILL, INC.
By:/s/ Michael W. Harlan
--------------------
Michael W. Harlan
Treasurer
CANADIAN BORROWER:
SANIFILL CANADA, INC.
By:/s/ Michael W. Harlan
--------------------
Michael W. Harlan
Treasurer
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GUARANTORS:
<TABLE>
<CAPTION>
<C> <C>
SANIFILL, INC. SAM HOUSTON RECYCLING CENTER, INC
AMERICAN GRADING, INC. SANIFILL DE MEXICO (US), INC.
BEN SINGER, INC. SANIFILL/PINE BLUFF LANDFILL, INC.
CALIFORNIA ASBESTOS MONOFILL, INC SANIFILL/ERL ACQUISITION CORPORATION
CAMPBELL WELLS CORPORATION SANIFILL LP HOLDING COMPANY, INC.
CAMPBELL WELLS NORM CORPORATION SANIFILL LANDFILL OPERATIONS AND TRANSFER, INC.
CENTRAL SANITARY LANDFILL, INC. SANIFILL FALCON DISPOSAL SERVICE, INC.
CHADWICK ROAD LANDFILL, INC. SANIFILL FOREST PRODUCTS, INC.
CITIZENS DISPOSAL, INC. SANIFILL/GENERAL PARTNER II CORPORATION
CITY DISPOSAL, INC. SANIFILL POWER CORPORATION
CLARKSTON DISPOSAL, INC. SANIFILL OF ARIZONA, INC.
CONTROL DESPERDIOS SOLIDOS, INC. SANIFILL OF ARKANSAS, INC.
COPPER STATE RECYCLING, SANIFILL OF CALIFORNIA, INC.
DELAWARE RECYCLABLE PRODUCTS, INC. SANIFILL OF COLORADO, INC.
ED WASTE, INC. SANIFILL OF FLORIDA, INC.
EE EQUIPMENT, INC. SANIFILL OF FLORIDA HAULING, INC.
EL COQUI WASTE DISPOSAL, INC. SANIFILL OF GEORGIA, INC.
EKL RIVER LANDFILL, INC. SANIFILL OF HAWAII, INC.
ENERGY RECLAMATION, INC. SANIFILL OF IOWA, INC.
ENVIRONMENTAL RECYCLING AND DISPOSAL, INC. SANIFILL OF MARYLAND, INC.
ENVIRONMENTAL RESTORATION CORP. SANIFILL OF MINNESOTA HAULING, INC.
EQUIPMENT CREDIT CORPORATION SANIFILL OF OHIO, INC.
GARNET OF MARYLAND, INC. SANIFILL OF OKLAHOMA, INC.
GARNET OF VIRGINIA, INC. SANIFILL OF OREGON, INC.
GRAND BLANC LANDFILL, INC. SANIFILL OF PENNSYLVANIA, INC.
HILGER TRANSFER, INC. SANIFILL OF SAN JUAN, INC.
HILLSBORO LANDFILL, INC. SANIFILL OF TENNESSEE, INC.
LIQUID WASTE MANAGEMENT, INC. SANIFILL OF TENNESSEE HAULING, INC.
METROPOLITAN DISPOSAL & RECYCLING CORPORATION SANIFILL OF TEXAS, INC.
MOELLER DISPOSAL SERVICES, INC. SANIFILL OF TEXAS HAULING, INC.
MT. HOOD REFUSE REMOVAL, INC. SANIFILL OF VIRGINIA, INC.
NOW DISPOSAL HOLDING CO. SANIFILL OF WASHINGTON, INC.
NOW DISPOSAL OPERATING CO. SANIFILL OF WISCONSIN, INC.
NORTH HENEPIN RECYCLING AND TRANSFER CORPORATION SF, INC.
PST RECLAMATION, INC. SANIFILL SOUTHERN ACQUISITION CORPORATION
PACIFIC DISPOSAL, INC. SOUTHERN WASTE SERVICES, INC.
PELLEGRENE ENTERPRISES, INC. SOUTHERN SANITATION, INC., A CALIFORNIA CORPORATION
R. M. CASH & SONS, INC. SOUTHERN SANITATION, INC., A KENTUCKY CORPORATION
REDWOOD LANDFILL, INC. SPRUCE RIDGE, INC.
RESIDUALS PROCESSING, INC. TAYLOR LAND RESOURCES, INC.
RIVERBEND LANDFILL CO., INC. V.M. CROW & SONS, INC.
VINLAND ENTERPRISES, INC.
By:/s/ Michael W. Harlan By: /s/ Michael W. Harlan
---------------------- ---------------------
Michael W. Harlan Michael E. Harlan
Treasurer Treasurer
</TABLE>
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GO OF WISCONSIN COMPANY, A GENERAL PARTNERSHIP
LAND RECLAMATION COMPANY, A GENERAL PARTNERSHIP
By: SANIFILL/GENERAL PARTNER II CORPORATION,
THEIR GENERAL PARTNER
By /s/ Michael W. Harlan
----------------------------
Michael W. Harlan
Treasurer
CAMPBELL WELLS, L.P.., A DELAWARE LIMITED PARTNERSHIP
CAMPBELL WELLS NORM, L.P., A DELAWARE LIMITED PARTNERSHIP
SANIFILL MANAGEMENT L.P.
By: SANIFILL GP HOLDING COMPANY, INC.,THEIR GENERAL
PARTNER
By:/s/ Michael W. Harlan
-----------------------------
Michael W. Harlan
Treasurer
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AGENT:
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
as U.S. Agent for the U.S. Banks
By:/s/ Curtis D. Karges
-------------------------
Curtis D. Karges
Senior Vice President
CANADIAN AGENT:
CHEMICAL BANK OF CANADA
as Canadian Agent for the Canadian Banks
/s/ Owen Roberts
By:_____________________________________
Owen Roberts
Name:___________________________________
Vice President
Title:__________________________________
104
<PAGE>
Issuing Banks
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By:/s/ Curtis D. Karges
--------------------
Curtis D. Karges
Senior Vice President
CHEMICAL BANK OF CANADA
/s/ Owen Roberts
By:___________________________
Owen Roberts
Name:_________________________
Vice President
Title:________________________
105
<PAGE>
U. S. Banks:
U.S. Commitment: ABN AMRO BANK N.V.
U.S.$27,500,000.00 HOUSTON AGENCY
BY: ABN AMRO NORTH AMERICA,
INC., as Agent
By:/s/ Lila Jordan
Name: Lila Jordan
Title: Vice President & Director
By:/s/ Laurie C. Tuzo
Name: Laurie C. Tuzo
Title: Vice President & Director
Address:
Three Riverway, Suite 1700
Houston, Texas 77056
Telecopy No.: (713) 629-7533
DOMESTIC LENDING OFFICE
Three Riverway, Suite 1700
Houston, Texas 77056
Attn: Belinda Rowell
EURODOLLAR LENDING OFFICE
Three Riverway, Suite 1700
Houston, Texas 77056
Attn: Belinda Rowell
106
<PAGE>
U. S. Banks:
-----------
U.S. Commitment: THE BANK OF NOVA SCOTIA
U.S.$20,000,000.00
By: /s/ F.C.H. Ashby
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
Address:
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Telecopy No.: (404) 888-8998
DOMESTIC LENDING OFFICE
Atlanta Agency
600 Peachtree Street, N. E.
Suite 2700
Atlanta, Georgia 30308
Attn: F. C. H. Ashby
EURODOLLAR LENDING OFFICE
Atlanta Agency
600 Peachtree Street, N. E.
Suite 2700
Atlanta, Georgia 30308
Attn: F. C. H. Ashby
107
<PAGE>
U. S. Banks:
-----------
U.S. Commitment: BANK ONE, TEXAS, N.A.
U.S.$27,500,000.00
By:/s/ H. Gale Smith
Name: H. Gale Smith
Title: Vice President
Address:
Telecopy No.:
DOMESTIC LENDING OFFICE
EURODOLLAR LENDING OFFICE
108
<PAGE>
U. S. Banks:
U.S. Commitment: CITIBANK, N.A.
U.S.$15,000,000.00
By:/s/ David L. Harris
Name: David L. Harris
Title: Vice President
Address:
400 Perimeter Center Terrace, NE
Suite 600
Atlanta, Georgia 30346
Telecopy No.: (770) 668-8137
DOMESTIC LENDING OFFICE
400 Perimeter Center Terrace, NE
Suite 600
Atlanta, Georgia 30346
Attn: Flavio R. Barbosa
EURODOLLAR LENDING OFFICE
400 Perimeter Center Terrace, NE
Suite 600
Atlanta, Georgia 30346
Attn: Flavio R. Barbosa
109
<PAGE>
U. S. Banks:
-----------
U.S. Commitment: THE FIRST NATIONAL BANK OF BOSTON
U.S.$30,000,000.00
By:/s/ Ennis J. Walton
Name: Ennis J. Walton
Title: Vice President
Address:
100 Federal Street MC01-08-05
Boston, Massachusetts 02110
Telecopy No.: (617) 434-2160
DOMESTIC LENDING OFFICE
100 Federal Street MC01-08-05
Boston, Massachusetts 02110
EURODOLLAR LENDING OFFICE
100 Federal Street MC01-08-05
Boston, Massachusetts 02110
110
<PAGE>
U. S. Banks
-----------
U.S. Commitment: FLEET BANK, N.A.
U.S.$25,000,000.00
By:/s/ Dilcia Pena Hill
Name: Dilcia Pena Hill
Title: Vice President
Address:
175 Water Street
New York, New York 10038
Telecopy No.: (212) 602-2671
DOMESTIC LENDING OFFICE
175 Water Street
New York, New York 10038
EURODOLLAR LENDING OFFICE
175 Water Street
New York, New York 10038
111
<PAGE>
U. S. Banks:
U.S. Commitment: NBD BANK
U.S.$30,000,000.00
By:/s/ William J. McCaffrey
Name: William J. McCaffrey
Title: Vice President
Address:
611 Woodward
Detroit, Michigan 48226
Telecopy No.: (313) 225-1212
DOMESTIC LENDING OFFICE
611 Woodward
Detroit, Michigan 48226
Attn: Bill McCaffrey
EURODOLLAR LENDING OFFICE
611 Woodward
Detroit, Michigan 48226
Attn: Bill McCaffrey
112
<PAGE>
U. S. Banks:
-----------
U.S. Commitment: TEXAS COMMERCE BANK
U.S.$30,000,000.00 NATIONAL ASSOCIATION
By:/s/ Curtis D. Karges
---------------------
Curtis D. Karges
Senior Vice President
Address:
712 Main Street
Houston, Texas 77002
Telecopy No.: (713) 216-6004
DOMESTIC LENDING OFFICE
712 Main Street
Houston, Texas 77002
EURODOLLAR LENDING OFFICE
712 Main Street
Houston, Texas 77002
113
<PAGE>
U. S. Banks:
U.S. Commitment: WELLS FARGO BANK (TEXAS), N.A.
U.S.$25,000,000.00
By:/s/ David M. Anderson
Name: David M. Anderson
Title: Vice President
Address:
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Telecopy No.: (713) 250-7029
DOMESTIC LENDING OFFICE
1000 Louisiana, 3rd Floor
Houston, Texas 77002
EURODOLLAR LENDING OFFICE
1000 Louisiana, 3rd Floor
Houston, Texas 77002
114
<PAGE>
U. S. Banks:
U.S. Commitment: BANK OF AMERICA ILLINOIS
U.S.$20,000,000.00
By:/s/ Paul R. Frey
Name: Paul R. Frey
Title: Senior Vice President
Address:
231 South LaSalle Street
Chicago, Illinois 60697
Telecopy No.: (312) 828-1974
DOMESTIC LENDING OFFICE
231 South LaSalle Street
Chicago, Illinois 60697
EURODOLLAR LENDING OFFICE
231 South LaSalle Street
Chicago, Illinois 60697
115
<PAGE>
U. S. Banks:
U.S. Commitment: BANQUE PARIBAS
U.S.$10,000,000.00
By:/s/ Scott Clingan
Name: Scott Clingan
Title: Vice President
By:/s/ Timothy A. Donnon
Name: Timothy A. Donnon
Title: Regional General Manager
Address:
1200 Smith Street, Suite 3100
Houston, Texas 77002
Telecopy No.: (713) 659-5234
DOMESTIC LENDING OFFICE
1200 Smith Street, Suite 3100
Houston, Texas 77002
EURODOLLAR LENDING OFFICE
1200 Smith Street, Suite 3100
Houston, Texas 77002
116
<PAGE>
U. S. Banks:
U.S. Commitment: CIBC, INC.
U.S.$10,000,000.00
By:/s/ M.A.G. Corkum
Name: M.A.G. Corkum
Title: Director
Address:
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Telecopy No.:
DOMESTIC LENDING OFFICE
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
EURODOLLAR LENDING OFFICE
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
117
<PAGE>
U. S. Banks:
U.S. Commitment: HIBERNIA NATIONAL BANK
U.S.$10,000,000.00
By:/s/ Colleen Lacy
Name: Colleen Lacy
Title: Vice President
Address:
313 Carondelet Street
New Orleans, Louisiana 70130
Telecopy No.: (504) 533-5344
DOMESTIC LENDING OFFICE
313 Carondelet Street
New Orleans, Louisiana 70130
EURODOLLAR LENDING OFFICE
313 Carondelet Street
New Orleans, Louisiana 70130
118
<PAGE>
U. S. Banks:
U.S. Commitment: UNION BANK OF CALIFORNIA
U.S.$10,000,000.00
By:/s/ Julie B. Bloomfield
Name: Julie B. Bloomfield
Title: Vice President
Address:
445 South Figueroa, 15th Floor
Los Angeles, California 90017
Telecopy No.: (213) 236-4096
DOMESTIC LENDING OFFICE
445 South Figueroa, 15th Floor
Los Angeles, California 90017
EURODOLLAR LENDING OFFICE
445 South Figueroa, 15th Floor
Los Angeles, California 90017
119
<PAGE>
U. S. Banks:
U.S. Commitment: COMERICA BANK
U.S.$10,000,000.00
By:/s/ Michael Turner
Name: Michael Turner
Title: Senior Vice President
Address:
One Shell Plaza, 4th Floor
910 Louisiana
Houston, Texas 77002
Telecopy No.: (713) 722-6550
DOMESTIC LENDING OFFICE
One Shell Plaza, 4th Floor
910 Louisiana
Houston, Texas 77002
EURODOLLAR LENDING OFFICE
One Shell Plaza, 4th Floor
910 Louisiana
Houston, Texas 77002
120
<PAGE>
U. S. Banks:
U.S. Commitment: DEUTSCHE BANK AG,
U.S.$10,000,000.00 NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH
By:/s/ Jean Hannigan
Name: Jean Hannigan
Title: Vice President
By:/s/ James Fox
Name: James Fox
Title: Assistant Vice President
Address:
31 West 52nd Street, 24th Floor
New York, New York 10019
Telecopy No.: (212) 469-8212
DOMESTIC LENDING OFFICE
31 West 52nd Street, 24th Floor
New York, New York 10019
EURODOLLAR LENDING OFFICE
31 West 52nd Street, 24th Floor
New York, New York 10019
121
<PAGE>
U. S. Banks:
U.S. Commitment: THE FUJI BANK, LIMITED
U.S.$10,000,000.00
By:/s/ David Kelley
Name: David Kelley
Title: Sr. Vice President
Address:
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Telecopy No.: (713) 759-0048
DOMESTIC LENDING OFFICE
1221 McKinney Street, Suite 4100
Houston, Texas 77010
EURODOLLAR LENDING OFFICE
1221 McKinney Street, Suite 4100
Houston, Texas 77010
122
<PAGE>
Canadian Banks
Canadian Commitment: CHEMICAL BANK OF CANADA
$10,000,000.00
By:/s/ Owen Roberts
Name: Owen Roberts
Title: Vice President
Address:
100 Yonge Street, Suite 900
Toronto, Ontario
Canada M5C 2WI
Telecopy No. (416) 594-2259
DOMESTIC LENDING OFFICE
100 Yonge Street, Suite 900
Toronto, Ontario
Canada M5C 2WI
EURODOLLAR LENDING OFFICE
100 Yonge Street, Suite 900
Toronto, Ontario
Canada M5C 2WI
123
<PAGE>
Canadian Banks:
--------------
Canadian Commitment: THE BANK OF NOVA SCOTIA
$10,000,000.00
By:/s/ R.P. Hodgson
Name: R.P. Hodgson
Title: Relationship Manager
Address:
Corporate Banking Toronto
16th Floor, 44 King Street West
Toronto, Ontario M5H 1H1 Canada
Telecopy No.: (416) 866-2009
DOMESTIC LENDING OFFICE
Corporate Banking Toronto
16th Floor, 44 King Street West
Toronto, Ontario M5H 1H1 Canada
EURODOLLAR LENDING OFFICE
Corporate Banking Toronto
16th Floor, 44 King Street West
Toronto, Ontario M5H 1H1 Canada
124
<PAGE>
Canadian Banks:
Canadian Commitment: CANADIAN IMPERIAL BANK OF COMMERCE
$10,000,000.00
By:/s/ R.M. Callander
Name: R.M. Callander
Title: Director
Address:
Commerce Court West
Cross Border Group
7th Floor
Toronto, Ontario
Canada M5L 1A2
Telecopy No.: (416) 980-8384
DOMESTIC LENDING OFFICE
Commerce Court West
Cross Border Group
7th Floor
Toronto, Ontario
Canada M5L 1A2
EURODOLLAR LENDING OFFICE
Commerce Court West
Cross Border Group
7th Floor
Toronto, Ontario
Canada M5L 1A2
125
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,364
<SECURITIES> 0
<RECEIVABLES> 66,464<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 86,797
<PP&E> 879,634
<DEPRECIATION> 122,057
<TOTAL-ASSETS> 1,040,152
<CURRENT-LIABILITIES> 83,402
<BONDS> 369,557<F2>
0
0
<COMMON> 250
<OTHER-SE> 438,536
<TOTAL-LIABILITY-AND-EQUITY> 1,040,152
<SALES> 181,406
<TOTAL-REVENUES> 181,406
<CGS> 115,747
<TOTAL-COSTS> 115,747
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 467
<INTEREST-EXPENSE> 8,007
<INCOME-PRETAX> 31,606
<INCOME-TAX> 12,642
<INCOME-CONTINUING> 18,964
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,964
<EPS-PRIMARY> .78
<EPS-DILUTED> .78
<FN>
<F1>Accounts receivable, net of allowance for doubtful accounts.
<F2>Long-term debt, net of current maturities and convertible subordinated
debentures, net.
</FN>
</TABLE>
<PAGE>
[Sanifill Press Release Paper appears here]
EXHIBIT 99
FOR IMMEDIATE RELEASE CONTACT: J. Chris Brewster
- ---------------------
713/942-6216
FIL #96-11
SANIFILL CLOSES THE SALE OF ITS MARINE NONHAZARDOUS
OILFIELD WASTE OPERATIONS TO NEWPARK RESOURCES
Houston, Texas (August 12, 1996) -- Sanifill, Inc. (NYSE-FIL) and Newpark
Resources, Inc. (NYSE-NR) today announced that they have closed the previously
announced acquisition by Newpark of the marine-related nonhazardous oilfield
waste ("NOW") operations of Campbell Wells, Ltd. ("Campbell Wells"), a Sanifill
subsidiary, for a purchase price of $70.5 million in cash.
In the acquisition, Newpark purchased substantially all of Campbell
Well's non-landfarm NOW assets and assumed leases associated with five transfer
stations located along the Gulf Coast and three receiving docks at the landfarm
facilities operated by Campbell Wells, all of which are located in Louisiana.
For the year ended December 31, 1995, Campbell Wells had revenues of
approximately $19 million from the business acquired by Newpark. Sanifill will
continue to own and operate its Louisiana NOW landfarms and its South Texas NOW
disposal site.
Newpark, Sanifill and Campbell Wells have also entered into a NOW
disposal agreement that became effective today, which provides for the delivery
of an agreed-upon annual volume of NOW to Campbell Wells' landfarms for disposal
over a 25-year period. Campbell Wells and Sanifill also today agreed to refrain
from competing in the Marine NOW collection business in the States of Louisiana,
Texas, Mississippi and Alabama and in the Gulf of Mexico for a limited period.
Campbell Wells and Sanifill will continue to compete for the disposal of NOW
waste that are generated on and are transported by land.
Lorne Bain, Sanifill's Chairman and Chief Executive Officer, said, "We
are very pleased with the conclusion of this transaction. We expect the effect
of this sale to be neutral to slightly accretive to Sanifill's earnings per
share. The cash proceeds will be used to pay down bank debt, but in effect
these funds will be rapidly deployed in acquisitions and development activities
focused on building the Company's core solid waste business."
Sanifill, Inc., headquartered in Houston, Texas, is an environmental
services company specializing in the management and disposal of nonhazardous
waste in 23 states, the District of Columbia, the Commonwealth of Puerto Rico,
Mexico and Canada.
