SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 7, 1999
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AMERICAN ECO CORPORATION
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(Exact name or registrant as specified in its charter)
Ontario, Canada 0-10621 52-1742490
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification
No.)
154 University Avenue, Toronto, Ontario M5H 3Y9
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(416) 340-2727
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N/A
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(Former name or former address, if changed since last report.)
<PAGE>
ITEM 5. OTHER EVENTS.
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On May 7, 1999, American Eco Corporation, ("American
Eco"), together with its principal subsidiaries (each, a
"Borrower," and collectively, the "Borrowers") entered into a
Credit Agreement with General Electric Capital Corporation, as
lender and agent (the "Agent"), for any additional lenders from
time to time under the Credit Agreement (the "Lenders"). The
Credit Agreement provides for a revolving credit facility (the
"Revolver") of up to $30 million, which includes a $2.5 million
letter of credit subfacility.
The proceeds of the Revolver will be used by the
Borrowers for working capital and other general corporate
purposes, as well as for acquisitions meeting the criteria
established in the Credit Agreement or as otherwise permitted by
the Lenders.
Under the Revolver, each Borrower (or the Borrower
group of which it is a member) may make borrowings based upon the
sum of up to (a) 85% of its eligible accounts receivable (other
than eligible incomplete cost plus contract accounts receivable);
and (b) 50% of its eligible incomplete cost plus contract
accounts receivable, in each case, less any reserves established
by the Agent.
The Revolver has a two-year term, subject to two
automatic one year extensions at the mutual discretion of the
Borrowers and the Lenders. Borrowing under the Revolver by US
Borrowers will accrue interest at a rate equal to 2% above the
latest month-end 30-day commercial paper rate for high-grade
unsecured notes sold through dealers by major corporations, in
multiples of $1,000, as from time to time reported in The Wall
Street Journal. Borrowing under the Revolver by Canadian
Borrowers will accrue interest at a rate equal to 2% above the
rate of interest per annum determined by the Agent, from month to
month, by reference to the average rate quoted on the Reuters
Monitor Screen (Page CDOR) applicable to 30-day Canadian dollar
bankers' acceptances. Letters of credit issued pursuant to the
Credit Agreement will be subject to a fee of 1% of the face
amount thereof, plus any costs and expenses incurred by the
Lenders in arranging for the issuance or guaranty of such letters
of credit and any charges assessed by the issuing banks.
The obligations of the Borrowers under the Credit
Agreement are secured by, among other things, (a) Guarantees
entered into by American Eco and certain of its United States and
Canadian subsidiaries; (b) Security Agreements entered into by
American Eco and certain of its United States and Canadian
subsidiaries of their receivables, inventory and general
intangibles, and (c) Patent, Trademark and Copyright Security
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<PAGE>
Agreements entered into by certain United States subsidiaries of
American Eco.
The Credit Agreement and certain of the related
security documents are filed as exhibits hereto and are
incorporated by reference herein. The descriptions herein of the
Credit Agreement and such related documents do not purport to be
complete and are qualified in their entirety by the provisions of
such agreement and documents.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(c) Exhibits.
10.1.1 Credit Agreement, dated as of May 7, 1999, by
and among American Eco, the Borrowers
identified therein, the other Credit Parties
signatory thereto, the Lenders signatory
thereto from time to time and General Electric
Capital Corporation (the "Agent"), as Agent and
Lender (without schedules or exhibits).
10.1.2 Annex A to the Credit Agreement.
10.2.1 US $30 million Revolving Note, dated May 7, 1999,
issued by AEC Funding Corp.
10.2.2 US $30 million Revolving Note, dated May 7, 1999,
issued by the Borrowers (other than AEC Funding
Corp.).
10.3 Security Agreement, dated as of May 7, 1999, among
American Eco, certain of its United States
subsidiaries and the Agent.
10.4 Security Agreement, dated as of May 7, 1999, between
American Eco and the Agent.
10.5 Guaranty, dated as of May 7, 1999, by and among
certain United States subsidiaries of American Eco
and the Agent.
10.6 Guarantee, dated as of May 7, 1999, between
American Eco and the Agent.
99.1 Press Release dated May 18, 1999.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
AMERICAN ECO CORPORATION
Dated: May 18, 1999 By: /s/ Michael E. McGinnis
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Name: Michael E. McGinnis
Title: President
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<PAGE>
Exhibit Index
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Exhibit Description
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10.1.1 Credit Agreement, dated as of May 7, 1999, by
and among American Eco, the Borrowers
identified therein, the other Credit Parties
signatory thereto, the Lenders signatory
thereto from time to time and General Electric
Capital Corporation (the "Agent"), as Agent and
Lender (without schedules or exhibits).
10.1.2 Annex A to the Credit Agreement.
10.2.1 US $30 million Revolving Note, dated May 7, 1999,
issued by AEC Funding Corp.
10.2.2 US $30 million Revolving Note, dated May 7, 1999,
issued by the Borrowers (other than AEC Funding
Corp.).
10.3 Security Agreement, dated as of May 7, 1999, among
American Eco, certain of its United States
subsidiaries and the Agent.
10.4 Security Agreement, dated as of May 7, 1999, between
American Eco and the Agent.
10.5 Guaranty, dated as of May 7, 1999, by and among
certain United States subsidiaries of American Eco
and the Agent.
10.6 Guarantee, dated as of May 7, 1999, between
American Eco and the Agent.
99.1 Press Release dated May 18, 1999.
Exhibit 10.1.1
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CREDIT AGREEMENT
Dated as of May 7, 1999
among
AEC FUNDING CORP.
ACTION CONTRACT SERVICES, INC.
BROOKFIELD CORP.
C.A. TURNER CONSTRUCTION COMPANY
C.A. TURNER MAINTENANCE, INC.
CHEMPOWER, INC.
CONTROLLED POWER LIMITED PARTNERSHIP
ECO SYSTEMS, INC.
GLOBAL POWER COMPANY
INDUSTRA, INC.
INDUSTRA SERVICE CORP.
SEPARATION AND RECOVERY SYSTEMS, INC.
SOUTHWICK CORP.
SPECIALTY MANAGEMENT GROUP, INC.
THE TURNER GROUP, INC.
UNITED ECO SYSTEMS, INC.
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
<PAGE>
TABLE OF CONTENTS
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PAGE
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1. AMOUNT AND TERMS OF CREDIT........................................... 1
1.1 Credit Facilities........................................... 1
1.2 Letters of Credit........................................... 3
1.3 Prepayments................................................. 3
1.4 Use of Proceeds............................................. 4
1.5 Interest and Applicable Margins............................. 4
1.6 Eligible Accounts........................................... 6
1.7 Cash Management Systems..................................... 8
1.8 Fees........................................................ 8
1.9 Receipt of Payments......................................... 10
1.10 Application and Allocation of Payments...................... 10
1.11 Loan Account and Accounting................................. 11
1.12 Indemnity................................................... 11
1.13 Access...................................................... 12
1.14 Taxes....................................................... 12
1.15 Capital Adequacy; Increased Costs; Illegality............... 13
1.16 Single Loan................................................. 14
1.17 Currency Matters............................................ 14
2. CONDITIONS PRECEDENT................................................. 14
2.1 Conditions to the Initial Loans............................. 14
2.2 Further Conditions to Each Loan............................. 15
3. REPRESENTATIONS AND WARRANTIES....................................... 16
3.1 Corporate Existence; Compliance with Law.................... 16
3.2 Executive Offices; FEIN..................................... 17
3.3 Corporate Power, Authorization, Enforceable Obligations..... 17
3.4 Financial Statements and Projections........................ 17
3.5 Material Adverse Effect..................................... 18
3.6 Ownership of Property; Liens................................ 18
3.7 Labor Matters............................................... 19
3.8 Ventures, Subsidiaries and Affiliates; Outstanding
Stock and Indebtedness...................................... 19
3.9 Government Regulation....................................... 19
3.10 Margin Regulations.......................................... 20
3.11 Taxes....................................................... 20
3.12 ERISA....................................................... 20
3.13 No Litigation............................................... 21
3.14 Brokers..................................................... 22
3.15 Intellectual Property....................................... 22
3.16 Full Disclosure............................................. 22
<PAGE>
3.17 Environmental Matters....................................... 22
3.18 Insurance................................................... 23
3.19 Deposit and Disbursement Accounts........................... 23
3.20 Government Contracts........................................ 23
3.21 Customer and Trade Relations................................ 23
3.22 Agreements and Other Documents.............................. 23
3.23 Solvency.................................................... 24
3.24 Year 2000 Representations................................... 24
3.25 Indenture Debt.............................................. 24
3.26 Inactive Canadian Subsidiaries.............................. 24
4. FINANCIAL STATEMENTS AND INFORMATION................................. 25
4.1 Reports and Notices......................................... 25
4.2 Communication with Accountants.............................. 25
5. AFFIRMATIVE COVENANTS................................................ 25
5.1 Maintenance of Existence and Conduct of Business............ 25
5.2 Payment of Obligations...................................... 25
5.3 Books and Records........................................... 26
5.4 Insurance; Damage to or Destruction of Collateral........... 26
5.5 Compliance with Laws........................................ 28
5.6 Supplemental Disclosure..................................... 28
5.7 Intellectual Property....................................... 29
5.8 Environmental Matters....................................... 29
5.9 Landlords' Agreements, Mortgagee Agreements and Bailee
Letters..................................................... 29
5.10 Further Assurances.......................................... 29
5.11 Year 2000 Problems.......................................... 30
6. NEGATIVE COVENANTS................................................... 30
6.1 Mergers, Subsidiaries, Etc.................................. 30
6.2 Investments; Loans and Advances............................. 33
6.3 Indebtedness................................................ 33
6.4 Employee Loans and Affiliate Transactions................... 34
6.5 Capital Structure and Business.............................. 35
6.6 Guaranteed Indebtedness..................................... 35
6.7 Liens....................................................... 35
6.8 Sale of Stock and Assets.................................... 35
6.9 ERISA....................................................... 36
6.10 Financial Covenants......................................... 36
6.11 Hazardous Materials......................................... 36
6.12 Sale-Leasebacks............................................. 36
6.13 Cancellation of Indebtedness................................ 36
6.14 Restricted Payments......................................... 36
6.15 Change of Corporate Name or Location; Change of Fiscal Year. 37
6.16 No Impairment of Intercompany Transfers..................... 37
<PAGE>
6.17 No Speculative Transactions................................. 37
6.18 Leases...................................................... 37
6.19 Changes Relating to the Indenture........................... 37
7. TERM................................................................. 38
7.1 Termination................................................. 38
7.2 Survival of Obligations Upon Termination of Financing
Arrangements................................................ 38
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES............................... 38
8.1 Events of Default........................................... 38
8.2 Remedies.................................................... 40
8.3 Waivers by Credit Parties................................... 41
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT.................. 41
9.1 Assignment and Participations............................... 41
9.2 Appointment of Agent........................................ 43
9.3 Agent's Reliance, Etc....................................... 44
9.4 GE Capital and Affiliates................................... 44
9.5 Lender Credit Decision...................................... 44
9.6 Indemnification............................................. 45
9.7 Successor Agent............................................. 45
9.8 Setoff and Sharing of Payments.............................. 46
9.9 Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert........................................ 46
10. SUCCESSORS AND ASSIGNS............................................... 48
10.1 Successors and Assigns...................................... 48
11. MISCELLANEOUS........................................................ 49
11.1 Complete Agreement; Modification of Agreement............... 49
11.2 Amendments and Waivers...................................... 49
11.3 Fees and Expenses........................................... 51
11.4 No Waiver................................................... 52
11.5 Remedies.................................................... 52
11.6 Severability................................................ 52
11.7 Conflict of Terms........................................... 52
11.8 Confidentiality............................................. 52
11.9 GOVERNING LAW............................................... 53
11.10 Notices..................................................... 54
11.11 Section Titles.............................................. 54
11.12 Counterparts................................................ 54
11.13 WAIVER OF JURY TRIAL........................................ 54
11.14 Press Releases, etc......................................... 54
11.15 Reinstatement............................................... 55
11.16 Advice of Counsel........................................... 55
<PAGE>
11.17 No Strict Construction...................................... 55
12. CROSS-GUARANTY....................................................... 55
12.1 Cross-Guaranty.............................................. 55
12.2 Waivers by Borrowers........................................ 56
12.3 Benefit of Guaranty......................................... 56
12.4 Subordination of Subrogation, Etc........................... 56
12.5 Election of Remedies........................................ 57
12.6 Limitation.................................................. 57
12.7 Contribution with Respect to Guaranty Obligations........... 57
12.8 Liability Cumulative........................................ 58
<PAGE>
INDEX OF APPENDICES
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Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule A - List of Borrowers
Schedule 1.1 - Responsible Individual
Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Schedule 1.6(r) - List of Account Debtors for Concentration
Exception
Schedule 3.2 - Executive Offices; Principal Place of
Business; FEIN
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Projections
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock and Indebtedness
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7 - Existing Liens
Schedule 6.16 - Existing Agreements
Schedule 6.20 - Credit Parties' Indebtedness
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Closing Checklist
Annex E (Section 4.1(a)) - Financial Statements and Projections --
Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J (Annex A) - Commitments as of Closing Date
<PAGE>
THIS CREDIT AGREEMENT ("Agreement"), dated as of May 7, 1999, among
each of the corporations listed on Schedule A hereto (such corporations are
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sometimes collectively referred to herein as "Borrowers" and individually as a
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"Borrower"); the other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL
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CORPORATION, a New York corporation (in its individual capacity, "GE Capital"),
for itself, as Lender, and as Agent for Lenders, and the other Lenders signatory
hereto from time to time.
RECITALS
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WHEREAS, Borrowers have requested that Lenders extend revolving credit
facilities to Borrowers of up to Thirty Million US Dollars ($30,000,000) in the
aggregate to provide (a) working capital financing for Borrowers, (b) funds for
other general corporate purposes of Borrowers; and (c) funds for certain fees
and expenses in connection with the transactions contemplated hereby; and for
these purposes, Lenders are willing to make certain loans and other extensions
of credit to Borrowers of up to such amount upon the terms and conditions set
forth herein; and
WHEREAS, Borrowers have agreed to secure all of their obligations under
the Loan Documents by granting to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon certain existing and after-acquired personal
property; and
WHEREAS, American Eco Corporation, an Ontario, Canada corporation
("Holdings") and the direct or indirect beneficial owner of all of the capital
stock or partnership interests of Borrowers, is willing to guaranty all of the
obligations of Borrowers to Agent and Lenders under the Loan Documents; and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A and, for purposes of this Agreement and the
other Loan Documents, the rules of construction set forth in Annex A shall
govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities
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(a) Revolving Credit Facility.
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(i) Subject to the terms and conditions hereof,
each Revolving Lender agrees to make available to Borrowers from time to time
until the Commitment Termination Date
<PAGE>
its Pro Rata Share of advances (each, a "Revolving Credit Advance"). The Pro
Rata Share of the Revolving Loan of any Revolving Lender shall not at any time
exceed its separate Revolving Loan Commitment. The obligations of each Revolving
Lender hereunder shall be several and not joint. The aggregate amount of
Revolving Credit Advances (calculated at the US Dollar Amount) outstanding shall
not exceed at any time the lesser of (A) the Maximum Amount and (B) the
Aggregate Borrowing Base, in each case, less the aggregate amount of Letter of
Credit Obligations (calculated at the US Dollar Amount) outstanding at such time
("Borrowing Availability"). Borrowing Availability may be further reduced by
Reserves imposed by Agent in its reasonable credit judgment. Moreover, the
Revolving Loan outstanding to any Borrower or Borrower Group shall not exceed at
any time that Borrower's or Borrower Group's respective separate Borrowing Base.
Until the Commitment Termination Date, each respective Borrower or Borrower
Group, as the case may be, may from time to time borrow, repay and reborrow
under this Section 1.1(a). Each Revolving Credit Advance shall be made on notice
by Borrower Representative on behalf of the applicable Borrower or Borrower
Group, as the case may be, to one of the representatives of Agent identified on
Disclosure Schedule 1.1 at the address specified thereon. Those notices must be
given no later than 11:00 a.m.(New York time) on the Business Day of the
proposed Revolving Credit Advance. Each such notice (a "Notice of Revolving
Credit Advance") must be given in writing (by telecopy or overnight courier)
substantially in the form of Exhibit 1.1(a)(i), and shall include the
information required in such Exhibit and such other information as may be
required by Agent. Each Revolving Credit Advance shall be made in US Dollars
except that each Revolving Credit Advance to AEC Funding shall be made in
Canadian Dollars.
(ii) Except as provided in Section 1.11, each
Borrower shall execute and
deliver to each Revolving Lender a note to evidence the Revolving Loan
Commitment of that Revolving Lender. Each note shall be in the principal amount
of the Revolving Loan Commitment of the applicable Revolving Lender, dated the
Closing Date and substantially in the form of Exhibit 1.1(a)(ii) (each a
"Revolving Note" and, collectively, the "Revolving Notes"). Each Revolving Note
shall represent the obligation of the applicable Borrower to pay the amount of
the applicable Revolving Lender's Revolving Loan Commitment or, if less, the
applicable Revolving Lender's Pro Rata Share of the aggregate unpaid principal
amount of all Revolving Credit Advances to such Borrower or Borrower Group
together with interest thereon as prescribed in Section 1.5. The entire unpaid
balance of the aggregate Revolving Loan and all other non-contingent Obligations
shall be immediately due and payable in full in immediately available funds on
the Commitment Termination Date.
(b) Reliance on Notices; Appointment of Borrower
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Representative. Agent shall be entitled to rely upon, and shall be fully
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protected in relying upon, any Notice of Revolving Credit Advance or similar
notice believed by Agent to be genuine. Agent may assume that each Person
executing and delivering any notice in accordance herewith was duly authorized,
unless the responsible individual acting thereon for Agent has actual knowledge
to the contrary. Each Borrower hereby designates Holdings as its representative
and agent on its behalf for the purposes of issuing Notices of Revolving Credit
Advances, giving instructions with respect to the disbursement of the proceeds
of the Loans, requesting Letters of Credit, giving and receiving all other
notices and consents hereunder or under any of the other Loan Documents and
taking all other actions (including in respect of compliance with covenants) on
behalf of any Borrower or
<PAGE>
Borrowers under the Loan Documents. Borrower Representative hereby accepts such
appointment. Agent and each Lender may regard any notice or other communication
pursuant to any Loan Document from Borrower Representative as a notice or
communication from all Borrowers, and may give any notice or communication
required or permitted to be given to any Borrower or any Borrower Group
hereunder to Borrower Representative on behalf of such Borrower or Borrower
Group. Each Borrower agrees that each notice, representation and warranty,
covenant, agreement and undertaking made on its behalf by Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower to the
same extent as if the same had been made directly by such Borrower.
1.2 Letters of Credit. Subject to and in accordance with the terms and
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conditions contained herein and in Annex B, Borrower Representative, on behalf
of the applicable Borrower, shall have the right to request, and Revolving
Lenders agree to incur, or purchase participations in, Letter of Credit
Obligations in respect of each Borrower. Each Letter of Credit Obligation in
respect of AEC Funding shall be in Canadian Dollars and each Letter of Credit
Obligation in respect of the Domestic Borrowers shall be in US Dollars.
1.3 Prepayments
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(a) Mandatory Prepayments. (i) If at any time the outstanding
---------------------
balance of the aggregate Revolving Loan (calculated as a US Dollar Amount)
exceeds the lesser of (A) the Maximum Amount and (B) the Aggregate Borrowing
Base, Borrowers shall immediately repay the aggregate outstanding Revolving
Credit Advances to the extent required to eliminate such excess. If any such
excess remains after repayment in full of the aggregate outstanding Revolving
Credit Advances, Borrowers shall provide cash collateral for the Letter of
Credit Obligations in the manner set forth in Annex B to the extent required to
eliminate such excess. Furthermore, if, at any time, the outstanding balance of
the Revolving Loan of any Borrower or Borrower Group exceeds that Borrower's or
Borrower Group's separate Borrowing Base at any time the applicable Borrower or
Borrower Group shall immediately repay its Revolving Credit Advances in the
amount of such excess (and, if necessary, shall provide cash collateral for its
Letter of Credit Obligations as described above). For the purposes of this
Section 1.3(a), the Revolving Loan to AEC Funding and the Borrowing Base of AEC
Funding shall each be calculated in the US Dollar Amount thereof.
(ii) Immediately upon receipt by any Credit Party
of proceeds of any Collateral, such Credit Party shall cause Borrowers to
prepay the Loans in an amount equal to all such proceeds, net of (A)
commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by such Credit
Party in connection therewith (in each case, paid to non-Affiliates), (B)
transfer taxes, (C) amounts payable to holders of senior Liens (to the
extent such Liens constitute Permitted Encumbrances hereunder), if any, and
(D) an appropriate reserve for income taxes in accordance with GAAP in
connection therewith. Any such prepayment shall be applied in accordance
with clause (b) below.
<PAGE>
(b) Application of Certain Mandatory Prepayments. Any
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prepayments made by any Borrower pursuant to clause (a)(ii) above shall be
applied as follows: first, to Fees and reimbursable expenses of Agent then due
and payable pursuant to any of the Loan Documents; second, to interest then due
and payable on Revolving Credit Advances made to such Borrower or such
Borrower's Borrower Group; third, to the principal balance of Revolving Credit
Advances outstanding to such Borrower or such Borrower's Borrower Group until
the same shall have been paid in full; fourth, to any Letter of Credit
Obligations of such Borrower or such Borrower's Borrower Group to provide cash
collateral therefor in the manner set forth in Annex B, until all such Letter of
Credit Obligations have been fully cash collateralized in the manner set forth
in Annex B; fifth, to interest then due and payable on the Revolving Credit
Advances outstanding to each other Borrower or Borrower Group, pro rata; sixth,
to the principal balance of the Revolving Credit Advances made to each other
Borrower or Borrower Group, pro rata, until the same shall have been paid in
full, and last to any Letter of Credit Obligations of each other Borrower or
Borrower Group, pro rata, to provide cash collateral therefor in the manner set
forth in Annex B, until all such Letter of Credit Obligations have been fully
cash collateralized. The Revolving Loan Commitment shall not be permanently
reduced by the amount of any such prepayments.
(c) Application of Prepayments from Insurance Proceeds.
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Prepayments from insurance proceeds in accordance with Section 5.4(c) shall be
applied as follows: insurance proceeds from casualties or losses to cash or the
Collateral shall be applied to the Revolving Credit Advances of the Borrower or
such Borrower's Borrower Group that incurred such casualties or losses. The
Revolving Loan Commitment shall not be permanently reduced by the amount of any
such prepayments. If the insurance proceeds received as to a particular Borrower
exceed the outstanding principal balances of the Loans to that Borrower or such
Borrower's Borrower Group or if the precise amount of insurance proceeds
allocable to the Collateral are not otherwise determined, the allocation and
application of those proceeds shall be determined by Agent, subject to the
approval of Requisite Lenders.
(d) Nothing in this Section 1.3 shall be construed to
constitute Agent's or any Lender's consent to any transaction referred to in
clause (a)(ii) above which is not permitted by other provisions of this
Agreement or the other Loan Documents.
1.4 Use of Proceeds. Each Borrower, individually, or, if applicable, as
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a member of a Borrower Group, shall utilize the proceeds of the Revolving Loan
solely for the financing of its respective ordinary working capital, general
corporate needs (but excluding in any event the making of any Restricted Payment
not specifically permitted by Section 6.14) and for such other purposes as
expressly permitted hereunder. Disclosure Schedule (1.4) contains a description
of each Borrower's or Borrower Group's respective sources and uses of funds as
of the Closing Date, including Loans and Letter of Credit Obligations to be made
or incurred on that date, and a funds flow memorandum detailing how funds from
each source are to be transferred to particular uses.
1.5 Interest and Applicable Margins. (a)(i) Domestic Borrowers shall
--------------------------------
pay interest to Agent, for the ratable benefit of Lenders in accordance with the
various Loans being made by each Lender, in arrears on each applicable Interest
Payment Date, at the Index Rate plus the
<PAGE>
Applicable Revolver Index Margin per annum based on the aggregate Revolving
Credit Advances outstanding to Domestic Borrowers from time to time; and (ii)
AEC Funding shall pay interest to Agent, for the ratable benefit of Lenders in
accordance with the various Loans being made by each Lender, in arrears on each
applicable Interest Payment Date, at the applicable BA Rate plus the Applicable
BA Rate Margin per annum based on the aggregate Revolving Credit Advances
outstanding to AEC Funding from time to time.
The Applicable Revolver Index Margin, Applicable BA Rate
Margin, Applicable L/C Margin and Applicable Unused Line Fee Margin will be
2.00%, 2.00%, 1.00%, and .25% per annum, respectively.
(b) If any payment on any Loan becomes due and payable on a
day other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis
and interest shall be made by Agent on the basis of a three hundred and sixty
(360) day year, in each case for the actual number of days occurring in the
period for which such interest and Fees are payable. The Index Rate shall be
determined each day based upon the Index Rate as in effect each day. The BA Rate
shall be determined as specified in the definition of "BA Rate" as set forth in
Annex A. Each determination by Agent of an interest rate and Fees hereunder
shall be conclusive, absent manifest error.
(d) (i) If an Event of Default shall have occurred and be
continuing under Section 8.1(a), (h) or (i) or (ii) if any other Event of
Default shall have occurred and be continuing and at the election of Agent (or
upon the written request of Requisite Lenders) confirmed by written notice from
Agent to Borrower Representative, then the interest rates applicable to the
Loans and the Letter of Credit Fees shall be increased by two percent (2%) per
annum above the rates of interest or the rate of such Fees otherwise applicable
hereunder ("Default Rate"), and all outstanding Obligations shall bear interest
at the Default Rate applicable to such Obligations. Interest and Letter of
Credit Fees at the Default Rate shall accrue from the initial date of such
Default or Event of Default until that Default or Event of Default is cured or
waived and shall be payable upon demand.
(e) Notwithstanding anything to the contrary set forth in this
Section 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest which would have been received had
the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, interest hereunder shall be paid at the
rate(s) of interest and in the
<PAGE>
manner provided in Sections 1.5(a) through (d) above, unless and until the rate
of interest again exceeds the Maximum Lawful Rate, and at that time this
paragraph shall again apply. In no event shall the total interest received by
any Lender pursuant to the terms hereof exceed the amount which such Lender
could lawfully have received had the interest due hereunder been calculated for
the full term hereof at the Maximum Lawful Rate. If the Maximum Lawful Rate is
calculated pursuant to this paragraph, such interest shall be calculated at a
daily rate equal to the Maximum Lawful Rate divided by the number of days in the
year in which such calculation is made. If, notwithstanding the provisions of
this Section 1.5(e), a court of competent jurisdiction shall finally determine
that a Lender has received interest hereunder in excess of the Maximum Lawful
Rate, Agent shall, to the extent permitted by applicable law, promptly apply
such excess in the order specified in Section 1.10 and thereafter shall refund
any excess to Borrowers or as a court of competent jurisdiction may otherwise
order.
1.6 Eligible Accounts. Based on the most recent Borrowing Base
------------------
Certificate delivered by each Borrower or Borrower Group, as the case may be, to
Agent and on other information available to Agent, Agent shall in its reasonable
credit judgment determine which Accounts of each Borrower shall be "Eligible
Accounts" for purposes of this Agreement, except any such Account to which any
of the exclusionary criteria set forth below applies shall not constitute an
"Eligible Account." Agent shall have the right to establish, modify or eliminate
Reserves against Eligible Accounts from time to time in its reasonable credit
judgment. In addition, Agent reserves the right, at any time and from time to
time after the Closing Date, to adjust any of the criteria set forth below, to
establish new criteria and to adjust advance rates with respect to Eligible
Accounts, in its reasonable credit judgment, subject to the approval of
Requisite Lenders in the case of adjustments or new criteria or changes in
advance rates which have the effect of making more credit available. Eligible
Accounts shall not include any Account of any Borrower:
(a) which does not arise from the sale of goods or the
performance of services by such Borrower in the ordinary course of its business;
(b) (i) upon which such Borrower's right to receive payment is
not absolute or is contingent upon the fulfillment of any condition whatsoever
or (ii) as to which such Borrower is not able to bring suit or otherwise enforce
its remedies against the Account Debtor through judicial process or (iii) if the
Account represents a progress billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract under which the Account
Debtor's obligation to pay that invoice is subject to such Borrower's completion
of further performance under such contract or is subject to the equitable lien
of a surety bond issuer;
(c) in the event that any defense, counterclaim, setoff or
dispute is asserted as to such Account;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, acceptable to Agent in
form and substance, has not been sent to the applicable Account Debtor;
<PAGE>
(f) that (i) is not owned by such Borrower or (ii) is subject
to any right, claim, security interest or other interest of any other Person,
other than Liens in favor of Agent, on behalf of itself and Lenders and, with
respect to Canadian Accounts only, Prior Claims that are unregistered and
otherwise unperfected and that secure amounts that are not yet due and payable;
(g) that arises from a sale to any director, officer, other
employee or Affiliate of any Credit Party, or to any entity which has any common
officer or director with any Credit Party;
(h) (i) with respect to US Accounts, that is the obligation of
an Account Debtor that is the United States government or a political
subdivision thereof, or any state or municipality or department, agency or
instrumentality thereof unless Agent, in its sole discretion, has agreed to the
contrary in writing and such Borrower, if necessary or desirable, has complied
with the Federal Assignment of Claims Act of 1940, or any applicable state
statute or municipal ordinance of similar purpose and effect, with respect to
such obligation; and (ii) with respect to Canadian Accounts, that is the
obligation of an Account Debtor that is the Canadian Government (Her Majesty the
Queen in Right of Canada) or a political subdivision thereof, or any province or
territory, or any municipality or department, agency or instrumentality thereof,
unless Agent, in its sole discretion, has agreed to the contrary in writing, the
Account is assignable by way of security and such Borrower, if necessary or
desirable, has complied with the Financial Administration Act (Canada) and any
amendments thereto, or any applicable provincial statute or municipal ordinance
of similar purpose and effect, with respect to such obligation;
(i) that is the obligation of an Account Debtor located in a
foreign country other than Canada (excluding the provinces of Quebec,
Newfoundland, the Northwest Territories and Nunavut) unless payment thereof is
assured by a letter of credit assigned and delivered to Agent, satisfactory to
Agent as to form, amount and issuer;
(j) to the extent such Borrower or any Subsidiary thereof is
liable for goods sold or services rendered by the applicable Account Debtor to
such Borrower or any Subsidiary thereof but only to the extent of the potential
offset;
(k) that arises with respect to goods which are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) the Account is not paid within the earlier
of: sixty (60) days following its due date or ninety (90) days following its
original invoice date;
(ii) if any Account Debtor obligated upon such
Account suspends business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come due; or
<PAGE>
(iii) if any petition or assignment is filed by or
against any Account Debtor obligated upon such Account under any
bankruptcy law or any other federal, state or foreign (including any
Canadian) receivership, insolvency relief or other law or laws for the relief
of debtors;
(m) which is the obligation of an Account Debtor if fifty
percent (50%) or more of the dollar amount of all Accounts owing by that Account
Debtor are ineligible under the other criteria set forth in this Section 1.6;
(n) as to which Agent's Lien thereon, on behalf of itself and
Lenders, is not a first priority perfected Lien;
(o) as to which any of the representations or warranties
in the Loan Documents is untrue;
(p) to the extent such Account is evidenced by a
judgment, Instrument or Chattel Paper;
(q) to the extent such Account exceeds any credit limit
established by Agent, in its reasonable credit judgment;
(r) to the extent that such Account, together with all other
Accounts owing by such Account Debtor and its Affiliates (other than those
Accounts specified on Disclosure Schedule 1.6(r)) as of any date of
determination exceed ten percent (10%) of all Eligible Accounts and with respect
to those Accounts specified on Disclosure Schedule 1.6(r), as of any date of
determination exceed twenty percent (20%) of all Eligible Accounts;
(s) which is payable in any currency other than US Dollars or
with respect to Canadian Accounts, Canadian Dollars; or
(t) which is otherwise unacceptable to Agent in its reasonable
credit judgment.
For the purpose of valuing AEC Funding's Borrowing Base in US Dollars, such
Borrower's Eligible Accounts denominated in Canadian Dollars shall be converted
by Borrower Representative into the US Dollar Amount thereof as determined on
the date of delivery of the relevant Borrowing Base Certificate unless Agent has
notified AEC Funding or Borrowing Representative that, in light of recent or
expected currency fluctuations, the conversion shall be made on a more current
basis.
1.7 Cash Management Systems. On or prior to the Closing Date, Borrowers
-----------------------
will establish and will maintain until the Termination Date, the cash management
systems described on Annex C (the "Cash Management Systems").
1.8 Fees. (a) Borrowers shall pay to GE Capital, individually, the Fees
----
specified in that certain fee letter of even date herewith among Borrowers and
GE Capital (the "GE Capital Fee Letter"), at the times specified for payment
therein.
<PAGE>
(b) As additional compensation for the Revolving Lenders,
Borrowers shall pay to Agent, for the ratable benefit of such Lenders, in
arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date the following:
(i) a fee for Borrowers' non-use of available
funds in an amount equal to the Applicable Unused Line Fee Margin per annum
(calculated on the basis of a 360 day year for actual days elapsed) multiplied
by the difference between (x) the Maximum Amount and (y) the average for
the period of the daily closing balances of the aggregate Revolving Loan
outstanding during the period for which such Fee is due. For the purposes of
this Section 1.8(b)(i)(y), the daily closing balances of the aggregate
Revolving Loan outstanding to AEC Funding shall be calculated by Agent in
the US Dollar Amount thereof; and
(ii) with respect to any calendar month in which
the average aggregate daily principal balance of the Revolving Loan
consisting of Revolving Credit Advances is less than $5,000,000, Borrowers
shall pay to Lender a minimum borrowing fee equal to the amount, if any, by
which (A) the amount of interest charges which would have been payable for
such month had the actual aggregate daily principal balance of the Revolving
Loan consisting of Revolving Credit Advances for each day during such month
been $5,000,000, exceeds (B) the actual interest charges payable upon the
Revolving Loan consisting of Revolving Credit Advances for such month. The
minimum borrowing fee shall be due and payable on the close of business on the
last day of each month in which a minimum borrowing fee is due and payable.
For the purposes of this Section 1.8(b)(ii), the US Dollar Amount of the
average daily principal balance of the Revolving Loan consisting of
Revolving Credit Advances to AEC Funding shall be added to the average daily
principal balance of the Revolving Loan consisting of Revolving Credit
Advances to the Domestic Borrowers and the interest charges shall be
determined as if such aggregate Revolving Loan consisting of Revolving Credit
Advances is an Index Rate Loan.
(c) If Borrowers prepay the Revolving Loan and terminate the
Revolving Loan Commitment, whether voluntarily or involuntarily and whether
before or after acceleration of the Obligations, Borrowers shall pay to Agent,
for the benefit of Lenders as liquidated damages and compensation for the costs
of being prepared to make funds available hereunder an amount equal to the
Applicable Percentage (as defined below) multiplied by the sum of the amount of
the Revolving Loan Commitment. As used herein, the term "Applicable Percentage"
shall mean (x) two percent (2%), in the case of a prepayment on or prior to the
first anniversary of the Closing Date, (y) one percent (1%), in the case of a
prepayment after the first anniversary of the Closing Date but on or prior to
the second anniversary, and (z) one percent (1%), in the case of a prepayment
after the second anniversary. Notwithstanding anything to the contrary contained
in this Section 1.8(c), in the event of the termination of this Agreement by
Borrowers prior to the Commitment Termination Date and the full and final
repayment of all of the Obligations and the receipt by Agent and Lenders of cash
collateral all as provided herein, Borrowers shall not be required to pay the
prepayment fee provided for above if each of the following conditions is
satisfied: (i) no Default or Event of Default shall exist or have occurred and
be continuing, (ii) Agent shall have received not less than thirty (30) days
prior written notice of the intention of Borrowers to so terminate this
Agreement, and (iii) the final payment in full of all of the Obligations is
received simultaneously with the sale of all or substantially all of the Capital
Stock
<PAGE>
or assets of Holdings to ITEQ Corporation or the merger of Holdings with and
into ITEQ Corporation and, in connection therewith, GE Capital, in its sole and
absolute discretion, elects to provide financing to ITEQ Corporation (either as
a lender or co-lender) with the proceeds of such financing used to repay the
Borrowers' Obligations hereunder.
(d) Borrowers shall pay to Agent, for the ratable benefit of the
Revolving Lenders, the Letter of Credit Fee as provided in Annex B.
1.9 Receipt of Payments. Domestic Borrowers shall make each payment
--------------------
under this Agreement not later than 2:00 p.m. (New York time) on the day when
due in immediately available funds in US Dollars to the US Collection Account
and AEC Funding shall make each payment under this Agreement not later than 2:00
p.m. (New York time) on the day when due in immediately available funds in
Canadian Dollars to the Canadian Collection Account. For purposes of computing
interest and Fees and determining Borrowing Availability or Net Borrowing
Availability as of any date, all payments shall be deemed received on the day of
receipt of immediately available funds therefor in the respective Collection
Account prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New
York time on any Business Day shall be deemed to have been received on the
following Business Day. Notwithstanding anything to the contrary contained
herein, if Agent receives any payment from or on behalf of any Credit Party in a
currency other than the currency in which an Obligation due and payable is
denominated, Agent may convert the payment (including the monetary proceeds of
realization upon any Collateral and any funds then held in a cash collateral
account) into the currency of the relevant Obligation at the exchange rate that
Agent would be prepared to sell the currency in which the relevant Obligation is
denominated against the currency received in New York on the Business Day
immediately preceding the date of actual payment. The Obligations shall be
satisfied only to the extent of the amount actually received by Agent upon such
conversion.
1.10 Application and Allocation of Payments. (a) So long as no Default
--------------------------------------
or Event of Default has occurred and is continuing, (i) payments consisting of
proceeds of Accounts received in the ordinary course of business shall be
applied to the Revolving Loan; (ii) payments matching specific scheduled
payments then due shall be applied to those scheduled payments; and (iii)
mandatory prepayments shall be applied as set forth in Section 1.3. All payments
and prepayments applied to a particular Loan shall be applied ratably to the
portion thereof held by each Lender as determined by its Pro Rata Share. As to
each other payment, and as to all payments made when a Default or Event of
Default has occurred and is continuing or following the Commitment Termination
Date, each Borrower hereby irrevocably waives the right to direct the
application of any and all payments received from or on behalf of such Borrower,
and each Borrower hereby irrevocably agrees that Agent shall have the continuing
exclusive right to apply any and all such payments against the Obligations of
Borrowers as Agent may deem advisable notwithstanding any previous entry by
Agent in the Loan Account or any other books and records. In the absence of a
specific determination by Agent with respect thereto, payments shall be applied
to amounts then due and payable in the following order: (1) to Fees and Agent's
expenses reimbursable hereunder; (2) to interest on the other Loans, ratably in
proportion to the interest accrued as to each Loan; (3) to principal payments on
the other Loans and to provide cash collateral for Letter of Credit Obligations
in the manner described in Annex B, ratably to the aggregate, combined principal
balance of the other Loans and outstanding Letter of Credit
<PAGE>
Obligations; and (4) to all other Obligations including expenses of Lenders to
the extent reimbursable under Section 11.3.
(b) Agent is authorized to, and at its sole election may,
charge to the Revolving Loan balance on behalf of each Borrower and cause to be
paid all Fees, expenses, Charges, costs (including insurance premiums in
accordance with Section 5.4(a)) and interest and principal owing by Borrowers
under this Agreement or any of the other Loan Documents if and to the extent
Borrowers fail to promptly pay any such amounts as and when due, even if such
charges would cause the balance of the aggregate Revolving Loan to exceed
Borrowing Availability or would cause the balance of the Revolving Loan of any
Borrower to exceed such Borrower's separate Borrowing Base. At Agent's option
and to the extent permitted by law, any charges so made shall constitute part of
the Revolving Loan hereunder.
1.11 Loan Account and Accounting. Agent shall maintain a loan account
----------------------------
(the "Loan Account") on its books to record: all Advances, all payments made by
Borrowers, and all other debits and credits as provided in this Agreement with
respect to the Loans or any other Obligations. All entries in the Loan Account
shall be made in accordance with Agent's customary accounting practices as in
effect from time to time. The balance in the Loan Account, as recorded on
Agent's most recent printout or other written statement, shall, absent manifest
error, be presumptive evidence of the amounts due and owing to Agent and Lenders
by each Borrower; provided that any failure to so record or any error in so
recording shall not limit or otherwise affect any Borrower's duty to pay the
Obligations. Agent shall render to Borrower Representative a monthly accounting
of transactions with respect to the Loans setting forth the balance of the Loan
Account as to each Borrower. Unless Borrower Representative notifies Agent in
writing of any objection to any such accounting (specifically describing the
basis for such objection), within thirty (30) days after the date thereof, each
and every such accounting shall (absent manifest error) be deemed final, binding
and conclusive upon Borrowers in all respects as to all matters reflected
therein. Only those items expressly objected to in such notice shall be deemed
to be disputed by Borrowers. Notwithstanding any provision herein contained to
the contrary, any Lender may elect (which election may be revoked) to dispense
with the issuance of Notes to that Lender and may rely on the Loan Account as
evidence of the amount of Obligations from time to time owing to it.
1.12 Indemnity. Each Credit Party that is a signatory hereto shall
---------
jointly and severally indemnify and hold harmless each of Agent, Lenders and
their respective Affiliates, and each such Person's respective officers,
directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including reasonable
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other
Loan Documents and the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and thereunder and any
actions or failures to act in connection therewith, including any and all
Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (collectively, "Indemnified Liabilities"); provided, that no such
Credit Party
<PAGE>
shall be liable for any indemnification to an Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss, liability or
expense results from that Indemnified Person's gross negligence or willful
misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL
DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED,
SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER
TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
1.13 Access. Each Credit Party which is a party hereto shall, during
------
normal business hours, from time to time upon two (2) Business Days' prior
notice as frequently as Agent determines to be appropriate: (a) provide Agent
and any of its officers, employees and agents access to its properties,
facilities, advisors and employees (including officers) of each Credit Party and
to the Collateral, (b) permit Agent, and any of its officers, employees and
agents, to inspect, audit and make extracts from any Credit Party's books and
records, and (c) permit Agent, and its officers, employees and agents, to
inspect, review, evaluate and make test verifications and counts of the
Accounts, Inventory and other Collateral of any Credit Party. If a Default or
Event of Default has occurred and is continuing or if access is necessary to
preserve or protect the Collateral as determined by Agent, each such Credit
Party shall provide such access to Agent and to each Lender at all times and
without advance notice. Furthermore, so long as any Event of Default has
occurred and is continuing, Borrowers shall provide Agent and each Lender with
access to their suppliers and customers. Each Credit Party shall make available
to Agent and its counsel, as quickly as is possible under the circumstances,
originals or copies of all books and records which Agent may request. Each
Credit Party shall deliver any document or instrument necessary for Agent, as it
may from time to time request, to obtain records from any service bureau or
other Person which maintains records for such Credit Party, and shall maintain
duplicate records or supporting documentation on media, including computer tapes
and discs owned by such Credit Party. Agent will give Lenders at least ten (10)
days' prior written notice of regularly scheduled audits. Representatives of
other Lenders may accompany Agent's representatives on regularly scheduled
audits at no charge to Borrowers.
1.14 Taxes. (a) Any and all payments by each Borrower hereunder
-----
(including any payments made pursuant to Section 12) or under the Notes shall be
made, in accordance with this Section 1.14, free and clear of and without
deduction for any and all present or future Taxes. If any Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder (including any sum payable pursuant to Section 12) or under the Notes,
(i) the sum payable shall be increased as much as shall be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 1.14) Agent or Lenders, as
applicable, receive an amount equal to the sum they would have received had no
such deductions been made, (ii) such Borrower shall make such deductions, and
(iii) such Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law. Within thirty (30) days after
the date of any payment of Taxes, Borrower Representative shall furnish to Agent
the original or a certified copy of a receipt evidencing payment thereof.
<PAGE>
(b) Each Credit Party that is a signatory hereto shall jointly
and severally indemnify and, within ten (10) days of demand therefor, pay Agent
and each Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.14) paid by Agent or such
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower Representative and Agent a properly completed and executed IRS Form
4224 or Form 1001 or other applicable form, certificate or document prescribed
by the IRS or the United States certifying as to such Foreign Lender's
entitlement to such exemption (a "Certificate of Exemption"). Any foreign Person
that seeks to become a Lender under this Agreement shall provide a Certificate
of Exemption to Borrower Representative and Agent prior to becoming a Lender
hereunder. No foreign Person may become a Lender hereunder if such Person is
unable to deliver a Certificate of Exemption.
1.15 Capital Adequacy; Increased Costs; Illegality. (a) If any Lender
----------------------------------------------
shall have determined that any law, treaty, governmental (or quasi-governmental)
rule, regulation, guideline or order regarding capital adequacy, reserve
requirements or similar requirements or compliance by any Lender with any
request or directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted
after the Closing Date, from any central bank or other Governmental Authority
increases or would have the effect of increasing the amount of capital, reserves
or other funds required to be maintained by such Lender and thereby reducing the
rate of return on such Lender's capital as a consequence of its obligations
hereunder, then Borrowers shall from time to time upon demand by such Lender
(with a copy of such demand to Agent) pay to Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of that reduction and showing the
basis of the computation thereof submitted by such Lender to Borrower
Representative and to Agent shall, absent manifest error, be final, conclusive
and binding for all purposes.
(b) If, due to either (i) the introduction of or any change in
any law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrowers shall from time to time, upon demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower
Representative and to Agent by such Lender, shall be conclusive and binding on
Borrowers for all purposes, absent manifest error. Each Lender agrees that, as
promptly as practicable after it becomes aware of any circumstances referred to
above which would result in any such increased cost, the affected Lender shall,
to the extent not inconsistent with such
<PAGE>
Lender's internal policies of general application, use reasonable commercial
efforts to minimize costs and expenses incurred by it and payable to it by
Borrowers pursuant to this Section 1.15(b).
(c) Replacement of Lender in Respect of Increased Costs.
--------------------------------------------------------
Within fifteen (15) days after receipt by Borrower Representative of written
notice and demand from any Lender (an "Affected Lender") for payment of
additional amounts or increased costs as provided in Section 1.14(a), 1.15(a) or
1.15(b), Borrower Representative may, at its option, notify Agent and such
Affected Lender of its intention to replace the Affected Lender. So long as no
Default or Event of Default has occurred and is continuing, Borrower
Representative, with the consent of Agent, may obtain, at Borrowers' expense, a
replacement Lender ("Replacement Lender") for the Affected Lender, which
Replacement Lender must be satisfactory to Agent. If Borrowers obtain a
Replacement Lender within ninety (90) days following notice of their intention
to do so, the Affected Lender must sell and assign its Loans and Commitments to
such Replacement Lender for an amount equal to the principal balance of all
Loans held by the Affected Lender and all accrued interest and Fees with respect
thereto through the date of such sale, provided that Borrowers shall have
reimbursed such Affected Lender for the additional amounts or increased costs
that it is entitled to receive under this Agreement through the date of such
sale and assignment.
Notwithstanding the foregoing, Borrowers shall not have the right to obtain a
Replacement Lender if the Affected Lender rescinds its demand for increased
costs or additional amounts within fifteen (15) days following its receipt of
Borrowers' notice of intention to replace such Affected Lender. Furthermore, if
Borrowers give a notice of intention to replace and do not so replace such
Affected Lender within ninety (90) days thereafter, Borrowers' rights under this
Section 1.15(c) shall terminate unless increased costs or additional amounts are
subsequently claimed by such Affected Lender and Borrowers shall promptly pay
all increased costs or additional amounts demanded by such Affected Lender
pursuant to Sections 1.14(a), 1.15(a) and 1.15(b).
1.16 Single Loan. All Loans to each Borrower and all of the other
------------
Obligations of each Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of that Borrower secured,
until the Termination Date, by all of the Collateral.
1.17 Currency Matters. Principal, interest, reimbursement obligations,
----------------
fees, and all other amounts payable under this Agreement and the other Loan
Documents to Agent and Lenders shall be payable in the currency in which such
Obligations are denominated. Unless stated otherwise, all calculations,
comparisons, measurements or determinations under this Agreement shall be made
in US Dollars. For the purpose of such calculations, comparisons, measurements
or determinations, amounts denominated in other currencies shall be converted by
Agent in the Equivalent Amount of US Dollars on the date of calculation,
comparison, measurement or determination.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be obligated to
--------------------------------
make any Loan or incur any Letter of Credit Obligations on the Closing Date, or
to take, fulfill, or perform any
<PAGE>
other action hereunder, until the following conditions have been satisfied or
provided for in a manner satisfactory to Agent, or waived in writing by Agent
and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or
-----------------------------------
counterparts hereof shall have been duly executed by, and delivered to,
Borrowers, Agent and Lenders; and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist attached
hereto as Annex D, each in form and substance satisfactory to Agent.
(b) Approvals. Agent shall have received (i) satisfactory
---------
evidence that the Credit Parties have obtained all required consents and
approvals of all Persons including all requisite Governmental Authorities, to
the execution, delivery and performance of this Agreement and the other Loan
Documents or (ii) an officer's certificate in form and substance satisfactory to
Agent affirming that no such consents or approvals are required.
(c) Opening Availability. The Eligible Accounts of each
---------------------
Borrower supporting the initial Revolving Credit Advance and the initial Letter
of Credit Obligations incurred and the amount of the Reserves to be established
on the Closing Date shall be sufficient in value, as determined by Agent, to
provide Borrowers, collectively, with Net Borrowing Availability, after giving
effect to the initial Revolving Credit Advance made hereunder and the incurrence
of any initial Letter of Credit Obligations (on a pro forma basis, with trade
payables being paid currently, and expenses and liabilities being paid in the
ordinary course of business and without acceleration of sales) of at least
$7,500,000. For the purposes of this Section 2.1(c), any Loan to be made to AEC
Funding and the determination of the Net Borrowing Availability for AEC Funding
shall be calculated in the US Dollar Amount thereof.
(d) Payment of Fees. Borrowers shall have paid the Fees
-----------------
required to be paid on the Closing Date in the respective amounts specified in
Section 1.8 (including the Fees specified in the GE Capital Fee Letter), and
shall have reimbursed Agent for all fees, costs and expenses of closing
presented as of the Closing Date.
(e) Capital Structure; Other Indebtedness. The capital
-----------------------------------------
structure of each Credit Party and the terms and conditions of all Indebtedness
of each Credit Party shall be acceptable to Agent in its sole discretion.
2.2 Further Conditions to Each Loan. Except as otherwise expressly
---------------------------------
provided herein, no Lender shall be obligated to fund any Loan or incur any
Letter of Credit Obligation, if, as of the date thereof:
***
(a) Any representation or warranty by any Credit Party
contained herein or in any of the other Loan Documents shall be untrue or
incorrect as of such date, except to the extent that such representation or
warranty expressly relates to an earlier date and except for changes therein
expressly permitted or expressly contemplated by this Agreement; or
<PAGE>
(b) Any event or circumstance having a Material Adverse Effect
shall have occurred since the date hereof as determined by the Requisite
Lenders; or
(c) Any Default or Event of Default has occurred and is
continuing or would result after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligation), and Agent or Requisite Lenders shall have
determined not to make any Advance or incur any Letter of Credit Obligation as a
result of that Default or Event of Default, or
(d) After giving effect to any Advance (or the incurrence of
any Letter of Credit Obligations), (i) the outstanding principal amount of the
aggregate Revolving Loan would exceed the lesser of the Aggregate Borrowing Base
and the Maximum Amount, or (ii) the outstanding principal amount of the
Revolving Loan of the applicable Borrower or Borrower Group would exceed such
Borrower's or Borrower Group's respective separate Borrowing Base. For the
purposes of this Section 2.2(d), any Revolving Loan outstanding or to be made to
AEC Funding shall be calculated in the US Dollar Amount thereof.
The request and acceptance by any Borrower or Borrower Group of the proceeds of
any Loan, or the incurrence of any Letter of Credit Obligation, shall be deemed
to constitute, as of the date of such request, acceptance or incurrence, (i) a
representation and warranty by Borrowers that the conditions in this Section 2.2
have been satisfied and (ii) a reaffirmation by Borrowers of the cross-guaranty
provisions set forth in Section 12 and of the granting and continuance of
Agent's Liens, on behalf of itself and Lenders, pursuant to the Collateral
Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and severally,
make the following representations and warranties to Agent and each Lender, with
respect to all Credit Parties, each and all of which shall survive the execution
and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is
-----------------------------------------
a corporation or limited partnership duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation; (b) is duly
qualified to conduct business and is in good standing in each other jurisdiction
where its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would not result
in exposure to losses, damages or liabilities in excess of $50,000; (c) has the
requisite corporate or limited partnership power and authority and the legal
right to own, pledge, mortgage or otherwise encumber and operate its properties,
to lease the property it operates under lease and to conduct its business as
now, heretofore and proposed to be conducted; (d) subject to specific
representations regarding Environmental Laws, has all licenses, permits,
consents or approvals from or by, and has made all filings with, and has given
all notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (e) is in compliance with
its charter and by-laws or other constituent documents; and (f) subject to
specific representations set forth herein regarding ERISA, Environmental Laws,
tax and other laws, is in compliance with all applicable provisions of law,
except where the failure to comply,
<PAGE>
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
3.2 Executive Offices; FEIN. As of the Closing Date, the current
-------------------------
location of each Credit Party's chief executive office and principal place of
business is set forth in Disclosure Schedule (3.2), and none of such locations
has changed within the twelve (12) months preceding the Closing Date. In
addition, Disclosure Schedule (3.2) lists the federal employer identification
number of each Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations. The
------------------------------------------------------------
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's corporate or limited partnership power; (b) have been
duly authorized by all necessary or proper corporate, partnership or shareholder
action; (c) do not contravene any provision of such Person's charter or bylaws
or other constituent documents; (d) do not violate any law or regulation, or any
order or decree of any court or Governmental Authority; (e) do not conflict with
or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound; (f) do not result in the creation or imposition of any Lien upon any of
the property of such Person other than those in favor of Agent, on behalf of
itself and Lenders, pursuant to the Loan Documents; and (g) do not require the
consent or approval of any Governmental Authority or any other Person, except
those referred to in Section 2.1(b), all of which will have been duly obtained,
made or complied with prior to the Closing Date. On or prior to the Closing
Date, each of the Loan Documents shall have been duly executed and delivered by
each Credit Party that is a party thereto and each such Loan Document shall then
constitute a legal, valid and binding obligation of such Credit Party
enforceable against it in accordance with its terms.
3.4 Financial Statements and Projections. Except for the Projections,
-------------------------------------
all Financial Statements concerning Holdings and its Subsidiaries which are
referenced below have been prepared in accordance with GAAP consistently applied
throughout the periods covered (except as disclosed therein and except, with
respect to unaudited Financial Statements, for the absence of footnotes and
normal year-end audit adjustments) and present fairly in all material respects
the financial position of the Persons covered thereby as at the dates thereof
and the results of their operations and cash flows for the periods then ended.
(a) The following Financial Statements attached hereto as
Disclosure Schedule (3.4(A)) have been delivered on the date hereof:
(i) (A) The audited consolidated balance sheets at
November 30, 1997 and 1998 and the related statements of income and cash flows
of Holdings and its Subsidiaries for the Fiscal Years then ended, certified by
PricewaterhouseCoopers, LLP.
(B) The unaudited consolidating balance sheets as
of November 30, 1998 and related statements of income for Holdings and its
Subsidiaries.
<PAGE>
(ii) (A) The unaudited consolidated balance sheet(s)
at February 28, 1999 and the related statement(s) of income and cash flows for
Holdings and its Subsidiaries for the Fiscal Quarter then ended.
(B) The unaudited consolidating balance sheet(s)
at February 28, 1999 and the related statement(s) of income for Holdings and its
Subsidiaries for the Fiscal Quarter then ended.
(b) Projections. The Projections delivered on the date hereof
and attached hereto as Disclosure Schedule (3.4(B)) have been prepared by
Borrowers in light of the past operations of their businesses and reflect
projections for the one (1) year period beginning on March 1, 1999 on a month by
month basis for the first year. The Projections are based upon estimates and
assumptions stated therein, all of which Borrowers believe to be reasonable and
fair in light of current conditions and current facts known to Borrowers and, as
of the Closing Date, reflect Borrowers' good faith and reasonable estimates of
the future financial performance of Borrowers and of the other information
projected therein for the period set forth therein.
3.5 Material Adverse Effect. Between November 30, 1998 and the Closing
-----------------------
Date, (a) no Credit Party has incurred any obligations, contingent or
non-contingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments which, alone or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, (b) no contract, lease
or other agreement or instrument has been entered into by any Credit Party or
has become binding upon any Credit Party's assets and no law or regulation
applicable to any Credit Party has been adopted which has had or could
reasonably be expected to have a Material Adverse Effect, and (c) no Credit
Party is in default and to the best of Borrowers' knowledge no third party is in
default under any material contract, lease or other agreement or instrument,
which alone or in the aggregate could reasonably be expected to have a Material
Adverse Effect. Between November 30, 1998 and the Closing Date no event has
occurred, which alone or together with other events, could reasonably be
expected to have a Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing Date, the real
-----------------------------
estate ("Real Estate") listed on Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned real
estate, and valid and marketable leasehold interests in all of its leased Real
Estate, all as described on Disclosure Schedule (3.6). Disclosure Schedule (3.6)
further describes any Real Estate with respect to which any Credit Party is a
lessor, sublessor or assignor as of the Closing Date. Each Credit Party also has
good and marketable title to, or valid leasehold interests in, all of its
personal properties and assets. As of the Closing Date, none of the properties
and assets of any Credit Party are subject to any Liens other than Permitted
Encumbrances, and there are no facts, circumstances or conditions known to any
Credit Party that may result in any Liens (including Liens arising under
Environmental Laws) other than Permitted Encumbrances. Each Credit Party has
received all deeds, assignments, waivers, consents, non-disturbance and
attornment or similar agreements, bills of sale and other documents, and has
duly effected all recordings, filings and other actions necessary to establish,
protect and perfect such Credit Party's right, title and interest in and to all
such Real Estate and other properties and assets. Disclosure Schedule (3.6) also
describes any purchase options, rights of first refusal or
<PAGE>
other similar contractual rights pertaining to any Real Estate. As of the
Closing Date, no portion of any Credit Party's Real Estate has suffered any
material damage by fire or other casualty loss which has not heretofore been
repaired and restored in all material respects to its original condition or
otherwise remedied. As of the Closing Date, all material permits required to
have been issued or appropriate to enable the Real Estate to be lawfully
occupied and used for all of the purposes for which they are currently occupied
and used have been lawfully issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date (a) no strikes or other
--------------
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party comply with the Fair Labor Standards Act and each other
federal, state, local or foreign law applicable to such matter; (c) all payments
due from any Credit Party for employee health and welfare insurance have been
paid or accrued as a liability on the books of such Credit Party; (d) except as
set forth in Disclosure Schedule (3.7), no Credit Party is a party to or bound
by any collective bargaining agreement, management agreement, consulting
agreement or any employment agreement, bonus, stock option or stock appreciation
plan (and true and complete copies of any agreements described on Disclosure
Schedule (3.7) have been delivered to Agent); (e) there is no organizing
activity involving any Credit Party pending or, to any Credit Party's knowledge,
threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board or any labor relations board,
and no labor organization or group of employees of any Credit Party has made a
pending demand for recognition; and (g) except as set forth in Disclosure
Schedule (3.7), there are no complaints or charges against any Credit Party
pending or, to the knowledge of any Credit Party, threatened to be filed with
any Governmental Authority or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment by
any Credit Party of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
------------------------------------------------------------------
Indebtedness. Except as set forth in Disclosure Schedule (3.8), no Credit Party
- ------------
has any Subsidiaries, is engaged in any joint venture or partnership with any
other Person, or is an Affiliate of any other Person. All of the issued and
outstanding Stock of each Credit Party is owned by each of the Stockholders and
in the amounts set forth on Disclosure Schedule (3.8). There are no outstanding
rights to purchase, options, warrants or similar rights or agreements pursuant
to which any Credit Party may be required to issue, sell, repurchase or redeem
any of its Stock or other equity securities or any Stock or other equity
securities of its Subsidiaries. All outstanding Indebtedness of each Credit
Party as of the Closing Date is described in Section 6.3 (including Disclosure
Schedule (6.3)).
3.9 Government Regulation. No Credit Party is an "investment company"
----------------------
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940. No Credit Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any Canadian or other United
States federal law or state, provincial, local or foreign law or statute that
restricts or limits its ability to incur Indebtedness or to perform its
obligations hereunder. The making of the Loans by Lenders to Borrowers, the
incurrence of the Letter of Credit Obligations
<PAGE>
on behalf of Borrowers and, the application of the proceeds thereof and
repayment thereof will not violate any provision of any such statute or any
rule, regulation or order issued by the Securities and Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it
-------------------
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U of the Federal Reserve Board
as now and from time to time hereafter in effect (such securities being referred
to herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry any Margin Stock or for any other
purpose which might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action which might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements, including
-----
information returns, required by any Governmental Authority to be filed by any
Credit Party have been filed with the appropriate Governmental Authority and all
Charges have been paid prior to the date on which any fine, penalty, interest or
late charge may be added thereto for nonpayment thereof (or any such fine,
penalty, interest, late charge or loss has been paid), excluding Charges or
other amounts being contested in accordance with Section 5.2(b). Proper and
accurate amounts have been withheld by each Credit Party from its respective
employees for all periods in full and complete compliance in all material
respects with all applicable federal, state, local, provincial and foreign law
and such withholdings have been timely paid to the respective Governmental
Authorities. Disclosure Schedule (3.11) sets forth as of the Closing Date those
taxable years for which any Credit Party's tax returns are currently being
audited by Revenue Canada, the IRS or any other applicable provincial or state
Governmental Authority and any assessments or threatened assessments in
connection with such audit, or otherwise currently outstanding. Except as
described on Disclosure Schedule (3.11), no Credit Party has executed or filed
with Revenue Canada, the IRS or any other provincial or state Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any Charges. None of the
Credit Parties and their respective predecessors are liable for any Charges: (a)
under any agreement (including any tax sharing agreements) or (b) to each Credit
Party's knowledge, as a transferee. As of the Closing Date, no Credit Party has
agreed or been requested to make any adjustment under IRC Section 481(a), by
reason of a change in accounting method or otherwise, which would have a
Material Adverse Effect.
3.12 ERISA. (a) Disclosure Schedule (3.12) lists all Plans and
-----
separately identifies all Pension Plans, including Title IV Plans, Multiemployer
Plans, ESOPs and Welfare Plans, including all Retiree Welfare Plans. Copies of
all such listed Plans, together with a copy of the latest form 5500 for each
such Plan, have been delivered to Agent. Except with respect to Multiemployer
Plans, each Qualified Plan has been determined by the IRS to qualify under
Section 401 of the IRC, and the trusts created thereunder have been determined
to be exempt
<PAGE>
from tax under the provisions of Section 501 of the IRC, and nothing has
occurred which would cause the loss of such qualification or tax-exempt status.
Each Plan is in compliance, in all material respects, with the applicable
provisions of ERISA and the IRC, including the timely filing of IRS/DOL
5500-series form reports required under the IRC or ERISA. No Credit Party or
ERISA Affiliate has failed to make any contribution or pay any material amount
due as required by either Section 412 of the IRC or Section 302 of ERISA or the
terms of any such Plan. No Credit Party or ERISA Affiliate has engaged in a
"prohibited transaction," as defined in Section 4975 of the IRC, in connection
with any Plan, which would subject any Credit Party to a material tax on
prohibited transactions imposed by Section 4975 of the IRC.
(b) Disclosure Schedule (3.12) sets forth all Canadian Benefit
--------------------------
Plans (other than, for greater certainty, universal plans created by and to
which any Credit Party is obligated to contribute by statute) and Canadian
Pension Plans adopted by each Credit Party. The Canadian Pension Plans are duly
registered under the ITA and all other applicable laws which require
registration and no event has occurred which is reasonably likely to cause the
loss of such registered status. All material obligations of each Credit Party
(including fiduciary, funding, investment and administration obligations)
required to be performed in connection with the Canadian Pension Plans and the
funding agreements therefor have been performed in a timely fashion. There have
been no improper withdrawals or applications of the assets of the Canadian
Pension Plans or the Canadian Benefit Plans. There are no outstanding material
disputes concerning the assets of the Canadian Pension Plans or the Canadian
Benefit Plans. Each of the Canadian Pension Plans is fully funded on a solvency
basis (using actuarial methods and assumptions which are consistent with the
valuations last filed with the applicable Governmental Authorities and which are
consistent with generally accepted actuarial principles).
(c) Except as set forth in Disclosure Schedule (3.12): (i) no
---------------------------
Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan of any
Credit Party or ERISA Affiliate has been terminated nor has any such Plan with
Unfunded Pension Liabilities been transferred outside of the "controlled group"
(within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party or
ERISA Affiliate; (vi) except in the case of any ESOP, stock of all Credit
Parties and their ERISA Affiliates makes up, in the aggregate, no more than ten
(10%) percent of the fair market value of the assets of any Plan, and (vii) no
liability under any Title IV Plan has been satisfied with the purchase of a
contract from an insurance company that is not rated AAA by the Standard &
Poor's Corporation or the equivalent by another nationally recognized rating
agency.
3.13 No Litigation. No action, claim, lawsuit, demand, investigation or
-------------
proceeding is now pending or, to the knowledge of any Credit Party, threatened
against any Credit Party, before any Governmental Authority or before any
arbitrator or panel of arbitrators (collectively, "Litigation"), (a) which
challenges any Credit Party's right or power to enter into or perform any
<PAGE>
of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (b) which has a reasonable risk of being determined adversely to any Credit
Party and which, if so determined, could have a Material Adverse Effect. Except
as set forth on Disclosure Schedule (3.13), as of the Closing Date there is no
Litigation pending or threatened which seeks damages in excess of $100,000 or
injunctive relief against or alleges criminal misconduct of any Credit Party.
3.14 Brokers. No broker or finder acting on behalf of any Credit Party
-------
or Affiliate thereof brought about the obtaining, making or closing of the Loans
and no Credit Party or Affiliate thereof has any obligation to any Person in
respect of any finder's or brokerage fees in connection therewith.
3.15 Intellectual Property. As of the Closing Date, each Credit Party
----------------------
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and License is listed,
together with application or registration numbers, as applicable, in Disclosure
Schedule (3.15) hereto. Each Credit Party conducts its business and affairs
without infringement of or interference with any Intellectual Property of any
other Person. Except as set forth in Disclosure Schedule (3.15), no Credit Party
is aware of any infringement claim by any other Person with respect to any
Intellectual Property.
3.16 Full Disclosure. No information contained in this Agreement, any
---------------
of the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other reports from time to time delivered hereunder or any written
statement furnished by or on behalf of any Credit Party to Agent or any Lender
pursuant to the terms of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents
will at all times be fully perfected first priority Liens in and to the
Collateral described therein, subject, as to priority, only to Permitted
Encumbrances with respect to the Collateral other than Accounts.
3.17 Environmental Matters. (a) Except as set forth in Disclosure
----------------------
Schedule (3.17), as of the Closing Date: (i) the Credit Parties are and have
been in compliance with all Environmental Laws, except for such noncompliance
which would not result in Environmental Liabilities which could reasonably be
expected to exceed $100,000; (ii) the Credit Parties have obtained, and are in
compliance with, all Environmental Permits required by Environmental Laws for
the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain or comply with
such Environmental Permits would not result in Environmental Liabilities which
could reasonably be expected to exceed $100,000, and all such Environmental
Permits are valid, uncontested and in good standing; (iii) no Credit Party is
involved in operations or knows of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of such Credit Party which could reasonably be
expected to exceed $100,000, and no Credit Party has permitted any current or
former tenant or occupant of the Real Estate to engage in any such operations;
(iv) there is no Litigation arising under or related to any Environmental
<PAGE>
Laws, Environmental Permits or Hazardous Material which seeks damages,
penalties, fines, costs or expenses in excess of $100,000 or injunctive relief,
or which alleges criminal misconduct by any Credit Party; and (v) no notice has
been received by any Credit Party identifying it as a "potentially responsible
party" or requesting information under CERCLA or analogous state statutes or
applicable foreign laws, and to the knowledge of the Credit Parties, there are
no facts, circumstances or conditions that may result in any Credit Party being
identified as a "potentially responsible party" under CERCLA or analogous state
statutes.
(b) Each Credit Party hereby acknowledges and agrees that
Agent (i) is not now, and has not ever been, in control of any of the Real
Estate or any Credit Party's affairs, and (ii) does not have the capacity
through the provisions of the Loan Documents or otherwise to influence any
Credit Party's conduct with respect to the ownership, operation or management of
any of its Real Estate or compliance with Environmental Laws or Environmental
Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies
---------
of any nature maintained, as of the Closing Date, for current occurrences by
each Credit Party, as well as a summary of the terms of each such policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19)
-----------------------------------
lists all banks and other financial institutions at which any Credit Party
maintains deposits or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.
3.20 Government Contracts. Except as set forth in Disclosure Schedule
---------------------
(3.20), as of the Closing Date, no Credit Party is a party to any contract or
agreement with any Governmental Authority and no Credit Party's Accounts are
subject to the Financial Administration Act (Canada), as amended, the Federal
Assignment of Claims Act (31 U.S.C. Section 3727) or any similar provincial,
state, local or foreign law.
3.21 Customer and Trade Relations. As of the Closing Date, there exists
----------------------------
no actual or, to the knowledge of any Credit Party, threatened termination or
cancellation of, or any material adverse modification or change in: the business
relationship of any Credit Party with any customer or group of customers whose
purchases during the preceding twelve (12) months caused them to be ranked among
the ten largest customers of such Credit Party; or the business relationship of
any Credit Party with any supplier material to its operations.
3.22 Agreements and Other Documents. As of the Closing Date, each
--------------------------------
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which it is subject and each of which are listed on Disclosure
Schedule (3.22): service agreements and maintenance contracts of each Credit
Party which if terminated or cancelled could be reasonably likely to have a
Material Adverse Effect; licenses and permits held by the Credit Parties, the
absence of which could be reasonably likely to have a Material Adverse Effect;
instruments and documents evidencing Indebtedness of such Credit Party and any
Lien granted by such Credit Party with
<PAGE>
respect thereto; and instruments and agreements evidencing the issuance of any
equity securities, warrants, rights or options to purchase equity securities of
such Credit Party.
3.23 Solvency. Both before and after giving effect to (a) the Loans and
--------
Letter of Credit Obligations to be made or incurred on the Closing Date or such
other date as Loans and Letter of Credit Obligations requested hereunder are
made or incurred, (b) the disbursement of the proceeds of such Loans pursuant to
the instructions of Borrower Representative, and (c) the payment and accrual of
all transaction costs in connection with the foregoing, each Credit Party is and
will be Solvent.
3.24 Year 2000 Representations. Each Credit Party has completed a Year
-------------------------
2000 Assessment, a copy of which has been delivered to Agent.
3.25 Indenture Debt. As of the Closing Date, Borrowers have delivered
---------------
to Agent a complete and correct copy of the Indenture (including all schedules,
exhibits, amendments, supplements, modifications, assignments, notes and all
other documents delivered pursuant thereto or in connection therewith). All
Obligations, including the Obligations to pay principal of and interest on the
Loans and the Letter of Credit Obligations, constitute Indebtedness permitted
under the Indenture and the execution and delivery of this Agreement will not
constitute a default or event of default under the Indenture. Holdings,
Borrowers and each other Credit Party acknowledge that Agent and each Lender are
entering into this Agreement and are extending the Commitments in reliance upon
this Section 3.25.
3.26 Inactive Canadian Subsidiaries. (a) Holdings and Industra Service
------------------------------
Corporation hereby represent, warrant and covenant as follows:
(i) As of the Closing Date, Nucon, Consultants and
Energy are each inactive Subsidiaries, do not conduct or transact any business
and own assets of less than $100,000 in the aggregate;
(ii) Each of Nucon, Consultants and Energy will be
dissolved within ninety (90) days from the Closing Date; and
(iii) Each of Nucon, Consultants and Energy will not
acquire any property or assets whatsoever, either directly or indirectly, from
any Credit Party or any other Person.
(b) Each of Holdings and the other Credit Parties to this
Agreement hereby covenant that in addition to, and not in limitation of, the
provisions of Section 6 below, no loans, advances, investments, financial
accommodations, transfers of assets or property or the like shall be made to or
for the benefit of Nucon, Consultants or Energy.
<PAGE>
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices. (a) Each Credit Party executing this Agreement
-------------------
hereby agrees that from and after the Closing Date and until the Termination
Date, it shall deliver to Agent or to Agent and Lenders, as required, the
Financial Statements, notices, Projections and other information at the times,
to the Persons and in the manner set forth in Annex E.
(b) Each Credit Party executing this Agreement hereby agrees
that from and after the Closing Date and until the Termination Date, it shall
deliver to Agent or to Agent and Lenders, as required, the various Collateral
Reports (including Borrowing Base Certificates in the form of Exhibit 4.1(b)) at
the times, to the Persons and in the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party executing this
--------------------------------
Agreement authorizes Agent and, so long as a Default or Event of Default has
occurred and is continuing, each Lender, to communicate directly with its
independent certified or chartered, as the case may be, public accountants
including PricewaterhouseCoopers, LLP, and authorizes and at Agent's request
shall instruct those accountants and advisors to disclose and make available to
Agent and each Lender any and all Financial Statements and other supporting
financial documents, schedules and information relating to any Credit Party
(including copies of any issued management letters) with respect to the
business, financial condition and other affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and severally
agrees as to all Credit Parties that from and after the date hereof and until
the Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Each Credit Party
------------------------------------------------
shall: do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and its rights and franchises; continue
to conduct its business substantially as now conducted or as otherwise permitted
hereunder; at all times maintain, preserve and protect all of its assets and
properties used or useful in the conduct of its business, and keep the same in
good repair, working order and condition in all material respects (taking into
consideration ordinary wear and tear) and from time to time make, or cause to be
made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices; and transact business only in such
corporate and trade names as are set forth in Disclosure Schedule (5.1).
5.2 Payment of Obligations. (a) Subject to Section 5.2(b), each Credit
----------------------
Party shall pay and discharge or cause to be paid and discharged promptly all
Charges payable by it, including (i) Charges imposed upon it, its income and
profits, or any of its property (real, personal or mixed) and all Charges with
respect to tax, social security (including pensions) and unemployment
withholding with respect to its employees, (ii) lawful claims for labor,
materials, supplies and services or otherwise, and (iii) all storage or rental
charges payable to warehousemen and bailees, in each case, before any thereof
shall become past due.
(b) Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges described in
Section 5.2(a); provided, that (i) adequate
<PAGE>
reserves with respect to such contest are maintained on the books of such Credit
Party, in accordance with GAAP, (ii) any Lien securing payment of such Charges
arises solely by operation of law and is unregistered and no Lien shall be
imposed to secure payment of such Charges (other than payments to bailees) that
is superior to any of the Liens securing the Obligations and such contest is
maintained and prosecuted continuously and with diligence and operates to
suspend collection or enforcement of such Charges, (iii) none of the Collateral
becomes subject to forfeiture or loss as a result of such contest, (iv) such
Credit Party shall promptly pay or discharge such contested Charges or claims
and all additional charges, interest, penalties and expenses, if any, and shall
deliver to Agent evidence acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to such
Credit Party or the conditions set forth in this Section 5.2(b) are no longer
met, (v) Agent has not advised Borrowers in writing that Agent reasonably
believes that nonpayment or nondischarge thereof could have or result in a
Material Adverse Effect, and (vi) if non-payment of the Charge could result in
any Lien against any Borrower's personal or real property, such Borrower has
notified Agent of the maximum amount of such Charges and, without duplication,
such amount has been deducted from such Borrower's or such Borrower's Borrower
Group's Borrowing Base as a Reserve.
5.3 Books and Records. Each Credit Party shall keep adequate books and
-----------------
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as Disclosure Schedule
(3.4(A)).
5.4 Insurance; Damage to or Destruction of Collateral. (a) The Credit
--------------------------------------------------
Parties shall, at their sole cost and expense, maintain the policies of
insurance described on Disclosure Schedule (3.18) as in effect on the date
hereof or otherwise in form and amounts customary for their businesses and
industry and acceptable to Agent and with insurers acceptable to Agent. If any
Credit Party at any time or times hereafter shall fail to obtain or maintain any
of the policies of insurance required above or to pay all premiums relating
thereto, Agent may at any time or times thereafter obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which Agent deems advisable. Agent shall have no obligation to
obtain insurance for any Credit Party or pay any premiums therefor. By doing so,
Agent shall not be deemed to have waived any Event of Default arising from any
Credit Party's failure to maintain such insurance or pay any premiums therefor.
All sums so disbursed, including attorneys' fees, court costs and other charges
related thereto, shall be payable on demand by Borrowers to Agent and shall be
additional Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in
any Credit Party's risk profile (including any change in the product mix
maintained by any Credit Party or any laws affecting the potential liability of
such Credit Party) to require additional forms and limits of insurance to, in
Agent's opinion, adequately protect both Agent's and Lenders' interests in all
or any portion of the Collateral and to ensure that each Credit Party is
protected by insurance in amounts and with coverage customary for its industry.
If requested by Agent, each Credit Party shall deliver to Agent from time to
time a report of a reputable insurance broker, satisfactory to Agent, with
respect to its insurance policies.
<PAGE>
(c) Each Credit Party shall deliver to Agent, in form and
substance satisfactory to Agent, endorsements to (i) all "All Risk" and business
interruption insurance naming Agent, on behalf of itself and Lenders, and (if
applicable, with respect to any insurance policy covering assets located in the
Province of Quebec) Agent and Lenders, as loss payee, and, to the extent
applicable, containing the standard mortgage clause approved by the Insurance
Bureau of Canada, (ii) all general liability and other liability policies naming
Agent, on behalf of itself and Lenders, and (with respect to any insurance
policy covering assets located in the Province of Quebec) Agent and Lenders, as
additional insured. Each Credit Party irrevocably makes, constitutes and
appoints Agent (and all officers, employees or agents designated by Agent), so
long as any Default or Event of Default has occurred and is continuing or the
anticipated insurance proceeds exceed $250,000, as such Credit Party's true and
lawful agent and attorney-in-fact for the purpose of making, settling and
adjusting claims under such "All Risk" policies of insurance, endorsing the name
of such Credit Party on any check or other item of payment for the proceeds of
such "All Risk" policies of insurance and for making all determinations and
decisions with respect to such "All Risk" policies of insurance. Agent shall
have no duty to exercise any rights or powers granted to it pursuant to the
foregoing power-of-attorney. Borrower Representative shall promptly notify Agent
of any loss, damage, or destruction to the Collateral in the amount of $250,000
or more, whether or not covered by insurance. After deducting from such proceeds
the expenses, if any, incurred by Agent in the collection or handling thereof,
Agent may, at its option, apply such proceeds to the reduction of the
Obligations in accordance with Section 1.3(c); provided that in the case of
insurance proceeds pertaining to any Credit Party that is not a Borrower, such
insurance proceeds shall be applied ratably to all of the Loans owing by each
Borrower, or permit or require the applicable Credit Party to use such money, or
any part thereof, to replace, repair, restore or rebuild the Collateral in a
diligent and expeditious manner with materials and workmanship of substantially
the same quality as existed before the loss, damage or destruction.
Notwithstanding the foregoing, if the casualty giving rise to such insurance
proceeds would not reasonably be expected to have a Material Adverse Effect and
such insurance proceeds do not exceed $250,000 in the aggregate, Agent shall
permit the applicable Credit Party to replace, restore, repair or rebuild the
property; provided that if such Credit Party shall not have completed or entered
into binding agreements to complete such replacement, restoration, repair or
rebuilding within 180 days of such casualty, Agent may apply such insurance
proceeds to the Obligations in accordance with Section 1.3(c); provided further
that in the case of insurance proceeds pertaining to any Credit Party that is
not a Borrower, such insurance proceeds shall be applied ratably to all of the
Loans owing by each Borrower or Borrower Group, as the case may be. All
insurance proceeds which are to be made available to any Borrower to replace,
repair, restore or rebuild the Collateral shall be applied by Agent to reduce
the outstanding principal balance of the Revolving Loan of such Borrower (which
application shall not result in a permanent reduction of the Revolving Loan
Commitment) and upon such application, Agent shall establish a Reserve against
the separate Borrowing Base of the affected Borrower in an amount equal to the
amount of such proceeds so applied. All insurance proceeds made available to any
Credit Party that is not a Borrower to replace, repair, restore or rebuild
Collateral shall be deposited in a cash collateral account. Thereafter, such
funds shall be made available to that Borrower or Credit Party to provide funds
to replace, repair, restore or rebuild the Collateral as follows: (i) Borrower
Representative shall request a Revolving Credit Advance or a release from the
cash collateral account be made to such Borrower or Credit Party in the amount
requested to be released; (ii) so long as the conditions set forth in Section
2.2 have been met, Revolving
<PAGE>
Lenders shall make such Revolving Credit Advance or Agent shall release funds
from the cash collateral account; and (iii) in the case of insurance proceeds
applied against the Revolving Loan, the Reserve established with respect to such
insurance proceeds shall be reduced by the amount of such Revolving Credit
Advance. To the extent not used to replace, repair, restore or rebuild the
Collateral, such insurance proceeds shall be applied in accordance with Section
1.3(c); provided that in the case of insurance proceeds pertaining to any Credit
Party that is not a Borrower, such insurance proceeds shall be applied ratably
to all of the Loans owing by each Borrower.
5.5 Compliance with Laws. (a) Each Credit Party shall comply with all
---------------------
federal, state, local, provincial and foreign laws and regulations of the United
States and Canada applicable to it, ERISA and labor matters and Environmental
Laws and Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(b) For each existing Canadian Pension Plan, each Credit Party
shall ensure that such plan retains its registered status under and is
administered in a timely manner in all material respects in accordance with the
applicable pension plan text, funding agreement, the ITA and all other
applicable laws.
(c) For each Canadian Pension Plan hereafter adopted by any
Credit Party which is required to be registered under the ITA or any other
applicable laws, that Credit Party shall use its best efforts to seek and
receive confirmation in writing from the applicable Governmental Authorities to
the effect that such plan is unconditionally registered under the ITA and such
other applicable laws.
(d) For each existing Canadian Pension Plan and Canadian
Benefit Plan hereafter adopted, each Credit Party shall in a timely fashion
perform in all material respects all obligations (including fiduciary, funding,
investment and administration obligations) required to be performed in
connection with such plan and the funding media therefor.
(e) Each Credit Party shall deliver to Agent if requested by
Agent, promptly after the filing thereof by any Credit Party with any applicable
Governmental Authority, copies of each annual and other return, report or
valuation with respect to each Canadian Pension Plan; promptly after receipt
thereof, a copy of any direction, order, notice, ruling or opinion that any
Credit Party may receive from any applicable Governmental Authority with respect
to any Canadian Pension Plan; and notification within 30 days of any increases
having a cost to such Credit Party in excess of C$250,000 per annum, in the
benefits of any existing Canadian Pension Plan or Canadian Benefit Plan, or the
establishment of any new Canadian Pension Plan or Canadian Benefit Plan, or the
commencement of contributions to any such plan to which any Credit Party was not
previously contributing.
5.6 Supplemental Disclosure. From time to time as may be requested by
------------------------
Agent (which request will not be made more frequently than once each year absent
the occurrence and continuance of a Default or an Event of Default), the Credit
Parties shall supplement each Disclosure Schedule hereto, or any representation
herein or in any other Loan Document, with
<PAGE>
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
such Disclosure Schedule or as an exception to such representation or which is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to any such Disclosure Schedule or representation shall be or be
deemed a waiver of any Default or Event of Default resulting from the matters
disclosed therein, except as consented to by Agent and Requisite Lenders in
writing; and (b) no supplement shall be required or permitted as to
representations and warranties that relate solely to the Closing Date.
5.7 Intellectual Property. Each Credit Party will conduct its business
---------------------
and affairs without infringement of or interference with any Intellectual
Property of any other Person in any material respect.
5.8 Environmental Matters. Each Credit Party shall and shall cause each
---------------------
Person within its control to: (a) conduct its operations and keep and maintain
its Real Estate in compliance with all Environmental Laws and Environmental
Permits other than noncompliance which could not reasonably be expected to have
a Material Adverse Effect; (b) implement any and all investigation, remediation,
removal and response actions which are appropriate or necessary to maintain the
value and marketability of the Real Estate or to otherwise comply with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate; (c) notify Agent promptly after such Credit Party becomes aware of any
violation of Environmental Laws or Environmental Permits or any Release on, at,
in, under, above, to, from or about any Real Estate which is reasonably likely
to result in Environmental Liabilities in excess of $100,000; and (d) promptly
forward to Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party in connection with any
such violation or Release or any other matter relating to any Environmental Laws
or Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $100,000, in each case whether or not the
Environmental Protection Agency or any Governmental Authority has taken or
threatened any action in connection with any such violation, Release or other
matter.
5.9 Landlords' Agreements, Mortgagee Agreements and Bailee Letters.
------------------------------------------------------------------
Each Credit Party shall obtain a landlord's agreement, mortgagee agreement or
bailee letter, as applicable, from the lessor of each leased property or
mortgagee of owned property or with respect to any warehouse, processor or
converter facility or other location where Collateral is located, which
agreement or letter shall contain a waiver or subordination of all Liens or
claims that the landlord, mortgagee or bailee may assert against the Collateral
at that location, and shall otherwise be satisfactory in form and substance to
Agent. Each Credit Party shall timely and fully pay and perform its obligations
under all leases and other agreements with respect to each leased location or
public warehouse where any Collateral is or may be located.
5.10 Further Assurances. Each Credit Party executing this Agreement
-------------------
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon request
<PAGE>
of Agent, duly execute and deliver, or cause to be duly executed and delivered,
to Agent such further instruments and do and cause to be done such further acts
as may be necessary or proper in the reasonable opinion of Agent to carry out
more effectively the provisions and purposes of this Agreement or any other Loan
Document.
5.11 Year 2000 Problems. On or before July 1, 1999, each Credit Party
------------------
shall complete and deliver to Agent a Year 2000 Corrective Plan. On or prior to
September 1, 1999, each Credit Party shall complete Year 2000 Corrective
Actions. On or before November 1, 1999, each Credit Party shall complete Year
2000 Implementation Testing. On or before December 1, 1999, each Credit Party
shall eliminate all Year 2000 Problems, except where the failure to correct the
same could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that, without the prior written consent of Agent and
the Requisite Lenders, from and after the date hereof until the Termination
Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or
----------------------------
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) amalgamate or merge with, consolidate with, acquire all or
substantially all of the assets or Stock of, or otherwise combine with or
acquire, any Person, except that any Borrower may merge with another Borrower or
any Subsidiary Guarantor may merge with a Borrower, so long as, in each
instance, a Borrower shall be the survivor of any such merger to which it is a
party.
Notwithstanding the foregoing, any Borrower (or Holdings, so
long as contemporaneously therewith, all assets so acquired are transferred to
one or more Borrowers), may acquire all or substantially all of the assets or
capital Stock of any Person (the "Target") (in each case, a "Permitted
Acquisition") subject to the satisfaction of each of the following conditions:
(i) Except for the Protective Acquisition, Agent
shall receive at least thirty (30) Business Days' prior written notice of such
proposed Permitted Acquisition, which notice shall include a reasonably detailed
description of such proposed Permitted Acquisition;
(ii) such Permitted Acquisition shall involve assets
which are substantially located in the United States and/or Canada and
comprising a business, or those assets of a business, of the type engaged in by
Borrowers as of the Closing Date, and which business would not subject Agent or
any Lender to regulatory or third party approvals in connection with the
exercise of its rights and remedies under this Agreement or any other Loan
Documents other than approvals applicable to the exercise of such rights and
remedies with respect to Borrowers prior to such Permitted Acquisition;
(iii) such Permitted Acquisition shall be consensual
and shall have been approved by the Target's board of directors;
<PAGE>
(iv) no additional Indebtedness, Guaranteed
Indebtedness, contingent obligations or other liabilities shall be incurred,
assumed or otherwise be reflected on a consolidated balance sheet of Borrowers
and Target after giving effect to such Permitted Acquisition, except (A) Loans
made hereunder and (B) ordinary course trade payables, accrued expenses and
unsecured Indebtedness of the Target to the extent no Default or Event of
Default has occurred and is continuing or would result after giving effect to
such Permitted Acquisition;
(v) the sum of all amounts payable in connection with
all Permitted Acquisitions (including all transaction costs and all
Indebtedness, liabilities and contingent obligations incurred or assumed in
connection therewith or otherwise reflected in a consolidated balance sheet of
Borrowers and Target but excluding all amounts payable in connection with the
Protective Acquisition) shall not exceed in the aggregate $15,000,000;
(vi) the Target shall not have incurred an operating
loss for the trailing twelve-month period preceding the date of the Permitted
Acquisition, as determined based upon the Target's financial statements for its
most recently completed fiscal year and its most recent interim financial period
completed within sixty (60) days prior to the date of consummation of such
Permitted Acquisition;
(vii) the business and assets acquired in such
Permitted Acquisition shall be free and clear of all Liens (other than Permitted
Encumbrances);
(viii) at or prior to the closing of any Permitted
Acquisition, Agent will be granted a first priority perfected Lien (subject to
Permitted Encumbrances) in all Collateral acquired pursuant thereto and each
Credit Party hereto and the Target shall have executed such documents and taken
such actions as may be required by Agent in connection therewith;
(ix) concurrently with delivery of the notice
referred to in clause (i) above, Borrowers shall have delivered to Agent, in
form and substance satisfactory to Agent:
(A) a pro forma consolidated balance sheet,
income statement and cash flow statement of Holdings and its
Subsidiaries (the "Acquisition Pro Forma"), based on recent
financial statements, which shall be complete and shall fairly
present in all material respects the assets, liabilities,
financial condition and results of operations of Holdings and
its Subsidiaries in accordance with GAAP consistently applied,
but taking into account such Permitted Acquisition and the
funding of all Loans in connection therewith, and such
Acquisition Pro Forma shall reflect that (x) average daily Net
Borrowing Availability of all Borrowers for the 90-day period
preceding the consummation of such Permitted Acquisition would
have exceeded $6,000,000 on a pro forma basis (giving effect
to such Permitted Acquisition and all Loans funded in
connection therewith as if made on the first day of such
period) and the Acquisition Projections (as hereinafter
defined) shall reflect that such Net Borrowing Availability of
$6,000,000 shall continue for at least 90 days after the
consummation of such Permitted Acquisition, and (y) on a pro
forma basis, no Event of Default has occurred and is
continuing or would result after giving effect to such
Permitted Acquisition and
<PAGE>
Borrowers would have been in compliance with the financial
covenants set forth in Annex G for the four quarter period
reflected in the Compliance Certificate most recently
delivered to Agent pursuant to Annex E prior to the
consummation of such Permitted Acquisition (giving effect to
such Permitted Acquisition and all Loans funded in connection
therewith as if made on the first day of such period);
(B) updated versions of the most recently
delivered Projections covering the one (1) year period
commencing on the date of such Permitted Acquisition and
otherwise prepared in accordance with the Projections (the
"Acquisition Projections") and based upon historical financial
data of a recent date satisfactory to Agent, taking into
account such Permitted Acquisition; and
(C) a certificate of the chief financial
officer of Holdings or such other officer acceptable to Agent
to the effect that: (w) each Borrower (after taking into
consideration all rights of contribution and indemnity such
Borrower has against Holdings and each other Subsidiary of
Holdings) will be Solvent upon the consummation of the
Permitted Acquisition; (x) the Acquisition Pro Forma fairly
presents the financial condition of Holdings and Borrowers (on
a consolidated basis) as of the date thereof after giving
effect to the Permitted Acquisition; (y) the Acquisition
Projections are reasonable estimates of the future financial
performance of Holdings and Borrowers subsequent to the date
thereof based upon the historical performance of Holdings,
Borrowers and the Target and show that Holdings and Borrowers
shall continue to be in compliance with the financial
covenants set forth in Annex G for the one (1) year period
thereafter; and (z) Holdings and Borrowers have completed
their due diligence investigation with respect to the Target
and such Permitted Acquisition, which investigation was
conducted in a manner similar to that which would have been
conducted by a prudent purchaser of a comparable business and
the results of which investigation were delivered to Agent and
Lenders;
(x) on or prior to the date of such Permitted
Acquisition, Agent shall have received, in form and substance satisfactory to
Agent, copies of the acquisition agreement and related agreements and
instruments, and all opinions, certificates, lien search results and other
documents reasonably requested by Agent; and
(xi) at the time of such Permitted Acquisition and
after giving effect thereto, no Default or Event of Default has occurred and is
continuing.
Notwithstanding the foregoing, (A) the Accounts of the Target
shall not be included in Eligible Accounts without the prior written consent of
Agent and Requisite Lenders; (B) in the case of a Permitted Acquisition where
the amount payable by Borrower is $2,000,000 or less, such Borrower shall only
be required to satisfy conditions 6.1(i), (ii), (v) and (xi) above and, in
addition, after giving effect to such Permitted Acquisition, the Borrowers have
an aggregate Net Borrowing Availability of not less than $8,000,000; and (C) in
the case of the Protective Acquisition, Specialty Management Group, Inc shall
only be required to satisfy conditions 6.1(ii), (viii) and (xi) above.
<PAGE>
6.2 Investments; Loans and Advances. Except as otherwise expressly
---------------------------------
permitted by this Section 6, no Credit Party shall make or permit to exist any
investment in, or make, accrue or permit to exist loans or advances of money to,
any Person, through the direct or indirect lending of money, holding of
securities or otherwise, except that (a) Borrowers may hold investments
comprised of notes payable, or stock or other securities issued by Account
Debtors to any Borrower pursuant to negotiated agreements with respect to
settlement of such Account Debtor's Accounts in the ordinary course of business,
so long as the aggregate amount of such Accounts so settled by Borrowers does
not exceed $300,000; (b) each Credit Party may maintain its existing investments
in its Subsidiaries as of the Closing Date; (c) so long as no Default or Event
of Default has occurred and is continuing and the outstanding aggregate amount
of Revolving Credit Advances is not greater than $5,000,000, Borrowers may make
investments up to $5,000,000 in the aggregate, in (i) marketable direct
obligations issued or unconditionally guaranteed by the United States of America
or any agency thereof maturing within one year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Ratings Group or Moody's Investors Service, Inc., (iii)
certificates of deposit, maturing no more than one year from the date of
creation thereof, issued by commercial banks incorporated under the laws of the
United States of America, each having combined capital, surplus and undivided
profits of not less than $300,000,000 and having a senior unsecured rating of
"A" or better by a nationally recognized rating agency (an "A Rated Bank"), (iv)
time deposits, maturing no more than 30 days from the date of creation thereof
with A Rated Banks and (v) mutual funds that invest solely in one or more of the
investments described in clauses (i) through (iv) above, (d) Credit Parties may
make other investments not exceeding $500,000 in the aggregate at any time
outstanding, (e) AEC Funding may make loans or advances of money to the Canadian
Subsidiaries for general operating and working capital purposes, provided that,
the aggregate outstanding amount of any such loans or advances shall not exceed
at any given time the Borrowing Availability for AEC Funding, (f) from and after
the Closing Date, in addition to those joint ventures and partnerships set forth
on Disclosure Schedule (3.8), Borrowers may make additional investments in joint
ventures or partnerships, provided that, no Default or Event of Default then
exists, such joint ventures or partnerships relate to the Borrowers' business as
presently conducted and the amount of such investments shall not exceed
$2,000,000 in the aggregate, or $1,000,000 with respect to any single such
investment; and (g) subject to the financial assistance restrictions under
applicable Canadian federal or provincial corporate laws, any Credit Party that
is not a Borrower may make loans or advances to any other Credit Party in such
amounts as such Credit Party may elect from time to time.
6.3 Indebtedness. (a) No Credit Party shall create, incur, assume or
------------
permit to exist any Indebtedness, except (without duplication) (i) Indebtedness
secured by purchase money security interests and Capital Leases permitted in
clause (c) of Section 6.7, (ii) the Loans and the other Obligations, (iii)
unfunded pension fund and other employee benefit plan obligations and
liabilities to the extent they are permitted to remain unfunded under applicable
law, (iv) existing Indebtedness described in Disclosure Schedule (6.3) and
refinancings thereof or amendments or modifications thereto which do not have
the effect of increasing the principal amount thereof or changing the
amortization thereof (other than to extend the same) and which are otherwise on
terms and conditions no less favorable to any Credit Party, Agent or any Lender,
as determined by Agent, than the terms of the Indebtedness being refinanced,
amended or modified, (v)
<PAGE>
Indebtedness specifically permitted under Section 6.1, and (vi) subject to the
financial assistance restrictions under applicable Canadian federal or
provincial corporate laws, and exclusive of any intercompany indebtedness
outstanding as of the Closing Date, Indebtedness consisting of intercompany
loans and advances made by any Credit Party to any other Credit Party, provided
that (A) each Credit Party shall record all intercompany transactions on its
books and records in a manner satisfactory to Agent; (B) at the time any such
intercompany loan or advance is made by any Credit Party to any other Credit
Party and after giving effect thereto, each such Credit Party shall be Solvent;
(C) no Event of Default would occur and be continuing after giving effect to any
such proposed intercompany loan; (D) in the case of any intercompany
Indebtedness owing to any Credit Party, the Borrower advancing such funds to
another Borrower not a member, if applicable, of such Borrower's Borrower Group
or to a Credit Party (not a Borrower) shall have Net Borrowing Availability
under its separate Borrowing Base of not less than fifteen (15%) percent of such
Borrower's or such Borrower Group's Borrowing Base after giving effect to such
intercompany loan; (E) the aggregate amount of such intercompany Indebtedness
owing by any Borrower to any other Borrower (not a member of such Borrower's
Borrower Group) shall not exceed $5,000,000 at any one time outstanding and the
aggregate amount of such Indebtedness owing by any Credit Party not a Borrower
to any Borrower shall not exceed $250,000; (F) the aggregate balance of all such
intercompany loans owing to any Borrower shall not exceed $10,000,000 at any
time and the aggregate balance of all such intercompany loans owing to all
Credit Parties not a Borrower shall not exceed $1,000,000; and (G) the recipient
of such intercompany loans shall be creditworthy as determined by Agent.
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness, other than (i) the
Obligations, (ii) Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of in accordance
with Section 6.8 and (iii) other Indebtedness not in excess of $250,000.
6.4 Employee Loans and Affiliate Transactions. (a) Except as otherwise
-----------------------------------------
expressly permitted in this Section 6 with respect to Affiliates, no Credit
Party shall enter into or be a party to any transaction with any other Credit
Party or any Affiliate thereof except in the ordinary course of and pursuant to
the reasonable requirements of such Credit Party's business and upon fair and
reasonable terms that are no less favorable to such Credit Party than would be
obtained in a comparable arm's length transaction with a Person not an Affiliate
of such Credit Party. In addition, if any such transaction or series of related
transactions involves payments in excess of $250,000 in the aggregate, the terms
of these transactions must be disclosed in advance to Agent and Lenders. All
such transactions existing as of the date hereof are described on Disclosure
Schedule (6.4(a)).
(b) From and after the date hereof, no Credit Party shall
enter into any lending or borrowing transaction with any employees of any Credit
Party, except loans to their respective employees on an arm's-length basis in
the ordinary course of business consistent with past practices for travel
expenses, relocation costs and similar purposes and stock option financing up to
a maximum of $250,000 to any employee and up to a maximum of $500,000 in the
aggregate at any one time outstanding.
<PAGE>
6.5 Capital Structure and Business. No Credit Party shall (a) make any
------------------------------
changes in any of its business objectives, purposes or operations which could in
any way adversely affect the repayment of the Loans or any of the other
Obligations or could reasonably be expected to have or result in a Material
Adverse Effect, (b) make any change in its capital structure as described on
Disclosure Schedule (3.8), including the issuance of any shares of Stock,
warrants, options or other securities convertible into Stock or any revision of
the terms of its outstanding Stock, except that Holdings may issue any share of
Stock, warrants, options or other securities convertible into Stock, so long as
no Change of Control occurs after giving effect thereto, or (c) amend its
charter or bylaws in a manner which would adversely affect Agent or Lenders or
such Credit Party's duty or ability to repay the Obligations. No Credit Party
shall engage in any business other than the businesses currently engaged in by
it.
6.6 Guaranteed Indebtedness. No Credit Party shall create, incur,
------------------------
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items of payment for deposit to the general account of any
Credit Party, and (b) for Guaranteed Indebtedness incurred for the benefit of
any other Credit Party if the primary obligation is expressly permitted by this
Agreement.
6.7 Liens. No Credit Party shall create, incur, assume or permit to
-----
exist any Lien on or with respect to its Accounts or any of its other properties
or assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7); (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with purchase money Indebtedness with respect to Equipment and
Fixtures acquired by any Credit Party in the ordinary course of business,
involving the incurrence of an aggregate amount of purchase money Indebtedness
and Capital Lease Obligations of not more than $1,000,000 outstanding at any one
time for all such Liens (provided that such Liens attach only to the assets
subject to such purchase money debt and such Indebtedness is incurred within
twenty (20) days following such purchase and does not exceed 100% of the
purchase price of the subject assets). In addition, no Credit Party shall become
a party to any agreement, note, indenture or instrument, or take any other
action, which would prohibit the creation of a Lien on any of its properties or
other assets in favor of Agent, on behalf of itself and Lenders, as additional
collateral for the Obligations, except operating leases, Capital Leases or
Licenses which prohibit Liens upon the assets that are subject thereto.
6.8 Sale of Stock and Assets. (a) No Credit Party shall sell, transfer,
------------------------
convey, assign or otherwise dispose of any of its properties or other assets,
including the capital Stock of any of its Subsidiaries (whether in a public or a
private offering or otherwise) or any of their Accounts, other than (i) the sale
of Inventory in the ordinary course of business, (ii) the sale, transfer,
conveyance or other disposition by a Credit Party of Equipment, Fixtures or Real
Estate that are obsolete or no longer used or useful in such Credit Party's
business and having a value not exceeding $1,000,000 in any single transaction
or $3,000,000 in the aggregate in any Fiscal Year, (iii) other Equipment,
Fixtures or Real Estate having a value not exceeding $1,000,000 in any single
transaction or $3,000,000 in the aggregate in any Fiscal Year, and (iv) the
Switch Gear Division Sale, provided that, Agent receives for application against
the Obligations, all proceeds from such sale including the cash proceeds paid at
the closing thereof, plus all deferred payments
<PAGE>
payable in connection therewith. The Switch Gear Division Sale shall not be
included within the limitations set forth in Sections 6.8(a)(ii) and (iii)
above.
(b) Notwithstanding anything to the contrary contained herein,
so long as no Default or Event of Default exists, any Borrower or any Canadian
Subsidiary may sell all or substantially all of its assets in a non-affiliated,
arms-length transaction, provided that, (i) Borrower Representative provides
Agent with no less than sixty (60) days prior written notice of any such
intended sale setting forth the name and address of the purchaser, the purchase
price and such other information as Agent may request, (ii) the net proceeds to
be received in connection with such sale is not less than the book value of the
assets to be sold and not less than the greater of (A) the Revolving Loan
outstanding to such Borrower or, in the case of any Canadian Subsidiary, to AEC
Funding and (B) the book value of the Eligible Accounts of such Borrower or
Canadian Subsidiary, as the case may be, as reflected in the Borrowing Base
which shall be delivered as of the date of the closing of such sale, and (iii)
all of the net proceeds of such sale shall be remitted to Agent for application
to the Obligations in accordance with Section 1.3 above.
6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA
-----
Affiliate to, cause or permit to occur an event which could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10 Financial Covenants. Borrowers shall not breach or fail to comply
-------------------
with any of the Financial Covenants (the "Financial Covenants") set forth in
Annex G.
6.11 Hazardous Materials. No Credit Party shall cause or permit a
--------------------
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities which could not reasonably be
expected to have a Material Adverse Effect.
6.12 Sale-Leasebacks. No Credit Party shall engage in any
---------------
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.
6.13 Cancellation of Indebtedness. No Credit Party shall cancel any
------------------------------
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's-length basis and in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments. No Credit Party shall make any Restricted
--------------------
Payment, except (a) intercompany loans and advances between Credit Parties to
the extent permitted by Sections 6.2 and 6.3 above, (b) dividends and
distributions by Subsidiaries of Holdings or any Credit Party paid to Holdings
or any Credit Party to the extent permitted by Sections 6.2 and 6.3, (c)
employee loans permitted under Section 6.4(b) above, and (d) regularly scheduled
payments of interest (determined on a pre-default, non-accelerated basis) with
respect to the Indenture Debt;
<PAGE>
provided that (i) no Default or Event of Default shall have occurred and be
continuing or would result after giving effect to any payment pursuant to this
clause (d), and (ii) Borrowers collectively shall have Net Borrowing
Availability of at least fifteen (15%) percent of the Aggregate Borrowing Base
after giving effect to any payment pursuant to this clause (d).
6.15 Change of Corporate Name or Location; Change of Fiscal Year. No
-------------------------------------------------------------
Credit Party shall (a) change its corporate name, or (b) change its chief
executive office, principal place of business, corporate offices or warehouses
or locations at which Collateral is held or stored, or the location of its
records concerning the Collateral, in any case without at least thirty (30) days
prior written notice to Agent and after Agent's written acknowledgment that any
reasonable action requested by Agent in connection therewith, including to
continue the perfection of any Liens in favor of Agent, on behalf of Agent and
Lenders, in any Collateral, has been completed or taken, and provided that any
such new location shall be in the continental United States or for the Canadian
Subsidiaries only, in Canada. Without limiting the foregoing, no Credit Party
shall change its name, identity or corporate structure in any manner which might
make any financing or continuation statement filed in connection herewith
seriously misleading within the meaning of Section 9-402(7) of the Code or any
other then applicable provision of the Code or materially misleading within the
meaning of the PPSA or any other applicable provision of the PPSA, except upon
prior written notice to Agent and Lenders and after Agent's written
acknowledgment that any reasonable action requested by Agent in connection
therewith, including to continue the perfection of any Liens in favor of Agent,
on behalf of Agent and Lenders, in any Collateral, has been completed or taken.
No Credit Party shall change its Fiscal Year.
6.16 No Impairment of Intercompany Transfers. No Credit Party shall
------------------------------------------
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement, the other Loan
Documents and as set forth on Disclosure Schedule 6.16) which could directly or
indirectly restrict, prohibit or require the consent of any Person with respect
to the payment of dividends or distributions or the making or repayment of
intercompany loans by a Subsidiary of any Borrower to any Borrower or between
Borrowers.
6.17 No Speculative Transactions. No Credit Party shall engage in any
----------------------------
transaction involving commodity options, futures contracts or similar
transactions.
6.18 Leases. No Credit Party shall enter into any operating lease for
------
Equipment or Real Estate, if the aggregate of all such operating lease payments
payable in any year for Borrowers and their Subsidiaries on a consolidated basis
would exceed $2,000,000.
6.19 Changes Relating to the Indenture. No Credit Party shall change or
---------------------------------
amend the terms of the Indenture (or any note or agreement in connection
therewith) if the effect of such amendment is to: (a) increase the interest rate
on such Indenture Debt; (b) change the dates upon which payments of principal or
interest are due on such Indenture Debt other than to extend such dates; (c)
change any default or event of default other than to delete or make less
restrictive any default provision therein, or add any covenant with respect to
such Indenture Debt; (d) change the redemption or prepayment provisions of such
Indenture Debt other than to extend the dates therefor or to reduce the premiums
payable in connection therewith; (e) grant any security or collateral to secure
payment of such Indenture Debt; or (f) change or amend any other term if
<PAGE>
such change or amendment would materially increase the obligations of the Credit
Party thereunder or confer additional material rights to the holder of such
Indenture Debt in a manner adverse to any Credit Party, Agent or any Lender.
7. TERM
7.1 Termination. The financing arrangements contemplated hereby shall
-----------
be in effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing Arrangements.
------------------------------------------------------------------
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Credit Parties or the rights of Agent and Lenders
relating to any unpaid portion of the Loans or any other Obligations, due or not
due, liquidated, contingent or unliquidated or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date. Except
as otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon the Credit Parties, and all rights of Agent and each Lender, all as
contained in the Loan Documents, shall not terminate or expire, but rather shall
survive any such termination or cancellation and shall continue in full force
and effect until the Termination Date; provided however, that in all events the
provisions of Section 11, the payment obligations under Sections 1.14 and 1.15,
and the indemnities contained in the Loan Documents shall survive the
Termination Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
-------------------
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Any Borrower (i) fails to make any payment of principal
of, or interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within ten (10) days following Agent's demand for such reimbursement or payment
of expenses.
(b) Any Credit Party fails or neglects to perform, keep or
observe any of the provisions of Sections 1.4, 1.7, 5.4 or 6, or any of the
provisions set forth in Annexes C or G, respectively.
(c) Any Borrower fails or neglects to perform, keep or observe
any of the provisions of Section 4 or any provisions set forth in Annexes E or
F, respectively, and the same shall remain unremedied for three (3) days or
more.
<PAGE>
(d) Any Credit Party fails or neglects to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for twenty (20) days
or more.
(e) A default or breach occurs under any other agreement,
document or instrument to which any Credit Party is a party which is not cured
within any applicable grace period, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness (other than
the Obligations) of any Credit Party (A) if such Indebtedness is not being
contested in accordance with Section 5.2(b), in excess of $500,000 in the
aggregate, or the Equivalent Amount thereof, or (B) if such Indebtedness is
being contested in accordance with Section 5.2(b), in excess of $1,000,000 in
the aggregate, or the Equivalent Amount thereof, or (ii) causes, or permits any
holder of such Indebtedness or a trustee to cause, Indebtedness or a portion
thereof (A) in excess of $500,000 in the aggregate, or the Equivalent Amount
thereof, if such Indebtedness is not being contested in accordance with Section
5.2(b), or (B) in excess of $1,000,000 in the aggregate, or the Equivalent
Amount thereof, if such Indebtedness is being contested in accordance with
Section 5.2(b), to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment, regardless of whether such default is
waived, or such right is exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base
Certificate is untrue or incorrect in any respect (other than inadvertent
immaterial errors not exceeding $1,000 in the aggregate in any Borrowing Base
Certificate, or any representation or warranty herein or in any Loan Document or
in any written statement, report, financial statement or certificate (other than
a Borrowing Base Certificate) made or delivered to Agent or any Lender by any
Credit Party is untrue or incorrect in any material respect as of the date when
made or deemed made.
(g) Assets of any Credit Party with a fair market value of
$250,000, or the Equivalent Amount thereof, or more shall be attached, seized,
levied upon or subjected to a writ or distress warrant, or come within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors of any Credit Party and such condition continues for thirty (30) days
or more.
(h) any involuntary case or proceeding (including the filing
of any notice in respect thereof) is commenced against any Credit Party under
any Insolvency Law, any incorporation law or other applicable law in any
jurisdiction in respect of the: (i) bankruptcy, liquidation, winding-up,
dissolution or suspension of general operations, (ii) composition, rescheduling,
reorganization, arrangement or readjustment of, or other relief from, or stay of
proceedings to enforce, some or all of the debts or obligations, (iii)
appointment of a trustee, interim receiver, receiver, receiver and manager,
liquidator, administrator, custodian, sequestrator, agent or other similar
official for, or for all or a substantial part of the assets, or (iv)
possession, foreclosure, seizure or retention, sale or other disposition of, or
other proceedings to enforce security over, all or a substantial part of the
assets, of any Credit Party, and such case or proceeding shall remain
undismissed or unstayed for sixty (60) days or more or such court shall enter a
decree or order granting the relief sought in such case or proceeding by a court
of competent jurisdiction;
<PAGE>
(i) Any Credit Party (i) files a petition seeking relief under
any Insolvency Law, (ii) consents or fails to contest in a timely and
appropriate manner or consents to the institution of proceedings thereunder or
to the filing of any such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) for such Credit Party or of any substantial part of any such
Credit Party's assets, (iii) makes an assignment for the benefit of creditors,
(iv) takes any corporate action in furtherance of any of the foregoing; or (v)
admits in writing its inability to, or shall be generally unable to, pay its
debts as such debts become due.
(j) A final judgment or judgments for the payment of money in
excess of $500,000, or the Equivalent Amount thereof, in the aggregate at any
time are outstanding against one or more of the Credit Parties and the same are
not, within thirty (30) days after the entry thereof, have been discharged or
execution thereof stayed or bonded pending appeal, or such judgments are not
discharged prior to the expiration of any such stay.
(k) Any material provision of any Loan Document for any reason
ceases to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any Lien created under any Loan Document ceases to be a valid and perfected
first priority security interest or Lien (except as otherwise permitted herein
or therein) in any of the Collateral purported to be covered thereby.
(l) Any Change of Control occurs.
(m) Any event occurs, whether or not insured or insurable, as
a result of which revenue-producing activities cease or are substantially
curtailed at one or more facilities of Borrowers generating more than twenty
(20%) percent of Borrowers' consolidated revenues for the Fiscal Year preceding
such event and such cessation or curtailment continues for more than 20 days.
(n) Any default or breach by any Credit Party occurs and is
continuing (i) under the Indenture or (ii) under any material agreements or
Contracts, which, if terminated, would have a Material Adverse Effect.
8.2 Remedies. (a) If any Default or Event of Default has occurred and
--------
is continuing and Agent or Requisite Lenders shall have determined not to make
any Advances or incur any Letter of Credit Obligations so long as that specific
Default or Event of Default is continuing, Agent may (and at the written request
of the Requisite Lenders shall), without notice, suspend the Revolving Loan
facility with respect to additional Advances and/or the incurrence of additional
Letter of Credit Obligations whereupon any additional Advances and the
incurrence of additional Letter of Credit Obligations shall be made or extended
in Agent's sole discretion (or in the sole discretion of the Requisite Lenders,
if such suspension occurred at their direction) so long as such Default or Event
of Default has occurred and is continuing. If any Default or Event of Default
shall have occurred and be continuing, Agent may (and at the written request
<PAGE>
of Requisite Lenders shall), without notice except as otherwise expressly
provided herein, increase the rate of interest applicable to the Loans and the
Letter of Credit Fees to the Default Rate.
(b) If any Default or Event of Default has occurred and is
continuing, Agent may (and at the written request of the Requisite Lenders
shall), without notice, (i) terminate the Revolving Loan facility with respect
to further Advances or the incurrence of further Letter of Credit Obligations;
(ii) declare all or any portion of the Obligations, including all or any portion
of any Loan to be forthwith due and payable, and require that the Letter of
Credit Obligations be cash collateralized as provided in Annex B, all without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrowers and each other Credit Party; and (iii) exercise
any rights and remedies provided to Agent under the Loan Documents and/or at law
or equity, including all remedies provided under the Code; provided, however,
that upon the occurrence of a Default which would constitute an Event of Default
under Section 8.1(h) or the occurrence of an Event of Default specified in
Sections 8.1(g) or (i), the Revolving Loan facility shall be immediately
terminated and all of the Obligations, including the aggregate Revolving Loan,
shall become immediately due and payable without declaration, notice or demand
by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided for in this
-------------------------
Agreement or by applicable law, each Credit Party waives (including for purposes
of Section 12): (a) presentment, demand and protest and notice of presentment,
dishonor, notice of intent to accelerate, notice of acceleration, protest,
default, nonpayment, maturity, release, compromise, settlement, extension or
renewal of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Agent on which any
Credit Party may in any way be liable, and hereby ratifies and confirms whatever
Agent may do in this regard, (b) all rights to notice and a hearing prior to
Agent's taking possession or control of, or to Agent's replevy, attachment or
levy upon, the Collateral or any bond or security which might be required by any
court prior to allowing Agent to exercise any of its remedies, and (c) the
benefit of all valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations. (a) The Credit Parties signatory
-------------------------------
hereto consent to any Lender's assignment of, and/or sale of participations in,
at any time or times, the Loan Documents, Loans, Letter of Credit Obligations
and any Commitment or of any portion thereof or interest therein, including any
Lender's rights, title, interests, remedies, powers or duties thereunder,
whether evidenced by a writing or not. Any assignment by a Lender shall (i)
require the consent of Agent (which shall not be unreasonably withheld or
delayed) and the execution of an assignment agreement (an "Assignment
Agreement") substantially in the form attached hereto as Exhibit 9.1(a) and
otherwise in form and substance satisfactory to, and acknowledged by, Agent;
(ii) be conditioned on such assignee Lender representing to the assigning Lender
and Agent that it is purchasing the applicable Loans to be assigned to it for
its own account, for investment purposes and not with a view to the distribution
thereof; (iii) if a partial assignment, be in an amount at least equal to
$5,000,000 and, after giving effect to any such partial assignment, the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000; and (iv) include a payment to Agent of an assignment fee of $3,500.
In the case
<PAGE>
of an assignment by a Lender under this Section 9.1, the assignee shall have, to
the extent of such assignment, the same rights, benefits and obligations as it
would if it were a Lender hereunder. The assigning Lender shall be relieved of
its obligations hereunder with respect to its Commitments or assigned portion
thereof from and after the date of such assignment. Each Borrower hereby
acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrowers to the assignee and that the assignee shall be
considered to be a "Lender". In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be limited to such
Lender's Pro Rata Share of the applicable Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of the Obligations, Agent
or any such Lender shall so notify Borrowers and Borrowers shall, upon the
request of Agent or such Lender, execute new Notes in exchange for the Notes, if
any, being assigned. Notwithstanding the foregoing provisions of this Section
9.1(a), any Lender may at any time pledge the Obligations held by it and such
Lender's rights under this Agreement and the other Loan Documents to a Federal
Reserve Bank, and any Lender that is an investment fund may assign the
Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to another investment fund managed by the same investment
advisor; provided, however, that no such pledge to a Federal Reserve Bank shall
release such Lender from such Lender's obligations hereunder or under any other
Loan Document.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrowers hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled repayment of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of Sections 1.12,
1.14, 1.15 and 9.8, each Borrower acknowledges and agrees that a participation
shall give rise to a direct obligation of Borrowers to the participant and the
participant shall be considered to be a "Lender". Except as set forth in the
preceding sentence no Borrower or Credit Party shall have any obligation or duty
to any participant. Neither Agent nor any Lender (other than the Lender selling
a participation) shall have any duty to any participant and may continue to deal
solely with the Lender selling a participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no
Lender shall, as between Borrowers and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist
any Lender permitted to sell assignments or participations under this Section
9.1 as reasonably required to enable the assigning or selling Lender to effect
any such assignment or participation, including the execution and delivery of
any and all agreements, notes and other documents and instruments
<PAGE>
as shall be requested and, if requested by Agent, the preparation of
informational materials for, and the participation of management in meetings
with, potential assignees or participants. Each Credit Party executing this
Agreement shall certify the correctness, completeness and accuracy of all
descriptions of the Credit Parties and their affairs contained in any selling
materials provided by them and all other information provided by them and
included in such materials, except that any Projections delivered by Borrowers
shall only be certified by Borrowers as having been prepared by Borrowers in
compliance with the representations contained in Section 3.4(b).
(e) A Lender may furnish any information concerning Credit
Parties in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants). Each Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.
(f) So long as no Event of Default has occurred and is
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.15(a),
increased costs under Section 1.15(b), or withholding taxes in accordance with
Section 1.14(a).
9.2 Appointment of Agent. GE Capital is hereby appointed to act on
---------------------
behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Neither Agent nor any of its Affiliates nor any of their
respective officers, directors, employees, agents or representatives shall be
liable to any Lender for any action taken or omitted to be taken by it hereunder
or under any other Loan Document, or in connection herewith or therewith, except
for damages caused by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders or
all affected Lenders with respect to any act or action (including failure to
act) in connection with this Agreement or any other Loan Document, then Agent
shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from Requisite Lenders or all
affected Lenders, as the case may be, and Agent shall not incur liability to any
Person by reason of so refraining. Agent shall be fully justified in failing or
refusing to take any action hereunder or under any other Loan Document (a) if
such action would, in the opinion of Agent, be contrary to law or the terms of
this Agreement or any other Loan Document, (b) if such action would, in the
opinion of Agent, expose Agent to Environmental Liabilities or (c) if Agent
shall not first be indemnified to its satisfaction against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. Without limiting the foregoing,
<PAGE>
no Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting hereunder or under any other Loan
Document in accordance with the instructions of Requisite Lenders or all
affected Lenders, as applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates nor
----------------------
any of their respective 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 or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limitation of
the generality of the foregoing, Agent: (a) may treat the payee of any Note as
the holder thereof until Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to Agent; (b) may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 GE Capital and Affiliates. With respect to its Commitments
----------------------------
hereunder, GE Capital shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally engage in
any kind of business with, any Credit Party, any of their Affiliates and any
Person who may do business with or own securities of any Credit Party or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. Each
Lender acknowledges the potential conflict of interest between GE Capital as a
Lender, and GE Capital as Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
------------------------
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender 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
<PAGE>
under this Agreement. Each Lender acknowledges the potential conflict of
interest of each other Lender as a result of Lenders holding disproportionate
interests in the Loans, and expressly consents to, and waives any claim based
upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the extent
---------------
not reimbursed by Credit Parties and without limiting the obligations of Credit
Parties hereunder), ratably according to their respective Pro Rata Shares, 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
Agent in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by Agent in connection therewith;
provided, however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and each other Loan Document, to the extent that Agent is not reimbursed for
such expenses by Credit Parties.
9.7 Successor Agent. Agent may resign at any time by giving not less
----------------
than thirty (30) days' prior written notice thereof to Lenders and Borrower
Representative. Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the resigning Agent's giving notice of resignation, then
the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of
a commercial bank or financial institution if such commercial bank or financial
institution is organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, by the 30th day after the date such notice of resignation was given
by the resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of Agent hereunder
until such time, if any, as the Requisite Lenders appoint a successor Agent as
provided above. Any successor Agent appointed by Requisite Lenders hereunder
shall be subject to the approval of Borrower Representative, such approval not
to be unreasonably withheld or delayed; provided that such approval shall not be
required if a Default or an Event of Default has occurred and is continuing.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall succeed to and become vested with all the rights,
powers, privileges and duties of the resigning Agent. Upon the earlier of the
acceptance of any appointment as Agent hereunder by a successor Agent or the
effective date of the resigning Agent's resignation, the resigning Agent shall
be discharged from its duties and obligations under this Agreement and the other
Loan Documents, except that any indemnity rights or other rights in favor of
such resigning Agent shall continue. After any resigning Agent's resignation
hereunder, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as Agent under
this Agreement and the other Loan Documents.
<PAGE>
9.8 Setoff and Sharing of Payments. In addition to any rights now or
--------------------------------
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
and subject to Section 9.9(f), each Lender is hereby authorized at any time or
from time to time, without notice to any Credit Party or to any other Person,
any such notice being hereby expressly waived to the fullest extent permitted by
law, to offset and to appropriate and to apply any and all balances held by it
at any of its offices for the account of any Borrower or Guarantor (regardless
of whether such balances are then due to such Borrower or Guarantor) and any
other properties or assets any time held or owing by that Lender or that holder
to or for the credit or for the account of any Borrower or Guarantor against and
on account of any of the Obligations which are not paid when due. Any Lender or
holder of any Note exercising a right to offset or otherwise receiving any
payment on account of the Obligations in excess of its Pro Rata Share thereof
shall purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares (other than offset rights exercised by any
Lender with respect to Sections 1.12, 1.14 and 1.15). Each Credit Party that is
a Borrower or Guarantor agrees, that (a) any Lender or holder may exercise its
right to offset with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amount so offset to other
Lenders and holders and (b) any Lender or holders so purchasing a participation
in the Loans made or other Obligations held by other Lenders or holders may
exercise all rights of offset, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such
participation. Notwithstanding the foregoing, if all or any portion of the
offset amount or payment otherwise received is thereafter recovered from the
Lender that has exercised the right of offset, the purchase of participations by
that Lender shall be rescinded and the purchase price restored without interest.
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
-------------------------------------------------------------------
Concert.
- -------
(a) Advances; Payments. (i) Agent shall notify Revolving
-------------------
Lenders, promptly after receipt of a Notice of Revolving Credit Advance and in
any event prior to 1:00 p.m. (New York time) on the date such Notice of
Revolving Advance is received, by telecopy, telephone or other similar form of
transmission. Each Revolving Lender shall make the amount of such Lender's Pro
Rata Share of such Revolving Credit Advance available to Agent in same day funds
by wire transfer to Agent's account as set forth in Annex H not later than 3:00
p.m. (New York time) on the requested funding date, in the case of an Index Rate
Loan or BA Rate Loan, as the case may be. After receipt of such wire transfers
(or, in the Agent's sole discretion, before receipt of such wire transfers),
subject to the terms hereof, Agent shall make the requested Revolving Credit
Advance to the Borrower designated by Borrower Representative in the Notice of
Revolving Credit Advance. All payments by each Revolving Lender shall be made
without setoff, counterclaim or deduction of any kind.
(ii) On the second (2nd) Business Day of each
calendar week or more frequently as aggregate cumulative payments in excess of
$2,000,000 are received with respect to the Loans (each, a "Settlement Date"),
Agent will advise each Lender by telephone, or telecopy
<PAGE>
of the amount of such Lender's Pro Rata Share of principal, interest and Fees
paid for the benefit of Lenders with respect to each applicable Loan. Provided
that such Lender has funded all payments or Advances required to be made by it
and has purchased all participations required to be purchased by it under this
Agreement and the other Loan Documents as of such Settlement Date, Agent will
pay to each Lender such Lender's Pro Rata Share of principal, interest and Fees
paid by Borrowers since the previous Settlement Date for the benefit of that
Lender on the Loans held by it. To the extent that any Lender (a "Non-Funding
Lender") has failed to fund all such payments and Advances or failed to fund the
purchase of all such participations, Agent shall be entitled to set off the
funding short-fall against that Non-Funding Lender's Pro Rata Share of all
payments received from Borrowers. Such payments shall be made by wire transfer
to such Lender's account (as specified by such Lender in Annex H or the
applicable Assignment Agreement) not later than 2:00 p.m. (New York time) on the
next Business Day following each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume
that each Revolving Lender will make its Pro Rata Share of each Revolving Credit
Advance available to Agent on each funding date. If such Pro Rata Share is not,
in fact, paid to Agent by such Revolving Lender when due, Agent will be entitled
to recover such amount on demand from such Revolving Lender without set-off,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower Representative and Borrowers shall immediately repay such amount
to Agent. Nothing in this Section 9.9(b) or elsewhere in this Agreement or the
other Loan Documents shall be deemed to require Agent to advance funds on behalf
of any Revolving Lender or to relieve any Revolving Lender from its obligation
to fulfill its Commitments hereunder or to prejudice any rights that Borrowers
may have against any Revolving Lender as a result of any default by such
Revolving Lender hereunder. To the extent that Agent advances funds to any
Borrower on behalf of any Revolving Lender and is not reimbursed therefor on the
same Business Day as such Advance is made, Agent shall be entitled to retain for
its account all interest accrued on such Advance until reimbursed by the
applicable Revolving Lender.
(c) Return of Payments. (i) If Agent pays an amount to a
Lender under this Agreement in the belief or expectation that a related payment
has been or will be received by Agent from Borrowers and such related payment is
not received by Agent, then Agent will be entitled to recover such amount from
such Lender on demand without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to any Borrower or paid
to any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together with interest at
such rate, if any, as Agent is required to pay to any Borrower or such other
Person, without set-off, counterclaim or deduction of any kind.
<PAGE>
(d) Non-Funding Lenders. The failure of any Non-Funding Lender
-------------------
to make any Revolving Credit Advance or any payment required by it hereunder
shall not relieve any other Revolving Lender (each such other Revolving Lender,
an "Other Lender") of its obligations to make such Advance or purchase such
participation on such date, but neither any Other Lender nor Agent shall be
responsible for the failure of any Non-Funding Lender to make an Advance or to
purchase a participation or make any other payment required hereunder.
Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent rights under or with respect to any Loan
Document or constitute a "Lender" or a "Revolving Lender" (or be included in the
calculation of "Requisite Lenders" hereunder) for any voting or consent rights
under or with respect to any Loan Document.
(e) Dissemination of Information. Agent will use reasonable
-----------------------------
efforts to provide Lenders with any notice of Default or Event of Default
received by Agent from, or delivered by Agent to, any Credit Party, with notice
of any Event of Default of which Agent has actually become aware and with notice
of any action taken by Agent following any Event of Default; provided, however,
that Agent shall not be liable to any Lender for any failure to do so, except to
the extent that such failure is attributable to Agent's gross negligence or
willful misconduct. Lenders acknowledge that Borrowers are required to provide
Financial Statements and Collateral Reports to Lenders in accordance with
Annexes E and F hereto and agree that Agent shall have no duty to provide the
same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the
-------------------
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of set-off) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan
------------------------
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
<PAGE>
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
----------------------------------------------
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2 below. Any letter of interest, commitment letter and/or
fee letter (other than the GE Capital Fee Letter) between any Credit Party and
Agent or any Lender or any of their respective Affiliates, predating this
Agreement and relating to a financing of substantially similar form, purpose or
effect shall be superseded by this Agreement.
11.2 Amendments and Waivers. (a) Except for actions expressly permitted
----------------------
to be taken by Agent, no amendment, modification, termination or waiver of any
provision of this Agreement or any other Loan Document, or any consent to any
departure by any Credit Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by Agent and Borrowers, and by Requisite
Lenders or all affected Lenders, as applicable. Except as set forth in clauses
(b) and (c) below, all such amendments, modifications, terminations or waivers
requiring the consent of any Lenders shall require the written consent of
Requisite Lenders.
(b) No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement which increases the
percentage advance rates set forth in the definition of the Domestic Borrowers
Borrowing Base, or AEC Funding Borrowing Base, or which makes less restrictive
the nondiscretionary criteria for exclusion from Eligible Accounts set forth in
Section 1.6, shall be effective unless the same shall be in writing and signed
by Agent, Requisite Lenders and Borrowers. No amendment, modification,
termination or waiver of or consent with respect to any provision of this
Agreement which waives compliance with the conditions precedent set forth in
Section 2.2 to the making of any Loan or the incurrence of any Letter of Credit
Obligations shall be effective unless the same shall be in writing and signed by
Agent, Requisite Lenders and Borrowers. Notwithstanding anything contained in
this Agreement to the contrary, no waiver or consent with respect to any Default
(if in connection therewith Agent or Requisite Lenders, as the case may be, have
exercised its or their right to suspend the making or incurrence of further
Advances or Letter of Credit Obligations pursuant to Section 8.2(a)) or any
Event of Default shall be effective for purposes of the conditions precedent to
the making of Loans or the incurrence of Letter of Credit Obligations set forth
in Section 2.2 unless the same shall be in writing and signed by Agent,
Requisite Lenders and Borrowers.
(c) No amendment, modification, termination or waiver shall,
unless in writing and signed by Agent and each Lender directly affected thereby,
do any of the following: (i) increase the principal amount of any Lender's
Commitment (which action shall be deemed to directly affect all Lenders); (ii)
reduce the principal of, rate of interest on or Fees payable with respect to any
Loan or Letter of Credit Obligations of any affected Lender; (iii) extend any
scheduled payment date or final maturity date of the principal amount of any
Loan of any affected Lender; (iv) waive, forgive, defer, extend or postpone any
payment of interest or Fees as to any affected Lender; (v) release any Guaranty
or, except as otherwise permitted herein or in the other Loan Documents,
release, or permit any Credit Party to sell or otherwise dispose of, any
Collateral with a value exceeding $5,000,000 in the aggregate (which action
shall be deemed to directly affect all Lenders); (vi) change the percentage of
the Commitments or of the aggregate
<PAGE>
unpaid principal amount of the Loans which shall be required for Lenders or any
of them to take any action hereunder; and (vii) amend or waive this Section 11.2
or the definitions of the term "Requisite Lenders" insofar as such definitions
affect the substance of this Section 11.2. Furthermore, no amendment,
modification, termination or waiver affecting the rights or duties of Agent
under this Agreement or any other Loan Document shall be effective unless in
writing and signed by Agent, in addition to Lenders required hereinabove to take
such action. Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
No amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the holder of that Note.
No notice to or demand on any Credit Party in any case shall entitle such Credit
Party or any other Credit Party to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 11.2 shall be binding upon
each holder of the Notes at the time outstanding and each future holder of the
Notes.
(d) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders,
the consent of Requisite Lenders is obtained, but the consent of other Lenders
whose consent is required is not obtained (any such Lender whose consent is not
obtained as described this clause (i) and in clauses (ii), (iii) and (iv) below
being referred to as a "Non-Consenting Lender"), or
(ii) requiring the consent of Requisite Lenders, the
consent of Lenders holding 51% or more of the aggregate Revolving Loan
Commitments is obtained, but the consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower
Representative's request, Agent or a Person acceptable to Agent shall have the
right with Agent's consent and in Agent's sole discretion (but shall have no
obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent's request, sell and
assign to Agent or such Person, all of the Commitments of such Non-Consenting
Lender for an amount equal to the principal balance of all Loans held by the
Non-Consenting Lender and all accrued interest and Fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.
(e) Upon indefeasible payment in full in cash and performance
of all of the Obligations (other than indemnification Obligations under Section
1.12), termination of the Commitments and a release of all claims against Agent
and Lenders, and so long as no suits, actions, proceedings, or claims are
pending or threatened against any Indemnified Person asserting any damages,
losses or liabilities that are Indemnified Liabilities, Agent shall deliver to
Borrowers termination statements, mortgage releases and other documents
necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations.
<PAGE>
11.3 Fees and Expenses. Borrowers shall reimburse (i) Agent for all
------------------
fees, costs and expenses (including the reasonable fees and expenses of all of
its special counsel, advisors, consultants and auditors) and (ii) Agent (and,
with respect to clauses (c) and (d) below, all Lenders) for all fees, costs and
expenses, including the reasonable fees, costs and expenses of counsel or other
advisors (including environmental and management consultants and appraisers)
incurred in connection with the negotiation and preparation of the Loan
Documents and for advice, assistance, or other representation in connection
with:
(a) the forwarding to Borrowers or any other Person on behalf
of Borrowers by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, consent with
respect to, or termination of, any of the Loan Documents or advice in connection
with the administration of the Loans made pursuant hereto or its rights
hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, any Borrower or any other
Person and whether as a party, witness or otherwise) in any way relating to the
Collateral, any of the Loan Documents or any other agreement to be executed or
delivered in connection therewith or herewith, including any litigation,
contest, dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against any or all of the
Borrowers or any other Person that may be obligated to Agent by virtue of the
Loan Documents; including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(d) any attempt to enforce any remedies of Agent against any
or all of the Credit Parties or any other Person that may be obligated to Agent
or any Lender by virtue of any of the Loan Documents; including any such attempt
to enforce any such remedies in the course of any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(e) any work-out or restructuring of the Loans during the
pendency of one or more Events of Default;
(f) efforts to (i) monitor the Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all attorneys' and other
professional and service providers' fees arising from such services, including
those in connection with any appellate proceedings; and all expenses, costs,
charges and other fees incurred by such counsel and others in any way or respect
arising in connection with or relating to any of the events or
<PAGE>
actions described in this Section 11.3 shall be payable, on demand, by Borrowers
to Agent. Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include: fees, costs and expenses of accountants,
environmental advisors, appraisers, investment bankers, management and other
consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.
11.4 No Waiver. Agent's or any Lender's failure, at any time or times,
---------
to require strict performance by the Credit Parties of any provision of this
Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders, and directed to Borrowers specifying
such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
--------
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which Agent or any Lender may have under any other agreement, including the
other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement
------------
and the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement
-----------------
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.
11.8 Confidentiality. Agent and each Lender agree to use commercially
---------------
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintaining the confidentiality of its own confidential information) to maintain
as confidential all confidential information provided to them by the Credit
Parties and designated as confidential for a period of two (2) years following
receipt thereof, except that Agent and any Lender may disclose such information
(a) to Persons employed or engaged by Agent or such Lender in evaluating,
approving, structuring or administering the Loans and the Commitments; (b) to
any bona fide assignee or
<PAGE>
participant or potential assignee or participant that has agreed to comply with
the covenant contained in this Section 11.8 (and any such bona fide assignee or
participant or potential assignee or participant may disclose such information
to Persons employed or engaged by them as described in clause (a) above); (c) as
required or requested by any Governmental Authority or reasonably believed by
Agent or such Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of Agent's or such
Lender's counsel, required by law; (e) in connection with the exercise of any
right or remedy under the Loan Documents or in connection with any Litigation to
which Agent or such Lender is a party; or (f) which ceases to be confidential
through no fault of Agent or such Lender.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
-------------
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK
COUNTY, CITY OF NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK COUNTY, CITY OF NEW YORK, NEW YORK AND, PROVIDED, FURTHER NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION WHICH SUCH CREDIT PARTY
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY
BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE
ADDRESS SET FORTH IN Annex I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF
OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
<PAGE>
11.10 Notices. Except as otherwise provided herein, whenever it is
-------
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
11.10), (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated on Annex I or to such other address
(or facsimile number) as may be substituted by notice given as herein provided.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower Representative or Agent)
designated on Annex I to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
11.11 Section Titles. The Section titles and Table of Contents
---------------
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
--------------------
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases, etc.. Each Credit Party executing this Agreement
---------------------
agrees that neither it nor its Affiliates will in the future issue any press
releases or other public disclosure using the name of GE Capital or its
affiliates or referring to this Agreement or the other Loan
<PAGE>
Documents without at least two (2) Business Days' prior notice to GE Capital and
without the prior written consent of GE Capital unless (and only to the extent
that) such Credit Party or Affiliate is required to do so under law and then, in
any event, such Credit Party or Affiliate will consult with GE Capital before
issuing such press release or other public disclosure. Each Credit Party
consents to the publication by Agent or any Lender of a tombstone or similar
advertising material relating to the financing transactions contemplated by this
Agreement. Agent or such Lender shall provide a draft of any such tombstone or
similar advertising material to each Credit Party for review and comment prior
to the publication thereof. Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements with Borrowers' consent which shall not be unreasonably
withheld or delayed.
11.15 Reinstatement. This Agreement shall remain in full force and
-------------
effect and continue to be effective should any petition be filed by or against
any Borrower for liquidation or reorganization, should any Borrower become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Borrower's assets, and shall continue to be effective or to be reinstated, as
the case may be, if at any time payment and performance of the Obligations, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each other
-----------------
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have participated
-----------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
12. CROSS-GUARANTY
12.1 Cross-Guaranty. Each Borrower hereby agrees that such Borrower is
--------------
jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agent and Lenders and their respective successors and assigns, the
full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to Agent
and Lenders by each other Borrower. Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection, that its obligations under this Section 12 shall not be
discharged until payment and performance, in full, of the Obligations has
occurred, and that its obligations under this Section 12 shall be absolute and
unconditional, irrespective of, and unaffected by,
<PAGE>
(a) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in, this Agreement, any other Loan Document
or any other agreement, document or instrument to which any Borrower is or may
become a party;
(b) the absence of any action to enforce this Agreement
(including this Section 12) or any other Loan Document or the waiver or consent
by Agent and Lenders with respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to
perfect its Lien against, any security for the Obligations or any action, or the
absence of any action, by Agent and Lenders in respect thereof (including the
release of any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.
12.2 Waivers by Borrowers. Each Borrower expressly waives all rights it
--------------------
may have now or in the future under any statute, or at common law, or at law or
in equity, or otherwise, to compel Agent or Lenders to marshall assets or to
proceed in respect of the Obligations guaranteed hereunder against any other
Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower. It is agreed among each Borrower, Agent and
Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 12 and such waivers, Agent and Lenders would
decline to enter into this Agreement.
12.3 Benefit of Guaranty. Each Borrower agrees that the provisions of
-------------------
this Section 12 are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.
12.4 Subordination of Subrogation, Etc. Notwithstanding anything to the
---------------------------------
contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 12.7, each Borrower hereby expressly and irrevocably
subordinates to payment of the Obligations any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Obligations are indefeasibly paid in full in
cash. Each Borrower acknowledges and agrees that this subordination is intended
to benefit Agent and Lenders and shall not limit or otherwise affect such
Borrower's liability hereunder or the enforceability of this Section 12, and
that Agent, Lenders and their respective successors and assigns are intended
third party beneficiaries of the waivers and agreements set forth in this
Section 12.4.
<PAGE>
12.5 Election of Remedies. If Agent or any Lender may, under applicable
--------------------
law, proceed to realize its benefits under any of the Loan Documents giving
Agent or such Lender a Lien upon any Collateral, whether owned by any Borrower
or by any other Person, either by judicial foreclosure or by non-judicial sale
or enforcement, Agent or any Lender may, at its sole option, determine which of
its remedies or rights it may pursue without affecting any of its rights and
remedies under this Section 12. If, in the exercise of any of its rights and
remedies, Agent or any Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable laws pertaining to "election of
remedies" or the like, each Borrower hereby consents to such action by Agent or
such Lender and waives any claim based upon such action, even if such action by
Agent or such Lender shall result in a full or partial loss of any rights of
subrogation which each Borrower might otherwise have had but for such action by
Agent or such Lender. Any election of remedies which results in the denial or
impairment of the right of Agent or any Lender to seek a deficiency judgment
against any Borrower shall not impair any other Borrower's obligation to pay the
full amount of the Obligations. In the event Agent or any Lender shall bid at
any foreclosure or trustee's sale or at any private sale permitted by law or the
Loan Documents, Agent or such Lender may bid all or less than the amount of the
Obligations and the amount of such bid need not be paid by Agent or such Lender
but shall be credited against the Obligations. The amount of the successful bid
at any such sale, whether Agent, Lender or any other party is the successful
bidder, shall be conclusively deemed to be the fair market value of the
Collateral and the difference between such bid amount and the remaining balance
of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Section 12, notwithstanding that any present
or future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which Agent or any Lender might otherwise be
entitled but for such bidding at any such sale.
12.6 Limitation. Notwithstanding any provision herein contained to the
----------
contrary, each Borrower's liability under this Section 12 (which liability is in
any event in addition to amounts for which such Borrower is primarily liable
under Section 1) shall be limited to an amount not to exceed as of any date of
determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower
under this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and
(b) the amount which could be claimed by Agent and Lenders
from such Borrower under this Section 12 without rendering such claim voidable
or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from each
other Borrower under Section 12.7.
12.7 Contribution with Respect to Guaranty Obligations. (a) To the
----------------------------------------------------
extent that any Borrower shall make a payment under this Section 12 of all or
any of the Obligations (other than Loans made to that Borrower for which it is
primarily liable) (a "Guarantor Payment") which, taking into account all other
Guarantor Payments then previously or concurrently made by any
<PAGE>
other Borrower, exceeds the amount which such Borrower would otherwise have paid
if each Borrower had paid the aggregate Obligations satisfied by such Guarantor
Payment in the same proportion that such Borrower's "Allocable Amount" (as
defined below) (as determined immediately prior to such Guarantor Payment) bore
to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of
any Borrower shall be equal to the maximum amount of the claim which could then
be recovered from such Borrower under this Section 12 without rendering such
claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.
(c) This Section 12.7 is intended only to define the relative
rights of Borrowers and nothing set forth in this Section 12.7 is intended to or
shall impair the obligations of Borrowers, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this Agreement, including Section 12.1. Nothing contained in this
Section 12.7 shall limit the liability of any Borrower to pay the Loans made
directly or indirectly to that Borrower and accrued interest, Fees and expenses
with respect thereto for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of the
Borrower to which such contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other
Credit Parties under this Section 12.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.
12.8 Liability Cumulative. The liability of Borrowers under this
---------------------
Section 12 is in addition to and shall be cumulative with all liabilities of
each Borrower to Agent and Lenders under this Agreement and the other Loan
Documents to which such Borrower is a party or in respect of any Obligations or
obligation of the other Borrower, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
AEC FUNDING CORP.
ACTION CONTRACT SERVICES, INC.
BROOKFIELD CORP.
C.A. TURNER CONSTRUCTION COMPANY
C.A. TURNER MAINTENANCE, INC.
CHEMPOWER, INC.
ECO SYSTEMS, INC.
GLOBAL POWER COMPANY
INDUSTRA, INC.
INDUSTRA SERVICE CORP.
SEPARATION AND RECOVERY SYSTEMS, INC.
SOUTHWICK CORP.
SPECIALTY MANAGEMENT GROUP, INC.
THE TURNER GROUP, INC.
UNITED ECO SYSTEMS, INC.
By: /s/ David L. Norris
-------------------------------------
Title: Vice President Of Each
----------------------------------
CONTROLLED POWER LIMITED PARTNERSHIP
By: Southwick Corp., its general partner
By: /s/ David L. Norris
-------------------------------------
Title: Vice President
----------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By: /s/ Charles D. Chiodo
-------------------------------------
Title: Duly Authorized Signatory
----------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
The following Persons are signatories to this Agreement in
their capacity as set forth below and not as Borrowers.
AMERICAN ECO CORPORATION, as a Credit Party
and as Borrower Representative
By: /s/ David L. Norris
-------------------------------------
Title: Vice President
----------------------------------
CAMBRIDGE CONSTRUCTION SERVICE CORP., as
a Credit Party
H.E. CO. SERVICES, INC., as a Credit Party
INDUSTRA SERVICE CORPORATION, as a Credit
Party
INDUSTRA THERMAL SERVICE CORP., as a Credit
Party
INDUSTRA THERMAL SERVICE CORPORATION, as a
Credit Party
LAKE CHARLES CONSTRUCTION CORPORATION, as a
Credit Party
MM INDUSTRA LIMITED, as a Credit Party
NUS, INC., as a Credit Party
SEPARATION AND RECOVERY SYSTEMS CALIFORNIA,
as a Credit Party
By: /s/ David L. Norris
-------------------------------------
Title: Vice President Of Each
----------------------------------
<PAGE>
SCHEDULE A
BORROWERS
---------
1. AEC FUNDING CORP., a Delaware corporation
2. ACTION CONTRACT SERVICES, INC., a Delaware corporation
3. BROOKFIELD CORP., an Ohio corporation
4. C.A. TURNER MAINTENANCE, INC., a Texas corporation
5. C.A. TURNER CONSTRUCTION COMPANY, a Delaware corporation
6. CHEMPOWER, INC., an Ohio corporation
7. CONTROLLED POWER LIMITED PARTNERSHIP, an Illinois limited partnership
8. ECO SYSTEMS, INC., a Delaware corporation
9. GLOBAL POWER COMPANY, an Ohio corporation
10. INDUSTRA, INC., a Washington corporation
11. INDUSTRA SERVICE CORP., a Washington corporation
12. SEPARATION AND RECOVERY SYSTEMS, INC., a Nevada corporation
13. SOUTHWICK CORP., an Ohio corporation
14. SPECIALTY MANAGEMENT GROUP, INC., a Texas corporation
15. THE TURNER GROUP, INC., a Delaware corporation
16. UNITED ECO SYSTEMS, INC., a Delaware corporation
Exhibit 10.1.2
Annex A (Recitals)
--------
to
CREDIT AGREEMENT
----------------
DEFINITIONS
-----------
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the
following respective meanings and all references to Sections,,
Exhibits, Schedules or Annexes in the following definitions shall
refer to Sections, Exhibits, Schedules or Annexes of or to the
Agreement:
"Account Debtor" shall mean any Person who may become
--------------
obligated to any Credit Party under, with respect to, or on
account of, an Account.
"Accounting Changes" has the meaning ascribed thereto
------------------
in Annex G.
-------
"Accounts" shall mean collectively the Canadian
--------
Accounts and US Accounts.
"Acquisition Pro Forma" shall have the meaning assigned
---------------------
to it in Section 6.1(ix)(A).
"Acquisition Projections" shall have the meaning
-----------------------
assigned to it in Section 6.1(ix)(B).
"Advance" shall mean any Revolving Credit Advance.
-------
"AEC Funding" shall mean AEC Funding Corp., a Delaware
-----------
corporation.
"AEC Funding Borrowing Base" shall mean for AEC Funding
--------------------------
only, as of any date of determination by Agent, from time to
time, an amount equal to the sum, expressed in Canadian Dollars
(except as otherwise provided for in the Agreement) at such time
of:
(a) up to eighty-five percent (85%) of the book value
of Eligible Accounts (other than Eligible Incomplete Cost Plus
Contract Accounts) owned by the Canadian Subsidiaries, less any
Reserves established by Agent at such time; and
(b) up to fifty percent (50%) of the book value of the
Eligible Incomplete Cost Plus Contract Accounts owned by the
Canadian Subsidiaries, less any Reserves established by Agent at
such time.
"Affected Lender" shall have the meaning assigned to it
---------------
in Section 1.15(c).
"Affiliate" shall mean, with respect to any Person, (a)
---------
each Person that, directly or indirectly, owns or controls,
whether beneficially, or as a trustee, guardian or other
fiduciary, ten percent (10%) or more of the Stock having ordinary
voting power in the election of directors of such Person, (b)
each Person that controls, is controlled by or is under common
control with such Person, (c) each of such Person's officers,
directors, joint venturers and partners and (d) in the case of
any Credit Party, the immediate family members, spouses and
lineal descendants of individuals who are Affiliates of any
Credit Party. For the purposes of this definition, "control" of
-------
a Person shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by
contract or otherwise; provided, however, that the term
-------- -------
"Affiliate" shall specifically exclude Agent and each Lender.
---------
"Agent" shall mean GE Capital or its successor
-----
appointed pursuant to Section 9.7.
-----------
"Aggregate Borrowing Base" shall mean, as of any date
------------------------
of determination, an amount equal to the sum of the Domestic
Borrowers Borrowing Base and the US Dollar Amount of the AEC
Funding Borrowing Base.
"Agreement" shall mean the Credit Agreement by and
---------
among Borrowers, the other Credit Parties named therein, GE
Capital, as Agent and Lender and the other Lenders signatory from
time to time to the Agreement.
"Appendices" shall have the meaning assigned to it in
----------
the recitals to the Agreement.
"Applicable BA Rate Margin" shall mean the per annum
-------------------------
interest rate from time to time in effect and payable in addition
to the BA Rate applicable to the Revolving Loan, as determined by
reference to Section 1.5(a).
--------------
"Applicable L/C Margin" shall mean the per annum fee,
---------------------
from time to time in effect, payable with respect to outstanding
Letter of Credit Obligations as determined by reference to
Section 1.5(a).
--------------
"Applicable Margins" means collectively the Applicable
------------------
L/C Margin, the Applicable Unused Line Fee Margin, the Applicable
BA Rate Margin and the Applicable Revolver Index Margin.
"Applicable Percentage" shall have the meaning assigned
---------------------
to it in Section 1.8(c).
"Applicable Revolver Index Margin" shall mean the per
--------------------------------
annum interest rate margin from time to time in effect and
payable in addition to the Index Rate applicable to the Revolving
Loan, as determined by reference to Section 1.5(a) of the
--------------
Agreement.
"Applicable Unused Line Fee Margin" shall mean the per
---------------------------------
annum fee, from time to time in effect, payable in respect to
Borrowers' non-use of committed funds pursuant to Section 1.8(b),
--------------
which fee is determined by reference to Section 1.5(a).
--------------
"Assignment Agreement" shall have the meaning assigned
--------------------
to it in Section 9.1(a).
--------------
"Bankruptcy Code" shall mean the provisions of Title 11
---------------
of the United States Code, 11 U.S.C. Sections 101 et. seq.
--- ---
"BA Rate" shall mean the rate per annum determined by
-------
Agent by reference to the average rate quoted on the Reuters
Monitor Screen (Page CDOR, or such other Page as may replace such
Page on such Screen for the purpose of displaying Canadian
interbank bid rates for Canadian dollar bankers' acceptances)
applicable to Canadian dollar bankers' acceptances with a term of
30 days as of 10:00 a.m. (Toronto time) one Business Day before
the Closing Date in respect of the period from and including the
Closing Date to the last day of the month in which the Closing
Date occurs, and, thereafter, one Business Day before the first
day of each month in respect of that month. If for any reason
the Reuters Monitor Screen rates are unavailable, BA Rate means
the rate of interest determined by Agent which is equal to the
arithmetic mean (rounded upwards to the nearest basis point) of
the rates quoted by The Bank of Nova Scotia, Royal Bank of Canada
and Canadian Imperial Bank of Commerce in respect of Canadian
Dollar bankers' acceptances with a term comparable to such BA
Period as of 10:00 a.m. (Toronto time) one Business Day before
the Closing Date in respect of the period from and including the
Closing Date to the last day of the month in which the Closing
Date occurs, and, thereafter, one Business Day before the first
day of each month in respect of that month. For greater
certainty, no adjustment shall be made to account for the
difference between the number of days in a year on which the
rates referred to in this definition are based and the number of
days in a year on the basis of which interest is calculated in
the Agreement.
"BA Rate Loans" shall mean a Loan or portion thereof
-------------
bearing interest by reference to the BA Rate.
"Borrower" and "Borrowers" shall have the respective
-------- ---------
meanings assigned thereto in the recitals to the Agreement.
"Borrower Accounts" shall have the meaning assigned to
-----------------
it in Annex C.
-------
"Borrower Groups" shall mean, individually and
---------------
collectively, the Turner Group; the United Eco Group; the
Industra Service Group and the Chempower Group.
"Borrower Representative" shall mean Holdings in its
-----------------------
capacity as Borrower Representative pursuant to the provisions of
Section 1.1(b).
--------------
"Borrowing Availability" shall have the meaning
----------------------
assigned to it in Section 1.1(a)(i).
-----------------
"Borrowing Base" shall mean, as the context may
--------------
require, each of the Domestic Borrowers Borrowing Base, the AEC
Funding Borrowing Base or any or all of them.
"Borrowing Base Certificate" shall mean a certificate
--------------------------
to be executed and delivered from time to time by each Borrower
Group, AEC Funding and Specialty, respectively, in the form
attached to the Agreement as Exhibit 4.1(b).
--------------
"Business Day" shall mean any day that is not a
------------
Saturday, a Sunday or a day on which banks are required or
permitted to be closed in the State of New York.
"Canadian Accounts" shall mean all "accounts," as such
-----------------
term is defined in the PPSA, now owned or hereafter acquired by
any Credit Party and, in any event, including (a) all accounts
receivable, other receivables, book debts, claims and other forms
of obligations (other than forms of obligations evidenced by
chattel paper, securities or Instruments) now owned or hereafter
received or acquired by or belonging or owing to any Credit
Party, whether arising out of goods sold or services rendered by
it or from any other transaction (including any such obligations
which may be characterized as an account or contract right under
the PPSA), (b) all of each Credit Party's rights in, to and under
all purchase orders or receipts now owned or hereafter acquired
by it for goods or services, (c) all of each Credit Party's
rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned,
reclaimed or repossessed goods), (d) all monies due or to become
due to any Credit Party, under all purchase orders and contracts
for the sale of goods or the performance of services or both by
such Credit Party or in connection with any other transaction
(whether or not yet earned by performance on the part of such
Credit Party) now or hereafter in existence, including the right
to receive the proceeds of said purchase orders and contracts,
and (e) all collateral security and guarantees of any kind, now
or hereafter in existence, given by any Person with respect to
any of the foregoing.
"Canadian Benefit Plans" shall mean all material
----------------------
employee benefit plans of any nature of kind whatsoever that are
not Canadian Pension Plans and are maintained or contributed to
by any Credit Party having employees in Canada.
"Canadian Collateral Documents" shall mean each
-----------------------------
Security Agreement of even date herewith entered into between
Agent, on behalf of itself and Lenders, and each of the Canadian
Subsidiaries, Holdings, Nucon and Energy, respectively.
"Canadian Collection Account" shall mean that certain
---------------------------
account of Agent, account number 101527 in the name of Agent at
Royal Bank of Canada in Toronto, Ontario or such other account as
may be specified in writing by Agent as the "Canadian Collection
Account".
"Canadian Dollars" or "C$" shall mean the lawful
---------------- --
currency of Canada.
"Canadian Pension Plans" shall mean each plan which is
----------------------
considered to be a pension plan for the purposes of any
applicable pension benefits standards statute and/or regulation
in Canada established, maintained or contributed to by any Credit
Party for its employees or former employees.
"Canadian Subsidiaries" shall mean, individually and
---------------------
collectively, MM Industra Limited, a Nova Scotia corporation;
Industra Service Corporation, a British Columbia corporation; and
Industra Thermal Service Corporation, a British Columbia
corporation.
"Capital Expenditures" shall mean, with respect to any
--------------------
Person, all expenditures (by the expenditure of cash or the
incurrence of Indebtedness) by such Person during any measuring
period for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under
GAAP.
"Capital Lease" shall mean, with respect to any Person,
-------------
any lease of any property (whether real, personal or mixed) by
such Person as lessee that, in accordance with GAAP, would be
required to be classified and accounted for as a capital lease on
a balance sheet of such Person.
"Capital Lease Obligation" shall mean, with respect to
------------------------
any Capital Lease of any Person, the amount of the obligation of
the lessee thereunder that, in accordance with GAAP, would appear
on a balance sheet of such lessee in respect of such Capital
Lease.
"Cash Collateral Account" has the meaning assigned to
-----------------------
it in Annex B.
-------
"Cash Equivalents" has the meaning assigned to it in
----------------
Annex B.
-------
"Cash Management Systems" shall have the meaning
-----------------------
assigned to it in Section 1.7.
-----------
"Change of Control" means any of the following: (a)
-----------------
any person or group of persons (within the meaning of the
Securities Exchange Act of 1934), shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange
Act of 1934,) of twenty percent (20%) or more of the issued and
outstanding shares of capital Stock of Holdings having the right
to vote for the election of directors of Holdings under ordinary
circumstances; (b) during any period of twelve consecutive
calendar months, individuals who at the beginning of such period
constituted the board of directors of Holdings (together with any
new directors whose election by the board of directors of
Holdings or whose nomination for election by the Stockholders of
Holdings was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose elections or nomination for
election was previously so approved) cease for any reason other
than death or disability to constitute a majority of the
directors then in office, (c) except as expressly permitted
hereunder, Holdings shall cease to directly or indirectly own and
control all of the economic and voting rights associated with all
of the outstanding capital Stock of any of its Subsidiaries or
(d) except as expressly permitted hereunder, any Borrower shall
cease to directly or indirectly own and control all of the
economic and voting rights associated with all of the outstanding
capital Stock of any of its Subsidiaries or (e) the occurrence of
a "Change of Control" as said quoted term is defined in the
Indenture.
"Charges" shall mean all federal, state, county, city,
-------
municipal, local, foreign or other governmental taxes (including
taxes owed to the PBGC at the time due and payable), levies,
assessments, charges, liens, claims or encumbrances upon or
relating to (a) the Collateral, (b) the Obligations, (c) the
employees, payroll, income or gross receipts of any Credit Party,
(d) any Credit Party's ownership or use of any properties or
other assets, or (e) any other aspect of any Credit Party's
business.
"Chattel Paper" shall mean any "chattel paper," as such
-------------
term is defined in the Code, now owned or hereafter acquired by
any Credit Party, wherever located.
"Chempower Group" shall mean collectively, Chempower,
---------------
Inc., an Ohio corporation; Global Power Company, an Ohio
corporation; Brookfield Corporation, an Ohio corporation;
Southwick Corporation, an Ohio corporation; and Controlled Power
Limited Partnership, an Illinois limited partnership.
"Closing Date" shall mean May 7, 1999.
------------
"Closing Checklist" shall mean the schedule, including
-----------------
all appendices, exhibits or schedules thereto, listing certain
documents and information to be delivered in connection with the
Agreement, the other Loan Documents and the transactions
contemplated thereunder, substantially in the form attached
hereto as Annex D.
-------
"Code" shall mean the Uniform Commercial Code as the
----
same may, from time to time, be enacted and in effect in the
State of New York; provided, however, in the event that, by
-------- -------
reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect
to, Agent's or any Lender's security interest in any Collateral
is governed by the Uniform Commercial Code as enacted and in
effect in a jurisdiction other than the State of New York, the
term "Code" shall mean the Uniform Commercial Code as enacted and
in effect in such other jurisdiction solely for purposes of the
provisions hereof relating to such attachment, perfection,
priority or remedies and for purposes of definitions related to
such provisions.
"Collateral" shall mean the property covered by the
----------
Security Agreement and the other Collateral Documents, and any
other property, tangible or intangible, now existing or hereafter
acquired, that may at any time be or become subject to a security
interest or Lien in favor of Agent, on behalf of itself and
Lenders, to secure the Obligations.
"Collateral Documents" shall mean the Security
--------------------
Agreement, the Canadian Collateral Documents, the Guaranties and
all similar agreements entered into guaranteeing payment of, or
granting a Lien upon property as security for payment of, the
Obligations.
"Collateral Reports" shall mean the reports with
------------------
respect to the Collateral referred to in Annex F.
-------
"Collection Account" shall mean the Canadian Collection
------------------
Account or the US Collection Account or both of them.
"Commitment Termination Date" shall mean the earliest
---------------------------
of (a) the Stated Expiry Date, (b) the date of termination of
Lenders' obligations to make Advances and/or incur Letter of
Credit Obligations or permit existing Loans to remain outstanding
pursuant to Section 8.2(b), and (c) the date of indefeasible
--------------
prepayment in full by Borrowers of the Loans and the cancellation
and return (or stand-by guarantee) of all Letters of Credit or
the cash collateralization of all Letter of Credit Obligations
pursuant to Annex B, and the permanent reduction of the Revolving
-------
Loan Commitment to zero dollars ($0).
"Commitments" shall mean (a) as to any Lender, the
-----------
aggregate of such Lender's Revolving Loan Commitment or in the
most recent Assignment Agreement executed by such Lender and (b)
as to all Lenders, the aggregate of all Lenders' Revolving Loan
Commitments, which aggregate commitment shall be Thirty Million
US Dollars ($30,000,000) on the Closing Date, as to each of
clauses (a) and (b), as such Commitments may be reduced or
adjusted from time to time in accordance with the Agreement.
"Compliance Certificate" shall have the meaning
----------------------
assigned to it in Annex E.
-------
"Concentration Accounts" shall have the meaning
----------------------
assigned to it in Annex C.
-------
"Consultants" shall mean Industra Engineers &
-----------
Consultants, Inc., a British Columbia corporation.
"Contracts" shall mean all "contracts," as such term is
---------
defined in the Code, now owned or hereafter acquired by any
Credit Party, in any event, including all contracts,
undertakings, or agreements (other than rights evidenced by
Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or
interest, including any agreement relating to the terms of
payment or the terms of performance of any Account.
"Copyrights" shall mean all of the following now owned
----------
or hereafter adopted or acquired by any Credit Party: (a) all
copyrights and General Intangibles of like nature (whether
registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including
all registrations, recordings and applications in the United
States Copyright Office or in any similar office or agency of the
United States, any state or territory thereof, or any other
country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
"Credit Parties" shall mean each Borrower and the
--------------
Guarantors.
"Current Assets" shall mean, with respect to any
--------------
Person, all current assets of such Person as of any date of
determination calculated in accordance with GAAP, but excluding
cash, cash equivalents and debts due from Affiliates.
"Current Liabilities" shall mean, with respect to any
-------------------
Person, all liabilities which should, in accordance with GAAP, be
classified as current liabilities, and in any event shall include
all Indebtedness payable on demand or within one year from any
date of determination without any option on the part of the
obligor to extend or renew beyond such year, all accruals for
federal or other taxes based on or measured by income and payable
within such year, and the current portion of long-term debt
required to be paid within one year, but excluding, in the case
of Borrowers, the aggregate outstanding principal balances of the
Revolving Loan.
"Default" shall mean any event which, with the passage
-------
of time or notice or both, would, unless cured or waived, become
an Event of Default.
"Default Rate" shall have the meaning assigned to it in
------------
Section 1.5(d).
--------------
"Disbursement Accounts" shall have the meaning assigned
---------------------
to it on Annex C.
-------
"Disclosure Schedules" shall mean the Schedules
--------------------
prepared by Borrowers and denominated as Disclosure Schedules
herein and as Schedules in the Index to the Agreement.
"Documents" shall mean any "documents," as such term is
---------
defined in the Code, now owned or hereafter acquired by any
Credit Party, wherever located.
"Dollars" or "US Dollars" or "$" shall mean lawful
------- ---------- -
currency of the United States of America.
"Domestic Borrowers" shall mean, individually and
------------------
collectively, the Borrower Groups, Specialty and SRS.
"Domestic Borrowers Borrowing Base" shall mean for each
---------------------------------
respective Borrower Group (determined, as to each such Borrower
Group, on a consolidated basis), SRS and Specialty, as of any
date of determination by Agent, from time to time, an amount
equal to the sum at such time of:
(a) up to eighty-five percent (85%) of the book value
of each such respective Domestic Borrower's Eligible Accounts
(other than Eligible Incomplete Cost Plus Contract Accounts),
less any Reserves established by Agent at such time; and
(b) up to fifty percent (50%) of the book value of
each such respective Domestic Borrower's Eligible Incomplete Cost
Plus Contract Accounts less any Reserves established by Agent at
such time.
"EBITDA" shall mean, with respect to any Person for any
------
fiscal period, without duplication, an amount equal to (a)
consolidated net income of such Person for such period, minus (b)
-----
the sum of (i) income tax credits, (ii) interest income, (iii)
gain from extraordinary items for such period, (iv) any aggregate
net gain (but not any aggregate net loss) during such period
arising from the sale, exchange or other disposition of capital
assets by such Person (including any fixed assets, whether
tangible or intangible, all inventory sold in conjunction with
the disposition of fixed assets and all securities), and (v) any
other non-cash gains which have been added in determining
consolidated net income, in each case to the extent included in
the calculation of consolidated net income of such Person for
such period in accordance with GAAP, but without duplication,
plus (c) the sum of (i) any provision for income taxes, (ii)
Interest Expense, (iii) loss from extraordinary items for such
period, (iv) the amount of non-cash charges (including
depreciation and amortization) for such period, (v) amortized
debt discount for such period, and (vi) the amount of any
deduction to consolidated net income as the result of any grant
to any members of the management of such Person of any Stock, in
each case to the extent included in the calculation of
consolidated net income of such Person for such period in
accordance with GAAP, but without duplication. For purposes of
this definition, the following items shall be excluded in
determining consolidated net income of a Person: (1) the income
(or deficit) of any other Person accrued prior to the date it
became a Subsidiary of, or was merged or consolidated into, such
Person or any of such Person's Subsidiaries; (2) the income (or
deficit) of any other Person (other than a Subsidiary) in which
such Person has an ownership interest, except to the extent any
such income has actually been received by such Person in the form
of cash dividends or distributions; (3) the undistributed
earnings of any Subsidiary of such Person to the extent that the
declaration or payment of dividends or similar distributions by
such Subsidiary is not at the time permitted by the terms of any
contractual obligation or requirement of law applicable to such
Subsidiary; (4) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was
made out of income accrued during such period; (5) any write-up
of any asset; (6) any net gain from the collection of the
proceeds of life insurance policies; (7) any net gain arising
from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of such Person, (8) in the case
of a successor to such Person by consolidation or merger or as a
transferee of its assets, any earnings of such successor prior to
such consolidation, merger or transfer of assets, and (9) any
deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such
Subsidiary over the cost to such Person of the investment in such
Subsidiary.
"Eligible Accounts" shall have the meaning assigned to
-----------------
it in Section 1.6.
-----------
"Eligible Incomplete Cost Plus Contract Accounts" shall
-----------------------------------------------
mean all Accounts that arise under a Contract for a specific
project, (a) which Contract provides for periodic billing for
time and materials, (b) which specific project is not yet
complete, and (c) which Accounts, notwithstanding the criteria
set forth in Section 1.6(b) of the Agreement, Agent, in its
reasonable credit judgment, determines to be an Eligible Account
under Section 1.6 of the Agreement.
"Energy" shall mean Canadian Energy Service Limited, a
------
British Columbia corporation.
"Energy Guaranty" shall mean the guaranty of even date
---------------
herewith executed by Energy in favor of Agent and Lenders.
"Environmental Laws" shall mean all applicable federal,
------------------
state, local and foreign laws, statutes, ordinances, codes,
rules, standards, orders-in-council and regulations, now or
hereafter in effect, and any applicable judicial or
administrative interpretation thereof, including any applicable
judicial or administrative order, consent decree, order or
judgment, imposing liability or standards of conduct for or
relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient
air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation).
Environmental Laws include the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 (42 U.S.C.
Sections 9601 et seq.) ("CERCLA"); the Hazardous Materials
------ ------
Transportation Authorization Act of 1994 (49 U.S.C. Section 5101
et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act
------
(7 U.S.C. Sections 136 et seq.); the Solid Waste Disposal Act (42
------
U.S.C. Sections 6901 et seq.); the Toxic Substance Control Act
------
(15 U.S.C. Sections 2601 et seq.); the Clean Air Act (42 U.S.C.
------
Sections 7401 et seq.); the Federal Water Pollution Control Act
------
(33 U.S.C. Sections 1251 et seq.); the Occupational Safety and
------
Health Act (29 U.S.C. Sections 651 et seq.); and the Safe
------
Drinking Water Act (42 U.S.C. Sections 300(f) et seq.), and any
------
and all regulations promulgated thereunder, and all analogous
state, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes.
"Environmental Liabilities" shall mean, with respect to
-------------------------
any Person, all liabilities, obligations, responsibilities,
response, remedial and removal costs, investigation and
feasibility study costs, capital costs, operation and maintenance
costs, losses, damages, punitive damages, property damages,
natural resource damages, consequential damages, treble damages,
costs and expenses (including all fees, disbursements and
expenses of counsel, experts and consultants), fines, penalties,
sanctions and interest incurred as a result of or related to any
claim, suit, action, investigation, proceeding or demand by any
Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute or common
law, including any arising under or related to any Environmental
Laws, Environmental Permits, or in connection with any Release or
threatened Release or presence of a Hazardous Material whether
on, at, in, under, from or about or in the vicinity of any real
or personal property.
"Environmental Permits" shall mean all permits,
---------------------
licenses, authorizations, certificates, approvals or
registrations required by any Governmental Authority under any
Environmental Laws.
"Equipment" shall mean all "equipment," as such term is
---------
defined in the Code, now owned or hereafter acquired by any
Credit Party, wherever located and, in any event, including all
such Credit Party's machinery and equipment, including processing
equipment, conveyors, machine tools, data processing and computer
equipment with software and peripheral equipment, and all
engineering, processing and manufacturing equipment, office
machinery, furniture, materials handling equipment, tools,
attachments, accessories, automotive equipment, trailers, trucks,
forklifts, molds, dies, stamps, motor vehicles, rolling stock and
other equipment of every kind and nature, fixtures and fixtures
not forming a part of real property, together with all additions
and accessions thereto, replacements therefor, all parts
therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and
rights with respect thereto, and all products and proceeds
thereof and condemnation awards and insurance proceeds with
respect thereto.
"Equivalent Amount" shall mean, on any date of
-----------------
determination, with respect to obligations or valuations
denominated in one currency (the "first currency"), the amount of
another currency (the "second currency") which would result from
the conversion of the relevant amount of the first currency into
the second currency at the 12:00 noon rate quoted on the Reuters
Monitors Screen (Page BOFC or such other Page as may replace such
Page for the purpose of displaying such exchange rates) on such
date or, if such date is not a Business Day, on the Business Day
immediately preceding such date of determination, or at such
other rate as may have been agreed in writing between Borrower
Representative and Agent.
"ERISA" shall mean the Employee Retirement Income
-----
Security Act of 1974 (or any successor legislation thereto), as
amended from time to time, and any regulations promulgated
thereunder.
"ERISA Affiliate" shall mean, with respect to any
---------------
Credit Party, any trade or business (whether or not incorporated)
which, together with such Credit Party, are treated as a single
employer within the meaning of Sections 414(b), (c), (m) or (o)
of the IRC.
"ERISA Event" shall mean, with respect to any Credit
-----------
Party or any ERISA Affiliate, (a) any event described in Section
4043(c) of ERISA with respect to a Title IV Plan; (b) the
withdrawal of any Credit Party or ERISA Affiliate from a Title IV
Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer, as defined in Section 4001(a)(2)
of ERISA; (c) the complete or partial withdrawal of any Credit
Party or any ERISA Affiliate from any Multiemployer Plan; (d) the
filing of a notice of intent to terminate a Title IV Plan or the
treatment of a plan amendment as a termination under Section 4041
of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any
Credit Party or ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Title IV Plan unless
such failure is cured within 30 days; (g) any other event or
condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Title IV Plan or
Multiemployer Plan or for the imposition of liability under
Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under
Section 4241 of ERISA; or (i) the loss of a Qualified Plan's
qualification or tax exempt status; or (j) the termination of a
Plan described in Section 4064 of ERISA.
"ESOP" shall mean a Plan which is intended to satisfy
----
the requirements of Section 4975(e)(7) of the IRC.
"Event of Default" shall have the meaning assigned to
----------------
it in Section 8.1.
-----------
"Fair Labor Standards Act" shall mean the Fair Labor
------------------------
Standards Act, 29 U.S.C. Section 201 et seq.
------
"Federal Funds Rate" shall mean, for any day, a
------------------
floating rate equal to the weighted average of the rates on
overnight Federal funds transactions among members of the Federal
Reserve System, as determined by Agent.
"Federal Reserve Board" means the Board of Governors of
---------------------
the Federal Reserve System, or any successor thereto.
"Fees" shall mean any and all fees payable to Agent or
----
any Lender pursuant to the Agreement or any of the other Loan
Documents.
"Financial Covenants" means the financial covenants set
-------------------
forth in Annex G.
-------
"Financial Statements" shall mean the consolidated and
--------------------
consolidating income statements, statements of cash flows and
balance sheets of Borrowers delivered in accordance with Section
-------
3.4 of the Agreement and Annex E to the Agreement.
--- -------
"Fiscal Month" shall mean any of the monthly accounting
------------
periods of Borrowers.
"Fiscal Quarter" shall mean any of the quarterly
--------------
accounting periods of Borrowers, ending on February 28, May 31,
August 31 and November 30 of each year.
"Fiscal Year" shall mean any of the annual accounting
-----------
periods of Borrowers ending on November 30 of each year.
"Fixtures" shall mean any "fixtures" as such term is
--------
defined in the Code, now owned or hereafter acquired by any
Credit Party.
"Funded Debt" shall mean, with respect to any Person,
-----------
without duplication, all Indebtedness for borrowed money
evidenced by notes, bonds, debentures, or similar evidences of
Indebtedness and which by its terms matures more than one year
from, or is directly or indirectly renewable or extendible at
such Person's option under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over
a period of more than one year from the date of creation thereof,
and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term
debt extendible beyond one year at the option of the debtor, and
also including, in the case of Borrowers, the Obligations and,
without duplication, Guaranteed Indebtedness consisting of
guaranties of Funded Debt of other Persons.
"GAAP" shall mean generally accepted accounting
----
principles in Canada consistently applied, as such term is
further defined in Annex G to the Agreement.
-------
"GE Capital" shall mean General Electric Capital
----------
Corporation, a New York corporation.
"GE Capital Fee Letter" shall mean that certain letter,
---------------------
dated as of May 7, 1999, between GE Capital and Borrowers with
respect to certain Fees to be paid from time to time by Borrowers
to GE Capital.
"General Intangibles" shall mean any "general
-------------------
intangibles," as such term is defined in the Code, now owned or
hereafter acquired by any Credit Party, and, in any event,
including all right, title and interest which such Credit Party
may now or hereafter have in or under any Contract, all customer
lists, Licenses, Copyrights, Trademarks, Patents, and all
applications therefor and reissues, extensions or renewals
thereof, rights in Intellectual Property, interests in
partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs,
knowledge, know-how, software, data bases, data, skill,
expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any
Trademark or Trademark License), all rights and claims in or
under insurance policies (including insurance for fire, damage,
loss and casualty, whether covering personal property, real
property, tangible rights or intangible rights, all liability,
life, key man and business interruption insurance, and all
unearned premiums), uncertificated securities, choses in action,
deposit, checking and other bank accounts, rights to receive tax
refunds and other payments, rights of indemnification, all books
and records, correspondence, credit files, invoices and other
papers, including without limitation all tapes, cards, computer
runs and other papers and documents in the possession or under
the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.
"Governmental Authority" shall mean any nation or
----------------------
government, any state, province, or other political subdivision
thereof, and any agency, department or other entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person,
-----------------------
any obligation of such Person guaranteeing any indebtedness,
lease, dividend, or other obligation ("primary obligations") of
any other Person (the "primary obligor") in any manner, including
any obligation or arrangement of such Person (a) to purchase or
repurchase any such primary obligation, (b) to advance or supply
funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor,
(c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such
primary obligation, or (d) to indemnify the owner of such primary
obligation against loss in respect thereof. The amount of any
Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which
such Guaranteed Indebtedness is made and (y) the maximum amount
for which such Person may be liable pursuant to the terms of the
instrument embodying such Guaranteed Indebtedness; or, if not
stated or determinable, the maximum reasonably anticipated
liability (assuming full performance) in respect thereof.
"Guaranties" shall mean, collectively, the Holdings
----------
Guaranty, each Subsidiary Guaranty, the Nucon Guaranty, the
Energy Guaranty, each guarantee of each Canadian Subsidiary and
any other guaranty executed by any Guarantor in favor of Agent
and Lenders in respect of the Obligations.
"Guarantors" shall mean Holdings, the Canadian
----------
Subsidiaries, the Subsidiary Guarantors, Nucon, Energy and each
other Person, if any, which executes a guarantee or other similar
agreement in favor of Agent and Lenders in connection with the
transactions contemplated by the Agreement and the other Loan
Documents.
"Hazardous Material" shall mean any substance, material
------------------
or waste which is regulated by or forms the basis of liability
now or hereafter under, any Environmental Laws, including any
material or substance which is (a) defined as a "solid waste,"
"hazardous waste," "hazardous material," "hazardous substance,"
"dangerous good", "extremely hazardous waste," "restricted
hazardous waste," "pollutant," "contaminant," "hazardous
constituent," "special waste," "toxic substance" or other similar
term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Holdings" shall mean American Eco Corporation, an
--------
Ontario corporation.
"Holdings Guaranty" shall mean the guaranty of even
-----------------
date herewith executed by Holdings in favor of Agent and Lenders.
"Indebtedness" of any Person shall mean without
------------
duplication (a) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property payment for
which is deferred six (6) months or more, but excluding
obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless
being contested in good faith, (b) all reimbursement and other
obligations with respect to letters of credit, bankers'
acceptances and surety bonds, whether or not matured, (c) all
obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect
to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations and the present
value (discounted at the Index Rate as in effect on the Closing
Date) of future rental payments under all synthetic leases, (f)
all obligations of such Person under commodity purchase or option
agreements or other commodity price hedging arrangements, in each
case whether contingent or matured, (g) all obligations of such
Person under any foreign exchange contract, currency swap
agreement, interest rate swap, cap or collar agreement or other
similar agreement or arrangement designed to alter the risks of
that Person arising from fluctuations in currency values or
interest rates, in each case whether contingent or matured, (h)
all Indebtedness referred to 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 in property or
other assets (including accounts and contract rights) owned by
such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, and (i) the
Obligations.
"Indemnified Liabilities" shall have the meaning
-----------------------
assigned to it in Section 1.12.
------------
"Indemnified Person" shall have the meaning assigned to
------------------
in Section 1.12.
------------
"Indenture" shall mean that certain Indenture dated as
---------
of May 21, 1998 by and among Holdings, the guarantors listed on
the signature page thereto and State Street Bank and Trust
Company, as trustee.
"Indenture Debt" shall mean the Indebtedness of any
--------------
Credit Party under the Indenture whether evidenced by the
Original Notes (as defined in the Indenture) or otherwise.
"Index Rate" shall mean the latest rate for 30-day
----------
dealer placed commercial paper (which for purposes hereof shall
mean high grade unsecured notes sold through dealers by major
corporations in multiples of $1,000) which normally is published
in the "Money Rates" section of The Wall Street Journal (or if
-----------------------
such rate ceases to be so published, as quoted from such other
generally available and recognizable source as Lender may
select). The Index Rate shall be determined based upon the Index
Rate as in effect each day and each change in any interest rate
provided for in the Agreement based upon the Index Rate shall
take effect at the time of such change in the Index Rate.
"Index Rate Loan" shall mean a Loan or portion thereof
---------------
bearing interest by reference to the Index Rate.
"Industra Service Group" shall mean, collectively,
----------------------
Industra, Inc., a Washington corporation; and Industra Service
Corp., a Washington corporation.
"Insolvency Laws" shall mean any of the Bankruptcy and
---------------
Insolvency Act (Canada), the Companies' Creditors Arrangement Act
(Canada), and Title 11 of the United States Code, each as now and
hereafter in effect, any successors to such statutes and any
other applicable insolvency or other similar law of any
jurisdiction permitting a debtor to obtain a stay or a compromise
of the claims of its creditors against it.
"Instruments" shall mean any "instrument," as such term
-----------
is defined in the Code, now owned or hereafter acquired by any
Person, wherever located, and, in any event, including all
certificated securities, all certificates of deposit, and all
notes and other, without limitation, evidences of indebtedness,
other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean any and all
---------------------
Licenses, Patents, Copyrights, Trademarks,and the good will
associated with such Trademarks.
"Interest Coverage Ratio" shall mean, with respect to
-----------------------
any Person for any period, the ratio of EBITDA to Interest
Expense.
"Interest Expense" shall mean, with respect to any
----------------
Person for any fiscal period, interest expense (whether cash or
non-cash) of such Person determined in accordance with GAAP for
the relevant period ended on such date, including, in any event,
interest expense with respect to any Funded Debt of such Person
and interest expense for the relevant period that has been
capitalized on the balance sheet of such Person.
"Interest Payment Date" means the first Business Day of
---------------------
each month to occur while such Loan is outstanding, and provided
--------
that, in addition to the foregoing, each of (a) the date upon
----
which all of the Commitments have been terminated and the Loans
have been paid in full and (b) the Commitment Termination Date
shall be deemed to be an "Interest Payment Date" with respect to
any interest which is then accrued under the Agreement.
"Inventory" shall mean any "inventory," as such term is
---------
defined in the Code, now or hereafter owned or acquired by any
Credit Party, wherever located, and in any event including
inventory, merchandise, goods and other personal property which
are held by or on behalf of any Credit Party for sale or lease or
are furnished or are to be furnished under a contract of service,
or which constitute raw materials, work in process or materials
used or consumed or to be used or consumed in such Credit Party's
business or in the processing, production, packaging, promotion,
delivery or shipping of the same, including other supplies.
"Investment Property" shall mean all "investment
-------------------
property" as such term is defined in Section 9-115 of the Code in
those jurisdictions in which such definition has been adopted now
owned or hereafter acquired by any Credit Party, wherever
located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited
liability companies, partnership interests, treasuries,
certificates of deposit, and mutual fund shares; (ii) all
securities entitlements of any Credit Party, including the rights
of any Credit Party to any securities account and the financial
assets held by a securities intermediary in such securities
account and any free credit balance or other money owing by any
securities intermediary with respect to that account; (iii) all
securities accounts held by any Credit Party; (iv) all commodity
contracts held by any Credit Party; and (v) all commodity
accounts held by any Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as
---
amended, and all regulations promulgated thereunder.
"IRS" shall mean the Internal Revenue Service.
---
"ITA" shall mean the Income Tax Act (Canada), as
---
amended, and all regulations promulgated thereunder.
""L/C Issuer" shall have the meaning assigned to such
-----------
term in Annex B.
-------
"L/C Sublimit" shall have the meaning assigned to such
------------
term in Annex B.
-------
"Lease Expenses" shall mean, with respect to any Person
--------------
for any fiscal period, the aggregate rental obligations of such
Person determined in accordance with GAAP which are payable in
respect of such period under leases of real and/or personal
property (net of income from subleases thereof, but including
taxes, insurance, maintenance and similar expenses which the
lessee is obligated to pay under the terms of such leases),
whether or not such obligations are reflected as liabilities or
commitments on a consolidated balance sheet of such Person or in
the notes thereto, excluding, however, any such obligations under
Capital Leases.
"Lenders" shall mean GE Capital, the other Lenders
-------
named on the signature page of the Agreement, and, if any such
Lender shall decide to assign all or any portion of the
Obligations, such term shall include any assignee of such Lender.
"Letter of Credit Fee" has the meaning ascribed thereto
--------------------
in Annex B.
-------
"Letter of Credit Obligations" shall mean all
----------------------------
outstanding obligations incurred by Agent and Lenders at the
request of Borrower Representative, whether direct or indirect,
contingent or otherwise, due or not due, in connection with the
issuance of a reimbursement agreement or guaranty by Agent or
purchase of a participation as set forth in Annex B with respect
-------
to any Letter of Credit. The amount of such Letter of Credit
Obligations shall equal the maximum amount which may be payable
by Agent or Lenders thereupon or pursuant thereto.
"Letters of Credit" shall mean commercial or standby
-----------------
letters of credit issued for the account of any Borrower by any
L/C Issuer, and bankers' acceptances issued by any Borrower, for
which Agent and Lenders have incurred Letter of Credit
Obligations.
"License" shall mean any license of rights or interests
-------
now held or hereafter acquired by any Credit Party.
"Lien" shall mean any mortgage or deed of trust,
----
pledge, hypothecation, assignment, deposit arrangement, lien,
charge, claim, security interest, easement or encumbrance, or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing,
and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law
of any jurisdiction).
"Litigation" shall have the meaning assigned to it in
----------
Section 3.13.
------------
"Loan Account" shall have the meaning assigned to it in
------------
Section 1.11.
------------
"Loan Documents" shall mean the Agreement, the Notes,
--------------
the Collateral Documents and all other agreements, instruments,
documents and certificates identified in the Closing Checklist
executed and delivered to, or in favor of, Agent and/or Lenders
and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, and all other written matter
whether heretofore, now or hereafter executed by or on behalf of
any Credit Party, or any employee of any Credit Party, and
delivered to Agent or any Lender in connection with the Agreement
or the transactions contemplated thereby. Any reference in the
Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all
amendments, restatements, supplements or other modifications
thereto, and shall refer to the Agreement or such Loan Document
as the same may be in effect at any and all times such reference
becomes operative.
"Loans" shall mean the Revolving Loan.
-----
"Lock Boxes" shall have the meaning assigned to it in
----------
Annex C.
-------
"Margin Stock" shall have the meaning assigned to it in
------------
Section 3.10.
------------
"Material Adverse Effect" shall mean a material adverse
-----------------------
effect on (a) the business, assets, operations, prospects or
financial or other condition of the Credit Parties considered as
a whole, (b) any Borrower's ability to pay any of the Loans or
any of the other Obligations in accordance with the terms of the
Agreement, (c) the Collateral or Agent's Liens, on behalf of
itself and Lenders, on the Collateral or the priority of such
Liens, (d) any other Credit Party's ability to pay any of the
Obligations in accordance with any Loan Documents to which it is
a party, or (e) Agent's or any Lender's rights and remedies under
the Agreement and the other Loan Documents. Without limiting the
foregoing, any event or occurrence adverse to one or more Credit
Parties which results or could reasonably be expected to result
in costs and/or liabilities and/or loss of revenues, individually
or in the aggregate, to any Credit Party in any 30-day period in
excess of the lesser of $3,000,000 and twenty percent 20% of
Borrowing Availability as of any date of determination shall be
deemed to have had Material Adverse Effect.
"Maximum Amount" shall mean, as of any date of
--------------
determination, an amount equal to the Revolving Loan Commitment
of all Lenders as of that date.
"Maximum Lawful Rate" shall have the meaning assigned
-------------------
to it in Section 1.5(e).
--------------
"Multiemployer Plan" shall mean a "multiemployer plan"
------------------
as defined in Section 4001(a)(3) of ERISA, and to which any
Credit Party or ERISA Affiliate is making, is obligated to make,
has made or been obligated to make, contributions on behalf of
participants who are or were employed by any of them.
"Net Borrowing Availability" shall mean as of any date
--------------------------
of determination (a) as to all Borrowers, the lesser of (i) the
Maximum Amount and (ii) the Aggregate Borrowing Base, in each
such case, less the sum of Aggregate Revolving Loans then
outstanding, or (b) as to an individual Borrower, the lesser of
(i) the Maximum Amount less the sum of the Revolving Loan
----
outstanding to all other Borrowers and (ii) that Borrower's
separate Borrowing Base, less the sum of the Revolving Loan
----
outstanding to that Borrower. The US Dollar Amount of the
Revolving Loan outstanding to AEC Funding shall be used for the
purposes of calculating Net Borrowing Availability.
"Net Worth" shall mean, with respect to any Person as
---------
of any date of determination, the book value of the assets of
such Person, minus the sum of (a) reserves applicable thereto,
-----
and (b) all of such Person's liabilities on a consolidated basis
(including accrued and deferred income taxes), all as determined
in accordance with GAAP.
"Non-Consenting Lender" shall have the meaning assigned
---------------------
to it in Section 11.2(d).
---------------
"Non-Funding Lender" shall have the meaning assigned to
------------------
it in Section 9.9(a)(ii).
------------------
"Notes" shall mean, collectively, the Revolving Notes.
-----
"Notice of Revolving Credit Advance" shall have the
----------------------------------
meaning assigned to it in Section 1.1(a).
--------------
"Nucon" shall mean Nucon, Ltd. an Alberta corporation.
-----
"Nucon Guaranty" shall mean the guaranty executed by
--------------
Nucon in favor of Agent and Lenders in respect of Holdings'
Obligations arising under or in connection with the Holdings
Guaranty.
"Obligations" shall mean all loans, advances, debts,
-----------
liabilities and obligations, for the performance of covenants,
tasks or duties or for payment of monetary amounts (whether or
not such performance is then required or contingent, or such
amounts are liquidated or determinable) owing by any Credit Party
to Agent or any Lender, and all covenants and duties regarding
such amounts, of any kind or nature, present or future, whether
or not evidenced by any note, agreement or other instrument,
arising under the Agreement or any of the other Loan Documents.
This term includes all principal, interest (including all
interest which accrues after the commencement of any case or
proceeding by or against any Credit Party in bankruptcy, whether
or not allowed in such proceeding), Fees, Charges, expenses,
attorneys' fees and any other sum chargeable to any Credit Party
under the Agreement or any of the other Loan Documents.
"Patents" shall mean all of the following in which any
-------
Credit Party now holds or hereafter acquires any interest: (a)
all letters patent of the United States or any other country, all
industrial designs and design patents of Canada or any other
country, all registrations and recordings of the foregoing, and
all applications for industrial designs and design patents of
Canada and all applications for letters patent of the United
States or any other country, including registrations, recordings
and applications in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any
State, or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty
----
Corporation or any successor thereto.
"Pension Plan" shall mean a Plan described in Section
------------ -------
3(2) of ERISA.
----
"Permitted Acquisition" shall have the meaning assigned
---------------------
to it in Section 6.1.
-----------
"Permitted Encumbrances" shall mean the following
----------------------
encumbrances: (a) Liens for taxes or assessments or other
governmental Charges not yet due and payable, or which are being
contested in accordance with Section 5.2(b), (b) pledges or
deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under
ERISA); (c) pledges or deposits of money securing bids, tenders,
contracts (other than contracts for the payment of money) or
leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected
workers', mechanics' or similar liens arising in the ordinary
course of business, so long as such Liens attach only to
Equipment, Fixtures and/or Real Estate; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens
arising in the ordinary course of business and securing
liabilities in an outstanding aggregate amount not in excess of
$1,000,000 at any time, so long as such Liens attach only to
Inventory; (f) deposits securing, or in lieu of, surety, appeal
or customs bonds in proceedings to which any Credit Party is a
party; (g) any attachment or judgment lien not constituting an
Event of Default under Section 8.1(j); (h) zoning restrictions,
--------------
easements, licenses, or other restrictions on the use of any Real
Estate or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such Real Estate; (i)
presently existing or hereinafter created Liens in favor of
Agent, on behalf of Lenders; (j) Liens expressly permitted under
clauses (b) and (c) of Section 6.7 of the Agreement; and (k) to
----------- --- -----------
the extent not included in clauses (a), (d) or (e) above, Prior
Claims that are unregistered and that secure amounts that are not
yet due and payable.
"Person" shall mean any individual, sole
------
proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or
government (whether federal, provincial, state, county, city,
municipal, local, foreign, or otherwise, including any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean, at any time, an employee benefit
----
plan, as defined in Section 3(3) of ERISA, which any Credit Party
or ERISA Affiliate maintains, contributes to or has an obligation
to contribute to on behalf of participants who are or were
employed by any Credit Party.
"PPSA" shall mean the Personal Property Security Act
----
(Ontario) and the Regulations thereunder, as from time to time in
effect, provided, however, if attachment, perfection or priority
of Agent's or Lenders' security interests in any Collateral are
governed by the personal property security laws of any
jurisdiction in Canada, other than Ontario, PPSA shall mean those
personal property security laws in such other jurisdiction for
the purposes of the provisions hereof relating to such
attachment, perfection or priority and for the definitions
related to such provisions.
"Prior Claims" shall mean all Liens created by
------------
applicable Canadian law (in contrast with Liens voluntarily
granted) which rank or are capable of ranking prior to or pari
passu with Agent's and Lenders' security interests (or the
applicable equivalent thereof) against all or part of the
Collateral, including for amounts owing for wages, employee
deductions, goods and services taxes, sales taxes, employer
health taxes, municipal taxes, workers' compensation, pension
fund obligations and overdue rents.
"Proceeds" shall mean "proceeds," as such term is
--------
defined in the Code and, in any event, shall include (a) any and
all proceeds of any insurance, indemnity, warranty or guaranty
payable to any Credit Party from time to time with respect to any
of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time
to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any Person acting
under color of governmental authority), (c) any claim of any
Credit Party against third parties (i) for past, present or
future infringement of any Patent or Patent License, or (ii) for
past, present or future infringement or dilution of any
Copyright, Copyright License, Trademark or Trademark License, or
for injury to the goodwill associated with any Trademark or
Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute
concerning any of the Collateral, (e) dividends, interest and
distributions with respect to Investment Property, and (f) any
and all other amounts from time to time paid or payable under or
in connection with any of the Collateral, upon disposition or
otherwise.
"Projections" means Holdings' forecasted consolidated
-----------
and consolidating: (a) balance sheets; (b) profit and loss
statements; and (c) cash flow statements, all prepared on a
Subsidiary by Subsidiary or division by division basis, if
applicable, and otherwise consistent with the historical
Financial Statements of Holdings together with appropriate
supporting details and a statement of underlying assumptions.
"Pro Rata Share" shall mean with respect to all matters
--------------
relating to any Lender (a) with respect to the Revolving Loan,
the percentage obtained by dividing (i) the Revolving Loan
Commitment by (ii) the aggregate Revolving Loan Commitments, and
(b) with respect to all Loans on and after the Commitment
Termination Date, the percentage obtained by dividing (i) the
aggregate outstanding principal balance of the Loans held by that
Lender, by (ii) the outstanding principal balance of the Loans
held by all Lenders.
"Proposed Change" shall have the meaning assigned to it
---------------
in Section 11.2(d).
---------------
"Protective Acquisition" shall mean the acquisition by
----------------------
Specialty Management Group, Inc. of all of the outstanding
capital Stock of Protective Sealing, Inc., a Texas corporation,
for up to 740,000 shares of capital Stock of Holdings.
"Qualified Plan" shall mean a Plan which is intended to
--------------
be tax-qualified under Section 401(a) of the IRC.
"Real Estate" shall have the meaning assigned to it in
-----------
Section 3.6.
-----------
"Records" shall mean all of the following now owned or
-------
hereafter acquired by any Credit Party: all present and future
books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other
shipping evidence, statements, correspondence, memoranda, credit
files and other data, property and general intangibles to the
extent relating to the Collateral or any account debtor, together
with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on
which the foregoing are stored (including any rights of any
Credit Party with respect to the foregoing maintained with or by
any other Person).
"Release" shall mean any release, threatened release,
-------
spill, emission, leaking, pumping, pouring, emitting, emptying,
escape, injection, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Material in the
indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water,
ground water or property.
"Requisite Lenders" shall mean (a) Lenders having more
-----------------
than sixty-six and two-thirds percent (66 2/3%) of the
Commitments of all Lenders, or (b) if the Commitments have been
terminated, more than sixty-six and two-thirds percent (66 2/3%)
of the aggregate outstanding amount of all Loans.
"Reserves" shall mean, with respect to the Borrowing
--------
Base of any Borrower (a) reserves established pursuant to
Sections 1.1.(a), 1.6, 5.2(b) and 5.4(c), and (b) such other
----------------------------------------
reserves against Eligible Accounts or Borrowing Availability of
any Borrower which Agent may, in its reasonable credit judgment,
establish from time to time. Without limiting the generality of
the foregoing, reserves established to ensure the payment of all
Prior Claims, accrued Interest Expenses or Indebtedness shall be
deemed to be a reasonable exercise of Agent's credit judgment.
"Restricted Payment" shall mean with respect to any
------------------
Credit Party (a) the declaration or payment of any dividend or
the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of
such Credit Party's Stock; (b) any payment on account of the
purchase, redemption, defeasance, sinking fund or other
retirement of such Credit Party's Stock or any other payment or
distribution made in respect thereof, either directly or
indirectly; (d) any payment made to redeem, purchase, repurchase
or retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire Stock of such Credit
Party now or hereafter outstanding; (e) any payment of a claim
for the rescission of the purchase or sale of, or for material
damages arising from the purchase or sale of, any shares of such
Credit Party's Stock or of a claim for reimbursement,
indemnification or contribution arising out of or related to any
such claim for damages or rescission; (f) any payment, loan,
contribution, or other transfer of funds or other property to any
Stockholder of such Credit Party other than payment of
compensation in the ordinary course to Stockholders who are
employees of such Credit Party; and (g) any payment of management
fees (or other fees of a similar nature) by such Credit Party to
any Stockholder of such Credit Party or their Affiliates; except
------
that, so long as no Default or Event of Default has occurred and
----
is continuing, any Borrower or Borrower Group may (i) make loans
or advances to Holdings, provided that, the proceeds of such
-------- ----
loans or advances are used by Holdings to make the regularly
scheduled payment of interest (on a pre-default, non-accelerated
basis) in respect of the Indenture Debt, and Borrowers
collectively shall have Net Borrowing Availability of at least
fifteen (15%) percent of the Aggregate Borrowing Base after
giving effect to any payment pursuant to this clause (g)(i) and
(ii) pay Holdings a management fee (or other fees of a similar
nature) in an aggregate amount not to exceed $6,500,000 per
annum.
"Retiree Welfare Plan" shall mean, at any time, a
--------------------
Welfare Plan that provides for continuing coverage or benefits
for any participant or any beneficiary of a participant after
such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the
IRC and at the sole expense of the participant or the beneficiary
of the participant.
"Revolving Credit Advance" shall have the meaning
------------------------
assigned to it in Section 1.1(a)(i).
-----------------
"Revolving Lenders" shall mean, as of any date of
-----------------
determination, Lenders having a Revolving Loan Commitment.
"Revolving Loan" shall mean, at any time, the sum of
--------------
(i) the aggregate amount of Revolving Credit Advances outstanding
to any Borrower or to all Borrowers plus (ii) the aggregate
----
Letter of Credit Obligations incurred on behalf of any Borrower
or all Borrowers. Unless the context otherwise requires,
references to the outstanding principal balance of the Revolving
Loan shall include the outstanding balance of Letter of Credit
Obligations.
"Revolving Loan Commitment" shall mean (a) as to any
-------------------------
Lender, the aggregate commitment of such Lender to make Revolving
Credit Advances and/or incur Letter of Credit Obligations as set
forth on Annex J to the Agreement or in the most recent
-------
Assignment Agreement executed by such Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make
Revolving Credit Advances and/or incur Letter of Credit
Obligations, which aggregate commitment shall be Thirty Million
US Dollars ($30,000,000) on the Closing Date, as such amount may
be adjusted, if at all, from time to time in accordance with the
Agreement.
"Revolving Note" shall have the meaning assigned to it
--------------
in Section 1.1(a)(ii).
------------------
"Security Agreement" shall mean the Security Agreement
------------------
of even date herewith entered into among Agent, on behalf of
itself and Lenders, and each Credit Party that is a signatory
thereto.
"Settlement Date" shall have the meaning assigned to it
---------------
in Section 9.9(a)(ii).
------------------
"Solvent" shall mean (a) with respect to any Person
-------
that is subject to Insolvency Laws of the United States of
America, on a particular date, that on such date (i) the fair
value of the property of such Person is greater than the total
amount of liabilities, including contingent liabilities, of such
Person; (ii) the present fair salable value of the assets of such
Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become
absolute and matured; (iii) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay as such debts and liabilities
mature; and (iv) such Person is not engaged in a business or
transaction, and is not about to engage in a business or
transaction, for which such Person's property would constitute an
unreasonably small capital; and (b) with respect to any Person
that is subject to Insolvency Laws of Canada, that on a
particular date 1. the property of such Person is sufficient, if
disposed of at a fairly conducted sale under legal process, to
enable payment of all of its obligations, due and accruing due,
(ii) the property of such Person is, at a fair valuation, greater
than the total amount of liabilities, including contingent
liabilities, of such Person; (iii) such Person has not ceased
paying its current obligations in the ordinary course of business
as they generally become due; and (iv) such Person is not for any
reason unable to meet its obligations as they generally become
due. The amount of contingent liabilities (such as litigation,
guarantees and pension plan liabilities) at any time shall be
computed as the amount which, in light of all the facts and
circumstances existing at the time, represents the amount which
can be reasonably be expected to become an actual or matured
liability. With respect to any Credit Party, for the purposes of
this definition only, the total amount of liabilities shall
exclude any intercompany liabilities due and owing to any Credit
Party.
"Specialty" shall mean Specialty Management Group,
---------
Inc., a Texas corporation.
"SRS" shall mean Separation and Recovery Systems, Inc.,
---
a Nevada corporation.
"Stated Expiry Date" shall mean the date which is two
------------------
(2) years from the Closing Date except that the Stated Expiry
Date shall automatically be extended for two (2) consecutive one
(1) year periods, the first of which shall commence on the second
(2nd) anniversary of the Closing Date and, if so extended for
such first one year period, the second of which shall commence on
the third (3rd) anniversary of the Closing Date, unless prior to
the then-current Stated Expiry Date (a) Borrower Representative,
on behalf of Borrowers, notifies Agent, in writing, not less than
sixty (60) days prior to the then-current Stated Expiry Date that
Borrowers have elected not to extend the then-current Stated
Expiry Date, or (b) Agent, on behalf of Lenders, notifies
Borrower Representative, in writing, not less than sixty (60)
days prior to the then-current Stated Expiry Date that Agent and
Lenders have elected not to extend the then-current Stated Expiry
Date. The foregoing notwithstanding, the Stated Expiry Date
shall not be extended if, as of the then-current Stated Expiry
Date, a Default or Event of Default then exists and is continuing
beyond any applicable notice or cure periods. Nothing contained
herein shall be deemed to be a commitment by Agent or Lenders, as
of the date of this Agreement, to permit the extension of the
Stated Expiry Date which is in effect on the date hereof. The
Stated Expiry Date shall in no event be later than the fourth
(4th) anniversary of the Closing Date.
"Stock" shall mean all shares, options, warrants,
-----
general or limited partnership interests, membership interests or
other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent
entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).
"Stockholder" shall mean, with respect to any Person,
-----------
each holder of Stock of such Person.
"Subsidiary" shall mean, with respect to any Person,
----------
(a) any corporation of which an aggregate of more than fifty
percent (50%) of the outstanding Stock having ordinary voting
power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, Stock of any
other 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, directly or indirectly, owned legally or
beneficially by such Person and/or one or more Subsidiaries of
such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or
more of such Stock whether by proxy, agreement, operation of law
or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of
such Person shall have an interest (whether in the form of voting
or participation in profits or capital contribution) of more than
fifty percent (50%) or of which any such Person is a general
partner or may exercise the powers of a general partner. Unless
the context otherwise requires, each reference to a Subsidiary
shall be a reference to a Subsidiary of Borrower.
"Subsidiary Guarantors" shall mean, individually and
---------------------
collectively, Lake Charles Construction Corporation, a Louisiana
corporation; Cambridge Construction Service Corp., a Nevada
corporation; H.E. Co. Services, Inc., a Texas corporation; and
Industra Thermal Service Corp., a Washington corporation;
Separation and Recovery Systems California, a California
corporation; and NUS, Inc., a Washington corporation.
"Subsidiary Guaranty" shall mean the Subsidiary
-------------------
Guaranty of even date herewith executed by the Subsidiary
Guarantors in favor of Agent, on behalf of itself and Lenders.
"Switch Gear Division Sale" shall mean the arms-length
-------------------------
sale by Controlled Power Limited Partnership of certain fixed
assets and work-in-process of its switch gear division for a
purchase price based upon the fair market value of the assets to
be sold.
"Tangible Net Worth" shall mean, with respect to any
------------------
Person at any date, the Net Worth of such Person at such date,
excluding, however, from the determination of the total assets at
--------- -------
such date, (a) all goodwill, capitalized organizational expenses,
capitalized research and development expenses, trademarks, trade
names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other intangible items, (b) all
unamortized debt discount and expense, (c) treasury Stock, and
(d) any write-up in the book value of any asset resulting from a
revaluation thereof.
"Target" shall have the meaning assigned to it in
------
Section 6.1.
-----------
"Taxes" shall mean taxes, levies, imposts, deductions,
-----
Charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on or measured by the net income
of Agent or a Lender by the jurisdictions under the laws of which
Agent and Lenders are organized or any political subdivision
thereof.
"Termination Date" shall mean the date on which the
----------------
Loans have been indefeasibly repaid in full and all other
Obligations under the Agreement and the other Loan Documents have
been completely discharged and Letter of Credit Obligations have
been cash collateralized, canceled or backed by stand-by letters
of credit in accordance with Annex B, and none of Borrowers shall
-------
have any further right to borrow any monies under the Agreement.
"Third Party Interactives" shall mean all Persons with
------------------------
whom any Credit Party exchanges data electronically in the
ordinary course of business, including, without limitation,
customers, suppliers, third-party vendors, subcontractors,
processors-converters, shippers and warehousemen.
"Title IV Plan" shall mean a Pension Plan (other than a
-------------
Multiemployer Plan), which is covered by Title IV of ERISA, and
which any Credit Party or ERISA Affiliate maintains, contributes
to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Trademarks" shall mean all of the following now owned
----------
or hereafter acquired by any Credit Party: (a) all trademarks,
trade names, corporate names, business names, trade styles,
service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including
registrations, recordings and applications in the United States
Patent and Trademark Office or in any similar office or agency of
the United States, any state or territory thereof, or any other
country or any political subdivision thereof; (b) all reissues,
extensions or renewals thereof; and (c) all goodwill associated
with or symbolized by any of the foregoing.
"Turner Group" shall mean, collectively the Turner
------------
Group, Inc., a Delaware corporation; C.A. Turner Construction
Company, a Delaware corporation; Action Contract Services, Inc.,
a Delaware corporation; and C.A. Turner Maintenance, Inc., a
Texas corporation
"Unfunded Pension Liability" shall mean, at any time,
--------------------------
the aggregate amount, if any, of the sum of (a) the amount by
which the present value of all accrued benefits under each Title
IV Plan exceeds the fair market value of all assets of such Title
IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for
each such Title IV Plan using the actuarial assumptions for
funding purposes in effect under such Title IV Plan, and (b) for
a period of five (5) years following a transaction which might
reasonably be expected to be covered by Section 4069 of ERISA,
the liabilities (whether or not accrued) that could be avoided by
any Credit Party or any ERISA Affiliate as a result of such
transaction.
"United Eco Group" shall mean, collectively, United Eco
----------------
Systems, Inc. a Delaware corporation; and Eco Systems, Inc., a
Delaware corporation.
"US Accounts" shall mean all "accounts," as such term
-----------
is defined in the Code, now owned or hereafter acquired by any
Credit Party and, in any event, including (a) all accounts
receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel
Paper, Documents or Instruments) now owned or hereafter received
or acquired by or belonging or owing to any Credit Party, whether
arising out of goods sold or services rendered by it or from any
other transaction (including any such obligations which may be
characterized as an account or contract right under the Code),
(b) all of each Credit Party's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it
for goods or services, (c) all of each Credit Party's rights to
any goods represented by any of the foregoing (including unpaid
sellers' rights of rescission, replevin, reclamation and stoppage
in transit and rights to returned, reclaimed or repossessed
goods), (d) all monies due or to become due to any Credit Party,
under all purchase orders and contracts for the sale of goods or
the performance of services or both by such Credit Party or in
connection with any other transaction (whether or not yet earned
by performance on the part of such Credit Party) now or hereafter
in existence, including the right to receive the proceeds of said
purchase orders and contracts, and (e) all collateral security
and guarantees of any kind, now or hereafter in existence, given
by any Person with respect to any of the foregoing.
"US Collection Account" shall mean that certain account
---------------------
of Agent, account number 502-328-54 in the name of Agent at
Bankers Trust Company in New York, New York ABA No. 021 001 033
or such other account as may be specified in writing by Agent as
the "US Collection Account".
"US Dollar Amount" shall mean, for any amount on any
----------------
particular date, the aggregate of:
(a) the portion, if any, of the amount denominated in
US Dollars; and
(b) the Equivalent Amount in US Dollars (determined on
such date unless otherwise specified herein) of
the portion, if any, of the amount denominated in
another currency.
"Year 2000 Assessment" shall mean a comprehensive
--------------------
written assessment of the nature and extent of each Credit
Party's Year 2000 Problems and Year 2000 Date-Sensitive
Systems/Components, including, without limitation, Year 2000
Problems regarding data exchanges with Third Party Interactives.
"Year 2000 Corrective Actions" shall mean, as to each
----------------------------
Credit Party, all actions necessary to eliminate such Person's
Year 2000 Problems, including, without limitation, computer code
enhancements and revisions, upgrades and replacements of Year
2000 Date-Sensitive Systems/Components, and coordination of such
enhancements, revisions, upgrades and replacements with Third
Party Interactives.
"Year 2000 Corrective Plan" shall mean, with respect to
-------------------------
each Credit Party, a comprehensive plan to eliminate all of its
Year 2000 Problems on or before December 1, 1999, including
without limitation (i) computer code enhancements or revisions,
(ii) upgrades or replacements of Year 2000 Date-Sensitive
Systems/Components, (iii) test and validation procedures, (iv) an
implementation time line and budget and (v) designation of
specific employees who will be responsible for planning,
coordinating and implementing each phase or subpart of the Year
2000 Corrective Plan.
"Year 2000 Date-Sensitive System/Component" shall mean,
-----------------------------------------
as to any Person, any system software, network software,
applications software, data base, computer file, embedded
microchip, firmware or hardware that accepts, creates,
manipulates, sorts, sequences, calculates, compares or outputs
calendar-related data accurately; such systems and components
shall include, without limitation, mainframe computers, file
server/client systems, computer workstations, routers, hubs,
other network-related hardware, and other computer-related
software, firmware or hardware and information processing and
delivery systems of any kind and telecommunications systems and
other communications processors, security systems, alarms,
elevators and HVAC systems.
"Year 2000 Implementation Testing" shall mean, as to
--------------------------------
each Credit Party, (i) the performance of test and validation
procedures regarding Year 2000 Corrective Actions on a unit basis
and on a systemwide basis; (ii) the performance of test and
validation procedures regarding data exchanges among the Credit
Parties' Year 2000 Date-Sensitive Systems/Components and data
exchanges with Third Party Interactives, and (iii) the design and
implementation of additional Corrective Actions, the need for
which has been demonstrated by test and validation procedures.
"Year 2000 Problems" shall mean, with respect to each
------------------
Credit Party, limitations on the capacity or readiness of any
such Credit Party's Year 2000 Date-Sensitive Systems/Components
to accurately accept, create, manipulate, sort, sequence,
calculate, compare or output calendar date information with
respect to calendar year 1999 or any subsequent calendar year
beginning on or after January 1, 2000 (including leap year
computations), including, without limitation, exchanges of
information among Year 2000 Date-Sensitive Systems/Components of
the Credit Parties and exchanges of information among the Credit
Parties and Year 2000 Date-Sensitive Systems/Components of Third
Party Interactives and functionality of peripheral interfaces,
firmware and embedded microchips.
Rules of construction with respect to accounting terms
used in this Agreement or the other Loan Documents shall be as
set forth in Annex G. All other undefined terms contained in any
-------
of the Loan Documents shall, unless the context indicates
otherwise, have the meanings provided for by the Code as in
effect in the State of New York to the extent the same are used
or defined therein. Unless otherwise specified, references in
the Agreement or any of the Appendices to a Section, subsection
or clause refer to such Section, subsection or clause as
contained in the Agreement. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to the
Agreement as a whole, including all Annexes, Exhibits and
Schedules, as the same may from time to time be amended,
restated, modified or supplemented, and not to any particular
section, subsection or clause contained in the Agreement or any
such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each
term stated in either the singular or plural shall include the
singular and the plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, feminine
and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; references to
Persons include their respective successors and assigns (to the
extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of
the same and any successor statutes and regulations. Whenever
any provision in any Loan Document refers to the knowledge (or an
analogous phrase) of any Credit Party, such words are intended to
signify that such Credit Party has actual knowledge or awareness
of a particular fact or circumstance or that such Credit Party,
if it had exercised reasonable diligence, would have known or
been aware of such fact or circumstance.
Exhibit 10.2.1
REVOLVING NOTE
Equivalent Amount in Canadian
Dollars of US$30,000,000. New York, New York
May 7, 1999
FOR VALUE RECEIVED, the undersigned corporation (the "Borrower"),
HEREBY PROMISES TO PAY to the order of GENERAL ELECTRIC CAPITAL CORPORATION
("Lender"), at the offices of GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation, as Agent for Lenders ("Agent"), at its address at 201 High Ridge
Road, Stamford, Connecticut 06927, or at such other place as Agent may designate
from time to time in writing, in lawful money of Canada and in immediately
available funds, the Equivalent Amount in Canadian Dollars of THIRTY MILLION US
DOLLARS AND NO CENTS (US$30,000,000) or, if less, the aggregate unpaid amount of
all Revolving Credit Advances made to the undersigned under the "Credit
Agreement" (as hereinafter defined). All capitalized terms used but not
otherwise defined herein have the meanings given to them in the Credit Agreement
or in Annex A thereto.
This Revolving Note is a Revolving Note issued pursuant to that certain
Credit Agreement dated as of the date hereof by and among Borrower, the other
Persons named therein as Credit Parties, Agent, Lender and the other Persons
signatory thereto from time to time as Lenders (including all annexes, exhibits
and schedules thereto, and as from time to time amended, restated, supplemented
or otherwise modified, the "Credit Agreement"), and is entitled to the benefit
and security of the Credit Agreement, the Security Agreement and all of the
other Loan Documents referred to therein. Reference is hereby made to the Credit
Agreement for a statement of all of the terms and conditions under which the
Loans evidenced hereby are made and are to be repaid. The date and amount of
each Revolving Credit Advance made by Lenders to Borrower, the rates of interest
applicable thereto and each payment made on account of the principal thereof,
shall be recorded by Agent on its books; provided that the failure of Agent to
make any such recordation shall not affect the obligations of Borrower to make a
payment when due of any amount owing under the Credit Agreement or this Note in
respect of the Revolving Credit Advances made by Lender to Borrower.
The principal amount of the indebtedness evidenced hereby shall be
payable in the amounts and on the dates specified in the Credit Agreement, the
terms of which are hereby incorporated herein by reference. Interest thereon
shall be paid until such principal amount is paid in full at such interest rates
and at such times, and pursuant to such calculations, as are specified in the
Credit Agreement.
If any payment on this Revolving Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
Upon and after the occurrence of any Event of Default, this Revolving
Note may, as provided in the Credit Agreement, and without demand, notice or
legal process of any kind, be declared, and immediately shall become, due and
payable.
<PAGE>
Time is of the essence of this Revolving Note. Demand, presentment,
protest and notice of nonpayment and protest are hereby waived by Borrower.
Except as provided in the Credit Agreement, this Revolving Note may not
be assigned by Lender to any Person.
THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THAT STATE.
AEC FUNDING CORP.
By: /s/ David L. Norris
-----------------------------
Title: Vice President
--------------------------
Exhibit 10.2.2
REVOLVING NOTE
$30,000,000. New York, New York
May 7, 1999
FOR VALUE RECEIVED, each of the undersigned corporations (collectively,
the "Borrowers"), HEREBY, JOINTLY AND SEVERALLY, PROMISES TO PAY to the order of
GENERAL ELECTRIC CAPITAL CORPORATION ("Lender"), at the offices of GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation, as Agent for Lenders
("Agent"), at its address at 201 High Ridge Road, Stamford, Connecticut 06927,
or at such other place as Agent may designate from time to time in writing, in
lawful money of the United States of America and in immediately available funds,
the amount of THIRTY MILLION DOLLARS AND NO CENTS ($30,000,000) or, if less, the
aggregate unpaid amount of all Revolving Credit Advances made to the undersigned
under the "Credit Agreement" (as hereinafter defined). All capitalized terms
used but not otherwise defined herein have the meanings given to them in the
Credit Agreement or in Annex A thereto.
This Revolving Note is a Revolving Note issued pursuant to that certain
Credit Agreement dated as of the date hereof by and among Borrowers, the other
Persons named therein as Credit Parties, Agent, Lender and the other Persons
signatory thereto from time to time as Lenders (including all annexes, exhibits
and schedules thereto, and as from time to time amended, restated, supplemented
or otherwise modified, the "Credit Agreement"), and is entitled to the benefit
and security of the Credit Agreement, the Security Agreement and all of the
other Loan Documents referred to therein. Reference is hereby made to the Credit
Agreement for a statement of all of the terms and conditions under which the
Loans evidenced hereby are made and are to be repaid. The date and amount of
each Revolving Credit Advance made by Lenders to Borrowers, the rates of
interest applicable thereto and each payment made on account of the principal
thereof, shall be recorded by Agent on its books; provided that the failure of
Agent to make any such recordation shall not affect the obligations of Borrowers
to make a payment when due of any amount owing under the Credit Agreement or
this Note in respect of the Revolving Credit Advances made by Lender to
Borrowers.
The principal amount of the indebtedness evidenced hereby shall be
payable in the amounts and on the dates specified in the Credit Agreement, the
terms of which are hereby incorporated herein by reference. Interest thereon
shall be paid until such principal amount is paid in full at such interest rates
and at such times, and pursuant to such calculations, as are specified in the
Credit Agreement. The indebtedness evidenced hereby and all other amounts
payable hereunder shall be the joint and several obligation of each of the
Borrowers.
If any payment on this Revolving Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and,
<PAGE>
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.
Upon and after the occurrence of any Event of Default, this Revolving
Note may, as provided in the Credit Agreement, and without demand, notice or
legal process of any kind, be declared, and immediately shall become, due and
payable.
Time is of the essence of this Revolving Note. Demand, presentment,
protest and notice of nonpayment and protest are hereby waived by Borrowers.
Except as provided in the Credit Agreement, this Revolving Note may not
be assigned by Lender to any Person.
THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THAT STATE.
ACTION CONTRACT SERVICES, INC.
BROOKFIELD CORP.
C.A. TURNER CONSTRUCTION COMPANY
C.A. TURNER MAINTENANCE, INC.
CHEMPOWER, INC.
ECO SYSTEMS, INC.
GLOBAL POWER COMPANY
INDUSTRA, INC.
INDUSTRA SERVICE CORP.
SEPARATION AND RECOVERY SYSTEMS, INC.
SOUTHWICK CORP.
SPECIALTY MANAGEMENT GROUP, INC.
THE TURNER GROUP, INC.
UNITED ECO SYSTEMS, INC.
By: /s/ David L. Norris
------------------------------------
Title: Vice President Of Each
---------------------------------
CONTROLLED POWER LIMITED
PARTNERSHIP
By: Southwick Corp., its general partner
By: /s/ David L. Norris
------------------------------------
Title: Vice President
---------------------------------
Exhibit 10.3
SECURITY AGREEMENT
------------------
SECURITY AGREEMENT, dated as of May 7, 1999, among each of the
corporations or limited partnerships listed on Schedule A
----------
hereto (each of such corporations are sometimes collectively referred to
herein as "Grantors" and individually as a "Grantor"), and GENERAL
-------- -------
ELECTRIC CAPITAL CORPORATION, a New York corporation, in its capacity as
Agent for Lenders.
W I T N E S S T H:
- - - - - - - - -
WHEREAS, pursuant to that certain Credit Agreement dated as
of the date hereof by and among Grantors, Agent and Lenders (including
all annexes, exhibits and schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the
"Credit Agreement"), Lenders have agreed to make the Loans and to incur
----------------
Letter of Credit Obligations on behalf of Grantors;
WHEREAS, in order to induce Agent and Lenders to enter into
the Credit Agreement and other Loan Documents and to induce Lenders to make
the Loans and to incur Letter of Credit Obligations as provided for in the
Credit Agreement, Grantors have agreed to grant a continuing Lien on the
Collateral (as hereinafter defined) to secure the Obligations;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
I. DEFINED TERMS. All capitalized terms used but not
-------------
otherwise defined herein have the meanings given to them in the Credit
Agreement or in Annex A thereto. All other undefined terms contained in
this Security Agreement, unless the context indicates otherwise, have the
meanings provided for by the Code to the extent the same are used or
defined therein.
II. GRANT OF LIEN.
-------------
A. To secure the prompt and complete payment,
performance and observance of all of the Obligations (specifically
including, without limitation, each Grantor's Obligations arising under
the cross-guaranty provisions of Section 12 of the Credit Agreement),
each Grantor hereby grants, assigns, conveys, mortgages, pledges,
hypothecates and transfers to Agent, for itself and the benefit of
Lenders, a Lien upon all of its right, title and interest in, to and under
the following property, whether now owned by or owing to, or hereafter
acquired by or arising in favor of such Grantor (including under any trade
names, styles or derivations thereof), and whether owned or consigned by
or to, or leased from or to, such Grantor, and regardless of where
located (all of which being hereinafter collectively referred to as the
"Collateral"):
----------
1. all Accounts;
2. all Inventory;
3. all General Intangibles;
4. all present and future Contracts and
contract rights to the extent relating to the Accounts and
Inventory, including, without limitation, contract rights which
evidence or support Accounts, choses in action or causes of actions
or claims arising out of Accounts or Inventory, agreements or
arrangements with sales agents, distributors or the like and/or
consignees, deposit accounts, Letters of Credit, Instruments
(relating to Accounts or Inventory), guaranty or warranty claims
with respect to Accounts or Inventory, and the proceeds of all of
the foregoing;
5. all present and future Chattel Paper,
Documents, Instruments and other forms of payment relating to or
evidencing the payment of money arising out of the sale, lease or
other disposition of Inventory or rendition of services in the
ordinary course of business; all monies and Investment Property to
the extent relating to the foregoing and the proceeds thereof, now
or hereafter held or received or held by, or in transit to, Agent,
Lender or any of their respective affiliates or participants,
whether for safekeeping, pledge, custody, transmission, collection
or otherwise; deposits (general or special) and balances to the extent
relating to the foregoing; all right, title and interest in, to and in
respect of all goods relating to, or which by sale have resulted in any of
the foregoing, including, without limitation, all goods described in
invoices, Documents, Contracts or Instruments with respect to, or otherwise
representing or evidencing, any of same, including, without limitation, all
returned, reclaimed or repossessed goods; all right, title and interest, and
all enforcement and other rights, remedies, and security and liens, in, to
and in respect of any of the foregoing, including, without limitation,
rights of stoppage in transit, replevin, repossession, sequestration and
reclamation and other rights and remedies of an unpaid vendor, lienor or
secured party, guaranties, or other Contracts of suretyship with respect
thereto, or deposits or other security for the obligation of any Account
Debtor, credit and other insurance to the extent relating to the foregoing;
6. Records;
7. All Borrower Accounts, Concentration Accounts,
Disbursement Accounts, and all other deposit and other bank accounts and all
deposits therein;
8. all money, cash or cash equivalents of any
Grantor; and
9. to the extent not otherwise included, all
Proceeds and products of the foregoing and all accessions to, substitutions
and replacements for, and rents and profits of, each of the foregoing.
B. In addition, to secure the prompt and complete
payment, performance and observance of the Obligations and in order to
induce Agent and Lenders as aforesaid, each Grantor hereby grants to Agent,
for itself and the benefit of Lenders, a right of setoff against the
property of such Grantor held by Agent or any Lender, consisting of property
described above in Section 2(a) now or hereafter in the possession or
-----------
custody of or in transit to Agent or any Lender, for any purpose, including
safekeeping, collection or pledge, for the account of such Grantor, or as to
which such Grantor may have any right or power.
III. AGENT'S AND LENDERS' RIGHTS: LIMITATIONS ON AGENT'S AND
-------------------------------------------------------
LENDERS' OBLIGATIONS.
--------------------
A. It is expressly agreed by Grantors that, anything
herein to the contrary notwithstanding, each Grantor shall remain liable
under each of its Contracts and each of its Licenses to observe and
perform all the conditions and obligations to be observed and performed by
it thereunder. Neither Agent nor any Lender shall have any obligation or
liability under any Contract or License by reason of or arising out of this
Security Agreement or the granting herein of a Lien thereon or the receipt
by Agent or any Lender of any payment relating to any Contract or License
pursuant hereto. Neither Agent nor any Lender shall be required or obligated
in any manner to perform or fulfill any of the obligations of any Grantor
under or pursuant to any Contract or License, or to make any payment, or to
make any inquiry as to the nature or the sufficiency of any payment received
by it or the sufficiency of any performance by any party under any Contract
or License, or to present or file any claims, or to take any action to
collect or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.
B. Agent may at any time after an Event of Default
shall have occurred and be continuing, without prior notice to any Grantor,
notify Account Debtors that the Accounts and related Collateral have been
assigned to Agent, and that payments shall be made directly to Agent. Upon
the request of Agent, each Grantor shall so notify Account Debtors.
C. Agent may at any time in Agent's own name or in the
name of any Grantor communicate with Account Debtors or parties to Contracts
to verify with such Persons, to Agent's satisfaction, the existence, amount
and terms of any such Accounts and related Collateral. If an Event of
Default shall have occurred and be continuing, each Grantor, at its own
expense, shall cause the independent certified public accountants then
engaged by such Grantor to prepare and deliver to Agent and each Lender at
any time and from time to time promptly upon Agent's request the following
reports with respect to each Grantor: 1. a reconciliation of all Accounts;
2. an aging of all Accounts; 3. trial balances; and 4. a test verification
of such Accounts as Agent may request. Each Grantor, at its own expense,
shall deliver to Agent the results of each physical verification, if any,
which such Grantor may in its discretion have made, or caused any other
Person to have made on its behalf, of all or any portion of its Inventory.
IV. REPRESENTATIONS AND WARRANTIES. Each Grantor
------------------------------
represents and warrants that:
A. Each Grantor is the sole owner of each item of the
Collateral upon which it purports to grant a Lien hereunder, and has good and
marketable title thereto free and clear of any and all Liens other than
Permitted Encumbrances.
B. No effective security agreement, financing
statement, equivalent security or Lien instrument or continuation statement
covering all or any part of the Collateral is on file or of record in any
public office, except such as may have been filed 1. by any Grantor in favor
of Agent pursuant to this Security Agreement or the other Loan Documents,
and 2. in connection with any other Permitted Encumbrances.
C. This Security Agreement is effective to create a
valid and continuing Lien on and, upon the filing of the appropriate
financing statements listed on Schedule I hereto, a perfected Lien in favor
----------
of Agent, for itself and the benefit of Lenders, on the Collateral with
respect to which a Lien may be perfected by filing pursuant to the Code.
Such Lien is prior to all other Liens, except Permitted Encumbrances that
would be prior to Liens in favor of Agent for the benefit of Agent and
Lenders as a matter of law, and is enforceable as such as against any and all
creditors of and purchasers from any Grantor (other than purchasers of
Inventory in the ordinary course of business). All action by any Grantor
necessary or desirable to protect and perfect such Lien on each item of the
Collateral has been duly taken.
D. Each Grantor's chief executive office, principal
place of business, corporate offices, all warehouses and premises where
Collateral is stored or located, and the locations of all of its books and
records concerning the Collateral are set forth on Schedule II hereto.
-----------
E. With respect to the Accounts, except as
specifically disclosed in the most recent Collateral Report delivered to
Agent 1. they represent bona fide sales of Inventory or rendering of services
to Account Debtors in the ordinary course of each Grantor's business and are
not evidenced by a judgment, Instrument or Chattel Paper; 2. there are no
setoffs,claims or disputes existing or asserted with respect thereto and no
Grantor has made any agreement with any Account Debtor for any extension of
time for the payment thereof, any compromise or settlement for less than the
full amount thereof, any release of any Account Debtor from liability there-
for, or any deduction therefrom except a discount or allowance allowed by
such Grantorin the ordinary course of its business for prompt payment and
disclosed to Agent; 3. to each Grantor's knowledge, there are no facts,
events or occurrences which in any way impair the validity or enforceability
thereof or could reasonably be expected to reduce the amount payable there-
under as shown on any Grantor's books and records and any invoices, state-
ments and Collateral Reports delivered to Agent and Lenders with respect
thereto; 4. no Grantor has received any notice of proceedings or actions
which are threatened or pending against any Account Debtor which might
result in any adverse change in such Account Debtor's financial condition;
and 5. no Grantor has knowledge that any Account Debtor is unable generally
to pay its debts as they become due. Further with respect to the Accounts
(x) the amounts shown on all invoices, statements and Collateral Reports
which may be delivered to the Agent with respect thereto are actually and
absolutely owing to such Grantor as indicated thereon and are not in any way
contingent; (y) no payments have been or shall be made thereon except
payments immediately delivered to the applicable Borrower Accounts or the
Agent as required pursuant to the terms of Annex C to the Credit Agreement;
and (z) to each Grantor's knowledge, all Account Debtors have the capacity to
contract.
F. With respect to any Inventory scheduled or listed
on the most recent Collateral Report delivered to Agent pursuant to the terms
of this Security Agreement or the Credit Agreement, 1. such Inventory is
located at one of the applicable Grantor's locations set forth on
Schedule II hereto, as applicable, 2. the applicable Grantor has good,
-----------
indefeasible and merchantable title to such Inventory and such Inventory is
not subject to any Lien or security interest or document whatsoever except
for the Lien granted to Agent, for the benefit of Agent and Lenders, and
except for Permitted Encumbrances, 3. such Inventory is not subject to any
licensing, patent, royalty, trademark, trade name or copyright agreements
with any third parties which would require any consent of any third party
upon sale or disposition of that Inventory or the payment of any monies to
any third party as a precondition of such sale or other disposition, and
4. the completion of manufacture, sale or other disposition of such
Inventory by Agent following an Event of Default shall not require the
consent of any Person and shall not constitute a breach or default
under any contract or agreement to which any Grantor is a party or to which
such property is subject.
G. No Grantor has any interest in, or title to, any
Patent, Trademark or Copyright except as set forth in Schedule IV hereto.
-----------
This Security Agreement is effective to create a valid and continuing Lien
on and, upon filing of the Copyright Security Agreements with the United
States Copyright Office and filing of the Patent Security Agreements and the
Trademark Security Agreements with the United State Patent and Trademark
Office, perfected Liens in favor of Agent on each Grantor's Patents,
Trademarks and Copyrights and such perfected Liens are enforceable as such
as against any and all creditors of and purchasers from any Grantor. Upon
filing of the Copyright Security Agreements with the United States Copyright
Office and filing of the Patent Security Agreements and the Trademark
Security Agreements with the United State Patent and Trademark Office and
the filing of appropriate financing statements listed on Schedule I hereto,
----------
all action necessary or desirable to protect and perfect Agent's Lien on
each Grantor's Patents, Trademarks or Copyrights shall have been duly taken.
V. COVENANTS. Each Grantor covenants and agrees with
---------
Agent, for the benefit of Agent and Lenders, that from and after the date of
this Security Agreement and until the Termination Date:
A. Further Assurances. At any time and from time to
------------------
time, upon the written request of Agent and at the sole expense of Grantors,
each Grantor shall promptly and duly execute and deliver any and all such
further instruments and documents and take such further actions as Agent may
deem desirable to obtain the full benefits of this Security Agreement and of
the rights and powers herein granted, including 1. using its best efforts to
secure all consents and approvals necessary or appropriate for the assignment
to or for the benefit of Agent of any License or Contract held by such Grantor
or in which such Grantor has any rights required to be assigned hereunder and
not heretofore assigned, 2. filing any financing or continuation statements
under the Code with respect to the Liens granted hereunder or under any other
Document, 3. transferring Collateral to Agent's possession (for the
benefit of Agent and Lenders) if such Collateral consists of Chattel Paper,
Instruments or if a Lien on such Collateral can be perfected only by
possession, or if requested by Agent, and 4. obtaining, or using its best
efforts to obtain, waivers of Liens, if any exist, from landlords and
mortgagees in accordance with the Credit Agreement. Each Grantor also hereby
authorizes Agent, for the benefit of Agent and Lenders, to file any such
financing or continuation statements without the signature of such Grantor to
the extent permitted by applicable law. If any amount payable under or in
connection with any of the Collateral is or shall become evidenced by any
Instrument, such Instrument, other than checks and notes received in the
ordinary course of business, shall be duly endorsed in a manner satisfactory
to Agent immediately upon such Grantor's receipt thereof.
B. Maintenance of Records. Grantors shall keep and
----------------------
maintain, at their own cost and expense, satisfactory and complete records of
the Collateral, including a record of any and all payments received and any
and all credits granted with respect to the Collateral and all other dealings
with the Collateral. Grantors shall mark their books and records pertaining
to the Collateral to evidence this Security Agreement and the Liens granted
hereby.
C. Covenants Regarding Patent, Trademark and
-----------------------------------------
Copyright Collateral.
--------------------
1. Grantors shall notify Agent immediately if
they know or have reason to know that any application or registration
relating to any Patent, Trademark or Copyright (now or hereafter existing)
may become abandoned or dedicated, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any court) regarding any
Grantor's ownership of any Patent, Trademark or Copyright, its right to
register the same, or to keep and maintain the same.
2. In no event shall any Grantor, either
itself or through any agent, employee, licensee or designee, file an
application for the registration of any Patent, Trademark or Copyright
with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency without giving Agent prior
written notice thereof, and, upon request of Agent, Grantor shall execute and
deliver any and all Patent Security Agreements, Copyright Security Agreements
or Trademark Security Agreements as Agent may request to evidence Agent's
Lien on such Patent, Trademark or Copyright, and the General Intangibles of
such Grantor relating thereto or represented thereby.
3. Grantors shall take all actions necessary
or requested by Agent to maintain and pursue each application, to obtain the
relevant registration and to maintain the registration of each of the
Patents, Trademarks and Copyrights (now or hereafter existing), including
the filing of applications for renewal, affidavits of use, affidavits of
noncontestability and opposition and interference and cancellation
proceedings,[unless the applicable Grantor shall determine that such Patent,
Trademark or Copyright is not material to the conduct of its business].
4. In the event that any of the Patent,
Trademark or Copyright Collateral is infringed upon, or misappropriated or
diluted by a third party, such Grantor shall notify Agent promptly after
such Grantor learns thereof. Such Grantor shall, unless such Grantor shall
reasonably determine that such Patent, Trademark or Copyright Collateral is
in no way material to the conduct of its business or operations, promptly
sue for infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution, and shall take
such other actions as Agent shall deem appropriate under the circumstances
to protect such Patent, Trademark or Copyright Collateral.
D. Indemnification. In any suit, proceeding or
---------------
action brought by Agent or any Lender relating to any Account or any other
Collateral for any sum owing thereunder or to enforce any provision of any
Account or any other Collateral each Grantor will save, indemnify and keep
Agent and Lenders harmless from and against all expense (including reasonable
attorneys' fees and expenses), loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction of liability whatsoever
of the obligor thereunder, arising out of a breach by any Grantor of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to, or in favor of, such obligor or its successors
from such Grantor, except in the case of Agent or any Lender, to the extent
such expense, loss, or damage is attributable solely to the gross negligence
or willful misconduct of Agent or such Lender as finally determined by a court
of competent jurisdiction. All such obligations of Grantors shall be and
remain enforceable against and only against Grantors and shall not be
enforceable against Agent or any Lender.
E. Compliance with Terms of Accounts, etc. In all
---------------------------------------
material respects, each Grantor will perform and comply with all obligations
in respect of its Accounts and other Collateral and all other agreements to
which it is a party or by which it is bound relating to the Collateral.
F. Limitation on Liens on Collateral. No Grantor
---------------------------------
will create, permit or suffer to exist, and each Grantor will defend the
Collateral against, and take such other action as is necessary to remove, any
Lien on the Collateral except Permitted Encumbrances, and will defend the
right, title and interest of Agent and Lenders in and to any of such Grantor's
rights under the Collateral against the claims and demands of all Persons
whomsoever.
G. Limitations on Disposition. No Grantor will sell,
--------------------------
lease, transfer or otherwise dispose of any of the Collateral, or attempt or
contract to do so except as permitted by the Credit Agreement.
H. Further Identification of Collateral. Grantors
------------------------------------
will, if so requested by Agent, furnish to Agent, as often as Agent requests,
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Agent may reasonably
request, all in such detail as Agent may specify.
I. Notices. Grantors will advise Agent promptly, in
-------
reasonable detail, 1. of any Lien (other than Permitted Encumbrances) or claim
made or asserted against any of the Collateral, and 2. of the occurrence of
any other event which would have a material adverse effect on the aggregate
value of the Collateral or on the Liens created hereunder or under any other
Loan Document.
VI. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
---------------------------------------
On the Closing Date each Grantor shall execute and
deliver to Agent a power of attorney (the "Power of Attorney") substantially
-----------------
in the form attached hereto as Exhibit A. The power of attorney granted
pursuant to the Power of Attorney is a power coupled with an interest and
shall be irrevocable until the Termination Date. The powers conferred on
Agent, for the benefit of Agent and Lenders, under the Power of Attorney
are solely to protect Agent's interests (for the benefit of Agent and
Lenders) in the Collateral and shall not impose any duty upon Agent or
any Lender to exercise any such powers. Agent agrees that A. it shall
not exercise any power or authority granted under the Power of Attorney
unless an Event of Default has occurred and is continuing, and B. Agent
shall account for any moneys received by Agent in respect of any
foreclosure on or disposition of Collateral pursuant to the Power of
Attorney provided that none of Agent or any Lender shall have any duty as
to any Collateral, and Agent and Lenders shall be accountable only for
amounts that they actually receive as a result of the exercise of such
powers. NONE OF AGENT, LENDERS OR THEIR RESPECTIVE AFFILIATES, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO
ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR
OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A
COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES.
VII. REMEDIES: RIGHTS UPON DEFAULT.
-----------------------------
A. In addition to all other rights and remedies granted
to it under this Security Agreement, the Credit Agreement, the other Loan
Documents and under any other instrument or agreement securing, evidencing
or relating to any of the Obligations, if any Event of Default shall have
occurred and be continuing, Agent may exercise all rights and remedies of
a secured party under the Code. Without limiting the generality of the
foregoing, each Grantor expressly agrees that in any such event Agent,
without demand of performance or other demand, advertisement or notice of
any kind (except the notice specified below of time and place of public or
private sale) to or upon such Grantor or any other Person (all and each of
which demands, advertisements and notices are hereby expressly waived to
the maximum extent permitted by the Code and other applicable law), may
forthwith enter upon the premises of such Grantor where any Collateral
is located through self-help, without judicial process, without first
obtaining a final judgment or giving such Grantor or any other Person notice
and opportunity for a hearing on Agent's claim or action and may collect,
receive, assemble, process, appropriate and realize upon the Collateral, or
any part thereof, and may forthwith sell, lease, assign, give an option or
options to purchase, or sell or otherwise dispose of and deliver said
Collateral (or contract to do so), or any part thereof, in one or more
parcels at a public or private sale or sales, at any exchange at such prices
as it may deem acceptable, for cash or on credit or for future delivery
without assumption of any credit risk. Agent or any Lender shall have
the right upon any such public sale or sales and, to the extent permitted by
law, upon any such private sale or sales, to purchase for the benefit of
Agent and Lenders, the whole or any part of said Collateral so sold, free
of any right or equity of redemption, which equity of redemption each Grantor
hereby releases. Such sales may be adjourned and continued from time to
time with or without notice. Agent shall have the right to conduct such
sales on any Grantor's premises or elsewhere and shall have the right to
use any Grantor's premises without charge for such time or times as Agent
deems necessary or advisable.
Each Grantor further agrees, at Agent's request, to assemble the
Collateral and make it available to Agent at places which Agent shall select,
whether at such Grantor's premises or elsewhere. Until Agent is able to
effect a sale, lease, or other disposition of Collateral, Agent shall have
the right to hold or use Collateral, or any part thereof, to the extent that
it deems appropriate for the purpose of preserving Collateral or its value
or for any other purpose deemed appropriate by Agent. Agent shall have no
obligation to any Grantor to maintain or preserve the rights of such Grantor
as against third parties with respect to Collateral while Collateral is in
the possession of Agent. Agent may, if it so elects, seek the appointment
of a receiver or keeper to take possession of Collateral and to enforce any
of Agent's remedies (for the benefit of Agent and Lenders), with respect to
such appointment without prior notice or hearing as to such appointment.
Agent shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale to the Obligations as provided in the
Credit Agreement, and only after so paying over such net proceeds, and
after the payment by Agent of any other amount required by any provision of
law, need Agent account for the surplus, if any, to any Grantor. To the
maximum extent permitted by applicable law, each Grantor waives all claims,
damages, and demands against Agent or any Lender arising out of the
repossession, retention or sale of the Collateral except such as arise solely
out of the gross negligence or willful misconduct of Agent or such Lender as
finally determined by a court of competent jurisdiction. Each Grantor agrees
that ten (10) days prior notice by Agent of the time and place of any public
sale or of the time after which a private sale may take place is reasonable
notification of such matters. Grantors shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Obligations, including any attorneys' fees and other
expenses incurred by Agent or any Lender to collect such deficiency.
B. Except as otherwise specifically provided herein,
each Grantor hereby waives presentment, demand, protest or any notice (to
the maximum extent permitted by applicable law) of any kind in connection
with this Security Agreement or any Collateral.
VIII. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY
---------------------------------------------
COLLATERAL. For the purpose of enabling Agent to exercise rights and
----------
remedies under Section 7 hereof (including, without limiting the terms of
---------
Section 7 hereof, in order to take possession of, hold, preserve, process,
---------
assemble, prepare for sale, market for sale, sell or otherwise dispose of
Collateral) at such time as Agent shall be lawfully entitled to exercise such
rights and remedies, each Grantor hereby grants to Agent, for the benefit of
Agent and Lenders, an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to such Grantor) to use,
license or sublicense any Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located, and including
in such license access to all media in which any of the licensed items may
be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.
IX. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF
----------------------------------------------------
COLLATERAL. Agent and each Lender shall use reasonable care with respect to
----------
the Collateral in its possession or under its control. Neither Agent nor any
Lender shall have any other duty as to any Collateral in its possession or
control or in the possession or control of any agent or nominee of Agent or
such Lender, or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto.
X. REINSTATEMENT. This Security Agreement shall remain
-------------
in full force and effect and continue to be effective should any petition
be filed by or against any Grantor for liquidation or reorganization, should
any Grantor become insolvent or make an assignment for the benefit of any
creditor or creditors or should a receiver or trustee be appointed for all
or any significant part of any Grantor's assets, and shall continue to be
effective or be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a
"voidable preference," "fraudulent conveyance," or otherwise, all as
though such payment or performance had not been made. In the event that
any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
XI. NOTICES. Except as otherwise provided herein, whenever
-------
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon
any of the parties by any other party, or whenever any of the parties
desires to give and serve upon any other party any communication with
respect to this Security Agreement, each such notice, demand, request,
consent, approval, declaration or other communication shall be in writing
and shall be given in the manner, and deemed received, as provided for in
the Credit Agreement.
XII. SEVERABILITY. Whenever possible, each provision of
------------
this Security Agreement shall be interpreted in a manner as to be effective
and valid under applicable law, but if any provision of this Security
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the
remaining provisions of this Security Agreement. This Security Agreement is
to be read, construed and applied together with the Credit Agreement and the
other Loan Documents which, taken together, set forth the complete
understanding and agreement of Agent, Lenders and Grantors with respect to
the matters referred to herein and therein.
XIII. NO WAIVER; CUMULATIVE REMEDIES. Neither Agent nor
------------------------------
any Lender shall by any act, delay, omission or otherwise be deemed to have
waived any of its rights or remedies hereunder, and no waiver shall be valid
unless in writing, signed by Agent and then only to the extent therein set
forth. A waiver by Agent of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which Agent
would otherwise have had on any future occasion. No failure to exercise nor
any delay in exercising on the part of Agent or any Lender, any right, power
or privilege hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law. None of the terms or
provisions of this Security Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by Agent and
Grantors.
XIV. LIMITATION BY LAW. All rights, remedies and powers
-----------------
provided in this Security Agreement may be exercised only to the extent that
the exercise thereof does not violate any applicable provision of law, and
all the provisions of this Security Agreement are intended to be subject to
all applicable mandatory provisions of law that may be controlling and to be
limited to the extent necessary so that they shall not render this Security
Agreement invalid, unenforceable, in whole or in part, or not entitled to be
recorded, registered or filed under the provisions of any applicable law.
XV. TERMINATION OF THIS SECURITY AGREEMENT. Subject to
--------------------------------------
Section 10 hereof, this Security Agreement shall terminate upon
----------
the Termination Date.
XVI. SUCCESSORS AND ASSIGNS. This Security Agreement and
----------------------
all obligations of Grantors hereunder shall be binding upon the successors
and assigns of each Grantor (including any debtor-in-possession on behalf
of such Grantor) and shall, together with the rights and remedies of Agent,
for the benefit of Agent and Lenders, hereunder, inure to the benefit of
Agent and Lenders, all future holders of any instrument evidencing any of
the Obligations and their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions of
any agreement governing or instrument evidencing the Obligations or any
portion thereof or interest therein shall in any manner affect the Lien
granted to Agent, for the benefit of Agent and Lenders, hereunder. No
Grantor may assign, sell, hypothecate or otherwise transfer any interest in
or obligation under this Security Agreement.
XVII. COUNTERPARTS. This Security Agreement may be
------------
executed in any number of separate counterparts, each of which shall
collectively and separately constitute one agreement.
XVIII. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY
-------------
PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THAT STATE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. EACH GRANTOR HEREBY CONSENTS AND AGREES THAT THE
STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW
YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN GRANTORS, AGENT AND LENDERS PERTAINING TO THIS SECURITY
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF
OR RELATING TO THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT, LENDERS AND GRANTORS ACKNOWLEDGE THAT ANY APPEALS
FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK
COUNTY, CITY OF NEW YORK, NEW YORK, AND, PROVIDED, FURTHER, NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH GRANTOR EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION
WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH GRANTOR
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH ON ANNEX I TO THE CREDIT
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID.
XIX. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
--------------------
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES
WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT DISPUTES ARISING HEREUNDER OR RELATING
HERETO BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, LENDERS, AND GRANTORS ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.
XX. SECTION TITLES. The Section titles contained in this
--------------
Security Agreement are and shall be without substantive meaning or content of
any kind whatsoever and are not a part of the agreement between the parties
hereto.
XXI. NO STRICT CONSTRUCTION. The parties hereto have
----------------------
participated jointly in the negotiation and drafting of this Security
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Security Agreement shall be construed as if drafted jointly by
the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of
this Security Agreement.
XXII. ADVICE OF COUNSEL. Each of the parties represents
-----------------
to each other party hereto that it has discussed this Security Agreement and,
specifically, the provisions of Section 18 and Section 19, with its counsel.
---------- ----------
XXIII. BENEFIT OF LENDERS. All Liens granted or
------------------
contemplated hereby shall be for the benefit of Agent and Lenders, and all
proceeds or payments realized from Collateral in accordance herewith shall be
applied to the Obligations in accordance with the terms of the Credit
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Security Agreement to be executed and delivered by its duly authorized officer
as of the date first set forth above.
AEC FUNDING CORP.
ACTION CONTRACT SERVICES, INC.
AMERICAN ECO CORPORATION
BROOKFIELD CORP.
C.A. TURNER CONSTRUCTION COMPANY
C.A. TURNER MAINTENANCE, INC.
CAMBRIDGE CONSTRUCTION SERVICE CORP.
CHEMPOWER, INC.
ECO SYSTEMS, INC.
GLOBAL POWER COMPANY
H.E. CO. SERVICES, INC.
INDUSTRA, INC.
INDUSTRA THERMAL SERVICE CORP.
INDUSTRA SERVICE CORP.
LAKE CHARLES CONSTRUCTION CORPORATION
NUS, INC.
SEPARATION AND RECOVERY SYSTEMS
CALIFORNIA
SEPARATION AND RECOVERY SYSTEMS, INC.
SOUTHWICK CORP.
SPECIALTY MANAGEMENT GROUP, INC.
THE TURNER GROUP, INC.
UNITED ECO SYSTEMS, INC.
By: /s/ David L. Norris
----------------------
Title: Vice President Of Each
------------------- -------
CONTROLLED POWER LIMITED PARTNERSHIP
By: Southwick Corp., its general partner
By: /s/ David L. Norris
---------------------
Title: Vice President
-----------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent
By: /s/ Charles D. Chiodo
------------------------------
Title: Duly Authorized Signatory
-------------------------
<PAGE>
SCHEDULE A
----------
to
SECURITY AGREEMENT
------------------
GRANTORS
---------
AEC FUNDING CORP., a Delaware corporation
ACTION CONTRACT SERVICES, INC., a Delaware corporation
AMERICAN ECO CORPORATION, an Ontario corporation
BROOKFIELD CORP., an Ohio corporation
C.A. TURNER CONSTRUCTION COMPANY, a Delaware corporation
C.A. TURNER MAINTENANCE, INC., a Texas corporation
CAMBRIDGE CONSTRUCTION SERVICE CORP., a Nevada corporation
CHEMPOWER, INC., an Ohio corporation
CONTROLLED POWER LIMITED PARTNERSHIP, an Illinois limited partnership
ECO SYSTEMS, INC., a Delaware corporation
GLOBAL POWER COMPANY, an Ohio corporation
H.E. CO. SERVICES, INC., a Texas corporation
INDUSTRA, INC., a Washington corporation
INDUSTRA SERVICE CORP., a Washington corporation
INDUSTRA THERMAL SERVICE CORP., a Washington corporation
LAKE CHARLES CONSTRUCTION CORPORATION, a Louisiana corporation
NUS, INC., a Washington corporation
SEPARATION AND RECOVERY SYSTEMS CALIFORNIA, a California
SEPARATION AND RECOVERY SYSTEMS, INC., a Nevada corporation
SOUTHWICK CORP., an Ohio corporation
SPECIALTY MANAGEMENT GROUP, INC., a Texas corporation
THE TURNER GROUP, INC., a Delaware corporation
UNITED ECO SYSTEMS, INC., a Delaware corporation
Exhibit 10.4
AMERICAN ECO CORPORATION SECURITY AGREEMENT
This Agreement is made as of May 7, 1999, between
AMERICAN ECO CORPORATION, an Ontario corporation ("GRANTOR")
and
GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation, on its own behalf and as agent (together wit
its successors and assigns, "AGENT") for the financial
institutions and other entities that are from time to time
signatories, as lenders ("LENDERS") to the Credit Agreement
(as hereinafter defined)
RECITALS
A. Pursuant to that certain Credit Agreement dated as of the date hereof among
the Persons named therein as Borrowers, Grantor and the other Persons named
therein as Credit Parties, Agent and Lenders (as from time to time amended,
restated, supplemented or otherwise modified, the "CREDIT AGREEMENT"), Lenders
have agreed to make Loans to Borrowers and to incur Letter of Credit Obligations
on behalf of Borrowers.
B. Pursuant to a Guarantee dated as of the date hereof, given by Grantor in
favour of Agent and Lenders (as from time to time amended, restated,
supplemented or otherwise modified, the "GUARANTEE"), Grantor has guaranteed the
payment and performance of the obligations of Borrowers, the other Credit
Parties, Nucon Ltd. and Canadian Energy Services Limited to Agent and Lenders
under the Credit Agreement and the other Loan Documents.
C. In connection with the making of the Loans and the incurrence of Letter of
Credit Obligations under the Credit Agreement and as a condition precedent
thereto, Lenders require that Grantor shall have executed and delivered this
Agreement as security for its obligations under the Guarantee, the Credit
Agreement, this Agreement and any of the other Loan Documents.
FOR VALUE RECEIVED, the parties agree as follows:
SECTION 1 -- INTERPRETATION
<PAGE>
1.1 TERMS DEFINED IN PPSA. The terms "Chattel Paper", "Document of Title",
"Instrument", "Intangible", "Security", "Proceeds", "inventory", "Accession",
"Money", "Account", "financing statement" and "financing change statement"
whenever used herein shall be interpreted in accordance with their respective
meanings when used in the Personal Property Security Act (Ontario), as amended
from time to time, which Act, including amendments thereto and any Act
substituted therefor and amendments thereto is herein referred to as the "PPSA".
Any reference herein to "Collateral" shall, unless the context otherwise
requires, be deemed a reference to "Collateral or any part thereof". The term
"Proceeds" whenever used herein and interpreted as above shall, by way of
example, include trade-ins, equipment, cash, bank accounts, notes, chattel
paper, goods, contracts rights, accounts and any other personal property or
obligation received when such Collateral or Proceeds are sold, exchanged,
collected or otherwise disposed of.
1.2 OTHER DEFINED TERMS. Unless otherwise defined, capitalized terms used herein
have the following meanings:
(1) AGREEMENT means this agreement and all schedules attached hereto as the same
may be amended, restated, supplemented and otherwise modified from time to time.
All uses of the words "hereto", "herein", "hereof", "hereby" and "hereunder" and
similar expressions refer to this security agreement and not to any particular
section or portion of it.
(2) CREDIT AGREEMENT has the meaning given to it in paragraph A of the Recitals.
(3) COLLATERAL has the meaning given to it in Section 2.1.
(4) CONTRACT has the meaning give to it in the Credit Agreement except that it
shall exclude rights evidenced by Chattel Paper, Documents of Title and
Instruments.
(5) GUARANTEE has the meaning given to it in paragraph B of the Recitals.
(6) INVENTORY has the meaning given to it in Section 2.1.
(7) OBLIGATIONS means any and all indebtedness, liabilities and obligations, now
or hereafter existing, direct or indirect, absolute or contingent, joint or
several, as principal or surety, of Grantor to Agent and Lenders or any of them
arising under, by virtue of or otherwise in connection with the Guarantee, this
Agreement, the Credit Agreement or any other Loan Document.
(8) RECEIVER has the meaning given to it in Section 8.1.
(9) SECURITY INTEREST has the meaning given to it in Section 2.1.
1.3 TERMS DEFINED IN CREDIT AGREEMENT. Other capitalized terms used herein and
not otherwise defined have the meanings given to them in the Credit Agreement or
in Annex "A" thereto.
SECTION 2 -- SECURITY INTEREST
<PAGE>
2.1 GRANT OF SECURITY INTEREST. As continuing collateral security for the due
payment and performance by Grantor of all of the Obligations, Grantor hereby
grants to Agent for itself and for the benefit of Lenders a security interest
(the "SECURITY INTEREST") in all of its right, title and interest in, to and
under the following property, whether now owned by or owing to, or hereafter
acquired by or arising in favour of the Grantor (including under any trade
names, styles or derivations thereof), and whether owned or consigned by or to,
or leased from or to, the Grantor, and regardless of where located (all of which
being hereinafter collectively referred to as the "COLLATERAL"):
(1) all Accounts;
(2) all inventory of whatever kind and wherever situate, including,
for greater certainty, all raw materials, work in process or
materials used or consumed or to be used or consumed in the
processing, production, packaging, promotion, delivery or
shipping of the same, including other supplies (collectively,
"INVENTORY");
(3) all Intangibles and General Intangibles;
(4) all present and future Contracts and contract rights, to the
extent relating to Accounts and Inventory including, without
limitation, contract rights which evidence or support Accounts or
Inventory, choses in action or causes of actions or claims
arising out of Accounts or Inventory, agreements or arrangements
with sales agents, distributors or the like and/or consignees,
deposit accounts, letters of credit, Instruments (relating to
Accounts or Inventory), guaranty or warranty claims with respect
to Accounts or Inventory;
(5) all present and future Instruments and other forms of payment
relating to or evidencing the payment of money arising out of the
sale, lease or other disposition of Inventory or rendition of
services in the ordinary course of business, Chattel Paper and
Documents of Title; all Money, Securities and Investment Property
to the extent relating to any of the foregoing and the proceeds
thereof, now or hereafter held or received or held by, or in
transit to, Agent, any Lender or any of their respective
affiliates or participants, whether for safekeeping, pledge,
custody, transmission, collection or otherwise; deposits (general
or special) and balances to the extent relating to any of the
foregoing; all right, title and interest in, to and in
respect of all goods relating to, or which by sale have
resulted in any of the foregoing, including, without
limitation, all goods described in invoices, Documents of
Title, Contracts or Instruments with respect to, or otherwise
representing or evidencing, any of same, including, without
limitation, all returned, reclaimed or repossessed goods; all
right, title and interest, and all enforcement and other
rights, remedies, and security and liens, in, to and in
respect of any of the foregoing, including, without
limitation, rights of stoppage in transit, replevin,
repossession, sequestration and reclamation and other rights
and remedies of an unpaid vendor, lienor or secured party,
<PAGE>
guaranties, or other Contracts of suretyship with respect
thereto, or deposits or other security for the obligation of
any Account Debtor, credit and other insurance to the extent
relating to the foregoing;
(6) Records;
(7) all deposit, disbursement, operating and other bank accounts
and all deposits therein;
(8) all Money, cash or cash equivalents of Grantor to the extent
related to any of the foregoing; and
(9) to the extent not otherwise included, all Proceeds and
products of the foregoing and all accessions to, substitutions
and replacements for, and rents and profits of, each of the
foregoing.
2.2 EXCEPTION TO LAST DAY. The Security Interest granted hereby shall not extend
or apply to, and Collateral shall not include, the last day of the term of any
lease or agreement therefor but upon the enforcement of the Security Interest
Grantor shall stand possessed of such last day in trust to assign the same to
any person acquiring such term.
2.3 LIABILITY FOR DEFICIENCY. If the Collateral is realized upon and the
Security Interest in the Collateral is not sufficient to satisfy all
Obligations, Grantor acknowledges and agrees that, subject to the provisions of
the PPSA, Grantor shall continue to be liable for any Obligations remaining
outstanding and Agent shall be entitled to pursue full payment thereof.
SECTION 3 -- AGENTS AND LENDERS' RIGHTS; LIMITATIONS ON AGENT'S
AND LENDERS' OBLIGATIONS
3.1 CONTINUED LIABILITY OF GRANTOR UNDER LICENSES, ETC. It is expressly agreed
by Grantor that, anything herein to the contrary notwithstanding, Grantor shall
remain liable under each of its Contracts and each of its Licenses to observe
and perform all the conditions and obligations to be observed and performed by
it thereunder. Neither Agent nor any Lender shall have any obligation or
liability under any Contract or License by reason of or arising out of this
Agreement or the granting herein of a Security Interest therein or the receipt
by Agent or any Lender of any payment relating to any Contract or License
pursuant hereto. Neither Agent nor any Lender shall be required or obligated in
any manner to perform or fulfill any of the obligations of Grantor under or
pursuant to any Contract or License, or to make any payment, or to make any
inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any Contract or License, or to
present or file any claims, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
3.2 NOTICE TO ACCOUNT DEBTORS. Agent may at any time without prior notice to
Grantor, notify any Account Debtors obligated under any Account of Grantor,
parties to any Contracts of Grantor and obligors in respect of Instruments and
Chattel Paper, that such Accounts and the right, title and interest of Grantor
<PAGE>
in and under such Contracts, Instruments and Chattel Paper have been assigned to
Agent, and, upon the occurrence of an Event of Default, may notify any such
Account Debtors, such parties to any Contracts of Grantor and such obligors that
payments shall be made directly to Agent. Upon the request of Agent, Grantor
shall so notify such Account Debtors, parties to Contracts and obligors in
respect of Instruments and Chattel Paper. Grantor acknowledges that any payments
on or other proceeds of Collateral received by Grantor from such Account
Debtors, whether before or after notification of this Security Interest to such
Account Debtors and whether before or after the occurrence of a Default or an
Event of Default, shall be received and held by Grantor in trust for Agent and
shall be turned over to Agent upon request.
3.3 VERIFICATION OF ACCOUNTS. Agent may at any time in Agent's own name or in
the name of Grantor communicate with Account Debtors, parties to Contracts,
obligors in respect of Instruments and obligors in respect of Chattel Paper to
verify with such Persons, to Agent's satisfaction, the existence, amount and
terms of any such Accounts, Contracts, Instruments or Chattel Paper. If an Event
of Default shall have occurred and be continuing, Grantor, at its own expense,
shall cause the independent chartered accountants then engaged by such Grantor
to prepare and deliver to Agent and each Lender at any time and from time to
time promptly upon Agent's request the following reports with respect to
Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts;
(iii) trial balances; and (iv) a test verification of such Accounts as Agent may
request. Grantor, at its own expense, shall deliver to Agent the results of each
physical verification, if any, which Grantor may in its discretion have made, or
caused any other Person to have made on its behalf, of all or any portion of its
Inventory.
SECTION 4 -- REPRESENTATIONS AND WARRANTIES OF GRANTOR
4.1 REPRESENTATIONS AND WARRANTIES. Grantor represents and warrants and so long
as this Agreement remains in effect shall be deemed to continuously represent
and warrant to Agent and Lenders that:
<PAGE>
(1) Grantor is a corporation duly incorporated, validly existing
and in good standing under the laws of Ontario and has all
requisite power and authority to execute, deliver and perform
this Agreement;
(2) Grantor's correct legal name is "American Eco Corporation";
(3) the execution, delivery and performance by Grantor of this
Agreement is within its corporate power, has been duly
authorized by all necessary corporate action and does not
contravene any law or governmental regulation or any
contractual restriction binding on or affecting Grantor or any
of its property;
(4) no authorization or approval or other action by, and no notice
to or filing with, any governmental body is required for the
due execution, delivery and performance by Grantor of this
Agreement;
(5) this Agreement is a legal, valid and binding obligation of
<PAGE>
Grantor, enforceable against Grantor in accordance with its
terms subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and (ii) the fact
that specific performance and injunctive relief may be given
at the discretion of the court;
(6) the Collateral is genuine and owned by Grantor free of all
Liens, save for Permitted Encumbrances;
(7) each Contract, Document of Title, Account, Chattel Paper and
Instrument constituting Collateral is enforceable in
accordance with its terms against the Account Debtor to pay
the same and the amount represented by Grantor to Agent from
time to time as owing by each Account Debtor or by all Account
Debtors will be the correct amount actually and
unconditionally owing by such Account Debtor or Account
Debtors, except for normal cash discounts where applicable,
and no Account Debtor will have any defence, set off, claim or
counterclaim against Grantor which can be asserted against
Agent, or Lenders whether in any proceeding to enforce
Collateral or otherwise;
(8) Grantor's chief executive office, principal place of business,
domicile (within the meaning of the Quebec Civil Code),
corporate offices, all warehouses and premises where
Collateral is stored or located, and the locations of all of
its books and records concerning the Collateral and all
Account Debtors are set forth on Schedule 4.1(8) hereto;
(9) the execution, delivery and performance of the obligations
under this Agreement and the creation of any security interest
in or assignment hereunder of Grantor's
rights in the Collateral to Agent will not result in a breach
of any agreement to which Grantor is a party or by which
Grantor or its property is bound;
(10) with respect to the Accounts of Grantor, (i) they represent
bona fide sales of Inventory or rendering of services to
Account Debtors in the ordinary course of Grantor's business
and are not evidenced by a judgment, Instrument or Chattel
Paper; (ii) the amounts shown on all invoices, statements and
Collateral Reports which may be delivered to Agent with
respect thereto are actually and absolutely owing to Grantor
as indicated thereon and are not in any way contingent; (iii)
no payments have been or shall be made thereon except payments
immediately delivered to the applicable Blocked Accounts or
Agent as required pursuant to the terms of Annex C to the
Credit Agreement; (iv) except as specifically disclosed in a
current Borrowing Base Certificate delivered to Agent, there
are no set-offs, claims or disputes existing or asserted with
respect thereto and Grantor has made no agreement with any
Account Debtor for any extension of time for the payment
thereof, any compromise or settlement for less than the full
amount thereof, any release of any Account Debtor from
liability therefor, or any deduction therefrom except a
discount or allowance allowed by Grantor in the ordinary
course of its business for prompt payment and disclosed to
Agent; (v) to Grantor's knowledge, except as specifically
<PAGE>
disclosed in a Collateral Report delivered to Agent, there are
no facts, events or occurrences which in any way impair the
validity or enforceability thereof or could reasonably be
expected to reduce the amount payable thereunder as shown on
Grantor's books and records and any invoices, statements and
Collateral Reports delivered to Agent and Lenders with respect
thereto; (vi) to Grantor's knowledge, all Account Debtors have
the capacity to contract; (vii) except as specifically
disclosed in a Collateral Report delivered to Agent, Grantor
has no notice of proceedings or actions which are threatened
or pending against any Account Debtor which might result in
any adverse change in such Account Debtor's financial
condition; and (viii) except as specifically disclosed in a
Collateral Report delivered to Agent, Grantor has no knowledge
that any Account Debtor is unable generally to pay its
accounts as they become due;
(11) all Inventory purchased by Grantor is purchased free and clear
of any and all Liens and other adverse claims other than
unpaid suppliers' rights to repossess goods under Section 81.1
of the Bankruptcy and Insolvency Act (Canada) and such
suppliers' substantially similar rights under the Civil Code
of Quebec;
(12) with respect to any Inventory scheduled or listed on any
statement, Collateral Report or other report delivered to
Agent pursuant to the terms of this Security Agreement or the
Credit Agreement or any Loan Document, (i) such Inventory is
located at one of Grantor's locations set forth on Schedule
4.1(8) hereto, (ii) no Inventory is now, or shall at any time
or times hereafter be stored at any other location without
Agent's prior consent, and if Agent gives such consent,
Grantor will concurrently therewith obtain, to the extent
required by the Credit Agreement, bailee, landlord
and mortgagee agreements, (iii) the applicable Grantor has
good, indefeasible and marketable title to such property and,
subject to Section 4.1(11) hereof, such property is not
subject to any Lien or security interest or document
whatsoever except for the Security Interest granted to Agent,
for the benefit of Agent and Lenders, and except for Permitted
Encumbrances, (iv) except as specifically disclosed in a
Collateral Report delivered to Agent, such Inventory is
Eligible Inventory of good and merchantable quality, free from
any defects, (v) such property is not subject to any
licensing, patent, royalty, trademark, trade name or copyright
agreements with any third parties which would require any
consent of any third party upon sale or disposition of that
Inventory or the payment of any monies to any third party as a
precondition of such sale or other disposition, and (vi) the
completion of manufacture, sale or other disposition of such
property by Agent following default, shall not require the
consent of any Person and shall not constitute a breach or
default under any contract or agreement to which Grantor is a
party or to which such property is subject; and
(13) Grantor has no interest in, or title to, any Patent, Trademark
or Copyright except as set forth in Schedule 4.1(13)(A)
<PAGE>
hereto. This Security Agreement is effective to create a valid
and continuing Lien on and, upon filing of this Agreement and
of the financing statements listed on Schedule 4.1(13)(B)
hereto, with the Canadian Intellectual Property Office,
perfected Liens in favour of Agent on Grantor's Patents,
Trademarks and Copyrights and such perfected Liens are
enforceable as such as against any and all creditors of and
purchasers from Grantor. Upon completion of the filings
referred to in the immediately preceding sentence, all action
necessary or desirable to protect and perfect Agent's Lien on
Grantor's Patents, Trademarks or Copyrights shall have been
duly taken.
SECTION 5 -- COVENANTS OF THE DEBTOR
5.1 COVENANTS. So long as this Agreement remains in effect, Grantor covenants
and agrees with Agent and Lenders as follows:
(1) DEFENCE OF COLLATERAL. Grantor shall defend the Collateral against the
claims and demands of all other parties claiming the same or an interest
therein; shall take all reasonable action to keep the Collateral free from all
Liens, except for Permitted Encumbrances or those Liens hereafter approved in
writing by Agent, prior to their creation or assumption, and shall not sell,
exchange, transfer, assign, lease, license or otherwise dispose of Collateral or
any interest therein without the prior written consent of Agent; provided always
that, until default Grantor may, in the ordinary course of Grantor's business,
sell or lease Inventory and, subject to the
<PAGE>
Credit Agreement and the Canadian Blocked Account Agreement, use Money in the
Disbursement Account.
(2) NOTICE TO AGENT. Grantor shall notify Agent promptly of:
(a) any change in the information contained herein or in the
Schedules hereto relating to Grantor, Grantor's business or
Collateral,
(b) the details of any significant acquisition of Collateral,
(c) the details of any claims or litigation affecting Grantor or
Collateral,
(d) any loss or damage to Collateral, and
(e) any default by any Account Debtor in payment or other performance
of his/her/its obligations with respect to Collateral.
(3) MAINTENANCE OF COLLATERAL. Grantor shall keep Collateral in good order,
condition and repair and not use Collateral in violation of the provisions of
this Agreement or any other agreement relating to Collateral or any policy
insuring Collateral or any applicable statute, law, by-law, rule, regulation or
ordinance; shall keep all agreements, registrations and applications relating to
Intellectual Property constituting Collateral and such Intellectual Property
used by Grantor in its business in good standing and renew all agreements and
registrations as may be necessary or desirable to protect such Intellectual
Property, unless otherwise agreed in writing by Agent; and shall apply to
<PAGE>
register all existing and future Intellectual Property constituting Collateral
whenever it is commercially reasonable to do so.
(4) FURTHER ASSURANCES; PLEDGE OF INSTRUMENTS. At any time and from time to
time, upon the written request of Agent and at the sole expense of Grantor,
Grantor shall promptly and duly execute and deliver any all such further
instruments and documents (including deeds of hypothec with respect to
Collateral located in the Province of Quebec) and take such further actions as
Agent may reasonably deem desirable to obtain the full benefits of this
Agreement and the other Loan Documents to which Grantor is a party and of the
rights and powers herein and therein granted, including (i) filing any financing
or continuation statements (or the applicable equivalent) under applicable law
with respect to the Liens granted hereunder or under any other Loan Document to
which Grantor is a party, and (ii) transferring Collateral to Agent's possession
(for the benefit of Agent and Lenders) if such Collateral consists of Documents
of Title, Securities, Investment Property, Chattel Paper, Instruments or if a
Lien on such Collateral can be perfected only by possession, or if requested by
Agent, Grantor also hereby authorizes Agent, for the benefit of Agent and
Lenders, to file any such financing or continuation statements (or the
applicable equivalent) without the signature of Grantor to the extent permitted
by applicable law. If any amount payable under or in connection with any of the
Collateral is or shall become evidenced by any Instrument, such Instrument,
other than cheques and notes received in the ordinary course of business, shall
be duly endorsed in a manner satisfactory to Agent immediately upon Grantor's
receipt thereof.
(5) TAXES. Grantor shall pay all taxes, rates, levies, assessments and other
charges of every nature which may be lawfully levied, assessed or imposed
against or in respect of Grantor or Collateral as and when the same become due
and payable.
(6) CONDUCT OF BUSINESS. Grantor shall carry on and conduct the business of
Grantor in a proper and efficient manner and so as to protect and preserve
Collateral and keep, in accordance with Canadian generally accepted accounting
principles, consistently applied, proper books of account for Grantor's business
as well as accurate and complete records concerning Collateral, and mark any and
all such records and Collateral at Agent's request so as to indicate Agent's
Security Interest.
(7) ADDITIONAL DOCUMENTS. Grantor shall deliver to Agent from time to time
promptly upon request:
(a) any Documents of Title, Instruments, Securities, Investment Property
and Chattel Paper constituting, representing or relating to
Collateral,
(b) all Records or other books of account, records, ledgers, reports,
correspondence, schedules, documents, statements, lists and other
writings relating to Collateral for the purpose of inspecting,
auditing or copying the same,
(c) all financial statements prepared by or for Grantor regarding
Grantor's business, and
<PAGE>
(d) such information concerning Collateral, Grantor and Grantor's business
and affairs as Agent may reasonably request.
(8) INDEMNIFICATION. In any suit, proceeding or action brought by Agent or any
Lender relating to any Account, Chattel Paper, Contract, Document of Title,
Intangible or Instrument for any sum owing thereunder or to enforce any
provision of any Account, Chattel Paper, Contract, Document of Title, Intangible
or Instrument, Grantor will save, indemnify and keep Agent and Lenders harmless
from and against all expense (including reasonable legal fees and expenses),
loss or damage suffered by reason of any defence, set-off, counterclaim,
recoupment, or reduction of liability whatsoever of the obligor thereunder,
arising out of a breach by Grantor of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at any time owing to, or in
favour of, such obligor or its successors from Grantor, except in the case of
Agent or any Lender, to the extent such expense, loss, or damage is attributable
solely to the gross negligence or wilful misconduct of Agent or such Lender as
finally determined by a court of competent jurisdiction. All such obligations of
Grantor shall be and remain enforceable against and only against Grantor and
shall not be enforceable against Agent or any Lender.
(9) CHANGE OF CORPORATE NAME OR LOCATION. Grantor shall not (1) change its
corporate name, or (2) change its chief executive office, principal place of
business, domicile (within the meaning of Quebec Civil Code), corporate offices
or warehouses or locations at which Collateral is held or stored, or the
location of its records concerning the Collateral, in any case without at least
thirty (30) days' prior written notice to Agent and after Agent's written
acknowledgment that any action requested by Agent in connection therewith,
including to continue the perfection of any Liens in favour of Agent, on behalf
of Agent and Lenders, or in favour of Agent and Lenders, as appropriate, in any
Collateral, has been completed or taken and provided that any such new location
shall be in Canada or the United States of America.
(10) INTELLECTUAL PROPERTY.
(a) Grantor shall notify Agent immediately if they know or have reason to
know that any application or registration relating to any of Grantor's
Patents, Trademarks or Copyrights (now or hereafter existing) may
become abandoned or dedicated, or of any adverse determination or
development (including the institution of, or any such determination
or development in, any proceeding in the Canadian Intellectual
Property Office or the United States Patent and Trademark Office or
the United States Copyright Office or any court) regarding Grantor's
ownership of any Patent, Trademark or Copyright, its rights to
register the same, or to keep and maintain the same.
(b) In no event shall Grantor, either itself or through any agent,
employee, licensee or designee, file an application for the
registration of any Patent, Trademark or Copyright with the Canadian
Intellectual Property Office or the United States Patent and Trademark
Office or the United States Copyright Office or any similar office or
agency without giving Agent prior written notice thereof, and, upon
request of Agent, Grantor shall execute and deliver any and all
<PAGE>
intellectual property security agreements, as Agent may request to
evidence Agent's Lien on such Patent, Trademark or Copyright, and the
General Intangibles and Intangibles of Grantor relating thereto or
represented thereby.
(c) Grantor shall take all actions necessary or requested by Agent to
maintain and pursue each application, to obtain the relevant
registration and to maintain the registration of each of Grantor's
Patents, Trademarks and Copyrights (now or hereafter existing),
including the filing of applications for renewal, affidavits or
declarations of use, affidavits of non-contestability and opposition
and interference and cancellation proceedings, unless the Grantor
shall determine that such Patent, Trademark or Copyright is not
material to the conduct of its business.
(d) In the event that any of Grantor's Patent, Trademark or Copyright
Collateral is infringed upon, or misappropriated or diluted by a third
party, Grantor shall notify Agent promptly after Grantor learns
thereof. Grantor shall, unless Grantor shall
reasonably determine that such Patent, Trademark or Copyright
Collateral is in no way material to the conduct of its
business or operations, promptly sue for infringement,
misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution,
and shall take such other actions as Agent shall deem
appropriate under the circumstances to protect such Patent,
Trademark or Copyright Collateral.
SECTION 6 -- USE AND VERIFICATION OF COLLATERAL
6.1 USE AND VERIFICATION OF COLLATERAL. Subject to compliance with Grantor's
covenants contained herein and Section 7.1 hereof, Grantor may, until the
occurrence of a Default or an Event of Default, possess, operate, collect, use
and enjoy and deal with Collateral in the ordinary course of Grantor's business
in any manner not inconsistent with the provisions hereof and the other Loan
Documents; provided always that Agent shall have the right at any time and from
time to time to verify the existence and state of the Collateral in any manner
Agent may consider appropriate and Grantor agrees to furnish all assistance and
information and to perform all such acts as Agent may reasonably request in
connection therewith and for such purpose to grant to Agent or its agents access
to all places where Collateral may be located and to all premises occupied by
Grantor, as contemplated by the Credit Agreement.
SECTION 7 -- SECURITIES
7.1 SECURITIES. If Collateral at any time includes Securities, Grantor
authorizes Agent to transfer the same or any part thereof into its own name or
that of its nominee(s) so that Agent or its nominee(s) may appear of record as
the sole owner thereof. Until the occurrence of a Default or an Event of
Default, Agent shall deliver promptly to Grantor all notices or other
communications received by it or its nominee(s) as such registered owner and,
upon demand and receipt of payment of any necessary expenses thereof, shall
issue to Grantor or its order a proxy to vote and take all action with respect
to such Securities. After the occurrence of a Default or an Event of Default,
Grantor waives all rights to receive any notices or communications received by
Agent or its nominee(s) as such registered owner and agrees that no proxy issued
<PAGE>
by Agent to Grantor or its order as aforesaid shall thereafter be effective.
SECTION 8 -- REMEDIES
8.1 APPOINTMENT OF RECEIVER. Upon the occurrence of and during the continuance
of any Default or Event of Default, Agent may appoint or reappoint by instrument
in writing, any Person or Persons, whether an officer or officers or an employee
or employees of Agent or not, to be a receiver or receivers (hereinafter called
a "RECEIVER", which term when used herein shall include a receiver and manager)
of Collateral (including any interest, income or profits therefrom) and may
remove any Receiver so appointed and appoint another in his/her/its stead. Any
such Receiver shall, so far as concerns responsibility for his/her/its acts, be
deemed the agent of Grantor and not Agent or any of Lenders, and neither Agent
nor any of Lenders shall be in any way responsible for any misconduct,
negligence or non-feasance on the part of any such Receiver, his/her/its
servants, agents or employees. Subject to the provisions of the instrument
appointing him/her/it, any such Receiver shall have power to take possession of
Collateral, to preserve Collateral or its value, to carry on or concur in
carrying on all or any part of the business of Grantor and to sell, lease,
license or otherwise dispose of or concur in selling, leasing, licensing or
otherwise disposing of Collateral. To facilitate the foregoing powers, any
such Receiver may, to the exclusion of all others, including Grantor, enter
upon, use and occupy all premises owned or occupied by Grantor wherein
Collateral may be situate, maintain Collateral upon such premises, borrow money
on a secured or unsecured basis and use Collateral directly in carrying on
Grantor's business or as security for loans or advances to enable the Receiver
to carry on Grantor's business or otherwise, as such Receiver shall, in its
discretion, determine. Except as may be otherwise directed by Agent, all Money
received from time to time by such Receiver in carrying out his/her/its
appointment shall be received in trust for and paid over to Agent. Every such
Receiver may, in the discretion of Agent, be vested with all or any of the
rights and powers of Agent.
8.2 EXERCISE OF RIGHTS BY AGENT. Upon and during the continuance of a Default or
Event of Default, Agent may, either directly or through its agents or nominees,
exercise any or all of the powers and rights given to a Receiver by virtue of
Section 8.1.
8.3 TAKING POSSESSION OF COLLATERAL. Agent may take possession of, collect,
demand, sue on, enforce, recover and receive Collateral and give valid and
binding receipts and discharges therefor and in respect thereof and, upon the
occurrence of a Default or an Event of Default, Agent may sell, license, lease
or otherwise dispose of Collateral in such manner, at such time or times and
place or places, for such consideration and upon such terms and conditions as to
Agent may seem reasonable.
8.4 RIGHTS AND REMEDIES UNDER PPSA. In addition to those rights granted herein
and in any other agreement now or hereafter in effect between Grantor and Agent
and any Lender and in addition to any other rights Agent or Lenders may have at
law or in equity, Agent shall have, both before and after the occurrence of a
Default or an Event of Default, all rights and remedies of a secured party under
the PPSA. However, Agent shall not be liable or accountable for any failure to
exercise its remedies, take possession of, collect, enforce, realize, sell,
<PAGE>
lease, license or otherwise dispose of Collateral or to institute any
proceedings for such purposes. Furthermore, Agent shall have no obligation to
take any steps to preserve rights against prior parties to any Instrument or
Chattel Paper whether Collateral or proceeds and whether or not in Agent's
possession and shall not be liable or accountable for failure to do so.
8.5 COOPERATION OF GRANTOR WITH RESPECT TO TAKING POSSESSION. Grantor
acknowledges that Agent or any Receiver appointed by it may take possession of
Collateral wherever it may be located and by any method permitted by law and
Grantor agrees upon request from Agent or any such Receiver to assemble and
deliver possession of Collateral at such place or places as directed.
8.6 COSTS. Grantor agrees to be liable for and to pay all costs, charges and
expenses reasonably incurred by Agent, any Lender or any Receiver appointed by
it, whether directly or for services rendered (including reasonable solicitors
and auditors costs and other legal expenses and Receiver remuneration), in
operating Grantor's accounts, in preparing or enforcing this Agreement, taking
and maintaining custody of, preserving, repairing, processing, preparing for
disposition and disposing of Collateral and in enforcing or collecting
indebtedness and all such costs, charges and expenses, together with any amounts
owing as a result of any borrowing by Agent, any Lender or any Receiver
appointed by it, as permitted hereby, shall be a first charge on the proceeds of
realization, collection or disposition of Collateral and shall be secured
hereby.
8.7 NOTICE OF SALE. The Agent will give Grantor such notice, if any, of the
date, time and place of any public sale or of the date after which any private
disposition of Collateral is to be made as may be required by the PPSA.
8.8 GRANT OF LICENCE TO USE INTELLECTUAL PROPERTY COLLATERAL. For the purpose of
enabling Agent to exercise rights and remedies under Section 8 hereof
(including, without limiting the terms of Section 8 hereof, in order to take
possession of, hold, preserve, process, assemble, prepare for sale, market for
sale, sell or otherwise dispose of Collateral) at such time as Agent shall be
lawfully entitled to exercise such rights and remedies, Grantor hereby grants to
Agent, for the benefit of Agent and Lenders, an irrevocable, non-exclusive
licence (exercisable without payment of royalty or other compensation to such
Grantor) to use, license or sublicense any Intellectual Property now owned or
hereafter acquired by Grantor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.
SECTION 9 -- MISCELLANEOUS
9.1 PERFORMANCE BY AGENT. Upon Grantor's failure to perform any of its duties
hereunder, Agent may, but shall not be obligated to, perform any or all of such
duties, and Grantor shall pay to Agent, forthwith upon written demand therefor,
an amount equal to the expense incurred by Agent in so doing plus interest
thereon from the date such expense is incurred until it is paid at an annual
rate of interest equal to the sum of the Index Rate plus the Applicable Revolver
Index Margin plus 2% per annum, as determined by Agent on the basis of a three
hundred and sixty (360) day year, in each case for the actual number of days
occurring in the period for which such interest is payable. The Index Rate shall
<PAGE>
be determined each day based upon the Index Rate as in effect each day. For the
purposes of the Interest Act (Canada), such rate of interest shall be equivalent
to a rate based on a calendar year equal to such rate of interest multiplied by
the actual number of days in the calendar year of calculation and divided by
360.
9.2 EXTENSIONS, ETC. Agent may grant extensions of time and other indulgences,
take and give up security, accept compositions, compound, compromise, settle,
grant releases and discharges and otherwise deal with Grantor, debtors of
Grantor, any other Credit Party, sureties and others and with Collateral and
other security as Agent may see fit without prejudice to the liability of
Grantor or Agent's right to hold and realize the Security Interest. Furthermore,
Agent may demand, collect and sue on Collateral in either Grantor's or Agent's
name, at Agent's option, and may endorse Grantor's name on any and all cheques,
commercial paper, and any other Instruments pertaining to or constituting
Collateral.
9.3 NO WAIVER. No delay or omission by Agent in exercising any right or remedy
hereunder or with respect to any of the Obligations shall operate as a waiver
thereof or of any other right or remedy, and no single or partial exercise
thereof shall preclude any other or further exercise thereof or the exercise of
any other right or remedy. Furthermore, Agent may remedy any default by Grantor
hereunder or with respect to any Obligations in any reasonable manner without
waiving the default remedied and without waiving any other prior or subsequent
default by Grantor. All rights and remedies of Agent granted or recognized
herein are cumulative and may be exercised at any time and from time to time
independently or in combination.
9.4 WAIVER OF PROTEST. Grantor waives protest of any Instrument constituting
Collateral at any time held by Agent on which Grantor is in any way liable and,
subject to Section 9.5 hereof, notice of any other action taken by Agent.
9.5 ASSIGNMENT AND ENUREMENT. This Agreement shall enure to the benefit of and
be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns. In any action brought by an assignee of
this Agreement and the Security Interest or any part thereof to enforce any
rights hereunder, Grantor shall not assert against the assignee any claim or
defence which Grantor now has or hereafter may have against Agent or any Lender.
If more than one Grantor executes this Agreement the obligations of such
Grantors hereunder shall be joint and several.
9.6 AMENDMENT. Save for any schedules which may be added hereto pursuant to the
provisions hereof, no modification, variation or amendment of any provision of
this Agreement shall be made except by a written agreement, executed by the
parties hereto and no waiver of any provision hereof shall be effective unless
in writing.
9.7 NOTICES. Except as otherwise provided herein, each notice, demand, request,
consent, approval, declaration or other communication which shall or may be
given hereunder shall be in writing and shall be deemed to have been validly
served, given or delivered if served, given or delivered in accordance with
Section 11.10 of the Credit Agreement.
9.8 REMEDIES CUMULATIVE. This Agreement and the security afforded hereby is in
<PAGE>
addition to and not in substitution for any other security now or hereafter held
by Agent and is intended to be a continuing security agreement and shall remain
in full force and effect until all Obligations and any extensions or renewals
thereof together with interest accruing thereon shall be paid in full.
9.9 HEADINGS. The headings used in this Agreement are for convenience only and
are not to be considered a part of this Agreement and do not in any way limit or
amplify the terms and provisions of this Agreement.
9.10 NUMBER AND GENDER. When the context so requires, the singular number shall
be read as if the plural were expressed and the provisions hereof shall be read
with all grammatical changes necessary dependent upon the person referred to
being a male, female, firm or corporation.
9.11 SEVERABILITY. In the event any provisions of this Agreement, as amended
from time to time, shall be deemed invalid or void, in whole or in part, by any
Court of competent jurisdiction, the remaining terms and provisions of this
Agreement shall remain in full force and effect.
9.12 EXTENSIONS. Nothing herein contained shall in any way obligate Agent to
grant, continue, renew, extend time for payment of or accept anything which
constitutes or would constitute Obligations.
9.13 ATTACHMENT. The Security Interest created hereby is intended to attach when
this Agreement is signed by Grantor and delivered to Agent.
9.14 AMALGAMATION. Grantor acknowledges and agrees that in the event it
amalgamates with any other company or companies it is the intention of the
parties hereto that the term "Grantor" when used herein shall apply to each of
the amalgamating companies and to the amalgamated company, such that the
Security Interest granted hereby:
(1) shall extend to "Collateral" (as that term is herein defined)
owned by each of the amalgamating companies and the
amalgamated company at the time of amalgamation and to any
"Collateral" thereafter owned or acquired by the amalgamated
company, and
(2) shall secure the "Obligations" (as that term is herein
defined) of each of the amalgamating companies and the
amalgamated company to Agent and Lenders at the time of
amalgamation and any "Obligations" of the amalgamated company
to Agent and Lenders thereafter arising. The Security Interest
shall attach to "Collateral" owned by each company
amalgamating with Grantor, and by the amalgamated company, at
the time of the amalgamation, and shall attach to any
"Collateral" thereafter owned or acquired by the amalgamated
company when such becomes owned or is acquired.
9.15 AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT. On the Closing Date, Grantor shall
execute and deliver to Agent a power of attorney (the "POWER OF ATTORNEY")
substantially in the form attached hereto as Exhibit A. The power of attorney
granted pursuant to the Power of Attorney is a power coupled with an interest
<PAGE>
and shall be irrevocable until the Termination Date. The powers conferred on
Agent, for the benefit of Agent and Lenders, under the Power of Attorney are
solely to protect Agent's interests (for the benefit of Agent and Lenders) in
the Collateral and shall not impose any duty upon Agent or any Lender to
exercise any such powers. Agent agrees that (a) it shall not exercise any power
of attorney or authority granted under the Power of Attorney unless an Event of
Default has occurred and is continuing, and (b) Agent shall account for any
money received by Agent in respect of any foreclosure on or disposition of
Collateral pursuant to the Power of Attorney provided that none of Agent or
Lenders shall have any duty as to any Collateral, and Agent and Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers. NONE OF AGENT, LENDERS OR THEIR RESPECTIVE AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE
TO ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR
OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES.
9.16 FURTHER ASSURANCES. Grantor hereby authorizes Agent to file such financing
statements, financing change statements and other documents and do such acts,
matters and things (including completing and adding schedules hereto identifying
Collateral or any Permitted Encumbrances affecting Collateral or identifying the
locations at which Grantor's business is carried on and Collateral and records
relating thereto are situate) as Agent may deem appropriate to perfect on an
ongoing basis and continue the Security Interest, to protect and preserve
Collateral and, following an Event of Default, to realize upon the Security
Interest.
9.17 GOVERNING LAW. This Agreement and the transactions evidenced hereby shall
be governed by and construed in accordance with the laws of the province of
Ontario, as the same may from time to time be in effect, including, where
applicable, the PPSA.
SECTION 10 -- COPY OF AGREEMENT
10.1 COPY. Grantor hereby acknowledges receipt of a copy of this Agreement.
10.2 WAIVER. To the extent permitted by applicable law, Grantor waives Grantor's
right to receive a copy of any financing statement or financing change statement
registered by Agent, or of any verification statement with respect to any
financing statement or financing change statement registered by Agent.
<PAGE>
The parties have executed this Agreement.
AMERICAN ECO CORPORATION
By: /s/ David L. Norris
Name: David L. Norris
Title: Vice President
By:
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Charles D. Chiodo
Name: Charles D. Chiodo
Title: Duly Authorized Signatory
Exhibit 10.5
GUARANTY
This GUARANTY (this "Guaranty"), dated as of May 7, 1999, by and among
the Guarantors identified as such on the signature page hereof (each, a
"Guarantor" and collectively, "Guarantors"), and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation, individually and as agent (in such
capacity, "Agent") for itself and the lenders from time to time signatory to the
Credit Agreement hereinafter defined ("Lenders").
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to that certain Credit Agreement dated as of the date
hereof by and among Guarantors, the Persons named therein as Credit Parties,
Agent and the Persons signatory thereto from time to time as Lenders (as from
time to time amended, restated, supplemented or otherwise modified, the "Credit
Agreement") Lenders have agreed to make Loans to, and incur Letter of Credit
Obligations for the benefit of, Borrowers.
WHEREAS, Guarantors are affiliates of each of the Borrowers and as such
will derive direct and indirect economic benefits from the making of the Loans
and other financial accommodations provided to Borrowers pursuant to the Credit
Agreement; and
WHEREAS, in order to induce Agent and Lenders to enter into the Credit
Agreement and other Loan Documents and to induce Lenders to make the Loans and
to incur Letter of Credit Obligations as provided for in the Credit Agreement,
Guarantors have agreed to guarantee payment of the Obligations;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce Lenders to provide the Loans and other
financial accommodations under the Credit Agreement, it is agreed as follows:
1. DEFINITIONS.
-----------
Capitalized terms used herein shall have the meanings assigned to them
in the Credit Agreement, unless otherwise defined herein.
References to this "Guaranty" shall mean this Guaranty, including all
amendments, modifications and supplements and any annexes, exhibits and
schedules to any of the foregoing, and shall refer to this Guaranty as the same
may be in effect at the time such reference becomes operative.
2. THE GUARANTY.
------------
2.1 Guaranty of Guaranteed Obligations of Borrower. Each Guarantor
-------------------------------------------------
hereby jointly and severally unconditionally guarantees to Agent and Lenders,
and their respective successors, endorsees, transferees and assigns, the prompt
payment (whether at stated maturity, by acceleration or otherwise) and
performance of the Obligations of Borrowers (hereinafter the "Guaranteed
Obligations"). Guarantors agree that this Guaranty is a guaranty of payment and
performance and not of collection, and that their obligations under this
Guaranty shall be primary, absolute and unconditional, irrespective of, and
unaffected by:
<PAGE>
(a) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in this Guaranty, any other Loan Document or
any other agreement, document or instrument to which any Credit Party and/or
Guarantors are or may become a party;
(b) the absence of any action to enforce this Guaranty or any
other Loan Document or the waiver or consent by Agent and/or Lenders with
respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to
perfect its Lien against, any Collateral for the Guaranteed Obligations or any
action, or the absence of any action, by Agent in respect thereof (including,
without limitation, the release of any such security); or
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being agreed by each Guarantor that its obligations under this
Guaranty shall not be discharged until the Termination Date. Each Guarantor
shall be regarded, and shall be in the same position, as principal debtor with
respect to the Guaranteed Obligations. Each Guarantor agrees that any notice or
directive given at any time to Agent which is inconsistent with the waiver in
the immediately preceding sentence shall be null and void and may be ignored by
Agent and Lenders, and, in addition, may not be pleaded or introduced as
evidence in any litigation relating to this Guaranty for the reason that such
pleading or introduction would be at variance with the written terms of this
Guaranty, unless Agent and Lenders have specifically agreed otherwise in
writing. It is agreed among each Guarantor, Agent and Lenders that the foregoing
waivers are of the essence of the transaction contemplated by the Loan Documents
and that, but for this Guaranty and such waivers, Agent and Lenders would
decline to enter into the Credit Agreement.
2.2 Demand by Agent or Lenders. In addition to the terms of the
-----------------------------
Guaranty set forth in Section 2.1 hereof, and in no manner imposing any
limitation on such terms, it is expressly understood and agreed that, if, at any
time, the outstanding principal amount of the Guaranteed Obligations under the
Credit Agreement (including all accrued interest thereon) is declared to be
immediately due and payable, then Guarantors shall, without demand, pay to the
holders of the Guaranteed Obligations the entire outstanding Guaranteed
Obligations due and owing to such holders. Payment by Guarantors shall be made
to Agent in immediately available Federal funds to an account designated by
Agent or at the address set forth herein for the giving of notice to Agent or at
any other address that may be specified in writing from time to time by Agent,
and shall be credited and applied to the Guaranteed Obligations.
2.3 Enforcement of Guaranty. In no event shall Agent have any
-------------------------
obligation (although it is entitled, at its option) to proceed against any
Borrower or any other Credit Party or any Collateral pledged to secure
Guaranteed Obligations before seeking satisfaction from any or all of the
Guarantors, and Agent may proceed, prior or subsequent to, or simultaneously
with, the enforcement of Agent's rights hereunder, to exercise any right or
remedy which it may have against any Collateral, as a result of any Lien it may
have as security for all or any portion of the Guaranteed Obligations.
2.4 Waiver. In addition to the waivers contained in Section 2.1 hereof,
------
Guarantors waive, and agree that they shall not at any time insist upon, plead
or in any manner whatever claim or take the benefit or advantage of, any
appraisal, valuation, stay, extension, marshaling of assets or redemption laws,
or exemption, whether now or at any time hereafter in force, which may delay,
prevent or otherwise affect the performance by Guarantors of their Guaranteed
Obligations under, or the enforcement by Agent or Lenders of, this Guaranty.
Guarantors hereby waive diligence, presentment and demand (whether for
non-payment or protest or of acceptance, maturity, extension of time, change in
<PAGE>
nature or form of the Guaranteed Obligations, acceptance of further security,
release of further security, composition or agreement arrived at as to the
amount of, or the terms of, the Guaranteed Obligations, notice of adverse
change in any Borrower's financial condition or any other fact which might
increase the risk to Guarantors) with respect to any of the Guaranteed
Obligations or all other demands whatsoever and waive the benefit of all
provisions of law which are or might be in conflict with the terms of this
Guaranty. Guarantors represent, warrant and jointly and severally agree that,
as of the date of this Guaranty, their obligations under this Guaranty are not
subject to any offsets or defenses against Agent or Lenders or any Credit
Party of any kind. Guarantors further jointly and severally agree that their
obligations under this Guaranty shall not be subject to any counterclaims,
offsets or defenses against Agent or any Lender or against any Credit Party of
any kind which may arise in the future.
2.5 Benefit of Guaranty. The provisions of this Guaranty are for the
-------------------
benefit of Agent and Lenders and their respective successors, transferees,
endorsees and assigns, and nothing herein contained shall impair, as between any
Credit Party and Agent or Lenders, the obligations of any Credit Party under the
Loan Documents. In the event all or any part of the Guaranteed Obligations are
transferred, indorsed or assigned by Agent or any Lender to any Person or
Persons, any reference to "Agent" or "Lender" herein shall be deemed to refer
equally to such Person or Persons.
2.6 Modification of Guaranteed Obligations, Etc. Each Guarantor hereby
--------------------------------------------
acknowledges and agrees that Agent and Lenders may at any time or from time to
time, with or without the consent of, or notice to, Guarantors or any of them:
(a) change or extend the manner, place or terms of
payment of, or renew or alter all or any portion of, the Guaranteed Obligations;
(b) take any action under or in respect of the Loan Documents
in the exercise of any remedy, power or privilege contained therein or available
to it at law, equity or otherwise, or waive or refrain from exercising any such
remedies, powers or privileges;
(c) amend or modify, in any manner whatsoever, the Loan
Documents;
(d) extend or waive the time for any Credit Party's
performance of, or compliance with, any term, covenant or agreement on its part
to be performed or observed under the Loan Documents, or waive such performance
or compliance or consent to a failure of, or departure from, such performance or
compliance;
(e) take and hold Collateral for the payment of the Guaranteed
Obligations guaranteed hereby or sell, exchange, release, dispose of, or
otherwise deal with, any property pledged, mortgaged or conveyed, or in which
Agent or Lenders have been granted a Lien, to secure any Obligations;
(f) release anyone who may be liable in any manner for the
payment of any amounts owed by Guarantors or any Credit Party to Agent or any
Lender;
(g) modify or terminate the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of any
Guarantor or any Credit Party are subordinated to the claims of Agent and
Lenders; and/or
(h) apply any sums by whomever paid or however realized to any
amounts owing by any Guarantor or any Credit Party to Agent or any Lender in
such manner as Agent or any Lender shall determine in its discretion;
<PAGE>
and Agent and Lenders shall not incur any liability to Guarantors as a result
thereof, and no such action shall impair or release the Guaranteed Obligations
of Guarantors or any of them under this Guaranty.
2.7 Reinstatement. This Guaranty shall remain in full force and effect
-------------
and continue to be effective should any petition be filed by or against any
Credit Party or any Guarantor for liquidation or reorganization, should any
Credit Party or any Guarantor become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for all or any
significant part of such Credit Party's or such Guarantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Guaranteed Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by Agent or any Lender, whether as a "voidable preference",
"fraudulent conveyance", or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Guaranteed Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
2.8 Deferral of Subrogation, Etc. Notwithstanding anything to the
-------------------------------
contrary in this Guaranty, or in any other Loan Document, each Guarantor hereby:
(a) expressly and irrevocably waives, on behalf of itself and
its successors and assigns (including any surety) until the Termination Date,
any and all rights at law or in equity to subrogation, to reimbursement, to
exoneration, to contribution, to indemnification, to set off or to any other
rights that could accrue to a surety against a principal, to a guarantor against
a principal, to a guarantor against a maker or obligor, to an accommodation
party against the party accommodated, to a holder or transferee against a maker,
or to the holder of any claim against any Person, and which such Guarantor may
have or hereafter acquire against any Credit Party in connection with or as a
result of such Guarantor's execution, delivery and/or performance of this
Guaranty, or any other documents to which such Guarantor is a party or
otherwise; and
(b) acknowledges and agrees (i) that this waiver is intended
to benefit Agent and Lenders and shall not limit or otherwise effect any
Guarantor's liability hereunder or the enforceability of this Guaranty, and (ii)
that Agent, Lenders and their respective successors and assigns are intended
third party beneficiaries of the waivers and agreements set forth in this
Section 2.8 and their rights under this Section 2.8 shall survive payment in
full of the Guaranteed Obligations.
2.9 Election of Remedies. If Agent may, under applicable law, proceed
--------------------
to realize benefits under any of the Loan Documents giving Agent and Lenders a
Lien upon any Collateral owned by any Credit Party, either by judicial
foreclosure or by non-judicial sale or enforcement, Agent may, at its sole
option, determine which of such remedies or rights it may pursue without
affecting any of such rights and remedies under this Guaranty. If, in the
exercise of any of its rights and remedies, Agent shall forfeit any of its
rights or remedies, including its right to enter a deficiency judgment against
any Credit Party, whether because of any applicable laws pertaining to "election
of remedies" or the like, Guarantors hereby consent to such action by Agent and
waive any claim based upon such action, even if such action by Agent shall
result in a full or partial loss of any rights of subrogation which Guarantors
might otherwise have had but for such action by Agent. Any election of remedies
which results in the denial or impairment of the right of Agent to seek a
deficiency judgment against any Credit Party shall not impair each Guarantor's
obligation to pay the full amount of the Guaranteed Obligations. In the event
Agent shall bid at any foreclosure or trustee's sale or at any private sale
permitted by law or the Loan Documents, Agent may bid all or less than the
amount of the Guaranteed Obligations and the amount of such bid need not be paid
by Agent but shall be credited against the Guaranteed Obligations. The amount of
the successful bid at any such sale shall be conclusively deemed to be the fair
market value of the collateral and the difference between such bid amount and
the remaining balance of the Guaranteed Obligations shall be conclusively deemed
to be the amount of the Guaranteed Obligations guaranteed under this Guaranty,
notwithstanding that any present or future law or court decision or ruling may
<PAGE>
have the effect of reducing the amount of any deficiency claim to which Agent
and Lenders might otherwise be entitled but for such bidding at any such sale.
2.10 Funds Transfers. If any Guarantor shall engage in any transaction
---------------
as a result of which any Borrower is required to make a mandatory prepayment
with respect to the Guaranteed Obligations under the terms of the Credit
Agreement (including any issuance or sale of such Guarantor's Stock or any sale
of its assets), such Guarantor shall distribute to, or make a contribution to
the capital of, one or more of the Borrowers an amount equal to the mandatory
prepayment required under the terms of the Credit Agreement.
3. DELIVERIES.
----------
In a form satisfactory to Agent, Guarantors shall deliver to Agent
(with sufficient copies for each Lender), concurrently with the execution of
this Guaranty and the Credit Agreement, the Loan Documents and other
instruments, certificates and documents as are required to be delivered by
Guarantors to Agent under the Credit Agreement.
4. REPRESENTATIONS AND WARRANTIES.
------------------------------
To induce Lenders to make the Loans and incur Letter of Credit
Obligations under the Credit Agreement, Guarantors jointly and severally make
the representations and warranties as to each Guarantor contained in the Credit
Agreement, each of which is incorporated herein by reference, and the following
representations and warranties to Agent and each Lender, each and all of which
shall survive the execution and delivery of this Guaranty:
4.1 Corporate Existence; Compliance with Law. Each Guarantor (i) is a
------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation; (ii) is duly qualified to do business and
is in good standing under the laws of each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification;
(iii) has the requisite corporate power and authority and the legal right to
own, pledge, mortgage and operate its properties, to lease the property it
operates under lease, and to conduct its business as now, heretofore and
proposed to be conducted; (iv) has all licenses, permits, consents or approvals
from or by, and has made all material filings with, and has given all notices
to, all Governmental Authorities having jurisdiction, to the extent required for
such ownership, operation and conduct; (v) is in compliance with its charter and
by-laws; and (vi) is in compliance with all applicable provisions of law, except
where the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
4.2 Executive Offices. Each Guarantor's executive office and principal
-----------------
place of business are as set forth in Disclosure Schedule (3.2) of the Credit
---------------------------
Agreement.
4.3 Corporate Power; Authorization; Enforceable Guaranteed Obligations.
------------------------------------------------------------------
The execution, delivery and performance of this Guaranty and all other Loan
Documents and all instruments and documents to be delivered by each Guarantor
hereunder and under the Credit Agreement are within such Guarantor's corporate
power, have been duly authorized by all necessary or proper corporate action,
including the consent of stockholders where required, are not in contravention
of any provision of such Guarantor's charter or by-laws, do not violate any law
or regulation, or any order or decree of any Governmental Authority, do not
conflict with or result in the breach of, or constitute a default under, or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which any Guarantor is a party or by which any Guarantor or any of its property
is bound, do not result in the creation or imposition of any Lien upon any of
the property of any Guarantor, other than those in favor of Agent, for itself
and the benefit of Lenders, and the same do not require the consent or approval
of any Governmental Authority or any other Person except those referred to in
Section 2.1(c) of the Credit Agreement, all of which have been duly obtained,
made or complied with prior to the Closing Date. On or prior to the Closing
Date, this Guaranty and each of the Loan Documents to which any Guarantor is a
<PAGE>
party shall have been duly executed and delivered for the benefit of or on
behalf of such Guarantor, and each shall then constitute a legal, valid and
binding obligation of such Guarantor, enforceable against such Guarantor in
accordance with its terms.
5. FURTHER ASSURANCES.
------------------
Each Guarantor agrees, upon the written request of Agent or any Lender,
to execute and deliver to Agent or such Lender, from time to time, any
additional instruments or documents reasonably considered necessary by Agent or
such Lender to cause this Guaranty to be, become or remain valid and effective
in accordance with its terms.
6. PAYMENTS FREE AND CLEAR OF TAXES.
--------------------------------
All payments required to be made by each Guarantor hereunder shall be
made to Agent and Lenders free and clear of, and without deduction for, any and
all present and future Taxes. If any Guarantor shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder, (a) the sum
payable shall be increased as much as shall be necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 6) Agent or Lenders, as applicable, receive an amount
equal to the sum they would have received had no such deductions been made, (b)
such Guarantor shall make such deductions, and (c) such Guarantor shall pay the
full amount deducted to the relevant taxing or other authority in accordance
with applicable law. Within thirty (30) days after the date of any payment of
Taxes, each applicable Guarantor shall furnish to Agent the original or a
certified copy of a receipt evidencing payment thereof. Each Guarantor shall
jointly and severally indemnify and, within ten (10) days of demand therefor,
pay Agent and each Lender for the full amount of Taxes (including any Taxes
imposed by any jurisdiction on amounts payable under this Section 6) paid by
Agent or such Lender, as appropriate, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally asserted.
7. OTHER TERMS.
-----------
7.1 Entire Agreement. This Guaranty, together with the other Loan
-----------------
Documents, constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements relating to a
guaranty of the loans and advances under the Loan Documents and/or the
Guaranteed Obligations.
7.2 Headings. The headings in this Guaranty are for convenience of
--------
reference only and are not part of the substance of this Guaranty.
7.3 Severability. Whenever possible, each provision of this Guaranty
------------
shall be interpreted in such a manner to be effective and valid under applicable
law, but if any provision of this Guaranty shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Guaranty.
7.4 Notices. Whenever it is provided herein that any notice, demand,
-------
request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by any other party, or whenever any
of the parties desires to give or serve upon another any such communication with
respect to this Guaranty, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be addressed to
the party to be notified as follows:
<PAGE>
(a) If to Agent, at:
GENERAL ELECTRIC CAPITAL CORPORATION
201 High Ridge Road
Stamford, Connecticut 06927
Attention: American Eco Account Manager
Telecopier: 203 316-7893
Telephone: 203 316-7500
with copies to:
OTTERBOURG, STEINDLER, HOUSTON & ROSEN, P.C.
230 Park Avenue
New York, New York 10169
Attention: Mitchell M. Brand, Esq.
Telecopier: 212 682-6104
Telephone: 212 661-9100
(b) If to any Lender, at the address of such Lender specified
in the Credit Agreement.
(c) If to any Guarantor, at the address of such Guarantor
specified on Schedule I hereto.
----------
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been validly served, given or delivered (i) upon the earlier of actual
receipt and three (3) Business Days after the same shall have been deposited
with the United States mail, registered or certified mail, return receipt
requested, with proper postage prepaid, (ii) upon transmission, when sent by
telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States mail as otherwise provided in this Section 7.4), (iii) one (1)
------------
Business Day after deposit with a reputable overnight carrier with all charges
prepaid, or (iv) when delivered, if hand-delivered by messenger.
7.5 Successors and Assigns. This Guaranty and all obligations of
------------------------
Guarantors hereunder shall be binding upon the successors and assigns of each
Guarantor (including a debtor-in-possession on behalf of such Guarantor) and
shall, together with the rights and remedies of Agent, for itself and for the
benefit of Lenders, hereunder, inure to the benefit of Agent and Lenders, all
future holders of any instrument evidencing any of the Obligations and their
respective successors and assigns. No sales of participations, other sales,
assignments, transfers or other dispositions of any agreement governing or
instrument evidencing the Obligations or any portion thereof or interest therein
shall in any manner affect the rights of Agent and Lenders hereunder. Guarantors
may not assign, sell, hypothecate or otherwise transfer any interest in or
obligation under this Guaranty.
7.6 No Waiver; Cumulative Remedies; Amendments. Neither Agent nor any
-------------------------------------------
Lender shall by any act, delay, omission or otherwise be deemed to have waived
any of its rights or remedies hereunder, and no waiver shall be valid unless in
writing, signed by Agent and then only to the extent therein set forth. A waiver
by Agent, for itself and the ratable benefit of Lenders, of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which Agent would otherwise have had on any future occasion. No failure
to exercise nor any delay in exercising on the part of Agent or any Lender, any
right, power or privilege hereunder, shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
<PAGE>
any rights and remedies provided by law. None of the terms or provisions of this
Guaranty may be waived, altered, modified, supplemented or amended except by
an instrument in writing, duly executed by Agent and Guarantors.
7.7 Termination. This Guaranty is a continuing guaranty and shall
-----------
remain in full force and effect until the Termination Date. Upon payment and
performance in full of the Guaranteed Obligations, Agent shall deliver to
Guarantors such documents as Guarantors may reasonably request to evidence such
termination.
7.8 Counterparts. This Guaranty may be executed in any number of
------------
counterparts, each of which shall collectively and separately constitute one and
the same agreement.
7.9 GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.
------------------------------------------------
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN
ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. EACH GUARANTOR HEREBY CONSENTS AND AGREES
THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG
GUARANTORS, AGENT OR ANY LENDER PERTAINING TO THIS GUARANTY OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, THAT AGENT AND GUARANTORS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, AND,
PROVIDED, FURTHER, THAT NOTHING IN THIS GUARANTY SHALL BE DEEMED OR OPERATE TO
PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
GUARANTEED OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR
OF AGENT, FOR THE BENEFIT OF AGENT AND LENDERS. EACH GUARANTOR EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND EACH GUARANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH GUARANTOR HEREBY WAIVES PERSONAL SERVICE
OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT
AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH GUARANTOR AT THE ADDRESS
SET FORTH ON SCHEDULE I HERETO AND THAT SERVICE SO MADE SHALL BE DEEMED
-----------
COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
7.10 WAIVER OF JURY TRIAL.
--------------------
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), EACH GUARANTOR AND AGENT DESIRES THAT DISPUTES
ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OR ARBITRATION, EACH GUARANTOR AND AGENT WAIVES ALL
<PAGE>
RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
IN CONNECTION WITH THIS GUARANTY AND THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO.
7.11 Limitation on Guaranteed Obligations. Notwithstanding any
----------------------------------------
provision herein contained to the contrary, each Guarantor's liability hereunder
shall be limited to an amount not to exceed as of any date of determination the
greater of:
(a) the net amount of all Loans and other extensions of credit
(including Letters of Credit) advanced under the Credit Agreement and directly
or indirectly re-loaned or otherwise transferred to, or incurred for the benefit
of, such Guarantor, plus interest thereon at the applicable rate specified in
the Credit Agreement; or
(b) the amount which could be claimed by the Agent and Lenders from
such Guarantor under this Guaranty without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Guarantor's right of contribution and indemnification from each
other Guarantor under Section 7.12.
7.12 Contribution with Respect to Guaranteed Obligations.
---------------------------------------------------
(a) To the extent that any Guarantor shall make a payment under this
Guaranty of all or any of the Guaranteed Obligations (a "Guarantor Payment")
which, taking into account all other Guarantor Payments then previously or
concurrently made by the other Guarantors, exceeds the amount which such
Guarantor would otherwise have paid if each Guarantor had paid the aggregate
Guaranteed Obligations satisfied by such Guarantor Payment in the same
proportion that such Guarantor's "Allocable Amount" (as defined below) (in
effect immediately prior to such Guarantor Payment) bore to the aggregate
Allocable Amounts of all of Guarantors in effect immediately prior to the making
of such Guarantor Payment, then, following indefeasible payment in full in cash
of the Obligations and termination of the Commitments, such Guarantor shall be
entitled to receive contribution and indemnification payments from, and be
reimbursed by, each of the other Guarantors for the amount of such excess, pro
rata based upon their respective Allocable Amounts in effect immediately prior
to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of any
Guarantor shall be equal to the maximum amount of the claim which could then be
recovered from such Guarantor under this Guaranty without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
(c) This Section 7.12 is intended only to define the relative rights of
------------
Guarantors and nothing set forth in this Section 7.12 is intended to or shall
-------------
impair the obligations of Guarantors, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Guaranty.
(d) The rights of the parties under this Section 7.12 shall be
-------------
exercisable upon the full and indefeasible payment of the Guaranteed Obligations
and the termination of the Credit Agreement and the other Loan Documents.
(e) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of any Guarantor to which such
contribution and indemnification is owing.
<PAGE>
8. SECURITY.
--------
To secure payment of each Guarantor's obligations under this Guaranty,
concurrently with the execution of this Guaranty, each Guarantor has entered
into a Security Agreement pursuant to which each Guarantor has granted to Agent
for the benefit of Lenders a security interest in certain of its personal
property as more particularly described in such Security Agreement.
9. CREDIT AGREEMENT.
----------------
Each Guarantor agrees to perform, comply with and be bound by, among
other covenants, the covenants contained in Sections 4, 5 and 6 of the Credit
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Guaranty as of the date first above written.
CAMBRIDGE CONSTRUCTION SERVICE CORP.
H.E. CO. SERVICES, INC.
INDUSTRA THERMAL SERVICE CORP.
LAKE CHARLES CONSTRUCTION CORPORATION
NUS, INC.
SEPARATION AND RECOVERY SYSTEMS
CALIFORNIA
By: /s/ David L. Norris
-----------------------------------------
Name: David L. Norris
-----------------------------------------
Title: Vice President Of Each
-----------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent
By: /s/ Charles D. Chiodo
-----------------------------------------
Name: Charles D. Chiodo
-----------------------------------------
Title: Duly Authorized Signatory
-----------------------------------------
Exhibit 10.6
AMERICAN ECO CORPORATION GUARANTEE
This Guarantee is made as of May 7, 1999, between
AMERICAN ECO CORPORATION, an Ontario corporation
("GUARANTOR")
and
GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation, on its own behalf and as agent (together with
its successors and assigns, "AGENT") for the financial
institutions and other entities that are from time to time
signatories, as lenders ("LENDERS") to the Credit Agreement
as hereinafter defined
RECITALS
A. Pursuant to that certain credit agreement dated as of the date hereof among
the Persons named therein as Borrowers, Guarantor and the other Persons named
therein as Credit Parties, Agent and Lenders (as from time to time amended,
restated, supplemented or otherwise modified, the "CREDIT AGREEMENT"), Lenders
have agreed to make Loans to Borrowers and to incur Letter of Credit Obligations
on behalf of Borrowers.
B. In connection with the making of the Loans and the incurrence of Letter of
Credit Obligations under the Credit Agreement and as a condition precedent
thereto, Agent and Lenders require that Guarantor shall have executed and
delivered a guarantee of the payment and performance of the obligations of
Borrowers, Canadian Subsidiaries, Nucon Ltd. and Canadian Energy Services
Limited to Agent and Lenders under the Credit Agreement and the other Loan
Documents.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce Lenders to provide the Loans and other
financial accommodations and to incur Letter of Credit Obligations under the
Credit Agreement, it is agreed as follows:
SECTION 1 -- INTERPRETATION
1.1 DEFINED TERMS. In this Guarantee, including the recitals and preamble:
<PAGE>
(1) GUARANTEE means this American Eco Corporation Guarantee, as amended,
supplemented, restated and modified from time to time.
(2) GUARANTEED OBLIGATIONS has the meaning given to it in Section 2 of this
Guarantee.
(3) GUARANTEED PARTIES has the meaning given to it in Section 2 of this
Guarantee.
(4) OBLIGORS means Borrowers, Canadian Subsidiaries, any other Credit Party from
time to time named in the Credit Agreement, Nucon Ltd. and Canadian Energy
Services Limited.
(5) TAX and TAXES each has the meaning given to it in Section 3.2(2) of this
Guarantee.
1.2 OTHER DEFINED TERMS. Capitalized terms used herein and not otherwise defined
have the meanings given to them in the Credit Agreement or in Annex "A" thereto.
1.3 REFERENCES. Unless something in the subject matter or context is
inconsistent therewith, all references to Sections are to sections and
subsections of this Guarantee. The words "hereto", "herein", "hereof",
"hereunder" and similar expressions refer to this Guarantee and not to any
particular Section, paragraph or other portion hereof.
1.4 RULES OF INTERPRETATION. In this Guarantee, unless otherwise specifically
provided, the singular includes the plural and vice versa and "in writing" or
"written" includes printing, typewriting, or any electronic means of
communication capable of being visibly reproduced at the point of reception,
including telecopier.
SECTION 2 -- GUARANTEE
2.1 GUARANTEE. Guarantor hereby irrevocably and unconditionally guarantees to
Agent for the benefit of each of the Lenders and Agent and their respective
successors, transferees and assigns (the "GUARANTEED PARTIES") the punctual and
complete payment and satisfaction when due (whether at stated maturity, by
acceleration or otherwise), and at all times thereafter, of all the
indebtedness, liabilities and obligations of each other Obligor, present and
future, direct and indirect, absolute and contingent, matured and unmatured, at
any time or from time to time existing or arising under or by virtue of or
otherwise in connection with the Credit Agreement and any other Loan Documents
to which such Obligor is party which are or may become at any time and from time
to time owing or payable by such Obligor to the Guaranteed Parties, or any of
them, or which remain owing and unpaid to the Guaranteed Parties, or any of
them, (the "GUARANTEED OBLIGATIONS").
2.2 FUNDS TRANSFERS. If Guarantor shall engage in any transaction as a result of
which Borrowers are required to make a mandatory prepayment with respect to the
Guaranteed Obligations under the terms of the Credit Agreement (including any
issuance or sale of Guarantor's Stock or any sale of its assets), Guarantor
shall distribute to Borrowers an amount, or make a contribution to the capital
of Borrowers in an amount, equal to the mandatory prepayment required under the
terms of the Credit Agreement.
<PAGE>
SECTION 3 -- PAYMENT
3.1 PAYMENT ON DEMAND. Guarantor agrees to make immediate payment to the
Guaranteed Parties, or any of them, of all Guaranteed Obligations owing or
payable to the Guaranteed Parties, or any of them, upon demand for payment
therefor by Agent to Guarantor.
3.2 NO SET-OFF. Each payment to be made by Guarantor hereunder in respect of the
Guaranteed Obligations shall be payable in the currency or currencies in which
such Guaranteed Obligations are denominated, and shall be made:
(1) without set-off or counterclaim; and
(2) free and clear of and without deduction or withholding for or
on account of any present and future taxes, levies, imposts,
stamp taxes, duties, charges to tax, fees, deductions,
withholdings and any conditions or restrictions resulting in
charges to tax and all penalties, interest and other payments
on or in respect thereof ("TAX" or "TAXES") unless Guarantor
is compelled by law to make payment subject to such Taxes.
3.3 TAXES. All Taxes in respect of this Guarantee or any amounts payable or paid
under this Guarantee shall be paid by Guarantor when due and in any event prior
to the date on which penalties attach thereto. Guarantor will indemnify each of
the Guaranteed Parties against and in respect of all such Taxes.
3.4 TAX GROSS-UP. Without limiting the generality of the foregoing, if any Taxes
or amounts in respect thereof must be deducted or withheld from any amounts
payable or paid by Guarantor hereunder, Guarantor shall pay such additional
amounts as may be necessary to ensure that each of the Guaranteed Parties
receives a net amount equal to the full amount which it would have received had
payment (including of any additional amounts payable under this Section 3.4) not
been made subject to such Taxes. Within thirty (30) days of each payment by
Guarantor hereunder of Taxes or in respect of Taxes, Guarantor shall deliver to
Agent satisfactory evidence (including originals, or certified copies, of all
relevant receipts) that such Taxes have been duly remitted to the appropriate
authority or authorities.
SECTION 4 -- OBLIGATIONS ABSOLUTE
4.1 OBLIGATIONS ABSOLUTE. The obligations of Guarantor hereunder are and shall
be absolute and unconditional and any monies or amounts expressed to be owing or
payable by Guarantor hereunder which may not be recoverable from Guarantor on
the footing of a guarantee shall be recoverable from Guarantor as a primary
obligor and principal debtor in respect thereof; provided however that this
Section 4.1 shall not be construed as conferring on Guarantor any rights or
benefits that Guarantor would have in law or equity under any of the Loan
Documents if it were an Obligor. Guarantor agrees that any notice or directive
given at any time to Agent that is inconsistent with the Guarantor being a
principal debtor with respect to the Guaranteed Obligations shall be null and
void and may be ignored by Agent, and, in addition, may not be pleaded or
introduced as evidence in any litigation relating to this Guarantee for the
<PAGE>
reason that such pleading or introduction would be at variance with the written
terms of this Guarantee, unless Agent has specifically agreed otherwise in
writing. This Guarantee is a guarantee of payment and performance and not of
collection.
SECTION 5 -- INDEMNITY
5.1 INDEMNITY. As an original and independent obligation under this Guarantee,
Guarantor shall:
(1) indemnify each of the Guaranteed Parties and keep each of the
Guaranteed Parties indemnified against any cost, loss, expense
or liability of whatever kind resulting from the failure by
any Obligor to make due and punctual payment of any of the
Guaranteed Obligations or resulting from any of the Guaranteed
Obligations being or becoming void, voidable, unenforceable or
ineffective against any Obligor (including, but without
limitation, all reasonable legal fees and disbursements and
other costs, charges and expenses incurred by the Guaranteed
Parties, or any of them, in connection with preserving or
enforcing, or attempting to preserve or enforce, their rights
under this Guarantee); and
(2) pay on demand the amount of such cost, loss, expense or
liability whether or not any of the Guaranteed Parties have
attempted to enforce any rights against any Obligor or any
other Person or otherwise.
SECTION 6 -- OBLIGATIONS CONTINUING
6.1 NO REDUCTION. The obligations of Guarantor hereunder shall be continuing and
shall remain in full force and effect until the Termination Date. The
obligations of Guarantor hereunder shall not be satisfied, reduced, affected or
discharged by any intermediate payment, settlement or satisfaction of the whole
or any part of the principal, interest, fees and other monies or amounts which
may at any time be or become owing or payable under or by virtue of or otherwise
in connection with the Guaranteed Obligations or the Loan Documents.
6.2 EFFECT OF RECISION. The obligations of Guarantor hereunder shall continue to
be effective or shall be reinstated, as the case may be, if at any time any
payment which would otherwise have reduced the obligations of Guarantor
hereunder (whether such payment shall have been by or on behalf of any Obligor,
or by or on behalf of Guarantor) is rescinded or reclaimed from any of the
Guaranteed Parties upon the insolvency, bankruptcy, liquidation or
reorganization of any Obligor or Guarantor or otherwise, all as though such
payment had not been made.
SECTION 7 -- OBLIGATIONS NOT AFFECTED
7.1 OBLIGATIONS NOT AFFECTED. The obligations of Guarantor hereunder shall not
be affected or impaired by any act, omission, matter or thing whatsoever,
occurring before, upon or after any demand for payment hereunder (and whether or
not known to Guarantor or any of the Guaranteed Parties) which, but for this
provision, might constitute a whole or partial defence to a claim against
Guarantor hereunder or might operate to release or otherwise exonerate Guarantor
<PAGE>
from any of its obligations hereunder or otherwise affect such obligations,
whether occasioned by default of Agent or any of the Lenders or otherwise, and,
to the extent waivable under applicable law, Guarantor hereby irrevocably waives
any defence it may now or hereafter have in any way relating to any of the
foregoing, including, without limitation:
(1) any limitation of status or power, disability, incapacity or
other circumstance relating to Guarantor, any other Obligor,
or any other Person, including any insolvency, bankruptcy,
liquidation, reorganization, readjustment, composition,
dissolution, winding-up or other proceeding involving or
affecting Guarantor, any other Obligor or any other Person;
(2) any irregularity, defect, unenforceability or invalidity in
respect of any indebtedness or other obligation of Guarantor,
any other Obligor or any other Person under the Loan Documents
or any other agreement, document or instrument;
(3) any failure of any other Obligor, or any other Person, whether
or not without fault on their part, to perform or comply with
any of the provisions of the Loan Documents or to give notice
thereof to Guarantor;
(4) the taking or enforcing or exercising or the refusal or
neglect to take or enforce or exercise any right or remedy
against any other Obligor or any other Person (including,
without limitation, rights and remedies granted under the Loan
Documents) or their respective assets, or the release or
discharge of any such right or remedies;
(5) the granting of time, renewals, extensions, compromises,
concessions, waivers, consents, releases, discharges and other
indulgences to any Obligor or any other Person;
(6) any amendment, restatement, variation, modification,
supplement or replacement of the Loan Documents or any other
agreement, document or instrument to which Guarantor, any
other Obligor or any other Person is or may become a party;
(7) any change in the ownership, control, name, objects,
businesses, assets, capital structure or constitution of
Guarantor, any other Obligor or any other Person;
(8) any merger or amalgamation of Guarantor or any other Obligor
with any Person or Persons;
(9) the occurrence of any change in the laws, rules, regulations
or ordinances of any jurisdiction or by any present or future
action of any governmental body or court amending, varying,
reducing or otherwise affecting, or purporting to amend, vary,
reduce or otherwise affect, any of the Guaranteed Obligations
or the obligations of Guarantor under this Guarantee;
<PAGE>
(10) the existence, value or condition of, or the failure to
perfect Agent's Liens against, any collateral for the
Guaranteed Obligations, or any action, or the absence of any
action, by Agent and Lenders or any of them in respect thereof
(including the release of any such security);
(11) the existence of any claim, set-off or other rights which
Guarantor may have at any time against any other Obligor, the
Guaranteed Parties, or any other Person, or which any other
Obligor may have at any time against the Guaranteed Parties,
whether in connection with the Loan Documents or otherwise;
and
(12) any other circumstance (including, without limitation, any
existence of or reliance on any representation by Agent, but
excluding complete, irrevocable payment) that might otherwise
constitute a legal or equitable discharge or defence of
Guarantor or any other Obligor under the Loan Documents
including, without limitation, those of Guarantor in respect
of its guarantee hereunder.
Guarantor acknowledges and agrees that the waivers set out in this Section 7.1,
and in Section 4.1 are of the essence of the transaction contemplated by the
Credit Agreement and the other Loan Documents and that, but for this Guarantee
and such waivers, Agent and Lenders would decline to enter into the Credit
Agreement.
7.2 WAIVER. Without in any way limiting the provisions of Section 7.1 of this
Guarantee, Guarantor hereby waives notice of acceptance hereof, notice of any
liability of Guarantor hereunder, notice or proof of reliance by the Guaranteed
Parties upon the obligations of Guarantor hereunder, and diligence, presentment,
demand for payment on Guarantor or any other Obligor, protest, notice of
dishonour or non-payment of any of the Guaranteed Obligations, or other notice
or formalities to Guarantor or any other Obligor, of any kind whatsoever.
7.3 NO OBLIGATION TO TAKE ACTION AGAINST OBLIGOR. Neither Agent nor any of the
other Guaranteed Parties shall have any obligation to enforce any rights or
remedies or to take any other steps against any Obligor, or any other Person or
any property of any Obligor, or any other Person before Agent is entitled to
demand payment and performance by Guarantor of its liabilities and obligations
under this Guarantee, and Guarantor hereby waives all benefit of discussion. The
obligations of Guarantor hereunder are independent of the Guaranteed Obligations
and a separate action or actions may be brought and prosecuted against Guarantor
to enforce this Guarantee, irrespective of whether any action is brought against
any other Obligor or whether any other Obligor is joined in any such action or
actions.
7.4 DEALING WITH OBLIGORS AND OTHERS. The Guaranteed Parties, without releasing,
discharging, limiting or otherwise affecting in whole or in part Guarantor's
obligations and liabilities hereunder and without the consent of or notice to
Guarantor, may:
(1) grant time, renewals, extensions, compromises, concessions,
waivers, releases, discharges and other indulgences to any
Obligor or any other Person;
(2) amend, vary, modify, supplement or replace any Loan Document
<PAGE>
or any other related document or instrument;
(3) take or abstain from taking securities or collateral from any
Obligor, or from perfecting securities or collateral of any
Obligor;
(4) release, discharge, compromise, realize, enforce or otherwise
deal with or do any act or thing in respect of (with or
without consideration) any and all collateral, mortgages or
other security given by any Obligor or any third party with
respect to the obligations or matters contemplated by the
Credit Agreement;
(5) accept compromises or arrangements from any Obligor;
(6) apply all monies at any time received from any Obligor, or
from any collateral upon such part of the Guaranteed
Obligations as they may see fit or change any such application
in whole or in part from time to time as they may see fit; and
(7) otherwise deal with, or waive or modify their right to deal
with any Obligor and all other Persons and securities as they
may see fit.
7.5 ACKNOWLEDGEMENT. Guarantor hereby acknowledges communication of the terms of
the Loan Documents and of all the provisions therein contained and consents to
and approves the same. Guarantor hereby represents and warrants that there are
no conditions precedent to the effectiveness of this Guarantee that have not
been satisfied or waived.
7.6 ACCOUNTS STATED. Guarantor shall be bound by any account settled between any
Obligor and the Guaranteed Parties, and if no such account has been so settled
immediately before demand for payment under this Guarantee, any account stated
by Agent shall be accepted by Guarantor as prima facie evidence in the absence
of manifest error of the amount which at the date of the account so stated is
due by such Obligor to the Guaranteed Parties or remains unpaid by such Obligor
to the Guaranteed Parties.
7.7 POSTPONEMENT. Until the Guaranteed Obligations are paid and otherwise
satisfied in full and Guarantor has satisfied all of its obligations pursuant to
this Guarantee including, without limitation, pursuant to Section 3.1 of this
Guarantee, all indebtedness and liabilities, present and future, of each Obligor
to Guarantor, and all notes and instruments evidencing such indebtedness and
liabilities, are hereby assigned to the Guaranteed Parties and postponed to the
liabilities to the Guaranteed Parties and all moneys received by Guarantor in
respect of the indebtedness and liabilities of each Obligor to Guarantor shall
be received in trust for the Guaranteed Parties and forthwith upon receipt shall
be paid over to Agent on behalf of the Guaranteed Parties, the whole without in
any way limiting or lessening the liability of Guarantor under the guarantee
contained in this Guarantee. This assignment and postponement is independent of
such guarantee and shall remain in full effect notwithstanding that the
liability of Guarantor under such guarantee may be extinct; provided that
nothing in this Section 7.7 shall restrict in any way any payments in respect of
the indebtedness and liabilities of any Obligor to Guarantor which are permitted
by the Credit Agreement.
<PAGE>
SECTION 8 -- REPRESENTATIONS AND WARRANTIES OF GUARANTOR
8.1 REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Agent
on behalf of the Guaranteed Parties as follows and acknowledges and confirms
that the Guaranteed Parties are relying upon such representations and
warranties:
(1) Guarantor is a corporation duly incorporated and validly
existing under the laws of Ontario and has all requisite power
and authority to execute, deliver and perform this Guarantee;
(2) the execution, delivery and performance by Guarantor of this
Guarantee is within its corporate power, has been duly
authorized by all necessary corporate action, does not
contravene any law or governmental regulation or any
contractual restriction binding on or affecting Guarantor or
any of its property;
(3) no authorization or approval or other action by, and no notice
to or filing with, any governmental body is required for the
due execution, delivery and performance by Guarantor of this
Guarantee;
(4) Guarantor is the direct or indirect beneficial owner of all of
the capital stock of each of the other Obligors (other than
Controlled Power Limited Partnership) and
is the direct or indirect beneficial owner of all of the
capital stock of each of the general and limited partners of
Controlled Power Limited Partnership;
(5) the execution, delivery and performance of the Guarantor's
obligations under this Guarantee will not result in a breach
of any agreement to which Guarantor is a party or by which
Guarantor or its property is bound; and
(6) this Guarantee is a legal, valid and binding obligation of
Guarantor, enforceable against Guarantor in accordance with
its terms subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and (ii) the fact
that specific performance and injunctive relief may be given
at the discretion of the court.
SECTION 9 -- GENERAL
9.1 NOTICES. Except as otherwise provided herein, each notice, demand, request,
consent, approval, declaration or other communication which shall or may be
given hereunder shall be in writing and shall be deemed to have been validly
served, given or delivered if served, given or delivered in accordance with
Section 11.10 of the Credit Agreement. The giving of any notice to any party
hereunder may be waived in writing by such party.
9.2 AMENDMENT. No modification, variation or amendment of any provision of this
Guarantee shall be made except by a written agreement, executed by the parties
hereto and no waiver of any provision hereof shall be effective unless in
writing.
<PAGE>
9.3 SUCCESSOR AGENT. In the event that Agent for the time being under the Credit
Agreement shall resign or be removed and a successor agent thereafter shall be
appointed in accordance with Section 9.7 of the Credit Agreement, then upon such
successor agent agreeing in writing to be bound by the provisions of this
Guarantee as Agent hereunder, all references herein to Agent in this Guarantee
shall be deemed to be references to such successor agent as and from such date
and such successor agent shall receive and become vested with all the rights,
powers, privileges and duties of the retiring or removed Agent and the retiring
or removed Agent shall be discharged from its further duties and obligations as
Agent under this Guarantee.
9.4 JUDGMENT CURRENCY. If for the purposes of obtaining judgment in any court in
any jurisdiction with respect to this Guarantee it becomes necessary to convert
into the currency of such jurisdiction (herein called the "JUDGMENT CURRENCY")
any amount due hereunder in any currency other than the Judgment Currency, then
conversion shall be made at the rate of exchange prevailing on the Business Day
before the day on which judgment is given. For this purpose, "rate of exchange"
means the rate at which Agent would, on the relevant date at or about 12:00 noon
(New York time), be prepared to sell a similar amount of such currency in New
York against the Judgment Currency. In the event that there is a change in the
rate of exchange prevailing between the Business Day before the day on which the
judgment is given and the date of payment of the amount due, Guarantor will, on
the date of payment, pay such additional amounts (if any) as may be necessary
to ensure that the amount paid on such date is the amount in the Judgment
Currency which when converted at the rate of exchange prevailing on the date of
payment is the amount then due under this Guarantee in such other currency. Any
additional amount due from Guarantor under this Section 9.4 will be due as a
separate debt and shall not be affected by judgment being obtained for any other
sums due under or in respect of this Guarantee.
9.5 APPLICABLE LAW. This Guarantee shall be conclusively deemed to be a contract
made under, and shall for all purposes be governed by, and construed and
interpreted in accordance with, the laws of the Province of Ontario and the
federal laws of Canada applicable therein in effect from time to time without
prejudice to or limitation of any other rights or remedies available under the
laws of any jurisdiction where property or assets of Guarantor may be found.
9.6 JURISDICTION.
(1) Guarantor irrevocably agrees that any suits, actions or
proceedings arising out of or in connection with this
Guarantee (collectively "PROCEEDINGS") may be brought in any
New York State Court or U.S. Federal Court sitting in the
State of New York and submits and attorns to the non-exclusive
jurisdiction of each such court.
(2) Guarantor irrevocably waives any objections which it may have
now or hereafter to the laying of the venue of any Proceedings
in any court referred to in paragraph (a) and any claim that
any such Proceedings have been brought in an inconvenient
forum and further irrevocably agrees that a judgment in any
Proceedings brought in any such court shall be conclusive and
binding upon Guarantor and may be enforced in any courts to
the jurisdiction of which such parties may be subject by
<PAGE>
Proceedings upon such judgment.
(3) Nothing contained in this Section 9.6 shall limit the right of
Agent or any other Guaranteed Party to take Proceedings
against Guarantor in any other court of competent jurisdiction
nor shall the taking of Proceedings in one or more
jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.
(4) Guarantor hereby irrevocably consents generally to the fullest
extent permitted by law in respect of any Proceedings to the
giving of any relief and the issue of any process in
connection with such Proceedings including, without
limitation, the making, enforcement or execution against any
property whatsoever (irrespective of its use or intended use)
of any order or judgment which may be made or given in such
Proceedings.
(5) Guarantor hereby irrevocably waives all right to trial by jury
in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising
<PAGE>
out of or relating to the Loan Documents or this Guarantee,
the transactions contemplated hereby or thereby or the actions
of any Guaranteed Party in the negotiation, administration,
performance or enforcement hereof or thereof.
9.7 COSTS AND EXPENSES. Guarantor shall pay on demand by Agent any and all
reasonable costs, fees and expenses (including, without limitation, reasonable
legal fees and expenses) incurred by Agent in enforcing any of its rights under
this Guarantee.
9.8 NO WAIVER, CUMULATIVE REMEDIES. Agent's or any Lender's failure, at any time
or times, to require strict performance by Guarantor of any provision of this
Guarantee shall not waive, affect or diminish any right of Agent or such Lender
thereafter to demand strict compliance and performance therewith. Any suspension
or waiver of an Event of Default shall not suspend, waive or affect any other
Event of Default whether the same is prior or subsequent thereto and whether the
same or of a different type. Agent's and Lenders' rights and remedies under this
Guarantee shall be cumulative and nonexclusive of any other rights and remedies
which Agent or any Lender may have under any other agreement, including the
other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required. No single or partial exercise by Agent or
Lender of any right or remedy precludes or otherwise affects the exercise of any
other right or remedy to which that party may be entitled.
9.9 WAIVER OF RIGHTS OF SUBROGATION, REIMBURSEMENT, ETC. Guarantor hereby
irrevocably waives any claim or other rights that it may now or hereafter
acquire against any Obligor that arise from the existence, payment, performance
or enforcement of the Guaranteed Obligations under this Guarantee, the Credit
Agreement or any other Loan Document, including, without limitation, any right
of subrogation, reimbursement, exoneration, contribution or indemnification and
any right to participate in any claim or remedy of the Guaranteed Parties
against any Obligor, or any collateral, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from any Obligor, directly or
<PAGE>
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right; provided,
however, that such waiver shall terminate at such time, if any, as the
Guaranteed Obligations and all other amounts payable under this Guarantee have
been paid in full and all obligations of the Guaranteed Parties under the Loan
Documents have terminated; provided that Agent shall be entitled to hold any
Potential Preference Payment (as hereafter defined) in trust for the benefit of
the Guaranteed Parties and shall forthwith pay such amount to the Guaranteed
Parties, to be credited and applied following the expiry of the potential
preference period, to the Guaranteed Obligations, whether matured or unmatured,
in accordance with the terms of the Credit Agreement. The term "POTENTIAL
PREFERENCE PAYMENT" shall mean any payment or other transfer received for the
benefit of the Guaranteed Parties for or on account of the Guaranteed
Obligations which could be avoided by a trustee in bankruptcy for any Obligor,
or by or for the benefit of other creditors of any Obligor as a "preference" or
a "preferential transfer" or for any other reason under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect in any
bankruptcy, insolvency or similar proceeding with respect to any Obligor.
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by the Credit Agreement and that the
waiver set forth in this Section 9.9 is knowingly made in contemplation of such
benefits.
9.10 GUARANTEE IN ADDITION TO OTHER OBLIGATIONS. The obligations of Guarantor
under this Guarantee are in addition to and not in substitution for any other
obligations to Agent or to any of the other Guaranteed Parties in relation to
the Loan Documents and any guarantees, indemnities or security at any time held
by or for the benefit of any of them.
9.11 ENTIRE AGREEMENT. This Guarantee, including all documents contemplated
hereby, constitutes the entire agreement between the parties with respect to the
subject matter and supersedes all prior negotiations, undertakings,
representations and understandings.
9.12 SEVERABILITY. Any provision of this Guarantee which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
9.13 SUCCESSORS AND ASSIGNEES. This Guarantee shall be binding upon and enure to
the benefit of Guarantor and Agent and the other Guaranteed Parties and their
respective successors and permitted assignees, except that Guarantor may not
assign any of its obligations hereunder.
<PAGE>
The Parties have executed this Guarantee.
AMERICAN ECO CORPORATION
By: /s/ David L. Norris
--------------------------
Name: David L. Norris
Title: Vice President
By:
--------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Charles D. Chiodo
--------------------------
Name: Charles D. Chiodo
Title: Authorized Signatory
Exhibit 99.1
AMERICAN
ECO CORPORATION
NEWS RELEASE
AMERICAN ECO CORPORATION, 11011 Jones Road, Houston, Texas 77070
FOR IMMEDIATE RELEASE
---------------------
AMERICAN ECO ARRANGES $30.0 MILLION
REVOLVING CREDIT LINE WITH GE CAPITAL
HOUSTON, May 18, 1999 - AMERICAN ECO CORPORATION (NASDAQ:ECGO,
TSE:ECX) announced that it has arranged a USD$30.0 million
revolving credit facility with GE Capital Corporation for
financing Accounts Receivables of its subsidiary companies.
American Eco currently carries outstanding receivables that
average USD$50.0 million.
American Eco's PRESIDENT & CEO, MICHAEL E. MCGINNIS, stated,
"American Eco is pleased to have the opportunity to work with GE
Capital which is familiar with the operations of companies
serving the industrial outsourcing market. This new credit
facility provides more flexibility in expanding services to our
existing customers in Canada and the United States".
AMERICAN ECO is a leading consolidator of outsourcing services to
the energy, pulp & paper, power generation and construction
management services.
Except for the historical information in this News Release, the
News Release includes forward looking statements that involve
risks and uncertainties including, but not limited to quarterly
fluctuations in results, the management of growth, competition
and other risks. Actual results may differ materially from such
information set forth herein.
# # # #
For additional information, contact:
Michael E. McGinnis
President & CEO
Houston, Texas
(281) 774-7000
www.americaneco.com
-------------------
