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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934*
KTI, Inc.
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- -------------------------------------------------------------------------------
(Title of Class of Securities)
482689205
- -------------------------------------------------------------------------------
(CUSIP Number)
Bret R. Maxwell, 233 S. Wacker Drive, Suite 9500, Chicago, Illinois 60606
(312)258-1400
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 4, 1997
- -------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ] .
Check the following box if a fee is being paid with the statement [X]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
SCHEDULE 13D
<TABLE>
<CAPTION>
- ---------------------- -----------------------
CUSIP No. 482689205 Page 2 of 65 Pages
- ---------------------- -----------------------
- -------------------------------------------------------------------------------
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Riverside Partnership 36-405-1881
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [ ]
(B) [X]
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3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF, BK
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
685,417**
NUMBER OF ---------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
EACH ---------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 685,417**
WITH
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
685,417**
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.0%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- -------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT! **SEE ITEM 5 HEREOF
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 3
Page 3 of 65 Pages
Item 1. Security and Issuer.
This Schedule 13D is filed with respect to shares of Common Stock ("Common
Stock") of KTI, Inc., a New Jersey corporation (the "Company"). The Company's
principal executive offices are located at 7000 Boulevard East, Guttenberg, New
Jersey 07093.
Item 2. Identity and Background.
This Schedule 13D is filed on behalf of Riverside Partnership, an Illinois
general partnership ("Filing Party"), which maintains its principal offices at
233 South Wacker Drive, 9500 Sears Tower, Chicago, Illinois 60606 ("Suite
9500"). The principal business of the Filing Party is venture capital and
private equity investment.
The Filing Party has three general partners: Riverside L.L.C., an Illinois
limited liability company ("RLLC"), The Productivity Fund III, L.P., a Delaware
limited partnership ("PF III"), and Environmental Private Equity Fund II, L.P.,
a Delaware limited partnership ("EPEF"). Each of the general partners of the
Filing Party is controlled through one or more partnerships, except RLLC, which
is also controlled by its manager, First Analysis Corporation, a Delaware
corporation ("FAC"). In this Schedule 13D, the persons who have or share
control of the Filing Party or its general partners after looking through one
or more intermediate partnerships will be referred to as "ultimate general
partners." The ultimate general partners of PF III are ("FAC") and Bret R.
Maxwell ("Maxwell"). The ultimate general partners of EPEF are FAC, Maxwell,
Robertson, Stephens & Co. ("RS"), Argentum Environmental Corporation ("AEC")
and Schneur Z. Genack, Inc. ("SZG"). The ultimate general partners of RLLC are
FAC, Maxwell, RS, AEC and SZG.
(a), (b) and (c). The following information is furnished with respect to
each person who takes executive actions on behalf of FAC with respect to its
functioning as an ultimate general partner of the Filing Party through PF III,
EPEF and RLLC, and on behalf of Maxwell personally, each of whom maintains
Suite 9500 as his principal business address:
Name Affiliation with FAC
---- --------------------
1. F. Oliver Nicklin President, Chief Executive Officer and Director
2. Bret R. Maxwell Vice Chairman
Each of the above is principally employed as an executive of FAC. FAC's
principal business is participation in venture capital partnerships and the
provision of research investment services. Its principal business address is
Suite 9500.
(a), (b) and (c) (con't). AEC maintains its business address c/o The
Argentum Group ("TAG"), 405 Lexington Avenue, New York, New York 10174 (the
"TAG Address"). SZG maintains its business address at the TAG Address. The
persons who take actions on behalf of
<PAGE> 4
Page 4 of 65 Pages
AEC and SZG with respect to their functioning as ultimate general
partners of the Filing Party through EPEF and RLLC are Schneur Z. Genack
("Genack"), Daniel Raynor ("Raynor") and Walter H. Barandiaran ("Barandiaran").
Each of Raynor and Barandiaran is principally employed as an executive of TAG
and maintains his business address at the TAG address. TAG's principal
business is merchant banking. Genack is principally employed as a private
investor. Genack's maintains his business address at 18 East 48th Street,
Suite 1800, New York, New York 10017.
(a), (b) and (c) (con't). RS maintains its business address at One
Embarcadero Center, San Francisco, California 94111 (the "RS Address"). The
person who takes actions on behalf of RS with respect to its functioning as an
ultimate general partner of the Filing Party through EPEF and RLLC is Charles
R. Hamilton ("Hamilton"). Hamilton is principally employed as a partner of RS.
Hamilton maintains his principal business address at the RS Address. RS's
principal business is investment banking.
(d) and (e) None of the Filing Party or its general partners and, to the
best of the Filing Party's knowledge, none of the persons listed in the
responses to Items 2(a), (b) or (c) above has, during the last five years, been
(i) convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such civil
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
(f) To the best of the Filing Party's knowledge, each of the natural
persons listed in the responses to Items 2(a), (b) or (c) above is a citizen of
the United States, except for Barandiaran, who is a citizen of Peru.
Item 3. Source and Amount of Funds or Other Consideration.
One-half of the funds invested by the Filing Party in the Company were
obtained through loans (the "Loans") from LaSalle National Bank, a national
banking association (the "Bank"), pursuant to a Secured Revolving Loan
Agreement dated November 17, 1995 between the Bank and RLLC, a copy of which is
attached to this Schedule as Exhibit A. Repayment of the Loans is guaranteed
pursuant to guarantees made November 17, 1995 (the "Guarantees") by each of
EPEF and PF III, copies of which are attached to this Schedule as Exhibits B-1
and B-2. The Filing Party, EPEF and PF III have also entered into an
Indemnification Agreement dated November 17, 1995, a copy of which is attached
to this Schedule as Exhibit C, wherein the Filing Party indemnifies EPEF and PF
III for losses incurred by EPEF or PF III pursuant to the Guarantees. The
remaining one-half of the funds invested by the Filing Party in the Company
were obtained from capital contributions to the Filing Party by EPEF. The
loaned funds were contributed to the Filing Party by RLLC in consideration of a
preferred partnership interest in the Filing Party.
<PAGE> 5
Page 5 of 65 Pages
Item 4. Purpose of Transaction.
The securities of the Company held by the Filing Party were purchased as
an investment. The Filing Party may, in the future, purchase additional
securities of the Company or dispose of securities of the Company.
The Filing Party has no present plans or proposals that relate to or would
result in transactions of the kind described in paragraphs (a) through (j) of
Item 4 of Rule 13D-101 promulgated under the Securities Exchange Act of 1934,
as amended (the "1934 Act"). In the future, however, the Filing Party reserves
the right to adopt such plans or proposals, subject to applicable regulatory
requirements, if any.
Item 5. Interest in Securities of the Issuer.
(a) (i) As of the date of this Schedule, the Filing Party owns 437,500
shares of the Company's Series A Preferred Stock ("Preferred Stock"), 218,750
Warrants ("$9 Warrants") to purchase Common Stock at an exercise price of $9
per share, and 29,167 Warrants ("$10 Warrants") to purchase Common Stock at an
exercise price of $10 per share (the $9 Warrants and the $10 Warrants are
sometimes collectively referred to herein as the "Warrants"). Subject to the
assumptions described in the next sentence, the Filing Party owns 9.0% of the
Common Stock. Such percentage is computed assuming the exercise of all of the
Warrants held by the Filing Party, the conversion of the Filing Party's
Preferred Stock into Common Stock, and no exercise of options or warrants or
conversion of any convertible security held by any other person.
In addition, Genack holds 25,000 shares of Preferred Stock, 12,500 $9
Warrants, and 1,667 $10 Warrants. Assuming conversion of Genack's Preferred
Stock and exercise of all Warrants held by Genack, and no exercise of options
or warrants or conversion of any convertible security by any other person,
Genack owns 0.6% of the Common Stock.
(ii) By reason of their status as ultimate general partners of the Filing
Party, each of FAC, Maxwell, RS, AEC and SZG, and the controlling persons
Genack, Raynor, Barandiaran and Hamilton, may be deemed to be the indirect
beneficial owner of 685,417 shares of Common Stock or 9.0% of such shares. By
reason of his status as the majority stockholder of FAC, F. Oliver Nicklin may
also be deemed to be the indirect beneficial owner of such shares.
(iii) The Filing Party disclaims beneficial ownership of all shares
described herein except those shares that are owned by the Filing Party
directly. The Filing Party understands that each of the other persons named as
an officer, director, partner, ultimate general partner or other affiliate of
the Filing Party herein disclaims beneficial ownership of all of the shares
described herein, except for Genack with respect to the 25,000 shares of
Preferred Stock and 14,167 Warrants held by him directly.
The Filing Party and each of its general partners disclaim the existence
of an "group" among any or all of them and further disclaim the existence of a
"group" among any or all of
<PAGE> 6
Page 6 of 65 Pages
them and any or all of the other persons named as an officer, director,
partner or other affiliate of the Filing Party, in each case within the meaning
of Section 13(d)(3) of the 1934 Act.
(b) (i) Subject to the conversion of the Preferred Stock and the exercise
of the Warrants, the Filing Party has the sole power to dispose of and to vote
685,417 shares of Common Stock. FAC, Maxwell, RS, AEC and SZG may be deemed to
share the power to dispose of or vote such shares.
(ii) Subject to the conversion of Genack's Preferred Stock and the
exercise of Warrants held by Genack, Genack has the sole power to vote and
dispose of 39,167 shares of Common Stock.
(c) (i) On June 4, 1997, the Filing Party purchased in a private placement
transaction with the Company 437,500 shares of the Preferred Stock and 247,917
Warrants at an aggregate cash purchase price of $3,500,000.
(ii) On June 4, 1997, Genack purchased in a private placement transaction
with the Company 25,000 shares of Preferred Stock and 14,167 Warrants at an
aggregate cash purchase price of $200,000.
(d) None.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
EPEF and PF III have agreed to hold each other harmless if one suffers a
loss in excess of its pro rata economic interest (if any) in any investment
made by the Filing Party. As between EPEF and PF III, EPEF has 100% of the
economic risk of the investment in Company stock made by the Filing Party.
Item 7. Material to be Filed as Exhibits.
Exhibit A. Secured Revolving Loan Agreement dated November 17, 1995 between
the Bank and RLLC. Page 8 of 65 pages.
Exhibit B-1. Guarantee dated November 17, 1995 made by EPEF to the Bank. Page
41 of 65 pages.
Exhibit B-2. Guarantee dated November 17, 1995 made by PF III to the Bank.
Page 51 of 65 pages.
<PAGE> 7
Page 7 of 65 Pages
Exhibit C. Indemnification Agreement dated November 17, 1995 between Filing
Party, EPEF and PF III. Page 61 of 65 pages.
After reasonable inquiry and to the best of the undersigned's knowledge
and belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: July 14, 1997
RIVERSIDE PARTNERSHIP, an Illinois general partnership
By: Riverside L.L.C., Managing General
Partner of Riverside Partnership
By: First Analysis Corporation, Manager
of Riverside L.L.C.
By: /s/ Bret R. Maxwell
-------------------------------------
Bret R. Maxwell
Title: Vice Chairman
<PAGE> 1
Page 8 of 65 Pages
EXHIBIT A
SECURED REVOLVING LOAN AGREEMENT
THIS SECURED REVOLVING LOAN AGREEMENT (this "Agreement"), dated as of
November 17, 1995, is by and between RIVERSIDE L.L.C., an Illinois
limited liability company (hereinafter, together with its successors and
permitted assigns, the "Borrower"), and LASALLE NATIONAL BANK, a
national banking association (hereinafter, together with its successors
and assigns, the "Bank").
RECITALS:
A. The Borrower has requested that the Bank provide the Borrower with
revolving loans in an aggregate principal amount not exceeding Five
Million Dollars ($5,000,000) at any one time outstanding.
B. The Bank is prepared to make such revolving loans on the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and for other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS
1.1 Terms Defined in this Agreement. When used herein the following
terms shall have the following respective meanings:
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling (including, without limitation, all
shareholders, directors and officers of such Person), controlled by, or
under direct or indirect common control with, such Person. A Person
shall be deemed to control another Person if such first Person
possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person, whether
through ownership of voting securities, by contract or otherwise.
"Agreement" means this Secured Revolving Loan Agreement as the same may
be modified, supplemented or amended from time to time.
"Authorized Officer" means the Chief Executive Officer, the President,
the Chief Financial Officer, the Treasurer or any Vice President of the
Manager of the Borrower.
"Bank Parties" has the meaning contained in Section 13.5 hereto.
"Borrowing Request" has the meaning contained in Section 8.1.12 hereof.
"Business-Day" means any day (other than Saturday or Sunday) of the year
that (a) in the case of a Business Day which relates to a Eurodollar
Rate Loan, banks are open for business in Chicago, Illinois and New
York, New York and on which dealings are carried on in the interbank
eurodollar market, and (b) in the case of a Business Day which relates
to a Prime Rate Loan, banks are open for business in Chicago, Illinois.
<PAGE> 2
Page 9 of 65 Pages
"Capitalized Lease Obligations" means any amount payable with respect to
any lease of any tangible or intangible property, however denoted, which
is required by GAAP to be reflected as a liability on the balance sheet
of the lessee thereunder.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time.
"Collateral" means all assets, property and rights on or in which a Lien
is granted to the Bank pursuant to the Pledge Agreement, any other
Collateral Document or any other Related Document.
"Collateral Documents" means, collectively, the Pledge Agreement and any
and all other documents and agreements provided for in Section 10
hereof, if any, or pursuant to which a Lien is granted to the Bank from
time to time as security for any of the Liabilities, as any of the
foregoing documents and agreements may be amended, modified or
supplemented from time to time.
"Compliance Certificate" has the meaning contained in Section 8.1.3
hereof.
"Continuation/Conversion Notice" - see Section 2.4.
"Current Market Value" as to any Stock means, (a) if quotations are
available, the closing sale price of such Stock on the preceding
Business Day on which trades were made, as appearing on any regularly
published reporting or quotation service, provided that no material
adverse change has occurred which would render such closing sale price
an unreasonable estimate of the market value of such Stock; or (b) if
there is no such closing sale price, the reasonable estimate of the
market value of such Stock as of the close of business on the preceding
Business Day (such estimate to be satisfactory to the Bank), it being
understood that for purposes of this clause (b), if Current Market Value
is being determined at the time a Revolving Loan is being made to
finance the purchase of Stock, Current Market Value of such Stock shall
be deemed to mean the cost of purchase of such Stock (excluding all
brokers fees and other commissions), absent a good faith determination
by the Bank that such purchase price is unreasonable
"Default" means any event, act or condition which, with lapse of time or
notice or lapse of time and notice, would constitute an Event of
Default.
"Environmental Laws" means any and all federal, state or local laws, statutes,
ordinances, rules, regulations, judgments, orders, decrees, permits,
concessions, agreements, licenses, or other governmental restrictions or
requirements relating to health, safety, the environment or the release or
discharge, or dumping or disposing (whether intentional or unintentional) of
any materials regulated under such laws or regulations (including, without
limitation, hazardous and toxic substances) into the environment, now or
hereafter in effect in any and all jurisdictions in which the Borrower is or
from time to time may be doing business, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Sections 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq., the Clean Air Act, 42 U.S.C.
2
<PAGE> 3
Page 10 of 65 Pages
Sections 7401 et seq., the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 et seq., and the Hazardous Materials Transportation Act,
49 U.S.C. Sections 1801 et seq., as amended or hereafter amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute, together with the regulations
thereunder, as in effect from time to time.
"ERISA Affiliate" means any corporation, trade or business which
together with the Borrower is a member of a controlled group of
corporations or trades or businesses as described in Sections 414(b) and
414(c) of the Code, or any corporation, trade or business which together
with the Borrower is otherwise treated as a single employer under
Section 4001 of ERISA.
"Eurocurrency Reserve Percentage" shall mean, with respect to any
Eurodollar Rate Loan for any Interest Period, a percentage (expressed as
a decimal) equal to the daily average during such Interest Period, as
prescribed by the Federal Reserve Board, for determining the aggregate
maximum reserve requirements (including all basic, supplemental,
marginal and other reserves) applicable to "Eurocurrency liabilities"
pursuant to Regulation D or any other then applicable regulation of the
Federal Reserve Board which prescribes reserve requirements applicable
to "Eurocurrency liabilities," as defined in Regulation D, as applicable
to the class of banks of which the Bank is a member. Without limiting
the effect of the foregoing, the Eurocurrency Reserve Percentage shall
reflect any other reserves required to be maintained by the Bank against
(a) any category of liabilities that includes deposits by reference to
which the Eurodollar Rate (Reserve Adjusted) is to be determined, or (b)
any category of extensions of credit or other assets that includes
Eurodollar Rate Loans. For purposes of this Agreement, any Eurodollar
Rate Loan hereunder shall be deemed to be "Eurocurrency liabilities," as
defined in Regulation D, and, as such, shall be deemed to be subject to
such reserve requirements without the benefit of, or credit for,
proration, exceptions or offsets which may be available to the Bank from
time to time under Regulation D.
"Eurodollar Rate Loan" shall mean any Revolving Loan which bears
interest at a rate determined by reference to the Eurodollar Rate
(Reserve Adjusted).
"Eurodollar Rate" shall mean, with respect to any Eurodollar Rate Loan
for any Interest Period, the rate of interest equal to the average
(rounded upward, if necessary, to the next higher 1/16 of 1%) rate per
annum at which Dollar deposits in immediately available funds are
offered to the Lending Office of the Bank two (2) Business Days prior to
the beginning of such Interest Period by prime banks in the interbank
eurodollar market as at or about the relevant local time of such Lending
Office, for delivery on the first day of such Interest Period, for the
number of days comprised therein and in an amount equal or comparable to
the amount of the Revolving Loan of the Bank for such Interest Period.
As used herein, "relevant local time" shall mean 10:00 A.M., Chicago
time.
"Eurodollar Rate (Reserve Adjusted)" shall mean, with respect to any
Eurodollar Rate Loan for any Interest Period, a rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) determined pursuant to
the following formula:
<TABLE>
<S> <C>
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) 1-Eurocurrency Reserve Percentage
</TABLE>
3
<PAGE> 4
Page 11 of 65 Pages
"Event of Default" means any of the events or conditions described in
Section 12.1 hereof.
"Excess Interest" has the meaning contained in Section 4.15 hereof.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or any
successor authority) that are applicable to the circumstances as of the
date of determination.
"Guarantees" means collectively, and "Guarantee" means individually each
of, those certain Guarantees executed in connection with this Agreement,
dated the date hereof, in favor of the Bank, pursuant to which each of
(i) Environmental Private Equity Fund II, L.P., a Delaware limited
partnership, and (ii) Productivity Fund III, L.P., a Delaware limited
partnership collectively guarantee payment of that portion of the
Liabilities equal to twenty percent (20%) of the total cost of purchase
of the Stock, the form of which is attached hereto as Exhibit F.
"Guarantors" means collectively, and "Guarantor" means individually each
of, those parties executing a Guarantee.
"Indebtedness" with respect to any Person means, as of the date of
determination thereof, (i) all of such Person's indebtedness for
borrowed money, (ii) all indebtedness of such Person or any other Person
secured by any Lien with respect to any property or asset owned or held
by such Person, regardless whether the indebtedness secured thereby
shall have been assumed by such Person, (iii) all indebtedness of other
Persons which such Person has directly or indirectly guaranteed (whether
by discount or otherwise), endorsed (otherwise than for collection or
deposit in the ordinary course of business), discounted with recourse to
such Person or with respect to which such Person is otherwise directly
or indirectly liable, including, without limitation, indebtedness in
effect guaranteed by such Person through any agreement (contingent or
otherwise) to (A) purchase, repurchase or otherwise acquire such
Indebtedness or any security therefor, (B) provide funds for the payment
or discharge of such indebtedness or any other liability of the obligor
of such indebtedness (whether in the form of loans, advances, stock
purchases, capital contribution or otherwise), (C) maintain the solvency
of any balance sheet or other financial condition of the obligor of such
indebtedness, or (D) make payment for any products, materials or
supplies or for any transportation or services regardless of the
nondelivery or nonfurnishing thereof, if in any such case the purpose or
intent of such agreement is to provide assurance that such indebtedness
will be paid or discharged or that any agreements relating thereto will
be complied with or that the holders of such indebtedness will be
protected against loss in respect thereof, (iv) all of such Person's
Capitalized Lease Obligations, (v) all actual or contingent
reimbursement obligations with respect to letters of credit issued for
such Person's account, and (vi) all other obligations and liabilities of
such Person (including, without limitation, all debts, claims and
indebtedness) whether primary, secondary, direct, contingent, fixed or
otherwise, heretofore, now and/or from time to time hereafter owing, due
or payable, however evidenced, created, incurred, acquired or owing and
however arising, whether under written or oral agreement, by operation
of law, or otherwise.
"Indemnified Liabilities" has the meaning contained in Section 13.5
hereof.
4
<PAGE> 5
Page 12 of 65 Pages
"Issuers" means collectively, and "Issuer" means individually each of,
the issuers of the Stock.
"Interest Period" - see Section 4.4.
"Lending Office" shall mean any office designated by the Bank in its
sole discretion beneath its signature hereto or otherwise from time to
time by written notice to the Borrower, as a Lending Office for purposes
hereunder. The Bank may designate separate Lending Offices for the
purposes of making, maintaining or continuing Prime Rate Loans or
Eurodollar Rate Loans and, with respect to Eurodollar Rate Loans, such
Lending Office may be a foreign branch or an Affiliate of the Bank or
the Bank's holding company.
"Liabilities" means any and all of the Borrower's obligations,
liabilities and indebtedness to the Bank, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing or arising, or due or to become due, which arise out
of or in connection with this Agreement or the Related Documents
(including, without limitation, all principal, interest, fees, costs and
expenses), and any refinancings, substitutions, extensions, renewals,
replacements and modifications for or of any or all of the foregoing.
"Lien" means any mortgage, pledge, lien, hypothecation, security
interest or other charge or encumbrance.
"Loan to Value Ratio" has the meaning contained in Section 8.7 hereof.
"Manager of the Borrower" means First Analysis Management Company III,
L.L.C., a Delaware limited liability company.
"Margin Stock" has the meaning given to such term in Regulation U.
"Maximum Commitment" means Five Million Dollars ($5,000,000).
"Maximum Loan Value" as applied to the Stock, means fifty percent (50%)
of the Current Market Value of such Stock.
"Multiemployer Plan" means a Plan which is a "multiemployer plan" as
defined in ERISA.
"Non-Margin Stock" means all stock and other securities which are not
considered as Margin Stock.
"Partnership" means Riverside Partnership, an Illinois general
partnership.
"Permitted Indebtedness" has the meaning contained in Section 9.2
hereof.
"Permitted Liens" is defined in Section 9.3 hereof.
"Person" means any individual, sole proprietorship, corporation, limited
liability company, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or any
agency or political subdivision thereof) or other entity of any kind.
5
<PAGE> 6
Page 13 of 65 Pages
"Plan" means a "pension plan", as such term is defined in ERISA, that is
subject to Title IV of ERISA and to which the Borrower or any ERISA
Affiliate may have any liability.
"Pledge Agreement" has the meaning contained in Section 10.1 hereof.
"Prime Rate" means the rate of interest announced from time to time by
the Bank as its "Prime Rate." The Prime Rate is one of the Bank's rates
and is not intended to be the Bank's lowest or best rate in effect at
any time. Any change in the Prime Rate shall be effective as of the
effective date stated in the announcement by the Bank of such change.
"Prime Rate Loan" shall mean any Revolving Loan which bears interest at
or by reference to the Prime Rate.
"Quarterly Payment Date" shall mean the last day of each March, June,
September and December or, if any such day is not a Business Day, the
next succeeding Business Day.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System and any successor rule or regulation of similar
import as in effect from time to time.
"Related Documents" means, collectively, the Revolving Note, the
Collateral Documents, the Guarantees and all other documents,
instruments and agreements executed or delivered by the Borrower or any
other Person pursuant to or in connection with this Agreement or the
foregoing documents, agreements and instruments, as the same may be
amended, supplemented or modified from time to time.
"Revolving Loan Commitment" has the meaning contained in Section 2.1
hereof.
"Revolving Loan(s)" has the meaning contained in Section 2.1 hereof.
"Revolving Note has the meaning contained in Section 3.1 hereof.
"Stock" means all Margin Stock and Non-Margin Stock which is purchased
in part with the proceeds of a Revolving Loan and which is pledged to
the Bank pursuant to the terms of the Pledge Agreement.
"Subsidiary" of any Person shall mean another Person of which such
Person owns, directly or indirectly, more than 50% of (a) the combined
voting power of all classes of stock having general voting power under
ordinary circumstances to elect a majority of the board of directors of
such Person, if it is a Corporation, (b) the capital interest or profits
interest of such Person, if it is a partnership, joint venture or
similar entity, or (c) the beneficial interest of such Person, if it is
a trust, association or other unincorporated organization.
"Termination Date" means the earlier of (i) November 16, 1997, (ii) such
other date on which the Revolving Loan Commitment shall terminate
pursuant to Section 12.2 hereof, or (iii) such other date as is mutually
agreed in writing between the Borrower and the Bank, it being understood
that the Bank will annually review its Revolving Loan Commitment to
consider a one year extensions of the Termination Date, but under no
circumstance shall the Bank be obligated to grant such extension and any
such extensions shall be in the Bank's sole and absolute discretion.
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1.2 Accounting Terms. Any accounting terms used in this Agreement which
are not specifically defined herein shall have the meanings customarily
given to such terms in accordance with GAAP.
1.3 Others Defined in U.C.C.. All terms contained in this Agreement (and
which are not otherwise specifically defined herein) shall have the
meanings provided by the U.C.C. to the extent the same are used or
defined therein.
SECTION 2. REVOLVING LOAN COMMITMENT; REVOLVING LOAN BORROWING
PROCEDURES
2.1 Revolving Loan Commitment. On the terms and subject to the
conditions set forth in this Agreement, the Bank agrees to make
revolving loans (collectively, "Revolving Loans", and individually a
"Revolving Loan") to the Borrower from time to time on and after the
Closing Date and before the Termination Date in such aggregate amounts
as the Borrower may from time to time request but not exceeding the
lesser of (a) an amount, which when added to the aggregate Revolving
Loans which are then outstanding equals the Maximum Commitment, or (b)
the Maximum Loan Value of the Stock to be purchased with the proceeds of
such Revolving Loan. The Borrower shall have the right to repay and
reborrow any of the Revolving Loans; provided, however, that it shall be
a condition precedent to any reborrowing that as of the date of any
reborrowing all of the conditions to borrowing set forth in this
Agreement shall be satisfied and all representations and warranties made
herein shall be true and correct in all material respects as of such
reborrowing date. The Bank's commitment hereunder to make Revolving
Loans is hereinafter called the "Revolving Loan Commitment".
2.2 Various Types of Revolving Loans. Each Revolving Loan shall be
either a Prime Rate Loan or a Eurodollar Rate Loan (each being herein
called a "Type" of Loan), as the Borrower shall specify in the related
Borrowing Request or Continuation/Conversion Notice pursuant to Section
2.3 or Section 2.4. Prime Rate Loans and Eurodollar Rate Loans may be
outstanding at the same time; provided, that (a) in the case of
Eurodollar Rate Loans, not more than five different Interest Periods
shall be outstanding at any one time for all such Revolving Loans, and
(b) the Borrower shall specify Revolving Loans and Interest Periods such
that no payment or prepayment of any principal on any Revolving Loan
shall result in a break-up of any Interest Period.
2.3 Revolving Loan Borrowing Procedures. Whenever the Borrower desires
to borrow a Revolving Loan hereunder, the Borrower shall give the Bank
irrevocable telephonic notice of such proposed Revolving Loan borrowing
no later than 12:00 noon, Chicago, Illinois time, on a day which in the
case of a Prime Rate Loan is at least one Business Day prior to the
proposed date of such borrowing, and in the case of a Eurodollar Rate
Loan is at least three Business Days prior to the proposed date of such
borrowing. In no event shall the Borrower request Eurodollar Rate Loans
in an aggregate principal amount of less than $250,000 or any larger
integral multiple of $50,000. Each such notice shall be effective upon
receipt by the Bank and shall specify the date and the amount of the
borrowing. Each request for a Revolving Loan shall automatically
constitute a representation and warranty by the Borrower that, as of the
date of such requested Revolving Loan, all conditions precedent to the
making of such Revolving Loan set forth in Section 11 hereof shall be
satisfied. Each borrowing of a Revolving Loan shall be on a Business
Day. Concurrently with the above-described telephonic notice, the
Borrower shall deliver to the Bank, via facsimile, a Borrowing Request
prepared in accordance with Section 8.1.12 hereof.
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2.4 Conversion and Continuation of Revolving Loans. The Borrower may, by
delivery to the Bank of a Continuation/ Conversion Notice (herein called
a "Continuation/Conversion Notice") in the form of Exhibit G attached
hereto with appropriate insertions, before 1:00 P.M., Chicago time,
three (3) Business Days prior to conversion or continuation, convert or
continue Revolving Loans as follows:
(a) convert Eurodollar Rate Loans into Prime Rate Loans,
(b) convert Prime Rate Loans into Eurodollar Rate Loans, and
(c) continue any such Revolving Loan into a subsequent
Interest Period of the same duration or of any other duration
permitted hereunder, subject to the following:
(i) the Interest Period applicable to any Eurodollar Rate Loan resulting
from a conversion shall be specified by the Borrower in the Continuation/
Conversion Notice delivered pursuant to this Section; provided, however, that
if no such Interest Period shall be specified, the Borrower shall be deemed to
have selected an Interest Period, in the case of a Eurodollar Rate Loan, of one
(1) month's duration. If the Borrower shall not have given timely notice to
continue any Revolving Loan into a subsequent Interest Period and shall not
otherwise have given notice to convert such Revolving Loan, such Revolving Loan
unless repaid pursuant to the terms hereof shall automatically be converted
into a Prime Rate Loan;
(ii) in the case of a conversion or continuation of less than all
Revolving Loans, the aggregate principal amount of such Revolving Loans
converted or continued shall be not less than $100,000 or any larger integral
multiple of $50,000;
(iii) if any Eurodollar Rate Loan is converted at a time other than the
last day of an Interest Period applicable thereto, the Borrower shall at the
time of conversion pay any loss or expense (including, without limitation,
breakage losses and expenses) associated therewith pursuant to Section 4.11;
(iv) any portion of a Revolving Loan maturing or required to be repaid in
less than one (1) month may not be converted into, or continued as, a
Eurodollar Rate Loan; and
(v) any portion of a Eurodollar Rate Loan required to be paid on any
principal payment date occurring in less than one (1) month after the end of
the then current Interest Period applicable to such Loan shall be automatically
converted at the end of such Interest Period into a Prime Rate Loan.
Notwithstanding the foregoing, so long as any Default shall exist, no Revolving
Loans shall be converted to or continued as Eurodollar Rate Loans.
SECTION 3. REVOLVING NOTE
3.1 Revolving Note. The Revolving Loans shall be evidenced by a promissory
note (hereinafter, as the same may be amended, modified or supplemented from
time to time, and together with any renewals or extensions thereof or exchanges
or substitutions therefor, the Revolving Note"), duly executed and delivered by
the Borrower, substantially in the form set forth in Exhibit A attached hereto,
with appropriate insertions, dated the Closing Date, payable to the order of
the Bank in the original principal amount of Five Million Dollars ($5,000,000).
The date and amount of each Revolving Loan made by the Bank and of each
repayment
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of principal thereon received by the Bank shall be recorded by the Bank in
its records. The aggregate unpaid principal amount so recorded shall be
rebuttable presumptive evidence of the principal amount owing and unpaid on the
Revolving Note. The failure so to record any such amount or any error in so
recording any such amount, however, shall not limit or otherwise affect the
Borrower's obligations hereunder or under the Revolving Note to repay the
principal amount of the Revolving Loans together with all interest accruing
thereon.
3.2 Interest: Due Date Extension. The Revolving Note shall provide for the
payment of interest as provided in Section 4 hereof. If any payment of
principal of, or interest on, the Revolving Note falls due on a day that is not
a Business Day, then such due date shall be extended to the next following
Business Day, and additional interest shall accrue and be payable for the
period of such extension.
SECTION 4. INTEREST AND FEES; CHANGE IN CIRCUMSTANCE
4.1 Interest Rates on Revolving Loans. The Borrower hereby promises to
pay interest on the unpaid principal amount of each Revolving Loan for the
period commencing on the date of disbursement of such Revolving Loan until such
loan is paid in full, as follows:
(a) At all times while such Revolving Loan is a Prime Rate Loan, at a rate
per annum equal to the Prime Rate from time to time in effect plus one-half
percent (1/2%);
(b) At all times while such Revolving Loan is a Eurodollar Rate Loan, for
each Interest Period, at a rate per annum equal to the Eurodollar Rate (Reserve
Adjusted) applicable to such Interest Period, plus two and one-half percent (2
1/2%).
4.2 Default Interest Rate. Notwithstanding the provisions of Section 4.1,
in the event that any Default under Section 12.1.4 or any Event of Default
shall occur hereunder, the Borrower hereby promises to pay interest on the
unpaid principal amount of each Revolving Loan for the period commencing on the
date of such Default or Event of Default until such Default or Event of Default
is cured or waived at a rate per annum equal to the interest rate otherwise in
effect hereunder from time to time (but not less than the applicable rate in
effect as at such due date), plus two percent (2.0%) per annum.
4.3 Interest Payment Dates. Accrued interest on each Prime Rate Loan shall
be payable on each Quarterly Payment Date and at maturity, commencing with the
first of such date to occur after the Closing Date. Accrued interest on each
Eurodollar Rate Loan shall be payable on the last day of each Interest Period
relating to such Revolving Loan, and at maturity. After maturity, accrued
interest on all Revolving Loans shall be payable on demand.
4.4 Interest Periods. Each "Interest Period" for a Eurodollar Rate Loan
shall commence on the date such Eurodollar Rate Loan was made or converted from
a Revolving Loan of a different Type, or on the expiration of the immediately
preceding Interest Period for such Eurodollar Rate Loan, and shall end on the
date which is one (1), two (2), three (3) or six (6) months thereafter, as the
Borrower may specify pursuant to Section 2.2 or Section 2.3 hereof. Each
"Interest Period" for a Eurodollar Rate Loan which would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day
(unless such next
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succeeding Business Day is the first Business Day of a calendar month, in
which case with respect to a Eurodollar Rate Loan such Interest Period shall
end on the next preceding Business Day).
4.5 Computation of Interest. Interest on each Revolving Loan shall be
computed for the actual number of days elapsed on the basis of a three hundred
sixty (360) day year. The applicable Eurodollar Rate for each Interest Period
shall be determined by the Bank, and notice thereof shall be given by the Bank
to the Borrower. Each determination of the applicable Eurodollar Rate by the
Bank shall be conclusive and binding upon the parties hereto, in the absence of
demonstrable error. The interest rate applicable to each Prime Rate Loan shall
change simultaneously with each change in the Prime Rate.
4.6 Commitment Fee. The Borrower agrees to pay to the Bank, for the period
commencing on the Closing Date and continuing through the Termination Date, a
commitment fee at the rate of one-quarter percent (1/4%) per annum on the sum
of the average daily unused portion of the Maximum Commitment. Such commitment
fees shall be payable by the Borrower in arrears on each Quarterly Payment
Date, commencing with the first such date to occur after the Closing Date.
4.7 Taxes. All payments by the Borrower under this Agreement shall be made
free and clear of, and without deduction for, any present or future income,
excise, stamp or other taxes, fees, levies, duties, withholdings or other
charges of any nature whatsoever, now or hereafter imposed by any taxing
authority, other than franchise taxes and taxes imposed on or measured by the
Bank's net income or receipts (such non-excluded items being called "Taxes").
In the event that any withholding or deduction from any payment to be made by
the Borrower hereunder is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then the Borrower will:
(a) pay directly to the relevant authority the full amount required to
be so withheld or deducted;
(b) promptly forward to the Bank an official receipt or other
documentation satisfactory to the Bank evidencing such payment to such
authority; and
(c) pay to the Bank such additional amount or amounts as is necessary to
ensure that the net amount actually received by the Bank will equal the full
amount the Bank would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against the Bank with respect to
any payment received by the Bank hereunder, the Bank may pay such Taxes and
the Borrower will promptly pay such additional amounts (including any
penalties, interest or expenses) as is necessary in order that the net amount
received by the Bank after the payment of such Taxes (including any Taxes on
such additional amount) shall equal the amount the Bank would have received
had not such Taxes been asserted.
4.8 Increased Costs: Capital Adequacy.
4.8.1 Increased Costs. If (i) Regulation D of the Board of Governors of
the Federal Reserve System, or (ii) after the date hereof, the adoption of
any applicable law, rule or regulation, or any change therein, or any change
in the interpretation or administration thereof by any governmental
authority, central
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bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank (or any Lending Office of the
Bank) with any request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency issued after the date
hereof;
(a) shall subject the Bank (or any Lending Office of the Bank) to any
tax, duty or other charge with respect to any Revolving Loan, the Revolving
Note or its obligation to make or maintain any Revolving Loan, or shall
change the basis of taxation of payments to the Bank of the principal of or
interest on any Revolving Loan or any other amounts due under this Agreement
in respect of any Revolving Loan or its obligation to make or maintain any
Revolving Loan (except for changes in the rate of tax on the overall net
income of the Bank imposed by the jurisdiction in which the Bank's principal
executive office is located); or
(b) shall impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Board of Governors of the
Federal Reserve System), special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, the
Bank (or any Lending Office of the Bank); or
(c) shall impose on the Bank (or its Lending Office) any other condition
affecting any Revolving Loan, the Revolving Note or its obligation to make or
maintain any Revolving Loan;
and the result of any of the foregoing is to increase the cost to (or to
impose a cost on) the Bank (or any Lending Office of the Bank) of making or
maintaining any Revolving Loan, or to reduce the amount of any sum received
or receivable by the Bank (or its Lending Office) under this Agreement or
under the Revolving Note with respect thereto, then upon demand by the Bank
(which demand shall be accompanied by a statement setting forth the basis of
such demand), the Borrower shall pay directly to the Bank from time to time
such additional amount or amounts as the Bank reasonably determines will
compensate the Bank for such increased cost or such reduction.
4.8.2 Capital Adequacy. If either (i) the introduction of or any
change in or in the interpretation of any law or regulation or (ii)
compliance by the Bank with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law) affects
or would affect the amount of capital required or expected to be maintained
by the Bank or any Person controlling the Bank and the Bank determines that
the amount of such capital is increased by or based upon the existence of the
Bank's commitment to lend hereunder, then, upon demand by the Bank, the
Borrower shall immediately pay to the Bank, from time to time as specified by
the Bank, additional amounts sufficient to compensate the Bank in the light
of such circumstances, to the extent that the Bank reasonably determines such
increase in capital to be allocable to the existence of the Bank's commitment
to lend hereunder.
4.9 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:
(a) the Bank determines that deposits in Dollars (in the applicable
amounts) are not being offered to it in the relevant market for such Interest
Period, or the Bank otherwise determines (which determination shall be
binding and conclusive on all parties) that by reason of circumstances
affecting the interbank
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eurodollar market adequate and reasonable means do not exist for ascertaining
the applicable Eurodollar Rate; or
(b) the Eurodollar Rate (Reserve Adjusted), as determined by the Bank,
will not adequately and fairly reflect the cost to the Bank of maintaining or
funding such Revolving Loans for such Interest Period, or that the making or
funding of Eurodollar Rate Loans has become impracticable as a result of an
event occurring after the date of this Agreement which in the opinion of the
Bank materially changes such Revolving Loans, then, so long as such
circumstances shall continue:
(i) the Bank shall promptly notify the Borrower thereof,
(ii) the Bank shall be under no obligation to make or convert
into Eurodollar Rate Loans so affected, and
(iii) on the last day of the then current Interest Period for
Eurodollar Rate Loans so affected, such Revolving Loans shall,
unless then repaid in full, automatically convert to Prime Rate
Loans.
If conditions subsequently change so that the foregoing conditions no longer
exist, the Bank will promptly notify the Borrower thereof, and upon the receipt
of such notice, the obligations of the Bank to make or continue Eurodollar Rate
Loans shall be reinstated.
4.10 Changes in Law Rendering Certain Loans Unlawful. In the event that any
change in (including the adoption of any new) applicable laws or regulations,
or any change in the interpretation of applicable laws or regulations by any
governmental or other regulatory body charged with the administration thereof,
should make it unlawful for the Bank or the Lending Office of the Bank to make,
maintain or fund Eurodollar Rate Loans, then (a) the Bank shall promptly notify
the Borrower, (b) the obligation of the Bank to make or convert into Eurodollar
Rate Loans made unlawful for the Bank shall, upon the effectiveness of such
event, be suspended for the duration of such unlawfulness, and (c) on the last
day of the current Interest Period for Eurodollar Rate Loans (or, in any event,
if the Bank so requests, on such earlier date as may be required by the
relevant law, regulation or interpretation), the Eurodollar Rate Loans shall,
unless then repaid in full, automatically convert to Prime Rate Loans. If
conditions subsequently change so that the foregoing conditions no longer
exist, the Bank will promptly notify the Borrower thereof, and upon the receipt
of such notice, the obligations of the Bank to make or continue Eurodollar Rate
Loans shall be reinstated.
4.11 Funding Losses. The Borrower hereby agrees that upon demand by the
Bank (which demand shall be accompanied by a statement setting forth the basis
for the calculations of the amount being claimed) the Borrower will indemnify
the Bank against any net loss or expense which the Bank may sustain or incur
(including, without limitation, any net loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by the Bank
to fund or maintain Eurodollar Rate Loans), as reasonably determined by the
Bank, as a result of (a) any payment or prepayment or conversion of any
Eurodollar Rate Loan of the Bank on a date other than the last day of an
Interest Period for such Revolving Loan, or (b) any failure of the Borrower to
borrow or convert any Revolving Loans on a date specified therefor in a
Borrowing Request or Continuation/Conversion request pursuant to this
Agreement. For this purpose, all notices to the Bank pursuant to this Agreement
shall be deemed to be irrevocable.
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4.12 Right of Bank to Fund Through Other Offices. The Bank may, if it so
elects, fulfill its Commitment as to any Eurodollar Rate Loan by causing its
Lending Office to make such Revolving Loan; provided, that in such event for
the purposes of this Agreement, such Revolving Loan shall be deemed to have
been made by the Bank and the obligation of the Borrower to repay such Loan
shall nevertheless be to the Bank and shall be deemed held by it, to the extent
of such Loan, for the account of such branch or affiliate.
4.13 Discretion of Bank as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, the Bank shall be entitled to fund
and maintain its funding of all or any part of the Revolving Loans in any
manner it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if the Bank had
actually funded and maintained each Eurodollar Rate Loan during each Interest
Period for such Revolving Loan through the purchase of deposits having a
maturity corresponding to such Interest Period and bearing an interest rate
equal to the Eurodollar Rate for such Interest Period.
4.14 Conclusiveness of Statements: Survival of Provisions. Determinations
and statements of the Bank pursuant to Section 4.8.1, Section 4.8.2, Section
4.9, Section 4.10 or Section 4.11 shall be conclusive absent demonstrable
error. The provisions of Sections 4.8.1, 4.8.2 and 4.10 shall survive
termination of this Agreement.
4.15 Maximum Interest. It is the intention of the Bank and the Borrower to
comply with the laws of the State of Illinois, and, notwithstanding any
provision to the contrary contained herein or in the other Related Documents,
the Borrower shall not be required to pay, and the Bank shall not be permitted
to collect, any amount in excess of the maximum amount of interest permitted by
applicable law ("Excess Interest"). If any Excess Interest is provided for or
determined to have been provided for by a court of competent jurisdiction in
this Agreement or in any of the other Related Documents, then in such event (i)
the provisions of this Section 4.15 shall govern and control; (ii) the Borrower
shall not be obligated to pay any Excess Interest; (iii) any Excess Interest
that the Bank may have received hereunder shall be, at the Bank's sole option,
(A) applied as a credit against either the outstanding principal balance of the
Revolving Loans or accrued and unpaid interest hereon, (B) refunded to the
payor thereof, or (C) any combination of the foregoing; (iv) the interest
rate(s) provided for herein shall be automatically reduced to the maximum rate
allowed under applicable law, and this Agreement and the other Related
Documents shall be deemed to have been, and shall be, reformed and modified to
reflect such reduction; and (v) the Borrower shall not have any action against
the Bank for any damages arising out of the payment or collection of any Excess
Interest. Notwithstanding the foregoing, if any interest payment or other
charge or fee payable hereunder or under any of the other Related Documents
exceeds the maximum amount then permitted by applicable law, then to the extent
permitted by law, the Borrower shall be obligated to pay the maximum amount
then permitted by applicable law and the Borrower shall continue to pay the
maximum amount from time to time permitted by applicable law until all such
interest payments and other charges and fees otherwise due hereunder or under
any of the other Related Documents (in the absence of such restraint imposed by
applicable law) have been paid in full.
SECTION 5. REDUCTION OR TERMINATION OF REVOLVING LOAN COMMITMENT; PREPAYMENTS
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5.1 Reduction or Termination of Revolving Loan Commitment by the Borrower.
The Borrower may from time to time on at least five (5) Business Days' prior
written notice received by the Bank permanently reduce the amount of the
Maximum Commitment but only upon first repaying the amount, if any, by which
the aggregate unpaid principal amount of the Revolving Note exceeds the then
reduced amount of the Maximum Commitment. The Borrower may at any time on like
notice terminate the Revolving Loan Commitment upon payment in full of the
Revolving Note; provided, however, that no such termination of the Revolving
Loan Commitment shall terminate or otherwise affect the obligations of the
Borrower hereunder or require the Bank to release any of the Collateral.
5.2 Optional Prepayment of Revolving Loans. The Borrower may prepay at any
time any Revolving Loans in whole or in part without penalty except to the
extent any amounts are owed pursuant to Section 4.11 as a result of such
prepayment; provided, that (a) the Borrower shall give the Bank not less than
one (1) Business Days' prior notice thereof for Prime Rate Loans and not less
than three (3) Business Days' prior notice thereof for Eurodollar Rate Loans,
specifying the Revolving Loans to be prepaid, and the date and amount of
prepayment, (b) subject to Section 4.9, Eurodollar Rate Loans shall be prepaid
only on the last day of the Interest Period relating thereto, (c) each partial
prepayment shall be in a principal amount of $100,000 or an integral multiple
thereof, and (d) any prepayment of the entire principal amount of all Revolving
Loans shall include accrued interest to the date of prepayment.
5.3 Mandatory Prepayments. If, on any date, the Partnership shall sell any
of the Stock, the Borrower shall promptly notify the Bank of such sale,
including the amount of net proceeds to be received by the Partnership in
respect of such sale and in return for the release of the Stock being sold, the
Borrower shall promptly repay in full any Revolving Loans then outstanding, the
proceeds of which were used to purchase such Stock.
5.4 Termination of Revolving Loan Commitment by the Bank. On the
Termination Date, all Revolving Loans and other Liabilities shall become
immediately due and payable, without presentment, demand or notice of any kind.
5.5 Interest on Principal Prepaid. Any prepayment of any Revolving Loan
shall include accrued interest to the date of prepayment on the principal
amount being prepaid.
5.6 Use of Proceeds: Regulation U. The proceeds of the Revolving Loans
shall be used by the Borrower to purchase Stocks for investment purposes.
Borrower understands that for purposes of this Agreement, all Stock (whether
Margin Stock or Non-Margin Stock) will be treated as Margin Stock and the Bank
will comply with Regulation U in connection therewith. Notwithstanding the
foregoing, the Borrower may request and the Bank shall make Revolving Loans for
the payment of interest hereunder, provided that each of the conditions to
borrowing set forth in Section 11 hereof is satisfied both before and after
giving effect to such Revolving Loan.
SECTION 6. MAKING OF PAYMENTS
6.1 Making of Payments. All payments of principal of, or interest on, the
Revolving Note and of any fees shall be made in lawful money of the United
States of America in immediately available funds
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by the Borrower to the Bank. All such payments shall be made to the Bank at
its principal office in Chicago, Illinois not later than 2:00 p.m., Chicago,
Illinois time, on the date due; and funds received after that hour shall be
deemed to have been received by the Bank on the next following Business Day.
6.2 Deposits to the Borrowers' Account. The Bank shall have the right to
deposit all proceeds of the Revolving Loans to the Borrower's operating
account, if any, with the Bank and shall have the right to charge such account
(or any other account in the Borrower's name) for all other Liabilities due
from and payable by the Borrower hereunder.
6.3 Set-off.
(a) The Borrower agrees that, if at any time (i) any amount owing by it
under this Agreement or any Related Document is then due and payable to the
Bank, or (ii) any Default or Event of Default shall have occurred and be
continuing, then the Bank, in its sole discretion, may set off against and
apply to the payment of any and all Liabilities any and all balances, credits,
deposits, accounts, moneys or other assets of the Borrower then or thereafter
with the Bank, including, without limitation, all negotiable instruments,
documents of title, chattel paper, securities or certificates of deposit. The
Borrower hereby grants to the Bank a continuing security interest in, any and
all such balances, credits, deposits, accounts, moneys or other assets of the
Borrower then or thereafter maintained with the Bank.
(b) Without limitation of Section 6.3(a) hereinabove, the Borrower agrees
that, upon and after the occurrence of any Default or Event of Default, the
Bank is hereby authorized, in its sole discretion, at any time and from time to
time, without notice to the Borrower, (i) to set off against and to appropriate
and (ii) apply to the payment of any and all Liabilities any and all amounts
which the Bank is obligated to pay over to the Borrower, and (ii) pending any
such action, to the extent necessary, to deposit such amounts with the Bank as
Collateral to secure such Liabilities and to dishonor any and all checks and
other items drawn against any deposits so held as the Bank in its sole
discretion may elect.
(c) The rights of the Bank under this Section 6.3 are in addition to all
other rights and remedies that the Bank may otherwise have.
6.4 Appointment As Attorney-In-Fact. The Borrower hereby irrevocably
constitutes and appoints the Bank (and any of the Bank's officers, employees or
agents designated by the Bank), with full power of substitution by the Bank, as
the Borrower's true and lawful agent and attorney, with power to endorse the
Borrower's name on any checks, notes, acceptances, money orders, drafts or
other forms of payment or security that may come into the Bank's possession and
to do any and all acts and things necessary or desirable in the Bank's sole
determination to carry out this Agreement and the Collateral Documents. The
Borrower hereby ratifies and approves all acts under such power of attorney and
neither the Bank nor any other Person acting as Borrower's attorney hereunder
will be liable for any acts or omissions or for any error of judgment or
mistake of fact or law made in good faith except as result of gross negligence
or willful misconduct. The appointment of the Bank (and any of the Bank's
officers, employees or agents the Bank) as the Borrower's attorney, and each
and every one of the Bank's rights and powers, being coupled with an interest,
are irrevocable until all of the Liabilities have been fully repaid and this
Agreement shall have expired or been terminated in accordance with the terms
hereof.
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SECTION 7. REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement and to make Revolving
Loans hereunder, the Borrower hereby represents and warrants to the Bank that:
7.1 Organization. The Borrower is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation; and the Borrower is duly qualified and in good
standing as a foreign limited liability company authorized to do business in
each jurisdiction where such qualification is required because of the nature of
its activities or properties. First Analysis Management Company III, L.L.C., a
Delaware limited liability company is the sole Manager of Borrower. First
Analysis Management Company III, L.L.C. and Environmental Private Equity
Management II, L.P. are the sole members of the Borrower. The Borrower is the
sole Managing General Partner of the Partnership. The Borrower and each of the
Guarantors are the sole partners of the Partnership.
7.2 Authorization: No Conflict. The Borrower's execution, delivery and
performance of this Agreement and each Related Document to which it is a party
and the consummation of the transactions contemplated by this Agreement and
each Related Document are within the Borrower's limited liability company
powers, have been duly authorized by all necessary limited liability company
action, require no governmental, regulatory or other approval, and do not and
will not contravene or conflict with any provision of (i) any law, statute or
regulation, (ii) any judgment, decree or order, or (iii) the Borrower's
Certificate of Formation or Operating Agreement, and do not and will not
contravene or conflict with, or cause any Lien (other than to the Bank) to
arise under, any provision of any agreement or document binding upon the
Borrower, or upon any property of the Borrower.
7.3 Validity; Binding Nature; Approvals. This Agreement and the Related
Documents to which the Borrower is a party are the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
their respective terms. No order, consent, license or exemption of, or filing
or registration with, any court or governmental department, agency,
instrumentality or regulatory body, or any other approval which has not been
obtained or taken and is not in full force and effect, is required to
authorize, or is required in connection with the execution, delivery and
performance by the Borrower of this Agreement and each of the Related Documents
to which it is a party.
7.4 Financial Statements. All income statements, balance sheets, cash
flow statements, statements of operations and other financial data that have
been or shall hereafter be furnished to the Bank for the purposes of or in
connection with this Agreement do and will present fairly in accordance with
GAAP, consistently applied, the financial condition of the Borrower as of the
dates thereof and the results of operations for the period(s) covered thereby.
There is no liability, direct or indirect, contingent or otherwise, of the
Borrower that is not reflected on these financial statements.
7.5 Material Adverse Change.
(a) Since the date of the most recent financial statements submitted
pursuant to Sections 8.1.1 and 8.1.2 there has been no material adverse change
in the financial condition, operations, assets, business, or properties of the
Borrower.
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(b) To the Borrower's knowledge, since the date of the most recent
financial statements submitted pursuant to Sections 8.1.5, 8.1.6, 8.1.7 and
8.1.8 there has been no material adverse change in the financial condition,
operations, assets, business, or properties of either of the Issuers or the
Guarantors.
7.6 Litigation and Contingent Liabilities.
No litigation, arbitration proceedings, governmental or quasi-governmental
proceedings or investigations are pending or threatened against the Borrower,
or to Borrower's knowledge the Issuers or the Guarantors, nor does the Borrower
know of any basis for any of the foregoing. The Borrower has obtained all
licenses, permits, franchises and other governmental authorizations necessary
to the ownership of its properties or to the conduct of its business and all of
the foregoing are valid and in full force and effect.
7.7 Liens. None of the assets of the Borrower is subject to any Lien,
except Permitted Liens.
7.8 Employee Benefit Plans. Neither the Borrower nor any ERISA Affiliate
maintains any Plan nor any Multiemployer Plan.
7.9 Broker's Fees. The Borrower has no obligation to any Person in respect
of any finder's, brokers or similar fee in connection with the Revolving Loans
or this Agreement.
7.10 Other Agreements. The Borrower is not in default, and will not be in
default upon the consummation of the transactions contemplated hereby, or under
any agreement, document, instrument, or mortgage to which the Borrower is a
party or by which it is bound.
7.11 Accuracy of Information. All factual information heretofore or
contemporaneously furnished by or on behalf of the Borrower to the Bank for
purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all other factual information hereafter furnished
by or on behalf of the Borrower to the Bank will be, true and accurate in every
material respect on the date as of which such information is dated or
certified, and the Borrower has not omitted and will not omit any material fact
necessary to prevent such information from being false or misleading. The
Borrower has disclosed to the Bank all facts which might materially and
adversely affect the business, credit, operations, financial condition or
prospects of the Borrower or the Borrower's ability to perform its obligations
under this Agreement or the Related Documents.
7.12 Tax Status. Borrower has made or filed all income and other tax
returns, reports and declarations required by any jurisdiction to which it is,
or was, subject, and has paid all taxes, assessments and other charges shown or
determined to be due on such returns, reports and declarations. Neither the
Borrower, nor to the Borrower's knowledge either of the issuers of the Stock is
currently undergoing any audit or investigation by any federal, state or local
taxing authority or agency, nor is any audit or investigation pending or
anticipated.
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7.13 No Default. No event has occurred and no condition exists which,
upon the execution and delivery of, or consummation of any transaction
contemplated by, this Agreement or any Related Document, or upon the funding of
any Revolving Loan, will constitute a Default or an Event of Default.
7.14 Compliance with Applicable Laws. The Borrower is in compliance with
the requirements of all applicable laws, rules, regulations, and orders of all
governmental authorities, including, without limitation, Environmental Laws.
7.15 Places of Business. As of the date hereof the chief executive office
and principal place of business of the Borrower is 9500 Sears Tower, Chicago,
Illinois 60606. The Borrower conducts no business at any other location.
7.16 Investment Company Act. The Borrower is not an "investment company"
or a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
7.17 Public Utility Holding Company Act. The Borrower is not a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate"
of a "holding company" or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
7.18 Solvency. The Borrower is solvent, is and will be able to pay its
debts as they become due and has capital sufficient to carry on its business
and all businesses in which it is about to engage, and owns property having a
value both at fair valuation and at present fair saleable value greater than
the amount required to pay the Borrower's debts. The Borrower will not be
rendered insolvent by the execution and delivery of this Agreement or any
document executed incidental to or in connection herewith, or by completion of
the transactions contemplated hereunder.
7.19 Licenses. The Borrower has obtained all licenses, permits, franchises
and other governmental authorizations necessary to the ownership of its
respective properties or to the conduct of its business.
7.20 Subsidiaries. The Borrower has no Subsidiaries.
7.21 Survival. The representations and warranties set forth in this
Section 7 shall survive until all Liabilities have been satisfied.
SECTION 8. AFFIRMATIVE COVENANTS
Until the expiration or termination of the Revolving Loan Commitment and
thereafter until all Liabilities are paid in full, the Borrower covenants and
agrees that it will:
8.1 Reports, Certificates and Other Information. Furnish or cause to be
furnished to the Bank:
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8.1.1 Borrower Financial Statements. On or before the one hundred
twentieth (120th) day after each of the Borrower's fiscal years, a copy of the
annual consolidated financial statements of the Borrower consisting of, at
least, a balance sheet and statement of income and cash flow for such period,
prepared in accordance with GAAP, consistently applied, signed by an Authorized
Officer.
8.1.2 Borrower Interim Reports. On or before the sixtieth (60th) day after
the end of each fiscal quarter of the Borrower, a copy of unaudited
consolidated financial statements of the Borrower prepared in accordance with
GAAP, consistently applied, signed by an Authorized Officer and consisting of,
at least, a balance sheet and statement of income and cash flow as at the close
of such fiscal quarter and for the period from the beginning of such calendar
year to the close of such fiscal quarter.
8.1.3 Certificates. On or before the tenth (10th) calendar day of each
calendar month, or if such day is not a Business Day, on the next such Business
Day, a duly completed certificate in the form of Exhibit B attached hereto (a
"Compliance Certificate") dated as of the last Business Day of the preceding
calendar month and signed by an Authorized Officer.
8.1.4 Reports from Accountants. Promptly upon receipt thereof, copies of
each report submitted to the Borrower by independent accountants in connection
with any annual, interim or other financial review made by them of the books of
the Borrower.
8.1.5 Issuer Financial Statements. On or before the one hundred twentieth
(120th) day after each of the Issuers' fiscal years, a copy of the annual
consolidated financial statements of such Issuer consisting of, at least, a
balance sheet and statement of income and cash flow for such period, prepared
in accordance with GAAP, consistently applied, audited by independent certified
public accountants of recognized standing; provided, that if such Issuer
obtains a filing extension from the Securities and Exchange Commission ("SEC"),
such financial statements shall only be required to be delivered within fifteen
(15) days of the filing of such financial statements with the SEC.
8.1.6 Issuer Interim Reports. On or before the sixtieth (60th) day after
the end of each of the Issuers' fiscal quarters, a copy of unaudited
consolidated financial statements of such Issuer prepared in accordance with
GAAP, consistently applied, signed by an authorized officer of such Issuer and
consisting of, at least, a balance sheet and statement of income and cash flow
as at the close of such fiscal quarter and for the period from the beginning of
such calendar year to the close of such fiscal quarter; provided, that if such
Issuer obtains a filing extension from the SEC, such financial statements shall
only be required to be delivered within fifteen (15) days of the filing of such
financial statements with the SEC.
8.1.7 Guarantor Financial Statements. On or before the one hundred
twentieth (120th) day after each of the Guarantors' fiscal years, a copy of the
annual consolidated financial statements of such Guarantor consisting of, at
least, a balance sheet and statement of income and cash flow for such period,
prepared in accordance with GAAP, consistently applied, audited by independent
certified public accountants of recognized standing.
8.1.8 Guarantor Interim Reports. On or before the sixtieth (60th) day
after the end of each of the Guarantors' fiscal quarters, a copy of unaudited
consolidated financial statements of such Guarantor
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prepared in accordance with GAAP, consistently applied, signed by an
authorized officer of such Guarantor and consisting of, at least, a balance
sheet and statement of income and cash flow as at the close of such fiscal
quarter and for the period from the beginning of such calendar year to the
close of such fiscal quarter.
8.1.9 Partnership Financial Statements. On or before the one hundred
twentieth (120th) day after each of the Partnership's fiscal years, a copy of
the annual consolidated financial statements of the Partnership consisting of,
at least, a balance sheet and statement of income and cash flow for such
period, prepared in accordance with GAAP, consistently applied, signed by an
authorized officer of the general partner of the Partnership.
8.1.10 Partnership Interim Reports. On or before the sixtieth (60th) day
after the end of each fiscal quarter of the Partnership, a copy of unaudited
consolidated financial statements of the Partnership prepared in accordance
with GAAP, consistently applied, signed by an authorized officer of the general
partner of the Partnership and consisting of, at least, a balance sheet and
statement of income and cash flow as at the close of such fiscal quarter and
for the period from the beginning of such calendar year to the close of such
fiscal quarter.
8.1.11 Notice of Default; Litigation. Forthwith upon learning of the
occurrence of any of the following, written notice thereof which describes the
same and the steps being taken by the Borrower with respect thereto: (i) the
occurrence of a Default or an Event of Default, and (ii) the institution of, or
any adverse determination in, any litigation, arbitration proceeding or
governmental proceeding in which any injunctive relief is sought or in which
money damages in excess of TwentyFive Thousand Dollars ($25,000) are sought.
8.1.12 Borrowinq Request. Upon each request by the Borrower for a
Revolving Loan hereunder, a duly completed borrowing request in the form of
Exhibit C attached hereto (the "Borrowinq Request"), in form and substance
satisfactory to the Bank and signed by an Authorized Officer.
8.1.13 Other Information. Such other information, certificates, schedules,
exhibits or documents (financial or otherwise) concerning the Borrower, the
Issuers or the Guarantors as the Bank may reasonably request from time to time.
8.2 Existence. Maintain in full force and effect its existence as a
limited liability company in good standing under the laws of its State of
formation, and all rights, licenses, leases and franchises necessary to the
conduct of its business, and qualify and remain qualified to do business in
each jurisdiction in which such qualification is required.
8.3 Books, Records and Inspections. Maintain complete and accurate books
and records, the Bank to have access to such books and records, and permit the
Bank and any officers and designated agents or representatives of the Bank to
visit, audit, examine, copy and inspect, and verify the Borrower's books and
records, offices, properties, Collateral and operations, at such times as the
Bank may reasonably request, at the sole cost and expense of the Bank, unless
there is a Default or an Event of Default, in which case such visit, audit,
examination and inspection shall be upon the Bank's demand and at the sole cost
and expense of the Borrower.
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8.4 Taxes and Liabilities. Promptly pay when due all taxes, duties,
assessments and other liabilities.
8.5 Compliance with Applicable Laws. Comply with the requirements of all
applicable laws, rules, regulations, and orders of all governmental
authorities, including, without limitation, Environmental Laws.
8.6 Use of Proceeds. Only use or permit the direct or indirect use of any
proceeds of or with respect to the Revolving Loans for "purchasing or carrying"
(within the meaning of Regulation U) Stock for investment purposes and in all
cases consistent with applicable laws and statutes.
8.7 Loan to Value Ratio. Maintain at all times a Loan to Value Ratio
equal to or less than .65 to 1.0; provided, that the Borrower agrees that if at
any time the Loan to Value Ratio is greater than .65 to 1.0, the Borrower will,
on or before the next Business Day, either (a) make a mandatory prepayment of
principal of the Revolving Loans (any such mandatory prepayment shall be
without premium or penalty) or (b) pledge to the Bank additional Stock, each in
an amount necessary to reduce the Loan to Value Ratio to equal to or less than
.65 to 1.0. For purposes of this Section, "Loan to Value Ratio" means at any
time the ratio obtained by dividing the aggregate outstanding amount of the
Revolving Loans by the aggregate Current Market Value of the Stocks.
SECTION 9. NEGATIVE COVENANTS
Until the expiration or termination of the Revolving Loan Commitment and
thereafter until all Liabilities are paid in full, Borrower covenants and
agrees that, unless at any time the Bank shall otherwise expressly consent in
writing, it will not:
9.1 Limits on Revolving Loan Commitment. Permit the aggregate outstanding
principal amount of the Revolving Loans to exceed the thencurrent Maximum
Commitment from time to time in effect.
9.2 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness except (i) the Revolving Loans or other Liabilities, and (ii)
other Indebtedness outstanding on the date hereof as set forth on Schedule 9.2
attached hereto (collectively, the "Permitted Indebtedness").
9.3 Liens. Create, incur, assume or suffer to exist any Lien with respect
to any assets now owned or hereafter acquired by the Borrower, except the
following Liens (the "Permitted Lien"):
(a) Liens in favor of the Bank, (b) Liens incurred in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, (c) Liens of carriers, materialmen and
mechanics and other like statutory Liens arising in the ordinary course of
business, (d) Liens for current taxes not delinquent or taxes being
contested in good faith and by appropriate proceedings and as to which such
reserves or other appropriate provisions as may be required by GAAP are
being maintained, (e) Liens arising in the ordinary course of business for
sums being contested in good faith and by appropriate proceedings and with
respect to which adequate reserves are being maintained in accordance with
GAAP, or for sums not due, and in either case not involving any deposits or
advances for borrowed
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money or the deferred purchase price of property or services; or (f) Liens
consented to in writing by the Bank.
9.4 Subsidiaries. Not create any Subsidiary or other affiliated entity
nor enter into any joint venture (other than the Partnership) with any other
entity, without the Bank's prior written consent.
9.5 Change in Nature of Business. Make any material change in the
nature of its business carried on as of the Closing Date.
9.6 Mergers. Consolidations, Sales. Without the Bank's prior written
consent, be a party to any merger, consolidation, or exchange of stock, or
purchase or otherwise acquire all or substantially all of the assets or
stock of any class of, or any partnership or joint venture interest in, any
other Person, or sell, transfer, convey or lease all or any substantial part
of its assets, or sell or assign, with or without recourse, any receivables.
9.7 Transactions with Affiliates. Not enter into, or cause, suffer or
permit to exist any arrangement or contract with any of its other Affiliates
unless such arrangement (a) is fair and equitable to the Borrower, (b) is of
a sort which would be entered into by a prudent Person in the position of
the Borrower with a Person which is not one of its Affiliates, and (c) is on
terms which are not less favorable to the Borrower than are obtainable from
a Person which is not one of its Affiliates.
9.8 Other Agreements. Enter into any agreement containing any provision
which would be violated or breached by the performance of its obligations
hereunder or under any Related Document or which would violate or breach any
provision hereof or of any Related Document.
9.9 Employee Benefit Plans. Establish or permit any ERISA Affiliate to
establish any Plan or Multiemployer Plan without the prior written consent
of the Bank.
SECTION 10. COLLATERAL SECURITY
10.1 Collateral Documents. Payment and performance of all of the
Liabilities shall be secured pursuant to a Pledge Agreement, substantially in
the form of Exhibit D attached hereto, pursuant to which the Partnership
grants a security interest in the Stock owned by it to the Bank as collateral
security for the Liabilities of the Borrower to the Bank (as the same may be
amended, modified or supplemented from time to time, the "Pledge Agreement").
10.2 Deliveries; Further Assurances. The Borrower agrees that it will,
at its sole expense, upon the Bank's request, forthwith execute and deliver,
or cause to be executed and delivered to the Bank, in due form for filing or
recording (the Borrower hereby agreeing to pay the cost of filing or
recording the same in all public offices deemed necessary by the Bank), such
assignments, security agreements, warehouse receipts, bailee letters,
consents, waivers, financing statements, and other documents, and do such
other acts and things, all as the Bank may from time to time reasonably
request, to establish and maintain to the satisfaction of the Bank a valid,
first perfected security interest in all of the present and/or future
Collateral (free of all other Liens whatsoever, except Permitted Liens) to
secure payment of the Liabilities, including, without
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limitation, all things necessary to enable the Bank to have a first priority
perfected security interest in the Collateral as required by Article 8 and
Article 9 of the Illinois Uniform Commercial Code, as amended
SECTION 11. CONDITIONS OF LENDING
The Bank's obligation to make any Revolving Loan is subject to the
following conditions precedent:
11.1 Initial Loans. The Bank's obligation to make the initial Revolving
Loan hereunder is, in addition to the conditions precedent specified in
Section 11.2 hereof, subject to the satisfaction of each of the following
conditions precedent:
11.1.1 Documents. The Bank shall have received all of the following,
each duly executed and delivered and dated the Closing Date, or such earlier
date as shall be satisfactory to the Bank, in form and substance satisfactory
to the Bank:
(a) Related Documents. This Agreement, the Revolving Note, the Pledge
Agreement, the Guarantees and such other Collateral Documents and Related
Documents as the Bank may require.
(b) Certificate of the Manager of the Borrower. A certificate of the
Secretary of the Manager of the Borrower certifying as to:
(1) Borrower's Certificate of Formation, certified by the Secretary of
State of the Borrower's State of formation as of a recent date;
(2) Operating Agreement of the Borrower;
(3) Resolutions of the Borrower's Members and/or Managers authorizing
the execution, delivery and performance of this Agreement and the Related
Documents to which the Borrower is a party;
(4) The names of the officer or officers of the Manager of the Borrower
authorized to sign this Agreement and the Related Documents together with a
sample of the true signature of each such officer. The Bank may conclusively
rely on each such certificate until formally advised by a like certificate of
any changes therein.
(c) Certificate of Existence. A good standing certificate from the
Secretary of State of Illinois and a good standing certificate from the
Secretaries of State of each other State in which the Borrower is required to
be qualified to transact business.
(d) Certificate of the General Partner of the Partnership. A certificate
of the Secretary of the General Partner of the Partnership certifying as to:
(1) Partnership Agreement of the Partnership;
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(2) Resolutions of the Partnership authorizing the execution, delivery
and performance of the Pledge Agreement;
(3) The names of the officer or officers of the General Partner of the
Borrower authorized to sign the Pledge Agreement together with a sample of
the true signature of each such officer. The Bank may conclusively rely on
each such certificate until formally advised by a like certificate of any
changes therein.
(e) Certificate of the General Partner of the each of the Guarantors. A
certificate of the Secretary of the General Partner of each of the Guarantors
certifying as to:
(1) Certificate of Limited Partnership of such Guarantor, certified by
the Secretary of State of such Guarantor's State of formation as of a recent
date;
(2) Partnership Agreement of such Guarantor;
(3) Resolutions authorizing the execution, delivery and performance of
such Guarantor's Guarantee;
(4) The names of the officer or officers of the General Partner of such
Guarantor authorized to sign the Guarantee of such Guarantor together with a
sample of the true signature of each such officer. The Bank may conclusively
rely on each such certificate until formally advised by a like certificate of
any changes therein.
(f) Certificate of Existence of Guarantors. A good standing certificate
from the Secretary of State of Illinois and a good standing certificate from
the Secretaries of State of each other State in which each of the Guarantors
is required to be qualified to transact business.
(g) Consents. Certified copies of all documents evidencing any necessary
limited liability company action, consents and governmental approvals, if
any, with respect to this Agreement and the Related Documents.
(h) Legal Opinion. An opinion of McDermott, Will & Emery, the legal
counsel of the Borrower, the Partnership and the Guarantors substantially in
the form of Exhibit E attached hereto.
(i) Regulation U. Form FR U1 (OMB No. 7100-0115) executed by an
Authorized Officer.
(j) Stock. All certificates representing shares of the Stock to be held
by the Partnership, together with assignments thereof endorsed in blank duly
executed by the Partnership and/or the Borrower, as applicable.
(k) Custody Agreement. A custody agreement from each securities
intermediary having a security entitlement to any of the Stock, in form and
substance reasonably satisfactory to the Bank.
(l) Forms UCC1. UCC1 Financing Statements naming the Borrower as debtor
(under its limited liability company and trade names) and the Bank as secured
party with respect to the Collateral and other
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documents as the Bank deems necessary or appropriate shall have been filed in
all jurisdictions that the Bank deems necessary or advisable.
(m) Financial Statements. A copy of (i) each of the Issuers' most recent
quarterly financial statements, including, at a minimum, a balance sheet and
related statements of income, retained earnings and cash flows and (iii) each
of the Guarantors' most recent quarterly financial statements, including, at
a minimum, a balance sheet and related statements of income, retained
earnings and cash flows.
(n) Other. Such other certificates, schedules, exhibits, instruments,
agreements and documents as the Bank may reasonably request.
11.1.2 Fees and Expenses. The Borrower shall have paid all fees owed to
the Bank and reimbursed the Bank for all costs and expenses due and payable
hereunder on or before the Closing Date.
11.1.3 Due Diligence. The Bank shall have completed its examinations of
the books and records of the Issuers, which examinations will be satisfactory
to the Bank in its sole and absolute discretion.
11.1.4 Certificate. The Bank shall have received a certificate signed
by an Authorized Officer and dated the Closing Date certifying satisfaction of
the conditions specified in Section 11.1 hereof and that all the conditions to
lending pursuant to Sections 11.2 hereof have been satisfied.
11.1.5 Compliance Certificate. The Bank shall have received certificates
duly executed by each of the Guarantors, in the form attached to the
Guarantees as Annex I and Annex II.
11.2 All Revolving Loans. The Bank's obligation to make the initial
Revolving Loan and each subsequent Revolving Loan is subject to the following
conditions precedent:
11.2.1 No Default. (a) No Default or Event of Default shall have
occurred and be continuing or will result from the making of such Revolving
Loan, (b) the representations and warranties contained in Section 7 hereof
shall be true and correct as of the Closing Date, and shall be true and
correct as of the date of any subsequently requested Revolving Loan with the
same effect as though made on the date thereof, (c) the aggregate amount of
the outstanding aggregate principal amount of the Revolving Loans shall not
exceed the then-current Maximum Commitment or other limit applicable to such
Revolving Loan, and (d) there shall have been no material adverse change with
respect to the business, credit, operations, or financial condition of the
Borrower since the date of the previous Revolving Loan made hereunder or
notice of any prospective material adverse change with respect to any
insurance maintained by the Borrower.
11.2.2 Litigation. (a) The Borrower shall have disclosed in writing to
the Bank all existing or threatened claims, litigation, arbitration
proceedings or governmental proceedings pending or threatened against the
Borrower not previously disclosed in writing to Bank before the date of the
last previous Revolving Loan (or, in the case of the initial Revolving
Loan(s), since the date of this Agreement), (b) the Borrower shall have
disclosed any and all material developments that have occurred with respect
to any previously disclosed claims, litigation, arbitration proceedings or
governmental proceedings and (c) the Bank shall not have determined that any
existing or threatened claim, litigation, arbitration proceeding or
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governmental proceeding is likely to have a material adverse impact on the
business, credit, operations, financial condition or prospects of the
Borrower or on the ability of the Borrower to perform its obligations
hereunder or under any Related Document.
11.2.3 Borrowing Request/Letter of Direction. A Borrowing Request,
certified by an Authorized Officer, together with a letter of direction as to
the payment of the proceeds of the Revolving Loan to be made.
11.2.4 Regulation U Compliance.
(a) Both before and after giving effect to such Revolving Loan, the
aggregate principal amount of all outstanding Revolving Loans shall not
exceed the Maximum Loan Value of all of the Stock.
(b) The Borrower shall have provided to the Bank a current list of all
Stock which is Collateral for the Revolving Loans, including, without
limitation, the Stock to be purchased with the proceeds of such Revolving
Loan, together with the Borrower's good faith estimate of the Current Market
Value of each such Stock.
11.2.5 Issuer Information. The Borrower shall have provided the Bank
with a copy of the most recent quarterly financial statements, including, at
a minimum, a balance sheet and related statements of income, retained
earnings and cash flows of the Issuer of the Stock to be purchased with the
proceeds of such Revolving Loan at least ten (10) Business Days prior to the
date of the making of such Revolving Loan and such Stock shall be acceptable
to the Bank in its sole and absolute discretion.
11.2.6 Perfected Interest. The Bank shall have received all pledge
agreements, stock or other certificates, assignments, financing statements,
agreements, opinions and other documents which it deems reasonable and
necessary in its sole discretion to provide it with a first priority
perfected security interest in the Stock being purchased with the proceeds of
such Revolving Loan, including, without limitation, a revised Schedule I to
the Pledge Agreement.
11.2.7 Other. The Bank shall have received such other certificates,
instruments, exhibits, schedules, agreements and documents as the Bank may
reasonably request in support of such requested Revolving Loan.
SECTION 12. EVENTS OF DEFAULT AND THEIR EFFECT
12.1 Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:
12.1.1 Nonpayment of Amounts Due Hereunder. (a) Default in the payment
when due of the principal on any Revolving Loan; or (b) default in the
payment when due of interest on any Revolving Loan, or the payment when due
of any fees or any other amounts payable by the Borrower under this
Agreement, the Revolving Note or any Collateral Document or any Related
Document, which default shall continue and not be cured within five (5) days.
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12.1.2 Nonpayment of Other Indebtedness Default in the payment when due,
whether by acceleration or otherwise, of any other Indebtedness of the
Borrower or default in the performance or observance of any obligation or
condition with respect to any such other Indebtedness if the effect of such
default is to accelerate the maturity of any such Indebtedness or cause any
of such Indebtedness to be prepaid, purchased or redeemed.
12.1.3 Other Material Obligations. Default in the payment when due, or
in the performance or observance of, any material obligation of, or condition
agreed to by, the Borrower with respect to any material purchase or lease of
goods or services.
12.1.4 Bankruptcy or Insolvency. The Borrower, the Partnership or either
Guarantor becomes insolvent or generally fails to pay, or admits in writing
its inability to pay, debts as they become due; or the Borrower, the
Partnership or either Guarantor applies for, consents to, or acquiesces in
the appointment of, a trustee, receiver or other custodian for itself or any
of its property, or makes a general assignment for the benefit of its
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for the Borrower, the
Partnership or either Guarantor; or any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any bankruptcy or insolvency
law, or any dissolution or liquidation proceeding, is commenced in respect of
the Borrower, the Partnership or either Guarantor, and if such case or
proceeding is not commenced by the Borrower, the Partnership or either
Guarantor, it is consented to or acquiesced in by the Borrower, the
Partnership or either Guarantor, as applicable; or the Borrower, the
Partnership or either Guarantor takes any limited liability company or
partnership action, as applicable to authorize, or in furtherance of, any of
the foregoing.
12.1.5 Specified Noncompliance with this Agreement. Failure by the
Borrower to comply with or to perform under any of Section 8.6, Section 8.7
and Section 9.
12.1.6 Other Noncompliance with this Agreement. Failure by the Borrower
to comply with or to perform any provision or covenant of this Agreement (and
not constituting an Event of Default under any of the other provisions of
this Section 12) and continuance of such failure for thirty (30) days after
notice thereof to the Borrower from the Bank or the holder of the Revolving
Note.
12.1.7 Representations and Warranties. Any representation or warranty
made by the Borrower, the Partnership or either Guarantor herein or in any
Related Document is breached or is false or misleading in any respect, or any
schedule, exhibit, certificate, financial statement, report, notice, or other
writing or document furnished by the Borrower, the Partnership or either
Guarantor to the Bank is false or misleading in any respect on the date as of
which the facts therein set forth are stated or certified.
12.1.8 Related Documents.
(a) The Borrower, the Partnership or either Guarantor shall fail to
comply with or to perform any provision of any of the Related Documents; or
any of the Related Documents shall fail to remain in full force and effect;
or any action shall be taken to discontinue any of the Collateral Documents
or to assert the invalidity of any thereof.
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(b) A default shall occur under any of the Related Documents, including,
without limitation, a default by any Guarantor of its covenants under its
applicable Guarantee.
12.1.9 Judgments. There shall be entered against the Borrower one or
more judgments or decrees in excess of Fifty Thousand Dollars ($50,000) in
the aggregate at any one time outstanding for the Borrower.
12.1.10 Impairment of Security. Any Lien securing the Liabilities shall,
in whole or in part, cease to be a perfected first priority Lien (subject
only to the Permitted Liens); this Agreement or any of the Related Documents
or any Lien granted under the Pledge Agreement, shall terminate, cease to be
effective or cease to be the legally valid, binding and enforceable
obligations of the Borrower, the Partnership or either Guarantor, as
applicable; or the Borrower, the Partnership or either Guarantor shall
directly or indirectly, contest in any manner such effectiveness, validity,
binding nature or enforceability.
12.1.11 Change in Ownership. There shall be any change in the ownership
of any of the outstanding equity securities of the Borrower, the result of
which is to cause the Borrower to be controlled, either directly or
indirectly, by a Person other than First Analysis Corporation or any of its
Affiliates.
12.2 Effect of Event of Default. If any Event of Default described in
Section 12.1.4 hereof shall occur, the Revolving Loan Commitment (if it has
not theretofore terminated) shall automatically and immediately terminate and
all Revolving Loans, the Revolving Note and all other Liabilities shall
become immediately due and payable, all without presentment, demand, protest,
diligence or notice of any kind, all of which are hereby expressly waived by
the Borrower; and, in the case of any other Event of Default in this
Agreement, the Bank may declare the Revolving Loan Commitment (if it is not
theretofore terminated) to be terminated and all Revolving Loans, the
Revolving Note and all other Liabilities to be immediately due and payable,
whereupon the Revolving Loan Commitment shall immediately terminate and all
Revolving Loans, the Revolving Note and all other Liabilities shall become
immediately due and payable, all without presentment, demand, protest,
diligence or notice of any kind, all of which are hereby expressly waived by
the Borrower.
SECTION 13. GENERAL
13.1 Waiver: Other Remedies: Amendments. No delay on the part of the
Bank or the holder of any Revolving Note in the exercise of any right, power
or remedy hereunder or under any Related Document shall operate as a waiver
hereof or thereof, nor shall any single or partial exercise by any of them of
any right, power or remedy hereunder or under any Related Document preclude
other or further exercise hereof or thereof, or the exercise of any other
right, power or remedy. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Bank or the
holder of the Revolving Note would otherwise have, whether arising under this
Agreement, any Collateral Document or other Related Document, or under
applicable law, or otherwise. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement, the Revolving Note
or any Related Document shall in any event be effective unless the same shall
be in writing and signed and delivered by the Bank, and then any such
amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
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13.2 Notices. Except as otherwise provided herein, all notices hereunder
shall be in writing. Notices given by mail shall be deemed to have been given
three days after the date sent if sent by certified mail, postage prepaid,
and: (a) if to the Borrower, addressed to the Borrower at its address shown
beside its signature hereto; (b) if to the Bank, addressed to the Bank at the
address shown beside its signature hereto; or in the case of each party, such
other address as such party, by written notice received by the other party to
this Agreement, may have designated as its address for notices. Notices given
by personal delivery shall be deemed to have been given when delivered. The
Bank shall be entitled to rely upon all telephonic notices given pursuant to
Section 2.2 hereof and the Borrower shall hold the Bank harmless from any
loss, cost or expense ensuing from any such reliance.
13.3 Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made, for
purposes of this Agreement such determination or calculation shall, to the
extent applicable and except as otherwise specified in this Agreement, be
made in accordance with GAAP applied on a basis consistent with GAAP as GAAP
is in effect as of the date of the first financial statements delivered
pursuant to Section 8.1 hereof.
13.4 Costs, Expenses and Taxes.
(a) The Borrower agrees to pay on demand all of the out-of-pocket costs
and expenses of the Bank (including the fees and outofpocket expenses of the
Bank's counsel and of local counsel, if any, who may be retained by said
counsel) in connection with the preparation, negotiation, execution and
delivery of this Agreement, the Related Documents and all other instruments
or documents provided for herein or delivered or to be delivered hereunder or
in connection herewith (including, without 'imitation, all amendments,
supplements and waivers executed and delivered pursuant hereto orin
connection herewith). The Borrower further agrees that the Bank, in its sole
discretion, may deduct all such unpaid amounts from the aggregate proceeds of
the Revolving Loans.
(b) The costs and expenses that the Bank incurs in any manner or way
with respect to the following shall be part of the Liabilities, payable by
the Borrower on demand if at any time after the date of this Agreement the
Bank: (i) employs counsel for advice or other representation (A) with respect
to the amendment or enforcement of this Agreement or the Related Documents,
or with respect to any Collateral securing the Liabilities hereunder, (B) to
represent the Bank in any workout or any type of restructuring of the
Revolving Loans, or any litigation, contest, dispute, suit or proceeding or
to commence, defend or intervene or to take any other action in or with
respect to any litigation, contest, dispute, suit or proceeding (whether
instituted by the Bank, the Borrower or any other Person) in any way or
respect relating to this Agreement, the Related Documents, the Borrower's
affairs or any collateral securing the Liabilities hereunder or (C) to
enforce any of the rights of the Bank with respect to the Borrower; (ii)
takes any action to protect, collect, sell, liquidate or otherwise dispose of
any collateral securing the Liabilities hereunder; and/or (iii) seeks to
enforce or enforces any of the rights and remedies of the Bank with respect
to the Borrower. Without limiting the generality of the foregoing, such
expenses, costs, charges and fees include: fees, costs and expenses of
attorneys, accountants and consultants; court costs and expenses; court
reporter fees, costs and expenses; long distance telephone charges; telegram
and telecopier charges; and expenses for travel, lodging and food.
29
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Page 37 of 65 Pages
(c) The Borrower further agrees to pay, and to save the Bank harmless
from all liability for, any stamp or other taxes which may be payable in
connection with or related to the execution or delivery of this Agreement,
the Related Documents, the borrowings hereunder, the issuance of the
Revolving Note or of any other instruments or documents provided for herein
or delivered or to be delivered hereunder or in connection herewith.
(d) All of the Borrower's obligations provided for in this Section 13.4
shall be Liabilities and shall survive repayment of the Revolving Loans,
cancellation of the Revolving Note, termination of this Agreement or any
Related Document.
13.5 Indemnification. In consideration of the execution and delivery of
this Agreement by the Bank and the Bank's agreement to extend the Revolving
Loan Commitment, the Borrower hereby agrees to indemnify, exonerate, defend
and hold the Bank and each of its officers, directors, employees and agents
(hereinafter collectively called the "Bank Parties" and individually called a
"Bank Party") free and harmless from and against any and all actions, causes
of action, suits, losses, penalties, costs (including, without limitation,
all documentary or other stamp taxes or duties), liabilities and damages, and
expenses in connection therewith of any kind or nature whatsoever
(irrespective of whether the Bank Party is a party to the action for which
indemnification hereunder is sought) (hereinafter, the "Indemnified
Liabilities"), including, without limitation, attorneys' fees and
disbursements, incurred by the Bank Parties or any of them as a result of, or
arising out of, or relating to:
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Revolving Loan;
(b) the execution, delivery, performance, administration or enforcement
of this Agreement and the Related Documents in accordance with their
respective terms by any of the Bank Parties; or
(c) any misrepresentation or breach of any warranty or covenant herein
or in any certificate delivered pursuant hereto.
If and to the extent that the foregoing agreements described ln this Section
13.5 may be unenforceable for any reason, the Borrower hereby agrees to make
the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. All of the
Borrower's obligations under this Section 13.5 shall survive repayment of the
Revolving Loans, cancellation of the Revolving Note, or any termination of
this Agreement or any Related Document.
13.6 Survival. The obligations of the Borrower under Sections 13.4 and
13.5 hereof shall in each case survive any termination of this Agreement, the
payment in full of all Liabilities and the termination of the Revolving Loan
Commitment.
13.7 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any such provision shall be prohibited by, or invalid
under, such law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this
30
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Page 38 of 65 Pages
Agreement. All obligations of the Borrower and rights of the Bank, which
obligations and rights are described herein, shall be in addition to, and not
in limitation of, those provided by applicable law. If and to the extent any
provision of any Collateral Document is inconsistent with the provisions of
this Agreement, the provisions of this Agreement shall control.
13.8 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, and all such counterparts
shall together constitute but one and the same Agreement.
13.9 Successor and Assigns. This Agreement shall be binding upon the
Borrower and the Bank and their respective successors and assigns, and shall
inure to the benefit of the Bank and the Bank's successors and assigns. The
Borrower shall have no right to assign its rights or delegate its duties
under this Agreement.
13.10 Prior Agreements. The terms and conditions set forth in this
Agreement and the Related Documents shall supersede all prior agreements,
discussions, correspondence, memoranda and understandings (whether written or
oral) of the Borrower and the Bank concerning or relating to the subject
matter of this Agreement (including, without limitation, the terms set forth
in any term sheet or commitment letter).
13.11 Assignments: Participations.
(a) The Bank shall have the right to assign to one or more banks or
other financial institutions all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of the
Revolving Loan Commitment, the Revolving Loans and the Revolving Note) and
the Collateral Documents. Upon any such assignment, (i) the assignee shall
become a party hereto and, to the extent of such assignment, have all rights
and obligations of the Bank hereunder and under the Collateral Documents and
(ii) the Bank shall, to the extent of such assignment, relinquish its rights
and be released from its obligations hereunder and under the Collateral
Documents. The Borrower hereby agrees to execute and deliver such agreements
and documents, and to take such other actions, as the Bank may reasonably
request to accomplish the foregoing.
(b) In addition to the assignments permitted in clause (a) of this
Section 13.11, the Bank and any assignee pursuant to clause (a) above shall
have the right to grant Participations to one or more banks or other
financial institutions in or to any Revolving Loan hereunder (and the
Collateral Documents) and the Revolving Note held by the Bank or such
assignee without notice to or consent from the Borrower. No holder of a
participation in all or any part of the Revolving Loans (and the Collateral
Documents) or the Revolving Note shall have any rights under this Agreement;
provided, however, that, to the extent permitted by applicable law, each
holder of a participation shall have the same rights as the Bank under
Section 6.3 hereof.
(c) The Borrower hereby consents to the disclosure of any information
obtained in connection herewith (i) by the Bank, to any bank or other
financial institution which is an assignee or potential assignee pursuant to
clause (a) above, and (ii) by the Bank and any assignee pursuant to clause
(a) above, to any
31
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bank or other financial institution which is a participant or potential
participant pursuant to clause (b) above, it being understood that the Bank and
each assignee shall advise any such bank or other financial institution of its
obligation to keep confidential any nonpublic information disclosed to it
pursuant to this Section 13.11. The Bank shall advise the Borrower of each bank
or other financial institution which becomes an assignee pursuant to clause (a)
above, and the Bank and each assignee, as applicable, shall advise the Borrower
of each bank or other financial institution which becomes a participant
pursuant to clause (b) above.
13.12 Marshalling; Recapture. The Bank shall not be under any obligation
to marshall any assets in favor of the Borrower or any Person or any other
party or against or in payment of any or all of the Liabilities. To the
extent the Bank receives any payment by or on behalf of the Borrower, which
payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to the
Borrower or its estate, trustee, receiver, custodian or any other party under
any bankruptcy law, state or federal law, common law or equitable cause, then
to the extent of such payment or repayment, the obligation or part thereof
which has been paid, reduced or satisfied by the amount so repaid shall be
reinstated by the amount so repaid and shall be included within the
Liabilities of the Borrower to the Bank as of the date such initial payment,
reduction or satisfaction occurred.
13.13 Captions. Section captions in this Agreement are for convenience
only, and shall not affect the construction of this Agreement.
13.14 GOVERNING LAW. THIS AGREEMENT AND THE RELATED DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
13.15 JURY TRIAL; VENUE. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND
ANY RIGHTS UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE RELATED
DOCUMENTS, OR (II) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH
THIS AGREEMENT OR THE RELATED DOCUMENTS, AND AGREES THAT ANY SUCH ACTION OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
THE BORROWER IRREVOCABLY AGREES THAT, SUBJECT TO THE BANK'S SOLE AND
ABSOLUTE ELECTION, ANY ACTION OR PROCEEDING IN ANY WAY, MANNER OR RESPECT
ARISING OUT OF THIS AGREEMENT, THE RELATED DOCUMENTS, OR ARISING FROM ANY
DISPUTE OR CONTROVERSY ARISING IN CONNECTION WITH THIS AGREEMENT OR THE
RELATED DOCUMENTS, SHALL BE LITIGATED ONLY IN THE COURTS HAVING SITUS WITHIN
THE CITY OF CHICAGO, THE STATE OF ILLINOIS, AND BORROWER HEREBY CONSENTS AND
SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED
WITHIN SUCH CITY AND STATE. THE BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE
TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY
THE BANK IN ACCORDANCE WITH THIS SECTION 13.15.
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IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Secured Revolving Loan Agreement as of the date first above written.
RIVERSIDE L.L.C.
By: FIRST ANALYSIS MANAGEMENT COMPANY
III, L.L.C., as Manager
By: \s\ Bret R. Maxwell
---------------------------------
Bret R. Maxwell,
its Managing Member
9500 Sears Tower
Chicago, Illinois 60606
Attention: Mark Koulogeorge
Telephone: (312) 2581400
Facsimile: (312) 2580334
LASALLE NATIONAL BANK
By: \s\ Michael Foster
-------------------------------
Michael Foster
Senior Vice President
Lending Office (Prime Rate Loans)
120 South La Salle Street
Chicago, Illinois 60603
Attention: Michael Foster
Telephone: (312) 9042791
Facsimile: (312) 9048544
Lending Office (Eurodollar Rate Loans)
120 South La Salle Street
Chicago, Illinois 60603
33
<PAGE> 1
Page 41 of 65 Pages
EXHIBIT B-1
GUARANTEE
THIS GUARANTEE (this "Guarantee") is made as of this 17th day of November,
1995, by ENVIRONMENTAL PRIVATE EQUITY FUND II, L.P., a Delaware limited
partnership (hereinafter, together with its successors and permitted assigns,
the "Guarantor") to and for the benefit of LASALLE NATIONAL BANK, a national
banking association (hereinafter, together with its successors and assigns, the
"Bank").
R E C I T A L S:
A. Riverside L.L.C., an Illinois limited liability company (the
"Borrower") and the Bank are parties to that certain Secured Revolving Loan
Agreement of even date herewith (as the same may be amended, supplemented or
modified from time to time, the "Loan Agreement"), providing for revolving
loans to be made to the Borrower by the Bank for the purchase of the Stock, as
described in the Loan Agreement.
B. Concurrently with the purchase of such Stock, the Borrower will
contribute such Stock to Riverside Partnership, an Illinois general partnership
of which Guarantor is a general partner.
C. It is in the best interests of the Guarantor to cause this Guarantee to
be executed on its behalf inasmuch as the Guarantor will derive substantial
direct and indirect benefits from the revolving loans to be made pursuant to
the Loan Agreement.
D. The Bank has required that the Guarantor execute this Guarantee in
connection with the Bank's agreement to enter into the Loan Agreement.
NOW, THEREFORE FOR VALUE RECEIVED, and in consideration of advances,
credit or other financial accommodations heretofore, now or that may hereafter
at any time be extended to the Borrower by the Bank, the Guarantor hereby
unconditionally guarantees, irrespective of the validity, regularity or
enforceability of any instrument, writing or agreement relating to or the
subject of any such financial accommodation, and whether or not due or to
become due before or after any bankruptcy or insolvency proceeding involving
the Borrower or would have become due but for the Borrower's bankruptcy
proceeding, the full and prompt payment to the Bank at maturity, to the extent
of the amount to which this Guarantee is limited, whether by acceleration or
otherwise, and at all times thereafter of any and all indebtedness, obligations
and liabilities of every kind and nature of the Borrower to the Bank which
arise out of or in connection with the Loan Agreement or any Related Document,
howsoever evidenced, whether now existing or hereafter created or arising,
directly or indirectly, primary or secondary, absolute or contingent, due or to
become due, or joint or several, and howsoever owned, held or acquired, whether
through discount, overdraft, purchase, direct loan or as collateral, or
otherwise, and the prompt, full and faithful performance and discharge by the
Borrower of each and every of the terms, conditions, agreements,
representations and warranties on the part of the Borrower contained in the
Loan Agreement or any Related Document, or in any modification or addenda
thereto or substitution thereof; and the Guarantor further agrees to pay all
expenses legal and/or otherwise, (including court costs and attorneys' fees),
paid or
<PAGE> 2
Page 42 of 65 Pages
incurred by the Bank in endeavoring to collect such indebtedness, or
any part thereof, or in enforcing this Guarantee or in defending any suit based
on any act of commission or omission of the Bank with respect to such
indebtedness, collateral, or this Guarantee or in connection with any recovery
claim hereinbelow defined (all of the aforesaid indebtedness, obligations and
liabilities plus interest and all expenses herein mentioned are hereinafter
collectively called the "Guaranteed Obligations").
The amount of recovery, however, against the Guarantor is limited to a
percentage of the aggregate cost of purchase of the Stock (as defined in the
Loan Agreement) currently held as Collateral (the "Maximum Guaranteed Amount"),
such percentage to be certified to the Bank by the Guarantor from time to time
in the form attached hereto as Annex II, plus all costs of collection and other
expenses (including court costs and attorneys' fees) described herein.
Notwithstanding the foregoing, in no event shall the sum of the percentages
guaranteed by each of the Guarantor and Productivity Fund III, L.P., a Delaware
limited partnership be less than 20%. If at any time the sum of the
percentages certified by the Guarantor and Productivity Fund III, L.P., a
Delaware limited partnership shall be less than 20%, such percentages shall be
deemed to be increased on a pro rata basis to a percentage equal to 20%
collectively.
The Guarantor hereby further agrees as follows:
1. CONTINUING GUARANTEE. This Guarantee includes any Guaranteed
Obligations arising under successive transactions continuing, compromising,
extending, increasing, modifying, releasing, or renewing the Guaranteed
Obligations, changing the interest rate, payment terms, or other terms and
conditions thereof, or creating new or additional Guaranteed Obligations after
prior Guaranteed Obligations have been satisfied in whole or in part. To the
maximum extent permitted by law, the Guarantor hereby waives any right to
revoke this Guarantee as to future indebtedness. If such a revocation is
effective notwithstanding the foregoing waiver, the Guarantor acknowledges and
agrees that (a) no such revocation shall be effective until written notice
thereof has been received by the Bank, (b) no such revocation shall apply to
any Guaranteed Obligations in existence on such date (including any subsequent
continuation, extension, or renewal thereof, or change in the interest rate,
payment terms, or other terms and conditions thereof), (c) no such revocation
shall apply to any Guaranteed Obligations made or created after such date to
the extent made or created pursuant to a legally binding commitment of the Bank
in existence on the date of such revocation, (d) no payment by the Guarantor,
the Borrower, or from any other source, prior to the date of such revocation
shall reduce the maximum obligation of the Guarantor hereunder, and (e) any
payment by the Borrower or from any source other than the Guarantor, subsequent
to the date of such revocation, shall first be applied to that portion of the
Guaranteed Obligations as to which the revocation is effective and which are
not, therefore, guaranteed hereunder, and to the extent so applied shall not
reduce the maximum obligation of the Guarantor thereunder. The agreements and
obligations of the undersigned under this Guarantee shall remain in full force
and effect until all Liabilities (as defined in the Loan Agreement) shall have
been paid in full and the Bank's Revolving Loan Commitment (as defined in the
Loan Agreement) has terminated.
2. PERFORMANCE UNDER THIS GUARANTEE. In the event that the Borrower
fails to make any payment of any Guaranteed Obligations on or before the due
date thereof, or if the Borrower
2
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Page 43 of 65 Pages
shall fail to perform, keep, observe, or fulfill any other obligation
referred to in any instrument, writing or agreement relating to the Guaranteed
Obligations, the Guarantor immediately shall cause such payment to be made to
the extent of the amount to which this Guarantee is limited, and shall cause
each of such obligations to be performed, kept, observed, or fulfilled.
3. PRIMARY OBLIGATIONS. This Guarantee is a primary and original
obligation of the Guarantor, is not merely the creation of a surety
relationship, and is an absolute, unconditional, and continuing guarantee of
payment and performance which shall remain in full force and effect without
respect to future changes in conditions, including any change of law or any
invalidity or irregularity with respect to the issuance of any instrument,
writing or agreement relating to the Guaranteed Obligations. The Guarantor
agrees that he is directly, jointly and severally with any other guarantor of
the Guaranteed Obligations, liable to the Bank, that the obligations of the
Guarantor hereunder are independent of the obligations of the Borrower or any
other guarantor, and that a separate action may be brought against the
Guarantor whether such action is brought against the Borrower or any other
guarantor or whether the Borrower or any such other guarantor is joined in such
action. The Guarantor agrees that his liability hereunder shall be immediate
and shall not be contingent upon the exercise or enforcement of any lien or
realization upon any security or collateral the Bank may at any time possess.
The Guarantor agrees that any release which may be given by the Bank to the
Borrower or any other guarantor shall not release the Guarantor. The Guarantor
consents and agrees that the Bank shall be under no obligation to marshal any
assets of the Borrower or any other guarantor in favor of the Guarantor, or
against or in payment of any or all of the Guaranteed Obligations.
4. WAIVERS.
(a) The Guarantor hereby waives: (1) notice of acceptance hereof;
(2) notice of any loans or other financial accommodations made or
extended to the Borrower or the creation or existence of any Guaranteed
Obligations; (3) notice of the amount of the Guaranteed Obligations,
subject, however, to the Guarantor's right to make inquiry of the Bank to
ascertain the amount of the Guaranteed Obligations at any reasonable
time; (4) notice of any adverse change in the financial condition of the
Borrower or of any other fact that might increase the Guarantor's risk
hereunder; (5) notice of presentment for payment, demand, protest, and
notice thereof as to any promissory notes or other instruments, writing
or agreements evidencing Guaranteed Obligations; (6) notice of any event
of default by the Borrower under any instrument, writing or agreement
with the Bank; and (7) all other notices (except if such notice is
specifically required to be given to the Guarantor hereunder) and demands
to which the Guarantor might otherwise be entitled.
(b) The Guarantor hereby waives the right by statute or otherwise to
require the Bank to institute suit against the Borrower; or to exhaust
any rights and remedies which the Bank has or may have against the
Borrower. In this regard, the Guarantor agrees that he is bound to the
payment of all Guaranteed Obligations to the extent of the amount to
which this Guarantee is limited, whether now existing or hereafter
accruing, as fully as if such Guaranteed Obligations were directly owing
to the Bank by the Guarantor. The Guarantor
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further waives any defense arising by reason of any disability or other
defense (other than the defense that the Guaranteed Obligations shall
have been fully and finally performed and indefeasibly paid) of the
Borrower or by reason of the cessation from any cause whatsoever of the
liability of the Borrower in respect thereof.
(c) The Guarantor hereby waives: (1) any rights to assert against
the Bank any defense (legal or equitable), set-off, counterclaim, or
claim which the Guarantor may now or at any time hereafter have against
the Borrower or any other party liable to the Bank; (2) any defense,
set-off, counterclaim, or claim, of any kind or nature, arising directly
or indirectly from the present or future lack of perfection, sufficiency,
validity, or enforceability of the Guaranteed Obligations or any security
therefor; (3) the benefit of any statute of limitations affecting the
Guarantor's liability hereunder or the enforcement thereof, and any act
which shall defer or delay the operation of any statute of limitations
applicable to the Guaranteed Obligations shall similarly operate to defer
or delay the operation of such statute of limitations applicable to the
Guarantor's liability hereunder.
(d) The Guarantor hereby waives any right of subrogation the
Guarantor has or may have as against the Borrower with respect to the
Guaranteed Obligations. In addition, the Guarantor hereby waives any
right to proceed against the Borrower, now or hereafter, for
contribution, indemnity, reimbursement, and any other suretyship rights
and claims, whether direct or indirect, liquidated or contingent, whether
arising under express or implied contract or by operation of law, which
the Guarantor may now have or hereafter have as against the Borrower with
respect to the Guaranteed Obligations. The Guarantor also hereby waives
any rights of recourse to or with respect to any asset of the Borrower.
The Guarantor agrees that in light of the immediately foregoing waivers,
the execution of this Guarantee shall not be deemed to make the Guarantor
a "creditor" of the Borrower, and that, for purposes of Sections 547 and
550 of the United States Bankruptcy Code, the Guarantor shall not be
deemed a "creditor" of the Borrower.
5. RELEASES. No release or discharge of the Borrower or any one or more
of the guarantors, or of any other person, whether primarily or secondarily
liable for and obligated with respect to the Guaranteed Obligations, or the
institution of bankruptcy, receivership, insolvency, reorganization,
dissolution or liquidation proceedings by or against any guarantor or person,
or the entry of any restraining or other order in any such proceeding, shall
release or discharge the Guarantor or any other guarantor of the Guaranteed
Obligations, or any other person, firm or corporation liable to the Bank for
the Guaranteed Obligations, unless and until all of the Guaranteed Obligations
shall have been fully paid.
6. RIGHT OF SETOFF AND SECURITY INTEREST. Any and all moneys, credits or
other property belonging to the Guarantor in transit to, or in the possession
or under the control of, the Bank, or any agent or bailee of the Bank, may,
without prior notice and opportunity to be heard, be appropriated and applied
against the liability of the Guarantor hereunder to the extent of the amount to
which this Guarantee is limited. The Guarantor does hereby assign and transfer
to the Bank any and all cash, negotiable instruments, documents of title,
chattel paper, securities, certificates of deposit, deposit
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accounts, other cash equivalents and other assets of the Guarantor in transit
to, or in the possession or control of the Bank, or any agent or bailee of the
Bank for any purpose and to apply the same on any or all of the Guaranteed
Obligations to the extent of the amount to which this Guarantee is limited. To
secure payment of the Guaranteed Obligations, the Guarantor grants to the Bank
a security interest in all property (including but not limited to all of the
property described above) of the Guarantor delivered concurrently herewith, or
now or at any time hereafter in the possession or control of the Bank, and all
proceeds of all such property. The undersigned agrees that the Bank shall have
the rights and remedies of a secured party under the Uniform Commercial Code of
Illinois with respect to all of the aforesaid property, including, without
limitation thereof, the right to sell or otherwise dispose of any or all of
such property. The Bank may without notice to anyone, apply or set off any
balances, credits, deposits, accounts, moneys or other indebtedness at any time
credited by or due from the Bank to the Guarantor against the amounts due
hereunder. Any notification of intended disposition of any property required by
law shall be deemed reasonably and properly given if given at least five (5)
calendar days before such disposition.
7. RECOVERY CLAIM. Should a claim ("Recovery Claim") be made upon the
Bank at any time for recovery of any amount received by the Bank in payment of
the Guaranteed Obligations (whether received from the Borrower, the Guarantor
pursuant hereto, or otherwise) and should the Bank repay all or part of said
amount by reason of (1) any judgment, decree, or order of any court or
administrative body having jurisdiction over the Bank or any of its property;
or (2) any settlement or compromise of any such Recovery Claim effected by the
Bank with the claimant (including the Borrower), the Guarantor shall remain
jointly and severally liable to the Bank for the amount so repaid to the same
extent as if such amount had never originally been received by the Bank,
notwithstanding any termination hereof or the return of this document to or the
cancellation of any note or other instrument evidencing any of the
indebtedness.
8. ASSIGNMENTS. In the event the Bank shall sell, assign or transfer the
Guaranteed Obligations, or any part thereof, or grant participation therein,
each and every immediate or remote successive assignee, transferee, holder of
or participant therein, of all or any part of the Guaranteed Obligations shall
have the right to enforce this Guarantee by suit or otherwise for the benefit
of such assignee, transferee holder or participant, as fully as if such
assignee, transferee holder or participant were herein by name specifically
given such rights, powers and benefits; but the Bank shall have an unimpaired,
prior and superior right to enforce this Guarantee for its benefit as to so
much of the Guaranteed Obligations as it has not sold, assigned or transferred.
9. FINANCIAL CONDITION OF THE BORROWER. The Guarantor represents and
warrants to the Bank that the Guarantor is currently informed of the financial
condition of the Borrower and of all other circumstances which a diligent
inquiry would reveal and which would bear upon the risk of nonpayment of the
Guaranteed Obligations. The Guarantor further represents and warrants to the
Bank that the Guarantor will continue to keep informed of the Borrower's
financial condition, the financial condition of other guarantors, if any, and
of all other circumstances which bear upon the risk of nonpayment or
nonperformance of the Guaranteed Obligations.
10. FINANCIAL STATEMENTS OF GUARANTOR.
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10.1 Representations and Warranties. The Guarantor represents and
warrants to the Bank that:
(a) All income statements, balance sheets, cash flow statements,
statements of operations and other financial data that have been or shall
hereafter be furnished to the Bank for the purposes of or in connection
with this Guarantee do and will present fairly in accordance with GAAP,
consistently applied, the financial condition of the Guarantor as of the
dates thereof and the results of operations for the period(s) covered
thereby. There is no liability, direct or indirect, contingent or
otherwise, of the Guarantor that is not reflected on these financial
statements.
(b) The balance sheet of the Guarantor, dated September 30, 1995,
and the related statements of income, retained earnings and cash flows
for the calendar period then ended, respectively, copies of which have
been furnished to the Bank, fairly present the financial condition of the
Guarantor, at such dates and the results of each of their operations for
the period ended on such respective dates, all in accordance with GAAP,
consistently applied.
(c) Since September 30, 1995, there has been no material adverse
change in the financial condition, operations, assets, business, or
properties of the Guarantor.
10.2 Covenants. The Guarantor covenants that so long as this Guarantee
shall remain outstanding the Guarantor shall:
(a) Guarantor Financial Statements. Furnish to the Bank on or
before the one hundred twentieth (120th) day after the Guarantor's fiscal
years, a copy of the annual consolidated financial statements of
Guarantor consisting of, at least, a balance sheet and statement of
income and cash flow for such period, prepared in accordance with GAAP,
consistently applied, audited by independent certified public accountants
of recognized standing.
(b) Guarantor Interim Statements. Furnish to the Bank on or before
the sixtieth (60th) day after the end of each fiscal quarter of the
Guarantor, a copy of unaudited consolidated financial statements of the
Guarantor prepared in accordance with GAAP, consistently applied, signed
by an authorized officer of Guarantor and consisting of, at least, a
balance sheet and statement of income and cash flow as at the close of
such fiscal quarter and for the period from the beginning of such
calendar year to the close of such fiscal quarter.
(c) Liquidity Covenant. Maintain liquid assets, including cash, cash
equivalents and/or undrawn capital commitments in an amount at least equal to
the Maximum Guaranteed Amount. The sum of the percentages of the aggregate cost
of purchase of the Stock (as defined in the Loan Agreement) currently held as
Collateral guaranteed by each of the Guarantor and Productivity Fund III, L.P.,
a Delaware limited partnership shall at all time be equal to or greater than
20%.
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(d) Certificate. Contemporaneously with the furnishing of each of
the financial statements described in Sections (a) and (b) above, furnish
to the Bank a duly completed certificate in the form of Annex I attached
hereto (a "Compliance Certificate") dated the date of such financial
statement and signed by an authorized officer of the Guarantor.
11. SUBORDINATION. The Guarantor hereby agrees that any and all present
and future indebtedness of the Borrower owing to the Guarantor is, and shall
be, subordinated in all respects to the Guaranteed Obligations. Notwithstanding
the foregoing, the Guarantor may receive from the Borrower regularly scheduled
payments of principal and interest in connection with such subordinated
indebtedness so long as a Default or an Event of Default (as such terms are
defined in the Loan Agreement) under the Loan Agreement has not occurred and is
continuing.
12. PAYMENTS; APPLICATION. All payments to be made hereunder by the
Guarantor shall be made in lawful money of the United States of America, shall
be made in immediately available funds, and shall be made without deduction
(whether for taxes or otherwise) or offset. All payments made by the Guarantor
hereunder shall be applied as follows; first, to all costs and expenses
(including attorneys' fees and costs) incurred by the Bank in enforcing this
Guarantee or in collecting the Guaranteed Obligations; second, to all accrued
and unpaid interest and fees owing to the Bank constituting Guaranteed
Obligations; and third, to the balance of the Guaranteed Obligations, all such
payments to be limited to the amount to which this Guarantee is limited.
13. INDEMNIFICATION. Subject to the limitations set forth herein, or in
any other instruments, writings and agreements between the Borrower and the
Bank, the Guarantor agrees to indemnify the Bank and hold the Bank harmless
against all obligations, demands, or liabilities asserted by any party and
against all losses in any way suffered, incurred, or paid by the Bank as a
result of or in any way arising out of, following, or consequential to the
Bank's transactions with the Borrower.
14. NOTICES. All notices or demands by the Guarantor or the Bank to the
other relating to this Guarantee shall be in writing and either personally
served or sent by certified mail, postage prepaid, return receipt requested, or
by prepaid telefacsimile or telegram, and shall be deemed to be given for
purposes of this Guarantee on the day that such writing is received by the
party to whom it is sent. Unless otherwise specified in a notice sent or
delivered in accordance with the provisions of this Section 14, such writing
shall be sent, if to the Guarantor, at the Guarantor's address set forth on the
signature page hereof, and if to the Bank, then to 120 South LaSalle Street,
Chicago, Illinois 60603, Attn.: Michael Foster.
15. CUMULATIVE REMEDIES. No remedy under this Guarantee is intended to
be exclusive of any other remedy, but each and every remedy shall be cumulative
and in addition to any and every other remedy given hereunder and those
provided by law or in equity. No delay or omission by the Bank to exercise any
right under this Guarantee shall impair any such right nor be construed to be a
waiver thereof. No failure on the part of the Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.
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16. BOOKS AND RECORDS. The Guarantor agrees that the Bank's books and
records showing the indebtedness between the Bank and the Borrower shall be
admissible in any action or proceeding and shall be binding upon the Guarantor
for the purpose of establishing the items therein set forth and shall
constitute prima facie proof thereof.
17. SEVERABILITY OF PROVISIONS. Any provision of this Guarantee which is
prohibited or unenforceable under applicable law, shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
18. ENTIRE AGREEMENT: AMENDMENTS. This Guarantee constitutes the entire
agreement between the Guarantor and the Bank pertaining to the subject matter
contained herein, and may not be altered, amended, or modified, nor may any
provision hereof be waived or noncompliance therewith consented to, except by
means of a writing executed by both the Guarantor and the Bank. Any such
alteration, amendment, modification, waiver, or consent shall be effective only
to the extent specified therein and for the specific purpose for which given.
No course of dealing and no delay or waiver of any right or default under this
Guarantee shall be deemed a waiver of any other similar or dissimilar right or
default or otherwise prejudice the rights and remedies hereunder.
19. SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon the
Guarantor's successors, and assigns and shall inure to the benefit of the
successors and assigns of the Bank.
20. CHOICE OF LAW AND VENUE. THE VALIDITY OF THIS GUARANTEE, ITS
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE GUARANTOR
AND THE BANK SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE
GUARANTOR HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS GUARANTEE SHALL BE TRIED AND DETERMINED ONLY IN THE STATE AND FEDERAL
COURTS LOCATED IN THE COUNTY OF COOK, STATE OF ILLINOIS, OR, AT THE SOLE OPTION
OF THE BANK IN ANY OTHER COURT IN WHICH THE BANK SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER
IN CONTROVERSY. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE GUARANTOR HEREBY
EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 21.
21. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE
GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY ACTION,
CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO
THIS GUARANTEE, OR IN ANY WAY CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
DEALINGS OF THE GUARANTOR AND THE BANK WITH RESPECT TO THIS GUARANTEE, OR THE
TRANSACTIONS RELATED
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HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY
LAW, THE GUARANTOR HEREBY AGREES THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM,
DEMAND, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT
THE BANK MAY FILE AN ORIGINAL COUNTERPART OF THIS SECTION 22 WITH ANY COURT OR
OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT OF THE GUARANTOR TO THE
WAIVER OF HIS RIGHT TO TRIAL BY JURY.
[SIGNATURE PAGE(S) FOLLOW]
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IN WITNESS WHEREOF, the Guarantor has executed and delivered this
Guarantee as of the date set forth above.
GUARANTOR:
ENVIRONMENTAL PRIVATE EQUITY FUND II,
L.P.
By: ENVIRONMENTAL PRIVATE EQUITY
MANAGEMENT II, L.P., its General Partner
By: FIRST ANALYSIS EPEF MANAGEMENT
COMPANY II, its General Partner
By: /s/ Bret R. Maxwell
---------------------------------
Bret R. Maxwell,
Its Coordinating General Partner
Address:
9500 Sears Tower
Chicago, Illinois 60606
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EXHIBIT B-2
GUARANTEE
THIS GUARANTEE (this "Guarantee") is made as of this 17th day of November,
1995, by PRODUCTIVITY FUND III, L.P., a Delaware limited partnership
(hereinafter, together with its successors and permitted assigns, the
"Guarantor") to and for the benefit of LASALLE NATIONAL BANK, a national
banking association (hereinafter, together with its successors and assigns, the
"Bank").
R E C I T A L S:
A. Riverside L.L.C., an Illinois limited liability company (the
"Borrower") and the Bank are parties to that certain Secured Revolving Loan
Agreement of even date herewith (as the same may be amended, supplemented or
modified from time to time, the "Loan Agreement"), providing for revolving
loans to be made to the Borrower by the Bank for the purchase of the Stock, as
described in the Loan Agreement.
B. Concurrently with the purchase of such Stock, the Borrower will
contribute such Stock to Riverside Partnership, an Illinois general partnership
of which Guarantor is a general partner.
C. It is in the best interests of the Guarantor to cause this Guarantee to
be executed on its behalf inasmuch as the Guarantor will derive substantial
direct and indirect benefits from the revolving loans to be made pursuant to
the Loan Agreement.
D. The Bank has required that the Guarantor execute this Guarantee in
connection with the Bank's agreement to enter into the Loan Agreement.
NOW, THEREFORE FOR VALUE RECEIVED, and in consideration of advances,
credit or other financial accommodations heretofore, now or that may hereafter
at any time be extended to the Borrower by the Bank, the Guarantor hereby
unconditionally guarantees, irrespective of the validity, regularity or
enforceability of any instrument, writing or agreement relating to or the
subject of any such financial accommodation, and whether or not due or to
become due before or after any bankruptcy or insolvency proceeding involving
the Borrower or would have become due but for the Borrower's bankruptcy
proceeding, the full and prompt payment to the Bank at maturity, to the extent
of the amount to which this Guarantee is limited, whether by acceleration or
otherwise, and at all times thereafter of any and all indebtedness, obligations
and liabilities of every kind and nature of the Borrower to the Bank which
arise out of or in connection with the Loan Agreement or any Related Document,
howsoever evidenced, whether now existing or hereafter created or arising,
directly or indirectly, primary or secondary, absolute or contingent, due or to
become due, or joint or several, and howsoever owned, held or acquired, whether
through discount, overdraft, purchase, direct loan or as collateral, or
otherwise, and the prompt, full and faithful performance and discharge by the
Borrower of each and every of the terms, conditions, agreements,
representations and warranties on the part of the Borrower contained in the
Loan Agreement or any Related Document,
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or in any modification or addenda thereto or substitution thereof; and the
Guarantor further agrees to pay all expenses legal and/or otherwise, (including
court costs and attorneys' fees), paid or incurred by the Bank in endeavoring
to collect such indebtedness, or any part thereof, or in enforcing this
Guarantee or in defending any suit based on any act of commission or omission
of the Bank with respect to such indebtedness, collateral, or this Guarantee or
in connection with any recovery claim hereinbelow defined (all of the aforesaid
indebtedness, obligations and liabilities plus interest and all expenses herein
mentioned are hereinafter collectively called the "Guaranteed Obligations").
The amount of recovery, however, against the Guarantor is limited to a
percentage of the aggregate cost of purchase of the Stock (as defined in the
Loan Agreement) currently held as Collateral (the "Maximum Guaranteed Amount"),
such percentage to be certified to the Bank by the Guarantor from time to time
in the form attached hereto as Annex II, plus all costs of collection and other
expenses (including court costs and attorneys' fees) described herein.
Notwithstanding the foregoing, in no event shall the sum of the percentages
guaranteed by each of the Guarantor and Environmental Private Equity Fund II,
L.P., a Delaware limited partnership be less than 20%. If at any time the sum
of the percentages certified by the Guarantor and Environmental Private Equity
Fund II, L.P., a Delaware limited partnership shall be less than 20%, such
percentages shall be deemed to be increased on a pro rata basis to a percentage
equal to 20% collectively.
The Guarantor hereby further agrees as follows:
1. CONTINUING GUARANTEE. This Guarantee includes any Guaranteed
Obligations arising under successive transactions continuing, compromising,
extending, increasing, modifying, releasing, or renewing the Guaranteed
Obligations, changing the interest rate, payment terms, or other terms and
conditions thereof, or creating new or additional Guaranteed Obligations after
prior Guaranteed Obligations have been satisfied in whole or in part. To the
maximum extent permitted by law, the Guarantor hereby waives any right to
revoke this Guarantee as to future indebtedness. If such a revocation is
effective notwithstanding the foregoing waiver, the Guarantor acknowledges and
agrees that (a) no such revocation shall be effective until written notice
thereof has been received by the Bank, (b) no such revocation shall apply to
any Guaranteed Obligations in existence on such date (including any subsequent
continuation, extension, or renewal thereof, or change in the interest rate,
payment terms, or other terms and conditions thereof), (c) no such revocation
shall apply to any Guaranteed Obligations made or created after such date to
the extent made or created pursuant to a legally binding commitment of the Bank
in existence on the date of such revocation, (d) no payment by the Guarantor,
the Borrower, or from any other source, prior to the date of such revocation
shall reduce the maximum obligation of the Guarantor hereunder, and (e) any
payment by the Borrower or from any source other than the Guarantor, subsequent
to the date of such revocation, shall first be applied to that portion of the
Guaranteed Obligations as to which the revocation is effective and which are
not, therefore, guaranteed hereunder, and to the extent so applied shall not
reduce the maximum obligation of the Guarantor thereunder. The agreements and
obligations of the undersigned under this Guarantee shall remain in full force
and effect until all Liabilities (as defined in the Loan Agreement) shall have
been paid in full and the Bank's Revolving Loan Commitment (as defined in the
Loan Agreement) has terminated.
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2. PERFORMANCE UNDER THIS GUARANTEE. In the event that the Borrower
fails to make any payment of any Guaranteed Obligations on or before the due
date thereof, or if the Borrower shall fail to perform, keep, observe, or
fulfill any other obligation referred to in any instrument, writing or
agreement relating to the Guaranteed Obligations, the Guarantor immediately
shall cause such payment to be made to the extent of the amount to which this
Guarantee is limited, and shall cause each of such obligations to be performed,
kept, observed, or fulfilled.
3. PRIMARY OBLIGATIONS. This Guarantee is a primary and original
obligation of the Guarantor, is not merely the creation of a surety
relationship, and is an absolute, unconditional, and continuing guarantee of
payment and performance which shall remain in full force and effect without
respect to future changes in conditions, including any change of law or any
invalidity or irregularity with respect to the issuance of any instrument,
writing or agreement relating to the Guaranteed Obligations. The Guarantor
agrees that he is directly, jointly and severally with any other guarantor of
the Guaranteed Obligations, liable to the Bank, that the obligations of the
Guarantor hereunder are independent of the obligations of the Borrower or any
other guarantor, and that a separate action may be brought against the
Guarantor whether such action is brought against the Borrower or any other
guarantor or whether the Borrower or any such other guarantor is joined in such
action. The Guarantor agrees that his liability hereunder shall be immediate
and shall not be contingent upon the exercise or enforcement of any lien or
realization upon any security or collateral the Bank may at any time possess.
The Guarantor agrees that any release which may be given by the Bank to the
Borrower or any other guarantor shall not release the Guarantor. The Guarantor
consents and agrees that the Bank shall be under no obligation to marshal any
assets of the Borrower or any other guarantor in favor of the Guarantor, or
against or in payment of any or all of the Guaranteed Obligations.
4. WAIVERS.
(a) The Guarantor hereby waives: (1) notice of acceptance hereof;
(2) notice of any loans or other financial accommodations made or
extended to the Borrower or the creation or existence of any Guaranteed
Obligations; (3) notice of the amount of the Guaranteed Obligations,
subject, however, to the Guarantor's right to make inquiry of the Bank to
ascertain the amount of the Guaranteed Obligations at any reasonable
time; (4) notice of any adverse change in the financial condition of the
Borrower or of any other fact that might increase the Guarantor's risk
hereunder; (5) notice of presentment for payment, demand, protest, and
notice thereof as to any promissory notes or other instruments, writing
or agreements evidencing Guaranteed Obligations; (6) notice of any event
of default by the Borrower under any instrument, writing or agreement
with the Bank; and (7) all other notices (except if such notice is
specifically required to be given to the Guarantor hereunder) and demands
to which the Guarantor might otherwise be entitled.
(b) The Guarantor hereby waives the right by statute or otherwise to
require the Bank to institute suit against the Borrower; or to exhaust
any rights and remedies which the Bank has or may have against the
Borrower. In this regard, the Guarantor agrees that he is bound to the
payment of all Guaranteed Obligations to the extent of the amount to
which this
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Guarantee is limited, whether now existing or hereafter accruing, as
fully as if such Guaranteed Obligations were directly owing to the Bank
by the Guarantor. The Guarantor further waives any defense arising by
reason of any disability or other defense (other than the defense that
the Guaranteed Obligations shall have been fully and finally performed
and indefeasibly paid) of the Borrower or by reason of the cessation from
any cause whatsoever of the liability of the Borrower in respect thereof.
(c) The Guarantor hereby waives: (1) any rights to assert against
the Bank any defense (legal or equitable), set-off, counterclaim, or
claim which the Guarantor may now or at any time hereafter have against
the Borrower or any other party liable to the Bank; (2) any defense,
set-off, counterclaim, or claim, of any kind or nature, arising directly
or indirectly from the present or future lack of perfection, sufficiency,
validity, or enforceability of the Guaranteed Obligations or any security
therefor; (3) the benefit of any statute of limitations affecting the
Guarantor's liability hereunder or the enforcement thereof, and any act
which shall defer or delay the operation of any statute of limitations
applicable to the Guaranteed Obligations shall similarly operate to defer
or delay the operation of such statute of limitations applicable to the
Guarantor's liability hereunder.
(d) The Guarantor hereby waives any right of subrogation the
Guarantor has or may have as against the Borrower with respect to the
Guaranteed Obligations. In addition, the Guarantor hereby waives any
right to proceed against the Borrower, now or hereafter, for
contribution, indemnity, reimbursement, and any other suretyship rights
and claims, whether direct or indirect, liquidated or contingent, whether
arising under express or implied contract or by operation of law, which
the Guarantor may now have or hereafter have as against the Borrower with
respect to the Guaranteed Obligations. The Guarantor also hereby waives
any rights of recourse to or with respect to any asset of the Borrower.
The Guarantor agrees that in light of the immediately foregoing waivers,
the execution of this Guarantee shall not be deemed to make the Guarantor
a "creditor" of the Borrower, and that, for purposes of Sections 547 and
550 of the United States Bankruptcy Code, the Guarantor shall not be
deemed a "creditor" of the Borrower.
5. RELEASES. No release or discharge of the Borrower or any one or more
of the guarantors, or of any other person, whether primarily or secondarily
liable for and obligated with respect to the Guaranteed Obligations, or the
institution of bankruptcy, receivership, insolvency, reorganization,
dissolution or liquidation proceedings by or against any guarantor or person,
or the entry of any restraining or other order in any such proceeding, shall
release or discharge the Guarantor or any other guarantor of the Guaranteed
Obligations, or any other person, firm or corporation liable to the Bank for
the Guaranteed Obligations, unless and until all of the Guaranteed Obligations
shall have been fully paid.
6. RIGHT OF SETOFF AND SECURITY INTEREST. Any and all moneys, credits or
other property belonging to the Guarantor in transit to, or in the possession
or under the control of, the Bank, or any agent or bailee of the Bank, may,
without prior notice and opportunity to be heard, be appropriated and applied
against the liability of the Guarantor hereunder to the extent of the amount to
which this
14
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Guarantee is limited. The Guarantor does hereby assign and transfer to the Bank
any and all cash, negotiable instruments, documents of title, chattel paper,
securities, certificates of deposit, deposit accounts, other cash equivalents
and other assets of the Guarantor in transit to, or in the possession or
control of the Bank, or any agent or bailee of the Bank for any purpose and to
apply the same on any or all of the Guaranteed Obligations to the extent of the
amount to which this Guarantee is limited. To secure payment of the Guaranteed
Obligations, the Guarantor grants to the Bank a security interest in all
property (including but not limited to all of the property described above) of
the Guarantor delivered concurrently herewith, or now or at any time hereafter
in the possession or control of the Bank, and all proceeds of all such
property. The undersigned agrees that the Bank shall have the rights and
remedies of a secured party under the Uniform Commercial Code of Illinois with
respect to all of the aforesaid property, including, without limitation
thereof, the right to sell or otherwise dispose of any or all of such property.
The Bank may without notice to anyone, apply or set off any balances, credits,
deposits, accounts, moneys or other indebtedness at any time credited by or due
from the Bank to the Guarantor against the amounts due hereunder. Any
notification of intended disposition of any property required by law shall be
deemed reasonably and properly given if given at least five (5) calendar days
before such disposition.
7. RECOVERY CLAIM. Should a claim ("Recovery Claim") be made upon the
Bank at any time for recovery of any amount received by the Bank in payment of
the Guaranteed Obligations (whether received from the Borrower, the Guarantor
pursuant hereto, or otherwise) and should the Bank repay all or part of said
amount by reason of (1) any judgment, decree, or order of any court or
administrative body having jurisdiction over the Bank or any of its property;
or (2) any settlement or compromise of any such Recovery Claim effected by the
Bank with the claimant (including the Borrower), the Guarantor shall remain
jointly and severally liable to the Bank for the amount so repaid to the same
extent as if such amount had never originally been received by the Bank,
notwithstanding any termination hereof or the return of this document to or the
cancellation of any note or other instrument evidencing any of the
indebtedness.
8. ASSIGNMENTS. In the event the Bank shall sell, assign or transfer the
Guaranteed Obligations, or any part thereof, or grant participation therein,
each and every immediate or remote successive assignee, transferee, holder of
or participant therein, of all or any part of the Guaranteed Obligations shall
have the right to enforce this Guarantee by suit or otherwise for the benefit
of such assignee, transferee holder or participant, as fully as if such
assignee, transferee holder or participant were herein by name specifically
given such rights, powers and benefits; but the Bank shall have an unimpaired,
prior and superior right to enforce this Guarantee for its benefit as to so
much of the Guaranteed Obligations as it has not sold, assigned or transferred.
9. FINANCIAL CONDITION OF THE BORROWER. The Guarantor represents and
warrants to the Bank that the Guarantor is currently informed of the financial
condition of the Borrower and of all other circumstances which a diligent
inquiry would reveal and which would bear upon the risk of nonpayment of the
Guaranteed Obligations. The Guarantor further represents and warrants to the
Bank that the Guarantor will continue to keep informed of the Borrower's
financial condition, the financial condition of other guarantors, if any, and
of all other circumstances which bear upon the risk of nonpayment or
nonperformance of the Guaranteed Obligations.
15
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10. FINANCIAL STATEMENTS OF GUARANTOR.
10.1 Representations and Warranties. The Guarantor represents and
warrants to the Bank that:
(a) All income statements, balance sheets, cash flow statements,
statements of operations and other financial data that have been or shall
hereafter be furnished to the Bank for the purposes of or in connection
with this Guarantee do and will present fairly in accordance with GAAP,
consistently applied, the financial condition of the Guarantor as of the
dates thereof and the results of operations for the period(s) covered
thereby. There is no liability, direct or indirect, contingent or
otherwise, of the Guarantor that is not reflected on these financial
statements.
(b) The balance sheet of the Guarantor, dated September 30, 1995,
and the related statements of income, retained earnings and cash flows
for the calendar period then ended, respectively, copies of which have
been furnished to the Bank, fairly present the financial condition of the
Guarantor, at such dates and the results of each of their operations for
the period ended on such respective dates, all in accordance with GAAP,
consistently applied.
(c) Since September 30, 1995, there has been no material adverse
change in the financial condition, operations, assets, business, or
properties of the Guarantor.
10.2 Covenants. The Guarantor covenants that so long as this Guarantee
shall remain outstanding the Guarantor shall:
(a) Guarantor Financial Statements. Furnish to the Bank on or
before the one hundred twentieth (120th) day after the Guarantor's fiscal
years, a copy of the annual consolidated financial statements of
Guarantor consisting of, at least, a balance sheet and statement of
income and cash flow for such period, prepared in accordance with GAAP,
consistently applied, audited by independent certified public accountants
of recognized standing.
(b) Guarantor Interim Statements. Furnish to the Bank on or before
the sixtieth (60th) day after the end of each fiscal quarter of the
Guarantor, a copy of unaudited consolidated financial statements of the
Guarantor prepared in accordance with GAAP, consistently applied, signed
by an authorized officer of Guarantor and consisting of, at least, a
balance sheet and statement of income and cash flow as at the close of
such fiscal quarter and for the period from the beginning of such
calendar year to the close of such fiscal quarter.
(c) Liquidity Covenant. Maintain liquid assets, including cash,
cash equivalents and/or undrawn capital commitments in an amount at least
equal to the Maximum Guaranteed Amount. The sum of the percentages of the
aggregate cost of purchase of the Stock (as defined in the Loan
Agreement) currently held as Collateral guaranteed by each
16
<PAGE> 7
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of the Guarantor and Environmental Private Equity Fund II, L.P., a
Delaware limited partnership shall at all time be equal to or greater
than 20%.
(d) Certificate. Contemporaneously with the furnishing of each of
the financial statements described in Sections (a) and (b) above, furnish
to the Bank a duly completed certificate in the form of Annex I attached
hereto (a "Compliance Certificate") dated the date of such financial
statement and signed by an authorized officer of the Guarantor.
11. SUBORDINATION. The Guarantor hereby agrees that any and all present
and future indebtedness of the Borrower owing to the Guarantor is, and shall
be, subordinated in all respects to the Guaranteed Obligations. Notwithstanding
the foregoing, the Guarantor may receive from the Borrower regularly scheduled
payments of principal and interest in connection with such subordinated
indebtedness so long as a Default or an Event of Default (as such terms are
defined in the Loan Agreement) under the Loan Agreement has not occurred and is
continuing.
12. PAYMENTS; APPLICATION. All payments to be made hereunder by the
Guarantor shall be made in lawful money of the United States of America, shall
be made in immediately available funds, and shall be made without deduction
(whether for taxes or otherwise) or offset. All payments made by the Guarantor
hereunder shall be applied as follows; first, to all costs and expenses
(including attorneys' fees and costs) incurred by the Bank in enforcing this
Guarantee or in collecting the Guaranteed Obligations; second, to all accrued
and unpaid interest and fees owing to the Bank constituting Guaranteed
Obligations; and third, to the balance of the Guaranteed Obligations, all such
payments to be limited to the amount to which this Guarantee is limited.
13. INDEMNIFICATION. Subject to the limitations set forth herein, or in
any other instruments, writings and agreements between the Borrower and the
Bank, the Guarantor agrees to indemnify the Bank and hold the Bank harmless
against all obligations, demands, or liabilities asserted by any party and
against all losses in any way suffered, incurred, or paid by the Bank as a
result of or in any way arising out of, following, or consequential to the
Bank's transactions with the Borrower.
14. NOTICES. All notices or demands by the Guarantor or the Bank to the
other relating to this Guarantee shall be in writing and either personally
served or sent by certified mail, postage prepaid, return receipt requested, or
by prepaid telefacsimile or telegram, and shall be deemed to be given for
purposes of this Guarantee on the day that such writing is received by the
party to whom it is sent. Unless otherwise specified in a notice sent or
delivered in accordance with the provisions of this Section 14, such writing
shall be sent, if to the Guarantor, at the Guarantor's address set forth on the
signature page hereof, and if to the Bank, then to 120 South LaSalle Street,
Chicago, Illinois 60603, Attn.: Michael Foster.
15. CUMULATIVE REMEDIES. No remedy under this Guarantee is intended to
be exclusive of any other remedy, but each and every remedy shall be cumulative
and in addition to any and every other remedy given hereunder and those
provided by law or in equity. No delay or omission by the Bank to exercise any
right under this Guarantee shall impair any such right nor be construed
17
<PAGE> 8
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to be a waiver thereof. No failure on the part of the Bank to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right.
16. BOOKS AND RECORDS. The Guarantor agrees that the Bank's books and
records showing the indebtedness between the Bank and the Borrower shall be
admissible in any action or proceeding and shall be binding upon the Guarantor
for the purpose of establishing the items therein set forth and shall
constitute prima facie proof thereof.
17. SEVERABILITY OF PROVISIONS. Any provision of this Guarantee which is
prohibited or unenforceable under applicable law, shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
18. ENTIRE AGREEMENT: AMENDMENTS. This Guarantee constitutes the entire
agreement between the Guarantor and the Bank pertaining to the subject matter
contained herein, and may not be altered, amended, or modified, nor may any
provision hereof be waived or noncompliance therewith consented to, except by
means of a writing executed by both the Guarantor and the Bank. Any such
alteration, amendment, modification, waiver, or consent shall be effective only
to the extent specified therein and for the specific purpose for which given.
No course of dealing and no delay or waiver of any right or default under this
Guarantee shall be deemed a waiver of any other similar or dissimilar right or
default or otherwise prejudice the rights and remedies hereunder.
19. SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon the
Guarantor's successors, and assigns and shall inure to the benefit of the
successors and assigns of the Bank.
20. CHOICE OF LAW AND VENUE. THE VALIDITY OF THIS GUARANTEE, ITS
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE GUARANTOR
AND THE BANK SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE
GUARANTOR HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS GUARANTEE SHALL BE TRIED AND DETERMINED ONLY IN THE STATE AND FEDERAL
COURTS LOCATED IN THE COUNTY OF COOK, STATE OF ILLINOIS, OR, AT THE SOLE OPTION
OF THE BANK IN ANY OTHER COURT IN WHICH THE BANK SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER
IN CONTROVERSY. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE GUARANTOR HEREBY
EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 21.
21. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE
GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
18
<PAGE> 9
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ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING ARISING UNDER OR
WITH RESPECT TO THIS GUARANTEE, OR IN ANY WAY CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE DEALINGS OF THE GUARANTOR AND THE BANK WITH RESPECT TO THIS
GUARANTEE, OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE GUARANTOR HEREBY AGREES
THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING SHALL BE
DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT THE BANK MAY FILE AN ORIGINAL
COUNTERPART OF THIS SECTION 22 WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN
EVIDENCE OF THE CONSENT OF THE GUARANTOR TO THE WAIVER OF HIS RIGHT TO TRIAL BY
JURY.
[SIGNATURE PAGE(S) FOLLOW]
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Page 60 of 65 Pages
IN WITNESS WHEREOF, the Guarantor has executed and delivered this
Guarantee as of the date set forth above.
GUARANTOR:
PRODUCTIVITY FUND III, L.P.
By: FIRST ANALYSIS MANAGEMENT
COMPANY III, L.L.C. its General
Partner
By: /s/ Bret R. Maxwell
-----------------------
Bret R. Maxwell,
Its Managing Member
Address:
9500 Sears Tower
Chicago, Illinois 60606
20
<PAGE> 1
Page 61 of 65 Pages
EXHIBIT C
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT ("Agreement") is made as of the 17th day of
November, 1995, by and between RIVERSIDE PARTNERSHIP, an Illinois general
partnership ("Partnership"), THE ENVIRONMENTAL PRIVATE EQUITY FUND II, L.P., a
Delaware limited partnership ("EPEF"), and PRODUCTIVITY FUND III, L.P., a
Delaware limited partnership ("PF-III").
W I T N E S S E T H
WHEREAS, LaSalle National Bank (the "Bank") intends to loan funds to
RIVERSIDE L.L.C., an Illinois limited liability company ("RLLC") pursuant to
the terms and conditions of a loan agreement dated November 17, 1995 (the
"Loan");
WHEREAS, RLLC will to use the proceeds of the Loan to purchase shares of
common stock of Utilities, Inc. and Harding Associates, Inc., which shares of
common stock will stand as collateral security for the Loan and will be
contributed (subject to the Loan) by RLLC to the Partnership, which is a
partnership formed by and between PF-III, EPEF and RLLC;
WHEREAS, as a condition to making the Loan and permitting the transfer of
common stock as aforesaid, the Bank requires that PF-III and EPEF guaranty the
obligations of RLLC under the Loan to the Bank; and
WHEREAS, in consideration for their respective guaranties, PF-III and EPEF
require that the Partnership indemnify PF-III and EPEF for any and all loss,
cost, damage or expense incurred by them in connection with their respective
guaranties;
NOW, THEREFORE, in consideration of the premises set forth above, the
parties hereto agree as follows:
A G R E E M E N T S
1. Indemnification. The Partnership agrees to indemnify and hold each of
PF-III and EPEF harmless from and against any and all loss, cost, damage or
expense (including reasonable attorneys' fees and costs of litigation) suffered
by them resulting from or incident to (a) any breach by RLLC of any covenant,
condition, representation, warranty or other provision of or in connection with
the Loan, (b) any inaccuracy or misrepresentation in or breach of any of the
warranties, representations, covenants or agreements made by RLLC in connection
with the Loan or in any certificate, document or instrument delivered by RLLC
in accordance with the Loan, whether or not such inaccuracy or breach was known
to, or should have been known by, PF-III or EPEF, or (c) any liabilities or
obligations of either PF-III or EPEF, including without limitation those
arising from or relating to, or arising in any manner from the guaranty by
PF-III and EPEF of the obligations of RLLC under or in connection with the
Loan.
2. Defense of Claims. In the event that any proceeding shall be
instituted or any claim or demand shall be asserted by any person against
PF-III or EPEF in respect of which
<PAGE> 2
Page 62 of 65 Pages
indemnification may be sought under the provisions of this Agreement (the
"Indemnified Party"), the Indemnified Party shall cause written notice thereof
to be given to the Partnership. Notwithstanding the foregoing, the right to
indemnification hereunder shall not be affected by any delay in giving notice.
In the event of such claim, demand or legal proceeding, the Partnership shall
have the right to employ at its expense such counsel as is acceptable to the
Indemnified Party to defend any such claim, demand or legal proceeding asserted
against such Indemnified Party, and the Indemnified Party shall have the right
to participate in the defending in good faith of any such claim, demand or
legal proceeding; and so long as the Partnership is defending such claim,
demand or legal proceeding in good faith, the Partnership will not settle such
claim, demand or legal proceeding without the written consent of the
Indemnified Party, which shall not be unreasonably withheld. The Indemnified
Party will make available to the Partnership or its representatives all records
and other materials required by them for their use in contesting any claim,
demand or legal proceeding asserted by a third party against the Indemnified
Party. Whether or not the Partnership so elects to defend any such claim,
demand or legal proceeding, the Indemnified Party shall not have an obligation
to do so.
3. Notices. Unless stated otherwise herein, all notices provided for
herein shall be given in writing and shall be delivered personally or
telecopied, expressed or mailed, with postage or other delivery charges
prepaid, as follows:
If to the Partnership:
233 South Wacker Drive
Suite 9500, Sears Tower
Chicago, Illinois 60606
Telecopier: (312) 258-0334
If to PF-III:
233 South Wacker Drive
Suite 9500, Sears Tower
Chicago, Illinois 60606
Telecopier: (312) 258-0334
If to EPEF:
233 South Wacker Drive
Suite 9500, Sears Tower
Chicago, Illinois 60606
Telecopier: (312) 258-0334
Notices shall be effective (a) upon receipt, if delivered personally or
telecopied, (b) on the first business day after having been given to a
recognized overnight courier service, or (c) three (3) business days after
deposit in a regular receptacle for the United States mail, certified mail,
return receipt requested, postage prepaid. Any party hereto may specify a new
address for notice by giving notice of change of address to all other parties
in accordance with this Section 3.
<PAGE> 3
Page 63 of 65 Pages
4. Governing Law. This Agreement has been executed and delivered in, and
shall be governed by and construed in accordance with, the laws of the State of
Illinois for agreements to be wholly performed in that State (i.e., without
application of such State's conflicts of laws provisions).
5. Headings. The titles of the Sections have been inserted as a matter of
convenience of reference only, and shall not control or affect the meaning or
construction of this Agreement.
6. Waiver of Rights. The failure or delay of any party hereto at any time
or times hereafter to require strict performance by another party hereto (as
applicable) of any of the provisions, terms and conditions contained in this
Agreement shall not waive, affect or diminish any right of any party at any
time or times thereafter to demand strict performance hereof, and such right
shall not be deemed to have been waived by any act or knowledge of any party,
their respective agents, officers or employees, unless such waiver is contained
in an instrument in writing signed by such party and directed to any other
party (as applicable) specifying such waiver. No waiver by any party hereto of
any failure to perform pursuant to the terms hereunder shall operate as a
waiver of any other or the same failure to perform pursuant to the terms
hereunder on a future occasion. No single or partial exercise by any party of
any right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy.
7. Choice of Forum and Venue. ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY
OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS AGREEMENT
SHALL BE LITIGATED IN COURTS HAVING SITUS WITHIN THE UNITED STATES OF AMERICA,
STATE OF ILLINOIS, COUNTY OF COOK. EACH OF THE PARTIES HERETO HEREBY CONSENTS
AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED
WITHIN SUCH COUNTY. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT HE OR SHE MAY
HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST HIM OR
HER OR BROUGHT BY HIM OR HER IN ACCORDANCE WITH THIS SECTION.
8. Waiver of Jury Trial. EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHTS THAT EACH MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENT DELIVERED TO THE OTHERS AS
OF THE DATE HEREOF, PRIOR THERETO OR THEREAFTER, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY
HERETO. EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT HE OR SHE HAS RECEIVED
FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION
OF THIS AGREEMENT AND EACH OTHER DOCUMENT TO WHICH HE OR SHE IS NOW OR WILL BE
IN THE FUTURE A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR
EACH PARTY ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER DOCUMENT.
9. Execution of Additional Instruments. Each party hereto shall execute
such other and further designations, powers of attorney and other instruments
necessary to comply with any applicable laws.
<PAGE> 4
Page 64 of 65 Pages
10. Construction. Whenever the singular tense is used in this Agreement
and when required by the context, the same shall include the plural and vice
versa, and the masculine gender shall include the feminine and neuter genders
and vice versa.
11. Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement and the
application thereof shall not be affected and shall be enforceable to the
fullest extent permitted by applicable law.
12. Heirs, Successors and Assigns. Each and all of the covenants, terms,
provisions and agreements herein contained shall be binding upon and inure to
the benefit of the parties hereto and, to the extent permitted by this
Agreement, their respective heirs, legal representatives, successors and
assigns.
13. Beneficiaries of Agreement. The rights and obligations contained in
this Agreement are hereby declared by the parties hereto to have been provided
expressly for the exclusive benefit of such persons as set forth herein, and
shall not benefit, and do not benefit, any unrelated third parties.
14. Integrated Agreement. This Agreement is intended to be the sole
agreement of the parties hereto with respect to the matters contained herein.
15. Amendment. This Agreement may be amended only by a written instrument
of amendment which is signed by all parties hereto and which expressly refers
to this Section 15. No course of dealing, action or inaction shall be
effective as an amendment of this Agreement.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be treated as an original, but all of which,
collectively, shall constitute a single document.
<PAGE> 5
Page 65 of 65 Pages
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the date first set forth above.
THE ENVIRONMENTAL PRIVATE EQUITY FUND II, L.P.
By: ENVIRONMENTAL PRIVATE EQUITY
MANAGEMENT II, L.P., its General Partner
By: FIRST ANALYSIS EPEF MANAGEMENT
COMPANY II, its Managing General Partner
By: /s/ Bret R. Maxwell
----------------------------------------------
Bret R. Maxwell, General Partner
PRODUCTIVITY FUND MANAGEMENT COMPANY III,
L.L.C., its General Partner
By: /s/ Bret R. Maxwell
----------------------------------------------
Bret R. Maxwell, Managing Member
RIVERSIDE PARTNERSHIP
By: RIVERSIDE L.L.C., its Managing General Partner
By: FIRST ANALYSIS MANAGEMENT COMPANY
III, L.L.C. its Manager
By: /s/ Bret R. Maxwell
----------------------------------------------
Bret R. Maxwell, Managing Member
