[LOGO] IONICS Worldwide Headquarters
Ionics, Incorporated
65 Grove Street
Watertown, Massachusetts
02472-2882 USA
Tel: (617) 926-2500
Fax: (617) 926-3760
www.ionics.com
August 9, 2001
Securities and Exchange Commission
Filing Desk, Room 1004
450 Fifth Street, N.W.
Washington, DC 20549
Re: Ionics, Incorporated (Commission File No. 1-7211) filing of Form 10-Q for
quarter ended June 30, 2001, Account No. 0000052466
Ladies and Gentlemen:
I enclose via electronic filing pursuant to the Electronic Data Gathering,
Analysis and Retrieval (EDGAR) System on behalf of Ionics, Incorporated (the
Company), the Form 10Q for the quarter ended June 30, 2001. Please
acknowledge receipt of this electronic filing by return email to the Company's
email address: plynes@ionics.com.
A manually signed copy of the Form 10-Q will be kept on file at the offices of
the Company.
If you have any questions or require further information, please contact the
undersigned at 617-926-2510, ext. 450.
Very truly yours,
/s/Stephen Korn
Stephen Korn
Vice President and
General Counsel
Enc.
cc: Arthur L. Goldstein, Chairman and Chief Executive Officer
Daniel M. Kuzmak, Vice President, Finance and Chief Financial Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2001
-------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number: 1-7211
IONICS, INCORPORATED
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2068530
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
65 Grove Street
Watertown, Massachusetts 02472
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 926-2500
Former name, former address and former fiscal year, if changed since last
report: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--------- -----------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
At June 30, 2001 the Company had 17,385,542 shares of Common Stock, par value $1
per share, outstanding.
IONICS, INCORPORATED
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 2001
INDEX
Page Number
-----------
PART I Financial Information
Consolidated Statements of Operations 2
Consolidated Balance Sheets 3
Consolidated Statements of Cash Flows 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of Results
of Operations and Financial Condition 8
PART II Other Information 12
Signatures 13
Exhibit Index 14
-1-
PART I - FINANCIAL INFORMATION
IONICS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
-------------------------- ----------------------------
2001 2000 2001 2000
----------- ------------ ------------ -----------
Revenue:
Equipment Business Group $ 51,770 $ 42,405 $103,751 $ 83,761
Ultrapure Water Group 25,214 26,558 59,062 54,304
Consumer Water Group 30,247 26,933 59,592 53,352
Instrument Business Group 6,443 6,908 14,231 14,182
----------- ------------ ------------ -----------
113,674 102,804 236,636 205,599
----------- ------------ ------------ -----------
Costs and expenses:
Cost of sales of Equipment Business Group 39,951 31,079 79,951 62,484
Cost of sales of Ultrapure Water Group 20,260 21,378 45,940 43,243
Cost of sales of Consumer Water Group 15,525 14,899 33,529 30,600
Cost of sales of Instrument Business Group 2,990 2,761 6,429 6,039
Research and development 1,609 1,827 3,299 3,648
Selling, general and administrative 27,580 24,086 56,081 47,060
----------- ------------ ------------ -----------
107,915 96,030 225,229 193,074
----------- ------------ ------------ -----------
Income from operations 5,759 6,774 11,407 12,525
Interest income 746 318 971 585
Interest expense (1,448) (1,202) (3,052) (1,926)
Equity income 589 639 1,030 971
----------- ------------ ------------ -----------
Income before income taxes and minority interest 5,646 6,529 10,356 12,155
Provision for income taxes 1,920 2,221 3,521 4,134
----------- ------------ ------------ -----------
Income before minority interest 3,726 4,308 6,835 8,021
Minority interest in losses (earnings) 443 (93) 329 (244)
----------- ------------ ------------ -----------
Net income $ 4,169 $ 4,215 $ 7,164 $ 7,777
=========== ============ ============ ===========
Basic earnings per share $ 0.24 $ 0.26 $ 0.43 $ 0.48
=========== ============ ============ ===========
Diluted earnings per share $ 0.24 $ 0.26 $ 0.42 $ 0.47
=========== ============ ============ ===========
Shares used in basic earnings per share calculations 17,100 16,216 16,746 16,213
=========== ============ ============ ===========
Shares used in diluted earnings per share calculations 17,183 16,429 16,886 16,417
=========== ============ ============ ===========
The accompanying notes are an integral part of these financial statements.
-2-
IONICS, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands, except share and par value amounts)
June 30, December 31,
2001 2000
--------------- ----------------
ASSETS
Current assets:
Cash and cash equivalents $ 25,855 $ 25,497
Short-term investments 600 1,105
Notes receivable, current 4,616 4,741
Accounts receivable 158,205 162,711
Receivables from affiliated companies 2,026 792
Inventories:
Raw materials 23,734 21,061
Work in process 11,862 8,264
Finished goods 4,967 5,376
--------------- ----------------
40,563 34,701
Other current assets 13,256 16,443
Deferred income taxes 12,749 12,749
--------------- ----------------
Total current assets 257,870 258,739
Notes receivable, long-term 21,807 17,502
Investments in affiliated companies 23,531 18,310
Property, plant and equipment:
Land 8,640 8,738
Buildings 48,198 48,773
Machinery and equipment 315,112 312,138
Other, including furniture, fixtures and vehicles 51,410 48,470
--------------- ----------------
423,360 418,119
Less accumulated depreciation (203,925) (195,276)
--------------- ----------------
219,435 222,843
Other assets 56,574 60,072
--------------- ----------------
Total assets $ 579,217 $ 577,466
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt $ 66,099 $ 75,045
Accounts payable 40,912 56,014
Customer deposits 8,095 4,883
Accrued commissions 2,563 2,002
Accrued expenses 32,664 35,419
Taxes on income 1,487 -
--------------- ----------------
Total current liabilities 151,820 173,363
Long-term debt and notes payable 10,568 10,911
Deferred income taxes 26,811 30,334
Other liabilities 6,169 5,997
Stockholders' equity:
Common stock, par value $1, authorized
shares: 55,000,000; issued: 17,385,542 in 2001 and
16,369,029 in 2000 17,385 16,369
Additional paid-in capital 186,006 162,114
Retained earnings 204,780 197,616
Accumulated other comprehensive income (24,322) (19,238)
--------------- ----------------
Total stockholders' equity 383,849 356,861
--------------- ----------------
Total liabilities and stockholders' equity $ 579,217 $ 577,466
=============== ================
The accompanying notes are an integral part of these financial statements.
-3-
IONICS, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Six Months Ended
June 30,
-------------------------------------
Operating activities: 2001 2000
------------ ------------
Net income $ 7,164 $ 7,777
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Depreciation and amortization 17,676 14,925
Provision for losses on accounts and notes receivable 2,924 1,261
Compensation expense on restricted stock awards - 36
Changes in assets and liabilities:
Notes receivable (4,467) (700)
Accounts receivable (2,337) (19,971)
Inventories (6,291) (5,942)
Other current assets 2,876 1,162
Investments in affiliates (5,445) 1,135
Accounts payable and accrued expenses (12,366) (53)
Income taxes 1,686 302
Other 506 (1,275)
------------ ------------
Net cash provided (used) by operating activities 1,926 (1,343)
------------ ------------
Investing activities:
Additions to property, plant and equipment (18,402) (21,218)
Disposals of property, plant and equipment 1,185 888
Acquisitions, net of cash acquired - (4,250)
Sale (Purchase) of short-term investments 452 (158)
------------ ------------
Net cash used by investing activities (16,765) (24,738)
------------ ------------
Financing activities:
Principal payments on current debt (54,222) (37,660)
Proceeds from borrowings of current debt 45,918 65,756
Principal payments on long-term debt (847) (492)
Proceeds from borrowings of long-term debt 227 3,946
Proceeds from issuance of common stock 21,814 -
Proceeds from stock option plans 3,095 454
------------ ------------
Net cash provided by financing activities 15,985 32,004
------------ ------------
Effect of exchange rate changes on cash (788) 252
------------ ------------
Net change in cash and cash equivalents 358 6,175
Cash and cash equivalents at beginning of period 25,497 13,169
------------ ------------
Cash and cash equivalents at end of period $ 25,855 $ 19,344
============ ============
The accompanying notes are an integral part of these financial statements.
-4-
IONICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
In the opinion of the management of Ionics, Incorporated (the "Company"), all
adjustments have been made that are necessary to present fairly the consolidated
financial position of the Company, the consolidated results of its operations
and the consolidated cash flows for each period presented. The consolidated
results of operations for the interim periods are not necessarily indicative of
the results of operations to be expected for the full year. These financial
statements should be read in conjunction with the Company's 2000 Annual Report
as filed on Form 10-K with the Securities and Exchange Commission. Other than
noted below, there have been no significant changes in the information reported
in those Notes, other than from the normal business activities of the Company,
and there have been no changes which would, in the opinion of management, have a
materially adverse effect upon the Company.
2. Earnings per share (EPS) calculations
(Amounts in thousands, except per share amounts)
For the three months ended June 30,
----------------------------------------------------------------------------------------------
2001 2000
---------------------------------------------- ---------------------------------------------
Net Per Share Net Per Share
Income Shares Amount Income Shares Amount
-------------- ------------- ------------ ------------- ------------- -------------
Basic EPS
Income available to
common stockholders $ 4,169 17,100 $ 0.24 $ 4,215 16,216 $ 0.26
Effect of dilutive
stock options - 83 - - 213 -
-------------- ------------- ------------ ------------- ------------- -------------
Diluted EPS $ 4,169 17,183 $ 0.24 $ 4,215 16,429 $ 0.26
============== ============= ============ ============= ============= =============
For the six months ended June 30,
----------------------------------------------------------------------------------------------
2001 2000
---------------------------------------------- ---------------------------------------------
Net Per Share Net Per Share
Income Shares Amount Income Shares Amount
-------------- ------------- ------------ ------------- ------------- -------------
Basic EPS
Income available to
common stockholders $ 7,164 16,746 $ 0.43 $ 7,777 16,213 $ 0.48
Effect of dilutive
stock options - 140 (0.01) - 204 (0.01)
-------------- ------------- ------------ ------------- ------------- -------------
Diluted EPS $ 7,164 16,886 $ 0.42 $ 7,777 16,417 $ 0.47
============== ============= ============ ============= ============= =============
The effect of dilutive stock options excludes those stock options for which the
impact would have been antidilutive based on the exercise price of the options.
The number of options that were antidilutive at the three months ended June 30,
2001 and 2000 was 1,555,834 and 1,715,684, respectively. The number of options
that were antidilutive at the six months ended June 30, 2001 and 2000 was
1,541,234 and 1,665,084, respectively.
-5-
3. Comprehensive Income
The table below sets forth comprehensive income as defined by Statement of
Financial Accounting Standard No. 130 for the three month and six month periods
ended June 30, 2001 and 2000, respectively.
(Amounts in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- -------------------------------
2001 2000 2001 2000
-------------- ------------- -------------- -------------
Net income $ 4,169 $ 4,215 $ 7,164 $ 7,777
Other comprehensive income,
net of tax:
Translation adjustments (494) (1,166) (5,084) (3,576)
-------------- ------------- -------------- -------------
Comprehensive income $ 3,675 $ 3,049 $ 2,080 $ 4,201
============== ============= ============== =============
4. Segment Information
The following table summarizes the Company's operations by the four business
group segments and "Corporate" (Corporate includes the elimination of
intersegment transfers).
For the three months ended June 30, 2001
-------------------------------------------------------------------------------------
Equipment Ultrapure Consumer Instrument
Business Water Water Business
Group Group Group Group Corporate Total
------------- ------------ ------------ ------------- ----------- -------------
(Amounts in thousands)
Revenue - unaffiliated
customers $51,770 $ 25,214 $ 30,247 $ 6,443 $ - $113,674
Inter-segment transfers 590 785 - 316 (1,691) -
Gross profit 11,819 4,954 14,722 3,453 - 34,948
For the three months ended June 30, 2000
-------------------------------------------------------------------------------------
Equipment Ultrapure Consumer Instrument
Business Water Water Business
Group Group Group Group Corporate Total
------------- ------------ ------------ ------------- ----------- -------------
(Amounts in thousands)
Revenue - unaffiliated
customers $42,405 $ 26,558 $ 26,933 $ 6,908 $ - $102,804
Inter-segment transfers 456 1,339 - 986 (2,781) -
Gross profit 11,326 5,180 12,034 4,147 - 32,687
For the six months ended June 30, 2001
-------------------------------------------------------------------------------------
Equipment Ultrapure Consumer Instrument
Business Water Water Business
Group Group Group Group Corporate Total
------------- ------------ ------------ ------------- ----------- -------------
(Amounts in thousands)
Revenue - unaffiliated
customers $103,751 $ 59,062 $ 59,592 $ 14,231 $ - $236,636
Inter-segment transfers 1,987 1,966 - 998 (4,951) -
Gross profit 23,800 13,122 26,063 7,802 - 70,787
For the six months ended June 30, 2000
-------------------------------------------------------------------------------------
Equipment Ultrapure Consumer Instrument
Business Water Water Business
Group Group Group Group Corporate Total
------------- ------------ ------------ ------------- ----------- -------------
(Amounts in thousands)
Revenue - unaffiliated
customers $83,761 $ 54,304 $ 53,352 $ 14,182 $ - $205,599
Inter-segment transfers 2,038 1,564 - 1,372 (4,974) -
Gross profit 21,277 11,061 22,752 8,143 - 63,233
-6-
5. Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 141, Business Combinations. SFAS
No. 141 requires that all business combinations be accounted for under the
purchase method only and that certain acquired intangible assets in a business
combination be recognized as assets apart from goodwill. Implementation of SFAS
No. 141 is required for fiscal years beginning after December 15, 2001.
In July 2001, the FASB also issued SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 addresses financial accounting and reporting for intangible
assets acquired individually or with a group of assets (but not those acquired
in a business combination) at acquisition. This Statement also addresses
financial accounting and reporting for goodwill and other intangible assets
subsequent to their acquisition. The provisions of this Statement are required
to be applied with fiscal years beginning after December 15, 2001. This
Statement is required to be applied at the beginning of an entity's fiscal year
and to be applied to all goodwill and other intangible assets recognized in its
financial statements at that date. Impairment losses for goodwill and
indefinite-lived intangible assets that arise due to the initial application of
this Statement are to be reported as resulting from a change in accounting
principle.
SFAS Nos. 141 and 142 were issued very recently, and consequently the Company
has not yet determined what effect, if any, the adoption of SFAS Nos. 141 and
142 will have on the Company's financial position or results of operations.
-7-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Results of Operations
Comparison of the Three and Six Months Ended June 30, 2001 with the Three and
Six Months Ended June 30, 2000
Revenues for the second quarter of 2001 increased 10.6% and net income decreased
1.1%, compared to the results of the second quarter of 2000. Revenues for the
first six-month period of 2001 increased 15.1% while net income decreased 7.9%
from the comparable six-month period in 2000. Gross profit was $34.9 million in
the second quarter of 2001 compared to $32.7 million in the second quarter of
2000. For the first six-month period of 2001, gross profit was $70.8 million
compared to $63.2 million for the first six-month period of 2000. Gross profit
increased in the second quarter and first six-month period of 2001 for the
Equipment Business Group (EBG) and the Consumer Water Group (CWG) as compared to
similar periods in 2000. The Ultrapure Water Group's (UWG) gross profit
decreased in the second quarter of 2001 but increased for the first six-month
period of 2001 from the comparable periods in 2000. Gross profit for the
Instrument Business Group (IBG) decreased in the second quarter and first
six-month period of 2001 from the comparable periods in 2000.
Total revenues for the second quarter of 2001 increased 10.6% to $113.7 million
from $102.8 million in 2000. For the second quarter of 2001, revenues were
higher in EBG and CWG but lower in UWG and IBG as compared to the same period in
2000. Revenues for the first six-month period of 2001 increased 15.1% to $236.6
million from $205.6 million in the comparable 2000 period. Revenues were higher
in all four business groups in the first six-month period of 2001, compared to
the same period in 2000.
EBG revenues increased 22.1% in the second quarter and increased 23.9% in the
first six-month period of 2001, as compared with the same respective periods of
2000. These increases came primarily from higher capital equipment sales and the
continuing work in 2001 on a desalination facility in Trinidad.
UWG revenues decreased $1.3 million, or 5.1%, in the second quarter of 2001 from
the second quarter of 2000. This decrease was due primarily to lower revenues in
the Company's Malaysian and Australian subsidiaries. UWG revenues increased $4.8
million, or 8.8%, in the first six-months of 2001 compared to the first six
months of 2000. This increase was the result of increased capital equipment
sales to the microelectronics industry.
The revenues of CWG increased $3.3 million, or 12.3%, in the second quarter of
2001 compared to the second quarter of 2000. Similarly, CWG revenues increased
$6.2 million, or 11.7%, in the first six-month period of 2001 compared to the
first six-month period of 2000. These increases were due to continued growth in
both the bottled water and home water businesses.
IBG revenues decreased $0.5 million, or 6.7%, in the second quarter of 2001
compared to the second quarter of 2000. Revenues for the first six-month period
of 2001 were approximately the same as revenues for the first six-month period
of 2000.
Cost of sales as a percentage of revenue for the second quarter was 69.3% in
2001 and 68.2% in 2000. For the six-month period, cost of sales as a percentage
of revenue was 70.1% in 2001 and 69.2% in 2000.
-8-
Cost of sales as a percentage of revenues increased for EBG and IBG for both the
second quarter and six-month periods of 2001, as compared to the respective
periods in 2000. UWG's cost of sales as a percentage of revenues was relatively
unchanged in the second quarter of 2001, as compared to the second quarter of
2000, but decreased in the first half of 2001 compared to the first half of
2000. Cost of sales as a percentage of revenue for CWG decreased in the second
quarter and first half of 2001 compared to the second quarter and first half of
2000. EBG's cost of sales percentage increased to 77.2% and to 77.1% in the
second quarter and first half of 2001, respectively, as compared to 73.3% and
74.6% in the same respective periods in 2000. The increases in this percentage
for EBG primarily reflect a shift in business mix to lower margin capital
equipment. IBG's cost of sales percentage increased to 46.4% and 45.2% in the
second quarter and first six months of 2001, respectively, from 40.0% and 42.6%
in the second quarter and first six months of 2000, respectively. These
increases were the result of a less favorable mix of sales in 2001 than in 2000,
as well as lower sales volume in the second quarter of 2001. These increases
were offset somewhat by decreases in the cost of sales as a percentage of
revenues for UWG and CWG. UWG's cost of sales as a percentage of revenue in the
second quarter of 2001 was relatively unchanged from the percentage in the
second quarter of 2000. Cost of sales as a percentage of revenue for the first
half of 2001 decreased to 77.8% from 79.6% in the first half of 2000. This
decrease was primarily due to improved performance in certain domestic
operations but was offset by charges incurred by the Company's Malaysian and
Australian subsidiaries in the second quarter of 2001. Cost of sales as a
percentage of revenues for CWG decreased to 51.3% and 56.3% in the second
quarter and first half of 2001, respectively, from 55.3% and 57.4% in the second
quarter and first half of 2000, respectively. The decreases are due to both
improved operations and a gain recognized on the sale of certain bottled water
assets in the second quarter of 2001.
Operating expenses (Research and Development and Selling, General and
Administrative) as a percentage of revenues increased during the second quarter
of 2001 to 25.7% from 25.2% in 2000. For the six-month period, operating
expenses as a percentage of revenues increased to 25.1% in 2001 from 24.7% in
2000. The increase in operating expenses as a percentage of revenues reflected
primarily the expansion of the consumer water business sales force both
domestically and in Europe during the second quarter of 2001.
Interest income of $0.7 million for the second quarter of 2001 increased from
$0.3 million for the second quarter of 2000. Interest income of $1.0 million for
the first half of 2001 increased from interest income of $0.6 million for the
first half of 2000. Interest expense of $1.4 million and $3.1 million for the
second quarter and first half of 2001, respectively, increased from $1.2 million
and $1.9 million for the second quarter and first half of 2000, respectively.
The increases in interest expense in 2001 reflect higher average borrowings by
the Company.
Financial Condition
Working capital increased $20.7 million during the first six months of 2001
while the Company's current ratio increased to 1.7 at June 30, 2001 from 1.5 at
December 31, 2000. At June 30, 2001, the Company had $25.9 million in cash and
cash equivalents which is approximately the same amount as that at December 31,
2000. Notes payable and current portion of long-term debt decreased $8.9
million, and accounts payable decreased $15.1 million. Inventory and investments
in affiliates increased $5.9 million and $5.2 million, respectively.
Cash provided by operating activities totaled $1.9 million during the first six
months of 2001. The primary uses of cash for investing purposes during this
period were for additions to property, plant and equipment. Significant
expenditures were made for "own and operate" facilities and ongoing operations
of the Company's bottled water business. Cash provided by financing activities
was $16.0 million for the first half of 2001, due to proceeds from the issuance
of common stock in a private placement and stock option exercises, partially
offset by payments and borrowings of short-term debt.
-9-
During 2001, construction has been continuing on the Trinidad desalination
facility owned by Desalination Company of Trinidad and Tobago Ltd. (Desalcott),
in which the Company has a 40% equity interest. During 2000 and through the
first half of 2001, the Company loaned $10 million to the 60% equity owner,
Hafeez Karamath Engineering Services Ltd. (HKES), as the source of HKES' equity
contribution, in addition to the $10 million contributed by the Company for its
40% equity interest. Desalcott has entered into a "bridge loan" agreement with a
Trinidad bank providing $60 million in construction financing. The bank has
indicated that it is willing to increase the amount of the bridge loan to
Desalcott, subject to certain conditions. Based on current estimates, the
augmented bridge loan plus the $20 million of equity provided to Desalcott
should provide sufficient funds to complete construction of the project.
Although Desalcott has received proposals for long-term debt financing, there is
no assurance that such financing will be obtained on terms acceptable to
Desalcott or on a timely basis. If permanent financing is not obtained on a
timely basis, or is insufficient to repay the bridge loan, Desalcott may be
required to obtain additional funds to finance the project, and the Company has
committed to lend Desalcott up to $10 million under such circumstance.
The Company completed a private placement of common stock to Fidelity Management
& Research Company (Fidelity), on behalf of funds and accounts managed by
Fidelity, in April 2001. 875,000 shares were sold at a price of $24.93 per
share, and the total proceeds to the Company were approximately $21.8 million.
The proceeds were used to reduce short-term borrowings. The Company filed a
registration statement with the Securities and Exchange Commission covering the
resale of these shares. The registration statement became effective on June 7,
2001.
On June 29, 2001, the Company entered into a Third Amended and Restated
Revolving Credit Agreement with Fleet National Bank (as lender and agent) and
Bank of America, N.A., the Chase Manhattan Bank, and Mellon Bank, N.A. (the
"Credit Agreement"). Under the terms of the Credit Agreement, which supercedes a
prior loan agreement with Fleet National Bank, the Company may borrow up to $90
million, subject to terms and financial covenants typical to such loan
agreements.
The Company believes that its cash and cash equivalents, cash from operations,
lines of credit and foreign exchange facilities are adequate to meet its
currently anticipated needs.
Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 141, Business Combinations. SFAS
No. 141 requires that all business combinations be accounted for under the
purchase method only and that certain acquired intangible assets in a business
combination be recognized as assets apart from goodwill. Implementation of SFAS
No. 141 is required for fiscal years beginning after December 15, 2001.
In July 2001, the FASB also issued SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 addresses financial accounting and reporting for intangible
assets acquired individually or with a group of assets (but not those acquired
in a business combination) at acquisition. This Statement also addresses
financial accounting and reporting for goodwill and other intangible assets
subsequent to their acquisition. The provisions of this Statement are required
to be applied with fiscal years beginning after December 15, 2001. This
Statement is required to be applied at the beginning of an entity's fiscal year
and to be applied to all goodwill and other intangible assets recognized in its
financial statements at that date. Impairment losses for goodwill and
indefinite-lived intangible assets that arise due to the initial application of
this Statement are to be reported as resulting from a change in accounting
principle.
SFAS Nos. 141 and 142 were issued very recently, and consequently the Company
has not yet determined what effect, if any, the adoption of SFAS Nos. 141 and
142 will have on the Company's financial position or results of operations.
-10-
Quantitative and Qualitative Disclosures about Market Risk
Derivative Instruments and Market Risk
--------------------------------------
There has been no material change in the information reported in the Company's
2000 Annual Report as filed on Form 10-K with the Securities and Exchange
Commission with respect to these risk matters.
Forward-Looking Information
Safe Harbor Statement under Private Securities Litigation Reform Act of 1995
----------------------------------------------------------------------------
The Company's future results of operations and certain statements contained in
this report, including, without limitation, "Management's Discussion and
Analysis of Results of Operations and Financial Condition," constitute
forward-looking statements. Such statements are based on management's current
views and assumptions and involve risks, uncertainties and other factors that
could cause actual results to differ materially from management's current
expectations. Among these factors are business conditions and the general
economy; competitive factors, such as acceptance of new products and price
pressures; risk of nonpayment of accounts receivable; risks associated with
foreign operations; risks involved in litigation; regulations and laws affecting
business in each of the Company's markets; market risk factors, as described
above under "Derivative Instruments and Market Risks;" and other risks and
uncertainties described from time to time in the Company's filings with the
Securities and Exchange Commission.
-11-
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
On April 18, 2001, the Company sold 875,000 shares of its common stock, par
value $1.00 per share, to certain funds and accounts managed by Fidelity
Management and Research Company. The shares were sold at a purchase price equal
to $24.93 per share for an aggregate consideration of approximately $21.8
million. The shares were sold in a private placement in reliance on Rule 506 of
Regulation D under the Securities Act of 1933. No underwriters were involved
with the issuance and sale of the shares. Pursuant to the terms of the stock
purchase agreement executed in connection with the sale of the shares, on May
18, 2001, the Company filed a registration statement on Form S-3 (File No.
333-61196) with the Securities and Exchange Commission covering the resale of
the shares. The registration statement became effective on June 7, 2001.
Item 4. Submission of Matters to a Vote of Security Holders
a) The Annual Meeting of the Stockholders was held on May 2, 2001. Stephen L.
Brown, William K. Reilly, John J. Shields and Allen S. Wyett were reelected
as Class III Directors for a three-year term. Continuing as Class I
Directors until the 2002 Annual Meeting are Douglas R. Brown, Kathleen F.
Feldstein, Arthur L. Goldstein and Carl S. Sloane. Continuing as Class II
Directors until the 2004 Annual Meeting are Arnaud de Vitry d'Avaucourt,
William E. Katz, Daniel I. C. Wang and Mark S. Wrighton. Each of the Class
III Directors received at least the following votes "for" election and no
more than the following votes withheld:
Votes for: 13,747,698
Votes withheld: 195,098
b) The other matter submitted for stockholder approval was ratification of the
selection of PricewaterhouseCoopers LLP as the Company auditors for 2001.
The following votes were cast:
Votes for: 13,868,419
Votes against: 62,938
Abstentions: 10,939
Broker non-votes: 500
Item 5. Other Information
On June 29, 2001, the Company replaced its principal revolving credit agreement
with Fleet National Bank and entered into an amended and restated revolving
credit agreement with Fleet National Bank (as agent and lender), Bank of
America, N.A., The Chase Manhattan Bank and Mellon Bank, N.A. Under the credit
agreement, the Company may borrow up to $90 million from the participating
banks.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit 4 - Instruments Defining the Rights of Security Holders
4.1 Third Amended and Restated Credit Agreement dated as of June
29, 2001, among the Company, Fleet National Bank (as agent and
lender), Bank of America, N.A., The Chase Manhattan Bank and
Mellon Bank, N.A.
4.2 Global Amendment and Affirmation Agreement dated as of June
29, 2001, among the Company, Fleet National Bank and certain
subsidiaries of the Company.
b) Reports on Exhibit 8-K
A report on Exhibit 8-K was filed on April 24, 2001, reporting under Item
2 the sale by the Company of 875,000 shares of Common Stock in a private
placement.
-12-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IONICS, INCORPORATED
Date: August 9, 2001 By: /s/Arthur L. Goldstein
-----------------------------
Arthur L. Goldstein
Chairman and Chief Executive Officer
(duly authorized officer)
Date: August 9, 2001 By: /s/Daniel M. Kuzmak
------------------------------
Daniel M. Kuzmak
Vice President and
Chief Financial Officer
(principal financial officer)
-13-
EXHIBIT INDEX
EXHIBITS
4.1 Third Amended and Restated Credit Agreement dated as of June 29,
2001, among the Company, Fleet National Bank (as agent and lender), Bank
of America, N.A., The Chase Manhattan Bank and Mellon Bank, N.A.
4.2 Global Amendment and Affirmation Agreement dated as of June 29,
2001, among the Company, Fleet National Bank and certain subsidiaries of
the Company.
-14-
Exhibit 4.1
EXECUTION COPY
THIRD AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
--------------------------
Dated as of June 29, 2001
among
IONICS, INCORPORATED
FLEET NATIONAL BANK
and the other lending institutions set forth
on Schedule 1 hereto
and
FLEET NATIONAL BANK, as Agent
TABLE OF CONTENTS
@@
1. DEFINITIONS AND RULES OF INTERPRETATION.........................................................1
---------------------------------------
1.1. Definitions..........................................................................1
-----------
1.2. Rules of Interpretation..............................................................17
-----------------------
2. THE REVOLVING CREDIT FACILITY...................................................................18
-----------------------------
2.1. Commitment to Lend...................................................................18
------------------
2.2. Commitment Fee.......................................................................18
--------------
2.3. Reduction of Total Commitment........................................................18
-----------------------------
2.4. The Revolving Credit Notes...........................................................19
--------------------------
2.5. Interest on Revolving Credit Loans...................................................19
----------------------------------
2.6. Requests for Revolving Credit Loans..................................................19
-----------------------------------
2.6.1. General...................................................................19
-------
2.6.2. Swing Line................................................................20
----------
2.7. Conversion Options...................................................................20
------------------
2.7.1. Conversion to Different Type of Revolving Credit Loan.....................20
-----------------------------------------------------
2.7.2. Continuation of Type of Revolving Credit Loan.............................21
---------------------------------------------
2.7.3. LIBOR Rate Loans..........................................................21
----------------
2.8. Funds for Revolving Credit Loan......................................................21
-------------------------------
2.8.1. Funding Procedures........................................................22
------------------
2.8.2. Advances by Agent.........................................................22
-----------------
2.9. Settlements..........................................................................22
-----------
2.9.1. General...................................................................22
-------
2.9.2. Failure to Make Funds Available...........................................23
-------------------------------
2.9.3. No Effect on Other Banks..................................................24
------------------------
2.10. Charge Against Borrower Account.....................................................24
-------------------------------
3. REPAYMENT OF THE REVOLVING CREDIT LOANS.........................................................24
---------------------------------------
3.1. Maturity.............................................................................24
--------
3.2. Mandatory Repayment of Revolving Credit Loans........................................25
---------------------------------------------
3.2.1. General...................................................................25
-------
3.2.2. Proceeds..................................................................25
--------
3.3. Optional Repayments of Revolving Credit Loans........................................25
---------------------------------------------
4. LETTERS OF CREDIT...............................................................................26
-----------------
4.1. Letter of Credit Commitments.........................................................26
----------------------------
4.1.1. Commitment to Issue Letters of Credit.....................................26
-------------------------------------
4.1.2. Letter of Credit Applications.............................................26
-----------------------------
4.1.3. Terms of Letters of Credit................................................26
--------------------------
4.1.4. Reimbursement Obligations of Banks........................................27
----------------------------------
4.1.5. Participations of Banks...................................................27
-----------------------
4.2. Reimbursement Obligation of the Borrower.............................................27
----------------------------------------
4.3. Letter of Credit Payments............................................................28
-------------------------
4.4. Obligations Absolute.................................................................28
--------------------
4.5. Reliance by Issuer...................................................................29
------------------
4.6. Letter of Credit Fee.................................................................29
--------------------
5. CERTAIN GENERAL PROVISIONS......................................................................30
--------------------------
5.1. Agent's Fee..........................................................................30
-----------
-ii-
5.2. Funds for Payments...................................................................30
------------------
5.2.1. Payments to Agent.........................................................30
-----------------
5.2.2. No Offset, etc............................................................30
---------------
5.3. Computations.........................................................................30
------------
5.4. Inability to Determine LIBOR Rate....................................................31
---------------------------------
5.5. Illegality...........................................................................31
----------
5.6. Additional Costs, etc................................................................31
---------------------
5.7. Capital Adequacy.....................................................................33
----------------
5.8. Certificate..........................................................................33
-----------
5.9. Indemnity............................................................................33
---------
5.10. Interest After Default; Late Fee....................................................34
--------------------------------
5.10.1. Overdue Amounts..........................................................34
---------------
5.10.2. Amounts Not Overdue......................................................34
-------------------
5.10.3. Late Fee.................................................................34
--------
6. GUARANTIES.....................................................................................34
-----------
7. REPRESENTATIONS AND WARRANTIES..................................................................34
------------------------------
7.1. Corporate Authority..................................................................34
-------------------
7.1.1. Incorporation; Good Standing..............................................34
----------------------------
7.1.2. Authorization.............................................................34
-------------
7.1.3. Enforceability............................................................35
--------------
7.2. Governmental Approvals...............................................................35
----------------------
7.3. Title to Properties; Leases..........................................................35
---------------------------
7.4. Financial Statements, Projections and Solvency.......................................35
----------------------------------------------
7.4.1. Fiscal Year...............................................................35
-----------
7.4.2. Financial Statements......................................................35
--------------------
7.4.3. Projections...............................................................36
-----------
7.4.4. Solvency..................................................................36
--------
7.5. No Material Changes, etc.............................................................36
------------------------
7.6. Franchises, Patents, Copyrights, etc.................................................36
------------------------------------
7.7. Litigation...........................................................................37
----------
7.8. No Materially Adverse Contracts, etc.................................................37
------------------------------------
7.9. Compliance with Other Instruments, Laws, etc.........................................37
--------------------------------------------
7.10. Tax Status..........................................................................37
----------
7.11. No Event of Default.................................................................38
-------------------
7.12. Holding Company and Investment Company Acts.........................................38
-------------------------------------------
7.13. Absence of Financing Statements, etc................................................38
------------------------------------
7.14. Certain Transactions................................................................38
--------------------
7.15. Employee Benefit Plans..............................................................38
----------------------
7.15.1. In General...............................................................38
----------
7.15.2. Terminability of Welfare Plans...........................................38
------------------------------
7.15.3. Guaranteed Pension Plans.................................................39
------------------------
7.15.4. Multiemployer Plans......................................................39
-------------------
7.16. Use of Proceeds.....................................................................39
---------------
7.16.1. General..................................................................39
-------
7.16.2. Regulations U and X......................................................40
-------------------
7.16.3. Ineligible Securities....................................................40
---------------------
7.17. Environmental Compliance............................................................40
------------------------
7.18. Subsidiaries, etc...................................................................41
-----------------
-iii-
7.19. Disclosure..........................................................................42
----------
8. AFFIRMATIVE COVENANTS OF THE BORROWER...........................................................42
-------------------------------------
8.1. Punctual Payment.....................................................................42
----------------
8.2. Maintenance of Office................................................................42
---------------------
8.3. Records and Accounts.................................................................42
--------------------
8.4. Financial Statements, Certificates and Information...................................42
--------------------------------------------------
8.5. Notices..............................................................................44
-------
8.5.1. Defaults..................................................................44
--------
8.5.2. Environmental Events......................................................44
--------------------
8.5.3. Notification of Certain Claims............................................44
------------------------------
8.5.4. Notice of Litigation and Judgments........................................45
----------------------------------
8.6. Corporate Existence; Maintenance of Properties.......................................45
----------------------------------------------
8.7. Insurance............................................................................45
---------
8.8. Taxes................................................................................46
-----
8.9. Inspection of Properties and Books, etc..............................................46
---------------------------------------
8.9.1. General...................................................................46
-------
8.9.2. Communications with Accountants...........................................46
-------------------------------
8.10. Compliance with Laws, Contracts, Licenses, and Permits..............................46
------------------------------------------------------
8.11. Employee Benefit Plans..............................................................47
----------------------
8.12. Use of Proceeds.....................................................................47
---------------
8.13. New Guarantors. The................................................................47
--------------
8.14. Additional Subsidiaries.............................................................47
-----------------------
8.15. Replacement Instruments.............................................................47
-----------------------
8.16. Further Assurances..................................................................47
------------------
8.17. Interest Rate Protection............................................................48
------------------------
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER......................................................48
------------------------------------------
9.1. Restrictions on Indebtedness.........................................................48
----------------------------
9.2. Restrictions on Liens................................................................49
---------------------
9.3. Restrictions on Investments..........................................................51
---------------------------
9.4. Restricted Payments..................................................................52
-------------------
9.5. Merger, Consolidation and Disposition of Assets......................................52
-----------------------------------------------
9.5.1. Mergers and Acquisitions..................................................52
------------------------
9.5.2. Disposition of Assets.....................................................53
---------------------
9.6. Sale and Leaseback...................................................................53
------------------
9.7. Compliance with Environmental Laws...................................................53
----------------------------------
9.8. Subordinated Debt....................................................................53
-----------------
9.9. Upstream Limitations.................................................................53
--------------------
9.10. Negative Pledges....................................................................54
----------------
9.11. Employee Benefit Plans..............................................................54
----------------------
9.12. Business Activities.................................................................54
-------------------
9.13. Fiscal Year.........................................................................54
-----------
9.14. Transactions with Affiliates........................................................55
----------------------------
9.15. Inconsistent Agreements.............................................................55
-----------------------
9.16. Modification of Documents and Charter Documents.....................................55
-----------------------------------------------
10. FINANCIAL COVENANTS OF THE BORROWER............................................................55
-----------------------------------
10.1. Leverage Ratio......................................................................55
--------------
10.2. Minimum EBITDA......................................................................55
--------------
10.3. Minimum Net Worth...................................................................56
-----------------
-iv-
10.4. Capital Expenditures................................................................56
--------------------
11. CLOSING CONDITIONS.............................................................................57
------------------
11.1. Loan Documents......................................................................57
--------------
11.2. Certified Copies of Charter Documents...............................................57
-------------------------------------
11.3. Corporate Action....................................................................57
----------------
11.4. Incumbency Certificate..............................................................57
----------------------
11.5. Information Certificates and UCC Search Results.....................................57
-----------------------------------------------
11.6. Certificates of Insurance...........................................................58
-------------------------
11.7. Solvency Certificate................................................................58
--------------------
11.8. Opinion of Counsel..................................................................58
------------------
11.9. Payment of Fees.....................................................................58
---------------
11.10. Compliance Certificate.............................................................58
----------------------
12. CONDITIONS TO ALL BORROWINGS...................................................................58
----------------------------
12.1. Representations True; No Event of Default...........................................58
-----------------------------------------
12.2. No Legal Impediment.................................................................59
-------------------
12.3. Governmental Regulation.............................................................59
-----------------------
12.4. Proceedings and Documents...........................................................59
-------------------------
13. EVENTS OF DEFAULT; ACCELERATION; ETC...........................................................59
------------------------------------
13.1. Events of Default and Acceleration..................................................59
----------------------------------
13.2. Termination of Commitments..........................................................63
--------------------------
13.3. Remedies............................................................................63
--------
14. SETOFF.........................................................................................63
------
15. THE AGENT......................................................................................64
---------
15.1. Authorization.......................................................................64
-------------
15.2. Employees and Agents................................................................65
--------------------
15.3. No Liability........................................................................65
------------
15.4. No Representations..................................................................65
------------------
15.4.1. General..................................................................65
-------
15.4.2. Closing Documentation, etc...............................................66
--------------------------
15.5. Payments............................................................................66
--------
15.5.1. Payments to Agent........................................................66
-----------------
15.5.2. Distribution by Agent....................................................66
---------------------
15.5.3. Delinquent Banks.........................................................66
----------------
15.6. Holders of Notes....................................................................67
----------------
15.7. Indemnity...........................................................................67
---------
15.8. Agent as Bank.......................................................................67
-------------
15.9. Resignation.........................................................................67
-----------
15.10. Notification of Defaults and Events of Default.....................................68
----------------------------------------------
16. EXPENSES AND INDEMNIFICATION...................................................................68
----------------------------
16.1. Expenses............................................................................68
--------
16.2. Indemnification.....................................................................69
---------------
16.3. Survival............................................................................69
--------
17. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION..................................................69
---------------------------------------------
17.1. Confidentiality.....................................................................69
---------------
17.2. Prior Notification..................................................................70
------------------
17.3. Other...............................................................................70
-----
18. SURVIVAL OF COVENANTS, ETC.....................................................................70
--------------------------
19. ASSIGNMENT AND PARTICIPATION...................................................................71
----------------------------
-v-
19.1. Conditions to Assignment by Banks...................................................71
---------------------------------
19.2. Certain Representations and Warranties; Limitations; Covenants......................71
--------------------------------------------------------------
19.3. Register............................................................................72
--------
19.4. New Notes...........................................................................73
---------
19.5. Participations......................................................................73
--------------
19.6. Disclosure..........................................................................73
----------
19.7. Assignee or Participant Affiliated with the Borrower................................74
----------------------------------------------------
19.8. Miscellaneous Assignment Provisions.................................................74
-----------------------------------
19.9. Assignment by Borrower..............................................................75
----------------------
20. NOTICES, ETC...................................................................................75
------------
21. GOVERNING LAW..................................................................................75
-------------
22. HEADINGS.......................................................................................76
--------
23. COUNTERPARTS...................................................................................76
------------
24. ENTIRE AGREEMENT, ETC..........................................................................76
---------------------
25. WAIVER OF JURY TRIAL...........................................................................76
--------------------
26. CONSENTS, AMENDMENTS, WAIVERS, ETC.............................................................77
----------------------------------
27. USURY..........................................................................................77
-----
28. SEVERABILITY...................................................................................78
------------
29. TRANSITIONAL ARRANGEMENTS......................................................................78
-------------------------
29.1. Prior Credit Agreement..............................................................78
----------------------
29.2. Return and Cancellation of Note.....................................................78
-------------------------------
29.3. Interest and Fees Under Prior Credit Agreement......................................78
----------------------------------------------
29.4. Addition of New Banks...............................................................78
---------------------
29.5. Revolving Credit Loans..............................................................79
--------- ------ -----
29.6. Existing Letter of Credit Instruments...............................................79
-------- ------ -- ------ -----------
Revolving Credit Commitment Percentage......................................................1
@@
-vi-
List of Schedules and Exhibits
SCHEDULES
---------
Schedule 1 Banks; Commitment
Schedule 1.1 Non-Consolidated Subsidiaries
Schedule 7.3 Title to Properties; Leases
Schedule 7.7 Litigation
Schedule 7.17 Environmental Compliance
Schedule 7.18(a) Subsidiaries, etc.
Schedule 7.18(b) Joint Ventures; Partnerships
Schedule 9.1 Existing Indebtedness
Schedule 9.2 Existing Liens
Schedule 9.3 Existing Investments
Schedule 9.5.2 Disposition of Assets
EXHIBITS
--------
Exhibit A Revolving Credit Note
Exhibit B Loan Request
Exhibit C Compliance Certificate
Exhibit D Information Certificate
Exhibit E Assignment and Acceptance
Exhibit F Intercompany Subordination Agreement
THIRD AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
--------------------------
This THIRD AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made as
of June 29, 2001, by and among IONICS, INCORPORATED (the "Borrower"), a
Massachusetts corporation having its principal place of business at 65 Grove
Street, Watertown, MA 02472, and FLEET NATIONAL BANK, a national banking
association and the other lending institutions listed on Schedule 1 and FLEET
NATIONAL BANK as agent for itself and such other lending institutions.
WHEREAS, pursuant to a Second Amended and Restated Credit Agreement,
dated as of July 28, 2000 (as amended and in effect from time to time, the
"Prior Credit Agreement"), among the Borrower, Fleet and the Agent, Fleet made
revolving credit loans and other extensions of credit to the Borrower; and
WHEREAS, the Borrower has requested among other things, to amend and
restate the Prior Credit Agreement on the terms and conditions set forth herein
and Fleet and the Agent are willing to amend and restate the Prior Credit
Agreement on the terms and conditions set forth herein;
NOW THEREFORE, the Borrower, Fleet and the Agent agree that on the
Closing Date the Prior Credit Agreement shall hereby be amended and restated in
its entirety and shall remain in full force and effect only as set forth herein.
1. DEFINITIONS AND RULES OF INTERPRETATION.
-------------------------------------------
1.1. Definitions. The following terms shall have the meanings set forth
in this ss.1 or elsewhere in the provisions of this Credit Agreement referred to
below:
Adjustment Date. The first day of the month immediately following the month
in which a Compliance Certificate is to be delivered by the Borrower pursuant
toss.8.4(c).
Affiliate. Any Person that would be considered to be an affiliate of
the Borrower under Rule 144(a) of the Rules and Regulations of the Securities
and Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.
Agent. Fleet National Bank, acting as agent for the Banks.
Agent's Head Office. The Agent's office located at 100 Federal Street,
Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
Agent's Special Counsel. Bingham Dana LLP or such other counsel as may be
approved by the Agent.
-2-
Applicable Margin. For each period commencing on an Adjustment Date
through the date immediately preceding the next Adjustment Date (each a "Rate
Adjustment Period"), the Applicable Margin shall be the applicable margin set
forth below with respect to the Leverage Ratio as determined for the period
ending on the fiscal quarter ended immediately preceding the applicable Rate
Adjustment Period.
----------- --------------------------------- -------------- ------------- ----------- -------------------
Letter
Prime LIBOR of
Rate Rate Credit Commitment
Level Leverage Ratio Loans Loans Fee Fee Rate
----------- --------------------------------- -------------- ------------- ----------- -------------------
----------- --------------------------------- -------------- ------------- ----------- -------------------
I Greater than or equal to 0.25% 2.00% 2.00% 0.375%
2.50:1.00
----------- --------------------------------- -------------- ------------- ----------- -------------------
----------- --------------------------------- -------------- ------------- ----------- -------------------
II Less than 2.50:1.00 but greater 0.25% 1.75% 1.75% 0.375%
than or equal to 2.00:1.00
----------- --------------------------------- -------------- ------------- ----------- -------------------
----------- --------------------------------- -------------- ------------- ----------- -------------------
III Less than 2.00:1.00 but greater 0.00% 1.50% 1.50% 0.250%
than or equal to 1.50:1.00
----------- --------------------------------- -------------- ------------- ----------- -------------------
----------- --------------------------------- -------------- ------------- ----------- -------------------
IV Less than 1.50:1.00 0.00% 1.25% 1.25% 0.250%
----------- --------------------------------- -------------- ------------- ----------- -------------------
Notwithstanding the foregoing, (a) until the delivery by the Borrower
to the Agent of the Compliance Certificate pursuant to ss.8.4(c) for the period
ending June 30, 2001, the Applicable Margin shall be the Applicable Margin set
forth above in Level I, and (b) if the Borrower fails to deliver any Compliance
Certificate pursuant to ss.8.4(c) hereof then, for the period commencing on the
next Adjustment Date to occur subsequent to such failure through the date
immediately following the date on which such Compliance Certificate is
delivered, the Applicable Margin shall be the highest Applicable Margin set
forth above.
Asset Sale. Any one of series of related transactions in which any
Person conveys, sells, transfers or otherwise disposes of, directly or
indirectly, any of its properties, business or assets (including the sale or
issuance of capital stock of any Subsidiary other than to the Borrower or any
Subsidiary) whether owned on the Closing Date or thereafter acquired.
Assignment and Acceptance. See 19.1.
-------------------------
Balance Sheet Date. December 31, 2000.
------------------
Bank Affiliate. (a) With respect to any Bank, (i) an Affiliate of such
Bank or (ii) any entity (whether a corporation, partnership, limited liability
company, trust or legal entity) that is engaged in making, purchasing, holding
or otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by such Bank or
an Affiliate of such Bank and (b) with respect to any Bank that is a fund which
-3-
invests in bank loans and similar extensions of credit, any other entity
(whether a corporation, partnership, limited liability company, trust or other
legal entity) that is a fund that invests in bank loans and similar extensions
of credit and is managed by the same investment advisor as such Bank or by an
Affiliate of such investment advisor.
Banks. Fleet and the other lending institutions listed on Schedule 1 hereto
and any other Person who becomes an assignee of any rights and obligations of a
Bank pursuant toss.19.
Borrower. As defined in the preamble hereto.
--------
Business Day. Any day other than a Saturday or Sunday on which banking
institutions in Boston, MA, are open for the transaction of banking business
and, in the case of LIBOR Rate Loans, also a day which is a LIBOR Business Day.
Capital Assets. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents,
copyrights, trademarks, franchises and good will); provided that Capital Assets
shall not include any item customarily charged directly to expense or
depreciated over a useful life of twelve (12) months or less in accordance with
generally accepted accounting principles.
Capital Expenditures. Amounts paid or Indebtedness incurred by the
Borrower or any of its Subsidiaries in connection with (a) the purchase or lease
by the Borrower or any of its Subsidiaries of Capital Assets that would be
required to be capitalized and shown on the balance sheet of such Person in
accordance with generally accepted accounting principles or (b) the lease of any
assets by the Borrower or any of its Subsidiaries as lessee under any Synthetic
Lease to the extent that such assets would have been Capital Assets had the
Synthetic Lease been treated for accounting purposes as a Capitalized Lease.
Capitalization Documents. Collectively, the formation documents (including,
without limitation, any certificate of incorporation and by-laws) of the
Borrower and its Subsidiaries.
Capitalized Leases. Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.
CERCLA. Seess.7.17(a).
------
Closing Date. The first date on which the conditions set forth in ss.12
have been satisfied and any Revolving Credit Loans are to be made or any Letter
of Credit is to be issued hereunder.
Code. The Internal Revenue Code of 1986.
----
Commitment. With respect to each Bank, the amount set forth on Schedule
1 hereto as the amount of such Bank's commitment to make Revolving Credit Loans
-4-
to, and to participate in the issuance, extension and renewal of Letters of
Credit for the account of, the Borrower, as the same may be reduced from time to
time; or if such commitment is terminated pursuant to the provisions hereof,
zero.
Commitment Fee. Seess.2.2.
--------------
Commitment Fee Rate. The applicable rate per annum set forth in the
chart contained in the definition of Applicable Margin under the heading
"Commitment Fee Rate".
Commitment Percentage. With respect to each Bank, the percentage set forth
on Schedule 1 hereto as such Bank's percentage of the aggregate Commitments of
all of the Banks.
Compliance Certificate. Seess.8.4(c).
----------------------
Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrower and its
Consolidated Subsidiaries, consolidated in accordance with generally accepted
accounting principles.
Consolidated Net Income (or Deficit). The consolidated net income (or
deficit) of the Borrower and its Subsidiaries, after deduction of all expenses,
taxes, and other proper charges, determined in accordance with generally
accepted accounting principles, after eliminating therefrom all extraordinary
nonrecurring items of income and non-cash loss.
Consolidated Net Worth. The excess of Consolidated Total Assets over
Consolidated Total Liabilities less, to the extent otherwise includable in the
computation of Consolidated Net Worth, any subscriptions receivable.
Consolidated Subsidiaries. Any Subsidiary other than those Subsidiaries
listed on Schedule 1.1.
Consolidated Total Assets. The sum of (a) all assets ("consolidated
balance sheet assets") of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with generally accepted accounting principles,
plus (b) without duplication, all assets leased by the Borrower or any
Subsidiary as lessee under any synthetic lease referred to in clause (f) of the
definition of the term "Indebtedness" to the extent that such assets would have
been consolidated balance sheet assets had the synthetic lease been treated for
accounting purposes as a Capitalized Lease, plus (c) without duplication, all
sold receivables referred to in clause (g) of the definition of the term
"Indebtedness" to the extent that such receivables would have been consolidated
balance sheet assets had they not been sold.
Consolidated Total Interest Expense. For any period, the aggregate
amount of interest required to be paid or accrued by the Borrower and its
Subsidiaries during such period on all Indebtedness of the Borrower and its
Subsidiaries outstanding during all or any part of such period, whether such
-5-
interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of any
Capitalized Lease, or any Synthetic Lease and including commitment fees, agency
fees, facility fees, balance deficiency fees and similar fees or expenses in
connection with the borrowing of money.
Consolidated Total Liabilities. All liabilities of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles and classified as such on the consolidated
balance sheet of the Borrower and its Subsidiaries and all other Indebtedness of
the Borrower and its Subsidiaries, whether or not so classified.
Conversion Request. A notice given by the Borrower to the Agent of the
Borrower's election to convert or continue a Loan in accordance withss.2.7.
Credit Agreement. This Third Amended and Restated Revolving Credit
Agreement, including the Schedules and Exhibits hereto.
Default. Seess.13.1.
-------
Delinquent Bank. Seess.15.5.3.
---------------
Distribution. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of the Borrower, other than
dividends payable solely in shares of common stock of the Borrower; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of the Borrower, directly or indirectly through a Subsidiary of the
Borrower or otherwise; the return of capital by the Borrower to its shareholders
as such; or any other distribution on or in respect of any shares of any class
of capital stock of the Borrower.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Bank designated
as such in Schedule 1 hereto; thereafter, such other office of such Bank, if
any, located within the United States that will be making or maintaining Prime
Rate Loans.
Drawdown Date. The date on which any Revolving Credit Loan is made or
is to be made, and the date on which any Revolving Credit Loan is converted or
continued in accordance with ss.2.7.
EBIT. With respect to any fiscal period, an amount equal to the sum of
(a) Consolidated Net Income (or Deficit) of the Borrower and its Subsidiaries
for such fiscal period, plus (b) in each case to the extent deducted in the
calculation of such Person's Consolidated Net Income and without duplication,
(i) income tax expense for such period, plus (ii) Consolidated Total Interest
Expense paid or accrued during such period, minus, (c) to the extent added in
computing Consolidated Net Income, and without duplication, all noncash gains
(including income tax benefits) for such period, all as determined in accordance
with generally accepted accounting principles.
-6-
EBITDA. With respect to any fiscal period, an amount equal to the sum
of (a) Consolidated Net Income of the Borrower and its Subsidiaries for such
fiscal period, plus (b) in each case to the extent deducted in the calculation
of such Person's Consolidated Net Income and without duplication, (i)
depreciation and amortization for such period, plus (ii) income tax expense for
such period, plus (iii) Consolidated Total Interest Expense paid or accrued
during such period, plus (iv) other noncash charges for such period, and minus,
to the extent added in computing Consolidated Net Income, and without
duplication, all noncash gains (including income tax benefits) for such period,
all as determined in accordance with generally accepted accounting principles.
Eligible Assignee. Any of (a) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (b) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (c) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, provided that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (d) the central
bank of any country which is a member of the OECD; and (e) if, but only if, any
Event of Default has occurred and is continuing, any other bank, insurance
company, commercial finance company or other financial institution or other
Person approved by the Agent, such approval not to be unreasonably withheld.
Employee Benefit Plan. Any employee benefit plan within the meaning of
ss.3(3) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.
Environmental Laws. Seess.7.17(a).
------------------
EPA. Seess.7.17(b).
---
Equity Issuance. The sale or issuance by the Borrower or any of its
Subsidiaries of any of its capital stock or equity interests or any warrants,
rights or options to acquire its capital stock or equity interests.
ERISA. The Employee Retirement Income Security Act of 1974.
-----
ERISA Affiliate. Any Person which is treated as a single employer with
the Borrower under ss.414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of ss.4043 of ERISA and the regulations
promulgated thereunder.
-7-
Eurocurrency Reserve Rate. For any day with respect to a LIBOR Rate
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Event of Default. Seess.13.1.
----------------
Fleet. Fleet National Bank, a national banking association, in its
individual capacity.
generally accepted accounting principles. (a) When used in ss.10,
whether directly or indirectly through reference to a capitalized term used
therein, means (i) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and
(ii) to the extent consistent with such principles, the accounting practice of
the Borrower reflected in its financial statements for the year ended on the
Balance Sheet Date, and (b) when used in general, other than as provided above,
means principles that are (i) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (ii) consistently applied with past financial
statements of the Borrower adopting the same principles, provided that in each
case referred to in this definition of "generally accepted accounting
principles" a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guarantors. Collectively, each domestic Subsidiary of the
Borrower (other than the Inactive Subsidiaries) existing on the Closing Date
and each other Person which is required to be or become a guarantor from time to
time pursuant to ss.8.13 hereof. Each such Person shall be a party to a
Guaranty.
Guaranty. Collectively, the Guaranty, dated as of July 28, 2000 and all
other Guaranties required pursuant to ss.8.13 made by each Guarantor in favor of
the Banks and the Agent pursuant to which each Guarantor guaranties to the Banks
and the Agent the payment and performance of the Obligations and in form and
substance satisfactory to the Banks and the Agent.
Hazardous Substances. Seess.7.17(b).
--------------------
-8-
Inactive Subsidiaries. Ionics Tampa Bay, Inc., a Florida corporation
and Springfield Elite Technologies, Inc., a Massachusetts corporation, so
long as such Subsidiaries do not engage in any business activities
whatsoever.
Indebtedness. As to any Person and whether recourse is secured by or is
otherwise available against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:
(a) every obligation of such Person for money borrowed,
(b) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
businesses,
(c) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person,
(d) every obligation of such Person issued or assumed
as the deferred purchase price of property or services (including
securities repurchase agreements but excluding trade accounts payable
or accrued liabilities arising in the ordinary course of business which
are not overdue or which are being contested in good faith),
(e) every obligation of such Person under any Capitalized Lease,
(f) every obligation of such Person under any lease (a "Synthetic
Lease") treated as an operating lease under generally accepted
accounting principles and as a loan or financing for U.S. income tax
purposes,
(g) all sales by such Person of (i) accounts or general
intangibles for money due or to become due, (ii) chattel paper,
instruments or documents creating or evidencing a right to payment of
money or (iii) other receivables (collectively "receivables"), whether
pursuant to a purchase facility or otherwise, other than in connection
with the disposition of the business operations of such Person
relating thereto or a disposition of defaulted receivables for
collection and not as a financing arrangement, and together with any
obligation of such Person to pay any discount, interest, fees,
indemnities, penalties, recourse, expenses or other amounts in
connection therewith,
(h) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for
value any shares of capital stock of any class issued by such Person,
any warrants, options or other rights to acquire any such shares, or
any rights measured by the value of such shares, warrants, options or
other rights,
(i) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing agreement
-9-
or arrangement (including, without limitation, caps, floors, collars
and similar agreements), the value of which is dependent upon interest
rates, currency exchange rates, commodities or other indices (a
"derivative contract"),
(j) every obligation in respect of Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent that such Person is liable therefor as a result of
such Person's ownership interest in or other relationship with such entity,
except to the extent that the terms of such Indebtedness provide that such
Person is not liable therefor and such terms are enforceable under
applicable law, and
(k) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of clauses
(a) through (j) (the "primary obligation") of another Person (the "primary
obligor"), in any manner, whether directly or indirectly, and including,
without limitation, any obligation of such Person (i) to purchase or pay
(or advance or supply funds for the purchase of) any security for the
payment of such primary obligation, (ii) to purchase property, securities
or services for the purpose of assuring the payment of such primary
obligation, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (v) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (w) any sale of receivables shall be the amount of unrecovered capital
or principal investment of the purchaser (other than the Borrower or any of its
wholly-owned Subsidiaries) thereof, excluding amounts representative of yield or
interest earned on such investment, (x) any Synthetic Lease shall be the
stipulated loss value, termination value or other equivalent amount, (y) any
derivative contract shall be the maximum amount of any termination or loss
payment required to be paid by such Person if such derivative contract were, at
the time of determination, to be terminated by reason of any event of default or
early termination event thereunder, whether or not such event of default or
early termination event has in fact occurred and (z) any equity related purchase
obligation shall be the maximum fixed redemption or purchase price thereof
inclusive of any accrued and unpaid dividends to be comprised in such redemption
or purchase price.
Ineligible Securities. Securities which may not be underwritten or dealt in
by member banks of the Federal Reserve System under Section 16 of the Banking
Act of 1933 (12 U.S.C.ss.24, Seventh), as amended.
-10-
Information Certificates. The Information Certificates, substantially in
the form of Exhibit D hereto.
Intercompany Subordination Agreement. The Intercompany Subordination
Agreement, dated as of July 28, 2000, among the Guarantors, the Borrower and the
Agent.
Interest Payment Date. (a) As to any Prime Rate Loan, the last day of
the calendar month with respect to interest accrued during such calendar month,
including, without limitation, the calendar month which includes the Drawdown
Date of such Prime Rate Loan; and (b) as to any LIBOR Rate Loan in respect of
which the Interest Period is (i) three (3) months or less, the last day of such
Interest Period and (ii) more than three (3) months, the date that is three (3)
months from the first day of such Interest Period and, in addition, the last day
of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan, (a)
initially, the period commencing on the Drawdown Date of such Loan and ending on
the last day of one of the periods set forth below, as selected by the Borrower
in a Loan Request or as otherwise required by the terms of this Credit Agreement
(i) for any Prime Rate Loan, the last day of the calendar month; and (ii) for
any LIBOR Rate Loan, 1, 2, 3 or 6 months; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Revolving Credit Loan and ending on the last day of one of the periods set
forth above, as selected by the Borrower in a Conversion Request; provided that
all of the foregoing provisions relating to Interest Periods are subject to the
following:
(i) if any Interest Period with respect to a LIBOR Rate
Loan would otherwise end on a day that is not a LIBOR Business Day,
that Interest Period shall be extended to the next succeeding LIBOR
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding LIBOR Business
Day;
(ii) if any Interest Period with respect to a Prime Rate
Loan would end on a day that is not a Business Day, that Interest
Period shall end on the next succeeding Business Day;
(iii)if the Borrower shall fail to give notice as
provided in ss.2.7, the Borrower shall be deemed to have requested a
conversion of the affected LIBOR Rate Loan to a Prime Rate Loan and the
continuance of all Prime Rate Loans as Prime Rate Loans on the last day
of the then current Interest Period with respect thereto;
(iv) any Interest Period relating to any LIBOR Rate Loan
that begins on the last LIBOR Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar
-11-
month at the end of such Interest Period) shall end on the last LIBOR
Business Day of a calendar month; and
(v) any Interest Period that would otherwise extend
beyond the Revolving Credit Loan Maturity Date shall end on the
Revolving Credit Loan Maturity Date.
International Standby Practices. With respect to any standby Letter of
Credit, International Standby Practices (ISP98), International Chamber of
Commerce Publication No. 590, or any successor code of standby letter of credit
practices among banks adopted by the Agent in the ordinary course of its
business as a standby letter of credit issuer and in effect at the time of
issuance of such Letter of Credit.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (d) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
Letter of Credit. Seess.4.1.1.
----------------
Letter of Credit Application. Seess.4.1.1.
----------------------------
Letter of Credit Fee. Seess.4.6.
--------------------
Letter of Credit Participation. Seess.4.1.4.
------------------------------
Leverage Ratio. ___ As of any date of determination, the ratio of (a)
Total Funded Indebtedness of the Borrower and its Subsidiaries outstanding on
such date to (b) the EBITDA of the Borrower and its Subsidiaries for the
Reference Period ended on such date.
LIBOR Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other LIBOR interbank market as may be selected by the Agent in its sole
discretion acting in good faith.
-12-
LIBOR Lending Office. Initially, the office of each Bank designated as
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
that shall be making or maintaining LIBOR Rate Loans.
LIBOR Rate. For any Interest Period with respect to a LIBOR Rate Loan,
the rate of interest equal to (i) the rate determined by the Agent at which
Dollar deposits for such Interest Period are offered based on information
presented on Telerate Page 3750 as of 11:00 a.m. London time on the second LIBOR
Business Day prior to the first day of such Interest Period divided by (ii) a
number equal to 1.00 minus the Eurocurrency Reserve Rate, if applicable.
LIBOR Rate Loans. Revolving Credit Loans bearing interest calculated by
reference to the LIBOR Rate.
Loan Documents. This Credit Agreement, the Notes, the Guaranty, the
Intercompany Subordination Agreement, the Letter of Credit Applications and the
Letters of Credit.
Loan Request. Seess.2.6.
------------
Majority Banks. As of any date, two or more Banks holding at least
fifty-one percent (51%) of the outstanding principal amount of the Notes on such
date; and if no such principal is outstanding, two or more Banks whose aggregate
Commitments constitute at least fifty-one percent (51%) of the Total Commitment.
Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
Multiemployer Plan. Any multiemployer plan within the meaning ofss.3(37) of
ERISA maintained or contributed to by the Borrower or any ERISA Affiliate.
Net Cash Proceeds. With respect to any Equity Issuances, the excess of
the gross cash proceeds received by such Person for such Equity Issuance after
deduction of all reasonable and customary transaction expenses (including
without limitation, underwriting discounts and commissions) actually incurred in
connection with such a sale or other issuance.
Net Cash Sale Proceeds. The net cash proceeds received by a Person in
respect of any Asset Sale, less the sum of (a) all reasonable out-of-pocket
fees, commissions and other reasonably and customary expenses actually incurred
in connection with such Asset Sale, including the amount of income, franchise,
sales and other applicable taxes required to be paid by such Person in
connection with such Asset Sale, and (b) the aggregate amount of cash so
received by such Person which is required to be used to retire (in whole or in
part) any Indebtedness (other than under the Loan Documents) of such Person
permitted by this Credit Agreement that was secured by a lien or security
interest permitted by this Credit Agreement having priority over the liens and
-13-
security interests (if any) of the Agent (for the benefit of the Agent and the
Banks) with respect to such assets transferred and which is required to be
repaid in whole or in part (which repayment, in the case of any other revolving
credit arrangement or multiple advance arrangement, reduces the commitment
thereunder) in connection with such Asset Sale.
Obligations. All indebtedness, obligations and liabilities of any of
the Borrower and its Subsidiaries to any of the Banks and the Agent,
individually or collectively, existing on the date of this Credit Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Credit Agreement or any of the other Loan Documents or in
respect of any of the Revolving Credit Loans made or Reimbursement Obligations
incurred or any of the Revolving Credit Notes, Letters of Credit Application,
Letters of Credit, any foreign exchange contracts between the Borrower and any
Bank, any interest rate protection arrangements between Borrower and any Bank,
any other financial accommodations provided by any Bank to the Borrower under or
in any manner related to or associated with any of the foregoing or other
instruments at any time evidencing any thereof.
Operating Accounting. Seess.2.6.2.
--------------------
outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created byss.4002 of ERISA
and any successor entity or entities having similar responsibilities.
Permitted Acquisitions. Any acquisition by the Borrower, or any of its
domestic Subsidiaries of a material portion of the assets, a division or line of
business or capital stock of a Person, provided (a) such assets or capital stock
are related to the business of the Borrower or such Subsidiary, (b) no Default
or Event of Default exists prior to or immediately after such acquisition, (c)
the terms of such acquisition are on an arms length basis, (d) if as a result of
such acquisition a new domestic Subsidiary is acquired or formed, ss.8.14 is
complied with at the time of consummation of such acquisition (or concurrently
therewith), (e) if the purchase price for such acquisition or the aggregate
purchase price for all acquisitions made during any fiscal year shall exceed
$5,000,000 during such fiscal year, the Borrower has demonstrated to the
reasonable satisfaction of the Agent and the Majority Banks, set forth in a pro
forma Compliance Certificate, compliance with ss.10 on a pro forma basis
immediately prior to and after giving effect to any such acquisition, the
calculation of which shall be based upon the financial statements delivered for
the twelve (12) calendar month period immediately preceding such acquisition,
(f) the board of directors and (if required by applicable law) the shareholders,
or the equivalent thereof, of the business to be acquired has approved such
acquisition, (g) if such acquisition is made by a merger, the Borrower or the
applicable Subsidiary as the case may be, shall be the surviving entity, and (h)
if the purchase price for such acquisition or the aggregate purchase price for
all acquisitions made during any fiscal year shall exceed $5,000,000 during such
-14-
fiscal year, all other terms and conditions of, and documentation for, such
acquisition are reasonably satisfactory to the Agent and the Banks.
Permitted Liens. Liens, security interests and other encumbrances permitted
byss.9.2.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Prime Rate. The higher of (i) the annual rate of interest announced
from time to time by Fleet at its head office in Boston, MA, as its "prime rate"
or "base rate" and (ii) one-half of one percent (1/2%) above the Federal Funds
Effective Rate. For the purposes of this definition, "Federal Funds Effective
Rate" shall mean for any day, the rate per annum equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three funds brokers of recognized
standing selected by the Agent. In addition, the Prime Rate is a reference rate
and does not necessarily represent the lowest or best rate charged to any
customer. Changes in the rate of interest resulting from any changes in the
"Prime Rate" shall take place immediately without notice or demand of any kind.
Prime Rate Loans. Revolving Credit Loans bearing interest calculated by
reference to the Prime Rate.
Rate Adjustment Period. See definition of Applicable Margin.
----------------------
RCRA. Seess.7.17(a).
----
Real Estate. All real property at any time owned or leased (as lessee or
sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Revolving Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by any Bank with respect to any Revolving Credit Loan
referred to in such Revolving Credit Note.
Reference Bank. Fleet.
--------------
Reference Period. The period of four (4) consecutive fiscal quarters of the
Borrower ending on the relevant date.
Register. Seess.19.3.
--------
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Reimbursement Obligation. The Borrower's obligation to reimburse the Agent
and the Banks on account of any drawing under any Letter of Credit as provided
inss.4.2.
Restricted Payment. In relation to the Borrower and its Subsidiaries,
any (a) Distribution or (b) payment or prepayment by the Borrower or its
Subsidiaries to the Borrower's or any Subsidiary's shareholders (or other equity
holders) or to any Affiliate of the Borrower or any Subsidiary or any Affiliate
of the Borrower's or such Subsidiary's shareholders.
Revolving Credit Loan Maturity Date. December 31, 2004.
-----------------------------------
Revolving Credit Loans. Revolving credit loans made or to be made by the
Banks to the Borrower pursuant to ss.2.
Revolving Credit Notes. See ss.2.4; provided, however, the Revolving
Credit Note issued by the Borrower to Fleet on the Closing Date, shall be the
Eighth Amended and Restated Revolving Credit Note.
SARA. Seess.7.17(a).
----
Section 20 Subsidiary. A Subsidiary of the bank holding company
controlling any Bank, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.
Settlement. The making or receiving of payments, in immediately
available funds, by the Banks, to the extent necessary to cause each Bank's
actual share of the outstanding amount of Revolving Credit Loans (after giving
effect to any Loan Request) to be equal to such Bank's Commitment Percentage of
the outstanding amount of such Revolving Credit Loans (after giving effect to
any Loan Request), in any case where, prior to such event or action, the actual
share is not so equal.
Settlement Amount. Seess.2.9.1.
-----------------
Settlement Date. (a) The Drawdown Date relating to any Loan Request,
(b) at the option of the Agent, on any Business Day immediately following the
Drawdown Date relating to any Swing Line Loans, (c) at the option of the Agent,
on any Business Day following a day on which the account officers of the Agent
active upon the Borrower's account become aware of the existence of an Event of
Default, (d) any Business Day on which the amount of Revolving Credit Loans
outstanding from Fleet plus Fleet's Commitment Percentage of the sum of the
Maximum Drawing Amount and any Unpaid Reimbursement Obligations is equal to or
greater than Fleet's Commitment Percentage of the Total Revolving Commitment,
(e) any day on which any conversion of a Prime Rate Loan to a LIBOR Rate Loan
occurs, (f) any Business Day on which (i) the amount of outstanding Revolving
Credit Loans decreases and (ii) the amount of the Agent's Revolving Credit Loans
outstanding equals zero Dollars ($0), or (g) any Business Day on which the
aggregate amount of outstanding Swing Line Loans exceeds $5,000,000.
-16-
Settling Bank. Seess.2.9.1.
-------------
Subordinated Debt. Unsecured Indebtedness of the Borrower or any of its
Subsidiaries that is expressly subordinated and made junior to the payment and
performance in full of the Obligations, and evidenced as such by the
Intercompany ___ Subordination Agreement and otherwise by a written instrument
containing subordination provisions in form and substance approved by the Banks
in writing.
Subsidiary. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
Swing Line Loans. Seess.2.6.2.
----------------
Synthetic Lease. As defined in paragraph (f) of the definition of
"Indebtedness".
Total Commitment. The sum of the Commitments of the Banks, as in effect
from time to time.
Total Funded Indebtedness. At anytime of determination, all funded
Indebtedness of the Borrower and its Subsidiaries, including, without limitation
the sum of (a) the aggregate outstanding amount of the Revolving Credit Loans,
(b) the Maximum Drawing Amount, the maximum amount which the beneficiary of any
other letters of credit issued for the account of the Borrower or any of its
Subsidiaries may draw under such letters of credit, (c) the aggregate
outstanding amount of all Subordinated Debt and (c) all other Indebtedness for
borrowed money, purchase money Indebtedness and with respect to Capitalized
Leases and Synthetic Leases, determined on a consolidated basis in accordance
with generally accepted accounting principles. For purposes of clarification,
Total Funded Indebtedness shall not include surety or other performance bonds.
Type. As to any Revolving Credit Loan, its nature as a Prime Rate Loan, or
a LIBOR Rate Loan.
Uniform Customs. With respect to any Letter of Credit, the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 or any successor version thereto adopted
by the Agent in the ordinary course of its business as a letter of credit issuer
and in effect at the time of issuance of such Letter of Credit.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which the
Borrower does not reimburse the Agent and the Banks on the date specified in,
and in accordance with,ss.4.2.
Voting Stock. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
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performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the singular.
(c) A reference to any law includes any amendment or modification to such
law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have the
meanings assigned to them therein, with the term "instrument" being that defined
under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "ss." refers to that section of this Credit
Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Credit Agreement as a whole and not to any particular
section or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including," the words "to" and "until" each mean "to but
excluding," and the word "through" means "to and including."
(k) This Credit Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are, however,
cumulative and are to be performed in accordance with the terms thereof.
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(l) This Credit Agreement and the other Loan Documents are the
result of negotiation among, and have been reviewed by counsel to, among others,
the Agent and the Borrower and are the product of discussions and negotiations
among all parties. Accordingly, this Credit Agreement and the other Loan
Documents are not intended to be construed against the Agent or any of the Banks
merely on account of the Agent's or any Bank's involvement in the preparation of
such documents.
2. THE REVOLVING CREDIT FACILITY.
2.1. Commitment to Lend. Subject to the terms and conditions set forth
in this Credit Agreement, each of the Banks severally agrees to lend to the
Borrower and the Borrower may borrow, repay, and reborrow from time to time from
the Closing Date up to but not including the Revolving Credit Loan Maturity Date
upon notice by the Borrower to the Agent given in accordance with ss.2.6, such
sums in Dollars as are requested by the Borrower up to a maximum aggregate
amount outstanding (after giving effect to all amounts requested) at any one
time equal to such Bank's Commitment minus such Bank's Commitment Percentage of
the sum of the Maximum Drawing Amount and all Unpaid Reimbursement Obligations,
provided that the sum of the outstanding amount of the Revolving Credit Loans
(after giving effect to all amounts requested) plus the Maximum Drawing Amount
and all Unpaid Reimbursement Obligations shall not at any time exceed the Total
Commitment. The Revolving Credit Loans shall be made pro rata in accordance with
each Bank's Commitment Percentage. Each request for a Revolving Credit Loan
hereunder shall constitute a representation and warranty by the Borrower that
the conditions set forth in ss.11 and ss.12, in the case of the initial
Revolving Credit Loans to be made on the Closing Date, and ss.12, in the case of
all other Revolving Credit Loans, have been satisfied on the date of such
request.
2.2. Commitment Fee. The Borrower agrees to pay to the Agent for the
accounts of the Banks in accordance with their respective Commitment Percentages
a commitment fee (the "Commitment Fee") calculated at the rate of Commitment Fee
Rate per annum on the average daily amount during each calendar quarter or
portion thereof from the date hereof to the Revolving Credit Loan Maturity Date
by which the Total Commitment minus the sum of the Maximum Drawing Amount and
all Unpaid Reimbursement Obligations exceeds the outstanding amount of Revolving
Credit Loans during such calendar quarter. The Commitment Fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter commencing on the first such date
following the date hereof, with a final payment on the Revolving Credit Loan
Maturity Date or any earlier date on which the Commitments shall terminate.
2.3. Reduction of Total Commitment. In addition the Borrower shall have
the right at any time and from time to time upon three (3) Business Days prior
written notice to the Agent to reduce by $100,000 or an integral multiple
thereof or terminate entirely the Total Commitment, whereupon the Commitments of
the Banks shall be reduced pro rata in accordance with their respective
Commitment Percentages of the amount specified in such notice or, as the case
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may be, terminated. Promptly after receiving any notice of the Borrower
delivered pursuant to this ss.2.3, the Agent will notify the Banks of the
substance thereof. Upon the effective date of any such reduction or termination,
the Borrower shall pay to the Agent for the respective accounts of the Banks the
full amount (i) of any Commitment Fee then accrued on the amount of the
reduction and (ii) necessary to comply with the borrowing limitations set forth
in ss.2.1. No reduction or termination of the Commitments may be reinstated.
2.4. The Revolving Credit Notes. The Revolving Credit Loans shall be
evidenced by separate promissory notes of the Borrower in substantially the form
of Exhibit A hereto (each a "Revolving Credit Note"), dated as of the Closing
Date and completed with appropriate insertions. One Revolving Credit Note shall
be payable to the order of each Bank in a principal amount equal to such Bank's
Commitment or, if less, the outstanding amount of all Revolving Credit Loans
made by such Bank, plus interest accrued thereon, as set forth below. The
Borrower irrevocably authorizes each Bank to make or cause to be made, at or
about the time of the Drawdown Date of any Revolving Credit Loan or at the time
of receipt of any payment of principal on such Bank's Revolving Credit Note, an
appropriate notation on such Bank's Record reflecting the making of such
Revolving Credit Loan or (as the case may be) the receipt of such payment. The
outstanding amount of the Revolving Credit Loans set forth on such Bank's Record
shall be prima facie evidence of the principal amount thereof owing and unpaid
to such Bank, but the failure to record, or any error in so recording, any such
amount on such Bank's Record shall not limit or otherwise affect the obligations
of the Borrower hereunder or under any Revolving Credit Note to make payments of
principal of or interest on any Revolving Credit Note when due.
2.5. Interest on Revolving Credit Loans. Except as otherwise provided
inss.5.11,
(a) Each Prime Rate Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the last
day of the Interest Period with respect thereto at the rate per annum
equal to the Prime Rate plus the Applicable Margin.
(b) Each LIBOR Rate Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the last
day of the Interest Period with respect thereto at the rate per annum
equal to the LIBOR Rate determined for such Interest Period plus the
Applicable Margin.
(c) The Borrower promises to pay interest on each
Revolving Credit Loan in arrears on each Interest Payment Date with
respect thereto.
2.6. Requests for Revolving Credit Loans.
2.6.1. General. The Borrower shall give to the Agent written
notice in the form of Exhibit B hereto (or telephonic notice confirmed
in a writing in the form of Exhibit B hereto) of each Revolving Credit
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Loan requested hereunder (a "Loan Request") by no later than 11:00 a.m.
(Boston time) and no less than (a) one (1) Business Day prior to the
proposed Drawdown Date of any Prime Rate Loan and (b) three (3) LIBOR
Business Days prior to the proposed Drawdown Date of any LIBOR Rate
Loan. Each such notice shall specify (i) the principal amount of the
Revolving Credit Loan requested, (ii) the proposed Drawdown Date of
such Revolving Credit Loan, (iii) the Interest Period for any LIBOR
Rate Loan and (iv) the Type of such Revolving Credit Loan. Promptly
upon receipt of any such notice, the Agent shall notify each of the
Banks thereof. Each Loan Request shall be irrevocable and binding on
the Borrower and shall obligate the Borrower to accept the Revolving
Credit Loan requested from the Banks on the proposed Drawdown Date.
Each Loan Request shall be in a minimum aggregate amount of $250,000 or
a whole multiple of $100,000 in excess thereof.
2.6.2. Swing Line. Notwithstanding the notice and minimum
amount requirements set forth in ss.2.6.1 but otherwise in accordance
with the terms and conditions of this Credit Agreement, the Agent may,
in its sole discretion and without conferring with the Banks, but
subject to the satisfaction of the conditions precedent set forth in
ss.12, make Revolving Credit Loans to the Borrower (a) by entry of
credits to the Borrower's operating account (the "Operating Account")
with the Agent to cover checks or other charges which the Borrower has
drawn or made against such account or (b) in an amount as otherwise
requested by the Borrower ("Swing Line Loans"). The Borrower hereby
requests and authorizes the Agent to make from time to time Swing Line
Loans by means of appropriate entries of such credits sufficient to
cover checks and other charges then presented for payment from the
Operating Account or as otherwise so requested. Except as set forth in
the first sentence of this ss.2.6.2, the Borrower acknowledges and
agrees that the making of Swing Line Loans shall, in each case, be
subject in all respects to the provisions of this Credit Agreement as
if they were Revolving Credit Loans covered by a Loan Request
including, without limitation, the limitations set forth in ss.2.1 and
the requirements that the applicable provisions of ss.11 (in the case
of Revolving Credit Loans made on the Closing Date) and ss.12 be
satisfied and that outstanding Swing Line Loans prior to a Settlement
shall not exceed $5,000,000 in the aggregate at any time. All actions
taken by the Agent pursuant to the provisions of this ss.2.6.2 shall be
conclusive and binding on the Borrower and the Banks absent the Agent's
gross negligence or willful misconduct. Swing Line Loans shall be Prime
Rate Loans and, prior to a Settlement, such interest shall be for the
account of the Agent. Swing Line Loans requested (a) prior to 2 p.m.
(Boston time) on any Business Day shall be made on the date requested
and (b) after 2 p.m. (Boston time) on any Business Day shall be made on
the following Business Day.
2.7. Conversion Options.
2.7.1. Conversion to Different Type of Revolving Credit Loan.
The Borrower may elect from time to time to convert any outstanding
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Revolving Credit Loan to a Revolving Credit Loan of another Type,
provided that (a) with respect to any such conversion of a Revolving
Credit Loan to a Prime Rate Loan, the Borrower shall give the Agent at
least one (1) Business Day prior written notice of such election; (b)
with respect to any such conversion of a Prime Rate Loan to a LIBOR
Rate Loan, the Borrower shall give the Agent by no later than 11:00
a.m. (Boston time) and at least three (3) LIBOR Business Days prior
written notice of such election; (c) with respect to any such
conversion of a LIBOR Rate Loan into a Prime Rate Loan, such conversion
shall only be made on the last day of the Interest Period with respect
thereto; and (d) no Revolving Credit Loan may be converted into a LIBOR
Rate Loan when any Default or Event of Default has occurred and is
continuing. On the date on which such conversion is being made each
Bank shall take such action as is necessary to transfer its Commitment
Percentage of such Revolving Credit Loans to its Domestic Lending
Office or its LIBOR Lending Office, as the case may be. All or any part
of outstanding Revolving Credit Loans of any Type may be converted into
a Revolving Credit Loan of another Type as provided herein, provided
that any partial conversion shall be in an aggregate principal amount
of $100,000 or a whole multiple thereof. Each Conversion Request
relating to the conversion of a Revolving Credit Loan to a LIBOR Rate
Loan shall be irrevocable by the Borrower.
2.7.2. Continuation of Type of Revolving Credit Loan. Any
Revolving Credit Loan of any Type may be continued as a Revolving
Credit Loan of the same Type upon the expiration of an Interest Period
with respect thereto by compliance by the Borrower with the notice
provisions contained in ss.2.7.1; provided that no LIBOR Rate Loan may
be continued as such when any Default or Event of Default has occurred
and is continuing, but shall be automatically converted to a Prime Rate
Loan on the last day of the first Interest Period relating thereto
ending during the continuance of any Default or Event of Default of
which officers of the Agent active upon the Borrower's account have
actual knowledge. In the event that the Borrower fails to provide any
such notice with respect to the continuation of any LIBOR Rate Loan as
such, then such LIBOR Rate Loan shall be automatically converted to a
Prime Rate Loan on the last day of the first Interest Period relating
thereto. The Agent shall notify the Banks promptly when any such
automatic conversion contemplated by this ss.2.7 is scheduled to occur.
2.7.3. LIBOR Rate Loans. Any conversion to or from LIBOR Rate
Loans shall be in such amounts and be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal amount of
all LIBOR Rate Loans having the same Interest Period shall not be less
than $250,000 or a whole multiple of $100,000 in excess thereof. No
more than seven (7) LIBOR Rate Loans having different Interest Periods
may be outstanding at any time.
2.8. Funds for Revolving Credit Loan.
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2.8.1. Funding Procedures. Not later than 11:00 a.m. (Boston
time) on the proposed Drawdown Date of any Revolving Credit Loans, each
of the Banks will make available to the Agent, at the Agent's Head
Office, in immediately available funds, the amount of such Bank's
Commitment Percentage of the amount of the requested Revolving Credit
Loans. Upon receipt from each Bank of such amount, and upon receipt of
the documents required by ss.ss.11 and 12 and the satisfaction of the
other conditions set forth therein, to the extent applicable, the Agent
will make available to the Borrower the aggregate amount of such
Revolving Credit Loans made available to the Agent by the Banks. The
failure or refusal of any Bank to make available to the Agent at the
aforesaid time and place on any Drawdown Date the amount of its
Commitment Percentage of the requested Revolving Credit Loans shall not
relieve any other Bank from its several obligation hereunder to make
available to the Agent the amount of such other Bank's Commitment
Percentage of any requested Revolving Credit Loans.
2.8.2. Advances by Agent. The Agent may, unless notified to
the contrary by any Bank prior to a Drawdown Date, assume that such
Bank has made available to the Agent on such Drawdown Date the amount
of such Bank's Commitment Percentage of the Revolving Credit Loans to
be made on such Drawdown Date, and the Agent may (but it shall not be
required to), in reliance upon such assumption, make available to the
Borrower a corresponding amount. If any Bank makes available to the
Agent such amount on a date after such Drawdown Date, such Bank shall
pay to the Agent on demand an amount equal to the product of (a) the
average computed for the period referred to in clause (c) below, of the
weighted average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period, times
(b) the amount of such Bank's Commitment Percentage of such Revolving
Credit Loans, times (c) a fraction, the numerator of which is the
number of days that elapse from and including such Drawdown Date to the
date on which the amount of such Bank's Commitment Percentage of such
Revolving Credit Loans shall become immediately available to the Agent,
and the denominator of which is 365. A statement of the Agent submitted
to such Bank with respect to any amounts owing under this paragraph
shall be prima facie evidence of the amount due and owing to the Agent
by such Bank. If the amount of such Bank's Commitment Percentage of
such Revolving Credit Loans is not made available to the Agent by such
Bank within three (3) Business Days following such Drawdown Date, the
Agent shall be entitled to recover such amount from the Borrower on
demand, with interest thereon at the rate per annum applicable to the
Revolving Credit Loans made on such Drawdown Date.
2.9. Settlements.
2.9.1. General. On each Settlement Date, the Agent shall, not
later than 11:00 a.m. (Boston time), give telephonic or facsimile
notice (a) to the Banks and the Borrower of the respective outstanding
amount of the Swing Line Loans made by the Agent on behalf of the Banks
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from the immediately preceding Settlement Date through the close of
business on the prior day and the amount of any LIBOR Rate Loans to be
made (following the giving of notice pursuant to ss.2.6.1(b)) on such
date pursuant to a Loan Request and (b) to the Banks of the amount (a
"Settlement Amount") that each Bank (a "Settling Bank") shall pay to
effect a Settlement of any Swing Line Loans. A statement of the Agent
submitted to the Banks and the Borrower or to the Banks with respect to
any amounts owing under this ss.2.9 shall be prima facie evidence of
the amount due and owing. Each Settling Bank shall, not later than 3:00
p.m. (Boston time) on such Settlement Date, effect a wire transfer of
immediately available funds to the Agent in the amount of the
Settlement Amount for such Settling Bank. All funds advanced by any
Bank as a Settling Bank pursuant to this ss.2.9 shall for all purposes
be treated as a Revolving Credit Loan made by such Settling Bank to the
Borrower and all funds received by any Bank pursuant to this ss.2.9
shall for all purposes be treated as repayment of amounts owed with
respect to Revolving Credit Loans made by such Bank. In the event that
any bankruptcy, reorganization, liquidation, receivership or similar
cases or proceedings in which the Borrower is a debtor prevent a
Settling Bank from making any Revolving Credit Loan to effect a
Settlement as contemplated hereby, such Settling Bank will make such
dispositions and arrangements with the other Banks with respect to such
Revolving Credit Loans, either by way of purchase of participations,
distribution, pro tanto assignment of claims, subrogation or otherwise
as shall result in each Bank's share of the outstanding Revolving
Credit Loans being equal, as nearly as may be, to such Bank's
Commitment Percentage of the outstanding amount of the Revolving Credit
Loans.
2.9.2. Failure to Make Funds Available. The Agent may, unless
notified to the contrary by any Settling Bank prior to a Settlement
Date, assume that such Settling Bank has made or will make available to
the Agent on such Settlement Date the amount of such Settling Bank's
Settlement Amount, and the Agent may (but it shall not be required to),
in reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Settling Bank makes available to the Agent
such amount on a date after such Settlement Date, such Settling Bank
shall pay to the Agent on demand an amount equal to the product of (a)
the average computed for the period referred to in clause (c) below, of
the weighted average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period, times
(b) the amount of such Settlement Amount, times (c) a fraction, the
numerator of which is the number of days that elapse from and including
such Settlement Date to the date on which the amount of such Settlement
Amount shall become immediately available to the Agent, and the
denominator of which is 360. A statement of the Agent submitted to such
Settling Bank with respect to any amounts owing under this ss.2.9.2
shall be prima facie evidence of the amount due and owing to the Agent
by such Settling Bank. If such Settling Bank's Settlement Amount is not
made available to the Agent by such Settling Bank within three (3)
Business Days following such Settlement Date, the Agent shall be
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entitled to recover such amount from the Borrower on demand, with
interest thereon at the rate per annum applicable to the Revolving
Credit Loans as of such Settlement Date.
2.9.3. No Effect on Other Banks. The failure or refusal of any
Settling Bank to make available to the Agent at the aforesaid time and
place on any Settlement Date the amount of such Settling Bank's
Settlement Amount shall not (a) relieve any other Settling Bank from
its several obligations hereunder to make available to the Agent the
amount of such other Settling Bank's Settlement Amount or (b) impose
upon any Bank, other than the Settling Bank so failing or refusing, any
liability with respect to such failure or refusal or otherwise increase
the Commitment of such other Bank.
2.10. Charge Against Borrower Account. The Borrower hereby authorizes
the Agent to charge any account (other than the Borrower's payroll accounts)
maintained with the Agent (up to the amount available therein) in order to
immediately pay the Agent the amount of any Swing Line Loans to the extent the
Settlement Amount received from a Settling Bank for such Swing Line Loans is not
sufficient to repay in full the outstanding Swing Line Loans, provided that,
prior to charging any other account maintained with the Agent, if there is
availability under the Total Commitment to repay such Swing Line Loans,
notwithstanding the notice or minimum requirements set forth in ss.2.6.1, the
Agent shall, and the Borrower hereby requests and authorizes the Agent to, make
Revolving Credit Loans pursuant to ss.2.6.1 to the Borrower sufficient to pay to
the Agent any Settlement Amount not made available to the Agent by any Settling
Bank at the aforesaid time and place on the applicable Settlement Date. The
Borrower acknowledges and agrees that the making of Swing Line Loans in
accordance with this ss.2.10 shall, in each case, be subject in all respects to
provisions of this Agreement as if they were Revolving Credit Loans covered by a
Loan Request including, without limitation, the limitations set forth in ss.2.1
(except for the notice or minimum requirements set forth in ss.2.6.1) and the
requirement that the applicable provisions of ss.12 be satisfied. All actions
taken by the Agent pursuant to the provisions of this ss.2.10 shall be
conclusive and binding on the Borrower absent the Agent's gross negligence or
willful misconduct. If any portion of any such amount paid to the Agent shall be
recovered by or on behalf of the Borrower from the Agent in bankruptcy or
otherwise, the loss of the amount so recovered shall be ratably shared among all
the Banks that have reimbursed the Agent pursuant to ss.2.9 in accordance with
their respective ratable share (unless the amounts so recovered by or on behalf
of the Borrower pertain to a Swing Line Loan extended after the occurrence and
during the continuance of an Event of Default of which the Agent has received
actual notice and which such Event of Default has not been waived by the Banks,
as applicable).
3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
3.1. Maturity. The Borrower promises to pay on the Revolving Credit
Loan Maturity Date, and there shall become absolutely due and payable on the
Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.
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3.2. Mandatory Repayment of Revolving Credit Loans.
3.2.1. General. If at any time the sum of the outstanding
amount of the Revolving Credit Loans, the Maximum Drawing Amount and
all Unpaid Reimbursement Obligations exceeds the Total Commitment, then
the Borrower shall immediately pay the amount of such excess to the
Agent for the respective accounts of the Banks for application: first,
to any Unpaid Reimbursement Obligations; second, to the Revolving
Credit Loans; and third, to provide to the Agent cash collateral for
Reimbursement Obligations as contemplated by ss.4.2(b) and (c). Each
payment of any Unpaid Reimbursement Obligations or prepayment of
Revolving Credit Loans shall be allocated among the Banks, in
proportion, as nearly as practicable, to each Reimbursement Obligation
or (as the case may be) the respective unpaid principal amount of each
Bank's Revolving Credit Note, with adjustments to the extent
practicable to equalize any prior payments or repayments not exactly in
proportion.
3.2.2. Proceeds. Concurrently with the receipt by the Borrower
or any of its Subsidiaries of (a) Net Cash Sale Proceeds from Asset
Sales (other than the sale of inventory or the disposition of obsolete
assets, in each case in the ordinary course of business consistent with
past practices) or (b) Net Cash Proceeds from any Equity Issuances, the
Borrower shall pay to the Agent for the respective accounts of the
Banks an amount equal to (i) one hundred percent (100%) of such Net
Cash Sale Proceeds from any Asset Sale by the Borrower or any of its
domestic Subsidiaries in excess of $500,000 in the aggregate in any
fiscal year and from any Asset Sale by any foreign Subsidiary of the
Borrower in excess of $5,000,000 in the aggregate in any fiscal year,
and (ii) seventy-five percent (75%) of such Net Cash Proceeds, in each
case, to be applied against the outstanding amount of the Revolving
Credit Loans.
3.3. Optional Repayments of Revolving Credit Loans. The Borrower shall
have the right, at its election, to repay the outstanding amount of the
Revolving Credit Loans, as a whole or in part, at any time without penalty or
premium, provided that any full or partial prepayment of the outstanding amount
of any LIBOR Rate Loans pursuant to this ss.3.3 may be made only on the last day
of the Interest Period relating thereto. The Borrower shall give the Agent, no
later than 10:00 a.m., Boston time, at least one (1) Business Days prior written
notice of any proposed prepayment pursuant to this ss.3.3 of Prime Rate Loans,
and three (3) LIBOR Business Days notice of any proposed prepayment pursuant to
this ss.3.3 of LIBOR Rate Loans, in each case specifying the proposed date of
prepayment of Revolving Credit Loans and the principal amount to be prepaid.
Each such partial prepayment of the Revolving Credit Loans shall be in an
integral multiple of $500,000 or a whole multiple of $100,000 in excess thereof,
shall be accompanied by the payment of accrued interest on the principal prepaid
to the date of prepayment and shall be applied, in the absence of instruction by
the Borrower, first to the principal of Prime Rate Loans and then to the
principal of LIBOR Rate Loans. Each partial prepayment shall be allocated among
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the Banks, in proportion, as nearly as practicable, to the respective unpaid
principal amount of each Bank's Revolving Credit Note, with adjustments to the
extent practicable to equalize any prior repayments not exactly in proportion.
4. LETTERS OF CREDIT.
4.1. Letter of Credit Commitments.
4.1.1. Commitment to Issue Letters of Credit. Subject to the
terms and conditions hereof, the satisfaction of the conditions
precedent set forth in ss.12 and the execution and delivery by the
Borrower of a letter of credit application on the Agent's customary
form (a "Letter of Credit Application"), the Agent on behalf of the
Banks and in reliance upon the agreement of the Banks set forth in
ss.4.1.4 and upon the representations and warranties of the Borrower
contained herein, agrees, in its individual capacity, to issue, extend
and renew for the account of the Borrower one or more standby or
documentary letters of credit (individually, a "Letter of Credit"), in
such form as may be requested from time to time by the Borrower and
agreed to by the Agent; provided, however, that, after giving effect to
such request, the sum of (a) the Maximum Drawing Amount on all Letters
of Credit, (b) all Unpaid Reimbursement Obligations, and (c) the amount
of all Revolving Credit Loans outstanding shall not exceed the Total
Commitment. Notwithstanding the foregoing, the Agent shall have no
obligation to issue any Letter of Credit to support or secure any
Indebtedness of the Borrower or any of its Subsidiaries to the extent
that such Indebtedness was incurred prior to the proposed issuance date
of such Letter of Credit, unless in any such case the Borrower
demonstrates to the satisfaction of the Agent that (x) such prior
incurred Indebtedness were then fully secured by a prior perfected and
unavoidable security interest in collateral provided by the Borrower or
such Subsidiary to the proposed beneficiary of such Letter of Credit or
(y) such prior incurred Indebtedness were then secured or supported by
a letter of credit issued for the account of the Borrower or such
Subsidiary and the reimbursement obligation with respect to such letter
of credit was fully secured by a prior perfected and unavoidable
security interest in collateral provided to the issuer of such letter
of credit by the Borrower or such Subsidiary.
4.1.2. Letter of Credit Applications. Each Letter of Credit
Application shall be completed to the reasonable satisfaction of the
Agent. In the event that any provision of any Letter of Credit
Application shall be inconsistent with any provision of this Credit
Agreement, then the provisions of this Credit Agreement shall, to the
extent of any such inconsistency, govern.
4.1.3. Terms of Letters of Credit. Each Letter of Credit
issued, extended or renewed hereunder shall, among other things, (a)
provide for the payment of sight drafts for honor thereunder when
presented in accordance with the terms thereof and when accompanied by
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the documents described therein, and (b) have an expiry date no later
than the date which is fourteen (14) days (or, if the Letter of Credit
is confirmed by a confirmer or otherwise provides for one or more
nominated persons, forty-five (45) days) prior to the Revolving Credit
Loan Maturity Date. Each Letter of Credit so issued, extended or
renewed shall be subject to the Uniform Customs or, in the case of a
standby Letter of Credit, either the Uniform Customs or the
International Standby Practices.
4.1.4. Reimbursement Obligations of Banks. Each Bank severally
agrees that it shall be absolutely liable, without regard to the
occurrence of any Default or Event of Default or any other condition
precedent whatsoever, to the extent of such Bank's Commitment
Percentage, to reimburse the Agent on demand for the amount of each
draft paid by the Agent under each Letter of Credit to the extent that
such amount is not reimbursed by the Borrower pursuant to ss.4.2 (such
agreement for a Bank being called herein the "Letter of Credit
Participation" of such Bank).
4.1.5. Participations of Banks. Each such payment made by a
Bank shall be treated as the purchase by such Bank of a participating
interest in the Borrower's Reimbursement Obligation under ss.4.2 in an
amount equal to such payment. Each Bank shall share in accordance with
its participating interest in any interest which accrues pursuant to
ss.4.2.
4.2. Reimbursement Obligation of the Borrower. In order to induce the
Agent to issue, extend and renew each Letter of Credit and the Banks to
participate therein, the Borrower hereby agrees to reimburse or pay to the
Agent, for the account of the Agent or (as the case may be) the Banks, with
respect to each Letter of Credit issued, extended or renewed by the Agent
hereunder,
(a) except as otherwise expressly provided in ss.4.2(b)
and (c), on each date that any draft presented under such Letter of
Credit is honored by the Agent, or the Agent otherwise makes a payment
with respect thereto, (i) the amount paid by the Agent under or with
respect to such Letter of Credit, and (ii) the amount of any taxes,
fees, charges or other costs and expenses whatsoever incurred by the
Agent or any Bank in connection with any payment made by the Agent or
any Bank under, or with respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the
Total Commitment to an amount less than the Maximum Drawing Amount, an
amount equal to such difference, which amount shall be held by the
Agent for the benefit of the Banks and the Agent as cash collateral for
all Reimbursement Obligations, and
(c) upon the termination of the Total Commitment, or
the acceleration of the Reimbursement Obligations with respect to all
Letters of Credit in accordance with ss.13, an amount equal to the then
Maximum Drawing Amount on all Letters of Credit, which amount shall be
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held by the Agent for the benefit of the Banks and the Agent as cash
collateral for all Reimbursement Obligations.
Each such payment shall be made to the Agent at the Agent's Head Office in
immediately available funds. Interest on any and all amounts remaining unpaid by
the Borrower under this ss.4.2 at any time from the date such amounts become due
and payable (whether as stated in this ss.4.2, by acceleration or otherwise)
until payment in full (whether before or after judgment) shall be payable to the
Agent on demand at the rate specified in ss.5.11 for overdue principal on the
Revolving Credit Loans.
4.3. Letter of Credit Payments. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Agent
shall notify the Borrower of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. If the Borrower fails to reimburse the Agent as
provided in ss.4.2 on or before the date that such draft is paid or other
payment is made by the Agent, the Agent may at any time thereafter notify the
Banks of the amount of any such Unpaid Reimbursement Obligation. No later than
3:00 p.m. (Boston time) on the Business Day next following the receipt of such
notice, each Bank shall make available to the Agent, at the Agent's Head Office,
in immediately available funds, such Bank's Commitment Percentage of such
Unpaid Reimbursement Obligation, together with an amount equal to the product of
(a) the average, computed for the period referred to in clause (c) below, of the
weighted average interest rate paid by the Agent for federal funds acquired by
the Agent during each day included in such period, times (b) the amount equal to
such Bank's Commitment Percentage of such Unpaid Reimbursement Obligation, times
(c) a fraction, the numerator of which is the number of days that elapse from
and including the date the Agent paid the draft presented for honor or otherwise
made payment to the date on which such Bank's Commitment Percentage of such
Unpaid Reimbursement obligation shall become immediately available to the Agent,
and the denominator of which is 360. All funds advanced by a Bank pursuant to
this ss.4.3 shall for all purposes be treated as a Revolving Credit Loan made by
such Bank to the Borrower. The responsibility of the Agent to the Borrower and
the Banks shall be only to determine that the documents (including each draft)
delivered under each Letter of Credit in connection with such presentment shall
be in conformity in all material respects with such Letter of Credit.
4.4. Obligations Absolute. The Borrower's obligations
under this ss.4 shall be absolute and unconditional under any and all
circumstances and irrespective of the occurrence of any Default or Event of
Default or any condition precedent whatsoever or any setoff, counterclaim or
defense to payment which the Borrower may have or have had against the Agent,
any Bank or any beneficiary of a Letter of Credit. The Borrower further agrees
with the Agent and the Banks that the Agent and the Banks shall not be
responsible for, and the Borrower's Reimbursement Obligations under ss.4.2 shall
not be affected by, among other things, the validity or genuineness of documents
or of any endorsements thereon, even if such documents should in fact prove to
be in any or all respects invalid, fraudulent or forged, or any dispute between
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or among the Borrower, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Borrower against the beneficiary of any
Letter of Credit or any such transferee. The Agent and the Banks shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit absent their gross negligence and willful misconduct. The
Borrower agrees that any action taken or omitted by the Agent or any Bank under
or in connection with each Letter of Credit and the related drafts and
documents, if done in good faith, shall be binding upon the Borrower and shall
not result in any liability on the part of the Agent or any Bank to the
Borrower.
4.5. Reliance by Issuer. To the extent not inconsistent with ss.4.4,
the Agent shall be entitled to rely, and shall be fully protected in relying
upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document reasonably believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Credit Agreement
unless it shall first have received such advice or concurrence of the Majority
Banks as it reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Banks against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Credit Agreement in accordance with a request
of the Majority Banks (solely with respect to the Borrower, absent the Agent's
gross negligence and willful misconduct), and such request and any action taken
or failure to act pursuant thereto shall be binding upon the Banks and all
future holders of the Revolving Credit Notes or of a Letter of Credit
Participation.
4.6. Letter of Credit Fee. The Borrower shall pay a fee (in each case,
a "Letter of Credit Fee") to the Agent quarterly in arrears on the first day of
each calendar quarter for the immediately preceding calendar quarter commencing
on the first such date following the date hereof (a) in respect of each standby
Letter of Credit an amount equal to the Applicable Margin for Letter of Credit
Fees per annum of the face amount of such standby Letter of Credit, of which an
amount equal to one eighth of one percent (1/8%) per annum of the face amount of
such standby Letter of Credit shall be for the account of the Agent, as a
fronting fee, and the balance of which Letter of Credit Fee shall be for the
accounts of the Banks in accordance with their respective Commitment Percentages
and (b) in respect of each documentary Letter of Credit an amount equal to the
Applicable Margin for Letter of Credit Fees per annum of the face amount of such
documentary Letter of Credit, of which an amount equal to one eighth of one
percent (1/8%) per annum of the face amount of such documentary Letter of Credit
shall be for the account of the Agent, as a fronting fee, and the balance of
which Letter of Credit Fee shall be for the accounts of the Banks in accordance
with their respective Commitment Percentages. In respect of each Letter of
Credit, the Borrower shall also pay to the Agent for the Agent's own account, on
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the date of issuance or any extension or renewal of any Letter of Credit and at
such other time or times as such charges are customarily made by the Agent, the
Agent's customary issuance, amendment, negotiation or document examination and
other administrative fees as in effect from time to time.
5. CERTAIN GENERAL PROVISIONS.
5.1. Agent's Fee. The Borrower shall pay to the Agent an agent fee in
accordance with the terms of the fee letter dated as of the date hereof.
5.2. Funds for Payments.
5.2.1. Payments to Agent. All payments of principal, interest,
Reimbursement Obligations, Commitment Fees, Letter of Credit Fees and
any other amounts due hereunder or under any of the other Loan
Documents shall be made on the due date thereof to the Agent in
Dollars, for the respective accounts of the Banks and the Agent, at the
Agent's Head Office or at such other place that the Agent may from time
to time designate, in each case at or about 11:00 a.m. (Boston,
Massachusetts, time or other local time at the place of payment) and in
immediately available funds.
5.2.2. No Offset, etc. All payments by the Borrower hereunder
and under any of the other Loan Documents shall be made without
recoupment, setoff or counterclaim and free and clear of and without
deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions
of any nature now or hereafter imposed or levied by any jurisdiction or
any political subdivision thereof or taxing or other authority therein
unless the Borrower is compelled by law to make such deduction or
withholding. If any such obligation is imposed upon the Borrower with
respect to any amount payable by it hereunder or under any of the other
Loan Documents, the Borrower will pay to the Agent, for the account of
the Banks or (as the case may be) the Agent, on the date on which such
amount is due and payable hereunder or under such other Loan Document,
such additional amount in Dollars as shall be necessary to enable the
Banks or the Agent to receive the same net amount which the Banks or
the Agent would have received on such due date had no such obligation
been imposed upon the Borrower. The Borrower will deliver promptly to
the Agent certificates or other valid vouchers for all taxes or other
charges deducted from or paid with respect to payments made by the
Borrower hereunder or under such other Loan Document.
5.3. Computations. All computations of interest on the Prime Rate Loans
and of Commitment Fees, Letter of Credit Fees or other fees shall, unless
otherwise expressly provided herein, be based on a 365-day year and paid for the
actual number of days elapsed, and all computations of interest on LIBOR Rate
Loans shall be based on a 360-day year and paid for the actual number of days
elapsed. Except as otherwise provided in the definition of the term "Interest
Period" with respect to LIBOR Rate Loans, whenever a payment hereunder or under
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any of the other Loan Documents becomes due on a day that is not a Business Day,
the due date for such payment shall be extended to the next succeeding Business
Day, and interest shall accrue during such extension. The outstanding amount of
the Revolving Credit Loans as reflected on the Records from time to time shall
be considered prima facie evidence thereof and binding on the Borrower unless
within ten (10) Business Days after receipt of any notice by the Agent or any of
the Banks of such outstanding amount, the Agent or such Bank shall notify the
Borrower to the contrary.
5.4. Inability to Determine LIBOR Rate. In the event, prior to the
commencement of any Interest Period relating to any LIBOR Rate Loan, the Agent
shall determine that adequate and reasonable methods do not exist for
ascertaining the LIBOR Rate that would otherwise determine the rate of interest
to be applicable to any LIBOR Rate Loan during any Interest Period, the Agent
shall forthwith give notice of such determination (which shall be conclusive and
binding on the Borrower and the Banks) to the Borrower and the Banks. In such
event (a) any Loan Request or Conversion Request with respect to LIBOR Rate
Loans shall be automatically withdrawn and shall be deemed a request for Prime
Rate Loans, (b) each LIBOR Rate Loan will automatically, on the last day of the
then current Interest Period relating thereto, become a Prime Rate Loan, and (c)
the obligations of the Banks to make LIBOR Rate Loans shall be suspended until
the Agent determines that the circumstances giving rise to such suspension no
longer exist, whereupon the Agent shall so notify the Borrower and the Banks.
5.5. Illegality. Notwithstanding any other provisions herein,
if any present or future law, regulation, treaty or directive or in the
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain LIBOR Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Borrower and the other Banks and thereupon (a) the
commitment of such Bank to make LIBOR Rate Loans or convert Loans of another
Type to LIBOR Rate Loans shall forthwith be suspended and (b) such Bank's
Revolving Credit Loans then outstanding as LIBOR Rate Loans, if any, shall be
converted automatically to Prime Rate Loans on the last day of each Interest
Period applicable to such LIBOR Rate Loans or within such earlier period as may
be required by law. The Borrower hereby agrees promptly to pay the Agent for the
account of such Bank, upon demand by such Bank, any additional amounts necessary
to compensate such Bank for any costs incurred by such Bank in making any
conversion in accordance with this ss.5.6, including any interest or fees
payable by such Bank to lenders of funds obtained by it in order to make or
maintain its LIBOR Rate Loans hereunder.
5.6. Additional Costs, etc. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any bank by any central bank or other fiscal, monetary or
other authority (whether or not having the force of law), shall:
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(a) subject any Bank or the Agent to any tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature with
respect to this Credit Agreement, the other Loan Documents, any Letters
of Credit, such Bank's Commitment or the Revolving Credit Loans (other
than taxes based upon or measured by the income or profits of such Bank
or the Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Revolving Credit Loans or any other
amounts payable to any Bank or the Agent under this Credit Agreement or
any of the other Loan Documents, or
(c)impose or increase or render applicable (other than
to the extent specifically provided for elsewhere in this Credit
Agreement) any special deposit, reserve, assessment, liquidity, capital
adequacy or other similar requirements (whether or not having the force
of law) against assets held by, or deposits in or for the account of,
or loans by, or letters of credit issued by, or commitments of an
office of any Bank, or
(d) impose on any Bank or the Agent any other
conditions or requirements with respect to this Credit Agreement, the
other Loan Documents, any Letters of Credit, the Revolving Credit
Loans, such Bank's Commitment, or any class of loans, letters of credit
or commitments of which any of the Revolving Credit Loans or such
Bank's Commitment forms a part, and the result of any of the foregoing
is
(i) to increase the cost to any Bank of
making, funding, issuing, renewing, extending or maintaining
any of the Revolving Credit Loans or such Bank's Commitment or
any Letter of Credit, or
(ii) to reduce the amount of principal,
interest, Reimbursement Obligation or other amount payable to
such Bank or the Agent hereunder on account of such Bank's
Commitment, any Letter of Credit or any of the Revolving
Credit Loans, or
(iii) to require such Bank or the Agent to make
any payment or to forego any interest or Reimbursement
Obligation or other sum payable hereunder, the amount of which
payment or foregone interest or Reimbursement Obligation or
other sum is calculated by reference to the gross amount of
any sum receivable or deemed received by such Bank or the
Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, within thirty (30) days of any
demand made by such Bank or (as the case may be) the Agent, pay to such Bank or
the Agent such additional amounts as will be sufficient to compensate such Bank
or the Agent for such additional cost, reduction, payment or foregone interest
or Reimbursement Obligation or other sum.
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5.7. Capital Adequacy. If after the date hereof any Bank or the Agent
determines that (a) the adoption of or change in any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank holding companies or any
change in the interpretation or application thereof by a court or governmental
authority with appropriate jurisdiction, or (b) compliance by such Bank or the
Agent or any corporation controlling such Bank or the Agent with any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) of any such entity regarding capital adequacy, has the
effect of reducing the return on such Bank's or the Agent's commitment with
respect to any Revolving Credit Loans to a level below that which such Bank or
the Agent could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's or the Agent's then existing policies
with respect to capital adequacy and assuming full utilization of such entity's
capital) by any amount deemed by such Bank or (as the case may be) the Agent to
be material, then such Bank or the Agent may notify the Borrower of such fact.
To the extent that the amount of such reduction in the return on capital is not
reflected in the Prime Rate, the Borrower and such Bank shall thereafter attempt
to negotiate in good faith, within thirty (30) days of the day on which the
Borrower receives such notice, an adjustment payable hereunder that will
adequately compensate such Bank in light of these circumstances. If the Borrower
and such Bank are unable to agree to such adjustment within thirty (30) days of
the date on which the Borrower receives such notice, then commencing on the date
of such notice (but not earlier than the effective date of any such increased
capital requirement), the fees payable hereunder shall increase by an amount
that will, in such Bank's reasonable determination, provide adequate
compensation. Each Bank shall allocate such cost increases among its customers
in good faith and on an equitable basis.
5.8. Certificate. A certificate setting forth any additional amounts
payable pursuant to ss.ss.5.7 or 5.8 and a brief explanation of such amounts
which are due, submitted by any Bank or the Agent to the Borrower, shall be
conclusive, absent manifest error, that such amounts are due and owing.
5.9. Indemnity. The Borrower agrees to indemnify each Bank and to hold
each Bank harmless from and against any loss, cost or expense (including loss of
anticipated profits) that such Bank may sustain or incur as a consequence of (a)
default by the Borrower in payment of the principal amount of or any interest on
any LIBOR Rate Loans as and when due and payable, including any such loss or
expense arising from interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain its LIBOR Rate Loans, (b) default by the
Borrower in making a borrowing or conversion after the Borrower has given (or is
deemed to have given) a Loan Request or a Conversion Request relating thereto in
accordance with ss.2.6 or ss.2.7 or (c) the making of any payment of a LIBOR
Rate Loan or the making of any conversion of any such Revolving Credit Loan to a
Prime Rate Loan on a day that is not the last day of the applicable Interest
Period with respect thereto, including interest or fees payable by such Bank to
lenders of funds obtained by it in order to maintain any such Revolving Credit
Loans.
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5.10. Interest After Default; Late Fee.
5.10.1. Overdue Amounts. Overdue principal and (to the extent
permitted by applicable law) interest on the Revolving Credit Loans and
all other overdue amounts payable hereunder or under any of the other
Loan Documents shall bear interest compounded monthly and payable on
demand at a rate per annum equal to four percent (4%) above the
interest rate otherwise applicable to such Revolving Credit Loans until
such amount shall be paid in full (after as well as before judgment).
5.10.2. Amounts Not Overdue. During the continuance of an
Event of Default the principal of the Revolving Credit Loans not
overdue shall, until such Event of Default has been cured or remedied
or such Event of Default has been waived by the Majority Banks pursuant
to ss.26, bear interest at a rate per annum equal to four percent (4%)
above the interest rate otherwise applicable to such Revolving Credit
Loans pursuant to ss.2.5.
5.10.3. Late Fee. If the entire amount of any required
principal and/or interest is not paid in full within ten (10) days
after the same is due, the Borrower shall pay to the Agent for the
account of the Banks a late fee equal to five percent (5%) of the
required payment.
6. GUARANTIES.
The Obligations shall also be guaranteed pursuant to the terms of the
Guaranty.
7. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks and the Agent as
follows:
7.1. Corporate Authority.
7.1.1. Incorporation; Good Standing. Each of the Borrower and
the Guarantors (a) is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation, (b)
has all requisite corporate power to own its property and conduct its
business as now conducted and as presently contemplated, and (c) is in
good standing as a foreign corporation and is duly authorized to do
business in each jurisdiction where such qualification is necessary
except where a failure to be so qualified would not have a materially
adverse effect on the business, assets or financial condition of the
Borrower and the Guarantors, taken as a whole.
7.1.2. Authorization. The execution, delivery and performance
of this Credit Agreement and the other Loan Documents to which the
Borrower or any of the Guarantors is or is to become a party and the
transactions contemplated hereby and thereby (a) are within the
corporate authority of such Person, (b) have been duly authorized by
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all necessary corporate proceedings, (c) to the best of the Borrower's
knowledge, do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to
which the Borrower or any of the Guarantors is subject or any judgment,
order, writ, injunction, license or permit applicable to the Borrower
or any of the Guarantors and (d) do not conflict with any provision of
the corporate charter or bylaws of, or, in any material respect, any
agreement or other instrument binding upon, the Borrower or any of the
Guarantors.
7.1.3. Enforceability. The execution and delivery of this
Credit Agreement and the other Loan Documents to which the Borrower or
any of the Guarantors is or is to become a party will result in valid
and legally binding obligations of such Person enforceable against it
in accordance with the respective terms and provisions hereof and
thereof, except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditors' rights and except to the extent
that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
7.2. Governmental Approvals. The execution, delivery and performance by
the Borrower and any of the Guarantors of this Credit Agreement and the other
Loan Documents to which the Borrower or any of the Guarantors is or is to become
a party and the transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or authority
other than those already obtained.
7.3. Title to Properties; Leases. Except as indicated on Schedule 7.3
hereto, the Borrower and its Consolidated Subsidiaries own all of the assets
reflected in the consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at the Balance Sheet Date or acquired since that date (except
property and assets sold or otherwise disposed of in the ordinary course of
business since that date), subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except Permitted Liens.
7.4. Financial Statements, Projections and Solvency.
7.4.1. Fiscal Year. The Borrower and each of its Subsidiaries
has a fiscal year which is the twelve months ending on December 31 of
each calendar year.
7.4.2. Financial Statements. There has been furnished to each
of the Banks a consolidated balance sheet of the Borrower and its
Subsidiaries as at the Balance Sheet Date, and a consolidated statement
of income of the Borrower and its Subsidiaries for the fiscal year then
ended, certified by PricewaterhouseCoopers LLP and an unaudited
consolidated balance sheet of the Borrower and its Subsidiaries, and an
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unaudited consolidated statement of income of the Borrower and its
Subsidiaries for the calendar quarter ended March 31, 2001. Such
balance sheets and statements of income have been prepared in
accordance with generally accepted accounting principles and fairly
present the financial condition of the Borrower as at the close of
business on the date thereof and the results of operations for the
fiscal year then ended. There are no contingent liabilities of the
Borrower or any of its Subsidiaries as of such date involving material
amounts, known to the officers of the Borrower, which were not
disclosed in such balance sheet and the notes related thereto.
7.4.3. Projections. The projections of the annual operating
budgets of the Borrower and its Subsidiaries on a consolidated basis,
balance sheets and cash flow statements for the 2001 fiscal year,
copies of which have been delivered to each Bank, disclose all material
assumptions made with respect to general economic, financial and market
conditions used in formulating such projections. To the knowledge of
the Borrower or any of its Subsidiaries, no facts exist that
(individually or in the aggregate) would result in any material change
in any of such projections. The projections are based upon reasonable
estimates and assumptions, have been prepared on the basis of the
assumptions stated therein and reflect the reasonable estimates of the
Borrower and its Subsidiaries of the results of operations and other
information projected therein.
7.4.4. Solvency. The Borrower and its Subsidiaries, on a
consolidated and consolidating basis, both before and after giving
effect to the transactions contemplated by this Credit Agreement and
the other Loan Documents (a) are solvent; (b) have assets having a fair
value in excess of their liabilities; (c) have assets having a fair
value in excess of the amount required to pay their liabilities on
existing debts as such debts become due and payable, and (d) have, and
expect to continue to have, access to adequate capital for the conduct
of their business and the ability to pay their debts from time to time
incurred in connection with the operation of their business as such
debts mature.
7.5. No Material Changes, etc. Since the Balance Sheet Date there has
occurred no materially adverse change in the financial condition or business of
the Borrower and its Subsidiaries as shown on or reflected in the consolidated
balance sheet of the Borrower and its Subsidiaries as at the Balance Sheet Date,
or the consolidated statement of income for the fiscal year then ended, other
than changes in the ordinary course of business that have not had any materially
adverse effect either individually or in the aggregate on the business or
financial condition of the Borrower or any of its Subsidiaries. Since the
Balance Sheet Date, the Borrower has not made any Distribution.
7.6. Franchises, Patents, Copyrights, etc. Each of the Borrower and its
Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
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for the conduct of its business substantially as now conducted without known
conflict with any rights of others.
7.7. Litigation. Except as set forth in Schedule 7.7 hereto, there are
no actions, suits, proceedings or investigations of any kind pending or
threatened against the Borrower or any of its Subsidiaries before any court,
tribunal or administrative agency or board that, if adversely determined, might,
either in any case or in the aggregate, materially adversely affect the
properties, assets, financial condition or business of the Borrower and its
Subsidiaries or materially impair the right of the Borrower and its
Subsidiaries, considered as a whole, to carry on business substantially as now
conducted by them, or result in any substantial liability not adequately covered
by insurance, or for which adequate reserves are not maintained on the
consolidated balance sheet of the Borrower and its Subsidiaries, or which
question the validity of this Credit Agreement or any of the other Loan
Documents, or any action taken or to be taken pursuant hereto or thereto.
7.8. No Materially Adverse Contracts, etc. Neither the Borrower nor any
of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the business,
assets or financial condition of the Borrower or any of its Subsidiaries.
Neither the Borrower nor any of its Subsidiaries is a party to any contract or
agreement that has or is expected, in the judgment of the Borrower's officers,
to have any materially adverse effect on the business of the Borrower and its
Subsidiaries, taken as a whole.
7.9. Compliance with Other Instruments, Laws, etc. Neither the Borrower
nor any of its Subsidiaries is in violation of any provision of its charter
documents, bylaws, or any agreement or instrument to which it may be subject or
by which it or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing cases in
a manner that could result in the imposition of substantial penalties or
materially and adversely affect the financial condition, properties or business
of the Borrower and any of its Subsidiaries, taken as a whole.
7.10. Tax Status. The Borrower and the Guarantors (a) have made or
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which any of them is subject or
have obtained a lawful extension for the making or filing of any such tax
returns, reports or declarations, (b) have paid all taxes and other governmental
assessments and charges shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and by appropriate
proceedings and (c) have set aside on their books provisions reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Borrower know of no basis for any such claim.
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7.11. No Event of Default. No Default or Event of Default has occurred and
is continuing.
7.12. Holding Company and Investment Company Acts. Neither the Borrower nor
any of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter" of
an "investment company", as such terms are defined in the Investment Company Act
of 1940.
7.13. Absence of Financing Statements, etc. Except with respect to
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or property of the Borrower or any of its Subsidiaries or any
rights relating thereto.
7.14. Certain Transactions. Except for arm's length transactions pursuant
to which the Borrower or any of its Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than the Borrower or such
Subsidiary could obtain from third parties, none of the officers, directors, or
employees of the Borrower or any of its Subsidiaries is presently a party to any
transaction with the Borrower or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.
7.15. Employee Benefit Plans.
7.15.1. In General. Each Employee Benefit Plan and each Guaranteed
Pension Plan has been maintained and operated in compliance in all material
respects with the provisions of ERISA and, to the extent applicable, the
Code, including but not limited to the provisions thereunder respecting
prohibited transactions and the bonding of fiduciaries and other persons
handling plan funds as required by ss.412 of ERISA. The Borrower has
heretofore delivered to the Agent the most recently completed annual
report, Form 5500, with all required attachments, and actuarial statement
required to be submitted under ss.103(d) of ERISA, with respect to each
Guaranteed Pension Plan.
7.15.2. Terminability of Welfare Plans. No Employee Benefit Plan,
which is an employee welfare benefit plan within the meaning of ss.3(1) or
ss.3(2)(B) of ERISA, provides benefit coverage subsequent to termination of
employment, except as required by Title I, Part 6 of ERISA or the
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applicable state insurance laws. The Borrower may terminate each such Plan
at any time (or at any time subsequent to the expiration of any applicable
bargaining agreement) in the discretion of the Borrower without liability
to any Person other than for claims arising prior to termination.
7.15.3. Guaranteed Pension Plans. Each contribution required to be
made to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien
provisions of ss.302(f) of ERISA, or otherwise, has been timely made. No
waiver of an accumulated funding deficiency or extension of amortization
periods has been received with respect to any Guaranteed Pension Plan, and
neither the Borrower nor any ERISA Affiliate is obligated to or has posted
security in connection with an amendment to a Guaranteed Pension Plan
pursuant to ss.307 of ERISA or ss.401(a)(29) of the Code. No liability to
the PBGC (other than required insurance premiums, all of which have been
paid) has been incurred by the Borrower or any ERISA Affiliate with respect
to any Guaranteed Pension Plan and there has not been any ERISA Reportable
Event (other than an ERISA Reportable Event as to which the requirement of
thirty (30) days notice has been waived), or any other event or condition
which presents a material risk of termination of any Guaranteed Pension
Plan by the PBGC. Based on the latest valuation of each Guaranteed Pension
Plan (which in each case occurred within twelve months of the date of this
representation), and on the actuarial methods and assumptions employed for
that valuation, the aggregate benefit liabilities of all such Guaranteed
Pension Plans within the meaning of ss.4001 of ERISA did not exceed the
aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities and assets of any
Guaranteed Pension Plan with assets in excess of benefit liabilities, by
more than $100,000.
7.15.4. Multiemployer Plans. Neither the Borrower nor any ERISA
Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under ss.4201 of ERISA or as a
result of a sale of assets described in ss.4204 of ERISA. Neither the
Borrower nor any ERISA Affiliate has been notified that any Multiemployer
Plan is in reorganization or insolvent under and within the meaning of
ss.4241 or ss.4245 of ERISA or is at risk of entering reorganization or
becoming insolvent, or that any Multiemployer Plan intends to terminate or
has been terminated under ss.4041A of ERISA.
7.16. Use of Proceeds.
7.16.1. General. The proceeds of the Revolving Credit Loans shall be
used to refinance existing Indebtedness, for working capital, and general
corporate purposes. The Borrower will obtain Letters of Credit solely for
working capital and other corporate purposes.
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7.16.2. Regulations U and X. No portion of any Revolving Credit Loan
is to be used, and no portion of any Letter of Credit is to be obtained,
for the purpose of purchasing or carrying any "margin security" or "margin
stock" as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
7.16.3. Ineligible Securities. No portion of the proceeds of any
Revolving Credit Loans is to be used, and no portion of any Letter of
Credit is to be obtained, for the purpose of knowingly purchasing, or
providing credit support for the purchase of, during the underwriting or
placement period or within thirty (30) days thereafter, any Ineligible
Securities underwritten or privately placed by a Section 20 Subsidiary.
7.17. Environmental Compliance. To the best of the Borrower's knowledge
(which for the purposes of this ss.7.17, shall not require the Borrower or any
of its Subsidiaries to make any further investigation of the condition or useage
of any of the Real Estate or operations thereon unless the Borrower or any of
its Subsidiaries becomes aware of or is notified of an environmental condition
which could reasonably be expected to require further investigation):
(a) none of the Borrower, its Subsidiaries or any
operator of the Real Estate or any operations thereon is in violation,
or alleged violation, of any judgment, decree, order, law, license,
rule or regulation pertaining to environmental matters, including
without limitation, those arising under the Resource Conservation and
Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended ("CERCLA"),
the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),
the Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any state or local statute, regulation,
ordinance, order or decree relating to health, safety or the
environment (hereinafter "Environmental Laws"), which violation would
have a material adverse effect on the environment or the business,
assets or financial condition of the Borrower or any of its
Subsidiaries;
(b) neither the Borrower nor any of its Subsidiaries
has received written notice from any third party including, without
limitation, any federal, state or local governmental authority, (i)
that any one of them has been identified by the United States
Environmental Protection Agency ("EPA") as a potentially responsible
party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B; (ii) that any hazardous
waste, as defined by 42 U.S.C. ss.6903(5), any hazardous substances as
defined by 42 U.S.C. ss.9601(14), any pollutant or contaminant as
defined by 42 U.S.C. ss.9601(33) and any toxic substances, oil or
hazardous materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which any one of them has
generated, transported or disposed of has been found at any site at
which a federal, state or local agency or other third party has
conducted or has ordered that any Borrower or any of its Subsidiaries
conduct a remedial investigation, removal or other response action
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pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, or legal
or administrative proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs, expenses, losses
or damages of any kind whatsoever in connection with the release of
Hazardous Substances;
(c) except as set forth on Schedule 7.17 attached
hereto: (i) no portion of the Real Estate has been used by the
Borrower, any of its Subsidiaries or operators of their properties for
the handling, processing, storage or disposal of Hazardous Substances
except in accordance with applicable Environmental Laws; and no
underground tank or other underground storage receptacle for Hazardous
Substances is located on any portion of the Real Estate; (ii) in the
course of any activities conducted by the Borrower, its Subsidiaries or
operators of its properties, no Hazardous Substances have been
generated or are being used on the Real Estate except in accordance
with applicable Environmental Laws; (iii) there have been no releases
by the Borrower, any of its Subsidiaries or operators of their
properties (i.e. any past or present releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
disposing or dumping) or threatened releases of Hazardous Substances
on, upon, into or from the properties of the Borrower or its
Subsidiaries, which releases would have a material adverse effect on
the value of any of the Real Estate or adjacent properties or the
environment; (iv) to the best of the Borrower's knowledge, there have
been no releases on, upon, from or into any real property in the
vicinity of any of the Real Estate which, through soil or groundwater
contamination, may have come to be located on, and which would have a
material adverse effect on the value of, the Real Estate; and (v) in
addition, any Hazardous Substances that have been generated on any of
the Real Estate have been transported offsite only by carriers having
an identification number issued by the EPA, treated or disposed of only
by treatment or disposal facilities maintaining valid permits as
required under applicable Environmental Laws, which transporters and
facilities have been and are, to the best of the Borrower's knowledge,
operating in compliance with such permits and applicable Environmental
Laws; and
(d) none of the Borrower and its Subsidiaries or any of
the Real Estate is subject to any applicable environmental law
requiring the performance of Hazardous Substances site assessments, or
the removal or remediation of Hazardous Substances, or the giving of
notice to any governmental agency or the recording or delivery to other
Persons of an environmental disclosure document or statement by virtue
of the transactions set forth herein and contemplated hereby, or as a
condition to the effectiveness of any other transactions contemplated
hereby.
7.18. Subsidiaries, etc. Schedule 7.18(a) sets forth the Subsidiaries
of the Borrower. Except as set forth on Schedule 7.18(b) hereto, neither the
Borrower nor any Subsidiary of the Borrower is engaged in any joint venture or
partnership with any other Person.
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7.19. Disclosure. None of this Credit Agreement or any of the other
Loan Documents contains any untrue statement of a material fact or omits to
state a material fact (known to the Borrower or any of its Subsidiaries in the
case of any document or information not furnished by it or any of its
Subsidiaries) necessary in order to make the statements herein or therein not
misleading. There is no fact known to the Borrower or any of its Subsidiaries
which materially adversely affects, or which is reasonably likely in the future
to materially adversely affect, the business, assets, financial condition or
prospects of the Borrower or any of its Subsidiaries, exclusive of effects
resulting from changes in general economic conditions, legal standards or
regulatory conditions.
8. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Revolving Credit
Loan, Unpaid Reimbursement Obligation, Letter of Credit or Revolving Credit Note
is outstanding or any Bank has any obligation to make any Revolving Credit Loans
or the Agent has any obligation to issue, extend or renew any Letters of Credit:
8.1. Punctual Payment. The Borrower will duly and punctually pay or
cause to be paid the principal and interest on the Revolving Credit Loans, all
Reimbursement Obligations, the Letter of Credit Fees, the Commitment Fees, the
Agent's fee and all other amounts provided for in this Credit Agreement and the
other Loan Documents to which the Borrower or any of its Subsidiaries is a
party, all in accordance with the terms of this Credit Agreement and such other
Loan Documents.
8.2. Maintenance of Office. The Borrower will maintain its chief
executive office in Watertown, MA, or at such other place in the United States
of America as the Borrower shall designate upon written notice to the Agent,
where notices, presentations and demands to or upon the Borrower in respect of
the Loan Documents to which the Borrower is a party may be given or made.
8.3. Records and Accounts. The Borrower will (a) keep, and cause each
of its Subsidiaries to keep, true and accurate records and books of account in
which full, true and correct entries will be made in accordance with generally
accepted accounting principles, (b) maintain adequate accounts and reserves for
all taxes (including income taxes), depreciation, depletion, obsolescence and
amortization of its properties and the properties of its Subsidiaries,
contingencies, and other reserves, and (c) at all times
engage PricewaterhouseCoopers LLP or other independent certified public
accountants reasonably satisfactory to the Agent as the independent certified
public accountants of the Borrower and its Subsidiaries and will not permit more
than thirty (30) days to elapse between the cessation of such firm's (or any
successor firm's) engagement as the independent certified public accountants of
the Borrower and its Subsidiaries and the appointment in such capacity of a
successor firm as shall be satisfactory to the Agent.
8.4. Financial Statements, Certificates and Information. The Borrower will
deliver to each of the Banks:
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(a) as soon as practicable, but in any event not later
than ninety (90) days after the end of each fiscal year of the
Borrower, the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such year, and the related consolidated
statement of income and consolidated statement of cash flow for such
year, setting forth in comparative form the figures for the previous
fiscal year and all such consolidated statements to be in reasonable
detail, prepared in accordance with generally accepted accounting
principles, and certified, without qualification and without an
expression of uncertainty as to the ability of the Borrower or any of
its Subsidiaries to continue as going concerns, by
PricewaterhouseCoopers LLP or by other independent certified public
accountants satisfactory to the Agent, together with a written
statement from such accountants to the effect that they have read a
copy of this Credit Agreement, and that, in making the examination
necessary to said certification, they have obtained no knowledge of any
Default or Event of Default, or, if such accountants shall have
obtained knowledge of any then existing Default or Event of Default
they shall disclose in such statement any such Default or Event of
Default; provided that such accountants shall not be liable to the
Banks for failure to obtain knowledge of any Default or Event of
Default;
(b) as soon as practicable, but in any event not later
than (i) forty-five (45) days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, copies of the
unaudited consolidated balance sheet of the Borrower and its
Subsidiaries and the unaudited consolidating balance sheet of the
Borrower and its Subsidiaries, each as at the end of such quarter, and
the related consolidated statement of income and consolidated
statement of cash flow and consolidating statement of income and
consolidating statement of cash flow for the portion of the Borrower's
fiscal year then elapsed, and (ii) sixty (60) days after the end of the
fourth fiscal quarter of each fiscal year of the Borrower, copies of
the unaudited consolidated balance sheet of the Borrower and its
Subsidiaries and the unaudited consolidating balance sheet of the
Borrower and its Subsidiaries, each as at the end of such quarter, and
the related consolidated and consolidating statement of income for the
portion of the Borrower's fiscal year then elapsed, all in reasonable
detail and prepared in accordance with generally accepted accounting
principles, together with a certification by the principal financial or
accounting officer of the Borrower that the information contained in
such financial statements fairly presents the financial position of the
Borrower and its Subsidiaries on the date thereof (subject to year-end
adjustments);
(c) simultaneously with the delivery of the
financial statements referred to in subsections (a) and (b)
above, a statement certified by the principal financial or accounting
officer of the Borrower in substantially the form of Exhibit C hereto
and setting forth in reasonable detail computations evidencing
compliance with the covenants contained in ss.10 and (if
applicable) reconciliations to reflect changes in generally accepted
accounting principles since the Balance Sheet Date;
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(d) contemporaneously with the filing or mailing
thereof, copies of all material of a financial nature filed with the
Securities and Exchange Commission or sent to the stockholders of the
Borrower;
(e) as soon as practicable, but in any event not later
than sixty (60) days after the end of each fiscal year, the Borrower's
annual budget for then current fiscal year;
(f) as soon as practicable, but in any event not later
than ninety (90) days after the end of each fiscal year of the
Borrower, copies of any accountants' management letter that may have
been issued;
(g) from time to time upon the request of the Agent, a backlog breakdown by
Subsidiary as of the end of any fiscal period;
(h) from time to time upon request of the Agent,
projections of the Borrower and its Subsidiaries updating those
projections delivered to the Banks and referred to in ss.7.4.3 or, if
applicable, updating any later such projections delivered in response
to a request pursuant to this ss.8.4(h); and
(i) from time to time such other financial data and information as the
Agent or any Bank may reasonably request.
8.5. Notices.
8.5.1. Defaults. The Borrower will promptly notify the Agent
in writing of the occurrence of any Default or Event of Default of
which it has knowledge. If any Person shall give any notice or take any
other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Credit Agreement or any
other note, evidence of indebtedness, indenture or other obligation to
which or with respect to which the Borrower or any of its Subsidiaries
is a party or obligor, whether as principal, guarantor, surety or
otherwise, the Borrower shall forthwith give written notice thereof to
the Agent, describing the notice or action and the nature of the
claimed default.
8.5.2. Environmental Events. The Borrower will promptly give
notice to the Agent (a) of any violation of any Environmental Law that
the Borrower or any of its Subsidiaries reports in writing or is
reportable by such Person in writing (or for which any written report
supplemental to any oral report is made) to any federal, state or local
environmental agency and (b) upon becoming aware thereof, of any
inquiry, proceeding, investigation, or other action, including a notice
from any agency of potential environmental liability, of any federal,
state or local environmental agency or board, that has the potential to
materially affect the assets, liabilities, financial conditions or
operations of the Borrower or any of its Subsidiaries.
8.5.3. Notification of Certain Claims. The Borrower will,
immediately upon becoming aware thereof, notify the Agent in writing of
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any setoff, claims (including, with respect to the Real Estate,
environmental claims), withholdings or other defenses to which any
material portion of the Borrower's assets or the assets of its
Subsidiaries, are subject.
8.5.4. Notice of Litigation and Judgments. The Borrower will,
and will cause each of its Subsidiaries to, give notice to the Agent in
writing within fifteen (15) days of becoming aware of any litigation or
proceedings threatened in writing or any pending litigation and
proceedings affecting the Borrower or any of its Subsidiaries or to
which the Borrower or any of its Subsidiaries is or becomes a party
involving an uninsured claim against the Borrower or any of its
Subsidiaries that could reasonably be expected to have a materially
adverse effect on (i) the Borrower and its Subsidiaries, taken as a
whole, or (ii) the ability of the Borrower and the Guarantors to repay
the Obligations and stating the nature and status of such litigation or
proceedings. The Borrower will, and will cause each of its Subsidiaries
to, give notice to the Agent, in writing, in form and detail
satisfactory to the Agent, within ten (10) days of any judgment not
covered by insurance, final or otherwise, against the Borrower or any
of its Subsidiaries in an amount in excess of $500,000.
8.6. Corporate Existence; Maintenance of Properties. The Borrower will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights and franchises and those of its
Subsidiaries and will not, and will not cause or permit any of its Subsidiaries
to, convert to a limited liability company unless the Borrower has provided at
least thirty (30) days prior written notice thereof to the Agent and executed
and delivered all such documents and instruments as the Agent may reasonable
request in light of such conversion on or prior to the effective date of such
conversion. It (a) will cause all of its properties and those of its
Subsidiaries used or useful in the conduct of its business or the business of
its Subsidiaries to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment, (b) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Borrower may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times, and (c) will, and will cause each of its Subsidiaries to, continue
to engage primarily in the businesses now conducted by them and in related
businesses; provided that nothing in this ss.8.6 shall prevent the Borrower from
discontinuing the operation and maintenance of any of its properties or any of
those of its Subsidiaries if such discontinuance is, in the judgment of the
Borrower, desirable in the conduct of its or their business and that do not in
the aggregate materially adversely affect (i) the business of the Borrower and
its Subsidiaries on a consolidated basis or (ii) the ability of the Borrower and
the Guarantors to repay the Obligations.
8.7. Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas and in
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amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent.
8.8. Taxes. The Borrower will, and will cause each of its Subsidiaries
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property; provided that any such tax, assessment, charge,
levy or claim need not be paid if the validity or amount thereof shall currently
be contested in good faith by appropriate proceedings and if the Borrower or
such Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and provided further that the Borrower and each Subsidiary of the
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor.
8.9. Inspection of Properties and Books, etc.
8.9.1. General. The Borrower shall permit the Banks, through
the Agent or any of the Banks' other designated representatives, to
visit and inspect any of the properties of the Borrower or any of its
Subsidiaries, to examine the books of account of the Borrower and its
Subsidiaries (and to make copies thereof and extracts therefrom), and
to discuss the affairs, finances and accounts of the Borrower and its
Subsidiaries with, and to be advised as to the same by, its and their
officers, all at such reasonable times and intervals as the Agent or
any Bank may reasonably request.
8.9.2. Communications with Accountants. The Borrower
authorizes the Agent and, if accompanied by the Agent, the Banks and,
so long as no Default or Event of Default has occurred and is
continuing, upon at least ten (10) days prior written notice to the
Borrower, to communicate directly with the Borrower's independent
certified public accountants and authorizes such accountants to
disclose to the Agent and the Banks any and all financial statements
and other supporting financial documents and schedules including copies
of any management letter with respect to the business, financial
condition and other affairs of the Borrower or any of its Subsidiaries;
provided, however, prior to the occurrence of an Event of Default such
communications shall be limited to conversations with such accountants
and receipt by the Agent and the Banks of all financial statements and
copies of all management letters. At the request of the Agent, the
Borrower shall deliver a letter addressed to such accountants
instructing them to comply with the provisions of this ss.8.9.2.
8.10. Compliance with Laws, Contracts, Licenses, and Permits. The
Borrower will, and will cause each of its Subsidiaries to, comply with (a) in
all material respects, the applicable laws and regulations wherever its business
is conducted, including all Environmental Laws, (b) the provisions of its
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charter documents and by-laws, (c) in all material respects, all agreements and
instruments by which it or any of its properties may be bound and (d) in all
material respects, all applicable decrees, orders, and judgments. If any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that the Borrower or any of its Subsidiaries may fulfill any of its obligations
hereunder or any of the other Loan Documents to which the Borrower or such
Subsidiary is a party, the Borrower will, or (as the case may be) will cause
such Subsidiary to, immediately take or cause to be taken all reasonable steps
within the power of the Borrower or such Subsidiary to obtain such
authorization, consent, approval, permit or license and furnish the Agent and
the Banks with evidence thereof.
8.11. Employee Benefit Plans. The Borrower will (a) promptly upon the
request of the Agent furnish to the Agent a copy of the most recent actuarial
statement required to be submitted under ss.103(d) of ERISA and Annual Report,
Form 5500, with all required attachments, in respect of each Guaranteed Pension
Plan and (b) promptly upon receipt or dispatch, furnish to the Agent any notice,
report or demand sent or received in respect of a Guaranteed Pension Plan under
ss.ss.302, 4041, 4042, 4043, 4063, 4066 and 4068 of ERISA, or in respect of a
Multiemployer Plan, under ss.ss.4041A, 4202, 4219, 4242, or 4245 of ERISA.
8.12. Use of Proceeds. The Borrower will use the proceeds of the
Revolving Credit Loans solely to refinance existing Indebtedness and for working
capital, and general corporate purposes. The Borrower will obtain Letters of
Credit solely for working capital purposes and other corporate purposes.
8.13. New Guarantors. The Borrower will cause each Subsidiary created,
acquired or otherwise existing, on or after the Closing Date to immediately
become a Guarantor and shall cause such Subsidiary to execute and deliver to the
Agent, for the benefit of the Agent and the Banks, a Guaranty.
8.14. Additional Subsidiaries. If, after the Closing Date, the Borrower
or any of its Subsidiaries creates or acquires, either directly or indirectly,
any Subsidiary, it will immediately notify the Agent of such creation or
acquisition, as the case may be, and provide the Agent with an updated Schedule
7.18(a) and take all other actions required by ss.8.13 hereof.
8.15. Replacement Instruments. Upon receipt of an affidavit and
statement of indemnification of an officer of the Agent or any Bank as to the
loss, theft, destruction or mutilation of any Revolving Credit Note, and, in the
case of any such loss, theft, destruction or mutilation, upon cancellation of
such Revolving Credit Note, the Borrower shall issue, in lieu thereof, a
replacement Revolving Credit Note in the same principal amount thereof and
otherwise of like tenor.
8.16. Further Assurances. The Borrower will, and will cause each of its
Subsidiaries to, cooperate with the Banks and the Agent and execute such further
instruments and documents as the Banks or the Agent shall reasonably request to
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carry out to their satisfaction the transactions contemplated by this Credit
Agreement and the other Loan Documents.
8.17. Interest Rate Protection. The Borrower will, no later than
September 30, 2001, implement interest rate protection arrangements in an amount
and on terms and conditions otherwise reasonably satisfactory to the Agent.
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Revolving Credit
Loan, Unpaid Reimbursement Obligation, Letter of Credit or Revolving Credit Note
is outstanding or any Bank has any obligation to make any Revolving Credit Loans
or the Agent has any obligations to issue, extend or renew any Letters of
Credit:
9.1. Restrictions on Indebtedness. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness other
than:
(a) Indebtedness to the Banks and the Agent arising under any of the Loan
Documents;
(b) endorsements for collection, deposit or negotiation and warranties of
products or services, in each case incurred in the ordinary course of business;
(c) Subordinated Debt;
(d) Purchase money Indebtedness incurred in connection with the
acquisition after the date hereof of any real or personal property by the
Borrower or such Subsidiary, provided that the aggregate principal amount at any
one time outstanding shall not exceed $7,000,000;
(e) Indebtedness existing on the date hereof and listed and described on
Schedule 9.1 hereto and any renewals, extensions or refinancings thereof;
(f) Indebtedness of any Guarantor to or of the Borrower to any
Guarantor so long as such Guarantor remains a Guarantor hereunder, has otherwise
complied with the provisions of ss.8.13 hereof and remains a Subsidiary of the
Borrower;
(g) Indebtedness of the Borrower or any Guarantor incurred in
connection with the guaranty of the obligations of any other Person other than a
Subsidiary of the Borrower or any of its Subsidiaries, provided that the
aggregate principal amount, including all Indebtedness of the Borrower and its
Subsidiaries of the same type listed on Schedule 9.1, at any one time
outstanding shall not exceed $20,000,000;
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(h) Indebtedness of the Borrower or any Guarantor to any foreign
Subsidiary so long as such Indebtedness is subordinated to the prior payment in
full of the Obligations pursuant to terms of the Intercompany Subordination
Agreement substantially in the form of Exhibit F hereto;
(i) Indebtedness arising from the Borrower's financing of consumer
credit sales of its water softeners and related products not exceeding in the
aggregate at any one time outstanding, the lesser of $2,000,000 and seventy-five
percent (75%) of the total unpaid amount due on customers' notes given in such
sales transactions;
(j) Indebtedness arising from the Borrower's financing (whether by sale or
by lease) of its water coolers;
(k) other Indebtedness (including Indebtedness listed on Schedule
9.1 other than such Indebtedness included in subsection (g) above and otherwise
without duplication) of the Borrower or any of its Consolidated Subsidiaries
owed to any other Person not exceeding in the aggregate principal amount at any
one time outstanding $60,000,000;
(l) Indebtedness in respect of surety and other performance bonds;
(m) Indebtedness incurred in connection with the guaranty of
obligations under project financing arrangements entered into by the Borrower or
any of its Subsidiaries so long as such guaranty is non-recourse to the Borrower
and its Subsidiaries; and
(n) Indebtedness incurred after the Closing Date on an unsecured,
subordinated basis in connection with a private debt offering, the terms and
conditions of which shall in all respects be reasonably satisfactory to the
Banks.
9.2. Restrictions on Liens. The Borrower will not, and will not permit
any of its Subsidiaries to, (a) create or incur or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (c) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (d) suffer to exist
for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; (e) sell, assign, pledge or otherwise
transfer any "receivables" as defined in clause (g) of the definition of the
term "Indebtedness," with or without recourse; or (f) enter into or permit to
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exist any arrangement or agreement, enforceable under applicable law, which
directly or indirectly prohibits the Borrower or any of its Subsidiaries from
creating or incurring any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest other than in favor of the Agent for the
benefit of the Banks and the Agent under the Loan Documents and other than
customary anti-assignment provisions in leases and licensing agreements entered
into by the Borrower or such Subsidiary in the ordinary course of its business,
provided that the Borrower or any of its Subsidiaries may create or incur or
suffer to be created or incurred or to exist:
(i) liens in favor of the Borrower on all or part of the assets of
Subsidiaries of the Borrower securing Indebtedness owing by Subsidiaries of the
Borrower to the Borrower;
(ii) liens to secure taxes, assessments and other government charges
in respect of obligations not overdue or liens to secure claims for labor,
material or supplies in respect of obligations not overdue;
(iii) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age pensions or
other social security obligations;
(iv) liens on properties in respect of judgments or awards that have
been in force for less than the applicable period for taking an appeal so long
as execution is not levied thereunder or in respect of which the Borrower or
such Subsidiary shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution shall have
been obtained pending such appeal or review;
(v) liens of carriers, warehousemen, mechanics and materialmen, and
other like liens on properties in existence less than 120 days from the date of
creation thereof in respect of obligations not overdue;
(vi) encumbrances on Real Estate consisting of easements,
rights of way, zoning restrictions, restrictions on the use of real property
and defects and irregularities in the title thereto, landlord's or lessor's
liens under leases to which the Borrower or a Subsidiary of the Borrower is a
party, and other minor liens or encumbrances none of which in the opinion of the
Borrower interferes materially with the use of the property affected in the
ordinary conduct of the business of the Borrower and its Subsidiaries, which
defects do not individually or in the aggregate have a materially adverse effect
on the business of the Borrower individually or of the Borrower and its
Subsidiaries on a consolidated basis;
(vii) liens existing on the date hereof and listed on Schedule 9.2 hereto;
(viii) purchase money security interests in or purchase money mortgages
on real or personal property acquired after the date hereof to secure purchase
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money Indebtedness of the type and amount permitted by ss.9.1(d), incurred in
connection with the acquisition of such property, which security interests or
mortgages cover only the real or personal property so acquired;
(ix) liens to secure Indebtedness of the type and amount permitted by
ss.9.1(d), provided that the aggregate principal amount of Indebtedness secured
by such lien shall not exceed the purchase price of the property so acquired;
(x) notes receivable arising from the financing of water softener sales
described in ss.9.1(j), which may be pledged as collateral;
(xi) liens securing Indebtedness permitted byss.9.1(m); provided that such
liens shall at -------- all times be limited to the assets of the related
project;
(xii) liens on the real property or other assets of any
Person acquired by the Borrower, provided that the aggregate principal
amount of Indebtedness secured by such liens shall not exceed
$5,000,000 at any one time outstanding;
(xiii) liens securing the same real property or other
assets described in subsections (xi) and (xii) above in connection with
the renewal, extension or replacement of the underlying Indebtedness;
and
(xiv) liens in favor of the Agent for the benefit of the
Banks and the Agent under the Loan Documents.
9.3. Restrictions on Investments. The Borrower will not, and will not
permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except:
(a) Investments in marketable direct or guaranteed
obligations of the United States of America or any OECD country that
mature within one (1) year from the date of purchase by the Borrower;
(b) Investments in demand deposits, certificates of
deposit, bankers acceptances and time deposits of United States banks
having total assets in excess of $1,000,000,000 or banks organized
under the laws of any OECD country having total assets in excess of
$10,000,000,000;
(c) Investments in securities commonly known as
"commercial paper" issued by a corporation organized and existing under
the laws of the United States of America or any state thereof or any
OECD country that at the time of purchase have been rated and the
ratings for which are not less than "P 1" if rated by Moody's Investors
Service, Inc., and not less than "A 1" if rated by Standard and Poor's
Rating Group;
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(d) Investments existing on the date hereof and listed on Schedule 9.3
hereto;
(e) Investments with respect to Indebtedness permitted byss.9.1(f) so long
as such entities remain Subsidiaries of the Borrower and remain a Guarantor
hereunder;
(f) Investments with respect to Indebtedness permitted byss.ss.9.1(g) and
(h);
(g) Investments consisting of the Guaranty or Investments by the
Borrower in any Guarantor, so long as such Guarantor remains a Guarantor
hereunder and a Subsidiary of the Borrower and the Borrower and the Guarantor
shall have otherwise complied with the provision of ss.6 hereof;
(h) Investments consisting of loans and advances to employees for
moving, entertainment, travel and other similar expenses in the ordinary course
of business not to exceed $400,000 in the aggregate at any time outstanding;
(i) Investments made after the Closing Date in joint ventures and
partnerships (other than Subsidiaries) and other minority investments in any
Person, provided that the aggregate amount of all such Investments made in any
fiscal year shall not exceed $30,000,000;
(j) Investments made after the Closing Date in any foreign
Subsidiary of the Borrower by the Borrower or any Guarantor, provided that the
aggregate principal amount of all such Investments made in any fiscal shall not
exceed $10,000,000; and
(k) Investments made solely from cash flow generated by the operations of
Ionics Iberica, S.A. in Persons doing business outside of the United States.
9.4. Restricted Payments. Neither the Borrower nor any Subsidiary will
make any Restricted Payment, provided, however, notwithstanding anything to the
contrary contained in this Credit Agreement, so long as no Default or Event of
Default has occurred and is continuing or would exist as a result thereof, any
Subsidiary of the Borrower shall be permitted to make Restricted Payments to the
Borrower or a Guarantor.
9.5. Merger, Consolidation and Disposition of Assets.
9.5.1. Mergers and Acquisitions. The Borrower will not, and
will not permit any of its Subsidiaries to, become a party to any
merger or consolidation, or agree to or effect any asset acquisition or
stock acquisition (other than the acquisition of assets in the ordinary
course of business consistent with past practices) except (a) the
merger or consolidation of one or more of the Subsidiaries of the
Borrower with and into the Borrower, (b) the merger or consolidation of
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two or more domestic Subsidiaries of the Borrower, (c) the merger or
consolidation of two or more foreign Subsidiaries of the Borrower, (d)
Permitted Acquisitions by the Borrower or any domestic Subsidiary and
(e) subject to the provisions of ss.9.3(k), acquisitions by Ionics
Iberica, S.A.
9.5.2. Disposition of Assets. The Borrower will not, and will
not permit any of its Subsidiaries to, become a party to or agree to or
effect any disposition of assets, other than (a) the sale of inventory
and the disposition of obsolete assets, in each case in the ordinary
course of business consistent with past practices, (b) the disposition
of the stock of or other equity interests in foreign Subsidiaries of
the Borrower the aggregate fair market value of which shall not exceed
$1,000,000 per single transaction or $5,000,000 in any fiscal year, (c)
the disposition of assets as contemplated by Schedule 9.5.2 and (d) the
disposition of other assets of the Borrower and its Subsidiaries
(including assets which are no longer necessary to the business of the
Borrower or any of its Subsidiaries) the aggregate fair market value of
which shall not exceed $1,000,000 in any fiscal year.
9.6. Sale and Leaseback. The Borrower will not, and will not permit any
of its Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby the Borrower or any Subsidiary of the Borrower shall sell or transfer
any property owned by it in order then or thereafter to lease such property or
lease other property that the Borrower or any Subsidiary of the Borrower intends
to use for substantially the same purpose as the property being sold or
transferred, other than sale and leaseback arrangements in which the aggregate
net book value of all property sold or transferred pursuant thereto does not
exceed $3,000,000 in any fiscal year.
9.7. Compliance with Environmental Laws. The Borrower will not, and
will not permit any of its Subsidiaries to, (a) use any of the Real Estate or
any portion thereof for the handling, processing, storage or disposal of
Hazardous Substances, (b) cause or permit to be located on any of the Real
Estate any underground tank or other underground storage receptacle for
Hazardous Substances, (c) generate any Hazardous Substances on any of the Real
Estate, (d) conduct any activity at any Real Estate or use any Real Estate in
any manner so as to cause a release (i.e. releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping) or threatened release of Hazardous Substances on, upon or
into the Real Estate or (e) otherwise conduct any activity at any Real Estate or
use any Real Estate, in each case, in any manner that would violate any
Environmental Law or bring such Real Estate in violation of any Environmental
Law.
9.8. Subordinated Debt. The Borrower will not, and will not permit any
of its Subsidiaries to, amend, supplement or otherwise modify the terms of any
of the Subordinated Debt or prepay, redeem or repurchase any of the Subordinated
Debt.
9.9. Upstream Limitations. The Borrower will not, and will not permit
any of its Subsidiaries to, enter into any agreement, contract or arrangement
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(other than the Credit Agreement and the other Loan Documents) restricting the
ability of any Subsidiary to pay or make dividends or distributions in cash or
kind to the Borrower, to make loans, advances or other payments of whatsoever
nature to the Borrower, or to make transfers or distributions of all or any part
of its assets to the Borrower.
9.10. Negative Pledges. Neither the Borrower nor any of the Guarantors
will enter into any agreement (other than this Credit Agreement and the other
Loan Documents) prohibiting the creation or assumption of any lien upon its
properties, revenues or assets or those of any of its Subsidiaries, whether now
owned or hereafter acquired to secure any of the Obligations (or any
refinancings thereof) other than agreements with Persons prohibiting any such
lien on assets in which such Person has a prior security interest which is
permitted by ss.9.2.
9.11. Employee Benefit Plans. Neither the Borrower nor any ERISA Affiliate
will
(a) engage in any "prohibited transaction" within the meaning ofss.406 of
ERISA orss.4975 of the Code which could result in a material liability for the
Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in ss.302 of ERISA, whether or not
such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could result
in the imposition of a lien or encumbrance on the assets of the Borrower or any
of its Subsidiaries pursuant to ss.302(f) or ss.4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances requiring the
posting of security pursuant toss.307 of ERISA orss.401(a)(29) of the Code; or
(e) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of ss.4001 of ERISA) of all Guaranteed
Pension Plans exceeding the value of the aggregate assets of such Plans,
disregarding for this purpose the benefit liabilities and assets of any such
Plan with assets in excess of benefit liabilities, by more than the amount set
forth in ss.7.15.3.
9.12. Business Activities. The Borrower will not, and will not permit
any of its Subsidiaries to, engage directly or indirectly (whether through
Subsidiaries or otherwise) in any type of business other than the businesses
conducted by them on the Closing Date and in related businesses.
9.13. Fiscal Year. The Borrower will not, and will not permit any of it
Subsidiaries to, change the date of the end of its fiscal year from that set
forth in ss.7.4.1.
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9.14. Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any transaction with any Affiliate
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any such Affiliate or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any such Affiliate has a substantial interest or is an officer,
director, trustee or partner, on terms more favorable to such Person than would
have been obtainable on an arm's-length basis in the ordinary course of
business.
9.15. Inconsistent Agreements. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any agreement containing any
provision which would be violated or breached by the performance by the Borrower
or any of its Subsidiaries of their respective obligations hereunder or under
any of the Loan Documents.
9.16. Modification of Documents and Charter Documents. The Borrower
will not, nor will it permit any of its Subsidiaries to, consent to or agree to
any amendment, supplement or other modification to its Capitalization Documents
without the prior written consent of the Agent unless such amendment, supplement
or modification would not have any material adverse effect on the Agent's or the
Bank's rights under the Loan Documents or the Borrower's or any of its
Subsidiaries' obligations under the Loan Documents.
10. FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Revolving Credit
Loan, Unpaid Reimbursement Obligation, Letter of Credit or Revolving Credit Note
is outstanding or any Bank has any obligation to make any Revolving Credit Loans
or the Agent has any obligation to issue, extend or renew any Letters of Credit:
10.1. Leverage Ratio. The Borrower will not, as of the end of any
Reference Period ending on the last day of any fiscal quarter described in the
table set forth below, permit the Leverage Ratio for such Reference Period to
exceed the ratio set forth opposite such fiscal quarter in such table:
------------------------------------- -------------------------------------
Fiscal Quarter Ratio
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
FQ2 2001 3.00:1.00
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
FQ3 2001 2.75:1.00
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
FQ4 2001 and each fiscal quarter 2.50:1.00
thereafter
------------------------------------- -------------------------------------
10.2. Minimum EBITDA. The Borrower will not, as of the end of any
Reference Period ending on the last day of any fiscal quarter described in the
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table set forth below, permit Consolidated EBITDA of the Borrower and its
Consolidated Subsidiaries for such Reference Period to be less than the amount
set forth opposite such fiscal quarter in such table:
------------------------------------- -------------------------------------
Date Amount
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
FQ2 2001 $25,000,000
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
FQ3 2001 $37,500,000
------------------------------------- -------------------------------------
------------------------------------- -------------------------------------
FQ4 2001 and each fiscal quarter $50,000,000
thereafter
------------------------------------- -------------------------------------
Solely for the purpose of this ss.10.2, (a) Reference Period shall mean
(i) for Q2 2001, the period commencing on 01/01/01 and ending on 06/30/01, and
(ii) for Q3 2001, the period commencing on 01/01/01 and ending on 09/30/01 and
(b) for Q4 2001 and each fiscal quarter thereafter, Reference Period shall have
the meaning set forth in ss.1.1 for such term.
10.3. Minimum Net Worth. The Borrower will not permit Consolidated Net
Worth at any time to be less than the sum of (a) $300,000,000 plus (b) on a
cumulative basis, 50% of positive Consolidated Net Income for each fiscal year
beginning with the fiscal year ended December 31, 2000 plus (c) 100% of Net Cash
Proceeds received by the Borrower.
10.4. Capital Expenditures. The Borrower will not make, or permit any
Consolidated Subsidiary to make, Capital Expenditures during any fiscal year
described in the table set forth below, that exceed in the aggregate the amount
set forth opposite such fiscal year in such table:
--------------------------------------- -----------------------------------
Fiscal Year Amount
--------------------------------------- -----------------------------------
--------------------------------------- -----------------------------------
2001 and each fiscal year thereafter $40,000,000
--------------------------------------- -----------------------------------
10.5 Ratio of EBIT to Interest Expense. The Borrower will not, as
of the end of any Reference Period ending on the last day of any fiscal quarter
described in the table set forth below, permit the ratio of EBIT to Consolidated
Total Interest Expense for such Reference Period to be less than the ratio set
forth opposite such fiscal quarter in such table:
--------------------------------------- -----------------------------------
Fiscal Quarter Ratio
--------------------------------------- -----------------------------------
--------------------------------------- -----------------------------------
Q2 2001 3.00:1.00
--------------------------------------- -----------------------------------
--------------------------------------- -----------------------------------
Q3 2001 3.00:1.00
--------------------------------------- -----------------------------------
--------------------------------------- -----------------------------------
Q4 2001 and each fiscal quarter 3.00:1.00
thereafter
--------------------------------------- -----------------------------------
Solely for the purpose of this ss.10.5, (a) Reference Period shall mean
(i) for Q2 2001, the period commencing on 01/01/01 and ending on 06/30/01, (ii)
for Q3 2001, the period commencing on 01/01/01 and ending on 09/30/01, and (b)
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for Q4 2001 and each fiscal quarter thereafter, Reference Period shall have the
meaning set forth in ss.1.1 for such term.
11. CLOSING CONDITIONS.
The obligations of the Banks to make the initial Revolving Credit Loans
and of the Agent to issue any initial Letters of Credit shall be subject to the
satisfaction of the following conditions precedent:
11.1. Loan Documents. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to each of the Banks.
Each Bank shall have received a fully executed copy of each such document. The
foregoing conditions have been satisfied prior to the date hereof except with
respect to this Credit Agreement, the Global Amendment and Affirmation
Agreement, dated as of the date hereof, among the Borrower and certain of its
affiliates and Fleet, as Agent for itself and the Banks, and the Revolving
Credit Notes.
11.2. Certified Copies of Charter Documents. Each of the Banks shall
have received from the Borrower and each of its domestic Subsidiaries a copy,
certified by a duly authorized officer of such Person to be true and complete on
the Closing Date, of each of (a) its charter or other incorporation documents as
in effect on such date of certification, and (b) its by-laws as in effect on
such date. The foregoing condition has been satisfied prior to the date hereof.
11.3. Corporate Action. All corporate action necessary for the
valid execution, delivery and performance by the Borrower and each of the
Guarantors of this Credit Agreement and the other Loan Documents to which it is
or is to become a party shall have been duly and effectively taken, and evidence
thereof satisfactory to the Banks shall have been provided to each of the Banks.
11.4. Incumbency Certificate. Each of the Banks shall have received
from the Borrower and each Guarantor an incumbency certificate, dated as of the
Closing Date, signed by a duly authorized officer of the Borrower or such
Guarantor, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (a) to sign, in the name and on behalf of
each of the Borrower or such Guarantor, each of the Loan Documents to which the
Borrower or such Guarantor is or is to become a party; (b) in the case of the
Borrower, to make Loan Requests and Conversion Requests and to apply for Letters
of Credit; and (c) to give notices and to take other action on its behalf under
the Loan Documents. The foregoing condition has been satisfied prior to the date
hereof.
11.5. Information Certificates and UCC Search Results. The Agent shall
have received from the Borrower and each Guarantor a completed and fully
executed Information Certificate and the results of UCC searches, indicating no
liens other than Permitted Liens and otherwise in form and substance
satisfactory to the Agent. The foregoing condition has been satisfied prior to
the date hereof.
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11.6. Certificates of Insurance. The Agent shall have received a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained. The foregoing
condition has been satisfied prior to the date hereof.
11.7. Solvency Certificate. Each of the Banks shall have received an
officer's certificate of the Borrower dated as of the Closing Date as to the
solvency of the Borrower and its Subsidiaries following the consummation of the
transactions contemplated herein and in form and substance satisfactory to the
Banks. The foregoing condition has been satisfied prior to the date hereof.
11.8. Opinion of Counsel. Each of the Banks and the Agent shall have
received a favorable legal opinion addressed to the Banks and the Agent, dated
as of the Closing Date, in form and substance satisfactory to the Banks and the
Agent, from Hutchins, Wheeler and Dittmar, counsel to the Borrower and its
Subsidiaries. The foregoing condition has been satisfied prior to the date
hereof.
11.9. Payment of Fees. The Borrower shall have paid to the Banks or the
Agent, as appropriate, all fees, including, without limitation, upfront fees due
and payable to each Bank other than Fleet and all fees due and payable to the
Agent for the account of the Agent.
11.10. Compliance Certificate. The Agent shall have received a
certificate of compliance with respect to the financial covenants set forth in
the Prior Credit Agreement for the period ended March 31, 2000, in form and
substance satisfactory to the Agent. The foregoing condition has been satisfied
prior to the date hereof.
12. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Revolving Credit Loan,
including the Revolving Credit Loan, and of the Agent to issue, extend or renew
any Letter of Credit, in each case whether on or after the Closing Date, shall
also be subject to the satisfaction of the following conditions precedent:
12.1. Representations True; No Event of Default. Each of the
representations and warranties of any of the Borrower and its Subsidiaries
contained in this Credit Agreement, the other Loan Documents or in any document
or instrument delivered pursuant to or in connection with this Credit Agreement
shall be true as of the date as of which they were made and shall also be true
at and as of the time of the making of such Revolving Credit Loan or the
issuance, extension or renewal of such Letter of Credit, with the same effect as
if made at and as of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Credit Agreement and the other
Loan Documents and changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse, and to the extent that
such representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing.
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12.2. No Legal Impediment. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Revolving Credit
Loan or to participate in the issuance, extension or renewal of such Letter of
Credit or in the reasonable opinion of the Agent would make it illegal for the
Agent to issue, extend or renew such Letter of Credit.
12.3. Governmental Regulation. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
12.4. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Agent and the Agent's Special Counsel, and the
Banks, the Agent and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Agent may reasonably request.
13. EVENTS OF DEFAULT; ACCELERATION; ETC.
13.1. Events of Default and Acceleration. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur:
(a) the Borrower shall fail to pay any principal of the
Revolving Credit Loans or any Reimbursement Obligation when the same
shall become due and payable, whether at the stated date of maturity or
any accelerated date of maturity or at any other date fixed for
payment;
(b) the Borrower or any of its Subsidiaries shall fail
to pay any interest on the Revolving Credit Loans, the Commitment Fee,
any Letter of Credit Fee, the Agent's fee, or other sums due hereunder
or under any of the other Loan Documents, when the same shall become
due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;
(c) the Borrower shall fail to comply with any of its
covenants contained in ss.ss.8.1, 8.4, 8.5, the first sentence of 8.6,
8.7-8.10, 8.12-8.15, 8.17, 9 or 10;
(d) the Borrower or any of its Subsidiaries shall fail
to perform any term, covenant or agreement contained herein or in any
of the other Loan Documents (other than those specified elsewhere in
this ss.13.1) for thirty (30) days after written notice of such failure
has been given to the Borrower by the Agent;
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(e) any representation or warranty of the Borrower or
any of its Subsidiaries in this Credit Agreement or any of the other
Loan Documents or in any other document or instrument delivered
pursuant to or in connection with this Credit Agreement shall prove to
have been false in any material respect upon the date when made or
deemed to have been made or repeated;
(f) the Borrower or any of its Subsidiaries shall fail
to pay at maturity, or within any applicable period of grace, any
obligation for borrowed money or credit received or in respect of any
Capitalized Leases or Synthetic Leases in excess of $500,000, or fail
to observe or perform any material term, covenant or agreement
contained in any agreement by which it is bound, evidencing or securing
borrowed money or credit received or in respect of any Capitalized
Leases or Synthetic Leases for such period of time as would permit
(assuming the giving of appropriate notice if required) the holder or
holders thereof or of any obligations issued thereunder to accelerate
the maturity thereof, or any such holder or holders shall rescind or
shall have a right to rescind the purchase of any such obligations;
(g) the Borrower or any of its Subsidiaries shall make
an assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee
or other custodian, liquidator or receiver of the Borrower or any of
its Subsidiaries or of any substantial part of the assets of the
Borrower or any of its Subsidiaries or shall commence any case or other
proceeding relating to the Borrower or any of its Subsidiaries under
any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation or similar law of any jurisdiction,
now or hereafter in effect, or shall take any action to authorize or in
furtherance of any of the foregoing, or if any such petition or
application shall be filed or any such case or other proceeding shall
be commenced against the Borrower or any of its Subsidiaries and the
Borrower or any of its Subsidiaries shall indicate its approval
thereof, consent thereto or acquiescence therein or such petition or
application shall not have been dismissed within forty-five (45) days
following the filing thereof;
(h) a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the Borrower
or any of its Subsidiaries bankrupt or insolvent, or approving a
petition in any such case or other proceeding, or a decree or order for
relief is entered in respect of the Borrower or any Subsidiary of the
Borrower in an involuntary case under federal bankruptcy laws as now or
hereafter constituted;
(i) there shall remain in force, undischarged,
unsatisfied and unstayed, for more than thirty days, whether or not
consecutive, any final judgment against the Borrower or any of its
Subsidiaries that, with other outstanding final judgments,
undischarged, against the Borrower or any of its Subsidiaries exceeds
in the aggregate $1,000,000;
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(j) the holders of all or any part of the Subordinated
Debt shall accelerate the maturity of all or any part of the
Subordinated Debt or the Subordinated Debt shall be prepaid, redeemed
or repurchased in whole or in part;
(k) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded, in each case otherwise than in
accordance with the terms thereof or with the express prior written
agreement, consent or approval of the Banks, or any action at law, suit
or in equity or other legal proceeding to cancel, revoke or rescind any
of the Loan Documents shall be commenced by or on behalf of the
Borrower or any of its Subsidiaries party thereto or any of their
respective stockholders, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid
or unenforceable in accordance with the terms thereof;
(l) the Borrower or any ERISA Affiliate incurs any
liability to the PBGC or a Guaranteed Pension Plan pursuant to Title IV
of ERISA in an aggregate amount exceeding $500,000, or the Borrower or
any ERISA Affiliate is assessed withdrawal liability pursuant to Title
IV of ERISA by a Multiemployer Plan requiring aggregate annual payments
exceeding $500,000, or any of the following occurs with respect to a
Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to
make a required installment or other payment (within the meaning of
ss.302(f)(1) of ERISA), provided that the Agent determines in its
reasonable discretion that such event (A) could be expected to result
in liability of the Borrower or any of its Subsidiaries to the PBGC or
such Guaranteed Pension Plan in an aggregate amount exceeding $500,000
and (B) could constitute grounds for the termination of such Guaranteed
Pension Plan by the PBGC, for the appointment by the appropriate United
States District Court of a trustee to administer such Guaranteed
Pension Plan or for the imposition of a lien in favor of such
Guaranteed Pension Plan; or (ii) the appointment by a United States
District Court of a trustee to administer such Guaranteed Pension Plan;
or (iii) the institution by the PBGC of proceedings to terminate such
Guaranteed Pension Plan;
(m) the Borrower or any of its Subsidiaries shall be
enjoined, restrained or in any way prevented by the order of any court
or any administrative or regulatory agency from conducting any material
part of its business and such order shall continue in effect for more
than thirty (30) days;
(n) there shall occur any material damage to, or loss,
theft or destruction of, a material portion of the assets of the
Borrower or any of its Subsidiaries, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God or
public enemy, or other casualty, which in any such case causes, for
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more than fifteen (15) consecutive days, the cessation or substantial
curtailment of revenue producing activities at any facility of the
Borrower or any of its Subsidiaries if such event or circumstance is
not covered by business interruption insurance and would have a
material adverse effect on the business or financial condition of the
Borrower or such Subsidiary;
(o) there shall occur the loss, suspension or
revocation of, or failure to renew, any license or permit now held or
hereafter acquired by the Borrower or any of its Subsidiaries if such
loss, suspension, revocation or failure to renew would have a material
adverse effect on the business or financial condition of the Borrower
and its Subsidiaries;
(p) the Borrower or any of its Subsidiaries shall be
indicted for a state or federal crime, or any civil or criminal action
shall otherwise have been brought against the Borrower or any of its
Subsidiaries, a punishment for which in any such case could include the
forfeiture of any assets of the Borrower or such Subsidiary included
having a fair market value in excess of $1,000,000; or
(q) the Borrower shall at any time, legally or
beneficially own less than (i) 100% of the shares (on a fully diluted
basis) of the common stock and other equity interests of each of its
domestic Subsidiaries or (ii) the percentage of shares (on a fully
diluted basis) of the common stock and other equity interests of each
of its foreign Subsidiaries which it legally or beneficially owned as
of the Closing Date except as otherwise permitted by ss.9.5.2(b);
(r) any person or group of persons (within the meaning
of Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said
Act) of twenty percent (20%) or more of the outstanding shares of
common stock of the Borrower; or, during any period of twelve
consecutive calendar months, individuals who were directors of the
Borrower on the first day of such period shall cease to constitute a
majority of the board of directors of the Borrower;
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Revolving Credit Notes and the other Loan Documents and all Reimbursement
Obligations to be, and they shall thereupon forthwith become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrower; provided that in the
event of any Event of Default specified in ss.ss.13.1(g), 13.1(h) or 13.1(j),
all such amounts shall become immediately due and payable automatically and
without any requirement of notice from the Agent or any Bank.
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13.2. Termination of Commitments. If any one or more of the Events of
Default specified in ss.13.1(g), ss.13.1(h) or ss.13.1(j) shall occur, any
unused portion of the credit hereunder shall forthwith terminate and each of the
Banks shall be relieved of all further obligations to make Revolving Credit
Loans to the Borrower and the Agent shall be relieved of all further obligations
to issue, extend or renew Letters of Credit. If any other Event of Default shall
have occurred and be continuing, the Agent may and, upon the request of the
Majority Banks, shall, by notice to the Borrower, terminate the unused portion
of the credit hereunder, and upon such notice being given such unused portion of
the credit hereunder shall terminate immediately and each of the Banks shall be
relieved of all further obligations to make Loans and the Agent shall be
relieved of all further obligations to issue, extend or renew Letters of Credit.
No termination of the credit hereunder shall relieve the Borrower or any of its
Subsidiaries of any of the Obligations.
13.3. Remedies. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Revolving Credit Loans pursuant to ss.13.1, each
Bank, if owed any amount with respect to the Revolving Credit Loans or the
Reimbursement Obligations, may, with the consent of the Majority Banks but not
otherwise, proceed to protect and enforce its rights by suit in equity, action
at law or other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Credit Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations to such Bank are
evidenced, including as permitted by applicable law the obtaining of the ex
parte appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Agent or the holder of any Revolving Credit Note or purchaser of any
Letter of Credit Participation is intended to be exclusive of any other remedy
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or any other provision of law.
14. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Banks to the Borrower and any securities or other property of the Borrower
in the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (a) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by
the Revolving Credit Notes held by such Bank or constituting Reimbursement
Obligations owed to such Bank, such amount shall be applied ratably to such
other Indebtedness and to the Indebtedness evidenced by all such Revolving
Credit Notes held by such Bank or constituting Reimbursement Obligations owed to
such Bank, and (b) if such Bank shall receive from the Borrower, whether by
voluntary payment, exercise of the right of setoff, counterclaim, cross action,
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enforcement of the claim evidenced by the Revolving Credit Notes held by, or
constituting Reimbursement Obligations owed to, such Bank by proceedings against
the Borrower at law or in equity or by proof thereof in bankruptcy,
reorganization, liquidation, receivership or similar proceedings, or otherwise,
and shall retain and apply to the payment of the Revolving Credit Note or Notes
held by, or Reimbursement Obligations owed to, such Bank any amount in excess of
its ratable portion of the payments received by all of the Banks with respect to
the Revolving Credit Notes held by, and Reimbursement Obligations owed to, all
of the Banks, such Bank will make such disposition and arrangements with the
other Banks with respect to such excess, either by way of distribution, pro
tanto assignment of claims, subrogation or otherwise as shall result in each
Bank receiving in respect of the Revolving Credit Notes held by it or
Reimbursement Obligations owed it, its proportionate payment as contemplated by
this Credit Agreement; provided that if all or any part of such excess payment
is thereafter recovered from such Bank, such disposition and arrangements shall
be rescinded and the amount restored to the extent of such recovery, but without
interest.
15. THE AGENT.
15.1. Authorization.
(a) The Agent is authorized to take such action on
behalf of each of the Banks and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related
documents delegated to the Agent, together with such powers as are
reasonably incident thereto, provided that no duties or
responsibilities not expressly assumed herein or therein shall be
implied to have been assumed by the Agent.
(b) The relationship between the Agent and each of the
Banks is that of an independent contractor. The use of the term "Agent"
is for convenience only and is used to describe, as a form of
convention, the independent contractual relationship between the Agent
and each of the Banks. Nothing contained in this Credit Agreement nor
the other Loan Documents shall be construed to create an agency, trust
or other fiduciary relationship between the Agent and any of the Banks.
(c) As an independent contractor empowered by the Banks
to exercise certain rights and perform certain duties and
responsibilities hereunder and under the other Loan Documents, the
Agent is nevertheless a "representative" of the Banks, as that term is
defined in Article 1 of the Uniform Commercial Code, for purposes of
actions for the benefit of the Banks and the Agent with respect to all
collateral security, if any, and guaranties contemplated by the Loan
Documents. Such actions include the designation of the Agent as
"secured party", "mortgagee" or the like on all financing statements
and other documents and instruments, whether recorded or otherwise,
relating to the attachment, perfection, priority or enforcement of any
security interests, mortgages or deeds of trust in collateral security
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intended to secure the payment or performance of any of the
Obligations, all for the benefit of the Banks and the Agent.
15.2. Employees and Agents. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent in its sole
discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Borrower.
15.3. No Liability. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
15.4. No Representations.
15.4.1. General. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the
Revolving Credit Notes, the Letters of Credit, any of the other Loan
Documents or any instrument at any time constituting, or intended to
constitute, collateral security for the Revolving Credit Notes, or for
the value of any such collateral security or for the validity,
enforceability or collectability of any such amounts owing with respect
to the Revolving Credit Notes, or for any recitals or statements,
warranties or representations made herein or in any of the other Loan
Documents or in any certificate or instrument hereafter furnished to it
by or on behalf of the Borrower or any of its Subsidiaries, or be bound
to ascertain or inquire as to the performance or observance of any of
the terms, conditions, covenants or agreements herein or in any
instrument at any time constituting, or intended to constitute,
collateral security for the Revolving Credit Notes or to inspect any of
the properties, books or records of the Borrower or any of its
Subsidiaries. The Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by the Borrower or
any holder of any of the Revolving Credit Notes shall have been duly
authorized or is true, accurate and complete. The Agent has not made
nor does it now make any representations or warranties, express or
implied, nor does it assume any liability to the Banks, with respect to
the credit worthiness or financial conditions of the Borrower or any of
its Subsidiaries. Each Bank acknowledges that it has, independently and
without reliance upon the Agent or any other Bank, and based upon such
information and documents as it has deemed appropriate, made its own
credit analysis and decision to enter into this Credit Agreement.
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15.4.2. Closing Documentation, etc. For purposes
of determining compliance with the conditions set forth in ss.11,
each Bank that has executed this Credit Agreement shall be deemed to
have consented to, approved or accepted, or to be satisfied with, each
document and matter either sent, or made available, by the Agent to
such Bank for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by or acceptable or
satisfactory to such Bank, unless an officer of the Agent active upon
the Borrower's account shall have received notice from such Bank prior
to the Closing Date specifying such Bank's objection thereto and such
objection shall not have been withdrawn by notice to the Agent to such
effect on or prior to the Closing Date.
15.5. Payments.
15.5.1. Payments to Agent. A payment by the Borrower to the
Agent hereunder or under any of the other Loan Documents for the
account of any Bank shall constitute a payment to such Bank. The Agent
agrees promptly to distribute to each Bank such Bank's pro rata share
of payments received by the Agent for the account of the Banks except
as otherwise expressly provided herein or in any of the other Loan
Documents.
15.5.2. Distribution by Agent. If in the opinion of the Agent
the distribution of any amount received by it in such capacity
hereunder, under the Revolving Credit Notes or under any of the other
Loan Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution shall have
been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay
over the same in such manner and to such Persons as shall be determined
by such court.
15.5.3. Delinquent Banks. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Bank that fails (a) to make available to the Agent its
pro rata share of any Revolving Credit Loan or to purchase any Letter
of Credit Participation or (b) to comply with the provisions of ss.14
with respect to making dispositions and arrangements with the other
Banks, where such Bank's share of any payment received, whether by
setoff or otherwise, is in excess of its pro rata share of such
payments due and payable to all of the Banks, in each case as, when and
to the full extent required by the provisions of this Credit Agreement,
shall be deemed delinquent (a "Delinquent Bank") and shall be deemed a
Delinquent Bank until such time as such delinquency is satisfied. A
Delinquent Bank shall be deemed to have assigned any and all payments
due to it from the Borrower, whether on account of outstanding
Revolving Credit Loans, Unpaid Reimbursement Obligations, interest,
fees or otherwise, to the remaining nondelinquent Banks for application
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to, and reduction of, their respective pro rata shares of all
outstanding Revolving Credit Loans and Unpaid Reimbursement
Obligations. The Delinquent Bank hereby authorizes the Agent to
distribute such payments to the nondelinquent Banks in proportion to
their respective pro rata shares of all outstanding Revolving Credit
Loans and Unpaid Reimbursement Obligations. A Delinquent Bank shall be
deemed to have satisfied in full a delinquency when and if, as a result
of application of the assigned payments to all outstanding Revolving
Credit Loans and Unpaid Reimbursement Obligations of the nondelinquent
Banks, the Banks' respective pro rata shares of all outstanding
Revolving Credit Loans and Unpaid Reimbursement Obligations have
returned to those in effect immediately prior to such delinquency and
without giving effect to the nonpayment causing such delinquency.
15.6. Holders of Notes. The Agent may deem and treat the payee of any
Revolving Credit Note or the purchaser of any Letter of Credit Participation as
the absolute owner or purchaser thereof for all purposes hereof until it shall
have been furnished in writing with a different name by such payee or by a
subsequent holder, assignee or transferee.
15.7. Indemnity. The Banks ratably agree hereby to indemnify and hold
harmless the Agent and its affiliates from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Agent or such affiliate has not
been reimbursed by the Borrower as required by ss.16), and liabilities of every
nature and character arising out of or related to this Credit Agreement, the
Revolving Credit Notes, or any of the other Loan Documents or the transactions
contemplated or evidenced hereby or thereby, or the Agent's actions taken
hereunder or thereunder, except to the extent that any of the same shall be
directly caused by the Agent's willful misconduct or gross negligence.
15.8. Agent as Bank. In its individual capacity, Fleet shall have the
same obligations and the same rights, powers and privileges in respect to its
Commitment and the Revolving Credit Loans made by it, and as the holder of any
of the Revolving Credit Notes and as the purchaser of any Letter of Credit
Participations, as it would have were it not also the Agent.
15.9. Resignation. The Agent may resign at any time by giving sixty
(60) days prior written notice thereof to the Banks and the Borrower. Upon any
such resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
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vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
15.10. Notification of Defaults and Events of Default. Each Bank hereby
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Agent thereof. The Agent hereby agrees that upon
receipt of any notice under this ss.15.10 it shall promptly notify the other
Banks of the existence of such Default or Event of Default.
16. EXPENSES AND INDEMNIFICATION.
16.1. Expenses. The Borrower agrees to pay (a) the reasonable costs of
producing and reproducing this Credit Agreement, the other Loan Documents and
the other agreements and instruments mentioned herein, (b) any taxes (including
any interest and penalties in respect thereto) payable by the Agent or any of
the Banks (other than taxes based upon the Agent's or any Bank's net income) on
or with respect to the transactions contemplated by this Credit Agreement (the
Borrower hereby agreeing to indemnify the Agent and each Bank with respect
thereto), (c) the reasonable fees, expenses and disbursements of the Agent's
Special Counsel or any local counsel to the Agent incurred in connection with
the preparation, syndication, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, any
amendments, modifications, approvals, consents or waivers hereto or hereunder,
or the cancellation of any Loan Document upon payment in full in cash of all of
the Obligations or pursuant to any terms of such Loan Document for providing for
such cancellation, (d) the fees, expenses and disbursements of the Agent or any
of its affiliates incurred by the Agent or such affiliate in connection with any
commercial finance examination or the preparation, syndication, administration
or interpretation of the Loan Documents and other instruments mentioned herein,
including all title insurance premiums and surveyor, engineering and appraisal
charges, if applicable, (e) any fees, costs, expenses and bank charges,
including bank charges for returned checks, incurred by the Agent in
establishing, maintaining or handling agency accounts, lock box accounts and
other accounts; (f) all reasonable out-of-pocket expenses (including without
limitation reasonable attorneys' fees and costs, which attorneys may be
employees of any Bank or the Agent, and reasonable consulting, accounting,
appraisal, investment banking and similar professional fees and charges)
incurred by any Bank or the Agent in connection with (i) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrower or
any of its Subsidiaries or the administration thereof after the occurrence of a
Default or Event of Default and (ii) any litigation, proceeding or dispute
whether arising hereunder or otherwise, in any way related to any Bank's or the
Agent's relationship with the Borrower or any of its Subsidiaries and (g) all
reasonable fees, expenses and disbursements of any Bank or the Agent incurred in
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connection with UCC and intellectual property searches, UCC and intellectual
property filings or mortgage recordings.
16.2. Indemnification. The Borrower agrees to indemnify and hold
harmless the Agent, its affiliates and the Banks from and against any and all
claims, actions and suits whether groundless or otherwise, and from and against
any and all liabilities, losses, damages and expenses of every nature and
character arising out of this Credit Agreement or any of the other Loan
Documents or the transactions contemplated hereby including, without limitation,
(a) any actual or proposed use by the Borrower or any of its Subsidiaries of the
proceeds of any of the Revolving Credit Loans or Letters of Credit, (b) the
reversal or withdrawal of any provisional credits granted by the Agent upon the
transfer of funds from lock box, bank agency or concentration accounts or in
connection with the provisional honoring of checks or other items, (c) any
actual or alleged infringement of any patent, copyright, trademark, service mark
or similar right of the Borrower or any of its Subsidiaries comprised in the
Collateral, (d) the Borrower or any of its Subsidiaries entering into or
performing this Credit Agreement or any of the other Loan Documents or (e) with
respect to the Borrower and its Subsidiaries and their respective properties and
assets, the violation of any Environmental Law, the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release or threatened release
of any Hazardous Substances or any action, suit, proceeding or investigation
brought or threatened with respect to any Hazardous Substances (including, but
not limited to, claims with respect to wrongful death, personal injury or damage
to property), in each case including, without limitation, the reasonable fees
and disbursements of counsel and allocated costs of internal counsel incurred in
connection with any such investigation, litigation or other proceeding except to
the extent that any of the foregoing are directly caused by the gross negligence
or willful misconduct of the otherwise indemnified party. In litigation, or the
preparation therefor, the Banks and the Agent and its affiliates shall be
entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of the Borrower
under this ss.16.2 are unenforceable for any reason, the Borrower hereby agrees
to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law.
16.3. Survival. The covenants contained in this ss.16 shall survive
payment or satisfaction in full of all other Obligations.
17. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
17.1. Confidentiality. Each of the Banks and the Agent agrees, on
behalf of itself and each of its affiliates, directors, officers, employees
and representatives, to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower or any of its Subsidiaries
pursuant to this Credit Agreement that is identified by such Person as being
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confidential at the time the same is delivered to the Banks or the Agent,
provided that nothing herein shall limit the disclosure of any such information
(a) after such information shall have become public other than through a
violation of this ss.17, (b) to the extent required by statute, rule, regulation
or judicial process, (c) to counsel for any of the Banks or the Agent, (d) to
bank examiners or any other regulatory authority having jurisdiction over any
Bank or the Agent, or to auditors or accountants, (e) to the Agent, any Bank or
any affiliate of the foregoing, (f) in connection with any litigation to which
any one or more of the Banks, the Agent or any affiliate of the Agent or any
Bank is a party, or in connection with the enforcement of rights or remedies
hereunder or under any other Loan Document, (g) to a Subsidiary or affiliate of
such Bank or (h) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant agrees to be bound by the
provisions of ss.19.6. Moreover, each of the Agent, the Banks and any affiliate
of the Agent or any Bank is hereby expressly permitted by the Borrower to refer
to any of the Borrower and its Subsidiaries in connection with any advertising,
promotion or marketing undertaken by the Agent, such Bank or such affiliate and,
for such purpose, the Agent, such Bank or such affiliate may utilize any trade
name, trademark, logo or other distinctive symbol associated with the Borrower
or any of its Subsidiaries or any of their businesses.
17.2. Prior Notification. Unless specifically prohibited by applicable
law or court order, each of the Banks and the Agent shall, prior to disclosure
thereof, notify the Borrower of any request for disclosure of any such
non-public information by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) or pursuant to legal
process.
17.3. Other. In no event shall any Bank or the Agent be obligated or
required to return any materials furnished to it or any affiliate thereof by the
Borrower or any of its Subsidiaries. The obligations of each Bank under this
ss.17 shall supersede and replace the obligations of such Bank under any
confidentiality letter in respect of this financing signed and delivered by such
Bank to the Borrower prior to the date hereof and shall be binding upon any
assignee of, or purchaser of any participation in, any interest in any of the
Revolving Credit Loans or Reimbursement Obligations from any Bank.
18. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Revolving Credit Notes, in any of the other Loan Documents or in any
documents or other papers delivered by or on behalf of the Borrower or any of
its Subsidiaries pursuant hereto shall be deemed to have been relied upon by the
Banks and the Agent, notwithstanding any investigation heretofore or hereafter
made by any of them, and shall survive the making by the Banks of any of the
Revolving Credit Loans and the issuance, extension or renewal of any Letters of
Credit, as herein contemplated, and shall continue in full force and effect so
long as any Letter of Credit or any amount due under this Credit Agreement or
the Notes or any of the other Loan Documents remains outstanding or any Bank has
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any obligation to make any Revolving Credit Loans or the Agent has any
obligation to issue, extend or renew any Letter of Credit, and for such further
time as may be otherwise expressly specified in this Credit Agreement. All
statements contained in any certificate or other paper delivered to any Bank or
the Agent at any time by or on behalf of the Borrower or any of its Subsidiaries
pursuant hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower or such Subsidiary
hereunder.
19. ASSIGNMENT AND PARTICIPATION.
19.1. Conditions to Assignment by Banks. Except as provided herein,
each Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage and Commitment and the same portion of
the Revolving Credit Loans at the time owing to it, the Revolving Credit Notes
held by it and its participating interest in the risk relating to any Letters of
Credit); provided that (a) the Agent shall have given its prior written consent
to such assignment; except that the consent of the Borrower or the Agent shall
not be required in connection with any assignment by a Bank to (i) an existing
Bank or (ii) a Bank Affiliate of such Bank, (b) each such assignment shall be of
a constant, and not a varying, percentage of all the assigning Bank's rights and
obligations under this Credit Agreement, (c) each assignment shall be in an
amount that is a whole multiple of $5,000,000 (or such smaller amount which
represents the assigning Bank's entire Commitment) and (d) the parties to such
assignment shall execute and deliver to the Agent, for recording in the Register
(as hereinafter defined), an Assignment and Acceptance, substantially in the
form of Exhibit E hereto (an "Assignment and Acceptance"), together with any
Notes subject to such assignment. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business Days after
the execution thereof, (i) the assignee thereunder shall be a party hereto and,
to the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder, and (ii) the assigning Bank shall, to the
extent provided in such assignment and upon payment to the Agent of the
registration fee referred to in ss.19.3, be released from its obligations under
this Credit Agreement.
19.2. Certain Representations and Warranties; Limitations; Covenants.
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it
is the legal and beneficial owner of the interest being assigned
thereby free and clear of any adverse claim, the assigning Bank makes
no representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan Documents
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or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or
mortgage, if any;
(b) the assigning Bank makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Borrower and its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of the Obligations,
or the performance or observance by the Borrower and its Subsidiaries
or any other Person primarily or secondarily liable in respect of any
of the Obligations of any of their obligations under this Credit
Agreement or any of the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy
of this Credit Agreement, together with copies of the most recent
financial statements referred to in ss.7.4 and ss.8.4 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such assignee will, independently and without
reliance upon the assigning Bank, the Agent or any other Bank and based
on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Credit Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers
under this Credit Agreement and the other Loan Documents as are
delegated to the Agent by the terms hereof or thereof, together with
such powers as are reasonably incidental thereto;
(g) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of
this Credit Agreement are required to be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made
arrangements with the assigning Bank satisfactory to such assignee with
respect to its pro rata share of Letter of Credit Fees in respect of
outstanding Letters of Credit.
19.3. Register. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Revolving Credit Loans owing to and
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Letter of Credit Participations purchased by, the Banks from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this Credit
Agreement. The Register shall be available for inspection by the Borrower and
the Banks at any reasonable time and from time to time upon reasonable prior
notice. Upon each such recordation, the assigning Bank agrees to pay to the
Agent a registration fee in the sum of $3,500.
19.4. New Notes. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Revolving Credit
Note subject to such assignment, the Agent shall (a) record the information
contained therein in the Register, and (b) give prompt notice thereof to the
Borrower and the Banks (other than the assigning Bank). Within five (5) Business
Days after receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Agent, in exchange for each surrendered Revolving
Credit Note, a new Revolving Credit Note to the order of such Eligible Assignee
in an amount equal to the amount assumed by such Eligible Assignee pursuant to
such Assignment and Acceptance and, if the assigning Bank has retained some
portion of its obligations hereunder, a new Revolving Credit Note to the order
of the assigning Bank in an amount equal to the amount retained by it hereunder.
Such new Revolving Credit Notes shall provide that they are replacements for the
surrendered Revolving Credit Notes, shall be in an aggregate principal amount
equal to the aggregate principal amount of the surrendered Revolving Credit
Notes, shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of the assigned Revolving Credit
Notes. Within five (5) days of issuance of any new Revolving Credit Notes
pursuant to this ss.19.4, the Borrower shall deliver an opinion of counsel,
addressed to the Banks and the Agent, relating to the due authorization,
execution and delivery of such new Revolving Credit Notes and the legality,
validity and binding effect thereof, in form and substance satisfactory to the
Banks. The surrendered Revolving Credit Notes shall be cancelled and returned to
the Borrower.
19.5. Participations. Each Bank may sell participations to one or more
banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; provided
that (a) any such sale or participation shall not affect the rights and duties
of the selling Bank hereunder to the Borrower and (b) the only rights granted to
the participant pursuant to such participation arrangements with respect to
waivers, amendments or modifications of the Loan Documents shall be the rights
to approve waivers, amendments or modifications that would reduce the principal
of or the interest rate on any Revolving Credit Loans, extend the term or
increase the amount of the Commitment of such Bank as it relates to such
participant, reduce the amount of any Commitment Fees or Letter of Credit Fees
to which such participant is entitled or extend any regularly scheduled payment
date for principal or interest.
19.6. Disclosure. The Borrower agrees that in addition to disclosures
made in accordance with standard and customary banking practices any Bank may
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disclose information obtained by such Bank pursuant to this Credit Agreement to
assignees or participants and potential assignees or participants hereunder;
provided that such assignees or participants or potential assignees or
participants shall agree (a) to treat in confidence such information unless such
information otherwise becomes public knowledge, (b) not to disclose such
information to a third party, except as required by law or legal process and (c)
not to make use of such information for purposes of transactions unrelated to
such contemplated assignment or participation. For purposes of this ss.19.6 an
assignee or participant or potential assignee or participant may include a
counterparty with whom such Bank has entered into or potentially might enter
into a derivative contract referenced to credit or other risks or events arising
under this Credit Agreement or any other Loan Document.
19.7. Assignee or Participant Affiliated with the Borrower. If any
assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Agent pursuant to ss.13.1 or ss.13.2, and
the determination of the Majority Banks shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to such assignee
Bank's interest in any of the Revolving Credit Loans or Reimbursement
Obligations. If any Bank sells a participating interest in any of the Revolving
Credit Loans or Reimbursement Obligations to a participant, and such participant
is the Borrower or an Affiliate of the Borrower, then such transferor Bank shall
promptly notify the Agent of the sale of such participation. A transferor Bank
shall have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan Documents or for
purposes of making requests to the Agent pursuant to ss.13.1 or ss.13.2 to the
extent that such participation is beneficially owned by the Borrower or any
Affiliate of the Borrower, and the determination of the Majority Banks shall for
all purposes of this Credit Agreement and the other Loan Documents be made
without regard to the interest of such transferor Bank in the Revolving Credit
Loans or Reimbursement Obligations to the extent of such participation.
19.8. Miscellaneous Assignment Provisions. Any assigning
Bank shall retain its rights to be indemnified pursuant to ss.16 with respect to
any claims or actions arising prior to the date of such assignment. If any
assignee Bank is not incorporated under the laws of the United States of America
or any state thereof, it shall, prior to the date on which any interest or fees
are payable hereunder or under any of the other Loan Documents for its account,
deliver to the Borrower and the Agent certification as to its exemption from
deduction or withholding of any United States federal income taxes. Anything
contained in this ss.19 to the contrary notwithstanding, any Bank may at any
time pledge all or any portion of its interest and rights under this Credit
Agreement (including all or any portion of its Revolving Credit Notes) to any of
the twelve Federal Reserve Banks organized under ss.4 of the Federal Reserve
Act, 12 U.S.C. ss.341. No such pledge or the enforcement thereof shall release
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the pledgor Bank from its obligations hereunder or under any of the other Loan
Documents.
19.9. Assignment by Borrower. The Borrower shall not assign or transfer
any of its rights or obligations under any of the Loan Documents without the
prior written consent of each of the Banks.
20. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Revolving Credit Notes or any Letter of Credit
Applications shall be in writing and shall be delivered in hand, mailed by
United States registered or certified first class mail, postage prepaid, sent by
overnight courier, or sent by telegraph, telecopy, facsimile or telex and
confirmed by delivery via courier or postal service, addressed as follows:
(a) if to the Borrower, at 65 Grove Street, Watertown, MA 02472, Attention:
Daniel M. Kuzmak, Chief Financial Officer, or at such other address for notice
as the Borrower shall last have furnished in writing to the Person giving the
notice;
(b) if to the Agent, at 100 Federal Street, Boston, Massachusetts 02110,
USA, Attention: John C. Dunne, Director, or such other address for notice as the
Agent shall last have furnished in writing to the Person giving the notice; and
(c) if to any Bank, at such Bank's address set forth on Schedule 1
hereto, or such other address for notice as such Bank shall have last furnished
in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
21. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
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OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN ss.20. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
22. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
23. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
24. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in ss.27.
25. WAIVER OF JURY TRIAL.
Each of Borrower, the Agent and the Banks hereby waives its right to a
jury trial with respect to any action or claim arising out of any dispute in
connection with this Credit Agreement, the Revolving Credit Notes or any of the
other Loan Documents, any rights or obligations hereunder or thereunder or the
performance of such rights and obligations. Except as prohibited by law, the
Borrower hereby waives any right it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Borrower (a) certifies that no representative, agent or
attorney of any Bank or the Agent has represented, expressly or otherwise, that
such Bank or the Agent would not, in the event of litigation, seek to enforce
the foregoing waivers and (b) acknowledges that the Agent and the Banks have
been induced to enter into this Credit Agreement, and the other Loan Documents
to which it is a party by, among other things, the waivers and certifications
contained herein.
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26. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement
to be given by the Banks may be given, and any term of this Credit Agreement,
the other Loan Documents or any other instrument related hereto or mentioned
herein may be amended, and the performance or observance by the Borrower or any
of its Subsidiaries of any terms of this Credit Agreement, the other Loan
Documents or such other instrument or the continuance of any Default or Event of
Default may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Borrower and the written consent of the Majority Banks. Notwithstanding the
foregoing, the rate of interest on the Revolving Credit Notes (other than
interest accruing pursuant to ss.5.11 following the effective date of any waiver
by the Majority Banks of the Default or Event of Default relating thereto) or
the amount of the Commitment Fee or Letter of Credit Fees may not be decreased
without the written consent of each Bank affected thereby; the amount of the
Commitments may not be increased without the written consent of the Borrower and
of each Bank affected thereby; the Revolving Credit Loan Maturity Date and the
Interest Payment Dates may not be postponed without the written consent of each
Bank affected thereby; this ss.26 and the definition of Majority Banks may not
be amended, without the written consent of all of the Banks; and the amount of
the Agent's Fee or any Letter of Credit Fees payable for the Agent's account and
ss.15 may not be amended without the written consent of the Agent. No waiver
shall extend to or affect any obligation not expressly waived or impair any
right consequent thereon. No course of dealing or delay or omission on the part
of the Agent or any Bank in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto. No notice to or demand upon the
Borrower shall entitle the Borrower to other or further notice or demand in
similar or other circumstances.
27. USURY.
All agreements between the Borrower and the Agent and the Banks are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of acceleration of the maturity of the Revolving Credit Notes or
otherwise, shall the amount paid or agreed to be paid to the Agent or any Bank
for the use or the forbearance of the Indebtedness represented by any Revolving
Credit Note exceed the maximum permissible under applicable law. In this regard,
it is expressly agreed that it is the intent of the Borrower, the Agent and the
Banks, in the execution, delivery and acceptance of the Revolving Credit Notes,
to contract in strict compliance with the laws of the Commonwealth of
Massachusetts. If, under any circumstances whatsoever, performance or
fulfillment of any provision of any of the Revolving Credit Notes or any of the
other Loan Documents at the time such provision is to be performed or fulfilled
shall involve exceeding the limit of validity prescribed by applicable law, then
the obligation so to be performed or fulfilled shall be reduced automatically to
the limits of such validity, and if under any circumstances whatsoever the Agent
or any Banks should ever receive as interest an amount which would exceed the
highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the principal balance evidenced by the Revolving
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Credit Notes and not to the payment of interest. The provisions of this ss.27
shall control every other provision of this Credit Agreement and each of the
Revolving Credit Notes.
28. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
29. TRANSITIONAL ARRANGEMENTS
29.1. Prior Credit Agreement. This Credit Agreement shall supersede the
Prior Credit Agreement in its entirety, except as provided in this ss.29. On the
Closing Date, the rights and obligations of the parties under the Prior Credit
Agreement and the "Revolving Credit Notes" as defined therein shall be subsumed
within and be governed by this Credit Agreement and the Revolving Credit Notes
as defined herein; provided, however, that each of the "Revolving Credit Loans"
(as such term is defined in the Prior Credit Agreement) outstanding under the
Prior Credit Agreement on the Closing Date shall, for purposes of this Credit
Agreement, be Revolving Credit Loans; and provided further that each "Letter of
Credit" (as defined in the Prior Credit Agreement) outstanding under the Prior
Credit Agreement on the Closing Date shall, for purposes of this Credit
Agreement, be a Letter of Credit. Schedule 1 of the Prior Credit Agreement is
deleted in its entirety and replaced with Schedule 1 attached hereto.
29.2. Return and Cancellation of Note. Upon its receipt of its
Revolving Credit Notes hereunder on the Closing Date, Fleet will promptly return
to the Borrower, marked "Substituted," any note of the Borrower held by Fleet
pursuant to the Prior Credit Agreement. Nothing herein shall be deemed to be an
acknowledgment by Fleet that the obligations evidenced by such note have been
paid.
29.3. Interest and Fees Under Prior Credit Agreement. All interest and
fees and expenses, if any, owing or accruing under or in respect of the Prior
Credit Agreement through the Closing Date shall be calculated as of the Closing
Date (pro rated in the case of any fractional periods), and shall be paid on the
Closing Date. Commencing on the Closing Date, the commitment fees shall be
payable by the Borrower to the Agent for the account of the Banks in accordance
with ss.2.2.
29.4. Addition of New Banks. Fleet, the Agent and the Borrower consent
to the addition of each of Bank of America, N.A., Mellon Bank, N.A. and The
Chase Manhattan Bank (collectively, the "New Banks") as a Bank hereunder such
that, after giving effect thereto and as of the Closing Date, each New Bank
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shall be a party to this Credit Agreement and shall have the rights and
obligations of a Bank hereunder. Each New Bank (a) represents and warrants that
(i) it is duly and legally authorized to enter into this Credit Agreement, (ii)
the execution, delivery and performance of this Credit Agreement do not conflict
with any provision of law or of the charter or by-laws of such New Bank, or of
any agreement binding on such New Bank, (iii) all acts, conditions and things
required to be done and performed and to have occurred prior to the execution,
delivery and performance of this Credit Agreement, and to render the same the
legal, valid and binding obligation of such New Bank, enforceable against it in
accordance with its terms, have been done and performed and have occurred in due
and strict compliance with all applicable laws; (b) confirms that it has
received a copy of this Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to ss.ss.7.4 and 8.4 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Credit Agreement; (c) agrees
that it will, independently and without reliance upon the Agent or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under this Credit Agreement; (d) appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under this
Credit Agreement and the other Loan Documents as are delegated to the Agent by
the terms of this Credit Agreement and such other Loan Documents, respectively,
together with such powers as are reasonably incidental thereto; and (e) agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Credit Agreement are required to be performed by it as a Bank.
29.5. Revolving Credit Loans. As of the Closing Date, each Bank shall
make such dispositions and arrangements with each other Bank with respect to the
then outstanding Revolving Credit Loans as shall result in the amount of
Revolving Credit Loans owed to each Bank being equal to the product of such
Bank's Commitment Percentage multiplied by the aggregate Revolving Credit Loans
outstanding on the Closing Date. As of the Closing Date, the Commitment
Percentage of each Bank shall be as set forth in Schedule 1.
29.6. Existing Letter of Credit Instruments. As of the Closing Date,
each Bank shall make such dispositions and arrangements with each other Bank
with respect to the Letter of Credit Participations of the Banks in each Letter
of Credit then outstanding as shall result in the Letter of Credit
Participations held by each Bank in each such Letter of Credit being equal to
the product of such Bank's Commitment Percentage multiplied by the aggregate
Letter of Credit Participations in such Letter of Credit on the Closing Date.
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
IONICS, INCORPORATED
By: /s/Daniel M. Kuzmak
----------------------------------------
Daniel M. Kuzmak
Vice President and Chief
Financial Officer
FLEET NATIONAL BANK, individually and as Agent
By: /s/ John C. Dunne
---------------------------------------------
John C. Dunne, Senior Vice President
BANK OF AMERICA, N.A.
By: /s/ Jennifer L. Gerdes
-------------------------------------------
Jennifer L. Gerdes
Vice President, Commercial
Banking
THE CHASE MANHATTAN BANK
By: /s/A. Neil Sweeny
-------------------------------------------
A. Neil Sweeny, Vice President
MELLON BANK, N.A.
By: /s/D. Eliot Klein
-----------------------------------------------
D. Eliot Klein, Vice President
SCHEDULE 1
Bank Commitments and Commitment Percentages
--------------------------- -------------------- ----------------------
Domestic and LIBOR Revolving Credit Revolving Credit
Lending Office Commitment Commitment Percentage
--------------------------- -------------------- ----------------------
--------------------------- -------------------- ----------------------
Fleet National Bank $45,000,000 50.00000%
100 Federal Street
Boston, MA 02110
Attn: John C. Dunne
Senior Vice President
--------------------------- -------------------- ----------------------
--------------------------- -------------------- ----------------------
Bank of America, N.A. $15,000,000 16.66666%
231 South LaSalle
Ill 1231-06-46
Chicago, IL 60697
Attn: Helen Perry
--------------------------- -------------------- ----------------------
--------------------------- -------------------- ----------------------
The Chase Manhattan Bank $15,000,000 16.66667%
999 Broad Street
Bridgeport, CT 06604
Attn: Neil Sweeny
Vice President
--------------------------- -------------------- ----------------------
--------------------------- -------------------- ----------------------
Mellon Bank, N.A. $15,000,000 16.66667%
One Boston Place
AIM 024 0061
Sixth Floor
Boston. MA 02108
Attn: Eliot Klein
Vice President
------------------------------------------------ --------------------
------------------------------------------------ --------------------
TOTAL $90,000,000 100.00000%
------------------------------------------------ --------------------
EXHIBIT A
[EIGHTH AMENDED AND RESTATED]* REVOLVING CREDIT NOTE
----------------------------------------------------
$___________ ________ __, 20__
FOR VALUE RECEIVED, the undersigned IONICS, INCORPORATED (the
"Borrower"), hereby promises to pay to the order of ________________, a
_________________ (the "Bank") at the Agent's head office at
______________________.
(a) prior to or on December 31, 2004, the principal
amount of _________________ Dollars ($________________) or, if less,
the aggregate unpaid principal amount of the Revolving Credit Loans
advanced by the Bank to the Borrower pursuant to the Third Amended and
Restated Revolving Credit Agreement, dated as of June 29, 2001 (as
amended and in effect from time to time, the "Credit Agreement"), among
the Borrower, the Bank and the other parties thereto;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time
to time outstanding from the Closing Date under the Credit Agreement
through and including the maturity date hereof at the times and at the
rate provided in the Credit Agreement.
[This Note is an amendment and restatement in its entirety of the
Seventh Amended and Restated Revolving Credit Note issued by the Borrower to the
Bank in the original principal amount of $80,000,000, dated March 1, 2001 (the
"Amended Note"). The Note is issued in substitution for, and not in payment of,
the Amended Note.]*
This Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Credit Agreement. The Bank and any
holder hereof is entitled to the benefits of the Credit Agreement and the other
Loan Documents, and may enforce the agreements of the Borrower contained
therein, and any holder hereof may exercise the respective remedies provided for
thereby or otherwise available in respect thereof, all in accordance with the
respective terms thereof. All capitalized terms used in this Note and not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be
made, at or about the time of the drawdown date of any Loan or at the time of
receipt of any payment of principal of this Note, an appropriate notation on the
grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, reflecting the making of such Loan
or (as the case may be) the receipt of such payment. The outstanding amount of
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the Revolving Credit Loans set forth on the grid attached to this Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by the Bank with respect to any Revolving Credit Loans shall
be prima facie evidence of the principal amount thereof owing and unpaid to the
Bank, but the failure to record, or any error in so recording, any such amount
on any such grid, continuation or other record shall not limit or otherwise
affect the obligation of the Borrower hereunder or under the Credit Agreement to
make payments of principal of and interest on this Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN ss.* OF THE CREDIT AGREEMENT. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
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VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed
in its corporate name and its corporate seal to be impressed thereon by its duly
authorized officer as of the day and year first above written.
[Corporate Seal]
IONICS, INCORPORATED
By: _______________________________________________
------------------- -------------------- ------------------------ -------------------- --------------------
Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made By:
------------------- -------------------- ------------------------ -------------------- --------------------
------------------- -------------------- ------------------------ -------------------- --------------------
------------------- -------------------- ------------------------ -------------------- --------------------
------------------- -------------------- ------------------------ -------------------- --------------------
------------------- -------------------- ------------------------ -------------------- --------------------
EXHIBIT B
Form of Loan Request
[insert date]
Fleet National Bank, as Agent
100 Federal Street
Boston, Massachusetts 02110
Re: Loan Request
Ladies and Gentlemen:
Reference is hereby made to that certain Third Amended and Restated
Revolving Credit Agreement, dated as of June 29, 2001 (as the same may be
amended and in effect from time to time, the "Credit Agreement"), among Ionics,
Incorporated (the "Borrower"), the lending institutions which are or may become
parties thereto from time to time (collectively, the "Banks"), and Fleet
National., as agent (the "Agent") for the Banks. Capitalized terms which are
used herein without definition and which are defined in the Credit Agreement
shall have the same meanings herein as in the Credit Agreement.
Pursuant to ss.2.6 of the Credit Agreement, we hereby request that a
Revolving Credit Loan consisting of [a Prime Rate Loan in the principal amount
of $__________, or a LIBOR Rate Loan or a Swing Line Loan consisting of a Prime
Rate Laon in the principal amount of $__________ with an Interest Period of
_________] be made on __________ __, __. We understand that this request is
irrevocable and binding on us and obligates us to accept the requested Revolving
Credit Loan on such date.
We hereby certify (a) that the aggregate outstanding principal amount
of the Revolving Credit Loans on today's date is $_______, (b) that we will use
the proceeds of the requested Revolving Credit Loan in accordance with the
provisions of the Credit Agreement, (c) that each of the representations and
warranties contained in the Credit Agreement or in any document or instrument
delivered pursuant to or in connection therewith was true as of the date as of
which it was made and is true at and as of the date hereof (except to the extent
of changes resulting from transactions contemplated or permitted by the Credit
Agreement and changes occurring in the ordinary course of business that singly
or in the aggregate do not have a material adverse effect, and to the extent
that such representations and warranties related expressly to an earlier date)
and (d) that no Default or Event of Default has occurred and is continuing.
Very truly yours,
IONICS, INCORPORATED
By:
-------------------------------------
Title:
EXHIBIT C
FORM OF
COMPLIANCE CERTIFICATE
_______, 20__
Fleet National Bank, as Agent
for the Banks
100 Federal Street
Boston, Massachusetts 02110, USA
Attention: John C. Dunne, Director
Ladies and Gentlemen:
Reference is hereby made to that certain Third Amended and Restated
Revolving Credit Agreement, dated as of June 29, 2001 (as amended and in effect
from time to time, the "Credit Agreement"), by and among IONICS, INCORPORATED
(the "Borrower"), FLEET NATIONAL BANK and the other lending institutions listed
on Schedule 1 thereto (collectively, the "Banks"), and FLEET NATIONAL BANK as
agent for the Banks (in such capacity, the "Agent"). Capitalized terms which are
used herein and not otherwise defined shall have the same meanings assigned to
such terms in the Credit Agreement.
Pursuant to ss.8.4(c) of the Credit Agreement, the principal financial
or accounting officer of the Borrower hereby certifies to you as follows: (a)
the information furnished in the calculations attached hereto was true and
correct as of the last day of the fiscal [quarter/year] ended ______________,
20__; (b) as of the date of this certificate, there exists no Default or Event
of Default , or if there is a Default or an Event of Default, such Default or
Event of Default is listed on an Exhibit attached hereto; and (c) the financial
statements delivered herewith were prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
except as disclosed therein.
IN WITNESS WHEREOF, the undersigned officer has duly executed this
Compliance Certificate as of the date first written above.
IONICS, INCORPORATED
By:____________________________________
Name:
Title:
Compliance Certificate Worksheet
IONICS, INCORPORATED
As of __________________________
1. Leverage Ratio (ss.10.1)
(a) Total Funded Indebtedness as of the fiscal quarter then ended
(i) Indebtedness for borrowed money (including all $__________
Subordinated Debt)
(ii) purchase money Indebtedness $__________
(iii) Indebtedness in respect of Capitalized Leases and $__________
Synthetic Leases
(iv) Indebtedness in respect of Letters of Credit $__________
(v) Indebtedness in respect of other letters of credit $__________
(vi) Total Funded Indebtedness (sum of Items 1(a)(i) $__________
through 1(a)(v))
(b) EBITDA for the prior twelve (12) calendar months ending as
of the last day of the fiscal quarter then ended
(i) Consolidated Net Income (or Deficit) $__________
(ii) depreciation $__________
(iii) amortization $__________
(iv) income tax expense $__________
(v) Consolidated Total Interest Expense $__________
(vi) other non-cash charges $__________
(vii) non-cash gains $__________
(viii) Consolidated EBITDA (Item 1(b)(i) plus the sum of $__________
----
Items 1(b)(ii) through 1(b)(vi)) minus Item
1(b)(vii)
(c) Ratio of Item 1(a)(vi) to Item 1(b)(viii) ____ :1.00
(d) Compliance
yes/no
2. Minimum EBITDA (ss.10.2)
(a) For Q2 2001, see Items 1(b)(i)-(viii) but calculated for the $__________
6 calendar month period ending 6/30/01
(b) For Q3 2001, see Items 1(b)(i)-(viii) but calculated for the
9 calendar month period ending 9/30/01 $__________
(c) For Q4 2001 and each fiscal quarter thereafter, see Item
1(b)(viii)
$----------
(d) Compliance
yes/no
3. Consolidated Net Worth (ss.10.3)
(a) Consolidated Net Worth as of fiscal quarter then ended
(i) Consolidated Total Assets $__________
(ii) Consolidated Total Liabilities $__________
(iii) subscriptions receivable $__________
(iv) Consolidated Net Worth: Item 3(a)(i) minus Items $__________
-----
3(a)(ii) minus Item 3(a)(iii)
-----
(b) Minimum Required Consolidated Net Worth
(i) $300,000,000 $__________
(ii) (positive) Consolidated Net Income (beginning with $__________
FY 2000)
(iii) Item 3(b)(ii) x 50% $__________
(iv) Net Cash Proceeds (100%) $__________
(v) Item 3(b)(i) plus Item (3)(b)(iii) plus Item $__________
---- ----
(3)(b)(iv)
(c) Compliance (Item 3(a)(iv) greater than or equal to Item
3(b)(v)) yes/no
4. Capital Expenditures (ss.10.4) for fiscal year 200
-------------------- -----
(a) Capital Expenditures $__________
(b) Maximum Capital Expenditures $40,000,000
(c) Compliance
yes/no
EXHIBIT D
FORM OF INFORMATION CERTIFICATE
The undersigned, the _______________ of IONICS, INCORPORATED/ [DOMESTIC
SUBSIDIARY], a Massachusetts/ __________ corporation (the "Company"), hereby
certifies, with reference to a certain Third Amended and Restated Revolving
Credit Agreement, dated as of June 29, 2001 (terms defined in such Credit
Agreement having the same meanings herein as specified therein), among the
[Company/Ionics, Incorporated], FLEET NATIONAL BANK, as agent (the "Agent") for
itself and other lending institutions party to the Credit Agreement (the
"Banks") and the Banks, to the Agent as follows:
1. Names.
(a) The exact corporate name of the Company as that name appears
on its [Articles of Organization/Certificate of Incorporation] is as
follows:
(b) The following is a list of all other names (including
trade names or similar appellations) used by the Company, or any other
business or organization to which the Company became the successor by
merger, consolidation, acquisition, change in form, nature or
jurisdiction of organization or otherwise, now or at any time during
the past five years:
2. Other Identifying Factors.
(a) The following is the type of organization of the Company:
(b) The following is the jurisdiction of the Company's
organization
(c) The following is the information required above in
this ss.2 for any other business or organization to which the Company
became the successor by merger, consolidation, acquisition, change in
form, nature or jurisdiction of organization or otherwise, now or at
any time during the past five years:
3. Chief Executive Office.
(a) The chief executive office of the Company is located at the
following address:
Address County State
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(b) The principal mailing address of the Company is the
following address, if different from the chief executive office address:
Mailing Address County State
4. Other Current Locations.
(a) The following are all other locations in the United States
of America in which the Company maintains any books or records or carries on its
business or at which any of its significant assets are located:
@@
Address County State
5. Prior Locations.
(a) Set forth below is the information required by ss.3 and by
subparagraph (a) of ss.4 with respect to each location or place of business
previously maintained by the Company at any time during the past five years in a
state in which the Company has previously maintained a location or place of
business at any time during the past four months:
@@
Address County State
IN WITNESS WHEREOF, we have hereunto signed this Certificate on ________ __,
20__.
IONICS, INCORPORATED
/DOMESTICSUBSIDIARY
By: _______________________________________________
Name:
Title:
EXHIBIT E
ASSIGNMENT AND ACCEPTANCE
Dated as of __________, 20__
Reference is made to the Third Amended and Restated Revolving Credit
Agreement, dated as of June 29, 2001 (as from time to time amended and in
effect, the "Credit Agreement"), by and among IONICS, INCORPORATED, a
Massachusetts corporation (the "Borrower"), the lending institutions referred to
therein as Banks (collectively, the "Banks"), and FLEET NATIONAL BANK, a
national banking association, as agent (in such capacity, the "Agent") for the
Banks. Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Credit Agreement.
________________ (the "Assignor") and __________________ (the
"Assignee") hereby agree as follows:
6. Assignment. Subject to the terms and conditions of this Assignment
and Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, a
$__________ interest in and to the rights, benefits, indemnities and obligations
of the Assignor under the Credit Agreement equal to _____.00% in respect of the
Total Commitment immediately prior to the Effective Date (as hereinafter
defined).
7. Assignor's Representations. The Assignor (i) represents and warrants
that (A) it is legally authorized to enter into this Assignment and Acceptance,
(B) as of the date hereof, its Commitment is $__________, its Commitment
Percentage is _____.00%, the aggregate outstanding principal balance of its
Revolving Credit Loans equals $__________, and the aggregate amount of its
Letter of Credit Participations equals $__________ (in each case after giving
effect to the assignment contemplated hereby but without giving effect to any
contemplated assignments which have not yet become effective), and (C)
immediately after giving effect to all assignments which have not yet become
effective, the Assignor's Commitment Percentage will be sufficient to give
effect to this Assignment and Acceptance, (ii) makes no representation or
warranty, express or implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or any of the other Loan Documents or the execution, ___
legality, ___ validity, enforceability, genuineness, sufficiency or value of the
Credit Agreement, the other Loan Documents or any other instrument or document
furnished pursuant thereto or the attachment, perfection or priority of any
security interest or mortgage, other than that it is the legal and beneficial
owner of the interest being assigned by it hereunder free and clear of any claim
or encumbrance; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any of
its Subsidiaries or any other Person primarily or secondarily liable in respect
of any of the Obligations, or the performance or observance by the Borrower or
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any of its Subsidiaries or any other Person primarily or secondarily liable in
respect of any of the Obligations of any of its obligations under the Credit
Agreement or any of the other Loan Documents or any other instrument or document
delivered or executed pursuant thereto; and (iv) attaches hereto the Revolving
Credit Note delivered to it under the Credit Agreement.
The Assignor requests that the Borrower exchange the Assignor's
Revolving Credit Note for new Revolving Credit Notes payable to the Assignor and
the Assignee as follows:
@@
Notes Payable to Amount of Revolving
the Order of: Credit Note
Assignor $__________
Assignee $__________
@@
8. Assignee's Representations. The Assignee (i) represents and warrants
that (A) it is duly and legally authorized to enter into this Assignment and
Acceptance, (B) the execution, delivery and performance of this Assignment and
Acceptance do not conflict with any provision of law or of the charter or
by-laws of the Assignee, or of any agreement binding on the Assignee, (C) all
acts, conditions and things required to be done and performed and to have
occurred prior to the execution, delivery and performance of this Assignment and
Acceptance, and to render the same the legal, valid and binding obligation of
the Assignee, enforceable against it in accordance with its terms, have been
done and performed and have occurred in due and strict compliance with all
applicable laws; (ii) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to ss.8.4 thereof and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (iii) agrees that it will, independently
and without reliance upon the Assignor, the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iv) represents and warrants that it is an Eligible
Assignee; (v) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement and the other
Loan Documents as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; (vi) agrees that it will
perform in accordance with their terms all the obligations which by the terms of
the Credit Agreement are required to be performed by it as a Bank; and (vii)
acknowledges that it has made arrangements with the Assignor satisfactory to the
Assignee with respect to its pro rata share of Letter of Credit Fees in respect
of outstanding Letters of Credit.
9. Effective Date. The effective date for this Assignment and Acceptance shall
be ______________________________ (the "Effective Date"). Following the
execution of this Assignment and Acceptance[ and the consent of the
Borrower hereto having
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been obtained], each party hereto shall deliver its duly executed counterpart
hereof to the Agent for acceptance by the Agent and recording in the Register by
the Agent. Schedule 1 to the Credit Agreement shall thereupon be replaced as of
the Effective Date by the Schedule 1 annexed hereto.
10. Rights Under Credit Agreement. Upon such acceptance and recording,
from and after the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Bank thereunder, and (ii) the Assignor
shall, with respect to that portion of its interest under the Credit Agreement
assigned hereunder, relinquish its rights and be released from its obligations
under the Credit Agreement; provided, however, that the Assignor shall retain
its rights to be indemnified pursuant to ss.16 of the Credit Agreement with
respect to any claims or actions arising prior to the Effective Date.
11. Payments. Upon such acceptance of this Assignment and Acceptance by
the Agent and such recording, from and after the Effective Date, the Agent shall
make all payments in respect of the rights and interests assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. The Assignor and the Assignee shall make any appropriate adjustments
in payments for periods prior to the Effective Date by the Agent or with respect
to the making of this assignment directly between themselves.
12. Governing Law. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TO
CONFLICT OF LAWS).
13. Counterparts. This Assignment and Acceptance may be executed in any
number of counterparts which shall together constitute but one and the same
agreement.
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
[ASSIGNOR]
By:________________________________________________
Title:
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[ASSIGNEE]
By:________________________________________________
Title:
CONSENTED TO:
FLEET NATIONAL BANK, as Agent
By:________________________________________
Title:
[IONICS, INCORPORATED.]
By:________________________________________
Title:
EXHIBIT F
INTERCOMPANY
SUBORDINATION AGREEMENT
INTERCOMPANY SUBORDINATION AGREEMENT, dated as of ______ __, 20__, by
and among IONICS, INCORPORATED, a Massachusetts corporation (the "Borrower"),
and ________________, a company organized under the laws of the ________________
and such other Persons which may become parties hereto by executing a joinder
agreement in form and substance reasonably satisfactory to the Agent (each, a
"Company" and collectively, the "Companies"), and FLEET NATIONAL BANK, as agent
(hereinafter, in such capacity, the "Agent") for itself and other lending
institutions (hereinafter, collectively, the "Banks") which are or may become
parties to the Third Amended and Restated Revolving Credit Agreement, dated as
of June 29, 2001 (as amended and in effect from time to time, the "Credit
Agreement"), by and among the Borrower, the Agent and the Banks.
WHEREAS, pursuant to the Credit Agreement the Banks have agreed, upon
the terms and subject to the conditions contained therein, to make loans and
otherwise to extend credit to the Borrower;
WHEREAS, the Borrower is the direct owner of all of the capital stock
of Ionics U.K.;
WHEREAS, the financial success of each Company is dependent in whole or in
part on the financial success of the Borrower;
WHEREAS, each Company expects to receive substantial direct and
indirect benefits as a result of the loans and extensions of credit made to the
Borrower pursuant to the Credit Agreement;
WHEREAS, it is a condition precedent to the Banks' making of the loans
and otherwise extending credit to the Borrower pursuant to the Credit Agreement
that each Company enter into this Agreement with the Agent; and
WHEREAS, in order to induce the Banks to make loans and otherwise
extend credit to the Borrower pursuant to the Credit Agreement, each Company has
agreed to enter into this Agreement with the Agent;
NOW, THEREFORE, in consideration of the foregoing, the mutual
agreements herein contained and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
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1. Definitions. Terms not otherwise defined herein have the same
respective meanings given to them in the Credit Agreement. In addition, the
following terms shall have the following meanings:
Senior Debt. All principal, interest, fees, costs, enforcement expenses
(including reasonable legal fees and disbursements), collateral protection
expenses and other reimbursement or indemnity obligations created or evidenced
by the Credit Agreement or any of the other Loan Documents and any other
Obligations. Senior Debt shall expressly include any and all interest at the
rate determined in the Credit Agreement accruing or out of pocket costs or
expenses incurred after the date of any filing by or against the Borrower of any
petition under the Federal Bankruptcy Code or any other bankruptcy, insolvency
or reorganization act regardless of whether the Agent's or any Bank's claim
therefor is allowed or allowable in the case or proceeding relating thereto.
Subordinated Debt. All Indebtedness of any Company (a "Debtor Company")
to any other Company or to any subsidiary of such other Company (a "Subordinated
Company"), direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and interest and premium, if any, thereon and
other amounts payable in respect thereof, including without limitation, that
which is evidenced by an intercompany note in form and substance satisfactory to
the Agent (the "Intercompany Note(s)"); provided however that debt of any
foreign Subsidiary of the Borrower, which is owed to the Borrower or any
domestic Subsidiary, shall be excluded from the definition of Subordinated Debt.
Subordinated Documents. Collectively, the Intercompany Notes, if any,
and any and all other documents or instruments evidencing or further guarantying
or securing directly or indirectly any of the Subordinated Debt, whether now
existing or hereafter created.
2. General. The Subordinated Debt and any and all Subordinated
Documents shall be and hereby are subordinated and the payment thereof is
deferred until the full and final payment in cash of the Senior Debt, whether
now or hereafter incurred or owed by a Debtor Company. Notwithstanding the
immediately preceding sentence, each Debtor Company shall be permitted to pay,
and each Subordinated Company shall be permitted to receive, any payments of
interest or principal on the Subordinated Debt, provided that at the time of
such payment, or after giving effect thereto, no Default or Event of Default has
occurred and is continuing under the Credit Agreement or would occur after
giving effect thereto, and provided further that even if a Default or an Event
of Default has occurred and is continuing or would occur after giving effect
thereto, each Debtor Company shall be permitted to pay to the Borrower, and the
Borrower shall be permitted to receive from such Debtor Company, any payments of
interest or principal on the Subordinated Debt owing to the Borrower.
3. Enforcement. No Subordinated Company will take or omit to take any
action or assert any claim with respect to the Subordinated Debt or otherwise
which is inconsistent with the provisions of this Agreement. Without limiting
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the foregoing, no Subordinated Company will assert, collect or enforce the
Subordinated Debt or any part thereof or take any action to foreclose or realize
upon the Subordinated Debt or any part thereof or enforce any of the
Subordinated Documents except (a) in each such case as necessary, so long as no
Default or Event of Default has occurred and is then continuing under the Credit
Agreement or would occur after giving effect thereto, to collect any sums
expressly permitted to be paid by a Debtor Company pursuant to ss.2, or (b) to
the extent (but only to such extent) that the commencement of a legal action may
be required to toll the running of any applicable statute of limitation. Until
the Senior Debt has been finally paid in full in cash, no Subordinated Company
shall exercise any right of subrogation, reimbursement, restitution,
contribution or indemnity whatsoever from any assets of any Debtor Company, or
any guarantor of or provider of collateral security for the Senior Debt. Each
Subordinated Company further waives any and all rights with respect to
marshalling.
4. Payments Held in Trust. Each Subordinated Company will hold in trust
and immediately pay over to the Agent for the account of the Banks and the
Agent, in the same form of payment received, with appropriate endorsements, for
application to the Senior Debt any cash amount that any Debtor Company pays to
the Subordinated Company with respect to the Subordinated Debt, or as collateral
for the Senior Debt any other assets of any Debtor Company that the Subordinated
Company may receive with respect to the Subordinated Debt, in each case except
with respect to payments expressly permitted pursuant to ss.2.
5. Defense to Enforcement. If any Subordinated Company, in
contravention of the terms of this Agreement, shall commence, prosecute or
participate in any suit, action or proceeding against any Debtor Company, then
such Debtor Company may interpose as a defense or plea the making of this
Agreement, and the Agent or any Bank may intervene and interpose such defense or
plea in its name or in the name of such Debtor Company. If any Subordinated
Company, in contravention of the terms of this Agreement, shall attempt to
collect any of the Subordinated Debt or enforce any of the Subordinated
Documents, then the Agent, any Bank or such Debtor Company may, by virtue of
this Agreement, restrain the enforcement thereof in the name of the Agent or
such Bank or in the name of such Debtor Company. If the Subordinated Company, in
contravention of the terms of this Agreement, obtains any cash or other assets
of any Debtor Company as a result of any administrative, legal or equitable
actions, or otherwise, the Subordinated Company agrees forthwith to pay, deliver
and assign to the Agent, for the account of the Banks and the Agent, with
appropriate endorsements, any such cash for application to the Senior Debt and
any such other assets as collateral for the Senior Debt.
6. Bankruptcy, etc.
6.1. Payments relating to Subordinated Debt. At any meeting of
creditors of any Debtor Company or in the event of any case or
proceeding, voluntary or involuntary, for the distribution, division or
application of all or part of the assets of any Debtor Company or the
proceeds thereof, whether such case or proceeding be for the
-4-
liquidation, dissolution or winding up of any Debtor Company or its
business, a receivership, insolvency or bankruptcy case or proceeding,
an assignment for the benefit of creditors or a proceeding by or
against any Debtor Company for relief under the federal Bankruptcy Code
or any other bankruptcy, reorganization or insolvency law or any other
law relating to the relief of debtors, readjustment of indebtedness,
reorganization, arrangement, composition or extension or marshalling of
assets or otherwise, the Agent is hereby irrevocably authorized at any
such meeting or in any such proceeding to receive or collect for the
benefit of the Banks and the Agent any cash or other assets of any
Debtor Company distributed, divided or applied by way of dividend or
payment, or any securities issued on account of any Subordinated Debt,
and apply such cash to or to hold such other assets or securities as
collateral for the Senior Debt, and to apply to the Senior Debt any
cash proceeds of any realization upon such other assets or securities
that the Agent in its discretion elects to effect, until all of the
Senior Debt shall have been paid in full in cash, rendering to the
applicable Subordinated Company any surplus to which such Subordinated
Company is then entitled.
6.2. Subordinated Debt Voting Rights. At any such meeting of
creditors or in the event of any such case or proceeding, each
Subordinated Company shall retain the right to vote and otherwise act
with respect to the Subordinated Debt (including, without limitation,
the right to vote to accept or reject any plan of partial or complete
liquidation, reorganization, arrangement, composition or extension),
provided that no Subordinated Company shall vote with respect to any
such plan or take any other action in any way so as to contest (i) the
validity of any Senior Debt or any collateral therefor or guaranties
thereof, (ii) the relative rights and duties of any holders of any
Senior Debt established in any instruments or agreements creating or
evidencing any of the Senior Debt with respect to any of such
collateral or guaranties or (iii) such Subordinated Company's
obligations and agreements set forth in this Agreement.
7. Security. Each Subordinated Company hereby acknowledges and agrees
that the Subordinated Debt is unsecured.
7.1. Further Assurances. Each Subordinated Company hereby
agrees, upon request of the Agent at any time and from time to time, to
execute such other documents or instruments as may be reasonably
requested by the Agent further to evidence of public record or
otherwise the senior priority of the Senior Debt as contemplated
hereby.
7.2. Books and Records. Each Subordinated Company further
agrees to maintain on its books and records such notations as the Agent
may reasonably request to reflect the subordination contemplated hereby
and to perfect or preserve the rights of the Agent hereunder. A copy of
this Agreement may be filed as a financing statement in any Uniform
Commercial Code recording office.
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8. Banks' Freedom of Dealing. Each Subordinated Company agrees, with
respect to the Senior Debt and any and all collateral therefor or guaranties
thereof, that any Debtor Company and the Banks may agree to increase the amount
of the Senior Debt or otherwise modify the terms of any of the Senior Debt, and
the Banks may grant extensions of the time of payment or performance to and make
compromises, including releases of collateral or guaranties, and settlements
with any Debtor Company or other persons, in each case without the consent of
any Subordinated Company, or a Debtor Company and without affecting the
agreements of the Subordinated Company, or a Debtor Company contained in this
Agreement; provided, however, that nothing contained in this ss.8 shall
constitute a waiver of a Debtor Company itself to agree or consent to a
settlement or compromise of a claim which the Agent or any Bank may have against
such Debtor Company, as applicable.
9. Modification or Sale of the Subordinated Debt. No Subordinated
Company will at any time while this Agreement is in effect, modify any of the
terms of any of the Subordinated Debt or any of the Subordinated Documents
unless such modification would diminish and of the rights and remedies of the
Agent hereunder; nor will any Subordinated Company sell, transfer, pledge,
assign, hypothecate or otherwise dispose of any or all of the Subordinated Debt
to any person other than a person who agrees in a writing, satisfactory in form
and substance to the Agent, to become a party hereto and to succeed to the
rights and to bound by all of the obligations of such Subordinated Company
hereunder. In the case of any such disposition by any Subordinated Company, such
Subordinated Company will notify the Agent at least ten (10) days prior to the
date of any of such intended disposition.
10. Obligations Absolute. Nothing contained in this Agreement shall
impair, as between either a Debtor Company and any Subordinated Company, the
obligation of a Debtor Company to pay to the Subordinated Company all amounts
payable in respect of the Subordinated Debt as and when the same shall become
due and payable in accordance with the terms thereof, or prevent such
Subordinated Company (except as expressly otherwise provided in ss.3 or ss.6)
from exercising all rights, powers and remedies otherwise permitted by
Subordinated Documents and by applicable law upon a default in the payment of
the Subordinated Debt or under any Subordinated Document, all, however, subject
to the rights of the Agent and the Banks as set forth in this Agreement.
11. Termination of Subordination. This Agreement shall continue in full
force and effect, and the obligations and agreements of the Subordinated
Companies, and the Debtor Companies hereunder shall continue to be fully
operative, until all of the Senior Debt shall have been paid and satisfied in
full in cash and such full payment and satisfaction shall be final and not
avoidable. To the extent that a Debtor Company or any guarantor of or provider
of collateral for the Senior Debt makes any payment on the Senior Debt that is
subsequently invalidated, declared to be fraudulent or preferential or set aside
or is required to be repaid to a trustee, receiver or any other party under any
bankruptcy, insolvency or reorganization act, state or federal law, common law
or equitable cause (such payment being hereinafter referred to as a "Voided
Payment"), then to the extent of such Voided Payment, that portion of the Senior
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Debt that had been previously satisfied by such Voided Payment shall be revived
and continue in full force and effect as if such Voided Payment had never been
made. In the event that a Voided Payment is recovered from the Agent or any
Bank, an Event of Default shall be deemed to have existed and to be continuing
under the Credit Agreement from the date of the Agent's or such Bank's initial
receipt of such Voided Payment until the full amount of such Voided Payment is
restored to the Agent or such Bank. During any continuance of any such Event of
Default, this Agreement shall be in full force and effect with respect to the
Subordinated Debt. To the extent that a Subordinated Company has received any
payments with respect to the Subordinated Debt subsequent to the date of the
Agent's or any Bank's initial receipt of such Voided Payment and such payments
have not been invalidated, declared to be fraudulent or preferential or set
aside or are required to be repaid to a trustee, receiver, or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
such Subordinated Company shall be obligated and hereby agrees that any such
payment so made or received shall be deemed to have been received in trust for
the benefit of the Agent or Bank, and such Subordinated Company hereby agrees to
pay to the Agent for the benefit of the Agent or (as the case may be) such Bank,
upon demand, the full amount so received by such Subordinated Company during
such period of time to the extent necessary fully to restore to the Agent or
such Bank the amount of such Voided Payment. Upon the payment and satisfaction
in full in cash of all of the Senior Debt, which payment shall be final and not
avoidable, this Agreement will automatically terminate without any additional
action by any party hereto.
13. Notices. All notices and other communications called for hereunder
shall be made in writing and, unless otherwise specifically provided herein,
shall be deemed to have been duly made or given when delivered by hand or mailed
first class, postage prepaid, or, in the case of telegraphic or telexed notice,
when transmitted, answer back received, addressed as follows: if to a
Subordinated Company or a Debtor Company, at c/o the Borrower, at the address
for notices to the Borrower set forth in ss.21 of the Credit Agreement, and if
to the Agent, at the address for notices to the Agent set forth in ss.21 of the
Credit Agreement, or at such address as either party may designate in writing to
the other.
14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE
LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW) AND SHALL BE A SEALED INSTRUMENT
UNDER SUCH LAWS.
15. Waiver of Jury Trial. EACH OF THE SUBORDINATED COMPANIES, AND THE
DEBTOR COMPANIES HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
ACTION OR CLAIM ARISING OUT OF, UNDER OR IN CONNECTION WITH ANY DISPUTE WITH
RESPECT TO THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. Except
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as prohibited by law, each of the Subordinated Companies and each of the Debtor
Companies hereby waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each of the Subordinated Companies and the Debtor Companies (a)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
either the Agent or any Bank would not, in the event of litigation, seek to
enforce the foregoing waivers and (ii) acknowledges that, in entering into the
Credit Agreement and the other Loan Documents to which the Agent or any Bank is
a party, the Agent and the Banks are relying upon, among other things, the
waivers and certifications contained in this ss.15.
16. Miscellaneous. This Agreement may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Agreement, it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against which enforcement is sought. The Agent, acting upon the instructions of
the requisite Banks, may, in its sole and absolute discretion, waive any
provisions of this Agreement benefiting the Agent and the Banks; provided,
however, that such waiver shall be effective only if in writing and signed by
the Agent and shall be limited to the specific provision or provisions expressly
so waived. This Agreement shall be binding upon the successors and assigns of
any Subordinated Company and each of the Debtor Companies and shall inure to the
benefit of the Agent and the Banks, the Agent's and the Banks' respective
successors and assigns. Upon receipt of an affidavit of an officer of the Agent
or any of the Banks as to the loss, theft, destruction or mutilation of this
Agreement, any Intercompany Note or any other security document which is not of
public record, and, in the case of any such loss, theft, destruction or
mutilation, upon cancellation of this Agreement, any Intercompany Note or other
security document, the Company receiving such notice will issue or cause to be
issued, in lieu thereof, a replacement Intercompany Note or other security
document in the same principal amount thereof and otherwise of like tenor. The
Agent hereby agrees to indemnify, defend and hold harmless such Company, its
successors and assigns, from and against any and all cost, expense (including,
without limitation, reasonable attorneys' fees), loss, liability or damage
incurred as a result of the Agent's failure to deliver such original
Intercompany Note, properly endorsed, to such Company.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
a contract under seal as of the date first above written.
FLEET NATIONAL BANK, as Agent
By: _______________________________________________
Name:
Title:
IONICS, INCORPORATED
By: _______________________________________________
Name:
Title:
By: _______________________________________________
Name:
Title:
Exhibit 4.2
GLOBAL AMENDMENT
AND AFFIRMATION AGREEMENT
dated as of June 29, 2001
to
GUARANTY
and
INTERCOMPANY SUBORDINATION AGREEMENT
as defined in that certain
THIRD AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
dated as of June 29, 2001
This GLOBAL AMENDMENT (this "Amendment"), dated as of June 29, 2001, is
by and among IONICS, INCORPORATED, a Massachusetts corporation (the "Borrower");
AQUA COOL ENTERPRISES, INC., a Massachusetts corporation, AQUA DESIGN, INC., a
California corporation, FIDELITY PUREWATER, INC., a California corporation,
FIDELITY WATER SYSTEMS, INC., a California corporation, IONICS KOREA, INC., a
Delaware corporation, IONICS LIFE SCIENCES, INC., a New Jersey corporation,
IONICS ULTRAPURE WATER CORPORATION, a California corporation, RESOURCES
CONSERVATION CO. INTERNATIONAL, a Delaware corporation, SEPARATION TECHNOLOGY,
INC., a Minnesota Corporation, and SIEVERS INSTRUMENTS, INC., a Colorado
corporation (collectively, the "Guarantors"); and FLEET NATIONAL BANK, a
national banking association, as agent (hereinafter, in such capacity, the
"Agent") for itself and the other banking institutions (hereinafter,
collectively, the "Banks") which are or may become parties to the Credit
Agreement (as defined below). Capitalized terms used herein unless otherwise
defined shall have the respective meanings set forth in the Credit Agreement (as
defined below).
WHEREAS, the Borrower, the Guarantors, certain financial institutions
and the Agent are parties to that certain Second Amended and Restated Revolving
Credit Agreement, dated as of July 28, 2000 (as amended, restated, modified and
in effect from time to time prior to the date hereof, the "Existing Credit
Agreement");
WHEREAS, the Borrower has requested, and the Banks and the Agent have
agreed to, among other things, amend and restate the Existing Credit Agreement
as set forth in that certain Third Amended and Restated Revolving Credit
Agreement, dated as of June 29, 2001 (as amended, restated, supplemented and/or
modified and in effect from time to time, the "Credit Agreement");
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WHEREAS, the Guarantors have executed and delivered to the Agent, for
the benefit of the Banks and the Agent, the Guaranty, dated as of July 28, 2000
(the "Guaranty"), pursuant to which the Guarantors have guaranteed the
Borrower's Obligations under or in respect of the Credit Agreement;
WHEREAS, the Guarantors, the Borrower and the Agent, for the benefit of
the Banks and the Agent, have entered into a certain Intercompany Subordination
Agreement, dated as of July 28, 2000 (the "Intercompany Subordination
Agreement," together with the Guaranty, the "Documents"), pursuant to which each
of the Guarantors and the Borrower agreed, among other things, that the
Subordinated Debt (as defined therein) and any and all Subordinated Documents
(as defined therein) be subordinated and the payment thereof be deferred until
the full and final payment in cash of the Senior Debt (as defined therein); and
WHEREAS, the Borrower, the Guarantors, the Agent and the Banks have
further agreed to certain amendments to the Documents upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises, the parties
hereto hereby agree as follows:
ss.1. Amendments to Documents. Any reference to the Existing
Credit Agreement (whether referred to by the full name of the Existing Credit
Agreement or by any name which refers thereto by definition) in the Documents
shall be deemed to be a reference to the Credit Agreement (as defined herein).
ss.2. Affirmation of Guaranty. Each Guarantor hereby
acknowledges that it has read and is aware of the provisions of the Credit
Agreement and hereby reaffirms its absolute, unconditional and continuing
guaranty of the Borrower's Obligations to the Banks and the Agent under the
Credit Agreement and the other Loan Documents pursuant to and in accordance with
the Guaranty, as amended herein.
ss.3. Affirmation of Intercompany Subordination Agreement. Each
of the Guarantors and the Borrower hereby acknowledges that it has read and is
aware of the provisions of the Credit Agreement and hereby reaffirms its
absolute, unconditional and continuing agreement that the Subordinated Debt (as
defined therein) and any and all Subordinated Documents (as defined therein) be
subordinated and the payment thereof be deferred until the full and final
payment in cash of the Senior Debt (as defined therein), pursuant to and in
accordance with the Intercompany Subordination Agreement, as amended herein.
ss.4. Conditions to Effectiveness. The effectiveness of the
amendments set forth herein shall be conditioned upon (a) the execution and
delivery of this Amendment by each of the Borrower and the Guarantors and (b)
the execution and delivery of the Credit Agreement and the satisfaction of the
conditions to effectiveness set forth in the Credit Agreement.
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ss.5. Representations and Warranties. Each of the Borrower and the
Guarantors hereby represents and warrants to the Agent and each of the Banks
that, as of the date hereof:
(a) The representations and warranties of such Person contained
in the Credit Agreement and the other Loan Documents to which it is a party (i)
were true and correct in all material respects when made, and (ii) except to the
extent such representations and warranties by their terms are made solely as of
a prior date, continue to be true and correct in all material respects on the
date hereof;
(b) The execution, delivery and performance by such Person of
this Amendment and the consummation of the transactions contemplated hereby: (i)
are within the corporate powers of such Person and have been duly authorized by
all necessary corporate action on the part of such Person, (ii) do not require
any approval, consent of, or filing with, any governmental agency or authority,
or any other person, association or entity, which bears on the validity of this
Amendment and which is required by law or the regulation or rule of any agency
or authority, or other person, association or entity, (iii) do not violate any
provisions of any order, writ, judgment, injunction, decree, determination or
award presently in effect in which such Person is named, or any provision of the
corporate charter or by-laws, of such Person, (iv) do not result in any breach
of or constitute a default under any agreement or instrument to which such
Person is a party or to which it or any of its properties are bound, including
without limitation any indenture, loan or loan agreement, lease, debt instrument
or mortgage, except for such breaches and defaults which would not have a
material adverse effect on such Person and its subsidiaries taken as a whole,
and (v) do not result in or require the creation or imposition of any mortgage,
deed of trust, pledge or encumbrance of any nature upon any of the assets or
properties of such Person; and
(c) This Amendment constitutes the legal, valid and binding
obligations of such Person, enforceable against such Person in accordance with
their respective terms, provided that (i) enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application affecting the rights and remedies of creditors, and (ii)
enforcement may be subject to general principles of equity, and the availability
of the remedies of specific performance and injunctive relief may be subject to
the discretion of the court before which any proceeding for such remedies may be
brought.
ss.6. No Other Amendments. Except as expressly provided in this Amendment,
all of the terms and conditions of the Documents shall remain in full force and
effect.
ss.7. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by each party on a separate counterpart, each
of which when so executed and delivered shall be an original, but all of which
together shall constitute one instrument. In proving this Amendment, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
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ss.8. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT
REFERENCE TO CONFLICTS OF LAWS).
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
as a sealed instrument as of the date first set forth above.
FLEET NATIONAL BANK, as Agent
By: /s/John C. Dunne
-----------------------------------------------
John C. Dunne, Senior Vice President
IONICS, INCORPORATED
By: /s/Daniel M. Kuzmak
--------------------------------------
Daniel M. Kuzmak, Vice President
and Chief Financial Officer
AQUA COOL ENTERPRISES, INC.
By: /s/Theodore G. Papastavros
-------------------------------------
Name: Theodore G. Papastavros
Title: Treasurer
AQUA DESIGN, INC.
By: /s/Edward J. Cichon
------------------------------------------
Name: Edward J. Cichon
Title: President
FIDELITY PUREWATER, INC.
By: /s/Anthony Di Paola
------------------------------------------
Name: Anthony Di Paola
Title: Treasurer
FIDELITY WATER SYSTEMS, INC.
By: /s/Anthony Di Paola
-------------------------------------------
Name: Anthony Di Paola
Title: Treasurer
IONICS KOREA, INC.
By: /s/Arthur L. Goldstein
-----------------------------------------
Name: Arthur L. Goldstein
Title: President
IONICS LIFE SCIENCES, INC.
By: /s/Theodore G. Papastavros
------------------------------------
Name: Theodore G. Papastavros
Title: Treasurer
IONICS ULTRAPURE WATER CORPORATION
By: /s/Stephen Korn
--------------------------------------------
Name: Stephen Korn
Title: Secretary
RESOURCES CONSERVATION CO. INTERNATIONAL
By: /s/Stephen Korn
--------------------------------------------
Name: Stephen Korn
Title:: Secretary
SEPARATION TECHNOLOGY INC.
By: /s/Ark W. Pang
----------------------------------------------
Name: Ark W. Pang
Title: President
SIEVERS INSTRUMENTS, INC.
By: /s/Stephen Korn
--------------------------------------------
Name: Stephen Korn
Title: Secretary