SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
================================================================================
SCHEDULE 13D/A
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS
FILED PURSUANT TO RULE 13d-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 28)(1)
Katy Industries, Inc.
---------------------
(Name of Issuer)
Common Stock, One Dollar ($1.00) par value
------------------------------------------
(Title of Class of Securities)
486026107
---------
(CUSIP Number)
Jonathan P. Johnson
President
CRL, Inc.
7505 Village Square Drive, Suite 200
Castle Rock, CO 80104
---------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 30, 2002
--------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. SEE Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
----------
(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934, as amended (the "Act"), or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the Act
(however, SEE the NOTES).
Page 1 of 82 Pages
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Wallace E. Carroll, Jr.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER 196,852
8 SHARED VOTING POWER 2,931,641
9 SOLE DISPOSITIVE POWER 196,852
10 SHARED DISPOSITIVE POWER 2,931,641
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,128,493
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 37.3%
14 TYPE OF REPORTING PERSON* IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 2 of 82 Pages
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Amelia M. Carroll
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER 20,842
8 SHARED VOTING POWER 3,133,651
9 SOLE DISPOSITIVE POWER 20,842
10 SHARED DISPOSITIVE POWER 3,133,651
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,154,493
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 37.6%
14 TYPE OF REPORTING PERSON* IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 3 of 82 Pages
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
The Wallace E. Carroll Trust U/A Dated 7/1/57
F/B/O Wallace E. Carroll, Jr. and his descendants
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER 2,151
8 SHARED VOTING POWER 2,073,436
9 SOLE DISPOSITIVE POWER 2,151
10 SHARED DISPOSITIVE POWER 2,073,436
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,075,587
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 24.7%
14 TYPE OF REPORTING PERSON* OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 82 Pages
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
The Wallace E. and Lelia H. Carroll Trust U/A Dated 5/1/58
F/B/O Wallace E. Carroll, Jr. and his descendants
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER 603,000
8 SHARED VOTING POWER 2,073,436
9 SOLE DISPOSITIVE POWER 603,000
10 SHARED DISPOSITIVE POWER 2,073,436
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,676,436
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 31.9%
14 TYPE OF REPORTING PERSON* OO
*SEE INSTRUCTIONS BEFORE FILING OUT!
Page 5 of 82 Pages
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
The Wallace E. Carroll Trust U/A Dated 1/20/61
F/B/O Wallace E. Carroll, Jr. and his descendants
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER 11,881
8 SHARED VOTING POWER -0-
9 SOLE DISPOSITIVE POWER 11,881
10 SHARED DISPOSITIVE POWER -0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11,881
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 1%
14 TYPE OF REPORTING PERSON* OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 6 of 82 Pages
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
The Lelia H. Carroll Trust U/A Dated 7/12/62
F/B/O Wallace E. Carroll, Jr. and his descendants
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)/ /
(b)/X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER 180,661
8 SHARED VOTING POWER -0-
9 SOLE DISPOSITIVE POWER 180,661
10 SHARED DISPOSITIVE POWER -0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 180,661
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.2%
14 TYPE OF REPORTING PERSON* 00
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 7 of 82 Pages
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
CRL, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER 2,073,436
8 SHARED VOTING POWER -0-
9 SOLE DISPOSITIVE POWER 2,073,436
10 SHARED DISPOSITIVE POWER -0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,073,436
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 24.7%
14 TYPE OF REPORTING PERSON* CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 8 of 82 Pages
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
The Wallace Foundation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Colorado
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER 32,910
8 SHARED VOTING POWER -0-
9 SOLE DISPOSITIVE POWER 32,910
10 SHARED DISPOSITIVE POWER -0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 32,910
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 1%
14 TYPE OF REPORTING PERSON* OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 9 of 82 Pages
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Subtrusts under The Wallace E. Carroll Trust U/A dated 12/20/79
F/B/O the descendants of Wallace E. Carroll, Jr.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
NOT APPLICABLE
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER 6,760
8 SHARED VOTING POWER -0-
9 SOLE DISPOSITIVE POWER 6,760
10 SHARED DISPOSITIVE POWER -0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,760
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 1%
14 TYPE OF REPORTING PERSON* OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 10 of 82 Pages
AMENDMENT NO. 28
TO SCHEDULE 13D
This amended statement relates to the Common Stock, $1.00 par
value per share (the "Shares"), of Katy Industries, Inc., a Delaware corporation
(the "Issuer"). This amended statement is being filed in accordance with Rule
101(a)(2)(i) of Regulation S-T promulgated by the Securities and Exchange
Commission in connection with the Commission's Electronic Data Gathering,
Analysis and Retrieval System ("EDGAR").
This amended statement on Schedule 13D is jointly filed by
Wallace E. Carroll, Jr. ("Mr. Carroll"); Amelia M. Carroll; The Wallace E.
Carroll Trust U/A Dated 7/1/57 F/B/O Wallace E. Carroll, Jr. and his
descendants; The Wallace E. and Lelia H. Carroll Trust U/A Dated 5/1/58 F/B/O
Wallace E. Carroll, Jr. and his descendants (the "58 Trust"); The Wallace E.
Carroll Trust U/A Dated 1/20/61 F/B/O Wallace E. Carroll, Jr. and his
descendants (the "61 Trust"); The Lelia H. Carroll Trust U/A Dated 7/12/62
F/B/O Wallace E. Carroll, Jr. and his descendants (the "62 Trust"); CRL,
Inc., a Delaware corporation ("CRL"); The Wallace Foundation; and the
Subtrusts under The Wallace E. Carroll Trust U/A dated 12/20/79 F/B/O the
descendants of Wallace E. Carroll, Jr. (collectively, the "Reporting
Persons") pursuant to a Schedule 13D Joint Filing Agreement dated as of May
15, 2002 filed as Exhibit F to this amended statement.
Item 5. Interest in Securities of the Issuer.
Item 5 is hereby amended as follows:
The amended information regarding sole and shared beneficial
ownership of the Shares of the Reporting Persons is incorporated by reference to
the cover pages to this amended statement.
On April 30, 2002, CRL entered into, effective as of August 31,
2001, a Second Amended and Restated Credit Agreement which amended and restated
the Amended and Restated Revolving Credit Agreement dated as of December 31,
1993, as amended, which was previously filed as Exhibit CC to Amendment No. 14
to this statement, and a Sixth Amendment to Pledge Agreement which amended the
Pledge Agreement dated as of December 31, 1993, as amended, which was previously
filed as Exhibit A to Amendment No. 24 to this statement (collectively as
amended, the "Agreements"), each with The Northern Trust Company ("Northern
Trust"), pursuant to which CRL had previously pledged to Northern Trust all of
the 2,073,436 Shares ("CRL Pledged Shares") it owns to secure the prompt and
complete payment and performance when due of all of CRL's obligations under the
Agreements. In connection therewith, Mr. Carroll entered into a Second Amendment
to Guarantor Pledge Agreement, effective as of August 31, 2002, amending the
Pledge Agreement dated as of February 28, 2001, as amended (as amended, the
"Guaranty Pledge Agreement"), in favor of Northern Trust, which was previously
filed as Exhibit F to Amendment No. 24 to this statement, pursuant to which Mr.
Carroll had previously pledged to Northern Trust 177,239 Shares ("Mr. Carroll
Pledged Shares") he owns to secure the full and prompt payment and performance
of all of CRL's obligations under the Agreements and Mr. Carroll's obligations
under the Guaranty Pledge Agreement and his Guaranty dated as of February 28,
2001 in favor of Northern Trust, which was previously filed as Exhibit G to
Amendment No. 24 to this statement. In addition and in connection therewith, the
58 Trust entered into a First Amendment to Trust Pledge Agreement, effective as
of August 31, 2002, amending the Pledge Agreement dated as of February 28, 2001
(as amended, the "Trust Pledge Agreement", and collectively with the Agreements
and the Guaranty Pledge Agreement, the "Loan Agreements") in favor of Northern
Trust, which was previously filed as Exhibit A to Amendment No. 27 to this
statement, and pursuant to which the 58 Trust pledged to Northern Trust 603,000
Shares (collectively with the CRL Pledged Shares and the Mr. Carroll Pledged
Shares, the "Pledged Shares") the 58 Trust owns to secure the full and prompt
payment and performance of all of CRL's obligations under the Agreements and the
58 Trust's obligations under the Trust Pledge Agreement.
Page 11 of 82 Pages
In connection therewith, Northern Trust, CRL, Mr. Carroll and the
58 Trust entered into a letter agreement dated as of August 31, 2001 (the
"Letter Agreement") pursuant to which Northern Trust approved and authorized the
voting of the Pledged Shares by CRL, Mr. Carroll and the 58 Trust in accordance
with the terms and conditions of the Stock Voting Agreement dated as of June 2,
2001 by and among KKTY Holding Company, L.L.C., CRL, Mr. Carroll, the 58 Trust
and certain other stockholders of the Issuer (the "Stock Voting Agreement"),
which was previously filed as Exhibit 99.1 to Amendment No. 25 to this
statement. A failure by CRL, Mr. Carroll or the 58 Trust to comply with the
terms of the Stock Voting Agreement shall constitute an immediate event of
default for purposes of the Loan Agreements.
The description of the Loan Agreements are qualified in their
entirety by the provisions of such agreements attached to this amended statement
as exhibits or previously filed as exhibits to prior amendments to this
statement.
Item 6. Contracts, Arrangements, Understandings or Relationships with
respect to Securities of the Issuer.
Item 6 is hereby amended as follows:
The description of the Loan Agreements set forth in Item 5
above is incorporated herein by reference in its entirety.
Item 7. Material to be filed as Exhibits.
Item 7 is hereby amended as follows:
In accordance with subparagraph 3 of Item 7, the following
exhibits are attached hereto:
EXHIBIT A - Second Amended and Restated Credit Agreement dated as of August 31,
2001 by and between CRL and Northern Trust.
EXHIBIT B - Sixth Amendment to Pledge Agreement dated as of August 31, 2001 by
and between CRL and Northern Trust.
EXHIBIT C - Second Amendment to Guarantor Pledge Agreement dated as of August
31, 2001 by and between Mr. Carroll and Northern Trust.
EXHIBIT D - First Amendment to Trust Pledge Agreement dated as of August 31,
2001 by and between the 58 Trust and Northern Trust.
EXHIBIT E - Letter Agreement dated as of August 31, 2001 by and among Northern
Trust, CRL, Mr. Carroll and the 58 Trust.
EXHIBIT F - Schedule 13D Joint Filing Agreement dated as of May 15, 2002 by
and among the Reporting Persons.
* * * * *
Page 12 of 82 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: May 15, 2002
WALLACE E. CARROLL TRUST
U/A Dated July 1, 1957 F/B/O
Wallace E. Carroll, Jr. and his
descendants
*
---------------------------------------
Wallace E. Carroll, Jr., Trustee
*
---------------------------------------
Amelia M. Carroll, Trustee
*
---------------------------------------
Philip E. Johnson, Trustee
WALLACE E. AND LELIA H. CARROLL TRUST
U/A Dated May 1, 1958 F/B/O
Wallace E. Carroll, Jr. and his
descendants
*
---------------------------------------
Wallace E. Carroll, Jr., Trustee
*
---------------------------------------
Amelia M. Carroll, Trustee
*
---------------------------------------
Philip E. Johnson, Trustee
WALLACE E. CARROLL TRUST
U/A Dated January 20, 1961 F/B/O
Wallace E. Carroll, Jr. and his
descendants
*
---------------------------------------
Wallace E. Carroll, Jr., Trustee
*
---------------------------------------
Amelia M. Carroll, Trustee
*
---------------------------------------
Philip E. Johnson, Trustee
Page 13 of 82 Pages
LELIA H. CARROLL TRUST
U/A Dated July 12, 1962 F/B/O
Wallace E. Carroll, Jr. and his
descendants
*
---------------------------------------
Wallace E. Carroll, Jr., Trustee
*
---------------------------------------
Amelia M. Carroll, Trustee
*
---------------------------------------
Philip E. Johnson, Trustee
THE WALLACE FOUNDATION
*
---------------------------------------
Wallace E. Carroll, Jr., Trustee
*
---------------------------------------
Amelia M. Carroll, Trustee
SUBTRUSTS UNDER THE WALLACE E.
CARROLL TRUST
U/A Dated December 20, 1979 F/B/O the
descendants of Wallace E. Carroll, Jr.
*
---------------------------------------
Wallace E. Carroll, Jr., Trustee
*
---------------------------------------
Amelia M. Carroll, Trustee
*
---------------------------------------
Philip E. Johnson, Trustee
*
---------------------------------------
WALLACE E. CARROLL, JR.
*
---------------------------------------
AMELIA M. CARROLL
CRL, INC.
/s/ Jonathan P. Johnson
---------------------------------------
Jonathan P. Johnson, President
*By: /s/ Jonathan P. Johnson
------------------------------
Jonathan P. Johnson
Attorney-in-fact
Page 14 of 82 Pages
EXHIBIT A
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of
August 31, 2001
between
CRL, INC.,
as Borrower,
and
THE NORTHERN TRUST COMPANY,
as Lender
Page 15 of 82 Pages
ARTICLE I. GENERAL 2
1.1. Definitions........................................................2
1.2. Other Definitional Provisions.....................................10
1.3. Restructuring.....................................................10
ARTICLE II. LOANS 10
2.1. Loans.............................................................10
2.2. Manner of Borrowing...............................................11
2.3. Notes.............................................................11
2.4. Principal Payments................................................12
2.5. Interest..........................................................13
2.6. Mandatory Reduction of Revolving Commitment.......................17
2.7. Optional Termination or Reduction.................................17
2.8. Manner and Application of Payments................................17
2.9. Facility Fee......................................................17
2.10. Reserved..........................................................18
2.11. Increased Costs; Legal Restrictions...............................18
ARTICLE III. LETTERS OF CREDIT 19
3.1. Letters of Credit.................................................19
3.2. Manner of Issuance................................................20
3.3. Term..............................................................20
3.4. Letter of Credit Fee..............................................21
3.5. Reimbursement Obligation..........................................21
3.6. Role of Lender....................................................22
3.7. Cash Collateral Pledge; Reimbursement of L/C Borrowings...........23
3.8. Uniform Customs and Practice......................................23
ARTICLE IV. REPRESENTATIONS AND WARRANTIES 23
4.1. Due Organization..................................................24
4.2. Authorization and Validity........................................24
4.3. Binding Agreement.................................................24
Page 16 of 82 Pages
4.4. No Conflicts or Consents..........................................24
4.5. Litigation........................................................24
4.6. Governmental Consents.............................................25
4.7. Regulation U......................................................25
4.8. Taxes.............................................................25
4.9. Burdensome Agreements, etc........................................25
4.10. Title and Liens...................................................25
4.11. Existing Defaults.................................................25
4.12. Investment Company Act............................................26
4.13. Public Utility Holding Company Act................................26
4.14. Solvency..........................................................26
4.15. Full Disclosure...................................................26
4.16. Compliance with Laws..............................................26
4.17. Subsidiaries......................................................26
4.18. ERISA.............................................................26
4.19. Environmental Laws................................................27
ARTICLE V. CONDITIONS PRECEDENT 28
5.1. Conditions of Initial Extension of Credit.........................28
5.2. Conditions of Each Loan...........................................31
ARTICLE VI. AFFIRMATIVE COVENANTS 32
6.1. Financial Data....................................................32
6.2. Payment of Charges................................................33
6.3. Insurance.........................................................33
6.4. Inspection of Books and Assets....................................33
6.5. Notices...........................................................33
6.6. Litigation........................................................33
6.7. Preservation of Corporate Existence...............................34
6.8. Maintenance of Properties.........................................34
6.9. Compliance with Law...............................................34
Page 17 of 82 Pages
6.10. Use of Proceeds...................................................34
6.11. Value of Pledged Collateral.......................................34
6.12. Compliance with ERISA.............................................35
ARTICLE VII. NEGATIVE COVENANTS 35
7.1. Consolidation, Merger, Sale of Assets, etc........................35
7.2. ERISA.............................................................35
7.3. Regulation U......................................................35
7.4. Liens on Borrower's Property......................................35
7.5. Indebtedness......................................................35
7.6. Sale of Stock of Subsidiaries.....................................36
ARTICLE VIII. EVENTS OF DEFAULT 36
8.1. Events of Default.................................................36
8.2. Remedies..........................................................38
ARTICLE IX. MISCELLANEOUS 39
9.1. Distribution of Information.......................................39
9.2. Waivers or Modifications..........................................40
9.3. Indemnification...................................................40
9.4. Independent Investigation.........................................41
9.5. Failure or Delay..................................................41
9.6. Severability......................................................41
9.7. Successors and Assigns............................................41
9.8. Notices...........................................................41
9.9. Publicity.........................................................43
9.10. Costs, Expenses and Fees..........................................43
9.11. Reserved..........................................................43
9.12. Counterparts......................................................43
9.13. Governing Law.....................................................43
9.14. Service of Process................................................43
9.15. Recapture.........................................................44
Page 18 of 82 Pages
9.16. Complete Agreement................................................44
9.17. Captions..........................................................44
9.18. WAIVER OF JURY TRIAL..............................................44
9.19. Waiver............................................................44
EXHIBITS
Exhibit A -Form of Revolving Note
Exhibit B - Form of Term Note
Exhibit C - Form of Application
Exhibit D - Form of Reaffirmation of Guaranty and Pledge
Exhibit E - Form of Aircraft Security Agreement
Exhibit F - Form of Leasehold Deed of Trust
Exhibit G - Form of Collateral Report Certificate
SCHEDULES
Schedule 4.17 - Subsidiaries/Affiliates
Schedule 7.4 - Liens
Schedule 7.5 - Indebtedness
Page 19 of 82 Pages
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This Second Amended and Restated Credit Agreement (this "AGREEMENT") is
entered into as of August 31, 2001, between CRL, Inc., a Delaware corporation
("BORROWER"), and The Northern Trust Company, an Illinois banking corporation
("LENDER").
RECITALS
WHEREAS, Borrower and Lender entered into an Amended and Restated Revolving
Credit Agreement dated as of December 9, 1993, as amended by a First Amendment
thereto dated as of December 31, 1994, a Second Amendment thereto dated as of
December 31, 1995, a Third Amendment thereto dated as of October 31, 1996, a
Fourth Amendment thereto dated as of December 31, 1997, a Fifth Amendment
thereto dated as of December 31, 1998, a Sixth Amendment thereto dated as of
August 25, 1999, a Seventh Amendment thereto dated as of February 29, 2000 and
an Eighth Amendment thereto dated as of February 28, 2001 (said Amended and
Restated Revolving Credit Agreement, as amended, the "PRIOR CREDIT AGREEMENT");
WHEREAS, pursuant to the Prior Credit Agreement, Lender has made certain
revolving loans (collectively, the "PRIOR Loans") to Borrower which Prior Loans
are evidenced by that certain promissory note of Borrower dated as of February
28, 2001 in the original principal amount of $11,000,000 (the "PRIOR NOTE");
WHEREAS, pursuant to the Prior Credit Agreement, Lender has issued certain
letters of credit (the "PRIOR LETTERS OF CREDIT") for the account of Borrower;
WHEREAS, all obligations of Borrower under the Prior Credit Agreement have
been secured by the Pledge Agreement, Trust Pledge Agreement and Guarantor
Pledge Agreement (as such terms are defined hereinafter);
WHEREAS, all obligations of Borrower under the Prior Credit Agreement have
been unconditionally guaranteed pursuant to the Guaranty (as defined
hereinafter); and
WHEREAS, Borrower and Lender desire that, on the terms and conditions
herein, (i) the Prior Credit Agreement be amended and restated into this
Agreement, (ii) the Prior Loans be converted into the Term Loan (as defined
hereinafter) under this Agreement, (iii) the Prior Letters of Credit continue
and be deemed Term Letters of Credit under this Agreement, (iv) Lender make
available its Revolving Commitment (as defined hereinafter) to Borrower pursuant
to which Borrower may request Revolving Loans and Revolving Letters of Credit
(as such terms are defined hereinafter) and (v) the Pledge Agreement, Trust
Pledge Agreement, Guarantor Pledge Agreement and the Guaranty continue in full
force and effect and, together with the other Security Documents, secure and
guaranty, as the case may be, the Revolving Loans, the Term Loan, the Letters of
Credit and all other Obligations of Borrower (as such terms are defined
hereinafter);
NOW, THEREFORE, in consideration of the premises, the following mutual
agreements and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree that the
Prior Credit Agreement be amended and restated to read in its entirety, as
follows:
ARTICLE I. GENERAL
1.1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following meanings:
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person or who is a director or officer of such Person. A Person shall be
deemed to control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such controlled Person, whether through the ownership of voting
securities, other ownership interests, by
Page 20 of 82 Pages
contract or otherwise. Without limiting the foregoing, for purposes of this
definition, beneficial ownership of 10% or more of the voting equity of a Person
shall be deemed to constitute control of such Person.
"AGGREGATE COLLATERAL MARGIN VALUE" shall mean, at the time of
determination, an amount equal to the sum of: (a) 50% times the Current Market
Value of the Katy common stock pledged to Lender pursuant to the Pledge
Agreement, the Guarantor Pledge Agreement and the Trust Pledge Agreement, plus
(b) 70% times the Current Market Value of the Margin Stock in the Securities
Account (as defined in the Trust Pledge Agreement) pledged to Lender pursuant to
the Trust Pledge Agreement, plus (c) 70% times the Appraised Value of the
Premises (as defined below) pledged to Lender pursuant to the Deed of Trust,
plus (d) 70% times the Appraised Value of the Aircraft (as defined in the
Aircraft Security Agreement) pledged to Lender pursuant to the Aircraft Security
Agreement.
"AGREEMENT" shall have the meaning given to it in the PREAMBLE hereof.
"AIRCRAFT" shall mean the "Collateral" as described in the Aircraft
Security Agreement.
"AIRCRAFT SECURITY AGREEMENT" shall mean that certain Aircraft Security
Agreement dated as of August 31, 2001 executed and delivered by Timberline
Aviation to and in favor of Lender, as the same may be amended, modified or
supplemented from time to time.
"APPLICATION" shall have the meaning set forth in SECTION 3.2.
"APPRAISED VALUE" shall mean a good faith estimate by Lender of the fair
market value of any property pledged to Lender, or, if Borrower elects, and at
Borrower's sole expense, the fair market value of any property pledged to Lender
as reflected in a written report of an independent licensed appraiser,
reasonably acceptable to Lender, as of a recent date. As of the Closing Date,
the Premises are deemed to have an Appraised Value of $1,879,000 and the
Aircraft is deemed to have an Appraised Value of $800,000, as the same may be
increased or reduced over the term of this Agreement pursuant to the terms of
the immediately preceding sentence.
"AUTHORIZED EMPLOYEE" shall mean each employee of Borrower designated from
time to time by Borrower in a written notice to Lender as an employee authorized
by Borrower to give any notice of borrowing hereunder, which designation shall
continue in full force and effect until terminated by Borrower in a subsequent
written notice to Lender.
"BANKRUPTCY CODE" shall have the meaning given to it in SECTION 8.1(g)
hereof.
"BORROWER" shall have the meaning given to it in the PREAMBLE hereof.
"BORROWING DATE" shall mean the date on which a Loan is made or a Letter of
Credit is issued.
"BUSINESS DAY" shall mean a day on which banks are open for business in
Chicago (and with respect to any borrowing at LIBOR, a day which banks are open
for business in both Chicago and London, England), other than a Saturday or a
Sunday.
"CAPITAL LEASE" shall mean, at the time any determination thereof is to be
made, any lease of property, real or personal, in respect of which the present
value of the minimum rental commitment is required to be capitalized on a
balance sheet of the lessee in accordance with GAAP.
"CAPITAL LEASE OBLIGATIONS" shall mean, as to any Person, the obligations
of such Person to pay rent or other amounts under leases of, or other agreements
conveying the right to use, real and/or personal property, which obligations are
required to be classified and accounted for as Capital Leases on a balance sheet
of such Person, prepared in accordance with GAAP (including Statement of
Financial
Page 21 of 82 Pages
Accounting Standards No. 13 of the Financial Accounting Standards Board),
together with any other rental obligations under any other lease which is in
substance such a lease. The amount of any Capital Lease Obligation shall be
deemed to be that portion of such Capital Lease Obligation as would be
classified properly and accounted for as a liability on the balance sheet of any
Person and its Subsidiaries in accordance with GAAP.
"CASH COLLATERALIZE" shall mean to pledge and deposit with or deliver to
Lender, as collateral for the L/C Obligations, cash or deposit account balances
pursuant to documentation in form and substance satisfactory to Lender.
Derivatives of such term shall have corresponding meaning. Borrower hereby
grants Lender a security interest in all such cash and deposit account balances.
Cash collateral shall be maintained in blocked, interest bearing deposit
accounts at Lender.
"CHANGE OF CONTROL" shall mean any transaction, event or circumstance the
result of which is that Wallace E. Carroll, Jr. and the Related Parties
beneficially own, in the aggregate, less than 60% of the voting power entitled
to vote for the election of directors of Borrower (including securities
convertible by their terms into stock having such voting power).
"CLOSING DATE" shall mean the day all conditions precedent set forth in
SECTION 5.1 are met.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time, including any rules or regulations promulgated thereunder, or any
successor legislation thereto from time to time in effect.
"COLLATERAL" shall mean, collectively, the Pledged Collateral, the
Guarantor Pledged Collateral, the Trust Collateral, the Aircraft and the
Premises.
"COLLATERAL BASE" shall mean, at the time of determination, an amount equal
to 85% times the Aggregate Collateral Margin Value at such time.
"COLLATERAL REPORT CERTIFICATE" shall mean a certificate, substantially in
the form of EXHIBIT G hereto, used by Borrower to report the Aggregate
Collateral Margin Value to Lender in accordance with SECTION 6.1.
"CONSOLIDATED" when used to describe a calculation or determination with
respect to any Person and its Subsidiaries, shall mean the calculation or
determination made in accordance with GAAP, including principles of
consolidation.
"CURRENT MARKET VALUE" shall mean "current market value" as such term is
defined in Regulation U of the Board of Governors of the Federal Reserve System.
"DEED OF TRUST" shall mean that certain Leasehold Deed of Trust (including
Security Agreement, Assignment of Rents and Leases, and Fixture Filing) dated as
of August 31, 2001, executed and delivered by Timberline Ground to and in favor
of Lender, as the same may be amended, modified or supplemented from time to
time.
"DEFAULT" shall mean the occurrence or existence of an event which, with
the lapse of time, determination by Lender, or written notice to Borrower, or
any combination of the foregoing, would constitute an Event of Default.
"DOLLAR" and "$" shall mean United States dollars or such coin or currency
of the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts in the United States.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local laws,
including statutes, regulations, ordinances, codes, rules and other governmental
restrictions and requirements, relating to the discharge of air pollutants,
water pollutants or process waste water or otherwise relating to the environment
or hazardous substances or the treatment, processing, storage, disposal,
release, transport or other handling thereof, including, but not limited to, the
federal Solid Waste Disposal Act, the
Page 22 of 82 Pages
federal Clean Air Act, the federal Clean Water Act, the federal Resource
Conservation and Recovery Act, the federal Hazardous Materials Transportation
Act, the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the federal Toxic Substances Control Act, regulations of
the Nuclear Regulatory Agency, and regulations of any state department of
natural resources or state environmental protection agency, in each case as now
or at any time hereafter in effect.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended or supplemented from time to time, including any rules or regulations
issued in connection therewith, or any successor legislation thereto from time
to time in effect.
"ERISA AFFILIATE" shall mean any corporation or trade or business which is
a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as Borrower or is under common control (within the
meaning of Section 414(c) of the Code) with Borrower.
"EVENT OF DEFAULT" shall mean an Event of Default as defined in SECTION
8.1.
"FACILITY FEE" shall have the meaning given to it in SECTION 2.9 hereof.
"FIRST AMENDMENT TO TRUST PLEDGE" shall have the meaning given to it in
SECTION 5.1(e) hereof.
"GAAP" shall mean United States generally accepted accounting principles.
"GUARANTOR" shall mean Wallace E. Carroll, Jr.
"GUARANTOR PLEDGE AGREEMENT" shall mean that certain Pledge Agreement dated
as of February 28, 2001 executed and delivered by the Guarantor to and in favor
of Lender, as amended by a First Amendment thereto dated as of June 2, 2001 and
as further amended by a Second Amendment thereto dated as of August 31, 2001,
and as the same may be amended, modified or supplemented from time to time.
"GUARANTOR PLEDGED COLLATERAL" shall mean the "Collateral" as described in
the Guarantor Pledge Agreement.
Page 23 of 82 Pages
"GUARANTY" shall mean that certain Guaranty dated as of February 28, 2001
executed and delivered by Guarantor to and in favor of Lender, as the same may
be amended, modified or supplemented from time to time.
"INDEBTEDNESS," as to any Person and as of any date, shall mean, without
duplication, (i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all reimbursement obligations and other liabilities
of such Person with respect to letters of credit issued for such Person's
account and surety bonds and obligations in respect thereof, (iv) all
obligations of such Person to pay the deferred purchase price of property or
services, (v) all obligations of such Person as lessee in respect of Capital
Lease Obligations, (vi) all obligations and liabilities secured by any Lien on
any property or asset owned or held by such Person regardless of whether the
obligations and liabilities secured thereby shall have been assumed by that
Person or are nonrecourse to the credit of the Person and (vii) all obligations
of others of a nature described in any of CLAUSES (i) through (vi) above
guaranteed by such Person.
"INDEMNIFIED PARTY" shall have the meaning ascribed to such term in SECTION
9.3.
"KATY" shall mean Katy Industries, Inc., a Delaware corporation, and any
successor thereto.
"L/C BORROWING" means an extension of credit resulting from a drawing under
any Letter of Credit which has neither been reimbursed nor converted into a
borrowing of Loans.
"L/C OBLIGATIONS" means, at any time, the sum of the following obligations
of Borrower (whether contingent or otherwise): (i) the Stated Amount of all
Letters of Credit then outstanding, plus (ii) the amount of all unreimbursed
drawings under all Letters of Credit, including all outstanding L/C Borrowings.
"LENDER" shall have the meaning given to it in the PREAMBLE hereof.
"LETTER AGREEMENT" shall have the meaning given to it in SECTION 5.1(g)
hereof.
"LETTERS OF CREDIT" shall mean the Revolving Letters of Credit and the Term
Letters of Credit.
"LIBOR" shall have the meaning given to it in SECTION 2.5(a)(i)(A) hereof.
"LIEN" shall mean, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any Capital
Lease, any option or other agreement to sell and any filing of or agreement to
give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, Letters of Credit,
Applications, the Guaranty, the Security Documents and such other agreements,
instruments and documents now or hereafter executed by or on behalf of Borrower,
any of its Subsidiaries, the Guarantor or any Pledgor and delivered to Lender in
connection with this Agreement, together with all agreements and documents
referred to herein or therein or contemplated hereby or thereby.
"LOANS" shall mean, individually and collectively, the Revolving Loans and
the Term Loan
"MARGIN STOCK" shall have the meaning ascribed to such term in Regulation U
of the Board of Governors of the Federal Reserve System.
Page 24 of 82 Pages
"MULTIEMPLOYER PLAN" means a multiemployer plan defined as such in Section
3(37) of ERISA to which contributions have been made by Borrower or any ERISA
Affiliate as a "contributing sponsor" (within the meaning of Section 4001(a)(13)
of ERISA).
"MULTIPLE EMPLOYER PLAN" means any Single-employer Plan which has two or
more contributing sponsors, at least two (2) of whom are not under common
control, within the contemplation of Sections 4063 and 4064 of ERISA.
"NOTES" shall mean, individually and collectively, the Revolving Note and
the Term Note.
"OBLIGATIONS" shall mean all obligations of Borrower to pay principal and
interest on the Loans, the L/C Obligations, fees, expenses, and indemnification
obligations, and all other obligations of Borrower arising under or in
connection with any Loan Document.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PENSION PLAN" shall mean any Plan which is a "defined benefit plan" within
the meaning of Section 3(35) of ERISA.
"PERSON" shall mean any corporation, natural person, limited liability
company, firm, joint venture, association, partnership, trust, unincorporated
organization, government or any department or agency of any government, or any
other entity.
"PLAN" means any plan, program or arrangement which constitutes an
"employee benefit plan" within the meaning of Section 3(3) of ERISA and which is
maintained or contributed to by Borrower or its ERISA Affiliates for the benefit
of their employees, including former employees.
"PLEDGE AGREEMENT" means that certain Pledge Agreement, dated as of
December 31, 1995, between Borrower and Lender, as amended by a First Amendment
thereto dated as of October 31, 1996, a Second Amendment thereto dated as of
December 31, 1997, a Third Amendment thereto dated as of August 25, 1999, a
Fourth Amendment thereto dated as of February 28, 2001, a Fifth Amendment
thereto dated as of June 2, 2001 and a Sixth Amendment thereto dated as of
August 31, 2001, and as the same may be amended from time to time.
"PLEDGED COLLATERAL" shall have the meaning given such term in the Pledge
Agreement.
"PLEDGOR" shall mean, individually and collectively, the Trust, Timberline
Aviation and Timberline Ground and any other pledgor or grantor of collateral to
secure the Obligations.
"PREMISES" shall have the meaning given to it in the Deed of Trust.
"PRIME RATE" shall mean at any time the rate of interest most recently
announced by Lender at its principal office as its "Prime Rate," which is not
necessarily the lowest rate made available by Lender. For purposes of this
Agreement, each change in the interest rate due to a change in the Prime Rate
shall take effect on the effective date of the change in the Prime Rate. Lender
may make commercial loans or other loans at rates of interest at, above or below
the Prime Rate.
"PRIOR CREDIT AGREEMENT" shall have the meaning given to it in the RECITALS
hereof.
"PRIOR LOANS" shall have the meaning given to it in the RECITALS hereof.
"PRIOR NOTE" shall have the meaning given to it in the RECITALS hereof.
Page 25 of 82 Pages
"PRIOR LETTERS OF CREDIT" shall have the meaning given to it in the
RECITALS hereof.
"QUALIFIED PLAN" shall mean any Plan that is an employee pension benefit
plan as defined in Section 3(2) of ERISA and that is intended to meet the
qualification requirements of the Code.
"REAFFIRMATION OF GUARANTY AND PLEDGE" shall have the meaning given to it
in SECTION 5.1(d) hereof.
"RELATED PARTIES" shall mean any spouse or lineal descendant of Wallace E.
Carroll, Jr., any trust for his benefit or for the benefit of his spouse or any
lineal descendant, or any corporation, limited liability company, partnership or
other entity in which any of the foregoing Persons is the direct record and
beneficial owner of all of the voting and nonvoting equity interests.
"REVOLVING COMMITMENT" shall mean the commitment of Lender to make
Revolving Loans to Borrower and issue Revolving Letters of Credit for the
account of Borrower up to an aggregate amount of $1,000,000 pursuant to the
terms and conditions hereof, as the same may be reduced from time to time
pursuant to SECTIONS 2.6 and 2.7 hereof.
"REVOLVING LETTERS OF CREDIT" shall mean Letters of Credit issued by Lender
for the Account of Borrower out of Revolving Commitment availability and
pursuant to SECTION 3.1 hereof.
"REVOLVING LOANS" shall mean the revolving loans made by Lender in
accordance with SECTION 2.1(a) hereof (and shall also include any drawings under
any outstanding Revolving Letter of Credit for which Borrower has failed to
reimburse Lender and which such drawings have been deemed a Revolving Loan
pursuant to SECTION 3.5(b)).
"REVOLVING NOTE" shall have the meaning set forth in SECTION 2.3(a) hereof.
"SECOND AMENDMENT TO GUARANTOR PLEDGE" shall have the meaning given to it
in SECTION 5.1(f) hereof.
"SECURITY DOCUMENTS" shall mean, individually and collectively, the Pledge
Agreement, the Trust Pledge Agreement, the Guarantor Pledge Agreement, the
Aircraft Security Agreement, the Deed of Trust and any other collateral document
executed in connection herewith and securing the Obligations.
"SINGLE-EMPLOYER PLAN" shall mean any employee benefit plan that is a
"single-employer plan" as defined in Section 4001(a)(15) of ERISA.
"SIXTH AMENDMENT TO PLEDGE AGREEMENT" shall have the meaning given to it in
SECTION 5.1(c) hereof.
"STATED AMOUNT" of each Letter of Credit shall mean the maximum amount
available to be drawn thereunder, determined without regard to whether any
conditions to drawing could then be met.
"SUBSIDIARY" of a Person shall mean any Person of which more than 50% of
the outstanding capital stock or interest ordinarily entitled to vote in the
election of directors, managers or trustees thereof is owned by or controlled
directly or indirectly through one or more Subsidiaries of such Person.
"TAXES" shall mean all federal, state and local or foreign income, payroll,
withholding, excise, sales, use, real and personal property, use and occupancy,
business and occupation, mercantile, real estate, capital stock and franchise or
other taxes, including interest and penalties thereon, and including estimated
payments with respect thereto.
"TERM FACILITY" shall mean, collectively, the Term Loan and the Term
Letters of Credit outstanding from time to time up to the Term Facility Amount.
Page 26 of 82 Pages
"TERM FACILITY AMOUNT" shall have the meaning ascribed to it in SECTION
2.3(b) hereof, as the same may be reduced from time to time pursuant to SECTION
2.4 hereof.
"TERMINATION DATE" shall mean August 31, 2002, or such earlier date on
which the Revolving Commitment and the Term Facility have been terminated
pursuant to the terms of this Agreement.
"TERM LETTERS OF CREDIT" shall mean the following Letters of Credit
outstanding on the Closing Date and issued under the Term Facility, each as
amended and/or renewed from time to time: (a) Letter of Credit No. S273766, in
the face amount of $1,400,000 issued by Lender on September 3, 1999 and amended
on September 7, 1999 for the account of Borrower in favor of Bank of America,
N.A. (d/b/a Nationsbank, N.A.), and (b) Letter of Credit No. S273764, in the
face amount of $1,400,000, issued by Lender on September 3, 1999 and amended on
September 7, 1999 for the account of Borrower in favor of Bank of America, N.A.
(d/b/a Nationsbank, N.A.).
"TERM LOAN" shall mean the term loan made by Lender in accordance with
SECTION 2.1(b) hereof (and shall also include any drawings under any outstanding
Term Letters of Credit for which Borrower has failed to reimburse Lender and
which such drawings have been deemed a Term Loan pursuant to SECTION 3.5(b)), as
the same may be reduced from time to time pursuant to SECTION 2.4 hereof.
"TERM NOTE" shall have the meaning set forth in SECTION 2.3(b) hereof.
"TIMBERLINE AVIATION" shall mean Timberline Aviation LLC, a Colorado
limited liability company, and any successor thereto.
"TIMBERLINE GROUND" shall mean Timberline Ground Services, L.L.C., a
Colorado limited liability company, and any successor thereto.
"TRUST" shall mean The Wallace E. and Lelia H. Carroll Trust, under Trust
Agreement dated May 1, 1958, for the benefit of Wallace E. Carroll, Jr., as
amended from time to time.
"TRUST COLLATERAL" shall mean the "Collateral" as described in the Trust
Pledge Agreement.
"TRUST PLEDGE AGREEMENT" shall mean that certain Pledge Agreement dated as
of February 28, 2001 executed and delivered by the Trust to and in favor of
Lender, as amended by a First Amendment thereto dated as of August 31, 2001, and
as the same may be amended, modified or supplemented from time to time.
1.2. OTHER DEFINITIONAL PROVISIONS. All terms defined in this Agreement
in the singular shall have comparable meanings when used in the plural and
vice-versa. The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise specified,
all accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP, applied
consistently with the financial statements of Borrower delivered to Lender for
the period ended September 30, 2001. All references to exhibits or schedules
shall refer to the exhibits or schedules annexed hereto and constituting a part
of this Agreement.
1.3. RESTRUCTURING. On the Closing Date, and at the time on such date
that the restructuring contemplated by this Agreement occurs, (a) the Prior
Loans shall be converted into the Term Loan under this Agreement and be
evidenced by the Term Note, (b) the Guaranty shall continue in full force and
effect without diminishing, affecting or modifying Guarantor's obligations
thereunder and such Guaranty shall also extend to and include all obligations of
Borrower under this Agreement, and (c) the security interests and liens granted
by Borrower, the Guarantor and each Pledgor under the Security Documents and the
documents delivered in connection therewith shall continue in full force and
effect under this Agreement. None of the Prior Loans shall
Page 27 of 82 Pages
be deemed to have been repaid as a result of the restructuring described in this
SECTION 1.3. None of the liens of Borrower or any Pledgor granted to Lender
pursuant to the Security Documents shall be terminated as a result of the
restructuring described in this SECTION 1.3.
ARTICLE II. LOANS
2.1. LOANS.
(a) REVOLVING LOANS. Subject to the terms and conditions of this
Agreement, Lender agrees to make Revolving Loans at such times as Borrower may
request, which Revolving Loans may be repaid in whole or in part and reborrowed
at any time up to but not including the Termination Date; PROVIDED, HOWEVER,
that Lender shall not have an obligation to make any Revolving Loan to the
extent that after the making of such Revolving Loan, (i) the Revolving Loans
outstanding plus the Stated Amount of Revolving Letters of Credit outstanding
would exceed the Revolving Commitment or (ii) all outstanding Obligations would
exceed the Collateral Base.
(b) TERM LOAN. Subject to the terms and conditions of this Agreement,
Lender hereby converts the Prior Loans into the Term Loan to Borrower on the
Closing Date, in the principal amount of THREE MILLION TWO HUNDRED THOUSAND AND
NO/100 DOLLARS ($3,200,000). In the event that any amount is drawn under a Term
Letter of Credit by the beneficiary thereof and Borrower shall have not
reimbursed Lender for such amount drawn immediately, the amount so paid shall be
added to the Term Loan and the Term Loan shall be increased by such amount;
PROVIDED, HOWEVER, that the Term Loan, together with the Stated Amount of the
Term Letters of Credit outstanding shall never exceed the Term Facility Amount
in effect.
2.2. MANNER OF BORROWING.
(a) REQUEST FOR BORROWING. Borrower shall give Lender notice in writing,
by telecopy or facsimile of its request for a Revolving Loan hereunder prior to
12:00 noon Chicago time on the Borrowing Date. Each Revolving Loan shall be in
an aggregate principal amount of $100,000 and in integral multiples of $10,000
in excess thereof or in the remaining unused amount of the Revolving Commitment.
(b) TELEPHONIC NOTICE. In lieu of delivering the above-described notice
of borrowing, an Authorized Employee of Borrower may give Lender telephonic
notice by the time required for giving notice of any proposed Revolving Loan
under this SECTION 2.2.
(c) AUTHORIZED EMPLOYEES. Each Authorized Employee of Borrower shall be
authorized to request a Revolving Loan and/or Revolving Letter of Credit on
behalf of Borrower. Lender shall be entitled to rely conclusively on such
Authorized Employee's authority to request a Revolving Loan and/or Revolving
Letter of Credit on behalf of Borrower until Lender receives written notice from
Borrower to the contrary. Lender shall have no duty to verify the authenticity
of the signature appearing on any written request for a Revolving Loan or
Revolving Letter of Credit given pursuant to this SECTION 2.2 and, with respect
to an oral, telecopy or facsimile request for a Revolving Loan or Revolving
Letter of Credit, Lender shall have no duty to verify the identity of any Person
representing himself as one of the Authorized Employees entitled to make such a
request on behalf of Borrower.
(d) NO LIABILITY. Lender shall not incur any liability to Borrower in
acting upon any telephonic, telecopy or facsimile notice referred to above which
Lender believes in good faith to have been given by an Authorized Employee or
for otherwise acting in accordance with this SECTION 2.2 and, upon Lender making
any Revolving Loans or issuing any Revolving Letter of Credit in accordance with
this Agreement pursuant to any such telephonic, telecopy or facsimile notice,
Borrower shall be deemed to have effected such Revolving Loan or such Revolving
Letter of Credit, as the case may be, hereunder.
Page 28 of 82 Pages
(e) NOTICE IRREVOCABLE. Any request for a Revolving Loan (or telephonic
notice in lieu thereof) pursuant to this SECTION 2.2 shall be irrevocable.
2.3. NOTES.
(a) REVOLVING NOTE. The Revolving Loans shall be evidenced by a
promissory note (as amended, modified, renewed, restated or substituted from
time to time, the "REVOLVING NOTE"), substantially in the form of EXHIBIT A,
dated the date hereof, payable to the order of Lender, and in the principal
amount of the Revolving Commitment. Lender is hereby authorized to note the date
and amount of each Revolving Loan and each payment of principal and interest and
the unpaid balance thereof on a schedule annexed to and constituting a part of
such Revolving Note, which notations shall constitute PRIMA FACIE evidence of
the accuracy of the information noted: PROVIDED, HOWEVER, that the failure of
Lender to make such notations or any error in making such notations shall not
limit, enlarge or otherwise affect the obligation of Borrower to repay such
Revolving Loans. In lieu of making any notations as provided in the preceding
sentence, Lender is hereby authorized, at its option, to record such information
in its books and records, which notations shall constitute PRIMA FACIE evidence
of the accuracy of the information contained therein; PROVIDED, HOWEVER, that
the failure of Lender to make such notations or any error in making such
notations shall not limit, enlarge or otherwise affect the obligation of
Borrower to repay the Revolving Loans. The outstanding principal balance of and
all accrued and unpaid interest on the Revolving Note shall be payable on the
Termination Date.
(b) TERM NOTE. The Term Facility shall be evidenced by a promissory note
(as amended, modified, renewed, restated or substituted from time to time, the
"TERM NOTE"), substantially in the form of EXHIBIT B, dated the date hereof,
payable to the order of Lender, and in the original principal amount of the SIX
MILLION AND NO/100 UNITED STATES DOLLARS ($6,000,000) (the "TERM FACILITY
AMOUNT"). The Term Facility Amount shall be payable, together with all accrued
and unpaid interest and fees on the Term Facility Amount, in full on the
Termination Date. The Term Facility Amount shall be reduced in an amount equal
to any reduction of the Stated Amount under any Term Letters of Credit, provided
the amount of such reduction was not added to the Term Loan as a result of not
being reimbursed by Borrower from a draw under any Term Letter of Credit. Any
reductions in the Term Facility Amount, whether from payment of principal on the
Term Loan or reductions in the Stated Amount under any Term Letter of Credit
cannot be reborrowed.
Upon receipt of the Term Note, Lender will: (a) record the aggregate unpaid
principal amount of the Prior Loans in the Term Note as the aggregate unpaid
principal amount of the Term Note; (b) mark the Prior Note as replaced by the
Term Note; and (c) return the Prior Note to Borrower upon its request. The
replacement of the Prior Note with the Term Note shall not be construed to deem
paid or forgiven the unpaid principal amount of, or unpaid accrued interest on,
the Prior Note at the time of replacement.
2.4. PRINCIPAL PAYMENTS.
(a) FINAL PAYMENT. The aggregate unpaid principal amount of all Loans
made to Borrower shall be paid to Lender on the Termination Date. In the event
that any L/C Obligations remain outstanding on the Termination Date, then
Borrower immediately shall (i) Cash Collateralize such L/C Obligations to the
extent that Borrower has the available cash on hand, and (ii) to the extent that
any L/C Obligations have not been Cash Collateralized, take the necessary action
to ensure that such L/C Obligations (together with any other outstanding
Obligations) do not exceed the Collateral Base. Borrower hereby agrees that if
any L/C Obligations remain outstanding on the Termination Date, this Agreement
and the other Loan Documents shall remain in full force and effect with respect
to all of Borrower's remaining outstanding Obligations (except that Lender shall
have no further obligation whatsoever to make or continue Loans or to issue
Letters of Credit) and, upon the occurrence and during the continuation of any
Default or Event of Default (whether prior to or subsequent to the Termination
Date), Lender may, in addition to any of its other rights and remedies
Page 29 of 82 Pages
under this Agreement and the other Loan Documents, liquidate the Cash Collateral
and Collateral and apply the proceeds thereof to pay all amounts owing to
Lender.
(b) OPTIONAL PREPAYMENTS. Borrower may from time to time prepay any
Loan, or portion thereof, bearing interest at the Prime Rate at any time and may
prepay any Loan, or portion thereof, bearing interest at LIBOR at the end of the
maturity period chosen or deemed elected by Borrower applicable to the advance
or portion of the advance being prepaid, without premium or penalty; PROVIDED,
that any partial prepayment shall be in an aggregate principal amount of at
least $10,000. Any prepayment of a Loan, or portion thereof, bearing interest at
LIBOR at a date other than the maturity date applicable to the advance or the
portion of the advance being prepaid shall be subject to the provisions of
SECTION 2.5(e) herein. All prepayments of principal shall include interest
accrued to the date of prepayment on the principal amount being prepaid, and, in
the case of the Term Loan, shall be applied to the unpaid installments, if any,
of the Term Loan in the inverse order of maturity.
(c) MANDATORY PREPAYMENTS. In the event that (i) the aggregate principal
amount of outstanding Revolving Loans PLUS the aggregate Stated Amount of all
Revolving Letters of Credit exceeds the Revolving Commitment, including after
giving effect to any reduction or termination in the amount of the Revolving
Commitment permitted or required by SECTION 2.6 or SECTION 2.7 or occurring as a
result of SECTION 8.2, then Borrower immediately shall make a payment of
principal on the Revolving Loans in an amount sufficient to eliminate such
excess, PROVIDED, that if such excess is not eliminated after the payment of the
principal of all outstanding Revolving Loans then Borrower shall Cash
Collateralize the Revolving Letters of Credit in the amount of such excess;
PROVIDED, FURTHER, that upon the occurrence and during the continuation of any
Default or Event of Default, Lender may liquidate such Cash Collateral and apply
the proceeds thereof to pay all amounts owing to Lender; (ii) all outstanding
Obligations exceed the Collateral Base, Borrower shall immediately comply with
the provisions of SECTION 6.11 herein to reduce such excess; or (iii) Borrower
sells any of its assets outside the ordinary course of Borrower's business (and
in accordance with SECTION 7.1 herein), Borrower shall immediately apply the
proceeds received from the sale of such assets, less reasonable costs of
disposition, to repay the outstanding Obligations under the Term Facility
(including, if necessary, Cash Collateralizing the L/C Obligations pertaining to
the Term Letters of Credit), unless otherwise agreed in writing by Lender.
Lender shall have the right, in its sole discretion, to apply mandatory payments
received by it, in any order and against any Obligations outstanding.
2.5. INTEREST .
(a) RATES. The unpaid principal amount of each Loan from time to time
outstanding hereunder shall bear interest at the following rates per year:
(i) before maturity of any Loan, whether by acceleration or
otherwise, at the option of Borrower subject to the terms hereof at a rate
equal to:
(A) "LIBOR," which shall mean that fixed rate of interest
per year for deposits with maturity periods of 1, 3 or 6 months
(which maturity period Borrower shall select subject to the terms
stated herein) in United States dollars offered to Lender in or
through the London interbank market at or about 11:00 A.M., London
time, three Business Days before the rate is to take effect in an
amount corresponding to the amount of such Loan, or portion thereof)
and for the London deposit maturity requested, DIVIDED BY one minus
any applicable reserve requirement (expressed as a decimal) on
Eurodollar deposit of the same amount and maturity as determined by
Lender in its sole discretion, PLUS 325 basis points; or
(B) the Prime Rate; and
Page 30 of 82 Pages
(ii) after the maturity of any Loan, until paid, at a rate equal
to 2% in addition to the Prime Rate (but not less than the Prime Rate in
effect at maturity).
(b) RATE SELECTION. Borrower shall select and change its selection of
the interest rate as between LIBOR and the Prime Rate to apply to any Loan, or
portion thereof, to at least $100,000 and in integral multiples of $100,000
thereafter of any advance, subject to the requirements herein stated:
(i) At the time a Loan is made;
(ii) At the expiration of the particular LIBOR maturity period
selected for the outstanding principal balance of any Loan currently
bearing interest at LIBOR; and
(iii) At any time for the outstanding principal balance of any
Loan currently bearing interest at the Prime Rate.
(c) RATE CHANGES AND NOTIFICATIONS.
(i) LIBOR. If Borrower wishes to borrow funds at LIBOR or if
Borrower wishes to change the rate of interest on any Loan, or portion
thereof, within the limits described above, from any other rate to LIBOR,
it shall, not less than three Business Days prior to the Business Day on
which such rate is to take effect, give Lender written or telephonic notice
thereof, which shall be irrevocable; PROVIDED, that the rate of interest on
such Loan or any portion thereof bearing interest at LIBOR may be changed
only on the last day of the maturity period thereof. Such notice shall
specify the Loan, or portion thereof, to which LIBOR is to apply, and, in
addition, the desired LIBOR maturity period of one, three or six months
(but not to exceed the Termination Date).
(ii) PRIME RATE. If Borrower wishes to borrow all or any portion
of a Loan at the Prime Rate or to change the rate of interest on such Loan,
or any portion thereof, to the Prime Rate, it shall, at or before 12:00
noon, Chicago time on the date such borrowing or change is to take effect,
which shall be a Business Day, give written or telephonic notice thereof,
which shall be irrevocable; PROVIDED, that the rate of interest on such
Loan or any portion thereof bearing interest at LIBOR may be changed only
on the last day of any maturity period thereof. Such notice shall specify
the amount of such Loan, or any portion thereof, to which the Prime Rate is
to apply.
(iii) FAILURE TO NOTIFY. If Borrower does not notify Lender at the
expiration of a selected maturity period with respect to any Loan, or
portion thereof, outstanding at LIBOR, then in the absence of such notice,
Borrower shall be deemed to have elected to have such Loan, or portion
thereof, accrue interest after the respective LIBOR maturity period at the
Prime Rate.
(d) INTEREST PAYMENT DATES. Accrued interest shall be paid in respect of
each portion of principal of any Loan to which the Prime Rate applies in arrears
on the last day of each calendar quarter of each year, at maturity, and upon
payment in full, and to each portion of principal of any Loan to which LIBOR
applies, the earlier or more frequent of the end of each respective maturity
period for such portion or every three months, at maturity, and upon payment in
full. If any such payment of interest at LIBOR falls due on a day that is not a
Business Day, payment shall be made on the next Business Day; however, if such
day would be in the following month, such interest shall be paid on the last
Business Day in the month when the interest payment is due. After maturity of
any installment of any Loan, interest shall be payable upon demand.
Page 31 of 82 Pages
(e) ADDITIONAL PROVISIONS WITH RESPECT TO LIBOR. The selection by
Borrower of LIBOR and the maintenance of Loans, or any portion thereof, at such
rate shall be subject to the following additional terms and conditions:
(i) AVAILABILITY OF DEPOSITS AT A DETERMINABLE RATE. If, after
Borrower has elected to borrow or maintain any Loan, or portion thereof, at
LIBOR, Lender notifies Borrower that:
(A) United States dollar deposits in the amount and for the
maturity requested are not available to Lender in the London
interbank market, or
(B) Reasonable means do not exist for Lender to determine
LIBOR for the amount and maturity requested,
all as determined by Lender in its sole discretion, then the principal
subject to LIBOR shall accrue or shall continue to accrue interest at the
Prime Rate.
(ii) PROHIBITION OF MAKING, MAINTAINING, OR REPAYMENT OF
PRINCIPAL AT LIBOR. If any treaty, statute, regulation, interpretation
thereof, or any directive, guideline, or otherwise by a central bank or
fiscal authority (whether or not having the force of law) shall either
prohibit or extend the time at which principal subject to LIBOR may be
purchased, maintained or repaid, all as determined by Lender in its sole
discretion, then on as and of the date the prohibition becomes effective,
the principal subject to that prohibition shall continue at the Prime Rate.
(iii) PAYMENTS OF PRINCIPAL AND INTEREST TO BE NET OF ANY TAXES OR
COSTS. All payments of principal and interest shall be made net of any
taxes and costs incurred by Lender resulting from having principal
outstanding hereunder at LIBOR, as determined by Lender in its sole
discretion. Without limiting the generality of the preceding obligation,
illustrations of such taxes and costs are:
(A) Taxes (or the withholding of amounts for taxes) of any
nature whatsoever including income, excise and interest equalization
taxes (other than income taxes imposed by the United States or any
state thereof on the income of Lender), as well as all levies,
imposts, duties or fees whether now in existence or resulting from a
change in, or promulgation of, any treaty, statute, regulation,
interpretation thereof, or any directive, guideline or otherwise, by
a central bank or fiscal authority (whether or not having the force
of law) or a change in the basis of, or time of payment of, such
taxes and other amounts resulting therefrom;
(B) Any reserve or special deposit requirements (other than
any included within the definition of LIBOR set forth hereinabove)
against assets or liabilities of, or deposits with or for the
account of, Lender with respect to principal outstanding at LIBOR
(including those imposed under Regulation D of the Federal Reserve
Board) or resulting from a change in, or the promulgation of, such
requirements by treaty, statute, regulation, interpretation thereof,
or any directive, guideline, or otherwise by a central bank or
fiscal authority (whether or not having the force of law);
(C) Any other costs resulting from compliance with treaties,
statutes, regulations, interpretations or any directives or
guidelines, or otherwise by a central bank or fiscal authority
(whether or not having the force of law);
Page 32 of 82 Pages
(D) Any loss (including loss of anticipated profits) or
expense incurred by reason of the liquidation or re-employment or
deposits acquired by Lender to make advances or maintain the
principal of any Loan or portion thereof outstanding at LIBOR:
(1) As the result of a voluntary prepayment at a date
other than the maturity date selected for principal
outstanding at LIBOR; or
(2) As the result of a mandatory repayment at a date
other than the maturity date selected for principal
outstanding at LIBOR as a result of Borrower exceeding any
applicable borrowing base or as the result of the occurrence
of an Event of Default and the acceleration of any portion
of the indebtedness hereunder; or
(3) As the result of a prohibition on making,
maintaining, or prepaying principal outstanding at LIBOR.
If Lender incurs any such taxes or costs, Borrower, upon
demand in writing specifying such taxes and costs, shall promptly pay them;
save for manifest error, Lender's specification shall be presumptively
deemed correct. All Loans made or carried at LIBOR shall be conclusively
deemed to have been funded by on or behalf of Lender in the London
interbank market by the purchase of deposits corresponding in amount and
maturity to the amount and interest periods selected (or deemed to have
been selected) by Borrower for such Loan hereunder.
2.6. MANDATORY REDUCTION OF REVOLVING COMMITMENT. Notwithstanding
anything to the contrary in this Agreement, the Revolving Commitment shall
terminate without notice of any kind on the Termination Date. Further, if at any
time prior to the Termination Date, and if Borrower has paid in full (and/or
Cash Collateralized, as the case may be) the Term Facility Amount, then if
Borrower (and/or Guarantor or any Pledgor, as the case may be) liquidates any
Collateral or sells any other assets of Borrower outside Borrower's ordinary
course of business, the proceeds from such liquidation and/or sale less
customary costs of sale or liquidation shall be applied to reduce the Revolving
Loans.
2.7. OPTIONAL TERMINATION OR REDUCTION. Borrower shall have the right
from time to time to reduce the Revolving Commitment, upon not less than 10
Business Days', or if pursuant to SECTION 6.11, upon 1 Business Day's prior
notice to Lender in writing or by telephonic, telecopy or facsimile
transmission, which notice shall specify the effective date of such termination
or reduction and shall be irrevocable and effective only upon receipt by Lender;
PROVIDED, HOWEVER, that after giving effect to any such termination or
reduction, (a) the aggregate principal amount of outstanding Revolving Loans
PLUS (b) the aggregate Stated Amount under all outstanding Revolving Letters of
Credit, shall not exceed the Revolving Commitment as then in effect. Any
optional reduction of the amount of the Revolving Commitment shall be in the
amount of $100,000 and in integral multiples of $10,000 in excess thereof or in
the full amount of the Revolving Commitment as then in effect. Any termination
or reduction pursuant to this SECTION 2.7 shall be permanent.
2.8. MANNER AND APPLICATION OF PAYMENTS. All payments in respect of the
Loans shall be in Dollars and in immediately available funds and shall be made
at the principal office of Lender prior to 2:00 p.m. Chicago time on the date of
the scheduled payment. All payments received after 2:00 p.m. Chicago time shall
be considered to have been received on the next Business Day. Any payment which
is to be made on a non-Business Day shall be rescheduled to the next succeeding
Business Day and interest, fees and other charges required to be paid in
connection with this Agreement shall continue to accrue to such rescheduled
Business Day. All payments of principal and interest and fees and other charges
required to be paid in connection with this Agreement in respect of the Loans
may be made by charging, and Borrower hereby authorizes Lender to charge, any of
Borrower's deposit accounts with Lender for
Page 33 of 82 Pages
the amount of each such payment. If Borrower shall not have sufficient collected
balances in such deposit accounts with Lender in order that each such payment
will be available when due hereunder, Borrower shall remain obligated to remit
any unpaid amounts due and owing and not collected from such deposit accounts.
If Borrower fails at any time and for any reason to have a deposit account with
Lender, all such payments shall be made directly to Lender at Lender's principal
office in immediately available funds.
2.9. FACILITY FEE. Borrower shall pay to Lender a facility fee (the
"FACILITY FEE") in immediately available funds for the period from the date
hereof to and including the Termination Date, such Facility Fee to be payable in
arrears on the last day of each calendar quarter, and on the Termination Date.
The Facility Fee shall be computed at a rate per annum of three-eighths of one
percent (3/8%) on the average daily amount of (a) the Revolving Commitment as in
effect from time to time, minus (b)(i) the aggregate unpaid principal amount of
all outstanding Revolving Loans, plus (ii) the aggregate Stated Amount of all
outstanding Revolving Letters of Credit, calculated on the basis of a year of
360 days, for actual days elapsed.
2.10. RESERVED.
2.11. INCREASED COSTS; LEGAL RESTRICTIONS. If, on or after the date
hereof, the introduction of any law, treaty, rule or regulation, or
determination of a court, governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof (whether or not
having the force of law), or any change therein or in the interpretation or
application thereof, shall:
(a) impose, modify or deem applicable any reserve, special deposit,
compensatory loan, deposit insurance, capital adequacy, minimum capital, capital
ratio or similar requirement against all or any assets held by, deposits or
accounts with, credit extended by or to, or commitments to extend credit or any
other acquisition of funds by, or Letters of Credit issued by, any office or
Affiliate of Lender, or impose on any office or Affiliate of Lender any other
condition affecting its making, renewing or maintaining any Loan or the
Revolving Commitment, or issuing or maintaining any Letter of Credit; or
(b) subject any office or Affiliate of Lender to, or cause the
termination or reduction of a previously granted exemption with respect to, any
tax, levy, impost, deduction, charge or withholding with respect to its making,
renewing or maintaining any Loan or issuing or maintaining any Letter of Credit,
or change the basis of taxation of payments to Lender of the principal of or
interest on the Loans or any other amounts under this Agreement or any of the
Loan Documents (except for taxes imposed on or measured by the overall net
income of Lender and imposed by the jurisdiction under the laws of which Lender
is organized or any political subdivision or agency thereof);
and the result of any of the foregoing events is to increase the cost to Lender
of maintaining the Revolving Commitment, or of making, renewing or maintaining
any Loan or issuing or maintaining any Letter of Credit, or to reduce the amount
of any sums received or receivable by Lender under this Agreement or any of the
Loan Documents or to reduce the rate of return on Lender's equity, then, in any
such case, Borrower promptly shall pay to Lender, upon delivery of the statement
referred to below, and indemnify and hold Lender harmless from and against any
such amount or amounts as may be necessary to compensate Lender for any such
additional cost, reduced benefit, reduced amount received or reduced rate of
return. If Lender sustains or incurs any additional cost, reduced benefit,
reduced amount received or reduced rate of return, Lender shall deliver to
Borrower a written statement of the nature and amounts thereof, which statement
shall be conclusive absent manifest error; PROVIDED, that the failure to provide
any such notice shall not affect the Obligations of Borrower under this SECTION
2.11. The Obligations of Borrower under this SECTION 2.11 shall survive and
continue to be in full force and effect notwithstanding (i) the execution and
delivery of this Agreement and the other Loan Documents, (ii) the making of the
Loans, (iii) the issuing of any Letter of Credit, (iv) the repayment of the
Loans, (v) the
Page 34 of 82 Pages
payment in full of all interest, fees and all other Obligations incurred
hereunder and under the other Loan Documents and (vi) the termination of all
Obligations of Lender under all Loan Documents; PROVIDED, HOWEVER, that the
Obligations of Borrower under this SECTION 2.11 shall terminate one year after
the Termination Date (except with respect to amounts due to Lender under this
SECTION 2.11 for which Borrower has received a written statement as provided
above).
ARTICLE III. LETTERS OF CREDIT
3.1. LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement (including,
without limitation, the last sentence of SECTION 3.3), Lender agrees to issue
Letters of Credit for the account of Borrower from the Closing Date to but not
including the Termination Date at such times as Borrower may request; PROVIDED,
HOWEVER, that Lender shall not be obligated to (i) issue any Term Letter of
Credit other than those existing on the Closing Date; or (ii) issue any
Revolving Letter of Credit to the extent that after the issuance of such
Revolving Letter of Credit, (A) the sum of the aggregate principal amount of all
outstanding Revolving Loans plus the aggregate Stated Amount of all outstanding
Revolving Letters of Credit would exceed the Revolving Commitment or (B) the
outstanding Obligations would exceed the Collateral Base.
(b) Lender is under no obligation to issue any Revolving Letter of
Credit if:
(i) any order, judgment or decree of any governmental authority
or arbitrator shall by its terms purport to enjoin or restrain Lender from
issuing such Letter of Credit, or any requirement of law applicable to
Lender or any request or directive (whether or not having the force of law)
from any governmental authority with jurisdiction over Lender shall
prohibit, or request that Lender refrain from, the issuance of letters of
credit generally or such Letter of Credit in particular or shall impose
upon Lender with respect to such Letter of Credit any restriction, reserve
or capital requirement (for which Lender is not otherwise compensated
hereunder) not in effect on the date hereof, or shall impose upon Lender
any unreimbursed loss, cost or expense which was not applicable on the date
hereof and which Lender in good faith deems material to it;
(ii) Lender has received written notice from Borrower on or prior
to the Business Day prior to the requested date of issuance of such Letter
of Credit, that one or more of the applicable conditions contained in
SECTION 5 is not then satisfied;
(iii) the expiry date of any requested Letter of Credit (A) is
more than 364 days after the date of issuance or (B) other than any Term
Letter of Credit, falls on a date after the Termination Date;
(iv) the expiry date of any requested Letter of Credit is prior
to the maturity date of any financial obligation to be supported by the
requested Letter of Credit; PROVIDED, HOWEVER, this CLAUSE (iv) shall not
be applicable in the event that the beneficiary, or its assigns, of the
Letter of Credit shall have no right to draw on the Letter of Credit
because the expiration date of the Letter of Credit has not been extended;
(v) any requested Letter of Credit does not provide for drafts,
or is not otherwise in form and substance acceptable to Lender, or the
issuance of a Letter of Credit shall violate any applicable policies of
Lender;
(vi) any standby Letter of Credit is for the purpose of
supporting the issuance of any letter of credit by any other Person; or
Page 35 of 82 Pages
(vii) such Letter of Credit is to be used for a purpose other than
in connection with Borrower's or any of Borrower's Subsidiaries', as the
case may be, existing lines of business.
3.2. MANNER OF ISSUANCE.
(a) APPLICATIONS. Borrower shall deliver to Lender at least four
Business Days (or such shorter time period to which Lender may agree in a
particular instance in its sole discretion) prior to the issuance date of any
Revolving Letter of Credit or on the amendment effective date with respect to
any amendment of an outstanding Letter of Credit, Lender's standard Application
and Agreement for Irrevocable Letter of Credit ("APPLICATION"), the current form
of which is attached hereto as EXHIBIT C (with blanks filled in accordingly), or
an application for amendment in a form acceptable to Lender.
(b) AUTHORIZED EMPLOYEES. Each Authorized Employee may execute and
deliver an Application, and request a Revolving Letter of Credit or an amendment
to any Letter of Credit (as applicable) on behalf of Borrower. Lender shall be
entitled to rely conclusively on each such Authorized Employee's authority to
take the action referred to in the immediately preceding sentence until Lender
receives written notice from Borrower to the contrary. Lender shall not have a
duty to verify the authenticity of the signature appearing on any Application
and Lender shall have no duty to verify the identity of any Person representing
himself as one of the Authorized Employees entitled to take the aforesaid
actions on behalf of Borrower.
(c) NO LIABILITY. Lender shall not incur any liability to Borrower in
acting upon any request referred to above which Lender believes in good faith to
have been given by an Authorized Employee or for otherwise acting in accordance
with this SECTION 3.2.
(d) APPLICATION IRREVOCABLE. Each Application submitted pursuant to this
SECTION 3.2 shall be irrevocable.
(e) ISSUANCE. Subject to the terms and conditions set forth in
SECTION 3.1 Lender will issue the Letter of Credit for the account of Borrower
on the Borrowing Date.
(f) CONTROLLING TERMS. If the terms of any Application address the
subject matter of any item, representation, warranty, covenant or agreement
addressed in this Agreement, the terms of this Agreement shall control over the
terms of such Application to the extent the terms of such Application conflict
or are inconsistent with the terms of this Agreement.
3.3. TERM. Letters of Credit shall be stated to expire no more than one
year from the date of issuance and may be renewed if so requested by Borrower in
the manner required by Lender (but in any event such request shall be in
writing, shall reasonably describe the Letter of Credit requested to be renewed
and the requested renewal term and shall be given by an Authorized Employee to
Lender not less then 30 days prior to expiration of such Letter of Credit). No
such renewal shall be for more than one year.
3.4. LETTER OF CREDIT FEE.
(a) For each Letter of Credit issued by Lender, Borrower shall pay to
Lender standard issuance and amendment fees and expenses as set forth in the
Application.
(b) In addition, Borrower shall pay to Lender annually for so long as a
Letter of Credit is outstanding a nonrefundable negotiation fee of 2% of the
Stated Amount of each Letter of Credit when issued; PROVIDED, that, upon renewal
of such Letter of Credit, such negotiation fee shall increase to 3.25%.
Page 36 of 82 Pages
(c) Lender shall debit Borrower's account with Lender for the fees
described in this SECTION 3.4.
3.5. REIMBURSEMENT OBLIGATION.
(a) REIMBURSEMENT. In the event that any amount is drawn under a Letter
of Credit by the beneficiary thereof and Borrower shall not have reimbursed
Lender for such amount drawn immediately when due in accordance with the
Application, the amount so paid shall, with respect to any drawing under a
Revolving Letter of Credit, be deemed a Revolving Loan under the Revolving
Commitment and, with respect to any drawing under a Term Letter of Credit, be
deemed a Term Loan under the Term Facility. With respect to any unreimbursed
drawing that is not converted into a Term Loan or Revolving Loan, as applicable,
for any reason whatsoever (including without limitation, that there may be no
availability under the Revolving Commitment or the Term Facility Amount, as
applicable), Borrower shall be deemed to have incurred an L/C Borrowing, which
L/C Borrowing shall be payable on demand and shall bear interest at the Prime
Rate plus 2.0% per annum until paid.
(b) IRREVOCABLE OBLIGATION. The obligation of Borrower to make payment
to Lender with respect to Letters of Credit shall be unconditional and
irrevocable and shall not be subject to any qualification or exception
whatsoever and shall be made under all circumstances, including without
limitation any of the following circumstances:
(i) Any lack of validity or enforceability of this Agreement or
any of the Loan Documents;
(ii) The existence of any claim, setoff, defense or other right
which Borrower may have at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), Lender or any other Person, whether in
connection with this Agreement, any Loan Document, the transactions
contemplated herein or any unrelated transactions (including any underlying
transactions between Borrower and the beneficiary named in any Letter of
Credit);
(iii) Any draft, certificate or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or in any statement therein being untrue or
inaccurate in any respect;
(iv) The surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents;
(v) The occurrence of any Default or Event of Default or
termination of the Revolving Commitment or this Agreement;
(vi) Any amendment, modification, waiver, consent or any
substitution, exchange or release of or failure to perfect any interest in
collateral security, with respect to any Letter of Credit;
(vii) Any failure, omission, delay or lack on the part of Lender
or any party to any of the Letters of Credit to enforce, assert or exercise
any right, power or remedy conferred upon Lender or any such party under
this Agreement or any Letter of Credit, or any other acts or omissions on
the part of Lender or any such party;
(viii) Any payment by Lender under any Letter of Credit against
presentation of a draft, certificate or other document that does not
strictly comply with the terms of any Letter of Credit, unless such payment
was made due to Lender's willful misconduct or gross negligence; or any
payment made by Lender under any Letter of Credit to any Person purporting
to be a trustee in
Page 37 of 82 Pages
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of any Letter of Credit, including any
payment arising in connection with (i) any case, action or proceeding
before any court or other governmental authority relating to bankruptcy,
insolvency, reorganization, arrangement, readjustment, liquidation,
dissolution or similar proceeding, domestic or foreign, or (ii) Borrower
making any general assignment for the benefit of its creditors,
composition, marshalling of assets for creditors, or other similar
arrangements in respect of its creditors generally or any substantial
portion of its creditors, unless such payment was made due to Lender's
willful misconduct or gross negligence; or
(ix) Any other event or circumstance that would, in the absence
of this clause, result in the release or discharge by operation of law or
otherwise of Borrower from the performance or observance of any obligation,
covenant or agreement contained in this SECTION 3.5.
3.6. ROLE OF LENDER.
(a) Borrower agrees that, in paying any drawing under a Letter of
Credit, Lender shall not have any responsibility to obtain any document (other
than any drafts, certificates or other documents expressly required by the
Letter of Credit) or to ascertain or inquire as to the validity or accuracy of
any such document or the authority of the Person executing or delivering any
such document.
(b) Borrower hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit;
PROVIDED, HOWEVER, that this assumption is not intended to, and shall not,
preclude Borrower's pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under any other agreement. Neither Lender
nor its officers, directors, employees or agents, nor any of the respective
correspondents, participants or assignees of Lender, shall be liable or
responsible for any of the matters described in CLAUSES (i) through (ix) of
SECTION 3.5(b); PROVIDED, HOWEVER, anything in such clauses to the contrary
notwithstanding, that Borrower may have a claim against Lender, and Lender may
be liable to Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by Borrower which
Borrower proves were caused by Lender's willful misconduct or gross negligence
or Lender's willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing: (i) Lender may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary
and (ii) Lender shall not be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.
3.7. CASH COLLATERAL PLEDGE; REIMBURSEMENT OF L/C BORROWINGS. If, as of
the Termination Date, any Letters of Credit may for any reason remain
outstanding and partially or wholly undrawn, Borrower shall immediately (a) Cash
Collateralize the L/C Obligations pertaining to such Letters of Credit to the
extent that Borrower has the available cash on hand, and (b) to the extent that
any L/C Obligations have not been Cash Collateralized, take the necessary action
to ensure that such L/C Obligations (together with any other outstanding
Obligations) do not exceed the Collateral Base. Upon a Default or Event of
Default which is continuing, Borrower shall immediately Cash Collateralize all
L/C Obligations. Upon the occurrence of the circumstances described in SECTION
2.4(c) requiring Borrower to Cash Collateralize Letters of Credit, then Borrower
shall Cash Collateralize the Letters of Credit in accordance with the terms of
SECTION 2.4(c). If Lender has honored any full or partial drawing request on any
Letter of Credit and such drawing has resulted in an L/C Borrowing hereunder,
Borrower shall immediately reimburse Lender for such L/C Borrowing.
Page 38 of 82 Pages
3.8. UNIFORM CUSTOMS AND PRACTICE. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit shall (unless otherwise
expressly provided in the Letters of Credit) apply to the Letters of Credit.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement, Borrower makes the
following representations and warranties on the date hereof which shall survive
the execution and delivery of this Agreement and the Loan Documents and the
making of the Loans until (a) the Revolving Commitment has been terminated, (b)
all Loans and all interest, fees and all other obligations incurred by Borrower
hereunder and under the Loan Documents have been paid in full and (c) all
obligations of Lender to Borrower under this Agreement and under the Loan
Documents have terminated.
4.1. DUE ORGANIZATION. Borrower and each of its Subsidiaries (a) is a
duly organized and validly existing corporation, limited liability company or
partnership, as applicable, in good standing under the laws of the state of its
organization, (b) is duly qualified as a foreign corporation, limited liability
company or partnership, as applicable, and in good standing under the laws of
each jurisdiction in which the business conducted or property owned by such
Person makes such qualification necessary, except such jurisdictions, if any,
where the failure to be so qualified and in good standing, whether considered
individually or when aggregated with all other such failures, would not have a
material adverse effect on Borrower's ability to perform its obligations under
this Agreement or any of the Loan Documents to which it is a party or any of the
transactions contemplated hereby or thereby, and (c) has the requisite
corporate, limited liability company or partnership, as applicable, power and
authority and the legal right to conduct its business and to own and operate its
property.
4.2. AUTHORIZATION AND VALIDITY. Borrower has the corporate power and
authority and the legal right to execute and deliver and perform its obligations
under, and has taken all necessary corporate action to authorize the execution
and delivery of and the performance of its obligations under, this Agreement and
the Loan Documents to which it is a party.
4.3. BINDING AGREEMENT. This Agreement and each of the Loan Documents to
which Borrower is a party has been duly executed and delivered by Borrower and
constitutes a legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, except as subject to or limited
by bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent
transfer and other similar laws affecting the rights of creditors generally and
general principles of equity.
4.4. NO CONFLICTS OR CONSENTS. Neither the execution, delivery and
performance of this Agreement and the Loan Documents, nor the consummation of
any of the transactions herein or therein contemplated, nor compliance with the
terms and conditions hereof or thereof will (a) violate any provision of law or
regulation (including, without limitation, Regulations T, U and X of the Federal
Reserve Board), (b) violate any order of any governmental authority, court,
arbitration board or tribunal binding upon Borrower, (c) violate the charter
documents or by-laws of Borrower or any of its Subsidiaries, or (d) result in
the breach of, constitute a default under, contravene any provisions of or
result in the creation of any Lien upon any of the properties or assets of
Borrower or any of its Subsidiaries pursuant to, any indenture, agreement (other
than this Agreement and the other Loan Documents), license, permit or
authorization to which Borrower or any of its Subsidiaries is a party or by
which any of their properties is bound.
4.5. LITIGATION. There is no litigation, investigation or proceeding
pending in any court or before any grand jury, arbitrator, regulatory
commission, board, administrative agency or other governmental authority, nor to
the knowledge of Borrower and its Subsidiaries after diligent investigation, is
any such proceeding
Page 39 of 82 Pages
threatened against or affecting Borrower or any Subsidiary of Borrower or any of
their properties, which would have a material adverse effect on the ability of
Borrower to perform its obligations under this Agreement or the Loan Documents
to which it is a party or any of the transactions contemplated hereby or
thereby.
4.6. GOVERNMENTAL CONSENTS. No consents, licenses, permits, approvals or
authorizations of, exemptions by, notices or reports to, or registrations,
filings or declarations with, any governmental authority or agency (with the
exception of filing Uniform Commercial Code financing statements against the
Collateral) are required in connection with the execution, delivery and
performance by Borrower of this Agreement or the other Loan Documents to which
it is a party or the transactions contemplated hereby or thereby which have not
been obtained or made and copies of which delivered to Lender.
4.7. REGULATION U. None of Borrower or any of its Subsidiaries is engaged
principally in, nor does Borrower or any of its Subsidiaries have as one of its
principal activities, the business of extending credit for the purpose of
purchasing or carrying Margin Stock. No part of the proceeds of the Loans will
be used by Borrower or any of its Subsidiaries in violation of Regulation U of
the Federal Reserve Board to purchase or carry any such Margin Stock, to extend
credit to others for the purpose of purchasing or carrying any such Margin Stock
or to retire Indebtedness which was incurred to purchase or carry any such
Margin Stock.
4.8. TAXES. Borrower and each of its Subsidiaries (or the consolidated
group of which Borrower and its Subsidiaries were or are a part) has (a) timely
filed all returns required to be filed by it with respect to all Taxes, (b) paid
all Taxes shown to have become due pursuant to such returns and (c) paid all
other Taxes for which a notice of assessment or demand for payment has been
received and which are due and payable. All Tax returns have been prepared in
accordance with all applicable laws and requirements and accurately reflect in
all material respects the taxable income (or other measure of Tax) of the
corporation (or consolidated group) filing the same.
4.9. BURDENSOME AGREEMENTS, ETC. Neither Borrower nor any Subsidiary of
Borrower is a party to any agreement or undertaking and is not subject to any
court order, court writ, injunction or decree of any court or governmental
instrumentality, domestic or foreign, which could have a material adverse effect
on the ability of Borrower to perform its obligations under this Agreement or
the Loan Documents.
4.10. TITLE AND LIENS. Except for Liens permitted by SECTION 7.4, all
property owned by Borrower and each of its Subsidiaries is free from Liens,
charges, security interests and encumbrances of any nature whatsoever, and
Borrower and each Subsidiary, as applicable, has good and marketable title in
fee simple to all real property (other than properties which it leases) and good
and merchantable title to all fixtures and articles of personal property affixed
to or used in connection with such real property and all other such property and
assets, except those disposed of in the ordinary course of business.
4.11. EXISTING DEFAULTS. Neither Borrower nor any Subsidiary of Borrower
is in default under any term of any mortgage, capital lease, indenture, deed of
trust or any other agreement with respect to Indebtedness to which it is a party
or by which it or any of its properties may be bound, except to the extent that
such default, whether considered individually or when aggregated with all other
such defaults, would not have a material adverse effect on Borrower's ability to
perform its obligations under this Agreement or any of the Loan Documents to
which it is a party or any of the transactions contemplated hereby or thereby.
4.12. INVESTMENT COMPANY ACT. Neither Borrower nor any of its Subsidiaries
is, nor immediately after the application by Borrower of the proceeds of any
Loan will be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Page 40 of 82 Pages
4.13. PUBLIC UTILITY HOLDING COMPANY ACT. None of Borrower or any of its
Subsidiaries is subject to any state law or regulation regulating public
utilities or similar entities, and none of Borrower or any of its Subsidiaries
is, within the meaning of the Public Utility Holding Company Act of 1935, as
amended, (a) a holding company, (b) a subsidiary, associate or affiliate of a
holding company or (c) a public utility.
4.14. SOLVENCY. Immediately after giving effect to the execution and
delivery of this Agreement and the Loan Documents to which it is a party and the
consummation of the borrowings and the other transactions contemplated hereby
and thereby, Borrower will be solvent, will be able to pay its debts and
obligations as they become due, will have capital sufficient to carry on its
business and all business in which it intends to engage and will own property
having a value both at fair valuation and at present fair saleable value greater
than the amount required to pay its debts.
4.15. FULL DISCLOSURE. There is no fact of which Borrower or any of its
Subsidiaries has knowledge after diligent investigation which has not been
disclosed to Lender and could impair the ability of Borrower to perform its
obligations under this Agreement or the Loan Documents to which it is a party or
any of the transactions contemplated hereby or thereby. No certificate or other
information provided in writing and delivered herewith or heretofore by Borrower
or any of its Subsidiaries to Lender in connection with the negotiation of this
Agreement contains any untrue statement or omits to state any fact necessary to
keep the statements contained herein or therein from being misleading, except
such certificate or other information as has been updated or corrected in a
writing that has been delivered to Lender.
4.16. COMPLIANCE WITH LAWS. Borrower and each of its Subsidiaries is in
compliance with all laws, rules, regulations, court orders and decrees and
orders of any governmental agency which are applicable to them or the properties
thereof, the failure to comply with which could have a material adverse effect
on the ability of Borrower to perform its obligations under this Agreement or
the other Loan Documents to which it is a party.
4.17. SUBSIDIARIES. Attached hereto as SCHEDULE 4.17 is a correct and
complete list of all Subsidiaries and Affiliates of Borrower, their jurisdiction
of organization and the percentage of interest owned in such entities by
Borrower.
4.18. ERISA.
(a) Borrower and the ERISA Affiliates and the plan administrator of each
Plan have fulfilled in all material respects their respective obligations under
ERISA and the Code with respect to such Plan and such Plan is currently in
material compliance with the applicable provisions of ERISA and the Code.
(b) With respect to each Plan, there has been no (i) "reportable event"
within the meaning of Section 4043 of ERISA and the regulations thereunder which
is not subject to the provision for waiver of the 30-day notice requirement to
the PBGC; (ii) failure to make or properly accrue any contribution which is due
to any Plan; (iii) action under Section 4041 of ERISA to terminate any Pension
Plan; (iv) withdrawal from any Pension Plan with two or more contributing
sponsors or the termination of any such Pension Plan resulting in liability
pursuant to Sections 4063 or 4064 of ERISA; (v) institution by PBGC of
proceedings to terminate any Pension Plan, or the occurrence of any event or
condition which might constitute grounds under ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan; (vi) the
imposition of liability pursuant to Sections 4062(e), 4069 or 4212 of ERISA;
(vii) complete or partial withdrawal (within the meaning of Sections 4203 and
4205 of ERISA) from any Pension Plan which is a Multiemployer Plan that is in
reorganization or insolvency pursuant to Sections 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Sections 4041A or 4042 of ERISA;
(viii) prohibited transaction described in Section 406 of ERISA or 4975 of the
Code which could give rise to the imposition of any material fines, penalties,
taxes or related charges to Borrower or any ERISA Affiliate; (ix) assertion of a
claim (other
Page 41 of 82 Pages
than routine claims for benefits) against any Plan (other than a Multiemployer
Plan) which could reasonably be expected to be successful; (x) receipt from the
Internal Revenue Service of notice of the failure of any Plan to qualify under
Section 401(a) of the Code, or the failure of any trust forming part of any Plan
to fail to qualify for exemption from taxation under Section 501(a) of the Code,
if applicable; or (xi) imposition of a Lien pursuant to Section 401(a)(29) or
412(n) of the Code or Section 302(f) of ERISA.
4.19. ENVIRONMENTAL LAWS.
(a) Borrower and each of its Subsidiaries have obtained all permits,
licenses and other authorizations which are required under the Environmental
Laws and are in compliance in all respects with any applicable Environmental
Laws, except to the extent that the failure to obtain such permits, licenses and
authorizations or failure to comply with such Environmental Laws would not have
a material adverse effect on (i) the business, operations, properties or
conditions (financial or otherwise) of Borrower or its Subsidiaries or (ii)
Borrower's performance of its Obligations under this Agreement or any other Loan
Document to which it is a party.
(b) On or prior to the date hereof, no notice, demand, request for
information, citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is pending
or, to the best of Borrower's knowledge, threatened by any governmental agency
or other Person with respect to any alleged or suspected failure by Borrower or
any of its Subsidiaries to comply in any respect with any Environmental Laws
pertaining to Borrower's or any of its Subsidiaries' businesses or now or
formerly owned, operated or leased properties, except to the extent that any of
the foregoing would not have a material adverse effect on (i) the business,
operations, properties or conditions (financial or otherwise) of Borrower or its
Subsidiaries or (ii) Borrower's performance of its Obligations under this
Agreement or any other Loan Document to which it is a party.
(c) There are no material Liens arising under or pursuant to any
Environmental Laws on any of the property owned or leased by Borrower or any of
its Subsidiaries.
(d) There are no conditions existing currently or, to Borrower's
knowledge, likely to exist during the term of this Agreement which would subject
Borrower or any of its Subsidiaries or any of their property to any Lien,
damages, penalties, injunctive relief or cleanup costs under any Environmental
Laws or which require or are likely to require cleanup, removal, remedial action
or other responses pursuant to Environmental Laws by Borrower and its
Subsidiaries, except to the extent that any of the foregoing would not have a
material adverse effect on (i) the business, operations, properties or
conditions (financial or otherwise) of Borrower or its Subsidiaries or (ii)
Borrower's performance of its Obligations under this Agreement or any other Loan
Document to which it is a party.
ARTICLE V. CONDITIONS PRECEDENT
5.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Lender
to make Loans is subject to the fulfillment of each of the following conditions
on or before the Closing Date:
(a) Lender shall have received a signed counterpart of this Agreement
with completed schedules hereto, and Borrower, by its execution of this
Agreement, agrees to all the terms and conditions herein, including without
limitation that the Pledge Agreement is in full force and effect and covers all
Obligations now existing and hereafter arising under this Agreement and the
other Loan Documents;
(b) Lender shall have received the Notes, dated as of August 31, 2001,
duly executed and delivered by Borrower;
Page 42 of 82 Pages
(c) Lender shall have received the Sixth Amendment to Pledge Agreement,
dated as of August 31, 2001, executed by Borrower and in form and substance
reasonably satisfactory to Lender (the "SIXTH AMENDMENT TO PLEDGE AGREEMENT"),
pursuant to which Lender confirms the release back to Borrower of the common
stock of Modtech Holdings, Inc. pledged pursuant to the Pledge Agreement;
(d) Lender shall have received a Reaffirmation of Guaranty and Pledge,
dated as of August 31, 2001, executed by Guarantor and substantially in the form
of EXHIBIT D (the "REAFFIRMATION OF GUARANTY AND PLEDGE");
(e) Lender shall have received the First Amendment to Trust Pledge
Agreement, dated as of August 31, 2001, executed by the Trust and in form and
substance reasonably satisfactory to Lender (the "FIRST AMENDMENT TO TRUST
PLEDGE"), together with original stock certificates evidencing 603,000 shares of
common stock of Katy, stock powers executed in blank and other documents
required thereunder to effectively pledge 603,000 shares of common stock of
Katy;
(f) Lender shall have received the Second Amendment to Guarantor Pledge
Agreement, dated as of August 31, 2001, executed by the Guarantor in form and
substance reasonably satisfactory to Lender (the "SECOND AMENDMENT TO GUARANTOR
PLEDGE");
(g) Lender shall have received the letter agreement dated as of August
31, 2001 acknowledged and approved by Borrower, Guarantor and the Trust (as
amended, modified or replaced from time to time, the "LETTER AGREEMENT"),
setting forth certain agreements pertaining to that certain Stock Voting
Agreement by and among KKTY Holding Company, L.L.C. and the Shareholders named
therein, dated as of June 2, 2001;
(h) Lender shall have received the Aircraft Security Agreement, dated as
of August 31, 2001, executed by Timberline Aviation and substantially in the
form of EXHIBIT E;
(i) Lender shall have received the Deed of Trust, dated as of August 31,
2001, executed by Timberline Ground and substantially in the form of EXHIBIT F;
(j) Lender shall have received an initial Collateral Report Certificate,
dated the Closing Date, executed by Borrower;
(k) Lender shall have received a written opinion of counsel for
Borrower, Guarantor and each Pledgor, dated the Closing Date and in form and
substance reasonably satisfactory to Lender;
(l) Lender shall have received evidence, reasonably satisfactory to
Lender, of the corporate existence and the authority of Borrower to enter into
this Agreement, the Loan Documents to which it is a party, the Sixth Amendment
to Pledge and the agreements and transactions contemplated in connection
herewith and therewith and of the legality hereof and thereof as Lender may
reasonably request, including, without limitation, articles of incorporation
certified by the Secretary of State where Borrower is organized (as of a recent
date), by-laws, officer's certificates (including certificate of incumbency
certifying the names and true signatures of the officers authorized to sign the
foregoing documents), corporate resolutions and certificates of good standing
(as of a recent date) with respect to Borrower;
(m) Lender shall have received evidence, reasonably satisfactory to
Lender, of the corporate, limited liability company, partnership or trust
existence, as applicable, and the authority of each Pledgor to enter into the
Loan Documents (and the First Amendment to Trust Pledge with respect to the
Trust) to which it is a party and the agreements and transactions contemplated
in connection therewith and the legality thereof as Lender may reasonably
request, including, without limitation, articles of incorporation, articles of
organization or certificate of formation, as applicable (each certified by the
Secretary of State where such Pledgor is organized
Page 43 of 82 Pages
(as of a recent date), officer's, manager's or trustee's certificates, as
applicable (including certificate of incumbency certifying the names and true
signatures of the officers, managers or trustees of each Pledgor, as applicable
authorized to sign the foregoing documents), resolutions and certificates of
good standing/existence (as of a recent date) with respect to each Pledgor;
(n) Borrower shall have delivered to Lender a written designation of the
Authorized Employees hereunder;
(o) Lender shall have received copies of all governmental and third
party consents and other approvals, if any, in form and substance reasonably
satisfactory to Lender required in connection with the execution, delivery and
performance by Borrower of the Agreement and the Loan Documents to which it is a
party, and the execution, delivery and performance by each Pledgor of the Loan
Documents to which each is a party;
(p) Borrower shall have executed and delivered to Lender a Federal
Reserve Form U-1, which shall be in form and substance reasonably satisfactory
to Lender;
(q) Lender shall have received a Certificate of No Default, signed by
the president or chief financial officer of Borrower to the effect that, after
giving effect to the waiver in SECTION 9.19 herein: (i) no Event of Default or
Default has occurred and is continuing and (ii) the representations and
warranties of Borrower contained herein and in the other Loan Documents are true
and correct as of the Closing Date;
(r) Lender shall have received satisfactory lien searches against
Borrower, Guarantor and each Pledgor including, without limitation, (i) UCC lien
searches, (ii) federal and state tax lien searches, (iii) pending suit and
judgment searches, (iv) with respect to the Aircraft, title and lien searches
with the Federal Aviation Administration for the Airframe, Engines, Parts (as
each term is defined in the Aircraft Security Agreement) and propellers (if
applicable) and (v) with respect to the Premises, title and lien searches from a
title company reasonably satisfactory to Lender;
(s) Lender shall have received such duly authorized UCC financing
statements and other documents together with such other acts and things as
Lender may reasonably require to establish and maintain a valid lien and
security interest in the Collateral;
(t) Lender shall have received such duly executed certificates, filings,
registrations and other instruments and documents as reasonably necessary to
file with the Federal Aviation Administration to establish and maintain a valid
lien and security interest in the Aircraft;
(u) Lender shall have received copies of insurance policies (if
requested) and certificates of evidence of insurance, in form and substance
satisfactory to Lender, for all insurance required by the Loan Documents,
including evidence that Lender has been named as an additional insured and
lender's loss payee thereunder to the extent required therein;
(v) Lender shall have received a copy of the Certificate of Aircraft
Registration recorded with the Federal Aviation Administration, certified by a
manager of Timberline Aviation;
(w) Lender shall have received a copy of the Certificate of
Airworthiness for the Aircraft issued by the Federal Aviation Administration,
certified by a manager of Timberline Aviation;
Page 44 of 82 Pages
(x) Lender shall have received a copy of the Ground Lease Agreement
between Walker Field, Colorado, Public Airport Authority and Timberline Ground
dated as of June 1, 1996, as amended, certified by a manager of Timberline
Ground;
(y) Lender shall have received a copy of any and all amendments,
modifications and changes to the Trust Agreement dated May 1, 1958 for the
benefit of Wallace E. Carroll, Jr. since February 28, 2001, the date on which
Lender last received a copy of such Trust Agreement from the Trust;
(z) Lender shall have received a ground lessor's consent and estoppel
certificate, in form and substance reasonably satisfactory to Lender, executed
and delivered by the owner of the Premises, pursuant to which said owner agrees
and consents to, among other things, Lender's filing of the Deed of Trust
against the Premises;
(aa) Lender shall have received a subordination agreement, in form and
substance reasonably satisfactory to Lender, executed and delivered by
Timberline Aviation as sublessee of the Premises, pursuant to which Timberline
Aviation subordinates its entire interest in the Premises to the Deed of Trust
of Lender;
Lender shall have received a lender's policy of title insurance
written by a title insurer reasonably acceptable to Lender, in the amount
of $800,000, insuring Lender's first priority security interest in the
Aircraft created by the Aircraft Security Agreement and otherwise in form
and substance reasonably acceptable to Lender;
(bb) Lender shall have received a lender's policy of title insurance
written by a title insurer reasonably acceptable to Lender, in the amount of
$1,879,000, insuring Lender's first lien and mortgage in the Premises created by
the Deed of Trust and otherwise in form and substance reasonably acceptable to
Lender;
(cc) Lender shall have received such other documents and certificates as
Lender may reasonably request;
(dd) There shall have occurred no material adverse change in the
business, operations, properties or condition (financial or otherwise) of
Borrower or any Pledgor since September 30, 2001 and there shall have occurred
no material adverse change in the properties or condition (financial or
otherwise) of Guarantor since the last personal financial statement of Guarantor
was submitted to Lender; and
(ee) Each of the applicable conditions set forth in SECTION 5.2 shall
have been fully satisfied.
5.2. CONDITIONS OF EACH LOAN. The obligation of Lender to make any Loan
shall be subject to the fulfillment of each of the following conditions (to the
extent applicable) to the satisfaction of Lender:
(a) Lender shall have received a notice of borrowing as provided in
SECTION 2.2;
(b) The representations and warranties of Borrower set forth herein and
in the Loan Documents to which it is a party and of Guarantor and each Pledgor
in the Loan Documents to which each is a party shall be true, correct and
complete in all respects on the Borrowing Date with the same effect as if such
representations and warranties had been made on and as of such date, except to
the extent that any falsehood, misstatement or omission, whether considered
individually or when aggregated with all other falsehoods, misstatements and
omissions, would not reasonably be expected to have a material adverse effect on
(i) the ability of Borrower to perform its obligations under this Agreement or
the Loan Documents to which it is a party or in connection with the transactions
contemplated hereby or thereby, (ii) the ability of the Guarantor or any Pledgor
to perform their obligations
Page 45 of 82 Pages
under the Loan Documents to which they are a party, (iii) the business,
operations, properties or condition (financial or otherwise) of Borrower or any
Pledgor or (iv) the properties or condition (financial or otherwise) of
Guarantor;
(c) No Default or Event of Default shall have occurred and be continuing
nor shall the making of such Loan result in a Default or Event of Default, and
the outstanding Obligations shall not exceed the Collateral Base;
(d) The making of such Loan shall be permitted by all applicable laws;
and
(e) All other documents (including any certificates, legal opinions or
other documents reasonably required by Lender) and legal matters in connection
with the transactions contemplated by this Agreement and the Loan Documents
shall be in form and substance reasonably satisfactory to Lender.
ARTICLE VI. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that on and after the date hereof and until
(a) the Revolving Commitment has been terminated, (b) all Loans and all
interest, fees and all other Obligations incurred by Borrower hereunder and
under the Loan Documents have been paid in full and (c) all obligations of
Lender to Borrower under this Agreement and under the Loan Documents have
terminated, Borrower will, and will cause each of its Subsidiaries to (as
applicable):
6.1. FINANCIAL DATA. Furnish to Lender (a) within 120 days after the end
of each fiscal year of Borrower, a Consolidated and consolidating balance sheet
of Borrower and its Subsidiaries as of the close of such fiscal year and
Consolidated and consolidating statements of income and retained earnings and
changes in financial position (or cash flow statements) of Borrower and its
Subsidiaries for such fiscal year, in each case reviewed by independent
certified public accountants of recognized standing selected by Borrower and
reasonably satisfactory to Lender and setting forth in comparative form
corresponding Consolidated and consolidating figures from the preceding year,
all in reasonable detail; (b) within 45 days after the end of each of the first
three fiscal quarters of each fiscal year of Borrower, a Consolidated and
consolidating balance sheet of Borrower and its Subsidiaries as of the close of
such quarter and Consolidated and consolidating statements of income and
retained earnings and changes in financial position (or cash flow statements) of
Borrower and its Subsidiaries for the period from the beginning of such fiscal
year to the end of such quarter, setting forth in each case in comparative form,
commencing with the financial statements for the fiscal quarter ending March 31,
2002, the corresponding Consolidated and consolidating figures for the
corresponding periods in the preceding fiscal year, all in reasonable detail and
certified by the chief financial officer of Borrower, subject to usual and
customary audit and year-end adjustments which in the aggregate would not be
material; (c) at the time of the delivery of the financial statements required
by clauses (a) and (b) of this SECTION 6.1, a certificate of the chief financial
officer of Borrower to the effect that there exists no Default or Event of
Default, or if any such Default or Event of Default exists, specifying the
nature thereof, the period of existence thereof and the action Borrower proposes
to take with respect thereto; (d) copies of all regular and periodic financial
and other reports, if any, which Borrower or any of its Subsidiaries shall file
with the Securities and Exchange Commission or any governmental agencies
substituted therefor; (e) on or before Friday of each week, a Collateral Report
Certificate for the preceding week, signed by the president, chief financial
officer or other duly authorized officer of Borrower; and (f) with reasonable
promptness, such further information regarding the business, operations,
properties or condition (financial or otherwise) of Borrower or its Subsidiaries
as Lender may reasonably request.
6.2. PAYMENT OF CHARGES. Pay and discharge all Taxes, assessments and
governmental charges or levies imposed upon Borrower or any of its Subsidiaries
or Borrower's or any of its Subsidiary's property or assets, or upon properties
leased by them, prior to the date on which penalties attach thereto, and all
lawful claims which, if unpaid, might become a lien or charge upon its property
or assets, PROVIDED,
Page 46 of 82 Pages
that Borrower or any of its Subsidiaries shall not be required to pay any such
Tax, assessment, charge, levy or claim (a) the payment of which is being
contested in good faith and by proper proceedings if adequate reserves with
respect thereto have been set up by Borrower or any of its Subsidiaries, as the
case may be, in accordance with GAAP or (b) if the payment of such Tax,
assessment, charge, levy or claim, whether considered individually or when
aggregated with all other unpaid Taxes, assessments, charges, levies or liens,
would not reasonably be expected to have a material adverse effect on the
ability of Borrower to perform its obligations under this Agreement or any of
the Loan Documents to which it is a party or the transactions contemplated
hereby or thereby.
6.3. INSURANCE. Maintain such insurance (with financially sound and
responsible insurance carriers reasonably satisfactory to Lender) against loss
or damage to, or liability in connection with, their property and such other
contingencies as is customarily maintained by other corporations engaged in the
same or similar business, similarly situated; PROVIDED, that in lieu of such
insurance, Borrower and its Subsidiaries may maintain or cause to be maintained
a system or systems of self-insurance reasonably satisfactory to Lender that
will accord with the approved practices of companies owning or operating
properties of a similar character.
6.4. INSPECTION OF BOOKS AND ASSETS. Upon prior written or telephonic
notice to Borrower, allow during normal business hours any representative of
Lender to visit and inspect any of Borrower's or its Subsidiaries' properties,
to examine their books of record and account and to discuss their affairs,
finances and accounts with their officers, all at such reasonable times and as
often as Lender may reasonably request.
6.5. NOTICES. Deliver immediately to Lender as soon as any officer,
director or Authorized Employee obtains knowledge of the occurrence of an event
or the existence of any circumstance which may give rise to a Default or Event
of Default, a certificate signed by an Authorized Employee specifying the nature
thereof, the period of existence thereof and what action Borrower proposes to
take with respect thereto.
6.6. LITIGATION. Promptly give written notice to Lender of any action,
proceeding or claim which has been commenced or threatened in writing against
Borrower, any of its Subsidiaries, the Guarantor or any Pledgor, or any dispute
which may exist between Borrower, any of its Subsidiaries, the Guarantor or any
Pledgor and any governmental regulatory body, in which the amount involved is
$100,000 or more or which, whether considered individually or when aggregated
with all other such actions, proceedings, claims and disputes, would have a
material adverse effect on the ability of Borrower, the Guarantor or any Pledgor
to perform its obligations under this Agreement or any of the Loan Documents to
which it is a party or any transaction contemplated hereby or thereby.
6.7. PRESERVATION OF CORPORATE EXISTENCE. Maintain and preserve its
corporate, limited liability company, or partnership, as applicable existence
and right to carry on its business, and duly procure all necessary renewals and
extensions thereof and use its reasonable best efforts to maintain, preserve and
renew all rights, powers, privileges and franchises which, in the opinion of the
Board of Directors or equivalent form of governing body of Borrower or such
Subsidiary, as the case may be, continue to be advantageous to it.
6.8. MAINTENANCE OF PROPERTIES. Ensure that their property and equipment
used or useful in their business in whomsoever's possession they may be, are
kept in good repair, working order and condition, and that from time to time
there are made in such properties and equipment all needful and proper repairs,
renewals, replacements, extensions, additions, betterments and improvements
thereto, to the extent and in the manner customary for companies in similar
businesses.
6.9. COMPLIANCE WITH LAW. Comply with the requirements of all applicable
laws, rules, regulations, court orders and decrees and orders of any
governmental agency which are applicable to Borrower and each Subsidiary or to
any of their properties (including, without limitation, laws, rules,
regulations, court orders and
Page 47 of 82 Pages
decrees and orders of any governmental agency with respect to employee benefits
and fair labor standards and wages), the failure to comply with which, whether
considered individually or when aggregated with all other failures, would
reasonably be expected to have a material adverse effect on the ability of
Borrower to perform its obligations under this Agreement or any of the Loan
Documents to which it is a party; PROVIDED, HOWEVER, that with respect to orders
of any governmental agency, Borrower and its Subsidiaries shall have the right
to contest in good faith, by appropriate proceedings, the validity or imposition
of any such order and upon such good faith contest to delay or refuse payment of
any amount due with respect to such order, upon notice to Lender and the
establishment of such reserves or the making of other appropriate provision
therefor in accordance with GAAP.
6.10. USE OF PROCEEDS. Use the proceeds of the Loans and cause Letters of
Credit to be issued only for working capital and other general corporate
purposes; PROVIDED, that Loan proceeds (a) of up to $250,000 per calendar year
may be used to pay federal and state income taxes on behalf of the Guarantor,
the Wallace Foundation and/or the Lelia H. Carroll Trust U/A Dated July 12, 1962
for the benefit of Wallace E. Carroll, Jr., and (b) may be used for other
purposes approved in writing by Lender. Neither Borrower nor any Subsidiary
shall use (or permit to be used) any proceeds of any of the Loans to acquire any
security in any transaction which is subject to Section 12 or 13 of the
Securities Exchange Act of 1934, as amended, or any regulations or rulings
thereunder.
6.11. VALUE OF PLEDGED COLLATERAL. If at any time the outstanding
Obligations exceed the Collateral Base, Borrower shall within seven (7) Business
Days (a) repay the outstanding Obligations in an amount sufficient to eliminate
such excess, or (b) if Borrower does not have cash readily available, sell such
an amount of Collateral that shall generate proceeds sufficient to eliminate
such excess, and apply such proceeds to the outstanding Obligations. Payments
made by Borrower to reduce the outstanding Obligations shall be applied in such
order and against such Obligations as Lender shall choose in its sole
discretion.
6.12. COMPLIANCE WITH ERISA. Borrower and each Subsidiary shall maintain
each Plan and Qualified Plan as to which it may have any liability in material
compliance with all applicable requirements of law and regulation.
ARTICLE VII.
NEGATIVE COVENANTS
Borrower covenants and agrees that on and after the date hereof and until
(a) the Revolving Commitment has terminated; (b) all Loans and all interest,
fees and all other obligations incurred by Borrower hereunder and under the Loan
Documents have been paid in full and (c) all obligations of Lender to Borrower
under this Agreement and under the Loan Documents have terminated, Borrower will
not, and will cause each of its Subsidiaries not to:
7.1. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. Without the written
consent of Lender, wind up, liquidate or dissolve their affairs or enter into
any transaction of merger or consolidation, or convey, sell, lease or otherwise
dispose of (or agree to do any of the foregoing at any future time) all or
substantially all of their property or assets.
7.2. ERISA. Maintain or permit to exist or become a party to a
Multiemployer Plan or Multiple Employer Plan.
7.3. REGULATION U. Directly or indirectly apply any part of the proceeds
of the Loans in violation of Regulation U of the Federal Reserve Board (a) to
purchase or carry any Margin Stock, (b) to extend credit to others for the
purpose of purchasing or carrying any Margin Stock or (c) to retire Indebtedness
which was incurred to purchase or carry any Margin Stock.
Page 48 of 82 Pages
7.4. LIENS ON BORROWER'S PROPERTY. Create, assume or suffer or permit to
exist any Lien (except Liens in existence on the Closing Date listed on SCHEDULE
7.4 hereto; purchase money Liens with respect to property acquired by Borrower
or its Subsidiaries in the ordinary course of their respective business;
PROVIDED, that the indebtedness secured by such purchase money Liens does not
exceed 80% of the fair market value of the property being acquired and such
purchase money Liens do not attached to any other property of Borrower or its
Subsidiaries; and Liens securing Indebtedness permitted under SECTION 7.5(b))
upon or with respect to any of its properties, whether now owned or hereafter
acquired, or assign any right to receive income.
7.5. INDEBTEDNESS. Create, incur, assume or permit or suffer to exist any
Indebtedness other than:
(a) Indebtedness hereunder and under the Notes; and
(b) Existing Indebtedness of Borrower and each Subsidiary which is
described on SCHEDULE 7.5 hereto, PROVIDED, that (i) the principal amount of
such Indebtedness shall not be increased above the principal amount thereof
outstanding on the Closing Date, and (ii) no such Indebtedness shall be renewed
or extended or remain outstanding after the stated maturity thereof, except,
however, Borrower's guaranty of up to $2,500,000 of that certain warehouse line
of credit incurred by Beacon Mortgage Company, LLC to Webster Bank may be
renewed for one additional year on its renewal date in May 2002.
7.6. SALE OF STOCK OF SUBSIDIARIES. Issue, sell or otherwise dispose of,
or part with control of, any shares of stock (or warrants, rights, options,
securities convertible into such stock or other similar rights to acquire stock)
or Indebtedness of any Subsidiary.
ARTICLE VIII.
EVENTS OF DEFAULT
8.1. EVENTS OF DEFAULT. Each of the following specified events shall
constitute an "Event of Default":
(a) PAYMENTS. Borrower shall default in the payment when due of (i) any
principal amount of the Loans, (ii) any interest on the Loans, (iii) any L/C
Obligation or any other Obligations hereunder or under any of the Loan Documents
and such default shall continue unremedied for five (5) days; or
(b) REPRESENTATIONS OF BORROWER. Any representation, warranty or
statement made by Borrower herein or in any of the Loan Documents to which it is
a party or in any certificate or other document delivered pursuant hereto or
thereto shall prove to be untrue in any material respect on the date as of which
made or deemed made; or
(c) REPRESENTATIONS OF PLEDGORS AND GUARANTOR. Any representation,
warranty or statement made by Guarantor or any Pledgor in any Loan Document to
which it or he, as the case may be, is a party, or in any certificate or other
document delivered pursuant thereto shall prove to be untrue in any material
respect on the date as of which made or deemed made; or
(d) COVENANTS OF BORROWER. Borrower shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
SECTION 6.1, SECTION 6.5, SECTION 6.10, SECTION 6.11 or any Section of ARTICLE
VII of this Agreement or (ii) default in the due performance or observance by it
of any other term, covenant or agreement contained in this Agreement or in any
Loan Document to which it is a party and such default described in this CLAUSE
(ii) shall continue
Page 49 of 82 Pages
unremedied for the applicable cure period, if any, or, if no such cure period is
provided, then for a period of 10 days; or
(e) COVENANTS OF THE PLEDGORS AND GUARANTOR. Guarantor or any Pledgor
shall default in the due performance or observance by it or him, as the case may
be, of any term, covenant or agreement contained in any Loan Document to which
it or he, as the case may be, is a party and any applicable cure period, if any,
shall have expired or, if no such cure period is provided, then for a period of
10 days; or
(f) DEFAULT UNDER OTHER AGREEMENTS. Borrower, any Subsidiary of
Borrower, Guarantor or any Pledgor shall default in the payment when due
(subject to any applicable grace period), whether by acceleration or otherwise,
of any Indebtedness of, or any Indebtedness directly or indirectly guaranteed
by, Borrower, any Subsidiary of Borrower, Guarantor or any Pledgor; or Borrower,
any Subsidiary of Borrower, Guarantor or any Pledgor shall default in the
performance or observance of any obligation or condition with respect to any
such Indebtedness or any other event shall occur if the effect of such default
or event (after giving effect to any applicable grace period) is to accelerate
the maturity of any such Indebtedness or to permit the holder or holders
thereof, or any trustee or agent for such holders, to cause such Indebtedness to
become due and payable prior to its expressed maturity or any such Indebtedness
shall become due prior to its stated maturity as a result of an event of
default; or
(g) BANKRUPTCY, ETC. Borrower, any Subsidiary of Borrower, Guarantor or
any Pledgor shall commence a voluntary case concerning itself or himself, as the
case may be, under the United States Bankruptcy Code as now or hereafter in
effect, or any successor thereto (the "BANKRUPTCY CODE"); or an involuntary case
is commenced against Borrower, any Subsidiary of Borrower, Guarantor or any
Pledgor and the petition is not controverted within 10 days, and is not
dismissed within 60 days, after commencement of the case; PROVIDED, Lender shall
have no obligation to make any new Loans or issue any Letters of Credit during
such 60 day period; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
Borrower, any Subsidiary of Borrower, Guarantor or any Pledgor, or Borrower, any
Subsidiary of Borrower, Guarantor or any Pledgor commences any other proceeding
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law or any jurisdiction
whether now or hereafter in effect relating to Borrower, any Subsidiary of
Borrower, Guarantor or any Pledgor, or there is commenced against Borrower, any
Subsidiary of Borrower, Guarantor or any Pledgor any such proceeding which
remains undismissed for a period of 60 days or more, or Borrower, any Subsidiary
of Borrower, Guarantor or any Pledgor is adjudicated insolvent or bankrupt, or
any order of relief or other order approving any such case or proceeding is
entered, or Borrower, any Subsidiary of Borrower, Guarantor or any Pledgor
suffers or permits any appointment of any custodian or the like for it or him,
as the case may be, or any substantial part of its or his, as the case may be,
property to continue undischarged or unstayed for a period of 60 days or more,
or Borrower, any Subsidiary of Borrower, Guarantor or any Pledgor admits in
writing its or his, as the case may be, inability to pay, or is generally unable
to pay its or his, as the case may be, debts as they mature, or Borrower, any
Subsidiary of Borrower, Guarantor or any Pledgor makes a general assignment for
the benefit of creditors or any corporate, limited liability company or
partnership action (as applicable) is taken by Borrower, any Subsidiary of
Borrower or any Pledgor for the purpose of effecting any of the foregoing; or
(h) JUDGMENTS. A final judgment or final judgments for the payment of
money is or are entered by a court or courts of competent jurisdiction, and all
appeals therefrom have been exhausted (or the time in which appeal is permitted
has lapsed without appeal being made), against Borrower, any Subsidiary of
Borrower, Guarantor or any Pledgor (other than any judgment as to which a
reputable insurance company has accepted full liability in writing) and the
aggregate amount of all such judgments exceeds $500,000; or
(i) OWNERSHIP OR CONTROL OF BORROWER. A Change of Control shall occur;
or
Page 50 of 82 Pages
(j) DISSOLUTION. Any order, judgment or decree shall be entered in any
proceeding against Borrower, any Subsidiary of Borrower or any Pledgor decreeing
the dissolution or winding up of Borrower, any Subsidiary of Borrower or any
Pledgor, and such order shall remain undischarged or unstayed for a period in
excess of 60 days; or Guarantor shall die or become incompetent; or
(k) LITIGATION. Any litigation, investigation or proceeding pending in
any court or before any grand jury, arbitrator, regulatory commission, board,
administrative agency or other governmental authority threatens to have a
material adverse effect on (a) the ability of Borrower, Guarantor, any
Subsidiary of Borrower any Pledgor or Freezing to perform its or his, as the
case may be, obligations under this Agreement or the other Loan Documents to
which it or he, as the case may be, is a party, or (b) the business, operations,
properties or condition (financial or otherwise) of Borrower, any Subsidiary of
Borrower or any Pledgor, or (c) the properties or condition (financial or
otherwise) of Guarantor; or
(l) OTHER AGREEMENTS. All or any provision of this Agreement or any
other Loan Document shall be declared to be illegal or null and void, or the
validity or enforceability thereof shall be contested by any Person, or shall be
rejected or disaffirmed by any Person, or a proceeding shall be commenced by any
governmental agency or authority or court or other Person seeking to establish
the invalidity or enforceability thereof, or any such Person that is a party to
this Agreement or any other Loan Document shall deny that it has any or further
liability or obligation thereunder; or
(m) INVALIDITY OF SECURITY DOCUMENTS. Any Security Document or any
provisions thereof shall cease to give Lender the Liens, rights, powers and
privileges purported to be created thereby (including without limitation a
perfected security interest in, and Lien on, all of the Collateral) and superior
to and prior to the rights of all third Persons subject to no other Liens; or
(n) MATERIAL ADVERSE CHANGE. Any material adverse change occurs in, or
any material adverse event occurs affecting, the ability of Borrower, any
Subsidiary of Borrower, Guarantor or any Pledgor to perform its or his, as the
case may be, obligations under any Loan Document to which it or he, as the case
may be, is a party or any of the transactions contemplated hereby or thereby.
8.2. REMEDIES.
(a) TERMINATION OF FACILITY. Upon the occurrence of any Event of Default
and at any time thereafter if any Event of Default shall then be continuing,
Lender may by written notice to Borrower, take any or all of the following
actions, without prejudice to the rights of Lender to enforce its claims against
Borrower (PROVIDED, that if an Event of Default specified in SECTION 8.1(g)
shall occur, the result which would occur upon the giving of written notice by
Lender to Borrower as specified in CLAUSES (i) and (ii) below, shall occur
automatically without the giving of any such notice): (i) declare the Revolving
Commitment terminated, whereupon all commitments and obligations of Lender under
this Agreement and under the Loan Documents shall forthwith terminate
immediately; (ii) declare the principal of and any accrued interest and fees in
respect of all Loans and all Obligations owing hereunder and under the Loan
Documents, to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by Borrower; (iii) require that Borrower Cash Collateralize
all L/C Obligations, and (iv) exercise any right or remedies under this
Agreement and the other Loan Documents.
(b) RIGHT OF SET-OFF. In addition to any rights now or hereafter granted
under applicable law or otherwise and not by way of limitation of any such
rights, upon the occurrence and during the continuation of any Event of Default,
Lender is hereby authorized at any time and from time to time, without
presentment, demand, protest or other notice of any kind to Borrower or any
other Person, any such notice being hereby expressly waived, and to the fullest
extent permitted by law, to set off
Page 51 of 82 Pages
and to appropriate and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by Lender to or for the credit or the account of Borrower against any
and all of the Obligations and liabilities of Borrower to Lender now or
hereafter existing under this Agreement or any of the Loan Documents, including,
without limitation, all claims of any nature or description arising out of or
connected with this Agreement and the Loan Documents, irrespective of whether or
not Lender shall have made any demand under this Agreement or any of the Loan
Documents and although such Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured. Notwithstanding the above, Lender agrees to
give Borrower prompt notice after any such set off, PROVIDED, HOWEVER, that any
failure by Lender to give such notice shall not affect Lender's rights hereunder
or otherwise impose any liability on Lender or create any rights in favor of
Borrower.
(c) REMEDIES NOT EXCLUSIVE. Lender shall have, in addition to the rights
and remedies given it by this Agreement and the Loan Documents, all rights and
remedies allowed by all applicable laws and all rights and remedies available to
Lender shall be cumulative and non-exclusive.
(d) APPLICATION OF PAYMENTS. Notwithstanding any contrary provision
contained in this Agreement or in any of the Loan Documents, Borrower
irrevocably waives the right to direct the application of any and all payments
received by Lender from Borrower after the occurrence of any Event of Default
and at any time thereafter if any Event of Default shall then be continuing, and
Borrower does hereby irrevocably agree that Lender shall have the continuing
exclusive right to apply and reapply any and all payments received after the
occurrence of any Event of Default and at any time thereafter if any Event of
Default shall then be continuing against the Obligations of Borrower under this
Agreement and the Loan Documents in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records.
ARTICLE IX.
MISCELLANEOUS
9.1. DISTRIBUTION OF INFORMATION. Borrower hereby authorizes Lender, as
Lender may elect in its sole discretion, to discuss with and furnish to (a) any
Affiliate of Lender, Lender's attorneys or other advisors, or (b) any court,
tribunal, arbitration board, government or self-regulatory agency with
jurisdiction over Lender, in connection with any proceeding, cause or matter
pending (or on its face purported to be pending) or in connection with any legal
or regulatory requirement, litigation or procedure of any such entity relating
to this Agreement or the Loan Documents or (c) any assignee or prospective
assignee and any participant or prospective participant, all financial
statements, audit reports and other information pertaining to Borrower and its
Subsidiaries, whether such information was provided by Borrower or its
Subsidiaries or prepared or obtained by Lender or third parties.
9.2. WAIVERS OR MODIFICATIONS. Any waiver, permit, consent or approval of
any Event of Default, Default or breach of any provision, condition or covenant
of, or any amendment or modification to, this Agreement or any of the Loan
Documents must be in writing and shall be effective only to the extent it is set
forth in writing. No such waiver, permit, consent, approval, amendment or
modification shall be effective without the consent of Borrower and Lender. No
waiver of a specific breach, Event of Default or Default shall operate as a
waiver of any other breach, Event of Default or Default or of the same breach,
Event of Default or Default occurring at a later time.
9.3. INDEMNIFICATION.
(a) TERMS OF INDEMNITY. Borrower agrees to indemnify and hold harmless
Lender, its directors, officers, counsel and employees and each Person, if any,
who controls Lender within the meaning of the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended (any and all of whom
are referred to in this SECTION 9.3 as the "INDEMNIFIED PARTIES" and
individually as an "INDEMNIFIED
Page 52 of 82 Pages
PARTY"), from and against any and all losses, claims, damages and liabilities,
joint or several (including all reasonable legal or other out-of-pocket expenses
reasonably incurred by any of the Indemnified Parties in connection with the
preparation for or defense of any pending or threatened claim, action or
proceeding, whether or not resulting in any liability (including reasonable
legal fees and expenses of attorneys which may be employees of Lender) to which
such Indemnified Party may become subject under any applicable Federal or state
law or otherwise, caused by or arising out of, or allegedly caused by or arising
out of, the preparation, review, negotiation, execution, delivery or performance
of this Agreement, the Loan Documents, the First Amendment to Trust Pledge
Agreement, the Sixth Amendment to Pledge Agreement (collectively, the
"AMENDMENTS") or any transaction contemplated hereby or thereby, other than
losses, claims, damages or liabilities arising from the gross negligence or
willful misconduct of the Indemnified Party. Promptly after receipt by an
Indemnified Party of notice of any claim, action or proceeding with respect to
which an Indemnified Party is entitled to indemnity hereunder, such Indemnified
Party will notify Borrower of such claim or the commencement of such action or
proceeding: PROVIDED, HOWEVER, that the failure of an Indemnified Party to give
notice as provided herein shall not relieve Borrower of its obligations under
this SECTION 9.3 with respect to such Indemnified Party, except to the extent
that Borrower actually is prejudiced by such failure. Borrower will assume the
defense of such claim, action or proceeding and will employ counsel reasonably
satisfactory to the Indemnified Party and will pay the fees and expenses of such
counsel. Notwithstanding the preceding sentence, the Indemnified Party will be
entitled, at the expense of Borrower, to employ counsel (and more than one if
reasonably necessary) separate from counsel for Borrower and for any other party
in such action if the Indemnified Party determines in its sole discretion that a
conflict of interest exists which makes representation by counsel chosen by
Borrower not advisable. In the event that an Indemnified Party is subpoenaed to
testify or produce documents in any action or proceeding brought against
Borrower or any of its Subsidiaries (or any of its officers, directors or
employees) in which such Indemnified Party is not named as a defendant (and is
not itself a plaintiff) or in which Borrower consents to such testimony or
production, Borrower agrees to reimburse such Indemnified Party for all
reasonable out-of-pocket expenses incurred by it (including reasonable fees and
expenses of counsel (which counsel may be an employee of the Lender) in
connection with its appearing as a witness or producing documents.
(b) SURVIVAL. The obligations of Borrower under this SECTION 9.3 shall
survive and continue to be in full force and effect notwithstanding (i) the
execution and delivery of this Agreement, the Loan Documents and the Amendments,
(ii) the making of the Loans, (iii) the repayment of the Loans, (iv) the
issuance of any Letter of Credit, (v) the payment in full of all interest, fees
and all other obligations incurred hereunder and under the Loan Documents and
(vi) the termination of all obligations of Lender to Borrower under all Loan
Documents.
9.4. INDEPENDENT INVESTIGATION. Lender shall be entitled to rely on all
representations and warranties made by Borrower under this Agreement in spite of
any independent investigation performed or to be performed by or on behalf of
Lender.
9.5. FAILURE OR DELAY. No failure or delay on the part of Lender in the
exercise of any power, right or privilege under this Agreement or any of the
Loan Documents and no course of dealing among Borrower and Lender shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege hereunder or thereunder preclude other or further exercise of
any other power, right or privilege.
9.6. SEVERABILITY. Any provision of this Agreement or the Loan Documents
which is prohibited or unenforceable in any jurisdiction shall be ineffective to
the extent of such prohibition or unenforceability, but all the remaining
provisions of this Agreement and the Loan Documents shall remain valid.
9.7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of Borrower and Lender and their respective
successors and
Page 53 of 82 Pages
assigns and any of Lender's participants; PROVIDED, HOWEVER, that Borrower may
not assign or transfer its rights or obligations under this Agreement without
the prior written consent of Lender, and no such consent shall in any event
relieve Borrower of its obligations hereunder.
9.8. NOTICES.
(a) Any notice, communication or demand which Borrower or Lender may be
required or may desire to give to another party under any provision of this
Agreement or the Loan Documents to which Borrower is a party shall be: (i) given
in writing and personally delivered, mailed or delivered by overnight courier
service to the party to whom such notice, communication or demand is directed or
(ii) made by telecopy or facsimile transmission delivered or transmitted to the
party to whom such notice, communication or demand is directed, at its address
as follows:
To Borrower: CRL, Inc.
7505 Village Square Drive
Suite 200
Castle Rock, Colorado 80104
Attention: Jonathan Johnson
Telecopy: (303) 688-8800
Telephone: (303) 688-8802
With a copy to: Darren R. Hensley, Esq.
Brobeck Phleger & Harrison LLP
370 Interlocken Boulevard
Suite 500
Broomfield, Colorado 80021
Telecopy: (303) 410-2199
Telephone: (303) 410-2000
To Lender: The Northern Trust Company
50 South LaSalle Street
Chicago, Illinois 60675
Attention: Edmund H. Lester
Vice President
Telecopy: (312) 444-7028
Telephone: (312) 444-3527
With a copy to: Gardner, Carton & Douglas
321 North Clark Street
Suite 3400
Chicago, Illinois 60610
Attention: Edward J. Tabaczyk
Telephone: (312) 245-8873
Telecopy: (312) 644-3381
(b) Any notice which is personally delivered shall be deemed to have
been given on the date on which it is personally delivered. Any notice which is
delivered by overnight courier service shall be deemed to have been given on the
Business Day after deposit with such courier service. Any notice which is
transmitted by telecopy or facsimile transmission shall be deemed to have been
given on the day that such notice is transmitted upon oral confirmation of
receipt. Any notice which is mailed shall be sent by registered or certified
mail, postage prepaid and return receipt requested, and shall be deemed to have
been given on the third Business Day after deposit in the mail. Notwithstanding
the foregoing, any request for a Loan pursuant to SECTION 2.2 (or any telephonic
notice in lieu thereof, as permitted by this Agreement) shall be effective only
when actually received by Lender.
Page 54 of 82 Pages
(c) Any of Borrower or Lender may change the address to which notices,
requests and other communications are to be sent to it by giving written notice
of such address change to the other parties in conformity with this SECTION 9.8,
but such change shall not be effective until notice of such change has been
received by the other parties.
9.9. PUBLICITY. Borrower shall not, without the prior written approval of
Lender, make any publicity release, advertisement, public statement or public
announcement which identifies Lender by name, unless such communication is
required by law.
9.10. COSTS, EXPENSES AND FEES. Borrower agrees to reimburse promptly
Lender (a) for all reasonable out-of-pocket costs and expenses, including,
without limitation, due diligence and audit expenses and reasonable fees and
expenses of auditors, attorneys (which attorneys may be Lender's employees and
including, without limitation, Gardner, Carton & Douglas, special counsel for
Lender) and other advisors, expended or incurred in the preparation, review,
negotiation, execution and delivery, and filing and recording as necessary, of
this Agreement, the Loan Documents, the Amendments or in amending or waiving
provisions of this Agreement and such other agreements or in obtaining advice
from auditors, attorneys and other advisors regarding its rights and
responsibilities under this Agreement and such other documents, whether or not
the transactions hereby contemplated are consummated, and (b) for all reasonable
out-of-pocket costs and expenses, including, without limitation, reasonable fees
and expenses of auditors, attorneys (which attorneys may be Lender's employees)
and other advisors, expended or incurred by Lender after a Default or Event of
Default in collecting any sum which becomes due under this Agreement, the Loan
Documents, in negotiations with respect to restructuring or "working out" the
credit facilities or in the protection, perfection, preservation and enforcement
of any and all rights of Lender in connection with this Agreement and the Loan
Documents, including, without limitation, the fees and costs incurred in any
out-of-court work-out or bankruptcy or reorganization proceeding. Borrower shall
pay and hold Lender harmless from and against any and all present and future
stamp and other similar Taxes with respect to the foregoing matters and save
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
Lender) to pay such Taxes.
9.11. RESERVED.
9.12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
9.13. GOVERNING LAW. The validity, construction and enforcement of this
Agreement and the Loan Documents and the rights and obligations of the parties
hereunder and thereunder shall be governed by and construed and interpreted in
accordance with the substantive laws of the State of Illinois (without regard to
conflicts of law principles).
9.14. SERVICE OF PROCESS. Borrower irrevocably consents to the service of
process in any action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to Borrower, such service to be
effective ten (10) days after such mailing notwithstanding SECTION 9.8 above.
Borrower absolutely and irrevocably consents and submits to the jurisdiction of
the courts of the State of Illinois and of any Federal court located in such
State in connection with any action or proceeding brought against Borrower by
Lender arising out of or relating to this Agreement or the Loan Documents.
Nothing herein shall affect the right to serve process in any other manner
permitted by law. Borrower hereby irrevocably designates James Elsen, Carroll
International Corporation, 2340 Des Plaines Avenue, Suite 303, Des Plaines,
Illinois 60018-3224, as the designee, appointee and agent of Borrower to
receive, for and on behalf of Borrower, service of process in such respective
jurisdictions in any legal action or proceeding with respect to this Agreement
or the other Loan Documents and such service shall be deemed completed 10 days
after delivery
Page 55 of 82 Pages
thereof to said agent notwithstanding SECTION 9.8 above. It is understood that a
copy of such process served on any such agent will be promptly forwarded by mail
to Borrower at its address set forth in SECTION 9.8, but the failure of Borrower
to receive such copy shall not affect in any way the service of such process.
Borrower further irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to Borrower at
its said address, such service to become effective 30 days after such mailing
notwithstanding SECTION 9.8 above. Nothing herein shall affect the right of
Lender to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against Borrower in any other
jurisdiction.
9.15. RECAPTURE. To the extent Lender receives any payment by or on behalf
of Borrower, which payment or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
Borrower or its estate, trustee, receiver, custodian or any other party under
any bankruptcy law, state or federal law, common law or equitable cause, then to
the extent of such payment or repayment, the obligation or part thereof which
has been paid, reduced or satisfied by the amount so repaid shall be reinstated
and shall be included within the liabilities of Borrower to Lender as of the
date such initial payment, reduction or satisfaction occurred.
9.16. COMPLETE AGREEMENT. This Agreement, together with the exhibits and
schedules to this Agreement, the Loan Documents to which Borrower and Lender are
parties and the other documents delivered on the Closing Date, is intended by
each of Borrower and Lender as a final expression of their agreement and is
intended as a complete statement of the terms and conditions of their agreement.
9.17. CAPTIONS. The descriptive headings of the various sections or parts
of this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
9.18. WAIVER OF JURY TRIAL. BORROWER AND LENDER ABSOLUTELY AND IRREVOCABLY
WAIVE TRIAL BY JURY AND ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH BORROWER OR LENDER MAY NOW OR HEREAFTER HAVE TO THE BRINGING
OF ANY SUCH ACTION OR PROCEEDING, INCLUDING WITH RESPECT TO ANY MATTER WHICH
NIGHT BE ASSERTED AGAINST LENDER BY BORROWER, IN ANY SUCH ACTION OR PROCEEDING.
9.19. WAIVER. Borrower has advised Lender that an Event of Default
occurred under Section 8.1(m) (Events of Default) of the Prior Credit Agreement
as a result of the closing price of the common stock of Katy being below $4.00
for five (5) consecutive trading days. Borrower has also advised Lender that an
Event of Default has occurred and is continuing under SECTION 8.1(f) (Events of
Default) of this Agreement as a result of Borrower's Subsidiary, Freezing in
Florida, LLC, violating certain financial covenants under Section 4.1(u) of that
certain Letter of Credit and Reimbursement Agreement between Freezing in
Florida, LLC and Bank of America National Association dated as of September 1,
1999 for the periods ending June 30, 2001, September 30, 2001 and December 31,
2001. Borrower has further advised Lender that the Event of Default under
SECTION 8.1(f) (Events of Default) of this Agreement that is now occurring as a
result of Freezing in Florida, LLC's violation of Section 4.1(u) of the
aforementioned Letter of Credit and Reimbursement Agreement may continue for a
certain unknown time period in the future. On the Closing Date, Lender waives
the Event of Default under Section 8.1(m) of the Prior Credit Agreement and
further waives, as of and through June 30, 2002 only, the Event of Default under
SECTION 8.1(f) of this Agreement. Lender's waiver of said Events of Default also
extends for such specified time periods and in accordance with this SECTION 9.19
to any event of default, default or similar event that may have occurred in any
other Loan Document as a result of said Events of Default. Lender's waiver of
said Events of Default is limited to the specific facts giving rise to such
Events of Default described above and shall not be deemed a waiver of or consent
to any other failure to comply with the terms of SECTION 8.1 of this Agreement
or any other provisions of this Agreement.
Page 56 of 82 Pages
Such waiver shall not prejudice or constitute a waiver of any right or remedies
which the Lender may have or be entitled to with respect to any other breach of
SECTION 8.1 or any other provision of this Agreement.
[SIGNATURE PAGE FOLLOWS]
Page 57 of 82 Pages
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
duly executed as of the day and year first above written.
CRL, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
THE NORTHERN TRUST COMPANY
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Page 58 of 82 Pages
EXHIBIT B
SIXTH AMENDMENT
TO PLEDGE AGREEMENT
This Sixth Amendment to Pledge Agreement (this "AMENDMENT"), dated as of
August 31, 2001 (the "EFFECTIVE DATE"), is entered into between CRL, INC., a
Delaware corporation (the "BORROWER"), and THE NORTHERN TRUST COMPANY, an
Illinois banking corporation having its principal office at 50 South LaSalle
Street, Chicago, Illinois 60675 (the "LENDER").
RECITALS:
A. The Borrower and the Lender have concurrently herewith entered into
a Second Amended and Restated Credit Agreement dated as of August 31, 2001 (as
amended from time to time the "CREDIT AGREEMENT") which amends and restates that
certain Amended and Restated Revolving Credit Agreement dated as of December 9,
1993, as amended by a First Amendment thereto dated as of December 31, 1994, a
Second Amendment thereto dated as of December 31, 1995, a Third Amendment
thereto dated as of October 31, 1996, a Fourth Amendment thereto dated as of
December 31, 1997, a Fifth Amendment thereto dated as of December 31, 1998, a
Sixth Amendment thereto dated as of August 25, 1999, a Seventh Amendment thereto
dated as of February 29, 2000 and an Eighth Amendment thereto dated as of
February 28, 2001 (said Amended and Restated Revolving Credit Agreement, as
amended, the "PRIOR CREDIT AGREEMENT"). The terms defined in the Credit
Agreement and not otherwise defined herein shall be used herein as defined in
the Credit Agreement.
B. In connection with the Prior Credit Agreement, the Borrower has
executed and delivered to the Lender a certain Pledge Agreement, dated as of
December 31, 1995, as amended by a First Amendment thereto dated as of October
31, 1996, a Second Amendment thereto dated as of December 31, 1997, a Third
Amendment thereto dated as of August 25, 1999, a Fourth Amendment thereto dated
as of February 28, 2001 and a Fifth Amendment thereto dated as of June 2, 2001
(said Pledge Agreement, as heretofore amended, the "PLEDGE AGREEMENT").
C. The Borrower and the Lender desire to amend the Pledge Agreement in
certain respects as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. AMENDMENTS TO THE PLEDGE AGREEMENT.
1.1. GLOBAL CHANGES THROUGHOUT PLEDGE AGREEMENT. All references
throughout the Pledge Agreement, including, without limitation, Schedule A
thereto, to Modtech Holdings, Inc. are hereby deleted as of the Effective Date.
1.2. SECTION 1(g) OF THE PLEDGE AGREEMENT. SECTION 1(g)(ii) of
the Pledge Agreement is hereby amended as of the Effective Date by (a) deleting
the comma appearing immediately before CLAUSE (B) appearing therein and
inserting the word "and" in its place, and (b) deleting the phrase "and (C) in
accordance with the terms and provisions of the Stock Voting Agreement, as
limited by the Letter Agreement, with respect to the common stock of Katy only"
appearing therein.
1.3. SECTION 1(j) OF THE PLEDGE AGREEMENT. SECTION 1(j) of the
Pledge Agreement is hereby amended as of the Effective Date by deleting the
following phrase at the end of the sentence thereof: "except to comply with the
covenants and agreements of Pledgor in the Stock Voting Agreement, as limited by
the Letter Agreement."
1.4. SECTION 2(b) OF THE PLEDGE AGREEMENT. SECTION 2(b) of the
Pledge Agreement is hereby amended as of the Effective Date by deleting the
following phrase at the beginning of the second sentence thereof:
Page 59 of 82 Pages
"Except in accordance with the express agreements of the
Pledgee contained in that certain letter agreement of the Pledgee regarding
the Stock Voting Agreement, dated as of June 2, 2001, executed and
delivered by the Pledgee and acknowledged and approved by the Pledgor and
Wallace E. Carroll, Jr. (the "LETTER AGREEMENT"),".
1.5. SECTION 3 OF THE PLEDGE AGREEMENT. SECTION 3 of the Pledge
Agreement is hereby amended as of the Effective Date by deleting the phrase
"Letter Agreement" appearing at the end of the second sentence therein and
substituting therefor the phrase "letter agreement regarding the Stock Voting
Agreement, dated as of August 31, 2002 executed and delivered by the Pledgee and
acknowledged and approved by Pledgor, Wallace E. Carroll, Jr. and Wallace E.
Carroll, Jr., Amelia M. Carroll and Philip E. Johnson, not individually but
solely as trustees under Trust Agreement dated May 1, 1958, as amended from time
to time and known as the Wallace E. and Lelia H. Carroll Trust for the benefit
of Wallace E. Carroll, Jr. (the "LETTER AGREEMENT")."
1.6. SECTION 8 OF THE PLEDGE AGREEMENT. SECTION 8 of the Pledge
Agreement is hereby amended as of the Effective Date as follows:
(a) SECTION 8(a) is hereby amended by deleting the following phrase
appearing before the colon in the first sentence thereof: ", not inconsistent
with the express terms of the Letter Agreement";
(b) SECTION (a)(i) is hereby amended by adding the following phrase
before the semi-colon appearing at the end of clause (i) therein: ", not
inconsistent with the express terms of the Letter Agreement"; and
(c) SECTION 8(d) is hereby amended by deleting the following phrase
appearing in the first sentence thereof: ", not inconsistent with the express
terms of the Letter Agreement,".
1.7. SECTION 24 OF THE PLEDGE AGREEMENT. SECTION 24 of the Pledge
Agreement is hereby amended as of the Effective Date as follows:
(a) SECTION 24(d) of the Pledge Agreement is hereby amended and
restated in its entirety to read as follows:
"(d) Pledgor agrees not to sell or otherwise dispose of, and not
to permit any Related Person to sell or otherwise dispose of, other than by
gift to a person who is not a Related Person or an "affiliate" (as defined
in Rule 144), Pledgor's Shares and/or Related Persons' Shares with a value
in excess of $250,000 in the aggregate during any calendar year. The sale
of any of Pledgor's Shares or Related Persons' Shares, the proceeds of
which, less customary costs of sale or liquidation and taxes payable as a
result of such sale, are used solely to pay down the Obligations shall be
specifically excluded in calculating the $250,000 in the immediately
preceding sentence."; and
(b) SECTION 24(f) of the Pledge Agreement is hereby amended by
deleting the phrase "without regard to the Stock Voting Agreement" appearing
therein.
2. REPRESENTATIONS AND WARRANTIES. To induce the Lender to enter into this
Amendment, the Borrower warrants that:
2.1. AUTHORIZATION. The Borrower is duly authorized to execute
and deliver this Amendment and is and will continue to be duly authorized to
perform its obligations under the Pledge Agreement, as amended hereby.
2.2. NO CONFLICTS. The execution and delivery of this Amendment
and the performance by the Borrower of its obligations under the Pledge
Agreement, as amended hereby, do not and will not conflict with any provision of
law or of the charter or by-laws of the Borrower or of any agreement binding
upon the Borrower with the exception of the Stock Voting Agreement, as limited
by the Letter Agreement (as such terms are defined in the Pledge Agreement).
Page 60 of 82 Pages
2.3. VALIDITY AND BINDING EFFECT. The Pledge Agreement, as
amended hereby, is the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar laws of
general application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies.
3. CONDITIONS PRECEDENT TO AMENDMENT. This Amendment shall become effective
as of the Effective Date upon satisfaction of each of the following conditions
precedent:
3.1. DOCUMENTATION. The Borrower shall have delivered to the
Lender all of the following, each duly executed by the appropriate parties and
dated the date of the Effective Date or other date satisfactory to the Lender,
in form and substance reasonably satisfactory to the Lender:
(a) AMENDMENT. Counterparts of this Amendment.
(b) CONDITIONS PRECEDENT IN CREDIT AGREEMENT. The conditions
precedent in Section 5 of the Credit Agreement shall have been satisfied in form
and substance reasonably satisfactory to the Lender.
(c) OTHER. Such other documents as the Lender may reasonably
request.
3.2. NO DEFAULT. As of the closing date, no Event of Default or
Default under the Loan Documents shall have occurred and be continuing.
3.3. REPRESENTATIONS AND WARRANTIES. As of the closing date, the
representations and warranties in ARTICLE IV of the Credit Agreement, in the
Loan Documents and in SECTION 2 of this Amendment shall be true and correct as
though made on such date, except for such changes as are specifically permitted
under the Credit Agreement.
4. GENERAL.
4.1. EXPENSES. The Borrower agrees to pay the Lender upon demand
for all reasonable out-of-pocket expenses, including reasonable attorneys' and
legal assistants' fees and expenses (which attorneys and legal assistants may be
employees of the Lender), incurred by the Lender in connection with the
preparation, negotiation and execution of this Amendment and any documents
required to be furnished herewith or therewith.
4.2. LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
4.3. SUCCESSORS. This Amendment shall be binding upon the
Borrower and the Lender and their respective successors and assigns, and shall
inure to the benefit of the Borrower and the Lender and the successors and
assigns of the Lender.
4.4. CONFIRMATION OF THE CREDIT AGREEMENT AND THE PLEDGE
AGREEMENT. The Credit Agreement, the Pledge Agreement, as amended hereby, the
Notes and the other Loan Documents remain in full force and effect and are
hereby ratified and confirmed in all respects.
4.5. REFERENCES TO THE PLEDGE AGREEMENT. On the Effective Date,
each reference in the Pledge Agreement to "this Agreement", or "herein" and each
reference in the Credit Agreement and the other Loan Documents to the "Pledge
Agreement" or like references shall be deemed to refer to the Pledge Agreement,
as amended hereby.
Page 61 of 82 Pages
4.6. COUNTERPARTS. This Amendment may be executed in any number
of counterparts, and any party hereto may execute one or more such counterparts,
all of which shall constitute one and the same Amendment. Delivery of an
executed counterpart of this Amendment by facsimile shall be as effective as
delivery of a manually executed counterpart of this Amendment.
(SIGNATURE PAGE TO FOLLOW)
Page 62 of 82 Pages
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed at Chicago, Illinois as of the date first written above.
CRL, INC.
By:
----------------------------------------
Title:
-------------------------------------
THE NORTHERN TRUST COMPANY
By:
----------------------------------------
Title
--------------------------------------
Page 63 of 82 Pages
EXHIBIT C
SECOND AMENDMENT
TO GUARANTOR PLEDGE AGREEMENT
This Second Amendment to Guarantor Pledge Agreement (this "AMENDMENT"),
dated as of August 31, 2001 (the "EFFECTIVE DATE"), is entered into between
Wallace E. Carroll, Jr. (the "GUARANTOR"), and THE NORTHERN TRUST COMPANY, an
Illinois banking corporation having its principal office at 50 South LaSalle
Street, Chicago, Illinois 60675 (the "LENDER").
RECITALS:
A. CRL, Inc., a Delaware corporation (the "BORROWER") and the Secured
Party have concurrently herewith entered into a Second Amended and Restated
Credit Agreement dated as of August 31, 2001 (as amended from time to time, the
"CREDIT AGREEMENT"), which amends and restates that certain Amended and Restated
Revolving Credit Agreement dated as of December 9, 1993, as amended by a First
Amendment thereto dated as of December 31, 1994, a Second Amendment thereto
dated as of December 31, 1995, a Third Amendment thereto dated as of October 31,
1996, a Fourth Amendment thereto dated as of December 31, 1997, a Fifth
Amendment thereto dated as of December 31, 1998, a Sixth Amendment thereto dated
as of August 25, 1999, a Seventh Amendment thereto dated as of February 29, 2000
and an Eighth Amendment thereto dated as of February 28, 2001 (said Amended and
Restated Revolving Credit Agreement, as amended, the "PRIOR CREDIT AGREEMENT").
The terms defined in the Credit Agreement and not otherwise defined herein shall
be used herein as defined in the Credit Agreement.
B. In connection with the Prior Credit Agreement, the Guarantor has
executed and delivered to the Lender a certain Pledge Agreement, dated as of
February 28, 2001, as amended by a First Amendment to Guarantor Pledge Agreement
dated as of June 2, 2001 (the "GUARANTOR PLEDGE AGREEMENT").
C. The Guarantor and the Lender desire to amend the Guarantor Pledge
Agreement in certain respects as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
5. AMENDMENTS TO THE PLEDGE AGREEMENT.
5.1. SECTION 4(a) OF THE GUARANTOR PLEDGE AGREEMENT.
SECTION 4(a) of the Guarantor Pledge Agreement is hereby amended as of the
Effective Date as follows:
(a) CLAUSE (ii) is hereby amended by inserting the following
phrase before the period therein: ", as limited by that certain letter agreement
of Secured Party regarding the Stock Voting Agreement, dated as of August 31,
2001, executed and delivered by Secured Party and acknowledged and approved by
the Debtor, Borrower and Wallace E. Carroll, Jr., Amelia M. Carroll and Philip
E. Johnson, not individually but solely as trustees under Trust Agreement dated
May 1, 1958, as amended from time to time and known as the Wallace E. and Lelia
H. Carroll Trust for the benefit of Wallace E. Carroll, Jr."; and
(b) CLAUSE (v) is hereby amended and restated in its entirety as
follows:
"(v) Except as provided in SECTION 19 of this Agreement with respect
to the shares of stock of Katy Industries, Inc. only, the Securities Act
(as defined hereinafter) and state securities laws affecting the offering
and sale by Persons such as Secured Party of securities such as the
Collateral and the reporting of a sale of the shares of stock of Katy
Industries, Inc. by the Debtor in filings required under Sections 13(d) and
16(a) of the Securities Exchange Act of 1934, as amended, with the
Securities and Exchange Commission, the sale of the Collateral by Secured
Party is not prohibited or regulated by any federal or state law or
regulation or any agreement binding upon Debtor, and requires no
registration or filing with, or consent or approval of, any governmental
body, regulatory authority or securities exchange."
Page 64 of 82 Pages
5.2. SECTION 6 OF THE GUARANTOR PLEDGE AGREEMENT. SECTION 6
of the Guarantor Pledge Agreement is hereby amended as of the Effective Date as
follows:
(a) SUBSECTION 6(b) is hereby amended by deleting the following
phrase appearing therein: "except as expressly provided in the Letter
Agreement"; and
(b) SUBSECTION 6(c) is hereby amended by deleting the following
phrase appearing therein: ", subject to the express terms of the Letter
Agreement,".
5.3. SECTION 7 OF THE GUARANTOR PLEDGE AGREEMENT. SECTION 7
of the Guarantor Pledge Agreement is hereby amended as of the Effective Date by
(a) deleting the following phrase appearing therein: "Except as expressly
provided in the Letter Agreement," and (b) inserting the following phrase before
the period in the first sentence thereof: "; provided, however, that Secured
Party shall exercise the voting rights consistent with the terms of the Stock
Voting Agreement, as limited by the Letter Agreement."
5.4. SECTION 10 OF THE GUARANTOR PLEDGE AGREEMENT.
SECTION 10 of the Guarantor Pledge Agreement is hereby amended as of the
Effective Date as follows:
(a) SUBSECTION 10(a) of the Guarantor Pledge Agreement is hereby
amended by deleting the following phrase appearing in the second sentence
thereof: ", not inconsistent with the express terms of the Letter Agreement,";
and
(b) SUBSECTION 10(b) of the Guarantor Pledge Agreement is hereby
amended by deleting the following phrases appearing therein:
"(such rights and remedies being subject to the express terms of the
Letter Agreement)" and "subject to the express terms of the Letter
Agreement".
5.5. SECTION 19 OF THE GUARANTOR PLEDGE AGREEMENT.
SECTION 19 of the Guarantor Pledge Agreement is hereby amended as of the
Effective Date as follows:
(a) SUBSECTION 19(b)(iii) of the Guarantor Pledge Agreement is
hereby amended by deleting the following phrase appearing therein: "Except for
the Stock Voting Agreement";
(b) SUBSECTION 19(d) of the Guarantor Pledge Agreement is hereby
amended and restated in its entirety to read as follows:
"(d) Debtor agrees not to sell or otherwise dispose of, and
not to permit any Related Person to sell or otherwise dispose of,
other than by gift to a person who is not a Related Person or an
"affiliate" (as defined in Rule 144), Debtor's Shares and/or Related
Persons' Shares with a value in excess of $250,000 in the aggregate
during any calendar year. The sale of any of Debtor's Shares or
Related Persons' Shares, the proceeds of which, less customary costs
of sale or liquidation and taxes payable as a result of such sale,
are used solely to pay down the Liabilities shall be specifically
excluded in calculating the $250,000 in the immediately preceding
sentence."; and
(c) SUBSECTION 19(f) of the Guarantor Pledge Agreement is hereby
amended by deleting the phrase "without regard to the Stock Voting Agreement"
appearing therein.
6. REPRESENTATIONS AND WARRANTIES. To induce the Lender to enter into
this Amendment, the Guarantor warrants that:
6.1. AUTHORIZATION. The Guarantor is duly authorized to
execute and deliver this Amendment and is and will continue to be duly
authorized to perform its obligations under the Guarantor Pledge Agreement, as
amended hereby.
Page 65 of 82 Pages
6.2. NO CONFLICTS. The execution and delivery of this
Amendment and the performance by the Guarantor of its obligations under the
Guarantor Pledge Agreement, as amended hereby, do not and will not conflict with
any provision of law or of any agreement binding upon the Guarantor, with the
exception of the Stock Voting Agreement, as limited by the Letter Agreement.
6.3. VALIDITY AND BINDING EFFECT. The Guarantor Pledge
Agreement, as amended hereby, is the legal, valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or other
similar laws of general application affecting the enforcement of creditors'
rights or by general principles of equity limiting the availability of equitable
remedies.
7. CONDITIONS PRECEDENT TO AMENDMENT. This Amendment shall become
effective as of the Effective Date upon satisfaction of each of the following
conditions precedent:
7.1. DOCUMENTATION. The Guarantor shall have delivered to
the Lender all of the following, each duly executed by the appropriate parties
and dated the date of the Effective Date or other date satisfactory to the
Lender, in form and substance satisfactory to the Lender:
(a) AMENDMENT. Counterparts of this Amendment.
(b) LETTER AGREEMENT. A duly executed Letter Agreement.
(c) CONDITIONS PRECEDENT IN THE CREDIT AGREEMENT. The conditions
precedent in Section 5 of the Credit Agreement shall have been satisfied in form
and substance satisfactory to Lender.
(d) OTHER. Such other documents as the Lender may reasonably
request.
7.2. NO DEFAULT. As of the closing date, no Event of Default
or Default under the Loan Documents or any event that would accelerate the
payment of the Liabilities under the Guaranty shall have occurred and be
continuing.
7.3. REPRESENTATIONS AND WARRANTIES. As of the closing date,
the representations and warranties in the Credit Agreement, in the Loan
Documents and in SECTION 2 of this Amendment shall be true and correct as though
made on such date, except for such changes as are specifically permitted under
the Credit Agreement, the Loan Documents or the Guaranty.
8. GENERAL.
8.1. LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
8.2. SUCCESSORS. This Amendment shall be binding upon the
Guarantor and the Lender and their respective successors and assigns, and shall
inure to the benefit of the Guarantor and the Lender and the successors and
assigns of the Lender.
8.3. CONFIRMATION OF THE GUARANTY AND THE GUARANTOR PLEDGE
AGREEMENT. The Guaranty and the Guarantor Pledge Agreement, as amended hereby,
remain in full force and effect and are hereby ratified and confirmed in all
respects.
8.4. REFERENCES TO THE GUARANTOR PLEDGE AGREEMENT. On the
Effective Date, each reference in the Guarantor Pledge Agreement to "this
Agreement", or "herein" and each reference in the Credit Agreement and the other
Loan Documents to the "Guarantor Pledge Agreement" or like references shall be
deemed to refer to the Guarantor Pledge Agreement, as amended hereby.
8.5. COUNTERPARTS. This Amendment may be executed in any
number of counterparts, and any party hereto may execute one or more such
counterparts, all of which shall constitute one and the same Amendment. Delivery
of an executed counterpart
Page 66 of 82 Pages
of this Amendment by facsimile shall be as effective as delivery of a manually
executed counterpart of this Amendment.
Page 67 of 82 Pages
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed at Chicago, Illinois as of the date first written above.
--------------------------------------------
Wallace E. Carroll, Jr., individually
THE NORTHERN TRUST COMPANY
By:
----------------------------------------
Title
--------------------------------------
Page 68 of 82 Pages
EXHIBIT D
FIRST AMENDMENT
TO TRUST PLEDGE AGREEMENT
This First Amendment to Trust Pledge Agreement (this "AMENDMENT"), dated as
of August 31, 2001 (the "EFFECTIVE DATE"), is entered into between Wallace E.
Carroll, Jr., Amelia M. Carroll and Philip E. Johnson, not individually but
solely as trustees under Trust Agreement dated May 1, 1958, as amended from time
to time and known as the Wallace E. and Lelia H. Carroll Trust for the benefit
of Wallace E. Carroll, Jr. (the trustees in their capacities as trustees under
the Trust and the Trust, each and collectively referred to herein as the
"DEBTOR"), and THE NORTHERN TRUST COMPANY, an Illinois banking corporation
having its principal office at 50 South LaSalle Street, Chicago, Illinois 60675
(the "SECURED PARTY").
RECITALS:
A. CRL, Inc., a Delaware corporation (the "BORROWER") and the Secured
Party have concurrently herewith entered into a Second Amended and Restated
Credit Agreement dated as of August 31, 2001 (as amended from time to time, the
"CREDIT AGREEMENT"), which amends and restates that certain Amended and Restated
Revolving Credit Agreement dated as of December 9, 1993, as amended by a First
Amendment thereto dated as of December 31, 1994, a Second Amendment thereto
dated as of December 31, 1995, a Third Amendment thereto dated as of October 31,
1996, a Fourth Amendment thereto dated as of December 31, 1997, a Fifth
Amendment thereto dated as of December 31, 1998, a Sixth Amendment thereto dated
as of August 25, 1999, a Seventh Amendment thereto dated as of February 29, 2000
and an Eighth Amendment thereto dated as of February 28, 2001 (said Amended and
Restated Revolving Credit Agreement, as amended, the "PRIOR CREDIT AGREEMENT").
The terms defined in the Credit Agreement and not otherwise defined herein shall
be used herein as defined in the Credit Agreement.
B. In connection with the Prior Credit Agreement, the Debtor has
executed and delivered to the Secured Party a certain Pledge Agreement, dated as
of February 28, 2001 (the "TRUST PLEDGE AGREEMENT").
C. The Trust Pledge Agreement was executed in part by Robert E. Kolek,
as co-trustee under the Trust. Since the time of execution of the Trust Pledge
Agreement, Robert E. Kolek has resigned as a co-trustee under the Trust and
Philip E. Johnson has been appointed as a co-trustee and in such capacity will
execute this Amendment along with the other co-trustees.
D. The Debtor and the Secured Party desire to amend the Trust Pledge
Agreement in certain respects as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
9. AMENDMENTS TO THE PLEDGE AGREEMENT.
9.1. SECTION 2(a) OF THE TRUST PLEDGE AGREEMENT. SECTION 2(a) of
the Trust Pledge Agreement is hereby amended as of the Effective Date by
inserting the following phrase before the first sentence appearing therein: "(i)
Those certain shares of stock listed on SCHEDULE 1 attached hereto, as such
schedule may change from time to time, and (ii)".
9.2. SECTION 3 OF THE TRUST PLEDGE AGREEMENT. SECTION 3 of the
Trust Pledge Agreement is hereby amended as of the Effective Date by inserting
the following after the last sentence appearing therein:
"Except as may be otherwise specifically provided in any separate agreement
executed by Debtor and Secured Party, Secured Party's recourse against
Debtor with respect to the Liabilities shall be limited to the Trust
Collateral and Debtor shall have no personal liability with respect to the
Liabilities; PROVIDED, HOWEVER, that Debtor shall have personal liability
to Secured Party for (i) any damages, costs, losses or expenses suffered by
Secured Party as a result of the lack of authenticity or
Page 69 of 82 Pages
genuineness of the Trust Collateral delivered to Secured Party hereunder or
the failure of Debtor to deliver any items required to be delivered by it
hereunder or the commission of any fraud by the Debtor under this Agreement
or under any other Loan Document to which it is a party or in any
transaction contemplated hereby or thereby or the breach of any
representation, warranty or covenant contained herein or made in connection
herewith or otherwise perform its obligations hereunder or under any other
Loan Documents to which it is a party (including any indemnity
obligations); or (ii) the payment of expenses due from Debtor hereunder or
under any other Loan Documents to which it is a party. For the purposes of
this SECTION 3, "personal liability" of the Debtor shall mean Secured
Party's recourse, with respect to the Trust, against the Trust as a legal
entity and all of its assets, whether held in the name of the Trust or in
the name of its trustees, and with respect to the trustees under the Trust,
except for any fraud committed by any Debtor as described above in which
case Secured Party shall retain all of its rights and remedies hereunder
and under applicable law and equity against that Debtor, against the
trustees in their capacity only as trustees under the Trust, and not in
their individual capacity, and only to any of the assets that the trustees
hold in their name for the Trust in their capacity as trustee, but not to
any of the assets that the trustee holds in their individual capacity."
9.3. SECTION 4(a) OF THE TRUST PLEDGE AGREEMENT. SECTION 4(a) of
the Trust Pledge Agreement is hereby amended as of the Effective Date as
follows:
(a) CLAUSE (ii) is hereby amended by inserting the following
phrase before the period therein: ", except for that certain Stock Voting
Agreement by and among KKTY Holding Company, L.L.C. ("KKTY") and the
shareholders named therein dated as of June 2, 2001 (the "STOCK VOTING
AGREEMENT"), as limited by that certain letter agreement of Secured Party
regarding the Stock Voting Agreement, dated as of August 31, 2001, executed and
delivered by Secured Party and acknowledged and approved by the Debtor, Borrower
and Wallace E. Carroll, Jr. (the "LETTER AGREEMENT")"; and
(b) CLAUSE (vii) is hereby amended and restated in its entirety
as follows:
"(vii) Except as provided in SECTION 20 of this Agreement with
respect to the shares of stock of Katy Industries, Inc. only, the
Securities Act (as defined hereinafter) and state securities laws affecting
the offering and sale by Persons such as Secured Party of securities such
as the Collateral and the reporting of a sale of the shares of stock of
Katy Industries, Inc. by the Debtor in filings required under Sections
13(d) and 16(a) of the Securities Exchange Act of 1934, as amended, with
the Securities and Exchange Commission, the sale of the Collateral by
Secured Party is not prohibited or regulated by any federal or state law or
regulation or any agreement binding upon Debtor, and requires no
registration or filing with, or consent or approval of, any governmental
body, regulatory authority or securities exchange."
9.4. SECTION 7 OF THE TRUST PLEDGE AGREEMENT. SECTION 7 of the
Trust Pledge Agreement is hereby amended as of the Effective Date by inserting
the following phrase before the period in the first sentence thereof: ";
provided, however, that Secured Party shall exercise the voting rights
consistent with the terms of the Stock Voting Agreement, as limited by the
Letter Agreement."
9.5. SECTION 13 OF THE TRUST PLEDGE AGREEMENT. SECTION 13 of the
Trust Pledge Agreement is hereby amended as of the Effective Date by adding a
new CLAUSE (e) thereto to read as follows:
"(e) References to "Collateral" in this SECTION 13 shall refer only
to Collateral in respect of the Securities Account and shall not
Page 70 of 82 Pages
refer to any of the securities or other Collateral in respect thereof
listed on SCHEDULE 1 hereto."
9.6. SECTION 20 OF THE TRUST PLEDGE AGREEMENT. A new SECTION 20
is hereby added to the Trust Pledge Agreement as of the Effective Date to read
as follows:
"20. SPECIAL PROVISIONS REGARDING CONTROL AND/OR RESTRICTED STOCK
PERTAINING TO RULE 144.
(a) For purposes of this SECTION 20, "Related Person" means, from
time to time:
(i) any trust or estate in which Debtor owns ten percent
(10%) or more of the total beneficial interest or of which it serves
as trustee, executor or in any similar capacity; and
(ii) any corporation or other organization (other than Katy
Industries, Inc., hereinafter referred to as the "ISSUER") in which
Debtor or any person mentioned in (i) is the beneficial owner
collectively of ten percent (10%) or more of any class of equity
securities or ten percent (10%) or more of the equity interest.
(b) Debtor represents and warrants that:
(i) Debtor is the legal, equitable and beneficial owner of
603,000 shares of the common stock ("DEBTOR'S SHARES") of the
Issuer, which includes the stock pledged as Collateral, free and
clear of all liens, claims and encumbrances other than in favor of
Secured Party. As of March 22, 2002, Debtor's Shares comprised
approximately 7.2% of all outstanding shares of common stock of the
Issuer (and constitutes approximately 3.0% as of March 22, 2002,
assuming the conversion of 700,000 shares of convertible preferred
stock, par value $100.00 per share, of the Issuer into 11,666,666
shares of common stock of the Issuer as contemplated by the Stock
Voting Agreement).
(ii) The Related Persons are the legal, equitable and
beneficial owners of 2,378,081 shares of the common stock ("RELATED
PERSONS' SHARES") of the Issuer. The Related Persons' Shares
comprises approximately 28.3% of all outstanding shares of common
stock of the Issuer as of March 22, 2002 (and constitutes
approximately 11.9% as of March 22, 2002, assuming the conversion of
700,000 shares of convertible preferred stock, par value $100.00 per
share, of the Issuer into 11,666,000 shares of common stock of the
Issuer as contemplated by the Stock Voting Agreement).
(iii) There are no stockholder agreements or other
restrictions on, or laws, rules or regulations prohibiting or
limiting, the sale or other disposition of Debtor's Shares other
than restrictions under the Securities Act (including the type of
restriction which can be removed by compliance with Securities and
Exchange Commission Rule 144 ("RULE 144")) and state securities laws
affecting the offering and sale by Persons such as Secured Party of
securities such as the Debtor's Shares.
(c) Debtor agrees to take or cause to be taken such actions, and to
execute and deliver or cause to be executed and delivered such documents
and instruments, all at Debtor's expense, as Secured Party may deem
reasonably necessary or appropriate from time to time to cause a sale of
Debtor's Shares in compliance with Rule 144; Debtor also
Page 71 of 82 Pages
irrevocably authorizes Secured Party to take or cause to be taken such
actions, and execute and deliver or cause to be executed and delivered such
documents and instruments, on Debtor's behalf.
(d) Debtor agrees not to sell or otherwise dispose of, and not to
permit any Related Person to sell or otherwise dispose of, other than by
gift to a person who is not a Related Person or an "affiliate" (as defined
in Rule 144), Debtor's Shares and/or Related Persons' Shares with a value
in excess of $250,000 in the aggregate during any calendar year. The sale
of any of Debtor's Shares or Related Persons' Shares, the proceeds of
which, less customary costs of sale or liquidation and taxes payable as a
result of such sale, are used solely to pay down the Liabilities shall be
specifically excluded in calculating the $250,000 in the immediately
preceding sentence.
(e) Debtor agrees to provide, or cause to be provided, to Secured
Party such information and copies of documents as Secured Party may
reasonably request concerning the amount, manner and other aspects of sales
or other dispositions of Debtor's Shares or Related Persons' Shares of any
nature whatsoever
(f) As to any matter covered by or related to this SECTION 20, and
without limiting Secured Party's rights under other terms of this
Agreement, and after an Event of Default, Debtor, for itself and its
successors, personal representatives and assigns, hereby irrevocably grants
Secured Party a POWER OF ATTORNEY, with full power of substitution, to take
actions (not inconsistent with the express terms of the Letter Agreement)
and execute and deliver documents and instruments, in Debtor's name, place
and stead, which power of attorney shall be deemed coupled with an
interest. Debtor hereby ratifies all that Secured Party shall do, execute
or deliver in accordance with such power of attorney.
(g) Whenever the Issuer proposes to register any of its securities
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), and/or
under any state securities law and the registration form to be used may be
used for the registration of Debtor's Shares, Debtor shall use its
reasonable best efforts to cause the Issuer to include Debtor's Shares in
such registration. In connection with any such registration, (i) Debtor
shall be responsible for all reasonable fees and expenses in connection
with such registration (including for payment of Secured Party's reasonable
expenses (including, without limitation, reasonable attorneys' fees) in
connection with such registration), (ii) Debtor shall gives its full
cooperation by doing such acts and providing such documents, statements and
notices as reasonably required to give effect to the registration, (iii)
Debtor shall provide copies of all documents, reports, statements and
notices given to or received by the Debtor in connection with such
registration to the Secured Party and (iv) Debtor shall indemnify Secured
Party for any and all losses, claims, damages or liabilities that arise out
of or are based upon any false statement or omission of facts or violation
of any securities laws by Debtor or the Issuer in connection with the
registration of any of Debtor's Shares."
9.7. SCHEDULE 1 TO THE TRUST PLEDGE AGREEMENT. A new SCHEDULE 1
is hereby added to the Trust Pledge Agreement to be in the form of the SCHEDULE
1 attached hereto as EXHIBIT A
10. REPRESENTATIONS AND WARRANTIES. To induce the Secured Party to enter
into this Amendment, the Debtor represents and warrants that:
10.1. AUTHORIZATION. The Debtor is duly authorized to execute and
deliver this Amendment and is and will continue to be duly authorized to perform
its obligations under the Trust Pledge Agreement, as amended hereby.
Page 72 of 82 Pages
10.2. NO CONFLICTS. The execution and delivery of this Amendment
and the performance by the Debtor of its obligations under the Trust Pledge
Agreement, as amended hereby, do not and will not conflict with any provision of
law or the Trust Agreement or of any agreement binding upon the Debtor with the
exception of the Stock Voting Agreement, as limited by the Letter Agreement.
10.3. VALIDITY AND BINDING EFFECT. The Trust Pledge Agreement, as
amended hereby, is the legal, valid and binding obligation of the Debtor,
enforceable against the Debtor in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar laws of
general application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies.
11. CONDITIONS PRECEDENT TO AMENDMENT. This Amendment shall become
effective as of the Effective Date upon satisfaction of each of the following
conditions precedent:
11.1. DOCUMENTATION. The Debtor shall have delivered to the
Secured Party all of the following, each duly executed by the appropriate
parties and dated the date of the Effective Date or other date satisfactory to
the Secured Party, in form and substance reasonably satisfactory to the Secured
Party:
(a) AMENDMENT. Fully executed counterparts of this Amendment.
(b) CONDITIONS PRECEDENT IN THE CREDIT AGREEMENT. The conditions
precedent in Section 5 of the Credit Agreement shall have been satisfied in form
and substance satisfactory to Secured Party.
(c) AMENDMENTS TO TRUST AGREEMENT. Copies of any and all
amendments, modifications and other changes to the Trust Agreement since last
delivered to the Secured Party on February 28, 2001.
(d) OTHER. Such other documents as the Secured Party may
reasonably request.
11.2. NO DEFAULT. As of the closing date, no Event of Default or
Default under the Loan Documents or any event that would accelerate the payment
of the Liabilities (as defined in the Trust Pledge Agreement) under the Trust
Pledge Agreement shall have occurred and be continuing.
11.3. REPRESENTATIONS AND WARRANTIES. As of the closing date, the
representations and warranties in the Credit Agreement, in the Loan Documents
and in SECTION 2 of this Amendment shall be true and correct as though made on
such date, except for such changes as are specifically permitted under the
Credit Agreement, the Loan Documents or the Trust Pledge Agreement.
12. GENERAL.
12.1. LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
12.2. SUCCESSORS. This Amendment shall be binding upon the Debtor
and the Secured Party and their respective successors and assigns, and shall
inure to the benefit of the Debtor and the Secured Party and the successors and
assigns of the Secured Party.
12.3. CONFIRMATION OF THE TRUST PLEDGE AGREEMENT. The Trust Pledge
Agreement, as amended hereby, remains in full force and effect and is hereby
ratified and confirmed in all respects. By execution of this Amendment, the
Debtor acknowledges and consents to the amendment and restatement of the Prior
Credit Agreement into the Credit Agreement and agrees that all Liabilities under
the Trust
Page 73 of 82 Pages
Pledge Agreement include all Obligations now existing and hereafter arising
under the Credit Agreement and the other Loan Documents
12.4. REFERENCES TO THE TRUST PLEDGE AGREEMENT. On the Effective
Date, each reference in the Trust Pledge Agreement to "this Agreement", or
"herein" and each reference in the Credit Agreement and the other Loan Documents
to the "Trust Pledge Agreement" or like references shall be deemed to refer to
the Trust Pledge Agreement, as amended hereby.
12.5. COUNTERPARTS. This Amendment may be executed in any number
of counterparts, and any party hereto may execute one or more such counterparts,
all of which shall constitute one and the same Amendment. Delivery of an
executed counterpart of this Amendment by facsimile shall be as effective as
delivery of a manually executed counterpart of this Amendment.
(SIGNATURE PAGE FOLLOWS)
Page 74 of 82 Pages
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed at Chicago, Illinois as of the date first written above.
WALLACE E. AND LELIA H. CARROLL TRUST U/A
DATED MAY 1, 1958 FOR THE BENEFIT OF WALLACE
E. CARROLL, JR.
By:
-----------------------------------------
Wallace E. Carroll, Jr., as Co-Trustee
By:
-----------------------------------------
Amelia M. Carroll, as Co-Trustee
By:
-----------------------------------------
Philip E. Johnson, as Co-Trustee
THE NORTHERN TRUST COMPANY
By:
-----------------------------------------
Title
---------------------------------------
Page 75 of 82 Pages
Dated as of August 31, 2001
Wallace E. Carroll, Jr.
CRL, Inc.
Wallace E. and Lelia H. Carroll Trust U/A May 1, 1958
for the benefit of Wallace E. Carroll, Jr.
7505 Village Square Drive
Suite 200
Castle Rock, Colorado 80104
Attn: Jonathan P. Johnson, President
Re: Voting of Katy Industries Common Stock
Ladies and Gentlemen:
It is our understanding that certain shareholders of Katy Industries, Inc.,
a Delaware corporation ("KATY"), including Wallace E. Carroll, Jr. ("CARROLL"),
CRL, Inc., a Delaware corporation ("CRL") and Wallace E. Carroll, Jr., and
Amelia M. Carroll, not individually but solely as trustees under Trust Agreement
dated May 1, 1958, as amended from time to time and known as the Wallace E. and
Lelia H. Carroll Trust for the benefit of Wallace E. Carroll, Jr. (the trustees
in their capacities as trustees under said trust and said trust, each and
collectively, referred to herein as the "Trust;" and, together with CRL, Carroll
and the other shareholders, the "SHAREHOLDERS"), have entered into that certain
Stock Voting Agreement with KKTY Holding Company, L.L.C., a Delaware limited
liability company ("KKTY"), dated as of June 2, 2001 (the "EFFECTIVE DATE"), a
fully executed copy of which is attached hereto (the "STOCK VOTING AGREEMENT"),
pursuant to which the Shareholders have jointly and severally agreed to vote (or
cause to be voted) 2,480,000 shares of common stock, $1 par value, of Katy
("COMMON STOCK") owned (whether of record or beneficially) by the Shareholders
as of the Effective Date (the "SECURITIES") with respect to certain questions
that may be put to the Shareholders, in each case, in accordance with the terms
and conditions of the Stock Voting Agreement (the "VOTE").
Also pursuant to the Stock Voting Agreement, each Shareholder has
severally, and not jointly:
1) appointed KKTY, and any designee of KKTY, each of them individually,
such Shareholder's proxy and attorney-in-fact, with full power of substitution
and resubstitution, to vote, to act by written consent or to request that the
chairman or secretary of Katy call a special meeting of the stockholders, during
the Closing Voting Period (as defined in the Stock Voting Agreement) with
respect to such Shareholder's Securities in accordance with the Vote (the
"PROXY");
2) represented and warranted that any proxies previously given in respect
of such Shareholder's Securities are not irrevocable, and that all such proxies
have been or are revoked (the "REVOCATION"); and
3) covenanted not to request that Katy register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any of
such Shareholder's Securities during the Closing Voting Period, unless such
transfer is made in compliance with the Stock Voting Agreement (the "STOP
TRANSFER").
Page 76 of 82 Pages
Pursuant to that certain Pledge Agreement by and between CRL and The
Northern Trust Company, an Illinois banking corporation ("NORTHERN TRUST"),
dated as of December 31, 1995, as amended, restated, supplemented or otherwise
modified from time to time (the "CRL PLEDGE AGREEMENT"), CRL has pledged certain
shares of Common Stock to Northern Trust ("CRL PLEDGED SHARES") in order to
secure CRL's obligations under that certain Amended and Restated Revolving
Credit Agreement by and between CRL and Northern Trust, dated as of December 9,
1993, as amended, restated, supplemented or otherwise modified from time to time
(the "CREDIT AGREEMENT"). In addition, pursuant to that certain Pledge Agreement
by and between Carroll and Northern Trust dated as of February 28, 2001, as
amended, restated, supplemented or otherwise modified from time to time (the
"CARROLL PLEDGE AGREEMENT"), Carroll has pledged certain shares of Common Stock
to Northern Trust (the "CARROLL PLEDGED SHARES") in order to secure Carroll's
obligations under that certain Guaranty dated as of February 28, 2001 executed
and delivered by Carroll to and in favor of Northern Trust, as amended,
restated, supplemented or otherwise modified from time to time (the "GUARANTY").
Further, pursuant to that certain Pledge Agreement by and between the Trust and
Northern Trust dated as of February 28, 2001, as amended, restated, supplemented
or otherwise modified from time to time (the "TRUST PLEDGE AGREEMENT"), the
Trust has pledged certain shares of Common Stock to Northern Trust (the "TRUST
PLEDGED SHARES"; together with the CRL Pledged Shares and the Carroll Pledged
Shares, the "PLEDGED SHARES") in order to secure obligations of CRL to Northern
Trust under the Credit Agreement and to secure the Trust's obligations under the
Trust Pledge Agreement.
CRL, Carroll and the Trust hereby represent and warrant to Northern Trust
that (i) the Recapitalization (as defined in the Stock Voting Agreement) has
occurred and been consummated in accordance with the terms of the
Recapitalization Agreement (as defined in the Stock Voting Agreement) and
therefore the Proxy, the Revocation and the Stop Transfer are no longer in
effect against the Shareholders and the Closing Voting Period has expired, and
(ii) the only remaining obligation under the Stock Voting Agreement is that of
the Shareholders, during the Convertible Voting Period (as defined in the Stock
Voting Agreement), to vote (or cause to be voted) the Securities in favor of the
election of all directors nominated by Katy's Board of Directors then in office,
including without limitation, each nominee for director designated by KKTY (such
remaining obligation referred to herein as the "CONVERTIBLE VOTING PERIOD
VOTE").
Northern Trust has examined the Stock Voting Agreement and, notwithstanding
any provisions to the contrary in the CRL Pledge Agreement, the Credit
Agreement, the Carroll Pledge Agreement, the Guaranty, the Trust Pledge
Agreement or any other agreement related thereto and delivered in connection
therewith (collectively, the "LOAN AGREEMENTS"), effective as of the date
hereof, hereby approves of and authorizes the Convertible Voting Period Vote,
and hereby agrees to allow to be voted, in such manner as Carroll, CRL, the
Trust or KKTY shall direct, in accordance with the provisions of the Stock
Voting Agreement, so many of the shares of Common Stock as are subject to the
Loan Agreements. Northern Trust further agrees to cooperate with Carroll, CRL,
the Trust and the other Shareholders, at the expense of CRL, Carroll and the
Trust in connection with their respective efforts to fulfill any other
agreements and covenants set forth in the Stock Voting Agreement not
inconsistent with the Loan Agreements and this Letter.
CRL, Carroll and the Trust hereby represent and warrant that none of them,
directly or indirectly, have received any consideration or remuneration in
exchange for entering into the Stock Voting Agreement. This Letter and the
consents herein shall terminate and be deemed withdrawn automatically upon the
expiration of the Convertible Voting Period.
Any failure to comply with the terms of the Stock Voting Agreement shall be
deemed to constitute an immediate event of default or default for purposes of
the Loan Agreements, without further action or notice by Northern Trust and
Northern Trust may declare all obligations under the Loan Agreements immediately
due and payable.
Page 77 of 82 Pages
This Letter shall be binding upon the successors, assigns, heirs, executors
and other legal representatives of the parties hereto. This Letter shall be
governed by and construed in accordance with the internal laws of the State of
Illinois.
This Letter replaces and supercedes that certain letter agreement of
Northern Trust regarding the Stock Voting Agreement, dated as of June 2, 2001,
executed and delivered by Northern Trust and acknowledged and approved by CRL
and Carroll (the "PRIOR LETTER"). The terms, conditions and obligations of each
party to the Prior Letter shall terminate upon this letter being executed by all
parties hereto and this Letter shall control as to the terms, conditions and
obligations herein.
Each reference in the CRL Pledge Agreement, the Carroll Pledge Agreement,
the Trust Pledge Agreement and any other Loan Agreement to the "Letter
Agreement" or like references shall be deemed to refer to this letter dated as
of August 31, 2001.
Sincerely,
THE NORTHERN TRUST COMPANY,
an Illinois banking corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Acknowledged and Approved:
CRL, INC., WALLACE E. CARROLL, JR.
a Delaware corporation
By:
--------------------------------- ------------------------------------
Name: Wallace E. Carroll, Jr.
-------------------------------
Title:
------------------------------
WALLACE E. and LELIA H. CARROLL
TRUST U/A DATED MAY 1, 1958 FBO
WALLACE E. CARROLL, JR.
By:
-----------------------------
Wallace E. Carroll, Jr. as Co-Trustee
Page 78 of 82 Pages
By:
-------------------------------
Amelia M. Carroll, Jr. as Co-Trustee
By:
-------------------------------
Philip E. Johnson, as Co-Trustee
Page 79 of 82 Pages
EXHIBIT F
SCHEDULE 13D JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k) under the Securities Exchange Act of
1934, as amended, the undersigned hereby agree to the joint filing on behalf of
each of them of a Statement on Schedule 13D originally dated January 15, 1992
(including amendments thereto) relating to the common stock of Katy Industries,
Inc. (the "Schedule 13D").
Furthermore, each of the undersigned severally represent that:
(i) Each is eligible to use the schedule on which the information is
filed; and
(ii) Each is responsible for the timely filing of the Schedule 13D and
any amendments thereto and for the completeness and accuracy of
the information concerning such person contained therein;
provided, however, that each such person is not responsible for
the completeness or accuracy of the information concerning the
other persons making the filing, unless such person knows or has
reason to believe that such information is inaccurate.
Each of the undersigned do hereby make, constitute and appoint
Jonathan P. Johnson and Wallace E. Carroll, Jr., individually, as their true and
lawful attorneys-in-fact and do hereby authorize any one of them to file and
execute any amendments to the Schedule 13D on their behalf.
Each of the undersigned agree and acknowledge that this Agreement
shall be filed as an Exhibit to the Schedule 13D.
This Agreement may be executed in one or more counterparts by each of
the undersigned, each of which, taken together, shall constitute but one and the
same instrument.
Dated: May 15, 2002
WALLACE E. CARROLL TRUST
U/A Dated July 1, 1957 F/B/O
Wallace E. Carroll, Jr. and his
descendants
/s/ Wallace E. Carroll, Jr.
--------------------------------------
Wallace E. Carroll, Jr., Trustee
/s/ Amelia M. Carroll
--------------------------------------
Amelia M. Carroll, Trustee
/s/ Philip E. Johnson
--------------------------------------
Philip E. Johnson, Trustee
WALLACE E. AND LELIA H. CARROLL TRUST
U/A Dated May 1, 1958 F/B/O
Wallace E. Carroll, Jr. and his
descendants
/s/ Wallace E. Carroll, Jr.
--------------------------------------
Wallace E. Carroll, Jr., Trustee
Page 80 of 82 Pages
/s/ Amelia M. Carroll
--------------------------------------
Amelia M. Carroll, Trustee
/s/ Philip E. Johnson
--------------------------------------
Philip E. Johnson, Trustee
WALLACE E. CARROLL TRUST
U/A Dated January 20, 1961 F/B/O
Wallace E. Carroll, Jr. and his
descendants
/s/ Wallace E. Carroll, Jr.
--------------------------------------
Wallace E. Carroll, Jr., Trustee
/s/ Amelia M. Carroll
--------------------------------------
Amelia M. Carroll, Trustee
/s/ Philip E. Johnson
--------------------------------------
Philip E. Johnson, Trustee
LELIA H. CARROLL TRUST
U/A Dated July 12, 1962 F/B/O
Wallace E. Carroll, Jr. and his
descendants
/s/ Wallace E. Carroll, Jr.
--------------------------------------
Wallace E. Carroll, Jr., Trustee
/s/ Amelia M. Carroll
--------------------------------------
Amelia M. Carroll, Trustee
/s/ Philip E. Johnson
--------------------------------------
Philip E. Johnson, Trustee
THE WALLACE FOUNDATION
/s/ Wallace E. Carroll, Jr.
--------------------------------------
Wallace E. Carroll, Jr., Trustee
/s/ Amelia M. Carroll
--------------------------------------
Amelia M. Carroll, Trustee
SUBTRUSTS UNDER THE WALLACE E.
CARROLL TRUST
U/A Dated December 20, 1979 F/B/O the
descendants of Wallace E. Carroll, Jr.
/s/ Wallace E. Carroll, Jr.
--------------------------------------
Wallace E. Carroll, Jr., Trustee
/s/ Amelia M. Carroll
--------------------------------------
Amelia M. Carroll, Trustee
/s/ Philip E. Johnson
--------------------------------------
Philip E. Johnson, Trustee
/s/ Wallace E. Carroll, Jr.
--------------------------------------
WALLACE E. CARROLL, JR.
Page 81 of 82 Pages
/s/ Amelia M. Carroll
--------------------------------------
AMELIA M. CARROLL
CRL, INC.
/s/ Jonathan P. Johnson
--------------------------------------
Jonathan P. Johnson, President
Page 82 of 82 Pages