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EXHIBIT 4.5
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LOAN AND SECURITY AGREEMENT
Dated as of September 30, 1999
$65,000,000
THE LENDERS NAMED HEREIN,
as Lenders
and
FLEET CAPITAL CORPORATION,
as Agent and Lender
and
NORTHWESTERN STEEL AND WIRE COMPANY,
as Borrower
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TABLE OF CONTENTS
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SECTION 1. CREDIT FACILITY...........................................1
1.1 Revolving Credit Loans..................................1
1.2 Letters of Credit; LC Guaranties........................3
SECTION 2. INTEREST, FEES AND CHARGES................................4
2.1 Interest................................................4
2.2 Computation of Interest and Fees........................5
2.3 LIBOR Option............................................5
2.4 Letter of Credit and LC Guaranty Fees...................6
2.5 Unused Line Fee.........................................7
2.6 Intentionally Omitted...................................7
2.7 Audit and Appraisal Fees................................7
2.8 Reimbursement of Expenses...............................7
2.9 Bank Charges............................................8
2.10 Capital Adequacy Charge.................................8
2.11 Payment of Charges......................................9
SECTION 3. LOAN ADMINISTRATION.......................................9
3.1 Manner of Borrowing Revolving Credit Loans..............9
3.2 Payments...............................................10
3.3 Mandatory Repayments...................................12
3.4 Application of Payments and Collections................12
3.5 All Loans to Constitute One Obligation.................12
3.6 Loan Account...........................................13
3.7 Statements of Account..................................13
SECTION 4. TERM AND TERMINATION.....................................13
4.1 Term of Agreement......................................13
4.2 Termination............................................13
SECTION 5. SECURITY INTERESTS.......................................14
5.1 Security Interest in Collateral........................14
5.2 Lien Perfection; Further Assurances....................15
5.3 Safekeeping of Collateral..............................15
5.4 Lien on Realty.........................................16
SECTION 6. COLLATERAL ADMINISTRATION................................16
6.1 General................................................16
6.2 Administration of Accounts.............................17
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6.3 Administration of Inventory...........................18
6.4 Administration of Equipment...........................19
6.5 Payment of Charges....................................19
SECTION 7. REPRESENTATIONS AND WARRANTIES..........................19
7.1 General Representations and Warranties................19
7.2 Continuous Nature of Representations and Warranties...25
7.3 Survival of Representations and Warranties............25
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS.....................25
8.1 Affirmative Covenants.................................25
8.2 Negative Covenants....................................28
SECTION 9. CONDITIONS PRECEDENT....................................33
9.1 Documentation.........................................33
9.2 No Default............................................33
9.3 Other Loan Documents..................................33
9.4 Availability..........................................33
9.5 No Litigation.........................................33
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.......33
10.1 Events of Default.....................................33
10.2 Acceleration of the Obligations.......................36
10.3 Other Remedies........................................36
10.4 Remedies Cumulative; No Waiver........................37
SECTION 11. AGENT...................................................38
11.1 Power of Attorney; Authorization and Action...........38
11.2 Agent's Reliance, Etc.................................38
11.3 FCC and Affiliates....................................38
11.4 Lender Credit Decision................................39
11.5 Indemnification.......................................39
11.6 Successor Agent.......................................39
SECTION 12. MISCELLANEOUS...........................................40
12.1 Power of Attorney.....................................40
12.2 Indemnity.............................................41
12.3 Modification of Agreement; Sale of Interest...........41
12.4 Severability..........................................44
12.5 Successors and Assigns................................44
12.6 Cumulative Effect; Conflict of Terms..................44
12.7 Execution in Counterparts.............................45
12.8 Notice................................................45
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12.9 Time of Essence.......................................46
12.10 Entire Agreement......................................46
12.11 Interpretation........................................46
12.12 Confidentiality.......................................46
12.13 GOVERNING LAW; CONSENT TO FORUM.......................46
12.14 WAIVERS BY BORROWER...................................47
12.15 Publicity.............................................48
12.16 DIP Facility and Exit Facility........................48
12.17 Term Debt.............................................49
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made as of this 30th day of September,
1999, by and between NORTHWESTERN STEEL AND WIRE COMPANY, an Illinois
corporation, with its chief executive office and principal place of business at
000 Xxxxxxx Xxxxxx, X.X. Xxx 000, Xxxxxxxx, Xxxxxxxx 00000; the lenders who are
signatories hereto ("Lenders"); and FLEET CAPITAL CORPORATION ("FCC"), a Rhode
Island corporation with an office at Xxx Xxxxx Xxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000, as agent for Lenders hereunder ("FCC", in such
capacity, being "Agent"). Capitalized terms used in this Agreement have the
meanings assigned to them in Appendix A, General Definitions. Accounting terms
not otherwise specifically defined herein shall be construed in accordance with
GAAP consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders agree to make a credit facility of up to Sixty-Five Million
Dollars ($65,000,000) available upon Borrower's request therefor, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. (A) Loans and Reserves. The aggregate
amount of the Revolving Credit Loans to be made by each Lender (such Lender's
"Revolving Credit Loan Commitment"), pursuant to the terms hereof, shall be the
amount set below such Lender's name on the signature pages hereof. The
aggregate principal amount of the Revolving Credit Loan Commitments is
Sixty-Five Million Dollars ($65,000,000). The percentage equal to the quotient
of (x) each Lender's Revolving Credit Loan Commitment, divided by (y) the
aggregate of all Revolving Credit Loan Commitments, is that Lender's "Revolving
Credit Percentage". Subject to all of the terms and conditions of this
Agreement, each Lender agrees, for so long as no Default or Event of Default
exists, to make Revolving Credit Loans to Borrower from time to time, as
requested by Borrower in accordance with the terms of Section 3.1 hereof, up to
a maximum principal amount at any time outstanding equal to the product of (A)
the Borrowing Base at such time multiplied by (B) such Lender's Revolving
Credit Percentage. It is expressly understood and agreed that Agent and Lenders
may use the Borrowing Base as a maximum ceiling on Revolving Credit Loans
outstanding to Borrower at any time. If the unpaid balance of the Revolving
Credit Loans should exceed the ceiling so determined or any other limitation
set forth in this Agreement, such Revolving Credit Loans shall nevertheless
constitute Obligations that are secured by the Collateral and entitled to all
the benefits thereof. In no event shall Lenders be required to make a Revolving
Credit Loan at any time that there exists a Default or an Event of Default.
Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as Agent shall deem reasonably necessary or
appropriate, against the amount of Revolving Credit Loans which Borrower may
otherwise request under this Section 1.1.1., including, without limitation,
with respect to (i) price
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adjustments, damages, unearned discounts, returned products or other matters for
which credit memoranda are issued in the ordinary course of Borrower's business;
(ii) shrinkage, spoilage and obsolescence of Inventory; (iii) slow moving
Inventory; (iv) other sums chargeable against Borrower's Loan Account as
Revolving Credit Loans under any section of this Agreement; (v) amounts owing by
Borrower to any Person to the extent secured by a Lien on, or trust over, any
Property of Borrower; and (vi) such other matters, events, conditions or
contingencies as to which Agent, in its commercially reasonable judgment,
determines reserves should be established from time to time hereunder.
(B) The Revolving Credit Loans shall be evidenced by promissory notes
to be executed and delivered by Borrower at the time of the initial Revolving
Credit Loan, the form of which is attached hereto and made a part hereof as
Exhibit A (the "Revolving Credit Notes"). Each Revolving Credit Note shall be
payable to the order of a Lender and shall represent the obligation of Borrower
to pay the amount of such Lender's Revolving Credit Loan Commitment or, if less,
the aggregate unpaid principal amount of all Revolving Credit Loans made by such
Lender to Borrower with interest thereon as prescribed in Section 2.1.1.
(C) Insofar as Borrower may request and Lenders may be willing in
their sole and absolute discretion to make Revolving Credit Loans to Borrower at
a time when the unpaid balance of Revolving Credit Loans exceeds, or would
exceed with the making of any such Revolving Credit Loan, the Borrowing Base
(any such Loan or Loans being herein referred to individually as an
"Overadvance" and collectively as "Overadvances"), Agent shall enter such
Overadvances as debits in the Loan Account. All Overadvances shall be repaid on
demand, shall be secured by the Collateral and shall bear interest as provided
in this Agreement for Revolving Credit Loans generally. Any Overadvance to be
made by Lenders pursuant to the terms hereof shall be made by Lenders ratably in
accordance with their Revolving Credit Percentages. Overadvances in the
aggregate amount of Five Hundred Thousand Dollars ($500,000) or less may, unless
a Default or Event of Default has occurred and is continuing, be made in the
sole and absolute discretion of Agent. Overadvances in an aggregate amount of
more than Five Hundred Thousand Dollars ($500,000) but less than One Million
Dollars ($1,000,000) may, unless a Default or an Event of Default has occurred
and is continuing, be made in the sole and absolute discretion of Required
Lenders. Overadvances in an aggregate amount of One Million Dollars ($1,000,000)
or more and Overadvances to be made after the occurrence and during the
continuation of a Default or an Event of Default shall require the consent of
all Lenders. The forgoing notwithstanding, in no event, unless otherwise
consented to by all Lenders, (x) shall any Overadvances be outstanding for more
than sixty (60) consecutive days, (y) after all outstanding Overadvances have
been repaid, shall Agent or Lenders make any additional Overadvances unless
sixty (60) days or more have expired since the last date on which any
Overadvances were outstanding or (z) shall Overadvances be outstanding on more
than ninety (90) days within any one hundred eighty day (180) period.
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1.1.2 Use of Proceeds. The Revolving Credit Loans shall be used
solely for the payment of Borrower's existing Indebtedness for Money Borrowed
and for Borrower's general operating and capital needs and for other corporate
purposes in a manner consistent with the provisions of this Agreement and all
applicable laws.
1.2 Letters of Credit; LC Guaranties.
(A) Subject to all of the terms and conditions of this Agreement,
if requested to do so by Borrower, Agent shall, on behalf of Lenders, issue
its, or cause to be issued Bank's Letters of Credit for the account of Borrower
or shall execute LC Guaranties by which Lenders shall guaranty the payment or
performance by Borrower of its reimbursement obligation with respect to Letters
of Credit issued for Borrower's account by Bank or Agent; provided that the
aggregate face amount of all Letters of Credit and LC Guaranties outstanding at
any time shall not exceed Twenty-Five Million Dollars ($25,000,000) and no
Letter of Credit may have an expiration date that is after sixty days prior to
the Commitment Termination Date, unless Borrower provides, on or prior to the
Commitment Termination Date, Agent with cash collateral for said Letter of
Credit or LC Guaranty, in a manner and amount acceptable to Agent. Further, the
expiration date of any Trade Letter of Credit shall be not more than 180 days
after the issuance thereof and the expiration date of any Standby Letter of
Credit shall not be more than one year after the date of issuance thereof
(although any such Standby Letter of Credit shall be renewable for an
additional one-year period in accordance with the terms hereof). Any amounts
paid by Agent or any Lender under any LC Guaranty or in connection with any
Letter of Credit (i) shall become part of the Obligations, (ii) unless paid by
Borrower pursuant to Section 1.2(C) below, shall be paid from the proceeds of a
Revolving Credit Loan requested pursuant to Section 3.1.1 below, to the extent
Lenders are required to make Revolving Credit Loans pursuant to the terms
hereof and (iii) otherwise, shall be payable on demand. In no event shall
Agent, Bank or Lenders be required to issue or cause to be issued Letters of
Credit or LC Guaranties at any time there exists a Default or an Event of
Default.
(B) Immediately upon the issuance of each Letter of Credit by
Agent or Bank or LC Guaranty by Agent hereunder, each Lender shall be deemed to
have automatically, irrevocably and unconditionally purchased from Agent an
undivided interest and participation in and to such Letter of Credit or
LC Guaranty, the obligations of Borrower in respect thereof and the liability
of Agent thereunder in an amount equal to the amount available for drawing
under such Letter of Credit or, in the case of a LC Guaranty, the amount
guaranteed thereunder, multiplied by such Lender's Revolving Credit Percentage.
Agent will notify each Lender promptly upon presentation to it of a draw under
a Letter of Credit or a demand for payment under a LC Guaranty. On a weekly
basis, or more frequently if requested by Agent, each Lender shall make payment
to Agent in immediately available funds, of an amount equal to such Lender's
pro rata share of the amount of any payment made by Agent in respect to any
Letter of Credit or LC Guaranty. The obligation of each Lender to reimburse
Agent under this Section 1.3 shall be unconditional, continuing, irrevocable
and absolute, except in respect of indemnity claims arising out of Agent's
wilful misconduct. In the event that any Lender fails to make payment to Agent
of any amount due under this Section 1.3, Agent shall be entitled to receive,
retain and apply against such obligation the principal and interest
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otherwise payable to such Lender hereunder until Agent receives such payment
from such Lender or such obligation is otherwise fully satisfied; provided,
however, that nothing contained in this sentence shall relieve such Lender of
its obligation to reimburse the Agent for such amount in accordance with this
Section 1.3(B).
(C) Borrower agrees, unconditionally, irrevocably and absolutely, to
pay immediately to Agent, for the account of Lenders, the amount drawn under a
Letter of Credit or paid pursuant to a LC Guaranty. If Borrower at any time
fails to make such payment in accordance with the terms of this Agreement,
Borrower shall be deemed to have elected to borrow from the Lenders on such date
Revolving Credit Loans equal in aggregate amount to the amount paid by Agent or
the issuing Lender, as the case may be, under such Letter of Credit or LC
Guaranty. The provisions of Section 1.2(A) and (B) notwithstanding, in the event
that any Lender is prohibited by any Legal Requirement from issuing or
participating in any LC Guaranty (or portion thereof), then Agent shall issue
such LC Guaranty (or such Lender's portion thereof) in lieu of such Lender and
such Lender shall not be deemed to have a participation therein. In such event,
any payments received by Agent pursuant to Section 1.2(C) of the Loan Agreement
which would otherwise be paid by Agent to such Lender shall be retained by Agent
to reimburse Agent for any amounts paid by Agent in respect to the LC Guaranty
(or portion thereof) Agent issued in lieu of such Lender.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rate of Interest. Interest shall accrue on the principal amount
of the Base Rate Revolving Credit Portion outstanding at the end of each day at
a fluctuating rate per annum equal to the Base Rate plus the Applicable Margin.
Said rate of interest shall increase or decrease by an amount equal to any
increase or decrease in the Base Rate, effective as of the opening of business
on the day that such change in the Base Rate occurs. If Borrower properly
exercises the LIBOR Option as provided in Section 2.3, interest shall accrue on
the principal amount of the LIBOR Revolving Credit Portion outstanding at the
end of each day at a rate per annum equal to the Applicable Margin plus the
LIBOR Rate applicable to each LIBOR Revolving Credit Portion for the
corresponding LIBOR Period.
2.1.2 Default Rate of Interest. At the option of Agent or Required
Lenders, upon and after the occurrence of an Event of Default, and during the
continuation thereof, the principal amount of all Loans shall bear interest at a
rate per annum equal to 2.0% plus the interest rate otherwise applicable thereto
(the "Default Rate") and the LC Percent shall be increased by an amount equal to
2% per annum.
2.1.3 Maximum Interest. In no event whatsoever shall the aggregate of
all amounts deemed interest hereunder or under the Revolving Credit Notes and
charged or collected pursuant to the terms of this Agreement exceed the highest
rate permissible under any law which a court of competent jurisdiction shall, in
a final determination, deem applicable hereto. If any provisions of
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this Agreement are in contravention of any such law, such provisions shall be
deemed amended to conform thereto.
2.2 Computation of Interest and Fees. Interest, Letter of Credit and LC
Guaranty fees and unused line fees hereunder shall be calculated daily and shall
be computed on the actual number of days elapsed over a year of 360 days. For
the purpose of computing interest hereunder, all items of payment received by
Agent shall be deemed applied by Agent on account of the Obligations (subject to
final payment of such items) as set forth in the letter agreement between Agent
and Borrower of even date herewith.
2.3 LIBOR Option.
(i) Upon the conditions that: (1) Agent shall have received a
LIBOR Request from Borrower at least 3 Business Days prior to the first day
of the LIBOR Period requested, (2) there shall have occurred no change in
applicable law which would make it unlawful for any Lender to obtain
deposits of U.S. dollars in the London interbank foreign currency deposits
market, (3) as of the date of the LIBOR Request and the first day of the
LIBOR Period, there shall exist no Default or Event of Default, (4) Agent
is able to determine the LIBOR Rate in respect of the requested LIBOR
Period or each Lender is able to obtain deposits of U.S. dollars in the
London interbank foreign currency deposits market in the applicable amounts
and for the requested LIBOR Period, and (5) as of the first date of the
LIBOR Period, there are no more than four outstanding LIBOR Revolving
Credit Portions including the LIBOR Revolving Credit Portion being
requested; then interest on the LIBOR Revolving Credit Portion requested
during the LIBOR Period requested will be based on the applicable LIBOR
Rate.
(ii) Each LIBOR Request shall be irrevocable and binding on
Borrower. Borrower shall indemnify Lenders for any loss, penalty or expense
incurred by Lenders due to failure on the part of Borrower to fulfill, on
or before the date specified in any LIBOR Request, the applicable
conditions set forth in this Agreement or due to the prepayment of the
applicable LIBOR Revolving Credit Portion prior to the last day of the
applicable LIBOR Period, including, without limitation, any loss (excluding
loss of anticipated profits) or expense incurred by reason of the
liquidation or redeployment of deposits or other funds acquired by Lenders
to fund or maintain the requested LIBOR Revolving Credit Portion.
(iii) If any Legal Requirement shall (1) make it unlawful for any
Lender to fund through the purchase of U.S. dollar deposits any LIBOR
Revolving Credit Portion or otherwise give effect to its obligations as
contemplated under this Section 2.3, or (2) shall impose on any Lender any
costs based on or measured by the excess above a specified level of the
amount of a category of deposits or other liabilities of such Lender which
includes deposits by reference to which the LIBOR Rate is determined as
provided herein or a category of extensions of credit or other assets of
such Lender which includes any LIBOR Revolving Credit Portion or (3) shall
impose on such Lender any restrictions (not already
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taken into account under statutory reserves) on the amount of such a
category of liabilities or assets which such Lender may hold, then, in each
such case, Agent may, by notice thereof to Borrower, terminate the LIBOR
Option. Any LIBOR Revolving Credit Portion subject thereto shall
immediately bear interest thereafter at the rate and in the manner provided
for the Base Rate Revolving Credit Portions pursuant to Section 2.1.1.
Borrower shall indemnify any such Lender against any loss, penalty or
expense incurred by such Lender due to liquidation or redeployment of
deposits or other funds acquired such Lender to fund or maintain any LIBOR
Revolving Credit Portion that is terminated under this paragraph.
(iv) Each Lender shall receive payments of amounts of principal
of and interest with respect to the LIBOR Revolving Credit Portions free
and clear of, and without deduction for, any Taxes. If (1) any Lender shall
be subject to any Tax in respect of any LIBOR Revolving Credit Portion or
any part thereof or (2) Borrower shall be required to withhold or deduct
any Tax from any such amount, the LIBOR Rate applicable to such LIBOR
Revolving Credit Portion shall be adjusted by Agent to reflect all
additional costs incurred by such Lender in connection with the payment by
such Lender or the withholding by Borrower of such Tax and such Borrower
shall provide Agent with a statement detailing the amount of any such Tax
actually paid by Borrower. Determination by Agent of the amount of such
costs shall, in the absence of manifest error, be conclusive. If after any
such adjustment any part of any Tax paid by any such Lender is subsequently
recovered by such Lender, such Lender shall reimburse Borrower to the
extent of the amount so recovered. A certificate of an officer of the
effected Lender setting forth the amount of such recovery and the basis
therefor shall, in the absence of manifest error, be conclusive.
(v) Each Lender agrees to take such actions as may be
commercially reasonable to mitigate the adverse effects to Borrower as
provided in clauses (iii) and (iv) of Section 2.3 above or Section 2.9
below; provided that no Lender shall be required to incur any costs or
expense in respect to any such mitigation.
2.4 Letter of Credit and LC Guaranty Fees. Borrower shall pay to Agent for
the ratable benefit of Lenders in respect to fees, for Agent's or Bank's benefit
in respect to issuance charges:
(i) for Standby Letters of Credit and LC Guaranties of Standby
Letters of Credit, a fee equal to the annualized LC Percent of the
aggregate face amount of such Letters of Credit and LC Guaranties
outstanding from time to time during the term of this Agreement, plus all
normal and customary charges associated with the issuance thereof as set
forth on Exhibit T hereof. Said fees shall be payable on the first calendar
day of each month (for the immediately preceding month) computed through
the last day of the preceding month; provided that such normal and
customary charges shall be payable upon the issuance of such Letter of
Credit or LC Guaranty or as when advised by Agent pursuant to Exhibit T.
All such fees and charges shall be deemed fully earned and shall be due and
payable upon issuance of each such Letter of Credit or LC Guaranty and
shall not be subject to rebate or proration upon the termination of this
Agreement for any reason; and
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(ii) for Trade Letters of Credit and LC Guaranties of Trade
Letters of Credit, a fee equal to the annualized LC Percent of the face
amount of each such Letter of Credit or LC Guaranty, plus the normal and
customary charges associated with the issuance thereof as set forth on
Exhibit T hereof. Said fees shall be payable on the first calendar day of
each month (for the immediately preceding month) computed through the last
day of the preceding month; provided that such normal and customary charges
shall be payable upon the issuance of such Letter of Credit or LC Guaranty
or as when advised by Agent pursuant to Exhibit T. All of such fees and
charges shall be fully earned and due and payable upon issuance, renewal or
extension (as the case may be) of each such Letter of Credit or LC
Guaranty, and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason.
2.5 Unused Line Fee. Borrower shall pay to Agent for the ratable benefit of
Lenders a fee equal to the Applicable Margin per annum of the average daily
amount by which the Maximum Revolving Loan exceeds the sum of the outstanding
principal balance of the Revolving Credit Loans plus the LC Amount. The unused
line fee shall be payable monthly in arrears on the first day of each calendar
month hereafter.
2.6 Intentionally Omitted.
2.7 Audit and Appraisal Fees. Borrower shall pay to Agent reasonable audit
and appraisal fees in accordance with Agent's current schedule of fees in effect
from time to time in connection with audits and appraisals of Borrower's books
and records and such other matters as Agent shall deem appropriate, plus all
out-of-pocket expenses incurred by Agent in connection with such audits and
appraisals. Audit fees shall be payable on the first day of the month following
the date of issuance by Agent of a request for payment thereof to Borrower.
2.8 Reimbursement of Expenses.
2.8.1 Administration and Enforcement Expenses. If, at any time or
times regardless of whether or not an Event of Default then exists, Agent, any
Lender (in respect to clauses (iii) and (iv) only) or any Participating Lender
(in respect to clauses (iii) and (iv) only) incurs legal or accounting expenses
or any other costs or out-of-pocket expenses in connection with (i) the
negotiation and preparation of this Agreement or any of the other Loan
Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents (ii) the administration of this Agreement or any of the
other Loan Documents and the transactions contemplated hereby and thereby; (iii)
any litigation, contest, dispute, suit, proceeding or action (whether instituted
by Agent, any Lender, Borrower or any other Person) in any way relating to the
Collateral, this Agreement or any of the other Loan Documents or Borrower's
affairs; (iv) any attempt to enforce any rights of Agent, any Lender or any
Participating Lender against Borrower or any other Person which may be obligated
to Agent or any Lender by virtue of this Agreement or any of the other Loan
Documents, including, without limitation, the Account Debtors; or (v) any
attempt to inspect, verify, protect,
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preserve, restore, collect, sell, liquidate or otherwise dispose of or realize
upon the Collateral; then all such legal and accounting expenses, other costs
and out-of-pocket expenses of Agent, any Lender or any Participating Lender
shall be charged to Borrower. All amounts chargeable to Borrower under this
Section 2.8 shall be Obligations secured by all of the Collateral, shall be
payable on demand to Agent, Lender or to such Participating Lender, as the case
may be, and shall bear interest from the date such demand is made until paid in
full at the rate applicable to Base Rate Revolving Credit Portions from time to
time. Costs and expenses charged to Borrower pursuant to this Section 2.8.1
shall not be duplicative of costs and expenses charged to Borrowers pursuant to
Section 2.7 above. The foregoing notwithstanding, Borrower shall not be required
to reimburseAgent, any Lender or any Participating Lender for any expenses or
costs incurred by Agent, such Lender or such Participating Lender in any
litigation, contest, dispute, suit, proceeding or action in which Borrower,
pursuant to a final non-applicable order from a court of competent jurisdiction,
are the prevailing party.
2.8.2 Collateral Protection Expenses. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
state, federal, or local authority on any of the Collateral or in respect of the
sale thereof shall be borne and paid by Borrower. If Borrower fails to promptly
pay any portion thereof when due, Agent may, at its option, but shall not be
required to, pay the same and charge Borrower therefor.
2.9 Bank Charges. Borrower shall pay to Agent, on demand, any and all
fees, costs or expenses which Agent, any Lender or any Participating Lender
pays to a bank or other similar institution (including, without limitation, any
fees paid by Agent or any Lender to any Participating Lender) arising out of or
in connection with (i) the forwarding to any Borrower or any other Person
on behalf of Borrower, by Agent, any Lender or any Participating Lender, of
proceeds of loans made by Lenders to Borrower pursuant to this Agreement and
(ii) the depositing for collection, by Agent, any Lender or any Participating
Lender, of any check or item of payment received or delivered to Agent, any
Lender or any Participating Lender on account of the Obligations.
2.10 Capital Adequacy Charge. In the event that any Lender (an
"Affected Lender") shall have determined that the adoption (effected after the
date hereof) of any law, rule or regulation regarding capital adequacy, or any
change therein or in the interpretation or application thereof or compliance by
any such Affected Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) from any central bank or
governmental authority, does or shall have the effect of reducing the rate of
return on such Affected Lender's capital as a consequence of its obligations
hereunder to a level below that which such Affected Lender could have achieved
but for such adoption, change or compliance (taking into consideration such
Affected Lender's policies with respect to capital adequacy) by an amount deemed
by such Affected Lender, in its reasonable discretion, to be material, then from
time to time, after submission by such Affected Lender to Borrower of a written
demand therefor, which demand shall be made within sixty (60) days of such
reduction, Borrower shall pay to such Affected Lender such additional amount or
amounts as will compensate such Affected Lender for such reduction. A
certificate of such Affected
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Lender claiming entitlement to payment as set forth above shall be conclusive in
the absence of manifest error. Such certificate shall set forth the nature of
the occurrence giving rise to such payment, the additional amount or amounts to
be paid to such Affected Lender, and the method by which such amounts were
determined. In determining such amount, such Affected Lender may use any
reasonable averaging and attribution methods. Each Lender and Agent agrees to
allocate any such cost increase among its similarly situated customers in good
faith and on an equitable basis; provided, however, that any such Affected
Lender shall not be entitled to such amounts unless similar assessments are
imposed by such Affected Lender on other comparable borrowers of such Affected
Lender. In the event that the provisions of this Section 2.10 or Section 2.3
(iv) result in the effective interest rates being charged to Borrower being
increased, on a per annum basis, by more than one quarter percent (1/4%),
Borrower may require any such Affected Lender or any Lender subject to a Tax
under Section 2.3(iv) to sell and transfer all its interest in this Agreement
and its Revolving Credit Notes to a substitute Lender (who shall be reasonably
acceptable to Agent) for a price in cash equal to principal balance of such
Affected or other Lender's outstanding Loans plus all accrued but unpaid
interest thereon plus all accrued but unpaid fees due any such Affected or other
Lender under the terms hereof. Any such sale and transfer shall be made pursuant
to the terms of Section 11.3 hereof. Any Lender who becomes an Affected Lender
or who incurs additional Taxes in respect to Section 2.3(iii) or 2.3 (iv) above,
shall give Borrower prompt written notice of such fact.
2.11 Payment of Charges. All amounts chargeable to Borrower under Section 2
and under Section 6.1.3 hereof shall be Obligations secured by all of the
Collateral, shall be payable on demand and shall bear interest from the date
such advance was made until paid in full at the rate applicable to Base Rate
Revolving Credit Portions from time to time.
SECTION 3. LOAN ADMINISTRATION
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under the
credit facility established pursuant to Section 1 hereof shall be as follows:
3.1.1 Loan Requests. A request for a Revolving Credit Loan shall be
made, or shall be deemed to be made, in the following manner: (i) Borrower may
give Agent a Notice of Revolving Credit Loan, in which notice Borrower shall
specify the amount of the proposed borrowing and the proposed borrowing date,
provided, however, that no such request may be made at a time when there exists
a Default or an Event of Default; and (ii) the becoming due of any amount
required to be paid under this Agreement, whether as interest or for any other
Obligation, shall be deemed irrevocably to be a request for a Revolving Credit
Loan on the due date in the amount required to pay such interest or other
Obligation. As an accommodation to Borrower, Agent may permit telephonic
requests for loans and electronic transmittal of instructions, authorizations,
agreements or reports to Agent by Borrower. Unless Borrower specifically directs
Agent in writing not to accept or act upon telephonic or electronic
communications from Borrower, Agent shall have no liability to Borrower for any
loss or damage suffered by any Borrower as a result of Agent's honoring of any
requests, execution of any instructions, authorizations or agreements or
reliance on any reports communicated
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to it telephonically or electronically and purporting to have been sent to Agent
by Borrower and Agent shall have no duty to verify the origin of any such
communication or the authority of the person sending it. Except as otherwise
provided in Section 2.3, each Revolving Credit Loan shall be made on notice,
given not later than 11:00 a.m. (Chicago time) on the Business Day of the
proposed Revolving Credit Loan, by Borrower to Agent, which shall give to each
Lender prompt written notice thereof by telecopier, telex or cable. Each such
notice (a "Notice of Revolving Credit Loan") shall be in writing or by telephone
to Agent at 000-000-0000 confirmed immediately in writing, specifying therein
the requested date and amount of such Revolving Credit Loan. Each Lender shall,
not later than 2:00 p.m. (Chicago time) on each requested date, wire to a bank
designated by Agent the amount of that Lender's Revolving Credit Percentage of
the requested Revolving Credit Loan. Agent shall, before 2:30 p.m. (Chicago
time) on the date of the proposed Revolving Credit Loan, subject to the
provisions hereof, wire to a bank designated by Borrower and reasonably
acceptable to Agent, the amount of such Revolving Credit Loan to the extent
received from the Lenders. The failure of any Lender to make the Revolving
Credit Loan to be made by it shall not relieve any other Lender of its
obligation hereunder to make its Revolving Credit Loan. Neither Agent nor any
other Lender shall be responsible for the failure of any other Lender to make
the Revolving Credit Loan to be made by such other Lender.
If at any time one or more Lenders refuse or fail to make a requested
Revolving Credit Loan when all conditions to a Revolving Credit Loan have been
satisfied or waived, then Agent may, at its option, but shall have no obligation
whatsoever to, purchase all, but not less than all, of the Revolving Credit
Notes held by the Lender(s) who so fail or refuse, and to assume such Lender's
commitments to make Revolving Credit Loans and each such Lender shall be
obligated to sell and transfer such Revolving Credit Notes to Agent for a price
in cash equal to the principal balance outstanding plus all accrued but unpaid
interest thereon plus all accrued but unpaid fees due any such Lender under the
terms hereof, and the foregoing provisions of this Section will be applicable to
Agent with respect to the Revolving Credit Notes so purchased by it. Any such
purchase, however, shall not relieve any such Lender from any breach of contract
claims available to Agent and/or Borrower against such Lender as a result of its
failure to make any such Revolving Credit Loan.
3.1.2 Disbursement. Borrower hereby irrevocably authorizes Agent to
disburse the proceeds of each Revolving Credit Loan requested, or deemed to be
requested, pursuant to this Section 3.1.2 as follows: (i) the proceeds of each
Revolving Credit Loan shall be disbursed by Agent in lawful money of the United
States of America in immediately available funds, in the case of the initial
Revolving Credit Loan, in accordance with the terms of the written disbursement
letter from Borrower, and in the case of each subsequent borrowing, by wire
transfer to such bank account as may be agreed upon by Borrower and Agent from
time to time or elsewhere if pursuant to a written direction from Borrower; and
(ii) the proceeds of each Revolving Credit Loan requested under Section
3.1.1(ii) shall be disbursed by Agent by way of direct payment of the relevant
interest or other Obligation.
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3.1.3 Letter of Credit and LC Guaranty Requests. A request for a
Letter of Credit or LC Guaranty shall be made in the following manner: Borrower
may give Agent and Bank a written notice of its request for the issuance of a
Letter of Credit or LC Guaranty, not later than 11:00 a.m. Chicago time, one
Business Day before the proposed issuance date thereof, in which notice Borrower
shall specify the proposed issuer and issuance date; provided, that no such
request may be made at a time when there exists a Default or Event of Default.
Such request shall be accompanied by an executed application and reimbursement
agreement in form and substance satisfactory to the Person being asked to issue
the Letter of Credit or LC Guaranty, as well as any required corporate
resolutions.
3.2 Payments. Except where evidenced by notes or other instruments issued
or made by Borrower to Lenders and accepted by Lenders specifically containing
payment provisions which are in conflict with this Section 3.2 (in which event
the conflicting provisions of said notes or other instruments shall govern and
control), the Obligations shall be payable as follows:
3.2.1 Principal. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Agent for the ratable benefit of Lenders
immediately upon the earliest of (i) the receipt by Agent or Borrower of any
proceeds of any of the Collateral, to the extent of said proceeds, except that,
so long as no Default or Event of Default exists, if, after application of the
proceeds to the Base Rate Revolving Credit Portion, any remaining Loans
outstanding at the time of receipt by Borrower or Agent of any such proceeds are
LIBOR Revolving Credit Portions, then Borrower may at its option direct that
such proceeds be held by Agent in a non-interest bearing cash collateral account
maintained by Agent to be applied to the payment of principal on the last day of
the LIBOR Period applicable to each LIBOR Revolving Credit Portion in the order
of maturity or Borrower may place such proceeds in an interest bearing account
provided that such account is pledged to Agent, for its benefit and the ratable
benefit of Lenders, in a manner reasonably satisfactory to Agent; (ii) the
occurrence of an Event of Default and the election of the Agent or Required
Lenders to accelerate the maturity and payment of the Obligations, or (iii)
termination of this Agreement pursuant to Section 4 hereof; provided, however,
that if an Overadvance shall exist at any time, Borrower shall, on demand, repay
the Overadvance.
3.2.2 Interest.
(i) Base Rate Revolving Credit Portion. Interest accrued on Base
Rate Revolving Credit Portions shall be due and payable on the earliest of
(1) the first calendar day of each month (for the immediately preceding
month), computed through the last calendar day of the preceding month, (2)
the occurrence of an Event of Default and the election of the Agent or
Required Lenders to accelerate the maturity and payment of the Obligations
or (3) termination of this Agreement pursuant to Section 4 hereof.
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(ii) LIBOR Revolving Credit Portion. Interest accrued on each
LIBOR Revolving Credit Portion shall be due and payable on each LIBOR
Interest Payment Date and on the earliest of (1) the last day of the
Interest Period applicable to such LIBOR Revolving Credit Portion, (2) the
occurrence of an Event of Default and the election of the Agent or Required
Lenders to accelerate the maturity and payment of the Obligations or (3)
termination of this Agreement pursuant to Section 4 hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrowers as and when provided in
Section 2 hereof, to Agent for its benefit and/or the ratable benefit of Lenders
or to any other Person designated by Agent in writing.
3.2.4 Other Obligations. The balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrowers to Agent for its benefit
and/or the ratable benefit of Lenders as and when provided in this Agreement,
the Notes, the Other Agreements or the Security Documents, or on demand,
whichever is later.
3.3 Mandatory Repayments.
3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral. Except as provided below or in Section 8.2.9 hereof, if Borrower
sells any of the Equipment or real Property, or if any of the Collateral is lost
or destroyed or taken by condemnation, Borrower shall pay to Agent for the
ratable benefit of Lenders, unless otherwise agreed by Required Lenders, as and
when received by Borrower and as a mandatory payment of the outstanding
Revolving Credit Loans, as herein provided, a sum equal to the net cash proceeds
(including insurance payments) received by Borrower from such sale, loss,
destruction or condemnation.
3.3.2 Other Mandatory Repayments. (a) If Borrower receives any
proceeds from any tax refunds, indemnity payments or pension reversions,
Borrower shall pay to Agent for the ratable benefit of Lenders, as and when
received by Borrower and as a mandatory payment of the outstanding principal
balance of the Revolving Credit Loans, a sum equal to the proceeds of such tax
refund, indemnity payment or pension reversion so received by Borrower.
(b) Borrower shall make a mandatory payment of outstanding
principal in the amount of the net proceeds received by Borrower from any
offering or sale of its debt or equity Securities.
3.4 Application of Payments and Collections. All items of payment received
by Agent by 12:00 noon, Chicago time, on any Business Day shall be deemed
received on that Business Day. All items of payment received after 12:00 noon,
Chicago time, on any Business Day shall be deemed received on the following
Business Day. For the purpose of determining Availability hereunder, all items
of payment received by Agent shall be deemed applied by Agent on account of the
Obligations (subject to final payment of such items) on the first Business Day
after receipt of such item in
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immediately good funds. Borrower irrevocably waives the right to direct the
application of any and all payments and collections at any time or times
hereafter received by Agent from or on behalf of Borrower, and Borrower does
hereby irrevocably agree that Agent shall, after the occurrence and during the
continuation of an Event of Default, have the continuing exclusive right to
apply and reapply any and all such payments and collections received at any time
or times hereafter by Agent or its agent against the Obligations, in such manner
as Agent may deem advisable, notwithstanding any entry by Agent upon any of its
books and records. If as the result of collections of Accounts as authorized by
Section 6.2.6 hereof a credit balance exists in the Loan Account, such credit
balance shall not accrue interest in favor of Borrower, but shall be available
to Borrower at any time or times for so long as no Default or Event of Default
exists.
3.5 All Loans to Constitute One Obligation. The Loans shall constitute one
general Obligation of Borrower, and shall be secured by Agent's Lien for its
benefit and the ratable benefit of Lenders upon all of the Collateral.
3.6 Loan Account. Agent shall enter all Loans as debits to the Loan Account
and shall also record in the Loan Account all payments made by Borrower on any
Obligations and all proceeds of Collateral which are finally paid to Agent or
any Lender, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrower.
3.7 Statements of Account. Agent will account to Borrower monthly with a
statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Agent shall be deemed final, binding and conclusive,
absent manifest error, upon Borrower unless Agent is notified by Borrower in
writing to the contrary within 45 days of the date each accounting is mailed to
Borrower. Such notice shall only be deemed an objection to those items
specifically objected to therein.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Agent's and Lender's right to cease
making Loans to Borrower upon or after the occurrence of any Default or Event of
Default, this Agreement shall be in effect for a period of three years from the
date hereof, through and including September 30, 2002 (the "Original Term"),
unless terminated as provided in Section 4.2 hereof.
4.2 Termination.
4.2.1 Termination by Agent or Required Lenders. Agent or Required
Lenders may terminate this Agreement with notice (or in respect to Events of
Default arising under Section 10.1.10 without notice) after the occurrence of an
Event of Default resulting in the Obligations being declared due and payable.
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4.2.2 Termination by Borrower. Upon at least 30 days prior written
notice to Agent, Borrower may, at its option, terminate this Agreement;
provided, however, no such termination shall be effective until Borrower have
paid all of the Obligations in immediately available funds and all Letters of
Credit and LC Guaranties have expired or have been cash collateralized to
Agent's satisfaction. Any notice of termination given by Borrower shall be
irrevocable unless Required Lenders otherwise agree in writing, and Lenders
shall have no obligation to make any Loans or issue or procure any Letters of
Credit or LC Guaranties on or after the termination date stated in such notice.
Borrower may elect to terminate this Agreement in its entirety only. No Section
of this Agreement or type of Loan available hereunder may be terminated singly.
4.2.3 Termination Charges. At the effective date of termination of
this Agreement for any reason, Borrower shall pay to Agent for its benefit and
the ratable benefit of Lenders (in addition to the then outstanding principal,
accrued interest and other charges owing under the terms of this Agreement and
any of the other Loan Documents) as liquidated damages for the loss of the
bargain and not as a penalty, an amount equal to one percent (1%) of the Total
Credit Facility, if termination occurs during the first, second or third
twelve-month period of the Original Term (September 30, 1999 through September
28, 2002); provided however that such termination charge shall not be payable in
the event that the Total Credit Facility is fully paid prior to such time, as a
result of financing pursuant to the DIP Facility described in Section 12.17 of
this Agreement. If termination occurs on or after September 29, 2002, no
termination charge shall be payable.
4.2.4 Effect of Termination. All of the Obligations (other than
contingent Obligations) shall be immediately due and payable upon the
termination date stated in any notice of termination of this Agreement. All
undertakings, agreements, covenants, warranties and representations of Borrower
contained in the Loan Documents shall survive any such termination and Agent
shall retain its Liens in the Collateral and Agent and Lenders shall retain all
of its and their rights and remedies under the Loan Documents notwithstanding
such termination until all Obligations have been discharged or paid, in full, in
immediately available funds, together with the applicable termination charge, if
any; provided, that upon discharge or payment in full of Obligations and either
(i) receipt by Agent, at Agent's option, of either (a) an indemnity for any loss
or damage in respect of asserted but unpaid contingent Obligations, on terms,
and from a Person or Persons, satisfactory to Agent in its reasonable discretion
or (b) cash Collateral for any asserted but unpaid contingent Obligations,
satisfactory to Agent in its reasonable discretion or (ii) retention by Agent of
its Liens in the Collateral, all of Borrower's undertakings, agreements,
covenants, warranties and representations contained in the Loan Documents shall
terminate, other than Borrower's indemnity and reimbursement obligations to
Agent (which shall survive indefinitely); and, if clause (i) above has been
satisfied, Agent's Lien in the Collateral shall also terminate, subject to the
immediately following sentence. Notwithstanding the foregoing or the payment in
full of the Obligations, Agent shall not be required to terminate its Liens in
the Collateral unless, with respect to any loss or damage Agent or any Lender
may incur as a result of dishonored checks or other items of payment received by
Agent or any Lender from Borrower or any Account Debtor and applied to the
Obligations, Agent shall, at its option, (x) have received a written agreement,
executed by Borrower,
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and by any Person whose loans or other advances to Borrower are used in whole or
in part to satisfy the Obligations, satisfactory to Agent in its reasonable
discretion, indemnifying Agent from any such loss or damage or (y) have received
cash Collateral for such loss or damage satisfactory to Agent in its reasonable
discretion.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Agent and Lenders of the Obligations, Borrower hereby grants to
Agent for its benefit and the ratable benefit of Lenders a continuing Lien upon
all of Borrower's assets, including all of the following Property and interests
in Property of Borrower, whether now owned or existing or hereafter created,
acquired or arising and wheresoever located:
(i) Accounts;
(ii) Inventory;
(iii) Equipment;
(iv) General Intangibles;
(v) Investment Property;
(vi) All monies and other Property of any kind now or at any time
or times hereafter in the possession or under the control of Agent or any Lender
or a bailee or Affiliate of Agent or any Lender;
(vii) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (i) through (vi) above, including,
without limitation, proceeds of and unearned premiums with respect to insurance
policies insuring any of the Collateral; and
(viii) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other computer
materials and records) of any Borrower pertaining to any of (i) through (vii)
above.
Notwithstanding the foregoing, Collateral shall not include: (1) any
licenses or permits, the encumbrance of which would violate any law, statute or
regulation; or (2) any material contract rights (including, without limitation,
any contracts or leases), the encumbrance of which would violate the terms of
the agreements establishing such rights; provided that Borrower shall use
reasonable good faith efforts to obtain any necessary consent to enable any such
contract right to be included within the Collateral.
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5.2 Lien Perfection; Further Assurances. At Agent's request, Borrower shall
promptly execute such UCC-1 financing statements as are required by the Code and
such other instruments, assignments or documents as are necessary to perfect
Agent's Lien upon any of the Collateral and shall take such other action as may
be required to perfect or to continue the perfection of Agent's Lien upon the
Collateral. Unless prohibited by applicable law, Borrower hereby authorizes
Agent to execute and file any such financing statement on Borrower's behalf. The
parties agree that a carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof. At Agent's request, Borrower shall also
promptly execute or cause to be executed and shall deliver to Agent any and all
documents, instruments and agreements deemed necessary by Agent to give effect
to or carry out the terms or intent of the Loan Documents.
5.3 Safekeeping of Collateral. Agent shall not be liable or responsible in
any way for the safekeeping of any of the Collateral or for any loss or damage
thereto (except for reasonable care in the custody thereof while any Collateral
is in Agent's actual possession) or for any diminution in the value thereof, or
for any act or default of any warehouseman, carrier, forwarding agency, or other
person whomsoever, but the same shall be at Borrower's sole risk.
5.4 Lien on Realty. The due and punctual payment and performance of the
Obligations shall also be secured by the Lien created by the Mortgages. If
Borrower shall acquire at any time or times hereafter any interest in other real
Property (other than leasehold interests in sales offices), Borrower agrees
promptly to execute and deliver to Agent, for its benefit and the ratable
benefit of Lenders, as additional security and Collateral for the Obligations,
deeds of trust, security deeds, mortgages or other collateral assignments
satisfactory in form and substance to Agent and its counsel (herein collectively
referred to as "New Mortgages") covering such real Property. The Mortgages and
each New Mortgage shall be duly recorded (at Borrower's expense) in each office
where such recording is required to constitute a valid Lien on the real Property
covered thereby. In respect to each Mortgage and each New Mortgage, Borrower
shall deliver to Agent, at Borrower's expense, mortgagee title insurance
policies issued by a title insurance company reasonably satisfactory to Agent
insuring Agent, as mortgagee; such policies shall be in form and substance
reasonably satisfactory to Agent and shall insure a valid first Lien in favor of
Agent for its benefit and the ratable benefit of Lenders, on the Property
covered thereby, subject only to those exceptions reasonably acceptable to Agent
and its counsel. Said policies shall be in form and substance reasonably
satisfactory to Agent. Borrower shall also deliver to Agent such other
documents, including, without limitation, ALTA Surveys of the real Property, as
Agent and its counsel may reasonably request relating to the real Property
subject to any such New Mortgage. In respect to Borrower's real Property located
in Sterling, Illinois, Agent and Lenders acknowledge that the mortgagee title,
insurance policies and ALTA Survey will be delivered by Borrower to Agent on or
before November 15, 1999, in accordance with that certain post-closing letter
dated as of the date hereof by and between Borrower and Agent.
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SECTION 6. COLLATERAL ADMINISTRATION
6.1 General.
6.1.1 Location of Collateral. All Collateral, other than Inventory in
transit, Equipment being repaired in the ordinary course of business consistent
with past practice at outside locations and motor vehicles, will at all times be
kept by Borrower and its Subsidiaries at one or more of the locations set forth
in Exhibit B hereto and shall not, without the prior written approval of Agent,
be moved therefrom except, prior to an Event of Default and Agent's or Required
Lenders' acceleration of the maturity of the Obligations in consequence thereof,
for (i) sales of Inventory in the ordinary course of business; and (ii) removals
in connection with dispositions of Equipment that are authorized by Section
8.2.9 hereof.
6.1.2 Insurance on Collateral. Borrower shall maintain and pay for
insurance upon all Collateral wherever located and with respect to Borrower's
business, covering casualty, hazard, public liability and such other risks in
such amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrower shall deliver the originals of such policies or such other
evidence satisfactory to Agent with satisfactory lender's loss payable
endorsements, naming Agent as loss payee, assignee or additional insured, as
appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Agent in the event of cancellation of the policy for any reason whatsoever and a
clause specifying that the interest of Agent shall not be impaired or
invalidated by any act or neglect of Borrower or the owner of the Property or by
the occupation of the premises for purposes more hazardous than are permitted by
said policy. If Borrower fails to provide and pay for such insurance, Agent may,
at its option, but shall not be required to, procure the same and charge
Borrower therefor. Borrower agrees to deliver to Agent, promptly as rendered,
true copies of all reports made in any reporting forms to insurance companies.
6.1.3 Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, any
and all excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Collateral or in respect of the sale thereof shall
be borne and paid by Borrower. If Borrower fails to promptly pay any portion
thereof when due, Agent may, at its option, but shall not be required to, pay
the same and charge Borrower therefor. Agent shall not be liable or responsible
in any way for the safekeeping of any of the Collateral or for any loss or
damage thereto (except for reasonable care in the custody thereof while any
Collateral is in Agent's actual possession) or for any diminution in the value
thereof, or for any act or default of any warehouseman, carrier, forwarding
agency, or other person whomsoever, but the same shall be at Borrower's sole
risk.
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6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. On or before the
fifteenth day of each month from and after the date hereof, Borrower shall
deliver to Agent, in form acceptable to Agent, a detailed aged trial balance of
all Accounts existing as of the last day of the preceding month, specifying the
names, addresses, face value, dates of invoices and due dates for each Account
Debtor obligated on an Account so listed ("Schedule of Accounts"), and, upon
Agent's request therefor, copies of proof of delivery and the original copy of
all documents, including, without limitation, repayment histories and present
status reports relating to the Accounts so scheduled and such other matters and
information relating to the status of then existing Accounts as Agent shall
reasonably request.
6.2.2 Discounts, Allowances, Disputes. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Agent as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of $500,000 are in dispute
between Borrower and any Account Debtor, Borrower shall provide Agent with
written notice thereof at the time of submission of the next Schedule of
Accounts, explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy. Upon and during the continuation of an
Event of Default, Agent shall have the right to settle or adjust all disputes
and claims directly with the Account Debtor and to compromise the amount or
extend the time for payment of the Accounts upon such terms and conditions as
Agent may deem commercially reasonable, and to charge the deficiencies, costs
and expenses thereof, including reasonable attorney's fees, to Borrower.
6.2.3 Taxes. If an Account includes a charge for any tax payable to
any governmental taxing authority, Agent is authorized, in its sole discretion,
to pay the amount thereof to the proper taxing authority for the account of
Borrower and to charge Borrower therefor, provided, however that Agent shall not
be liable for any taxes to any governmental taxing authority that may be due by
Borrower.
6.2.4 Account Verification. Whether or not a Default or an Event of
Default has occurred, any of Agent's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Agent, any designee of
Agent or Borrower, to verify the validity, amount or any other matter relating
to any Accounts by mail, telephone, telegraph or otherwise. Borrower shall
cooperate fully with Agent in an effort to facilitate and promptly conclude any
such verification process. Agent agrees to conduct any such verification in a
commercially reasonable manner.
6.2.5 Maintenance of Dominion Account. Borrower shall maintain
a Dominion Account pursuant to a lockbox or other arrangement acceptable to
Agent with Bank. Borrower shall issue to any such banks an irrevocable letter of
instruction directing such banks to deposit all payments or other remittances
received in the lockbox to the Dominion Account for application on account of
the Obligations. All funds deposited in the Dominion Account shall immediately
become
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the property of Agent and Borrower shall obtain the agreement by such banks in
favor of Agent to waive any offset rights against the funds so deposited. Agent
assumes no responsibility for such lockbox arrangement, including, without
limitation, any claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder.
6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite
collection, Borrower shall endeavor in the first instance to make collection of
its Accounts for Agent. All remittances received by Borrower on account of
Accounts, together with the proceeds of any other Collateral, shall be held as
Agent's property by Borrower as trustee of an express trust for Agent's benefit
and Borrower shall immediately deposit same in kind in the Dominion Account.
Agent retains the right at all times after the occurrence and during the
continuance of a Default or an Event of Default to notify Account Debtors that
Accounts have been assigned to Agent and to collect Accounts directly in its own
name and to charge the collection costs and expenses, including attorneys' fees
to Borrower.
6.3 Administration of Inventory.
6.3.1 Records and Reports of Inventory. Borrower shall keep accurate
and complete records of its Inventory. Borrower shall furnish to Agent Inventory
reports in form and detail satisfactory to Agent at such times as Agent may
request, but at least once each month, not later than the fifteenth day of such
month. Said Inventory reports shall be included within the Borrowing Base
Certificates. Borrower shall conduct a physical inventory no less frequently
than annually and shall provide to Agent a report based on each such physical
inventory promptly thereafter, together with such supporting information as
Agent shall reasonably request.
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrower shall keep accurate
records itemizing and describing the kind, type, quality and quantity of its
Equipment and all dispositions made in accordance with Section 8.2.9 hereof, and
shall furnish Agent with a current schedule containing the foregoing information
on at least an annual basis and more often if requested by Agent. Immediately on
request therefor by Agent, Borrower shall deliver to Agent any and all evidence
of ownership, if any, of any of the Equipment.
6.5 Payment of Charges. All amounts chargeable to Borrower under Section 6
hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the rate applicable to Revolving Credit Loans from time to time.
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SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Agent and Lenders to
enter into this Agreement and to make advances hereunder, Borrower warrants,
represents and covenants to Agent and Lenders that:
7.1.1 Organization and Qualification. Each of Borrower and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of
Borrower and its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on Exhibit D hereto and in all other states and jurisdictions where the
character of its Properties or the nature of its activities make such
qualification necessary or in which the failure of Borrower or any of its
Subsidiaries to be so qualified would have a material adverse effect on the
financial condition, business or Properties of Borrower or any of its
Subsidiaries.
7.1.2 Corporate Power and Authority. Each of Borrower and its
Subsidiaries is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of the
other Loan Documents have been duly authorized by all necessary corporate action
and do not and will not (i) require any consent or approval of the shareholders
of Borrower or any of its Subsidiaries; (ii) contravene Borrower's or any of its
Subsidiaries' charter, articles or certificate of incorporation or by-laws;
(iii) violate, or cause Borrower or any of its Subsidiaries to be in default
under, any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award in effect having applicability to
Borrower or any of its Subsidiaries; (iv) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which Borrower or any of its Subsidiaries is a party or
by which it or its Properties may be bound or affected; or (v) result in, or
require, the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the Properties now owned or hereafter acquired by
Borrower or any of its Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of each of Borrower and its Subsidiaries
enforceable against it in accordance with its respective terms except as may be
provided under applicable bankruptcy, insolvency, reorganization, moratorium,
equity or redemption or similar laws affecting creditors' rights generally, and
the discretion of the court before which any proceeding thereof may be brought
or general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), including the availability of
specific equitable remedies.
7.1.4 Capital Structure. Exhibit E hereto states (i) the correct name
of each of the Subsidiaries of Borrower, its jurisdiction of incorporation and
the percentage of its Voting Stock owned by Borrower, (ii) the name of each of
Borrower's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number, nature and holder of all outstanding Securities
of Borrower
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and each Subsidiary of Borrower and (iv) the number of authorized, issued and
treasury shares of Borrower and each Subsidiary of Borrower. Borrower has good
title to all of the shares it purports to own of the stock of each of its
Subsidiaries, free and clear in each case of any Lien other than Permitted
Liens. All such shares have been duly issued and are fully paid and
non-assessable. Except as set forth on Exhibit E, there are no outstanding
options to purchase, or any rights or warrants to subscribe for, or any
commitments or agreements to issue or sell, or any Securities or obligations
convertible into, or any powers of attorney relating to, shares of the capital
stock of Borrower or any of its Subsidiaries. Except as provided in Exhibit E,
there are no outstanding agreements or instruments binding upon any of
Borrower's shareholders relating to the ownership of its shares of capital
stock.
7.1.5 Corporate Names. Neither Borrower nor any of its Subsidiaries
has been known as or used any corporate, fictitious or trade names except those
listed on Exhibit F hereto. Within the last five years, except as set forth on
Exhibit F or in respect to the Acquisition, neither Borrower nor any of its
Subsidiaries has been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person.
7.1.6 Business Locations; Agent for Process. Each of Borrower's and
its Subsidiaries' chief executive office and other places of business are as
listed on Exhibit B hereto. During the preceding one-year period, neither
Borrower nor any of its Subsidiaries has had an office, place of business or
agent for service of process other than as listed on Exhibit B. Except as shown
on Exhibit B, no inventory is stored with a bailee, warehouseman or similar
party, nor is any Inventory consigned to any Person.
7.1.7 Title to Properties; Priority of Liens. Each of Borrower and its
Subsidiaries has good, indefeasible and marketable title to and fee simple
ownership of, or valid and subsisting leasehold interests in, all of its real
Property, and good title to all of the Collateral and all of its other Property,
in each case, free and clear of all Liens except Permitted Liens. Borrower has
paid or discharged all lawful claims in accordance with good business practice
which, if unpaid, might become a Lien against any of Borrower's Properties that
is not a Permitted Lien. The Liens granted to Agent, for its benefit and the
ratable benefit of Lenders, under Section 5 hereof are first priority Liens,
subject only to Permitted Liens.
7.1.8 Accounts. Agent may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrower with
respect to any Account or Accounts. Unless otherwise indicated in writing to
Agent, with respect to each Eligible Account:
(i) It is genuine and in all respects what it purports to be, and
it is not evidenced by a judgment;
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(ii) It arises out of a completed, bona fide sale and delivery
of goods or rendition of services by Borrower in the ordinary course of its
business and in accordance with the terms and conditions of all purchase
orders, contracts or other documents relating thereto and forming a part of
the contract between Borrower and the Account Debtor;
(iii) It is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services, a copy or
computer disc or file of which has been furnished or is available to Agent;
(iv) Such Account, and Lender's security interest therein, is
not, and will not (by voluntary act or omission of Borrower) be in the
future, subject to any offset, Lien, deduction, defense, dispute,
counterclaim or any other adverse condition except for disputes resulting
in returned goods where the amount in controversy is deemed by Agent to be
immaterial, and each such Account is absolutely owing to Borrower and is
not contingent in any respect or for any reason;
(v) Borrower has made no agreement with any Account Debtor
thereunder for any extension, compromise, settlement or modification of any
such Account or any deduction therefrom, except discounts or allowances
which are granted by Borrower in the ordinary course of its business for
prompt payment and which are reflected in the calculation of the net amount
of each respective invoice related thereto and are reflected in the
Schedules of Accounts submitted to Agent pursuant to Section 6.2.1 hereof;
(vi) To the best of Borrower's knowledge, there are no facts,
events or occurrences which in any way impair the validity or
enforceability of any Accounts or tend to reduce the amount payable
thereunder from the face amount of the invoice and statements delivered to
Agent with respect thereto;
(vii) To the best of Borrower's knowledge, the Account Debtor
thereunder (1) had the capacity to contract at the time any contract or
other document giving rise to the Account was executed and (2) such Account
Debtor is Solvent; and
(viii) To the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any Account
Debtor thereunder which might result in any material adverse change in such
Account Debtor's financial condition or the collectibility of such Account.
7.1.9 Equipment. The Equipment is in good operating condition
and repair, and all necessary replacements of and repairs thereto shall be made
so that the value and operating efficiency of the Equipment shall be maintained
and preserved, reasonable wear and tear excepted. Borrower will not permit any
of the Equipment to become affixed to any real Property leased to Borrower so
that an interest arises therein under the real estate laws of the applicable
jurisdiction unless the landlord of such real Property has executed a landlord
waiver or leasehold mortgage in
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favor of and in form acceptable to Agent, and Borrower will not permit any of
the Equipment to become an accession to any personal Property other than
Equipment that is subject to first priority (except for Permitted Liens) Liens
in favor of Agent for its benefit and the ratable benefit of Lenders.
7.1.10 Financial Statements; Fiscal Year. The consolidated balance
sheets of Borrower and such other Persons described therein (including the
accounts of all Subsidiaries of Borrower for the respective periods during which
a Subsidiary relationship existed) as of July 31, 1999, and the related
statements of income, changes in stockholder's equity, and changes in financial
position for the periods ended on such dates, have been prepared in accordance
with GAAP, and present fairly the financial positions of Borrower and such
Persons at such dates and the results of Borrower's operations for such periods.
Since July 31, 1999, there has been no material change in the condition,
financial or otherwise, of Borrower and such other Persons as shown on the
Consolidated balance sheet as of such date and no change in the aggregate value
of Equipment and real Property owned by Borrower or such other Persons, except
changes in the ordinary course of business, none of which individually or in the
aggregate has been materially adverse. The fiscal year of Borrower and each of
its Subsidiaries ends on July 31st of each year.
7.1.11 Full Disclosure. The financial statements referred to in
Section 7.1.10 hereof do not, nor does this Agreement or any other written
statement of Borrower to Agent, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading. As of the Closing Date, there is no fact which Borrower
has failed to disclose to Agent in writing which materially affects adversely or
so far as Borrower can now reasonably foresee, will materially affect adversely
the Properties, business, prospects, profits or condition (financial or
otherwise) of Borrower or any of its Subsidiaries or the ability of Borrower or
its Subsidiaries to perform this Agreement or the other Loan Documents.
7.1.12 Solvent Financial Condition. Each of Borrower and its
Subsidiaries on a consolidated basis is now and, after giving effect to the
Loans to be made, at all times will be, Solvent.
7.1.13 Surety Obligations. Neither Borrower nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or obligation of any
Person, except for such obligations which may be required for the construction
of a New Mill, the installation of the Equipment the purchase of which was
financed with the Pollution Control Bonds, or improvements or additions to
Borrower's real Property or Equipment financed with the TIF Financing.
7.1.14 Taxes. Borrowers' federal tax identification number is
00-0000000. The federal tax identification number of each of Borrower's
Subsidiaries is shown on Exhibit G hereto. Borrower and each of its Subsidiaries
has filed all federal, state and local tax returns and other reports it is
required by law to file and has paid, or made provision for the payment of, all
taxes, assessments, fees, levies and other governmental charges upon it, its
income and Properties as and
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when such taxes, assessments, fees, levies and charges that are due and payable,
unless and to the extent any thereof are being actively contested in good faith
and by appropriate proceedings and Borrower maintains reasonable reserves on its
books therefor. The provision for taxes on the books of Borrower and its
Subsidiaries are adequate for all years not closed by applicable statutes, and
for its current fiscal year.
7.1.15 Brokers. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement; provided however that Ernst & Young shall
receive a fee from Borrower in an amount disclosed to Agent.
7.1.16 Patents, Trademarks, Copyrights and Licenses. Each of Borrower
and its Subsidiaries owns or possesses all the patents, trademarks, service
marks, trade names, copyrights and licenses necessary for the present and
planned future conduct of its business without any known conflict with the
rights of others. All such patents, trademarks, service marks, tradenames,
copyrights, licenses and other similar rights are listed on Exhibit H hereto.
7.1.17 Governmental Consents. Each of Borrower and its Subsidiaries
has, and is in good standing with respect to, all governmental consents,
approvals, licenses, authorizations, permits, certificates, inspections and
franchises necessary to continue to conduct its business as heretofore or
proposed to be conducted by it and to own or lease and operate its Properties as
now owned or leased by it, the absence of which would not cause a material
adverse effect to the Borrowers' business or operations.
7.1.18 Compliance with Laws. Each of Borrower and its Subsidiaries has
duly complied with, in all material respects, and its Properties, business
operations and leaseholds are in compliance in all material respects with, the
provisions of all federal, state and local laws, rules and regulations
applicable to Borrower or such Subsidiary, as applicable, its Properties or the
conduct of its business and there have been no citations, notices or orders of
noncompliance issued to Borrower or any of its Subsidiaries under any such law,
rule or regulation, which in any case could reasonably be expected to have a
material adverse effect on Borrower's business, assets or prospects. Each of
Borrower and its Subsidiaries has established and maintains an adequate
monitoring system to insure that it remains in compliance with all federal,
state and local laws, rules and regulations applicable to it. No Inventory has
been produced in violation of the Fair Labor Standards Act (29 U.S.C. ss.201 et
seq.) as amended.
7.1.19 Restrictions. To the best of Borrower's knowledge, neither
Borrower nor any of its Subsidiaries is a party or subject to any contract,
agreement, or charter or other corporate restriction, which materially and
adversely affects its business or the use or ownership of any of its Properties.
Neither Borrower nor any of its Subsidiaries is a party or subject to any
contract oragreement which restricts its right or ability to incur Indebtedness,
other than as set forth on Exhibit I hereto, none of which prohibit the
execution of or compliance with this Agreement or the other Loan Documents by
Borrower or any of its Subsidiaries, as applicable.
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7.1.20 Litigation. Except as set forth on Exhibit J hereto, there are
no actions, suits, proceedings or investigations pending, or to the knowledge of
Borrower, threatened, against or affecting Borrower or any of its Subsidiaries,
or the business, operations, Properties, prospects, profits or condition of
Borrower or any of its Subsidiaries. Neither Borrower nor any of its
Subsidiaries is in default with respect to any order, writ, injunction,
judgment, decree or rule of any court, governmental authority or arbitration
board or tribunal. Agent and Lenders acknowledge that the Borrower has informed
them that the Internal Revenue Service has notified Borrower that the Internal
Revenue Service is reviewing certain tax write-offs and/or the timing of such
write-offs taken by Borrower in connection with the shut-down and/or sale of the
facility in Houston, Texas.
7.1.21 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrower's performance hereunder, constitute a Default or an Event of Default.
Except in respect to the Senior Notes, neither Borrower nor any of its
Subsidiaries is in default, and no event has occurred and no condition exists
which constitutes, or which with the passage of time or the giving of notice or
both would constitute, a default in the payment of any Indebtedness to any
Person for Money Borrowed.
7.1.22 Leases. Exhibit K hereto is a complete listing of all
capitalized leases of Borrower and its Subsidiaries and Exhibit L hereto is a
complete listing of all operating leases of Borrower and its Subsidiaries. Each
of Borrower and its Subsidiaries is in compliance, in all material respects,
with all of the terms of each of its respective capitalized and operating
leases.
7.1.23 Pension Plans. Except as disclosed on Exhibit M hereto, neither
Borrower nor any of its Subsidiaries has any Plan. Borrower and each of its
Subsidiaries is in compliance, in all material respects, with the requirements
of ERISA and the regulations promulgated thereunder with respect to each Plan.
No fact or situation that could result in a material adverse change in the
financial condition of Borrower or any of its Subsidiaries exists in connection
with any Plan. Neither Borrower nor any of its Subsidiaries has any withdrawal
liability in connection with a Multiemployer Plan. The foregoing
notwithstanding, Agent and Lenders acknowledge that Borrower has informed them
that Borrower has an under funded pension liability. The existence of such under
funded pension liability shall not, per se, constitute a breach of the
representations and warranties contained in this Section 7.1.23.
7.1.24 Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower or any of its Subsidiaries and any
customer or any group of customers whose purchases individually or in the
aggregate are material to the business of Borrower or any of its Subsidiaries,
or with any material supplier, and there exists no present condition or state of
facts or circumstances which would materially affect adversely Borrower or any
of its Subsidiaries or prevent Borrower or any of its Subsidiaries from
conducting such business after the consummation of the transaction contemplated
by this Agreement in substantially the same manner in which it has heretofore
been conducted.
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7.1.25 Labor Relations. Except as described on Exhibit N hereto,
neither Borrower nor any of its Subsidiaries is a party to any collective
bargaining agreement. There are no material grievances, disputes or
controversies with any union or any other organization of Borrower's or any of
its Subsidiaries' employees, or threats of strikes, work stoppages or any
asserted pending demands for collective bargaining by any union or organization.
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Borrower's or its Subsidiaries' business or operations
that would render the information in any exhibit attached hereto either
inaccurate, incomplete or misleading, so long as Agent has consented to such
changes or such changes are expressly permitted by this Agreement or such
changes could not reasonably be expected to have a material adverse effect on
the business, assets or prospects of Borrower.
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Agent
and the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations owing to Agent or any
Lender, Borrower covenants that, unless otherwise consented to by Required
Lenders in writing, it shall:
8.1.1 Visits and Inspections. Permit representatives of Agent or any
Lender, from time to time, as often as may be reasonably requested, but only
during normal business hours, to visit and inspect the Properties of Borrower
and each of its Subsidiaries, inspect, audit and make extracts from its books
and records and discuss with its officers, its employees and its independent
accountants, Borrower's and each of its Subsidiaries' business, assets,
liabilities, financial condition, business prospects and results of operations.
8.1.2 Notices. Promptly notify Agent in writing of the occurrence of
any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading.
8.1.3 Financial Statements. Keep, and cause each Subsidiary to keep,
adequate records and books of account with respect to its business activities in
which proper entries are made in accordance with good business practice and, to
the extent applicable, GAAP reflecting all its financial transactions; and cause
to be prepared and furnished to Agent and Lenders the following (all to be
prepared in accordance with GAAP applied on a consistent basis, unless
Borrower's
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certified public accountants concur in any change therein and such change is
disclosed to Agent and Lenders and is consistent with GAAP):
(i) not later than 90 days after the close of each fiscal year
of Borrower, unqualified (other than for a going concern qualification)
audited (in respect to the Consolidated financial statements only)
financial statements of Borrower and its Subsidiaries as of the end of such
year, on a Consolidated basis, certified by a firm of independent certified
(in respect to the Consolidated financial statements only) public
accountants of recognized standing selected by Borrower but acceptable to
Agent (except for a qualification for a change in accounting principles
with which the accountant concurs);
(ii) not later than 30 days after the end of each month
hereafter, including the last month of Borrower's fiscal year, unaudited
interim financial statements of Borrower and its Subsidiaries as of the end
of such month and of the portion of Borrower's financial year then elapsed,
on a Consolidated basis, certified by the President, Chief Financial
Officer or Controller of Borrower as prepared in accordance with GAAP and
fairly presenting the Consolidated financial position and results of
operations of Borrower and its Subsidiaries for such month and period
subject only to changes from audit and year-end adjustments and except that
such statements need not contain notes;
(iii) promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements, financial statements or reports
which Borrower has made available to its shareholders and copies of any
regular, periodic and special reports or registration statements which
Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any national
securities exchange;
(iv) promptly after the filing thereof, copies of any annual
report to be filed with ERISA in connection with each Plan; and
(v) such other data and information (financial and otherwise)
as Agent, from time to time, may reasonably request, bearing upon or
related to the Collateral or Borrower's and each of its Subsidiaries'
financial condition or results of operations.
Concurrently with the delivery of the financial statements described
in clause (i) of this Section 8.1.3, Borrower shall forward to Agent a copy of
the accountants' letter to Borrower's management that is prepared in connection
with such financial statements and also shall cause to be prepared and shall
furnish to Agent a certificate of the aforesaid certified public accountants
certifying to Agent that, based upon their examination of the financial
statements of Borrower and its Subsidiaries performed in connection with their
examination of said financial statements, they are not aware of any Default or
Event of Default in respect to the covenants contained in Section 8.2.8 or 8.1.8
or, if they are aware of such Default or Event of Default, specifying the nature
thereof, and acknowledging, in a manner satisfactory to Agent, that they are
aware that Agent and
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Lenders are relying on such financial statements in making its decisions with
respect to the Loans. Concurrently with the delivery of the financial statements
described in clauses (i) and (ii) of this Section 8.1.3, or more frequently if
requested by Agent or Required Lenders, Borrower shall cause to be prepared and
furnished to Agent a Compliance Certificate in the form of Exhibit O hereto
executed by the President, Chief Financial Officer or Controller of Borrower.
Borrower authorizes Agent or its designated representatives to
communicate directly with its independent certified public accountants and
authorizes those accountants to disclose to Agent any and all financial
statements and other supporting financial documents and schedules. At or before
the initial Closing Date, Borrower shall deliver a letter addressed to such
accountants instructing them to comply with the provisions of this Section
8.1.3. Further within five (5) days after the earlier of the last day of each
fiscal year of Borrower and the date Borrower engaged independent certified
public accountants to audit Borrower's financial statements, Borrower shall
deliver to such independent certified public accountants a letter from Borrower
addressed to such independent certified public accountants indicating that it is
a primary intention of Borrower in engaging such accountants that Agent relies
upon such financial statements of Borrower and its Subsidiaries.
8.1.4 Borrowing Base Certificates. On a monthly basis, or if required
as provided below on a weekly basis, Borrower shall deliver to Agent, a
borrowing base certificate ("Borrowing Base Certificate") in the form attached
hereto as Exhibit C relating to Eligible Accounts and Eligible Inventory as of
the last day of the immediately preceding week (or such other period as may be
applicable), with such supporting materials as Agent shall reasonably request.
The foregoing notwithstanding, Borrower shall deliver Borrowing Base
Certificates on a weekly basis if Default or an Event of Default has occurred
and is continuing or if Availability is less than Twenty Million Dollars
($20,000,000). Once Borrower begins to deliver weekly Borrowing Base
Certificates, Borrower may only return to monthly deliveries if three
consecutive weekly Borrowing Base Certificates show Availability to equal or
exceed Twenty Million Dollars ($20,000,000) and during such three week period
there is no existing and continuing Default or Event of Default. In respect to
such weekly Borrowing Base Certificates, Agent and Lenders acknowledge that
information concerning Inventory shall be updated only on a monthly basis,
unless Agent, in its discretion requires more current information. In connection
with such weekly Borrowing Base Certificates, information concerning Accounts
shall be updated weekly. Agent agrees to promptly deliver to Lenders the
Borrowing Base Certificates, Schedules of Accounts or other reports delivered to
it by Borrower pursuant to this Section 8.1.4 and Sections 6.2.1, 6.2.2, 6.3.1
and 6.4.1. Monthly Borrowing Base Certificates shall be due on the 15th day of
each month for the immediately preceding month. Weekly Borrowing Base
Certificates shall be due on the last day of each week for the immediately
preceding week.
8.1.5 Landlord and Storage Agreements. Provide Agent with copies of
all agreements between Borrower or any of its Subsidiaries and any landlord or
warehouseman which owns any premises at which any Inventory may, from time to
time, be kept. In respect to any lease entered into after the Closing Date
(other than leases for sales offices), Borrower shall provide Agent
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with landlord waivers or bailee letters with respect to such leased premises.
Such landlord waivers or bailee letters shall be in a form supplied by Agent to
Borrower with such reasonable revisions as are customarily accepted by Agent or
by similar financial institutions in similar financial transactions.
8.1.6 Projections. No later than the first day of each fiscal year of
Borrower, deliver to Agent and Lenders Projections of Borrower for the
forthcoming fiscal year, month by month.
8.1.7 Year 2000. Take all action necessary to assure that at all times
the computer-based systems utilized by Borrower and each of its Subsidiaries are
able to effectively interpret, process and manipulate data, including dates
before, on and after December 31, 1999, except to the extent that failure to do
so would not be likely to have a Material Adverse Effect. At Agent's request,
Borrower shall provide to Agent assurance reasonably satisfactory to Agent that
the computer-based systems utilized by Borrower and each of its Subsidiaries are
able to recognize and perform without error functions involving dates before, on
and after December 31, 1999, except to the extent that the failure to do so
would not be likely to have a material adverse effect on Borrower's business,
assets or prospects.
8.1.8 Availability. Maintain at all times Availability of at least
Five Million Dollars ($5,000,000).
8.1.9 Cash Management. Enter into such cash management agreements with
Bank as are necessary or appropriate so that Bank shall be the primary
depository and disbursement bank of Borrower.
8.2 Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lender, Borrower covenants that,
unless Required Lenders has first consented thereto in writing, it will not:
8.2.1 Mergers; Consolidations; Acquisitions. Merge or consolidate, or
permit any Subsidiary of Borrower to merge or consolidate, with any Person; nor
acquire, nor permit any of its Subsidiaries to acquire, all or any substantial
part of the Properties of any Person.
8.2.2 Loans. Make, or permit any Subsidiary of Borrower to make, any
loans or other advances of money (other than for salary, travel advances,
advances against commissions and other similar advances in the ordinary course
of business) to any Person.
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to exist,
or permit any Subsidiary of Borrower to create, incur or suffer to exist, any
Indebtedness, except:
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(i) Obligations owing to Agent and Lenders;
(ii) Subordinated Debt existing on the date of this Agreement;
(iii) Indebtedness of any Subsidiary of Borrower to Borrower;
(iv) accounts payable to trade creditors and current operating
expenses (other than for Money Borrowed) which are not aged more than 120
days from billing date or more than 30 days from the due date, in each case
incurred in the ordinary course of business and paid within such time
period, unless the same are being actively contested in good faith and by
appropriate and lawful proceedings; and Borrower or such Subsidiary shall
have set aside such reserves, if any, with respect thereto as are required
by GAAP and deemed adequate by Borrower or such Subsidiary and its
independent accountants;
(v) Obligations to pay Rentals permitted by Section 8.2.13;
(vi) Permitted Purchase Money Indebtedness;
(vii) contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in the
ordinary course of business;
(viii) Indebtedness owing to Senior Note Holders in respect to
the Senior Notes;
(ix) Term Debt;
(x) Indebtedness owing in respect to the Pollution Control
Bonds;
(xi) In the event the Senior Note Restructuring does not occur,
Indebtedness owing in respect to the Refinanced Senior Notes;
(xii) Indebtedness owing in respect to the TIF Financing;
(xiii) Capital Lease Obligations to the extent permitted by
Section 8.2.8; and
(xiv) Indebtedness not included in paragraphs (i) through (xiii)
above which does not exceed at any time, in the aggregate, the sum of One
Million Dollars ($1,000,000).
8.2.4 Affiliate Transactions. Enter into, or be a party to, or permit
any Subsidiary of Borrower to enter into or be a party to, any transaction with
any Affiliate of Borrower or stockholder, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower's or such Subsidiary's
business and upon fair and reasonable terms which are fully
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disclosed to Agent and are no less favorable to Borrower than would obtain in a
comparable arm's length transaction with a Person not an Affiliate or
stockholder of Borrower or such Subsidiary.
8.2.5 Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Agent for its
benefit and the ratable benefit of Lenders;
(ii) Liens for taxes (excluding any Lien imposed pursuant to
any of the provisions of ERISA) not yet due, or being contested in the
manner described in Section 7.1.14 hereto, but only if in Agent's judgment
such Lien does not adversely affect Agent's rights or the priority of
Agent's Lien in the Collateral;
(iii) Liens arising in the ordinary course of Borrower's
business by operation of law or regulation, but only if payment in respect
of any such Lien is not at the time required and such Liens do not, in the
aggregate, materially detract from the value of the Property of Borrower or
materially impair the use thereof in the operation of Borrower's business;
(iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(v) Liens securing Indebtedness of one of Borrower's
Subsidiaries to Borrower or another such Subsidiary;
(vi) such other Liens as are disclosed by any title insurance
commitments or ALTA surveys delivered after the Closing Date in connection
with Borrower's or its Subsidiary's real Property; provided that such Liens
do not materially and adversely affect Borrower's financial condition or
business operations;
(vii) Liens securing the Term Debt;
(viii) Liens securing the Pollution Control Bonds;
(ix) Liens incurred in connection with, or secured by the TIF
Financing;
(x) such other Liens as appear on Exhibit P hereto; and
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(xi) such other Liens as Required Lenders may hereafter approve
in writing.
8.2.6 Subordinated Debt and Senior Notes. Make, or permit any
Subsidiary of Borrower to make, any payment of any part or all of any
Subordinated Debt or take any other action or omit to take any other action in
respect of any Subordinated Debt, except in accordance with the Subordination
Agreement relative thereto. Make or permit any Subsidiary of Borrower to make
any prepayment of interest or principal owing in respect of the Senior Notes
other than in connection with the Senior Note Restructuring. Amend or modify any
of the Senior Note Documents in any manner materially adverse to Borrower, Agent
or Lenders, except in connection with the Senior Note Restructuring.
8.2.7 Distributions. Declare or make, or permit any Subsidiary of
Borrower to declare or make, any Distributions.
8.2.8 Capital Expenditures. (a) Make New Mill Capital Expenditures
(including, without limitation, by way of capitalized leases) which, in the
aggregate, as to Borrower and its Subsidiaries, exceed during any fiscal year of
Borrower the amount set forth opposite such fiscal year in the following
schedule:
FISCAL YEAR PERMITTED NEW MILL CAPITAL EXPENDITURES
----------- ---------------------------------------
July 31, 2000 $80,000,000
July 31, 2001 $40,000,000 plus the New Mill Carryover Amount
July 31, 2002 $0 plus the New Mill Carryover Amount
July 31, 2003 $0
For any fiscal year, the New Mill Carryover Amount shall be the aggregate amount
of permitted New Mill Capital Expenditures for all prior fiscal years in the
above schedule without giving effect to any New Mill Carryover Amount less the
aggregate amount of New Mill Capital Expenditures made within such prior fiscal
years.
(b) Make new Capital Expenditures (including, without limitation, by
way of capitalized leases and New Mill Capital Expenditures in excess of the
amounts permitted above) which, in the aggregate, as to Borrower and its
Subsidiaries, exceed during any fiscal year of Borrower the amount set forth
opposite such fiscal year in the following schedule:
FISCAL YEAR PERMITTED CAPITAL EXPENDITURES
----------- ------------------------------
July 31, 2000 $30,000,000
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July 31, 2001 $30,000,000 plus Carryover Amount
July 31, 2002 $25,000,000 plus the Carryover Amount
July 31, 2003 $20,000,000 plus the Carryover Amount
The Carryover Amount for any fiscal year shall mean the lesser of (x) $5,000,000
or (y) the excess (if any) of the amount of Capital Expenditures permitted
pursuant to this Section 8.2.8(b) for the immediately prior fiscal year over the
actual aggregate amount of Capital Expenditures made within said fiscal year.
For the purposes of this Section 8.2.8(b), New Mill Capital Expenditures
permitted pursuant to Section 8.2.8(a) above shall not be included within
Capital Expenditures.
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose of any
of, or permit any Subsidiary of Borrower to sell, lease or otherwise dispose any
of, its Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of business for so long as no Event of Default
exists hereunder, (ii) a transfer of Property to Borrower by a Subsidiary of
Borrower or (iii) dispositions expressly authorized by this Agreement, including
dispositions of unneeded Property with a non-material value, (iv) for so long as
no Default or Event of Default exists, (a) dispositions of Equipment which, in
the aggregate during any consecutive twelve-month period, has a fair market
value or book value, whichever is less, of One Million Dollars ($1,000,000) or
less, provided that all proceeds thereof are remitted to Agent for application
to the Loans, or (b) replacements within 60 days of disposition of Equipment
that is substantially worn, damaged or obsolete with Equipment of like kind,
function and value or with better or more efficient Equipment, provided that the
replacement Equipment shall be free and clear of Liens other than Permitted
Liens that are not Purchase Money Liens, and Borrower shall have given Agent at
least 5 days prior written notice of such disposition; or (v) sales by Borrower
or its Subsidiaries of (x) Equipment related to the non-operating facility in
Houston, Texas, (y) real Property so long as such sales do not materially and
adversely affect Borrower's operations, or (z) Equipment or real Property
related to discontinued mill operations, so long as the proceeds of such sales
are remitted to Agent, for its benefit and the ratable benefit of Lenders, for
application to the Revolving Credit Loans.
8.2.10 Stock of Subsidiaries. Permit any of its Subsidiaries to issue
any additional shares of its capital stock except director's qualifying shares.
8.2.11 Xxxx-and-Hold Sales, Etc. Make a sale to any customer on a
xxxx-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.
8.2.12 Restricted Investment. Make or have, or permit any Subsidiary
of Borrower to make or have, any Restricted Investment.
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8.2.13 Leases. Become, or permit any of its Subsidiaries to become, a
lessee under any operating lease (other than a lease under which Borrower or any
of its Subsidiaries is lessor) of Property if the aggregate Rentals payable
during any current or future period of 12 consecutive months under the lease in
question and all other leases under which Borrower or any of its Subsidiaries is
then lessee would exceed Five Million Dollars ($5,000,000). The term "Rentals"
means, as of the date of determination, all payments which the lessee is
required to make by the terms of any lease.
8.2.14 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary of
Borrower.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Agent or
Lenders under the other sections of this Agreement, neither Lender nor Agent
shall not be required to make the Loans contemplated to be made on the Closing
Date under this Agreement unless and until each of the following conditions has
been and continues to be satisfied:
9.1 Documentation. Agent shall have received, in form and substance
satisfactory to Agent and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments and certificates as Lender and its counsel shall require in
connection therewith from time to time, including all documents, instruments,
agreements and schedules listed in the Schedule of Documents attached hereto and
incorporated herein as Exhibit R, all in form and substance satisfactory to
Lender and its counsel.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied or waived by Lender in its
sole discretion.
9.4 Availability. Agent shall have determined that immediately after
Lenders have made the initial Loans contemplated hereby, and applied all closing
costs, whether paid or accrued, in connection with the transactions contemplated
hereby, Availability shall not be less than Fifteen Million Dollars
($15,000,000).
9.5 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
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SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Interest, Principal and Fees. Borrower shall fail to
pay any interest or principal due in respect to outstanding Revolving Credit
Loans or any fees payable in respect to unused Revolving Credit Loans or
outstanding Letters of Credit or LC Guaranties on the due date thereof (whether
due at stated maturity, on demand, upon acceleration or otherwise).
10.1.2 Payment of Other Obligations. Borrower shall fail to pay any of
the Obligations (other than interest and principal due in respect to outstanding
Revolving Credit Loans or any fees payable in respect to unused Revolving Credit
Loans or outstanding Letters of Credit or LC Guaranties) on or within ten (10)
days after the due date for such Obligation (whether due at stated maturity, on
demand, upon acceleration or otherwise).
10.1.3 Misrepresentations. Any representation, warranty or other
statement made or furnished to Agent or Lenders by or on behalf of Borrower or
any Subsidiary of Borrower in this Agreement, any of the other Loan Documents or
any instrument, certificate or financial statement furnished in compliance with
or in reference thereto proves to have been false or misleading in any material
respect when made or furnished or when reaffirmed pursuant to Section 7.2
hereof.
10.1.4 Breach of Specific Covenants. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in Sections 5.2, 6.1.2, 6.2.4,
6.2.5, 6.2.6, 8.1.1, 8.1.8 or 8.2 hereof on the date that Borrower is required
to perform, keep or observe such covenant.
10.1.5 Breach of Other Covenants. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 10.1 hereof) and
the breach of such other covenant is not cured to Required Lenders' satisfaction
within 15 days (10 days in respect to Section 6.1.1 and 2 days in respect to
Sections 6.2.1, 6.2.2, 6.2.3, 8.1.3 and 8.1.4) after the sooner to occur of
Borrower's receipt of notice of such breach from Agent or the date on which such
failure or neglect first becomes known to any officer of Borrower. The foregoing
notwithstanding, Borrower shall only be entitled to the 2-day grace period
contained herein in respect to Section 8.1.4 twice within any calendar year.
10.1.6 Default Under Security Documents/Other Agreements. Any event of
default shall occur under, or Borrower shall default in the performance or
observance of any term, covenant, condition or agreement contained in, any of
the Security Documents or the Other Agreements and such default shall continue
beyond any applicable grace period.
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10.1.7 Other Defaults. There shall occur any default or event of
default on the part of Borrower under any agreement, document or instrument to
which Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any Indebtedness (other than the Obligations) with an
aggregate principal amount of $750,000 or more if the payment or maturity of
such Indebtedness is accelerated in consequence of such event of default or
demand for payment of such Indebtedness is made.
10.1.8 Uninsured Losses. Any loss, theft, damage or destruction of
any of the Collateral in an amount in excess of $750,000 or more not fully
covered (subject to such deductibles as Lender shall have permitted) by
insurance.
10.1.9 Adverse Changes. There shall occur any material adverse change
in the financial condition or business prospects of Borrower.
10.1.10 Insolvency and Related Proceedings. Borrower shall cease to be
Solvent or shall suffer the appointment of a receiver, trustee, custodian or
similar fiduciary, or shall make an assignment for the benefit of creditors, or
any petition for an order for relief shall be filed by or against Borrower under
the Bankruptcy Code (if against Borrower, the continuation of such proceeding
for more than 10 days), or Borrower shall make any offer of settlement,
extension or composition to its unsecured creditors generally.
10.1.11 Business Disruption: Condemnation. There shall occur a
cessation of a substantial part of the business of Borrower for a period which
significantly affects Borrower's capacity to continue its business, on a
profitable basis; or Borrower shall suffer the loss or revocation of any license
or permit now held or hereafter acquired by Borrower which loss or revocation
materially and adversely affects Borrower's ability to lawfully operate its
business; or Borrower shall be enjoined, restrained or in any way prevented by
court, governmental or administrative order from conducting all or any material
part of its business affairs; or any material lease or agreement pursuant to
which Borrower leases, uses or occupies any Property shall be canceled or
terminated prior to the expiration of its stated term and such cancellation or
termination materially and adversely affects Borrower's ability to operate its
business; or any material part of the Collateral shall be taken through
condemnation or the value of such Property shall be impaired in any material
respect through condemnation.
10.1.12 Change in Control. A Change in Control shall occur, other than
in connection with the Senior Note Restructuring.
10.1.13 ERISA. A Reportable Event shall occur which Agent, in its sole
discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if Borrower or any Subsidiary of Borrower is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from
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Borrower's or such Subsidiary's complete or partial withdrawal from such Plan.
Agent and Lenders acknowledge that Borrower has informed them that Borrower has
an under funded pension liability. The existence of such under funded pension
liability shall not, per se, cause an Event of Default under this Section
10.1.13.
10.1.14 Challenge to Agreement. Borrower, any Subsidiary of Borrower,
or any Affiliate of any of them, shall challenge or contest in any action, suit
or proceeding the validity or enforceability of this Agreement, or any of the
other Loan Documents, the legality or enforceability of any of the Obligations
or the perfection or priority of any Lien granted to Agent.
10.1.15 Judgments. Any money judgments, writ of attachment or similar
processes are issued or rendered against Borrower or any Subsidiary of Borrower
or any of their respective Property in an amount of $500,000 or more for any
single judgment, attachment or process or $1,000,000 or more for all such
judgments, attachments or processes in the aggregate, in each case in excess of
any applicable insurance with respect to which the insurer has admitted
liability and which judgment, attachment or process is not stayed, released or
discharged within 30 days. Any non-money judgment (or any non-monetary portion
of a judgment) shall be issued or rendered against Borrower and such judgment is
reasonably expected to have a material adverse effect on Borrower's business,
assets or prospects and such judgment is not stayed, released or discharged
within 30 days.
10.2 Acceleration of the Obligations. Upon the occurrence of an Event of
Default and during the continuance thereof, Agent may and shall, at the request
of Required Lenders, (i) without notice, terminate this facility with respect to
further Revolving Credit Loans and Letters of Credit and LC Guaranties,
whereupon no Revolving Credit Loans may be made hereunder and no Letters of
Credit or LC Guaranties may be issued hereunder, and/or (ii) with notice,
declare all Obligations to be forthwith due and payable, whereupon all
Obligations shall become and be due and payable, without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by
Borrowers; provided, however, that upon the occurrence of an Event of Default
specified in Section 10.1.10 hereof, the Obligations shall become due and
payable without declaration, notice or demand by Agent.
Agent shall take such action with respect to any Default or Event of
Default as shall be directed by the Required Lenders; provided that, unless and
until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable and in the best
interests of Agent and Lenders taken as a whole, including any action (or the
failure to act) pursuant to the Loan Documents.
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10.3 Other Remedies. Upon and after the occurrence and during the
continuance of an Event of Default, Agent and/or Lenders shall have and may
exercise from time to time the following rights and remedies:
10.3.1 All of the rights and remedies of a secured party under the
Code or under other applicable law, and all other legal and equitable rights to
which Agent or Lenders may be entitled, all of which rights and remedies shall
be cumulative and shall be in addition to any other rights or remedies contained
in this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
10.3.2 The right to take immediate possession of the Collateral, and
to (i) require Borrower to assemble the Collateral, at Borrower's expense, and
make it available to Agent at a place designated by Agent which is reasonably
convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, Borrower
agrees not to charge Agent for storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any Collateral
in its then condition, or after any further manufacturing or processing thereof,
at public or private sale or sales, with such notice as may be required by law,
in lots or in bulk, for cash or on credit, all as Agent, in its sole discretion,
may deem advisable. Borrower agrees that 10 days written notice to Borrower of
any public or private sale or other disposition of Collateral shall be
reasonable notice thereof, and such sale shall be at such locations as Agent may
designate in said notice. Agent shall have the right to conduct such sales on
Borrower's premises, without charge therefor, and such sales may be adjourned
from time to time in accordance with applicable law. Agent shall have the right
to sell, lease or otherwise dispose of the Collateral, or any part thereof, for
cash, credit or any combination thereof, and Agent and Lenders may purchase all
or any part of the Collateral at public or, if permitted by law, private sale
and, in lieu of actual payment of such purchase price, may set off the amount of
such price against the Obligations. The proceeds realized from the sale of any
Collateral may be applied, after allowing 2 Business Days for collection, first
to the costs, expenses and attorneys' fees incurred by Agent in collecting the
Obligations, in enforcing the rights of Agent under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising for
sale, selling and delivering any Collateral, second to the interest due upon any
of the Obligations; and third, to the principal of the Obligations. If any
deficiency shall arise, Borrower shall remain liable to Agent and Lenders
therefor.
10.3.4 Agent is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses and
all franchise agreements shall inure to Agent's and Lenders' benefit.
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10.3.5 Agent or Required Lenders may, at its or their option, require
Borrower to deposit with Agent funds equal to the LC Amount and, if Borrower
fails to promptly make such deposit, Lenders may advance such amount as a
Revolving Credit Loan (whether or not an Overadvance is created thereby). Each
such Revolving Credit Loan shall be secured by all of the Collateral and shall
bear interest and be payable at the same rate and in the same manner as Base
Rate Revolving Credit Portions. Any such deposit or advance shall be held by
Agent as a reserve to fund future payments on such LC Guaranties and future
drawings against such Letters of Credit. At such time as all LC Guaranties have
been paid or terminated and all Letters of Credit have been drawn upon or
expired any amounts remaining in such reserve shall be applied against any
outstanding Obligations, or, if all Obligations have been indefeasibly paid in
full, returned to Borrowers.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrower
contained in this Agreement and the other Loan Documents, or in any document
referred to herein or contained in any agreement supplementary hereto or in any
schedule given to Agent or any Lenders or contained in any other agreement
between Agent and/or Lenders and Borrower, heretofore, concurrently, or
hereafter entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Agent or Lenders to require
strict performance by Borrower of any provision of this Agreement or to exercise
or enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies, but
all such requirements, Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and all other Obligations owing or to
become owing from Borrower to Agent and/or Lenders shall have been fully
satisfied. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the other Loan
Documents and no Event of Default by Borrower under this Agreement or any other
Loan Documents shall be deemed to have been suspended or waived by Agent or
Lenders, unless such suspension or waiver is by an instrument in writing
specifying such suspension or waiver and is signed by a duly authorized
representative of Agent, Lenders or Required Lenders (as applicable) and
directed to Borrower.
SECTION 11. AGENT
11.1 Power of Attorney; Authorization and Action. Each Lender hereby
appoints and authorizes Agent to take such action on its behalf and to exercise
such powers under this Agreement, and the other Loan Documents as are delegated
to Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement and the other Loan Documents (including, without limitation,
enforcement or collection of the Notes), Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Required Lenders, and such instructions
shall be binding upon all Lenders; provided, however, that Agent shall not be
required to take any action
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which exposes Agent to personal liability or which is contrary to this Agreement
or the other Loan Documents or applicable law. Agent agrees to give each Lender
promptly a copy of each notice given to it by Borrower pursuant to the terms of
this Agreement and the other Loan Documents.
11.2 Agent's Reliance, Etc. Neither Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this Agreement or the other
Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, Agent: (i)
may treat the payee of any Note as the holder thereof until Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to Agent; (ii) may consult with legal counsel, independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (iii) makes no warranty or
representations to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (iv) shall not have any duty beyond
Agent's customary practices to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or the
other Loan Documents on the part of Borrowers or to inspect the property
(including the books and records) of Borrowers; (v) shall not be responsible to
any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; and
(vi) shall incur no liability under or in respect of this Agreement or the other
Loan Documents by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopy, telegram, cable or telex)
believed in good faith by it to be genuine and signed or sent by the proper
party or parties.
11.3 FCC and Affiliates. With respect to its commitment hereunder to make
Revolving Credit Loans and to issue or procure Letters of Credit and LC
Guaranties, FCC shall have the same rights and powers under this Agreement and
the other Loan Documents as any other Lender and may exercise the same as though
it were not Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include FCC in its individual capacity. FCC and its
Affiliates may lend money to, and generally engage in any kind of business with,
Borrowers, any of their Subsidiaries and any Person who may do business with or
own securities of any Borrower or any such Subsidiary, all as if FCC were not
Agent and without any duty to account therefor to Lenders.
11.4 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the financial statements referred to in Section 7.1.10 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.
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11.5 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Borrowers), ratably according to the respective principal amounts
of the Notes then held by each of them, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against Agent in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or
omitted by Agent under this Agreement, provided that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Agent's gross negligence or wilful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse Agent promptly upon demand for its
ratable shares of any out-of-pocket expenses (including reasonable counsel fees)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and each other Loan Document,
to the extent that Agent is not reimbursed for such expenses by Borrowers.
11.6 Successor Agent. Agent may resign at any time by giving written notice
thereof to Lenders and Borrowers. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Agent which shall be
reasonably acceptable to Borrower. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a commercial bank or financial institution organized under the laws of
the United States of America or of any state thereof and having a combined
capital and surplus of at least Five Hundred Million Dollars ($500,000,000) and
which shall be reasonably acceptable to Borrower. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement and the
other Loan Documents.
SECTION 12. MISCELLANEOUS
12.1 Power of Attorney.
Borrower hereby irrevocably designates, makes, constitutes and appoints
Agent (and all Persons designated by Agent) as Borrower's true and lawful
attorney (and agent-in-fact) and Agent, or Agent's agent, may, without notice to
Borrower and in Borrower's or Agent's name, but at the cost and expense of
Borrower:
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12.1.1 At such time or times after the occurrence and during
the continuance of a Default or an Event of Default as Agent or said agent, in
its sole discretion, may determine, endorse any Borrower's name on any checks,
notes, acceptances, drafts, money orders or any other evidence of payment or
proceeds of the Collateral which come into the possession of Agent or under
Agent's control.
12.1.2 At such time or times upon or after the occurrence and
during the continuance of an Event of Default as Agent or its agent in its sole
discretion may determine: (i) demand payment of the Accounts from the Account
Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and
generally exercise all of Borrower's rights and remedies with respect to the
collection of the Accounts; (ii) settle, adjust, compromise, discharge or
release any of the Accounts or other Collateral or any legal proceedings brought
to collect any of the Accounts or other Collateral, each in a commercially
reasonable manner under the circumstances; (iii) sell or assign any of the
Accounts and other Collateral upon such terms, for such amounts and at such time
or times as Agent deems advisable; (iv) take control, in any manner, of any item
of payment or proceeds relating to any Collateral; (v) prepare, file and sign
Borrower's name to a proof of claim in bankruptcy or similar document against
any Account Debtor or to any notice of lien, assignment or satisfaction of lien
or similar document in connection with any of the Collateral; (vi) receive, open
and dispose of all mail addressed to Borrower and notify postal authorities to
change the address for delivery thereof to such address as Agent may designate;
(vii) endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Agent on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight xxxx, xxxx of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrower's stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, Equipment
and any other Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in Agent's
reasonable determination, to fulfill Borrower's obligations under this
Agreement.
The power of attorney granted hereby shall constitute a power coupled with
an interest and shall be irrevocable.
12.2 Indemnity. Borrower hereby agrees to indemnify Agent and Lenders
and hold Agent and Lenders harmless from and against any liability, loss,
damage, suit, action or proceeding ever suffered or incurred by Agent and
Lenders (including reasonable attorneys fees and legal expenses) as the result
of Borrower's failure to observe, perform or discharge Borrower's duties
hereunder. In addition, Borrower shall defend Agent and Lenders against and save
it harmless from all claims of any Person with respect to the Collateral (except
those resulting from the negligence or intentional misconduct of Agent or any
Lender). Without limiting the generality of the foregoing, these indemnities
shall extend to any claims asserted against Agent or any Lender by any Person
under any Environmental Laws or similar laws by reason of any Borrower's or any
other Person's failure
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to comply with laws applicable to solid or hazardous waste materials or other
toxic substances. Notwithstanding any contrary provision in this Agreement, the
obligation of Borrower under this Section 11.2 shall survive the payment in full
of the Obligations and the termination of this Agreement.
12.3 Modification of Agreement; Sale of Interest.
(a) The Loan Documents constitute the complete agreement between the
parties with respect to the subject matter hereof and may not be modified,
altered or amended except by an agreement in writing signed by Borrowers,
Required Lenders or all Lenders as required by the terms hereof, and, if
required by the terms hereof, Agent. Borrower may not sell, assign or transfer
any of the Loan Documents or any portion thereof, including without limitation,
Borrower's rights, title, interests, remedies, powers and duties hereunder or
thereunder. Borrower hereby consents to Agent's and any Lender's sale of
participation, assignment, transfer or other disposition in accordance with the
terms hereof, at any time or times, of any of the Loan Documents or of any
portion thereof or interest therein, including, without limitation, Agent's and
any Lender's rights, title, interests, remedies, powers or duties thereunder,
whether evidenced in writing or not; Borrower agrees that it will use
commercially reasonable efforts to assist and cooperate with Agent and any
Lender in any manner reasonably requested by Agent or such Lender to effect the
sale of participation in or assignment of any of the Loan Documents or of any
portion thereof or interest therein, including, without limitation, review of
appropriate disclosure documents or placement memoranda and executing
appropriate amendments to the signature pages hereto to reflect the addition of
any Lender and such Lender's respective commitments. In addition, Borrower will
make its management available to meet with potential Lenders or Participating
Lenders from time to time as reasonably requested by Agent. The foregoing
notwithstanding, except with respect to sales, assignments or transfers to
Affiliates under common control pursuant to which the selling, assigning or
transferring Lender retains its voting rights, no Lender shall sell, participate
or assign, transfer or otherwise dispose of any of the Loan Documents or any
portion thereof or interest therein, without the prior written consent of Agent,
and if no Event of Default has occurred and is continuing, Borrower, which
consent shall not be unreasonably withheld or delayed.
(b) In respect to any assignment by a Lender of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Revolving Loan Commitments, the Revolving Credit Loans owed to it
and the Revolving Credit Note held by it) (i) each such assignment shall be of a
uniform, and not a varying, percentage of all rights and obligations, (ii)
except in the case of an assignment of all of a Lender's rights and obligations
under this Agreement, (A) the aggregate amount of the Revolving Loan Commitment
of the assigning Lender being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to
such assignment) shall in no event be less than $5,000,000, and in integral
multiples of $1,000,000 thereafter, or such lesser amount as to which Borrowers
and Agent may consent to and (B) after giving effect to each such assignment,
the amount of the Revolving Loan Commitment of the assigning Lender shall in no
event be less than $5,000,000, (iii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance, an Assignment
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and Acceptance in the form of Exhibit S hereto (an "Assignment and Acceptance"),
together with any Revolving Credit Note subject to such assignment and a
processing and recordation fee of $3,500, and (iv) any Lender may without the
consent of Borrowers or the Agent, and without paying any fee, assign to any
Affiliate of such Lender that is a bank or financial institution all of its
rights and obligations under this Agreement. The foregoing notwithstanding, no
Person may become a Lender or a Participating Lender hereunder, unless such
Person is a financial institution having stockholders' equity (or the
equivalent) of at least One Hundred Million Dollars ($100,000,000). Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in such Assignment and Acceptance (x) the assignee thereunder shall be
a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (y) the Lender assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto). If, pursuant to this Section 11.3, any interest in this
Agreement or any Revolving Credit Loan or Letter of Credit or LC Guaranty is
transferred to any transferee which is organized under the laws of any
jurisdiction other than the United States or any state thereof, the transferor
Lender shall cause such transferee (other than any Participating Lender), and
shall cause any Participating Lender, concurrently with the effectiveness of
such transfer, (a) to represent to the transferor Lender (for the benefit of the
transferor Lender, Agent, and Borrower) that under applicable law and treaties
no Taxes will be required to be withheld by Agent, Borrower or the transferor
Lender with respect to any payments to be made to such transferee in respect of
the Revolving Credit Loans or Letters of Credit or LC Guaranties, (b) to furnish
to the transferor Lender, Agent and Borrower either U.S. Internal Revenue
Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein such
transferee claims entitlement to complete exemption form U.S. federal
withholding tax on all interest payments hereunder), and (c) to agree (for the
benefit of the transferor Lender, Agent and Borrower) to provide the transferor
Lender, Agent and Borrower a new Form 4224 or Form 1001 upon the obsolescence of
any previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and completed
by such transferee, and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
(c) In the event any Lender assigns or otherwise transfers all or any
part of its Revolving Credit Note, any such Lender shall so notify Borrower and
Borrower shall, upon the request of such Lender, issue new Revolving Credit
Notes in exchange for the old Revolving Credit Notes.
(d) Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of Borrower (a
"Participating Lender") participating interests in any Loans, the commitments of
that Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; provided, however, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the
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originating Lender shall remain solely responsible for the performance of such
obligations, (iii) Borrower and the Agent shall continue to deal solely
and directly with the originating Lender in connection with the originating
Lender's rights and obligations under this Agreement and the other Loan
Documents, and (iv) no Lender shall grant any participation under which the
Participating Lender shall have rights to approve any amendment to or waiver of
this Agreement or the Loan Documents, except to the extent such amendment or
waiver would: (A) extend the final maturity date for payment of the Loans in
which such Participating Lender is participating; (B) reduce the interest rate
or the amount of principal or fees applicable to the Loans in which such
Participating Lender is participating; or (C) release all or substantially all
of the Collateral, except as expressly provided herein. In those cases in which
an originating Lender grants rights to a Participating Lender to approve any
amendment to or waiver of this Agreement or the other Loan Documents respecting
the matters described in clauses (A) through (C) of the preceding sentence, the
relevant participation agreements shall provide for a voting mechanism whereby a
majority of the amount of such Lender's portion of the Loans (irrespective of
whether held by such Lender or a Participating Lender) shall control the vote
for all of such Lender's portion of the Loans. In the case of any participation,
the Participating Lender shall not have any rights under this Agreement or any
of the other Loan Documents entered into in connection herewith (the
Participating Lender's right against such Lender in respect of such
participation to be those set forth in the participation or other agreement
executed by such Lender and the Participating Lender relating thereto). In no
event shall any Participating Lender grant a participation in its participation
interest in the Loans without the prior written consent of Agent, which approval
shall not be unreasonably withheld or delayed. All amounts payable by the
Borrower hereunder shall be determined as if the originating Lender had not sold
any such participation, except that, if amounts outstanding under this Agreement
are due and unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participating Lender
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board or U.S. Treasury Regulation 31
CFR ss.203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
(f) No amendment or waiver of any provision of this Agreement or the
Notes or any other Loan Document, nor consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however: (a) that no amendment, waiver or consent shall, unless
in writing and signed by each Lender affected thereby do any of the following:
(i) increase the aggregate Revolving Loan Commitments or subject any Lender to
any additional obligations, (ii) reduce the principal of, or decrease the rate
of interest on, the Notes or other amount payable hereunder other than those
fees and expenses payable only to FCC in its capacity as Agent which may be
reduced
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by FCC unilaterally, (iii) postpone any date fixed for any payment of principal
of, or interest on, the Notes or other amounts payable hereunder, other than
those payable only to FCC in its capacity as Agent which may be postponed by FCC
unilaterally, (iv) reduce the aggregate unpaid principal amount of the Notes, or
the number of Lenders which shall be required for the Lenders or any of them to
take any action hereunder, (v) release or discharge any Person liable for the
performance of any obligations of Borrower hereunder or under any of the Loan
Documents except in accordance with the terms of such Loan Documents or as
otherwise permitted herein, (vi) increase the advance rates contained in the
definition of the Borrowing Base or otherwise change in such a manner as to make
more liberal to Borrower the definitions of Borrowing Base, Eligible Accounts or
Eligible Inventory, (vii) to the extent Agent's or Lenders' consent is required
by the terms hereof, release all or substantially all of the Collateral or
(viii) amend this Section 12.3; (b) that no amendment, waiver or consent shall
be effective unless in writing and signed by either Required Lenders or all
Lenders, as required by the terms hereof and, if such amendment, waiver or
consent affects Agent or its rights hereunder, Agent.
(g) The foregoing notwithstanding, provided that no Event of Default
has occurred and is continuing, no Lender shall effect any transfer, assignment
or participation of its interests hereunder if the effect of any such transfer,
assignment or participation is to increase, in any material amount, Borrower's
costs or obligations hereunder.
12.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
12.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Agent and Lenders permitted under Section
12.3 hereof.
12.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
12.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
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12.8 Notice. Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, three
Business Days after deposit in the mail, postage prepaid, one Business Day after
delivery to an overnight courier or, in the case of facsimile notice, when sent,
addressed as follows:
(A) If to Agent: Fleet Capital Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Loan Administration Manager
Facsimile No.: (000) 000-0000
With a copy to: Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. XxXxxxx
Facsimile No.: (000) 000-0000
(B) If to Borrower: Northwestern Steel and Wire Company
000 Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
With copies to: Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopier No: (000) 000-0000
(C) If to any Lender, at its address indicated on the signature pages
hereof or in a notice to Borrower of an assignment of a Note,
or to such other address as each party may designate for itself by notice given
in accordance with this Section 12.8; provided, however, that any notice,
request or demand to or upon Agent and/or Lender pursuant to Sections 3.1.1 or
4.2.2 hereof shall not be effective until received by Agent and/or Lenders.
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12.9 Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
12.10 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
12.11 Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.
12.12 Confidentiality. Agent and each Lender shall hold all nonpublic
information obtained pursuant to the requirements of this Agreement (including,
without limitation, Borrower's ownership structure) in accordance with Agent's
and each Lenders's customary procedures for handling confidential information of
this nature and in accordance with safe and sound banking practices and in any
event may make disclosures reasonably required by a prospective participant or
assignee in connection with the contemplated participation or assignment or as
required or requested by any governmental authority or representative thereof or
pursuant to legal process provided, however, that Agent or any Lender shall
require any potential participant or assignee to agree, in writing, to comply
with the provisions of this Section 12.13 prior to making any such disclosure to
any such potential assignee or participant.
12.13 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED IN AND SHALL BE DEEMED TO HAVE BEEN MADE IN CHICAGO,
ILLINOIS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS; PROVIDED, HOWEVER, THAT IF ANY OF THE
COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN ILLINOIS, THE LAWS OF
SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE
OF AGENT'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S OR LENDERS'
OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF ILLINOIS. AS
PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT
OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR AGENT OR
LENDERS, BORROWER HEREBY CONSENTS AND AGREES THAT THE CIRCUIT COURT OF XXXX
COUNTY, ILLINOIS, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
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DISPUTES BETWEEN BORROWER AND AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR
TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF AGENT OR LENDERS TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY AGENT OR LENDERS OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM
OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.
12.14 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY
(WHICH AGENT AND LENDERS HEREBY ALSO WAIVE) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (ii) EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED FOR HEREIN, OR IN THE OTHER LOAN DOCUMENTS, PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY,
RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL
PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND
GUARANTIES AT ANY TIME HELD BY AGENT OR ANY LENDER ON WHICH BORROWER MAY IN ANY
WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS
REGARD; (iii) EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN THE OTHER LOAN
DOCUMENTS, NOTICE PRIOR TO AGENT OR ANY LENDER TAKING POSSESSION OR CONTROL OF
THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT
PRIOR TO ALLOWING AGENT OR LENDERS TO EXERCISE ANY OF AGENT'S OR LENDERS'
REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS;
AND (v) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE FOREGOING
WAIVERS ARE EACH MATERIAL INDUCEMENT TO AGENT'S AND
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LENDERS' ENTERING INTO THIS AGREEMENT AND THAT AGENT AND LENDERS ARE RELYING
UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS
LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
12.15 Publicity. Borrower hereby consents to Agent's use of the name or
tradestyle of Borrower in any announcements or advertisements relating to the
completion of the transactions contemplated hereby and the role played by Agent
in providing financing to Borrower hereunder in such media and in such manner as
Agent, with the prior written consent of Borrower, deems appropriate.
12.16 DIP Facility and Exit Facility. (a) Agent and Lenders acknowledge
that Borrower is contemplating filing a petition for reorganization under
Chapter 11 of the Bankruptcy Code, although the filing of any such petition
shall constitute an Event of Default under Section 10.1.10 of the Agreement
which Event of Default is not waived hereby. It is the intention of the parties
hereto (and Agent and Lenders have relied to their detriment thereon), that if
Borrower files any such petition, Agent and Lenders and Borrower shall enter
into the DIP Facility providing for debtor-in-possession financing on
substantially the same terms and conditions contained herein, except in respect
to certain fees, term of agreement and certain events of default. At the
effective date of termination of the DIP Facility for any reason other than
financing under (b), Borrower shall pay to Agent for its benefit and the ratable
benefit of Lenders (in addition to the then outstanding principal, accrued
interest and other charges owing) as liquidated damages for the loss of the
bargain and not as a penalty, an amount equal to one percent (1%) of the total
credit facility committed under the DIP Facility. Any such DIP Facility shall be
subject, however, to the approval of the terms and conditions thereof
(including, without limitation, the collateral and the underlying loan
documents) by Borrower, Agent and each Lender and by the applicable United
States Bankruptcy Court. Agent's and Lender's commitment to provide any such DIP
Facility is subject to (but not limited by) (a) the entry of a Final Order in
form and substance reasonably acceptable to Agent and Lenders (or upon the entry
of an interim order acceptable to Agent and Lenders), which authorizes and
approves:
(i) All material aspects of the DIP Facility Documents and the
transactions contemplated by the DIP Facility Documents, and
(ii) All material actions to be taken, undertakings to be made and
obligations to be incurred by the Borrower in connection with
the DIP Facility.
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Agent and Lenders acknowledge that they shall make advances upon the entry of
such Final Order (or interim order acceptable to Agent and Lenders) which
contains a "good faith" finding under Section 364(e) under the Bankruptcy Code,
unless an appeal from such order is filed and a stay obtained.
(b) In addition, in the event that Borrower does file such a petition for
reorganization under Chapter 11 of the Bankruptcy Code and in such
reorganization proceeding a Confirmation Order (as defined below) is entered,
then it is the intention of the parties hereto (and Agent and Lenders have
relied to their detriment thereon) to enter into an Exit Facility upon
substantially the same terms and conditions contained herein, except in respect
to certain fees, term of agreement, and any other pertinent third party
agreements. At the effective date of termination prior to maturity of the Exit
Facility for any reason, Borrower shall pay to Agent for its benefit and the
ratable benefit of Lenders (in addition to the then outstanding principal,
accrued interest and other charges owing) as liquidated damages for the loss of
the bargain and not as a penalty, an amount equal to one percent (1%) of the
total credit facility committed under the Exit Facility. Agent and Lenders'
commitment to provide the Exit Facility is subject to (but not limited to) the
entry of a confirmation order ("Confirmation Order") pursuant to Section 1129 of
the Bankruptcy Code, which is a Final Order in form and substance reasonably
acceptable to Agent and Lenders, which order (i) confirms a Plan of
Reorganization of the debtor (Borrower), accepted by and in form and substance
reasonably acceptable to Agent and Lenders, and (ii) authorizes and approves:
(aa) All material aspects of the Exit Facility Documentation and the
transactions contemplated by the Exit Facility Documentation;
(bb) All material actions to be taken, undertakings to be made and
obligations to be incurred by Borrower in connection with the
Exit Facility; and
(cc) The payment in full of all obligations under each DIP Facility
and the Obligations.
12.17 Term Debt. Agent and Lenders acknowledge that Borrower contemplates
raising additional funds by issuing certain first senior mortgage notes or other
long term debt ("Term Debt"), during the Original Term, for the purpose to
construct a new, more efficient, low cost mill (the "New Mill") to replace
certain of Borrower's existing rolling mill capacity at its Sterling, Illinois
facility, and to repay or restructure certain outstanding senior unsecured debt.
If Agent and Required Lenders are satisfied, in the exercise of their reasonable
discretion, with the terms and conditions of such Term Debt, including without
limitation, interest rates and fees payable thereon, assets pledged to secure
the repayment thereof, intercreditor agreements between Agent, Lenders and the
holders of such Term Debt, amortization schedules, covenants and events of
default, Agent and Lenders shall release such Liens on that portion of
Borrower's plants, real Property and/or Equipment (the "Term Debt Property") as
required by the holders of such Term Debt to secure the Term Debt, upon
execution of documents and agreements (including, without limitation,
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intercreditor agreements), with terms and conditions acceptable to Agent and
Lenders in their reasonable discretion evidencing such Term Debt documents.
Agents and Lenders acknowledge that they shall have no Liens on the Term Debt
Property.
IN WITNESS WHEREOF, this Agreement has been duly executed in Chicago,
Illinois, on the day and year specified at the beginning of this Agreement.
NORTHWESTERN STEEL AND WIRE
COMPANY, an Illinois corporation
("Borrower")
By: /s/ XXXXXX X. XXXXXXXX
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
Accepted in Chicago, Illinois:
FLEET CAPITAL CORPORATION
("Agent" and "Lender")
By: /s/ XXXXXX XXXXXX
-----------------------------------
Name: Xxxxxx Xxxxxx
---------------------------
Title: Vice President
---------------------------
Address:
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Loan Administration Manager
Telecopier No.: (000) 000-0000
Revolving Loan Commitment: $65,000,000
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APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of September 30,
1999, by and among Northwestern Steel and Wire Company, the lender signatories
thereto ("Lenders") and Fleet Capital Corporation ("FCC") as agent for such
Lenders (FCC, in such capacity "Agent"), the following terms shall have the
following meanings (terms defined in the singular to have the same meaning when
used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated under or on
account of an Account.
Accounts - all accounts, contract rights, chattel paper, instruments
and documents, whether now owned or hereafter created or acquired by
Borrower or in which Borrower now has or hereafter acquires any interest.
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled
by, or is under common control with, a Person; (ii) which beneficially owns
or holds 10% or more of any class of the Voting Stock of a Person; or (iii)
10% or more of the Voting Stock (or in the case of a Person which is not a
corporation, 10% or more of the equity interest) of which is beneficially
owned or held by a Person or a Subsidiary of a Person.
Agreement - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits thereto and this Appendix A.
ALTA Survey - a survey prepared in accordance with the standards
adopted by the American Land Title Association and the American Congress on
Surveying and Mapping in 1986, known as the "Minimum Standard Detail
Requirements of Land Title Surveys". The ALTA Survey shall be in sufficient
form to satisfy the requirements of Chicago Title Insurance Company to
provide extended coverage over survey defects and shall also show the
location of all easements, utilities, and covenants of record, dimensions
of all improvements, encroachments from any adjoining property, and certify
as to the location of any flood plain area affecting the subject real
estate. The ALTA Survey shall contain the following certification: "To
Northwestern Steel and Wire Company, Fleet Capital Corporation, as Agent,
and Chicago Title Insurance Company. This is to certify that this map of
plat and the survey on which it is based were made in accordance with the
"Minimum Standard Detail Requirements for Land Title Surveys" jointly
established and adopted by ALTA and ACSM in 1986. (signed (SEAL) License
No. __________".
58
Applicable Margin - the following percentages set forth below with
respect to the Base Rate Revolving Credit Portion:
Applicable Margin
-----------------
LIBOR Base Rate
Revolving Revolving Unused
Credit Portion Credit Portion Line Fee
-------------- ----------------- --------
2.25% .250% .375%
Availability - the amount of money which Borrower is entitled to
borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when the sum of the principal amount of Revolving Credit
Loans then outstanding (including any amounts which Lender may have paid
for the account of Borrower pursuant to any of the Loan Documents and which
have not been reimbursed by Borrower) is subtracted from the Borrowing
Base. If the amount outstanding is equal to or greater than the Borrowing
Base, Availability is 0.
Bank - Fleet National Bank.
Bankruptcy Code - 11 U.S.C. Sections. 101 et seq.
Base Rate - the rate of interest announced or quoted by Bank from time
to time as its prime rate for commercial loans, whether or not such rate is
the lowest rate charged by Bank to its most preferred borrowers; and, if
such prime rate for commercial loans is discontinued by Bank as a standard,
a comparable reference rate designated by Bank as a substitute therefor
shall be the Base Rate.
Base Rate Revolving Credit Portion - that portion of the Revolving
Credit Loan not subject to a LIBOR Option.
Board - the Board of Governors of the Federal Reserve System of the
United States.
Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(i) the Maximum Revolving Loan at such date; or
(ii) an amount equal to:
(a) eighty-five percent (85%) of the net amount of
Eligible Accounts outstanding at such date;
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PLUS
(b) the sum of (A) sixty-five percent (65%), of the
value of Eligible Inventory (other than Eligible Inventory
consisting of supplies and Rolling Stock) at such date
calculated on the basis of the lower of cost or market with
the cost of raw materials and finished goods calculated on a
first-in, first-out basis, plus (B) the lesser of One Million
Dollars ($1,000,000) or twenty-five percent (25%), or such
lesser percentage as determined by Agent in its sole
discretion, of the value of Eligible Inventory consisting of
supplies and Rolling Stock at such date calculated on the
basis of the lower of cost or market with the cost of such
steel plant supplies and Rolling Stock calculated on a
first-in, first-out basis.
MINUS (subtract from the lesser of (i) or (ii) above)
(ii) an amount equal to the sum of (a) any amount which
Agent reasonably expects it may be obligated to pay in the future
for the account of Borrower, plus (b) the amount of any reserve
established by Agent pursuant to Section 1.1.1, plus (c) the LC
Amount.
For purposes hereof, the net amount of Eligible Accounts at
any time shall be the face amount of such Eligible Accounts less,
to the extent not already deducted in the calculation of Eligible
Accounts, any and all returns, rebates, discounts (which may, at
Agent's option, be calculated on shortest terms), credits,
allowances or excise taxes of any nature at any time issued, owing,
claimed by Account Debtors, granted, outstanding or payable in
connection with such Accounts at such time. In addition, for
purposes of computing the amount of the Borrowing Base, Agent shall
subtract from the gross amount of Eligible Accounts cash proceeds
received by Borrower but not yet applied to specific Accounts.
Borrowing Base Certificate - as defined in Section 8.1.4.
Business Day - (i) when used with respect to the LIBOR Option,
shall mean a day on which dealings may be effected in deposits of United
States dollars in the London interbank foreign currency deposits market
and on which the Agent is conducting business and on which banks may
conduct business in London, England, Chicago, Illinois, and New York,
New York and (ii) when used with respect to the other provisions of this
Agreement, shall mean any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed either in the
State of Illinois or in the State of Wisconsin.
Capital Expenditures - expenditures made or liabilities
incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which
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have a useful life of more than one year, including the total principal
portion of Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Change of Control - means the occurrence of any of the following
events: (i) all or substantially all of Borrower's assets, on a
consolidated basis, are sold as an entirety to any Person or related
group of Persons or there shall be consummated any consolidation or
merger of Borrower (A) in which Borrower is not the continuing or
surviving company (other than a consolidation or merger with a wholly
owned Subsidiary in which all shares of Common Stock outstanding
immediately prior to the effectiveness thereof are changed into or
exchanged for the same consideration) or (B) pursuant to which the
common stock of Borrower would be converted into cash, securities or
other property, in any case, other than a sale of assets or
consolidation or merger of Borrower in which the holders of the common
stock of Borrower immediately prior to the sale of assets or
consolidation or merger have, directly or indirectly, at least a
majority of the common stock of Borrower of the transferee or continuing
or surviving company immediately after such sale of assets or
consolidation or merger, (ii) any "person"(as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 of the Exchange
Act provided that such person shall be deemed to have "beneficial
ownership" of all shares that such person has the right to acquire,
whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 35% of the total voting
power of the outstanding voting securities of Borrower; or (iii) during
any period of two consecutive years, individuals who at the beginning of
such period constituted the Board (together with any new directors whose
election by such Board of Directors or whose nomination for election by
the shareholders of Borrower, as the case may be, was approved by a vote
of at least a majority of the directors of Borrower then still in
office) who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved
cease for any reason to constitute a majority of the Board of Directors
of Borrower then in office.
Closing Date - the date on which all of the conditions precedent
in Section 9 of the Agreement are satisfied and the initial Loans are
made.
Code - the Uniform Commercial Code as adopted and in force in the
State of Illinois, as from time to time in effect.
Collateral - all of the Property and interests in Property
described in Section 5 of the Agreement, and all other Property and
interests in Property that now or hereafter secure the payment and
performance of any of the Obligations.
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Commitment Termination Date - the earliest of: (i) September 29,
2002; (ii) the date of termination of the commitment to make further
Revolving Credit Loans pursuant to Section 4.2.1 or 4.2.2 hereof; and
(iii) the date of termination of the commitment to make further
Revolving Credit Loans pursuant to Section 10.2 hereof.
Common Stock - Borrower's common stock, $0.01 par value.
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
Confirmation Order - as defined in Section 12.16.
Default - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an Event
of Default. Agent and Lenders acknowledge that Borrower's potential
inability to repay the principal amount of Senior Notes on the due date
therefor shall not constitute a Default. The actual failure by Borrower
to pay such principal amount on the due date therefor shall, however,
constitute an Event of Default.
Default Rate - as defined in Section 2.1.2 of the Agreement.
DIP Facility - a credit facility entered into among Borrower,
Agent and Lenders pursuant to which Agent and Lenders would agree to
provide credit accommodations to Borrower during a proceeding for
reorganization under Chapter 11 of the Bankruptcy Code.
DIP Facility Documentation - the DIP Facility Loan Agreement and
such other appropriate security documents and other definitive
documentation with respect to the DIP Facility, each in form and
substance acceptable to Agent and Lenders.
DIP Facility Loan Agreement - a Loan and Security Agreement
relating to the DIP Facility, in form and substance acceptable to Agent
and Lenders.
Distribution - in respect of any corporation means and includes:
(i) the payment of any dividends or other distributions on capital stock
of the corporation (except distributions in such stock) and (ii) the
redemption or acquisition of Securities unless made contemporaneously
from the net proceeds of the sale of Securities.
Dominion Account - a special account of Agent for its benefit and
the ratable benefit of Lenders established by Borrower pursuant to the
Agreement at a bank selected by Borrower, but acceptable to Agent in its
reasonable discretion, and over which Agent shall have sole and
exclusive access and control for withdrawal purposes.
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Eligible Account - an Account arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services
which Agent, in its discretion deems to be an Eligible Account. Without
limiting the generality of the foregoing, no Account shall be an
Eligible Account if:
(i) it arises out of a sale made by Borrower to a
Subsidiary or an Affiliate of Borrower or to a Person controlled
by an Affiliate of Borrower; or
(ii) it is due or unpaid more than 90 days after the
original invoice date; or
(iii) 25% or more of the Accounts from the Account Debtor
are not deemed Eligible Accounts hereunder; or
(iv) the total unpaid Accounts of the Account Debtor exceed
10% of the net amount of all Eligible Accounts, to the extent of
such excess; or
(v) any covenant, representation or warranty contained in
the Agreement with respect to such Account has been breached; or
(vi) the Account Debtor is also Borrower's creditor or
supplier, or the Account Debtor has disputed liability with respect
to such Account, or the Account Debtor has made any claim with
respect to any other Account due from such Account Debtor to
Borrower, or the Account otherwise is or is reasonably expected to
become subject to any right of setoff by the Account Debtor; or
(vii) the Account Debtor has commenced a voluntary case
under the federal bankruptcy laws, as now constituted or hereafter
amended, or made an assignment for the benefit of creditors, or a
decree or order for relief has been entered by a court having
jurisdiction in the premises in respect of the Account Debtor in an
involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other petition or other
application for relief under the federal bankruptcy laws has been
filed against the Account Debtor, or if the Account Debtor has
failed, suspended business, ceased to be Solvent, or consented to
or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets
or affairs; or
(viii) it arises from a sale to an Account Debtor outside the
United States or Canada (other than Quebec), unless the sale is on
letter of credit, guaranty or acceptance terms in each case
acceptable to Agent in its sole discretion; or
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(ix) it arises from a sale to the Account Debtor on a
xxxx-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; or
(x) the Account Debtor is the United States of America or
any department, agency or instrumentality thereof, unless Borrower
assigns its right to payment of such Account to Agent, in a manner
satisfactory to Agent so as to comply with the Assignment of Claims
Act of 1940 (31 U.S.C. ss.203 et seq., as amended); or
(xi) the Account is subject to a Lien other than a
Permitted Lien or the Account is not at all times subject to
Agent's duly perfected, first priority security interest; or
(xii) the goods giving rise to such Account have not been
delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by Borrower and
accepted by the Account Debtor; or
(xiii) the Account is evidenced by chattel paper or an
instrument of any kind, or has been reduced to judgment; or
(xiv) Borrower has made any agreement with the Account
Debtor for any deduction therefrom, except for discounts or
allowances which are made in the ordinary course of business for
prompt payment and which discounts or allowances are reflected in
the calculation of the face value of each invoice related to such
Account;
(xv) Borrower has made an agreement with the Account
Debtor to extend the time of payment thereof; or
(xvi) any Account subject to "claims and shortages".
Eligible Inventory - such Inventory of Borrower (other than
packaging materials) which Agent, in its discretion deems to be Eligible
Inventory. Without limiting the generality of the foregoing, no
Inventory shall be Eligible Inventory if:
(i) it is not raw materials or finished goods that is
readily marketable;
(ii) it is not in good, new and saleable condition;
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(iii) it is slow-moving, obsolete or unmerchantable;
(iv) it does not meet all standards imposed by any
governmental agency or authority;
(v) it does not conform in all respects to any covenants,
warranties and representations set forth in the Agreement;
(vi) it is not at all times subject to Agent's duly
perfected, first priority security interest and no other Lien
except a Permitted Lien;
(vii) it is not situated at a location in compliance
with the Agreement and is not in transit;
(viii) it is defective Inventory;
(ix) it is Inventory located off-site (including
transfer scrap)and in respect to which Inventory Borrower has
not obtained Lien releases and access waivers in form and
substance acceptable to Agent;
(x) it is consigned Inventory;
(xi) it represents inter-company profit; or
(xii) it is packaging.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and
consent decrees relating to health, safety and environmental matters.
Equipment - all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory) of every kind and description used in
Borrower's operations or owned by Borrower or in which Borrower has an
interest, whether now owned or hereafter acquired by Borrower and
wherever located, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements
therefor.
ERISA - the Employee Retirement Income Security Act of 1974,
as amended, and all rules and regulations from time to time promulgated
thereunder.
Event of Default - as defined in Section 10.1 of the
Agreement.
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Exit Facility - a credit facility entered into among Borrower,
Agent and Lenders pursuant to which Agent and Lenders would agree to
provide credit accommodations to Borrower upon the effectiveness of a
Confirmation Order.
Exit Facility Documentation - the Exit Facility Loan Agreement
and such other appropriate security documents and other definitive
documentation with respect to the Exit Facility, each in form and
substance acceptable to Agent and Lenders.
Exit Facility Loan Agreement - a Loan and Security Agreement
relating to the Exit Facility, in form and substance acceptable to
Agent and Lenders.
Final Order - means an order of Bankruptcy Court as to which
the time to appeal, petition for certiorari, or move for reargument or
rehearing has expired and as to which no appeal, petition for
certiorari or other proceedings for reargument or rehearing shall then
be pending or as to which any right to appeal, petition for certiorari,
reargue or rehear shall have been waived in writing in form and
substance satisfactory to the Debtor and Lenders or, in the event that
an appeal, writ of certiorari, or reargument or rehearing thereof has
been sought, such order of the Bankruptcy Court shall have been
determined by the highest court to which such order was appealed or
certiorari, reargument or rehearing shall have been denied and the time
to take any further appeal, petition for certiorari or move for
reargument or rehearing shall have expired.
GAAP - generally accepted accounting principles in the United
States of America in effect from time to time.
General Intangibles - all general intangibles of Borrower,
whether now owned or hereafter created or acquired by Borrower,
including, without limitation, all choses in action, causes of action,
corporate or other business records, deposit accounts, inventions,
designs, patents, patent applications, trademarks, trade names, trade
secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, tax refund claims, computer programs, all claims under
guaranties, security interests or other security held by or granted to
Borrower to secure payment of any of the Accounts by an Account Debtor,
all rights to indemnification and all other intangible property of
every kind and nature (other than Accounts).
Guarantee(s) - The Guarantee(s) dated on or about the date
hereof made by Guarantors and any other Guarantee delivered pursuant to
the terms hereof on any amendment hereto, in each case substantially in
the form of Exhibit V attached hereto, as amended, supplemental or
otherwise modified from time to time.
Guarantors - The individual or collective reference to
Northwestern Steel and Wire Company, a Delaware corporation and
Northwestern Steel and Wire Company, a Texas corporation.
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Xxxxxxxxx Xxxxx Pledge Agreement - the Stock Pledge Agreement
executed or to be executed by Borrower in favor of Agent for its
benefit and the ratable benefit of Lenders, by which Borrower granted
to Agent, for its benefit and the ratable benefit of Lenders, a first
priority interest in the capital stock of each Guarantor to secure
repayment of the Obligations. Such Pledge Agreement shall be in
substantially the form attached hereto as Exhibit X.
Indebtedness - as applied to a Person means, without duplication
(i) all items which in accordance with GAAP would be
included in determining total liabilities as shown on the
liability side of a balance sheet of such Person as at the
date as of which Indebtedness is to be determined, including,
without limitation, Capitalized Lease Obligations,
(ii) all obligations of other Persons which such Person
has guaranteed,
(iii) all reimbursement obligations in connection
with letters of credit or letter of credit guaranties issued
for the account of such Person, and
(iv) in the case of Borrower (without duplication),
the Obligations.
Inventory - all of Borrower's inventory, whether now owned or
hereafter acquired including, but not limited to, all goods intended
for sale or lease by Borrower, or for display or demonstration; all
work in process; all raw materials and other materials and supplies of
every nature and description used or which might be used in connection
with the manufacture, printing, packing, shipping, advertising,
selling, leasing or furnishing of such goods or otherwise used or
consumed in Borrower's business; and all documents evidencing and
General Intangibles relating to any of the foregoing, whether now owned
or hereafter acquired by Borrower.
Investment Property - all of Borrower's investment property,
whether now owned or hereinafter acquired by Borrower, including,
without limitation, all securities (certificated or uncertificated),
securities accounts, securities entitlements, commodity accounts and
contracts.
LC Amount - at any time, the aggregate undrawn face amount of
all Letters of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Lender or any
Affiliate of Lender shall guaranty the payment or performance by
Borrower of its reimbursement obligation under any letter of credit.
LC Percent - one and one-half percent (1 1/2%).
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Legal Requirement - any requirement imposed upon any Lender or
any Participating Lender by any law of the United States of America or
the United Kingdom or by any regulation, order, interpretation, ruling
or official directive (whether or not having the force of law) of the
Board, the Bank of England or any other board, central bank or
governmental or administrative agency, institution or authority of the
United States of America, the United Kingdom or any political
subdivision of either thereof.
Letter of Credit - any letter of credit issued by Agent or Bank
for the account of any Borrower.
LIBOR Interest Payment Date - with respect to any LIBOR
Revolving Credit Portion, the first day of each calendar month during
the applicable LIBOR Period.
LIBOR Option - the option granted pursuant to Section 2.3 of
the Agreement to have the interest on all or any portion of the
principal amount of the Revolving Credit Loans based on a LIBOR Rate.
LIBOR Period - any period of one month, two months, three
months or six months commencing on a Business Day, selected as provided
in Section 2.3(i); provided, however that no LIBOR Period shall extend
beyond the last day of the Original Term, unless Borrower, Agent and
Lenders have agreed to an extension of the Original Term beyond the
expiration of the LIBOR Period in question. If any LIBOR Period so
selected shall end on a date that is not a Business Day, such LIBOR
Period shall instead end on the next preceding or succeeding Business
Day as determined by Agent in accordance with the then current banking
practice in London; provided, that Borrower shall not be required to
pay double interest, even though the preceding LIBOR Period ends and
the new LIBOR Period begins on the same day. Each determination by
Agent of the LIBOR Period shall, in the absence of manifest error, be
conclusive. In addition to the foregoing, until the earlier of December
31, 1999 or such time as Borrower completes initial syndication of the
credit facilities contemplated herein, all LIBOR periods shall be one
week.
LIBOR Rate - with respect to any LIBOR Revolving Credit
Portion for the related LIBOR Period, an interest rate per annum
(rounded upwards, if necessary, to the next higher 1/16 of 1% equal to
the product of (i) the Base LIBOR Rate (as hereinafter defined)
multiplied by (ii) Statutory Reserves. For purposes of this definition,
the term "Base LIBOR Rate" shall mean the rate (rounded to the next
higher 1/16 of 1%) at which deposits of U.S. dollars approximately
equal in principal amount to the LIBOR Revolving Credit Portion
specified in the applicable LIBOR Request are offered to Agent by prime
banks in the London interbank foreign currency deposits market at
approximately 11:00 a.m., London time, 2 Business Days prior to the
commencement of such LIBOR Period, for delivery on the first day of
such LIBOR Period. Each determination by Bank of any LIBOR Rate shall,
in the absence of manifest error, be conclusive.
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LIBOR Request - a notice in writing (or by telephone confirmed
by telex, telecopy or other facsimile transmission on the same day as
the telephone request) from Borrower, on behalf of all Borrowers, to
Agent requesting that interest on a portion of the Revolving Credit
Loan be based on the LIBOR Rate, specifying: (i) the first day of the
LIBOR Period; (ii) the length of the LIBOR Period consistent with the
definition of that term; and (iii) the dollar amount of the LIBOR
Revolving Credit Portion consistent with the definition of such term.
LIBOR Revolving Credit Portion - that portion of the Revolving
Credit Loans specified in a LIBOR Request (including any portion of
Revolving Credit Loans which is being borrowed by Borrower concurrently
with such LIBOR Request) which is not less than $1,000,000 and is an
integral multiple of $100,000, which does not exceed the outstanding
balance of Revolving Credit Loans not already subject to a LIBOR Option
and, which, as of the date of the LIBOR Request specifying such LIBOR
Revolving Credit Portion, has met the conditions for basing interest on
the LIBOR Rate in Section 2.3 of the Agreement and the LIBOR Period of
which was commenced and not terminated.
Lien - any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on common law, statute or contract. The
term "Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting Property. For the
purpose of the Agreement, Borrower shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes.
Loan Account - the loan account established on the books of
Agent pursuant to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the
Security Documents.
Loans - all loans and advances of any kind made by Lender
pursuant to the Agreement.
Maximum Revolving Loan - Sixty-Five Million Dollars
($65,000,000); provided, however, that, commencing on the first
anniversary of the Closing Date, on at least three Business Days' prior
written notice to Agent, Borrower may reduce the Maximum Revolving Loan
by an amount not less than One Million Dollars ($1,000,000) and an
integral multiple of One Hundred Thousand Dollars ($100,000). Once the
amount of the Maximum Revolving Loan has been reduced by Borrower, it
may not be thereafter increased. The maximum aggregate amount of any
such reductions shall not exceed Ten Million Dollars ($10,000,000)
within any one fiscal year of Borrower or Twenty Million Dollars
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($20,000,000) during the Original Term hereof. Borrower may not
exercise its rights to reduce the Maximum Revolving Loan more
frequently than semi-annually.
Money Borrowed - means (i) Indebtedness arising from the
lending of money by any Person to Borrower; (ii) Indebtedness, whether
or not in any such case arising from the lending by any Person of money
to Borrower, (A) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (B) which constitutes
obligations evidenced by bonds, debentures, notes or similar
instruments, or (C) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or
partial payment for Property; (iii) Indebtedness that constitutes a
Capitalized Lease Obligation; (iv) reimbursement obligations with
respect to letters of credit or guaranties of letters of credit and (v)
Indebtedness of Borrower under any guaranty of obligations that would
constitute Indebtedness for Money Borrowed under clauses (i) through
(iii) hereof, if owed directly by Borrower.
Mortgages - the mortgages to be executed by Borrower or any
Guarantor on or about the Closing Date in favor of Agent for its
ratable benefit and the benefit of Lenders, and by which such Borrower
shall grant and convey to Agent for its benefit and the ratable benefit
of Lenders, as security for the Obligations, a Lien upon the such
Borrower's interest in the real Property located in: Sterling and/or
Rock Falls, Illinois. Agent and Lenders acknowledge that Mortgages for
a portion of the real Property located in Sterling and/or Rock Falls,
Illinois may be delivered post-closing.
Multiemployer Plan - has the meaning set forth in Section 4001
(a)(3) of ERISA.
New Mortgages - as defined in Section 5.3 of the Agreement.
Notes - collectively, the Revolving Credit Notes.
Notice of Revolving Credit Loan - as defined in Section 3.1.1
of the Agreement.
Obligations - all Loans and all other advances, debts,
liabilities, obligations, covenants and duties, together with all
interest, fees and other charges thereon, owing, arising, due or
payable from Borrowers or any one of them to Agent or any Lender of any
kind or nature, present or future, whether or not evidenced by any
note, guaranty or other instrument, whether arising under the
Agreement, or any of the other Loan Documents, any interest rate
protection agreement, swaps or caps or otherwise whether direct or
indirect (including those acquired by assignment), absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising and however acquired.
Original Term - as defined in Section 4.1 of the Agreement.
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Other Agreements - any and all agreements, instruments and
documents (other than the Agreement and the Security Documents),
heretofore, now or hereafter executed by any Borrower, any Subsidiary
of any Borrower or any other third party and delivered to Agent and/or
Lenders in respect of the transactions contemplated by the Agreement.
Overadvance - as defined in Section 1.1.1(C) of the Agreement.
Participating Lender - each Person who shall be granted the
right by any Lender to participate in any of the Loans described in the
Agreement and who shall have entered into a participation agreement in
form and substance satisfactory to such Lender.
Patent Security Agreement - the Patent Security Agreement
executed by Borrower on or about the Closing Date in favor of Agent,
for its benefit and the ratable benefit of Lenders, and by which
Borrower assigned to Agent, for its benefit and the ratable benefit of
Lenders, and granted to Agent, for its benefit and the ratable benefit
of Lenders, a security interest in, as security for all of the
Obligations, all of Borrower's rights, title and interest in and to all
of its patents.
Permitted Liens - any Lien of a kind specified in Section
8.2.5 of the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money
Indebtedness of Borrower incurred after the date hereof which is
secured by a Purchase Money Lien and which, when aggregated with the
principal amount of all other such Indebtedness and Capitalized Lease
Obligations of Borrower at the time outstanding, does not exceed Five
Million Dollars ($5,000,000). For the purposes of this definition, the
principal amount of any Purchase Money Indebtedness consisting of
capitalized leases shall be computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited
liability company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of Borrower that is covered by Title IV of ERISA.
Pollution Control Bonds - those certain bonds, notes or other
instruments evidencing Indebtedness for Money Borrowed of Borrower in a
principal amount not to exceed Ten Million Dollars ($10,000,000), the
proceeds of which Indebtedness are used by Borrower to finance the
purchase and/or installation of pollution control Equipment at
Borrower's facility. The terms and conditions of such bonds, notes or
other instruments and the documents and agreements evidencing or
relating to such bonds, notes or other instruments, including without
limitation, interest rates and fees payable thereon, assets pledged to
secure the repayment thereof, inter-creditor agreements between Agent,
Lenders and the holders of
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such Pollution Control Bonds, amortization schedules, covenants and
events of default shall be subject to the satisfaction of Agent and
Required Lenders, in the reasonable exercise of their discretion.
Projections - Borrower's forecasted (a) balance sheets, (b)
profit and loss statements, (c) cash flow statements, and (d)
capitalization statements, all prepared on a consistent basis with
Borrower's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i)
Indebtedness (other than the Obligations) for the payment of all or any
part of the purchase price of any fixed assets, (ii) any Indebtedness
(other than the Obligations) incurred at the time of or within 10 days
prior to or after the acquisition of any fixed assets for the purpose
of financing all or any part of the purchase price thereof, and (iii)
any renewals, extensions or refinancings thereof, but not any increases
in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all times
be confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness
secured by such Lien.
Refinanced Senior Notes - any notes or similar instruments
issued in connection with any refinancing of the Senior Notes, provided
that the terms and conditions of such Refinanced Senior Notes and the
documents, instruments and agreements evidencing or relating to such
Refinanced Senior Notes, including, with limitation, interest rates and
fees payable thereon, amortization schedules, covenants and events of
default shall be subject to the satisfaction of Agent and Required
Lenders, in the reasonable exercise of their discretion. In addition to
the foregoing, it is acknowledged that the amounts due in respect of
the Refinanced Senior Notes will not be secured by any Lien on any of
Borrower's Property. The aggregate principal amount of the Refinanced
Senior Notes shall not exceed the aggregate amount of the Senior Notes
so refinanced.
Rentals - as defined in Section 8.2.13 of the Agreement.
Reportable Event - any of the events set forth in Section
4043(b) of ERISA.
Required Lenders - as of any date, the Lenders with at least
sixty-six and two-thirds percent (66 2/3%) of the aggregate principal
amount of the Revolving Loan Commitments; provided, that if any time
there are two or fewer Lenders, Required Lenders shall mean all
Lenders.
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Restricted Investment - any investment made in cash or by
delivery of Property to any Person, whether by acquisition of stock,
Indebtedness or other obligation or Security, or by loan, advance or
capital contribution, or otherwise, or in any Property except the
following:
(i) investments in one or more Subsidiaries of Borrower to
the extent existing on the Closing Date;
(ii) Property to be used in the ordinary course of
business;
(iii) Current assets arising from the sale of goods and
services in the ordinary course of business of Borrower and its
Subsidiaries;
(iv) investments in direct obligations of the United
States of America, or any agency thereof or obligations
guaranteed by the United States of America, provided that such
obligations mature within one year from the date of
acquisition thereof;
(v) investments in certificates of deposit maturing
within one year from the date of acquisition issued by a bank
or trust company organized under the laws of the United States
or any state thereof having capital surplus and undivided
profits aggregating at least $100,000,000; and
(vi) investments in commercial paper given the highest
rating by a national credit rating agency and maturing not more
than 270 days from the date of creation thereof.
Revolving Credit Loans - a Loan made by Lenders as provided in
Section 1.1.1 of the Agreement.
Revolving Credit Loan Commitments - as defined in Section
1.1.1 of the Agreement.
Revolving Credit Note - the Revolving Credit Note(s) to be
executed by Borrowers in favor of Lenders to evidence the Revolving
Credit Loans, which shall be in the form of Exhibit A attached hereto.
Revolving Credit Percentage - as defined in Section 1.1.1 of
the Agreement.
Rolling Stock - all rail cars accounted for as Inventory on the
books and records of Borrower.
Schedule of Accounts - as defined in Section 6.4.1 of the
Agreement.
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Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Agreement(s) - the Security Agreement(s) dated on or
about the Closing Date made by the Guarantors in favor of Agent for
its benefit and the ratable benefit of Lenders and any other Security
Agreement delivered to Agent to secure the repayment of the
Obligations or any Guarantee, in each case substantially in the form
of Exhibit X, as amended, supplemented or otherwise modified from time
to time.
Security Documents - the Mortgages, any New Mortgage, Patent
Security Agreement, the Trademark Security Agreement, the Security
Agreements, the Guarantor Stock Pledge Agreement and all other
instruments and agreements now or at any time hereafter securing the
whole or any part of the Obligations.
Senior Note Documents - those certain 9 1/2% Senior Notes in the
aggregate amount of $115,000,000 issued by Borrower for the benefit of
the holders thereof, the Indenture dated as of June 10, 1993 between
Borrower and Continental Bank, National Association, as Trustee and
all documents, instruments, agreements, schedules or exhibits executed
or delivered by Borrower in connection with the foregoing and all
amendments, modifications or restatements, if any, of the foregoing.
Senior Notes - those certain 9 1/2% Senior Notes issued by
Borrower pursuant to the Senior Note Documents.
Senior Note Holders - holders of the Senior Notes.
Senior Note Restructuring - the repayment of all or substantially
all of the outstanding principal balance of the Senior Notes effected
by or in connection with (i) the payment of $50,000,000 to the Senior
Note Holders, (ii) the issuance to Senior Note Holders of common stock
representing up to seventy percent (70%) of the outstanding shares of
Common Stock on a fully diluted basis, (iii) granting the Senior Note
Holders the right to elect four out of the seven members of Borrower's
Board of Directors, (iv) the incurrence by Borrower of the Term Debt,
which Term Debt would be guaranteed by the United States of America or
an agency thereof under the Emergency Steel Loan Guarantee Act of
1999, and/or (v) such other terms and conditions as are approved by
Agent and Required Lenders, in the exercise of their reasonable
discretion. As provided in Section 12.17, the terms and conditions of
the Term Debt, including, without limitation, interest rates and fees
payable thereon, assets pledged to secure the repayment thereof,
intercreditor agreements between Agent, Lenders and the holders of
such Term Debt, amortization schedules, covenants and events of
default shall be subject to the satisfaction of Agent and Required
Lenders, in the reasonable exercise of their discretion.
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Solvent - as to any Person, such Person has capital sufficient to
carry on its business and transactions and all business and
transactions in which it is about to engage.
Standby Letter of Credit - any Letter of Credit issued by Agent
or Bank for the account of Borrower which is not a Trade Letter of
Credit.
Statutory Reserves - a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is
the number one minus the aggregate of the maximum reserve percentages
(including, without limitation, any marginal, special, emergency or
supplemental reserves), expressed as a decimal, established by the
Board of Governors of the Federal Reserve System, and any other
banking authority to which Bank, Agent or any Lender is subject, for
Eurocurrency Liabilities (as defined in Regulation D of the Board or
any successor thereto) as applicable to each outstanding LIBOR
Revolving Credit Portion and the LIBOR Period applicable thereto. Such
reserve percentages shall include, without limitation, those imposed
under such Regulation D. LIBOR Revolving Credit Portions shall be
deemed to constitute Eurocurrency Liabilities and as such shall be
deemed to be subject to such reserve requirements without benefit of
or credit for proration, exceptions or offsets which may be available
from time to time to Bank or any Lender under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
Stock - all shares, options, warrants, interest, participations
or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or nonvoting,
including, without limitation, common stock, preferred stock, or any
other "equity security" (as such term in defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Act of 1934, as amended).
Subordinated Debt - Indebtedness of any Borrower that is
subordinated to the Obligations in a manner satisfactory to Agent.
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the
Voting Stock at the time of determination.
Tax - in relation to any LIBOR Revolving Credit Portion and the
applicable LIBOR Rate, any tax, levy, impost, duty, deduction,
withholding or charges of whatever nature required by any Legal
Requirement (i) to be paid by Lender and/or (ii) to be withheld or
deducted from any payment otherwise required hereby to be made by
Borrowers to Agent or any Lender; provided, that the term "Tax" shall
not include any taxes imposed upon the net income of Agent or any
Lender.
Term Debt - as defined in Section 12.17 of the Agreement.
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TIF Financing - any tax increment financing involving Borrower or its
Property, the terms and conditions of which including, without limitation,
effective principal amount of, effective interest rates and fees payable in
connection therewith, amortizations, schedules, covenants, (if any) and
events of default (if any) shall be subject to the satisfaction of Agent
and Required Lenders, in the reasonable exercise of their discretion.
Total Credit Facility - Sixty-Five Million Dollars ($65,000,000).
Trade Letter of Credit - a Letter of Credit issued by Bank or Agent
for the account of a Borrower in connection with the purchase of Inventory
by such Borrower.
Trademark Security Agreement - the Trademark Security Agreement
executed by Borrower on or about the Closing Date in favor of Agent, for
its benefit and the ratable benefit of Lenders, and by which Borrower to
Agent, for its benefit and the ratable benefit of Lenders, and granted to
Agent, for its benefit and the ratable benefit of Lenders, a security
interest in, as security for the Obligations all of Borrower's right, title
and interest in and to all of its trademarks.
Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors (or Persons performing
similar functions).
Other Terms. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the Code to the
extent the same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The Section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing.
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LIST OF EXHIBITS
----------------
Exhibit A Form of Revolving Credit Note
Exhibit B Borrower's and each Subsidiary's Business Locations
Exhibit C Form of Borrowing Base Certificate
Exhibit D Jurisdictions in which Borrower and each Subsidiary is
Authorized to do Business
Exhibit E Capital Structure of Borrower
Exhibit F Legal Names
Exhibit G Tax Identification Numbers of Subsidiaries of Borrower
Exhibit H Patents, Trademarks, Copyrights and Licenses
Exhibit I Contracts Restricting Borrower's Right to Incur Debts
Exhibit J Litigation
Exhibit K Capitalized Leases
Exhibit L Operating Leases
Exhibit M Pension Plans
Exhibit N Labor Contracts
Exhibit O Compliance Certificate
Exhibit P Permitted Liens
Exhibit Q Financial Covenants
Exhibit R Schedule of Documents
Exhibit S Form of Assignment and Acceptance Agreement
Exhibit T Letter of Credit Charges
Exhibit U Intentionally Omitted
Exhibit V Form of Guarantee
Exhibit W Form of Guarantor Stock Pledge Agreement
Exhibit X Form of Security Agreement
