CREDIT AGREEMENT
by and among
LONE STAR STEEL COMPANY
and
THE BANKS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, As Agent
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, N.A.,
As Co-Agent
Dated as of October 2, 1997
TABLE OF CONTENTS
Section Page
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1. CERTAIN DEFINITIONS 1
1.1 Certain Definitions 1
1.2 Construction 18
1.2.1 Number; Inclusion 18
1.2.2 Determination 18
1.2.3 Agent's Discretion and Consent 19
1.2.4 Documents Taken as a Whole 19
1.2.5 Headings 19
1.2.6 Implied References to This Agreement 19
1.2.7 Persons 19
1.2.8 Modifications to Documents 19
1.2.9 From, To and Through 19
1.2.10 Shall; Will 20
1.3 Accounting Principles 20
2. REVOLVING CREDIT AND SWING LOAN FACILITIES 20
2.1 Revolving Credit Commitments 20
2.1.1 Revolving Credit Loans 20
2.1.2 Swing Loan Commitment 21
2.1.3 Reduction of Commitment 21
2.2 Nature of Banks' Obligations with Respect to Revolving
Credit Loans 21
2.3 Commitment Fees 22
2.4 Revolving Credit Loan Requests; Swing Loan Requests 22
2.4.1 Revolving Credit Loan Requests 22
2.4.2 Swing Loan Requests 23
2.5 Making Revolving Credit Loans and Swing Loans; Revolving
Credit Notes and Swing Notes 23
2.5.1 Making Revolving Credit Loans 23
2.5.2 Making Swing Loans 23
2.6 Revolving Credit Notes 24
2.7 Swing Loan Note 24
2.8 Use of Proceeds 24
2.9 Borrowings to Repay Swing Loans 24
2.10 Letter of Credit Subfacility 24
2.10.1 Issuance of Letters of Credit 24
2.10.2 Letter of Credit Fees 25
2.10.3 Disbursements, Reimbursement 25
2.10.4 Repayment of Participation Advances 26
2.10.5 Documentation 27
2.10.6 Determinations to Honor Drawing Requests 27
2.10.7 Nature of Participation and Reimbursement Obligations 27
2.10.8 Indemnity 29
2.10.9 Liability for Acts and Omissions 29
2.10.10 Comparable Treatment of the Agent Under Overdraft
Reimbursement Agreement and Letters of Credit 30
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Section Page
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2.11 Extension by Banks of the Expiration Date 30
3. COLLATERAL 30
4. INTEREST RATES 31
4.1 Interest Rate Options 31
4.1.1 Rate Options 31
4.1.2 Rate Quotations 31
4.2 Interest Periods 31
4.2.1 Ending Date and Business Day 32
4.2.2 Amount of Borrowing Tranche 32
4.2.3 Termination Before Expiration Date 32
4.2.4 Renewals 32
4.3 Interest After Default 32
4.3.1 Letter of Credit Fees, Interest Rate 32
4.3.2 Other Obligations 32
4.3.3 Acknowledgment 33
4.4 Euro-Rate Unascertainable; Illegality; Increased Costs;
Deposits Not Available 33
4.4.1 Unascertainable 33
4.4.2 Illegality; Increased Costs; Deposits Not Available 33
4.4.3 Agent's and Bank's Rights 34
4.5 Selection of Interest Rate Options 34
5. PAYMENTS 34
5.1 Payments 34
5.2 Pro Rata Treatment of Banks 35
5.3 Interest Payment Dates 35
5.4 Voluntary Prepayments 36
5.4.1 Right to Prepay 36
5.4.2 Replacement of a Bank 37
5.4.3 Change of Lending Office 37
5.5 Additional Compensation in Certain Circumstances 37
5.5.1 Increased Costs or Reduced Return Resulting from Taxes,
Reserves, Capital Adequacy Requirements, Expenses, Etc. 37
5.5.2 Indemnity 38
5.6 Settlement Date Procedures 39
6. REPRESENTATIONS AND WARRANTIES 40
6.1 Representations and Warranties 40
6.1.1 Organization and Qualification 40
6.1.2 Capitalization and Ownership 40
6.1.3 Subsidiaries 40
6.1.4 Power and Authority 41
6.1.5 Validity and Binding Effect 41
6.1.6 No Conflict 41
6.1.7 Litigation 41
6.1.8 Title to Properties 42
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Section Page
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6.1.9 Financial Statements 42
6.1.10 Use of Proceeds; Margin Stock; Section 20 Subsidiaries 42
6.1.11 Full Disclosure 43
6.1.12 Taxes 43
6.1.13 Consents and Approvals 44
6.1.14 No Event of Default; Compliance with Instruments 44
6.1.15 Patents, Trademarks, Copyrights, Licenses, Etc. 44
6.1.16 Security Interests 44
6.1.17 Status of the Pledged Collateral 45
6.1.18 Insurance 45
6.1.19 Compliance with Laws 46
6.1.20 Material Contracts; Burdensome Restrictions 46
6.1.21 Investment Companies; Regulated Entities 46
6.1.22 Plans and Benefit Arrangements 46
6.1.23 Employment Matters 47
6.1.24 Environmental Matters 48
6.1.25 Senior Debt Status 49
6.2 Updates to Schedules 50
7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT 51
7.1 First Loans and Letters of Credit 51
7.1.1 Officer's Certificate 51
7.1.2 Secretary's Certificate 51
7.1.3 Delivery of Loan Documents 52
7.1.4 Opinion of Counsel 52
7.1.5 Legal Details 52
7.1.6 Payment of Fees 52
7.1.7 Consents 52
7.1.8 Officer's Certificate Regarding MACs 53
7.1.9 No Violation of Laws 53
7.1.10 No Actions or Proceedings 53
7.1.11 Insurance Policies; Certificates of Insurance;
Endorsements 53
7.1.12 Filing Receipts; Lien Searches 53
7.1.13 Administrative Questionnaire 54
7.1.14 Repayment of Existing Indebtedness; Payoff Letters 54
7.1.15 Processor and Warehouseman's Agreements 54
7.2 Each Additional Loan or Letter of Credit 54
8. COVENANTS 55
8.1 Affirmative Covenants 55
8.1.1 Preservation of Existence, Etc 55
8.1.2 Payment of Liabilities, Including Taxes, Etc. 55
8.1.3 Maintenance of Insurance 55
8.1.4 Maintenance of Properties and Leases 56
8.1.5 Maintenance of Patents, Trademarks, Etc. 57
8.1.6 Visitation Rights 57
8.1.7 Keeping of Records and Books of Account 57
8.1.8 Plans and Benefit Arrangements 57
8.1.9 Compliance with Laws 57
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8.1.10 Use of Proceeds 58
8.1.11 Further Assurances 58
8.1.12 Subordination of Intercompany Loans 58
8.1.13 Processors and Warehousemen's Agreements 58
8.2 Negative Covenants 59
8.2.1 Indebtedness 59
8.2.2 Liens 60
8.2.3 Guaranties 60
8.2.4 Loans and Investments 60
8.2.5 Dividends and Related Distributions 61
8.2.6 Liquidations, Mergers, Consolidations, Acquisitions 64
8.2.7 Dispositions of Assets or Subsidiaries 66
8.2.8 Affiliate Transactions 67
8.2.9 Subsidiaries, Partnerships and Joint Ventures 67
8.2.10 Continuation of or Change in Business 68
8.2.11 Plans and Benefit Arrangements 68
8.2.12 Fiscal Year 69
8.2.13 Issuance of Stock 69
8.2.14 Changes in Organizational Documents 69
8.2.15 Minimum Interest Coverage Ratio 69
8.2.16 Maximum Leverage Ratio 69
8.2.17 Minimum Tangible Net Worth 69
8.2.18 Minimum Working Capital 70
8.2.19 Negative Pledges-- Assets of the Loan Parties 70
8.2.20 Slab Financing Agreement 70
8.3 Reporting Requirements 70
8.3.1 Quarterly Financial Statements 70
8.3.2 Annual Financial Statements 71
8.3.3 Certificate of the Borrower 71
8.3.4 Notice of Default 72
8.3.5 Notice of Litigation 72
8.3.6 Certain Events 72
8.3.7 Budgets, Forecasts, Other Reports and Information 72
8.3.8 Notices Regarding Plans and Benefit Arrangements 73
9. DEFAULT 74
9.1 Events of Default 74
9.1.1 Payments Under Loan Documents 75
9.1.2 Breach of Representation or Warranty 75
9.1.3 Breach of Negative Covenants or Visitation Rights 75
9.1.4 Breach of Other Covenants 75
9.1.5 Defaults in Other Agreements or Indebtedness 75
9.1.6 Final Judgments or Orders 76
9.1.7 Loan Document Unenforceable 76
9.1.8 Uninsured Losses; Proceedings Against Assets 76
9.1.9 Notice of Lien or Assessment 76
9.1.10 Insolvency 76
9.1.11 Events Relating to Plans and Benefit Arrangements 77
9.1.12 Cessation of Business 77
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9.1.13 Change of Control 77
9.1.14 Involuntary Proceedings 78
9.1.15 Voluntary Proceedings 78
9.2 Consequences of Event of Default 78
9.2.1 Events of Default Other Than Bankruptcy, Insolvency or
Reorganization Proceedings 78
9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings 79
9.2.3 Set-off 79
9.2.4 Suits, Actions, Proceedings 79
9.2.5 Application of Proceeds 80
9.2.6 Other Rights and Remedies 80
9.3 Notice of Sale 80
10. THE AGENT 81
10.1 Appointment 81
10.2 Delegation of Duties 81
10.3 Nature of Duties; Independent Credit Investigation 81
10.4 Actions in Discretion of Agent; Instructions From the Banks 82
10.5 Reimbursement and Indemnification of Agent by the Borrower 82
10.6 Exculpatory Provisions; Limitation of Liability 83
10.7 Reimbursement and Indemnification of Agent by Banks 83
10.8 Reliance by Agent 84
10.9 Notice of Default 84
10.10 Notices 84
10.11 Banks in Their Individual Capacities 84
10.12 Holders of Notes 85
10.13 Equalization of Banks 85
10.14 Successor Agent 86
10.15 Agent's Fee 86
10.16 Availability of Funds 86
10.17 Calculations 87
10.18 Beneficiaries 87
11. MISCELLANEOUS 87
11.1 Modifications, Amendments or Waivers 87
11.1.1 Increase of Commitment; Extension or Expiration Date 87
11.1.2 Extension of Payment; Reduction of Principal Interest
or Fees; Modification of Terms of Payment 88
11.1.3 Release of Collateral or Guarantor 88
11.1.4 Miscellaneous 88
11.2 No Implied Waivers; Cumulative Remedies; Writing Required 88
11.3 Reimbursement and Indemnification of Banks by the Borrower;
Taxes 89
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Section Page
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11.4 Holidays 89
11.5 Funding by Branch, Subsidiary or Affiliate 90
11.5.1 Notional Funding 90
11.5.2 Actual Funding 90
11.6 Notices 90
11.7 Severability 91
11.8 Governing Law 91
11.9 Prior Understanding 91
11.10 Duration; Survival 91
11.11 Successors and Assigns 92
11.12 Confidentiality 93
11.12.1 General 93
11.12.2 Sharing Information With Affiliates of the Banks 93
11.13 Counterparts 94
11.14 Agent's or Bank's Consent 94
11.15 Exceptions 94
11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL 94
11.17 Tax Withholding Clause 95
11.18 Joinder of Guarantors 95
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(A) - PRICING GRID
SCHEDULE 1.1(B) - REVOLVING CREDIT COMMITMENTS OF BANKS AND ADDRESSES
FOR NOTICES
SCHEDULE 1.1(P) - PERMITTED LIENS
SCHEDULE 6.1.1 - QUALIFICATIONS TO DO BUSINESS
SCHEDULE 6.1.2(A) - CAPITALIZATION (LIST)
SCHEDULE 6.1.2(B) - CAPITALIZATION (EXCEPTION)
SCHEDULE 6.1.3(A) - SUBSIDIARIES (LIST)
SCHEDULE 6.1.3(B) - SUBSIDIARIES (EXCEPTION)
SCHEDULE 6.1.8(A) - OWNED AND LEASED REAL PROPERTY (LIST)
SCHEDULE 6.1.8(B) - OWNED AND LEASED REAL PROPERTY (EXCEPTION)
SCHEDULE 6.1.13 - CONSENTS AND APPROVALS
SCHEDULE 6.1.15(A) - PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.
(EXCEPTION)
SCHEDULE 6.1.15(B) - PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC. (LIST)
SCHEDULE 6.1.17 - PARTNERSHIP AGREEMENTS; LLC AGREEMENTS
SCHEDULE 6.1.18(A) - INSURANCE POLICIES (LIST)
SCHEDULE 6.1.18(B) - INSURANCE POLICIES (EXCEPTION)
SCHEDULE 6.1.20 - MATERIAL CONTRACTS
SCHEDULE 6.1.22 - EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 6.1.24 - ENVIRONMENTAL DISCLOSURES
SCHEDULE 8.2.1 - PERMITTED INDEBTEDNESS
EXHIBITS
EXHIBIT 1.1(A)(1) - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(G)(1) - GUARANTOR JOINDER
EXHIBIT 1.1(G)(2) - GUARANTY AGREEMENT
EXHIBIT 1.1(I)(1) - INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT 1.1(I)(2) - SUBORDINATION AGREEMENT
EXHIBIT 1.1(P)(1) - PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT
EXHIBIT 1.1(P)(2) - PLEDGE AGREEMENT
EXHIBIT 1.1(R) - REVOLVING CREDIT NOTE
EXHIBIT 1.1(S)(1) - SECURITY AGREEMENT
EXHIBIT 1.1(S)(2) - SWING LOAN NOTE
EXHIBIT 2.4.1 - LOAN REQUEST
EXHIBIT 2.4.2 - SWING LOAN REQUEST
EXHIBIT 7.1.4 - OPINION OF COUNSEL
EXHIBIT 8.1.13(A)(1) - PROCESSOR AGREEMENT
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EXHIBIT 8.1.13(A)(2) - WAREHOUSEMAN'S AGREEMENT
EXHIBIT 8.1.13(B) - PROCESSOR FINANCING STATEMENT
EXHIBIT 8.2.5 - DIVIDEND, PREFERRED STOCK REDEMPTION AND INTERCOMPANY
INDEBTEDNESS COMPLIANCE CERTIFICATE
EXHIBIT 8.2.6 - ACQUISITION COMPLIANCE CERTIFICATE
EXHIBIT 8.3.3 - QUARTERLY COMPLIANCE CERTIFICATE
These Schedules and Exhibits are not filed with this Credit Agreement.
Registrant agrees to furnish supplementally a copy of any omitted schedule or
exhibit to the Commission upon request.
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of October 2, 1997 and is made by and
among Lone Star Steel Company, a Delaware corporation (the "Borrower"), each
of the Guarantors (as hereinafter defined), the BANKS (as hereinafter
defined), and PNC BANK, NATIONAL ASSOCIATION, in its capacity as agent for
the Banks under this Agreement (hereinafter referred to in such capacity as
the "Agent") and Bank of America National Trust and Savings Association,
N.A., as Co-Agent.
WITNESSETH:
WHEREAS, the Borrower has requested the Banks to provide a revolving
credit facility to the Borrower; and
WHEREAS, the revolving credit facility shall be used to refinance
existing Indebtedness of the Borrower, to fund redemptions of preferred stock
of the Borrower, for general working capital purposes and as otherwise
provided herein; and
WHEREAS, the Banks are willing to provide such credit upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally
bound hereby, covenant and agree as follows:
1. CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS.
In addition to words and terms defined elsewhere in this Agreement,
the following words and terms shall have the following meanings,
respectively, unless the context hereof clearly requires otherwise:
AFFILIATE as to any Person shall mean any other Person (i) which
directly or indirectly controls, is controlled by, or is under common control
with such Person, (ii) which beneficially owns or holds 5% or more of any
class of the voting or other equity interests of such Person, or (iii) 5% or
more of any class of voting interests or other equity interests of which is
beneficially owned or held, directly or indirectly, by such Person. Control,
as used in this definition, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities,
by contract or otherwise, including the power to elect a majority of the
directors or trustees of a corporation or trust, as the case may be.
AGENT shall mean PNC Bank, National Association, and its successors
and assigns.
AGENT'S FEE shall have the meaning assigned to that term in Section
10.15.
AGENT'S LETTER shall have the meaning assigned to that term in
Section 10.15.
AGREEMENT shall mean this Credit Agreement, as the same may be
supplemented or amended from time to time, including all schedules and
exhibits.
ANNUAL STATEMENTS shall have the meaning assigned to that term in
Section 6.1.9(i).
APPLICABLE COMMITMENT FEE RATE shall mean the percentage rate per
annum based on the Leverage Ratio then in effect according to the pricing
grid on SCHEDULE 1.1(A) below the heading "Commitment Fee." The Applicable
Commitment Fee Rate shall be computed in accordance with the parameters set
forth on SCHEDULE 1.1(A).
APPLICABLE MARGIN shall mean, as applicable:
(A) the percentage spread to be added to Base Rate under the Base
Rate Option based on the Leverage Ratio then in effect according to the
pricing grid on SCHEDULE 1.1(A) below the heading "Base Rate Spread," or
(B) the percentage spread to be added to Euro-Rate under the
Euro-Rate Option based on the Leverage Ratio then in effect according to the
pricing grid on SCHEDULE 1.1(A) below the heading "Euro-Rate Spread."
The Applicable Margin shall be computed in accordance with the
parameters set forth on SCHEDULE 1.1(A).
ASSIGNMENT AND ASSUMPTION AGREEMENT shall mean an Assignment and
Assumption Agreement by and among a Purchasing Bank, a Transferor Bank and
the Agent, as Agent and on behalf of the remaining Banks, substantially in
the form of EXHIBIT 1.1(A)(1).
AUTHORIZED OFFICER shall mean those individuals, designated by
written notice to the Agent from the Borrower, authorized to execute notices,
reports and other documents on behalf of the Loan Parties required hereunder.
The Borrower may amend such list of individuals from time to time by giving
written notice of such amendment to the Agent.
BANKS shall mean the financial institutions named on SCHEDULE
1.1(B) and their respective successors and assigns as permitted hereunder,
each of which is referred to herein as a Bank.
BASE NET WORTH shall mean the sum of
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(i) $122,698,000, PLUS
(ii) 50% of consolidated net income of the Borrower and its
Subsidiaries for each fiscal quarter in which net income was earned (as
opposed to a net loss) during the period from September 1, 1997 through the
date of determination,
PLUS
(iii) the amount of any contributions made to the capital of the
Borrower after the Closing Date or proceeds received by the Borrower after
the Closing Date from the sale of its capital stock, net of ordinary and
reasonable expenses directly related to such sale, and
MINUS
(iv) the amount of payments made by the Borrower after the Closing
Date to redeem its Preferred Stock to the extent that such payments reduce
the Consolidated Tangible Net Worth of the Borrower and are permitted
hereunder.
BASE RATE shall mean the greater of (i) the interest rate per annum
announced from time to time by the Agent at its Principal Office as its then
prime rate, which rate may not be the lowest rate then being charged
commercial borrowers by the Agent, or (ii) the Federal Funds Effective Rate
plus 1/2% per annum.
BASE RATE OPTION shall mean the option of the Borrower to have
Revolving Credit Loans bear interest at the rate and under the terms and
conditions set forth in Section 4.1.1(i).
BENEFIT ARRANGEMENT shall mean at any time an "employee benefit
plan," within the meaning of Section 3(3) of ERISA, which is neither a Plan
nor a Multiemployer Plan and which is maintained, sponsored or otherwise
contributed to by any member of the ERISA Group.
BORROWER shall mean Lone Star Steel Company, a corporation
organized and existing under the laws of the State of Delaware.
BORROWER'S SHARES shall have the meaning assigned to that term in
Section 6.1.2.
BORROWING DATE shall mean, with respect to any Loan, the date for
the making thereof or the renewal or conversion thereof at the same or to a
different Interest Rate Option, which shall be a Business Day.
BORROWING TRANCHE shall mean specified portions of Loans
outstanding as follows: (i) any Loans to which a Euro-Rate Option applies
which become subject to the same Interest Rate Option under the same Loan
Request by the Borrower and which have the same
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Interest Period shall constitute one Borrowing Tranche, and (ii) all Loans to
which a Base Rate Option applies shall constitute one Borrowing Tranche.
BUSINESS DAY shall mean any day other than a Saturday or Sunday or
a legal holiday on which commercial banks are authorized or required to be
closed for business in Pittsburgh, Pennsylvania; and if the applicable
Business Day relates to any Loan to which the Euro-Rate Option applies, such
day must also be a day on which dealings are carried on in the London
interbank market.
CITBC shall mean The CIT Group/Business Credit, Inc.
CLOSING DATE shall mean the Business Day on which the first Loan
shall be made, which shall be October 2, 1997.
COLLATERAL shall mean the Pledged Collateral, the UCC Collateral,
and the Intellectual Property Collateral.
CO-AGENT shall mean and Bank of America National Trust and Savings
Association, N.A. The Co-Agent shall have no duties or responsibilities under
this Agreement.
COLLATERAL PACKAGE shall have the meaning assigned to such term in
Section 8.1.13.
COMMERCIAL LETTER OF CREDIT shall mean any Letter of Credit which
is a commercial letter of credit issued in respect of the purchase of goods
or services by one or more of the Loan Parties in the ordinary course of
their business.
COMMITMENT shall mean as to any Bank its Revolving Credit
Commitment, and in the case of the Agent, its Swing Loan Commitment, and
COMMITMENTS shall mean the aggregate of the Revolving Credit Commitments and
Swing Loan Commitment of all of the Banks.
COMMITMENT FEE shall have the meaning assigned to that term in
Section 2.3.
CONSIDERATION shall mean with respect to any Permitted Acquisition,
the aggregate, without duplication, of(i) the cash paid by any of the Loan
Parties, directly or indirectly, to the seller in connection therewith, (ii)
the Indebtedness incurred or assumed by any of the Loan Parties, whether in
favor of the seller or otherwise, (iii) any Guaranty of Indebtedness or any
other Guaranty that constitutes a liability under GAAP given or incurred by
any Loan Party in connection therewith, and (iv) any other consideration
given or obligation that constitutes a liability under GAAP incurred by any
of the Loan Parties in connection therewith.
CONSIGNED INVENTORY shall mean inventory which belongs to Lone Star
Technologies which is in the possession of the Loan Parties on consignment or
similar arrangement.
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CONSOLIDATED TANGIBLE NET WORTH shall mean as of any date of
determination total stockholders' equity less intangible assets of the
Borrower and its Subsidiaries as of such date determined and consolidated in
accordance with GAAP.
DOLLAR, DOLLARS, U.S. DOLLARS and the symbol $ shall mean lawful
money of the United States of America.
DRAWING DATE shall have the meaning assigned to that term in
Section 2.10.3.2
EBITDA for any period of determination shall mean (i) the sum of
net income, depreciation, amortization, other non-cash charges to net income,
interest expense and income tax expense minus (ii) non-cash credits to net
income, in each case of the Borrower and its Subsidiaries for such period
determined and consolidated in accordance with GAAP.
ENVIRONMENTAL COMPLAINT shall mean any written complaint setting
forth a cause of action for personal or property damage or natural resource
damage or equitable relief, order, notice of violation, citation, issued
pursuant to any Environmental Laws by an Official Body, or subpoena relating
to, arising out of, or issued pursuant to, any of the Environmental Laws or
any Environmental Conditions, as the case may be.
ENVIRONMENTAL CONDITIONS shall mean any conditions of the
environment, including the workplace, natural resources (including flora or
fauna), soil, surface water, groundwater, any actual or potential drinking
water supply sources, substrata or the ambient air, which are in
noncompliance with applicable Environmental Laws relating to or arising out
of, or caused by, the use, handling, storage, treatment, recycling,
generation, transportation, release, spilling, leaking, pumping, emptying,
discharging, injecting, escaping, leaching, disposal, dumping, threatened
release or other management or mismanagement of Regulated Substances
resulting from the use of, or operations on, any Property.
ENVIRONMENTAL LAWS shall mean all federal, state, local and foreign
Laws and regulations, including permits, licenses, authorizations, bonds,
orders, judgments, and consent decrees issued, or entered into, pursuant
thereto, relating to pollution or protection of human health or the
environment.
ERISA shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations
thereunder, as from time to time in effect.
ERISA GROUP shall mean, at any time, the Borrower and all members
of a controlled group of corporations and all trades or businesses (whether
or not incorporated) under common control and all other entities which,
together with the Borrower, are treated as a single employer under Section
414 of the Internal Revenue Code.
EURO-RATE shall mean with respect to the Loans comprising any
Borrowing Tranche to which the Euro-Rate Option applies for any Interest
Period, the interest rate per
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annum determined by the Agent by dividing (the resulting quotient rounded
upward to the nearest 1/100th of 1% per annum) (i) the rate of interest
determined by the Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the average of
the London interbank offered rates of interest per annum for U.S. Dollars at
11:00 a.m. London time as set forth on Telerate display page 3750 or such
other display page on the Telerate System as may replace such page to
evidence the average of rates quoted by banks designated by the British
Bankers' Association (or appropriate successor or, if the British Bankers'
Association or its successor ceases to provide such quotes, a comparable
replacement determined by the Agent) two (2) Business Days prior to the first
day of such Interest Period for an amount comparable to such Borrowing
Tranche and having a borrowing date and a maturity comparable to such
Interest Period by (ii) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage. The Euro-Rate may also be expressed by the following formula:
Telerate page 3750 quoted by British Bankers'
Euro-Rate = ASSOCIATION OR APPROPRIATE SUCCESSOR
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1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option
outstanding on the effective date of any change in the Euro-Rate Reserve
Percentage as of such effective date. The Agent shall give prompt notice to
the Borrower of the Euro-Rate as determined or adjusted in accordance
herewith, which determination shall be conclusive absent manifest error.
EURO-RATE OPTION shall mean the option of the Borrower to have
Revolving Credit Loans bear interest at the rate and under the terms and
conditions set forth in Section 4.1.1(ii).
EURO-RATE RESERVE PERCENTAGE shall mean the maximum percentage
(expressed as a decimal rounded upward to the nearest 1/100 of 1%) as
determined by the Agent which is in effect during any relevant period, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including supplemental,
marginal and emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as "Eurocurrency Liabilities") of a member
bank in such System.
EVENT OF DEFAULT shall mean any of the events described in Section
9.1 and referred to therein as an "Event of Default."
EXISTING CREDIT AGREEMENT shall mean that certain Financing
Agreement dated as of March 2, 1993, as amended, between the Borrower and
CITBC.
EXPIRATION DATE shall mean, with respect to the Revolving Credit
Commitments and Swing Loan Commitment, October 2, 2002.
FEDERAL FUNDS EFFECTIVE RATE for any day shall mean the rate per
annum (based on a year of 360 days and actual days elapsed and rounded upward
to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York
(or any successor) on such day as
-6-
being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day,
as computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the "Federal Funds Effective
Rate" as of the date of this Agreement; PROVIDED, if such Federal Reserve
Bank (or its successor) does not announce such rate on any day, the "Federal
Funds Effective Rate" for such day shall be the Federal Funds Effective Rate
for the last day on which such rate was announced.
GAAP shall mean generally accepted accounting principles as are in
effect from time to time, subject to the provisions of Section 1.3, and
applied on a consistent basis both as to classification of items and amounts.
GOVERNMENTAL ACTS shall have the meaning assigned to that term in
Section 2.10.8.
GUARANTOR shall mean each Person signing as a Guarantor on the
signature pages hereto on the date hereof or which joins this Agreement as a
Guarantor after the date hereof pursuant to Section 11.18.
GUARANTOR JOINDER shall mean a joinder by a Person as a Guarantor
under this Agreement, the Guaranty Agreement and the other Loan Documents in
the form of EXHIBIT 1.1(G)(1).
GUARANTY of any Person shall mean any obligation of such Person
guaranteeing or in effect guaranteeing any liability or obligation of any
other Person in any manner, whether directly or indirectly, including any
agreement to indemnify or hold harmless any other Person, any performance
bond or other suretyship arrangement and any other form of assurance against
loss, except endorsement of negotiable or other instruments for deposit or
collection in the ordinary course of business.
GUARANTY AGREEMENT shall mean the Guaranty and Suretyship Agreement
in substantially the form of EXHIBIT 1.1(G)(2) which will be executed and
delivered each Guarantor on the Closing Date and any Person which thereafter
joins this Agreement as a Guarantor pursuant to Section 11.18.
HISTORICAL STATEMENTS shall have the meaning assigned to that term
in Section 6.1.9(i).
INACTIVE SUBSIDIARIES means the four Subsidiaries listed on
Schedule 6.1.3 and designated as "Inactive Subsidiaries."
INDEBTEDNESS shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or
joint or several) of such Person for or in respect of: (i) borrowed money or
which are evidenced by a bond, note or similar instrument, (ii) amounts
raised under or liabilities in respect of any note purchase or acceptance
credit
-7-
facility, (iii) reimbursement obligations (contingent or otherwise) under any
letter of credit, currency swap agreement, interest rate swap, cap, collar or
floor agreement or other interest rate management device, (iv) any other
transaction (including forward sale or purchase agreements, capitalized
leases and conditional sales agreements) having the commercial effect of a
borrowing of money entered into by such Person to finance its operations or
capital requirements (but not including trade payables and accrued expenses
incurred in the ordinary course of business which are not represented by a
promissory note or other evidence of indebtedness and which are not more than
forty-five (45) days past due except if such trade payable is being contested
in good faith), or (v) any Guaranty of Indebtedness for borrowed money.
Notwithstanding any of the foregoing, Indebtedness shall not include any
obligations of the Borrower to Lone Star Technologies incurred under the Slab
Financing Arrangement relating to the purchases of slab.
INELIGIBLE SECURITY shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 and Section 21 of the Banking Act of 1933 (12 U.S.C. Section 24,
Seventh, Section 378(a)), as amended.
INSOLVENCY PROCEEDING shall mean, with respect to any Person, (a) a
case, action or proceeding with respect to such Person (i) before any court
or any other Official Body under any bankruptcy, insolvency, reorganization
or other similar Law now or hereafter in effect, or (ii) for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator,
conservator (or similar official) of any such Person or otherwise relating to
the liquidation, dissolution, winding-up or relief of such Person, or (b) any
general assignment for the benefit of creditors, composition, marshaling of
assets for creditors, or other, similar arrangement in respect of such
Person's creditors generally or any substantial portion of its creditors;
undertaken under any Law.
INTELLECTUAL PROPERTY COLLATERAL shall mean all of the property
described in the Patent, Trademark and Copyright Assignment.
INTERCOMPANY SUBORDINATION AGREEMENT shall mean as applicable (i) a
Subordination Agreement among the Agent for the benefit of the Banks, the
Borrower and Lone Star Technologies in the form attached hereto as EXHIBIT
1.1(I)(1), or (ii) a Subordination Agreement among the Agent for the benefit
of the Banks and the Loan Parties in the form attached hereto as EXHIBIT
1.1(I)(2).
INTEREST COVERAGE RATIO shall mean for any period of determination
the ratio of(i) EBITDA to (ii) the sum of (A) interest expense of the
Borrower and its Subsidiaries for such period plus (B) cash dividend payments
or other cash distributions paid by the Borrower or cash or other
consideration paid to purchase whether by way of redemption or otherwise
capital stock of the Borrower during such period, excluding cash payments
made by the Borrower to redeem the Preferred Stock of the Borrower.
INTEREST PERIOD shall have the meaning assigned to such term in
Section 4.2.
-8-
INTEREST RATE OPTION shall mean any Euro-Rate Option or Base Rate
Option.
INTERIM STATEMENTS shall have the meaning assigned to that term in
Section 6.1.9(i).
INTERNAL REVENUE CODE shall mean the Internal Revenue Code of 1986,
as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations
thereunder, as from time to time in effect.
INVENTORY of the Loan Parties shall mean all inventory of the Loan
Parties as determined under GAAP, except for Consigned Inventory.
LABOR CONTRACTS shall mean all employment agreements, employment
contracts, collective bargaining agreements and other agreements among any
Loan Party or Subsidiary of a Loan Party and its employees.
LAW shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, opinion, release, ruling,
order, injunction, writ, decree or award of any Official Body.
LETTER OF CREDIT shall have the meaning assigned to that term in
Section 2.10.1.
LETTER OF CREDIT FEE shall have the meaning assigned to that term
in Section 2.10.2.
LETTERS OF CREDIT OUTSTANDING shall mean at any time the sum of(i)
the aggregate undrawn face amount (i.e., the amount available for drawing) of
outstanding Letters of Credit and (ii) the aggregate amount of all unpaid and
outstanding Reimbursement Obligations.
LEVERAGE RATIO shall be computed as of the end of each fiscal
quarter of the Borrower ending on or after September 30, 1997 as the ratio of
consolidated Indebtedness on such quarter-end to the EBITDA for the four
fiscal quarters ending on such quarter-end.
LIEN shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien, security interest or other encumbrance is created or exists at
the time of the filing).
LLC INTERESTS shall have the meaning given to such term in Section
6.1.3.
LOAN DOCUMENTS shall mean this Agreement, the Agent's Letter, the
Intercompany Subordination Agreement, the Notes, the Patent, Trademark and
Copyright
-9-
Assignment, the Security Agreement, any Pledge Agreement or Guaranty
Agreement hereafter executed and delivered under this Agreement, and any
other instruments, certificates or agreements delivered or contemplated to be
delivered hereunder or thereunder or in connection herewith or therewith, as
the same may be supplemented or amended from time to time in accordance
herewith or therewith, and LOAN DOCUMENT shall mean any of the Loan Documents.
LOAN PARTIES shall mean the Borrower and any Guarantors.
LOAN REQUEST shall have the meaning given to such term in Section
2.4.
LOANS shall mean collectively and LOAN shall mean separately all
Revolving Credit Loans and the Swing Loans or any Revolving Credit Loan or
the Swing Loan.
LONE STAR TECHNOLOGIES shall mean Lone Star Technologies, Inc., a
Delaware corporation which owns all of the capital stock of the Borrower.
MATERIAL ADVERSE CHANGE shall mean any set of circumstances or
events which (a) has or is reasonably expected to have any material adverse
effect whatsoever upon the validity or enforceability of this Agreement or
any other Loan Document, (b) is or is reasonably expected to be material and
adverse to the business, properties, assets, financial condition, results of
operations or prospects of the Loan Parties taken as a whole, (c) impairs
materially or is reasonably expected to impair materially the ability of the
Loan Parties taken as a whole to duly and punctually pay or perform its
Indebtedness, or (d) impairs materially or is reasonably expected to impair
materially the ability of the Agent or any of the Banks, to the extent
permitted, to enforce their legal remedies pursuant to the Loan Documents.
MONTH, with respect to an Interest Period under the Euro-Rate
Option, shall mean the interval between the days in consecutive calendar
months numerically corresponding to the first day of such Interest Period. If
any Euro-Rate Interest Period begins on a day of a calendar month for which
there is no numerically corresponding day in the month in which such Interest
Period is to end, the final month of such Interest Period shall be deemed to
end on the last Business Day of such final month.
MULTIEMPLOYER PLAN shall mean any employee benefit plan which is a
"multiemployer plan" within the meaning of Section 4001 (a)(3) of ERISA and
to which the Borrower or any member of the ERISA Group is then making or
accruing an obligation to make contributions or, within the preceding five
Plan years, has made or had an obligation to make such contributions.
MULTIPLE EMPLOYER PLAN shall mean a Plan which has two or more
contributing sponsors (including the Borrower or any member of the ERISA
Group) at least two of whom are not under common control, as such a plan is
described in Sections 4063 and 4064 of ERISA.
NON-QUALIFIED INVENTORY OF THE LOAN PARTIES shall mean all
Inventory of the Loan Parties (i) in the possession of Processors or
Warehousemen unless the Borrower has
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caused such Processor or Warehouseman to execute and deliver to the Agent for
the benefit of the Banks a Processors Agreement or a Warehouseman's
Agreement, as applicable, and (ii) in the possession of Persons other than
either the Loan Parties or Persons described in clause (i) above.
NOTES shall mean the Revolving Credit Notes and Swing Loan Note.
NOTICES shall have the meaning assigned to that term in Section
11.6.
OBLIGATION shall mean any obligation or liability of any of the
Loan Parties to the Agent or any of the Banks under or in connection with
this Agreement, the Notes, the Letters of Credit, the Agent's Letter or any
other Loan Document, howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, now or hereafter existing, or due or to
become due.
OFFICIAL BODY shall mean any national, federal, state, local or
other government or political subdivision or any agency, authority, bureau,
central bank, commission, department or instrumentality thereof, or any
court, tribunal, grand jury or arbitrator, in each case whether foreign or
domestic.
ORA INDEMNITY AGREEMENT shall mean that the last paragraph of the
Termination/Reassignment pursuant to which the Borrower agrees to reimburse
the Agent for any amounts which the Agent pays to CITBC under the Overdraft
Reimbursement Agreement as more fully provided therein. The ORA Indemnity
Agreement is supplemented by the Borrower's agreements in Section 2 hereof
which agreements shall supersede the ORA Indemnity Agreement to the extent of
any conflict between the two.
ORAIA REIMBURSEMENT OBLIGATIONS shall mean reimbursement
obligations of the Borrower under the ORA Indemnity Agreement.
TERMINATION/REASSIGNMENT shall mean that certain letter agreement
titled "Termination/Reassignment" dated as of the Closing Date between the
Borrower and CITBC, pursuant to which CITBC agrees to release its Liens in
the assets of the Borrower upon payoff of the amounts due to CITBC as more
fully provided therein.
OVERDRAFT REIMBURSEMENT AGREEMENT shall mean that certain Indemnity
Agreement by PNC Bank, National Association in favor of CITBC attached to and
referred to (as a "letter") in the Termination/Reassignment, pursuant to
which the Agent agrees to reimburse CITBC for any checks or similar
instruments delivered by the Borrower or its account debtors to CITBC which
are dishonored or returned after the date thereof as more fully provided
therein.
PARTICIPATION ADVANCE shall mean, with respect to any Bank, such
Bank's payment in respect of its participation in a Reimbursement Borrowing
according to its Ratable Share pursuant to Section 2.10.4.
PARTNERSHIP INTERESTS shall have the meaning given to such term in
Section 6.1.3.
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PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT shall mean the
Patent, Trademark and Copyright Security Agreement in substantially the form
of EXHIBIT 1.1(P)(1) executed and delivered by each of the Loan Parties to
the Agent for the benefit of the Banks.
PBGC shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any successor.
PERMITTED ACQUISITIONS shall have the meaning assigned to such term
in Section 8.2.6.
PERMITTED INVESTMENTS shall mean:
(i) direct obligations of the United States of America or any
agency or instrumentality thereof or obligations backed by the full faith and
credit of the United States of America maturing in twelve (12) months or less
from the date of acquisition;
(ii) commercial paper maturing in 180 days or less rated not
lower than A-1, by Standard & Poor's or P-1 by Xxxxx'x Investors Service,
Inc. on the date of acquisition; and
(iii) demand deposits, time deposits or certificates of deposit
maturing within one year in commercial banks whose obligations are rated A-1,
A or the equivalent or better by Standard & Poor's on the date of acquisition.
(iv) Payroll deposits and other deposits available for withdrawal
on demand, with any commercial bank not meeting the qualification specified
in subparagraph (iii) above but which is located in the area in which a Loan
Party maintains an office, provided that all such deposits in all such
accounts are made in the ordinary course of business and do not in the
aggregate exceed $5,000,000 at any time; and
(vii) investments in money market funds all of whose assets
comprise securities of the types and maturities described in subparagraphs
(i) through (iii) above.
PERMITTED LIENS shall mean:
(i) Liens for taxes, assessments, or similar charges which are
not yet due and payable;
(ii) Pledges or deposits made in the ordinary course of business
to secure payment of worker's compensation, or to participate in any fund in
connection with worker's compensation, unemployment insurance, old-age
pensions or other social security programs;
(iii) Liens of mechanics, materialmen, warehousemen, carriers, or
other like Liens, securing obligations incurred in the ordinary course of
business that are not yet due
-12-
and payable and Liens of landlords securing obligations to pay lease payments
that are not yet due and payable or in default;
(iv) Good-faith pledges or deposits to secure (i) performance of
bids, tenders, contracts (other than for the repayment of borrowed money) or
leases, not in excess of the aggregate amount due thereunder or indemnity,
performance or other similar bonds or, in each instance in the ordinary
course of business or (ii) statutory obligations or surety, appeal or other
similar bonds;
(v) Encumbrances consisting of zoning restrictions, easements or
other restrictions on the use of real property, none of which materially
impairs the use of such property or the value thereof, and none of which is
violated in any material respect by existing or proposed structures or land
use;
(vi) Liens in favor of the Agent for the benefit of the Banks;
(vii) Liens on property leased by any Loan Party or Subsidiary of
a Loan Party under capital and operating leases securing obligations of such
Loan Party or Subsidiary to the lessor under such leases;
(viii) Any Lien existing on the date of this Agreement and
described on SCHEDULE 1.1(P), PROVIDED that the principal amount secured
thereby is not hereafter increased, and no additional assets (other than
accessions and improvements to, and proceeds of, the property subject
thereto) become subject to such Lien;
(ix) Purchase Money Security Interests, PROVIDED that the
aggregate amount of loans and deferred payments secured by such Purchase
Money Security Interests shall not exceed $1,000,000 (excluding for the
purpose of this computation any loans or deferred payments secured by Liens
described on SCHEDULE 1.1(P)); and
(x) The following, (A) if the validity or amount thereof is
being contested in good faith by appropriate and lawful proceedings
diligently conducted so long as levy and execution thereon have been stayed
and continue to be stayed or (B) if a final judgment is entered and such
judgment is discharged within thirty (30) days of entry, and in the aggregate
do not materially impair the ability of any Loan Party to perform its
Obligations hereunder or under the other Loan Documents taken as a whole:
(1) Claims or Liens for taxes, assessments or charges due and
payable; PROVIDED that the applicable Loan Party maintains such reserves or
other appropriate provisions as shall be required by GAAP and pays all such
taxes, assessments or charges forthwith upon the commencement of
proceedings (which are not promptly stayed or enjoined) to foreclose any
such Lien;
(2) Claims, Liens or encumbrances upon, and defects of title to,
real or personal property other than the Collateral, including any
attachment of
-13-
personal or real property or other legal process prior to adjudication of
a dispute on the merits;
(3) Claims or Liens of mechanics, materialmen, warehousemen,
landlords or other like Liens; or
(4) Liens resulting from final judgments or orders other than
those which cause an Event of Default under Section 9.1.6.
(xi) Liens on accounts receivable sold or pledged by a Loan Party
in accordance with Section 8.2.7(v).
PERMITTED OTHER LINE OF BUSINESS ACQUISITION shall have the meaning
in Section 8.2.6.
PERSON shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
organization, joint venture, Official Body, or any other entity.
PLAN shall mean at any time an employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained
by any member of the ERISA Group for employees of any member of the ERISA
Group or (ii) has at any time within the preceding five years been maintained
by any Person which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of the ERISA Group.
PLEDGE AGREEMENT shall mean the Pledge Agreement in substantially
the form of EXHIBIT 1.1 (P)(2) executed and delivered by the owners of the
capital stock each of the Guarantors on the date hereof and any other
Subsidiary which hereafter joins this Agreement as a Guarantor pursuant to
Section 11.18.
PLEDGED COLLATERAL shall mean the property of the Loan Parties in
which security interests are to be granted under the Pledge Agreement.
PNC BANK shall mean PNC Bank, National Association, its successors
and assigns.
POTENTIAL DEFAULT shall mean any event or condition which with
notice, passage of time or a determination by the Agent or the Required
Banks, or any combination of the foregoing, would constitute an Event of
Default.
PREFERRED STOCK shall mean the Series A Preferred Stock, par value
$1 per share, of the Borrower.
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PRINCIPAL OFFICE shall mean the main banking office of the Agent in
Pittsburgh, Pennsylvania.
PRIOR SECURITY INTEREST shall mean a valid and enforceable
perfected first-priority security interest under the Uniform Commercial Code
in the UCC Collateral and the Pledged Collateral which is subject only to
Permitted Liens.
PROCESSOR shall have the meaning assigned to such term in Section
8.1.13.
PROHIBITED TRANSACTION shall mean any prohibited transaction as
defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA
for which neither an individual nor a class exemption has been issued by the
United States Department of Labor.
PROPERTY shall mean all real property, both owned and leased, of
any Loan Party or Subsidiary of a Loan Party.
PURCHASE MONEY SECURITY INTEREST shall mean Liens upon tangible
personal property securing loans, advances or financial accommodations to any
Loan Party or Subsidiary of a Loan Party or deferred payments by such Loan
Party or Subsidiary for the purchase of such tangible personal property.
Purchase Money Security Interests do not include capitalized leases.
PURCHASING BANK shall mean a Bank which becomes a party to this
Agreement by executing an Assignment and Assumption Agreement.
RATABLE SHARE shall mean the proportion that a Bank's Commitment
(excluding the Swing Loan Commitment) bears to the Commitments (excluding the
Swing Loan Commitments) of all of the Banks.
REGULATED SUBSTANCES shall mean any substance, including any solid,
liquid, semisolid, gaseous, thermal, thoriated or radioactive material,
refuse, garbage, wastes, chemicals, petroleum products, by-products,
coproducts, impurities, dust, scrap, heavy metals, defined as a "hazardous
substance," "pollutant," "pollution," "contaminant," "hazardous or toxic
substance," "extremely hazardous substance,""toxic chemical,""toxic waste,"
"hazardous waste," "industrial waste," "residual waste," "solid waste,"
"municipal waste," "mixed waste," "infectious waste," "chemotherapeutic
waste," "medical waste," or "regulated substance" or any related materials,
substances or wastes as now or hereafter defined pursuant to any
Environmental Laws, ordinances, rules, regulations or other directives of any
Official Body charged with the administration of Environmental Laws, the
generation, manufacture, extraction, processing, distribution, treatment,
storage, disposal, transport, recycling, reclamation, use, reuse, spilling,
leaking, dumping, injection, pumping, leaching, emptying, discharge, escape,
release or other management or mismanagement of which is regulated by any
Environmental Laws.
REGULATION U shall mean Regulation U, T, G or X as promulgated by
the Board of Governors of the Federal Reserve System, as amended from time to
time.
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REIMBURSEMENT BORROWING shall have the meaning assigned to such
term in Section 2.10.3.4.
REIMBURSEMENT OBLIGATION shall have the meaning assigned to such
term in Section 2.10.3.2.
REPORTABLE EVENT shall mean a reportable event described in Section
4043 of ERISA and regulations thereunder with respect to a Plan or
Multiemployer Plan.
REQUIRED BANKS shall mean
(i) if there are no Loans, Reimbursement Obligations or
Reimbursement Borrowings outstanding, Banks whose Revolving Credit
Commitments aggregate at least 51% of the Revolving Credit Commitments of all
of the Banks, or
(ii) if there are Loans, Reimbursement Obligations, or
Reimbursement Borrowings outstanding, any Bank or group of Banks if the sum
of the Loans (excluding the Swing Loans), Reimbursement Obligations and
Reimbursement Borrowings of such Banks then outstanding aggregates at least
51% of the total principal amount of all of the Loans (excluding the Swing
Loans), Reimbursement Obligations and Reimbursement Borrowings then
outstanding. Reimbursement Obligations and Reimbursement Borrowings shall be
deemed, for purposes of this definition, to be in favor of the Agent and not
a participating Bank if such Bank has not made its Participation Advance in
respect thereof and shall be deemed to be in favor of such Bank to the extent
of its Participation Advance if it has made its Participation Advance in
respect thereof
REQUIRED SHARE shall have the meaning assigned to such term in
Section 5.6.
REVOLVING CREDIT COMMITMENT shall mean, as to any Bank at any time,
the amount initially set forth opposite its name on SCHEDULE 1.1(B) in the
column labeled "Amount of Commitment for Revolving Credit Loans," and
thereafter on Schedule I to the most recent Assignment and Assumption
Agreement, and REVOLVING CREDIT COMMITMENTS shall mean the aggregate
Revolving Credit Commitments of all of the Banks.
REVOLVING CREDIT LOANS shall mean collectively and REVOLVING CREDIT
LOAN shall mean separately all Revolving Credit Loans or any Revolving Credit
Loan made by the Banks or one of the Banks to the Borrower pursuant to
Section 2.1 or 2.10.3.
REVOLVING CREDIT NOTES shall mean collectively and REVOLVING CREDIT
NOTE shall mean separately all the Revolving Credit Notes of the Borrower in
the form of EXHIBIT 1.1(R) evidencing the Revolving Credit Loans together
with all amendments, extensions, renewals, replacements, refinancings or
refundings thereof in whole or in part.
REVOLVING FACILITY USAGE shall mean at any time the sum of the
Loans outstanding and the Letters of Credit Outstanding.
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SECTION 20 SUBSIDIARY shall mean the Subsidiary of the bank holding
company controlling any Bank, which Subsidiary has been granted authority by
the Federal Reserve Board to underwrite and deal in certain Ineligible
Securities.
SECURITY AGREEMENT shall mean the Security Agreement in
substantially the form of EXHIBIT 1.1(S)(1) executed and delivered by each of
the Loan Parties to the Agent for the benefit of the Banks.
SENIOR OFFICER shall mean with respect to any Loan Party, the Chief
Executive Officer, Chief Financial Officer or Controller of such Loan Party
(or equivalent positions if such positions are replaced with other positions
in the future).
SETTLEMENT DATE shall mean the Wednesday of each week (if such day
is a Business Day and if not, the next succeeding Business Day) and any other
Business Day on which the Agent elects to effect settlement pursuant to
Section 5.6.
SLAB FINANCING ARRANGEMENT shall mean Borrower's Slab Financing
Arrangement with Lone Star Technologies as from time to time in effect,
provided that the Borrower's Obligations thereunder must be subject to the
Subordination Agreement and the maximum principal amount owing thereunder
must not exceed $30,000,000 without the consent of the Required Banks.
STANDARD & POOR'S shall mean Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc.
STANDBY LETTER OF CREDIT shall mean a Letter of Credit issued to
support obligations of one or more of the Loan Parties, contingent or
otherwise, which finance or otherwise support the working capital and
business needs of the Loan Parties and is not a Commercial Letter of Credit.
SUBSIDIARY of any Person at any time shall mean (i) any corporation
or trust of which 50% or more (by number of shares or number of votes) of the
outstanding capital stock or shares of beneficial interest normally entitled
to vote for the election of one or more directors or trustees (regardless of
any contingency which does or may suspend or dilute the voting rights) is at
such time owned directly or indirectly by such Person or one or more of such
Person's Subsidiaries, (ii) any partnership of which 50% or more of either
the general partnership interests or the total partnership interests is at
the time directly or indirectly owned by such Person or one or more of such
Person's Subsidiaries, (iii) any limited liability company of which 50% or
more of the limited liability company interests is at the time directly or
indirectly owned by such Person or one or more of such Person's Subsidiaries
or (iv) any other Person which is controlled by such Person or one or more of
such Person's Subsidiaries.
SUBSIDIARY SHARES shall have the meaning assigned to that term in
Section 6.1.3.
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SWING LOAN COMMITMENT shall mean PNC Bank's commitment to make
Swing Loans to the Borrower pursuant to Section 2.1.2 hereof in an aggregate
principal amount up to $5,000,000.
SWING LOAN NOTE shall mean the Swing Loan Note of the Borrower in
the form of EXHIBIT 1.1(S)(2) evidencing the Swing Loans, together with all
amendments, extensions, renewals, replacements, refinancings or refundings
thereof in whole or in part.
SWING LOAN REQUEST shall mean a request for Swing Loans made in
accordance with Section 2.4.2 hereof.
SWING LOANS shall mean collectively and SWING LOAN shall mean
separately all Swing Loans or any Swing Loan made by PNC Bank to the Borrower
pursuant to Section 2.1.2 hereof.
TRANSFEROR BANK shall mean the selling Bank pursuant to an
Assignment and Assumption Agreement.
UCC COLLATERAL shall mean the property of the Loan Parties in which
security interests are to be granted under the Security Agreement.
UNIFORM COMMERCIAL CODE shall have the meaning assigned to that
term in Section 6.1.16.
WAREHOUSEMAN shall have the meaning assigned to such term in
Section 8.1.13.
1.2 CONSTRUCTION.
Unless the context of this Agreement otherwise clearly requires, the
following rules of construction shall apply to this Agreement and each of the
other Loan Documents:
1.2.1 NUMBER; INCLUSION.
references to the plural include the singular, the
plural, the part and the whole; "or" has the inclusive meaning represented by
the phrase "and/or," and "including" has the meaning represented by the
phrase "including without limitation";
1.2.2 DETERMINATION.
references to "determination" of or by the Agent or the
Banks shall be deemed to include good-faith estimates by the Agent or the
Banks (in the case of quantitative determinations) and good-faith beliefs by
the Agent or the Banks (in the case of qualitative determinations), except
where this Agreement provides that such determination shall include other
estimates or beliefs, as the case may be, and such determination shall be
conclusive absent manifest error;
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1.2.3 AGENT'S DISCRETION AND CONSENT.
whenever the Agent or the Banks are granted the right
herein to act in its or their sole discretion or to grant or withhold consent
such right shall be exercised in good faith, except where this Agreement
provides that such right shall be exercised under a different standard;
1.2.4 DOCUMENTS TAKEN AS A WHOLE.
the words "hereof," "herein," "hereunder," "hereto" and
similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document as a whole and not to any particular
provision of this Agreement or such other Loan Document;
1.2.5 HEADINGS.
the section and other headings contained in this
Agreement or such other Loan Document and the Table of Contents (if any),
preceding this Agreement or such other Loan Document are for reference
purposes only and shall not control or affect the construction of this
Agreement or such other Loan Document or the interpretation thereof in any
respect;
1.2.6 IMPLIED REFERENCES TO THIS AGREEMENT.
article, section, subsection, clause, schedule and
exhibit references are to this Agreement unless otherwise specified;
1.2.7 PERSONS.
reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement or such other Loan Document, as the case may be,
and reference to a Person in a particular capacity excludes such Person in
any other capacity;
1.2.8 MODIFICATIONS TO DOCUMENTS.
reference to any agreement (including this Agreement and
any other Loan Document together with the schedules and exhibits hereto or
thereto), document or instrument means such agreement, document or instrument
as amended, modified, replaced, substituted for, superseded or restated;
1.2.9 FROM, TO AND THROUGH.
relative to the determination of any period of time,
"from" means "from and including," "to" means "to but excluding," and
"through" means "through and including"; and
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1.2.10 SHALL; WILL.
references to "shall" and "will" are intended to have the
same meaning.
1.3 ACCOUNTING PRINCIPLES.
Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and
prepared in accordance with GAAP (including principles of consolidation where
appropriate), and all accounting or financial terms shall have the meanings
ascribed to such terms by GAAP; PROVIDED, HOWEVER, that (i) all accounting
terms used in Section 8.2 [Negative Covenants] (and all defined terms used in
the definition of any accounting term used in Section 8.2) shall have the
meaning given to such terms (and defined terms) under GAAP as in effect on
the date hereof applied on a basis consistent with those used in preparing
the Annual Statements referred to in Section 6.1.9(i) [Historical Statements]
and (ii), Consigned Inventory, and the corresponding account payable for the
payment of such Consigned Inventory shall be excluded when computing the
amount of inventory or assets or accounts payable, as the case may be, of the
Loan Parties for purposes of the financial covenants in Section 8.2.15
through 8.2.18 or elsewhere in this Agreement and for purposes of the
definitions comprising such covenants. In the event of any change after the
date hereof in GAAP, and if such change would result in the inability to
determine compliance with the covenants set forth in Section 8.2 based upon
the Borrower's regularly prepared financial statements by reason of the
preceding sentence, then the parties hereto agree to endeavor, in good faith,
to agree upon an amendment to this Agreement that would adjust such financial
covenants in a manner that would not affect the substance thereof, but would
allow compliance therewith to be determined in accordance with the Borrower's
financial statements at that time.
2. REVOLVING CREDIT AND SWING LOAN FACILITIES
2.1 REVOLVING CREDIT COMMITMENTS.
2.1.1 REVOLVING CREDIT LOANS.
Subject to the terms and conditions hereof and relying
upon the representations and warranties herein set forth, each Bank severally
agrees to make Revolving Credit Loans to the Borrower at any time or from
time to time on or after the date hereof to the Expiration Date provided that
after giving effect to such Loan the aggregate amount of Loans from such Bank
shall not exceed such Bank's Revolving Credit Commitment minus such Bank's
Ratable Share of the Letters of Credit Outstanding. Within such limits of
time and amount and subject to the other provisions of this Agreement, the
Borrower may borrow, repay and reborrow pursuant to this Section 2.1.
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2.1.2 SWING LOAN COMMITMENT.
Subject to the terms and conditions hereof and relying
upon the representations and warranties herein set forth, PNC Bank may, at
its option, cancelable at any time for any reason whatsoever, make swing
loans (the "Swing Loans") to the Borrower at any time or from time to time
after the date hereof to, but not including, the Expiration Date, in an
aggregate principal amount up to but not in excess of $5,000,000 (the "Swing
Loan Commitment"), provided that the aggregate Revolving Facility Usage of
all the Banks at any one time outstanding shall not exceed the Revolving
Credit Commitments of all the Banks. Within such limits of time and amount
and subject to the other provisions of this Agreement, the Borrower may
borrow, repay and reborrow pursuant to this Section 2.1.2.
2.1.3 REDUCTION OF COMMITMENT.
2.1.3.1 VOLUNTARY.
The Borrower shall have the right at any time and from
time to time upon five (5) Business Days' prior written notice to the Agent
to permanently reduce, in whole multiples of $5,000,000 of principal, or
terminate the Revolving Credit Commitments without penalty or premium, except
as hereinafter set forth, provided that any such reduction or termination
shall be accompanied by (a) the payment in full of any Commitment Fee then
accrued on the amount of such reduction or termination and (b) prepayment of
the Revolving Credit Notes, together with the full amount of interest accrued
on the principal sum to be prepaid (and all amounts referred to in Section
5.5 hereof), to the extent that the Revolving Facility Usage exceeds the
Revolving Credit Commitments as so reduced or terminated. From the effective
date of any such reduction or termination the obligations of Borrower to pay
the Commitment Fee pursuant to Section 2.3 shall correspondingly be reduced
or cease.
2.1.3.2 MANDATORY REDUCTION ON SALE OR ASSIGNMENT
OF ACCOUNTS.
The Revolving Credit Commitments shall be reduced upon a
sale or assignment of the accounts receivable of the Borrower as provided in
Section 8.2.7(v) provided that the Borrower also shall make the payments
described in clauses (a) and (b) of Section 2.1.3.1 in connection with such
reduction of Revolving Credit Commitments.
2.2 NATURE OF BANKS' OBLIGATIONS WITH RESPECT TO REVOLVING CREDIT LOANS.
Each Bank shall be obligated to participate in each request for Revolving
Credit Loans pursuant to Section 2.4 [Revolving Credit Loan Requests] in
accordance with its Ratable Share. The aggregate of each Bank's Revolving
Credit Loans outstanding hereunder to the Borrower at any time shall never
exceed its Revolving Credit Commitment minus its Ratable Share of the Letters
of Credit Outstanding. The obligations of each Bank hereunder are several.
The failure of any Bank to perform its obligations hereunder shall not affect
the Obligations of the Borrower to any other party nor shall any other party
be liable for the failure of such Bank to
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perform its obligations hereunder. The Banks shall have no obligation to make
Revolving Credit Loans hereunder on or after the Expiration Date.
2.3 COMMITMENT FEES.
Accruing from the date hereof to the Expiration Date, the Borrower agrees
to pay to the Agent for the account of each Bank, as consideration for such
Bank's Revolving Credit Commitment hereunder, a nonrefundable commitment fee
(the "Commitment Fee") equal to the Applicable Commitment Fee Rate (computed on
the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed) on the average daily difference between the amount of (i) such Bank's
Revolving Credit Commitment as the same may be constituted from time to time and
the (ii) the sum of such Bank's Loans outstanding plus its Ratable Share of the
amount of Letters of Credit Outstanding. All Commitment Fees shall be payable in
arrears on the first Business Day of each October, January, April and July after
the date hereof and on the Expiration Date or upon acceleration of the Notes.
2.4 REVOLVING CREDIT LOAN REQUESTS: SWING LOAN REQUESTS.
2.4.1 REVOLVING CREDIT LOAN REQUESTS.
Except as otherwise provided herein, the Borrower may from
time to time prior to the Expiration Date request the Banks to make Revolving
Credit Loans, or renew or convert the Interest Rate Option applicable to
existing Revolving Credit Loans pursuant to Section 4.2 [Interest Periods], by
delivering to the Agent, not later than 12:00 Noon, Pittsburgh time, (i) three
(3) Business Days prior to the proposed Borrowing Date with respect to the
making of Revolving Credit Loans to which the Euro-Rate Option applies or the
conversion to or the renewal of the Euro-Rate Option for any Loans; and (ii) one
(1) Business Day prior to either the proposed Borrowing Date with respect to the
making of a Revolving Credit Loan to which the Base Rate Option applies or the
last day of the preceding Interest Period with respect to the conversion to the
Base Rate Option for any Loan, of a duly completed request therefor
substantially in the form of EXHIBIT 2.4.1 or a request by telephone immediately
confirmed in writing by letter, facsimile or telex in such form (each, a "Loan
Request"), it being understood that the Agent may rely on the authority of any
individual making such a telephonic request without the necessity of receipt of
such written confirmation. Each Loan Request shall be irrevocable and shall
specify (i) the proposed Borrowing Date; (ii) the aggregate amount of the
proposed Loans comprising each Borrowing Tranche, which shall be in integral
multiples of $500,000 and not less than $1,000,000 for each Borrowing Tranche to
which the Euro-Rate Option applies and not less than the lesser of $500,000 or
the maximum amount available for Borrowing Tranches to which the Base Rate
Option applies; (iii) whether the Euro-Rate Option or Base Rate Option shall
apply to the proposed Loans comprising the applicable Borrowing Tranche; and
(iv) in the case of a Borrowing Tranche to which the Euro-Rate Option applies,
an appropriate Interest Period for the Loans comprising such Borrowing Tranche.
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2.4.2 SWING LOAN REQUESTS.
Except as otherwise provided herein, the Borrower may from
time to time prior to the Expiration Date request PNC Bank to make Swing Loans
by delivery to PNC Bank not later than Noon Pittsburgh time on the proposed
Borrowing Date of a duly completed request therefor substantially in the form of
EXHIBIT 2.4.2 hereto or a request by telephone immediately confirmed in writing
by letter, facsimile or telex (each, a "Swing Loan Request"), it being
understood that the Agent may rely on the authority of any individual making
such a telephonic request without the necessity of receipt of such written
confirmation. Each Swing Loan Request shall be irrevocable and shall specify the
proposed Borrowing Date and the principal amount of such Swing Loan, which shall
be not less than $100,000.
2.5 MAKING REVOLVING CREDIT LOANS AND SWING LOANS: REVOLVING CREDIT NOTES
AND SWING NOTES.
2.5.1 MAKING REVOLVING CREDIT LOANS.
The Agent shall, promptly after receipt by it of a Loan Request pursuant to
Section 2.4 [Revolving Credit Loan Requests], notify the Banks of its receipt of
such Loan Request specifying: (i) the proposed Borrowing Date and the time and
method of disbursement of the Revolving Credit Loans requested thereby; (ii) the
amount and type of each such Revolving Credit Loan and the applicable Interest
Period (if any); and (iii) the apportionment among the Banks of such Revolving
Credit Loans as determined by the Agent in accordance with Section 2.2 [Nature
of Banks' Obligations]. Each Bank shall remit the principal amount of each
Revolving Credit Loan to the Agent such that the Agent is able to, and the Agent
shall, to the extent the Banks have made funds available to it for such purpose
and subject to Section 7.2 [Each Additional Loan], find such Revolving Credit
Loans to the Borrower in U.S. Dollars and immediately available funds at the
Principal Office prior to 2:00 p.m., Pittsburgh time, on the applicable
Borrowing Date, PROVIDED that if any Bank fails to remit such funds to the Agent
in a timely manner, the Agent may elect in its sole discretion to fund with its
own funds the Revolving Credit Loans of such Bank on such Borrowing Date, and
such Bank shall be subject to the repayment obligation in Section 10.16
[Availability of Funds].
2.5.2 MAKING SWING LOANS.
So long as PNC Bank elects to make Swing Loans, PNC Bank
shall, after receipt by it of a Swing Loan Request pursuant to Section 2.4.2,
fund such Swing Loan to the Borrower in U.S. Dollars and immediately available
funds at the Principal Office prior to 3:00 o'clock PM Pittsburgh time on the
Borrowing Date. PNC Bank may at any time (i) terminate, temporarily or
permanently, the Swing Loan facility hereunder by notifying the Borrower or (ii)
elect not to make a Swing Loan following its receipt of a Swing Loan Request
(and before the making of such Swing Loan).
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2.6 REVOLVING CREDIT NOTES.
The Obligation of the Borrower to repay the aggregate unpaid principal
amount of the Revolving Credit Loans made to it by each Bank, together with
interest thereon, shall be evidenced by a Revolving Credit Note dated the
Closing Date payable to the order of such Bank in a face amount equal to the
Revolving Credit Commitment of such Bank.
2.7 SWING LOAN NOTE.
The Obligation of the Borrower to repay the aggregate unpaid principal
amount of the Swing Loans made to it by PNC Bank, together with interest
thereon, shall be evidenced by the Swing Loan Note dated the Closing Date
payable to the order of PNC Bank in a face amount equal to the Swing Loan
Commitment.
2.8 USE OF PROCEEDS.
The proceeds of the Revolving Credit Loans shall be used to refinance the
Indebtedness of the Borrower for borrowed money existing prior to the Closing
Date, to redeem the Preferred Stock of the Borrower and to make certain
dividends and other distributions to Lone Star Technologies permitted hereunder
and for general purposes all in accordance with Section 8.1.10 [Use of
Proceeds].
2.9 BORROWINGS TO REPAY SWING LOANS.
PNC may, at its option, exercisable at any time for any reason whatsoever,
demand repayment of the Swing Loans, and each Bank shall make a Revolving Credit
Loan in an amount equal to such Bank's Ratable Share of the aggregate principal
amount of the outstanding Swing Loans, plus, if PNC so requests, accrued
interest thereon, PROVIDED that no Bank shall be obligated in any event to make
Revolving Credit Loans in excess of its Revolving Credit Commitment. Revolving
Credit Loans made pursuant to the preceding sentence shall bear interest at the
Base Rate Option and shall be deemed to have been properly requested in
accordance with Section 2.4.1 and of the apportionment among the Banks, and the
Banks shall be unconditionally obligated to fund such Revolving Credit Loans
(whether or not the conditions specified in Section 2.4.1 are then satisfied) by
the time PNC so requests, which shall not be earlier than 3:00 p.m. Pittsburgh
time on the Business Day next after the date the Banks receive such notice from
PNC.
2.10 LETTER OF CREDIT SUBFACILITY.
2.10.1 ISSUANCE OF LETTERS OF CREDIT.
Borrower may request the issuance of a letter of credit
(each a "Letter of Credit") on behalf of itself or another Loan Party by
delivering to the Agent a completed application and agreement for letters of
credit in such form as the Agent may specify from time to time by no later than
Noon Pittsburgh time, at least five (5) Business Days, or such shorter period as
may be agreed to by the Agent, in advance of the proposed date of issuance.
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Each Letter of Credit shall be either a Standby Letter of Credit or a
Commercial Letter of Credit. Subject to the terms and conditions hereof and
in reliance on the agreements of the other Banks set forth in this Section
2.10, the Agent will issue a Letter of Credit provided that each Letter of
Credit shall (A) have a maximum maturity of twenty four (24) months from the
date of issuance, and (B) in no event expire later than ten (10) Business
Days prior to the Expiration Date and providing that in no event shall (i)
the Letters of Credit Outstanding exceed, at any one time, $20,000,000 or
(ii) the Revolving Facility Usage exceed, at any one time, the Revolving
Credit Commitments (for purposes of this computation, PNC Bank's Swing Loans
shall be deemed to be borrowed amounts under its Revolving Credit Commitment).
2.10.2 LETTER OF CREDIT FEES.
The Borrower shall pay (i) to the Agent for the ratable
account of the Banks a fee (the "Letter of Credit Fee") at a percentage rate per
annum equal to the Applicable Margin which applies to Loans under the Euro-Rate
Option, and (ii) to the Agent for its own account a fronting fee equal to 1/8%
per annum (computed on the basis of a year of 360 days and actual days elapsed),
which fees shall be computed on the daily average Letters of Credit Outstanding
and shall be payable quarterly in arrears commencing with the first Business Day
of each October, January, April and July following issuance of each Letter of
Credit and on the Expiration Date. The Borrower shall also pay to the Agent for
the Agent's sole account the Agent's then in effect customary administrative
fees and expenses payable with respect to the Letters of Credit as the Agent may
generally charge or incur from time to time in connection with the issuance,
maintenance, modification (if any), assignment or transfer (if any),
negotiation, and administration of Letters of Credit.
2.10.3 DISBURSEMENTS, REIMBURSEMENT.
2.10.3.1 Immediately upon the Issuance of each Letter
of Credit, each Bank shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Agent a participation in such
Letter of Credit and each drawing thereunder in an amount equal to such Bank's
Ratable Share of the maximum amount available to be drawn under such Letter of
Credit and the amount of such drawing, respectively. Each Bank is hereby deemed
to, and hereby irrevocably and unconditionally agrees to, purchase from the
Agent a participation in the Overdraft Reimbursement Agreement and each of the
Agent's obligations thereunder, including the Agent's obligations in connection
with any right of CITBC to be reimbursed by the Agent, in an amount equal to
such Bank's Ratable Share of each such obligation.
2.10.3.2 In the event of any request for a drawing
under a Letter of Credit by the beneficiary or transferee thereof or any demand
for reimbursement by or right of reimbursement in favor of CITBC under the
Overdraft Reimbursement Agreement, the Agent will promptly notify the Borrower.
Provided that it shall have received such notice, the Borrower shall reimburse
(such obligation to reimburse the Agent shall sometimes be referred to as a
"Reimbursement Obligation") the Agent prior to 12:00 noon, Pittsburgh time on
each date that an amount is paid by the Agent under any Letter of Credit or
Overdraft Reimbursement
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Agreement (each such date, a "Drawing Date") in an amount equal to the amount
so paid by the Agent. In the event the Borrower fails to reimburse the Agent
for the full amount of any drawing under any Letter of Credit or payment by
the Agent under the Overdraft Reimbursement Agreement by 12:00 noon,
Pittsburgh time, on the Drawing Date, the Agent will promptly notify each
Bank thereof, and the Borrower shall be deemed to have requested that
Revolving Credit Loans be made by the Banks under the Base Rate Option to be
disbursed on the Drawing Date under such Letter of Credit or Overdraft
Reimbursement Agreement, subject to the amount of the unutilized portion of
the Revolving Credit Commitment and subject to there being no Potential
Default or Event of Default described in or arising under Sections 9.1.14
or 9.1.15 (each a "Bankruptcy Default"). Any notice given by the Agent
pursuant to this Section 2.10.3.2 may be oral if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.
2.10.3.3 Each Bank shall upon any notice pursuant to
Section 2.10.3.2 make available to the Agent an amount in immediately
available funds equal to its Ratable Share of the amount of the drawing or
other payment by the Agent, whereupon the participating Banks shall (subject
to Section 2.10.3.4) each be deemed to have made a Revolving Credit Loan
under the Base Rate Option to the Borrower in that amount. If any Bank so
notified fails to make available to the Agent for the account of the Agent
the amount of such Bank's Ratable Share of such amount by no later than 2:00
p.m., Pittsburgh time on the Drawing Date, then interest shall accrue on such
Bank's obligation to make such payment, from the Drawing Date to the date on
which such Bank makes such payment (i) at a rate per annum equal to the
Federal Funds Effective Rate during the first three days following the
Drawing Date and (ii) at a rate per annum equal to the rate applicable to
Loans under the Base Rate Option on and after the fourth day following the
Drawing Date. The Agent will promptly give notice of the occurrence of the
Drawing Date, but failure of the Agent to give any such notice on the Drawing
Date or in sufficient time to enable any Bank to effect such payment on such
date shall not relieve such Bank from its obligation under this Section
2.10.3.3.
2.10.3.4 With respect to any unreimbursed drawing or
other payment by the Agent described in this Section 2.10.3 above that is not
converted into Revolving Credit Loans under the Base Rate Option to the Borrower
in whole or in part as contemplated by Section 2.10.3.2, because of the
existence of a Bankruptcy Default or for any other reason, the Borrower shall be
deemed to have incurred from the Agent a borrowing (each a "Reimbursement
Borrowing") in the amount of such drawing. Such Reimbursement Borrowing shall be
due and payable on demand (together with interest) and shall bear interest at
the rate per annum applicable to the Revolving Credit Loans under the Base Rate
Option. Each Bank's payment to the Agent pursuant to Section 2.10.3.3 shall be
deemed to be a payment in respect of its participation in such Reimbursement
Borrowing and shall constitute a Participation Advance from such Bank in
satisfaction of its participation obligation under this Section 2.10.3.
2.10.4 REPAYMENT OF PARTICIPATION ADVANCES.
2.10.4.1 Upon (and only upon) receipt by the Agent
for its account of immediately available funds from the Borrower (i) in
reimbursement of any
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payment made by the Agent under the Letter of Credit or the Overdraft
Reimbursement Agreement with respect to which any Bank has made a
Participation Advance to the Agent, or (ii) in payment of interest on such a
payment made by the Agent under such a Letter of Credit or Overdraft
Reimbursement Agreement, the Agent will pay to each Bank, in the same funds
as those received by the Agent, the amount of such Bank's Ratable Share of
such funds, except the Agent shall retain the amount of the Ratable Share of
such funds of any Bank that did not make a Participation Advance in respect
of such payment by Agent.
2.10.4.2 If the Agent is required at any time to
return to any Loan Party, or to a trustee, receiver, liquidator, custodian, or
any official in any Insolvency Proceeding, any portion of the payments made by
any Loan Party to the Agent pursuant to Section 2.10.4.1 in reimbursement of a
payment made under the Letter of Credit or the Overdraft Reimbursement Agreement
or interest or fee thereon, each Bank shall, on demand of the Agent, forthwith
return to the Agent the amount of its Ratable Share of any amounts so returned
by the Agent plus interest thereon from the date such demand is made to the date
such amounts are returned by such Bank to the Agent, at a rate per annum equal
to the Federal Funds Effective Rate in effect from time to time.
2.10.5 DOCUMENTATION.
Each Loan Party agrees to be bound by the terms of the
Overdraft Reimbursement Agreement and the Agent's application and agreement
for letters of credit. In the event of a conflict between such Overdraft
Reimbursement Agreement or application for letters of credit or agreement and
this Agreement, this Agreement shall govern. It is understood and agreed
that, except in the case of gross negligence or willful misconduct, the Agent
shall not be liable for any error, negligence and/or mistakes, whether of
omission or commission, in following any Loan Party's instructions or those
contained in the Letters of Credit or Overdraft Reimbursement Agreement or
any modifications, amendments or supplements thereto.
2.10.6 DETERMINATIONS TO HONOR DRAWING REQUESTS.
In determining whether to honor any request for drawing
under any Letter of Credit by the beneficiary thereof, the Agent shall be
responsible only to determine that the documents and certificates required to be
delivered under such Letter of Credit have been delivered and that they on their
face comply with and satisfy the requirements of such Letter of Credit.
2.10.7 NATURE OF PARTICIPATION AND REIMBURSEMENT OBLIGATIONS.
Each Bank's obligation in accordance with this Agreement to
make the Revolving Credit Loans or Participation Advances, as contemplated by
Section 2.10.3, as a result of a drawing under a Letter of Credit, and the
Obligations of the Borrower to reimburse the Agent upon a draw under a Letter of
Credit, shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Section 2.10 under all
circumstances, including the following circumstances:
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(i) any set-off, counterclaim, recoupment, defense or other
right which such Bank may have against the Agent, the Borrower or any other
Person for any reason whatsoever;
(ii) the failure of any Loan Party or any other Person to
comply, in connection with a Reimbursement Borrowing, with the conditions set
forth in Section 2.1 [Revolving Credit Commitments], 2.4 [Revolving Credit
Loan Requests], 2.5.1 [Making Revolving Credit Loans] or 7.2 [Each Additional
Loan] or as otherwise set forth in this Agreement for the making of a Revolving
Credit Loan, it being acknowledged that such conditions are not required for
the making of a Reimbursement Borrowing and the obligation of the Banks to
make Participation Advances under Section 2.10.3;
(iii) any lack of validity or enforceability of any Letter of
Credit;
(iv) the existence of any claim, set-off, defense or other
right which any Loan Party or any Bank may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons for whom
any such transferee may be acting), the Agent or any Bank or any other Person
or, whether in connection with this Agreement, the transactions contemplated
herein or any unrelated transaction (including any underlying transaction
between any Loan Party or Subsidiaries of a Loan Party and the beneficiary for
which any Letter of Credit was procured);
(v) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect even if the Agent has been notified thereof;
(vi) payment by the Agent under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
(vii) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of any
Loan Party or Subsidiaries of a Loan Party;
(viii) any breach of this Agreement or any other Loan Document by
any party thereto;
(ix) the occurrence or continuance of an Insolvency Proceeding
with respect to any Loan Party;
(x) the fact that an Event of Default or a Potential Default
shall have occurred and be continuing; and
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(xi) the fact that the Expiration Date shall have passed or
this Agreement or the Commitments hereunder shall have been terminated.
2.10.8 INDEMNITY.
In addition to amounts payable as provided in Section 10.5
[Reimbursement and Indemnification of Agent by the Borrower], the Borrower
hereby agrees to protect, indemnify, pay and save harmless the Agent from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable fees, expenses and disbursements of
counsel and allocated costs of internal counsel) which the Agent may incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of any
Letter of Credit, other than as a result of (A) the gross negligence or willful
misconduct of the Agent as determined by a final judgment of a court of
competent jurisdiction or (B) subject to the following clause (ii), the wrongful
dishonor by the Agent of a proper demand for payment made under any Letter of
Credit, or (ii) the failure of the Agent to honor a drawing under any such
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Official Body (all such
acts or omissions herein called "Governmental Acts").
2.10.9 LIABILITY FOR ACTS AND OMISSIONS.
As between any Loan Party and the Agent, such Loan Party
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, the Agent shall not be
responsible for: (i) the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with the
application for an issuance of any such Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged (even if the Agent shall have been notified thereof);
(ii) the validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any such Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason; (iii) the failure of the
beneficiary of any such Letter of Credit, or any other party to which such
Letter of Credit may be transferred, to comply fully with any conditions
required in order to have a right to draw upon such Letter of Credit or any
other claim of any Loan Party against any beneficiary of such Letter of
Credit, or any such transferee, or any dispute between or among any Loan
Party and any beneficiary of any Letter of Credit or any such transferee;
(iv) errors, omissions, interruptions or delays in transmission or delivery
of any messages, by mail, cable, telegraph, telex or otherwise, whether or
not they be in cipher; (v) errors in interpretation of technical terms; (vi)
any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or (viii)
any consequences arising from causes beyond the control of the Agent,
including any Governmental Acts, and none of the above shall affect or
impair, or prevent the vesting of, any of the Agent's rights or powers
hereunder. Nothing in the preceding sentence shall relieve the Agent from
liability for the Agent's gross negligence or
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willful misconduct in connection with actions or omissions described in such
clauses (i) through (viii) of such sentence.
In furtherance and extension and not in limitation of
the specific provisions set forth above, any action taken or omitted by the
Agent under or in connection with the Letters of Credit issued by it or any
documents and certificates delivered thereunder, if taken or omitted in good
faith, shall not put the Agent under any resulting liability to the Borrower or
any Bank.
2.10.10 COMPARABLE TREATMENT OF THE AGENT UNDER OVERDRAFT
REIMBURSEMENT AGREEMENT AND LETTERS OF CREDIT.
All of the rights given to the Agent under Sections
2.10.6 through 2.10.9 above relating to Letters of Credit issued by the Agent
hereunder shall apply in a comparable manner and shall be given to the Agent
relating to the Overdraft Reimbursement Agreement and each reference in such
Section to a Letter of Credit or Letters of Credit shall be deemed to refer also
to the Overdraft Reimbursement Agreement.
2.11 EXTENSION BY BANKS OF THE EXPIRATION DATE.
Upon or promptly after delivery by the Borrower of the annual
financial statements to be provided under Section 8.3.2 [Annual Financial
Statements] for the fiscal year ending December 31, 1998 or any subsequent
fiscal year, the Borrower may request a one-year extension of the Expiration
Date by written notice to the Banks, and the Banks agree to respond to the
Borrower's request for an extension by the later of sixty (60) days following
receipt of the request or May 31 of such year; provided, however, that the
failure of any Bank to respond within such time period shall not in any manner
constitute an agreement by such Bank to extend the Expiration Date. If all Banks
elect to extend, the Expiration Date shall be extended for a period of one year.
3. COLLATERAL
Each of the Loan Parties shall grant first priority Liens in their assets
(including capital stock of each of the Loan Parties but excluding all real
property, all stock of the Inactive Subsidiaries, and any immaterial assets of
the Inactive Subsidiaries) pursuant to the Patent, Trademark and Copyright
Security Agreement, the Security Agreement and the Pledge Agreement. Any
Subsidiaries of the Borrower formed after the date hereof shall guaranty the
Obligations of the Loan Parties hereunder pursuant to a Guaranty Agreement as
more fully provided in Sections 8.2.9 and 11.18. Each of the Loan Parties and
Lone Star Technologies shall execute and deliver to the Agent for the benefit of
the Banks the Intercompany Subordination Agreement as provided in Section 7.1.3.
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4. INTEREST RATES
4.1 INTEREST RATE OPTIONS.
The Borrower shall pay interest in respect of the outstanding unpaid
principal amount of the Loans as selected by it from the Base Rate Option or
Euro-Rate Option set forth below applicable to the Loans, it being understood
that, subject to the provisions of this Agreement, the Borrower may select
different Interest Rate Options and different Interest Periods to apply
simultaneously to the Loans comprising different Borrowing Tranches and may
convert to or renew one or more Interest Rate Options with respect to all or any
portion of the Loans comprising any Borrowing Tranche, PROVIDED that there shall
not be at any one time outstanding more than Six (6) Borrowing Tranches in the
aggregate among all of the Loans, and PROVIDED FURTHER that only the Base Rate
Option shall apply to the Swing Loans. If at any time the designated rate
applicable to any Loan made by any Bank exceeds such Bank's highest lawful rate
(i.e., the highest rate such Bank is permitted to charge to the Borrower, taking
into account all applicable Laws), the rate of interest on such Bank's Loan
shall be limited to such Bank's highest lawful rate.
4.1.1 RATE OPTIONS.
The Borrower shall have the right to select from the
following Interest Rate Options applicable to the Revolving Credit Loans
(subject to the provisions above regarding Swing Loans):
(i) REVOLVING CREDIT BASE RATE OPTION: A
fluctuating rate per annum (computed on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed) equal to the Base Rate plus the
Applicable Margin, such interest rate to change automatically from time to time
effective as of the effective date of each change in the Base Rate; or
(ii) REVOLVING CREDIT EURO-RATE OPTION: A rate per
annum (computed on the basis of a year of 360 days and actual days elapsed)
equal to the Euro-Rate plus the Applicable Margin.
4.1.2 RATE QUOTATIONS.
The Borrower may call the Agent on or before the date
on which a Loan Request is to be delivered to receive an indication of the rates
then in effect, but it is acknowledged that such projection shall not be binding
on the Agent or the Banks nor affect the rate of interest which thereafter is
actually in effect when the election is made.
4.2 INTEREST PERIODS.
At any time when the Borrower shall select, convert to or renew a
Euro-Rate Option, the Borrower shall notify the Agent thereof at least three (3)
Business Days prior to the effective date of such Euro-Rate Option by delivering
a Loan Request. The notice shall specify
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an interest period (the "Interest Period") during which such Interest Rate
Option shall apply, such Interest Period to be one, two, three or six Months
if Borrower selects the Euro-Rate Option. Notwithstanding the preceding
sentence, the following provisions shall apply to any selection of, renewal
of, or conversion to a Euro-Rate Option:
4.2.1 ENDING DATE AND BUSINESS DAY.
any Interest Period which would otherwise end on a date
which is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day;
4.2.2 AMOUNT OF BORROWING TRANCHE.
each Borrowing Tranche of Euro-Rate Loans shall be in
integral multiples of $500,000 and not less than $1,000,000
4.2.3 TERMINATION BEFORE EXPIRATION DATE.
the Borrower shall not select, convert to or renew an
Interest Period for any portion of the Loans that would end after the Expiration
Date; and
4.2.4 RENEWALS.
in the case of the renewal of a Euro-Rate Option at the
end of an Interest Period, the first day of the new Interest Period shall be the
last day of the preceding Interest Period, without duplication in payment of
interest for such day.
4.3 INTEREST AFTER DEFAULT.
To the extent permitted by Law, upon the occurrence of an Event of
Default and until such time as such Event of Default shall have been cured or
waived:
4.3.1 LETTER OF CREDIT FEES. INTEREST RATE.
the Letter of Credit Fees and the rate of interest for
each Loan otherwise applicable pursuant to Section 2.10.2 [Letter of Credit
Fees] or Section 4.1 [Interest Rate Options], respectively, shall be increased
by 2.0% per annum; and
4.3.2 OTHER OBLIGATIONS.
each other Obligation hereunder if not paid when due
shall bear interest at a rate per annum equal to the sum of the rate of interest
applicable under the Base Rate Option plus an additional 2.0% per annum from the
time such Obligation becomes due and payable and until it is paid in full.
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4.3.3 ACKNOWLEDGMENT.
The Borrower acknowledges that the increase in rates
referred to in this Section 4.3 reflects, among other things, the fact that such
Loans or other amounts have become a substantially greater risk given their
default status and that the Banks are entitled to additional compensation for
such risk; and all such interest shall be payable by Borrower upon demand by
Agent.
4.4 EURO-RATE UNASCERTAINABLE; ILLEGALITY; INCREASED COSTS; DEPOSITS
NOT AVAILABLE.
4.4.1 UNASCERTAINABLE.
If on any date on which a Euro-Rate would otherwise be
determined, the Agent shall have determined that:
(i) adequate and reasonable means do not exist
for ascertaining such Euro-Rate, or
(ii) a contingency has occurred which materially
and adversely affects the London interbank eurodollar market relating to the
Euro-Rate, the Agent shall have the rights specified in Section 4.4.3.
4.4.2 ILLEGALITY; INCREASED COSTS; DEPOSITS NOT
AVAILABLE.
If at any time any Bank shall have determined that:
(i) the making, maintenance or funding of any
Loan to which a Euro-Rate Option applies has been made impracticable or unlawful
by compliance by such Bank in good faith with any Law or any interpretation or
application thereof by any Official Body or with any request or directive of any
such Official Body (whether or not having the force of Law), or
(ii) such Euro-Rate Option will not adequately and
fairly reflect the cost to such Bank of the establishment or maintenance of any
such Loan, or
(iii) after making all reasonable efforts,
deposits of the relevant amount in Dollars for the relevant Interest Period for
a Loan to which a Euro-Rate Option applies, respectively, are not available to
such Bank with respect to such Loan, in the London interbank market,
then the Agent shall have the rights specified in Section 4.4.3.
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4.4.3 AGENT'S AND BANK'S RIGHTS.
In the case of any event specified in Section 4.4.1
above, the Agent shall promptly so notify the Banks and the Borrower thereof,
and in the case of an event specified in Section 4.4.2 above, such Bank shall
promptly so notify the Agent and endorse a certificate to such notice as to the
specific circumstances of such notice, and the Agent shall promptly send copies
of such notice and certificate to the other Banks and the Borrower. Upon such
date as shall be specified in such notice (which shall not be earlier than the
date such notice is given), the obligation of (A) the Banks, in the case of such
notice given by the Agent, or (B) such Bank, in the case of such notice given by
such Bank, to allow the Borrower to select, convert to or renew a Euro-Rate
Option shall be suspended until the Agent shall have later notified the
Borrower, or such Bank shall have later notified the Agent, of the Agent's or
such Bank's, as the case may be, determination that the circumstances giving
rise to such previous determination no longer exist. If at any time the Agent
makes a determination under Section 4.4.1 and the Borrower has previously
notified the Agent of its selection of conversion to or renewal of a Euro-Rate
Option and such Interest Rate Option has not yet gone into effect, such
notification shall be deemed to provide for selection of, conversion to or
renewal of the Base Rate Option otherwise available with respect to such Loans.
If any Bank notifies the Agent of a determination under Section 4.4.2, the
Borrower shall, subject to the Borrower's indemnification Obligations under
Section 5.5.2 [Indemnity], as to any Loan of the Bank to which a Euro-Rate
Option applies, on the date specified in such notice either convert such Loan to
the Base Rate Option otherwise available with respect to such Loan, or prepay
such Loan in accordance with Section 5.4 [Voluntary Prepayments]. Absent due
notice from the Borrower of conversion or prepayment, such Loan shall
automatically be converted to the Base Rate Option otherwise available with
respect to such Loan upon such specified date.
4.5 SELECTION OF INTEREST RATE OPTIONS.
If the Borrower fails to select a new Interest Period to apply to any
Borrowing Tranche of Loans under the Euro-Rate Option at the expiration of an
existing Interest Period applicable to such Borrowing Tranche in accordance with
the provisions of Section 4.2 [Interest Periods], or if any such selection is
ineffective for any reason (including Borrower's inability to meet any of the
conditions described in Section 7.2), then the Borrower shall be deemed to have
converted such Borrowing Tranche to the Base Rate Option, as applicable,
commencing upon the last day of the existing Interest Period.
5. PAYMENTS
5.1 PAYMENTS.
All payments and prepayments to be made in respect of principal,
interest, Commitment Fees, Letter of Credit Fees, Agent's Fee or other fees or
amounts due from the Borrower or any other Loan Party hereunder or under the
other Loan Documents shall be payable prior to 12:00 Noon, Pittsburgh time, on
the date when due without presentment, demand, protest
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or notice of any kind, all of which are hereby expressly waived by the
Borrower and each other Loan Party, and without set-off counterclaim or other
deduction of any nature, and an action therefor shall immediately accrue.
Such payments shall be made to the Agent at the Principal Office for the
account of PNC Bank with respect to the Swing Loans and for the ratable
accounts of the Banks with respect to the Revolving Credit Loans or
Reimbursement Obligations in U.S. Dollars and in immediately available funds,
and the Agent shall promptly distribute such amounts to the Banks in
immediately available funds, PROVIDED that in the event payments are received
by 11:00 a.m., Pittsburgh time, by the Agent with respect to the Loans and
such payments are not distributed to the Banks on the same day received by
the Agent, the Agent shall pay the Banks the Federal Funds Effective Rate
with respect to the amount of such payments for each day held by the Agent
and not distributed to the Banks. The Agent's and each Bank's statement of
account, ledger or other relevant record shall be prima facia evidence of the
amount of principal of and interest on the Loans and other amounts owing
under this Agreement.
5.2 PRO RATA TREATMENT OF BANKS.
Each borrowing shall be allocated to each Bank according to its
Ratable Share, and each selection of, conversion to or renewal of any Interest
Rate Option and each payment or prepayment by the Borrower with respect to
principal, interest, Commitment Fees, Letter of Credit Fees, or other fees
(except for the Agent's Fee) or amounts due from the Borrower hereunder to the
Banks with respect to the Loans, shall (except as provided in Section 4.4.3
[Agent's and Bank's Rights] in the case of an event specified in Section 4.4
[Euro-Rate Unascertainable, Etc.], 5.4.2 [Replacement of a Bank] or 5.5
[Additional Compensation in Certain Circumstances]) be made in proportion to the
applicable Loans outstanding from each Bank and, if no such Loans are then
outstanding, in proportion to the Ratable Share of each Bank. Notwithstanding
any of the foregoing, each borrowing or payment or prepayment by the Borrower of
principal, interest, fees or other amounts from the Borrower with respect to
Swing Loans shall be made by or to PNC Bank according to Section 2.
5.3 INTEREST PAYMENT DATES.
Interest on Loans to which the Base Rate Option applies shall be due
and payable in arrears on the first Business Day of each October, January, April
and July after the date hereof and on the Expiration Date or upon acceleration
of the Notes. Interest on Loans to which the Euro-Rate Option applies shall be
due and payable on the last day of each Interest Period for those Loans and, if
such Interest Period is longer than three (3) Months, also on the 90th day of
such Interest Period. Interest on the principal amount of each Loan or other
monetary Obligation shall be due and payable on demand after such principal
amount or other monetary Obligation becomes due and payable (whether on the
stated maturity date, upon acceleration or otherwise).
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5.4 VOLUNTARY PREPAYMENTS.
5.4.1 RIGHT TO PREPAY.
The Borrower shall have the right at its option from
time to time to prepay the Loans in whole or part without premium or penalty
(except as provided in Section 5.4.2 below or in Section 5.5 [Additional
Compensation in Certain Circumstances]):
(i) at any time with respect to any Loan to which
the Base Rate Option applies,
(ii) on the last day of the applicable Interest
Period with respect to Loans to which a Euro-Rate Option applies,
(iii) on the date specified in a notice by any
Bank pursuant to Section 4.4 [Euro-Rate Unascertainable, Etc.] with respect to
any Loan to which a Euro-Rate Option applies.
Whenever the Borrower desires to prepay any part of the
Loans, it shall provide a prepayment notice to the Agent by 1:00 p.m. at least
one (1) Business Day prior to the date of prepayment of the Revolving Credit
Loans or no later than Noon, Pittsburgh time, on the date of prepayment of Swing
Loans, setting forth the following information:
(x) the date, which shall be a Business Day, on which the
proposed prepayment is to be made;
(y) a statement indicating the application of the prepayment
between the Swing Loans and Revolving Credit Loans; and
(z) the total principal amount of such prepayment, which shall
not be less than $100,000 for any Swing Loan, $100,000 for any
Revolving Credit Loan to which the Base Rate Option applies or
$500,000 for any Revolving Credit Loan to which the Euro-Rate Option
applies.
All prepayment notices shall be irrevocable. The principal amount
of the Loans for which a prepayment notice is given, together with interest on
such principal amount except with respect to Loans to which the Base Rate Option
applies, shall be due and payable on the date specified in such prepayment
notice as the date on which the proposed prepayment is to be made. Except as
provided in Section 4.4.3 [Agent's and Bank's Rights], if the Borrower prepays a
Loan but fails to specify the applicable Borrowing Tranche which the Borrower is
prepaying, the prepayment shall be applied first to Loans to which the Base Rate
Option applies, then to Dollar Loans to which the Euro-Rate Option applies. Any
prepayment hereunder shall be subject to the Borrower's Obligation to indemnify
the Banks under Section 5.5.2 [Indemnity].
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5.4.2 REPLACEMENT OF A BANK.
In the event any Bank (i) gives notice under Section
4.4 [Euro-Rate Unascertainable, Etc.] or Section 5.5.1 [Increased Costs, Etc.],
(ii) does not fund Revolving Credit Loans because the making of such Loans would
contravene any Law applicable to such Bank, (iii) does not approve any action as
to which consent of the Required Banks is requested by the Borrower and obtained
hereunder, or (iv) becomes subject to the control of an Official Body (other
than normal and customary supervision), then the Borrower shall have the right
at its option, with the consent of the Agent, which shall not be unreasonably
withheld, to prepay the Loans of such Bank in whole, together with all interest
accrued thereon, and terminate such Bank's Commitment within ninety (90) days
after (w) receipt of such Bank's notice under Section 4.4 [Euro-Rate
Unascertainable, Etc.] or Section 5.5.1 [Increased Costs, Etc.], (x) the date
such Bank has failed to fund Revolving Credit Loans because the making of such
Loans would contravene Law applicable to such Bank, (y) the date of obtaining
the consent which such Bank has not approved, or (z) the date such Bank became
subject to the control of an Official Body, as applicable; PROVIDED that the
Borrower shall also pay to such Bank at the time of such prepayment any amounts
required under Section 5.5 [Additional Compensation in Certain Circumstances]
and any accrued interest due on such amount and any related fees; PROVIDED,
however, that the Commitment of such Bank shall be provided by one or more of
the remaining Banks or a replacement bank acceptable to the Agent; PROVIDED,
further, the remaining Banks shall have no obligation hereunder to increase
their Commitments. Notwithstanding the foregoing, the Agent may only be replaced
subject to the requirements of Section 10. 14 [Successor Agent] and PROVIDED
that all Letters of Credit have expired or been terminated or replaced.
5.4.3 CHANGE OF LENDING OFFICE.
Each Bank agrees that upon the occurrence of any event
giving rise to increased costs or other special payments under Section 4.4.2
[Illegality, Etc.] or Section 5.5.1 [Increased Costs, Etc.] with respect to such
Bank, it will if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another lending office
for any Loans or Letters of Credit affected by such event, PROVIDED that such
designation is made on such terms that such Bank and its lending office suffer
no economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of such Section. Nothing
in this Section 5.4.3 shall affect or postpone any of the Obligations of the
Borrower or any other Loan Party or the rights of the Agent or any Bank provided
in this Agreement.
5.5 ADDITIONAL COMPENSATION IN CERTAIN CIRCUMSTANCES.
5.5.1 INCREASED COSTS OR REDUCED RETURN RESULTING FROM
TAXES, RESERVES, CAPITAL ADEQUACY REQUIREMENTS, EXPENSES, ETC.
If any Law, guideline or interpretation or any change
in any Law, guideline or interpretation or application thereof by any Official
Body charged with the
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interpretation or administration thereof or compliance with any request or
directive (whether or not having the force of Law) of any central bank or
other Official Body:
(i) subjects any Bank to any tax or changes the
basis of taxation with respect to this Agreement, the Notes, the Loans or
payments by the Borrower of principal, interest, Commitment Fees, or other
amounts due from the Borrower hereunder or under the Notes (except for taxes on
the overall net income of such Bank([including taxes referred to in the last
sentence of Section 11.17])),
(ii) imposes, modifies or deems applicable any
reserve, special deposit or similar requirement against credits or commitments
to extend credit extended by, or assets (funded or contingent) of, deposits with
or for the account of, or other acquisitions of funds by, any Bank, or
(iii) imposes, modifies or deems applicable any
capital adequacy or similar requirement (A) against assets (funded or
contingent) of, or letters of credit, other credits or commitments to extend
credit extended by, any Bank, or (B) otherwise applicable to the obligations of
any Bank under this Agreement, and the result of any of the foregoing is to
increase the cost to, reduce the income receivable by, or impose any additional
expense (including loss of margin) upon any Bank with respect to this Agreement,
the Notes or the making, maintenance or funding of any part of the Loans (or, in
the case of any capital adequacy or similar requirement, to have the effect of
reducing the rate of return on any Bank's capital, taking into consideration
such Bank's customary policies with respect to capital adequacy) by an amount
which such Bank in its sole discretion deems to be material, such Bank shall
from time to time notify the Borrower and the Agent of the amount determined
reasonably and in good faith (using any reasonable averaging and attribution
methods employed in good faith) by such Bank to be necessary to compensate such
Bank for such increase in cost, reduction of income, additional expense or
reduced rate of return. Such notice shall set forth in reasonable detail the
basis for such determination. Such amount shall be due and payable by the
Borrower to such Bank ten (10) Business Days after such notice is given.
5.5.2 INDEMNITY.
In addition to the compensation required by Section
5.5.1 [Increased Costs, Etc.], the Borrower shall indemnify each Bank against
all liabilities, losses or expenses (including loss of margin, any loss or
expense incurred in liquidating or employing deposits from third parties and any
loss or expense incurred in connection with funds acquired by a Bank to fund or
maintain Loans subject to a Euro-Rate Option) which such Bank sustains or incurs
as a consequence of any
(i) payment, prepayment, conversion or renewal of
any Loan to which a Euro-Rate Option applies on a day other than the last day of
the corresponding Interest Period (whether or not such payment or prepayment is
mandatory, voluntary or automatic and whether or not such payment or prepayment
is then due),
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(ii) attempt by the Borrower to revoke (expressly,
by later inconsistent notices or otherwise) in whole or part any Loan Requests
under Section 2.4 [Revolving Credit Loan Requests] or Section 4.2 [Interest
Periods] or notice relating to prepayments under Section 5.4 [Voluntary
Prepayments], or
(iii) default by the Borrower in the performance
or observance of any covenant or condition contained in this Agreement or any
other Loan Document, including any failure of the Borrower to pay when due (by
acceleration or otherwise) any principal, interest, Commitment Fee or any other
amount due hereunder.
If any Bank sustains or incurs any such loss or
expense, it shall from time to time notify the Borrower of the amount determined
reasonably and in good faith by such Bank (which determination may include any
reasonably assumptions, allocations of costs and expenses and averaging or
attribution methods as such Bank shall elect) to be necessary to indemnify such
Bank for such loss or expense. Such notice shall set forth in reasonable detail
the basis for such determination. Such amount shall be due and payable by the
Borrower to such Bank ten (10) Business Days after such notice is given.
5.6 SETTLEMENT DATE PROCEDURES.
In order to minimize the transfer of funds between the Banks and the
Agent, the Borrower may borrow, repay and reborrow Swing Loans and PNC Bank may
make Swing Loans as provided in Section 2.1.2 hereof. Not later than 10:00 am,
Pittsburgh time, on each Settlement Date, the Agent shall notify each Bank of
its Ratable Share of the total of the Revolving Credit Loans and the Swing Loans
(each a "Required Share"). The Agent shall also effect settlement of the Swing
Loans in accordance with the foregoing sentence on the proposed Borrowing Dates
for Revolving Credit Loans and on any mandatory prepayment dates and may at its
option effect settlement on any other Business Day (each a" Settlement Date").
On each Settlement Date, (i) the Borrower may in its discretion repay all
outstanding Swing Loans, or (ii) if the Borrower does not repay all outstanding
Swing Loans the Agent shall notify each Bank of its Ratable Share of the Swing
Loans (each a "Required Share"). On such Settlement Date, the Borrower shall be
deemed to borrow from the Banks Revolving Credit Loans under the Base Rate
Option equal to the outstanding Swing Loans and simultaneously making payment of
the proceeds thereof in repayment of the Swing Loans. Prior to 12:00 Noon,
Pittsburgh time on such Settlement Date, each Bank shall fund its Required Share
of the Revolving Credit Loans referred to in the preceding sentence by making
payment thereof to the Agent. These settlement procedures are established solely
as a matter of administrative convenience, and nothing contained in this Section
5.6 shall relieve the Banks of their obligations to fund other Revolving Credit
Loans on dates other than a Settlement Date pursuant to Section 2.1.2. The
Agent may at any time at its option for any reason whatsoever require each Bank
to pay immediately to the Agent such Bank's Ratable Share of the outstanding
Revolving Credit Loans and each Bank may at any time require the Agent to pay
immediately to such Bank its Ratable Share of all payments made by the Borrower
to the Agent with respect to the Revolving Credit Loans.
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6. REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES.
The Loan Parties, jointly and severally, represent and warrant to the
Agent and each of the Banks as follows:
6.1.1 ORGANIZATION AND QUALIFICATION.
Each Loan Party and each Subsidiary of the Borrower is
a corporation, partnership or limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. Each Loan Party and each Subsidiary of the Borrower has the lawful
power to own or lease its properties and to engage in the business it presently
conducts or proposes to conduct. Each Loan Party and each Subsidiary of the
Borrower is duly licensed or qualified and in good standing in each jurisdiction
listed on SCHEDULE 6.1.1 and in all other jurisdictions where the property owned
or leased by it or the nature of the business transacted by it or both makes
such licensing or qualification necessary in order to prevent a Material Adverse
Change.
6.1.2 CAPITALIZATION AND OWNERSHIP.
Schedule 6.1.2(A) sets forth the authorized capital
stock of the Borrower including Borrower's common stock and Preferred Stock, and
the number of shares of such capital stock (referred to herein as the
"Borrower's Shares") which are issued and outstanding. All such Borrower's
Shares are owned by Lone Star Technologies as indicated on SCHEDULE 6.1.2(A).
All of the Borrower's Shares have been validly issued and are fully paid and
nonassessable. There are no options, warrants or other rights in favor of any
Person other than Lone Star Technologies outstanding to purchase the Borrower's
Shares except as indicated on SCHEDULE 6.1.2(B).
6.1.3 SUBSIDIARIES.
SCHEDULE 6.1.3(A) states the name of each of the
Borrower's Subsidiaries, its jurisdiction of incorporation, its authorized
capital stock, the issued and outstanding shares (referred to herein as the
"Subsidiary Shares") and the owners thereof if it is a corporation, its
outstanding partnership interests (the "Partnership Interests") if it is a
partnership and its outstanding limited liability company interests, interests
assigned to managers thereof and the voting rights associated therewith (the
"LLC Interests") if it is a limited liability company. The Borrower and each
Subsidiary of the Borrower has good and marketable title to all of the
Subsidiary Shares, Partnership Interests and LLC Interests it purports to own,
free and clear in each case of any Lien, other than statutory Permitted Liens.
All Subsidiary Shares, Partnership Interests and LLC Interests have been validly
issued, and all Subsidiary Shares are fully paid and nonassessable. All capital
contributions and other consideration required to be made or paid in connection
with the issuance of the Partnership Interests and LLC Interests have been made
or paid, as the case may be. There are no options, warrants or other rights
outstanding to purchase
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any such Subsidiary Shares, Partnership Interests or LLC Interests except as
indicated on SCHEDULE 6.1.3(B).
6.1.4 POWER AND AUTHORITY.
Each Loan Party has full power to enter into, execute,
deliver and carry out this Agreement and the other Loan Documents to which it is
a party, to incur the Indebtedness contemplated by the Loan Documents and to
perform its Obligations under the Loan Documents to which it is a party, and all
such actions have been duly authorized by all necessary proceedings on its part.
6.1.5 VALIDITY AND BINDING EFFECT.
This Agreement has been duly and validly executed and
delivered by each Loan Party, and each other Loan Document which any Loan Party
is required to execute and deliver on or after the date hereof will have been
duly executed and delivered by such Loan Party on the required date of delivery
of such Loan Document. This Agreement and each other Loan Document constitutes,
or when executed and delivered will constitute, legal, valid and binding
obligations of each Loan Party which is or will be a party thereto on and after
the date of delivery thereof, enforceable against such Loan Party in accordance
with its terms, except to the extent that enforceability of any of such Loan
Document may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforceability of creditors' rights generally
or by general principles of equity.
6.1.6 NO CONFLICT.
Neither the execution and delivery of this Agreement or
the other Loan Documents by any Loan Party nor the consummation of the
transactions herein or therein contemplated or compliance with the terms and
provisions hereof or thereof by any of them will in any material way conflict
with, constitute a default under or result in any breach of (i) the terms and
conditions of the certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation, limited liability
company agreement or other organizational documents of any Loan Party or (ii)
any Law or any material agreement or instrument or order, writ, judgment,
injunction or decree to which any Loan Party or any of its Subsidiaries is a
party or by which it or any of its Subsidiaries is bound or to which it is
subject, or result in the creation or enforcement of any Lien, charge or
encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan
Party or any of its Subsidiaries (other than Liens granted under the Loan
Documents).
6.1.7 LITIGATION.
Except as disclosed on Schedule 6.1.7, there are no
actions, suits, proceedings or investigations pending or, to the knowledge of
any Loan Party, threatened against such Loan Party or any Subsidiary of such
Loan Party at law or equity before any Official Body which individually or in
the aggregate may reasonably be expected to result in any Material
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Adverse Change. None of the Loan Parties or any Subsidiaries of any Loan
Party is in violation of any order, writ, injunction or any decree of any
Official Body which may reasonably be expected to result in any Material
Adverse Change.
6.1.8 TITLE TO PROPERTIES.
All real property owned or leased by each Loan Party and
each Subsidiary of each Loan Party is described on SCHEDULE 6.1.8(A). Each Loan
Party and each Subsidiary of each Loan Party has good and marketable title to or
valid leasehold interest in all material properties, assets and other rights
which it purports to own or lease or which are reflected as owned or leased on
its books and records, free and clear of all Liens and encumbrances except
Permitted Liens, and subject to the terms and conditions of the applicable
leases. Except as disclosed in SCHEDULE 6.1.8(B), all of the material leases of
real property are in full force and effect without the necessity for any consent
which has not previously been obtained upon consummation of the transactions
contemplated hereby.
6.1.9 FINANCIAL STATEMENTS.
(i) HISTORICAL STATEMENTS. The Borrower has delivered
to the Agent copies of its audited consolidated year-end financial statements
for and as of the end of the three fiscal years ended December 31, 1996 (the
"Annual Statements"). In addition, the Borrower has delivered to the Agent
copies of its unaudited consolidated interim financial statements for the fiscal
year to date and as of the end of the fiscal quarter ended June 30, 1997 (the
"Interim Statements") (the Annual and Interim Statements being collectively
referred to as the "Historical Statements"). The Historical Statements were
compiled from the books and records maintained by the Borrower's management, are
correct and complete and fairly represent the consolidated financial condition
of the Borrower and its Subsidiaries as of their dates and the results of
operations for the fiscal periods then ended and have been prepared in
accordance with GAAP consistently applied, subject (in the case of the Interim
Statements) to normal year-end audit adjustments.
(ii) ACCURACY OF FINANCIAL STATEMENTS. Neither the
Borrower nor any Subsidiary of the Borrower has any liabilities, contingent or
otherwise, or forward or long-term commitments required under GAAP to be
disclosed in the Historical Statements or in the notes thereto that are not so
disclosed, and except as disclosed therein there are no unrealized or
anticipated losses from any commitments of the Borrower or any Subsidiary of the
Borrower which may reasonably be expected to cause a Material Adverse Change.
Since December 31, 1996, no Material Adverse Change has occurred.
6.1.10 USE OF PROCEEDS; MARGIN STOCK; SECTION 20 SUBSIDIARIES.
6.1.10.1 GENERAL.
The Loan Parties intend to use the proceeds of the Loans in
accordance with Sections 2.8 and 8.1.10.
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6.1.10.2 MARGIN STOCK.
None of the Loan Parties or any Subsidiaries of any Loan Party
engages or intends to engage principally, or as one of its important activities,
in the business of extending credit for the purpose, immediately, incidentally
or ultimately, of purchasing or carrying margin stock (within the meaning of
Regulation U). No part of the proceeds of any Loan has been or will be used,
immediately, incidentally or ultimately, to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock or to refund Indebtedness originally incurred for such purpose, or
for any purpose which entails a violation of or which is inconsistent with the
provisions of Regulation U. None of the Loan Parties or any Subsidiary of any
Loan Party holds or intends to hold margin stock in such amounts that more than
25% of the reasonable value of the assets of any Loan Party or Subsidiary of any
Loan Party are or will be represented by margin stock.
6.1.10.3 SECTION 20 SUBSIDIARIES.
The Loan Parties do not intend to use and shall not use any
portion of the proceeds of the Loans, directly or indirectly (i) knowingly to
purchase any Ineligible Securities from a Section 20 Subsidiary during any
period in which such Section 20 Subsidiary makes a market in such Ineligible
Securities, (ii) knowingly to purchase during the underwriting or placement
period Ineligible Securities being underwritten or privately placed by a Section
20 Subsidiary, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by as Section 20 Subsidiary and
issued by or for the benefit of any Loan Party or any Affiliate of any Loan
Party.
6.1.11 FULL DISCLOSURE.
Neither this Agreement nor any other Loan Document, nor any
certificate, statement, agreement or other documents furnished to the Agent or
any Bank in connection herewith or therewith, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which they were made, not misleading. There is no fact known to any Loan Party
which materially and adversely affects the business, property, assets, financial
condition or results of operations of the Loan Parties taken as a whole which
has not been set forth in this Agreement or in the certificates, statements,
agreements or other documents furnished in writing to the Agent and the Banks
prior to or at the date of the making of this representation in connection with
the transactions contemplated hereby.
6.1.12 TAXES.
Except as disclosed in Schedule 6.1.12, all federal, and all
material state, local and other, tax returns required to have been filed with
respect to each Loan Party and each Subsidiary of the Borrower have been filed,
and payment or adequate provision has been made for the payment of all material
taxes, fees, assessments and other governmental charges which have or may become
due pursuant to said returns or to assessments received (except to the
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extent that such taxes, fees, assessments and other charges are being
contested in good faith by appropriate proceedings diligently conducted and
for which such reserves or other appropriate provisions, if any, as shall be
required by GAAP shall have been made) and there are no agreements or waivers
extending the statutory period of limitations applicable to any federal
income tax return of any Loan Party or Subsidiary of any Loan Party for any
period.
6.1.13 CONSENTS AND APPROVALS.
Except for the filing of financing statements and the Patent
and Trademark Assignment in the applicable governmental filing offices, no
consent, approval, exemption, order or authorization of or a registration or
filing with, any Official Body or any other Person is required by any Law or any
agreement in connection with the execution, delivery and carrying out of this
Agreement and the other Loan Documents by any Loan Party, except as listed on
SCHEDULE 6.1.13, all of which shall have been obtained or made on or prior to
the Closing Date except as otherwise indicated on SCHEDULE 6.1.13.
6.1.14 NO EVENT OF DEFAULT: COMPLIANCE WITH INSTRUMENTS.
No event has occurred and is continuing and no condition
exists or will exist after giving effect to the borrowings or other extensions
of credit to be made on the Closing Date under or pursuant to the Loan Documents
which constitutes an Event of Default or Potential Default. None of the Loan
Parties or any Subsidiaries of any Loan Party is in violation of (i) any term of
its certificate of incorporation, bylaws, certificate of limited partnership,
partnership agreement, certificate of formation, limited liability company
agreement or other organizational documents or (ii) any agreement or instrument
to which it is a party or by which it or any of its properties may be subject or
bound where such violation would constitute a Material Adverse Change.
6.1.15 PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.
Each Loan Party and each Subsidiary of the Borrower owns or
possesses all the material patents, trademarks, service marks, trade names,
copyrights, licenses, registrations, franchises, permits and rights necessary to
own and operate its properties and to carry on its business as presently
conducted and planned to be conducted by such Loan Party or Subsidiary, without
known conflict with the rights of others, except as may be disclosed in SCHEDULE
6.1.15(A). All material patents, trademarks, service marks, trade names,
copyrights, licenses, registrations, franchises and permits of each Loan Party
and each Subsidiary of the Borrower are listed and described on SCHEDULE
6.1.15(B).
6.1.16 SECURITY INTERESTS.
Upon completion of the filing and other steps described in the
following sentence, the Liens and security interests granted to the Agent for
the benefit of the Banks pursuant to the Patent, Trademark and Copyright
Security Agreement, the Pledge Agreement and the Security Agreement in the
Collateral will constitute Prior Security Interests
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under the Uniform Commercial Code as in effect in each applicable
jurisdiction (the "Uniform Commercial Code") or other applicable Law,
entitled to all the rights, benefits and priorities provided by the Uniform
Commercial Code or such Law. Upon the filing of financing statements relating
to said security interests in each office and in each jurisdiction where
required in order to perfect the security interests described above, taking
possession of any stock certificates or other certificates evidencing the
Pledged Collateral and recordation of the Patent, Trademark and Copyright
Security Agreement in the United States Patent and Trademark Office and
United States Copyright Office, as applicable, all such action as is
necessary or advisable to establish such rights of the Agent will have been
taken, and there will be upon execution and delivery of the Patent, Trademark
and Copyright Security Agreement, the Pledge Agreement and the Security
Agreement, such filings and such taking of possession, no necessity for any
further action in order to preserve, protect and continue such rights, except
the filing of continuation statements with respect to such financing
statements within six months prior to each five-year anniversary of the
filing of such financing statements. All filing fees and other expenses in
connection with each such action have been or will be paid by the Borrower.
6.1.17 STATUS OF THE PLEDGED COLLATERAL.
All the shares of capital stock, Partnership Interests or
LLC Interests included in the Pledged Collateral pledged to the Agent for the
benefit of the Banks are, or will be upon issuance, validly issued and
nonassessable and owned beneficially and of record by the pledgor free and clear
of any Lien (other than statutory Permitted Liens) or restriction on transfer,
except as otherwise provided by the Pledge Agreement and except as the right of
the Banks to dispose of the shares, Partnership Interests or LLC Interests may
be limited by the Securities Act of 1933, as amended, and the regulations
promulgated by the Securities and Exchange Commission thereunder and by
applicable state securities laws. There are no shareholder, partnership, limited
liability company or other agreements or understandings with respect to the
shares of capital stock, Partnership Interests or LLC Interests included in the
Pledged Collateral except for the partnership agreements and limited liability
company agreements described on SCHEDULE 6.1.17. The Loan Parties have
delivered true and correct copies of such partnership agreements and limited
liability company agreements to the Agent.
6.1.18 INSURANCE.
SCHEDULE 6.1.18(A) lists all insurance policies to which any
Loan Party or Subsidiary of any Loan Party is a party, all of which are valid
and in full force and effect. No notice has been given or claim made and no
grounds exist to cancel or avoid any of such policies or to reduce the coverage
provided thereby. Except as disclosed in SCHEDULE 6.1.18(B), such policies
provide adequate coverage from reputable and financially sound insurers in
amounts sufficient to insure the assets and risks of each Loan Party and each
Subsidiary of the Borrower in accordance with prudent business practice in the
industry of the Loan Parties and their Subsidiaries.
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6.1.19 COMPLIANCE WITH LAWS.
The Loan Parties and their Subsidiaries are in compliance in
all material respects with all applicable Laws (other than Environmental Laws
which are specifically addressed in Section 6.1.24 [Environmental Matters]) in
all jurisdictions in which any Loan Party or Subsidiary of any Loan Party is
presently or will be doing business except where the failure to do so would not
constitute a Material Adverse Change.
6.1.20 MATERIAL CONTRACTS; BURDENSOME RESTRICTIONS.
SCHEDULE 6.1.20 lists all material contracts relating to the
business operations of each Loan Party and each Subsidiary of the Borrower,
including all employee benefit plans and written Labor Contracts with ten or
more employees or with key managers. All such material contracts are valid,
binding and enforceable upon such Loan Party or Subsidiary and each of the other
parties thereto in accordance with their respective terms, and there is no
default thereunder, to the Loan Parties' knowledge, with respect to parties
other than such Loan Party or Subsidiary except in each case for matters which
do not constitute a Material Adverse Change. None of the Loan Parties or their
Subsidiaries is bound by any contractual obligation, or subject to any
restriction in any organization document, or any requirement of Law which could
result in a Material Adverse Change.
6.1.21 INVESTMENT COMPANIES; REGULATED ENTITIES.
None of the Loan Parties or any Subsidiaries of any Loan
Party is an "investment company" registered or required to be registered under
the Investment Company Act of 1940 or under the "control" of an "investment
company" as such terms are defined in the Investment Company Act of 1940 and
shall not become such an "investment company" or under such "control." None of
the Loan Parties or any Subsidiaries of any Loan Party is subject to any other
Federal or state statute or regulation limiting its ability to incur
Indebtedness for borrowed money.
6.1.22 PLANS AND BENEFIT ARRANGEMENTS.
Except as set forth on SCHEDULE 6.1.22:
(i) The Borrower and each other member of the ERISA Group
are in compliance in all material respects with any applicable provisions of
ERISA with respect to all Benefit Arrangements, Plans and Multiemployer Plans.
There has been no Prohibited Transaction with respect to any Benefit Arrangement
or any Plan or, to the best knowledge of the Borrower, with respect to any
Multiemployer Plan or Multiple Employer Plan, which could result in any material
liability of the Borrower or any other member of the ERISA Group. The Borrower
and all other members of the ERISA Group have made when due any and all payments
required to be made under any agreement relating to a Multiemployer Plan or a
Multiple Employer Plan or any Law pertaining thereto. With respect to each Plan
and Multiemployer Plan, the Borrower and each other member of the ERISA Group
(i) have fulfilled
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in all material respects their obligations under the minimum funding
standards of ERISA, (ii) have not incurred any material liability to the PBGC
other than for premium payments, and (iii) do not currently have asserted
against them or currently owe any penalty for failure to fulfill the minimum
funding requirements of ERISA.
(ii) To the best of the Borrower's knowledge, each Multi
employer Plan and Multiple Employer Plan is able to pay benefits thereunder when
due.
(iii) Neither the Borrower nor any other member of the
ERISA Group has instituted or intends to institute proceedings to terminate any
Plan.
(iv) No event requiring notice to the PBGC under Section
302(f)(4)(A) of ERISA has occurred or is reasonably expected to occur with
respect to any Plan, and no amendment with respect to which security is required
under Section 307 of ERISA has been made or is reasonably expected to be made to
any Plan.
(v) Neither the Borrower nor any other member of the ERISA
Group has incurred or reasonably expects to incur any material withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer Plan.
Neither the Borrower nor any other member of the ERISA Group has been notified
by any Multiemployer Plan or Multiple Employer Plan that such Multiemployer Plan
or Multiple Employer Plan has been terminated within the meaning of Title IV of
ERISA and, to the best knowledge of the Borrower, no Multiemployer Plan or
Multiple Employer Plan is reasonably expected to be reorganized or terminated,
within the meaning of Title IV of ERISA.
(vi) To the extent that any Benefit Arrangement is insured,
the Borrower and all other members of the ERISA Group have paid when due all
premiums required to be paid for all periods through the Closing Date. To the
extent that any Benefit Arrangement is funded other than with insurance, the
Borrower and all other members of the ERISA Group have made when due all
contributions required to be paid for all periods through the Closing Date.
(vii) All Plans, Benefit Arrangements and Multiemployer
Plans have been administered in material accordance with their terms and
applicable Law.
6.1.23 EMPLOYMENT MATTERS.
Each of the Loan Parties and each of their Subsidiaries is
in compliance with the Labor Contracts and all applicable federal, state and
local labor and employment Laws including those related to equal employment
opportunity and affirmative action, labor relations, minimum wage, overtime,
child labor, medical insurance continuation, worker adjustment and relocation
notices, immigration controls and worker and unemployment compensation, where
the failure to comply would constitute a Material Adverse Change. There are no
outstanding grievances, arbitration awards or appeals therefrom arising out of
the Labor Contracts or current or threatened strikes, picketing, handbilling or
other work stoppages or
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slowdowns at facilities of any of the Loan Parties or any of their
Subsidiaries which in any case would constitute a Material Adverse Change.
The Borrower has delivered to the Agent true and correct copies of each of
the written Labor Contracts with ten or more employees or with key managers.
6.1.24 ENVIRONMENTAL MATTERS.
Except as disclosed on SCHEDULE 6.1.24:
(i) None of the Loan Parties or any Subsidiaries of any
Loan Party has received any Environmental Complaint from any Official Body or
private Person alleging that such Loan Party or Subsidiary or any prior owner of
any of the Property is currently a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 ET SEQ., or any other federal or state list of environmentally
problematic sites under which any Loan Party may be required to undertake
remedial activities pursuant to applicable Environmental Laws and none of the
Loan Parties has any reason to believe that such an Environmental Complaint
might be received with respect to one or more matters which might reasonably be
expected to require them to make material expenditures for unbudgeted
remediation of environmental conditions during the term of this Agreement. There
are no pending or, to any Loan Party's knowledge, threatened Environmental
Complaints relating to any Loan Party or Subsidiary of any Loan Party or, to any
Loan Party's knowledge, any prior owner of any of the Property pertaining to, or
arising out of, any Environmental Conditions with respect to one or more matters
which might reasonably be expected to require them to make material expenditures
for unbudgeted remediation of environmental conditions during the term of this
Agreement.
(ii) There are no known circumstances at, on or under any of
the Property that constitute a material breach of or material non-compliance
with any Environmental Laws, and there are no known past or present
Environmental Conditions at, on or under any of the Property or, to any Loan
Party's knowledge, at, on or under adjacent property, that prevent material
compliance with the Environmental Laws at any of the Property except for those
matters, if any, which are being addressed under the supervision of an Official
Body with jurisdiction over such matters.
(iii) Neither any of the Property nor any structures,
improvements, equipment, fixtures, activities or facilities thereon or
thereunder contain or use Regulated Substances except in material compliance
with Environmental Laws. There are no processes, facilities, operations,
equipment or other activities at, on or under any of the Property, or, to any
Loan Party's knowledge, at, on or under adjacent property, that currently result
in the release or threatened release of Regulated Substances onto any of the
Property, except to the extent that such releases or threatened releases are not
a material breach of or otherwise not a material violation of the Environmental
Laws and except for those matters, if any, which are being addressed under the
supervision of an Official Body with jurisdiction over such matters.
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(iv) There are no aboveground storage tanks, underground
storage tanks or underground piping associated with such tanks, used for the
management of Regulated Substances at, on or under any of the Property that (a)
do not have, to the extent required by Environmental Laws, a full operational
secondary containment system in place, and (b) are not otherwise in material
compliance with all Environmental Laws. There are no abandoned underground
storage tanks or underground piping associated with such tanks known to the Loan
Parties and previously used for the management of Regulated Substances at, on or
under any of the Property that have not either been closed in place in material
accordance with Environmental Laws or removed in material compliance with all
applicable Environmental Laws and no known contamination associated with the use
of such tanks exists on any of the Property that is not in material compliance
with Environmental Laws.
(v) Each Loan Party and each Subsidiary of any Loan Party
has all material permits, licenses, authorizations, plans and approvals
necessary under the Environmental Laws for the conduct of the business of such
Loan Party or Subsidiary as presently conducted. Each Loan Party and each
Subsidiary of any Loan Party has submitted all material notices, reports and
other filings required by the Environmental Laws to be submitted to an Official
Body which pertain to current operations on any of the Property.
(vi) All present and to any Loan Party's knowledge all past
on-site generation, storage, processing, treatment, recycling, reclamation,
disposal or other use or management of Regulated Substances at, on, or under any
of the Property and all off-site transportation, storage, processing, treatment,
recycling, reclamation, disposal or other use or management of Regulated
Substances to the extent done by the Loan Parties, have been done in material
compliance with Environmental Laws; and to the extent done by other Persons on
behalf of the Loan Parties, the Loan Parties have no actual knowledge that such
activities have not been done by such other Persons in material accordance with
the Environmental Laws.
For purposes of this Section 6.1.24 with respect to any fines, penalties
or remediation activities (other than those identified in the Loan Party's
most recent budget as submitted to the Agent and the Banks during the fall of
each year) the term "material" shall mean in the aggregate any events or
occurrences which either result in the actual expenditure of funds by any
Loan Party or based upon reasonably determined cost estimates are likely to
result in the expenditure of funds by any Loan Party in excess of $1,000,0000
within a single calendar year.
6.1.25 SENIOR DEBT STATUS.
The Obligations of each Loan Party under this
Agreement, the Notes, the Guaranty Agreement and each of the other Loan
Documents to which it is a party do rank and will rank at least PARI PASSU in
priority of payment with all other Indebtedness of such Loan Party except
Indebtedness of such Loan Party to the extent secured by Permitted Liens. There
is no Lien upon or with respect to any of the properties or income of any Loan
Party or Subsidiary of any Loan Party which secures indebtedness or other
obligations of any Person except for Permitted Liens.
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6.2 UPDATES TO SCHEDULES.
Should any of the information or disclosures on any of the following
Schedules attached hereto be outdated or incorrect in any material respect as
of the date on which Borrower delivers its compliance certificate for each
fiscal quarter end pursuant to Section 8.3.3. Borrower shall deliver an
amended and restated form of such Schedule together with such compliance
certificate:
Schedule 6.1.1 - Qualifications to do Business
Schedule 6.1.2(A) - Capitalization (List)
Schedule 6.1.3(A) - Subsidiaries (List)
Schedule 6.1.8(A) - Owned and Leased Real Property (List)
Schedule 6.1.15(B) - Patents, Trademarks, Copyrights, Licenses, etc.
(List)
Schedule 6.1.17 - Patents, Trademarks, Copyrights, Licenses, etc.
Schedule 6.1.18(A) - Insurance Policies (List)
Schedule 6.1.20 - Material Contracts
Should any of the information or disclosures provided on any of the
Schedules listed below become outdated or incorrect in any material respect
at any time during the term of this Agreement, the Borrower shall promptly
provide the Agent in writing with such revisions or updates to such Schedule
as may be necessary or appropriate to update or correct same; PROVIDED,
however that no Schedule shall be deemed to have been amended, modified or
superseded by any such correction or update, nor shall any breach of warranty
or representation resulting from the inaccuracy or incompleteness of any such
Schedule be deemed to have been cured thereby, unless and until the Required
Banks, in their sole and absolute discretion, shall have accepted in writing
such revisions or updates to such Schedule:
Schedule 6.1.2(B) - Capitalization (Exception)
Schedule 6.1.3(B) - Subsidiaries (Exception)
Schedule 6.1.7 - Litigation
Schedule 6.1.8(B) - Owned and Leased Real Property (Exception)
Schedule 6.1.12 - Taxes
Schedule 6.1.13 - Consents and Approvals
Schedule6.1.15(A) - Patents, Trademarks, Copyrights, Licenses, etc.
(Exception)
Schedule 6.1.18(A) - Insurance Policies (Exception)
Schedule 6. 1.22 - Employee Benefit Plan Disclosures
Schedule 6. 1.24 - Environmental Disclosures
Should any of the information or disclosures provided on Schedule A to
the Security Agreement become outdated or incorrect at any time during the
term of this Agreement, the Borrower shall provide the Agent in writing with
such revision or update to such Schedule as may be necessary or appropriate
to update or correct same in accordance with Section 8.3.6(ii).
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7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
The obligation of each Bank to make Loans and of the Agent to issue
Letters of Credit hereunder is subject to the performance by each of the Loan
Parties of its Obligations to be performed hereunder at or prior to the
making of any such Loans or issuance of such Letters of Credit and to the
satisfaction of the following further conditions:
7.1 FIRST LOANS AND LETTERS OF CREDIT.
On the Closing Date:
7.1.1 OFFICER'S CERTIFICATE.
The representations and warranties of each of the
Loan Parties contained in Section 6 and in each of the other Loan Documents
shall be true and accurate on and as of the Closing Date with the same effect
as though such representations and warranties had been made on and as of such
date (except representations and warranties which relate solely to an earlier
date or time, which representations and warranties shall be true and correct
on and as of the specific dates or times referred to therein), and each of
the Loan Parties shall have performed and complied with all covenants and
conditions hereof and thereof, no Event of Default or Potential Default shall
have occurred and be continuing or shall exist; and there shall be delivered
to the Agent for the benefit of each Bank a certificate of each of the Loan
Parties, dated the Closing Date and signed by the Chief Executive Officer,
President or Chief Financial Officer of each of the Loan Parties, to each
such effect.
7.1.2 SECRETARY'S CERTIFICATE.
There shall be delivered to the Agent for the
benefit of each Bank a certificate dated the Closing Date and signed by the
Secretary or an Assistant Secretary of each of the Loan Parties, certifying
as appropriate as to:
(i) the directors' resolutions or similar
action taken by each Loan Party in connection with this Agreement and the
other Loan Documents;
(ii) the names of the officer or officers
authorized to sign this Agreement and the other Loan Documents and the true
signatures of such officer or officers and specifying the Authorized Officers
permitted to act on behalf of each Loan Party for purposes of this Agreement
and the true signatures of such officers, on which the Agent and each Bank
may conclusively rely; and
(iii) copies of its organizational
documents, including its certificate of incorporation, bylaws, certificate of
limited partnership, partnership agreement, certificate of formation, and
limited liability company agreement as in effect on the Closing Date
certified by the appropriate state official where such documents are filed in
a state office together with reasonably current certificates from the
appropriate state officials as to the continued
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existence and good standing of each Loan Party in each state where organized
or qualified to do business.
7.1.3 DELIVERY OF LOAN DOCUMENTS.
The Guaranty Agreement, the Notes, the Patent, the Trademark and
Copyright Assignment, the Intercompany Subordination Agreement, the Pledge
Agreement and the Security Agreement shall have been duly executed by all of
the appropriate parties and delivered to the Agent for the benefit of the
Banks, together with all appropriate financing statements.
7.1.4 OPINION OF COUNSEL.
There shall be delivered to the Agent for the benefit of each Bank
written opinions of Xxxxxxxx and Xxxxxx, P.C., and Xxxxxx X. Xxxxxx, Esq.,
counsel for the Loan Parties and Lone Star Technologies (relating to the
Intercompany Subordination Agreement) (who may rely on the opinions of such
other counsel as may be acceptable to the Agent), dated the Closing Date and
in form and substance satisfactory to the Agent and its counsel:
(i) as to the matters set forth in EXHIBIT 7.1.4; and
(ii) as to such other matters incident to the transactions
contemplated herein as the Agent may reasonably request.
7.1.5 LEGAL DETAILS.
All legal details and proceedings in connection with the
transactions contemplated by this Agreement and the other Loan Documents
shall be in form and substance satisfactory to the Agent and counsel for the
Agent, and the Agent shall have received all such other counterpart originals
or certified or other copies of such documents and proceedings in connection
with such transactions, in form and substance satisfactory to the Agent and
said counsel, as the Agent or said counsel may reasonably request.
7.1.6 PAYMENT OF FEES.
The Borrower shall have paid or caused to be paid to the Agent for
itself and for the account of the Banks to the extent not previously paid all
fees accrued through the Closing Date and the costs and expenses for which
the Agent and the Banks are entitled to be reimbursed and submitted bills for
reimbursement, if applicable.
7.1.7 CONSENTS.
All material consents required to effectuate the transactions
contemplated hereby as set forth on SCHEDULE 6.1.13 shall have been obtained.
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7.1.8 OFFICER'S CERTIFICATE REGARDING MACs.
Since December 31, 1996 no Material Adverse Change shall have
occurred; prior to the Closing Date, there shall have been no material change
in the management of any Loan Party or Subsidiary of any Loan Party (other
than promotions of officers and transfers of officers from one or more Loan
Parties to the other Loan Parties or to Loan Star Technologies); and there
shall have been delivered to the Agent for the benefit of each Bank a
certificate dated the Closing Date and signed by the Chief Executive Officer,
President or Chief Financial Officer of each Loan Party to each such effect.
7.1.9 NO VIOLATION OF LAWS.
The making of the Loans and the issuance of the Letters of
Credit shall not contravene any Law applicable to any Loan Party or Lone Star
Technologies or any of the Banks.
7.1.10 NO ACTIONS OR PROCEEDINGS.
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, this Agreement, the other Loan
Documents or the consummation of the transactions contemplated hereby or
thereby or which, in the Agent's sole discretion, would make it inadvisable
to consummate the transactions contemplated by this Agreement or any of the
other Loan Documents.
7.1.11 INSURANCE POLICIES; CERTIFICATES OF INSURANCE;
ENDORSEMENTS.
The Loan Parties shall have delivered evidence acceptable to
the Agent that adequate insurance in compliance with Section 8.1.3
[Maintenance of Insurance] is in full force and effect and that all premiums
then due thereon have been paid, together with a copy of each Loan Party's
casualty insurance policy or policies evidencing coverage satisfactory to the
Agent, with additional insured and lender loss payable special endorsements
attached thereto in form and substance satisfactory to the Agent and its
counsel naming the Agent as additional insured and lender loss payee.
7.1.12 FILING RECEIPTS; LIEN SEARCHES.
The Agent shall have received (1) signed originals of all
documents to be recorded in order to perfect the Lien of the Banks on the
Collateral and (2) results of lien searches evidencing to the Agent's
satisfaction that there exist no Liens other than Permitted Liens on the
assets of the Loan Parties and the Liens in favor of the Agent constitute a
Prior Security Interest in favor of the Agent for the benefit of the Banks.
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7.1.13 ADMINISTRATIVE QUESTIONNAIRE.
Each of the Banks and the Borrower shall have completed and
delivered to the Agent the Agent's form of administrative questionnaire.
7.1.14 REPAYMENT OF EXISTING INDEBTEDNESS; PAYOFF LETTERS.
The Borrower shall have repaid all obligations owed to the
lenders under the Existing Credit Agreement and shall have delivered a
satisfactory payoff letter to the Agent evidencing the same. It is
acknowledged that the Borrower may request from the Agent a Letter Credit
hereunder in favor of CITBC securing payment by Borrower of Borrower's
reimbursement obligations under a letter of credit which is outstanding under
the Existing Credit Agreement for the period between the Closing Date and the
date on which such letter of credit has been either terminated or replaced.
7.1.15 PROCESSOR AND WAREHOUSEMAN'S AGREEMENTS.
Each Loan Party shall request from each Processor or
Warehouseman to which such Loan Party as of the Closing Date has delivered
possession of $1,000,000 or more of its inventory for processing by such
Processor or holding by such Warehouseman, as applicable, the Processor
Agreement or Warehouseman's Agreement referred to in Section 8.1.13 provided
that the failure to obtain such Processor Agreement or Warehouseman's
Agreement shall not constitute a Potential Default or an Event of Default,
except to the extent provided in Section 8.1.13.2.
7.2 EACH ADDITIONAL LOAN OR LETTER OF CREDIT.
At the time of making any Loans or issuing any Letters of Credit other
than Loans made or Letters of Credit issued on the Closing Date and after
giving effect to the proposed extensions of credit: the representations and
warranties of the Loan Parties contained in Section 6 and in the other Loan
Documents shall be true on and as of the date of such additional Loan or
Letter of Credit with the same effect as though such representations and
warranties had been made on and as of such date (except (a) representations
and warranties which expressly relate solely to an earlier date or time,
which representations and warranties shall be true and correct on and as of
the specific dates or times referred to therein, and (b) if the Loan Parties
update any Schedule listed in the first (but not the second) paragraph of
Section 6.2 on or before the time that the Borrower is required to deliver
its compliance certificate for one of its fiscal quarters, then such Schedule
shall be deemed to have been updated at such time (or times) within such
fiscal quarter as the event (or events) giving rise to such update occurred
or at the beginning of such fiscal quarter if such event (or events) occurred
(assuming that such events occurred within such quarter)) and the Loan
Parties shall have performed and complied with all covenants and conditions
hereof; no Event of Default or Potential Default shall have occurred and be
continuing or shall exist; the making of the Loans or issuance of such Letter
of Credit shall not contravene any Law applicable to any Loan Party or
Subsidiary of any Loan Party or any of the
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Banks; and the Borrower shall have delivered to the Agent a duly executed and
completed Loan Request or application for a Letter of Credit as the case may
be.
8. COVENANTS
8.1 AFFIRMATIVE COVENANTS.
The Loan Parties, jointly and severally, covenant and agree that until
payment in full of the Loans, Reimbursement Obligations and Reimbursement
Borrowings, and interest thereon, expiration or termination of all Letters of
Credit, satisfaction of all of the Loan Parties' other Obligations hereunder
and under the other Loan Documents and termination of the Commitments, the
Loan Parties shall comply at all times with the following affirmative
covenants:
8.1.1 PRESERVATION OF EXISTENCE, ETC.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain its legal existence as a corporation, limited
partnership or limited liability company and its license or qualification and
good standing in each jurisdiction in which its ownership or lease of
property or the nature of its business makes such license or qualification
necessary, except as otherwise expressly permitted in Section 8.2.6
[Liquidations, Mergers, Etc.].
8.1.2 PAYMENT OF LIABILITIES, INCLUDING TAXES, ETC.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, duly pay and discharge all liabilities to which it is
subject or which are asserted against it, promptly as and when the same shall
become due and payable, including all taxes, assessments and governmental
charges upon it or any of its properties, assets, income or profits, prior to
the date on which penalties attach thereto, except to the extent that such
liabilities, including taxes, assessments or charges, are being contested in
good faith and by appropriate and lawful proceedings diligently conducted and
for which such reserve or other appropriate provisions, if any, as shall be
required by GAAP shall have been made, but only to the extent that failure to
discharge any such liabilities would not result in a Material Adverse Change,
PROVIDED that the Loan Parties and their Subsidiaries will pay all such
liabilities (which have not promptly been stayed or enjoined) forthwith upon
the commencement of proceedings to foreclose any Lien which may have attached
as security therefor.
8.1.3 MAINTENANCE OF INSURANCE.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, insure its properties and assets against loss or damage by
fire and such other insurable hazards as such assets are commonly insured
(including fire, extended coverage, property damage, workers' compensation,
public liability and business interruption insurance) and against other risks
(including errors and omissions) in such amounts as similar properties and
assets are insured by prudent companies in similar circumstances carrying on
similar businesses, and with reputable
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and financially sound insurers, including self-insurance to the extent
customary, all as reasonably determined by the Agent. At the request of the
Agent, the Loan Parties shall deliver to the Agent (x) on the Closing Date
and annually thereafter an original certificate of insurance signed by the
Loan Parties' independent insurance broker describing and certifying as to
the existence of the insurance on the Collateral required to be maintained by
this Agreement and the other Loan Documents, together with a copy of the
endorsement described in the next sentence attached to such certificate and
(y) from time to time a summary schedule indicating all insurance then in
force with respect to each of the Loan Parties. Such policies of insurance
shall contain special endorsements, in form and substance acceptable to the
Agent, which shall (i) specify the Agent as an additional insured, mortgagee
and lender loss payee as its interests may appear, with the understanding
that any obligation imposed upon the insured (including the liability to pay
premiums) shall be the sole obligation of the applicable Loan Parties and not
that of the insured, (ii) provide that the interest of the Banks shall be
insured regardless of any breach or violation by the applicable Loan Parties
of any warranties, declarations or conditions contained in such policies or
any action or inaction of the applicable Loan Parties or others insured under
such policies, (iii) provide a waiver of any right of the insurers to set off
or counterclaim or any other deduction, whether by attachment or otherwise,
(iv) provide that any and all rights of subrogation which the insurers may
have or acquire shall be, at all times and in all respects, junior and
subordinate to the prior payment in full of the Indebtedness hereunder and
that no insurer shall exercise or assert any right of subrogation until such
time as the Indebtedness hereunder has been paid in full and the Commitments
have terminated, (v) provide, except in the case of public liability
insurance and workmen's compensation insurance, that all insurance proceeds
for losses of less than $1,000,000 shall be adjusted with and payable to the
applicable Loan Parties and that all insurance proceeds for losses of
$1,000,000 or more shall be adjusted with and payable to the Agent, (vi)
include effective waivers by the insurer of all claims for insurance premiums
against the Agent, (vii) provide that no cancellation of such policies for
any reason (including non-payment of premium) nor any change therein shall be
effective until at least thirty (30) days after receipt by the Agent of
written notice of such cancellation or change, (viii) be primary without
right of contribution of any other insurance carried by or on behalf of any
additional insureds with respect to their respective interests in the
Collateral, and (ix) provide that inasmuch as the policy covers more than one
insured, all terms, conditions, insuring agreements and endorsements (except
limits of liability) shall operate as if there were a separate policy
covering each insured. The applicable Loan Parties shall notify the Agent
promptly of any occurrence causing a material loss or decline in value of the
Collateral and the estimated (or actual, if available) amount of such loss or
decline.
8.1.4 MAINTENANCE OF PROPERTIES AND LEASES.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain in good repair, working order and condition
(ordinary wear and tear excepted) in accordance with the general practice of
other businesses of similar character and size, all of those properties
useful or necessary to its business, and from time to time, such Loan Party
will make or cause to be made all appropriate repairs, renewals or
replacements thereof.
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8.1.5 MAINTENANCE OF PATENTS, TRADEMARKS, ETC.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, maintain in full force and effect all patents, trademarks,
service marks, trade names, copyrights, licenses, franchises, permits and
other authorizations necessary for the ownership and operation of its
properties and business if the failure so to maintain the same would
constitute a Material Adverse Change.
8.1.6 VISITATION RIGHTS.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, permit any of the officers or authorized employees or
representatives of the Agent or any of the Banks to visit and inspect any of
its properties and to examine and make excerpts from its books and records
and discuss its business affairs, finances and accounts with its officers,
all in such detail and at such times and as often as any of the Banks may
reasonably request, PROVIDED that each Bank shall provide the Borrower and
the Agent with reasonable notice prior to any visit or inspection. In the
event any Bank desires to conduct an audit of any Loan Party, such Bank shall
make a reasonable effort to conduct such audit contemporaneously with any
audit to be performed by the Agent.
8.1.7 KEEPING OF RECORDS AND BOOKS OF ACCOUNT.
The Borrower shall, and shall cause each Subsidiary of the
Borrower to, maintain and keep proper books of record and account which
enable the Borrower and its Subsidiaries to issue financial statements in
accordance with GAAP and as otherwise required by applicable Laws of any
Official Body having jurisdiction over the Borrower or any Subsidiary of the
Borrower, and in which full, true and correct entries shall be made in all
material respects of all its dealings and business and financial affairs.
8.1.8 PLANS AND BENEFIT ARRANGEMENTS.
The Borrower shall, and shall cause each other member of the
ERISA Group to, comply with ERISA, the Internal Revenue Code and other
applicable Laws applicable to Plans and Benefit Arrangements (including
provisions relating to the qualification of Plans and Benefit Arrangements
under Section 401 of the Internal Revenue Code), except where such failure,
alone or in conjunction with any other failure, would not result in a
Material Adverse Change. Without limiting the generality of the foregoing,
the Borrower shall cause all of its Plans and all Plans maintained by any
member of the ERISA Group to be funded in accordance with the minimum funding
requirements of ERISA and shall make, and cause each member of the ERISA
Group to make, in a timely manner, all contributions due to Plans, Benefit
Arrangements and Multiemployer Plans.
8.1.9 COMPLIANCE WITH LAWS.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, comply with all applicable Laws, including all Environmental
Laws, in all respects, PROVIDED that
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it shall not be deemed to be a violation of this Section 8.1.9 if any failure
to comply with any Law would not result in fines, penalties, remediation
costs, other similar liabilities or injunctive relief which in the aggregate
would constitute a Material Adverse Change.
8.1.10 USE OF PROCEEDS.
The Loan Parties will use the Letters of Credit and the
proceeds of the Loans only for general corporate purposes, including (i) for
working capital, (ii) to fund redemptions of Preferred Stock permitted
hereunder, (iii) to finance Permitted Acquisitions, or (iv) to repay and
terminate Indebtedness outstanding under the Existing Credit Agreement. The
Loan Parties will not use the Letters of Credit and the proceeds of the Loans
for any purposes which contravenes any applicable Law or any provision hereof.
8.1.11 FURTHER ASSURANCES.
Each Loan Party shall, from time to time, at its expense,
faithfully preserve and protect the Agent's Lien on and Prior Security
Interest in the Collateral as a continuing first priority perfected Lien,
subject only to Permitted Liens, and shall do such other acts and things as
the Agent may deem necessary or advisable from time to time in order to
preserve, perfect and protect the Liens granted under the Loan Documents and
to exercise and enforce its rights and remedies thereunder with respect to
the Collateral.
8.1.12 SUBORDINATION OF INTERCOMPANY LOANS.
8.1.12.1 BY LONE STAR TECHNOLOGIES.
Lone Star Technologies shall subordinate any intercompany
Indebtedness, loans or advances owed by any Loan Party to Lone Star
Technologies pursuant to the terms of the Subordination Agreement in the form
of EXHIBIT 1.1(I)(2).
8.1.12.2 BY LOAN PARTIES.
Each Loan Party shall cause any intercompany Indebtedness,
loans or advances owed by any Loan Party to any other Loan Party to be
subordinated pursuant to the terms of the Intercompany Subordination
Agreement in the form of EXHIBIT 1.1(I)(1).
8.1.13 PROCESSORS AND WAREHOUSEMEN'S AGREEMENTS.
8.1.13.1 INDIVIDUAL PROCESSOR OR WAREHOUSEMAN'S LIMIT.
Each Loan Party shall request from each processor (each a
"Processor") or warehouseman (each a "Warehouseman") to which such Loan Party
shall at any time deliver possession of $1,000,000 or more of its inventory
for processing by such Processor or Warehouseman the documents listed in (i)
and (ii) below and deliver such documents to the Agent (collectively such
documents are referred to as the "Collateral Package"):
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(i) an agreement in the form of EXHIBIT 8.1.13(A)(1)
executed by such Processor or in the form of EXHIBIT 8.1.13(A)(2) FROM EACH
Warehouseman; and
(ii) a financing statement in the form of Exhibit
8.1.13(B) acknowledging the rights of the applicable Loan Party and the Agent
in such inventory.
8.1.13.2 AGGREGATE LIMIT ON OFF-SITE INVENTORY.
The Loan Parties shall not at any time permit the aggregate
amount of Non-Qualified Inventory of the Loan Parties to exceed 20% of the
total Inventory of the Loan Parties.
8.2 NEGATIVE COVENANTS.
The Loan Parties, jointly and severally, covenant and agree that until
payment in full of the Loans, Reimbursement Obligations and Reimbursement
Borrowings and interest thereon, expiration or termination of all Letters of
Credit, satisfaction of all of the Loan Parties' other Obligations hereunder
and under the other Loan Documents and termination of the Commitments, the
Loan Parties shall comply with the following negative covenants:
8.2.1 INDEBTEDNESS.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, at any time create, incur, assume or suffer to exist
any Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) Existing Indebtedness as set forth on SCHEDULE
8.2.1 (including any extensions or renewals thereof, PROVIDED there is no
increase in the amount thereof or other significant change in the terms
thereof unless otherwise specified on SCHEDULE 8.2.1;
(iii) Indebtedness secured by Purchase Money Security
Interests not exceeding $1,000,000 in the aggregate;
(iv) Indebtedness of a Loan Party to another Loan Party
which is subordinated in accordance with the provisions of Section 8.1.12
[Subordination of Intercompany Loans];
(v) Indebtedness of a Loan Party to Lone Star
Technologies provided that
(a) such Indebtedness shall be subordinated in
accordance with the provisions of Section 8.1.12 [Subordination of Intercompany
Loans];
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(b) no Potential Default or Event of Default shall
exist immediately prior to and after giving effect to the incurrence of such
Indebtedness; and
(c) the Borrower shall demonstrate that it shall be
in compliance with the covenant contained in Section 8.2.16[Maximum Leverage
Ratio], provided that (i) Borrower shall compute the numerator of such Leverage
Ratio (Indebtedness) as of the date on which Borrower incurs such Indebtedness
and the denominator of Leverage Ratio as of the four quarters ending on the
last day of the quarter preceding such date of incurrence. Borrower shall
deliver to the Agent and the Banks at least five (5) Business Days prior to
the date on which Borrower incurs such Indebtedness a certificate in the form
of EXHIBIT 8.2.5 evidencing such compliance; and
(vi) Indebtedness under (A) hedging agreements for the
sole purpose of protecting against risks associated with the fluctuations in
the price of natural gas, electricity and other fuels or feedstocks
reasonably expected to be owned or consumed by the Loan Parties in the
ordinary course of business (and not for speculative purposes) and (B) an
Interest rate protection agreement protecting against interest rate risk
associated with the Borrower's Obligations hereunder, in either case (of (A)
or (B)) with a financial institution reasonably acceptable to the Agent.
8.2.2 LIENS.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, at any time create, incur, assume or suffer to exist
any Lien on any of its property or assets, tangible or intangible, now owned
or hereafter acquired, or agree or become liable to do so, except Permitted
Liens.
8.2.3 GUARANTIES.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, at any time, directly or indirectly, become or be
liable in respect of any Guaranty, except for Guaranties of Indebtedness of
the Loan Parties which is permitted under Section 8.2.1.
8.2.4 LOANS AND INVESTMENTS.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, at any time make or suffer to remain outstanding any
loan or advance to, or purchase, acquire or own any stock, bonds, notes or
securities of or any partnership interest (whether general or limited) or
limited liability company interest in, or any other investment or interest
in, or make any capital contribution to, any other Person, or agree, become
or remain liable to do any of the foregoing, except:
(i) trade credit extended on usual and customary terms
in the ordinary course of business;
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(ii) advances to employees to meet expenses incurred by
such employees in the ordinary course of business;
(iii) Permitted Investments and Permitted Acquisitions;
(iv) loans, advances and investments in other Loan
Parties; and
(v) other investments not described above, provided that
the total cash and other property given or Indebtedness incurred in
connection therewith does not exceed $5,000,000 in the aggregate at any time
outstanding.
8.2.5 DIVIDENDS AND RELATED DISTRIBUTIONS.
Except as provided in this Section 8.2.5 below, each of the
Loan Parties shall not, and shall not permit any of its Subsidiaries to:
(A) make or pay, or agree to become or remain liable to make
or pay, any dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of its shares
of capital stock, partnership interests or limited liability company
interests or make any payments on account of the purchase, redemption,
retirement or acquisition of its shares of capital stock (or warrants,
options or rights therefor), partnership interests or limited liability
company interests, or
(B) make or pay any amounts, whether principal, interest or
otherwise, on or in respect of loans or other obligations of a Loan Party to
Lone Star Technologies or otherwise make payments, transfer assets or pay or
provide any consideration (including incurring or assuming debt or other
obligations) to Lone Star Technologies or any Affiliates of Lone Star
Technologies other than the Loan Parties.
Notwithstanding the preceding sentence, the Loan Parties may
(i) make regularly scheduled payments of principal or
interest under the Slab Financing Arrangement provided that no Potential
Default or Event of Default shall exist immediately prior to and after giving
effect to such payment; or
(i) pay dividends or make other distributions or payments to
another Loan Party, or
(ii) pay a dividend or make a payment on Indebtedness incurred in
accordance with Section 8.2.1(v) to Lone Star Technologies, provided that
(a) no Potential Default or Event of Default shall exist
immediately prior to and after giving effect to such dividend;
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(b) the Borrower shall demonstrate that it shall be in
compliance with the covenants contained in the sections listed in the grid
below computed as of the dates and subject to the adjustments set forth in
such grid. Borrower shall deliver to the Agent and the Banks at least five
(5) Business Days prior to the date on which Borrower pays such dividend (the
"Dividend Payment Date") a certificate in the form of EXHIBIT 8.2.5
evidencing such compliance.
Covenant - Section Covenant - Title Date of Computation; Adjustments
------------------
Section 8.2.15 Minimum Interest Four quarters ending on the
Coverage Ratio quarter preceding the Dividend
Payment Date, except that the
denominator (clause (ii) in the
definition of "Interest Coverage
Ratio") shall be increased by
the amount of such dividend
Section 8.2.16 Maximum Leverage Numerator (Indebtedness)--As of
Ratio the Dividend Payment Date after
giving effect to any
Indebtedness incurred on such
Dividend Payment Date
Denominator--Four quarters
ending on the quarter preceding
the Dividend Payment Date
Section 8.2.17 Minimum Tangible Net Base Net Worth--computed as of
Worth the end of the quarter preceding
the date of the dividend
Consolidated Tangible Net Worth-
-computed as of the end of the
quarter preceding the Dividend
Payment Date, but decreased by
the amount of such dividend
Section 8.2.18 Minimum Working Computed as of the Dividend
Capital Payment Date after giving effect
thereto
(iii) make reimbursements to Lone Star Technologies for costs
and expenses, including payroll expenses for employees of Lone Star
Technologies, incurred by Lone Star Technologies provided that the aggregate
amount per year shall not exceed $4,000,000 and provided that one of the
following ((A), (B) or (C) below) is true:
(A) If Lone Star Technologies has not formed or acquired
any Subsidiaries (each an "Affiliate Subsidiary") other than the Borrower and
the Loan Parties, and is not undertaking to form or acquire, or investigating
the formation or acquisition of, an Affiliate Subsidiary, then all such costs
and expenses incurred shall be for the benefit of the Loan Parties, or
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(B) If Lone Star Technologies has not formed or acquired
any Affiliate Subsidiary but is undertaking to form or acquire, or
investigating the formation or acquisition of, an Affiliate Subsidiary, then
all such costs and expenses shall either be for the benefit of the Loan
Parties or for such undertaking or investigation and for no other purpose
(including the making of a dividend to the shareholders of Lone Star
Technologies) and shall be allocated to the Loan Parties and to such
undertaking or investigation in a reasonable and customary manner, or
(C) if Lone Star Technologies has formed or acquired any
Affiliate Subsidiaries, then Lone Star Technologies may allocate such costs
and expenses between such Affiliate Subsidiaries and the Loan Parties
pursuant to a cost sharing agreement provided that
(1) such agreement is reasonable as determined by
the Agent prior to such time as such agreement is entered into, and
(2) all such costs and expenses so incurred and
allocated to the Loan Parties and the Affiliate Subsidiaries shall be for the
benefit of the Loan Parties or such Affiliate Subsidiaries and for no other
purpose.
(iv) redeem by cash payment the Borrower's Preferred Stock
(including cash dividends payable on such Preferred Stock that are accrued
but not paid on the date of such redemption), provided that:
(a) no Potential Default or Event of Default shall exist
immediately prior to and after giving effect to such redemption;
(b) the Borrower shall demonstrate that it shall be in
compliance with the covenants contained in the sections listed in the grid
below computed as of the dates and subject to the adjustments set forth in
such grid. Borrower shall deliver at least five (5) Business Days prior to
the date on which Borrower makes such redemption payment (the "Redemption
Payment Date") a certificate in the form of EXHIBIT 8.2.5 evidencing such
compliance.
Covenant - Section Covenant - Title Date of Computation; Adjustments
------------------
Section 8.2.15 Minimum Interest Four quarters ending on the
(applies only if the Coverage Ratio quarter preceding the Redemption
Borrower shall pay Payment Date, except that the
accrued cash denominator (clause (ii) in the
dividends in definition of "Interest Coverage
connection with the Ratio") shall be increased by
redemption) the amount of such cash
dividend.
Section 8.2.16 Maximum Leverage Numerator (Indebtedness)--As of
Ratio the Redemption Payment Date
after giving effect to any
Indebtedness incurred on such
Redemption
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Payment Date
Denominator--Four quarters
ending on the quarter preceding
the Redemption Payment Date
Section 8.2.17 Minimum Tangible Base Net Worth--computed as of
Net Worth the end of the quarter preceding
the date of such redemption
payment, but decreased by the
amount of such redemption
payment
Consolidated Tangible Net Worth-
-computed as of the end of the
quarter preceding the Redemption
Payment Date, but decreased by
the amount of such redemption
payment
Section 8.2.18 Minimum Working Computed as of the Redemption
Capital Payment Date after giving effect
thereto
(v) pay dividends in the form of Borrower's common stock or
the Borrower's Preferred Stock.
8.2.6 LIQUIDATIONS, MERGERS, CONSOLIDATIONS, ACQUISITIONS.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, dissolve, liquidate or wind-up its affairs, or become
a party to any merger or consolidation, or (except as provided under Section
8.2.7) acquire by purchase, lease or otherwise all or substantially all of
the assets or capital stock of any other Person, PROVIDED that
(1) any Loan Party or Subsidiary other than the Borrower may
consolidate or merge into or be dissolved into the Borrower or another Loan
Party which is wholly-owned by one or more of the other Loan Parties, and
(2) any Loan Party may acquire, whether by purchase or by
merger, whether accounted for as a purchase or a pooling or otherwise (A)
ownership interests of another Person or (B) substantially all of the assets
of another Person or of a business or division of another Person (each a
"Permitted Acquisition"), PROVIDED that each of the following requirements is
met:
(i) if the Loan Parties are acquiring the ownership
interests in such Person, such interest shall include a majority of each
class of voting securities and the power to elect a majority of the directors
or other equivalent governing individuals with respect to such Person;
(ii) if the Loan Parties are acquiring the ownership
interests in such Person, such Person shall execute a Guarantor Joinder and
join this Agreement
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as a Guarantor pursuant to Section 11.18 [Joinder of Guarantors] on or
before the date of such Permitted Acquisition;
(iii) the Loan Parties, such Person and its owners, as
applicable, shall grant Liens in the assets of or acquired from and stock or
other ownership interests in such Person and otherwise comply with Section
11.18 [Joinder of Guarantors] on or before the date of such Permitted
Acquisition;
(iv) the board of directors or other equivalent
governing body of such Person shall have approved such Permitted Acquisition
and, if the Loan Parties shall use any portion of the Loans to fund such
Permitted Acquisition, the Loan Parties also shall have delivered to the
Banks written evidence of the approval of the board of directors (or
equivalent body) of such Person for such Permitted Acquisition;
(v) the business acquired, or the business conducted by
the Person whose ownership interests are being acquired, as applicable, shall
be substantially the same as one or more line or lines of business conducted
by the Loan Parties and shall comply with Section 8.2.10 [Continuation of or
Change in Business], EXCEPT that the Loan Parties may make an acquisition of
assets or stock of a Person in another line of business provided that total
Consideration paid or incurred in connection therewith does not exceed
$5,000,000 (the "Permitted Other Line of Business Acquisition");
(vi) no Potential Default or Event of Default shall exist
immediately prior to and after giving effect to such Permitted Acquisition;
(vii) the Borrower shall demonstrate that it shall be in
compliance with the covenants contained in the sections listed in the grid
below computed as of the dates and subject to the adjustments set forth in
such grid. Borrower shall deliver at least five (5) Business Days prior to
the date on which Borrower makes such Permitted Acquisition payment (the
"Acquisition Date") a certificate in the form of EXHIBIT 8.2.6 evidencing
such compliance.
Covenant - Section Covenant - Title Date of Computation; Adjustments
------------------
Section 8.2.16 Maximum Leverage Numerator (Indebtedness)--As of
Ratio the Acquisition Date after
giving effect to any
Indebtedness incurred on such
Acquisition Date
Denominator--Four quarters
ending on the last day of the
quarter preceding the
Acquisition Date
Section 8.2.17 Minimum Tangible Net Base Net Worth--computed as of
Worth the end of the quarter preceding
the date of such Permitted
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Acquisition,
Consolidated Tangible Net Worth-
-computed as of the end of the
quarter preceding the
Acquisition Date, but adjusted
for transactions on the
Acquisition Date
Section 8.2.18 Minimum Working Computed as of the Acquisition
Capital Date after giving effect thereto
(viii) the Loan Parties shall deliver to the Agent at
least five (5) Business Days before such Permitted Acquisition then current
drafts (with the executed versions to be delivered promptly after their
execution) of any agreements entered into or proposed to be entered into by
such Loan Parties in connection with such Permitted Acquisition and shall
deliver to the Agent such other information about such Person or its assets
as any Loan Party may reasonably require.
8.2.7 DISPOSITIONS OF ASSETS OR SUBSIDIARIES.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, sell, convey, assign, lease, abandon or otherwise
transfer or dispose of voluntarily or involuntarily, any of its properties or
assets, tangible or intangible (including sale, assignment, discount or other
disposition of accounts, contract rights, chattel paper, equipment or general
intangibles with or without recourse or of capital stock, shares of
beneficial interest, partnership interests or limited liability company
interests of a Subsidiary of such Loan Party), except:
(i) transactions involving the sale of Inventory of the Loan
Parties or Consigned Inventory in the ordinary course of business;
(ii) any sale, transfer, lease or other disposition of assets
in the ordinary course of business which are no longer necessary or required
in the conduct of such Loan Party's or such Subsidiary's business;
(iii) any sale, transfer or lease of assets by a Loan Party or
its Subsidiary to another Loan Party; provided that the Loan Parties shall on
or before such transfer deliver and record all documents necessary or
appropriate, as determined by the Agent, to perfect or otherwise establish
first priority Liens in all such personal property in favor of the Agent for
the benefit of the Banks following such transfer;
(iv) any sale, transfer, lease or other disposition of assets
in the ordinary course of business which are replaced by substitute assets
acquired or leased, PROVIDED such substitute assets (if personal property)
are subject to the Banks' Prior Security Interest; or
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(v) any sale of accounts receivable of the Borrower to a
purchaser or any assignment of such accounts to a lender provided that (i)
the amount of the proceeds from such sale or loan, as the case may be, shall
be an integral multiple of $5,000,000, (ii) the Revolving Credit Commitments
shall be reduced by the amount of such proceeds (such reduction shall be
allocated ratably among the Banks) and the Borrower shall otherwise comply
with Section 2.1.3.2, (iii) the Borrower shall apply such proceeds to repay
the Loans to the extent the Revolving Facility Usage exceeds the amount of
the Revolving Credit Commitments as so reduced, and (iv) the purchaser or
lender, as applicable, shall not have any recourse against any Loan Party or
any Subsidiary of any Loan Party for payment of any portion of the purchase
price or loan, as the case may be, or for any interest thereon or other
obligations related to such sale or loan.
8.2.8 AFFILIATE TRANSACTIONS.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, enter into or carry out any transaction (including
purchasing property or services from or selling property or services to) any
of its Affiliates that is not a Loan Party, unless such transaction is not
otherwise prohibited by this Agreement, is entered into upon fair and
reasonable arm's length terms and conditions (or terms and conditions more
favorable to the Loan Parties) which are fully disclosed to the Agent, and is
in accordance with all applicable Law. The Banks acknowledge that
transactions under the Borrower's present cost sharing agreement (provided
that such transactions meet the requirements of Section 8.2.5(iii)) and under
the Slab Financing Arrangement satisfy the foregoing requirements.
8.2.9 SUBSIDIARIES, PARTNERSHIPS AND JOINT VENTURES.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, own or create directly or indirectly any Subsidiaries
other than (i) any Subsidiary which has joined this Agreement as Guarantor on
the Closing Date; (ii) the Inactive Subsidiaries, and (iii) any Subsidiary
formed after the Closing Date which joins this Agreement as a Guarantor
pursuant to Section 11.18 [Joinder of Guarantors], provided that (A) such
Subsidiary and the Loan Parties, as applicable, shall grant and cause to be
perfected first priority Liens to the Agent for the benefit of the Banks in
all personal property held by, and stock of or other ownership interests in,
such Subsidiary, and (B) any Inactive Subsidiary shall at all times have no
assets other than immaterial assets consisting of receivables from Affiliates
in amounts not exceeding $10,000 in the aggregate (i.e. for all Inactive
Subsidiaries), voluntarily incur no liabilities and conduct no business,
unless and until it joins this Agreement as a Guarantor pursuant to Section
11.18 (at which time it shall cease to be an Inactive Subsidiary). Each of
the Loan Parties shall not become or agree to (1) become a general partner in
any general or limited partnership, except that the Loan Parties may be
general partners in other Loan Parties, or (2) become a joint venturer or
hold a joint venture interest in any joint venture.
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8.2.10 CONTINUATION OF OR CHANGE IN BUSINESS.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, engage in any business other than Oilfield products,
specialty tubing and flat rolled steel and other tubular products and
services, including tubular processing and fabrication, and such Loan Party
or Subsidiary shall not permit any material change in such business, except
that the Loan Parties may make a Permitted Other Line of Business
Acquisition, subject to Section 8.2.6.
8.2.11 PLANS AND BENEFIT ARRANGEMENTS.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to:
(i) fail to satisfy the minimum funding requirements of
ERISA and the Internal Revenue Code with respect to any Plan;
(ii) request a minimum funding waiver from the Internal
Revenue Service with respect to any Plan;
(iii) engage in a Prohibited Transaction with any Plan,
Benefit Arrangement or Multiemployer Plan which, alone or in conjunction with
any other circumstances or set of circumstances resulting in liability under
ERISA, would constitute a Material Adverse Change;
(iv) fail to make when due any contribution to any
Multiemployer Plan that the Borrower or any member of the ERISA Group may be
required to make under any agreement relating to such Multiemployer Plan, or
any Law pertaining thereto;
(v) withdraw (completely or partially) from any
Multiemployer Plan or withdraw (or be deemed under Section 4062(e) of ERISA
to withdraw) from any Multiple Employer Plan, where any such withdrawal is
likely to result in a material liability of the Borrower or any member of the
ERISA Group;
(vi) terminate, or institute proceedings to terminate,
any Plan, where such termination is likely to result in a material liability
to the Borrower or any member of the ERISA Group;
(vii) make any amendment to any Plan with respect to which
security is required under Section 307 of ERISA;
(viii) fail to give any and all notices and make all
disclosures and governmental filings required under ERISA or the Internal
Revenue Code, where such failure is likely to result in a Material Adverse
Change; or
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(ix) permit any Plan or Benefit Arrangement which has
been qualified under Section 401 of the Internal Revenue Code to cease to be
so qualified.
8.2.12 FISCAL YEAR.
The Borrower shall not, and shall not permit any Subsidiary of
the Borrower to, change its fiscal year from the twelve-month period
beginning January l and ending December 31
8.2.13 ISSUANCE OF STOCK.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, issue any additional shares of its capital stock or
any options, warrants or other rights in respect thereof except for (i)
shares of Loan Parties other than the Borrower issued to another Loan Party
and pledged to the Agent and (ii) shares of the Borrower issued to Lone Star
Technologies.
8.2.14 CHANGES IN ORGANIZATIONAL DOCUMENTS.
Each of the Loan Parties shall not, and shall not permit any
of its Subsidiaries to, amend in any respect its certificate of incorporation
(including any provisions or resolutions relating to capital stock), by-laws,
certificate of limited partnership, partnership agreement, certificate of
formation, limited liability company agreement or other organizational
documents without providing at least ten (10) calendar days' prior written
notice to the Agent and the Banks and, in the event such change would be
adverse to the Banks as determined by the Agent in its sole discretion,
obtaining the prior written consent of the Required Banks.
8.2.15 MINIMUM INTEREST COVERAGE RATIO.
The Loan Parties shall not permit the Interest Coverage Ratio,
calculated as of the end of each fiscal quarter for the period of four (4)
fiscal quarters then ended, to be less than 4.0 to 1.0.
8.2.16 MAXIMUM LEVERAGE RATIO.
The Loan Parties shall not at permit the Leverage Ratio to
exceed 3.0 to 1.0 at the end of any fiscal quarter.
8.2.17 MINIMUM TANGIBLE NET WORTH.
The Borrower shall not at any time permit Consolidated
Tangible Net Worth to be less than Base Net Worth.
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8.2.18 MINIMUM WORKING CAPITAL.
The Loan Parties shall not at any time permit the difference
between the amounts in the following clauses (i) and (ii) to be less than
$75,000,000: (i) consolidated current assets (excluding cash and marketable
securities to the extent that the amount thereof does not exceed the amount
of the Revolving Credit Loans outstanding at such time) of the Borrower and
its Subsidiaries and (ii) consolidated current liabilities of the Borrower
and its Subsidiaries (excluding from current liabilities the amount of the
Revolving Credit Loans outstanding, whether or not normally required to be
included or excluded under GAAP).
8.2.19 NEGATIVE PLEDGES-- ASSETS OF THE LOAN PARTIES.
Each of the Loan Parties covenants and agrees that it shall
not, and shall not permit any of its Subsidiaries to, enter into any
agreement with any Person which prohibits, or limits in any manner the right
of any of the Loan Parties from granting any Liens on any of their assets
(other than assets subject to Permitted Liens) to the Agent or the Banks.
8.2.20 SLAB FINANCING AGREEMENT.
The Borrower shall not amend or modify the Slab Financing
Arrangement without the prior consent of the Required Banks.
8.3 REPORTING REQUIREMENTS.
The Loan Parties, jointly and severally, covenant and agree that until
payment in full of the Loans, Reimbursement Obligations and Reimbursement
Borrowings and interest thereon, expiration or termination of all Letters of
Credit, satisfaction of all of the Loan Parties' other Obligations hereunder
and under the other Loan Documents and termination of the Commitments, the
Loan Parties will furnish or cause to be furnished to the Agent and each of
the Banks:
8.3.1 QUARTERLY FINANCIAL STATEMENTS.
As soon as available and in any event within forty-five (45)
calendar days after the end of each of the first three fiscal quarters in
each fiscal year, financial statements of the Borrower, consisting of a
consolidating and consolidated balance sheet as of the end of such fiscal
quarter and related consolidating and consolidated statements of income,
stockholders' equity and cash flows for the fiscal quarter then ended and the
fiscal year through that date, all in reasonable detail and certified
(subject to normal year-end audit adjustments) by the Chief Executive
Officer, President or Chief Financial Officer of the Borrower as having been
prepared in accordance with GAAP, consistently applied, and setting forth in
comparative form the respective financial statements for the corresponding
date and period in the previous fiscal year.
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8.3.2 ANNUAL FINANCIAL STATEMENTS.
As soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Borrower, financial statements of
the Borrower consisting of a consolidating and consolidated balance sheet as
of the end of such fiscal year, and related consolidating and consolidated
statements of income, stockholders' equity and cash flows for the fiscal year
then ended, all in reasonable detail and setting forth in comparative form
the financial statements as of the end of and for the preceding fiscal year,
and certified by independent certified public accountants of nationally
recognized standing satisfactory to the Agent. The certificate or report of
accountants shall be free of qualifications (other than any consistency
qualification that may result from a change in the method used to prepare the
financial statements as to which such accountants concur) and shall not
indicate the occurrence or existence of any event, condition or contingency
which would materially impair the prospect of payment or performance of any
covenant, agreement or duty of any Loan Party under any of the Loan
Documents. The Loan Parties shall deliver with such financial statements and
certification by their accountants a letter of such accountants to the Agent
and the Banks substantially to the effect that, in connection with their
audit, nothing came to their attention that caused them to believe that (i)
the Loan Parties were was not in compliance with (or any Event of Default
existed under) Section 9. l of this Agreement, insofar as such compliance (or
Event of Default) relates to accounting matters; and (ii) the calculations by
Borrower in its compliance certificate of its covenants set forth in Section
8.2 are not fairly stated, in all material respects, in relation to the
audited financial statements from which they were derived. If the independent
public accountants believe that the Loan Parties were not in compliance with
any of the terms, covenants, provisions, or conditions or the calculations
are not fairly stated in relation to the financial statements the accountants
letter should state such and the nature thereof.
8.3.3 CERTIFICATE OF THE BORROWER.
Concurrently with the financial statements of the Borrower
furnished to the Agent and to the Banks pursuant to Sections 8.3.1
[Quarterly Financial Statements] and 8.3.2 [Annual Financial Statements], a
certificate of the Borrower signed by the Chief Executive Officer, President
or Chief Financial Officer of the Borrower, in the form of EXHIBIT 8.3.3, to
the effect that, except as described pursuant to Section 8.3.4
[Notice of Default] or as otherwise specified in such certificate, (i) the
representations and warranties of the Borrower contained in Section 6 and in
the other Loan Documents are true on and as of the date of such certificate
with the same effect as though such representations and warranties had been
made on and as of such date (except representations and warranties which
expressly relate solely to an earlier date or time) and the Loan Parties have
performed and complied with all covenants and conditions hereof (ii) no Event
of Default or Potential Default exists and is continuing on the date of such
certificate and (iii) containing calculations in sufficient detail to
demonstrate compliance as of the date of such financial statements with all
financial covenants contained in Section 8.2 [Negative Covenants].
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8.3.4 NOTICE OF DEFAULT.
Promptly after any officer of any Loan Party has learned of
the occurrence of an Event of Default or Potential Default, a certificate
signed by the Chief Executive Officer, President or Chief Financial Officer
of such Loan Party setting forth the details of such Event of Default or
Potential Default.
8.3.5 NOTICE OF LITIGATION.
Promptly after the commencement thereof; notice of all
actions, suits or proceedings, and promptly after any Loan Party becomes
aware thereof, notice of any investigations, before or by any Official Body
or any other Person against any Loan Party or Subsidiary of any Loan Party
which involve a claim to the Collateral worth $100,000 or more or involve a
claim or series of claims in excess of $5,000,000 in the aggregate or which
if adversely determined would constitute a Material Adverse Change.
8.3.6 CERTAIN EVENTS.
Written notice to the Agent:
(i) within the time limits set forth in Section 8.2.14
[Changes in Organizational Documents], any amendment to the organizational
documents of any Loan Party; and
(ii) at least fifteen (15) calendar days prior thereto,
with respect to any change in any Loan Party's locations from the locations
set forth in Schedule A to the Security Agreement.
8.3.7 BUDGETS. FORECASTS. OTHER REPORTS AND INFORMATION.
Promptly upon their becoming available to the Borrower:
(i) the annual budget and any forecasts or projections
of the Borrower, to be supplied prior to commencement of the fiscal year to
which any of the foregoing may be applicable,
(ii) any press releases relating to the Borrower or any
other Loan Party;
(iii) any management letters submitted to the Borrower by
independent accountants in connection with any annual, interim or special
audit,
(iv) any reports, notices or proxy statements generally
distributed by Lone Star Technologies to its stockholders on a date no later
than the date supplied to such stockholders,
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(v) regular or periodic reports, including Forms 10-K,
10-Q and 8-K, registration statements and prospectuses, filed by Lone Star
Technologies with the Securities and Exchange Commission,
(vi) a copy of any final order or judgment in any
proceeding to which the Borrower or any of its Subsidiaries is a party issued
by any Official Body, and
(vii) such other reports and information as any of the
Banks may from time to time reasonably request.
8.3.8 NOTICES REGARDING PLANS AND BENEFIT ARRANGEMENTS.
8.3.8.1 CERTAIN EVENTS.
Promptly upon becoming aware of the occurrence thereof, notice
(including the nature of the event and, when known, any action taken or
threatened by the Internal Revenue Service or the PBGC with respect thereto)
of:
(i) any Reportable Event with respect to the Borrower
or any other member of the ERISA Group (other than any for which the
obligation to report said Reportable Event to the PBGC has been waived),
(ii) any Prohibited Transaction which could subject the
Borrower or any other member of the ERISA Group to a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Internal Revenue Code in connection with any Plan, any Benefit Arrangement or
any trust created thereunder,
(iii) any assertion of material withdrawal liability
with respect to any Multiemployer Plan,
(iv) any partial or complete withdrawal from a
Multiemployer Plan by the Borrower or any other member of the ERISA Group
under Title IV of ERISA (or assertion thereof, where such withdrawal is
likely to result in material withdrawal liability,
(v) any cessation of operations (by the Borrower or
any other member of the ERISA Group) at a facility in the circumstances
described in Section 4062(e) of ERISA,
(vi) withdrawal by the Borrower or any other member of
the ERISA Group from a Multiple Employer Plan,
(vii) a failure by the Borrower or any other member of
the ERISA Group to make a payment to a Plan required to avoid imposition of a
Lien under Section 302(f) of ERISA,
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(viii) the adoption of an amendment to a Plan requiring
the provision of security to such Plan pursuant to Section 307 of ERISA,
(ix) any change in the actuarial assumptions or funding
methods used for any Plan, where the effect of such change is to materially
increase or materially reduce the unfunded benefit liability or obligation to
make periodic contributions, or
(x) the assertion by the Internal Revenue Service that
any Plan or Benefit Arrangement which has been qualified under Section 401 of
the Internal Revenue Code has ceased to be so qualified.
8.3.8.2 NOTICES OF INVOLUNTARY TERMINATION AND ANNUAL
REPORTS.
Promptly (a) after receipt thereof copies of all notices
received by the Borrower or any other member of the ERISA Group of the PBGC's
intent to terminate any Plan administered or maintained by the Borrower or
any member of the ERISA Group, or to have a trustee appointed to administer
any such Plan; and (b) at the request of the Agent or any Bank each annual
report (IRS Form 5500 series) and all accompanying schedules, the most recent
actuarial reports, the most recent financial information concerning the
financial status of each Plan administered or maintained by the Borrower or
any other member of the ERISA Group, and schedules showing the amounts
contributed to each such Plan by or on behalf of the Borrower or any other
member of the ERISA Group in which any of their personnel participate or from
which such personnel may derive a benefit, and each Schedule B (Actuarial
Information) to the annual report filed by the Borrower or any other member
of the ERISA Group with the Internal Revenue Service with respect to each
such Plan.
8.3.8.3 NOTICE OF VOLUNTARY TERMINATION.
Promptly upon the filing thereof copies of any Form 5310, or
any successor or equivalent form to Form 5310, filed with the Internal
Revenue Service or Form 600, or any successor or equivalent form to Form 600,
filed with the PBGC in connection with the termination of any Plan.
9. DEFAULT
9.1 EVENTS OF DEFAULT.
An Event of Default shall mean the occurrence or existence of any one or
more of the following events or conditions (whatever the reason therefor and
whether voluntary, involuntary or effected by operation of Law):
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9.1.1 PAYMENTS UNDER LOAN DOCUMENTS.
The Borrower shall fail to pay on the due date thereof any
principal of any Loan (including scheduled installments, mandatory
prepayments or the payment due at maturity), Reimbursement Obligation or
Reimbursement Borrowing or shall fail to pay within one (1) Business Day of
the due date thereof any interest on any Loan , Reimbursement Obligation or
Reimbursement Borrowing or any other amount owing hereunder or under the
other Loan Documents;
9.1.2 BREACH OF REPRESENTATION OR WARRANTY.
Any representation or warranty made at any time by any of the
Loan Parties herein or by any of the Loan Parties in any other Loan Document,
or in any certificate, other instrument or statement furnished pursuant to
the provisions hereof or thereof shall prove to have been false or misleading
in any material respect as of the time it was made or furnished;
9.1.3 BREACH OF NEGATIVE COVENANTS OR VISITATION RIGHTS.
Any of the Loan Parties shall default in the observance or
performance of any covenant contained in Section 8.1.6 [Visitation Rights] or
Section 8.2 [Negative Covenants];
9.1.4 BREACH OF OTHER COVENANTS.
Any of the Loan Parties shall default in the observance or
performance of any other covenant, condition or provision hereof or of any
other Loan Document and such default shall continue unremedied for a period
of fifteen (15) Business Days after any Senior Officer of any Loan Party
becomes aware of the occurrence thereof (such grace period to be applicable
only in the event such default can be remedied by corrective action of the
Loan Parties as determined by the Agent in its sole discretion);
9.1.5 DEFAULTS IN OTHER AGREEMENTS OR INDEBTEDNESS.
A default or event of default shall occur at any time under
the terms of any other agreement involving borrowed money or any other
Indebtedness under which any Loan Party or Subsidiary of any Loan Party may
be obligated as a borrower or guarantor in excess of $5,000,000 in the
aggregate, and such breach, default or event of default consists of the
failure to pay (beyond any period of grace permitted with respect thereto,
whether waived or not) any indebtedness when due (whether at stated maturity,
by acceleration or otherwise) or if such breach or default permits or causes
the acceleration of any indebtedness (whether or not such right shall have
been waived) or the termination of any commitment to lend;
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9.1.6 FINAL JUDGMENTS OR ORDERS.
Any final judgments or orders for the payment of money in
excess of $5,000,000 in the aggregate shall be entered against any Loan Party
by a court having jurisdiction in the premises, which judgment is not
discharged, vacated, bonded or stayed pending appeal within a period of
thirty (30) days from the date of entry;
9.1.7 LOAN DOCUMENT UNENFORCEABLE.
Any of the Loan Documents shall cease to be legal, valid and
binding agreements enforceable against the party executing the same or such
party's successors and assigns (as permitted under the Loan Documents) in any
material respect or shall in any way be terminated (except in accordance with
its terms) or become or be declared ineffective or inoperative or shall in
any material respect be challenged or contested or cease to give or provide
the respective Liens, security interests, rights, titles, interests,
remedies, powers or privileges intended to be created thereby;
9.1.8 UNINSURED LOSSES: PROCEEDINGS AGAINST ASSETS.
There shall occur any material uninsured damage to or loss,
theft or destruction of any of the Collateral in excess of $100,000 or the
Collateral in excess of $100,000 or any other of the Loan Parties' material
assets are attached, seized, levied upon or subjected to a writ or distress
warrant,; or come within the possession of any receiver, trustee, custodian
or assignee for the benefit of creditors, and the same is not cured within
thirty (30) days thereafter. For the purpose of this Section 9.1.8: (i) any
loss shall be deemed to be insured to the extent that it is covered by
insurance but the Loan Parties do not receive compensation therefor because
the amount recoverable (or portion thereof) is less than or equal to the
deductible amount under such policy, and (ii) Collateral shall be valued at
using a method other than replacement cost;
9. 1.9 NOTICE OF LIEN OR ASSESSMENT.
A notice of Lien or assessment in excess of $1,000,000 which
is not a Permitted Lien is filed of record with respect to all or any part of
any of the Loan Parties' assets in excess of $1,000,000 by the United States,
or any department, agency or instrumentality thereof or by any state, county,
municipal or other governmental agency, including the PBGC, or any taxes or
debts owing at any time or times hereafter to any one of these becomes
payable and the same is not paid as required under Section 8.1.2;
9.1.10 INSOLVENCY.
Any Loan Party ceases to be solvent or admits in writing its
inability to pay its debts as they mature;
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9.1.11 EVENTS RELATING TO PLANS AND BENEFIT ARRANGEMENTS.
Any of the following occurs: (i) any Reportable Event, which
the Agent determines in good faith constitutes grounds for the termination of
any Plan by the PBGC or the appointment of a trustee to administer or
liquidate any Plan, shall have occurred and be continuing; (ii) proceedings
shall have been instituted or other action taken to terminate any Plan, or a
termination notice shall have been filed with respect to any Plan; (iii) a
trustee shall be appointed to administer or liquidate any Plan; (iv) the PBGC
shall give notice of its intent to institute proceedings to terminate any
Plan or Plans or to appoint a trustee to administer or liquidate any Plan;
and, in the case of the occurrence of(i), (ii), (iii) or (iv) above, the
Agent determines in good faith that the amount of the Borrower's liability is
likely to exceed 10% of its Consolidated Tangible Net Worth; (v) the Borrower
or any member of the ERISA Group shall fail to make any contributions when
due to a Plan or a Multiemployer Plan; (vi) the Borrower or any other member
of the ERISA Group shall make any amendment to a Plan with respect to which
security is required under Section 307 of ERISA; (vii) the Borrower or any
other member of the ERISA Group shall withdraw completely or partially from a
Multiemployer Plan; or (viii) the Borrower or any other member of the ERISA
Group shall withdraw (or shall be deemed under Section 4062(e) of ERISA to
withdraw) from a Multiple Employer Plan; and, with respect to any of the
events specified in (v), (vi), (vii) or (viii), the Agent determines in good
faith that any such occurrence would be reasonably likely to materially and
adversely affect the total enterprise represented by the Borrower and the
other members of the ERISA Group;
9.1.12 CESSATION OF BUSINESS.
Any Loan Party ceases to conduct its business as contemplated,
except as expressly permitted under Section 8.2.6 [Liquidations, Mergers, Etc.]
or Section 8.2.7 [Dispositions of Assets or Subsidiaries], or any Loan Party
is enjoined, restrained or in any -way prevented by court order from conducting
all or a substantial part of its business and such injunction, restraint or
other preventive order is not dismissed within thirty (30) days after the entry
thereof;
9.1.13 CHANGE OF CONTROL.
(i) Lone Star Technologies shall cease to own 100% of
the capital stock of the Borrower or shall pledge, transfer, hypothecate or
xxxxx x Xxxx on any such capital stock; or (ii) within a period of twelve
(12) consecutive calendar months, individuals who constituted a majority of
the Borrower's Board of Directors at the beginning of such period (together
with any new directors whose election by the Borrower's Board of Directors or
whose nomination for election by the Borrower's shareholders was approved by
a majority of the director s still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason (other than death or disability)
to constitute a majority of the Borrower's Board of Directors then in office.;
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9.1.14 INVOLUNTARY PROCEEDINGS.
A proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect
of any Loan Party without such Loan Party's consent or acquiescence in an
involuntary case under any applicable bankruptcy, insolvency, reorganization
or other similar law now or hereafter in effect, or for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of any Loan Party for any substantial part of its
property, or for the winding-up or liquidation of its affairs, and such
proceeding shall remain undismissed or unstayed and in effect for a period of
sixty (60) consecutive days or such court shall enter a decree or order
granting any of the relief sought in such proceeding; or
9.1.15 VOLUNTARY PROCEEDINGS.
Any Loan Party shall commence a voluntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, shall consent or acquiesce to the entry of an order for
relief in an involuntary case under any such law, or shall consent or
acquiesce to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator (or other similar
official) of itself or for any substantial part of its property or shall make
a general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any action in furtherance of
any of the foregoing.
9.2 CONSEQUENCES OF EVENT OF DEFAULT.
9.2.1 EVENTS OF DEFAULT OTHER THAN BANKRUPTCY. INSOLVENCY OR
REORGANIZATION PROCEEDINGS.
If an Event of Default specified under Sections 9. 1.1 through
9.1.13 shall occur and be continuing, the obligation of the Banks and the
Agent to make Loans or issue Letters of Credit, as the case may be, shall be
suspended and the Agent may, and upon the request of the Required Banks,
shall (i) by written notice to the Borrower, declare the unpaid principal
amount of the Notes then outstanding and all interest accrued thereon, any
unpaid fees and all other Indebtedness of the Borrower to the Banks hereunder
and thereunder to be forthwith due and payable, and the same shall thereupon
become and be immediately due and payable to the Agent for the benefit of
each Bank without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived and the Commitments shall then
be terminated, and (ii) require the Borrower to, and the Borrower shall
thereupon, deposit in a non-interest-bearing account with the Agent, as cash
collateral for its Obligations under the Loan Documents, an amount equal to
the maximum amount currently or at any time thereafter available to be drawn
on all outstanding Letters of Credit, and the Borrower hereby pledges to the
Agent and the Banks, and grants to the Agent and the Banks a security
interest in, all such cash as security for such Obligations. Upon the curing
of all existing Events of Default to the satisfaction of the Required Banks,
the Agent shall return such cash collateral to the Borrower;
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9.2.2 BANKRUPTCY, INSOLVENCY OR REORGANIZATION PROCEEDINGS.
If an Event of Default specified under Section 9. 1.14
[Involuntary Proceedings] or Section 9.1.15 [Voluntary Proceedings] shall
occur, the Banks shall be under no further obligations to make Loans
hereunder and the unpaid principal amount of the Loans then outstanding and
all interest accrued thereon, any unpaid fees and all other Indebtedness of
the Borrower to the Banks hereunder and thereunder shall be immediately due
and payable, without presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived; and
9.2.3 SET-OFF
If an Event of Default shall occur and be continuing, any Bank
to whom any Obligation is owed by any Loan Party hereunder or under any other
Loan Document or any participant of such Bank which has agreed in writing to
be bound by the provisions of Section 10.13 [Equalization of Banks] and any
branch, Subsidiary or Affiliate of such Bank or participant anywhere in the
world shall have the right, in addition to all other rights and remedies
available to it, without notice to such Loan Party, to set-off against and
apply to the then unpaid balance of all the Loans and all other Obligations
of the Borrower and the other Loan Parties hereunder or under any other Loan
Document any debt owing to, and any other funds held in any manner for the
account of, the Borrower or such other Loan Party by such Bank or participant
or by such branch, Subsidiary or Affiliate, including all funds in all
deposit accounts (whether time or demand, general or special, provisionally
credited or finally credited, or otherwise) now or hereafter maintained by
the Borrower or such other Loan Party for its own account (but not including
funds held in custodian or trust accounts) with such Bank or participant or
such branch, Subsidiary or Affiliate. Such right shall exist whether or not
any Bank or the Agent shall have made any demand under this Agreement or any
other Loan Document, whether or not such debt owing to or funds held for the
account of the Borrower or such other Loan Party is or are matured or
unmatured and regardless of the existence or adequacy of any Collateral,
Guaranty or any other security, right or remedy available to any Bank or the
Agent; and
9.2.4 SUITS, ACTIONS, PROCEEDINGS.
If an Event of Default shall occur and be continuing, and
whether or not the Agent shall have accelerated the maturity of Loans
pursuant to any of the foregoing provisions of this Section 9.2, the Agent or
any Bank, if owed any amount with respect to the Loans, may proceed to
protect and enforce its rights by suit in equity, action at law and/or other
appropriate proceeding, whether for the specific performance of any covenant
or agreement contained in this Agreement or the other Loan Documents,
including as permitted by applicable Law the obtaining of the EX PARTE
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of the Agent or such Bank; and
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9.2.5 APPLICATION OF PROCEEDS.
From and after the date on which the Agent has taken any
action pursuant to this Section 9.2 and until all Obligations of the Loan
Parties have been paid in full, any and all proceeds received by the Agent
from any sale or other disposition of the Collateral, or any part thereof or
the exercise of any other remedy by the Agent, shall be applied as follows:
(i) first, to reimburse the Agent and the Banks for
out-of-pocket costs, expenses and disbursements, including reasonable
attorneys' and paralegals' fees and legal expenses, incurred by the Agent or
the Banks in connection with realizing on the Collateral or collection of any
Obligations of any of the Loan Parties under any of the Loan Documents,
including advances made by the Banks or any one of them or the Agent for the
reasonable maintenance, preservation, protection or enforcement of, or
realization Upon, the Collateral, including advances for taxes, insurance,
repairs and the like and reasonable expenses incurred to sell or otherwise
realize on, or prepare for sale or other realization on, any of the
Collateral;
(ii) second, to the repayment of all Indebtedness then
due and unpaid of the Loan Parties to the Banks incurred under this Agreement
or any of the other Loan Documents, whether of principal, interest, fees,
expenses or otherwise, in such manner as the Agent may determine in its
discretion; and
(iii) the balance, if any, as required by Law.
9.2.6 OTHER RIGHTS AND REMEDIES.
In addition to all of the rights and remedies contained in
this Agreement or in any of the other Loan Documents, the Agent shall have
all of the rights and remedies of a secured party under the Uniform
Commercial Code or other applicable Law, all of which rights and remedies
shall be cumulative and non-exclusive, to the extent permitted by Law. The
Agent may, and upon the request of the Required Banks shall, exercise all
post-default rights granted to the Agent and the Banks under the Loan
Documents or applicable Law.
9.3 NOTICE OF SALE.
Any notice required to be given by the Agent of a sale, lease, or other
disposition of the Collateral or any other intended action by the Agent, if
given ten (10) days prior to such proposed action, shall constitute
commercially reasonable and fair notice thereof to the Borrower.
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10. THE AGENT
10.1 APPOINTMENT.
Each Bank hereby irrevocably designates, appoints and authorizes PNC Bank
to act as Agent for such Bank under this Agreement and to execute and deliver or
accept on behalf of each of the Banks the other Loan Documents. Each Bank hereby
irrevocably authorizes, and each holder of any Note by the acceptance of a Note
shall be deemed irrevocably to authorize, the Agent to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
any other instruments and agreements referred to herein, and to exercise such
powers and to perform such duties hereunder as are specifically delegated to or
required of the Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. PNC Bank agrees to act as the Agent on behalf of
the Banks to the extent provided in this Agreement.
10.2 DELEGATION OF DUTIES.
The Agent may perform any of its duties hereunder by or through agents or
employees (PROVIDED such delegation does not constitute a relinquishment of its
duties as Agent) and, subject to Sections 10.5 [Reimbursement and
Indemnification of Agent by the Borrower] and 10.6 [Exculpatory Provisions,
Etc.], shall be entitled to engage and pay for the advice or services of any
attorneys, accountants or other experts concerning all matters pertaining to its
duties hereunder and to rely upon any advice so obtained.
10.3 NATURE OF DUTIES; INDEPENDENT CREDIT INVESTIGATION.
The Agent shall have no duties or responsibilities except those expressly
set forth in this Agreement and no implied covenants, functions,
responsibilities, duties, obligations, or liabilities shall be read into this
Agreement or otherwise exist. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement a
fiduciary or trust relationship in respect of any Bank; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement except as
expressly set forth herein. Without limiting the generality of the foregoing,
the use of the term "agent" in this Agreement with reference to the Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable Law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties. Each
Bank expressly acknowledges (i) that the Agent has not made any representations
or warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of any of the Loan Parties, shall be deemed to constitute
any representation or warranty by the Agent to any Bank; (ii) that it has made
and will continue to make, without reliance upon the Agent, its own independent
investigation of the financial condition and affairs and its own appraisal of
the creditworthiness of each of the Loan Parties in connection with this
Agreement and the making and continuance of the Loans hereunder; and (iii)
except as expressly provided herein, that the Agent shall have no duty or
responsibility, either initially or on a
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continuing basis, to provide any Bank with any credit or other information
with respect thereto, whether coming into its possession before the making of
any Loan or at any time or times thereafter.
10.4 ACTIONS IN DISCRETION OF AGENT; INSTRUCTIONS FROM THE BANKS.
The Agent agrees, upon the written request of the Required Banks, to take
or refrain from taking any action of the type specified as being within the
Agent's rights, powers or discretion herein, PROVIDED that the Agent shall not
be required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement or any other Loan Document or applicable
Law. In the absence of a request by the Required Banks, the Agent shall have
authority, in its sole discretion, to take or not to take any such action,
unless this Agreement specifically requires the consent of the Required Banks or
all of the Banks. Any action taken or failure to act pursuant to such
instructions or discretion shall be binding on the Banks, subject to Section
10.6 [Exculpatory Provisions, Etc.]. Subject to the provisions of Section 10.6,
no Bank shall have any right of action whatsoever against the Agent as a result
of the Agent acting or refraining from acting hereunder in accordance with the
instructions of the Required Banks, or in the absence of such instructions, in
the absolute discretion of the Agent.
10.5 REIMBURSEMENT AND INDEMNIFICATION OF AGENT BY THE BORROWER.
The Borrower unconditionally agrees to pay or reimburse the Agent and hold
the Agent harmless against (a) liability for the payment of all reasonable
out-of-pocket costs, expenses and disbursements, including fees and expenses
of counsel, appraisers and environmental consultants, incurred by the Agent
(i) in connection with the development, negotiation, preparation, printing,
execution, administration, syndication, interpretation and performance of
this Agreement and the other Loan Documents, (ii) relating to any requested
amendments, waivers or consents pursuant to the provisions hereof; (iii) in
connection with the enforcement of this Agreement or any other Loan Document
or collection of amounts due hereunder or thereunder or the proof and
allowability of any claim arising under this Agreement or any other Loan
Document, whether in bankruptcy or receivership proceedings or otherwise, and
(iv) in any workout or restructuring or in connection with the protection,
preservation, exercise or enforcement of any of the terms hereof or of any
rights hereunder or under any other Loan Document or in connection with any
foreclosure, collection or bankruptcy proceedings, and (b) 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 the Agent, in its capacity as
such, in any way relating to or arising out of this Agreement or any other
Loan Documents or any action taken or omitted by the Agent hereunder or
thereunder, PROVIDED that the Borrower shall not be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements if the same results from
the Agent's gross negligence or willful misconduct, or if the Borrower was
not given notice of the subject claim and the opportunity to participate in
the defense thereof at its expense (except that the Borrower shall remain
liable to the extent such failure to give notice does not result in a loss to
the Borrower), or if the same results from a compromise or settlement
agreement entered into without the consent of the Borrower, which
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shall not be unreasonably withheld. In addition, the Borrower agrees to
reimburse and pay all reasonable out-of-pocket expenses of the Agent's
regular employees and agents engaged periodically to perform audits of the
Loan Parties' books, records and business properties.
10.6 EXCULPATORY PROVISIONS; LIMITATION OF LIABILITY.
Neither the Agent nor any of its directors, officers, employees, agents,
attorneys or Affiliates shall (a) be liable to any Bank for any action taken or
omitted to be taken by it or them hereunder, or in connection herewith including
pursuant to any Loan Document, unless caused by its or their own gross
negligence or willful misconduct, (b) be responsible in any manner to any of the
Banks for the effectiveness, enforceability, genuineness, validity or the due
execution of this Agreement or any other Loan Documents or for any recital,
representation, warranty, document, certificate, report or statement herein or
made or furnished under or in connection with this Agreement or any other Loan
Documents, or (c) be under any obligation to any of the Banks to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions hereof or thereof on the part of the Loan Parties, or the financial
condition of the Loan Parties, or the existence or possible existence of any
Event of Default or Potential Default. No claim may be made by any of the Loan
Parties, any Bank, the Agent or any of their respective Subsidiaries against the
Agent, any Bank or any of their respective directors, officers, employees,
agents, attorneys or Affiliates, or any of them, for any special, indirect or
consequential damages or, to the fullest extent permitted by Law, for any
punitive damages in respect of any claim or cause of action (whether based on
contract, tort, statutory liability, or any other ground) based on, arising out
of or related to any Loan Document or the transactions contemplated hereby or
any act, omission or event occurring in connection therewith, including the
negotiation, documentation, administration or collection of the Loans, and each
of the Loan Parties, (for itself and on behalf of each of its Subsidiaries), the
Agent and each Bank hereby waive, releases and agree never to xxx upon any claim
for any such damages, whether such claim now exists or hereafter arises and
whether or not it is now known or suspected to exist in its favor. Each Bank
agrees that, except for notices, reports and other documents expressly required
to be furnished to the Banks by the Agent hereunder or given to the Agent for
the account of or with copies for the Banks, the Agent and each of its
directors, officers, employees, agents, attorneys or Affiliates shall not have
any duty or responsibility to provide any Bank with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Loan Parties which may come
into the possession of the Agent or any of its directors, officers, employees,
agents, attorneys or Affiliates.
10.7 REIMBURSEMENT AND INDEMNIFICATION OF AGENT BY BANKS.
Each Bank agrees to reimburse and indemnify the Agent (to the extent not
reimbursed by the Borrower and without limiting the Obligation of the Borrower
to do so) in proportion to its Ratable Share from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements, including attorneys' fees and disbursements
(including the allocated costs of staff counsel), and costs of appraisers and
environmental consultants, of any kind or nature whatsoever which may be imposed
on, incurred
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by or asserted against the Agent, in its capacity as such, in any way
relating to or arising out of this Agreement or any other Loan Documents or
any action taken or omitted by the Agent hereunder or thereunder, PROVIDED
that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (a) if the same results from the Agent's gross
negligence or willful misconduct, or (b) if such Bank was not given notice of
the subject claim and the opportunity to participate in the defense thereof
at its expense (except that such Bank shall remain liable to the extent such
failure to give notice does not result in a loss to the Bank), or (c) if the
same results from a compromise and settlement agreement entered into without
the consent of such Bank, which shall not be unreasonably withheld. In
addition, each Bank agrees promptly upon demand to reimburse the Agent (to
the extent not reimbursed by the Borrower and without limiting the Obligation
of the Borrower to do so) in proportion to its Ratable Share for all amounts
due and payable by the Borrower to the Agent in connection with the Agent's
periodic audit of the Loan Parties' books, records and business properties.
10.8 RELIANCE BY AGENT.
The Agent shall be entitled to rely upon any writing, telegram, telex or
teletype message, resolution, notice, consent, certificate, letter, cablegram,
statement, order or other document or conversation by telephone or otherwise
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons, and upon the advice and opinions of counsel and
other professional advisers selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action hereunder unless it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
10.9 NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of the occurrence
of any Potential Default or Event of Default unless the Agent has received
written notice from a Bank or the Borrower referring to this Agreement,
describing such Potential Default or Event of Default and stating that such
notice is a "notice of default."
10.10 NOTICES.
The Agent shall promptly send to each Bank a copy of all notices received
from the Borrower pursuant to the provisions of this Agreement or the other Loan
Documents promptly upon receipt thereof. The Agent shall promptly notify the
Borrower and the other Banks of each change in the Base Rate and the effective
date thereof.
10.11 BANKS IN THEIR INDIVIDUAL CAPACITIES.
With respect to its Revolving Credit Commitment and the Revolving Credit
Loans made by it and any other rights and powers given to it as a Bank hereunder
or under any of the other Loan Documents, the Agent shall have the same rights
and powers hereunder as any
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other Bank and may exercise the same as though it were not the Agent, and the
term "Banks" shall, unless the context otherwise indicates, include the Agent
in its individual capacity. PNC Bank and its Affiliates and each of the Banks
and their respective Affiliates may, without liability to account, except as
prohibited herein, make loans to, accept deposits from, discount drafts for,
act as trustee under indentures of, and generally engage in any kind of
banking or trust business with, the Loan Parties and their Affiliates, in the
case of the Agent, as though it were not acting as Agent hereunder and in the
case of each Bank, as though such Bank were not a Bank hereunder. The Banks
acknowledge that, pursuant to such activities, the Agent or its Affiliates
may (i) receive information regarding the Loan Parties (including information
that may be subject to confidentiality obligations in favor of the Loan
Parties) and acknowledge that the Agent shall be under no obligation to
provide such information to them, and (ii) accept fees and other
consideration from the Loan Parties for services in connection with this
Agreement and otherwise without having to account for the same to the Banks.
10.12 HOLDERS OF NOTES.
The Agent may deem and treat any payee of any Note as the owner thereof for
all purposes hereof unless and until written notice of the assignment or
transfer thereof shall have been filed with the Agent. Any request, authority or
consent of any Person who at the time of making such request or giving such
authority or consent is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
10.13 EQUALIZATION OF BANKS.
The Banks and the holders of any participations in any Notes agree among
themselves that, with respect to all amounts received by any Bank or any such
holder for application on any Obligation hereunder or under any Note or under
any such participation, whether received by voluntary payment, by realization
upon security, by the exercise of the right of set-off or banker's lien, by
counterclaim or by any other non-pro rata source, equitable adjustment will be
made in the manner stated in the following sentence so that, in effect, all such
excess amounts will be shared ratably among the Banks and such holders in
proportion to their interests in payments under the Notes, except as otherwise
provided in Section 4.4.3 [Agent's and Bank's Rights], 5.4.2 [Replacement of a
Bank] or 5.5 [Additional Compensation in Certain Circumstances]. The Banks or
any such holder receiving any such amount shall purchase for cash from each of
the other Banks an interest in such Bank's Loans in such amount as shall result
in a ratable participation by the Banks and each such holder in the aggregate
unpaid amount under the Notes, PROVIDED that if all or any portion of such
excess amount is thereafter recovered from the Bank or the holder making such
purchase, such purchase shall be rescinded and the purchase price restored to
the extent of such recovery, together with interest or other amounts, if any,
required by law (including court order) to be paid by the Bank or the holder
making such purchase.
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10.14 SUCCESSOR AGENT.
The Agent (i) may resign as Agent or (ii) shall resign if such resignation
is requested by the Required Banks (if the Agent is a Bank, the Agent's Loans
and its Commitment shall be considered in determining whether the Required Banks
have requested such resignation) or required by Section 5.4.2 [Replacement of a
Bank], in either case of(i) or (ii) by giving not less than thirty (30) days'
prior written notice to the Borrower. If the Agent shall resign under this
Agreement, then either (a) the Required Banks shall appoint from among the Banks
a successor agent for the Banks, subject to the consent of the Borrower, such
consent not to be unreasonably withheld, or (b) if a successor agent shall not
be so appointed and approved within the thirty (30) day period following the
Agent's notice to the Banks of its resignation, then the Agent shall appoint,
with the consent of the Borrower, such consent not to be unreasonably withheld,
a successor agent who shall serve as Agent until such time as the Required Banks
appoint and the Borrower consents to the appointment of a successor agent. Upon
its appointment pursuant to either clause (a) or (b) above, such successor agent
shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall mean such successor agent, effective upon its appointment, and the
former Agent's rights, powers and duties as Agent shall be terminated without
any other or further act or deed on the part of such former Agent or any of the
parties to this Agreement. After the resignation of any Agent hereunder, the
provisions of this Section 10 shall inure to the benefit of such former Agent
and such former Agent shall not by reason of such resignation be deemed to be
released from liability for any actions taken or not taken by it while it was an
Agent under this Agreement.
10.15 AGENT'S FEE.
The Borrower shall pay to the Agent a nonrefundable fee (the "Agent's Fee")
under the terms of a letter (the "Agent's Letter") between the Borrower and
Agent, as amended from time to time.
10.16 AVAILABILITY OF FUNDS.
The Agent may assume that each Bank has made or will make the proceeds of a
Loan available to the Agent unless the Agent shall have been notified by such
Bank on or before the later of the close of Business on the Business Day
preceding the Borrowing Date with respect to such Loan or two (2) hours before
the time on which the Agent actually funds the proceeds of such Loan to the
Borrower (whether using its own funds pursuant to this Section 10.16 or using
proceeds deposited with the Agent by the Banks and whether such funding occurs
before or after the time on which Banks are required to deposit the proceeds of
such Loan with the Agent). The Agent may, in reliance upon such assumption (but
shall not be required to), make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the Agent
by such Bank, the Agent shall be entitled to recover such amount on demand from
such Bank (or, if such Bank fails to pay such amount forthwith upon such demand
from the Borrower) together with interest thereon, in respect of each day during
the period commencing on the date such amount was made available to the Borrower
and ending on the date the Agent recovers such amount, at a rate per annum equal
to (i) the Federal Funds Effective Rate during
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the first three (3) days after such interest shall begin to accrue and (ii)
the applicable interest rate in respect of such Loan after the end of such
three-day period.
10.17 CALCULATIONS.
In the absence of gross negligence or willful misconduct, the Agent shall
not be liable for any error in computing the amount payable to any Bank whether
in respect of the Loans, fees or any other amounts due to the Banks under this
Agreement. In the event an error in computing any amount payable to any Bank is
made, the Agent, the Borrower and each affected Bank shall, forthwith upon
discovery of such error, make such adjustments as shall be required to correct
such error, and any compensation therefor will be calculated at the Federal
Funds Effective Rate.
10.18 BENEFICIARIES.
Except as expressly provided herein, the provisions of this Section 10 are
solely for the benefit of the Agent and the Banks, and the Loan Parties shall
not have any rights to rely on or enforce any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for any
of the Loan Parties.
11. MISCELLANEOUS
11.1 MODIFICATIONS, AMENDMENTS OR WAIVERS.
With the written consent of the Required Banks, the Agent, acting on behalf
of all the Banks, and the Borrower, on behalf of the Loan Parties, may from time
to time enter into written agreements amending or changing any provision of this
Agreement or any other Loan Document or the rights of the Banks or the Loan
Parties hereunder or thereunder, or may grant written waivers or consents to a
departure from the due performance of the Obligations of the Loan Parties
hereunder or thereunder. Any such agreement, waiver or consent made with such
written consent shall be effective to bind all the Banks and the Loan Parties;
PROVIDED, that, without the written consent of all the Banks, no such agreement,
waiver or consent may be made which will:
11.1.1 INCREASE OF COMMITMENT; EXTENSION OR EXPIRATION DATE.
Increase the amount of the Commitment of any Bank hereunder or
extend the Expiration Date;
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11.1.2 EXTENSION OF PAYMENT; REDUCTION OF PRINCIPAL INTEREST OR
FEES; MODIFICATION OF TERMS OF PAYMENT.
Whether or not any Loans are outstanding, extend the time for
payment of principal or interest of any Loan (excluding the due date of any
mandatory prepayment of a Loan or any mandatory Commitment reduction in
connection with such a mandatory prepayment hereunder except for mandatory
reductions of the Commitments on the Expiration Date), the Commitment Fee or any
other fee payable to any Bank, or reduce the principal amount of or the rate of
interest borne by any Loan or reduce the Commitment Fee or any other fee payable
to any Bank, or otherwise affect the terms of payment of the principal of or
interest of any Loan, the Commitment Fee or any other fee payable to any Bank;
11.1.3 RELEASE OF COLLATERAL OR GUARANTOR.
Except for sales of assets permitted by Section 8.2.7
[Disposition of Assets or Subsidiaries], release any Collateral consisting of
capital stock or other ownership interests of any Loan Party or its Subsidiary
or substantially all of the assets of any Loan Party, or any Guarantor from its
Obligations under the Guaranty Agreement; or
11.1.4 MISCELLANEOUS
Amend Section 5.2 [Pro Rata Treatment of Banks], 10.6
[Exculpatory Provisions, Etc.] or 10.13 [Equalization of Banks] or this Section
11.1, alter any provision regarding the pro rata treatment of the Banks, change
the definition of Required Banks, or change any requirement providing for the
Banks or the Required Banks to authorize the taking of any action hereunder;
PROVIDED, further, that no agreement, waiver or consent which would modify the
interests, rights or obligations of the Agent in its capacity as Agent or as the
issuer of Letters of Credit shall be effective without the written consent of
the Agent.
11.2 NO IMPLIED WAIVERS; CUMULATIVE REMEDIES; WRITING REQUIRED.
No course of dealing and no delay or failure of the Agent or any Bank in
exercising any right, power, remedy or privilege under this Agreement or any
other Loan Document shall affect any other or future exercise thereof or operate
as a waiver thereof, nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege preclude any further exercise thereof or of any other right, power,
remedy or privilege. The rights, remedies, powers and privileges of the Agent
and the Banks under this Agreement and any other Loan Documents are cumulative
and not exclusive of any rights, remedies, powers and privileges which they
would otherwise have. Any waiver, permit, consent or approval of any kind or
character on the part of any Bank of any breach or default under this Agreement
or any such waiver of any provision or condition of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing.
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11.3 REIMBURSEMENT AND INDEMNIFICATION OF BANKS BY THE BORROWER; TAXES.
The Borrower agrees unconditionally upon demand to pay or reimburse to each
Bank (other than the Agent, as to which the Borrower's Obligations are set forth
in Section 10.5 [Reimbursement and Indemnification of Agent by the Borrower])
and to save such Bank harmless against (i) liability for the payment of all
reasonable out-of-pocket costs, expenses and disbursements (including fees and
expenses of counsel), incurred by such Bank (a) in connection with the
enforcement of this Agreement or any other Loan Document, or collection of
amounts due hereunder or thereunder or the proof and allowability of any claim
arising under this Agreement or any other Loan Document, whether in bankruptcy
or receivership proceedings or otherwise, and (b) in any workout or
restructuring or in connection with the protection, preservation, exercise or
enforcement of any of the terms hereof or of any rights hereunder or under any
other Loan Document or in connection with any foreclosure, collection or
bankruptcy proceedings, or (ii) 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 such Bank, in its capacity as such, in any way relating to or arising
out of this Agreement or any other Loan Documents or any action taken or omitted
by such Bank hereunder or thereunder, PROVIDED that the Borrower shall not be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements (A) if
the same results from such Bank's gross negligence or willful misconduct, or (B)
if the Borrower was not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense (except that the Borrower
shall remain liable to the extent such failure to give notice does not result in
a loss to the Borrower), or (C) if the same results from a compromise or
settlement agreement entered into without the consent of the Borrower, which
shall not be unreasonably withheld. The Banks will attempt to minimize the fees
and expenses of legal counsel for the Banks which are subject to reimbursement
by the Borrower hereunder by considering the usage of one law firm to represent
the Banks and the Agent if appropriate under the circumstances. The Borrower
agrees unconditionally to pay all stamp, document, transfer, recording or filing
taxes or fees and similar impositions now or hereafter determined by the Agent
or any Bank to be payable in connection with this Agreement or any other Loan
Document, and the Borrower agrees unconditionally to save the Agent and the
Banks harmless from and against any and all present or future claims,
liabilities or losses with respect to or resulting from any omission to pay or
delay in paying any such taxes, fees or impositions. For the purposes of this
Section 11.3, all references to any Bank or the Banks shall be deemed to include
Bank Of America National Trust and Savings Association, N.A. in its capacity as
the Co-Agent and Bank Of America National Trust and Savings Association, N.A. in
its capacity as the Co-Agent shall be afforded all of the rights given to any
Bank in this Section.
11.4 HOLIDAYS.
Whenever payment of a Loan to be made or taken hereunder shall be due on a
day which is not a Business Day such payment shall be due on the next Business
Day and such extension of time shall be included in computing interest and fees,
except that the Loans shall be due on the Business Day preceding the Expiration
Date if the Expiration Date is not a Business Day. Whenever any payment or
action to be made or taken hereunder (other than payment of the
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Loans) shall be stated to be due on a day which is not a Business Day, such
payment or action shall be made or taken on the next following Business Day
(except as provided in Section 4.2 [Interest Periods] with respect to
Interest Periods under the Euro-Rate Option), and such extension of time
shall not be included in computing interest or fees, if any, in connection
with such payment or action.
11.5 FUNDING BY BRANCH, SUBSIDIARY OR AFFILIATE.
11.5.1 NATIONAL FUNDING.
Each Bank shall have the right from time to time, without notice
to the Borrower, to deem any branch, Subsidiary or Affiliate (which for the
purposes of this Section 11.5 shall mean any corporation or association which is
directly or indirectly controlled by or is under direct or indirect common
control with any corporation or association which directly or indirectly
controls such Bank) of such Bank to have made, maintained or funded any Loan to
which the Euro-Rate Option applies at any time, PROVIDED that immediately
following (on the assumption that a payment were then due from the Borrower to
such other office), and as a result of such change, the Borrower would not be
under any greater financial obligation pursuant to Section 5.5 [Additional
Compensation in Certain Circumstances] than it would have been in the absence of
such change. Notional funding offices may be selected by each Bank without
regard to such Bank's actual methods of making, maintaining or funding the Loans
or any sources of funding actually used by or available to such Bank.
11.5.2 ACTUAL FUNDING.
Each Bank shall have the right from time to time to make or
maintain any Loan by arranging for a branch, Subsidiary or Affiliate of such
Bank to make or maintain such Loan subject to the last sentence of this Section
11.5.2. If any Bank causes a branch, Subsidiary or Affiliate to make or maintain
any part of the Loans hereunder, all terms and conditions of this Agreement
shall, except where the context clearly requires otherwise, be applicable to
such part of the Loans to the same extent as if such Loans were made or
maintained by such Bank, but in no event shall any Bank's use of such a branch,
Subsidiary or Affiliate to make or maintain any part of the Loans hereunder
cause such Bank or such branch, Subsidiary or Affiliate to incur any cost or
expenses payable by the Borrower hereunder or require the Borrower to pay any
other compensation to any Bank (including any expenses incurred or payable
pursuant to Section 5.5 [Additional Compensation in Certain Circumstances])
which would otherwise not be incurred.
11.6 NOTICES.
All notices, requests, demands, directions and other communications (as
used in this Section 11.6, collectively referred to as "Notices") given to or
made upon any party hereto under the provisions of this Agreement shall be by
telephone or in writing (including telex or facsimile communication) unless
otherwise expressly permitted hereunder and shall be delivered or sent by telex
or facsimile to the respective parties at the addresses and numbers set forth
under
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their respective names on SCHEDULE 1.1(B) hereof or in accordance with any
subsequent unrevoked Notice from any party to the others. All Notices shall,
except as otherwise expressly herein provided, be effective (a) in the case
of telex or facsimile, when received, (b) in the case of hand-delivered
Notice, when hand-delivered, (c) in the case of telephone, when telephoned,
PROVIDED, however, that in order to be effective, telephonic Notices must be
confirmed in writing no later than the next day by letter, facsimile or
telex, (d) if given by mail, four (4) days after such communication is
deposited in the mail with first-class postage prepaid, certified or
registered mail, return receipt requested, and (e) if given by any other
means (including by air courier), when delivered; PROVIDED, that Notices to
the Agent shall not be effective until received. Any Bank giving any Notice
to any Loan Party shall simultaneously send a copy thereof to the Agent, and
the Agent shall promptly notify the other Banks of the receipt by it of any
such Notice.
11.7 SEVERABILITY.
The provisions of this Agreement are intended to be severable. If any
provision of this Agreement shall be held invalid or unenforceable in whole or
in part in any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability thereof in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.
11.8 GOVERNING LAW.
Each Letter of Credit and Section 2.10 [Letter of Credit Subfacility] shall
be subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, as the same
may be revised or amended from time to time, and to the extent not inconsistent
therewith, the internal laws of the Commonwealth of Pennsylvania without regard
to its conflict of laws principles, and the balance of this Agreement shall be
deemed to be a contract under the Laws of the Commonwealth of Pennsylvania and
for all purposes shall be governed by and construed and enforced in accordance
with the internal laws of the Commonwealth of Pennsylvania without regard to its
conflict of laws principles.
11.9 PRIOR UNDERSTANDING.
This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto and thereto relating to the transactions provided for herein and therein,
including any prior confidentiality agreements and commitments.
11.10 DURATION; SURVIVAL.
All representations and warranties of the Loan Parties contained herein or
made in connection herewith shall survive the making of Loans and issuance of
Letters of Credit and shall not be waived by the execution and delivery of this
Agreement, any investigation by the
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Agent or the Banks, the making of Loans, issuance of Letters of Credit, or
payment in full of the Loans. All covenants and agreements of the Loan
Parties contained in Sections 8.1 [Affirmative Covenants], 8.2
[Negative Covenants] and 8.2.20 [Reporting Requirements] herein shall
continue in full force and effect from and after the date hereof so long as
the Borrower may borrow or request Letters of Credit hereunder and until
termination of the Commitments and payment in full of the Loans and
expiration or termination of all Letters of Credit. All covenants and
agreements of the Borrower contained herein relating to the payment of
principal, interest, premiums, additional compensation or expenses and
indemnification, including those set forth in the Notes, Section 5 [Payments]
and Sections 10.5 [Reimbursement and Indemnification of Agent by the Borrower],
10.7 [Reimbursement and Indemnification of Agent by the Banks] and 11.3
[Reimbursement and Indemnification of Banks by the Borrower, Etc.], shall
survive payment in full of the Loans, expiration or termination of the
Letters of Credit and termination of the Commitments.
11.11 SUCCESSORS AND ASSIGNS.
(i) This Agreement shall be binding upon and shall inure to
the benefit of the Banks, the Agent, the Loan Parties and their respective
successors and assigns, except that none of the Loan Parties may assign or
transfer any of its rights and Obligations hereunder or any interest herein.
Each Bank may, at its own cost, make assignments of or sell participations in
all or any part of its Commitments and the Loans made by it to one or more banks
or other entities, subject to the consent of the Borrower and the Agent with
respect to any assignee, such consent not to be unreasonably withheld, PROVIDED
that (1) no consent of the Borrower shall be required (A) if an Event of Default
exists and is continuing, or (B) in the case of an assignment by a Bank to an
Affiliate of such Bank, and (2) any assignment by a Bank to a Person other than
an Affiliate of such Bank may not be made in amounts of Revolving Credit
Commitments less than the lesser of $5,000,000 or the amount of the assigning
Bank's Revolving Credit Commitment. In the case of an assignment, upon receipt
by the Agent of the Assignment and Assumption Agreement, the assignee shall
have, to the extent of such assignment (unless otherwise provided therein), the
same rights, benefits and obligations as it would have if it had been a
signatory Bank hereunder, the Commitments shall be adjusted accordingly, and
upon surrender of any Note subject to such assignment, the Borrower shall
execute and deliver a new Note to the assignee in an amount equal to the amount
of the Revolving Credit Commitment assumed by it and a new Revolving Credit Note
to the assigning Bank in an amount equal to the Revolving Credit Commitment
retained by it hereunder. Any Bank which assigns any or all of its Commitment or
Loans to a Person other than an Affiliate of such Bank shall pay (or cause to be
paid by the assignee) to the Agent a service fee in the amount of $3,500 for
each assignment. In the case of a participation, the participant shall only have
the rights specified in Section 9.2.3 [Set-off] (the participant's rights
against such Bank in respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto and
not to include any voting rights except with respect to changes of the type
referenced in Sections 11.1.1 [Increase of Commitment, Etc.], 11.1.2 [Extension
of Payment, Etc.], or 11.1.3 [Release of Collateral or Guarantor], all of such
Bank's obligations under this Agreement or any
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other Loan Document shall remain unchanged, and all amounts payable by any
Loan Party hereunder or thereunder shall be determined as if such Bank had
not sold such participation.
(ii) Any assignee or participant which is not incorporated
under the Laws of the United States of America or a state thereof shall deliver
to the Borrower and the Agent the form of certificate described in Section 11.17
[Tax Withholding Clause] relating to federal income tax withholding. Each Bank
may furnish any publicly available information concerning any Loan Party or its
Subsidiaries and any other information concerning any Loan Party or its
Subsidiaries in the possession of such Bank from time to time to assignees and
participants (including prospective assignees or participants), PROVIDED that
such assignees and participants agree to be bound by the provisions of Section
11.12 [Confidentiality].
(iii) Notwithstanding any other provision in this Agreement,
any Bank may at any time pledge or grant a security interest in all or any
portion of its rights under this Agreement, its Note and the other Loan
Documents to any Federal Reserve Bank in accordance with Regulation A of the FRB
or U.S. Treasury Regulation 31 CFR Section 203.14 without notice to or consent
of the Borrower or the Agent. No such pledge or grant of a security interest
shall release the transferor Bank of its obligations hereunder or under any
other Loan Document.
11.12 CONFIDENTIALITY.
11.12.1 GENERAL.
The Agent and the Banks each agree to keep confidential all
information obtained from any Loan Party or its Subsidiaries which is nonpublic,
confidential or proprietary in nature (including any information the Borrower
specifically designates as confidential), except as provided below, and to use
such information only in connection with their respective capacities under this
Agreement and for the purposes contemplated hereby. The Agent and the Banks
shall be permitted to disclose such information (i) to outside legal counsel,
accountants and other professional advisors who need to know such information in
connection with the administration and enforcement of this Agreement, subject to
agreement of such Persons to maintain the confidentiality, (ii) to assignees and
participants as contemplated by Section 11.11 or as provided in Section 11.12.2,
(iii) to the extent requested by any bank regulatory authority or, with notice
to the Borrower, as otherwise required by applicable Law or by any subpoena or
similar legal process, or in connection with any investigation or proceeding
arising out of the transactions contemplated by this Agreement, (iv) if it
becomes publicly available other than as a result of a breach of this Agreement
or becomes available from a source not known to be subject to confidentiality
restrictions, or (v) if the Borrower shall have consented to such disclosure.
11.12.2 SHARING INFORMATION WITH AFFILIATES OF THE BANKS.
Each Loan Party acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Borrower or
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one or more of its Affiliates (in connection with this Agreement or
otherwise) by any Bank or by one or more Subsidiaries or Affiliates of such
Bank and each of the Loan Parties hereby authorizes each Bank to share any
information delivered to such Bank by such Loan Party and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Bank
to enter into this Agreement, to any such Subsidiary or Affiliate of such
Bank, it being understood that any such Subsidiary or affiliate of any Bank
receiving such information shall be bound by the provisions of Section
11.12.1 as if it were a Bank hereunder. Such Authorization shall survive the
repayment of the Loans and other Obligations and the termination of the
Commitments.
11.13 COUNTERPARTS.
This Agreement may be executed by different parties hereto on any number of
separate counterparts, each of which, when so executed and delivered, shall be
an original, and all such counterparts shall together constitute one and the
same instrument.
11.14 AGENT'S OR BANK'S CONSENT.
Whenever the Agent's or any Bank's consent is required to be obtained under
this Agreement or any of the other Loan Documents as a condition to any action,
inaction, condition or event, the Agent and each Bank shall be authorized to
give or withhold such consent in its sole and absolute discretion (except when
this Agreement or such other Loan Documents expressly provide that such consent
may not be unreasonably withheld) and to condition its consent upon the giving
of additional collateral, the payment of money or any other matter.
11.15 EXCEPTIONS.
The representations, warranties and covenants contained herein shall be
independent of each other, and no exception to any representation, warranty or
covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exceptions be deemed to permit any action or omission that would be in
contravention of applicable Law.
11.16 CONSENT TO FORUM: WAIVER OF JURY TRIAL.
EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY AND THE UNITED
STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH LOAN
PARTY AT THE ADDRESSES PROVIDED FOR IN SECTION 11.6 AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH LOAN PARTY WAIVES ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON
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LACK OF JURISDICTION OR VENUE. EACH LOAN PARTY, THE AGENT AND THE BANKS
HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF
ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT
OR THE COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.
11.17 TAX WITHHOLDING CLAUSE.
Each Bank or assignee or participant of a Bank that is not incorporated
under the Laws of the United States of America or a state thereof agrees that it
will deliver to each of the Borrower and the Agent two (2) duly completed copies
of the following: (i) Internal Revenue Service Form W-9, 4224 or 1001, or other
applicable form prescribed by the Internal Revenue Service, certifying that such
Bank, assignee or participant is entitled to receive payments under this
Agreement and the other Loan Documents without deduction or withholding of any
United States federal income taxes, or is subject to such tax at a reduced rate
under an applicable tax treaty, or (ii) Internal Revenue Service Form W-8 or
other applicable form or a certificate of such Bank, assignee or participant
indicating that no such exemption or reduced rate is allowable with respect to
such payments. Each Bank, assignee or participant required to deliver to the
Borrower and the Agent a form or certificate pursuant to the preceding sentence
shall deliver such form or certificate as follows: (A) each Bank which is a
party hereto on the Closing Date shall deliver such form or certificate at least
five (5) Business Days prior to the first date on which any interest or fees are
payable by the Borrower hereunder for the account of such Bank; (B) each
assignee or participant shall deliver such form or certificate at least five (5)
Business Days before the effective date of such assignment or participation
(unless the Agent in its sole discretion shall permit such assignee or
participant to deliver such form or certificate less than five (5) Business Days
before such date in which case it shall be due on the date specified by the
Agent). Each Bank, assignee or participant which so delivers a Form W-8, W-9,
4224 or 1001 further undertakes to deliver to each of the Borrower and the Agent
two (2) additional copies of such form (or a successor form) on or before the
date that such form expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, either certifying that such Bank,
assignee or participant is entitled to receive payments under this Agreement and
the other Loan Documents without deduction or withholding of any United States
federal income taxes or is subject to such tax at a reduced rate under an
applicable tax treaty or stating that no such exemption or reduced rate is
allowable. The Agent and the Borrower shall be entitled to withhold United
States federal income taxes at the full withholding rate unless the Bank,
assignee or participant establishes an exemption or that it is subject to a
reduced rate as established pursuant to the above provisions.
11.18 JOINDER OF GUARANTORS.
Any Subsidiary of the Borrower which is required to join this Agreement as
a Guarantor pursuant to Section 8.2.9 [Subsidiaries, Partnerships and Joint
Ventures] shall execute and deliver to the Agent (i) a Guarantor Joinder in
substantially the form attached hereto as EXHIBIT 1.1(G)1 pursuant to which it
shall join the Guaranty Agreement, this Agreement and
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the other Loan Documents as a Guarantor; (ii) documents in the forms
described in Section 7.1 [First Loans and Letter of Credit] (including
opinions of counsel) modified as appropriate to relate to such Subsidiary;
and (iii) documents necessary to grant and perfect Prior Security Interests
to the Agent for the benefit of the Banks in all personal property held by
such Subsidiary. The owners of the capital stock of such Subsidiary shall
execute and deliver to the a Pledge Agreement (or joinder to the Pledge
Agreement) and appropriate stock powers and certificates pledging such
capital stock to the Agent for the benefit of the Banks. The Loan Parties and
the Borrower shall deliver the foregoing documents to the Agent within five
(5) Business Days after such Subsidiary becomes a Subsidiary of the Borrower.
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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
ATTEST: LONE STAR STEEL COMPANY
/s/ Xxx X. Stiff By: /s/ X.X. Xxx
------------------------- --------------------------------
Assistant Secretary Title: Executive Vice President
-----------------------------
PNC BANK, NATIONAL ASSOCIATION,
individually and as Agent
By: /s/ Xxxx Xxxxx
-------------------------------
Title: Vice President
-----------------------------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, N.A., individually and as Co-Agent
By: /s/ Xxxx Xxxxxxxx
-------------------------------
Title: Vioe President
-----------------------------
THE SANWA BANK,LTD.
By: /s/ Xxxxxxxx Xxxxxx
-------------------------------
Title: Senior Vice President
-----------------------------
BNY FINANCIAL CORPORATION
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Title: Vice President
-----------------------------
GUARANTORS:
LONE STAR LOGISTICS, INC.
By: /s/ X.X. Xxx
-------------------------------
Title: Chief Financial Officer
-----------------------------
T & N LONE STAR WAREHOUSE CO.
By: /s/ X.X. Xxx
-------------------------------
Title: Treasurer
-----------------------------
TEXAS & NORTHERN RAILWAY COMPANY
By: /s/ X.X. Xxx
-------------------------------
Title: Treasurer
-----------------------------
