LOAN AND SECURITY AGREEMENT
by and among
CONGRESS FINANCIAL CORPORATION (CENTRAL)
as Lender
and
HUNTCO STEEL, INC.
MIDWEST PRODUCTS, INC.
as Borrowers
HUNTCO INC.
HUNTCO NEVADA, INC.
HSI AVIATION, INC.
as Guarantors
TABLE OF CONTENTS
SECTION 1. DEFINITIONS
SECTION 2. CREDIT FACILITIES
2.1 Loans
2.2 Letter of Credit Accommodations
2.3 Availability Reserves
SECTION 3. INTEREST AND FEES
3.1 Interest
3.2 Closing Fee
3.3 Syndication Fee
3.4 Servicing Fee
3.5 Unused Line Fee
3.6 Changes in Laws and Increased Cost of Loans
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations
4.2 Conditions Precedent to Blytheville Fixed Asset Availability
4.3 Conditions Precedent to All Loans and Letter of Credit
Accommodations
SECTION 5. GRANT OF SECURITY INTEREST
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts
6.2 Statements
6.3 Collection of Accounts
6.4 Payments
6.5 Authorization to Make Loans
6.6 Appointment of Agent for Requesting Loans and
Receipts of Loans and Statements
6.7 Use of Proceeds
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting
7.2 Accounts Covenants
7.3 Inventory Covenants
7.4 Equipment and Real Property Covenants
7.5 Right to Cure
7.6 Power of Attorney
7.7 Access to Premises
SECTION 8. REPRESENTATIONS AND WARRANTIES
8.1 Corporate Existence, Power and Authority; Subsidiaries
8.2 Financial Statements; No Material Adverse Change
8.3 Chief Executive Office; Collateral Locations
8.4 Priority of Liens; Title to Properties
8.5 Tax Returns
8.6 Litigation
8.7 Compliance with Other Agreements and Applicable Laws
8.8 Bank Accounts
8.9 Environmental Compliance
8.10 Employee Benefits
8.11 Capitalization
8.12 Accuracy and Completeness of Information
8.13 Survival of Warranties; Cumulative
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence
9.2 New Collateral Locations
9.3 Compliance with Laws, Regulations, Etc.
9.4 Payment of Taxes and Claims
9.5 Insurance
9.6 Financial Statements and Other Information
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
9.8 Encumbrances
9.9 Indebtedness
9.10 Loans, Investments, Guarantees, Etc.
9.11 Dividends and Redemptions
9.12 Transactions with Affiliates
9.13 Additional Bank Accounts
9.14 Compliance with ERISA
9.15 After Acquired Real Property
9.16 Net Worth
9.17 Year 2000 Compliance
9.19 Costs and Expenses
9.20 Further Assurances
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default
10.2 Remedies
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver
11.2 Waiver of Notices
11.3 Amendments and Waivers
11.4 Waiver of Counterclaims
11.5 Indemnification
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term
12.2 Notices
12.3 Partial Invalidity
12.4 Successors
12.5 Entire Agreement
INDEX TO EXHIBITS AND SCHEDULES
Exhibit A Information Certificate for Huntco Steel, Midwest, Huntco, Huntco
Nevada and HSIA
Schedule 1.6 Blytheville Collateral
Schedule 1.40 Existing Lenders
Schedule 1.41 Existing Letters of Credit
Schedule 6.5 Authorized Persons to Request Advances
Schedule 8.4 Existing Liens
Schedule 8.8 Bank Accounts
Schedule 8.9 Environmental Compliance
Schedule 9.9 Existing Indebtedness
Schedule 9.10 Loans, Advances and Guarantees
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated April 15, 1999 is entered into by and
among Congress Financial Corporation (Central), an Illinois corporation
("Lender") and Huntco Steel, Inc., a Delaware corporation ("Huntco Steel"),
Midwest Products, Inc., a Missouri corporation ("Midwest", and together with
Huntco Steel, individually, each a "Borrower" and collectively, "Borrowers")
and Huntco Inc., a Missouri corporation ("Huntco"), Huntco Nevada, Inc., a
Nevada corporation ("Huntco Nevada") and HSI Aviation, Inc., a Missouri
corporation ("HSIA"; and together with Huntco and Huntco Nevada, individually,
each a "Guarantor" and collectively, "Guarantors").
W I T N E S S E T H:
WHEREAS, Borrowers and Guarantors have requested that Lender enter into
certain financing arrangements with Borrowers pursuant to which Lender may
make loans and provide other financial accommodations to each Borrower; and
WHEREAS, Lender is willing to make such loans and advances and provide such
financial accommodations on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also
mean the singular and to the singular shall also mean the plural. All
references to Borrowers pursuant to the definition set forth in the recitals
hereto, unless the context otherwise requires, shall mean each and all of them
and their respective successors and assigns, individually and collectively,
jointly and severally. All references to Guarantors pursuant to the
definition set forth in the recitals hereto, unless the context otherwise
requires, shall mean each and all of them and their respective successors and
assigns, individually and collectively, jointly and severally. All references
to Lender pursuant to the definitions set forth in the recitals hereto, or to
any other person herein, shall include their respective successors and
assigns. The words "hereof", "herein", "hereunder", "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced. The word "including" when used in
this Agreement shall mean "including, without limitation". An Event of
Default shall exist or continue or be continuing until such Event of Default
is waived in accordance with Section 11.3 or is cured in a manner satisfactory
to Lender if such Event of Default is capable of being cured as determined by
Lender. Any accounting term used herein unless otherwise defined in this
Agreement shall have the meanings customarily given to such term in accordance
with GAAP. For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of each Borrower
to payment for goods sold or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to
deposits of United States dollars in a non-United States or an international
banking office of Reference Bank used to fund a Eurodollar Rate Loan or any
Eurodollar Rate Loan made with the proceeds of such deposit, whether or not
the Reference Bank actually holds or has made any such deposits or loans. The
Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of
any change in the Reserve Percentage.
1.3 "Affiliate" shall mean, with respect to a specified Person, a
partnership, corporation or any other person which directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with such Person, and without limiting the generality of the
foregoing, includes (a) any Person which beneficially owns or holds five (5%)
percent or more of any class of voting securities of such Person or other
equity interests in such Person; (b) any Person of which such Person
beneficially owns or holds five (5%) percent or more of any class of voting
securities or in which such Person beneficially owns or holds five (5%)
percent or more of the equity interests; and (c) any director, officer or
employee of such Person. For the purposes of this definition, the term
"control" (including with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
1.4 "Availability Reserves" shall mean, as of any date of determination,
such amounts as Lender, may from time to time establish and revise in good
faith reducing the amount of Loans and Letter of Credit Accommodations which
would otherwise be available to any Borrower under the lending formula(s)
provided for herein: (a) to reflect events, conditions, contingencies or risks
which, as determined by Lender in good faith, adversely affect or have a
reasonable likelihood of adversely affecting either (i) the Collateral or any
other property which is security for the Obligations, its value or the amount
which may be realized by Lender from the sale or other disposition thereof, or
(ii) the assets or financial condition of Borrower or any Obligor, or (iii)
the security interests and other rights of Lender in the Collateral (including
the enforceability, perfection and priority thereof), or (b) to reflect
Lender's good faith belief that any collateral report or financial information
furnished by or on behalf of any Borrower or Obligor to Lender is or may have
been incomplete, inaccurate or misleading in any material respect or (c) to
reflect outstanding Letter of Credit Accommodations as provided in Section 2.2
hereof or (d) in respect of any state of facts which Lender determines in good
faith constitutes an Event of Default or may, with notice or passage of time
or both, constitute an Event of Default. The amount of any Availability
Reserve established by Lender shall have a reasonable relationship to the
event, condition or circumstance which is the basis for such reserve as
determined by Lender in good faith.
1.5 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.6 "Blytheville Collateral" shall mean the Equipment located at the
premises of Huntco Steel in Blytheville, Arkansas and the Real Property of
Huntco Steel in Blytheville, Arkansas, in each case as described on Schedule
1.6 hereto, which are subject to the Capital Leases of Huntco Steel with the
City, as in effect on the date hereof to secure the Indebtedness of Huntco
Steel to the City permitted under Section 9.9 hereof.
1.7 "Blytheville Fixed Asset Availability" shall mean, as to Huntco Steel,
on and after the date that each of the conditions set forth in Section 4.2
have been satisfied, the amount equal to $4,750,000, as reduced effective as
of the first day of each month commencing June 1, 1999 by an amount equal to
$65,972.22.
1.8 "Blytheville Mortgage" shall mean the Fee and Leasehold Mortgage and
Security Agreement and Assignment of Leases and Rents by Huntco Steel in favor
of Lender with respect to the Real Property and related assets constituting
part of the Blytheville Collateral, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.9 "Blytheville 1992 Bond Agreements" shall mean, collectively, the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Trust
Indenture, dated as of June 1, 1992, between the City, as issuer and the
Blytheville 1992 Bond Trustee, as trustee, (b) the Lease Agreement, dated as
of June 1, 1992, between the City, as lessor and Huntco Steel, as lessee, and
(c) all agreements, documents and instruments at any time executed and/or
delivered by any Borrower or Guarantor in connection with any of the
foregoing.
1.10 "Blytheville 1992 Bonds" shall mean, collectively, the City of
Blytheville, Arkansas Industrial Development Revenue Bonds (Huntco Steel, Inc.
Project) Series 1992 issued by the City in the original principal amount of
$2,000,000, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.11 "Blytheville 1992 Bond Trustee" shall mean BNY Trust Company of
Missouri, a Missouri trust company, in its capacity as successor trustee to
Xxxxxxx Trust Company, Inc., Little Rock, Arkansas, for the holders of the
Blytheville 1992 Bonds and any successor, replacement or additional trustee,
and their respective successors and assigns.
1.12 "Blytheville 1995 Bonds" shall mean, collectively, the City of
Blytheville, Arkansas, Taxable Industrial Development Revenue Bonds (Huntco
Steel, Inc. Project) Subordinate Series 1995 issued by the City in the
original principal amount of up to $30,000,000, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.13 "Blytheville 1996 Bonds" shall mean, collectively, the City of
Blytheville, Arkansas, Taxable Industrial Development Revenue Bonds (Huntco
Steel, Inc. Project) Subordinate Series 1996 issued by the City in the
original principal amount of up to $12,000,000, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.14 "Blytheville Subordinate Bond Agreements" shall mean collectively, the
following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Trust
Indenture, dated as of May 1, 1995, between the City and the Blytheville
Subordinate Bond Trustee, as amended pursuant to the First Supplemental Trust
Indenture, dated as of January 1, 1996; (b) the Lease Agreement, dated as of
May 1, 1995, between the City, as lessor, and Huntco Steel, as lessee, as
amended pursuant to the First Amendment to Lease Agreement, dated as of
January 1, 1996; and (c) all agreements, documents and instruments at any time
executed and/or delivered by any Borrower or Guarantor in connection with any
of the foregoing.
1.15 "Blytheville Subordinate Bonds" shall mean, collectively, the
Blytheville 1995 Bonds and the Blytheville 1996 Bonds.
1.16 "Blytheville Subordinate Bond Trustee" shall mean Huntco Nevada, Inc.,
a Nevada corporation in its capacity as trustee for the holders of the
Blytheville Subordinate Bonds and any successor, replacement or additional
trustee, and their respective successors and assigns.
1.17 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of New York, the State of Illinois or the Commonwealth
of Pennsylvania, and a day on which the Reference Bank and Lender are open for
the transaction of business, except that if a determination of a Business Day
shall relate to any Eurodollar Rate Loans, the term Business Day shall also
exclude any day on which banks are closed for dealings in dollar deposits in
the London interbank market or other applicable Eurodollar Rate market.
1.18 "Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.19 "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's capital stock, partnership interests or interests in any limited
liability company at any time outstanding, and any and all rights, warrants or
options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.20 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of one hundred eighty (180) days or less
issued or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof; provided, that, the full
faith and credit of the United States of America is pledged in support
thereof; (b) certificates of deposit or bankers' acceptances with a maturity
of one hundred eighty (180) days or less of any financial institution that is
a member of the Federal Reserve System having combined capital and surplus and
undivided profits of not less than $250,000,000; (c) commercial paper
(including variable rate demand notes) with a maturity of one hundred eighty
(180) days or less issued by a corporation (except an Affiliate of Borrower)
organized under the laws of any State of the United States of America or the
District of Columbia and rated at least A-1 by Standard & Poor's Ratings
Service, a division of The XxXxxx-Xxxx Companies, Inc. or at least P-1 by
Xxxxx'x Investors Service, Inc.; (d) repurchase obligations with a term of not
more than thirty (30) days for underlying securities of the types described in
clause (a) above entered into with any financial institution having combined
capital and surplus and undivided profits of not less than $250,000,000; (e)
repurchase agreements and reverse repurchase agreements relating to marketable
direct obligations issued or unconditionally guaranteed by the United States
of America or issued by any governmental agency thereof and backed by the full
faith and credit to the United States of America, in each case maturing within
one hundred eighty (180) days or less from the date of acquisition; provided,
that, the terms of such agreements comply with the guidelines set forth in the
Federal Financial Agreements of Depository Institutions with Securities
Dealers and Others, as adopted by the Comptroller of the Currency on October
31, 1985; and (f) investments in money market funds and mutual funds which
invest substantially all of their assets in securities of the types described
in clauses (a) through (e) above.
1.21 "Change of Control" shall mean (a) the transfer (in one transaction or
a series of transactions) of all or substantially all of the assets of any
Borrower or Guarantor to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act); (b) the liquidation or dissolution of any
Borrower or Guarantor or the adoption of a plan by the stockholders of any
Borrower or Guarantor relating to the dissolution or liquidation of such
Borrower or Guarantor; (c) the acquisition by any Person or group (as such
term is used in Section 13(d)(3) of the Exchange Act) of beneficial ownership,
directly or indirectly, of fifty (50%) percent or more of the voting power of
the total outstanding Voting Stock of any Borrower or Guarantor (other than
Huntco); (d) during any period of one (1) year, individuals who at the
beginning of such period constituted the Board of Directors of any Borrower or
Guarantor (together with any new directors whose nomination for election was
approved by a vote of at least a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of such Borrower or
Guarantor, then still in office; (e) the failure of Huntco to own one hundred
(100%) percent of the voting power of the total outstanding Voting Stock of
Huntco Nevada (other than as a result of a merger permitted under Section 9.7
hereof); and (f) the failure of Huntco Nevada to own one hundred (100%)
percent of the voting power of the total outstanding Voting Stock of Huntco
Steel and Midwest (other than as a result of a merger permitted under Section
9.7 hereof).
1.22 "City" shall mean the City of Blytheville, Arkansas, a municipality
duly existing under the laws of the State of Arkansas, and its successors and
assigns.
1.23 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.24 "Collateral" shall have the meaning set forth in Section 5.1 hereof.
1.25 "Collateral Access Agreement" shall mean an agreement in writing, in
form and substance satisfactory to Lender, from any lessor of premises to a
Borrower or Guarantor, or any other person to whom any Collateral (including
Inventory, Equipment, bills of lading or other documents of title) is
consigned or who has custody, control or possession of any such Collateral or
is otherwise the owner or operator of any premises on which any of such
Collateral is located, pursuant to which such lessor, consignee or other
person, inter alia, acknowledges the security interest of Lender in such
Collateral, agrees to waive any and all claims such lessor, consignee or other
person may, at any time, have against such Collateral, whether for processing,
storage or otherwise, and agrees to permit Lender access to, and the right to
remain on, the premises of such lessor, consignee or other person so as to
exercise the rights and remedies of Lender and otherwise deal with such
Collateral.
1.26 "Eligible Accounts" shall mean, as to each Borrower, the Accounts
created by such Borrower which satisfy and at all times continue to satisfy
the criteria set forth below as determined by Lender in good faith. Accounts
shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and delivery of
goods by such Borrower or rendition of services by such Borrower in the
ordinary course of its business which transactions are completed in accordance
with the terms and provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than ninety (90) days after the date of
the original invoice for them;
(c) such Accounts comply with the terms and conditions contained in Section
7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed sale,
sale and return, sale on approval, or other terms under which payment by the
account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect to such
Accounts is located in the United States of America or Canada (provided, that,
at any time promptly upon Lender's request, Borrowers shall execute and
deliver, or cause to be executed and delivered, such other agreements,
documents and instruments as may be required by Lender to perfect the security
interests of Lender in those Accounts of an account debtor with its chief
executive office or principal place of business in Canada in accordance with
the applicable laws of the Province of Canada in which such chief executive
office or principal place of business is located and take or cause to be taken
such other and further actions as Lender may request to enable Lender as
secured party with respect thereto to collect such Accounts under the
applicable Federal or Provincial laws of Canada) or, at Lender's option, if
the chief executive office and principal place of business of the account
debtor with respect to such Accounts is located other than in the United
States of America or Canada, then if either: (f) the account debtor has
delivered to Borrowers an irrevocable letter of credit issued or confirmed by
a bank satisfactory to Lender and payable only in the United States of America
and in U.S. dollars, sufficient to cover such Account, in form and substance
satisfactory to Lender and if required by Lender, the original of such letter
of credit has been delivered to Lender or the agent of Lender and the issuer
thereof notified of the assignment of the proceeds of such letter of credit to
Lender, or (ii) such Account is subject to credit insurance payable to Lender
issued by an insurer and on terms and in an amount acceptable to Lender, or
(iii) such Account is otherwise acceptable in all respects to Lender (subject
to lending formula with respect thereto as Lender may determine);
(f) such Accounts do not consist of progress xxxxxxxx, xxxx and hold invoices
or retainage invoices, except as to xxxx and hold invoices, if Lender shall
have received an agreement in writing from the account debtor, in form and
substance satisfactory to Lender, confirming the unconditional obligation of
the account debtor to take the goods related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not asserted a
counterclaim, defense or dispute and does not have, and does not engage in
transactions which may give rise to, any right of setoff against such Accounts
(but the portion of the Accounts of such account debtor in excess of the
amount at any time and from time to time owed by such Borrower to such account
debtor or claimed owed by such account debtor may be deemed Eligible
Accounts);
(h) there are no facts, events or occurrences which have impaired the
validity, enforceability or collectability of such Account or reduced the
amount payable or delayed payment thereunder (provided, that, to the extent
there are facts or occurrences which have only reduced the amount payable
thereunder, then the portion of such Accounts which are not reduced may still
be an Eligible Account);
(i) such Accounts are subject to the first priority, valid and perfected
security interest of Lender and any goods giving rise thereto are not, and
were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of the account
debtor with respect to such Accounts is an officer, employee, agent or other
Affiliate of any Borrower directly or indirectly;
(k) the account debtors with respect to such Accounts are not any foreign
government, the United States of America, any State, political subdivision,
department, agency or instrumentality thereof, unless, if the account debtor
is the United States of America, any State, political subdivision, department,
agency or instrumentality thereof, upon Lender's request, the Federal
Assignment of Claims Act of 1940, as amended or any similar State or local
law, if applicable, has been complied with in a manner satisfactory to Lender;
(l) there are no proceedings or actions which are threatened or pending
against the account debtors with respect to such Accounts which might result
in any material adverse change in any such account debtor's financial
condition;
(m) such Accounts are not owed by an account debtor who has Accounts unpaid
more than ninety (90) days after the date of the original invoice for them,
which constitute more than fifty (50%) percent of the total Accounts of such
account debtor; and
(n) such Accounts are owed by account debtors whose total indebtedness to
such Borrower does not exceed the credit limit with respect to such account
debtors as determined by such Borrower consistent with its current practice as
of the date hereof or as modified after the date hereof by Borrowers in good
faith and as is reasonably acceptable to Lender (but the portion of the
Accounts not in excess of such credit limit may be deemed Eligible Accounts);
(o) such Accounts are owed by account debtors deemed creditworthy at all
times by such Borrower consistent with its current practice as of the date
hereof and who are reasonably acceptable to Lender.
Any Accounts which are not Eligible Accounts shall nevertheless be part of the
Collateral.
1.27 "Eligible Equipment" shall mean, as to each Borrower, Equipment owned
by such Borrower as of the date hereof and included in the appraisal of the
Equipment by Xxxxxx Xxxx & Associates, Inc. received by Lender on or before
the date hereof and which is addressed to Lender and upon which Lender is
expressly permitted to rely, which Equipment is in good order, repair, running
and marketable condition, located at such Borrower's premises and acceptable
to Lender in all respects. In general, Eligible Equipment shall not include:
(a) Equipment at premises other than those owned or leased and controlled by
such Borrower, except as to premises that are leased by such Borrower, only if
Lender shall have received a Collateral Access Agreement from the owner and
lessor of such premises in form and substance satisfactory to Lender; (b)
Equipment subject to a security interest or lien in favor of any person other
than Lender except those permitted in this Agreement; (c) Equipment which is
not located in the continental United States of America; (d) Equipment which
is not subject to the first priority, valid and perfected security interest of
Lender; (e) worn-out obsolete, damaged or defective Equipment or Equipment not
used or usable in the ordinary course of such Borrower's business as presently
conducted; (f) computer hardware; or (g) tooling. Any Equipment which is not
Eligible Equipment shall nevertheless be part of the Collateral.
1.28 "Eligible Inventory" shall mean, as to each Borrower, the Inventory
consisting of finished goods held for resale in the ordinary course of the
business of such Borrower and raw materials for such finished goods which
satisfy the criteria set forth below as determined by Lender in good faith.
Eligible Inventory shall not include (a) work-in-process; (b) components which
are not part of finished goods; (c) spare parts for equipment; (d) packaging
and shipping materials; (e) supplies used or consumed in the business of such
Borrower; (f) Inventory at premises other than those owned and controlled by
any Borrower, except any Inventory which would otherwise be deemed Eligible
Inventory at locations which are not owned and operated by such Borrower may
nevertheless be considered Eligible Inventory if: (i) as to premises leased by
such Borrower, Lender shall have received a Collateral Access Agreement duly
authorized, executed and delivered by the owner and lessor of such premises
and (ii) as to premises of third parties (including consignees and
processors), Lender shall have received a Collateral Access Agreement duly
authorized, executed and delivered by the owner and operator of such premises,
and in addition, if required by Lender: (A) the owner and operator executes
appropriate UCC-1 financing statements in favor of such Borrower, which are
duly assigned to Lender and (B) any secured lender to the owner and operator
is properly notified of the first priority lien on such Inventory of Lender;
(g) Inventory subject to a security interest or lien in favor of any person
other than Lender except those permitted in this Agreement; (h) xxxx and hold
goods; (i) unserviceable, obsolete or slow moving Inventory (other than slow
moving Inventory that is readily saleable [as determined in a manner
consistent with the current practices of Borrowers]); (j) Inventory which is
not subject to the first priority, valid and perfected security interest of
Lender; (k) returned, damaged and/or defective Inventory; and (l) Inventory
purchased or sold on consignment (except as otherwise provided in Section
1.28(f) above). Any Inventory which is not Eligible Inventory shall
nevertheless be part of the Collateral.
1.29 "Eligible New Equipment" shall mean, as to each Borrower, Equipment
owned by such Borrower and acquired after the date hereof and which is not
included in the appraisal referred to in Section 1.27 above, which would
otherwise constitute Eligible Equipment pursuant to the criteria set forth in
Section 1.27 above. Any Equipment which is not Eligible New Equipment shall
nevertheless be part of the Collateral.
1.30 "Environmental Laws" shall mean all foreign, Federal, State and local
laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between each Borrower and
any governmental authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource),
or to human health or safety, (b) relating to the exposure to, or the use,
storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or
disposal, or threatened release, of Hazardous Materials, or (c) relating to
all laws with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials. The term "Environmental Laws"
includes (i) the Federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980, the Federal Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide
Act, and the Federal Safe Drinking Water Act of 1974, (ii) applicable state
counterparts to such laws, and (iii) any common law or equitable doctrine that
may impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to any Hazardous
Materials.
1.31 "Equipment" shall mean all of each Borrower's now owned and hereafter
acquired or leased equipment, machinery, computers and computer hardware and
software (whether owned or licensed), vehicles, tools, furniture, fixtures,
all attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements thereof,
wherever located.
1.32 "Equipment Availability" shall mean, as to Huntco Steel the amount
equal to $34,800,000, as reduced effective as of the first day of each month
commencing June 1, 1999 by an amount equal to $483,333.33 and, as to Midwest,
the amount equal to $881,000, as reduced effective as of the first day of each
month commencing June 1, 1999 by an amount equal to $12,236.11, provided,
that:
(a) upon the written request of Huntco, the Equipment Availability as to a
Borrower may be increased at any time after the first anniversary of the date
hereof, but no more than once in any twenty-four (24) month period, effective
as of the first day of the month after each of the conditions set forth below
are satisfied, to an amount equal to eighty (80%) percent of the orderly
liquidation value of the Eligible Equipment and the Eligible New Equipment
then owned by such Borrower (calculated based on an updated appraisal as
described below); provided, that, any such increase in the Equipment
Availability as to such Borrower shall only be effective if each of the
following conditions is satisfied: (i) Lender shall have received the written
request of Huntco for such increase not less than fifteen (15) Business Days
prior to the effective date of such increase, (ii) no Event of Default, or
act, condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred, (iii) Lender
shall have received an updated appraisal of the Eligible Equipment and the
Eligible New Equipment of such Borrower by an independent appraiser acceptable
to Lender and in form, scope and methodology acceptable to Lender and
addressed to Lender and on which Lender is expressly permitted to rely, which
appraisal is conducted no earlier than forty-five (45) days prior to the
effective date of such increase, (iv) Lender shall have received such
appraisal not less than ten (10) days prior to the effective date of such
increase and (v) on and after the effective date of such increase in the
Equipment Availability, as of the first day of each month thereafter, the
Equipment Availability for such Borrower shall be reduced by an amount equal
to the Equipment Availability for such Borrower as so increased divided by
sixty (60); and
(b) upon the written request of Huntco, the Equipment Availability as to a
Borrower may be increased at any time and from time to time after the date
hereof by an amount equal to seventy (70%) percent of the Hard Costs of
Eligible New Equipment purchased by such Borrower after the date hereof,
provided that, (i) any such increase shall be effective as of the first
Business Day after Lender has notified Huntco that each of the following
conditions with respect to such purchase by such Borrower have been satisfied:
(A) Lender shall have received from Huntco not less than fifteen (15)
Business Days prior written notice of the proposed increase in the Equipment
Availability, which notice shall specify the following: (1) the proposed date
and amount of the purchase by such Borrower of the Eligible New Equipment
which is to be the basis for such increase, (2) the Borrower that is making
such purchase, (3) a list and description of the Eligible New Equipment (by
model, make, manufacturer, serial no. and/or such other identifying
information as may be appropriate, as determined by Lender), (4) the Hard
Costs and the total purchase price for the Eligible New Equipment to be
purchased with the proceeds of such increase in the Equipment Availability
(and the terms of payment of such purchase price), and (5) such other
information and documents as Lender may from time to time require related
thereto, (B) Lender shall have a valid and perfected first security interest
in and lien upon the Eligible New Equipment to be purchased with the proceeds
of the increase in the Equipment Availability and the Eligible New Equipment
shall be free and clear of all other liens, security interests, claims or
other encumbrances, and Borrowers shall have delivered to Lender such evidence
thereof, as Lender may from time to time, require, (C) Lender shall have
received copies of all agreements, documents and instruments relating to the
sale of the Eligible New Equipment to such Borrower, including, without
limitation, any purchase orders, invoices, bills of sale or similar documents
and (D) no Event of Default, or act, condition or event which with notice or
passage of time or both would constitute an Event of Default, shall exist or
have occurred, (ii) the Eligible New Equipment which is the basis for such
increase was not included in the calculation of any increase in the Equipment
Availability pursuant to the exercise by Borrowers of the option to increase
the Equipment Availability under Section 1.32(a) above, and (iii) on and after
the effective date after any such increase in the Equipment Availability to a
Borrower, as of the first day of each month thereafter, the Equipment
Availability for such Borrower shall be reduced by an amount equal to the sum
of: (A) $483,333.33 in the case of Huntco Steel or $12,236.11 in the case of
Midwest (or at any time after any increase in the Equipment Availability for a
Borrower pursuant to Section 1.32(a) above, then the amount of each reduction
in the Equipment Availability calculated as provided in Section 1.32(a)(v)
above), plus (B) the amount equal to the increase in the Equipment
Availability for such Borrower divided by seventy-two (72).
1.33 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to
time be amended, modified, recodified or supplemented, together with all
rules, regulations and interpretations thereunder or related thereto.
1.34 "ERISA Affiliate" shall mean any person required to be aggregated with
any Borrower or any Subsidiary of any Borrower under Sections 414(b), 414(c),
414(m) or 414(o) of the Code.
1.35 "Eurodollar Rate" shall mean with respect to the Interest Period for a
Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by a Borrower or Huntco on behalf of
such Borrower and approved by Lender) on or about 9:00 a.m. (New York time)
two (2) Business Days prior to the commencement of such Interest Period in
amounts substantially equal to the principal amount of the Eurodollar Rate
Loans requested by and available to such Borrower in accordance with this
Agreement, with a maturity of comparable duration to the Interest Period
selected by or on behalf of such Borrower.
1.36 "Event of Default" shall mean the occurrence or existence of any event
or condition described in Section 10.1 hereof.
1.37 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.38 "Excess Availability" shall mean, as to each Borrower, the amount, as
determined by Lender, calculated at any time, equal to: (a) the lesser of (i)
the amount of the Loans available to such Borrower as of such time based on
the applicable lending formulas multiplied by the Net Amount of Eligible
Accounts and the Value of Eligible Inventory plus the Equipment Loan
Availability and, to the extent applicable, the Blytheville Fixed Asset
Available, in each case as applicable to such Borrower, as determined by
Lender, and subject to the sublimits and Availability Reserves from time to
time established by Lender hereunder and (ii) the Maximum Credit (as then in
effect), minus (b) the sum of: (i) the amount of all then outstanding and
unpaid Obligations of such Borrower (other than the Obligations arising
pursuant to the guarantee by such Borrower of the Obligations of the other
Borrower), plus (ii) the aggregate amount of all trade payables and other
obligations of such Borrower which are more than sixty (60) days past due as
of such time (other than trade payables which are the subject of a bona fide
dispute between such Borrower and the vendor or supplier to who such payable
is owed) and including the amount of any checks issued by such Borrower to pay
such trade payables and other obligations which are more than sixty (60) days
past due, but not yet sent.
1.39 "Exchange Act" shall mean the Securities Exchange Act of 1934, as the
same now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.40 "Existing Lenders" shall mean the lenders to Borrowers listed on
Schedule 1.40 hereto (and including Mercantile Bank National Association in
its capacity as collateral agent acting for such lenders and the Private
Noteholders).
1.41 "Existing Letters of Credit" shall mean, collectively, the letters of
credit issued for the account of a Borrower or Guarantor or for which such
Borrower or Guarantor is otherwise liable listed on Schedule 1.41 hereto, as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.42 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements and other agreements, documents and
instruments now or at any time hereafter executed and/or delivered by any
Borrower or Obligor in connection with this Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.43 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board which are
applicable to the circumstances as of the date of determination consistently
applied.
1.44 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
1.45 "Hard Costs" shall mean, with respect to the purchase by a Borrower of
an item of Eligible New Equipment, the net cash amount actually paid to
acquire title to such item, net of all incentives, discounts and rebates, and
exclusive of freight, delivery charges, installation costs and charges, trade-
in allowances, software costs, charges and fees, warranty costs, taxes,
insurance and other incidental costs or expenses and all indirect costs or
expenses of any kind.
1.46 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other
kind and/or type of pollutants or contaminants (including materials which
include hazardous constituents), sewage, sludge, industrial slag, solvents
and/or any other similar substances, materials, or wastes and including any
other substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.47 "Indebtedness" shall mean, with respect to any Person, any liability,
whether or not contingent, (a) in respect of borrowed money (whether or not
the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof) or evidenced by bonds, notes, debentures or similar
instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (except any such balance that constitutes an
account payable to a trade creditor (whether or not an Affiliate) created,
incurred, assumed or guaranteed by such Person in the ordinary course of
business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of
such Person to pay or be liable for the payment of any indebtedness described
in this definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge
thereof, or to maintain solvency, assets, level of income, or other financial
condition; (e) all obligations with respect to redeemable stock and redemption
or repurchase obligations under any Capital Stock or other equity securities
issued by such Person; (f) all reimbursement obligations and other liabilities
of such Person with respect to surety bonds (whether bid, performance or
otherwise), letters of credit, banker's acceptances or similar documents or
instruments issued for such Person's account; and (g) all indebtedness of such
Person in respect of indebtedness of another Person for borrowed money or
indebtedness of another Person otherwise described in this definition which is
secured by any consensual lien, security interest, collateral assignment,
conditional sale, mortgage, deed of trust, or other encumbrance on any asset
of such Person, whether or not such obligations, liabilities or indebtedness
are assumed by or are a personal liability of such Person, all as of such
time.
1.48 "Information Certificate" shall mean the Information Certificates with
respect to each Borrower and Guarantor constituting Exhibit A hereto
containing material information with respect to such Borrower and Guarantor,
its business and assets provided by or on behalf of Borrowers and Guarantors
to Lender in connection with the preparation of this Agreement and the other
Financing Agreements and the financing arrangements provided for herein.
1.49 "Intercompany Loan Agreement" shall mean the Loan Agreement, dated
October 21, 1996, by and between Huntco Nevada and Huntco Steel, providing for
revolving loans by Huntco Nevada to Huntco Steel from time to time up to a
maximum principal amount of $75,000,000 outstanding at any time, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated, or replaced.
1.50 "Interest Period" shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2), or three (3) months duration as Borrower may
elect, the exact duration to be determined in accordance with the customary
practice in the applicable Eurodollar Rate market; provided, that, a Borrower
may not elect an Interest Period which will end after the last day of the
then-current term of this Agreement.
1.51 "Interest Rate" shall mean the following:
(a) subject to clause (b) and (c) below, as to Prime Rate Loans, a rate
equal to one-half (1/2%) percent per annum in excess of the Prime Rate and, as
to Eurodollar Rate Loans, a rate of two and one-quarter (2 1/4%) percent per
annum in excess of the Adjusted Eurodollar Rate (based on the Eurodollar Rate
applicable for the Interest Period selected by a Borrower (or Huntco on behalf
of such Borrower) as in effect three (3) Business Days after the date of
receipt by Lender of the request of a Borrower (or Huntco on behalf of such
Borrower) for such Eurodollar Rate Loans in accordance with the terms hereof,
whether such rate is higher or lower than any rate previously quoted to such
Borrower or Huntco);
(b) notwithstanding anything to the contrary set forth in clause (a) above,
the Interest Rate shall mean as to Prime Rate Loans, a rate equal to one-
quarter (1/4%) percent per annum in excess of the Prime Rate, and as to
Eurodollar Rate Loans, a rate equal to two (2%) percent per annum in excess of
the Adjusted Eurodollar Rate, effective as of January 1 of any year after each
of the following conditions is satisfied as determined by Lender: (i) the
Pre-Tax Income of Huntco and its Subsidiaries for the immediately preceding
fiscal year (commencing with the fiscal year ending on December 31, 1999) as
set forth in the audited financial statements of Huntco and its Subsidiaries
for such fiscal year delivered to Lender, together with the unqualified
opinion of the independent certified accountants, in accordance with Section
9.6 hereof shall equal or exceed $2,000,000 and (ii) no Event of Default or
act, condition or event which with notice or passage of time would constitute
an Event of Default shall exist or have occurred and be continuing, provided,
that, unless and until Lender shall have received such audited financial
statements for purposes of calculating the Pre-Tax Income in the immediately
preceding year, Borrowers shall pay the rates provided for in Section 1.51(a)
above, but as of the first day of the month after the receipt of such
financial statements and upon the satisfaction of the conditions set forth
herein, Lender shall adjust the account of Borrowers to reflect such
reduction; and
(c) notwithstanding anything to the contrary contained herein, the Interest
Rate shall mean the rate of two and one-half (2 1/2%) percent per annum in
excess of the Prime Rate as to Prime Rate Loans and the rate of four and one-
quarter (4 1/4%) percent per annum in excess of the Adjusted Eurodollar Rate
as to Eurodollar Rate Loans, at Lender's option, without notice, (i) either
(A) for the period on and after the date of termination or non-renewal hereof
until such time as all Obligations are indefeasibly paid in full, or (B) for
the period from and after the date of the occurrence of any Event of Default,
and for so long as such Event of Default is continuing as determined by Lender
and (ii) on the Loans to a Borrower at any time outstanding in excess of the
amounts available to such Borrower under Section 2 (whether or not such
excess(es) arise or are made with or without Lender's knowledge or consent and
whether made before or after an Event of Default).
1.52 "Inventory" shall mean all of each Borrower's now owned and hereafter
existing or acquired raw materials, work in process, finished goods and all
other inventory of whatsoever kind or nature, wherever located.
1.53 "Letter of Credit Accommodations" shall mean the letters of credit,
merchandise purchase or other guaranties which are from time to time either
(a) issued or opened by Lender for the account of any Borrower or Obligor or
(b) with respect to which Lender has agreed to indemnify the issuer or
guaranteed to the issuer the performance by any Borrower of its obligations to
such issuer (including the Existing Letters of Credit).
1.54 "Loans" shall mean the loans now or hereafter made by Lender to or for
the benefit of a Borrower on a revolving basis (involving advances, repayments
and readvances) as set forth in Section 2.1 hereof.
1.55 "Material Adverse Effect" shall mean a material adverse effect on (a)
the condition (financial or otherwise), business, performance, operations or
properties of Borrowers and Guarantors (taken as a whole); (b) the legality,
validity or enforceability of this Agreement or any of the other Financing
Agreements; (c) the legality, validity, enforceability, perfection or priority
of the security interests and liens of Lender upon the Collateral or any other
property which is security for the Obligations; (d) the Collateral or any
other property which is security for the Obligations, or the value of the
Collateral or such other property; (e) the ability of any Borrower to repay
the Obligations or of any Borrower or Guarantor to perform its obligations
under this Agreement or any of the other Financing Agreements; or (f) the
ability of Lender to enforce the Obligations or realize upon the Collateral or
otherwise with respect to the rights and remedies of Lender under this
Agreement or any of the other Financing Agreements.
1.56 "Maximum Credit" shall mean $140,000,000, provided, that, the Maximum
Credit may be reduced at the option of Huntco one time without premium or
penalty by up to $50,000,000, so long as (a) Lender shall have received not
less than five (5) Business Days prior written notice of the exercise by
Borrowers of such option and (b) as of the date of such reduction and after
giving effect thereto, the aggregate amount of the Loans and Letter of Credit
Accommodations outstanding shall be less than the Maximum Credit as so
reduced.
1.57 "Mortgages" shall mean, collectively, the following (as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced): (a) Blytheville Mortgage; (b) the Deed of Trust,
Security Agreement, Assignment of Rents and Leases and Fixture Filing by
Huntco Steel in favor of Lender with respect to the Real Property and related
assets of Huntco Steel located in Chattanooga, Tennessee; (c) the Open-End
Mortgage and Security Agreement by Huntco Steel in favor of Lender with
respect to the Real Property and related assets of Huntco Steel located in
Berkeley County, South Carolina; (d) the Mortgage, Security Agreement,
Financing Statement and Assignment of Leases and Rents and Fixture Filing by
Huntco Steel in favor of Lender with respect to the Real Property and related
assets of Huntco Steel located in Gallatin County, Kentucky; (e) the Mortgage,
Security Agreement and Fixture Filing by Huntco Steel in favor of Lender with
respect to the Real Property and related assets of Huntco Steel located in
Madison, Illinois, (f) the Leasehold Real Estate Mortgage Assignment of Rents,
Security Agreement and Financing Statement by Huntco Steel in favor of Lender
with respect to the Real Property and related assets of Huntco Steel located
in Catoosa, Oklahoma; (g) the Deed of Trust and Security Agreement by Huntco
Steel in favor of Lender with respect to the Real Property and related assets
of Huntco Steel located in Xxxxxx County, Missouri; (h) the Deed of Trust and
Security Agreement Assignment of Leases and Rents by Huntco Steel in favor of
Lender with respect to the Real Property and related assets of Huntco Steel
located in Pasadena, Texas; and (i) the Deed of Trust, Security Agreement,
Assignment of Rents and Leases and Fixture Filing by Midwest in favor of
Lender with respect to the Real Property and related assets of Midwest located
in Strafford, Missouri.
1.58 "Net Amount of Eligible Accounts" shall mean, as to each Borrower, the
gross amount of the Eligible Accounts of such Borrower less (a) sales, excise
or similar taxes included in the amount thereof and (b) returns, discounts,
claims, credits and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed with respect thereto.
1.59 "Net Worth" shall mean as to any Person, at any time, the net worth of
such Person calculated in accordance with GAAP. For purposes of Section 9.16
hereof, the application of GAAP to the calculation of Net Worth of any
Borrower or Guarantor shall be consistent with the current practices of
Borrowers and Guarantors as in effect on the date hereof.
1.60 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of
every kind, nature and description owing by any or all of Borrowers to Lender
and/or Lender's Affiliates, including principal, interest, charges, fees,
costs and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether arising under this Agreement or otherwise,
whether now existing or hereafter arising, whether arising before, during or
after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to any Borrower under the United States
Bankruptcy Code or any similar statute (including, without limitation, the
payment of interest and other amounts which would accrue and become due but
for the commencement of such case), whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, and however acquired by Lender.
1.61 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner
of any property which is security for the Obligations, other than Borrowers.
1.62 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.63 "Pre-Tax Income" shall mean, with respect to any Person, for any
period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the
extent included therein any extraordinary or one-time gains and any non-cash
losses or charges) after deducting all charges which should be deducted before
arriving at the net income (loss) for such period and before deducting the
Provision for Taxes for such period, all as determined in accordance with
GAAP, provided, that, (a) the net income of any Person that is not a wholly-
owned Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid or payable to a Borrower or a wholly-owned Subsidiary of
such person; (b) the effect of any change in accounting principles adopted by
such Person or its Subsidiaries after the date hereof shall be excluded; and
(c) the net income (if positive) of any wholly-owned Subsidiary to the extent
that the declaration or payment of dividends or similar distributions by such
wholly-owned Subsidiary to a Borrower or to any other wholly-owned Subsidiary
of a Borrower is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule
or government regulation applicable to such wholly-owned Subsidiary shall be
excluded. For the purpose of this definition, net income excludes any gain
(but not loss), together with any related Provision of Taxes for such gain
(but not loss) realized upon the sale or other disposition of any assets that
are not sold in the ordinary course of business (including, without
limitation, dispositions pursuant to sale and leaseback transactions), or of
any Capital Stock of such Person or a Subsidiary of such Person and any net
income realized as a result of changes in accounting principles or the
application thereof to such Person.
1.64 "Prime Rate" shall mean the rate from time to time publicly announced
by First Union National Bank or its successors, as its prime rate, whether or
not such announced rate is the best rate available at such bank.
1.65 "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.66 "Private Note Agreements" shall mean, collectively, the following (as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced): (a) the Private Notes; (b) the Note
Purchase Agreements, dated July 14, 1995, by and among Huntco and the Private
Noteholders, as amended pursuant to the First Amendment to Note Purchase
Agreements, dated as of March 24, 1998, by and among Huntco and the Private
Noteholders; (c) the Subsidiary Guaranty, dated March 24, 1998, issued by HSIA
in favor of the Private Noteholders; (d) the Subsidiary Guaranty, dated July
14, 1995, issued by Huntco Nevada, Huntco Steel and Midwest in favor of the
Private Noteholders; and (e) all agreements, documents and instruments at any
time executed and/or delivered by any Borrower or Obligor in connection with
any of the foregoing.
1.67 "Private Noteholders" shall mean, collectively, each and all of the
following and their respective successors and assigns: (a) Principal Life
Insurance Company; (b) Nippon Life Insurance Company of America; (c)
TransAmerica Life Insurance and Annuity Company; (d) TransAmerica Assurance
Company; (e) TransAmerica Occidental Life Insurance Company; (f)
ProvidentMutual Life and Annuity Company of America; (g) Berkshire Life
Insurance Company; (h) the Security Mutual Life Insurance Company of Lincoln,
Nebraska; and (i) any other person that at any time is a holder of any of the
Private Notes.
1.68 "Private Notes" shall mean, collectively, the 8.13% Notes due July 15,
2005, dated July 14, 1995 issued by Huntco pursuant to the Note Purchase
Agreements, dated July 14, 1995, by and among Huntco and the Private
Noteholders, as such notes now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.69 "Provision for Taxes" shall mean an amount equal to all taxes imposed
on or measured by net income, whether Federal, State or local, and whether
foreign or domestic, that are paid or payable by any Person and its
Subsidiaries in respect of such fiscal year on a consolidated basis in
accordance with GAAP.
1.70 "Real Property" shall mean all now owned and hereafter acquired real
property of each Borrower, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all
licenses, easements and appurtenances relating thereto, wherever located,
including the real property and related assets more particularly described in
the Mortgages located in Blytheville, Arkansas, Chattanooga, Tennessee,
Berkeley County, South Carolina, Gallatin County, Kentucky, Madison, Illinois,
Catoosa, Oklahoma, Pasadena, Texas, Springfield, Missouri and Strafford,
Missouri.
1.71 "Records" shall mean all of each Borrower's present and future books
of account of every kind or nature, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes
and other data and software storage media and devices, file cabinets or
containers in or on which the foregoing are stored (including any rights of
Borrowers with respect to the foregoing maintained with or by any other
person).
1.72 "Reference Bank" shall mean First Union National Bank, or such other
bank as Lender may from time to time designate.
1.73 "Renewal Date" shall have the meaning set forth in Section 12.1
hereof.
1.74 "Subsidiary" or "subsidiary" shall mean, with respect to any Person,
any corporation, limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the
outstanding Capital Stock or other interests entitled to vote in the election
of the board of directors of such corporation (irrespective of whether, at the
time, Capital Stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency), managers, trustees or other controlling persons, or an
equivalent controlling interest therein, of such Person is, at the time,
directly or indirectly, owned by such Person and/or one or more subsidiaries
of such Person.
1.75 "Value" shall mean with respect to Inventory of Midwest, the lower of
cost computed on a first-in-first-out basis in accordance with GAAP or market
value and with respect to Inventory of Huntco Steel, the lower of specific
identification in accordance with GAAP or market value.
"Voting Stock" shall mean with respect to any Person, (a) one (1) or more
classes of Capital Stock of such Person having general voting powers to elect
at least a majority of the board of directors, managers or trustees of such
Person, irrespective of whether at the time Capital Stock of any other class
or classes have or might have voting power by reason of the happening of any
contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
SECTION 2. CREDIT FACILITIES
2.1 Loans.
(a) Subject to and upon the terms and conditions contained herein, Lender
agrees to make Loans to each Borrower from time to time in amounts requested
by such Borrower or on its behalf by Huntco up to the amount equal to:
(i) eighty-five (85%) percent of the Net Amount of Eligible Accounts of
such Borrower, plus
(ii) sixty-five (65%) percent of the Value of Eligible Inventory of such
Borrower, plus
(iii) the Equipment Availability for such Borrower as then in effect, plus
(iv) as to Huntco Steel, the Blytheville Fixed Asset Availability as then
in effect (on and after the date each of the conditions set forth in Section
4.2 have been satisfied), minus
(v) any Availability Reserves allocated to such Borrower.
(b) Lender may, in its good faith discretion, from time to time, upon not
less than five (5) days prior notice to Huntco or any Borrower, (i) reduce the
lending formula with respect to Eligible Accounts to the extent that Lender
determines in good faith that: (A) the dilution with respect to the Accounts
of such Borrower for any period (based on the ratio of (1) the aggregate
amount of reductions in Accounts other than as a result of payments in cash to
(2) the aggregate amount of total sales) has increased or may be reasonably
anticipated to increase above historical levels in any material respect, or
(B) the general creditworthiness of account debtors has declined or (ii)
reduce the lending formula(s) with respect to Eligible Inventory of a Borrower
to the extent that Lender determines in good faith that: (A) the number of
days of the turnover of the Inventory for any period has adversely changed in
any material respect or (B) the liquidation value of the Eligible Inventory,
or any category thereof, has decreased in any material respect, or (C) the
nature, quality and mix of the Inventory has deteriorated in any material
respect. The amount of any reduction in any lending formula by Lender
pursuant to this Section 2.1(b) shall have a reasonable relationship to the
matter which is the basis for such reduction in the good faith determination
of Lender. To the extent an Availability Reserve shall have been established
which is sufficient to address any event, condition or matter in a manner
satisfactory to Lender in its good faith determination, Lender shall not
exercise its rights under this Section 2.1(b) to reduce the lending formulas
to address such event, condition or matter.
(c) Except in Lender's discretion, the aggregate amount of the Loans and the
Letter of Credit Accommodations outstanding at any time shall not exceed the
Maximum Credit as then in effect. In the event that the outstanding amount of
any component of the Loans, or the aggregate amount of the outstanding Loans
and Letter of Credit Accommodations, exceed the amounts available under the
lending formulas, the sublimits for Letter of Credit Accommodations set forth
in Section 2.2(d) or the Maximum Credit, as applicable, such event shall not
limit, waive or otherwise affect any rights of Lender in that circumstance or
on any future occasions and Borrowers shall, upon demand by Lender, which may
be made at any time or from time to time, immediately repay to Lender the
entire amount of any such excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to and upon the terms and conditions contained herein, at the
request of a Borrower (or Huntco on behalf of such Borrower), Lender agrees to
provide or arrange for Letter of Credit Accommodations for the account of such
Borrower (and, in addition to such Borrower, any Guarantor, to the extent it
relates to the businesses of Borrowers) containing terms and conditions
acceptable to Lender and the issuer thereof. Any payments made by Lender to
any issuer thereof and/or related parties in connection with the Letter of
Credit Accommodations shall constitute additional Loans to Borrowers pursuant
to this Section 2.
(b) In addition to any charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations, Borrowers shall
pay to Lender a letter of credit fee at a rate equal to one and one-half (1
1/2%) percent per annum on the daily outstanding balance of the Letter of
Credit Accommodations for the immediately preceding month (or part thereof),
payable in arrears as of the first day of each succeeding month, except that
Borrowers shall pay to Lender such letter of credit fee, at Lender's option,
without notice, at a rate equal to three and one-half (3 1/2%) percent per
annum on such daily outstanding balance for: (i) the period from and after
the date of termination or non-renewal hereof until Lender has received full
and final payment of all Obligations (notwithstanding entry of a judgment
against any Borrower) and (ii) the period from and after the date of the
occurrence of an Event of Default and for so long as such Event of Default is
continuing. Such letter of credit fee shall be calculated on the basis of a
three hundred sixty (360) day year and actual days elapsed and the obligation
of Borrowers to pay such fee shall survive the termination or non-renewal of
this Agreement.
(c) No Letter of Credit Accommodations shall be available unless on the date
of the proposed issuance of any Letter of Credit Accommodations, the Loans
available to the Borrower requesting it or on whose behalf it is requested
(subject to the Maximum Credit and any Availability Reserves) are equal to or
greater than: (i) if the proposed Letter of Credit Accommodation is for the
purpose of purchasing Eligible Inventory, the sum of (A) the percentage equal
to one hundred (100%) percent minus the then applicable percentage set forth
in Section 2.1(a)(ii) above multiplied by the Value of such Eligible
Inventory, plus (B) freight, taxes, duty and other amounts that Lender
estimates must be paid in connection with such Inventory upon arrival and for
delivery to one of such Borrower's locations for Eligible Inventory within the
United States of America and (ii) if the proposed Letter of Credit
Accommodation is for any other purpose, an amount equal to one hundred (100%)
percent of the face amount thereof and all other commitments and obligations
made or incurred by Lender with respect thereto. Effective on the issuance of
each Letter of Credit Accommodation, an Availability Reserve shall be
established in the applicable amount set forth in Section 2.2(c)(i) or Section
2.2(c)(ii).
(d) Except in Lender's discretion, the amount of all outstanding Letter of
Credit Accommodations and all other commitments and obligations made or
incurred by Lender in connection therewith shall not at any time exceed
$25,000,000. At any time an Event of Default exists or has occurred, upon
Lender's request, Borrowers will either furnish cash collateral to secure the
reimbursement obligations to the issuer in connection with any Letter of
Credit Accommodations or furnish cash collateral to Lender for the Letter of
Credit Accommodations, and in either case, the Loans otherwise available to
Borrowers shall not be reduced as provided in Section 2.2(c) to the extent of
such cash collateral.
(e) Each Borrower shall indemnify and hold Lender harmless from and against
any and all losses, claims, damages, liabilities, costs and expenses which
Lender may suffer or incur in connection with any Letter of Credit
Accommodations and any documents, drafts or acceptances relating thereto,
including, but not limited to, any losses, claims, damages, liabilities, costs
and expenses due to any action taken by any issuer or correspondent with
respect to any Letter of Credit Accommodation. Each Borrower assumes all
risks with respect to the acts or omissions of the drawer under or beneficiary
of any Letter of Credit Accommodation and for such purposes the drawer or
beneficiary shall be deemed such Borrower's agent. Each Borrower assumes all
risks for, and agrees to pay, all foreign, Federal, State and local taxes,
duties and levies relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances thereunder. Each
Borrower hereby releases and holds Lender harmless from and against any acts,
waivers, errors, delays or omissions, whether caused by such Borrower, by any
issuer or correspondent or otherwise with respect to or relating to any Letter
of Credit Accommodation except for Lender's own gross negligence or willful
misconduct as determined pursuant to a final non-appealable order of a court
of competent jurisdiction. The provisions of this Section 2.2(e) shall
survive the payment of Obligations and the termination or non-renewal of this
Agreement.
(f) Nothing contained herein shall be deemed or construed to grant Borrowers
any right or authority to pledge the credit of Lender in any manner. Lender
shall have no liability of any kind with respect to any Letter of Credit
Accommodation provided by an issuer other than Lender unless Lender has duly
executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit
Accommodation. Borrowers shall be bound by any interpretation made in good
faith by Lender, or any other issuer or correspondent under or in connection
with any Letter of Credit Accommodation or any documents, drafts or
acceptances thereunder, notwithstanding that such interpretation may be
inconsistent with any instructions of Borrowers. Lender shall have the sole
and exclusive right and authority to, and Borrowers shall not: (i) at any time
an Event of Default exists or has occurred and is continuing, (A) approve or
resolve any questions of non-compliance of documents, (B) give any
instructions as to acceptance or rejection of any documents or goods or (C)
execute any and all applications for steamship or airway guaranties,
indemnities or delivery orders, and (ii) at all times, (A) grant any
extensions of the maturity of, time of payment for, or time of presentation
of, any drafts, acceptances, or documents, and (B) agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters
of credit included in the Collateral. Lender may take such actions either in
its own name or in any Borrower's name.
(g) Any rights, remedies, duties or obligations granted or undertaken by any
Borrower to any issuer or correspondent in any application for any Letter of
Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed
to have been granted or undertaken by such Borrower to Lender. Any duties or
obligations undertaken by Lender to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement by
Lender in favor of any issuer or correspondent relating to any Letter of
Credit Accommodation, shall be deemed to have been undertaken by Borrowers to
Lender and to apply in all respects to Borrowers.
2.3 Availability Reserves. All Loans otherwise available to Borrowers
pursuant to the lending formulas and subject to the Maximum Credit and other
applicable limits hereunder shall be subject to Lender's continuing right to
establish and revise Availability Reserves in good faith.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Lender interest on the outstanding principal
amount of the non-contingent Obligations at the Interest Rate. All interest
accruing hereunder on and after the date of any Event of Default or
termination or non-renewal hereof shall be payable on demand.
(b) A Borrower (or Huntco on behalf of such Borrower) may from time to time
request that Prime Rate Loans to it be converted to Eurodollar Rate Loans or
that any existing Eurodollar Rate Loans to it continue for an additional
Interest Period. Such request from or on behalf of a Borrower shall specify
the amount of the Prime Rate Loans which will constitute Eurodollar Rate Loans
(subject to the limits set forth below) and the Interest Period to be
applicable to such Eurodollar Rate Loans. Subject to the terms and conditions
contained herein, three (3) Business Days after receipt by Lender of such a
request from or on behalf of a Borrower, such Prime Rate Loans shall be
converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall
continue, as the case may be, provided, that, (i) no Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred and be continuing,
(ii) no party hereto shall have sent any notice of termination or non-renewal
of this Agreement, (iii) the Borrower requesting such Eurodollar Rate Loan (or
Huntco on behalf of such Borrower) shall have complied with such customary
procedures as are established by Lender and specified by Lender to Borrowers
from time to time for requests by Borrowers for Eurodollar Rate Loans, (iv) no
more than six (6) Interest Periods may be in effect at any one time, (v) the
aggregate amount of the Eurodollar Rate Loans must be in an amount not less
than $2,000,000 or an integral multiple of $500,000 in excess thereof, and
(vii) Lender shall have determined that the Interest Period or Adjusted
Eurodollar Rate is available to Lender through the Reference Bank and can be
readily determined as of the date of the request for such Eurodollar Rate Loan
by or on behalf of such Borrower. Any request by or on behalf of a Borrower
to convert Prime Rate Loans to Eurodollar Rate Loans or to continue any
existing Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything
to the contrary contained herein, Lender and Reference Bank shall not be
required to purchase United States Dollar deposits in the London interbank
market or other applicable Eurodollar Rate market to fund any Eurodollar Rate
Loans, but the provisions hereof shall be deemed to apply as if Lender and
Reference Bank had purchased such deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate Loans
upon the last day of the applicable Interest Period, unless Lender has
received and approved a request to continue such Eurodollar Rate Loan at least
three (3) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans to a Borrower shall, at Lender's option,
upon notice by Lender to Huntco, convert to Prime Rate Loans in the event that
(i) this Agreement shall terminate or not be renewed, or (ii) the aggregate
principal amount of the Prime Rate Loans which have previously been converted
to Eurodollar Rate Loans or existing Eurodollar Rate Loans continued, as the
case may be, at the beginning of an Interest Period shall at any time during
such Interest Period exceed either (A) the aggregate principal amount of the
Loans then outstanding, or (B) the then outstanding principal amount of Loans
then available to such Borrower under Section 2 hereof. Borrowers shall pay
to Lender, upon demand by Lender (or Lender may, at its option, charge any
loan account of a Borrower) any amounts required to compensate Lender, the
Reference Bank or any participant with Lender for any loss (including loss of
anticipated profits), cost or expense incurred by such person, as a result of
the conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of
the foregoing.
(d) Interest shall be payable by Borrowers to Lender monthly in arrears not
later than the first day of each calendar month and shall be calculated on the
basis of a three hundred sixty (360) day year and actual days elapsed. The
interest rate on Prime Rate Loans shall increase or decrease by an amount
equal to each increase or decrease in the Prime Rate effective on the first
day of the month after any change in such Prime Rate is announced based on the
Prime Rate in effect on the last day of the month in which any such change
occurs. In no event shall charges constituting interest payable by Borrowers
to Lender exceed the maximum amount or the rate permitted under any applicable
law or regulation, and if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision shall be
deemed amended to conform thereto.
3.2 Closing Fee. Borrowers shall pay to Lender as a closing fee the amount
of $700,000, which shall be fully earned and payable by Borrowers as of the
date hereof.
3.3 Syndication Fee. Borrowers shall pay to Lender as a syndication fee the
amount of $350,000, which shall be fully earned and payable by Borrowers as of
the date hereof.
3.4 Servicing Fee. Borrowers shall pay to Lender monthly a servicing fee in
an amount equal to $5,000 in respect of Lender's services for each month (or
part thereof) while this Agreement remains in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be fully
earned as of and payable in advance on the date hereof and on the first day of
each such month hereafter.
3.5 Unused Line Fee. Borrowers shall pay to Lender monthly an unused line
fee at a rate equal to three-eighths (3/8%) percent per annum calculated upon
the amount by which the Maximum Credit exceeds the average daily principal
balance of the outstanding Loans and Letter of Credit Accommodations during
the immediately preceding month (or part thereof) while this Agreement is in
effect and for so long thereafter as any of the Obligations are outstanding,
which fee shall be payable on the first day of each month in arrears.
3.6 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein, all Eurodollar
Rate Loans shall, upon notice by Lender to Huntco or any Borrower, convert to
Prime Rate Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof) shall either (A)
make it unlawful for Lender, Reference Bank or any participant to make or
maintain Eurodollar Rate Loans or to comply with the terms hereof in
connection with the Eurodollar Rate Loans, or (B) shall result in the increase
in the costs to Lender, Reference Bank or any participant of making or
maintaining any Eurodollar Rate Loans by an amount reasonably deemed by Lender
to be material, or (C) reduce the amounts received or receivable by Lender in
respect thereof, by an amount reasonably deemed by Lender to be material or
(ii) the cost to Lender, Reference Bank or any participant of making or
maintaining any Eurodollar Rate Loans shall otherwise increase by an amount
reasonably deemed by Lender to be material. Borrowers shall pay to Lender,
upon demand by Lender (or Lender may, at its option, charge any loan account
of a Borrower) any amounts required to compensate Lender, the Reference Bank
or any participant with Lender for any loss (including loss of anticipated
profits), cost or expense incurred by such person as a result of the
foregoing, including, without limitation, any such loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by such person to make or maintain the Eurodollar Rate Loans or
any portion thereof. A certificate of Lender setting forth the basis for the
determination of such amount necessary to compensate Lender as aforesaid shall
be delivered to a Borrower (or Huntco on behalf of Borrowers) and shall be
conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar Rate Loans
are received by Lender other than on the last day of the applicable Interest
Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections under
Section 6.3 or any other payments made with the proceeds of Collateral,
Borrowers shall pay to Lender upon demand by Lender (or Lender may, at its
option, charge any loan account of a Borrower) any amounts required to
compensate Lender, the Reference Bank or any participant with Lender for any
additional loss (including loss of anticipated profits), cost or expense
incurred by such person as a result of such prepayment or payment, including,
without limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such person
to make or maintain such Eurodollar Rate Loans or any portion thereof.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Lender
making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Lender shall have received, in form and substance satisfactory to Lender,
all releases, terminations and such other documents as Lender may request to
evidence and effectuate the termination by the Existing Lenders to Borrowers
of their respective financing arrangements with Borrowers and the termination
and release by it or them, as the case may be, of any interest in and to any
assets and properties of Borrowers and any Obligor, duly authorized, executed
and delivered by it or each of them, including, but not limited to, UCC
termination statements for all UCC financing statements previously filed by it
or any of them or their predecessors, as secured party and any Borrower or
Obligor, as debtor;
(b) Lender shall have received evidence, in form and substance satisfactory
to Lender, that Lender has valid perfected and first priority security
interests in and liens upon the Collateral and any other property which is
intended to be security for the Obligations or the liability of any Obligor in
respect thereof, subject only to the security interests and liens permitted
herein or in the other Financing Agreements;
(c) all requisite corporate action and proceedings in connection with this
Agreement and the other Financing Agreements shall be satisfactory in form and
substance to Lender, and Lender shall have received all information and copies
of all documents, including, without limitation, records of requisite
corporate action and proceedings which Lender may have requested in connection
therewith, such documents where requested by Lender or its counsel to be
certified by appropriate corporate officers or governmental authorities;
(d) no material adverse change shall have occurred in the assets, business or
prospects of Borrowers since the date of Lender's latest field examination and
no change or event shall have occurred which would impair the ability of any
Borrower or Obligor to perform its obligations hereunder or under any of the
other Financing Agreements to which it is a party or of Lender to enforce the
Obligations or realize upon the Collateral;
(e) Lender shall have completed a field review of the Records and such other
information with respect to the Collateral as Lender may require to determine
the amount of the Loans available to Borrowers (including, without limitation,
current perpetual inventory records and/or roll-forwards of Accounts and
Inventory through the date of closing and test counts of the Inventory in a
manner satisfactory to Lender, together with such supporting documentation as
may be necessary or appropriate, and other documents and information that will
enable Lender to accurately identify and verify the Collateral), the results
of which each case shall be satisfactory to Lender, not more than three (3)
Business Days prior to the date hereof;
(f) Lender shall have received, in form and substance satisfactory to Lender,
all consents, waivers, acknowledgments and other agreements from third persons
which Lender may deem necessary or desirable in order to permit, protect and
perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other
Financing Agreements, including, without limitation, Collateral Access
Agreements;
(g) the aggregate amount of the Excess Availability of Borrowers shall be not
less than $5,000,000 as of the date hereof (calculating Excess Availability
for this purpose without regard to the Maximum Credit), after giving effect to
the initial Loans made or to be made and Letter of Credit Accommodations
issued or to be issued in connection with the initial transactions hereunder;
(h) Lender shall have received, in form and substance satisfactory to Lender,
evidence that all Indebtedness of Borrowers and Guarantors evidenced by or
arising under the Private Notes and the other Private Note Agreements has been
paid and satisfied in full and Borrowers and Guarantors have no other or
further obligations or liabilities thereunder or in connection therewith;
(i) Lender shall have received evidence, in form and substance satisfactory
to Lender, that all Indebtedness of Huntco Steel evidenced by or arising under
the Promissory Note, dated January 30, 1997, issued by Huntco Steel payable to
Huntco Nevada (as assignee of Huntco) has been paid and satisfied in full and
such note marked "paid in full" or "cancelled";
(j) Lender shall have received evidence, in form and substance satisfactory
to Lender, that on or about the date hereof Huntco Nevada shall have
contributed as capital to Huntco Steel such portion of the existing
Indebtedness of Huntco Steel to Huntco Nevada so that after giving effect to
such capital contribution the Net Worth of Huntco Steel is not less than
$10,000,000;
(k) Lender shall have received evidence, in form and substance satisfactory
to Lender, that the lessor and sublessor of the Real Property of Huntco Steel
located in Catoosa, Oklahoma have agreed to extend the current month-to-month
lease with respect thereto for a period of not less than four (4) months after
the date hereof;
(l) Lender shall have received title reports with respect to the Real
Property subject to the Mortgages, in form and substance satisfactory to
Lender;
(m) Lender shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance reasonably satisfactory to Lender, and certificates of
insurance policies and/or endorsements naming Lender as loss payee;
(n) Lender shall have received, in form and substance reasonably satisfactory
to Lender, such opinion letters of counsel(s) to Borrowers and Guarantors with
respect to the Financing Agreements and the security interests and liens of
Lender with respect to the Collateral and such other matters as Lender may
request; and
(o) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to
Lender, in form and substance satisfactory to Lender.
4.2 Conditions Precedent to Blytheville Fixed Asset Availability. Each of
the following is an additional condition precedent to Lender making Loans
and/or providing Letter of Credit Accommodations to Borrowers based on the
Blytheville Fixed Asset Availability as provided in Section 2.1(a)(iv) hereof:
(a) Lender shall have received updated environmental audits of Huntco Steel's
plant located at 0000 Xxxxx Xxxxxx Xxxx 0000, Xxxxxxxxxxx, Xxxxxxxx conducted
by an independent environmental engineering firm acceptable to Lender, and in
form, scope and methodology satisfactory to Lender, confirming (i) Huntco
Steel is in compliance with all material applicable Environmental Laws and
(ii) the absence of any material environmental problems;
(b) Lender shall have received, in form and substance satisfactory to Lender,
a valid and effective title insurance policy issued by a company and agent
reasonably acceptable to Lender (i) insuring the priority, amount and
sufficiency of the Blytheville Mortgage, (ii) insuring against matters that
would be disclosed by surveys and (iii) containing any legally available
endorsements, assurances or affirmative coverage requested by Lender for
protection of its interests;
(c) Lender shall have a valid and perfected first priority security interest
in and mortgage and lien upon the Real Property of Huntco Steel constituting
Blytheville Collateral, which Real Property shall only be subject to the
security interests and liens permitted herein;
(d) Lender shall have received the Blytheville Mortgage by Huntco Steel in
favor of Lender in form and substance reasonably satisfactory to Lender, duly
authorized, executed and delivered by Huntco Steel;
(e) Lender shall have received, in form and substance satisfactory to Lender,
(i) the Estoppel and Consent Agreement by and among the City, the Blytheville
1992 Bond Trustee, Huntco Steel and Lender in connection with the Blytheville
Mortgage, duly authorized, executed and delivered by the City, the Blytheville
1992 Bond Trustee and Huntco Steel and (ii) the Estoppel and Consent Agreement
by and among the City, the Blytheville Subordinate Bond Trustee, Huntco Steel,
Huntco Nevada in its capacity as owner and holder of the Blytheville
Subordinated Bonds and Lender in connection with the Blytheville Mortgage,
duly authorized, executed and delivered by the City, the Blytheville
Subordinate Bond Trustee, Huntco Steel and Huntco Nevada;
(f) Lender shall have received, in form and substance satisfactory to Lender,
the Intercreditor and Subordination Agreement by and among Huntco Nevada in
its capacity as Blytheville Subordinate Bond Trustee and as holder of the
Blytheville Subordinate Bonds and Lender as acknowledged and agreed to by
Borrowers, duly authorized, executed and delivered by Huntco Nevada and
Borrowers;
(g) Lender shall have received, in form and substance reasonably satisfactory
to Lender, all consents, waivers, acknowledgements and agreements from other
third parties which Lender may deem necessary or desirable in order to permit,
protect and perfect the mortgage and liens upon, and security interests of
Lender in the Blytheville Collateral and related assets subject to the
Mortgage with respect thereto;
(h) Lender shall have received, in form and substance reasonably satisfactory
to Lender, evidence that the execution, delivery and performance by Huntco
Steel of the Blytheville Mortgage and compliance with the provisions thereof
does not violate and will not violate any law or regulation or any order or
decree of any court or Governmental Authority in any respect, or does not and
will not conflict with or result in the breach of, or constitute a default in
any respect under any mortgage, deed of trust, security agreement, agreement
or instrument to which any Borrower or Guarantor is a party or may be bound,
and or does not or will not violate any provision of the Certificate of
Incorporation or By-Laws of any Borrower or Guarantor;
(i) Lender shall have received, in form and substance reasonably satisfactory
to Lender, such opinion letters of Arkansas counsel to Lender with respect to
the Blytheville Mortgage and such other matters with respect thereto as Lender
may request; and
(j) each of the foregoing conditions set forth in this Section 4.2 shall have
been satisfied by no later than July 15, 1999.
4.3 Conditions Precedent to All Loans and Letter of Credit Accommodations.
Each of the following is an additional condition precedent to Lender making
Loans and/or providing Letter of Credit Accommodations to Borrowers, including
the initial Loans and Letter of Credit Accommodations and any future Loans and
Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in the other
Financing Agreements shall be true and correct in all material respects with
the same effect as though such representations and warranties had been made on
and as of the date of the making of each such Loan or providing each such
Letter of Credit Accommodation and after giving effect thereto, except to the
extent that such representations and warranties expressly relate solely to an
earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any Governmental
Authority shall exist, and no action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any
arbitrator or Governmental Authority, which (i) purports to enjoin, prohibit,
restrain or otherwise affect (A) the making of the Loans or providing the
Letter of Credit Accommodations, or (B) the consummation of the transactions
contemplated pursuant to the terms hereof or the other Financing Agreements or
(ii) has or could reasonably be expected to have a material adverse effect on
the assets, business or prospects of any Borrower or Obligor or would impair
the ability of any Borrower or Obligor to perform its obligations hereunder or
under any of the other Financing Agreements or of Lender to enforce any
Obligations or realize upon any of the Collateral; and
(c) no Event of Default and no act, condition or event which, with notice or
passage of time or both, would constitute an Event of Default, shall exist or
have occurred and be continuing on and as of the date of the making of such
Loan or providing each such Letter of Credit Accommodation and after giving
effect thereto.
SETION 5. GRANT OF SECURITY INTEREST
5.1 To secure payment and performance of all Obligations, each Borrower
hereby grants to Lender, a continuing security interest in, a lien upon, and a
right of set off against, and hereby assigns to Lender as security, the
following property and interests of such Borrower, whether now owned or
hereafter acquired or existing, and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by Lender, collectively, the "Collateral"):
(a) Accounts;
(b) all present and future contract rights, general intangibles (including
tax and duty refunds, registered and unregistered patents, trademarks, service
marks, copyrights, trade names, applications for the foregoing, trade secrets,
goodwill, processes, drawings, blueprints, customer lists, licenses, whether
as licensor or licensee, chooses in action and other claims and existing and
future leasehold interests in equipment, real estate and fixtures), chattel
paper, documents, instruments, investment property, letters of credit,
bankers' acceptances and guaranties;
(c) all present and future monies, securities and other investment property,
credit balances, deposits, deposit accounts and other property of such
Borrower now or hereafter held or received by or in transit to Lender or its
Affiliates or at any other depository or other institution from or for the
account of such Borrower whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Accounts and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of
an unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Accounts or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(d) Inventory;
(e) Equipment;
(f) Records; and
(g) all products and proceeds of the foregoing, in any form, including
insurance proceeds and any claims against third parties for loss or damage to
or destruction of any or all of the foregoing.
5.2 Notwithstanding anything to the contrary contained in Section 5.1 above,
the types or items of Collateral described in such Section shall not include
any Equipment which is, or at the time of a Borrower's acquisition thereof
shall be, subject to a purchase money mortgage or other purchase money lien or
security interest (including capitalized or finance leases) permitted under
Section 9.8 hereof if: (a) the valid grant of a security interest or lien to
Lender in such item of Equipment is prohibited by the terms of the agreement
between such Borrower and the holder of such purchase money mortgage or other
purchase money lien or security interest or under applicable law and such
prohibition has not been or is not waived, or the consent of the holder of the
purchase money mortgage or other purchase money lien or security interest has
not been or is not otherwise obtained, or under applicable law such
prohibition cannot be waived and (b) the purchase money mortgage or other
purchase money lien or security interest on such item of Equipment is or shall
become valid and perfected.
5.3 Notwithstanding anything to the contrary contained in Section 5.1 above,
the types or items of Collateral described in such Section shall not include
any rights or interest in any contract, lease, permit, license, charter or
license agreement covering real or personal property of a Borrower, as such,
if under the terms of such contract, lease, permit, license, charter or
license agreement, or applicable law with respect thereto, the valid grant of
a security interest or lien therein to Lender is prohibited and such
prohibition has not been or is not waived or the consent of the other party to
such contract, lease, permit, license, charter or license agreement has not
been or is not otherwise obtained; provided, that, the foregoing exclusion
shall in no way be construed (a) to apply if any such prohibition is
unenforceable under Section 9-318 of the UCC or other applicable law or (b) so
as to limit, impair or otherwise affect Lender's unconditional continuing
security interests in and liens upon any rights or interests of such Borrower
in or to monies due or to become due under any such contract, lease, permit,
license, charter or license agreement (including any Accounts).
5.4 Notwithstanding anything to the contrary contained in Section 5.1 above,
the types or items of Collateral described in such Section shall not include
the Capital Stock of HSIA owned by Huntco Steel.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Lender shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all
payments made by or on behalf of Borrowers and (c) all other appropriate
debits and credits as provided in this Agreement, including, without
limitation, fees, charges, costs, expenses and interest. All entries in the
loan account(s) shall be made in accordance with Lender's customary practices
as in effect from time to time.
6.2 Statements. Lender shall render to Huntco, as agent for Borrowers, each
month a statement setting forth the balance in each Borrower's loan account(s)
maintained by Lender for Borrowers pursuant to the provisions of this
Agreement, including principal, interest, fees, costs and expenses. Each such
statement shall be subject to subsequent adjustment by Lender but shall be
considered correct and deemed accepted by Borrowers and conclusively binding
upon Borrowers as an account stated except to the extent that Lender receives
a written notice from Borrowers of any specific exceptions of Borrowers
thereto within thirty (30) days after the date such statement has been mailed
by Lender. Until such time as Lender shall have rendered to Huntco a written
statement as provided above, the balance in a Borrower's loan account(s) shall
be presumptive evidence of the amounts due and owing to Lender by such
Borrower, absent manifest error.
6.3 Collection of Accounts.
(a) Borrowers shall establish and maintain, at their expense, blocked
accounts or lockboxes and related blocked accounts (in either case, "Blocked
Accounts"), as Lender may specify, with such banks as are acceptable to Lender
into which Borrowers shall promptly deposit and direct its account debtors to
directly remit all payments on Accounts and all payments constituting proceeds
of Inventory or other Collateral in the identical form in which such payments
are made, whether by cash, check or other manner. The banks at which the
Blocked Accounts are established shall enter into an agreement, in form and
substance satisfactory to Lender, providing that all items received or
deposited in the Blocked Accounts are the property of Lender, that the
depository bank has no lien upon, or right to setoff against, the Blocked
Accounts, the items received for deposit therein, or the funds from time to
time on deposit therein and that the depository bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis, all funds received
or deposited into the Blocked Accounts to such bank account of Lender as
Lender may from time to time designate for such purpose ("Payment Account").
Borrowers agree that all payments made to such Blocked Accounts or other funds
received and collected by Lender, whether on the Accounts or as proceeds of
Inventory or other Collateral or otherwise shall be the property of Lender.
(b) For purposes of calculating the amount of the Loans available to
Borrowers, such payments will be applied (conditional upon final collection)
to the Obligations on the Business Day of receipt by Lender of immediately
available funds in the Payment Account provided such payments and notice
thereof are received in accordance with Lender's usual and customary practices
as in effect from time to time and within sufficient time to credit such
Borrower's loan account on such day, and if not, then on the next Business
Day. For the purposes of calculating interest on the Obligations, such
payments or other funds received will be applied (conditional upon final
collection) to the Obligations one (1) Business Day following the date of
receipt of immediately available funds by Lender in the Payment Account
provided such payments or other funds and notice thereof are received in
accordance with Lender's usual and customary practices as in effect from time
to time and within sufficient time to credit such Borrower's loan account on
such day, and if not, then on the next Business Day.
(c) Each Borrower and all of its directors, employees, agents, Subsidiaries
and other Affiliates shall, acting as trustee for Lender, receive, as the
property of Lender, any monies, checks, notes, drafts or any other payment
relating to and/or proceeds of Accounts or other Collateral which come into
their possession or under their control and immediately upon receipt thereof,
shall deposit or cause the same to be deposited in the Blocked Accounts, or
remit the same or cause the same to be remitted, in kind, to Lender. In no
event shall the same be commingled with a Borrower's own funds. Each Borrower
agrees to reimburse Lender on demand for any amounts owed or paid to any bank
at which a Blocked Account is established or any other bank or person involved
in the transfer of funds to or from the Blocked Accounts arising out of
Lender's payments to or indemnification of such bank or person. The
obligation of Borrowers to reimburse Lender for such amounts pursuant to this
Section 6.3 shall survive the payment of the Obligations and the termination
or non-renewal of this Agreement.
6.4 Payments. All Obligations shall be payable to Lender as provided in
Section 6.3 to the Payment Account or to such other account or place as Lender
may designate from time to time. Lender may apply payments received or
collected from Borrowers or for the account of Borrowers (including, without
limitation, the monetary proceeds of collections or of realization upon any
Collateral) to such of the Obligations, whether or not then due, in such order
and manner as Lender determines, provided, that, (a) all such payments shall
be applied to Obligations which are then due and payable before being applied
to pay any Obligations which are not then due and payable, (b) all such
payments shall be applied to Prime Rate Loans before being applied to
Eurodollar Rate Loans. At Lender's option, all principal, interest, fees,
costs, expenses and other charges provided for in this Agreement or the other
Financing Agreements may be charged directly to the loan account(s) of
Borrowers. Borrowers shall make all payments to Lender on the Obligations
free and clear of, and without deduction or withholding for or on account of,
any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees,
deductions, withholding, restrictions or conditions of any kind. If after
receipt of any payment of, or proceeds of Collateral applied to the payment
of, any of the Obligations, Lender is required to surrender or return such
payment or proceeds to any Person for any reason, then the Obligations
intended to be satisfied by such payment or proceeds shall be reinstated and
continue and this Agreement shall continue in full force and effect as if such
payment or proceeds had not been received by Lender. Borrowers shall be
liable to pay to Lender, and do hereby indemnify and hold Lender harmless for,
the amount of any payments or proceeds surrendered or returned. This Section
6.4 shall remain effective notwithstanding any contrary action which may be
taken by Lender in reliance upon such payment or proceeds. This Section 6.4
shall survive the payment of the Obligations and the termination or non-
renewal of this Agreement.
6.5 Authorization to Make Loans. Lender is authorized to make the Loans and
provide the Letter of Credit Accommodations based upon telephonic or other
instructions received from anyone purporting to be one of the officers of
Huntco or any Borrower listed on Schedule 6.5 hereof or other authorized
person or, at the discretion of Lender, if such Loans are necessary to satisfy
any Obligations. All requests for Loans or Letter of Credit Accommodations
hereunder shall specify the date on which the requested advance is to be made
or Letter of Credit Accommodations established (which day shall be a Business
Day) and the amount of the requested Loan. Requests received after 11:30 a.m.
Chicago time on any day shall be deemed to have been made as of the opening of
business on the immediately following Business Day. All Loans and Letter of
Credit Accommodations under this Agreement shall be conclusively presumed to
have been made to, and at the request of and for the benefit of, Borrowers
when deposited to the credit of any Borrower or otherwise disbursed or
established in accordance with the instructions of any Borrower (or its agent)
or in accordance with the terms and conditions of this Agreement.
6.6 Appointment of Agent for Requesting Loans and Receipts of Loans and
Statements.
(a) Each Borrower hereby irrevocably appoints and constitutes Huntco as its
agent to request and receive Loans and Letter of Credit Accommodations
pursuant to the Agreement and the other Financing Agreements from Lender in
the name or on behalf of such Borrower. Lender may disburse the Loans to such
bank account of a Borrower or otherwise make such Loans to a Borrower and
provide such Letter of Credit Accommodations to a Borrower as Huntco may
designate or direct, without notice to any other Borrower or Obligor.
(b) Huntco hereby accepts the appointment by Borrowers as the agent of
Borrowers pursuant to Section 6.6(a) hereof. Huntco shall ensure that the
disbursement of any Loans to each Borrower requested by or paid to Huntco or
the issuance of any Letter of Credit Accommodations for a Borrower hereunder
shall be paid to or for the account of such Borrower.
(c) Each Borrower hereby irrevocably appoints and constitutes Huntco as its
agent to receive statements on account and all other notices from Lender with
respect to the Obligations or otherwise under or in connection with this
Agreement and the other Financing Agreements.
(d) No purported termination of the appointment of Huntco as agent as
aforesaid shall be effective, except after ten (10) days prior written notice
to Lender.
6.7 Use of Proceeds. Borrowers shall use the initial proceeds of the Loans
provided by Lender to Borrowers hereunder only for: (a) payments to each of
the persons listed in the disbursement direction letter furnished by Borrowers
to Lender on or about the date hereof and (b) costs, expenses and fees in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Financing Agreements. All other Loans made or Letter
of Credit Accommodations provided by Lender to Borrowers pursuant to the
provisions hereof shall be used by Borrowers only for general operating,
working capital and other proper corporate purposes of Borrowers and
Guarantors not otherwise prohibited by the terms hereof. None of the proceeds
will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security or for the purposes of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the Loans to be
considered a "purpose credit" within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting. Borrowers shall provide Lender with the following
documents in a form satisfactory to Lender: (a) on a weekly basis or more
frequently as Lender may request, (i) a schedule of sales made, credits issued
and cash received and (ii) perpetual inventory reports by category and
location; (b) on a monthly basis or more frequently as Lender may request, (i)
agings of accounts payable and (ii) agings of accounts receivable, (c) upon
Lender's reasonable request, (i) copies of customer statements and credit
memos, remittance advices and reports, and copies of deposit slips and bank
statements, (ii) copies of shipping and delivery documents, and (iii) copies
of purchase orders, invoices and delivery documents for Inventory and
Equipment acquired by Borrowers; and (d) such other reports as to the
Collateral as Lender shall request from time to time. If any of Borrower's or
Guarantor's records or reports of the Collateral are prepared or maintained by
an accounting service, contractor, shipper or other agent, each Borrower
hereby irrevocably authorizes such service, contractor, shipper or agent to
deliver such records, reports, and related documents to Lender and to follow
Lender's instructions with respect to further services at any time that an
Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Each Borrower shall notify Lender promptly of: (i) any material delay in
such Borrower's performance of any of its obligations to any material account
debtor or the assertion of any material claims, offsets, defenses or
counterclaims by any material account debtor, or any material disputes with
material account debtors, or any settlement, adjustment or compromise thereof,
(ii) all material adverse information relating to the financial condition of
any material account debtor and (iii) any event or circumstance which, to such
Borrower's knowledge would cause Lender to consider any then existing Accounts
as no longer constituting Eligible Accounts. No credit, discount, allowance
or extension or agreement for any of the foregoing shall be granted to any
account debtor without Lender's consent, except in the ordinary course of such
Borrower's business in accordance with practices and policies previously
disclosed in writing to Lender. So long as no Event of Default exists or has
occurred and is continuing, each Borrower shall settle, adjust or compromise
any claim, offset, counterclaim or dispute with any account debtor. At any
time that an Event of Default exists or has occurred, Lender shall, at its
option, have the exclusive right to settle, adjust or compromise any claim,
offset, counterclaim or dispute with account debtors or grant any credits,
discounts or allowances.
(b) Without limiting the obligation of Borrowers to deliver any other
information to Lender, Borrowers shall promptly report to Lender any return of
Inventory by any one account debtor if the Inventory so returned in such case
has a value in excess of $500,000. At any time that Inventory is returned,
reclaimed or repossessed, the Account (or portion thereof) which arose from
the sale of such returned, reclaimed or repossessed Inventory shall not be
deemed an Eligible Account. In the event any account debtor returns Inventory
when an Event of Default exists or has occurred and is continuing, Borrowers
shall, upon Lender's request, (i) hold the returned Inventory in trust for
Lender, (ii) segregate all returned Inventory from all of its other property,
(iii) dispose of the returned Inventory solely according to Lender's
instructions, and (iv) not issue any credits, discounts or allowances with
respect thereto without Lender's prior written consent.
(c) With respect to each Account: (i) the amounts shown on any invoice
delivered to Lender or schedule thereof delivered to Lender shall be true and
complete, (ii) no payments shall be made thereon except payments immediately
delivered to Lender pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall
be granted to any account debtor except as reported to Lender in accordance
with this Agreement and except for credits, discounts, allowances or
extensions made or given in the ordinary course of business of Borrowers in
accordance with practices and policies previously disclosed to Lender, (iv)
there shall be no setoffs, deductions, contrasts, defenses, counterclaims or
disputes existing or asserted with respect thereto except as reported to
Lender in accordance with the terms of this Agreement, (v) none of the
transactions giving rise thereto will violate any applicable Federal, State or
local laws or regulations, all documentation relating thereto will be legally
sufficient under such laws and regulations and all such documentation will be
legally enforceable in accordance with its terms.
(d) Lender shall have the right at any time or times, in Lender's name or in
the name of a nominee of Lender, to verify the validity, amount or any other
matter relating to any Account or other Collateral, by mail, telephone,
facsimile transmission or otherwise.
(e) Each Borrower shall deliver or cause to be delivered to Lender,
immediately upon such Borrower's receipt thereof, with appropriate endorsement
and assignment, with full recourse to such Borrower, all chattel paper and
instruments which such Borrower now owns or may at any time acquire prior to
an Event of Default which is in the amount of more than $250,000 as to any
instrument issued to such Borrower by an employee and $100,000 as to all
chattel paper and other instruments (so long as the aggregate amount of such
chattel paper and other instruments do not exceed $250,000) and after an Event
of Default, or prior to an Event of Default if the aggregate amount thereof
exceeds $250,000 as to all chattel paper and instruments other than those
issued by an employee (and if the aggregate amount of instruments issued by
employees exceeds $500,000), regardless of the amount thereof, except as
Lender may otherwise agree.
(f) Lender may, at any time or times that an Event of Default exists or has
occurred, (i) notify any or all account debtors that the Accounts have been
assigned to Lender and that Lender has a security interest therein and Lender
may direct any or all account debtors to make payment of Accounts directly to
Lender, (ii) extend the time of payment of, compromise, settle or adjust for
cash, credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Accounts or other obligations included in the
Collateral and thereby discharge or release the account debtor or any other
party or parties in any way liable for payment thereof without affecting any
of the Obligations, (iii) demand, collect or enforce payment of any Accounts
or such other obligations, but without any duty to do so, and Lender shall not
be liable for its failure to collect or enforce the payment thereof nor for
the negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Lender may deem reasonably necessary or desirable for
the protection of its interests. At any time that an Event of Default exists
or has occurred, at Lender's request, all invoices and statements sent to any
account debtor shall state that the Accounts and such other obligations have
been assigned to Lender and are payable directly and only to Lender and each
Borrower shall deliver to Lender such originals of documents evidencing the
sale and delivery of goods or the performance of services giving rise to any
Accounts as Lender may reasonably require.
7.3 Inventory Covenants. With respect to the Inventory: (a) each Borrower
shall at all times maintain inventory records reasonably satisfactory to
Lender, keeping in all material respects correct and accurate records
itemizing and describing the kind, type, quality and quantity of Inventory,
the cost therefor and daily withdrawals therefrom and additions thereto; (b)
each Borrower shall conduct a physical count of the Inventory of such Borrower
at least once each year, but at any time or times as Lender may request on or
after an Event of Default, and promptly following such physical inventory
shall supply Lender with a report in the form and with such specificity as may
be reasonably satisfactory to Lender concerning such physical count; (c) each
Borrower shall not remove any Inventory from the locations set forth or
permitted herein, without the prior written consent of Lender, except for
sales of Inventory in the ordinary course of such Borrower's business and
except to move Inventory directly from one location of such Borrower set forth
or permitted herein to another such location of such Borrower or the other
Borrower (including any locations of account debtors, consignees or processors
to the extent permitted hereunder), so long as a financing statement between
Lender, as secured party and such other Borrower, as debtor, covering such
Inventory has previously been recorded in the appropriate governmental offices
of the jurisdiction of such location); (d) upon Lender's request, Borrowers
shall at Lender's expense, at any time prior to an Event of Default, and at
Borrower's expense, at any time or times as Lender may request on or after an
Event of Default, deliver or cause to be delivered to Lender written reports
or appraisals as to the Inventory in form, scope and methodology acceptable to
Lender and by an appraiser acceptable to Lender, addressed to Lender and upon
which Lender is expressly permitted to rely; (e) each Borrower shall produce,
use, store and maintain the Inventory, with all reasonable care and caution
and in accordance with applicable standards of any insurance and in conformity
with applicable laws (including, but not limited to, the requirements of the
Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto); (f) each Borrower assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; (g) each Borrower shall not sell
Inventory to any customer on approval, or any other basis which entitles the
customer to return or may obligate such Borrower to repurchase such Inventory;
(h) each Borrower shall keep the Inventory in good and marketable condition;
and (i) each Borrower shall not, without prior written notice to Lender,
acquire or accept any Inventory on consignment or approval unless Borrower has
separately identified and reported such Inventory as consigned Inventory in a
form satisfactory to Lender.
7.4 Equipment and Real Property Covenants. With respect to the Equipment and
Real Property: (a) upon Lender's request, Borrowers shall, at Lender's
expense, at any time or times as Lender may request on or before an Event of
Default and at Borrowers' expense on and after an Event of Default, deliver or
cause to be delivered to Lender written reports or appraisals as to the
Equipment and the Real Property in form, scope and methodology acceptable to
Lender and by an appraiser acceptable to Lender, addressed to Lender and upon
which Lender is expressly permitted to rely; (b) in the event that the
aggregate amount of the Excess Availability of Borrowers (calculated for this
purpose without regard to the Maximum Credit) for any five (5) consecutive day
period shall be less than $5,000,000, or at any time on or after an Event of
Default, or act, condition or event which with notice or passage of time or
both would constitute an Event of Default, promptly upon Lender's request, (i)
Borrowers shall deliver to, or cause to be delivered, to Lender updated,
current environmental audits of Borrowers' plants and the Real Property
conducted by an independent environmental engineering firm acceptable to
Lender, and in form, scope and methodology satisfactory to Lender, confirming
(A) Borrowers are in compliance with all material applicable Environmental
Laws and (B) the absence of any material environmental problems, (ii)
Borrowers shall deliver, or cause to be delivered to, Lender, in form and
substance satisfactory to Lender, a valid and effective title insurance policy
issued by a company and agent acceptable to Lender (A) insuring the priority,
amount and sufficiency of the Mortgages, (B) insuring against matters that
would be disclosed by surveys, (iii) containing any legally available
endorsements, assurances or affirmative coverage reasonably requested by
Lender for protection of its interests, (iv) Borrowers shall deliver, or cause
to be delivered to Lender, current ALTA certified surveys with respect to the
Real Property of Borrowers by acceptable registered land surveyors certified
by such surveyor to Lender and the title insurance company indicating length
and bearing of exterior boundary lines, measurements of the distance between
buildings and boundary lines, locations of fences, drives, utility and other
easements, encroachments, any existing buildings, ingress and egress, and such
other items as Lender requires and with a legal description, and (v) within
ten (10) days after the date of delivery of such surveys, if the surveys would
require a change in the property description attached to any of the Mortgages
and/or the fixture filings with respect to the Real Property of Borrowers,
Borrowers shall execute and deliver to Lender amendments to the appropriate
Mortgages and/or fixture filings and all necessary title insurance policy
endorsement(s) which would be required to reflect such changes in property
description, each in form and substance satisfactory to Lender; (c) each
Borrower shall keep the Equipment in good order, repair, running and
marketable condition (ordinary wear and tear excepted); (d) each Borrower
shall use the Equipment and Real Property with all reasonable care and caution
and in accordance with applicable standards of any insurance and in conformity
with all applicable laws; (e) the Equipment is and shall be used in Borrowers'
businesses and not for personal, family, household or farming use; (f) each
Borrower shall not remove any Equipment from the locations set forth or
permitted herein, except to the extent necessary to have any Equipment
repaired or maintained in the ordinary course of the business of such Borrower
or to move Equipment directly from one location of a Borrower set forth or
permitted herein to another such location of such or the other Borrower (so
long as a financing statement between Lender, as secured party, and such other
Borrower, as debtor, covering such Equipment has previously been recorded in
the appropriate governmental offices of the jurisdiction of such location) and
except for the movement of motor vehicles used by or for the benefit of such
Borrower in the ordinary course of business; and (g) each Borrower assumes all
responsibility and liability arising from the use of the Equipment and Real
Property.
7.5 Right to Cure. Lender may, at its option, after prior notice to Huntco,
(a) cure any default by a Borrower under any agreement with a third party or
pay or bond on appeal any judgment entered against any Borrower, (b) discharge
taxes, liens, security interests or other encumbrances at any time levied on
or existing with respect to the Collateral and (c) pay any amount, incur any
expense or perform any act which, in Lender's judgment, is necessary or
appropriate to preserve, protect, insure or maintain the Collateral and the
rights of Lender with respect thereto. Lender may add any amounts so expended
to the Obligations and charge any Borrower's account therefor, such amounts to
be repayable by Borrowers on demand. Lender shall be under no obligation to
effect such cure, payment or bonding and shall not, by doing so, be deemed to
have assumed any obligation or liability of Borrowers. Any payment made or
other action taken by Lender under this Section shall be without prejudice to
any right to assert an Event of Default hereunder and to proceed accordingly.
7.6 Power of Attorney. Each Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as such Borrower's true
and lawful attorney-in-fact, and authorizes Lender, in such Borrower's or
Lender's name, to: (a) at any time an Event of Default exists or has occurred
and is continuing (i) demand payment on Accounts or other proceeds of
Inventory or other Collateral, (ii) enforce payment of Accounts by legal
proceedings or otherwise, (iii) exercise all of such Borrower's rights and
remedies to collect any Account or other Collateral, (iv) sell or assign any
Account upon such terms, for such amount and at such time or times as the
Lender deems advisable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Account, (vii) prepare, file and sign
such Borrower's name on any proof of claim in bankruptcy or other similar
document against an account debtor, (viii) notify the post office authorities
to change the address for delivery of such Borrower's mail to an address
designated by Lender, and open and dispose of all mail addressed to such
Borrower, and (ix) do all acts and things which are necessary, in Lender's
determination, to fulfill such Borrower's obligations under this Agreement and
the other Financing Agreements and (b) at any time to (i) take control in any
manner of any item of payment or proceeds thereof constituting Collateral or
proceeds thereof received in or for deposit in the Blocked Accounts or
otherwise received by Lender, (ii) have access to any lockbox or postal box
into which remittances from customers or other payments in respect of Accounts
or other Collateral are deposited, (iii) endorse such Borrower's name upon any
items of payment or proceeds thereof and deposit the same in the Lender's
account for application to the Obligations, (iv) endorse such Borrower's name
upon any chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Account or any goods pertaining thereto or any other
Collateral, (v) sign such Borrower's name on any verification of Accounts and
notices thereof to account debtors and (vi) execute in such Borrower's name
and file any UCC financing statements or amendments thereto, provided, that,
in the event Lender exercises its rights under this clause (vi), Lender shall
provide a copy of such financing statement or amendment thereto to Huntco.
Each Borrower hereby releases Lender and its officers, employees and designees
from any liabilities arising from any act or acts under this power of attorney
and in furtherance thereof, whether of omission or commission, except as a
result of Lender's own gross negligence or willful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction.
7.7 Access to Premises. From time to time as requested by Lender, (a) Lender
or its designee shall have complete access to all premises of Borrowers during
normal business hours and after not less than three (3) days' prior notice to
Borrowers prior to an Event of Default, or at any time and without notice to
Borrowers if an Event of Default exists or has occurred, for the purposes of
inspecting, verifying and auditing the Collateral and all of such Borrower's
books and records, including, without limitation, the Records, and (b) each
Borrower shall promptly furnish to Lender such copies of such books and
records or extracts therefrom as Lender may request, and (c) Lender or its
designee may use during normal business hours such of each Borrower's
personnel, equipment, supplies and premises as may be reasonably necessary for
the foregoing and if an Event of Default exists or has occurred and is
continuing for the collection of Accounts and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrowers and Guarantors hereby jointly and severally represent and warrant to
Lender the following (which shall survive the execution and delivery of this
Agreement), the truth and accuracy of which are a continuing condition of the
making of Loans and providing Letter of Credit Accommodations by Lender to
Borrowers:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Each Borrower
and Guarantor is a corporation duly organized and in good standing under the
laws of its state of incorporation and is duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions where
the nature and extent of the business transacted by it or the ownership of
assets makes such qualification necessary and where the failure to so qualify
would have a material adverse effect on such Borrower's or Guarantor's
financial condition, results of operation or business or the rights of Lender
hereunder or under any of the other Financing Agreements or the rights of
Lender in or to any of the Collateral. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder are all within each
Borrower's and Guarantor's corporate powers, have been duly authorized and are
not in contravention of law or the terms of such Borrower's or Guarantor's
certificate of incorporation, by-laws, or other organizational documentation,
or any indenture, agreement or undertaking to which such Borrower or Guarantor
is a party or by which such Borrower or Guarantor or its property are bound.
This Agreement and the other Financing Agreements to which any Borrower or
Guarantor is a party constitute legal, valid and binding obligations of such
Borrower and Guarantor enforceable in accordance with their respective terms
except as such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar laws of general applicability affecting
the enforcement of creditors' rights and (b) the application of general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law). Borrowers and Guarantors do not have
any Subsidiaries except as set forth on the Information Certificate.
8.2 Financial Statements; No Material Adverse Change. All historical
financial statements relating to Borrowers and Guarantors which have been or
may hereafter be delivered by Borrowers or Guarantors to Lender have been
prepared in accordance with GAAP (except as to any interim financial
statements, to the extent such statements are subject to normal year-end
adjustments and do not include any notes), and fairly present the financial
condition and the results of operation of Borrowers as at the dates and for
the periods set forth therein. Except as disclosed in any interim financial
statements furnished by Borrowers and Guarantors to Lender prior to the date
of this Agreement, there has been no material adverse change in the assets,
liabilities, prospects and condition, financial or otherwise of any Borrower
or Guarantor, since the date of the most recent audited financial statements
furnished by Borrowers or Guarantors to Lender prior to the date of this
Agreement.
8.3 Chief Executive Office; Collateral Locations. The chief executive office
of each Borrower and Guarantor and each Borrower's and Guarantor's Records
concerning Accounts are located only at the addresses set forth below and its
only other places of business and the only other locations of Collateral, if
any, are the addresses set forth in the Information Certificate, subject to
the right of each Borrower and Guarantor to establish new locations in
accordance with Section 9.2 below. The Information Certificate correctly
identifies any of such locations which are not owned by Borrowers or
Guarantors and sets forth the owners and/or operators thereof and to the best
of each Borrower's knowledge, the holders of any mortgages on such locations.
8.4 Priority of Liens; Title to Properties. The security interests and liens
granted to Lender hereunder and under the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral (other than motor vehicles for which compliance with
the applicable state certificate of title statute is required in order to
perfect a security interest and other than any aircraft or related assets
which require filings with the Federal Aviation Administration in order to
perfect a security interest) subject only to the liens indicated on Schedule
8.4 hereto and the other liens permitted under Section 9.8 hereof. Each
Borrower and Guarantor has good and marketable title to all of its properties
and assets subject to no liens, mortgages, pledges, security interests,
encumbrances or charges of any kind, except those granted to Lender and such
others as are specifically listed on Schedule 8.4 hereto or permitted under
Section 9.8 hereof.
8.5 Tax Returns. Each Borrower and Guarantor has filed, or caused to be
filed, in a timely manner all tax returns, reports and declarations which are
required to be filed by it. All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Each Borrower
and Guarantor has paid or caused to be paid all taxes due and payable or
claimed due and payable in any assessment received by it, except taxes the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to such Borrower or Guarantor and with
respect to which adequate reserves have been set aside on its books. Adequate
provision has been made for the payment of all accrued and unpaid Federal,
State, county, local, foreign and other taxes whether or not yet due and
payable and whether or not disputed.
8.6 Litigation. Except as set forth on the Information Certificates of
Borrowers and Guarantors, there is no present investigation by any
Governmental Authority pending, or to the best of each Borrower's and
Guarantor's knowledge threatened, against or affecting any Borrower or
Guarantor, its assets or business and there is no action, suit, proceeding or
claim by any Person pending, or to the best of each Borrower's and Guarantor's
knowledge threatened, against any Borrower or Guarantor or its assets or
goodwill, or against or affecting any transactions contemplated by this
Agreement, which if adversely determined against such Borrower or Guarantor
would have a Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws. Each Borrower and
Guarantor is not in default in any respect under, or in violation in any
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which it is a party or by which it or any of its assets
are bound where such default or violation would have a Material Adverse
Effect. Each Borrower and Guarantor is in compliance in all respects with all
applicable provisions of laws, rules, regulations, licenses, permits,
approvals and orders of any foreign, Federal, State or local Governmental
Authority where the failure to comply would have a Material Adverse Effect.
8.8 Bank Accounts. All of the deposit accounts, investment accounts or other
accounts in the name of or used by any Borrower or Guarantor maintained at any
bank or other financial institution are set forth on Schedule 8.8 hereto,
subject to the right of each Borrower and Guarantor to establish new accounts
in accordance with Section 9.13 below.
8.9 Environmental Compliance.
(a) Except as set forth on Schedule 8.9 hereto, no Borrower or Guarantor, or
any Subsidiary, has generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time
violates any applicable Environmental Law or any license, permit, certificate,
approval or similar authorization thereunder and the operations of each
Borrower and Guarantor complies in all respects with all Environmental Laws
and all licenses, permits, certificates, approvals and similar authorizations
thereunder where the failure to so comply would have a Material Adverse
Effect.
(b) Except as set forth on Schedule 8.9 hereto, there has been no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any Governmental Authority or any other person nor is any pending or
to the best of each Borrower's and Guarantor's knowledge threatened, with
respect to any non-compliance with or violation of the requirements of any
Environmental Law by any Borrower or Guarantor (or any Subsidiary) or the
release, spill or discharge, threatened or actual, of any Hazardous Material
or the generation, use, storage, treatment, transportation, manufacture,
handling, production or disposal of any Hazardous Materials or any other
environmental, health or safety matter, which affects any Borrower or its
business, operations or assets or any properties at which any Borrower or
Guarantor has transported, stored or disposed of any Hazardous Materials which
would have a Material Adverse Effect.
(c) No Borrower or Guarantor has material liability (contingent or otherwise)
in connection with a release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials. Without limiting the generality of the foregoing, no Borrower or
Guarantor has any material liability with respect to the matters disclosed in
the Phase I Environmental Site Assessment Reports dated March 22, 1999 by
Xxxx, Xxxxx and Associates, Inc. with respect to the Real Property of Huntco
Steel in Blytheville, Arkansas and the Phase I Report by United Agricultural
Services Inc. dated November 17, 1993 with respect to the Real Property of
Huntco Steel in Blytheville, Arkansas.
(d) Each Borrower and Guarantor has all licenses, permits, certificates,
approvals or similar authorizations required to be obtained or filed in
connection with the operations of such Borrower and Guarantor under any
Environmental Law and all of such licenses, permits, certificates, approvals
or similar authorizations are valid and in full force and effect.
8.10 Employee Benefits.
(a) No Borrower or Guarantor has engaged in any transaction in connection
with which any Borrower, Guarantor or its ERISA Affiliates could be subject to
either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax
imposed by Section 4975 of the Code, including any accumulated funding
deficiency described in Section 8.10(c) hereof and any deficiency with respect
to vested accrued benefits described in Section 8.10(d) hereof.
(b) No liability to the Pension Benefit Guaranty Corporation has been or is
expected by any Borrower or Guarantor to be incurred with respect to any
employee benefit plan of any Borrower or Guarantor or its ERISA Affiliates.
There has been no reportable event (within the meaning of Section 4043(b) of
ERISA) or any other event or condition with respect to any employee pension
benefit plan of any Borrower or Guarantor or its ERISA Affiliates which
presents a risk of termination of any such plan by the Pension Benefit
Guaranty Corporation.
(c) Full payment has been made of all amounts which any Borrower or Guarantor
or its ERISA Affiliates is required under Section 302 of ERISA and Section 412
of the Code to have paid under the terms of each employee benefit plan as
contributions to such plan as of the last day of the most recent fiscal year
of such plan ended prior to the date hereof, and no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists with respect to any employee benefit plan,
including any penalty or tax described in Section 8.10(a) hereof and any
deficiency with respect to vested accrued benefits described in Section
8.10(d) hereof.
(d) The current value of all vested accrued benefits under all employee
benefit plans maintained by each Borrower and Guarantor that are subject to
Title IV of ERISA does not exceed the current value of the assets of such
plans allocable to such vested accrued benefits, including any penalty or tax
described in Section 8.10(a) hereof and any accumulated funding deficiency
described in Section 8.10(c) hereof. The terms "current value" and "accrued
benefit" have the meanings specified in ERISA.
(e) No Borrower or Guarantor or any of its ERISA Affiliates is or has ever
been obligated to contribute to any "multiemployer plan" (as such term is
defined in Section 4001(a)(3) of ERISA) that is subject to Title IV of ERISA.
8.11 Capitalization.
(a) Except as a result of transactions permitted under Section 9.7 below, all
of the issued and outstanding: (i) shares of Capital Stock of Huntco Nevada
are directly and beneficially owned and held by Huntco as of the date hereof,
(ii) shares of Capital Stock of Huntco Steel and Midwest are directly and
beneficially owned and held by Huntco Nevada, and (iii) shares of Capital
Stock of HSIA are directly and beneficially owned and held by Huntco Steel,
and in each case all of such shares referred to in clauses (i), (ii) and (iii)
above have been duly authorized and are fully paid and non-assessable, free
and clear of all claims, liens, pledges and encumbrances of any kind, except
as disclosed in writing to Lender.
(b) Each Borrower and Guarantor is solvent and will continue to be solvent
after the creation of the Obligations, the security interests of Lender and
the other transactions contemplated hereunder, is able to pay its debts as
they mature and has (and has reason to believe it will continue to have)
sufficient capital (and not unreasonably small capital) to carry on its
business and all businesses in which it is about to engage. The assets and
properties of each Borrower at a fair valuation and at their present fair
salable value are, and will be, greater than the indebtedness of such
Borrower, and including subordinated and contingent liabilities computed at
the amount which, to the best of Borrowers' knowledge, represents an amount
which can reasonably be expected to become an actual or matured liability.
8.12 Accuracy and Completeness of Information. All information furnished by
or on behalf of any Borrower or Guarantor in writing to Lender in connection
with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby (including, without limitation, all
information on the Information Certificate) is true and correct in all
material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make such
information not misleading. No event or circumstance has occurred which has
had or could reasonably be expected to have a material adverse affect on the
businesses, assets or prospects of any Borrower or Guarantor, which has not
been accurately disclosed to Lender in writing.
8.13 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to
have been made again to Lender on the date of each additional borrowing or
other credit accommodation hereunder, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and
accurate on and as of such earlier date), and shall be conclusively presumed
to have been relied on by Lender regardless of any investigation made or
information possessed by Lender. The representations and warranties set forth
herein shall be cumulative and in addition to any other representations or
warranties which Borrowers and Guarantors shall now or hereafter give, or
cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Each Borrower and Guarantor shall at all times
preserve, renew and keep in full, force and effect its corporate existence
(other than pursuant to a merger of such Borrower or Guarantor with and into
another Borrower or Guarantor to the extent permitted hereunder), and rights
and franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases
and contracts necessary to carry on its business as presently or proposed to
be conducted where the failure to maintain any of the same would have a
Material Adverse Effect. Each Borrower and Guarantor shall give Lender thirty
(30) days prior written notice of any proposed change in its corporate name,
which notice shall set forth the new name and such Borrower or Guarantor shall
deliver to Lender a copy of the amendment to the Certificate of Incorporation
of such Borrower or Guarantor providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation of such Borrower or
Guarantor as soon as it is available.
9.2 New Collateral Locations. Each Borrower and Guarantor may open any new
location within the continental United States provided such Borrower or
Guarantor (a) gives Lender thirty (30) days prior written notice of the
intended opening of any such new location, except, that, Borrowers and
Guarantors shall not be required to give such prior written notice of a new
location of Collateral at any consignee, processor, warehouse, bailee or other
third person, provided, that, (i) no Event of Default, or act, condition or
event which with notice or passage of time or both would constitute an Event
of Default, shall exist or have occurred and be continuing, (ii) the total
amount of Inventory located at all such new locations shall not exceed
$500,000, and (iii) Borrowers and Guarantors shall include such new locations
in the monthly reports provided by Borrowers and Guarantors to Lender in
accordance with Section 9.6 hereof, and (b) executes and delivers, or causes
to be executed and delivered, to Lender such agreements, documents, and
instruments as Lender may deem reasonably necessary or desirable to protect
its interests in the Collateral at such location, including UCC financing
statements.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, at
all times, comply in all material respects with all laws, rules, regulations,
licenses, permits, approvals and orders applicable to it and duly observe all
requirements of any Federal, State or local Governmental Authority, including
ERISA, the Code, the Occupational Safety and Health Act of 1970, as amended,
the Fair Labor Standards Act of 1938, as amended, and all statutes, rules,
regulations, orders, permits and stipulations relating to environmental
pollution and employee health and safety, including all of the Environmental
Laws.
(b) Each Borrower and Guarantor shall establish and maintain, at its expense,
a system to assure and monitor its continued compliance with all Environmental
Laws in all of its operations. Copies of all environmental surveys, audits,
assessments, feasibility studies and results of remedial investigations shall
be promptly furnished, or caused to be furnished, by each Borrower and
Guarantor to Lender. Borrowers and Guarantors shall take, and shall cause any
Subsidiary to take, prompt and appropriate action to respond to any non-
compliance with any of the Environmental Laws and shall regularly report to
Lender on such response.
(c) Borrowers and Guarantors shall give both oral and written notice to
Lender immediately upon a Borrower's or Guarantor's receipt of any notice of,
or a Borrower's or Guarantor's otherwise obtaining knowledge of, (i) the
occurrence of any event involving the release, spill or discharge, threatened
or actual, of any Hazardous Material or (ii) any investigation, proceeding,
complaint, order, directive, claims, citation or notice with respect to: (A)
any non-compliance with or violation of any Environmental Law by any Borrower
or Guarantor or (B) the release, spill or discharge, threatened or actual, of
any Hazardous Material other than as permitted by or in accordance with any
applicable Environmental Laws or (C) the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials other than as permitted by or in accordance with any applicable
Environmental Laws or (D) any other environmental, health or safety matter,
which affects any Borrower or Guarantor or its business, operations or assets
or any properties at which any Borrower or Guarantor transported, stored or
disposed of any Hazardous Materials.
(d) Without limiting the generality of the foregoing, whenever Lender
reasonably determines that there is non-compliance, or any condition which
requires any action by or on behalf of any Borrower or Guarantor in order to
avoid any non-compliance, with any Environmental Law, such Borrower or
Guarantor shall, at Lender's request and the expense of Borrowers: (i) cause
an independent environmental engineer acceptable to Lender to conduct such
tests of the site where such Borrower's or Guarantor's non-compliance or
alleged non-compliance with such Environmental Laws has occurred as to such
non-compliance and prepare and deliver to Lender a report as to such non-
compliance setting forth the results of such tests, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof and (ii) provide to Lender a supplemental report of such
engineer whenever the scope of such non-compliance, or such Borrower's or
Guarantor's response thereto or the estimated costs thereof, shall change in
any material respect.
(e) Each Borrower and Guarantor shall indemnify and hold harmless Lender, its
directors, officers, employees, agents, invitees, representatives, successors
and assigns, from and against any and all losses, claims, damages,
liabilities, costs, and expenses (including attorneys' fees and legal
expenses) directly or indirectly arising out of or attributable to the use,
generation, manufacture, reproduction, storage, release, threatened release,
spill, discharge, disposal or presence of a Hazardous Material, including the
costs of any required or necessary repair, cleanup or other remedial work with
respect to any property of any Borrower or Guarantor and the preparation and
implementation of any closure, remedial or other required plans. All
representations, warranties, covenants and indemnifications in this Section
9.3 shall survive the payment of the Obligations and the termination or non-
renewal of this Agreement.
9.4 Payment of Taxes and Claims. Each Borrower and Guarantor shall, and
shall cause any Subsidiary to, duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to such
Borrower, Guarantor or Subsidiary and with respect to which adequate reserves
have been set aside on its books. Borrowers shall be liable for any tax or
penalties imposed on Lender as a result of the financing arrangements provided
for herein and each Borrower and Guarantor agrees to indemnify and hold Lender
harmless with respect to the foregoing, and to repay to Lender on demand the
amount thereof, and until paid by Borrowers such amount shall be added and
deemed part of the Loans, provided, that, nothing contained herein shall be
construed to require Borrowers or Guarantors to pay any income or franchise
taxes attributable to the income of Lender from any amounts charged or paid
hereunder to Lender. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
9.5 Insurance.
(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, at
all times, maintain with financially sound and reputable insurers insurance
with respect to the Collateral against loss or damage and all other insurance
of the kinds and in the amounts customarily insured against or carried by
corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Lender as to form, amount and insurer. Each
Borrower and Guarantor shall furnish certificates, policies or endorsements to
Lender as Lender shall require as proof of such insurance, and, if any
Borrower or Guarantor fails to do so, Lender is authorized, but not required,
to obtain such insurance at the expense of Borrowers. All policies shall
provide for at least thirty (30) days prior written notice to Lender of any
cancellation or reduction of coverage and that Lender may act as attorney for
any Borrower or Guarantor in obtaining, and at any time an Event of Default
exists or has occurred, adjusting, settling, amending and canceling such
insurance. Each Borrower and Guarantor shall cause Lender to be named as a
loss payee and an additional insured (but without any liability for any
premiums) under such insurance policies and each Borrower and Guarantor shall
obtain non-contributory lender's loss payable endorsements to all insurance
policies in form and substance satisfactory to Lender. Such lender's loss
payable endorsements shall specify that the proceeds of such insurance shall
be payable to Lender as its interests may appear and further specify that
Lender shall be paid regardless of any act or omission by Borrowers or any of
their Affiliates.
(b) At its option, Lender may apply any insurance proceeds received by Lender
at any time to the cost of repairs or replacement of Collateral and/or to
payment of the Obligations, whether or not then due, in any order and in such
manner as Lender may determine or hold such proceeds as cash collateral for
the Obligations, except that notwithstanding anything to the contrary
contained herein, if any of the Equipment or any portion of any building,
structure or improvement on the Real Property of a Borrower is lost,
physically damaged or destroyed, upon the written request of Huntco, Lender
shall hold the net cash proceeds from insurance received by Lender pursuant to
this Section 9.5 as a result of such loss, damage or destruction as cash
collateral and release such cash collateral to Huntco to the extent necessary
for the repair, refurbishing or replacement of such Equipment or building,
structure or improvement, provided, that, all of the following conditions are
satisfied: (i) no Event of Default or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred and be continuing, (ii) the amount of the insurance
proceeds (together with any cash or Cash Equivalents of Borrowers then
available to them for such purpose) are sufficient, in Lender's reasonable
determination, to effect such repair, refurbishing or replacement in a
satisfactory manner and as required hereunder, (iii) such proceeds shall be
used first to repair, refurbish or replace the Collateral so lost, damaged or
destroyed (free and clear of any security interests, liens, claims or
encumbrances), (iv) the insurance carrier shall have waived any right of
subrogation against Borrowers and Guarantors under its policy, (v) the
casualty resulted in a payment of $1,000,000 in insurance proceeds or less,
(vi) such repair, refurbishing or replacement shall be commenced as soon as
reasonably practicable and shall be diligently pursued to satisfactory
completion, (vii) the proceeds shall be disbursed from such cash collateral,
from time to time as needed and/or, at Lender's option, released by Lender
directly to the contractor, subcontractor, materialmen, laborers, engineers,
architects and other persons rendering services or materials to repair,
refurbish or replace the property so lost, damaged or destroyed, (viii) such
repair, refurbishing or replacement can, in the good faith estimate of Lender,
be completed prior to the end of the then current term of this Agreement, and
(ix) the repair, refurbishing or replacement to which the proceeds are applied
shall cause the Equipment, building, structure or improvement so lost, damaged
or destroyed to be of at least equal value and substantially the same
character as prior to such loss, damage or destruction. Upon completion of the
work and payment in full therefor, or upon the failure to commence, or
diligently to continue the work, Lender may, at Lender's option, either apply
the amount of any such proceeds then or thereafter in the possession of Lender
to the payment of the Obligations or hold such proceeds as cash collateral for
the Obligations on terms and conditions reasonably acceptable to Lender and
not release such funds to Borrowers or Guarantors, provided, that, nothing
contained herein shall limit the right of Lender to apply any or all of such
proceeds to the Obligations at any time an Event of Default shall exist or
have occurred and be continuing or at any time with respect to the
establishment of any Availability Reserves.
9.6 Financial Statements and Other Information.
(a) Each Borrower and Guarantor shall keep proper books and records in which
true and complete entries shall be made of all dealings or transactions of or
in relation to the Collateral and the businesses of Borrowers, Guarantors and
their Subsidiaries (if any) in accordance with GAAP and Borrowers and
Guarantors shall furnish or cause to be furnished to Lender: (i) within forty-
five (45) days after the end of each fiscal month, monthly unaudited
consolidated financial statements and unaudited consolidating financial
statements (including in each case balance sheets, statements of income and
loss, statements of cash flow, and statements of shareholders' equity), all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Huntco and its Subsidiaries as of the end of and through
such fiscal month and (ii) within ninety (90) days after the end of each
fiscal year, audited consolidated financial statements and unaudited
consolidating financial statements of Huntco and its Subsidiaries (including
in each case balance sheets, statements of income and loss, statements of cash
flow and statements of shareholders' equity), and the accompanying notes
thereto, all in reasonable detail, fairly presenting the financial position
and the results of the operations of Huntco and its Subsidiaries as of the end
of and for such fiscal year, together with the unqualified opinion of
independent certified public accountants, which accountants shall be an
independent accounting firm selected by Borrowers and reasonably acceptable to
Lender, that such financial statements have been prepared in accordance with
GAAP, and present fairly the results of operations and financial condition of
Borrowers, Guarantors and their Subsidiaries as of the end of and for the
fiscal year then ended. It is acknowledged and agreed that delivery to Lender
pursuant to Section 9.6(c) hereof of copies of Huntco's Annual Reports on Form
10-K for any applicable fiscal year filed with the Securities and Exchange
Commission (or any governmental body or agency succeeding to the functions of
the Securities and Exchange Commission) shall be deemed to satisfy the
requirements of Section 9.6(a)(ii) above with respect to furnishing Lender
with consolidated financial statements for any fiscal year, provided, that, it
is received by Lender by the date required hereunder.
(b) Borrowers and Guarantors shall promptly notify Lender in writing of the
details of (i) any material loss, damage, investigation, action, suit,
proceeding or claim relating to the Collateral or any other property which is
security for the Obligations or which would result in any material adverse
change in any Borrower's or Guarantor's business, properties, assets, goodwill
or condition, financial or otherwise and (ii) the occurrence of any Event of
Default or act, condition or event which, with the passage of time or giving
of notice or both, would constitute an Event of Default. In addition,
Borrowers shall provide Lender monthly with a report of all locations of
Inventory at consignees, processors, warehouses, bailees or other third
parties indicating the name and address of such person and the approximate
amount of the Inventory at such location.
(c) Borrowers and Guarantor shall promptly after the sending or filing
thereof furnish or cause to be furnished to Lender copies of all reports which
any Borrower or Guarantor sends to its stockholders generally and copies of
all reports and registration statements which any Borrower or Guarantor files
with the Securities and Exchange Commission, any national securities exchange
or the National Association of Securities Dealers, Inc.
(d) Borrowers and Guarantors shall furnish or cause to be furnished to Lender
such budgets, forecasts, projections and other information respecting the
Collateral and the businesses of Borrowers and Guarantors, as Lender may, from
time to time, reasonably request. Lender is hereby authorized to deliver a
copy of any financial statement or any other information relating to the
business of any Borrower or Guarantor to any court or other Governmental
Authority or to any participant or assignee or prospective participant or
assignee. Each Borrower and Guarantor hereby irrevocably authorizes and
directs all accountants or auditors at any time on and after an Event of
Default to deliver to Lender, at Borrowers' expense, copies of the financial
statements of Borrowers and Guarantors and any reports or management letters
prepared by such accountants or auditors on behalf of Borrowers and Guarantors
and to disclose to Lender such information as they may have regarding the
businesses of Borrowers and Guarantors. Any documents, schedules, invoices or
other papers delivered to Lender may be destroyed or otherwise disposed of by
Lender one (1) year after the same are delivered to Lender, except as
otherwise designated by Borrowers to Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each Borrower
and Guarantor shall not, and shall not permit any Subsidiary to, directly or
indirectly,
(a) merge into or with or consolidate with any other Person or permit any
other Person to merge into or with or consolidate with it, except, that, any
Borrower or Guarantor may merge with and into or consolidate with any other
Borrower or Guarantor, provided, that, each of the following conditions is
satisfied as determined by Lender: (i) Lender shall have received not less
than ten (10) days prior written notice of the intention of such Borrower or
Guarantor to so merge or consolidate and such information with respect thereto
as Lender may request, (ii) as of the effective date of the merger or
consolidation and after giving effect thereto, no Event of Default or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred, (iii) Lender
shall have received true, correct and complete copies of all agreements,
documents and instruments relating to such merger, including, but not limited
to, the certificate or certificates of merger as filed with each appropriate
Secretary of State, (iv) the surviving entity shall immediately upon the
effectiveness of the merger expressly confirm in writing pursuant to an
agreement, in form and substance satisfactory to Lender, its continuing
liability in respect of the Obligations and Financing Agreements and execute
and deliver such other agreements, documents and instruments as Lender may
reasonably request in connection therewith, (v) the surviving entity shall,
immediately before and immediately after giving effect to such transaction or
series of transactions have a Net Worth (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions) equal to or greater
than the Net Worth of each of the entities involved in such merger immediately
prior to such transaction or series of transactions, and (vi) each Guarantor
shall ratify and confirm that its guarantees of the Obligations shall apply to
the Obligations as assumed by such surviving entity; or
(b) sell, assign, lease, transfer, abandon or otherwise dispose of any
Capital Stock or Indebtedness to any other Person or any of its assets to any
other Person except, for,
(i) sales of Inventory in the ordinary course of business,
(ii) the disposition of worn-out or obsolete Equipment or any other
Equipment no longer used or usable in the business of a Borrower so long as
(A) any proceeds are paid to Lender, (B) such sales do not involve Equipment
having an aggregate fair market value in excess of $5,000,000 for all such
Equipment disposed of in any fiscal year of Borrowers, (C) such sales shall be
on commercially reasonably prices and terms in a bona fide arm's length
transaction with a person who is not an Affiliate, (D) at least eighty (80%)
percent of the consideration received from any such sale is in the form of
cash or Cash Equivalents, provided, that, any portion of such consideration
evidenced by a promissory note or other instrument shall be promptly delivered
to Lender, duly endorsed and assigned to Lender, (E) the amount of the cash to
be received by such Borrower pursuant to the sale or other disposition of such
Equipment shall be not less than one hundred (100%) percent of the following
amount (such amount as to any Equipment being referred to herein as the
"minimum sales price" for such Equipment): (1) one hundred (100%) percent of
the orderly liquidation value of the Equipment so sold or otherwise disposed
of (based on the appraisal thereof received by Lender prior to the date hereof
less (2) the amount of the reductions in the Equipment Availability from the
date hereof through and including the date of the sale or other disposition of
such Equipment allocable to such Equipment (as calculated by Lender), (F) the
Equipment Availability shall be permanently reduced by an amount equal to the
minimum sales price applicable to such Equipment so sold or otherwise disposed
of, (G) after giving effect to such sale or other disposition and such
reduction in the Equipment Availability, there shall be Excess Availability,
(H) as to any such sale of Equipment for an amount in excess of $100,000,
Lender shall have received prior written notice of such sale or other
disposition, (I) on a biweekly basis, if there have been any sales of such
Equipment in the immediately preceding two (2) week period, Borrowers shall
furnish a report to Lender of the amount of such Equipment so sold, which
report shall set forth in reasonable detail satisfactory to Lender a list and
description of the Equipment sold (by model, make, manufacturer, serial no.
and/or such other identifying information as may be appropriate, as determined
by Lender), the parties to such sale or other disposition, the sale price and
the manner of payment thereof and such other information with respect thereto
as Lender may request, and (J) as of the date of any such sale and after
giving effect thereto, no Event of Default, or act, condition or event which
with notice or passage of time or both would constitute an Event of Default
shall exist or have occurred, or
(iii) the issuance and sale by any Borrower or Guarantor of Capital Stock
of such Borrower or Guarantor after the date hereof, provided, that, (A)
Lender shall have received not less than ten (10) Business Days prior written
notice of such issuance and sale by such Borrower or Guarantor, which notice
shall specify the parties to whom such shares are to be sold, the terms of
such sale, the total amount which it is anticipated will be realized from the
issuance and sale of such stock and the net cash proceeds which it is
anticipated will be received by such Borrower or Guarantor from such sale, (B)
such Borrower or Guarantor shall not be required to pay any dividends or
repurchase or redeem such Capital Stock or make any other payments in respect
thereof, unless otherwise permitted in Section 9.11 hereof, (C) the terms of
such Capital Stock, and the terms and conditions of the purchase and sale
thereof, shall not include any terms that limit the right of Borrowers or
Guarantors to request or receive Loans or Letter of Credit Accommodations or
to amend or modify any of the terms and conditions of this Agreement or any of
the other Financing Agreements or otherwise in any way relate to or affect the
arrangements of any Borrower or Guarantor with Lender or are more restrictive
or burdensome to any Borrower or Guarantor than the terms of any Capital Stock
in effect on the date hereof, and (D) as of the date of such issuance and sale
and after giving effect thereto, no Event of Default or act, condition or
event which with notice or passage of time or both would constitute an Event
of Default shall exist or have occurred, or
(iv) the issuance of Capital Stock of any Borrower or Guarantor consisting
of common stock pursuant to a stock option plan or 401(k) plan of such
Borrower or Guarantor for the benefit of its employees, directors and
consultants, provided, that, (A) in no event shall such Borrower or Guarantor
be required to issue, or shall such Borrower or Guarantor issue, Capital Stock
pursuant to such stock option plan or 401(k) plan which would result in a
Change of Control or other Event of Default and (B) Borrowers shall give
Lender prior written notice of the material terms of such stock option plan
and such other information with respect thereto as Lender may reasonably
request;
(c) wind up, liquidate or dissolve; or
(d) agree to do any of the foregoing.
9.8 Encumbrances. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, create, incur, assume or suffer to exist any
security interest, mortgage, pledge, lien, charge or other encumbrance of any
nature whatsoever on any of its assets or properties, including, without
limitation, the Collateral, except:
(a) liens and security interests of Lender;
(b) liens securing the payment of taxes, either not yet overdue or the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to such Borrower or Guarantor and with
respect to which adequate reserves have been set aside on its books;
(c) non-consensual statutory liens (other than liens securing the payment of
taxes) arising in the ordinary course of such Borrower's or Guarantor's
business to the extent: (i) such liens secure indebtedness or obligations
which are not overdue or (ii) such liens secure Indebtedness relating to
claims or liabilities which are fully insured and being defended at the sole
cost and expense and at the sole risk of the insurer or being contested in
good faith by appropriate proceedings diligently pursued and available to such
Borrower or Guarantor, in each case prior to the commencement of foreclosure
or other similar proceedings and with respect to which adequate reserves have
been set aside on its books;
(d) pledges and deposits of cash by any Borrower or Guarantor after the date
hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security
benefits consistent with the current practices of Borrowers and Guarantors as
of the date hereof;
(e) pledges and deposits of cash by Borrowers after the date hereof to secure
the performance of tenders, bids, leases, trade contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar
obligations in each case in the ordinary course of business consistent with
the current practices of Borrowers and Guarantors as of the date hereof;
provided, that, in connection with any performance bonds issued by a surety or
other person, the issuer of such bond shall have waived in writing any rights
in or to, or other interest in, any of the Collateral in an agreement, in form
and substance satisfactory to Lender;
(f) the Capital Leases with respect to the Blytheville Collateral to secure
the Indebtedness of Huntco Steel to the City thereunder permitted under
Sections 9.9(d) and 9.9(e) below;
(g) liens arising from (i) operating leases and the precautionary UCC
financing statement filings in respect thereof and (ii) equipment or other
materials which are not owned by a Borrower located on the premises of such
Borrower (but not in connection with, or as part of, the financing thereof)
from time to time in the ordinary course of business and consistent with
current practices of Borrowers and the precautionary UCC financing statement
filings in respect thereof, provided, that, Lender shall have received written
notice of such equipment or other materials and such equipment and other
materials shall be separately identified to Lender in any report with respect
to Equipment and Inventory provided to Lender in a manner satisfactory to
Lender;
(h) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which do not interfere in any
material respect with the use of such real property or ordinary conduct of the
businesses of Borrowers as presently conducted thereon or materially impair
the value of the Real Property which may be subject thereto;
(i) purchase money security interests in Equipment (including Capital Leases)
and purchase money mortgages on real estate arising after the date hereof in
the aggregate for Borrowers not to exceed $10,000,000 so long as such security
interests and mortgages do not apply to any property of Borrowers other than
the Equipment or real estate so acquired, and the Indebtedness secured thereby
does not exceed the cost of the Equipment or real estate so acquired, as the
case may be;
(j) mortgages and liens upon the Real Property of a Borrower (other than the
Real Property constituting the Blytheville Collateral) arising after the date
hereof to secure the Indebtedness of such Borrower permitted under Section
9.9(f) below;
(k) the mortgage and lien upon the Real Property of Huntco Steel located at
000 Xxxxxxxxxx Xxxx, Xxxxx, Xxxxxxxx 00000 to secure the Indebtedness of
Huntco Steel to Huntco Nevada permitted under Section 9.9(g) below, provided,
that, such mortgage and lien of Huntco Nevada is and shall be junior and
subordinate to the mortgage and lien of Lender with respect to such Real
Property on terms and conditions acceptable to Lender:
(i) security interests and liens of Huntco Nevada in and upon assets of
Huntco Steel arising after the date hereof to secure Indebtedness of such
Borrower to Huntco Nevada arising after the date hereof permitted under
Section 9.9(h) below, provided, that, such security interests and liens are
and shall be junior and subordinate to the security interests and liens of
Lender on terms and conditions acceptable to Lender; and
(l) security interests and liens set forth on Schedule 8.4 hereto.
9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) to the extent
secured by liens (including Capital Leases) permitted under Section 9.8 of
this Agreement;
(c) unsecured Indebtedness of a Borrower or Guarantor to any other Borrower
or Guarantor arising pursuant to loans permitted under Section 9.10 below; and
(d) Indebtedness of Huntco Steel to the City evidenced by or arising under
the Lease Agreement, dated as of June 1, 1992, between the City, as lessor,
and Huntco Steel, as lessee, as in effect on the date hereof, with respect to
the Blytheville Collateral located in Blytheville, Arkansas; provided, that:
(i) the aggregate amount required to be paid by Huntco Steel pursuant to
such Lease Agreement shall not exceed the currently outstanding principal
amount of the Blytheville 1992 Bonds as of the date hereof which is $850,000,
less the aggregate amount of all repayments, repurchases or redemptions,
whether optional or mandatory, in respect thereof, plus interest thereon at
the rate provided for in the Blytheville 1992 Bonds as in effect on the date
hereof,
(ii) the lien of the City and the Blytheville 1992 Bond Trustee pursuant
to the Blytheville 1992 Bond Agreements is and shall be subject and
subordinate to the rights of Huntco Steel under the Lease Agreement, dated as
of June 1, 1992, between the City, as lessor and Huntco Steel, as lessee,
(iii) Borrowers and Guarantors shall not, directly or indirectly, make any
payments in respect of such Indebtedness, except, that, Huntco Steel may make
regularly scheduled payments of rent and additional rent to the Blytheville
1992 Bond Trustee (as assignee of the City) when due in accordance with the
terms of such Lease Agreement as in effect on the date hereof,
(iv) Borrowers and Guarantors shall not, directly or indirectly, (A)
amend, modify, alter or change any terms of such Indebtedness or any of the
Blytheville 1992 Bond Agreements, except that Huntco Steel may, after prior
written notice to Lender, amend, modify, alter or change the terms thereof so
as to extend the maturity thereof or defer the timing of any payments in
respect thereof, or to forgive or cancel any portion of such Indebtedness
other than pursuant to payments thereof, or to reduce the interest rate or any
fees in connection therewith, or (B) redeem, retire, defease, purchase or
otherwise acquire such indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, and
(v) Borrowers and Guarantors shall furnish to Lender all notices or
demands concerning such Indebtedness either received by any Borrower or
Guarantor or on its behalf, promptly after receipt thereof, or sent by any
Borrower or Guarantor or on its behalf, concurrently with the sending thereof,
as the case may be;
(e) Indebtedness of Huntco Steel evidenced by or arising under the Lease
Agreement, dated as of May 1, 1995, between the City, as lessor, and Huntco
Steel, as lessee, as in effect on the date hereof, with respect to the
Blytheville Collateral located in Blytheville, Arkansas; provided, that:
(i) the aggregate amount required to be paid by Huntco Steel pursuant to
such Lease Agreement shall not exceed the currently outstanding principal
amount of the Blytheville 1995 Bonds as of the date hereof which is
$30,000,000 and the Blytheville 1996 Bonds as of the date hereof which is
$12,000,000, in each case less the aggregate amount of all repayments,
repurchases or redemptions, whether optional or mandatory, in respect thereof,
plus interest thereon at the rate provided for in the Blytheville Subordinate
Bonds as in effect on the date hereof,
(ii) the lien of the City and the Blytheville Subordinate Bond Trustee
pursuant to the Blytheville Subordinate Bond Agreements is and shall be
subject to the rights of Huntco Steel under the Lease Agreement, dated as of
May 1, 1995, between the City, as lessor, and Huntco Steel, as lessee, and
such Lease Agreement is subject and subordinate to the lien of the City and
the Blytheville 1992 Bond Trustee pursuant to the Blytheville 1992 Bond
Agreements,
(iii) Borrowers and Guarantors shall not, directly or indirectly, make any
payments in respect of such Indebtedness, except, that, Huntco Steel may make
regularly scheduled payments of rent and additional rent to the Blytheville
Subordinate Bond Trustee (as assignee of the City) in amounts equal to the
interest then due and payable under the terms of the Blytheville Subordinate
Bonds (as in effect on the date hereof) in accordance with the terms of such
Lease Agreement as in effect on the date hereof, provided, that, (A) no Event
of Default or act, condition or event which with notice or passage of time or
both would constitute an Event of Default, shall exist or have occurred and
(B) the proceeds of any such payment received by the Blytheville Subordinate
Bond Trustee shall be paid to Huntco Nevada as the owner and holder of all of
the Blytheville Subordinate Bonds, which shall promptly use such proceeds
either (1) to make a payment to Huntco in accordance with the terms of the tax
sharing arrangements of Huntco Nevada with Huntco as in effect on the date
hereof to be used by Huntco to make payments of taxes owing by it or (2) to
make additional loans in cash or other immediately available funds to a
Borrower under the Intercompany Loan Agreement or (3) to make contributions of
capital in cash or other immediately available funds to Borrowers or (4) for
the operating expenses and other proper corporate purposes of Huntco Nevada,
provided, that, the aggregate amount of such proceeds used by Huntco Nevada
for such expenses and corporate purposes shall not exceed $100,000 in any
fiscal year, less any amounts used for such purposes pursuant to Section
9.10(g), Section 9.10(h) and Section 9.11(c) below in such fiscal year,
(iv) Borrowers and Guarantors shall not, directly or indirectly, (A)
amend, modify, alter or change any terms of such indebtedness or any of the
Blytheville Subordinate Bond Agreements, except that Huntco Steel may, after
prior written notice to Lender, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
indebtedness other than pursuant to payments thereof, or to reduce the
interest rate or any fees in connection therewith, or (B) redeem, retire,
defease, purchase or otherwise acquire such indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and
(v) Borrowers and Guarantors shall furnish to Lender all notices or
demands in connection with such Indebtedness either received by any Borrower
or Guarantor or on its behalf, promptly after the receipt thereof, or sent by
any Borrower or Guarantor or on its behalf, concurrently with the sending
thereof, as the case may be,
(vi) such Indebtedness of Huntco Steel shall be subject to, and
subordinate in right of payment to, the right of Lender to receive the prior
indefeasible payment and satisfaction in full of all of the Obligations,
(vii) Huntco Nevada is and shall be the exclusive direct legal and
beneficial owner of all of the Blytheville Subordinate Bonds, free and clear
of any lien, security interest, pledge, claim or other encumbrance except in
favor of Lender,
(viii) Lender shall have received, in form and substance satisfactory to
Lender, a subordination agreement between Huntco Nevada, as such owner of the
Blytheville Subordinate Bonds and the Blytheville Subordinate Bond Trustee, as
acknowledged and agreed to by Huntco Steel, providing for the subordination in
right of payment of such Indebtedness to the prior indefeasible payment in
full of the Obligations, the subordination of the interest of Huntco Nevada
(in its capacity as Blytheville Subordinate Bond Trustee and in its capacity
as owner and holder of the Blytheville Subordinate Bonds) in the Real Property
and related assets of Huntco Steel subject to the Lease thereof to the
interests therein of Lender and related matters, duly authorized, executed and
delivered by Huntco Nevada (in its capacity as Blytheville Subordinate Bond
Trustee and in its capacity as owner of the Blytheville Subordinate Bonds) and
Huntco Steel;
(f) Indebtedness of a Borrower or Guarantor arising at any time after the
first anniversary of the date hereof pursuant to a mortgage loan by a
financial institution to such Borrower or Guarantor based on the value of the
Real Property owned by such Borrower or Guarantor as of the date hereof (other
than the Real Property included in the Blytheville Collateral), provided,
that:
(i) as to any such Indebtedness: (A) Lender shall have received not less
than thirty (30) days prior written notice of the intention of such Borrower
to incur such Indebtedness, which notice shall set forth in reasonable detail
satisfactory to Lender, the amount of such proposed Indebtedness, the person
to whom such Indebtedness is proposed to be owed, the proposed interest rate,
schedule of repayments and maturity date with respect thereto and such other
information with respect thereto as Lender may request, and (B) Lender may, at
its option (but shall not be obligated to), within fifteen (15) days after the
receipt of such notice and other information, prepare a written proposal for
Lender to provide such mortgage loan to such Borrower or Guarantor, and (C) if
Lender shall provide such proposal to such Borrower or Guarantor and the terms
of the proposal of Lender are at least as favorable to such Borrower as the
terms of the proposed Indebtedness received by such Borrower or Guarantor for
such loan, such Borrower or Guarantor shall use commercially reasonable
efforts to negotiate in good faith with Lender in order to consummate such
loan from Lender,
(ii) in the event that Lender does not provide a proposal to such Borrower
or Guarantor or the terms thereof are not at least as favorable to such
Borrower or Guarantor as the terms of the proposed Indebtedness or for any
other reason such Borrower or Guarantor does not obtain financing with respect
to such Real Property from Lender, then as to such Indebtedness, (A) Lender
shall have received true, correct and complete copies of all agreements,
documents and instruments evidencing or otherwise related to such
Indebtedness, as duly authorized, executed and delivered by the parties
thereto, (B) Lender shall have received a Collateral Access Agreement with
respect to the Real Property subject to the mortgage and lien to secure such
Indebtedness from the person to whom such Indebtedness is owed, duly
authorized, executed and delivered by such person, in form and substance
satisfactory to Lender, (C) such Indebtedness shall be incurred by such
Borrower or Guarantor at commercially reasonable rates and terms in a bona
fide arm's length transaction, (D) such Indebtedness shall not be owed to any
shareholder, officer, director, agent, employee or other Affiliate of any
Borrower or Guarantor, (E) Borrowers and Guarantors shall cause the person to
whom such Indebtedness is owed to remit all of the proceeds of the loan giving
rise to such Indebtedness directly to Lender for application to the
Obligations, (F) the terms and conditions of such Indebtedness shall be
reasonably satisfactory to Lender, (G) the Real Property, the value of which
is the basis for such loan, shall be the only collateral for such
Indebtedness, (H) as of the date of incurring such Indebtedness and after
giving effect thereto, the daily average of the aggregate amount of the Excess
Availability of Borrowers for the immediately preceding thirty (30)
consecutive days shall have been not less than $20,000,000, (I) as of the date
of incurring such Indebtedness and after giving effect thereto, the aggregate
amount of the Excess Availability of Borrowers shall be not less than
$20,000,000, (J) as of the date of incurring such Indebtedness and after
giving effect thereto, no Event of Default or act, condition or event which
with notice or passage of time or both would constitute an Event of Default
shall exist or have occurred, (K) such Borrower or Guarantor may only make
regularly scheduled payments of principal and interest in respect of such
Indebtedness, (L) such Borrower or Guarantor shall not, directly or
indirectly, (1) amend, modify, alter or change the terms of the agreements
with respect to such Indebtedness, except, that, Borrowers may, after prior
written notice to Lender, amend, modify, alter or change the terms thereof so
as to extend the maturity date thereof or defer the timing of any payments in
respect thereof, or to forgive or cancel any portion of such Indebtedness
(other than pursuant to payments thereof), or to reduce the interest rate or
any fees in connection therewith, or to release any liens or security
interests in any assets and properties of Borrowers or to make any covenants
contained therein less restrictive or burdensome as to Borrowers or otherwise
more favorable to Borrowers or (2) redeem, retire, defease, purchase or
otherwise acquire such indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, and (M) Borrowers and Guarantors shall
furnish to Lender all notices or demands in connection with such Indebtedness
either received by any Borrower or Guarantor or on its behalf promptly after
the receipt thereof, or sent by any Borrower or Guarantor or on its behalf,
concurrently with the sending thereof, as the case may be; and
(iii) in no event shall all of such Indebtedness of Borrowers arising
pursuant to such loans be secured by Real Property having a fair market value
(based on the appraisal by Xxxxxxx and Xxxxxxxxx of all of the Real Property
of Borrowers received by Lender prior to the date hereof) of more than
$5,000,000,
(iv) so long as each of the conditions set forth in Sections 9.9(f)(i),
(ii) and (iii) above are satisfied, as determined by Lender in good faith,
Lender shall, upon Borrowers' request and at Borrowers' expense, enter into a
subordination agreement with the person to whom such Indebtedness is owed, in
form and substance satisfactory to Lender, providing for the subordination of
the Mortgage with respect to such Real Property to the mortgage of such person
on such Real Property or if required by the person to whom such Indebtedness
is owed, execute and deliver to Huntco a discharge and satisfaction of the
Mortgage with respect to such Real Property which is the collateral for such
Indebtedness;
(g) Indebtedness of Huntco Steel to Huntco Nevada existing on the date hereof
evidenced by the Promissory Note, dated December 4, 1996, issued by Huntco
Steel payable to Huntco Nevada in the original principal amount of $3,730,000
to the extent permitted under Section 9.10(h) hereof;
(h) Indebtedness of Huntco Steel to Huntco Nevada arising pursuant to loans by
Huntco Nevada to such Borrower permitted under Section 9.10(g) hereof,
provided, that, the amount of principal and interest of such Indebtedness
owing by Huntco Steel to Huntco Nevada as of March 31, 1999 was
$35,601,655.61;
(i) Indebtedness of Borrower under interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements, interest rate exchange
agreements and similar contractual arrangements entered into for the purpose
of protecting a Person against fluctuations in interest rates; provided, that,
such arrangements are with banks or other financial institutions that have
combined capital and surplus and undivided profits of not less than
$100,000,000 and are not for speculative purposes and such Indebtedness shall
be unsecured;
(j) Indebtedness of any Borrower or Guarantor set forth on Schedule 9.9
hereto; provided, that, (i) such Borrower or Guarantor may only make regularly
scheduled payments of principal and interest in respect of such Indebtedness
in accordance with the terms of the agreement or instrument evidencing or
giving rise to such Indebtedness as in effect on the date hereof, (ii) such
Borrower or Guarantor shall not, directly or indirectly, (A) amend, modify,
alter or change the terms of such Indebtedness or any agreement, document or
instrument related thereto as in effect on the date hereof, except, that, such
Borrower or Guarantor may, after prior written notice to Lender, amend,
modify, alter or change the terms thereof so as to extend the maturity
thereof, or defer the timing of any payments in respect thereof, or to forgive
or cancel any portion of such Indebtedness (other than pursuant to payments
thereof), or to reduce the interest rate or any fees in connection therewith,
or to make any covenants contained therein less restrictive or burdensome as
to Borrowers and Guarantors or otherwise more favorable to Borrowers or (B)
redeem, retire, defease, purchase or otherwise acquire such Indebtedness
(except pursuant to regularly scheduled payments permitted herein), or set
aside or otherwise deposit or invest any sums for such purpose, and (iii)
Borrowers and Guarantors shall furnish to Lender all notices or demands in
connection with such Indebtedness either received by any Borrower or Guarantor
or on its behalf, promptly after the receipt thereof, or sent by any Borrower
or on its behalf, concurrently with the sending thereof, as the case may be.
9.10 Loans, Investments, Guarantees, Etc. Each Borrower and Guarantor shall
not, and shall not permit any Subsidiary to, directly or indirectly, make any
loans or advance money or property to any Person, or invest in (by capital
contribution, dividend or otherwise) or purchase or repurchase the Capital
Stock or Indebtedness or all or a substantial part of the assets or property
of any person, or guarantee, assume, endorse, or otherwise become responsible
for (directly or indirectly) the Indebtedness, performance, obligations or
dividends of any Person or form or acquire any Subsidiaries or agree to do any
of the foregoing, except:
(a) the endorsement of instruments for collection or deposit in the ordinary
course of business;
(b) investments in cash or Cash Equivalents, provided, that, (i) no Loans are
then outstanding and (ii) as to any of the foregoing, unless waived in writing
by Lender, each Borrower and Guarantor shall take such actions as are deemed
necessary by Lender to perfect the security interest of Lender in such
investments;
(c) the guarantee by each Borrower and Guarantor of the Obligations of any
Borrower in favor of Lender;
(d) the existing equity investments of Huntco in Huntco Nevada and of Huntco
Nevada in Borrowers and Huntco Steel in HSIA and any equity investments after
the date hereof by Huntco in Huntco Nevada and Huntco Nevada in Borrowers;
(e) loans by any Borrower to the other Borrower after the date hereof,
provided, that, as to each such loan each of the following conditions is
satisfied: (i) each month Borrowers shall provide to Lender a report in form
and substance satisfactory to Lender indicating the amount of such loans made
in the immediately preceding month and any repayments in connection therewith,
(ii) the Indebtedness arising pursuant to such loan shall not be evidenced by
a promissory note or other instrument, unless the single original of such note
or other instrument is delivered to Lender to hold as part of the Collateral,
with such endorsement and/or assignment by the payee of such note or other
instrument as Lender may require, and (iii) as of the date of each such loan
and after giving effect thereto, no Event of Default, or act, condition or
event which with notice or passage of time or both would constitute an Event
of Default shall exist or have occurred;
(f) loans by any Guarantor to any other Guarantor, provided, that, as to any
such loan, (i) each month Guarantors shall provide to Lender a report in form
and substance satisfactory to Lender of the amount of such loans made in the
immediately preceding month and any repayments in connection therewith and
(ii) the Indebtedness arising pursuant to such loan shall not be evidenced by
a promissory note or other instrument, unless the single original of such note
or other instrument is delivered to Lender to hold as part of the Collateral,
with such endorsement and/or assignment by the payee of such note or other
instrument as Lender may require;
(g) loans by Huntco Nevada prior to the date hereof to Huntco Steel under the
Intercompany Loan Agreement and loans by Huntco Nevada from time to time after
the date hereof to Huntco Steel under the Intercompany Loan Agreement as in
effect on the date hereof, provided, that, as to any such loan, (i) the
Indebtedness arising pursuant to such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note
or other instrument is delivered to Lender to hold as part of the Collateral,
with such endorsement and/or assignment by the payee of such note or other
instrument as Lender may require, (ii) the Indebtedness of such Borrower
arising pursuant to such loans shall be subject to, and subordinate in right
of payment to, the right of Lender to receive the prior indefeasible payment
and satisfaction in full of all of the Obligations, (iii) if any of such
Indebtedness is to be secured by any assets of a Borrower, then the security
interests and liens on the assets of such Borrower in favor of Huntco Nevada
to secure such Indebtedness shall be junior and subordinate to the security
interests and liens of Lender on such assets on terms and conditions
acceptable to Lender, (iv) Lender shall have received, in form and substance
satisfactory to Lender, a subordination agreement between Huntco Nevada and
Lender, as acknowledged and agreed to by such Borrower, providing for the
subordination in right of payment of such Indebtedness to the prior
indefeasible payment and satisfaction in full of all of the Obligations and
related matters, and if any of such Indebtedness is secured by any assets of a
Borrower, the subordination of the security interest and lien of Huntco Nevada
as required hereunder, duly authorized, executed and delivered by Huntco
Nevada and such Borrower, (v) such Borrower shall not, directly or indirectly
make, or be required to make, any payments in respect of such Indebtedness or
set aside or otherwise deposit or invest any sums for such purpose so long as
any of the Obligations are outstanding and unpaid and this Agreement has not
been terminated, except that Borrowers may make regularly scheduled semi-
annual payments of interest in respect of such Indebtedness at the rate set
forth in such Intercompany Loan Agreement as in effect on the date hereof,
provided, that, (A) no Event of Default or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred, and (B) the proceeds of any such payments shall be
promptly used by Huntco Nevada either (1) to make a payment to Huntco in
accordance with the terms of the tax sharing arrangements of Huntco Nevada
with Huntco as in effect on the date hereof to be used by Huntco to make
payments of taxes owing by it or (2) to make additional loans in cash or other
immediately available funds to a Borrower under the Intercompany Loan
Agreement, or (3) to make additional contributions in cash or other
immediately available funds to the capital of Borrowers or (4) for the
operating expenses and other proper corporate purposes of Huntco Nevada,
provided, that, the aggregate amount of such proceeds used by Huntco Nevada
for such expenses and corporate purposes shall not exceed $100,000 in any
fiscal year, less any amounts used for such purposes pursuant to Section
9.9(e)(iii) above, Section 9.10(h) and Section 9.11(c) below in such fiscal
year, (vi) Lender shall have received true, correct and complete copies of all
agreements, documents and instruments evidencing or otherwise related to such
Indebtedness as duly authorized, executed and delivered by the parties
thereto, (vii) such Indebtedness shall be incurred by such Borrower at rates
and terms no less favorable to such Borrower than it would obtain in a
comparable, commercially bona fide arms' length transaction with a person who
is not an Affiliate, (viii) as of the date of each such loan and after giving
effect thereto, no Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred, (ix) such Borrower shall not, directly or indirectly,
(A) amend, modify, alter or change the terms of the Intercompany Loan
Agreement, or any agreement, document or instrument related thereto as in
effect on the date hereof, except that such Borrower may, after prior written
notice to Lender, amend, modify, alter or change the terms thereof so as to
extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to any payments thereof), or to reduce the interest rate or any fees
in connection therewith, or to make any covenants contained therein less
restrictive or burdensome as to Borrowers and Guarantors or otherwise more
favorable to Borrowers or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any
sums for such purpose, and (x) Borrowers and Guarantors shall furnish to
Lender all notices or demands in connection with such Indebtedness either
received by any Borrower or Guarantor or on its behalf, promptly after the
receipt thereof, or sent by any Borrower or Guarantor or on its behalf,
concurrently with the sending thereof, as the case may be;
(h) the loan by Huntco Nevada to Huntco Steel prior to the date hereof in the
amount of $3,730,000, provided, that, (i) the Indebtedness arising pursuant to
such loan is evidenced only by the Promissory Note, dated December 4, 1996,
issued by Huntco Steel payable to Huntco Nevada, the original of which has
been pledged and delivered by Huntco Nevada to Lender, with such endorsement
and assignment as Lender may require, (ii) the Indebtedness arising pursuant
to such loan is subject to, and subordinate in right of payment to, the right
of Lender to receive the prior indefeasible payment and satisfaction in full
of all of the Obligations, (iii) Lender shall have received, in form and
substance satisfactory to Lender, a subordination agreement between Huntco
Nevada and Lender, as acknowledged and agreed to by Huntco Steel, providing
for the subordination in right of payment of such Indebtedness to the prior
indefeasible payment and satisfaction in full of all of the Obligations and
related matters, duly authorized, executed and delivered by Huntco Nevada and
Huntco Steel, (iv) Huntco Steel shall not, directly or indirectly make, or be
required to make, any payments in respect of such Indebtedness or set aside or
otherwise deposit or invest any sums for such purpose so long as any of the
Obligations are outstanding and unpaid and this Agreement has not been
terminated, except that Huntco Steel may make regularly scheduled annual
payments of interest in respect of such Indebtedness at the rate set forth in
such Promissory Note as in effect on the date hereof, provided, that, (A) no
Event of Default or act, condition or event which with notice of passage of
time or both would constitute an Event of Default shall exist or have
occurred, and (B) the proceeds of any such payments shall be promptly used by
Huntco Nevada either (1) to make a payment to Huntco in accordance with the
terms of the tax sharing arrangements of Huntco Nevada with Huntco as in
effect on the date hereof to be used by Huntco to make payments of taxes owing
to it or (2) to make additional loans in cash or other immediately available
funds to a Borrower under the Intercompany Loan Agreement, or (3) to make
additional contributions in cash or other immediately available funds to the
capital of Borrowers, or (4) for the operating expenses and other proper
corporate purposes of Huntco Nevada, provided, that, the aggregate amount of
such proceeds used by Huntco Nevada for such expenses and corporate purposes
shall not exceed $100,000 in any fiscal year, less any amounts used for such
purposes pursuant to Section 9.9(e)(iii), Section 9.10 (g) above and Section
9.11(c) below in such fiscal year, (v) Lender shall have received true,
correct and complete copies of all agreements, documents and instruments
evidencing or otherwise related to such Indebtedness as duly authorized,
executed and delivered by the parties thereto, (vi) Huntco Steel and Huntco
Nevada shall not, directly or indirectly, (A) amend, modify, alter or change
the terms of such Indebtedness or any agreement, document or instrument
related thereto as in effect on the date hereof, except that Huntco Steel may,
after prior written notice to Lender, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof, or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness (other than pursuant to any payments thereof), or to reduce the
interest rate or any fees in connection therewith, or to make any covenants
contained therein less restrictive or burdensome as to Borrowers and
Guarantors or otherwise more favorable to Borrowers or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and (vii)Borrowers and
Guarantors shall furnish to Lender all notices or demands in connection with
such Indebtedness either received by any Borrower or Guarantor or on its
behalf, promptly after the receipt thereof, or sent by any Borrower or
Guarantor or on its behalf, concurrently with the sending thereof, as the case
may be;
(i) loans and other payments by Borrowers to Guarantors to the extent
permitted under Section 9.12 hereof and any other loans or investments or
purchases or repurchases of Capital Stock (and other payments in respect
thereof or otherwise) permitted under Sections 9.11 and 9.12 hereof;
(j) loans of money or property (other than Collateral) to any Person (other
than any Borrower or Guarantor), or investment by capital contribution in any
Person (other than any Borrower or Guarantor) which is not otherwise permitted
above; provided, that, as to any such loans or investments, each of the
following conditions is satisfied: (i) the Person receiving such loan or
investment is engaged in a business related, ancillary or complimentary to the
businesses of Borrowers as conducted on the date hereof, (ii) the total
aggregate amount of any such loans or investments shall not exceed $5,000,000
in the aggregate, (iii) as of the date of any such loan or investment and
after giving effect thereto, no Event of Default, or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred, (iv) in the case of an investment by
capital contribution, at Lender's option, the original of any stock or other
instrument evidencing such capital contribution shall be promptly delivered to
Lender, together with such stock power, assignment or endorsement as Lender
may request, (v) in the case of loans of money or property, the original of
any promissory note or other instrument evidencing the Indebtedness arising
pursuant to such loans shall be delivered, or caused to be delivered, to
Lender, at Lender's option, together with an appropriate endorsement and with
full recourse to the payee thereof, (vi) as of the date of any loan or
investment and after giving effect thereto, the daily average of the aggregate
Excess Availability of Borrowers for the immediately preceding thirty (30)
consecutive day period shall have been not less than $15,000,000, and as of
the date of any such loan or investment and after giving effect thereto, the
aggregate Excess Availability of Borrowers shall be not less than $15,000,000
and (vii) Lender shall have received (A) not less than five (5) Business Days
prior written notice thereof setting forth in reasonable detail the nature and
terms thereof, (B) true, correct and complete copies of all agreements,
documents and instruments relating thereto and (C) such other information with
respect thereto as Lender may request;
(k) stock or obligations issued to any Borrower or Guarantor by any Person
(or the representative of such Person) in respect of Indebtedness or other
obligations of such Person owing to such Borrower or Guarantor in connection
with the insolvency, bankruptcy, receivership or reorganization of such Person
or a composition or readjustment of the debts of such Person or settlement or
compromise of past due Accounts; provided, that, the original of any such
stock or instrument evidencing such obligations shall be promptly delivered to
Lender, upon Lender's request, together with such stock power, assignment or
endorsement by such Borrower or Guarantor as Lender may request;
(l) obligations of account debtors to a Borrower arising from Accounts which
are past due evidenced by a promissory note made by such account debtor
payable to such Borrower; provided, that, promptly upon the receipt of the
original of any such promissory note by such Borrower, such promissory note
shall be endorsed to the order of Lender, by such Borrower and promptly
delivered to Lender as so endorsed;
(m) loans or advances by a Borrower or Guarantor to any of its employees,
after the date hereof, not to exceed the principal amount of $1,000,000 in the
aggregate at any time outstanding in the ordinary course of such Borrower's or
Guarantor's business for reasonable and necessary work-related travel and
other ordinary business expenses to be incurred by such employees in
connection with their employment with such Borrower or Guarantor;
(n) the existing loans, advances and guarantees set forth on Schedule 9.10
hereto, provided, that, as to such loans, advances and guarantees, (i)
Borrowers and Guarantors shall not, directly or indirectly, (A) amend, modify,
alter or change the terms of such loans, advances or guarantees or any
agreement, document or instrument related thereto, or (B) as to such
guarantees, redeem, retire, defease, purchase or otherwise acquire such
guarantee or set aside or otherwise deposit or invest any sums for such
purpose and (ii) Borrowers and Guarantors shall furnish to Lender all notices,
demands or other materials in connection with such loans, advances or
guarantees either received by any Borrower or Guarantor or on its behalf,
promptly after the receipt thereof, or sent by any Borrower or Guarantor or on
its behalf, concurrently with the sending thereof, as the case may be.
9.11 Dividends and Redemptions. Each Borrower and Guarantor shall not, and
shall not permit any Subsidiary to, directly or indirectly, declare or pay any
dividends on account of any shares of class of Capital Stock of such Borrower
or Guarantor now or hereafter outstanding, or set aside or otherwise deposit
or invest any sums for such purpose, or redeem, retire, defease, purchase or
otherwise acquire any shares of any class of Capital Stock (or set aside or
otherwise deposit or invest any sums for such purpose) for any consideration
other than common stock or apply or set apart any sum, or make any other
distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing, except, that,
(a) any Subsidiary of a Borrower may pay dividends to such Borrower;
(b) Borrowers may pay dividends or other amounts to Huntco Nevada and Huntco
Nevada may pay dividends or other amounts to Huntco, in each case to the
extent permitted under Section 9.12 below;
(c) Borrowers may pay dividends to Huntco Nevada (in addition to dividends
otherwise permitted hereunder); provided, that, as to any such dividend each
of the following conditions is satisfied: (i) the proceeds of any such
dividend shall be promptly used by Huntco Nevada either (A) to make additional
loans in cash or other immediately available funds to a Borrower under the
Intercompany Loan Agreement, or (B) to make additional contributions in cash
or other immediately available funds to the capital of Borrowers or (C) to
make a payment to Huntco in accordance with the terms of the tax sharing
arrangements of Huntco Nevada with Huntco as in effect on the date hereof, or
(D) for the operating expenses and other proper corporate purposes of Huntco
Nevada, provided, that, the aggregate amount of such proceeds used by Huntco
Nevada for such expenses and corporate purposes shall not exceed $100,000 in
any fiscal year, less any amounts used for such purposes pursuant to Section
9.9(e)(iii), Section 9.10(g) and Section 9.10(h) above, (ii) Lender shall have
received ten (10) days prior notice of the intention to pay such dividend,
(iii) such dividend is not in violation of applicable law or any other
agreement to which any Borrower or Guarantor is a party or by which any
Borrower or Guarantor or its properties are bound, (iv) as of the date of any
such dividend and after giving effect thereto, no Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred, (v) as of the
date of any such dividend and after giving effect thereto, the aggregate
amount of such dividends in any fiscal year shall not exceed $5,000,000, and
(vi) Huntco shall have had Pre-Tax Income of not less than $5,000,000 in the
immediately preceding fiscal year (calculated based on the audited financial
statements for such year);
(d) Huntco may pay quarterly dividends in respect of the issued and
outstanding shares of Capital Stock of Huntco consisting of Series A Preferred
Stock in accordance with the terms of the Certificate of Incorporation of
Huntco as in effect on the date hereof provided, that, (i) in no event shall
the aggregate amount of all such dividends paid in any fiscal year exceed
$200,000 and (ii) as of the date of any such payment and after giving effect
thereto, no Event of Default, or act, condition or event which with notice or
passage of time or both would constitute an Event of Default shall exist or
have occurred; and
(e) Borrowers may pay dividends or other distributions to Huntco Nevada, the
proceeds of which are used by Huntco Nevada to pay a substantially
contemporaneous dividend to Huntco, the proceeds of which are used by Huntco
to make a substantially contemporaneous payment of a dividend to its
stockholders, or to repurchase or redeem any of its Capital Stock; provided,
that, as to any such dividend or other payments each of the following
conditions is satisfied: (i) Lender shall have received ten (10) days prior
written notice of the intention to pay such dividend or repurchase or redeem
such shares of Capital Stock, (ii) such dividend or other payment is not in
violation of applicable law or any other agreement to which any Borrower or
Guarantor is a party or by which any Borrower or Guarantor or its properties
are bound, (iii) as of the date of any such dividend or redemption and after
giving effect thereto, no Event of Default, or act, condition or event which
with notice or passage of time or both would constitute an Event of Default
shall exist or have occurred, (iv) as of the date of any such dividend or
other payment, and after giving effect thereto, the daily average of the
aggregate amount of the Excess Availability of Borrowers (with Excess
Availability calculated for this purpose without regard to the Maximum Credit)
for the immediately preceding thirty (30) consecutive days shall have been not
less than $7,500,000, and (v) as of the date of any such dividend or other
payment and after giving effect thereto, the aggregate amount of the Excess
Availability of Borrowers shall be not less than $7,500,000.
9.12 Transactions with Affiliates. Each Borrower and Guarantor shall not,
and shall not permit any Subsidiary to, directly or indirectly,
(a) purchase, acquire or lease any property from, or sell, transfer or lease
any property to, any officer, director, agent or other Affiliate of any
Borrower or Guarantor, except in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's or Guarantor's business and upon
fair and reasonable terms no less favorable to such Borrower or Guarantor than
such Borrower or Guarantor would obtain in a comparable arm's length
transaction with a person who is not an Affiliate, or
(b) make any payments of management, consulting or other fees for management
or similar services, or of any Indebtedness owing to any officer, employee,
shareholder, director or other Affiliate of any Borrower or Guarantor, except:
(i) reasonable compensation to officers, employees and directors of
Borrowers and Guarantors for services rendered to Borrowers and Guarantors in
the ordinary course of business,
(ii) payments by Borrowers to Huntco of the monthly base management fee
in accordance with the terms of the Management Services Agreement, dated as of
July 1, 1993, between Huntco and Midwest (as in effect on the date hereof) and
the Management Services Agreement, dated as of January 1, 1998, between Huntco
and Huntco Steel (as in effect on the date hereof), provided, that, (A) the
aggregate of all such payments in any fiscal year shall not exceed $2,000,000
and (B) as of the date of any payment of such fees and after giving effect
thereto, no Event of Default, or act, condition or event which with notice or
passage of time or both would constitute an Event of Default shall exist or
have occurred,
(iii) payments by a Borrower to the other Borrower or a Guarantor in
respect of Indebtedness arising pursuant to loans made by such Borrower or a
Guarantor to the extent permitted under Section 9.10 hereof,
(iv) payments by a Guarantor to a Borrower or another Guarantor in
respect of Indebtedness arising pursuant to loans made by such Borrower or
Guarantor to the extent permitted under Section 9.10 hereof,
(v) payments by Borrowers to Huntco (A) for actual and necessary
reasonable out-of-pocket administrative and operating expenses of Huntco for
the businesses of Huntco as presently conducted in the ordinary course of
business (including lease payments, payroll, insurance, franchise taxes and
similar items), but only to the extent that the monthly management fees paid
by Borrowers to Huntco as described in Section 9.12(b)(ii) are insufficient
for such purposes, and (B) for actual and necessary reasonable out-of-pocket
legal and accounting, insurance (including premiums for such insurance),
marketing, payroll and similar types of services paid for by Guarantors in the
ordinary course of their businesses or as the same may be directly
attributable to any Borrower or Guarantor;
(vi) payments by Borrowers and Huntco Nevada to Huntco pursuant to the tax
sharing arrangements among Borrowers and Guarantors (as in effect on the date
hereof); provided, that, (A) such Borrower (or Huntco Nevada, as the case may
be), is included in the consolidated Federal income tax return filed by Huntco
as to which such Borrower or Huntco Nevada is making such payment, (B) the
payments in any year shall not exceed the Federal income tax liability that
such Borrower or Huntco Nevada would have been liable for if such Borrower or
Huntco Nevada were not part of such consolidated federal income tax return
filed by Huntco, (C) such payments shall be made by such Borrower or Huntco
Nevada no earlier then ten (10) days prior to the date on which Huntco is
required to make its payments to the Internal Revenue Service, and (D) in the
event that such Borrower or Huntco Nevada also joins with Huntco in filing any
combined or consolidated (or similar) State or local income tax returns, then
the making of payments to Huntco shall be allowed in a manner as similar as
possible to that provided herein with respect to Federal income taxes.
9.13 Additional Bank Accounts. Each Borrower and Guarantor shall not, and
shall not permit any Subsidiary to, directly or indirectly, open, establish or
maintain any deposit account, investment account or any other account with any
bank or other financial institution, other than the Blocked Accounts and the
accounts set forth in Schedule 8.8 hereto, except: (a) as to any new or
additional Blocked Accounts and other such new or additional accounts which
contain any Collateral or proceeds thereof, with the prior written consent of
Lender and subject to such conditions thereto as Lender may establish and (b)
as to any accounts used by such Borrower or Guarantor to make payments of
payroll, taxes or other obligations to third parties, after prior written
notice to Lender.
9.14 Compliance with ERISA.
(a) No Borrower or Guarantor shall, or shall permit any Subsidiary to, with
respect to any "employee benefit plans" maintained by such Borrower or
Guarantor or any of its ERISA Affiliates: (i) terminate any of such employee
benefit plans so as to incur any liability to the Pension Benefit Guaranty
Corporation established pursuant to ERISA, (ii) allow or suffer to exist any
prohibited transaction involving any of such employee benefit plans or any
trust created thereunder which would subject any Borrower or such ERISA
Affiliate to a tax or penalty or other liability on prohibited transactions
imposed under Section 4975 of the Code or ERISA, (iii) fail to pay to any such
employee benefit plan any contribution which it is obligated to pay under
Section 302 of ERISA, Section 412 of the Code or the terms of such plan, (iv)
allow or suffer to exist any accumulated funding deficiency, whether or not
waived, with respect to any such employee benefit plan, (v) allow or suffer to
exist any occurrence of a reportable event or any other event or condition
which presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any such employee benefit plan that is a single employer plan,
which termination could result in any liability to the Pension Benefit
Guaranty Corporation or (vi) incur any withdrawal liability with respect to
any multiemployer pension plan.
(b) As used in this Section 9.14, the terms "employee benefit plans",
"accumulated funding deficiency" and "reportable event" shall have the
respective meanings assigned to them in ERISA, and the term "prohibited
transaction" shall have the meaning assigned to it in Section 4975 of the Code
and ERISA.
9.15 After Acquired Real Property. If any Borrower hereafter acquires any
Real Property, fixtures or any other property that is of the kind or nature
described in the Mortgages and such Real Property, fixtures or other property,
as the case may be, is adjacent or contiguous to, or located on, any of the
Real Property of Borrowers, or is at any other location and has a fair market
value in an amount equal to or greater than $1,000,000 (or if an Event of
Default, or act, condition or event which with notice or passage of time or
both would constitute an Event of Default exists, then regardless of the
location or the fair market value of such assets), without limiting any other
rights of Lender, or duties or obligations of such Borrower, upon Lender's
request, such Borrower shall execute and deliver to Lender a mortgage, deed of
trust or deed to secure debt, as Lender may determine, in form and substance
substantially similar to the Mortgages and as to any provisions relating to
specific state laws satisfactory to Lender and in form appropriate for
recording in the real estate records of the jurisdiction in which such Real
Property or other property is located granting to Lender a lien and mortgage
on and security interest in such Real Property, fixtures or other property
(except as such Borrower would otherwise be permitted to incur hereunder or
under the Mortgage or as otherwise consented to in writing by Lender) and such
other agreements, documents and instruments as Lender may require in
connection therewith, provided, that, such Borrower shall not be required to
execute and deliver such mortgage, deed of trust or deed to secure debt as to
Real Property acquired after the date hereof which is subject to a security
interest permitted under Section 9.8 hereof to the extent it is prohibited
under the terms thereof.
9.16 Net Worth. At any time and from time to time that the aggregate amount
of the Excess Availability of Borrowers is equal to or less than $15,000,000
(with Excess Availability calculated for this purpose without regard to the
Maximum Credit), the Net Worth of Huntco and its Subsidiaries shall be not
less than $88,000,000.
9.17 Year 2000 Compliance. Each Borrower and Guarantor shall take, and shall
cause any Subsidiary to take, all action which may be required so that its
computer-based information systems, including, without limitation, all of its
proprietary computer hardware and software and all computer hardware and
software leased or licensed from third parties (and whether supplied by others
or with which such Borrower's, Guarantor's or Subsidiary's systems interface)
are able to operate effectively and correctly process in all material respects
data using dates on or after January 1, 2000. Compliance with the foregoing
shall mean that the systems will operate and correctly process data without
human intervention such that in all material respects (a) there is correct
century recognition, (b) calculations properly accommodate same century and
multi-century formulas and date values, (c) all leap years shall be calculated
correctly and (d) the information systems shall otherwise comply in all
material respects with applicable industry standards and regulatory guidelines
regarding the change of the century and year 2000 compliance. Borrowers and
Guarantors shall, by no later than July 31, 1999, certify to Lender in writing
that its information systems have been modified, updated and programmed as
required by this Section. On and after July 31, 1999, the computer-based
information systems of Borrowers shall be, and with ordinary course upgrading
and maintenance, will continue to be sufficient in all material respects to
permit Borrowers to conduct their businesses without any material adverse
effect as a result of the year 2000.
9.18 End of Fiscal Years; Fiscal Quarters. Each Borrower and Guarantor
shall, for financial reporting purposes, cause its, and each of its
Subsidiaries' (a) fiscal years to end on December 31 of each year or, as to
Huntco Steel, the Saturday nearest December 31 of such year and (b) fiscal
quarters to end on March 31, June 30, September 30 and December 31 of each
year or, as to Huntco Steel, the Saturday nearest each such date for each of
its fiscal quarters.
9.19 Costs and Expenses. Borrowers shall pay to Lender on demand all costs,
expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Lender's
rights in the Collateral, this Agreement, the other Financing Agreements and
all other documents related hereto or thereto, including any amendments,
supplements or consents which may hereafter be contemplated (whether or not
executed) or entered into in respect hereof and thereof, including, but not
limited to: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if
applicable); (b) costs and expenses and fees for insurance premiums,
environmental audits, surveys, assessments, engineering reports and
inspections, appraisal fees and search fees; (c) all title insurance and other
insurance premiums, appraisal fees and search fees; (d) costs and expenses of
remitting loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the Blocked Accounts, together with Lender's
customary charges and fees with respect thereto; (e) charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (f) costs and expenses of preserving and protecting the
Collateral; (g) costs and expenses paid or incurred in connection with
obtaining payment of the Obligations, enforcing the security interests and
liens of Lender, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Lender arising
out of the transactions contemplated hereby and thereby (including, without
limitation, preparations for and consultations concerning any such matters);
(h) all out-of-pocket expenses and costs heretofore and from time to time
hereafter incurred by Lender during the course of periodic field examinations
of the Collateral and Borrowers' operations, plus a per diem charge at the
rate of $650 per person per day for Lender's examiners in the field and
office; and (i) the reasonable fees and disbursements of counsel (including
legal assistants) to Lender in connection with any of the foregoing.
9.20 Further Assurances. At the request of Lender at any time and from time
to time, each Borrower shall, at its expense, duly execute and deliver, or
cause to be duly executed and delivered, such further agreements, documents
and instruments, and do or cause to be done such further acts as may be
necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise
effectuate the provisions or purposes of this Agreement or any of the other
Financing Agreements. Lender may at any time and from time to time request a
certificate from an officer of Borrowers representing that all conditions
precedent to the making of Loans and providing Letter of Credit Accommodations
contained herein are satisfied. In the event of such request by Lender,
Lender may, at its option, cease to make any further Loans or provide any
further Letter of Credit Accommodations until Lender has received such
certificate and, in addition, Lender has determined that such conditions are
satisfied. Where permitted by law, each Borrower hereby authorizes Lender to
execute and file one or more UCC financing statements signed only by Lender.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) any Borrower or Guarantor fails to pay any of the Obligations within
three (3) days after the same becomes due and payable or (ii) any Borrower or
Guarantor fails to perform any of the covenants contained in Sections 9.1,
9.2, 9.3, 9.4, 9.6, 9.14, 9.15, 9.16, 9.17 and 9.19 of this Agreement and such
failure shall continue for ten (10) days; provided, that, such ten (10) day
period shall not apply in the case of: (A) any failure to observe any such
covenant which is not capable of being cured at all or within such ten (10)
day period or which has been the subject of a prior failure within a six (6)
month period or (B) an intentional breach of any Borrower or Guarantor of any
such covenant or (iii) any Borrower or Guarantor fails to perform any of the
terms, covenants, conditions or provisions contained in this Agreement or any
of the other Financing Agreements other than those described in Sections
10.1(a)(i) and 10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made by any Borrower or
Obligor to Lender in this Agreement, the other Financing Agreements or any
other agreement, schedule, confirmatory assignment or otherwise shall when
made or deemed made be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to perform any of the material
terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Lender;
(d) any judgment for the payment of money is rendered against any Borrower or
Obligor in excess of $500,000 in any one case or in excess of $1,000,000 in
the aggregate and shall remain undischarged or unvacated for a period in
excess of thirty (30) days or execution shall at any time not be effectively
stayed, or any judgment other than for the payment of money, or injunction,
attachment, garnishment or execution is rendered against any Borrower or
Obligor or any of its assets;
(e) any Borrower or any Obligor dissolves or suspends or discontinues doing
business (other than pursuant to a merger by a Borrower or Guarantor into
another Borrower or Guarantor to the extent permitted hereunder);
(f) any Borrower or Obligor becomes insolvent (however defined or evidenced),
makes an assignment for the benefit of creditors, makes or sends notice of a
bulk transfer or calls a meeting of its creditors or principal creditors;
(g) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction now or hereafter in effect (whether at law or in equity)
is filed against any Borrower or Obligor or all or any part of its properties
and such petition or application is not dismissed within thirty (30) days
after the date of its filing or any Borrower or Obligor shall file any answer
admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or
the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by any Borrower or Obligor or for all or any part of its property; or
(i) any default by any Borrower or Obligor under any agreement, document or
instrument relating to any Indebtedness for borrowed money owing to any person
other than Lender, or any capitalized lease obligations, contingent
Indebtedness in connection with any guarantee, letter of credit, indemnity or
similar type of instrument in favor of any person other than Lender, in any
case in an amount in excess of $500,000, which default continues for more than
the applicable cure period, if any, with respect thereto, or any default by
any Borrower or Obligor under any material contract to any person other than
Lender, which default continues for more than the applicable cure period, if
any, with respect thereto;
(j) any Change of Control;
(k) the indictment or threatened indictment of any Borrower or Obligor under
any criminal statute, or commencement or threatened commencement of criminal
or civil proceedings by any governmental unit or agency against any Borrower
or Obligor, pursuant to which statute or proceedings by any governmental unit
or agency the penalties or remedies sought or available include forfeiture of
any of the property of such Borrower or Obligor;
(l) there shall be any event, condition or circumstance which has a Material
Adverse Effect;
(m) there shall be an event of default under any of the other Financing
Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is continuing,
Lender shall have all rights and remedies provided in this Agreement, the
other Financing Agreements, the Uniform Commercial Code and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by Borrowers or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by any Borrower of
this Agreement or any of the other Financing Agreements. Lender may, at any
time or times, proceed directly against any Borrower or Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default exists or
has occurred and is continuing, Lender may, in its discretion and without
limitation, (i) accelerate the payment of all Obligations and demand immediate
payment thereof to Lender (provided, that, upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h), all Obligations shall
automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises
on or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require any Borrower, at Borrowers' expense,
to assemble and make available to Lender any part or all of the Collateral at
any place and time designated by Lender, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition
thereof or for any other purpose, (vi) sell, lease, transfer, assign, deliver
or otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Lender or elsewhere) at such prices
or terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with the Lender having the right to purchase the whole or any part
of the Collateral at any such public sale, all of the foregoing being free
from any right or equity of redemption of Borrowers, which right or equity of
redemption is hereby expressly waived and released by Borrowers and/or (vii)
terminate this Agreement. If any of the Collateral is sold or leased by
Lender upon credit terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefor is finally collected by
Lender. If notice of disposition of Collateral is required by law, five (5)
days prior notice by Lender to Borrowers designating the time and place of any
public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable
notice thereof and each Borrower waives any other notice. In the event Lender
institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, each Borrower waives the posting of
any bond which might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually received by
Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such
order as Lender may elect, whether or not then due. Each Borrower shall
remain liable to Lender for the payment of any deficiency with interest at the
highest rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys' fees and legal expenses.
(d) Without limiting the foregoing, upon the occurrence of an Event of
Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice, (i)
cease making Loans or arranging for Letter of Credit Accommodations or reduce
the lending formulas or amounts of Loans and Letter of Credit Accommodations
available to Borrowers and/or (ii) terminate any provision of this Agreement
providing for any future Loans or Letter of Credit Accommodations to be made
by Lender to Borrowers.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement and the
other Financing Agreements and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of Illinois (without
giving effect to principles of conflicts of law).
(b) Borrowers, Guarantors and Lender irrevocably consent and submit to the
non-exclusive jurisdiction of the Circuit Court of Xxxx County, Illinois and
the United States District Court for the Northern District of Illinois and
waive any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Agreement or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of the parties hereto in respect of this Agreement or any of the
other Financing Agreements or the transactions related hereto or thereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above to the extent such
courts have and accept jurisdiction thereof (except that Lender shall have the
right to bring any action or proceeding against any Borrower or Guarantor or
its property in the courts of any other jurisdiction which Lender deems
necessary or appropriate in order to realize on the Collateral or to otherwise
enforce its rights against any Borrower or its property).
(c) Each Borrower and Guarantor hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails
(unless Lender has taken control of all of the mail of such Borrower or
Guarantor), or, at Lender's option, by service upon any Borrower or Guarantor
in any other manner provided under the rules of any such courts. Within
thirty (30) days after such service, such Borrower or Guarantor shall appear
in answer to such process, failing which such Borrower shall be deemed in
default and judgment may be entered by Lender against such Borrower for the
amount of the claim and other relief requested.
(d) BORROWERS, GUARANTORS AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO
IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
BORROWERS, GUARANTORS AND LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT BORROWERS OR LENDER MAY FILE AN ORIGINAL COUNTERPART
OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to Borrowers or Guarantors (whether
in tort, contract, equity or otherwise) for losses suffered by Borrowers or
Guarantors in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by
a final and non-appealable judgment or court order binding on Lender, that the
losses were the result of acts or omissions constituting gross negligence or
willful misconduct. In any such litigation, Lender shall be entitled to the
benefit of the rebuttable presumption that it acted in good faith and with the
exercise of ordinary care in the performance by it of the terms of this
Agreement.
11.2 Waiver of Notices. Each Borrower and Guarantor hereby expressly waives
demand, presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and commercial paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices, of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on any Borrower or Guarantor
which Lender may elect to give shall entitle Borrowers or Guarantors to any
other or further notice or demand in the same, similar or other circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any provision hereof
shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender, and as to amendments, as also signed by an authorized officer of any
Borrower. Lender shall not, by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of its rights, powers and/or
remedies unless such waiver shall be in writing and signed by an authorized
officer of Lender. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Lender of any right, power and/or
remedy on any one occasion shall not be construed as a bar to or waiver of any
such right, power and/or remedy which Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.
11.4 Waiver of Counterclaims. Each Borrower and Guarantor waives all rights
to interpose any claims, deductions, setoffs or counterclaims of any nature
(other than compulsory counterclaims) in any action or proceeding with respect
to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.
11.5 Indemnification. Borrowers and Guarantors shall indemnify and hold
Lender, and its directors, agents, employees and counsel, harmless from and
against any and all losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant
thereto, including, without limitation, amounts paid in settlement, court
costs, and the fees and expenses of counsel. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section may
be unenforceable because it violates any law or public policy, Borrowers and
Guarantors shall pay the maximum portion which it is permitted to pay under
applicable law to Lender in satisfaction of indemnified matters under this
Section. The foregoing indemnity shall survive the payment of the Obligations
and the termination or non-renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Financing Agreements shall become effective
as of the date set forth on the first page hereof and shall continue in full
force and effect for a term ending on the date three (3) years from the date
hereof (the "Renewal Date"), and from year to year thereafter, unless sooner
terminated pursuant to the terms hereof.
(b) Lender or Borrowers may terminate this Agreement and the other Financing
Agreements effective on the Renewal Date or on the anniversary of the Renewal
Date in any year by giving to the other party at least sixty (60) days prior
written notice; provided, that, this Agreement and all other Financing
Agreements must be terminated simultaneously.
(c) In addition, Borrowers may, at any time, upon ten (10) days prior written
notice to Lender, terminate this Agreement and the other Financing Agreements.
(d) Upon the effective date of termination or non-renewal of the Financing
Agreements, Borrowers shall pay to Lender, in full, all outstanding and unpaid
Obligations and shall furnish cash collateral to Lender in such amounts as
Lender determines are reasonably necessary to secure Lender from loss, cost,
damage or expense, including attorneys' fees and legal expenses, in connection
with any contingent Obligations, including issued and outstanding Letter of
Credit Accommodations and checks or other payments provisionally credited to
the Obligations and/or as to which Lender has not yet received final and
indefeasible payment. Such payments in respect of the Obligations and cash
collateral shall be remitted by wire transfer in Federal funds to such bank
account of Lender, as Lender may, in its discretion, designate to Huntco or
any Borrower for such purpose. Interest shall be due until and including the
next Business Day, if the amounts so paid by Borrowers to the bank account
designated by Lender are received in such bank account later than 12:00 noon,
Chicago time.
(e) No termination of this Agreement or the other Financing Agreements shall
relieve or discharge any Borrower of its respective duties, obligations and
covenants under this Agreement or the other Financing Agreements until all
Obligations have been fully and finally discharged and paid, and Lender's
continuing security interest in the Collateral and the rights and remedies of
Lender hereunder, under the other Financing Agreements and applicable law,
shall remain in effect until all such Obligations have been fully and finally
discharged and paid.
(f) If for any reason this Agreement is terminated prior to the end of the
then current term or renewal term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and
by mutual agreement of the parties as to a reasonable calculation of
Lender's lost profits as a result thereof, Borrowers agree to pay to
Lender, upon the effective date of such termination, an early termination
fee in the amount set forth below if such termination is effective in the
period indicated:
Amount Period
(i) 2% of Maximum Credit From the date hereof to
and including Xxxxx 00,
0000
(xx) 1% of Maximum Credit From April 16, 2000 to
and including Xxxxx 00,
0000
(xxx) 1/2 % of Maximum Credit From the April 16, 2001 to
and including April 14, 2002.
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrowers agree
that it is reasonable under the circumstances currently existing. In
addition, Lender shall be entitled to such early termination fee upon the
occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h)
hereof, even if Lender does not exercise its right to terminate this
Agreement, but elects, at its option, to provide financing to a Borrower or
permit the use of cash collateral under the United States Bankruptcy Code.
The early termination fee provided for in this Section 12.1 shall be deemed
included in the Obligations.
(g) Notwithstanding anything to the contrary contained in Section 12.1(f)
above, in the event of the termination of this Agreement at the request of any
Borrower or Guarantor prior to the end of the term of this Agreement and the
full and final repayment of all Obligations and the receipt by Lender of cash
collateral all as provided in Section 12.1(a) above, Borrowers shall (i) not
be required to pay to Lender an early termination fee if such payments are
made to Lender with the initial proceeds of a financing transaction provided
or underwritten by First Union National Bank and/or one of its Affiliates to
Borrower or Huntco, including, without limitation, a replacement credit
facility, a high-yield debt offering, an equity offering through Wheat First
Securities, a merger or acquisition transaction through Xxxxxx Xxxxxxxxx
Xxxxxx, or any combination thereof and (ii) only be required to pay fifty
(50%) percent of the early termination fee that would otherwise be payable in
accordance with Section 12.1(f) above if each of the following conditions is
satisfied: (A) no Event of Default (or act, condition or event which with
notice, lapse of time or both would constitute an Event of Default) shall
exist or have occurred, (B) Lender shall have received not less than sixty
(60) days prior written notice of the intention of Borrowers to terminate this
Agreement and the other Financing Agreements, and (C) the full repayment of
the Obligations and receipt of cash collateral all as provided in Section
12.1(a) above is received upon the consummation of the sale by Borrowers of
all of their assets or the sale by the owners of Borrowers of all of the
Capital Stock of Borrowers, in any case, in a bona fide arm's length
transaction and on commercially reasonable prices and terms with a person
other than an Affiliate of any Borrower or Guarantor.
12.2 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth below and to Huntco,
as agent for Borrowers at its chief executive office set forth below (with a
copy to Huntco Steel at its chief executive office set forth below), or to
such other address as either party may designate by written notice to the
other in accordance with this provision, and (b) deemed to have been given or
made: if delivered in person, immediately upon delivery; if by telex, telegram
or facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with
instructions to deliver the next Business Day, one (1) Business Day after
sending; and if by certified mail, return receipt requested, five (5) days
after mailing.
12.3 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.4 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure
to the benefit of and be enforceable by Lender, Borrowers, Guarantors and
their respective successors and assigns, except that Borrowers may not assign
their rights under this Agreement, the other Financing Agreements and any
other document referred to herein or therein without the prior written consent
of Lender. Lender may, after notice to any Borrower, assign its rights and
delegate its obligations under this Agreement and the other Financing
Agreements and further may assign, or sell participations in, all or any part
of the Loans, the Letter of Credit Accommodations or any other interest herein
to another financial institution or other person, in which event, the assignee
or participant shall have, to the extent of such assignment or participation,
the same rights and benefits as it would have if it were the Lender hereunder,
except as otherwise provided by the terms of such assignment or participation.
12.5 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between
the terms of this Agreement and any schedule or exhibit hereto, the terms of
this Agreement shall govern.
IN WITNESS WHEREOF, Lender, Borrowers and Guarantors have caused these
presents to be duly executed as of the day and year first above written.
LENDER BORROWERS
CONGRESS FINANCIAL CORPORATION HUNTCO STEEL, INC.
(CENTRAL)
By:
By:
Title:
Title:
Chief Executive Office:
Address:
0000 Xxxx Xxxxxxxxx
000 Xxxxx Xxxxxx Xxxxx Xxxx. X-000
Xxxxxxx, Xxxxxxxx 00000 Springfield, Missouri
MIDWEST PRODUCTS, INC.
By:
Title:
Chief Executive Office:
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
GUARANTORS
HUNTCO INC.
By:
Title:
Chief Executive Office:
00000 Xxxxx Xxxxx Xxxxx Xxxxx
Xxxxx 000X
Xxxx & Xxxxxxx, Xxxxxxxx 00000
HUNTCO NEVADA, INC.
By:
Title: President
Chief Executive Office:
0000 Xxxx Xxxxxxxx
Xxxxx Xxx Xxxxx, Xxxxxx 00000
HSI AVIATION, INC.
By:
Title:
Chief Executive Office:
00000 Xxxxx Xxxxx Xxxxx Xxxxx
Xxxxx 000X
Xxxx & Xxxxxxx, Xxxxxxxx 00000
