EXHIBIT 4
REVOLVING CREDIT AGREEMENT
WITH
TERM LOAN CONVERSION OPTIONS
between
FANSTEEL INC.
and
THE NORTHERN TRUST COMPANY
Dated as January 17, 1997
REVOLVING CREDIT AGREEMENT WITH TERM LOAN CONVERSION OPTIONS
Dated as of January 17, 1997
FANSTEEL INC., a corporation organized under the laws of the state of
Delaware (the "Borrower"), and THE NORTHERN TRUST COMPANY, an Illinois banking
corporation (the "Lender"), agree as follows:
SECTION 1. LOANS
SECTION 1.1 REVOLVING CREDIT LOANS. Subject to the terms and conditions
of this Agreement, the Lender agrees to make loans to the Borrower, from time to
time from the date of this Agreement to (but not including) January 17, 2000
(the "Commitment Termination Date"), at such times and in such amounts, not to
exceed $17,000,000 (such amount, as it may be from time to time reduced or
increased hereunder to other levels not, however, to exceed $17,000,000, is
herein called the "Commitment") at any one time outstanding, as the Borrower may
request (the "Revolving Credit Loan(s)"). During such period the Borrower may
borrow, repay and reborrow hereunder. Each borrowing shall be in the amount of
at least $100,000 or the remaining unused amount of the Commitment. All
Revolving Credit Loans shall be payable in full not later than the Commitment
Termination Date.
SECTION 1.2 REVOLVING CREDIT NOTE. The Revolving Credit Loans shall be
evidenced by a promissory note (the "Revolving Credit Note"), substantially in
the form of
Exhibit A, with appropriate insertions, dated the date hereof, payable to the
order of the Lender, in the principal amount of the Commitment.
SECTION 1.3 TERM LOAN CONVERSION OPTION; TERM LOANS; TERM NOTES. The
Borrower may from time to time (but not more than two times in total) convert
all or a portion of the then-outstanding principal amount of the Revolving
Credit Loans to a five-year term loan (a "Term Loan"); provided that any such
conversion (a "Conversion") and resulting Term Loan shall be subject to all of
the terms and conditions of this Agreement including without limitation the
following:
(a) as a condition of any Conversion the Borrower shall, not less
than two banking days of the Lender prior to the banking day of the Lender
on which such Conversion is to take effect, give the Lender written notice
thereof in the form of Exhibit B (a "Conversion Notice"), which notice
shall state the information and make the certification provided therein
(signed by the President or Chief Financial Officer of the Borrower) and
which notice shall be accompanied by a promissory note (a "Term Note") in
the form of Exhibit C-1 or C-2 (as appropriate) dated the date of such
effective date of the Conversion (and shall be, in any event, in form and
substance satisfactory to the Lender and shall include such further
insertions and other changes as the Lender may require as a condition of
the Conversion);
(b) If the Borrower shall have elected "Option A" in a Conversion
Notice, then the provisions of Section 2B below shall be applicable with
respect to the resulting Term Loan (herein called an "Option A Term Loan").
If the Borrower shall have elected "Option B" in a conversion notice, then
the provisions of Section 2C below shall be applicable with respect to the
resulting Term Loan (herein called an "Option B Term Loan");
(c) No more than two Conversions shall be effected;
(d) No Conversion shall be effected later than April 30, 1998;
(e) The principal amount of all Conversions shall not exceed
$6,000,000 in the aggregate; and
(f) No Conversion shall be effected at any time when an Event of
Default or Unmatured Event of Default shall have occurred and be
continuing.
Simultaneously with the effectiveness of any Conversion, the principal
amount of the Revolving Credit Loans shall be deemed to have been voluntarily
prepaid under Section 2A.7 in an amount equal to the converted principal amount
(it being understood that interest thereon and any other payment due under
Section 2A.7 shall be required to be concurrently paid in accordance with such
Section); and such converted principal amount shall thereupon be evidenced by,
and be deemed continuing indebtedness under, the Term Note delivered in
connection with such Conversion.
The Revolving Credit Loans and any Term Loan(s) are collectively called the
"Loans," and the Revolving Credit Note and any Term Note(s) are herein
collectively called the "Notes."
SECTION 1.4 CERTAIN AUTOMATIC ADJUSTMENTS TO THE COMMITMENT. Subject to
the terms and conditions of this Agreement:
(a) Simultaneously with the effectiveness of any Conversion, the
Commitment shall automatically be reduced by an amount equal to the
principal amount converted;
(b) Simultaneously with each repayment of principal of a Term Loan,
the Commitment shall automatically be increased by an amount equal to the
principal amount repaid;
(c) Simultaneously with the issuance of any letter of credit (not
including for this purpose renewals of letters of credit outstanding on the
date hereof) by the Lender to the Borrower (it being understood that any
such issuance shall be in the Lender's sole discretion), the Commitment
shall automatically be reduced by the face amount of such letter of credit;
and
(d) Simultaneously with the expiry, undrawn, of any such letter of
credit, the Commitment shall automatically be increased in an amount equal
to such face amount.
SECTION 2A. INTEREST, PAYMENTS AND FEES FOR REVOLVING LOANS
SECTION 2A.1 INTEREST. The unpaid principal amount of the Revolving
Credit Loans from time to time outstanding hereunder shall bear interest at the
following rates per year:
(a) before maturity, whether by acceleration or otherwise, at the option
of the Borrower, subject to the terms hereof at a rate equal to:
(i) "LIBOR," which shall mean that fixed rate of interest per
year for deposits with maturity periods of one, two or three
months (which maturity period the Borrower shall select subject
to the terms stated herein) in United States dollars offered to
the Lender in or through the London interbank market at or about
11:00 A.M., London time, two days (during which banks are
generally open in both Chicago and London) before the rate is to
take effect in an amount corresponding to the amount of the
requested advance ("advance" referring to a Loan or portion
thereof) and for the London deposit maturity requested, divided
by one minus any applicable reserve requirement (expressed as a
decimal) on Eurodollar deposits of the same amount and maturity
as determined by the Lender, plus one-half of one percent (.50%);
or
(ii) the "Federal Funds Rate," which shall mean the weighted average
of the rates on overnight Federal Funds transactions, with members of
the Federal Reserve System only, arranged by Federal funds brokers,
plus three-quarters of one per cent (.75%). The Federal Funds Rate
shall be determined by the Lender on the basis of reports by Federal
funds brokers to, and published daily by, the Federal Reserve Bank of
New York in the Composite Closing Quotations for U.S. Government
Securities. If such publication is unavailable or the Federal Funds
Rate is not set forth therein, the Federal Funds rate shall be
determined on the basis of any other source reasonably selected by the
Lender. The Federal Funds Rate applicable each day shall be the
Federal Funds Rate reported as applicable to Federal Funds
Transactions on that date. In the case of Saturday, Sunday or legal
holiday, the Federal Funds Rate shall be the rate applicable to
Federal Funds transactions on the immediately preceding day for which
the Federal Funds Rate is reported; or
(iii) the "Prime Rate," which shall mean that rate of interest
per year announced from time to time by the Lender called its
prime rate, which rate may not at any time be the lowest rate
charged by the Lender. Changes in the rate of interest on the
Loan resulting from a change in the Prime Rate shall take effect
on the date set forth in each announcement for a change in the
Prime Rate; and
(b) after the maturity of any Loan, until paid, at a rate equal to 2% in
addition to the Prime Rate (but not less than the Prime Rate in effect at
maturity).
SECTION 2A.2 RATE SELECTION. The Borrower shall select and change its
selection of the interest rate as among LIBOR, the Federal Funds Rate and the
Prime Rate to apply to at least $100,000 and in integral multiples of $50,000
thereafter of any advance, subject to the requirements herein stated:
(a) At the time any advance is made;
(b) At the expiration of the particular LIBOR maturity period selected for
the outstanding principal balance of any advance currently bearing interest
at LIBOR; and
(c) At any time for the outstanding principal balance of any advance
currently bearing interest at the Prime Rate.
SECTION 2A.3 RATE CHANGES AND NOTIFICATIONS.
(a) LIBOR. If the Borrower wishes to borrow funds at LIBOR or if the
Borrower wishes to change the rate of interest on any advance, within the
limits described above, from any other rate to LIBOR, it shall, not less
than two banking days of the Lender prior to the banking day of the Lender
on which such rate is to take effect, give the Lender written or telephonic
notice thereof, which shall be irrevocable. Such notice shall specify the
advance to which LIBOR is to apply, and, in addition, the desired LIBOR
maturity period of one, three, or six months (but not to exceed the
maturity date of the Revolving Credit Loans).
(b) Federal Funds Rate. If the Borrower wishes to borrow funds at the
Federal Funds Rate or to change the rate of interest on any advance from
any other rate to the Federal Funds Rate, it shall, at or before 10:00
A.M., Chicago time, on the date such borrowing or change is to take effect,
which shall be a banking day of the Lender, give written or telephonic
notice thereof, which shall be irrevocable. Such notice shall specify the
advance and the desired interest rate option.
(c) Failure to Notify. If the Borrower does not notify the Lender at the
expiration of a selected maturity period with respect to any principal
outstanding at LIBOR, or if the Borrower does not notify the Lender as to
its selection of the interest rate with respect to any new advance of
principal, then in the absence of such notice the Borrower shall be deemed
to have elected to have such principal accrue interest at the Prime Rate.
SECTION 2A.4 INTEREST PAYMENT DATES. Accrued interest shall be paid in
respect of each portion of principal of the Revolving Credit Loans to which the
Federal Funds Rate or the Prime Rate applies on the last day of each month of
each year, beginning with the first of such dates to occur after the date of the
first advance, at maturity, and upon payment in full, and to each portion of
principal to which LIBOR applies, at the end of each respective maturity period,
every three months, at maturity, and upon payment in full, whichever is earlier
or more frequent. After maturity, interest shall be payable upon demand.
SECTION 2A.5 ADDITIONAL PROVISIONS WITH RESPECT TO LIBOR LOANS.
The selection by the Borrower of LIBOR and the maintenance of advances at
such rate shall be subject to the following additional terms and conditions:
(a) Availability of Deposits at a Determinable Rate. If, after the
Borrower has elected to borrow or maintain any advance at LIBOR, the Lender
notifies the Borrower that:
(i) United States dollar deposits in the amount and for the
maturity requested are not available to the Lender in the London
interbank market, or
(ii) Reasonable means do not exist for the Lender to
determine LIBOR for the amount and maturity requested,
all as determined by the Lender in its sole discretion, then the principal
subject to LIBOR shall accrue or shall continue to accrue interest at the
Prime Rate.
(b) Prohibition of Making, Maintaining, or Repayment of Principal at
LIBOR. If any treaty, statute, regulation, interpretation thereof, or any
directive, guideline, or otherwise by a central bank or fiscal authority
(whether or not having the force of law) shall either prohibit or extend
the time at which any principal subject to LIBOR may be purchased,
maintained, or repaid, then on and as of the date the prohibition becomes
effective, the principal subject to that prohibition shall continue at the
Prime Rate.
(c) Payments of Principal and Interest to be Net of Any Taxes or Costs.
All payments of principal and interest shall be made net of any taxes and
costs incurred by the Lender resulting from having principal outstanding
hereunder at LIBOR. Without limiting the generality of the preceding
obligation, illustrations of such taxes and costs are:
(i) Taxes (or the withholding of amounts for taxes) of any
nature whatsoever including income, excise, and interest
equalization taxes (other than income taxes imposed by the United
States or any state thereof on the income of the Lender), as well
as all levies, imposts, duties, or fees whether now in existence
or resulting from a change in, or promulgation of, any treaty,
statute, regulation, interpretation thereof, or any directive,
guideline, or otherwise, by a central bank or fiscal authority
(whether or not having the force of law) or a change in the basis
of, or time of payment of, such taxes and other amounts resulting
therefrom;
(ii) Any reserve or special deposit requirements against assets
or liabilities of, or deposits with or for the account of, the
Lender with respect to principal outstanding at LIBOR (including
those imposed under Regulation D of the Federal Reserve Board) or
resulting from a change in, or the promulgation of, such
requirements by treaty, statute, regulation, interpretation
thereof, or any directive, guideline, or otherwise by a central
bank or fiscal authority (whether or not having the force of
law);
(iii) Any other costs resulting from compliance with treaties,
statutes, regulations, interpretations, or any directives or
guidelines, or otherwise by a central bank or fiscal authority
(whether or not having the force of law);
(iv) Any loss (including loss of anticipated profits) or
expense incurred by reason of the liquidation or re-employment of
deposits acquired by the Lender:
(A) To make advances or maintain principal outstanding at
LIBOR; or
(B) As the result of a voluntary prepayment at a date other
than the maturity date selected for principal outstanding at
LIBOR; or
(C) As the result of a mandatory repayment at a date other
than that maturity date selected for principal outstanding
at LIBOR as the result of the occurrence of an Event of
Default and the acceleration of any portion of the
indebtedness hereunder; or
(D) As the result of a prohibition on making, maintaining,
or repaying principal outstanding at LIBOR.
If the Lender incurs any such taxes or costs, the Borrower, upon demand in
writing specifying such taxes and costs, shall pay them at the later of 30
days thereafter or the date of the next scheduled payment hereunder; save
for manifest error the Lender's specification shall be presumptively deemed
correct. All advances made at LIBOR shall be conclusively deemed to have
been funded by or on behalf of the Lender (in the case of LIBOR, in the
London interbank market) by the purchase of deposits corresponding in
amount and maturity to the amount and interest periods selected (or deemed
to have been selected) by the Borrower under this Agreement.
SECTION 2A.6 ADDITIONAL PROVISIONS WITH RESPECT TO FEDERAL FUNDS RATE
LOANS.
The selection by the Borrower of the Federal Funds Rate and the maintenance
of advances at such rate shall be subject to the following additional terms and
conditions:
(a) Determinable Rate. If, after the Borrower has elected to borrow or
maintain any advance at the Federal Funds Rate, the Lender notifies the
Borrower that reasonable means do not exist for the Lender to determine the
Federal Funds Rate, as determined by the Lender in its sole discretion,
then the principal subject to the Federal Funds Rate shall accrue or shall
continue to accrue interest at the Prime Rate.
(b) Prohibition of Making, Maintaining, or Repayment of Principal at the
Federal Funds Rate. If any treaty, statute, regulation, interpretation
thereof, or any directive, guideline, or otherwise by a central bank or
fiscal authority (whether or not having the force of law) shall either
prohibit or extend the time at which any principal subject to the Federal
Funds Rate may be purchased, maintained, or repaid , then on and as of the
date the prohibition becomes effective, the principal subject to that
prohibition shall continue at the Prime Rate.
SECTION 2A.7 PAYMENT AND PREPAYMENT. The Borrower may from time to time
prepay any principal bearing interest at the Federal Funds Rate or the Prime
Rate in whole or in part at any time and may prepay any principal bearing
interest at LIBOR at the end of the maturity period chosen or agreed to by the
Borrower applicable to the advance or portion of the advance being prepaid,
without premium or penalty. Any prepayment of an amount bearing interest at
LIBOR at a date other than the maturity date applicable to the advance or the
portion of the advance being prepaid shall be subject to the provisions of
Section 2A.5. All prepayments of principal shall include interest accrued to
the date of prepayment on the principal amount being prepaid.
SECTION 2A.8 BASIS OF COMPUTATION. Interest shall be computed for the
actual number of days elapsed on the basis of a year consisting of 360 days,
including the date a Loan is made and excluding the date a Loan or any portion
thereof is paid or prepaid.
SECTION 2A.9 FACILITY FEE. The Borrower agrees to pay the Lender an
annual facility fee which shall be payable in advance on the date of this
Agreement and on each anniversary of the date of this Agreement, and which shall
be (in each case) in an amount equal to one-eighth of one per cent (.125%) of
the Commitment which is in effect on the respective date of payment.
SECTION 2A.10 COMMITMENT FEE, VOLUNTARY REDUCTION OF COMMITMENT. The
Borrower agrees to pay the Lender a commitment fee (the "Commitment Fee") of
one-eighth of one percent (.125%) per year on the average daily unused amount of
the Commitment. The Commitment Fee shall commence to accrue on the date of this
Agreement and shall be paid on the last day of each March, June, September and
December in each year, beginning with the first of such dates to occur after the
date of this Agreement, at maturity and upon payment in full. Upon at least ten
days' prior written notice, which shall be irrevocable, the Borrower may reduce
the Commitment, effective as of the last banking day of any calendar quarter, in
an amount of at least $500,000 or in full. Upon any such reduction of any part
of the unused Commitment, the Commitment Fee on the part reduced shall be paid
in full as of the date of such reduction.
SECTION 2B. INTEREST AND PAYMENTS FOR OPTION A TERM LOANS
SECTION 2B.1 INTEREST. The unpaid principal amount of each and any Option
A Term Loan shall bear interest at the following rates per year:
(a) before maturity, whether by acceleration or otherwise, at the option
of the Borrower, subject to the terms hereof at a rate equal to:
(i) "LIBOR," which shall mean that fixed rate of interest per year
for deposits with maturity periods of one, two, three or six months
(which maturity period the Borrower shall select subject to the terms
stated herein) in United States dollars offered to the Lender in or
through the London interbank market at or about 11:00 A.M., London
time, three days (during which banks are generally open in both
Chicago and London) before the rate is to take effect in an amount
corresponding to the amount of the requested advance ("advance"
referring to a Loan or portion thereof) and for the London deposit
maturity requested, divided by one minus any applicable reserve
requirement (expressed as a decimal) on Eurodollar deposits of the
same amount and maturity as determined by the Lender, plus three-
quarters of one percent (.75%); or
(ii) The "Bank Offered Rate," which shall be that rate of interest
per year equal to that rate of interest per year offered by the Lender
and accepted by the Borrower and fixed for up to five years, as
offered by the Lender and accepted by the Borrower; or
(iii) "Prime Rate," which shall mean that rate of interest per year
announced from time to time by the Lender called its prime rate, which
rate may not at any time be the lowest rate charged by the Lender.
Changes in the rate of interest on the Loan resulting from a change in
the Prime Rate shall take effect on the date set forth in each
announcement for a change in the Prime Rate; and
(b) after the maturity of any Loan, until paid, at a rate equal to 2% in
addition to the Prime Rate (but not less than the Prime Rate in effect at
maturity).
SECTION 2B.2 RATE SELECTION. The Borrower shall select and change its
selection of the interest rate as among LIBOR, the Bank Offered Rate and the
Prime Rate to apply to at least $1,000,000 and in integral multiples of $50,000
thereafter of any advance, subject to the requirements herein stated:
(a) At the time any advance is made;
(b) At the expiration of the particular LIBOR or Bank Offered Rate
maturity period selected for the outstanding principal balance of any
advance currently bearing interest at LIBOR or the Bank Offered Rate; and
(c) At any time for the outstanding principal balance of any advance
currently bearing interest at the Prime Rate.
SECTION 2B.3 RATE CHANGES AND NOTIFICATIONS.
(a) LIBOR. If the Borrower wishes to borrow funds at LIBOR or if the
Borrower wishes to change the rate of interest on any advance, within the
limits described above, from any other rate to LIBOR, it shall, not less
than two banking days of the Lender prior to the banking day of the Lender
on which such rate is to take effect, give the Lender written or telephonic
notice thereof, which shall be irrevocable. Such notice shall specify the
advance to which LIBOR is to apply, and, in addition, the desired LIBOR
maturity period of one, two, three or six months (but not to exceed the
maturity date of this Agreement).
(b) Bank Offered Rate. If the Borrower wishes to borrow funds at the Bank
Offered Rate or to change the rate of interest on any advance to the Bank
Offered Rate, it shall, at or before 10:00 A.M., Chicago time, on the date
such borrowing or change is to take effect, which shall be a banking day of
the Lender, give written or telephonic notice thereof, which shall be
irrevocable. Such notice shall specify the advance to which the Bank
Offered Rate is to apply and the desired maturity period (but not to exceed
the maturity date of the Loan). The Lender shall then in its sole
discretion offer or decline to offer a Bank Offered Rate (and if it offers
a Bank Offered Rate, the rate of such Bank Offered Rate shall be in the
Lender's sole discretion), and the Borrower shall irrevocably accept or
decline such particular Bank Offered Rate and the related advance and
confirm such acceptance in writing by letter or other written communication
dated and sent the date of such borrowing or change. Without limiting the
Borrower's obligations under any other document or instrument, the Lender
may in offering such Bank Offered Rate and the related advance rely without
inquiry upon any person whom it reasonably believes to be a party
authorized to accept or decline such Bank Offered Rate and the related
advance.
(c) Failure to Notify. If the Borrower does not notify the Lender at the
expiration of a selected maturity period with respect to any principal
outstanding at LIBOR or the Bank Offered Rate, then in the absence of such
notice Borrower shall be deemed to have elected to have such principal
accrue interest after the respective LIBOR or Bank Offered Rate maturity
period at the Prime Rate.
SECTION 2B.4 INTEREST PAYMENT DATES. Accrued interest shall be paid on
each Option A Term Loan to which the Bank Offered Rate or the Prime Rate applies
on the last day of each month of each year, beginning with the first of such
dates to occur after the date of the conversion of such Loan, at maturity, and
upon payment in full, and to each Option A Term Loan to which LIBOR applies, at
the end of each respective maturity period, every three months, at maturity, and
upon payment in full, whichever is earlier or more frequent. After maturity,
interest shall be payable upon demand.
SECTION 2B.5 ADDITIONAL PROVISIONS WITH RESPECT TO LIBOR AND BANK OFFERED
RATE LOANS.
The selection by the Borrower of LIBOR or the Bank Offered Rate and the
maintenance of advances at such rate shall be subject to the following
additional terms and conditions:
(a) Availability of Deposits at a Determinable Rate. If, after the
Borrower has elected to borrow or maintain any advance at LIBOR, the Lender
notifies the Borrower that:
(i) United States dollar deposits in the amount and for the
maturity requested are not available to the Lender in the London
interbank market, or
(ii) Reasonable means do not exist for the Lender to
determine LIBOR for the amount and maturity requested,
all as determined by the Lender in its sole discretion, then the principal
subject to LIBOR shall accrue or shall continue to accrue interest at the
Prime Rate.
(b) Prohibition of Making, Maintaining, or Repayment of Principal at
LIBOR. If any treaty, statute, regulation, interpretation thereof, or any
directive, guideline, or otherwise by a central bank or fiscal authority
(whether or not having the force of law) shall either prohibit or extend
the time at which any principal subject to LIBOR may be purchased,
maintained, or repaid, then on and as of the date the prohibition becomes
effective, the principal subject to that prohibition shall continue at the
Prime Rate.
(c) Payments of Principal and Interest to be Net of Any Taxes or Costs.
All payments of principal and interest shall be made net of any taxes and
costs incurred by the Lender resulting from having principal outstanding
hereunder at LIBOR or the Bank Offered Rate. Without limiting the
generality of the preceding obligation, illustrations of such taxes and
costs are:
(i) Taxes (or the withholding of amounts for taxes) of any
nature whatsoever including income, excise, and interest
equalization taxes (other than income taxes imposed by the United
States or any state thereof on the income of the Lender), as well
as all levies, imposts, duties, or fees whether now in existence
or resulting from a change in, or promulgation of, any treaty,
statute, regulation, interpretation thereof, or any directive,
guideline, or otherwise, by a central bank or fiscal authority
(whether or not having the force of law) or a change in the basis
of, or time of payment of, such taxes and other amounts resulting
therefrom;
(ii) Any reserve or special deposit requirements against assets
or liabilities of, or deposits with or for the account of, the
Lender with respect to principal outstanding at LIBOR (including
those imposed under Regulation D of the Federal Reserve Board) or
resulting from a change in, or the promulgation of, such
requirements by treaty, statute, regulation, interpretation
thereof, or any directive, guideline, or otherwise by a central
bank or fiscal authority (whether or not having the force of
law);
(iii) Any other costs resulting from compliance with treaties,
statutes, regulations, interpretations, or any directives or
guidelines, or otherwise by a central bank or fiscal authority
(whether or not having the force of law);
(iv) Any loss (including loss of anticipated profits) or
expense incurred by reason of the liquidation or re-employment of
deposits acquired by the Lender:
(A) To make advances or maintain principal outstanding at
LIBOR or the Bank Offered Rate; or
(B) As the result of a voluntary prepayment at a date other
than the maturity date selected for principal outstanding at
LIBOR or the Bank Offered Rate; or
(C) As the result of a mandatory repayment at a date other
than that maturity date selected for principal outstanding
at LIBOR or the Bank Offered Rate as the result of the
occurrence of an Event of Default and the acceleration of
any portion of the indebtedness hereunder; or
(D) As the result of a prohibition on making, maintaining,
or repaying principal outstanding at LIBOR or the Bank
Offered Rate.
If the Lender incurs any such taxes or costs, the Borrower, upon demand in
writing specifying such taxes and costs, shall pay them at the later of 30
days thereafter or the date of the next scheduled payment hereunder; save
for manifest error the Lender's specification shall be presumptively deemed
correct. All advances made at LIBOR or the Bank Offered Rate shall be
conclusively deemed to have been funded by or on behalf of the Lender (in
the case of LIBOR, in the London interbank market) by the purchase of
deposits corresponding in amount and maturity to the amount and interest
periods selected (or deemed to have been selected) by the Borrower under
this Agreement.
SECTION 2B.6 PAYMENT AND PREPAYMENT. The Borrower may from time to time,
upon at least two days' prior written notice to the Lender, prepay any Option A
Term Loan bearing interest at the Prime Rate in whole or in part without premium
or penalty except as otherwise set forth in this Agreement, and such prepayment
shall be applied to the unpaid installments of such Term Loan in the inverse
order of maturity. Any prepayment of a Term Loan bearing interest at LIBOR or a
Bank Offered Rate shall be subject to the provisions of Section 2B.5. All
prepayments of principal shall include interest accrued to the date of
prepayment on the principal amount being prepaid.
SECTION 2B.7 PRINCIPAL REPAYMENT DATES. Each Option A Term Loan shall be
payable in equal consecutive quarterly principal installments, each of which
shall be in an amount equal to one-twentieth (1/20) of the principal amount of
the Loan (subject to adjustment of the final payment, if necessary, by the
Lender), payable on the last day of March, June, September and December of each
year, beginning with the first of such dates to occur after the date of the
Conversion.
SECTION 2C. INTEREST AND PAYMENTS FOR OPTION B TERM LOANS
SECTION 2C.1 INTEREST. The unpaid principal amount of each and any Option
B Term Loan shall bear interest at the following rates per year:
(a) before maturity, whether by acceleration or otherwise, at the option
of the Borrower, subject to the terms hereof at a rate equal to:
(i) "LIBOR," which shall means that fixed rate of interest per year
for deposits with maturity periods of one, two, three or six months
(which maturity period the Borrower shall select subject to the terms
stated herein) in United States dollars offered to the Lender in or
through the London interbank market at or about 11:00 A.M., London
time, three days (during which banks are generally open in both
Chicago and London) before the rate is to take effect in an amount
corresponding to the amount of the requested advance ("advance"
referring to a Loan or portion thereof) and for the London deposit
maturity requested, divided by one minus any applicable reserve
requirement (expressed as a decimal) on Eurodollar deposits of the
same amount and maturity as determined by the Lender, plus one percent
(1.00%); or
(ii) The "Bank Offered Rate" which shall be that rate of interest per
year equal to that rate of interest per year offered by the Lender and
accepted by the Borrower and fixed for up to five years as offered by
Lender and accepted by Borrower; or
(iii) the "Prime Rate," which shall mean that rate of interest per
year announced from time to time by the Lender called its prime rate,
which rate may not at any time be the lowest rate charged by the
Lender. Changes in the rate of interest on the Loan resulting from a
change in the Prime Rate shall take effect on the date set forth in
each announcement for a change in the Prime Rate; and
(b) after the maturity of any Loan, until paid, at a rate equal to 2% in
addition to the Prime Rate (but not less than the Prime Rate in effect at
maturity).
SECTION 2C.2 RATE SELECTION. The Borrower shall select and change its
selection of the interest rate as among LIBOR, the Bank Offered Rate and the
Prime Rate to apply to at least $500,000 and in integral multiples of $50,000
thereafter of any advance, subject to the requirements herein stated:
(a) At the time any advance is made;
(b) At the expiration of the particular LIBOR or Bank Offered Rate
maturity period selected for the outstanding principal balance of any
advance currently bearing interest at LIBOR or the Bank Offered Rate; and
(c) At any time for the outstanding principal balance of any advance
currently bearing interest at the Prime Rate.
SECTION 2C.3 RATE CHANGES AND NOTIFICATIONS.
(a) LIBOR. If the Borrower wishes to borrow funds at LIBOR or if the
Borrower wishes to change the rate of interest on any advance, within the
limits described above, from any other rate to LIBOR, it shall, not less
than two banking days of the Lender prior to the banking day of the Lender
on which such rate is to take effect, give the Lender written or telephonic
notice thereof, which shall be irrevocable. Such notice shall specify the
advance to which LIBOR is to apply, and, in addition, the desired LIBOR
maturity period of one, two, three, or six months (but not to exceed the
maturity date of this Agreement).
(b) Bank Offered Rate. If Borrower wishes to borrow funds at the Bank
Offered Rate or to change the rate of interest on any advance to the Bank
Offered Rate, it shall, at or before 10:00 A.M., Chicago time, on the date
such borrowing or change is to take effect, which shall be a banking day of
the Lender, give written or telephonic notice thereof, which shall be
irrevocable. Such notice shall specify the advance to which the Bank
Offered Rate is to apply and the desired maturity period (but not to exceed
the maturity date of the Loan). The Lender shall then in its sole
discretion offer or decline to offer a Bank Offered Rate (and if it offers
a Bank Offered Rate, the rate of such Bank Offered Rate shall be in the
Lender's sole discretion), and the Borrower shall irrevocably accept or
decline such particular Bank Offered Rate and the related advance and
confirm such acceptance in writing by letter or other written communication
dated and sent the date of such borrowing or change. Without limiting the
Borrower's obligations under any other document or instrument, the Lender
may in offering such Bank Offered Rate and the related advance rely without
inquiry upon any person whom it reasonably believes to be a party
authorized to accept or decline such Bank Offered Rate and the related
advance.
(c) Failure to Notify. If the Borrower does not notify the Lender at the
expiration of a selected maturity period with respect to any principal
outstanding at LIBOR or the Bank Offered Rate, then in the absence of such
notice Borrower shall be deemed to have elected to have such principal
accrue interest after the respective LIBOR or Bank Offered Rate maturity
period at the Prime Rate.
SECTION 2C.4 INTEREST PAYMENT DATES. Accrued interest shall be paid on
each Option B Term Loan to which the Bank Offered Rate or the Prime Rate applies
on the last day of each month of each year, beginning with the first of such
dates to occur after the date of the conversion of such Loan, at maturity, and
upon payment in full, and to each Option B Term Loan to which LIBOR applies, at
the end of each respective maturity period, every three months, at maturity, and
upon payment in full, whichever is earlier or more frequent. After maturity,
interest shall be payable upon demand.
SECTION 2C.5 ADDITIONAL PROVISIONS WITH RESPECT TO LIBOR AND BANK OFFERED
RATE LOANS.
The selection by the Borrower of LIBOR or the Bank Offered Rate and the
maintenance of advances at such rate shall be subject to the following
additional terms and conditions:
(a) Availability of Deposits at a Determinable Rate. If, after the
Borrower has elected to borrow or maintain any advance at LIBOR, the Lender
notifies the Borrower that:
(i) United States dollar deposits in the amount and for the
maturity requested are not available to the Lender in the London
interbank market, or
(ii) Reasonable means do not exist for the Lender to
determine LIBOR for the amount and maturity requested,
all as determined by the Lender in its sole discretion, then the principal
subject to LIBOR shall accrue or shall continue to accrue interest at the
Prime Rate.
(b) Prohibition of Making, Maintaining, or Repayment of Principal at
LIBOR. If any treaty, statute, regulation, interpretation thereof, or any
directive, guideline, or otherwise by a central bank or fiscal authority
(whether or not having the force of law) shall either prohibit or extend
the time at which any principal subject to LIBOR may be purchased,
maintained, or repaid, then on and as of the date the prohibition becomes
effective, the principal subject to that prohibition shall continue at the
Prime Rate.
(c) Payments of Principal and Interest to be Net of Any Taxes or Costs.
All payments of principal and interest shall be made net of any taxes and
costs incurred by the Lender resulting from having principal outstanding
hereunder at LIBOR or the Bank Offered Rate. Without limiting the
generality of the preceding obligation, illustrations of such taxes and
costs are:
(i) Taxes (or the withholding of amounts for taxes) of any
nature whatsoever including income, excise, and interest
equalization taxes (other than income taxes imposed by the United
States or any state thereof on the income of the Lender), as well
as all levies, imposts, duties, or fees whether now in existence
or resulting from a change in, or promulgation of, any treaty,
statute, regulation, interpretation thereof, or any directive,
guideline, or otherwise, by a central bank or fiscal authority
(whether or not having the force of law) or a change in the basis
of, or time of payment of, such taxes and other amounts resulting
therefrom;
(ii) Any reserve or special deposit requirements against assets
or liabilities of, or deposits with or for the account of, the
Lender with respect to principal outstanding at LIBOR (including
those imposed under Regulation D of the Federal Reserve Board) or
resulting from a change in, or the promulgation of, such
requirements by treaty, statute, regulation, interpretation
thereof, or any directive, guideline, or otherwise by a central
bank or fiscal authority (whether or not having the force of
law);
(iii) Any other costs resulting from compliance with treaties,
statutes, regulations, interpretations, or any directives or
guidelines, or otherwise by a central bank or fiscal authority
(whether or not having the force of law);
(iv) Any loss (including loss of anticipated profits) or
expense incurred by reason of the liquidation or re-employment of
deposits acquired by the Lender:
(A) To make advances or maintain principal outstanding at
LIBOR or the Bank Offered Rate; or
(B) As the result of a voluntary prepayment at a date other
than the maturity date selected for principal outstanding at
LIBOR or the Bank Offered Rate; or
(C) As the result of a mandatory repayment at a date other
than that maturity date selected for principal outstanding
at LIBOR or the Bank Offered Rate as the result of the
occurrence of an Event of Default and the acceleration of
any portion of the indebtedness hereunder; or
(D) As the result of a prohibition on making, maintaining,
or repaying principal outstanding at LIBOR or the Bank
Offered Rate.
If the Lender incurs any such taxes or costs, the Borrower, upon demand in
writing specifying such taxes and costs, shall pay them at the later of 30
days thereafter or the date of the next scheduled payment hereunder; save
for manifest error the Lender's specification shall be presumptively deemed
correct. All advances made at LIBOR or the Bank Offered Rate shall be
conclusively deemed to have been funded by or on behalf of the Lender (in
the case of LIBOR, in the London interbank market) by the purchase of
deposits corresponding in amount and maturity to the amount and interest
periods selected (or deemed to have been selected) by the Borrower under
this Agreement.
SECTION 2C.6 PAYMENT AND PREPAYMENT. The Borrower may from time to time,
upon at least two days' prior written notice to the Lender, prepay any Option B
Term Loan bearing interest at the Prime Rate in whole or in part without premium
or penalty except as otherwise set forth in this Agreement, and such prepayment
shall be applied to the unpaid installments of such Term Loan in the inverse
order of maturity. Any prepayment of a Term Loan bearing interest at LIBOR or a
Bank Offered Rate shall be subject to the provisions of Section 2C.5. All
prepayments of principal shall include interest accrued to the date of
prepayment on the principal amount being prepaid.
SECTION 2C.7 PRINCIPAL REPAYMENT DATES. Each Option B Term Loan shall be
payable in 20 consecutive quarterly principal installments payable on the last
day of March, June, September and December of each year, beginning with the
first of such dates to occur after the date of the Conversion. The first 19 of
such installments shall each be in an amount equal to one-fortieth (1/40) of the
principal amount of the Loan, and the final installment shall be of all
principal amounts then outstanding.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, the Borrower represents
and warrants to the Lender that:
SECTION 3.1 ORGANIZATION. The Borrower is a corporation existing and in
good standing under the laws of the state indicated in the heading; any
subsidiary is a corporation or partnership duly existing and in good standing
under the laws of the state of its formation as indicated on Exhibit D; the
Borrower and any subsidiary are duly qualified, in good standing and authorized
to do business in each jurisdiction where, because of the nature of their
activities or properties, such qualification is required; and the Borrower and
any subsidiary have the power and authority to own their properties and to carry
on their businesses as now being conducted.
SECTION 3.2 AUTHORIZATION; NO CONFLICT. The borrowings hereunder, the
execution and delivery of the Notes and the performance by the Borrower of its
obligations under this Agreement and the Notes are within the Borrower's
corporate powers, have been authorized by all necessary corporate action, have
received all necessary governmental approval (if any shall be required) and do
not and will not contravene or conflict with any provision of law or of the
charter or by-laws of the Borrower or any subsidiary or of any agreement binding
upon the Borrower or any subsidiary.
SECTION 3.3 FINANCIAL STATEMENTS. The Borrower's audited consolidating and
consolidated financial statements as at December 31, 1995 and its unaudited
consolidating and consolidated financial statements as at March 31, 1996, copies
of which have been furnished to the Lender, have been prepared in conformity
with generally accepted accounting principles applied on a basis consistent with
that of the preceding fiscal year, and accurately present the financial
condition of the Borrower and any subsidiary as at such dates and the results of
their operations for the respective periods then ended. Since the date of those
financial statements, no material, adverse change in the business, properties,
assets, operations, conditions or prospects of the Borrower or any subsidiary
has occurred of which the Lender has not been advised in writing before this
Agreement was signed. There is no known contingent liability of the Borrower or
any subsidiary which is known to be in an amount in excess of $1,000,000 which
is not reflected in such financial statements or of which the Lender has not
been advised in writing before this Agreement was signed.
SECTION 3.4 TAXES. Federal income tax returns for the Borrower and any
subsidiary have been examined and closed by the Internal Revenue Service for all
years including the year ended December 31, 1993. The Borrower and any
subsidiary have filed or caused to be filed all federal, state and local tax
returns which, to the knowledge of the Borrower or any subsidiary, are required
to be filed, and have paid or have caused to be paid all taxes as shown on such
returns or on any assessment received by them, to the extent that such taxes
have become due (except for current taxes not delinquent and taxes being
contested in good faith and by appropriate proceedings for which adequate
reserves have been provided on the books of the Borrower or the appropriate
subsidiary, and as to which no foreclosure, distraint, sale or similar
proceedings have been commenced). The Borrower and any subsidiary have set up
reserves which are adequate for the payment of additional taxes for years which
have not been audited by the respective tax authorities.
SECTION 3.5 LIENS. None of the assets of the Borrower or any subsidiary
are subject to any mortgage, pledge, title retention lien, or other lien,
encumbrance or security interest, except for: (a) current taxes not delinquent
or taxes being contested in good faith and by appropriate proceedings; (b) liens
arising in the ordinary course of business for sums not due or sums being
contested in good faith and by appropriate proceedings, but not involving any
deposits or advances or borrowed money or the deferred purchase price of
property or services; and (c) liens set forth on Exhibit D-1.
SECTION 3.6 ADVERSE CONTRACTS. Neither the Borrower nor any subsidiary is
a party to any agreement or instrument or subject to any charter or other
corporate restriction, nor is it subject to any judgment, decree or order of any
court or governmental body, which may have a material and adverse effect on the
business, assets, liabilities, financial condition, operations or business
prospects of the Borrower and its subsidiaries taken as a whole or on the
ability of the Borrower to perform its obligations under this Agreement or any
Note. Neither the Borrower nor any subsidiary has, nor with reasonable
diligence should have had, knowledge of or notice that it is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any such agreement, instrument, restriction, judgment,
decree or order.
SECTION 3.7 REGULATION U. The Borrower is not engaged principally in, nor
is one of the Borrower's important activities, the business of extending credit
for the purpose of purchasing or carrying "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereinafter in effect.
SECTION 3.8 LITIGATION AND CONTINGENT LIABILITIES. Except as set forth on
Exhibit D-2 no litigation (including derivative actions), arbitration
proceedings or governmental proceedings are pending or threatened in writing
against the Borrower which would (singly or in the aggregate), if adversely
determined, have a material and adverse effect on the financial condition,
continued operations or prospects of the Borrower or any subsidiary, except as
set forth (including estimates of the dollar amounts involved) in a schedule
furnished by the Borrower to the Lender before this Agreement was signed.
SECTION 3.9 SUBSIDIARIES. Attached hereto as Exhibit D is a correct and
complete list of all subsidiaries and affiliates of the Borrower.
SECTION 4. COVENANTS
Until all obligations of the Borrower hereunder and under the Notes are
paid and fulfilled in full, the Borrower agrees that it shall, and shall cause
any subsidiary to, comply with the following covenants, unless the Lender
consents otherwise in writing:
SECTION 4.1 CORPORATE EXISTENCE, MERGERS, ETC. The Borrower and any
subsidiary shall preserve and maintain its corporate existence, rights,
franchises, licenses and privileges, and will not liquidate, dissolve, or merge
or consolidate with or into any other corporation, or sell, lease, transfer or
otherwise dispose of all or a substantial part of its assets, except that:
(a) Any subsidiary may merge or consolidate with or into the Borrower or
any one or more wholly-owned subsidiaries; and
(b) Any subsidiary may sell, lease, transfer or otherwise dispose of any
or all of its assets (i) to the Borrower or one or more wholly-owned
subsidiaries; or (ii) to any other entity, provided that, in the case of
this clause (ii), the assets of such subsidiary sold, leased, transferred
or otherwise disposed of do not constitute a substantial part of the
consolidated total assets of the Borrower and its subsidiaries, and
provided further that no Event of Default or Unmatured Event of Default has
occurred and is continuing at the time of such sale, lease, transfer or
other disposition or would occur after giving effect thereto.
For purposes of clause (ii) of subsection (b) of this Section 4.1, the
assets of a subsidiary sold, leased, transferred or otherwise disposed of shall
be deemed to constitute a "substantial part" of the consolidated total assets of
the Borrower and its subsidiaries only if the aggregate value of the assets
disposed of exceeds 20% of the consolidated total assets of the Borrower and its
subsidiaries immediately prior to such disposition. As used in the preceding
sentence, the term "value" shall mean, with respect to any asset disposed of,
the greater of such asset's book or fair market value as of the date of
disposition, with "book value" being the value of such asset as would appear
immediately prior to such disposition on a balance sheet of such subsidiary
prepared in accordance with generally accepted accounting principles
consistently applied.
SECTION 4.2 REPORTS, CERTIFICATES AND OTHER INFORMATION. The Borrower
shall furnish to the Lender:
(a) Interim Reports. Within 45 days after the end of each quarter of each
fiscal year of the Borrower, a copy of an unaudited financial statement of
the Borrower and any subsidiary prepared on a consolidating and
consolidated basis consistent with the audited consolidating and
consolidated financial statements of the Borrower and any subsidiary
referred to above, signed by an authorized officer of the Borrower and
consisting of at least (i) a balance sheet as at the close of such quarter
and (ii) a statement of earnings and source and application of funds for
such quarter and for the period from the beginning of such fiscal year to
the close of such quarter.
(b) Audit Report. Within 120 days after the end of each fiscal year of
the Borrower, a copy of an annual audit report of the Borrower and any
subsidiary prepared on a consolidating and consolidated basis and in
conformity with generally accepted accounting principles applied on a basis
consistent with the audited consolidating and consolidated financial
statements of the Borrower and any subsidiary referred to above, duly
certified by independent certified public accountants of recognized
standing satisfactory to the Lender, accompanied by an opinion without
significant qualification and a certificate from such accountants
containing a computation of, and showing compliance with, any financial
ratio or restriction contained in this Agreement, and to the effect that,
in making the examination necessary for the signing of such annual audit
report by such accountants, they have not become aware of any Event of
Default or any Unmatured Event of Default, or if they have become aware of
any such event, describing it.
(c) Certificates. Contemporaneously with the furnishing of a copy of each
annual audit report and of each quarterly statement provided for in this
Section, a certificate dated the date of such annual report or such
quarterly statement and signed by either the President, the Chief Financial
Officer or the Treasurer of the Borrower, to the effect that no Event of
Default or Unmatured Event of Default has occurred and is continuing, or,
if there is any such event, describing it and the steps, if any, being
taken to cure it, and containing (except in the case of the certificate
dated the date of the annual report) a computation of, and showing
compliance with, any financial ratio or restriction contained in this
Agreement.
(d) Reports to Shareholders. Copies of each communication from the
Borrower or any subsidiary which is sent to all of its shareholders,
promptly upon the filing or making thereof.
(e) Notice of Default, Litigation and ERISA Matters. Immediately upon
learning of the occurrence of any of the following, written notice
describing the same and the steps being taken by the Borrower or any
subsidiary affected in respect thereof: (i) the occurrence of an Event of
Default or an Unmatured Event of Default; or (ii) the institution of, or
any adverse determination in, any litigation, arbitration or governmental
proceeding affecting the Borrower or any subsidiary, or any assets of the
Borrower or any subsidiary, which may result in a breach of any of the
covenants of this Agreement; or (iii) the occurrence of a reportable event
under, or the institution of steps by the Borrower or any subsidiary to
withdraw from, or the institution of any steps to terminate, any employee
benefit plans as to which the Borrower or any of its subsidiaries may have
any liability.
(f) Subsidiaries. Promptly from time to time a written report of any
changes in the list of its subsidiaries set forth on Exhibit D.
(g) Other Information. From time to time such other information,
financial or otherwise, concerning the Borrower or any subsidiary as the
Lender may reasonably request.
SECTION 4.3 INSPECTION. The Borrower and any subsidiary shall permit the
Lender and its agents at any time during normal business hours to inspect their
properties and to inspect and make copies of their books and records, but not
more frequently than once per fiscal quarter unless an Event of Default or an
Unmatured Event of Default shall have occurred and be continuing, in which case
there shall be no limit on the number of such inspections by the Lender and its
agents.
SECTION 4.4 FINANCIAL REQUIREMENTS. The Borrower and any subsidiary shall:
(a) Minimum Tangible Net Worth. Maintain a minimum consolidated tangible
net worth which shall, as at the end of each fiscal year, be not less than
the sum of $35,000,000 plus 50% of the Borrower's consolidated positive net
income for such year.
(b) Maximum Senior Debt Ratio. Not permit the ratio of (i) Senior Funded
Debt (which for purposes of this Agreement shall mean and include items
(1), (2) and (4) of the definition of "Indebtedness" in Section 4.5(a)
below) to (ii) EBIDTA (which term as used herein shall mean consolidated
net income before interest expense, taxes, depreciation and amortization)
to be greater than 2.50:1.00 for each period of four consecutive fiscal
quarters.
(c) Minimum Current Ratio. Maintain at all times a consolidated current
ratio of not less than 1:50:1.
(d) Minimum Fixed Charge Coverage Ratio. Maintain a ratio of (i) EBIDTA
to (ii) Current Maturities (which for this purpose shall mean all
indebtedness maturing during the four-quarter period in question together
with all interest payable thereon during such period, as shown on the
Borrower's balance sheet) which shall be not less than 1.50:1.00 for each
period of four consecutive fiscal quarters.
SECTION 4.5 INDEBTEDNESS, LIENS AND TAXES. The Borrower and any subsidiary
shall:
(a) Indebtedness. Not incur, permit to remain outstanding, assume or in
any way become committed for Indebtedness, except (i) Indebtedness to the
Lender; (ii) other Indebtedness for borrowed money to the lender identified
on Exhibit D-3 in the maximum principal amount stated on such exhibit;
(iii) other Senior Funded Debt, provided that no Event of Default or
Unmatured Event of Default has occurred and is continuing at the time of
the incurrence or assumption thereof or would occur after giving effect
thereto, and provided further that the Lender is given prior written notice
of the incurrence or assumption of any Senior Funded Debt in a principal
amount in excess of $750,000; (iv) Indebtedness hereafter incurred in
connection with the liens permitted by clause (iv) of subsection (b) of
this Section 4.5; (v) Indebtedness of a corporation or other entity
outstanding on the date such corporation or other entity (A) first becomes
a subsidiary of the Borrower, (B) merges into the Borrower or any
subsidiary, or (C) is acquired by the purchase of all or substantially all
of such corporation's or other entity's assets and the assumption of such
Indebtedness of such corporation or other entity, provided that such
Indebtedness is not incurred in contemplation of such corporation or other
entity becoming a subsidiary or such merger or acquisition, provided
further that no Event of Default or Unmatured Event of Default has occurred
and is continuing at the time of the assumption of such Indebtedness or
would occur after giving effect thereto, and provided further that the
Lender is given prior written notice of the assumption of such
Indebtedness; and (vi) renewals, extensions, refundings or refinancings of
any Indebtedness permitted by the preceding clauses (i) through (v),
provided that the principal amount of such Indebtedness is not increased
and the terms applicable to such Indebtedness as renewed, extended,
refunded or refinanced are no more onerous to the obligor with respect to
such Indebtedness than those applicable to the original Indebtedness. As
used herein, the term "Indebtedness" shall mean at any date, without
duplication: (1) all obligations for borrowed money; (2) all obligations
evidenced by bonds, debentures, notes, or preferred stock; (3) all
obligations to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of business;
(4) all obligations as lessee under capital leases; (5) all Indebtedness of
others secured by a lien on any asset of the Borrower or any subsidiary;
and (6) all Indebtedness of others guaranteed by the Borrower or any
subsidiary.
(b) Liens. Not create, suffer or permit to exist any lien or encumbrance
of any kind or nature upon any of their assets now or hereafter owned or
acquired, or acquire or agree to acquire any property or assets of any
character under any conditional sale agreement or other title retention
agreement, but this Section shall not be deemed to apply to: (i) liens
existing on the date of this Agreement and identified on Exhibit
D-1; (ii) liens of landlords, contractors, laborers or supplymen, tax
liens, or liens securing performance or appeal bonds or other similar liens
or charges arising out of the Borrower's business, provided that tax liens
are removed before related taxes become delinquent and other liens are
promptly removed, in either case unless contested in good faith and by
appropriate proceedings, and as to which adequate reserves shall have been
established; (iii) liens securing borrowings or advances from the Borrower
by wholly-owned subsidiaries; (iv) liens in connection with the acquisition
of property by the Borrower or any subsidiary after the date hereof in the
ordinary course of its business by way of purchase money mortgage,
conditional sale or other title retention agreement, capital lease or other
deferred payment contract, and attaching only to the property being
acquired, if the Indebtedness secured thereby does not exceed $1,000,000 in
the aggregate for the Borrower and all subsidiaries at any one time
outstanding; (v) existing liens securing Indebtedness of a corporation or
other entity outstanding on the date such corporation or other entity (A)
first becomes a subsidiary of the Borrower, (B) merges into the Borrower or
any subsidiary, or (C) is acquired by the purchase of all or substantially
all of such corporation's or other entity's assets (the "acquired assets")
and the assumption of such Indebtedness of such corporation or other
entity, provided that such liens are not applicable to the Borrower or any
other subsidiary or the assets (other than the acquired assets) of the
Borrower or any subsidiary, and provided further that none of such liens
are created in contemplation of such corporation or other entity becoming a
subsidiary or such merger or acquisition; and (vi) the extension, renewal
or replacement of any lien specified in the preceding clauses (i) through
(v), provided that (A) no property shall become subject to such extended,
renewed or replacement lien that was not subject to the lien extended,
renewed or replaced, (B) the principal amount of Indebtedness secured by
any such extended, renewed or replacement lien shall not be increased by
such extension, renewal or replacement, (C) the Indebtedness secured by
such lien could be incurred in compliance with this Agreement at the time
of such extension, renewal or replacement, and (D) after giving effect
thereto, no Event of Default or Unmatured Event of Default shall have
occurred and be continuing.
(c) Taxes. Pay and discharge all taxes, assessments and governmental
charges or levies imposed upon them, upon their income or profits or upon
any properties belonging to them, prior to the date on which penalties
attach thereto, and all lawful claims for labor, materials and supplies
when due, except that no such tax, assessment, charge, levy or claim need
be paid which is being contested in good faith and by appropriate
proceedings and as to which adequate reserves shall have been established,
and as to which no foreclosure, distraint, sale or similar proceedings have
commenced.
(d) Keep Well Agreements. Not assume, guarantee, indorse or otherwise
become or be responsible in any manner (whether by agreement to purchase
any obligations, stock, assets, goods or services, or to supply or advance
any funds, assets, goods or services, or otherwise) with respect to the
obligation of any other person or entity, except (i) under guaranties in
existence on the date hereof and set forth on
Exhibit D-4; (ii) by the indorsement of negotiable instruments for deposit
or collection in the ordinary course of business; and (iii) as permitted by
this Agreement.
SECTION 4.6 INVESTMENTS AND LOANS. Neither the Borrower nor any
subsidiary shall, without the Lender's advance written consent, make any loan,
advance, extension of credit or capital contribution to, or purchase or
otherwise acquire for a consideration evidences of indebtedness, capital stock
or other securities of, any legal entity, except that the Borrower and any
subsidiary may:
(a) purchase or otherwise acquire and own short-term money market items;
(b) extend credit upon customary terms to their customers in the ordinary
course of their business;
(c) extend credit to officers and employees in accordance with policies in
effect on the date of this Agreement of which the Lender has been advised
in writing; and
(d) in addition to the transactions permitted by subsections (a), (b) and
(c) of this Section 4.6, make loans, advances, extensions of credit and
capital contributions to, and purchase or otherwise acquire for a
consideration evidences of indebtedness, capital stock and other securities
of, any legal entities, provided that no Event of Default or Unmatured
Event of Default has occurred and is continuing at the time of such
transaction or would occur after giving effect thereto.
SECTION 4.7 OWNERSHIP.
(a) Stock of Subsidiaries. The Borrower shall continue to own, directly
or indirectly, the same (or greater) percentage of the stock of each
subsidiary that it held on the date of this Agreement, except that the
Borrower may sell all or any part of the stock of any subsidiary that is
not a Significant Subsidiary, provided that no Event of Default or
Unmatured Event of Default has occurred and is continuing at the time of
such sale or would occur after giving effect thereto. As used herein, the
term "Significant Subsidiary" shall mean any subsidiary, including its
subsidiaries, which meets any of the following conditions: (i) the
Borrower's and its other subsidiaries' investments in and advances to such
subsidiary exceed 20% of the consolidated total assets of the Borrower and
its subsidiaries as at the date of determination of such subsidiary's
status as a Significant Subsidiary; or (ii) the Borrower's and its other
subsidiaries' proportionate share of the total assets (after intercompany
eliminations) of such subsidiary exceeds 20% of the consolidated total
assets of the Borrower and its subsidiaries as at such date of
determination; or (iii) the portion of the Borrower's consolidated net
income for the period of four consecutive fiscal quarters immediately
preceding such date of determination attributable to such subsidiary
exceeds 20%.
(b) Issuance of Additional Securities. No subsidiary shall issue any
additional securities other than to the Borrower.
SECTION 4.8 MAINTENANCE OF PROPERTIES. The Borrower and any subsidiary
shall maintain, or cause to be maintained, in good repair, working order and
condition, all their properties (whether owned or held under lease), and from
time to time make or cause to be made all needed and appropriate repairs,
renewals, replacements, additions, betterments and improvements thereto, so that
the business carried on in connection therewith may be properly and
advantageously conducted at all times.
SECTION 4.9 INSURANCE. The Borrower and any subsidiary shall maintain
insurance in responsible companies in such amounts and against such risks as is
maintained by the Borrower and its subsidiaries on the date of this Agreement
and, at a minimum, insurance on their business, fixed assets, inventory and
other properties, workmen's compensation or similar insurance as required by
law, and adequate public liability (including product liability) insurance
against claims for personal injury, death or property damage arising out of its
products, facilities or operations, as is usually carried by similar businesses
conducting operations in similar areas.
SECTION 4.10 USE OF PROCEEDS. The proceeds of all Loans shall be used only
for the Borrower's working capital, general corporate purposes and acquisitions
by the Borrower (as to which the Borrower will provide the Lender with
particulars in advance). The Borrower and any subsidiary shall not use or
permit any proceeds of the Loans to be used, either directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of "purchasing or
carrying any margin stock" within the meaning of Regulations U or X of the Board
of Governors of the Federal Reserve System, as amended from time to time. If
requested by the Lender, the Borrower and any subsidiary will furnish to the
Lender a statement in conformity with the requirements of Federal Reserve Form
U-1 to the foregoing effect. No part of the proceeds of the Loans will be used
for any purpose which violates or is inconsistent with the provisions of
Regulation U or X of the Board of Governors.
SECTION 5. CONDITIONS OF LENDING AND CONVERSION
The obligation of the Lender to make any Revolving Credit Loan or to effect
any Conversion is subject to the following conditions precedent:
SECTION 5.1 DOCUMENTATION. In addition to the conditions precedent set
forth in Section 5.2, the obligation of the Lender to make the first Revolving
Credit Loan is subject to the conditions precedent that the Lender shall have
received all of the following, each duly executed and dated the date of the
first Revolving Credit Loan, in form and substance satisfactory to the Lender
and its counsel, at the expense of the Borrower, and in such number of signed
counterparts as the Lender may request (except for the Revolving Credit Note, of
which only the original shall be signed):
(a) Note. The Revolving Credit Note in the form of Exhibit A, with
appropriate insertions;
(b) Resolution. A copy of a resolution of the Board of Directors of the
Borrower authorizing or ratifying the execution, delivery and performance,
respectively, of this Agreement, the Notes and the other documents provided
for in this Agreement, certified by the Secretary of the Borrower;
(c) Articles of Incorporation and By-laws. A copy of the articles of
incorporation and by-laws of the Borrower, certified by the Secretary of
the Borrower;
(d) Certificate of Incumbency. A certificate of the Secretary of the
Borrower certifying the names of the officer or officers of the Borrower
authorized to sign this Agreement, the Notes and the other documents
provided for in this Agreement, together with a sample of the true
signature of each such officer (the Lender may conclusively rely on such
certificate until formally advised by a like certificate of any changes
therein);
(e) Certificate of No Default. A certificate signed by the President, the
Chief Financial Officer or the Treasurer of the Borrower to the effect
that: (i) no Event of Default or Unmatured Event of Default has occurred
and is continuing or will result from the making of the first Revolving
Credit Loan; and (ii) the representations and warranties of the Borrower
contained herein are true and correct as at the date of the first Revolving
Credit Loan as though made on that date;
(f) Opinion of Counsel to the Borrower. An opinion of counsel to the
Borrower in form satisfactory to the Lender; and
(g) Miscellaneous. Such other documents and certificates as the Lender
may request.
SECTION 5.2 REPRESENTATIONS AND WARRANTIES; NO DEFAULT.
(a) Representations and Warranties. At the date of each Revolving Credit
Loan and each Conversion, the Borrower's representations and warranties set
forth herein shall be true and correct as at such date with the same effect
as though those representations and warranties had been made on that date.
(b) No Default. At the time of each Revolving Credit Loan and each
Conversion, and immediately after giving effect thereto, the Borrower shall
be in compliance with all the terms and provisions set forth herein on its
part to be observed or performed, and no Event of Default or Unmatured
Event of Default shall have occurred and be continuing at the time of such
event, or would result from the making of such Loan or Conversion.
SECTION 5.3 SUCCEEDING LOANS AND CONVERSIONS. The application by the
Borrower for any succeeding Revolving Credit Loan other than the first Revolving
Credit Loan, or for any Conversion, shall be deemed a representation and
warranty by the Borrower that the statements in Section 5.2 are true and correct
on and as at the date of each succeeding Revolving Credit Loan or Conversion, as
the case may be.
SECTION 6. DEFAULT
SECTION 6.1 EVENTS OF DEFAULT. Each of the following occurrences is hereby
defined as an "Event of Default":
(a) Nonpayment. The Borrower shall fail to make any payment of principal,
interest, or other amounts payable hereunder when and as due and such
circumstance shall have continued for a period of three consecutive days;
or
(b) Default under Related Documents. Any default, event of default, or
similar event shall occur or continue under any instrument, document, note,
agreement, or guaranty delivered to the Lender in connection with the
Loans, or any such instrument, document, note, agreement, or guaranty shall
not be, or shall cease to be, enforceable in accordance with its terms; or
(c) Cross-Default. There shall occur any default or event of default, or
any event which might become such with notice or the passage of time or
both, or any similar event, or any event which requires the prepayment of
borrowed money or the acceleration of the maturity thereof, under the terms
of any evidence of any Senior Funded Debt or other agreement with respect
to any Senior Funded Debt issued or assumed or entered into by the Borrower
or any subsidiary or under the terms of any note, indenture, agreement or
instrument under which any such evidence of any Senior Funded Debt or other
agreement with respect to any Senior Funded Debt is issued, assumed,
secured or guaranteed, and such event shall continue beyond any applicable
period of grace, unless and for so long as, in the case of any Senior
Funded Debt in respect of capital leases, the Borrower or any subsidiary,
as the case may be, is contesting such default or event in good faith and
by appropriate proceedings and the Borrower or such subsidiary has
established such reserves or other provisions therefor as may be required
by generally accepted accounting principles; or
(d) Dissolutions, etc. The Borrower shall fail to comply with any
provision concerning its existence or that of any subsidiary or any
prohibition against dissolution, liquidation, merger, consolidation or sale
of assets; or
(e) Warranties. Any representation, warranty, schedule, certificate,
financial statement, report, notice or other writing furnished by or on
behalf of the Borrower to the Lender is false or misleading in any material
respect on the date as of which the facts therein set forth are stated or
certified; or
(f) Change in Control. Any person or entity presently not in control of
the Borrower shall obtain control directly or indirectly of the Borrower,
whether by purchase or gift of stock or assets, by contract, or otherwise;
it being understood and agreed that for purposes of this subsection (f),
the sale by Xxxxxx X. Xxxxx, Xx. of up to (but not including) 50% of the
common stock of the Borrower in and of itself shall not be considered a
change in control of the Borrower; or
(g) ERISA. Any reportable event shall occur under the Employee Retirement
Income Security Act of 1974, as amended, in respect of any employee benefit
plan maintained for employees of the Borrower or any subsidiary; or
(h) Litigation. Any suit, action or other proceeding (judicial or
administrative) commenced against the Borrower or any subsidiary, or with
respect to any assets of the Borrower or any subsidiary, shall threaten to
have a material and adverse effect on the future operations of the Borrower
or any subsidiary; or a final judgment or settlement in excess of
$1,000,000 in excess of insurance shall be entered in, or agreed to in
respect of, any such suit, action or proceeding; or
(i) Noncompliance with this Agreement. The Borrower shall fail to comply
with any provision hereof, which failure does not otherwise constitute an
Event of Default, and such failure shall continue for ten days after notice
thereof to the Borrower by the Lender or any other holder of the Note; or
(j) Guaranty. Any guaranty of the Loans shall be repudiated or become
unenforceable or incapable of performance; or
(k) Bankruptcy. Any bankruptcy, insolvency, reorganization, arrangement,
readjustment, liquidation, dissolution, or similar proceeding, domestic or
foreign, is instituted by or against the Borrower or any subsidiary (and,
in the case of an involuntary filing, 30 days shall have elapsed without
such filing being dismissed), or the Borrower or any subsidiary shall take
any step toward, or to authorize, such a proceeding; or
(l) Insolvency. The Borrower or any subsidiary shall become insolvent,
generally shall fail or be unable to pay its debts as they mature, shall
admit in writing its inability to pay its debts as they mature, shall make
a general assignment for the benefit of its creditors, shall enter into any
composition or similar agreement, or shall suspend the transaction of all
or a substantial portion of its usual business.
SECTION 6.2 REMEDIES. Upon the occurrence of any Event of Default set
forth in subsections (a)-(j) of Section 6.1 and during the continuance thereof,
the Lender or any other holder of the Notes may declare the Notes and any other
amounts owed to the Lender, including without limitation any accrued but unpaid
fees, to be immediately due and payable, whereupon the Notes and any other
amounts owed to the Lender shall forthwith become due and payable. Upon the
occurrence of any Event of Default set forth in subsections (k)-(l) of Section
6.1, the Notes and any other amounts owed to the Lender, including without
limitation any accrued but unpaid fees, shall be immediately and automatically
due and payable without action of any kind on the part of the Lender or any
other holder of the Notes. Upon the occurrence of any Event of Default, any
obligation of the Lender to make Loans shall immediately and automatically
terminate without action of any kind on the part of the Lender. The Borrower
expressly waives presentment, demand, notice or protest of any kind in
connection herewith. The Lender shall promptly give the Borrower notice of any
such declaration, but failure to do so shall not impair the effect of such
declaration. No delay or omission on the part of the Lender or any holder of
the Notes in exercising any power or right hereunder or under any Note shall
impair such right or power or be construed to be a waiver of any Event of
Default or any acquiescence therein, nor shall any single or partial exercise of
any power or right hereunder preclude other or further exercise thereof, or the
exercise of any other power or right.
SECTION 7. CERTAIN DEFINITIONS
SECTION 7.1 GENERAL. As used herein:
(a) The term "affiliate" means any corporation of which the Borrower owns
directly or indirectly 20% or more, but less than 50%, of the outstanding
voting stock, or any partnership, joint venture, trust or other legal
entity of which the Borrower has effective control, by contract or
otherwise.
(b) The term "subsidiary" means any corporation, partnership, joint
venture, trust, or other legal entity of which the Borrower owns directly
or indirectly 50% or more of the outstanding voting stock or interest, or
of which the Borrower has effective control, by contract or otherwise.
(c) The term "Unmatured Event of Default" means an event or condition
which would become an Event of Default with notice or the passage of time
or both.
(d) Except as and unless otherwise specifically provided herein, all
accounting terms in this Agreement shall have the meanings given to them by
generally accepted accounting principles and shall be applied and all
reports required by this Agreement shall be prepared, in a manner
consistent with the audited financial statements referred to in Section
3.3.
SECTION 7.2 APPLICABILITY OF SUBSIDIARY AND AFFILIATE REFERENCES. Terms
hereof pertaining to any subsidiary or affiliate shall apply only during such
times as the Borrower has any subsidiary or affiliate.
SECTION 8. MISCELLANEOUS
SECTION 8.1 WAIVER OF DEFAULT. The Lender may, by written notice to the
Borrower, at any time and from time to time, waive any Event of Default or
Unmatured Event of Default, which shall be for such period and subject to such
conditions as shall be specified in any such notice. In the case of any such
waiver, the Lender and the Borrower shall be restored to their former position
and rights hereunder and under the Notes, respectively, and any Event of Default
or Unmatured Event of Default so waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to or impair any right consequent
thereon or to any subsequent or other Event of Default or Unmatured Event of
Default.
SECTION 8.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto shall be deemed to have been given or made when
deposited in the mail, postage prepaid, addressed:
(a) if to the Lender to 00 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000
(Attention: Xxxxxx X. Xxxxxxx)
(b) if to the Borrower to Number Xxx Xxxxxxxx Xxxxx, Xxxxx Xxxxxxx,
Xxxxxxxx 00000 (Attention: R. Xxxxxxx XxXxxxx, Chief Financial Officer)
or to such other address as may be hereafter designated in writing by the
respective parties hereto.
SECTION 8.3 NONWAIVER; CUMULATIVE REMEDIES. No failure to exercise, and no
delay in exercising, on the part of the Lender of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies of the Lender
herein provided are cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 8.4 SURVIVAL OF AGREEMENTS. All agreements, representations and
warranties made herein shall survive the delivery of the Notes and the making of
the Loans.
SECTION 8.5 SUCCESSORS. This Agreement shall, upon execution and delivery
by the Borrower, and acceptance by the Lender in Chicago, Illinois, become
effective and shall be binding upon and inure to the benefit of the Borrower,
the Lender and their respective successors and assigns, except that the Borrower
may not transfer or assign any of its rights or interest hereunder without the
prior written consent of the Lender.
SECTION 8.6 CAPTIONS. Captions in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof. References herein to Sections or provisions without reference to the
document in which they are contained are references to this Agreement.
SECTION 8.7 SINGULAR AND PLURAL. Unless the context requires otherwise,
wherever used herein the singular shall include the plural and vice versa, and
the use of one gender shall also denote the others where appropriate.
SECTION 8.8 COUNTERPARTS. This Agreement may be executed by the parties on
any number of separate counterparts, and by each party on separate counterparts;
each counterpart shall be deemed an original instrument; and all of the
counterparts taken together shall be deemed to constitute one and the same
instrument.
SECTION 8.9 FEES. The Borrower agrees to pay or reimburse the Lender for
all costs and expenses of preparing, seeking advice in regard to, and enforcing
this Agreement and the Notes, or preserving its rights hereunder or under any
document or instrument executed in connection herewith (including legal fees and
reasonable time charges of attorneys who may be employees of the Lender, whether
in or out of court, in original or appellate proceedings or in bankruptcy).
SECTION 8.10 CONSTRUCTION. This Agreement, the Notes and any document or
instrument executed in connection herewith shall be governed by, and construed
and interpreted in accordance with, the internal laws of the State of Illinois,
and shall be deemed to have been executed in the State of Illinois.
SECTION 8.11 SUBMISSION TO JURISDICTION; VENUE. To induce the Lender to
make the Loans, as evidenced by the Notes and this Agreement, the Borrower
irrevocably agrees that, subject to the Lender's sole and absolute election, all
suits, actions or other proceedings in any way, manner or respect, arising out
of or from or related to this Agreement, the Notes or any document executed in
connection herewith, shall be subject to litigation in courts having situs
within Chicago, Illinois. The Borrower hereby consents and submits to the
jurisdiction of any local, state or federal court located within said city and
state. The Borrower hereby waives any right it may have to trial by jury, to
transfer or change the venue of any suit, action or other proceeding brought
against the Borrower by the Lender in accordance with this Section, or to claim
that any such proceeding has been brought in an inconvenient forum.
* * * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
FANSTEEL INC.
By:
Its:
THE NORTHERN TRUST COMPANY
By:
Its:
