EXHIBIT 10.14
Secured Credit Agreement
Among
Maverick Tube Corporation
And
Xxxxxx Trust And Savings Bank
AS AGENT
And
Xxxxxx Trust And Savings Bank
AND
Mercantile Bank National Association,
AS LENDERS
DATED AS OF SEPTEMBER 18, 1998
TABLE OF CONTENTS
MAVERICK TUBE CORPORATION
SECURED CREDIT AGREEMENT
SECTION 1. THE CREDITS........................................1
Section 1.1. The Revolving Credit...........................1
Section 1.2. The Notes......................................2
Section 1.3. Interest Rates.................................3
Section 1.4. Letter of Credit...............................6
Section 1.5. Reimbursement Obligations......................7
Section 1.6. Manner of Borrowing and Rate Selection.........7
Section 1.7. Participation in the L/C.......................8
Section 1.8. The Collateral.................................9
SECTION 2. FEES, PREPAYMENTS AND TERMINATIONS.................9
Section 2.1. Commitment Fees................................9
Section 2.2. Other Fees.....................................9
Section 2.3. Optional Prepayments..........................10
Section 2.4. Mandatory Prepayments-Borrowing Base..........10
Section 2.5. Terminations..................................10
Section 2.6. Capital Adequacy..............................10
SECTION 3. PLACE AND APPLICATION OF PAYMENTS.................11
SECTION 4. DEFINITIONS.......................................11
Section 4.2. Interpretation................................21
SECTION 5. REPRESENTATIONS AND WARRANTIES....................21
Section 5.1. Organization and Qualification................21
Section 5.2. Financial Reports.............................21
Section 5.3. Litigation; Tax Returns; Approvals............22
Section 5.4. Regulation U..................................22
Section 5.5. No Default....................................22
Section 5.6. ERISA.........................................22
Section 5.7. Environmental Law.............................23
Section 5.8. Security Interests............................23
Section 5.10. Accurate Information..........................24
Section 5.11. Enforceability................................24
Section 5.12. Year 2000 Compliance..........................25
SECTION 6. CONDITIONS PRECEDENT..............................25
Section 6.1. General.......................................25
Section 6.2. Initial Extension of Credit...................25
Section 6.3. Each Extension of Credit......................26
Section 6.4. Legal Matters.................................27
SECTION 7. COVENANTS.........................................27
Section 7.1. Maintenance of Property.......................27
Section 7.2. Taxes.........................................27
Section 7.3. Maintenance of Insurance......................27
Section 7.4. Financial Reports.............................28
Section 7.5. Inspection....................................29
Section 7.6. Consolidation and Merger......................29
Section 7.7. Transactions with Affiliates..................30
Section 7.8. Maximum Total Funded Debt Ratio...............30
Section 7.9. [Intentionally Omitted].......................30
Section 7.10. Consolidated Tangible Net Worth...............30
Section 7.11. Maximum Leverage Ratio........................30
Section 7.12. Minimum Fixed Charge Coverage Ratio...........30
Section 7.13. Restricted Payments...........................30
Section 7.14. Liens.........................................31
Section 7.15. Borrowings and Guaranties.....................32
Section 7.16. Investments, Loans, Advances and Acquisitions.33
Section 7.17. Sale of Property..............................35
Section 7.18. Notice of Suit or Adverse Change in
Business or Default.......................35
Section 7.19. ERISA.........................................35
Section 7.20. Supplemental Performance......................35
Section 7.21. Use of Proceeds...............................35
Section 7.22. Compliance with Laws, etc.....................36
Section 7.23. Environmental Covenant........................36
Section 7.24. No Restrictions on Subsidiaries...............36
SECTION 8. EVENTS OF DEFAULT AND REMEDIES....................37
Section 8.1. Definitions...................................37
Section 8.2. Remedies for Non-Bankruptcy Defaults..........39
Section 8.3. Remedies for Bankruptcy Defaults..............39
Section 8.4. L/Cs..........................................39
SECTION 9. CHANGE IN CIRCUMSTANCES REGARDING
EURODOLLAR LOANS................................40
Section 9.1. Change of Law.................................40
Section 9.2. Unavailability of Deposits or Inability to
Ascertain the Adjusted Eurodollar Rate....40
Section 9.3. Taxes and Increased Costs.....................40
Section 9.4. Funding Indemnity.............................41
Section 9.5. Lending Branch................................42
Section 9.6. Discretion of Bank as to Manner of Funding....42
SECTION 10. THE AGENT.........................................42
Section 10.1. Appointment and Powers........................42
Section 10.2. Powers........................................42
Section 10.3. General Immunity..............................42
Section 10.4. No Responsibility for Loans, Recitals, etc....43
Section 10.5. Right to Indemnity............................43
Section 10.6. Action Upon Instructions of Banks.............43
Section 10.7. Employment of Agents and Counsel..............43
Section 10.8. Reliance on Documents; Counsel................43
Section 10.9. May Treat Payee as Owner......................43
Section 10.10. Agent's Reimbursement.........................44
Section 10.11. Rights as a Lender............................44
Section 10.12. Bank Credit Decision..........................44
Section 10.13. Resignation of Agent..........................44
Section 10.14. Duration of Agency............................44
SECTION 11. MISCELLANEOUS.....................................45
Section 11.1. Amendments and Waivers........................45
Section 11.2. Waiver of Rights..............................45
Section 11.3. Several Obligations...........................45
Section 11.4. Non-Business Day..............................46
Section 11.5. Survival of Indemnities.......................46
Section 11.6. Documentary Taxes.............................46
Section 11.7. Representations...............................46
Section 11.8. Notices.......................................46
Section 11.9. Costs and Expenses............................47
Section 11.10. Counterparts..................................48
Section 11.11. Successors and Assigns; Governing Law;
Entire Agreement..........................48
Section 11.12. No Joint Venture..............................48
Section 11.13. Severability..................................48
Section 11.14. Table of Contents and Headings................48
Section 11.15. Sharing of Payments...........................48
Section 11.16. Conflict Among Documents......................49
Section 11.17. Confidentiality...............................49
Section 11.18. Participants..................................50
Section 11.19. Assignment Agreements.........................50
Exhibit A Revolving Credit Note
Exhibit B Pay-off Letter
Exhibit C Application and Agreement for Letter of Credit
Exhibit D Borrowing Base Certificate
Exhibit E Schedule of Subsidiaries
Exhibit F Security Agreement Re: Accounts Receivable
and Inventory
Exhibit G Compliance Certificate
Exhibit H Form of Legal Opinion
Exhibit I Accounts Receivable Aging Report
Exhibit J Environmental Disclosure
Exhibit K Liens
Exhibit L Indebtedness
Exhibit M Certain Restrictions
MAVERICK TUBE CORPORATION
SECURED CREDIT AGREEMENT
Xxxxxx Trust and Savings Bank
Chicago, Illinois
Mercantile Bank National Association
St. Louis, Missouri
Ladies and Gentlemen:
The undersigned, MAVERICK TUBE CORPORATION, a Delaware corporation (the
"Borrower") applies to you for your several commitments, subject to all the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, to make a revolving credit (the "Revolving
Credit") available to the Borrower, all as more fully hereinafter set forth.
Each of you is hereinafter referred to individually as "Bank" and collectively
as "Banks." Xxxxxx Trust and Savings Bank in its individual capacity is
sometimes referred to herein as "Xxxxxx," and in its capacity as Agent for the
Banks is hereinafter in such capacity called the "Agent."
SECTION 1. THE CREDITS.
Section 1.1. The Revolving Credit. (a) Subject to all of the terms and
conditions hereof, the Banks agree, severally and not jointly, to extend a
Revolving Credit to the Borrower which may be utilized in the form of loans
(individually a "Revolving Credit Loan" and collectively the "Revolving Credit
Loans"), and L/Cs (as hereinafter defined). The aggregate principal amount of
all Revolving Credit Loans under the Revolving Credit plus the amount available
for drawing under the L/Cs, and the aggregate principal amount of all unpaid
Reimbursement Obligations (as hereinafter defined) at any time outstanding shall
not exceed the lesser of (i) the Banks' Revolving Credit Commitments (as
hereinafter defined) in effect from time to time during the term of this
Agreement and (ii) the Borrowing Base as determined on the basis of the most
recent Borrowing Base Certificate. The Revolving Credit shall be available to
the Borrower, and may be availed of by the Borrower from time to time, be repaid
(subject to the restrictions on prepayment set forth herein) and used again,
during the period from the date hereof to and including September 30, 2003 (the
"Termination Date").
The respective maximum aggregate principal amounts of the Revolving
Credit at any one time outstanding and the percentage (the "Commitment
Percentage") of the Revolving Credit available at any time which each Bank by
its acceptance hereof severally agrees to make available to the Borrower are as
follows (collectively, the "Revolving Credit Commitments" and individually, a
"Revolving Credit Commitment"):
Xxxxxx Trust and Savings Bank $25,000,000 50%
Mercantile Bank National Association $25,000,000 50%
Total $50,000,000 100%
(c) Loans under the Revolving Credit may be Eurodollar Loans or
Domestic Rate Loans. All Loans under the Revolving Credit shall be made from
each Bank in proportion to its respective Revolving Credit Commitment as above
set forth. Each Domestic Rate Loan shall be in an amount not less than $250,000
or such greater amount which is an integral multiple of $100,000 and each
Eurodollar Loan shall be in an amount not less than $1,000,000 or such greater
amount which is an integral multiple of $500,000.
(d) The initial borrowing under this Agreement shall be in an amount
sufficient to pay all amounts outstanding under that certain Secured Credit
Agreement dated as of May 15, 1992, as amended (the "Existing Agreement") among
the Borrower, Xxxxxx Trust and Savings Bank, individually and as agent
thereunder, and Mercantile Bank National Association. The Agent shall apply the
proceeds of the initial borrowing hereunder to pay all principal and interest
outstanding under the Existing Agreement.
Section 1.2. The Notes. All Revolving Credit Loans made by each Bank
under its Revolving Credit Commitment, shall be evidenced by a single Secured
Revolving Credit Note of the Borrower substantially in the form of Exhibit A
hereto individually, a "Revolving Note" and together, the "Revolving Notes")
payable to the order of each Bank in the principal amount of such Bank's
Revolving Credit Commitment, but the aggregate principal amount of indebtedness
evidenced by such Revolving Note at any time shall be, and the same is to be
determined by, the aggregate principal amount of all Revolving Credit Loans made
by such Bank to the Borrower pursuant hereto on or prior to the date of
determination less the aggregate amount of principal repayments on such
Revolving Credit Loans received by or on behalf of such Bank on or prior to such
date of determination. Each Revolving Note shall be dated as of the execution
date of this Agreement, shall be delivered concurrently herewith, and shall be
expressed to mature on the Termination Date and to bear interest as provided in
Section 1.3 hereof. Each Bank shall record on its books or records or on a
schedule to its Revolving Note the amount of each Revolving Credit Loan made by
it hereunder, whether each Revolving Credit Loan is a Domestic Rate Loan or
Eurodollar Loan, and, with respect to Eurodollar Loans, the interest rate and
Interest Period applicable thereto, and all payments of principal and interest
and the principal balance from time to time outstanding, provided that prior to
any transfer of such Revolving Note all such amounts shall be recorded on the
schedule to such Revolving Note. The record thereof, whether shown on such books
or records or on the schedule to the Revolving Note, shall be prima facie
evidence as to all such amounts; provided, however, that the failure of any Bank
to record, or any mistake in recording, any of the foregoing shall not limit or
otherwise affect the obligation of the Borrower to repay all Revolving Credit
Loans made hereunder together with accrued interest thereon. Upon the request of
any Bank, the Borrower will furnish a new Revolving Note to such Bank to replace
its outstanding Revolving Note and at such time the first notation appearing on
the schedule on the reverse side of, or attached to, such Revolving Note shall
set forth the aggregate unpaid principal amount of Revolving Credit Loans then
outstanding from such Bank, and, with respect to each Eurodollar Loan, the
interest rate and Interest Period applicable thereto. Such Bank will cancel and
deliver to the Borrower the outstanding Revolving Credit Note upon receipt of
the new Revolving Credit Note.
Section 1.3. Interest Rates. (a) Domestic Rate. Each Domestic Rate Loan
shall bear interest (computed on the basis of a year of 360 days and actual days
elapsed) on the unpaid principal amount thereof from the date such Loan is made
until maturity (whether by acceleration, upon prepayment or otherwise) at a rate
per annum equal to the sum of the Applicable Margin plus the Domestic Rate from
time to time in effect, payable monthly in arrears on the last day of each
month, commencing on September 30, 1998 and at maturity (whether by
acceleration, upon prepayment or otherwise).
(b) Eurodollar Rate. Each Eurodollar Loan shall bear interest (computed
on the basis of a year of 360 days and actual days elapsed) on the unpaid
principal amount thereof from the date such Loan is made until the last day of
the Interest Period applicable thereto or, if earlier, until maturity (whether
by acceleration or otherwise) at a rate per annum equal to the sum of the
Applicable Margin plus the Adjusted Eurodollar Rate, payable on the last day of
each Interest Period applicable thereto and at maturity (whether by acceleration
or otherwise), and, with respect to any Interest Period applicable to a
Eurodollar Loan in excess of three months, on the date occurring every three
months after the date such Interest Period began and at the end of such Interest
Period; provided that if on the last day of the Interest Period applicable to
any Eurodollar Loan the Borrower does not prepay such Loan, such Loan shall
become a Domestic Rate Loan as of the last day of the Interest Period applicable
thereto.
"Adjusted Eurodollar Rate" means a rate per annum determined pursuant
to the following formula:
Adjusted Eurodollar Rate = Eurodollar Rate/(100% - Reserve Percentage)
"Eurodollar Rate" means, for each Interest Period, (a) the LIBOR Index
Rate for such Interest Period, if such rate is available, and (b) if the LIBOR
Index Rate cannot be determined, the arithmetic average of the rates of interest
per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) at which
deposits in U.S. Dollars in immediately available funds are offered to the Agent
at 11:00 a.m. (London, England time) two (2) Business Days before the beginning
of such Interest Period by three (3) or more major banks in the interbank
eurodollar market selected by the Bank for a period equal to such Interest
Period and in an amount equal or comparable to the applicable Eurodollar Loan
scheduled to be outstanding during such Interest Period.
"LIBOR Index Rate" means, for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars for a period equal to such
Interest Period, which appears on the Telerate Page 3750 as of 11:00 a.m.
(London, England time) on the day two (2) Business Days before the commencement
of such Interest Period.
"Telerate Page 3750" means the display designated as "Page 3750" on the
Telerate Service (or such other page as may replace Page 3750 on that service or
such other service as may be nominated by the British Bankers' Association as
the information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for U.S. Dollar deposits). Each
determination of the Eurodollar Rate made by the Agent shall be conclusive and
binding absent manifest error.
"Interest Period" means, with respect to any Eurodollar Loan, the
period commencing on, as the case may be, the creation, continuation or
conversion date with respect to such LIBOR Loan and ending one (1), two (2),
three (3) or six (6) months thereafter as selected by the Borrower in its notice
as provided herein; provided that all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which
is not a Business Day, that Interest Period shall be extended to the
next succeeding Business Day, unless in the case of an Interest Period
for a Eurodollar Loan the result of such extension would be to carry
such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the final maturity
date of the Notes;
(iii) the interest rate to be applicable to each Loan for each
Interest Period shall apply from and including the first day of such
Interest Period to but excluding the last day thereof; and
(iv) no Interest Period may be selected if after giving effect
thereto the Company will be unable to make a principal payment
scheduled to be made during such Interest Period without paying part of
a Eurodollar Loan on a date other than the last day of the Interest
Period applicable thereto.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the month
in which an Interest Period is to end, then such Interest Period shall end on
the last Business Day of such month.
"Reserve Percentage" means the daily arithmetic average maximum rate at
which reserves (including, without limitation, any supplemental, marginal and
emergency reserves) are imposed on member banks of the Federal Reserve System
during the applicable Interest Period by the Board of Governors of the Federal
Reserve System (or any successor) under Regulation D on "eurocurrency
liabilities" (as such term is defined in Regulation D), subject to any
amendments of such reserve requirement by such Board or its successor, taking
into account any transitional adjustments thereto. For purposes of this
definition, the Eurodollar Loans shall be deemed to be Eurocurrency liabilities
as defined in Regulation D without benefit or credit for any prorations,
exemptions or offsets under Regulation D.
(c) Default Rate. If any payment of principal or interest on
any Revolving Credit Loan is not made when due (including any payment
due upon acceleration), such Loan shall bear interest (computed on the
basis of a year of 360 days and actual days elapsed) from the date such
payment was due until paid in full, payable on demand, at a rate per
annum equal to:
(i) with respect to any Domestic Rate Loan, the sum
of 2% plus the Applicable Margin plus the Domestic Rate from
time to time in effect; and
(ii) with respect to any Eurodollar Loan, the sum of
2% plus the rate of interest in effect thereon at the time of
such default until the end of the Interest Period then
applicable thereto, and, thereafter, at a rate per annum equal
to the sum of 2% plus the Applicable Margin plus the Domestic
Rate from time to time in effect.
(d) Interest Rate and Commitment Fee Margin Adjustments. The
Applicable Margin specified in subsections (a) and (b) hereof shall be
subject to reduction if the Borrower's Total Funded Debt to EBITDA
Ratio for any fiscal quarter and for the preceding fiscal quarter shall
have been in a lower range specified below than that range associated
with the interest rate margins then in effect, and shall be subject to
increase if the Borrower's Total Funded Debt to EBITDA Ratio for any
fiscal quarter shall be in a higher range specified below than the
range associated with the interest rate margins then in effect. The
margins from time to time applicable to the Revolving Credit Loans in
accordance herewith are hereinafter referred to as the "Applicable
Margins".
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SUMMARY PRICING MATRIX
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Level I Level II Level III Level IV
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Total Funded Debt less than greater than greater than greater than
to EBITDA Ratio 1.00 time or equal to or equal to or equal to
1.00 time and 2.00 times & 2.50 times
less than less than
2.00 times 2.50 times
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Domestic Rate 0% 0% 0% 0%
Margin
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Eurodollar Margin .75% 1.00% 1.25% 1.50%
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Commitment Fee .20% .25% .25% .375%
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Not later than ten Business Days after receipt by the Agent of the
financial statements called for by Section 7.4 hereof for the applicable
quarter, the Agent shall determine the Total Funded Debt to EBITDA Ratio for the
applicable period and shall promptly notify the Borrower and each Bank of such
determination and of any change in the Applicable Margins resulting therefrom.
Any such change in the Applicable Margins shall be effective as of the date the
Agent so notifies the Borrower with respect to all Loans outstanding on such
date, and such new Applicable Margins shall continue in effect until the
effective date of the next quarterly redetermination in accordance with this
Section 1.3(d). Each determination of the Total Funded Debt to EBITDA Ratio and
Applicable Margins by the Agent in accordance with this Section be conclusive
and binding on the Borrower absent manifest error or willful misconduct. The
Applicable Margins shall first be adjusted upon receipt of the financial
statements for the fiscal quarter ending September 30, 1999. From the date
hereof until the date the Applicable Margins are first adjusted pursuant hereto,
the Applicable Margins shall be those set forth in Level II above.
Section 1.4. Letter of Credit. (a) Subject to all the terms and
conditions hereof and satisfaction of all conditions precedent to borrowing
under this Agreement and so long as no Potential Default or Event of Default is
in existence, at the Borrower's request Xxxxxx shall issue letters of credit
(individually, an "L/C" and collectively the "L/Cs") for the account of the
Borrower in an aggregate amount not to exceed $5,000,000, subject to
availability under the Revolving Credit, and the Banks hereby agree to
participate therein as more fully described in Section 1.7 hereof. Each L/C
shall be issued pursuant to an application and agreement for letter of credit
(individually, an "L/C Agreement" and collectively the "L/C Agreements") in the
form of Exhibit C hereto, shall consist of a standby or trade letter of credit,
shall be in form and substance acceptable to Xxxxxx and the Banks, and shall
have an expiry date not more than one year from the date of issuance thereof,
subject to annual renewals (but in no event later than the Termination Date).
The aggregate amount available to be drawn under all L/Cs issued pursuant hereto
shall be deducted from the credit otherwise available under the Revolving
Credit. In consideration of the issuance of L/Cs the Borrower agrees to pay
Xxxxxx for the benefit of the Banks a fee (the "L/C Participation Fee") in the
amount per annum equal to the Applicable Margin (but not to exceed 1% in any
event) for Eurodollar Loans (computed on the basis of a 360 day year and actual
days elapsed) of the face amount for each L/C issued for the account of the
Borrower hereunder. In addition, the Borrower shall pay Xxxxxx (x) a fee (the
"L/C Issuance Fee") in the amount per annum equal to (i) for standby L/Cs,
one-eighth of one percent (0.125%) of the stated amount of each standby L/C
issued hereunder and (ii) for commercial L/Cs, the customary issuance fee for
commercial L/Cs as may be established by Xxxxxx from time to time, and (y) such
drawing, negotiation, amendment and other administrative fees in connection with
each L/C as may be established by Xxxxxx from time to time (the "L/C
Administrative Fee"). All L/C Issuance Fees and L/C Participation Fees shall be
payable quarterly in arrears on the last day of each December, March, June and
September commencing September 30, 1998 and on the Termination Date, and all L/C
Administrative Fees shall be payable on the date of issuance of each L/C
hereunder and on the date required by Xxxxxx.
(b) The Agent shall give prompt telephone, telex, or telecopy notice to
each Bank of each issuance of, or amendment to, an L/C specifying the effective
date of the L/C or amendment, the amount, the beneficiary, and the expiration
date of the L/C, in each case as established originally or through the relevant
amendment, as applicable, the account party or parties for the L/C, each Bank's
pro rata participation in such L/C and whether the Agent has classified the L/C
as a commercial, performance, or financial letter of credit for regulatory
reporting purposes.
Section 1.5. Reimbursement Obligations;. The Borrower is obligated, and
hereby unconditionally agrees to pay in immediately available funds to the Agent
for the account of Xxxxxx and the Banks who are participating in the L/Cs the
face amount of each draft drawn and presented under each L/C issued by Xxxxxx
hereunder (the obligation of the Borrower under this Section 1.5 is a
"Reimbursement Obligation"). If at any time the Borrower fails to pay any
Reimbursement Obligation when due, the Borrower shall be deemed to have
automatically requested a Domestic Rate Loan from the Banks hereunder, as of the
maturity date of such Reimbursement Obligation, the proceeds of which Loan shall
be used to repay such Reimbursement Obligation. Such Loan shall only be made if
no Potential Default or Event of Default shall exist and upon approval by all of
the Banks, and shall be subject to availability under the Revolving Credit. If
such Loan is not made by the Banks for any reason, the unpaid amount of such
Reimbursement Obligation shall be due and payable to the Agent for the pro rata
benefit of the Banks upon demand and shall bear interest at the rate of interest
specified in Section 1.3(c)(i) hereof.
Section 1.6. Manner of Borrowing and Rate Selection. (a) The Borrower
(through any one of its Authorized Representatives) shall give telephonic, telex
or telecopy notice to the Agent (which notice, if telephonic, shall be promptly
confirmed in writing) no later than (i) 11:00 a.m. (Chicago time) on the date
the Banks are requested to make each Domestic Rate Loan under the Revolving
Credit and (ii) 11:00 a.m. (Chicago time) on the date at least three (3)
Business Days prior to the date of each Eurodollar Loan under the Revolving
Credit which the Banks are requested to make. Each such notice shall specify the
date of the Loan requested (which shall be a Business Day), the amount of such
Loan, whether the Loan is to be made available by means of a Domestic Rate Loan
or Eurodollar Loan and, with respect to Eurodollar Loans, the Interest Period
applicable thereto; provided, that in no event shall the principal amount of any
requested Revolving Credit Loan plus the aggregate principal amount of all
Loans, the undrawn face amount of all L/Cs and unpaid Reimbursement Obligations
outstanding hereunder exceed the amounts specified in Section 1.1 hereof. The
Borrower agrees that the Agent may rely on any such telephonic, telex or
telecopy notice given by any person who the Agent believes is authorized to give
such notice without the necessity of independent investigation and in the event
any notice by such means conflicts with the written confirmation, such notice
shall govern if any Bank has acted in reliance thereon. The Agent shall, on the
day any such notice is received by it, give prompt telephonic, telex or telecopy
(if telephonic, to be confirmed in writing within one Business Day) notice of
the receipt of notice from the Borrower hereunder to each of the Banks (using
its best efforts to give such notice by no later than 1:00 p.m., Chicago time,
of the day such notice is received [if received at or before 11:00 a.m., Chicago
time] or by no later than the morning of the following Business Day [if not
received prior to 11:00 a.m., Chicago time]), and, if such notice requests the
Banks to make any Eurodollar Loans, the Agent shall confirm to the Borrower by
telephonic, telex or telecopy means, which confirmation shall be conclusive and
binding on the Borrower in the absence of manifest error or willful misconduct,
the Interest Period and the interest rate applicable thereto promptly after such
rate is determined by the Agent.
(b) Subject to the provisions of Section 6 hereof, the proceeds of each
Revolving Credit Loan shall be made available to the Borrower at the principal
office of the Agent in Chicago, Illinois, in immediately available funds, on the
date such Loan is requested to be made, except to the extent a Revolving Credit
Loan represents a refinancing of a Reimbursement Obligation, in which case the
proceeds of such Loan shall be applied to the payment of the relevant unpaid
Reimbursement Obligation. Not later than 3:00 p.m. Chicago time, on the date
specified for any Loan to be made hereunder, each Bank shall make its portion of
such Loan available to the Borrower in immediately available funds at the
principal office of the Agent, except as otherwise provided above with respect
to repaying any outstanding Reimbursement Obligations.
(c) Unless the Agent shall have been notified by a Bank prior to 2:00
p.m. (Chicago time) on the date of a Loan to be made by such Bank (which notice
shall be effective upon receipt and may be made by telecopy) that such Bank does
not intend to make the proceeds of such Loan available to the Agent, the Agent
may assume that such Bank has made such proceeds available to the Agent on such
date and the Agent may in reliance upon such assumption (but shall not be
required to) make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such Bank,
the Agent shall be entitled to receive such amount on demand from such Bank (or,
if such Bank fails to pay such amount forthwith upon such demand, to recover
such amount, together with interest thereon at the rate otherwise applicable
thereto under Section 1.3 hereof, from the Borrower) together with interest
thereon in respect of each day during the period commencing on the date such
amount was made available to the Borrower and ending on the date the Agent
recovers such amount, at a rate per annum equal to the effective rate charged to
the Agent for overnight Federal funds transactions with member banks of the
Federal Reserve System for each day, as determined by the Agent (or, in the case
of a day which is not a Business Day, then for the preceding Business Day) (the
"Fed Funds Rate"). Nothing in this Section 1.6(c) shall be deemed to permit any
Bank to breach its obligations to make Loans under the Revolving Credit or to
limit the Borrower's claims against any Bank for such breach.
Section 1.7. Participation in the L/C. Each of the Banks will acquire a
risk participation in each L/C upon the issuance thereof ratably in accordance
with its Commitment Percentage. In the event any Reimbursement Obligation is not
immediately paid by the Borrower pursuant to Section 1.5 hereof, each Bank will
pay to Xxxxxx funds in an amount equal to such Bank's Commitment Percentage of
such Reimbursement Obligation. At the election of all of the Banks, such funding
by the Banks of an unpaid Reimbursement Obligations shall be treated as
additional Revolving Credit Loans to the Borrower hereunder rather than a
purchase of participations by the Banks in the L/C held by Xxxxxx. The
availability of funds to the Borrower under the Revolving Credit shall be
reduced in an amount equal to the undrawn face amount of the L/C. The obligation
of the Banks to Xxxxxx under this Section 1.7 shall be absolute and
unconditional and shall not be affected or impaired by any Event of Default or
Potential Default which may then be continuing hereunder. Xxxxxx shall notify
each Bank by telephone of its proportionate share relative to its percentage of
the total Banks' Revolving Credit Commitments set forth in Section 1.1 hereof (a
"Commitment Percentage") of such unpaid Reimbursement Obligation. If such notice
has been given to each Bank by 12:00 Noon, Chicago time, each Bank agrees to pay
Xxxxxx in immediately available and freely transferable funds on the same
Business Day its Commitment Percentage of such Reimbursement Obligation. Funds
shall be so made available at the account designated by Xxxxxx in such notice to
the Banks. Upon the election by the Banks to treat such funding as additional
Revolving Credit Loans hereunder and payment by each Bank, such Loans shall bear
interest in accordance with Section 1.3(a) hereof. Xxxxxx shall share with each
Bank its Commitment Percentage of each payment of a Reimbursement Obligation
(whether of principal or interest) and any L/C Participation Fee payable by the
Borrower. The L/C Issuance Fee and L/C Administration Fee shall be solely for
Xxxxxx' account and shall not be shared by the other Banks. Any such amount
shall be promptly remitted to the Banks when and as received by Xxxxxx from the
Borrower.
Section 1.8. The Collateral. The Revolving Notes and the other
obligations of the Borrower hereunder and under the Loan Documents shall be
secured by valid and perfected first liens on the inventory and accounts
receivable of the Borrower and the Guarantors, in each instance whether now
owned or existing or hereafter acquired or arising (collectively the
"Collateral") and the Borrower agrees that it will, and will cause each
Guarantor to, from time to time at the request of the Agent or any Bank execute
and deliver such documents and do such acts and things as the Agent or such Bank
may reasonably request in order to provide for or perfect such liens.
SECTION 2. FEES, PREPAYMENTS AND TERMINATIONS.
Section 2.1. Commitment Fees. For the period from the date hereof to
and including the Termination Date, or such earlier date on which the Revolving
Credit is terminated in whole pursuant to Section 2.5 hereof, the Borrower shall
pay to the Agent for the account of the Banks a commitment fee with respect to
the Revolving Credit at the rate per annum (computed on the basis of a year of
360 days for the actual number of days elapsed) equal to the Applicable Margin,
of the average daily unused amount of the Banks' Revolving Credit Commitments
hereunder in effect from time to time, all such fees to be payable quarterly in
arrears on the last day of each calendar quarter commencing on September 30,
1998, unless the Revolving Credit is terminated in whole on an earlier date, in
which event the commitment fees for the final period shall be paid on the date
of such earlier termination in whole.
Section 2.2. Other Fees.
(a) Agent's Fees. The Borrower shall pay to and for the sole account
of the Agent such fees as the Borrower and the Agent may agree upon in writing
from time to time. Such fees shall be in addition to any fees and charges the
Agent may be entitled to receive under the other Loan Documents.
(b) Closing Fee. The Borrower shall pay to the Agent for the ratable
account of the Banks a closing fee in an amount equal to 0.20% of the Banks'
Revolving Credit Commitments as in effect on the date hereof. All such closing
fees payable pursuant to this Section 2.2(b) shall be payable on the date of
this Agreement and shall be non-refundable.
Section 2.3. Optional Prepayments. (a) The Borrower shall have the
privilege of prepaying without premium or penalty and in whole or in part (but
if in part, then in a minimum principal amount of $100,000 or such greater
amount which is an integral multiple of $100,000) any Domestic Rate Loan under
the Revolving Credit at any time upon prior telex or telephonic notice to the
Agent on or before 12:00 Noon on the same Business Day. Except as otherwise
provided in Section 2.3(b) hereof, the Borrower may not prepay any Eurodollar
Loan under the Revolving Credit.
(b) The Borrower may prepay any Eurodollar Loans upon telephonic notice
(which shall be promptly confirmed in writing by facsimile communication, telex
or telegraph) by no later than 11:00 a.m. (Chicago time) on the date of such
prepayment from the Borrower to the Agent, such prepayment to be made by the
payment of the principal amount to be prepaid and accrued interest thereon and
any compensation required by Section 9.4 hereof, if applicable; provided,
however, that any such prepayment shall be in a principal amount of no less than
$250,000 or such greater amount which is an integral multiple of $100,000, and
after giving effect to any such prepayment the outstanding principal amount of
such Eurodollar Loans prepaid in part shall not be less than $250,000 or such
greater amount which is an integral multiple of $100,000.
(c) Any amount prepaid under the Revolving Credit may, subject to the
terms and conditions of this Agreement, be borrowed, repaid and borrowed again.
Section 2.4. Mandatory Prepayments-Borrowing Base. The Borrower shall
not permit the sum of the principal amount of all Loans plus the amount
available for drawing under the L/Cs and the aggregate principal amount of all
unpaid Reimbursement Obligations at any time outstanding to exceed the lesser of
(i) the Banks' Revolving Credit Commitments or (ii) the Borrowing Base as
determined on the basis of the most recent Borrowing Base Certificate. In
addition to the Borrower's obligations to pay any outstanding Reimbursement
Obligations as set forth in Section 1.5 hereof, the Borrower will make such
payments on any outstanding Loans and Reimbursement Obligations which are
necessary to cure any such excess within three Business Days after the
occurrence thereof without any notice or demand from the Agent or any of the
Banks, all of which are expressly waived by the Borrower. Any amount repaid
under the Revolving Credit may, subject to the terms and conditions of this
Agreement, be borrowed, repaid and borrowed again.
Section 2.5. Terminations. The Borrower shall have the right at any
time upon 5 Business Days' prior notice to the Banks to terminate the Revolving
Credit Commitments in whole or in part (but if in part in a minimum amount of
$5,000,000 or any integral multiple thereof); provided, however, that the
Borrower may not terminate any portion of the Revolving Credit Commitments that
is in use in the form of Revolving Credit Loans, Reimbursement Obligations or
L/Cs.
Section 2.6. Capital Adequacy. If, after the date of this Agreement,
any Bank or the Agent shall have determined in good faith that the adoption
after such date of any applicable law, rule or regulation regarding capital
adequacy, or any change therein (including, without limitation, any revision in
the Final Risk-Based Capital Guidelines of the Board of Governors of the Federal
Reserve System (12 CFR Part 208, Appendix A; 00 XXX Xxxx 000, Xxxxxxxx X) or of
the Office of the Comptroller of the Currency (12 CFR Part 3, Appendix A), or in
any other applicable capital rules heretofore adopted and issued by any
governmental authority), or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank (or
its Lending Office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital, or on the capital of any corporation controlling such
Bank, in each case as a consequence of its obligations hereunder, to a level
below that which such Bank would have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within thirty (30) days after demand by such Bank (with a copy to
the Agent), the Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank for such reduction.
SECTION 3. PLACE AND APPLICATION OF PAYMENTS.
All payments of principal and interest made by the Borrower in respect
of the Revolving Notes and Reimbursement Obligations and all fees payable by the
Borrower hereunder, shall be made to the Agent at its office at 000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 and in immediately available funds, prior to
12:00 noon on the date of such payment. All such payments shall be made without
setoff or counterclaim and without reduction for, and free from, any and all
present and future levies, imposts, duties, fees, charges, deductions
withholdings, restrictions or conditions of any nature imposed by any government
or any political subdivision or taxing authority thereof. Any payments received
after 12:00 noon Chicago time (or after the time the Banks may otherwise direct)
shall be deemed received upon the following Business Day. The Agent shall remit
to each Bank its proportionate share of each payment of principal, interest,
commitment fees and L/C fees received by the Agent by 12:00 noon Chicago time on
the same day of its receipt and its proportionate share of each such payment
received by the Agent after 12:00 noon Chicago time on the Business Day
following its receipt by the Agent. In the event the Agent does not remit any
amount to any Bank when required by the preceding sentence, the Agent shall pay
to such Bank interest on such amount until paid at a rate per annum equal to the
Fed Funds Rate. The Borrower hereby authorizes the Agent to automatically debit
its accounts with Xxxxxx for any principal, interest and fees when due under the
Revolving Notes, the L/C Agreements or this Agreement and to transfer the amount
so debited from such account to the Agent for application as herein provided.
All proceeds of Collateral shall be applied in the manner specified in the
applicable Security Documents.
SECTION 4. DEFINITIONS.
Section 4.1. Certain Terms Defined. The terms hereinafter set forth
when used herein shall have the following meanings:
"Account Debtor" shall mean the person who is obligated on a
Receivable.
"PMAC Acquisition" shall mean the acquisition by the Borrower of
certain assets comprising the "Cold Draw Department" of PMAC, Ltd., a Texas
limited partnership, pursuant to the Acquisition Documents.
"Acquisition Documents" shall mean that certain Asset Purchase
Agreement dated as of August 17, 1998 between the Borrower and PMAC, Ltd. and
all other agreements executed in connection therewith.
"Adjusted Eurodollar Rate" shall have the meaning specified in
Section 1.3(b) hereof.
"Affiliate" shall mean any person, company or business entity under
common control or having shareholders owning at least ten percent (10%) of each
thereof, whether such common control be direct or indirect. All of the
Borrower's officers, directors, joint venturers, Subsidiaries and partners shall
be deemed to be the Borrower's Affiliates for purposes of this Agreement.
"Agent" is defined in the first paragraph of this Agreement.
"Agreement" shall mean this Secured Credit Agreement as supplemented
and amended from time to time.
"Applicable Margin" shall have the meaning specified in Section 1.3(d)
hereof.
"Authorized Representatives" shall mean Xxxxx Xxxxxxxxx, Xxxxx Xxxxx,
Xxx Xxxxx, Xxxx Xxxxxx, Xxxxx Xxxxx, and Xxxxxx Xxxx.
"Bank" and "Banks" shall have the meanings specified in the first
paragraph of this Agreement.
"Xxxx and Hold" shall mean unpaid Receivables resulting from the sale
of Inventory which has not yet been delivered to, and is not yet in the process
of being delivered to, the Account Debtor on such Receivables.
"Borrower" is defined in the first paragraph hereof.
"Borrowing Base", as determined on the basis of the information
contained in the most recent Borrowing Base Certificate, shall mean an amount
equal to:
(a) 85% of the amount of Eligible Receivables of the Borrower, plus
(b) 55% of the Value of Eligible Xxxx and Hold Receivables, plus
(c) 55% of the Value of Eligible Inventory of the Borrower,
provided that in no event shall such amount exceed an amount
equal to 60% of the aggregate principal amount of all Loans,
Reimbursement Obligations and L/Cs outstanding under this
Agreement at any time.
"Borrowing Base Certificate" shall mean the certificate in the form of
Exhibit D hereto which is required to be delivered to the Banks in accordance
with Sections 1.6(a) and 7.4(c) hereof.
"Business Day" shall mean any day except Saturday or Sunday on which
banks are open for business in Chicago, Illinois, and, with respect to
Eurodollar Loans, dealing in United States Dollar deposits in London, England
and Nassau, Bahamas.
"Capitalized Lease" shall mean any lease or obligation for rentals
which is required to be capitalized on a consolidated balance sheet of the
Borrower and its Subsidiaries in accordance with generally accepted accounting
principles.
"Capitalized Lease Obligation" shall mean the present discounted value
of the rental obligations under any Capitalized Lease determined on a
consolidated basis in accordance with generally accepted accounting principles.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"Change in Law" shall have the meaning specified in Section 9.3 hereof.
"Collateral" shall mean the collateral security provided to the Agent
for the benefit of the Banks pursuant to the Security Documents.
"Commitment Percentage" shall have the meaning set forth in Section 1.1
hereof.
"Consolidated EBITDA" shall mean, with reference to any period,
Consolidated Net Income for such period plus all amounts deducted in arriving at
such Consolidated Net Income amount in respect of (a) Consolidated Interest
Expense for such period, plus (b) foreign, federal, state and local income taxes
for such period, plus (c) all amounts properly charged for depreciation of fixed
assets and amortization of intangible assets during such period on the books of
the Company and its Subsidiaries.
"Consolidated Interest Expense" shall mean, with reference to any
period, the sum of all interest charges (including imputed interest charges with
respect to Capitalized Lease Obligations, all amortization of debt discount and
expense), of the Borrower and its Subsidiaries for such period determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied.
"Consolidated Net Income" shall mean the net income of the Borrower and
its Subsidiaries, all as determined and computed on a consolidated basis in
accordance with generally accepted accounting principles consistently applied.
"Consolidated Stockholders' Equity" shall mean the stockholders' equity
of the Borrower and its Subsidiaries, determined on a consolidated basis in
accordance with generally accepted accounting principles, consistently applied.
"Consolidated Tangible Net Worth" shall mean the sum of all capital
stock, preferred stock, capital in excess of par value and retained earnings,
less the amount of goodwill and all other Intangible Assets and Deferred Charges
(other than Deferred Charges for income taxes) of the Borrower and the
Subsidiaries, determined on a consolidated basis in accordance with generally
accepted accounting principles, consistently applied.
"Debt" of any Person shall mean as of any time the same is to be
determined, the aggregate of (i) all liabilities, reserves and any other items
which would be classified as a liability on a balance sheet in accordance with
generally accepted accounting principles, (ii) all guaranties, endorsements
(other than any liability arising out of the endorsement of items for deposit or
collection in the ordinary course of business) and other contingent obligations
in respect of, or any obligations to purchase or otherwise acquire, indebtedness
of others, (iii) all reimbursement and other obligations with respect to letters
of credit and banker's acceptances, (iv) the aggregate amount of rentals or
other consideration payable under all leases and other agreements for the use,
acquisition or retention of real or personal property of a nature such that
payments due thereunder may under generally accepted accounting principles in
effect on the date hereof be included in a balance sheet of the lessee, and (v)
all indebtedness and liabilities secured by any lien or any security interest on
any Property or assets of such person, whether or not the same would be
classified as a liability on a balance sheet, but excluding all general
contingency reserves and reserves for deferred income taxes and investment
credit, and with respect to Debt of the Borrower, all computed and determined on
a consolidated basis for the Borrower and its Subsidiaries after the elimination
of intercompany items in accordance with generally accepted accounting
principles consistent with those used in the preparation of the audit report
referred to in Section 5.2 hereof.
"Deferred Charges" shall mean all items which are classified as
deferred charges in accordance with generally accepted accounting principles
consistently applied, on a basis consistent with the principles reflected in the
financial statements referred to in Section 5.2 hereof.
"Domestic Rate" means for any day the rate of interest announced by
Xxxxxx from time to time as its prime commercial rate in effect on such day,
with any change in the Domestic Rate resulting from a change in said prime
commercial rate to be effective as of the date of the relevant change in said
prime commercial rate (the "Xxxxxx Prime Rate"), provided that if the rate per
annum determined by adding 0.5% to the rate at which Xxxxxx would offer to sell
federal funds in the interbank market on or about 10:00 a.m. (Chicago time) on
any day (the "Adjusted Fed Funds Rate") shall be higher than the Xxxxxx Prime
Rate on such day, the Domestic Rate for such day and for any succeeding day
which is not a Business Day shall be such Adjusted Fed Funds Rate. The
determination of the Adjusted Fed Funds Rate by Xxxxxx shall be final and
conclusive provided Xxxxxx has acted in good faith in connection therewith.
"Domestic Rate Loan" means a Revolving Credit Loan which bears interest
as provided in Section 1.3(a) hereof.
"Eligible Xxxx and Hold Receivables" shall mean Xxxx and Hold
Receivables which would otherwise be Eligible Receivables had the Inventory from
which they arose been delivered to, or been in the process of being delivered to
the Account Debtor on such Receivables.
"Eligible Inventory" shall mean any Inventory of the Borrower and the
Guarantors in which the Agent has a first priority perfected security interest
which the Banks in their reasonable judgment deem to be acceptable for inclusion
in the Borrowing Base, and which complies with each of the following
requirements:
(a) It consists of any material in the form of raw pipe or
tube and finished drawn over mandrill pipe or tube, which are in first
class condition and are suitable for sale in the ordinary course of the
Borrower's business or coil steel or couplings which are in first-class
condition, are in the form in which they were when originally acquired
by the Borrower or applicable Guarantor and are suitable for use in the
production of Borrower's or such Guarantor's finished goods Inventory;
(b) It substantially conforms to the Borrower's or such
Guarantor's advertised or represented specifications, applicable
government standards and regulations and other quality standards and
has not been determined by the Banks to be unacceptable due to age,
type, variety, quality, quantity, or location;
(c) All warranties of the Borrower or applicable Guarantor in
the Loan Documents are true and correct with respect thereto;
(d) It is owned by the Borrower or applicable Guarantor;
(e) It has been identified to the Agent in the manner
prescribed by the Banks pursuant to the Security Documents;
(f) It is either (i) located at a location disclosed to and
approved by the Agent and the Banks, and if requested by the Agent or
any Bank, any Person (other than the Borrower) owning or controlling
such location shall have waived all right, title and interest in and to
such Inventory in a manner satisfactory to the Agent and such Bank or
(ii) in transit between any two such locations and has not been in
transit for more than (A) four days if it has been shipped by truck,
(B) fourteen days if it has been shipped by rail or (C) 30 days if it
has been shipped by barge; and
(g) If it is evidenced by a negotiable warehouse receipt or
other negotiable document of title, such receipt or document of title
has been endorsed in blank or to the order of the Agent and has been
delivered to the Agent or its trustee or bailee.
"Eligible Receivables" shall mean any Receivable of the Borrower or any
Guarantor in which the Agent has a first priority perfected security interest
which the Banks in their reasonable judgment deem to be acceptable for inclusion
in the Borrowing Base, and which complies with each of the following
requirements:
(a) It arises out of a bona fide sale of Inventory which has
been delivered to, or is in the process of being delivered to the
Account Debtor on said Receivable in the ordinary course of Borrower's
or such Guarantor's business, in the case of payment terms, and
otherwise in the ordinary course of business on ordinary trade terms;
(b) All warranties of the Borrower or such Guarantor in the
Loan Documents are true and correct with respect thereto;
(c) It has been identified to the Banks in the manner
required by the Banks;
(d) It is evidenced by an invoice dated not later than the
date of shipment to the Account Debtor thereunder;
(e) It has not remained unpaid in whole or in part more than
90 days from and after its due date or more than 120 days from and
after its invoice date;
(f) It is net of any credit or allowance given by the
Borrower or such Guarantor to such Account Debtor;
(g) It is not owing by an Account Debtor who (i) has become
insolvent, (ii) is the subject of any bankruptcy, arrangement,
reorganization proceedings or other proceedings for relief of debtors
or (iii) has admitted its inability to pay its debts generally or has
stopped paying its debts generally;
(h) If the Account Debtor is also a supplier to or creditor
of the Borrower or a Guarantor, then either (i) that Account Debtor
shall have entered into an agreement with or for the benefit of the
Banks with respect to the waiver of rights of setoff which is
acceptable to the Banks or (ii) 120% of the amount owed at such time by
the Borrower or the applicable Guarantor to that Account Debtor shall
be subtracted from the amount of the Receivable;
(i) The Account Debtor is not principally located outside the
continental United States unless (A) such Receivable is secured by an
irrevocable letter of credit issued by a commercial Bank which is
acceptable to the Banks or the Banks are satisfied that all filings
have been made and actions taken as are required by the Banks in
connection therewith as a result of the location of such Account Debtor
or (B) the Account Debtor thereon is principally located in Canada and
either (i) the Administrative Agent shall have made such filings and
taken such other action as may be necessary for it to obtain a first
priority security interest therein under applicable Canadian law
without regard to any filings made in any State of the United States,
or (ii) the Administrative Agent shall have received an opinion of
Canadian counsel satisfactory in form and substance to the
Administrative Agent to the effect that the Administrative Agent's
security interest in such Receivables is perfected by filings made
under the applicable state's version of the Uniform Commercial Code;
(j) It is not owing by the United States of America or any
department, agency or instrumentality thereof unless the Banks shall
have received evidence satisfactory to the Banks of compliance with the
Assignment of Claims Act;
(k) Such Receivable is not subject to any dispute,
counterclaim or defense asserted by the Account Debtor thereunder;
(l) The Account Debtor has not failed to pay within the times
specified in subsection (e) above 50% or more in aggregate amount of
all its Receivables on which it is the Account Debtor;
(m) The Account Debtor is not an Affiliate of the Borrower or
any Guarantor;
(n) The Receivable does not arise from a "sale or return," or
a "sale on approval" of Inventory or a "Xxxx and Hold" sale of
Inventory; and
(o) If the Account Debtor is located in the State of New
Jersey or the State of Minnesota, Borrower or the applicable Guarantor
(i) has filed and has effective (A) in respect of Account Debtors
located in the State of New Jersey, a Notice of Business Activities
Report with the New Jersey Division of Taxation for the then current
year or (B) in respect of Account Debtors located in the State of
Minnesota, a Minnesota Business Activity Report with the Minnesota
Department of Revenue for the then current year, as applicable, or (ii)
is otherwise exempt from such reporting requirements under the laws of
such State(s).
"Environmental Laws" shall have the meaning specified in Section 5.7(a)
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Eurodollar Loan" means a Revolving Credit Loan which bears interest as
provided in Section 1.3(b) hereof.
"Eurodollar Rate" shall have the meaning specified in Section 1.3(b)
hereof.
"Event of Default" shall mean any event or condition identified as such
in Section 8.1 hereof.
"Executive Officer" shall mean, with respect to the Borrower or any
Subsidiary, any of the Chairman, Chief Executive Officer, Chief Financial
Officer or any Vice President of the Borrower or such Subsidiary.
"Existing Agreement" shall have the meaning specified in Section 1.1(d)
hereof.
"Existing Lender" shall have the meaning specified in Section 1.1(d)
hereof.
"Exposure" shall mean, as to any Bank, the sum (without duplication) of
such Bank's (a) unused Revolving Credit Commitment, if any, (b) outstanding
Revolving Credit Loans, if any, (c) interest in outstanding Reimbursement
Obligations, if any, and (d) the amount of its participation in outstanding
L/Cs.
"Fed Funds Rate" shall have the meaning specified in Section 1.6(c)
hereof.
"Fixed Charge Coverage Ratio" shall mean, for any period for which the
same is to be determined, the ratio for such period of (a) "Consolidated Net
Income Available for Fixed Charges", defined as earnings before interest and
taxes plus depreciation and amortization plus operating and capital lease
expenses less capital expenditures, all determined on a consolidated basis for
the Borrower and its Subsidiaries in accordance with generally accepted
accounting principles, consistently applied, to (b) "Fixed Charges", defined as
interest expense plus operating and capital lease expense plus current scheduled
maturities of all indebtedness for borrowed money other than the Revolving
Credit Loans, all determined on a consolidated basis for the Borrower and its
Subsidiaries in accordance with generally accepted accounting principles,
consistently applied.
"Funded Debt" of any Person shall mean all indebtedness for borrowed
money of such Person, whether classified as long-term or short-term under
generally accepted accounting principles.
"Generally accepted accounting principles" shall mean generally
accepted accounting principles consistently applied and consistent with the
audited consolidated financial statements described in Section 5.2 hereof.
"Guarantors" shall mean Maverick Tube, L.P., a Delaware limited
partnership, and Maverick Investment Corporation, a Delaware corporation, and
"Guarantor" shall mean any of the Guarantors.
"Xxxxxx" shall have the meaning specified in the first paragraph of
this Agreement.
"Intangible Assets" shall mean amortizable loan costs, business
acquisition costs, license agreements, trademarks, trade names, patents,
capitalized research and development, proprietary products (the results of past
research and development treated as long term assets and excluded from
Inventory), goodwill and all other assets which would be classified as
intangible assets (all determined in accordance with generally accepted
accounting principles consistently applied).
"Interest Period" shall have the meaning specified in Section 1.3(b)
hereof.
"Inventory" shall mean all raw materials, work in process, finished
goods, and goods held for sale or lease or furnished or to be furnished under
contracts of service in which the Borrower or any Subsidiary now has or
hereafter acquires any right.
"L/C" shall have the meaning set forth in Section 1.4 hereof.
"L/C Agreement" shall have the meaning set forth in Section 1.4 hereof.
"Loan" shall mean a Revolving Credit Loan and the term "Loans" shall
mean any two or more Revolving Credit Loans collectively.
"Loan Documents" shall mean this Agreement and any and all exhibits
hereto, the Revolving Notes, the L/C Agreements, the Subsidiary Guaranty and, if
applicable, the Security Documents.
"Person" shall mean and include any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or government (whether national,
federal, state, county, city, municipal, or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Plan" shall mean any employee benefit plan covering any officers or
employees of the Borrower or any Subsidiary, any benefits of which are, or are
required to be, guaranteed by the PBGC.
"Potential Default" shall mean any event or condition which, with the
lapse of time, or giving of notice, or both, would constitute an Event of
Default.
"Property" shall mean all assets and properties of any nature
whatsoever, whether real or personal, tangible or intangible, including without
limitation intellectual property.
"Receivables" shall mean all accounts, contract rights, instruments,
documents, chattel paper and general intangibles in which the Borrower or any
Subsidiary now has or hereafter acquires any right.
"Reimbursement Obligation" has the meaning specified in Section 1.5
hereof.
"Rentals" shall mean and include all fixed rents (including as such all
payments which the lessee is obligated to make to the lessor on termination of
the lease or surrender of the property) payable by the Borrower or a Subsidiary,
as lessee or sublessee under a lease of real or personal property, but shall be
exclusive of any amounts required to be paid by the Borrower or a Subsidiary
(whether or not designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes and similar charges. Fixed rents under
any so-called "percentage leases" shall be computed solely on the basis of the
minimum rents, if any, required to be paid by the lessee regardless of sales
volume or gross revenues. Capitalized Lease Obligations shall be excluded from
the definition of Rentals for all purposes hereunder other than the use of the
term "rentals" in the definitions of Capitalized Lease and Capitalized Lease
Obligations.
"Required Banks" shall mean any Bank or Banks which in the aggregate
hold 66-2/3% of the aggregate unpaid principal balance of the Loans and
Reimbursement Obligations or, if no Loans or Reimbursement Obligations are
outstanding hereunder, any Bank or Banks in the aggregate having 66-2/3% of the
Revolving Credit Commitments.
"Reserve Percentage" shall have the meaning specified in Section 1.3(b)
hereof.
"Restricted Payments" shall have the meaning specified in Section 7.15
hereof.
"Revolving Credit" shall have the meaning specified in the first
paragraph of this Agreement.
"Revolving Credit Commitment" and "Revolving Credit Commitments" shall
have the meanings specified in Section 1.1(b) hereof.
"Revolving Credit Loan" and "Revolving Credit Loans" shall have the
meanings specified in Section 1.1(a) hereof.
"Revolving Note" or "Revolving Notes" shall have the meanings specified
in Section 1.2 hereof.
"Security Agreement" shall mean the Security Agreement Re: Accounts
Receivable, Inventory and General Intangibles of the Borrower and the Guarantors
in the form of Exhibit F hereto.
"Security Documents" shall mean the Security Agreement and any other
agreements and financing statements now or hereafter executed and delivered by
the Borrower in respect of the Collateral.
"Subsidiary" shall mean any corporation or other entity at least a
majority of the outstanding voting stock of which is at the time owned directly
or indirectly by the Borrower and/or its Subsidiaries.
"Subsidiary Guaranty" shall mean the Guaranty Agreement of even date
herewith from the Guarantors to the Banks, as the same may be supplemented and
amended from time to time.
"Termination Date" shall have the meaning set forth in Section 1.1(a)
hereof.
"Total Capitalization" shall mean the sum of (a) the Consolidated
Stockholders' Equity, plus (b) Consolidated Funded Debt.
"Total Consolidated Funded Debt" shall mean with respect to the
Borrower all Funded Debt of the Borrower and its Subsidiaries, on a consolidated
basis eliminating intercompany items.
"Total Funded Debt Ratio" shall mean, as of any date the same is to be
determined, the ratio of (a) the aggregate outstanding principal amount of the
Total Consolidated Funded Debt as of such date, to (b) the Consolidated EBITDA
for the four consecutive fiscal quarters of the Borrower most recently ended.
"Year 2000 Problem" means any significant risk that computer hardware,
software, or equipment containing embedded microchips essential to the business
or operations of the Borrower or any of its Subsidiaries will not, in the case
of dates or time periods occurring after December 31, 1999, function at least as
efficiently and reliably as in the case of times or time periods occurring
before January 1, 2000, including the making of accurate leap year calculations.
Section 4.2. Interpretation. Capitalized terms defined elsewhere in
this Agreement shall, unless otherwise specified, have the meanings so ascribed
to them in all provisions of this Agreement. The foregoing definitions are
equally applicable to both the singular and plural forms of the terms defined.
All references to time of day herein are references to Chicago, Illinois time
unless otherwise specifically provided. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for the
purposes of this Agreement, it shall be done in accordance with generally
accepted accounting principles except where such principles are inconsistent
with the specific provisions of this Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks as follows:
Section 5.1. Organization and Qualification. The Borrower is duly
organized and validly existing under the laws of the State of Delaware, has full
and adequate corporate power to carry on its business as now conducted, is duly
licensed or qualified in all jurisdictions wherein the nature of its activities
requires such licensing or qualifying, except where the failure to be so
licensed or qualified would not have a material adverse effect on the condition,
financial or otherwise, of the Borrower, has full right, power and authority to
make the PMAC Acquisition, to enter into the Acquisition Documents, this
Agreement and the other Loan Documents to which it is a party, to make the
borrowings herein provided for and encumber its assets as collateral security
therefor, to execute and issue the Revolving Notes in evidence thereof, and to
perform each and all of the matters and things herein and therein provided for;
and this Agreement does not, nor does the performance or observance by the
Borrower of any of the matters or things provided for in this Agreement, the
other Loan Documents and the Acquisition Documents, contravene any provision of
law or any charter or by-law provision or any covenant, indenture or agreement
of or judgment, order or decree applicable to or affecting the Borrower or any
of its Property.
Section 5.2. Financial Reports. The Borrower heretofore has delivered
to each Bank a copy of the annual audit report as of September 30, 1997, of the
Borrower and its Subsidiaries and unaudited financial statements of the Borrower
and its Subsidiaries as of, and for the nine month period ending June 30, 1998.
Such financial statements have been prepared in accordance with generally
accepted accounting principles (except that such unaudited financial statements
may omit any footnotes), on a basis consistent, except as otherwise noted
therein, with that of the previous fiscal year or period and fairly reflect the
financial position of the Borrower as of the dates thereof, and the results of
its operations for the periods covered thereby. To the best knowledge of the
Executive Officers of the Borrower and each Subsidiary, the Borrower and its
Subsidiaries have no significant contingent liabilities (determined in
accordance with generally accepted accounting principles consistently applied)
other than as indicated on said financial statements and since said date of
September 30, 1997, has been no material adverse change in the condition,
financial or otherwise, of the Borrower or any Subsidiary, except those
disclosed in writing to the Banks prior to the date of this Agreement.
Section 5.3. Litigation; Tax Returns; Approvals. There is no
litigation, labor controversy or governmental proceeding pending, nor to the
best knowledge of the Executive Officers of the Borrower and each Subsidiary
threatened, against the Borrower or any Subsidiary which if adversely determined
would result in any material adverse change in the properties, business or
operations of the Borrower or any Subsidiary. All United States federal income
tax returns for the Borrower and its Subsidiaries required to be filed have been
filed on a timely basis, and all amounts required to be paid as shown by said
returns have been paid. Except as disclosed in the letter referred to above in
this Section 5.3, there are no pending or, to the best knowledge of the
Executive Officers of the Borrower and each Subsidiary, threatened objections to
or controversies in respect of the United States federal income tax returns of
the Borrower and its Subsidiaries for any fiscal year. No authorization,
consent, license, exemption or filing or registration with any court or
governmental department, agency or instrumentality, is or will be necessary to
the valid execution, delivery or performance by the Borrower of the Loan
Documents or the Acquisition Documents to which it is a party.
Section 5.4. Regulation U. Neither the Borrower nor any Subsidiary is
engaged in 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) and no part of the proceeds of any Loan
or other extension of credit hereunder will be used to purchase or carry any
margin stock or to extend credit to others for such a purpose.
Section 5.5. No Default. The Borrower is in full compliance with all of
the terms and conditions of the Loan Documents, and no Potential Default or
Event of Default is existing under this Agreement.
Section 5.6. ERISA. The Borrower and its Subsidiaries are in compliance
in all material respects with ERISA to the extent applicable to it and neither
the Borrower nor any Subsidiary has received any notice to the contrary from the
PBGC or any other governmental entity or agency. No steps have been taken to
terminate any Plan, and no contribution failure has occurred with respect to any
Plan sufficient to give rise to a lien under Section 302(f) of ERISA. No
condition exists or event or transaction has occurred with respect to any Plan
which might result in the incurrence by the Borrower or any Subsidiary of any
material liability, fine or penalty. Neither the Borrower nor any Subsidiary has
any contingent liability with respect to any post-retirement benefit under a
Plan, other than liability for continuation coverage described in Part 6 of
Title I of ERISA.
Section 5.7. Environmental Law. (a) Except as disclosed on Exhibit J,
no Executive Officer of the Borrower nor any Executive Officer of a Subsidiary
has received any notice to the effect, or has any knowledge, that its Property
or operations are not in compliance with any of the requirements of applicable
federal, state and local environmental, health and safety statutes and
regulations ("Environmental Laws") or are the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any hazardous substances as defined in the CERCLA or petroleum
products or crude oil or any fraction thereof (collectively "Hazardous
Substances") into the environment, which non-compliance or remedial action could
have a material adverse effect on the business, operations, Property, assets or
conditions (financial or otherwise) of the Borrower or any Subsidiary;
(b) there have been no releases of Hazardous Substances at, on or under
any Property now or previously owned or leased by the Borrower or any of its
Subsidiaries that, singly or in the aggregate, have, or may reasonably be
expected to have, a material adverse effect on the financial condition,
operations, assets, business, Properties or prospects of the Borrower and its
Subsidiaries;
(c) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any Property now or previously
owned or leased by the Borrower or any of its Subsidiaries that, singly or in
the aggregate, have, or may reasonably be expected to have, a material adverse
effect on the financial condition, operations, assets, business, Properties or
prospects of the Borrower and its Subsidiaries;
(d) neither the Borrower nor any Subsidiary has directly transported,
or received any notice or has any knowledge that they have directly arranged for
the transportation of, any Hazardous Substances to any location which is listed
or proposed for listing on the National Priorities List pursuant to CERCLA, on
the CERCLIS or on any similar state list or which is the subject of federal,
state or local enforcement actions or other investigations which may lead to
material claims against the Borrower or such Subsidiary thereof for any remedial
work, damage to natural resources or personal injury, including claims under
CERCLA; and
(e) except as disclosed on Exhibit J no conditions exist at, on or
under any Property now owned or leased by the Borrower or any Subsidiary, and
the Borrower has no knowledge that any conditions exist at, on or under any
Property previously owned or leased by the Borrower or any Subsidiary, which,
with the passage of time, or the giving of notice or both, would give rise to
liability under any Environmental Law which may reasonably be expected to have,
a material adverse effect on the financial condition, operations, assets,
business, Properties or prospects of the Borrower and its Subsidiaries.
Section 5.8. Security Interests. There are no security interests, liens
or encumbrances on any of the assets or Property of the Borrower or any
Subsidiary except the security interests, liens and charges which are now
existing and are permitted by Section 7.15 of this Agreement.
Section 5.9. Subsidiaries. As of the date hereof, the Borrower's only
Subsidiaries are identified on Exhibit E hereof. Each of said Subsidiaries is
duly organized and validly existing under the laws of the state or country of
its incorporation, has full and adequate corporate power to carry on its
business as now conducted, is duly licensed or qualified to do business in all
jurisdictions wherein the nature of its activities requires such licensing or
qualification except when the failure to be so licensed or qualified would not
have a material adverse effect on the condition, financial or otherwise, of such
Subsidiary. Each Guarantor has full right, power and authority to enter into the
Subsidiary Guaranty, to guaranty the payment of the Borrower's indebtedness,
obligations and liabilities to the Agent and the Banks, and to perform each and
all of the matters and things therein provided for; and the Subsidiary Guaranty
does not, nor does the performance or observance by any Guarantor of any of the
matters or things provided for therein, contravene any provision of law or any
charter, partnership agreement or by-law provision or any covenant, indenture or
agreement of or judgment, order or decree applicable to or affecting any
Guarantor or any of their respective Property.
Section 5.10. Accurate Information. No information, exhibit or report
furnished by the Borrower or any Subsidiary to the Banks in connection with the
negotiation or performance of the Loan Documents contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which made. The financial projections furnished by the Borrower
to the Banks contain reasonable projections as of the date hereof of future
results of operations and financial position of the Borrower and its
Subsidiaries.
Section 5.11. Enforceability. This Agreement, when executed and
delivered by the Borrower, will be a legal, valid and binding agreement of the
Borrower, enforceable against it in accordance with its terms, except as may be
limited by (i) bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other similar laws or judicial decisions for the relief of debtors
or the limitation of creditors' rights generally; and (ii) any equitable
principles relating to or limiting the rights of creditors generally or any
equitable remedy which may be granted to cure any defaults; and the Acquisition
Documents, the Revolving Notes, the other Loan Documents and any other
instrument or agreement required hereunder has been so authorized and, when
executed and delivered, will be similarly valid, binding and enforceable, except
as may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws or judicial decisions for the relief
of debtors or the limitation of creditors' rights generally; and (ii) any
equitable principles relating to or limiting the rights of creditors generally
or any equitable remedy which may be granted to cure any defaults; and the
Subsidiary Guaranty, when executed and delivered by each Guarantor, will be a
legal, valid and binding agreement of such Guarantor, enforceable against it in
accordance with its terms, except as may be limited by (i) bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or other similar
laws or judicial decisions for the relief of debtors or the limitation of
creditors' rights generally; and (ii) any equitable principles relating to or
limiting the rights of creditors generally or any equitable remedy which may be
granted to cure any defaults.
Section 5.12. Year 2000 Compliance. The Borrower is in the process of
conducting a comprehensive review and assessment of the computer applications of
the Borrower and its Subsidiaries and is in the process of making inquiry of
their material suppliers, vendors (including data processors) and customers,
with respect to any defect in computer software, data bases, hardware, controls
and peripherals related to the occurrence of the year 2000 or the use at any
time of any date which is before, on and after December 31, 1999, in connection
therewith. Based on the foregoing review, assessment and inquiry, the Borrower
believes that no such defect could reasonably be expected to have a material
adverse effect on the business or financial affairs of the Borrower (or of the
Borrower and its Subsidiaries taken on a consolidated basis).
SECTION 6. CONDITIONS PRECEDENT.
The obligation of the Banks to make any Loan pursuant hereto or to
issue any L/C shall be subject to the following conditions precedent:
Section 6.1. General. The Agent shall have received the notice of
borrowings and request for any L/C hereinabove provided for.
Section 6.2. Initial Extension of Credit. Prior to the initial
extension hereunder, the following conditions precedent shall have been
satisfied:
(a) the Borrower shall have provided a Borrowing Base Certificate to
the Agent, and shall have delivered to the Agent for the benefit of the Banks in
sufficient counterparts for distribution to the Banks:
(a) the Revolving Notes;
(b) the fully executed Subsidiary Guaranty;
(c) the fully executed Security Agreement and such financing
statements relating thereto as the Agent may request;
(d) evidence of insurance required by Section 7.3 hereof and
by the Security Documents showing the Agent as loss payee thereunder
pursuant to an endorsement acceptable to the Banks;
(e) a good standing certificate or certificate of existence
for the Borrower and each Guarantor dated as of the date no earlier
than September 9, 1998 from the office of the secretary of state of the
states of their respective organization;
(f) copies of the Certificate of Incorporation or Certificate
of Limited Partnership, and all amendments thereto, of each Guarantor,
certified by the office of the secretary of state of Delaware as of the
date no earlier than September 9, 1998.
(g) copies of the By-Laws or Limited Partnership Agreement,
and all amendments thereto, of each Guarantor certified as true,
correct and complete on the date hereof by the Secretary of each
Guarantor;
(h) copies, certified by the Secretary or Assistant Secretary
of the Borrower and each Guarantor, of resolutions regarding the
transactions contemplated by this Agreement, duly adopted by the Board
of Directors of the Borrower and each Guarantor, respectively, and
satisfactory in form and substance to all of the Banks;
(i) an incumbency signature certificate for the Borrower
and each Guarantor satisfactory in form and substance to all of the
Banks;
(j) the favorable written opinions of counsel for the
Borrower and the Guarantors in form and substance satisfactory to each
of the Banks and their respective legal counsel; and
(k) copies, certified as true, complete and correct by the
Secretary of the Borrower, of the Acquisition Documents.
(b) all conditions precedent to the PMAC Acquisitions shall have been
satisfied;
(c) the Acquisition Documents shall be in form and substance
satisfactory to the Banks and their respective legal counsel;
(d) the Agent shall have received evidence satisfactory to the Banks
that the total consideration to be paid by the Borrower and its Subsidiaries in
connection with the PMAC Acquisition shall not exceed $12,500,000; and
(e) except as previously disclosed to the Lenders in the Borrower's
financial statements for the period ending July 31, 1998, no material adverse
change in the financial condition, operations or Properties of the Borrower and
its Subsidiaries shall have occurred since September 30, 1997;
Section 6.3. Each Extension of Credit. As of the time of the making
of each Loan and the issuance of the L/C hereunder:
(a) each of the representations and warranties set forth in
Section 5 hereof shall be and remain true and correct as of said time,
except that the representations and warranties made under Section 5.2
shall be deemed to refer to the most recent financial statements
furnished to the Banks pursuant to Section 7.4 hereof;
(b) the Borrower shall be in full compliance with all of the
terms and conditions hereof, and no Potential Default or Event of
Default shall have occurred and be continuing;
(c) after giving effect to the requested extension of credit
and to each Revolving Credit Loan that has been made and each L/C
issued hereunder, the aggregate principal amount of all Revolving
Credit Loans, the amount available for drawing under all L/Cs and the
aggregate principal amount of all Reimbursement Obligations then
outstanding shall not exceed the Banks' Revolving Credit Commitments
then in effect;
and the request by the Borrower for any Loan or L/C pursuant hereto shall be and
constitute a warranty to the foregoing effects.
Section 6.4. Legal Matters. Legal matters incident to the execution
and delivery of the Loan Documents shall be satisfactory to each of the Banks
and their legal counsel.
SECTION 7. COVENANTS.
It is understood and agreed that so long as credit is in use or
available under this Agreement or any amount remains unpaid on any Revolving
Note, Reimbursement Obligation or L/C remains outstanding, except to the extent
compliance in any case or cases is waived in writing by the Required Banks:
Section 7.1. Maintenance of Property. The Borrower will, and will cause
each Subsidiary to, keep and maintain all of its Properties necessary or useful
in its business in good condition, and make all necessary renewals,
replacements, additions, betterments and improvements thereto; provided,
however, that nothing in this Section shall prevent the Borrower or any
Subsidiary from discontinuing the operating and maintenance of any of its
properties if such discontinuance is, in the judgment of the Borrower, desirable
in the conduct of its business and not disadvantageous in any material respect
to the Banks as holders of the Revolving Notes.
Section 7.2. Taxes. The Borrower will, and will cause each Subsidiary
to, duly pay and discharge all taxes, rates, assessments, fees and governmental
charges upon or against the Borrower or any Subsidiary or against its Properties
in each case before the same becomes delinquent and before penalties accrue
thereon unless and to the extent that the same is being contested in good faith
and by appropriate proceedings which prevent enforcement of the matter under
contest and adequate reserves, determined in accordance with generally accepted
accounting principles consistently applied, have been established with respect
thereto.
Section 7.3. Maintenance of Insurance. The Borrower will, and will
cause each Subsidiary to, maintain insurance with insurers recognized as
financially sound and reputable by prudent business persons in such forms and
amounts and against such risks as is usually carried by companies engaged in
similar business and owning similar properties in the same general areas in
which the Borrower or such Subsidiary operates. The Agent shall be named as loss
payee under any insurance policies which relate to the Collateral. The Borrower
shall, at the Agent's or any Bank's request, provide copies to the Agent and
each Bank of all insurance policies and other materials related thereto
maintained by the Borrower and its Subsidiaries.
Section 7.4. Financial Reports. The Borrower will, and will cause each
Subsidiary to, maintain a system of accounting in accordance with sound
accounting practice and will furnish promptly to the Banks and their duly
authorized representatives such information respecting the business and
financial condition of the Borrower and its Subsidiaries as may from time to
time be requested and, without any request, will furnish each Bank:
(a) as soon as available, and in any event within 45 days
after the close of each monthly period of the Borrower which is also
the end of a fiscal quarter of the Borrower and within 30 days after
the close of each other monthly fiscal period of the Borrower (i) a
copy of consolidated balance sheets and profit and loss statements for
the Borrower and its Subsidiaries (for such monthly period and the year
to date) for such period of such Borrower and for the corresponding
periods of the preceding fiscal year, and (ii) consolidating balance
sheets and profit and loss statements for the Borrower and each
Subsidiary for the year to date, and (iii) in respect of each month
which is also the end of a fiscal quarter of the Borrower, a copy of
the Borrower's 10-Q for such period, all in reasonable detail, prepared
by the Borrower and certified by the chief financial officer of the
Borrower;
(b) as soon as available, and in any event within 90 days
after the close of each fiscal year of the Borrower, (i) a copy of the
audit report for such year and accompanying financial statements,
including consolidated and consolidating balance sheets,
reconciliations of change in stockholders' equity, profit and loss
statements and statements of cash flows for the Borrower and its
Subsidiaries showing in comparative form the figures for the previous
fiscal year of the Borrower, all in reasonable detail, accompanied by
the unqualified opinion of Ernst & Young or other independent public
accountants of nationally recognized standing selected by the Borrower
and satisfactory to each Bank;
(c) within 30 days after the last day of each month, a
Borrowing Base Certificate in the form of Exhibit D hereto, setting
forth a computation of the Borrowing Base as of the last day of the
period covered thereby, certified as correct by the Borrower's chief
financial officer, and certifying that the signer thereof has
re-examined the terms and provisions of the Loan Documents and that to
the best of his knowledge and belief, no Potential Default or Event of
Default has occurred or, if any such Potential Default or Event of
Default has occurred, setting forth the description of such Potential
Default or Event of Default and specifying the action, if any, taken by
the Borrower to remedy the same;
(d) within 30 days after the last day of every month, an
accounts receivable aging report in the form of Exhibit I attached
hereto;
(e) within 45 days after the last day of every month which is
also the end of a fiscal quarter of the Borrower and within 30 days
after the last day of every other month, a Compliance Certificate in
the form of Exhibit G attached hereto, prepared and signed by the chief
financial officer of the Borrower;
(f) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, which the
Borrower shall have filed with the Securities and Exchange Commission
or any governmental agency substituted therefor, or any national
securities exchange, including copies of the Borrower's form 10K annual
report, including financial statements audited by Ernst & Young or
other independent public accountants of nationally recognized standing
selected by the Borrower and reasonably satisfactory to the Required
Banks, its form 10Q quarterly report to the Securities and Exchange
Commission and any Form 8K filed by the Borrower with the Securities
and Exchange Commission; and
(g) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports and
proxy statements so mailed.
Section 7.5. Inspection. The Borrower shall, and shall cause each
Subsidiary to, permit the Banks, by their representatives and agents, to inspect
any of the Properties, corporate books and financial records of the Borrower and
each Subsidiary, to examine and make copies of the books of accounts and other
financial records of the Borrower and its Subsidiaries and to discuss the
affairs, finances and accounts of the Borrower and its Subsidiaries with, and to
be advised as to the same by, its officers at such times and intervals as the
Banks may request. So long as no Potential Default or Event of Default shall
have occurred and be continuing, the Borrower shall pay to the Banks from time
to time upon demand an amount sufficient to compensate the Banks for their fees,
charges and expenses in connection with two field audits of the Collateral per
year for the Borrower. During the existence of any Event of Default or Potential
Default, the Banks may perform more than two field audits in each calendar year,
with all fees, charges and expenses of the Banks associated therewith to be paid
by the Borrower.
Section 7.6. Consolidation and Merger. The Borrower will not, and will
not permit any Subsidiary to, consolidate with or merge into any Person, or
permit any other Person to merge into it, or acquire (in a transaction analogous
in purpose or effect to a consolidation or merger) all or substantially all of
the Property or capital stock of any other Person, unless:
(a) the Borrower or Subsidiary shall be the surviving entity
of any such merger;
(b) the Person merging into or being acquired by the Borrower
or a Subsidiary shall be in the same or a related line of business as
the Borrower or one or more of its Subsidiaries;
(c) no Potential Default or Event of Default shall exist
before or after giving effect to such merger; and
(d) the aggregate consideration paid by the Borrower and its
Subsidiaries in all such mergers and acquisitions and all investments
and acquisitions permitted by Sections 7.16(j) and (k) hereof in any 12
month period, shall not exceed $5,000,000.
;provided, however, that nothing contained in this Section 7.6 shall operate to
prevent the PMAC Acquisition.
Section 7.7. Transactions with Affiliates. The Borrower will not, and
will not permit any Subsidiary to, enter into any transaction, including without
limitation, the purchase, sale, lease or exchange of any Property, or the
rendering of any service, with any Affiliate of the Borrower except in the
ordinary course of and pursuant to the reasonable requirements of the Borrower's
business and upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than would be obtained in a comparable arm's-length transaction
with a Person not an Affiliate of the Borrower.
Section 7.8. Maximum Total Funded Debt Ratio. The Borrower will
not permit its Total Funded Debt Ratio to exceed 3.25 to 1 at any time.
Section 7.9. [INTENTIONALLY OMITTED].
Section 7.10. Consolidated Tangible Net Worth. The Borrower will
maintain Consolidated Tangible Net Worth in an amount not less than (a)
$70,000,000 at all times from the date hereof through September 30, 1998 and (b)
at all times during each fiscal quarter of the Borrower thereafter, an amount
equal to the sum of (i) the minimum amount of Consolidated Tangible Net Worth
the Borrower was required to maintain during the immediately preceding fiscal
quarter, plus (ii) 75% of the Borrower's Consolidated Net Income (but not less
than zero) for such fiscal quarter then ended.
Section 7.11. Maximum Leverage Ratio. The Borrower will not permit the
ratio of its Total Consolidated Funded Debt to its Total Capitalization to
exceed 0.5 to 1 at any time.
Section 7.12. Minimum Fixed Charge Coverage Ratio. The Borrower will
not permit its Fixed Charge Coverage Ratio to be less than 1.25 to 1 at any
time.
Section 7.13. Restricted Payments. The Borrower will not (a) declare or
pay any dividends on any class of stock, (b) directly or indirectly purchase,
redeem or otherwise acquire or retire any of its capital stock, or (c) make any
distribution of any kind or character with respect to its capital stock;
provided, however, in each case no Potential Default or Event of Default shall
then exist or result therefrom the Borrower may pay cash dividends on its common
stock and may purchase its capital stock in an aggregate amount for all such
dividends and purchases in each fiscal year of the Borrower not exceeding the
lesser of a (a)$6,000,000 and (b) 50% of Borrower's consolidated net income for
the most recently completed fiscal year.
Section 7.14. Liens. The Borrower will not, and will not permit any
Subsidiary to, pledge, mortgage or otherwise encumber or subject to or permit to
exist upon or be subjected to any lien, charge or security interest of any kind
(including any conditional sale or other title retention agreement and any lease
in the nature thereof), on any of its Properties of any kind or character at any
time owned by the Borrower or any Subsidiary, other than:
(a) liens, pledges or deposits for worker's compensation,
unemployment insurance, old age benefits or social security
obligations, taxes, assessments, statutory obligations or other similar
charges, good faith deposits made in connection with tenders, contracts
or leases to which the Borrower or a Subsidiary is a party or other
deposits required to be made in the ordinary course of business,
provided in each case the obligation secured is not overdue or, if
overdue, is being contested in good faith by appropriate proceedings
and adequate reserves have been provided therefor in accordance with
generally accepted accounting principles and that the obligation is not
for borrowed money, customer advances, trade payables, or obligations
to agricultural producers;
(b) the pledge of assets for the purpose of securing an
appeal or stay or discharge in the course of any legal proceedings,
provided that the aggregate amount of liabilities of the Borrower and
all Subsidiaries so secured by a pledge of property permitted under
this subsection (b) including interest and penalties thereon, if any,
shall not be in excess of $2,500,000 at any one time outstanding;
(c) liens, pledges, mortgages, security interests, or other
charges granted to the Agent to secure the Revolving Notes,
Reimbursement Obligations, the L/Cs and other amounts payable under the
Loan Documents;
(d) liens, pledges, mortgages, security interests or other
charges existing on the date hereof and set forth on Exhibit K attached
hereto;
(e) liens, pledges, mortgages, security interests and other
encumbrances on Property which secure only indebtedness incurred to
finance the acquisition of such Property (but only to the extent of the
fair market value of such Property and not including purchase money
security interests in Inventory);
(f) liens for property taxes and assessments or governmental
charges or levies which are not yet due and payable;
(g) liens incidental to the conduct of business or the
ownership of Properties and assets (including warehousemen's liens,
grower liens and attorneys' liens and statutory landlords' liens) or
other liens of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money, provided in
each case, the obligation secured is not overdue or, if overdue, is
being contested in good faith by appropriate actions or proceedings and
for which adequate reserves, determined in accordance with generally
accepted accounting principles, have been established;
(h) minor survey exceptions or minor encumbrances, easements
or reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use
of real properties, which are necessary for the conduct of the
activities of the Borrower and its Subsidiaries or which customarily
exist on properties of corporations engaged in similar activities and
similarly situated and which do not in any event materially impair
their use in the operation of the business of the Borrower and its
Subsidiaries; and
(i) mortgages, liens and encumbrances on the Borrower's real
estate and equipment securing only Funded Debt permitted by Section
7.15(f) hereof.
Section 7.15. Borrowings and Guaranties. The Borrower will not, and will
not permit any Subsidiary to, issue, incur, assume, create or have outstanding
any indebtedness for borrowed money (including as such all indebtedness
representing the deferred purchase price of Property and all indebtedness,
obligations and liabilities relating to bankers acceptances and letters of
credit) or customer advances, nor be or remain liable, whether as endorser,
surety, guarantor or otherwise, for or in respect of any liability or
indebtedness of any other Person, other than:
(a) indebtedness of the Borrower arising under or pursuant
to this Agreement or the other Loan Documents;
(b) the liability of the Borrower and its Subsidiaries
arising out of the endorsement for deposit or collection of commercial
paper received in the ordinary course of business;
(c) indebtedness of the Borrower and its Subsidiaries
existing on the date hereof and set forth on Exhibit L attached hereto,
other than indebtedness under the Existing Agreement;
(d) trade payables of the Borrower and its Subsidiaries
arising in the ordinary course of the Borrower's and its Subsidiaries'
business;
(e) indebtedness of the Subsidiaries to the Borrower;
(f) Funded Debt in an aggregate principal amount of up to
$6,000,000 with respect to bonds or notes or other secured indebtedness
to be guaranteed by ADFA and/or AIDC and any refundings or refinancings
thereof;
(g) indebtedness not otherwise permitted by this Section
7.15, provided that the aggregate principal amount of all such
indebtedness outstanding at any time does not exceed $7,500,000; and
(h) indebtedness of the Guarantors to the Borrower and
indebtedness of the Guarantors to the Agent and the Banks under the
Subsidiary Guaranty.
Section 7.16. Investments, Loans, Advances and Acquisitions. The
Borrower will not, and will not permit any Subsidiary to, make or retain any
investment (whether through the purchase of stock, obligations, capital
contributions or otherwise) in or make any loan or advance to, any other Person,
or acquire substantially as an entirety the Property or business of any other
Person, other than:
(a) investments in certificates of deposit having a maturity
of two years or less issued by any Bank and which are held by the Bank
issuing the same;
(b) investments in commercial paper rated P1 by Xxxxx'x
Investors Services, Inc. or A1 by Standard and Poor's Corporation
maturing within 270 days of the date of issuance thereof;
(c) loans or advances in the usual and ordinary course of
business to officers, directors and employees for expenses (including
moving expenses related to a transfer) incidental to carrying on the
business of the Borrower or any Subsidiary of the Borrower;
(d) investments shown on the financial statements referred to
in Section 5.2 in existing Subsidiaries;
(e) advances to the Borrower's foreign sales corporations
made in the ordinary course of the Borrower's business in an aggregate
principal amount outstanding at any time of up to $100,000;
(f) marketable obligations issued, guarantied, or fully
insured by the United States of America, or those for which the full
faith and credit of the United States of America is pledged for the
repayment of principal and interest thereof; provided that such
obligations have a final maturity of no more than two years from the
date acquired by the Borrower;
(g) marketable obligations issued, guarantied or fully
insured by any agency, instrumentality, or corporation of the United
States established or to be established by the Congress, for the which
the credit of such agency, instrumentality, or corporation is pledged
for the repayment of the principal and interest thereof; provided that
such obligations have a final maturity of no more than one year from
the date acquired by the Borrower; and
(h) any investments listed from time to time on the "working
list" maintained by Xxxxxx Trust and Savings Bank or Xxxxxx Investment
Management, Inc., acting as a fiduciary agent;
(i) loans, advances and guaranties not otherwise permitted by
this Section 7.16, provided that the aggregate amount of all such
loans, advances and guaranties outstanding at any time does not exceed
$5,000,000;
(j) other investments in and acquisitions (other than by
merger or consolidation) substantially as an entirety of the Property
or business of any Person or a majority of the capital stock or other
equity interests of any other Person, provided that:
(i) such Person shall be in the same or a related
line of business as the Borrower or one or more Subsidiaries;
(ii) the board of directors (or equivalent governing
body) of such Person shall have given its prior effective
written consent or approval of such acquisition;
(iii) no Potential Default or Event of Default shall
exist before or after giving effect to such acquisition;
(iv) the aggregate consideration paid in connection
with all such investments and acquisitions, all mergers
permitted by Section 7.6 hereof and all investments and
acquisitions permitted by Section 7.16(k) hereof, does not
exceed $5,000,000 in any 12 month period;
(k) investments in and acquisitions of less than all or
substantially all of the Property or business of any Person or of less
than a majority of the capital stock or other equity interests of any
other Person, provided that:
(i) such Person shall be in the same or a related
line of business as the Borrower or one or more Subsidiaries;
(ii) the Board of Directors (or equivalent governing
body) of such Person shall have given its prior effective
written consent or approval of such acquisition;
(iii) no Potential Default or Event of Default shall
exist before or after giving effect to such acquisition;
(iv) the aggregate consideration paid in connection
with all such investments and acquisitions, all mergers
permitted by Section 7.6 and all investments and acquisitions
permitted by 7.16(j) hereof, does not exceed $5,000,000 in any
12 month period;
(l) investments in and loans and advances to the Guarantors;
and
(m) investments or advances made in connection with the PMAC
Acquisition.
Section 7.17. Sale of Property. The Borrower will not and will not
permit any Subsidiary to, sell, lease, assign, transfer or otherwise dispose of
(whether in one transaction or in a series of related transactions) all or a
material part of its Property to any other Person; provided, however, that so
long as no Event of Default or Potential Default has occurred and is continuing
or would result after giving effect thereto, the Borrower and its Subsidiaries
may make:
(a) sales of its Inventory in the ordinary course of
business; and
(b) sales or leases of its surplus, obsolete or worn-out
machinery and equipment.
For purposes of this Section, "material part" shall mean 5% or more of
the book value of all of the property of the Borrower and its Subsidiaries.
Section 7.18. Notice of Suit or Adverse Change in Business or Default.
The Borrower shall, as soon as possible, and in any event within ten (10) days
after it learns of the following, give written notice to the Agent and each Bank
of (i) any material proceeding(s) being instituted or threatened to be
instituted by or against the Borrower or any Subsidiary in any federal, state,
local or foreign court or before any commission or other regulatory body
(federal, state, local or foreign), (ii) any material adverse change in the
business, Property or condition, financial or otherwise (including, without
limitation, any material loss or depreciation in the value of the Collateral) of
the Borrower, and (iii) the occurrence of any Potential Default or Event of
Default.
Section 7.19. ERISA. The Borrower will, and will cause each Subsidiary
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed is likely to result in the
imposition of a lien against any of its Property and will promptly notify the
Agent and each Bank of (i) the occurrence of any reportable event (as defined in
ERISA) which might result in the termination by the PBGC of any Plan, (ii)
receipt of any notice from PBGC of its intention to seek termination of any such
Plan or appointment of a trustee therefor, and (iii) its intention to terminate
or withdraw from any Plan. The Borrower will not, and will not permit any
Subsidiary to, terminate any such Plan or withdraw therefrom unless it shall be
in compliance with all of the terms and conditions of this Agreement after
giving effect to any liability to PBGC resulting from such termination or
withdrawal.
Section 7.20. Supplemental Performance. The Borrower will, and will
cause each Subsidiary to, at any time and from time to time upon request of any
Bank take or cause to be taken any action and execute, acknowledge, deliver or
record any further documents, security agreements or other instruments which
such Bank in its discretion deems necessary to carry out the purposes of the
Loan Documents.
Section 7.21. Use of Proceeds. The Borrower shall use the proceeds of
each Loan and other extensions of credit hereunder only (a) to pay the
Borrower's indebtedness under the Existing Agreement, (b) to finance the PMAC
Acquisition and (c) so long as such use of proceeds is not otherwise prohibited
by the terms hereof and such use would not otherwise cause the occurrence of a
Potential Default or an Event of Default hereunder, for proper corporate
purposes of the Borrower.
Section 7.22. Compliance with Laws, etc. The Borrower will, and will
cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include
(without limitation) the maintenance and preservation of its corporate existence
and qualification as a foreign corporation except where the failure to be so
qualified would not have a material adverse effect on the condition, financial
or otherwise, of Borrower or any Subsidiary.
Section 7.23. Environmental Covenant. The Borrower will, and will cause
each of its Subsidiaries to,
(a) use and operate all of its facilities and Properties in
compliance with all Environmental Laws where the failure to do so could
have a material adverse effect on the condition, financial or
otherwise, of the Borrower or any of its Subsidiaries, keep all
necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters in effect and remain
in material compliance therewith, and handle all hazardous materials in
material compliance with all applicable Environmental Laws;
(b) immediately notify the Agent and each Bank and provide
copies upon receipt of all written claims, complaints, notices or
inquiries relating to the condition of its facilities and Property or
compliance with Environmental Laws, and shall promptly, but in no event
later than 45 days (or, if such actions or proceedings are capable of
being cured but not within 45 days, then, in no event later than 105
days so long as Borrower continues to diligently proceed to cure) after
the occurrence of such actions or proceedings, cure and have dismissed,
to the reasonable satisfaction of the Banks, any actions and
proceedings relating to compliance with Environmental Laws; and
(c) provide such information and certifications which the
Agent or any Bank may reasonably request from time to time to evidence
compliance with this Section 7.23.
Section 7.24. No Restrictions on Subsidiaries. The Borrower shall not
and shall not permit any of its Subsidiaries directly or indirectly to create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary (or the
Borrower, in the case of subsections (e) and (g) of this Section) to: (a) pay
dividends or make any other distribution on any of such Subsidiary's capital
stock or other equity interests owned by the Borrower or any Subsidiary of the
Borrower; (b) pay any indebtedness owed to the Borrower or any other Subsidiary;
(c) make loans or advances to the Borrower or any other Subsidiary; (d) transfer
any of its Property or assets to the Borrower or any other Subsidiary; (e) merge
or consolidate with or into the Borrower or any other Subsidiary of the
Borrower; (f) guaranty the payment when due of the Borrower's indebtedness,
obligations and liabilities to the Agent or the Banks; or (g) grant to the Agent
for the benefit of the Banks liens and security interests on such Subsidiary's
or the Borrower's assets to secure the payment of the Borrower's and the
Guarantors' indebtedness, obligations and liabilities under the Loan Documents;
provided that (i) the foregoing shall not apply to restrictions and conditions
imposed by law or by this Agreement, (ii) the foregoing shall not apply to
restrictions and conditions existing on the date hereof identified on Exhibit M
(but shall apply to any extension or renewal of, or any amendment or
modification expanding the scope of, any such restriction or condition), (iii)
the foregoing shall not apply to customary restrictions and conditions contained
in agreements relating to the sale of a Subsidiary pending such sale, provided
such restrictions and conditions apply only to the Subsidiary that is to be sold
and such sale is permitted hereunder, (iv) clause (g) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to secured
indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the Property securing such indebtedness and (v) clause (g) of the
foregoing shall not apply to customary provisions in leases and other contracts
restricting the assignment thereof.
Section 7.25.Year 2000 Assessment. The Borrower shall take all actions necessary
and commit adequate resources to assure that its computerbased and other systems
(and those of all Subsidiaries) are able to effectively process dates, including
dates before, on and after January 1, 2000, without experiencing any Year 2000
Problem that could cause a material adverse effect on the business or financial
affairs of the Borrower (or of the Borrower and its Subsidiaries taken on a
consolidated basis). At the request of the Bank, the Borrower will provide the
Bank with written assurances and substantiations (including, but not limited to,
the results of internal or external audit reports prepared in the ordinary
course of business) reasonably acceptable to the Bank as to the capability of
the Borrower and its Subsidiaries to conduct its and their businesses and
operations before, on and after January 1, 2000, without experiencing a Year
2000 Problem causing a material adverse effect on the business or financial
affairs of the Borrower (or of the Borrower and its Subsidiaries taken on a
consolidated basis).
SECTION 8. EVENTS OF DEFAULT AND REMEDIES.
Section 8.1. Definitions. Any one or more of the following shall
constitute an Event of Default:
(a) Default in the payment when due of any principal of or
interest on any Revolving Note, whether at the stated maturity thereof
or as required by Section 2.4 hereof or at any other time provided in
this Agreement, or of any Reimbursement Obligation, or of any fee or
other amount payable by the Company pursuant to this Agreement, which
default, in the case of default in the payment when due of any interest
on any Revolving Note, continues for five days after the due date
therefor;
(b) Default in the observance or performance of any covenant
set forth in Sections 7.3, 7.5, 7.6, 7.8, 7.10, 7.11, 7.12, 7.13, 7.14,
7.15, 7.16, 7.17, 7.20 and 7.24, inclusive, hereof, or of any provision
of any Security Document requiring the maintenance of insurance on the
Collateral subject thereto or dealing with the use or remittance of
proceeds of such Collateral;
(c) Default in the observance or performance of any other
covenant, condition, agreement or provision hereof or any of the other
Loan Documents and such default shall continue for 30 days after the
first to occur of (i) the Borrower's knowledge thereof or (ii) written
notice thereof to the Borrower by the Agent or any Bank;
(d) Default shall occur under any evidence of indebtedness in
a principal amount exceeding $2,000,000 issued or assumed or guaranteed
by the Borrower or any Subsidiary, or under any mortgage, agreement or
other similar instrument under which the same may be issued or secured
and such default shall continue for a period of time sufficient to
permit the acceleration of maturity of any indebtedness evidenced
thereby or outstanding or secured thereunder;
(e) Any representation or warranty made by the Borrower
herein or in any Loan Document or in any statement or certificate
furnished by it pursuant hereto or thereto, proves untrue in any
material respect as of the date made or deemed made pursuant to the
terms hereof;
(f) Any judgment or judgments, writ or writs, or warrant or
warrants of attachment, or any similar process or processes, other than
those fully covered by insurance in a manner acceptable to the Banks,
in an aggregate amount in excess of $2,000,000 shall be entered or
filed against the Borrower or any Subsidiary or against any of their
respective Property or assets and remain unstayed and undischarged for
a period of 60 days from the date of its entry;
(g) Any reportable event (as defined in ERISA) which
constitutes grounds for the termination of any Plan or for the
appointment by the appropriate United States District Court of a
trustee to administer or liquidate any such Plan, shall have occurred
and be continuing thirty (30) days after written notice to such effect
shall have been given to the Borrower by any Bank; or any such Plan
shall be terminated; or a trustee shall be appointed by the appropriate
United States District Court to administer any such Plan; or the
Pension Benefit Guaranty Corporation shall institute proceedings to
administer or terminate any such Plan;
(h) The Borrower or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the Bankruptcy Code
of 1978, as amended, (ii) admit in writing its inability to pay, or not
pay, its debts generally as they become due or suspend payment of its
obligations, (iii) make an assignment for the benefit of creditors,
(iv) apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, conservator, liquidator or similar
official for it or any substantial part of its property, (v) file a
petition seeking relief or institute any proceeding seeking to have
entered against it an order for relief under the Bankruptcy Code of
1978, as amended, to adjudicate it insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, marshalling of
assets, adjustment or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, or (vi)
fail to contest in good faith any appointment or proceeding described
in Section 8.1(i) hereof;
(i) A custodian, receiver, trustee, conservator, liquidator
or similar official shall be appointed for the Borrower or any
Subsidiary or any substantial part of its respective Property, or a
proceeding described in Section 8.1(h)(v) shall be instituted against
any Borrower or any Subsidiary and such appointment continues
undischarged or any such proceeding continues undismissed or unstayed
for a period of 60 days; or
(j) Any Guarantor shall breach, repudiate, disavow or purport
to terminate its obligations under the Subsidiary Guaranty or any part
thereof, or the Subsidiary Guaranty or any part thereof shall for any
reason not be the legal, valid and binding obligation of any Guarantor
Subsidiary.
Section 8.2. Remedies for Non-Bankruptcy Defaults. When any Event of
Default, other than an Event of Default described in subsections (h) and (i) of
Section 8.1 hereof, has occurred and is continuing, the Agent, if directed by
any of the Banks, shall give notice to the Borrower and take any or all of the
following actions: (i) terminate the remaining Revolving Credit Commitments
hereunder on the date (which may be the date thereof) stated in such notice,
(ii) declare the principal of and the accrued interest on the Revolving Notes
and unpaid Reimbursement Obligations to be forthwith due and payable and
thereupon the Revolving Notes and unpaid Reimbursement Obligations including
both principal and interest, shall be and become immediately due and payable
without further demand, presentment, protest or notice of any kind, and (iii)
proceed to foreclose against any Collateral under any of the Security Documents,
take any action or exercise any remedy under any of the Loan Documents or
exercise any other action, right, power or remedy permitted by law. Any Bank may
exercise the right of set off with regard to any deposit accounts or other
accounts maintained by the Borrower with any of the Banks.
Section 8.3. Remedies for Bankruptcy Defaults. When any Event of
Default described in subsections (h) or (i) of Section 8.1 hereof has occurred
and is continuing, then the Revolving Notes shall immediately become due and
payable without presentment, demand, protest or notice of any kind, and the
obligation of the Banks to extend further credit pursuant to any of the terms
hereof shall immediately terminate.
Section 8.4. L/Cs. Promptly following the acceleration of the maturity
of the Revolving Notes pursuant to Section 8.2 or 8.3 hereof, the Borrower shall
immediately pay to the Agent for the benefit of the Banks the full undrawn face
amount of all then outstanding L/Cs. The Agent shall hold all such funds and
proceeds thereof as additional collateral security for the obligations of the
Borrower to the Banks under the Loan Documents. The amount paid under any L/C
for which the Borrower has not reimbursed the Banks shall bear interest from the
date of such payment at the default rate of interest specified in Section
1.3(c)(i) hereof.
SECTION 9. CHANGE IN CIRCUMSTANCES REGARDING EURODOLLAR LOANS.
Section 9.1. Change of Law. Notwithstanding any other provisions of
this Agreement or any Revolving Note, if at any time after the date hereof with
respect to Eurodollar Loans, any Bank shall determine in good faith that any
change in applicable law or regulation or in the interpretation thereof makes it
unlawful for such Bank to make or continue to maintain any Eurodollar Loan or to
give effect to its obligations as contemplated hereby, such Bank shall promptly
give notice thereof to the Borrower to such effect, and such Bank's obligation
to make or relend any such affected Eurodollar Loans under this Agreement shall
terminate until it is no longer unlawful for such Bank to make or maintain such
affected Loan. The Borrower shall prepay the outstanding principal amount of any
such affected Eurodollar Loan made to it, together with all interest accrued
thereon and all other amounts due and payable to the Banks under Section 9.4 of
this Agreement, on the earlier of the last day of the Interest Period applicable
thereto and the first day on which it is illegal for such Bank to have such
Loans outstanding; provided, however, the Borrower may then elect to borrow the
principal amount of such affected Loan by means of another type of Revolving
Credit Loan available hereunder, subject to all of the terms and conditions of
this Agreement.
Section 9.2. Unavailability of Deposits or Inability to Ascertain the
Adjusted Eurodollar Rate. Notwithstanding any other provision of this Agreement
or any Revolving Note to the contrary, if prior to the commencement of any
Interest Period any Bank shall determine (i) that deposits in the amount of any
Eurodollar Loan scheduled to be outstanding are not available to it in the
relevant market or (ii) by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the Adjusted
Eurodollar Rate, then the Agent shall promptly give telephonic or telex notice
thereof to the Borrower and the Banks (such notice to be confirmed in writing),
and the obligation of the Banks to make any such Eurodollar Loan in such amount
and for such Interest Period shall terminate until deposits in such amount and
for the Interest Period selected by the Borrower shall again be readily
available in the relevant market and adequate and reasonable means exist for
ascertaining the Adjusted Eurodollar Rate. Upon the giving of such notice, the
Borrower may elect to either (i) pay or prepay, as the case may be, such
affected Loan, subject to the provisions of Section 9.4 hereof or (ii) reborrow
such affected Loan as another type of Revolving Credit Loan available hereunder,
subject to all terms and conditions of this Agreement.
Section 9.3. Taxes and Increased Costs. With respect to any outstanding
Eurodollar Loans, if any Bank shall determine in good faith that any change in
any applicable law, treaty, regulation or guideline (including, without
limitation, Regulation D of the Board of Governors of the Federal Reserve
System) or any new law, treaty, regulation or guideline, or any interpretation
of any of the foregoing by any governmental authority charged with the
administration thereof or any central bank or other fiscal, monetary or other
authority having jurisdiction over such Bank or its lending branch or the
Eurodollar Loans contemplated by this Agreement (whether or not having the force
of law) ("Change in Law") shall:
(a) impose, modify or deem applicable any reserve, special
deposit or similar requirements against assets held by, or deposits in
or for the account of, or Loans by, or any other acquisition of funds
or disbursements by, such Bank (other than reserves included in the
determination of the Adjusted Eurodollar Rate);
(b) subject such Bank, any Eurodollar Loan, or any Revolving
Note to any tax (including, without limitation, any United States
interest equalization tax or similar tax however named applicable to
the acquisition or holding of debt obligations and any interest or
penalties with respect thereto), duty, charge, stamp tax, fee deduction
or withholding in respect of this Agreement, any Eurodollar Loan, or
any Revolving Note except such taxes as may be measured by the overall
net income of such Bank or its lending branch and imposed by the
jurisdiction, or any political subdivision or taxing authority thereof,
in which such Bank's principal executive office or its lending branch
is located or in which the Bank has nexus;
(c) change the basis of taxation of payments of principal and
interest due from the Borrower to such Bank hereunder or under any
Revolving Note (other than by a change in taxation of the overall net
income of such Bank); or
(d) impose on such Bank any penalty with respect to the
foregoing or any other condition regarding this Agreement, its
disbursement, any Eurodollar Loan, or any Revolving Note;
and such Bank shall determine in good faith that the result of any of the
foregoing is to increase the cost (whether by incurring a cost or adding to a
cost) to such Bank of making or maintaining any Eurodollar Loan hereunder or to
reduce the amount of principal or interest received by such Bank, then the
Borrower shall pay to such Bank from time to time as specified by such Bank such
additional amounts as such Bank shall determine are sufficient to compensate and
indemnify it for such increased cost or reduced amount. If any Bank makes such a
claim for compensation, it shall provide to the Borrower a certificate setting
forth such increased cost or reduced amount as a result of any event mentioned
herein specifying such Change in Law, and such certificate shall be conclusive
and binding on the Borrower as to the amount thereof except in the case of
manifest error or willful misconduct. Upon the imposition of any such cost, the
Borrower may prepay any affected Loan, subject to the provisions of Sections 2.3
and 9.4 hereof.
Section 9.4. Funding Indemnity. (a) In the event any Bank shall incur
any loss, cost, expense or premium (including, without limitation, any loss of
profit and any loss, cost, expense or premium incurred by reason of the
liquidation or re-employment of deposits or other funds acquired by such Bank to
fund or maintain any Eurodollar Loan or the relending or reinvesting of such
deposits or amounts paid such Bank) as a result of:
(i) any payment or prepayment of a Eurodollar Loan on a date
other than the last day of the then applicable Interest Period;
(ii) any failure by the Borrower to borrow any Eurodollar Loan
on the date specified in the notice given pursuant to Section 1.6
hereof; or
(iii) the occurrence of any Event of Default;
then, upon the demand of such Bank, the Borrower shall pay to such Bank such
amount as will reimburse such Bank for such loss, cost or expense.
(b) If any Bank makes a claim for compensation under this Section 9.4,
it shall provide to the Borrower a certificate setting forth the amount of such
loss, cost or expense in reasonable detail and such certificate shall be
conclusive and binding on the Borrower as to the amount thereof except in the
case of manifest error.
Section 9.5. Lending Branch. Each Bank may, at its option, elect to
make, fund or maintain its Eurodollar Loans hereunder at the branch or office
specified opposite its signature on the signature page hereof or such other of
its branches or offices as such Bank may from time to time elect, subject to the
provisions of Section 1.6(b) hereof.
Section 9.6. Discretion of Bank as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Bank shall
be entitled to fund and maintain its funding of all or any part of its Loans in
any manner it sees fit, it being understood however, that for the purposes of
this Agreement all determinations hereunder (including determinations for the
purposes of Section 9.4) shall be made as if the Banks had actually funded and
maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits in the relevant interbank market having a
maturity corresponding to such Interest Period and bearing an interest rate
equal to the Adjusted Eurodollar Rate for such Interest Period.
SECTION 10. THE AGENT.
Section 10.1. Appointment and Powers. Xxxxxx Trust and Savings Bank is
hereby appointed by the Banks as Agent under the Loan Documents, including but
not limited to the Security Documents, wherein the Agent shall hold a security
interest for the benefit of the Banks, solely as the Agent of the Banks, and
each of the Banks irrevocably authorizes the Agent to act as the Agent of such
Bank. The Agent agrees to act as such upon the express conditions contained in
this Agreement.
Section 10.2. Powers. The Agent shall have and may exercise such powers
hereunder as are specifically delegated to the Agent by the terms of the Loan
Documents, together with such powers as are incidental thereto. The Agent shall
have no implied duties to the Banks, nor any obligation to the Banks to take any
action under the Loan Documents except any action specifically provided by the
Loan Documents to be taken by the Agent.
Section 10.3. General Immunity. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the Banks or any
Bank for any action taken or omitted to be taken by it or them under the Loan
Documents or in connection therewith except for its or their own gross
negligence or willful misconduct.
Section 10.4. No Responsibility for Loans, Recitals, etc. The Agent
shall not (i) be responsible to the Banks for any recitals, reports, statements,
warranties or representations contained in the Loan Documents or furnished
pursuant thereto, (ii) be responsible for the value, worth, payment or
collection of any Loans hereunder, (iii) be bound to ascertain or inquire as to
the performance or observance of any of the terms of the Loan Documents, or (iv)
be responsible to determine or verify the existence, eligibility or value of any
Collateral, or the correctness of any Borrowing Base Certificate. In addition,
neither the Agent nor its counsel shall be responsible to the Banks for the
enforceability or validity of any of the Loan Documents.
Section 10.5. Right to Indemnity. The Banks hereby indemnify the Agent
for any actions taken in accordance with this Section 10, and the Agent shall be
fully justified in failing or refusing to take any action hereunder, unless it
shall first be indemnified to its satisfaction by the Banks pro rata against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action, other than any liability which may arise out
of Agent's gross negligence or willful misconduct.
Section 10.6. Action Upon Instructions of Banks. The Agent agrees, upon
the written request of the Banks, to take any action of the type specified in
the Loan Documents as being within the Agent's rights, duties, powers or
discretion. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with written instructions signed
by the Banks, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks and on all holders of the
Revolving Notes. In the absence of a request by the Banks, the Agent shall have
authority, in its sole discretion, to take or not to take any action, unless the
Loan Documents specifically require the consent of all of the Banks.
Section 10.7. Employment of Agents and Counsel. The Agent may execute
any of its duties as Agent hereunder by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Banks, except as to money
or securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it in good faith
and with reasonable care. The Agent shall be entitled to advice and opinion of
legal counsel concerning all matters pertaining to the duties of the agency
hereby created.
Section 10.8. Reliance on Documents; Counsel. Absent gross negligence or
willful misconduct, the Agent shall be entitled to rely upon any Revolving Note,
notice, consent, certificate, affidavit, letter, telegram, statement, paper or
document believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons, and, in respect to legal matters, upon the
opinion of legal counsel selected by the Agent.
Section 10.9. May Treat Payee as Owner. The Agent may deem and treat the
payee of any Revolving Note as the owner thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof shall have been
filed with the Agent. Any request, authority or consent of any person, firm or
corporation who at the time of making such request or giving such authority or
consent is the holder of any such Revolving Note shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Revolving Note or of
any Revolving Note issued in exchange therefor.
Section 10.10. Agent's Reimbursement. Each Bank agrees to reimburse the
Agent pro rata in accordance with its Commitment Percentage for any reasonable
out-of-pocket expenses (including fees and charges for field audits) not
reimbursed by the Borrower (a) for which the Agent is entitled to reimbursement
by the Borrower under the Loan Documents and (b) for any other reasonable
expenses incurred by the Agent on behalf of the Banks, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents.
Section 10.11. Rights as a Lender. With respect to its commitment, Loans
made by it, the L/C issued by it and the Revolving Notes issued to it, the Agent
shall have the same rights and powers hereunder as any Bank and may exercise the
same as though it were not the Agent, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include the Agent in its individual
capacity. The Agent may accept deposits from, lend money to, and generally
engage in any kind of banking or trust business with the Borrower as if it were
not the Agent.
Section 10.12. Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements referred to in Section 5.2 and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into the Loan Documents. Each Bank also acknowledges that it
will, independently and without reliance upon the Agent or any other Bank and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents.
Section 10.13. Resignation of Agent. Subject to the appointment of a
successor Agent, the Agent may resign as Agent for the Banks under this
Agreement and the other Loan Documents at any time by sixty days' notice in
writing to the Banks. Such resignation shall take effect upon appointment of
such successor. The Banks shall have the right to appoint a successor Agent who
shall be entitled to all of the rights of, and vested with the same powers as,
the original Agent under the Loan Documents. In the event a successor Agent
shall not have been appointed within the sixty day period following the giving
of notice by the Agent, the Agent may appoint its own successor. Resignation by
the Agent shall not affect or impair the rights of the Agent under Sections 10.5
and 10.10 hereof with respect to all matters preceding such resignation. Any
successor Agent must be a national banking association or a Bank chartered in
any State of the United States.
Section 10.14. Duration of Agency. The agency established by Section 10.1
hereof shall continue, and Sections 10.1 through and including this Section
10.14 shall remain in full force and effect, until the Revolving Notes and all
other amounts due hereunder and thereunder, including without limitation all
Reimbursement Obligations, shall have been paid in full and the Banks'
commitments to extend credit to or for the benefit of the Borrower shall have
terminated or expired.
SECTION 11. MISCELLANEOUS.
Section 11.1. Amendments and Waivers. Any term, covenant, agreement or
condition of this Agreement may be amended only by a written amendment executed
by the Borrower, the Required Banks and, if the rights or duties of the Agent
are affected thereby, the Agent, or compliance therewith only may be waived
(either generally or in a particular instance and either retroactively or
prospectively), if the Borrower shall have obtained the consent in writing of
the Required Banks and, if the rights or duties of the Agent are affected
thereby, the Agent, provided, however, that without the consent in writing of
the holders of all outstanding Revolving Notes and unpaid Reimbursement
Obligations and the issuer of the L/Cs, or all Banks if no Revolving Note or L/C
is outstanding, no such amendment or waiver shall (a) change the amount or
postpone the date of payment of any scheduled payment or required prepayment of
principal of the Revolving Notes or reduce the rate or extend the time of
payment of interest on the Revolving Notes, or reduce the amount of principal
thereof, or modify any of the provisions of the Revolving Notes with respect to
the payment or prepayment thereof, (b) give to any Revolving Note any preference
over any other Revolving Notes, (c) amend the definition of Required Banks, (d)
alter, modify or amend the provisions of this Section 11.1, (e) change the
amount or term of any of the Banks' Revolving Credit Commitments or the fees
required under Section 2.1 hereof, (f) alter, modify or amend the provisions of
Section 6 of this Agreement, (g) alter, modify or amend any Bank's right
hereunder to consent to any action, make any request or give any notice, (h)
change the advance rates under the Borrowing Base, or (i) release any Collateral
under the Security Documents, unless such release is permitted or contemplated
by the Loan Documents. Any such amendment or waiver shall apply equally to all
Banks and the holders of the Revolving Notes and Reimbursement Obligations and
shall be binding upon them, upon each future holder of any Revolving Note and
Reimbursement Obligation and upon the Borrower, whether or not such Revolving
Note shall have been marked to indicate such amendment or waiver. No such
amendment or waiver shall extend to or affect any obligation not expressly
amended or waived.
Section 11.2. Waiver of Rights. No delay or failure on the part of the
Agent or any Bank or on the part of the holder or holders of any Revolving Note
or Reimbursement Obligation in the exercise of any power or right shall operate
as a waiver thereof, nor as an acquiescence in any Potential Default or Event of
Default, nor shall any single or partial exercise of any power or right preclude
any other or further exercise thereof, or the exercise of any other power or
right, and the rights and remedies hereunder of the Agent, the Banks and of the
holder or holders of any Revolving Notes are cumulative to, and not exclusive
of, any rights or remedies which any of them would otherwise have.
Section 11.3. Several Obligations. The commitments of each of the Banks
hereunder shall be the several obligations of each Bank and the failure on the
part of any one or more of the Banks to perform hereunder shall not affect the
obligation of the other Banks hereunder, provided that nothing herein contained
shall relieve any Bank from any liability for its failure to so perform. In the
event that any one or more of the Banks shall fail to perform its commitment
hereunder, all payments thereafter received by the Agent on the principal of
Loans and Reimbursement Obligations hereunder, whether from any Collateral or
otherwise, shall be distributed by the Agent to the Banks making such additional
Loans ratably as among them in accordance with the principal amount of
additional Loans made by them until such additional Loans shall have been fully
paid and satisfied, and all payments on account of interest shall be applied as
among all the Banks ratably in accordance with the amount of interest owing to
each of the Banks as of the date of the receipt of such interest payment.
Section 11.4. Non-Business Day. (a) If any payment of principal or
interest on any Domestic Rate Loan shall fall due on a day which is not a
Business Day, interest at the rate such Loan bears for the period prior to
maturity shall continue to accrue on such principal from the stated due date
thereof to and including the next succeeding Business Day on which the same is
payable.
(b) If any payment of principal or interest on any Eurodollar Loan
shall fall due on a day which is not a Business Day, the payment date thereof
shall be extended to the next date which is a Business Day and the Interest
Period for such Loan shall be accordingly extended, unless as a result thereof
any payment date would fall in the next calendar month, in which case such
payment date shall be the next preceding Business Day.
Section 11.5. Survival of Indemnities. All indemnities and all
provisions relative to reimbursement to the Banks of amounts sufficient to
protect the yield to the Banks with respect to Eurodollar Loans, including, but
not limited to, Sections 9.3 and 9.4 hereof, shall survive the termination of
this Agreement and the payment of the Revolving Notes.
Section 11.6. Documentary Taxes. Although the Borrower is of the opinion
that no documentary or similar taxes are payable in respect to this Agreement or
the Revolving Notes, Borrower agrees that it will pay such taxes, including
interest and penalties, in the event any such taxes are assessed irrespective of
when such assessment is made and whether or not any credit is then in use or
available hereunder.
Section 11.7. Representations. All representations and warranties made
herein or in certificates given pursuant hereto shall survive the execution and
delivery of this Agreement and of the Revolving Notes, and shall continue in
full force and effect with respect to the date as of which they were made and as
reaffirmed on the date of each borrowing, request for L/C and as long as any
credit is in use or available hereunder.
Section 11.8. Notices. Unless otherwise expressly provided herein, all
communications provided for herein shall be in writing or by telex and shall be
deemed to have been given or made when served personally, when an answer back is
received in the case of notice by telex or 2 days after the date when deposited
in the United States mail (registered, if to Borrower) addressed if to Borrower
to 00000 Xxxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxx 00000,
Attention: Vice President Finance; if to the Agent or Xxxxxx at 000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Emerging Majors West; and if to any
of the Banks, at the address for each Bank set forth under its signature hereon;
or at such other address as shall be designated by any party hereto in a written
notice to each other party pursuant to this Section 11.8.
Section 11.9. Costs and Expenses. (a) The Borrower agrees to pay on
demand all costs and expenses of the Agent and each Bank in connection with the
negotiation, preparation, execution and delivery of this Agreement, the
Revolving Notes and the other instruments and documents to be delivered
hereunder or in connection with the transactions contemplated hereby, including
the fees and expenses of Xxxxxxx and Xxxxxx, special counsel to the Agent and
Xxxxxxxx Xxxxxx, counsel to Mercantile Bank National Association; all costs and
expenses of the Agent and the reasonable costs and expenses of each Bank
(including in each case attorneys' fees and expenses) incurred in connection
with any consents or waivers hereunder or amendments hereto, and all costs and
expenses (including attorneys' fees and expenses), if any, incurred by the
Agent, the Banks or any other holders of a Revolving Note or any Reimbursement
Obligation in connection with the enforcement of this Agreement or the Revolving
Notes and the other instruments and documents to be delivered hereunder. In
addition, at the time of requesting any amendment hereof the Borrower shall pay
to the Agent for the account of the Banks an amendment fee of $5,000 for each
such requested amendment. The Borrower agrees to indemnify and save harmless the
Banks and the Agent from any and all liabilities, losses, costs and expenses
incurred by the Banks or the Agent in connection with any action, suit or
proceeding brought against the Agent or any Bank by any Person which arises out
of the transactions contemplated or financed hereby or by the Revolving Notes,
or out of any action or inaction by the Agent or any Bank hereunder or
thereunder, except for such thereof as is caused by the gross negligence or
willful misconduct of the party indemnified.
(b) Without limiting the generality of the foregoing, the Borrower
unconditionally agrees to forever indemnify, defend and hold harmless, the Agent
and each Bank, and covenants not to xxx for any claim for contribution against,
the Agent or any Bank for any damages, costs, loss or expense, including without
limitation, response, remedial or removal costs, arising out of any of the
following: (i) any presence, release, threatened release or disposal of any
hazardous or toxic substance or petroleum by the Borrower or any Subsidiary or
otherwise occurring on or with respect to their respective Property, (ii) the
operation or violation of any Environmental Law, whether federal, state, or
local, and any regulations promulgated thereunder, by the Borrower or any
Subsidiary or otherwise occurring on or with respect to their respective
Property, (iii) any claim for personal injury or property damage in connection
with the Borrower or any Subsidiary or otherwise occurring on or with respect to
their respective Property, and (iv) the inaccuracy or breach of any
environmental representation, warranty or covenant by the Borrower made herein
or in any loan agreement, promissory note, mortgage, deed of trust, security
agreement or any other instrument or document evidencing or securing any
indebtedness, obligations or liabilities of the Borrower owing to the Agent or
any Bank or setting forth terms and conditions applicable thereto or otherwise
relating thereto, except for damages arising from the Agent's or such Bank's
willful misconduct or gross negligence. This indemnification shall survive the
payment and satisfaction of all indebtedness, obligations and liabilities of the
Borrower owing to the Agent and the Banks and the termination of this Agreement,
and shall remain in force beyond the expiration of any applicable statute of
limitations and payment or satisfaction in full of any single claim under this
indemnification. This indemnification shall be binding upon the successors and
assigns of the Borrower and shall inure to the benefit of Agent and the Banks
and their respective directors, officers, employees, agents, and collateral
trustees, and their successors and assigns.
(c) The provisions of this Section 11.9 shall survive payment
of the Revolving Notes and Reimbursement Obligations and the termination of the
Banks' Revolving Credit Commitments hereunder.
Section 11.10. Counterparts. This Agreement may be executed in any number
of counterparts and all such counterparts taken together shall be deemed to
constitute one and the same instrument. One or more of the Banks may execute a
separate counterpart of this Agreement which has also been executed by the
Borrower, and this Agreement shall become effective as and when Borrower and all
of the Banks have executed this Agreement or a counterpart thereof and lodged
the same with the Agent.
Section 11.11. Successors and Assigns; Governing Law; Entire Agreement.
This Agreement shall be binding upon the Borrower and the Banks and their
respective successors and assigns, and shall inure to the benefit of the
Borrower and each of the Banks and the benefit of their respective successors
and assigns, including any subsequent holder of any Revolving Note or
Reimbursement Obligation. This Agreement and the rights and duties of the
parties hereto shall be construed and determined in accordance with the laws of
the State of Illinois, except conflict of laws principles. This Agreement
constitutes the entire understanding of the parties with respect to the subject
matter hereof and any prior agreements, whether written or oral, with respect
thereto are superseded hereby. The Borrower may not assign any of its rights or
obligations hereunder without the written consent of all of the Banks.
Section 11.12. No Joint Venture. Nothing contained in this Agreement
shall be deemed to create a partnership or joint venture among the parties
hereto.
Section 11.13. Severability. In the event that any term or provision
hereof is determined to be unenforceable or illegal, it shall deemed severed
herefrom to the extent of the illegality and/or unenforceability and all other
provisions hereof shall remain in full force and effect.
Section 11.14. Table of Contents and Headings. The table of contents and
section headings in this Agreement are for reference only and shall not affect
the construction of any provision hereof.
Section 11.15. Sharing of Payments. Each Bank agrees with each other Bank
that if such Bank shall receive and retain any payment, whether by set-off or
application of deposit balances or otherwise ("Set-Off"), on any Loan,
Reimbursement Obligation or other amount outstanding under this Agreement in
excess of its ratable share of payments on all Loans, Reimbursement Obligations
and other amounts then outstanding to the Banks, then such Bank shall purchase
for cash at face value, but without recourse, ratably from each of the other
Banks such amount of the Loans and Reimbursement Obligations held by each such
other Bank (or interest therein) as shall be necessary to cause such Bank to
share such excess payment ratably with all the other Banks; provided, however,
that if any such purchase is made by any Bank, and if such excess payment or
part thereof is thereafter recovered from such purchasing Bank, the related
purchases from the other Banks shall be rescinded ratably and the purchase price
restored as to the portion of such excess payment so recovered, but without
interest. Each Bank's ratable share of any such Set-Off shall be determined by
the proportion that the aggregate principal amount of Loans and Reimbursement
Obligations then due and payable to such Bank bears to the total aggregate
principal amount of Loans and Reimbursement Obligations then due and payable to
all the Banks.
Section 11.16. Conflict Among Documents. In the event of any conflict
between the terms hereof and the terms of any Loan Document other than the L/C
Agreement, the terms of such other Loan Document shall govern as to the
provision in conflict and in the event of any conflict between the terms hereof
and the terms of the L/C Agreement, the terms of this Agreement shall govern as
to the provision in conflict.
Section 11.17. Confidentiality. Each Bank agrees (on behalf of itself and
its affiliates, directors, officers, employees, agents and representatives) to
use reasonable precautions to keep confidential, in accordance with its
customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, any non-public information
supplied to such Bank by the Borrower or any of its Subsidiaries pursuant to
this Agreement which is identified to such Banks by any of such, as being
confidential at the time the same is delivered to such Bank; provided, however,
that nothing contained in this Section 11.17 shall prohibit or limit the
disclosure by any Bank of any such information (i) to the extent required by any
statute, rule, regulation, subpoena or judicial process, (ii) to any
governmental or regulatory agency having jurisdiction over such Bank, (iii) to
any professional advisors, including counsel and accountants, for any Bank, (iv)
to any bank examiners or auditors, (v) in connection with any litigation to
which any Bank is a party, (vi) in connection with the enforcement of any Bank's
rights and remedies under this Agreement, any of the Revolving Notes or any of
the other Loan Documents or (vii) to any assignee or participant of any Bank (or
prospective assignee or participant) so long as such assignee or participant (or
prospective assignee or participant) first executes and delivers to such Bank a
confidentiality agreement in substantially the form of this Section 11.17 and
such Bank delivers to the Borrower a copy of such executed confidentiality
agreement; and provided further, that in no event shall any Bank be obligated or
required to return any materials furnished to such Bank by the Borrower or any
of its Subsidiaries, hereunder. Notwithstanding the foregoing, no Bank shall
have any liability to the Borrower or to any of its Subsidiaries or to any of
their shareholders, partners, directors, officers, employees or agents by reason
of, or in any way claimed to be related to, any disclosure by such Bank (or any
of its affiliates, directors, officers, employees, agents or representatives) of
any information with respect to the Borrower or any of its Subsidiaries except
as the same results from the gross negligence or willful misconduct of such Bank
as determined by a court of competent jurisdiction.
Section 11.18. Participants. Each Bank shall have the right at its own
cost to grant participations (to be evidenced by one or more agreements or
certificates of participation) in the Revolving Credit Loans made and/or
Reimbursement Obligations, participations in L/Cs and Revolving Credit
Commitment held by such Bank at any time and from time to time to one or more
other Persons; provided that (i) no such participation shall relieve any Bank of
any of its obligations under this Agreement, (ii) no such participant shall have
any direct rights under this Agreement except as provided in this Section 11.18,
and no Agent shall have any obligation or responsibility to such participant.
Any agreement pursuant to which such participation is granted shall provide that
the granting Bank shall retain the sole right and responsibility to enforce the
obligations of the Borrower under this Agreement and the other Loan Documents
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of the Loan Documents, except that such agreement may
provide that such Bank will not agree to any modification, amendment or waiver
of the Loan Documents that would reduce the amount of or postpone any fixed date
for payment of any Obligation in which such participant has an interest. Any
party to which such a participation has been granted shall have the benefits of
Section 9.3 and Section 9.4 hereof, up to an amount not exceeding the amount
that would otherwise have been payable to the Bank who sold the participation
interest to such party. The Borrower and each Guarantor authorizes each Bank to
disclose to any participant or prospective participant under this Section 11.18
any financial or other information pertaining to the Borrower or any Guarantor.
Section 11.19. Assignment Agreements. (a) Each Bank may, at its own
expense, from time to time, assign to other commercial lenders part of its
rights and obligations under this Agreement (including without limitation the
indebtedness evidenced by the Revolving Notes then owned by such assigning Bank,
together with an equivalent proportion of its obligation to make loans and
advances and participate in L/Cs) pursuant to written agreements executed by
such assigning Bank, such assignee lender or lenders, the Borrower and the
Agent, which agreements shall specify in each instance the portion of the
indebtedness evidenced by the Revolving Notes which is to be assigned to each
such assignee lender and the portion of the Revolving Credit Commitment of the
assigning Bank to be assumed by it (the "Assignment Agreements"); provided,
however, that unless, in the case of clauses (i) and (iii) the Agent, the
Borrower, the assignor Bank and the assignee lender, in writing, agree to the
contrary, (i) the aggregate amount of the Exposure of the assigning Bank being
assigned to such assignee lender pursuant to each such assignment (determined as
of the effective date of the relevant Assignment Agreement) shall in no event be
less than $5,000,000 and shall be an integral multiple of $1,000,000 (other than
assignments between existing Banks which may be in the amount of $1,000,000 or
in such greater amount which is an integral multiple of $500,000); (ii) the
parties to each such assignment shall execute and deliver to the Agent an
Assignment Agreement, together with any Revolving Notes subject to such
assignment, (iii) each Bank (other than Xxxxxx) shall maintain for its own
account at least $15,000,000 of its Exposure or assign all of its Exposure; (iv)
the Agent and (except for an assignment made during the continuance of any Event
of Default) the Borrower must each consent, which consents shall not be
unreasonably withheld, to each such assignment to (provided no such consent is
required for any assignment to any affiliate of the assigning Bank), and (v) the
assignee lender must pay to the Agent a processing and recordation fee of $3,500
and any out-of-pocket attorney's fees incurred by the Agent in connection with
such Assignment Agreement. Upon the execution of each Assignment Agreement by
the assigning Bank thereunder, the assignee lender thereunder, the Borrower and
the Agent, satisfaction of all of the conditions set forth above and payment to
such assigning Bank by such assignee lender of the purchase price for the
portion of the Exposure being acquired by it, (i) such assignee lender shall
thereupon become a "Bank" for all purposes of this Agreement with an Exposure in
the amounts set forth in such Assignment Agreement and with all the rights,
powers and obligations afforded a Bank hereunder, (ii) such assigning Bank shall
have no further liability for funding the portion of any of its Revolving Credit
Commitment assumed by such other Bank, and (iii) the address for notices to such
assignee Bank shall be as specified in the Assignment Agreement executed by it.
Concurrently with the execution and delivery of such Assignment Agreement, the
Borrower shall execute and deliver new Revolving Notes to the assignee Bank in
the amount of its Revolving Credit Commitment or Revolving Credit Loan and new
Revolving Notes to the assigning Bank in the amounts of its Revolving Credit
Commitment or Revolving Credit Loan after giving effect to the reduction
occasioned by such assignment, such new Revolving Notes to constitute "Revolving
Notes" for all purposes of this Agreement.
(b) Any Bank may at any time pledge or assign all or any
portion of its rights under this Agreement and its Revolving Note to any Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment.
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set forth.
Dated as of September 18, 1998.
MAVERICK TUBE CORPORATION
By /s/ Xxxxx X. Eisenberg______________________________
Its President_______________________________________
Accepted and Agreed to as of the day and year last above written.
XXXXXX TRUST AND SAVINGS BANK, individually and as Agent
By /s/ Xxxxxx Xxxxx
Its Vice President
Address: 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Emerging Majors West
MERCANTILE BANK NATIONAL ASSOCIATION
By
Its
Address: 000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: St. Louis Group
