10-AA
U.S. $100,000,000
SUBORDINATED CREDIT AGREEMENT
Dated as of February 28, 2001
by and between
National Steel Corporation
as Borrower
and
NUF LLC
as Lender
TABLE OF CONTENTS
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Page
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Article I
DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS
Section 1.1 Defined Terms....................................................... 2
Section 1.2 Accounting Terms and Principles..................................... 22
Section 1.3 Certain Terms and References........................................ 22
Section 1.4 Time Periods........................................................ 23
Section 1.5 Quantities.......................................................... 23
Section 1.6 Pronouns............................................................ 24
Section 1.7 Construction........................................................ 24
Article II
THE FACILITIES
Section 2.1 The Commitments..................................................... 24
Section 2.2 Borrowing Procedures................................................ 24
Section 2.3 Reduction and Termination of the Commitments........................ 25
Section 2.4 Repayment of Loans.................................................. 25
Section 2.5 Evidence of Debt.................................................... 25
Section 2.6 Optional Prepayments................................................ 26
Section 2.7 Mandatory Prepayments............................................... 26
Section 2.8 Interest............................................................ 27
Section 2.9 Conversion and Continuation Options ................................ 28
Section 2.10 Fees................................................................ 28
Section 2.11 Payments and Computations; Protective Advances...................... 29
Section 2.12 Special Provisions Governing Eurodollar Rate Loans.................. 29
Section 2.13 Capital Adequacy.................................................... 31
Section 2.14 Taxes............................................................... 31
Section 2.15 Collateral Audits................................................... 32
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Article III
CONDITIONS PRECEDENT TO THE EFFECTIVENESS
OF THIS AGREEMENT AND TO LOANS
Section 3.1 Conditions Precedent to the Effectiveness
of this Agreement..................................... 32
Section 3.2 Conditions Precedent to Each Loan..................... 35
Article IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Corporate Existence; Compliance with Law.............. 36
Section 4.2 Corporate Power, Authorization;
Enforceable Obligations............................... 37
Section 4.3 Financial Statements.................................. 38
Section 4.4 Legal Proceedings..................................... 38
Section 4.5 Taxes................................................. 38
Section 4.6 Full Disclosure....................................... 39
Section 4.7 Margin Regulations.................................... 39
Section 4.8 Ownership of the Material Subsidiaries................ 40
Section 4.9 ERISA................................................. 40
Section 4.10 Liens and Encumbrances................................ 41
Section 4.11 Related Documents..................................... 41
Section 4.12 No Burdensome Restrictions; No Defaults............... 41
Section 4.13 No Other Ventures..................................... 42
Section 4.14 Investment Company Act................................ 42
Section 4.15 Public Utility Holding Company Act.................... 42
Section 4.16 Insurance............................................. 42
Section 4.17 Labor Matters......................................... 43
Section 4.18 Use of Proceeds....................................... 43
Section 4.19 Environmental Matters................................. 43
Section 4.20 Ownership of Properties............................... 44
Section 4.21 Existing Indebtedness................................. 45
Section 4.22 Solvency.............................................. 45
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Article V
REPORTING COVENANTS
Section 5.1 Financial Statements.................................... 46
Section 5.2 Default Notices......................................... 47
Section 5.3 [not used].............................................. 48
Section 5.4 ERISA Matters........................................... 48
Section 5.5 Litigation.............................................. 48
Section 5.6 Notices under Related Documents......................... 48
Section 5.7 SEC Filings; Press Releases............................. 49
Section 5.8 Labor Relations......................................... 49
Section 5.9 Insurance............................................... 49
Section 5.10 Environmental Matters................................... 49
Section 5.11 Other Information....................................... 50
Article VI
AFFIRMATIVE COVENANTS
Section 6.1 Preservation of Corporate Existence, Etc................ 51
Section 6.2 Compliance with Law, Etc................................ 51
Section 6.3 Conduct of Business..................................... 51
Section 6.4 Payment of Taxes, Etc................................... 51
Section 6.5 Maintenance of Insurance................................ 51
Section 6.6 Access.................................................. 52
Section 6.7 Keeping of Books........................................ 52
Section 6.8 Maintenance of Properties, Etc.......................... 52
Section 6.9 Maintenance of Contractual Obligations, Etc............. 52
Section 6.10 Application of Proceeds................................. 53
Section 6.11 Year.................................................... 53
Section 6.12 Environmental........................................... 53
Section 6.13 Inventory............................................... 53
Section 6.14 Accounting Changes; Year................................ 54
Section 6.15 EG Line Subsidiary...................................... 54
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Article VII
NEGATIVE COVENANTS
Section 7.1 Liens, Etc............................................. 54
Section 7.2 Indebtedness........................................... 56
Section 7.3 Guaranty Obligations................................... 57
Section 7.4 Restrictions on Subsidiary Distributions;
No New Negative Pledge................................. 57
Section 7.5 Restricted Payments.................................... 58
Section 7.6 Restriction on Fundamental Changes..................... 58
Section 7.7 Sale of Assets......................................... 58
Section 7.8 Investments in Other Persons........................... 59
Section 7.9 Change in Nature of Business........................... 60
Section 7.10 Compliance with ERISA.................................. 60
Section 7.11 Modification of Related Documents...................... 60
Section 7.12 Modification of Existing Indebtedness Agreements....... 60
Section 7.13 Transactions with Affiliates........................... 60
Section 7.14 Operating Leases....................................... 62
Section 7.15 Sale and Leaseback Transactions........................ 62
Section 7.16 Cancellation of Indebtedness Owed to It................ 62
Section 7.17 Material Subsidiaries.................................. 62
Section 7.18 Capital Structure...................................... 63
Section 7.19 No Speculative Transactions............................ 63
Article VIII
SUBORDINATION
Section 8.1 Obligations Subordinate to Senior Loan Obligations..... 63
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Article IX
EVENTS OF DEFAULT
Section 9.1 Events of Default............................................. 68
Section 9.2 Remedies...................................................... 71
Article X
MISCELLANEOUS
Section 10.1 Amendments, Waivers........................................... 72
Section 10.2 Assignment.................................................... 72
Section 10.3 Costs; Expenses; Indemnities.................................. 73
Section 10.4 Third Party Reliance.......................................... 76
Section 10.5 Independence of Representations and Warranties................ 76
Section 10.6 Governing Law................................................. 76
Section 10.7 Submission to Jurisdiction; Consent to
Service of Process............................................ 76
Section 10.8 Notices, Etc.................................................. 77
Section 10.9 No Waiver; Remedies........................................... 78
Section 10.10 Execution in Counterparts; Effectiveness;
Assignments by the Borrower................................... 78
Section 10.11 Entire Agreement.............................................. 78
Section 10.12 Further Assurances............................................ 78
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SCHEDULES
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Schedule 1.1 - Non-Material Subsidiaries
Schedule 4.8 - Material Subsidiaries
Schedule 4.9 - Employee Benefit Plans
Schedule 4.11 - Amendments to Related Documents
Schedule 4.13 - Joint Ventures and Partnerships
Schedule 4.19(d)- Disposal Facilities
Schedule 4.21 - Existing Indebtedness
Schedule 7.1 - Existing Liens
Schedule 7.8 - Existing Investments
EXHIBITS
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Exhibit A - Form of Subordinated Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion or Continuation
Exhibit D - Subordination Agreement
Exhibit E - Form of Opinion of Counsel for the Loan Parties
Exhibit F - Form Subordinated Security Agreement
Exhibit G - Fourth Amendment to Senior Credit Agreement
Exhibit H - Form Subordinated Guaranty
Exhibit I - Form Subordinated Pledge Agreement
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SUBORDINATED CREDIT AGREEMENT, dated as of February 28, 2001 by and
between National Steel Corporation, a Delaware corporation (the "Borrower"), and
NUF LLC, a Delaware limited liability company (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lender make available for
the purposes specified in this Agreement a revolving credit facility; and
WHEREAS, the Borrower has agreed subject and subordinate to the terms
of the Credit Agreement dated as of November 19, 1999 made between the Borrower
and the Lenders and Issuers defined therein and Citicorp USA, Inc., as
Administrative Agent and the Fuji Bank Limited, as Syndication Agent, and the
Pledge Agreement dated as of November 30, 1999 executed by the Borrower in favor
of the Senior Agent (the "Pledge Agreement") and the Security Agreement dated as
of November 30, 1999 executed by Borrower in connection therewith to secure its
obligations to the Lender in connection with such financing with security
interests in, and liens on, all of the Borrower's inventory and other Collateral
(as hereinafter defined), as provided for herein; and
WHEREAS, the Sender, Lender, the Borrower, the Lender and the
Guarantor have entered into the Subordination Agreement dated as of February 28,
2001 in connection with the subordination of the Secured Obligations to the
Senior Loan Obligations (each as defined herein).
WHEREAS, the Lender is willing to make available to the Borrower such
revolving credit facility upon the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and obligations herein set forth and other good and valuable
consideration, the adequacy and receipt of which is hereby acknowledged, and in
reliance upon the representations, warranties and covenants herein contained,
the parties hereto, intending to be legally bound, hereby agree as follows:
Article I
DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS
Section 1.1 Defined Terms. As used in this Agreement, the following
terms have the following meanings (such meanings to be equally applicable to
both the singular and plural forms and, unless the context otherwise requires,
to all genders and all other grammatical forms of the terms defined):
"Account" has the meaning specified in the Subordinated Security
Agreement.
"Advance Rate" means, at any time, in respect of any class of Eligible
Inventory, the advance rate set forth on Schedule 1.2 (Advance Rates)
corresponding to such class.
"Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such Person and each officer, director, general partner or joint-venturer
of such Person. For the purposes of this definition, "control" means the
possession of the power to direct or cause the direction of management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Affiliate Transaction" has the meaning specified in Section 7.13(a)
(General Limitation on Affiliate Transactions).
"Agreement" means this Subordinated Credit Agreement, together with
all exhibits and schedules hereto, as the same may be restated, amended,
supplemented or otherwise modified from time to time.
"Applicable Margin" means with respect to the Loans maintained as
Eurodollar Rate Loans, a rate equal to 3.50% per annum, and with respect to
Loans maintained as Base Rate Loans, a rate equal to 2.5% per annum.
"Asset Sale" means a sale, lease or other transfer of (a) any shares
of Stock or Stock Equivalents of a Material Subsidiary, (b) all or substantially
all of the assets or any division or line of business of the Borrower or any
Material Subsidiary or (c) any other asset of the Borrower or a Material
Subsidiary outside the ordinary course of business.
2
"Balance Sheet Date" has the meaning specified in Section 4.3(a)
(Accuracy of Financial Statements).
"Bankruptcy Code" shall mean Title 11 of the United States Code (11
U.S.C. 101 et seq.), as amended from time to time and any successor statute.
"Base Rate" means, with respect to any period, a fluctuating interest
rate per annum as shall be in effect from time to time, which rate per annum
shall be equal at all times to the highest of:
(a) the rate of interest announced publicly by Citibank in New York,
New York, from time to time, as Citibank's base rate;
(b) the rate of interest announced publicly by The Fuji Bank, Limited
in New York from time to time, as its base rate; and
(c) the sum of (i) one-half of one percent (0.5%) per annum plus (ii)
the Federal Funds Rate.
"Base Rate Loan" means Loans the rate of interest applicable to which
is based upon the Base Rate.
"Book Value" means, as to any Inventory in respect of which such
amount is to be determined, the lower of (i) the cost thereof (as reflected in
the general ledgers of the owner of such Inventory and determined in accordance
with GAAP calculated on a first in first out basis) or (ii) the market value
thereof.
"Borrower" has the meaning specified at the beginning of this
Agreement.
"Borrowing" means a borrowing consisting of Loan(s) hereunder.
"Borrowing Base Deficiency" means, at any time, the aggregate
principal amount of all Indebtedness under the Credit Facilities (as defined in
the Indenture) at any one time outstanding (less the sum of the aggregate amount
of all required payments of principal applied to reduce the aggregate amount
available to be borrowed under the Credit Facilities including pursuant to
Section 4.10 of the Indenture) exceeding the greater of (i) $350,000,000 and
(ii) the sum of the amounts equal to (x) 60% of the book value of the inventory
of the Corporation and the Restricted Subsidiaries (as defined in the Indenture)
and (y) 85% of the book value of the accounts receivable of the Borrower
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and the Restricted Subsidiaries (as defined in the Indenture), in each case as
of the most recently ended quarter of the Borrower prior to the incurrence of
any such Indebtedness for which financial statements of the Borrower have been
provided to the Lender.
"Business Day" means a day of the year on which banks are not required
or authorized to close in New York City and, if the applicable Business Day
relates to notices, determinations, fundings and payments in connection with the
Eurodollar Rate or any Eurodollar Rate Loans, a day on which dealings in Dollar
deposits are also carried on in the London interbank market.
"Capitalized Lease" means, with respect to any Person, any lease of
property by such Person as lessee which would be accounted for as a capital
lease on a balance sheet of such Person prepared in conformity with GAAP.
"Capitalized Lease Obligations" means, with respect to any Person, the
capitalized amount of all obligations of such Person or any of its Subsidiaries
under Capitalized Leases, as determined on a consolidated basis in conformity
with GAAP.
"Change of Control" means any of the following: (a) NKK shall cease to
own and control, directly or indirectly, all of the voting rights associated
with a majority of the outstanding Stock and the outstanding Voting Stock of the
Borrower, (b) NKK shall cease to own and control all of the economic rights
associated with twenty five percent (25%) or more of the outstanding Stock of
the Borrower or (c) the Borrower shall cease to own and control, directly or
indirectly, all of the economic and voting rights associated with all of the
outstanding Stock of any of its Material Subsidiaries.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Collateral" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by Borrower in or upon which a Lien is
purported to be granted under any of the Collateral Documents.
"Collateral Documents" means the Subordinated Security Agreement, the
Subordinated Pledge Agreement and any other document permitted by the Senior
Credit Agreement pursuant to which the Borrower grants a Lien on any of its
property to secure payment of the Secured Obligations.
"Combined Availability" shall have the meaning ascribed to such term
in the Senior Credit Agreement.
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"Commitment" means the amount of $100,000,000.
"Constituent Documents" means, with respect to any Person, (i) the
certificate of incorporation (or the equivalent organizational documents) of
such Person, (ii) the bylaws (or the equivalent governing documents) of such
Person and (iii) any document generally setting forth the manner of election and
duties of the directors or managing members of such Person (if any) and the
designation, amount and/or relative rights, limitations and preferences of any
class or series of such Person's Stock.
"Contaminant" means any material, substance or waste that is
classified, regulated or otherwise characterized under any Environmental Law as
hazardous, toxic, a contaminant or a pollutant or by other words of similar
meaning or regulatory effect, including any petroleum or petroleum-derived
substance or waste, asbestos and polychlorinated biphenyls.
"Contractual Obligation" of any Person means any obligation, promise,
agreement (whether written or oral, express or implied and whether or not
legally binding), contract (including settlements and collective bargaining
agreements), undertaking or similar provision of any security issued by such
Person or of any agreement, undertaking, contract, lease, indenture, mortgage,
deed of trust or other instrument (excluding a Loan Document) to which such
Person is a party or by which it or any of its property is bound or to which any
of its properties is subject.
"Credit Event" has the meaning specified in Section 3.2 (Conditions
Precedent to Each Loan).
"Default" means any event which with the passing of time or the giving
of notice or both would become an Event of Default.
"Dollar" and the sign "$" each mean the lawful currency of the United
States.
"Effective Date" means the date on which the conditions precedent to
the effectiveness of this Agreement set forth in Section 3.1 shall have been
satisfied or waived.
"EG Lease Agreement" means the Amended and Restated Lease Agreement,
dated as of December 20, 1985, between the Borrower and Wilmington Trust
Company, as amended as of November 1, 2000.
5
"EG Line" means the electrolytic-galvanizing line servicing the
facilities of the Borrower in Ecorse, Michigan and subject to the EG Lease
Agreement, or a replacement financing arrangement with the EG Line Subsidiary on
terms at least as favorable to the EG Line Subsidiary on an annual cash basis as
those of the EG Lease Agreement were to the Borrower.
"EG Line Financing" has the meaning ascribed to such term in the
Senior Credit Agreement.
"EG Line Subsidiary" means the Subsidiary of the Borrower (a) that is
wholly-owned and controlled by the Borrower, (b) the sole business of which is
owning and operating the EG Line and (c) the sole assets of which are the EG
Line and other assets used directly in relation to the ownership or operation
thereof.
"Eligible Assignee" means (a) any Affiliate of Lender or NKK which the
Lender confirms in writing to the Senior Agent and the Senior Lenders is
financially capable of performing the obligations of the Lender hereunder; or
(b) a commercial bank having total assets in excess of five billion Dollars
($5,000,000,000) acceptable to the Borrower (which acceptance may not be
unreasonably withheld); or (c) a finance company, insurance company, other
financial institution or fund, acceptable to the Senior Agent and the Borrower,
each acting commercially reasonably, that regularly is engaged in making,
purchasing or investing in loans; provided, however, that, with respect to
clauses (b) and (c) of this definition, no consent of the Borrower shall be
required during the continuance of an Event of Default.
"Eligible Inventory" means Inventory of the Borrower (other than any
Inventory which has been consigned by the Borrower) (i) which is owned solely by
the Borrower, (ii) with respect to which the Lender has a valid and perfected
Lien, (iii) with respect to which no warranty contained in any of the Loan
Documents has been breached, (iv) which is not, as determined in the sole
discretion of the Lender acting in a commercially reasonable manner, obsolete or
unmerchantable and (v) which the Lender deems to be Eligible Inventory, based on
such credit and collateral considerations as the Lender may deem appropriate, in
its sole discretion acting commercially reasonably and in accordance with its
regular business practices and policies in effect from time to time and
applicable to asset based loans with advance rates based on current assets
(which practices and policies may be changed by the Lender in its sole
discretion).
"Encumbrances" means, with respect to property, all Liens, leases,
options, preferences, priorities, rights of first refusal, easements,
servitudes, rights-of-
6
way, licenses, securities purchase option, call or similar right, restrictions
under any shareholder agreement or any other Contractual Obligation, encumbrance
or any other restriction or limitation whatsoever on any right incident to the
ownership in fee of such property (including rights to transfer, use or possess
such property), whether contingent or non-contingent, matured or unmatured,
known or unknown.
"Environmental Laws" means all applicable Requirements of Law now or
hereafter in effect and as amended or supplemented from time to time, relating
to pollution or the regulation and protection of human health, safety, the
environment or natural resources, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 X.X.X.xx. 9601
et seq.); the Hazardous Material Transportation Act, as amended (49 U.S.C.ss.180
et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7
X.X.X.xx. 136 et seq.); the Resource Conservation and Recovery Act, as amended
(42 X.X.X.xx. 6901 et seq.); the Toxic Substance Control Act, as amended (42
X.X.X.xx. 7401 et seq.); the Clean Air Act, as amended (42 X.X.X.xx. 740 et
seq.); the Federal Water Pollution Control Act, as amended (33 X.X.X.xx. 1251 et
seq.); the Occupational Safety and Health Act, as amended (29 U.S.C.ss.651 et
seq.); and the Safe Drinking Water Act, as amended (42 X.X.X.xx. 300f et seq.)
and their state and local counterparts or equivalents and any transfer of
ownership notification or approval statute.
"Environmental Liabilities and Costs" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by
any other Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute, including any thereof arising under
any Environmental Law, Permit, Order or Contractual Obligation with any
Governmental Authority or other Person, which relate to any environmental,
health or safety condition or a Release or threatened Release and result from
the past, present or future operations of, or ownership of property by, such
Person or any of its Subsidiaries.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control or treated as a single employer with the
Borrower or any of its Subsidiaries within the meaning of Section 414 (b), (c),
(m) or (o) of the Code.
7
"ERISA Event" means (i) a reportable event described in Section
4043(b) or 4043(c)(l), (2), (3), (5), (6), (8) or (9) of ERISA with respect to a
Title IV Plan or a Multiemployer Plan; (ii) the withdrawal of the Borrower, any
of its Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer,
as defined in Section 4001(a)(2) of ERISA; (iii) the complete or partial
withdrawal of the Borrower, any of its Subsidiaries or any ERISA Affiliate from
any Multiemployer Plan; (iv) notice of reorganization or insolvency of a
Multiemployer Plan; (v) the filing of a notice of intent to terminate a Title IV
Plan or the treatment of a plan amendment as a termination under Section 4041 of
ERISA; (vi) the institution of proceedings to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (vii) the failure to make any required
contribution to a Title IV Plan or Multiemployer Plan; (viii) the imposition of
a lien under Section 412 of the Code or Section 302 of ERISA on the Borrower or
any of its Subsidiaries or any ERISA Affiliate; or (ix) any other event or
condition which might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or the imposition of any
liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Federal Reserve Board, as amended.
"Eurodollar Base Rate" means (a) with respect to an Interest Period,
the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate
determined by Lender to be the offered rate which appears on the page of the
Telerate Screen which displays an average British Bankers Association Interest
Settlement Rate (such page currently being page number 3740 or 3750, as
applicable) for deposits (for delivery on the first day of such period) with a
term equivalent to such period in Dollars, determined as of approximately 11:00
a.m. (London, England time) on the day two (2) Business Days prior to the first
day of such Interest Period, or, at the option of the Lender, with notice to the
Borrower, (b) the rate of interest determined by the Lender to be the average
(rounded upward to the nearest whole multiple of one sixteenth of one percent
(0.0625%) per annum, if such average is not such a multiple) of the rates per
annum at which deposits in Dollars are offered by the principal office of the
Fuji Bank, Limited (or such other bank as the Lender may, with notice to the
Borrower, reasonable nominate) in London, England, to major banks in the London
interbank market at 11:00 A.M. (London Time) two (2) Business Days before the
first day of such Interest Period for a principal amount substantially equal to
the maximum principal amount of the Eurodollar Rate Loan scheduled to be
outstanding during such Interest Period and for a period equal to such Interest
Period.
8
"Eurodollar Borrowing Unit" means ten million Dollars ($10,000,000).
"Eurodollar Rate" means, with respect to any Interest Period for any
Eurodollar Rate Loan, an interest rate per annum equal to the rate per annum
obtained by dividing (a) the Eurodollar Base Rate determined as set forth below
by (b) (i) a percentage equal to one hundred percent (100%) minus (ii) the
Eurodollar Rate Reserve Percentage.
"Eurodollar Rate Loan" means any outstanding principal amount of the
Loans of Lender that, for an Interest Period, bears interest at a rate
determined with reference to the Eurodollar Rate.
"Eurodollar Rate Reserve Percentage" means with respect to any
Interest Period the reserve percentage applicable two Business Days before the
first day of such Interest Period under regulations issued from time to time by
the Federal Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement)
for a member bank of the United States Federal Reserve System in New York City
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities which includes
deposits by reference to which the Eurodollar Base Rate is determined) having a
term equal to such Interest Period.
"Event of Default" has the meaning specified in Section 9.1 (Events of
Default).
"Fair Market Value" means (a) with respect to any asset or group of
assets (other than a marketable security) at any time, the value of the
consideration obtainable in a sale of such asset at such date assuming a sale by
a willing seller to a willing purchaser dealing at arm's length and arranged in
an orderly manner over a reasonable period of time having regard to the nature
and characteristics of such asset, provided, however, that, if such asset shall
have been the subject of a relatively contemporaneous appraisal by an
independent third-party appraiser, the basic assumptions underlying which have
not materially changed since its date, the "Fair Market Value" of such asset
shall be the value set forth in such appraisal and (b) with respect to any
marketable security at any time, the closing sale price of such security on the
Business Day next preceding such date, as appearing in any published list of any
national securities exchange or in the National Market List of the National
Association of Securities Dealers, Inc. or, if there is no such closing sale
price of such security, the final price for the purchase of such security at
face value quoted on such Business Day
9
by a financial institution of recognized standing which regularly deals in
securities of such type.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the United
States Federal Reserve System arranged by Federal funds brokers, as published
for such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
such day on such transactions received by the Lender from three Federal funds
brokers of recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the United
States Federal Reserve System or any successor thereto.
"Financial Statements" means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of the Borrower and its
Subsidiaries delivered in accordance with Section 4.3 (Financial Statements) and
Section 5.1 (Financial Statements).
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any individual or entity exercising (x)
executive or administrative functions of, or generally pertaining to,
governments, nations, states or other political subdivisions thereof or (y)
legislative, judicial or regulatory functions, including central banks, the PBGC
and arbitrators.
"Guarantor" means National Steel Pellet Company, a Delaware
corporation.
"Guaranty Obligation" means, as applied to any Person, any obligation,
contingent or otherwise, of such Person directly or indirectly guaranteeing
Indebtedness of another Person and any obligation, direct or indirect,
contingent or otherwise, of such
10
Person (a) to purchase or pay (or advance or supply funds for the purchase of or
payment of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guaranty Obligation" shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hedging Contracts" means all Interest Rate Contracts, foreign
exchange contracts, currency swap or option agreements, forward contracts,
commodity swap, purchase or option agreements, other commodity price hedging
arrangements and all other similar agreements or arrangements designed to alter
the risks of any Person arising from fluctuations in interest rates, currency
values or commodity prices.
"Indebtedness" shall mean any indebtedness, whether or not contingent,
for or in respect of borrowed money or evidenced by bonds, notes, debentures or
similar instruments or letters of credit (or reimbursement agreements in respect
thereof) or representing the balance deferred and unpaid of the purchase price
of any property, including pursuant to capital leases (except any such balance
that constitutes an accrued expense or a trade payable), if and to the extent
any of the foregoing indebtedness would appear as a liability upon a balance
sheet of such person or entity prepared on a consolidated basis in accordance
with generally accepted accounting principles, and including, to the extent not
otherwise included, the guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of the
foregoing indebtedness.
"Indemnitee" has the meaning specified in Section 10.3 (Costs;
Expenses; Indemnities).
"Indemnified Matter" has the meaning specified in Section 10.3 (Costs;
Expenses; Indemnities).
"Indenture" means the Indenture of Mortgage and Deed of Trust, dated
May 1, 1952, between the Borrower, Great Lakes Steel Corporation (a predecessor
in interest of the Borrower) and City Bank Farmers Trust Company and Xxxxx X.
Xxxxxx, as Trustees, as supplemented by all instruments supplemental thereto,
including the Eleventh Supplemental Indenture, dated as of March 31, 1999, to
the Indenture of
11
Mortgage and Deed of Trust, dated May 1, 1952, between the Borrower
and The Chase Manhattan Bank and Xxxxx X. Xxxxxx, as Trustees.
"Intercreditor Agreement" means the agreement, dated as of November
19, 1999, executed by the Borrower, the Guarantor, the Senior Agent and the
Receivables Facility Agent.
"Interest Period" means, in the case of any Eurodollar Rate Loan, (a)
initially, the period commencing on the date such Eurodollar Rate Loan is made
or on the date of conversion of a Base Rate Loan to such Eurodollar Rate Loan
and ending one (1), two (2), or three (3) months thereafter, as selected by the
Borrower in its Notice of Borrowing or Notice of Conversion or Continuation
given to the Lender pursuant to Section 2.2 (Borrowing Procedures) or Section
2.9 (Conversion and Continuation Options) and (b) thereafter, if such Loan is
continued, in whole or in part, as a Eurodollar Rate Loan pursuant to Section
2.9, a period commencing on the last day of the immediately preceding Interest
Period therefor and ending one (1), two (2) or three (3) months thereafter, as
selected by the Borrower in its Notice of Conversion or Continuation given to
the Lender pursuant to Section 2.9; provided, however, that all of the foregoing
provisions relating to Interest Periods in respect of Eurodollar Rate Loans are
subject to the following:
(a) if any Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless, in the case of Eurodollar Rate Loans only, the
result of such extension would be to extend such Interest Period into another
calendar month, in which event such Interest Period shall end on the immediately
preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(c) the Borrower may not select any Interest Period that ends
after the Scheduled Termination Date;
(d) the Borrower may not select any Interest Period in respect of
Loans having an aggregate principal amount of less than ten million Dollars
($10,000,000); and
12
(e) there shall be outstanding at any one time no more than six
(6) Interest Periods in the aggregate.
"Interest Rate Contracts" means all interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements and interest rate
insurance.
"Investment" means, with respect to any Person, (i) any purchase or
other acquisition by such Person of Securities, or of a beneficial interest in
Securities issued by or other equity ownership interest in any other Person,
(ii) any purchase by that Person of all or a significant part of the assets of a
business conducted by another Person and (iii) any loan, advance (other than
deposits with financial institutions available for withdrawal on demand, prepaid
expenses, accounts receivable and similar items made or incurred in the ordinary
course of business as presently conducted), or capital contribution by such
Person to any other Person, including all Indebtedness to such Person arising
from a sale of property by such Person other than in the ordinary course of its
business.
"Inventory" has the meaning specified in the Subordinated Security
Agreement.
"IRS" means the Internal Revenue Service of the United States or any
successor thereto.
"Leases" means, with respect to any Person, all of those leasehold
estates in real property owned by such Person, as lessee, as such may be
amended, supplemented or otherwise modified from time to time.
"Legal Proceeding" means any judicial, administrative, investigative,
informal or arbitral action, arbitration, suit, claim, demand, audit,
investigation, litigation, hearing (public or private), including proceedings of
a Governmental Authority.
"Lender" means NUF LLC, a Delaware limited liability company and its
successors and permitted assignees in accordance with Section 10.2.
"Lien" means any lien (statutory or other), pledge, mortgage, deed of
trust, charge, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, security interest or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever intended
to assure payment of any Indebtedness or other obligation, including any
conditional sale or other title retention
13
agreement, the interest of a lessor under a Capitalized Lease, any financing
lease having substantially the same economic effect as any of the foregoing and
the filing of any financing statement under the Uniform Commercial Code or
comparable Requirement of Law naming the owner of the asset to which such Lien
relates as debtor.
"Loan" means any loan made by Lender to the Borrower pursuant to this
Agreement.
"Loan Documents" means, collectively, this Agreement, any Subordinated
Notes, the Subordination Agreement, the Subordinated Guaranty, the Collateral
Documents, and each agreement or document permitted by the Senior Loan Documents
and executed by the Borrower and delivered in connection with or pursuant to any
of the foregoing.
"Loan Party" means each of the Borrower, the Guarantor and each other
Subsidiary of Borrower that executes and delivers a Loan Document.
"Material Adverse Change" means a material adverse change in any of
(a) the condition (financial or otherwise), business, performance, prospects,
operations or properties of the Borrower or the Borrower and its Subsidiaries
taken as one enterprise, (b) the legality, validity or enforceability of any
Loan Document, (c) the perfection or priority of the Liens granted pursuant to
the Collateral Documents, (d) the ability of the Borrower to repay the
Obligations or of the Loan Parties to perform their obligations under the Loan
Documents or (e) the rights and remedies of the Lender under the Loan Documents.
"Material Adverse Effect" means an effect that results in or causes,
or could reasonably be expected to result in or cause, a Material Adverse
Change.
"Material Subsidiary" means (a) the Guarantor, (b) NSFC and the EG
Line Subsidiary (when formed) and (c) any Subsidiary of the Borrower other than
(i) the Guarantor, NSFC and the EG Line Subsidiary (when formed), (ii) any
Subsidiary of the Borrower listed on Schedule 1.1 (Non-Material Subsidiaries) as
long as the book value of the total assets of such Subsidiary does not exceed
the figure set forth opposite such subsidiary on Schedule 1.1 by more than ten
million Dollars ($10,000,000) and (iii) any Subsidiary of the Borrower that has
total assets with a book value not in excess of ten million Dollars
($10,000,000).
14
"Multiemployer Plan" means a multiemployer plan, as defined in Section
400l(a)(3) of ERISA, to which the Borrower, any of its Subsidiaries or any ERISA
Affiliate has any obligation or liability, contingent or otherwise.
"NSFC" means National Steel Funding Corporation, a Delaware
corporation.
"NKK" means NKK Corporation, a company organized and existing under
the laws of Japan.
"Notice of Borrowing" has the meaning specified in Section 2.2(a)
(Form of Notice of Borrowing).
"Notice of Conversion or Continuation" has the meaning specified in
Section 2.9(a) (Delivery of Notice of Conversion or Continuation).
"Obligations" means the Loans and all other advances, debts,
liabilities, obligations, covenants and duties owing by the Borrower to the
Lender, or any Indemnitee, of every type and description, present or future,
whether or not evidenced by any note, guaranty or other instrument, arising
under this Agreement or under any other Loan Document, whether or not for the
payment of money, arising by reason of an extension of credit, or any loan,
guaranty, indemnification, or in any other manner, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising and however acquired. The term
"Obligations" includes, without limitation, all interest, charges, expenses,
fees, attorneys' fees and disbursements and other sums chargeable to the
Borrower under this Agreement or any other Loan Document.
"Order" means any order, award, injunction, judgment, decree,
settlement, process, ruling, subpoena, writ, assessment, arbitration award,
verdict (whether temporary, preliminary or permanent) or any determination or
pronouncement (whether or not such determination or pronouncement can be
appealed or otherwise modified) of any Governmental Authority reached as a
result of a Legal Proceeding.
"Other Taxes" has the meaning specified in Section 2.14(b) (Stamp or
Documentary Taxes).
"Outstanding Amounts" means, at any particular time, the sum of the
principal amount of the Loans outstanding at such time.
15
"paid in full" and "payment in full" shall have the meanings, with
respect to any and all Senior Loan Obligations, ascribed to such terms in the
Subordination Agreement.
"Permit" means any certificate, permit, franchise, approval,
authorization, license, variance, exemption, privilege, immunity, waiver, or
permission required from, or otherwise granted by, a Governmental Authority
under an applicable Requirement of Law or in connection with any Contractual
Obligation with a Governmental Authority.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, estate, trust, labor union, limited
liability company, unincorporated association, joint venture or other entity or
a Governmental Authority.
"Pledge Agreement" has the meaning set forth at the beginning of this
Agreement.
"Proceeding" has the meaning specified in Section 8.1(a)(i).
"Post-Commencement Interest" means all interest accrued or accruing
after the commencement of any Proceeding (and interest that would accrue but for
the commencement of any Proceeding) in accordance with and at the contract rate
(including, without limitation, any rate applicable upon default) specified in
the agreement or instrument creating, evidencing or governing any Senior Loan
Obligations, whether or not, pursuant to applicable law or otherwise, the claim
for such interest is allowed as a claim in such Proceeding.
"Quarter" means each of the three-month periods ending on March 31,
June 30, September 30 and December 31.
"Receivables Facility Agent" means the "Collateral Agent", under and
as defined in the Receivables Purchase Agreement.
"Receivables Purchase Agreement" means the Receivables Purchase
Agreement, dated as of May 16, 1994, among NSFC, the Borrower, as servicer, the
financial institutions listed therein, as buyers, Xxxxxx Guaranty Trust Company
of New York, the Fuji Bank and Trust Company, The Mitsubishi Bank, Ltd. and
Comerica Bank, as letter of credit issuing banks, X.X. Xxxxxx Delaware, as
reserve letter of credit bank, Xxxxxx Guaranty Trust Company of New York, as
Lender and X.X. Xxxxxx Delaware, as structuring and collateral agent.
16
"Receivables Purchase Facility" means the Receivables Purchase
Agreement, the Receivables Sale Agreement, and each other document and
instrument executed in respect thereof.
"Receivables Sale Agreement" means the Purchase and Sale Agreement,
dated as of May 16, 1994, between the Borrower, as seller, and NSFC, as
purchaser.
"Related Documents" means the Indenture, the Senior Credit Documents,
the Receivables Purchase Facility and each other document and instrument
executed in respect thereof (including agreements and other documents and
instruments in respect of the Borrower's existing cash management system,
lockboxes and concentration accounts).
"Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration, in each case, of any Contaminant into the indoor or outdoor
environment or into or out of any property owned by such Person, including the
movement of Contaminants through or in the air, soil, surface water, ground
water or property.
"Remedial Action" means all actions required to (a) clean up, remove,
treat or in any other way address any Contaminant in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release so that a Contaminant does not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment or (c)
perform pre-remedial studies and investigations and post-remedial monitoring and
care.
"Requirement of Law" means, as to any Person, the Constituent
Documents of such Person and any federal, state, local, foreign or international
law, treaty, constitution, statute, rules, regulations, ordinance, principles of
common law and equity and Orders of any Governmental Authority applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
"Responsible Officer" means, with respect to any Person, any of the
principal executive officers or general partners of such Person, but, in any
event, with respect to financial matters (including matters relating to the
solvency of such Person or Financial Statements), the chief financial officer,
treasurer or controller of such Person.
"Restricted Payment" means (a) any dividend or other distribution,
direct or indirect, on account of any Stock or Stock Equivalents of the Borrower
or any of its
17
Subsidiaries now or hereafter outstanding, except a dividend payable solely in
Stock or Stock Equivalents or a dividend or distribution payable solely to the
Borrower and/or the Guarantor, (b)any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any Stock or Stock Equivalents of the Borrower or any of its Subsidiaries now or
hereafter outstanding other than one payable solely to the Borrower and/or the
Guarantor and (c) any payment or prepayment of principal, premium (if any),
interest fees or other charges on, or redemption, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any Indebtedness of
the Borrower or any of its Subsidiaries or any other Loan Party (other than the
Senior Loan Obligations), other than any required redemptions, retirement,
purchases or other payments, in each case to the extent permitted to be made by
the terms of such Indebtedness after giving effect to any applicable
subordination provisions.
"Sale and Leaseback Transaction" means any arrangement, directly or
indirectly, whereby a Person or its Subsidiary shall sell or transfer any
property, real or personal, and used or useful in its business, whether or not
owned or hereafter acquired, and thereafter rent or lease such property or other
property that such Person or its Subsidiary intends to use for substantially the
same purpose as the property being sold or transferred.
"Scheduled Termination Date" means February 25, 2002.
"Secured Obligations" means, in the case of the Borrower, the
Obligations and in the case of any other Loan Party, the obligations of such
Loan Party under the Subordinated Guaranty and other Loan Documents to which it
is a party.
"Secured Party" means the Lender and any other holder of any of the
Obligations.
"Securities" means Stock, Stock Equivalents, voting trust
certificates, bonds, debentures, notes, other evidence of indebtedness, whether
secured, unsecured, convertible or subordinated, and certificates of interest,
shares or participations in, and temporary or interim certificates for the
purchase or acquisition of, and rights to subscribe to, purchase or acquire, any
of the foregoing, but shall not include any evidence of the Obligations.
"Senior Agent" shall have the meaning ascribed to such term in the
Subordination Agreement.
18
"Senior Credit Agreement" and "Security Agreement" shall have the
meanings ascribed to such terms in the Subordination Agreement.
"Senior Loan Documents" has the meaning ascribed to such term in the
Subordination Agreement.
"Senior Loan Obligations" shall have the meaning ascribed to such term
in the Subordination Agreement.
"Senior Loan Obligations Default" means any default or event of
default under any agreement or instrument pursuant to which any Senior Loan
Obligations is issued or committed, or by which it is governed or evidenced, in
each instance as now in effect or as hereafter from time to time modified or
amended, without necessity of consent by or notice to the Lender.
"Solvent" means, with respect to any Person, that the value of the
assets of such Person (both at fair value and present fair saleable value) is,
on the date of determination, greater than the total amount of liabilities
(including contingent and unliquidated liabilities) of such Person as of such
date and that, as of such date, such Person is able to pay all liabilities of
such Person as such liabilities mature and does not have unreasonably small
capital. In computing the amount of contingent or unliquidated liabilities at
any time, such liabilities will be computed at the amount which, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
"Stock" means shares of capital stock (whether denominated as common
stock or preferred stock), beneficial, partnership or membership interests,
participations or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or non-voting.
"Stock Equivalents" means all securities convertible into or
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any stock, whether or not presently convertible, exchangeable or
exercisable.
" Subordinated Guaranty" means a guaranty, in substantially the form
of Exhibit H, executed by the Guarantor.
"Subordinated Indebtedness" shall have the meaning ascribed to such
term in Section 8.1.
19
"Subordinated Note" means a promissory note of the Borrower payable to
the order of the Lender in a principal amount equal to the amount of the
Lender's Commitment evidencing the aggregate Indebtedness of the Borrower to the
Lender resulting from the Loans owing to the Lender.
"Subordinated Pledge Agreement" means an agreement, in substantially
the form of Exhibit I, executed by the Borrower.
"Subordinated Security Agreement" means an agreement, in substantially
the form of Exhibit F, executed by the Borrower.
"Subordination Agreement" means the Lien Subordination Agreement dated
as of February 28, 2001 and attached hereto as Exhibit D among Lender, Senior
Agent, Borrower and National Steel Pellet Company and each other entity that
becomes a party thereto in accordance with the provisions thereof.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company or other business entity of which an
aggregate of fifty percent (50%) or more of the outstanding Voting Stock is, at
the time, directly or indirectly, owned or controlled by such Person and/or one
or more Subsidiaries of such Person.
"Tax Affiliate" means, as to any Person, (a) any Subsidiary of such
Person and (b) any Affiliate of such Person with which such Person files or is
eligible to file consolidated, combined or unitary tax returns.
"Tax Return" has the meaning specified in Section 4.5(a) (Timely
Filing of Tax Returns and Payment of Taxes).
"Taxes" has the meaning specified in Section 2.14(a) (Deduction of
Taxes).
"Termination Date" shall mean the earliest of (a) the Scheduled
Termination Date, (b) the date of termination of the Commitment pursuant to the
terms hereof and (c) the date on which the Obligations become due and payable
pursuant to Section 9.2 (Remedies).
"Title IV Plan" means a pension plan, other than a Multiemployer Plan,
which is covered by Title IV of ERISA to which the Borrower, any of its
Subsidiaries or any ERISA Affiliate has any obligation or liability (contingent
or otherwise).
20
"Uniform Commercial Code" means the Uniform Commercial Code as the
same may, from time to time, be in effect in the State of New York; provided,
however, that in the event that, by reason of any mandatory Requirement of Law,
any or all of the attachment, perfection or priority of any security interest
granted under the Subordinated Security Agreement in any Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than the
State of New York, the term "Uniform Commercial Code" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority and for
purpose of definitions related to such provisions.
"United States" or "U.S." shall mean the United States of America or
any political subdivision thereof.
"Unused Commitment Fee" has the meaning specified in Section 2.10
(Unused Commitment Fee).
"Unused Commitment Fee Rate" means as of any date of determination, a
per annum rate equal to 0.5% per annum.
"Upfront Fee" means $12,500 payable in accordance with Section 3.1(p).
"Voting Stock" means Stock of any Person having ordinary voting power
to elect a majority of the board of directors, managers, trustees or other
controlling Persons, of such Person (irrespective of whether, at the time, Stock
of any other class or classes of such entity shall have or might have voting
power by reason of the happening of any contingency).
"Withdrawal Liability" means, as to the Borrower at any time, the
aggregate liability incurred (whether or not assessed) with respect to all
Multiemployer Plans pursuant to Section 4201 of ERISA or for increases in
contributions required to be made pursuant to Section 4243 of ERISA.
"Year" means the calendar year.
21
Section 1.2 Accounting Terms and Principles.
(a) Except as set forth below, all accounting terms not specifically
defined herein shall be construed in conformity with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in conformity with GAAP.
(b) If any change in the accounting principles used in the preparation
of the most recent Financial Statements referred to in Section 5.1(Financial
Statements) is hereafter required or permitted by the rules, regulations,
pronouncements and opinions of the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or any successors thereto)
and such change is adopted by the Borrower with the agreement of its independent
public accountants and results in a change in the method of calculation of any
of the covenants, standards or defined terms found in Article IX (Events of
Default), the parties hereto agree to enter into negotiations in order to amend
such provisions so as to equitably reflect such change with the desired results
that the criteria for evaluating compliance with such covenants, standards and
defined terms by the Borrower shall be the same after such change as if such
change had not been made; provided, however, that no change in GAAP that would
affect a calculation that measures compliance with any such covenant, standard
or defined term shall be given effect until such provisions are amended to
reflect such changes in GAAP.
Section 1.3 Certain Terms and References.
(a) Certain Terms. The term "including" when used in any Loan Document
means "including without limitation" unless the context otherwise requires and
except as used in Section 1.4 (Time Periods) and any substantially similar
section of any Loan Document. When used in any Loan Document, the words "either"
and "or" do not refer to an exclusive choice.
(b) Internal Cross References. Unless otherwise expressly noted,
references in any Loan Document to an Exhibit, Schedule, Article, Section,
subsection or clause refer to the appropriate Exhibit or Schedule to, or
Article, Section, subsection or clause in, such Loan Document. The words
"herein," "hereof" and "hereunder" and other words of similar import as used in
any Loan Document refer to such Loan Document as a whole and not to any
particular Article, Section, subsection or clause in such Loan Document.
22
(c) Table of Contents and Headings. The table of contents and section
headings of any Loan Document are for reference purposes only and are to be
given no effect in the construction or interpretation of such Loan Document;
provided, however, that headings may be used for cross-reference purposes and,
when used as such, shall prevail over an inconsistent reference to a section
number.
(d) References to Parties. In this Agreement, the terms "Lender,"
"Borrower," include, without limitation, their respective successors and
permitted assigns.
(e) References to Agreements. References to each agreement defined in
this Article I shall include, without limitation, all appendices, exhibits and
schedules thereto and, unless specifically stated otherwise, shall include,
without limitation, amendments, restatements, supplements or other modifications
thereto and as the same may be in effect at any and all times such reference
becomes operative.
(f) References to Legislation. Unless the context otherwise requires,
references in any Loan Document to any legislation or administrative rule or
regulation include, without limitation, references to any amendment or
modification of such legislation, rule or regulation, to any successor
legislation, rule or regulation and to any subordinate legislation, rule or
regulation made thereunder. A reference to conduct in any Loan Document
includes, without limitation, references to an omission, statement or
undertaking.
(g) Reference to Indenture. Any reference herein to any numbered
section of the Indenture shall be a reference to a section of the Eleventh
Supplemental Indenture, dated as of March 31, 1999 to the Indenture of Mortgage
and Deed of Trust, dated May 1, 1952, between the Borrower and The Chase
Manhattan Bank and Xxxxx X. Xxxxxx, as Trustees as in effect on the date hereof.
Section 1.4 Time Periods. In this Agreement and any other Loan
Document, in the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including."
Section 1.5 Quantities. In any Loan Document, in all instances where
the same Dollar amount, time period, percentage or other quantity is expressed
both using roman numerals and fully written out, the latter expression shall
prevail over the expression using roman numerals in case of direct conflicts.
23
Section 1.6 Pronouns. All pronouns contained in any Loan Document and
any variations thereof shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the parties may require.
Section 1.7 Construction. The parties hereto acknowledge and agree
that they have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any of the provisions of this
Agreement.
Article II
THE FACILITIES
Section 2.1 The Commitments. On the terms and subject to the
conditions contained in this Agreement, the Lender agrees to make loans (each a
"Loan") to the Borrower from time to time on any Business Day during the period
from the date hereof until the Termination Date in an aggregate amount at any
time outstanding for all such loans by Lender not to exceed the Commitment;
provided, however, that at no time shall Lender be obligated to make a Loan in
excess of the Commitment. Within the limits of Lender's Commitment, amounts of
Loans repaid may be reborrowed under this Section 2.1 on the terms and subject
to the conditions contained in this Section 2.1 and the remainder of this
Agreement.
Section 2.2 Borrowing Procedures.
(a) Form of Notice of Borrowing. Each Borrowing shall be made on
notice given by the Borrower to the Lender not later than 1:00 P.M. (New York
City time) Four (4) Business Days prior to the date of the proposed Borrowing.
Each such notice (a "Notice of Borrowing") shall be in substantially the form of
Exhibit B, specifying therein (A) the date of such proposed Borrowing, (B) the
aggregate amount of such proposed Borrowing, and (C) the initial Interest Period
or Periods. The Loans shall be made as Eurodollar Rate Loans unless the
Scheduled Termination Date is within one month of the date of the proposed
Borrowing, in which case the Borrower shall request the proposed Borrowing to be
of Base Rate Loans. Each Borrowing shall be in an aggregate amount of a
Eurodollar Borrowing Unit or an integral multiple of five million Dollars
($5,000,000) in excess thereof; provided, however, that the aggregate
24
amount of the Eurodollar Rate Loans for each Interest Period must be in an
amount of a Eurodollar Borrowing Unit or an integral multiple of five million
Dollars ($5,000,000) in excess thereof. The Borrower may not request more than
five (5) Borrowings per month without the consent of the Lender.
Section 2.3 Reduction and Termination of the Commitments. (a) To the
extent permitted by Section 8.5 (d) of the Senior Credit Agreement, the Borrower
may, with the consent of the Lender, terminate in whole or reduce ratably in
part the unused portion of the Commitment of the Lender upon payment of a
corresponding amount of outstanding Loans in accordance with Section 2.6;
provided, however, that each partial reduction shall, unless otherwise agreed by
the Lender, be in the aggregate amount of not less than five million Dollars
($5,000,000) or an integral multiple of five million Dollars ($5,000,000) in
excess thereof.
(b) The Commitment of the Lender shall automatically reduce by the
amount of any equitable contribution made in cash to the Borrower or the
Guarantor by the Lender, NKK or any of their Affiliates (other than the Borrower
or any of its Subsidiaries).
Section 2.4 Repayment of Loans. The Borrower shall repay the entire
unpaid principal amount of the Loans on the Scheduled Termination Date.
Section 2.5 Evidence of Debt.
(a) Maintenance of Accounts by Lender. The Lender shall maintain in
accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower resulting from each Loan from time to time,
including the amounts of principal and interest payable and paid from time to
time under this Agreement.
(b) Accounts as Prima Facie Evidence. The entries made in the accounts
maintained pursuant to Section 2.5(a) (Maintenance of Accounts by Lender) shall,
to the extent permitted by applicable law, be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided, however,
that the failure of Lender to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans in
accordance with their terms.
(c) Prompt Execution of Subordinated Notes. Notwithstanding any other
provision of the Agreement, in the event that Lender requests that the Borrower
execute and deliver a promissory note or notes payable to Lender in order to
evidence the indebtedness owing to Lender by the Borrower hereunder, the
Borrower will
25
promptly execute and deliver a Subordinated Note or Subordinated Notes to Lender
evidencing any Loans of Lender, substantially in the form of Exhibit A, and the
interests evidenced by such note or notes shall at all times (including after
assignment of all or part of such interests) be evidenced by one or more
Subordinated Notes payable to the payee named therein.
Section 2.6 Optional Prepayments.
(a) Procedure for Prepayment. Subject to the provisions of Section 8.5
of the Senior Credit Agreement and Article VIII hereof, the Borrower may, upon
at least three (3) Business Days' prior notice to the Lender and the Senior
Agent, stating the proposed date and aggregate principal amount of the
prepayment, prepay the outstanding principal amount of the Loans in whole or
ratably in part, together with accrued interest to the date of such prepayment
on the principal amount prepaid; provided, however, that if any prepayment of
any Eurodollar Rate Loan is made by the Borrower other than on the last day of
an Interest Period for such Loan, the Borrower shall also pay any amounts owing
pursuant to Section 10.3(c) (Eurodollar Loans); and, provided, further, unless
otherwise agreed by the Lender, that each partial prepayment shall be in an
aggregate principal amount not less than five million Dollars ($5,000,000) or
integral multiples of one million Dollars ($1,000,000) in excess thereof. Upon
the giving of such notice of prepayment, the principal amount of the Loans
specified to be prepaid shall become due and payable on the date specified for
such prepayment, unless the Borrower will not be in compliance with Section 8.5
of the Senior Credit Agreement on such date, in which case such notice shall be
null and void and of no further effect (in such circumstances, the
indemnification provisions, inter alia, of Section 2.12(d) shall apply).
(b) Exclusive Procedure. The Borrower shall have no right to prepay
the principal amount of any Loan other than as provided in this Section 2.6.
Section 2.7 Mandatory Prepayments
(a) Payment of Obligations. Upon the payment in full in cash and
discharge of all Obligations (as defined in the Senior Credit Agreement) owing
under, and the termination of the commitments of the lenders under the Senior
Credit Agreement, the Borrower shall forthwith prepay all Loans.
(b) Excess Borrowing. To the extent permitted by the Senior Credit
Agreement and subject to Article VIII hereof, if at any time, the aggregate
principal amount of Loans exceed the aggregate Commitments the Borrower shall
forthwith (but
26
after first making any payment required pursuant to Section 2.9 of the Senior
Credit Agreement, and subject to Section 8.5 thereof,) pay the full amount of
such excess or deficiency, as the case may be, together with accrued interest.
Section 2.8 Interest.
(a) Rate. All Loans and the outstanding principal balance of all other
Obligations shall bear interest on the unpaid principal amount thereof from the
date such Loans are made and such other Obligations are due and payable until
paid in full, except as otherwise provided in Section 2.8(c) (Default Rate) as
follows:
(i) if a Base Rate Loan or such other Obligation, at a rate per
annum equal to the sum of (A) the Base Rate as in effect from time to time
as interest accrues, plus (B) the Applicable Margin; and
(ii) if a Eurodollar Rate Loan, at a rate per annum equal to the
sum of (A) the Eurodollar Rate determined for the applicable Interest
Period, plus (B) the Applicable Margin in effect from time to time during
such Eurodollar Interest Period.
(b) Accrual. Interest accrued on each Eurodollar Rate Loan shall be
payable in arrears (A) on the last day of each Interest Period applicable to
such Loan, (B) upon the payment or prepayment thereof in full or in part and (C)
if not theretofore paid in full, at maturity (whether by acceleration or
otherwise) of such Eurodollar Rate Loan; and interest accrued on the principal
balance of all other Obligations shall be payable in arrears (A) on the last day
of each Quarter, commencing on the first such day following the incurrence of
such Obligation, (B) upon repayment thereof in full or in part and (C) if not
theretofore paid in full, at the time such other Obligation becomes due and
payable (whether by acceleration or otherwise).
(c) Default Rate. Notwithstanding the rates of interest specified in
Section 2.8(a) (Rate) or elsewhere herein, effective immediately upon the
occurrence of an Event of Default and for as long thereafter as such Event of
Default shall be continuing, the principal balance of all Loans and of all other
Obligations shall bear interest at a rate which is two percent (2%) per annum in
excess of the rate of interest applicable to such Obligations from time to time.
27
Section 2.9 Conversion and Continuation Options.
(a) Delivery of Notice of Conversion or Continuation. The Borrower
may elect at the end of any applicable Interest Period (i) which is within one
month of the Scheduled Termination Date to convert Eurodollar Rate Loans into
Base Rate Loans or (ii) to continue such Eurodollar Rate Loans or any portion
thereof for an additional Interest Period; provided, however, that the aggregate
amount of the Eurodollar Rate Loans for each Interest Period must be in the
amount of a Eurodollar Borrowing Unit or an integral multiple of five million
Dollars ($5,000,000) in excess thereof. Each such election shall be made by
giving the Lender at least five (5) Business Days' prior written notice (a
"Notice of Conversion or Continuation"), which shall in substantially the form
of Exhibit C hereto and shall specify (A) the amount of the Eurodollar Rate Loan
being converted or continued, (B) in the case of a continuation of Eurodollar
Rate Loans, the applicable Interest Period and (C) in the case of a conversion,
the date of conversion (which date shall be a Business Day and, if a conversion
from Eurodollar Rate Loans, shall also be the last day of the applicable
Interest Period). Each Notice of Conversion or Continuation shall be irrevocable
and binding upon the Borrower. The election of the Borrower made in accordance
with this Section 2.9(a) shall be effective, subject to Section 2.9(b) (Event of
Default; Failure to Give Appropriate Notice).
(b) Event of Default; Failure to Give Appropriate Notice.
Notwithstanding the foregoing, no continuation in whole or in part of Eurodollar
Rate Loans upon the expiration of any applicable Interest Period, shall be
permitted at any time at which (i) a Default or an Event of Default shall have
occurred and be continuing or (ii) the continuation of, or conversion into,
would violate any of the provisions of Section 2.12 (Special Provisions
Governing Eurodollar Rate Loans). If, within the time period required under the
terms of this Section 2.9, the Lender does not receive a Notice of Conversion or
Continuation from the Borrower containing a permitted election to continue any
Eurodollar Rate Loans for an additional Interest Period or to convert any such
Loans, then, upon the expiration of the applicable Interest Period, such Loans
will be automatically continued with an Interest Period of one month.
Section 2.10 Fees.
Unused Commitment Fee. The Borrower agrees to pay to Lender a
commitment fee (the "Unused Commitment Fee") on the average daily unused portion
of Lender's Commitment from the date hereof until the Termination Date at the
Unused Commitment Fee Rate, payable in arrears (i) on the last day of each
Quarter, commencing on the first such day following the Effective Date and (ii)
on the Termination Date.
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Section 2.11 Payments and Computations; Protective Advances.
(a) Payment Procedures. The Borrower shall make each payment
hereunder (including fees and expenses) not later than 11:00 A.M. (New York City
time) on the day when due, in Dollars to the account of Lender (Account Number
001-008615) at The Fuji Bank and Trust Company (ABA Number 000000000) in
immediately available funds without set-off or counterclaim together with a
notice thereof to Lender at its address referred to in Section 10.8 (Notices,
Etc.). Payments received by the Lender after 11:00 A.M. (New York City time)
shall be deemed to be received on the next Business Day.
(b) Computations of Interest. All computations of interest and fees
shall be made by the Lender on the basis of a year of three hundred and sixty
(360) days for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest and fees are
payable. Each determination by the Lender of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
(c) Payments on Business Days. Whenever any payment hereunder shall
be stated to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest or fees, as the
case may be; provided, however, that if such extension would cause payment of
interest on or principal of any Eurodollar Rate Loan to be made in the next
calendar month, such payment shall be made on the immediately preceding Business
Day.
Section 2.12 Special Provisions Governing Eurodollar Rate Loans.
(a) Determination of Eurodollar Rate. The Eurodollar Rate for each
Interest Period for Eurodollar Rate Loans shall be determined by the Lender
pursuant to the procedures set forth in the definition of "Eurodollar Rate." The
Lender's determination shall be presumed to be correct, absent manifest error,
and shall be binding on the Borrower.
(b) Impossibility to Ascertain Eurodollar Rate. In the event that (i)
the Lender determines that adequate and fair means do not exist for ascertaining
the applicable interest rates by reference to which the Eurodollar Rate then
being determined is to be fixed or (ii) the Lender shall forthwith so notify the
Borrower, whereupon each Eurodollar Loan will automatically, on the last day of
the current
29
Interest Period for such Loan, convert into a Base Rate Loan and the obligations
of the Lender to make Eurodollar Rate Loans or to convert Base Rate Loans into
Eurodollar Rate Loans shall be suspended until the Lender shall notify the
Borrower that it has determined that the circumstances causing such suspension
no longer exist.
(c) Cost Increases Due to Changes in Law. If at any time Lender shall
determine that the introduction of or any change in or in the interpretation of
any law, treaty or governmental rule, regulation or order (other than any change
by way of imposition or increase of reserve requirements included in determining
the Eurodollar Rate Reserve Percentage) or the compliance by Lender with any
guideline, request or directive from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to Lender of agreeing to make or making, funding or maintaining any
Eurodollar Rate Loans, then the Borrower shall from time to time, upon demand by
Lender pay to the Lender additional amounts sufficient to compensate Lender for
such increased cost. A certificate as to the amount of such increased cost,
submitted to the Borrower by Lender, shall be conclusive and binding for all
purposes, absent manifest error.
(d) Specific Losses for Eurodollar Loans. In addition to all amounts
otherwise required to be paid by the Borrower pursuant to this Agreement, the
Borrower shall compensate Lender, upon demand, for all losses, expenses and
liabilities (including any loss or expense incurred by reason of the borrowing,
liquidation or reemployment of deposits or other funds acquired by Lender to
fund or maintain Lender's Eurodollar Rate Loans to the Borrower but excluding
any loss of the Applicable Margin on the relevant Loans) which that Lender may
sustain (i) if for any reason a proposed Borrowing or continuation of Eurodollar
Rate Loans does not occur on a date specified therefor in a Notice of Borrowing
or a Notice of Conversion or Continuation given by Borrower or in a telephonic
request by it for borrowing or continuation or a successive Interest Period does
not commence after notice therefor is given pursuant to Section 2.9(a) (Delivery
of Notice of Conversion or Continuation), (ii) if for any reason any Eurodollar
Rate Loan is prepaid (including any mandatory prepayment pursuant to Section 2.7
(Mandatory Prepayments)) on a date which is not the last day of the applicable
Interest Period, (iii) as a consequence of a required conversion of a Eurodollar
Rate Loan to a Base Rate Loan as a result of any of the events indicated in
Section 2.12(b) (Impossibility to Ascertain EuroDollar Rate) or (iv) as a
consequence of any failure by a Borrower to repay or prepay Eurodollar Rate
Loans when required by the terms hereof, including, without limitation following
delivery of a prepayment notice pursuant to Section 2.6(a) in respect of which
the notified prepayment is not in fact made due to the prohibition in the final
sentence of such Section 2.6(a). Lender shall deliver to the Borrower
concurrently with such demand a written statement as to
30
such losses, expenses and liabilities, and this statement shall be conclusive as
to the amount of compensation due to Lender, absent manifest error.
Section 2.13 Capital Adequacy. If at any time Lender determines that
(a) the adoption of, or any change in or in the interpretation of, any
Requirement of Law regarding capital adequacy, (b) compliance with any such
Requirement of Law or (c) compliance with any guideline or request or directive
from any central bank or other Governmental Authority (whether or not having the
force of law) (and in each case whether in respect of the Lender itself or the
Lender's source of funds) shall have the effect of reducing the rate of return
on Lender's capital as a consequence of its obligations hereunder, to a level
below that which Lender could have achieved but for such adoption, change,
compliance or interpretation, then, upon demand from time to time by Lender the
Borrower shall, subject to Section 8.1(b)(i) hereof and Section 8.5(d) of the
Senior Credit Agreement, pay to the Lender, from time to time as specified by
Lender, additional amounts sufficient to compensate Lender for such reduction. A
certificate as to such amounts submitted to the Borrower by Lender shall be
conclusive and binding for all purposes absent manifest error.
Section 2.14 Taxes.
(a) Deduction of Taxes. Any and all payments by the Borrower under
each Loan Document shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings and all liabilities with respect thereto, excluding, (x) in the
case of Lender, taxes measured by its net income and franchise taxes imposed on
it, by the jurisdiction (or any political subdivision thereof) under the laws of
which Lender is organized and, (y) in the case of Lender, taxes measured by its
net income and franchise taxes imposed on it, by the jurisdiction in which
Lender's principal place of business is located (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by any
Requirement of Law to deduct any Taxes from or in respect of any sum payable
under any Loan Document to Lender (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.14) Lender receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions, and (iii) the Borrower shall
pay the full amount deducted to the relevant taxing authority or other authority
in accordance with applicable Requirements of Law.
(b) Stamp or Documentary Taxes. In addition, the Borrower agrees to
pay any present or future stamp or documentary taxes or any other excise or
property
31
taxes, charges or similar levies of the United States or any applicable foreign
jurisdiction and all liabilities with respect thereto, which arise from any
payment made under any Loan Document or from the execution, delivery or
registration of, or otherwise with respect to, any Loan Document (collectively,
"Other Taxes").
(c) Indemnification. The Borrower will indemnify Lender for the full
amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 2.14) paid by Lender and
any liability (including for penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. This indemnification shall be made within thirty (30) days
from the date Lender makes written demand therefor.
(d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.14 shall survive the payment in full of the Obligations.
Section 2.15 Collateral Audits. Borrower shall promptly provide Lender
with copies of any collateral audit conducted by Senior Agent.
Article III
CONDITIONS PRECEDENT TO THE EFFECTIVENESS
OF THIS AGREEMENT AND TO LOANS
------------------------------
Section 3.1 Conditions Precedent to the Effectiveness of this
Agreement. This Agreement shall not become effective until, and the obligation
of Lender to make the Loans requested to be made by it is subject to, the
receipt by the Lender of each of the following, each dated the Effective Date
unless otherwise indicated or agreed to by the Lender, in form and substance
satisfactory to the Lender.
(a) Subordinated Credit Agreement. This Agreement, duly executed and
delivered by the Borrower and, for the account of Lender requesting the same, a
Subordinated Note or Subordinated Notes of the Borrower conforming to the
requirements set forth herein;
(b) Subordinated Security Agreement. The Subordinated Security
Agreement, duly executed by the Borrower, together with copies of search reports
pursuant to the Uniform Commercial Code as of a recent date listing all
effective
32
financing statements that name Borrower as debtor, together with copies of such
financing statements;
(c) Subordination Agreement. The Subordination Agreement, duly
executed by Senior Agent, Lender, Borrower and Guarantor.
(d) Opinion of Counsel. A favorable opinion of Yukevich, Marchetti,
Liekar & Xxxxxxxxx, P.C., counsel to the Loan Parties, in substantially the form
of Exhibit E, addressed to the Lender and addressing such other matters as
Lender may reasonably request;
(e) Subordinated Guaranty. The Subordinated Guaranty duly executed by
the Guarantor.
(f) Related Documents. A copy of each Related Document certified as
being complete and correct by a Responsible Officer of the Borrower;
(g) Constituent Documents. A copy of all Constituent Documents of
Borrower and Guarantor, that have been filed with the Secretary of State of the
state of incorporation of Borrower and Guarantor or another Governmental
Authority, certified as of a recent date by such Secretary of State or other
Governmental Authority, together with certificates of such official attesting to
the good standing of each of Borrower and Guarantor;
(h) Secretary Certificate. A certificate of the secretary or assistant
secretary of Borrower and Guarantor certifying as of the Effective Date (A) the
names and true signatures of each officer who has been authorized to execute and
deliver any Loan Document or other document required hereunder to be executed
and delivered by or on behalf of Borrower and Guarantor, (B) the Constituent
Documents as in effect on the date of such certification and, in respect of
those Constituent Document subject to Section 3.1(g) (Constituent Documents),
that there have been no changes in such Constituent Documents from the date of
the certification by a Governmental Authority delivered pursuant to Section
3.1(g) and (C) the resolutions of such Borrower's and Guarantor's Board of
Directors approving and authorizing the execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party;
(i) Solvency Certificate. A certificate of a Responsible Officer of
the Borrower and the Guarantor, stating that the Borrower and Guarantor are
Solvent as of the Effective Date after giving effect to the payment of all
estimated legal, accounting and other fees related hereto;
33
(j) Borrowing Base Certificate. A copy of the latest Borrowing Base
Certificate (as defined in the Senior Credit Agreement) delivered to the Senior
Agent;
(k) Officer Certificate. A certificate of a Responsible Officer to the
effect that (i) the conditions set forth in Section 3.2(b) (Representations and
Warranties; Borrowing Base Deficiency; Events of Default) have been satisfied
and (ii) no Legal Proceedings shall have been initiated against Borrower or any
of its Material Subsidiaries which, if adversely determined, would have a
Material Adverse Effect;
(l) Insurance. Evidence satisfactory to the Lender that the insurance
policies required by Section 6.5 (Maintenance of Insurance) and each Collateral
Document are in full force and effect, together with endorsements naming the
Lender, on behalf of the Secured Parties, as an additional insured or loss payee
under all insurance policies to be maintained with respect to the Collateral;
(m) Auditors. A letter from the Borrower to its independent certified
public accountants authorizing the independent certified public accountants of
the Lender to communicate with the Lender in accordance with Section 6.6
(Access);
(n) Consents, Etc. (i) Evidence satisfactory to the Lender that, as of
the Effective Date, each of the Borrower and its Material Subsidiaries shall
have received all consents and authorizations required pursuant to any material
Contractual Obligation with any other Person and shall have obtained all Permits
of, and effected all notices to and filings with, any Governmental Authority, in
each case, as may be necessary to allow each of the Borrower and its Material
Subsidiaries lawfully (A) to execute, deliver and perform, in all material
respects, their respective obligations hereunder, the Loan Documents to which
each of them, respectively, is, or shall be, a party and each other agreement or
instrument to be executed and delivered by each of them, respectively, pursuant
thereto or in connection therewith and (B) to create and perfect the Liens on
the Collateral to be owned by each of them in the manner and for the purpose
contemplated by the Loan Documents;
(ii) Without prejudice to the generality of Subsection 3.1(n)(i):
(A) Approval of the Board of Directors of the Borrower and approval of
the independent directors of the Borrower acting as a special committee;
and
34
(B) a written opinion from an investment banking firm of national
standing that the transaction contemplated by this Agreement is fair, from
a financial point of view, to the Borrower.
(o) Additional Documents. Such other certificates, documents,
agreements and information with respect to Borrower as the Lender may, in its
sole discretion, request.
(p) Payment by Borrower of the Upfront Fee. The Borrower shall have
paid to the Lender the Upfront Fee in full in immediately available funds.
(q) Subordinated Pledge Agreement. The Subordinated Pledge Agreement
duly executed by the Borrower.
Section 3.2 Conditions Precedent to Each Loan. The obligation of
Lender to make any Loan shall be subject to the satisfaction of all of the
following further conditions precedent, that:
(a) Notices and Requests. With respect to any Loan, the Lender shall
have received a duly executed Notice of Borrowing.
(b) Representations and Warranties; Borrowing Base Deficiency; Events
of Default. The following statements shall be true on the date of such Loan or
issuance, both before and after giving effect thereto and to the application of
the proceeds therefrom and to such issuance:
(i) the representations and warranties set forth in Article IV
(Representations and Warranties) (other than the representations and
warranties set forth in Section 4.12(b) and 4.3(b)) shall be true and
correct in all material respects on and as of such date with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date;
(ii) no Borrowing Base Deficiency shall exist; and
(iii) no Event of Default shall have occurred and be continuing;
35
(c) Requirements of Law. The making of such Loan on such date does
not violate any Requirement of Law on the date of or immediately following such
Loan or issuance and is not enjoined, temporarily, preliminarily or permanently;
and
(d) Indenture Provisions. The Lender shall have received evidence and
calculation reasonably satisfactory to it demonstrating that the making of such
Loan on such date does not violate any provision of the Indenture, including
without limitation, Section 4.05, and without limitation, that such Loan will
constitute "Permitted Debt" as defined in the Indenture.
(e) Additional Documents. The Lender shall have received such
additional documents, information and materials as Lender may reasonably
request.
Each submission by the Borrower to the Lender of a Notice of Borrowing each
acceptance by the Borrower of the proceeds of a Loan, (each such event being a
"Credit Event"), shall be deemed to constitute a representation and warranty by
the Borrower on the date of the making of such Loan as to the matters specified
in Section 3.2(b) (Representations and Warranties; Borrowing Base Deficiency;
Events of Default).
Article IV
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, the Borrower
represents and warrants to the Lender that, on and as of the Effective Date
(after giving effect to the making of any Loan or other financial accommodations
on the Effective Date) and on and as of each date as required by Section
3.2(b)(i):
Section 4.1 Corporate Existence; Compliance with Law. Each of the
Borrower and its Material Subsidiaries, (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
(b) is duly qualified as a foreign corporation and in good standing under the
laws of each jurisdiction where such qualification is necessary, except where
the failure to be so qualified or in good standing would not in the aggregate
have a Material Adverse Effect, (c) has all requisite power and authority and
the legal right to own, pledge, mortgage and operate its properties, to lease
the property it operates under lease and to conduct its business as now or
currently proposed to be conducted, (d) is in compliance with its Constituent
Documents, (e) is in compliance with all other applicable Requirements of Law
except where the failure to be in compliance would not in the aggregate have a
Material Adverse Effect and (f) has obtained all Permits from or by, has made
all necessary
36
filings with and has given all necessary notices to, each Governmental Authority
having jurisdiction, to the extent required for such ownership, operation and
conduct, except for Permits which can be obtained or made by the taking of
ministerial action to secure the grant or transfer thereof or the failure to
obtain or make would not in the aggregate have a Material Adverse Effect.
Section 4.2 Corporate Power; Authorization; Enforceable Obligations.
(a) Noncontravention. The execution, delivery and performance by
Borrower of the Loan Documents to which it is a party and the consummation of
the transactions contemplated thereby:
(i) are within Borrower's corporate or other powers;
(ii) have been duly authorized by all necessary corporate
action, including the consent of stockholders where required;
(iii) do not and will not (A) violate any applicable Requirement
of Law applicable to Borrower (including under its Constituent Documents or
Regulations T, U and X of the Federal Reserve Board, as the same are from
time to time in effect, and all official rulings and interpretations
thereunder) or any Order of any Governmental Authority applicable to
Borrower, (B) conflict with or result in the breach of, constitute a
default under, or result in or permit the termination or acceleration of,
any Contractual Obligation of Borrower or any of its Material Subsidiaries
or (C) result in the creation or imposition of any Lien or Encumbrance upon
any of the property of Borrower or any of its Material Subsidiaries, other
than those in favor of the Secured Parties pursuant to the Collateral
Documents;
(iv) do not require obtaining any Permit from or filing or
registration with, any Governmental Authority or any other Person; and
(b) Due Execution. This Agreement has been, and each of the other
Loan Documents will have been upon delivery thereof pursuant to Section 3.1
(Conditions Precedent to the Effectiveness of this Agreement), duly executed and
delivered by Borrower. This Agreement is, and the other Loan Documents will be,
when delivered hereunder, the legal, valid and binding obligation of Borrower,
enforceable against it in accordance with its terms.
37
Section 4.3 Financial Statements.
(a) Accuracy of Financial Statements. The consolidated balance sheet
of the Borrower and its Subsidiaries as at December 31, 1999 (the "Balance Sheet
Date"), and the related consolidated statements of income, retained earnings and
cash flows of the Borrower and its Subsidiaries for the Year then ended,
certified by Ernst & Young, LLP, and the consolidated balance sheets of the
Borrower and its Subsidiaries as at September 30, 2000, and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the nine (9) months then ended, certified by a
Responsible Officer of the Borrower, copies of which have been furnished to
Lender, fairly present, subject, in the case of said balance sheets as at
September 30, 2000, and said statements of income, retained earnings and cash
flows for the nine (9) months then ended, to the absence of footnote disclosure
and normal recurring year-end audit adjustments, the consolidated financial
condition of the Borrower and its Subsidiaries as at such dates and the
consolidated results of the operations of the Borrower and its Subsidiaries for
the period ended on such dates, all in conformity with GAAP.
(b) No Material Adverse Change. Since the Balance Sheet Date, there
has been no Material Adverse Change and there have been no events or
developments that in the aggregate have had a Material Adverse Effect.
(c) No Additional Liability. Neither the Borrower nor any of its
Material Subsidiaries has any material obligation, contingent liability or
liability for taxes, long-term leases or unusual forward or long-term commitment
which is not reflected in the Financial Statements referred to in Section 4.3(a)
(Accuracy of Financial Statements) or in the notes thereto or otherwise
permitted by this Agreement.
Section 4.4 Legal Proceedings. There are no pending, or, to the
knowledge of the Borrower, threatened, Legal Proceedings that may affect the
Borrower or any of its Material Subsidiaries or their respective properties
before any Governmental Authority other than those that, if determined adversely
to Borrower, would not have a Material Adverse Effect. The performance of any
action by Borrower required or contemplated by any of the Loan Documents is not
restrained or enjoined (either temporarily, preliminarily or permanently).
Section 4.5 Taxes.
(a) Timely Filing of Tax Returns and Payment of Taxes. All material
federal, state, local and foreign tax returns, reports and statements
(collectively, the "Tax
38
Returns") required to be filed by the Borrower or any of its Tax Affiliates have
been filed with the appropriate governmental agencies in all jurisdictions in
which such Tax Returns are required to be filed, all such Tax Returns are true
and correct in all material respects, and all taxes, charges and other
impositions reflected therein or otherwise due and payable have been paid prior
to the date on which any fine, penalty, interest, late charge or loss may be
added thereto for non-payment thereof, except where contested in good faith and
by appropriate proceedings if adequate reserves therefor have been established
on the books of the Borrower or such Tax Affiliate in conformity with GAAP.
Proper and accurate amounts have been withheld by the Borrower and each of its
Tax Affiliates from their respective employees for all periods in full and
complete compliance with the tax, social security and unemployment withholding
provisions of applicable Requirements of Law and such withholdings have been
timely paid to the respective Governmental Authorities.
(b) Tax-Sharing Agreements. None of the Borrower or any of its Tax
Affiliates has (i) executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any charges, (ii) agreed
or been requested to make any adjustment under Section 481(a) of the Code by
reason of a change in accounting method or otherwise or (iii) any obligation
under any written tax sharing agreement or other Contractual Obligation for the
allocation of the payment of taxes other than those delivered to the Lender
prior to the date hereof.
Section 4.6 Full Disclosure. The information prepared or furnished by
or on behalf of the Borrower in connection with this Agreement or the
consummation of the financing hereunder taken as a whole does not contain any
untrue statement of a material fact nor omits to state a material fact necessary
to make the statements contained therein or herein not misleading. All facts
known to the Borrower which are material to an understanding of the financial
condition, business, properties or prospects of the Borrower and its Material
Subsidiaries taken as one enterprise have been disclosed to the Lender.
Section 4.7 Margin Regulations. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Federal Reserve Board,
as the same is from time to time in effect, and all official rulings and
interpretations thereunder), and no proceeds of any Borrowing will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock in contravention of Regulation T, U
or X of the Federal Reserve Board, as the same are from time to time in effect,
and all official rulings and interpretations thereunder.
39
Section 4.8 Ownership of the Material Subsidiaries. Set forth on
Schedule 4.8 (Material Subsidiaries) is a true, complete and accurate list
showing all Material Subsidiaries of the Borrower and, as to each such Material
Subsidiary (if formed), the jurisdiction of its incorporation, the number of
shares of each class of Stock authorized, the number outstanding on the date
hereof and the percentage of the outstanding shares of each such class owned
(directly or indirectly) by the Borrower and any other Stock and Stock
Equivalents of such Material Subsidiary. All of the outstanding Stock of each
Material Subsidiary of the Borrower has been validly issued, is fully paid and
non-assessable and is owned by the Borrower or a Material Subsidiary of the
Borrower free and clear of all Liens and Encumbrances (other than the Liens
created pursuant to the Senior Loan Documents, Subordinated Security Document,
the Subordinated Pledge Agreement and the Pledge Agreement). Neither the
Borrower nor any such Material Subsidiary is a party to, or has knowledge of,
any Contractual Obligation restricting the transfer or hypothecation of any
Stock or Stock Equivalent of any such Material Subsidiary, other than the Loan
Documents and the Senior Loan Documents. The Borrower does not own or hold,
directly or indirectly, any Securities of any Person other than such
Subsidiaries and Investments permitted by Section 7.8 (Investments in Other
Persons). There are no Material Subsidiaries other than the Guarantor, NSFC and
the EG Line Subsidiary.
Section 4.9 ERISA.
(a) List of Employee Benefit Plans. Schedule 4.9 (Employee Benefit
Plans) separately identifies, as of the date hereof, all Title IV Plans, all
Multiemployer Plans and all of the employee benefit plans within the meaning of
Section 3(3) of ERISA to which the Borrower or any of its Material Subsidiaries
has any obligation or liability, contingent or otherwise.
(b) Tax Qualification. Each employee benefit plan of the Borrower or
any of its Material Subsidiaries which is intended to qualify under Section 401
of the Code does so qualify, and any trust created thereunder is exempt from tax
under the provisions of Section 501 of the Code, except where all such failures
have no Material Adverse Effect.
(c) Compliance with Requirements of Law. Each Title IV Plan is in
compliance in all material respects with applicable provisions of ERISA, the
Code and other Requirements of Law except for non-compliance that in the
aggregate would not have no Material Adverse Effect.
40
(d) No Material Adverse Effect. There has been no, nor is there
reasonably expected to occur, any ERISA Event which will have a Material Adverse
Effect.
(e) No Withdrawal Liability. Except to the extent set forth on
Schedule 4.9, none of the Borrower, any of the Borrower's Subsidiaries or any
ERISA Affiliate would have any Withdrawal Liability as a result of a complete
withdrawal as of the date hereof from any Multiemployer Plan.
Section 4.10 Liens and Encumbrances. There are no Liens or
Encumbrances of any nature whatsoever on any properties of the Borrower or any
of its Material Subsidiaries other than those permitted by Section 7.1 (Liens,
Etc.). The Liens granted by the Borrower to the Lender pursuant to the
Collateral Documents are fully perfected Liens in and to the Collateral, subject
only to timely filing with Governmental Authorities of the appropriate UCC-1 and
UCC-3 financing statements.
Section 4.11 Related Documents. Except as set forth on Schedule 4.11
(Amendments to Related Documents) and as permitted under Section 7.11
(Modification of Related Documents), none of the Related Documents has been
amended or modified in any respect and no provision therein has been waived.
Each of the representations and warranties in each of the Related Documents are
true and correct in all material respects, and no default or material breach (or
event which with the giving of notice or lapse of time or both would be a
default or a material breach) has occurred thereunder, except as duly waived, to
the extent such waiver is permitted under Section 7.11 (Modification of Related
Documents) and a copy of such waiver has been delivered to the Lender.
Section 4.12 No Burdensome Restrictions; No Defaults.
(a) Material Contracts. Neither the Borrower nor any of its Material
Subsidiaries (i) is a party to any Contractual Obligation the compliance with
which would have a Material Adverse Effect or the performance of which, either
unconditionally or upon the happening of an event, will result in the creation
of a Lien or other Encumbrance (other than a Lien or Encumbrance granted
pursuant to a Loan Document or a Senior Loan Document or otherwise permitted
hereby) on the property or assets of the Borrower or any of its Material
Subsidiaries or (ii) is subject to any restriction under its Constituent
Documents which would have a Material Adverse Effect.
(b) No Default. Neither the Borrower nor any of its Material
Subsidiaries is in default under or with respect to any Contractual Obligation
owed by
41
it and, to the knowledge of the Borrower, no other party is in default under or
with respect to any Contractual Obligation owed to Borrower or to any Material
Subsidiary of a Borrower, other than, in either case, those defaults which in
the aggregate would have no Material Adverse Effect.
(c) Requirements of Law. To the best knowledge of the Borrower, there
is no Requirement of Law applicable to Borrower the compliance with which by
Borrower would have a Material Adverse Effect.
(d) Restrictions on Stock. No Material Subsidiary of the Borrower is
subject to any Contractual Obligation restricting or limiting its ability to
declare or make any dividend payment or other distribution on account of any
shares of any class of its Stock or its ability to purchase, redeem, or
otherwise acquire for value or make any payment in respect of, any such shares
or any shareholder rights, except pursuant to a Loan Document or any Senior Loan
Document.
Section 4.13 No Other Ventures. Except as set forth on Schedule 4.13
(Joint Ventures and Partnerships), none of the Borrower or any of its Material
Subsidiaries is engaged in any joint venture or partnership with any other
Person.
Section 4.14 Investment Company Act. Neither the Borrower nor any of
its Material Subsidiaries is an "investment company", or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended. None
of the making of the Loans by the Lender, the application of the proceeds and
repayment thereof by the Borrower and the consummation of the transactions
contemplated by the Loan Documents will result in a violation by the Borrower or
any of its Material Subsidiaries of any provision of such act or any Requirement
of Law created by the Securities and Exchange Commission thereunder.
Section 4.15 Public Utility Holding Company Act. Neither the Borrower
nor any of its Material Subsidiaries is a "holding company," or an "affiliate"
or a "holding company" or a "subsidiary company" of a "holding company," as each
such term is defined and used in the Public Utility Holding Act of 1935, as
amended.
Section 4.16 Insurance. All policies of insurance of any kind or
nature of the Borrower or any of its Material Subsidiaries are in full force and
effect and are of a nature and provide such coverage (a) as is sufficient and as
is customarily carried by companies of the size and character of the Borrower or
such Material Subsidiary and (b) as is required under any of the Related
Documents or Loan Documents.
42
Section 4.17 Labor Matters.
(a) No Strikes. There are no strikes, work stoppages, slowdowns or
lockouts pending, threatened against or involving, the Borrower or any of its
Material Subsidiaries, other than those that in the aggregate would not have a
Material Adverse Effect.
(b) No Claims or Complaints. There are no unfair labor practices,
grievances or complaints pending, or, to the best of the Borrower knowledge
after due inquiry, threatened, against or involving the Borrower or any of its
Material Subsidiaries, nor are there any arbitration or grievances threatened
that are reasonably likely to involve the Borrower or any of its Material
Subsidiaries, other than those which, in the aggregate, if resolved adversely to
the Borrower or such Material Subsidiary, would have no Material Adverse Effect.
Section 4.18 Use of Proceeds. The proceeds of the Loans are being used
by the Borrower solely for general working capital and corporate purposes and
not to repay or refinance existing Indebtedness of the Borrower and its
Subsidiaries or any transaction costs, fees and expenses related to any such
refinancing.
Section 4.19 Environmental Matters.
(a) Environmental Laws. The operations of the Borrower and each of its
Material Subsidiaries and their respective tenants have been and are in
compliance with all Environmental Laws, other than such non-compliances that in
the aggregate have no Material Adverse Effect or have been disclosed in the
Financial Statements delivered pursuant to Section 4.3(a) (Accuracy of Financial
Statements).
(b) Permits. The Borrower and its Material Subsidiaries have obtained
and currently possess all Permits necessary for their operations, all such
Permits are in good standing and the Borrower and each of its Material
Subsidiaries is in compliance with the terms and conditions of such Permits,
except for failures to comply that in the aggregate have no Material Adverse
Effect.
(c) No Threatened Legal Proceeding. None of the Borrower or any of its
Material Subsidiaries currently (or, to the best of the knowledge of the
Borrower after due inquiry, previously) owned or leased property or engaged
operations subject to any threatened or outstanding Order, Contractual
Obligation, notice of violation or potential liability or is subject to any
pending, or, to the Borrower's knowledge,
43
threatened, Legal Proceeding with respect to (i) any Environmental Law, (ii) a
Remedial Action or (iii) Environmental Liabilities and Costs arising from a
Release or threatened Release, other than those that in the aggregate have no
Material Adverse Effect.
(d) Disposal Facilities. Except as set forth on Schedule 4.19(d)
(Disposal Facilities), none of the Borrower or any of its Material Subsidiaries
is a treatment, storage or disposal facility requiring a Permit under the
Resource Conservation and Recovery Act, 42 U.S.C.(S).6901 et seq., as amended,
the regulations thereunder or similar Requirement of Law.
(e) No Undisclosed Information. There are no facts, circumstances or
conditions arising out of or relating to the operations or ownership of real
property owned or operated by the Borrower or any of its Material Subsidiaries
that are not specifically included in the information furnished to the Lender
other than those that in the aggregate have no Material Adverse Affect.
(f) No Environmental Lien. As of the date hereof, no Environmental
Lien had attached to any property of the Borrower or any of its Material
Subsidiaries.
Section 4.20 Ownership of Properties.
(a) Title. The Borrower and its Material Subsidiaries own good,
indefeasible and marketable title to, or valid leasehold interests in, all real
properties and good and indefeasible title to all personal properties and assets
purported to be owned by the Borrower or any of its Material Subsidiaries,
including those reflected on the most recent Financial Statements delivered by
the Borrower, and none of such properties and assets is subject to any Lien or
other Encumbrance, except Liens granted to the Lender pursuant to the Loan
Documents or otherwise permitted hereunder or granted under the Senior Loan
Documents. The Borrower and its Material Subsidiaries have received all deeds,
assignments, waivers, consents, non-disturbance and recognition or similar
agreements, bills of sale and other documents and have duly effected all
recordings, filings and other actions necessary to establish, protect and
perfect the Borrower's and its Material Subsidiaries' right, title and interest
in and to all such property.
(b) Permits. All Permits required to have been issued or appropriate
to enable all real property owned or leased by the Borrower or any of its
Material Subsidiaries to be lawfully occupied and used for all of the purposes
for which they are currently occupied and used have been lawfully issued and are
in full force and effect, other than those which in the aggregate would have no
Material Adverse Effect.
44
(c) No Condemnation Proceeding. None of the Borrower nor any of its
Material Subsidiaries has received any notice, or has any knowledge, of any
pending, threatened or contemplated condemnation or other Legal Proceeding
affecting any real property owned or leased by the Borrower or any of its
Material Subsidiaries or any part thereof, except those which, in the aggregate,
would have no Material Adverse Effect.
(d) No Damage. No portion of any real property owned or leased by the
Borrower or any of its Material Subsidiaries has suffered any material damage by
fire or other casualty loss which has not heretofore been completely repaired
and restored to its original condition.
Section 4.21 Existing Indebtedness. Schedule 4.21 (Existing
Indebtedness) separately identifies all Indebtedness as of the date hereof of
the Borrower and its Subsidiaries which is to remain outstanding after the
Effective Date and is (i) for borrowed money or (ii) incurred outside of the
ordinary course of the business and in a manner and to the extent consistent
with past practice or (iii) material to the financial condition, business,
operations or prospects of the Borrower and its Subsidiaries, taken as a whole
(or will be material to the financial condition, business, operations or
prospects of the Borrower and its Subsidiaries, taken as a whole). For purpose
of subsection (iii) of this Section 4.21, Indebtedness equal to or in excess
often million Dollars ($10,000,000) is deemed material.
Section 4.22 Solvency. Both before and after giving effect to (a) the
Loans to be made or extended on the Effective Date or such other date as Loans
requested hereunder are made or extended, (b) the disbursement of the proceeds
of such Loans pursuant to the instructions of the Borrower, (c) the consummation
of the other financing transactions contemplated hereby and (d) the payment and
accrual of all transaction costs in connection with the foregoing, Borrower is
Solvent.
Article V
REPORTING COVENANTS
As long as any of the Obligations or the Commitments remain
outstanding, unless the Lender otherwise consents in writing, the Borrower
agrees with the Lender that:
45
Section 5.1 Financial Statements. The Borrower shall furnish to the
Lender the following Financial Statements:
(a) Monthly Reports. As soon as available and in any event within
thirty (30) days after the end of each fiscal month in each Year (other than any
fiscal month ending on the last day of any Quarter), consolidated and
consolidating unaudited balance sheets of the Borrower and its Subsidiaries as
of the close of such month and consolidated and consolidating statements of
income, retained earnings and cash flow of the Borrower and its Subsidiaries for
such month and that portion of the current Year ending as of the close of such
month, in each case prepared in accordance with GAAP (subject to the absence of
footnote disclosure and normal recurring year-end audit adjustments) together
with (i) a statement by a Responsible Officer of the Borrower that such
financial information presents fairly in accordance with GAAP (subject to the
absence of footnote disclosure and normal recurring year-end adjustments) the
financial position, results of operations and statements of cash flow of the
Borrower and its Subsidiaries, on both a consolidated and consolidating basis,
as at the end of such month and for the period then ended and (ii) a certificate
of such Responsible Officer stating that no Default or Event of Default has
occurred and is continuing or, if a Default or an Event of Default has occurred
and is continuing, a statement as to the nature thereof and the action which the
Borrower proposes to take with respect thereto;
(b) Quarterly Financial Statements and Compliance Certificates. As
soon as available and in any event within fifty (50) days after the end of each
Quarter of each Year, consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries as of the end of such quarter and consolidated and
consolidating statements of income, retained earnings and cash flow of the
Borrower and its Subsidiaries for the period commencing at the end of the
previous Year and ending with the end of such Quarter, all prepared in
conformity with GAAP and certified by the Responsible Officer of the Borrower
and a certificate of such Responsible Officer stating that no Default or Event
of Default has occurred and is continuing or, if a Default or an Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the action which the Borrower proposes to take with respect thereto;
(c) Annual Audited Financial Statements. As soon as available and in
any event within ninety-five (95) days after the end of each Year, consolidated
and consolidating balance sheets of the Borrower and its Subsidiaries as of the
end of such year and consolidated and consolidating statements of income,
retained earnings and cash flows of the Borrower and its Subsidiaries for such
Year, all prepared in conformity with GAAP and certified, in the case of such
consolidated financial statements, without qualification as to the scope of the
audit or as to the Borrower being a going concern by
46
Ernst & Young, LLP or other independent public accountants of recognized
international standing and acceptable to the Lender, together with a certificate
of such accounting firm stating that in the course of the regular audit of the
business of the Borrower and its Subsidiaries, which audit was conducted by such
accounting firm in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge that a Default or Event of Default has
occurred and is continuing or, if in the opinion of such accounting firm a
Default or Event of Default has occurred and is continuing, a statement as to
the nature thereof;
(d) Borrowing Base Certificate. A copy of every Borrowing Base
Certificate (as defined in the Senior Credit Agreement) delivered to the Senior
Agent at the same time as such delivery;
(e) Annual Operating Plans. Not later than thirty (30) days after the
end of each Year beginning with the Year ending December 31, 2000, and an annual
operating plan of the Borrower and its Subsidiaries for the following Year,
approved by the Board of Directors of the Borrower, which will include, without
limitation, a statement of all of the material assumptions on which such plan is
based, monthly balance sheets and a monthly budget for the following year and
which will integrate sales, gross profits, operating expenses, operating profit
and cash flow projections all prepared on the same basis and in similar detail
as that on which operating results are reported (and in the case of cash flow
projections, representing management's good faith estimates of future financial
performance based on historical performance); and
(f) Additional Information. Promptly, from time to time, such other
information regarding the operations, including information regarding specific
product categories and lines of business of the Borrower and its Subsidiaries,
the business affairs and financial condition (including financial controls and
accounting practices) of the Borrower or any of its Subsidiaries or compliance
by the Borrower and its Subsidiaries with the terms of any Loan Document, as the
Lender may reasonably request.
Section 5.2 Default Notices. Promptly, and in any event within five
(5) Business Days after any Responsible Officer of the Borrower becomes aware of
any occurrence which it knows to constitute any Default or Event of Default, the
Borrower shall deliver to the Lender a certificate of a Responsible Officer
setting forth the details of such occurrence and the action which the Borrower
is taking or proposes to take with respect thereto.
47
Section 5.3 [not used]
Section 5.4 ERISA Matters. The Borrower shall furnish the Senior
Agent (with sufficient copies for each of the Lenders):
(a) ERISA Event. Promptly and in any event within thirty (30) days
after the Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has
reason to know that any ERISA Event has occurred, a written statement of a
Responsible Officer of the Borrower describing such ERISA Event and the action,
if any, that the Borrower, its Subsidiaries or its ERISA Affiliates propose to
take with respect thereto and a copy of any notice filed with any Governmental
Authority pertaining thereto;
(b) Request for Minimum Funding Waiver. Promptly and in any event
within ten (10) days after the Borrower, any of its Subsidiaries or any ERISA
Affiliate knows or has reason to know that a request for a minimum funding
waiver under Section 412 of the Code has been filed with respect to any Title IV
Plan or Multiemployer Plan, a written statement of a Responsible Officer of the
Borrower describing such waiver request and the action, if any, which the
Borrower, its Subsidiaries and ERISA Affiliates propose to take with respect
thereto and a copy of any notice filed with any Governmental Authority
pertaining thereto;
(c) Notice of Intent to Terminate. Simultaneously with the date that
the Borrower, any of its Subsidiaries or any ERISA Affiliate files a notice of
intent to terminate any Title IV Plan, if such termination would require
material additional contributions in order to be considered a standard
termination within the meaning of Section 4041(b) of ERISA, a copy of each
notice.
Section 5.5 Litigation. Promptly after the commencement thereof, the
Borrower shall give the Lender written notice of the commencement of any Legal
Proceeding that, if adversely determined, would have a Material Adverse Effect.
Not later than fifty (50) days after the end of each Quarter, the Borrower shall
deliver to the Lender a written report describing any Legal Proceeding that may
affect the Borrower or any of its Subsidiaries and that, in the reasonable
judgment of the Borrower, exposes the Borrower or such Subsidiary to liability
in an amount aggregating two million Dollars ($2,000,000) or more.
Section 5.6 Notices under Related Documents. Promptly after the
sending or filing thereof, the Borrower shall send the Lender copies of all
material notices, certificates or reports delivered pursuant to or in connection
with any Related Document.
48
Section 5.7 SEC Filings; Press Releases. Promptly after the sending
or filing thereof, the Borrower shall send the Lender copies of (a) all reports
which the Borrower sends to its security holders generally or to the holders of
Securities issued under the Indenture, (b) all reports and registration
statements which the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission or any national securities exchange or the
National Association of Securities Dealers, Inc., (c) all press releases and (d)
all other statements concerning material changes or developments in the business
of Borrower made available by Borrower to the public.
Section 5.8 Labor Relations. Promptly after becoming aware of the
same, the Borrower shall give the Lender written notice of (a) any material
labor dispute to which the Borrower of any of its Material Subsidiaries is or
may become a party, including any strikes, lockouts or other disputes relating
to such Person's plants and other facilities and (b) any Worker Adjustment and
Retraining Notification Act or related liability incurred with respect to the
closing of any plant or other facility of any of such Person.
Section 5.9 Insurance. As soon as is practicable and in any event
within thirty (30) days prior to the expiration or termination of any insurance
coverage for which the Borrower is required to name the Lender as additional
insured or loss payee hereunder or under any other Loan Document, the Borrower
will furnish the Lender (in sufficient copies for each of the Lenders) a
confirmation executed by the insurance company or the Borrower's insurance
broker and in form and substance satisfactory to the Lender that such coverage
has been continued.
Section 5.10 Environmental Matters. The Borrower shall provide the
Lender promptly and in any event within ten (10) days of the Borrower or any of
its Material Subsidiaries learning of any of the following, written notice of
any of the following:
(a) Environmental Lien. The receipt by Borrower of notification that
any real or personal property of Borrower is subject to any Environmental Lien
that has a Material Adverse Effect;
(b) Notice of Violation of an Environmental Law. The receipt by
Borrower of any notice of violation of or potential liability under, or
knowledge by such Borrower that there exists a condition which could reasonably
be expected to result in a violation of or liability under, any Environmental
Law, except for violations and liabilities the consequence of which in the
aggregate would have no reasonable
49
likelihood of subjecting the Borrower and its Subsidiaries collectively to
Environmental Liabilities and Costs that have a Material Adverse Effect;
(c) Commencement of a Legal Proceeding. The commencement of any Legal
Proceeding alleging a violation of or liability under any Environmental Law,
other than those the consequences of which in the aggregate would have no
reasonable likelihood of subjecting the Borrower and its Subsidiaries
collectively to Environmental Liabilities and Costs that have a Material Adverse
Effect;
(d) Property Acquisition. Any proposed acquisition of Securities,
assets or real estate, any proposed leasing of property or any other action
Borrower or any of its Material Subsidiaries other than those the consequences
of which in the aggregate have reasonable likelihood of subjecting the Borrower
and its Subsidiaries collectively to Environmental Liabilities and Costs that
have a Material Adverse Effect; and
(e) Additional Permits; Additional Capital Improvements. Any proposed
action by any Borrower or any of its Material Subsidiaries which in the
aggregate have a reasonable likelihood of requiring the Borrower to obtain
additional environmental, health or safety Permits or make additional capital
improvements to obtain compliance with Environmental Laws that in the aggregate
subject the Borrower to additional Environmental Liabilities and Costs that have
a Material Adverse Effect; and
(f) Status Report. Upon written request by Lender, a report providing
an update of the status of any environmental, health or safety compliance,
hazard or liability issue identified in any notice or report delivered pursuant
to this Agreement.
Section 5.11 Other Information. The Borrower will provide the Lender
with such other information respecting the business, properties, condition
(financial or otherwise) or operations of the Borrower or any of its
Subsidiaries as Lender may from time to time reasonably request.
50
Article VI
AFFIRMATIVE COVENANTS
As long as the Obligations or the Commitment remain outstanding,
unless the Lender otherwise consents in writing, the Borrower agrees with the
Lender that:
Section 6.1 Preservation of Corporate Existence, Etc. The Borrower
shall, and shall cause each of its Material Subsidiaries to, preserve and
maintain, its corporate existence, rights (charter and statutory) and
franchises, except as permitted by Section 7.6 (Restriction on Fundamental
Changes).
Section 6.2 Compliance with Law, Etc. The Borrower shall, and shall
cause each of its Material Subsidiaries to, comply in all material respects with
all applicable Requirements of Law, Contractual Obligations and Permits;
provided, however, that the Borrower shall not be deemed in default of this
Section 6.2 if such non-compliance in the aggregate would not have a Material
Adverse Effect.
Section 6.3 Conduct of Business. The Borrower shall, and shall
cause each of its Material Subsidiaries to conduct its business in the ordinary
course consistent with past practice and use its reasonable efforts, in the
ordinary course and consistent with past practice, to preserve its business and
the goodwill and business of the customers, advertisers, suppliers and others
having business relations with the Borrower or any of its Material Subsidiaries;
provided, however, that the Borrower shall not be deemed in default of this
Section 6.3 if all such failures to comply in the aggregate would have no
Material Adverse Effect.
Section 6.4 Payment of Taxes, Etc. The Borrower shall, and shall
cause each of its Material Subsidiaries to, pay and discharge before the same
shall become delinquent, all lawful claims, taxes, assessments, charges and
levies of a Governmental Authority, except where contested in good faith, by
proper proceedings and adequate reserves therefor have been established on the
books of the Borrower or the appropriate Subsidiary in conformity with GAAP.
Section 6.5 Maintenance of Insurance. The Borrower shall (i)
maintain, and cause to be maintained for each of its Material Subsidiaries,
insurance with responsible and reputable insurance companies or associations in
such amounts and covering such risks as is usually carried by companies engaged
in similar businesses and owning similar properties in the same general areas in
which the Borrower or such
51
Material Subsidiary operates and, in any event, all insurance required by any
Collateral Documents.
Section 6.6 Access. The Borrower shall from time to time, permit
the Lender, or any agents or representatives thereof, within five (5) Business
Days after written notification of the same (except that during the continuance
of an Event of Default, no such notice shall be required), on any Business Day,
to (a) examine and make copies of and abstracts from the records and books of
account of the Borrower and each of its Subsidiaries, (b) visit the properties
of the Borrower and each of its Subsidiaries, (c) discuss the affairs, finances
and accounts of the Borrower and each of its Subsidiaries with any of their
respective officers or directors and (d) communicate directly with the
Borrower's independent certified public accountants. The Borrower shall
authorize its independent certified public accountants to disclose to the Lender
any and all financial statements and other information of any kind, as the
Lender reasonably requests from the Borrower and which such accountants may have
with respect to the business, financial condition, results of operations or
other affairs of the Borrower or any of its Subsidiaries.
Section 6.7 Keeping of Books. The Borrower shall, and shall cause
each of its Material Subsidiaries to, keep, proper books of record and account,
in which full and correct entries shall be made of all financial transactions
and the assets and business of the Borrower and each such Material Subsidiary.
Section 6.8 Maintenance of Properties, Etc. The Borrower shall, and
shall cause each of its Material Subsidiaries to, maintain and preserve and (if
necessary) acquire, (a) all of its properties which are necessary in the conduct
of its business in good working order and condition, (b) all rights, permits,
licenses, approvals and privileges (including all Permits) which are used or
useful or necessary in the conduct of its business and (c) all Intellectual
Property owned by the Borrower or its Material Subsidiaries or that is necessary
for the operations of their respective businesses; provided, however, that the
Borrower shall not be deemed in default of this Section 6.8 if all such failures
in the aggregate would have no Material Adverse Effect.
Section 6.9 Maintenance of Contractual Obligations, Etc. The
Borrower shall, and shall cause each of its Material Subsidiaries to, perform,
observe and comply with each of the covenants, conditions and agreements set
forth in the Related Documents (which in the case of the Senior Loan Documents,
shall be as such covenants, conditions and agreements are from time to time
waived or amended in accordance with the provisions thereof) and under each
other Contractual Obligation under which it or any of its Material Subsidiaries
may be bound (including to pay all rent
52
and other charges payable under any lease and all Indebtedness and other
obligations as the same become due) and do all things necessary to preserve and
to keep unimpaired any rights the Borrower or any of its Material Subsidiaries
may have under any Contractual Obligation; provided, however, that the Borrower
shall not be deemed in default of this Section 6.9 if all such failures in the
aggregate would have no Material Adverse Effect.
Section 6.10 Application of Proceeds. The Borrower shall use the
entire amount of the proceeds of the Loans as provided in Section 4.18 (Use of
Proceeds).
Section 6.11 Year. The Borrower shall, and shall cause each of its
Material Subsidiaries to, maintain as its fiscal year the twelve month period
ending on the thirty-first (31st) of December of each year.
Section 6.12 Environmental. The Borrower shall, and shall cause any
Material Subsidiary to, comply in all material respects with Environmental Laws
and, without limiting the foregoing, the Borrower shall, at its sole cost and
expense, upon receipt of any notification or otherwise obtaining knowledge of
any Release or other event that has any reasonable likelihood of the Borrower or
any of its Material Subsidiaries incurring Environmental Liabilities and Costs
that have a Material Adverse Effect, promptly advise the Lender thereof and (i)
if requested by the Lender, conduct or pay for consultants to conduct, tests or
assessments of environmental conditions at such operations or properties,
including the investigation and testing of subsurface conditions and (ii) take
such Remedial Action, undertake such investigation or other action as required
by Environmental Laws or other Requirements of Law or as any Governmental
Authority requires or as is appropriate and consistent with good business
practice to address the Release or event.
Section 6.13 Inventory.
(a) Appraisals and Investigations. The Borrower shall promptly
furnish to the Lender any information which Borrower furnishes to the Senior
Agent regarding the Inventory and its value, including correct and complete
copies of any invoices, underlying agreements, instruments or other documents.
(b) Physical Verifications. The Lender may make physical
verifications of the Inventory in any manner and through any medium that the
Lender considers advisable, and the Borrower and the Guarantor shall furnish, or
shall cause to
53
be furnished, all such assistance and information as the Lender may require in
connection therewith.
Section 6.14 Accounting Changes; Year. The Borrower will disclose in
writing to the Lender promptly after such change, any change in (a) the
accounting treatment, reporting practices or tax reporting treatment of the
Borrower or any of its Material Subsidiaries and (b) the fiscal year of the
Borrower or any of its Material Subsidiaries.
Section 6.15 EG Line Subsidiary. The Borrower shall cause the EG
Line Subsidiary to at all times (a) conduct no business other than owning and
operating the EG Line (and other business directly related thereto) and (b) own
or lease no assets other than the EG Line and other assets directly used in
relation to the ownership or operation thereof.
Article VII
NEGATIVE COVENANTS
As long as any of the Obligations or the Commitments remain
outstanding and unless the Lender otherwise consents in writing, the Borrower
agrees with the Lender that:
Section 7.1 Liens, Etc. The Borrower will not, and will not permit
any of its Subsidiaries to, create or suffer to exist, any Lien or other
Encumbrance upon, or with respect to, any of its properties or assets, whether
now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to
assign, any right to receive income, except for:
(a) Liens created pursuant to the Loan Documents or the Senior Loan
Documents;
(b) Liens securing Indebtedness permitted under Section 7.2(g) and
Liens on the EG Line securing Indebtedness in respect of the EG Line Financing
in an amount not to exceed forty-three million Dollars ($43,000,000) in the
aggregate;
(c) Purchase Money Liens. Purchase money Liens or purchase money
security interests upon or in any property (other than the Collateral) acquired
or
54
held by any Loan Party in the ordinary course of business to secure the purchase
price of such property or to secure Indebtedness incurred solely for the purpose
of financing the acquisition of such property; provided, however, that (i) any
such Lien is created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost (including
the cost of construction) of the property subject thereto, (ii) the principal
amount of the Indebtedness secured by such Lien does not exceed one hundred
percent (100%) of such cost, (iii) such Lien does not extend to or cover any,
other property other than such item of property and any improvements on such
item and (iv) the aggregate principal amount of the Indebtedness secured by the
Liens permitted by this Section 7.1(c) (Purchase Money Liens) at any time
outstanding shall not exceed fifty million Dollars ($50,000,000) in the
aggregate;
(d) Refinancing of Indebtedness. Any Lien securing the renewal,
extension, refinancing or refunding of any Indebtedness or other Obligation
secured by any Lien permitted by Section 7.1(b) or Section 7.1(c) (Purchase
Money Liens) without any increase in the amount secured thereby or in the assets
subject to such Lien;
(e) Mechanics' Liens. Liens arising by operation of law in favor of
materialmen, mechanics, warehousemen, carriers, lessors or other similar Persons
incurred by Borrower in the ordinary course of business which secure its
obligations to such Person; provided, however, that (i) Borrower is not in
default with respect to such payment obligation to such Person or (ii) Borrower
is in good faith and by appropriate proceedings diligently contesting such
obligation and adequate provision is made for the payment thereof on the books
of Borrower in conformity with GAAP and all such Liens in the aggregate would,
if all such contests are adversely determined, have no Material Adverse Effect;
(f) Tax Liens. Liens (excluding Environmental Liens) securing taxes,
assessments or governmental charges or levies; provided, however, that (i)
Borrower is in default in respect of any payment obligation with respect thereto
or (ii) Borrower is in good faith and by appropriate proceedings diligently
contesting such obligation and adequate provision is made for the payment
thereof on the books of Borrower in conformity with GAAP and all such Liens in
the aggregate would, if all such contests are adversely determined, have no
Material Adverse Effect;
(g) Employment Benefits Liens. Liens incurred, or pledges and
deposits made in the ordinary course of business, in connection with workers'
compensation, unemployment insurance, old-age pensions and other social security
benefits;
55
(h) Performance Liens. Pledges or deposits of Cash or Cash
Equivalents securing the performance of bids, tenders, leases, contracts (other
than for the repayment of borrowed money), statutory obligations, surety and
performance bonds and other obligations of like nature, in each case incurred as
an incident to and in the ordinary course of business;
(i) Judgment Liens. Pledges or deposits of cash or Cash Equivalents
securing appeal bonds and judgment liens; provided, however, that all such Liens
in the aggregate have no Material Adverse Effect;
(j) Zoning Restrictions and Easements. Zoning restrictions,
easements, licenses, reservations or restrictions on the use of real property or
minor irregularities of title incident thereto which do not in the aggregate
render title thereto unmarketable or impair, in any material manner, the use of
such property for the purposes for which such property is held by Borrower;
(k) Expired Financing Statements and Operating Leases. Expired
financing statements, financing statements filed for precautionary purposes in
respect of operating leases, and financing statements in respect of Liens
permitted hereby; and
(l) Existing Liens. Liens existing as of the date hereof set forth on
Schedule 7.1 (Existing Liens).
Section 7.2 Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly create, incur, assume,
maintain or otherwise become or remain directly or indirectly liable with
respect to any Indebtedness except:
(a) the Obligations and the Senior Loan Obligations;
(b) Indebtedness with respect to Guaranty Obligations permitted by
Section 7.3 (Guaranty Obligations);
(c) current liabilities for goods or services purchased in the
ordinary course of business;
(d) Indebtedness owing to any wholly-owned Subsidiary of the Borrower
by the Borrower or by any other wholly-owned Subsidiary of the Borrower and
Indebtedness owing to the Borrower by any Subsidiary of the Borrower which is
subordinated to the Obligations on terms acceptable to the Lenders;
56
(e) Indebtedness outstanding on the Effective Date and listed on
Schedule 4.21 (Existing Indebtedness) ("Existing Indebtedness") and any
refinancing thereof without any increase in the principal amount of such
Indebtedness or decrease in the average maturity thereof;
(f) Indebtedness incurred pursuant to the Indenture;
(g) (i) purchase money Indebtedness used to purchase properties of
the Borrower subject to an operating lease as of the date of the Senior Credit
Agreement if the aggregate principal amount of such Indebtedness is not more
than the Fair Market Value thereof and (ii) Capitalized Lease Obligations if the
corresponding Capitalized Lease is the result of the conversion of an operating
lease of the Borrower existing as of the date of the Senior Credit Agreement and
the present value of all payments due under the corresponding Capitalized Lease
is not more than one hundred and five percent (105%) of the present value of all
payments due or that will become due under such operating lease;
(h) Indebtedness otherwise permitted by Section 4.05 (Limitation on
Debt and Restricted Subsidiary Preferred Stock) of the Indenture; and
(i) surety bonds for the performance of a contract other than for the
payment of money entered into in the ordinary course of business consistent with
past practice.
Section 7.3 Guaranty Obligations. The Borrower will not, and will not
permit any of its Subsidiaries to, incur, assume, endorse, be or become liable
for, guaranty (whether directly or indirectly) or permit or suffer to exist, any
Guaranty Obligation, except for (a) Guaranty Obligations evidenced by a Loan
Document or a Senior Loan Document, (b) Guaranty Obligations incurred by the
Borrower in respect of Indebtedness of the Borrower permitted by Section 7.2
(Indebtedness) and (c) Guaranty Obligations incurred by the Borrower to guaranty
the obligations of the EG Line Subsidiary under the EG Line Financing.
Section 7.4 Restrictions on Subsidiary Distributions; No New Negative
Pledge.
(a) No Encumbrance on Dividend Payments. The Borrower will not, and
will not permit any of its Material Subsidiaries to, agree to enter into or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the
57
ability of such Material Subsidiary to pay dividends or make any other
distribution or transfer of funds or assets or make loans or advances to or
other Investments in, or pay any Indebtedness owed to, the Borrower or any other
Material Subsidiary.
(b) No New Negative Pledges. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into or suffer to exist or become
effective any Contractual Obligation which prohibits or limits the ability of
the Borrower or any Subsidiary to create, incur, assume or suffer to exist any
Lien or Encumbrance upon any of the Collateral, whether now owned or hereafter
acquired, to secure the Obligations.
Section 7.5 Restricted Payments. The Borrower will not, and will not
permit any of its Material Subsidiaries to, directly or indirectly, declare,
order, pay, make or set apart any sum for any Restricted Payment; provided,
however, that any Material Subsidiary may make Restricted Payments to the
Borrower or the Guarantor; provided, further, that, the Borrower and its
Material Subsidiaries may make any Restricted Payment permitted under Section
4.06 (Limitation on Restricted Payments) of the Indenture and under Section 8.5
of the Senior Credit Agreement.
Section 7.6 Restriction on Fundamental Changes. The Borrower will
not, and will not permit any of its Material Subsidiaries to, (i) merge with any
Person other than a wholly-owned Material Subsidiary of the Borrower, provided,
however, that neither the Guarantor nor the EG Line Subsidiary shall merge with
any other Person, (ii) consolidate with any Person, (iii) acquire all or
substantially all of the Stock or Stock Equivalents of any Person or (iv)
acquire all or substantially all of the assets of any Person or all or
substantially all of the assets constituting the business of a division, branch
or other unit operation of any Person; provided, however, that the Borrower
shall be authorized to consummate any transaction described in clauses (i)
through (iv) and the Guarantor shall be authorized to consummate any transaction
described in clauses (ii) through (iv), in each case to the extent the Stock,
Stock Equivalents and assets that are acquired do not have in the aggregate a
Fair Market Value of more than fifty million Dollars ($50,000,000) per Year and,
in the case of any transaction described in clause (i) involving the Borrower,
the surviving corporation is the Borrower.
Section 7.7 Sale of Assets.
(a) Sale of Assets. The Borrower will not, and will not permit any of
its Material Subsidiaries to, engage in any Asset Sale, except (i) the sale of
Accounts and certain related property pursuant to the Receivables Purchase
Facility to the extent permitted under the Intercreditor Agreement or (ii) any
Asset Sale permitted under
58
Section 4.08 (Limitation on Sale of Mortgaged Properly) or (other than an Asset
Sale involving any Collateral) Section 4.10 (Limitation on Sale of Assets Other
than Mortgaged Property) of the Indenture.
(b) Sale of Accounts Receivable. The Borrower will not sell,
otherwise dispose of or factor at maturity or collection, or permit any of its
Subsidiaries to sell or otherwise dispose of, or factor at maturity or
collection, any Accounts, except pursuant to the Receivables Purchase Facility
to the extent permitted under the Intercreditor Agreement.
Section 7.8 Investments in Other Persons. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly make or
maintain any Investment, except:
(a) Investments in Accounts, contract rights and chattel paper (each
as defined in the Uniform Commercial Code), notes receivable and similar
items arising or acquired in the ordinary course of business consistent
with the past practice of the Borrower and its Subsidiaries;
(b) Investments received in settlement of amounts due to Borrower
effected in the ordinary course of business;
(c) Investments in Subsidiaries existing as of the Effective Date,
any Investment in the Guarantor Investments resulting from any transaction
permitted under Section 7.6 (Restriction on Fundamental Changes) and
Investments in the EG Line Subsidiary consisting of the EG Line and other
assets in an aggregate amount not to exceed one million Dollars
($1,000,000);
(d) Loans or advances to employees of any of Borrower's Material
Subsidiaries in the ordinary course of business, which loans and advances
shall not in the aggregate exceed one million Dollars ($1,000,000)
outstanding at any time;
(e) Investments in Cash Equivalents;
(f) Investments existing on the date hereof and set forth on Schedule
7.8 (Existing Investments); and
59
(g) Investments in joint ventures to the extent permitted under
clause (g) or (h) of the definition of "Permitted Investments" in Section
1.01 (Definitions) of the Indenture.
Section 7.9 Change in Nature of Business. The Borrower will not, and
will not permit any of its Material Subsidiaries to, make any material change in
the nature or conduct of its business as carried on at the date hereof.
Section 7.10 Compliance with ERISA. The Borrower will not, and will
not permit any of its Subsidiaries to, or cause or permit any ERISA Affiliate
to, cause or permit to occur (a) an event that could result in the imposition of
a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA or (b) an
ERISA Event that could have a Material Adverse Effect.
Section 7.11 Modification of Related Documents. The Borrower will
not, and will not permit any of its Subsidiaries to, without the prior written
consent of the Lender, alter, rescind, terminate, amend, supplement, refinance,
refund, waive or otherwise modify any provision of any Related Document (other
than the Senior Loan Documents).
Section 7.12 Modification of Existing Indebtedness Agreements. The
Borrower will not, and will not permit any of its Subsidiaries to, change or
amend the terms of any Existing Indebtedness if the effect of such amendment is
to (a) increase the interest rate on such Existing Indebtedness; (b) change the
dates upon which payments of principal or interest are due on such Existing
Indebtedness other than to extend such dates; (c) change any default or event of
default other than to delete or make less restrictive any default provision
therein or add any covenant with respect to such Existing Indebtedness; (d)
change the redemption or prepayment provisions of such Existing Indebtedness
other than to extend the dates therefor or to reduce the premiums payable in
connection therewith; (e) grant any security or collateral to secure payment of
such Existing Indebtedness; or (f) change or amend any other term if such change
or amendment would materially increase the obligations of the obligor or confer
additional material rights to the holder of such Existing Indebtedness in a
manner adverse to the Borrower, any of its Subsidiaries, or the Lender.
Section 7.13 Transactions with Affiliates.
(a) General Limitation on Affiliate Transactions. The Borrower will
not, and will not permit any of its Subsidiaries to, except as otherwise
expressly permitted herein, directly or indirectly, conduct any business or
enter into or suffer to
60
exist any transaction or series of transactions (including the purchase, sale,
transfer, assignment, lease, conveyance or exchange or the rendering of any
service) (an "Affiliate Transaction") with, or for the benefit of, any Affiliate
of the Borrower unless (i) the terms of such Affiliate Transaction are (A) set
forth in writing and (B) not less favorable to the Borrower or such Subsidiary,
as the case may be, that those that could be obtained in a comparable arm's-
length transaction with a Person that is not an Affiliate of the Borrower, (ii)
if such Affiliate Transaction involves aggregate payments or value in excess of
ten million Dollars ($10,000,000), the board of directors of the Borrower
(including a majority of the disinterested members of the board of directors of
the Borrower) approves such Affiliate Transaction and, in its good faith
judgment, believes that such Affiliate Transaction complies with clause (i) of
this Section 7.13(a) as evidenced by a board resolution promptly delivered to
the Senior Agent and (iii) if such Affiliate Transaction involves aggregate
payments or value in excess of twenty million Dollars ($20,000,000), the
Borrower obtains a written opinion from an independent financial advisor to the
effect that such Affiliate Transaction is fair, from a financial point of view,
to the Borrower or such Subsidiary, as the case may be.
(b) Approval of Specific Affiliate Transactions. The following
Affiliate Transactions shall not be prohibited under Section 7.13(a) (General
Limitation on Affiliate Transactions):
(i) any Affiliate Transaction between the Borrower and the
Guarantor;
(ii) any Restricted Payment permitted to be made pursuant to
Section 7.5 (Restricted Payments);
(iii) any issuance of securities, or other payments, awards or
grants in securities or otherwise pursuant to, or the funding of,
employment arrangements, pension or other benefit plans, stock option and
stock ownership plans and other compensatory arrangements approved by the
board of directors of the Borrower;
(iv) the payment of reasonable fees to directors of the Borrower
or such Subsidiary who are not employees of the Borrower or any of its
Subsidiaries;
(v) loans and advances to employees made in the ordinary course
of business and consistent with the past practices of the Borrower or such
61
Subsidiary, as the case may be, provided, however, that such loans and
advances do not exceed $5,000,000 in the aggregate at any time outstanding;
(vi) any Affiliate Transaction between the Borrower or any
Subsidiary, on the one hand, and one or more joint ventures that are
Affiliates of the Borrower or any Subsidiary, on the other hand, that (A)
are on terms no less favorable to the Borrower or such Subsidiary, as the
case may be, than those that could be obtained in a comparable arm's length
transaction with a person that is not an Affiliate of the Borrower and (B)
if such Affiliate Transactions involve aggregate payments or value in
excess of ten million Dollars ($10,000,000), the board of directors of the
Borrower (including a majority of the disinterested members thereof)
approves such Affiliate Transaction and, in its good faith judgment,
believes that such Affiliate Transaction complies with clause (A) of this
Section 7.13(b)(vi); and
(vii) the execution, delivery and performance of obligations
under the Loan Documents.
Section 7.14 Operating Leases. The Borrower will not, and will not
permit any of its Subsidiaries to, become or remain liable as lessee or
guarantor or other surety with respect to any operating lease, unless that
aggregate amount of all rents payable under all such operating leases shall not
exceed one hundred million Dollars ($100,000,000) in any Year.
Section 7.15 Sale and Leaseback Transactions. The Borrower will not,
and will not permit any of its Subsidiaries to, enter into any Sale and
Leaseback Transaction covering any property with a Fair Market Value in excess
of one hundred million Dollars ($100,000,000) in the aggregate.
Section 7.16 Cancellation of Indebtedness Owed to It. The Borrower
will not, and will not permit any of its Subsidiaries to, cancel any claim or
Indebtedness owed to it except for reasonable consideration and in the ordinary
course of business consistent with the past practice.
Section 7.17 Material Subsidiaries. The Borrower will not have any
Subsidiary other than the Guarantor, NSFC and the EG Line Subsidiary that is a
Material Subsidiary. The Borrower will not permit the sum of (a) the aggregate
of the amounts by which the book value of the total assets of each Subsidiary
listed in Schedule 1.1 (Non-Material Subsidiaries) exceeds the amount set forth
opposite such Subsidiary in such Schedule plus (b) the aggregate book value of
all assets of all
62
Subsidiaries of the Borrower (other than the Guarantor, NSFC, the EG Line
Subsidiary and such Subsidiaries listed on Schedule 1.1) to exceed ten million
Dollars ($10,000,000).
Section 7.18 Capital Structure. The Borrower will not, and will not
permit any of its Material Subsidiaries to, change its capital structure
(including in the terms of its outstanding Stock) or amend its Constituent
Documents other than for changes and amendments which in the aggregate have no
Material Adverse Effect.
Section 7.19 No Speculative Transactions. The Borrower will not, and
will not permit any of its Subsidiaries to, engage in any speculative
transaction or in any transaction involving Hedging Contracts except for the
sole purpose of hedging in the normal course of business and consistent with
industry practices.
Article VIII
SUBORDINATION
Section 8.1 Obligations Subordinate to Senior Loan Obligations. The
Borrower and the Lender, by the Lender's acceptance hereof, covenant and agree
that, to the extent and in the manner hereinafter set forth in this Section 8,
the Obligations (collectively, the "Subordinated Indebtedness") are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full in cash of all Senior Loan Obligations. This Section 8 constitutes a
continuing offer to all Persons who become holders of, or continue to hold,
Subordinated Indebtedness, each of whom is an obligee hereunder and is entitled
to enforce such holder's rights hereunder, subject to the provisions hereof,
without any act or notice of acceptance hereof or reliance hereon.
(a) Payment Over of Proceeds Upon Bankruptcy, Etc.
(i) In the event of (A) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relative to the
Borrower or any Loan Party or its assets, (B) any liquidation, dissolution
or other winding up of the Borrower or any Loan Party, whether voluntary or
involuntary or whether or not involving insolvency or bankruptcy or (C) any
assignment for the benefit of creditors or any other marshalling of assets
or liabilities of the Borrower or any Loan Party (each such event, if any,
herein sometimes referred to as a "Proceed-
63
ing"), then and in any such event the holders of all Senior Loan
Obligations shall first be paid in full (including, without limitation, all
Post-Commencement Interest) or provision for such payment shall be made and
agreed to in writing by the holders of Senior Loan Obligations before the
Lender is entitled to receive any direct or indirect payment or
distribution of any cash, property or securities on account of or with
respect to Subordinated Indebtedness and to that end the holders of Senior
Loan Obligations shall be entitled to receive (pro rata on the basis of the
respective amounts of such Senior Loan Obligations held by them) directly,
for application to the payment thereof (to the extent necessary to pay all
such Senior Loan Obligations in full in cash, whether or not due, including
specifically, without limitation, all Post-Commencement Interest after
giving effect to any substantially concurrent payment or distribution to
the holders of such Senior Loan Obligations and any provision for such
payment made and agreed to in writing by the holders of Senior Loan
Obligations), any and all payments or distributions of any kind or
character, whether in cash, property or securities, which may be payable or
deliverable in respect of the Subordinated Indebtedness in any such
Proceeding (including any payment or distribution which may be payable or
deliverable by reason of the payment of any other Indebtedness of the
Borrower being subordinated to the payment of Subordinated Indebtedness).
To the extent any payment of Senior Loan Obligations (whether by or on
behalf of the Borrower as proceeds of security of enforcement of any right
of setoff or otherwise) is declared to be fraudulent or preferential, set
aside or required to be paid to a trustee, receiver or other similar party
under any bankruptcy, insolvency, receivership or similar law, then if such
payment is recovered by, or paid over to, such trustee, receiver or other
similar party, the Senior Loan Obligations or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding
as if such payment had not occurred.
(ii) Notwithstanding the foregoing provisions of paragraph (i)
of this Section 8, in the event of any Proceeding the Lender shall have
received any payment from or distribution of assets of the Borrower or the
estate created by the commencement of any such Proceeding of any kind or
character in respect of the Subordinated Indebtedness, whether in cash,
property or securities (including any payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness
of the Borrower being subordinated to the payment of the Subordinated
Indebtedness) before all Senior Loan Obligations, whether or not due and
including specifically, without limitation, all Post-Commencement Interest
thereon, is paid in full or provision therefor is made and agreed to in
writing by the holders of Senior Loan Obligations, then in such event, such
payment or distribution shall be received
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and held in trust for the benefit of and shall be paid over to the holders
of Senior Loan Obligations (pro rata, on the basis of the respective
amounts of such Senior Loan Obligations held by them) remaining unpaid, to
the extent necessary to pay all such Senior Loan Obligations in full in
cash including, without limitation, all Post-Commencement Interest thereon,
after giving effect to any substantially concurrent payment or distribution
to or for the holders of such Senior Loan Obligations, if made in cash for
application to (and if made other than in cash to be held as collateral
security for) the payment in full of the Senior Loan Obligations.
(b) Default on Senior Loan Obligations.
(i) If any Senior Loan Obligations Default shall at any time
occur or exist, then at all times thereafter until such Senior Loan
Obligations Default shall have been cured or otherwise ceases to exist
pursuant to the terms of such Senior Loan Obligations, or the benefits of
this sentence shall have been waived in writing by or on behalf of, and at
the sole option of, the holders of a majority of the principal amount of
such Senior Loan Obligations, then and in such event (A) the Borrower may
not and shall not make any payment on account of or with respect to the
Subordinated Indebtedness which a holder of Subordinated Indebtedness would
be entitled to receive but for the provisions of this Section 8(b)(i) and
(B) the Lender shall not be entitled, nor shall the Lender have the right
to, declare to be due and payable, demand prepayment of, or take any action
to collect, any principal outstanding hereunder, any interest accrued
thereon, or any other amount payable hereunder, and any purported such
declaration, demand or other action shall have no force or effect.
(ii) In the event that, notwithstanding the foregoing provisions
of this Section 8.1(b), any payment or distribution shall be made by or on
behalf of the Borrower from any of its assets and received by the Lender at
a time when such payment was prohibited by the provisions of Section
8.1(b)(i), then such payment or distribution shall be held in trust for the
benefit of, and shall be immediately paid over to, the holders of Senior
Loan Obligations (pro rata, on the basis of the respective amount of such
Senior Loan Obligations held by them) remaining unpaid, if made in cash for
application to (and if made other than in cash to be held as collateral
security for) the payment in full of all Senior Loan Obligations in
accordance with its terms (after giving effect to any prior or
substantially concurrent payment to the holders of such Senior Loan
Obligations).
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(iii) The provisions of this Section 8(b) shall not modify or
limit in any way the application of Section 8(a).
(c) Subrogation to Rights of Lenders of Senior Loan Obligations.
After all amounts payable under or in respect of Senior Loan Obligations are
paid in full in cash, whether or not due, the Lender shall be subrogated to the
extent of the payments or distributions made to the holders of, or otherwise
applied to payment of, such Senior Loan Obligations pursuant to the provisions
of this Section 8 (equally and ratably with the holders of all Indebtedness of
the Borrower which by its express terms is subordinate and subject in right of
payment to Senior Loan Obligations to substantially the same extent as the
Subordinated Indebtedness is so subordinate and subject in right of payment and
which is entitled to like rights of subrogation), and to the rights of the
holders of such Senior Loan Obligations to receive payments and distributions of
cash, property and securities applicable to the Senior Loan Obligations until
the Subordinated Indebtedness shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior Loan
Obligations of any cash, property or securities to which the Lender would be
entitled except for the provisions of this Section 8, and no payments over
pursuant to the provisions of this Section 8 to the holders of Senior Loan
Obligations by the Lenders shall, as among the Borrower and its creditors (other
than holders of Senior Loan Obligations and the Lender), be deemed to be a
payment or distribution by the Borrower to or on account of the Senior Loan
Obligations, it being understood that the provisions of this are solely for the
purpose of defining the relative rights of the holders of Senior Loan
Obligations on the one hand and the Lender on the other hand.
(d) No Waiver of Subordination Provisions. No right of any holder of
any Senior Loan Obligations to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Borrower or by any act or failure to act by such holder or any
agent of such holder, or by any noncompliance by the Borrower with such terms,
provisions and covenants of this Agreement, regardless of any knowledge thereof
which any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of the Senior Loan Obligations may, at any time and from time to
time, without the consent of or notice to the Lender, incurring any liabilities
to the Lender and without impairing or releasing the subordination and other
benefits provided in this Section 8 or the obligations hereunder of the Lender
to the holders of the Senior Loan Obligations, even if any right of
reimbursement or subrogation or other right or remedy
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of the Lender is affected, impaired or extinguished thereby, do any one or more
of the following:
(i) change the manner, place or terms of payment or change or
extend the time of payment of, or renew, exchange, amend, increase or
alter, the terms of any Senior Loan Obligations, any security therefor or
guaranty thereof or any liability of the Borrower or any guarantor to any
holder of Senior Loan Obligations, or any liability incurred directly or
indirectly in respect thereof, or otherwise amend, renew, exchange, extend,
modify, increase or supplement in any manner Senior Loan Obligations or any
instrument evidencing or guaranteeing or securing the same or any agreement
under which Senior Loan Obligations is outstanding;
(ii) sell, exchange, release, surrender, realize upon, enforce
or otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing Senior Loan Obligations or any liability of
the Borrower or any guarantor to such holder, or any liability incurred
directly or indirectly in respect thereof;
(iii) settle or compromise any Senior Loan Obligations or any
security therefor or any liability incurred directly or indirectly in
respect thereof and apply any sums by whomsoever paid and however realized
to the Senior Loan Obligations in any manner or order; and
(iv) fail to take or to record or otherwise perfect, for any
reason or for no reason, any lien or security interest securing Senior Loan
Obligations by whomsoever granted, exercise or delay in or refrain from
exercising any right or remedy against the Borrower or any security or any
guarantor or any other Person, elect any remedy and otherwise deal freely
with the Borrower and any security and any guarantor of the Senior Loan
Obligations or any liability of the Borrower or any guarantor to any holder
of Senior Loan Obligations or any liability incurred directly or indirectly
in respect thereof.
(e) Additional Documentation.
(i) The Lender by its acceptance hereof agrees that it takes
this Agreement as an obligation subordinated to Senior Loan Obligations and
agrees to execute any additional documentation that may be necessary, in
the reasonable opinion of the holder of any Senior Loan Obligations, to
evidence the
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subordination between the Lender and the holders of Senior Loan Obligations
as provided in this Section 8.
(ii) The Senior Agent is hereby authorized, and shall have the
right (without any duty) to take such action as may be necessary or
appropriate to effectuate the subordination provided for in this Section 8
including, without limitation, the timely filing of a claim or proof of
debt for the unpaid balance of the Subordinated Indebtedness in the form
required in any Proceeding.
(f) Agreements of Lender. The Lender for itself and its successors
and assigns, agrees that it will not, except as permitted under the Senior
Credit Agreement, without the prior written consent of a majority of the holders
of the Senior Loan Obligations, (i) modify or amend this Agreement except to the
extent not prohibited by the Senior Credit Agreement or the Subordination
Agreement, (ii) cancel, waive, forgive, transfer or assign or subordinate the
Subordinated Indebtedness to any other Indebtedness of the Borrower or (iii) so
long as any Senior Loan Obligations is outstanding, (A) initiate any Proceeding
involving the Borrower or any other Loan Party pursuant to which its is sought
to adjudicate the Borrower or any other Loan Party bankrupt or insolvent or (B)
exercise or assert any right or remedy, by suit or otherwise, against the
Borrower or any other Loan Party in respect of the Subordinated Indebtedness
except as expressly permitted under the Senior Credit Agreement (provided that
nothing herein shall prevent the Lender from filing a claim or statement of
interest with respect to the Obligations in any Proceeding).
Article IX
EVENTS OF DEFAULT
Section 9.1 Events of Default. Each of the following events shall be
an Event of Default:
(a) Failure to Repay Principal. The Borrower shall fail to pay any
principal of any Loan when the same becomes due and payable; or
(b) Failure to Pay Interest. The Borrower shall fail to pay any
interest on any Loan, any fee under any of the Loan Documents or any other
Obligation (other than those subject to Section 9.1(a) (Failure to Repay
Principal)) and such non-payment continues for a period of five (5) Business
Days after the due date therefor; or
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(c) Borrowing Base Deficiency. A Borrowing Base Deficiency shall
exist and be continuing for a period of more than 30 days (or such other longer
grace period as is provided for such failure in the Indenture), after a
Responsible Officer of the Borrower first becomes aware of such Borrowing Base
Deficiency; or
(d) Representation and Warranties. Any representation or warranty
made or deemed made by Borrower in any Loan Document in connection with any Loan
Document shall prove to have been incorrect in any material respect when made or
deemed made; or
(e) Covenants. Borrower shall fail to perform or observe (i) any
term, covenant or agreement contained in Section 5.1 (Financial Statements) or
Article VII (Negative Covenants), or (ii) any other term, covenant or agreement
contained in this Agreement or in any other Loan Document if such failure under
this clause (ii) shall remain unremedied for ten (10) days after the earlier of
the date on which (A) a Responsible Officer of the Borrower becomes aware of
such failure or (B) written notice thereof shall have been given to the Borrower
by the Lender; or
(f) Unenforceability of Collateral Documents. Any material provision
of any Collateral Document or any Subordinated Guaranty after delivery thereof
pursuant to this Agreement or any other Loan Document shall for any reason cease
to be valid and binding, or enforceable against, on Borrower shall so state in
writing; or
(g) Unenforceability of Liens. Any Collateral Document shall for any
reason cease to create a valid Lien on any of the Collateral purported to be
created thereby or, except as permitted by any Loan Document, such a Lien shall
cease to be a perfected Lien or Borrower shall state in writing any of the
foregoing; or
(h) Default Under Other Indebtedness. (i) The Borrower or any of its
Material Subsidiaries shall fail to make any payment on any Indebtedness (other
than Indebtedness incurred hereunder) of the Borrower or such Material
Subsidiary (or any Guaranty Obligation in respect of Indebtedness of any other
Person) having a principal amount equal to or greater than ten million Dollars
($10,000,000), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), (ii) any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Indebtedness, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Indebtedness or (iii) any such Indebtedness shall become or be declared to
be
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due and payable, or required to be prepaid or repurchased (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof;
or
(i) Bankruptcy, Etc. (i) The Borrower or any of its Material
Subsidiaries shall generally not pay its debts as such debts become due, shall
admit in writing its inability to pay its debts generally, shall make a general
assignment for the benefit of creditors (ii) any Legal Proceeding shall be
instituted by or against the Borrower or any of its Material Subsidiaries
seeking (A) to adjudicate it bankrupt or insolvent, (B) liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of it
or its debts under any Requirement of Law relating to bankruptcy, insolvency or
reorganization or relief of debtors or (C) the entry of an order for relief or
the appointment of a custodian, receiver, trustee or other similar official for
it or for any substantial part of its property and, in the case of any such
Legal Proceeding instituted against the Borrower or any of its Material
Subsidiaries (but not instituted by the Borrower or such Material Subsidiary),
either such Legal Proceeding shall remain undismissed or unstayed for a period
of thirty (30) days or any of the actions sought in such Legal Proceeding shall
occur or (iii) the Borrower or any of its Material Subsidiaries shall take any
corporate action to authorize any of the actions set forth in subsection (i) or
(ii) above; or
(j) Orders. One or more Orders shall have been entered against the
Borrower or any of its Material Subsidiaries (involving, in the case of Orders
providing solely for the payment of a sum of money, an amount in excess of ten
million Dollars ($10,000,000) in the aggregate to the extent not fully covered
by insurance) if (i) enforcement proceedings shall not have been commenced by
any creditor upon any such Order or (ii) there shall be any period of thirty
(30) consecutive days during which a stay of enforcement of any such Order, by
reason of a pending appeal or otherwise, shall not be in effect; or
(k) Event of Default. There shall occur an "Event of Default" within
the meaning specified in Article IX of the Senior Credit Agreement; or
(l) Change of Control. There shall occur any Change of Control; or
(m) ERISA Event. An ERISA Event shall occur and the amount of all
liabilities and deficiencies, whether or not assessed, and all waiver requests
resulting therefrom, exceeds ten million Dollars ($10,000,000) in the aggregate;
or
(n) Environmental Law Violation. The Borrower or any of its Material
Subsidiaries shall have entered into any Contractual Obligation with any
70
Governmental Authority or any Order shall have been entered against the Borrower
or any of its Material Subsidiaries, in either case based on, arising from the
violation of or pursuant to, any Environmental Law or the generation, storage,
transportation, treatment, disposal or Release of any Contaminant and, in
connection with all the foregoing, Borrower and its Material Subsidiaries are
likely to incur Environmental Liabilities and Costs in excess of ten million
Dollars ($10,000,000) in the aggregate.
Section 9.2 Remedies. Subject to the provisions of the Subordination
Agreement and Article VIII hereof, during the continuance of any Event of
Default, the Lender (i) may, by notice to the Borrower, declare the obligation
of Lender to make Loans to be terminated, whereupon the same shall forthwith
terminate and (ii) may, by notice to the Borrower, declare the Loans, all
interest thereon and all other amounts and Obligations payable under this
Agreement to be forthwith due and payable, whereupon the Loans, all such
interest and all such amounts and Obligations shall become and be forthwith due
and payable without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower; provided, however,
that upon the occurrence of the Event of Default specified in Section 9.1(i)
(Bankruptcy, Etc.), (A) the obligation of Lender to make Loans shall
automatically be terminated and (B) the Loans, all interest thereon and all
other amounts and Obligations payable under this Agreement shall automatically
become and be due and payable without presentment, demand, protest or any notice
of any kind, all of which are hereby expressly waived by the Borrower . In
addition to the remedies set forth above, but still subject to the provisions of
the Subordination Agreement and Article VIII hereof, the Lender may exercise any
remedies provided for by the Collateral Documents in accordance with the terms
thereof or any other remedies provided by applicable Requirements of Law.
Notwithstanding anything to the contrary in this Article IX, to the
extent the Borrower is prohibited pursuant to Section 8.5(d) of the Senior
Credit Agreement or Section 8.1(b)(i) hereof from paying any amount (other than
on the Scheduled Termination Date) otherwise due and payable under any Loan
Document, such failure to pay shall not constitute an Event of Default hereunder
until the earlier to occur of (i) three Business Days following the day such
prohibition ceases to exist and (ii) the Scheduled Termination Date. Interest
shall accrue on any such amounts, the payment of which is so prohibited, from
the date such amounts are otherwise due and payable hereunder to the date of
payment at the rate which is two percent (2%) per annum in excess of the rate of
interest otherwise applicable to such Obligations from time to time, or if no
rate is theretofore applicable, at the rate which is two percent (2%) per annum
above Base Rate.
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Article X
MISCELLANEOUS
Section 10.1 Amendments, Waivers, Etc. No amendment or waiver of any
provision of this Agreement or any other Loan Document nor consent to any
departure by Borrower therefrom shall in any event be effective unless the same
shall be in writing and signed by the Lender and then any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. Following notification by the Senior Agent that a waiver or
amendment is intended to be made to any of the conditions precedent,
representations, warranties or covenants or events of defaults (or to
definitions therein) in the Senior Credit Agreement, the Lender and Borrower
shall enter into a waiver or, as applicable, an amendment to this Agreement to
effect such waiver or amendments to the corresponding conditions precedent,
representations and warranties, affirmative covenants and negative covenants or
events of defaults (or to definitions therein) of this Agreement. Such waiver or
amendment shall become effective contemporaneously with the waiver under or
amendment of the Senior Credit Agreement. As consideration for any such waiver
or amendment, the Lender shall be entitled to receive from the Borrower, prior
to the effectiveness of any such waiver or amendment, an amount equal to that
portion of the aggregate consideration paid or to be paid to the lenders and
agents under the Senior Credit Agreement in respect of such waiver or amendment
thereunder, which at such time is equal to the proportion that the Commitment
hereunder bears the aggregate commitments under the Senior Credit Agreement. In
the event that the Lender fails to enter into any such waiver or amendment which
it is obligated to execute pursuant to this Section 10.1, the Lender shall not
be entitled to rely upon any provisions of this Agreement which should have been
so amended as giving rise to a Default or Event of Default hereunder.
Section 10.2 Assignment.
Lender may sell, transfer, negotiate or assign to one or more Eligible
Assignees (of which it has given prior written notice to the Borrower and Senior
Agent) all or a portion of its rights and obligations hereunder (including all
of its rights and obligations with respect to the Loans). Upon the assignment by
Lender to an Eligible Assignee, such Eligible Assignee shall thereupon succeed
to, and become vested with, all of the rights, powers, privileges and duties of
the Lender under this Agreement and the other Loan Documents and expressly
subject to the subordination provisions therein. After any such assignment
hereunder, the provisions of Article X shall inure to the benefit of such
assigning Lender, its Affiliates, and their respective directors, officers,
72
employees, agents and advisors as to any action taken, or omitted to be taken,
by such assigning Lender while such retiring assigning Lender was Lender under
this Agreement and the other Loan Documents. Any such assignment to an Eligible
Assignee, shall only become effective immediately following such Eligible
Assignee's agreement in writing delivered to the Senior Agent to be bound by the
terms of this Agreement and the Subordination Agreement. Upon an assignment by
the Lender of all its rights and obligations hereunder, the Lender may transfer
all items of Collateral held under the Collateral Documents and execute and
deliver to such Eligible Assignee such amendments to financing statements, and
take such other actions as may be necessary or appropriate in connection with
the assignment to such Eligible Assignee of the security interests created under
the Collateral Documents.
Section 10.3 Costs; Expenses; Indemnities.
(a) Reimbursement of Costs and Expenses. The Borrower agrees to pay
on demand (i) all costs and expenses (including without limitation attorney
fees) of the Lender in connection with the preparation, execution, delivery,
administration, modification and amendment of this Agreement, each of the other
Loan Documents and each of the other documents to be delivered hereunder and
thereunder, including all filings and recording fees, and all audit costs and
expenses, (ii) all costs and expenses (including without limitation attorney
fees) of the Lender in connection with the repayment, financing or re-financing
of any Borrowings hereunder, including without limitation, any fees or break
costs in connection therewith, and (iii) all costs and expenses (including
without limitation attorney fees) of the Lender in connection with the
restructuring or enforcement (whether through negotiation, legal proceedings or
otherwise) of this Agreement and the other Loan Documents.
(b) Indemnification Against Third-Party Claims. The Borrower agrees
to indemnify and hold harmless the Lender and its Affiliates, and the directors,
officers, employees, Lenders, attorneys, consultants and advisors of or to any
of the foregoing (including those retained in connection with the satisfaction
or attempted satisfaction of any of the conditions set forth in Article III
(Conditions Precedent to the Effectiveness of this Agreement and to Loans) (each
of the foregoing being an "Indemnitee") from and against any and all claims,
damages, liabilities, obligations, losses, penalties, actions, judgments, suits,
costs, disbursements and expenses of any kind or nature (including fees and
disbursements of counsel to any such Indemnitee) which may be imposed on,
incurred by or asserted against any such Indemnitee in connection with or
arising out of any Legal Proceeding, whether or not any such Indemnitee is a
party thereto, whether direct, indirect or consequential and whether based on
any Requirement of Law or a Contractual Obligation or otherwise, in any
73
manner relating to or arising out of this Agreement, any other Loan Document,
any Obligation, any Related Document, or any act, event or transaction related
or attendant to any thereof, the financing or re-financing by the Lender of
Borrowings hereunder, the use or intended use of the proceeds of the Loans or in
connection with any investigation of any potential matter covered hereby, but
---
not otherwise (collectively, the "Indemnified Matters"); provided, however, that
-------------
the Borrower shall not have any obligation under this Section 10.3(b) to an
Indemnitee with respect to any Indemnified Matter caused by or resulting from
(i) the gross negligence or willful misconduct of that Indemnitee, as determined
by a court of competent jurisdiction in a final non-appealable judgment or order
or (ii) such Indemnitee being an Affiliate of the Borrower. Without limiting the
foregoing, Indemnified Matters include, without limitation, (i) all
Environmental Liabilities and Costs arising from or connected with the past,
present or future operations of the Borrower or any of its Subsidiaries
involving any property subject to a Collateral Document or damage to real or
personal property or natural resources or harm or injury alleged to have
resulted from any Release of Contaminants on, upon or into such property or any
contiguous real estate; (ii) any costs or liabilities incurred in connection
with any Remedial Action concerning the Borrower or any of its Subsidiaries;
(iii) any costs or liabilities incurred in connection with any Environmental
Lien; (iv) any costs or liabilities incurred in connection with any other matter
under any Environmental Law, including CERCLA and applicable state property
transfer laws, whether, with respect to any of the foregoing, such Indemnitee is
a mortgagee pursuant to any leasehold mortgage, a mortgagee in possession, the
successor in interest to the Borrower or any of its Subsidiaries or the owner,
lessee or operator of any property of the Borrower or any of its Subsidiaries by
virtue of foreclosure, except, with respect to any of the foregoing referred to
in clauses (i), (ii), (iii) and (iv), to the extent incurred following (A)
foreclosure by the Lender, Lender having become the successor in interest to the
Borrower or any of its Subsidiaries and (B) attributable solely to acts of the
Lender, or any agent on behalf of the Lender.
(c) Eurodollar Loans. If Lender receives any payment of principal of
any Eurodollar Rate Loan other than on the last day of an Interest Period
relating to such Loan, whether as a result of any payment made by the Borrower
or acceleration of the maturity of the Loans pursuant to Section 9.2 (Remedies)
or for any other reason, the Borrower shall, upon demand by pay to the Lender
all amounts required to compensate Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such payment or
conversion, including any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by Lender to
fund or maintain such Loan.
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(d) Reimbursement of Brokers' Fees. The Borrower shall indemnify the
Lender, and hold the Lender harmless from and against, any and all claims for
brokerage commissions, fees and other compensation made against the Lender for
any broker, finder or consultant with respect to any agreement, arrangement or
understanding made by or on behalf of Borrower or any of its Material
Subsidiaries in connection with the transactions contemplated by this Agreement.
(e) Notification of Borrower. The Lender agrees that, in the event
that any such Legal Proceeding set forth in Section 10.3(b) (Indemnification
Against Third-Party Claims) is asserted or threatened in writing or instituted
against it or any other Indemnitee, or any Remedial Action is requested of it,
any of its Affiliates or any of their respective directors, officers, employees,
agents and advisors, for which any Indemnitee may desire indemnity or defense
hereunder, such Indemnitee shall promptly notify the Borrower in writing.
(f) Borrower's Obligation to Defend. The Borrower, at the request of
any Indemnitee, shall have the obligation to defend against such Legal
Proceeding or requested Remedial Action and the Borrower, in any event, may
participate in the defense thereof with legal counsel of the Borrower's choice.
In the event that such Indemnitee requests the Borrower to defend against such
Legal Proceeding or requested Remedial Action, the Borrower shall promptly do so
and such Indemnitee shall have the right to have legal counsel of its choice
participate in such defense. No action taken by legal counsel chosen by such
Indemnitee in defending against any such Legal Proceeding or requested Remedial
Action, shall vitiate or in any way impair the Borrower's obligation and duty
hereunder to indemnify and hold harmless such Indemnitee.
(g) Survival of Indemnification Obligation. The Borrower agrees that
any indemnification or other protection provided to any Indemnitee pursuant to
this Agreement (including pursuant to this Section 10.3) or any other Loan
Document shall (i) survive payment in full of the Obligations and (ii) inure to
the benefit of any Person who was at any time an Indemnitee under this Agreement
or any other Loan Document.
(h) Limitation of Liability. The Borrower agrees that no Indemnitee
shall have any liability (whether direct or indirect, based on any Requirement
of Law, Contractual Obligation or otherwise) to Borrower or any of their
respective Subsidiaries or any of their equity holders or creditors for, in
relation to, or in connection with the transactions contemplated hereby and in
the other Loan Documents and Related Documents, except to the extent such
liability is found in a final judgment by a court of competent jurisdiction to
have resulted from such Indemnitee's gross negligence or
75
willful misconduct. In no event, however, shall any Indemnified Party be liable
on any theory of liability for any special, indirect, consequential or punitive
damages and the Borrower hereby waives, releases and agrees (for itself and on
behalf of its Subsidiaries) not to xxx upon any such claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.
Section 10.4 Third Party Reliance. The parties hereto understand and
agree that the provisions of Article VIII and Sections 10.2 and 10.8 are for the
benefit of the Senior Agent and the Lenders and Issuers (as defined therein)
from time to time party to the Senior Credit Agreement (in addition to the
parties hereto), create independent rights thereof and may be enforced
independently thereby.
Section 10.5 Independence of Representations and Warranties. The
parties hereto intend that each representation, warranty and covenant contained
herein shall have independent significance. If the Borrower has breached any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) that the
Borrower has not breached shall not detract from or mitigate the fact that such
party is in breach of the first representation, warranty or covenant.
Section 10.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York.
Section 10.7 Submission to Jurisdiction; Consent to Service of
Process.
(a) Submission to Jurisdiction. The parties hereto irrevocably
submit, for themselves and in respect of their property, to the non-exclusive
jurisdiction of any federal or state court located within the Borough of
Manhattan, in the City and State of New York over any dispute arising out of, in
connection with, or relating to this Agreement, any Loan Document or any of the
transactions contemplated hereby and each party hereby irrevocably agrees that
all Legal Proceedings related to such dispute may be heard and determined in
such courts. The parties hereto irrevocably waive, to the fullest extent
permitted by all applicable Requirements of Law, any objection which they may
now or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such dispute.
Each of the parties hereto agrees that any Order in any such dispute may be
enforced in other jurisdictions by suit on the judgment, other Legal Proceedings
or in any other manner provided by all applicable Requirements of Law.
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(b) Consent to Service of Process. The Borrower irrevocably consents
to the service of any and all process in any such action or proceeding by the
mailing (by registered or certified mail, postage prepaid) of a copy of such
process to the Borrower at its address specified in Section 10.8 (Notices,
Etc.). The Borrower agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment, other Legal Proceedings or in any other manner provided by
any Requirement of Law.
(c) Jurisdiction Non-Exclusive. Nothing contained in this Section
10.7 shall affect the right of the Lender or Lender to serve process in any
other manner permitted by applicable Requirements of Law or commence Legal
Proceedings or otherwise proceed against the Borrower or any other Loan Party in
any other jurisdiction.
(d) Currency Conversion. If for the purposes of obtaining judgment in
any court it is necessary to convert a sum due hereunder in Dollars into another
currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Lender could purchase Dollars with
such other currency at the spot rate of exchange quoted by the Lender at 11:00
A.M. (New York time) on the Business Day preceding that on which final judgment
is given, for the purchase of Dollars, for delivery two Business Days
thereafter.
(e) Waiver of Trial By Jury. Each of the Lender, the Lenders, the
Issuers and Borrower hereby irrevocably waives trial by jury in any Legal
proceeding brought by another party hereto involving, directly or indirectly,
any matter in any way arising out of, related to or connected with this
Agreement, any other Loan Document or the transactions contemplated hereby.
Section 10.8 Notices, Etc. All notices and other communications
provided for in this Agreement shall be in writing (including telecopy) and
mailed, telecopied or delivered by hand, if to the Borrower, at its address at
0000 Xxxxxx Xxxxx Xxxxxxx; Xxxxxxxxx, XX 00000-0000 (telecopy number:
(000) 000-0000) (telephone number: (000) 000-0000), Attention: Xx. Xxxxxxx X.
XxXxxxxxx, with copy to Xxxxxx X. Xxxxxxxx, Esq. at the same address, and if to
the Lender at: 000 Xxxx Xxxxxx, 00/xx/ Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xx. Xxxxxx Xxxxxxxxx. All notices required to be delivered pursuant
to this Agreement shall be copied to Citicorp USA Inc., as Senior Agent, 000
Xxxxxxxxx Xxxxxx, 00/xx/ Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xx. Xxxxx
X. Xxxxxx.
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Section 10.9 No Waiver; Remedies. No failure on the part of Lender
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided under any Requirement of Law.
Section 10.10 Execution in Counterparts; Effectiveness; Assignments
by the Borrower. This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed an original, and all of which
taken together shall constitute one and the same agreement. This Agreement shall
become effective when it shall have been executed by the Borrower and Lender and
when each of the conditions set forth in Section 3.1 (Conditions Precedent to
the Effectiveness of this Agreement) shall have been satisfied (or satisfaction
of such conditions shall have been duly waived), and thereafter this Agreement
shall be binding upon and inure to the benefit of the Borrower, the Lender and
their respective successors and permitted assigns. The Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of Lender.
Section 10.11 Entire Agreement. This Agreement, together with all of
the other Loan Documents and all certificates and documents delivered hereunder
or thereunder, embodies the entire agreement of the parties and supersedes all
prior Contractual Obligations relating to the subject matter hereof (and any
such prior Contractual Obligations are hereby terminated and of no further force
and effect).
Section 10.12 Further Assurances. The Borrower and the Lender each
agrees to execute and deliver such other documents or agreements and to take
such other action as may be reasonably necessary or desirable for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.
[Signature Page to Follow]
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In Witness Whereof, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
NATIONAL STEEL CORPORATION
as Borrower
By:_________________________________
Title:
NUF LLC
as Lender
By:_________________________________
Title:
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