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EXHIBIT 10.3
LOAN AGREEMENT
AMONG
METAL MANAGEMENT, INC.,
a Delaware corporation,
HOUTEX METALS COMPANY, INC.,
a Texas corporation
AND
LASALLE NATIONAL BANK,
a national banking association
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TABLE OF CONTENTS
1. DEFINITIONS AND DETERMINATIONS..............................1
1.1 Definitions........................................1
1.1 Time Periods.......................................9
1.2 Accounting Terms...................................9
1.3 References........................................10
1.4 Lender's Discretion...............................10
1.5 Borrower's Knowledge..............................10
2. LOANS AND TERMS OF PAYMENT.................................10
2.1 Revolving Loan....................................10
2.1.1 Amount..........................10
2.1.2 Procedure for Borrowing.........10
2.1.3 Interest Payments...............11
2.1.4 Principal Payment 11
2.1.5 Revolver Note...................11
2.1.6 Use of Proceeds of Revolver.....11
2.1.7 Mandatory Prepayment............11
2.2 Term Loan.........................................11
2.2.1 Amount of Term Loan.............11
2.2.3 Term Note.......................11
2.3 General Interest Provisions.......................12
2.3.1 Interest Rate...................12
2.3.2 Interest Computation............12
2.3.3 Maximum Interest................12
2.4 Prepayments.......................................12
2.4.1 No Premiums.....................12
2.4.2 Payment of Additional Sums......12
2.5 Default Rate......................................12
2.6 Method of Payment; Good Funds.....................12
2.7 Extension Right...................................13
2.8 Loan Fee..........................................13
CONDITIONS OF FUNDING...............................................13
3.1 Title to Collateral...............................13
3.2 Delivery of Instruments...........................14
3.3 Lender's Security Interests.......................14
3.4 Proceedings and Documents.........................14
3.5 Representations and Warranties....................14
3.6 Performance; No Default...........................14
3.7 Material Adverse Effect...........................14
3.8 Use of Assets.....................................14
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4. REPRESENTATIONS AND WARRANTIES............................................................................ 15
4.1 MMI.............................................................................................. 15
4.2 HouTex........................................................................................... 15
4.3 Authority........................................................................................ 15
4.4 Necessary Assets................................................................................. 15
4.5 Binding Agreements............................................................................... 15
4.6 Business and Properties of the Borrowers......................................................... 15
4.6.1 Business Activity.............................................................. 15
4.6.2 Operating Agreements........................................................... 16
4.6.3 Business Sites................................................................. 16
4.6.4 Operation and Maintenance of Equipment......................................... 16
4.7 Title to Property; Liens......................................................................... 16
4.9 Financial Statements............................................................................. 16
4.10 Litigation....................................................................................... 16
4.11 Conflicting Agreements........................................................................... 17
4.12 Taxes of Borrowers............................................................................... 17
4.13 Compliance with Applicable Laws.................................................................. 17
4.14 Patents, Trademarks, Franchises, Agreements...................................................... 17
4.15 Environmental Matters............................................................................ 17
4.16 Application of Certain Laws and Regulations...................................................... 17
4.16.1 Investment Company Act......................................................... 17
4.16.2 Holding Company Act............................................................ 17
4.16.3 Regulations as to Borrowing.................................................... 18
4.17 Margin Regulations............................................................................... 18
4.18 No Misrepresentation............................................................................. 18
4.19 Burdensome Obligations........................................................................... 18
4.20 Employee Benefit Plans........................................................................... 18
4.21 Employee Matters................................................................................. 19
4.22 Eligible Inventory............................................................................... 19
4.23 Eligible Accounts................................................................................ 19
4.24 Bailment Relationships. ........................................................................ 20
4.25 Owned and Leased Property........................................................................ 20
5. AFFIRMATIVE COVENANTS..................................................................................... 20
5.1 Legal Existence; Good Standing................................................................... 20
5.2 Inspection of Books and Records.................................................................. 20
5.3 Inspection of Collateral......................................................................... 20
5.4 Financial Statements and Other Information....................................................... 20
5.4.1 Annual Statements.............................................................. 21
5.4.2 Monthly Statements............................................................. 21
5.4.3 Notice of Defaults; Loss....................................................... 21
5.4.4 Notice of Suits, Adverse Events................................................ 21
5.4.5 Reports to Security Holders, Creditors and Governmental Bodies................. 22
5.4.6 Other Information.............................................................. 22
5.5 Reports to Governmental Bodies and Other Persons................................................. 22
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5.6 Borrowing Base Certificate; Accounts Aging Report........22
5.7 Shareholders.............................................22
5.8 Maintenance of Licenses, Franchises, Agreements..........22
5.9 Insurance................................................23
5.10 Future Leases............................................23
5.11 Environmental Matters....................................23
6. NEGATIVE COVENANTS................................................23
6.1 Liens....................................................23
6.2 Distributions............................................23
6.3 Amendments of Agreements.................................24
6.4 Fundamental Business Changes.............................24
6.5 Sale or Transfer of Assets...............................24
6.6 Payments on Certain Indebtedness.........................24
6.7 Amendment of Corporate Documents.........................24
6.8 Compliance with ERISA....................................24
7. DEFAULT AND REMEDIES..............................................24
7.1 Events of Default........................................24
7.1.1 Default in Payment.....................24
7.1.2 Breach of Covenants....................25
7.1.3 Breach of Representation...............25
7.1.4 Acceleration of any Indebtedness.......25
7.1.5 Bankruptcy.............................25
7.1.6 Judgments..............................26
7.1.7 Impairment of Operating Agreements.....26
7.2 Events of Default........................................26
7.2.1 Default in Payment.....................26
7.2.2 Breach of Covenants....................26
7.2.3 Breach of Representation...............27
7.2.4 Acceleration of any Indebtedness.......27
7.2.5 Bankruptcy.............................27
7.2.6 Judgments..............................28
7.2.7 Impairment of Operating Agreements.....28
7.3 Acceleration of Borrowers' Obligations Owing by MMI......28
7.4 Acceleration of Borrowers' Obligations Owing by HouTex...29
7.5 Remedies on Default......................................29
7.6 Application of Funds to MMI Obligations..................29
7.6.1 Expenses...............................29
7.6.2 Borrowers' Obligations.................29
7.6.3 Surplus................................29
7.7 Application of Funds to HouTex Obligations...............29
7.7.1 Expenses...............................30
7.7.2 Borrowers' Obligations.................30
7.7.3 Surplus................................30
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8. CLOSING................................................................................................... 30
9. EXPENSES AND INDEMNITY.................................................................................... 30
9.1 Attorneys' Fees and Other Fees and Expenses...................................................... 30
9.1.1 Fees and Expenses for Preparation of Loan Documents............................ 30
9.1.2 Fees and Expenses in Enforcement of Rights or Defense of Loan Documents........ 30
9.2 Indemnity...................................................................... 31
9.2.1 Brokerage Fees................................................................. 31
9.2.2 Securities Violations.......................................................... 31
9.2.3 Operation of Collateral; Joint Venturers....................................... 31
10. MISCELLANEOUS............................................................................................. 31
10.1 Notices.......................................................................................... 31
10.2 Survival of Loan Agreement....................................................................... 33
10.3 Further Assurance................................................................................ 33
10.4 Taxes and Fees................................................................................... 33
10.5 Severability..................................................................................... 33
10.6 Waiver........................................................................................... 33
10.7 Modification of Loan Documents................................................................... 33
10.8 Captions......................................................................................... 33
10.9 Sale of Interest................................................................................. 33
10.10 Successors and Assigns 34
10.11 Remedies Cumulative..................................................................... 34
10.12 Entire Agreement........................................................................ 34
10.13 APPLICABLE LAW.......................................................................... 34
10.14 JURISDICTION AND VENUE.................................................................. 34
10.15 WAIVER OF RIGHT TO JURY TRIAL........................................................... 35
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LOAN AGREEMENT
THIS LOAN AGREEMENT is dated as of January 7, 1997, by and among METAL
MANAGEMENT, INC., a Delaware corporation ("MMI"), HOUTEX METALS COMPANY, INC., a
Texas corporation ("HouTex") (jointly, the "Borrowers"), and LASALLE NATIONAL
BANK, a national banking association ("Lender").
RECITALS:
A. MMI desires to obtain a $6,500,000 term loan from Lender to provide
funds to MMI to acquire certain entities currently engaged in businesses related
to the business of MMI, including HouTex, and to provide MMI with necessary
working capital.
B. HouTex desires to obtain a $3,500,000 revolving line of credit from
Lender to refinance certain existing indebtedness of HouTex and to provide
HouTex with necessary working capital.
C. Lender is willing to make such loans subject to the terms and
conditions set forth herein.
NOW, THEREFORE, it is agreed as follows:
1. DEFINITIONS AND DETERMINATIONS.
1.1 Definitions. As used in this Loan Agreement and in the other Loan
Documents, unless otherwise expressly indicated herein or therein, the following
terms shall have the following meanings (such meanings to be applicable equally
both to the singular and plural terms defined):
Accountants: any independent certified public accounting firm
selected by the Borrowers and reasonably satisfactory to Lender.
Accounts: all of HouTex's now existing or hereafter arising or
acquired accounts receivable, chattel paper, contract rights, letters
of credit, instruments, documents and all other rights to payment,
however created, including, without limitation, any right to payment
for goods sold or leased or for services rendered, whether arising out
of the sale of inventory or otherwise and whether or not it has been
earned by performance, and any and all notes, drafts, acceptances,
general intangibles and other obligations arising out of or
representing a right to payment, however created.
Affiliate: any Person that directly or indirectly, through one
or more intermediaries, controls or is controlled by or is under common
control with another Person. The term "control" means possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. For the
purposes hereof, any Person which owns
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or controls, directly or indirectly, 10% or more of the voting
securities of another Person shall be deemed to "control" such Person.
Borrowing Base: at any time and subject to change from time to
time in Lender's reasonable discretion following notice to Borrower,
the sum of (i) 90% of Eligible Accounts, plus (ii) 65% of the Value of
Eligible Inventory.
Borrowing Base Certificate: a certificate of HouTex in a form
satisfactory to Lender summarizing the Eligible Accounts and Eligible
Inventory and including (a) a calculation of the Borrowing Base,
together with any supporting documentation requested by Lender, and (b)
a certified statement by the chief financial officer or president of
HouTex that (i) to the best knowledge of such Person, no HouTex Event
of Default or any other event or condition that, with the giving of
notice or the lapse of time, or both, would become a HouTex Event of
Default then exists, and (ii) the representations and warranties
pertaining to HouTex set forth in this Loan Agreement are true and
correct in all material respects as of the date of such certificate as
though remade on such date.
Borrowers' Obligations: (i) any and all Indebtedness due or to
become due, now existing or howsoever arising of the Borrowers to
Lender pursuant to the terms of this Loan Agreement or the other Loan
Documents, and (ii) the performance of the covenants of the Borrowers
contained in this Loan Agreement and the other Loan Documents.
Business Day: any day other than a Saturday, Sunday or other
day on which Lender is closed.
Capital Expenditures: payments which are made by a Borrower
for the lease, purchase, improvement, construction or use of any
property, the value or cost of which under GAAP is required to be
capitalized and appear on such Borrower's balance sheet in the category
of property, plant or equipment, without regard to the manner in which
such payments or the instrument pursuant to which such payments are
made is characterized by such Borrower or any other Person, and shall
include, without limitation, payments for the installment purchase of
property and payments under Capitalized Leases.
Capitalized Leases: any lease of Property, the obligations for
the rental of which are required to be capitalized in accordance with
GAAP.
CERCLA: the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time (42 USC Section
1802 et seq.)
Closing: as defined in Section 8 below.
Closing Date: as defined in Section 8 below.
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Code: the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
Collateral: the Property in which Lender is granted the
Security Interests pursuant to the Loan Documents.
Default: any event or condition that, with the giving of
notice or the lapse of time, or both, would become an Event of Default.
Default Rate: 4% plus the Prime Rate in effect from time to
time.
Default Period: a period of time commencing on the date that
an Event of Default has occurred and ending on the date that such Event
of Default is cured or waived.
Eligible Account: any Account of HouTex that satisfies all of
the following requirements:
(i) such Account has been earned from the final
delivery of goods or services to an account debtor located
within the United States of America;
(ii) such Account is a valid, binding and legally
enforceable obligation of the account debtor obligated thereon
and such account debtor is not (a) an Affiliate of HouTex, (b)
a shareholder, director, officer or employee of HouTex, (c) a
debtor under any proceeding under the United States Bankruptcy
Code or any other comparable bankruptcy or insolvency law, or
(d) an assignor for the benefit of creditors;
(iii) such Account, if owed by the United States of
America or any department, agency or instrumentality thereof,
has been validly assigned by HouTex as collateral security to
Lender for the benefit of Lender in full compliance with the
Assignment of Claims Act of 1940, as amended, and with all
other laws, rules, and contractual provisions which may be
applicable to the assignment of such Account;
(iv) such Account is assignable and, if evidenced by
an instrument or chattel paper, the same has been endorsed and
delivered to Lender;
(v) such Account is subject to a perfected, first
priority Lien in favor of Lender and is free and clear of any
other Lien other than Permitted Liens;
(vi) such Account is net of any credit or allowance
given by HouTex to the account debtor obligated thereon and
such Account is not subject to any asserted offset,
counterclaim or other defense with respect thereto which has
not been waived or released by the account debtor or dismissed
or denied by a court having jurisdiction over such asserted
offset, counterclaim or other defense;
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(vii) such Account does not arise from a sale to an
account debtor on a xxxx-and-hold, guaranteed sale,
sale-or-return, sale-on-approval, consignment or any other
repurchase or return basis as to which such account debtor's
rights to such repurchase or return have not expired or been
waived;
(viii) such Account is evidenced by an invoice or
other comparable record dated not later than five Business
Days after the date of completion of services or shipment of
the goods shipped pursuant to such invoice or other record;
(ix) such Account is not unpaid in whole or in part
more than 90 days after its original invoice date;
(x) such Account is not owing by an account debtor
which has currently failed to pay in full 25% or more of the
other Accounts owing by such account debtor to HouTex within
90 days after the due date of such other Accounts;
(xi) such Account is payable in U.S. dollars; and
(xii) such Account has not otherwise been deemed
ineligible by Lender in its reasonable discretion.
An Account which is at any time an Eligible Account, but which
subsequently fails to meet any of the foregoing requirements, shall, at
the option of Lender, cease to be an Eligible Account.
Eligible Inventory: any Inventory that satisfies all of the
following requirements:
(i) such Inventory does not constitute an Eligible
Account;
(ii) such Inventory has not been acquired by HouTex
on consignment;
(iii) if such Inventory has been placed out on
consignment by HouTex, then not less than 30 days prior to
placing such Inventory on consignment, HouTex shall have: (A)
obtained Lender's written consent to the identity of the
consignee, the location of the consignment, and the form of
agreement upon which the Inventory was consigned, (B) filed
informational financing statements in such forms and locations
as Lender may require memorializing HouTex's ownership of the
Inventory, and (C) taken all other action reasonably required
by Lender, including marking the Inventory as consigned goods,
in order to evidence HouTex's continuing interest in the
Inventory;
(iv) such Inventory is not obsolete and is of good
and merchantable quality, free from any defects which might
adversely affect the market value thereof;
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(v) such Inventory is located at facilities owned or
leased by HouTex and listed on Exhibit A, or stored in the
warehouses listed on Exhibit A (provided that Lender has
previously received a warehousemen's estoppel letter with
respect to such location, in form and substance acceptable to
Lender), or located or stored at such additional locations as
are hereafter approved in writing by Lender, or such Inventory
is in transit to a customer of HouTex in the ordinary course
of HouTex's business (or has not yet been off loaded from the
barge on which such Inventory has been transported to such
customer);
(vi) such Inventory was not produced in violation of
applicable laws;
(vii) such Inventory is owned by HouTex and is
subject to a perfected, first priority Lien of Lender and is
not subject to any other Lien except Permitted Liens; and
(viii) such Inventory has not otherwise been deemed
ineligible by Lender in its reasonable discretion.
Any Inventory of HouTex which is at any time Eligible Inventory, but
which subsequently fails to meet any of the foregoing requirements,
shall, at Lender's option, cease to be Eligible Inventory.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations issued thereunder, as in effect
from time to time.
Extended Maturity Date: September 30, 1997.
Extension Notice: as defined in Section 2.7 below.
Extension Right: as defined in Section 2.7 below.
Event of Default: any MMI Event of Default or HouTex Event of
Default set forth in Section 7 below.
GAAP: generally accepted accounting principles as in effect
from time to time, which shall include the official interpretations
thereof by the Financial Accounting Standards Board, consistently
applied.
Good Funds: United States Dollars available to Lender in
federal funds at or before 12:00 noon Chicago time on a Business Day.
Governmental Body: any foreign, federal, state, municipal or
other government, or any department, commission, board, bureau, agency,
public authority or instrumentality thereof or any court or arbitrator.
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Guarantees: the MMI Guaranty and the HouTex Guaranty.
Hazardous Materials: any hazardous, toxic or dangerous waste,
substance or material defined as such in or for purposes of CERCLA and
all other applicable federal, state or local laws, ordinances and
regulations referred to in Section 5.11.
HouTex Event of Default: as defined in Section 7.2 below.
HouTex Guaranty: that certain Guaranty of even date herewith
made by the Individual Guarantors and MMI for the benefit of Lender
pursuant to which the Individual Guarantors and MMI have guaranteed the
repayment of the obligations of HouTex under the Loan Documents.
Indebtedness: all liabilities, obligations and reserves,
contingent or otherwise, which, in accordance with GAAP, would be
reflected as a liability on a balance sheet or would be required to be
disclosed in a financial statement, including, without duplication: (i)
all Indebtedness for Borrowed Money, (ii) all obligations under
conditional sales or other title retention agreements, (iii) all
obligations secured by any Lien upon Property, and (iv) all guaranties
and other contingent obligations, including, without limitation,
letters of credit.
Indebtedness for Borrowed Money: without duplication, all
Indebtedness (i) in respect of money borrowed, (ii) evidenced by a
note, debenture or other like written obligation to pay money, (iii) in
respect of rent or hire of Property under Capitalized Leases or for the
deferred purchase price of Property or (iv) in respect of obligations
under conditional sales or other title retention agreements, and all
guaranties of any and all of the foregoing.
Individual Guarantors: Xxxxxx X. Xxxxxx, T. Xxxxxxxx Xxxxxxxx,
Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxxxx Xxxx.
Inventory: all goods which are held by HouTex for sale or
lease, or which are to be furnished under contracts for service, or
which are raw materials, work-in-process, finished goods, materials or
supplies used or usable in connection with the manufacture, processing,
supply, servicing, storing, packing, shipping, advertising, selling,
leasing or furnishing of such goods by HouTex and any constituents
thereof and properly classified as inventory for purposes of GAAP.
Lien: any mortgage, pledge, assignment, lien, charge,
encumbrance or security interest of any kind, or the interest of a
vendor or lessor under any conditional sale agreement, Capitalized
Lease, or other title retention agreement.
Loans: the Revolver and the Term Loan.
Loan Agreement: this Loan Agreement and any amendments or
supplements hereto.
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Loan Documents: this Loan Agreement, the Notes, the Security
Agreement, the Guarantees, appropriate Uniform Commercial Code
Financing Statements, and such other instruments and documents as
Lender may require to evidence and/or perfect the Security Interests.
Material Adverse Effect: any changes or effects pertaining to
a Borrower that individually or in the aggregate are or can reasonably
be expected to be materially adverse to (i) the assets, business,
operations, income, prospects or condition (financial or otherwise) of
such Borrower, or (ii) the ability of such Borrower to fulfill any
covenants or to perform any of its obligations under this Loan
Agreement or the other Loan Documents.
Maturity Date: June 30, 1997.
Maximum Revolving Loan Amount: at any time, the lesser of (i)
the Borrowing Base at such time, or (ii) $3,500,000.
MMI Event of Default: as defined in Section 7.1 below.
MMI Guaranty: that certain Guaranty of even date herewith made
by the Individual Guarantors for the benefit of Lender pursuant to
which the Individual Guarantors have guaranteed the repayment of the
obligations of MMI under the Loan Documents.
Notes: the Revolver Note and the Term Note.
Operating Agreement: any site lease, equipment lease, or other
agreement relating to the operation of the business of a Borrower.
Operating Lease: any lease which, under GAAP, is not required
to be capitalized.
PBGC: the Pension Benefit Guaranty Corporation or any
Governmental Body succeeding to the functions thereof.
Permitted Liens: any of the following Liens:
(i) the Security Interests;
(ii) Liens for taxes or assessments and similar
charges, which either are (A) not delinquent or (B) being
contested diligently and in good faith by appropriate
proceedings, and as to which Borrower has set aside reserves
on its books which are acceptable under GAAP;
(iii) statutory Liens, such as mechanic's
materialman's, warehouseman's, carrier's or other like Liens,
incurred in good faith in the ordinary course of business,
provided that the underlying obligations relating to such
Liens are paid in the
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ordinary course of business or the repayment of such
obligations is otherwise secured in a manner that is
satisfactory to Lender;
(iv) Liens in respect of judgments or awards with
respect to which Borrower, in good faith, diligently shall be
prosecuting an appeal or proceeding for review, so long as
while being so contested such judgments or awards are bonded
or the enforcement or other realization thereon is stayed,
provided that the amount of such bonds outstanding at any one
time shall not exceed $100,000;
(v) pledges or deposits in the aggregate amount not
to exceed $100,000 at any time, other than those made in the
ordinary course of business to secure payment of worker's
compensation, or to participate in any fund in connection with
worker's compensation, unemployment insurance, old-age
pensions or other social security programs; and
(vi) any additional liens against the Collateral
described on Exhibit B attached hereto.
Person: any individual, firm, corporation, business
enterprise, trust, association, joint venture, partnership,
Governmental Body or other entity, whether acting in an individual,
fiduciary or other capacity.
Plan: any employee pension benefit plan subject to Title IV of
ERISA, established or maintained by a Borrower, or any such Plan to
which such Borrower is required to contribute on behalf of any of its
employees.
Prime Rate: the per annum rate of interest announced or
published publicly from time to time by Lender at its principal place
of business in Chicago, Illinois, as its prime or equivalent rate of
interest, which rate is not necessarily the lowest rate of interest
charged by Lender with respect to commercial loans.
Property: all types of real, personal or mixed property and
all types of tangible or intangible property of the Borrowers.
Revolver: the $3,500,000 revolving loan made by Lender to
HouTex pursuant to the terms of Section 2.1 below.
Revolver Advance: any advance of the Revolver made in
accordance with the terms set forth in Section 2.1 below.
Revolver Note: the Note of even date herewith made by HouTex
to the order of Lender in the amount of $3,500,000 to evidence the
Revolver.
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Security Agreement: the Security Agreement of even date
herewith executed by HouTex in favor of Lender.
Security Interests: the Liens in the Collateral granted to
Lender pursuant to the Loan Documents.
Term Loan: the $6,500,000 term loan made by Lender to MMI
pursuant to the terms of Section 2.2 below.
Term Note: the Note of even date herewith made by MMI to the
order of Lender in the amount of $6,500,000 to evidence the Term Loan.
UCC: the Uniform Commercial Code, as adopted in the State of
Illinois, as the same may be amended from time to time.
Value: with respect to any Inventory, the lesser of (i) the
market value of such Inventory, or (ii) HouTex's cost of such Inventory
calculated in accordance with GAAP on a first-in, first-out basis.
1.1 Time Periods. In this Loan Agreement and the other Loan Documents,
in the computation of periods of time from a specified date to a later specified
date (i) the word "from" means "from and including", (ii) the words "to" and
"until" each mean "to, but excluding" and (iii) the words "through", "end of"
and "expiration" each mean "through and including". All references in this Loan
Agreement and the other Loan Documents to "month", "quarter" or "year" shall be
deemed to refer to a calendar month, quarter or year.
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed, all accounting determinations hereunder shall be made
and all financial statements required to be delivered pursuant hereto shall be
prepared in accordance with GAAP.
1.3 References. All references in this Loan Agreement to "Article",
"Section", "subsection", "subparagraph", "clause" or "Exhibit", unless otherwise
indicated, shall be deemed to refer to an Article, Section, subsection,
subparagraph, clause or Exhibit, as applicable, of this Loan Agreement.
1.4 Lender's Discretion. Whenever the terms "satisfactory to Lender",
"determined by Lender", "acceptable to Lender", "Lender shall elect", "Lender
shall request" or similar terms are used in this Loan Agreement, except as
otherwise specifically provided in this Loan Agreement, such terms shall mean
satisfactory to, at the election of, determined by, acceptable to or requested
by, as applicable, Lender in its reasonable discretion.
1.5 Borrower's Knowledge. Any statements, representations or warranties
which are based upon the best knowledge of a Borrower shall be deemed to have
been made after due inquiry by such Borrower with respect to the matter in
question.
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2. LOANS AND TERMS OF PAYMENT.
2.1 Revolving Loan.
2.1.1 Amount. The Revolver is a revolving loan which shall be
made available to HouTex by Lender from time to time on and after the
Closing Date through the day immediately preceding the Maturity Date
(or the Extended Maturity Date, if applicable) in the maximum principal
amount outstanding at any one time equal to the Maximum Revolving Loan
Amount at such time. Subject to the limitations set forth in this
Section 2, from the Closing Date through the day immediately preceding
the Maturity Date (or the Extended Maturity Date, if applicable),
HouTex may reborrow all or any portion of the Revolver that is repaid
or prepaid.
2.1.2 Procedure for Borrowing. Each request for a Revolver
Advance shall be irrevocable and shall be made by HouTex in writing or
by telephone and shall only be acceptable if made by one of the Persons
listed on Exhibit E. If a request for a Revolver Advance is made prior
to 1:00 p.m. Chicago time on a Business Day, then such Revolver Advance
shall be made by Lender on the date of such request. If such request is
made at or after 1:00 p.m. Chicago time, then such Revolver Advance
shall be made by Lender on the next Business Day. Each request for a
Revolver Advance shall be deemed a certification by HouTex that no
HouTex Event of Default or event or circumstance that with the passage
of time, the giving of notice or both would constitute a HouTex Event
of Default then exists or will be created if the requested Revolver
Advance is made. Lender shall not be obligated to make any Revolver
Advance if (i) a HouTex Event of Default or event or circumstance that
with the passage of time, the giving of notice or both would constitute
a HouTex Event of Default then exists or will be created if the
requested Revolver Advance is made, or (ii) after making such Revolver
Advance, the outstanding aggregate principal amount of the Revolver
will exceed the Maximum Revolving Loan Amount.
2.1.3 Interest Payments. Except as otherwise provided herein
or in the Revolver Note, accrued and unpaid interest on the outstanding
principal balance of the Revolver shall be due and payable monthly in
arrears on the first Business Day of each month commencing February
1997.
2.1.4 Principal Payment. The outstanding principal balance of
the Revolver shall be paid in full not later than the Maturity Date (or
the Extended Maturity Date, if applicable).
2.1.5 Revolver Note. HouTex shall execute and deliver to
Lender on the Closing Date the Revolver Note to evidence the Revolver.
2.1.6 Use of Proceeds of Revolver. The proceeds of the
Revolver shall be used by HouTex to refinance certain existing
indebtedness of HouTex and to provide working capital.
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2.1.7 Mandatory Prepayment. If the outstanding principal
balance of the Revolver at any time exceeds the amount of the Maximum
Revolving Loan Amount at such time, HouTex shall immediately repay the
amount of such excess without notice or demand.
2.2 Term Loan.
2.2.1 Amount of Term Loan. Subject to the terms and conditions
set forth in this Loan Agreement, Lender hereby agrees to make to MMI a
term loan on the Closing Date (the "Term Loan") in the principal amount
of $6,500,000.
2.2.2 Principal and Interest Payments; Maturity.
(i) Except as otherwise provided herein or in the
Term Note, accrued and unpaid interest on the outstanding
principal balance of the Term Loan shall be due and payable
monthly in arrears on the first Business Day of each month
commencing February 1997.
(ii) The remaining unpaid principal balance of the
Term Loan, together with all accrued and unpaid interest
thereon, if not sooner declared to be due in accordance with
the provisions of this Loan Agreement, shall be due and
payable in full on the Maturity Date (or the Extended Maturity
Date, if applicable).
2.2.3 Term Note. MMI shall execute and deliver to Lender on
the Closing Date the Term Note to evidence the Term Loan.
2.3 General Interest Provisions.
2.3.1 Interest Rate. The principal balance of the Loans
outstanding from time to time shall bear interest at the per annum
rates set forth in the Notes.
2.3.2 Interest Computation. Interest shall be (a) computed on
the basis of a year consisting of 360 days and (b) payable for the
actual number of days during the period for which interest is being
charged.
2.3.3 Maximum Interest. Notwithstanding any provision to the
contrary contained herein or in any of the other Loan Documents, Lender
shall not collect a rate of interest on any obligation or liability due
and owing by the Borrowers to Lender in excess of the maximum contract
rate of interest permitted by applicable law. Lender and the Borrowers
have agreed that the interest laws of the State of Illinois shall
govern the relationship between them, but in the event of a final
adjudication to the contrary, the Borrowers shall be obligated to pay
to Lender only such interest as then shall be permitted by the laws of
the state found to govern the contract relationship between Lender and
the Borrowers. All interest found in excess of that rate of interest
allowed and collected by Lender shall be applied to the
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principal balance of the Loans in such manner as to prevent the payment
and collection of interest in excess of the rate permitted by
applicable law.
2.4 Prepayments.
2.4.1 No Premiums. Except as otherwise provided in the Term
Note, all or a portion of the principal balance(s) of the Loans may be
prepaid at any time and from time to time without premium or penalty.
2.4.2 Payment of Additional Sums. All prepayments of the Loans
pursuant to this Section shall be accompanied by the payment of any
accrued and unpaid interest on the portion of the principal balance
being prepaid to the date on which Lender is in receipt of Good Funds,
and any other sums which are due and payable pursuant to the terms of
the Loan Documents.
2.5 Default Rate. During a Default Period that arises due to an MMI
Event of Default, the aggregate outstanding principal balance of the Term Loan
shall bear interest at the Default Rate. During a Default Period that arises due
to a HouTex Event of Default, the aggregate outstanding principal balance of the
Revolver shall bear interest at the Default Rate.
2.6 Method of Payment; Good Funds. All payments to be made by the
Borrowers pursuant to the Loan Documents shall be delivered to Lender at 000
Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, or to such other address as Lender
shall notify the Borrowers. Payment shall not be deemed to have been received by
Lender until Lender is in receipt of Good Funds.
2.7 Extension Right. MMI and HouTex shall each have the right (the
"Extension Right") to extend the terms of the MMI Loan and the HouTex Loan,
respectively, for one additional three month period commencing on the Maturity
Date and ending on the Extended Maturity Date, subject to the following terms,
provisions and conditions:
(i) MMI and/or HouTex, as applicable, shall give written
notice (the "Extension Notice") to Lender of its or their election to
exercise the Extension Right no later than May 31, 1997;
(ii) Concurrently with the delivery of an Extension Notice,
the Borrowers shall pay to Lender a nonrefundable extension fee equal
to $25,000 in the aggregate;
(iii) If MMI seeks to exercise its Extension Right, then no
MMI Event of Default or event that with the passage of time, the giving
of notice or both would constitute an MMI Event of Default exists as of
the date on which such Extension Notice is delivered or on the Maturity
Date, and if HouTex seeks to exercise its Extension Right, then no
HouTex Event of Default or event that with the passage of time, the
giving of notice or both would constitute a HouTex Event of Default
exists as of the date on which such Extension Notice is delivered or on
the Maturity Date.
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(iv) Except as expressly provided to the contrary in the Notes
or this Loan Agreement, all of the other terms, provisions and
conditions of the Notes and the other Loan Documents shall remain in
full force and effect in accordance with their respective terms,
including, without limitation, the obligation to make monthly payments
of interest at the then applicable rate(s) of interest; and
(v) There shall have been no material adverse change in the
projected income and expenses of the Individual Guarantors in the
aggregate or either Borrower, or in any other financial information
provided by the Individual Guarantors in the aggregate or either
Borrower to Lender.
2.8 Loan Fee. The unpaid balance of a nonrefundable loan fee in the
amount of $15,000 shall be due and payable by the Borrowers on the Closing Date.
3. CONDITIONS OF FUNDING. Lender's obligation to make the Loans shall be
subject to the satisfaction of all of the following conditions in a manner, form
and substance satisfactory to Lender:
3.1 Title to Collateral. The Borrowers have good and marketable title
to all of the Collateral free and clear of all Liens, except Permitted Liens, as
of the date of Closing and each subsequent Revolver Advance.
3.2 Delivery of Instruments. The following shall have been delivered to
Lender, each duly authorized and executed: (i) the Loan Documents; (ii) evidence
of the insurance required by Section 5.9 below; (iii) certificates of incumbency
for each Borrower; (iv) certificates of good standing for each Borrower from
their respective states of incorporation and from any other states in which they
are required to be qualified to do business; (v) certified copies of the
certificates of incorporation and by-laws, and all amendments thereto, of each
Borrower; (vi) certified copies of resolutions adopted by each Borrower
authorizing the execution of the Loan Documents and the consummation of the
transactions contemplated therein; (vii) certified copies of the Operating
Agreements; (viii) the initial Borrowing Base Certificate dated as of the
Closing Date; and (ix) such other instruments, documents, certificates,
consents, waivers and opinions as Lender may request.
3.3 Lender's Security Interests. All filings of Uniform Commercial Code
Financing Statements and all other recordings and actions necessary to perfect
and maintain the Security Interests as first, valid and perfected liens and
security interests in the Collateral, subject only to the Permitted Liens, shall
have been filed or taken and confirmation thereof received.
3.4 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Loan Agreement and the
other Loan Documents and all documents and instruments incident to such
transactions shall be satisfactory to Lender, and Lender shall have received all
such counterpart originals or certified or other copies as Lender reasonably may
request.
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3.5 Representations and Warranties. The representations and warranties
of the Borrowers set forth in this Loan Agreement and the other Loan Documents
shall be true and correct in all material respects as of the date of Closing and
as of the date each Revolver Advance is made.
3.6 Performance; No Default. The Borrowers shall have performed and
complied with all agreements and conditions contained in the Loan Documents to
be performed by or complied with by them prior to Closing and no Default or
Event of Default then exists.
3.7 Material Adverse Effect. No Material Adverse Effect shall have
occurred.
3.8 Use of Assets. Lender shall be satisfied that the Borrowers are
entitled to the use and quiet enjoyment of all assets necessary and desirable
for the continued ownership and operation of their respective businesses at each
location at which such businesses are presently conducted and are proposed to be
conducted, including, without limitation, the use of equipment, Property,
fixtures, licenses, permits, offices, inventory, warehouses and means of ingress
and egress thereto, including any easements or rights-of-way necessary to reach
any equipment or other items necessary for the operation of such businesses.
4. REPRESENTATIONS AND WARRANTIES. Each Borrower represents and warrants
to Lender only for itself and not as to the other Borrower as follows:
4.1 MMI. MMI is a duly formed, publicly traded corporation validly
existing and in good standing in the State of Delaware and in each jurisdiction
in which the failure to be in good standing could have a Material Adverse Effect
on MMI. MMI has full power and authority to execute and deliver the Loan
Documents and to perform its obligations hereunder and thereunder. The
certificate of incorporation and the by-laws of MMI, certified copies of which
have been furnished to Lender, are in effect and are the true, correct and
complete documents relating to MMI's creation and governance.
4.2 HouTex. HouTex is a duly formed corporation validly existing and in
good standing in the State of Texas and in each jurisdiction in which the
failure to be in good standing could have a Material Adverse Effect on HouTex.
HouTex has full power and authority to execute and deliver the Loan Documents
and to perform its obligations hereunder and thereunder. MMI is the sole
shareholder of HouTex. The certificate of incorporation and the by-laws of
HouTex, certified copies of which have been furnished to Lender, are in effect
and are the true, correct and complete documents relating to HouTex's creation
and governance.
4.3 Authority. No consent or approval of, or other action by, any
shareholder, partner, Governmental Body or any other Person, which has not
already been obtained, is required to be obtained by a Borrower to authorize, or
is required to be obtained by such Borrower in connection with the execution,
delivery and performance of, the Loan Documents, or is required as a condition
to the validity or enforceability of the Security Interests or any of the Loan
Documents.
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4.4 Necessary Assets. Each Borrower owns all of the assets necessary to
operate and maintain the operations of its business as conducted on the date
hereof.
4.5 Binding Agreements. This Loan Agreement and the other Loan
Documents, when executed and delivered, will constitute the valid and legally
binding obligations of each Borrower, and enforceable against each Borrower in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
equitable principles.
4.6 Business and Properties of the Borrowers.
4.6.1 Business Activity. Neither Borrower is engaging in any
business or activities other than scrap metal recycling or the
acquisition or sale of businesses related thereto. The property that
the Borrowers shall own upon Closing and any licenses and permits
issued to the Borrowers in connection with their respective businesses
constitute all of the Property, licenses and permits which are
necessary for the operation of such businesses as heretofore conducted
and as proposed to be conducted after the Closing.
4.6.2 Operating Agreements. All Operating Agreements are in
full force and effect and no event has occurred which could result in
the cancellation or termination of any Operating Agreement, which
cancellation or termination could have a Material Adverse Effect.
4.6.3 Business Sites. There is set forth in Exhibit A the
locations of all inventory (other than inventory that is in transit to
customers in the ordinary course of the Borrowers' businesses),
equipment, goods and offices presently used in the operation of the
businesses of the Borrowers. None of such locations shall be changed
without the prior written consent of Lender, which consent shall not be
unreasonably withheld.
4.6.4 Operation and Maintenance of Equipment. To the best of
each Borrower's knowledge, the equipment owned or to be acquired on the
Closing Date by HouTex is in good operating condition and repair and
has been used, operated and maintained in substantial compliance with
all applicable laws, rules and regulations.
4.7 Title to Property; Liens. As of the Closing Date, HouTex shall have
good and marketable title to the Collateral free and clear of all Liens, except
Permitted Liens. The applicable Loan Documents create valid and perfected Liens
in the Property described therein, subject only to Permitted Liens.
4.8 Solvency. Neither Borrower (i) is bankrupt or insolvent, (ii) has
made an assignment for the benefit of its creditors, (iii) has had a trustee or
receiver appointed, (iv) has had any bankruptcy, reorganization or insolvency
proceedings instituted by or against it, and (v) shall be rendered insolvent by
its execution, delivery or performance of the Loan Documents or by the
transactions contemplated thereunder. Notwithstanding the foregoing, Lender
hereby acknowledges
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that (a) the Borrowers may have incurred or may hereafter incur seller debt in
connection with the acquisition of the stock or assets of businesses related to
the business of the Borrowers, (b) the Borrowers shall be unable to service such
debt if they are unable to refinance the same prior to the maturity thereof, and
(c) the existence of such debt shall not be deemed a violation of the terms of
this Section prior to the maturity thereof or a default with respect thereto.
4.9 Financial Statements. The Borrowers have delivered to Lender the
financial statements described on Exhibit C. To the best of each Borrower's
knowledge, said financial statements contain no material misstatements, nor are
the same based upon assumptions or facts known by such Borrower to be false or
misleading.
4.10 Litigation. There are no actions, suits, arbitration proceedings
or claims pending or, to the best knowledge of each Borrower, threatened at law
or in equity or before any Governmental Body which, if adversely determined,
could have a Material Adverse Effect. There are no proceedings pending or, to
the best knowledge of each Borrower, threatened which call into question the
validity or enforceability of any of this Loan Agreement or the other Loan
Documents or any of the transactions contemplated hereby or thereby.
4.11 Conflicting Agreements. Neither Borrower is in default under any
material agreement to which it is a party or by which such Borrower or any of
its Property is bound. No provision of any mortgage, indenture, contract,
agreement, statute, rule, regulation, judgment, decree or order binding on
either Borrower or affecting the business or Property of either Borrower
conflicts with or in any way would prevent the execution, delivery or
performance of the terms of any of the Loan Documents. The execution, delivery
and carrying out of the terms of the Loan Documents shall not constitute a
default under any such mortgage, indenture, contract or agreement, or result in
the creation or imposition of or obligation to create any Lien upon the Property
of either Borrower pursuant to the terms thereof.
4.12 Taxes of Borrowers. Any charges, accruals and reserves on the
books of each Borrower with respect to all federal, state, local and other taxes
are considered by the management of such Borrower to be adequate, and neither
Borrower has knowledge of any unpaid assessment which is or might be due and
payable against such Borrower, or its business or Property, except such
assessments as are being contested in good faith and by appropriate proceedings
diligently conducted and for which adequate reserves have been set aside in
accordance with GAAP.
4.13 Compliance with Applicable Laws. Neither Borrower is in default in
respect of any judgment, order, writ, injunction, decree or decision of any
Governmental Body. Each Borrower is in compliance in all material respects with
all applicable statutes and regulations of all Governmental Bodies.
4.14 Patents, Trademarks, Franchises, Agreements. Each Borrower owns or
possesses as of the Closing Date all patents, trademarks, service marks, trade
names, copyrights, franchises, permits and licenses, and rights with respect
thereto, necessary for the conduct of its business as now
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conducted and as proposed to be conducted, without any known conflict with the
rights of others and, in each case, free of any Lien other than the Permitted
Liens.
4.15 Environmental Matters. To the best knowledge of each Borrower,
except as otherwise disclosed on Exhibit D no portion of such Borrower's
Property has been used as a land fill, and there are not any known Hazardous
Materials generated, manufactured, released, stored, buried or deposited over,
beneath, in or on (or used in the construction and/or renovation of) such
Property, except in compliance with all applicable laws.
4.16 Application of Certain Laws and Regulations.
4.16.1 Investment Company Act. Neither Borrower is an
"investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended.
4.16.2 Holding Company Act. Neither Borrower is a "holding
company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
4.16.3 Regulations as to Borrowing. Neither Borrower is
subject to any statute or regulation which regulates the incurrence of
any Indebtedness for Borrowed Money including, without limitation,
statutes or regulations relative to common or interstate carriers or to
the sale of electricity, gas, steam, water, telephone, telegraph or
other public utility services.
4.17 Margin Regulations. None of the transactions contemplated by this
Loan Agreement or any of the other Loan Documents, including the use of proceeds
of the Loan, will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including, without limitation, Regulations G, T, U and X, and neither
Borrower owns or intends to carry or purchase any "margin security" within the
meaning of such Regulations U or G.
4.18 No Misrepresentation. No representation or warranty contained
herein and no certificate, information or report furnished or to be furnished by
either Borrower or any Individual Guarantor in connection with any of the Loan
Documents or any of the transactions contemplated hereby or thereby contains or
will contain a misstatement of material fact, or omits or will omit to state a
material fact required to be stated in order to make the statements contained
herein or therein not misleading in the light of the circumstances under which
such statements were made.
4.19 Burdensome Obligations. After giving effect to the transactions
contemplated by the Loan Documents, neither Borrower shall be a party to or be
bound by any franchise, agreement, deed, lease or other instrument, which is so
unusual or burdensome, so as to cause, in the foreseeable future, a material and
adverse effect upon, or impair the financial condition, operations, business,
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prospects or Property of such Borrower. Neither Borrower presently anticipates
that future expenditures needed to meet the provisions of federal or state
statutes, orders, rules or regulations will be so burdensome so as to have a
Material Adverse Effect on such Borrower. Notwithstanding the foregoing, Lender
hereby acknowledges that (a) the Borrowers may have incurred or may hereafter
incur seller debt in connection with the acquisition of the stock or assets of
businesses related to the business of the Borrowers, (b) the Borrowers shall be
unable to service such debt if they are unable to refinance the same prior to
the maturity thereof, and (c) the existence of such debt shall not be deemed a
violation of the terms of this Section prior to the maturity thereof or a
default with respect thereto.
4.20 Employee Benefit Plans. Any Plan of a Borrower is in material
compliance with the applicable provisions of ERISA and the Code, and all reports
required to be filed by ERISA and the Code in respect of each such Plan have
been filed. Each Borrower has met all requirements imposed by ERISA and the Code
in respect of the funding of all Plans. No Plan which is subject to Part 3 of
Subtitle B of Title I of ERISA or Section 412 of the Code ever has incurred an
"accumulated funding deficiency" as such term is defined in Section 302 of ERISA
or Section 412(a) of the Code (whether or not waived). There has been no
non-exempt prohibited transaction (within the meaning of Section 4975 of the
Code or Part 4 of Subtitle B of Title I of ERISA) with respect to any Plan.
Since the effective date of ERISA, there have not been, and there do not now
exist, any events or conditions which would permit any Plan to be terminated
under circumstances which would cause the Lien provided under Section 4068 of
ERISA to attach to the Property of a Borrower. Since the effective date of
ERISA, no "reportable event", as defined in Title IV of ERISA, which may
constitute grounds for the termination of any Plan under Title IV of ERISA, has
occurred and no Plan has been terminated in whole or in part. No liability to
the PBGC (other than required premiums, all of which have been paid to the
extent that they were due and payable) or to any Plan has been or is expected to
be incurred by a Borrower. As of the Closing Date, the present value of all
accrued benefits under each Plan, calculated on the basis of the actuarial
assumptions specified in the most recent actuarial valuation for such Plan, will
not exceed the fair market value of the assets of such Plan allocable to such
benefits.
4.21 Employee Matters. As of the date hereof, the employees of the
Borrowers are not subject to any collective bargaining agreement, and there are
no strikes, work stoppages or controversies pending, or to the best knowledge of
the Borrowers, threatened against either Borrower by any of its employees.
4.22 Eligible Inventory. With respect to Eligible Inventory referred to
in any Borrowing Base Certificate, the completion and sale or other disposition
of such Inventory by a Person other than HouTex would not require the consent of
any Person or constitute a breach of any contract to which HouTex is a party or
to which the Inventory is subject.
4.23 Eligible Accounts. With respect to Eligible Accounts referred to
in any Borrowing Base Certificate, as of the date of such Borrowing Base
Certificate: (a) the Eligible Accounts are genuine, are in all respects what
they purport to be, and are not evidenced by a judgment; (b) the Eligible
Accounts represent undisputed, bona fide transactions completed in accordance
with the
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terms and provisions contained in the documents delivered to Lender with respect
thereto; (c) the amounts reflected on the applicable Borrowing Base Certificate
and on HouTex's books and records and all invoices and statements which may be
delivered to Lender with respect thereto are owing solely to HouTex and are not
in any way contingent (except with respect to Accounts in connection with which
account debtors are entitled to return Inventory solely on the basis of the
quality of such Inventory); (d) no payments have been made in respect of such
Eligible Accounts or the portion thereof reflected in such Borrowing Base
Certificate; (e) there are no setoffs, counterclaims or disputes asserted or, to
the best of HouTex's knowledge, existing with respect thereto and HouTex has not
made any agreement with any account debtor for any deduction therefrom except a
discount or allowance allowed by HouTex in the ordinary course of its business
for prompt payment which has been reflected by a corresponding reduction in the
amount of the Eligible Accounts; (f) to the best of HouTex's knowledge, there
are no facts, events or occurrences which in any way impair the validity or
enforcement thereof or tend to reduce the amount payable thereunder as shown on
the respective Borrowing Base Certificate, HouTex's books and records and all
invoices and statements delivered to Lender with respect thereto; (g) to the
best of HouTex's knowledge without inquiry, all account debtors with respect to
the Eligible Accounts have the capacity to contract and are solvent; and (h) to
the best of HouTex's knowledge without inquiry, there are no proceedings or
actions which are threatened or pending against any account debtor with respect
to the Eligible Accounts which could reasonably be expected to result in any
material adverse change in such account debtor's financial condition.
4.24 Bailment Relationships. Exhibit A lists all locations at which
HouTex stores Inventory pursuant to agreements with warehousemen, consignees or
other bailees. All such agreements are in full force and effect and, to HouTex's
knowledge, no claim has been made or default asserted against HouTex thereunder.
HouTex has paid all storage costs and other charges which are due and payable by
it under its agreements with all warehousemen, consignees and other bailees.
4.25 Owned and Leased Property. HouTex owns no real property. The only
real property leased by HouTex is described on Exhibit A attached hereto. HouTex
has not leased or subleased any of its Property to any other Person.
5. AFFIRMATIVE COVENANTS. Until all of Borrowers' Obligations are paid
and performed in full, each Borrower covenants to Lender only for itself and not
as to the other Borrower as follows:
5.1 Legal Existence; Good Standing. Each Borrower shall maintain its
existence and shall remain in good standing (or shall have such good standing
reinstated within 15 days after the loss thereof) in its jurisdiction of
incorporation and maintain its qualification in all other jurisdictions in which
the failure to do so could have a Material Adverse Effect on such Borrower.
5.2 Inspection of Books and Records. Each Borrower shall permit
representatives of Lender to visit its offices to examine its books and records
and Accountants' reports relating thereto,
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and to make copies or extracts therefrom, and to discuss its business and
affairs with its employees, all at reasonable times during normal business
hours, upon reasonable prior notice.
5.3 Inspection of Collateral. Lender (by any of its officers, employees
and/or agents) shall have the right, during normal business hours and upon
reasonable notice to the Borrowers prior to the occurrence of an Event of
Default (and after the occurrence of an Event of Default, at any time or times)
to inspect the Collateral and all related records (and the premises upon which
it is located) and to verify the amount and condition of or any other matter
relating to the Collateral. All reasonable costs, fees and expenses incurred by
Lender in connection with all such field examinations shall constitute part of
Borrowers' Obligations, payable by the Borrowers to Lender on demand.
5.4 Financial Statements and Other Information. Each Borrower will
maintain a system of accounting in accordance with GAAP and furnish to Lender:
5.4.1 Annual Statements. As soon as available and in any event
within 90 days after the close of each fiscal year, each Borrower shall
furnish to Lender a copy of its (a) balance sheet as of the end of such
year, and (b) statements of income and cash flow for such year, setting
forth in each case in comparative form the corresponding figures for
the preceding year, all in reasonable detail, and in each case audited
by the Accountants. Such annual statements shall be accompanied by a
report of the Accountants which states that in preparing the financial
statements of such Borrower, nothing came to the attention of the
Accountants that caused them to believe that such Borrower was not in
compliance with the terms, covenants, provisions, or conditions of any
of the Loan Documents or that there shall have occurred a condition or
event that constitutes an Event of Default (or, if applicable,
specifying in such certificate the nature and status of any instances
of non-compliance or Events of Default), and which is otherwise in a
form reasonably satisfactory to Lender.
5.4.2 Monthly Statements. As soon as available and in any
event within 15 days after the end of each month, each Borrower shall
furnish to Lender a copy of its (a) unaudited balance sheet as of the
end of such month, and (b) unaudited statements of income and cash flow
for such month and for the period from the beginning of the then
current fiscal year to the end of such month, all in reasonable detail
and containing such information as Lender may require and certified by
the chief financial officer of such Borrower.
5.4.3 Notice of Defaults; Loss. Immediate written notice of
the following: (i) any Indebtedness of either Borrower is declared or
becomes due and payable prior to its declared or stated maturity, or
called and not paid when due, (ii) the holder of any note, or other
evidence of Indebtedness, certificate or security evidencing any such
Indebtedness of either Borrower has the right to declare such
Indebtedness due and payable prior to its stated maturity, (iii) there
shall occur and be continuing a Default or Event of Default, and such
notice shall be accompanied by a statement of the president of each
Borrower setting forth what action the Borrowers propose to take in
respect thereof, or (iv) any event within either
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Borrower's control that causes a material loss or depreciation in the
value of assets of such Borrower or otherwise results in a Material
Adverse Effect.
5.4.4 Notice of Suits, Adverse Events. Immediate written
notice of the following: (i) the issuance of any citation, summons,
subpoena, order to show cause or other order naming either Borrower a
party to any proceeding before any Governmental Body that may have a
Material Adverse Effect, together with a copy of such citation,
summons, subpoena, order to show cause or other order, (ii) any lapse
or other termination of any material license, permit, franchise,
agreement or other authorization issued to either Borrower by any
Governmental Body or any other Person, (iii) any refusal by any
Governmental Body or any other Person to renew or extend any such
material license, permit, franchise, agreement or other authorization,
and (iv) any dispute between either Borrower and any Governmental Body
or any other Person, which dispute could have a Material Adverse
Effect.
5.4.5 Reports to Security Holders, Creditors and Governmental
Bodies. Promptly upon becoming available, copies of any periodic or
special reports filed by either Borrower with any Governmental Body or
Person, if such reports indicate any material change in the business,
operations, affairs or condition of such Borrower, or if copies thereof
are requested by Lender, and copies of any material notices and other
communications from any Governmental Body or Person which specifically
relate to such Borrower.
5.4.6 Other Information.
(i) Prompt notice of (A) any change in the officers
of either Borrower, (B) any change of location of any material
item of Property of either Borrower, (C) any change in the
name of either Borrower, (D) any sale or purchase of Property
outside the regular course of business of either Borrower, and
(E) any material adverse change in the business or financial
affairs of either Borrower.
(ii) Promptly upon request therefor, such other
information and reports relating to the past, present or
future financial condition, operations, plans and projections
of the Borrowers as Lender reasonably may request from time to
time.
5.5 Reports to Governmental Bodies and Other Persons. Each Borrower
shall file, all on a timely basis, all reports, applications, documents,
instruments and information required to be filed pursuant to all rules,
regulations or requests of any Governmental Body or other Persons having
jurisdiction over the operation of such Borrower, including, but not limited to,
such of the Loan Documents as may be required to be filed with any such
Governmental Body or other Persons pursuant to applicable rules and regulations
promulgated thereby.
5.6 Borrowing Base Certificate; Accounts Aging Report. As soon as
available and in any event on or before 5:00 p.m. on Tuesday of each week,
HouTex shall deliver to Lender the Borrowing Base Certificate stating the amount
of the Borrowing Base as of such last day of the preceding week. As soon as
available and in any event within 15 days after the end of each month,
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HouTex shall deliver to Lender the following, all of which are to be in form and
substance satisfactory to Lender and certified by the chief financial officer of
HouTex: (i) an aging report for all Accounts and all accounts payable of HouTex,
describing the aging status of such Accounts and accounts payable as of the last
day of such month, and (ii) a listing of all Inventory of HouTex as of the last
day of such month.
5.7 Shareholders. MMI at all times shall remain the sole shareholder of
HouTex.
5.8 Maintenance of Licenses, Franchises, Agreements. Each Borrower
shall maintain in full force at all times and in a timely manner shall apply for
renewal of all licenses, approvals, permits, franchises and agreements necessary
for the continuation of the operation of its business, and give Lender not less
than thirty days prior written notice of the proposed amendment of any of such
licenses, permits, agreements or franchises; provided, however, that if the
cancellation, suspension or termination of any such licenses, permits,
agreements or franchises was not intentionally caused by such Borrower, then
such Borrower shall have fifteen days after obtaining knowledge of such
cancellation, suspension or termination to cause the same to be reinstated or
reissued.
5.9 Insurance. Each Borrower shall obtain and maintain such insurance
as is reasonably required by Lender, which insurance must be written by insurers
and in amounts and form specified in the other Loan Documents, or if not
specified as aforesaid, then in amounts and form reasonably satisfactory to
Lender.
5.10 Future Leases. Concurrently with the execution by HouTex as lessee
under any site lease subsequent to the date hereof, HouTex shall deliver to
Lender (i) notice of the execution of such lease, together with an executed copy
thereof, (ii) if requested by Lender, a collateral assignment of such lease in
favor of Lender in a form acceptable to Lender, and (iii) a consent and estoppel
letter from the lessor under such lease, in form and content reasonably
satisfactory to Lender.
5.11 Environmental Matters. If either Borrower receives (i) any notice
of any violation or administrative or judicial complaint or order having been
filed or about to be filed against such Borrower or any of such Borrower's
Property alleging violations of any law, ordinance or regulation requiring such
Borrower to take any action in connection with the release or clean-up of any
Hazardous Materials, or (ii) any notice from any Governmental Body or any other
Person alleging that such Borrower is or may be liable for costs associated with
a release or clean-up of any Hazardous Materials or any damages resulting from
such release, such Borrower shall provide Lender with a copy of such notice.
Such Borrower, at its sole cost and expense, shall comply in all respects with
the foregoing notices and, in all events, at its sole cost and expense, shall
satisfy the requirements of and at all times hereafter shall maintain such
Borrower's Property in compliance with all federal, state and local
environmental protection, occupational, health, safety and similar laws,
ordinances, restrictions, licenses, and regulations, including, without
limitation, CERCLA, the Federal Water Pollution Control Act (33 U.S.C. Sec. 1251
et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sec. 6901 et
seq.), the Safe Drinking Water Act (42 U.S.C. Sec. 300f et
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seq.), the Toxic Substances Control Act (15 U.S.C. Sec. 2601 et seq.), the Clean
Air Act (42 U.S.C. Sec. 7401 et seq.) and other comparable state or local laws,
rules and/or regulations.
6. NEGATIVE COVENANTS. Until all of Borrowers' Obligations are paid and
performed in full, each Borrower covenants to Lender only for itself and not as
to the other Borrower as follows:
6.1 Liens. HouTex shall not create, incur, assume or suffer to exist
any Lien upon any of the Collateral, whether now owned or hereafter acquired,
except Permitted Liens.
6.2 Distributions. HouTex shall not make dividends or other
distributions to MMI of any revenue or other amounts received by or on behalf of
HouTex from the operation or ownership of its business or otherwise if a HouTex
Event of Default or event or circumstance that with the passage of time, the
giving of notice or both would constitute a HouTex Event of Default then exists.
6.3 Amendments of Agreements. Neither Borrower shall consent to any
amendment to any agreements, franchises, licenses or permits which are required
in order to conduct the businesses of such Borrower if such amendment could have
a Material Adverse Effect on such Borrower.
6.4 Fundamental Business Changes. Neither Borrower shall engage in any
business other than the business in which such Borrower is engaged as of the
date hereof or otherwise materially change the nature of such business.
6.5 Sale or Transfer of Assets. HouTex shall not sell, lease, assign,
transfer or otherwise dispose of any Property outside the ordinary course of
business, except dispositions of non-material Property or the disposition of any
obsolete or unusable items or equipment which promptly are replaced with new
items or equipment of like function and comparable value.
6.6 Payments on Certain Indebtedness. HouTex shall not make any
voluntary or optional prepayment of any Indebtedness for Borrowed Money, other
than the Revolver.
6.7 Amendment of Corporate Documents. Neither Borrower shall amend,
modify or waive any term or provision of such Borrower's certificate of
incorporation or by-laws in a manner that could have a Material Adverse Effect.
6.8 Compliance with ERISA. Neither Borrower shall (i) terminate any
Plan which would result in any material liability of such Borrower to the PBGC,
(ii) permit the occurrence of any "reportable event" (as defined in Title IV of
ERISA), or any other event or condition, which presents a risk of such a
termination by the PBGC of any Plan, or (iii) withdraw or effect a partial
withdrawal from any Plan, if such withdrawal would result in such withdrawing
employer incurring any withdrawal liability in excess of $25,000.
7. DEFAULT AND REMEDIES.
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7.1 Events of Default. The occurrence of any of the following shall
constitute an "MMI Event of Default" under the Loan Documents:
7.1.1 Default in Payment. If MMI shall fail to pay all or any
portion of its obligations under any of the Loan Documents on or before
the date on which the same become due and payable.
7.1.2 Breach of Covenants.
(a) If MMI shall fail to observe or perform any
covenant or agreement of MMI contained in Sections 5.1, 5.2,
5.3, 5.6, 5.7, 5.8, 5.9 or 5.11 or in Section 6 above;
(b) If MMI shall fail to observe or perform any
covenant or agreement made by MMI in Section 5.4.1 or 5.4.2,
and such failure shall continue for a period of thirty days
after written notice of such failure is given by Lender.
(c) If MMI shall fail to observe or perform any
covenant or agreement (other than those referred to in
subparagraphs (a) and (b) above) made by MMI in any of the
Loan Documents; provided, however, that if such failure by its
nature can be cured, then MMI shall have a period of thirty
days after written notice from Lender of such failure to cure
the same and an MMI Event of Default shall not be deemed to
exist during such period, provided further that if MMI
commences to cure such failure during such period and is
diligently and in good faith attempting to effect such cure,
such period shall be extended for thirty additional days, but
in no event shall such period be longer than sixty days in the
aggregate.
7.1.3 Breach of Representation. Any representation or warranty
made by MMI in or pursuant to any of the Loan Documents or in any
instrument or document furnished in compliance with the Loan Documents
shall prove to be false or misleading in any material respect on the
date as of which such representation or warranty is made.
7.1.4 Acceleration of any Indebtedness. If (i) MMI at any time
shall be in default (as principal or guarantor or other surety) in the
payment of any principal of or premium or interest on any Indebtedness
for Borrowed Money (other than Borrowers' Obligations), beyond the
grace period, if any, applicable thereto (including, without
limitation, Indebtedness for Borrowed Money owing by MMI to the seller
of any stock or assets of or other interest in a business acquired by
MMI), and the aggregate amount of such payments then in default beyond
such grace period shall exceed $100,000, or (ii) if MMI at any time
shall be in default in respect of any issue of Indebtedness for
Borrowed Money (other than
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Borrowers' Obligations) outstanding in a principal amount of at least
$100,000, or in respect of any agreement or instrument relating to any
such issue of Indebtedness for Borrowed Money, and such default shall
continue beyond the grace period, if any, applicable thereto
(including, without limitation, Indebtedness for Borrowed Money owing
by MMI to the seller of any stock or assets of or other interest in a
business acquired by MMI).
7.1.5 Bankruptcy.
(a) If MMI or any Individual Guarantor shall (i)
generally not be paying debts as they become due, (ii) file,
or consent, by answer or otherwise, to the filing against MMI
or Individual Guarantor, of a petition for relief or
reorganization or arrangement or any other petition in
bankruptcy or insolvency under the laws of any jurisdiction,
(iii) make an assignment for the benefit of creditors, (iv)
consent to the appointment of a custodian, receiver, trustee
or other officer with similar powers for, or for any
substantial part of the Property owned by MMI or Individual
Guarantor, (v) be adjudicated insolvent, or (vi) take action
for the purpose of any of the foregoing.
(b) If any Governmental Body of competent
jurisdiction shall enter an order appointing a custodian,
receiver, trustee or other officer with similar powers with
respect to MMI or Individual Guarantor without MMI's or such
Individual Guarantor's consent, or with respect to any
substantial part of the Property belonging to MMI or such
Individual Guarantor, or if an order for relief shall be
entered in any case or proceeding for liquidation or
reorganization or otherwise to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of MMI or an
Individual Guarantor, or if any petition for any such relief
shall be filed against MMI or an Individual Guarantor and such
petition shall not be dismissed within sixty days.
7.1.6 Judgments. If there shall exist final judgments against
MMI which shall have been outstanding for any period of thirty days or
more from the date of the entry thereof and shall not have been
discharged in full or stayed pending appeal and if the aggregate amount
thereof exceeds $100,000.
7.1.7 Impairment of Operating Agreements. If any Operating
Agreement which is necessary to the operation of the business of MMI
shall be revoked or terminated and not replaced by a substitute
satisfactory to Lender within thirty days after the date of such
revocation or termination.
7.2 Events of Default. The occurrence of any of the following shall
constitute a "HouTex Event of Default" under the Loan Documents:
7.2.1 Default in Payment. If HouTex shall fail to pay all or
any portion of its obligations under any of the Loan Documents on or
before the date on which the same become due and payable.
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7.2.2 Breach of Covenants.
(a) If HouTex shall fail to observe or perform any
covenant or agreement of HouTex contained in Sections 5.1,
5.2, 5.3, 5.6, 5.8, 5.9 or 5.11 or in Section 6 above;
(b) If HouTex shall fail to observe or perform any
covenant or agreement made by HouTex in Section 5.4.1 or
5.4.2, and such failure shall continue for a period of thirty
days after written notice of such failure is given by Lender.
(c) If HouTex shall fail to observe or perform any
covenant or agreement (other than those referred to in
subparagraphs (a) and (b) above and that contained in Section
5.7) made by HouTex in any of the Loan Documents; provided,
however, that if such failure by its nature can be cured, then
so long as the continued operation and safety of the
Collateral and the priority, validity and enforceability of
the Security Interests and the value of the Collateral are not
impaired, threatened or jeopardized, then HouTex shall have a
period of thirty days after written notice from Lender of such
failure to cure the same and a HouTex Event of Default shall
not be deemed to exist during such period, provided further
that if HouTex commences to cure such failure during such
period and is diligently and in good faith attempting to
effect such cure, such period shall be extended for thirty
additional days, but in no event shall such period be longer
than sixty days in the aggregate.
7.2.3 Breach of Representation. Any representation or warranty
made by HouTex in or pursuant to any of the Loan Documents or in any
instrument or document furnished in compliance with the Loan Documents
shall prove to be false or misleading in any material respect on the
date as of which such representation or warranty is made.
7.2.4 Acceleration of any Indebtedness. If (i) HouTex at any
time shall be in default (as principal or guarantor or other surety) in
the payment of any principal of or premium or interest on any
Indebtedness for Borrowed Money (other than Borrowers' Obligations),
beyond the grace period, if any, applicable thereto (including, without
limitation, Indebtedness for Borrowed Money owing by HouTex to the
seller of any stock or assets of or other interest in a business
acquired by HouTex), and the aggregate amount of such payments then in
default beyond such grace period shall exceed $100,000, or (ii) if
HouTex at any time shall be in default in respect of any issue of
Indebtedness for Borrowed Money (other than Borrowers' Obligations)
outstanding in a principal amount of at least $100,000, or in respect
of any agreement or instrument relating to any such issue of
Indebtedness for Borrowed Money, and such default shall continue beyond
the grace period, if any, applicable thereto (including, without
limitation, Indebtedness for Borrowed Money owing by HouTex to the
seller of any stock or assets of or other interest in a business
acquired by HouTex).
7.2.5 Bankruptcy.
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(a) If HouTex or any Individual Guarantor shall (i)
generally not be paying debts as they become due, (ii) file,
or consent, by answer or otherwise, to the filing against
HouTex or such Individual Guarantor, of a petition for relief
or reorganization or arrangement or any other petition in
bankruptcy or insolvency under the laws of any jurisdiction,
(iii) make an assignment for the benefit of creditors, (iv)
consent to the appointment of a custodian, receiver, trustee
or other officer with similar powers for, or for any
substantial part of the Property owned by HouTex or such
Individual Guarantor, (v) be adjudicated insolvent, or (vi)
take action for the purpose of any of the foregoing.
(b) If any Governmental Body of competent
jurisdiction shall enter an order appointing a custodian,
receiver, trustee or other officer with similar powers with
respect to HouTex or an Individual Guarantor without HouTex's
or such Individual Guarantor's consent, or with respect to any
substantial part of the Property belonging to HouTex or such
Individual Guarantor, or if an order for relief shall be
entered in any case or proceeding for liquidation or
reorganization or otherwise to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of HouTex or an
Individual Guarantor, or if any petition for any such relief
shall be filed against HouTex or an Individual Guarantor and
such petition shall not be dismissed within sixty days.
7.2.6 Judgments. If there shall exist final judgments against
HouTex which shall have been outstanding for any period of thirty days
or more from the date of the entry thereof and shall not have been
discharged in full or stayed pending appeal and if the aggregate amount
thereof exceeds $100,000.
7.2.7 Impairment of Operating Agreements. If any Operating
Agreement which is necessary to the operation of the business of HouTex
shall be revoked or terminated and not replaced by a substitute
satisfactory to Lender within thirty days after the date of such
revocation or termination.
7.3 Acceleration of Borrowers' Obligations Owing by MMI. Upon the
occurrence of:
(a) any MMI Event of Default described in clauses
(ii), (iii), (iv) and (v) of Section 7.1.5(a) or Section
7.1.5(b), all of the outstanding Borrowers' Obligations that
are then owing by MMI automatically shall mature and become
due and payable, or
(b) any other MMI Event of Default, Lender, at any
time, (unless such MMI Event of Default shall have been waived
by Lender) at its option, may declare all of the outstanding
Borrowers' Obligations that are then owing by MMI to be due
and payable, whereupon such Borrowers' Obligations immediately
shall mature and become due and payable,
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all without presentment, demand, protest, or notice, all of which hereby are
waived.
7.4 Acceleration of Borrowers' Obligations Owing by HouTex. Upon the
occurrence of:
(a) any HouTex Event of Default described in clauses
(ii), (iii), (iv) and (v) of Section 7.2.5(a) or Section
7.2.5(b), all of the outstanding Borrowers' Obligations that
are then owing by HouTex automatically shall mature and become
due and payable and HouTex's right to request additional
Revolver Advances shall immediately terminate, or
(b) any other HouTex Event of Default, Lender, at any
time, (unless such HouTex Event of Default shall have been
waived by Lender) at its option, may declare all of the
outstanding Borrowers' Obligations that are then owing by
HouTex to be due and payable, whereupon such Borrowers'
Obligations immediately shall mature and become due and
payable and HouTex's right to request additional Revolver
Advances shall immediately terminate,
all without presentment, demand, protest, or notice, all of which hereby are
waived.
7.5 Remedies on Default. If any of Borrowers' Obligations have been
accelerated pursuant to Sections 7.3 or 7.4, Lender, at its option, may enforce
its rights and remedies under the Loan Documents in accordance with their
respective terms and enforce any of the rights or remedies granted to Lender
under any other Loan Document and any other rights or remedies accorded to
Lender at equity or law, by virtue of statute or otherwise.
7.6 Application of Funds to MMI Obligations. Any funds received by
Lender from MMI or from the Individual Guarantors pursuant to the exercise of
any rights accorded to Lender under the MMI Guaranty shall be applied by Lender
in the following order of priority:
7.6.1 Expenses. First, to the payment of all fees and
expenses, including, without limitation, reasonable attorneys' fees,
court costs and all other costs incurred by the Lender in exercising
any rights against MMI or the Individual Guarantors accorded to the
Lender pursuant to the Loan Documents or by applicable law;
7.6.2 Borrowers' Obligations. Next to the payment of
Borrowers' Obligations owing by MMI in such order as Lender may
determine; and
7.6.3 Surplus. Any surplus, to the Person or Persons entitled
thereto.
7.7 Application of Funds to HouTex Obligations. Any funds received by
Lender from HouTex or from the Individual Guarantors of MMI pursuant to the
exercise of any rights accorded to Lender under the HouTex Guaranty, including,
without limitation, insurance proceeds, condemnation proceeds or proceeds from
the sale of Collateral, shall be applied by Lender in the following order of
priority:
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7.7.1 Expenses. First, to the payment of (i) all fees and
expenses, including, without limitation, reasonable attorneys' fees,
court costs, fees of appraisers, title charges, costs of maintaining
and preserving the Collateral, costs of sale, and all other costs
incurred by the Lender in exercising any rights against HouTex or the
Individual Guarantors accorded to the Lender pursuant to the Loan
Documents or by applicable law and (ii) all Liens superior to the Liens
of Lender, except such superior Liens subject to which any sale of the
Collateral may have been made;
7.7.2 Borrowers' Obligations. Next to the payment of
Borrowers' Obligations owing by HouTex in such order as Lender may
determine; and
7.7.3 Surplus. Any surplus, to the Person or Persons entitled
thereto.
8. CLOSING. The initial closing of the Loans (the "Closing") shall be on
the date hereof (the "Closing Date"), and the Closing shall take place on such
date provided all conditions for the Closing as set forth in this Loan Agreement
have been satisfied. The Closing shall occur at such place and at such time as
the parties hereto shall agree.
9. EXPENSES AND INDEMNITY.
9.1 Attorneys' Fees and Other Fees and Expenses. Each Borrower agrees
to pay to Lender on demand all fees paid and expenses incurred by Lender in
connection with the transactions contemplated hereby and in connection with any
amendments, modifications or waivers (whether or not the same become effective)
under or in respect of any of the Loan Documents, including, without limitation:
9.1.1 Fees and Expenses for Preparation of Loan Documents. All
reasonable fees, expenses and disbursements (including without
limitation, charges for required lien searches, reproduction of
documents, long distance telephone calls and overnight express
carriers) of counsel retained by Lender in connection with the
preparation and negotiation of any of the Loan Documents or any
amendments, modifications or waivers hereto or thereto (whether or not
the same become effective).
9.1.2 Fees and Expenses in Enforcement of Rights or Defense of
Loan Documents. Any reasonable attorneys' fees and expenses or other
costs or expenses incurred by Lender in connection with the enforcement
or collection against the Borrowers or the Individual Guarantors of any
provision of any of the Loan Documents, and in connection with or
arising out of any litigation, investigation or proceeding instituted
by any Governmental Body or any other Person with respect to any of the
Loan Documents, whether or not suit is instituted, including, but not
limited to, such costs or expenses arising from the enforcement or
collection against the Borrowers and the Individual Guarantors of any
provision of any of the Loan Documents in any state or federal
bankruptcy or reorganization proceeding; provided, however, that MMI
shall not be liable for any of the costs or expenses incurred by Lender
in connection with the enforcement or collection of HouTex's
obligations under any of the
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Loan Documents and HouTex shall not be liable for any of the costs or
expenses incurred by Lender in connection with the enforcement or
collection of MMI's obligations under any of the Loan Documents.
9.2 Indemnity. Each Borrower hereby agrees to indemnify and save Lender
harmless from the following:
9.2.1 Brokerage Fees. The fees, if any, of brokers and finders
incurred by either Borrower.
9.2.2 Securities Violations. Any loss, cost, liability, damage
or expense (including reasonable attorneys' fees and expenses) incurred
by Lender in investigating, preparing for, defending against, or
providing evidence, producing documents or taking other action in
respect of any commenced or threatened litigation, administrative
proceeding, including, without limitation, any suit instituted by any
creditors of the Borrowers or investigation under any statutes, rules
or regulations pertaining to any federal securities law, the United
States Bankruptcy Code, any relevant state corporate statute or any
other securities law, bankruptcy law or law affecting mergers generally
of any jurisdiction, or any regulation pertaining to any of the
foregoing, or at common law or otherwise, relating, directly or
indirectly, to the transactions contemplated by the Loan Documents;
provided, however, that nothing herein is intended to require the
Borrowers to indemnify Lender for any losses, costs, liability, damages
or expenses incurred as a direct result of the gross negligence or
willful misconduct of Lender or its employees or agents.
9.2.3 Operation of Collateral; Joint Venturers. Any loss,
cost, liability, damage or expense (including reasonable attorneys'
fees and expenses) incurred in connection with the ownership, operation
or maintenance of the Collateral, the construction of Lender and the
Borrowers as having the relationship of joint venturers or partners or
the determination that Lender or the Borrowers have acted as agent for
the other.
10. MISCELLANEOUS.
10.1 Notices. Except as expressly provided to the contrary, any
notices, communications and waivers under this Loan Agreement and the other Loan
Documents shall be in writing and shall be (i) delivered in person, (ii) mailed,
postage prepaid, either by registered or certified mail, return receipt
requested, or (iii) sent by overnight express courier, addressed in each case as
follows:
To Lender: LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Mr. Xxxxx Xxxxxx
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With copy to: Schwartz, Cooper, Xxxxxxxxxxx & Xxxxxx
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxx, Esq.
To MMI: Metal Management, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: President
With copy to: Xxxxxxx & Xxxxxxxx Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
To HouTex: HouTex Metals Company, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxxx Xxxxxx
With copies to: Metal Management, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: President
Chamberlin, Hrdlicka, White, Xxxxxxxx & Xxxxxx
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxx, Esq.
or to any other address as to any of the parties hereto, as such party shall
designate in a written notice to the other party hereto. All notices sent
pursuant to the terms of this Section shall be deemed received (i) if personally
delivered, then on the date of delivery, (ii) if sent by overnight, express
courier, then on the next federal banking day immediately following the day
sent, or (iii) if sent by registered or certified mail, then on the earlier of
the third federal banking day following the day sent or when actually received.
10.2 Survival of Loan Agreement. All covenants, agreements,
representations and warranties made in this Loan Agreement and in the
certificates delivered pursuant hereto shall survive the initial disbursement of
the Loans and the execution and delivery to Lender of the Notes and of all other
Loan Documents and shall continue in full force and effect so long as any of
Borrowers' Obligations remain outstanding, unperformed or unpaid.
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10.3 Further Assurance. From time to time, the Borrowers shall execute
and deliver to Lender such additional documents as Lender may require to carry
out the purposes of this Loan Agreement and the other Loan Documents and to
protect Lender's rights hereunder and thereunder.
10.4 Taxes and Fees. Should any tax (other than taxes based upon the
net income of Lender), recording or filing fees become payable in respect of any
of the Loan Documents, or any amendment, modification or supplement thereto, the
Borrowers agree to pay the same to Lender on demand, together with any interest
or penalties thereon, and agree to hold Lender harmless with respect thereto.
10.5 Severability. If any provision of this Loan Agreement is deemed to
be invalid by reason of the operation of law, or by reason of the interpretation
placed thereon by any administrative agency or any court, the Borrowers and
Lender shall negotiate an equitable adjustment in the provisions hereof in order
to effect, to the maximum extent permitted by law, the purpose of this provision
and the validity and enforceability of the remaining provisions, and this Loan
Agreement shall otherwise remain in full force and effect.
10.6 Waiver. No delay on the part of Lender in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, and no single or
partial exercise of any right, power or privilege hereunder shall preclude other
or further exercise thereof, or be deemed to establish a custom or course of
dealing or performance between the parties hereto, or preclude the exercise of
any other right, power or privilege.
10.7 Modification of Loan Documents. No modification or waiver of any
provision of any of the Loan Documents shall be effective unless the same shall
be in writing, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on
the Borrowers in any case shall entitle them to any other or further notice or
demand in the same, similar or other circumstances.
10.8 Captions. The headings in this Loan Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
10.9 Sale of Interest. Neither Borrower may sell, assign or transfer
this Loan Agreement or any portion thereof, including, without limitation, such
Borrower's right, title, interest, remedies, powers, and/or duties hereunder or
thereunder. Each Borrower hereby consents to Lender's sale, assignment, transfer
or other disposition of its interest in this Loan Agreement and the other Loan
Documents at any time or times. Each Borrower acknowledges and agrees that any
and all such assignees may be provided with information concerning such
Borrower, its operations, business and financial condition and this Loan
Agreement which have been or would be provided to Lender.
10.10 Successors and Assigns. This Loan Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns.
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10.11 Remedies Cumulative. All rights and remedies of Lender pursuant
to this Loan Agreement, any other Loan Documents or otherwise, shall be
cumulative and non-exclusive, and may be exercised singularly or concurrently.
One or more successive actions may be brought against the Borrowers as often as
Lender deems advisable, until all of Borrowers' Obligations are paid and
performed in full.
10.12 Entire Agreement. This Loan Agreement and the other Loan
Documents executed prior or pursuant hereto constitute the entire agreement
between the parties hereto with respect to the transactions contemplated hereby
or thereby and supersede any prior agreements, whether written or oral, relating
to the subject matter hereof.
10.13 APPLICABLE LAW. THE LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF ILLINOIS,
UNLESS OTHERWISE PROVIDED THEREIN.
10.14 JURISDICTION AND VENUE. EACH BORROWER HEREBY AGREES THAT ALL
ACTIONS OR PROCEEDINGS INITIATED BY SUCH BORROWER AND ARISING DIRECTLY OR
INDIRECTLY OUT OF THE LOAN DOCUMENTS SHALL BE LITIGATED IN THE CIRCUIT COURT OF
XXXX COUNTY, ILLINOIS, OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS OR, IF LENDER INITIATES SUCH ACTION, ANY COURT IN WHICH
LENDER SHALL INITIATE SUCH ACTION, TO THE EXTENT SUCH COURT HAS JURISDICTION.
EACH BORROWER HEREBY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY LENDER IN ANY OF SUCH
COURTS, AND HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR
OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS
AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO SUCH BORROWER AT THE ADDRESS TO WHICH NOTICES ARE TO BE SENT
PURSUANT TO SECTION 10.1. EACH BORROWER WAIVES ANY CLAIM THAT CHICAGO, ILLINOIS
OR THE NORTHERN DISTRICT OF ILLINOIS IS AN INCONVENIENT FORUM OR AN IMPROPER
FORUM BASED ON LACK OF VENUE. SHOULD A BORROWER, AFTER BEING SO SERVED, FAIL TO
APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN
THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE MAILING THEREOF, SUCH BORROWER
SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED BY LENDER
AGAINST SUCH BORROWER AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT,
PROCESS OR PAPERS. THE EXCLUSIVE CHOICE OF FORUM FOR BORROWERS SET FORTH IN THIS
SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT, BY LENDER, OF ANY
JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING, BY LENDER, OF ANY ACTION TO
ENFORCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION.
10.15 WAIVER OF RIGHT TO JURY TRIAL. LENDER AND THE BORROWERS
ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER
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ANY OF THE LOAN DOCUMENTS OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED
THEREBY WOULD BE BASED UPON DIFFICULT AND COMPLEX ISSUES AND THEREFORE, THE
PARTIES AGREE THAT ANY COURT PROCEEDING ARISING OUT OF ANY SUCH CONTROVERSY WILL
BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
This Loan Agreement has been executed and delivered by each of the
parties hereto by a duly authorized officer of each such party on the date first
set forth above.
METAL MANAGEMENT, INC., a
Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Title: President
----------------------------
HOUTEX METALS COMPANY, INC., a
Texas corporation
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Title: Vice President
---------------------------
LASALLE NATIONAL BANK, a national
banking association
By: /s/ Xxxxx Xxxxxx
------------------------------
Title: Senior Vice President
---------------------------
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List of Exhibits
A - List of Business Sites (1.1; 4.6.3; 4.25; 4.26)
B - Description of Additional Liens and Indebtedness (1.1; 4.18; 6.1)
C - Description of Financial Statements and Projections (4.9)
D - Environmental Matters (4.15)
E - List of HouTex Officers with Authority to Request Advances (2.1.2)
