1
EXECUTION COPY
$250,000,000
CREDIT AGREEMENT
dated as of February 15, 1994
between
KAISER ALUMINUM & CHEMICAL CORPORATION,
KAISER ALUMINUM CORPORATION,
CERTAIN FINANCIAL INSTITUTIONS,
and
BANKAMERICA BUSINESS CREDIT, INC.,
as Agent
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 4
1.2. Use of Defined Terms. . . . . . . . . . . . . . . . . . . . 39
1.3. Cross-References. . . . . . . . . . . . . . . . . . . . . . 39
1.4. Accounting and Financial Determinations and
Other Terms . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE II
COMMITMENTS AND BORROWING PROCEDURES
2.1. Commitments . . . . . . . . . . . . . . . . . . . . . . . . 40
2.1.1. Revolving Commitment . . . . . . . . . . . . . . 40
2.1.2. Swingline Commitment . . . . . . . . . . . . . . 41
2.1.3. Lenders Not Required To Make Loans
or Issue Letters of Credit . . . . . . . . . . . 42
2.1.4. Borrowing Base Determinations. . . . . . . . . . 42
2.2. Reduction of Revolving Commitment Amount. . . . . . . . . . 43
2.3. Borrowing Procedure . . . . . . . . . . . . . . . . . . . . 43
2.4. Agent's Books and Records; Monthly Statements . . . . . . . 44
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST, AND FEES
3.1. Repayments. . . . . . . . . . . . . . . . . . . . . . . . . 45
3.2. Voluntary Prepayments . . . . . . . . . . . . . . . . . . . 45
3.3. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . 46
3.3.1. Prepayment Under, or Cash
Collateralization of, Revolving
Commitment . . . . . . . . . . . . . . . . . . . 46
3.3.2. Cash Dominion. . . . . . . . . . . . . . . . . . 47
3.3.3. Acceleration . . . . . . . . . . . . . . . . . . 47
3.4. Interest Provisions . . . . . . . . . . . . . . . . . . . . 48
3.4.1. Rates. . . . . . . . . . . . . . . . . . . . . . 48
3.4.2. Continuation and Conversion
Elections. . . . . . . . . . . . . . . . . . . . 50
3.4.3. Funding. . . . . . . . . . . . . . . . . . . . . 51
3.4.4. Default Rates. . . . . . . . . . . . . . . . . . 51
3.4.5. Interest Payment Dates . . . . . . . . . . . . . 52
3.5. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
3.5.1. Commitment Fee . . . . . . . . . . . . . . . . . 52
3.5.2. Audit Fees . . . . . . . . . . . . . . . . . . . 52
3.5.3. Other Fees . . . . . . . . . . . . . . . . . . . 53
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ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
4.1. Illegality. . . . . . . . . . . . . . . . . . . . . . . . . 53
4.2. Deposits Unavailable. . . . . . . . . . . . . . . . . . . . 54
4.3. Increased Costs, etc. . . . . . . . . . . . . . . . . . . . 54
4.4. Funding Losses. . . . . . . . . . . . . . . . . . . . . . . 54
4.5. Increased Capital Costs . . . . . . . . . . . . . . . . . . 55
4.6. Taxes, etc. . . . . . . . . . . . . . . . . . . . . . . . . 55
4.7. Payments, Computations, etc . . . . . . . . . . . . . . . . 57
4.8. Sharing of Payments . . . . . . . . . . . . . . . . . . . . 59
4.9. Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
4.10. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 60
4.11. Change of Lending Office, Replacement of
Lender, etc . . . . . . . . . . . . . . . . . . . . . . . . 60
4.12. Computation of Additional Amounts Due . . . . . . . . . . . 61
ARTICLE V
LETTERS OF CREDIT
5.1. Requests. . . . . . . . . . . . . . . . . . . . . . . . . . 62
5.2. Issuance and Extensions . . . . . . . . . . . . . . . . . . 63
5.3. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 64
5.4. Other Lenders' Participation. . . . . . . . . . . . . . . . 64
5.5. Disbursements . . . . . . . . . . . . . . . . . . . . . . . 65
5.6. Reimbursement . . . . . . . . . . . . . . . . . . . . . . . 66
5.7. Mandatory Payment to Agent of Letter of Credit
Outstandings. . . . . . . . . . . . . . . . . . . . . . . . 66
5.8. L/C Collateral Account. . . . . . . . . . . . . . . . . . . 66
5.8.1. Deposit. . . . . . . . . . . . . . . . . . . . . 66
5.8.2. Investment . . . . . . . . . . . . . . . . . . . 67
5.8.3. Application of Funds . . . . . . . . . . . . . . 67
5.8.4. Fees . . . . . . . . . . . . . . . . . . . . . . 68
5.9. Nature of Reimbursement Obligations . . . . . . . . . . . . 68
5.10. Indemnification by Lenders. . . . . . . . . . . . . . . . . 69
ARTICLE VI
PARENT GUARANTOR
6.1. Parent Guaranty . . . . . . . . . . . . . . . . . . . . . . 69
6.2. Renewal, etc. of Obligations; Waiver. . . . . . . . . . . . 69
6.3. No Impairment, etc. . . . . . . . . . . . . . . . . . . . . 70
6.4. Reinstatement; Subrogation. . . . . . . . . . . . . . . . . 70
ARTICLE VII
CONDITIONS TO EXTENSIONS OF CREDIT
7.1. Initial Credit Extension. . . . . . . . . . . . . . . . . . 71
7.1.1. Resolutions, etc . . . . . . . . . . . . . . . . 71
7.1.2. Insurance. . . . . . . . . . . . . . . . . . . . 72
7.1.3. Payment of Outstanding
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Indebtedness; Existing Letters of
Credit . . . . . . . . . . . . . . . . . . . . . 72
7.1.4. Parent Pledge Agreement. . . . . . . . . . . . . 72
7.1.5. Company Pledge Agreement . . . . . . . . . . . . 73
7.1.6. Security Agreements. . . . . . . . . . . . . . . 73
7.1.7. Company Trademark Security
Agreement; Company Patent Security
Agreement. . . . . . . . . . . . . . . . . . . . 74
7.1.8. Company Mortgages; Company Deeds of
Trust. . . . . . . . . . . . . . . . . . . . . . 74
7.1.9. Subsidiary Guaranty. . . . . . . . . . . . . . . 75
7.1.10. Subsidiary Pledge Agreement. . . . . . . . . . . 75
7.1.11. Intercompany Note Pledge Agreement . . . . . . . 76
7.1.12. Opinions of Counsel. . . . . . . . . . . . . . . 76
7.1.13. Closing Fees, Expenses, etc. . . . . . . . . . . 76
7.1.14. Environmental Reports. . . . . . . . . . . . . . 76
7.1.15. Investment Account Letter. . . . . . . . . . . . 76
7.1.16. Sufficient Quantities, etc . . . . . . . . . . . 77
7.1.17. Availability . . . . . . . . . . . . . . . . . . 77
7.1.18. Issuance of Senior Debt and Equity . . . . . . . 77
7.1.19. Cash Management Arrangements . . . . . 77
7.2. All Credit Extensions . . . . . . . . . . . . . . . . . . . 77
7.2.1. Compliance with Warranties, No
Default, etc . . . . . . . . . . . . . . . . . . 78
7.2.2. Credit Request; Borrowing Base
Certificate. . . . . . . . . . . . . . . . . . . 79
7.2.3. Satisfactory Legal Form. . . . . . . . . . . . . 80
7.3. Conditions Subsequent . . . . . . . . . . . . . . . . . . . 80
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1. Organization, etc . . . . . . . . . . . . . . . . . . . . . 80
8.2. Due Authorization, Non-Contravention, etc . . . . . . . . . 81
8.3. Government Approval, Regulation, etc. . . . . . . . . . . . 81
8.4. Validity, etc . . . . . . . . . . . . . . . . . . . . . . . 82
8.5. Financial Information . . . . . . . . . . . . . . . . . . . 82
8.6. No Material Adverse Effect. . . . . . . . . . . . . . . . . 83
8.7. Absence of Default or Violation of Law. . . . . . . . . . . 83
8.8. Litigation, etc . . . . . . . . . . . . . . . . . . . . . . 84
8.9. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 84
8.10. Ownership of Properties . . . . . . . . . . . . . . . . . . 84
8.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.12. Pension and Welfare Plans . . . . . . . . . . . . . . . . . 85
8.13. Environmental Warranties. . . . . . . . . . . . . . . . . . 85
8.14. Regulations G, U, and X . . . . . . . . . . . . . . . . . . 87
8.15. Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . 87
8.16. Senior Indebtedness . . . . . . . . . . . . . . . . . . . . 87
8.17. Accuracy of Information . . . . . . . . . . . . . . . . . . 88
8.18. Joint Venture Contingent Liabilities. . . . . . . . . . . . 89
8.19. Mortgaged Property. . . . . . . . . . . . . . . . . . . . . 89
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ARTICLE IX
COVENANTS
9.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . 89
9.1.1. Financial Information, Reports,
Notices, etc. . . . . . . . . . . . . . . . . . 89
9.1.2. Compliance with Laws, etc. . . . . . . . . . . . 92
9.1.3. Maintenance of Properties. . . . . . . . . . . . 93
9.1.4. Insurance. . . . . . . . . . . . . . . . . . . . 93
9.1.5. Books and Records; Audits;
Confidentiality. . . . . . . . . . . . . . . . . 95
9.1.6. Environmental Covenant . . . . . . . . . . . . . 97
9.1.7. Performance of Instruments . . . . . . . . . . . 98
9.1.8. Maintenance of Collateral. . . . . . . . . . . . 98
9.1.9. Collateral Reporting . . . . . . . . . . . . . . 98
9.1.10. Delivery; Further Assurances . . . . . . . . . . 99
9.1.11. Real Property; Title Policies;
Surveys. . . . . . . . . . . . . . . . . . . . .101
9.1.12. Intercompany Demand Notes. . . . . . . . . . . .103
9.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . .103
9.2.1. Business Activities. . . . . . . . . . . . . . .103
9.2.2. Indebtedness . . . . . . . . . . . . . . . . . .103
9.2.3. Liens. . . . . . . . . . . . . . . . . . . . . .107
9.2.4. Financial Condition. . . . . . . . . . . . . . .110
9.2.5. Investments. . . . . . . . . . . . . . . . . . .111
9.2.6. Restricted Payments, etc . . . . . . . . . . . .113
9.2.7. Capital Expenditures.. . . . . . . . . . . . . .116
9.2.8. Rental Obligations . . . . . . . . . . . . . . .117
9.2.9. Take or Pay Contracts. . . . . . . . . . . . . .117
9.2.10. Consolidation, Merger, etc . . . . . . . . . . .117
9.2.11. Asset Dispositions . . . . . . . . . . . . . . .118
9.2.12. Sale or Discount of Receivables. . . . . . . . .119
9.2.13. Restrictions on Actions under
Certain Agreements . . . . . . . . . . . . . . .120
9.2.14. Transactions with Affiliates . . . . . . . . . .121
9.2.15. Negative Pledges, etc. . . . . . . . . . . . . .122
9.2.16. Sale-Leaseback Transactions. . . . . . . . . . .123
9.2.17. Change of Location or Name . . . . . . . . . . .123
9.2.18. Intercompany Transfers of Property . . . . . . .123
9.2.19. Inconsistent Agreements. . . . . . . . . . . . .124
9.2.20. Transfer of Collateral . . . . . . . . . . . . .124
ARTICLE X
EVENTS OF DEFAULT
10.1. Listing of Events of Default. . . . . . . . . . . . . . . .125
10.1.1. Non-Payment of Obligations . . . . . . . . . . .125
10.1.2. Breach of Warranty . . . . . . . . . . . . . . .125
10.1.3. Non-Performance of Certain
Covenants and Obligations. . . . . . . . . . . .125
10.1.4. Non-Performance of Certain
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Covenants and Obligations. . . . . . . . . . . .125
10.1.5. Non-Performance of Other Covenants
and Obligations. . . . . . . . . . . . . . . . .126
10.1.6. Default on Other Indebtedness. . . . . . . . . .126
10.1.7. Judgments. . . . . . . . . . . . . . . . . . . .126
10.1.8. Pension Plans. . . . . . . . . . . . . . . . . .127
10.1.9. Change in Control. . . . . . . . . . . . . . . .127
10.1.10. Bankruptcy, Insolvency, etc. . . . . . . . . . .127
10.1.11. Subordinated Debt and Senior Debt. . . . . . . .128
10.1.12. Impairment of Certain Documents. . . . . . . . .128
10.2. Action if Bankruptcy. . . . . . . . . . . . . . . . . . . .128
10.3. Action if Other Event of Default. . . . . . . . . . . . . .128
ARTICLE XI
THE ADMINISTRATIVE AGENT
11.1. Appointment; Actions. . . . . . . . . . . . . . . . . . . .129
11.2. Funding Reliance, etc . . . . . . . . . . . . . . . . . . .131
11.3. Exculpation . . . . . . . . . . . . . . . . . . . . . . . .132
11.4. Successors. . . . . . . . . . . . . . . . . . . . . . . . .133
11.5. Credit Extensions by the Agent. . . . . . . . . . . . . . .134
11.6. Credit Decisions. . . . . . . . . . . . . . . . . . . . . .134
11.7. Copies, etc . . . . . . . . . . . . . . . . . . . . . . . .134
11.8. Designation of Additional Agents. . . . . . . . . . . . . .135
11.9. Certain Releases. . . . . . . . . . . . . . . . . . . . . .135
11.10. Approval of Loan Documents. . . . . . . . . . . . . . . . .136
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Waivers, Amendments, etc. . . . . . . . . . . . . . . . . .136
12.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . .138
12.3. Payment of Costs and Expenses . . . . . . . . . . . . . . .138
12.4. Indemnification . . . . . . . . . . . . . . . . . . . . . .139
12.5. Survival. . . . . . . . . . . . . . . . . . . . . . . . . .140
12.6. Severability. . . . . . . . . . . . . . . . . . . . . . . .141
12.7. Headings. . . . . . . . . . . . . . . . . . . . . . . . . .141
12.8. Execution in Counterparts, Effectiveness, etc . . . . . . .141
12.9. Governing Law; Submission to Jurisdiction . . . . . . . . .141
12.10. Successors and Assigns. . . . . . . . . . . . . . . . . . .143
12.11. Sale and Transfer of Credit Extensions and
Commitments; Participations in Credit
Extensions and Commitments. . . . . . . . . . . . . . . . .143
12.11.1. Assignments. . . . . . . . . . . . . . . . . . .143
12.11.2. Participations . . . . . . . . . . . . . . . . .144
12.12. Other Transactions. . . . . . . . . . . . . . . . . . . . .145
12.13. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . .145
12.14. Final Agreement, etc. . . . . . . . . . . . . . . . . . . .145
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EXHIBITS
Exhibit A-1(a) Borrowing Request - Revolving Loan Borrowing
Exhibit A-1(b) Borrowing Request - Swingline Borrowings
Exhibit A-2 Continuation/Conversion Notice
Exhibit B Revolving L/C Request
Exhibit C-1 Certificate as to Senior Debt
Exhibit C-2 Certificate as to Parent Guarantor Preferred
Stock
Exhibit D-1 Borrowing Base Certificate
Exhibit D-2 Compliance Certificate
Exhibit E-1 Parent Pledge Agreement
Exhibit E-2 Parent Security Agreement
Exhibit F-1 Company Pledge Agreement
Exhibit F-2 Company Security Agreement
Exhibit F-3 Company Patent Security Agreement
Exhibit F-4 Company Trademark Security Agreement
Exhibit G Collection Bank Agreement
Exhibit H Concentration Bank Agreement
Exhibit I-1 Company Deed of Trust
Exhibit I-2 Company Mortgage
Exhibit J Subsidiary Guaranty
Exhibit K-1 Subsidiary Pledge Agreement
Exhibit K-2 Subsidiary Security Agreement
Exhibit K-3 Intercompany Note Pledge Agreement
Exhibit L-1 Opinion of Outside Counsel to Company
Exhibit L-2 Opinion of Inside Counsel to Company
Exhibit L-3 Opinion of Special Patent Counsel to Company
Exhibit L-4 Opinions of Local Counsel
Exhibit L-5 Opinion of Counsel to Agent
Exhibit M Assignee Agreement to be bound
Exhibit N Investment Account Letter
Exhibit O-1 Intercompany Demand Note
Exhibit O-2 Intercompany Demand Note
Exhibit O-3 Intercompany Demand Note
Exhibit 0-4 Intercompany Demand Note
Exhibit 0-5 Intercompany Demand Note
Exhibit P-1 Equity Proceeds Note
Exhibit P-2 Equity Proceeds Note
Exhibit Q Form of Confidentiality Agreement
Exhibit R Form of RTZ Aluminum Holdings Limited Letter
Exhibit S Form of Flood Plain Status Letter
SCHEDULES
Schedule I Pledged Subsidiaries and Joint Venture Affiliates
(Company Pledge Agreement)
Schedule II Mortgaged Real Property (Company Mortgage and Deed
of Trust)
Schedule III Subsidiaries executing the Subsidiary Guaranty
Schedule IV Subsidiaries executing the Subsidiary Pledge
Agreement and the Subsidiary Security Agreement
Schedule V Pledged Subsidiaries (Subsidiary Pledge Agreement)
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Schedule VI Intercompany Demand Notes (Subsidiary Pledge
Agreement)
Schedule VII Subsidiaries executing Intercompany Note Pledge
Agreement
Schedule VIII Intercompany Demand Notes (Intercompany Note
Pledge Agreement)
Schedule IX Existing Letters of Credit
Schedule X Local Counsel
Schedule XI Other Material Subsidiaries
Schedule XII Existing Investments
Schedule XIII Certain Intercompany Debt
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of February 15, 1994,
is between KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware
corporation (the "Company"), KAISER ALUMINUM CORPORATION, a
-------
Delaware corporation (the "Parent Guarantor"), the various
----------------
financial institutions that are or may from time to time become
parties hereto pursuant to the terms hereof (collectively, the
"Lenders" and, individually, a "Lender"), and BANKAMERICA
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BUSINESS CREDIT, INC., a Delaware corporation, as agent (in such
capacity, together with its successors and assigns in such
capacity, the "Agent") for the Lenders.
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W I T N E S S E T H:
WHEREAS, the Company, a direct Subsidiary of the Parent
Guarantor, is engaged, directly and through its various
Subsidiaries and Joint Venture Affiliates, in the business of the
mining of bauxite, the refining of bauxite into alumina, the
production of primary aluminum and semi-fabricated and fabricated
aluminum products, and the sale of bauxite, alumina, primary
aluminum, and semi-fabricated and fabricated aluminum products to
direct customers and distributors; and
WHEREAS, the Company desires to obtain Commitments from
the Lenders pursuant to which Loans and other Credit Extensions,
in a maximum aggregate principal amount at any one time
outstanding not to exceed $250,000,000, will be made to or for
the account of the Company from time to time prior to the
Revolving Commitment Termination Date; and
WHEREAS, each Lender, severally and for itself alone,
is willing, on the terms and subject to the conditions
hereinafter set forth (including Article VII), to extend its
-----------
Commitments and make its Loans and other Credit Extensions to or
for the account of the Company; and
WHEREAS, the proceeds of any Loans made on the Initial
Borrowing Date will be applied by the Company, together with
other funds, to make payment in full of all Indebtedness of the
Company identified in Item 1 ("Indebtedness to be Paid") of the
------ -----------------------
Disclosure Schedule; and
WHEREAS, in order to induce the Lenders to enter into
this Agreement and to extend their respective Commitments and
make the Loans and other Credit Extensions, the Parent Guarantor
has agreed to unconditionally guarantee all obligations of the
Company hereunder and under the other Loan Documents; and
WHEREAS, on the terms and subject to the conditions
hereof, on or prior to the Initial Borrowing Date, the following
transactions shall occur as provided below:
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(a) as security for the Company's Obligations, the
Company shall execute and deliver to the Agent, on behalf of the
Secured Lenders:
(i) the Company Security Agreement, granting to
the Agent, on behalf of the Secured Lenders, a security
interest in the Company's personal property described
therein;
(ii) the Company Pledge Agreement, pledging to
the Agent, on behalf of the Secured Lenders;
(A) all of the issued and outstanding shares
of capital stock of each first-tier, Domestic
Subsidiary of the Company listed on Schedule I
----------
hereto;
(B) the percentage of the issued and
outstanding shares of capital stock of each first-
tier, non-Domestic Subsidiary or Joint Venture
Affiliate of the Company listed on such Schedule I
----------
set forth opposite the name of such Subsidiary or
Joint Venture Affiliate;
(C) the KT Note; and
(D) all other promissory notes or other debt
instruments held by the Company; and
(iii) the Company Mortgages and Company Deeds of
Trust, mortgaging to the Agent (or one or more trustees
therefor) and granting to the Agent (or one or more
trustees therefor), on behalf of the Secured Lenders, a
security interest in all real property of the Company
listed on Schedule II hereto.
-----------
(b) as security for the Parent Guarantor's Obligations
under the Parent Guaranty, the Parent Guarantor shall
execute and deliver to the Agent, on behalf of the Secured
Lenders:
(i) the Parent Security Agreement, granting to
the Agent, on behalf of the Secured Lenders, a security
interest in the Parent Guarantor's personal property
described therein; and
(ii) the Parent Pledge Agreement, pledging to the
Agent, on behalf of the Secured Lenders:
(A) all of the issued and outstanding shares
of capital stock of the Company held by the Parent
Guarantor; and
(B) all promissory notes or other debt
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instruments (other than the Equity Proceeds Notes)
held by the Parent Guarantor;
(c) each Subsidiary of the Company listed on
Schedule III hereto shall execute and deliver to the Agent,
------------
the Subsidiary Guaranty, guaranteeing the Company's
Obligations and each other such Subsidiary's Obligations
under the Subsidiary Guaranty;
(d) as security for such Subsidiary's Obligations
under the Subsidiary Guaranty, each Subsidiary of the
Company listed on Schedule IV hereto shall execute and
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deliver to the Agent, on behalf of the Secured Lenders, the
Subsidiary Pledge Agreement, pledging to the Agent, on
behalf of the Secured Lenders:
(i) all of the issued and outstanding shares of
capital stock of each first-tier, Domestic Subsidiary
of such Subsidiary listed on Schedule V hereto;
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(ii) the percentage of the issued and outstanding
shares of capital stock of each first-tier, non-
Domestic Subsidiary of such Subsidiary listed on such
Schedule V set forth opposite the name of such
----------
Subsidiary;
(iii) any Intercompany Demand Note held by such
Subsidiary listed on Schedule VI hereto; and
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(iv) all other promissory notes or other debt
instruments held by such Subsidiary;
(e) as security for such Subsidiary's Obligations
under the Subsidiary Guaranty, each Subsidiary of the
Company listed on Schedule IV hereto shall execute and
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deliver to the Agent the Subsidiary Security Agreement,
granting to the Agent, on behalf of the Secured Lenders, a
security interest in such Subsidiary's personal property
described therein; and
(f) each Subsidiary of the Company listed on Schedule
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VII hereto which is not otherwise a party to the
---
Subsidiary Pledge Agreement shall execute and deliver
to the Agent, on behalf of the Secured Lenders, the
Intercompany Note Pledge Agreement, pledging to the
Agent, on behalf of the Secured Lenders, any
Intercompany Demand Note held by such Subsidiary listed
on Schedule VIII hereto;
-------------
NOW, THEREFORE, the parties hereto agree as follows:
3
12
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms when
-------------
used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the
following meanings (such meanings to be equally applicable to the
singular and plural forms thereof):
"Account" means any present or future right to payment for
-------
goods sold or leased or for services rendered, whether due or to
become due, whether now existing or hereafter arising and whether
or not it has been earned by performance.
"Account Debtor" means each Person obligated in any way on
--------------
an Account.
"Adjusted Capital Expenditures" means, for any period,
-----------------------------
(a) Capital Expenditures for such period (exclusive of
capitalized interest)
minus
- -----
(b) that portion of Capital Expenditures for such
period (exclusive of capitalized interest) attributable to
any Subsidiary of the Company which is equal to (i) the
proportionate direct or indirect ownership of Persons other
than the Company and its Subsidiaries of the voting stock
of, or partnership interest in, such Subsidiary or (ii) if
the economic burden of such Capital Expenditures is borne or
to be borne by minority owners of such Subsidiary (other
than the Company and its Subsidiaries) in a proportion other
than the proportion of their direct or indirect ownership of
the voting stock of, or partnership interest in, such
Subsidiary, the proportionate share of the economic burden
of such Capital Expenditures borne or to be borne by such
minority owners.
"Affected Lender" is defined in Section 4.11(b).
--------------- ---------------
"Affiliate" means, with respect to any Person, any other
---------
Person which, directly or indirectly, controls, is controlled by,
or is under common control with such Person (excluding any
trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be
"controlled by" any other Person if such other Person possesses,
directly or indirectly, power to
(a) vote 20% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election
of a majority of directors or managing general partners;
4
13
(b) vote sufficient securities of any class to control
the election of one or more directors or managing general
partners; or
(c) direct or cause the direction of the management
and policies of such Person, whether by contract or
otherwise.
"Agent" is defined in the preamble.
----- --------
"Agreement" means, on any date, this Credit Agreement as
---------
originally in effect on the Effective Date and as thereafter from
time to time amended, supplemented, amended and restated, or
otherwise modified and in effect on such date.
"AJI" means Alpart Jamaica Inc., a Delaware corporation.
---
"ALPART" means Alumina Partners of Jamaica, a Delaware
------
general partnership.
"Anglesey" means Anglesey Aluminium Limited, a United
--------
Kingdom corporation.
"Asset Disposition" means any sale, transfer, lease which is
-----------------
accounted for as a sale under GAAP, contribution, conveyance, or
other disposition (other than the grant of a Lien), in any case
made after the Initial Borrowing Date, of any Property of the
Company or any of its Subsidiaries to any Person.
"Assignee Agreement to be Bound" means an Assignee Agreement
------------------------------
to be Bound in substantially the form of Exhibit M attached
---------
hereto.
"Assignee Lender" is defined in Section 12.11.1.
--------------- ---------------
"Authorized Officer" means, with respect to any Obligor,
------------------
those of its officers whose signatures and incumbency shall have
been certified to the Agent and the Lenders pursuant to
Section 7.1.1(a).
- ----------------
"Bank of America" means Bank of America National Trust and
---------------
Savings Association, a national banking association, in its
individual capacity.
"Bank of America Rate" is defined in "Reference Rate".
-------------------- --------------
"Borrowing" means the Revolving Loans made by all Lenders on
---------
the same Business Day pursuant to the same Borrowing Request in
accordance with Section 2.1.1 or the Swingline Loan made by
-------------
Business Credit pursuant to a Borrowing Request in accordance
with Section 2.1.3.
-------------
5
14
"Borrowing Base" means, at any time,
--------------
(a) an amount equal to 85% of the Net Amount of
Eligible Accounts as at such time
plus
- ----
(b) the lesser of (i) $175,000,000 and (ii) 65% of all
Eligible Inventory as at such time
minus
- -----
(c) all reserves, including any reserves for sales,
excise or similar taxes in respect of Eligible Accounts and
any reserves for rental expenses, processing fees or other
expenses relating to Eligible Inventory located at premises
not owned by the Company or KAII, which the Agent, after
consultation with the Company, in its commercially
reasonable discretion deems necessary or desirable to
maintain with respect to the Company's account, including
any amounts which the Agent may be obligated to pay in the
future for the account of the Company;
provided, however, that (i) the Net Amount of Eligible Accounts
- -------- -------
of KAII included in the Borrowing Base shall at no time exceed
20% of the Net Amount of Eligible Accounts included in the
Borrowing Base, (ii) the Net Amount of Eligible Accounts of the
Company owed by Foreign Account Debtors included in the Borrowing
Base shall at no time exceed 5% of the Net Amount of Eligible
Accounts of the Company included in the Borrowing Base and (iii)
Convertor Inventory that is located on the premises of a third
party included in the Borrowing Base shall at no time exceed 5%
of Eligible Inventory included in the Borrowing Base; and
provided further that the limitation set forth in clause (i) may,
- -------- ------- ----------
to the extent approved by the Agent in its sole discretion, be
increased by the amount, expressed in dollars, of any unused
amount of the Net Amount of Eligible Accounts of the Company owed
by Foreign Account Debtors permitted to be included in the
Borrowing Base under clause (ii).
-----------
"Borrowing Base Calculation Date" means, with respect to the
-------------------------------
delivery date of any Borrowing Base Certificate, the last day of
the preceding month or the last day of the next preceding month,
as the case may be.
"Borrowing Base Certificate" means a certificate duly
--------------------------
executed on behalf of the Company by a Financial Authorized
Officer of the Company in substantially the form of Exhibit D-1
-----------
attached hereto.
"Borrowing Request" means a loan request and certificate
-----------------
duly executed by an Authorized Officer of the Company, (a) in
respect of any Borrowing of Revolving Loans, in substantially the
form of Exhibit A-1(a) attached hereto, or (b) in respect of any
--------------
6
15
Borrowing of Swingline Loans, in substantially the form of
Exhibit A-1(b) attached hereto.
- --------------
"Business Credit" means BankAmerica Business Credit, Inc., a
---------------
Delaware corporation.
"Business Day" means any day which is
------------
(a) neither a Saturday or Sunday nor a legal holiday on
which banks are authorized or required to be closed in New York,
New York or in San Francisco, California; and
(b) relative to the making, continuing, converting,
prepaying, or repaying of any LIBO Rate Loans, also a day on
which dealings in Dollars are carried on in the London interbank
market.
"Canadian Subsidiaries" means Kaiser Aluminum & Chemical
---------------------
Canada Investment Limited, an Ontario corporation, and Kaiser
Canada.
"Capital Expenditures" means, for any period, the aggregate
--------------------
expenditures of the Company and its Subsidiaries on a
consolidated basis for fixed or capital assets made during such
period which, in accordance with GAAP, would be classified as
capital expenditures (including the aggregate amount of all
Capitalized Lease Liabilities incurred during such period);
provided, however, that any repurchase or leaseback by the
- -------- -------
Company of a facility sold by the Company in connection with the
issuance of industrial revenue bonds by a state, municipality or
other subdivision of the United States of America or any
department, agency, public corporation or other instrumentality
thereof shall not in any event be deemed to be a Capital
Expenditure.
"Capitalized Lease Liabilities" means all monetary
-----------------------------
obligations of the Company or any of its Subsidiaries under any
leasing or similar arrangement which, in accordance with GAAP,
would be classified as a capitalized lease, and, for purposes of
this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined
in accordance with GAAP, and the stated maturity thereof shall be
the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time:
--------------------------
(a) any evidence of Indebtedness, maturing not more
than one year after such time, issued or guaranteed by the
United States Government;
(b) any certificate of deposit or bankers' acceptance,
maturing not more than one year after such time, which is
7
16
issued or accepted by either
(i) a commercial banking institution that is a
member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less
than $500,000,000;
(ii) any Lender; or
(iii) with respect to certificates of deposit
that do not exceed $10,000,000 in the aggregate
outstanding at any time, any other commercial banking
institution;
(c) commercial paper rated A-1 or better by Standard &
Poor's Corporation or Prime-1 or better by Moody's Investors
Service, Inc.;
(d) repurchase agreements with respect to any of the
foregoing, with any bank or trust company referred to above
in clause (b) or with any nationally recognized securities
----------
dealer having total capital and surplus and undivided
profits of not less than $500,000,000; or
(e) investments in the Goldman, Sachs & Co.
Institutional Liquid Assets fund and other money market
funds which have substantially similar investment policies.
"CERCLA" means the Comprehensive Environmental Response,
------
Compensation and Liability Act of 1980, as amended or otherwise
modified from time to time.
"CERCLIS" means the Comprehensive Environmental Response
-------
Compensation Liability Information System List.
"Change in Control" means the occurrence of any of the
-----------------
following events: (a) MAXXAM not owning (other than by reason of
the existence of a Lien or other encumbrance but including by
reason of the foreclosure of or other realization upon a Lien or
other encumbrance) direct or indirect sole beneficial ownership
(as defined under Regulation 13d-3 of the Securities Exchange Act
of 1934 as in effect on the date of this Agreement) of at least
51% of the total common equity, on a fully diluted basis, of the
Parent Guarantor or the Company; or (b) MAXXAM, through direct
representation or through persons nominated by it, not
controlling a majority of the Board of Directors of the Parent
Guarantor or the Company necessary to effectuate any actions by
the Board of Directors of the Parent Guarantor or the Company; or
(c) any person or group (as defined in Section 13(d)(3) of the
----------------
Securities Exchange Act of 1934 as in effect on the date of this
Agreement), directly or indirectly, owning more of the total
voting power entitled to vote generally in the election of
directors of the Parent Guarantor or the Company than MAXXAM; or
(d) Charles Hurwitz, members of his immediate family and trusts
8
17
for the benefit thereof (each such person, including Mr. Hurwitz
and any trustee of such trusts, being herein called a
"Beneficiary") not having (other than by reason of death,
-----------
incapacity, bankruptcy, reorganization, insolvency or similar
proceeding or in connection with the resolution of any litigation
outstanding as of the date of the Subordinated Indenture or any
similar litigation or the existence of a Lien but including by
reason of the foreclosure of or other realization upon a Lien or
other encumbrance) direct or indirect sole beneficial ownership
(as defined under Regulation 13d-3 of the Securities Exchange Act
of 1934 as in effect on the date of this Agreement) of at least
the Minimum Percentage (defined below) of the total equity of
MAXXAM, other than as a result of new issuances of equity
securities by MAXXAM to third parties (other than to a third
party who is not a Beneficiary and who controls MAXXAM).
"Minimum Percentage" means that percentage obtained by
------------------
multiplying (i) the percentage of the total equity of MAXXAM,
directly or indirectly, beneficially owned by the Beneficiaries
as of the date of the Subordinated Indenture and (ii) 80%.
"Code" means the Internal Revenue Code of 1986, as amended,
----
reformed, or otherwise modified from time to time.
"Collateral" means all Property and rights on or in which a
----------
Lien is granted to the Agent (or to any agent, trustee, or other
Person acting on the Agent's behalf) pursuant to this Agreement,
any of the Collateral Documents, or any other Instruments
provided for herein or therein or delivered or to be delivered
hereunder or thereunder or in connection herewith or therewith,
as any of the foregoing may be amended, supplemented, restated,
or otherwise modified from time to time in accordance with the
provisions hereof or thereof.
"Collateral Documents" means, collectively, the Parent
--------------------
Collateral Documents, the Company Collateral Documents, the
Subsidiary Collateral Documents, the Collection Bank Agreements,
the Concentration Bank Agreement, and each other Instrument or
document pursuant to which a Lien is granted to the Agent (or
perfected in favor of the Agent) (or to or in favor of any agent,
trustee, or other Person acting on the Agent's behalf) as
security for any of the Obligations, as any of the foregoing may
be amended, supplemented, restated, or otherwise modified from
time to time in accordance with the provisions hereof or thereof.
"Collection Bank" means any bank at which the Company
---------------
maintains a collection or lockbox account or other similar
collection arrangement.
"Collection Bank Agreement" means any agreement between the
-------------------------
Company, the Agent, and any Collection Bank and delivered
pursuant to Section 7.1.19, in substantially the form of
--------------
Exhibit G attached hereto, as any such agreement may be amended,
- ---------
supplemented, restated, or otherwise modified from time to time
in accordance with the provisions hereof or thereof, including
9
18
pursuant to Section 7.3.
-----------
"Collection Deposit Account" has the meaning set forth in
--------------------------
the Collection Bank Agreement.
"Commitment" means, as the context may require, a Lender's
----------
Revolving Commitment, or Business Credit's Swingline Commitment.
"Commitment Termination Event" means
----------------------------
(a) any Event of Default described in clauses (a)
-----------
through (e) of Section 10.1.10 with respect to the Company
--- ---------------
shall have occurred; or
(b) any other Event of Default shall have occurred and
be continuing and the Agent, acting at the direction of the
Majority Lenders, gives written notice to the Company
pursuant to clause (a) of Section 10.3 that the Commitments
---------- ------------
have been terminated.
"Company" is defined in the preamble.
------- --------
"Company Collateral Documents" means the Company Pledge
----------------------------
Agreement, the Company Security Agreement, the Company Patent
Security Agreement, the Company Trademark Security Agreement,
each Company Deed of Trust, each Company Mortgage, and the
Louisiana Security Documents.
"Company Deed of Trust" means any deed of trust executed and
---------------------
delivered by the Company pursuant to Section 7.1.8, each in
-------------
substantially the form of Exhibit I-1 attached hereto, as
-----------
amended, supplemented, restated, or otherwise modified from time
to time in accordance with the provisions hereof or thereof.
"Company Mortgage" means any mortgage executed and delivered
----------------
by the Company pursuant to Section 7.1.8, each in substantially
-------------
the form of Exhibit I-2 attached hereto, as amended,
-----------
supplemented, restated, or otherwise modified from time to time
in accordance with the provisions hereof or thereof.
"Company Patent Security Agreement" means the patent
---------------------------------
security agreement executed and delivered by the Company pursuant
to Section 7.1.7, in substantially the form of Exhibit F-3
------------- -----------
attached hereto, as amended, supplemented, restated, or otherwise
modified from time to time in accordance with the provisions
hereof or thereof.
"Company Pledge Agreement" means the pledge agreement
------------------------
executed and delivered by the Company pursuant to Section 7.1.5,
-------------
in substantially the form of Exhibit F-1 attached hereto, as
-----------
amended, supplemented, restated, or otherwise modified from time
to time in accordance with the provisions hereof or thereof.
"Company Security Agreement" means the security agreement
--------------------------
10
19
executed and delivered by the Company pursuant to Section 7.1.6,
-------------
in substantially the form of Exhibit F-2 attached hereto, as
-----------
amended, supplemented, restated, or otherwise modified from time
to time in accordance with the provisions hereof or thereof.
"Company Trademark Security Agreement" means the trademark
------------------------------------
security agreement executed and delivered by the Company pursuant
to Section 7.1.7, in substantially the form of Exhibit F-4
------------- -----------
attached hereto, as amended, supplemented, restated, or otherwise
modified from time to time in accordance with the provisions
hereof or thereof.
"Compliance Certificate" means a certificate of the Company
----------------------
duly executed by a Financial Authorized Officer of the Company,
in substantially the form of Exhibit D-2 attached hereto, with
-----------
such changes as the Agent and the Company may from time to time
agree upon for purposes of monitoring the Company's compliance
herewith.
"Concentration Account" is defined in the Concentration Bank
---------------------
Agreement.
"Concentration Bank Agreement" means an agreement between
----------------------------
the Company, the Agent, and Bank of America, as concentration
bank, and delivered pursuant to Section 7.1.19, in substantially
--------------
the form of Exhibit H attached hereto, as amended, supplemented,
---------
restated, or otherwise modified from time to time in accordance
with the provisions hereof or thereof, including pursuant to
Section 7.3.
- -----------
"Confidential Information" is defined in clause (c) of
------------------------ ----------
Section 9.1.5.
- -------------
"Contingent Liability" means any agreement, undertaking, or
--------------------
arrangement by which any Person guarantees, endorses, agrees to
purchase, or otherwise becomes or is contingently liable upon (by
direct or indirect agreement, contingent or otherwise, to provide
funds for payment, to supply funds to, or otherwise to invest in,
a debtor, or otherwise to assure a creditor against loss) the
debt, obligation, or other liability of any other Person (other
than by endorsements of Instruments in the course of collection),
or guarantees the payment of dividends or other distributions
upon the shares of any other Person. The amount of any Person's
obligation under any Contingent Liability shall (subject to any
limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum outstanding principal amount, if
larger) of the debt, obligation, or other liability guaranteed
thereby.
"Continuation/Conversion Notice" means a notice of
------------------------------
continuation or conversion and certificate duly executed by an
Authorized Officer of the Company, in substantially the form of
Exhibit A-2 attached hereto.
- -----------
11
20
"Controlled Group" means all members of a controlled group
----------------
of corporations and all members of a controlled group of trades
or businesses (whether or not incorporated) under common control
which, together with the Company, are treated as a single
employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.
"Convertor Inventory" means raw materials, work-in-process
-------------------
or other goods delivered to a third party pursuant to a bailment
arrangement with such third party under which such Inventory is
to be processed, improved or otherwise altered by such third
party.
"Credit Extension" means
----------------
(a) any disbursement of Revolving Loans by the
Lenders;
(b) any disbursement of Swingline Loans by Business
Credit; or
(c) any issuance or extension by an Issuer Bank of a
Letter of Credit.
"Credit Request" means any Borrowing Request or Revolving
--------------
L/C Request.
"Deconsolidation Tax Allocation Agreement" means the Tax
----------------------------------------
Allocation Agreement dated June 30, 1993 between the Company and
the Parent Guarantor a copy of which has been delivered to the
Agent and the Lenders prior to the date hereof, as amended from
time to time with the written consent of the Agent.
"Default" means any Event of Default or any condition,
-------
occurrence, or event which, after notice or lapse of time or
both, would constitute an Event of Default.
"Disbursement" means any payment or disbursement made under
------------
a Letter of Credit by the Issuer Bank thereof to the beneficiary
thereunder.
"Disbursement Date" is defined in clause (a) of Section 5.5.
----------------- ---------- -----------
"Disclosure Schedule" means the Disclosure Schedule dated as
-------------------
of February 15, 1994 delivered by the Company to the Agent and
each Lender prior to the execution and delivery of this
Agreement, as it may be amended, supplemented, or otherwise
modified from time to time by the Company with the prior written
consent of the Agent.
"Distributions" is defined in clause (a) of Section 9.2.6.
------------- ---------- -------------
"Dollar" and the sign "$" mean lawful money of the United
------
States.
12
21
"Domestic Office" means, with respect to any Lender, the
---------------
office of such Lender designated as such below its signature
hereto, or designated in the Assignee Agreement to be Bound
pursuant to which such Lender became a party hereto, or such
other office of a Lender (or any successor or assign of such
Lender) within the United States as may be designated from time
to time by written notice from such Lender, as the case may be,
to each other Person party hereto.
"Domestic Subsidiary" means a Subsidiary that is created or
-------------------
organized in or under the laws of the United States, any state
thereof, or the District of Columbia.
"EBITDA" means, for any Fiscal Quarter, an amount equal to:
------
(a) Net Income for such Fiscal Quarter (including
extraordinary gains and extraordinary losses, in each case
as determined in accordance with GAAP);
plus
- ----
(b) the aggregate amount deducted, in determining Net
Income for such Fiscal Quarter, in respect of all foreign,
federal, state, and local income taxes of the Company and
its Subsidiaries, calculated on a consolidated basis in
accordance with GAAP;
plus
- ----
(c) the aggregate amount of interest expense
(excluding amortization of deferred financing costs and, to
the extent not paid in cash, interest on the PIK Note and
the Equity Proceeds Notes) of the Company and its
Subsidiaries for such Fiscal Quarter, calculated on a
consolidated basis in accordance with GAAP, minus the amount
-----
of interest income of the Company and its Subsidiaries which
was included in the calculation of Net Income for such
Fiscal Quarter in accordance with GAAP;
plus
- ----
(d) the aggregate amount of depreciation expense of
the Company and its Subsidiaries for such Fiscal Quarter,
calculated on a consolidated basis in accordance with GAAP;
plus
- ----
(e) the aggregate amount of amortization expense of
the Company and its Subsidiaries for such Fiscal Quarter,
calculated on a consolidated basis in accordance with GAAP;
plus
- ----
(f) the aggregate amount of the noncash portion of the
13
22
FAS 106 charge of the Company and its Subsidiaries
calculated on a consolidated basis in accordance with GAAP;
minus
- -----
(g) that portion of the amounts set forth in
clauses (b), (c), (d), (e), and (f) above attributable to
----------- --- --- --- ---
(i) the proportionate direct or indirect ownership of
Persons other than the Company and its Subsidiaries of the
voting stock of, or partnership interest in, any Subsidiary
or (ii) if the economic burden of the amounts set forth in
clauses (b), (c), (d), (e) and (f) above is borne or to be
----------- --- --- --- ---
borne by minority owners of such Subsidiary (other than the
Company and its Subsidiaries) in a proportion other than the
proportion of their direct or indirect ownership of the
voting stock of, or partnership interest in, such
Subsidiary, the proportionate share of the economic burden
of such amounts borne or to be borne by such minority
owners.
"Effective Date" is defined in Section 12.8.
-------------- ------------
"Eligible Account" means, at any time, all Accounts of the
----------------
Company and KAII that are not ineligible as the basis for Credit
Extensions, based on the following criteria and on such other
criteria as the Agent may, after consultation with the Company,
from time to time establish in its commercially reasonable
discretion. Without intending to limit the Agent's discretion to
establish other criteria of eligibility pursuant to the preceding
sentence, Eligible Accounts shall not include any Account:
(a) which, except in the case of Product Swaps, does
not represent a bona fide sale or lease and delivery of
goods of or rendition of services by the Company or KAII in
the ordinary course of the Company's or KAII's business, as
the case may be, or which is not for a liquidated amount
payable by the Account Debtor thereon on the terms set forth
in the invoice therefor;
(b) which represents a Progress Billing other than
Progress Billings in an amount not to exceed $5,000,000 in
the aggregate;
(c) which represents a sale on a bill-and-hold,
guaranteed sale, sale and return, sale on approval,
consignment, repurchase or return basis, other than, in each
case, a Product Swap or an Account that represents the
balance of an Account Debtor's minimum annual purchase
commitment to the Company provided that the documents
relating to such Account provide that title to the Inventory
purchased by the Account Debtor and held by the Company has
passed to the Account Debtor;
(d) which is evidenced by a promissory note or other
14
23
instrument or by chattel paper;
(e) with respect to which more than 90 days, in the
case of an Account as to which National Southwire is the
Account Debtor, have elapsed since the date of the original
invoice therefor or with respect to which more than 65 days,
in the case of all other Accounts, have elapsed since the
date of the original invoice therefor;
(f) which is not evidenced by an invoice rendered to
the Account Debtor, which is evidenced by an invoice dated
more than 60 days after the date of shipment to the Account
Debtor or which is evidenced by an invoice dated more than
60 days after the date of performance of the relevant
service for the Account Debtor;
(g) owed by an Account Debtor which is a director,
officer, shareholder, employee or Affiliate of the Company
or KAII;
(h) if the aggregate dollar amount of all Accounts
owed by the Account Debtor thereon exceeds 5% (15% in
respect of Accounts owed by the Account Debtors identified
in Item 11 ("Major Account Debtors") of the Disclosure
---------------------
Schedule, as such Item may be amended from time to time by
the Agent, in its commercially reasonable judgment, after
consultation with the Company, to add or delete Account
Debtors) of the aggregate amount of all Accounts at such
time, but only to the extent of such excess;
(i) which is owed by an Account Debtor which, at the
time of any determination of Eligible Accounts, owes any
amount with respect to any Account that has been outstanding
more than 60 days past the due date, other than amounts
which in total do not exceed 20% of the aggregate of all
Accounts owing by such Account Debtor and which are the
subject of bona fide disputes between such Account Debtor
---------
and the Company or KAII;
(j) which are owed by the government of the United
States of America, or any department, agency, public
corporation, or other instrumentality thereof, unless the
Federal Assignment of Claims Act of 1940, as amended, and
any other steps necessary to perfect the Agent's Security
Interest therein, have been complied with to the Agent's
reasonable satisfaction with respect to such Account;
(k) which is owed by any state, municipality, or other
political subdivision of the United States of America, or
any department, agency, public corporation, or other
instrumentality thereof and as to which the Agent determines
that the Agent's Security Interest therein is not or cannot
be perfected;
15
24
(l) except as provided in clause (j) above, as to
----------
which either the perfection, enforceability, or validity of
the Security Interest in such Account, or the Agent's right
or ability to obtain direct payment to the Agent of the
Proceeds of such Account, is governed by any federal, state,
or local statutory requirements other than those of the
Uniform Commercial Code;
(m) with respect to which, in whole or in part, a
check, promissory note, draft, trade acceptance or other
instrument for the payment of money has been received,
presented for payment and returned uncollected for any
reason;
(n) which is owed by an Account Debtor to which the
Company or KAII is indebted in any way unless the Account
Debtor has entered into an agreement acceptable to the Agent
in its commercially reasonable judgment to waive setoff
rights; or if the Account Debtor thereon has disputed
liability, asserted a right of setoff or made any claim with
respect to such Account; but in each such case only to the
extent of such indebtedness, setoff, dispute, or claim;
(o) as to which any one or more of the following
events has occurred with respect to the Account Debtor on
such Account: death or judicial declaration of incompetency
of an Account Debtor who is an individual; the filing by or
against the Account Debtor of a request or petition in a
proceeding that is then pending for liquidation,
reorganization, arrangement, adjustment of debts,
adjudication as a bankrupt, winding-up, or other relief
under the bankruptcy, insolvency, or similar laws of the
United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making
of any general assignment by the Account Debtor for the
benefit of creditors in a proceeding that is then pending;
the appointment of a receiver or trustee for the Account
Debtor or for any of the assets of the Account Debtor,
including the appointment of or taking possession by a
"custodian," as defined in the Federal Bankruptcy Code in a
proceeding that is then pending; the institution by or
against the Account Debtor of any other type of insolvency
proceeding (under the bankruptcy laws of the United States
or otherwise) or of any formal or informal proceeding for
the dissolution or liquidation of, settlement of claims
against, or winding up of affairs of, the Account Debtor in
a proceeding that is then pending; the nonpayment generally
by the Account Debtor of its debts as they become due; or
the cessation of the business of the Account Debtor as a
going concern;
(p) if the Agent believes in its commercially
reasonable judgment that the prospect of collection of such
Account is impaired or that the Account may not be paid by
16
25
reason of the Account Debtor's financial inability to pay;
(q) which is owed by an Account Debtor which the
Agent, in its commercially reasonable judgment, otherwise
deems to be uncreditworthy;
(r) which is owed by a Foreign Account Debtor; except
to the extent that such Account (i) is secured or payable by
a letter of credit or acceptance, (ii) insured under foreign
credit insurance, on terms and conditions satisfactory to
the Agent in its commercially reasonable discretion, or
(iii) is owed by an Account Debtor identified in Item 12
-------
("Major Foreign Account Debtors") of the Disclosure
-----------------------------
Schedule, as such Item may be amended from time to time by
the Agent, in its commercially reasonable judgment, after
consultation with the Company, to add or delete Account
Debtors;
(s) which is not payable in the United States other
than Accounts in an aggregate amount not to exceed
$2,000,000 payable in the United Kingdom;
(t) which is not payable in Dollars, other than
Accounts in an aggregate amount not to exceed $2,000,000
payable in Pounds Sterling, unless the Company or KAII, as
the case may be, has executed an appropriate Hedging
Agreement acceptable to the Agent with respect thereto;
(u) which represents a rebilling of an Account
Debtor for a discount or other adjustment
inappropriately applied to an Account by such Account
Debtor; and
(v) which has arisen from Inventory which, at the time
of the determination of Eligible Accounts, constituted
Eligible Inventory.
"Eligible Assignee" is defined in Section 4.11(b).
----------------- ---------------
"Eligible Inventory" means, at any time, any Inventory of
------------------
the Company arising in the ordinary course of the Company's
business that:
(a) is not, in the reasonable opinion of the Agent,
obsolete or unmerchantable;
(b) is located in the United States or in route to the
United States; provided that such Inventory is insured in
accordance with the Company's normal practice and to the
reasonable satisfaction of the Agent, title to such
Inventory has passed to the Company and, in the case of
Inventory in route to the United States, is evidenced by a
negotiable bill of lading that has been delivered to the
Agent;
17
26
(c) upon which the Agent has a first priority
perfected Security Interest;
(d) is not stores Inventory, Tolling Inventory, repair
and maintenance Inventory, or Inventory delivered to the
Company on consignment;
(e) is not ineligible as the basis for Credit
Extensions based on such other criteria as the Agent may,
after consultation with the Company, from time to time
establish in its commercially reasonable discretion; and
(f) has not given rise to any Account which, at the
time of the determination of Eligible Inventory, constituted
an Eligible Account.
"Environmental Laws" means all applicable federal, state, or
------------------
local statutes, laws, ordinances, codes, rules, regulations,
requirements, and guidelines (including consent decrees and
administrative orders to which the Company, any of its
Subsidiaries, or any Obligor is subject) relating to protection
of the environment or human health or imposing liability or
standards of conduct concerning any Hazardous Material, as any of
the foregoing may be from time to time amended or supplemented.
"Environmental Reports" means the "Environmental
---------------------
Assessments" report, dated January, 1994, prepared by
Kennedy/Jenks/Chilton, copies of which have been delivered to the
Agent and each Lender prior to the date hereof.
"Equity Proceeds Notes" means the Amended and Restated
---------------------
Senior Subordinated Intercompany Note dated June 30, 1993, in the
principal amount of $37,796,752.50, issued by the Company in the
form of Exhibit P-1 attached hereto, the Senior Subordinated
Intercompany Note of the Company, dated the Initial Borrowing
Date, in substantially the form of Exhibit P-2 attached hereto,
and one or more Senior Subordinated Intercompany Notes issued by
the Company after the Initial Borrowing Date, in substantially
the form of Exhibit P-3 attached hereto, in an aggregate
principal amount not to exceed 50% of the net proceeds of all
offerings of securities of the Parent Guarantor consummated after
the Initial Borrowing Date if the net proceeds of such offerings
are loaned to, contributed to, or used to purchase the stock of,
the Company, as each such promissory note may be amended or
otherwise modified from time to time in accordance with the
provisions hereof.
"ERISA" means the Employee Retirement Income Security Act of
-----
1974, as amended, and any successor statute of similar import,
together with the regulations thereunder, in each case as in
effect from time to time. References to sections of ERISA also
refer to any successor sections.
"Event of Cash Dominion" means (a) the occurrence of a
----------------------
18
27
Default and the continuance of such Default for five consecutive
days after delivery by the Agent, in its sole discretion or at
the request of the Majority Lenders, of written notice thereof to
the Company or (b) the occurrence of any of the following events
and the delivery by the Agent as required under Section 11.1(e)
of written notice thereof to the Company: (i) the Revolving
Commitment Availability is less than $40,000,000 at any time or
(ii) the Revolving Commitment Availability is less than
$50,000,000 for three consecutive Business Days. An Event of
Cash Dominion shall terminate, provided no Default shall have
occurred and be continuing, if the Revolving Commitment
Availability is greater than $50,000,000 for each day during a
period of three consecutive months and the Agent delivers written
notice as required under Section 11.1(e) of such termination to
the Company.
"Event of Default" is defined in Section 10.1.
---------------- ------------
"Executive Officers" means, with respect to any corporation,
------------------
such corporation's chairman, president, chief financial officer,
treasurer, any vice president, any attorney in the office of the
Company's general counsel, and any officer who performs a similar
policy-making function for such corporation.
"Existing Letters of Credit" means the letters of credit
--------------------------
listed on Schedule IX hereto.
-----------
"Federal Funds Rate" means, for any period, a fluctuating
------------------
interest rate per annum equal (for each day during such period)
to
(a) the weighted average of the rates on overnight
federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which
is a Business Day, the average of the quotations for such
day on such transactions received by Bank of America from
three federal funds brokers of recognized standing selected
by it.
"Fee Letter" is defined in Section 3.5.3.
---------- -------------
"Financial Authorized Officer" means, with respect to any
----------------------------
Obligor, those of its Authorized Officers who occupy the offices
of chief financial officer, chief accounting officer, controller,
assistant controller, treasurer, or assistant treasurer.
"Fiscal Quarter" means any quarter of a Fiscal Year.
--------------
"Fiscal Year" means any period of twelve consecutive
-----------
calendar months ending on the last day of December; references to
19
28
a Fiscal Year with a number corresponding to any calendar year
(e.g., the "1994 Fiscal Year") refer to the Fiscal Year ending on
----
the last day of December of such calendar year. The current
fiscal year of the Company will end on December 31, 1994.
"Foreign Account Debtor" means an Account Debtor which (i)
----------------------
does not maintain its chief executive office and principal place
of business in the United States; or (ii) is not organized under
the laws of the United States or any state thereof; or (iii) is
the government of any foreign country or sovereign state, or of
any state, province, municipality, or other political subdivision
thereof, or of any department, agency, public corporation, or
other instrumentality thereof.
"F.R.S. Board" means the Board of Governors of the Federal
------------
Reserve System or any successor thereto.
"Fundamental Loan Documents" means this Agreement, the
--------------------------
Company Collateral Documents, the Subsidiary Guaranty, the
Subsidiary Collateral Documents, the Parent Guaranty and the
Parent Collateral Documents.
"Furukawa" means Furukawa Kaiser Forged Products Company, a
--------
corporation organized under the laws of Japan.
"GAAP" means generally accepted accounting principles as set
----
forth in the opinions and pronouncements of the Securities and
Exchange Commission and the Accounting Principles Board of the
American Institute of Certified Public Accountants and the
statements and pronouncements of the Financial Accounting
Standards Board and in such other statements and pronouncements
by such other Person as may be approved by a significant segment
of the accounting profession and concurred in by the independent
certified public accountants certifying the relevant audited
financial statement.
"Hazardous Material" means
------------------
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous,
dangerous, or toxic chemical, material, or substance
regulated under or within the meaning of any other
Environmental Law.
"Hedging Agreement" means (a) any interest rate swap, cap,
-----------------
or collar agreement or similar arrangement entered into by any
Person and any financial institution to protect such Person
20
29
against interest rate risk and (b) any agreement or arrangement
entered into by any Person and any financial institution to
protect such Person against fluctuations in currency exchange
rates.
"Hedging Obligations" means, with respect to any Person, all
-------------------
liabilities of such Person under any Hedging Agreement or other
interest rate or currency swap agreements, interest rate or
currency cap agreements, and interest rate or currency collar
agreements, and all other agreements or arrangements designed to
protect such Person against interest rate risk or fluctuations in
currency exchange rates.
"herein", "hereof", "hereto", "hereunder", and similar terms
------ ------ ------ ---------
contained in this Agreement or any other Loan Document refer to
this Agreement or such other Loan Document, as the case may be,
as a whole and not to any particular Section, paragraph, or
provision of this Agreement or such other Loan Document.
"Highest Lawful Rate" is defined in clause (b) of
------------------- ----------
Section 3.4.6.
- -------------
"Impermissible Qualification" means, with respect to the
---------------------------
opinion or certification of any independent public accountant as
to any financial statement of any Obligor, any qualification,
emphasis point, or exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination
of matters relevant to such financial statement; or
(c) which relates to the treatment or classification
of any item in such financial statement and which, as a
condition to its removal, would require an adjustment to
such item the effect of which would be to cause such Obligor
to be in default of any of its obligations under
Section 9.2.4.
-------------
"including" means including without limiting the generality
---------
of any description preceding such term, and, for purposes of this
Agreement and each other Loan Document, the parties hereto agree
that the rule of ejusdem generis shall not be applicable to limit
------- -------
a general statement which is followed by or referable to an
enumeration of specific matters to matters similar to the matters
specifically mentioned.
"Indebtedness" means, with respect to any Person, without
------------
duplication:
(a) all obligations of such Person in respect of
principal for borrowed money, all obligations of such Person
in respect of principal (including the principal amount of
any obligation incurred in lieu of the cash payment of
21
30
interest) evidenced by bonds, debentures, notes, or other
similar instruments and all obligations of such Person in
respect of interest on borrowed money or obligations
evidenced by bonds, debentures, notes, or other similar
instruments to the extent accrued and unpaid for a period
exceeding seven months;
(b) all obligations, contingent or otherwise, relative
to the face or stated amount (as reduced from time to time)
of all letters of credit (including the Letters of Credit),
whether or not drawn, and bankers' acceptances issued and
outstanding for the account of such Person;
(c) all obligations of such Person as lessee under
leases which have been or should be, in accordance with
GAAP, recorded as Capitalized Lease Liabilities;
(d) net liabilities of such Person in respect of
Hedging Obligations which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance
sheet of such Person as of the date at which Indebtedness is
to be determined;
(e) all obligations of such Person to pay the deferred
purchase price of Property (except trade accounts payable
and other current liabilities arising in the ordinary course
of business);
(f) all obligations listed in clauses (a) through (e)
----------- ---
secured by a Lien on Property owned or being purchased by
such Person (including Indebtedness arising under
conditional sales or other title retention agreements),
whether or not such Indebtedness shall have been assumed by
such Person or is limited in recourse;
(g) any Redeemable Stock issued by such Person;
(h) all Contingent Liabilities of such Person in
respect of any Indebtedness of any other Person; and
(i) all advance payments to such Person of more than
$5,000,000 in the aggregate from any single customer of such
Person relating to the delivery of goods or the performance
of services by such Person (other than advance payments to
the extent held in segregated accounts), but only to the
extent that such payments originally were received more than
six months before the date on which such Person was required
to deliver such goods or perform such services, and which
have not yet been earned by such delivery or performance;
provided, however, the obligations of any Person arising from the
- -------- -------
honoring by a bank or other financial institution of a check,
draft, or similar Instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the
22
31
ordinary course of business shall not constitute Indebtedness;
provided that such obligations are extinguished within two
- --------
Business Days of their incurrence (or, in the case of foreign
overdrafts, within five Business Days of their incurrence) unless
covered by an overdraft credit line.
"Indemnified Liability" and "Indemnified Liabilities" are
--------------------- -----------------------
defined in Section 12.4.
------------
"Indemnified Parties" is defined in Section 12.4.
------------------- ------------
"Indemnified Persons" is defined in clause (b) of
------------------- ----------
Section 11.1.
- ------------
"Initial Borrowing Date" means the date on which the initial
----------------------
Credit Extensions are made.
"Instrument" means any contract, agreement, indenture,
----------
mortgage, document, or writing (whether by formal agreement,
letter or otherwise) under which any obligation is evidenced,
assumed, or undertaken, or any Lien (or right or interest
therein) is granted or perfected.
"Intercompany Demand Note" means an intercompany demand
------------------------
revolving note, in substantially the form, with appropriate
insertions, of (i) Exhibit O-1 attached hereto, in the case of
-----------
any such note issued by the Company in favor of any Person other
than KAAC or KFC, (ii) Exhibit 0-2 attached hereto, in the case
---
of any such note issued by the Company in favor of KAAC, (iii)
Exhibit 0-3 attached hereto, in the case of any such note issued
---
by the Company in favor of KFC, and (iv) Exhibit O-4 attached
---
hereto, in the case of any such note issued in favor of KFC by
any Subsidiary of the Company, or (v) Exhibit O-5 attached
---
hereto, in the case of any such note issued by KFC in favor of
KAAC, in each case, endorsed, pledged, and delivered by the
Person in whose favor such promissory note was written to the
Agent, on behalf of the Secured Lenders, pursuant to the
Subsidiary Pledge Agreement or the Intercompany Note Pledge
Agreement, as each such promissory note may be amended, endorsed,
or otherwise modified from time to time in accordance with the
provisions hereof, and also means any other promissory note
accepted from time to time in substitution therefor or renewal
thereof, in accordance with the provisions hereof.
"Intercompany Note Pledge Agreement" means the intercompany
----------------------------------
note pledge agreement executed and delivered by certain
Subsidiaries of the Company pursuant to Section 7.1.11 or 9.1.12,
-------------- ------
as the case may be, in substantially the form of Exhibit K-3
-----------
attached hereto, as amended, supplemented, restated, or otherwise
modified from time to time in accordance with the provisions
hereof or thereof.
"Interest Coverage Ratio" means, for any period, the ratio
-----------------------
of
23
32
(a) (i) the sum of EBITDA for all of the Fiscal
Quarters comprising such period minus (ii) the aggregate
-----
Adjusted Capital Expenditures for all of the Fiscal Quarters
comprising such period
to
- --
(b) (i) the aggregate amount of interest expense
(excluding amortization of deferred financing costs and, to
the extent not paid in cash, interest on the PIK Note and
the Equity Proceeds Notes) of the Company and its
Subsidiaries for all of the Fiscal Quarters comprising such
period, calculated on a consolidated basis in accordance
with GAAP, minus (ii) the amount of interest income of the
-----
Company and its Subsidiaries which was included in the
calculation of Net Income, in accordance with GAAP, for all
of the Fiscal Quarters comprising such period, minus (iii)
-----
that portion of the amount set forth in clause (i) above
----------
attributable to (A) the proportionate direct or indirect
ownership of Persons other than the Company and its
Subsidiaries of the voting stock of, or partnership interest
in, any Subsidiary or (B) if the economic burden of the
amount set forth in clause (i) above is borne or to be borne
----------
by minority owners of such Subsidiary (other than the
Company and its Subsidiaries) in a proportion other than the
proportion of their direct or indirect ownership of the
voting stock of, or partnership interest in, such
Subsidiary, the proportionate share of the economic burden
of such amount borne or to be borne by such minority owners.
"Interest Period" means, with respect to any LIBO Rate Loan,
---------------
the period beginning on (and including) the date on which such
LIBO Rate Loan is made or continued as, or converted into, a LIBO
Rate Loan pursuant to Section 2.3 or 3.4.2 and ending on (but
----------- -----
excluding, for purposes of determining accrued interest) the day
which numerically corresponds to such date one, two, three, or
six months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), as
the Company may select in its relevant notice pursuant to
Section 2.3 or 3.4.2; provided, however, that
- ----------- ----- -------- -------
(a) no more than seven different Interest Periods may
be in effect at one time with respect to all Revolving
Loans;
(b) if such Interest Period would otherwise end on a
day which is not a Business Day, such Interest Period shall
end on the next following Business Day (unless such next
following Business Day is the first Business Day of a
calendar month, in which case such Interest Period shall end
on the Business Day next preceding such numerically
corresponding day); and
(c) no Interest Period may end later than the date set
24
33
forth in clause (a) of the definition of "Stated Maturity
---------- ---------------
Date".
----
"Inventory" means goods (whether consisting of whole goods,
---------
spare parts or components), merchandise, and other personal
property, wherever located, to be furnished under any contract of
service or held for sale or lease, all raw materials, work-in-
process, finished goods, returned goods, and materials and
supplies of any kind, nature or description which are or might be
used or consumed in the Company's business or used in connection
with the manufacture, packing, shipping, advertising, selling, or
finishing of such goods, merchandise, and such other personal
property, and all documents of title or other documents
representing them.
"Investment" means, with respect to any Person,
----------
(a) any loan or advance made by such Person to any
other Person (excluding commission, travel, relocation, and
similar advances) and any purchase or other acquisition made
by such Person of any bond, debenture, note, or similar
instrument of any other Person; and
(b) any ownership or similar interest held by such
Person in any other Person.
The amount of any Investment shall be the original principal or
capital amount thereof less all returns of principal or equity
thereon (and without adjustment by reason of the financial
condition of such other Person) and shall, if made by the
transfer or exchange of Property other than cash, be deemed to
have been made in an original principal or capital amount equal
to the fair market value of such Property.
"Issuer Bank" means any Affiliate, office, branch, or agency
-----------
of Bank of America, or any other Lender, which has agreed to
issue and has issued one or more Letters of Credit at the request
(such request to be made with the consent of the Company, which
consent shall not be unreasonably delayed or withheld) of the
Agent.
"Issuer Party" and "Issuer Parties" are defined in
------------ --------------
Section 5.10.
- ------------
"Joint Venture Affiliate" means QAL, KJBC, Anglesey,
-----------------------
Furukawa, and any other Person (a) which is not a Subsidiary of
the Company, (b) in which the Company or its Subsidiaries own an
equity interest of more than 5% (and in which no Restricted
Affiliate has an equity interest, other than through a direct or
indirect ownership interest in the Company), and (c) which
supplies or processes bauxite, alumina, or aluminum to or for the
Company or any of its Subsidiaries or sells to third parties
bauxite, alumina, aluminum or aluminum products purchased from
the Company or any of its Subsidiaries.
25
34
"KAII" means Kaiser Aluminium International, Inc., a
----
Delaware corporation.
"KATSI" means Kaiser Aluminum Technical Services, Inc., a
-----
California corporation.
"KBC" means Kaiser Bauxite Company, a Nevada corporation.
---
"KEC" means Kaiser Export Company, a Delaware corporation.
---
"KFC" means Kaiser Finance Corporation, a Delaware
---
corporation.
"Kaiser Canada" means Kaiser Aluminum & Chemical of Canada
-------------
Limited, an Ontario corporation.
"KJBC" means Kaiser Jamaica Bauxite Company, a Jamaica
----
partnership.
"KAAC" means Kaiser Alumina Australia Corporation, a
----
Delaware corporation.
"KJC" means Kaiser Jamaica Corporation, a Delaware corpora
---
tion.
"KT Note means the promissory note dated December 21, 1989,
-------
as amended by Amendment dated as of July 1, 1993, executed by the
Parent Guarantor and delivered to the Company, a copy of which
has been delivered to the Agent and each Lender prior to the date
hereof, and endorsed, delivered, and pledged to the Agent, on
behalf of the Secured Lenders, pursuant to the Company Pledge
Agreement or the Subsidiary Pledge Agreement, as such promissory
note may be amended, endorsed, or otherwise modified from time to
time in accordance with the provisions hereof, and also means any
other promissory note accepted from time to time in substitution
therefor or renewal thereof, in accordance with the provisions
hereof.
"L/C Collateral Account" is defined in Section 5.8.1.
---------------------- -------------
"Lenders" is defined in the preamble.
------- --------
"Letter of Credit" is defined in Section 5.1 and includes
---------------- -----------
the Existing Letters of Credit.
"Letter of Credit Outstandings" means, at any time, an
-----------------------------
amount equal to the sum of
(a) the then aggregate amount which is undrawn and
available under all issued and outstanding Letters of Credit
plus
- ----
(b) the then aggregate amount of all unpaid and
26
35
outstanding Reimbursement Obligations with respect to issued
and outstanding Letters of Credit.
"LIBO Rate" means, relative to any Interest Period, the rate
---------
of interest determined by the Agent to be the rate per annum at
which Dollar deposits in immediately available funds are offered
to Bank of America in the London interbank market as at or about
11:00 a.m., London time, two Business Days prior to the beginning
of such Interest Period for delivery on the first day of such
Interest Period, and in an amount approximately equal to the
amount of each LIBO Rate Loan to which such Interest Period
applies and for a period equal to such Interest Period.
"LIBO Rate Loan" means all or any portion of a Loan bearing
--------------
interest, at all times during an Interest Period applicable to
such Loan or portion thereof, at a fixed rate determined by
reference to the LIBO Rate (Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" means, relative to any
----------------------------
Interest Period, a rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) determined pursuant to the following
formula:
LIBO Rate = LIBO Rate
-------------------------------
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for each LIBO Rate Loan to
which such Interest Period applies will be determined by the
Agent.
"LIBOR Office" means, with respect to any Lender, the
------------
office, if any, of such Lender designated as such below its
signature hereto, or designated in the Assignee Agreement to be
Bound pursuant to which such Lender became a party hereto, or
such other office of a Lender as designated from time to time by
written notice from such Lender to the Company and the Agent,
whether or not outside the United States, which shall be making
or maintaining LIBO Rate Loans of such Lender hereunder.
"LIBOR Reserve Percentage" means, relative to any Interest
------------------------
Period, a percentage (expressed as a decimal) equal to the daily
average during such Interest Period of the percentages in effect
on each day of such Interest Period, as prescribed by the F.R.S.
Board, for determining the maximum aggregate reserve requirements
(including any emergency, supplemental, or other marginal reserve
requirement) applicable to "Eurocurrency Liabilities" pursuant to
Regulation D or any other applicable regulation issued from time
to time by the F.R.S. Board which prescribes reserve requirements
applicable to "Eurocurrency Liabilities" as currently defined in
Regulation D having a term approximately equal or comparable to
such Interest Period.
27
36
"Lien" means any security interest, mortgage, pledge,
----
hypothecation, assignment for security purposes, deposit
arrangement for security purposes, encumbrance, lien (statutory
or other), or other similar arrangement of any kind or nature.
"Loan" means, as the context may require, a Revolving Loan
----
of any type, or a Swingline Loan.
"Loan Document" means this Agreement, all Letters of Credit,
-------------
each Credit Request, the Subsidiary Guaranty, the Collateral
Documents, and each other agreement, document, or Instrument
executed and delivered or to be executed and delivered by the
Parent Guarantor, the Company, or any Subsidiary of the Parent
Guarantor or the Company in connection with this Agreement, as
any and all of the foregoing may be amended, supplemented,
restated, or otherwise modified from time to time in accordance
with the provisions hereof or thereof, but excluding, however,
the Intercompany Demand Notes, the KT Note and the Equity
Proceeds Notes.
"Majority Lenders" means, at any time, Lenders having at
----------------
least 51% of the Revolving Commitments.
"Materially Adverse Effect" means, relative to any
-------------------------
occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental
investigation or proceeding), a materially adverse effect on:
(a) the assets of or the then-existing or projected
business, revenues, financial condition, or operations, of
the Parent Guarantor, the Company, any other Obligor which
is a Significant Subsidiary, any Joint Venture Affiliate
(other than KJBC), ALPART, or VALCO; or
(b) the ability of the Parent Guarantor, the Company,
or any other Obligor which is a Significant Subsidiary to
perform any of its payment or other material obligations
under this Agreement or any other Loan Document to which it
is a party.
"MAXXAM" means MAXXAM Inc., a Delaware corporation (formerly
------
known as MCO Holdings, Inc.).
"Minimum Net Worth" means $410,000,000 plus 50% of Net
-----------------
Income (but not loss) for each Fiscal Quarter of the Company
commencing with the Fiscal Quarter ending March 31, 1997.
"Net Amount of Eligible Accounts" means the gross amount of
-------------------------------
Eligible Accounts less the sum of (a) all returns, discounts,
claims, credits, and allowances of any nature at any time issued
in respect thereof, (b) all unapplied advance payments or
deposits in respect thereof, (c) and all credits relating to
Accounts of National Southwire with respect to which more than 90
days have elapsed since the date of the original issuance of the
28
37
credit memo therefor and all credits relating to Accounts of all
other Account Debtors with respect to which more than 65 days
have elapsed since the date of the original issuance of the
credit memo therefor.
"Net Disposition Proceeds" means, with respect to any Asset
------------------------
Disposition by the Company or any Subsidiary of the Company, the
excess of
(a) the sum of
(i) the gross cash proceeds received by the
Company or such Subsidiary from such disposition
plus
----
(ii) immediately upon receipt thereof by the
Company or such Subsidiary, the gross cash proceeds in
respect of principal from or in respect of any
promissory note or deferred payment obligations or
other security taken in connection with such
disposition (including as a result of any sale or other
disposition of any such note, obligations, or security,
or as a result of any financing with respect thereto)
minus
-----
(b) the sum of
(i) all legal, consulting, brokerage, investment
banking, and accounting fees and disbursements and all
governmental fees incurred (or reasonably expected to
be incurred) in connection with such sale that, in any
case, except for payments for legal fees and expenses
to a law firm of which an Affiliate of the Company is a
member, are not payable to Affiliates of the Company
plus
----
(ii) all taxes actually paid or to be paid in
connection with such sale
plus
----
(iii) to the extent the proceeds described in
clause (a) are applied (or to be applied with
----------
reasonable promptness) in payment thereof, all
Indebtedness secured, directly or indirectly (i.e.,
----
such disposition is permitted by the terms of the
Instruments evidencing or applicable to such
Indebtedness, or by the terms of a consent granted
thereunder, only on the condition that the proceeds of
such disposition be applied to such Indebtedness), by
such Property.
29
38
"Net Income" means, for any period, all amounts which, in
----------
conformity with GAAP, would be included under net income on a
consolidated income statement of the Company and its Subsidiaries
for such period; provided that there shall be excluded (a) the
--------
income (or loss) of any Person (other than a Subsidiary of the
Company) in which any other Person (other than the Company or any
of its Subsidiaries) has a joint interest, except to the extent
of the amount of dividends or other distributions actually paid
to the Company or any of its Subsidiaries by such Person during
such period, (b) the income (or loss) of any Person accrued prior
to the date it becomes a Subsidiary of the Company or is merged
into or consolidated with the Company or any of its Subsidiaries
or that Person's assets are acquired by the Company or any of its
Subsidiaries, (c) the income of any Subsidiary of the Company to
the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or
any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Subsidiary, and (d)
any after-tax gains or losses attributable to Asset Dispositions
or returned surplus assets of any Pension Plan.
"Net Worth" means the consolidated net worth of the Company
---------
and its Subsidiaries, calculated in accordance with GAAP;
provided, however, that (a) the cumulative effect, in an amount
- -------- -------
not to exceed $508,000,000, of the changes in accounting
principles attributable to the adoption of FAS 106, 109 and 112
recorded in the first Fiscal Quarter of the 1993 Fiscal Year,
shall be excluded, and (b) the effect of any issuance after the
Initial Borrowing Date of any class of the capital stock of the
Company or any of its Subsidiaries shall be excluded.
"Nonrecourse Indebtedness" means, with respect to any
------------------------
Person, Indebtedness that is nonrecourse to the credit of such
Person.
"Non-United States Person" means a Person who is not (a) a
------------------------
citizen or resident of the United States, (b) a corporation,
partnership, or other entity created or organized under the laws
of the United States, or (c) an estate or trust the income of
which is subject to United States federal income taxation
regardless of its source.
"Obligations" means all obligations (monetary or otherwise)
-----------
of the Company and each other Obligor arising under or in
connection with this Agreement, the Letters of Credit, and each
other Loan Document.
"Obligor" means the Parent Guarantor, the Company and each
-------
of their Subsidiaries obligated under any Loan Document.
"Organic Document" means, with respect to any Obligor, its
----------------
articles or certificate of incorporation, its by-laws, and all
shareholder agreements, voting trusts, and similar arrangements
30
39
applicable to any of its authorized shares of capital stock.
"Parent Collateral Documents" means the Parent Pledge
---------------------------
Agreement and the Parent Security Agreement.
"Parent Guarantor Preferred Stock" means preferred stock of
--------------------------------
any class or series issued by the Parent Guarantor.
"Parent Guarantor" is defined in the preamble.
---------------- --------
"Parent Guaranty" is defined in Section 6.1.
--------------- -----------
"Parent Pledge Agreement" means the pledge agreement
-----------------------
executed and delivered by the Parent Guarantor pursuant to
Section 7.1.4, in substantially the form of Exhibit E-1 attached
- ------------- -----------
hereto, as amended, supplemented, restated, or otherwise modified
from time to time in accordance with the provisions hereof or
thereof.
"Parent Security Agreement" means the security agreement
-------------------------
executed and delivered by the Parent Guarantor pursuant to
Section 7.1.6, in substantially the form of Exhibit E-2 attached
- ------------- -----------
hereto, as amended, supplemented, restated, or otherwise modified
from time to time in accordance with the provisions hereof or
thereof.
"Participant" is defined in Section 12.11.2.
----------- ---------------
"PBGC" means the Pension Benefit Guaranty Corporation and
----
any entity succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is
------------
defined in section 3(2) of ERISA, which is subject to Title IV of
ERISA (other than a multiemployer plan as defined in section
4001(a)(3) of ERISA), of which the Company or any corporation,
trade, or business that is, along with the Company, a member of a
Controlled Group, is a contributing sponsor, as such term is
defined in section 4001(a)(13) of ERISA, or to which any
Controlled Group member has a reasonable possibility of any
liability by reason of having been a substantial employer within
the meaning of section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
"Percentage" means, with respect to any Lender, the
----------
percentage set forth opposite its name on the signature pages of
this Agreement, or set forth in the Assignee Agreement to be
Bound pursuant to which such Lender became a party hereto, as
such percentage may be adjusted from time to time pursuant to
Assignee Agreement(s) to be Bound executed by such Lender and its
Assignee Lender(s) and delivered pursuant to Section 12.11.1.
---------------
"Person" means any natural person, corporation, firm,
------
association, government, governmental agency, or any other
31
40
entity, whether acting in an individual, fiduciary, or other
capacity.
"PIK Note" means the Senior Subordinated Intercompany Note
--------
of the Company dated December 15, 1992, as amended on the Initial
Borrowing Date, executed by the Company in the original principal
amount of $2,500,000, a copy of which has been delivered to the
Agent and each Lender prior to the date hereof, as such
promissory note may be amended or otherwise modified from time to
time in accordance with the provisions hereof .
"Plan" means any Pension Plan or Welfare Plan.
----
"Pledge Agreement(s)" means, individually, the Parent Pledge
-------------------
Agreement, the Company Pledge Agreement, the Intercompany Note
Pledge Agreement, or the Subsidiary Pledge Agreement, as the
context may require, and, collectively, the Parent Pledge
Agreement, the Company Pledge Agreement, the Intercompany Note
Pledge Agreement, and the Subsidiary Pledge Agreement.
"Preferred Stock (USWA)" means shares of the Company's
----------------------
Cumulative (1985 Series A) Preference Stock and shares of the
Company's Cumulative (1985 Series B) Preference Stock which have
been or may in the future be issued in connection with the Kaiser
Aluminum USWA Employee Stock Ownership Plan or the Kaiser
Aluminum Salaried Employee Stock Ownership Plan.
"Proceeds" means all products and proceeds (as defined in
--------
the Uniform Commercial Code) of any Collateral, and all proceeds
of such proceeds and products, including all cash and credit
balances, all payments under any indemnity, warranty, or guaranty
payable with respect to any Collateral, all awards for taking by
eminent domain, all proceeds of fire or other insurance, and all
money and other Property obtained as a result of any claims
against third parties or any legal action or proceeding with
respect to Collateral.
"Product Swap" means an agreement by the Company or KAII to
------------
deliver bauxite, alumina or aluminum products to or on behalf of
an Account Debtor in exchange for (i) an agreement by such
Account Debtor to deliver like or related products to or on
behalf of the Company or KAII, as the case may be, and (ii) the
payment of cash in the ordinary course of business on ordinary
trade terms.
"Progress Billing" means any invoice for goods sold or
----------------
leased or services rendered under a contract or agreement
pursuant to which the Account Debtor's obligation to pay such
invoice is conditioned upon the completion of any further
performance by the Company or KAII under the contract or
agreement.
"Property" means any interest in any kind of property or
--------
asset, whether real, personal or mixed or tangible or intangible.
32
41
"QAL" means Queensland Alumina Limited, a Queensland,
---
Australia corporation.
"Quarterly Payment Date" means the last day of each March,
----------------------
June, September, and December or, if any such day is not a
Business Day, the next succeeding Business Day.
"Redeemable Stock" means any equity security or option or
----------------
warrant related thereto that by its terms or otherwise is
required to be purchased or redeemed, or is redeemable at the
option of the holder thereof, in either case at any time prior to
March 31, 1999.
"Reference Rate" means the higher of (a) the Federal Funds
--------------
Rate plus one-half of one percent (1/2%) and (b) the rate of
interest (the "Bank of America Rate") publicly announced from
--------------------
time to time by Bank of America in San Francisco, California, as
its reference rate. The Bank of America Rate is a rate set by
Bank of America based upon various factors including Bank of
America's cost and desired return, general economic conditions,
and other factors, and is used as a reference point for pricing
some loans, which loans may be priced at, above, or below the
Bank of America Rate. Any change in the Bank of America Rate
shall take effect at the opening of business on the day specified
in the public announcement of such change.
"Reference Rate Loan" means all or any portion of a Loan
-------------------
bearing interest at a fluctuating rate determined by reference to
the Reference Rate.
"Reimbursement Obligation" is defined in Section 5.6.
------------------------ -----------
"Release" means a "release", as such term is defined in
-------
CERCLA.
"Required Lenders" means, at any time, Lenders having at
----------------
least 67% of the Revolving Commitments.
"Restated Certificate of Incorporation" means the restated
-------------------------------------
certificate of incorporation of the Company dated July 25, 1989.
"Restricted Affiliate" means the Parent Guarantor, MAXXAM,
--------------------
and any Affiliate of either thereof (in each case other than the
Company, its Subsidiaries which are not Restricted Subsidiaries,
any Joint Venture Affiliate, and any Subsidiary of a Joint
Venture Affiliate in which neither the Parent Guarantor, MAXXAM,
nor any Affiliate of either thereof (other than the Company, its
Subsidiaries which are not Restricted Subsidiaries, or any Joint
Venture Affiliate) has any equity interest other than through a
direct or indirect ownership interest in the Company).
"Restricted Subsidiary" means any Subsidiary of the Company
---------------------
in which a Restricted Affiliate has an interest, other than
through such Restricted Affiliate's direct or indirect ownership
33
42
interest in the Company.
"Revolving Commitment" is defined in clause (b) of
-------------------- ----------
Section 2.1.1.
- -------------
"Revolving Commitment Amount" is defined in clause (b) of
--------------------------- ----------
Section 2.1.1.
- -------------
"Revolving Commitment Availability" means, at any time, the
---------------------------------
excess of
(a) the lesser of (i) the Revolving Commitment Amount
at such time and (ii) the Borrowing Base as in effect at
such time
over
- ----
(b) the Revolving Credit Outstandings at such time.
"Revolving Commitment Termination Date" means the earliest
-------------------------------------
of
(a) March 31, 1994 (unless the Initial Borrowing Date
shall have occurred before the close of business, San
Francisco time, on such date);
(b) February 15, 1999;
(c) the date on which the Revolving Commitment Amount
is reduced to zero pursuant to Section 2.2; and
-----------
(d) the date on which any Commitment Termination Event
occurs.
Upon the occurrence of any event described in clause (a), (b),
---------- ---
(c), or (d), the Revolving Commitment of each Lender and the
- --- ---
Swingline Commitment of Business Credit shall terminate
automatically and without any further action.
"Revolving Credit Outstandings" means, at any time, the sum
-----------------------------
of (a) the aggregate outstanding principal amount of all
Revolving Loans at such time, (b) the aggregate outstanding
principal amount of all Swingline Loans at such time, and (c) the
Letter of Credit Outstandings at such time.
"Revolving L/C Request" means a request and certificate,
---------------------
duly executed by an Authorized Officer of the Company, in
substantially the form of Exhibit B attached hereto, which
---------
request shall include a duly completed application for the
issuance or extension of a standby or commercial letter of credit
in the form specified from time to time by the proposed Issuer
Bank of a Letter of Credit, as such application may be amended,
supplemented, restated, or otherwise modified from time to time.
Each Revolving L/C Request shall specify, among other things, the
34
43
date on which the proposed Letter of Credit is to be issued and
whether such Letter of Credit shall be transferable in whole or
in part. All Revolving L/C Requests and all documents submitted
by the Company in support of Revolving L/C Requests shall be in
form and substance satisfactory to the relevant Issuer Bank.
"Revolving Loans" is defined in clause (a)(i) of
--------------- -------------
Section 2.1.1.
- -------------
"Secured Lenders" means the Agent, each Lender and each
---------------
Issuer Bank, together with any successors and assigns thereto.
"Security Agreement(s)" means, individually, the Parent
---------------------
Security Agreement, the Company Security Agreement, or the
Subsidiary Security Agreement, as the context may require, and,
collectively, the Parent Security Agreement, the Company Security
Agreement, and the Subsidiary Security Agreement.
"Security Interest" means, collectively, the Liens granted
-----------------
to the Agent, on behalf of the Secured Lenders, in the Collateral
pursuant to the Collateral Documents.
"Senior Debt" means Indebtedness of the Company or any of
-----------
its Subsidiaries under the Senior Notes, the Senior Indenture, or
any guaranty of such Indebtedness.
"Senior Debt Instruments" means the Senior Notes, the Senior
-----------------------
Indenture, and all other Instruments and agreements executed and
delivered by the Company or any of its Subsidiaries in connection
therewith.
"Senior Indenture" means the indenture dated as of
----------------
February 17, 1994 between the Company, and KFC, KAAC, AJI and
KJC, as Subsidiary Guarantors, and First Trust National
Association, as trustee, pursuant to which the Senior Notes were
issued, as amended, supplemented, restated, or otherwise modified
from time to time in accordance with the terms of such indenture
and this Agreement.
"Senior Notes" means the 9-7/8% Senior Notes due 2002 in a
------------
principal amount not exceeding $225,000,000 issued by the Company
pursuant to the Senior Indenture, as amended, supplemented,
restated or otherwise modified from time to time in accordance
with the terms of the Senior Indenture and this Agreement and all
other promissory notes accepted from time to time in substitution
therefor or renewal thereof in accordance with the terms of the
Senior Indenture and this Agreement.
"Significant Subsidiary" means each Subsidiary of the
----------------------
Company that
(a) is designated with an asterisk in Item 2
------
("Existing Subsidiaries") of the Disclosure Schedule;
---------------------
35
44
(b) accounted for at least 5% of consolidated revenues
of the Company and its Subsidiaries from sales to third
parties for the four Fiscal Quarters of the Company ending
on the last day of the last Fiscal Quarter of the Company
immediately preceding the date as of which any such
determination is made; or
(c) has assets (other than assets which are eliminated
in consolidation) which represent at least 5% of the
consolidated assets of the Company and its Subsidiaries as
of the last day of the last Fiscal Quarter of the Company
immediately preceding the date as of which any such
determination is made,
all of which, with respect to clauses (b) and (c), shall be as
----------- ---
included in the consolidated financial statements of the Company
for the period, or as of the date, in question.
"Solvent" means, with respect to any Person at any time, a
-------
condition under which
(a) the fair saleable value of such Person's assets
is, at such time, greater than the total amount of such
Person's liabilities (including contingent and unliquidated
liabilities) at such time;
(b) such Person is able to pay all of its liabilities
as such liabilities mature; and
(c) such Person does not have unreasonably small
capital with which to conduct its business.
For purposes of this definition
(i) the amount of a Person's contingent or
unliquidated liabilities at any time shall be that
amount which, in light of all the facts and
circumstances then existing, represents the amount
which can reasonably be expected to become an actual or
matured liability;
(ii) the "fair saleable value" of an asset shall
be the amount which may be realized within a reasonable
time either through collection or sale of such asset at
its regular market value; and
(iii) the "regular market value" of an asset
shall be the amount which a capable and diligent
business person could obtain for such asset from an
interested buyer who is willing to purchase such asset
under ordinary selling conditions.
"Stated Amount" of each Letter of Credit means the "stated
-------------
amount" or "face amount" (or other similar term) of such Letter
36
45
of Credit, as defined therein.
"Stated Expiry Date" is defined in clause (b)(ii) of
------------------ --------------
Section 5.1.
- -----------
"Stated Maturity Date" means (a) in the case of any
--------------------
Revolving Loan, February 15, 1999, and (b) in the case of any
Swingline Loan, the earlier of (i) the seventh calendar day
following the date such Swingline Loan is made or
(ii) February 15, 1999.
"Subordinated Debt" means Indebtedness of the Company or any
-----------------
of its Subsidiaries under the Subordinated Notes, the
Subordinated Indenture, or any guaranty of such Indebtedness.
"Subordinated Debt Instruments" means the Subordinated
-----------------------------
Notes, the Subordinated Indenture, and all other Instruments and
agreements executed and delivered by the Company or any of its
Subsidiaries in connection therewith.
"Subordinated Indenture" means the indenture dated as of
----------------------
February 1, 1993 between the Company, and KAAC, AJI and KJC, as
Subsidiary Guarantors, and The First National Bank of Boston, as
trustee, pursuant to which the Subordinated Notes were issued, as
supplemented to make KFC an additional Subsidiary Guarantor (as
such term is defined therein), and as the same may be further
amended, supplemented, restated, or otherwise modified from time
to time in accordance with the terms of such indenture and this
Agreement.
"Subordinated Notes" means the 12 3/4% Senior Subordinated
------------------
Notes due 2003 in a principal amount not exceeding $400 million
issued by the Company pursuant to the Subordinated Indenture, as
amended, supplemented, restated, or otherwise modified from time
to time in accordance with the terms of the Subordinated
Indenture and this Agreement and all other promissory notes
accepted from time to time in substitution therefor or renewal
thereof in accordance with the terms of the Subordinated
Indenture and this Agreement.
"Subsidiary" means, with respect to any Person, any
----------
corporation of which more than 50% of the outstanding capital
stock having ordinary voting power to elect a majority of the
board of directors of such corporation (irrespective of whether
at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence
of any contingency), or any other entity of which more than 50%
of the equity securities or other ownership interest, is or are
at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by
one or more other Subsidiaries of such Person. Any determination
of whether a Subsidiary is directly or indirectly "wholly-owned"
by any Person shall be made after disregarding (a) any shares of
such Subsidiary held by the officers, employees, or directors of
37
46
such Subsidiary and (b) any shares of such Subsidiary held by
Restricted Affiliates.
"Subsidiary Collateral Documents" means the Subsidiary
-------------------------------
Pledge Agreement, the Subsidiary Security Agreement, and the
Intercompany Note Pledge Agreement.
"Subsidiary Guaranty" means the guaranty executed and
-------------------
delivered by any Subsidiary of the Company pursuant to
Section 7.1.9, in substantially the form of Exhibit J attached
- ------------- ---------
hereto, as amended, supplemented, restated, or otherwise modified
from time to time in accordance with the provisions hereof or
thereof.
"Subsidiary Pledge Agreement" means the pledge agreement
---------------------------
executed and delivered by any Subsidiary of the Company pursuant
to Section 7.1.10, in substantially the form of Exhibit K-1
-------------- -----------
attached hereto, as amended, supplemented, restated, or otherwise
modified from time to time in accordance with the provisions
hereof or thereof.
"Subsidiary Security Agreement" means the security agreement
-----------------------------
executed and delivered by any Subsidiary of the Company pursuant
to Section 7.1.6, in substantially the form of Exhibit K-2
------------- -----------
attached hereto, as amended, supplemented, restated, or otherwise
modified from time to time in accordance with the provisions
hereof or thereof.
"Swingline Commitment" is defined in Section 2.1.2.
-------------------- -------------
"Swingline Loans" is defined in Section 2.1.2.
--------------- -------------
"Tax Allocation Agreement" means the Tax Allocation
------------------------
Agreement dated December 21, 1989, between the Company and
MAXXAM, a copy of which has been delivered to the Agent and the
Lenders prior to the date hereof, as amended from time to time
with the prior written consent of the Agent.
"Taxes" is defined in clause (a) of Section 4.6.
----- ---------- -----------
"Tolling Inventory" means raw materials, work-in-process or
-----------------
other goods delivered to the Company by a third person pursuant
to a bailment arrangement with the Company under which such
Inventory is to be processed, improved, or otherwise altered by
the Company.
"Transfer Agreement" means the Transfer Agreement dated as
------------------
of December 21, 1989, between the Parent Guarantor and the
Company, a copy of which has been delivered to the Agent and the
Lenders prior to the date hereof, as amended, supplemented,
restated, or otherwise modified from time to time with the prior
written consent of the Agent.
"type" means, relative to any Revolving Loan, the portion
----
38
47
thereof, if any, being maintained as a Reference Rate Loan or a
LIBO Rate Loan.
"Uniform Commercial Code" means the Uniform Commercial Code
-----------------------
(or any successor statute) of the State of New York or, to the
extent relevant to the perfection or enforcement of security
interests, the Uniform Commercial Code (or any successor statute)
of any other state the laws of which are required by
Section 9-103 thereof to be applied in connection with the issue
- -------------
of perfection or enforcement of security interests.
"United States" or "U.S." means the United States of
------------- ----
America, its fifty States, and the District of Columbia.
"VALCO" means Volta Aluminium Company Limited, a Ghanaian
-----
corporation.
"Welfare Plan" means a "welfare plan", as such term is
------------
defined in section 3(1) of ERISA.
SECTION 1.2. Use of Defined Terms. Unless otherwise
--------------------
defined or the context otherwise requires, terms for which
meanings are provided in this Agreement shall have such meanings
when used in the Disclosure Schedule and in each Credit Request,
Continuation/Conversion Notice, Borrowing Base Certificate,
Compliance Certificate, Loan Document, notice, and other
communication delivered from time to time in connection with this
Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified,
----------------
references in this Agreement and in each other Loan Document to
any Article or Section are references to such Article or Section
of this Agreement or such other Loan Document, as the case may
be, and, unless otherwise specified, references in any Article,
Section, or definition to any clause are references to such
clause of such Article, Section, or definition.
SECTION 1.4. Accounting and Financial Determinations and
-------------------------------------------
Other Terms. Unless otherwise specified, all accounting terms
- -----------
used herein or in any other Loan Document shall be interpreted,
all accounting determinations and computations hereunder or
thereunder shall be made, and all financial statements required
to be delivered hereunder or thereunder shall be prepared in
accordance with GAAP applied on a basis consistent with those
used in the preparation of the financial statements for the
period ending December 31, 1993 to be furnished to the Lenders
under this Agreement; provided, however, that if there is any
-----------------
change in GAAP subsequent to December 31, 1993 the Agent and the
Company shall each have the right to notify the other party that
the Required Lenders or the Company, as the case may be, wish to
incorporate the effect of any such change in GAAP on the
operation of any covenant contained in Article IX or on the
Borrowing Base, the Interest Coverage Ratio for purposes of
Section 3.4.1 or any other provision hereof. In the event that
- -------------
39
48
the party receiving such notice agrees with such request to
incorporate the effect of any such change, thereafter the
Company's compliance with such covenant, the Borrowing Base, the
Interest Coverage Ratio and all other calculations in respect of
any other provision hereof will be determined on the basis of
GAAP including such change.
ARTICLE II
COMMITMENTS AND BORROWING PROCEDURES
SECTION 2.1. Commitments. On the terms and subject to the
-----------
conditions of this Agreement (including Article VII), each
-----------
Lender, severally and for itself alone, agrees to make Revolving
Loans and other Credit Extensions, and Business Credit agrees to
make Swingline Loans, pursuant to the Commitments described in
this Section 2.1.
-----------
SECTION 2.1.1. Revolving Commitment.
--------------------
(a) From time to time on any Business Day occurring
during the period commencing on the Initial Borrowing Date, and
continuing to (but not including) the Revolving Commitment
Termination Date, each Lender will
(i) make Loans (relative to such Lender, its
"Revolving Loans") to the Company equal to such
---------------
Lender's Percentage of the aggregate amount of
Revolving Loans requested by the Company pursuant to
Section 2.3(a) to be made on such Business Day, and
--------------
(ii) (A) in the case of any Issuer Bank, issue Letters
of Credit for the account of the Company, for the benefit of
the Company or any Subsidiary of the Company, or (B) in the
case of each other Lender, participate in such Letters of
Credit, in each case in accordance with Article V.
---------
(b) The Revolving Credit Outstandings at any time
shall not exceed the lesser of (x) $250,000,000 (such amount, as
it may be reduced from time to time pursuant to Section 2.2,
-----------
being herein called the "Revolving Commitment Amount") and (y)
---------------------------
the Borrowing Base as then in effect. The Commitment of each
Lender to make Revolving Loans and to issue or participate in
Letters of Credit is herein referred to as its "Revolving
---------
Commitment".
- ----------
(c) On the terms and subject to the conditions hereof,
the Company may from time to time (i) borrow, prepay, and
reborrow Revolving Loans and (ii) request the issuance of Letters
of Credit, allow Letters of Credit to expire undrawn or, if drawn
upon, repay Reimbursement Obligations relative thereto and
request the issuance of new Letters of Credit.
40
49
SECTION 2.1.2. Swingline Commitment.
--------------------
(a) From time to time on any Business Day occurring
during the period commencing on the Initial Borrowing Date, and
continuing to (but not including) the Revolving Commitment
Termination Date, Business Credit will make a portion of the
Revolving Commitment available to the Company by making Loans
("Swingline Loans") to the Company in an aggregate amount not to
---------------
exceed $25,000,000 outstanding at any one time, notwithstanding
the fact that such Borrowings may exceed Business Credit's
Revolving Commitment. The Commitment of Business Credit to make
Swingline Loans from time to time is herein referred to as its
"Swingline Commitment."
--------------------
(b) Business Credit at any time in its sole and
absolute discretion may require each other Lender on one Business
Day's notice to make a Revolving Loan in an amount equal to such
Lender's Percentage of the aggregate amount of Swingline Loans
outstanding on the date notice is given. In the event that
Revolving Loans are made by Lenders other than Business Credit
under the immediately preceding sentence, each such Lender shall
deposit with the Agent same day funds in an amount equal to such
Lender's Percentage of such Revolving Loans. Such deposit will
be made to an account which the Agent shall specify from time to
time by written notice to the Lenders. The proceeds of such
Revolving Loans shall be immediately applied to repay the
outstanding Swingline Loans and the Company authorizes the Agent
to charge its account with Bank of America (up to the amount
available in such account) in order to immediately pay Business
Credit the amount of such Swingline Loans to the extent amounts
received from other Lenders are not sufficient to repay in full
the outstanding Swingline Loans. If any portion of any such
amount paid to Business Credit should be recovered by or on
behalf of the Company from Business Credit in bankruptcy, by
assignment for the benefit of creditors, or otherwise, the loss
of the amount so recovered shall be ratably shared among all
Lenders in the manner contemplated by Section 4.8.
-----------
(c) Each Lender's obligation to make the Revolving
Loans referred to in clause (b) shall be absolute and
----------
unconditional and shall not be affected by any circumstance,
including (i) any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against Business Credit,
the Company, or any other Person for any reason whatsoever;
(ii) the occurrence or continuance of a Default; (iii) any
adverse change in the condition (financial or otherwise) of the
Company; (iv) any breach of this Agreement by the Company or any
other Lender; or (v) any other circumstance, happening, or event
whatsoever, whether or not similar to any of the foregoing.
(d) Interest on each Swingline Loan shall accrue to
Business Credit from the date of making such Swingline Loan to
and including the earlier of (i) the date prior to the day on
which payment of such Swingline Loan is made by the Company or
41
50
(ii) the date prior to the day of receipt by the Agent from any
Lender of its Percentage of any Revolving Loans made to repay
such Swingline Loan; provided that, from and after the date of
--------
the making of any such Revolving Loans, interest shall accrue on
such Lender's Percentage of any such Revolving Loans for the
account of such Lender.
SECTION 2.1.3 Lenders Not Required To Make Loans or Issue
-------------------------------------------
Letters of Credit.
- -----------------
(a) No Lender shall be required to make any Revolving
Loan or issue (in the case of the relevant Issuer Bank) any
Letter of Credit and Business Credit shall not be required to
make any Swingline Loan, if, after giving effect thereto, the
Revolving Credit Outstandings would exceed the lesser of (x) the
Borrowing Base as then in effect and (y) the Revolving Commitment
Amount as then in effect; and
(b) the Issuer Bank shall not be required to issue any
Letter of Credit if, after giving effect thereto, the Letter of
Credit Outstandings would exceed $125,000,000.
SECTION 2.1.4. Borrowing Base Determinations.
-----------------------------
(a) Except during the continuance of an Event of Cash
Dominion, the Company will furnish to the Agent, on or before the
12th Business Day of each month and on the date of the delivery
of (i) any Borrowing Request requesting the making of Revolving
Loans, or (ii) any Revolving L/C Request, a Borrowing Base
Certificate setting forth the Company's calculation of the
Borrowing Base (with supporting calculations in reasonable
detail) as of the last day of the preceding calendar month (or,
if the Credit Request described in clause (i) or (ii) is
---------- ----
delivered on or after the first day of any month but before the
12th Business Day of such month (or, if earlier, the date the
Borrowing Base Certificate required to be delivered during such
month is actually delivered), as of the last day of the next
preceding calendar month) and certifying
(A) that the information contained in such
Borrowing Base Certificate is true and complete in all
material respects,
(B) that, except as is disclosed in such Borrowing
Base Certificate, the Company has no reason to believe that
there has been a material reduction in the Borrowing Base
from the Borrowing Base Calculation Date for such Borrowing
Base Certificate to the date on which such Borrowing Base
Certificate is delivered,
(C) if a Credit Request is being delivered in
connection with the delivery of such Borrowing Base
Certificate, that as of the date of such Borrowing Base
Certificate, the Revolving Credit Outstandings do not (and,
42
51
after giving effect to the making of all Loans, or the issuance
of all Letters of Credit, if any, being requested in conjunction
with the delivery of such Borrowing Base Certificate, will not)
exceed the Borrowing Base which was in effect on the Borrowing
Base Calculation Date for such Borrowing Base Certificate, and
(D) as to such other matters as the Agent may
reasonably request,
(b) During the continuance of an Event of Cash
Dominion, the Company will furnish to the Agent at least weekly,
on or before the third day of each week, a collateral summary
report duly executed on behalf of the Company by a Financial
Authorized Officer of the Company setting forth sales, credit
memos, collections, discounts and outstanding Loans as of the
most recent practicable date.
During the continuance of an Event of Cash Dominion, the
Borrowing Base will be determined by the Agent, after
consultation with the Company, each day on the basis of such
relevant information as the Agent deems appropriate to consider
in calculating the actual Borrowing Base, including the
collateral summary reports and such other information regarding
the Accounts of the Company and KAII and the Inventory of the
Company as the Agent shall obtain from the Company and KAII
pursuant to Section 9.1.9 or otherwise.
-------------
SECTION 2.2. Reduction of Revolving Commitment Amount. The
----------------------------------------
Company may, from time to time on any Business Day occurring
after the Initial Borrowing Date, voluntarily reduce the
unutilized portion of the Revolving Commitment Amount; provided,
--------
however, that (a) all such reductions that involve prepayments of
- -------
LIBO Rate Loans shall require at least three Business Days prior
notice to the Agent, (b) all other reductions, including any such
reductions that involve prepayments of Reference Rate Loans,
shall require at least one Business Days prior notice to the
Agent, (c) each such reduction shall be permanent, and (d) any
such partial reduction of the Revolving Commitment Amount that
involves prepayments of LIBO Rate Loans shall be in an amount of
not less than $5,000,000. All notices referred to in the
foregoing sentence shall be given prior to 10:00 a.m., San
Francisco time, on the day of such notice.
SECTION 2.3. Borrowing Procedure.
-------------------
(a) By delivering a Borrowing Request to the Agent on
or before 10:00 a.m., San Francisco time, on a Business Day, the
Company, on advance notice of at least (i) three Business Days,
in the case of any disbursement of LIBO Rate Loans, or (ii) one
Business Day, in the case of any disbursement of Reference Rate
Loans, but in no case more than five Business Days, may from time
to time request that the Lenders make a disbursement of Revolving
Loans. Each request for a disbursement of Reference Rate Loans
43
52
shall specify an aggregate principal amount of at least
$1,000,000 and integral multiples of $1,000,000 in excess
thereof, and each request for a disbursement of LIBO Rate Loans
shall specify an aggregate principal amount of at least
$5,000,000 and integral multiples of $1,000,000 in excess
thereof. On the terms and subject to the conditions of this
Agreement, each Borrowing shall be comprised of the Loans of the
type(s) and Interest Period(s) specified in such Borrowing
Request and shall be made on the Business Day specified in such
Borrowing Request. The Agent shall promptly notify each Lender
by telephone (promptly confirmed in writing) of any such
Borrowing Request on the day such Borrowing Request is received
by the Agent. Subject to Section 2.1.3, prior to 9:30 a.m., San
-------------
Francisco time, on the Business Day specified in such Borrowing
Request, each Lender shall deposit with the Agent same day funds
in an amount equal to such Lender's Percentage of the requested
Borrowing. Such deposit will be made to an account which the
Agent shall specify from time to time by written notice to the
Lenders. To the extent funds are received from the Lenders by
9:30 a.m., San Francisco time, on any Business Day, the Agent
shall deposit such funds into the Company's account number 12339-
11101 at Bank of America not later than 10:30 a.m., San Francisco
time, on such Business Day. No Lender's obligation to make any
Loan shall be affected by any other Lender's failure to make any
Loan.
(b) By delivering a Borrowing Request to the Agent on
or before 1:00 p.m., San Francisco time, on a Business Day, the
Company may from time to time request that Business Credit make a
disbursement of a Swingline Loan. Each request for a
disbursement of a Swingline Loan shall specify an aggregate
principal amount of at least $500,000 and integral multiples of
$10,000 in excess thereof. All Swingline Loans shall be
Reference Rate Loans and no Swingline Loan may be outstanding for
more than seven calendar days. Business Credit shall deposit
same day funds in an amount equal to the requested Swingline Loan
into the Company's account number 12339-11101 at Bank of America
not later than 3:00 p.m., San Francisco time, on such Business
Day.
(c) In lieu of delivering the above-described
Borrowing Requests, the Company may give the Agent telephone
notice by the required time of any proposed Borrowing; provided
that such notice shall be promptly confirmed in writing by
delivery of a Borrowing Request on or prior to the proposed
borrowing date. Each telephone request for a Revolving Loan or a
Swingline Loan shall be conclusively presumed to be made by a
Person authorized by the Company to do so and crediting a
Revolving Loan or a Swingline Loan to the Company's deposit
account shall conclusively establish the obligation of the
Company to repay such Revolving Loan or Swingline Loan as
provided herein.
SECTION 2.4. Agent's Books and Records; Monthly Statements.
---------------------------------------------
44
53
The Agent will charge all Revolving Loans, Swingline Loans and,
as and when they become due and payable, other monetary
Obligations to a loan account of the Company maintained by the
Agent. All fees, commissions, costs, expenses, and other charges
under or pursuant to the Loan Documents not paid when due may, at
the Agent's option, be charged as Revolving Loans to the
Company's loan account as of the date due from the Company or the
date paid or incurred by the Agent, as the case may be. The
Company agrees that the Agent's books and records showing the
monetary Obligations and the transactions pursuant to this
Agreement and the other Loan Documents shall be admissible in any
action or proceeding arising therefrom, and shall constitute
prima facie proof thereof, irrespective of whether any Obligation
- ----- -----
is also evidenced by a promissory note or other instrument. The
Agent will provide to the Company a monthly statement of Loans,
payments, and other transactions pursuant to this Agreement.
Such statement shall be deemed correct, accurate, and binding on
the Company and as an account stated (except for reversals and
reapplications of payments made as provided in Section 4.7 and
-----------
corrections of errors discovered by the Agent), unless the
Company notifies the Agent in writing to the contrary within 60
days after such statement is rendered. In the event a timely
written notice of objection is given by the Company, only the
items to which exception is expressly made will be considered to
be disputed by the Company.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST, AND FEES
SECTION 3.1. Repayments. The Company shall repay in full
----------
the unpaid principal amount of each Loan upon the Stated Maturity
Date therefor.
SECTION 3.2. Voluntary Prepayments. Prior to repayment in
---------------------
full of each Loan pursuant to Section 3.1, and except during the
-----------
continuance of an Event of Cash Dominion, the Company may, from
time to time on any Business Day, make a voluntary prepayment, in
whole or in part, without premium or penalty (except as may be
required by Section 4.4), of the outstanding principal amount of
-----------
the Loans; provided, however, that
-------- -------
(a) if any such prepayment of any LIBO Rate Loan is
made on any day other than the last day of the Interest
Period for such Loan the Company shall comply with the
provisions of Section 4.4;
-----------
(b) all such voluntary partial prepayments of LIBO
Rate Loans (i) shall be in an aggregate amount of not less
than $5,000,000 and integral multiples of $1,000,000 in
excess thereof, unless such prepayment is a prepayment of
the entire outstanding principal amount of LIBO Loans of all
45
54
Lenders, and (ii) shall be applied pro rata to such LIBO
--- ----
Rate Loans of all Lenders;
(c) all such voluntary partial prepayments of
Reference Rate Loans shall be, in the case of Revolving
Loans, in an aggregate amount of not less than $1,000,000
and integral multiples of $1,000,000 in excess thereof,
unless such prepayment is a prepayment of the entire
outstanding principal amount of Reference Rate Loans of all
Lenders, and, in the case of Swingline Loans, in an
aggregate amount of not less than $250,000 and integral
multiples of $10,000 in excess thereof, unless such
prepayment is a prepayment of the entire outstanding
principal amount of Swingline Loans;
(d) all such voluntary partial prepayments of
Reference Rate Loans shall be applied first to Swingline
Loans and then pro rata to the Reference Rate Loans of all
--- ----
Lenders;
(e) all such voluntary prepayments of LIBO Rate Loans
shall require at least five Business Days prior written
notice to the Agent;
(f) all such voluntary prepayments of Reference Rate
Loans that are Revolving Loans shall require at least one
but no more than five Business Days prior written notice to
the Agent; and
(g) all such voluntary prepayments of Reference Rate
Loans that are Swingline Loans may be made without any prior
written notice.
SECTION 3.3. Mandatory Prepayments. Prior to repayment in
---------------------
full of each Loan pursuant to Section 3.1, the Company shall make
-----------
mandatory prepayments, without premium or penalty (except as may
be required by Section 4.4), in accordance with this Section 3.3.
----------- -----------
SECTION 3.3.1. Prepayment Under, or Cash Collateralization
-------------------------------------------
of, Revolving Commitment. Except during the continuance of an
- ------------------------
Event of Cash Dominion, the Company shall, on the second Business
Day after the date of delivery of any Borrowing Base Certificate
indicating that the Revolving Credit Outstandings on the date of
such Borrowing Base Certificate exceed the Borrowing Base as
shown on such Certificate, make a mandatory prepayment of the
then aggregate outstanding principal amount of all Swingline
Loans and, if all Swingline Loans have been prepaid, shall make a
mandatory prepayment of the then aggregate outstanding principal
amount of all Revolving Loans (or a repayment of outstanding
Reimbursement Obligations with respect to Letters of Credit),
and, if all Revolving Loans and such Reimbursement Obligations
have been prepaid or repaid, shall furnish cash collateral with
respect to undrawn and outstanding Letters of Credit, in an
aggregate amount equal to such excess. If the Company shall fail
46
55
to deliver a Borrowing Base Certificate when due hereunder and
the Agent determines that the Revolving Credit Outstandings on
the date such Borrowing Base Certificate was due exceeded the
Borrowing Base, as of the last day of the preceding month, the
Company shall on the second Business Day after receipt of notice
from the Agent, make a mandatory prepayment of the then aggregate
outstanding principal amount of all Swingline Loans and, if all
Swingline Loans have been prepaid, shall make a mandatory
prepayment of the then aggregate outstanding principal amount of
all Revolving Loans (or a repayment of outstanding Reimbursement
Obligations with respect to Letters of Credit), and, if all
Revolving Loans have been prepaid, shall furnish cash collateral
with respect to Letters of Credit, in an aggregate amount equal
to such excess. On the terms and subject to the conditions
hereof, the Company may reborrow amounts applied to the
prepayment of Swingline Loans and Revolving Loans pursuant to
this Agreement.
SECTION 3.3.2. Cash Dominion. During the continuance of an
-------------
Event of Cash Dominion (a) all collected funds on deposit in the
Concentration Account pursuant to the Concentration Bank
Agreement shall be applied on a daily basis to the prepayment of
the then aggregate outstanding principal amount of all Swingline
Loans and, if all Swingline Loans have been prepaid, to the
prepayment of the then aggregate outstanding principal amount of
all Revolving Loans; (b) on any day on which Revolving Credit
Outstandings exceed the Borrowing Base, as calculated as of such
date, the Company shall make a mandatory prepayment of the then
aggregate outstanding principal amount of all Swingline Loans,
and, if all Swingline Loans have been prepaid, shall make a
mandatory prepayment of the then aggregate outstanding principal
amount of all Revolving Loans (or a repayment of outstanding
Reimbursement Obligations with respect to Letters of Credit),
and, if all Revolving Loans have been prepaid, shall furnish cash
collateral with respect to Letters of Credit, in an aggregate
amount equal to such excess; and (c) the Company shall deposit,
or cause to be deposited in the Concentration Account (unless
deposited in a Collection Deposit Account or remitted or paid
directly to the Agent) (i) all remittances and payments received
by the Company in respect of Accounts (except Accounts payable by
Subsidiaries and Joint Venture Affiliates paid by accounting
entries), Instruments (other than Intercompany Demand Notes), and
sales of Inventory for cash and all prepayments, deposits, and
other advance payments in respect of sales of Inventory; (ii) all
Net Disposition Proceeds received from any Asset Disposition; and
(iii) all tax refunds, insurance proceeds and other amounts
received from third parties. On the terms and subject to the
conditions hereof, the Company may reborrow amounts applied to
the prepayment of Swingline Loans and Revolving Loans pursuant to
this Agreement.
SECTION 3.3.3. Acceleration. The Company shall,
------------
immediately upon any acceleration of the Stated Maturity Date of
any Loans pursuant to Section 10.2 or Section 10.3, repay all
------------ ------------
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56
Loans which are so accelerated.
SECTION 3.4. Interest Provisions. Interest on the
-------------------
outstanding principal amount of Loans shall accrue and be payable
in accordance with this Section 3.4, in each case computed on the
-----------
basis of the actual number of days elapsed in a 360-day year.
SECTION 3.4.1. Rates. The Company shall pay interest on
-----
the unpaid principal amount of each Revolving Loan and Swingline
Loan made to the Company from time to time outstanding as
follows:
(a) if any portion of the unpaid principal amount of
such Loan is a Reference Rate Loan, the Company shall pay
interest on such portion at a rate per annum equal to the
sum of (i) the Reference Rate from time to time in effect
and (ii) a margin of 1-1/2%; and
(b) if any portion of the unpaid principal amount of
such Loan is a LIBO Rate Loan, during each Interest Period
applicable thereto, the Company shall pay interest on such
portion at a rate per annum equal to the sum of (i) the LIBO
Rate (Reserve Adjusted) for such Interest Period and (ii) a
margin of 3-1/4%;
provided, however, that,
- -------- -------
(i) so long as no Default shall have occurred and be
continuing, if as of the last day of any Fiscal Quarter,
commencing with the second Fiscal Quarter of the 1995 Fiscal
Year, the Interest Coverage Ratio for the four Fiscal
Quarter period ended on such last day is greater than or
equal to 1.25 to 1.00 but less than 1.50 to 1.00, and the
Agent receives a Compliance Certificate pursuant to
clause (c) of Section 9.1.1 to such effect, then, for each
---------- -------------
day during the Fiscal Quarter in which such Compliance
Certificate is required to be delivered, the margins set
forth in clauses (a) and (b) above and any fees payable
----------- ---
pursuant to clause (a)(ii) of Section 5.3 (in each case
-------------- -----------
without giving effect to any previous increase or reduction
pursuant to this proviso) shall each be reduced by 1/2 of 1%
per annum; and
(ii) so long as no Default shall have occurred and be
continuing, if as of the last day of any Fiscal Quarter,
commencing with the second Fiscal Quarter of the 1995 Fiscal
Year, the Interest Coverage Ratio for the four Fiscal
Quarter period ended on such last day is greater than or
equal to 1.50 to 1.00 but less than 2.00 to 1.00, and the
Agent receives a Compliance Certificate pursuant to
clause (c) of Section 9.1.1 to such effect, then, for each
---------- -------------
day during the Fiscal Quarter in which such Compliance
Certificate is required to be delivered, the margins set
forth in clauses (a) and (b) above and any fees payable
----------- ---
48
57
pursuant to clause (a)(ii) of Section 5.3 (in each case
-------------- -----------
without giving effect to any previous increase or reduction
pursuant to this proviso) shall each be reduced by 1% per annum;
and
(iii) so long as no Default shall have occurred and be
continuing, if as of the last day of any Fiscal Quarter,
commencing with the second Fiscal Quarter of the 1995 Fiscal
Year, the Interest Coverage Ratio for the four Fiscal
Quarter period ended on such last day is greater than or
equal to 2.00 to 1.00, and the Agent receives a Compliance
Certificate pursuant to clause (c) of Section 9.1.1 to such
---------- -------------
effect, then, for each day during the Fiscal Quarter in
which such Compliance Certificate is required to be
delivered, the margins set forth in clauses (a) and (b)
----------- ---
above and any fees payable pursuant to clause (a)(ii) of
--------------
Section 5.3 (in each case without giving effect to any
-----------
previous increase or reduction pursuant to this proviso)
shall each be reduced by 1-1/2% per annum.
Prior to the date in any Fiscal Quarter on which the Agent
receives the Compliance Certificate which is required to be
delivered during such Fiscal Quarter, the interest margin and
letter of credit fees shall be the same as were applicable to the
immediately preceding Fiscal Quarter. If such Compliance
Certificate shall indicate that such interest margin or letter of
credit fees should be increased pursuant to this proviso, the
Company shall, on the date of delivery of such Compliance
Certificate, pay to the Agent for the account of those Lenders
which received underpayment thereof an amount equal to the
difference between (A) the aggregate amount of interest and
letter of credit fees which would theretofore have been payable
during such Fiscal Quarter had such increase been made on the
first day of such Fiscal Quarter and (B) the amounts of interest
and letter of credit fees which were actually paid during such
Fiscal Quarter. If such Compliance Certificate shall indicate
that the Company paid more interest or letter of credit fees than
would have been required if any reduction therein required by
this proviso had commenced on the first day of such Fiscal
Quarter, any such excess payment shall be credited to future
payments of interest or letter of credit fees, as the case may
be, payable to those Lenders which received over-payments thereof
and, if the Company shall not have received full credit for any
such excess payment from any Lender at the time when such
Lender's Commitments hereunder terminate and all monetary
Obligations owing to such Lender are paid in full, then such
Lender shall pay to the Company any such excess payment, without
interest, at such time.
In the event that any accountant's report delivered pursuant
to clause (b)(iii) of Section 9.1.1 shall indicate any
--------------- -------------
miscomputation of the Interest Coverage Ratio in any Compliance
Certificate, if such accountant's report shall indicate that the
interest margin or letter of credit fees should have been
49
58
increased pursuant to this proviso for any Fiscal Quarter during
the relevant Fiscal Year, the Company shall, within ten Business
Days after such accountant's report is delivered, pay the Agent,
for the account of the Lenders, additional interest on the Loans
and letter of credit fees for the Letters of Credit in an
aggregate amount equal to the excess of (A) the aggregate amount
of interest which would have been payable on the Loans and letter
of credit fees which would have been payable on the Letters of
Credit for any period of time if the Compliance Certificate in
respect of the Fiscal Quarter in question had shown the same
Interest Coverage Ratio for the four Fiscal Quarter period ended
on the last day of such Fiscal Quarter as did such accountant's
report, over (B) the aggregate of the interest which was actually
paid on the Loans and the letter of credit fees which were
actually paid on the Letters of Credit in respect of such period
of time. If such accountant's report shall indicate that the
Company paid more interest or letter of credit fees than would
have been required if any reduction therein had commenced on the
first day of any Fiscal Quarter during the relevant Fiscal Year,
any such excess payment shall be credited to future payments of
interest or letter of credit fees, as the case may be, payable to
those Lenders which received over-payments thereof and, if the
Company shall not have received full credit for any such excess
payment from any Lender at the time when such Lender's
Commitments hereunder terminate and all monetary Obligations
owing to such Lender are paid in full, then such Lender shall pay
to the Company any such excess payment, without interest, at such
time.
Upon termination of the Lenders' Commitments hereunder, no
further retroactive adjustments shall be made to the interest or
letter of credit fees paid during the term of this Agreement.
All LIBO Rate Loans shall bear interest from (and including)
the first day of the applicable Interest Period to (but
excluding) the last day of such Interest Period at the interest
rate determined as applicable to such LIBO Rate Loan; provided,
--------
however, that any margin reduction or increase resulting from the
- -------
Interest Coverage Ratio test set forth in this Section 3.4.1
-------------
shall become effective at any time during any Interest Period.
SECTION 3.4.2. Continuation and Conversion Elections. By
-------------------------------------
delivering a Continuation/Conversion Notice to the Agent on or
before 10:00 a.m., San Francisco time, on a Business Day, the
Company may from time to time irrevocably elect, on
(a) not less than three nor more than five Business
Days notice (in the case of continuations of or conversions
into LIBO Rate Loans), or
(b) not less than one nor more than five Business Days
notice (in the case of conversions into Reference Rate
Loans)
50
59
that all or any portion of any outstanding Revolving Loan be (i)
converted into a LIBO Rate Loan, (ii) converted into a Reference
Rate Loan, or (iii) continued as a LIBO Rate Loan. All
conversions of Revolving Loans that are Reference Rate Loans
shall be made pro rata among all such Reference Rate Loans of all
--- ----
Lenders. All conversions or continuations of Revolving Loans
that are LIBO Rate Loans shall be made pro rata among all such
--- ----
LIBO Rate Loans of all Lenders. In the absence of delivery of a
Continuation/Conversion Notice with respect to any LIBO Rate Loan
within the time periods specified above before the last day of
the then current Interest Period with respect thereto, such LIBO
Rate Loan shall, on such last day, automatically convert to a
Reference Rate Loan. No portion of the outstanding principal
amount of any Revolving Loan may be continued as, or be converted
into, a LIBO Rate Loan during the continuation of any Event of
Default. No Swingline Loans may be converted into a LIBO Rate
Loan.
SECTION 3.4.3. Funding. Each Lender may, if it so elects,
-------
fulfill its obligation to make, continue, or convert any LIBO
Rate Loan hereunder by causing one of its foreign branches or
Affiliates (or an international banking facility created by such
Lender) to make or maintain such LIBO Rate Loan; provided,
--------
however, that such LIBO Rate Loan shall nonetheless be deemed to
- -------
have been made and to be held by such Lender, and the obligation
of the Company to repay such LIBO Rate Loan shall nevertheless be
to such Lender for the account of such foreign branch, Affiliate,
or international banking facility. In addition, the Company
hereby consents and agrees that, for purposes of any
determination to be made for purposes of Section 4.2, 4.3, or
----------- ---
4.4, it shall be conclusively assumed that each Lender elected to
- ---
fund all LIBO Rate Loans by purchasing Dollar deposits in the
London interbank eurodollar market.
SECTION 3.4.4. Default Rates. During the continuation of
-------------
any Event of Default,
(a) the Company shall pay interest (after as well as
before judgment) on the principal amount of all Loans
outstanding to it at a rate per annum which is determined by
increasing each of the interest rates set forth in
clauses (a) and (b) of Section 3.4.1 by 2% per annum;
----------- --- -------------
(b) the letter of credit fees payable pursuant to
clause (a)(ii) of Section 5.3 shall be increased by 2% per
-------------- -----------
annum for all Letters of Credit; and
(c) the Company shall pay interest on any other
Obligations which are then due and payable (other than
Reimbursement Obligations which are accruing interest
pursuant to Section 5.5) to the extent permitted by
-----------
applicable law, at a rate per annum equal to the Reference
Rate plus 3-1/2%.
51
60
SECTION 3.4.5. Interest Payment Dates. Interest accrued on
----------------------
each Loan shall be payable
(a) with respect to Reference Rate Loans, in arrears on
the first day of each month;
(b) with respect to LIBO Rate Loans, (i) except during
the continuance of any Event of Default, on the last day of
each applicable Interest Period and, if such Interest Period
shall exceed three months, on the day which numerically
corresponds to the first day of such Interest Period and
falls in the third month thereafter (or, if there is no such
numerically corresponding date, on the last Business Day of
such third month) and (ii) during the continuance of an
Event of Default, in arrears on the first day of each month;
and
(c) on that portion of any Loan the Stated Maturity
Date of which is accelerated pursuant to Section 10.2 or
------------
Section 10.3, immediately upon such acceleration.
------------
Interest accrued on Loans or other monetary Obligations arising
under this Agreement or any other Loan Document after the date
such amount is due and payable (whether on the Stated Maturity
Date, upon acceleration or otherwise) shall be payable upon
demand.
SECTION 3.5. Fees. The Company and the Parent Guarantor,
----
jointly and severally, agree to pay the fees set forth in this
Section 3.5.
- -----------
SECTION 3.5.1. Commitment Fee. The Company and the Parent
--------------
Guarantor, jointly and severally, agree to pay to the Agent for
the account of each Lender, for the period (including any portion
thereof when any of its Commitments are suspended by reason of
the Company's inability to satisfy any condition of Article VII)
-----------
commencing on the Effective Date and continuing through the
Revolving Commitment Termination Date, a commitment fee at the
rate of 1/2 of 1% per annum on such Lender's Percentage of the
sum of the average daily unused portion of the Revolving
Commitment Amount. Such commitment fees shall be payable by the
Company in arrears on each Quarterly Payment Date, commencing
with the first such day following the Effective Date, and on the
Revolving Commitment Termination Date.
SECTION 3.5.2. Audit Fees. The Company and the Parent
----------
Guarantor, jointly and severally, agree to pay to the Agent an
audit fee equal to $500 per day per auditor (whether or not such
auditor is an employee of the Agent) for each audit of the
Collateral undertaken pursuant to Section 9.1.5 and to pay all
-------------
out-of-pocket expenses of each auditor incurred in connection
with such Collateral audits; provided, however, that, except
-------- -------
during the continuance of an Event of Cash Dominion, the Company
and the Parent Guarantor shall not be required to pay for more
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than one collateral audit during any 180-day period and, during
the continuance of an Event of Cash Dominion, shall not be
required to pay for more than one collateral audit during any 90-
day period.
SECTION 3.5.3. Other Fees. The Company and the Parent
----------
Guarantor, jointly and severally, agree to pay to the Agent
certain other fees set forth in clause (iii) of the confidential
------------
letter dated January 24, 1994 from Bank of America to the Company
(the "Fee Letter") for retention by the Agent as set forth in the
----------
Fee Letter.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. Illegality.
----------
(a) If any Lender shall determine (which determination
shall, upon written notice thereof to the Company and the
other Lenders, be conclusive and binding on the Company)
that the introduction of or any change in (or in the
interpretation of) any law makes it unlawful, or any central
bank or other governmental authority asserts that it is
unlawful, for such Lender to make, continue, or maintain any
Loan as, or to convert any Loan into, a LIBO Rate Loan, the
obligations of all Lenders to make, continue, maintain, or
convert any such Loans shall, upon such determination,
forthwith be suspended until such Lender shall notify the
Agent that the circumstances causing such suspension no
longer exist, and all LIBO Rate Loans shall automatically
convert into Reference Rate Loans at the end of the then
current Interest Periods with respect thereto or sooner, if
required by such law or assertion.
(b) If any Lender shall determine (which determination
shall, upon written notice thereof to the Company and the
other Lenders, be conclusive and binding on the Company)
that the introduction of or any change in (or in the
interpretation of) any law makes it unlawful, or any central
bank or other governmental authority asserts that it is
unlawful, for such Lender to issue or amend (in the case of
an Issuer Bank) or to participate in (in the case of each
other Lender) any additional Letters of Credit, the
obligations of all Lenders so to issue, amend, or
participate in additional Letters of Credit shall, upon such
determination, forthwith terminate, and the Agent shall, by
written notice to the Company and each Lender, declare that
such obligations have so terminated. If circumstances
subsequently change so that such affected Lender shall
determine that it is no longer so affected, such obligations
shall, upon such determination (and telephonic notice
thereof immediately confirmed in writing to the Agent, each
other Lender, and the Company), forthwith be reinstated, and
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the Agent shall, by written notice to the Company and each
Lender, declare that such obligations have been so
reinstated.
SECTION 4.2. Deposits Unavailable. If the Agent shall have
--------------------
reasonably determined that
(a) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to Bank of
America in the relevant market; or
(b) by reason of circumstances affecting Bank of
America's relevant market, adequate means do not exist for
ascertaining the interest rate applicable hereunder to LIBO
Rate Loans,
then, upon written notice from the Agent to the Company and the
Lenders, the obligations of all Lenders under Section 2.3 and
-----------
Section 3.4.2 to make or continue any Loans as, or to convert any
- -------------
Loans into, LIBO Rate Loans shall forthwith be suspended until
the Agent shall notify the Company and the Lenders that the
circumstances causing such suspension no longer exist.
SECTION 4.3. Increased Costs, etc. The Company agrees to
--------------------
reimburse each Lender for any increase in the cost to such Lender
of, or any reduction in the amount of any sum receivable by such
Lender in respect of, issuing, maintaining, or participating in
the Letters of Credit, or making, continuing, or maintaining (or
of its obligation to make, continue, or maintain) any Loans as,
or of converting (or of its obligation to convert) any Loans
into, LIBO Rate Loans. Such Lender shall promptly notify the
Agent and the Company in writing of the occurrence of any such
event, such notice to state, in reasonable detail, the reasons
therefor and the additional amount required fully to compensate
such Lender for such increased cost or reduced amount as well as
the calculation of such additional amount. Such additional
amounts shall be payable by the Company directly to such Lender
within 15 days of its receipt of such notice, and such notice
shall, in the absence of manifest error, be conclusive and
binding on the Company.
SECTION 4.4. Funding Losses. In the event any Lender shall
--------------
incur any loss or expense (including any loss or expense incurred
by reason of the liquidation or reemployment of deposits or other
funds acquired by such Lender to make, continue, or maintain any
portion of the principal amount of any Loan as, or to convert any
portion of the principal amount of any Loan into, a LIBO Rate
Loan) as a result of
(a) any conversion or repayment or prepayment of the
principal amount of any LIBO Rate Loans on a date other than
the scheduled last day of the Interest Period applicable
thereto, whether pursuant to Section 3.1, 3.2, 3.3, or 3.4.2
----------- --- --- -----
or otherwise,
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(b) any Loans not being made as LIBO Rate Loans in
accordance with the Borrowing Request therefor (other than
as a result of a determination pursuant to Section 4.1 or
-----------
4.2), or
---
(c) any Loans not being continued as, or converted
into, LIBO Rate Loans in accordance with the Continuation/
Conversion Notice therefor (other than as a result of a
determination pursuant to Section 4.1 or 4.2),
----------- ---
then, upon the written notice of such Lender to the Company (with
a copy to the Agent), the Company shall, within 15 days of its
receipt thereof, pay directly to such Lender such amount as will
(in the reasonable determination of such Lender) reimburse such
Lender for such loss or expense. Such written notice (which
shall include calculations in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on the
Company.
SECTION 4.5. Increased Capital Costs. If any change in, or
-----------------------
the introduction, adoption, effectiveness, interpretation,
reinterpretation, or phase-in of, any law or regulation,
directive, guideline, decision, or request (whether or not having
the force of law) of any court, central bank, regulator, or other
governmental authority affects or would affect the amount of
capital required or expected to be maintained by any Lender or
any Person controlling such Lender, and such Lender determines
(in its sole and absolute discretion) that the rate of return on
its or such controlling Person's capital as a consequence of its
Commitments or the Credit Extensions (including the disbursement
of Loans and the issuance of or participation in Letters of
Credit) made by such Lender is reduced to a level below that
which such Lender or such controlling Person could have achieved
but for the occurrence of any such circumstance, then, in any
such case upon written notice from time to time by such Lender to
the Company, with a copy to the Agent, the Company shall, within
15 days of its receipt of such notice, pay directly to such
Lender additional amounts sufficient to compensate such Lender or
such controlling Person for such reduction in rate of return. A
statement of such Lender as to any such additional amount or
amounts (including calculations thereof in reasonable detail)
shall, in the absence of manifest error, be conclusive and
binding on the Company. In determining such amount, such Lender
may use any method of averaging and attribution that it (in its
sole and absolute discretion) shall deem applicable, subject in
each case to Section 4.12.
------------
SECTION 4.6. Taxes, etc.
----------
(a) All payments by the Company and each other Obligor
to the Agent or any Lender in respect of any Obligation
shall be made without any setoff or counterclaim, and free
and clear of and without deduction or withholding for or on
account of, any present or future Taxes now or hereafter
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imposed on the Agent or any Lender with respect to such payments
by any governmental or other authority, except to the extent that
such deduction or withholding is compelled by law. As used
herein, the term "Taxes" shall include all
-----
excise and other taxes of whatever nature imposed on the
Agent or any Lender with respect to, or arising out of, such
payments or the transactions contemplated hereby (other than
taxes generally assessed on the net income of the Agent or
any Lender, as the case may be, by the government of the
country, or any political subdivision or taxing authority
thereof or therein, in which the Agent or such Lender is
incorporated or in which such Lender's Domestic Office or
such Lender's LIBOR Office is located) as well as all
levies, imposts, duties, charges, or fees of whatever
nature. If any Obligor is compelled by law to make any such
deduction or withholding it will:
(i) pay to the relevant authorities the full
amount required to be so withheld or deducted;
(ii) (except to the extent that such deduction or
withholding results from the breach, by the recipient
of a payment, of its agreement contained in clause (b)
----------
below, or would not be required if such recipient's
representation and warranty contained in clause (b)
----------
below were true) pay such additional amounts as may be
necessary in order that the net amount received by the
Agent and each Lender, after such deduction or
withholding (including any required deduction or
withholding on such additional amounts) shall equal the
amount such payee would have received had no such
deduction or withholding been made; and
(iii) promptly forward to the Agent (for delivery
to such payee) an official receipt or other
documentation satisfactory to the Agent evidencing such
payment to such authorities.
Moreover, if any Taxes are directly asserted against the
Agent or any Lender with respect to any payment made in
respect of, or arising out of, any Obligation, such payee
may pay such Taxes, and each Obligor which is obligated to
pay such Obligation agrees promptly to pay such additional
amount (including any penalties, interest or expenses) as
may be necessary in order that the net amount received by
such payee after the payment of such taxes (including any
Taxes on such additional amount) shall equal the amount such
payee would have received had no such Taxes been asserted
(except to the extent that such Taxes result from the
breach, by such payee, of its agreement contained in
clause (b) below or would not be asserted if such payee's
----------
representation and warranty contained in clause (b) below
----------
were true). For purposes of this Section 4.6, a
-----------
distribution hereunder by the Agent or any Lender to or for
56
65
the account of any Lender shall be deemed to be a payment by
the applicable Obligor.
(b) Each Lender which is a Non-United States Person
agrees (to the extent it is permitted to do so under the
laws and any applicable double taxation treaties of the
United States, the jurisdiction of such Lender's
incorporation, and the jurisdictions in which such Lender's
Domestic Office and such Lender's LIBOR Office are located)
to execute and deliver to the Agent for delivery to the
Company, before the first scheduled payment date in each
year, either (i) three United States Internal Revenue
Service Forms 1001 or (ii) three United States Internal
Revenue Service Forms 4224 together with three United States
Internal Revenue Service Forms W-9, or any successor forms,
as appropriate, properly completed and claiming complete or
partial, as the case may be, exemption from withholding and
deduction of United States federal Taxes. Each Lender which
is a Non-United States Person represents and warrants to
each Obligor and to the Agent that, at the date of this
Agreement, (i) its Domestic Office and its LIBOR Office are
entitled to receive payments of principal, interest,
Reimbursement Obligations, and fees hereunder and under the
other Loan Documents without deduction or withholding for or
on account of any Taxes imposed by the United States or any
political subdivision thereof and (ii) it is permitted to
take the actions described in the preceding sentence under
the laws and any applicable double taxation treaties of the
jurisdictions specified in the preceding sentence. Each
Lender which is a Non-United States Person further agrees
that, to the extent any form claiming complete or partial
exemption from withholding and deduction of United States
federal Taxes delivered under this clause (b) is found to be
----------
incomplete or incorrect in any material respect, such Lender
shall (to the extent it is permitted to do so under the laws
and any double taxation treaties of the United States, the
jurisdiction of its incorporation, and the jurisdictions in
which its Domestic Office and its LIBOR Office are located)
execute and deliver to the Agent a complete and correct
replacement form.
(c) Each Lender agrees to use reasonable efforts to
change its Domestic Office or LIBOR Office to avoid or to
minimize any amounts otherwise payable under clause (a) of
----------
this Section 4.6, in each case solely if such change can be
-----------
made in a manner so that such Lender, in its sole
determination, suffers no legal, economic, or regulatory
disadvantage.
SECTION 4.7. Payments, Computations, etc.
---------------------------
(a) Unless otherwise expressly provided, all payments
by the Company pursuant to this Agreement or any other Loan
Document shall be made by the Company to the Agent for the
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pro rata account of the Lenders entitled to receive such
--- ----
payment. Except for Proceeds received directly by the
Agent, all such payments required to be made to the Agent
shall be made, without setoff, deduction or counterclaim,
not later than 9:30 a.m., San Francisco time, or, with
respect to payments which are to be funded by other Credit
Extensions, 10:30 a.m., San Francisco time, in either case
on the date due, in same day or immediately available funds,
to such account as the Agent shall specify from time to time
by written notice to the Company. Funds received after that
time shall be deemed to have been received by the Agent on
the next succeeding Business Day. The Agent shall promptly
remit to each Lender such Lender's share, if any, of such
payments received by the Agent not later than 9:30 a.m.,
San Francisco time, or 10:30 a.m., San Francisco time, as
applicable, for the account of such Lender in same day funds
on the day received. If the Agent fails so to remit such
funds to such Lender, the Agent shall pay to such Lender
interest on the amount of such Lender's share of such
payments at the daily average Federal Funds Rate for each
day on which such failure continues excluding the day on
which such remittance is made. All interest and commitment
fees shall be computed on the basis of the actual number of
days (including the first day but excluding the last day)
occurring during the period for which such interest or fee
is payable over a year comprised of 360 days. Whenever any
payment to be made shall otherwise be due on a day which is
not a Business Day, such payment shall (except as otherwise
required by clause (b) of the definition of the term
----------
"Interest Period" with respect to LIBO Rate Loans) be made
---------------
on the next succeeding Business Day and such extension of
time shall be included in computing interest, if any, in
connection with such payment.
(b) If after receipt of any payment of, or Proceeds
applied to the payment of, all or any part of the
Obligations, the Lenders, the Issuer Bank, or the Agent is
for any reason compelled to surrender such payment or
Proceeds to any Person, because such payment or Proceeds is
invalidated, declared fraudulent, set aside, determined to
be void or voidable as a preference, impermissible set off,
or a diversion of trust funds, or for any other reason, the
Obligations or part thereof intended to be satisfied shall
be revived and continue and this Agreement shall continue in
full force as if such payment or Proceeds had not been
received by the Lenders, the Issuer Bank, or the Agent; and
the Company shall be liable to the Lenders, the Issuer Bank,
and the Agent, and hereby does indemnify the Lenders, the
Issuer Bank, and the Agent and hold the Lenders, the Issuer
Bank, and the Agent harmless for, the amount of such payment
or Proceeds surrendered. The provisions of this Section 4.7
-----------
shall be and remain effective notwithstanding any contrary
action which may have been taken by the Lenders, the Issuer
Bank, and the Agent in reliance upon such payment or
58
67
Proceeds, and any such contrary action so taken shall be
without prejudice to the rights of the Lenders, the Issuer
Bank, and the Agent under this Agreement and shall be deemed
to have been conditioned upon such payment or Proceeds
having become final and irrevocable.
SECTION 4.8. Sharing of Payments. If any Lender shall
-------------------
obtain any payment or other recovery (whether voluntary,
involuntary, by application of setoff, or otherwise) on account
of any Letter of Credit it has issued or in which it is a
participant, or on account of any Loan (other than pursuant to
the terms of Sections 4.3, 4.4, 4.5, and 4.6) in each case in
------------ --- --- ---
excess of its pro rata share of payments then or therewith
--- ----
obtained by all Lenders, such Lender shall purchase from the
other Lenders such participations in the Letters of Credit in
which they have participated or they have issued, or in Loans
made by them, as the case may be, as shall be necessary to cause
such purchasing Lender to share the excess payment or other
recovery ratably with each of them; provided, however, that if
-------- -------
all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Lender, the purchase
shall be rescinded and each Lender which has sold a participation
to the purchasing Lender shall repay to the purchasing Lender the
purchase price to the ratable extent of such recovery together
with an amount equal to such selling Lender's ratable share
(according to the proportion of
(a) the amount of such selling Lender's required
repayment to the purchasing Lender
to
- --
(b) the total amount so recovered from the purchasing
Lender)
of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered. The Company
agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 4.8 may, to the fullest extent
-----------
permitted by law, exercise all its rights of payment (including
pursuant to Section 4.9) with respect to such participation as
-----------
fully as if such Lender were the direct creditor of the Company
in the amount of such participation. If under any applicable
bankruptcy, insolvency, or other similar law, any Lender receives
a secured claim in lieu of a setoff to which this Section 4.8
-----------
applies, such Lender shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this
Section 4.8 to share in the benefits of any recovery on such
- -----------
secured claim.
SECTION 4.9. Setoff. Each Lender shall, with the prior
------
written consent of the Required Lenders, during the continuance
of any Event of Default, have the right to appropriate and apply
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to the payment of the Obligations owing to it (whether or not
then due), and (as security for such Obligations) the Company
hereby grants to each Lender a continuing security interest in,
any and all balances, credits, deposits, accounts, or moneys of
the Company then or thereafter maintained with such Lender,
excluding any specifically designated trust account; provided,
--------
however, that any such appropriation and application shall be
- -------
subject to the provisions of Section 4.8. Each Lender agrees
-----------
promptly to notify the Company and the Agent after any such
setoff and application made by such Lender; provided, however,
-------- -------
that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each
Lender under this Section 4.9 are in addition to other rights and
-----------
remedies (including other rights of setoff under applicable law
or otherwise) which such Lender may have.
SECTION 4.10. Use of Proceeds. The Company shall apply the
---------------
proceeds of each Loan and shall use each Letter of Credit in
accordance with the fourth recital and for general corporate and
------ -------
working capital purposes of the Company and its Subsidiaries. No
proceeds of any Loan and no Letter of Credit will be used to
purchase or carry (a) any equity security not issued by the
Company of a class which is registered pursuant to Section 12 of
----------
the Securities Exchange Act of 1934, or (b) any "margin stock",
as defined in F.R.S. Board Regulation U.
SECTION 4.11. Change of Lending Office, Replacement of
----------------------------------------
Lender, etc.
- -----------
(a) Each Lender agrees that, upon the occurrence of
any event giving rise to the operation of Section 4.1, 4.3,
----------- ---
or 4.5 with respect to such Lender, it will, if requested by
---
the Company and to the extent permitted by law or by the
relevant governmental authority, in consultation with the
Agent, for a period of thirty days use reasonable efforts in
good faith to avoid the illegality or to avoid or minimize
the increase in costs or reduction in payments resulting
from such event (including using reasonable efforts to
change its Domestic Office or LIBOR Office); provided that
--------
such avoidance or minimization can be made in such a manner
so that such Lender, in its sole determination, suffers no
legal, economic, or regulatory disadvantage.
(b) If any Lender (an "Affected Lender") shall
---------------
make a determination under Section 4.1 or shall make a
-----------
demand for payment under Section 4.3, 4.5, or 4.6, and
----------- --- ---
the Company shall find a Lender or other entity capable
of being an Assignee Lender under Section 12.11.1 (an
---------------
"Eligible Assignee") which offers in writing to
-----------------
(i) purchase all, but not less than all, Loans of
and Reimbursement Obligations owed (directly or by way
of participation) to such Affected Lender,
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(ii) purchase a 100% participation in all
obligations of such Affected Lender in respect of all
Letters of Credit issued or participated in by such
Affected Lender, and
(iii) assume all the Commitments of such Affected
Lender,
in each case without recourse for the full amount thereof on
a specified date, together with accrued and unpaid interest
and commitment fees thereon to the date of purchase, and all
other amounts owing to such Affected Lender hereunder and
under the other Loan Documents, and such Eligible Assignee
tenders the purchase price of such amounts on such specified
date, and if, in the sole determination of such Affected
Lender, its acceptance of such offer would be permitted by
law and all relevant governmental authorities and would not
result in any legal, economic, or regulatory disadvantage to
such Affected Lender, then the Company shall be excused from
the payment of any increased costs claimed by such Affected
Lender under any of such Sections accruing after the first
interest payment date pursuant to Section 3.4.5 for each
-------------
Loan of such Affected Lender on or following such specified
date, if the Affected Lender demanding payment under any
such Section declines such purchase offer. If such Affected
Lender shall accept such purchase offer, upon consummation
of such purchase in accordance with Section 12.11.1, such
---------------
Affected Lender shall cease to be a Lender hereunder. Any
reasonable expenses actually incurred by such Affected
Lender or the Agent under this Section 4.11 shall be paid by
------------
the Company upon delivery to the Company of a certificate as
to the amount of such expenses, which certificate shall in
the absence of manifest error be conclusive and binding.
SECTION 4.12. Computation of Additional Amounts Due. In
-------------------------------------
determining any additional amounts due from the Company under
Section 4.3, 4.4, or 4.5 hereof, each Lender shall act reasonably
- ----------- --- ---
and in good faith and will, to the extent that the increased
costs or reductions in amounts received or receivable relate to
such Lender's loans generally and are not specifically
attributable to the Loans hereunder, use averaging and
attribution methods which are reasonable and equitable and which
cover all loans similar to the Loans made by such Lender whether
or not the loan documentation for such other loans permits such
Lender to receive increased costs of the type described in such
Sections of this Agreement.
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ARTICLE V
LETTERS OF CREDIT
SECTION 5.1. Requests.
--------
(a) By delivering to the Agent and the relevant Issuer
Bank one or more Revolving L/C Requests on or before 10:00
a.m., San Francisco time, at least three (or such shorter
period as may be agreed among the Company, the Agent, and
such Issuer Bank), but not more than eight, Business Days
before the proposed date of issuance, the Company may
request that such Issuer Bank issue, on any Business Day on
or after the Initial Borrowing Date and prior to the
Revolving Commitment Termination Date, irrevocable standby
or commercial letters of credit for its account (each such
letter of credit, as it may be amended, supplemented,
extended, restated, or modified from time to time, a "Letter
------
of Credit"). Each Letter of Credit and Revolving L/C
---------
Request shall be acceptable as to form, substance,
beneficiary, and purpose to the Agent and such Issuer Bank
in their sole and absolute discretion, and each Letter of
Credit shall be used by the Company in each case solely for
the purposes described in Section 4.10.
------------
(b) Upon receipt of a Revolving L/C Request under
clause (a), the Agent shall promptly notify the Lenders in
----------
writing thereof. The Issuer Bank is under no obligation to
issue any Letter of Credit if
(i) any order, judgment or decree of any
governmental authority shall by its terms purport to
enjoin or restrain the Issuer Bank from issuing such
Letter of Credit; or any law applicable to the Issuer
Bank or any request or directive from any governmental
authority with jurisdiction over the Issuer Bank shall
prohibit or request that the Issuer Bank refrain from
the issuance of letters of credit generally or such
Letter of Credit in particular;
(ii) the Stated Amount thereof (A) when added to
the Letter of Credit Outstandings immediately prior to
the issuance of such Letter of Credit, would exceed
$125,000,000;
(iii) such Letter of Credit is not stated to
expire on a date (its "Stated Expiry Date") no later
------------------
than the tenth Business Day immediately preceding
February 15, 1999;
(iv) such Letter of Credit requires the Issuer
Bank thereof to make payment to any beneficiary thereof
prior to the third Business Day after a conforming
demand for payment is made thereunder; or
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(v) such Letter of Credit does not provide for the
presentation of drafts payable at sight; and
(c) The Issuer Bank will make available to the
beneficiary thereunder (with a copy to the Agent) the
original of each Letter of Credit which it issues in
accordance with the Revolving L/C Request therefor and will
notify the beneficiary thereof (with a copy to the Agent) of
any extension of the Stated Expiry Date thereof pursuant to
Section 5.2.
-----------
(d) On the Initial Borrowing Date, the Existing
Letters of Credit shall automatically be deemed to be
Letters of Credit and shall be subject to all the terms and
conditions of this Agreement and the Company's reimbursement
obligations in respect of the Existing Letters of Credit
shall automatically be deemed to have been satisfied by the
incurrence of its Reimbursement Obligations, pursuant to
this Article V, in respect of the Letters of Credit;
provided that the Agent shall have received satisfactory
--------
evidence that each issuer of the Existing Letters of Credit
shall have consented to the termination of such
reimbursement obligations in respect of the Existing Letters
of Credit.
SECTION 5.2. Issuance and Extensions.
-----------------------
(a) Subject to the terms and conditions of this
Agreement (including Article VII), each Issuer Bank shall
-----------
issue Letters of Credit in accordance with the Revolving L/C
Requests made therefor. By delivery to an Issuer Bank and
the Agent of a Revolving L/C Request at least three Business
Days but not more than 45 days prior to the Stated Expiry
Date of any Letter of Credit, the Company may request such
Issuer Bank to extend the Stated Expiry Date of such Letter
of Credit for an additional period. Unless otherwise
directed by the Agent in accordance with Section 7.2, no
-----------
Issuer Bank shall issue, or extend the Stated Expiry Date
of, any Letter of Credit if it shall have received from any
Obligor, the Agent, or any Lender actual notice of a then-
continuing Default or of any other failure to satisfy any of
the conditions precedent to Credit Extensions set forth in
Article VII.
-----------
(b) Notwithstanding any provision of any Revolving L/C
Request to the contrary, it is understood that in the event
of any conflict between the terms of any such Revolving L/C
Request and the terms of this Agreement, the terms of this
Agreement shall control with respect to events of default,
representations and warranties, and covenants, except that
such Revolving L/C Request may provide for further
warranties and covenants relating specifically to the
transaction or affairs underlying the relevant Letter of
Credit. The terms and conditions of this Agreement shall be
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deemed to be incorporated by reference into each Revolving
L/C Request regardless of whether expressly so stated in
such Revolving L/C Request.
SECTION 5.3. Fees and Expenses.
-----------------
(a) The Company agrees to pay to the Agent with
respect to each Letter of Credit,
(i) for the account of the Issuer Bank, a fronting
fee equal to three-eighths of 1% per annum on the
average daily aggregate Letter of Credit Outstandings
(excluding, however, in the case of fees payable under
this clause (a)(i), that portion of Letter of Credit
-------------
Outstandings constituting Reimbursement Obligations
accruing interest pursuant to Section 5.5), and
-----------
(ii) for the account of the Lenders, pro rata
--- ----
according to their respective Percentages, a letter of
credit fee of 3% per annum (subject to adjustment as
provided in Section 3.4.1 and 3.4.4) on the average daily
------------- -----
aggregate Letter of Credit Outstandings (excluding, however,
in the case of fees payable under this clause (a)(ii), that
--------------
portion of Letter of Credit Outstandings constituting
Reimbursement Obligations accruing interest pursuant to
Section 5.5) under or with respect to all Letters of Credit
-----------
accruing, as to each Letter of Credit (other than the
Existing Letters of Credit), from and including the date of
issuance thereof to and excluding the earlier of the date
such Letter of Credit is drawn in full, expires, or is
terminated and the Revolving Commitment Termination Date
and, as to each Existing Letter of Credit, from and
including the Initial Borrowing Date to and excluding the
earlier of the date such Existing Letter of Credit is drawn
in full, expires, or is terminated and the Revolving
Commitment Termination Date.
(b) Such fronting and letter of credit fees shall be
computed for the actual number of days elapsed on the basis
of a 360-day year and shall be payable in arrears on each
Quarterly Payment Date for the period ending on (but
excluding) such Quarterly Payment Date and on the Revolving
Commitment Termination Date. The Company further agrees to
pay to the Agent for the account of each Issuer Bank all
customary administrative fees and expenses of such Issuer
Bank in connection with the issuance and maintenance of each
Letter of Credit issued by it.
SECTION 5.4. Other Lenders' Participation. Concurrently
----------------------------
with the issuance of each Letter of Credit in accordance with the
terms and conditions of this Agreement, and on the Initial
Borrowing Date with respect to the Existing Letters of Credit,
the Issuer Bank thereof shall be deemed to have sold and
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transferred to each other Lender, and each other Lender shall be
deemed irrevocably and unconditionally to have purchased and
received from such Issuer Bank, without recourse, representation,
or warranty, an undivided interest and participation, to the
extent of such other Lender's Percentage, in such Letter of
Credit and the Company's Reimbursement Obligations with respect
thereto, and each Lender shall, to the extent of its Percentage,
be entitled to receive from the Agent a ratable portion of the
letter of credit fees received by the Agent pursuant to
clause (a)(ii) of Section 5.3 with respect to each Letter of
- -------------- -----------
Credit. Each Lender shall, to the extent of its Percentage, be
responsible to reimburse promptly such Issuer Bank for
Reimbursement Obligations which have not been reimbursed by the
Company in accordance with Section 5.5. Each Lender's obligation
-----------
to reimburse the Issuer Bank under this Section shall be absolute
and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or other right which
such Lender may have against the Issuer Bank, the Company or any
other Person or, subject to Section 7.2, the occurrence or
continuance of a Default or an Event of Default; provided,
--------
however, that nothing herein shall adversely affect the right of
- -------
any Lender to commence any proceeding against an Issuer Bank for
any wrongful Disbursement made by such Issuer Bank under a Letter
o Credit as a result of acts or omissions constituting gross
negligence or willful misconduct on the part of the Issuer Bank.
SECTION 5.5. Disbursements.
-------------
(a) Each Issuer Bank will notify the Company and the
Agent in writing promptly of the presentment of any demand
for payment under any Letter of Credit issued by such Issuer
Bank, together with notice of the date (the "Disbursement
------------
Date") such payment shall be made. On the terms and subject
----
to the conditions of such Letter of Credit and this
Agreement, the Issuer Bank shall make such payment to the
beneficiary (or its designee) of such Letter of Credit.
Prior to 10:30 a.m., San Francisco time, on the Disbursement
Date, the Company will reimburse such Issuer Bank for all
amounts which it has disbursed or is required to disburse
under such Letter of Credit on such Disbursement Date. To
the extent such Issuer Bank is not reimbursed in full in
accordance with the foregoing sentence of this clause (a),
----------
the Company's Reimbursement Obligation shall accrue interest
at a rate per annum equal to the Reference Rate from time to
time in effect plus a margin of 3-1/2% per annum, payable on
demand.
(b) Upon notice by the Issuer Bank to the Company of
any Disbursement pursuant to clause (a) of this Section 5.5,
---------- -----------
the Lenders (including such Issuer Bank) shall, upon
satisfaction by the Company of the conditions in Section 7.2
-----------
or the waiver of the conditions of Section 7.2 by the Agent
-----------
as permitted therein, and to the extent that the Revolving
Commitment is then available, fund the Reimbursement
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Obligation therefor by making Revolving Loans as provided in
Section 2.1.1 (without giving effect to such Reimbursement
-------------
Obligation for purposes of determining the Revolving
Commitment Availability).
SECTION 5.6. Reimbursement. The Company's obligation (a
-------------
"Reimbursement Obligation") under Section 5.5 to reimburse an
------------------------ -----------
Issuer Bank with respect to each Disbursement (including interest
thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim, or
defense to payment which the Company may have or have had against
a beneficiary or transferee of any Letter of Credit (or any
Person or Persons for whom any such transferee may be acting) or
against the Agent or any Lender, including any defense based upon
the failure of any Disbursement to conform to the terms of the
applicable Letter of Credit (if, in the Issuer Bank's good faith
opinion, such Disbursement is determined to be appropriate) or
any non-application or misapplication by the beneficiary of the
proceeds of such Disbursement or the legality, validity, form,
regularity, or enforceability of such Letter of Credit; provided,
--------
however, that nothing herein shall adversely affect the right of
- -------
the Company to commence any proceeding against an Issuer Bank for
any wrongful Disbursement made by such Issuer Bank under a Letter
of Credit as a result of acts or omissions constituting gross
negligence or willful misconduct on the part of such Issuer Bank.
SECTION 5.7. Mandatory Payment to Agent of Letter of Credit
----------------------------------------------
Outstandings. The Company agrees that, upon the occurrence of
- ------------
any event described in Section 10.2 or any termination of the
------------
Commitments pursuant to Section 10.3, it will immediately, upon
------------
written notice from the Agent, acting at the direction of the
Majority Lenders, pay to the Agent in Dollars and in immediately
available funds an amount equal to the then aggregate Letter of
Credit Outstandings. Any amounts so received by the Agent
pursuant to the provisions of the foregoing sentence, after
application against outstanding Reimbursement Obligations, shall
be deposited by the Agent into the L/C Collateral Account
pursuant to Section 5.8.1.
-------------
SECTION 5.8. L/C Collateral Account.
----------------------
SECTION 5.8.1. Deposit. The Agent shall deposit all funds
-------
paid by the Company to the Agent pursuant to Section 3.3.1 as
-------------
cash collateral and Section 5.7 (to the extent required to be
-----------
deposited in the L/C Collateral Account) to the credit of a
deposit account owned by the Agent (the "L/C Collateral
--------------
Account"). As security for the payment of all Obligations, the
- -------
Company hereby grants, conveys, assigns, pledges, sets over, and
transfers to the Agent, and creates in the Agent's favor a lien
on and security interest in, all money, instruments, and
securities at any time held in or acquired in connection with the
L/C Collateral Account, together with all proceeds thereof, for
the benefit of the Secured Lenders. The Company shall not have
any right to withdraw or to cause the Agent to withdraw any funds
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deposited in the L/C Collateral Account. At any time and from
time to time, upon the Agent's request, the Company promptly
shall execute and deliver any and all such further instruments
and documents (including financing statements and bond powers
executed in blank) as may be necessary, appropriate, or desirable
in the Agent's judgment to obtain the full benefits (including
perfection and priority) of the security interest created or
intended to be created by this Section 5.8.1 and of the rights
-------------
and powers herein granted. The Company shall not create or
suffer to exist any Lien on any amounts or investments held in
the L/C Collateral Account other than the Lien granted under this
Section 5.8.1.
- -------------
SECTION 5.8.2. Investment. The Company, no more than three
----------
times in any calendar month, may direct the Agent to invest the
funds held in the L/C Collateral Account (so long as the
aggregate amount of such funds exceeds any relevant minimum
investment requirement) in one or more certificates of deposit
issued by the Person which is then acting as Agent or by Bank of
America, with such maturities as the Company may specify, pending
application of such funds on account of Reimbursement Obligations
or on account of other Obligations, as the case may be. In the
absence of any such direction from the Company, the Agent shall
invest the funds held in the L/C Collateral Account in one or
more certificates of deposit issued by the Person which is then
acting as Agent or by Bank of America with maturities not to
exceed 30 days, unless the aggregate amount of such funds which
are not then otherwise invested is less than the smallest
certificate of deposit offered by such Person, in which case the
Agent shall have no obligation to invest such funds. All such
investments shall be made in the Agent's name. The Company
recognizes that any losses or taxes with respect to such
investments shall be borne solely by the Company, and the Company
agrees to hold the Agent and the Lenders harmless from any such
losses or taxes. Unless the Company otherwise makes direct
payment, the Agent shall liquidate any investment held in the L/C
Collateral Account in order to apply the proceeds of such
investment on account of Reimbursement Obligations (or on account
of other Obligations, as the case may be) without regard to
whether such investment has matured and without liability for any
penalties or other fees incurred (with respect to which the
Company hereby fully indemnifies the Agent) as a result of such
application.
SECTION 5.8.3. Application of Funds. The Agent shall apply
--------------------
funds in the L/C Collateral Account (a) on account of
Reimbursement Obligations when the same become due and payable if
and to the extent that the Company fails directly to pay such
Reimbursement Obligations, (b) if there are Letter of Credit
Outstandings, and the balance of the L/C Collateral Account
exceeds the aggregate Letter of Credit Outstandings for five
consecutive Business Days, on account of the Obligations (other
than Reimbursement Obligations) in such order as the Agent may
elect to the extent of such excess on the day of application, and
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(c) after the date on which all Letters of Credit shall have
expired and the Company finally shall have paid in full all
outstanding Reimbursement Obligations, on account of the other
Obligations in such order as the Agent may elect if the Agent
shall have received actual notice of the occurrence of an Event
of Default on or before such date which is continuing on such
date. Except in the case described in clause (c) above, the
----------
Agent shall release all funds and transfer all investments
remaining in the L/C Collateral Account to the Company within
five Business Days after the date on which all Letters of Credit
shall have expired and the Company finally shall have paid in
full all outstanding Reimbursement Obligations. If the Agent
resigns, the outgoing Agent and the new Agent shall effect a
transfer to the new Agent of all of the outgoing Agent's right,
title, and interest in and to the L/C Collateral Account
concurrently with the effectiveness of such resignation.
SECTION 5.8.4. Fees. The Company shall pay to the Agent
----
fees customarily charged by the Agent with respect to the
maintenance of accounts similar to the L/C Collateral Account.
SECTION 5.9. Nature of Reimbursement Obligations. The
-----------------------------------
Company shall assume all risks of the acts, omissions, or misuse
of any Letter of Credit by the beneficiary thereof. Neither any
Issuer Bank nor the Agent or any Lender (except to the extent of
its own gross negligence or willful misconduct) shall be
responsible for:
(a) the form, validity, sufficiency, accuracy,
genuineness, or legal effect of any Letter of Credit or any
document submitted by any party in connection with the
application for and issuance of a Letter of Credit, even if
it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent, or forged;
(b) the form, validity, sufficiency, accuracy,
genuineness, or legal effect of any Instrument transferring
or assigning or purporting to transfer or assign a Letter of
Credit or the rights or benefits thereunder or proceeds
thereof in whole or in part, which may prove to be invalid
or ineffective for any reason;
(c) failure of the beneficiary to comply fully with
conditions required in order to demand payment under a
Letter of Credit;
(d) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise; or
(e) any loss or delay in the transmission or otherwise
of any document or draft required in order to make a
Disbursement under a Letter of Credit or of the proceeds
thereof.
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None of the foregoing shall affect, impair, or prevent the
vesting of any of the rights or powers granted any Issuer Bank,
the Agent, or any Lender hereunder. In furtherance and extension
and not in limitation or derogation of any of the foregoing, any
action taken or omitted to be taken by such Issuer Bank in good
faith shall be binding upon the Company and each Lender and shall
not put such Issuer Bank under any resulting liability to the
Company or any Lender, except to the extent incurred by such
Issuer Bank's gross negligence or willful misconduct.
SECTION 5.10. Indemnification by Lenders. The Lenders
--------------------------
severally agree to indemnify each Issuer Bank (acting in its
capacity as such) and each officer, director, employee, agent,
and Affiliate of each Issuer Bank (collectively, the "Issuer
------
Parties" and individually, an "Issuer Party"), ratably according
- ------- ------------
to their respective Percentages, to the extent not reimbursed by
the Company, from and against any and all actions, causes of
action, suits, losses, liabilities, damages, and expenses which
may at any time (including at any time following the payment of
any of the Reimbursement Obligations) be imposed on, incurred by,
or asserted against such Issuer Party in any way relating to or
arising out of the issuance of, transfer of, or payment or
failure to pay under any Letter of Credit issued in accordance
with the terms of this Agreement or the use of proceeds of any
payment made under any Letter of Credit issued in accordance with
the terms of this Agreement; provided, that no Lender shall be
--------
liable for the payment to such Issuer Party of any portion of
such actions, causes of action, suits, losses, liabilities,
damages, and expenses which have arisen by reason of such Issuer
Party's gross negligence or willful misconduct.
ARTICLE VI
PARENT GUARANTOR
SECTION 6.1. Parent Guaranty. In consideration for the
---------------
Lenders extending the Commitments, the Parent Guarantor hereby
unconditionally guarantees, as primary obligor and not merely as
surety, the due and punctual payment and performance of all
Obligations of the Company when due according to their terms
(whether by required prepayment, declaration, demand, or
otherwise). The foregoing guaranty is herein referred to as the
"Parent Guaranty".
---------------
SECTION 6.2. Renewal, etc. of Obligations; Waiver. The
------------------------------------
Parent Guarantor agrees that the Obligations of the Company may
be extended or renewed, in whole or in part, without notice to or
further assent from the Parent Guarantor and that it will remain
bound upon the Parent Guaranty notwithstanding any extension,
renewal, or other alteration of any Obligation. The Parent
Guarantor waives presentation to, demand of, payment from, and
protest of any Obligation to the Company and also waives notice
of protest for nonpayment. The obligations of the Parent
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Guarantor under the Parent Guaranty shall not be affected by
(a) the failure of the Agent, any Lender, any Issuer
Bank, or any other holder of any Obligation of the Company:
(i) to assert any claim or demand, or to enforce
any right or remedy against the Company under the
provisions of this Agreement or any other Loan Document
or otherwise; or
(ii) to exercise any right or remedy against any
other guarantor of any Obligations;
(b) any extension or renewal of any thereof;
(c) any rescission, waiver, amendment, or modification
of any of the terms or provisions of this Agreement or any
other Transaction Document; or
(d) the release of any of the security held by any
Lender for any Obligations.
The Parent Guarantor further agrees that the Parent Guaranty
constitutes a guaranty of payment when due and not of collection
and waives any right to require that any resort be had by the
Agent, any Lender, any Issuer Bank, or any other holder of any
Obligation of the Company to any of the security held for payment
of any Obligation or to any balance of any deposit account or
credit on its books in favor of the Company or any other Person.
SECTION 6.3. No Impairment, etc. The obligations of the
------------------
Parent Guarantor under the Parent Guaranty shall not be subject
to any reduction, limitation, impairment, or termination for any
reason, including any claim of waiver, release, surrender,
alteration, or compromise, and shall not be subject to any
defense or setoff, counterclaim, recoupment, or termination
whatsoever by reason of the invalidity, illegality, or
unenforceability of the Obligations of the Company or otherwise.
Without limiting the generality of the foregoing, the obligations
of the Parent Guarantor under the Parent Guaranty shall not be
discharged or impaired or otherwise affected by the failure of
the Agent, any Lender, or any other holder of any Obligation of
the Company to assert any claim or demand or to enforce any
remedy under this Agreement or any other Transaction Document, by
any waiver or modification of any thereof, by any default,
failure, or delay, willful or otherwise, in the performance of
the Obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of the Parent Guarantor, or
would otherwise operate as a discharge of the Parent Guarantor as
a matter of law or equity.
SECTION 6.4. Reinstatement; Subrogation. The Parent
--------------------------
Guarantor agrees that the Parent Guaranty shall continue to be
70
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effective or be reinstated, as the case may be, if, at any time
payment, or any part thereof, of principal of or interest on any
Obligation is rescinded or must otherwise be restored by the
Agent, any Lender, or any other holder of any Obligation of the
Company upon the bankruptcy or reorganization of any Obligor or
otherwise. The Parent Guarantor hereby expressly waives, to the
fullest extent permitted by law, all rights of the Parent
Guarantor against the Company, arising out of any payment by the
Parent Guarantor under the Parent Guaranty, or any exercise of
remedies under the Parent Pledge Agreement or the Parent Security
Agreement, whether arising by way of any right of subrogation,
contribution, reimbursement, indemnity, or otherwise and agrees
that, if, and to the extent that, any such rights may not be
waived under applicable law, it will contribute such rights to
the Company as a capital contribution concurrently with the
arising of such rights.
ARTICLE VII
CONDITIONS TO EXTENSIONS OF CREDIT
SECTION 7.1. Initial Credit Extension. The obligations of
------------------------
the Lenders and the Issuer Bank to make Credit Extensions on the
Initial Borrowing Date shall be subject to the prior or
concurrent satisfaction of each of the conditions precedent set
forth in this Section 7.1.
-----------
SECTION 7.1.1. Resolutions, etc. The Agent shall have
----------------
received from each Obligor:
(a) a certificate, in form and substance satisfactory
to the Agent and the Lenders, dated the Initial Borrowing
Date, of its Secretary or Assistant Secretary as to
(i) resolutions of its Board of Directors then in
full force and effect authorizing the execution,
delivery and performance of this Agreement and each
other Loan Document to be executed by it;
(ii) the incumbency and signatures of those of
its officers authorized to act with respect to this
Agreement, and each other Loan Document to be executed
by it; and
(iii) each of its Organic Documents, certified in
a manner satisfactory to the Agent,
upon which certificate the Agent and each Lender may
conclusively rely until it shall have received a further
certificate of the Secretary or Assistant Secretary of such
Obligor canceling or amending such prior certificate;
(b) a good standing certificate (or other equivalent
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document or certificate satisfactory to the Agent and the
Lenders) certified by the secretary of state (or other
appropriate government official) in the jurisdiction of such
Obligor's incorporation; and
(c) such other documents (certified, if requested) as
the Agent or any Lender (acting through the Agent) may
reasonably request with respect to any Organic Document.
SECTION 7.1.2. Insurance. The Agent shall have received a
---------
letter dated as of a recent date from Alexander & Alexander
comparing the insurance coverage currently maintained by the
Parent Guarantor, the Company and its Subsidiaries to the
insurance coverage described in the "Insurance Program Review"
dated October 1989, prepared by Tillinghast, a copy of which has
been delivered to the Agent and each Lender prior to the date
hereof. The Agent shall have received evidence in the form of a
certificate of the Company, executed by an Authorized Officer,
that all insurance policies and coverages required pursuant to
Section 9.1.4, Section 7(j) of each Security Agreement and
- ------------- ------------
Section 1.7 of each Company Mortgage and Company Deed of Trust
- -----------
are in effect, together with certificates of insurance in form
and substance satisfactory to the Agent, including evidence
satisfactory to the Agent that the Agent has been named as loss
payee under such policies as and to the extent required by each
Security Agreement and each Company Mortgage and Company Deed of
Trust and the insurance coverage described in such certificates
shall be satisfactory to the Agent.
SECTION 7.1.3. Payment of Outstanding Indebtedness;
------------------------------------
Existing Letters of Credit. Each item of Indebtedness of the
- --------------------------
Company identified in Item 1 ("Indebtedness to be Paid") of the
------ -----------------------
Disclosure Schedule, together with all interest accrued thereon
and all prepayment premiums and other amounts payable in
connection therewith, shall have been paid in full or fully
defeased. Each other item of Indebtedness of the Company or of
the Parent Guarantor shall have been disclosed in Item 4
------
("Ongoing Indebtedness") of the Disclosure Schedule or shall
--------------------
otherwise be permitted by Section 9.2.2, and each holder whose
-------------
Indebtedness is secured shall be designated in such Item 4 with
------
an asterisk.
In addition, the Agent shall have received evidence, satisfactory
to the Agent, that each issuer of the Existing Letters of Credit
shall have consented to the termination of the Company's
reimbursement obligations in respect of the Existing Letters of
Credit.
SECTION 7.1.4. Parent Pledge Agreement. The Agent shall
-----------------------
have received the Parent Pledge Agreement, dated the Initial
Borrowing Date, duly executed by the Parent Guarantor and the
Agent, and the Agent shall have received
(a) the certificates evidencing all of the issued and
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outstanding shares of capital stock of the Company owned by
the Parent Guarantor (accompanied by undated stock powers
duly executed in blank) and
(b) any promissory notes or other debt instruments
required to be delivered pursuant to the Parent Guarantor
Pledge Agreement, endorsed (which endorsement may be on an
allonge) to the order of the Agent.
-------
SECTION 7.1.5. Company Pledge Agreement. The Agent shall
------------------------
have received the Company Pledge Agreement, dated the Initial
Borrowing Date, duly executed by the Company and the Agent, and
the Agent shall have received
(a) the certificates evidencing (i) all of the issued
and outstanding shares of capital stock of each Domestic
Subsidiary of the Company which is listed on Schedule I
----------
attached hereto, and (ii) the percentage of the issued and
outstanding shares of capital stock of each corporation
listed on such Schedule I which is not a Domestic Subsidiary
----------
set forth opposite the name of such corporation, which
certificates shall in each case be accompanied by undated
stock powers duly executed in blank;
(b) the KT Note, duly executed by the Parent Guarantor
and endorsed to the order of the Agent; and
(c) all promissory notes or other debt instruments
held by the Company which have a face amount in excess of
$100,000, in each case endorsed (which endorsement may be on
an allonge) to the order of the Agent.
-------
SECTION 7.1.6. Security Agreements. The Agent shall have
-------------------
received the Parent Security Agreement, duly executed by the
Parent Guarantor and the Agent, the Company Security Agreement,
duly executed by the Company and the Agent, and the Subsidiary
Security Agreement, duly executed by each Subsidiary of the
Company which is listed on Schedule IV hereto and the Agent, in
-----------
each case dated the Initial Borrowing Date, and the Agent shall
have received
(a) duly executed financing statements (Form UCC-1),
naming the Parent Guarantor, the Company, or such
Subsidiary, as the case may be, as the debtor and the Agent
as the secured party, or other similar instruments or
documents, suitable for filing under the Uniform Commercial
Code of all jurisdictions as may be necessary or, in the
reasonable opinion of the Agent, desirable to perfect the
security interests of the Agent in the Collateral granted
pursuant to the Security Agreements (other than fixtures
which are not attached to the real property covered by a
Company Mortgage or Company Deed of Trust) to the extent
that perfection may be accomplished by filing under the
Uniform Commercial Code in any state in the United States or
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the District of Columbia; and
(b) with such exceptions as may have been approved by
the Agent, certified copies of Requests for Information or
Copies (Form UCC-11) (or similar search reports certified by
a party reasonably acceptable to the Agent), dated a date
reasonably near the Initial Borrowing Date, listing all
effective financing statements which name the Parent
Guarantor, the Company, or any such Subsidiary (under any
present name and any previous names) as debtor and which are
filed in the jurisdictions in which filings were or are to
be made pursuant to clause (a), together with copies of such
----------
financing statements.
SECTION 7.1.7. Company Trademark Security Agreement;
-------------------------------------
Company Patent Security Agreement. The Agent shall have received
- ---------------------------------
the Company Trademark Security Agreement and the Company Patent
Security Agreement, in each case duly executed by the Company and
the Agent and dated the Initial Borrowing Date.
SECTION 7.1.8. Company Mortgages; Company Deeds of Trust.
-----------------------------------------
The Agent shall have received Company Mortgages or Company Deeds
of Trust, as required by the Agent, duly executed by the Company,
with respect to the real property listed on Schedule II hereto,
-----------
together with
(a) evidence of the completion of all recordings and
filings of the Company Mortgages and the Company Deeds of
Trust as may be necessary or, in the reasonable opinion of
the Agent, desirable to effectively create a valid,
perfected, first-priority mortgage or deed of trust Lien on,
and security interest in, the properties purported to be
covered thereby (or evidence that provision entirely
satisfactory to the Agent and its counsel for the recording
and filing thereof and for the payment of all fees, taxes,
and other expenses in connection therewith has been made);
(b) with respect to each piece of real property
covered by a Company Mortgage or a Company Deed of Trust,
one ALTA (except with respect to real property in Texas
which shall be governed by a TLTA policy) lender's form
title insurance policy in form reasonably satisfactory to
the Agent, insuring that on the Effective Date, the Company
owns a fee interest in the real property and that the
Company Mortgage or Company Deed of Trust, as the case may
be, is a valid, perfected, first-priority Lien on the real
property, which policies shall be issued to the Agent in
amounts reasonably satisfactory to the Agent by a title
insurance company reasonably satisfactory to the Agent in an
aggregate amount of $125,000,000 for all such policies
covering all such properties, which amount shall be
allocated to such properties as set forth on Schedule II
-----------
hereto, and each reinsured in amounts and with insurance
companies as reasonably required by the Agent, subject to no
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exceptions other than such exceptions as are acceptable to
the Agent, and containing endorsements in form and substance
satisfactory to the Agent; provided, however, during the
-------- -------
term of the Loan, the Agent and the Required Lenders may
require other endorsements to the title insurance policies
as may reasonably be required by any amendments to this
Agreement, in connection with any release of any real
property from the Lien of any Company Mortgage or Company
Deed of Trust or any surrender of any Company Mortgage or
Company Deed of Trust;
(c) legible copies of all recorded documents noted as
exceptions in such title insurance policies;
(d) certified copies of all leases (including ground
leases) and, as to certain properties identified by the
Agent, other contracts materially affecting such real
property, as requested by the Agent;
(e) certified rent rolls as to each property in a form
and scope satisfactory to the Agent;
(f) certified copies of all licenses, approvals, and
permits (including certificates indicating that certificates
of occupancy were issued) from federal, state, local, and
other governmental authorities materially affecting such
real property that are reasonably requested by the Agent or
any Lender (acting through the Agent);
(g) affidavits from the Company satisfactory to title
insurers; and
(h) such other approvals, consents, waivers, opinions
(including opinions of local counsel to the Company as to
the compliance of the mortgaged properties with zoning
restrictions or documents as the Agent or any Lender (acting
through the Agent) may reasonably request.
SECTION 7.1.9. Subsidiary Guaranty. The Agent shall have
-------------------
received the Subsidiary Guaranty, dated the Initial Borrowing
Date, duly executed by each Subsidiary of the Company which is
listed on Schedule III hereto.
------------
SECTION 7.1.10. Subsidiary Pledge Agreement. The Agent
---------------------------
shall have received the Subsidiary Pledge Agreement, dated the
Initial Borrowing Date, duly executed by each Subsidiary of the
Company listed on Schedule IV hereto and by the Agent, and the
-----------
Agent shall have received
(a) the certificates evidencing all of the shares of
capital stock required to be pledged pursuant to the
Subsidiary Pledge Agreement, which certificates shall in
each case be accompanied by undated stock powers duly
executed in blank;
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(b) each Intercompany Demand Note held by each such
Subsidiary, endorsed to the order of the Agent by such
Subsidiary; and
(c) all promissory notes or other debt instruments
held by each such Subsidiary which have a face amount in
excess of $100,000, in each case endorsed (which endorsement
may be on an allonge) to the order of the Agent.
-------
SECTION 7.1.11. Intercompany Note Pledge Agreement. The
----------------------------------
Agent shall have received the Intercompany Note Pledge Agreement,
dated the Initial Borrowing Date, duly executed by each
Subsidiary of the Company listed on Schedule VII hereto which is
------------
not otherwise a party to the Subsidiary Pledge Agreement and by
the Agent, and the Agent shall have received each Intercompany
Demand Note held by each such Subsidiary, endorsed to the order
of the Agent.
SECTION 7.1.12. Opinions of Counsel. The Agent shall have
-------------------
received opinions, dated the Initial Borrowing Date and addressed
to the Agent and all Lenders, from
(a) Kramer, Levin, Naftalis, Nessen, Kamin & Frankel,
special outside counsel to the Obligors, in substantially
the form of Exhibit L-1 attached hereto;
-----------
(b) Anthony R. Pierno Esq., general counsel of the
Company, in substantially the form of Exhibit L-2 attached
-----------
hereto;
(c) Andrew Barlay, Esq., special patent and trademark
counsel to the Obligors, in substantially the form of
Exhibit L-3 attached hereto;
-----------
(d) the local counsel listed in Schedule X hereto, in
----------
substantially the forms set forth in Exhibit L-4 attached
-----------
hereto; and
(e) O'Melveny & Myers, counsel to the Agent, in
substantially the form of Exhibit L-5 attached hereto.
-----------
SECTION 7.1.13. Closing Fees, Expenses, etc. The Agent
---------------------------
shall have received for its own account all fees, costs, and
expenses due and payable pursuant to Sections 3.5.3 and 12.3, if
-------------- ----
then invoiced.
SECTION 7.1.14. Environmental Reports. The Agent shall
---------------------
have received the Environmental Reports, in form, scope and
substance satisfactory to all Lenders, with respect to
substantially all of the domestic real property owned by the
Company or any of its Subsidiaries.
SECTION 7.1.15. Investment Account Letter. The Agent shall
-------------------------
have received a letter, in substantially the form of Exhibit N
---------
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attached hereto, with such changes as may be approved by the
Agent, duly executed by each Person with which the Company or the
Parent Guarantor maintains any account for investment in Cash
Equivalent Investments permitted hereunder.
SECTION 7.1.16. Sufficient Quantities, etc. The Agent shall
--------------------------
have received duly executed multiple original counterparts of
each Loan Document required to be executed and delivered pursuant
to this Section 7.1 (other than financing or termination
-----------
statements, stock certificates or stock powers, and such other
documents where the Agent has not required delivery of
counterparts) for the Agent and each Lender together with such
additional executed counterparts as the Agent may reasonably
request for filing or recordation purposes.
SECTION 7.1.17. Availability. Following the making of the
------------
initial Loans on the Initial Borrowing Date, the Revolving
Commitment Availability (calculated as though the Existing
Letters of Credit were issued on the Initial Borrowing Date)
shall be at least $180,000,000.
SECTION 7.1.18. Issuance of Senior Debt and Equity. The
----------------------------------
Company shall have issued the Senior Debt and the Parent
Guarantor shall have issued Parent Guarantor Preferred Stock, the
aggregate gross proceeds of which shall be at least $250,000,000.
In addition, the Parent Guarantor shall have made a capital
contribution to the Company, purchased shares of capital stock of
the Company or made an intercompany loan to the Company, or any
combination thereof, in an aggregate amount equal to the cash
proceeds received by the Parent Guarantor from the issuance of
such Parent Guarantor Preferred Stock, net of all underwriting
discounts and commissions and all legal, accounting and other
fees and expenses incurred in connection with the public offering
of such Parent Guarantor Preferred Stock. The Agent shall have
received certificates in substantially the form of Exhibit C-1
-----------
and C-2 attached hereto, dated the Initial Borrowing Date, of an
---
Authorized Officer of the Company as to the satisfaction of the
conditions set forth in this Section 7.1.18.
--------------
SECTION 7.1.19. Cash Management Arrangements. The Agent
----------------------------
shall have received each Collection Bank Agreement and the
Concentration Bank Agreement, duly executed by the Company, and,
respectively, each Collection Bank, and Bank of America, as
concentration bank, together with such other documents, releases,
and agreements as reasonably required by the Agent or any Lender
(acting through the Agent) in connection with perfecting its Lien
in the accounts established thereby.
SECTION 7.2. All Credit Extensions. The obligation of each
---------------------
Lender to fund any Loan on the occasion of any Borrowing
(including the initial Borrowing), the obligation of Business
Credit to fund any Swingline Loan, and the obligation of any
Issuer Bank to issue any Letter of Credit, as the case may be,
shall, except as provided in Section 2.1.3(b), be subject to the
----------------
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prior or concurrent satisfaction (or waiver) of each of the
conditions precedent set forth in this Section 7.2.
-----------
Notwithstanding the foregoing, the Lenders acknowledge and agree
that during the continuance of an Event of Cash Dominion, unless
and until the Agent receives written instructions from the
Majority Lenders during the continuance of an Event of Cash
Dominion to cease making Swingline Loans and Revolving Loans and
instructing Issuer Banks to issue Letters of Credit (a) the
Agent, acting in its sole and absolute discretion, pursuant to
Section 12.1(b), may waive the conditions of this Section 7.2 and
- --------------- -----------
continue to make Revolving Loans and Swingline Loans, provided
that the Revolving Credit Outstandings after giving effect to
such Loans do not exceed the Borrowing Base, and instruct the
applicable Issuer Bank to issue Letters of Credit notwithstanding
the existence of a Default and (b) if the Agent, acting in its
sole and absolute discretion, has determined that it is in the
best interests of the Lenders to continue to fund, the Lenders
shall be obligated to continue to make Revolving Loans and to
reimburse the Agent for Swingline Loans and shall be deemed to
have purchased and received an undivided interest in Letters of
Credit made or issued.
SECTION 7.2.1. Compliance with Warranties, No Default, etc.
-------------------------------------------
Both immediately before and immediately after giving effect to
any Credit Extension (but, if any default of the nature referred
to in Section 10.1.5 shall have occurred with respect to any
--------------
other Indebtedness, without giving effect to the application,
directly or indirectly, of the proceeds of such Credit Extension)
the following statements shall be true and correct:
(a) the representations and warranties set forth in
Article VIII (excluding, however, in the case of Borrowings
------------
other than the Borrowing made on the Initial Borrowing Date,
those contained in Sections 8.8 and 8.13 and the last
------------ ----
sentence of Section 8.12) and in each of the other Loan
------------
Documents shall be true and correct in all material respects
with the same effect as if then made (unless stated to
relate solely to an earlier date, in which case such
representations and warranties shall be true and correct in
all material respects as of such earlier date), except that
after the Initial Borrowing Date, for purposes of this
clause (a), the words "has a reasonable possibility of
----------
having a Materially Adverse Effect" which appear in
Sections 8.7 and 8.10 shall be deemed to read "could
------------ ----
reasonably be expected to have a Materially Adverse Effect"
and the words "has no reasonable possibility of having a
Materially Adverse Effect" which appear in Section 8.1 shall
-----------
be deemed to read "could not reasonably be expected to have
a Materially Adverse Effect";
(b) except as disclosed by the Company to the Agent
and the Lenders in Item 3 ("Litigation") or Item 8
------ ---------- ------
("Environmental Matters") of the Disclosure Schedule or in
---------------------
the Environmental Reports
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(i) no labor controversy, litigation, arbitration,
or governmental proceeding, or governmental
investigation known to the Company's Executive Officers
(including any litigation or governmental proceeding or
such governmental investigation with respect to any
environmental matter) shall be pending or, to the
knowledge of the Company's Executive Officers, after
due inquiry, threatened against the Parent Guarantor,
the Company, or any of their Subsidiaries which has a
reasonable possibility of having a Materially Adverse
Effect or which purports to affect the legality,
validity, or enforceability of this Agreement, or any
other Transaction Document; and
(ii) no development shall have occurred in any
labor controversy, litigation, arbitration, or
governmental proceeding, or governmental investigation
known to the Company's Executive Officers (including
any litigation or governmental proceeding or such
governmental investigation with respect to any
environmental matter) disclosed in Item 3
------
("Litigation") or Item 8 ("Environmental Matters") of
---------- ------ ---------------------
the Disclosure Schedule or in the Environmental Reports
which has a reasonable possibility of having a
Materially Adverse Effect;
provided, however, that after the Initial Borrowing Date,
-------- -------
the words "has a reasonable possibility of having a
Materially Adverse Effect" which appear in clauses (i) and
-----------
(ii) of this clause (b) shall be deemed to read "could
--- ----------
reasonably be expected to have a Materially Adverse Effect";
and
(c) no Default shall have then occurred and be
continuing; and neither the Parent Guarantor, the Company,
any of their Subsidiaries, nor any other Obligor shall be in
violation of any law, governmental regulation, or court
order or decree where such violation has a reasonable
possibility of having a Materially Adverse Effect; provided,
--------
however, that after the Initial Borrowing Date, the words
-------
"has a reasonable possibility of having a Materially Adverse
Effect" which appear in this clause (c) shall be deemed to
----------
read "could reasonably be expected to have a Materially
Adverse Effect".
SECTION 7.2.2. Credit Request; Borrowing Base Certificate.
------------------------------------------
The Agent shall have received a Credit Request, and, in
connection with any request for any Revolving Loan or the
issuance of any Letter of Credit other than during the
continuance of an Event of Cash Dominion, a Borrowing Base
Certificate delivered pursuant to Section 2.4.1 for such Credit
-------------
Extension. The delivery of a Credit Request and the acceptance
by the Company of the proceeds of such Credit Extension shall
constitute a representation and warranty by the Company that, on
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the date of such Credit Extension (both immediately before and
after giving effect to such Credit Extension and the application
of the proceeds thereof), except as contemplated by the last
sentence of Section 7.2, the statements made in Section 7.2.1 are
----------- -------------
true and correct.
SECTION 7.2.3. Satisfactory Legal Form. All documents
-----------------------
executed or submitted pursuant hereto by or on behalf of the
Parent Guarantor, the Company, any of the Company's Subsidiaries,
or any other Obligor shall be reasonably satisfactory in form and
substance to the Agent and its counsel and the Agent and its
counsel shall have received all information, approvals, opinions,
documents, or instruments as the Agent or its counsel may
reasonably request.
SECTION 7.3. Conditions Subsequent. Within 60 days of the
---------------------
Initial Borrowing Date, the Collection Bank Agreements and the
Concentration Bank Agreement shall be amended to provide for such
procedures and protections as the Agent reasonably requests
related to the occurrence of an Event of Cash Dominion and the
Company, each Collection Bank and Bank of America shall have
executed such other documents, releases, and agreements as
reasonably required by the Agent.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into
this Agreement, and to induce the Lenders to extend their
Commitments and to make Credit Extensions hereunder, the Parent
Guarantor represents and warrants (and the Company, to the extent
that any such representation and warranty shall be applicable to
the Company, its Subsidiaries, or any of its or their Properties,
also represents and warrants) unto the Agent and each Lender as
set forth in this Article VIII.
------------
SECTION 8.1. Organization, etc. Each of the Obligors, the
-----------------
Canadian Subsidiaries, VALCO, QAL, Anglesey, ALPART, KJBC, and
each other Significant Subsidiary of the Company is a corpora-
tion, partnership, or other entity validly organized and existing
and (in the case of non-Domestic Subsidiaries and Joint Venture
Affiliates, to the extent that "good standing" is recognized
under applicable law) in good standing under the laws of the
jurisdiction of its incorporation or organization, as the case
may be; is duly qualified to do business and (in the case of non-
Domestic Subsidiaries and Joint Venture Affiliates, to the extent
that "good standing" is recognized under applicable law) in good
standing as a foreign corporation, partnership, or other entity
in each jurisdiction where the nature of its business or
activities requires such qualification; and has full corporate,
partnership, or other organizational power and authority and
holds all requisite governmental licenses, permits, and other
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approvals to own, lease, and operate its Properties and to
conduct its business substantially as now being operated and
conducted, except where the failure to be so qualified and in
good standing or to have such power, authority, licenses,
permits, and other approvals has no reasonable possibility of
having a Materially Adverse Effect. The Parent Guarantor, the
Company, each Subsidiary of the Company, and each Obligor (a) has
full corporate power and authority to enter into and perform its
respective obligations under this Agreement, and the other Loan
Documents and (b) holds all requisite governmental licenses,
permits, and other approvals to enter into and perform its
respective obligations under this Agreement, and the other Loan
Documents.
SECTION 8.2. Due Authorization, Non-Contravention, etc.
-----------------------------------------
The execution, delivery, and performance by each Obligor of the
Loan Documents to which such Obligor is a party are within such
Obligor's corporate powers, have been duly authorized by all
necessary corporate action, and do not
(a) contravene such Obligor's Organic Documents;
(b) contravene any contractual restriction where such
a contravention has a reasonable possibility of having a
Materially Adverse Effect, or contravene any law or
governmental regulation or court decree or order binding on
or affecting such Obligor; or
(c) result in, or require the creation or imposition
of, any Lien on any of such Obligor's properties, other than
pursuant to the Loan Documents.
SECTION 8.3. Government Approval, Regulation, etc. No
------------------------------------
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or
other Person is required for the due execution, delivery, or
performance by any Obligor of any Loan Document to which it is a
party, except for the filing or recording of financing
statements, the Company Mortgages, Company Deeds of Trust,
Company Patent Security Agreement, Company Trademark Security
Agreement, any actions required outside of the United States
(with respect to Collateral located outside of the United States
or Collateral consisting of stock of foreign issuers), notations
on documents of title, and actions required under the Federal
Assignment of Claims Act of 1940 in order to perfect the security
interests of the Agent in the Collateral. None of the Parent
Guarantor, the Company, or any of their Subsidiaries is subject
to regulation as an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, or 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", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
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SECTION 8.4. Validity, etc. This Agreement, and all other
-------------
Loan Documents executed by the Company will, on the due execution
and delivery hereof and thereof by all parties hereto and
thereto, constitute the legal, valid, and binding obligations of
the Company enforceable against the Company in accordance with
their respective terms; this Agreement and each other Loan
Document executed by the Parent Guarantor will, on the due
execution hereof and thereof by all parties hereto and thereto,
constitute the legal, valid, and binding obligations of the
Parent Guarantor enforceable against the Parent Guarantor in
accordance with their respective terms; and each Loan Document
executed pursuant hereto by each other Obligor will, on the due
execution and delivery thereof by such Obligor and by all other
parties thereto, constitute the legal, valid, and binding
obligation of such Obligor enforceable against such Obligor in
accordance with its terms; in each case, however, except as
enforceability may be limited by bankruptcy, insolvency, or other
similar laws of general application relating to or affecting the
enforcement of creditors' rights generally, and by general
principles of equity.
SECTION 8.5. Financial Information.
---------------------
(a) The consolidated balance sheet of the Company and
its Subsidiaries as of December 31, 1992 and the related
statements of consolidated income and consolidated cash
flows for the year then ended present fairly the financial
position of the Company and its Subsidiaries at December 31,
1992 and the results of their operations and their cash
flows for the year then ended in conformity with GAAP. The
consolidated balance sheet of the Company and its
Subsidiaries as of September 30, 1993 and the related
statements of consolidated income and consolidated statement
of cash flows for the nine months then ended present fairly
(subject to normal year-end adjustments) the financial
position of the Company and its Subsidiaries at September
30, 1993 and the results of their operations and their cash
flows for the nine months then ended in conformity with GAAP
for interim financial information.
(b) The consolidated balance sheet of the Parent
Guarantor and its Subsidiaries as of December 31, 1992 and
the related statements of consolidated income and
consolidated cash flows for the year then ended present
fairly the financial position of the Parent Guarantor and
its Subsidiaries at December 31, 1992 and the results of
their operations and their cash flows for the year then
ended in conformity with GAAP. The consolidated balance
sheet of the Parent Guarantor and its Subsidiaries as of
September 30, 1993 and the related statements of
consolidated income and consolidated statement of cash flows
for the nine months then ended present fairly (subject to
normal year-end adjustments) the financial position of the
Parent Guarantor and its Subsidiaries at September 30, 1993
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and the results of their operations and their cash flows for
the nine months then ended in conformity with GAAP for
interim financial information.
(c) The financial statements and projections of the
Company dated December 28, 1993 and January 26, 1994 were
prepared on the basis of the estimates and assumptions
stated therein and represented, at each such date, the
Company's good faith forecasts and projections of its future
financial performance prepared after duly diligent
investigations; such estimates, assumptions, projections,
and forecasts were fair and reasonable, and reflected the
Company's estimates of the most likely future financial
results and condition of the Company, in the light of
business conditions existing at the date thereof; and any
such estimates, assumptions, projections, and forecasts, if
prepared as of the date of this Agreement, would contain
estimates of the future financial performance of the Company
which would not materially and adversely differ from the
respective estimates contained in the financial projections
and forecasts. As of the date hereof and, in connection
with the initial Credit Extension, as of the Initial
Borrowing Date, no material developments have occurred since
January 26, 1994 which would lead the Company to believe
that such projections and forecasts, taken as a whole, are
not reasonably attainable, subject to the uncertainties and
approximations inherent in any projections. It is
understood by the Agent and the Lenders that all of the
estimates and assumptions on which such projections and
forecasts are based may not prove to be correct, that actual
future financial performance may vary from that projected,
and that nothing contained in this clause (c) shall be
----------
construed as a warranty, or guarantee, of future financial
performance.
SECTION 8.6. No Material Adverse Effect.
--------------------------
(a) For purposes of Credit Extensions to be made on
the Initial Borrowing Date, no event or events have occurred
since September 30, 1993 which, individually or in the
aggregate, have had or have a reasonable possibility of
having a Materially Adverse Effect.
(b) For purposes of Credit Extensions requested to be
made after the Initial Borrowing Date, no event or events
have occurred since the Initial Borrowing Date which,
individually or in the aggregate, have had or could
reasonably be expected to have a Materially Adverse Effect.
SECTION 8.7. Absence of Default or Violation of Law. No
--------------------------------------
Obligor nor any Subsidiary thereof is (a) in default in the
payment of (or in the performance of any material obligation
applicable to) any Indebtedness outstanding in a principal amount
exceeding $10,000,000 or (b) in violation of any law,
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governmental regulation, or court decree or order where such
violation has a reasonable possibility of having a Materially
Adverse Effect.
SECTION 8.8. Litigation, etc. There is no pending or, to
---------------
the knowledge, after due inquiry, of the Executive Officers of
the Parent Guarantor or the Company, threatened labor
controversy, litigation, action, or proceeding affecting the
Parent Guarantor, the Company, or any of their Subsidiaries or
Joint Venture Affiliates, or any of their respective Properties,
or revenues, which has a reasonable possibility of having a
Materially Adverse Effect or which purports to affect the
legality, validity, or enforceability of this Agreement, or any
other Loan Document, except as disclosed in Item 3 ("Litigation")
------ ----------
or Item 8 ("Environmental Matters") of the Disclosure Schedule or
------ ---------------------
in the Environmental Reports.
SECTION 8.9. Subsidiaries.
------------
(a) The Parent Guarantor has no Subsidiaries except
the Company and its Subsidiaries. The Company has no
Subsidiaries, except those Subsidiaries
(i) which are identified in Item 2 ("Existing
------ --------
Subsidiaries") of the Disclosure Schedule; or
------------
(ii) which have been formed or acquired in
accordance with Section 9.2.5 or 9.2.10.
------------- ------
(b) Other than as set forth in Schedule XI hereto, as
-----------
of the Initial Borrowing Date neither the Parent Guarantor
nor the Company has any Subsidiaries having total assets
greater than $1,000,000 (exclusive of assets eliminated in
consolidation) other than those Subsidiaries set forth in
Schedules III, IV and VII hereto.
------------- -- ---
SECTION 8.10. Ownership of Properties.
-----------------------
(a) The Parent Guarantor, the Company, and each
of their Subsidiaries owns good title to all of its
Properties, of any nature whatsoever, which are material to
the Parent Guarantor, the Company, and their Subsidiaries as
a whole or which, in the case of Properties owned by the
Company or any of its Significant Subsidiaries, are material
to the Company or such Significant Subsidiary, in each case
free and clear of all Liens or material claims except for
"Permitted Exceptions" (as defined in the Company Mortgages
and Company Deeds of Trust) or as permitted pursuant to
Section 9.2.3.
-------------
(b) The Parent Guarantor, the Company, and each of
their Subsidiaries owns (or is licensed to use) and
possesses all such patents, trademarks, trade names, service
marks, and copyrights as the Parent Guarantor and the
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Company consider necessary for the conduct of its business
and the business of its Subsidiaries as now conducted
without, individually or in the aggregate, any infringement
or alleged infringement upon rights of other Persons which
has a reasonable possibility of having a Materially Adverse
Effect.
SECTION 8.11. Taxes. The Parent Guarantor, the Company, and
-----
each of their Domestic Subsidiaries and their other Significant
Subsidiaries have filed all federal, state, and all other
material tax returns and reports required by law to have been
filed by it and have paid or caused to be paid all material taxes
and governmental charges thereby shown to be owing, except any
such taxes or charges which are being diligently contested in
good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP have been set aside on its
books.
SECTION 8.12. Pension and Welfare Plans. During the twelve-
-------------------------
consecutive-month period prior to the date of the execution and
delivery of this Agreement and prior to the date of each Credit
Extension hereunder, no actions have been taken by the Parent
Guarantor, the Company, any member of their Controlled Groups, or
any other Person (with the requisite authority to act) to
terminate any Pension Plan that has insufficient assets to
satisfy all benefit liabilities thereunder (within the meaning of
Section 4001(a)(16) of ERISA), and no contribution failure has
- -------------------
occurred with respect to any Pension Plan sponsored or maintained
by any Controlled Group member sufficient to give rise to a Lien
on assets of any Controlled Group member under section 302(f) of
ERISA, which failure has not been cured within 30 days of the
applicable due date. With respect to any Pension Plan, neither
the Parent Guarantor, the Company, nor any of their Subsidiaries
has failed in any material respect to comply with applicable
provisions of ERISA and the Code and any regulations, rulings, or
notices issued thereunder. Item 7 ("Employee Benefit Plans") of
------ ----------------------
the Disclosure Schedule lists all Welfare Plans of the Parent
Guarantor, the Company, or any of their Domestic Subsidiaries and
sets forth the Company's estimate of the expected aggregate
contributions of the Parent Guarantor, the Company, and their
Domestic Subsidiaries to Pension Plans for the 1992 and 1993
Fiscal Years and the aggregate expected costs of the Parent
Guarantor, the Company and their Domestic Subsidiaries for
medical benefits for the 1992 and 1993 Fiscal Years under Welfare
Plans.
SECTION 8.13. Environmental Warranties. Except as set forth
------------------------
in Item 8 ("Environmental Matters") of the Disclosure Schedule or
------ ---------------------
in the Environmental Reports:
(a) all facilities and Property (including underlying
groundwater) owned, operated, or leased by the Parent
Guarantor, the Company, or any of their Subsidiaries have
been, and continue to be, owned, operated, or leased by the
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Parent Guarantor, the Company, and their Subsidiaries in material
compliance with all Environmental Laws;
(b) there are no pending or, to the knowledge of the
Parent Guarantor's or the Company's Executive Officers,
after due inquiry, threatened
(i) claims, complaints, notices, or requests for
information received by the Parent Guarantor, the
Company, or any of their Subsidiaries, from any
federal, state, or local governmental agency or
authority, or from any Person which has commenced a
legal proceeding against the Parent Guarantor, the
Company, or any of their respective Subsidiaries, with
respect to any alleged violation of any Environmental
Law, or
(ii) complaints, notices, or inquiries to the
Parent Guarantor, the Company, or any of their
Subsidiaries, from any federal, state, or local
governmental agency or authority, or from any Person
which has commenced a legal proceeding against the
Parent Guarantor, the Company, or any of their
respective Subsidiaries, regarding potential liability
under any Environmental Law;
(c) there have been no Releases of Hazardous Materials
at, on, into or under any Property now or previously owned,
operated, or leased by the Parent Guarantor, the Company, or
any of their Subsidiaries that, singly or in the aggregate,
have a reasonable possibility of having a Materially Adverse
Effect;
(d) the Parent Guarantor, the Company, and their
Subsidiaries have been issued and are in material compliance
with all permits, certificates, approvals, licenses, and
other authorizations relating to environmental matters and
necessary for their businesses;
(e) no Property now or previously owned, operated, or
leased by the Parent Guarantor, the Company, or any of their
Subsidiaries is listed or, to the knowledge of the Parent
Guarantor's or the Company's Executive Officers, after due
inquiry, proposed for listing (with respect to owned
Property only) on the National Priorities List pursuant to
CERCLA or on the CERCLIS or, to the best knowledge and
belief of the Parent Guarantor's and the Company's Executive
Officers, on any similar state list of sites requiring
investigation or clean-up;
(f) there are no underground storage tanks (as defined
in 40 C.F.R. Section 280.1, as the same may be amended,
modified, supplemented, or replaced from time to time),
active or abandoned, including petroleum storage tanks, on
or under
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any Property now or previously owned or leased by the Parent
Guarantor, the Company, or any of their Subsidiaries that,
singly or in the aggregate, have a reasonable possibility of
having a Materially Adverse Effect;
(g) none of the Parent Guarantor, the Company, or
any of their Subsidiaries has, to the best knowledge
and belief of each Executive Officer of the Company,
transported or arranged for the transportation of any
Hazardous Material to any location which is listed or
proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar
state list or which is the subject of federal, state,
or local enforcement actions or other investigations
which has a reasonable possibility of leading to
material claims against the Parent Guarantor, the
Company or such Subsidiary thereof for any remedial
work, damage to natural resources, or personal injury,
including claims under CERCLA; and
(h) there are no polychlorinated biphenyls or
friable asbestos present at any real property now or
previously owned or leased by the Parent Guarantor, the
Company, or any of their Subsidiaries that, singly or
in the aggregate, have a reasonable possibility of
having a Materially Adverse Effect.
SECTION 8.14. Regulations G, U, and X. No Obligor is
-----------------------
engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock, and no proceeds of
any Credit Extension will be used for a purpose which
violates, or would be inconsistent with, F.R.S. Board
Regulation G, U, or X. Terms for which meanings are
provided in F.R.S. Board Regulation G, U, or X or any
regulations substituted therefor, as from time to time in
effect, are used in this Section 8.14 with such
------------
meanings.
SECTION 8.15. Solvency. On and as of the date of each
--------
Credit Extension, both before and after giving effect to
(a) all Indebtedness (including the Loans and the
Letters of Credit) being incurred, assumed, or
guaranteed, and
(b) Liens created by the Company in connection
therewith,
but in no case regarding the KT Note as an asset of the
Company, the Company and the Parent Guarantor will each be
Solvent.
SECTION 8.16. Senior Indebtedness.
-------------------
(a) The monetary Obligations of the Company
hereunder and under the other Loan Documents constitute
"Senior Indebtedness" of the Company under clause (i)
---------
of the
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definition of the term "Senior Indebtedness" and, to the
extent that such monetary Obligations constitute
"Obligations" (as defined in the Subordinated Indenture),
"Specified Senior Debt" described in clause
------
(i)(A) of the definition of such term under the terms
------
of the Subordinated Indenture; the monetary Obligations of
KFC, KAAC, AJI and KJC under the Loan Documents constitute
"Senior Indebtedness" of such corporations under clause (i)
----------
of the definition of the term "Senior Indebtedness" and, to
the extent that such monetary Obligations constitute
"Obligations" (as defined in the Subordinated Indenture),
"Guarantor Specified Senior Debt" described in clause (i)(A)
-------------
of the definition of such term of such corporations under
the terms of the Subordinated Indenture; the subordination
provisions of the Subordinated Indenture are enforceable
against the holders of the Subordinated Debt; and the Agent
and the Lenders will be entitled to the benefits of such
subordination provisions.
(b) The monetary Obligations of the Company hereunder
and under the other Loan Documents constitute "Senior
Indebtedness of the Company" (as defined in the PIK Note)
under the terms of the PIK Note; the subordination
provisions of the PIK Note are enforceable against the
holder of the PIK Note; and the Agent and the Lenders will
be entitled to the benefits of such subordination provisions
of the PIK Note.
(c) The monetary Obligations of the Company hereunder
and under the other Loan Documents constitute (or, in the
case of any Equity Proceeds Note issued after the date
hereof, will constitute) "Senior Indebtedness of the
Company" (as defined in each Equity Proceeds Note) under the
terms of each Equity Proceeds Note; the subordination
provisions of each Equity Proceeds Note are enforceable (or,
in the case of any Equity Proceeds Notes issued after the
date hereof, will be enforceable) against the holder of such
note; and the Agent and the Lenders will be entitled to the
benefits of such subordination provisions of each Equity
Proceeds Note.
SECTION 8.17. Accuracy of Information. All factual
-----------------------
information heretofore or contemporaneously furnished by or on
behalf of any Obligor in writing to the Agent or any Lender for
purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all other such factual
information hereafter furnished in writing by or on behalf of any
Obligor to the Agent or any Lender pursuant to or in connection
with any Loan Document will be, true and accurate in every
material respect on the date as of which such information is
dated or certified, and such information is not, or shall not be,
as the case may be, incomplete by omitting to state any material
fact necessary to make such information not misleading in light
of the circumstances then prevailing.
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SECTION 8.18. Joint Venture Contingent Liabilities. Item 11
------------------------------------ -------
("Joint Venture Contingent Liabilities") of the Disclosure
------------------------------------
Schedule contains a fair summary of the types of the material
Contingent Liabilities of the Company and its Subsidiaries in
respect of the businesses, operations, and financial obligations
of VALCO, ALPART, Anglesey, KJBC, and QAL.
SECTION 8.19. Mortgaged Property. The real property and
------------------
improvements which are mortgaged by the Company Mortgages and
Company Deeds of Trust, as the case may be, constitute, as of the
date of this Agreement, all of the real property and improvements
owned or leased by the Company or any of its Subsidiaries which
comprise, or are part of, or are used in the operations of, or
are located contiguous to, the respective plants of the Company
which are located at the locations listed on Schedule II hereto,
-----------
except for certain unimproved property which is located
contiguous to the Company's facilities at Newark, Ohio, Mead,
Washington and Greenwood County, South Carolina, but will not be
so mortgaged. Such unimproved property (a) is not a part of or
used in the operations of the Company's plants in Newark, Ohio,
Mead, Washington or Greenwood County, South Carolina which are to
be mortgaged to the Agent, and (b) does not have any material
structures or improvements located on it.
ARTICLE IX
COVENANTS
SECTION 9.1. Affirmative Covenants. The Parent Guarantor
---------------------
agrees (and the Company, to the extent that any such agreement of
the Parent Guarantor shall be applicable to the Company, any of
its Subsidiaries, or any of its or their properties, also agrees)
with the Agent and each Lender that, until all Commitments have
terminated, no Letters of Credit are outstanding, and all
outstanding monetary Obligations have been paid in full:
SECTION 9.1.1. Financial Information, Reports, Notices,
---------------------------------------
etc. The Company will furnish, or will cause to be furnished, to
- ---
the Agent, for itself and for delivery to the Lenders, copies of
the following financial statements, reports, notices, and
information:
(a) within 50 days after the end of each of the first
three Fiscal Quarters of each Fiscal Year of the Company,
consolidated and consolidating balance sheets of the Company
and its Subsidiaries as of the end of such Fiscal Quarter
and consolidated and consolidating statements of income of
the Company and its Subsidiaries for such Fiscal Quarter and
for the period commencing at the end of the previous Fiscal
Year and ending with the end of such Fiscal Quarter and a
consolidated statement of cash flows of the Company and its
Subsidiaries for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal
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Quarter, certified (subject to normal year-end adjustments)
on behalf of the Company by a Financial Authorized Officer
of the Company;
(b) within 95 days after the end of each Fiscal Year
of the Company, (i) a copy of the annual audit report for
such Fiscal Year for the Company and its Subsidiaries,
including therein a consolidated balance sheet as at the
close of such Fiscal Year, and related consolidated
statements of income and cash flows for such Fiscal Year, of
the Company and its Subsidiaries, in each case audited
(without any Impermissible Qualification) by Arthur Andersen
& Co. or other independent public accountants acceptable to
the Agent and the Required Lenders, (ii) a consolidating
balance sheet at the close of such Fiscal Year, and a
related consolidating statement of income for such Fiscal
Year, of the Company and its Subsidiaries, certified on
behalf of the Company by a Financial Authorized Officer of
the Company, and (iii) a report from the accountants
referred to in clause (i), containing a computation prepared
----------
by the Company of each of the financial covenants contained
in Section 9.2.4 as at the end of such Fiscal Year, and,
-------------
commencing with the 1995 Fiscal Year, of the Interest
Coverage Ratio as of the end of each Fiscal Quarter of such
Fiscal Year (except the first Fiscal Quarter of the 1995
Fiscal Year), which report shall specify that it has been
prepared using the procedures specified in the letter dated
February 14, 1994 from Arthur Andersen & Co. to the Agent, a
copy of which has been delivered to each Lender, and
reporting that, in making the audit necessary for the
signing of such annual report by such accountants, they have
not become aware of any material miscomputation by the
Company of such financial covenants, or of the Interest
Coverage Ratio as of the end of each of such Fiscal
Quarters, or of any Default or Event of Default that has
occurred and is continuing, or, if they have become aware of
such miscomputation, Default, or Event of Default,
describing such miscomputation, Default, or Event of
Default;
(c) as soon as available and in any event within 50
days (or, in the case of the fourth Fiscal Quarter of any
Fiscal Year, 95 days) after the end of each Fiscal Quarter,
(i) a Compliance Certificate, executed on behalf of the
Company by a Financial Authorized Officer of the Company,
showing (in reasonable detail and with appropriate
calculations and computations in all respects satisfactory
to the Agent) compliance with the financial covenants set
forth in Section 9.2.4 and, commencing with the second
-------------
Fiscal Quarter of the 1995 Fiscal Year, the calculation of
the Interest Coverage Ratio for the four Fiscal Quarter
Period ended on the last day of such Fiscal Quarter and (ii)
a detail schedule of Inventory by site (in substantially the
form currently produced by the Company, with such changes as
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to which the Agent may consent, such consent not to be
unreasonably withheld);
(d) as soon as possible and in any event within three
Business Days after an Executive Officer of the Parent
Guarantor or the Company shall have become aware of the
occurrence of
(i) any Default, a statement on behalf of the
Company by the chief financial Authorized Officer of
the Company setting forth details of such Default and
the action which the Company and/or the relevant other
Obligor has taken and proposes to take with respect
thereto, or
(ii) any
(A) default or event of default (however
denominated) under any Subordinated Debt
Instrument
(B) default or event of default (however
denominated) under any Senior Debt Instrument or
(C) default or event of default (however
denominated) under any agreement relating to any
Joint Venture Affiliate, ALPART, or VALCO or any
other material document or agreement to which the
Company or any of its Significant Subsidiaries is
a party, in each case where such a default or
event of default has a reasonable possibility of
having a Materially Adverse Effect,
notice and a description in reasonable detail thereof;
(e) as soon as possible and in any event within three
Business Days after (i) the occurrence of any material
adverse development with respect to any labor controversy,
litigation, action, or proceeding described in Section 8.8
-----------
or (ii) the commencement of any labor controversy,
litigation, action, or proceeding of the type described in
Section 8.8, written notice thereof and copies of all
-----------
material documentation relating thereto;
(f) promptly after the sending or filing thereof,
copies of all publicly available reports which the Parent
Guarantor or the Company sends to any of its security
holders, and all publicly available reports and registration
statements which the Parent Guarantor or the Company or any
of their Subsidiaries files with the Securities and Exchange
Commission or any national securities exchange;
(g) as soon as possible and in any event within three
Business Days after an Executive Officer of the Parent
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Guarantor or the Company shall have become aware of the
taking of any action by the Company or any other Person to
terminate any Pension Plan that has insufficient assets to
satisfy all benefit liabilities thereunder (within the
meaning of Section 4001(a)(16) of ERISA), or the failure to
make a required contribution to any Pension Plan if such
failure is sufficient to give rise to a Lien against assets
of any Controlled Group member under section 302(f) of
ERISA, or the taking of any action with respect to a Pension
Plan which could reasonably be expected to result in the
requirement that the Company or any Controlled Group member
furnish a bond or other security to the PBGC or such Pension
Plan, or the occurrence of any event relating to any Pension
Plan with respect to which there is a reasonable possibility
of the incurrence by the Company, the Parent Guarantor or
any of their Subsidiaries of any liability, fine, or penalty
which would have a Materially Adverse Effect, or any
material increase in the contingent liability of the Company
with respect to any post-retirement Welfare Plan benefit
excluding liabilities occurring solely by operation of any
generally applicable law enacted after the date of this
Agreement, written notice thereof and copies of all material
documentation relating thereto;
(h) (i) promptly upon receipt thereof, a copy of all
notices, documents, or other Instruments received by the
Company pursuant to any Subordinated Debt Instrument or any
Senior Debt Instrument and not otherwise required to be
delivered hereunder and (ii) concurrently with the delivery
thereof, a copy of all notices, documents, or other
Instruments delivered by the Company pursuant to any
Subordinated Debt Instrument or any Senior Debt Instrument
and not otherwise required to be delivered hereunder;
(i) no later than five Business Days after the
approval thereof by the Company's Board of Directors, a copy
of the annual business plan, budget, and updated business
projections of the Company and its Subsidiaries, and upon
the delivery to the Agent of any financial statements
relating to a Fiscal Quarter included in such plan, budget,
or projections, a summary comparing the Company's actual
financial performance during such Fiscal Quarter to that
provided in such plan, budget, or projections; and
(j) such other information respecting the condition or
operations, financial or otherwise, of the Parent Guarantor,
the Company, or any of their Subsidiaries as any Lender
(acting through the Agent) may from time to time reasonably
request.
SECTION 9.1.2. Compliance with Laws, etc. The Parent
-------------------------
Guarantor and the Company will, and will cause each of their
Subsidiaries to, comply in all respects with all applicable laws,
rules, regulations, and orders (except for such noncompliance
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which could not reasonably be expected to have a Materially
Adverse Effect), including (and subject to the foregoing
exception):
(a) subject to Section 9.2.10, the maintenance and
--------------
preservation of its corporate existence under the laws of
its jurisdiction of incorporation or organization, as the
case may be, and its qualification as a foreign corporation,
partnership, or other entity in each jurisdiction where the
nature of its business requires such qualification; and
(b) the payment, before the same become delinquent, of
all taxes, assessments, and governmental charges imposed
upon it or upon its Property, except to the extent being
contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP have been
set aside on its books.
SECTION 9.1.3. Maintenance of Properties. The Parent
-------------------------
Guarantor and the Company will, and will cause each of their
Significant Subsidiaries to, maintain, preserve, protect, and
keep their material properties in good repair, working order, and
condition (ordinary wear and tear excepted), and make necessary
and proper repairs, renewals, and replacements so that their
business carried on in connection therewith may be properly
conducted at all times unless the Parent Guarantor or the Company
determines in the exercise of its good faith business judgment
that the continued maintenance of any such properties is no
longer economically desirable.
SECTION 9.1.4. Insurance.
---------
(a) The Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with
financially sound and reputable insurance companies
(including, consistent with past practice, insurance
companies affiliated with the Company, insurance with
respect to their Properties and business (including business
interruption insurance, fire insurance and public liability
insurance) in such amounts, of such character and against
such risks as are usually maintained by companies engaged in
the same or similar business or having comparable
properties, and in any case having a coverage which is not
materially less than the insurance of such type maintained
by the Company and its Subsidiaries on the date of this
Agreement, provided, that to the extent that any of the
--------
insurance required by this clause (a) ceases to be available
----------
at commercially reasonable rates, the Company may effect
substitute insurance coverage therefor in accordance with
prudent standards then being followed by other companies
engaged in the same or similar business or having comparable
properties. In addition, the Company will maintain flood
insurance on each Property subject to a Company Deed of
Trust or Company Mortgage to the extent such Property is
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eligible for the National Flood Insurance Program. In the
event that the Company wishes to effect substitute coverage
pursuant to the foregoing proviso, it will (i) notify the
-------
Agent of such intent as soon as reasonably practicable, and
(ii) in any event not less than three Business Days prior to
the termination of the coverage for which substitution is to
be made, furnish the Agent with a report of the Company
describing in reasonable detail the nature of such
substitute coverage and the reasons why the Company believes
that such substitute coverage is appropriate.
(b) The Company will cause:
(i) the Agent and the Lenders to be named as an
additional insured, for a total coverage of $10,000,000
for all such Persons, under the public liability
policies of the Company and its Subsidiaries; and
(ii) the Agent to be named as loss payee under
all insurance policies of the Company and its
Subsidiaries that have executed the Subsidiary Security
Agreement covering loss of or damage to Property
(pursuant to loss payable clauses satisfactory to the
Agent),
and will,
(A) as soon as practicable after effecting any
insurance policies of the Company or any of its
Subsidiaries (other than ALPART or VALCO) (and, with
respect to any such policies which are replacements for
other insurance policies which are required hereby, and
which are terminating, in any event within three
Business Days after such termination), furnish the
Agent with an insurance broker's certificate or binder
in respect of such policies or replacement policies;
(B) if a replacement insurance policy for an
insurance policy which is required hereby and which is
terminating has not been effected prior to the third
Business Day before such termination, furnish the Agent
on such third Business Day a report of the Company
describing in reasonable detail the status of such
replacement policies;
(C) upon request of the Agent, furnish to the
Agent copies of all insurance policies at any time
maintained by the Parent Guarantor, the Company and
each Subsidiary of the Company executing a Security
Agreement and furnish to the Agent with copies for each
Lender, on or prior to the 15th day of July of each
year, a certificate of an Authorized Officer of the
Company setting forth the nature and extent of all
insurance maintained by the Company, and its
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Significant Subsidiaries in accordance with this
Section 9.1.4 (and which, in the case of a certificate
-------------
of a broker, were placed through such broker); and
(D) furnish to the Agent with copies for each
Lender, on or prior to the 15th day of July of each
year, a letter dated as of a recent date from the
Company's insurance broker or brokers comparing the
insurance coverage then maintained by the Parent
Guarantor, the Company and its Subsidiaries to the
insurance coverage described in the most recent such
letter delivered pursuant to this clause (D) or
----------
pursuant to Section 7.1 (in the case of the first such
-----------
delivery).
SECTION 9.1.5. Books and Records; Audits; Confidentiality.
------------------------------------------
(a) Each of the Parent Guarantor and the Company will,
and will cause each of its Significant Subsidiaries to,
maintain at all times proper and complete (in all material
respects) books, records and accounts, in which complete and
timely (in all material respects) entries are made, which
reflect all of its business affairs and transactions in
accordance with GAAP. The Company will and will cause KAII
to maintain at all times books and records pertaining to the
Collateral in such detail, form and scope as the Agent shall
reasonably require, including records, to the extent
normally maintained in accordance with accepted accounting
principles, of (i) all payments received and all credits and
extensions granted with respect to the Accounts, (ii) the
return, rejection, repossession, stoppage in transit, loss,
damage or destruction of any Inventory, and (iii) all other
dealings affecting the Collateral.
(b) Each of the Parent Guarantor and the Company will
permit the Agent, and any Lender who wishes to accompany the
Agent, or any representatives thereof, at all reasonable
times and intervals (and at any time during the continuance
of an Event of Default or an Event of Cash Dominion), on
reasonable notice during ordinary business hours, to have
access to examine, audit, make extracts from and inspect the
Company's and KAII's records, files, and books of account
and the Collateral and to discuss the Company's and KAII's
affairs with the Company's and KAII's officers and
management and the independent public accountant for the
Company, KAII, and the Parent Guarantor (and each of the
Parent Guarantor and the Company hereby authorizes such
independent public accountant to discuss the Parent
Guarantor's, the Company's, or KAII's financial matters with
the Agent and with each Lender or its representatives). The
Company will, and will cause KAII to, deliver to the Agent,
to the extent reasonably requested, any instrument necessary
for the Agent to obtain records from any service bureau
maintaining records for the Company or KAII. The Agent may,
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at the Company's expense, make copies of all of the
Company's and KAII's books and records, or require the
Company or KAII to deliver such copies to the Agent. The
Agent may, without expense to the Agent, use such of the
Company's and KAII's personnel, supplies, and premises as
may be reasonably necessary for maintaining or enforcing the
Security Interest. In addition, subject to the provisions
of Section 3.5.2, the Parent Guarantor and the Company shall
-------------
pay the reasonable fees of any independent public accountant
incurred in connection with the Agent's exercise of its
rights pursuant to this Section 9.1.5.
-------------
(c) Subject to the provisions of the next paragraph,
the Agent, each Lender, and each prospective purchaser of or
participant in any part of any Loan, Commitment, or any
other interest under this Agreement, each severally and for
itself alone, agrees to maintain all Confidential
Information (as defined below) obtained by it in connection
with its rights under this Agreement or the other Loan
Documents, including its rights of access contained in this
Section 9.1.5 and information supplied pursuant to
-------------
Section 9.1.1, confidential and not disclose the same to
any Person who is not an officer, director, employee, legal
counsel, or authorized agent or advisor of the Agent, or
any such Lender or any purchaser or prospective purchaser
of or participant in all or any part of any Loan,
Commitment, or any other interest under this Agreement
pursuant to the provisions of Section 12.11.2 who shall
---------------
agree, by executing a letter agreement substantially in the
form attached hereto as Exhibit Q, to be bound by the
---------
provisions of this clause (c). The Agent, each Lender, and
----------
each other Person bound hereby shall not use any
Confidential Information except for purposes relating to
this Agreement, the other Loan Documents, or otherwise in
connection with its status as a creditor or potential
creditor of the Company pursuant to the transactions
contemplated hereby or thereby. The term "Confidential
------------
Information" shall mean information specifically labelled
-----------
or identified as "Confidential" furnished by or on behalf
of the Company to the Agent, any Lender, or other Person
exercising rights hereunder and any information or
documents (whether or not specifically labeled or
identified as "Confidential") obtained pursuant to
Section 9.1.5(b) by the Agent, any Lender or other Person
----------------
exercising rights hereunder, but shall not include any such
information which (a) has become or hereafter becomes
available to the public other than as a result of a
disclosure by the Agent, any Lender, or other Person
exercising rights hereunder or required to be bound hereby,
or (b) was or became available to the Agent, any Lender, or
other Person exercising rights hereunder or required to be
bound hereby on a non-confidential basis prior to its
disclosure by the Company, its representatives, or its
agents, or (c) becomes available to the Agent, any Lender,
or other Person exercising rights hereunder or required to
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be bound hereby on a non-confidential basis from a source
other than the Company, its representatives, or its agents
or another Lender or other Person exercising rights
hereunder or required to be bound hereby.
The restrictions set forth in the preceding paragraph
shall not prevent the disclosure by the Agent, any Lender,
or any other Person required to be bound hereby of any such
information
(i) with the prior written consent of the Company
or as expressly contemplated by this Agreement or any
other Loan Document;
(ii) upon order of any court or administrative
agency of competent jurisdiction, to the extent
required by such order and not effectively stayed on
appeal or otherwise, or as otherwise required by law;
(iii) in connection with any litigation or other
legal proceeding at law, in equity, or in bankruptcy to
which the Parent Guarantor or the Company or any
Subsidiary of either thereof and the Agent, such
Lender, or other Person are parties; or
(iv) to any Affiliate of any Lender who shall
agree, by executing a letter agreement substantially in
the form attached hereto as Exhibit Q, to be bound by
---------
the provisions of this clause (c);
----------
provided, however, that, in the case of any intended
-------- -------
disclosure under clause (ii), the Agent, the relevant
-----------
Lender, or other Person shall (unless otherwise required by
applicable law) give the Company not less than five Business
Days prior notice (or such shorter period as may be
reasonable or required by any court or agency under the
circumstances), specifying the Confidential Information
involved and stating such Person's intention to disclose
such Confidential Information (including the manner and
extent of such disclosure) in order to allow the Company an
opportunity to seek an appropriate protective order.
SECTION 9.1.6. Environmental Covenant. The Parent
----------------------
Guarantor and the Company will, and will cause each of their
Subsidiaries to,
(a) use and operate all of their respective facilities
and properties in material compliance with all Environmental
Laws, keep all necessary permits, approvals, certificates,
licenses, and other authorizations relating to environmental
matters in effect and remain in material compliance
therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;
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(b) (i) as soon as possible and in any event no
later than 15 Business Days after an Executive
Officer of the Company shall have become aware of
the receipt thereof, notify the Agent and provide
copies of all written claims, complaints, notices,
or inquiries by a governmental or regulatory
authority, or any Person which has commenced a
legal proceeding against the Parent Guarantor, the
Company, or any of their Subsidiaries, relating to
compliance by the Company or its Subsidiaries
with, or potential liability of the Company or its
Subsidiaries under, Environmental Laws; and
(ii) with reasonable diligence cure all
environmental defects and conditions which are the
subject of any actions and proceedings against the
Parent Guarantor, the Company, or any of their
Subsidiaries relating to compliance with
Environmental Laws, except to the extent that such
actions and proceedings (or the obligation of the
Parent Guarantor, the Company, or any such
Subsidiary to cure such defects and conditions)
are being contested by the Parent Guarantor, the
Company or any of their Subsidiaries in good faith
by appropriate proceedings; and
(c) provide such information, access, and
certifications which the Agent may reasonably request from
time to time to evidence compliance with this Section 9.1.6.
-------------
SECTION 9.1.7. Performance of Instruments. Each of the
--------------------------
Parent Guarantor and the Company will, and will cause each of
their Subsidiaries to, perform promptly and faithfully all of
their Obligations under each Loan Document to which it is or is
to be a party, subject to any applicable grace periods.
SECTION 9.1.8. Maintenance of Collateral. The Parent
-------------------------
Guarantor and the Company will, and will cause their Subsidiaries
having an interest in any Property which is, or is intended to
be, Collateral to,
(a) acquire and maintain such Property in a manner
that will enable the Parent Guarantor, the Company, or such
Subsidiary, as the case may be, to cause such Property to be
subject to the Liens of the Collateral Documents; and
(b) obtain the consent or approval of any Person whose
consent or approval is required for the grant of Liens by
the Parent Guarantor, the Company, or any such Subsidiary in
any such Property.
SECTION 9.1.9. Collateral Reporting. Except during the
--------------------
continuance of an Event of Cash Dominion, the Company will, and
will cause KAII to, provide the Agent with the following
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documents, in form and scope satisfactory to the Agent, on a
monthly basis: (a) an accounts receivable summary aging report
together with a reconciliation to the previous month's accounts
receivable summary aging report; (b) a reconciliation of the
account receivable summary aging report to the accounts
receivable general ledger; (c) a monthly listing of delinquent
accounts in excess of $100,000 that are thirty days past the due
date or sixty-five days past the invoice date, (d) monthly
inventory summary reports by category in respect of the Inventory
of the Company, (e) monthly inventory summary reports by location
in respect of the Inventory of the Company; and (f) certificates
of an officer of the Company certifying on behalf of the Company
as to the foregoing. During the continuance of an Event of Cash
Dominion, the Company will, and will cause KAII to, continue to
provide the Agent with the documents described in clauses (a)
-----------
through (f) above. In addition, the Company will, and will cause
- -----------
KAII to, provide the Agent with the following documents
immediately upon any written request therefor by the Agent: (a)
copies of shipping and delivery documents; (b) copies of
invoices, customer statements, credit memos, remittance advises
and reports, and deposit slips; (c) copies of purchase orders,
invoices, and delivery documents for Inventory of the Company
acquired by the Company; and (d) such other reports as to the
Collateral as the Agent shall request from time to time. If any
of the Company's or KAII's records or reports of the Collateral
are prepared by an accounting service or other agent, the Company
hereby authorizes such service or agent to deliver such records,
reports, and related documents to the Agent.
SECTION 9.1.10. Delivery; Further Assurances. The Parent
----------------------------
Guarantor and the Company will, and will cause each of their
wholly owned Subsidiaries to, at the expense of the Company,
(a) without any request by the Agent, within 10
Business Days after the receipt thereof, deliver or cause to
be delivered to the Agent, in due form for transfer (i.e.,
----
endorsed in blank or, if appropriate, accompanied by duly
executed blank stock or bond powers), all equity securities
having a value, and all debt instruments (other than the
Equity Proceeds Notes, which shall not constitute
Collateral) having face amounts, in excess of $100,000, at
any time representing all or any of the Collateral, in due
form for transfer (i.e., endorsed in blank or, if
---
appropriate, accompanied by duly executed blank bond
powers);
(b) upon forming or acquiring any Subsidiary,
immediately notify the Agent of such formation or
acquisition, and if requested by the Agent at the request of
the Required Lenders, unless such Subsidiary is acquired or
formed by a Subsidiary of the Company which is not a
Domestic Subsidiary,
(i) pledge and deliver to the Agent pursuant to
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108
the Company Pledge Agreement or the Subsidiary Pledge
Agreement, as the case may be, certificates evidencing all
of the issued and outstanding capital stock of such
Subsidiary owned directly or indirectly by the Company (or,
if such Subsidiary is not a Domestic Subsidiary, 65% of such
capital stock) accompanied by undated stock powers duly
executed in blank or pledge to the Agent pursuant to the
Company Pledge Agreement, the Subsidiary Pledge Agreement,
the Company Security Agreement, or the Subsidiary Security
Agreement, as the case may be, all of the Company's or such
Subsidiary's general or limited partnership interest in such
Subsidiary;
(ii) if such pledgor is a Subsidiary of the
Company, cause such pledgor to execute and deliver to
the Agent a counterpart of the Subsidiary Guaranty and
such other items of documentation as shall be necessary
in order for such pledgor to assume the obligations
under the Subsidiary Guaranty (and such pledgor, if a
Subsidiary of the Company, may thereupon become a
"Subsidiary Guarantor" (under and as defined in the
Subordinated Indenture or the Senior Indenture) if and
to the extent required to become a "Subsidiary
Guarantor" by Section 5.12(c) of the Subordinated
---------------
Indenture or Section 4.10(b)(ii) of the Senior
-------------------
Indenture); and
(iii) cause such Subsidiary to deliver to the
Agent such evidence of due execution, and such other
information with respect to its Organic Documents and
contractual obligations, and as to the Collateral in
which it has an interest, as the Agent may request, and
to take all action necessary or as the Agent may request to
create, preserve, perfect, confirm, and validate the Liens
created or purported to be created by such Collateral Documents;
(c) if any Subsidiary of the Company is required to
grant a Lien to the Agent over any interest in real property
pursuant to clause (b) of Section 9.1.11, and if requested
---------- --------------
by the Agent at the request of the Required Lenders,
(i) cause such Subsidiary to execute and
deliver to the Agent a counterpart of the Subsidiary
Guaranty and such other items of documentation as shall
be necessary in order for such Subsidiary to assume the
obligations under the Subsidiary Guaranty (and such
Subsidiary may thereupon become a "Subsidiary
Guarantor" (under and as defined in the Subordinated
Indenture or the Senior Indenture) if and to the extent
required to become a "Subsidiary Guarantor" by
Section 5.12(c) of the Subordinated Indenture or
---------------
Section 4.10(b)(ii) of the Senior Indenture),
-------------------
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109
(ii) cause such Subsidiary to execute and
deliver to the Agent counterparts of the Subsidiary
Security Agreement, the Subsidiary Pledge Agreement,
and such other items of documentation as shall be
necessary in order for such Subsidiary to assume the
obligations under the Subsidiary Security Agreement and
the Subsidiary Pledge Agreement, and
(iii) cause such Subsidiary to deliver to the
Agent such evidence of due execution, and such other
information with respect to its Organic Documents and
contractual obligations, and as to the Collateral in
which it has an interest, as the Agent may request, and
to take all action necessary or as the Agent may
request to create, preserve, perfect, confirm, and
validate the Liens created or purported to be created
by such Collateral Documents;
(d) upon the opening of any account for investment in
Cash Equivalent Investments permitted hereunder by the
Company or any Obligor which has executed the Subsidiary
Security Agreement, promptly notify the Agent thereof and
promptly deliver a letter, in substantially the form of one
of the letters contained in Exhibit N attached hereto, with
---------
such changes as the Agent may approve, duly executed by the
Person with which the Company or such Subsidiary maintains
such account;
(e) upon request of the Agent, furnish or cause to be
furnished to the Agent such opinions of counsel, and other
documents with respect to the Collateral as the Agent may
reasonably specify; and
(f) upon request of the Agent, forthwith execute and
deliver or cause to be executed and delivered to the Agent,
in due form for filing or recording (and pay the cost of
filing or recording the same in all public offices deemed
necessary by the Agent), such assignments, security
agreements, pledge agreements, consents, waivers, financing
statements, stock or bond powers, and other documents, and
do such other acts and things, all as the Agent may from
time to time request, to establish and maintain to the
satisfaction of the Agent valid perfected Liens in all
Collateral (free of all other Liens, claims, and rights of
third parties whatsoever, except for Liens, claims, and
rights permitted by Section 9.2.3), provided, that the
------------- --------
Company shall not be required to register itself in Ghana or
the United Kingdom for this purpose.
SECTION 9.1.11. Real Property; Title Policies; Surveys. As
--------------------------------------
further security for the payment of the Obligations, the Parent
Guarantor and the Company will, and will cause their Subsidiaries
to:
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110
(a) obtain and maintain the consent or approval of any
Person whose consent or approval is required to the granting
of a Lien on any interest in real property which is, or is
required by the terms of this Agreement to be, subject to a
mortgage or deed of trust in favor of the Agent; and
(b) concurrently with or promptly after the purchase
or acquisition by the Company or any such Subsidiary of, or
the formation or acquisition by the Company or any such
Subsidiary of any Subsidiary with an interest in, any real
property (including all improvements) which is located in
the United States and which is structurally related to, or
which is located contiguous to, real property upon which
there is an existing Lien in favor of the Agent pursuant to
a Company Mortgage or Company Deed of Trust,
(i) execute, acknowledge, and deliver to the
Agent a mortgage or deed of trust (or, if appropriate,
an amendment or supplement to an existing mortgage or
deed of trust), in such form and substance, and in such
number of counterparts, as the Agent may reasonably
require, mortgaging and granting a security interest in
such interest in real property;
(ii) obtain, with respect to each such interest
in real property, a title insurance policy (in amounts
reasonably satisfactory to the Agent) with respect to,
a survey of, and such other documents relating to, such
real property, in each case conforming to the
requirements of Section 7.1.8;
-------------
(iii) cause such mortgage or deed of trust to be
duly recorded or filed to create a valid, perfected,
first-priority mortgage or deed of trust lien on, and security
interest in the property purported to be covered thereby, and pay
all fees, taxes, and other expenses in connection therewith; and
(iv) deliver to the Agent such other items of
documentation with respect to any of the foregoing as
the Agent shall reasonably request (including
certificates as to incumbency, resolutions, and
opinions of counsel in all relevant jurisdictions).
At the request of the Agent, the Company will cause (and, in any
event, the Company shall be permitted to cause) any real property
which is required to be mortgaged pursuant to clause (b) of this
----------
Section 9.1.11 and which is owned by a Subsidiary of the Company,
- --------------
to be transferred to the Company prior to the execution and
delivery of such mortgage or deed of trust, as applicable. The
Agent and the Required Lenders shall have the right, in their
sole and absolute discretion, to accept or reject any such real
property interest offered pursuant to this Section 9.1.11.
--------------
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111
SECTION 9.1.12. Intercompany Demand Notes. Within 60 days
-------------------------
after the last day of any Fiscal Quarter as of which the
aggregate outstanding Indebtedness of the Company to any wholly
owned Domestic Subsidiary of the Company exceeds $10,000,000, the
Company will, if the same has not previously been done, (a)
execute and deliver to such Subsidiary an Intercompany Demand
Note payable to such Subsidiary, and (b) cause such Subsidiary to
execute and deliver the Intercompany Note Pledge Agreement and to
pledge such note to the Agent pursuant to the Intercompany Note
Pledge Agreement.
SECTION 9.2. Negative Covenants. The Parent Guarantor
------------------
agrees (and the Company, to the extent that any such agreement of
the Parent Guarantor shall be applicable to the Company, any of
its Subsidiaries, or any of its or their properties, also agrees)
with the Agent and each Lender that, until all Commitments have
terminated, no Letters of Credit are outstanding, and all
outstanding monetary Obligations have been paid in full:
SECTION 9.2.1. Business Activities. The Parent Guarantor
-------------------
will not engage in any other business activity other than
ownership of the Company and such activities as may be incidental
or related thereto including the offering and sale of securities
of the Parent Guarantor. The Company will not, and will not
permit any of its Subsidiaries to, engage in any business
activity, except those described in the first recital, those in
-------------
which the Company and its Subsidiaries are engaged on the
Effective Date, and such activities as may be incidental or
related thereto or reasonably related extensions thereof.
SECTION 9.2.2. Indebtedness. The Parent Guarantor and the
------------
Company will not, and will not permit any of their Subsidiaries
to, create, incur, assume, or suffer to exist or otherwise become
or be liable in respect of any Indebtedness, other than the
following:
(a) In the case of the Parent Guarantor, the Company,
and their Subsidiaries,
(i) Indebtedness in respect of this Agreement and
the other Loan Documents;
(ii) Indebtedness identified in Item 1
------
("Indebtedness to be Paid") of the Disclosure Schedule,
-----------------------
provided that the conditions set forth in Section 7.1.3
-------------
in respect of payment of such Indebtedness shall be
satisfied on the Initial Borrowing Date; and
(iii) Indebtedness existing as of the Effective
Date which is identified in Item 4 ("Ongoing
------ -------
Indebtedness") of the Disclosure Schedule;
------------
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112
(b) In the case of the Company and its Subsidiaries,
(i) Indebtedness of the Company in respect of the
Senior Debt, and Contingent Obligations of AJI, KJC,
KFC and KAAC as a "Subsidiary Guarantor" (under and as
defined in the Senior Indenture) in respect of the
Senior Debt;
(ii) subject to Section 9.2.18, Indebtedness
--------------
owing from (A) the Company to any wholly-owned
Subsidiary of the Company (other than KAAC) which (if
required by Section 9.1.12) is evidenced by an
--------------
Intercompany Demand Note which has been pledged to the
Agent pursuant to the Intercompany Note Pledge
Agreement or the Subsidiary Pledge Agreement, (B) any
wholly-owned Subsidiary of the Company to the Company,
provided that such Indebtedness is not evidenced by any
--------
instrument, (C) any wholly-owned Subsidiary of the
Company to any other wholly-owned Subsidiary of the
Company, provided that with respect to any such
--------
Indebtedness to KFC or any such Indebtedness of KFC to
KAAC, such Indebtedness is evidenced by an Intercompany
Demand Note which has been pledged to the Agent
pursuant to the Subsidiary Pledge Agreement or the
Intercompany Note Pledge Agreement, and provided,
--------
further, that with respect to any such Indebtedness
-------
other than to KFC (or of KFC to KAAC), such
Indebtedness is not evidenced by any instrument, (D)
VALCO or ALPART to the Company, its Subsidiaries, or
Persons (other than the Company, its Subsidiaries or
any Restricted Affiliate) having an equity interest in
VALCO or ALPART, as the case may be, (E) the Company or
its Subsidiaries to VALCO or ALPART, or (F) the Company
to KAAC, provided that any such Indebtedness (other
--------
than Indebtedness in respect of accounts payable and
other current liabilities, in each case arising in the ordinary
course of business out of the purchase by the Company of alumina
from KAAC) shall be evidenced by an Intercompany Demand Note
which has been pledged to the Agent pursuant to the Subsidiary
Pledge Agreement and Indebtedness in respect of such accounts
payable and other current liabilities shall not be evidenced by
any instrument;
(iii) Indebtedness of the Company, KJC, AJI and
KAAC (including, without duplication, Contingent
Liabilities in respect of Indebtedness) in an aggregate
amount (excluding any such Indebtedness identified in
Item 4 ("Ongoing Indebtedness") of the Disclosure
------ --------------------
Schedule) not to exceed $150,000,000 in respect of
ALPART, $75,000,000 in respect of QAL and $25,000,000
in respect of VALCO; provided, however, that for
-------- -------
purposes of calculating the aggregate amount of
Indebtedness of the Company and its Subsidiaries
104
113
outstanding pursuant to this clause (b)(iii), there
---------------
shall be subtracted from the total amount of
Indebtedness of non-wholly-owned Subsidiaries an amount
equal to (A) that portion of such Indebtedness
attributable to the proportionate direct or indirect
ownership of Persons other than the Company and its
Subsidiaries of the voting stock of, or partnership
interest in, such Subsidiary or (B) if the economic
burden of such Indebtedness is borne or to be borne by
minority owners of such Subsidiary (other than the
Company and its Subsidiaries) in a proportion other
than the proportion of their direct or indirect
ownership of the voting stock of, or partnership
interest in, such Subsidiary, the proportionate share
of the economic burden of such Indebtedness borne or to
be borne by such minority owners;
(iv) Indebtedness incurred by the Company in
connection with the purchase, redemption, retirement,
or other acquisition by the Company of the Preferred
Stock (USWA) outstanding on the date hereof (plus
additional shares of such Preferred Stock (USWA) issued
as dividends thereon or on such shares issued as
dividends) to the extent the purchase, redemption,
retirement, or acquisition thereof is required by the
Code and such Indebtedness is issued to the then
holders of or beneficial owners of such shares of
Preferred Stock (USWA);
(v) Indebtedness of the Company in an amount not
exceeding $5,000,000 at any time outstanding in respect
of the guaranty by the Company of the obligations of
National Refractories & Minerals Corporation under the
Revolving Credit and Term Loan Agreement dated as of
April 30, 1985 (as the same has been and may hereafter
be amended, modified, supplemented, restated, confirmed
or replaced from time to time) among Congress Financial
Corporation (Western), National Refractories & Minerals
Corporation, National Refractories & Minerals, Inc. and
National Refractories Holding Co.;
(vi) the obligation of the Company to make
advances not exceeding $2,500,000 to National
Refractories & Minerals Corporation under the Standby
Revolving Credit and Security Agreement and Guaranty
dated as of April 30, 1985 (as the same has been and
may hereafter be amended, modified, supplemented,
restated, confirmed or replaced from time to time)
among the Company, National Refractories & Minerals
Corporation, National Refractories & Minerals, Inc. and
National Refractories Holding Co.;
(vii) the guaranty by the Company of the payment
of certain shutdown, supplemental unemployment,
105
114
pension, and retiree health and life insurance benefits
as provided under the Agreement dated February 2, 1989
(as the same has been or may be amended, supplemented,
restated, modified, confirmed, or replaced from time to
time) between the Company and the United Steelworkers
of America relating to the sale by the Company of its
smelter and rolling mill in Ravenswood, West Virginia,
to Ravenswood Acquisition Corporation;
(viii) the obligations of the Company and any of
its Subsidiaries to purchase or sell goods, services,
or technology utilized in their bauxite, alumina, and
aluminum business and related extensions thereof,
including on a take-or-pay basis, pursuant to
agreements entered into the ordinary course of business
consistent with past practice;
(ix) the obligations of QAL in respect of
charters of vessels;
(x) Indebtedness of the Company in respect of
unsecured Hedging Obligations;
(xi) Indebtedness of the Company and its
Subsidiaries (other than KAAC, AJI, KJC and KAII) in
respect of letters of credit (including any such
letters of credit identified in Item 4 ("Ongoing
------ -------
Indebtedness") of the Disclosure Schedule) in an
------------
aggregate amount not to exceed $15,000,000 at any one
time outstanding issued for the account of the Company
or any of its Subsidiaries in support of certain self-
insurance and reinsurance obligations;
(xii) Indebtedness of the Company in respect of
the Redeemable Stock referred to in clause (i) or (ii)
---------- ----
of Section 9.2.6(a);
----------------
(xiii) Indebtedness of the Company under the
Equity Proceeds Notes;
(xiv) Nonrecourse Indebtedness of Subsidiaries of
the Company that are not Obligors, the proceeds of
which are used to finance the construction, acquisition
or retrofitting of aluminum smelters, alumina
refineries, or fabrication plants, including, in either
case, related facilities or interests therein;
(xv) Indebtedness of the Company in an aggregate
principal amount not to exceed $25,000,000 outstanding
at any one time (excluding any such Indebtedness
identified in Item 4 ("Ongoing Indebtedness") of the
------ --------------------
Disclosure Schedule) incurred in connection with one or
more industrial revenue bond financings;
106
115
(xvi) Indebtedness of KAAC in the form of Liens
on assets of KAAC and its Subsidiaries securing the
obligations of QAL; and
(xvii) other Indebtedness of the Company and its
Subsidiaries (other than KAAC, AJI, KJC and KAII) in an
aggregate principal amount not to exceed $30,000,000
outstanding at any one time; and
(c) in the case of the Parent Guarantor, Indebtedness
arising under the KT Note and Contingent Liabilities of the
Parent Guarantor in respect of any Indebtedness of the
Company incurred pursuant to clause (b) (other than
----------
subclause (xv) thereof) above.
SECTION 9.2.3. Liens. The Parent Guarantor will not
-----
create, incur, assume, or suffer to exist any Lien over any of
its Properties, revenues, or assets, whether now owned or
hereafter acquired, except for Liens of the type described in
clauses (a), (b), (e), and (h) of this Section 9.2.3. The
- ----------- --- --- --- -------------
Company will not, and will not permit any of its Subsidiaries to,
create, incur, assume, or suffer to exist any Lien upon any of
its Properties, revenues, or assets, whether now owned or
hereafter acquired, other than the following:
(a) Liens securing payment of the Obligations granted
pursuant to any Loan Document;
(b) Until the Initial Borrowing Date, Liens securing
payment of Indebtedness of the type permitted and described
in clause (a)(ii) of Section 9.2.2;
-------------- -------------
(c) Liens granted prior to the Effective Date and
identified in Item 5 ("Ongoing Liens") of the Disclosure
------ -------------
Schedule;
(d) Liens granted to secure payment of Indebtedness
permitted by clause (b)(xvii) of Section 9.2.2 on any
---------------- -------------
Property (other than Accounts and Inventory) created at the
time of the acquisition of such Property in order to secure
payment of the purchase price thereof or in order to secure
any loan incurred for the purpose of financing such
acquisition, and any Lien to which any Property is subject
at the time of its acquisition (including Property of a
Subsidiary at the time it becomes a Subsidiary), provided
that the principal amount of the Indebtedness secured by any
such Lien does not exceed 80% of the cost of such Property
(except in the case of Liens on the Property of a Subsidiary
at the time it becomes a Subsidiary) and that no such Lien
may extend to other property, together with refundings or
extensions of the foregoing for amounts not exceeding the
principal amount of the Indebtedness so refunded or extended
and secured only by the Property theretofore securing the
same;
107
116
(e) Liens for taxes, assessments, or other
governmental charges or levies to the extent that payment
thereof shall not at the time be required in accordance with
the provisions of Section 9.1.2;
-------------
(f) Liens of carriers, warehousemen, mechanics,
workmen, repairmen, vendors, materialmen, and landlords and
other similar Liens incurred in the ordinary course of
business for sums not overdue or being contested in good
faith by appropriate proceedings, and deposits or Liens to
obtain the release of any such Lien;
(g) Liens and deposits incurred or made in the
ordinary course of business in connection with worker's
compensation, unemployment insurance, or other forms of
governmental insurance or benefits, or in connection with,
or to secure performance of, bids, tenders, statutory
obligations, and leases (other than, in each of such cases,
for borrowed money or the obtaining of advances or credit)
entered into in the ordinary course of business, or to
secure obligations on surety or appeal bonds, and other
Liens and deposits for purposes of like nature in the
ordinary course of business;
(h) judgment Liens or similar awards in existence less
than 15 days after the entry thereof or with respect to
which execution has been stayed, or the payment of which is
covered (subject to a customary deductible) by insurance;
(i) mineral leases, easements, covenants,
restrictions, exceptions, or reservations in any Property of
the Company or any Subsidiary of the Company which do not
materially impair the use of such Property for the purposes
for which it is held;
(j) zoning laws and ordinances, and rights reserved to
or vested in any municipality or government or proper
authority to control or regulate any Property of the Company
or its Subsidiaries, or to use such Property in any manner
which does not materially impair the use of such Property
for the purposes for which it is held by the Company or such
Subsidiary;
(k) undetermined or inchoate Liens incident to
construction, maintenance, or current operations and Liens
and charges incident to such construction, maintenance, or
operations which have been filed of record but which are
being contested in good faith by appropriate proceedings;
(l) Liens reserved in leases for rent and to assure
compliance with the lease terms covering solely Property
kept at the leased premises and rights of lessees to
Property being leased from the Company or any of its
Subsidiaries;
108
117
(m) Liens on any Property in which the Company or any
of its Subsidiaries has a leasehold estate, easement, right
of way, or similar interest and to which such interest is or
may become subject, and the rights reserved to the lessors
or grantors thereof, and to their successors and assigns,
under applicable law or the instrument creating such
interest;
(n) Liens on the Company's or any of its Subsidiary's
rights under agreements with respect to spot, forward,
future and option transactions, entered into in the ordinary
course of business, involving (or, in the case of futures
and options, for or relating to) the purchase and sale of
aluminum, alumina, or bauxite or on the transaction accounts
in which such transactions are effected securing the
Company's or such Subsidiary's obligations under such
agreements;
(o) minor defects and irregularities in the title to
any Property which do not in the aggregate materially impair
the use of such Property for the purposes for which it is
held;
(p) Liens on Property of ALPART securing Indebtedness
in respect of ALPART permitted by clause (b)(iii) of
---------------
Section 9.2.2 and Liens on Property of VALCO securing
-------------
Indebtedness in respect of VALCO permitted by
clause (b)(iii) of Section 9.2.2;
--------------- -------------
(q) Liens on Property of KAAC or its Subsidiaries
securing Indebtedness of KAAC in respect of QAL permitted by
clause (b)(iii) of Section 9.2.2;
--------------- -------------
(r) Liens on Property of Subsidiaries of the Company
that are not Obligors securing Nonrecourse Indebtedness;
provided, however, that no such Lien may extend to Property
-------- -------
other than the Property constructed, acquired or retrofitted
with the proceeds of such Nonrecourse Indebtedness or the
capital stock of entities formed to hold such interests;
(s) Liens on cash securing letters of credit in an
amount not to exceed $15,000,000 at any one time
outstanding;
(t) Liens on Property (other than Accounts and
Inventory) of the Company securing Indebtedness permitted by
Section 9.2.2(b)(xv);
--------------------
(u) Liens covering portions of the proceeds of Asset
Dispositions, which are held in escrow in connection with
such Asset Dispositions;
(v) Liens on Property (other than Accounts and
Inventory) of the Company securing Indebtedness permitted by
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118
clause (b)(iv) of Section 9.2.2; and
-------------- -------------
(w) other Liens on Property (other than Accounts and
Inventory) of the Company and its Subsidiaries incidental to
the conduct of the business of the Company and its
Subsidiaries or the ownership of their Property which were
not incurred in connection with borrowed money or the
obtaining of advances or credit and which do not in the
aggregate materially detract from the value of their
Property or materially impair the use thereof in the
operation of their business and which, in any event, do not
secure obligations aggregating in excess of $5,000,000.
SECTION 9.2.4. Financial Condition. The Company will not
-------------------
permit:
(a) Net Worth. The Company shall not permit Net Worth
as of the end of any Fiscal Quarter set forth below to be
less than the correlative amount indicated:
Fiscal Quarter Net Worth
-------------- ---------
First Fiscal Quarter of 1994 $450,000,000
Second Fiscal Quarter of 1994 $433,000,000
Third Fiscal Quarter of 1994 $416,000,000
Fourth Fiscal Quarter of 1994 $400,000,000
First Fiscal Quarter of 1995 $396,000,000
Second Fiscal Quarter of 1995 $392,000,000
Third Fiscal Quarter of 1995 $388,000,000
Fourth Fiscal Quarter of 1995 $385,000,000
First Fiscal Quarter of 1996 $391,000,000
Second Fiscal Quarter of 1996 $397,000,000
Third Fiscal Quarter of 1996 $404,000,000
Fourth Fiscal Quarter of 1996 $410,000,000
First Fiscal Quarter of 1997 Minimum Net Worth
and each Fiscal Quarter thereafter
(b) Interest Coverage Ratio. The Company shall not
permit the Interest Coverage Ratio (i) for the one Fiscal
Quarter period ending March 31, 1996 to be less than 1.1 to
1.0, (ii) for the two Fiscal Quarter period ending June 30,
1996 to be less than 1.2 to 1.0, (iii) for the three Fiscal
Quarter period ending September 30, 1996 to be less than 1.3
to 1.0, and (iv) for the four Fiscal Quarter period ending
on the last day of each of the Fiscal Quarters set forth
below to be less than the correlative ratio indicated:
Date Ratio
---- -----
Fourth Fiscal Quarter of 1996 1.4 to 1.0
First Fiscal Quarter of 1997 1.5 to 1.0
Second Fiscal Quarter of 1997 1.7 TO 1.0
Third Fiscal Quarter of 1997 1.8 to 1.0
Fourth Fiscal Quarter of 1997 2.0 to 1.0
110
119
and each Fiscal Quarter thereafter
SECTION 9.2.5. Investments. The Parent Guarantor will not
-----------
make, incur, assume, or suffer to exist any Investment except for
its ownership or purchase of the shares of capital stock of the
Company, Cash Equivalent Investments, and Equity Proceeds Notes.
The Company will not, and will not permit any of its Subsidiaries
to, make, incur, assume, or suffer to exist any Investment in any
other Person, other than the following:
(a) Investments existing on the Effective Date and
identified in Item 6 ("Ongoing Investments") of the Disclosure
------ -------------------
Schedule;
(b) Cash Equivalent Investments;
(c) subject to Section 9.2.18, without duplication,
--------------
Indebtedness which is an Investment permitted by
clause (b)(ii) of Section 9.2.2;
-------------- -------------
(d) Investments made pursuant to the arrangements
described in clauses (b)(v) and (b)(vi) of Section 9.2.2, and
-------------- ------- -------------
deposits permitted by clause (g) of Section 9.2.3;
---------- -------------
(e) subject to Section 9.2.18, Investments in the
--------------
ordinary course of business in the Company and its
Subsidiaries (other than Investments made prior to October 1,
1993 by any Obligor (other than KBC and KEC) in KBC, KEC or
any Subsidiary of the Company that is not an Obligor);
(f) provided no Default or Event of Default under
Section 10.1.1 shall have occurred and be continuing,
--------------
Investments made after September 30, 1993 in the ordinary
course of business in QAL, Anglesey, KJBC and Furukawa;
(g) Investments which are Capital Expenditures permitted
by Section 9.2.7;
-------------
(h) Investments of cash held in escrow accounts required
pursuant to the terms of any contract or agreement between the
Parent Guarantor, the Company, or any of its Subsidiaries and
any Person as in effect on the Effective Date (including
escrows in existence on the Effective Date) which are listed
on Schedule XII hereto;
------------
(i) Investments received in connection with Asset
Dispositions, and Investments in escrows established in
connection with Asset Dispositions which are permitted hereby;
(j) trade credit extended in the ordinary course of
business (including such credit represented by any bond, note,
debenture, or similar instrument) and advance payments, made
in the ordinary course of business, under contracts for the
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purchase of goods or the receipt of services, and loans and
advances made to any Person in connection with the purchase of
assets by such Person for lease by such Person to the Company
or any of its Subsidiaries to the extent that such leases are
otherwise permitted hereunder;
(k) Investments in the form of advance payments in
connection with spot, forward, future and option
transactions, entered into in the ordinary course of
business, involving (or, in the case of futures and
options, for or relating to) the purchase and sale of
aluminum, alumina, or bauxite;
(l) Investments acquired in the settlement or other
resolution of disputes with any Person or of debts;
(m) Investments of any Person which are in
existence at the time such Person becomes a Subsidiary of
the Company and which, in the case of any such
Investments which would breach any provision of this
Agreement if made directly by the Company,
(i) were not entered into in contemplation of
such Person becoming a Subsidiary of the Company,
and
(ii) do not constitute more than 20% of the
assets of such Person at the time such Person
becomes a Subsidiary of the Company;
(n) any Investments (other than Investments in
MAXXAM or any Affiliate (other than the Company, its
Subsidiaries which are not Restricted Subsidiaries, or
any Joint Venture Affiliate) of MAXXAM) not otherwise
permissible hereunder in an aggregate amount not to
exceed $20,000,000 at any time outstanding;
(o) provided (i) no Default or Event of Default
shall have occurred and be continuing (or would occur
after giving effect to such Investment) and (ii) that the
Interest Coverage Ratio is greater than 2.0 to 1,
Investments in Subsidiaries and Joint Venture Affiliates
not otherwise permissible hereunder in an aggregate
amount not to exceed
(A) the sum of:
(1) 50% of Net Income (or, if Net Income
for any such period shall be a deficit, minus 100%
of such deficit) accrued on a cumulative basis for
the period (taken as one accounting period) from
January 1, 1994 to the end of the Company's most
recently ended Fiscal Quarter, and
(2) the aggregate net proceeds, including
the fair market value of Property other than cash,
received by the Company as capital contributions
(other than from
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a Joint Venture Affiliate or a Subsidiary of the
Company) to the Company after December 31, 1993, or
from the issue or sale (other than to a Joint
Venture Affiliate or to a Subsidiary of the
Company), after December 31, 1993, of capital stock
other than Redeemable Stock (including capital
stock, other than Redeemable Stock, issued upon the
conversion of, or in exchange for, Indebtedness or
Redeemable Stock, and including upon exercise of
warrants or options or other rights to purchase such
capital stock, issued after December 31, 1993), or
from the issue or sale, after December 31, 1993 of
any debt or other security of the Company
convertible or exercisable into such capital stock
that has been so converted or exercised;
minus
-----
(B) the aggregate amount of Investments then
outstanding pursuant to clause (n); and
----------
(p) extensions and renewals of Investments
permitted by clauses (a), (h), (i), (j), (l) and (m) of
----------- --- --- --- --- ---
this Section 9.2.5,
-------------
provided that the principal amount thereof is not increased.
SECTION 9.2.6. Restricted Payments, etc.
------------------------
(a) The Company and the Parent Guarantor will not
declare, pay, or make any dividend or distribution (in cash,
Property, or obligations) on any shares of any class of
capital stock (now or hereafter outstanding) of the Company or
the Parent Guarantor or on any warrants, options, or other
rights with respect to any shares of any class of capital
stock (now or hereafter outstanding) of the Company or the
Parent Guarantor (excluding dividends or distributions payable
in its common stock (other than Redeemable Stock) or warrants
to purchase its common stock or splitups or reclassifications
of its common stock into additional or other shares of its
common stock) or apply, or permit any of their respective
Subsidiaries to apply, any of its funds, or Property to the
purchase, redemption, sinking fund, or other retirement, or
agree, or permit any of their respective Subsidiaries to
agree, to purchase or redeem, any shares of any class of
capital stock (now or hereafter outstanding) of the Company or
the Parent Guarantor, or warrants, options, or other rights
with respect to any shares of any class of capital stock (now
or hereafter outstanding) of the Company or the Parent
Guarantor (all of the foregoing non-excluded dividends,
distributions, application of funds or Property, purchases,
redemption and similar payments collectively being herein
called "Distributions") except that
-------------
(i) the Company shall be permitted to purchase,
redeem, retire, or otherwise acquire and to declare, pay,
or make dividends or other distributions on its 4-1/8%
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Preference Stock, par value $100 per share, 4-3/4%
Preference Stock (1957 Series), par value $100 per share,
4-3/4% Preference Stock (1959 Series), par value $100 per
share, and 4-3/4% Preference Stock (1966 Series), par
value $100 per share, in each case only in accordance
with the terms of the Restated Certificate of
Incorporation, and in each case unless (A) an Event of
Default shall have occurred and be continuing and (B) the
Company shall have been instructed by the Agent in
writing not to make any such Distribution;
(ii) the Company shall be permitted to purchase,
redeem, retire, or otherwise acquire and to declare, pay,
or make dividends or other distributions on any shares of
the Preferred Stock (USWA), in each case unless (A) an
Event of Default shall have occurred and be continuing
and (B) the Company shall have been instructed by the
Agent in writing not to make any such Distribution;
(iii) the Company shall be permitted to pay for the
benefit of, or to reimburse, the Parent Guarantor for
the reasonable out-of-pocket expenses actually incurred
(and documented as such) by the Parent Guarantor for
services rendered to the Parent Guarantor by Persons who
are not Affiliates or employees of the Parent Guarantor,
MAXXAM, the Company or any of their respective
Subsidiaries (provided that payments of legal fees and
expenses to a law firm of which an Affiliate of the
Company is a member shall be permitted) in connection
with the registration, issuance or sale of securities of
the Parent Guarantor to the extent that the net proceeds
of such issuance or sale are used by the Parent Guarantor
to make a loan or capital contribution to, or purchase
securities of, the Company;
(iv) the Company shall be permitted to make
Distributions to the Parent Guarantor of all or a portion
of the KT Note and accrued interest thereon;
(v) provided no Default shall have occurred and be
continuing (or will have occurred and be continuing
immediately following such Distribution), the Company
shall be permitted to make Distributions to the Parent
Guarantor in each Fiscal Quarter in an aggregate amount
not exceeding the dividends payable by the Parent
Guarantor during such Fiscal Quarter in respect of all
then outstanding shares of the Parent Guarantor Preferred
Stock minus the amount of any payments made during such
-----
Fiscal Quarter on the Equity Proceeds Notes;
(vi) the Parent Guarantor shall be permitted to
make Distributions to the holders of any outstanding
shares of the Parent Guarantor Preferred Stock (or
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depositary shares in respect thereof) in an amount not to
exceed the payments received or receivable from time to
time by the Parent Guarantor from the Company under
clause (v) of this Section 9.2.6(a) and in respect of the
---------- ----------------
Equity Proceeds Notes; and
(vii) the Parent Guarantor shall be permitted to
convert shares of the Parent Guarantor Preferred Stock
(or depositary shares in respect thereof) into the common
stock of the Parent Guarantor or redeem shares of the
Parent Guarantor Preferred Stock (or depositary shares in
respect thereof) in exchange for the common stock of the
Parent Guarantor plus an amount in cash equal to all
----
amounts payable by the Parent Guarantor in respect of
accrued and unpaid dividends in connection with such
conversion or redemption, in each case in accordance with
the Certificate of Designations governing such shares of
Parent Guarantor Preferred Stock (or the Depositary
Agreement in respect of such depositary shares).
(b) The Company will not, and will not permit any of its
Subsidiaries to,
(i) make any payment or prepayment of principal of,
or any prepayment of interest on, any Subordinated Debt
(including pursuant to Section 4.05, 4.06, or 4.07 of the
------------------ ----
Subordinated Indenture) or make any payment of interest
on, or any payment in respect of, any Subordinated Debt
which would violate the subordination provisions of such
Subordinated Debt;
(ii) subject to Section 9.2.18, make any prepayment
--------------
of principal of, or any prepayment of interest on, any
other Indebtedness (other than Indebtedness owing from
the Company or any Subsidiary to any Subsidiary not
listed on Schedule XIII hereto or to any Joint Venture
-------------
Affiliate); provided, however, that the Company may
-------- -------
prepay the principal of or interest on Indebtedness in
respect of this Agreement, the Company may repay
Indebtedness in connection with the refinancing of all or
substantially all of such Indebtedness and the Company
may prepay Indebtedness in an amount not to exceed
$10,000,000 in the aggregate (such $10,000,000 to be
computed, as of any time, based on prepayments made prior
to such time which, if made at such time, would be
prepayments);
(iii) make any payment or prepayment of principal
of, or interest on, the PIK Note; provided, however, that
-------- -------
if no Event of Cash Dominion shall have occurred and be
continuing (or will have occurred immediately following
such payment) and provided no Default shall have occurred
and be continuing (or would occur as a result of such
payment) the Company may repay the PIK Note at or after
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the maturity thereof;
(iv) redeem, purchase, or defease any Subordinated
Debt, any Senior Debt, the PIK Note or any Equity
Proceeds Note;
(v) make any payment or prepayment of principal of,
or interest on, the Equity Proceeds Notes except that the
Company may pay principal and interest from time to time
on the Equity Proceeds Notes in accordance with the
provisions of the Equity Proceeds Notes, subject to the
subordination provisions thereof; provided, however, that
-------- -------
if any Equity Proceeds Note is issued in connection with
the issuance of Parent Guarantor Preferred Stock that is
convertible into shares of the common stock of the Parent
Guarantor, immediately upon the conversion of all of such
shares of the Parent Guarantor Preferred Stock (or
depositary shares in respect thereof) into shares of the
common stock of the Parent Guarantor pursuant to the
Certificate of Designations governing such shares of the
Parent Guarantor Preferred Stock (or the Depositary
Agreement in respect of such depositary shares), (A) the
Company shall, after the payment of all amounts payable
by the Parent Guarantor in respect of accrued and unpaid
dividends in connection with such conversion and in
accordance with the terms of such Equity Proceeds Note,
defer further principal and interest payments on such
Equity Proceeds Note until such time as no Senior
Indebtedness of the Company (as defined in such Equity
Proceeds Note) under or in connection with this Agreement
or the other Loan Documents or any refinancing of such
Senior Indebtedness of the Company is then outstanding
and (B) the Parent Guarantor shall, after all amounts
payable by the Parent Guarantor in respect of accrued and
unpaid dividends in connection with such conversion have
been paid, if requested by the Agent, with the written
consent of the Required Lenders, deliver such Equity
Proceeds Note to the Company as a capital contribution
and the Company shall immediately cancel such Equity
Proceeds Note; or
(vi) make any payment of principal of or interest on
the Indebtedness listed on Schedule XIII hereto.
-------------
(c) The Company and the Parent Guarantor will not, and
will not permit any of their respective Subsidiaries to, make
any deposit for any of the foregoing purposes.
SECTION 9.2.7. Capital Expenditures. The Company will not,
--------------------
and will not permit any of its Subsidiaries to, make Adjusted
Capital Expenditures in any Fiscal Year set forth below in an
aggregate amount in excess of the sum of (a) the Base Amount set
forth below opposite such Fiscal Year plus (b) in the case of each
----
Fiscal Year commencing with the 1995 Fiscal Year the Carryover
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125
Amount applicable to such Fiscal Year:
Fiscal Year Base Amount
----------- -----------
1994 $60,000,000
1995 $70,000,000
1996 $75,000,000
1997 $80,000,000
1998 $90,000,000
The "Carryover Amount" applicable to any Fiscal Year is equal to
----------------
(i) the sum of the Base Amounts applicable to all periods set forth
which end prior to the Fiscal Year for which the Carryover Amount
is being calculated minus (ii) the aggregate amount of Adjusted
Capital Expenditures which were actually made by the Company and
its Subsidiaries during the 1994 Fiscal Year and during each Fiscal
Year thereafter prior to the Fiscal Year for which such Carryover
Amount is being calculated; provided, however, that the Carryover
-------- -------
Amount shall not exceed $10,000,000 for the 1995 Fiscal Year,
$20,000,000 for the 1996 Fiscal Year and $30,000,000 for any Fiscal
Year thereafter.
SECTION 9.2.8. Rental Obligations. The Company will not,
------------------
and will not permit any of its Subsidiaries to, enter into at any
time any arrangement which does not create a Capitalized Lease
Liability and which involves the leasing by the Company or any of
its Subsidiaries for terms which exceed, or when added to the term
of any extension which may be made at the sole option of the
Company or any such Subsidiary might exceed, one year from any
lessor of any Property (or any interest therein), except such
arrangements which, together with all other such arrangements which
shall then be in effect, will not require the payment of an
aggregate amount of rentals by the Company and its Subsidiaries on
a consolidated basis (excluding escalations resulting from a rise
in the consumer price or similar index) in excess, for any Fiscal
Year of $35,000,000; provided, however, that any calculation made
-------- -------
for purposes of this Section 9.2.8 shall exclude any amounts
-------------
required to be expended for maintenance and repairs, insurance,
taxes, assessments, and other similar charges.
SECTION 9.2.9. Take or Pay Contracts. The Company will not,
---------------------
and will not permit any of its Subsidiaries to, enter into or be a
party to any arrangement for the purchase of materials, supplies,
other Property, or services if such arrangement by its express
terms requires that payment be made by the Company or such
Subsidiary regardless of whether such materials, supplies, other
Property, or services are delivered or furnished to it, except
those set forth in Item 9 ("Take or Pay and Similar Contracts") of
------ ---------------------------------
the Disclosure Schedule.
SECTION 9.2.10. Consolidation, Merger, etc. The Parent
--------------------------
Guarantor and the Company will not, and will not permit any of
their Subsidiaries to, liquidate or dissolve, consolidate with, or
merge into or with, any other corporation, except that if no
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126
Default or Event of Default shall occur and be continuing or shall
exist at the time of any such merger or consolidation or
immediately thereafter and after giving effect thereto,
(a) any Subsidiary of the Company may liquidate or
dissolve into or may merge or consolidate with or into the
Company if the Company is the surviving corporation;
(b) any Subsidiary of the Company may liquidate or
dissolve into or may merge or consolidate with or into any
wholly-owned Subsidiary of the Company that is an Obligor if
the Obligor is the surviving corporation;
(c) any Subsidiary of the Company that is not an Obligor
may liquidate or dissolve or merge or consolidate with or into
any other Subsidiary of the Company that is not an Obligor;
(d) the Parent Guarantor may, with the prior written
consent of the Required Lenders, merge with and into the
Company and, provided that the Parent Guarantor shall assume
all of the Obligations of the Company under this Agreement and
the other Loan Documents, the Company may, with the prior
written consent of the Required Lenders, merge with and into
the Parent Guarantor; and
(e) the Company and its Subsidiaries may engage in Asset
Dispositions permitted by Section 9.2.11.
--------------
Notwithstanding the foregoing, neither the Company nor any
Subsidiary may engage in any such transaction unless at least five
(or, in the case of any such transaction involving the Company or
any other Obligor, 30) Business Days prior thereto, or such shorter
period as shall be acceptable to the Agent, the Company shall have
delivered to the Agent a description of the proposed transaction,
in reasonable detail, and a certificate signed by an Authorized
Officer certifying that such transaction will not result in a
Default or an Event of Default.
SECTION 9.2.11. Asset Dispositions. The Company will not,
------------------
and will not permit any of its Subsidiaries to, make any Asset
Disposition, other than the following:
(a) the Company and its Subsidiaries may dispose of cash
or Cash Equivalent Investments;
(b) subject to Section 9.2.18, the Company or any
--------------
wholly-owned Subsidiary of the Company may dispose of its
assets to the Company or any wholly-owned Subsidiary of the
Company;
(c) the Company and its Subsidiaries may dispose of
Inventory in the ordinary course of business;
(d) the Company and its Subsidiaries may license
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technology or know-how on a nonexclusive basis in the ordinary
course of business;
(e) ALPART or VALCO may dispose of any of their
respective assets for fair value;
(f) subject to Section 9.2.2(xv) the Company may dispose
of a facility that is subsequently repurchased or leased by
the Company in connection with the issuance of industrial
revenue bonds by a state, municipality or other subdivision of
the United States of America or any department, agency, public
corporation or other instrumentality thereof;
(g) the Company and its Subsidiaries may dispose of
assets with a fair market value of less than $250,000 (in a
single transaction or related series of transactions) in the
ordinary course of business;
(h) the Company may dispose of any of its assets in
connection with the leaseback of such assets by the Company or
any of its Subsidiaries, provided that such leaseback is
otherwise permitted hereunder and such Asset Disposition
occurs not later than twelve months after such assets are
placed in service;
(i) transfers of Property permitted by Section 9.2.12
--------------
and Section 9.2.18; and
--------------
(j) if no Default or Event of Default shall have
occurred and be continuing or shall occur after giving effect
thereto, the Company and its Subsidiaries may dispose of
assets, in addition to those dispositions permitted in
clauses (a) through (h) above; provided the fair market value
----------- --- --------
of the assets disposed of pursuant to this Section 9.2.11(g)
-----------------
does not exceed $25,000,000 in any Fiscal Year.
Notwithstanding the foregoing, the Company will not, and will not
permit any of its Subsidiaries to, take any action which would
require an "Asset Sale Offer" (under and as defined in the
Subordinated Indenture) to be made pursuant to Section 5.16(b) of
---------------
the Subordinated Indenture or to violate the provisions of
Section 5.12 of the Subordinated Indenture or Section 4.12 of the
- ------------ ------------
Senior Indenture. In addition, notwithstanding the foregoing, the
Company will not, and will not permit any of its Subsidiaries, to
make any Asset Disposition of Accounts (other than pursuant to
Section 9.2.12) or any Asset Disposition of any other Property if,
- --------------
after giving effect to such Asset Disposition, the Revolving Credit
Outstandings immediately following such Asset Disposition will
exceed the Borrowing Base.
SECTION 9.2.12. Sale or Discount of Receivables. The Company
-------------------------------
will not, and will not permit any of its Subsidiaries to, directly
or indirectly, sell, sell with recourse, discount or otherwise sell
for less than the face value thereof, any of its notes or accounts
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128
receivable; provided, however, that the Company and its
-------- -------
Subsidiaries may sell, sell with recourse, discount or otherwise
sell for less than the face value thereof, to any Lender or
Lenders, (a) any accounts receivable arising in connection with any
sale of product for delivery outside the United States which
accounts receivable are secured by a letter of credit provided the
discount on such accounts receivable secured by a letter of credit
is not greater than that necessary to reflect the time value of
money and (b) any notes or accounts receivable arising in
connection with any sale of product for delivery in the
Commonwealth of Independent States provided the aggregate amount of
all such accounts receivable does not exceed $10,000,000 in any
calendar month.
SECTION 9.2.13. Restrictions on Actions under Certain
-------------------------------------
Agreements. Neither the Parent Guarantor nor the Company will
- ----------
(a) consent to any amendment, supplement, or other
modification of any of the terms or provisions contained in,
or applicable to, any document or instrument evidencing or
governing any Subordinated Debt or any Senior Debt, the PIK
Note or any Equity Proceeds Note other than any amendment,
supplement, or other modification which extends the date or
reduces the amount of any required repayment or any amendment,
supplement or modification of the PIK Note or any Equity
Proceeds Note that is consented to in writing by the Agent;
(b) designate any other Indebtedness as "Specified
Senior Debt" under the Subordinated Indenture or designate or
permit any Subsidiary of the Company to designate any other
Indebtedness of such Subsidiary as "Guarantor Specified Senior
Debt" under the Subordinated Indenture;
(c) take, or permit any of its Subsidiaries to take any
action, or permit, or allow any of its Subsidiaries to permit,
to exist any condition, which in any such case would require
(i) the Company to cause any of its present or future
Subsidiaries (other than KAAC, AJI, KFC and KJC, and except as
otherwise provided in clauses (b) and (c) of Section 9.1.10
----------- --- --------------
and clause (b)(i) of Section 9.2.2), or which would directly
------------- -------------
require any such Subsidiary, to guarantee or otherwise become
liable in respect of any Subordinated Debt or Senior Debt, or
(ii) the Company or any Subsidiary of the Company to provide
collateral security in respect of any Subordinated Debt or
Senior Debt;
(d) make any offer to prepay, redeem, defease or
repurchase any Subordinated Debt or Senior Debt;
(e) fail to deliver any certificate and opinion
permitted to be given to the trustee under clauses (a) and (b)
----------- ---
of Section 16.14 of the Subordinated Indenture with respect to
-------------
any "Subsidiary Guarantor" (under and as defined in the
Subordinated Indenture) or to deliver any certificate and
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129
opinion permitted to be given to the trustee under clauses (a)
-----------
and (b) of Section 15.05 of the Senior Indenture with respect
--- -------------
to any "Subsidiary Guarantor" (under and as defined in the
Senior Indenture); and
(f) consent to any amendment, supplement or other
modification of any of the terms or provisions contained in,
or applicable to, any document or instrument evidencing or
governing the Parent Guarantor Preferred Stock (or depositary
shares in respect thereof) if such amendment, supplement or
other modification would have a Materially Adverse Effect.
SECTION 9.2.14. Transactions with Affiliates. The Company
----------------------------
will not, and will not permit any of its Subsidiaries to, enter
into, or cause, suffer, or permit to exist any transaction,
arrangement, or contract with any Affiliate of the Company (other
than the Company, its Subsidiaries which are not Restricted
Subsidiaries, Joint Venture Affiliates, and any Subsidiary of a
Joint Venture Affiliate in which neither the Parent Guarantor,
MAXXAM nor any Affiliate of either thereof (other than the Company,
its Subsidiaries which are not Restricted Subsidiaries, or any
Joint Venture Affiliate) has any equity interest other than through
a direct or indirect ownership interest in the Company) requiring,
constituting or involving any payments or other transfers of
Property to be made by the Company or any Subsidiary to or for the
benefit of, or pursuant to which the Company or any of its
Subsidiaries incurs a Contingent Liability in respect of any
obligation of, or incurs a contractual obligation for the benefit
of, any Affiliate of the Company (other than Persons described in
the previous parenthetical of this sentence).
Notwithstanding the foregoing provisions of this
Section 9.2.14, (a) directors, officers, and employees of the
- --------------
Company and its Subsidiaries may render services to the Company and
its Subsidiaries which are not Restricted Subsidiaries for
compensation and other benefits comparable to those generally paid
by corporations engaged in the same or similar businesses for the
same or similar services; (b) the transactions provided for in, and
the loan evidenced by, the KT Note shall be permitted; (c) the
performance of the Tax Allocation Agreement, the Deconsolidation
Tax Allocation Agreement and the Transfer Agreement shall be
permitted, except that the Company shall not be permitted to make
any cash payments to MAXXAM or any other Affiliate pursuant to the
Tax Allocation Agreement but MAXXAM may offset amounts owing to it
under the Tax Allocation Agreement against amounts owed by MAXXAM
under the Tax Allocation Agreement and the Company may make cash
payments to MAXXAM pursuant to the Tax Allocation Agreement if such
payments are required as a result of any audit of the tax returns
of MAXXAM and such payments do not exceed the payments made by
MAXXAM to the Company, subsequent to the date hereof, pursuant to
the Tax Allocation Agreement; (d) the Company may make payments to
MAXXAM for any Fiscal year in respect of (i) services actually
rendered to the Company during such Fiscal Year by employees of
MAXXAM, and (ii) the Company's allocable share of MAXXAM's overhead
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130
expenses during such Fiscal Year which are attributable to
employees of the Company who are located at MAXXAM's corporate
headquarters, provided that the charges for such services are fully
--------
documented and that the aggregate amount of such payments made by
the Company to MAXXAM for any Fiscal Year does not exceed the
aggregate amount of payments made to the Company by MAXXAM for
similar purposes for any Fiscal Year by more than $1,500,000; (e)
subject to Section 9.2.10, a merger or other combination between
--------------
the Company and the Parent Guarantor shall be permitted; (f)
Distributions permitted by Section 9.2.6 shall be permitted; (g)
-------------
transactions between ALPART or VALCO and Persons who own an equity
interest in ALPART or VALCO shall be permitted; (h) continuation of
performance under agreements entered into with Persons who were not
then Affiliates shall be permitted (but excluding, however, any
renegotiation, extension, or modification of such agreements after
such Person has become, or is anticipated to become, an Affiliate),
provided that such agreement was not entered into in connection
- --------
with or in anticipation of such Person becoming an Affiliate of the
Company; (i) payments of legal fees and expenses to a law firm of
which an Affiliate of the Company is a member shall be permitted;
(j) the Company may provide services and facilities to the Parent
Guarantor in connection with activities of the Parent Guarantor
that are permitted by the first sentence of Section 9.2.1 in
-------------
exchange for payment of its actual costs (allocated in good faith
where appropriate) of providing such services and facilities; (k)
any amendment to the KT Note that extends the maturity thereof or
reduces the interest rate thereon shall be permitted; (l)
performance of the PIK Note and any Equity Proceeds Note in
accordance with the provisions of Section 9.2.6 shall be permitted;
-------------
and (m) the issuance of any Equity Proceeds Note shall be
permitted.
For purposes of this Section 9.2.14, the term "Affiliate"
--------------
shall not be deemed to include employee benefit plans, and trusts
in connection therewith, for the benefit of employees of the
Company and its Subsidiaries.
SECTION 9.2.15. Negative Pledges, etc. The Parent Guarantor
---------------------
and the Company will not, and will not permit any of their
Subsidiaries (other than ALPART and VALCO) to, enter into any
agreement (excluding this Agreement, any other Loan Document, and
any agreement governing any Indebtedness permitted either by
clause (a)(iii) of Section 9.2.2 as in effect on the Effective
- --------------- -------------
Date, or by clause (b)(xv) of Section 9.2.2 as to the assets
-------------- -------------
financed with the proceeds of such Indebtedness) (a) prohibiting
the creation or assumption of any Lien securing the Obligations of
the Company and its Subsidiaries upon its Properties, revenues, or
assets which constitute Collateral, or over any properties,
revenues, or assets which, if acquired after the Effective Date
would be required to be subjected to a Lien in favor of the Agent
pursuant to Section 9.1.10 or 9.1.11 or over any other real
-------------- ------
property owned in fee by the Company or any such Subsidiary on the
Effective Date, or (b) specifically prohibiting the Parent
Guarantor, the Company, or any other Obligor from amending or
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otherwise modifying this Agreement or any other Loan Document to
which it is a party; provided, however, that the execution and
-------- -------
delivery of the Senior Indenture shall not be deemed to breach
clause (a) of this Section 9.2.15.
- ---------- --------------
SECTION 9.2.16. Sale-Leaseback Transactions. The Company
---------------------------
will not, and will not permit any of its Subsidiaries to, directly
or indirectly, become liable as lessee or guarantor or other surety
with respect to any lease (whether an operating or capital lease)
of any Property, whether now owned or hereafter acquired, (a) which
the Company or any of its Subsidiaries has sold or transferred or
is to sell or transfer to any other Person or (b) which the Company
or any of its Subsidiaries intends to use for substantially the
same purpose as any other Property which has been or is to be sold
or transferred by the Company or such Subsidiary to any Person in
connection with such lease, except (i) any Capitalized Lease
Liabilities permitted under Section 9.2.2 or (ii) any consolidated
-------------
lease expense resulting therefrom that would be permitted under
Section 9.2.8.
- -------------
SECTION 9.2.17. Change of Location or Name. Each of the
--------------------------
Parent Guarantor and the Company will not, nor will either permit
any of its Subsidiaries listed on Schedule IV hereto to, change
-----------
(a) the location of its principal place of business,
chief executive office, major executive office, chief place of
business, or its records concerning its business and financial
affairs; or
(b) its name or the name under or by which it conducts
its business,
in each case without first giving the Agent at least 30 days, or
such shorter period as shall be acceptable to the Agent, prior
written notice thereof and taking any and all actions which the
Agent may request to maintain and preserve all Liens in favor of
the Agent granted pursuant to the Collateral Documents; provided,
--------
however, that notwithstanding the foregoing, each of the Parent
- -------
Guarantor and the Company will not, and will not permit any such
Subsidiary to, change the location of its principal place of
business, chief executive office, chief place of business, or its
records concerning its business and financial affairs
(i) to Louisiana or Tennessee, or
(ii) from the contiguous continental United States to
any place outside the contiguous continental United States.
SECTION 9.2.18. Intercompany Transfers of Property. The
----------------------------------
Parent Guarantor and the Company will not, and will not permit any
Obligor (other than KBC or KEC) to, transfer or cause to be
transferred, in one or a series of related transactions any
Property of the Parent Guarantor, the Company or any such
Subsidiary to any Subsidiary of the Company or to any Joint Venture
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Affiliate, except:
(i) any Obligor may transfer, and pay for, goods,
services, working capital and technology (other than Accounts)
to Subsidiaries of the Company and Joint Venture Affiliates in
the ordinary course of business and may license technology or
know-how to Subsidiaries of the Company and Joint Venture
Affiliates in the ordinary course of business; provided, in
--------
each case, that after giving effect to such transfer the
Revolving Credit Outstandings immediately following such
transfer will not exceed the Borrowing Base;
(ii) any Obligor may transfer Property (other than cash
and Accounts) to Subsidiaries and Joint Venture Affiliates,
provided that such transfer is made in exchange for cash in an
--------
amount equal to the fair market value of such Property;
(iii) any Obligor may transfer Property (other than
Accounts) to any other Obligor (other than KBC and KEC);
(iv) the use of the proceeds of Indebtedness incurred by
the Company, KJC, AJI and KAAC by ALPART, QAL and VALCO
pursuant to Section 9.2.2(b)(iii);
---------------------
(v) transfers of capital stock or other equity interests
to the issuer of such capital stock or other equity interests
such that immediately after giving effect to such transfer and
related transfers, the proportional beneficial ownership by the
transferor of the class of capital stock or equity interests so
transferred is not reduced;
(vi) Investments permitted by Sections 9.2.5(f) and
-----------------
9.2.5(o); and
--------
(vii) other transfers of Property (other than Accounts);
provided that the aggregate amount thereof (if other than
cash, such amount shall be the fair market value of such asset
at the time of such transfer), less the aggregate amount of
such Property returned to the Company or any Obligor (if
returned other than in cash, the amount of such Property shall
be the fair market value thereof at the time so returned),
does not exceed, in the aggregate, the greater of (A)
$25,000,000 or (B) 5% of the Company's Net Worth, calculated
after giving effect to such transfers and returns.
SECTION 9.2.19. Inconsistent Agreements. The Parent
-----------------------
Guarantor and the Company will not, and will not permit any of its
Subsidiaries to, enter into any material agreement (other than the
Senior Debt Instruments) containing any provision which would be
violated or breached by any Credit Extension or by the performance
by the Parent Guarantor or the Company or any other Obligor of its
obligations hereunder or under any Loan Document.
SECTION 9.2.20. Transfer of Collateral. The Company will
----------------------
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not, and will not permit any of its Subsidiaries to, transfer to
the Company's Gramercy alumina refinery any equipment owned on the
Initial Borrowing Date and not located or used at, or in transit
to, the Company's Gramercy alumina refinery on the Initial
Borrowing Date.
ARTICLE X
EVENTS OF DEFAULT
SECTION 10.1. Listing of Events of Default. Each of the
----------------------------
following events or occurrences described in this Section 10.1
------------
shall constitute an "Event of Default".
----------------
SECTION 10.1.1. Non-Payment of Obligations. The Company
--------------------------
shall default in the payment or prepayment when due of any
principal of or interest on any Loan or Reimbursement Obligation;
or the Company shall default (and such default shall continue
unremedied for a period of five days) in the payment when due of
any commitment or letter of credit fee payable hereunder.
SECTION 10.1.2. Breach of Warranty. Any representation,
------------------
warranty, or certification of the Parent Guarantor, the Company, or
any other Obligor made or deemed to be made hereunder or in any
other Loan Document to which it is or is to become a party or any
other writing or certificate furnished by or on behalf of the
Parent Guarantor, the Company, or any other Obligor to the Agent or
any Lender for the purposes of or in connection with this Agreement
or any such other Loan Document (including any certificates
delivered pursuant to Article VII) is or shall be incorrect when
-----------
made in any material respect.
SECTION 10.1.3. Non-Performance of Certain Covenants and
----------------------------------------
Obligations. The Parent Guarantor, the Company, or any Obligor
- -----------
shall default in the due performance and observance of any of its
respective obligations under Sections 3.3.2(b) and (c), 9.2.4,
----------------- --- -----
9.2.6 or 9.2.7 of this Agreement.
- ----- -----
SECTION 10.1.4. Non-Performance of Certain Covenants and
----------------------------------------
Obligations. The Parent Guarantor, the Company, or any other
- -----------
Obligor shall default in the due performance and observance of any
of its respective obligations under
(a) Section 9.2 (other than Sections 9.2.4, 9.2.6 and
-------------------------------------------------
9.2.7), 9.1.4, or 9.1.9 or clause (a) of Section 9.1.5
------------------------------------------------------
of this Agreement,
(b) Section 1.2, 1.4, 1.5, 1.7, 1.10, 1.11, 1.15, 1.17,
----------- --- --- --- ---- ---- ---- ----
1.19, 1.20.1, or 1.21 of any Company Mortgage or Company Deed
---- ------ ----
of Trust,
(c) Section 6(e), 7(h), 7(i), 7(j), 7(l), 7(r), or 10 of
------------ ---- ---- ---- ---- ---- --
the Company Security Agreement,
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(d) Section 7(h), 7(i), 7(j), 7(k) or 10 of the Parent
------------ ---- ---- ---- --
Security Agreement,
(e) Section 7(h), 7(i), 7(j), 7(l) or 10 of the
------------ ---- ---- ---- --
Subsidiary Security Agreement,
(f) Section 4.1 or 4.2 of the Company Pledge Agreement,
----------- ---
the Parent Pledge Agreement, or the Subsidiary Pledge
Agreement, or
(g) Section 4.1 of the Intercompany Note Pledge
-----------
Agreement,
and such default shall continue unremedied for a period of five
days after written notice thereof shall have been given by the
Agent to the Company.
SECTION 10.1.5. Non-Performance of Other Covenants and
--------------------------------------
Obligations. Any Obligor shall default in the due performance and
- -----------
observance of any other agreement contained herein, or in any other
Loan Document to which it is or is to become a party, and such
default shall continue unremedied for a period of 30 days after
written notice thereof shall have been given by the Company to the
Agent or to the Company by the Agent.
SECTION 10.1.6. Default on Other Indebtedness. A default
-----------------------------
shall occur in the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, of any
Indebtedness (other than Indebtedness described in Section 10.1.1)
--------------
of the Parent Guarantor, the Company, any of their Subsidiaries, or
any Joint Venture Affiliate having an aggregate principal amount in
excess of $20,000,000 or, in the case of Indebtedness of Joint
Venture Affiliates, having an aggregate principal amount for which
the Parent Guarantor, the Company, or any of their Subsidiaries is
contingently liable in excess of $20,000,000; or a default shall
occur in the performance or observance of any obligation or
condition with respect to any such Indebtedness if the effect of
such default is to accelerate the maturity of any such Indebtedness
or to permit the holder or holders thereof, or any trustee or agent
for such holders, to cause such Indebtedness to become due and
payable prior to its expressed maturity.
SECTION 10.1.7. Judgments. A final judgment which,
---------
together with other outstanding final judgments against the Company
and its Significant Subsidiaries, exceeds an aggregate of
$20,000,000 (to the extent such judgments are not covered by valid
and collectible insurance from solvent unaffiliated insurers) shall
be entered against the Company and/or any of its Significant
Subsidiaries and (a) within 30 days after entry thereof, judgments
exceeding such amount shall not have been discharged, settled,
bonded or execution thereof stayed pending appeal or, within 30
days after the expiration of any such stay, such judgments
exceeding such amount shall not have been discharged, settled,
bonded or execution thereof stayed or (b) an enforcement proceeding
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135
shall have been commenced (and not discharged, settled, bonded or
execution thereof stayed) by any creditor upon judgments exceeding
such amount.
SECTION 10.1.8. Pension Plans. Any of the following
-------------
events shall occur with respect to any Pension Plan
(a) the taking of any action by the Parent
Guarantor, the Company, any member of their Controlled Groups,
or any other Person (with the requisite authority to act) to
terminate a Pension Plan if, as a result of such termination,
the Parent Guarantor, the Company, or any such member could
reasonably expect to, or in the case of liability arising
under section 4063 or section 4069 of ERISA, there is a
reasonable likelihood that it could be required to, make a
contribution to such Pension Plan, or could reasonably expect
to incur a liability or obligation to such Pension Plan, in
excess of $10,000,000; or
(b) a contribution failure occurs with respect to
any Pension Plan sufficient to give rise to a Lien against
assets of any Controlled Group member under Section 302(f) of
ERISA in an amount in excess of $1,000,000, which failure has
not been completely cured within 30 days of the applicable due
date.
SECTION 10.1.9. Change in Control. Any Change in Control
-----------------
shall occur.
SECTION 10.1.10. Bankruptcy, Insolvency, etc. The Parent
---------------------------
Guarantor, the Company, any Significant Subsidiary, any other
Obligor, or any Joint Venture Affiliate (other than KJBC) shall
(a) become insolvent or generally fail to pay, or admit
in writing its inability or unwillingness to pay, debts as
they become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator, or other
custodian for the Parent Guarantor, the Company, any
Significant Subsidiary, any other Obligor, or any such Joint
Venture Affiliate or any Property of any thereof, or make a
general assignment for the benefit of creditors;
(c) in the absence of such application, consent, or
acquiescence, permit or suffer to exist the appointment of a
trustee, receiver, sequestrator, or other custodian for the
Parent Guarantor, the Company, any Significant Subsidiary, any
other Obligor, or any such Joint Venture Affiliate or for a
substantial part of the Property of any thereof, and, in the
case of any such Person other than the Company, such trustee,
receiver, sequestrator, or other custodian shall not be
discharged within 60 days;
127
136
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up, or liquidation proceeding, in respect
of the Parent Guarantor or of the Company;
(e) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up, or liquidation proceeding, in respect
of any Significant Subsidiary, any other Obligor (other than
the Parent Guarantor or the Company), or any such Joint
Venture Affiliate, and, if such case or proceeding is not
commenced by such Person, such case or proceeding shall be
consented to or acquiesced in by such Person or shall result
in the entry of an order for relief or shall remain for 60
days undismissed; or
(f) take any corporate action authorizing, or in
furtherance of, any of the foregoing.
SECTION 10.1.11. Subordinated Debt and Senior Debt. The
---------------------------------
Company shall be required, pursuant to the terms of any
Subordinated Debt Instrument or any Senior Debt Instrument, or
shall offer, to redeem, repurchase, prepay, or defease any
Subordinated Debt or any Senior Debt.
SECTION 10.1.12. Impairment of Certain Documents. Except
-------------------------------
as otherwise expressly permitted in any Loan Document, any of the
Fundamental Loan Documents shall terminate or cease in whole or in
part to be the legally valid, binding, and enforceable obligation
of the relevant Obligor, or such Obligor or any Person acting for
or on behalf of such Obligor contests such validity, binding
effect, or enforceability, or purports to revoke any Fundamental
Loan Document, or any asset or item of Property purported to be
secured by any Collateral Document ceases to be so secured and
continues not to be secured for ten Business Days after written
notice thereof has been given to such Obligor by the Agent.
SECTION 10.2. Action if Bankruptcy. If any Event of Default
--------------------
described in clauses (a) through (e) of Section 10.1.10 shall occur
----------- --- ---------------
with respect to the Company, the outstanding principal amount of
all outstanding Loans and all other Obligations shall automatically
be and become immediately due and payable, without notice, demand
or presentment and the Company shall pay to the Agent in Dollars
and immediately available funds an amount equal to the then
aggregate Letter of Credit Outstandings in accordance with
Section 5.7.
- -----------
SECTION 10.3. Action if Other Event of Default. If any Event
--------------------------------
of Default (other than any Event of Default described in
clauses (a) through (e) of Section 10.1.10 with respect to the
- ----------- --- ---------------
Company) shall occur for any reason, whether voluntary or
involuntary, and be continuing,
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(a) the Agent shall, upon the direction of the Majority
Lenders,
(i) by written notice to the Company declare the
Commitments terminated, whereupon the Commitments of each
Lender will thereupon terminate immediately and any fees
payable hereunder shall become due and payable without notice
of any kind;
(ii) by written notice to the Company declare all or any
portion of the outstanding principal amount of the Loans and
other Obligations to be due and payable, whereupon the full
unpaid amount of such Loans and other Obligations which shall
be so declared due and payable shall be and become immediately
due and payable, without further notice, demand, or
presentment and the Company shall pay to the Agent in Dollars
and immediately available funds an amount equal to the then
aggregate Letter of Credit Outstandings in accordance with
Section 5.7; or
-----------
(iii) terminate any Letter of Credit which may be
terminated in accordance with its terms; and
(b) the Agent shall, upon the direction of the Majority
Lenders, and may, in its sole and absolute discretion,
(i) reduce the Revolving Commitment Availability or one
or more of the elements thereof; or
(ii) decline to permit the issuance of additional Letters
of Credit or the extension of the Stated Expiry Date of any
outstanding Letter of Credit.
Each and every right, power, and remedy provided herein or in any
other Loan Document shall be cumulative and shall be in addition to
every other right, power, and remedy provided herein or in any
other Loan Document or provided under applicable law.
ARTICLE XI
THE ADMINISTRATIVE AGENT
SECTION 11.1. Appointment; Actions.
--------------------
(a) Each Lender hereby appoints Business Credit as its
Agent under and for purposes of this Agreement, each of the
other Loan Documents and the Collateral Documents. Each
Lender irrevocably authorizes, and each assignee of any Lender
shall be deemed to authorize, the Agent to act on behalf of
such Lender under this Agreement, each of the other Loan
Documents and the Collateral Documents and, in the absence of
other written instructions received from time to time by the
Agent from the Majority Lenders or, as required by the Credit
129
138
Agreement, the Required Lenders or all of the Lenders (with
which instructions the Agent agrees that it will comply,
except as otherwise provided in this Section 11.1), each
Lender irrevocably authorizes the Agent to take such actions
on its behalf and to exercise such powers hereunder and
thereunder as are in each case specifically delegated to or
required of the Agent by the terms hereof or thereof, together
with such powers as may be reasonably incidental thereto.
Each Lender agrees that no Lender shall have any right
individually to seek to realize upon the security granted by
or any guaranty provided by any Collateral Document, it being
understood and agreed that such rights and remedies may be
exercised solely by the Agent for the benefit of the Lenders
in accordance with the terms of this Agreement and the
Collateral Documents.
(b) The Agent shall not have by reason of this Agreement
or any other Loan Document a fiduciary relationship in respect
of any Lender; and nothing in this Agreement or any other Loan
Document, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in
respect of this Agreement or any other Loan Document except as
expressly set forth herein or therein. Notwithstanding the
foregoing, the Lenders acknowledge that the Agent is
authorized to exercise its discretion in taking certain
actions and exercising certain powers under this Agreement,
including determining which Accounts and Inventory constitute
Eligible Accounts and Eligible Inventory, determining the
Revolving Commitment Availability pursuant to Section 10.3,
------------
and during the continuance of an Event of Cash Dominion,
continuing to make Credit Extensions in accordance with and
subject to the provisions of Section 7.2. Each Lender hereby
-----------
irrevocably indemnifies and agrees to indemnify (which
indemnity shall survive any termination of this Agreement) the
Agent, and each of its officers, directors, employees and
agents (collectively, the "Indemnified Persons"), pro rata
------------------- --- ----
according to such Lender's Percentage, from and against any
and all liabilities, demands, judgments, obligations, losses,
damages, claims, costs, or expenses of any kind or nature
whatsoever (including those relating to the preparation,
execution, delivery, administration, modification, amendment,
or enforcement (whether through negotiations, legal
proceedings, or otherwise) of this Agreement, and the other
Loan Documents) which may at any time be imposed on, incurred
by, or asserted against, any of the Indemnified Persons in any
way relating to or arising out of this Agreement, or any other
Loan Document, including reasonable attorneys' fees and
allocated costs of in-house counsel, and as to which the Agent
is not reimbursed by the Company; provided, however, that no
-------- -------
Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, claims, costs, or
expenses of any Indemnified Person which have resulted from
such Indemnified Person's gross negligence or willful
misconduct. The Agent shall not be required to take any
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139
action, make any inquiry, or request any document hereunder,
or under any other Loan Document, or to prosecute or defend
any suit in respect of this Agreement, or any other Loan
Document, unless (i) if it has requested instructions from the
Lenders as to such action, it shall have received such
instructions from the Required Lenders (or, if required by
this Agreement, all the Lenders or the Majority Lenders, as
the case may be) and (ii) it is indemnified hereunder to its
satisfaction. If any indemnity in favor of the Agent shall be
or become inadequate, in the determination of the Agent, the
Agent may call for additional indemnification from the Lenders
and cease to do the acts indemnified against hereunder until
such additional indemnity is given. The agreements in this
clause (c) shall survive the termination of the Commitments
----------
and the Letters of Credit and the repayment of the Loans and
other Obligations.
(c) The Company hereby requests the Agent to, and each
Lender hereby instructs the Agent to, and the Agent agrees to,
deliver to the Company on the Initial Borrowing Date, for
delivery by the Company to R.T.Z. Aluminum Holdings Limited, a
letter in the form of Exhibit R attached hereto.
---------
(d) The Company hereby requests the Agent to, and each
Lender hereby instructs the Agent to, and the Agent agrees to,
deliver to the Company on the Initial Borrowing Date, a letter
regarding the flood plain status of the properties covered by
the Company Mortgages and the Company Deeds of Trust, in the
form of Exhibit S attached hereto.
---------
(e) The Agent hereby agrees that it will promptly
give the Company notice of the occurrence of either of
the following events: (i) the Revolving Commitment
Availability is less than $40,000,000 at any time or (ii)
the Revolving Commitment Availability is less than
$50,000,000 for three consecutive Business Days and
provided no Default shall have occurred and be
continuing, will promptly give notice to the Company in
the event that, thereafter, the Revolving Commitment
Availability is greater than $50,000,000 for each day
during a period of three consecutive months. In
addition, the Agent hereby agrees to advise the other
Lenders on or prior to the notification of the other
Lenders by the Agent of any Borrowing Request delivered
during the continuance of an Event of Default in the
event that it has determined to waive any of the
conditions of Section 7.2 during the continuance of such
-----------
Event of Default.
SECTION 11.2. Funding Reliance, etc.
---------------------
(a) Unless the Agent shall have been notified by
telephone and such notice shall have been confirmed in writing
by any Lender by 5:00 p.m., San Francisco time, on the
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140
Business Day prior to a Borrowing that such Lender will not
make available the amount which would constitute its
Percentage of such Borrowing on the date specified therefor,
the Agent may assume that such Lender has made such amount
available to the Agent and, in reliance upon such assumption,
make available to the Company a corresponding amount. If and
to the extent that such Lender shall not have made such amount
available to the Agent, such Lender and the Company severally
agree to repay the Agent forthwith on demand such
corresponding amount together with interest thereon, for each
day from the date the Agent made such amount available to the
Company to the date such amount is repaid to the Agent, at the
interest rate(s) applicable at the time to Loans comprising
such Borrowing in the case of the Company and at the daily
average Federal Funds Rate in the case of any Lender.
(b) Unless the Agent shall have been notified by
telephone and such notice shall have been confirmed in writing
by the Company by 5:00 p.m., San Francisco time, on the day
prior to the due date of any Obligation, that any Obligor will
not make the full amount of all payments scheduled to be made
by it on such due date, the Agent may assume that such Obligor
has made such amount available to the Agent and, in reliance
upon such assumption, make available to the Lenders their
respective pro rata shares of such amount. If the Agent makes
--- ----
any such amount available to any Lender, but such amount was
not in fact made available by or on behalf of such Obligor to
the Agent on such due date, such Lender shall pay to the Agent
on demand the amount previously made available to such Lender,
together with interest on such amount at the daily average
Federal Funds Rate for the number of days from and including
the date on which such Lender received such amount to the date
on which such amount becomes immediately available to the
Agent, and together with such other compensatory amounts as
may be required to be paid by such Lender to the Agent
pursuant to the Rules for Interbank Compensation of the
Council on International Banking or the Clearinghouse
Compensation Committee, as the case may be, as in effect from
time to time. A statement of the Agent submitted to any
Lender with respect to any amounts owing under this paragraph
shall be conclusive, in the absence of manifest error. If
such amount is not in fact made available to the Agent by such
Lender within two Business Days after the date on which such
Lender is (i) informed by the Agent that such amount was not
made available to the Agent by or on behalf of such Obligor,
and (ii) requested by the Agent to refund such amount to the
Agent, then the Agent shall be entitled to recover on demand
an amount calculated in the manner specified in the second
preceding sentence of this clause (b) after substituting the
----------
term "Reference Rate" for the term "Federal Funds Rate".
SECTION 11.3. Exculpation.
-----------
(a) No Indemnified Person shall be liable to any Lender
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141
for any action taken or omitted to be taken by such
Indemnified Person under this Agreement or any other Loan
Document or in connection herewith or therewith (except for
such Indemnified Person's own willful misconduct or gross
negligence), nor responsible for any recitals, statements,
representations or warranties herein or therein, nor for the
effectiveness, genuineness, enforceability, validity, or due
execution of this Agreement or any other Loan Document, nor
for the creation, perfection, or priority of any Liens
purported to be created by any of the Loan Documents, or the
validity, genuineness, enforceability, existence, condition,
value, or sufficiency of any collateral security, nor to make
any inquiry respecting the performance by any Obligor of its
obligations hereunder or under any other Loan Document. Each
Indemnified Person shall be entitled to rely upon advice of
counsel concerning legal matters and upon any notice, consent,
certificate, statement, or writing which such Indemnified
Person believes to be genuine and to have been presented by a
proper Person, and shall not be liable to any Lender or any
Obligor for the consequences of such reliance.
(b) The Agent shall be deemed not to have knowledge of
the occurrence of a Default or an Event of Default (other
than, in the case of the Agent, an Event of Default arising
under Section 10.1.1), or any breach of any of the Loan
--------------
Documents unless, in each case, it shall have received written
notice thereof from a Lender or from the Company. No
Indemnified Person shall be responsible or liable for any
shortage, discrepancy, damage, loss, or destruction of any
part of the Collateral, wherever the same may be located and
regardless of the cause thereof, unless the same shall happen
through its own gross negligence or willful misconduct. No
Indemnified Person shall, under any circumstances or any event
whatsoever, have any liability for any error or omission or
delivery of any kind made in the settlement, collection, or
payment of any of the Collateral or of any instrument received
in payment therefor or for any damage resulting therefrom
other than as a result of its own gross negligence or willful
misconduct.
SECTION 11.4. Successors. The Agent may resign as such at
----------
any time upon at least 30 days' prior written notice to the Company
and all Lenders. If the Agent at any time shall resign, the
Required Lenders may appoint another Lender or a commercial banking
institution organized under the laws of the United States (or any
state thereof) or a United States branch or agency of a foreign
commercial banking institution, and having a combined capital and
surplus of at least $500,000,000 as a successor Agent which shall
thereupon become the Agent hereunder. If no successor Agent shall
have been so appointed by the Required Lenders, and shall have
accepted such appointment, within 30 days after the retiring
Agent's giving notice of resignation, then the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent which shall be
one of the Lenders or one of such commercial banking institutions.
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Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall be entitled to receive
from the retiring Agent such documents of transfer and assignment
as such successor Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges,
and duties of the retiring Agent and the retiring Agent shall be
discharged from any further duties and obligations under or in
connection with this Agreement and any Loan Document. In addition,
in the event that Business Credit resigns as the Agent, Bank of
America shall be discharged from any duties and obligations under
or in connection with this Agreement and any Loan Documents that
were delegated to Bank of America by Business Credit in its
capacity as Agent. After the resignation hereunder of a retiring
Agent, the provisions of
(a) this Article XI shall inure to its benefit as to
----------
any actions taken or omitted to be taken by it while it was
the Agent under this Agreement; and
(b) Sections 12.3 and 12.4 shall continue to inure to
------------- ----
its benefit.
SECTION 11.5. Credit Extensions by the Agent. Business
------------------------------
Credit and its successor as Agent shall have the same rights and
powers with respect to (a) the Loans made by it or any of its
Affiliates and (b) Letters of Credit issued (or participated in) by
it or any of its Affiliates as any other Lender and may exercise
the same as if it were not the Agent. The terms "Lender" and
"Lenders" as used herein shall include the Agent in its individual
capacity.
SECTION 11.6. Credit Decisions. Each Lender acknowledges
----------------
that it has, independently of the Agent, and each other Lender, and
based on such Lender's review of the financial information of the
Company and such other documents, information, and investigations
as such Lender has deemed appropriate, made its own credit decision
to extend its Commitments. Each Lender also acknowledges that it
will, independently of the Agent, and each other Lender, and based
on such other documents, information, and investigations as it
shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any
rights and privileges available to it under this Agreement or any
other Loan Document.
SECTION 11.7. Copies, etc. The Agent shall give prompt
-----------
written notice to each Lender of each notice or request required or
permitted to be given to the Agent by any Obligor pursuant to the
terms of this Agreement or any other Loan Document (unless
concurrently delivered to the Lenders by or on behalf of such
Obligor pursuant to the terms hereof). The Agent will promptly
distribute to each Lender each document or instrument received for
its account and copies of all other communications received by the
Agent from the Company for distribution to the Lenders by the Agent
in accordance with the terms of this Agreement and the other Loan
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Documents.
SECTION 11.8. Designation of Additional Agents. Whenever the
--------------------------------
Agent shall deem it necessary or prudent in order either to conform
to any law of any jurisdiction in which all or any part of the
Collateral shall be situated or to make any claim or bring any suit
with respect to the Collateral or the Collateral Documents, or in
the event that the Agent shall have been requested to do so by the
Required Lenders, the Agent and to the extent necessary, the Parent
Guarantor and the Company, shall (and the Company shall cause each
other Obligor to) execute and deliver a supplemental agreement and
all other instruments and agreements necessary or proper to
constitute another bank or trust company, or one or more Persons
approved by the Agent, either to act as Agent or agents with
respect to all or any part of the Collateral, in any such case with
such powers of the Agent as may be provided in such supplemental
agreement, and to vest in such bank, trust company or Person as
such Agent or separate trustee, as the case may be, any Property,
title, right, or power of the Agent deemed necessary or advisable
by the Agent.
SECTION 11.9. Certain Releases.
----------------
(a) To the extent that the Agent becomes concerned that
the exercise of any remedies or any action taken or omitted to
be taken by it in connection with any Collateral shall subject
it to the possibility of any liability, cost, or expense which
it deems to be significant, arising under any law, rules, or
regulations relating to hazardous or toxic wastes or
materials, the Agent may, without liability to any Lender or
other party to this Agreement or any other Loan Document, or
any other Person, decline to accept, abandon, forfeit, or
release such Collateral regardless of any effect such
declination, abandonment, forfeiture, or release may have upon
the Lenders, or otherwise, if either (i) the Agent is
requested to decline to accept, abandon, forfeit, or release
such Collateral by the Required Lenders or (ii) the Agent is
not, within 30 days after making a specific proposal therefor,
specifically indemnified to its satisfaction by the Required
Lenders or insured to its satisfaction by a third party or
parties for any liability, costs, and expenses which might
result therefrom.
(b) In addition, if the Agent becomes concerned that the
inclusion of certain Property in the Collateral is not in the
best interests of the Agent or the Lenders, either because of
potential adverse legal implications (including the potential
effects of California's "one form of action",
"anti-deficiency" and related rules of law which may apply in
connection with real property located in California) or
potential liabilities, costs, or expenses which the Agent
deems to be significant that may be imposed upon a Person
secured by such Collateral, the Agent may, without liability
to any Lender or other party to this Agreement or any other
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144
Loan Document, or any other Person, decline to accept,
abandon, forfeit, or release such Collateral regardless of any
effect such declination, abandonment, forfeiture, or release
may have upon the Lenders or otherwise unless (i) the Agent is
requested to do otherwise by the Required Lenders and (ii) the
Agent is, within 30 days after making a specific proposal
therefor, specifically indemnified to its satisfaction by the
Required Lenders or insured to its satisfaction by a third
party or parties for any liability, costs, and expenses which
might result therefrom.
SECTION 11.10. Approval of Loan Documents. Each of the
--------------------------
Lenders hereby approves the forms of the Loan Documents
attached as Exhibits to this Agreement and hereby authorizes
the Agent on its behalf to accept from the Company and the
other Obligors, as the case may be, and, authorizes the Agent
to execute and deliver as Agent, the Collateral Documents in
substantially the form of such Exhibits, with such changes,
additions, or deletions as the Agent, in its sole and absolute
discretion, may approve as necessary or appropriate to
accomplish the purposes of such Loan Documents. Each of the
Lenders also authorizes the Agent to accept, or execute and
deliver, such additional documents, in form and substance
satisfactory to the Agent in its sole and absolute discretion,
in connection with the initial Borrowing or any subsequent
Borrowing as the Agent, in its sole and absolute discretion,
may approve as necessary or appropriate to accomplish the
purposes of the Loan Documents. Each of the Lenders further
authorizes the Agent, in its sole and absolute discretion, to
approve the form and content of all certificates, opinions,
collateral, financing statements, and other documents
delivered to it at or in connection with the initial Borrowing
or any subsequent Borrowing as the Agent, in its sole and
absolute discretion, may deem necessary or appropriate.
Whenever the Agent is permitted to consent to any matter
hereunder, the Agent shall have the right, in its sole
discretion, to consult with any or all of the other Lenders
prior to providing or refraining from providing any such
consent.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. Waivers, Amendments, etc.
------------------------
(a) The provisions of this Agreement and of
each other Loan Document may from time to time be
amended or modified, if such amendment or
modification is in writing and consented to by the
Company or the Obligor(s) party thereto (as the case
may be) and the Required Lenders; and the provisions
of this Agreement may be waived by the Required
Lenders or by the Agent acting with the consent of
the Required Lenders; provided, however, that no
such amendment, modification, or waiver which would:
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(i) modify this Section 12.1, change the
------------
definition of "Required Lenders" or "Majority
----------------
Lenders," increase any Revolving Commitment Amount
or modify any requirement hereunder that any
particular action be taken by all the Lenders, the
Required Lenders or the Majority Lenders shall be
effective unless consented to by each Lender;
(ii) increase the Percentage of any Lender,
reduce any fees described in Article III payable to
-----------
any Lender, or extend any Lender's Commitment
Termination Date shall be made without the consent
of such Lender;
(iii) extend the due date for, or reduce the
amount of, any scheduled repayment of principal of
or interest on any Loan or any Reimbursement
Obligation, or reduce the principal amount of or
rate of interest on any Loan or reduce the amount of
any Reimbursement Obligation, shall be made without
the consent of the Lender which made such Loan or
participated in such Letter of Credit, or each
Lender which issued or is participating in the
Letter of Credit with respect to which such
Reimbursement Obligation is owed, as the case may
be;
(iv) release all, substantially all, or any
material portion of the Collateral (except for
releases in connection with dispositions of assets
which are permitted hereunder or under any Loan
Document, and releases which are required by the
Collateral Documents) without the consent of Lenders
holding at least 100% of the then aggregate
outstanding principal amount of the Revolving Credit
Outstandings or, if no such principal amount is then
outstanding, Lenders having at least 100% of the
Revolving Commitments;
(v) affect adversely the interests, rights, or
obligations of the Agent qua Agent, shall be made
---
without the consent of the Agent; or
(vi) modify any Letter of Credit or any
Revolving L/C Request without the consent of the
relevant Issuer Bank.
(b) Notwithstanding the foregoing, during the
continuance of an Event of Cash Dominion, the Agent may, at
any time thereafter, in its sole and absolute discretion,
continue to make Revolving Loans and Swingline Loans and
instruct the applicable Issuer Bank to issue Letters of Credit
in accordance with and subject to the provisions of
Section 7.2.
-----------
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146
(c) No failure or delay on the part of the Agent, any
Lender, any Issuer Bank, or the holder of any of the
Obligations in exercising any power, right, or remedy under
this Agreement or any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of
any such power, right, or remedy preclude any other or further
exercise thereof or the exercise of any other power, right, or
remedy. No notice to or demand on the Company or any Obligor
in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by the
Agent, any Lender, any Issuer Bank, or the holder of any of
the Obligations under this Agreement or any other Loan
Document shall, except as may be otherwise stated in such
waiver or approval, be applicable to subsequent transactions.
No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval thereafter to be granted
hereunder.
(d) Each of the Parent Guarantor and the Company hereby
waives demand, presentment for payment, protest, notice of
protest, notice of acceleration (except as otherwise provided
herein), or of intention to accelerate the maturity of any of
the Loans, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of
any extensions, renewals, partial payments, or any changes in
any of the terms, provisions, and covenants of this Agreement,
or any other Loan Document, or any releases or substitutions
of any security, or any delay, indulgence, or other act of any
trustee or any other Person under or in connection with this
Agreement, or any other Loan Document whether before or after
maturity.
SECTION 12.2. Notices. Except as otherwise provided herein
-------
or in any other Loan Document, all notices and other communica-
tions provided to any party hereto under this Agreement or any
other Loan Document shall be in writing or by telex or by facsimile
(followed promptly thereby by mailing of such notice or
communication) and addressed, delivered, or transmitted to such
party at its address, telex, or facsimile number set forth below
its signature hereto, or set forth in the Assignee Agreement to be
Bound pursuant to which such party became a party hereto, or at
such other address, telex, or facsimile number as may be designated
by such party in a notice to the other parties. Any notice, if
delivered by hand or if sent by mail or by overnight courier
properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shall
be deemed given when transmitted (answerback confirmed in the case
of telexes).
SECTION 12.3. Payment of Costs and Expenses. The Parent
-----------------------------
Guarantor and the Company, jointly and severally, agree to pay on
demand all expenses of the Agent (including the reasonable fees and
out-of-pocket expenses of counsel to the Agent and of local
counsel, if any, who may be retained by counsel to the Agent and
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147
the allocated costs of in-house counsel) in connection with
(a) the negotiation, preparation, execution, and
delivery of this Agreement and of each other Loan Document,
including schedules and exhibits, and any amendments, waivers,
consents, supplements, or other modifications to this
Agreement or any other Loan Document as may from time to time
hereafter be required, whether or not the transactions
contemplated hereby are consummated,
(b) the filing, recording, refiling, and rerecording of
the Collateral Documents (including financing statements or
similar documentation) and all amendments, supplements, and
modifications to any thereof and any and all other documents
or instruments of further assurance required to be filed,
recorded, refiled, or rerecorded by the terms hereof or of the
Collateral Documents, and
(c) the preparation and review of the form of any
document or instrument relevant to this Agreement or any other
Loan Document.
The Parent Guarantor and the Company, jointly and severally,
further agree to pay, and to save the Agent and the Lenders
harmless from all liability for, any stamp, recording, or similar
taxes which may be payable in connection with the execution or
delivery of this Agreement, the Credit Extensions hereunder, the
issuance of the Letters of Credit, or the execution and delivery of
any other Loan Documents. The Parent Guarantor and the Company,
jointly and severally, also agree to reimburse the Agent and each
Lender upon demand for all reasonable out-of-pocket expenses
(including attorneys' fees and legal expenses) incurred by the
Agent or such Lender in connection with the enforcement of any
Obligations and to reimburse the Agent upon demand for all
reasonable out-of-pocket expenses (including attorneys' fees and
legal expenses) incurred by the Agent in connection with the
negotiation of any restructuring or "work-out," whether or not
consummated, of any Obligations.
SECTION 12.4. Indemnification. In consideration of the
---------------
execution and delivery of this Agreement by the Agent and each
Lender, and the extension of the Commitments, the Company hereby
indemnifies, exonerates, and holds the Agent (in its capacity as
the Agent) and each Lender and each of their respective officers,
directors, employees, and agents (collectively, the "Indemnified
-----------
Parties") free and harmless from and against any and all actions,
- -------
causes of action, suits, losses, costs, liabilities, and damages,
and expenses incurred in connection therewith (irrespective of
whether any such Indemnified Party is a party to the action for
which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (collectively, the "Indemnified
-----------
Liabilities" and, individually, an "Indemnified Liability"),
- ----------- ---------------------
incurred by the Indemnified Parties or any of them as result of,
arising out of, or relating to
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(a) any transaction or goods financed or to be
financed in whole or in part, directly or indirectly, with the
proceeds of any Credit Extension;
(b) the entering into, issuance, acceptance, or
performance of or participation in this Agreement and any
other Loan Document by any of the Indemnified Parties
(including any unsuccessful action brought by or on behalf of
the Company or any other Obligor as the result of any
determination by the Majority Lenders pursuant to Article VII
-----------
not to make any Credit Extension);
(c) any investigation, litigation, or proceeding related
to any acquisition or proposed acquisition by the Parent
Guarantor, the Company, or any of their Subsidiaries or Joint
Venture Affiliates of all or any portion of the stock or
assets of any Person, whether or not such Indemnified Party is
party thereto;
(d) any investigation, litigation, or proceeding related
to any environmental cleanup, audit, compliance, or other
matter relating to the protection of the environment or the
Release by the Parent Guarantor, the Company or any of their
Subsidiaries or Joint Venture Affiliates of any Hazardous
Material; or
(e) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging, or
releases from, any real property owned or operated by the
Parent Guarantor, the Company, or any of their Subsidiaries or
Joint Venture Affiliates of any Hazardous Material (including
any losses, liabilities, damages, injuries, costs, expenses,
or claims asserted or arising under any Environmental Law),
regardless of whether caused by, or within the control of, the
Company or such Subsidiary,
except for any such Indemnified Liabilities arising for the account
of a particular Indemnified Party by reason of the relevant
Indemnified Party's gross negligence or willful misconduct, and if
and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Company hereby agrees to make the
maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
Each Indemnified Party, as soon as reasonably practicable, shall
notify the Agent of the commencement of any legal proceeding by any
third Person under which any Indemnified Liability might arise.
The Agent shall notify the Company of any such commencement
promptly after the Agent receives its notice. The Company shall
have the option to participate in the defense of all claims under
which any Indemnified Liability might arise, but the Company shall
not have the option to compel any Indemnified Party to employ
counsel of the Company's choosing.
SECTION 12.5. Survival. The obligations of the Company
--------
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under Sections 4.3, 4.4, 4.5, 4.6, 4.7, 12.3, and 12.4, and the
------------ --- --- --- --- ---- ----
obligations of the Lenders under Sections 4.8, 11.1 and 11.2, shall
------------------ ----
in each case survive any termination of this Agreement. The
representations and warranties made by each Obligor in this
Agreement and in each other Loan Document shall survive the
execution and delivery of this Agreement and each such other Loan
Document notwithstanding any investigation.
SECTION 12.6. Severability. Any provision of this Agreement
------------
or any other Loan Document which is prohibited or unenforceable in
any jurisdiction shall, as to such provision and such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 12.7. Headings. The various headings of this Agree
--------
ment and of each other Loan Document are inserted for convenience
only and shall not affect the meaning or interpretation of this
Agreement or such other Loan Document or any provisions hereof or
thereof.
SECTION 12.8. Execution in Counterparts, Effectiveness, etc.
---------------------------------------------
This Agreement may be executed by the parties hereto in several
counterparts and by the different parties on separate counterparts,
each of which shall be deemed to be an original and all of which
shall constitute together but one and the same agreement. This
Agreement shall become effective on the date (the "Effective Date")
--------------
when counterparts hereof executed on behalf of the Parent
Guarantor, the Company, the Agent, and each Lender (or notice
thereof satisfactory to the Agent) shall have been received by the
Agent and notice thereof shall have been given by the Agent to the
Parent Guarantor, the Company, and each Lender.
SECTION 12.9. Governing Law; Submission to Jurisdiction.
------------------------------------------
(a) THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT (EXCEPT
TO THE EXTENT THAT SUCH OTHER LOAN DOCUMENT CONTAINS A
CONTRARY EXPRESS CHOICE OF LAWS PROVISION) SHALL EACH BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT
TO SUCH LAWS RELATING TO CONFLICTS OF LAWS.
(b) THE PARENT GUARANTOR AND THE COMPANY HEREBY SUBMIT
TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL
AND STATE OF NEW YORK COURTS LOCATED IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK, NEW YORK FOR ALL PURPOSES
OF OR IN CONNECTION WITH THIS AGREEMENT, AND ALL OTHER LOAN
DOCUMENTS, PROVIDED, HOWEVER, THAT NOTHING IN THIS
-------- -------
SECTION 12.9 SHALL AFFECT EITHER THE AGENT'S OR ANY LENDER'S
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE PARENT
GUARANTOR, THE COMPANY, OR THEIR RESPECTIVE PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTIONS.
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150
(c) UNTIL SUCH TIME AS THE AGENT AND THE LENDERS SHALL
HAVE RECEIVED FINAL PAYMENT OF THE FULL AMOUNT OF ALL
OBLIGATIONS AND PERFORMANCE OF ALL OBLIGATIONS, AND ALL
LETTERS OF CREDIT SHALL HAVE EXPIRED, THE PARENT GUARANTOR AND
THE COMPANY HEREBY IRREVOCABLY DESIGNATE AND APPOINT KRAMER,
LEVIN, NAFTALIS, NESSEN, KAMIN & FRANKEL, CURRENTLY LOCATED AT
919 THIRD AVENUE, NEW YORK, NEW YORK 10022 (ATTENTION: EZRA
LEVIN), AS THEIR AGENT TO ACCEPT AND ACKNOWLEDGE ON THEIR
BEHALF ANY AND ALL PROCESS WHICH MAY BE SERVED IN CONNECTION
WITH ANY SUIT, ACTION, OR PROCEEDING OF THE NATURE REFERRED TO
IN THE PRECEDING PARAGRAPH. THE PARENT GUARANTOR AND THE
COMPANY EACH HEREBY ACKNOWLEDGE THAT, TO THE FULLEST EXTENT
PERMITTED BY LAW, SUCH SERVICE SHALL BE EFFECTIVE AND BINDING
SERVICE ON IT IN EVERY RESPECT REGARDLESS OF WHETHER IT SHALL
BE DOING OR SHALL HAVE AT ANY TIME DONE BUSINESS IN THE STATE
OF NEW YORK.
(d) THE PARENT GUARANTOR AND THE COMPANY HEREBY AGREE TO
TAKE ANY AND ALL ACTION THAT MAY BE NECESSARY TO ENSURE THAT
AT ALL TIMES DURING THE TERM OF THIS AGREEMENT THERE SHALL BE
AN AGENT IN NEW YORK DESIGNATED AND APPOINTED BY THEM FOR THE
PURPOSE DESCRIBED ABOVE, TO MAINTAIN SUCH DESIGNATION AND
APPOINTMENT OF SUCH AGENT IN FULL FORCE AND EFFECT FOR THE
TERM OF THIS AGREEMENT, AND TO DELIVER PROMPTLY TO THE AGENT
AT SUCH TIMES AS THE AGENT MAY REQUEST EVIDENCE IN WRITING OF
SUCH AGENT'S ACCEPTANCE OF SUCH APPOINTMENT.
(e) THE PARENT GUARANTOR AND THE COMPANY HEREBY CONSENT
TO PROCESS BEING SERVED IN ANY SUIT, ACTION, OR PROCEEDING OF
THE NATURE REFERRED TO ABOVE EITHER (I) BY THE MAILING OF A
COPY THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
RETURN RECEIPT REQUESTED, TO ITS RESPECTIVE ADDRESS SHOWN
BELOW ITS SIGNATURE HERETO OR (II) BY SERVING A COPY THEREOF
UPON THE PERSON SPECIFIED ABOVE AS THE AUTHORIZED AGENT FOR
SERVICE OF PROCESS FOR THE PARENT GUARANTOR AND THE COMPANY
(TO THE EXTENT PERMITTED BY APPLICABLE LAW, REGARDLESS OF
WHETHER THE APPOINTMENT OF SUCH AGENT FOR SERVICE OF PROCESS
FOR ANY REASON SHALL PROVE TO BE INEFFECTIVE OR SUCH AGENT FOR
SERVICE OF PROCESS SHALL ACCEPT OR ACKNOWLEDGE SUCH SERVICE);
PROVIDED, HOWEVER, THAT, TO THE EXTENT LAWFUL AND PRACTICABLE,
-------- -------
WRITTEN NOTICE OF SAID SERVICE UPON SAID AGENT SHALL BE MAILED
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN
RECEIPT REQUESTED, TO THE PARENT GUARANTOR OR THE COMPANY, AS
APPLICABLE, AT ITS RESPECTIVE ADDRESS SHOWN BELOW ITS
SIGNATURE HERETO. THE PARENT GUARANTOR AND THE COMPANY AGREE
THAT SUCH SERVICE, TO THE FULLEST EXTENT PERMITTED BY LAW, (I)
SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON IT IN ANY SUCH SUIT, ACTION, OR PROCEEDING AND (II) SHALL
BE TAKEN AND HELD TO BE VALID PERSONAL SERVICE UPON AND
PERSONAL DELIVERY TO IT. NOTHING HEREIN SHALL AFFECT EITHER
THE AGENT'S OR ANY BANK'S RIGHT TO SERVE PROCESS IN OR TO
BRING PROCEEDINGS AGAINST THE PARENT GUARANTOR OR THE COMPANY
IN THE COURTS OF ANY OTHER JURISDICTION.
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SECTION 12.10. Successors and Assigns. This Agreement shall
----------------------
be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns; provided,
--------
however, that:
- -------
(a) neither the Parent Guarantor nor the Company may
assign or transfer their rights or obligations hereunder
without the prior written consent of the Agent and all
Lenders; and
(b) the rights of sale, assignment, and transfer of the
Lenders are subject to Section 12.11.
-------------
SECTION 12.11. Sale and Transfer of Credit Extensions and
------------------------------------------
Commitments; Participations in Credit Extensions and Commitments.
- ----------------------------------------------------------------
Each Lender may assign, or sell participations in, its Credit
Extensions and Commitments to one or more other Persons in
accordance with this Section 12.11.
-------------
SECTION 12.11.1. Assignments. Any Lender,
-----------
(a) with the written consents of the Company and the
Agent (which consents shall not be unreasonably delayed or
withheld and which consent, in the case of the Company, shall
be deemed to have been given in the absence of a written
notice delivered by the Company to the Agent on or before the
fifth Business Day after receipt by the Company of such
Lender's request for consent, stating, in reasonable detail,
the reasons why the Company proposes to withhold such consent)
may at any time assign and delegate to one or more Affiliates
of such Lender (if such Lender is not to remain liable for the
performance of its Affiliate's obligations hereunder or under
any other applicable Loan Document),
(b) with the written consents of the Company (which
consent shall not be unreasonably delayed or withheld) and the
Agent (which consent may be withheld for any reason) may at
any time assign and delegate to one or more other banks,
savings and loan associations, commercial finance companies
and other similar financial institutions, and
(c) with written notice to the Company and the Agent,
but without the consent of the Company or the Agent, may
assign and delegate to any other Lender or to one or more
Affiliates of such Lender (if such Lender remains liable for
the performance of its Affiliate's obligations hereunder and
under any other applicable Loan Document)
(each Person described in either of the foregoing clauses as being
the Person to whom such assignment and delegation is to be made,
being hereinafter referred to as an "Assignee Lender"), all or any
---------------
fraction of such Lender's total Credit Extensions and Revolving
Commitment (which assignment and delegation shall be of a constant,
and not a varying, percentage of all the assigning Lender's Credit
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Extensions and Commitments); provided, however, that the aggregate
-------- -------
principal amount of the portion of the Revolving Commitment so
assigned to any Assignee Lender shall be not less than $20,000,000,
unless such assignment covers all of such Lender's interests and
obligations hereunder and under the Loan Documents; and provided,
--------
further, that any such Assignee Lender will comply, if applicable,
- -------
with the provisions contained in clause (b) of Section 4.6; and
---------- -----------
provided, further, that the Parent Guarantor, the Company, each
- -------- -------
other Obligor and the Agent shall be entitled to continue to deal
solely and directly with such assigning Lender in connection with
the interests so assigned and delegated to an Assignee Lender until
(i) written notice of such assignment and
delegation, together with payment instructions,
addresses, and related information with respect to such
Assignee Lender, shall have been given to the Company and
the Agent by such Lender and such Assignee Lender,
(ii) such Assignee Lender shall have executed and
delivered to the Company and the Agent an Assignee
Agreement to be Bound, accepted by the Agent, and
(iii) the processing fees described below shall
have been paid.
From and after the date that the Agent accepts such Assignee
Agreement to be Bound (subject to clauses (a) and (b) above),
----------- ---
(A) the Assignee Lender thereunder shall be deemed automatically to
have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such
Assignee Lender pursuant to such Assignee Agreement to be Bound,
shall have the rights and obligations of a Lender hereunder and
under the other Loan Documents, and (B) the assigning Lender, to
the extent that rights and obligations hereunder have been assigned
and delegated by it pursuant to such Assignee Agreement to be
Bound, shall be released from its obligations which are not then
due and payable hereunder and under the other Loan Documents.
Accrued interest, and accrued fees, in respect of the rights and
obligations that have been assigned, shall be paid as provided in
the Assignee Agreement to be Bound. Accrued interest and accrued
fees shall be paid at the same time or times provided in this
Agreement. Such assigning Lender or such Assignee Lender must also
pay a processing fee to the Agent upon delivery of any Assignee
Agreement to be Bound in the amount of $3500. Any attempted
assignment and delegation not made in accordance with this
Section 12.11.1 shall be null and void.
- ---------------
SECTION 12.11.2. Participations. Any Lender may at any
--------------
time sell to one or more financial institutions (each of such
financial institutions being herein called a "Participant")
-----------
participating interests in any of the Credit Extensions,
Commitments, or other interests or obligations of such Lender
hereunder; provided, however, that
-------- -------
144
153
(a) no participation contemplated in this
Section 12.11.2 shall relieve such Lender from its Commitments
---------------
or its other obligations hereunder or under any other Loan
Document,
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations,
(c) the Parent Guarantor, the Company, each other
Obligor, and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and each of the
other Loan Documents, and
(d) no Participant, unless such Participant is an
Affiliate of such Lender, or is itself a Lender, shall be
entitled to require such Lender to take or refrain from taking
any action hereunder or under any other Loan Document.
SECTION 12.12. Other Transactions. Nothing contained herein
------------------
shall preclude the Agent or any Lender from engaging in any debt or
equity transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Company or any of
its Affiliates in which the Company or such Affiliate is not
restricted hereby from engaging with any other Person.
SECTION 12.13. WAIVER OF JURY TRIAL.
--------------------
THE AGENT, THE LENDERS, THE PARENT GUARANTOR, AND THE COMPANY
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR OTHER
ACTIONS OF THE AGENT, THE LENDERS, THE PARENT GUARANTOR, OR THE
COMPANY IN CONNECTION WITH OR RELATED TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT. THE PARENT GUARANTOR AND THE COMPANY EACH
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING
INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT. THIS WAIVER
IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY
OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTATION, OR MODIFICATIONS TO THIS
AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED
AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
SECTION 12.14. Final Agreement, etc. This written loan
--------------------
agreement, together with the other Loan Documents, represents the
final agreement between the parties with respect to the subject
matter hereof and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties with
145
154
respect to the subject matter hereof. The inclusion in this
Agreement or any Loan Document of provisions not included in, or
the deletion of provisions previously included in, prior drafts of
this Agreement or such other Loan Document shall not be considered
in interpreting the final executed version of this Agreement or
such other Loan Document.
146
155
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized as of the day and year first above written.
KAISER ALUMINUM & CHEMICAL
CORPORATION
By /s/
Name Printed: John T. La Duc
Title: Vice President
Address: 6177 Sunol Drive
Pleasanton, CA 94566
Attn: Treasurer
With a copy to:
5847 San Felipe
Suite 2600
Houston, Texas 77087
Telephone No.: 713-267-3777
Facsimile No.: 713-267-3710
Telex No.: None
Attention: Treasurer
Sig. 1
156
KAISER ALUMINUM CORPORATION
By /s/
Name Printed: John T. La Duc
Title: Vice President
Address: 5847 San Felipe
Suite 2600
Houston, Texas 77087
Telephone No.: 713-267-3777
Facsimile No.: 713-267-3710
Telex No.: None
Attention: Kris Vasan,
Treasurer
Sig. 2
157
PERCENTAGE LENDERS
- ---------- -------
30% BANKAMERICA BUSINESS CREDIT, INC.
By /s/
Name Printed: Joyce White
Title: Senior Vice President
Domestic
Office: Two North Lake Avenue
Suite 400
Pasadena, California 91101
Telephone No.: 818-397-1800
Facsimile No.: 818-796-3358
Telex No.: None
Attention: Vice President
LIBOR
Office: Same as domestic
Address for
payments: Two North Lake Avenue
Suite 400
Pasadena, Califorina 91101
Attention: Operations Officer
Ref: Kaiser Aluminum
Sig. 3
158
PERCENTAGE CONGRESS FINANCIAL CORPORATION (WESTERN)
- ----------
26%
By /s/
Name Printed: Vicky Balmot
Title: Senior Vice President
Domestic
Office: 225 South Lake Avenue
Office #1000
Pasadena, CA 91101
Attention: William Davis
Senior Vice President
Telephone No.: 818-304-4972
Facsimile No.: 818-304-4969
Telex No.: None
LIBOR
Office: 1133 Avenue of the Americas
New York, NY 10036
Attention: Tony Razon
Address for
payments: Chemical Bank
55 Water Street
New York, New York 10041
(ABA 021-000128)
(#322-020-530)
Ref: Kaiser Aluminum
Sig. 4
159
PERCENTAGE LA SALLE NATIONAL BANK
- ----------
6%
By /s/
Name Printed: Douglas C. Colletti
Title: Vice President
Domestic
Office: 120 S. La Salle Street
5th Floor
Chicago, IL 60603
Telephone No.: 312-750-6123
Facsimile No.: 312-750-6450
Telex No.: None
Payments/Settlements:
Telephone No.: 312-781-8424
Facsimile No.: 312-750-6528
LIBOR
Office: Same as domestic
Address for
payments: La Salle National Bank
120 S. La Salle Street
5th Floor
Chicago, IL 60603
ABA 071-000-505
G/L Acct: 1378000
Attention: Carolyn Sanford
Ref: Kaiser Aluminum
Sig. 5
160
PERCENTAGE CIT GROUP/BUSINESS CREDIT, INC.
- ----------
6%
By /s/
Name Printed: Steven R. Bellah
Title: Vice President
Domestic
Office: CIT Group/Business
Credit, Inc.
2110 Walnut Hill Lane
Irving, Texas 75038
Telephone No.: 214-580-2763
Facsimile No.: 214-550-9035
Telex No.: None
Attention: Regional Manager
LIBOR
Office: Same as domestic
Address for
payments: Same as domestic
Attention: Regional Manager
Ref: Kaiser Aluminum
Sig. 6
161
PERCENTAGE TRANSAMERICA BUSINESS CREDIT CORPORATION
- ----------
8%
By /s/
Name Printed: Laura Cushing
Title: Senior Account Executive
Domestic
Office: Same as Address
for payments
Telephone No.: 312-864-3976
Facsimile No.: 312-380-6169
Telex No.: None
Attention: Laura Cushing
LIBOR
Office: Same as domestic
Address for
payments: 8750 West Bryn Mawr Ave.
Suite 720
Chicago, Illinois 60631
Attention: Keith Mason
Ref: Kaiser Aluminum
Sig. 7
162
PERCENTAGE BANK OF AMERICA NATIONAL TRUST AND
- ---------- SAVINGS ASSOCIATION
10%
By /s/
Name Printed: James MacGregor
Title: Vice President
Domestic
Office: 555 California Street
41st Floor
San Francisco, California 94104
Telephone No.: 415-622-8512
Facsimile No.: 415-622-4585
Telex No.: None
LIBOR
Office: Same as domestic
Address for
payments: Bank of America
A/C Administration
Unit 5693
1850 Gateway Boulevard
Concord, California 94520
Attention: Account Administrator
Ref: Kaiser Aluminum
Loan repayment
Sig. 8
163
PERCENTAGE HELLER FINANCIAL, INC.
- ----------
8%
By /s/
Name Printed: John Buff
Title: Vice President
Domestic 101 Park Avenue
Office: New York, NY 10178
Telephone No.: 212-880-7174
Facsimile No.: 212-880-2060
Telex No.: None
Attention: Richard Peller
LIBOR
Office: same as domestic
Address for
payments: First National Bank
of Chicago
ABA #71000013
For Credit
to: Heller Business Credit
Account #5298695
Ref: Kaiser
Sig. 9
164
PERCENTAGE NATIONAL WESTMINSTER BANK PLC
6%
By /s/
Name Printed: Peter K. Doherty
Title: Vice President
Domestic
Office: National Westminster Bank Plc
North American Mining & Metals
Office
175 Water Street
29th Floor
New York, NY 10038
Telephone No.: 212-602-4327
Facsimile No.: 212-602-4402
Telex No.: None
Attention: Peter K. Doherty
LIBOR
Office: National Westminster
Bank Plc
Nassau Branch
175 Water Street
19th Floor
New York, NY 10038
Address for
payments: National Westminister
Bank Plc
New York Branch
175 Water Street
19th Floor
New York, NY 10038
Attention: Margaret Beardsley
Ref: Kaiser Aluminum - Line 12
Sig. 10
165
AGENT
-----
BANKAMERICA BUSINESS CREDIT, INC.
By /s/
Name Printed: Joyce White
Title: Senior Vice President
Office: Two North Lake Avenue
Suite 400
Pasadena, CA 91101
Telephone No.: 818-397-1800
Facsimile No.: 818-796-3358
Telex No.: None
Attention: Vice President
Sig. 11