CREDIT AGREEMENT
Dated as of November 22, 1999
among
HAYNES INTERNATIONAL, INC.,
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS
and
FLEET CAPITAL CORPORATION,
as Administrative Agent
TABLE OF CONTENTS
Page
ARTICLE I: DEFINITIONS
1.1 Certain Defined Terms 1
1.2 Supplemental Disclosure 28
ARTICLE II: THE REVOLVING LOAN FACILITIES
2.1 Revolving Loans 29
2.2 Rate Options for all Advances 29
2.3 Optional Payments; Mandatory Prepayments 29
2.4 Reduction of Commitments 30
2.5 Method of Borrowing 30
2.6 Method of Selecting Types and Interest Periods for Advances 31
2.7 Minimum Amount of Each Advance 31
2.8 Method of Selecting Types and Interest Periods for Conversion
and Continuation of Advances 31
2.9 Default Rate 32
2.10 Method of Payment 32
2.11 Notes 32
2.12 Telephonic Notices 32
2.13 Promise to Pay; Interest, Commitment Fees and Termination Fees;
Interest Payment Dates; Interest and Fee Basis; Taxes; Loan and
Control Accounts 33
2.14 Notification of Advances, Interest Rates, Prepayments and
Aggregate Revolving Loan Commitment Reductions 38
2.15 Lending Installations 38
2.16 Non-Receipt of Funds by the Administrative Agent 38
2.17 Termination Date 39
2.18 Replacement of Certain Lenders 39
2.19 Collection Account Arrangements 40
ARTICLE III: THE LETTER OF CREDIT FACILITY
3.1 Obligation to Issue 40
3.2 Types and Amounts 41
3.3 Conditions 41
3.4 Procedure for Issuance of Letters of Credit 41
3.5 Letter of Credit Participation 42
3.6 Reimbursement Obligation 42
3.7 Letter of Credit Fees 43
3.8 Issuing Bank Reporting Requirements 43
3.9 Indemnification; Exoneration 43
3.10 Cash Collateral 44
ARTICLE IV: CHANGE IN CIRCUMSTANCES
4.1 Yield Protection 45
4.2 Changes in Capital Adequacy Regulations 46
4.3 Availability of Types of Advances 46
4.4 Funding Indemnification 47
4.5 Lender Statements; Survival of Indemnity 47
ARTICLE V: CONDITIONS PRECEDENT
5.1 Initial Advances and Letters of Credit 48
5.2 Each Advance and Letter of Credit 49
ARTICLE VI: REPRESENTATIONS AND WARRANTIES
6.1 Organization; Corporate Powers 50
6.2 Authority 50
6.3 No Conflict; Governmental Consents 50
6.4 Financial Statements 51
6.5 No Material Adverse Change 51
6.6 Taxes 51
6.7 Litigation; Loss Contingencies and Violations 51
6.8 Subsidiaries 53
6.9 ERISA 53
6.10 Accuracy of Information 54
6.11 Securities Activities 54
6.12 Material Agreements 54
6.13 Assets and Properties 54
6.14 Statutory Indebtedness Restrictions 55
6.15 Insurance 55
6.16 Labor Matters 55
6.17 Year 2000 Issues. 55
ARTICLE VII: COVENANTS
7.1 Reporting 55
7.2 Affirmative Covenants 61
7.3 Negative Covenants 64
7.4 Financial Covenants 72
ARTICLE VIII: DEFAULTS
8.1 Defaults 72
ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES
9.1 Termination of Commitments; Acceleration 75
9.2 Defaulting Lender 75
9.3 Amendments 77
9.4 Preservation of Rights 78
ARTICLE X: GENERAL PROVISIONS
10.1 Survival of Representations 78
10.2 Governmental Regulation 78
10.3 Performance of Obligations 78
10.4 Headings 79
10.5 Entire Agreement 79
10.6 Several Obligations; Benefits of this Agreement 79
10.7 Expenses; Indemnification 79
10.8 Numbers of Documents 81
10.9 Accounting 81
10.10 Severability of Provisions 81
10.11 Nonliability of Lenders 81
10.12 GOVERNING LAW 81
10.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL 82
ARTICLE XI: THE ADMINISTRATIVE AGENT
11.1 Appointment; Nature of Relationship 82
11.2 Powers 83
11.3 General Immunity 83
11.4 No Responsibility for Loans, Creditworthiness, Recitals, Etc. 83
11.5 Action on Instructions of Lenders 83
11.6 Employment of Administrative Agents and Counsel 84
11.7 Reliance on Documents; Counsel 84
11.8 The Administrative Agent's Reimbursement and Indemnification 84
11.9 Rights as a Lender 84
11.10 Lender Credit Decision 85
11.11 Successor Administrative Agent 85
11.12 Collateral Documents 85
ARTICLE XII: SETOFF; RATABLE PAYMENTS
12.1 Setoff 86
12.2 Ratable Payments 86
12.3 Application of Payments 86
12.4 Relations Among Lenders 87
ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
13.1 Successors and Assigns 88
13.2 Participations 88
13.3 Assignments 89
13.4 Confidentiality 90
13.5 Dissemination of Information 91
ARTICLE XIV: NOTICES
14.1 Giving Notice 91
14.2 Change of Address 91
ARTICLE XV: COUNTERPARTS 91
EXHIBITS AND SCHEDULES
Exhibits
EXHIBIT A -- Commitments
(Definitions)
EXHIBIT B -- Form of Revolving Note
(Definitions)
EXHIBIT C -- Form of Borrowing Base Certificate
(Definitions)
EXHIBIT D -- Form of Borrowing Notice (Section 2.6)
EXHIBIT E -- Form of Request for Letter of Credit (Section 3.3)
EXHIBIT F -- Form of Assignment and Acceptance Agreement
(Sections 2.18 and 13.3)
EXHIBIT G -- Forms of Borrower's and Parent's Counsels' Opinions
(Section 5.1)
EXHIBIT H -- List of Closing Documents
(Section 5.1)
EXHIBIT I -- Form of Officer's Certificate
(Sections 5.2 and 7.1(A)(iv))
EXHIBIT J -- Form of Compliance Certificate
(Sections 5.2 and 7.1(A)(iv))
Schedules
Schedule 1.1.1 -- Permitted Existing Indebtedness (Definitions)
Schedule 1.1.2 -- Permitted Existing Investments (Definitions)
Schedule 1.1.3 -- Permitted Existing Liens (Definitions)
Schedule 1.1.4 -- Eligible Foreign Account Debtors (Definitions)
Schedule 1.1.5 -- Locations of Inventory held by Eligible Foreign Subsidiaries
(Definitions)
Schedule 6.3 -- Conflicts; Governmental Consents (Section 6.3)
Schedule 6.7 -- Litigation; Loss Contingencies; Environmental Matters (Section 6.7)
Schedule 6.8 -- Subsidiaries (Section 6.8)
Schedule 6.9 -- ERISA (Section 6.9)
Schedule 6.15 -- Insurance (Sections 6.15 and 7.2(E))
Schedule 7.3(B) -- Permitted Real Property Sales (Section 7.3(B))
Schedule 7.3(G) -- Transactions with Shareholders and Affiliates (Section 7.3(G))
CREDIT AGREEMENT
This Credit Agreement dated as of November 22, 1999 is entered into among
Haynes International, Inc., a Delaware corporation, as the Borrower, the
institutions from time to time parties hereto as Lenders, whether by execution
of this Agreement or an Assignment Agreement pursuant to Section 13.3, and Fleet
Capital Corporation, as a Lender and as Administrative Agent. The parties hereto
agree as follows:
ARTICLE I: DEFINITIONS
1.1 Certain Defined Terms. In addition to the terms defined above, the
following terms used in this Agreement shall have the following meanings,
applicable both to the singular and the plural forms of the terms defined.
As used in this Agreement:
"Acquisition" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its respective Subsidiaries (i) acquires any ongoing business or all or
substantially all of the assets of any firm, corporation or division thereof,
whether through purchase of assets, merger or otherwise or (ii) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage of voting power) of the
outstanding equity interests of another Person.
"Account(s)" means and includes all of the Borrower's and the Eligible
Foreign Subsidiaries' presently existing and hereafter arising or acquired
accounts, accounts receivable, and all present and future rights of the Borrower
and the Eligible Foreign Subsidiaries to payment for goods sold or leased or for
services rendered (except those evidenced by instruments or chattel paper),
whether or not they have been earned by performance, and all rights in any
merchandise or goods which any of the same may represent, and all rights, title,
security and guaranties with respect to each of the foregoing, including,
without limitation, any right of stoppage in transit.
"Administrative Agent" means Fleet in its capacity as contractual
representative for itself and the Lenders pursuant to Article XI hereof and any
successor Administrative Agent appointed pursuant to Article XI hereof.
"Advance" means a borrowing hereunder consisting of the aggregate amount of
the Loans made by the Lenders to the Borrower of the same Type and, in the case
of Eurodollar Rate Advances, for the same Interest Period.
1
"Affected Lender" is defined in Section 2.18 hereof.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person is the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934) of greater than ten percent (10%) or more of any class of voting
securities (or other voting interests) of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
Capital Stock, by contract or otherwise.
"Aggregate Revolving Loan Commitment" means the aggregate of the Revolving
Loan Commitments of all the Lenders, as reduced from time to time pursuant to
the terms hereof. The initial Aggregate Revolving Loan Commitment is Seventy-Two
Million and 00/100 Dollars ($72,000,000.00).
"Agreement" means this Credit Agreement, as it may be amended, restated or
otherwise modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect as of the date of this Agreement, applied in a manner
consistent with that used in preparing the financial statements referred to in
Section 6.4(B)(1) hereof; provided, however, that with respect to the
calculation of financial ratios and other financial tests required by this
Agreement, "Agreement Accounting Principles" means generally accepted accounting
principles as in effect as of the date of this Agreement, applied in a manner
consistent with that used in preparing the financial statements referred to in
Section 6.4(A) hereof; provided, further, that if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any such financial ratios
or financial tests or any related definition to eliminate the effect of any
change in Agreement Accounting Principles occurring after the date of this
Agreement on the operation of such ratio or test (or if the Administrative Agent
notifies the Borrower that the Required Lenders wish to amend such financial
ratios or financial tests or any related definition for such purpose), then the
Borrower and the Administrative Agent shall negotiate in good faith to amend
such financial ratios or financial tests or definitions.
"Alternate Base Rate" means, the higher of (i) the annual rate of interest
announced or quoted from time to time by Fleet as its prime rate for commercial
loans, whether or not such rate is the lowest rate charged by Fleet to its most
preferred borrowers, and (ii) one-half of one percent (1/2%) above the Federal
Funds Effective Rate.
"Applicable Eurodollar Margin" means, as at any date of determination, the
rate per annum then applicable to Eurodollar Rate Loans determined in accordance
with the provisions of Section 2.13(D)(ii) hereof.
2
"Applicable Floating Margin" means, as at any date of determination, the
rate per annum then applicable to Floating Rate Loans determined in accordance
with the provisions of Section 2.13(D)(ii) hereof.
"Applicable L/C Fee Percentage" means, as at any date of determination, a
rate per annum equal to the Applicable Eurodollar Margin in effect on such date.
"Assignment Agreement" shall mean an assignment and acceptance agreement
entered into in connection with an assignment pursuant to Section 13.3 hereof in
substantially the form of Exhibit F.
"Asset Sale" means, with respect to any Person, the sale, lease,
conveyance, disposition or other transfer by such Person of any of its assets
(including by way of a sale-leaseback transaction and including the sale or
other transfer of any of the Equity Interests of any Subsidiary of such Person).
"Authorized Officer" means, with respect to the Borrower, any of the
President, Chief Financial Officer, or Vice President thereof, acting singly.
"Availability Reserve" means, on any date of calculation, the sum of (i)
the Senior Note Reserve plus (ii) the excess of that portion of the Borrowing
Base related to the sum of (x) Eligible Inventory of the Eligible Foreign
Subsidiaries and (y) Net Amount of Eligible Accounts of the Eligible Foreign
Subsidiaries over $12,000,000 plus (iii) the Fixed Charge Reserve plus (iv) the
aggregate balance of all trade payables owed by the Borrower and any Subsidiary
if, in the reasonable credit judgment of the Administrative Agent (which credit
judgment shall be exercised in a manner that is not arbitrary or capricious and
is consistent with the standards of eligibility and credit judgment generally
applied by the Administrative Agent to other borrowers similarly situated), such
trade payables are materially past due; provided, however, that the
Administrative Agent shall not consider any trade payable materially past due
unless such trade payable is at least thirty days past due; provided, further,
that any trade payable the payment of which is the subject of a dispute being
contested in good faith by appropriate proceedings properly instituted and
diligently conducted by the Borrower or the applicable Subsidiary shall not be
considered by the Administrative Agent materially past due.
"Benefit Plan" means a defined benefit plan (as defined in Section 3(35) of
ERISA) subject to Title IV of ERISA (other than a Multiemployer Plan) in respect
of which the Borrower or any other member of the Controlled Group is an
"employer" as defined in Section 3(5) of ERISA.
"Blackstone Affiliates" means Blackstone Capital Partners II Merchant
Banking Fund L.P., a Delaware limited partnership, Blackstone Offshore Capital
Partners II L.P., a Delaware limited partnership, Blackstone Family Investment
Partnership L.P., a Delaware limited partnership, Blackstone Capital Partners
III Merchant Banking Fund L.P., a Delaware limited partnership, each of their
respective Affiliates that is not an operating company or controlled by an
operating company and each general partner of any of them who is a partner or
employee of The Blackstone Group L.P. and their families, related trusts, and
controlled entities.
3
"Blackstone Monitoring Fees" means the management, consulting, monitoring
and advisory fees paid to the Blackstone Affiliates by the Borrower.
"Borrower" means Haynes International, Inc., a Delaware corporation,
together with its respective successors and permitted assigns, including any
debtor-in-possession on behalf thereof.
"Borrowing Base" means, as of any date of calculation, an amount, as set
forth on the most current Borrowing Base Certificate delivered to the
Administrative Agent, equal to the sum of (i) up to eighty-five percent (85%) of
the Net Amount of Eligible Accounts plus (ii) the lesser of (x) $50,000,000 and
(y) up to sixty percent (60%) of Eligible Inventory related to the Borrower
consisting of finished goods and raw materials for such finished goods plus up
to forty-five percent (45%) of Eligible Inventory related to the Borrower
consisting of work-in-process and semi-processed goods plus (iii) up to sixty
percent (60%) of Eligible Inventory related to the Eligible Foreign Subsidiaries
consisting of finished goods and raw materials for such finished goods plus up
to forty-five percent (45%) of Eligible Inventory related to the Eligible
Foreign Subsidiaries consisting of work-in-process and semi-processed goods
minus (iv) the Availability Reserve.
"Borrowing Base Certificate" means the certificate, in substantially the
same form as Exhibits C attached hereto and made a part hereof, setting forth
the Borrowing Base and the component calculations thereof.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.6 hereof.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Loans bearing interest at the Eurodollar Rate, a day on which (x)
dealings may be effected in deposits of Dollars in the London interbank foreign
currency deposits market, (y) the Administrative Agent is conducting business
and (z) banks may conduct business in London, England, Chicago, Illinois, and
New York, New York and (ii) for all other purposes, any day that is not a
Saturday, a Sunday or a day on which banks are required or permitted to be
closed either in the State of Illinois or the State of Indiana.
"Capital Expenditures" means, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including
Capitalized Leases and Permitted Purchase Money Indebtedness) by the Borrower
and its Subsidiaries during that period that, in conformity with Agreement
Accounting Principles, are required to be included in or reflected by the
property, plant, equipment or similar fixed asset accounts reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries; provided,
however, that Capital Expenditures for the Borrower and its Subsidiaries shall
not include (i) expenditures to the extent they are made with the proceeds of
the issuance of Capital Stock of the Parent after the Closing Date or with funds
that constitute Net Cash Proceeds but are not required to be used to repay
permanently the Obligations in accordance with Section 2.3(B), (ii) expenditures
of proceeds of insurance settlements, condemnation awards and other settlements
in respect of lost, destroyed, damaged or condemned assets, equipment or other
property to the extent such expenditures are made to replace or repair such
lost, destroyed, damaged or condemned assets, equipment or other property or
otherwise to acquire assets or properties useful in the business of the Borrower
and its Subsidiaries within 12 months after receipt of such proceeds, (iii)
interest capitalized during such period, (iv) expenditures that are accounted
for as capital expenditures of such person and that actually are paid for by a
third party (excluding the Parent or any Subsidiary thereof) and for which
neither the Parent nor any Subsidiary thereof has provided or is required to
provide or incur, directly or indirectly, any consideration or obligation to
such third party or any other person (whether before, during or after such
period), (v) the book value of any asset owned by such person prior to or during
such period to the extent that such book value is included as a capital
expenditure during such period as a result of such person reusing or beginning
to reuse such asset during such period without a corresponding expenditure
actually having been made in such period, or (vi) expenditures during such
period related to any lease financing entered into between the Borrower and any
financial institution; provided, however, that any amount described in this
clause (vi) in excess of $10,000,000 with respect to such expenditures shall be
included in calculations of Capital Expenditures hereunder.
4
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, share capital, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Capitalized Lease" of a Person means any lease of property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be capitalized
on a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government; (ii) domestic and
Eurodollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies (fully protected against
currency fluctuations for any such deposits with a term of more than ninety (90)
days); (iii) shares of money market, mutual or similar funds having assets in
excess of $100,000,000 and the investments of which are limited to investment
grade securities (i.e., securities rated at least Baa by Moody's Investors
Service, Inc. or at least BBB by Standard & Poor's Ratings Group, a division of
The McGraw-Hill Companies, Inc.); and (iv) commercial paper of United States and
foreign banks and bank holding companies and their subsidiaries and United
States and foreign finance, commercial industrial or utility companies which, at
the time of acquisition, are rated A-1 (or better) by Standard & Poor's Ratings
Group, a division of The McGraw-Hill Companies, Inc. or P-1 (or better) by
Moody's Investors Service, Inc.; provided that the maturities of such Cash
Equivalents shall not exceed 365 days.
5
"Change" is defined in Section 4.2 hereof.
"Change of Control" means (a) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the Borrower and its Subsidiaries; or (b) a majority of the
Board of Directors of the Borrower or of any direct or indirect holding company
thereof shall consist of Persons who are not Continuing Directors of the
Borrower; or (c) the acquisition by any Person, other than the Blackstone
Affiliates, of the power, directly or indirectly, to vote or direct the voting
of securities having more than 35% of the ordinary voting power for the election
of directors of the Borrower or of any direct or indirect holding company
thereof.
"Closing Date" means November 22, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means all property and interests in property now owned or
hereafter acquired by the Parent, the Borrower or any of its respective
Subsidiaries in or upon which a security interest, lien or mortgage is granted
to the Administrative Agent, for the benefit of the Holders of Secured
Obligations under any of the Collateral Documents or under any of the other Loan
Documents. Notwithstanding the foregoing, Collateral shall not include any
property or assets to the extent that the treatment of such property or assets
as Collateral would violate the indenture under which the Senior Notes are
issued.
"Collateral Documents" means all agreements, instruments and documents
executed in connection with this Agreement, including, without limitation, the
Security Agreement, the Parent Pledge Agreement, the Collection Account
Agreements, and all other security agreements, loan agreements, notes,
mortgages, guarantees, pledges, powers of attorney, consents, assignments,
contracts, fee letters, notices, leases, financing statements and all other
written matter whether heretofore, now, or hereafter executed by or on behalf of
the Parent, the Borrower, or any Subsidiary thereof, and delivered to the
Administrative Agent or any of the Lenders, together with all agreements and
documents referred to therein or contemplated thereby.
6
"Collection Account" means each lock-box and blocked depository account
maintained by the Borrower, subject to a Collection Account Agreement, for the
collection of Accounts and other proceeds of Collateral.
"Collection Account Agreement" means a written agreement among the
Borrower, the Administrative Agent, and, as applicable, each of the banks at
which the Borrower maintains a Collection Account in a form reasonably
acceptable to the Administrative Agent.
"Commission" means the Securities and Exchange Commission and any Person
succeeding to the functions thereof.
"Commitment" means, for each Lender, collectively, such Lender's Revolving
Loan Commitment.
"Consolidated Assets" means the total assets of the Borrower and its
Subsidiaries on a consolidated basis, calculated in accordance with Agreement
Accounting Principles.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls ("PCBs"), or any
constituent of any such substance or waste that is, in each case, regulated
under any Environmental, Health or Safety Requirements of Law, and includes but
is not limited to these terms as defined in Environmental, Health or Safety
Requirements of Law.
"Continuing Director" of any Person means, as of the date of determination,
any Person who (i) was a member of the Board of Directors of such Person on the
date of this Agreement or (ii) was nominated for election or elected to the
Board of Directors of such Person with the affirmative vote of a majority of the
Continuing Directors of such Person who were members of such Board of Directors
at the time of such nomination or election.
"Contractual Obligation", as applied to any Person, means any provision of
any equity or debt securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument, in any case in writing, to which that
Person is a party or by which it or any of its properties is bound, or to which
it or any of its properties is subject.
"Controlled Group" means the group consisting of (i) any corporation which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower; (ii) a partnership or other trade
or business (whether or not incorporated) which is under common control (within
the meaning of Section 414(c) of the Code) with the Borrower; and (iii) solely
for purposes of the funding requirements under Section 412 of the Code and the
tax imposed for failure to meet the minimum funding standards under Section 4971
of the Code, a member of the same affiliated service group (within the meaning
of Section 414(m) of the Code) as the Borrower, any corporation described in
clause (i) above or any partnership or trade or business described in clause
(ii) above.
7
"Controlled Subsidiary" of any Person means a Subsidiary of such Person (i)
90% or more of the total Equity Interests or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more wholly-owned Subsidiaries of such Person and (ii) of
which such Person possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies, whether through the ownership
of voting securities, by agreement or otherwise.
"Conversion/Continuation Notice" is defined in Section 2.8(D) hereof.
"Cure Loan" is defined in Section 9.2(iii) hereof.
"Customary Permitted Liens" means:
(i) Liens (other than Environmental Liens and Liens in favor of the
IRS or the PBGC) with respect to the payment of taxes, assessments or
governmental charges in all cases which are not yet due or (if foreclosure,
distraint, sale or other similar proceedings shall not have been commenced)
which are being contested in good faith by appropriate proceedings properly
instituted and diligently conducted and with respect to which adequate
reserves or other appropriate provisions are being maintained in accordance
with Agreement Accounting Principles;
(ii) statutory Liens of landlords and Liens of suppliers, mechanics,
carriers, materialmen, warehousemen or workmen and other similar Liens
imposed by law for amounts not yet due or which are being contested in good
faith by appropriate proceedings properly instituted and diligently
conducted and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with Agreement Accounting
Principles;
(iii) Liens (other than Environmental Liens and Liens in favor of the
IRS or the PBGC) incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment insurance
or other types of social security benefits or to secure the performance of
bids, tenders, sales, contracts (other than for the repayment of borrowed
money), surety, appeal and performance bonds; provided that (A) all such
Liens do not in the aggregate materially detract from the value of the
Borrower's or its respective Subsidiary's assets or property taken as a
whole or materially impair the use thereof in the operation of the
businesses taken as a whole and (B) all Liens securing bonds to stay
judgments or in connection with appeals do not secure at any time an
aggregate amount exceeding $2,000,000;
(iv) Liens arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar charges or encumbrances on the use
of real property which do not in any case materially detract from the value
of the property subject thereto or interfere in any material respect with
the ordinary conduct of the business of the Borrower or any of its
Subsidiaries;
(v) Liens of attachment or judgment with respect to judgments, writs
or warrants of attachment, or similar process against the Borrower or any
of its respective Subsidiaries which do not constitute a Default under
Section 8.1(H) hereof;
8
(vi) any interest or title of the lessor in the property subject to
any operating lease entered into by the Borrower or any of its respective
Subsidiaries in the ordinary course of business;
(vii) licenses of intellectual property granted in the ordinary course
of business;
(viii) leases or subleases of any real property owned or held by the
Borrower;
(ix) Liens incurred in the ordinary course of business pursuant to
construction upon or improvement of the Borrower's real property, provided
that such Liens shall be discharged within one-hundred twenty days (120)
after the completion of the construction upon or improvement of the
above-mentioned real property;
(x) Liens incurred under any Collateral Document; and
(xi) Liens in favor of any regulatory agency within the United States
where such agency controls the payment of duties upon goods imported into
the United States by the Borrower.
"Default" means an event described in Article VIII hereof.
"DOL" means the United States Department of Labor and any Person succeeding
to the functions thereof.
"Dollar" and "$" means dollars in the lawful currency of the United States.
"EBITDA" means, for any period, for the Borrower and its Subsidiaries on a
consolidated basis, the sum of the amounts for such period, without duplication,
of (i) Net Income, plus (ii) Interest Expense, plus (iii) charges against income
for foreign, federal, state and local taxes to the extent deducted in computing
Net Income, plus (iv) depreciation expense to the extent deducted in computing
Net Income, plus (v) amortization expense, including, without limitation,
amortization of goodwill and other intangible assets to the extent deducted in
computing Net Income, plus (vi) other non-cash charges classified as long-term
deferrals in accordance with Agreement Accounting Principles to the extent
deducted in computing Net Income, plus (vii) to the extent deducted in computing
Net Income, (x) other extraordinary or non-recurring cash charges, to the extent
that such extraordinary or non-recurring cash charges during such period do not
exceed $3,000,000 (the "Initial Cash Charges") and (y) other extraordinary or
non-recurring cash or non-cash charges, to the extent that such extraordinary or
non-recurring cash or non-cash charges during such period do not exceed, when
taken together with the Initial Cash Charges, $5,000,000, plus (viii) legal fees
and expenses related to any antitrust litigation to the extent that such fees
and expenses do not exceed $3,000,000 during the applicable four (4) fiscal
quarter period plus (ix) any fees, expenses or charges related to any equity
offering, investments permitted hereunder, acquisition or recapitalization or
Indebtedness permitted to be incurred hereunder (whether or not successful) and
fees, expenses or charges related to the transactions contemplated by this
Agreement (including fees to the Blackstone Affiliates), plus (x) the Blackstone
Monitoring Fees, to the extent that such fees do not exceed $1,000,000 during
the applicable four (4) fiscal quarter period. For the purposes of calculating
EBITDA for any period of four (4) consecutive fiscal quarters (each, a
"Reference Period"), if during such Reference Period the Borrower or any
Subsidiary shall have made a "Material Acquisition" (as defined below), EBITDA
for such Reference Period shall be calculated after giving pro forma effect
thereto as if such Material Acquisition occurred on the first day of such
Reference Period. As used in this definition, "Material Acquisition" means any
Acquisition involving the payment of consideration by the Borrower, the Borrower
or any Subsidiary in excess of $1,000,000. Pro forma calculations shall be
determined in good faith by an Authorized Officer of the Borrower and may
include, with the consent of the Administrative Agent, which consent shall not
unreasonably be withheld, adjustments to (i) reflect operating expense
reductions and synergies reasonably expected to result from any acquisition,
merger, or asset disposition, or (ii) eliminate the effect of any extraordinary
accounting event with respect to any acquired person or assets on Net Income.
9
"Eligible Accounts" means Accounts created by the Borrower or any Eligible
Foreign Subsidiary in the ordinary course of its business arising out of the
sale of goods or rendition of services by the Borrower or such Eligible Foreign
Subsidiary, which Accounts are and at all times shall continue to meet standards
of eligibility from time to time established in accordance with this Agreement.
Standards of eligibility will be established by the Administrative Agent in its
reasonable credit judgment and may be revised from time to time by the
Administrative Agent in its reasonable credit judgment (which credit judgment
shall be exercised in a manner that is not arbitrary or capricious and is
consistent with the standards of eligibility and credit judgment generally
applied by the Administrative Agent to other borrowers similarly situated) and
shall be based on risks that the Administrative Agent reasonably believes may
have a material adverse effect on categories of Eligible Account. In general,
without limiting the foregoing, the following Accounts are not Eligible
Accounts:
(i) Accounts originated by the Borrower which remain unpaid ninety (90)
days after the date of the original applicable invoice, unless such Accounts
result from the sale of Inventory to a non-U.S. account debtor, in which case
such Accounts remain unpaid for one-hundred twenty (120) days after the date of
the original applicable invoice, or sixty (60) days after the due date,
whichever is earlier, and Accounts originated by any Eligible Foreign Subsidiary
which remain unpaid one-hundred twenty (120) days after the date of the original
applicable invoice or sixty (60) days after the due date, whichever is earlier;
(ii) all Accounts owing by a single account debtor if fifty percent (50%)
of the balance owing by such account debtor, calculated without taking into
account any credit balances of such account debtor, remains unpaid (x) if the
Borrower originated such Account, ninety (90) days after the date of the
original applicable invoice unless such Account results from the sale of
Inventory to a non-U.S. account debtor, in which case such Account remains
unpaid for one-hundred twenty (120) days after the date of the original
applicable invoice and (y) if an Eligible Foreign Subsidiary originated such
Account, one-hundred twenty days after the date of the original applicable
invoice, or, in either case, sixty (60) days after the due date, whichever is
earlier;
10
(iii) Accounts with respect to which the account debtor is a director,
officer, employee, Subsidiary or Affiliate of the Borrower or an Eligible
Foreign Subsidiary (other than portfolio companies of The Blackstone Group
L.P.);
(iv) if the Administrative Agent, in its discretion, elects to treat such
Accounts originated by the Borrower or such Eligible Foreign Subsidiary as
ineligible Accounts with respect to which the account debtor is any federal
governmental authority, the United States of America or any department or agency
thereof, unless with respect to any such Account, the Borrower or such Eligible
Foreign Subsidiary has complied to the Administrative Agent's satisfaction with
the provisions of the Federal Assignment of Claims Act or other applicable
statutes, including, without limitation, executing and delivering to the
Administrative Agent all statements of assignment and/or notification which are
in form and substance acceptable to the Administrative Agent and which are
deemed necessary by the Administrative Agent to effectuate the assignment to the
Administrative Agent of such Accounts;
(v) with respect to Accounts originated by the Borrower, Accounts not
denominated in (x) Dollars or (y) pounds sterling, Swiss francs, euro or any
other currency acceptable to the Administrative Agent, provided, that the
aggregate balance of Accounts denominated in those currencies permitted under
this clause (y) does not exceed the equivalent of Three Million Dollars
(US$3,000,000);
(vi) with respect to Accounts originated by any Eligible Foreign
Subsidiary, Accounts not denominated in Dollars, pounds sterling, Swiss francs,
euro or any other currency acceptable to the Administrative Agent;
(vii) with respect to Accounts originated by the Borrower, Accounts where
the account debtor party thereto is not a resident of the United States, unless
such account debtor (x) has supplied the Borrower with an irrevocable letter of
credit issued by a financial institution satisfactory to the Administrative
Agent sufficient to cover such Account in form and substance satisfactory to the
Administrative Agent or (y) is one of the account debtors set forth on Schedule
1.1.4 hereto; provided, however, that the Borrower may request that the
Administrative Agent add additional account debtors to Schedule 1.1.4; provided,
further, that the Administrative Agent may, in its reasonable discretion, remove
any account debtor from Schedule 1.1.4;
(viii) Accounts with respect to which the account debtor has (a) asserted a
counterclaim, (b) a right of setoff, or (c) a receivable owing from the Borrower
or such Eligible Foreign Subsidiary but only to the extent of such counterclaim,
setoff or receivable;
(ix) Accounts originated by the Borrower with respect to which the
Administrative Agent does not have a first and valid fully perfected and
enforceable security interest for which notice has been provided to the
Borrower;
(x) Accounts with respect to which the account debtor is the subject of
bankruptcy or a similar insolvency proceeding or has made an assignment for the
benefit of creditors or whose assets have been conveyed to a receiver, trustee
or assignee for the benefit of creditors;
11
(xi) Accounts with respect to which the account debtor's obligation to pay
the Account is conditional upon the account debtor's approval or is otherwise
subject to any contractual repurchase obligation or return right, as with sales
made on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval
(except with respect to Accounts in connection with which account debtors are
entitled to return Inventory on the basis of the quality of such Inventory) or
consignment basis;
(xii) Accounts with respect to which the account debtor is located in
Minnesota or New Jersey (or any other jurisdiction which adopts a statute or
other requirement with respect to which any Person that obtains business from
within such jurisdiction or is otherwise subject to such jurisdiction's tax law
requiring such Person to file a business activity report or make any other
required filings in a timely manner in order to enforce its claims in such
jurisdiction's courts or arising under such jurisdiction's laws); provided,
however, such Accounts shall nonetheless be eligible if the Borrower has filed a
business activity report (or other applicable report or filing) with the
applicable state office by the time required or is qualified to do business in
such jurisdiction and, at the time the Account was created, was qualified to do
business in such jurisdiction or had on file with the applicable state office a
current business activity report (or other applicable report or filing);
(xiii) Accounts with respect to which the account debtor's obligation does
not constitute its legal, valid and binding obligation, enforceable against it
in accordance with its terms;
(xiv) Accounts with respect to which the Borrower or such Eligible Foreign
Subsidiary has not yet shipped the applicable goods, performed the applicable
service or issued the applicable invoice;
(xv) Accounts in connection with which the Borrower or any other party to
such Account is in default in the performance or observance of any of the terms
thereof in any material respect;
(xvi) Accounts for which the prospect of payment or performance by the
account debtor is or will be impaired as determined by the Administrative Agent
in the exercise of its reasonable credit judgment (which credit judgment shall
not be exercised in a manner that is arbitrary or capricious);
(xvii) any Account arising from a long-term contract or progressive billing
arrangement where such contract or billing arrangement permits the account
debtor to withhold any portion of the regularly scheduled payments due under
such Account;
(xviii) any Account owing to the Borrower or any Eligible Foreign
Subsidiary by an Affiliate thereof;
(xix) any Account created by the sale, transfer or assignment of "slag"
metal by-products; and
12
(xx) any Account for which a deposit with respect to payment thereof has
been made by the account debtor to the extent of such deposit.
Notwithstanding the foregoing, (i) Accounts of the Borrower or an Eligible
Foreign Subsidiary which are acquired pursuant to a Permitted Acquisition or
created from a line of business acquired pursuant to a Permitted Acquisition
shall not be deemed Eligible Accounts unless and until the Administrative Agent,
after concluding any due diligence it reasonably deems necessary (which the
Administrative Agent agrees to undertake as soon as reasonably practicable after
the Borrower or such Eligible Foreign Subsidiary has provided it with access to
the information and/or Persons necessary to conduct such due diligence), shall
be satisfied as to the condition thereof, that such Accounts are of the same
general collateral value as the Borrower's or such Eligible Foreign Subsidiary's
Accounts prior to such Acquisition and that such Accounts would otherwise meet
the standards of eligibility set forth herein (including, without limitation,
with respect to Accounts acquired by the Borrower, perfection of the
Administrative Agent's security interests in such Accounts), but for the fact
that such Accounts were acquired by the Borrower or such Eligible Foreign
Subsidiary outside of the ordinary course of business; and (ii) Accounts
acquired pursuant to such Permitted Acquisition or created from a line of
business acquired pursuant to such Permitted Acquisition may be deemed Eligible
Accounts from and after such Permitted Acquisition if the foregoing
determinations have been made to the Administrative Agent's satisfaction. To the
extent that the Administrative Agent's due diligence reveals the existence of
facts which indicate that such acquired Accounts are not of similar collateral
value as the Accounts of the Borrower or such Eligible Foreign Subsidiary
analyzed in connection with establishing the initial Borrowing Base percentages,
the Administrative Agent shall have the option, in lieu of treating such
Accounts as ineligible, to set a lower Borrowing Base percentage for such
Accounts, it being understood and agreed that before doing so, the
Administrative Agent will discuss its analysis with the Borrower and, if
applicable, such Eligible Foreign Subsidiaries and confirm such percentages to
the Lenders in writing.
13
"Eligible Foreign Subsidiaries" means Haynes International, Limited, a
corporation formed under the laws of the United Kingdom, Nickel-Contor, AG, a
corporation formed under the laws of Switzerland, and Haynes International,
S.A.R.L., a corporation organized under the laws of France, each of which is a
wholly-owned Subsidiary of the Borrower.
"Eligible Inventory" means Net Inventory valued at cost determined on a
first-in-first-out basis (determined in accordance with Agreement Accounting
Principles, consistently applied) minus the value of reserves which have been
recorded by the Borrower or the Eligible Foreign Subsidiaries with respect to
obsolete, slow-moving or excess Inventory and such other reserves as the
Administrative Agent elects to establish in accordance with its reasonable
credit judgment (which credit judgment shall be exercised in a manner that is
not arbitrary or capricious and is consistent with the standards of eligibility
and credit judgment applied generally by the Administrative Agent to other
borrowers similarly situated) and shall be based on risks that the
Administrative Agent reasonably believes may have a material adverse effect on
categories of Eligible Inventory.
"Environmental, Health or Safety Requirements of Law" means all applicable
Requirements of Law derived from or relating to federal, state and local laws or
regulations relating to or addressing pollution or protection of the
environment, or protection of worker health or safety, including, but not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601 et seq., the Occupational Safety and Health Act of 1970,
29 U.S.C. ss. 651 et seq., and the Resource Conservation and Recovery Act of
1976, 42 U.S.C. ss. 6901 et seq., in each case including any amendments thereto,
any successor statutes, and any regulations or legally binding guidance
promulgated thereunder, and any state or local equivalent thereof.
"Environmental Lien" means a lien in favor of any Governmental Authority
for (a) any liability under Environmental, Health or Safety Requirements of Law,
or (b) damages arising from, or costs incurred by such Governmental Authority in
response to, a Release or threatened Release of a Contaminant into the
environment.
"Environmental Property Transfer Act" means any applicable requirement of
Environmental, Health or Safety Requirements of Law that conditions, restricts,
prohibits or requires any notification or disclosure triggered by the closure of
any property or the transfer, sale or lease of any property or deed or title for
any property for environmental reasons, including, but not limited to, any
so-called "Industrial Site Recovery Act" or "Responsible Property Transfer Act."
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time including (unless the context otherwise requires) any
final rules or regulations promulgated thereunder.
14
"Eurodollar Base Rate" means, for any Interest Period with respect to a
Eurodollar Rate Loan, the rate (rounded upwards, if necessary, to the next
higher 1/16 of 1%) at which deposits in Dollars in an amount comparable to the
amount of such Eurodollar Rate Loan are offered to the Administrative Agent by
prime banks in the London interbank foreign currency deposits market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, for delivery on the first day of such
Interest Period.
"Eurodollar Rate" means, with respect to a Eurodollar Rate Loan for the
relevant Interest Period, the Eurodollar Base Rate applicable to such Interest
Period plus the then Applicable Eurodollar Margin. The Eurodollar Rate shall be
rounded to the next higher multiple of 1/16 of 1% if the rate is not such a
multiple.
"Eurodollar Rate Advance" means an Advance which bears interest at the
Eurodollar Rate.
"Eurodollar Rate Loan" means a Loan, or, if less than a whole Loan, the
portion thereof, which bears interest at the Eurodollar Rate.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for on such day on such transactions
received by Fleet from three Federal funds brokers of recognized standing
selected by Fleet.
"Fee Letter" means that certain letter agreement, dated as of November 22,
1999, between the Borrower and the Administrative Agent on behalf of the
Lenders, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Financing" means, with respect to any Person, the issuance or sale by such
Person of any Equity Interests of such Person or any Indebtedness, other than
Indebtedness permitted under Section 7.3(A), consisting of debt securities of
such Person.
"Fixed Charge Coverage Ratio" is defined in Section 7.4(A) hereof.
"Fixed Charge Reserve" means (i) the Standard Fixed Charge Reserve at any
time the Fixed Charge Coverage Ratio equals or exceeds 1.0 to 1.0, (ii)
$2,500,000 plus the Standard Fixed Charge Reserve at any time the Fixed Charge
Coverage Ratio equals or exceeds 0.85 to 1.0 but is less than 1.0 to 1.0, and
(iii) $5,000,000 plus the Standard Fixed Charge Reserve at any time the Fixed
Charge Coverage Ratio equals or exceeds 0.75 to 1.0 but is less than 0.85 to
1.0.
"Fleet" means Fleet Capital Corporation, a Rhode Island corporation, and
its successors and assigns.
15
"Floating Rate" means, for any day for any Revolving Loan, a rate per annum
equal to the Alternate Base Rate for such day, changing and as the Alternate
Base Rate changes, plus the then Applicable Floating Margin.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan, or, if less than a whole Loan, the
portion thereof, which bears interest at the Floating Rate.
"Foreign Subsidiaries" means each of the Eligible Foreign Subsidiaries,
Haynes International, S.R.L., a corporation formed under the laws of Italy, and
Haynes Foreign Sales Corporation, a corporation formed under the laws of
Barbados.
"Governmental Acts" is defined in Section 3.9(A) hereof.
"Governmental Authority" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Gross Negligence" means recklessness, the absence of the slightest care or
the complete disregard of consequences. Gross Negligence does not mean the
absence of ordinary care or diligence or an inadvertent act or inadvertent
failure to act. If the term "gross negligence" is used with respect to the
Administrative Agent or any Lender or any indemnitee in any of the other Loan
Documents, it shall have the meaning set forth herein.
"Hedging Obligations" of a Person means any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, commodity prices,
exchange rates or forward rates applicable to such party's assets, liabilities
or exchange transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Holders of Secured Obligations" means the holders of the Secured
Obligations from time to time and shall include their respective successors,
transferees and assigns.
"Indebtedness" of any Person means, without duplication, such Person's (a)
obligations for borrowed money, (b) obligations representing the deferred
purchase price of property or services (other than payables which are payable on
terms customary in the trade or due within one year), (c) obligations, whether
or not assumed, secured by Liens on property or assets now or hereafter owned or
acquired by such Person, (d) obligations which are evidenced by notes,
acceptances or other instruments, (e) Capitalized Lease Obligations, (f)
obligations with respect to letters of credit, (g) net Hedging Obligations and
(h) Off Balance Sheet Liabilities. The amount of Indebtedness of any Person at
any date shall be without duplication, in the case of Indebtedness of others
secured by a Lien to which the property or assets owned or held by such Person
is subject, the lesser of the fair market value at such date of any asset
subject to a Lien securing the Indebtedness of others and the amount of the
Indebtedness secured.
16
"Indemnified Matters" is defined in Section 10.7(B) hereof.
"Indemnitees" is defined in Section 10.7(B) hereof.
"Interest Coverage Ratio" means, for any period, the ratio of (i) EBITDA to
(ii) Interest Expense, for the Borrower and its consolidated Subsidiaries.
"Interest Expense" means, for any period, the total interest expense (net
of interest income) of the Borrower and its consolidated Subsidiaries, whether
paid or accrued (including the interest component of Capitalized Leases,
commitment and letter of credit fees), but excluding interest expense not
payable in cash (including amortization of discount), all as determined in
conformity with Agreement Accounting Principles.
"Interest Period" means, with respect to a Eurodollar Rate Loan, a period
of one (1), two (2), three (3), or six (6) months commencing on a Business Day
selected by the Borrower pursuant to this Agreement. Such Interest Period shall
end on (but exclude) the day which corresponds numerically to such date one (1),
two (2), three (3), or six (6) months thereafter; provided, however, that if
there is no such numerically corresponding day in such next, second, third, or
sixth succeeding month, such Interest Period shall end on the last Business Day
of such next, second, third, or sixth succeeding month. If an Interest Period
would otherwise end on a day which is not a Business Day, such Interest Period
shall end on the next succeeding Business Day, provided, however, that if said
next succeeding Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day.
"Interest Rate Agreements" is defined in Section 7.3(P) hereof.
"Inventory" shall mean any and all goods, including, without limitation,
goods in transit, wheresoever located, whether now owned or hereafter acquired
by the Borrower or the Eligible Foreign Subsidiaries, which are held for sale or
lease, furnished under any contract of service or held as raw materials, work in
process or supplies, and all materials used or consumed in the business of the
Borrower or the Eligible Foreign Subsidiaries, and shall include all right,
title and interest of the Borrower or the Eligible Foreign Subsidiaries in any
property the sale or other disposition of which has given rise to Accounts and
which has been returned to or repossessed or stopped in transit by the Borrower
or the Eligible Foreign Subsidiaries.
"Investment" means, with respect to any Person, (i) any purchase or other
acquisition by that Person of any Indebtedness or Equity Interests, or of a
beneficial interest in any Indebtedness or Equity Interests, issued by any other
Person, (ii) any purchase by that Person of all or substantially all of the
assets constituting a business unit of another Person, and (iii) any loan,
advance (other than deposits with financial institutions available for
withdrawal on demand, prepaid expenses, accounts receivable, advances to
employees and similar items made or incurred in the ordinary course of business)
or capital contribution by that Person to any other Person, including all
Indebtedness to such Person arising from a sale of property by such Person other
than in the ordinary course of its business.
17
"IRS" means the Internal Revenue Service and any Person succeeding to the
functions thereof.
"Issuing Bank" means Fleet Capital Corporation for the purpose of issuing
Letters of Credit, and its respective successors, in the case of each issuance
in Fleet Capital Corporation's separate capacity as an issuer of Letters of
Credit pursuant to Section 3.1. The designation of any Lender other than Fleet
as an Issuing Bank after the date hereof shall be subject to the prior written
consent of the Administrative Agent and the Borrower.
"L/C Draft" means a draft drawn on the Issuing Bank pursuant to a Letter of
Credit.
"L/C Interest" shall have the meaning ascribed to such term in Section 3.5
hereof.
"L/C Obligations" means, without duplication, an amount equal to the sum of
(i) the aggregate of the amount then available for drawing under each of the
Letters of Credit, (ii) the face amount of all outstanding L/C Drafts
corresponding to the Letters of Credit, which L/C Drafts have been accepted by
the Issuing Bank, and (iii) the aggregate outstanding amount of all
Reimbursement Obligations at such time.
"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to the Lender or the
Administrative Agent, any office, branch, subsidiary or affiliate of the Lender
or the Administrative Agent.
"Letter of Credit" means the letters of credit to be issued by the Issuing
Bank pursuant to Section 3.1 hereof.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or security
agreement of any kind or nature whatsoever (including, without limitation, the
interest of a vendor or lessor under any conditional sale, Capitalized Lease or
other title retention agreement).
"Loan(s)" means, with respect to a Lender, such Lender's portion of any
Advance made pursuant to Section 2.1 hereof, whether made, continued as, or
converted to Floating Rate Loans or Eurodollar Rate Loans.
18
"Loan Account" is defined in Section 2.13(F) hereof.
"Loan Documents" means this Agreement, the Notes, the Fee Letter, the
License Agreement, any agreement memorializing any Hedging Obligations, and all
other documents, instruments and agreements executed in connection therewith or
contemplated thereby, as the same may be amended, restated or otherwise modified
and in effect from time to time.
"Margin Stock" shall have the meaning ascribed to such term in Regulation
U.
"Material Adverse Effect" means a material adverse effect upon (a) the
business, condition (financial or otherwise), operations, performance or
properties of the Borrower and its Subsidiaries, taken as a whole, (b) the
ability of the Borrower or any of its respective Subsidiaries to perform their
respective obligations under the Loan Documents in any material respect, or (c)
the ability of the Lenders or the Administrative Agent to enforce, in any
material respect, the Obligations.
"Multiemployer Plan" means a "Multiemployer Plan" as defined in Section
4001(a)(3) of ERISA which is contributed to by either the Borrower or any member
of the Controlled Group.
"Net Amount of Eligible Accounts" means the outstanding face amount of
Eligible Accounts, less the sum of (i) all finance charges, late fees and other
fees that are unearned, (ii) the value of all accruals which have been recorded
by the Borrower or the relevant Eligible Foreign Subsidiary with respect to
downward price adjustments, and (iii) such other reserves as the Administrative
Agent elects to establish in accordance with its reasonable credit judgment
(which credit judgment shall be exercised in a manner that is not arbitrary or
capricious and is consistent with the standards of eligibility and credit
judgment generally applied by the Administrative Agent to other borrowers
similarly situated) and shall be based on risks that the Administrative Agent
reasonably believes may have a material adverse effect on categories of Eligible
Accounts.
"Net Cash Proceeds" from an Asset Sale means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets subject to such Asset Sale) therefrom in each case
net of (i) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, foreign and local taxes
required to be paid or accrued as a liability as a consequence of such Asset
Sale, (ii) all distributions and other payments required to be made to any
Person owning a beneficial interest in assets subject to sale or minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Sale or required to be made to any creditor as a result of such Asset Sale,
(iii) the deduction of appropriate amounts to be provided by the seller as a
reserve, in accordance with Agreement Accounting Principles, against any
liabilities associated with the assets disposed of in such Asset Sale; provided,
however, that upon any reduction in such reserves (other than to the extent
resulting from payments of the respective reserved liabilities), Net Cash
Proceeds shall be increased by the amount of such reduction to reserves, and
retained by the Borrower or any Subsidiary of the Borrower after such Asset Sale
and (iv) any portion of the purchase price from an Asset Sale placed in escrow
(whether as a reserve for adjustment of the purchase price, for satisfaction of
indemnities in respect of such Asset Sale or otherwise in connection with such
Asset Sale); provided, however, that upon the termination of such escrow, Net
Cash Proceeds shall be increased by any portion of funds therein released to the
Borrower or its Subsidiaries.
19
"Net Income" means, for any period, the net earnings (or loss) after taxes
of the Borrower and its consolidated Subsidiaries for such period taken as a
single accounting period determined in conformity with Agreement Accounting
Principles.
"Net Inventory" means Inventory of the Borrower or the Eligible Foreign
Subsidiaries which is owned by the Borrower or the Eligible Foreign Subsidiaries
and held for sale or lease by the Borrower or the Eligible Foreign Subsidiaries
or any party contractually obligated to share or handle the same on behalf of
the Borrower or the Eligible Foreign Subsidiaries in the ordinary course of
business or furnished under any contract of service by the Borrower or the
Eligible Foreign Subsidiaries which continues to meet standards of eligibility
from time to time established in accordance with this Agreement. Standards of
eligibility will be established by the Administrative Agent in its reasonable
credit judgment and may be revised from time to time by the Administrative Agent
in its reasonable credit judgment (which credit judgment shall be exercised in a
manner that is not arbitrary or capricious and is consistent with the standards
of eligibility and credit judgment applied generally by the Administrative Agent
to other borrowers similarly situated) and shall be based on risks that the
Administrative Agent reasonably believes may have a material adverse effect on
categories of Inventory. In general, without limiting the foregoing, the
following inventory is not Net Inventory:
(i) Inventory which is obsolete, not in good condition, not either
currently usable or currently saleable in the ordinary course of the Borrower's
or the applicable Eligible Foreign Subsidiary's business or does not meet all
material standards imposed by any governmental authority having regulatory
authority over such item of Inventory, its use or its sale;
(ii) Inventory consisting of packaging material or supplies;
(iii) Inventory which (a) is consigned to a third party for sale or (b) is
on consignment from a third party to the Borrower or the Eligible Foreign
Subsidiaries, for sale; provided, however, that this clause (iii) shall not
apply to consigned Inventory in which the Administrative Agent has a valid and
perfected first priority security interest;
(iv) Inventory which consists of goods in transit which has been sold to a
dealer or distributor of the Borrower or the Eligible Foreign Subsidiaries, and
is in the process of being delivered to that dealer or distributor; provided,
however, that this clause (iv) shall not apply to sales by the Borrower to an
Eligible Foreign Subsidiary or by an Eligible Foreign Subsidiary to the
Borrower;
(v) Inventory which is subject to a Lien in favor of any Person other than
the Administrative Agent (other than Liens permitted under this Agreement which
do not have priority);
(vi) with respect to the Borrower, Inventory with respect to which the
Administrative Agent does not have a first and valid fully-perfected security
interest;
(vii) Inventory which is not located either (a) on the Borrower's owned
premises in the United States listed on Schedule 1 to the Security Agreement or
on the Eligible Foreign Subsidiaries' premises set forth on Schedule 1.1.5
hereto or (b) with respect to the Borrower's Inventory, in other owned or leased
premises, warehouses or with bailees in the United States not listed on Schedule
2 to the Security Agreement permitted to be established under such Security
Agreement, in each case in connection with which the Administrative Agent shall
have received landlord, mortgagee, bailee and/or warehousemen's access and lien
waiver agreements, or other contractual agreements determined by the
Administrative Agent, in its reasonable discretion, to be necessary to protect
the Lien of the Administrative Agent with respect to the Borrower's Inventory,
in each case in form and substance acceptable to the Administrative Agent; and
20
(viii) Inventory which is evidenced by an Account.
Notwithstanding the foregoing, (i) Inventory of the Borrower or any Eligible
Foreign Subsidiary which is acquired pursuant to a Permitted Acquisition or
created from a line of business acquired pursuant to a Permitted Acquisition
shall not be deemed Eligible Inventory unless and until the Administrative
Agent, after concluding any due diligence it reasonably deems necessary (which
the Administrative Agent agrees to undertake as soon as reasonably practicable
after the Borrower or such Eligible Foreign Subsidiary has provided it with
access to the information and/or Persons necessary to conduct such due
diligence), shall be satisfied as to the condition thereof, that such Inventory
is of the same general collateral value as the Borrower's or such Eligible
Foreign Subsidiary's Inventory prior to a Permitted Acquisition and that such
Inventory would otherwise meet the standards of eligibility set forth herein
(including, without limitation, with respect to Inventory acquired by the
Borrower, perfection of the Administrative Agent's security interests in such
Inventory) but for the fact that such Inventory was acquired by the Borrower or
such Eligible Foreign Subsidiary outside of the ordinary course of business and
(ii) Inventory acquired pursuant to a Permitted Acquisition or created from a
line of business acquired pursuant to such Permitted Acquisition may be deemed
Eligible Inventory from and after such Permitted Acquisition if the foregoing
determinations have been made to the Administrative Agent's satisfaction. To the
extent that the Administrative Agent's due diligence reveals the existence of
facts which indicate that the acquired Inventory in a Permitted Acquisition is
not of similar collateral value as the Inventory of the Borrower or such
Eligible Foreign Subsidiary analyzed in connection with establishing the initial
Borrowing Base percentages, the Administrative Agent shall have the option, in
lieu of treating such Inventory as ineligible, to set a lower Borrowing Base
percentage for such Inventory, it being understood and agreed that before doing
so, the Administrative Agent will discuss its analysis with the Borrower and, if
applicable, such Eligible Foreign Subsidiary.
21
"Non Pro Rata Loan" is defined in Section 9.2 hereof.
"Notes" means the Revolving Notes.
"Notice of Assignment" is defined in Section 13.3(B) hereof.
"Obligations" means all Loans, advances, debts, liabilities, obligations,
covenants and duties owing by the Borrower to the Administrative Agent, any
Lender, any Affiliate of the Administrative Agent or any Lender, or any
Indemnitee, of any kind or nature, present or future, arising under this
Agreement, the Notes or any other Loan Document, whether or not evidenced by any
note, guaranty or other instrument, whether or not for the payment of money,
whether arising by reason of an extension of credit, loan, guaranty,
indemnification, or in any other manner, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired. The term includes, without
limitation, all interest, charges, expenses, fees, attorneys' fees and
disbursements, paralegals' fees, and any other sum chargeable to the Borrower
under this Agreement or any other Loan Document.
"Off Balance Sheet Liabilities" of a Person means (a) any repurchase
obligation or liability of such Person or any of its Subsidiaries with respect
to accounts or notes receivable sold by such Person or any of its Subsidiaries,
(b) any liability under any sale and leaseback transactions which do not create
a liability on the consolidated balance sheet of such Person, (c) any liability
under any financing lease or so-called "synthetic" lease transaction, or (d) any
obligations arising with respect to any other transaction which is the
functional equivalent of or takes the place of borrowing but which does not
constitute a liability on the consolidated balance sheet of such Person and its
Subsidiaries.
"Other Taxes" is defined in Section 2.13(E)(ii) hereof.
"Parent" means Haynes Holdings, Inc., a Delaware corporation, together with
its successors and permitted assigns.
"Parent Pledge Agreement" means that certain Pledge Agreement of even date
herewith executed by Parent in favor of the Administrative Agent for the benefit
of the Holders of the Secured Obligations, as the same way be amended, restated
or otherwise modified from time to time pledging all of the Capital Stock and
Equity Interests of the Borrower owned by Parent.
"Participants" is defined in Section 13.2(A) hereof.
22
"Payment Date" means the first day of each month.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Acquisition" is defined in Section 7.3(F) hereof.
"Permitted Existing Indebtedness" means the Indebtedness of the Borrower
and its Subsidiaries identified as such on Schedule 1.1.1 to this Agreement.
"Permitted Existing Investments" means the Investments of the Borrower and
its Subsidiaries identified as such on Schedule 1.1.2 to this Agreement.
"Permitted Existing Liens" means the Liens on assets of the Borrower and
its Subsidiaries identified as such on Schedule 1.1.3 to this Agreement.
"Permitted Purchase Money Indebtedness" is defined in Section 7.3(A)(v)
hereof.
"Permitted Refinancing Indebtedness" means any replacement, renewal,
refinancing or extension of any Indebtedness permitted by this Agreement that
(i) does not exceed the aggregate principal amount (plus accrued interest and
any applicable premium and associated fees and expenses) of the Indebtedness
being replaced, renewed, refinanced or extended, (ii) does not have a Weighted
Average Life to Maturity at the time of such replacement, renewal, refinancing
or extension that is less than the Weighted Average Life to Maturity of the
Indebtedness being replaced, renewed, refinanced or extended, (iii) does not
rank at the time of such replacement, renewal, refinancing or extension senior
in right of payment to the Indebtedness being replaced, renewed, refinanced or
extended, and (iv) does not contain terms (including, without limitation, terms
relating to security, amortization, interest rate, premiums, fees, covenants,
events of default and remedies) in the aggregate materially less favorable to
the Borrower or to the Lenders than those applicable to the Indebtedness being
replaced, renewed, refinanced or extended.
"Person" means any individual, corporation, firm, enterprise, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company or other entity of any kind, or any
government or political subdivision or any agency, department or instrumentality
thereof.
"Plan" means an employee benefit plan defined in Section 3(3) of ERISA in
respect of which the Borrower or any member of the Controlled Group is an
"employer" as defined in Section 3(5) of ERISA.
"Pro Rata Share" means, with respect to any Lender, the percentage obtained
by dividing (A) such Lender's Commitment at such time (in each case, as adjusted
from time to time in accordance with the provisions of this Agreement) by (B)
the Aggregate Revolving Loan Commitment at such time; provided, however, if all
of the Commitments are terminated pursuant to the terms of this Agreement, then
"Pro Rata Share" means the percentage obtained by dividing (x) the sum of such
Lender's Revolving Loans, by (y) the aggregate amount of all Revolving Loans.
23
"Reimbursement Obligation" is defined in Section 3.6 hereof.
"Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of any
Contaminant into the indoor or outdoor environment, including the movement of
Contaminants through or in the air, soil, surface water or groundwater.
"Rentals" of a Person means the aggregate fixed amounts payable by such
Person under any lease of real or personal property but does not include any
amounts payable under Capitalized Leases of such Person.
"Replacement Lender" is defined in Section 2.18 hereof.
"Reportable Event" means a reportable event as defined in Section 4043(c)
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days after
such event occurs; provided, however, that a failure to meet the minimum funding
standards of Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or Section 412(d)
of the Code.
24
"Required Lenders" means Lenders whose Pro Rata Shares, in the aggregate,
are greater than 50.1%; provided, however, (x) that, at any time there are two
or more Lenders party hereto, at no time shall any action be taken by the
Required Lenders hereunder or under any other Loan Documents unless at least two
(2) of such Lenders have consented thereto, (y) that, if any of the Lenders
shall have failed to fund its Pro Rata Share of any Revolving Loan requested by
the Borrower, which such Lenders are obligated to fund under the terms of this
Agreement and any such failure has not been cured, then for so long as such
failure continues, "Required Lenders" means Lenders (excluding all Lenders whose
failure to fund their respective Pro Rata Shares of such Revolving Loans has not
been so cured) whose Pro Rata Shares represent greater than 50.1% of the
aggregate Pro Rata Shares of such Lenders, and (z) that, if the Commitments have
been terminated pursuant to the terms of this Agreement, "Required Lenders"
means Lenders (without regard to such Lenders' performance of their respective
obligations hereunder) whose aggregate ratable shares (stated as a percentage)
of the aggregate outstanding principal balance of all Loans and L/C Obligations
are greater than 50.1%.
"Requirements of Law" means, as to any Person, the charter and by-laws or
other organizational or governing documents of such Person, and any law, rule or
regulation, or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject including,
without limitation, the Securities Act of 1933, the Securities Exchange Act of
1934, Regulations T, U and X, ERISA, the Fair Labor Standards Act, the Worker
Adjustment and Retraining Notification Act, Americans with Disabilities Act of
1990, and any certificate of occupancy, zoning ordinance, building,
environmental or land use requirement or permit or environmental, labor,
employment, occupational safety or health law, rule or regulation, including
Environmental, Health or Safety Requirements of Law.
"Reserves" shall mean the maximum reserve requirement, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) with respect
to "Eurocurrency liabilities" or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on Eurodollar
Rate Loans is determined or category of extensions of credit or other assets
which includes loans by a non-United States office of any Lender to United
States residents.
"Restricted Payment" means (i) any dividend or other distribution, direct
or indirect, on account of any Equity Interests of the Borrower now or hereafter
outstanding, (ii) any redemption, retirement, purchase or other acquisition for
value, direct or indirect, of any Equity Interests of the Borrower or any of its
Subsidiaries now or hereafter outstanding, (iii) any payments of principal or
interest on or any redemption, purchase, retirement, defeasance, prepayment or
other acquisition for value, direct or indirect, of the Senior Notes or
subordinated indebtedness, and (iv) any payment of a claim for the rescission of
the purchase or sale of, or for material damages arising from the purchase or
sale of, any Indebtedness (other than the Obligations or Permitted Refinancing
Indebtedness) or any Equity Interests of the Borrower or any of the Borrower's
Subsidiaries, or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission.
25
"Revolving Credit Availability" means, at any particular time, the amount
by which the lesser of the Aggregate Revolving Loan Commitment or the Borrowing
Base at such time exceeds the Revolving Credit Obligations at such time.
"Revolving Credit Obligations" means, at any particular time, the sum of
(i) the outstanding principal amount of the Revolving Loans at such time, plus
(ii) the L/C Obligations at such time.
"Revolving Loan" is defined in Section 2.1 hereof.
"Revolving Loan Commitment" means, for each Lender, the obligation of such
Lender to make Revolving Loans and to purchase participations in Letters of
Credit not exceeding the amount set forth on Exhibit A to this Agreement
opposite its name thereon under the heading "Revolving Loan Commitment" or the
signature page of the Assignment Agreement by which it became a Lender, as such
amount may be modified from time to time pursuant to the terms of this Agreement
or to give effect to any applicable assignment.
"Revolving Loan Termination Date" means November 22, 2002.
"Revolving Note" means a promissory note, in substantially the form of
Exhibit B hereto, duly executed by the Borrower and payable to the order of a
Lender in the amount of its Revolving Loan Commitment, including any amendment,
restatement, modification, substitution, renewal or replacement of such
Revolving Note.
"Risk-Based Capital Guidelines" is defined in Section 4.2 hereof.
"Secured Obligations" means, collectively, (i) the Obligations and (ii) all
Hedging Obligations owing under Interest Rate Agreements to any Lender or any
affiliate of any Lender.
"Security Agreement" means that certain Security Agreement of even date
herewith executed by the Borrower in favor of the Administrative Agent for the
benefit of the Holders of Secured Obligations, as the same may be amended,
restated or otherwise modified from time to time.
"Senior Note Reserve" means (x) on any date on which the Borrower is
required to make a regularly scheduled interest payment (such payment, a
"Scheduled Senior Note Payment") pursuant to the terms of the Senior Notes (such
date, the "Applicable Interest Date"), immediately prior to the Borrower's
tender of such Scheduled Senior Note Payment, an amount equal to accrued and
unpaid interest on the Senior Notes for the period beginning with the date
immediately preceding such Applicable Interest Date on which the Borrower made
its last Scheduled Senior Note Payment (such date, the "Previous Interest Date")
and ending on the date immediately preceding such Applicable Interest Date and
(y) on any other day (the "Test Day"), an amount equal to accrued and unpaid
interest during the period beginning on the applicable Previous Interest Date
and ending on the last day of the month immediately preceding the month in which
such Test Day occurs.
26
"Senior Notes" means those certain 11.625% Senior Notes due in 2004 issued
by the Borrower in the aggregate original principal amount of $140,000,000.
"Single Employer Plan" means a Benefit Plan maintained by the Borrower or
any member of the Controlled Group for employees of the Borrower or any member
of the Controlled Group.
"Standard Fixed Charge Reserve" means $2,000,000.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Taxes" is defined in Section 2.13(E)(i) hereof.
"Termination Date" means the earlier of (a) the Revolving Loan Termination
Date, and (b) the date of termination of the Aggregate Revolving Loan Commitment
pursuant to Section 2.4 hereof or the Commitments pursuant to Section 9.1
hereof.
"Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of the Borrower or any member of the
Controlled Group from a Benefit Plan during a plan year in which the Borrower or
such Controlled Group member was a "substantial employer" as defined in Section
4001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of twenty percent (20%) of Benefit Plan participants
who are employees of the Borrower or any member of the Controlled Group; (iii)
the imposition of an obligation on the Borrower or any member of the Controlled
Group under Section 4041 of ERISA to provide affected parties written notice of
intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Benefit Plan; (v) any event or condition which could reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Benefit Plan; or (vi) the
partial or complete withdrawal of the Borrower or any member of the Controlled
Group from a Multiemployer Plan.
"Transferee" is defined in Section 13.5 hereof.
27
"Type" means, with respect to any Loan, its nature as a Floating Rate Loan
or a Eurodollar Rate Loan.
"Unfunded Liabilities" means (i) in the case of Single Employer Plans, the
amount (if any) by which the present value of all vested nonforfeitable benefits
under all Single Employer Plans exceeds the fair market value of all such Plan
assets allocable to such benefits, all determined as of the then most recent
valuation date for such Plans, and (ii) in the case of Multiemployer Plans, the
withdrawal liability that would be incurred by the Controlled Group if all
members of the Controlled Group completely withdrew from all Multiemployer
Plans.
"Unmatured Default" means an event which, but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"Weighted Average Life to Maturity" means when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Year 2000 Issues" means any anticipated costs, problems and uncertainties
associated with the inability of certain computer applications to effectively
handle data, including dates, on and after January 1, 2000, as it affects the
business, operations and financial condition of the Borrower or any of its
Subsidiaries.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms. Any accounting terms used in this
Agreement which are not specifically defined herein shall have the meanings
customarily given them in accordance with generally accepted accounting
principles in existence in the United States as of the date hereof.
1.2 Supplemental Disclosure. At any time at the request of the
Administrative Agent and at such additional times as the Borrower determines,
the Borrower shall supplement each schedule or representation herein or in the
other Loan Documents with respect to any matter hereafter arising which, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in such schedule or as an exception to such
representation or which is necessary to correct any information in such schedule
or representation which has been rendered inaccurate thereby. Unless any such
supplement to such schedule or representation discloses the existence or
occurrence of events, facts or circumstances which are not prohibited by the
terms of this Agreement or any other Loan Documents, such supplement to such
schedule or representation shall not be deemed an amendment thereof unless
expressly consented to in writing by Administrative Agent, and no such
amendments, except as the same may be consented to in a writing which expressly
includes a waiver, shall be or be deemed a waiver by the Administrative Agent or
any Lender of any Default disclosed therein.
28
ARTICLE II: THE REVOLVING LOAN FACILITIES
2.1 Revolving Loans. Upon the satisfaction of the conditions precedent set
forth in Sections 5.1 and 5.2, from and including the date of this Agreement and
prior to the Termination Date, each Lender severally and not jointly agrees, on
the terms and conditions set forth in this Agreement, to make revolving loans to
the Borrower from time to time, in Dollars, in an amount not to exceed such
Lender's Pro Rata Share of Revolving Credit Availability at such time (each
individually, a "Revolving Loan" and, collectively, the "Revolving Loans");
provided, however, at no time shall the Revolving Credit Obligations exceed the
Aggregate Revolving Loan Commitment or the Borrowing Base. Subject to the terms
of this Agreement, any Borrower may borrow, repay and reborrow Revolving Loans
at any time prior to the Termination Date. The Revolving Loans made on the
Closing Date shall initially be Floating Rate Loans and thereafter may be
continued as Floating Rate Loans or converted into Eurodollar Rate Loans in the
manner provided in Section 2.8 and subject to the other conditions and
limitations therein set forth and set forth in this Article II. On the
Termination Date, the Borrower shall repay in full the outstanding principal
balance of the Revolving Loans. Each Advance under this Section 2.1 shall
consist of Revolving Loans made by each Lender ratably in proportion to such
Lender's respective Pro Rata Share.
2.2 Rate Options for all Advances. The Revolving Loans may be Floating Rate
Advances or Eurodollar Rate Advances, or a combination thereof, selected by the
Borrower in accordance with Section 2.8, but subject to the limitation in
Section 2.1 with respect to Revolving Loans made on the Closing Date. The
Borrower may select, in accordance with Section 2.8, Rate Options and Interest
Periods applicable to portions of the Revolving Loans; provided that there shall
be no more than four (4) Interest Periods in effect with respect to all of the
Loans at any time.
2.3 Optional Payments; Mandatory Prepayments.
(A) Optional Payments. The Borrower may from time to time repay or prepay,
without penalty or premium all or any part of outstanding Floating Rate
Advances. Eurodollar Rate Advances may be voluntarily repaid or prepaid prior to
the last day of the applicable Interest Period, subject to the indemnification
provisions contained in Section 4.4; provided, that the Borrower may not so
prepay Eurodollar Rate Advances unless it shall have provided at least three (3)
Business Days' written notice to the Administrative Agent of such prepayment.
(B) Mandatory Prepayments.
(i) Mandatory Prepayments of Revolving Loans. If at any time and for any
reason the Revolving Credit Obligations are greater than the Aggregate Revolving
Loan Commitment or the Borrowing Base, the Borrower shall immediately make a
mandatory prepayment of the Obligations in an amount equal to such excess.
29
(ii) Upon the consummation of any Asset Sale or any Financing by the
Borrower or any Subsidiary of the Borrower, other than (1) Asset Sales permitted
pursuant to Section 7.3(B)(i) and (ii); (2) equity contributions, the Net Cash
Proceeds of which are used to fund all or a portion of the consideration in
connection with a Permitted Acquisition; (3) Financings consisting of the
issuance of Equity Interests to the extent the proceeds thereof are used to pay
Permitted Refinancing Indebtedness or are used to effect Permitted Acquisitions;
and (4) proceeds from Indebtedness permitted pursuant to Section 7.3(A), and
except to the extent that the Net Cash Proceeds of such Asset Sale or Financing,
when combined with the Net Cash Proceeds of all such Asset Sales and Financing
during the immediately preceding twelve-month period, do not exceed $2,000,000,
the Borrower shall make a mandatory prepayment of the Loans in an amount equal
to one hundred percent (100%) of such Net Cash Proceeds or such proceeds
converted from non-cash to cash or Cash Equivalents.
(iii) Nothing in this Section 2.3(B) shall be construed to constitute the
Lenders' consent to any transaction referred to in paragraph (ii) above which is
not expressly permitted by the terms of this Agreement.
(iv) Each mandatory prepayment required by paragraphs (i) and (ii) of this
Section 2.3(B) shall be referred to herein as a "Designated Prepayment."
Designated Prepayments shall be allocated and applied to the Obligations
according to Section 12.3 herein.
(v) Subject to the preceding provisions of this Section 2.3(B), all of the
mandatory prepayments made under this Section 2.3(B) shall be applied first to
Floating Rate Loans and to any Eurodollar Rate Loans maturing on such date and
then to subsequently maturing Eurodollar Rate Loans in order of maturity.
2.4 Reduction of Commitments. The Borrower may permanently reduce the
Aggregate Revolving Loan Commitment in whole, or in part ratably among the
Lenders, in an aggregate minimum amount of $500,000 and integral multiples of
$500,000 in excess of that amount (unless the Aggregate Revolving Loan
Commitment is reduced in whole), upon at least one (1) Business Day's written
notice to the Administrative Agent, which notice shall specify the amount of any
such reduction; provided, however, that the amount of the Aggregate Revolving
Loan Commitment may not be reduced below the aggregate principal amount of the
outstanding Revolving Credit Obligations. All accrued commitment fees shall be
payable on the effective date of any termination of the obligations of the
Lenders to make Loans hereunder.
2.5 Method of Borrowing. Not later than 12:00 p.m. (Chicago time) on each
Borrowing Date, each Lender shall make available its Pro Rata Share of the
subject Revolving Loans, in funds immediately available to the Administrative
Agent in Chicago, Illinois at its address specified pursuant to Article XIV. The
Administrative Agent will promptly make the funds so received from the Lenders
available to the Borrower at the Administrative Agent's aforesaid address.
30
2.6 Method of Selecting Types and Interest Periods for Advances. The
Borrower shall select the Type of Advance and, in the case of each Eurodollar
Rate Advance, the Interest Period applicable to each Advance from time to time.
The Borrower shall give the Administrative Agent irrevocable notice in
substantially the form of Exhibit D hereto (a "Borrowing Notice") not later than
11:00 a.m. (Chicago time) (a) on the Borrowing Date of each Floating Rate
Advance and (b) by 10:00 a.m. (Chicago time) on the day that is three (3)
Business Days before the Borrowing Date for each Eurodollar Rate Advance,
specifying: (i) the Borrowing Date (which shall be a Business Day) for such
Advance; (ii) the aggregate amount of such Advance; (iii) the Type of Advance
selected; and (iv) in the case of each Eurodollar Rate Advance, the Interest
Period applicable thereto. The Borrower shall select Interest Periods so that,
to the best of the Borrower's knowledge, it will not be necessary to prepay all
or any portion of any Eurodollar Rate Advance prior to the last day of the
applicable Interest Period or the Revolving Loan Termination Date in order to
make mandatory prepayments as required pursuant to the terms hereof. Each
Floating Rate Advance and all Obligations other than Loans shall bear interest
from and including the date of the making of such Advance to (but not including)
the date of repayment thereof at the Floating Rate, changing when and as such
Floating Rate changes. Changes in the rate of interest on that portion of any
Advance maintained as a Floating Rate Loan will take effect simultaneously with
each change in the Alternate Base Rate. Each Eurodollar Rate Advance shall bear
interest from and including the first day of the Interest Period applicable
thereto to (but not including) the last day of such Interest Period at the
interest rate determined as applicable to such Eurodollar Rate Advance.
2.7 Minimum Amount of Each Advance. Each Eurodollar Rate Advance (other
than a Eurodollar Rate Advance to repay a Reimbursement Obligation) shall be in
the minimum amount of $1,000,000 (and in multiples of $500,000 if in excess
thereof). Any Floating Rate Advance may be in any minimum amount. No Advance may
exceed the Revolving Credit Availability on the Borrowing Date therefor.
2.8 Method of Selecting Types and Interest Periods for Conversion and
Continuation of Advances.
(A) Right to Convert. The Borrower may elect from time to time, subject to
the provisions of Section 2.2 and this Section 2.8, to convert all or any part
of a Loan of any Type into any other Type or Types of Loans; provided that any
conversion of any Eurodollar Rate Advance shall be made on, and only on, the
last day of the Interest Period applicable thereto.
(B) Automatic Conversion and Continuation. Floating Rate Loans shall
continue as Floating Rate Loans unless and until such Floating Rate Loans are
converted into Eurodollar Rate Loans. Eurodollar Rate Loans shall continue as
Eurodollar Rate Loans until the end of the then applicable Interest Period
therefor, at which time such Eurodollar Rate Loans shall be automatically
converted into Floating Rate Loans unless the Borrower shall have given the
Administrative Agent notice in accordance with Section 2.8(D) requesting that,
at the end of such Interest Period, such Eurodollar Rate Loans continue as
Eurodollar Rate Loans.
(C) No Conversion Post-Default or Post-Unmatured Default. Notwithstanding
anything to the contrary contained in Section 2.8(A) or Section 2.8(B), Loans
may be converted into or continued as Eurodollar Rate Loans after the occurrence
and continuation of a Default or and Unmatured Default until such time as the
Administrative Agent notifies the Borrower that such conversions and
continuations may no longer occur.
(D) Conversion/Continuation Notice. The Borrower shall give the
Administrative Agent irrevocable notice (a "Conversion/Continuation Notice") of
each conversion of a Floating Rate Loan into a Eurodollar Rate Loan or
continuation of a Eurodollar Rate Loan not later than 11:00 a.m. (Chicago time)
three (3) Business Days prior to the date of the requested conversion or
continuation, specifying: (1) the requested date (which shall be a Business Day)
of such conversion or continuation; (2) the amount and Type of the Loan to be
converted or continued; and (3) the amount of Eurodollar Rate Loan(s) into which
such Loan is to be converted or continued and the duration of the Interest
Period applicable thereto.
31
2.9 Default Rate. After the occurrence and during the continuance of a
Default, at the option of the Administrative Agent or at the direction of the
Required Lenders, the Obligations shall bear interest at a per annum rate equal
to the Floating Rate plus two percent (2.0%) and the fees payable under Section
3.7 with respect to Letters of Credit shall be increased by two percent (2.0%)
per annum above the Floating Rate.
2.10 Method of Payment. All payments of principal, interest, and fees
hereunder shall be made, without setoff, deduction or counterclaim, in
immediately available funds to the Administrative Agent at the Administrative
Agent's address specified pursuant to Article XIV, or at any other Lending
Installation of the Administrative Agent specified in writing by the
Administrative Agent to the Borrower, by 12:00 p.m. (Chicago time) on the date
when due and shall be made ratably among the Lenders (unless such amount is not
to be shared ratably in accordance with the terms hereof). Each payment
delivered to the Administrative Agent for the account of any Lender shall be
delivered promptly by the Administrative Agent to such Lender in the same type
of funds which the Administrative Agent received at its address specified
pursuant to Article XIV or at any Lending Installation specified in a notice
received by the Administrative Agent from such Lender. The Borrower authorizes
the Administrative Agent to charge the account of the Borrower maintained with
Fleet for each payment of principal, interest and fees as it becomes due
hereunder.
2.11 Notes. Each Lender is authorized to record the principal amount of
each of its Loans and each repayment with respect to its Loans on the schedule
attached to its respective Notes; provided, however, that the failure to so
record shall not affect each Borrower's obligations under any such Note.
2.12 Telephonic Notices. The Borrower authorizes the Lenders and the
Administrative Agent to extend Advances, effect selections of Types of Advances
and to transfer funds based on telephonic notices made by any person or persons
the Administrative Agent or any Lender in good faith believes to be acting on
behalf of the Borrower. The Borrower agrees to deliver promptly to the
Administrative Agent a written confirmation, signed by an Authorized Officer, if
such confirmation is requested by the Administrative Agent or any Lender, of
each telephonic notice. If the written confirmation differs in any material
respect from the action taken by the Administrative Agent and the Lenders, (i)
the telephonic notice shall govern absent manifest error and (ii) the
Administrative Agent or the Lender, as applicable, shall promptly notify the
Authorized Officer who provided such confirmation of such difference.
32
2.13 Promise to Pay; Interest, Commitment Fees and Termination Fees;
Interest Payment Dates; Interest and Fee Basis; Taxes; Loan and Control
Accounts.
(A) Promise to Pay. The Borrower unconditionally promises to pay when due
the principal amount of each Loan and all other Obligations incurred by the
Borrower, and to pay all unpaid interest accrued thereon, in accordance with the
terms of this Agreement and the Notes.
(B) Interest Payment Dates. Interest accrued on each Floating Rate Loan
shall be payable in arrears on each Payment Date, commencing with the first such
date to occur after the Closing Date, and at maturity (whether by acceleration
or otherwise). Interest accrued on each Eurodollar Rate Loan shall be payable on
the last day of its applicable Interest Period, on any date on which the
Eurodollar Rate Loan is prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on the principal balance of all other Obligations
shall be payable in arrears (i) on the first day of each calendar month,
commencing on the first such day following the incurrence of such Obligation,
(ii) upon repayment thereof in full or in part, and (iii) if not theretofore
paid in full, at the time such other Obligation becomes due and payable (whether
by acceleration or otherwise).
(C) Commitment Fees. (i) The Borrower shall pay to the Administrative
Agent, for the account of the Lenders in accordance with their Pro Rata Shares,
from and after the Closing Date until the date on which the Aggregate Revolving
Loan Commitment shall be terminated in whole, a commitment fee accruing at the
rate of (x) one-half of one percent (0.5%) if the then applicable Interest
Coverage Ratio is less than 1.5 to 1.0 or (y) three-eighths of one percent
(0.375%) if the then applicable Interest Coverage Ratio is equal to or greater
than 1.5 to 1.0 on the amount by which (A) the Aggregate Revolving Loan
Commitment in effect from time to time exceeds (B) the Revolving Credit
Obligations in effect from time to time. All such commitment fees payable under
this clause (C) shall be payable monthly in arrears on the first day of each
month occurring after the Closing Date (with the first such payment being
calculated for the period from the Closing Date and ending on November 30,
1999), and, in addition, on the date on which the Aggregate Revolving Loan
Commitment shall be terminated in whole.
(ii) The Borrower agrees to pay to the Administrative Agent for the sole
account of the Administrative Agent (unless otherwise agreed between the
Administrative Agent and any Lender) the fees set forth in the Fee Letter,
payable at the times and in the amounts set forth therein.
33
(D) Interest and Fee Basis; Applicable Eurodollar Margin and Applicable
Floating Margin.
(i) Interest and fees shall be calculated for actual days elapsed on the
basis of a 360-day year. Interest shall be payable for the day an Obligation is
incurred but not for the day of any payment on the amount paid, if payment is
received prior to 12:00 p.m. (Chicago time) at the place of payment designated
in this Agreement. If any payment of principal of or interest on a Loan or any
payment of any other Obligations shall become due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day
and, in the case of a principal payment, such extension of time shall be
included in computing interest in connection with such payment.
(ii) The Applicable Floating Margin and the Applicable Eurodollar Margin
shall be determined from time to time by reference to the table set forth below,
on the basis of the then applicable Interest Coverage Ratio as calculated on a
quarterly basis as of the end of each of the Borrower's fiscal quarters using
EBITDA and Interest Expense for such fiscal quarter:
Interest Applicable Floating Applicable Eurodollar
Coverage Ratio Margin for Margins for
Revolving Loans Revolving Loans
Less than 1.25 to 1.0 0.75% 2.75%
Less than 1.5 to 1.0 but equal 0.50% 2.50%
to or greater than 1.25 to 1.0
Less than 2.0 to 1.0 but equal
to or greater than 1.5 to 1.0. 0.25% 2.25%
Equal to or greater than 2.0 to
1.0 0% 2.00%
Upon receipt of each quarterly report provided for in Section 7.1(A)(ii),
the Applicable Floating Margin and the Applicable Eurodollar Margin shall be
adjusted, any such adjustment being effective three (3) Business Days following
the Administrative Agent's receipt of such financial statements and the
compliance certificate required to be delivered in connection therewith pursuant
to Section 7.1(a)(iv); provided, that if the Borrower shall not have timely
delivered its financial statements in accordance with Section 7.1(A)(ii), then
commencing on the date upon which such financial statements should have been
delivered and continuing until such financial statements are actually delivered,
it shall be assumed for purposes of determining the Applicable Floating Margin
and Applicable Eurodollar Margin that the Interest Coverage Ratio was less than
1.5 to 1.0. Notwithstanding anything herein to the contrary, from the Closing
Date through the date of delivery of the quarterly financial statement due on
June 30, 2000, the Applicable Floating Margin and the Applicable Eurodollar
Margin shall be determined based upon an assumption that the Interest Coverage
Ratio is less than 1.5 to 1.0 but equal or greater than 1.25 to 1.0.
34
(E) Taxes.
(i) Any and all payments by the Borrower hereunder shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings or any liabilities with respect
thereto including those arising after the date hereof as a result of the
adoption of or any change in any law, treaty, rule, regulation, guideline or
determination of a Governmental Authority or any change in the interpretation or
application thereof by a Governmental Authority but excluding, in the case of
each Lender and the Administrative Agent, such taxes (including income taxes,
franchise taxes and branch profit taxes) as are imposed on or measured by such
Lender's or Administrative Agent's, as the case may be, net income by the United
States of America or any Governmental Authority of the jurisdiction or any
political subdivision of or taxing authority therein under the laws of which
such Lender or Administrative Agent, as the case may be, is organized or
maintains a Lending Installation (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings, and liabilities which the Administrative
Agent or a Lender determines to be applicable to this Agreement, the other Loan
Documents, the Revolving Loan Commitments, the Loans or the Letters of Credit
being hereinafter referred to as "Taxes"). If the Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or under
the other Loan Documents to any Lender or the Administrative Agent, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.13(E)) such Lender or the Administrative Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, and (iii)
the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. If a withholding
tax of the United States of America or any other Governmental Authority shall be
or become applicable (y) after the date of this Agreement, to such payments by
the Borrower made to the Lending Installation or any other office that a Lender
may claim as its Lending Installation, or (z) after such Lender's selection and
designation of any other Lending Installation, to such payments made to such
other Lending Installation, such Lender shall use reasonable efforts to make,
fund and maintain its Loans through another Lending Installation of such Lender
in another jurisdiction so as to reduce the Borrower's liability hereunder, if
the making, funding or maintenance of such Loans through such other Lending
Installation of such Lender does not, in the judgment of such Lender, otherwise
adversely affect such Loans, or obligations under the Revolving Loan Commitments
or such Lender.
(ii) In addition, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges, or similar
levies which arise from any payment made hereunder, from the issuance of Letters
of Credit hereunder, or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement, the other Loan Documents, the
Revolving Loan Commitments, the Loans or the Letters of Credit (hereinafter
referred to as "Other Taxes").
35
(iii) The Borrower indemnifies each Lender and the Administrative Agent for
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any Governmental Authority on amounts payable
under this Section 2.13(E)) paid by such Lender or the Administrative Agent (as
the case may be) and any liability for penalties, interest, and reasonable
expenses arising therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted. This indemnification shall be
made within thirty (30) days after the date such Lender or the Administrative
Agent (as the case may be) makes written demand therefor. A certificate as to
any additional amount payable to any Lender or the Administrative Agent under
this Section 2.13(E) submitted to the Borrower and the Administrative Agent (if
a Lender is so submitting) by such Lender or the Administrative Agent shall show
in reasonable detail the amount payable and the calculations used to determine
such amount and shall, absent manifest error, be final, conclusive and binding
upon all parties hereto.
(iv) Within thirty (30) days after the date of any payment of Taxes or
Other Taxes by the Borrower, the Borrower shall furnish to the Administrative
Agent the original or a certified copy of a receipt evidencing payment thereof,
and such other certificates, receipts and other documents as may be required (in
the judgment of such Lender or the Administrative Agent) to establish any tax
credit to which the Lender or the Administrative Agent may be entitled.
(v) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.13(E) shall survive the payment in full of the Secured
Obligations, the termination of the Letters of Credit and the cancellation or
termination of this Agreement.
(vi) Without limiting the obligations of the Borrower under this Section
2.13(E), each Lender that is not created or organized under the laws of the
United States of America or a political subdivision thereof shall deliver to the
Borrower and the Administrative Agent on or before the Closing Date, or, if
later, the date on which such Lender becomes a Lender pursuant to Section 13.3,
a true and accurate certificate executed in duplicate by a duly authorized
officer of such Lender, in a form satisfactory to the Borrower and the
Administrative Agent, to the effect that such Lender is capable under the
provisions of an applicable tax treaty concluded by the United States of America
(in which case the certificate shall be accompanied by two executed copies of
Form W-8BEN of the IRS) or under Section 1442 of the Code (in which case the
certificate shall be accompanied by two copies of W-8ECI of the IRS) of
receiving payments of interest hereunder without deduction or withholding of
United States federal income tax. Each such Lender further agrees to deliver to
the Borrower and the Administrative Agent from time to time a true and accurate
certificate executed in duplicate by a duly authorized officer of such Lender
substantially in a form satisfactory to the Borrower and the Administrative
Agent, before or promptly upon the occurrence of any event requiring a change in
the most recent certificate previously delivered by it to the Borrower and the
Administrative Agent pursuant to this Section 2.13(E)(vi). Further, each Lender
which delivers a certificate accompanied by W-8BEN of the IRS covenants and
agrees to deliver to the Borrower and the Administrative Agent within fifteen
(15) days prior to the third anniversary of such dates, and every third
anniversary of such date thereafter on which this Agreement is still in effect,
another such certificate and two accurate and complete original signed copies of
W-8BEN (or any successor form or forms required under the Code or the applicable
regulations promulgated thereunder), and each Lender that delivers a certificate
accompanied by W-8ECI of the IRS covenants and agrees to deliver to the Borrower
and the Administrative Agent within fifteen (15) days prior to the beginning of
each subsequent taxable year of such Lender during which this Agreement is still
in effect, another such certificate and two accurate and complete original
signed copies of IRS W-8ECI (or any successor form or forms required under the
Code or the applicable regulations promulgated thereunder). Each such
certificate shall certify as to one of the following:
36
(a) that such Lender is capable of receiving payments of interest
hereunder without deduction or withholding of United States of America
federal income tax;
(b) that such Lender is not capable of receiving payments of interest
hereunder without deduction or withholding of United States of America
federal income tax as specified therein but is capable of recovering the
full amount of any such deduction or withholding from a source other than
the Borrower and will not seek and will not be entitled to any such
recovery from the Borrower; or
(c) that, as a result of the adoption of or any change in any law,
treaty, rule, regulation, guideline or determination of a Governmental
Authority or any change in the interpretation or application thereof by a
Governmental Authority after the date such Lender became a party hereto,
such Lender is not capable of receiving payments of interest hereunder
without deduction or withholding of United States of America federal income
tax as specified therein and that it is not capable of recovering the full
amount of the same from a source other than the Borrower.
Each Lender shall promptly furnish to the Borrower and the Administrative Agent
such additional documents as may be reasonably required by the Borrower or the
Administrative Agent to establish any exemption from or reduction of any Taxes
or Other Taxes required to be deducted or withheld and which may be obtained
without undue expense to such Lender.
(F) Loan Account. Each Lender shall maintain in accordance with its usual
practice an account or accounts (a "Loan Account") evidencing the Obligations of
the Borrower to such Lender owing to such Lender from time to time, including
the amount of principal and interest payable and paid to such Lender from time
to time hereunder and under the Notes.
(G) Control Account. The Register maintained by the Administrative Agent
pursuant to Section 13.3(C) shall include a control account, and a subsidiary
account for each Lender, in which accounts (taken together) shall be recorded
(i) the date and amount of each Advance made hereunder, the type of Loan
comprising such Advance and any Interest Period applicable thereto, (ii) the
effective date and amount of each Assignment Agreement delivered to and accepted
by it and the parties thereto pursuant to Section 13.3, (iii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder or under the Notes, (iv) the amount of any sum
received by the Administrative Agent from the Borrower hereunder and each
Lender's share thereof, and (v) all other appropriate debits and credits as
provided in this Agreement, including, without limitation, all fees, charges,
expenses and interest.
37
(H) Entries Binding. The entries made in the Register and each Loan Account
shall be conclusive and binding for all purposes, absent manifest error, unless
the Borrower objects to information contained in the Register and each Loan
Account within thirty (30) days after the Borrower's receipt of such
information.
2.14 Notification of Advances, Interest Rates, Prepayments and Aggregate
Revolving Loan Commitment Reductions. Promptly after receipt thereof, the
Administrative Agent will notify each Lender of the contents of each Aggregate
Revolving Loan Commitment reduction notice, Borrowing Notice,
Continuation/Conversion Notice, and repayment notice received by it hereunder.
The Administrative Agent will notify each Lender of the interest rate applicable
to each Eurodollar Rate Loan promptly upon determination of such interest rate
and will give each Lender prompt notice of each change in the Alternate Base
Rate.
2.15 Lending Installations. Each Lender may book its Loans at any Lending
Installation selected by such Lender and may change its Lending Installation
from time to time. All terms of this Agreement shall apply to any such Lending
Installation and the Notes shall be deemed held by each Lender for the benefit
of such Lending Installation. Each Lender may, by written or facsimile notice to
the Administrative Agent and the Borrower, designate a Lending Installation
through which Loans will be made by it and for whose account Loan payments are
to be made.
2.16 Non-Receipt of Funds by the Administrative Agent. Unless the Borrower
or a Lender, as the case may be, notifies the Administrative Agent prior to the
date on which it is scheduled to make payment to the Administrative Agent of (i)
in the case of a Lender, the proceeds of a Loan or (ii) in the case of the
Borrower, a payment of principal, interest or fees to the Administrative Agent
for the account of the Lenders, that it does not intend to make such payment,
the Administrative Agent may assume that such payment has been made. The
Administrative Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Administrative Agent, the recipient of such payment shall, on
demand by the Administrative Agent, repay to the Administrative Agent the amount
so made available together with interest thereon in respect of each day during
the period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to (i) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day or (ii) in the case of payment by the
Borrower, the interest rate applicable to the relevant Loan.
38
2.17 Termination Date. This Agreement shall be effective until the
Termination Date. Notwithstanding the termination of this Agreement on the
Termination Date, until all of the Obligations (other than contingent indemnity
obligations) shall have been fully and indefeasibly paid and satisfied and all
of the Letters of Credit shall have expired, been cancelled or terminated, all
of the rights and remedies of the Administrative Agent, the Lenders, and the
Issuing Bank under this Agreement and the other Loan Documents shall survive.
2.18 Replacement of Certain Lenders. In the event a Lender ("Affected
Lender") shall have: (i) failed to fund its Pro Rata Share of any Advance
requested by the Borrower, which such Lender is obligated to fund under the
terms of this Agreement and which failure has not been cured, (ii) requested
compensation from the Borrower under Sections 2.13(E), 4.1 or 4.2 to recover
Taxes, Other Taxes or other additional costs incurred by such Lender which are
not being incurred generally by the other Lenders, (iii) delivered a notice
pursuant to Section 4.3 claiming that such Lender is unable to extend Eurodollar
Rate Loans to any Borrower for reasons not generally applicable to the other
Lenders or (iv) has invoked Section 10.2, then, in any such case, the Borrower
or the Administrative Agent may make written demand on such Affected Lender
(with a copy to the Administrative Agent in the case of a demand by the Borrower
and a copy to the Borrower in the case of a demand by the Administrative Agent)
for the Affected Lender to assign, and such Affected Lender shall use its best
efforts to assign pursuant to one or more duly executed Assignments Agreements
five (5) Business Days after the date of such demand, to one or more financial
institutions that comply with the provisions of Section 13.3(A) which the
Borrower or the Administrative Agent, as the case may be, shall have engaged for
such purpose ("Replacement Lender"), all of such Affected Lender's rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, its Revolving Loan Commitment, all Loans owing to it, all of
its participation interests in existing Letters of Credit, and its obligation to
participate in additional Letters of Credit hereunder) in accordance with
Section 13.3. The Administrative Agent agrees, upon the occurrence of such
events with respect to an Affected Lender and upon the written request of the
Borrower, to use its reasonable efforts to obtain the commitments from one or
more financial institutions to act as a Replacement Lender. The Administrative
Agent is authorized to execute one or more of such assignment agreements as
attorney-in-fact for any Affected Lender failing to execute and deliver the same
within five (5) Business Days after the date of such demand. Further, with
respect to such assignment the Affected Lender shall have concurrently received,
in cash, all amounts due and owing to the Affected Lender hereunder or under any
other Loan Document, including, without limitation, the aggregate outstanding
principal amount of the Loans owed to such Lender, together with accrued
interest thereon through the date of such assignment, amounts payable under
Sections 2.13(E), 4.1, and 4.2 with respect to such Affected Lender and
compensation payable under Section 2.13(C) in the event of any replacement of
any Affected Lender under clause (ii) or clause (iii) of this Section 2.18;
provided that upon such Affected Lender's replacement, such Affected Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13(E), 4.1, 4.2, 4.4, and 10.7, as well as to any fees
accrued for its account hereunder and not yet paid, and shall continue to be
obligated under Section 11.8. Upon the replacement of any Affected Lender
pursuant to this Section 2.18, the provisions of Section 9.2 shall continue to
apply with respect to Loans which are then outstanding with respect to which the
Affected Lender failed to fund its Pro Rata Share and which failure has not been
cured.
39
2.19 Collection Account Arrangements.
(a) Establishment of Collection Accounts. On the Closing Date, the Borrower
shall have entered into and shall thereafter maintain lock-box services
agreements, cash collection account arrangements and/or similar arrangements for
the collection of Accounts included in the Collateral and other proceeds of
Collateral into one or more Collection Accounts, in form and substance
reasonably acceptable to the Administrative Agent, and in connection with such
arrangements, the Borrower shall have entered into and shall thereafter maintain
in effect Collection Account Agreements for each of such Collection Accounts. On
the Closing Date, the Borrower shall put in place arrangements so that its
account debtors directly remit all payments on Accounts to the Collection
Accounts (or lock boxes established in connection therewith). Any of the
foregoing collections received by the Borrower and not deposited in the
Collection Accounts, shall be deemed to have been received by the Borrower as
the Administrative Agent's trustee and, upon the receipt thereof, the Borrower
shall promptly transfer all such amounts into a Collection Account in their
original form. All deposits in any Collection Account shall be remitted to the
Administrative Agent or as the Administrative Agent may direct, all in
accordance with the provisions of the Collection Account Agreements.
(b) Disbursement of Collections Held in the Collection Accounts; Credit for
Collections. (i) All payments received by the Administrative Agent in respect of
Collateral, all collection of Accounts received by the Administrative Agent and
all proceeds of other Collateral received by the Administrative Agent, whether
through payment or otherwise, will be the sole property of the Administrative
Agent for the benefit of the Holders of Secured Obligations and will be deemed
to be received by the Administrative Agent for application to the Obligations.
(ii) No collections deposited in any Collection Account and received by the
Administrative Agent shall be credited toward any payment by the Borrower of
interest, principal, fees or other expenses under the Loan Documents until such
Business Day as the Administrative Agent has determined, in its sole discretion,
that such collections constitute good collected funds. Prior to such
determination, such collections shall be held by the Administrative Agent on a
provisional basis.
ARTICLE III: THE LETTER OF CREDIT FACILITY
3.1 Obligation to Issue. Subject to the terms and conditions of this
Agreement and in reliance upon the representations, warranties and covenants of
the Borrower herein set forth, the Issuing Bank hereby agrees to issue for the
account of the Borrower through such Issuing Bank's branches as it and the
Borrower may jointly agree, one or more Letters of Credit denominated in Dollars
in accordance with this Article III, from time to time during the period,
commencing on the date hereof and ending on the Business Day prior to the
Termination Date.
40
3.2 Types and Amounts. The Issuing Bank shall not have any obligation to
and shall not:
(i) issue any Letter of Credit if on the date of issuance, before or
after giving effect to the Letter of Credit requested hereunder, (a) the
Revolving Credit Obligations at such time would exceed the Aggregate
Revolving Loan Commitment or the Borrowing Base at such time, or (b) the
aggregate outstanding amount of the L/C Obligations would exceed
$15,000,000; or
(ii) issue any Letter of Credit which has an expiration date later
than the date which is the earlier of one (1) year after the date of
issuance thereof (unless otherwise agreed to by the Issuing Bank) or five
(5) Business Days immediately preceding the Termination Date.
3.3 Conditions. In addition to being subject to the satisfaction of the
conditions contained in Sections 5.1 and 5.2, the obligation of the Issuing Bank
to issue any Letter of Credit is subject to the satisfaction in full of the
following conditions:
(i) the Borrower shall have delivered to the applicable Issuing Bank
at such times and in such manner as such Issuing Bank may reasonably
prescribe, a request for issuance of such Letter of Credit in substantially
the form of Exhibit E hereto, duly executed applications for such Letter of
Credit, and such other documents, instructions and agreements as may be
required pursuant to the terms thereof, and the proposed Letter of Credit
shall be reasonably satisfactory to such Issuing Bank as to form and
content; and
(ii) as of the date of issuance no order, judgment or decree of any
court, arbitrator or Governmental Authority shall purport by its terms to
enjoin or restrain the Issuing Bank from issuing such Letter of Credit and
no law, rule or regulation applicable to such Issuing Bank and no request
or directive (whether or not having the force of law) from a Governmental
Authority with jurisdiction over such Issuing Bank shall prohibit or
request that such Issuing Bank refrain from the issuance of Letters of
Credit generally or the issuance of that Letter of Credit.
3.4 Procedure for Issuance of Letters of Credit. (a) Subject to the terms
and conditions of this Article III and provided that the applicable conditions
set forth in Sections 5.1 and 5.2 hereof have been satisfied, the Issuing Bank
shall, on the requested date, issue a Letter of Credit on behalf of the Borrower
in accordance with the Issuing Bank's usual and customary business practices
and, in this connection, the Issuing Bank may assume that the applicable
conditions set forth in Section 5.2 hereof have been satisfied unless it shall
have received notice to the contrary from the Administrative Agent or a Lender
or has knowledge that the applicable conditions have not been met.
41
(b) The Issuing Bank shall give the Administrative Agent written or telex
notice, or telephonic notice confirmed promptly thereafter in writing, of the
issuance of a Letter of Credit; provided, however, that the failure to provide
such notice shall not result in any liability on the part of the Issuing Bank.
(c) The Issuing Bank shall not extend or amend any Letter of Credit unless
the requirements of this Section 3.4 are met as though a new Letter of Credit
was being requested and issued.
3.5 Letter of Credit Participation. Immediately upon the issuance of each
Letter of Credit hereunder, each Lender shall be deemed to have automatically,
irrevocably and unconditionally purchased and received from the Issuing Bank an
undivided interest and participation in and to such Letter of Credit, the
obligations of the Borrower in respect thereof, and the liability of the Issuing
Bank thereunder (collectively, an "L/C Interest") in an amount equal to the
amount available for drawing under such Letter of Credit multiplied by such
Lender's Pro Rata Share. The Issuing Bank will notify each Lender promptly upon
presentation to it of an L/C Draft or upon any other draw under a Letter of
Credit. On or before the Business Day on which the Issuing Bank makes payment of
each such L/C Draft or, in the case of any other draw on a Letter of Credit, on
demand by the Administrative Agent, each Lender shall make payment to the
Administrative Agent, for the account of the Issuing Bank, in immediately
available funds in an amount equal to such Lender's Pro Rata Share of the amount
of such payment or draw. The obligation of each Lender to reimburse the Issuing
Bank under this Section 3.5 shall be unconditional, continuing, irrevocable and
absolute. In the event that any Lender fails to make payment to the
Administrative Agent of any amount due under this Section 3.5, the
Administrative Agent shall be entitled to receive, retain and apply against such
obligation the principal and interest otherwise payable to such Lender hereunder
until the Administrative Agent receives such payment from such Lender or such
obligation is otherwise fully satisfied; provided, however, that nothing
contained in this sentence shall relieve such Lender of its obligation to
reimburse the Issuing Bank for such amount in accordance with this Section 3.5.
3.6 Reimbursement Obligation. The Borrower agrees unconditionally,
irrevocably and absolutely to pay immediately to the Administrative Agent, for
the account of the Lenders, the amount of each advance which may be drawn under
or pursuant to a Letter of Credit or an L/C Draft related thereto (such
obligation of the Borrower to reimburse the Administrative Agent for an advance
made under a Letter of Credit or L/C Draft being hereinafter referred to as a
"Reimbursement Obligation" with respect to such Letter of Credit or L/C Draft).
If the Borrower at any time fails to repay a Reimbursement Obligation pursuant
to this Section 3.6, the Borrower shall be deemed to have elected to borrow
Revolving Loans from the Lenders, as of the date of the advance giving rise to
the Reimbursement Obligation, equal in amount to the amount of the unpaid
Reimbursement Obligation. Such Revolving Loans shall be made as of the date of
the payment giving rise to such Reimbursement Obligation, automatically, without
notice and without any requirement to satisfy the conditions precedent otherwise
applicable to an Advance of Revolving Loans. Such Revolving Loans shall
constitute a Floating Rate Advance, the proceeds of which Advance shall be used
to repay such Reimbursement Obligation. If, for any reason, the Borrower fails
to repay a Reimbursement Obligation on the day such Reimbursement Obligation
arises and, for any reason, the Lenders are unable to make or have no obligation
to make Revolving Loans, then such Reimbursement Obligation shall bear interest
from and after such day, until paid in full, at the interest rate applicable to
a Floating Rate Advance plus any amount required under Section 2.9 herein.
42
3.7 Letter of Credit Fees. The Borrower agrees to pay (i) monthly, in
arrears, to the Administrative Agent for the ratable benefit of the Lenders,
except as set forth in Section 9.2, a letter of credit fee at a rate per annum
equal to the Applicable L/C Fee Percentage on the average daily outstanding face
amount available for drawing under all Letters of Credit, (ii) monthly, in
arrears, to the Administrative Agent for the sole account of the Issuing Bank, a
letter of credit fronting fee of one-eighth of one percent (0.125%) per annum on
the average daily outstanding face amount available for drawing under all
Letters of Credit issued by the Issuing Bank, and (iii) to the Administrative
Agent for the benefit of the Issuing Bank, all customary fees and other
issuance, amendment, document examination, negotiation and presentment expenses
and related charges in connection with the issuance, amendment, presentation of
L/C Drafts, and the like customarily charged by the Issuing Bank with respect to
standby and commercial Letters of Credit, including, without limitation,
standard commissions with respect to commercial Letters of Credit, payable at
the time of invoice of such amounts.
3.8 Issuing Bank Reporting Requirements. In addition to the notices
required by Section 3.4(C), the Issuing Bank shall, no later than the tenth
Business Day following the last day of each month, provide to the Administrative
Agent, upon the Administrative Agent's request, schedules, in form and substance
reasonably satisfactory to the Administrative Agent, showing the date of issue,
account party, amount, expiration date and the reference number of each Letter
of Credit issued by it outstanding at any time during such month and the
aggregate amount payable by the Borrower during such month. In addition, upon
the request of the Administrative Agent, the Issuing Bank shall furnish to the
Administrative Agent copies of any Letter of Credit and any application for or
reimbursement agreement with respect to a Letter of Credit to which the Issuing
Bank is party and such other documentation as may reasonably be requested by the
Administrative Agent. Upon the request of any Lender, the Administrative Agent
will provide to such Lender information concerning such Letters of Credit.
3.9 Indemnification; Exoneration. (A) In addition to amounts payable as
elsewhere provided in this Article III, the Borrower hereby agrees to protect,
indemnify, pay and save harmless the Administrative Agent, the Issuing Bank and
each Lender from and against any and all liabilities and costs which the
Administrative Agent, the Issuing Bank or such Lender may incur or be subject to
as a consequence, direct or indirect, of (i) the issuance of any Letter of
Credit other than, in the case of the Issuing Bank, as a result of its Gross
Negligence or willful misconduct, or (ii) the failure of the Issuing Bank to
honor a drawing under a Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
Governmental Authority (all such acts or omissions herein called "Governmental
Acts").
43
(B) As among the Borrower, the Lenders, the Administrative Agent and the
Issuing Bank, the Borrower assumes all risks of the acts and omissions of, or
misuse of such Letter of Credit by, the beneficiary of any Letters of Credit. In
furtherance and not in limitation of the foregoing, subject to the provisions of
the Letter of Credit applications and Letter of Credit reimbursement agreements
executed by the Borrower at the time of request for any Letter of Credit,
neither the Administrative Agent, the Issuing Bank nor any Lender shall be
responsible (in the absence of Gross Negligence or willful misconduct in
connection therewith: (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and issuance of the Letters of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or sufficiency 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;
(iii) for failure of the beneficiary of a Letter of Credit to comply duly with
conditions required in order to draw upon such Letter of Credit; (iv) for
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex, or other similar form of
teletransmission or otherwise; (v) for errors in interpretation of technical
trade terms; (vi) for any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit or of
the proceeds thereof; (vii) for the misapplication by the beneficiary of a
Letter of Credit of the proceeds of any drawing under such Letter of Credit; and
(viii) for any consequences arising from causes beyond the control of the
Administrative Agent, the Issuing Bank and the Lenders, including, without
limitation, any Governmental Acts. None of the above shall affect, impair, or
prevent the vesting of the Issuing Bank's rights or powers under this Section
3.9.
(C) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Bank under or in connection with the Letters of Credit or any related
certificates shall not, in the absence of Gross Negligence or willful
misconduct, put the Issuing Bank, the Administrative Agent or any Lender under
any resulting liability to the Borrower or relieve the Borrower of any of its
obligations hereunder to any such Person.
(D) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 3.9 shall survive the payment in full of principal and interest
hereunder, the termination of the Letters of Credit and the termination of this
Agreement.
3.10 Cash Collateral. Notwithstanding anything to the contrary herein or in
any application for a Letter of Credit, after the occurrence and during the
continuance of Default, the Borrower shall, upon the Administrative Agent's
demand, deliver to the Administrative Agent for the benefit of the Lenders and
the Issuing Bank, cash, or other collateral of a type satisfactory to the
Required Lenders (but only to the extent permitted by the Senior Notes), having
a value, as determined by such Lenders, equal to the aggregate outstanding L/C
Obligations. Any such collateral shall be held by the Administrative Agent in a
separate account appropriately designated as a cash collateral account in
relation to this Agreement and the Letters of Credit and retained by the
Administrative Agent for the benefit of the Lenders and the Issuing Bank as
collateral security for the Borrower's obligations in respect of this Agreement
and each of the Letters of Credit and L/C Drafts. Such amounts shall be applied
to reimburse the Issuing Bank for drawings or payments under or pursuant to
Letters of Credit or L/C Drafts, or if no such reimbursement is required, to
payment of such of the other Obligations as the Administrative Agent shall
determine. If no Default shall be continuing, amounts remaining in any cash
collateral account established pursuant to this Section 3.10 which are not to be
applied to reimburse an Issuing Bank for amounts actually paid or to be paid by
the Issuing Bank in respect of a Letter of Credit or L/C Draft, shall be
returned to the Borrower (after deduction of the Administrative Agent's expenses
incurred in connection with such cash collateral account). The Administrative
Agent shall use its best efforts to invest such cash collateral in Permitted
Investments. Any proceeds or income resulting from such Permitted Investments
shall be property of the Borrower subject to the security interest of the
Administrative Agent. Any gain or loss resulting from such Permitted Investments
shall be for the account of the Borrower.
44
ARTICLE IV: CHANGE IN CIRCUMSTANCES
4.1 Yield Protection. If any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) adopted after the date of this Agreement and having general
applicability to all banks within the jurisdiction in which such Lender operates
(excluding, for the avoidance of doubt, the effect of and phasing in of capital
requirements or other regulations or guidelines passed prior to the date of this
Agreement), or any interpretation or application thereof by any Governmental
Authority charged with the interpretation or application thereof, or the
compliance of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation to any
tax, duty, charge or withholding on or from payments due from the Borrower
(excluding federal taxation of the overall net income of any Lender or
applicable Lending Installation), or changes the basis of taxation of
payments to any Lender in respect of its Loans, its L/C Interests, the
Letters of Credit or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or
any applicable Lending Installation (other than reserves and assessments
taken into account in determining the interest rate applicable to
Eurodollar Rate Loans) with respect to its Loans, L/C Interests or the
Letters of Credit, or
(iii) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation of making,
funding or maintaining the Loans, the L/C Interests or the Letters of
Credit or reduces any amount received by any Lender or any applicable
Lending Installation in connection with Loans or Letters of Credit, or
requires any Lender or any applicable Lending Installation to make any
payment calculated by reference to the amount of Loans or L/C Interests
held or interest received by it or by reference to the Letters of Credit,
by an amount deemed material by such Lender;
45
and the result of any of the foregoing is to increase the cost to that Lender of
making, renewing or maintaining its Loans, L/C Interests or Letters of Credit or
to reduce any amount received under this Agreement, then, within fifteen (15)
days after receipt by the Borrower of written demand by such Lender pursuant to
Section 4.5, the Borrower shall pay such Lender that portion of such increased
expense incurred or reduction in an amount received which such Lender determines
is attributable to making, funding and maintaining its Loans, L/C Interests,
Letters of Credit and its Revolving Loan Commitment.
4.2 Changes in Capital Adequacy Regulations. If a Lender determines (i) the
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a "Change" (as defined below), and (ii) such
increase in capital will result in an increase in the cost to such Lender of
maintaining its Loans, L/C Interests, the Letters of Credit or its obligation to
make Loans hereunder, then, within fifteen (15) days after receipt by the
Borrower of written demand by such Lender pursuant to Section 4.5, the Borrower
shall pay such Lender the amount necessary to compensate for any shortfall in
the rate of return on the portion of such increased capital which such Lender
determines is attributable to this Agreement, its Loans, its L/C Interests, the
Letters of Credit or its obligation to make Loans hereunder (after taking into
account such Lender's policies as to capital adequacy). "Change" means (i) any
change after the date of this Agreement in the "Risk-Based Capital Guidelines"
(as defined below) excluding, for the avoidance of doubt, the effect of any
phasing in of such Risk-Based Capital Guidelines or any other capital
requirements passed prior to the date hereof, or (ii) any adoption of or change
in any other law, governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having the force of law)
after the date of this Agreement and having general applicability to all banks
and financial institutions within the jurisdiction in which such Lender operates
which affects the amount of capital required or expected to be maintained by any
Lender or any Lending Installation or any corporation controlling any Lender.
"Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in
effect in the United States on the date of this Agreement, including transition
rules, and (ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988 report of the
Basle Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement.
4.3 Availability of Types of Advances. If (i) any Lender determines that
maintenance of its Eurodollar Rate Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation or directive, whether or not
having the force of law, or (ii) the Required Lenders determine that (x)
deposits of a type and maturity appropriate to match fund Eurodollar Rate
Advances are not available or (y) the interest rate applicable to a Eurodollar
Rate Advance does not accurately reflect the cost of making or maintaining such
an Advance, then the Administrative Agent shall suspend the availability of the
affected Eurodollar Rate Advance and, in the case of any occurrence set forth in
clause (i) require any Eurodollar Rate Advance to be repaid.
46
4.4 Funding Indemnification. If any payment of a Eurodollar Rate Advance
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment, or otherwise, or a Eurodollar Rate
Advance is not made on the date specified by the Borrower for any reason other
than default by the Lenders, the Borrower indemnifies each Lender for any loss
or cost incurred by it resulting therefrom, including, without limitation, any
loss or cost in liquidating or employing deposits acquired to fund or maintain
the Eurodollar Rate Advance. In connection with any assignment by any Lender of
any portion of the Loans made pursuant to Section 13.3 and made during the
Syndication Period, and if, notwithstanding the provisions of Section 2.2, the
Borrower has requested and the Administrative Agent has consented to the use of
the Eurodollar Rate, the Borrower shall be deemed to have repaid all outstanding
Eurodollar Rate Advances as of the effective date of such assignment and
reborrowed such amount as a Floating Rate Advance and/or Eurodollar Rate Advance
(chosen in accordance with the provisions of Section 2.2) and the
indemnification provisions under this Section 4.4 shall apply.
4.5 Lender Statements; Survival of Indemnity. If reasonably possible, each
Lender shall designate an alternate Lending Installation with respect to its
Eurodollar Rate Loans to reduce any liability of the Borrower to such Lender
under Sections 4.1 and 4.2 or to avoid the unavailability of a Type of Advance
under Section 4.3, so long as such designation is not disadvantageous to such
Lender. Each Lender requiring compensation pursuant to Section 2.13(E) or to
this Article IV shall use its reasonable efforts to notify the Borrower and the
Administrative Agent in writing of any Change, law, policy, rule, guideline or
directive giving rise to such demand for compensation not later than ninety (90)
days following the date upon which the responsible account officer of such
Lender knows or should have known of such Change, law, policy, rule, guideline
or directive. Any demand for compensation pursuant to this Article IV shall be
in writing and shall state the amount due, if any, under Section 4.1, 4.2 or 4.4
and shall set forth in reasonable detail the calculations upon which such Lender
determined such amount and state that such calculation has been made in a manner
consistent with the treatment generally accorded other borrowers. Such written
demand shall be rebuttably presumed correct for all purposes. Determination of
amounts payable under such Sections in connection with a Eurodollar Rate Loan
shall be calculated as though each Lender funded its Eurodollar Rate Loan
through the purchase of a deposit of the type and maturity corresponding to the
deposit used as a reference in determining the Eurodollar Rate applicable to
such Loan, whether in fact that is the case or not. The obligations of the
Borrower under Sections 4.1, 4.2 and 4.4 shall survive payment of the
Obligations and termination of this Agreement.
47
ARTICLE V: CONDITIONS PRECEDENT
5.1 Initial Advances and Letters of Credit. The Lenders shall not be
required to make the initial Loans or issue any Letters of Credit unless on or
prior to the Closing Date all of the following conditions precedent shall have
been fully satisfied:
(A) The Documents. Borrower shall have furnished to the Administrative
Agent each of the following, with sufficient copies for the Lenders, all in form
and substance satisfactory to the Administrative Agent and the Lenders:
(1) Copies of the Certificate of Incorporation of the Parent and the
Borrower, together with all amendments and certificates of good standing,
both certified by the appropriate governmental officer in its jurisdiction
of incorporation;
(2) Copies, certified by the Secretary or Assistant Secretary of each
of the Borrower and the Parent, of its respective By-Laws and of its
respective Board of Directors' resolutions (and resolutions of other
bodies, if any are deemed necessary by counsel for any Lender) authorizing
the execution of the Loan Documents;
(3) An incumbency certificate, executed by each of the Secretary or
Assistant Secretary of the Borrower and the Parent, which shall identify by
name and title and bear the signature of the officers of each of the
Borrower and the Parent authorized to sign the Loan Documents and to make
borrowings hereunder, upon which certificate the Lenders shall be entitled
to rely until informed of any change in writing by the Borrower;
(4) A certificate, in form and substance satisfactory to the
Administrative Agent, signed by the chief financial officer of the
Borrower, stating that on Closing Date no Default or Unmatured Default has
occurred and is continuing;
(5) A written opinion of the Borrower's and the Parent's counsel,
addressed to the Administrative Agent and the Lenders, addressing the
issues identified in Exhibit G hereto containing assumptions and
qualifications acceptable to the Administrative Agent and the Lenders;
(6) Notes payable to the order of each Lender;
(7) Such other documents as the Administrative Agent or any Lender or
its counsel may have reasonably requested, including, without limitation,
all of the documents reflected on the List of Closing Documents attached as
Exhibit H to this Agreement;
(8) Satisfactory evidence that the Borrower and its Subsidiaries have
made a full and complete assessment of the Year 2000 Issues and have a
realistic and achievable program for remediating the Year 2000 Issues;
48
(9) Satisfactory evidence that all sums due and payable under Section
10.7(A) and the Fee Letter have been paid;
(10) Satisfactory evidence that the Borrower has complied with the
requirements of all applicable Environmental Property Transfer Acts; and
(11) Satisfactory evidence that the effectiveness of the Loan
Documents shall not result in the occurrence of an "Event of Default" under
the Senior Notes.
(B) The Administrative Agent shall have obtained satisfactory results of
its due diligence, including, without limitation, with respect to financial
information and assets of the Borrower and their Subsidiaries, material pending
and threatened litigation and other administrative or legal proceedings
affecting the Borrower and its Subsidiaries, environmental reports and
liabilities pertaining to or arising with respect to properties of the Borrower
and the Borrower's material contracts and Contractual Obligations.
(C) The Borrower's cash management system and agreements with respect
thereto shall be satisfactory to the Administrative Agent.
(D) The Revolving Credit Availability on the Closing Date shall equal
$7,500,000.
5.2 Each Advance and Letter of Credit. The Lenders shall not be required to
make any Advance or issue any Letter of Credit, unless on the applicable
Borrowing Date, or in the case of a Letter of Credit, the date on which the
Letter of Credit is to be issued:
(i) There exists no Default or Unmatured Default; and
(ii) The representations and warranties contained in Article VI are
true and correct in all material respects as of such Borrowing Date except
for changes in the Schedules to this Agreement reflecting transactions
permitted by this Agreement.
Each Borrowing Notice with respect to each such Advance and the letter of
credit application with respect to a Letter of Credit shall constitute a
representation and warranty by the Borrower that the conditions contained in
Sections 5.2(i) and (ii) have been satisfied. Any Lender may require an
officer's certificate in substantially the form of Exhibit I hereto and/or a
duly completed compliance certificate in substantially the form of Exhibit J
hereto as a condition to making an Advance.
ARTICLE VI: REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent and the Lenders to enter into
this Agreement and to make the Loans and the other financial accommodations to
the Borrower and to issue the Letters of Credit described herein, the Borrower
represents and warrants as follows to each Lender and the Administrative Agent
as of the Closing Date, and thereafter on each date as required by Section 5.2:
49
6.1 Organization; Corporate Powers. The Borrower and each of its
Subsidiaries (i) is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction in which failure to be
so qualified and in good standing could reasonably be expected to result in a
Material Adverse Effect, and (iii) has all requisite corporate power and
authority to own, operate and encumber its property and to conduct its business
as presently conducted and as proposed to be conducted.
6.2 Authority.
(A) The Borrower has the requisite corporate power and authority to
execute, deliver and perform each of the Loan Documents.
(B) The execution, delivery and performance of each of the Loan Documents
and the consummation of the transactions contemplated thereby have been duly
approved by the board of directors and, if necessary, the shareholders of the
Borrower, and such approvals have not been rescinded. No other corporate action
or proceedings on the part of each of the Borrower is necessary to consummate
such transactions.
(C) Each of the Loan Documents to which the Borrower is a party has been
duly executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms (except as
enforceability may be limited by bankruptcy, insolvency, or similar laws
affecting the enforcement of creditors' rights generally), and no unmatured
default, default or breach of any covenant by any such party exists thereunder.
6.3 No Conflict; Governmental Consents. The execution, delivery and
performance of the Loan Documents to which the Borrower is a party do not and
will not (i) conflict with the certificate of incorporation or by-laws of the
Borrower, (ii) with respect to the Loan Documents, constitute a tortious
interference with any Contractual Obligation of any Person or conflict with,
result in a breach of or constitute (with or without notice or lapse of time or
both) a default under any Requirement of Law (including, without limitation, any
Environmental Property Transfer Act) or Contractual Obligation of the Borrower,
or require termination of any Contractual Obligation, except such interference,
breach, default or termination which individually or in the aggregate could not
reasonably be expected to result in a Material Adverse Effect, (iii) result in
or require the creation or imposition of any Lien whatsoever upon any of the
property or assets of the Borrower or any Subsidiary, other than Liens permitted
by the Loan Documents, or (iv) require any approval of the Borrower's or any
Subsidiary's shareholders except such as have been obtained. Except as set forth
on Schedule 6.3 to this Agreement, the execution, delivery and performance of
each of the Loan Documents to which the Borrower or its respective Subsidiaries
is a party do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by any Governmental
Authority, including under any Environmental Property Transfer Act, except
filings, consents or notices which have been made, obtained or given, or which,
if not made, obtained or given, individually or in the aggregate could not
reasonably be expected to result in a Material Adverse Effect.
50
6.4 Financial Statements. Complete and accurate copies of the following
financial statements and the following related information have been delivered
to the Administrative Agent: the consolidated balance sheet of the Borrower and
its Subsidiaries as at September 30, 1999 and the related combined statements of
income, changes in stockholders' equity and cash flows of the Borrower and its
Subsidiaries for the fiscal year then ended, and the audit report related
thereto.
6.5 No Material Adverse Change. Since September 30, 1999, there has
occurred no change in the business, properties, condition (financial or
otherwise) or results of operations of the Borrower and its Subsidiaries taken
as a whole or any other event which has had or could reasonably be expected to
result in a Material Adverse Effect.
6.6 Taxes.
(A) Tax Examinations. All deficiencies which have been asserted against the
Borrower or any of its Subsidiaries as a result of any federal, state, local or
foreign tax examination for each taxable year in respect of which an examination
has been conducted have been fully paid or finally settled or are being
contested in good faith, and as of the Closing Date no issue has been raised by
any taxing authority in any such examination which, by application of similar
principles, reasonably can be expected to result in assertion by such taxing
authority of a material deficiency for any other year not so examined which has
not been reserved for in the Borrower's and its Subsidiaries' consolidated
financial statements to the extent, if any, required by Agreement Accounting
Principles. Except as permitted pursuant to Section 7.2(D), neither the Borrower
nor any of its Subsidiaries anticipates any material tax liability with respect
to the years which have not been closed pursuant to applicable law.
(B) Payment of Taxes. All tax returns and reports of the Borrower and its
respective Subsidiaries required to be filed have been timely filed, and all
taxes, assessments, fees and other governmental charges thereupon and upon their
respective property, assets, income and franchises which are shown in such
returns or reports to be due and payable have been paid except those items which
are being contested in good faith and have been reserved for in accordance with
Agreement Accounting Principles. The Borrower has no knowledge of any proposed
tax assessment against it or any of its Subsidiaries that will result in or
could reasonably be expected to result in a Material Adverse Effect.
6.7 Litigation; Loss Contingencies and Violations. Except as set forth in
Schedule 6.7 to this Agreement, there is no action, suit, proceeding,
arbitration or (to the Borrower's knowledge) investigation before or by any
Governmental Authority or private arbitrator pending or, to the Borrower's
knowledge, threatened against the Borrower, or any of its Subsidiaries or any
property of any of them which will have or could reasonably be expected to
result in a Material Adverse Effect. Except as disclosed on Schedule 6.7, there
is no material loss contingency within the meaning of Agreement Accounting
Principles which has not been reflected in the consolidated financial statements
of the Borrower prepared and delivered pursuant to Section 7.1(A) for the fiscal
period during which such material loss contingency was incurred. The Borrower
and its Subsidiaries are in compliance with all Requirements of Law applicable
to them and their respective businesses, in each case where the failure to so
comply individually or in the aggregate could reasonably be expected to result
in a Material Adverse Effect. Such compliance includes, without limitation,
except as disclosed on Schedule 6.7 to this Agreement:
51
(i) the operations of the Borrower and its respective Subsidiaries
complying in all material respects with Environmental, Health or Safety
Requirements of Law;
(ii) the Borrower and its respective Subsidiaries having all permits,
licenses or other authorizations required under Environmental, Health or
Safety Requirements of Law to conduct their respective operations as
currently conducted and being in material compliance with such permits;
(iii) none of the Borrower, its Subsidiaries, or any of their
respective present property or operations, or, to the best of Borrower's or
any Subsidiary's knowledge, any of their respective past property or
operations, being subject to or the subject of, any investigation known to
the Borrower or any of its respective Subsidiaries, any judicial or
administrative proceeding, order, judgment, decree, settlement or other
agreement respecting: (A) any material violation of Environmental, Health
or Safety Requirements of Law; (B) any remedial action required under
Environmental, Health or Safety Requirements of Law; or (C) any material
claims or liabilities arising from the Release or threatened Release of a
Contaminant into the environment;
(iv) there not being now, nor to the best of the Borrower's or any
Subsidiary's knowledge having ever been, other than in material compliance
with Environmental, Health or Safety Requirements of Law, on or in the
property of the Borrower or any Subsidiary any landfill, waste pile,
underground storage tanks, aboveground storage tanks, surface impoundment
or hazardous waste storage facility of any kind, any polychlorinated
biphenyls (PCBs) used in hydraulic oils, electric transformers or other
equipment, or any asbestos containing material; and
(v) Neither the Borrower nor any of its Subsidiaries having any
material contingent obligation in connection with any Release or threatened
Release of a Contaminant into the environment.
Neither the Borrower nor any of its Subsidiaries is subject to or in default
with respect to any final judgment, writ, injunction, restraining order or order
of any nature, decree, rule or regulation of any court or Governmental Authority
which will result in or could reasonably be expected to result in a Material
Adverse Effect.
(B) For purposes of this Section 6.7, with respect to any Environmental,
Health and Safety Requirements of Law, "material" means any noncompliance or
basis for liability which could reasonably be likely to subject the Borrower to
liability in excess of $3,000,000.
52
6.8 Subsidiaries. Schedule 6.8 to this Agreement (i) contains a description
of the corporate structure of the Borrower, its Subsidiaries and any other
Person in which the Borrower or any of its Subsidiaries holds a material Equity
Interest (in chart form) as of the Closing Date; and (ii) accurately sets forth
(A) the correct legal name, the jurisdiction of incorporation and the
jurisdictions in which the Borrower and the direct and indirect Subsidiaries of
the Borrower are qualified to transact business as a foreign corporation as of
the Closing Date, (B) the authorized, issued and outstanding shares of each
class of Capital Stock of the Borrower and each of its Subsidiaries and the
owners of such shares (on a fully-diluted basis) as of the Closing Date, and (C)
a summary of the direct and indirect partnership, joint venture, or other Equity
Interests, if any, of the Borrower and the Subsidiaries of the Borrower in any
Person that is not a corporation as of the Closing Date. None of the issued and
outstanding Capital Stock of the Borrower or any of its Subsidiaries is subject
to any vesting, redemption, or repurchase agreement, and there are no warrants
or options outstanding with respect to such Capital Stock as of the Closing
Date, except as disclosed on Schedule 6.8. The outstanding Capital Stock of the
Borrower and each of its Subsidiaries is duly authorized, validly issued, fully
paid and nonassessable and is not Margin Stock. The Borrower has no Subsidiaries
other than Haynes Sour Gas Tubulars, Inc., a Delaware corporation, the Foreign
Subsidiaries, and any other Person permitted to be formed or acquired under this
Agreement.
6.9 ERISA. Except as disclosed on Schedule 6.9, no Benefit Plan has
incurred any accumulated funding deficiency (as defined in Sections 302(a)(2) of
ERISA and 412(a) of the Code) whether or not waived. No Borrower nor any member
of the Controlled Group has incurred any liability in excess of $3,000,000 to
the PBGC which remains outstanding other than the payment of premiums, and there
are no premium payments which have become due which are unpaid. Since December
31, 1998, there has been no material adverse change in the funding status or
financial condition of any Benefit Plan. Neither the Borrower nor any member of
the Controlled Group has (i) failed to make a required contribution or payment
to a Multiemployer Plan or (ii) made a complete or partial withdrawal under
Sections 4203 or 4205 of ERISA from a Multiemployer Plan, where in either event
the related liability would be in excess of $3,000,000. Except as provided on
Schedule 6.9, neither the Borrower nor any member of the Controlled Group has
failed to make a required installment or any other required payment under
Section 412 of the Code on or before the due date for such installment or other
payment and neither the Borrower nor any member of the Controlled Group is
required to provide security to a Benefit Plan under Section 401(a)(29) of the
Code due to a Plan amendment that results in an increase in current liability
for the plan year. Each Plan which is intended to be qualified under Section
401(a) of the Code as currently in effect has received a favorable determination
letter that such Plan and each trust related to such Plan is exempt from federal
income tax under Section 501(a) of the Code as currently in effect. The Borrower
and all of its Subsidiaries are in compliance with the responsibilities,
obligations and duties imposed on them by ERISA and the Code with respect to all
Plans except where the liability for noncompliance would not exceed $3,000,000.
Neither the Borrower nor any of its respective Subsidiaries nor any fiduciary of
any Plan has engaged in a nonexempt prohibited transaction described in Sections
406 of ERISA or 4975 of the Code which could reasonably be expected to subject
the Borrower to liability in excess of $3,000,000. Neither the Borrower nor any
member of the Controlled Group has taken or failed to take any action which
would constitute or result in a Termination Event, which action or inaction
could reasonably be expected to subject the Borrower to liability in excess of
$3,000,000. Neither the Borrower nor any member of the Controlled Group is
subject to any liability in excess of $3,000,000 under Sections 4063, 4064,
4069, 4204 or 4212(c) of ERISA.
53
6.10 Accuracy of Information. As of the Closing Date, the information,
exhibits and reports furnished by or on behalf of the Borrower and any of its
Subsidiaries to the Administrative Agent or to any Lender in connection with the
negotiation of, or compliance with, the Loan Documents, the representations and
warranties of the Borrower and its Subsidiaries contained in the Loan Documents,
and all certificates and documents delivered to the Administrative Agent and the
Lenders pursuant to the terms thereof, taken as a whole, do not contain as of
the date furnished any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading.
6.11 Securities Activities. Neither the Borrower nor any Subsidiary thereof
are engaged in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
6.12 Material Agreements. Neither the Borrower nor any Subsidiary thereof
are a party to any Contractual Obligation or subject to any charter or other
corporate restriction which, if complied with or performed in accordance with
its terms, will have or could reasonably be expected to result in, individually
or in the aggregate, a Material Adverse Effect. Neither the Borrower nor any
Subsidiary thereof have received notice or has knowledge that (i) it is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Contractual Obligation applicable to
it, or (ii) any condition exists which, with the giving of notice or the lapse
of time or both, would constitute a default with respect to any such Contractual
Obligation, in each case, except where such default or defaults, if any,
individually or in the aggregate will not result in or could not reasonably be
expected to result in a Material Adverse Effect.
6.13 Assets and Properties. The Borrower and each of its Subsidiaries have
good and marketable title to all of their material assets and properties
(tangible and intangible, real or personal) owned by them or a valid leasehold
interest in all of their material leased assets (except insofar as marketability
may be limited by any laws or regulations of any Governmental Authority
affecting such assets), and all such assets and property are free and clear of
all Liens, except Liens permitted under Section 7.3(C). Substantially all of the
material assets and properties owned by, leased to or used by the Borrower
and/or each such Subsidiary of the Borrower are in adequate operating condition
and repair, ordinary wear and tear excepted. Except for Liens granted to the
Administrative Agent for the benefit of the Administrative Agent and the Holders
of Secured Obligations, neither this Agreement nor any other Loan Document, nor
any transaction contemplated under any such agreement, will affect any right,
title or interest of the Borrower or its Subsidiaries in and to any of such
assets in a manner that would have or could reasonably be expected to result in
a Material Adverse Effect.
54
6.14 Statutory Indebtedness Restrictions. Neither the Borrower nor any of
its Subsidiaries are subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or the
Investment Company Act of 1940, or any other federal or state statute or
regulation which limits its ability to incur indebtedness or its ability to
consummate the transactions contemplated hereby.
6.15 Insurance. Schedule 6.15 to this Agreement accurately sets forth as of
the Closing Date all insurance policies and programs currently in effect with
respect to the respective properties and assets and business of the Borrower and
its Subsidiaries, specifying, for each such policy and program, (i) the amount
thereof, (ii) the risks insured against thereby, (iii) the name of the insurer
and each insured party thereunder, (iv) the policy or other identification
number thereof, (v) the expiration date thereof, (vi) the annual premium with
respect thereto, and (vii) any reserves relating to any self-insurance program
that is in effect. Such insurance policies and programs reflect coverage that is
reasonably consistent with prudent industry practice.
6.16 Labor Matters.
As of the Closing Date, no attempt to organize the employees of the
Borrower, and no labor disputes, strikes or walkouts affecting the operations of
the Borrower or any of its Subsidiaries, is pending, or, to the Borrower's
knowledge, threatened, planned or contemplated.
6.17 Year 2000 Issues. The Borrower and its Subsidiaries have made a full
and complete assessment of the Year 2000 Issues and have a realistic and
achievable program for remediating the Year 2000 Issues on a timely basis. Based
on this assessment and program, neither the Borrower nor any Subsidiary
reasonably anticipates any material adverse effect on its operations, business
or financial condition as a result of Year 2000 Issues.
ARTICLE VII : COVENANTS
The Borrower covenants and agrees that so long as any Commitments are
outstanding and thereafter until payment in full of all of the Obligations
(other than contingent indemnity obligations), unless the Required Lenders shall
otherwise give prior written consent:
7.1 Reporting. The Borrower shall:
(A) Financial Reporting . Furnish to the Lenders:
(i) Monthly Reports. As soon as practicable, and in any event within
forty-five (45) days after the end of each calendar month beginning with
the month ending October 31, 1999, the consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at the end of such
period and the related consolidated and consolidating statements of income
and cash flows of the Borrower and its Subsidiaries for such calendar
month, certified by the chief financial officer of the Borrower as fairly
presenting the consolidated and consolidating financial position of the
Borrower and its Subsidiaries as at the dates indicated and the results of
their operations and cash flows for the calendar months indicated in
accordance with Agreement Accounting Principles, subject to normal year end
adjustments, and, in comparative form the corresponding figures for such
month set forth in the consolidated and consolidating financial budget for
the current fiscal year delivered pursuant to Section 7.1(A)(v) or in such
other form mutually acceptable to the Borrower and the Administrative
Agent.
55
(ii) Quarterly Reports. As soon as practicable, and in any event
within forty-five (45) days after the end of each fiscal quarter for the
first three fiscal quarters in each fiscal year, the consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such period and
the related consolidated statements of cash flows of the Borrower and its
Subsidiaries for such fiscal quarter and for the period from the beginning
of the then current fiscal year to the end of such fiscal quarter,
certified by the chief financial officer of the Borrower on behalf of the
Borrower as fairly presenting the consolidated financial position of the
Borrower and its Subsidiaries as at the dates indicated and the results of
their operations and cash flows for the periods indicated in accordance
with Agreement Accounting Principles, subject to normal year end
adjustments, and in comparative form such corresponding consolidated
information as set forth in the consolidated financial budget for the
current fiscal year delivered pursuant to Section 7.1(A)(v), together with
the corresponding figures for such fiscal quarter during the previous
fiscal year or in a form otherwise mutually acceptable to the Borrower and
the Administrative Agent.
(iii) Annual Reports. As soon as practicable, and in any event within
ninety (90) days after the end of each fiscal year, (a) the consolidated
balance sheet of the Borrower and its Subsidiaries as at the end of such
fiscal year and the related consolidated statements of income,
stockholders' equity and cash flows of the Borrower and its Subsidiaries
for such fiscal year, and in comparative form, unless otherwise agreed to
by the Administrative Agent and the Borrower, the corresponding figures for
the previous fiscal year along with consolidating schedules in form and
substance sufficient to calculate the financial covenants set forth in
Section 7.4, and a schedule from the Borrower setting forth for each item
in clause (a) hereof, and the corresponding figures from the consolidated
financial budget for the current fiscal year delivered pursuant to Section
7.1(A)(v), and (c) an audit report on the items listed in clause (a) hereof
of independent certified public accountants of recognized national
standing, which audit report shall be unqualified and shall state that such
financial statements fairly present the consolidated and consolidating
financial position of the Borrower and its Subsidiaries as at the dates
indicated and the results of their operations and cash flows for the
periods indicated in conformity with Agreement Accounting Principles and
that the examination by such accountants in connection with such
consolidated and consolidating financial statements has been made in
accordance with generally accepted auditing standards. The deliveries made
pursuant to this clause (iii) shall be accompanied, within one-hundred
twenty (120) days after the end of each fiscal year by any management
letter prepared by the above-referenced accountants.
56
(iv) Officer's Certificate. Together with each delivery of any
financial statement (a) pursuant to clauses(ii) and (iii) of this Section
7.1(A), an Officer's Certificate of the Borrower, substantially in the form
of Exhibit I attached hereto and made a part hereof, stating that no
Default or Unmatured Default exists, or if any Default or Unmatured Default
exists, stating the nature and status thereof and (b) pursuant to clauses
(ii) and (iii) of this Section 7.1(A), a compliance certificate,
substantially in the form of Exhibit J attached hereto and made a part
hereof, signed by the Borrower's chief financial officer or treasurer,
setting forth calculations for the period then ended for Section 2.3(B), if
applicable, which demonstrate compliance, when applicable, with the
provisions of Section 7.4.
(v) Borrowing Base Certificates. A Borrowing Base Certificate in a
form substantially similar to Exhibit C, (x) each calendar week, with such
Borrowing Base Certificate being delivered to the Administrative Agent on
the third Business Day following the last Business Day in such calendar
week, with respect to the Net Amount of Eligible Accounts related to the
Borrower and (y) each calendar month, with such Borrowing Base Certificate
being delivered to the Administrative Agent on the tenth Business Day
following the end of such month, with respect to all Eligible Inventory and
all Net Amount of Eligible Accounts, including, without limitation,
information regarding the agings of the accounts receivable in the
Borrowing Base, a list of all accounts receivable which do not constitute
Eligible Accounts, and any Inventory roll forwards. The Administrative
Agent may also request supporting documentation in connection with any
delivery of any Borrowing Base Certificate. Each such Borrowing Base
Certificate and any supporting documents related thereto shall be certified
by the chief financial officer of the Borrower as being true and correct on
the last day of the week or month subject to such Borrowing Base
Certificate. Notwithstanding the foregoing, upon the Administrative Agent's
request, the Borrower shall deliver Borrowing Base Certificates more often
than monthly or weekly, as applicable, and the Administrative Agent may at
any time request by telephone, facsimile or e-mail a verification by the
Borrower of the validity or outstanding balance of any Account subject to
the terms of this Agreement. The Borrower may update the Borrowing Base
Certificates and supporting documents more frequently than weekly or
monthly, as applicable, and the most recently delivered Borrowing Base
Certificates shall be the applicable Borrowing Base Certificates for
purposes of determining the Borrowing Base at any time;
(vi) Budgets; Business Plans; Financial Projections. As soon as
practicable and in any event not later than thirty (30) days after the
beginning of each fiscal year of the Borrower, a copy of the plan and
forecast (including a projected balance sheet, income statement and a
statement of cash flow) of the Borrower and their Subsidiaries for the
upcoming fiscal year of the Borrower on a monthly basis and for the
succeeding fiscal year in its entirety prepared in such detail as shall be
reasonably satisfactory to the Administrative Agent.
57
(B) Notice of Default. Promptly upon any of the chief executive officer,
chief operating officer, chief financial officer, treasurer or controller of the
Borrower obtaining knowledge (i) of any condition or event which constitutes a
Default or Unmatured Default, or becoming aware that any Lender or
Administrative Agent has given any written notice with respect to a claimed
Default or Unmatured Default under this Agreement, or (ii) that any Person has
given any written notice to the Borrower or any Subsidiary of the Borrower or
taken any other action with respect to a claimed default or event or condition
of the type referred to in Section 8.1(E), deliver to the Administrative Agent
and the Lenders an Officer's Certificate specifying (a) the nature and period of
existence of any such claimed default, Default, Unmatured Default, condition or
event, (b) the notice given or action taken by such Person in connection
therewith, and (c) what action the Borrower has taken, is taking and propose to
take with respect thereto.
(C) Lawsuits. (i) Promptly upon the Borrower obtaining knowledge of the
institution of, or written threat of, any action, suit, proceeding, governmental
investigation or arbitration against or affecting the Borrower or any of its
Subsidiaries or any property of the Borrower or any of its Subsidiaries not
previously disclosed pursuant to Section 6.7, which action, suit, proceeding,
governmental investigation or arbitration exposes, or in the case of multiple
actions, suits, proceedings, governmental investigations or arbitrations arising
out of the same general allegations or circumstances which expose, in the
Borrower's reasonable judgment, the Borrower or any of its Subsidiaries to
liability in an amount aggregating $3,000,000 or more (exclusive of claims
covered by insurance policies of the Borrower or any of its Subsidiaries unless
the insurers of such claims have disclaimed coverage or reserved the right to
disclaim coverage on such claims and exclusive of claims covered by the
indemnity of a financially responsible indemnitor in favor of the Borrower or
any of its Subsidiaries unless the indemnitor has disclaimed or reserved the
right to disclaim coverage thereof), give written notice thereof to the
Administrative Agent and the Lenders and provide such other information as may
be reasonably available to enable each Lender and the Administrative Agent and
its counsel to evaluate such matters; and (ii) in addition to the requirements
set forth in clause (i) of this Section 7.1(C), upon request of the
Administrative Agent or the Required Lenders, promptly give written notice of
the status of any action, suit, proceeding, governmental investigation or
arbitration covered by a report delivered pursuant to clause (i) above and
provide such other information as may be reasonably available to it that would
not violate any attorney-client privilege by disclosure to the Lenders to enable
each Lender and the Administrative Agent and its counsel to evaluate such
matters.
58
(D) ERISA Notices. Deliver or cause to be delivered to the Administrative
Agent and the Lenders, at the Borrower's expense, the following information and
notices as soon as reasonably possible, and in any event:
(i) (a) within ten (10) Business Days after the Borrower knows that a
Termination Event has occurred, a written statement of the chief financial
officer of the Borrower describing such Termination Event and the action,
if any, which the Borrower has taken, is taking or proposes to take with
respect thereto, and when known, any action taken or threatened by the IRS,
DOL or PBGC with respect thereto and (b) within ten (10) Business Days
after any member of the Controlled Group obtains knowledge that a
Termination Event has occurred which could reasonably be expected to
subject the Borrower to liability, individually or in the aggregate, in
excess of $3,000,000, a written statement of the chief financial officer of
the Borrower describing such Termination Event and the action, if any,
which the member of the Controlled Group has taken, is taking or proposes
to take with respect thereto, and when known, any action taken or
threatened by the IRS, DOL or PBGC with respect thereto;
(ii) within ten (10) Business Days after the Borrower or any of its
Subsidiaries obtains knowledge that a prohibited transaction (defined in
Sections 406 of ERISA and Section 4975 of the Code) has occurred which
could result individually or in the aggregate in liability in excess of
$3,000,000, a statement of the chief financial officer of the Borrower
describing such transaction and the action which the Borrower or such
Subsidiary has taken, is taking or proposes to take with respect thereto;
(iii) within ten (10) Business Days after the Borrower or any of its
Subsidiaries receives notice of any unfavorable determination letter from
the IRS regarding the qualification of a Plan under Section 401(a) of the
Code which could result in liability individually or in the aggregate in
excess of $3,000,000, copies of each such letter;
(iv) within fifteen (15) Business Days after a request by the Lender,
copies of the most recent annual report (form 5500 series), including
Schedule B thereto, filed with respect to each Benefit Plan;
(v) within fifteen (15) Business Days after the later of (A) a request
by the Lender or (B) receipt by the Borrower or any member of the
Controlled Group of each actuarial report for any Benefit Plan or
Multiemployer Plan and each annual report for any Multiemployer Plan,
copies of each such report;
(vi) within fifteen (15) Business Days after the filing thereof with
the IRS, a copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by the Borrower, the
Borrower's Subsidiaries, or a member of the Controlled Group with respect
to such request;
59
(vii) within fifteen (15) Business Days after receipt by the Borrower
or any member of the Controlled Group of the PBGC's intention to terminate
a Benefit Plan or to have a trustee appointed to administer a Benefit Plan
which could result in liability individually or in the aggregate in excess
of $3,000,000, copies of each such notice;
(viii) within fifteen (15) Business Days after receipt by the
Borrower, the Borrower's Subsidiaries, or any member of the Controlled
Group of a notice from a Multiemployer Plan regarding the imposition of
withdrawal liability which could result in liability individually or in the
aggregate in excess of $3,000,000, copies of each such notice;
(ix) within ten (10) Business Days after the Borrower, any of
Borrower's Subsidiaries, or any member of the Controlled Group fails to
make a required installment or any other required payment under Section 412
of the Code on or before the due date for such installment or payment which
could result in liability individually or in the aggregate in excess of
$3,000,000, a notification of such failure; and
(x) within ten (10) Business Days the Borrower, the Borrower's
Subsidiaries, or any member of the Controlled Group knows or has reason to
know that (a) a Multiemployer Plan has been terminated, (b) the
administrator or plan sponsor of a Multiemployer Plan intends to terminate
a Multiemployer Plan, or (c) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan,
in each case where liability individually or in the aggregate could exceed
$3,000,000
For purposes of this Section 7.1(D), the Borrower, any of its Subsidiaries and
any member of the Controlled Group shall be deemed to know all facts known by
the Administrator of any Plan (other than a Multiemployer Plan) of which the
Borrower or any member of the Controlled Group or such Subsidiary is the plan
sponsor.
(E) Labor Matters. Notify the Administrative Agent and the Lenders in
writing, promptly upon the Borrower's learning thereof, of (i) any material
labor dispute to which the Borrower or any of its Subsidiaries may become a
party, including, without limitation, any strikes, lockouts or other disputes
relating to such Persons' plants and other facilities and (ii) any Worker
Adjustment and Retraining Notification Act liability incurred with respect to
the closing of any plant or other facility of the Borrower or any of its
Subsidiaries.
(F) Other Indebtedness. Deliver to the Administrative Agent (i) a copy of
each regular report, notice or communication regarding potential or actual
defaults (including any accompanying officer's certificate) delivered by or on
behalf of the Borrower or its Subsidiaries to the holders of funded Indebtedness
pursuant to the terms of the agreements governing such Indebtedness, such
delivery to be made at the same time and by the same means as such notice or
other communication is delivered to such holders, and (ii) a copy of each other
notice or other communication regarding potential or actual defaults received by
the Borrower or its Subsidiaries from the holders of the Senior Notes pursuant
to the terms of such Senior Notes, such delivery to be made promptly after such
notice or other communication is received by the Borrower or its Subsidiaries.
60
(G) Other Reports. Deliver or cause to be delivered to the Administrative
Agent and the Lenders copies of all financial statements, reports and notices,
if any, sent or made available generally by the Borrower or its respective
Subsidiaries to the holders of the Senior Notes or filed with the Commission by
the Borrower or its respective Subsidiaries, all press releases made available
generally by the Borrower or its respective Subsidiaries to the public
concerning material developments in the business of the Borrower or any such
Subsidiary and all notifications received from the Commission by the Borrower or
its respective Subsidiaries pursuant to the Securities Exchange Act of 1934 and
the rules promulgated thereunder; provided, however, that the Borrower shall not
be required to provide copies of routine correspondence with the Commission
regarding filings under the Securities Act of 1933 or any comments of the
Commission with respect thereto or responses to any such comments.
(H) Environmental Notices. As soon as possible and in any event within ten
(10) days after receipt by the Borrower, a copy of (i) any notice or claim to
the effect that the Borrower or any of its Subsidiaries is or may be liable to
any Person as a result of the Release by the Borrower, any of its Subsidiaries,
or any other Person of any Contaminant into the environment, and (ii) any notice
alleging any violation of any Environmental, Health or Safety Requirements of
Law by the Borrower or any of its Subsidiaries if, in either case, such notice
or claim relates to an event which could reasonably be expected to subject the
Borrower or its Subsidiaries to liability, individually or in the aggregate, in
excess of $3,000,000.
(I) Year 2000. The Borrower and its Subsidiaries will take all actions
reasonably necessary to assure that the Year 2000 Issues will not result in a
Material Adverse Effect on the business operations or financial condition of the
Borrower or its Subsidiaries. The Borrower and its Subsidiaries will advise the
Lenders prior to the Closing Date of any reasonably anticipated Material Adverse
Effect as a result of Year 2000 Issues.
(J) Other Information. Promptly upon receiving a request therefor from the
Administrative Agent, prepare and deliver to the Administrative Agent and the
Lenders such other information with respect to the Borrower, any of its
Subsidiaries, or the Collateral, including, without limitation, schedules
identifying and describing the Collateral and any dispositions thereof or any
Asset Sale or Financing (and the use of the Net Cash Proceeds thereof), as from
time to time may be reasonably requested by the Administrative Agent.
7.2 Affirmative Covenants.
(A) Corporate Existence, Etc. The Borrower shall, and shall cause each of
its Subsidiaries to, at all times maintain their corporate existence and
preserve and keep, or cause to be preserved and kept, in full force and effect
their rights and franchises material to their businesses, unless failure to
maintain such existence or such rights and franchises could not reasonably be
expected to result in a Material Adverse Effect.
61
(B) Corporate Powers; Conduct of Business. The Borrower shall, and shall
cause each of its Subsidiaries to, qualify and remain qualified to do business
in each jurisdiction in which the nature of its business requires it to be so
qualified and where the failure to be so qualified will have or could reasonably
be expected to result in a Material Adverse Effect.
(C) Compliance with Laws, Etc. The Borrower and its Subsidiaries shall
comply with all Environmental, Health or Safety Requirements of Law, except
where noncompliance will not have or is not reasonably likely to subject the
Borrower or any of its Subsidiaries to liability, individually or in the
aggregate, in excess of $3,000,000. In addition to the foregoing, the Borrower
shall, and shall cause its Subsidiaries to, (a) comply with all other
Requirements of Law and all restrictive covenants affecting such Person or the
business, properties, assets or operations of such Person, and (b) obtain as
needed all Permits necessary for their operations and maintain such Permits in
good standing, in each case unless failure to comply or obtain could not
reasonably be expected to result in a Material Adverse Effect.
(D) Payment of Taxes and Claims; Tax Consolidation. The Borrower shall pay,
and cause each of its Subsidiaries to pay, (i) all taxes, assessments and other
governmental charges imposed upon them or on any of their properties or assets
or in respect of any of their franchises, business, income or property before
any penalty or interest accrues thereon, and (ii) all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums which
have become due and payable and which by law have or may become a Lien (other
than a Lien permitted by Section 7.3(C)) upon the Borrower's or any Subsidiary's
property or assets, prior to the time when any penalty or fine shall be incurred
with respect thereto; provided, however, that no such taxes, assessments and
governmental charges referred to in clause (i) above or claims referred to in
clause (ii) above (and interest, penalties or fines relating thereto) need be
paid if being contested in good faith by appropriate proceedings diligently
instituted and conducted and if such reserve or other appropriate provision, if
any, as shall be required in conformity with Agreement Accounting Principles
shall have been made therefor.
(E) Insurance. The Borrower shall maintain for itself and its Subsidiaries,
or shall cause each of their Subsidiaries to maintain in full force and effect,
the insurance policies and programs listed on Schedule 6.15 to this Agreement or
substantially similar policies and programs or other policies and programs as
reflect coverage that is reasonably consistent with prudent industry practice.
The Borrower shall deliver to the Administrative Agent endorsements (x) to all
"All Risk" physical damage insurance policies on all of the Borrower's tangible
real and personal property and assets and business interruption insurance
policies naming the Administrative Agent loss payee, and (y) to all general
liability and other liability policies naming the Administrative Agent an
additional insured. In the event the Borrower or any of its Subsidiaries at any
time or times hereafter shall fail to obtain or maintain any of the policies or
insurance required herein or to pay any premium in whole or in part relating
thereto, then the Administrative Agent, without waiving or releasing any
obligations or resulting Default hereunder, may at any time or times thereafter
(but shall be under no obligation to do so) obtain and maintain such policies of
insurance and pay such premiums and take any other action with respect thereto
which the Administrative Agent deems advisable. All sums so disbursed by the
Administrative Agent shall constitute part of the Obligations, payable as
provided in this Agreement.
62
(F) Inspection of Property; Books and Records; Discussions. The Borrower
shall permit and cause each of its Subsidiaries to permit, any authorized
representative(s) designated by either the Administrative Agent or any Lender to
visit and inspect any of the properties of the Borrower or any of its
Subsidiaries, to examine and make copies of their respective financial and
accounting records, books, journals, orders, receipts and any correspondence and
other data relating to their respective businesses or the transactions
contemplated hereby (including, without limitation, in connection with
environmental compliance, hazard or liability), and to discuss their affairs,
finances and accounts with their officers and independent certified public
accountants, all upon reasonable notice and at such reasonable times during
normal business hours (subject to applicable confidentiality restrictions), as
often as may be reasonably requested. The Borrower shall keep and maintain, and
cause each of its Subsidiaries to keep and maintain, in all material respects,
proper books of record and account in which entries in conformity with Agreement
Accounting Principles shall be made of all dealings and transactions in relation
to their respective businesses and activities.
(G) RESERVED.
(H) Maintenance of Property. The Borrower shall cause all material property
useful and necessary in the conduct of its businesses or the businesses of any
of its Subsidiaries to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and shall cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Borrower may be necessary so that the
businesses carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section 7.2(H)
shall prevent the Borrower from discontinuing the operation or maintenance of
any of such property if such discontinuance is, in the judgment of the Borrower,
desirable in the conduct of their businesses or the businesses of any of its
Subsidiaries and not disadvantageous in any material respect to the
Administrative Agent or the Lenders.
(I) Use of Proceeds. The Borrower shall use the proceeds of the Revolving
Loans to (i) repay existing Indebtedness and (ii) provide funds for the
additional working capital needs and other general corporate purposes of the
Borrower. The Borrower will not, nor will it permit any Subsidiary to, use any
of the proceeds of the Loans to purchase or carry any Margin Stock or to make
any Acquisition, other than a Permitted Acquisition.
(J) Maintenance of Intellectual Property. The Borrower shall exercise
commercially reasonable efforts to preserve, protect and, if appropriate, file
applications with the United States Patent and Trademark Office, to register its
existing and future material U.S. trademarks or to seek U.S. patent protection.
63
7.3 Negative Covenants.
(A) Indebtedness. Neither the Borrower, nor any of its respective
Subsidiaries, shall directly or indirectly create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to any Indebtedness,
except:
(i) the Obligations;
(ii) Indebtedness evidenced by the Senior Notes;
(iii) Permitted Existing Indebtedness and Permitted Refinancing
Indebtedness;
(iv) Indebtedness in respect of obligations secured by Customary
Permitted Liens and other Liens permitted under this Agreement;
(v) Indebtedness owed to the Lenders in respect of Hedging Obligations
permitted under Section 7.3(P);
(vi) secured or unsecured purchase money Indebtedness (including
Capitalized Leases) incurred by the Borrower or any of its Subsidiaries
after the Closing Date to finance the acquisition of fixed assets, if (1)
at the time of such incurrence, no Default or Unmatured Default has
occurred and is continuing or would result from such incurrence, (2) such
Indebtedness has a scheduled maturity and is not due on demand, (3) such
Indebtedness does not exceed the lower of the fair market value or the cost
of the applicable fixed assets on the date acquired, (4) such Indebtedness
does not exceed $15,000,000 in the aggregate outstanding at any time, and
(5) any Lien securing such Indebtedness is permitted under Section 7.3(C)
(such Indebtedness being referred to herein as "Permitted Purchase Money
Indebtedness");
(vii) Indebtedness (a) in respect of performance bonds and surety or
appeal bonds provided by the Borrower or any of its Subsidiaries to their
customers in the ordinary course of their business, (b) in respect of
performance bonds or similar obligations of the Borrower or any of its
Subsidiaries for or in connection with or to secure statutory, regulatory
or similar obligations, including obligations under health, safety or
environmental obligations and (c) arising from guarantees to suppliers,
lessors, licensees, contractors, franchises or customers of obligations
(other than Indebtedness) incurred in the ordinary course of business;
(viii) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or
from guarantees or letters of credit, surety bonds or performance bonds
securing any obligations of the Borrower pursuant to such agreement, in
each case incurred in connection with the disposition of any business
assets of the Borrower (other than a guarantee or other obligation incurred
by a Person acquiring such assets for the purpose of financing such
purchase) in a principal amount not to exceed the gross proceeds actually
received by the Borrower or any of its Subsidiaries in connection with such
disposition; provided, however, that the principal amount of any
Indebtedness incurred pursuant to this clause, when taken together with all
Indebtedness incurred pursuant to this clause and then outstanding, shall
not exceed $2,000,000;
64
(ix) Indebtedness (i) of the Borrower arising from the honoring by a
bank or other financial institution of a check, draft or similar instrument
issued by the Borrower drawn against insufficient funds in the ordinary
course of business in an amount not to exceed $250,000 at any time, and so
long as such Indebtedness is extinguished within two (2) Business Days of
its incurrence and (ii) Indebtedness of any Foreign Subsidiary arising from
the honoring by a bank or other financial institution of a check, draft or
similar instrument issued by such Foreign Subsidiary drawn against
insufficient funds in the ordinary course of business, provided that such
Indebtedness shall not secured by any Inventory or Accounts of the Borrower
or any Subsidiary;
(x) Indebtedness of a Subsidiary payable to the Borrower or any other
Subsidiary;
(xi) Indebtedness of the Borrower payable to any Subsidiary; provided,
however, that the aggregate of such Indebtedness shall not exceed
$5,000,000;
(xii) Indebtedness due and payable by the Borrower in favor the Parent
with respect to the Borrower's repurchase from its former employees of
Capital Stock of the Parent or options to purchase Capital Stock of the
Parent; provided, however that such Indebtedness in the aggregate shall not
exceed $1,000,000 at any time and the repayment of such Indebtedness shall
be subordinate to the repayment in full of the Secured Obligations;
(xiii) Indebtedness permitted pursuant to Section 7.3(F); and
(xiv) unsecured Indebtedness not described in clauses (i) - (xiii) of
this Section 7.3(A), so long as the aggregate of such Indebtedness does not
at any time exceed $10,000,000.
(B) Sales of Assets. Neither the Borrower nor any of its Subsidiaries shall
sell, assign, transfer, lease, convey or otherwise dispose of any property,
whether now owned or hereafter acquired, or any income or profits therefrom, or
enter into any agreement to do so, except:
65
(i) sales of Inventory in the ordinary course of business;
(ii) the disposition in the ordinary course of business of property
that is obsolete, excess or no longer useful in the Borrower's or its
Subsidiaries' business or the sale of inventory in the ordinary course of
business;
(iii) sales, assignments, transfers, leases, conveyances or other
dispositions of other assets if such transaction (a) is for consideration
consisting at least 75% of cash, (b) is for not less than fair market
value, and (c) when combined with all such other transactions (each such
transaction being valued at book value) (i) during the immediately
preceding twelve-month period, represents the disposition of not greater
than ten percent (10%) of the Borrower's Consolidated Assets at the end of
the fiscal year immediately preceding that in which such transaction is
proposed to be entered into, and (ii) during the period from the Closing
Date to the date of such proposed transaction, represents the disposition
of not greater than twenty percent (20%) of the Borrower's Consolidated
Assets at the end of the fiscal year immediately preceding that in which
such transaction is proposed to be entered into; and
(iv) the sale, transfer or assignment of all or part of the real
property set forth on Schedule 7.3(B) hereto; provided, however, that the
Borrower shall not indemnify the purchaser, transferee or assignee of such
real property with respect to any environmental loss or claim not customary
for the sale, transfer or assignment of similar property.
(C) Liens. Neither the Borrower nor any of its Subsidiaries shall directly
or indirectly create, incur, assume or permit to exist any Lien on or with
respect to any of their respective property or assets except:
(i) Liens securing the Secured Obligations;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens;
(iv) purchase money Liens (including the interest of a lessor under a
Capitalized Lease and Liens to which any property is subject at the time of
the Borrower's acquisition thereof) securing Permitted Purchase Money
Indebtedness; provided that such Liens shall not apply to any property of
the Borrower or its Subsidiaries other than that purchased or subject to
such Capitalized Lease;
(v) Liens securing Indebtedness assumed or incurred in connection with
a Permitted Acquisition; and
(vi) Liens not described in clauses (i) - (v) of this Section 7.3(C)
securing Indebtedness which Indebtedness in the aggregate does not exceed
$5,000,000 at any time.
66
(D) Investments. Except to the extent permitted pursuant to paragraph (G)
below, neither the Borrower nor any of its Subsidiaries shall directly or
indirectly make or own any Investment except:
(i) Investments in Cash Equivalents;
(ii) Permitted Existing Investments in an amount not greater than the
amount thereof on the Closing Date;
(iii) Investments in trade receivables or received in connection with
the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with, customers
and suppliers arising in the ordinary course of business;
(iv) Investments consisting of deposit accounts maintained by the
Borrower or its Subsidiaries;
(v) Investments consisting of non-cash consideration from a sale,
assignment, transfer, lease, conveyance or other disposition of property
permitted by Section 7.3(B);
(vi) Investments in Permitted Acquisitions;
(vii) Investments with respect to payments made by the Borrower to the
Parent for taxes due and payable;
(viii) Investments constituting loans or advances to employees of the
Borrower or its Subsidiaries for the relocation of such employees, travel
expenses incurred by such employees, or other ordinary course business
expenses incurred by such employees; provided, however, that the aggregate
amount of such Investments does not exceed $500,000 at any time;
(ix) Investments permitted by Section 7.3(A); and
(x) Investments, other than those Investments set forth in clauses (i)
- (ix) of this Section 7.3(D), which, in the aggregate, shall not exceed at
any time $1,000,000;
provided, however, that the Investments described in clause (vi) above shall not
be permitted if either a Default or an Unmatured Default shall have occurred and
be continuing on the date thereof or would result therefrom.
(E) Restricted Payments. Neither the Borrower nor any of its Subsidiaries
shall declare or make any Restricted Payment, except:
67
(i) the defeasance, redemption or repurchase of any Indebtedness with
the Net Cash Proceeds of Permitted Refinancing Indebtedness;
(ii) mandatory payments of interest due on the Senior Notes in
accordance with repayment provisions in effect with respect to such
Indebtedness as of the Closing Date;
(iii) regular payments of the Blackstone Monitoring Fees;
(iv) dividends to purchase the Parent's common stock or common stock
options from present to former officers or employees of the Parent, the
Borrower, or any Subsidiary thereof, upon the death, disability, or
termination of employment of such officer or employee;
(v) dividends to the Parent to pay corporate overhead expenses
incurred in the ordinary course of business and any taxes that are due and
payable by the Parent and the Borrower as part of a consolidated group; and
(vi) any dividend to the Borrower by any Subsidiary;
provided, however, that the Restricted Payments described in clauses (ii) and
(iii) above shall not be permitted if either a Default or an Unmatured Default
shall have occurred and be continuing at the date of declaration or payment
thereof or would result therefrom.
(F) Conduct of Business; Subsidiaries; Acquisitions. Neither the Borrower
nor any of its Subsidiaries shall engage in any business other than the
businesses engaged in by the Borrower on the date hereof and any businesses or
activities which are substantially similar, related or incidental thereto. The
Borrower shall not make any Acquisition unless such Acquisition meets the
following requirements (each such Acquisition, a "Permitted Acquisition"):
(i) the business being acquired shall be substantially similar,
related or incidental to the businesses or activities engaged in by the
Borrower or a Subsidiary on the Closing Date; and
(ii) the Borrower, prior to any such Acquisition, shall have delivered
to the Administrative Agent pro forma projections, based on information
reasonably acceptable to the Agent, demonstrating that after giving effect
to such Acquisition, the Borrower would be in compliance with the terms of
this Agreement for the period beginning on the date such Acquisition is
consummated and ending on the first anniversary thereof; provided, however,
that the Borrower need not deliver any pro forma projections for any
Acquisition the purchase price of which is less than $7,500,000;
provided, however, that the Borrower shall not consummate any Permitted
Acquisition until such time as it has received from the Administrative Agent
written notice indicating that the Administrative Agent is satisfied that the
Year 2000 Issues will not have a Material Adverse Effect on the business
operations or financial condition of the Borrower or its Subsidiaries.
68
(G) Transactions with Shareholders and Affiliates. Except for the
transactions listed on Schedule 7.3(G), neither the Borrower nor any of its
Subsidiaries shall directly or indirectly enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with any holder or
holders of any of the Equity Interests of the Borrower, or with any Affiliate of
the Borrower which is not its Subsidiary, on terms that are less favorable to
the Borrower or any of its Subsidiaries, as applicable, than those that might be
obtained in an arm's length transaction at the time from Persons who are not
such a holder or Affiliate, except for Restricted Payments permitted by Section
7.3(E); provided, however, that the foregoing restrictions shall not apply to
(i) payment of the Blackstone Monitoring Fees, so long as such fees do not
exceed $1,000,000 during any twelve month period and the payment thereof
complies with Section 7.3(E), (ii) fees related to the transactions contemplated
herein that are payable on the Closing Date, (iii) the indemnification of the
directors of the Parent, the Borrower and their respective Subsidiaries in
accordance with customary practice, (iv) loans or advances to employees in
accordance with Section 7.3(D), (v) any employment agreement entered into by any
of the Borrower or any of its Subsidiaries in the ordinary course of business,
(vi) payments by the Parent, the Borrower or any of their respective
Subsidiaries to a Blackstone Affiliate made for any financial advisory,
financing, underwriting or placement services or in respect of other investment
banking activities, including, without limitation, in connection with
acquisitions or divestitures; provided, however, that, with respect to this
clause (vi), the aggregate of such payments shall not exceed $3,000,000 at any
time, and (vii) any issuance of securities, or other payments, awards or grants
in cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the board of
directors of the Parent.
(H) Restriction on Fundamental Changes. Neither the Borrower nor any of its
Subsidiaries shall enter into any merger or consolidation, or liquidate, wind-up
or dissolve (or suffer any liquidation or dissolution), or convey, lease, sell,
transfer or otherwise dispose of, in one transaction or series of transactions,
all or substantially all of the Borrower's or any Subsidiary's business or
property, whether now or hereafter acquired, except (i) transactions permitted
under Sections 7.3(B) or 7.3(F) and (ii) the merger of the Borrower and any
Subsidiary provided that the surviving entity is subject to Collateral Documents
required by the Administrative Agent, and (iii) the merger of the Parent and the
Borrower provided that the surviving entity is subject to Collateral Documents
required by the Administrative Agent.
(I) Sales and Leasebacks. Neither the Borrower nor any of its respective
Subsidiaries shall become liable, directly, or by assumption, with respect to
any lease, whether an operating lease or a Capitalized Lease, of any property
(whether real or personal or mixed) (i) which they or one of their Subsidiaries
sold or transferred or is to sell or transfer to any other Person, or (ii) which
they or one of their Subsidiaries intends to use for substantially the same
purposes as any other property which has been or is to be sold or transferred by
them or one of their Subsidiaries to any other Person in connection with such
lease, unless in either case the sale involved is not prohibited under Section
7.3(B) and the lease involved is not prohibited under Section 7.3(A).
69
(J) Margin Regulations. Neither the Borrower nor any of its Subsidiaries
shall use all or any portion of the proceeds of any credit extended under this
Agreement to purchase or carry Margin Stock.
(K) ERISA. The Borrower shall not
(i) engage, or permit any of its Subsidiaries to engage, in any
prohibited transaction described in Sections 406 of ERISA or 4975 of the
Code for which a statutory or class exemption is not available or a private
exemption has not been previously obtained from the DOL, which could
reasonably be expected to subject the Borrower to a liability in excess of
$3,000,000;
(ii) permit to exist any accumulated funding deficiency (as defined in
Sections 302 of ERISA and 412 of the Code), with respect to any Benefit
Plan, whether or not waived, which could reasonably be expected to subject
the Borrower to a liability in excess of $3,000,000;
(iii) fail, or permit any Controlled Group member to fail, to pay
timely required contributions or annual installments due with respect to
any waived funding deficiency to any Benefit Plan, which could reasonably
be expected to subject the Borrower to a liability in excess of $3,000,000;
(iv) terminate, or permit any Controlled Group member to terminate,
any Benefit Plan which would result in any liability of the Borrower or any
Controlled Group member under Title IV of ERISA, which could reasonably be
expected to subject the Borrower to a liability in excess of $3,000,000;
(v) fail to make any contribution or payment to any Multiemployer Plan
which the Borrower or any Controlled Group member may be required to make
under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto, which could reasonably be expected to subject the
Borrower to a liability in excess of $3,000,000;
(vi) fail, or permit any Controlled Group member to fail, to pay any
required installment or any other payment required under Section 412 of the
Code on or before the due date for such installment or other payment, which
could reasonably be expected to subject the Borrower to a liability in
excess of $3,000,000; or
(vii) amend, or permit any Controlled Group member to amend, a Plan
resulting in an increase in current liability for the plan year such that
the Borrower or any Controlled Group member is required to provide security
to such Plan under Section 401(a)(29) of the Code, which could reasonably
be expected to subject the Borrower to a liability in excess of $3,000,000.
70
(L) Corporate Documents. Neither the Borrower nor any of its Subsidiaries
shall amend, modify or otherwise change any of the terms or provisions in any of
their respective constituent documents as in effect on the date hereof in any
manner materially adverse to the interests of the Lenders, without the prior
written consent of the Required Lenders.
(M) Other Indebtedness. The Borrower shall not amend, supplement or
otherwise modify the terms of the Senior Notes in any way that would be
materially less advantageous to the Borrower or materially adverse to the
Lenders, including, without limitation, with respect to amount, maturity,
amortization, interest rate, premiums, fees, covenants, events of default,
remedies and dividend provisions.
(N) Fiscal Year. Neither the Borrower nor any of its consolidated
Subsidiaries shall change its fiscal year for accounting or tax purposes from a
period consisting of the 12-month period ending on the last day of September of
each year.
(O) Subsidiary Covenants. The Borrower shall not, and will not permit any
of its Subsidiaries to, create or otherwise cause to become effective any Lien
or restriction of any kind on the ability of any Subsidiary to pay dividends or
make any other distribution on its stock, or make any other Restricted Payment,
pay any Indebtedness or other Obligation owed to the Borrower or any other
Subsidiary, make loans or advances or other Investments in the Borrower or any
other Subsidiary, or sell, transfer or otherwise convey any of its property to
the Borrower or any other Subsidiary, except for such encumbrances or
restrictions existing under or by reason of (i) any restrictions existing under
the Loan Documents and (ii) any restrictions with respect to a Subsidiary
imposed pursuant to an agreement that has been entered into in connection with
the disposition of all or substantially all of the Capital Stock or assets of
such Subsidiary.
(P) Hedging Obligations. The Borrower shall not and shall not permit any of
its Subsidiaries to enter into any interest rate, commodity or foreign currency
exchange, swap, collar, cap or similar agreements evidencing Hedging
Obligations, other than interest rate, foreign currency or commodity exchange,
swap, collar, cap or similar agreements entered into by the Borrower or a
Subsidiary pursuant to which the Borrower or such Subsidiary has hedged its
actual interest rate, foreign currency or commodity exposure (such permitted
hedging agreements are sometimes referred to herein as "Interest Rate
Agreements").
(Q) Change of Deposit Accounts. Except to the extent permitted in Section
7.3(D)(iv), the Borrower shall not establish or maintain any deposit account
with any bank or other financial institution other than those which have entered
into a Collection Account Agreement in form and substance acceptable to the
Administrative Agent.
71
(R) Limitation on Revolving Credit Availability. The Borrower shall not
permit the Revolving Credit Availability to be less than Seven Million Five
Hundred Thousand Dollars ($7,500,000) on the Closing Date.
7.4 Financial Covenants. The Borrower and its Subsidiaries on a
consolidated basis shall comply with the following:
(A) Minimum Fixed Charge Coverage Ratio. The Borrower and its Subsidiaries
on a consolidated basis shall maintain a ratio ("Fixed Charge Coverage Ratio")
of (i) the sum of the amounts of (a) EBITDA for the applicable period minus (b)
Capital Expenditures for the applicable period to (ii) the Interest Expense for
the applicable period of at least 0.75 to 1.0.
The Fixed Charge Coverage Ratio shall be determined as of the last day of each
fiscal quarter for the four fiscal quarter period ending on such day; provided,
however, that (x) for the first calculation made after the date of this
Agreement, such calculation shall be based upon the period commencing January 1,
2000 and ending March 31, 2000, (y) for the second calculation made after the
date of this Agreement, such calculation shall be based upon the period
commencing January 1, 2000 and ending June 30, 2000, and (z) for the third
calculation made after the date of this Agreement, such calculation shall be
based upon the period commencing January 1, 2000 and ending September 30, 2000.
(B) Capital Expenditures. The Borrower will not, nor will it permit any
Subsidiary to expend or be committed to expend for Capital Expenditures in any
fiscal year, in the aggregate for the Borrower and its Subsidiaries, in excess
of (i) in fiscal year 2000, $14,000,000, (ii) in fiscal year 2001, $16,000,000
plus an amount not in excess of $3,000,000 if such amount was permitted to be
expended in fiscal year 2000 but was not expended in fiscal year 2000, and (iii)
in fiscal year 2002, $18,000,000 plus an amount not in excess of $3,000,000 if
such amount was permitted to be expended in fiscal year 2001 but was not
expended in fiscal year 2001.
ARTICLE VIII: DEFAULTS
8.1 Defaults. Each of the following occurrences shall constitute a Default
under this Agreement:
(A) Failure to Make Payments When Due. The Borrower shall (i) fail to pay
when due any of the Obligations consisting of principal or interest with respect
to the Loans or (ii) shall fail to pay within three (3) Business Days of the
date when due any of the other Obligations under this Agreement or the other
Loan Documents.
(B) Breach of Certain Covenants. The Borrower shall fail duly and
punctually to perform or observe any agreement, covenant or obligation binding
on the Borrower under:
(i) Sections 7.1(A)(i), (v) and (vi);
72
(ii) Sections 7.1(A)(ii) and (iii), and such failure shall continue
unremedied for fifteen (15) Business Days;
(iii) Section 7.2(E), and such failure shall continue unremedied for
five (5) Business Days;
(iv) Section 7.2(F), and such failure shall continue unremedied for
ten (10 ) Business Days;
(v) Each provision of Section 7.2 not set forth in clauses (iii) and
(iv) above, and such failure shall continue unremedied for thirty (30)
Business Days; or
(vi) Section 7.3 or 7.4.
(C) Breach of Representation or Warranty. Any representation or warranty
made or deemed made by the Borrower to the Administrative Agent or any Lender
herein or by the Borrower or any of its Subsidiaries in any of the other Loan
Documents or in any statement or certificate at any time given by any such
Person pursuant to any of the Loan Documents shall be false or misleading in any
material respect on the date as of which made (or deemed made).
(D) Other Defaults. The Borrower shall default in the performance of or
compliance with any term contained in this Agreement (other than as covered by
paragraphs (A), (B) or (C) of this Section 8.1), or the Borrower or any of its
Subsidiaries shall default in the performance of or compliance with any term
contained in any of the other Loan Documents, and such default shall continue
uncured or unwaived for thirty (30) days after the occurrence thereof.
(E) Default as to Other Indebtedness. The Borrower or any of its
Subsidiaries shall fail, within any applicable grace period, to make any payment
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) with respect to any Indebtedness the outstanding principal amount of
which Indebtedness is in excess of $5,000,000; or any breach, default or event
of default shall occur, or any other condition shall exist under any instrument,
agreement or indenture pertaining to any such Indebtedness, if the effect
thereof is to cause an acceleration, mandatory redemption, a requirement that
the Borrower offer to purchase such Indebtedness or other required repurchase of
such Indebtedness, or permit the holder(s) of such Indebtedness to accelerate
the maturity of any such Indebtedness or require a redemption or other
repurchase of such Indebtedness; or any such Indebtedness shall be otherwise
declared to be due and payable (by acceleration or otherwise) or required to be
prepaid, redeemed or otherwise repurchased by the Borrower or any of its
Subsidiaries (other than by a regularly scheduled required prepayment) prior to
the stated maturity thereof.
(F) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) An involuntary case shall be commenced against the Borrower or any
of the Borrower's Subsidiaries and the petition shall not be dismissed,
stayed, bonded or discharged within sixty (60) days after commencement of
the case; or a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Borrower or any of the
Borrower's Subsidiaries in an involuntary case, under any applicable
bankruptcy, insolvency or other similar law now or hereinafter in effect;
or any other similar relief shall be granted under any applicable federal,
state, local or foreign law.
73
(ii) A decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over the Borrower or any
of the Borrower's Subsidiaries or over all or a substantial part of the
property of the Borrower or any of the Borrower's Subsidiaries shall be
entered; or an interim receiver, trustee or other custodian of the Borrower
or any of the Borrower's Subsidiaries or of all or a substantial part of
the property of the Borrower or any of the Borrower's Subsidiaries shall be
appointed or a warrant of attachment, execution or similar process against
any substantial part of the property of the Borrower or any of the
Borrower's Subsidiaries shall be issued and any such event shall not be
stayed, dismissed, bonded or discharged within sixty (60) days after entry,
appointment or issuance.
(G) Voluntary Bankruptcy; Appointment of Receiver, Etc. The Borrower or any
of the Borrower's Subsidiaries shall (i) commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, (ii) consent to the entry of an order for relief in an involuntary case,
or to the conversion of an involuntary case to a voluntary case, under any such
law, (iii) consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property, (iv)
make any assignment for the benefit of creditors or (v) take any corporate
action to authorize any of the foregoing.
(H) Judgments and Attachments. Any money judgment(s) (other than a money
judgment covered by insurance as to which the insurance company has not
disclaimed or reserved the right to disclaim coverage), writ or warrant of
attachment, or similar process against the Borrower or any of its Subsidiaries
or any of their respective assets involving in any single case or in the
aggregate an amount in excess of $4,000,000 is or are entered and shall remain
undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days or
in any event later than fifteen (15) days prior to the date of any proposed sale
thereunder.
(I) Dissolution. Any order, judgment or decree shall be entered against the
Borrower decreeing its involuntary dissolution or split up and such order shall
remain undischarged and unstayed for a period in excess of sixty (60) days; or
the Borrower shall otherwise dissolve or cease to exist except as specifically
permitted by this Agreement.
(J) Loan Documents. At any time, for any reason, any Loan Document as a
whole that materially affects the ability of the Administrative Agent, or any of
the Lenders to enforce the Obligations ceases to be in full force and effect.
74
(K) Termination Event. Any Termination Event occurs which the Required
Lenders believe is reasonably likely to subject the Borrower to liability in
excess of $3,000,000.
(L) Waiver of Minimum Funding Standard. If the plan administrator of any
Plan applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412(a) of the Code believes the substantial
business hardship upon which the application for the waiver is based could
reasonably be expected to subject the Borrower or any Controlled Group member to
liability which individually or in the aggregate could result in liability in
excess of $4,000,000.
(M) Change of Control. A Change of Control shall occur.
(N) Environmental Matters. The Borrower or any of its Subsidiaries shall be
the subject of any proceeding or investigation pertaining to (i) the Release by
the Borrower or any of its Subsidiaries of any Contaminant into the environment,
(ii) the liability of the Borrower or any of its Subsidiaries arising from the
Release by any other Person of any Contaminant into the environment, or (iii)
any violation of any Environmental, Health or Safety Requirements of Law which
by the Borrower or any of its Subsidiaries, which, in any case, has or is
reasonably likely to subject the Borrower or any of its Subsidiaries to
liability, individually and in the aggregate, in excess of $5,000,000.
A Default shall be deemed "continuing" until cured or until waived in
writing in accordance with Section 9.3.
ARTICLE IX: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES
9.1 Termination of Commitments; Acceleration. If any Default described in
Section 8.1(F) or 8.1(G) occurs with respect to the Borrower, the obligations of
the Lenders to make Loans hereunder and the obligation of the Administrative
Agent to issue Letters of Credit hereunder shall automatically terminate and the
Obligations shall immediately become due and payable without any election or
action on the part of the Administrative Agent or any Lender. If any other
Default occurs, the Required Lenders may terminate or suspend the obligations of
the Lenders to make Loans hereunder and the obligation of the Issuing Bank to
issue Letters of Credit hereunder, or declare the Obligations to be due and
payable, or both, whereupon the Obligations shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which the Borrower expressly waives.
9.2 Defaulting Lender. In the event that any Lender fails to fund its Pro
Rata Share of any Advance requested or deemed requested by the Borrower, which
such Lender is obligated to fund under the terms of this Agreement (the funded
portion of such Advance being hereinafter referred to as a "Non Pro Rata Loan"),
until the earlier of such Lender's cure of such failure and the termination of
the Revolving Loan Commitments, the proceeds of all amounts thereafter repaid to
the Administrative Agent by the Borrower and otherwise required to be applied to
such Lender's share of all other Obligations pursuant to the terms of this
Agreement shall be advanced to the Borrower by the Administrative Agent on
behalf of such Lender to cure, in full or in part, such failure by such Lender,
but shall nevertheless be deemed to have been paid to such Lender in
satisfaction of such other Obligations. Notwithstanding anything in this
Agreement to the contrary:
75
(i) the foregoing provisions of this Section 9.2 shall apply only with
respect to the proceeds of payments of Obligations and shall not affect the
conversion or continuation of Loans pursuant to Section 2.8;
(ii) any such Lender shall be deemed to have cured its failure to fund
its Pro Rata Share of any Advance at such time as an amount equal to such
Lender's original Pro Rata Share of the requested principal portion of such
Advance is fully funded to the Borrower, whether made by such Lender itself
or by operation of the terms of this Section 9.2, and whether or not the
Non Pro Rata Loan with respect thereto has been repaid, converted or
continued;
(iii) amounts advanced to the Borrower to cure, in full or in part,
any such Lender's failure to fund its Pro Rata Share of any Advance ("Cure
Loans") shall bear interest at the rate applicable to Floating Rate Loans
in effect from time to time, and for all other purposes of this Agreement
shall be treated as if they were Floating Rate Loans;
(iv) regardless of whether or not a Default has occurred or is
continuing, and notwithstanding the instructions of the Borrower as to its
desired application, all repayments of principal which, in accordance with
the other terms of this Agreement, would be applied to the outstanding
Floating Rate Loans shall be applied first, ratably to all Floating Rate
Loans constituting Non Pro Rata Loans, second, ratably to Floating Rate
Loans other than those constituting Non Pro Rata Loans or Cure Loans and,
third, ratably to Floating Rate Loans constituting Cure Loans;
(v) for so long as and until the earlier of any such Lender's cure of
the failure to fund its Pro Rata Share of any Advance and the termination
of the Revolving Loan Commitments, the term "Required Lenders" for purposes
of this Agreement shall mean Lenders (excluding all Lenders whose failure
to fund their respective Pro Rata Shares of such Advance have not been so
cured) whose Pro Rata Shares represent greater than 50.1% of the aggregate
Pro Rata Shares of such Lenders; and
(vi) for so long as and until any such Lender's failure to fund its
Pro Rata Share of any Advance is cured in accordance with Section 9.2(ii),
(A) such Lender shall not be entitled to any commitment fees with respect
to its Revolving Loan Commitment and (B) such Lender shall not be entitled
to any letter of credit fees, which commitment fees and letter of credit
fees shall accrue in favor of the Lenders which have funded their
respective Pro Rata Share of such requested Advance, shall be allocated
among such performing Lenders ratably based upon their relative Revolving
Loan Commitments, and shall be calculated based upon the average amount by
which the aggregate Revolving Loan Commitments of such performing Lenders
exceeds the sum of (I) the outstanding principal amount of the Loans owing
to such performing Lenders, plus (II) the outstanding Reimbursement
Obligations owing to such performing Lenders, plus (III) the aggregate
participation interests of such performing Lenders arising pursuant to
Section 3.5 with respect to undrawn and outstanding Letters of Credit.
76
9.3 Amendments. Subject to the provisions of this Article IX, the Required
Lenders (or the Administrative Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Lender affected thereby:
(i) Postpone or extend the Revolving Loan Termination Date or any
other date fixed for any payment of principal of, or interest on, the
Loans, the Reimbursement Obligations or any fees or other amounts payable
to such Lender (except with respect to (a) any modifications of the
provisions relating to prepayments of Loans and other Obligations and (b) a
waiver of the application of the default rate of interest pursuant to
Section 2.9 hereof).
(ii) Reduce the principal amount of any Loans or L/C Obligations, or
reduce the rate or extend the time of payment of interest or fees thereon.
(iii) Reduce the percentage specified in the definition of Required
Lenders or any other percentage of Lenders specified to be the applicable
percentage in this Agreement to act on specified matters.
(iv) Increase the amount of the Revolving Loan Commitment of any
Lender hereunder.
(v) Permit the Borrower to assign its rights under this Agreement,
except in a transaction permitted hereby.
(vi) Release all or substantially all of the Collateral.
(vii) Amend any percentage set forth in the Borrowing Base.
(viii) Amend this Section 9.3.
77
No amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent. The Administrative Agent may waive payment of the fee required under
Section 13.3(B) without obtaining the consent of any of the Lenders.
9.4 Preservation of Rights. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan or the issuance of a Letter of Credit
notwithstanding the existence of a Default or the inability of the Borrower to
satisfy the conditions precedent to such Loan or issuance of such Letter of
Credit shall not constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment or other variation
of the terms, conditions or provisions of the Loan Documents whatsoever shall be
valid unless in writing signed by the Lenders required pursuant to Section 9.3,
and then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Administrative Agent and the Lenders until the
Obligations have been paid in full.
ARTICLE X: GENERAL PROVISIONS
10.1 Survival of Representations. All representations and warranties of the
Borrower contained in this Agreement shall survive delivery of the Notes and the
making of the Loans herein contemplated.
10.2 Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
10.3 Performance of Obligations. The Borrower agrees that the
Administrative Agent may, but shall have no obligation, after the occurrence and
during the continuance of a Default, to make any other payment or perform any
act required of the Borrower under any Loan Document. The Administrative Agent
shall use its reasonable efforts to give the Borrower notice of any action taken
under this Section 10.3 prior to the taking of such action or promptly
thereafter provided the failure to give such notice shall not affect the
Borrower's obligations in respect thereof. The Borrower agrees to pay the
Administrative Agent, upon demand, the principal amount of all funds advanced by
the Administrative Agent under this Section 10.3, together with interest thereon
at the rate from time to time applicable to Floating Rate Loans from the date of
such advance until the outstanding principal balance thereof is paid in full. If
the Borrower fails to make payment in respect of any such advance under this
Section 10.3 within one (1) Business Day after the date the Borrower receives
written demand therefor from the Administrative Agent, the Administrative Agent
shall promptly notify each Lender and each Lender agrees that it shall thereupon
make available to the Administrative Agent, in Dollars in immediately available
funds, the amount equal to such Lender's Pro Rata Share of such advance. If such
funds are not made available to the Administrative Agent by such Lender within
one (1) Business Day after the Administrative Agent's demand therefor, the
Administrative Agent will be entitled to recover any such amount from such
Lender together with interest thereon at the Federal Funds Effective Rate for
each day during the period commencing on the date of such demand and ending on
the date such amount is received. The failure of any Lender to make available to
the Administrative Agent its Pro Rata Share of any such unreimbursed advance
under this Section 10.3 shall neither relieve any other Lender of its obligation
hereunder to make available to the Administrative Agent such other Lender's Pro
Rata Share of such advance on the date such payment is to be made nor increase
the obligation of any other Lender to make such payment to the Administrative
Agent. All outstanding principal of, and interest on, advances made under this
Section 10.3 shall constitute Obligations.
78
10.4 Headings. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents.
10.5 Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Parent, the Blackstone Affiliates, the
Administrative Agent and the Lenders and supersede all prior agreements and
understandings among the Borrower, the Parent, the Administrative Agent and the
Lenders relating to the subject matter thereof.
10.6 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or Administrative Agent of any other Lender (except to the
extent to which the Administrative Agent is authorized to act as such). The
failure of any Lender to perform any of its obligations hereunder shall not
relieve any other Lender from any of its obligations hereunder. This Agreement
shall not be construed so as to confer any right or benefit upon any Person
other than the parties to this Agreement and their respective successors and
assigns.
10.7 Expenses; Indemnification.
(A) Expenses. The Borrower shall reimburse the Administrative Agent for any
reasonable costs, internal charges and out-of-pocket expenses (including
reasonable attorneys' and paralegals' fees and time charges of attorneys and
paralegals for the Administrative Agent, which attorneys and paralegals may be
employees of the Administrative Agent) paid or incurred by the Administrative
Agent in connection with any of the preparation, negotiation, execution,
delivery, syndication, amendment, modification, and administration of the Loan
Documents. The Borrower also agree to reimburse the Administrative Agent and the
Lenders for any reasonable costs, internal charges and out-of-pocket expenses
(including attorneys' and paralegals' fees and time charges of attorneys and
paralegals for the Administrative Agent and the Lenders, which attorneys and
paralegals may be employees of the Administrative Agent or the Lenders) paid or
incurred by the Administrative Agent or any Lender in connection with the
collection of the Obligations and enforcement of the Loan Documents. In addition
to expenses set forth above, the Borrower agrees to reimburse the Administrative
Agent, promptly after the Administrative Agent's reasonable request therefor,
for each audit, or other business analysis performed by Administrative Agent for
the benefit of the Lenders (with the consent of the Borrower) i n connection
with this Agreement or the other Loan Documents in an amount equal to the
Administrative Agent's then customary charges for each person employed to
perform such audit or analysis, plus all reasonable costs and expenses
(including without limitation, travel expenses) incurred by the Administrative
Agent in the performance of such audit or analysis. The Administrative Agent
shall provide the Borrower with a detailed statement of all reimbursements
requested under this Section 10.7(A).
79
(B) Indemnity. The Borrower further agrees to defend, protect, indemnify,
and hold harmless the Administrative Agent and each and all of the Lenders and
each of their respective Affiliates, and each of such Administrative Agent's,
Lender's, or Affiliate's respective officers, directors, employees, attorneys
and Administrative Agents (including, without limitation, those retained in
connection with the satisfaction or attempted satisfaction of any of the
conditions set forth in Article V) (collectively, the "Indemnitees") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses of any kind or nature
whatsoever (including, without limitation, the fees and disbursements of counsel
for such Indemnitees in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnitees shall be designated a party
thereto), imposed on, incurred by, or asserted against such Indemnitees in any
manner relating to or arising out of:
(i) this Agreement, the other Loan Documents, or any act, event or
transaction related or attendant thereto or to the making of the Loans, and
the issuance of and participation in Letters of Credit hereunder, the
management of such Loans or Letters of Credit, the use or intended use of
the proceeds of the Loans or Letters of Credit hereunder, or any of the
other transactions contemplated by the Loan Documents; or
(ii) any liabilities, obligations, responsibilities, losses, damages,
personal injury, death, punitive damages, economic damages, consequential
damages, treble damages, intentional, willful or wanton injury, damage or
threat to the environment, natural resources or public health or welfare,
costs and expenses (including, without limitation, attorney, expert and
consulting fees and costs of investigation, feasibility or remedial action
studies), fines, penalties and monetary sanctions, interest, direct or
indirect, known or unknown, absolute or contingent, past, present or future
relating to violation of any Environmental, Health or Safety Requirements
of Law arising from or in connection with the past, present or future
operations of the Borrower, its Subsidiaries or any of their respective
predecessors in interest, or, the past, present or future environmental,
health or safety condition of any respective property of the Borrower or
its Subsidiaries, the presence of asbestos-containing materials at any
respective property of the Borrower or its Subsidiaries or the Release or
threatened Release of any Contaminant into the environment (collectively,
the "Indemnified Matters");
provided, however, the Borrower shall have no obligation with respect to
Indemnified Matters caused solely by or resulting solely from the willful
misconduct or Gross Negligence of an Indemnitee or breach of contract by an
Indemnitee with respect to the Loan Documents. If the undertaking to indemnify,
pay and hold harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, the Borrower shall
contribute the maximum portion which it is permitted to pay and satisfy under
applicable law, to the payment and satisfaction of all Indemnified Matters
incurred by the Indemnitees.
80
(C) Waiver of Certain Claims; Settlement of Claims. The Borrower further
agrees to assert no claim against any of the Indemnitees on any theory of
liability for consequential, special, indirect, exemplary or punitive damages.
(D) Survival of Agreements. The obligations and agreements of the Borrower
under this Section 10.7 shall survive the termination of this Agreement.
10.8 Numbers of Documents. All statements, notices, closing documents, and
requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to each
of the Lenders.
10.9 Accounting. Except as provided to the contrary herein, all accounting
terms used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with Agreement Accounting Principles.
10.10 Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
10.11 Nonliability of Lenders. The relationship among the Borrower and the
Lenders and the Administrative Agent shall be solely that of borrower and
lender. Neither the Administrative Agent nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Administrative Agent nor any
Lender undertakes any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the Borrower's business
or operations.
10.12 GOVERNING LAW. ANY DISPUTE BETWEEN THE BORROWER AND THE
ADMINISTRATIVE AGENT OR ANY LENDER ARISING OUT OF, CONNECTED WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH,
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
LAWS (INCLUDING 735 ILCS SECTION 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES) OF THE STATE OF ILLINOIS.
81
10.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) NON-EXCLUSIVE JURISDICTION. EACH OF THE PARTIES HERETO AGREES THAT ALL
DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, MAY BE RESOLVED NON-EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN
CHICAGO, ILLINOIS, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO,
ILLINOIS.
(B) VENUE. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
IN ANY JURISDICTION SET FORTH IN PARAGRAPH (A) ABOVE.
(C) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
ARTICLE XI: THE ADMINISTRATIVE AGENT
11.1 Appointment; Nature of Relationship. Fleet is appointed by the Lenders
as the Administrative Agent hereunder and under each other Loan Document, and
each of the Lenders irrevocably authorizes the Administrative Agent to act as
the contractual representative of such Lender with the rights and duties
expressly set forth herein and in the other Loan Documents. The Administrative
Agent agrees to act as such contractual representative upon the express
conditions contained in this Article XI. Notwithstanding the use of the defined
term "Administrative Agent," it is expressly understood and agreed that the
Administrative Agent shall not have any fiduciary responsibilities to any Lender
by reason of this Agreement and that the Administrative Agent is merely acting
as the representative of the Lenders with only those duties as are expressly set
forth in this Agreement and the other Loan Documents. In its capacity as the
Lenders' contractual representative, the Administrative Agent (i) does not
assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of
the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code
and (iii) is acting as an independent contractor, the rights and duties of which
are limited to those expressly set forth in this Agreement and the other Loan
Documents. Each of the Lenders agrees to assert no claim against the
Administrative Agent on any agency theory or any other theory of liability for
breach of fiduciary duty, all of which claims each Lender waives.
82
11.2 Powers. The Administrative Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to the
Administrative Agent by the terms of each thereof, together with such powers as
are reasonably incidental thereto. The Administrative Agent shall have no
implied duties or fiduciary duties to the Lenders, or any obligation to the
Lenders to take any action hereunder or under any of the other Loan Documents
except any action specifically provided by the Loan Documents required to be
taken by the Administrative Agent.
11.3 General Immunity. Neither the Administrative Agent nor any of its
directors, officers, Administrative Agents or employees shall be liable to the
Borrower, the Lenders or any Lender for any action taken or omitted to be taken
by it or them hereunder or under any other Loan Document or in connection
herewith or therewith except to the extent such action or inaction arises from
the Gross Negligence or willful misconduct of such Person.
11.4 No Responsibility for Loans, Creditworthiness, Recitals, Etc. Neither
the Administrative Agent nor any of its directors, officers, Administrative
Agents or employees shall be responsible for or have any duty to ascertain,
inquire into, or verify (i) any statement, warranty or representation made in
connection with any Loan Document or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of any obligor
under any Loan Document; (iii) the satisfaction of any condition specified in
Article V, except receipt of items required to be delivered solely to the
Administrative Agent; (iv) the existence or possible existence of any Default or
(v) the validity, effectiveness or genuineness of any Loan Document or any other
instrument or writing furnished in connection therewith. The Administrative
Agent shall not be responsible to any Lender for any recitals, statements,
representations or warranties herein or in any of the other Loan Documents, for
the perfection or priority of the Liens on any of the Collateral, or for the
execution, effectiveness, genuineness, validity, legality, enforceability,
collectibility, or sufficiency of this Agreement or any of the other Loan
Documents or the transactions contemplated thereby, or for the financial
condition of any guarantor of any or all of the Obligations, the Borrower or any
of its Subsidiaries.
11.5 Action on Instructions of Lenders. The Administrative Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Loan Document in accordance with written instructions signed
by the Required Lenders, and such instructions and any action taken or failure
to act pursuant thereto shall be binding on all of the Lenders and on all
holders of Notes. The Administrative Agent shall be fully justified in failing
or refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.
83
11.6 Employment of Administrative Agents and Counsel. The Administrative
Agent may execute any of its duties as the Administrative Agent hereunder and
under any other Loan Document by or through employees, Administrative Agents,
and attorney-in-fact and shall not be answerable to the Lenders, except as to
money or securities received by it or its authorized Administrative Agent, for
the default or misconduct of any such Administrative Agent or attorneys-in-fact
selected by it with reasonable care. The Administrative Agent shall be entitled
to advice of counsel concerning the contractual arrangement between the
Administrative Agent and the Lenders and all matters pertaining to the
Administrative Agent's duties hereunder and under any other Loan Document.
11.7 Reliance on Documents; Counsel. The Administrative Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
to legal matters, upon the opinion of counsel selected by the Administrative
Agent, which counsel may be employees of the Administrative Agent.
11.8 The Administrative Agent's Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify the Administrative Agent ratably in
proportion to their respective Revolving Loan Commitments (i) for any amounts
not reimbursed by the Borrower for which the Administrative Agent is entitled to
reimbursement by the Borrower under the Loan Documents, (ii) for any other
expenses incurred by the Administrative Agent on behalf of the Lenders, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of the Loan Documents or any other document delivered in
connection therewith or the transactions contemplated thereby, or the
enforcement of any of the terms thereof or of any such other documents, provided
that no Lender shall be liable for any of the foregoing to the extent any of the
foregoing is found in a final non-appealable judgment by a court of competent
jurisdiction to have arisen solely from the Gross Negligence or willful
misconduct of the Administrative Agent.
11.9 Rights as a Lender. With respect to its Revolving Loan Commitment,
Loans made by it, and the Notes issued to it, the Administrative Agent shall
have the same rights and powers hereunder and under any other Loan Document as
any Lender and may exercise the same as through it were not the Administrative
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Administrative Agent in its individual capacity. The
Administrative Agent may accept deposits from, lend money to, and generally
engage in any kind of trust, debt, equity or other transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with the
Borrower or any of their Subsidiaries in which such Person is not prohibited
hereby from engaging with any other Person.
84
11.10 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on the financial statements prepared by the Borrower and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.
11.11 Successor Administrative Agent. The Administrative Agent may resign
at any time by giving written notice thereof to the Lenders and the Borrower.
Upon any such resignation, the Required Lenders shall have the right to appoint,
on behalf of the Borrower and the Lenders, a successor Administrative Agent. If
no successor Administrative Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within thirty days after the
retiring Administrative Agent's giving notice of resignation, then the retiring
Administrative Agent may appoint, on behalf of the Borrower and the Lenders, a
successor Administrative Agent. Notwithstanding anything herein to the contrary,
each such successor Administrative Agent shall be subject to approval by the
Borrower, which approval shall not be unreasonably withheld. Such successor
Administrative Agent shall be a commercial bank having capital and retained
earnings of at least $500,000,000. Upon the acceptance of any appointment as the
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder and under the other Loan Documents. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article XI shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Administrative Agent hereunder and under the other Loan Documents.
11.12 Collateral Documents. Each Lender authorizes the Administrative Agent
to enter into each of the Collateral Documents to which it is a party and to
take all action contemplated by such documents. Each Lender agrees that no
Lender shall have the right individually to seek to realize upon the security
granted by any Collateral Document, it being understood and agreed that such
rights and remedies may be exercised solely by the Administrative Agent for the
benefit of the Holders of Secured Obligations upon the terms of the Collateral
Documents.
85
ARTICLE XII: SETOFF; RATABLE PAYMENTS
12.1 Setoff. In addition to, and without limitation of, any rights of the
Lenders under applicable law, upon acceleration of payment of the Obligations
pursuant to the terms of this Agreement, any indebtedness from any Lender to the
Borrower (including all account balances, whether provisional or final and
whether or not collected or available) may be offset and applied toward the
payment of the Obligations owing to such Lender, whether or not the Obligations,
or any part hereof, shall then be due.
12.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans (other than payments received pursuant to
Sections 4.1, 4.2 or 4.4) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or otherwise, receives collateral for its Obligation or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to the obligations owing to them. In case any
such payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made.
12.3 Application of Payments. Subject to the provisions of Section 9.2, the
Administrative Agent shall, unless otherwise specified at the direction of the
Required Lenders which direction shall be consistent with the last sentence of
this Section 12.3, apply all payments and prepayments in respect of any
Obligations and all proceeds of the Collateral in the following order:
(A) first, to pay interest on and then principal of any portion of the
Loans which the Administrative Agent may have advanced on behalf of any
Lender for which the Administrative Agent has not then been reimbursed by
such Lender or the Borrower and which is then past due;
(B) second, to pay interest on and then principal of any advance made
under Section 10.3 for which the Administrative Agent has not then been
paid by the Borrower or reimbursed by the Lenders;
(C) third, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Administrative Agent and
which is then due;
(D) fourth, to pay Obligations in respect of any fees, expenses,
reimbursements or indemnities then due to the Lenders and the issuer(s) of
Letters of Credit;
(E) fifth, to pay interest due in respect of Loans and L/C
Obligations;
86
(F) sixth, to the ratable payment or prepayment of principal
outstanding on Loans, Reimbursement Obligations and Hedging Obligations
under Interest Rate Agreements owed to a Lender or an Affiliate thereof in
such order as the Administrative Agent may determine in its sole
discretion;
(G) seventh, to provide required cash collateral, if required pursuant
to Section 3.10 and
(H) eighth, to the ratable payment of all other Obligations.
Unless otherwise designated (which designation shall only be applicable prior to
the occurrence and during the continuation of a Default) by the Borrower, all
principal payments in respect of Loans shall be applied first, to repay
outstanding Floating Rate Loans, and then to repay outstanding Eurodollar Rate
Loans with those Eurodollar Rate Loans which have earlier expiring Interest
Periods being repaid prior to those which have later expiring Interest Periods.
The order of priority set forth in this Section 12.3 and the related provisions
of this Agreement are set forth solely to determine the rights and priorities of
the Administrative Agent, the Lenders, and the issuer(s) of Letters of Credit as
among themselves. The order of priority set forth in clauses (D) through (H) of
this Section 12.3 may at any time and from time to time be changed by the
Required Lenders with the consent of or approval by the Borrower, or any other
Person, in either case such consent or approval not to be unreasonably withheld.
The order of priority set forth in clauses (A) through (C) of this Section 12.3
may be changed only with the prior written consent of the Administrative Agent.
12.4 Relations Among Lenders.
(A) Except with respect to the exercise of set-off rights of any Lender in
accordance with Section 12.1, the proceeds of which are applied in accordance
with this Agreement, and except as set forth in the following sentence, each
Lender agrees that it will not take any action, nor institute any actions or
proceedings, against the Borrower or any other obligor hereunder or with respect
to any Loan Document, without the prior written consent of the Required Lenders
or, as may be provided in this Agreement or the other Loan Documents, at the
direction of the Administrative Agent.
(B) The Lenders are not partners or co-venturers, and no Lender shall be
liable for the acts or omissions of, or (except as otherwise set forth herein in
case of the Administrative Agent) authorized to act for, any other Lender. The
Administrative Agent shall have the exclusive right on behalf of the Lenders to
enforce on the payment of the principal of and interest on any Loan after the
date such principal or interest has become due and payable pursuant to the terms
of this Agreement.
ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
87
13.1 Successors and Assigns. The terms and provisions of the Loan Documents
shall be binding upon and inure to the benefit of the Borrower and the Lenders
and their respective successors and assigns, except that (i) the Borrower shall
not have the right to assign its rights or obligations under the Loan Documents,
other than an assignment made pursuant to Section 7.3(I) herein, and (ii) any
assignment by any Lender must be made in compliance with Section 13.3 hereof.
Notwithstanding clause (ii) of this Section 13.1, any Lender may at any time,
without the consent of the Borrower or the Administrative Agent, assign all or
any portion of its rights under this Agreement and its Notes to a Federal
Reserve Bank; provided, however, that no such assignment shall release the
transferor Lender from its obligations hereunder. The Administrative Agent may
treat the payee of any Note as the owner thereof for all purposes hereof unless
and until such payee complies with Section 13.3 hereof in the case of an
assignment thereof or, in the case of any other transfer, a written notice of
the transfer is filed with the Administrative Agent. Any assignee or transferee
of a Note agrees by acceptance thereof to be bound by all the terms and
provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
13.2 Participations.
(A) Permitted Participants; Effect. Subject to the terms set forth in this
Section 13.2, any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Revolving Loan Commitment of such
Lender, any L/C Interest of such Lender or any other interest of such Lender
under the Loan Documents on a pro rata or non-pro rata basis. Notice of such
participation to the Borrower and the Administrative Agent shall be required
prior to any participation becoming effective with respect to a Participant
which is not a Lender or an Affiliate thereof. In the event of any such sale by
a Lender of participating interests to a Participant, such Lender's obligations
under the Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
such Lender shall remain the holder of any such Note for all purposes under the
Loan Documents, all amounts payable by the Borrower under this Agreement shall
be determined as if such Lender had not sold such participating interests, and
the Borrower and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents except that, for purposes of Article IV
hereof, the Participants shall be entitled to the same rights as if they were
Lenders. No Participant shall be entitled to receive any amount in excess of
such amount as the Lender from which such Participant purchased its
participating interest would have received with respect to such participating
interest.
(B) Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification or
waiver with respect to any Loan or Revolving Loan Commitment in which such
Participant has an interest which forgives principal, interest or fees or
reduces the interest rate or fees payable pursuant to the terms of this
Agreement with respect to any such Loan or Revolving Loan Commitment, postpones
any date fixed for any regularly-scheduled payment of principal of, or interest
or fees on, any such Loan or Revolving Loan Commitment, or releases all or
substantially all of the Collateral, if any, securing any such Loan.
88
(C) Benefit of Setoff. The Borrower agrees that each Participant shall be
deemed to have the right of setoff provided in Section 12.1 hereof in respect to
its participating interest in amounts owing under the Loan Documents to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under the Loan Documents, provided that each Lender shall retain the
right of setoff provided in Section 12.1 hereof with respect to the amount of
participating interests sold to each Participant except to the extent such
Participant exercises its right of setoff; provided, however, that such
Participant shall not be permitted to exercise such right of setoff if the
related Lender already has done so. The Lenders agree to share with each
Participant, and each Participant, by exercising the right of setoff provided in
Section 12.1 hereof, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 12.2 as if each Participant were a Lender.
13.3 Assignments.
(A) Permitted Assignments. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time assign to one or
more banks or other entities ("Purchasers") all or a portion of its rights and
obligations under this Agreement (including, without limitation, its Revolving
Loan Commitment, all Loans owing to it, all of its participation interests in
existing Letters of Credit, and its obligation to participate in additional
Letters of Credit hereunder) in accordance with the provisions of this Section
13.3. Each assignment shall be of a constant, and not a varying, ratable
percentage of all of the assigning Lender's rights and obligations under this
Agreement. Such assignment shall be substantially in the form of Exhibit F
hereto and shall not be permitted hereunder unless such assignment is either for
all of such Lender's rights and obligations under the Loan Documents or, without
the prior written consent of the Administrative Agent, involves loans and
commitments in an aggregate amount of at least $10,000,000 (which minimum amount
may be waived by the Required Lenders after the occurrence of a Default or
Unmatured Event of Default). The consent of the Borrower, whose consent shall
not be unreasonably withheld absent the occurrence and continuation of a Default
and whose consent shall not be required during the occurrence and continuation
of a Default, and the Administrative Agent shall be required prior to an
assignment becoming effective with respect to a Purchaser which is not a Lender
or an Affiliate thereof.
(B) Effect; Effective Date. Upon (i) delivery to the Administrative Agent
of a notice of assignment, substantially in the form attached as Appendix I to
Exhibit F hereto (a "Notice of Assignment"), together with any consent required
by Section 13.3.(A) hereof, and (ii) payment of a $3,500 fee to the
Administrative Agent for processing such assignment, such assignment shall
become effective on the effective date specified in such Notice of Assignment.
The Notice of Assignment shall contain a representation by the Purchaser to the
effect that none of the consideration used to make the purchase of the
Commitment, Loans and L/C Obligations under the applicable assignment agreement
are "plan assets" as defined under ERISA and that the rights and interests of
the Purchaser in and under the Loan Documents will not be "plan assets" under
ERISA. On and after the effective date of such assignment, such Purchaser, if
not already a Lender, shall for all purposes be a Lender party to this Agreement
and any other Loan Documents executed by the Lenders and shall have all the
rights and obligations of a Lender under the Loan Documents, to the same extent
as if it were an original party hereto, and no further consent or action by the
Borrower, the Lenders or the Administrative Agent shall be required to release
the transferor Lender with respect to the percentage of the Aggregate Revolving
Loan Commitment, Loans and Letter of Credit participations assigned to such
Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to
this Section 13.3(B), the transferor Lender, the Administrative Agent and the
Borrower shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Purchaser, in each case in principal amounts
reflecting their Revolving Loan Commitment, as adjusted pursuant to such
assignment.
89
(C) The Register. The Administrative Agent shall maintain at its address
referred to in Section 14.1 a copy of each assignment delivered to and accepted
by it pursuant to this Section 13.3 and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Revolving Loan
Commitment of and principal amount of the Loans owing to, each Lender from time
to time and whether such Lender is an original Lender or the assignee of another
Lender pursuant to an assignment under this Section 13.3. The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower and each of its Subsidiaries, the Administrative Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
13.4 Confidentiality. Subject to Section 13.5, the Administrative Agent and
the Lenders shall hold all nonpublic information obtained pursuant to this
Agreement or otherwise obtained from the Borrower or an Affiliate thereof and
identified as such by the Borrower in accordance with such Person's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by a prospective Transferee in connection with
the contemplated participation or assignment or as required or requested by any
Governmental Authority or representative thereof or pursuant to legal process
and shall require any such Transferee to agree (and require any of its
Transferees to agree) to comply with this Section 13.4. In no event shall the
Administrative Agent or any Lender be obligated or required to return any
materials furnished by the Borrower; provided, however, each prospective
Transferee shall be required to agree that if it does not become a participant
or assignee it shall return all materials furnished to it by or on behalf of the
Borrower in connection with this Agreement.
90
13.5 Dissemination of Information. The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the Borrower and its Subsidiaries; provided that prior to any such
disclosure, such prospective Transferee shall agree to preserve in accordance
with Section 13.4 the confidentiality of any confidential information described
therein in an agreement which is reasonably satisfactory to the Borrower.
ARTICLE XIV: NOTICES
14.1 Giving Notice. Except as otherwise permitted by Section 2.12 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Documents shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as may
be designated by such party in a notice to the other parties. Any notice, if
mailed and 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).
14.2 Change of Address. The Borrower, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
ARTICLE XV: COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower, the Administrative Agent
and the Lenders.
The remainder of this page is intentionally blank.
91
IN WITNESS WHEREOF, the Borrower, the Lenders and the Administrative Agent
have executed this Agreement as of the date first above written.
HAYNES INTERNATIONAL, INC.,
as the Borrower
By: /s/
---------------------------------
Name:
Title:
Address:
1020 West Park Avenue
Kokomo, Indiana 46904-9013
Attention: Chief Financial Officer
Facsimile No.: (765) 456-6965
FLEET CAPITAL CORPORATION,
individually and as Administrative Agent
By: /s/
-------------------------------------
Name:
Title:
Address:
One South Wacker Drive
Suite 1400
Chicago, Illinois 60606
Attention: Loan Administration Manager
Facsimile: (312) 346-7038