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EXHIBIT 10.14
LOAN AGREEMENT
AGREEMENT, dated as of December 29, 1995, between
TRANS-RESOURCES, INC., a Delaware corporation (the "Company"), and BANK
HAPOALIM B.M., an Israeli banking corporation acting through its New York
Branches (the "Bank").
In consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
1. DEFINITIONS.
1.1 Certain General Definitions. For all purposes of this
Agreement and the other Loan Documents, unless the context otherwise requires:
"Accelerated Principal" shall have the meaning
provided therefor in Section 2.4 hereof.
"Adjusted Net Worth" of the Company means the sum of
(i) the total amount of preferred stockholders' equity and common stockholders'
equity that would appear on an unconsolidated balance sheet of the Company, as
at such date prepared in accordance with generally accepted accounting
principles, plus (ii) the aggregate outstanding principal amount at that date
of the Senior Subordinated Notes, the Senior Reset Notes and all other
Subordinated Debt.
"Advance" shall have the meaning provided therefor in
Section 2.1 hereof.
"Agreement" means this Agreement, including all
Exhibits hereto, as the same may be amended or otherwise modified from time to
time, and the terms "herein," "hereof," "hereunder" and like terms shall be
taken as referring to this Agreement in its entirety and shall not be limited
to any particular section or provision thereof.
"Approved Change" means any change in Control of the
Company or TPR which has been approved in writing by the Bank, which approval
shall not unreasonably be withheld if the Bank has determined that after review
of such financial and other information concerning the Person that would become
in Control of the Company or TPR and receipt of such additional guarantees or
security, if any, as the Bank may reasonably request, there will be no material
adverse change in the creditworthiness of the Company or the likelihood of the
Advances being repaid in accordance with their terms.
"Business Day" means a day on which both (i) banks
are regularly open for business in both London and New York City and (ii) the
Bank's New York Branches shall be open for ordinary business. In the Bank's
discretion, the New York
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Branches may be closed on any Saturday, Sunday, legal holiday or other day on
which it is lawfully permitted to close.
"Commitment Expiration Date" means the third
anniversary of the date of this Agreement.
"Company Pledge Agreement" means collectively the
1990 Pledge Agreement, as amended by 1990 Pledge Agreement Amendment No. 1,
1990 Pledge Agreement Amendment No. 2 and 1990 Pledge Agreement Amendment No. 3
and as further amended by 1990 Pledge Agreement Amendment No. 4, under which
the Company grants to the Bank a valid perfected first priority lien, charge
and security interest in approximately 93.02% of the outstanding HCL Stock and
the proceeds thereof under Israeli law.
"Consolidated Indebtedness" of any Person means, as
of any date, the aggregate Indebtedness that would appear on a consolidated
balance sheet of that Person and its consolidated Subsidiaries, as at such
date, prepared in accordance with generally accepted accounting principles.
"Consolidated Net Income" of HCL, for any period,
means the aggregate of the Net Income of HCL and its Subsidiaries for such
period on a consolidated basis; provided that (i) the Net Income of any Person
(other than a Subsidiary) in which HCL or any Subsidiary of HCL has a joint
interest with a third party shall be included only to the extent of the amount
of dividends or distributions paid to HCL or such Subsidiary, (ii) the Net
Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded from Net Income,
and (iii) all charges incurred and credits realized which are unusual in nature
and infrequently occurring shall be excluded from Net Income.
"Consolidated Tangible Net Worth" of any Person
means, as of any date, the total amount of non-redeemable preferred stock and
common stockholders' equity that would appear on a consolidated balance sheet
of that Person and its consolidated Subsidiaries, as at such date prepared in
accordance with generally accepted accounting principles, except that there
shall be deducted therefrom all intangible assets (determined in accordance
with generally accepted accounting principles) including, without limitation,
organization costs, patents, trademarks, copyrights, franchises, research and
development expenses, and any amount reflected as treasury stock; provided,
however, that costs in excess of fair value of net assets of businesses
acquired shall not be deducted.
"Control" means the power to direct or cause the
direction of the management and policies of a Person, either alone or in
conjunction with others and whether through the ownership of voting securities,
by contract or otherwise.
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"Current Assets" of any Person means, as of the date
of any determination thereof, the aggregate amount carried as current assets on
the books of such Person, determined in accordance with generally accepted
accounting principles.
"Current Liabilities" of any Person means, as of the
date of any determination thereof, the aggregate amount carried as current
liabilities on the books of such Person, determined in accordance with
generally accepted accounting principles; provided, however, that, in the case
of the Company, Current Liabilities shall not include the Senior Reset Notes.
"Current Ratio" of any Person means the ratio of such
Person's Current Assets to such Person's Current Liabilities.
"Date of Determination" means, with respect to each
Interest Period, two Business Days prior to the commencement of that Interest
Period.
"Default" means any condition, event or act which,
with notice or lapse of time, or both, would constitute an Event of Default.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, including the rules and regulations
promulgated thereunder.
"Event of Default" shall have the meaning provided
therefor in Section 12.1 hereof.
"Facility Fees" means the fees payable by the Company
to the Bank pursuant to Section 5.5 hereof.
"Financial Statements" shall have the meaning
provided therefor in Section 7.6 hereof.
"Governmental Person" means any United States,
Israeli, or other national, state or local government, political subdivision,
or governmental, quasi-governmental, judicial, public or statutory
instrumentality, agency, authority, body or entity including the Federal
Deposit Insurance Corporation, any central bank or any comparable authority.
"Governmental Rule" means any law, rule, regulation,
ordinance, order, code, interpretation, judgment, decree, directive, guideline,
policy or similar form of decision of any Governmental Person.
"HCL" means Haifa Chemicals Ltd., an Israeli
corporation.
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"HCL Stock" means the ordinary shares, par value NIS
1 per share, issued by HCL.
"Indebtedness" of any Person means indebtedness
incurred by that Person in respect of (i) money borrowed, (ii) any note, loan,
debenture or similar instrument, (iii) deferred payments for assets or services
acquired (except for payments deferred by unaffiliated persons on terms
consistent with industry standards), (iv) capitalized rentals under any
capitalized lease (whether in respect of land, machinery, equipment or
otherwise), but excluding rentals under any operating lease, (v) guarantees,
bonds, stand-by letters of credit or other instruments issued in support of
Indebtedness of any other Person, and (vi) guarantees or other assurances
equivalent to guarantees against financial loss in respect of Indebtedness as
defined under any of clauses (i) to (v) above.
"Interest Period" means, in the case of each Advance,
(i) the period commencing on the date on which that Advance is made and ending
on the next following Payment Date (the "Initial Interest Period"), and (ii)
each consecutive three-month period following such Initial Interest Period
commencing at the end of the immediately preceding Interest Period and ending
on the next following Payment Date. The last Interest Period for each Advance
shall end on the Maturity Date. If any Interest Period would otherwise come to
an end on a day which is not a Business Day, the termination thereof shall be
postponed to the next day which is a Business Day unless it would thereby
terminate in the next calendar month. In such case, such Interest Period shall
terminate on the immediately preceding Business Day.
"Israeli Resident" means an individual who, under the
laws of the State of Israel, is a citizen or resident of the State of Israel or
any other Person of which 25% or more of any class of equity securities are
owned, directly or indirectly, by one or more Israeli Residents. The term
"Israeli Resident" shall not include any "exempted person" under the laws of
the State of Israel.
"Junior Indenture" means any indenture or agreement
pursuant to which any Junior Subordinated Debt has been or will be issued or
incurred by the Company.
"Junior Subordinated Capital" of any Person means, as
of any date, the total of the Consolidated Tangible Net Worth of such Person
and the outstanding aggregate principal amount of Junior Subordinated Debt and
the outstanding aggregate liquidation value of any outstanding shares of
redeemable preferred stock having no mandatory redemption requirements earlier
than the later of (x) the Maturity Date, or (y) the payment in full of the
principal of and interest on the Note.
"Junior Subordinated Debt" means obligations of the
Company as reflected on the Company's books which are subordinated in right of
payment to the Senior Subordinated Notes and Senior Reset Notes (to at least
the same extent as the Senior Subordinated Notes and Senior Reset Notes are
subordinated to Senior Indebtedness,
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including without limitation any class of equity securities convertible into
obligations so subordinated) and shall include an agreement by holders of such
obligations and any transferees not to receive any payments during the
continuation of any default with respect to the Senior Subordinated Notes or
Senior Reset Notes or (without the prior written consent of the holders of the
Senior Subordinated Notes and the Senior Reset Notes) enforce any remedies with
respect to such obligations during the continuation of a default with respect
to such obligations as long as the Senior Subordinated Notes and Senior Reset
Notes are outstanding.
"LIBOR" means, with respect to any Interest Period,
the rate or rates established by the New York Branches of the Bank on the Date
of Determination for that Interest Period by applying the London Eurodollar
Deposit Rates quoted on the display designated as page "RMEY" to subscribers of
the Reuters Monitor Money Rates Service. The rates so quoted reflect the
selling rates selected by such Service as rates offered at 11:00 A.M. London
Standard Time for bank to bank United States Dollar deposits in such amounts
and for such periods of time (Interest Periods) as may apply; provided, that,
in the case of the initial Interest Period and last Interest Period for each
Advance, if that Interest Period is not a one, two or three-month period, LIBOR
shall be determined by interpolation by the Bank using the rates so quoted for
the relevant one, two or three-month periods, as the case may be. If the RMEY
page shall be replaced by another page on the Reuters Money Market Rates
Service for quoting London Eurodollar Deposit Rates, then rates quoted on such
replacement page shall be applied. If the Bank determines that London
Eurodollar Deposit Rates are no longer being quoted (temporarily or
permanently) on the Reuters Monitor Money Rates Service or that such Service is
no longer functioning (temporarily or permanently) in substantially the same
manner as on the date hereof, then the Company and the Bank shall negotiate in
good faith towards the aim of agreeing upon a substitute, publicly available
reference for the determination of LIBOR.
"LIBOR-Based Rate" shall have the meaning assigned
thereto in Section 5.1 hereof.
"Lien" means any charge, lien, mortgage, pledge,
security interest or other encumbrance of any nature whatsoever upon, of or in
property or other assets of a Person, whether absolute or conditional,
voluntary or involuntary, whether created pursuant to agreement, arising by
force of statute, by judicial proceedings or otherwise.
"Loan Documents" means this Agreement, the Note, the
Company Pledge Agreement, the TRIL Pledge Agreement, and any other instruments,
agreements or other documents delivered by the Company, TRIL or HCL to the Bank
pursuant to any of the foregoing Loan Documents.
"London Interbank Market" means the London interbank
market for United States Dollars and/or United States Dollar interest rates.
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"Maturity Date" means the ninth anniversary of the
date of this Agreement.
"Net Income" of any Person for any fiscal period
means the difference between gross revenues and all costs, expenses and other
proper charges (including taxes on income) as determined in accordance with
generally accepted accounting principles.
"1990 Pledge Agreement" means the Pledge Agreement
dated as of December 21, 1990 between the Bank, the Trust Company and the
Company.
"1990 Pledge Agreement Amendment No. 1" means
Amendment No. 1 to the 1990 Pledge Agreement, dated as of November 29, 1993.
"1990 Pledge Agreement Amendment No. 2" means
Amendment No. 2 to the 1990 Pledge Agreement, dated as of June 28, 1994.
"1990 Pledge Agreement Amendment No. 3" means
Amendment No. 3 to the 1990 Pledge Agreement, dated as of March 6, 1995.
"1990 Pledge Agreement Amendment No. 4" means
Amendment No. 4 to the 1990 Pledge Agreement in form and substance satisfactory
to the Bank and substantially in the form set forth in Exhibit 1.1-1 annexed
hereto.
"Note" means the Company's promissory note,
substantially in the form of Exhibit 1.1-2 hereto, with appropriate insertions.
"Payment Date" means the second day of each January,
April, July and October following the date hereof.
"PBGC" means the Pension Benefit Guaranty Corporation
and any entity succeeding to any or all of its functions under ERISA.
"Person" shall include an individual, a partnership,
a joint venture, a corporation (including, without limitation, the Company or
any Subsidiary), a trust, an estate, an unincorporated organization or
association and a Governmental Person. If any Person is a corporation, unless
otherwise provided, the use of the term Person to refer to that corporation
means that corporation as a single entity and not as consolidated with its
Subsidiaries.
"Plan" means an employee benefit plan or other plan,
including both single-employer and multi-employer plans, maintained for
employees of the Company or any Subsidiary thereof or any controlled group of
trades or businesses under common control, as defined respectively in Sections
1563 and 414(c) of the Internal Revenue Code of 1986, as
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amended, of which the Company or any Subsidiary thereof is or becomes a part,
and covered by Title IV of ERISA.
"Prime-Based Rate" means the Bank's New York
Branches' stated prime rate as reflected from time to time in its books and
records. The Prime-Based Rate shall change automatically when and as the prime
rate shall change. The Bank may make loans to others at rates above or below
its prime rate.
"Reinvestment Costs" shall have the meaning provided
therefor in Section 2.4 hereof.
"Reportable Event" shall have the meaning set forth
in Section 4043(b) of Title IV of ERISA.
"Senior Indebtedness" means (a) the principal of and
interest on all Indebtedness of the Company whether short or long-term and
whether secured or unsecured (including all Indebtedness evidenced by notes,
bonds, debentures or other securities sold by such Person for money), including
without limitation all Indebtedness incurred by the Company in the acquisition
(whether by way of purchase, merger, consolidation or otherwise and whether by
such Person or another Person) of any capital stock, business, real property or
other assets (except assets acquired in the ordinary course of the conduct of
the acquiror's business), (b) guarantees by the Company of Indebtedness of a
Subsidiary of the Company, and (c) renewals, extensions, refundings, deferrals,
restructurings, amendments and modifications of any such Indebtedness,
obligation or guarantee; provided that Senior Indebtedness shall not include
(i) Indebtedness evidenced by the Senior Subordinated Notes or Senior Reset
Notes, which is subordinated to the Note; (ii) any other Indebtedness that
constitutes Subordinated Debt including Junior Subordinated Debt; or (iii) any
Indebtedness of the Company to any of its Subsidiaries.
"Senior Reset Note Indenture" means the Indenture
dated as of March 1, 1989 between the Company and First Alabama Bank, as
Trustee.
"Senior Reset Notes Repurchase Event" shall have the
meaning set forth in Section 10.9 hereof.
"Senior Reset Notes" means the Company's 14 1/2%
Senior Subordinated Reset Notes due September 1, 1996, issued under the Senior
Reset Note Indenture.
"Senior Subordinated Note Indenture" means the
Indenture dated as of March 30, 1993 between the Company and First Alabama
Bank, as Trustee.
"Senior Subordinated Notes" means the Company's
11-7/8% Senior Subordinated Notes due July 1, 2002, issued under the Senior
Subordinated Note Indenture.
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"Senior Subordinated Notes Repurchase Event" shall
have the meaning set forth in Section 10.9 hereof.
"Significant Subsidiary" means a significant
subsidiary of the Company (other than Eddy Potash, Inc.), as such term is
defined in Rule 1-02 of Regulation S-X promulgated under the Securities Act of
1933, as amended.
"Subordinated Debt" means (a) unsecured obligations
of the Company as reflected on the Company's books which (i) are not due until
the later of (x) the Maturity Date, or (y) the payment in full of the principal
of and interest on the Note, and (ii) are subordinated in right of payment to
the Note (to at least the same extent as the Senior Subordinated Notes are
subordinated to Senior Indebtedness) and shall include an agreement by holders
of such obligations and any transferees not to receive any payments with
respect to such obligations as long as there exists and is continuing a default
in payment of principal or interest on the Note, (b) Junior Subordinated Debt
(including any such Junior Subordinated Debt converted to such after the date
hereof) and (c) the obligations of the Company evidenced by the Senior Reset
Notes and the Senior Subordinated Notes or any other indebtedness that is
subordinated in right of payment to the Note (to at least the same extent as
the Senior Reset Notes and the Senior Subordinated Notes are subordinated to
Senior Indebtedness).
"Subsidiary" means, when used with reference to any
corporation, any corporation of which at least a majority of the outstanding
stock having, by the terms thereof, ordinary voting power to elect a majority
of the Board of Directors of such corporation is at the time directly or
indirectly owned by such first-mentioned corporation.
"Tangible Net Worth" means tangible net worth as
determined in accordance with generally accepted accounting principles on an
unconsolidated basis but including and excluding specific items in the same
manner as is provided in the definition of "Consolidated Tangible Net Worth."
"TPR" means TPR Investment Associates, Inc., a
Delaware corporation.
"Treasury Obligation" means a note, bill or bond
issued by the United States Treasury Department as a full faith and credit
general obligation of the United States.
"TRIL" means Trans-Resources (Israel) Ltd., an
Israeli corporation.
"TRIL Pledge Agreement" means the Pledge Agreement
under which TRIL grants to the Bank a valid perfected first priority lien,
charge and security interest in 6.98% of the outstanding HCL Stock and the
proceeds thereof under Israeli law (which shall be in form and substance
satisfactory to the Bank and substantially in the form set forth in Exhibit
1.1-3 annexed hereto).
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"Trust Company" means Trust Company of Bank Hapoalim
B.M., ([Mem]"[Ayin][Veth] [Mem][Yod][Lamed][Ayin][Vav][Feh][Heh]
[Koph][Nun][Veth] [Lamed][Shin] [Thav][Vav][Nun][Mem][Aleph][Nun]
[Thav][Resh][Veth][Cheth]) a company duly incorporated and existing under the
laws of the State of Israel, having its registered office at 55 Rothschild
Boulevard, Tel-Aviv 65124.
"United States of America," when used in a
geographical sense, means all of the States of the United States of America and
the District of Columbia and, so long as they continue as possessions or
territories of the United States, Puerto Rico and the Virgin Islands.
"Working Capital" of any Person means, as of the date
of any determination thereof, the excess of the Current Assets of that Person
over the Current Liabilities of that Person.
1.2 Use of Accounting Terms. Accounting terms used herein
shall be construed, calculations hereunder shall be made and financial data
required hereunder shall be prepared, both as to classification of items and as
to amounts, in accordance with generally accepted accounting principles in
effect in the United States (except that any reference in this Agreement to
generally accepted accounting principles with respect to financial statements
of HCL shall be deemed to be references to Israeli generally accepted
accounting principles, unless otherwise provided herein) as of the date thereof
consistently applied, which principles shall be consistent with those used in
the preparation of the most recent reviewed financial statements of such Person
delivered to the Bank. All statements relating to earnings and expenses shall
set forth separately or otherwise identify all extraordinary and nonrecurring
items.
2. COMMITMENT OF THE BANK.
2.1 Loans. Subject to the terms and conditions of this
Agreement, the Bank agrees to make loans (collectively called the "Advances"
and individually an "Advance") to the Company on any Business Day during the
period from the date hereof to, but not including, the Commitment Expiration
Date in accordance with Section 2.2 hereof, in such amounts as the Company may
from time to time request, but in no event shall the amount of any Advance,
when added to the amount of all Advances previously made hereunder, exceed
Forty Million Dollars ($40,000,000), less any amount paid or required to be
paid to the Bank as a mandatory prepayment pursuant to Section 2.3(c) hereof,
and in no event shall the Bank be required to make Advances hereunder more
frequently than twice each calendar month. Repayment of the principal amount
of each Advance shall be made in equal quarterly annual installments commencing
on the first Payment Date following the second anniversary of the date on which
such Advance is made and ending on the Maturity Date (it being understood that
the number of such installments will range from 16 installments, in the case of
an Advance made on the Commitment Expiration Date, to 28 installments, in the
case of an Advance made on the date of this Agreement). The last principal
installment shall be in the
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then outstanding unpaid principal balance of the Note and shall be due and
payable on the Maturity Date, together with all unpaid interest accrued through
that date.
2.2 Borrowing Procedures. The Company shall give the Bank at
least three (3) Business Days' prior written notice (which if sent by telecopy
shall promptly be confirmed by delivering the original of the written notice to
the Bank) of each proposed Advance, specifying in reasonable detail to the Bank
the purpose for which the proceeds of such Advance will be used. Upon the
satisfaction of each of the conditions specified in Sections 8 and 9 to the
extent applicable to such Advance, the Bank shall pay over in immediately
available funds to the Company the amount of such proposed Advance, not later
than 3:00 P.M., New York time, on the date of such proposed Advance. Each
Advance shall be in an aggregate amount of at least $500,000.
2.3 Voluntary and Mandatory Prepayments.
(a) The Company may prepay the Note in part or in
full at any time, subject to the provisions set forth in the Note, upon not
less than seven days prior written notice to the Bank, provided that each such
prepayment shall be in the amount of $100,000 or any integral multiple thereof;
except that prepayment of the entire outstanding principal amount of the Note
need not be in the amount of $100,000 or any integral multiple thereof.
(b) Any voluntary or mandatory prepayments of the
principal of the Note, whether partial or full, shall be accompanied by the
payment of any accrued interest on the principal amount so prepaid and any
other payment or charge required by the Note.
(c) If any law, regulation, directive or treaty or
any change therein or in the interpretation or application thereof shall make
it unlawful for the Bank to maintain the Advances evidenced by the Note or to
claim or receive any amount otherwise payable under the Note or this Agreement,
the Bank shall so notify the Company. In the case of any such notice, the
Company shall prepay the outstanding principal amount of the Note in full
together with all accrued interest (i) on the last Business Day of the Interest
Period which includes the date of such notice, if the Bank may lawfully receive
such prepayment on such day, or (ii) on such earlier date on which the Bank may
lawfully receive such payment, if payment on such earlier date is reasonably
required as a result of such impending illegality.
(d) Notwithstanding anything in this Section 2.3 to
the contrary, any prepayment, whether voluntary or mandatory, may be applied by
the Bank to any principal or interest of the Note, in such amounts and order of
priority as the Bank deems appropriate in its sole discretion. The Bank shall
have no liability to the Company for any failure to apply prepayments in
accordance with any instructions that the Bank may receive from the Company
which are inconsistent with the provisions of this Subsection 2.3(d).
2.4 Compensation for Reinvestment Costs. If the Company
makes any payment or prepayment of or on account of the outstanding principal
amount of the Note at
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any time other than the last day of an Interest Period, whether after an Event
of Default or otherwise, then the Company shall compensate the Bank for the
costs (the "Reinvestment Costs") of reinvesting, for the period extending until
the last day of the then current Interest Period, the funds received by it upon
such payment at a rate or rates which may be less than the LIBOR-Based Rate
applicable to the principal portion of such amount paid (the "Accelerated
Principal"). The Company and the Bank acknowledge that determining the actual
amount of the Reinvestment Costs may be difficult or impossible in any specific
instance. Accordingly, the Company and the Bank agree that the Reinvestment
Costs shall be the excess, if any, of
(i) the product of (A) the Accelerated Principal,
times (B) the applicable LIBOR-Based Rate divided by
360, times (C) the remaining number of days from the
date of the payment to the last day of the relevant
Interest Period, over
(ii) that amount of interest which the Bank
determines that the holder of a Treasury Obligation
selected by the Bank in the amount (or as close to
such amount as feasible) of the Accelerated Principal
and having a maturity date on (or as soon after as
feasible) the last day of the relevant Interest
Period, would earn if that Treasury Obligation were
purchased in the secondary market on the date the
Accelerated Principal is paid to the Bank and were
held to maturity.
The Company agrees that determination of Reinvestment Costs
shall be based on amounts that a holder of a Treasury Obligation could receive
under these circumstances, whether or not the Bank actually invests the
Accelerated Principal in any Treasury Obligation. The Bank's determination as
to Reinvestment Costs pursuant to this Section 2.4 shall be conclusive, final
and binding on the Company in the absence of manifest error.
2.5 Increased Costs. If, after the date of this Agreement,
the adoption of any applicable Governmental Rule, any change in any applicable
Governmental Rule, any change in the interpretation or administration of any
applicable Governmental Rule by any Governmental Person charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive (whether or not having the force of law) of any such
Governmental Person
(a) shall subject the Bank to any tax, duty or
other charge with respect to all or any portion of
any Advance, or its obligation to make all or any
portion of any Advance or shall change the basis of
taxation of payments to the Bank of any amounts due
under this Agreement, or the Note (except for changes
which affect franchise taxes or taxes measured by or
imposed on the overall net income of the Bank or any
of its offices imposed by the tax laws of any
jurisdiction in the world); or
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(b) shall impose, modify or deem applicable any
reserve (including, without limitation, any imposed
by the Board of Governors of the Federal Reserve
System), special deposit, capital adequacy
requirement, capital equivalency, ratio of assets to
liabilities or any other capital substitute or
similar requirement against assets of, deposits with
or for the account of, credit extended by, letters of
credit issued and maintained by, or collateral
subject to a lien in favor of the Bank, or shall
impose on the Bank any other condition affecting all
or any portion of any Advance;
and the result of any of the foregoing is to increase the cost to or to impose
a cost on the Bank of making or maintaining all or any portion of any Advance,
or to reduce the amount of any sum received or receivable by the Bank under
this Agreement or the Note, or (in the case of a capital adequacy or similar
requirement) to reduce the rate of return on the Bank's capital as a
consequence of maintaining all or any portion of any Advance to a level below
that which could have been achieved but for the imposition of such requirement
(taking into consideration the Bank's capital adequacy policies), then, within
30 days after demand by the Bank, the Company shall pay the Bank for its own
account such additional amount or amounts as will compensate the Bank for such
increased cost or reduction actually incurred. The Bank will promptly notify
the Company of any event of which it has knowledge, occurring after the date of
this Agreement, which will entitle the Bank to compensation pursuant to this
Section 2.5. A certificate of the Bank claiming compensation for itself under
this Section 2.5 and setting forth in reasonable detail the additional amount
or amounts to be paid to the Bank shall be conclusive evidence of the amount of
such compensation absent manifest error. In determining such amount, the Bank
may use any reasonable averaging and attribution methods.
2.6 Net Payments. All payments to the Bank under this
Agreement or the Note shall be made without defense, setoff or counterclaim and
in such amounts as may be necessary in order that all such payments (after
deduction or withholding for or on account of any present or future taxes,
levies, imposts, duties, or other charges of whatsoever nature imposed by any
government, any political subdivision or any taxing authority, other than any
franchise tax or other tax owed and measured by the overall net income of the
Bank or any of its offices pursuant to the tax laws of any jurisdiction in the
world (collectively, the "Taxes")), shall not be less than the amounts
otherwise specified to be paid under this Agreement or the Note. A certificate
as to any additional amounts payable to the Bank under this Section 2.6
submitted to the Company by the Bank shall show in reasonable detail the
amounts payable and the calculations used to determine in good faith such
amounts and shall be conclusive absent manifest error. Any amounts payable by
the Company under this Section 2.6 with respect to past payments shall be due
within three Business Days following receipt by the Company of such certificate
from the Bank; any such amounts payable with respect to future payments shall
be due concurrently with such future payments. With respect to each deduction
or withholding for or on account of any Taxes, the Company shall promptly
furnish to the Bank such certificates, receipts and other documents as may be
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required (in the reasonable judgment of the Bank) to establish any tax credit
to which the Bank may be entitled.
2.7 Security for the Advances. The Advances shall be secured
by a first priority lien upon and security interest in approximately 99.99% of
the issued and outstanding HCL Stock pursuant to the Company Pledge Agreement
and the TRIL Pledge Agreement.
3. USE OF PROCEEDS. The Company covenants and agrees that it
shall use the proceeds of each and every Advance made to it by the Bank
pursuant hereto (i) to repurchase, or reimburse the Company for purchases after
November 15, 1995 of, outstanding Senior Subordinated Notes and/or Senior Reset
Notes; provided, that not more than $20,000,000 of such proceeds shall be used
for this purpose; and (ii) for general corporate purposes, including the
acquisition by the Company of businesses or lines of businesses.
4. NOTE EVIDENCING BORROWINGS. The Advances shall be evidenced
by the Note. All Advances made by the Bank to the Company and all repayments
of principal by the Company shall be reflected by the Bank in its records or,
at the Bank's option, on the schedule attached to the Note, which records or
schedule shall be rebuttable presumptive evidence of the entries made therein
or thereon. The Bank agrees to provide statements of such amounts to the
Company upon the Company's written request; provided, however, that, in the
event of any conflict between such statement and the Bank's books and records,
the latter shall be controlling absent manifest error.
5. INTEREST AND FEES
5.1 Interest. Subject to Sections 5.2 and 5.3 hereof, the
unpaid principal of each Advance shall bear interest prior to maturity for each
Interest Period at a rate per year (the "LIBOR-Based Rate") equal to 2.25
percentage points per annum above the LIBOR for that Interest Period.
5.2 Absence of LIBOR Determination; Unenforceability.
Notwithstanding anything to the contrary contained in Section 5.1, if the Bank
determines, on any Date of Determination, that (i) by reason of circumstances
affecting the London Interbank Market generally, adequate and fair means do not
exist for ascertaining an applicable LIBOR or it is impractical for the Bank to
continue to fund the outstanding principal amount of the Note during the
applicable Interest Period, or (ii) London Eurodollar Deposit Rates are no
longer being quoted (temporarily or permanently) on the Reuters Monitor Money
Rates Service or such Service is no longer functioning (temporarily or
permanently) in substantially the same manner as on the date hereof, and, after
negotiating in good faith, the Bank has failed to agree with the Company with
respect to a substitute, publicly available reference for the determination of
LIBOR, or (iii) quotes for funds in United States Dollars in sufficient amounts
comparable to the then outstanding principal amount of the Note and for the
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duration of the applicable Interest Period would not be available to the Bank
in the London Interbank Market, or (iv) quotes for funds in United States
Dollars in the London Interbank Market will not accurately reflect the cost to
the Bank of funding the outstanding principal amount of the Note during the
applicable Interest Period, or (v) the making or funding of loans, or charging
of interest at rates, based on LIBOR shall be unlawful or unenforceable for any
reason, then as long as such circumstance(s) shall continue, interest on the
outstanding principal amount of the Note shall be payable at a variable rate
per year which shall be equal to the Prime-Based Rate and such interest shall
be payable on the last day of each Interest Period until the principal amount
of the Note is paid in full.
5.3 Default Rate. Regardless of the applicability of any
other interest rate hereunder, whether pursuant to Section 5.1 or 5.2 or
otherwise, interest on the outstanding principal amount of the Note shall be
payable at the Default Rate (as hereinafter defined), at any date after the
entire outstanding principal balance of the Note shall have become due and
payable (whether by reason of stated maturity, acceleration or otherwise;
provided, however, in the case of acceleration, the Default Rate also shall
apply retroactively from the earliest date an Event of Default, by reason of
nonpayment or otherwise, first occurred). For the purposes hereof, the
"Default Rate" means a variable rate per year which shall at all times be equal
to two percent (2%) per year above the Prime-Based Rate, except that in the
case of acceleration, the Default Rate applicable to any Advance bearing
interest at the LIBOR-Based Rate shall be equal to two percent (2%) per year
above the LIBOR-Based Rate during the Interest Period in which such
acceleration occurs until the last day of such Interest Period and, thereafter,
shall be equal to two percent (2%) per year above the Prime-Based Rate.
5.4 Generally. Interest shall be payable on the unpaid
principal balance of each Advance evidenced by the Note on the last day of each
Interest Period in respect thereof and at any time that any part of such
principal is due or is paid, or any time that the Note is paid in full. Such
interest shall be calculated on a daily basis on the outstanding principal
balance of each Advance at the applicable LIBOR-Based Rate or the Default Rate,
as the case may be, divided by 360 on the actual days elapsed from the date
hereof, or from the date the entire principal balance of the Note shall have
become due and payable, or from the stated date of maturity, as appropriate,
until paid. Any payment by other than immediately available funds shall be
subject to collection. Interest shall continue to accrue until the funds by
which payment of principal is made are available to the Bank for its use.
Interest shall never exceed the maximum lawful rate of interest applicable to
the Note.
5.5 Fees.
(a) The Company shall pay to the Bank a
non-refundable Facility Fee of $200,000 for making this credit facility
available to the Company. The Facility Fee shall be payable in three equal
installments, of which the first such installment is being paid concurrently
with the execution and delivery of this Agreement and the second and third such
installments shall be payable, respectively, on the first and second
anniversaries of the date
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of this Agreement, whether or not any Advances have then been made or requested
or this Agreement otherwise remains in effect.
(b) The Company shall pay the usual and customary
fees and charges of the Trust Company for its services in holding, as trustee
for the Bank, the certificates representing HCL Stock, in accordance with the
Company Pledge Agreement and the TRIL Pledge Agreement.
5.6 Conclusive Determination. The Bank's determination (i)
as to the occurrence or continuation of any of the events referred to in
Section 5.2, and (ii) of LIBOR and the applicable interest rate and the amount
of interest accrued under the Note, shall be conclusive, final and binding on
the Company in the absence of manifest error.
6. PAYMENTS, OFFSETS AND REDUCTION OR TERMINATION OF THE CREDIT
6.1 Place of Payment. All payments hereunder (including
payments with respect to the Note) shall be made without set-off, counterclaim
or deduction and shall be made in immediately available funds by the Company to
the Bank, prior to 3:00 p.m., New York time, at its offices at 1177 Avenue of
the Americas, New York, New York 10036 or at such other place as may be
designated by the Bank to the Company in writing. Any payment received after
3:00 p.m., New York time, shall be deemed received on the next Business Day.
If any payment of principal of or interest on the Note or any other amount
under the Note or this Agreement falls due on a day that is not a Business Day,
it shall be payable on the next succeeding Business Day (unless such day would
be a day in the next calendar month, and in such case payment shall be due on
the immediately preceding Business Day), and the resulting additional or
decreased time (if any) shall be included in or deducted from the computation
of interest.
6.2 Set-Off. In addition to and not in limitation of all
rights of set-off that the Bank may have under applicable law, any and all
balances, credits, deposits, accounts or moneys of the Company then or
thereafter maintained or held at any of the Bank's offices worldwide and in any
currency, shall be subject to being set off against any obligations of the
Company to the Bank arising under this Agreement or the other Loan Documents,
and in furtherance thereof, the Bank may at any time and from time to time
after an Event of Default shall have occurred and be continuing at its option
and without notice to the Company, except as may be required by law,
appropriate and apply toward the payment of any of such obligations of the
Company to the Bank all or any part of the balances of each such balance,
credit, deposit, account, or money with the Bank.
7. REPRESENTATIONS AND WARRANTIES.
To induce the Bank to enter into this Agreement and to make
Advances hereunder, the Company represents, warrants and covenants to the Bank
that:
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7.1 Corporate Existence. The Company is a duly organized and
validly existing corporation in good standing under the laws of the State of
Delaware and has the corporate power and authority to own its properties and
other assets and to transact the business in which it is now engaged or
proposes to engage. Each of TRIL and HCL is a duly organized and validly
existing corporation under the laws of the State of Israel and has the
corporate power and authority to own its properties and other assets and to
transact the business in which it is now engaged or proposes to engage. Each
of the Company and HCL is duly qualified as a foreign corporation and is in
good standing in each jurisdiction in which the failure to qualify would have a
material adverse effect on its business.
7.2 Holdings. TPR owns both beneficially and of record all
of the issued and outstanding capital stock of the Company. The Company owns
beneficially (including 3,662,830 shares owned of record by TRIL) 52,480,013
shares of HCL Stock, which represents approximately 99.999% of the issued and
outstanding HCL Stock, of which 48,817,183 shares, representing approximately
93.02%, are owned of record by the Company. HCL owns beneficially and of
record all 2,640 of the issued and outstanding shares of capital stock of TRIL,
except for one share owned of record by a subsidiary of HCL. As of the date
hereof, (i) the shareholders of TPR and their respective interests therein, and
(ii) the identity of the principal stockholder of the Company and its interest
therein, are as set forth in the Company's Form 10-K for the fiscal year ended
December 31, 1994. As of the date hereof, the Company has no Subsidiaries
other than those listed on Exhibit 21 to such Form 10-K, and certain other
Subsidiaries which, if considered in the aggregate as a single Subsidiary,
would not constitute a Significant Subsidiary.
7.3 Authorization and Execution. (a) The Company has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Loan Documents executed by it. The execution, delivery and
performance by the Company of such Loan Documents and the borrowing hereunder
have been duly authorized by all requisite corporate action. This Agreement,
the 1990 Pledge Agreement, the 1990 Pledge Agreement Amendment No. 1, the 1990
Pledge Agreement Amendment No. 2 and the 1990 Pledge Agreement Amendment No. 3,
are, and the Note and the 1990 Pledge Agreement Amendment No. 4, when executed
and delivered by the Company pursuant hereto, will be legal, valid and binding
obligations of the Company, enforceable against the Company, in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by the application by a
court of equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The 1990 Pledge Agreement,
the 1990 Pledge Agreement Amendment No. 1, the 1990 Pledge Agreement Amendment
No. 2 and the 1990 Pledge Agreement Amendment No. 3 remain in full force and
effect and upon the execution and delivery of the 1990 Pledge Amendment No. 4
they shall constitute a valid, binding and enforceable pledge of 48,817,183
shares of HCL Stock, as security for the obligation of the Company to the Bank
under the Note. Since the 1990 Pledge Agreement was entered into, neither the
Company nor, to the best knowledge of the Company, any other party to the
Company Pledge Agreement has in any manner violated or caused the violation of
any of the terms and conditions of the 1990 Pledge Agreement, the 1990 Pledge
Agreement Amendment No. 1,
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the 1990 Pledge Agreement Amendment No. 2 or the 1990 Pledge Agreement
Amendment No. 3, nor failed to perform or fulfill any of its obligations
thereunder.
(b) TRIL has the corporate power and authority to execute,
deliver and carry out the terms and provisions of the TRIL Pledge Agreement and
any other Loan Documents executed by it. The execution, delivery and
performance by TRIL of such Loan Documents has been duly authorized by all
requisite corporate action. The TRIL Pledge Agreement, when executed and
delivered by TRIL pursuant hereto, will be a legal, valid and binding
obligation of TRIL, enforceable against TRIL, in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by the application by a court of equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law). The TRIL Pledge Agreement, when executed and
delivered by TRIL, shall constitute a valid, binding and enforceable pledge of
3,662,830 shares of HCL Stock, as security for the obligation of the Company to
the Bank under the Note.
7.4 Compliance with Other Instruments. Neither the Company
nor HCL is in default in the performance, observance or fulfillment of any of
the material obligations, covenants or conditions contained in any evidence of
Indebtedness of the Company or HCL, or contained in any instrument under or
pursuant to which any such evidence of Indebtedness has been issued or made and
delivered. Neither the execution and delivery of the Loan Documents, nor the
consummation of the transactions herein contemplated, including but not limited
to the use of the proceeds of any Advance for the funding of any acquisition or
for any other purpose, will conflict with or result in a breach of any of the
terms, conditions or provisions of the Certificate of Incorporation or By- laws
or other organizational charter and instruments of the Company, or of any
agreement or instrument to which the Company is now a party or otherwise bound
or to which any of the Company's properties or other assets is subject, or of
any law, statute, rule or regulation or any order or decree of any court or
governmental instrumentality, or of any arbitration award, franchise or permit,
or constitute a default thereunder, or result in the creation or imposition of
any Lien upon any of the properties or other assets of the Company, except as
herein contemplated.
7.5 Consents. No consent or approval of, or exemption by,
any Person (including, without limitation, the shareholders of the Company),
and no waiver of any right by any Person is required to authorize or permit, or
is otherwise required in connection with, the execution, delivery and
performance of the Loan Documents, or with respect to the required use by the
Company of the proceeds of any Loan, except those which shall have been
obtained on or prior to the date hereof.
7.6 Financial Statements. The Company has heretofore
furnished to the Bank copies of the unqualified audited consolidated financial
statements of the Company as of December 31, 1994 and for the year then ended,
the unaudited consolidated financial statements of the Company as of September
30, 1995 and for the nine-month period then ended, and the unqualified audited
consolidated financial statements of HCL as of December 31, 1994 and for the
year then ended and the unaudited consolidated financial statements of HCL as
of September 30, 1995 and for the nine-month period then ended
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(collectively, the "Financial Statements"). All of the Financial Statements
present fairly the financial position of the Company or HCL, as the case may
be, on the date of the balance sheet included therein and the results of the
operations of the Company or HCL, as the case may be, for the period involved,
and have been prepared in accordance with, in the case of the Company,
generally accepted accounting principles in effect in the United States and in
the case of HCL, generally accepted accounting principles in effect in Israel,
applied on a consistent basis throughout the periods involved (subject to, in
the case of the interim financial statements, normal year-end audit adjustments
not material in amount).
7.7 No Material Changes. There has been no material adverse
change in the business, properties or other assets or in the condition,
financial or otherwise, of the Company or HCL since the date of the most recent
balance sheets included in their respective Financial Statements.
7.8 Litigation. Except as set forth on Schedule A, there are
no actions, suits, investigations or proceedings (whether or not purportedly on
behalf of the Company or HCL) pending or, to the knowledge of the Company
threatened against or affecting the Company or HCL, at law or in equity or
before or by any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind,
which involve the possibility of any material liability or of any material
adverse effect on the business, operations, prospects, properties or other
assets or in the condition, financial or otherwise, of the Company or HCL.
7.9 Compliance with Law. Each of the Company and HCL is in
compliance, in all material respects, with all applicable requirements of law
and all applicable rules and regulations of each Federal, state, municipal or
other governmental department, agency or authority, domestic or foreign, the
noncompliance with which would have a material adverse effect on the business,
affairs, or financial condition of the Company or HCL, as the case may be.
7.10 Investment Company. The Company is not an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, or the regulations under such
act.
7.11 Residency and Citizenship Status of Company. The
Company (i) is not an "Israel resident" for purposes of Israeli Exchange
Control Law, 5738-1978, (ii) maintains its chief executive offices and
principal place of business in the State of New York, (iii) is not registered
in Israel as a foreign company and does not have a registered office in Israel,
and (iv) is not a representative, branch or agency in Israel for any other
Person.
7.12 Ownership of Company. As of the date of this Agreement,
none of the issued and outstanding shares of each class of the Company's
capital stock are owned, directly or indirectly, of record and/or beneficially,
by Israeli Residents.
7.13 Regulation U, Etc. None of the proceeds of any Advance
will be used, directly or indirectly, for any purpose that will violate, or
cause the Bank to be in violation of, or that will require the Bank to file or
obtain any forms or notices or applications of any
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kind so as not to be in violation of, Regulation U (12 CFR, Part 221) of the
Board of Governors of the Federal Reserve System. Neither the Company nor any
agent acting on its behalf has taken or will take any action which might cause
this Agreement or the Note or the making of any Advance to violate Regulation U
or any other regulation of the Board of Governors of the Federal Reserve
System.
7.14 ERISA. (i) Each single-employer Plan has been
maintained and funded, in all material respects, in accordance with its terms
and with all provisions of ERISA applicable thereto, and the Company and its
Subsidiaries have each taken all actions required to be taken by them to cause
each multi-employer Plan to be maintained and funded, in all material respects,
in accordance with its terms and with all provisions of ERISA applicable
thereto; (ii) no Reportable Event has occurred and is continuing with respect
to any single-employer Plan or, to the Company's knowledge, any multi-employer
Plan; and (iii) no liability to PBGC has been incurred by the Company or any
Subsidiary thereof with respect to any single-employer Plan or, to the
Company's knowledge, any multi-employer Plan, other than for premiums due and
payable.
7.15 Control of the Company. TPR (i) is a Delaware
corporation, the economic equity interest of which is 100% owned by Arie Genger
and members of his family, and (ii) owns all of the issued and outstanding
common stock of the Company and Controls the Company.
7.16 Senior Subordinated Note Indenture. The Company has
delivered to the Bank a true and correct copy of the Senior Subordinated Note
Indenture and all amendments and supplements thereto as in effect on the date
hereof.
7.17 Senior Reset Note Indenture. The Company has delivered
to the Bank a true and correct copy of the Senior Reset Note Indenture and all
amendments and supplements thereto as in effect on the date hereof.
7.18 Priority of Loans. All indebtedness of the Company to
the Bank arising from the Loan Documents, including but not limited to the
Company's obligations to pay the principal of and interest on the Note, is and
at all times will be senior in right of payment to the Senior Subordinated
Notes and the Senior Reset Notes, as provided in the Senior Reset Note
Indenture and Senior Subordinated Note Indenture, respectively.
7.19 No Bank of Israel Approval Needed. No exchange control
specific permit issued by the Bank of Israel is required in connection with the
transactions contemplated in this Agreement, other than the specific permit for
the TRIL Pledge Agreement, which was issued prior to the date hereof.
7.20 Refinancing Commitment for Senior Reset Notes. The
Company or its Subsidiary has obtained a firm written commitment to provide it
with funds sufficient to refinance or otherwise repay the Senior Reset Notes, a
true and complete copy of which commitment has been furnished to the Bank.
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8. CONDITIONS PRECEDENT TO INITIAL ADVANCE.
The obligation of the Bank to make the initial Advance to the
Company hereunder is subject to the satisfaction, on or before the date of the
making of such Advance, of each of the following conditions precedent which are
solely for the benefit of the Bank:
8.1 Repayment of Previous Company Loan. The Company (i)
shall have repaid in full the loan in the principal amount of $27,500,000
previously made by the Bank to the Company pursuant to the Loan Agreement dated
as of June 30, 1994 between the Bank and the Company and (ii) shall have
delivered to the Bank a duly executed guarantee of the loan from the Bank to
HCL referred to in Section 11.19(i) hereof, which guarantee shall be in form
and substance satisfactory to the Bank.
8.2 Note. The Note shall have been duly executed and
delivered to the Bank.
8.3 Pledge and Security Agreements. (i) The Company shall
have delivered to the Bank (A) a duly executed copy of the Company Pledge
Agreement, together with certificates representing 48,817,183 shares of HCL
Stock, registered in the name of the Trust Company, and a certificate from the
Secretary of HCL certifying that such shares are so registered (in form and
substance acceptable to the Bank), (B) a certificate from the Registrar of
Pledges in Jerusalem, Israel to the effect that the pledge of such shares has
been duly filed therewith in accordance with applicable law (in form and
substance acceptable to the Bank), (C) a duly executed copy of the 1990 Pledge
Agreement Amendment No. 4, and (D) any other instruments and documents as the
Bank may reasonably require to perfect its lien on such collateral under both
United States and Israeli law, as appropriate, including UCC-1 financing
statements, and the Bank shall have a valid and enforceable first priority lien
and security interest in all of such collateral.
(ii) TRIL shall have delivered to the Bank (A) a duly
executed copy of the TRIL Pledge Agreement, together with certificates
representing 3,662,830 shares of HCL Stock, registered in the name of the Trust
Company, and a certificate from the Secretary of HCL certifying that such
shares are so registered (in form and substance acceptable to the Bank), (B) a
certificate from the Registrar of Companies to the effect that the pledge of
such shares has been duly filed therewith in accordance with applicable law (in
form and substance acceptable to the Bank), and (C) any other instruments and
documents as the Bank may reasonably require to perfect its lien on such
collateral under both United States and Israeli law, as appropriate, including
UCC-1 financing statements, and the Bank shall have a valid and enforceable
first priority lien and security interest in all of such collateral.
8.4 Opinions of Counsel. The Bank shall have received (i)
from United States counsel for the Company a favorable written opinion
addressed to the Bank and dated the date of the initial Advance hereunder,
satisfactory to the Bank and substantially in the form set forth in Exhibit
8.4-1 annexed hereto, and (ii) from Israeli counsel to the Company and HCL, a
favorable written opinion addressed to the Bank and dated the date of the
initial Advance hereunder, satisfactory to the Bank and substantially in the
form set forth in Exhibit 8.4-2.
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8.5 Supporting Documents. The Bank shall have received the
following from each of the Company and TRIL: (i) a certificate of its
Secretary or an Assistant Secretary, dated the date of the initial Advance
hereunder, certifying as to (A) its By-laws, in the case of the Company, and
its Memorandum of Association, in the case of TRIL; (B) resolutions of its
Board of Directors authorizing the execution, delivery and performance of this
Agreement, the Note and any other Loan Documents executed by it, in the case of
the Company and the TRIL Pledge Agreement, in the case of TRIL; (C) the full
force and effect of such resolutions on the date of such Advance; and (D) the
incumbency and signature of each of the officers of the Company who sign the
Loan Documents and all other closing papers hereunder; (ii) certified copies of
its Certificate of Incorporation, in the case of the Company, and its Articles
of Association, in the case of TRIL, listing all charter papers on file, as
amended through the date hereof; (iii) a good standing certificate from the
Secretary of State of the State of Delaware, in the case of the Company; and
(iv) such additional supporting documents as the Bank may reasonably request.
8.6 Fees. All applicable fees and charges payable by the
Company to the Bank or with respect to the transactions described in this
Agreement shall have been paid.
8.7 Proceedings. All corporate and legal proceedings and all
instruments and agreements in connection with the transactions contemplated by
this Agreement shall be satisfactory in form, scope and substance to the Bank
and its counsel, and the Bank and such counsel shall have received all
information and copies of all documents, including records of corporate
proceedings, which the Bank or its counsel may reasonably have requested in
connection therewith, such documents where appropriate to be certified by
proper corporate and governmental authorities.
9. CONDITIONS PRECEDENT TO ALL ADVANCES INCLUDING THE INITIAL
ADVANCE.
The obligation of the Bank to make each Advance (including the
initial Advance) is subject to the satisfaction, on or before the date of the
making of such Advance, of each of the following conditions precedent which are
solely for the benefit of the Bank:
9.1 Borrowing Request. Written request for the borrowing
shall have been received by the Bank at least three (3) Business Days before
the proposed borrowing pursuant to Section 2.2 hereof.
9.2 No Default. Both before and after giving effect to the
Advance (including upon application of the proceeds thereof), there shall exist
no Default or Event of Default.
9.3 Representations. Both before and after giving effect to
the Advance (including upon application of the proceeds thereof), all
representations and warranties by the Company contained herein and all
representations and warranties contained in the other Loan Documents shall be
true and correct, with the same force and effect as if made on and as of the
date of the Advance.
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9.4 Officers' Certificate. The Company shall have delivered
to the Bank a certificate signed by the chief financial officer and the
Chairman, President or any Vice President (other than the chief financial
officer) of the Company dated the date of the Advance, certifying and
confirming that (i) no Default or Event of Default exists as set forth in
Section 9.2 hereof, and (ii) the representations and warranties referred to in
Section 9.3 hereof are true and correct and, in furtherance of and without
limiting the generality of the foregoing, the Company is not "insolvent" within
the meaning of the Federal Bankruptcy Code Section 101(32).
9.5 Pledge Agreements. The Company Pledge Agreement and the
TRIL Pledge Agreement shall remain in full force and effect and all filings
necessary to perfect and protect the Bank's interest in the HCL Stock subject
to the Company Pledge Agreement and the TRIL Pledge Agreement shall have been
filed and kept current in the appropriate offices of all applicable
jurisdictions.
9.6 Fees. All applicable fees and charges payable by the
Company to the Bank or with respect to the transactions described in this
Agreement shall have been paid.
9.7 Proceedings. All corporate and legal proceedings and all
instruments and agreements in connection with the transactions contemplated by
this Agreement shall be satisfactory in form, scope and substance to the Bank
and its counsel, and the Bank and such counsel shall have received all
information and copies of all documents, including records of corporate
proceedings, which the Bank or its counsel may reasonably have requested in
connection therewith, such documents where appropriate to be certified by
proper corporate and governmental authorities.
10. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that from and after the date
hereof until the expiration or termination of the commitment of the Bank to
make Advances under the terms of this Agreement and all sums due and to become
due hereunder or under any other Loan Document have been paid or repaid in
full, unless the Bank shall otherwise consent in a writing delivered to the
Company:
10.1 Pay Principal and Interest. The Company will punctually
pay or cause to be paid the principal and interest to become due in respect of
the Note according to the terms hereof and thereof.
10.2 Maintenance of Company Office. The Company will
maintain an office in New York, New York (or such other place in the United
States of America as the Company may designate in writing to the Bank or to any
subsequent holder of the Note), where notices and demands to or upon the
Company in respect of the Note may be given or made.
10.3 Keep Books. The Company will keep proper books of
record and account in which true, correct and complete entries will be made of
its transactions in accordance with generally accepted accounting principles.
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10.4 Payment of Taxes; Corporate Existence; Maintenance of Properties.
The Company will, as to itself, and will cause HCL to:
(a) Pay and discharge promptly all taxes (including, without
limitation, all payroll withholdings), assessments and governmental charges or
levies imposed upon it or upon its income or profits or upon any of its
property, real, personal or mixed, or upon any part thereof, before the same
shall become in default, as well as all claims for labor, materials and supplies
which, if unpaid, might by law become a Lien upon its property; provided,
however, that it shall not be required to pay any such tax, assessment, charge,
levy or claim or discharge any such Lien if the validity thereof shall be
contested in good faith by appropriate proceedings and if it shall have set
aside on its books such reserves, if any, as may be required in accordance with
generally accepted accounting principles with respect to the tax, assessment,
charge, levy or claim so contested;
(b) (i) Conduct its business according to good business practices; (ii)
keep in full force and effect its corporate existence, and material rights,
licenses, permits and franchises (except those the Company determines to be no
longer material) and comply in all material respects with all of the laws, rules
and regulations governing its business (except such non-compliance as does not
have a material adverse effect on the Company or HCL); and (iii) make all such
reports and pay all such franchise and other taxes and license fees and do all
such other things as may be lawfully required, to maintain its material rights,
licenses, powers and franchises under the laws of the United States of America
and of the States or jurisdictions in which it is organized or does business;
and
(c) Maintain and keep, or cause to be maintained and kept, its
properties in good repair, working order and condition, and from time to time
make or cause to be made all needful repairs, renewals, replacements and
improvements so that the business carried on in connection therewith may be
properly conducted at all times.
10.5 Financial Statements and Reports. The Company will furnish to the
Bank, in duplicate:
(a) As soon as practicable, and in any event within 90 days after
the end of each fiscal year of the Company, annual unqualified audited
consolidated balance sheets of the Company and its Subsidiaries as at the end of
such year and related consolidated statements of income, retained earnings and
cash flows of the Company and its Subsidiaries for such year, setting forth in
comparative form the corresponding figures for the preceding fiscal year,
audited by independent certified public accountants of recognized standing
selected by the Company and acceptable to the Bank;
(b) As soon as practicable, and in any event within 105 days after
the end of each fiscal year of the Company, annual unaudited consolidating
balance sheets of the Company and its Subsidiaries as at the end of such year
and related consolidating statement of income of the Company and its
Subsidiaries for such year, certified by the chief financial officer of the
Company as to (i) fair presentation of the financial position and the results of
operations of the Company and (ii) having been prepared in accordance with
generally accepted accounting principles consistently applied;
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(c) As soon as practicable, and in any event within 60 days after
the end of each fiscal quarter of the Company, a consolidated balance sheet,
related consolidated statements of income, retained earnings and cash flows of
the Company showing its financial condition as of the last day of such fiscal
quarter and the results of operations for such fiscal quarter, certified by the
chief financial officer of the Company as to (i) fair presentation of the
financial position and the results of operations of the Company and (ii) having
been prepared in accordance with generally accepted accounting principles
consistently applied;
(d) As soon as practicable, and in any event within 60 days after
the end of each fiscal quarter of the Company, a consolidating balance sheet and
related consolidating statement of income of the Company showing its financial
condition as of the last day of such fiscal quarter and the results of
operations for the fiscal year to date, certified by the chief financial officer
of the Company as to (i) fair presentation of the financial position and of the
Company and the results of operations (ii) having been prepared in accordance
with generally accepted accounting principles consistently applied;
(e) As soon as practicable, and in any event within 180 days after
the end of each fiscal year of HCL, unqualified audited consolidated balance
sheets, related statements of income, retained earnings and cash flows showing
HCL's financial condition, as of the close of such fiscal year and its results
of operations during such year, setting forth in each case in comparative form
the corresponding figures for the preceding fiscal year, audited by independent
certified public accountants of recognized standing selected by the Company or
HCL and acceptable to the Bank;
(f) Promptly upon filing with the United States Securities and
Exchange Commission, copies of the Company's Forms 10-K and 10-Q as well as all
other reports required of the Company under Sections 13 or 15(d) of the
Securities Exchange Act of 1934, as amended;
(g) Promptly following the occurrence thereof, notice of any
material adverse change in the business, affairs or financial condition of the
Company or HCL;
(h) Promptly following the occurrence thereof, notice that the
operations of Eddy Potash, Inc. have been put on a standby basis or
discontinued;
(i) Promptly following the occurrence thereof, notice of any
Default hereunder or of any default under any other Loan Document, the Senior
Subordinated Note Indenture, the Senior Reset Note Indenture, any Senior
Indebtedness, any Junior Indenture, or any Indebtedness to any institutional
lender;
(j) When any quarterly or annual financial statements are required
under this Section 10.5, or more often at the Bank's request, a certificate
signed by the chief executive officer or chief financial officer of the Company
(or, if requested by the Bank, by the Company's independent certified public
accountants) certifying that no Default has occurred and is continuing; and
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(k) Such other information as to the financial condition,
operations, business, properties and other assets of the Company or HCL as the
Bank may from time to time reasonably request.
The Company shall cause all audited financial statements required to be
delivered to the Bank pursuant to this Section 10.5 to be addressed to the Bank
by the independent certified public accountant who performed the audit.
10.6 Application of Proceeds. The Company will apply all proceeds of
each Advance as provided in Section 3 hereof. In furtherance of the foregoing,
the Company shall give notice to the Bank promptly and in no event less than
five Business Days following any acquisition for which the proceeds of any
Advance are used.
10.7 ERISA Compliance. The Company will comply, in all material
respects, and cause each of its Subsidiaries to comply, in all material
respects, with the provisions of ERISA, if applicable, with respect to each of
its or their respective Plans and as soon as possible after the Company knows or
has reason to know that any Reportable Event with respect to any Plan has
occurred, furnish to the Bank a statement signed by its chief executive officer
or its chief financial officer setting forth details as to such Reportable Event
and the action, if any, which the Company or its Subsidiary proposes to take
with respect thereto, together with a copy of the notice of such Reportable
Event furnished to PBGC.
10.8 HCL Dividends. If the Company is unable to make any payment when
due under the Note, the Company shall cause HCL to declare and pay cash
dividends to the Company in amounts sufficient so that the Company may make such
payments, and the Company shall use such dividends for such purpose; provided,
however, that if the declaration and payment of such dividends would be
prohibited by any applicable Governmental Rule, the Company shall not be
required to cause such declaration and payment, but shall use its best efforts
to obtain any necessary approvals and permits so that such declaration and
payment can be made in compliance with applicable Governmental Rules.
10.9 Senior Subordinated Notes Repurchase Event or Senior Reset Notes
Repurchase Event. In the event of either (i) a "Change of Control," as defined
in the Senior Subordinated Note Indenture, of the Company giving rise to an
offer by the Company to purchase Senior Subordinated Notes pursuant to Section
4.18 of the Senior Subordinated Note Indenture (a "Senior Subordinated Notes
Repurchase Event") or (ii) a "Change of Control," as defined in the Senior Reset
Note Indenture, of the Company giving rise to an offer by the Company to
purchase Senior Reset Notes pursuant to Section 4.17 of the Senior Reset Note
Indenture (a "Senior Reset Notes Repurchase Event"), the Company shall give the
Bank notice of such event not more than five Business Days thereafter.
10.10 Senior Reset Note Indenture Covenants. So long as the Senior
Reset Note Indenture is in force and effect, the Company agrees to do and
perform, in favor of and for the benefit of the Bank, all things set forth in
Sections 4.02, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.19
and 4.20 of the Senior Reset Note Indenture, as in
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effect on the date hereof (notwithstanding any amendment thereof), and such
sections are incorporated herein by reference, as if set out herein in full,
with such modifications as may be appropriate, mutatis mutandis.
10.11 Senior Subordinated Note Indenture. The Company agrees to do and
perform, in favor of and for the benefit of the Bank, all things set forth in
Section 4.02, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14,
4.15 and 4.16 of the Senior Subordinated Note Indenture, as in effect on the
date hereof (notwithstanding any amendment or termination thereof), and such
sections are incorporated herein by reference, as if set out herein in full,
with such modifications as may be appropriate, mutatis mutandis, provided that,
for the purposes of this Section 10.11, the term "Event of Default" as used in
such Sections shall be deemed to mean an Event of Default as defined in this
Agreement, and any notice required to be furnished to the trustee under the
Senior Subordinated Note Indenture pursuant to the provisions of Sections 4.12
and 4.15 shall be furnished to the Bank.
11. NEGATIVE COVENANTS.
The Company covenants and agrees that from and after the date hereof
until the expiration or termination of the commitment of the Bank to make
Advances under the terms of this Agreement and all sums due and to become due
hereunder or under any other Loan Document have been paid or repaid in full,
unless the Bank shall otherwise consent in a writing delivered to the Company,
the Company, after giving effect to any Advance hereunder, will not:
11.1 Indebtedness to Adjusted Net Worth Ratio of the Company. Permit
the ratio of the Company's total Indebtedness to the Company's Adjusted Net
Worth to exceed, at any time, (a) 3 to 1, or (b) on a consolidated basis, 5 to
1.
11.2 Maintenance of Adjusted Net Worth of the Company. Permit the
Company's Adjusted Net Worth to be less than $100,000,000.
11.3 Maintenance of Tangible Net Worth of the Company. Permit (a) the
Company's Tangible Net Worth to be $0 or less at any time, or (b) the Company's
Tangible Net Worth, on a consolidated basis, to be $0 or less at any time.
11.4 Maintenance of Tangible Net Worth of HCL. Permit HCL's Tangible
Net Worth on a consolidated basis, as calculated according to Israeli generally
accepted accounting principles, to be less than $65,000,000.
11.5 Maintaining Current Ratios. Permit (a) the Company's Current Ratio
to be less than 1.5 to 1 at any time, or (b) the Company's Current Ratio, on a
consolidated basis, to be less than (i) 1.35 to 1 at any time prior to March 31,
1996 or (ii) 1.5 to 1 at any time on or subsequent to March 31, 1996, or (c)
HCL's Current Ratio, on a consolidated basis, to be less than 1.5 to 1 at any
time.
11.6 Maintenance of Working Capital. Permit the Company's Working
Capital, on a consolidated basis, to be less than (i) $60,000,000 at any time
prior to March
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31, 1996, (ii) $70,000,000 at any time on or subsequent to March 31, 1996 and
prior to June 30, 1996, and (iii) $75,000,000 at any time on or subsequent to
June 30, 1996.
11.7 No Net Losses. Permit the Company to have, on a consolidated
basis, a net loss at the end of any fiscal year (other than the fiscal year
ending December 31, 1995), or HCL to have a net loss at the end of any fiscal
year (including the year ending December 31, 1995).
11.8 Restrictions on Dividends. Pay dividends during the period
beginning on January 1, 1995 and ending on the Maturity Date (or, if later, the
date on which all principal of and interest on the Note has been paid in full)
that exceed, in the aggregate, (i) $4,000,000 plus (ii) an additional amount of
$4,000,000 for each calendar year, beginning with the 1996 calendar year, on a
cumulative basis, plus (iii) an additional amount of $500,000 for every three
calendar month period beginning January 1, 1996, on a cumulative basis,
provided, that no dividends may be paid upon the occurrence and during the
continuance of an Event of Default or if, immediately after the payment thereof,
a Default or Event of Default would exist.
11.9 Maintenance of Average Net Income. Permit the average of the
Consolidated Net Income of HCL for the most recently completed fiscal year and
for the next preceding fiscal year to be less than $8,000,000 per year.
11.10 Amendment of Subordinated Debt. Amend or otherwise change the
terms of any Subordinated Debt, or make any payment consistent with an amendment
or change thereto, if the effect of such amendment or change is to increase the
interest rate or the liquidation preference of such debt securities, accelerate
the dates upon which payments of principal or interest are due thereon, change
any event of default or condition to an event of default with respect to such
indenture or agreement, change the redemption provisions thereof or change the
subordination provisions thereof, or which, together with all such other
amendments or changes made, increase the obligations of the obligor or confer
additional rights on the holder of such debt securities.
11.11 Amendments of Junior Subordinated Capital. Amend or otherwise
change the terms of any Junior Subordinated Capital, or make any payment
consistent with an amendment or change thereto, if the effect of such amendment
or change is to increase the interest rate, the dividend rate or the liquidation
preference on such Junior Subordinated Capital, accelerate the dates upon which
payments of principal, dividends or interest are due thereon, change any event
of default or condition to an event of default with respect to such Junior
Subordinated Capital, change the redemption provisions thereof or change the
subordination provisions thereof, or which, together with all other amendments
or changes made, increase the obligations of the obligor or confer additional
rights on the holder of such Junior Subordinated Capital.
11.12 Use of Proceeds of Advances. Use any part of the proceeds of any
Advance hereunder for any purpose other than those specified in Section 3
hereof.
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11.13 Disposal of Property; Merger. (i) Wind up, liquidate or dissolve;
(ii) sell, exchange, lease, transfer or otherwise dispose of all or
substantially all of (or agree to do any of the foregoing) its properties or
other assets (unless the net proceeds are applied to prepay the Note in
accordance with Section 2.3 hereof) other than in transactions with Subsidiaries
of the Company; or (iii) consolidate with or merge with or into any other
corporation, firm or entity.
11.14 HCL Disposal of Property; Merger.
(a) Permit HCL to sell, exchange, lease, transfer or otherwise
dispose of all or substantially all of its assets, except in the ordinary course
of business.
(b) Permit HCL to sell, exchange or otherwise transfer the shares
of any of HCL's controlled Subsidiaries except to another HCL-controlled
Subsidiary.
(c) Permit HCL to consolidate with or merge with or into any
other corporation, firm or entity.
11.15 Release of Obligations. Discharge or release HCL from, or extend
or otherwise modify in any material way any or all of HCL's material obligations
to the Company, now or hereafter incurred.
11.16 Certain Liens. Contract, create, assume, incur or suffer to be
created, assumed or incurred any Lien upon, or pledge of, any property or other
assets of the Company or any of its Subsidiaries which will secure any other
Senior Indebtedness, Senior Subordinated Notes, Senior Reset Notes, any Junior
Subordinated Debt or any Subordinated Debt other than (i) Liens created pursuant
hereto, (ii) Liens securing the purchase price of goods acquired in the ordinary
course of business, not exceeding, in aggregate amount, $1,000,000 and (iii)
Liens existing on the date hereof upon the Company's stock ownership of certain
of its Subsidiaries, other than HCL, securing loans made to such Subsidiaries by
Persons unaffiliated with TPR, the Company or any Subsidiary, and Liens which
may arise hereafter upon such stock ownership in connection with the refinancing
of such loans.
11.17 Maintenance of Priority. Permit or cause the Indebtedness of the
Company to the Bank arising under the Loan Documents, including but not limited
to the Company's obligations to pay the principal of and interest on the Note,
to not be fully senior in right of payment in all respects to the Senior
Subordinated Notes, the Senior Reset Notes, any Junior Subordinated Debt and all
other Subordinated Debt.
11.18 HCL Stock. Permit HCL to issue any additional shares of capital
stock or sell, assign or transfer or permit HCL to sell, assign or transfer, any
of the HCL Stock owned by the Company or TRIL or, anything herein to the
contrary notwithstanding, permit the creation of any liens or encumbrances on
any of the HCL Stock, whether or not pledged pursuant to the Company Pledge
Agreement or the TRIL Pledge Agreement, except pursuant to the Company Pledge
Agreement and the TRIL Pledge Agreement. Nothing in this Section 11.18 shall
prohibit HCL from issuing additional shares of HCL Stock if required to do so
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pursuant to a Governmental Rule, provided that such additional shares are
expressly pledged and made subject to a first priority security interest in
favor of the Bank.
11.19 Contingent Obligations. Assume, guarantee, endorse or otherwise
become directly or contingently liable for the obligations of any other Person
or Persons in excess of $40 million in the aggregate, except for (i) the
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business, and (ii) the guarantee by the Company of a loan that may be
granted by one of the Bank's Israeli branches to HCL, the proceeds of which will
be used, directly or indirectly, to repay the loan referred to in Section 8.1
hereof.
11.20 Issuance of Securities. The Company shall not issue any shares of
capital stock or securities convertible into shares of capital stock, or grant
any options or rights to acquire any shares of capital stock, to any Israeli
Resident, if, upon such issuance or upon the conversion of all outstanding
convertible securities of the Company or upon the exercise of all existing
options or rights, 25% or more of the issued and outstanding shares of any class
of the Company's capital stock would be owned, directly or indirectly,
beneficially and/or of record by Israeli Residents.
12. DEFAULTS AND REMEDIES.
12.1 Events of Default. In the case of the occurrence of any of the
following events for any reason whatsoever, and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any governmental body or otherwise (each herein
sometimes called an "Event of Default"):
(a) Any representation or warranty made herein or in any
certificate hereafter delivered to the Bank pursuant to this Agreement, the Note
or any other Loan Document shall prove to have been false or misleading in any
material respect when made; or
(b) Any default shall occur in the payment of principal of or
interest on the Note, as and when the same shall become due and payable, whether
at the due date thereof, by acceleration, mandatory prepayment or otherwise; or
(c) (i) Any default shall occur in the due observance or
performance by the Company of any other covenant, agreement or condition
contained herein (other than pursuant to Section 10.10 or 10.11 hereof) or in
the Note, the Company Pledge Agreement, the TRIL Pledge Agreement or any other
Loan Document to be performed by the Company; or (ii) any default shall occur in
the due observance or performance by the Company of any covenant, agreement or
condition contained in Section 10.10 or 10.11 hereof and, in the case of this
clause (ii), such default shall continue for 30 days after receipt of notice
thereof from the Bank or of a "Notice of Default" pursuant to Section 6.01 of
the Senior Subordinated Note Indenture or the Senior Reset Note Indenture, as
applicable; or
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(d) (i) TPR, the Company, HCL, or any Significant Subsidiary
shall suspend or discontinue its business, or (ii) TPR, the Company, HCL, Eddy
Potash, Inc. or any Significant Subsidiary shall call a meeting of its creditors
for the purpose of postponing or adjusting its liabilities or seeking an
arrangement with its creditors, shall make an assignment for the benefit of
creditors or a composition with creditors, shall be unable or admit in writing
its inability to pay its debts generally as they mature, shall generally not pay
its debts when they are due, shall file a petition in bankruptcy, shall become
insolvent (howsoever such insolvency may be evidenced), shall suffer an order
for relief to be entered against it under any bankruptcy law which shall remain
undismissed or unstayed for a period of 45 days or more, shall petition or apply
to any tribunal for the appointment of any receiver, custodian, liquidator or
trustee of or for it or any substantial part of its property or other assets or
shall commence any proceeding relating to it under any bankruptcy,
reorganization, arrangement, readjustment of debt, receivership, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or there shall be commenced against TPR, the Company, HCL, Eddy Potash,
Inc. or any Significant Subsidiary any such proceeding which shall remain
undismissed or unstayed for a period of 45 days or more; or TPR, the Company,
HCL, Eddy Potash, Inc., or any Significant Subsidiary shall take any action for
the purpose of effecting any of the foregoing; or
(e) Any order, judgment or decree shall be entered in any
proceeding against TPR, the Company, HCL, Eddy Potash, Inc. or any Significant
Subsidiary decreeing the dissolution of TPR, the Company, HCL, Eddy Potash, Inc.
or any Significant Subsidiary and such order, judgment or decree shall remain
undischarged or unstayed for a period in excess of 30 days; or
(f) Any Loan Document shall become invalid or unenforceable, in
whole or in part, or any default or event of default shall have occurred
thereunder; or the Bank shall not have a valid perfected first priority lien,
pledge and charge with respect to the HCL Stock under the laws of the State of
Israel; or
(g) Any default (unless duly waived in writing by the obligee)
shall occur with respect to any Indebtedness (other than the Indebtedness
evidenced by the Note) of the Company aggregating more than $250,000, any of its
Subsidiaries for or relating to borrowed money (including, without limitation,
for the deferred purchase price of property or for the payment of rent under any
lease), aggregating more than $250,000, or under any agreement under which any
evidence of Indebtedness may be issued by the Company or any of its Subsidiaries
and such default shall continue for more than the period of grace, if any,
specified therein, if the effect of such default is to accelerate the maturity
of such Indebtedness or to permit the holder thereof, or any trustee, to cause
the same to become due prior to its stated maturity or if any such Indebtedness
shall not be paid when due; or
(h) Final judgment for the payment of money in excess of $250,000
shall be rendered by a court of record against the Company or any of its
Subsidiaries, and the Company or any of its Subsidiaries shall not discharge the
same or provide for its discharge in accordance with its terms, or procure a
stay of execution thereof within 30 days from the date of entry thereof and
within such period of 30 days, or such longer period
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during which execution of such judgment shall have been stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal; or
(i) Any Reportable Event which the Bank determines in good faith
might constitute grounds for the termination of any Plan or for the appointment
by the appropriate United States District Court of a trustee to administer any
Plan shall have occurred and be continuing 30 days after notice to such effect
shall be given to the Company by the Bank, or any Plan shall be terminated (with
the exception of any Plan covering employees at Eddy Potash, Inc.), or a trustee
shall be appointed by an appropriate United States District Court to administer
any Plan, or PBGC shall institute proceedings to terminate any Plan or appoint a
trustee to administer any Plan, or the Company or any of its Subsidiaries shall
completely or partially withdraw from any multi-employer Plan (with the
exception of any Plan covering employees at Eddy Potash, Inc.) or appoint a
trustee to administer any such Plan or shall cease operation at any facility
where such cessation could reasonably be expected to result in a separation from
employment of more than 20% of the total number of employees who are
participants under a Plan (with the exception of any Plan covering employees at
Eddy Potash, Inc.); and in each case such event or condition, together with all
such other events or conditions, if any, would subject the Company or any of its
Subsidiaries to any tax, penalty or other liability aggregating in excess of
$250,000, provided, however, that in determining whether such taxes, penalties
or other liabilities exceed such limitation, there shall be excluded therefrom
any tax, penalty or other liability which (i) within 30 days of being imposed,
is paid or satisfied, or (ii) is being contested in good faith and by
appropriate proceedings, with respect to which adequate reserves have been set
aside by the Company and its Subsidiaries in conformity with generally accepted
accounting principles and with respect to which none of the property or assets
of the Company or any of its Subsidiaries has become or is about to become
subject to any Lien; or
(j) An Event of Default as defined under the Senior Subordinated
Note Indenture or the Senior Reset Note Indenture shall occur; or
(k) The Company shall be in default under any other obligation to
Bank Hapoalim B.M. for the payment of money; or
(l) TPR shall no longer Control the Company, or shall cease to
own a majority of the issued and outstanding common stock of the Company, or
Arie Genger and members of his immediate family shall cease to own, in the
aggregate, directly or indirectly, more than a majority of the equity and voting
interests in TPR, unless any such change constitutes an Approved Change, or Arie
Genger shall at any time for a reason other than death or serious disability,
fail to maintain beneficial ownership, directly or indirectly, of at least 20%
of the voting stock of the Company; or
(m) The Company or any Subsidiary thereof shall become an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, or the regulations under such
Act; or
(n) a Senior Subordinated Notes Repurchase Event or Senior Reset
Notes Repurchase Event shall occur;
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then, if any Event of Default described in subsection (d) above shall have
occurred the Note shall immediately become due and payable, and if any Event of
Default described in any other subsection of this Section 12.1 shall have
occurred, and at any time thereafter, if any such event shall then be
continuing, the Bank may, by written notice to the Company, declare the
principal of and accrued interest on the Note, and any other amounts owed under
this Agreement, the Note or any Loan Document, to be due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived.
12.2 Suits for Enforcement. If any one or more of such Events of
Default shall occur and be continuing, the holder of the Note may proceed, to
the extent permitted by law, to protect and enforce such holder's rights either
by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, condition or agreement contained in the Loan
Documents or in aid of the exercise of any power granted in the Loan Documents,
or proceed to enforce the payment of the Note or to enforce any other legal or
equitable right of the holder of the Note.
12.3 Remedies Cumulative. No right or remedy herein or in any
other agreement or instrument conferred upon the Bank or the holder of the Note
is intended to be exclusive of any other right or remedy, and each and every
such right or remedy shall be cumulative and shall be in addition to every other
right and remedy given hereunder or under any Loan Document or now or hereafter
existing at law or in equity or by statute or otherwise. Without limiting the
generality of the foregoing, if the Note or any of the other obligations of the
Company to the Bank shall not be paid when due, whether at the stated maturity
thereof, by acceleration or otherwise, the Bank shall not be required to resort
to any particular security, right or remedy or to proceed in any particular
order of priority, and the Bank shall have the right at any time and from time
to time, in any manner and in any order, to enforce its security interests,
liens, rights and remedies, or any of them, as it deems appropriate in the
circumstances and apply the proceeds of its collateral to such obligations of
the Company as it determines in its sole discretion.
13. MISCELLANEOUS.
13.1 Notices. All notices, requests and other communications to any
party under this Agreement and the other Loan Documents shall be in writing and
shall be given to such party, by mail, telecopy, telex, personal delivery or
other customary means of delivery, addressed to it as set forth below or such
other address or telex number as such party may in the future specify for such
purpose by notice to the other party. Each such notice, request or communication
shall be effective (i) if given by telex, when such telex is transmitted to the
telex number specified below and the appropriate answerback is received, (ii) if
given by mail, two days after such communication is deposited in the United
States mails and sent by certified or registered mail, return receipt requested,
with first class postage prepaid, addressed as aforesaid or (iii) if given by
telecopy, personal delivery or any other means, when received at the address
specified below.
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Party Address
If to the Company: Trans-Resources, Inc.
9 West 57th Street
Suite 3900
New York, New York 10019
Attention: President
Telephone: (212) 888-3044
Telecopier: (212) 888-3708
with a copy to: Lester W. Youner
Vice President, Treasurer and
Chief Financial Officer
Trans-Resources, Inc.
9 West 57th Street
New York, New York 10019
Telephone: (212) 888-3044
Telecopier: (212) 888-3708
and with a copy to: Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, New York 10112
Attention: Edward Klimerman, Esq.
Telephone: (212) 698-7700
Telex: 147264
Answerback: RBLNYK
Telecopier: (212) 698-7825
If to the Bank: Bank Hapoalim B.M. New York Branches
1177 Avenue of the Americas
New York, New York 10036
Attention: Mordechai Kremer
First Vice President
Telephone: (212) 782-2165
Telecopier: (212) 782-2222
with a copy to: Bank Hapoalim B.M.
New York Branches
1177 Avenue of the Americas
New York, New York 10036
Attention: Lawrence Lefkowitz, Esq.
Telephone: (212) 782-2130
Telecopier: (212) 782-2141
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and with a copy to: Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036-7798
Attention: Steven K. Weinberg, Esq.
Telephone: (212) 479-6240
Telecopier: (212) 479-6275
13.2 Survival of Representations; Successors and Assigns. All
covenants, agreements, representations and warranties made herein and in any
certificate delivered pursuant hereto shall survive the making by the Bank of
the Advances contemplated herein and the execution and delivery to the Bank of
the Note evidencing the Advances regardless of any investigation made by the
Bank and of the Bank's access to any information and shall continue in full
force and effect until the expiration or termination of the commitment of the
Bank to make Advances under the terms of this Agreement and all sums due and to
become due hereunder or under any other Loan Document have been paid or repaid
in full. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party, subject to the provisions hereof. All covenants, agreements,
representations and warranties by the Company which are contained or
incorporated in this Agreement or in any other Loan Document shall inure to the
benefit of the successors and assigns of the Bank and any holder of the Note.
Except for the parties hereto and their respective successors and assigns, no
other Person shall be entitled to the benefits of this Agreement or to rely
thereon.
13.3 Effect of Delay. No failure or delay on the part of the Bank in
exercising any right, power or privilege hereunder or under the Note, nor any
course of dealing between the Company and the Bank, shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise or the exercise of any other right, power or privilege.
13.4 Expenses. The Company agrees to pay all out-of-pocket costs and
expenses (including the reasonable fees and disbursements of special counsel)
incurred by the Bank in connection with (i) the preparation and execution of the
commitment letter and this Agreement and the other Loan Documents and the making
of the Advances hereunder; provided, however, that whether or not the Advances
are ever made, the Company agrees to pay the Bank all of its costs and expenses,
including the reasonable fees and disbursements of the Bank's counsel, incurred
in connection with the preparation and negotiation of the commitment letter and
the Loan Documents, and in addition the Company shall pay the reasonable fees
and disbursements of Israeli counsel to the Bank, (ii) any modifications or
waivers of this Agreement or any other Loan Document requested by the Company,
and (iii) the enforcement and preservation of the rights of the Bank under or in
connection with the Loan Documents. All of such expenses shall be paid by the
Company on demand as incurred. The provisions of this Section 13.4 shall survive
any termination of this Agreement, whether by reason of bankruptcy of the
Company or otherwise.
13.5 Modifications and Waivers. No modification or waiver of any
provisions of this Agreement or of any other agreement or instrument made or
issued pursuant hereto or contemplated hereby, nor consent to any departure by
the Company
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therefrom, shall in any event be effective, irrespective of any course of
dealing between the parties, unless the same shall be in a writing executed by
the Bank, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on
the Company in any case shall thereby entitle the Company to any other or
further notice or demand in the same, similar or other circumstances. Any
transaction or matter excepted from the operation of any Section of this
Agreement shall nevertheless be subject to the prohibitions and limitations
contained elsewhere in this Agreement, unless expressly stated otherwise.
13.6 Set-Off of Accounts. The balance of every account of the Company
with the Bank existing from time to time at any of the Bank's offices worldwide
and in any currency, shall be subject to being setoff against any obligations of
the Company to the Bank arising under this Agreement or other Loan Documents,
and the Bank may at any time and from time to time after an Event of Default
shall have occurred and be continuing at its option and without notice to the
Company, except as may be required by law, appropriate and apply toward the
payment of any of such obligations of the Company to the Bank all or any part of
the balance of each such account with the Bank.
13.7 Counterparts. This Agreement may be executed in any number of
counterparts and by telecopier, each of which shall constitute an original, and
all of which taken together shall constitute one and the same agreement.
13.8 Construction and Jurisdiction. This Agreement, the Note and the
other Loan Documents, except the Company Pledge Agreement and the TRIL Pledge
Agreement, shall be governed by and construed and enforced in accordance with
the laws of the State of New York applicable to contracts made and to be
performed wholly within such State. The Company Pledge Agreement and the TRIL
Pledge Agreement shall be governed by the laws of Israel applicable to contracts
made and to be performed wholly within such nation. Any action or proceeding in
connection with this Agreement or the Note may be brought in a court of record
of the State of New York, County of New York or any federal court located
therein, the parties hereby consenting to the jurisdiction thereof, and service
of process may be made upon any party by mailing a copy thereof to such party,
by registered mail, at its address to be used for the giving of notices under
this Agreement. IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTE
AND THE OTHER LOAN DOCUMENTS, THE PARTIES MUTUALLY WAIVE TRIAL BY JURY AND ANY
CLAIM THAT NEW YORK COUNTY IS AN INCONVENIENT FORUM. The Company hereby
irrevocably appoints Rubin Baum Levin Constant & Friedman, and any successor
firm or professional corporation, as its agent for service of process for any
and all matters related to or arising out of any of the Loan Documents or any
transactions contemplated thereby.
13.9 Headings. Section headings are for convenience only and shall not
affect the interpretation or construction of this Agreement or the Note.
13.10 Scope of Pledge Agreements; Termination.
It is hereby agreed as follows:
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(a) The security interest created in favor of the Bank under the
TRIL Pledge Agreement shall secure payment of all amounts due or that may become
due under this Agreement and the Note. Upon the expiration or termination of the
commitment of the Bank to make Advances under the terms of this Agreement and
the payment in full of any amount due or that may become the due under this
Agreement or the Note, TRIL shall be entitled to the return to it of all of the
Pledged Shares (as defined in the TRIL Pledge Agreement) or the unrealized
remainder thereof and the TRIL Pledge Agreement shall thereupon be terminated in
accordance with Clause 13 thereof.
(b) Subject to Section 13.10(c) hereof, the security interest
created in favor of the Bank under the Company Pledge Agreement only shall
secure payment of all amounts due or that may become due under this Agreement
and the other Loan Documents and, upon the expiration or termination of the
commitment of the Bank to make Advances under the terms of this Agreement and
the payment in full of any amount due or that may become due under this
Agreement or any other Loan Document, the Company shall be entitled to the
return to it of all of the Pledged Shares (as defined in the Company Pledge
Agreement) or the unrealized remainder thereof and the Company Pledge Agreement
shall thereupon be terminated in accordance with Clause 13 thereof. For the
removal of doubt it is specifically acknowledged that the guarantee of the
Company to be delivered in accordance with Section 8.1(ii) hereof shall not be
secured by the TRIL Pledge Agreement or the Company Pledge Agreement.
(c) The limitation as to the applicability of the security
interest created in favor of the Bank under the Company Pledge Agreement set
forth in Section 13.10(b) above shall be of no force or effect and shall not be
effective unless and until the Company shall have repaid in full the loan in the
outstanding principal amount of $27,500,000 previously made by the Bank to the
Company pursuant to the Loan Agreement dated as of June 30, 1994 between the
Bank and the Company.
13.11 Transfers and Booking of Advances. (a) Without limiting any of
the Bank's rights hereunder, the Bank may, after any Advance is made hereunder,
book any of the Advances in any of its branches anywhere in the world, or
negotiate, assign, grant security interests in, delegate or otherwise transfer
(each of the foregoing acts, a "Transfer") all of, or sell one or more
participations in any portion of, any or all of the following: (i) the Note, and
(ii) the Bank's rights and related obligations under this Agreement and the
other Loan Documents (any of the foregoing which is subject to a Transfer, a
"Transferred Item"); provided, however, that at no time shall the Company be
required, as a result of any such Transfer or participation, to (x) to give
notices required by this Agreement to more than one Person and that one Person's
designated department, employees and/or counsel, or (y) to obtain any consent or
approval required under this Agreement from more than one Person, or (z) be
subject to any additional taxes, fees, costs or expenses (including withholding
taxes).
(b) In the event the Bank Transfers any Transferred Item, then to
the extent provided by the Bank with respect to such Transfer, the Person to
whom such Transfer is made (the "Transferee") shall have, and may exercise and
enjoy, the rights, powers, privileges and remedies of the Bank with respect to
such Transferred Item. The
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Bank shall, after any Transfer, and to the extent of such Transfer, be forever
relieved and fully discharged from all liability and responsibility, if any,
that it may thereafter have to the Company with respect thereto, but not with
respect to matters occurring prior to such Transfer. The Bank shall retain all
its rights and powers with respect to any Transferred Item to the extent not so
Transferred.
(c) The provisions of Section 13.6 (regarding setoff rights)
shall apply to any account of the Company with, and any claim of the Company
against, any Transferee to the extent of such Transfer which shall have
purchased the loan representing the Advance or any portion thereof and shall
become a "Bank" hereunder. This subsection (c) of Section 13.11 shall not limit
any other rights of the Bank or such Transferee whether arising under this
Section 13.11, or otherwise hereunder or under applicable law.
[Remainder of page intentionally left blank.]
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(d) The Bank is authorized to disclose any information it may
have or acquire about the Company and its Subsidiaries to any prospective or
actual Transferee.
IN WITNESS WHEREOF, the Company and the Bank have caused this Agreement
to be duly executed and delivered in the City of New York by their duly
authorized officers, all as of the date first above written.
TRANS-RESOURCES, INC.
By: Lester Youner
--------------------------------
Title: Vice President
BANK HAPOALIM B.M.
AN ISRAELI BANK ACTING THROUGH
ITS NEW YORK BRANCHES
By: Barry Ben-Zeev
--------------------------------
Title: Senior Vice President
By: Mordechai Kremer
--------------------------------
Title: First Vice President
39
EXHIBIT 1.1-1 -- Form of 1990 Pledge Agreement Amendment No. 4
EXHIBIT 1.1-2 -- Form of Note
EXHIBIT 1.1-3 -- Form of TRIL Pledge Agreement
EXHIBIT 8.4-1 -- Form of Opinion of United States Counsel to the Company
EXHIBIT 8.4-1 -- Form of Opinion of Israeli Counsel to the Company
SCHEDULE A -- Litigation
40
EXHIBIT 1.1-2
SECURED PROMISSORY NOTE
U.S. $40,000,000.00 December ___, 1995
New York, New York
1. Obligation and Repayment:
FOR VALUE RECEIVED, TRANS-RESOURCES, INC., a Delaware corporation (the
"Borrower"), promises to pay to the order of BANK HAPOALIM B.M. (the
"Bank") at the Bank's office at 1177 Avenue of the Americas, New York,
New York 10036 or at such other place in the United States as the Bank
may specify by notice (the "Office"), the principal amount of FORTY
MILLION DOLLARS ($40,000,000.00) or, if less, the aggregate unpaid
principal amount of all Advances made by the Bank to the Borrower under
the Loan Agreement dated as of December 29, 1995 (the "Loan Agreement")
between the Borrower and the Bank, in lawful money of the United
States, in immediately available funds. Repayment of the principal
amount of each Advance shall be made, as provided in the Loan
Agreement, in equal quarterly annual installments commencing on the
first Payment Date following the second anniversary of the date on
which such Advance is made and ending on the Maturity Date (it being
understood that the number of such installments will range from 16
installments, in the case of an Advance made on the Commitment
Expiration Date, to 28 installments, in the case of an Advance made on
the date of the Loan Agreement). The last principal installment shall
be in the then outstanding unpaid principal balance of this Note and
shall be due and payable on the Maturity Date (i.e., the ninth
anniversary of the date of the Loan Agreement), together with all
unpaid interest accrued through the Maturity Date. All capitalized
terms not otherwise defined herein shall have the respective meanings
assigned to them in the Loan Agreement.
2. Interest and Fees:
The Borrower further agrees to pay interest on the unpaid principal of
each Advance from time to time from the date hereof to the date such
Advance is paid in full in lawful money of the United States, as
specified in the Loan Agreement, at the Office at the respective rates
and on the respective dates specified in the Loan Agreement. The
Borrower also further agrees to pay all such other fees as are
specified in the Loan Agreement.
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3. Schedule:
All Advances made by the Bank to the Borrower and all repayments of
principal by the Borrower shall be reflected by the Bank in its records
or, at the Bank's option, on the Schedule attached to this Note (the
"Schedule"), which records or Schedule shall be rebuttable presumptive
evidence of the entries made therein or thereon. The Borrower hereby
unconditionally and irrevocably authorizes the Bank to make such
notations on the Schedule. Notwithstanding anything to the contrary
contained herein, the failure of the Bank to make any appropriate
notation on the Schedule shall not prevent or hinder the Bank from
collecting, or affect the Bank's right to payment of the principal of
and interest on this Note.
4. Voluntary and Mandatory Prepayment:
The Borrower shall be entitled to prepay the outstanding principal
amount of this Note in part or in full on any Business Day, upon not
less than seven days prior written notice to the Bank, provided that
each such prepayment shall be in the amount of $100,000 or any integral
multiple thereof; except that prepayment of the entire outstanding
principal amount of the Note need not be in the amount of $100,000 or
any integral multiple thereof. The Borrower shall be required to prepay
the outstanding principal of this Note in whole or in part as set forth
in Section 2.3 of the Loan Agreement. Any such prepayment, whether
voluntary or mandatory, shall be together with all interest due on the
principal amount prepaid to the date of payment. Any prepayment shall
be applied by the Bank in accordance with Section 2.3 of the Loan
Agreement.
5. Certain Definitions:
a. Liabilities shall include all amounts from time to time
payable by the Borrower under this Note or the Loan Agreement
and any and all other obligations or liabilities of the
Borrower arising under this Note or the Loan Agreement.
b. Person shall mean "Person" as defined in the Loan Agreement.
c. Transfer shall mean any negotiation, assignment, granting of a
security interest in, delegation or other transfer of, a
complete or partial interest or obligation; such term shall
also mean to make a Transfer.
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6. Waiver:
Notice, presentment, protest, notice of dishonor and demand for payment
are hereby waived as to all of the Liabilities.
7. Costs and Expenses:
The Borrower shall pay all costs and expenses of every kind incurred by
the Bank in connection with any proceedings to collect any Liabilities,
including reasonable attorneys fees and disbursements, as provided in
the Loan Agreement.
8. Maturity on Business Day:
If any payment of principal of or interest on this Note or any other
amount under this Note falls due on a day that is not a Business Day,
it shall be payable on the next succeeding Business Day (unless such
day would be a day in the next calendar month, and in such case payment
shall be due on the immediately preceding Business Day), and the
resulting additional or decreased time (if any) shall be included in or
deducted from the computation of interest.
9. Parties; No Transfers by the Borrower:
a. Without the Bank's written consent, the Borrower shall have no
right to Transfer any of its obligations hereunder and any
such purported Transfer shall be void. Subject to the
foregoing, this Note is binding upon the Borrower and upon the
Borrower's successors and assigns.
b. If this Note is not a negotiable instrument, then the Borrower
hereby waives all defenses (except such defenses as may be
asserted against a holder in due course of a negotiable
instrument) which the Borrower may have or acquire against any
Transferee who takes this Note, or any complete or partial
interest in it, for value, in good faith and without notice
that it is overdue or has been dishonored or of any defense
against or claim to it on the part of any Person.
10. Reference to Loan Agreement, Company Pledge Agreement and TRIL Pledge
Agreement, Acceleration, Remedies:
This Note is entitled to the security and benefits provided in the Loan
Agreement, the Company Pledge Agreement and the TRIL Pledge Agreement
and is subject to the terms and conditions thereof. This Note is
subject to mandatory prepayment in whole or in part as specified in
Section 2.3 of the Loan Agreement and upon the occurrence of an Event
of Default, the principal of and accrued interest hereon may
automatically become, or may be declared to be, forthwith due and
payable, as provided in the Loan
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Agreement, the Company Pledge Agreement and the TRIL Pledge Agreement,
and the Bank shall be entitled to each and every one of the remedies
set forth therein.
11. No Oral Changes; No Waiver; Other Rights:
This Note may not be changed orally. Neither a waiver by the Bank of
any of its options, powers or rights in one or more instances, nor any
delay on the part of the Bank in exercising any of its options, powers
or rights, nor any partial or single exercise thereof, shall constitute
a waiver thereof in any other instance. The options, powers and rights
of the Bank specified herein are in addition to those otherwise created
in the Loan Agreement and other Loan Documents.
12. Partial Unenforceability:
Any provision of this Note which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or
nonauthorization, without invalidating the remaining provisions of this
Note in that or any other jurisdiction and without affecting the
validity, enforceability or legality of such provision in any other
jurisdiction.
13. Governing Law, Jurisdiction, Litigation and Waiver of Jury Trial:
This Note shall be governed by and construed and enforced in accordance
with the laws of the State of New York applicable to contracts made and
to be performed wholly within such State. Any action or proceeding in
connection with this Note may be brought in a court of record of the
State of New York, County of New York or any federal court located
therein, the parties hereby consenting to the jurisdiction thereof, and
service of process may be made upon any party by mailing a copy thereof
to such party, by registered mail, at its address to be used for the
giving of notices under the Loan Agreement. IN ANY ACTION OR ANY
JUDICIAL PROCEEDING RELATING TO THIS NOTE THE BORROWER AND THE BANK
MUTUALLY WAIVE TRIAL BY JURY.
TRANS-RESOURCES, INC.
By:__________________________
Name:
Title:
4
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SCHEDULE A
OF ADVANCES AND PAYMENTS TO SECURED PROMISSORY NOTE
DATED DECEMBER ___, 1995
MADE BY TRANS-RESOURCES, INC.
ADVANCES AND PRINCIPAL PAYMENTS
Amount of Notation
Date Advance Made Amount of Advance Repaid made by
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