EXHIBIT 10.1
REVOLVING CREDIT AGREEMENT
--------------------------
Dated as of March 10, 1999
among
CALIFORNIA STEEL INDUSTRIES, INC.,
the Lending Institutions listed on Schedule 1 hereto,
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BANKBOSTON, N.A.,
as Loan and
Collateral Agent for the Banks,
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as Letter of Credit and
Documentation Agent for the Banks,
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
and
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC,
as the Arrangers
TABLE OF CONTENTS
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1. DEFINITIONS AND RULES OF INTERPRETATION..................................................... 1
1.1. Definitions.......................................................................... 1
1.2. Rules of Interpretation.............................................................. 23
2. THE REVOLVING CREDIT FACILITY............................................................... 24
2.1. Commitment to Lend................................................................... 24
2.2. Commitment Fee....................................................................... 25
2.3. Reduction of Total Commitment........................................................ 25
2.4. The Revolving Credit Notes........................................................... 25
2.5. Interest on Revolving Credit Loans................................................... 26
2.6. Requests for Revolving Credit Loans.................................................. 26
2.6.1. General..................................................................... 26
2.6.2. Swing Line.................................................................. 27
2.6.3. Temporary Suspension of Eurodollar Rate Options............................. 27
2.7. Conversion Options................................................................... 28
2.7.1. Conversion to Different Type of Revolving Credit Loan....................... 28
2.7.2. Continuation of Type of Revolving Credit Loan............................... 29
2.7.3. Eurodollar Rate Loans....................................................... 29
2.8. Funds for Revolving Credit Loan...................................................... 29
2.8.1. Funding Procedures.......................................................... 29
2.8.2. Advances by the Loan and Collateral Agent................................... 30
2.9. Change in Borrowing Base............................................................. 30
2.10. Settlements......................................................................... 31
2.10.1. General.................................................................... 31
2.10.2. Failure to Make Funds Available............................................ 32
2.10.3. No Effect on Other Banks................................................... 32
3. REPAYMENT OF THE REVOLVING CREDIT LOANS..................................................... 33
3.1. Maturity............................................................................. 33
3.2. Mandatory Repayments of Revolving Credit Loans....................................... 33
3.3. Optional Repayments of Revolving Credit Loans........................................ 33
4. LETTERS OF CREDIT........................................................................... 34
4.1. Letter of Credit Commitments......................................................... 34
4.1.1. Commitment to Issue Letters of Credit....................................... 34
4.1.2. Letter of Credit Applications............................................... 35
4.1.3. Terms of Letters of Credit.................................................. 35
4.1.4. Reimbursement Obligations of Banks.......................................... 35
4.1.5. Participations of Banks..................................................... 35
4.2. Reimbursement Obligation of the Borrower............................................. 35
4.3. Letter of Credit Payments............................................................ 36
4.4. Obligations Absolute................................................................. 37
4.5. Reliance by Issuer................................................................... 38
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4.6. Letter of Credit Fee................................................................. 38
5. CERTAIN GENERAL PROVISIONS.................................................................. 39
5.1. Fees Payable at Closing.............................................................. 39
5.2. Funds for Payments................................................................... 39
5.2.1. Payments to Agents.......................................................... 39
5.2.2. No Offset, etc.............................................................. 39
5.2.3. Withholding................................................................. 40
5.3. Computations......................................................................... 40
5.4. Inability to Determine Eurodollar Rate............................................... 40
5.5. Illegality........................................................................... 41
5.6. Additional Costs, etc................................................................ 41
5.7. Capital Adequacy..................................................................... 43
5.8. Certificate.......................................................................... 43
5.9. Indemnity............................................................................ 43
5.10. Interest After Default.............................................................. 44
5.11. Replacement of Bank................................................................. 44
5.12. Legal Impediment.................................................................... 45
6. COLLATERAL SECURITY......................................................................... 45
7. REPRESENTATIONS AND WARRANTIES.............................................................. 46
7.1. Corporate Authority.................................................................. 46
7.1.1. Incorporation; Good Standing................................................ 46
7.1.2. Authorization............................................................... 46
7.1.3. Enforceability.............................................................. 46
7.2. Governmental Approvals............................................................... 47
7.3. Title to Properties; Leases.......................................................... 47
7.4. Financial Statements and Projections................................................. 47
7.4.1. Fiscal Year................................................................. 47
7.4.2. Financial Statements........................................................ 47
7.4.3. Projections................................................................. 48
7.5. No Material Changes, etc............................................................. 48
7.6. Franchises, Patents, Copyrights, etc................................................. 48
7.7. Litigation........................................................................... 48
7.8. No Materially Adverse Contracts, etc................................................. 49
7.9. Compliance with Other Instruments, Laws, etc......................................... 49
7.10. Tax Status.......................................................................... 49
7.11. No Event of Default................................................................. 50
7.12. Holding Company and Investment Company Acts......................................... 50
7.13. Absence of Financing Statements, etc................................................ 50
7.14. Perfection of Security Interest..................................................... 50
7.15. Certain Transactions................................................................ 50
7.16. Employee Benefit Plans.............................................................. 50
7.16.1. In General................................................................. 50
7.16.2. Terminability of Welfare Plans............................................. 51
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7.16.3. Guaranteed Pension Plans................................................... 51
7.16.4. Multiemployer Plans........................................................ 52
7.17. Use of Proceeds..................................................................... 52
7.17.1. General.................................................................... 52
7.17.2. Regulations U and X........................................................ 52
7.17.3. Ineligible Securities...................................................... 52
7.18. Environmental Compliance............................................................ 53
7.19. Subsidiaries, etc................................................................... 55
7.20. Bank Accounts....................................................................... 55
7.21. Year 2000 Problem................................................................... 55
7.22. Disclosure.......................................................................... 55
8. AFFIRMATIVE COVENANTS OF THE BORROWER....................................................... 55
8.1. Punctual Payment..................................................................... 55
8.2. Maintenance of Office................................................................ 56
8.3. Records and Accounts................................................................. 56
8.4. Financial Statements, Certificates and Information................................... 56
8.5. Notices.............................................................................. 58
8.5.1. Defaults.................................................................... 58
8.5.2. Environmental Events........................................................ 58
8.5.3. Notification of Claim against Collateral.................................... 59
8.5.4. Notice of Litigation and Judgments.......................................... 59
8.5.5. Notices Concerning Inventory Collateral..................................... 59
8.6. Corporate Existence; Maintenance of Properties....................................... 60
8.7. Insurance............................................................................ 60
8.8. Taxes................................................................................ 60
8.9. Inspection of Properties and Books, etc.............................................. 61
8.9.1. General..................................................................... 61
8.9.2. Collateral Reports.......................................................... 61
8.9.3. Appraisals.................................................................. 61
8.9.4. Communications with Accountants............................................. 62
8.10. Compliance with Laws, Contracts, Licenses, and Permits.............................. 62
8.11. Employee Benefit Plans.............................................................. 62
8.12. Use of Proceeds..................................................................... 63
8.13. Bank Accounts....................................................................... 63
8.13.1. General.................................................................... 63
8.13.2. Acknowledgment of Application.............................................. 63
8.14. Further Assurances.................................................................. 63
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.................................................. 63
9.1. Restrictions on Indebtedness......................................................... 64
9.2. Restrictions on Liens................................................................ 64
9.3. Restrictions on Investments.......................................................... 66
9.4. Distributions........................................................................ 67
9.5. Merger, Consolidation and Disposition of Assets...................................... 67
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9.5.1. Mergers and Acquisitions.................................................... 68
9.5.2. Disposition of Assets....................................................... 68
9.6. Sale and Leaseback................................................................... 68
9.7. Compliance with Environmental Laws................................................... 69
9.8........................................................................................ 69
Permitted IBJ Debt, Permitted Refinancing Indebtedness and Indebtedness to DKB Nederland... 69
9.9. Employee Benefit Plans............................................................... 69
9.10. Business Activities................................................................. 70
9.11. Fiscal Year......................................................................... 70
9.12. Transactions with Affiliates........................................................ 70
9.13. Bank Accounts....................................................................... 70
9.14. CSIFSC.............................................................................. 70
10. FINANCIAL COVENANTS OF THE BORROWER........................................................ 71
10.1. Capital Expenditures................................................................ 71
10.2. Consolidated Tangible Net Worth..................................................... 71
10.3. Fixed Charge Coverage............................................................... 71
10.4. Interest Charge Coverage............................................................ 71
11. CLOSING CONDITIONS......................................................................... 71
11.1. Loan Documents...................................................................... 72
11.2. Certified Copies of Charter Documents and IBJ Loan Documents........................ 72
11.3. Corporate Action.................................................................... 72
11.4. Incumbency Certificate.............................................................. 72
11.5. Validity of Liens................................................................... 72
11.6. Perfection Certificates and UCC Search Results...................................... 73
11.7. Certificates of Insurance........................................................... 73
11.8. Agency Account Agreements........................................................... 73
11.9. Borrowing Base Report; Funding Audit................................................ 73
11.10. Accounts Receivable Aging Report................................................... 73
11.11. Hazardous Waste Assessments........................................................ 73
11.12. Solvency Certificate............................................................... 74
11.13. Opinion of Counsel................................................................. 74
11.14. Payment of Fees.................................................................... 74
11.15. Payoff Letter...................................................................... 74
12. CONDITIONS TO ALL BORROWINGS............................................................... 74
12.1. Representations True; No Event of Default........................................... 74
12.2. Governmental Regulation............................................................. 75
12.3. Proceedings and Documents........................................................... 75
12.4. Borrowing Base Report............................................................... 75
13. EVENTS OF DEFAULT; ACCELERATION; ETC....................................................... 75
13.1. Events of Default and Acceleration.................................................. 75
13.2. Termination of Commitments.......................................................... 79
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13.3. Remedies............................................................................ 80
13.4. Distribution of Collateral Proceeds................................................. 80
14. SETOFF..................................................................................... 81
15. THE AGENTS................................................................................. 82
15.1. Authorization....................................................................... 82
15.2. Employees and Agents................................................................ 82
15.3. No Liability........................................................................ 83
15.4. No Representations.................................................................. 83
15.4.1. General...................................................................... 83
15.4.2. Closing Documentation, etc................................................... 84
15.5. Payments............................................................................ 84
15.5.1. Payments to Agents........................................................... 84
15.5.2. Distribution by Agents....................................................... 84
15.5.3. Delinquent Banks............................................................. 84
15.6. Holders of Revolving Credit Notes................................................... 85
15.7. Indemnity........................................................................... 85
15.8. Agents as Banks..................................................................... 85
15.9. Resignation......................................................................... 86
15.10. Notification of Defaults and Events of Default..................................... 86
15.11. Duties in the Case of Enforcement.................................................. 86
16. EXPENSES AND INDEMNIFICATION............................................................... 87
16.1. Expenses............................................................................ 87
16.2. Indemnification..................................................................... 88
16.3. Survival............................................................................ 89
17. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.............................................. 89
17.1. Sharing of Information with Section 20 Subsidiary................................... 89
17.2. Confidentiality..................................................................... 89
17.3. Prior Notification.................................................................. 90
17.4. Other............................................................................... 90
18. SURVIVAL OF COVENANTS, ETC................................................................. 90
19. ASSIGNMENT AND PARTICIPATION............................................................... 91
19.1. Conditions to Assignment by Banks................................................... 91
19.2. Certain Representations and Warranties; Limitations; Covenants...................... 91
19.3. Register............................................................................ 93
19.4. New Revolving Credit Notes.......................................................... 93
19.5. Participations...................................................................... 94
19.6. Disclosure.......................................................................... 94
19.7. Assignee or Participant Affiliated with the Borrower................................ 94
19.8. Miscellaneous Assignment Provisions................................................. 95
19.9. Assignment by Borrower.............................................................. 95
19.10. Syndication........................................................................ 95
20. NOTICES, ETC............................................................................... ▇▇
-▇▇-
▇▇. GOVERNING LAW.............................................................................. 97
22. HEADINGS................................................................................... 97
23. COUNTERPARTS............................................................................... 97
24. ENTIRE AGREEMENT, ETC...................................................................... 97
25. WAIVER OF JURY TRIAL....................................................................... 98
26. CONSENTS, AMENDMENTS, WAIVERS, ETC......................................................... 98
27. SEVERABILITY............................................................................... 99
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SCHEDULES AND EXHIBITS
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Schedule 1 Banks; Commitments
Schedule 7.3 Title to Properties; Leases
Schedule 7.5 No Material Changes
Schedule 7.7 Litigation
Schedule 7.18 Environmental Compliance
Schedule 7.19 Subsidiaries
Schedule 7.20 Bank Accounts
Schedule 9.1 Permitted Existing Indebtedness
Schedule 9.2 Permitted Existing Liens
Schedule 9.3 Permitted Existing Investments
Exhibit A Form of Borrowing Base Report
Exhibit B Form of Revolving Credit Note
Exhibit C Form of Loan Request
Exhibit D Form of Compliance Certificate
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Customs Agent Agreement
REVOLVING CREDIT AGREEMENT
--------------------------
This REVOLVING CREDIT AGREEMENT is made as of March 10, 1999, by and among
(a) CALIFORNIA STEEL INDUSTRIES, INC., a Delaware corporation having its
principal place of business at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Borrower"), (b) BANKBOSTON, N.A, BANK OF AMERICA NATIONAL TRUST AND
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SAVINGS ASSOCIATION and the other lending institutions listed on Schedule 1, (c)
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BANKBOSTON, N.A., as loan and collateral agent for the Banks (as hereinafter
defined), (d) BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
documentation and letter of credit agent for the Banks, and (e) BANCBOSTON
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC. and NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC, as arrangers.
1. DEFINITIONS AND RULES OF INTERPRETATION.
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1.1. DEFINITIONS. The following terms shall have the meanings set forth in
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this (S)1 or elsewhere in the provisions of this Credit Agreement referred to
below:
Accounts Receivable. All rights of the Borrower or any of its Subsidiaries
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to payment for goods sold, leased or otherwise marketed in the ordinary course
of business and all rights of the Borrower or any of its Subsidiaries to payment
for services rendered in the ordinary course of business and all sums of money
or other proceeds due thereon pursuant to transactions with account debtors,
except for that portion of the sum of money or other proceeds due thereon that
relate to sales, use or property taxes in conjunction with such transactions,
recorded on books of account in accordance with generally accepted accounting
principles.
Adjustment Date. Each date which is the first day of the month immediately
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following the month in which the Borrower's quarterly unaudited financial
statements and related Compliance Certificate are required to be delivered by
the Borrower pursuant to (S)8.4(b) and (S)8.4(d), respectively.
Affiliate. Any Person that would be considered to be an affiliate of the
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Borrower under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.
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Agency Account Agreement. See (S)8.13.1.
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Agents. Collectively, the Loan and Collateral Agent and the Letter of
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Credit Agent.
Applicable Margin. For each period commencing on an Adjustment Date through
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the date immediately preceding the next Adjustment Date (each a "Rate Adjustment
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Period"), the Applicable Margin shall be the applicable margin or rate (in each
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case per annum) set forth below with respect to the Leverage Ratio, as
determined as of the end of and for the period of four consecutive fiscal
quarters of the Borrower ending immediately prior to the applicable Rate
Adjustment Period and pertaining to such Adjustment Date:
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LEVEL LEVERAGE RATIO EURODOLLAR BASE COMMITMENT FEE
RATE LOANS RATE LOANS
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I Greater than or 1.00% 0.00% 0.20%
equal to 3.5:1.0
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II Less than 3.5:1.0
but greater than or 0.875% 0.00% 0.20%
equal to 3.0:1.0
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III Less than 3.0:1.0
but greater than or 0.750% 0.00% 0.15%
equal to 2.5:1.0
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IV Less than 2.5:1.0 0.700% 0.00% 0.15%
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Notwithstanding the foregoing, (a) for the period commencing on the Closing Date
to (but not including) the first Adjustment Date which occurs following the
earlier of (i) the quarter on which the Borrower achieves a Fixed Charge
Coverage Ratio in excess of 1.10:1.00 and (ii) the last day of the fiscal
quarter following the closing of the transactions contemplated under the
Permitted Refinancing Indebtedness, the Applicable Margin shall be at least
equal to the Applicable Margin set forth on Level II of the chart set forth
above, and (b) if the Borrower fails to deliver any financial statements when
due pursuant to (S)8.4(a) or (b) hereof or any Compliance Certificate when due
pursuant to (S)8.4(d) hereof then, for the period commencing on the next
Adjustment Date to occur subsequent to such failure (if such failure is then
continuing uncured) through the date immediately following the date on which
such financial statements or Compliance Certificate, as the case may be, is
delivered, the Applicable Margin shall be the Applicable Margin set forth on
Level I of the chart set forth above.
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Approved Customs Broker. A customs broker satisfactory to the Loan and
-----------------------
Collateral Agent which has entered into a Customs Agent Agreement with the Loan
and Collateral Agent and the Borrower.
Arranger(s). BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. and NationsBanc ▇▇▇▇▇▇▇▇▇▇
-----------
Securities LLC.
Assignment and Acceptance. See (S)19.1.
-------------------------
Balance Sheet Date. December 31, 1998.
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Banks. BKB, BofA and the other lending institutions listed on Schedule 1
----- -------- -
hereto and any other Person who becomes an assignee of any rights and
obligations of a Bank pursuant to (S)19.
Base Rate. The higher of (i) the annual rate of interest announced from
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time to time by BKB at its head office in Boston, Massachusetts, as its "base
rate" or (ii) one-half of one percent (1/2%) above the Federal Funds Effective
Rate. For the purposes of this definition, "Federal Funds Effective Rate" shall
mean for any day, the rate per annum equal to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by the Loan and Collateral Agent from three funds brokers
of recognized standing selected by the Loan and Collateral Agent.
Base Rate Loans. Revolving Credit Loans bearing interest calculated by
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reference to the Base Rate.
BKB. BankBoston, N.A., a national banking association, in its individual
---
capacity.
BKB Concentration Account. See (S)8.13.1.
-------------------------
BofA. Bank of America National Trust and Savings Association, a national
----
banking association, in its individual capacity.
Borrower. As defined in the preamble hereto.
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Borrowing Base. At the relevant time of reference thereto, an amount
--------------
determined by the Loan and Collateral Agent by reference to the most recent
Borrowing Base Report delivered to the Banks and the Loan and Collateral
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Agent, as adjusted pursuant to the provisions below, which is equal to the sum
of:
(a) 85% of Eligible Accounts Receivable for which invoices have been
issued and are payable; plus
----
(b) the lesser of (i) 60% of the Net Book Value of Eligible Inventory
and (ii) $90,000,000 on or prior to July 31, 1999 and $80,000,000
thereafter; minus
-----
(c) $15,000,000 on or prior to July 31, 1999 and $20,000,000
thereafter at all times; minus
-----
(d) Reserves; plus
----
(e) the Discretionary Amount.
The Loan and Collateral Agent may, in its discretion, from time to time, upon
five (5) days' prior notice to the Borrower, (x) reduce the lending formula with
respect to Eligible Accounts Receivable to the extent that the Loan and
Collateral Agent determines that: (i) the dilution with respect of the Accounts
Receivable for any period has increased in any material respect or may be
reasonably anticipated to increase in any material respect above historical
levels, or (ii) the general creditworthiness of account debtors or other
obligors of the Borrower has declined or (y) reduce the lending formula(s) with
respect to Eligible Inventory to the extent that the Loan and Collateral Agent
determines that: (i) the number of days of the turnover of the inventory of the
Borrower for any period has changed in any material adverse respect, (ii) the
liquidation value of the Eligible Inventory, or any category thereof, has
decreased, or (iii) the nature and quality of the inventory of the Borrower has
deteriorated in any material respect or the mix of such inventory has changed
materially. In determining whether to reduce the lending formula(s), the Loan
and Collateral Agent may consider events, conditions, contingencies or risks
which are also considered in determining Eligible Accounts Receivable, Eligible
Inventory or in establishing the Reserves.
Borrowing Base Report. A Borrowing Base Report signed by the chief
---------------------
financial officer of the Borrower and in substantially the form of Exhibit A
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hereto.
Business Day. Any day on which banking institutions in Boston,
------------
Massachusetts and Los Angeles, California, are open for the transaction of
banking business and, in the case of Eurodollar Rate Loans, also a day which is
a Eurodollar Business Day.
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Capital Assets. Fixed assets, both tangible (such as land, buildings,
--------------
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); provided that Capital Assets shall not
--------
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or Indebtedness incurred by the
--------------------
Borrower or any of its Subsidiaries in connection with (i) the purchase or lease
by the Borrower or any of its Subsidiaries of Capital Assets that would be
required to be capitalized and shown on the balance sheet of such Person in
accordance with generally accepted accounting principles or (ii) the lease of
any assets by the Borrower or any of its Subsidiaries as lessee under any
synthetic lease referred to in clause (vi) of the definition of the term
"Indebtedness" to the extent that such assets would have been Capital Assets had
the synthetic lease been treated for accounting purposes as a Capitalized Lease.
Capitalized Leases. Leases under which the Borrower or any of its
------------------
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.
CERCLA. See (S)7.18(a).
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Closing Date. The first date on which the conditions set forth in (S)11
------------
have been satisfied and any Revolving Credit Loans are to be made or any Letter
of Credit is to be issued hereunder.
Code. The Internal Revenue Code of 1986.
----
Collateral. All of the property, rights and interests of the Borrower and
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its Subsidiaries that are subject to the security interests and mortgages
created by the Security Documents.
Commitment. With respect to each Bank, the amount set forth on Schedule 1
---------- -------- -
hereto as the amount of such Bank's commitment to make Revolving Credit Loans
to, and to participate in the issuance, extension and renewal of Letters of
Credit for the account of, the Borrower, as the same may be reduced from time to
time; or if such commitment is terminated pursuant to the provisions hereof,
zero.
Commitment Percentage. With respect to each Bank, the percentage
---------------------
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set forth on Schedule 1 hereto as such Bank's percentage of the Total
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Commitment.
Consolidated or consolidated. With reference to any term defined herein,
----------------------------
shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
Consolidated EBITDA. For any period, an amount equal the consolidated
-------------------
earnings (or loss) from the operations of the Borrower and its Subsidiaries for
any period, after all expenses and other proper charges but before payment or
provision for any income taxes or interest expense for such period plus
----
depreciation, amortization and all other noncash charges for such period, all
determined in accordance with generally accepted accounting principles.
Consolidated Funded Debt. With respect to the Borrower and its
------------------------
Subsidiaries on a consolidated basis for any period, the average principal
amount outstanding during such period in respect of all Indebtedness of the
Borrower and its Subsidiaries for borrowed money and Indebtedness in respect of
Capitalized Leases, in each case determined in accordance with generally
accepted accounting principles.
Consolidated Net Income (or Deficit). The consolidated net income (or
------------------------------------
deficit) of the Borrower and its Subsidiaries, after deduction of all expenses,
taxes, and other proper charges, determined in accordance with generally
accepted accounting principles.
Consolidated Operating Cash Flow. With respect to the Borrower and its
--------------------------------
Subsidiaries for any particular fiscal period, an amount equal to (a)
Consolidated EBITDA for such period less (b) the sum of (i) the amount of
----
Capital Expenditures made during such period, plus (ii) the amount of
----
Distributions made during such period, plus (iii) income taxes paid by the
----
Borrower and its Subsidiaries during such period.
Consolidated Tangible Net Worth. The excess of Consolidated Total Assets
-------------------------------
over Consolidated Total Liabilities, and less the sum of:
(a) the total book value of all assets of the Borrower and its
Subsidiaries properly classified as intangible assets under generally
accepted accounting principles, including such items as good will, the
purchase price of acquired assets in excess of the fair market value
thereof, trademarks, trade names, service marks, brand names, copyrights,
patents and licenses, and rights with respect to the
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foregoing; plus
(b) all amounts representing any write-up in the book value of any
assets of the Borrower or its Subsidiaries resulting from a revaluation
thereof subsequent to the Balance Sheet Date; plus
(c) to the extent otherwise includable in the computation of
Consolidated Tangible Net Worth, any equity subscriptions receivable; plus
(d) the value of the Investments of the Borrower and its Subsidiaries
in Companhia Siderurgica de Tubarao.
Consolidated Total Assets. The sum of (i) all assets ("consolidated
------------------------- ------------
balance sheet assets") of the Borrower and its Subsidiaries determined on a
--------------------
consolidated basis in accordance with generally accepted accounting principles,
plus (ii) without duplication, all assets leased by the Borrower or any
----
Subsidiary as lessee under any synthetic lease referred to in clause (vi) of the
definition of the term "Indebtedness" to the extent that such assets would have
been consolidated balance sheet assets had the synthetic lease been treated for
accounting purposes as a Capitalized Lease, plus (iii) without duplication, all
----
sold receivables referred to in clause (vii) of the definition of the term
"Indebtedness" to the extent that such receivables would have been consolidated
balance sheet assets had they not been sold.
Consolidated Total Debt Service. For any fiscal period, the sum of (i)
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Consolidated Total Interest Expense, plus (ii) all scheduled mandatory payments
of principal on Indebtedness of the Borrower and its Subsidiaries required to be
made during such period, including payments consisting of principal in respect
of Capitalized Leases or synthetic leases referred to in clause (vi) of the
definition of the term "Indebtedness". Demand obligations shall be deemed to be
due and payable during any fiscal period during which such obligations are
outstanding.
Consolidated Total Interest Expense. For any period, the aggregate amount
-----------------------------------
of interest required to be paid or accrued by the Borrower and its Subsidiaries
during such period on all Indebtedness of the Borrower and its Subsidiaries
outstanding during all or any part of such period, whether such interest was or
is required to be reflected as an item of expense or capitalized, including
payments consisting of interest in respect of any Capitalized Lease, or any
synthetic lease referred to in clause (vi) of the definition of the term
"Indebtedness," and including commitment fees, agency fees, facility fees,
balance deficiency fees and similar fees or expenses in connection with the
borrowing of money.
-8-
Consolidated Total Liabilities. All liabilities of the Borrower and its
------------------------------
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles and classified as such on the consolidated
balance sheet of the Borrower and its Subsidiaries and all other Indebtedness of
the Borrower and its Subsidiaries, whether or not so classified.
Conversion Request. A notice given by the Borrower to the Loan and
------------------
Collateral Agent of the Borrower's election to convert or continue a Revolving
Credit Loan in accordance with (S)2.7.
Credit Agreement. This Revolving Credit Agreement, including the Schedules
----------------
and Exhibits hereto.
CSIFSC. CSI Foreign Sales Corporation, a U.S. Virgin Islands corporation.
------
CST. Companhia Siderurgica de Tubarao, a Brazilian corporation.
---
Customs Agent Agreement. A Customs Agent Agreement, substantially in the
-----------------------
form of Exhibit F hereto, entered into among the Loan and Collateral Agent, the
------- -
Borrower and an Approved Customs Broker.
Default. See (S)13.1.
-------
Delinquent Bank. See (S)15.5.3.
---------------
Derivative Contract. See paragraph (ix) of the definition of Indebtedness.
-------------------
Discretionary Amount. As at any date of determination, an amount
--------------------
determined by the Agents in their sole and absolute discretion which shall not
exceed $5,000,000 for a period not to exceed 30 consecutive days.
Distribution. The declaration or payment of any dividend on or in respect
------------
of any shares of any class of capital stock of the Borrower, other than
dividends payable solely in shares of common stock of the Borrower; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of the Borrower, directly or indirectly through a Subsidiary of the
Borrower or otherwise; the return of capital by the Borrower to its shareholders
as such; or any other distribution on or in respect of any shares of any class
of capital stock of the Borrower.
DKB: The Dai-Ichi Kangyo Bank, Limited, Los Angeles Agency.
---
DKB Nederland: The Dai-Ichi Kangyo Bank Nederland N.V.
-------------
-9-
Dollars or $. Dollars in lawful currency of the United States of America.
------- -
Domestic Lending Office. Initially, the office of each Bank designated as
-----------------------
such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,
-------- -
located within the United States that will be making or maintaining Base Rate
Loans.
Drawdown Date. The date on which any Revolving Credit Loan is made or is
-------------
to be made, and the date on which any Revolving Credit Loan is converted or
continued in accordance with (S)2.7.
Eligible Accounts Receivable. The aggregate of the unpaid portions of
----------------------------
Accounts Receivable (net of any credits, rebates, offsets, holdbacks or other
adjustments or commissions payable to third parties that are adjustments to such
Accounts Receivable) (a) that the Borrower reasonably and in good faith
determines to be collectible; (b) that are with account debtors or other
obligors that (i) are not Affiliates of the Borrower; provided, however, at any
-----------------
time up to $2,500,000 of Accounts Receivable owed by Persons who are Affiliates
of the Borrower (other than Subsidiaries of the Borrower or Persons who own
Voting Stock of the Borrower) and otherwise qualify as Eligible Accounts
Receivable may be considered Eligible Accounts Receivable, (ii) purchased the
goods or services giving rise to the relevant Account Receivable in an arm's
length transaction, (iii) are not insolvent or involved in any case or
proceeding, whether voluntary or involuntary, under any bankruptcy,
reorganization, arrangement, insolvency, adjustment of debt, dissolution,
liquidation or similar law of any jurisdiction and (iv) are, in the Loan and
Collateral Agent's reasonable judgment, creditworthy; (c) that are in payment of
obligations that have been fully performed, do not consist of progress ▇▇▇▇▇▇▇▇
or ▇▇▇▇ and hold invoices (except ▇▇▇▇ and hold invoices of up to $500,000 in
the aggregate at any time) and are not subject to dispute or any other similar
claims that would reduce the cash amount payable therefor; (d) that are not
subject to any pledge, restriction, security interest or other lien or
encumbrance other than those created by the Loan Documents; (e) in which the
Loan and Collateral Agent has a valid and perfected first priority security
interest; (f) that are not outstanding for more than (i) ninety (90) days past
the earlier to occur of (A) the date of the respective invoices therefor and (B)
the date of shipment thereof in the case of goods or the end of the calendar
month following the provision thereof in the case of services or (ii) sixty (60)
days past the due date therefor; (g) that are not due from an account debtor or
other obligor located in Minnesota unless the Borrower (i) has received a
certificate of authority to do business and is in good standing in such state or
(ii) has filed a notice of business activities report with the appropriate
office or agency of such state for the current year; (h) that are not
-10-
due from any single account debtor or other obligor if more than twenty percent
(20%) of the aggregate amount of all Accounts Receivable owing from such account
debtor or other obligor would otherwise not be Eligible Accounts Receivable; (i)
that are payable in Dollars; (j) that are not payable from an office outside of
the United States; (k) that are not secured by a letter of credit unless the
Loan and Collateral Agent has a prior, perfected security interest in such
letter of credit, and (l) not more than 10% of such Accounts Receivable may be
from any single account debtor.
Eligible Assignee. Any of (i) a commercial bank or finance company
-----------------
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (ii)
a savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (iii) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
----
country, and having total assets in excess of $1,000,000,000, provided that such
--------
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (iv) the
central bank of any country which is a member of the OECD; and (v) if, but only
if, any Event of Default has occurred and is continuing, any other bank,
insurance company, commercial finance company or other financial institution or
other Person approved by the Agents, such approval not to be unreasonably
withheld.
Eligible Inventory. With respect to the Borrower or any of its
------------------
Subsidiaries, finished goods and work in progress and raw materials owned by the
Borrower or such Subsidiary; provided that Eligible Inventory shall not include
--------
any inventory (i) held on consignment, or not otherwise owned by the Borrower or
such Subsidiary, or of a type no longer sold by the Borrower or such Subsidiary,
(ii) which has been returned by a customer and is damaged or subject to any
legal encumbrance other than Permitted Liens, (iii) which is not in the
possession of the Borrower or such Subsidiary unless (A) the Loan and Collateral
Agent has received a waiver from the party in possession of such inventory in
form and substance satisfactory to the Loan and Collateral Agent or (B) such
inventory is In-Transit Inventory, (iv) which is held by the Borrower or such
Subsidiary on property leased by the Borrower or a Subsidiary, unless the Loan
and Collateral Agent has received a waiver from the lessor of such leased
property and, if any, sublessor thereof in form and substance satisfactory to
the Loan and Collateral Agent, (v) as to which (other than with the case of In-
Transit Inventory) appropriate Uniform
-11-
Commercial Code financing statements showing the Borrower or such Subsidiary as
debtor and the Loan and Collateral Agent as secured party have not been filed in
the proper filing office or offices in order to perfect the Loan and Collateral
Agent's security interest therein, (vi) which has been shipped to a customer of
the Borrower or such Subsidiary regardless of whether such shipment is on a
consignment basis, (vii) which, other than In-Transit Inventory, is not located
within the United States of America, (viii) which the Loan and Collateral Agent
reasonably deem to be not marketable, (ix) scrap inventory, held coils (i.e.
coils not used for initial orders) in excess of $1,000,000 at any time, and
"Other Inventory" as classified by the Borrower on its financial statements as
of the Balance Statement Date, or (x) which has been owned by the Borrower or
such Subsidiary for more than one (1) year.
Employee Benefit Plan. Any employee benefit plan within the meaning of
---------------------
(S)3(3) of ERISA maintained of contributed to by the Borrower or any ERISA
Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.
Environmental Laws. See (S)7.18(a).
------------------
EPA. See (S)7.18(b).
---
ERISA. The Employee Retirement Income Security Act of 1974.
-----
ERISA Affiliate. Any Person which is treated as a single employer with the
---------------
Borrower under (S)414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
----------------------
Pension Plan within the meaning of (S)4043 of ERISA and the regulations
promulgated thereunder.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar Rate
-------------------------
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open for
-----------------------
international business (including dealings in Dollar deposits) in
-12-
London or such other eurodollar interbank market as may be selected by the Agent
in its sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank designated
-------------------------
as such in Schedule 1 hereto; thereafter, such other office of such Bank, if
-------- -
any, that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar Rate
---------------
Loan, the rate of interest equal to (i) the average of the per annum rates
(rounded upwards to the nearest 1/16 of one percent) at which the Loan and
Collateral Agent's Eurodollar Lending Office is offered Dollar deposits two
Eurodollar Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations of such Eurodollar Lending Office are customarily conducted,
for delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of the Eurodollar
Rate Loan to which such Interest Period applies, divided by (ii) a number equal
to 1.00 minus the Eurocurrency Reserve Rate, if applicable.
Eurodollar Rate Loans. Revolving Credit Loans bearing interest calculated
---------------------
by reference to the Eurodollar Rate.
Event of Default. See (S)13.1.
----------------
Fee Letter. The fee letter referred to in (S)5.1.
----------
Fixed Charge Coverage Ratio. See (S)10.3.
---------------------------
generally accepted accounting principles. (i) When used in (S)10, whether
----------------------------------------
directly or indirectly through reference to a capitalized term used therein,
means (A) principles that are consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, in
effect for the fiscal year ended on the Balance Sheet Date, and (B) to the
extent consistent with such principles, the accounting practice of the Borrower
reflected in its financial statements for the year ended on the Balance Sheet
Date, and (ii) when used in general, other than as provided above, means
principles that are (A) consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors, as in effect from
time to time, and (B) consistently applied with past financial statements of the
Borrower adopting the same principles, provided that in each case referred to in
this definition of "generally accepted accounting principles" a certified public
accountant would, insofar as the use of such accounting principles is pertinent,
be in a position to deliver an unqualified opinion (other than a qualification
regarding changes in generally
-13-
accepted accounting principles) as to financial statements in which such
principles have been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the
-----------------------
meaning of (S)3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Hazardous Substances. See (S)7.18(b).
--------------------
IBJ. The Industrial Bank of Japan, Limited, Los Angeles Agency.
---
IBJ Loan Documents. The documents listed on Schedule 11.2(iii), in the
------------------ ------------------
form delivered to the Banks on the Closing Date.
Indebtedness. As to any Person and whether recourse is secured by or is
------------
otherwise available against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:
(i) every obligation of such Person for money borrowed,
(ii) every obligation of such Person evidenced by bonds, debentures,
Revolving Credit Notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
businesses,
(iii) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for
the account of such Person,
(iv) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith),
(v) every obligation of such Person under any Capitalized Lease,
(vi) every obligation of such Person under any lease (a "synthetic
---------
lease") treated as an operating lease under generally accepted accounting
-----
principles and as a loan or financing for U.S. income tax purposes,
-14-
(vii) all sales by such Person of (A) accounts or general intangibles
for money due or to become due, (B) chattel paper, instruments or documents
creating or evidencing a right to payment of money or (C) other receivables
(collectively "receivables"), whether pursuant to a purchase facility or
-----------
otherwise, other than in connection with the disposition of the business
operations of such Person relating thereto or a disposition of defaulted
receivables for collection and not as a financing arrangement, and together
with any obligation of such Person to pay any discount, interest, fees,
indemnities, penalties, recourse, expenses or other amounts in connection
therewith,
(viii) every obligation of such Person (an "equity related purchase
-----------------------
obligation") to purchase, redeem, retire or otherwise acquire for value any
----------
shares of capital stock of any class issued by such Person, any warrants,
options or other rights to acquire any such shares, or any rights measured
by the value of such shares, warrants, options or other rights,
(ix) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing agreement or arrangement
(including, without limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon interest rates, currency
exchange rates, commodities or other indices (a "derivative contract"),
-------------------
(x) every obligation in respect of Indebtedness of any partnership
or other entity to the extent that such Person is liable therefor as a
result of such Person's ownership interest in such entity, except to the
extent that the terms of such Indebtedness provide that such Person is not
liable therefor and such terms are enforceable under applicable law,
(xi) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of clauses
(i) through (x) (the "primary obligation") of another Person (the "primary
------------------ -------
obligor"), in any manner, whether directly or indirectly, and including,
-------
without limitation, any obligation of such Person (A) to purchase or pay
(or advance or supply funds for the purchase of) any security for the
payment of such primary obligation, (B) to purchase property, securities or
services for the purpose of assuring the payment of such primary
obligation, or (C) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such
-15-
primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (v) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (w) any sale of receivables shall be the amount of unrecovered capital
or principal investment of the purchaser (other than the Borrower or any of its
wholly-owned Subsidiaries) thereof, excluding amounts representative of yield or
interest earned on such investment, (x) any synthetic lease shall be the
stipulated loss value, termination value or other equivalent amount, (y) any
derivative contract shall be the maximum amount of any termination or loss
payment required to be paid by such Person if such derivative contract were, at
the time of determination, to be terminated by reason of any event of default or
early termination event thereunder, whether or not such event of default or
early termination event has in fact occurred and (z) any equity related purchase
obligation shall be the maximum fixed redemption or purchase price thereof
inclusive of any accrued and unpaid dividends to be comprised in such redemption
or purchase price.
Ineligible Securities. Securities which may not be underwritten or dealt
---------------------
in by member banks of the Federal Reserve System under Section 16 of the Banking
Act of 1993 (12 U.S.C. (S)24, Seventh), as amended.
Interest Payment Date. (i) As to any Base Rate Loan, the last day of the
---------------------
calendar month with respect to interest accrued during such calendar month,
including, without limitation, the calendar month which includes the Drawdown
Date of such Base Rate Loan; (ii) as to any Eurodollar Rate Loan in respect of
which the Interest Period is (A) 3 months or less, the last day of such Interest
Period and (B) more than 3 months, the date that is 3 months from the first day
of such Interest Period and, in addition, the last day of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan, (i)
---------------
initially, the period commencing on the Drawdown Date of such Revolving Credit
Loan and ending on the last day of one of the periods set forth below, as
selected by the Borrower in a Loan Request or as otherwise required by the terms
of this Credit Agreement (A) for any Base Rate Loan, the last day of the
calendar month; (B) for any Eurodollar Rate Loan, 1, 2, 3, or 6 months; and (ii)
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Revolving Credit Loan and
-16-
ending on the last day of one of the periods set forth above, as selected by the
Borrower in a Conversion Request; provided that all of the foregoing provisions
--------
relating to Interest Periods are subject to the following:
(a) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business Day, that
Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Eurodollar Business Day;
(b) if any Interest Period with respect to a Base Rate Loan would end
on a day that is not a Business Day, that Interest Period shall end on the
next succeeding Business Day;
(c) if the Borrower shall fail to give notice as provided in (S)2.7,
the Borrower shall be deemed to have requested a conversion of the affected
Eurodollar Rate Loan to a Base Rate Loan and the continuance of all Base
Rate Loans as Base Rate Loans on the last day of the then current Interest
Period with respect thereto;
(d) any Interest Period relating to any Eurodollar Rate Loan that
begins on the last Eurodollar Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Eurodollar
Business Day of a calendar month; and
(e) any Interest Period that would otherwise extend beyond the
Revolving Credit Loan Maturity Date shall end on the Revolving Credit Loan
Maturity Date.
International Standby Practices. With respect to any standby Letter of
-------------------------------
Credit, International Standby Practices (ISP98) as promulgated by the Institute
of International Banking Law & Practice, Inc., or any successor code of standby
letter of credit practices among banks adopted by the Letter of Credit Agent in
the ordinary course of its business as a standby letter of credit issuer and in
effect at the time of issuance of such Letter of Credit.
In-Transit Inventory. Raw materials owned by the Borrower or any of its
--------------------
Subsidiaries (collectively, "inventory"), which otherwise qualifies as Eligible
Inventory and (i) all title documents relating to which have been consigned
(endorsed) to one of the Agents in a manner reasonably acceptable to the Agents,
(ii) one of the Agents or an Approved Customs Broker is in
-17-
possession of all documents of title relating to such inventory and (iii) such
inventory is insured in a manner reasonably acceptable to the Agents.
Investments. All expenditures made and all liabilities incurred
-----------
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (i) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (ii) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(iii) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (iv) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (ii) may be
deducted when paid; and (v) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
Letter of Credit. See (S)4.1.1.
----------------
Letter of Credit Agent. Bank of America National Trust and Savings
----------------------
Association.
Letter of Credit Agent's Head Office. The Letter of Credit Agent's head
------------------------------------
office located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such
other location as the Letter of Credit Agent may designate from time to time.
Letter of Credit Application. See (S)4.1.1.
----------------------------
Letter of Credit Fee. See (S)4.6.
--------------------
Letter of Credit Participation. See (S)4.1.4.
------------------------------
Leverage Ratio. With respect to the Borrower and its Subsidiaries as of
--------------
the last day of and for any period, the ratio of (a) Consolidated Funded Debt of
the Borrower and its Subsidiaries for such period to (b) Consolidated EBITDA of
the Borrower and its Subsidiaries for such period.
Loan and Collateral Agent. BankBoston, N.A.
-------------------------
Loan and Collateral Agent's Head Office. The Loan and Collateral
---------------------------------------
-18-
Agent's head office located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
or at such other location as the Loan and Collateral Agent may designate from
time to time.
Loan and Collateral Agent's Special Counsel. ▇▇▇▇▇▇▇ ▇▇▇▇ LLP or such
-------------------------------------------
other counsel as may be approved by the Agents.
Loan Documents. This Credit Agreement, the Revolving Credit Notes, the
--------------
Letter of Credit Applications, the Letters of Credit, the Fee Letter, any
documents entered into by the Borrower in connection with Derivative Contracts
with either of the Agents and the Security Documents.
Loan Request. See (S)2.6.
------------
Local Accounts. See (S)7.20.
--------------
Majority Banks. As of any date, the Banks holding at least fifty one
--------------
percent (51%) of the outstanding principal amount of the Revolving Credit Notes
on such date; and if no such principal is outstanding, the Banks whose aggregate
Commitments constitutes at least fifty one percent (51%) of the Total
Commitment.
Maximum Drawing Amount. The maximum aggregate amount that the
----------------------
beneficiaries may at any time draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
Multiemployer Plan. Any multiemployer plan within the meaning of (S)3(37)
------------------
of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate.
Net Book Value. At the relevant time of reference thereto, the net book
--------------
value of Eligible Inventory determined on a first-in first-out basis and at
lower of cost or market. The "cost" of any Eligible Inventory shall be the
lesser of (a) the calculated cost of purchases, as determined from invoices
received by the Borrower or any of its Subsidiaries, or from the Borrower's or
such Subsidiary's purchase journal or stock ledger (based upon the Borrower's
accounting practices, disclosed to the Loan and Collateral Agent and in effect
on the date hereof or, if hereafter modified, modified in accordance with
generally accepted accounting principles and disclosed to the Loan and
Collateral Agent prior to such modification) and (b) the lowest ticketed or
promoted price at which such Eligible Inventory is offered to the public, after
all ▇▇▇▇-▇▇▇▇▇ (whether or not such price is then reflected in the accounting
system of the Borrower or such Subsidiary). "Cost" does not
-19-
include inventory capitalization costs or, to the extent not yet paid for, other
non-purchase price charges (such as freight) used in the Borrower's or such
Subsidiary's calculation of the cost of goods sold.
Obligations. All indebtedness, obligations and liabilities of any of the
-----------
Borrower and its Subsidiaries to any of the Banks and the Agents, individually
or collectively, existing on the date of this Credit Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Credit Agreement or any of the other Loan Documents or in respect of any of the
Revolving Credit Loans made or Reimbursement Obligations incurred or any of the
Revolving Credit Notes, Letter of Credit Applications, Letters of Credit, or
other instruments at any time evidencing any thereof.
Operating Account. See (S)2.6.2.
-----------------
outstanding. With respect to the Revolving Credit Loans, the aggregate
-----------
unpaid principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by (S)4002 of ERISA
----
and any successor entity or entities having similar responsibilities.
Perfection Certificates. The Perfection Certificates as defined in the
-----------------------
Security Agreements.
Permitted IBJ Debt. Indebtedness of the Borrower to IBJ as evidenced by
------------------
the IBJ Loan Documents existing on the date hereof.
Permitted IBJ Liens. Liens on the Borrower's Real Estate, machinery,
-------------------
equipment and other assets pledged to secure the Permitted IBJ Debt.
Permitted Liens. Liens, security interests and other encumbrances
---------------
permitted by (S)9.2.
Permitted Refinancing Indebtedness. Indebtedness of the Borrower for
----------------------------------
borrowed money (i) which in the aggregate is not less than $150,000,000 or
greater than $250,000,000 in principal amount, (ii) which is not secured by any
assets of the Borrower or any of its Subsidiaries, (iii) which is not guaranteed
by any Subsidiary of the Borrower, (iv) on substantially the terms set forth in
the [draft Offering Memorandum dated March , 1999] delivered to the Agents on
the Closing Date or otherwise on terms and conditions which are satisfactory to
the Agents and (v) the net proceeds of which are used, concurrently with the
incurrence of such Indebtedness, to completely repay, and which refinances, the
indebtedness of the Borrower to IBJ and DKB
-20-
Nederland.
Person. Any individual, corporation, partnership, trust, unincorporated
------
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
RCRA. See (S)7.18(a).
----
Real Estate. All real property at any time owned or leased (as lessee or
-----------
sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Revolving Credit Note, or the continuation
------
of such grid, or any other similar record, including computer records,
maintained by any Bank with respect to any Revolving Credit Loan referred to in
such Revolving Credit Note.
Register. See (S)19.3.
--------
Reimbursement Obligation. The Borrower's obligation to reimburse the
------------------------
Letter of Credit Agent and the Banks on account of any drawing under any Letter
of Credit as provided in (S)4.2.
Reserves. As determined by the Loan and Collateral Agent, such amounts as
--------
the Loan and Collateral Agent may from time to time reasonably establish and
revise (a) to reflect events, conditions, contingencies or risks which (i)
adversely affect either (A) any Collateral, the rights of the Loan and
Collateral Agent or any of the Banks in any Collateral or its value or (B) the
security interest and other rights of the Loan and Collateral Agent or any of
the Banks in the Collateral (including the enforceability, perfection and
priority thereof) or (ii) adversely affect in any material respect the assets
(other than any Collateral) or business or financial condition of the Borrower
or any of its Subsidiaries or (b) to reflect the reasonable belief of the Loan
and Collateral Agent that any Borrowing Base Report or other collateral report
or financial information furnished by or on behalf of the Borrower to the Loan
and Collateral Agent or any of the Banks is or may have been incomplete,
inaccurate or misleading in any material respect. Reserves may include, but are
not limited to: rent, whether for personal or real property and whether or not a
lessor's or landlord's waiver, in a form acceptable to the Loan and Collateral
Agent, has been received by the Loan and Collateral Agent from such lessor or
landlord; payables based upon past due normal trade terms; layaways and customer
deposits; taxes and other governmental charges, whether ad valorem, personal or
real property or otherwise and whether or not the tax claims therefor may have
priority over the Loan and Collateral Agent's security interest in any of the
Collateral; and any customs, duty,
-21-
freight or other out-of-pocket costs or expenses required or advisable to "land"
any Inventory the purchase of which is supported by a Letter of Credit.
Revolving Credit Loan Maturity Date. The earlier to occur of March 10,
-----------------------------------
2004 or the date which is sixty (60) days prior to the maturity of the Permitted
Refinancing Indebtedness.
Revolving Credit Loans. Revolving credit loans made or to be made by the
----------------------
Banks to the Borrower pursuant to (S)2.
Revolving Credit Note Record. A Record with respect to a Revolving Credit
----------------------------
Note.
Revolving Credit Notes. See (S)2.4.
----------------------
▇▇▇▇. See (S)7.18(a).
----
Section 20 Subsidiary. A Subsidiary of the bank holding company
---------------------
controlling any Bank, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.
Security Agreement. The Security Agreement, dated or to be dated on or
------------------
prior to the Closing Date, between the Borrower and the Loan and Collateral
Agent and in form and substance satisfactory to the Banks and the Agents.
Security Documents. The Security Agreement and all other instruments and
------------------
documents, including without limitation Uniform Commercial Code financing
statements, required to be executed or delivered pursuant to any Security
Document.
Settlement. The making or receiving of payments, in immediately available
----------
funds, by the Banks, to the extent necessary to cause each Bank's actual share
of the outstanding amount of Revolving Credit Loans (after giving effect to any
Loan Request) to be equal to such Bank's Commitment Percentage of the
outstanding amount of such Revolving Credit Loans (after giving effect to any
Loan Request), in any case where, prior to such event or action, the actual
share is not so equal.
Settlement Amount. See (S)2.10.1.
-----------------
Settlement Date. (a) The Drawdown Date relating to any Loan Request, (b)
---------------
the Friday of each week, or if a Friday is not a Business Day, the Business Day
immediately following such Friday, (c) at the option of the Agents, on any
Business Day following a day on which the account officers of
-22-
the Agents active upon the Borrower's account become aware of the existence of
an Event of Default, (d) any Business Day on which the amount of Revolving
Credit Loans outstanding from BKB plus BKB's Commitment Percentage of the sum of
----
the Maximum Drawing Amount and any Unpaid Reimbursement Obligations is equal to
or greater than BKB's Commitment Percentage of the Total Commitment, (e) the
Business Day immediately following any Business Day on which the amount of
Revolving Credit Loans outstanding increases or decreases by more than
$5,000,000 as compared to the previous Settlement Date, (f) any day on which any
conversion of a Base Rate Loan to a Eurodollar Rate Loan occurs, or (g) any
Business Day on which (i) the amount of outstanding Revolving Credit Loans
decreases and (ii) the amount of the Loan and Collateral Agent's Revolving
Credit Loans outstanding equals zero Dollars ($0).
Settling Bank. See (S)2.10.1.
-------------
Subsidiary. Any corporation, association, trust, or other business entity
----------
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock.
Super-majority Banks. As of any date, the Banks holding at least sixty-six
--------------------
and seven-tenth percent (66.7%) of the outstanding principal amount of the
Revolving Credit Notes on such date; and if no such principal is outstanding,
the Banks whose aggregate Commitments constitutes at least sixty-six and seven-
tenth percent (66.7%) of the Total Commitment.
Total Commitment. The sum of the Commitments of the Banks, as in effect
----------------
from time to time.
Type. As to any Revolving Credit Loan its nature as a Base Rate Loan or a
----
Eurodollar Rate Loan.
Uniform Customs. With respect to any Letter of Credit, the Uniform Customs
---------------
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 or any successor version thereto adopted by the
Letter of Credit Agent in the ordinary course of its business as a letter of
credit issuer and in effect at the time of issuance of such Letter of Credit.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which
-------------------------------
the Borrower has not reimbursed the Letter of Credit Agent and the Banks on the
date specified in, and in accordance with, (S)4.2.
-23-
Voting Stock. Stock or similar interests, of any class or classes (however
------------
designated), the holders of which are at the time entitled, as such holders, to
vote for the election of a majority of the directors (or persons performing
similar functions) of the corporation, association, trust or other business
entity involved, whether or not the right so to vote exists by reason of the
happening of a contingency.
1.2. RULES OF INTERPRETATION.
-----------------------
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the State of New York, have the meanings
assigned to them therein, with the term "instrument" being that defined
under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "(S)" refers to that section of this
Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the computation
-24-
of periods of time from a specified date to a later specified date, the
word "from" means "from and including," the words "to" and "until" each
mean "to but excluding," and the word "through" means "to and including."
(k) This Credit Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the same
or similar matters. All such limitations, tests and measurements are,
however, cumulative and are to be performed in accordance with the terms
thereof.
(l) This Credit Agreement and the other Loan Documents are the result
of negotiation among, and have been reviewed by counsel to, among others,
the Agents and the Borrower and are the product of discussions and
negotiations among all parties. Accordingly, this Credit Agreement and the
other Loan Documents are not intended to be construed against the Agents or
any of the Banks merely on account of any Agent or any Bank's involvement
in the preparation of such documents.
2. THE REVOLVING CREDIT FACILITY.
-----------------------------
2.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth in
------------------
this Credit Agreement, each of the Banks severally agrees to lend to the
Borrower and the Borrower may borrow, repay, and reborrow from time to time from
the Closing Date up to but not including the Revolving Credit Loan Maturity Date
upon notice by the Borrower to the Loan and Collateral Agent given in accordance
with (S)2.6, such sums as are requested by the Borrower up to a maximum
aggregate amount outstanding (after giving effect to all amounts requested) at
any one time equal to such Bank's Commitment minus such Bank's Commitment
-----
Percentage of the sum of the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations, provided that the sum of the outstanding amount of the Revolving
--------
Credit Loans (after giving effect to all amounts requested) plus the Maximum
----
Drawing Amount and all Unpaid Reimbursement Obligations shall not at any time
exceed the lesser of (i) the Total Commitment and (ii) the Borrowing Base. The
Revolving Credit Loans shall be made pro rata in accordance with each Bank's
--- ----
Commitment Percentage. Each request for a Revolving Credit Loan hereunder shall
constitute a representation and warranty by the Borrower that the conditions set
forth in (S)11 and (S)12, in the case of the initial Revolving Credit Loans to
be made on the Closing Date, and (S)12, in the case of all other Revolving
Credit Loans, have been satisfied on the date of such request.
-25-
2.2. COMMITMENT FEE. The Borrower agrees to pay to the Loan and Collateral
--------------
Agent for the accounts of the Banks in accordance with their respective
Commitment Percentages a commitment fee calculated at the rate equal to the
Applicable Margin then in effect multiplied by the average daily amount during
each calendar quarter or portion thereof from the Closing Date to the Revolving
Credit Loan Maturity Date by which the Total Commitment minus the sum of the
-----
Maximum Drawing Amount and all Unpaid Reimbursement Obligations exceeds the
outstanding amount of Revolving Credit Loans during such calendar quarter;
provided, however, that notwithstanding the foregoing, the commitment fee shall
-------- -------
be calculated with an Applicable Margin of 0.50% if during any quarter the
average daily Revolving Credit Loans outstanding plus the average Maximum
Drawing Amount and all Unpaid Reimbursement Obligations during such quarter is
less than (i) $50,000,000, if the average Total Commitment during such quarter
is more than $100,000,000, and (ii) $40,000,000, if the average Total Commitment
during such quarter is $100,000,000 or less. The commitment fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter commencing on the first such date
following the date hereof, with a final payment on the Revolving Credit Maturity
Date or any earlier date on which the Commitments shall terminate.
2.3. REDUCTION OF TOTAL COMMITMENT. The Borrower shall have the right at
------------------------------
any time and from time to time upon five (5) Business Days prior written notice
to the Loan and Collateral Agent to reduce by $1,000,000 or an integral multiple
thereof or terminate entirely the Total Commitment, whereupon the Commitments of
the Banks shall be reduced pro rata in accordance with their respective
--- ----
Commitment Percentages of the amount specified in such notice or, as the case
may be, terminated. Promptly after receiving any notice of the Borrower
delivered pursuant to this (S)2.3, the Loan and Collateral Agent will notify the
Banks of the substance thereof. Upon the effective date of any such reduction or
termination, the Borrower shall pay to the Loan and Collateral Agent for the
respective accounts of the Banks the full amount of any commitment fee then
accrued on the amount of the reduction. No reduction or termination of the
Commitments may be reinstated.
2.4. THE REVOLVING CREDIT NOTES. The Revolving Credit Loans shall be
--------------------------
evidenced by separate promissory notes of the Borrower in substantially the form
of Exhibit B hereto (each a "Revolving Credit Note"), dated as of the Closing
------- - ---------------------
Date and completed with appropriate insertions. One Revolving Credit Note shall
be payable to the order of each Bank in a principal amount equal to such Bank's
Commitment or, if less, the outstanding amount of all
-26-
Revolving Credit Loans made by such Bank, plus interest accrued thereon, as set
forth below. The Borrower irrevocably authorizes each Bank to make or cause to
be made, at or about the time of the Drawdown Date of any Revolving Credit Loan
or at the time of receipt of any payment of principal on such Bank's Revolving
Credit Note, an appropriate notation on such Bank's Revolving Credit Note Record
reflecting the making of such Revolving Credit Loan or (as the case may be) the
receipt of such payment. The outstanding amount of the Revolving Credit Loans
set forth on such Bank's Revolving Credit Note Record shall be prima facie
----- -----
evidence of the principal amount thereof owing and unpaid to such Bank, but the
failure to record, or any error in so recording, any such amount on such Bank's
Revolving Credit Note Record shall not limit or otherwise affect the obligations
of the Borrower hereunder or under any Revolving Credit Note to make payments of
principal of or interest on any Revolving Credit Note when due.
2.5. INTEREST ON REVOLVING CREDIT LOANS. Except as otherwise provided in
----------------------------------
(S)5.10,
(a) Each Base Rate Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending on, but excluding, the last day
of the Interest Period with respect thereto at the rate per annum equal to
the Base Rate plus the Applicable Margin.
----
(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on, but excluding, the
last day of the Interest Period with respect thereto at the rate per annum
equal to the Eurodollar Rate determined for such Interest Period plus the
----
Applicable Margin.
(c) The Borrower promises to pay interest on each Revolving Credit
Loan in arrears on each Interest Payment Date with respect thereto.
2.6. REQUESTS FOR REVOLVING CREDIT LOANS.
-----------------------------------
2.6.1. GENERAL. The Borrower shall give to the Loan and Collateral
-------
Agent written notice in the form of Exhibit C hereto (or telephonic notice
------- -
confirmed in a writing in the form of Exhibit C hereto) of each Revolving
------- -
Credit Loan requested hereunder (a "Loan Request") no less than (i) two (2)
------------
Business Days prior to the proposed Drawdown Date of any Base Rate Loan and
(ii) three (3) Eurodollar Business Days prior to the proposed Drawdown Date
of any Eurodollar Rate Loan. Each such notice shall specify (A) the
principal amount of the Revolving Credit Loan requested, (B) the proposed
Drawdown Date
-27-
of such Revolving Credit Loan, (C) the Interest Period for such Revolving
Credit Loan and (D) the Type of such Revolving Credit Loan. Promptly upon
receipt of any such notice, the Loan and Collateral Agent shall notify each
of the Banks thereof. Each Loan Request shall be irrevocable and binding on
the Borrower and shall obligate the Borrower to accept the Revolving Credit
Loan requested from the Banks on the proposed Drawdown Date. Each Loan
Request for a Base Rate Loan shall be in a minimum aggregate amount of
$1,000,000 or an integral multiple of $500,000 in excess thereof. Each Loan
Request for a Eurodollar Loan shall be in a minimum aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof.
2.6.2. SWING LINE. Notwithstanding the notice and minimum amount
----------
requirements set forth in (S)2.6.1 but otherwise in accordance with the
terms and conditions of this Credit Agreement, the Loan and Collateral
Agent may, in its sole discretion and without conferring with the Banks,
make Revolving Credit Loans to the Borrower (i) by entry of credits to the
Borrower's operating account (the "Operating Account") with the Loan and
-----------------
Collateral Agent to cover checks or other charges which the Borrower has
drawn or made against such account or (ii) in an amount as otherwise
requested by the Borrower. The Borrower hereby requests and authorizes the
Loan and Collateral Agent to make from time to time such Revolving Credit
Loans by means of appropriate entries of such credits sufficient to cover
checks and other charges then presented for payment from the Operating
Account or as otherwise so requested. The Borrower acknowledges and agrees
that the making of such Revolving Credit Loans shall, in each case, be
subject in all respects to the provisions of this Credit Agreement as if
they were Revolving Credit Loans covered by a Loan Request including,
without limitation, the limitations set forth in (S)2.1 and the
requirements that the applicable provisions of (S)11 (in the case of
Revolving Credit Loans made on the Closing Date) and (S)12 be satisfied.
All actions taken by the Loan and Collateral Agent pursuant to the
provisions of this (S)2.6.2 shall be conclusive and binding on the Borrower
and the Banks absent the Loan and Collateral Agent's gross negligence or
willful misconduct. Revolving Credit Loans made pursuant to this (S)2.6.2
shall be Base Rate Loans until converted in accordance with the provisions
of the Credit Agreement and, prior to a Settlement, such interest shall be
for the account of the Loan and Collateral Agent.
2.6.3 Temporary Suspension of Eurodollar Rate
----------------------------------------
-28-
Options. Notwithstanding (S)2.6.1, no Eurodollar Rate Loans shall be made,
-------
and no Base Rate Loans may be converted to Eurodollar Rate Loans, for a
period (the "initial period") of seven (7) days following the Closing Date
--------------
unless prior to the end of the initial period a satisfactory syndication
has been completed. If, following the end of the initial period, no
satisfactory syndication has been completed, no Interest Period for any
Eurodollar Loan may have duration of more than one month, unless such
Interest Period commences after the earlier to occur of the expiration of
sixty (60) days following the end of the initial period and the completion
of a satisfactory syndication.
2.7. Conversion Options.
------------------
2.7.1. CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN. The
-----------------------------------------------------
Borrower may elect from time to time to convert any outstanding Revolving
Credit Loan to a Revolving Credit Loan of another Type, provided that (i)
--------
with respect to any such conversion of a Revolving Credit Loan to a Base
Rate Loan, the Borrower shall give the Loan and Collateral Agent at least
two (2) Business Days prior written notice of such election; (ii) with
respect to any such conversion of a Base Rate Loan to a Eurodollar Rate
Loan, the Borrower shall give the Loan and Collateral Agent at least three
(3) Eurodollar Business Days prior written notice of such election; (iii)
with respect to any such conversion of a Eurodollar Rate Loan into a
Revolving Credit Loan of another Type, such conversion shall only be made
on the last day of the Interest Period with respect thereto and (iv) no
Revolving Credit Loan may be converted into a Eurodollar Rate Loan when any
Default or Event of Default has occurred and is continuing or if such
conversion is not permitted by (S)2.6.3. On the date on which such
conversion is being made each Bank shall take such action as is necessary
to transfer its Commitment Percentage of such Revolving Credit Loans to its
Domestic Lending Office or its Eurodollar Lending Office, as the case may
be. All or any part of outstanding Revolving Credit Loans of any Type may
be converted into a Revolving Credit Loan of another Type as provided
herein, provided that any partial conversion to a Base Rate Loan shall be
--------
in an aggregate principal amount of $1,000,000 or an integral multiple of
$500,000 in excess thereof and that any partial conversion to a Eurodollar
Loan shall be in an aggregate principal amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof. Each Conversion Request relating
to the conversion of a Revolving Credit Loan to a Eurodollar Rate Loan
shall be irrevocable by the Borrower.
-29-
2.7.2. CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN. Any Revolving
---------------------------------------------
Credit Loan of any Type may be continued as a Revolving Credit Loan of the
same Type upon the expiration of an Interest Period with respect thereto by
compliance by the Borrower with the notice provisions contained in
(S)2.7.1; provided that no Eurodollar Rate Loan may be continued as such
--------
when any Default or Event of Default has occurred and is continuing, but
shall be automatically converted to a Base Rate Loan on the last day of the
first Interest Period relating thereto ending during the continuance of any
Default or Event of Default of which officers of the Loan and Collateral
Agent active upon the Borrower's account have actual knowledge. In the
event that the Borrower fails to provide any such notice with respect to
the continuation of any Eurodollar Rate Loan as such, then such Eurodollar
Rate Loan shall be automatically converted to a Base Rate Loan on the last
day of the first Interest Period relating thereto. The Loan and Collateral
Agent shall notify the Banks promptly when any such automatic conversion
contemplated by this (S)2.7 is scheduled to occur.
2.7.3. EURODOLLAR RATE LOANS. Any conversion to or from Eurodollar
---------------------
Rate Loans shall be in such amounts and be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal amount of all
Eurodollar Rate Loans having the same Interest Period shall not be less
than $5,000,000 or an integral multiple of $1,000,000 in excess thereof. In
addition, no more than eight (8) Eurodollar Rate Loans shall be outstanding
at any one time.
2.8. FUNDS FOR REVOLVING CREDIT LOAN.
-------------------------------
2.8.1. FUNDING PROCEDURES. Not later than 11:00 a.m. (Boston time) on
------------------
the proposed Drawdown Date of any Revolving Credit Loans, each of the Banks
will make available to the Loan and Collateral Agent, at the Loan and
Collateral Agent's Head Office, in immediately available funds, the amount
of such Bank's Commitment Percentage of the amount of the requested
Revolving Credit Loans. Upon receipt from each Bank of such amount, and
upon receipt of the documents required by (S)(S)11 and 12 and the
satisfaction of the other conditions set forth therein, to the extent
applicable, the Loan and Collateral Agent will make available to the
Borrower the aggregate amount of such Revolving Credit Loans made available
to the Loan and Collateral Agent by the Banks. The failure or refusal of
any Bank to make available to the Loan and Collateral Agent at the
aforesaid time and place on any Drawdown Date the amount of its Commitment
-30-
Percentage of the requested Revolving Credit Loans shall not relieve any
other Bank from its several obligation hereunder to make available to the
Loan and Collateral Agent the amount of such other Bank's Commitment
Percentage of any requested Revolving Credit Loans.
2.8.2. ADVANCES BY THE LOAN AND COLLATERAL AGENT. The Loan and
-----------------------------------------
Collateral Agent may, unless notified to the contrary by any Bank prior to
a Drawdown Date, assume that such Bank has made available to the Loan and
Collateral Agent on such Drawdown Date the amount of such Bank's Commitment
Percentage of the Revolving Credit Loans to be made on such Drawdown Date,
and the Loan and Collateral Agent may (but it shall not be required to), in
reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Bank makes available to the Loan and
Collateral Agent such amount on a date after such Drawdown Date, such Bank
shall pay to the Loan and Collateral Agent on demand an amount equal to the
product of (i) the average computed for the period referred to in clause
(iii) below, of the weighted average interest rate paid by the Loan and
Collateral Agent for federal funds acquired by the Loan and Collateral
Agent during each day included in such period, times (ii) the amount of
-----
such Bank's Commitment Percentage of such Revolving Credit Loans, times
-----
(iii) a fraction, the numerator of which is the number of days that elapse
from and including such Drawdown Date to the date on which the amount of
such Bank's Commitment Percentage of such Revolving Credit Loans shall
become immediately available to the Loan and Collateral Agent, and the
denominator of which is 365. A statement of the Loan and Collateral Agent
submitted to such Bank with respect to any amounts owing under this
paragraph shall be prima facie evidence of the amount due and owing to the
----- -----
Loan and Collateral Agent by such Bank. If the amount of such Bank's
Commitment Percentage of such Revolving Credit Loans is not made available
to the Loan and Collateral Agent by such Bank within three (3) Business
Days following such Drawdown Date, the Loan and Collateral Agent, following
written notice to the Borrower, shall be entitled to recover such amount
from the Borrower within three (3) Business Days of delivery of such
notice, with interest thereon at the rate per annum applicable to the
Revolving Credit Loans made on such Drawdown Date.
2.9. CHANGE IN BORROWING BASE. The Borrowing Base shall be determined
------------------------
monthly (or at such other interval as may be specified pursuant to (S)8.4(f)) by
the Loan and Collateral Agent by reference to the Borrowing
-31-
Base Report, commercial finance examination by the Loan and Collateral Agent and
collateral audit reports and other information obtained by or provided to the
Loan and Collateral Agent. The Loan and Collateral Agent shall give to the
Borrower and the Letter of Credit Agent written notice of any change in the
Borrowing Base determined by the Loan and Collateral Agent. In the case of a
reduction in the lending formula with respect to Eligible Accounts Receivable or
Eligible Inventory, such notice shall be effective 5 days after its receipt by
the Borrower, and in the case of any change in the general criteria for Eligible
Accounts Receivable or Eligible Inventory, such notice shall be effective upon
its receipt by the Borrower. Prior to the time that such notice becomes
effective the Borrowing Base shall be computed as it would have been computed in
the absence of such notice.
2.10. SETTLEMENTS.
-----------
2.10.1. GENERAL. On each Settlement Date, the Loan and Collateral
-------
Agent shall, not later than 11:00 a.m. (Boston time), give telephonic or
facsimile notice (i) to the Banks and the Borrower of the respective
outstanding amount of Revolving Credit Loans made and/or received by the
Loan and Collateral Agent on behalf of the Banks from the immediately
preceding Settlement Date through the close of business on the prior day
and the amount of any Eurodollar Rate Loans to be made (following the
giving of notice pursuant to (S)2.6.1(ii)) on such date pursuant to a Loan
Request and (ii) to the Banks of the amount (a "Settlement Amount") that
-----------------
each Bank (a "Settling Bank") shall pay to effect a Settlement of any
-------------
Revolving Credit Loan. A statement of the Loan and Collateral Agent
submitted to the Banks and the Borrower or to the Banks with respect to any
amounts owing under this (S)2.10 shall be prima facie evidence of the
----- -----
amount due and owing. Each Settling Bank shall, not later than 3:00 p.m.
(Boston time) on such Settlement Date, effect a wire transfer of
immediately available funds to the Loan and Collateral Agent in the amount
of the Settlement Amount for such Settling Bank. All funds advanced by any
Bank as a Settling Bank pursuant to this (S)2.10 shall for all purposes be
treated as a Revolving Credit Loan made by such Settling Bank to the
Borrower and all funds received by any Bank pursuant to this (S)2.10 shall
for all purposes be treated as repayment of amounts owed with respect to
Revolving Credit Loans made by such Bank. In the event that any bankruptcy,
reorganization, liquidation, receivership or similar cases or proceedings
in which the Borrower is a debtor prevent a Settling Bank from making any
Revolving Credit Loan to effect a Settlement as contemplated hereby, such
Settling Bank will make such dispositions and arrangements with the other
Banks with respect to
-32-
such Revolving Credit Loans, either by way of purchase of participations,
distribution, pro tanto assignment of claims, subrogation or otherwise as
--- -----
shall result in each Bank's share of the outstanding Revolving Credit Loans
being equal, as nearly as may be, to such Bank's Commitment Percentage of
the outstanding amount of the Revolving Credit Loans.
2.10.2. FAILURE TO MAKE FUNDS AVAILABLE. The Loan and Collateral
-------------------------------
Agent may, unless notified to the contrary by any Settling Bank prior to a
Settlement Date, assume that such Settling Bank has made or will make
available to the Loan and Collateral Agent on such Settlement Date the
amount of such Settling Bank's Settlement Amount, and the Loan and
Collateral Agent may (but it shall not be required to), in reliance upon
such assumption, make available to the Borrower a corresponding amount. If
any Settling Bank makes available to the Loan and Collateral Agent such
amount on a date after such Settlement Date, such Settling Bank shall pay
to the Loan and Collateral Agent on demand an amount equal to the product
of (i) the average computed for the period referred to in clause (iii)
below, of the weighted average interest rate paid by the Loan and
Collateral Agent for federal funds acquired by the Loan and Collateral
Agent during each day included in such period, times (ii) the amount of
such Settlement Amount, times (iii) a fraction, the numerator of which is
the number of days that elapse from and including such Settlement Date to
the date on which the amount of such Settlement Amount shall become
immediately available to the Loan and Collateral Agent, and the denominator
of which is 360. A statement of the Loan and Collateral Agent submitted to
such Settling Bank with respect to any amounts owing under this (S)2.10.2
shall be prima facie evidence of the amount due and owing to the Loan and
----- -----
Collateral Agent by such Settling Bank. If such Settling Bank's Settlement
Amount is not made available to the Loan and Collateral Agent by such
Settling Bank within three (3) Business Days following such Settlement
Date, the Loan and Collateral Agent, following prior written notice to the
Borrower, shall be entitled to recover such amount from the Borrower within
three (3) Business Days of delivery of such notice, with interest thereon
at the rate per annum applicable to the Revolving Credit Loans as of such
Settlement Date.
2.10.3. NO EFFECT ON OTHER BANKS. The failure or refusal of any
------------------------
Settling Bank to make available to the Loan and Collateral Agent at the
aforesaid time and place on any Settlement Date the amount of such Settling
Bank's Settlement Amount shall not (i) relieve any other
-33-
Settling Bank from its several obligations hereunder to make available to
the Loan and Collateral Agent the amount of such other Settling Bank's
Settlement Amount or (ii) impose upon any Bank, other than the Settling
Bank so failing or refusing, any liability with respect to such failure or
refusal or otherwise increase the Commitment of such other Bank.
3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
---------------------------------------
3.1. MATURITY. The Borrower promises to pay on the Revolving Credit Loan
--------
Maturity Date, and there shall become absolutely due and payable on the
Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.
3.2. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at any time the
----------------------------------------------
sum of the outstanding amount of the Revolving Credit Loans, the Maximum Drawing
Amount and all Unpaid Reimbursement Obligations exceeds the lesser of (i) the
Total Commitment and (ii) the Borrowing Base, then the Borrower shall
immediately pay the amount of such excess to the Loan and Collateral Agent for
the respective accounts of the Banks for application: first, to any Unpaid
Reimbursement Obligations; second, to the Revolving Credit Loans; and third, to
provide to the Letter of Credit Agent cash collateral for Reimbursement
Obligations as contemplated by (S)4.2(b) and (c). Each payment of any Unpaid
Reimbursement Obligations or prepayment of Revolving Credit Loans shall be
allocated among the Banks, in proportion, as nearly as practicable, to each
Reimbursement Obligation or (as the case may be) the respective unpaid principal
amount of each Bank's Revolving Credit Note, with adjustments to the extent
practicable to equalize any prior payments or repayments not exactly in
proportion.
3.3. OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS. Subject to the
---------------------------------------------
provisions of (S)5.9, the Borrower shall have the right, at its election, to
repay the outstanding amount of the Revolving Credit Loans, as a whole or in
part, at any time without penalty or premium. The Borrower shall give the Loan
and Collateral Agent, no later than 10:00 a.m., Boston time, at least three (3)
Business Days prior written notice of any proposed prepayment pursuant to this
(S)3.3 of Base Rate Loans, and three (3) Eurodollar Business Days notice of any
proposed prepayment pursuant to this (S)3.3 of Eurodollar Rate Loans, in each
case specifying the proposed date of prepayment of Revolving Credit Loans and
the principal amount to be prepaid. Each such partial prepayment of the
Revolving Credit Loans shall be in an integral multiple of $1,000,000, shall be
accompanied by the payment of accrued interest on the principal prepaid to the
date of prepayment together with any
-34-
amount due under (S)5.9 hereof and shall be applied, in the absence of
instruction by the Borrower, first to the principal of Base Rate Loans and then
to the principal of Eurodollar Rate Loans. Each partial prepayment shall be
allocated among the Banks, in proportion, as nearly as practicable, to the
respective unpaid principal amount of each Bank's Revolving Credit Note, with
adjustments to the extent practicable to equalize any prior repayments not
exactly in proportion.
4. LETTERS OF CREDIT.
-----------------
4.1. LETTER OF CREDIT COMMITMENTS.
----------------------------
4.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the terms
-------------------------------------
and conditions hereof and the execution and delivery by the Borrower of a
letter of credit application on the Letter of Credit Agent's customary form
(a "Letter of Credit Application"), the Letter of Credit Agent on behalf of
----------------------------
the Banks and in reliance upon the agreement of the Banks set forth in
(S)4.1.4 and upon the representations and warranties of the Borrower
contained herein, agrees, in its individual capacity, to issue, extend and
renew for the account of the Borrower one or more standby or documentary
letters of credit (individually, a "Letter of Credit"), in such form as may
----------------
be requested from time to time by the Borrower and agreed to by the Letter
of Credit Agent; provided, however, that, after giving effect to such
-------- -------
request, (a) the sum of the aggregate Maximum Drawing Amount and all Unpaid
Reimbursement Obligations shall not exceed $25,000,000.00 at any one time
and (b) the sum of (i) the Maximum Drawing Amount on all Letters of Credit,
(ii) all Unpaid Reimbursement Obligations, and (iii) the amount of all
Revolving Credit Loans outstanding shall not exceed the lesser of (A) the
Total Commitment and (B) the Borrowing Base. Notwithstanding the foregoing,
the Letter of Credit Agent shall have no obligation to issue any Letter of
Credit to support or secure any Indebtedness of the Borrower or any of its
Subsidiaries to the extent that such Indebtedness was incurred prior to the
proposed issuance date of such Letter of Credit, unless in any such case
the Borrower demonstrates to the satisfaction of the Letter of Credit Agent
that (x) such prior incurred Indebtedness were then fully secured by a
prior perfected and unavoidable security interest in collateral provided by
the Borrower or such Subsidiary to the proposed beneficiary of such Letter
of Credit or (y) such prior incurred Indebtedness were then secured or
supported by a letter of credit issued for the account of the Borrower or
such Subsidiary and the reimbursement obligation with respect to such
letter of credit was fully secured by a prior perfected and unavoidable
security interest in collateral provided to the issuer of
-35-
such letter of credit by the Borrower or such Subsidiary. Letter of Credit
Agent shall notify the Loan and Collateral Agent of the Maximum Drawing
Amount and other terms of each proposed Letter of Credit at least two (2)
Business Days prior to the issuance thereof. Upon the issuance of any
Letter of Credit, the Letter of Credit Agent shall promptly furnish a copy
thereof to the Loan and Collateral Agent.
4.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
-----------------------------
Application shall be completed to the satisfaction of the Letter of Credit
Agent. In the event that any provision of any Letter of Credit Application
shall be inconsistent with any provision of this Credit Agreement, then the
provisions of this Credit Agreement shall, to the extent of any such
inconsistency, govern.
4.1.3. TERMS OF LETTERS OF CREDIT. Each LeTter of Credit issued,
--------------------------
extended or renewed hereunder shall, among other things, (i) provide for
the payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the documents
described therein, and (ii) have an expiry date no later than the earlier
of (a) one (1) year from the date of issuance and (b) the date which is
thirty (30) days (or, if the Letter of Credit is confirmed by a confirmer
or otherwise provides for one or more nominated persons, forty-five (45)
days) prior to the Revolving Credit Loan Maturity Date. Each Letter of
Credit so issued, extended or renewed shall be subject to either the
Uniform Customs or the International Standby Practices.
4.1.4. REIMBURSEMENT OBLIGATIONS OF BANKS. Each Bank severally
----------------------------------
agrees that it shall be absolutely liable, without regard to the occurrence
of any Default or Event of Default or any other condition precedent
whatsoever, to the extent of such Bank's Commitment Percentage, to
reimburse the Letter of Credit Agent on demand for the amount of each draft
paid by the Letter of Credit Agent under each Letter of Credit to the
extent that such amount is not reimbursed by the Borrower pursuant to
(S)4.2 (such agreement for a Bank being called herein the "Letter of Credit
Participation" of such Bank).
4.1.5. PARTICIPATIONS OF BANKS. Each such payment made by a Bank
-----------------------
shall be treated as the purchase by such Bank of a participating interest
in the Borrower's Reimbursement Obligation under (S)4.2 in an amount equal
to such payment. Each Bank shall share in accordance with its participating
interest in any interest which accrues pursuant to (S)4.2.
4.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to
----------------------------------------
-36-
induce the Letter of Credit Agent to issue, extend and renew each Letter of
Credit and the Banks to participate therein, the Borrower hereby agrees to
reimburse or pay to the Letter of Credit Agent, for the account of the Letter of
Credit Agent or (as the case may be) the Banks, with respect to each Letter of
Credit issued, extended or renewed by the Letter of Credit Agent hereunder,
(a) except as otherwise expressly provided in (S)4.2(b) and (c), on
each date that any draft presented under such Letter of Credit is honored
by the Letter of Credit Agent, or the Letter of Credit Agent otherwise
makes a payment with respect thereto, (i) the amount paid by the Letter of
Credit Agent under or with respect to such Letter of Credit, and (ii) the
amount of any taxes, fees, charges or other costs and expenses whatsoever
incurred by the Letter of Credit Agent or any Bank in connection with any
payment made by the Letter of Credit Agent or any Bank under, or with
respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the Total Commitment
to an amount less than the Maximum Drawing Amount, an amount equal to such
difference, which amount shall be held by the Letter of Credit Agent for
the benefit of the Banks and the Letter of Credit Agent as cash collateral
for all Reimbursement Obligations, and
(c) upon the termination of the Total Commitment, or the
acceleration of the Reimbursement Obligations with respect to all Letters
of Credit in accordance with (S)13, an amount equal to the then Maximum
Drawing Amount on all Letters of Credit, which amount shall be held by the
Letter of Credit Agent for the benefit of the Banks and the Letter of
Credit Agent as cash collateral for all Reimbursement Obligations.
Each such payment shall be made to the Letter of Credit Agent at the Letter of
Credit Agent's Head Office in immediately available funds. Interest on any and
all amounts remaining unpaid by the Borrower under this (S)4.2 at any time from
the date such amounts become due and payable (whether as stated in this (S)4.2,
by acceleration or otherwise) until payment in full (whether before or after
judgment) shall be payable to the Letter of Credit Agent on demand at the rate
specified in (S)5.10 for overdue principal on the Revolving Credit Loans.
4.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or other
-------------------------
demand for payment shall be made under any Letter of Credit, the Letter of
Credit Agent shall notify the Borrower of the date and amount of the draft
presented or demand for payment and of the date and time when it expects to pay
such draft or honor such demand for payment. If the Borrower
-37-
fails to reimburse the Letter of Credit Agent as provided in (S)4.2 on or before
the date that such draft is paid or other payment is made by the Letter of
Credit Agent, the Letter of Credit Agent may at any time thereafter notify the
Loan and Collateral Agent, who will promptly notify the Banks of their
respective Commitment Percentage of the amount of any such Unpaid Reimbursement
Obligation. No later than 3:00 p.m. (Boston time) on the Business Day next
following the receipt of such notice, each Bank shall make available to the
Letter of Credit Agent, at the Letter of Credit Agent's Head Office, in
immediately available funds, such Bank's Commitment Percentage of such Unpaid
Reimbursement Obligation, together with an amount equal to the product of (i)
the average, computed for the period referred to in clause (ii) below, of the
weighted average interest rate for federal funds during each day included in
such period, times (iii) the amount equal to such Bank's Commitment Percentage
-----
of such Unpaid Reimbursement Obligation, times (iii) a fraction, the numerator
-----
of which is the number of days that elapse from and including the date the
Letter of Credit Agent paid the draft presented for honor or otherwise made
payment to the date on which such Bank's Commitment Percentage of such Unpaid
Reimbursement obligation shall become immediately available to the Letter of
Credit Agent, and the denominator of which is 360. The responsibility of the
Letter of Credit Agent to the Borrower and the Banks shall be only to determine
that the documents (including each draft) delivered under each Letter of Credit
in connection with such presentment shall be in conformity in all material
respects with such Letter of Credit.
4.4. OBLIGATIONS ABSOLUTE. The Borrower's obligations under this (S)4
--------------------
shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the Letter of Credit Agent, any
Bank or any beneficiary of a Letter of Credit. The Borrower further agrees with
the Letter of Credit Agent and the Banks that the Letter of Credit Agent and the
Banks shall not be responsible for, and the Borrower's Reimbursement Obligations
under (S)4.2 shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or forged,
or any dispute between or among the Borrower, the beneficiary of any Letter of
Credit or any financing institution or other party to which any Letter of Credit
may be transferred or any claims or defenses whatsoever of the Borrower against
the beneficiary of any Letter of Credit or any such transferee. The Letter of
Credit Agent and the Banks shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however
-38-
transmitted, in connection with any Letter of Credit. The Borrower agrees that
any action taken or omitted by the Letter of Credit Agent or any Bank under or
in connection with each Letter of Credit and the related drafts and documents,
if done in good faith, shall be binding upon the Borrower and shall not result
in any liability on the part of the Letter of Credit Agent or any Bank to the
Borrower.
4.5. RELIANCE BY ISSUER. To the extent not inconsistent with (S)4.4, the
------------------
Letter of Credit Agent shall be entitled to rely, and shall be fully protected
in relying upon, any Letter of Credit, draft, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Letter of Credit Agent. The Letter
of Credit Agent shall be fully justified in failing or refusing to take any
action under this Credit Agreement unless it shall first have received such
advice or concurrence of the Majority Banks as it reasonably deems appropriate
or it shall first be indemnified to its reasonable satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Letter of Credit Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Credit Agreement in accordance with a request of the Majority Banks,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon the Banks and all future holders of the Revolving Credit Notes
or of a Letter of Credit Participation.
4.6. LETTER OF CREDIT FEE. The Borrower shall, on the date of issuance or
--------------------
any extension or renewal of any Letter of Credit pay a fee (in each case, a
"Letter of Credit Fee") to the Letter of Credit Agent (i) in respect of each
--------------------
standby Letter of Credit an amount equal to (a) Applicable Margin for Eurodollar
Rate Loans then in effect of the face amount of such standby Letter of Credit
which shall be for the accounts of the Banks in accordance with their respective
Commitment Percentages, plus (b) one quarter of one percent (0.25%) per annum of
----
the face amount of such standby Letter of Credit as a fronting fee for the
account of the Letter of Credit Agent, and (ii) in respect of each documentary
Letter of Credit an amount equal to (a) Applicable Margin for Eurodollar Rate
Loans then in effect, minus 0.50% of the face amount of such documentary Letter
-----
of Credit which shall be for the accounts of the Banks in accordance with their
respective Commitment Percentages, plus (b) one quarter of one percent (0.25%)
----
per annum of the face amount of such documentary Letter of Credit as a fronting
fee for the
-39-
account of the Letter of Credit Agent. In respect of each Letter of Credit, the
Borrower shall also pay to the Letter of Credit Agent for the Letter of Credit
Agent's own account, at such other time or times as such charges are customarily
made by the Letter of Credit Agent, the Letter of Credit Agent's customary
issuance, amendment, negotiation or document examination and other
administrative fees as in effect from time to time.
5. CERTAIN GENERAL PROVISIONS.
--------------------------
5.1. FEES PAYABLE AT CLOSING. The Borrower agrees to pay all fees referred
-----------------------
to in a separate fee letter entered on or prior to the Closing Date among the
Borrower and the Agents which are payable on the Closing Date in accordance with
the terms of such fee letter.
5.2. FUNDS FOR PAYMENTS.
------------------
5.2.1. PAYMENTS TO AGENTS. All payments of principal, interest,
------------------
Reimbursement Obligations, commitment fees, Letter of Credit Fees and any
other amounts due hereunder or under any of the other Loan Documents shall
be made to the Loan and Collateral Agent or the Letter of Credit Agent, as
the case may be, for the respective accounts of the Banks and the Agents,
at the Loan and Collateral Agent's Head Office or the Letter of Credit
Agent's Head Office, as the case may be, or at such other location that
such Agent may from time to time designate, in each case in immediately
available funds.
5.2.2. NO OFFSET, ETC. All payments by the Borrower hereunder and
--------------
under any of the other Loan Documents shall be made without recoupment,
setoff or counterclaim and free and clear of and without deduction for any
taxes, levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any jurisdiction or any political subdivision thereof
or taxing or other authority therein unless the Borrower is compelled by
law to make such deduction or withholding. If any such obligation is
imposed upon the Borrower with respect to any amount payable by it
hereunder or under any of the other Loan Documents, the Borrower will pay
to the Loan and Collateral Agent or the Letter of Credit Agent, as the case
may be, for the account of the Banks or (as the case may be) the Agents, on
the date on which such amount is due and payable hereunder or under such
other Loan Document, such additional amount in Dollars as shall be
necessary to enable the Banks or the Agents to receive the same net amount
which the Banks or the Agents would have received on such due date had no
such obligation been imposed upon the Borrower. The
-40-
Borrower will deliver promptly to the Agents certificates or other valid
vouchers for all taxes or other charges deducted from or paid with respect
to payments made by the Borrower hereunder or under such other Loan
Document.
5.2.3. WITHHOLDING Each Bank that is a party to this Credit
-----------
Agreement and that is not incorporated under the laws of the United States
of America or a state thereof agrees that it will deliver to the Loan and
Collateral Agent, on or prior to the Closing Date, or, in the case of a
Bank which becomes a Bank pursuant to an Assignment and Acceptance, on the
date which such Assignment and Acceptance becomes effective, a copy of
United States Internal Revenue Service form 1001 or 4224 (or other
applicable form prescribed by the United States Internal Revenue Service),
in each case certifying that such Bank is entitled to receive payments
under this Credit Agreement without deduction or withholding of any United
States federal income taxes.
5.3. COMPUTATIONS. All computations of interest on the Revolving Credit
------------
Loans and of commitment fees, Letter of Credit Fees or other fees shall, unless
otherwise expressly provided herein, be based on a 360-day year and paid for the
actual number of days elapsed. Except as otherwise provided in the definition of
the term "Interest Period" with respect to Eurodollar Rate Loans, whenever a
payment hereunder or under any of the other Loan Documents becomes due on a day
that is not a Business Day, the due date for such payment shall be extended to
the next succeeding Business Day, and interest shall accrue during such
extension. The outstanding amount of the Revolving Credit Loans as reflected on
the Revolving Credit Note Records from time to time shall constitute prima facie
evidence of such outstanding amount.
5.4. INABILITY TO DETERMINE EURODOLLAR RATE. In the event, prior to the
--------------------------------------
commencement of any Interest Period relating to any Eurodollar Rate Loan, the
Loan and Collateral Agent shall determine or be notified by the Majority Banks
that adequate and reasonable methods do not exist for ascertaining the
Eurodollar Rate that would otherwise determine the rate of interest to be
applicable to any Eurodollar Rate Loan during any Interest Period, the Loan and
Collateral Agent shall forthwith give notice of such determination (which shall
be conclusive and binding on the Borrower and the Banks) to the Borrower and the
Banks. In such event (i) any Loan Request or Conversion Request with respect to
Eurodollar Rate Loans shall be automatically withdrawn and shall be deemed a
request for Base Rate Loans, (ii) each Eurodollar Rate Loan will automatically,
on the last day of
-41-
the then current Interest Period relating thereto, become a Base Rate Loan, and
(iii) the obligations of the Banks to make Eurodollar Rate Loans shall be
suspended until the Loan and Collateral Agent or the Majority Banks determine
that the circumstances giving rise to such suspension no longer exist, whereupon
the Loan and Collateral Agent or, as the case may be, the Loan and Collateral
Agent upon the instruction of the Majority Banks, shall so notify the Borrower
and the Banks.
5.5. ILLEGALITY. Notwithstanding any other provisions herein, if any
----------
present or future law, regulation, treaty or directive or in the interpretation
or application thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Borrower and the other Banks and thereupon (i) the
commitment of such Bank to make Eurodollar Rate Loans or convert Loans of
another Type to Eurodollar Rate Loans shall forthwith be suspended and (ii) such
Bank's Revolving Credit Loans then outstanding as Eurodollar Rate Loans, if any,
shall be converted automatically to Base Rate Loans on the last day of each
Interest Period applicable to such Eurodollar Rate Loans or within such earlier
period as may be required by law. The Borrower hereby agrees promptly to pay the
Loan and Collateral Agent for the account of such Bank, upon demand by such
Bank, any additional amounts necessary to compensate such Bank for any costs
incurred by such Bank in making any conversion in accordance with this (S)5.5,
including any interest or fees payable by such Bank to lenders of funds obtained
by it in order to make or maintain its Eurodollar Rate Loans hereunder.
5.6. ADDITIONAL COSTS, ETC. If any present or future applicable law, which
---------------------
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to any Bank or
Agent by any central bank or other fiscal, monetary or other authority (whether
or not having the force of law), shall:
(a) subject any Bank or Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Credit Agreement, the other Loan Documents, any Letters of Credit, such
Bank's Commitment or the Loans (other than taxes based upon or measured by
the income or profits of such Bank or Agent), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the
-42-
principal of or the interest on any Revolving Credit Loans or any other
amounts payable to any Bank or Agent under this Credit Agreement or any of
the other Loan Documents, or
(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Credit Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or letters of credit
issued by, or commitments of an office of any Bank, or
(d) impose on any Bank or Agent any other conditions or requirements
with respect to this Credit Agreement, the other Loan Documents, any
Letters of Credit, the Revolving Credit Loans, such Bank's Commitment, or
any class of loans, letters of credit or commitments of which any of the
Revolving Credit Loans or such Bank's Commitment forms a part, and the
result of any of the foregoing is
(i) to increase the cost to any Bank of making, funding,
issuing, renewing, extending or maintaining any of the Revolving
Credit Loans or such Bank's Commitment or any Letter of Credit, or
(ii) to reduce the amount of principal, interest, Reimbursement
Obligation or other amount payable to such Bank or Agent hereunder on
account of such Bank's Commitment, any Letter of Credit or any of the
Revolving Credit Loans, or
(iii) to require such Bank or Agent to make any payment or to
forego any interest or Reimbursement Obligation or other sum payable
hereunder, the amount of which payment or foregone interest or
Reimbursement Obligation or other sum is calculated by reference to
the gross amount of any sum receivable or deemed received by such Bank
or Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, following delivery to the
Borrower of a certificate in accordance with (S)5.8 hereof, pay to such Bank or
such Agent such additional amounts as will be sufficient to compensate such Bank
or Agent for such additional cost, reduction, payment or foregone interest or
Reimbursement Obligation or other sum to the extent accrued
-43-
after the delivery of such notice or during a period of not more than ninety
(90) days prior to the delivery of such notice.
5.7. CAPITAL ADEQUACY. If after the date hereof any Bank or Agent
----------------
determines that (i) the adoption of or change in any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank holding companies or any
change in the interpretation or application thereof by a court or governmental
authority with appropriate jurisdiction, or (ii) compliance by such Bank or
Agent or any corporation controlling such Bank or Agent with any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) of any such entity regarding capital adequacy, has the
effect of reducing the return on such Bank's or Agent's commitment with respect
to any Revolving Credit Loans to a level below that which such Bank or Agent
could have achieved but for such adoption, change or compliance (taking into
consideration such Bank's or Agent's then existing policies with respect to
capital adequacy and assuming full utilization of such entity's capital) by any
amount deemed by such Bank or (as the case may be) Agent to be material, then
such Bank or such Agent may notify the Borrower of such fact. To the extent that
the amount of such reduction in the return on capital is not reflected in the
Base Rate, the Borrower agrees to pay such Bank or (as the case may be) such
Agent for the amount of such reduction in the return on capital with respect to
a period after the delivery of such certificate specified in (S)5.8 or up to
ninety (90) days prior to the deliver of such certificate. Each Bank shall
allocate such cost increases among its customers in good faith and on an
equitable basis.
5.8. CERTIFICATE. A certificate setting forth any additional amounts
-----------
payable pursuant to (S)(S)5.6 or 5.7 and a reasonably detailed explanation of
such amounts which are due, submitted by any Bank or Agent to the Borrower,
shall be conclusive, absent manifest error, that such amounts are due and owing.
5.9. INDEMNITY. The Borrower agrees to indemnify each Bank and to hold
---------
each Bank harmless from and against any loss, cost or expense (including loss of
anticipated profits) that such Bank may sustain or incur as a consequence of (i)
default by the Borrower in payment of the principal amount of or any interest on
any Eurodollar Rate Loans as and when due and payable, including any such loss
or expense arising from interest or fees payable by such Bank to lenders of
funds obtained by it in order to maintain its Eurodollar Rate Loans, (ii)
default by the Borrower in making a borrowing or conversion after the Borrower
has given (or is deemed to have given) a Loan Request or a Conversion Request
relating thereto in accordance with (S)2.6 or (S)2.7 or (iii) the making of any
payment of a Eurodollar Rate Loan or
-44-
the making of any conversion of any such Loan to a Base Rate Loan on a day that
is not the last day of the applicable Interest Period with respect thereto,
including interest or fees payable by such Bank to lenders of funds obtained by
it in order to maintain any such Loans.
5.10. INTEREST AFTER DEFAULT. During the continuance of a Default or an
----------------------
Event of Default, the principal and (to the extent permitted by applicable law)
any overdue interest, of the Revolving Credit Loans and all other overdue
amounts payable hereunder or under any of the other Loan Documents shall bear
interest at a rate per annum equal to (i) in the case of principal of the
Revolving Credit Loans, two percent (2%) above the rate of interest otherwise
applicable to such Revolving Credit Loans pursuant to (S)2.5 until such Default
or Event of Default has been cured or remedied or such Default or Event of
Default has been waived by the Majority Banks pursuant to (S)26, and (ii) in the
case of overdue interest or other amounts, the rate per annum equal to two
percent (2%) above the Base Rate compounded monthly and payable on demand until
such amount shall be paid in full (after as well as before judgment).
5.11. REPLACEMENT OF BANK.
-------------------
(a) In the event that any Bank makes a demand for payment under
(S)5.6 or (S)5.7, the Borrower may within one hundred twenty (120) days of
such demand, if no Event of Default or Default then exists, (i) reduce the
Total Commitment, in the full amount of such Bank's Commitment and repay
such Bank in full or (ii) replace such Bank with an Eligible Assignee in
accordance with (S)19.1 (including execution of an appropriate Assignment
and Acceptance Agreement). If the Borrower accomplishes the replacement or
repayment of such Bank within 120 days following the demand, the Borrower
shall only owe any such Banks amounts under (S)5.5, (S)5.6 or (S)5.7, as
applicable, hereof through the date of replacement or repayment. If the
Borrower does not accomplish either replacement or repayment of such Bank
within such 120 days, the Borrower shall owe such Bank in accordance with
the terms of any written agreement reached between Bank and the Borrower,
and, if no such agreement has been reach, the Borrower shall owe such Bank
in accordance with the terms and provisions of (S)5.5, (S)5.6 or (S)5.7, as
applicable. If the Total Commitment is reduced by the Borrower pursuant to
this (S)5.11(a), the Borrower and the Banks agree that the Commitment
Percentages of each Bank will be automatically ratably adjusted to reflect
such reduction of the Total Commitment.
(b) If (i) there exists no Default or Event of Default on any such
-45-
date and no Default or Event of Default shall be caused by the action
permitted below and (ii) any Bank refuses to consent to any amendment,
waiver or consent to any provision hereof or in any Loan Document in
accordance with the terms of (S)26 (other than an amendment to increase the
Commitment of such Bank), but to which each other Bank has previously
agreed, then, the Borrower may, with the prior written consent of the Loan
and Collateral Agent, within 90 days after the date of such consent,
amendment or waiver, replace such Bank in whole with another Eligible
Assignee, pursuant to an Assignment and Acceptance Agreement and otherwise
in accordance with the terms of (S)19.
5.12. LEGAL IMPEDIMENT. No Bank shall be obligated to make any Revolving
----------------
Credit Loan, and the Letter of Credit Agent shall not be obligated to issue,
extend or renew any Letter of Credit, if any change has occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of such Bank would make it illegal for such Bank to make such Loan or to
participate in the issuance, extension or renewal of such Letter of Credit or in
the reasonable opinion of the Letter of Credit Agent would make it illegal for
the Letter of Credit Agent to issue, extend or renew such Letter of Credit.
6. COLLATERAL SECURITY.
-------------------
The Obligations shall be secured by a perfected first priority security
interest (subject only to Permitted Liens entitled to priority under applicable
law) in all of the Borrower's and its Subsidiaries (other than CSIFSC) assets,
whether now owned or hereafter acquired, pursuant to the terms of the Security
Documents to which the Borrower is a party, other than (a) any now owned or
after acquired (i) Real Estate, (ii) equipment in any of its forms (including
(A) all furniture, furnishings, trade fixtures, machinery and appliances; (B)
all production, manufacturing, distribution, selling, data-processing, computer
and office equipment; (C) all tools, tooling, molds and dies; (D) all sales
literature, promotional literature, processes, practices, techniques,
procedures, trade secrets, know-how and other information data, including
designs, drawings, compilations of data, specifications, assembly procedures,
software and firmware, in each case, in the form of equipment (all the items
described in this clause (D) collectively, the "Proprietary Works") and (E) all
-----------------
physical representations of or media containing Proprietary Works or other
information, including notebooks, drawings, diagrams, plans, manuals, computer
peripherals, hardware, firmware, software, data-storage tapes, disks, diskettes
and other computerized information, but only to the extent that such
representations or media relate to equipment), and all accessions and additions
thereto, parts and
-46-
appurtenances thereof, substitutions therefor and replacements thereof, (b) any
proceeds of any or all of the items referred to in clause (a) above (including
proceeds that constitute property of any type described in clause (a) above),
including (i) all payments under insurance, or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the property described in clause (a) above and (ii) cash proceeds thereof
and (c) the interest of the Borrower in the capital stock of CST.
7. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Borrower represents and warrants to the Banks and the Agents as
follows:
7.1. CORPORATE AUTHORITY.
-------------------
7.1.1. INCORPORATION; GOOD STANDING. Each of the Borrower and its
----------------------------
Subsidiaries (i) is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation, (ii) has all
requisite corporate power to own its property and conduct its business as
now conducted and as presently contemplated, and (iii) is in good standing
as a foreign corporation and is duly authorized to do business in each
jurisdiction where such qualification is necessary except where a failure
to be so qualified would not have a materially adverse effect on the
business, assets or financial condition of the Borrower or such Subsidiary.
7.1.2. AUTHORIZATION. The execution, delivery and performance of
-------------
this Credit Agreement and the other Loan Documents to which the Borrower or
any of its Subsidiaries is or is to become a party and the transactions
contemplated hereby and thereby (i) are within the corporate authority of
such Person, (ii) have been duly authorized by all necessary corporate
proceedings, (iii) do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to which
the Borrower or any of its Subsidiaries is subject or any judgment, order,
writ, injunction, license or permit applicable to the Borrower or any of
its Subsidiaries, (iv) do not conflict with any provision of the corporate
charter or bylaws of the Borrower or any of its Subsidiaries and (v) do not
materially conflict with any provision of any agreement or other instrument
binding upon the Borrower or any of its Subsidiaries.
7.1.3. ENFORCEABILITY. The execution and delivery of this Credit
--------------
Agreement and the other Loan Documents to which the Borrower or
-47-
any of its Subsidiaries is or is to become a party will result in valid and
legally binding obligations of such Person enforceable against it in
accordance with the respective terms and provisions hereof and thereof,
except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally
the enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor
may be brought.
7.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance by
----------------------
the Borrower and any of its Subsidiaries of this Credit Agreement and the other
Loan Documents to which the Borrower or any of its Subsidiaries is or is to
become a party and the transactions contemplated hereby and thereby do not
require the approval or consent of, or filing with, any governmental agency or
authority other than those already obtained and the filing of Uniform Commercial
Code financing statements.
7.3. TITLE TO PROPERTIES; LEASES. Except as indicated on Schedule 7.3
--------------------------- ------------
hereto, the Borrower and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
Balance Sheet Date or acquired since that date (except property and assets sold
or otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, including any mortgages, leases, conditional
sales agreements, title retention agreements, liens or other encumbrances except
Permitted Liens.
7.4. FINANCIAL STATEMENTS AND PROJECTIONS.
------------------------------------
7.4.1. FISCAL YEAR. The Borrower and each of its Subsidiaries has a
-----------
fiscal year which is the twelve months ending on December 31 of each
calendar year.
7.4.2. FINANCIAL STATEMENTS. There has been furnished to each of
--------------------
the Banks a consolidated balance sheet of the Borrower and its Subsidiaries
as at the Balance Sheet Date, and a consolidated statement of income of the
Borrower and its Subsidiaries for the fiscal year then ended, certified by
KPMG Peat Marwick LLP. Such balance sheet and statement of income have been
prepared in accordance with generally accepted accounting principles and
fairly present the financial condition of the Borrower as at the close of
business on the date thereof and the results of operations for the fiscal
year then ended. There are no contingent liabilities of the Borrower or any
of its Subsidiaries as of such date involving material amounts, known to
the
-48-
officers of the Borrower, which were not disclosed in such balance sheet
and the notes related thereto.
7.4.3. PROJECTIONS. The projections of the annual operating budgets
-----------
of the Borrower and its Subsidiaries on a consolidated basis, balance
sheets and cash flow statements for the 1999 to 2003 fiscal years, copies
of which have been delivered to each Bank, disclose all assumptions made
with respect to general economic, financial and market conditions used in
formulating such projections. To the knowledge of the Borrower or any of
its Subsidiaries, no facts exist that (individually or in the aggregate)
would result in any material change in any of such projections. The
projections are based upon reasonable estimates and assumptions, have been
prepared on the basis of the assumptions stated therein and reflect the
reasonable estimates of the Borrower and its Subsidiaries of the results of
operations and other information projected therein.
7.5. NO MATERIAL CHANGES, ETC. Except as set forth in Schedule 7.5
------------------------ ------------
hereto, since the Balance Sheet Date, (i) there has occurred no materially
adverse change in the financial condition or business of the Borrower and its
Subsidiaries as shown on or reflected in the consolidated balance sheet of the
Borrower and its Subsidiaries as at the Balance Sheet Date, or the consolidated
statement of income for the fiscal year then ended, other than changes in the
ordinary course of business that have not had any materially adverse effect
either individually or in the aggregate on the business or financial condition
of the Borrower or any of its Subsidiaries and (ii) the Borrower has not made
any Distribution.
7.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. Each of the Borrower and its
------------------------------------
Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without known
conflict with any rights of others.
7.7. LITIGATION. Except as set forth in Schedule 7.7 hereto, there are no
---------- ------------
actions, suits, proceedings or investigations of any kind pending or, to the
Borrower's knowledge, threatened against the Borrower or any of its Subsidiaries
before any court, tribunal or administrative agency or board as to which there
is a reasonable possibility of adverse determination and that, if adversely
determined, could reasonably be expected, either in any case or in the
aggregate, to materially adversely affect the properties, assets, financial
condition or business of the Borrower and its Subsidiaries or materially impair
the right of the Borrower and its Subsidiaries, considered as a whole, to carry
on business substantially as now conducted by them, or result in any
-49-
substantial liability not adequately covered by insurance, or for which adequate
reserves are not maintained on the consolidated balance sheet of the Borrower
and its Subsidiaries, or which question the validity of this Credit Agreement or
any of the other Loan Documents, or any action taken or to be taken pursuant
hereto or thereto.
7.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower nor any
------------------------------------
of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or
could reasonably be expected in the future to have a materially adverse effect
on the business, assets or financial condition of the Borrower or any of its
Subsidiaries. Neither the Borrower nor any of its Subsidiaries is a party to any
contract or agreement that has or is expected, in the judgment of the Borrower's
officers, to have any materially adverse effect on the business of the Borrower
or any of its Subsidiaries.
7.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Borrower
--------------------------------------------
nor any of its Subsidiaries is in violation of any provision of its charter
documents, bylaws, or any agreement or instrument to which it may be subject or
by which it or any of its material properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing cases in
a manner that could reasonably be expected to result in the imposition of
substantial penalties or materially and adversely affect the financial
condition, properties or business of the Borrower or any of its Subsidiaries.
7.10. TAX STATUS. The Borrower and its Subsidiaries (i) have made or filed
----------
all federal and material state income and all other material tax returns,
reports and declarations required by any jurisdiction to which any of them is
subject, (ii) have paid all taxes and other governmental assessments and charges
shown or determined to be due on such returns, reports and declarations, except
those being contested in good faith and by appropriate proceedings and (iii)
have set aside on their books provisions reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Borrower know of no basis for any such claim. The Borrowing Base Report most
recently delivered to the Loan and Collateral Agent sets forth the amount of
reserves established by the Borrower and each of its Subsidiaries to cover the
Borrower's or such Subsidiary's sales or use tax obligations in each
jurisdiction where the Borrower or such Subsidiary is required to pay such
taxes. Such reserves are adequate for the payment of all of such obligations.
-50-
7.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred
and is continuing.
7.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the Borrower
-------------------------------------------
nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of
a "holding company", or an affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter" of
an "investment company", as such terms are defined in the Investment Company Act
of 1940.
7.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
------------------------------------
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or property of the Borrower or any of its Subsidiaries or any
rights relating thereto.
7.14. PERFECTION OF SECURITY INTEREST. All filings, assignments, pledges
-------------------------------
and deposits of documents or instruments have been made and all other actions
have been taken that are necessary or advisable in the reasonable opinion of the
Borrower's counsel, under applicable law, to establish and perfect the Loan and
Collateral Agent's security interest in the Collateral. The Collateral and the
Loan and Collateral Agent's rights with respect to the Collateral are not
subject to any setoff, claims, withholdings or other defenses. The Borrower is
the owner of the Collateral free from any lien, security interest, encumbrance
and any other claim or demand, except for Permitted Liens.
7.15. CERTAIN TRANSACTIONS. None of the officers, directors, or employees
--------------------
of the Borrower or any of its Subsidiaries is presently a party to any
transaction with the Borrower or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.
7.16. EMPLOYEE BENEFIT PLANS.
----------------------
7.16.1. IN GENERAL. Each Employee Benefit Plan and each
----------
-51-
Guaranteed Pension Plan has been maintained and operated in compliance in
all material respects with the provisions of ERISA and, to the extent
applicable, the Code. The Borrower has heretofore delivered to the Loan and
Collateral Agent the most recently completed annual report, Form 5500, with
all required attachments, and actuarial statement required to be submitted
under (S)103(d) of ERISA, with respect to each Guaranteed Pension Plan.
7.16.2. TERMINABILITY OF WELFARE PLANS. No Employee Benefit Plan,
------------------------------
which is an employee welfare benefit plan within the meaning of (S)3(1) or
(S)3(2)(B) of ERISA, provides benefit coverage subsequent to termination of
employment, except as required by Title I, Part 6 of ERISA or the
applicable state insurance laws. The Borrower may terminate each such Plan
at any time (or at any time subsequent to the expiration of any applicable
bargaining agreement) in the discretion of the Borrower without liability
to any Person other than for claims arising prior to termination.
7.16.3. GUARANTEED PENSION PLANS. Each contribution required to be
------------------------
made to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien
provisions of (S)302(f) of ERISA, or otherwise, has been timely made. No
waiver of an accumulated funding deficiency or extension of amortization
periods has been received with respect to any Guaranteed Pension Plan, and
neither the Borrower nor any ERISA Affiliate is obligated to or has posted
security in connection with an amendment to a Guaranteed Pension Plan
pursuant to (S)307 of ERISA or (S)401(a)(29) of the Code. No liability to
the PBGC (other than required insurance premiums, all of which have been
paid) has been incurred by the Borrower or any ERISA Affiliate with respect
to any Guaranteed Pension Plan and there has not been any ERISA Reportable
Event (other than an ERISA Reportable Event as to which the requirement of
30 days notice has been waived), or any other event or condition which
presents a material risk of termination of any Guaranteed Pension Plan by
the PBGC. Based on the latest valuation of each Guaranteed Pension Plan
(which in each case occurred within twelve months of the date of this
representation), and on the actuarial methods and assumptions employed for
that valuation, the aggregate benefit liabilities of all such Guaranteed
Pension Plans within the meaning of (S)4001 of ERISA did not exceed the
aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities and assets of any
Guaranteed Pension Plan with assets in excess of benefit liabilities by
more than
-52-
$1,000,000.
7.16.4. MULTIEMPLOYER PLANS. Neither the Borrower nor any ERISA
-------------------
Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under (S)4201 of ERISA or as a
result of a sale of assets described in (S)4204 of ERISA. Neither the
Borrower nor any ERISA Affiliate has been notified that any Multiemployer
Plan is in reorganization or insolvent under and within the meaning of
(S)4241 or (S)4245 of ERISA or is at risk of entering reorganization or
becoming insolvent, or that any Multiemployer Plan intends to terminate or
has been terminated under (S)4041A of ERISA.
7.17. USE OF PROCEEDS.
---------------
7.17.1. GENERAL. The proceeds of the Revolving Credit Loans shall
-------
be used solely to refinance certain indebtedness of the Borrower to DKB and
for working capital and general corporate purposes. The Borrower will
obtain Letters of Credit solely for working capital purposes and as
security for capital expenditures; provided, however, the Borrower shall
not obtain Letters of Credit to support workers compensation obligations.
7.17.2. REGULATIONS U AND X. No portion of any Revolving Credit
-------------------
Loan is to be used, and no portion of any Letter of Credit is to be
obtained, for the purpose of purchasing or carrying any "margin security"
or "margin stock" as such terms are used in Regulations U and X of the
Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and
224.
7.17.3. INELIGIBLE SECURITIES. No portion of the proceeds of any
---------------------
Revolving Credit Loans is to be used, and no portion of any Letter of
Credit is to be obtained, for the purpose of (a) knowingly purchasing, or
providing credit support for the purchase of, Ineligible Securities from a
Section 20 Subsidiary during any period in which such Section 20 Subsidiary
makes a market in such Ineligible Securities, (b) knowingly purchasing, or
providing credit support for the purchase of, during the underwriting or
placement period, any Ineligible Securities being underwritten or privately
placed by a Section 20 Subsidiary, or (c) making, or providing credit
support for the making of, payments of principal or interest on Ineligible
Securities underwritten or privately placed by a Section 20 Subsidiary and
issued by or for the benefit of the Borrower or any Subsidiary or other
Affiliate of the Borrower.
-53-
7.18. ENVIRONMENTAL COMPLIANCE. The Borrower has taken all steps required
------------------------
by applicable law to investigate the past and present condition and usage of the
Real Estate and the operations conducted thereon and, based upon such
investigation, has determined that:
(a) except as set forth on Schedule 7.18, none of the Borrower, its
-------- ----
Subsidiaries or any operator of the Real Estate or any operations thereon
is in violation, or alleged violation, of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental matters, including
without limitation, those arising under the Resource Conservation and
Recovery Act ("RCRA"), the Comprehensive Environmental Response,
----
Compensation and Liability Act of 1980 as amended ("CERCLA"), the Superfund
------
Amendments and Reauthorization Act of 1986 ("▇▇▇▇"), the Federal Clean
----
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or
any state or local statute, regulation, ordinance, order or decree relating
to health, safety or the environment (hereinafter "Environmental Laws"),
------------------
which violation would have a material adverse effect on the environment or
the business, assets or financial condition of the Borrower or any of its
Subsidiaries;
(b) except as set forth on Schedule 7.18, neither the Borrower nor
-------- ----
any of its Subsidiaries has received notice from any third party including,
without limitation, any federal, state or local governmental authority, (i)
that any one of them has been identified by the United States Environmental
Protection Agency ("EPA") as a potentially responsible party under CERCLA
---
with respect to a site listed on the National Priorities List, 40 C.F.R.
Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇; (ii) that any hazardous waste, as defined by 42 U.S.C.
(S)6903(5), any hazardous substances as defined by 42 U.S.C. (S)9601(14),
any pollutant or contaminant as defined by 42 U.S.C. (S)9601(33) and any
toxic substances, oil or hazardous materials or other chemicals or
substances regulated by any Environmental Laws ("Hazardous Substances")
--------------------
which any one of them has generated, transported or disposed of has been
found at any site at which a federal, state or local agency or other third
party has conducted or has ordered that any Borrower or any of its
Subsidiaries conduct a remedial investigation, removal or other response
action pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise) arising
out of any third party's incurrence of costs, expenses, losses or damages
of any kind whatsoever in connection with the release of Hazardous
Substances;
-54-
(c) except as set forth on Schedule 7.18 attached hereto, to the best
-------- ----
of the Borrower's knowledge: (i) no portion of the Real Estate has been
used for the handling, processing, storage or disposal of Hazardous
Substances except in accordance with applicable Environmental Laws, and no
underground tank or other underground storage receptacle for Hazardous
Substances is located on any portion of the Real Estate, which would have a
material adverse effect on the value of the Real Estate or the business of
the Borrower or any of its Subsidiaries; (ii) in the course of any
activities conducted by the Borrower, its Subsidiaries or operators of its
properties, no Hazardous Substances have been generated or are being used
on the Real Estate except in accordance with applicable Environmental Laws
which would have a material adverse effect on the value of the Real Estate
or the business of the Borrower or any of its Subsidiaries; (iii) there
have been no releases (i.e. any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, disposing or dumping) or threatened releases of Hazardous
Substances on, upon, into or from the properties of the Borrower or its
Subsidiaries, which releases would have a material adverse effect on the
value of any of the Real Estate or adjacent properties or the environment;
(iv) there have been no releases on, upon, from or into any real property
in the vicinity of any of the Real Estate which, through soil or
groundwater contamination, may have come to be located on, and which would
have a material adverse effect on the value of, the Real Estate; and (v) in
addition, any Hazardous Substances that have been generated on any of the
Real Estate have been transported offsite only by carriers having an
identification number issued by the EPA, treated or disposed of only by
treatment or disposal facilities maintaining valid permits as required
under applicable Environmental Laws, which transporters and facilities have
been and are operating in compliance with such permits and applicable
Environmental Laws, and any violation of the foregoing would not have a
material adverse effect on the value of any of the Real Estate or the
business of the Borrower or any of its Subsidiaries; and
(d) none of the Borrower and its Subsidiaries or any of the Real
Estate is subject to any applicable environmental law requiring the
performance of Hazardous Substances site assessments, or the removal or
remediation of Hazardous Substances, or the giving of notice to any
governmental agency or the recording or delivery to other Persons of an
environmental disclosure document or statement by virtue of the
transactions set forth herein and contemplated hereby.
-55-
7.19. SUBSIDIARIES, ETC. Schedule 7.19 sets forth the only Subsidiaries
----------------- -------- ----
of the Borrower. Except as set forth on Schedule 7.19 hereto, neither the
-------- ----
Borrower nor any Subsidiary of the Borrower is engaged in any joint venture or
partnership with any other Person.
7.20. BANK ACCOUNTS. Schedule 7.20 sets forth the account numbers and
------------- -------- ----
location of all bank accounts of the Borrower or any of its Subsidiaries (the
"Local Accounts").
7.21. Year 2000 Problem. The Borrower and its Subsidiaries have reviewed
-----------------
the areas within their businesses and operations which could be adversely
affected by, and have developed or are developing a program to address on a
timely basis, the "Year 2000 Problem" (i.e. the risk that computer applications
used by the Borrower or any of its Subsidiaries may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999). Based upon such review, the Borrower
reasonably believes that the "Year 2000 Problem" will not have any materially
adverse effect on the business or financial condition of the Borrower or any of
its Subsidiaries.
7.22. DISCLOSURE. None of this Credit Agreement or any of the other Loan
----------
Documents contains any untrue statement of a material fact or omits to state a
material fact (known to the Borrower or any of its Subsidiaries in the case of
any document or information not furnished by it or any of its Subsidiaries)
necessary in order to make the statements herein or therein not misleading.
There is no fact known to the Borrower or any of its Subsidiaries which
materially adversely affects, or which is reasonably likely in the future to
materially adversely affect, the business, assets, financial condition or
prospects of the Borrower or any of its Subsidiaries, exclusive of effects
resulting from changes in general economic conditions, legal standards or
regulatory conditions.
8. AFFIRMATIVE COVENANTS OF THE BORROWER.
-------------------------------------
The Borrower covenants and agrees that, so long as any Revolving Credit
Loan, Unpaid Reimbursement Obligation, Letter of Credit or Note is outstanding
or any Bank has any obligation to make any Revolving Credit Loans or the Letter
of Credit Agent has any obligation to issue, extend or renew any Letters of
Credit:
8.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or cause
----------------
to be paid the principal and interest on the Revolving Credit Loans, all
Reimbursement Obligations, the Letter of Credit Fees, the commitment fees, the
Loan and Collateral Agent's fee, Letter of Credit Agent's fee and all
-56-
other amounts provided for in this Credit Agreement and the other Loan Documents
to which the Borrower or any of its Subsidiaries is a party, all in accordance
with the terms of this Credit Agreement and such other Loan Documents.
8.2. MAINTENANCE OF OFFICE. The Borrower will maintain its chief
---------------------
executive office in ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such
other place in the United States of America as the Borrower shall designate upon
written notice to the Loan and Collateral Agent, where notices, presentations
and demands to or upon the Borrower in respect of the Loan Documents to which
the Borrower is a party may be given or made.
8.3. RECORDS AND ACCOUNTS. The Borrower will (i) keep, and cause each of
--------------------
its Subsidiaries to keep, true and accurate records and books of account in
which full, true and correct entries will be made in accordance with generally
accepted accounting principles, (ii) maintain adequate accounts and reserves for
all taxes (including income taxes), depreciation, depletion, obsolescence and
amortization of its properties and the properties of its Subsidiaries,
contingencies, and other reserves, and (iii) at all times engage KPMG Peat
Marwick LLP or another "big five" certified public accountants (including any
successors thereto) or other independent certified public accountants
satisfactory to the Agents, as the independent certified public accountants of
the Borrower and its Subsidiaries and will not permit more than thirty (30) days
to elapse between the cessation of such firm's (or any successor firm's)
engagement as the independent certified public accountants of the Borrower and
its Subsidiaries and the appointment in such capacity of a successor firm.
8.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower will
--------------------------------------------------
deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than ninety
(90) days after the end of each fiscal year of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries and the
consolidating balance sheet of the Borrower and its Subsidiaries, each as
at the end of such year, and the related consolidated statement of income
and consolidated statement of cash flow and consolidating statement of
income and consolidating statement of cash flow for such year, each setting
forth in comparative form the figures for the previous fiscal year and all
such consolidated and consolidating statements to be in reasonable detail,
prepared in accordance with generally accepted accounting principles, and
certified without qualification by KPMG Peat Marwick LLP or by another "big
five" certified public accountants (including any successors thereto) or by
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other independent certified public accountants satisfactory to the Agents,
together with a written statement from such accountants to the effect that
they have read a copy of this Credit Agreement, and that, in making the
examination necessary to said certification, they have obtained no
knowledge of any Default or Event of Default, or, if such accountants shall
have obtained knowledge of any then existing Default or Event of Default
they shall disclose in such statement any such Default or Event of Default;
provided that such accountants shall not be liable to the Banks for failure
--------
to obtain knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than thirty
(30) days after the end of each of the fiscal quarters of the Borrower,
copies of the unaudited consolidated balance sheet of the Borrower and its
Subsidiaries and the unaudited consolidating balance sheet of the Borrower
and its Subsidiaries, each as at the end of such quarter, and the related
consolidated statement of income and consolidated statement of cash flow
and consolidating statement of income and consolidating statement of cash
flow for the portion of the Borrower's fiscal year then elapsed, all in
reasonable detail and prepared in accordance with generally accepted
accounting principles, together with a certification by the principal
financial or accounting officer of the Borrower that the information
contained in such financial statements fairly presents the financial
position of the Borrower and its Subsidiaries on the date thereof (subject
to year-end adjustments);
(c) as soon as practicable, but in any event within thirty (30) days
after the end of each month in each fiscal year of the Borrower, unaudited
monthly consolidated financial statements of the Borrower and its
Subsidiaries for such month and unaudited monthly consolidating financial
statements of the Borrower and its Subsidiaries for such month, each
prepared in accordance with generally accepted accounting principles,
together with a certification by the principal financial or accounting
officer of the Borrower that the information contained in such financial
statements fairly presents the financial condition of the Borrower and its
Subsidiaries on the date thereof (subject to year-end adjustments);
(d) simultaneously with the delivery of the financial statements
referred to in subsections (a), (b) and (c) above, a statement certified by
the principal financial or accounting officer of the Borrower in
substantially the form of Exhibit D hereto (the "Compliance Certificate")
------- - ----------------------
and setting forth in reasonable detail computations evidencing compliance
with the covenants contained in (S)10 and (if
-58-
applicable) reconciliations to reflect changes in generally accepted
accounting principles since the Balance Sheet Date;
(e) contemporaneously with the filing or mailing thereof, copies of
all material of a financial nature filed with the Securities and Exchange
Commission or sent to the stockholders of the Borrower;
(f) within ten (10) days after the end of each calendar month or at
such earlier time as the Loan and Collateral Agent may reasonably request,
a Borrowing Base Report setting forth the Borrowing Base as at the end of
such calendar month or other date so requested by the Loan and Collateral
Agent;
(g) within ten (10) days after the end of each calendar month, an
Accounts Receivable aging report;
(h) from time to time, not to exceed once per calendar year, upon
request of either Agent, projections of the Borrower and its Subsidiaries
updating those projections delivered to the Banks and referred to in
(S)7.4.2 or, if applicable, updating any later such projections delivered
in response to a request pursuant to this (S)8.4(h); and
(i) from time to time such other financial data and information
(including accountants' management letters) as any Agent or any Bank may
reasonably request.
8.5. NOTICES.
-------
8.5.1. DEFAULTS. The Borrower will promptly notify each of the Agents
--------
in writing of the occurrence of any Default or Event of Default. If any
Person shall give any notice or take any other action in respect of a
claimed default (whether or not constituting an Event of Default) under
this Credit Agreement or any other note, evidence of indebtedness,
indenture or other obligation to which or with respect to which the
Borrower or any of its Subsidiaries is a party or obligor, whether as
principal, guarantor, surety or otherwise, the Borrower shall forthwith
give written notice thereof to each of the Agents, describing the notice or
action and the nature of the claimed default.
8.5.2. ENVIRONMENTAL EVENTS. The Borrower will promptly give notice
--------------------
to each of the Agents and each of the Banks (i) of any violation of any
Environmental Law that the Borrower or any of its Subsidiaries reports in
writing or is reportable by such Person in writing (or for
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which any written report supplemental to any oral report is made) to any
federal, state or local environmental agency and (ii) upon becoming aware
thereof, of any inquiry, proceeding, investigation, or other action,
including a notice from any agency of potential environmental liability, of
any federal, state or local environmental agency or board, that has the
potential to materially affect the assets, liabilities, financial
conditions or operations of the Borrower or any of its Subsidiaries, or the
Loan and Collateral Agent's security interests pursuant to the Security
Documents.
8.5.3. NOTIFICATION OF CLAIM AGAINST COLLATERAL. The Borrower will,
----------------------------------------
immediately upon becoming aware thereof, notify each of the Agents and each
of the Banks in writing of any setoff, claims, withholdings or other
defenses to which any of the Collateral, or the Loan and Collateral Agent's
rights with respect to the Collateral, are subject.
8.5.4. NOTICE OF LITIGATION AND JUDGMENTS. The Borrower will, and
----------------------------------
will cause each of its Subsidiaries to, give notice to each of the Agents
and each of the Banks in writing within fifteen (15) days of becoming aware
of any litigation or proceedings threatened in writing or any pending
litigation and proceedings affecting the Borrower or any of its
Subsidiaries or to which the Borrower or any of its Subsidiaries is or
becomes a party involving an uninsured claim against the Borrower or any of
its Subsidiaries that could reasonably be expected to have a materially
adverse effect on the Borrower or any of its Subsidiaries and stating the
nature and status of such litigation or proceedings. The Borrower will, and
will cause each of its Subsidiaries to, give notice to each of the Agents,
in writing, in form and detail satisfactory to each of the Agents, within
ten (10) days of any judgment not covered by insurance, final or otherwise,
against the Borrower or any of its Subsidiaries in an amount in excess of
$250,000.
8.5.5. NOTICES CONCERNING INVENTORY COLLATERAL. The Borrower shall
---------------------------------------
provide to the Loan and Collateral Agent prompt notice of (i) any physical
count of the Borrower's or any of its Subsidiaries' inventory, together
with a copy of the results thereof certified by the Borrower or such
Subsidiary, (ii) any determination by the Borrower or any of its
Subsidiaries that the inventory levels of the Borrower or such Subsidiary
are not adequate to meet the sales projections of the Borrower or such
Subsidiary, and (iii) any failure of the Borrower or any of its
Subsidiaries to pay rent at any location, which failure continues for more
than three days following the day on which such
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rent is due and payable by the Borrower or such Subsidiary.
8.6. Corporate Existence; Maintenance of Properties. The Borrower will
----------------------------------------------
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights and franchises and those of its
Subsidiaries and will not, and will not cause or permit any of its Subsidiaries
to, convert to a limited liability company. It (i) will cause all of its
properties and those of its Subsidiaries used or useful in the conduct of its
business or the business of its Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment,
(ii) will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Borrower may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, and (iii) will, and will
cause each of its Subsidiaries to, continue to engage primarily in the
businesses now conducted by them and in related businesses; provided that
--------
nothing in this (S)8.6 shall prevent the Borrower from discontinuing the
operation and maintenance of any of its assets or any of those of its
Subsidiaries if such discontinuance is, in the judgment of the Borrower,
desirable in the conduct of its or their business and that do not in the
aggregate materially adversely affect the business of the Borrower and its
Subsidiaries on a consolidated basis.
8.7. Insurance. The Borrower will, and will cause each of its Subsidiaries
---------
to, maintain with financially sound and reputable insurers insurance with
respect to its properties and business against such casualties and contingencies
as shall be in accordance with the general practices of businesses engaged in
similar activities in similar geographic areas and in amounts, containing such
terms, in such forms and for such periods as may be reasonable and prudent and
in accordance with the terms of the Security Agreements.
8.8. TAXES. The Borrower will, and will cause each of its Subsidiaries
-----
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property; provided that any such tax, assessment, charge,
--------
levy or claim need not be paid if the validity or amount thereof shall currently
be contested in good faith by appropriate proceedings and if the Borrower or
such Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and provided further that the Borrower and each Subsidiary of the
-------- -------
Borrower will pay all such taxes, assessments,
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charges, levies or claims forthwith upon the commencement of proceedings to
foreclose any lien that may have attached as security therefor.
8.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
---------------------------------------
8.9.1. GENERAL. The Borrower shall permit the Banks, through the
-------
Agents or any of the Banks' other designated representatives, to visit and
inspect any of the properties of the Borrower or any of its Subsidiaries,
to examine the books of account of the Borrower and its Subsidiaries (and
to make copies thereof and extracts therefrom), and to discuss the affairs,
finances and accounts of the Borrower and its Subsidiaries with, and to be
advised as to the same by, its and their officers, all at such reasonable
times and intervals as any Agent or Bank may reasonably request. The Loan
and Collateral Agent may, at the Borrower's expense, participate in or
observe any physical count of inventory included in the Collateral.
8.9.2. COLLATERAL REPORTS. No more frequently than three times
------------------
during each calendar year, or more frequently as determined by the Agents
if an Event of Default shall have occurred and be continuing, upon the
request of the Agents, the Borrower will obtain and deliver to the Agents,
or, if the Agents so elects, will cooperate with the Agents in the Agent's
obtaining, a report of an independent collateral auditor satisfactory to
the Agents (which may be affiliated with one of the Banks) with respect to
the Accounts Receivable and inventory components included in the Borrowing
Base, which report shall indicate whether or not the information set forth
in the Borrowing Base Report most recently delivered is accurate and
complete in all material respects based upon a review by such auditors of
the Accounts Receivable (including verification with respect to the amount,
aging, identity and credit of the respective account debtors and the
billing practices of the Borrower or its applicable Subsidiary) and
inventory (including verification as to the value, location and respective
types). All such collateral value reports shall be conducted and made at
the expense of the Borrower.
8.9.3. APPRAISALS. If an Event of Default shall have occurred and be
----------
continuing, upon the request of the Agents, the Borrower will obtain and
deliver to the Agents appraisal reports in form and substance and from
appraisers satisfactory to the Agents, stating the then current business
value of each of the Borrower and its Subsidiaries. All such appraisals
shall be conducted and made at the expense of the Borrower.
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8.9.4. COMMUNICATIONS WITH ACCOUNTANTS. The Borrower authorizes the
-------------------------------
Agents and, if accompanied by the Agents, the Banks to communicate directly
with the Borrower's independent certified public accountants and authorizes
such accountants to disclose to the Agents and the Banks any and all
financial statements and other supporting financial documents and schedules
including copies of any management letter with respect to the business,
financial condition and other affairs of the Borrower or any of its
Subsidiaries. At the request of the Agents, the Borrower shall deliver a
letter addressed to such accountants instructing them to comply with the
provisions of this (S)8.9.4.
8.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The
------------------------------------------------------
Borrower will, and will cause each of its Subsidiaries to, comply with (i) the
applicable laws and regulations wherever its business is conducted, including
all Environmental Laws, except where the failure to so comply would not be
expected to have a materially adverse effect upon the business, assets or
financial conditions of the Borrower and its Subsidiaries on a consolidated
basis, (ii) the provisions of its charter documents and by-laws, (iii) all
agreements and instruments by which it or any of its properties may be bound,
except where the failure to so comply could not reasonably be expected to have a
materially adverse effect upon the business, assets or financial conditions of
the Borrower and its Subsidiaries on a consolidated basis, and (iv) all
applicable decrees, orders, and judgments. If any authorization, consent,
approval, permit or license from any officer, agency or instrumentality of any
government shall become necessary or required in order that the Borrower or any
of its Subsidiaries may fulfill any of its obligations hereunder or any of the
other Loan Documents to which the Borrower or such Subsidiary is a party, the
Borrower will, or (as the case may be) will cause such Subsidiary to,
immediately take or cause to be taken all reasonable steps within the power of
the Borrower or such Subsidiary to obtain such authorization, consent, approval,
permit or license and furnish the Agents and the Banks with evidence thereof.
8.11. EMPLOYEE BENEFIT PLANS. The Borrower will (i) promptly upon request
----------------------
of the Loan and Collateral Agent, furnish to the Loan and Collateral Agent a
copy of the most recent actuarial statement required to be submitted under
(S)103(d) of ERISA and Annual Report, Form 5500, with all required attachments,
in respect of each Guaranteed Pension Plan and (ii) promptly upon receipt or
dispatch, furnish to the Loan and Collateral Agent any notice, report or demand
sent or received in respect of a Guaranteed Pension Plan under (S)(S)302, 4041,
4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer
Plan, under (S)(S)4041A, 4202, 4219, 4242, or 4245 of
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ERISA.
8.12. USE OF PROCEEDS. The Borrower will use the proceeds of the Revolving
---------------
Credit Loans and will obtain Letters of Credit solely for the purposes set forth
in (S)7.17.1.
8.13. BANK ACCOUNTS.
-------------
8.13.1. GENERAL. On or prior to the Closing Date, the Borrower
-------
will, and will cause each of its Subsidiaries other than CSIFSC to, (i)
establish a depository account (the "BKB Concentration Account") under the
-------------------------
control of the Loan and Collateral Agent for the benefit of the Banks and
the Agents, in the name of the Borrower, (ii) cause all financial
institutions at which the Local Accounts are maintained to entered into
agency account agreements and, if applicable, lock box agreements
(collectively, "Agency Account Agreements") in form and substance
-------------------------
satisfactory to the Loan and Collateral Agent (which shall provide for,
among other things, the right of the Loan and Collateral Agent to require
any such financial institution to transfer any deposits held by such
financial institution to the BKB Concentration Account upon written notice
from the Loan and Collateral Agent after the occurrence and continuation
without cure of a Default or Event of Default), (iii) cause all cash
proceeds of Accounts Receivable to be deposited only into the BKB
Concentration Account or the Local Accounts, and (iv) at all times ensure
that immediately upon the Borrower's or any of its Subsidiaries' receipt of
any funds constituting or cash proceeds of any Collateral, all such amounts
shall have been deposited in the BKB Concentration Account or the Local
Accounts.
8.13.2. ACKNOWLEDGMENT OF APPLICATION. The Borrower hereby agrees
-----------------------------
that all amounts received by the Loan and Collateral Agent in the BKB
Concentration Account will be held as Collateral for the Obligations to be
applied in accordance with (S)13.4.
8.14. FURTHER ASSURANCES. The Borrower will, and will cause each of its
------------------
Subsidiaries to, cooperate with the Banks and the Agents and execute such
further instruments and documents as the Banks or the Agents shall reasonably
request to effectuate the transactions contemplated by this Credit Agreement and
the other Loan Documents.
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
------------------------------------------
The Borrower covenants and agrees that, so long as any Revolving Credit
Loan, Unpaid Reimbursement Obligation, Letter of Credit or Note is
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outstanding or any Bank has any obligation to make any Revolving Credit Loans or
the Letter of Credit Agent has any obligations to issue, extend or renew any
Letters of Credit:
9.1. RESTRICTIONS ON INDEBTEDNESS. The Borrower will not, and will not
----------------------------
permit any of its Subsidiaries to, create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness other
than:
(a) Indebtedness to the Banks and the Agents arising under any of the
Loan Documents;
(b) endorsements for collection, deposit or negotiation and warranties
of products or services, in each case incurred in the ordinary course of
business;
(c) Indebtedness incurred in connection with the acquisition after the
date hereof of any real or personal property by the Borrower or such
Subsidiary or under any Capitalized Lease, provided that the aggregate
--------
principal amount of such Indebtedness of the Borrower and its Subsidiaries
shall not exceed the aggregate amount of $5,000,000 at any one time;
(d) Indebtedness existing on the date hereof and listed and described
on Schedule 9.1 hereto and any extensions, renewals or replacements thereof
-------- ---
which are, in each case, on terms and conditions no less favorable to the
Borrower and the interest of the Agents and the Banks;
(e) Indebtedness of a Subsidiary of the Borrower existing on the date
hereof to the Borrower;
(f) Permitted IBJ Debt;
(g) Permitted Refinancing Indebtedness;
(h) Other Indebtedness not otherwise permitted by this (S)9.1;
provided, that combined sum of the aggregate outstanding principal amount
--------
of all such Indebtedness of the Borrower and its Subsidiaries permitted
pursuant to this (S)9.1(h) and the aggregate outstanding principal amount
of Indebtedness permitted under (S)9.1(c) shall not exceed $5,000,000 at
any time.
9.2. RESTRICTIONS ON LIENS. The Borrower will not, and will not permit any
---------------------
of its Subsidiaries to, (i) create or incur or suffer to be created or
-65-
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (ii) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (iii) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (iv) suffer to
exist for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid would by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors which in the aggregate exceed the lesser
of (A) $1,000,000 and (B) $5,000,000 minus the amount of the Indebtedness of the
-----
Borrower and its Subsidiaries described under (S)(S)9.1(c) and 9.1(h); or (v)
sell, assign, pledge or otherwise transfer any "receivables" as defined in
clause (vii) of the definition of the term "Indebtedness," with or without
recourse; provided that the Borrower or any of its Subsidiaries may create or
--------
incur or suffer to be created or incurred or to exist:
(a) liens in favor of the Borrower on all or part of the assets of
Subsidiaries of the Borrower securing Indebtedness owing by Subsidiaries of
the Borrower to the Borrower;
(b) liens to secure taxes, assessments and other government charges in
respect of obligations not overdue or liens on properties to secure claims
for labor, material or supplies in respect of obligations not overdue;
(c) deposits or pledges made in connection with, or to secure payment
of, workmen's compensation, unemployment insurance, old age pensions or
other social security obligations;
(d) liens on properties in respect of judgments or awards that have
been in force for less than the applicable period for taking an appeal so
long as execution is not levied thereunder or in respect of which the
Borrower or such Subsidiary shall at the time in good faith be prosecuting
an appeal or proceedings for review and in respect of which a stay of
execution shall have been obtained pending such appeal or review;
(e) liens of carriers, warehousemen, mechanics and materialmen, and
other like liens on properties, in existence less than 120 days from the
date of creation thereof in respect of obligations not
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overdue;
(f) encumbrances on Real Estate consisting of easements, rights of
way, zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or lessor's
liens under leases to which the Borrower or a Subsidiary of the Borrower is
a party, and other minor liens or encumbrances none of which in the opinion
of the Borrower interferes materially with the use of the property affected
in the ordinary conduct of the business of the Borrower and its
Subsidiaries, which defects do not individually or in the aggregate have a
materially adverse effect on the business of the Borrower individually or
of the Borrower and its Subsidiaries on a consolidated basis;
(g) liens existing on the date hereof and listed on Schedule 9.2
-------- ---
hereto and any extensions, renewals or replacements thereof which are, in
each case, on terms and conditions no less favorable to the Borrower and
the interest of the Agents and the Banks;
(h) purchase money security interests in or purchase money mortgages
on real or personal property acquired after the date hereof to secure
purchase money Indebtedness of the type and amount permitted by (S)9.1(c),
incurred in connection with the acquisition of such property, which
security interests or mortgages cover only the Indebtedness incurred solely
for the purpose of financing the acquisition of such real or personal
property so acquired;
(i) liens in favor of the Loan and Collateral Agent for the benefit of
the Banks and the Agents under the Loan Documents;
(j) Permitted IBJ Liens; and
(k) liens on assets other than inventory or Accounts Receivables which
are pledged to secure Indebtedness of the type and amount permitted by
(S)9.1(h).
9.3. RESTRICTIONS ON INVESTMENTS. The Borrower will not, and will not
---------------------------
permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United States
of America that mature within one (1) year from the date of purchase by the
Borrower;
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(b) demand deposits, certificates of deposit, bankers acceptances and
time deposits of United States banks having total assets in excess of
$1,000,000,000;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof that at the time of purchase have been rated
and the ratings for which are not less than "P 1" if rated by ▇▇▇▇▇'▇
Investors Service, Inc., and not less than "A 1" if rated by Standard and
Poor's Rating Group;
(d) Investments existing on the date hereof and listed on Schedule 9.3
-------- ---
hereto;
(e) Investments with respect to Indebtedness permitted by (S)9.1(g) so
long as such entities remain Subsidiaries of the Borrower;
(f) Investments consisting of Investments by the Borrower in
Subsidiaries of the Borrower existing on the Closing Date;
(g) Investments consisting of promissory notes received as proceeds of
asset dispositions permitted by (S)9.5.2; and
(h) Investments consisting of loans and advances to employees for
moving, entertainment, travel and other similar expenses in the ordinary
course of business not to exceed $250,000 in the aggregate at any time
outstanding;
(i) Investments under the Loan Documents;
9.4. DISTRIBUTIONS. The Borrower will not make any Distributions; provided,
------------- ---------
however, so long as no Default or Event of Default exist or would result
--------
therefrom, the Borrower may: (a) make semi-annual Distributions not to exceed
50% of the Consolidated Net Income of the Borrower for the two fiscal quarters
most recently ended so long as (i) such Distributions are made within 45 days
after delivery to the Banks of the financial statements required by Section
8.4(a) and (b) and (ii) the Borrower has delivered calculations to the Agents,
demonstrating in a format satisfactory to the Agents that the making of such
Distribution will not cause a Default or Event of Default on a projected basis
for the next two fiscal quarters of the Borrower; and (b) make Distributions to
the preferred stockholders of the Borrower not to exceed $3,000,000 per year.
9.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
-----------------------------------------------
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9.5.1. MERGERS AND ACQUISITIONS. The Borrower will not, and will not
------------------------
permit any of its Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition or stock
acquisition other than: (a) the acquisition of assets in the ordinary
course of business consistent with the Borrower's steel business; (b) the
merger or consolidation of one or more of the Subsidiaries of the Borrower
with and into the Borrower; (c) the merger or consolidation of two or more
Subsidiaries of the Borrower; and (d) other stock and asset acquisitions so
long as (i) the aggregate purchase price paid by the Borrower or its
Subsidiaries shall not exceed $20,000,000 from the Closing Date, (ii) after
giving effect to any such acquisition the Borrowing Base shall exceed the
outstanding amount of Revolving Credit Loans plus the Maximum Drawing
Amount of all Unpaid Reimbursement Obligations by at least $15,000,000,
(iii) on the last day of the fiscal quarter following any such acquisition
the Fixed Charge Ratio shall not be less than 1.25:1.00, (iv) any such
acquisitions of a substantial portion of the assets of any Person have been
approved by not less than a majority of the Board of Directors of the
target Person (consisting of directors who were directors of said Person
for the twelve (12) months period preceding such acquisition), (v) prior to
and after giving effect to such acquisition there shall be no Default or
Event of Default, (vi) the Borrower has demonstrated to the reasonable
satisfaction of the Loan and Collateral Agent that, after giving effect to
such acquisition, the Borrower shall be in compliance, on a pro forma
basis, with the financial covenants contained in (S)10 hereof for the 12
months following such acquisition; and (vi) the acquisition is of a
business which is in the steel related business or is made to acquire or
develop raw materals used in steel making.
9.5.2. DISPOSITION OF ASSETS. The Borrower will not, and will not
---------------------
permit any of its Subsidiaries to, become a party to or agree to or effect
any disposition of assets other than: (a) the sale of inventory, the
licensing of intellectual property and the disposition of obsolete assets,
in each case in the ordinary course of business consistent with the
Borrower's steel business; (b) the sale or other disposition of capital
stock of CST held by the Borrower; and (c) disposition of assets not in the
ordinary course of business which does not exceed, in the aggregate,
$10,000,000, provided, that such assets are or are to be no longer used in
--------
the Borrower's business.
9.6. SALE AND LEASEBACK. The Borrower will not, and will not permit any of
------------------
its Subsidiaries to, enter into any arrangement, directly or indirectly, whereby
the Borrower or any Subsidiary of the Borrower shall sell or transfer
-69-
any property owned by it in order then or thereafter to lease such property or
lease other property that the Borrower or any Subsidiary of the Borrower intends
to use for substantially the same purpose as the property being sold or
transferred.
9.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrower will not, and will
----------------------------------
not permit any of its Subsidiaries to, (i) use any of the Real Estate or any
portion thereof for the handling, processing, storage or disposal of Hazardous
Substances, (ii) cause or permit to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Hazardous
Substances, (iii) generate any Hazardous Substances on any of the Real Estate,
(iv) conduct any activity at any Real Estate or use any Real Estate in any
manner so as to cause a release (i.e. releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping) or threatened release of Hazardous Substances on, upon or
into the Real Estate or (v) otherwise conduct any activity at any Real Estate or
use any Real Estate in any manner that would violate any Environmental Law or
bring such Real Estate in violation of any Environmental Law.
9.8. PERMITTED IBJ DEBT, PERMITTED REFINANCING INDEBTEDNESS AND
----------------------------------------------------------
INDEBTEDNESS TO DKB NEDERLAND. The Borrower will not amend, supplement or
-----------------------------
otherwise modify the terms of any Permitted IBJ Debt, any Permitted Refinancing
Indebtedness or the Indebtedness to DKB Nederland permitted under (S)9.1(d)
other than on terms and conditions no less favorable to the Borrower, any
Subsidiary or the interest of the Agents or the Banks, or prepay, redeem or
repurchase any Permitted Refinancing Indebtedness.
9.9. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA Affiliate
----------------------
will
(a) engage in any "prohibited transaction" within the meaning of
(S)406 of ERISA or (S)4975 of the Code which could result in a material
liability for the Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in (S)302 of ERISA, whether or
not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could
result in the imposition of a lien or encumbrance on the assets of the
Borrower or any of its Subsidiaries pursuant to (S)302(f) or (S)4068 of
ERISA; or
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(d) amend any Guaranteed Pension Plan in circumstances requiring the
posting of security pursuant to (S)307 of ERISA or (S)401(a)(29) of the
Code; or
(e) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of (S)4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities, by
more than the amount set forth in (S)7.16.3.
9.10. Business Activities. The Borrower will not, and will not permit any
-------------------
of its Subsidiaries to, engage directly or indirectly (whether through
Subsidiaries or otherwise) in any type of business other than the businesses
conducted by them on the Closing Date and in related businesses.
9.11. Fiscal Year. The Borrower will not, and will not permit any of it
-----------
Subsidiaries to, change the date of the end of its fiscal year from that set
forth in (S)7.4.1.
9.12. Transactions with Affiliates. The Borrower will not, and will not
----------------------------
permit any of its Subsidiaries to, engage in any transaction with any Affiliate
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any such Affiliate or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any such Affiliate has a substantial interest or is an officer,
director, trustee or partner, unless such transaction is on fair and reasonable
terms no less favorable to the Borrower than would have been obtainable on an
arm's-length with a Person other than an Affiliate.
9.13. BANK ACCOUNTS. The Borrower will not, and will not permit any of its
-------------
Subsidiaries to, (i) establish any bank accounts other than the BKB
Concentration Account of the Local Accounts without Loan and Collateral Agent's
prior written consent, (ii) violate directly or indirectly any Agency Account
Agreement or other bank agency or lock box agreement in favor of the Loan and
Collateral Agent for the benefit of the Banks and the Agents with respect to
such account.
9.14. CSIFSC. The Borrower will not permit CSIFSC to conduct any business
------
or own assets in excess of $500,000 in the aggregate at any time.
-71-
10. FINANCIAL COVENANTS OF THE BORROWER.
-----------------------------------
The Borrower covenants and agrees that, so long as any Revolving Credit
Loan, Unpaid Reimbursement Obligation, Letter of Credit or Revolving Credit Note
is outstanding or any Bank has any obligation to make any Revolving Credit Loans
or the Letter of Credit Agent has any obligation to issue, extend or renew any
Letters of Credit.
10.1. CAPITAL EXPENDITURES. The Borrower will not make, or permit any
--------------------
Subsidiary of the Borrower to make, Capital Expenditures that exceed, in the
aggregate, $55,000,000 for the Borrower's 1999 fiscal year and $40,000,000 for
each fiscal year thereafter; provided, however, that, if during any fiscal year
-------- -------
the amount of Capital Expenditures permitted for that fiscal year is not so
utilized, such unutilized amount may be utilized in the next succeeding fiscal
year but not in any subsequent fiscal year.
10.2. CONSOLIDATED TANGIBLE NET WORTH. The Borrower will not permit
-------------------------------
Consolidated Tangible Net Worth to be less than the sum of (a) $142,000,000,
plus (b) on a cumulative basis, 50% of positive Consolidated Net Income for each
fiscal year subsequent to the Closing Date, plus (c) the proceeds received by
the Borrower in connection with the sale of equity securities of the Borrower or
its Subsidiaries.
10.3. FIXED CHARGE COVERAGE. Commencing on December 31, 1998, the Borrower
---------------------
will not permit, as of the last day of any fiscal quarter of the Borrower, the
ratio of (i) Consolidated Operating Cash Flow for the four fiscal quarters then
ended to (ii) Consolidated Total Debt Service for such period (the "Fixed Charge
------------
Coverage Ratio") to be less than the ratio set forth below opposite such date:
--------------
Date Ratio
---- -----
12/31/99 1.10:1.00
3/31/00 1.15:1.00
The last day of each fiscal
quarter beginning with 6/30/00 1.25:1.00
10.4. INTEREST CHARGE COVERAGE. The Borrower will not permit the ratio of
------------------------
(i) Consolidated Operating Cash Flow for the four fiscal quarters then ended to
(ii) Consolidated Total Interest Expense for such period to be less than
1.00:1.00 on March 31, 1999, June 30, 1999 and September 30, 1999.
11. CLOSING CONDITIONS.
------------------
The obligations of the Banks to make the initial Revolving Credit
-72-
Loans and of the Letter of Credit Agent to issue any initial Letters of Credit
shall be subject to the satisfaction of the following conditions precedent on or
prior to March 15, 1999:
11.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been duly
--------------
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to each of the Banks.
Each Bank shall have received a fully executed copy of each such document.
11.2. CERTIFIED COPIES OF CHARTER DOCUMENTS AND IBJ LOAN DOCUMENTS. Each
------------------------------------------------------------
of the Banks shall have received from the Borrower and each of its Subsidiaries
a copy, certified by a duly authorized officer of such Person to be true and
complete on the Closing Date, of each of (i) its charter or other incorporation
documents as in effect on such date of certification, (ii) its by-laws as in
effect on such date, (iii) the IBJ Loan Documents as listed on Schedule 11.2
-------- ----
(iii) and (iv) the revised covenants for fiscal year 1999 under the Permitted
-----
IBJ Debt in form and substance satisfactory to the Banks.
11.3. CORPORATE ACTION. All corporate action necessary for the valid
----------------
execution, delivery and performance by the Borrower and each of its Subsidiaries
of this Credit Agreement and the other Loan Documents to which it is or is to
become a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Banks shall have been provided to each of the Banks.
11.4. INCUMBENCY CERTIFICATE. Each of the Banks shall have received from
----------------------
the Borrower an incumbency certificate, dated as of the Closing Date, signed by
a duly authorized officer of the Borrower, and giving the name and bearing a
specimen signature of each individual who shall be authorized: (i) to sign, in
the name and on behalf of each of the Borrower, each of the Loan Documents and
Subordination Documents to which the Borrower is or is to become a party; (ii)
to make Loan Requests and Conversion Requests and to apply for Letters of
Credit; and (iii) to give notices and to take other action on its behalf under
the Loan Documents.
11.5. VALIDITY OF LIENS. The Security Documents shall be effective to
-----------------
create in favor of the Loan and Collateral Agent a legal, valid and enforceable
first (except for Permitted Liens entitled to priority under applicable law)
security interest in and lien upon the Collateral. All filings, recordings,
deliveries of instruments and other actions necessary or desirable in the
opinion of the Loan and Collateral Agent to protect and preserve such security
interests shall have been duly effected. The Loan and Collateral Agent shall
have received evidence thereof in form and substance satisfactory
-73-
to the Loan and Collateral Agent.
11.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The Loan and
----------------------------------------------
Collateral Agent shall have received from the Borrower a completed and fully
executed Perfection Certificate and the results of UCC searches with respect to
the Collateral, indicating no liens other than Permitted Liens and otherwise in
form and substance satisfactory to the Loan and Collateral Agent.
11.7. CERTIFICATES OF INSURANCE. The Agents shall have received (i) a
-------------------------
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of the Security Agreements and (ii) certified copies of all
policies evidencing such insurance (or certificates therefore signed by the
insurer or an agent authorized to bind the insurer).
11.8. AGENCY ACCOUNT AGREEMENTS. The Borrower shall have established the
-------------------------
BKB Concentration Account, and the Loan and Collateral Agent shall have received
an Agency Account Agreement executed by each depository institution at which the
Borrower maintains Local Accounts.
11.9. BORROWING BASE REPORT; FUNDING AUDIT. The Loan and Collateral Agent
------------------------------------
shall have received (i) from the Borrower the initial Borrowing Base Report
dated as of the Closing Date and (ii) a pre-funding audit from the Loan and
Collateral Agent's examiners verifying the components of the Borrowing Base in
form and substance satisfactory to the Agents.
11.10. ACCOUNTS RECEIVABLE AGING REPORT. The Loan and Collateral Agent
--------------------------------
shall have received from the Borrower the most recent Accounts Receivable aging
report of the Borrower and its Subsidiaries dated as of a date which shall be no
more than fifteen (15) days prior to the Closing Date and the Borrower shall
have notified the Loan and Collateral Agent in writing on the Closing Date of
any material deviation from the Accounts Receivable values reflected in such
Accounts Receivable aging report and shall have provided the Loan and Collateral
Agent with such supplementary documentation as the Loan and Collateral Agent may
reasonably request.
11.11. HAZARDOUS WASTE ASSESSMENTS. The Agents shall have received
---------------------------
hazardous waste site assessments from environmental engineers and in form and
substance satisfactory to the Agents, covering all Real Estate and all other
real property in respect of which the Borrower or any of its Subsidiaries may
have material liability, whether contingent or otherwise, for
-74-
dumping or disposal of Hazardous Substances.
11.12. SOLVENCY CERTIFICATE. Each of the Banks shall have received an
--------------------
officer's certificate of the Borrower dated as of the Closing Date as to the
solvency of the Borrower and its Subsidiaries following the consummation of the
transactions contemplated herein and in form and substance satisfactory to the
Banks.
11.13. OPINION OF COUNSEL. Each of the Banks and the Agents shall have
------------------
received a favorable legal opinion addressed to the Banks and the Agents, dated
as of the Closing Date, in form and substance satisfactory to the Banks and the
Agents, from ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to the Borrower and its
Subsidiaries.
11.14. PAYMENT OF FEES. The Borrower shall have paid to the Banks or the
---------------
Agents, as appropriate, the closing fee, the Agents' fees and all other amounts
due and payable under this Agreement.
11.15. PAYOFF LETTER. The Loan and Collateral Agent shall have received a
-------------
payoff letter from DKB, indicating the amount of the obligations of the Borrower
under the revolving credit facilities agented by DKB, to be discharged on the
Closing Date and an acknowledgment by DKB that upon receipt of such funds it
will forthwith execute and deliver to the Loan and Collateral Agent for filing
all termination statements and take such other actions as may be necessary to
discharge all security interests granted by the Borrower or any of its
Subsidiaries in favor of DKB.
12. CONDITIONS TO ALL BORROWINGS.
----------------------------
The obligations of the Banks to make any Revolving Credit Loan, and of the
Letter of Credit Agent to issue, extend or renew any Letter of Credit, in each
case whether on or after the Closing Date, shall also be subject to the
satisfaction of the following conditions precedent:
12.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
-----------------------------------------
representations and warranties of any of the Borrower and its Subsidiaries
contained in this Credit Agreement, the other Loan Documents or in any document
or instrument delivered pursuant to or in connection with this Credit Agreement
shall be true as of the date as of which they were made and shall also be true
at and as of the time of the making of such Revolving Credit Loan or the
issuance, extension or renewal of such Letter of Credit, with the same effect as
if made at and as of that time (except to the extent of changes
-75-
resulting from transactions contemplated or permitted by this Credit Agreement
and the other Loan Documents and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, or to the
extent that such representations and warranties relate expressly to an earlier
date) and no Default or Event of Default shall have occurred and be continuing.
The Loan and Collateral Agent shall have received a certificate of the Borrower
signed by an authorized officer of the Borrower to such effect.
12.2. GOVERNMENTAL REGULATION. Each Bank shall have received such
-----------------------
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
12.3. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
-------------------------
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Agents and the Agents' Special Counsel, and the
Banks, the Agents and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Agents may reasonably request.
12.4. BORROWING BASE REPORT. The Loan and Collateral Agent shall have
---------------------
received the most recent Borrowing Base Report required to be delivered to the
Loan and Collateral Agent in accordance with (S)8.4(f) and, if requested by the
Loan and Collateral Agent, a Borrowing Base Report dated within five (5) days of
the Drawdown Date of such Loan or of the date of issuance, extension or renewal
of such Letter of Credit.
13. EVENTS OF DEFAULT; ACCELERATION; ETC.
------------------------------------
13.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following events
----------------------------------
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, "Defaults") shall occur:
--------
(a) the Borrower shall fail to pay any principal of the Revolving
Credit Loans or any Reimbursement Obligation when the same shall become due
and payable, whether at the stated date of maturity or any accelerated date
of maturity or at any other date fixed for payment;
(b) the Borrower or any of its Subsidiaries shall fail to pay
-76-
any interest on the Revolving Credit Loans, the commitment fee, any Letter
of Credit Fee, the Loan and Collateral Agent's fee, or other sums due
hereunder or under any of the other Loan Documents, within two (2) Business
Days of when the same shall become due and payable, whether at the stated
date of maturity or any accelerated date of maturity or at any other date
fixed for payment;
(c) the Borrower shall fail to comply with any of its covenants
contained in (S)8.2, 8.3, 8.4, 8.5, 8.13, 9, or 10;
(d) the Borrower or any of its Subsidiaries shall fail to perform any
term, covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified elsewhere in this (S)13.1) for thirty
(30) days after written notice of such failure has been given to the
Borrower by any Agent;
(e) any representation or warranty of the Borrower or any of its
Subsidiaries in this Credit Agreement or any of the other Loan Documents or
in any other document or instrument delivered pursuant to or in connection
with this Credit Agreement shall prove to have been false in any material
respect upon the date when made or deemed to have been made or repeated;
(f) the Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligation for
borrowed money or credit received or in respect of any Capitalized Leases
in each case in excess of $5,000,000, or fail to observe or perform any
material term, covenant or agreement contained in any agreement by which it
is bound, evidencing or securing borrowed money or credit received or in
respect of any Capitalized Leases in each case in excess of $5,000,000 for
such period of time as would permit (assuming the giving of appropriate
notice if required) the holder or holders thereof or of any obligations
issued thereunder to accelerate the maturity thereof, or any such holder or
holders shall rescind or shall have a right to rescind the purchase of any
such obligations;
(g) the Borrower or any of its Subsidiaries shall make an assignment
for the benefit of creditors, or admit in writing its inability to pay or
generally fail to pay its debts as they mature or become due, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator or receiver of the Borrower or any of its Subsidiaries or of any
substantial part of the assets of the Borrower or any of its Subsidiaries
or shall commence any case or other proceeding relating to the Borrower or
any of its Subsidiaries under any
-77-
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or
hereafter in effect, or shall take any action to authorize or in
furtherance of any of the foregoing, or if any such petition or application
shall be filed or any such case or other proceeding shall be commenced
against the Borrower or any of its Subsidiaries and the Borrower or any of
its Subsidiaries shall indicate its approval thereof, consent thereto or
acquiescence therein or such petition or application shall not have been
dismissed within forty-five (45) days following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any of
its Subsidiaries bankrupt or insolvent, or approving a petition in any such
case or other proceeding, or a decree or order for relief is entered in
respect of the Borrower or any Subsidiary of the Borrower in an involuntary
case under federal bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any final
judgment against the Borrower that, with other outstanding final judgments,
undischarged, against the Borrower exceeds in the aggregate $1,000,000;
(j) if any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded or the Loan and Collateral Agent's security interests,
mortgages or liens in a substantial portion of the Collateral shall cease
to be perfected, or shall cease to have the priority contemplated by the
Security Documents, in each case otherwise than in accordance with the
terms thereof or with the express prior written agreement, consent or
approval of the Banks, or any action at law, suit or in equity or other
legal proceeding to cancel, revoke or rescind any of the Loan Documents
shall be commenced by or on behalf of the Borrower or any of its
Subsidiaries party thereto or any of their respective stockholders, or any
court or any other governmental or regulatory authority or agency of
competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of
the Loan Documents is illegal, invalid or unenforceable in accordance with
the terms thereof;
(k) the Borrower or any ERISA Affiliate incurs any liability to the
PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA in an
aggregate amount exceeding $1,000,000, or the Borrower
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or any ERISA Affiliate is assessed withdrawal liability pursuant to Title
IV of ERISA by a Multiemployer Plan requiring aggregate annual payments
exceeding $1,000,000, or any of the following occurs with respect to a
Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to
make a required installment or other payment (within the meaning of
(S)302(f)(1) of ERISA), provided that the Loan and Collateral Agent
--------
determines in its reasonable discretion that such event (A) could be
expected to result in liability of the Borrower or any of its Subsidiaries
to the PBGC or such Guaranteed Pension Plan in an aggregate amount
exceeding $1,000,000 and (B) could constitute grounds for the termination
of such Guaranteed Pension Plan by the PBGC, for the appointment by the
appropriate United States District Court of a trustee to administer such
Guaranteed Pension Plan or for the imposition of a lien in favor of such
Guaranteed Pension Plan; or (ii) the appointment by a United States
District Court of a trustee to administer such Guaranteed Pension Plan; or
(iii) the institution by the PBGC of proceedings to terminate such
Guaranteed Pension Plan;
(l) the Borrower or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part of
its business and such order shall continue in effect for more than thirty
(30) days;
(m) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy,
or other casualty, which in any such case causes, for more than fifteen
(15) consecutive days, the cessation or substantial curtailment of revenue
producing activities at any facility of the Borrower or any of its
Subsidiaries which could reasonably be expected to have a material adverse
effect on the Borrower's ability to comply with its obligations hereunder.
(n) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by
the Borrower or any of its Subsidiaries if such loss, suspension,
revocation or failure to renew would have a material adverse effect on the
business or financial condition of the Borrower or such Subsidiary;
(o) the Borrower or any of its Subsidiaries shall be indicted for a
state or federal crime, or any civil or criminal action shall otherwise
have been brought or threatened against the Borrower or any of its
Subsidiaries, a punishment for which in any such case could
-79-
include the forfeiture of any assets of the Borrower or such Subsidiary
included in the Borrowing Base or any assets of the Borrower or such
Subsidiary not included in the Borrowing Base but having a fair market
value in excess of $1,000,000;
(p) (i) Kawasaki Steel Corporation and Companhia Vale do Rio Doce
shall directly or indirectly together own less than 50% of the outstanding
shares of common stock of the Borrower, or shall cease to possess the right
to appoint a majority of the Board of Directors of the Borrower, or (ii) a
"Change of Control" under and as defined in the Permitted Refinancing
Indebtedness shall have occurred;
then, and in any such event, so long as the same may be continuing, either of
the Agents may, and upon the request of the Super-majority Banks shall, by
notice in writing to the Borrower declare all amounts owing with respect to this
Credit Agreement, the Revolving Credit Notes and the other Loan Documents and
all Reimbursement Obligations to be, and they shall thereupon forthwith become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Borrower; provided
--------
that in the event of any Event of Default specified in (SS)13.1(g), 13.1(h) or
13.1(j), all such amounts shall become immediately due and payable automatically
and without any requirement of notice from any Agent or any Bank.
13.2. TERMINATION OF COMMITMENTS. If any one or more of the Events of
--------------------------
Default specified in (S)13.1(g), (S)13.1(h) or (S)13.1(j) shall occur, any
unused portion of the credit hereunder shall forthwith terminate and each of the
Banks shall be relieved of all further obligations to make Loans to the Borrower
and the Letter of Credit Agent shall be relieved of all further obligations to
issue, extend or renew Letters of Credit. If any other Event of Default shall
have occurred and be continuing, or if on any Drawdown Date or other date for
issuing, extending or renewing any Letter of Credit the conditions precedent to
the making of the Revolving Credit Loans to be made on such Drawdown Date or (as
the case may be) to issuing, extending or renewing such Letter of Credit on such
other date are not satisfied, any Agent may and, upon the request of the
Majority Banks, shall, by notice to the Borrower, terminate the unused portion
of the credit hereunder, and upon such notice being given such unused portion of
the credit hereunder shall terminate immediately and each of the Banks shall be
relieved of all further obligations to make Loans and the Letter of Credit Agent
shall be relieved of all further obligations to issue, extend or renew Letters
of Credit. No termination of the credit hereunder shall relieve the Borrower or
any of its Subsidiaries of any of the Obligations.
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13.3. REMEDIES. In case any one or more of the Events of Default shall
--------
have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Revolving Credit Loans pursuant to (S)13.1, each
Bank, if owed any amount with respect to the Revolving Credit Loans or the
Reimbursement Obligations, may, with the consent of the Majority Banks but not
otherwise, proceed to protect and enforce its rights by suit in equity, action
at law or other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Credit Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations to such Bank are
evidenced, including as permitted by applicable law the obtaining of the ex
--
parte appointment of a receiver, and, if such amount shall have become due, by
-----
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or Agent or the holder of any Revolving Credit Note or purchaser of any Letter
of Credit Participation is intended to be exclusive of any other remedy and each
and every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or any other provision of law.
13.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, following
-----------------------------------
the occurrence or during the continuance of any Default or Event of Default, any
Agent or any Bank, as the case may be, receives any monies in connection with
the enforcement of any the Security Documents, or otherwise with respect to the
realization upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of each Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by each Agent in connection with the collection of such monies by
each Agent, for the exercise, protection or enforcement by each Agent of
all or any of the rights, remedies, powers and privileges of each Agent
under this Credit Agreement or any of the other Loan Documents or in
respect of the Collateral or in support of any provision of adequate
indemnity to each Agent against any taxes or liens which by law shall have,
or may have, priority over the rights of each Agent to such monies;
(b) Second, to all other Obligations (other than Obligations under
Derivative Contracts with either of the Agents) in such order or preference
as the Majority Banks may determine; provided, however, that (i)
-------- -------
distributions shall be made (A) pari passu among Obligations with respect
---- -----
to the Agents' fee payable pursuant to (S)5.1 and all other
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Obligations and (B) with respect to each type of Obligation owing to the
Banks, such as interest, principal, fees and expenses, among the Banks pro
---
rata, and (ii) the Loan and Collateral Agent may in its discretion make
----
proper allowance to take into account any Obligations not then due and;
(c) Third, to all Obligations under Derivative Contracts with either
of the Agents, pro rata;
--- ----
(d) Fourth, upon payment and satisfaction in full or other provisions
for payment in full satisfactory to the Banks and the Agents of all of the
Obligations, to the payment of any obligations required to be paid pursuant
to (S)9-504(1)(c) of the Uniform Commercial Code of the State of New York;
and
(e) Fifth, the excess, if any, shall be returned to the Borrower or to
such other Persons as are entitled thereto.
14. SETOFF.
------
Each of the Banks agrees with each other Bank that (i) if an amount to be
set off is to be applied to Indebtedness of the Borrower to such Bank, other
than Indebtedness evidenced by the Revolving Credit Notes held by such Bank or
constituting Reimbursement Obligations owed to such Bank, such amount shall be
applied ratably to such other Indebtedness and to the Indebtedness evidenced by
all such Revolving Credit Notes held by such Bank or constituting Reimbursement
Obligations owed to such Bank, and (ii) if such Bank shall receive from the
Borrower, whether by voluntary payment, exercise of the right of setoff,
counterclaim, cross action, enforcement of the claim evidenced by the Revolving
Credit Notes held by, or constituting Reimbursement Obligations owed to, such
Bank by proceedings against the Borrower at law or in equity or by proof thereof
in bankruptcy, reorganization, liquidation, receivership or similar proceedings,
or otherwise, and shall retain and apply to the payment of the Revolving Credit
Note or Revolving Credit Notes held by, or Reimbursement Obligations owed to,
such Bank any amount in excess of its ratable portion of the payments received
by all of the Banks with respect to the Revolving Credit Notes held by, and
Reimbursement Obligations owed to, all of the Banks, such Bank will make such
disposition and arrangements with the other Banks with respect to such excess,
either by way of distribution, pro tanto assignment of claims, subrogation or
--- -----
otherwise as shall result in each Bank receiving in respect of the Revolving
Credit Notes held by it or Reimbursement obligations owed it, its proportionate
payment as contemplated by this Credit Agreement; provided that if all or any
--------
part of such excess payment is thereafter recovered
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from such Bank, such disposition and arrangements shall be rescinded and the
amount restored to the extent of such recovery, but without interest.
15. THE AGENTS.
----------
15.1. AUTHORIZATION.
-------------
(a) Each of the Agents is authorized to take such action on behalf
of each of the Banks and to exercise all such powers as are hereunder and
under any of the other Loan Documents and any related documents delegated
to such Agent, together with such powers as are reasonably incident
thereto, provided that no duties or responsibilities not expressly assumed
--------
herein or therein shall be implied to have been assumed by the Agents.
(b) The relationship between the Agents and each of the Banks is
that of an independent contractor. The use of the term "Agent" is for
convenience only and is used to describe, as a form of convention, the
independent contractual relationship between the Agents and each of the
Banks. Nothing contained in this Credit Agreement nor the other Loan
Documents shall be construed to create an agency, trust or other fiduciary
relationship between the Agents and any of the Banks.
(c) As an independent contractor empowered by the Banks to exercise
certain rights and perform certain duties and responsibilities hereunder
and under the other Loan Documents, each of the Agents is nevertheless a
"representative" of the Banks, as that term is defined in Article 1 of the
Uniform Commercial Code, for purposes of actions for the benefit of the
Banks and the Agents with respect to all collateral security and guaranties
contemplated by the Loan Documents. Such actions include the designation
of the Loan and Collateral Agent as "secured party", "mortgagee" or the
like on all financing statements and other documents and instruments,
whether recorded or otherwise, relating to the attachment, perfection,
priority or enforcement of any security interests, mortgages or deeds of
trust in collateral security intended to secure the payment or performance
of any of the Obligations, all for the benefit of the Banks and the Agents.
15.2. EMPLOYEES AND AGENTS. Each of the Agents may exercise its powers and
--------------------
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents. Each
of the Agents may utilize the services of such Persons
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as such Agent in its sole discretion may reasonably determine, and all
reasonable fees and expenses of any such Persons shall be paid by the Borrower.
15.3. NO LIABILITY. Neither the Agents nor any of its shareholders,
------------
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agents or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
15.4. NO REPRESENTATIONS.
------------------
15.4.1. GENERAL. The Agents shall not be responsible for the
-------
execution or validity or enforceability of this Credit Agreement, the
Revolving Credit Notes, the Letters of Credit, any of the other Loan
Documents or any instrument at any time constituting, or intended to
constitute, collateral security for the Revolving Credit Notes, or for the
value of any such collateral security or for the validity, enforceability
or collectability of any such amounts owing with respect to the Revolving
Credit Notes, or for any recitals or statements, warranties or
representations made herein or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by or on behalf of the
Borrower or any of its Subsidiaries, or be bound to ascertain or inquire as
to the performance or observance of any of the terms, conditions, covenants
or agreements herein or in any instrument at any time constituting, or
intended to constitute, collateral security for the Revolving Credit Notes
or to inspect any of the properties, books or records of the Borrower or
any of its Subsidiaries. The Agents shall not be bound to ascertain whether
any notice, consent, waiver or request delivered to it by the Borrower or
any holder of any of the Revolving Credit Notes shall have been duly
authorized or is true, accurate and complete. Each of the Agents has not
made nor does it now make any representations or warranties, express or
implied, nor does it assume any liability to the Banks, with respect to the
credit worthiness or financial conditions of the Borrower or any of its
Subsidiaries. Each Bank acknowledges that it has, independently and without
reliance upon the Agents or any other Bank, and based upon such information
and documents as it has deemed appropriate, made its own credit analysis
and decision to enter into this Credit Agreement.
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15.4.2. CLOSING DOCUMENTATION, ETC. For purposes of determining
--------------------------
compliance with the conditions set forth in (S)11, each Bank that has
executed this Credit Agreement shall be deemed to have consented to,
approved or accepted, or to be satisfied with, each document and matter
either sent, or made available, by the Agents or the Arrangers to such Bank
for consent, approval, acceptance or satisfaction, or required thereunder
to be to be consent to or approved by or acceptable or satisfactory to such
Bank, unless an officer of the Agents or the Arrangers active upon the
Borrower's account shall have received notice from such Bank prior to the
Closing Date specifying such Bank's objection thereto and such objection
shall not have been withdrawn by notice to the Agents or the Arrangers to
such effect on or prior to the Closing Date.
15.5. PAYMENTS.
--------
15.5.1. PAYMENTS TO AGENTS. A payment by the Borrower to the Loan
------------------
and Collateral Agent hereunder or the Letter of Credit Agreement, as the
case may be, or any of the other Loan Documents for the account of any Bank
shall constitute a payment to such Bank. Each of the Agents agrees promptly
to distribute to each Bank such Bank's pro rata share of payments received
--- ----
by such Agent for the account of the Banks except as otherwise expressly
provided herein or in any of the other Loan Documents.
15.5.2. DISTRIBUTION BY AGENTS. If in the opinion of either of the
----------------------
Agents the distribution of any amount received by it in such capacity
hereunder, under the Revolving Credit Notes or under any of the other Loan
Documents might involve it in liability, it may refrain from making
distribution until its right to make distribution shall have been
adjudicated by a court of competent jurisdiction. If a court of competent
jurisdiction shall adjudge that any amount received and distributed by
either of the Agents is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to such Agent its
proportionate share of the amount so adjudged to be repaid or shall pay
over the same in such manner and to such Persons as shall be determined by
such court.
15.5.3. DELINQUENT BANKS. Notwithstanding anything to the contrary
----------------
contained in this Credit Agreement or any of the other Loan Documents, any
Bank that fails (i) to make available to the appropriate Agent its pro rata
--- ----
share of any Revolving Credit Loan or to purchase any Letter of Credit
Participation or (ii) to comply with the provisions of (S)14 with respect
to making dispositions and
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arrangements with the other Banks, where such Bank's share of any payment
received, whether by setoff or otherwise, is in excess of its pro rata
--- ----
share of such payments due and payable to all of the Banks, in each case
as, when and to the full extent required by the provisions of this Credit
Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall be
---------------
deemed a Delinquent Bank until such time as such delinquency is satisfied.
A Delinquent Bank shall be deemed to have assigned any and all payments due
to it from the Borrower, whether on account of outstanding Loans, Unpaid
Reimbursement Obligations, interest, fees or otherwise, to the remaining
nondelinquent Banks for application to, and reduction of, their respective
pro rata shares of all outstanding Loans and Unpaid Reimbursement
--- ----
Obligations. The Delinquent Bank hereby authorizes each of the Agents to
distribute such payments to the nondelinquent Banks in proportion to their
respective pro rata shares of all outstanding Loans and Unpaid
--- ----
Reimbursement Obligations. A Delinquent Bank shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of
the assigned payments to all outstanding Loans and Unpaid Reimbursement
Obligations of the nondelinquent Banks, the Banks' respective pro rata
--- ----
shares of all outstanding Loans and Unpaid Reimbursement Obligations have
returned to those in effect immediately prior to such delinquency and
without giving effect to the nonpayment causing such delinquency.
15.6. HOLDERS OF REVOLVING CREDIT NOTES. Each of the Agents may deem and
---------------------------------
treat the payee of any Revolving Credit Note or the purchaser of any Letter of
Credit Participation as the absolute owner or purchaser thereof for all purposes
hereof until it shall have been furnished in writing with a different name by
such payee or by a subsequent holder, assignee or transferee.
15.7. INDEMNITY. The Banks ratably agree hereby to indemnify and hold
---------
harmless each of the Agents and its affiliates from and against any and all
claims, actions and suits (whether groundless or otherwise), losses, damages,
costs, expenses (including any expenses for which such Agent or such affiliate
has not been reimbursed by the Borrower as required by (S)16), and liabilities
of every nature and character arising out of or related to this Credit
Agreement, the Revolving Credit Notes, or any of the other Loan Documents or
----------------------
the transactions contemplated or evidenced hereby or thereby, or such Agent's
actions taken hereunder or thereunder, except to the extent that any of the same
shall be directly caused by such Agent's willful misconduct or gross negligence.
15.8. AGENTS AS BANKS. In its individual capacity, each of the Agents
---------------
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shall have the same obligations and the same rights, powers and privileges in
respect to its Commitment and the Revolving Credit Loans made by it, and as the
holder of any of the Revolving Credit Notes and as the purchaser of any Letter
----------------------
of Credit Participations, as it would have were it not also an Agent.
15.9. RESIGNATION. Any Agent may resign at any time by giving sixty (60)
-----------
days prior written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
15.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank hereby
----------------------------------------------
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Agents thereof. Each of the Agents hereby agrees
that, upon receipt of any notice under this (S)15.10 or upon otherwise learning
of the existence of a Default or an Event of Default, it shall promptly notify
the other Agent, each of the Banks (other than the Bank that provided such
notice to such Agent) and the Borrower of the existence of such Default or Event
of Default.
15.11. DUTIES IN THE CASE OF ENFORCEMENT. In case one of more Events of
---------------------------------
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, the Loan and Collateral Agent shall, if
(i) so requested by the Majority Banks and (ii) the Banks have provided to the
Loan and Collateral Agent such additional indemnities and assurances against
expenses and liabilities as the Loan and Collateral Agent may reasonably
request, proceed to enforce the provisions of the Security Documents authorizing
the sale or other disposition of all or any part of the Collateral and exercise
all or any such other legal and equitable and other rights or remedies as it may
have in respect of such Collateral. The Majority Banks may direct the Loan and
Collateral Agent in writing as to the method
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and the extent of any such sale or other disposition, the Banks hereby agreeing
to indemnify and hold the Loan and Collateral Agent, harmless from all
liabilities incurred in respect of all actions taken or omitted in accordance
with such directions, provided that Loan and Collateral Agent need not comply
--------
with any such direction to the extent that the Loan and Collateral Agent
reasonably believes the Loan and Collateral Agent's compliance with such
direction to be unlawful or commercially unreasonable in any applicable
jurisdiction.
16. EXPENSES AND INDEMNIFICATION.
----------------------------
16.1. EXPENSES. The Borrower agrees to pay (i) the reasonable costs of
--------
producing and reproducing this Credit Agreement, the other Loan Documents and
the other agreements and instruments mentioned herein, (ii) any taxes (including
any interest and penalties in respect thereto) payable by any Agent, Arranger or
Bank (other than taxes based upon any Agent's, or Arranger's or any Bank's net
income) on or with respect to the transactions contemplated by this Credit
Agreement (the Borrower hereby agreeing to indemnify each Agent, Arranger and
Bank with respect thereto), (iii) the reasonable fees, expenses and
disbursements of the Loan and Collateral Agent's Special Counsel or any local
counsel to the Loan and Collateral Agent incurred in connection with the
preparation, syndication, administration or interpretation of the Loan Documents
and other instruments mentioned herein, each closing hereunder, any amendments,
modifications, approvals, consents or waivers hereto or hereunder, or the
cancellation of any Loan Document upon payment in full in cash of all of the
Obligations or pursuant to any terms of such Loan Document for providing for
cancellation, (iv) the fees, expenses and disbursements of any Agent, any of its
affiliates or any Arranger incurred in connection with the preparation,
syndication, administration or interpretation of the Loan Documents and other
instruments mentioned herein, including all title insurance premiums and
surveyor, engineering and appraisal charges, (v) any fees, costs, expenses and
bank charges, including bank charges for returned checks, incurred by the Agents
in establishing, maintaining or handling agency accounts, lock box accounts and
other accounts for the collection of any of the Collateral; (vi) all reasonable
out-of-pocket expenses (including without limitation reasonable fees and costs
for one outside counsel for the Agents, and reasonable consulting, accounting,
appraisal, investment banking and similar professional fees and charges)
incurred by any Bank or any Agent in connection with (A) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrower or
any of its Subsidiaries or the administration thereof after the occurrence of a
Default or Event of Default and (B) any litigation, proceeding or dispute
whether arising hereunder or
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otherwise, in any way related to any Bank's or any Agent's relationship with the
Borrower or any of its Subsidiaries and (vii) all reasonable fees, expenses and
disbursements of any Bank or any Agent incurred in connection with UCC searches,
UCC filings or mortgage recordings. Without in any way limiting the Agents' or
Banks' rights to be reimbursed by the Borrower and its Subsidiaries pursuant to
(S)(S)16.1 and 16.2, at the begining of each year the Agents will provide the
Borrower of an estimate as to the amount of expenses for which they shall seek
reimbursement from the Borrower during the course of such year.
16.2. INDEMNIFICATION. The Borrower agrees to indemnify and hold harmless
---------------
the Agents, its affiliates, the Banks and the Arrangers from and against any and
all claims, actions and suits whether groundless or otherwise, and from and
against any and all liabilities, losses, damages and expenses of every nature
and character arising out of this Credit Agreement or any of the other Loan
Documents or the transactions contemplated hereby ("Claims") including, without
limitation, (i) any actual or proposed use by the Borrower or any of its
Subsidiaries of the proceeds of any of the Revolving Credit Loans or Letters of
Credit, (ii) the reversal or withdrawal of any provisional credits granted by
the Loan and Collateral Agent upon the transfer of funds from lock box, bank
agency or concentration accounts or in connection with the provisional honoring
of checks or other items, (iii) any actual or alleged infringement of any
patent, copyright, trademark, service ▇▇▇▇ or similar right of the Borrower or
any of its Subsidiaries comprised in the Collateral, (iv) the Borrower or any of
its Subsidiaries entering into or performing this Credit Agreement or any of the
other Loan Documents or (v) with respect to the Borrower and its Subsidiaries
and their respective properties and assets, the violation of any Environmental
Law, the presence, disposal, escape, seepage, leakage, spillage, discharge,
emission, release or threatened release of any Hazardous Substances or any
action, suit, proceeding or investigation brought or threatened with respect to
any Hazardous Substances (including, but not limited to, claims with respect to
wrongful death, personal injury or damage to property), in each case including,
without limitation, the reasonable fees and disbursements of one outside counsel
for the Agents incurred in connection with any such investigation, litigation or
other proceeding. In litigation, or the preparation therefor, the Banks, the
Arrangers and each of the Agents and its affiliates shall be entitled to select
their own counsel and, in addition to the foregoing indemnity, the Borrower
agrees to pay promptly the reasonable fees and expenses of one outside counsel
for the Agents. If, and to the extent that the obligations of the Borrower under
this (S)16.2 are unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment in satisfaction of such obligations
which is permissible under
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applicable law. Notwithstanding the foregoing, the Borrower shall have no
liability pursuant to this (S)16.2 to any Person to the extent that any Claims
arose solely from such Person's gross negligence or willful misconduct.
16.3. SURVIVAL. The covenants contained in this (S)16 shall survive
--------
payment or satisfaction in full of all other Obligations.
17. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
---------------------------------------------
17.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY. The Borrower
-------------------------------------------------
acknowledges that from time to time financial advisory, investment banking and
other services may be offered or provided to the Borrower or one or more of its
Subsidiaries, in connection with this Credit Agreement or otherwise, by a
Section 20 Subsidiary. The Borrower, for itself and each of its Subsidiaries,
hereby authorizes (a) such Section 20 Subsidiary to share with each Agent and
each Bank any information delivered to such Section 20 Subsidiary by the
Borrower or any of its Subsidiaries, and (b) each Agent and each Bank to share
with such Section 20 Subsidiary any information delivered to such Agent or such
Bank by the Borrower or any of its Subsidiaries pursuant to this Credit
Agreement, or in connection with the decision of such Bank to enter into this
Credit Agreement; it being understood, in each case, that any such Section 20
Subsidiary receiving such information shall be bound by the confidentiality
provisions of this Credit Agreement. Such authorization shall survive the
payment and satisfaction in full of all of Obligations.
17.2. CONFIDENTIALITY. Each of the Banks and each of the Agents agrees, on
---------------
behalf of itself and each of its affiliates, directors, officers, employees and
representatives, to use all due care to keep confidential, in accordance with
their customary procedures for handling confidential information of the same
nature and in accordance with safe and sound banking practices, any non-public
information supplied to it by the Borrower or any of its Subsidiaries pursuant
to this Credit Agreement, provided that nothing herein shall limit the
--------
disclosure of any such information (a) after such information shall have become
public other than through a violation of this (S)17, (b) to the extent required
by statute, rule, regulation or judicial process, (c) to counsel for any Bank or
any Agent, (d) to bank examiners or any other regulatory authority having
jurisdiction over any Bank or any Agent, or to auditors or accountants, (e) to
any Agent, any Bank or any Section 20 Subsidiary, (f) in connection with any
litigation to which any one or more of the Banks, the Agents or any Section 20
Subsidiary is a party, or in connection with the enforcement of rights or
remedies hereunder or under any other Loan Document, (g) to a Subsidiary or
affiliate of such Bank as provided in (S)17.1 or (h) to any assignee or
participant (or prospective
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assignee or participant) so long as such assignee or participant agrees to be
bound by the provisions of (S)19.6.
17.3. PRIOR NOTIFICATION. Unless specifically prohibited by applicable law
------------------
or court order, each of the Banks and each of the Agents shall, prior to
disclosure thereof, notify the Borrower of any request for disclosure of any
such non-public information by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) or pursuant to legal
process.
17.4. OTHER. In no event shall any Bank or any Agent be obligated or
-----
required to return any materials furnished to it or any Section 20 Subsidiary by
the Borrower or any of its Subsidiaries. The obligations of each Bank under this
(S)17 shall supersede and replace the obligations of such Bank under any
confidentiality letter in respect of this financing signed and delivered by such
Bank to the Borrower prior to the date hereof and shall be binding upon any
assignee of, or purchaser of any participation in, any interest in any of the
Revolving Credit Loans or Reimbursement Obligations from any Bank.
18. SURVIVAL OF COVENANTS, ETC.
--------------------------
All covenants, agreements, representations and warranties made herein, in
the Revolving Credit Notes, in any of the other Loan Documents or in any
documents or other papers delivered by or on behalf of the Borrower or any of
its Subsidiaries pursuant hereto shall be deemed to have been relied upon by the
Banks and the Agents at the time made or deemed made, notwithstanding any
investigation heretofore or hereafter made by any of them, and shall survive the
making by the Banks of any of the Revolving Credit Loans and the issuance,
extension or renewal of any Letters of Credit, as herein contemplated, and shall
continue in full force and effect so long as any Letter of Credit or any amount
due under this Credit Agreement or the Revolving Credit Notes or any of the
other Loan Documents remains outstanding or any Bank has any obligation to make
any Revolving Credit Loans or the Letter of Credit Agent has any obligation to
issue, extend or renew any Letter of Credit, and for such further time as may be
otherwise expressly specified in this Credit Agreement. All statements
contained in any certificate or other paper delivered to any Bank or any Agent
at any time by or on behalf of the Borrower or any of its Subsidiaries pursuant
hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower or such Subsidiary
hereunder.
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19. ASSIGNMENT AND PARTICIPATION.
----------------------------
19.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein, each
---------------------------------
Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage and Commitment and the same portion of
the Revolving Credit Loans at the time owing to it, the Revolving Credit Notes
held by it and its participating interest in the risk relating to any Letters of
Credit); provided that (i) each Agent and, unless a Default or Event of Default
--------
shall have occurred and be continuing, the Borrower, shall have given its prior
written consent to such assignment, which consent, in the case of the Borrower,
will not be unreasonably withheld, (ii) each such assignment shall be of a
constant, and not a varying, percentage of all the assigning Bank's rights and
obligations under this Credit Agreement, (iii) each assignment shall be in an
amount that is a whole multiple of $5,000,000 or the entire amount of such
Bank's Commitment, and (iv) the parties to such assignment shall execute and
deliver to the Loan and Collateral Agent, for recording in the Register (as
hereinafter defined), an Assignment and Acceptance, substantially in the form of
Exhibit E hereto (an "Assignment and Acceptance"), together with any Revolving
------- - -------------------------
Credit Notes subject to such assignment. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five (5)
Business Days after the execution thereof, (i) the assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder, and (ii) the assigning Bank
shall, to the extent provided in such assignment and upon payment to the Loan
and Collateral Agent of the registration fee referred to in (S)19.3, be released
from its obligations under this Credit Agreement.
19.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS. By
--------------------------------------------------------------
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, the assigning Bank makes no representation or
warranty, express or implied, and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant
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hereto or the attachment, perfection or priority of any security interest
or mortgage,
(b) the assigning Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower
and its Subsidiaries or any other Person primarily or secondarily liable in
respect of any of the Obligations, or the performance or observance by the
Borrower and its Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations of any of their obligations
under this Credit Agreement or any of the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this Credit
Agreement, together with copies of the most recent financial statements
referred to in (S)7.4 and (S)8.4 and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision
to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon the
assigning Bank, the Agents or any other Bank and based on such documents
and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this Credit
Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agents to take such
action as agents on its behalf and to exercise such powers under this
Credit Agreement and the other Loan Documents as are delegated to the
Agents by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Credit Agreement are
required to be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements with the
assigning Bank satisfactory to such assignee with respect to its pro rata
--- ----
share of Letter of Credit Fees in respect of
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outstanding Letters of Credit.
19.3. REGISTER. The Loan and Collateral Agent shall maintain a copy of
--------
each Assignment and Acceptance delivered to it and a register or similar list
(the "Register") for the recordation of the names and addresses of the Banks and
--------
the Commitment Percentage of, and principal amount of the Revolving Credit Loans
owing to and Letter of Credit Participations purchased by, the Banks from time
to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agents and the Banks may treat each Person
whose name is recorded in the Register as a Bank hereunder for all purposes of
this Credit Agreement. The Register shall be available for inspection by the
Borrower and the Banks at any reasonable time and from time to time upon
reasonable prior notice. Upon each such recordation, the assigning Bank agrees
to pay to the Loan and Collateral Agent a registration fee in the sum of $3,000;
provided, however, that no such fee shall be due from BofA for assignments made
-------- -------
within the first 60 days after the Closing Date in connection with the initial
syndication of the facility.
19.4. NEW REVOLVING CREDIT NOTES. Upon its receipt of an Assignment and
--------------------------
Acceptance executed by the parties to such assignment, together with each Note
subject to such assignment, the Loan and Collateral Agent shall (i) record the
information contained therein in the Register, and (ii) give prompt notice
thereof to the Borrower and the Banks (other than the assigning Bank). Within
five (5) Business Days after receipt of such notice, the Borrower, at its own
expense, shall execute and deliver to the Loan and Collateral Agent, in exchange
for each surrendered Note, a new Note to the order of such Eligible Assignee in
an amount equal to the amount assumed by such Eligible Assignee pursuant to such
Assignment and Acceptance and, if the assigning Bank has retained some portion
of its obligations hereunder, a new Note to the order of the assigning Bank in
an amount equal to the amount retained by it hereunder. Such new Revolving
Credit Notes shall provide that they are replacements for the surrendered
Revolving Credit Notes, shall be in an aggregate principal amount equal to the
aggregate principal amount of the surrendered Revolving Credit Notes, shall be
dated the effective date of such in Assignment and Acceptance and shall
otherwise be substantially the form of the assigned Revolving Credit Notes.
Within five (5) days of issuance of any new Revolving Credit Notes pursuant to
this (S)19.4, the Borrower shall deliver an opinion of counsel, addressed to the
Banks and the Agents, relating to the due authorization, execution and delivery
of such new Revolving Credit Notes and the legality, validity and binding effect
thereof, in form and substance satisfactory to the Banks. The surrendered
Revolving Credit Notes shall be cancelled and returned to the
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Borrower.
19.5. PARTICIPATIONS. Each Bank may sell participations to one or more
--------------
banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; provided
--------
that (i) each such participation shall be in an amount of not less than
$5,000,000, (ii) any such sale or participation shall not affect the rights and
duties of the selling Bank hereunder to the Borrower and (iii) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications that would reduce the
principal of or the interest rate on any Revolving Credit Loans, extend the term
or increase the amount of the Commitment of such Bank as it relates to such
participant, reduce the amount of any commitment fees or Letter of Credit Fees
to which such participant is entitled or extend any regularly scheduled payment
date for principal or interest.
19.6. DISCLOSURE. The Borrower agrees that in addition to disclosures
----------
made in accordance with standard and customary banking practices any Bank may
disclose information obtained by such Bank pursuant to this Credit Agreement to
assignees or participants and potential assignees or participants hereunder;
provided that such assignees or participants or potential assignees or
--------
participants shall agree (i) to treat in confidence such information unless such
information otherwise becomes public knowledge, (ii) not to disclose such
information to a third party, except as required by law or legal process and
(iii) not to make use of such information for purposes of transactions unrelated
to such contemplated assignment or participation. For purposes of this (S)19.6
an assignee or participant or potential assignee or participant may include a
counterparty with whom such Bank has entered into or potentially might enter
into a derivative contract referenced to credit or other risks or events arising
under this Credit Agreement or any other Loan Document. Anything to the contrary
contained herein notwithstanding, each Bank and each Agent may include
references to the Borrower (and may utilize any logo or other distinctive symbol
associated with the Borrower) in connection with any advertising, promotion, or
marketing undertaken by such Bank or such Agent.
19.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If any
----------------------------------------------------
assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Agents pursuant to
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(S)13.1 or (S)13.2, and the determination of the Majority Banks shall for all
purposes of this Credit Agreement and the other Loan Documents be made without
regard to such assignee Bank's interest in any of the Revolving Credit Loans or
Reimbursement Obligations. If any Bank sells a participating interest in any of
the Revolving Credit Loans or Reimbursement Obligations to a participant, and
such participant is the Borrower or an Affiliate of the Borrower, then such
transferor Bank shall promptly notify the Loan and Collateral Agent of the sale
of such participation. A transferor Bank shall have no right to vote as a Bank
hereunder or under any of the other Loan Documents for purposes of granting
consents or waivers or for purposes of agreeing to amendments or modifications
to any of the Loan Documents or for purposes of making requests to the Agents
pursuant to (S)13.1 or (S)13.2 to the extent that such participation is
beneficially owned by the Borrower or any Affiliate of the Borrower, and the
determination of the Majority Banks shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to the interest of
such transferor Bank in the Revolving Credit Loans or Reimbursement Obligations
to the extent of such participation.
19.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall
-----------------------------------
retain its rights to be indemnified pursuant to (S)16 with respect to any claims
or actions arising prior to the date of such assignment. If any assignee Bank is
not incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are payable
hereunder or under any of the other Loan Documents for its account, deliver to
the Borrower and the Loan and Collateral Agent certification as to its exemption
from deduction or withholding of any United States federal income taxes.
Anything contained in this (S)19 to the contrary notwithstanding, any Bank may
at any time pledge all or any portion of its interest and rights under this
Credit Agreement (including all or any portion of its Revolving Credit Notes) to
any of the twelve Federal Reserve Banks organized under (S)4 of the Federal
Reserve Act, 12 U.S.C. (S)341. No such pledge or the enforcement thereof shall
release the pledgor Bank from its obligations hereunder or under any of the
other Loan Documents.
19.9. ASSIGNMENT BY BORROWER. The Borrower shall not assign or transfer
----------------------
any of its rights or obligations under any of the Loan Documents without the
prior written consent of each of the Banks.
19.10. SYNDICATION. The Borrower hereby agrees to assist and cooperate
-----------
with the Arrangers in its efforts to complete the syndication of the commitments
and Revolving Credit Loans hereunder, including, but not limited to, promptly
preparing and providing materials and information reasonably deemed necessary by
the Arrangers to successfully complete and
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otherwise facilitate such syndication, including, without limitation, all
projections prepared by or on behalf of the Borrower relating to the
transactions contemplated hereby. The Borrower and its respective directors,
officers, employees and agents shall, at the reasonable request of the
Arrangers, meet with potential lenders and provide such additional information
as such Persons might reasonably request at a time and location to be agreed
upon by the Borrower.
20. NOTICES, ETC.
------------
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Revolving Credit Notes or any Letter of Credit
Applications shall be in writing and shall be delivered in hand, mailed by
United States registered or certified first class mail, postage prepaid, sent by
overnight courier, or sent by telegraph, telecopy, facsimile or telex and
confirmed by delivery via courier or postal service, addressed as follows:
(a) if to the Borrower, at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: Executive Vice President, Finance, or at such other
address for notice as the Borrower shall last have furnished in writing to
the Person giving the notice;
(b) if to the Loan and Collateral Agent, at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. or
such other address for notice as the Loan and Collateral Agent shall last
have furnished in writing to the Person giving the notice;
(c) if to the Letter of Credit Agent, at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President, or
at such other address for notice as the Borrower shall last have furnished
in writing to the Person giving the notice; and
(d) if to any Bank, at such Bank's address set forth on Schedule 1
-------- -
hereto, or such other address for notice as such Bank shall have last
furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
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21. GOVERNING LAW.
-------------
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SAID STATE OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING
THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE
OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS
SPECIFIED IN (S)20. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.
22. HEADINGS.
--------
The captions in this Credit Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
23. COUNTERPARTS.
------------
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
24. ENTIRE AGREEMENT, ETC.
---------------------
The Loan Documents and any other documents executed in connection herewith
or therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Credit Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
(S)26.
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25. WAIVER OF JURY TRIAL.
--------------------
The Borrower hereby waives its right to a jury trial with respect to any
action or claim arising out of any dispute in connection with this Credit
Agreement, the Revolving Credit Notes or any of the other Loan Documents, any
rights or obligations hereunder or thereunder or the performance of which rights
and obligations. Except as prohibited by law, the Borrower hereby waives any
right it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. The Borrower (i)
certifies that no representative, agent or attorney of any Bank or any Agent has
represented, expressly or otherwise, that such Bank or such Agent would not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that the Agents and the Banks have been induced to enter into this
Credit Agreement, the other Loan Documents to which it is a party by, among
other things, the waivers and certifications contained herein.
26. CONSENTS, AMENDMENTS, WAIVERS, ETC.
----------------------------------
Any consent or approval required or permitted by this Credit Agreement to
be given by the Banks may be given, and any term of this Credit Agreement, the
other Loan Documents or any other instrument related hereto or mentioned herein
may be amended, and the performance or observance by the Borrower or any of its
Subsidiaries of any terms of this Credit Agreement, the other Loan Documents or
such other instrument or the continuance of any Default or Event of Default may
be waived (either generally or in a particular instance and either retroactively
or prospectively) with, but only with, the written consent of the Borrower and
the written consent of the Majority Banks. Notwithstanding the foregoing, the
rate of interest on the Revolving Credit Notes (other than interest accruing
pursuant to (S)5.10 following the effective date of any waiver by the Majority
Banks of the Default or Event of Default relating thereto) or the amount of the
commitment fee or Letter of Credit Fees may not be decreased without the written
consent of each Bank affected thereby; the amount of the Commitments may not be
increased without the written consent of the Borrower and of each Bank affected
thereby; the Revolving Credit Loan Maturity Date may not be postponed without
the written consent of each Bank affected thereby; this (S)26 and the definition
of Majority Banks may not be amended, without the written consent of all of the
Banks and the Borrower; and the amount of the Loan and Collateral Agent's fee or
any Letter of Credit Fees; (S)15 may not be amended without the written consent
of each of the Agents; (S)10 may not be amended or waived without the written
consent of the Super-majority Banks; the Borrowing Base may not be
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amended to increase the lending formula(s) with respect to Eligible Accounts
Receivable or Eligible Inventory without the written consent of all of the
Banks; and the definition of "Eligible Accounts Receivable", "Eligible
Inventory" or "Discretionary Amount" may not be amended without the written
consent of all of the Banks. No waiver shall extend to or affect any obligation
not expressly waived or impair any right consequent thereon. No course of
dealing or delay or omission on the part of any Agent or any Bank in exercising
any right shall operate as a waiver thereof or otherwise be prejudicial thereto.
No notice to or demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances.
27. SEVERABILITY.
------------
The provisions of this Credit Agreement are severable and if any one clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Credit Agreement in any jurisdiction.
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IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
CALIFORNIA STEEL INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
BANKBOSTON, N.A., individually
and as Loan and Collateral Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION, individually and as
Letter of Credit Agent,
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
BANCBOSTON ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ INC., as Arranger
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
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NATIONSBANC ▇▇▇▇▇▇▇▇▇▇
SECURITIES LLC, as Arranger
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
EXHIBIT A
---------
BORROWING BASE REPORT
---------------------
EXHIBIT B
---------
REVOLVING CREDIT NOTE
---------------------
EXHIBIT C
---------
REVOLVING CREDIT LOAN REQUEST
-----------------------------
EXHIBIT D
---------
COMPLIANCE CERTIFICATE
----------------------
EXHIBIT E
---------
ASSIGNMENT AND ACCEPTANCE
-------------------------
EXHIBIT F
---------
CUSTOMS AGENT AGREEMENT
-----------------------