Exhibit 10.59
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of February 27, 1997
among
MOTIVEPOWER INDUSTRIES, INC.,
as Borrower
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent and Lender,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO,
as Lenders
Arranged By
BANCAMERICA SECURITIES, INC.
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS..........................................................2
1.01 Certain Defined Terms..........................................2
1.02 Other Interpretive Provisions.................................31
1.03 Accounting Principles.........................................32
1.04 Amendment and Restatement.....................................32
ARTICLE II
THE CREDITS.........................................................33
2.01 Amounts and Terms of Commitments..............................33
(a) The Term Credit...................................33
(b) The Revolving Credit..............................34
(c) Letters of Credit.................................34
2.02 Loan Accounts; Notes..........................................40
--------------------
2.03 Procedure for Borrowing.......................................40
-----------------------
2.04 Conversion and Continuation Elections.........................41
-------------------------------------
2.05 Voluntary Termination or Reduction of Commitments.............42
-------------------------------------------------
2.06 Optional Prepayments..........................................43
--------------------
2.07 Mandatory Prepayments of Loans; Mandatory Commitment
----------------------------------------------------
Reductions.................................................43
(a) Asset Dispositions................................43
(b) Subordinated Debt Issuance........................44
(c) Overadvances......................................44
(d) General...........................................44
(e) Reduction of Commitment...........................45
2.08 Repayment.....................................................45
---------
(a) The Term Credit...................................45
---------------
(b) The Revolving Credit..............................45
--------------------
2.09 Interest......................................................46
2.10 Fees..........................................................46
(a) Arrangement, Agency Fees..............................46
(b) Commitment Fees...................................47
(c) Compensation for Letters of Credit................47
2.11 Computation of Fees and Interest..............................48
--------------------------------
2.12 Payments by the Borrower......................................48
------------------------
2.13 Payments by the Lenders to the Agent..........................49
------------------------------------
2.14 Sharing of Payments, Etc......................................50
-------------------------
2.15 Security and Guaranty.........................................50
---------------------
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY..............................50
3.01 Taxes.........................................................50
3.02 Illegality....................................................51
3.03 Increased Costs and Reduction of Return.......................52
3.04 Funding Losses................................................53
3.05 Inability to Determine Rates..................................54
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Section Page
3.06 Reserves on Offshore Rate Loans..............................54
-------------------------------
3.07 Certificates of Lenders......................................54
-----------------------
3.08 Substitution of Lenders......................................54
-----------------------
3.09 Survival.....................................................55
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ARTICLE IV
CONDITIONS PRECEDENT...............................................55
4.01 Conditions of Initial Closing................................55
(a) Credit Agreement and Notes.......................55
(b) Resolutions; Incumbency..........................55
(c) Organization Documents; Financials and Solvency;
Good Standing....................................55
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(d) Legal Opinions...................................56
--------------
(e) Payment of Fees..................................56
---------------
(f) Collateral Documents.............................56
--------------------
(g) Insurance Policies...............................58
------------------
(h) Environmental Review.............................58
--------------------
(i) Certificate......................................58
-----------
(j) Borrower Reorganization..........................59
-----------------------
(k) Repayment of Eurodollar Loans to BABC............59
-------------------------------------
(l) Assignment of BABC Loans.........................59
------------------------
(m) Documentation of Borrowing Subsidiary Loans......59
-------------------------------------------
(n) Termination of PTRA and HBTC Liens...............59
----------------------------------
(o) Other Documents..................................59
---------------
4.02 Conditions to All Borrowings.................................59
(a) Notice of Borrowing or Conversion/Continuation
................................................60
(b) Continuation of Representations and Warranties
................................................60
(c) No Existing Default..............................60
(d) Availability.....................................60
ARTICLE V
REPRESENTATIONS AND WARRANTIES.....................................60
5.01 Corporate Existence and Power................................60
5.02 Corporate Authorization; No Contravention....................61
5.03 Governmental Authorization...................................61
5.04 Binding Effect...............................................61
5.05 Litigation...................................................62
5.06 No Default...................................................62
5.07 ERISA Compliance.............................................62
5.08 Use of Proceeds; Margin Regulations..........................63
5.09 Title to Properties..........................................63
5.10 Taxes........................................................63
5.11 Financial Condition..........................................63
5.12 Environmental Matters........................................64
5.13 Collateral Documents.........................................65
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Section Page
5.14 Regulated Entities...........................................66
5.15 No Burdensome Restrictions...................................66
5.16 Copyrights, Patents, Trademarks and Licenses, etc.
.........................................................66
5.17 Capitalization and Subsidiaries..............................67
-------------------------------
5.18 Insurance....................................................67
---------
5.19 Solvency.....................................................67
--------
5.20 Swap Obligations.............................................67
----------------
5.21 Full Disclosure..............................................67
---------------
ARTICLE VI
AFFIRMATIVE COVENANTS..............................................68
6.01 Financial Statements and Borrowing Base Certificate
.........................................................68
6.02 Certificates; Other Information..............................69
-------------------------------
6.03 Notices......................................................70
-------
6.04 Preservation of Corporate Existence, Etc.....................72
----------------------------------------
6.05 Maintenance of Property; Locomotives.........................72
------------------------------------
6.06 Insurance....................................................72
---------
6.07 Payment of Obligations.......................................73
----------------------
6.08 Compliance with Laws.........................................73
--------------------
6.09 Compliance with ERISA........................................74
---------------------
6.10 Inspection of Property and Books and Records.................74
--------------------------------------------
6.11 Environmental Laws...........................................74
------------------
6.12 Use of Proceeds..............................................74
---------------
6.13 Location and Perfection of Collateral........................75
-------------------------------------
6.14 Further Assurances...........................................75
------------------
ARTICLE VII
NEGATIVE COVENANTS.................................................76
7.01 Limitation on Liens..........................................76
7.02 Disposition of Assets........................................78
7.03 Restriction on Fundamental Changes; Acquisitions.............79
7.04 Loans and Investments........................................82
7.05 Limitation on Indebtedness...................................84
7.06 Transactions with Affiliates.................................84
7.07 Use of Proceeds..............................................85
7.08 Contingent Obligations.......................................85
7.09 Joint Ventures; Subsidiaries.................................86
7.10 Lease Obligations............................................87
7.11 Restricted Payments; No Permitted Restrictions for
Subsidiaries..............................................87
7.12 ERISA........................................................88
7.13 Change in Business; Holding Companies; FSC Operations
.........................................................88
7.14 Accounting Changes...........................................89
------------------
7.15 Capital Expenditures.........................................89
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Section Page
7.16 Maximum Ratio of Funded Debt to Cash Flow....................89
-----------------------------------------
7.17 Minimum Tangible Net Worth...................................89
--------------------------
7.18 Minimum Fixed Charges Coverage Ratio.........................89
------------------------------------
ARTICLE VIII
EVENTS OF DEFAULT..................................................90
8.01 Event of Default.............................................90
(a) Non-Payment......................................90
-----------
(b) Representation or Warranty.......................90
--------------------------
(c) Specific Defaults................................90
-----------------
(d) Other Defaults...................................90
--------------
(e) Cross-Default....................................90
-------------
(f) Insolvency; Voluntary Proceedings................91
---------------------------------
(g) Involuntary Proceedings..........................91
-----------------------
(h) ERISA............................................91
-----
(i) Monetary Judgments...............................92
------------------
(j) Non-Monetary Judgments...........................92
----------------------
(k) Change of Control................................92
-----------------
(l) Loss of Licenses.................................92
----------------
(m) Adverse Change...................................92
--------------
(n) Guarantor Defaults...............................92
------------------
(o) Collateral.......................................93
----------
(p) Cross-Acceleration to MK Gain Debt...............93
----------------------------------
(q) Locomotive Leases................................93
-----------------
8.02 Remedies.....................................................93
--------
8.03 Specified Swap Contract Remedies.............................94
--------------------------------
8.04 Rights Not Exclusive.........................................94
--------------------
8.05 Certain Financial Covenant Defaults..........................96
-----------------------------------
ARTICLE IX
THE AGENT..........................................................96
9.01 Appointment and Authorization; "Agent".......................96
9.02 Delegation of Duties.........................................97
9.03 Liability of Agent...........................................97
9.04 Reliance by Agent............................................97
9.05 Notice of Default............................................98
9.06 Credit Decision..............................................98
9.07 Indemnification of Agent.....................................99
9.08 Agent in Individual Capacity.................................99
9.09 Successor Agent.............................................100
9.10 Withholding Tax.............................................100
9.11 Collateral Matters..........................................102
ARTICLE X
MISCELLANEOUS.....................................................102
10.01 Amendments and Waivers.....................................102
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Section Page
10.02 Notices.....................................................103
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10.03 No Waiver; Cumulative Remedies..............................104
------------------------------
10.04 Costs and Expenses..........................................105
------------------
10.05 Borrower Indemnification....................................105
------------------------
10.06 Marshalling; Payments Set Aside.............................107
-------------------------------
10.07 Successors and Assigns......................................107
----------------------
10.08 Assignments, Participations, etc............................107
---------------------------------
10.09 Confidentiality.............................................109
---------------
10.10 Set-off.....................................................110
-------
10.11 Intentionally Omitted.......................................110
---------------------
10.12 Notification of Addresses, Lending Offices, Etc.
.........................................................110
10.13 Counterparts................................................110
------------
10.14 Severability................................................111
------------
10.15 No Third Parties Benefited..................................111
--------------------------
10.16 Governing Law and Jurisdiction..............................111
------------------------------
10.17 Waiver of Jury Trial........................................111
--------------------
10.18 Entire Agreement............................................112
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||
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SCHEDULES
Schedule 1.1A Terms of Reorganization
Schedule 2.01 Commitments
Schedule 2.01(c) Outstanding Letters of Credit as of Closing
Schedule 2.07 Motor Coils Machine Shop Equipment
Schedule 5.05 Litigation
Schedule 5.07 ERISA
Schedule 5.11 (A) December 31, 1996 Unaudited
Financials
(B) Off Balance Sheet Liabilities
(C) Pro Forma
(D) Projections
Schedule 5.12 Environmental Matters
Schedule 5.13 List of UCC Filing Jurisdictions
Schedule 5.17 Capitalization and Subsidiaries
Schedule 5.18 Insurance Matters
Schedule 6.05 Owned Railroad Locomotives
Schedule 6.13 Location of Collateral
Schedule 7.01 Permitted Liens
Schedule 7.05 Permitted Indebtedness
Schedule 7.06 Affiliate Transactions
Schedule 7.08 Contingent Obligations
Schedule 10.02 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Compliance Certificate (Section 1.01)
Exhibit B Form of Amended and Restated Guaranty (Section
1.01)
Exhibit C Form of Notice of Borrowing (Section 1.01)
Exhibit D Form of Notice of Conversion/Continuation
(Section 1.01)
Exhibit E Form of Revolving Loan Note (Section 1.01)
Exhibit F Form of Amended and Restated Term Loan Note
(Section 1.01)
Exhibit G Form of Amended and Restated Security Agreement
(Borrower)(Section 1.01)
Exhibit H Form of Amended and Restated Security Agreement
(Guarantors) (Section 1.01)
Exhibit I Form of Legal Opinion of Borrower's Counsel
(Section 4.01)
Exhibit J Form of Borrowing Base Certificate (Section
6.01)
Exhibit K Form of Assignment and Acceptance (Section
10.08)
vi
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
February 27, 1997, among MotivePower Industries, Inc., a Delaware corporation
(the "Borrower"), the several financial institutions from time to time party to
this Agreement (collectively, the "Lenders"; individually, a "Lender"), and Bank
of America National Trust and Savings Association, as agent for the Lenders (the
"Agent").
WHEREAS, MotivePower Industries, Inc. (f/k/a MK Rail Corporation), a
Delaware corporation, Motor Coils Manufacturing Company (f/k/a Motor Coils
Manufacturing Co.), a Pennsylvania corporation ("Motor Coils"), Engine Systems
Company, Inc. (f/k/a MK Engine Systems Company, Inc.), a New York corporation
("Engine"), ▇▇▇▇▇ Industries Company (f/k/a ▇▇▇▇▇ Industries, Inc.), an Illinois
corporation ("▇▇▇▇▇"), ▇▇▇▇▇▇▇▇▇▇ Company (f/k/a Touchstone, Inc.), a Tennessee
corporation ("Touchstone"), Power Parts Company, a Nevada corporation ("Power
Parts") (each an "Existing Borrower" and collectively, the "Existing
Borrowers"), and BankAmerica Business Credit, Inc., a Delaware corporation
individually as a lender and as agent ("BABC"), are parties to that certain
Amended and Restated Loan and Security Agreement dated as of September 10, 1996
(as amended, the "Existing Loan Agreement");
WHEREAS, immediately prior to the effectiveness of this amendment and
restatement of the Agreement, BABC has resigned as agent and assigned to the
Agent all of its rights, duties and obligations as agent under the Existing Loan
Agreement (and Agent has assumed all such rights, duties and obligations as the
successor agent thereunder), and BABC has assigned to the Lenders all of its
rights and outstanding loans, commitments and letter of credit obligations under
the Existing Loan Agreement, and each Lender has assumed its ratable share of
such loans, commitments and letter of credit obligations in accordance with the
Pro Rata Shares (as defined below) hereunder;
WHEREAS, on the Closing Date (as defined below) the Borrower and its
Subsidiaries are undertaking a reorganization (the "Reorganization")of their
corporate structure as described in full on Schedule 1.1A hereto, pursuant to
which (among other things) the Borrower will become a holding company and no
longer conduct business operations;
WHEREAS, pursuant to the Borrower's request on the Closing Date, the
proceeds of the Loans (as defined below) hereunder, to the extent necessary, are
being applied in repayment of the outstanding loans to the Borrowing
Subsidiaries (as defined below) on the date hereof under the Existing Loan
Agreement and Boise Locomotive Company, a Delaware corporation ("Boise
1
Locomotive"), provided, that such repayment shall not in any way release the
Borrowing Subsidiaries from their continuing obligations under the Guaranty (as
defined below); and
WHEREAS, the Agent, the Lenders and the Borrower have agreed to amend
and restate the Existing Loan Agreement (i) to continue to make available to the
Borrower credit facilities in an aggregate amount up to $75,000,000, which will
(among other things) be restated as a secured term loan which is increased to
$20,000,000 and a secured revolving credit facility which is reduced to
$55,000,000, all upon the terms and conditions set forth in this Agreement, (ii)
to amend and restate the guaranty obligations of the Borrowing Subsidiaries and
certain other Subsidiaries of the Borrower set forth in the Existing Loan
Agreement to continue such obligations as part of the Guaranty, and (iii) to
amend and restate the mortgages, security interests and liens granted by
Borrower, the Borrowing Subsidiaries and certain other Subsidiaries of the
Borrower in the Existing Loan Agreement and the other agreements contemplated
thereby to continue such mortgages, liens and security interests pursuant to the
Security Agreements and other Collateral Documents (as such terms are defined
below);
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the
following meanings:
"Account Debtor" means the Person obligated in any way
on or in connection with an Account.
"Accounts" means all of the Borrower's, the Borrowing
Subsidiaries', ▇▇▇▇▇'▇ and in certain limited circumstances, the FSC's
(on a consolidated basis) now owned or hereafter acquired or arising
accounts, and any other rights to payment for the sale or lease of
goods or rendition of services, whether or not they have been earned by
performance.
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly,
in (a) the acquisition of all or substantially all of the assets of a
Person, or of any business or division of a Person, (b) the acquisition
of in excess of 50% of the capital stock, partnership interests,
membership interests or equity of any Person, or otherwise
2
causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than
a Person that is a Subsidiary) provided that the Borrower or the
Subsidiary is the surviving entity.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the
ownership of voting securities, membership interests, by contract, or
otherwise; provided, however, that neither Agent, Arranger or Bank of
America Illinois shall in any event be deemed to be Affiliates of the
Borrower or its Affiliates.
"Agent" means BofA in its capacity as agent for the Lenders
hereunder, and any successor agent arising under Section 9.09.
"Agent-Related Persons" means BofA and any successor agent
arising under Section 9.09, together with their respective Affiliates
(including, without limitation, in the case of BofA, the Arranger), and
the officers, directors, employees, agents and attorneys-in-fact of
such Persons and Affiliates.
"Agent's Payment Office" means the address for payments set
forth on Schedule 10.02 or such other address as the Agent may from
time to time specify.
"Agreement" means this Second Amended and Restated Credit
Agreement, as hereafter modified, amended or restated from time to
time.
"Applicable Margin" means the percentage as set forth below
then applicable to, respectively, the Commitment Fee, Offshore Rate
Loans, Base Rate Loans, documentary or commercial Letter of Credit fees
and stand-by Letter of Credit fees as determined by using the following
performance based grid after determining which of the pricing levels
(being I through V) specified thereon is then in effect:
3
Pricing Pricing Pricing
Level II: Level III: Level IV:
Ratio of: less than less than less than
(A) Funded Debt to Pricing 1.50x and 2.25x and 3.00x and Pricing
(B) Cash Flow Level I: greater than greater than greater than Level V:
less than or equal to or equal to or equal to greater than
1.00x 1.00x 1.50x 2.25x 3.00
------------ ------------ ------------ ------------ ------------
Commitment Fee: 0.20% 0.25% 0.30% 0.35% 0.375%
Offshore Rate Loans: 0.50% 0.75% 1.00% 1.50% 2.00%
Base Rate Loans: 0.00% 0.00% 0.00% 0.50% 1.00%
Documentary or
Commercial Letters
of Credit: 0.25% 0.375% 0.50% 0.75% 1.00%
Stand-by Letters of
Credit: 0.50% 0.75% 1.00% 1.50% 2.00%
As of the Closing Date, the Applicable Margin shall mean the
percentages set forth under Pricing Level III and in no event will the
Applicable Margin be reduced below Pricing Level III for a period of
six (6) months after the Closing Date. Subject to the limitations of
the first sentence of this paragraph, the Pricing Level in effect and
thereby the Applicable Margin will first be subject to adjustment on
the third (3rd) Business Day following delivery of the financial
statements as required by Section 6.01(b) and the Compliance
Certificate as required by Section 6.02(b) for the Fiscal Quarter
ending June 27, 1997, and any such adjustment shall be effective as of
the third (3rd) Business Day following the delivery of such quarterly
financial statements for each Fiscal Quarter thereafter; provided,
however, that if the Borrower would be entitled to have the Applicable
Margin decreased based on the financial results for its Fiscal Quarter
ending in June, 1997 but for the operation of the first sentence of
this paragraph, then such decrease in the Applicable Margin shall
instead take effect as of the date which is the six (6) month
anniversary of the Closing Date, and the Applicable Margin shall be
readjusted again based on the financial results for the Borrower's
Fiscal Quarter ending in September 1997 and thereafter from time to
time in accordance with the above provision. The applicable pricing
level set forth in the grid above (and as such the Applicable Margin)
for the Commitment Fee, Offshore Rate Loans, Base Rate Loans,
documentary or commercial Letter of Credit fees and stand-by Letter of
Credit fees will be determined and adjusted (up or down) as necessary
quarterly based on which pricing level as set forth in the grid above
reflects the Borrower's ratio of Funded Debt to Cash Flow (as
determined pursuant to Section
4
7.16) for the trailing twelve month period then ended as calculated
using the Borrower's quarterly consolidated financial statements.
Further, if Borrower's annual audited financial statements (as required
by Section 6.01(a)) and the Compliance Certificate as required by
Section 6.02(b) for any Fiscal Year as subsequently delivered
demonstrate that such ratio of Funded Debt to Cash Flow (as determined
pursuant to Section 7.16) calculated at the end of the final Fiscal
Quarter in such Fiscal Year was higher than was reported in the final
quarterly financial statement delivered during any such Fiscal Year,
then the Borrower shall pay to the Agent for the ratable benefit of
Lenders a make-up payment within five (5) days after delivery of the
Borrower's annual audited financial statements. The make-up payment
shall be equal to the difference between interest that should have been
paid during such Fiscal Year and interest actually paid.
Notwithstanding the foregoing, at any time during which the Borrower
has failed to deliver the financial statements for any Fiscal Quarter
end as required by Section 6.01(b) and the Compliance Certificate as
required by Section 6.02(b), or the annual audited financial statements
required by Section 6.01(a) hereof and the Compliance Certificate as
required by Section 6.02(b), the ratio of Funded Debt to Cash Flow
shall be deemed to be greater than or equal to 3.0 to 1.0 for purposes
of the calculation of which Pricing Level shall apply in determining
the Applicable Margin.
"Arranger" means BancAmerica Securities, Inc., a
Delaware corporation.
"Assignee" has the meaning specified in Section
10.08(a).
"Attorney Costs" means and includes all fees and disbursements
of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"Availability" means, at any time, (a) the sum of (A)
eighty-five percent (85%) of the Net Amount of Eligible Accounts of the
Borrower, the Borrowing Subsidiaries, ▇▇▇▇▇ and the FSC (on a
consolidated basis) plus (B) seventy percent (70%) of the aggregate
amount of all Eligible Inventory consisting of raw materials and
finished goods of the Borrower, the Borrowing Subsidiaries and ▇▇▇▇▇
(on a consolidated basis), plus (C) thirty percent (30%) of the
aggregate amount of all Eligible Inventory consisting of
work-in-process of the Borrower, the Borrowing Subsidiaries and ▇▇▇▇▇
(on a consolidated basis), minus (b) the sum of (i) reserves for
accrued interest on the Obligations, (ii) the Environmental Compliance
Reserve, and (iii) all other reserves which the Agent deems necessary
in the exercise of
5
its reasonable credit judgment to maintain with respect to the
Borrower's, the Borrowing Subsidiaries', ▇▇▇▇▇'▇ and the FSC's Accounts
and/or Inventory, including, without limitation, reserves for any
amounts which the Agent or any Lender may be obligated to pay in the
future for the account of the Borrower or any Guarantor.
"BABC" means BankAmerica Business Credit, Inc., a
Delaware corporation.
"Bankruptcy Code" means the Federal Bankruptcy Reform
Act of 1978 (11 U.S.C. ss.101, et seq.).
"Base Rate" means, for any day, the higher of: (a) one-half of
one percent (0.50%) per annum above the latest Federal Funds Rate; and
(b) the rate of interest in effect for such day as publicly announced
from time to time by BofA in San Francisco, California, as its
"reference rate." (The "reference rate" is a rate set by BofA based
upon various factors including BofA's costs and desired return, general
economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such
announced rate.) Any change in the reference rate announced by BofA
shall take effect at the opening of business on the day specified in
the public announcement of such change.
"Base Rate Loan" means a Loan that bears interest based on the
Base Rate.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Boise Locomotive" has the meaning set forth in the
recitals to this Agreement.
"Borrower" means MotivePower Industries, Inc., a
Delaware corporation.
"Borrower Pledge Agreement" means the Pledge Agreement of even
date herewith executed by the Borrower in favor of the Agent, on behalf
of the Lenders, pledging all the stock of its Subsidiaries (other than
MK Gain), and any amendments, modifications or restatements thereof, or
any pledge agreements entered into after the Closing Date by the
Borrower.
"Borrowing" means a borrowing hereunder consisting of Loans of
the same Type made to the Borrower on the same day by the Lenders under
Article II, and, other than in the case of Base Rate Loans, having the
same Interest Period.
6
"Borrowing Date" means any date on which a Borrowing occurs
under Section 2.03 or a letter of credit is issued under Section 2.01.
"Borrowing Subsidiary" or "Borrowing Subsidiaries" means,
individually or collectively, Engine Systems Company, Inc., a New York
corporation; Motor Coils Manufacturing Company, a Pennsylvania
corporation; Power Parts Company, a Nevada corporation; Touchstone
Company, a Tennessee corporation; and Boise Locomotive Company, a
Delaware corporation.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in Chicago are authorized or
required by law to close and, if the applicable Business Day relates to
any Offshore Rate Loan, means such a day on which dealings are carried
on in the applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law,
in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"Capital Expenditures" means, all payments due (whether or not
paid) during a Fiscal Year in respect of the cost of any fixed asset or
improvement, or replacement, substitution, or addition thereto, which
has a useful life of more than one year, including, without limitation,
those costs arising in connection with the direct or indirect
acquisition of such asset by way of increased product or service
charges or offset items or in connection with a capital lease.
"Cash Flow" means, as to any Person and for any period for
which such amount is being determined, EBITDA minus Capital
Expenditures.
"CERCLA" has the meaning specified in the definition of
"Environmental Laws."
"Change of Control" means (a) that the Borrower shall cease to
own, directly or indirectly, all of the outstanding capital stock of
each Guarantor or MK Gain and its Subsidiaries; or (b) that any Person
or group of Persons (within the meaning of the Exchange Act) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the
Exchange Act) of 20% or more of the issued and outstanding shares of
the Borrower's capital stock having the right to vote for the election
of directors of Borrower
7
under ordinary circumstances; or (c) that during any period of twelve
(12) consecutive calendar months, individuals who at the beginning of
such period constituted the Borrower's board of directors (together
with any new directors whose election by the Borrower's board of
directors or whose nomination for election by the Borrower's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason other than death or
disability to constitute a majority of the directors then in office.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Collateral" means all property and interests in property and
proceeds thereof now owned or hereafter acquired by the Borrower or any
Guarantor or any Borrowing Subsidiary (excluding the capital stock of
MK Gain), including, without limitation, any such property or interests
in property (or the proceeds thereof) in or upon which a Lien now or
hereafter exists in favor of the Lenders, or the Agent on behalf of the
Lenders, whether under this Agreement or under any other documents
executed by any such Person and delivered to the Agent or the Lenders.
"Collateral Documents" means, collectively, (i) the Security
Agreements, the Guaranty, the Mortgages, the Pledge Agreements and all
other locomotive mortgages and lease assignments, security agreements,
mortgages, deeds of trust, patent and trademark assignments, lease
assignments, guarantees and other similar agreements between the
Borrower or any Borrowing Subsidiary or any Guarantor and the Lenders
or the Agents for the benefit of the Agent (on behalf of the Lenders)
and/or the Lenders now or hereafter delivered to the Lenders or the
Agent pursuant to or in connection with the transactions contemplated
hereby, and all financing statements (or comparable documents now or
hereafter filed in accordance with the Uniform Commercial Code or
comparable law) against the Borrower, any Borrowing Subsidiary or any
Guarantor as debtor in favor of the Lenders or the Agent for the
benefit of the Lenders as secured party, and (ii) any amendments,
supplements, modifications, renewals, replacements, consolidations,
substitutions and extensions of any of the foregoing.
"Commitment", as to each Lender, means such Lender's Pro Rata
Share of each of the Term Commitment and the Revolving Commitment as
the same may be reduced under
8
Section 2.05 or as a result of one or more assignments under Section
10.08.
"Commitment Fee" has the meaning specified in
Section 2.09.
"Compliance Certificate" means a certificate
substantially in the form of Exhibit A.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including any
obligation of that Person (i) to purchase, repurchase or otherwise
acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such
primary obligation, or to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency
or any balance sheet item, level of income or financial condition of
the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless
the holder of any such primary obligation against loss in respect
thereof (each, a "Guaranty Obligation"); (b) with respect to any Surety
Instrument issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings or payments;
(c) to purchase any materials, supplies or other property from, or to
obtain the services of, another Person if the relevant contract or
other related document or obligation requires that payment for such
materials, supplies or other property, or for such services, shall be
made regardless of whether delivery of such materials, supplies or
other property is ever made or tendered, or such services are ever
performed or tendered or (d) in respect of any Swap Contract.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or by
which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Borrower (a) converts Loans of one Type to another
Type, or (b) continues as Loans of the same Type, but with a new
Interest Period, Loans having Interest Periods expiring on such date.
9
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or
otherwise remedied during such time) constitute an Event of Default.
"Disposition" means (i) the sale, lease, conveyance or other
disposition of property or assets by the Borrower or any Subsidiary of
the Borrower and/or (ii) the sale or transfer by the Borrower or any
Subsidiary of the Borrower of any equity securities issued by any
Subsidiary of the Borrower and held by such transferor Person.
"Dollars", "dollars" and "$" each mean lawful money of
the United States.
"EBITDA" means, as to any Person and for any period as to
which such amount is being determined, the sum of the amounts (on a
consolidated basis) for such period of (i) net income from operations
(meaning, among other things, income exclusive of extraordinary gains
and losses), (ii) interest expense, (iii) provisions for taxes based on
income, (iv) depreciation expense, and (v) amortization expense.
"Eligible Accounts" means all Accounts of the Borrower, the
Borrowing Subsidiaries, ▇▇▇▇▇ and the FSC (on a consolidated basis)
which the Agent in the exercise of its reasonable commercial discretion
determines to be Eligible Accounts. Without limiting the discretion of
the Agent to establish other criteria of ineligibility, Eligible
Accounts shall not include any Account:
(A) with respect to which more than 90 days have
elapsed since the date of the original invoice therefor or which is
more than 60 days past due except to the extent that such Account is
secured or payable by a letter of credit in form and substance and from
an issuer satisfactory to the Agent in its reasonable discretion (and
assigned to the Agent, for the benefit of the Lenders); provided,
however, that if the Account Debtor is either (i) a Class I Carrier (as
defined for carriers other than common and contract carriers of
passengers from time to time in the rules and regulations promulgated
by the Surface Transportation Board, Department of Transportation) or
(ii) a Specified Original Equipment Manufacturer, then up to $3,000,000
of Accounts owing by such Account Debtors otherwise deemed ineligible
by virtue of not having satisfied the requirements of the first part of
this clause (A) shall nonetheless be eligible so long as not more than
120 days have elapsed since the date of the original invoices therefor
and such Accounts are not more than 90 days past due and otherwise
satisfy the requirements for Eligible Accounts;
10
(B) with respect to which any of the representations,
warranties, covenants, and agreements contained in any Security
Agreement are not or have ceased to be complete and correct or have
been breached;
(C) with respect to which, in whole or in part, a
check, promissory note, draft, trade acceptance or other instrument for
the payment of money has been received, presented for payment and
returned uncollected for any reason;
(D) which represents a progress billing (as
hereinafter defined), arises under a contract backed by a performance
bond, or as to which the Borrower has extended the time for payment
without the consent of the Agent; for the purposes hereof, "progress
billing" means any invoice for goods sold or leased or services
rendered under a contract or agreement pursuant to which the Account
Debtor's obligation to pay such invoice is conditioned upon the
Borrower's, such Borrowing Subsidiary's, ▇▇▇▇▇'▇ or the FSC's
completion of any further performance under the contract or agreement;
(E) as to which any one or more of the following
events has occurred with respect to the Account Debtor on such Account:
death or judicial declaration of incompetency of an Account Debtor who
is an individual; the filing by or against the Account Debtor of a
request or petition for liquidation, reorganization, arrangement,
adjustment of debts, adjudication as a bankrupt, winding-up, or other
relief under the bankruptcy, insolvency, or similar laws of the United
States, any state or territory thereof, or any foreign jurisdiction,
now or hereafter in effect; the making of any general assignment by the
Account Debtor for the benefit of creditors; the appointment of a
receiver or trustee for the Account Debtor or for any of the assets of
the Account Debtor, including, without limitation, the appointment of
or taking possession by a "custodian", as defined in the Bankruptcy
Code; the institution by or against the Account Debtor of any other
type of insolvency proceeding (under the bankruptcy laws of the United
States or otherwise) or of any formal or informal proceeding for the
dissolution or liquidation of, settlement of claims against, or winding
up of affairs of, the Account Debtor; the nonpayment generally by the
Account Debtor of its debts as they become due; or the cessation of the
business of the Account Debtor as a going concern;
(F) if fifty percent (50%) or more of the aggregate
dollar amount of outstanding Accounts (excluding, however, any
so-called retainages which are not then due and owing) owed at such
time by the Account Debtor is classified
11
as ineligible under the other criteria set forth herein or
otherwise established by the Agent;
(G) owed to the FSC or owed to any Person by an
Account Debtor which: (i) does not maintain its chief executive office
in the United States; or (ii) is not organized under the laws of the
United States or any state thereof; or (iii) is the government of any
foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality
thereof; except to the extent that such Account is secured or payable
by a letter of credit or foreign credit insurance in form and substance
and from an issuer satisfactory to the Agent in its reasonable
discretion (and assigned to the Agent on behalf of the Lenders);
(H) owed by an Account Debtor which is an Affiliate
or employee of the Borrower or any Subsidiary of the Borrower
including, without limitation, the FSC or MK Gain and its Subsidiaries;
(I) except as provided in clause (K) below, as to
which either the perfection, enforceability, or validity of the Agent's
Lien in such Account, or the Agent's right or ability to obtain direct
payment to the Agent of the proceeds of such Account, is governed by
any federal, state, or local statutory requirements other than those of
the UCC;
(J) which is owed by an Account Debtor to which the
Borrower or any of its Subsidiaries is indebted in any way, or which is
subject to any right of setoff or recoupment by the Account Debtor,
unless the Account Debtor has entered into an agreement acceptable to
the Agent to waive setoff rights; or if the Account Debtor thereon has
disputed liability or made any claim with respect to any other Account
due from such Account Debtor; but in each such case only to the extent
of such indebtedness, setoff, recoupment, dispute, or claim;
(K) which is owed by the government of the United
States of America, or any department, agency, public corporation, or
other instrumentality thereof, unless the Federal Assignment of Claims
Act of 1940, as amended (31 U.S.C. ss. 3727 et seq.), and any other
steps necessary to perfect the Agent's Lien therein, have been complied
with to the Agent's satisfaction with respect to such Account;
(L) which is owed by any state, municipality, or
other political subdivision of the United States of America, or any
department, agency, public corporation, or other
12
instrumentality thereof and as to which the Agent determines
that its Lien therein is not or cannot be perfected;
(M) which represents a sale on a ▇▇▇▇-and-hold,
guaranteed sale, sale and return, sale on approval, consignment, or
other repurchase or return basis;
(N) which is evidenced by a promissory note or
other instrument or by chattel paper;
(O) if Agent believes, in the exercise of its
reasonable judgment, that the prospect of collection of such Account is
impaired or that the Account may not be paid by reason of the Account
Debtor's financial inability to pay;
(P) with respect to which the Account Debtor is
located in the states of New Jersey, Minnesota, West Virginia, or any
other state requiring the filing of a Business Activity Report or
similar document in order to bring suit or otherwise enforce its
remedies against such Account Debtor in the courts or through any
judicial process of such state, unless the Borrower, any Borrowing
Subsidiary, ▇▇▇▇▇ or the FSC, as applicable, has qualified to do
business in New Jersey, Minnesota, West Virginia, or such other state,
or has filed a Notice of Business Activities Report with the applicable
division of taxation, the department of revenue, or with such other
state offices, as appropriate, for the then-current year, or is exempt
from such filing requirement;
(Q) arises out of a sale not made in the ordinary
course of the Borrower's, any such Borrowing Subsidiary's,
▇▇▇▇▇'▇, or the FSC's business;
(R) the goods giving rise to such Account have not
been shipped and delivered to and accepted by the Account Debtor or the
services giving rise to such Account have not been performed by the
Borrower or any applicable Borrowing Subsidiary or ▇▇▇▇▇, and, if
applicable, accepted by the Account Debtor, or the Account Debtor
revokes its acceptance of such goods or services;
(S) arising under a contract providing for
financial penalties for default that may be set-off against
such Account;
(T) which is not subject to a first priority and
perfected security interest in favor of the Agent for the
benefit of the Lenders;
(U) of Touchstone with respect to which the
Account Debtor is located in Minnesota; or
13
(V) which is owed by an Account Debtor who has been
issued, granted or provided with a performance bond, surety contract or
other Surety Instrument with respect to Accounts which are related to a
contract so secured by such performance bond, surety contract or other
Surety Instrument.
If any Account at any time ceases to be an Eligible Account by
reason of any of the foregoing exclusions or any failure to meet any
other eligibility criteria established by the Agent in the exercise of
its reasonable discretion then such Account shall promptly be excluded
from the calculation of Eligible Accounts, and the Accounts of the FSC
shall not in any event be Eligible Accounts unless they satisfy all of
the restrictions above, including, without limitation clause (G) above,
and in addition the Borrower shall have provided the Agent (on behalf
of the Lenders) with a legal opinion from counsel licensed in Barbados
and such other documents as the Agent shall request all in form and
substance and from Persons acceptable to the Agent establishing that
Agent (on behalf of the Lenders) has a prior perfected security
interest in such Accounts and such other matters as the Agent shall
request on the FSC and further that the Agent shall be satisfied with
its ability to prosecute any claims related to such Accounts.
"Eligible Assignee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $100,000,000; (b) 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 a combined
capital and surplus of at least $100,000,000, provided that such bank
is acting through a branch or agency located in the United States; (c)
a Person that is primarily engaged in the business of commercial
banking and that is (i) a Subsidiary of a Lender, (ii) a Subsidiary of
a Person of which a Lender is a Subsidiary, or (iii) a Person of which
a Lender is a Subsidiary; (d) a commercial finance company or finance
subsidiary of a corporation organized under the laws of the United
States of America, or any State thereof, and having total assets in
excess of $100,000,000; (e) an insurance company organized under the
laws of the United States of America (or any State thereof) and having
total assets in excess of $100,000,000; (f) a savings bank or savings
and loan association organized under the laws of the United States of
America, or any State thereof, and having total assets in excess of
$100,000,000; (g) a pension fund or other institutional lender or
investor; (h) a corporation (other than a financial institution)
organized under the laws of any State of the United States of America
and having total assets in excess
14
of $100,000,000; and (i) and any Lender party to this Agreement on the
Closing Date or any Affiliate of any thereof.
"Eligible Inventory" means all Inventory of the Borrower, the
Borrowing Subsidiaries and ▇▇▇▇▇ (determined individually or on a
consolidated basis, as applicable), valued at the lower of cost or
market on a first-in, first out ("FIFO") basis, that constitutes raw
materials, work-in-process, and first quality finished goods and that:
(a) is not, in the Agent's reasonable opinion, obsolete, slow-moving or
unmerchantable; (b) is located at premises owned by the Borrower,
Borrowing Subsidiary or ▇▇▇▇▇ or on premises otherwise reasonably
acceptable to the Agent, provided, however, that Inventory located on
premises leased to the Borrower, a Borrowing Subsidiary or ▇▇▇▇▇ shall
not be Eligible Inventory unless the Agent shall have received a
written waiver or subordination agreement, duly executed on behalf of
the appropriate landlord and in form and substance acceptable to the
Agent, of all Liens which the landlord for such premises may be
entitled to assert against such Inventory; (c) is not in transit or
held on consignment or at a third party's premises; (d) upon which the
Agent for the benefit of the Lenders has a first priority perfected
security interest; (e) is not spare parts (for manufacturing equipment
or not otherwise held for sale in the ordinary course), packaging and
shipping materials, supplies, ▇▇▇▇-and-hold Inventory, returned or
defective Inventory, or Inventory delivered to the Borrower, a
Borrowing Subsidiary or ▇▇▇▇▇ on consignment; (f) is not raw materials,
work-in-process or finished goods identified to a specific contract as
to which progress payments have been received; (g) has excluded from
the value thereof freight-in and other transportation charges and
warehouse overhead; (h) is not raw materials, work-in-process or
finished goods inventory in excess of $3,000,000 in value (based on the
lower of cost or market value on a FIFO basis) in the aggregate to the
extent it has been identified to a specific contract for which
performance bonds or a surety contract or other Surety Instrument of
any kind has been issued or provided; or (i) the Agent, in the exercise
of its reasonable commercial discretion, deems eligible as the basis
for Revolving Loans based on such collateral and credit criteria as the
Agent may from time to time establish. If any Inventory at any time
ceases to be Eligible Inventory, such Inventory shall promptly be
excluded from the calculation of Eligible Inventory.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability
or responsibility for violation of any Environmental Law, or for
release or injury to the environment or threat to public health,
personal injury
15
(including sickness, disease or death), property damage, natural
resources damage, or otherwise alleging liability or responsibility for
damages (punitive or otherwise), investigation, cleanup, removal,
remedial or response costs, restitution, civil or criminal penalties,
injunctive relief, or other type of relief, resulting from or based
upon the presence, placement, discharge, emission or release (including
intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental, placement, spills, leaks,
discharges, emissions or releases) of any Hazardous Material at, in, or
from Property, whether or not owned by the Borrower or taken as
Collateral in connection with any operations of the Borrower.
"Environmental Compliance Reserve" means any reserves which
the Agent, after the Closing Date, establishes from time to time for
amounts that are reasonably likely to be expended by the Borrower (or
its Subsidiaries) in order for the Borrower (or its Subsidiaries) and
their operations and property to comply with any notice from a
Governmental Authority asserting material non-compliance with
Environmental Laws; provided, however, that such reserve shall be
limited to an amount reasonably likely to be expended by the Borrower
(or its Subsidiaries) prior to the Stated Maturity Date, all as
reasonably determined by Agent.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental,
health, safety and land use matters; including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Clean Air Act, the Federal Water Pollution Control Act
of 1972, the Solid Waste Disposal Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act, and
the Emergency Planning and Community Right-to-Know Act.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning
of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of
the Code for purposes of provisions relating to Section 412 of the
Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate
from a Pension Plan subject to Section 4063
16
of ERISA during a plan year in which it was a substantial employer (as
defined in Section 4001(a)(2) of ERISA) or a cessation of operations
which is treated as such a withdrawal under Section 4062(e) of ERISA;
(c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer
Plan; (e) an event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title
IV of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
"Estimated Remediation Costs" means all costs associated with
performing work to remediate contamination of real property or
groundwater, including engineering and other professional fees and
expenses, costs to remove, transport and dispose of contaminated soil,
costs to "cap" or otherwise contain contaminated soil, and costs to
pump and treat water and monitor water quality.
"Eurodollar Reserve Percentage" has the meaning
specified in the definition of "Offshore Rate".
"Event of Default" means any of the events or
circumstances specified in Section 8.01.
"Event of Loss" means, with respect to any property, any of
the following: (a) any loss, destruction or damage of such property;
(b) any pending or threatened institution of any proceedings for the
condemnation or seizure of such property or for the exercise of any
right of eminent domain; or (c) any actual condemnation, seizure or
taking, by exercise of the power of eminent domain or otherwise, of
such property, or confiscation of such property or the requisition of
the use of such property.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and regulations promulgated thereunder.
"Existing Borrowers" has the meaning set forth in the
recitals to this Agreement.
"Existing Loan Agreement" has the meaning set forth in
the recitals to this Agreement.
17
"FDIC" means the Federal Deposit Insurance Corporation, and
any Governmental Authority succeeding to any of its principal
functions.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or, if
for any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the arithmetic
mean as determined by the Agent of the rates for the last transaction
in overnight federal funds arranged prior to 9:00 a.m. (New York City
time) on that day by each of three leading brokers of federal funds
transactions in New York City selected by the Agent.
"Fee Letter" has the meaning specified in Section
2.10(a).
"Fiscal Month" means Borrower's fiscal month for accounting
purposes, which shall be the four or five week period ending on the
last Friday of each calendar month.
"Fiscal Quarter" means the Borrower's fiscal quarter for
accounting purposes, which shall be the three (3) Fiscal Month period
ending during the calendar months of March, June, September and
December of each year.
"Fiscal Year" means the Borrower's fiscal year for financial
accounting purposes. The current Fiscal Year of the Borrower will end
on December 31, 1997.
"Fixed Charges" means, as to any Person and for any period on
which such amount is to be determined, the sum of the amounts (on a
consolidated basis) for such period for (i) interest expense, (ii) rent
expenses pursuant to all operating leases, (iii) Capital Expenditures,
(iv) principal payments which such Person is obligated to make as
scheduled payments with respect to the Commitments, Loans and other
Indebtedness, (v) cash tax expense paid or due and (vi) cash dividends
paid.
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"FSC" means MotivePower Foreign Sales Corporation, a
Barbados corporation.
"Funded Debt" means, for any Person and for any period
for which such amount is being determined, the sum of the
18
amounts for such period (without duplication) of (i) Indebtedness, (ii)
the aggregate drawn amount of all outstanding Letters of Credit, (iii)
the aggregate amount of payments which the Borrower is obligated to pay
at any time with respect to its redeemable preferred stock and (iv) the
aggregate amount of obligations with respect to capital leases.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the
Closing Date and consistently applied.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantors" means each of the Borrowing Subsidiaries,
MotivePower Investments, ▇▇▇▇▇, FSC, and any other Person that becomes
a Subsidiary of the Borrower after the Closing Date other than MK Gain
and its Subsidiaries.
"Guaranty" means the Amended and Restated Guaranty of even
date herewith in substantially the form of Exhibit B executed by the
Guarantors in favor of the Agent, on behalf of the Lenders, together
with all amendments, modifications and supplements thereto consented to
by the Agent in writing.
"Guaranty Obligation" has the meaning specified in the
definition of "Contingent Obligation."
"Hazardous Materials" means all those substances that are
regulated by, or which may form the basis of liability or a standard of
conduct under, any Environmental Law, including any substance
identified under any Environmental Law as a pollutant, contaminant,
hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or
petroleum derived substance or waste.
19
"HBTC" means the Houston Belt & Terminal Railway
Company, a corporation.
"Indebtedness" of any Person means, without duplication, (a)
all indebtedness for borrowed money; (b) all obligations issued,
undertaken or assumed as the deferred purchase price of property or
services (other than trade payables entered into in the ordinary course
of business on ordinary terms); (c) all non-contingent reimbursement or
payment obligations with respect to Surety Instruments; (d) all
obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all
indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case
with respect to property acquired by the Person (even though the rights
and remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property); (f) all
obligations with respect to capital leases; (g) all indebtedness
referred to in clauses (a) through (f) above secured by (or for which
the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including
accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such
Indebtedness; and (h) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in
clauses (a) through (g) above.
"Indemnified Liabilities" has the meaning specified in
Section 10.05.
"Indemnified Person" has the meaning specified in
Section 10.05.
"Independent Auditor" has the meaning specified in
Section 6.01(a).
"Insolvency Proceeding" means (a) any case, action or
proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of its
creditors generally or any substantial portion of its creditors;
undertaken under U.S. federal, state or foreign law, including the
Bankruptcy Code.
"Interest Payment Date" means, (a) as to any Offshore
Rate Loan, the last day of each Interest Period applicable
20
to such Offshore Rate Loan, (b) as to any Offshore Rate Loan with a 6-
or 12-month Interest Period, on each 3-month anniversary of the making
of such Offshore Rate Loan and the last day of the Interest Period of
such Offshore Rate Loan, and (c) as to any Base Rate Loan, the last
Business Day of each calendar quarter and each date such Loan is
converted into another Type of Loan.
"Interest Period" means, as to any Offshore Rate Loan, the
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two,
three or six months (or if available, 12-months) thereafter as selected
by the Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation; provided that:
(i) if any Interest Period would otherwise end
on a day that is not a Business Day, that Interest Period
shall be extended to the following 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 preceding Business Day;
(ii) any Interest Period that begins on the last
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
Business Day of the calendar month at the end of such Interest
Period; and
(iii) no Interest Period for any Loan shall extend
beyond the Stated Maturity Date.
"Inventory" means all of the Borrower's, the Borrowing
Subsidiaries' and ▇▇▇▇▇'▇ (on a consolidated basis) now owned and
hereafter acquired inventory, goods, merchandise, and other personal
property, wherever located, to be furnished under any contract of
service or held for sale, all returned goods, raw materials, other
materials and supplies of any kind, nature or description which are or
might be consumed in such Person's business or used in connection with
the packing, shipping, advertising, selling or finishing of such goods,
merchandise and such other personal property, and all documents of
title or other documents representing them but excluding, in any event,
railroad locomotives and rolling stock held for lease.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
21
"Issuing Bank" shall initially mean BofA, and any other bank
selected by the Agent from time to time to issue Letters of Credit
under Section 2.01(c).
"Joint Venture" means a partnership, limited liability
company, joint venture or other similar legal arrangement (whether
created by contract or conducted through a separate legal entity) now
or hereafter formed by the Borrower or any of its Subsidiaries with
another Person in order to conduct a common venture or enterprise with
such Person.
"Lenders" means the institutions specified in the introductory
clause hereto. Unless the context otherwise clearly requires, "Lender"
includes any such institution in its capacity as Specified Swap
Provider or the Issuing Bank. Unless the context otherwise clearly
requires, references to any such institution as a "Lender" shall also
include any of such institution's Affiliates that may at any time of
determination be Specified Swap Providers or the Issuing Bank.
"Lending Office" means, as to any Lender, the office or
offices of such Lender specified as its "Lending Office" or "Domestic
Lending Office" or "Offshore Lending Office", as the case may be, on
Schedule 10.02, or such other office or offices as the Lender may from
time to time
notify the Borrower and the Agent.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement of
any kind or nature whatsoever in respect of any property (including
those created by, arising under or evidenced by any conditional sale or
other title retention agreement, the interest of a lessor under a
capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any financing
statement naming the owner of the asset to which such lien relates as
debtor, under the Uniform Commercial Code or any comparable law), but
not including the interest of a lessor under an operating lease.
"Letter of Credit" has the meaning specified in
Section 2.01(c).
"Loan" means an extension of credit by a Lender to the
Borrower under Article II, and may be a Base Rate Loan or an Offshore
Rate Loan (each, a "Type" of Loan), and includes any Revolving Loan or
Term Loan.
"Loan Documents" means this Agreement, the Notes, the
Collateral Documents, the Fee Letter, any documents evidencing or
related to Specified Swap Contracts or Letters
22
of Credit, and all other documents delivered to the Agent, any Lender,
a Specified Swap Provider or the Issuing Bank in connection with the
transactions contemplated by this Agreement.
"Majority Lenders" means, at any time, Lenders then holding at
least 66-2/3% of the then aggregate unpaid principal amount of the
Loans, or, if no such principal amount is then outstanding, Lenders
then having at least 66-2/3% of the Commitments.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of the
Borrower or the Borrower and its Subsidiaries taken as a whole; (b) a
material impairment of the ability of the Borrower or any Guarantor to
perform under any Loan Document and to avoid any Event of Default; or
(c) a material adverse effect upon (i) the legality, validity, binding
effect or enforceability against the Borrower or any Guarantor of any
Loan Document, or (ii) the perfection or priority of any Lien granted
under any of the Collateral Documents.
"MK Gain" means (i) initially MK Gain, S.A. de C.V., a
Mexican corporation, and its direct and indirect wholly
owned subsidiaries and (ii) thereafter MPI de Mexico, S.A.
de C.V. if and when the Agent is notified in writing of the
consummation of the Borrower's corporate reorganization of
its Mexican operations, pursuant to which a newly formed
holding company, MPI de Mexico, S.A. de C.V., shall become a
Wholly-Owned Subsidiary of the Borrower and all of the
assets and operations of MK Gain, S.A. de C.V. shall have
been merged into or contributed to such Person.
"Mortgage" means any deed of trust, mortgage, leasehold
mortgage, assignment of rents or other document creating a Lien on real
property or any interest in real property.
"Mortgaged Property" means all property subject to a
Lien pursuant to a Mortgage.
"MotivePower Investments" means MotivePower Investments
Limited, a Delaware corporation and a direct Wholly-Owned subsidiary of
the Borrower.
"MotivePower Investments Pledge Agreement" means the Pledge
Agreement of even date herewith executed by MotivePower Investments in
favor of the Agent, on behalf of the Lenders, pledging all the stock of
its Subsidiaries, and
23
any amendments, modifications or restatements thereof, or any pledge
agreements entered into after the Closing Date by MotivePower
Investments.
"Multiemployer Plan" means a "Multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Borrower or any
ERISA Affiliate makes, is making, or is obligated to make contributions
or, during the preceding three calendar years, has made, or been
obligated to make, contributions.
"Net Amount of Eligible Accounts" means, at any time, the
gross amount of Eligible Accounts less sales, excise or similar taxes,
and less returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or
claimed.
"Net Issuance Proceeds" means, as to any issuance of debt or
equity by any Person, cash proceeds and non-cash proceeds received or
receivable by such Person in connection therewith, net of reasonable
out-of-pocket costs and expenses paid or incurred in connection
therewith in favor of any Person not an Affiliate of such Person, such
costs and expenses not to exceed 5% of the gross proceeds of such
issuance.
"Net Proceeds" means, as to any Disposition by a Person,
proceeds in cash, checks or other cash equivalent financial instruments
as and when received by such Person, net of: (a) the direct costs
relating to such Disposition excluding amounts payable to such Person
or any Affiliate of such Person, (b) sales, use or other transaction
taxes paid or payable by such Person as a direct result thereof, and
(c) amounts required to be applied to repay principal, interest and
prepayment premiums and penalties on Indebtedness secured by a Lien on
the asset which is the subject of such Disposition. "Net Proceeds"
shall also include proceeds paid on account of any Event of Loss, net
of (i) all money actually applied to repair or reconstruct the damaged
property or property affected by the condemnation or taking, (ii) all
of the costs and expenses reasonably incurred in connection with the
collection of such proceeds, award or other payments, and (iii) any
amounts retained by or paid to parties having superior rights to such
proceeds, awards or other payments.
"Note" or "Notes" means the Revolving Loan Note and the
Term Loan Note.
"Notice of Borrowing" means a notice in substantially
the form of Exhibit B.
24
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit C.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document owing
by the Borrower, the Borrowing Subsidiaries and any other Guarantor to
any Lender, the Agent, the Issuing Bank, a Specified Swap Provider
and/or any Indemnified Person, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become
due, now existing or hereafter arising.
"Offshore Rate" means, for any Interest Period, with respect
to Offshore Rate Loans comprising part of the same Borrowing, the rate
of interest per annum (rounded upward to the next 1/16th of 1%)
determined by the Agent as follows:
Offshore Rate = LIBOR
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect
on such day (whether or not applicable to any Lender) under
regulations issued from time to time by the FRB for
determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum determined
by the Agent to be the arithmetic mean (rounded upward to the
next 1/16th of 1%) of the rates of interest per annum notified
to the Agent by each Reference Lender as the rate of interest
at which dollar deposits in the approximate amount of the
amount of the Loan to be made or continued as, or converted
into, an Offshore Rate Loan by such Reference Lender and
having a maturity comparable to such Interest Period would be
offered to major banks in the London interbank market at their
request at approximately 11:00 a.m. (London time) two Business
Days prior to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on
the Offshore Rate.
25
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate
of determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement, and
all applicable resolutions of the board of directors (or any committee
thereof) of such corporation.
"Other Taxes" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents.
"Participant" has the meaning specified in Section
10.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions
under ERISA.
"Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which the Borrower
sponsors, maintains, or to which it makes, is making, or is obligated
to make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any
time during the immediately preceding five (5) plan years.
"Permitted Acquisitions" has the meaning specified in
Section 7.03.
"Permitted Liens" has the meaning specified in
Section 7.01.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Borrower sponsors or maintains or to which the
Borrower makes, is making, or is obligated to make contributions and
includes any Pension Plan.
"Pledge Agreements" means the Borrower Pledge
Agreement, the MotivePower Investments Pledge Agreement and
the Power Pledge Agreement.
"Pledged Collateral" has the meaning specified in the
Pledge Agreements.
26
"Power Pledge Agreement" means the Pledge Agreement of even
date herewith executed by Power Parts Company, a Nevada corporation in
favor of the Agent, on behalf of the Lenders, pledging all the stock of
its Subsidiaries, and any amendments, modifications or restatements
thereof, or any pledge agreements entered into after the Closing Date
by such Person.
"Pro Rata Share" means, as to any Lender at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth
decimal place) at such time of such Lender's Commitment divided by the
combined Commitments of all Lenders.
"PTRA" means the Port Terminal Railroad Association, a
Texas association.
"Reference Lender" means BofA.
"Reorganization" shall have the meaning specified in
the recitals hereto.
"Replacement Lender" has the meaning specified in
Section 3.08.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice requirement under ERISA has been
waived in regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of
an arbitrator or of a Governmental Authority, in each case applicable
to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"Responsible Officer" means the chief executive officer or the
president of the Borrower, or any other officer having substantially
the same authority and responsibility; or, with respect to compliance
with financial covenants, the chief financial officer or the treasurer
of the Borrower, or any other officer having substantially the same
authority and responsibility.
"Revolving Commitment" means Fifty-Five Million Dollars
($55,000,000).
"Revolving Loan" has the meaning specified in
Section 2.01.
27
"Revolving Loan Note" means the promissory note executed by
the Borrower in favor of the Agent, on behalf of the Lenders pursuant
to Section 2.02(b), in substantially the form of Exhibit E as
thereafter amended from time to time with the consent of the Agent.
"SEC" means the Securities and Exchange Commission, or
any Governmental Authority succeeding to any of its
principal functions.
"Security Agreement (Borrower)" means the Amended and Restated
Security Agreement executed by the Borrower in favor of the Agent, on
behalf of the Lenders, in substan tially the form of Exhibit G together
with all amendments, modifications and supplements thereto consented to
by the Agent in writing.
"Security Agreement (Guarantors)" means the Amended and
Restated Security Agreement executed by the Guarantors in favor of the
Agent, on behalf of the Lenders, in substantially the form of Exhibit H
together with all amendments, modifications and supplements thereto
consented to by the Agent in writing.
"Security Agreements" means, collectively, the Security
Agreement (Borrower) and the Security Agreement
(Guarantors).
"Solvent" means, as to any Person at any time, that (a) the
fair value of the property of such Person is greater than the amount of
such Person's liabilities (including disputed, contingent and
unliquidated liabilities) as such value is established and liabilities
evaluated for purposes of Section 101(31) of the Bankruptcy Code and,
in the alternative, for purposes of the Illinois Uniform Fraudulent
Transfer Act; (b) the present fair saleable value of the property of
such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become
absolute and matured; (c) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed,
contingent and unliquidated liabilities) as they mature in the normal
course of business; (d) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature; and (e) such
Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's property
would constitute unreasonably small capital.
"Specified Original Equipment Manufacturer" means
General Motors Corporation and General Electric Company and their
respective Subsidiaries and divisions that engage
28
primarily in the business of manufacturing railroad
locomotives or locomotive parts.
"Specified Swap Contract" means any Swap Contract made or
entered into at any time, or in effect at any time (whether heretofore
or hereafter), whether directly or indirectly, and whether as a result
of assignment or transfer or otherwise, between the Borrower and any
Specified Swap Provider which Swap Contract is or was intended by the
Borrower to have been entered into, in part or entirely, for purposes
of mitigating interest rate or currency exchange risk relating to the
Loans (which intent shall conclusively be deemed to exist if the
Borrower so represents to the Specified Swap Provider in writing), and
as to which the final scheduled payment by the Borrower is not later
than the Stated Maturity Date.
"Specified Swap Provider" means any Lender, or any Affiliate
of any Lender, that is at the time of determina tion party to a
Specified Swap Contract with the Borrower.
"Stated Maturity Date" means the fourth (4th)
anniversary of the Closing Date.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests
or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the
Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires,
references herein to a "Subsidiary" refer to a Subsidiary or
Subsidiaries of the Borrower including, without limitation, MK Gain and
the Guarantors.
"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, performance bonds, bank
guaranties, shipside bonds, surety bonds and similar instruments.
"Swap Contract" means any agreement, whether or not in
writing, relating to any transaction that is a rate swap, basis swap,
forward rate transaction, commodity swap, commodity option, equity or
equity index swap or option, bond, note or ▇▇▇▇ option, interest rate
option, forward foreign exchange transaction, cap, collar or floor
transaction, currency swap, cross-currency rate swap, swap option,
currency option or any other, similar transaction (including any option
to enter into any of the foregoing) or any combination of the
foregoing, and, unless the context otherwise clearly requires, any
master agreement relating to or governing any or all of the foregoing.
29
"Tangible Net Worth" means, as to any Person and as of any
date on which the amount thereof is to be determined, (a) the stated
amount of the shareholders' equity for all issued and outstanding
capital stock, minus (b) the aggregate stated amount of any redeemable
preferred stock (plus accrued and unpaid dividends), and minus (c) the
stated amount of all patents, copyrights, trademarks, trade names,
franchises, goodwill, deferred charges, organization expenses,
unamortized discounts and other intangibles.
"Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent,
such taxes (including income taxes or franchise taxes) as are imposed
on or measured by each Lender's net income by the jurisdiction (or any
political subdivision thereof) under the laws of which such Lender or
the Agent, as the case may be, is organized or maintains a lending
office.
"Term Commitment" means Twenty Million Dollars
($20,000,000).
"Term Loan" has the meaning specified in Section 2.01.
"Term Loan Note" means the amended and restated term loan
promissory note executed by the Borrower in favor of the Agent on
behalf of the Lenders pursuant to Section 2.02(b),in substantially the
form of Exhibit F as thereafter amended from time to time with the
consent of the Agent.
"Type" has the meaning specified in the definition of
"Loan."
"UCC" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Illinois; provided, however,
in the event that, by reason of mandatory provisions of law, any or all
of the attachment, perfection or priority of the security interest of
Agent (or any party for which Agent is agent) in any collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction
other than the State of Illinois, the term "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction solely for
purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions related to such
provisions.
"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Plan's assets, determined in accordance with the
assumptions used for
30
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United States
of America.
"Unused Letter of Credit Subfacility" means an amount equal to
$15,000,000 minus the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit plus (b) the aggregate unpaid
reimbursement obligations with respect to all Letters of Credit.
"Wholly-Owned Subsidiary" means any corporation in which
(other than directors' qualifying shares required by law) 100% of the
capital stock of each class having ordinary voting power, and 100% of
the capital stock of every other class, in each case, at the time as of
which any determination is being made, is owned, beneficially and of
record, by the Person being considered, or by one or more of the other
Wholly-Owned Subsidiaries, or both.
1.02 Other Interpretive Provisions. (a) The meanings of
defined terms are equally applicable to the singular and plural
forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar
words refer to this Agreement as a whole and not to any particular
provision of this Agreement; and subsection, Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from
and including"; the words "to" and "until" each mean "to but
excluding", and the word "through" means "to and including."
(iv) The term "property" includes any kind of
property or asset, real, personal or mixed, tangible or intangible.
(v) Reference to "$" or "dollars" shall mean US
Dollars or if evaluating another currency, then the US Dollar value or
equivalent at the time of consideration utilizing the spot rate for
open market transactions in such currency.
31
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and 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 cumulative and shall
each be performed in accordance with their terms. Unless otherwise expressly
provided, any reference to any action of the Agent or the Lenders by way of
consent, approval or waiver shall be deemed modified by the phrase "in its/their
sole discretion."
(g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent, the
Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent merely
because of the Agent's or Lenders' involvement in their preparation.
1.03 Accounting Principles. Unless the context otherwise clearly
requires or Mexican GAAP is specifically referenced, all accounting terms not
expressly defined herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with GAAP,
consistently applied. References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Borrower.
1.04 Amendment and Restatement. (a) This Agreement, the Guaranty and
the Security Agreements collectively amend and restate in its entirety the
Existing Loan Agreement and, upon effectiveness of this Agreement, the Guaranty
and the Security Agreements, the terms and provisions of the Existing Loan
Agreement shall, subject to Sections 1.04(b) and (c), be superseded hereby and
thereby.
(b) Notwithstanding the amendment and restatement of the
Existing Loan Agreement by this Agreement, the Guaranty, the Security Agreements
and the Notes, the Borrower and the other Existing Borrowers shall continue to
be liable to BABC, the Agent and the Lenders with respect to agreements on the
part of the Existing Borrowers under the Existing Loan Agreement to indemnify
32
and hold BABC, the Agent and the Lenders harmless from and against all claims,
demands, liabilities, damages, losses, costs, charges and expenses to which
BABC, the Agent or any Lender may be subject arising in connection with any
action taken, failure to take action or transaction contemplated in or under the
Existing Loan Agreement during the period that such agreement was in effect.
(c) Notwithstanding the amendment and restatement of the
Existing Loan Agreement by this Agreement, the Guaranty and the Security
Agreements, the indebtedness, liabilities and obligations owing to the Agent and
the Lenders by the Borrower and the other Existing Borrowers under the Existing
Loan Agreement remain outstanding as of the date hereof, constitute continuing
Obligations hereunder and thereunder and shall continue to be secured by the
Collateral.
This Agreement is given in partial substitution for the
Existing Loan Agreement, and does not evidence a repayment and reborrowing of
the obligations of the Existing Borrowers under such agreement, and is in no way
intended to constitute a novation of the Existing Loan Agreement, including,
without limitation, the guarantees provided thereunder which shall be continuing
under the Guaranty and the Liens granted thereunder which shall be continuing
under the Security Agreements.
(d) Upon the effectiveness of this Agreement, each reference
to the Existing Loan Agreement in any other document, instrument or agreement
executed and/or delivered in connection therewith (the "Existing Loan
Documents") shall mean and be a reference to this Agreement.
(e) The parties hereto acknowledge and agree that any waivers,
express or implied by course of conduct or otherwise, amendments or other
actions (or failures to act) under the Existing Loan Agreement and the other
Existing Loan Documents shall be of no force or effect, and of no use in
interpreting the rights and duties of the parties under this Agreement and the
other Loan Documents.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments.
(a) The Term Credit. Each Lender severally agrees, on the
terms and conditions set forth herein, to continue to make a single loan to the
Borrower (each such Loan, a "Term Loan") on the Closing Date in an amount not to
exceed such Lender's Pro Rata Share of the Term Commitment, and that such Term
Loan shall be made by continuing the Borrower's term loan under the Existing
33
Loan Agreement and converting as much of the revolving loan under the Existing
Loan Agreement as shall be necessary thereafter so that the Borrower has
borrowed the aggregate Term Commitment of the Lenders on the Closing Date.
Amounts borrowed as Term Loans which are repaid or prepaid by the Borrower may
not be reborrowed.
(b) The Revolving Credit. Each Lender severally agrees, on the
terms and conditions set forth herein, to make revolving loans to the Borrower
(each such loan, a "Revolving Loan") from time to time on any Business Day
during the period from the Closing Date to the Stated Maturity Date, in amounts
not to exceed such Lender's Pro Rata Share of the lesser of (i) the Availability
and (ii) the Revolving Commitment; provided, however, that, if after giving
effect to any proposed Borrowing of Revolving Loans, the aggregate principal
amount of all outstanding Revolving Loans, the undrawn amount of outstanding
Letters of Credit and any unpaid reimbursement obligations in respect of the
Letters of Credit would exceed either of the Availability or the Revolving
Commitment of the Lenders, then the Lenders shall not be obligated to make such
proposed Revolving Loans until such excess has been eliminated. Within the
limits of each Lender's Commitment, and subject to the other terms and
conditions hereof, the Borrower may borrow under this Section 2.01(b), prepay
under Section 2.06 and reborrow under this Section 2.01(b).
(c) Letters of Credit.
(i) Agreement to Cause Issuance. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations
and warranties of the Borrower herein set forth, the Agent agrees to
take reasonable steps to cause the Issuing Bank to issue for the
account of the Borrower and to provide credit support or other
enhancement in connection with one or more stand-by or documentary
letters of credit (each such letter of credit, a "Letter of Credit" and
such letters of credit, collectively, the "Letters of Credit") in
accordance with this Section 2.01(c) from time to time during the term
of this Agreement.
(ii) Amounts; Outside Expiration Date. The Agent shall not
have any obligation to take steps to cause to be issued any Letter of
Credit at any time: (1) if the maximum undrawn amount of the requested
Letter of Credit is greater than the Unused Letter of Credit
Subfacility at such time; (2) if the maximum undrawn amount of the
requested Letter of Credit and all commissions, fees, and charges due
from the Borrower in connection with the opening thereof exceed the
Availability of Borrower at such time; (3) which has an expiration date
later than the Stated Maturity Date; or (4) if the stated amount of all
Letters of Credit (including the one proposed to be issued) supporting
or issued in respect
34
of any performance bonds, surety contracts or Surety Instruments of any
kind exceeds $2,500,000; provided, however, that, if after giving
effect to any such new Letter of Credit, the aggregate principal amount
of all outstanding Revolving Loans, the undrawn amount of outstanding
Letters of Credit and any unpaid reimbursement obligations in respect
of the Letters of Credit exceeds the Availability or the Revolving
Commitment of the Lenders, then the Lenders shall refuse to make or
otherwise restrict the issuance of new Letters of Credit as the Lenders
determine until such excess has been eliminated.
(iii)Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in
Article IV, the obligation of the Agent to take reasonable steps to
cause to be issued any Letter of Credit is subject to the following
conditions precedent having been satisfied in a manner satisfactory to
the Agent:
(1) The Borrower shall have delivered to the proposed Issuing
Bank of such Letter of Credit, at such time and in such manner as such proposed
issuer may prescribe, an application in form and substance satisfactory to such
proposed issuer for the issuance of the Letter of Credit and such other
documents as may be required pursuant to the terms thereof, the form and terms
of the proposed Letter of Credit shall be satisfactory to the Agent and such
proposed Issuing Bank; and
(2) as of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to enjoin or
restrain money center banks generally from issuing letters of credit of the type
and in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed issuer of such Letter of Credit refrain from, the
issuance of letters of credit generally or the issuance of such Letters of
Credit.
(iv) Issuance of Letters of Credit.
(1) Request for Issuance. The Borrower shall give the Agent
and the Issuing Bank three (3) Business Days' prior written notice, containing
the original signature of a Responsible Officer of the Borrower of Borrower's
request for the issuance of a Letter of Credit. Such notice shall be irrevocable
and shall specify the original face amount of the Letter of Credit requested,
the effective date (which date shall be a Business Day) of issuance of such
requested Letter of Credit, whether such Letter of Credit may be drawn in a
single or in partial draws, the date on which such requested Letter of Credit is
to expire (which date shall be a Business Day), the purpose for which such
35
Letter of Credit is to be issued (such Letter of Credit shall not be issued for
the purpose of backing the issuance of performance bonds, or to a surety or in
lieu of performance bonds unless such surety or performance bond has been issued
in accordance with Section 7.08(e) hereof), and the beneficiary of the requested
Letter of Credit. The Borrower shall attach to such notice the proposed form of
the Letter of Credit that the Agent is requested to cause to be issued.
(2) Responsibilities of the Agent; Issuance. The Agent
---------------------------------------
shall determine, as of the Business Day immediately preceding the
requested effective date of issuance of the Letter of Credit set
forth in the notice from the Borrower pursuant to Section
-------
2.01(c)(1), (i) the amount of the applicable Unused Letter of
----------
Credit Subfacility and (ii) the Availability of the Borrower as
of such date, and that such issuance will comply with Section
-------
2.01(c)(ii). If the undrawn amount of the requested Letter of
-----------
Credit is not greater than the applicable Unused Letter of Credit
Subfacility and would not exceed the Availability of the
Borrower, and if such issuance will comply with Section
-------
2.01(c)(ii), then the Agent shall take reasonable steps to cause
-----------
such issuer to issue the requested Letter of Credit on such
requested effective date of issuance.
(3) Notice of Issuance. Promptly after the issuance of any
Letter of Credit, the Agent shall give notice to each Lender of the issuance of
such Letter of Credit.
(4) No Extensions or Amendment. The Agent shall not be
obligated to cause any Letter of Credit to be extended or amended unless the
requirements of this Section 2.01(c)(iv)(4) are met as though a new Letter of
Credit were being requested and issued. With respect to any Letter of Credit
which contains any "evergreen" or automatic renewal provision, each Lender shall
be deemed to have consented to any such extension or renewal unless any such
Lender shall have provided to the Agent, not less than 30 days prior to the last
date on which the applicable issuer can in accordance with the terms of the
applicable Letter of Credit decline to extend or renew such Letter of Credit,
written notice that it declines to consent to any such extension or renewal,
provided, that if all of the requirements of this Section 2.01(c)(iv) are met
and no Event or Event of Default exists, no Lender shall decline to consent to
any such extension or renewal.
(v) Payments Pursuant to Letters of Credit.
(1) Payment of Letter of Credit Obligations. The Borrower
agrees to reimburse the Issuing Bank for any draw under any Letter of Credit
issued for its benefit immediately upon demand, and to pay the issuer of the
Letter of Credit the amount of all other obligations and other amounts payable
to such issuer under or in connection with any Letter of Credit immediately when
due, irrespective of any claim, setoff, defense or other right
36
which the Borrower may have at any time against such Issuing Bank or any other
Person.
(2) Revolving Loans to Satisfy Reimbursement Obligations. In
the event that the Issuing Bank of any Letter of Credit honors a draw under such
Letter of Credit and the Borrower shall not have repaid such amount to the
Issuing Bank of such Letter of Credit pursuant to Section 2.04(c)(v)(1), the
Agent shall, upon receiving notice of such failure, notify each Lender of such
failure, and each Lender shall unconditionally pay to the Agent, for the account
of such Issuing Bank, as and when provided hereinbelow, an amount equal to such
Lender's Pro Rata Share of the amount of such payment in Dollars and in same day
funds. If the Agent so notifies the Lenders prior to noon (Chicago time) on any
Business Day, each Lender shall make available to the Agent the amount of such
payment, as provided in the immediately preceding sentence, on such Business
Day. Such amounts paid by the Lenders to the Agent, for the benefit of the
Issuing Bank, shall constitute Revolving Loans which shall be deemed to have
been requested by the Borrower pursuant to Section 2.01(b).
(vi) Participations.
(1) Purchase of Participations. With respect to all Letters of
Credit set forth on Schedule 2.01(c) and immediately upon issuance of any other
Letter of Credit in accordance with Section 2.01(c)(iv) each Lender shall be
deemed to have irrevocably and unconditionally purchased and received without
recourse or warranty, an undivided interest and participation in the credit
support or enhancement provided through the Agent to such Issuing Bank in
connection with the issuance of such Letter of Credit, equal to such Lender's
Pro Rata Share of the face amount of such Letter of Credit (including, without
limitation, all obligations of the Borrower with respect thereto, and any
security therefor or guaranty pertaining thereto).
(2) Sharing of Reimbursement Obligation Payments. Whenever the
Agent receives a payment from the Borrower on account of reimbursement
obligations in respect of a Letter of Credit as to which the Agent has
previously received for the account of the Issuing Bank thereof payment from a
Lender pursuant to Section 2.01(c)(v)(2), the Agent shall promptly pay to such
Lender such Lender's Pro Rata Share of such payment from Borrower in Dollars.
Each such payment shall be made by the Agent on the Business Day on which the
Agent receives immediately available funds paid to such Person pursuant to the
immediately preceding sentence, if received prior to noon (Chicago time) on such
Business Day and otherwise on the next succeeding Business Day.
(3) Documentation. Upon the request of any Lender, the
Agent shall furnish to such Lender copies of any Letter of
Credit, reimbursement agreements executed in connection
37
therewith, application for any Letter of Credit and credit support or
enhancement provided through the Agent in connection with the issuance of any
Letter of Credit, and such other documentation as may reasonably be requested by
such Lender.
(4) Obligations Irrevocable. The obligations of each Lender to
make payments to the Agent, for the benefit of the Issuing Bank, with respect to
any Letter of Credit or with respect to any credit support or enhancement
provided through the Agent with respect to a Letter of Credit, and the
obligations of the Borrower to make payments to the Agent, for the account of
the Lenders, shall be irrevocable, not subject to any qualification or exception
whatsoever, including, without limitation, any of the following circumstances:
(I) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(II) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time against a beneficiary named
in a Letter of Credit or any transferee of any Letter of Credit (or any Person
for whom any such transferee may be acting), any Lender, the Agent, the Issuing
Bank of such Letter of Credit, or any other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying transactions between the
Borrower or any other Person and the beneficiary named in any Letter of Credit);
(III) any draft, certificate or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(IV) the surrender or impairment of any security
for the performance or observance of any of the terms of any of
the Loan Documents; or
(V) the occurrence of any Default or Event of
Default.
(vii) Recovery or Avoidance of Payments. In the event any
payment by or on behalf of the Borrower received by the Agent with respect to
any Letter of Credit (or any guaranty by the Borrower or reimbursement
obligation of the Borrower relating thereto) and distributed by the Agent to the
Lenders on account of their respective participations therein is thereafter set
aside, avoided or recovered from the Agent in connection with any receivership,
liquidation or bankruptcy proceeding, the Lenders shall, upon demand by the
Agent, pay to the Agent their respective Pro Rata Shares of such amount set
aside, avoided or recovered, together with interest at the rate required to be
paid by the Agent upon the amount required to be repaid by it.
38
(viii) Indemnification; Exoneration.
(1) Indemnification. In addition to amounts payable as
elsewhere provided in this Section 2.01(c), the Borrower hereby agrees to
protect, indemnify, pay and save the Lenders, the Issuing Bank and the Agent
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys' fees) which
any Lender or the Agent may incur or be subject to as a consequence, direct or
indirect, of the issuance of any Letter of Credit or the provision of any credit
support or enhancement in connection therewith.
(2) Assumption of Risk by the Borrower. As among the Borrower,
the Lenders, the Issuing Bank and the Agent, the Borrower assumes all risks of
the acts and omissions of, or misuse of any of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, subject to the provisions of the applications for
the issuance of Letters of Credit, the Lenders, the Issuing Bank and the Agent
shall not be responsible for: (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any Person in
connection with the application for and issuance of and presentation of drafts
with respect to any of the Letters of Credit, even if it should prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B)
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (C) the failure of the beneficiary of any
Letter of Credit to comply duly with conditions required in order to draw upon
such Letter of Credit; (D) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the transmission or otherwise of any
document required in order make a drawing under any Letter of Credit or of the
proceeds thereof; (G) the misapplication by the beneficiary of any Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or (H) any
consequences arising from causes beyond the control of the Lenders, the Issuing
Bank or the Agent, including, without limitation, any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto Governmental
Authority. None of the foregoing shall affect, impair or prevent the vesting of
any rights or powers of the Agent, the Issuing Bank or any Lender under this
Section 2.01(c).
(ix) Outstanding Letters of Credit at Closing.
Schedule 2.01(c) sets forth a complete list, as of the Closing
Date, of all outstanding Letters of Credit under the Existing
39
Loan Agreement which are continuing as Letters of Credit hereunder, including
the number of such Letters of Credit, the beneficiary, the stated amount and the
expiry date thereof.
2.02 Loan Accounts; Notes. (a) The Loans made by each Lender shall be
evidenced by one or more loan accounts or records maintained by such Lender in
the ordinary course of business. The loan accounts or records maintained by the
Agent and each Lender shall be conclusive absent manifest error of the amount of
the Loans made by the Lenders to the Borrower and the interest and payments
thereon. Any failure so to record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Borrower hereunder to pay any
amount owing with respect to the Loans.
(b) The Loans made by the Lenders will be evidenced by the
Revolving Loan Note and the Term Loan Note in addition to loan accounts. The
Agent, on behalf of the Lenders, is irrevocably authorized by the Borrower to
endorse the Note(s) and the Agent's record shall be conclusive absent manifest
error; provided, however, that the failure of the Agent to make, or an error in
making, a notation thereon with respect to any Loan shall not limit or otherwise
affect the obligations of the Borrower hereunder or under any such Note to the
Agent or any Lender.
2.03 Procedure for Borrowing. (a) Each Borrowing shall be made upon the
Borrower's irrevocable written notice delivered to the Agent in the form of a
Notice of Borrowing (which notice must be received by the Agent prior to 11:00
a.m. (Chicago time)) (i) three (3) Business Days prior to the requested
Borrowing Date, in the case of Offshore Rate Loans, and (ii) one (1) Business
Day prior to the requested Borrowing Date, in the case of Base Rate Loans,
specifying:
(A) the amount of the Borrowing, which shall be in
an aggregate minimum amount of (i) $5,000,000 or any multiple
of $1,000,000 in excess thereof in the case of Offshore Rate
Loans and (ii) $1,000,000 or any multiple of $500,000 in
excess thereof in the case of Base Rate Loans;
(B) the requested Borrowing Date, which shall
be a Business Day;
(C) the Type of Loans comprising the Borrowing;
and
(D) if an Offshore Rate Loan, the duration of the
Interest Period applicable to such Loans included in such
notice. If the Notice of Borrowing fails to specify the
duration of the Interest Period for any
40
Borrowing comprised of Offshore Rate Loans, such Interest
Period shall be three months.
provided, however, that with respect to the Borrowing to be made on the Closing
Date, the Notice of Borrowing shall be delivered to the Agent not later than
12:00 noon (Chicago time) on the Closing Date and such Borrowing will consist of
Base Rate Loans only; and further provided that if so requested by the Agent,
all Borrowings during the first sixty (60) days following the Closing Date shall
have the same Interest Period and shall be Base Rate Loans or Offshore Rate
Loans for Interest Periods no longer than one month.
(b) The Agent will promptly notify each Lender of its receipt
of any Notice of Borrowing and of the amount of such Lender's Pro Rata Share of
that Borrowing.
(c) Each Lender will make the amount of its Pro Rata Share of
each Borrowing available to the Agent for the account of the Borrower at the
Agent's Payment Office by 11:00 a.m. (Chicago time) on the Borrowing Date
requested by the Borrower in funds immediately available to the Agent. The
proceeds of all such Loans will then be made available to the Borrower by the
Agent by wire transfer in accordance with written instructions provided to the
Agent by the Borrower of like funds as received by the Agent.
(d) After giving effect to any Borrowing, unless the Agent
shall otherwise consent, there may not be more than five (5) different Interest
Periods in effect.
2.04 Conversion and Continuation Elections. (a) The
Borrower may, upon irrevocable written notice to the Agent in
accordance with Section 2.04(b):
(i) elect, as of any Business Day, in the case of
Base Rate Loans, or as of the last day of the applicable Interest
Period, in the case of any other Type of Loans, to convert any such
Loans (or any part thereof in an amount not less than $5,000,000, or
that is in an integral multiple of $1,000,000 in excess thereof) into
Offshore Rate Loans; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any Loans having Interest Periods expiring
on such day (or any part thereof in an amount not less than $5,000,000,
or that is in an integral multiple of $1,000,000 in excess thereof) as
Offshore Rate Loans with an Interest Period of the same duration;
provided, that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $5,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the
41
Borrower to continue such Loans as, and convert such Loans into, Offshore Rate
Loans shall terminate.
(b) The Borrower shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than 11:00 a.m.
(Chicago time) at least (i) three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Offshore Rate Loans; and (ii) one Business Day in advance of the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be
converted or continued;
(C) the Type of Loans resulting from the
proposed conversion or continuation; and
(D) other than in the case of conversions into
Base Rate Loans, the duration of the requested Interest
Period.
(c) If upon the expiration of any Interest Period applicable
to Offshore Rate Loans, the Borrower has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans or if any Default or Event
of Default then exists, the Borrower shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.
(d) The Agent will promptly notify each Lender of its receipt
of a Notice of Conversion/Continuation, or, if no timely notice is provided by
the Borrower, the Agent will promptly notify each Lender of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Lender.
(e) Unless the Majority Lenders otherwise consent, during the
existence of a Default or Event of Default, the Borrower may not elect to have a
Loan funded as, converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, unless the Agent shall otherwise consent, there may not be more than five
(5) different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of Commitments. The
Borrower may, upon not less than four (4) Business Days' prior
notice to the Agent, terminate the Term Commitments, or
42
permanently reduce the Revolving Commitments by an aggregate minimum amount of
$5,000,000 or any multiple of $1,000,000 in excess thereof; unless, after giving
effect thereto and to any prepayments of Loans made on the effective date
thereof, the then-outstanding principal amount of the Loans would exceed the
amount of the combined Commitments then in effect. Once reduced in accordance
with this Section 2.05, the Commitments may not be increased. Any reduction of
the Commitments shall be applied to each Lender according to its Pro Rata Share.
All accrued Commitment Fees to, but not including the effective date of any
reduction or termination of Commitments, shall be paid on the effective date of
such reduction or termination.
2.06 Optional Prepayments. Subject to Section 3.04, the Borrower may, at
any time or from time to time, upon not less than four (4) Business Days'
irrevocable notice to the Agent (or on one (1) Business Days' irrevocable notice
to the Agent with respect to Base Rate Loans outstanding as Revolving Loans),
ratably prepay Loans in whole or in part, in minimum amounts of $5,000,000 or
any multiple of $1,000,000 in excess thereof. Such notice of prepayment shall
specify the date and amount of such prepayment and the Type(s) of Loans to be
prepaid. The Agent will promptly notify each Lender of its receipt of any such
notice, and of such Lender's Pro Rata Share of such prepayment. If such notice
is given by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to each such date on the
amount prepaid and any amounts required pursuant to Section 3.04. Optional
prepayments of the Term Loan shall be made without prepayment penalties other
than any amounts owing pursuant to Section 3.04 and shall be applied in inverse
order of maturity.
2.07 Mandatory Prepayments of Loans; Mandatory Commitment
Reductions.
(a) Asset Dispositions. If the Borrower or any of its
Subsidiaries (other than MK Gain) shall at any time or from time to time make or
agree to make a Disposition, or shall suffer an Event of Loss, then (i) the
Borrower shall promptly notify the Agent of such proposed Disposition or Event
of Loss (including the amount of the estimated Net Proceeds to be received by
the Borrower or such Subsidiary in respect thereof) and (ii) promptly upon, and
in no event later than 10 days after, receipt by the Borrower or such Subsidiary
of the Net Proceeds of such Disposition or Event of Loss, the Borrower shall
prepay the Term Loan in an aggregate amount equal to such Net Proceeds, in the
inverse order of their stated maturity; provided, however, that no such
prepayment shall be required with respect to (A) equipment sales in the ordinary
course of business of obsolete and non-useable equipment to the extent the Net
Proceeds of such sale are reinvested in equipment used in the business of the
Borrower or any such Subsidiary within 90 days of receipt
43
thereof, or (B) the sale of the Borrower's facility located in Mountaintop,
Pennsylvania or Touchstone's facility located in Jackson, Tennessee to the
extent the Net Proceeds of such sale (I) received in cash are reinvested in a
new facility for Touchstone and construction for such facility begins within 12
months from the date of such sale and is completed with reasonable diligence
thereafter and (II) received in the form of a promissory note of up to $500,000
in principal amount are reinvested in equipment used in the business of the
Borrower or any Guarantor within 90 days of receipt of the cash payments under
or in respect of such promissory note, or (C) the sale of equipment resulting in
Net Proceeds of up to $2,000,000 in aggregate amount by Motor Coils from its
machine shop in Braddock, Pennsylvania and identified on Schedule 2.07 hereto to
the extent the Net Proceeds of such sales are reinvested in equipment used by
Motor Coils on or before December 31, 1997.
(b) Subordinated Debt Issuance. If the Borrower or any
Subsidiary (other than MK Gain) shall, at any time, issue any Indebtedness after
the Closing Date which is subordinated in right of payment to the Obligations,
is permitted under Section 7.05 and is otherwise on terms and conditions
including, without limitation, subordination and standstill provisions
acceptable to the Agent in its sole discretion, then the Borrower shall promptly
notify the Agent of the estimated Net Issuance Proceeds of such issuance to be
received by the Borrower in respect thereof. Promptly upon, and in no event
later than 1 day after, receipt by the Borrower of Net Issuance Proceeds of such
issuance, the Borrower shall prepay the Term Loan in an aggregate amount equal
to the amount of such Net Issuance Proceeds, in the inverse order of maturity.
(c) Overadvances. In the event that the outstanding balance of
the Revolving Loans shall, at any time, exceed the lesser at such time of (i)
the Revolving Commitment and (ii) Availability less in both the case of clause
(i) and (ii) above the outstanding amount of the Letters of Credit and the
unpaid reimbursement obligations in respect of drawn letters of credit, the
Borrower shall immediately repay the Revolving Loans in the amount of such
excess.
(d) General. Any prepayments pursuant to this Section
2.07 shall be applied first to any Base Rate Loans then
outstanding and then to Offshore Rate Loans with the shortest
Interest Periods remaining; provided, however, that if the amount
of Base Rate Loans then outstanding is not sufficient to satisfy
the entire prepayment requirement, the Borrower may, at its
option, place any amounts which it would otherwise be required to
use to prepay Offshore Rate Loans on a day other than the last
day of the Interest Period therefor in an interest-bearing
account pledged to the Agent for the benefit of the Lenders until
the end of such Interest Period at which time such pledged
amounts will be applied to prepay such Offshore Rate Loans. The
44
Borrower shall pay, together with each prepayment under this Section 2.07,
accrued interest on the amount prepaid and any amounts required pursuant to
Section 3.04.
(e) Reduction of Commitment. Upon the making of any mandatory
prepayment under this Section 2.07 (other than under paragraph (c), the
Commitment of each Lender shall automatically be reduced by an amount equal to
such Lender's ratable share of the aggregate of principal repaid, effective as
of the earlier of the date that such prepayment is made or the date by which
such prepayment is due and payable hereunder. All accrued Commitment Fees to,
but not including the effective date of any reduction or termination of
Commitments, shall be paid on the effective date of such reduction or
termination.
2.08 Repayment.
(a) The Term Credit. The Borrower shall repay the Term
Loan on each date as follows (each a "Principal Payment Date"):
Quarterly Term
Loan Repayment
Payment Date Amount
------------ ------
each of June 30, 1997, $625,000 each
September 30, 1997,
December 31, 1997, and
March 31, 1998
each of June 30, 1998, $1,250,000 each
September 30, 1998,
December 31, 1998 and
March 31, 1999
each of June 30, 1999, $1,250,000 each
September 30, 1999,
December 31, 1999 and
March 31, 2000
each of June 30, 2000, $1,875,000 each
September 30, 2000, and
December 31, 2000
Stated Maturity Date $1,875,000 or the
then remaining
principal amount of
the Term Loan
(b) The Revolving Credit. The Borrower shall repay to
the Lenders in full on the Stated Maturity Date the aggregate
principal amount of Revolving Loans outstanding on such date.
45
2.09 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Offshore Rate or the Base Rate, as the case may be (and subject to
the Borrower's right to convert to other Types of Loans under Section 2.04),
plus the Applicable Margin in effect for such Type of Loan from time to time.
(b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any prepayment
of Loans under Section 2.06 or 2.07 for the portion of the Loans so prepaid and
upon payment (including prepayment) in full thereof and, during the existence of
any Event of Default, interest shall be paid on demand of the Agent, which shall
be made at the request or with the consent of the Majority Lenders.
(c) Notwithstanding subsection (a) of this Section 2.09, while
any Event of Default exists and after acceleration of the maturity date of the
Loans, the Borrower shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on the principal amount of all
outstanding Loans, at a rate per annum which is determined by adding 2% per
annum to the otherwise applicable interest rate in effect for such Loans;
provided, however, that, on and after the expiration of any Interest Period
applicable to any Offshore Rate Loan outstanding on the date of occurrence of
such Event of Default or acceleration, the principal amount of such Loan shall,
during the continuation of such Event of Default or after acceleration, bear
interest as a Base Rate Loan at a rate per annum equal to the Base Rate plus (i)
the Applicable Margin in effect for such Loan plus (ii) an additional two
percent (2%).
(d) Anything herein to the contrary notwithstanding, the
obligations of the Borrower to any Lender hereunder shall be subject to the
limitation that payments of interest shall not be required, for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Lender would be contrary
to the provisions of any law applicable to such Lender limiting the highest rate
of interest that may be lawfully contracted for, charged or received by such
Lender, and in such event the Borrower shall pay such Lender interest at the
highest rate permitted by applicable law.
2.10 Fees. (a) Arrangement, Agency Fees. The Borrower shall pay an
arrangement fee to the Arranger for the Arranger's own account, and shall pay an
agency fee to the Agent for the Agent's own account, as required by the letter
agreement ("Fee Letter") between the Borrower, the Arranger BofA and Bank of
America Illinois dated December 30, 1996, as amended from time to time.
46
(b) Commitment Fees. The Borrower shall pay to the Agent for the
account of each Lender a commitment fee (the "Commitment Fee") on the average
daily unused portion of such Lender's Revolving Commitment, computed on a
quarterly basis in arrears on the last Business Day of each calendar quarter as
an amount equal to the average daily non-utilization for that quarter as
calculated by the Agent on the Revolving Commitment multiplied by a per annum
rate equal to the Applicable Margin then in effect for the Commitment Fee. Such
Commitment Fee shall accrue from the Closing Date to the Stated Maturity Date
and shall be due and payable quarterly in arrears on the last Business Day of
each quarter commencing on March 31, 1997 through the Stated Maturity Date, with
the final payment to be made on the Stated Maturity Date; provided that, in
connection with any reduction or termination of Commitments under Section 2.05
or Section 2.07, the accrued Commitment Fee calculated for the period ending on
such date shall also be paid on the date of such reduction or termination, with
the following quarterly payment being calculated on the basis of the period from
such reduction or termination date to such quarterly payment date. The
Commitment Fees provided in this subsection shall accrue at all times after the
above-mentioned commencement date, including at any time during which one or
more conditions in Article IV are not met.
(c) Compensation for Letters of Credit.
(1) Letter of Credit Fees. Borrower agrees to pay to the Agent,
for the ratable account of the Lenders, (i) for each stand-by Letter of Credit,
a fee calculated at a per annum rate equal to the Applicable Margin on the
undrawn amount of each such stand-by Letter of Credit issued for the Borrower's
account and (ii) for each commercial or documentary Letter of Credit, a fee
calculated at a one-time flat rate equal to the Applicable Margin multiplied by
the stated amount of each such commercial or documentary Letter of Credit issued
for the Borrower's account. The Letter of Credit fees for stand-by Letters of
Credit shall be payable in arrears on the last Business Day of each calendar
quarter during which each such Letter of Credit remains outstanding, and the
Letter of Credit fees for all commercial or documentary Letters of Credit issued
during each calendar quarter will be payable in arrears on the last Business Day
of each calendar quarter and at maturity. The Letter of Credit Fee for stand-by
Letters of Credit shall be computed on the basis of a 360-day year for the
actual number of days elapsed.
(2) Issuer Fees and Charges. The Borrower shall pay to the
Issuing Bank of any Letter of Credit issued for the benefit of or on behalf of
the Borrower or its Borrowing Subsidiaries solely for such Issuing Bank's
account (i) a one-time fronting fee of 1/8 of 1% of the face amount of such
Letter of Credit payable upon issuance; provided, however, that BofA will if it
is the Issuing Bank with respect to any Letter of Credit set forth
47
on Schedule 2.01(c) attempt in good faith to obtain any necessary internal
approvals or satisfy any regulatory concerns to permit any such Letters of
Credit which have been issued by BofA under the Existing Loan Agreement to
continue as outstanding Letters of Credit under this Agreement without requiring
a reissuance of such Letters of Credit which would necessitate paying or
otherwise require the payment of an additional fronting fee, and (ii) such other
standard charges as are assessed by such Issuing Bank for letters of credit
issued by it, including, without limitation, its standard fees for documenting,
administering, amending, renewing, negotiating, paying and canceling letters of
credit and all other fees associated with issuing or servicing letters of
credit, as and when assessed.
2.11 Computation of Fees and Interest. (a) All computations of interest
for Base Rate Loans when the Base Rate is determined by BofA's "reference rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year). Interest
and fees shall accrue during each period during which interest or such fees are
computed from and including the first day thereof to and excluding the last day
thereof.
(b) Each determination of an interest rate by the Agent
shall be conclusive and binding on the Borrower and the Lenders
in the absence of manifest error.
2.12 Payments by the Borrower. (a) All payments to be made by the
Borrower shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Borrower shall be made
to the Agent for the account of the Lenders at the Agent's Payment Office, and
shall be made in Dollars and in immediately available funds, no later than 12:00
noon. (Chicago time) on the date specified herein. The Agent will promptly
distribute to each Lender its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any
payment received by the Agent later than 12:00 noon (Chicago time) shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrower
prior to the date on which any payment is due to the Lenders that
48
the Borrower will not make such payment in full as and when required, the Agent
may assume that the Borrower has made such payment in full to the Agent on such
date in immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower has not made such payment in full to the Agent, each Lender
shall repay to the Agent on demand such amount distributed to such Lender,
together with interest thereon at the Federal Funds Rate for each day from the
date such amount is distributed to such Lender until the date repaid.
2.13 Payments by the Lenders to the Agent.
(a) Unless the Agent receives notice from a Lender on or prior
to the Closing Date or, with respect to any Borrowing after the Closing Date, at
least one (1) Business Day prior to the date of such Borrowing, that such Lender
will not make available as and when required hereunder to the Agent for the
account of the Borrower the amount of that Lender's Pro Rata Share of the
Borrowing, the Agent may assume that each Lender has made such amount available
to the Agent in immediately available funds on the Borrowing Date and the Agent
may (but shall not be so required), in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent any Lender shall not have made its full amount available to the Agent in
immediately available funds and the Agent in such circumstances has made
available to the Borrower such amount, that Lender shall on the Business Day
following such Borrowing Date make such amount available to the Agent, together
with interest at the Federal Funds Rate for each day during such period. A
notice of the Agent submitted to any Lender with respect to amounts owing under
this subsection (a) shall be conclusive, absent manifest error. If such amount
is so made available, such payment to the Agent shall constitute such Lender's
Loan on the date of Borrowing for all purposes of this Agreement. If such amount
is not made available to the Agent on the Business Day following the Borrowing
Date, the Agent will notify the Borrower of such failure to fund and, upon
demand by the Agent, the Borrower shall pay such amount to the Agent for the
Agent's account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Lender to make any Loan on any Borrowing
Date shall not relieve any other Lender of any obligation hereunder to make a
Loan on such Borrowing Date, but no Lender shall be responsible for the failure
of any other Lender to make the Loan to be made by such other Lender on any
Borrowing Date.
49
2.14 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Obligations in its
favor any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder), such Lender shall immediately (a) notify the Agent of
such fact, and (b) purchase from the other Lenders such participations in the
Loans made by them as shall be necessary to cause such purchasing Lender to
share the excess payment pro rata with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from the
purchasing Lender, such purchase shall to that extent be rescinded and each
other Lender shall repay to the purchasing Lender the purchase price paid
therefor, together with an amount equal to such paying Lender's ratable share
(according to the proportion of (i) the amount of such paying Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off, but subject to Section 10.10) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount
of such participation. The Agent will keep records (which shall be conclusive
and binding in the absence of manifest error) of participations purchased under
this Section and will in each case notify the Lenders following any such
purchases or repayments.
2.15 Security and Guaranty. All Obligations of the Borrower, the
Guarantors and the Borrowing Subsidiaries under this Agreement, the Notes and
all other Loan Documents shall be secured in accordance with the Collateral
Documents.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes. (a) Any and all payments by the Borrower to each Lender or
the Agent under this Agreement and any other Loan Document shall be made free
and clear of, and without deduction or withholding for any Taxes. In addition,
the Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each
Lender and the Agent for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by the Lender or the Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes
50
were correctly or legally asserted. Payment under this indemnification shall be
made within 30 days after the date the Lender or the Agent makes written demand
therefor.
(c) If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as
necessary so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums
payable under this Section) such Lender or the Agent, as the case may
be, receives an amount equal to the sum it would have received had no
such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and
withholdings;
(iii) the Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority or
other authority in accordance with applicable law; and
(iv) the Borrower shall also pay to each Lender
or the Agent for the account of such Lender, at the time interest is
paid, all additional amounts which the respective Lender specifies as
necessary to preserve the after-tax yield the Lender would have received
if such Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the Borrower
of Taxes or Other Taxes, the Borrower shall furnish the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to any
Lender or the Agent pursuant to subsection (c) of this Section, then such Lender
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Borrower which may thereafter accrue, if such change
in the judgment of such Lender is not otherwise disadvantageous to such Lender.
(f) Nothing in this Section 3.01 shall override the terms of any
Specified Swap Contract relating to the subject matter hereof.
3.02 Illegality. (a) If any Lender determines that the
introduction of any Requirement of Law, or any change in any
Requirement of Law, or in the interpretation or administration of
any Requirement of Law, has made it unlawful, or that any central
51
bank or other Governmental Authority has asserted that it is unlawful, for any
Lender or its applicable Lending Office to make Offshore Rate Loans, then, on
notice thereof by the Lender to the Borrower through the Agent, any obligation
of that Lender to make Offshore Rate Loans shall be suspended until the Lender
notifies the Agent and the Borrower that the circumstances giving rise to such
determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any
Offshore Rate Loan, the Borrower shall, upon its receipt of notice of such fact
and demand from such Lender (with a copy to the Agent), prepay in full such
Offshore Rate Loans of that Lender then outstanding, together with interest
accrued thereon and amounts required under Section 3.04, either on the last day
of the Interest Period thereof, if the Lender may lawfully continue to maintain
such Offshore Rate Loans to such day, or immediately, if the Lender may not
lawfully continue to maintain such Offshore Rate Loan. If the Borrower is
required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, the Borrower shall borrow from the affected Lender, in the amount of
such repayment, a Base Rate Loan.
(c) If the obligation of any Lender to make or maintain Offshore
Rate Loans has been so terminated or suspended, the Borrower may elect, by
giving notice to the Lender through the Agent that all Loans which would
otherwise be made by the Lender as Offshore Rate Loans shall be instead Base
Rate Loans.
(d) Before giving any notice to the Agent under this Section,
the affected Lender shall designate a different Lending Office with respect to
its Offshore Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Lender, be
illegal or otherwise disadvantageous to the Lender.
3.03 Increased Costs and Reduction of Return. (a) If any Lender
determines that, due to either (i) the introduction of or any change (other than
any change by way of imposition of or increase in reserve requirements included
in the calculation of the Offshore Rate or in respect of the assessment rate
payable by any Lender to the FDIC for insuring U.S. deposits) in or in the
interpretation of any law or regulation or (ii) the compliance by that Lender
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Lender of agreeing to make or making, funding or maintaining
any Offshore Rate Loans, then the Borrower shall be liable for, and shall from
time to time, upon demand (with a copy of such demand to be sent to the Agent),
pay to the Agent for the account of such Lender, additional amounts as are
sufficient to compensate such Lender for such increased costs.
52
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Lender (or its Lending Office) or any corporation controlling
the Lender with any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by the Lender or any
corporation controlling the Lender and (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy and such
Lender's desired return on capital) determines that the amount of such capital
is increased as a consequence of its Commitments, loans, credits or obligations
under this Agreement, then, upon demand of such Lender to the Borrower through
the Agent, the Borrower shall pay to the Lender, from time to time as specified
by the Lender, additional amounts sufficient to compensate the Lender for such
increase.
3.04 Funding Losses. The Borrower shall reimburse each Lender and hold
each Lender harmless from any loss or expense which the Lender may sustain or
incur as a consequence of:
(a) the failure of the Borrower to make on a timely
basis any payment of principal of any Offshore Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert a
Loan after the Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation;
(c) the failure of the Borrower to make any prepayment
in accordance with any notice delivered under Section 2.06;
(d) the prepayment (including pursuant to Section 2.07) or other
payment (including after acceleration thereof) of an Offshore Rate Loan on a day
that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any
Offshore Rate Loan to a Base Rate Loan on a day that is not the
last day of the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Borrower to the Lenders under this Section
3.04 and under Section 3.03(a), each Offshore Rate Loan made by a Lender (and
each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the LIBOR used in determining the
Offshore Rate for such Offshore
53
Rate Loan by a matching deposit or other borrowing in the interbank eurodollar
market for a comparable amount and for a comparable period, whether or not such
Offshore Rate Loan is in fact so funded.
3.05 Inability to Determine Rates. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the Offshore
Rate for any requested Interest Period with respect to a proposed Offshore Rate
Loan or that the Offshore Rate applicable pursuant to Section 2.09(a) for any
requested Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to such Lenders of funding such Loan, the
Agent will promptly so notify the Borrower and each Lender. Thereafter, the
obligation of the Lenders to make or maintain Offshore Rate Loans hereunder
shall be suspended until the Agent revokes such notice in writing. Upon receipt
of such notice, the Borrower may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Borrower does not revoke
such Notice, the Lenders shall make, convert or continue the Loans, as proposed
by the Borrower, in the amount specified in the applicable notice submitted by
the Borrower, but such Loans shall be made, converted or continued as Base Rate
Loans instead of Offshore Rate Loans.
3.06 Reserves on Offshore Rate Loans. The Borrower shall pay to each
Lender, as long as such Lender shall be required under regulations of the FRB to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), additional costs on the unpaid principal amount of each Offshore
Rate Loan equal to the actual costs of such reserves allocated to such Loan by
the Lender (as determined by the Lender in good faith, which determination shall
be conclusive), payable on each date on which interest is payable on such Loan,
provided the Borrower shall have received at least 15 days' prior written notice
(with a copy to the Agent) of such additional interest from the Lender. If a
Lender fails to give notice 15 days prior to the relevant Interest Payment Date,
such additional interest shall be payable 15 days from receipt of such notice.
3.07 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article III shall deliver to the Borrower (with a copy
to the Agent) a certificate setting forth in reasonable detail the amount
payable to the Lender hereunder and such certificate shall be conclusive and
binding on the Borrower in the absence of manifest error.
3.08 Substitution of Lenders. Upon the receipt by the
Borrower from any Lender (an "Affected Lender") of a claim for
compensation under Section 3.03, the Borrower may: (i) request
the Affected Lender to use commercially reasonable efforts to
54
obtain a replacement bank or financial institution satisfactory to the Borrower
and to the Agent (a "Replacement Lender") to acquire and assume all or a ratable
part of all of such Affected Lender's Loans and Commitment;(ii) request one or
more of the other Lenders to acquire and assume all or part of such Affected
Lender's Loans and Commitment; or (iii) designate a Replacement Lender. Any such
designation of a Replacement Lender under clause (i) or (iii) shall be subject
to the prior written consent of the Agent (which consent shall not be
unreasonably withheld).
3.09 Survival. The agreements and obligations of the Borrower in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Closing. The obligation of each Lender to
agree to enter into this Agreement and to purchase the existing loans and other
obligations of the Existing Borrowers from BABC is subject to the condition that
the Agent has received on or before the Closing Date all of the following, in
form and substance satisfactory to the Agent and with sufficient copies for each
Lender:
(a) Credit Agreement and Notes. This Agreement
(together with the Exhibits and Schedules substantially in the
form of the Exhibits and Schedules attached hereto, together with
such supplements thereto as the Agent shall approve) and the
Notes executed by the Borrower;
(b) Resolutions; Incumbency. The following documents:
(i) Copies of the resolutions of the board of directors
of the Borrower, MotivePower Investments and each Guarantor authorizing
the transactions contemplated hereby, certified as of the Closing Date
by the Secretary or an Assistant Secretary of such Person; and
(ii) A certificate of the Secretary or Assistant
Secretary of the Borrower, MotivePower Investments and each Guarantor
certifying the names and true signatures of the officers of the
Borrower, MotivePower Investments or such Guarantor authorized to
execute, deliver and perform, as applicable, this Agreement, and all
other Loan Documents to be delivered by it hereunder;
(c) Organization Documents; Financials and Solvency;
Good Standing. Each of the following documents:
55
(i) the articles or certificate of incorporation
and the bylaws of the Borrower, MotivePower Investments and each
Guarantor as in effect on the Closing Date, certified by the Secretary
or Assistant Secretary of the Borrower, MotivePower Investments or such
Guarantor as of the Closing Date;
(ii) a good standing certificate for the
Borrower, MotivePower Investments and each Guarantor from the Secretary
of State (or similar, applicable Governmental Authority) of its state of
incorporation and each state where the Borrower, MotivePower Investments
or such Guarantor is qualified to do business as a foreign corporation
as of a recent date, together with a bring-down certificate by
facsimile, dated the Closing Date;
(iii) evidence satisfactory to the Agent and the
Lenders that the Borrower had consolidated EBITDA (excluding MK Gain) of
not less than $25 million for the immediately preceding four quarters
ending December 31, 1996; provided, however, that this calculation of
EBITDA may exclude from consideration certain cost items to be
identified by the Borrower and acceptable to the Agent in its sole
discretion; and
(iv) a certificate from the Borrower, MotivePower
Investments and each Guarantor certifying that each such Person is
Solvent on a stand-alone basis as of the Closing Date, together with
such evidence or financial statements as the Agent may request to
document such certification.
(d) Legal Opinions. An opinion of Doepken Keevican &
▇▇▇▇▇, counsel to the Borrower and the Guarantors and addressed
to the Agent and the Lenders, substantially in the form of
Exhibit I together with such local counsel opinions as may be
requested by the Agent;
(e) Payment of Fees. Evidence of payment by the Borrower of all
accrued and unpaid fees, costs and expenses to the extent then due and payable
on the Closing Date, together with Attorney Costs of BofA to the extent invoiced
prior to or on the Closing Date, plus such additional amounts of Attorney Costs
as shall constitute BofA's reasonable estimate of Attorney Costs incurred or to
be incurred by it through the closing proceedings (provided that such estimate
shall not thereafter preclude final settling of accounts between the Borrower
and BofA); including any such costs, fees and expenses arising under or
referenced in Sections 2.10 and 10.04;
(f) Collateral Documents. The Guaranty, the Security
Agreement (Borrower), the Security Agreement (Guarantors) and the
other Collateral Documents, executed by the Borrower and/or the
56
Guarantors, as appropriate, in appropriate form for recording,
where necessary, together with
(i) acknowledgment copies of all UCC-l financing
statements filed, registered or recorded to perfect the security
interests of the Agent for the benefit of the Lenders, or other evidence
satisfactory to the Agent that there has been filed, registered or
recorded all financing statements and other filings, registrations and
recordings necessary and advisable to perfect the Liens of the Agent for
the benefit of the Lenders in accordance with applicable law;
(ii) written advice relating to such Lien and
judgment searches as the Agent shall have requested, and such
termination statements or other documents as may be necessary to confirm
that the Collateral is subject to no other Liens in favor of any Persons
(other than Permitted Liens);
(iii) all certificates and instruments
representing the Pledged Collateral, stock transfer powers
executed in blank in such form as the Agent may specify;
(iv) evidence that all other actions necessary
or, in the opinion of the Agent, desirable to perfect and protect the
first priority security interest created by the Collateral Documents
have been taken;
(v) funds sufficient to pay any filing or
recording tax or fee in connection with any and all UCC-1
financing statements and the Mortgages;
(vi) with respect to the Mortgaged Property, an
A.L.T.A. Form B (or other form acceptable to the Agent mortgagee policy
of title insurance or a binder issued by a title insurance company
satisfactory to the Agent and the Lenders) insuring (or undertaking to
insure, in the case of a binder) that such Mortgage creates and
constitutes a valid first Lien against the Mortgaged Property in favor
of the Agent, on behalf of the Lenders, subject only to exceptions
acceptable to the Agent, with such endorsements and affirmative
insurance as the Agent or any Lender may reasonably request;
(vii) evidence that the Agent, on behalf of the
Lenders, has been named as loss payee under all policies of casualty
insurance, and as additional insured under all policies of liability
insurance, required by the Mortgage;
(viii) flood insurance and earthquake insurance on
terms satisfactory to the Agent;
(ix) current ALTA surveys and surveyor's
certification as to all real property and all land covered by
57
a lease in respect of which there is delivered a Mortgage, or as may be
reasonably required by the Agent, each in form and substance
satisfactory to the Agent and the Lenders;
(x) proof of payment of all title insurance
premiums, documentary stamp or intangible taxes, recording fees and
mortgage taxes payable in connection with the recording of any Mortgage
or the issuance of the title insurance policies (whether due on the
Closing Date or in the future) including sums due in connection with any
future advances;
(xi) such consents, estoppels, subordination
agreements and other documents and instruments executed by landlords,
tenants and other Persons party to material contracts relating to any
Collateral as to which the Agent shall be granted a Lien for the benefit
of the Lenders, as requested by the Agent; and
(xii) evidence that all other actions necessary
or, in the opinion of the Agent, desirable to perfect and protect the
first priority Lien created by the Collateral Documents, and to enhance
the Agent's ability to preserve and protect its interests in and access
to the Collateral, have been taken;
(g) Insurance Policies. Standard lenders' payable
endorsements with respect to the insurance policies or other
instruments or documents evidencing insurance coverage on the
properties of the Borrower in accordance with Section 6.06;
(h) Environmental Review. An environmental site assessment with
respect to any real property as to which the Agent is granted a Lien for the
benefit of the Lenders, dated as of a recent date prior to the Closing Date,
prepared by a qualified firm acceptable to the Agent, stating, among other
things, that such real property is free from Hazardous Materials and that
operations conducted thereon are in compliance with all Environmental Laws and
showing any Estimated Remediation Costs;
(i) Certificate. A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating that:
(i) the representations and warranties contained
in Article V are true and correct on and as of such date, as
though made on and as of such date;
(ii) no Default or Event of Default exists or
would result from the initial Borrowing; and
(iii) there has occurred since December 31, 1995,
no event or circumstance that has resulted or could
58
reasonably be expected to result in a Material Adverse
Effect; and
(j) Borrower Reorganization. The Reorganization of the Borrower
and its Subsidiaries shall have been consummated in accordance with Schedule
1.1A hereto, and otherwise on terms and conditions and pursuant to documents
acceptable to the Agent (and certified copies of all such documents shall have
been provided to the Agent and the Lenders), including, without limitation,
evidence that all outstanding loans and letter of credit obligations under the
Existing Loan Agreement shall have been repaid by the Existing Borrowers (other
than the Borrower) or assumed by the Borrower, except to the extent any such
obligations remain under the other Loan Documents;
(k) Repayment of Eurodollar Loans to BABC. Any loans under the
Existing Loan Agreement with BABC bearing interest at or with reference to any
type of Offshore, LIBOR, Eurodollar or other similar rate shall have been
converted into base rate or reference rate loans in a manner satisfactory to the
Agent;
(l) Assignment of BABC Loans. BABC, the Lenders and the Agent
shall have entered into Assignment and Assumption Agreements in form and
substance acceptable to all such Persons pursuant to which the loans,
commitments and rights of BABC as agent and lender under the Existing Loan
Agreement and the Existing Loan Documents shall have been assigned and assumed
by the Agent and the Lenders hereunder;
(m) Documentation of Borrowing Subsidiary Loans. The
-------------------------------------------
Borrower shall have provided the Agent with original copies of
the documents and promissory notes (together with pledge
agreements and assignments collaterally assigning such
instruments to the Agent, on behalf of the Lenders) evidencing
the intercompany loans to be made from time to time by the
Borrower directly to the Borrowing Subsidiaries, which
intercompany loans will be unsecured, payable on a demand basis,
subordinated to the obligations and otherwise in form and
substance acceptable to the Agent;
(n) Termination of PTRA and HBTC Liens. Evidence that
the Liens in favor of the PTRA and the HBTC have been terminated
pursuant to documents and termination statements in form and
substance acceptable to the Agent; and
(o) Other Documents. Such other approvals, opinions,
documents or materials as the Agent may reasonably request.
4.02 Conditions to All Borrowings. The obligation of each
Lender and/or the Agent to make any Loan to be made by it
(including its initial Loan), to cause any Letter of Credit to be
issued or to continue or convert any Loan under Section 2.04 is
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subject to the satisfaction of the following conditions precedent on the
relevant Borrowing Date or Conversion/Continuation Date:
(a) Notice of Borrowing or Conversion/Continuation. The Agent
shall have received (with, in the case of the initial Loan only, a copy for each
Lender) a fully completed and signed a Notice of Borrowing, a request for a
Letter of Credit (together with an appropriate letter of credit application) or
a Notice of Conversion/Continuation, as applicable;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date or Conversion/ Continuation Date with the same effect as
if made on and as of such Borrowing Date or Conversion/Continuation Date (except
to the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date);
(c) No Existing Default. No Default or Event of
Default shall exist or shall result from such Borrowing, Letter
of Credit issuance or continuation or conversion;
(d) Availability. The amount of Availability at such time
(taking into account such proposed Loan or Letter of Credit) shall be sufficient
to permit the making of such Revolving Loan, provided, however, that the
foregoing conditions precedent are not conditions to each Lender participating
in or precedent are not conditions to each Lender participating in or
reimbursing the Agent for such Lenders' Pro Rata Share of any Letter of Credit
which is drawn at any time; and
Each Notice of Borrowing, request for a Letter of Credit and Notice of
Conversion/Continuation submitted by the Borrower hereunder shall constitute a
representation and warranty by the Borrower hereunder, as of the date of each
such notice and as of each Borrowing Date or Conversion/Continuation Date, as
applicable, that the conditions in Section 4.02 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and each Lender that:
5.01 Corporate Existence and Power. The Borrower and each
of its Subsidiaries:
(a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation;
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(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents to
which it is a party;
(c) is duly qualified as a foreign corporation and is licensed
and in good standing under the laws of each jurisdiction where in any material
respect its ownership, lease or operation of property or the conduct of its
business requires such qualification or license.
5.02 Corporate Authorization; No Contravention. The execution, delivery
and performance by the Borrower and its Subsidiaries of this Agreement and each
other Loan Document to which the Borrower and its Subsidiaries is party, and the
consummation of the Reorganization, have been duly authorized by all necessary
corporate action, and do not and will not:
(a) contravene the terms of any of that Person's
Organization Documents;
(b) conflict with or result in any breach or contravention of,
or the creation of any Lien under, any document evidencing any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its property is
subject; or
(c) violate any Requirement of Law.
5.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except for recordings or filings in connection with the
Liens granted to the Agent under the Collateral Documents) is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, the Borrower or any of the Guarantors of the Agreement or
any other Loan Document or the consummation of the Reorganization.
5.04 Binding Effect. This Agreement and each other Loan Document to
which the Borrower or any of its Subsidiaries is a party and the other
agreements in connection with the Reorganization constitute the legal, valid and
binding obligations of the Borrower and any of its Subsidiaries to the extent it
is a party thereto, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
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5.05 Litigation. Except as specifically disclosed in Schedule 5.05,
there are no actions, suits, proceedings, claims or disputes pending, or to the
best knowledge of the Borrower, threatened or contemplated, at law, in equity,
in arbitration or before any Governmental Authority, against the Borrower, or
its Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or
any other Loan Document, or any of the transactions contemplated
hereby or thereby; or
(b) if determined adversely to the Borrower or its Subsidiaries,
would reasonably be expected to have a Material Adverse Effect. No injunction,
writ, temporary restraining order or any order of any nature has been issued by
any court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other Loan Document,
or directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.
5.06 No Default. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Borrower or from the grant or
perfection of the Liens of the Agent and the Lenders on the Collateral. As of
the Closing Date, neither the Borrower nor any Subsidiary is in default under or
with respect to any Contractual Obligation in any respect which, individually or
together with all such defaults, could reasonably be expected to have a Material
Adverse Effect, or that would, if such default had occurred after the Closing
Date, create an Event of Default under Section 8.01(e).
5.07 ERISA Compliance. Except as specifically disclosed in
Schedule 5.07:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best knowledge of the
Borrower, nothing has occurred which would cause the loss of such qualification.
The Borrower and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to
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any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
neither the Borrower nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
5.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for the purposes set forth in and permitted by Section 6.12
and Section 7.07. Neither the Borrower nor any Subsidiary is generally engaged
in the business of purchasing or selling Margin Stock or extending credit for
the purpose of purchasing or carrying Margin Stock.
5.09 Title to Properties. The Borrower and its Subsidiaries have good
record and marketable title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of the Borrower and its Subsidiaries is subject to no Liens, other than
Permitted Liens.
5.10 Taxes. The Borrower and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP, or if such taxes are due by MK Gain to a Mexican taxing
authority then in accordance with Mexican GAAP. There is no proposed tax
assessment against the Borrower or any Subsidiary that would, if made, have a
Material Adverse Effect.
5.11 Financial Condition. (a) The audited consolidated financial
statements of the Borrower and its Subsidiaries dated December 31, 1995 and the
unaudited consolidated and consolidating financial statements of the Borrower
and its Subsidiaries dated December 31, 1996 (which are attached hereto as
Schedule 5.11(A)), and the related consolidated and consolidating statements of
income or operations, shareholders'
63
equity and cash flows for the fiscal years then ended on such
dates:
(i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, subject to ordinary, good faith
year-end audit adjustments;
(ii) fairly present the financial condition of
the Borrower and its Subsidiaries as of the date thereof and
results of operations for the period covered thereby; and
(iii) except as specifically disclosed in Schedule
5.11(B), show all material indebtedness and other liabilities, direct or
contingent, of the Borrower and its consolidated Subsidiaries as of the
date thereof, including liabilities for taxes, material commitments and
Contingent Obligations.
(b) Since December 31, 1995, there has been no Material
Adverse Effect.
(c) The pro forma delivered on the date hereof and attached
hereto as Schedule 5.11(C) is the unaudited consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries, and was prepared by the
Borrower assuming the consummation of the transactions contemplated by this
Agreement as of the Closing Date (including, without limitation the
Reorganization) and based on the unaudited consolidating balance sheet of the
Borrower dated December 31, 1996 and was prepared in accordance with GAAP
(subject to the exceptions set forth on Schedule 5.11(C) hereof), with only such
adjustments thereto as would be required in accordance with GAAP.
(d) The projections delivered on the Closing Date and attached
hereto as Schedule 5.11(D) represent the Borrower's best estimate of the future
financial performance of the Borrower and its consolidated Subsidiaries (other
than MK Gain) for the periods set forth therein. These projections have been
prepared on the basis of the assumptions set forth therein, which the Borrower
believes are fair and reasonable in light of current and reasonably foreseeable
business conditions.
5.12 Environmental Matters. (a) Except as specifically disclosed in
Schedule 5.12, the ongoing operations of the Borrower and its Subsidiaries
comply in all respects with all Environmental Laws, except such noncompliance
which would not (if enforced in accordance with applicable law) result in
liability in excess of $500,000 in the aggregate (or with respect to MK Gain,
which could have a Material Adverse Effect).
(b) Except as specifically disclosed in Schedule 5.12,
the Borrower and its Subsidiaries have obtained all licenses,
64
permits, authorizations and registrations required under any Environmental Law
("Environmental Permits") and necessary for their respective ordinary course
operations, all such Environmental Permits are in good standing, and the
Borrower and each of its Subsidiaries are in compliance with all material terms
and conditions of such Environmental Permits.
(c) Except as specifically disclosed in Schedule 5.12, none of
the Borrower, its Subsidiaries or any of their respective present property or
operations, is subject to any outstanding written order from or agreement with
or investigation by any Governmental Authority, nor subject to any judicial or
docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material, nor subject to any claim, proceeding
or notice from any Person regarding Environmental Laws, Environmental Claims or
Hazardous Materials.
(d) Except as specifically disclosed in Schedule 5.12, there are
no Hazardous Materials or other conditions or circumstances existing with
respect to any property of the Borrower or any Subsidiary, or arising from
operations prior to the Closing Date, of the Borrower or any of its Subsidiaries
that would reasonably be expected to give rise to Environmental Claims with a
potential liability of the Borrower and its Subsidiaries in excess of $500,000
in the aggregate for any such condition, circumstance or property (or with
respect to MK Gain, which could have a Material Adverse Effect). In addition,
(i) neither the Borrower nor any Subsidiary has any underground storage tanks
(x) that are not properly registered or permitted under applicable Environmental
Laws, or (y) that are leaking or disposing of Hazardous Materials off-site, and
(ii) the Borrower and its Subsidiaries have notified all of their employees of
the existence, if any, of any health hazard arising from the conditions of their
employment and have met all notification requirements under Title III of CERCLA
and all other Environmental Laws.
5.13 Collateral Documents. (a) The provisions of each of the Collateral
Documents are effective to create in favor of the Agent for the benefit of the
Lenders, a legal, valid and enforceable first priority security interest in all
right, title and interest of the Borrower and the Guarantors in the collateral
described therein; and financing statements have been filed in the offices in
all of the jurisdictions listed on Schedule 5.13, which is also a schedule to
the Security Agreement and each patent and trademark assignment included as part
of the Collateral Documents has been filed in the U.S. Patent and Trademark
Office and the U.S. Copyright Office.
(b) Each Mortgage when delivered will be effective to grant to
the Agent for the benefit of the Lenders a legal, valid and enforceable mortgage
lien on all the right, title and interest of the mortgagor under such Mortgage
in the Mortgaged
65
Property described therein. When each such Mortgage is duly recorded in the
offices listed on the schedule to such Mortgage and the mortgage recording fees
and taxes in respect thereof are paid and compliance is otherwise had with the
formal requirements of state law applicable to the recording of real estate
mortgages generally, each such mortgaged property, subject to the encumbrances
and exceptions to title set forth therein and except as noted in the title
policies delivered to the Agent pursuant to Section 4.01, is subject to a legal,
valid, enforceable and perfected first priority deed of trust; and when
financing statements have been filed in the offices specified in such Mortgage,
such Mortgage also creates a legal, valid, enforceable and perfected first Lien
on, and security interest in, all right, title and interest of the Borrower or
any Guarantor under such Mortgage in all personal property and fixtures which is
covered by such Mortgage, subject to no other Liens, except the encumbrances and
exceptions to title set forth therein and except as noted in the title policies
delivered to the Agent pursuant to Section 4.01, and Permitted Liens.
(c) All representations and warranties of the Borrower
and the Guarantors party thereto contained in the Collateral
Documents are true and correct.
5.14 Regulated Entities. None of the Borrower, any Person controlling
the Borrower, or any Subsidiary, is an "Investment Company" within the meaning
of the Investment Company Act of 1940. The Borrower is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
5.15 No Burdensome Restrictions. Neither the Borrower nor any Guarantor
is a party to or bound by any Contractual Obligation, or subject to any
restriction in any Organization Document, or any Requirement of Law, which could
reasonably be expected to have a Material Adverse Effect.
5.16 Copyrights, Patents, Trademarks and Licenses, etc. The Borrower and
the Guarantors own or are licensed or otherwise have the right to use all of the
patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict with the rights
of any other Person. To the best knowledge of the Borrower, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by the Borrower or any
Subsidiary (other than MK Gain) infringes upon any rights held by any other
Person. Except as specifically disclosed in Schedule 5.05, no claim or
litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application,
66
principle or any statute, law, rule, regulation, standard or code is pending or,
to the knowledge of the Borrower, proposed, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
5.17 Capitalization and Subsidiaries. As of the Closing Date, the
Borrower has no Subsidiaries other than those specifically disclosed in part (a)
of Schedule 5.17 hereto and has no equity investments in any other corporation
or entity other than those specifically disclosed in part (b) of Schedule 5.17.
The amount of the Borrower's and each of its Subsidiaries' authorized and issued
capital stock and the ownership of every block representing 5% or more thereof
is as set forth on Schedule 5.17 including, without limitation, after
implementation of the Reorganization.
5.18 Insurance. Except as specifically disclosed in Schedule 5.18, the
properties of the Borrower and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Borrower, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the Borrower or such Subsidiary operates, and all such
insurance policies in effect on the Closing Date are described on Schedule 5.18.
5.19 Solvency. The Borrower and each of its Subsidiaries
are Solvent.
5.20 Swap Obligations. On the Closing Date, neither the
Borrower nor any of its Subsidiaries has incurred any outstanding
obligations under any Swap Contracts.
5.21 Full Disclosure. None of the representations or warranties made by
the Borrower or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Borrower or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Borrower to the Lenders prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
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ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, unless the Majority
Lenders waive compliance in writing:
6.01 Financial Statements and Borrowing Base Certificate. The Borrower
shall deliver to the Agent, in form and detail satisfactory to the Agent and the
Majority Lenders, with sufficient copies for each Lender:
(a) as soon as available, but not later than 90 days after the
end of each Fiscal Year (commencing with the Fiscal Year ended December 31,
1996, a copy of the (i) audited consolidated balance sheet of the Borrower and
its Subsidiaries, (ii) unaudited consolidated balance sheet of the Borrower and
its Subsidiaries (excluding MK Gain and its Subsidiaries), and (iii) unaudited
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries, all as at the end of such year, and the related audited
consolidated and unaudited consolidated (excluding MK Gain and its Subsidiaries)
and consolidating statements of income or operations, shareholders' equity and
cash flows for such year for the Borrower and its Subsidiaries, setting forth in
each case in comparative form the figures for the previous Fiscal Year, and
accompanied by the opinion of Deloitte & Touche, L.L.P. or another
nationally-recognized independent public accounting firm ("Independent Auditor")
which report shall state that such consolidated financial statements present
fairly the financial position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years. Such opinion shall not be
qualified or limited because of a restricted or limited examination by the
Independent Auditor of any material portion of the Borrower's or any
Subsidiary's records and shall be delivered to the Agent pursuant to a reliance
agreement between the Agent and Lenders and such Independent Auditor in form and
substance satisfactory to the Agent;
(b) as soon as available, but not later than 45 days after the
end of each Fiscal Quarter of each Fiscal Year (commencing with the Fiscal
Quarter ending in March 1997), a copy of the unaudited consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries (including an
additional consolidated balance sheet of the Borrower and its Subsidiaries
excluding MK Gain and its Subsidiaries) as of the end of such Fiscal Quarter and
the related consolidated, consolidated (excluding MK Gain and its Subsidiaries)
and consolidating statements of income, shareholders' equity and cash flows for
the Borrower and its Subsidiaries for the period commencing on the first day and
ending on the last day of such Fiscal Quarter, and certified by a Responsible
Officer as fairly presenting, in
68
accordance with GAAP (subject to ordinary, good faith year-end audit
adjustments), the financial position and the results of operations of the
Borrower and its Subsidiaries;
(c) as soon as available, but not later than 30 days after the
end of each Fiscal Month (commencing for the Fiscal Month ending in February
1997), a copy of the unaudited consolidated and consolidating balance sheet of
the Borrower and its Subsidiaries (including an additional consolidated balance
sheet of the Borrower and its Subsidiaries excluding MK Gain and its
Subsidiaries) as at the end of such Fiscal Month and the related consolidated,
consolidated (excluding MK Gain and its Subsidiaries) and consolidating
statement of income, shareholders' equity and cash flows for such Fiscal Month,
and certified by a Responsible Officer as fairly presenting, in accordance with
GAAP (subject to ordinary, good faith year-end audit adjustments), the financial
position and the results of operations of the Borrower and its Subsidiaries;
(d) as soon as available, but not later than fifteen (15) days
after the end of each Fiscal Month (commencing with the Fiscal Month ending
February 21, 1997): (a) a Borrowing Base Certificate for the Borrower, the
Borrowing Subsidiaries and ▇▇▇▇▇ (on a consolidated basis) in the form of
Exhibit J attached hereto; and (b) a statement of the balance of each of the
intercompany loans between the Borrower and each Borrowing Subsidiary in
accordance with Section 7.04. If the Borrower's records or reports of the
Collateral are prepared by an accounting service or other agent, the Borrower
hereby authorizes such service or agent to deliver such records, reports, and
related documents to the Agent, for distribution to the Lenders.
6.02 Certificates; Other Information. The Borrower shall
furnish to the Agent, with sufficient copies for each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.01(a), a certificate of the Independent Auditor stating
that in making the examination necessary therefor no knowledge was obtained of
any Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in Sections 6.01(a) and (b), a Compliance
Certificate executed by a Responsible Officer;
(c) as soon as available, but not later than five (5) days of
filing with the SEC, copies of all financial statements and reports that the
Borrower sends to its shareholders, and copies of all financial statements and
regular, periodical or special reports (including Forms 10K, 10Q and 8K) that
the Borrower or any Subsidiary may make to, or file with, the SEC;
69
(d) on or before December 1 of each year, a budget and
projections for the next Fiscal Year on a month by month and consolidated and
consolidating basis and otherwise in form and substance reasonably acceptable to
the Agent; and
(e) promptly, such additional information regarding the
business, financial or corporate affairs of (I) the Borrower or any of its
Subsidiaries (other than MK Gain) as the Agent, at the request of any Lender,
may from time to time request, and (II) MK Gain or its Subsidiaries as the
Agent, at the request of any Lender, may from time to time request after the
occurrence of a Default or Event of Default or if MK Gain or any of its
Subsidiaries shall breach, default or violate any terms or conditions of any
Contractual Obligations of such person evidencing Indebtedness with a principal
amount in excess of $1,000,000 which breach, default or violation would with
notice or the passage of time cause or permit the acceleration of the maturity
of such Indebtedness or a failure to pay any amounts due and owing thereon.
6.03 Notices. The Borrower shall promptly notify the Agent,
and if requested by the Agent, all the Lenders:
(a) of the occurrence of any Default or Event of
Default, and of the occurrence or existence of any event or
circumstance that foreseeably will become a Default or Event of
Default;
(b) of (i) any breach or nonperformance of, or any default
under, any Contractual Obligation of the Borrower or any of its Subsidiaries
which could result in a Material Adverse Effect; and (ii) any dispute,
litigation, investigation, proceeding or suspension which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental Authority
involving amounts in excess of $250,000 or which could result in a Material
Adverse Effect;
(c) of the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary (i) in which
the amount of damages claimed is $2,500,000 (or its equivalent in another
currency or currencies) or more, (ii) in which injunctive or similar relief is
sought and which, if adversely determined, would reasonably be expected to have
a Material Adverse Effect, or (iii) in which the relief sought is an injunction
or other stay of the performance of this Agreement or any Loan Document;
(d) upon, but in no event later than 10 days after, becoming
aware of (i) any and all enforcement, investigation, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened against
the Borrower or any Subsidiary or any of their respective properties pursuant to
any applicable Environmental Laws, (ii) all other Environmental
70
Claims, and (iii) any environmental or similar condition on any real property
adjoining or in the vicinity of the property of the Borrower or any Subsidiary
that could reasonably be anticipated to cause such property or any part thereof
to be subject to any restrictions on the ownership, occupancy, transferability
or use of such property under any Environmental Laws;
(e) of any other litigation or proceeding affecting the Borrower
or any of its Subsidiaries which the Borrower would be required to report to the
SEC pursuant to the Exchange Act, within four (4) days after reporting the same
to the SEC;
(f) of any of the following events affecting the Borrower,
together with a copy of any notice with respect to such event that may be
required to be filed with a Governmental Authority and any notice delivered by a
Governmental Authority to the Borrower with respect to such event:
(i) an ERISA Event;
(ii) if any of the representations and warranties
in Section 5.07 ceases to be true and correct;
(iii) the adoption of any new Pension Plan or
other Plan subject to Section 412 of the Code;
(iv) the adoption of any amendment to a Pension
Plan or other Plan subject to Section 412 of the Code, if such amendment
results in a material increase in contributions or Unfunded Pension
Liability; or
(v) the commencement of contributions to any
Pension Plan or other Plan subject to Section 412 of the
Code;
(g) of any material change in accounting policies or
financial reporting practices by the Borrower or any of its
consolidated Subsidiaries;
(h) of the entry by the Borrower or any of its
Subsidiaries (other than MK Gain) into any Swap Contract,
together with the details thereof;
(i) of the occurrence of any default, event of default,
termination event or other event under any Swap Contract that after the giving
of notice, passage of time or both, would permit either counterparty to such
Swap Contract to terminate early any or all trades relating to such contract;
and
(j) upon the request from time to time of the Agent, termination
or unwind amounts, together with a description of the method by which such
amounts were determined, relating to any
71
then-outstanding Swap Contracts to which the Borrower or any of its Subsidiaries
(other than MK Gain) is party.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Borrower or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under Section 6.03(a) shall describe with particularity any and all clauses or
provisions of this Agreement or other Loan Document that have been (or
foreseeably will be) breached or violated.
6.04 Preservation of Corporate Existence, Etc. The Borrower
shall, and shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state
or jurisdiction of incorporation;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business except
in connection with transactions permitted by Section 7.03 and sales of assets
permitted by Section 7.02;
(c) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
6.05 Maintenance of Property; Locomotives. (a) The Borrower shall
maintain, and shall cause each Subsidiary to maintain, and preserve all its
property which is used or useful in its business in good working order and
condition, ordinary wear and tear and make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, except as permitted by
Section 7.02.
(b) All railroad locomotives which are owned by the Borrower or Boise
Locomotive as of the Closing Date are listed on Schedule 6.05, and all such
locomotives and any other owned locomotives acquired after the Closing Date are
currently and during the term of this Agreement shall only be located and used
within the 48 contiguous states of the United States.
6.06 Insurance. In addition to insurance requirements set
forth in the Collateral Documents, the Borrower shall maintain,
and shall cause each of its Subsidiaries to maintain, with
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financially sound and reputable independent insurers, insurance with respect to
its properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar business, of such
types and in such amounts as are customarily carried under similar circumstances
by such other Persons; including workers' compensation insurance, public
liability and property and casualty insurance, which amount shall not be reduced
by the Borrower in the absence of 30 days' prior notice to the Agent. All such
insurance (other than for MK Gain) shall name the Agent as loss payee/mortgagee
and as additional insured, for the benefit of the Lenders, as their interests
may appear. All casualty and key man insurance maintained by the Borrower and
the Guarantors shall name the Agent as loss payee and all liability insurance
shall name the Agent as additional insured for the benefit of the Lenders, as
their interests may appear. Upon request of the Agent or any Lender, the
Borrower shall furnish the Agent, with sufficient copies for each Lender, at
reasonable intervals (but not more than once per calendar year) a certificate of
a Responsible Officer of the Borrower (and, if requested by the Agent, any
insurance broker of the Borrower) setting forth the nature and extent of all
insurance maintained by the Borrower and its Subsidiaries in accordance with
this Section or any Collateral Documents (and which, in the case of a
certificate of a broker, were placed through such broker).
6.07 Payment of Obligations. The Borrower shall, and shall cause each
Subsidiary (excluding MK Gain for purposes of paragraphs (b) and (c) below) to,
pay and discharge as the same shall become due and payable, all their respective
obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Borrower or such Subsidiary or if such
taxes are due by MK Gain to a Mexican taxing authority then in accordance with
Mexican GAAP;
(b) all lawful claims which, if unpaid, would by law
become a Lien upon its property; and
(c) all indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.
6.08 Compliance with Laws. The Borrower shall comply, and shall cause
each Subsidiary to comply, in all material respects with all Requirements of Law
of any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
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6.09 Compliance with ERISA. The Borrower shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
6.10 Inspection of Property and Books and Records. The Borrower shall
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP (or in
the case of MK Gain, Mexican GAAP) consistently applied shall be made of all
financial transactions and matters involving the assets and business of the
Borrower and such Subsidiary. The Borrower shall permit, and shall cause each
Subsidiary (including MK Gain only to the extent an event specified in Section
6.02(e)(II) has occurred and is continuing) to permit, representatives and
independent contractors of the Agent or any Lender to visit and inspect
(including taking and removing samples) any of their respective properties, to
examine their respective corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective directors, officers, and independent
public accountants, all at the expense of the Borrower and at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Borrower; provided, however, when a
Default or an Event of Default exists the Agent or any Lender may do any of the
foregoing at the expense of the Borrower at any time during normal business
hours and without advance notice.
6.11 Environmental Laws. (a) The Borrower shall, and shall
cause each Subsidiary to, conduct its operations and keep and
maintain its property in compliance in all material respects with
all Environmental Laws.
(b) Upon the written request of the Agent or any Lender, the
Borrower shall submit and cause each of its Subsidiaries to submit, to the Agent
with sufficient copies for each Lender, at the Borrower's sole cost and expense,
at reasonable intervals, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue identified
in any notice or report required pursuant to Section 6.03(d), that could,
individually or in the aggregate, result in liability in excess of $500,000.
6.12 Use of Proceeds. The Borrower shall use the proceeds of the Loans
solely (i) to refinance all Obligations under the Existing Loan Agreement, (ii)
to fund Permitted Acquisitions, (iii) for other working capital needs of the
Borrower not in contravention of any Requirement of Law or of any Loan Document
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or (iv) to loan such proceeds directly to the Borrowing Subsidiaries (on an
unsecured and demand repayment basis pursuant to documents and promissory notes
acceptable to the Agent and the Lenders, which documents and promissory notes
are subordinated to the Obligations and pledged to the Agent on behalf of the
Lenders) provided that such Borrowing Subsidiaries shall likewise only be
permitted to use the proceeds of such intercompany loans in accordance with
paragraphs (i) through (iii) above.
6.13 Location and Perfection of Collateral. The Borrower represents and
warrants to the Agent and the Lenders that: (a) Schedule 6.3 is a correct and
complete list of the Borrower's and each Guarantor's chief executive office, the
location of its books and records, the locations of the Collateral with respect
to that Person, and the locations of all of its other places of business; and
(b) Schedule 6.3 correctly identifies any of such facilities and locations that
are not owned by the Borrower or a Guarantor and sets forth the names of the
owners and lessors or sublessors of and, to the best of the Borrower's
knowledge, the holders of any mortgages on, such facilities and locations. The
Borrower covenants and agrees that it will not and will cause the Guarantors not
to (i) maintain any Collateral at any location other than those locations listed
for the Borrower or any Guarantor on Schedule 6.3, (ii) otherwise change or add
to any of such locations, or (iii) change the location of their chief executive
office from the location identified in Schedule 6.3, unless it gives the Agent
at least thirty (30) days' prior written notice thereof and executes any and all
financing statements and other documents that the Agent requests in connection
therewith. Without limiting the foregoing, Borrower represents that all
Inventory is, and covenants that all of its Inventory will be, located either
(a) on premises owned by the Borrower or a Guarantor, (b) on premises leased by
the Borrower, provided that the Agent has received an executed landlord waiver
from the landlord of such premises in form and substance satisfactory to the
Agent, (c) in a public warehouse, provided that the Agent has received an
executed bailee letter from the applicable public warehouseman in form and
substance satisfactory to the Agent or (d) up to $5,000,000 in the aggregate may
be held by a consignee of the Borrower or any of its Subsidiaries for sale on
consignment with no landlord waiver. The Borrower agrees and agrees to cause
each Guarantor to, take all steps necessary to maintain the perfection and
priority of the Agent's Lien and security interest (on behalf of the Lenders) in
the Collateral.
6.14 Further Assurances. (a) The Borrower shall ensure that all written
information, exhibits and reports furnished to the Agent or the Lenders do not
and will not contain any untrue statement of a material fact and do not and will
not omit to state any material fact or any fact necessary to make the statements
contained therein not misleading in light of the circumstances in which made,
and will promptly disclose to the Agent and the Lenders and correct any defect
or error that may be
75
discovered therein or in any Loan Document or in the execution,
acknowledgment or recordation thereof.
(b) Promptly upon request by the Agent or the Majority Lenders,
the Borrower shall (and shall cause each Guarantor to) execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register, any and all
such further acts, deeds, conveyances, security agreements, mortgages,
assignments, estoppel certificates, financing statements and continuations
thereof, termination statements, notices of assignment, transfers, certificates,
assurances and other instruments the Agent or such Lenders, as the case may be,
may reasonably require from time to time in order (i) to carry out more
effectively the purposes of this Agreement or any other Loan Document, (ii) to
subject to the Liens created by any of the Collateral Documents any of the
properties, rights or interests covered by any of the Collateral Documents,
(iii) to perfect and maintain the validity, effectiveness and priority of any of
the Collateral Documents and the Liens intended to be created thereby, and (iv)
to better assure, convey, grant, assign, transfer, preserve, protect and confirm
to the Agent and Lenders the rights granted or now or hereafter intended to be
granted to the Lenders under any Loan Document or under any other document
executed in connection therewith.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, unless the Majority
Lenders waive compliance in writing:
7.01 Limitation on Liens. The Borrower shall not, and shall not suffer
or permit any Subsidiary (other than MK Gain) to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of its property, whether now owned or hereafter acquired, other than the
following ("Permitted Liens"):
(a) any Lien (other than a Lien on the Collateral) existing on
property of the Borrower or any Guarantor on the Closing Date and set forth in
Schedule 7.01 securing Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that nonpayment thereof is permitted by Section 6.07, provided that no
notice of lien has been filed or recorded under the Code;
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(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary course
of business which are not delinquent or remain payable without penalty or which
are being contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the property
subject thereto;
(e) Liens (other than any Lien imposed by ERISA and other than
on the Collateral) consisting of pledges or deposits required in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other social security legislation;
(f) Liens (other than Liens on the Collateral) on the property
of the Borrower or the Guarantors securing (i) the nondelinquent performance of
bids, trade contracts (other than for borrowed money), leases, statutory
obligations, (ii) contingent obligations on surety and appeal bonds, and (iii)
other nondelinquent obligations of a like nature; in each case, incurred in the
ordinary course of business, provided all such Liens in the aggregate would not
(even if enforced) cause a Material Adverse Effect;
(g) Liens (other than Liens on the Collateral) consisting of
judgment or judicial attachment liens, provided that the enforcement of such
Liens is effectively stayed and all such liens in the aggregate at any time
outstanding for the Borrower and the Guarantors do not exceed $250,000;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Borrower and its
Subsidiaries;
(i) Liens on assets of corporations which become Subsidiaries
after the date of this Agreement; provided, however, that such Liens existed at
the time the respective corporations became Subsidiaries and were not created in
anticipation thereof;
(j) purchase money security interests on any property acquired
or held by the Borrower or its Borrowing Subsidiaries in the ordinary course of
business, securing Indebtedness incurred or assumed for the purpose of financing
all or any part of the cost of acquiring such property; provided that (i) any
such Lien attaches to such property concurrently with or within 20 days after
the acquisition thereof, (ii) such Lien attaches solely to the property so
acquired in such transaction, (iii) the principal amount of the debt secured
thereby does not exceed 100% of the cost of such property, and (iv) the
principal amount of the Indebtedness secured by any and all such purchase money
security
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interests shall not at any time exceed, together with
Indebtedness permitted under Section 7.05(d), $5,000,000;
(k) Liens securing obligations in respect of capital leases on
assets subject to such leases; provided that such capital leases are otherwise
permitted hereunder;
(l) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Borrower in excess of those set forth by regulations promulgated
by the FRB, and (ii) such deposit account is not intended by the Borrower or any
Subsidiary to provide collateral to the depository institution; and
(m) Liens on certain limited assets of Boise Locomotive in favor
of the issuer of a performance bond on behalf of Boise Locomotive in connection
with the issuance of performance bonds as expressly permitted by Section
7.08(e).
7.02 Disposition of Assets. The Borrower shall not, and shall not suffer
or permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise permit a Disposition of (whether in one or a
series of transactions) any property (including accounts and notes receivable,
with or without recourse) or enter into any agreement to do any of the
foregoing, except the following transactions to the extent they are arms-length
transactions with Persons who are not Affiliates of the Borrower or its
Subsidiaries for pricing reflecting the fair market value of any assets or
property being sold:
(a) Dispositions of inventory, or used, worn-out or
surplus equipment, all in the ordinary course of business;
(b) the sale of equipment in the ordinary course and in
accordance with past practices to the extent that such equipment is exchanged
for credit against the purchase price of similar replacement equipment, or the
proceeds of such sale are reasonably promptly (and in any event within ninety
(90) days of such sale) applied to the purchase price of such replacement
equipment;
(c) Dispositions (other than by MK Gain and its Subsidiaries)
not otherwise permitted hereunder which are made for fair market value;
provided, that (i) at the time of any Disposition, no Default or Event of
Default shall exist or shall result after giving effect to such Disposition,
(ii) the aggregate sales price from such Disposition shall be paid in cash, and
(iii) the aggregate value of all assets so sold by the
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Borrower and its Subsidiaries, together, shall not exceed the lesser of (i)
$3,000,000 in any Fiscal Year (plus the amount of the proceeds from the sale of
the Borrower's Mountaintop, PA facility during the Fiscal Year it is sold, if
ever) and (ii) $10,000,000 in the aggregate during the term of the Agreement;
and
(d) Dispositions by MK Gain and its Subsidiaries of assets with
a value not in excess of twenty percent (20%) of the aggregate value of the
assets of MK Gain and its Subsidiaries (on a consolidated basis) as shown on MK
Gain's consolidated financial statements in any Fiscal Year, and in any event
not in excess of $20,000,000 in the aggregate.
7.03 Restriction on Fundamental Changes; Acquisitions. Neither Borrower
nor any of its Subsidiaries will: (a) enter into any transaction of merger or
consolidation; (b) liquidate, windup or dissolve itself (or suffer any
liquidation or dissolution); (c) convey, sell, lease, sublease, transfer or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its business or assets, or the capital stock of or other
equity interests in any of its Subsidiaries, whether now owned or hereafter
acquired; or (d) acquire by purchase or otherwise all or any substantial part of
the business or assets of, or stock or other evidence of beneficial ownership
of, any Person; provided, however, (i) the Borrower may make Capital
Expenditures used for the purchase of assets permitted under Section 7.15 and
Investments permitted under Section 7.04; (ii) any Subsidiary (other than MK
Gain) of Borrower may be merged with or into Borrower (provided that Borrower is
the surviving entity) or any other Subsidiary of Borrower (other than MK Gain);
(iii) notwithstanding any prohibition on MK Gain or its wholly-owned
Subsidiaries making any such purchases or acquisitions referenced above, and so
long as no Default or Event of Default has occurred and is continuing hereunder
after giving effect thereto, MK Gain and its wholly-owned Subsidiaries may enter
into future acquisitions that are not hostile in nature to acquire all or
substantially all of the assets or capital stock of any corporation, entity or
division (collectively, "MK Gain Acquisitions") if: (A) the aggregate
consideration to be paid by MK Gain and its wholly-owned Subsidiaries, whether
in the form of cash payments, promissory notes or other deferred purchase price,
or assumed debt and liabilities and Indebtedness, in connection with all such MK
Gain Acquisitions and howsoever evidenced, shall not exceed $25,000,000 in the
aggregate (less the amount of any Investments by MK Gain in Joint Ventures
pursuant to Section 7.04(g)); (B) such MK Gain Acquisitions shall only be of
businesses and assets related or similar to the Borrower's current lines of
business and satisfying the restrictions in Section 7.13, and which businesses
would not subject the Agent or any Lender to regulatory or third party approval
in connection with the exercise of their rights and remedies under this
Agreement or any other Loan Documents; and (C) other than as
79
permitted by Section 7.05(f), no new Indebtedness for borrowed money to finance
such acquisition will be incurred in connection with such MK Gain Acquisitions;
(iv) notwithstanding any prohibition on the Borrower making any such purchases
or acquisitions referenced above, and so long as no Default or Event of Default
has occurred and is continuing hereunder after giving effect thereto, the
Borrower may enter into future acquisitions that are not hostile in nature to
acquire all or substantially all of the assets or capital stock of any
corporation, entity or division (collectively, "Permitted Acquisitions") if:
(A) the aggregate consideration to be paid by the Borrower,
whether in the form of cash payments, promissory notes or other deferred
purchase price, or assumed debt and liabilities and Indebtedness, in connection
with all such Permitted Acquisitions and howsoever evidenced, shall not exceed
$15,000,000 in the aggregate during the first twelve (12) months after the
Closing Date or $45,000,000 in the aggregate at any time;
(B) such Permitted Acquisitions shall only be of businesses and
assets related or similar to the Borrower's current lines of business and
satisfying the restrictions in Section 7.13, and which businesses would not
subject the Agent or any Lender to regulatory or third party approval in
connection with the exercise of their rights and remedies under this Agreement
or any other Loan Documents;
(C) the assets so acquired shall be transferred free and clear
of any liens and encumbrances (other than Permitted Liens), and any assumed debt
and liabilities and Indebtedness (excluding purchase money debt and Capital
Leases otherwise permitted under Section 7.05) shall be repaid prior to or
simultaneously with any such Permitted Acquisition;
(D) other than under the Agreement, no new Indebtedness for
borrowed money to finance such acquisition will be incurred in connection with
such Permitted Acquisitions;
(E) environmental audits, pro forma financial statements and a
pro forma borrowing base certificate (in the form of Exhibit J and showing the
pro forma borrowing base of the Borrower after consummation of the Permitted
Acquisition), appraisals and any other testing or due diligence investigation
reasonably required by Agent shall have been completed in a satisfactory manner
and shows that the Borrower shall continue to be in compliance with this
Agreement after the consummation of such Permitted Acquisition including,
without limitation, its pro forma compliance with Sections 7.16, 7.17 and 7.18;
(F) Agent, on behalf of Lenders, will be granted a first and
prior perfected security interest (subject to Permitted Liens) in any assets
being so acquired including, without
80
limitation, a pledge of any capital stock together with a guarantee from any new
Subsidiary (if such Permitted Acquisition is an acquisition of stock) and a
pledge of the underlying assets to secure such Subsidiary guarantee; and
(G) Agent and the Lenders shall have received at least 15 days
advance written notice of any proposed acquisition together with each of the
following documents in form and substance reasonably satisfactory to the Agent:
(I) pro forma balance sheets of the Borrower (the "Acquisition
Pro Forma") on a consolidated and consolidating basis, based on financial data
as of a recent date, which shall be complete and shall accurately and fairly
represent Borrower's assets, liabilities, financial condition and results of
operations in accordance with GAAP consistently applied, but taking into account
such Permitted Acquisition and the transactions contemplated by any purchase
agreement documenting such Permitted Acquisition, and such Acquisition Pro Forma
shall establish that the maximum Revolving Loans shall exceed the outstanding
principal balance on the Revolving Loan by at least $5,000,000 and the
Acquisition Projections (as hereinafter defined) shall establish that such
minimum availability shall continue for at least 30 days after the consummation
of such Future Acquisition;
(II) Projections prepared in accordance with Section
7.03(iv)(G)(I) (the "Acquisition Projections") hereof and based upon historical
financial data of a recent date satisfactory to Agent, taking into account such
Future Acquisition on a pro forma basis for the prior four (4) quarters and for
the next three (3) years; and
(III) a certificate of the chief financial officer of Borrower
to the effect that: (x) Borrower will be Solvent upon the consummation of the
transactions contemplated by the Acquisition; (y) the Acquisition Pro Forma
fairly presents the financial condition of the Borrower (on a consolidated
basis) as of the date thereof after giving effect to the transactions
contemplated by such Permitted Acquisition; (z) the Acquisition Projections are
reasonable estimates of the future financial performance of Borrower subsequent
to the date thereof based upon the historical performance of Borrower after
taking into account the consummation of the Permitted Acquisition and in
addition show that on that basis the Borrower would have been in compliance with
the financial covenants set forth in Sections 7.16, 7.17 and 7.18 for the four
(4) quarter period immediately prior to such Permitted Acquisition; and
(H) Agent, on behalf of Lenders, shall have received Lien
searches (reasonably satisfactory to Agent) with respect to any assets being
acquired.
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7.04 Loans and Investments. The Borrower shall not purchase or acquire,
or suffer or permit any of its Subsidiaries to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any obligations or
other securities of, or any interest in, any Person, or make or commit to make
any Acquisitions, or make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any Person
including any Affiliate of the Borrower (together, "Investments"), except for:
(a) Investments held by the Borrower or its
Subsidiaries in the form of cash equivalents or short-term
marketable securities;
(b) extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale or lease of
goods or services in the ordinary course of business;
(c) extensions of credit by the Borrower in cash directly to any
of its Borrowing Subsidiaries in the form of intercompany loans; provided that
such intercompany loans shall be subject to the following terms and conditions:
(i) such loans shall be unsecured and payable on demand, and the
Borrower and the Borrowing Subsidiaries hereby agree that all
such Indebtedness shall be subordinated in right of payment to
the final payment in full in cash of the Obligations;
(ii) no Default or Event of Default shall then exist and be
continuing or would result after giving effect thereto, and
after giving effect to each such intercompany loan, both the
Borrower making such loan and the recipient thereof shall be
Solvent;
(iii) each recipient of such a loan shall use the proceeds
thereof solely for its own working capital requirements and
other general corporate purposes arising in the ordinary course
of its business or as permitted by Section 6.12; and
(iv) such loans shall be evidenced by subordinated promissory
notes in form and substance acceptable to the Agent and pledged
to and delivered to the Agent pursuant to documentation in form
and substance acceptable to the Agent granting the Agent (on
behalf of the Lenders) a first perfected security interest
therein;
(d) Investments by the Borrower in its Borrowing Subsidiaries
satisfying the terms and conditions of paragraph (c) above and incurred in order
to consummate Permitted Acquisitions otherwise permitted under Section 7.03;
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(e) Investments by the Borrower in Joint Ventures not
exceeding $2,500,000 in any Fiscal Year as to all such
investments in the aggregate;
(f) Investments by the Borrower in its wholly-owned
Subsidiaries (other than MK Gain and its Subsidiaries and/or the
Borrowing Subsidiaries) not in excess of $2,500,000 in the
aggregate;
(g) Investments by MK Gain in (i) its wholly-owned Subsidiaries
from time to time or (ii) in Joint Ventures in amounts not in excess of
$10,000,000 in the aggregate (less the aggregate amount of MK Gain Acquisitions
in excess of $15,000,000), provided that in either case the funds, monies,
properties or consideration constituting such Investment or Joint Venture was
not received from or provided by (directly or indirectly) the Borrower or its
other Subsidiaries at any time on or after the Closing Date provided that at
such time no Default or Event of Default shall then have occurred and be
continuing or would result after giving effect thereto;
(h) Investments by the Borrower in Boise Locomotive in the form
of asset drop downs and assignments of title to owned railroad locomotives or
rights with respect to leased railroad locomotives, provided that the Borrower
shall have (i) obtained all consents with respect to Contractual Obligations and
otherwise required to consummate such transactions without violating any
Contractual Obligations of the Borrower or any of its Subsidiaries, (ii)
provided the Agent with ten (10) Business Days prior written notice of such
transactions (including a certification that all consents as required by
paragraph (i) above have been obtained), (iii) with respect to owned railroad
locomotives, provided the Agent (on behalf of the Lenders) with such documents
as may be reasonably requested by the Agent and in form and substance reasonably
acceptable to the Agent including, without limitation, properly recorded
assignments of all locomotives mortgages and assignments of leases with respect
to such locomotives and a legal opinion from legal counsel in form and substance
reasonably satisfactory to the Agent opining as to the continuing prior
perfected security interest of the Agent (on behalf of the Lenders) in such
owned railroad locomotives and the corporate power and authority, and
enforceability of the transfer documents and mortgages with respect thereto; and
(iv) no Default or Event of Default shall then have occurred and be continuing
or would result after giving effect thereto;
(i) Investments by the Borrower in any purchaser of its
Mountaintop, Pennsylvania facility in the form of a promissory note with a
principal amount not in excess of $500,000 in the aggregate which promissory
note represents the deferred portion of the purchase price from the sale of such
Mountaintop, Pennsylvania facility; and
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(j) Investments by the Borrower in MK Gain in the form of that
certain promissory note in the original principal amount of $16,551,001.67 and
dated June 30, 1995, provided that the Borrower may not extend any further funds
or loans under such promissory note, but the Borrower may (so long as no Default
or Event of Default has then occurred or would result after giving effect
thereto) elect to make a further capital contribution to MK Gain by converting
such promissory note to equity, and after written notice thereof the Agent may
present the original of such promissory note which has been pledged to Agent (on
behalf of the Lenders) for cancellation.
7.05 Limitation on Indebtedness. The Borrower shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations
permitted pursuant to Section 7.08;
(c) Indebtedness existing on the Closing Date and set
forth in Schedule 7.05;
(d) Indebtedness incurred in connection with leases
permitted pursuant to Section 7.10(c);
(e) Indebtedness consisting of purchase money loans
permitted pursuant to Section 7.01(j); and
(f) Indebtedness of MK Gain (including and not in addition to
any Indebtedness permitted under paragraphs (a) through (e) above) not in excess
of $65,000,000 in aggregate principal amount at any time outstanding; provided,
however, that in no event may the Borrower or any Guarantor be liable in any way
or have any Contingent Obligation with respect to any such Indebtedness of MK
Gain.
7.06 Transactions with Affiliates. The Borrower shall not, and shall not
suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Borrower, except upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Borrower or such
Subsidiary (which shall include, without limitation, not permitting their
outstanding trade credit being extended to, or accounts or accounts receivable
due from MK Gain and its Subsidiaries to exceed, the payment terms provided to
other creditors generally, and in any event to not be outstanding for more than
90 days) except that (a) the Borrower and its Subsidiaries may make travel
advances or other loans to their employees in connection with relocations
provided that all such
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loans and advances are less than $75,000 in the aggregate, (b) the Borrower's
Subsidiaries may make payments to the Borrower, (i) to satisfy the Federal,
state and local income tax obligations to the extent such obligations are the
result of the net consolidated income of the Borrower's Subsidiaries being
attributed to the Borrower for tax purposes, (ii) as permitted under Section
9.10 hereof or (iii) to pay such other amounts as are described on Schedule
7.06.
7.07 Use of Proceeds. (a) The Borrower shall not, and shall not suffer
or permit any Borrowing Subsidiary to, use any portion of the Loan proceeds,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance indebtedness of the Borrower or others incurred to purchase
or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or
carrying any Margin Stock, or (iv) to acquire any security in any transaction
that is subject to Section 13 or 14 of the Exchange Act.
(b) The Borrower shall not, directly or indirectly, use any
portion of the Loan proceeds (i) knowingly to purchase Ineligible Securities
from the Arranger during any period in which the Arranger makes a market in such
Ineligible Securities, (ii) knowingly to purchase during the underwriting or
placement period Ineligible Securities being underwritten or privately placed by
the Arranger, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by the Arranger and issued by or for
the benefit of the Borrower or any Affiliate of the Borrower. The Arranger is a
registered broker-dealer and permitted to underwrite and deal in certain
Ineligible Securities; and "Ineligible Securities" means 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 1933 (12 U.S.C. ss. 24, Seventh), as
amended.
7.08 Contingent Obligations. The Borrower shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations or to have any surety or performance bond obligation used
on its behalf except:
(a) endorsements for collection or deposit in the
ordinary course of business;
(b) Contingent Obligations of the Borrower and its
Subsidiaries existing as of the Closing Date and listed in
Schedule 7.08;
(c) Contingent Obligations under the Loan Documents;
(d) Contingent Obligations of MK Gain and its wholly-
owned Subsidiaries in the form of guaranties with respect to any
Indebtedness permitted under Section 7.05(f);
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(e) Contingent Obligations of the Borrower with respect to
performance bonds or surety contracts of any kind provided that such performance
bonds or surety contracts are issued in connection with Contractual Obligations
to reconstruct railroad locomotives which provide aggregate total consideration
and payments to the Borrower and its Subsidiaries not in excess of $10,000,000
in the aggregate (whether or not progress payments have been made thereunder or
such amounts are then due and owing) and are issued pursuant to contracts and
agreements in form and substance and from an issuer or surety reasonably
satisfactory to the Agent, and in any event such issuer or surety shall not be
permitted to take a Lien on any property or assets of the Borrower or its
Subsidiaries other than the Inventory and Accounts (excluding cash payments not
made directly to such issuer or surety) directly identifiable to the contract
being supported by such surety or performance bond; and
(f) Contingent Obligations of the Borrower in the form of
unsecured guaranties of (i) the Indebtedness of any Borrowing Subsidiary with
respect to Indebtedness permitted under Section 7.05(a) through (e), (ii) the
obligations of Boise Locomotive being assumed by Boise Locomotive from the
Borrower pursuant to the transactions permitted under Section 7.04(h), and (iii)
up to $1,000,000 of other obligations or liabilities of any Borrowing
Subsidiaries which are permitted by the terms of this Agreement, but in any
event excluding any guaranty or other Contingent Obligation of any kind of the
Indebtedness, obligations and/or liabilities of MK Gain and its Subsidiaries or
Joint Ventures.
7.09 Joint Ventures; Subsidiaries. The Borrower shall not, and shall not
suffer or permit any Subsidiary to (a) form a new Subsidiary after the Closing
Date, except that MK Gain may form additional Wholly-Owned Subsidiaries, and the
Borrower may form a new Wholly-Owned Subsidiary to serve as a Mexican holding
company called MPI de Mexico, S.A. de C.V. provided that such corporation shall
not hold any assets except that all of the assets or stock of MK Gain (as it
exists on the Closing Date) may be contributed to such company provided that (i)
no Default or Event of Default then exists and is continuing or would result
after giving effect thereto, (ii) such transaction can be completed on a
tax-free basis to the Borrower and the Guarantors, (iii) MPI de Mexico, S.A. de
C.V. will be only a holding company and not conduct any business or operations
of any kind and (iv) the Borrower provides the Agent with at least ten (10)
Business Days prior written notice of such transaction providing reasonable
details on the terms and structure thereof and reaffirming the treatment of and
pledge to the Agent (on behalf of the Lenders) of any Indebtedness owing by MK
Gain to the Borrower or any Guarantor or (b) enter into any Joint Venture, other
than in the ordinary course of business and in accordance with past practices,
except that MK Gain may enter into Joint Ventures with Persons (other than the
Borrower and/or any Guarantors) as permitted by Section 7.04(g)(ii).
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7.10 Lease Obligations. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, (i) create or suffer to exist any obligations for the
payment of rent for any property under lease or agreement to lease or (ii)
directly or indirectly, enter into any arrangement with any Person providing for
the Borrower or such Subsidiary to lease or rent property that the Borrower or
such Subsidiary has sold or will sell or otherwise transfer to such Person,
except for:
(a) leases of the Borrower and its Subsidiaries in
existence on the Closing Date and any renewal, extension or
refinancing thereof;
(b) operating leases entered into by the Borrower and its
Subsidiaries in the ordinary course of business (including any in existence on
the Closing Date) for which the aggregate amount of Rentals (as hereinafter
defined) payable by (i) the Borrower and its Subsidiaries (other than MK Gain)
on a consolidated basis in any Fiscal Year in respect of such lease and all
other such leases would exceed Fifteen Million Dollars ($15,000,000) or (ii) MK
Gain and its Subsidiaries (on a consolidated basis) in any Fiscal Year in
respect of such lease and all other such leases would exceed Four Million
Dollars ($4,000,000); where the term "Rentals" means all payments due from the
lessee or sublessee under a lease, including, without limitation, basic rent,
percentage rent, property taxes, utility or maintenance costs, and insurance
premiums;
(c) capital leases other than those permitted under clause (a)
of this Section, entered into by the Borrower or any Subsidiary after the
Closing Date to finance the acquisition of equipment; provided that the
aggregate rental payments for all such capital leases shall not exceed
$5,000,000 less the amount of any outstanding purchase money Indebtedness
permitted under Section 7.05(e); and
(d) sale-leasebacks of locomotives by the Borrower or Boise
Locomotive in the ordinary course of its business, which sale-leaseback
transactions are otherwise done in compliance with Section 7.02(c) above.
7.11 Restricted Payments; No Permitted Restrictions for Subsidiaries.
(a) The Borrower shall not, and shall not suffer or permit any Subsidiary to,
declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account of any shares of
any class of its capital stock, or purchase, redeem or otherwise acquire for
value any shares of its capital stock or any warrants, rights or options to
acquire such shares, now or hereafter outstanding; except that:
(i) the Borrower may declare and make dividend payments
or other distributions payable solely in its common stock;
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(ii) the Borrower may purchase, redeem or otherwise acquire
shares of its common stock or warrants or options to acquire any such shares
with the proceeds received from the substantially concurrent issue of new shares
of its common stock;
(iii) any Subsidiary may declare and pay cash dividends
to the Borrower;
(iv) so long as no Default or Event of Default shall have
occurred or would result after giving effect thereto, the Borrower may make cash
dividend payments on its common stock not in excess of $3,000,000 in any Fiscal
Year; and
(v) Motor Coils or Touchstone may declare and pay dividends to
MotivePower Investments in the form of promissory notes which otherwise satisfy
the terms and conditions for loans under Section 7.04(c) (as if such dividend
constituted a loan from MotivePower Investments instead of the Borrower).
(b) The Borrower shall not permit any of its Subsidiaries (other
than MK Gain) to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
such Subsidiary to (I) pay dividends or make any other distributions to the
Borrower or any of its other Subsidiaries (1) on its capital stock or (2) with
respect to any other interest or participation in, or measured by, its profits,
(II) pay any indebtedness owed to the Borrower or any of its other Subsidiaries,
(III) make loans or advances to the Borrower or any of its other Subsidiaries,
or (IV) transfer any of its properties or assets to the Borrower or any of its
other Subsidiaries (collectively, "Encumbrances"), except for such Encumbrances
existing under or by reason of (1) this Agreement, (2) applicable law, (3)
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, or (4) purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in paragraph (b)(IV) above on the property
so acquired.
7.12 ERISA. The Borrower shall not, and shall not suffer or permit any
of its ERISA Affiliates to: (a) engage in a prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan which has
resulted or could reasonably be expected to result in liability of the Borrower
in an aggregate amount in excess of $500,000; or (b) engage in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
7.13 Change in Business; Holding Companies; FSC Operations.
The Borrower shall not, and shall not suffer or permit any
Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on
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by the Borrower and its Subsidiaries on the date hereof. Both the Borrower and
MotivePower Investments shall only act as holding companies to own the capital
stock of their Subsidiaries and shall not own other assets or conduct business
operations except in accordance with past practices as in effect immediately
after the Reorganization. The FSC will only be permitted to engage in business
as a foreign sales corporation on a commission basis, being commissioned for
foreign sales on an acceptable basis within the IRS guidelines, and will not
have any assets or property of any kind other than Accounts then due and owing
in the ordinary course of business from foreign Persons in aggregate amounts not
in excess of $5,000,000 (and provided that an equivalent account receivable is
created in favor of one of the Guarantors or the Borrower) and a minimal amount
in a bank account which may be maintained in Barbados.
7.14 Accounting Changes. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change the fiscal year of
the Borrower or of any Subsidiary.
7.15 Capital Expenditures. The Borrower shall not, and shall not permit
any Subsidiary to make or incur any Capital Expenditure if, after giving effect
thereto, the aggregate amount of all Capital Expenditures by the Borrower and
its Subsidiaries on a consolidated basis would exceed during any Fiscal Year the
amount of $15,000,000 plus an amount equal to the proceeds of equipment sales
which are made and reinvested in replacement equipment in accordance with
Section 7.02(b) during any Fiscal Year.
7.16 Maximum Ratio of Funded Debt to Cash Flow. The Borrower (on a
consolidated basis with its subsidiaries other than MK Gain) shall not permit
the ratio as of the last day of each Fiscal Quarter after the Closing Date of
its (A) Funded Debt as of such date to (B) Cash Flow for the immediately
preceding four Fiscal Quarters ending on such date, to be greater than (i)
3.50:1.00 for Fiscal Quarters ending during Fiscal Year 1997, (ii) 3.25:1.00 for
Fiscal Quarters ending during Fiscal Year 1998, and (iii) 3.00:1.00 thereafter.
7.17 Minimum Tangible Net Worth. The Borrower (on a consolidated basis
with its Subsidiaries other than MK Gain) shall not permit its Tangible Net
Worth at any time to be less than the sum of (i) 90% of actual Tangible Net
Worth as of December 31, 1996 (which excludes MK Gain), plus (ii) 75% of the
Borrower's cumulative net income (which excludes MK Gain, and shall not in any
event be reduced by losses) commencing January 1, 1997.
7.18 Minimum Fixed Charges Coverage Ratio. The Borrower
(on a consolidated basis with its Subsidiaries other than MK
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Gain) shall not permit the ratio of its (A)(i) EBITDA, plus (ii) rent expense
pursuant to all operating leases to (B) Fixed Charges, as of the last day of
each Fiscal Quarter after the Closing Date for the immediately preceding four
Fiscal Quarters ending as of the last day of each such Fiscal Quarter, to be
less than 1.25:1.00.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall
constitute an "Event of Default":
(a) Non-Payment. The Borrower fails to make, (i) when and as
required to be made herein, payments of any amount of principal of any Loan, or
(ii) within 3 days after the same becomes due, payment of any interest, fee or
any other amount payable hereunder or under any other Loan Document including,
without limitation, any Specified Swap Contract; or
(b) Representation or Warranty. Any representation or warranty
by the Borrower or any of its Subsidiaries made or deemed made herein, in any
other Loan Document, or which is contained in any certificate, document or
financial or other statement by the Borrower, any Borrowing Subsidiary, or any
Responsible Officer, furnished at any time under this Agreement, or in or under
any other Loan Document is incorrect in any material respect on or as of the
date made or deemed made; or
(c) Specific Defaults. The Borrower fails to perform
or observe any term, covenant or agreement contained in (i) any
of Section 6.01, 6.02, 6.03 for a period of five (5) days or
(ii) in any of Section 6.06 or 6.13 or in Article VII; or
(d) Other Defaults. The Borrower or any of its Subsidiaries
fails to perform or observe any other term or covenant contained in this
Agreement or any other Loan Document to which it is a party, and such default
shall continue unremedied for a period of 20 days after the earlier of (i) the
date upon which a Responsible Officer knew or reasonably should have known of
such failure or (ii) the date upon which written notice thereof is given to the
Borrower by the Agent or any Lender; or
(e) Cross-Default. The Borrower or any of its Subsidiaries
(other than MK Gain) (A) fails to make any payment in respect of any
Indebtedness, preferred stock or Contingent Obligation, having an aggregate
principal amount or redemption price (including undrawn committed or available
amounts and including amounts owing to all creditors under any combined or
syndicated credit arrangement) of more than $1,000,000 when due
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(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) and such failure continues after the applicable grace or notice
period, if any, specified in the relevant document on the date of such failure;
or (B) fails to perform or observe any other condition or covenant, or any other
event shall occur or condition exist, under any agreement or instrument relating
to any such Indebtedness, preferred stock or Contingent Obligation, and such
failure continues after the applicable grace or notice period, if any, specified
in the relevant document on the date of such failure if the effect of such
failure, event or condition is to cause, or to permit the holder or holders of
such Indebtedness or preferred stock or beneficiary or beneficiaries of such
Indebtedness or preferred stock (or a trustee or agent on behalf of such holder
or holders or beneficiary or beneficiaries) to cause such Indebtedness or
preferred stock to be declared to be due and payable prior to its stated
maturity, or such Contingent Obligation to become payable or cash collateral in
respect thereof to be demanded; or
(f) Insolvency; Voluntary Proceedings. The Borrower or any of
its Subsidiaries (i) ceases or fails to be solvent, or generally fails to pay,
or admits in writing its inability to pay, its debts as they become due, subject
to applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Borrower or any of its
Subsidiaries, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Borrower's or any
of its Subsidiary's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Borrower or any of its Subsidiaries
admits the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; or (iii) the Borrower or any of its
Subsidiaries acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its property or business;
or
(h) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Borrower under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess
91
of $1,000,000; or (ii) the aggregate amount of Unfunded Pension Liability among
all Pension Plans at any time exceeds $1,000,000; or (iii) the Borrower or any
ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate
amount in excess of $1,000,000; or
(i) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Borrower or any Guarantor involving in the aggregate a liability (to the extent
not covered by independent third-party insurance as to which the insurer does
not dispute coverage) as to any single or related series of transactions,
incidents or conditions, of $500,000 or more, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 10 days after
the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Borrower or any of its Subsidiaries which does or
would reasonably be expected to have a Material Adverse Effect, and there shall
be any period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(k) Change of Control. There occurs any Change of
Control; or
(l) Loss of Licenses. Any other Governmental Authority revokes
or fails to renew any license, permit or franchise of the Borrower or any
Subsidiary, or the Borrower or any Subsidiary for any reason loses any material
license, permit or franchise, or the Borrower or any Subsidiary suffers the
imposition of any restraining order, escrow, suspension or impound of funds in
connection with any proceeding (judicial or administrative) with respect to any
license, permit or franchise and the result is a Material Adverse Effect; or
(m) Adverse Change. There occurs a Material Adverse
Effect; or
(n) Guarantor Defaults. Any Guarantor fails in any material
respect to perform or observe any term, covenant or agreement in the Guaranty;
or the Guaranty is for any reason partially (including with respect to future
advances) or wholly revoked or invalidated, or otherwise ceases to be in full
force and effect, or the Guarantor or any other Person contests in any manner
the validity or enforceability thereof or denies that it has any further
liability or obligation thereunder; or any event described at subsections (f) or
(g) of this Section occurs with respect to any Guarantor; or
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(o) Collateral.
(i) any provision of any Collateral Document
shall for any reason cease to be valid and binding on or enforceable
against the Borrower or any of its Subsidiaries party thereto or the
Borrower or any of its Subsidiaries shall so state in writing or bring
an action to limit its obligations or liabilities thereunder; or
(ii) any Collateral Document shall for any reason
(other than pursuant to the terms thereof) cease to create a valid
security interest in the Collateral purported to be covered thereby or
such security interest shall for any reason cease to be a perfected and
first priority security interest subject only to Permitted Liens; or
(p) Cross-Acceleration to MK Gain Debt. A default occurs under
any mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness of MK Gain or any of
its Subsidiaries (or any Guaranty Obligation of MK Gain or any of its
Subsidiaries), whether such Indebtedness or Guaranty Obligation now exists or
shall be created after the date hereof, which default (a) is caused by a failure
to pay principal of or premium, if any, or interest on such Indebtedness or
Guaranty Obligation prior to the expiration of the grace period provided in such
Indebtedness (a "Payment Default") or (b) results in the acceleration of such
Indebtedness or Guaranty Obligation prior to its express maturity and, in each
case, the principal amount of such Indebtedness or Guaranty Obligation, together
with the principal amount of any other Indebtedness or Guaranty Obligation as to
which there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $1,000,000 or more; or
(q) Locomotive Leases. Any default, violation or breach shall
occur in any covenants or agreements contained in any lease documents pursuant
to which the Borrower or Boise Locomotive leases railroad locomotives from any
other Person, and such locomotive lease shall be terminated, or such default,
violation or breach shall continue, for more than the applicable grace period
(and shall not have been waived in writing), and shall give the lessor
thereunder the right to terminate such locomotive lease or otherwise bring suit
of any kind against the Borrower or Boise Locomotive for injunctive relief,
damages or other penalties or costs of any kind; or
8.02 Remedies. If any Event of Default occurs, the Agent
shall, at the request of, or may, with the consent of, the
Majority Lenders,
(a) declare the commitment of each Lender to make Loans
to be terminated, whereupon such commitments shall be terminated;
93
(b) declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Borrower; and
(c) exercise on behalf of itself and the Lenders all
rights and remedies available to it and the Lenders under the
Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 8.01 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each
Lender to make Loans shall automatically terminate and the unpaid principal
amount of all outstanding Loans and all interest and other amounts as aforesaid
shall automatically become due and payable without further act of the Agent or
any Lender.
8.03 Specified Swap Contract Remedies. Notwithstanding any other
provision of this Article VIII, each Specified Swap Provider shall have the
right, with prior notice to the Agent, but without the approval or consent of
the Agent or the other Lenders, with respect to any Specified Swap Contract of
such Specified Swap Provider, (a) to declare an event of default, termination
event or other similar event thereunder, (b) to determine net termination
amounts in accordance with the terms of such Specified Swap Contract, and (c) to
prosecute any legal action against the Borrower to enforce net amounts owing to
such Specified Swap Provider.
8.04 Rights Not Exclusive. (a) The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
(b) If an Event of Default exists: (i) the Agent shall have for
the benefit of the Lenders, in addition to all other rights of the Agent and the
Lenders, the rights and remedies of a secured party under the UCC; (ii) the
Agent may, at any time, take possession of the Collateral and keep it on the
applicable Borrower's or any Guarantor's premises, at no cost to the Agent or
any Lender, or remove any part of it to such other place or places as the Agent
may desire, or the Borrower shall, upon the Agent's demand, at the Borrower's
cost, assemble the Collateral and make it available to the Agent at a place
reasonably convenient to the Agent; and (iii) the Agent may sell and deliver any
Collateral at public or private sales, for cash, upon credit or otherwise, at
such prices and upon such terms as the Agent deems advisable, in its sole
discretion, and may, if the Agent
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deems it reasonable, postpone or adjourn any sale of the Collateral by an
announcement at the time and place of sale or of such postponed or adjourned
sale without giving a new notice of sale. Without in any way requiring notice to
be given in the following manner, the Borrower agrees that any notice by the
Agent of sale, disposition or other intended action hereunder or in connection
herewith, whether required by the UCC or otherwise, shall constitute reasonable
notice to the Borrower if such notice is mailed by registered or certified mail,
return receipt requested, postage prepaid, or is delivered personally against
receipt, at least five (5) Business Days prior to such action to the Borrower's
address specified in or pursuant to Section 10.12. If any Collateral is sold on
terms other than payment in full at the time of sale, no credit shall be given
against the Obligations until the Agent or the Lenders receive payment, and if
the buyer defaults in payment, the Agent may resell the Collateral without
further notice to the Borrower or any other Person. In the event the Agent seeks
to take possession of all or any portion of the Collateral by judicial process,
the Borrower and the Guarantors irrevocably waive: (a) the posting of any bond,
surety or security with respect thereto which might otherwise be required; (b)
any demand for possession prior to the commencement of any suit or action to
recover the Collateral; and (c) any requirement that the Agent retain possession
and not dispose of any Collateral until after trial or final judgment. The
Borrower and the Guarantors agree that the Agent has no obligation to preserve
rights to the Collateral or marshal any Collateral for the benefit of any
Person. The Agent is hereby granted a license or other right to use, without
charge, the Borrower's and the Guarantors' labels, patents, copyrights, name,
trade secrets, trade names, trademarks, and advertising matter, or any similar
property, in completing production of, advertising or selling any Collateral,
and the Borrower's and the Guarantors' rights under all licenses and all
franchise agreements shall inure to the Agent's benefit. The proceeds of sale
shall be applied in accordance with this Agreement and the Borrower shall remain
liable for any deficiency.
(c) Supporting Letter of Credit; Cash Collateral. If
--------------------------------------------
any Letter of Credit is outstanding upon the termination of this
Agreement, then upon such termination the Borrower shall deposit
with the Agent, for the ratable benefit of the Lenders, with
respect to each Letter of Credit then outstanding, as the
Majority Lenders, in their sole discretion shall specify, either
(A) a standby letter of credit (a "Supporting Letter of Credit")
---------------------------
in form and substance satisfactory to the Agent, issued by an
issuer satisfactory to the Agent and in an amount equal to the
greatest amount for which such Letter of Credit may be drawn,
under which Supporting Letter of Credit the Agent is entitled to
draw amounts necessary to reimburse the Agent and the Lenders for
payments made by the Agent and the Lenders under such Letter of
Credit or under any credit support or enhancement provided
through the Agent with respect thereto, or (B) cash in amounts
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necessary to reimburse the Agent and the Lenders for payments made or to be made
(including, without limitation, the amount that the Agent estimates will be
necessary to cover its expenses and legal fees in connection therewith) by the
Agent or the Lenders under such Letter of Credit or under any credit support or
enhancement provided through the Agent with respect thereto. Such Supporting
Letter of Credit or deposit of cash shall be held by the Agent, for the ratable
benefit of the Lenders, as security for, and to provide for the payment of, the
aggregate undrawn amount of such Letters of Credit remaining outstanding.
8.05 Certain Financial Covenant Defaults. In the event that, after
taking into account any extraordinary charge to earnings taken or to be taken as
of the end of any fiscal period of the Borrower (a "Charge"), and if solely by
virtue of such Charge, there would exist an Event of Default due to the breach
of any of Sections 7.16, 7.17, or 7.18 as of such fiscal period end date, such
Event of Default shall be deemed to arise upon the earlier of (a) the date after
such fiscal period end date on which the Borrower announces publicly it will
take, is taking or has taken such Charge (including an announcement in the form
of a statement in a report filed with the SEC) or, if such announcement is made
prior to such fiscal period end date, the date that is such fiscal period end
date; and (b) the date the Borrower delivers to the Agent its audited annual or
unaudited quarterly financial statements in respect of such fiscal period
reflecting such Charge as taken.
ARTICLE IX
THE AGENT
9.01 Appointment and Authorization; "Agent". Each Lender hereby
irrevocably (subject to Section 9.09) appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of
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market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.
9.02 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
9.03 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by the Borrower or any Subsidiary or
Affiliate of the Borrower, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or for the value of
or title to any Collateral, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Borrower or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Borrower or any of the Borrower's Subsidiaries or
Affiliates.
9.04 Reliance by Agent. (a) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation 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 (including counsel
to the Borrower), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders 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
Agent shall in all cases be fully protected in acting, or in
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refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Majority Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either (i) if it is in substantially the form sent by
the Agent to such Lender for consent, approval, acceptance or satisfaction, or
(ii) required to be consented to or approved by or acceptable or satisfactory to
such Lender on the Closing Date, to the extent not so delivered to such Lender
but available at Closing.
9.05 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Lenders, unless the Agent shall have
received written notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Lenders in
accordance with Article VIII; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interest
of the Lenders.
9.06 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Borrower and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrower and its Subsidiaries, the value of and title to any Collateral, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and has made its own decision to enter into this Agreement and to extend
credit to the Borrower and its Borrowing Subsidiaries hereunder. Each Lender
also represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to
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make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
the Agent shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Borrower
which may come into the possession of any of the Agent-Related Persons.
9.07 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Lender shall be liable for the payment to the Agent-Related Persons of
any portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including, without limitation, Attorney Costs)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the Agent
is not reimbursed for such expenses by or on behalf of the Borrower. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
9.08 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, engage in Swap Contracts and generally engage in
any kind of banking, trust, financial advisory, underwriting or other business
with the Borrower and its Subsidiaries and Affiliates as though BofA were not
the Agent hereunder and without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, BofA or its Affiliates may
receive information regarding the Borrower or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Borrower or such Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Loans, BofA
shall have the same rights and powers under this Agreement as any other Lender
and may exercise
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the same as though it were not the Agent, and the terms "Lender" and "Lenders"
include BofA in its individual capacity.
9.09 Successor Agent. The Agent may, and at the request of the Majority
Lenders shall, resign as Agent upon 30 days' notice to the Lenders. If the Agent
resigns under this Agreement, the Majority Lenders shall appoint from among the
Lenders a successor agent for the Lenders which successor agent shall be
approved by the Borrower. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Lenders and the Borrower, a successor agent from among the
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent, and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article IX and Sections 10.04 and 10.05 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Lenders appoint a successor agent as provided for
above.
9.10 Withholding Tax. (a) If any Lender is a "foreign
corporation, partnership or trust" within the meaning of the Code
and such Lender claims exemption from, or a reduction of, U.S.
withholding tax under Sections 1441 or 1442 of the Code, such
Lender agrees with and in favor of the Agent, to deliver to the
Agent:
(i) if such Lender claims an exemption from, or
a reduction of, withholding tax under a United States tax treaty,
properly completed IRS Forms 1001 and W-8 before the payment of any
interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which interest
may be paid under this Agreement;
(ii) if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed copies of
IRS Form 4224 before the payment of any interest is due in the first
taxable year of such Lender and in each succeeding taxable year of such
Lender during which interest may be paid under this Agreement, and two
copies of IRS Form W-9; and
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(iii) such other form or forms as may be required under
the Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of the Borrower to such Lender, such Lender
agrees to notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrower to such Lender. To the extent of
such percentage amount, the Agent will treat such Lender's IRS Form 1001 as no
longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrower to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify the Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Agent.
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9.11 Collateral Matters. (a) The Agent is authorized on behalf of all
the Lenders, without the necessity of any notice to or further consent from the
Lenders, from time to time to take any action with respect to any Collateral or
the Collateral Documents which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the Collateral granted
pursuant to the Collateral Documents.
(b) The Lenders irrevocably authorize the Agent, at its option
and in its discretion, to release any Lien granted to or held by the Agent (on
behalf of the Lenders or otherwise) upon any Collateral (i) upon termination of
the Commitments and payment in full of all Loans and all other Obligations known
to the Agent and payable under this Agreement or any other Loan Document; (ii)
constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; (iii) constituting property
in which the Borrower or any Subsidiary owned no interest at the time the Lien
was granted or at any time thereafter; (iv) constituting property leased to the
Borrower or any Subsidiary under a lease which has expired or been terminated in
a transaction permitted under this Agreement or is about to expire and which has
not been, and is not intended by the Borrower or such Subsidiary to be, renewed
or extended; (v) consisting of an instrument evidencing Indebtedness or other
debt instrument, if the indebtedness evidenced thereby has been paid in full; or
(vi) if approved, authorized or ratified in writing by the Majority Lenders or
all the Lenders, as the case may be, as provided in Section 10.01(f). Upon
request by the Agent at any time, the Lenders will confirm in writing the
Agent's authority to release particular types or items of Collateral pursuant to
this Section 9.11(b), provided that the absence of any such confirmation for
whatever reason shall not affect the Agent's rights under this Section 9.11.
(c) Each Lender agrees with and in favor of each other (which
agreement shall not be for the benefit of the Borrower or any Subsidiary) that
the Borrower's obligation to such Lender under this Agreement and the other Loan
Documents is not and shall not be secured by any real property collateral now or
hereafter acquired by such Lender other than the real property described in the
Mortgages.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower or any Subsidiary therefrom, shall be effective unless
the same shall be in writing and signed by the Majority Lenders (or by the Agent
at the written request of the Majority Lenders) and the Borrower and
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acknowledged by the Agent, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all the Lenders and the Borrower and
acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender (or
reinstate any Commitment terminated pursuant to Section 8.02);
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment or mandatory prepayment of principal,
interest, fees or other amounts due to the Lenders (or any of them) hereunder or
under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required
for the Lenders or any of them to take any action hereunder; or
(e) amend this Section, or Section 2.14, or any
provision herein providing for consent or other action by all
Lenders; or
(f) discharge any Guarantor, or release any portion of the
Collateral except as otherwise may be provided in the Collateral Document or
this Agreement or except where the consent of the Majority Lenders only is
specifically provided for;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Majority Lenders or all the
Lenders, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document, and (ii) the Fee Letter may be amended, or
rights or privileges thereunder waived, in a writing executed by the respective
parties thereto.
10.02 Notices. (a) All notices, requests, consents, approvals, waivers
and other communications shall be in writing and mailed, faxed or delivered, to
the address or facsimile number specified for notices on Schedule 10.02
(including, unless the context expressly otherwise provides, by facsimile
transmission, provided that any matter transmitted by the Borrower by facsimile
(i) shall be immediately confirmed by a telephone call to the recipient at the
number specified on Schedule 10.02, and (ii) shall be followed promptly by
delivery of a hard copy original thereof) or, if directed to the Borrower (at
the address set forth below), or, in the case of any Person
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to such other address as shall be designated by such Person in a written notice
to the other parties, and as directed to any other party, at such other address
as shall be designated by such party in a written notice in compliance with this
Section 10.02.
Notices to the Borrower should be addressed as follows:
MotivePower Industries, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel and Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Doepken Keevican & ▇▇▇▇▇
Professional Corporation
37th Floor, USX Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or IX shall not be effective until actually
received by the Agent.
(c) Any agreement of the Agent and the Lenders herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Borrower. The Agent and the Lenders shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by the
Borrower to give such notice and the Agent and the Lenders shall not have any
liability to the Borrower or other Person on account of any action taken or not
taken by the Agent or the Lenders in reliance upon such telephonic or facsimile
notice. The obligation of the Borrower to repay the Loans and other obligations
hereunder shall not be affected in any way or to any extent by any failure by
the Agent and the Lenders to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Agent and the Lenders of a confirmation
which is at variance with the terms understood by the Agent and the Lenders to
be contained in the telephonic or facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Agent or
any Lender, any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or
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partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
10.04 Costs and Expenses. The Borrower shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent) within
five Business Days after demand (subject to Section 4.01(e)) for all costs and
expenses incurred by BofA (including in its capacity as Agent) in connection
with the development, preparation, delivery, syndication, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
reasonable Attorney Costs incurred by BofA (including in its capacity as Agent)
with respect thereto; and
(b) pay or reimburse the Agent, the Arranger and each Lender
within five Business Days after demand (subject to Section 4.01(e)) for all
costs and expenses (including, without limitation, Attorney Costs) incurred by
them in connection with the enforcement, attempted enforcement, or preservation
of any rights or remedies under this Agreement or any other Loan Document during
the existence of an Event of Default or after acceleration of the Loans
(including in connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding); and
(c) pay or reimburse BofA (including in its capacity as Agent)
within five Business Days after demand (subject to Section 4.01(e)) for all
appraisal (including the allocated cost of internal appraisal services), audit,
environmental inspection and review (including the allocated cost of such
internal services), search and filing costs, fees and expenses, incurred or
sustained by BofA (including in its capacity as Agent) in connection with the
matters referred to under subsections (a) and (b) of this Section.
10.05 Borrower Indemnification. (a) Whether or not the transactions
contemplated hereby are consummated, the Borrower shall indemnify, defend and
hold the Agent-Related Persons, and each Lender and each of its respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including, without limitation, Attorney
Costs) of any kind or nature whatsoever which may at any time (including at any
time following repayment of the Loans and termination of all Specified Swap
Contracts and the termination, resignation or replacement of
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the Agent or replacement of any Lender) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or any
Specified Swap Contracts or the Loans or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, that the Borrower shall
have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
(b) (i) The Borrower shall indemnify, defend and hold harmless
each Indemnified Person, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses or disbursements (including, without
limitation, Attorney Costs and the allocated cost of internal
environmental audit or review services), which may be incurred by or
asserted against such Indemnified Person in connection with or arising
out of any pending or threatened investigation, litigation or
proceeding, or any action taken by any Person, with respect to any
Environmental Claim arising out of or related to any property, whether
or not subject to a Mortgage in favor of the Agent or any Lender, or
arising out of or related to any operations of the Borrower. No action
taken by legal counsel chosen by the Agent or any Lender in defending
against any such investigation, litigation or proceeding or requested
remedial, removal or response action shall vitiate or in any way impair
the Borrower's obligation and duty hereunder to indemnify and hold
harmless the Agent and each Lender.
(ii) In no event shall any site visit, observation, or
testing by the Agent or any Lender (or any contractee of the Agent or
any Lender) be deemed a representation or warranty that Hazardous
Materials are or are not present in, on, or under, the site, or that
there has been or shall be compliance with any Environmental Law.
Neither the Borrower nor any other Person is entitled to rely on any
site visit, observation, or testing by the Agent or any Lender. Neither
the Agent nor any Lender owes any duty of care to protect the Borrower
or any other Person against, or to inform the Borrower or any other
party of, any Hazardous Materials or any other adverse condition
affecting any site or property. The Agent or any Lender may in its
discretion disclose to the Borrower or any other Person any report or
findings made as a result of, or in connection with, any site visit,
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observation, or testing by the Agent or any Lender. The Borrower
understands and agrees that the Agent and the Lenders make no warranty
or representation to the Borrower or any other Person regarding the
truth, accuracy or completeness of any such report or findings that may
be disclosed. The Borrower also understands that, depending on the
results of any site visit, observation or testing by the Agent or any
Lender and disclosed to the Borrower, the Borrower may have a legal
obligation to notify one or more environmental agencies of the results,
that such reporting requirements are site-specific, and are to be
evaluated by the Borrower without advice or assistance from the Agent or
any Lender.
(c) The obligations in this Section shall survive payment of all
other Obligations. At the election of any Indemnified Person, the Borrower shall
defend such Indemnified Person using legal counsel satisfactory to such
Indemnified Person in such Person's sole discretion, at the sole cost and
expense of the Borrower. All amounts owing under this Section shall be paid
within 30 days after demand.
10.06 Marshalling; Payments Set Aside. Neither the Agent nor the Lenders
shall be under any obligation to ▇▇▇▇▇▇▇▇ any assets in favor of the Borrower or
any other Person or against or in payment of any or all of the Obligations. To
the extent that the Borrower makes a payment to the Agent or the Lenders, or the
Agent or the Lenders exercise their right of set-off, and such payment or the
proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Agent or such Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Lender
severally agrees to pay to the Agent upon demand its pro rata share of any
amount so recovered from or repaid by the Agent.
10.07 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Lender.
10.08 Assignments, Participations, etc. (a) Any Lender may, with the
written consent of the Borrower at all times other than during the existence of
a Default or an Event of Default, and the written consent of the Agent, which
consents of the Borrower and the Agent shall not be unreasonably withheld, at
any time assign
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and delegate to one or more Eligible Assignees (provided that no written consent
of the Borrower or the Agent shall be required in connection with any assignment
and delegation by a Lender to an Eligible Assignee that is an Affiliate of such
Lender) (each an "Assignee") all, or any ratable part of all, of the Loans, the
Commitments and the other rights and obligations of such Lender hereunder, in a
minimum amount of $5,000,000; provided, however, that (i) the Borrower and the
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (A) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Borrower
and the Agent by such Lender and the Assignee; (B) such Lender and its Assignee
shall have delivered to the Borrower and the Agent an Assignment and Acceptance
in the form of Exhibit K ("Assignment and Acceptance") and (C) the assignor
Lender or Assignee has paid to the Agent a processing fee in the amount of
$3,500, (ii) if the assignor Lender or any of its Affiliates is a Specified Swap
Provider with respect to any Specified Swap Contract, such Lender shall not
assign all of its interest in the Loans and the Commitments to an Assignee
unless such Assignee, or an Affiliate of such Assignee, shall also assume all
obligations of such assignor Lender or Affiliate with respect to all such
Specified Swap Contracts, and (iii) for purposes of clarification, if the
Borrower is entitled to consent to any assignment, it shall be deemed to be
reasonable for the Borrower to withhold such consent if the proposed assignee is
a Person primarily engaged in, a parent corporation or Subsidiary of, or under
common control with a Person primarily engaged in the manufacture of railroad
locomotives.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received (and provided its consent with respect to) an
executed Assignment and Acceptance and payment of the above-referenced
processing fee (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Loan Documents.
(c) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
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(d) Any Lender may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Borrower (a "Participant")
participating interests in any Loans, the Commitment of that Lender and the
other interests of that Lender (the "originating Lender") hereunder and under
the other Loan Documents; provided, however, that (i) the originating Lender's
obligations under this Agreement shall remain unchanged, (ii) the originating
Lender shall remain solely responsible for the performance of such obligations,
(iii) the Borrower and the Agent shall continue to deal solely and directly with
the originating Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment, consent or waiver would require unanimous consent of the Lenders
as described in the first proviso to Section 10.01. In the case of any such
participation, the Participant shall be entitled to the benefit of Sections
3.01, 3.03 and 10.05 as though it were also a Lender hereunder, and if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Lender in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 C.F.R. ss.203.14, and such Federal Reserve Lender may
enforce such pledge or security interest in any manner permitted under
applicable law.
10.09 Confidentiality. Each Lender agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Borrower and provided to it by the Borrower or any Subsidiary,
or by the Agent on such Borrower's or Subsidiary's behalf, under this Agreement
or any other Loan Document, and neither it nor any of its Affiliates shall use
any such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents or in connection with any other business
now or hereafter existing or contemplated with the Borrower or any Subsidiary;
except to the extent such information (i) was or becomes generally available to
the public other than as a result of disclosure by the Lender, or (ii) was or
becomes available on a non-confidential basis from a source other than the
Borrower,
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provided that such source is not bound by a confidentiality agreement with the
Borrower known to the Lender; provided, however, that any Lender may disclose
such information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Lender is subject or in connection with an
examination of such Lender by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent, any
Lender or their respective Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Lender's independent auditors and other
professional advisors; (G) to any Participant or Assignee, actual or potential,
provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Lenders hereunder; (H) as to any
Lender or its Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrower or any
Subsidiary is party or is deemed party with such Lender or such Affiliate; and
(I) to its Affiliates.
10.10 Set-off. In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Borrower, any such notice being waived by the
Borrower to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Lender to or for
the credit or the account of the Borrower against any and all Obligations owing
to such Lender, now or hereafter existing, irrespective of whether or not the
Agent or such Lender shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Borrower and the Agent after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application.
10.11 Intentionally Omitted.
10.12 Notification of Addresses, Lending Offices, Etc. Each Lender shall
notify the Agent in writing of any changes in the address to which notices to
the Lender should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
10.13 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which, when so executed,
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shall be deemed an original, and all of said counterparts taken together shall
be deemed to constitute but one and the same instrument.
10.14 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.15 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Borrower, the Lenders, the
Agent and the Agent-Related Persons, and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.
10.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT
AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAW OF THE STATE OF ILLINOIS; PROVIDED THAT THE AGENT AND THE LENDERS
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND
THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER, THE AGENT AND
THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
BORROWER, THE AGENT AND THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
ILLINOIS LAW.
(c) Nothing contained in this Section shall override
any contrary provision contained in any Swap Contract.
10.17 Waiver of Jury Trial. THE BORROWER, THE LENDERS AND THE AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER, THE
LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
111
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.18 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Borrower,
the Lenders and the Agent, and supersedes all prior or contemporaneous
agreements and understandings (including, without limitation, that certain
Commitment Letter dated December 30, 1996 among the Borrower, the Arranger, BofA
and Bank of America Illinois) of such Persons, verbal or written, relating to
the subject matter hereof and thereof except as otherwise set forth in Section
1.04 and the Fee Letter.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Chicago by their proper and duly authorized
officers as of the day and year first above written.
MOTIVEPOWER INDUSTRIES, INC., as
Borrower
By:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
and a Lender
By:
Title:
ABN AMRO BANK, N.V., as a Lender
By:
Title:
THE BANK OF NEW YORK, as a Lender
By:
Title:
CORESTATES BANK, N.A., as a Lender
By:
Title:
113
CREDIT LYONNAIS NEW YORK BRANCH, as
a Lender
By:
Title:
DG BANK DEUTSCHE GENOSSENSCHAFTS
BANK, as a Lender
By:
Title:
MELLON BANK, N.A., as a Lender
By:
Title:
NATIONAL BANK OF CANADA, as a Lender
By:
Title:
NATIONAL CITY BANK, as a Lender
By:
Title:
PNC BANK, N.A., as a Lender
By:
Title:
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IN WITNESS WHEREOF, the undersigned have accepted and agreed
to this Agreement as of the date first above written.
Motor Coils Manufacturing Company
By:
Title:
Engine Systems Company, Inc.
By:
Title:
▇▇▇▇▇ Industries Company
By:
Title:
Power Parts Company
By:
Title:
Touchstone Company
By:
Title:
MotivePower Investments Limited
By:
Title:
Boise Locomotive Company
By:
Title:
MotivePower Foreign Sales Corporation
By:
Title:
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SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
Pro
Term Revolving Rata
Lender Commitment Commitment Commitment Share
Bank of America NT $12,000,000 $ 3,199,999.97 $ 8,800,000.03 16.0003%
& SA
ABN AMRO Bank, $ 7,000,000 $ 1,866,666.67 $ 5,133,333.33 9.3333%
N.A.
The Bank of $ 7,000,000 $ 1,866,666.67 $ 5,133,333.33 9.3333%
New York
Corestates Bank, $ 7,000,000 $ 1,866,666.67 $ 5,133,333.33 9.3333%
N.A.
Credit Lyonnais $ 7,000,000 $ 1,866,666.67 $ 5,133,333.33 9.3333%
New York Branch
DG Bank Deutsche $ 7,000,000 $ 1,866,666.67 $ 5,133,333.33 9.3333%
Gennossenschafts
Bank
Mellon Bank, N.A. $ 7,000,000 $ 1,866,666.67 $ 5,133,333.33 9.3333%
National Bank of $ 7,000,000 $ 1,866,666.67 $ 5,133,333.33 9.3333%
Canada
National City Bank $ 7,000,000 $ 1,866,666.67 $ 5,133,333.33 9.3333%
of Pennsylvania
PNC Bank, N.A. $ 7,000,000 $ 1,866,666.67 $ 5,133.333.33 9.3333%
----------- -------------- -------------- -----
TOTAL $75,000,000 $20,000,000.00 $55,000,000.00 100%
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