EXECUTION COPY
EXHIBIT 10.4
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SENIOR SECURED NOTE PURCHASE AGREEMENT
Dated as of May 20, 2004
by
REPUBLIC ENGINEERED PRODUCTS, INC.,
as Borrower,
and
PERRY PRINCIPALS INVESTMENTS, L.L.C.,
as Term 2 Noteholder
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TABLE OF CONTENTS
Page
1. THE NOTE..................................................................................... 2
1.1. Purchase of Note........................................................................ 2
1.2. Fees.................................................................................... 2
1.3. Indemnity............................................................................... 2
1.4. Taxes................................................................................... 3
1.5. Note Register........................................................................... 4
2. CONDITIONS PRECEDENT TO CLOSING.............................................................. 4
2.1. Conditions to the Term 2 Noteholder Obligations......................................... 4
3. REPRESENTATIONS AND WARRANTIES............................................................... 5
3.1. Corporate Power, Authorization, Enforceable Obligations................................. 5
3.2. Financial Statements and Projections.................................................... 5
3.3. Solvency................................................................................ 6
3.4. Unfunded Pension Liabilities............................................................ 6
4. APPLICATION OF TRUST MONEYS.................................................................. 6
4.1. Trust Moneys............................................................................ 6
4.2. Retirement of Notes..................................................................... 7
4.3. Withdrawals of Insurance Proceeds and Condemnation Awards............................... 7
4.4. Intentionally Omitted................................................................... 10
4.5. Powers Exercisable Notwithstanding Event of Default..................................... 10
4.6. Powers Exercisable by Collateral Agent or Receiver...................................... 10
4.7. Disposition of Notes Retired............................................................ 10
4.8. Investment of Trust Moneys.............................................................. 10
5. AFFIRMATIVE COVENANTS........................................................................ 11
5.1. Corporate Existence..................................................................... 11
5.2. Payment of Taxes and Other Claims....................................................... 11
5.3. Maintenance of Properties, Books and Records; Compliance with Law; Inspection Rights.... 11
5.4. Insurance; Damage to or Destruction of Collateral....................................... 12
5.5. Compliance Certificates................................................................. 13
5.6. Provision of Financial Information...................................................... 14
5.7. Further Assurance to the Term 2 Noteholders and Collateral Agent........................ 15
5.8. Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases... 15
5.9. Mandatory Pavments...................................................................... 15
6. NEGATIVE COVENANTS........................................................................... 15
6.1. Limitation on Additional Indebtedness and Certain Preferred Stock....................... 15
6.2. Limitation on Sale-Leaseback Transactions............................................... 18
6.3. Limitation on Liens..................................................................... 18
i
6.4. Limitation on Restricted Payments....................................................... 19
6.5. Disposition of Proceeds of Asset Sales.................................................. 22
6.6. Limitation on Transactions with Affiliates.............................................. 22
6.7. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries........... 23
6.8. Impairment of Security Interest......................................................... 23
6.9. Waiver of Stay, Extension or Usury Laws................................................. 24
6.10. Additional Subsidiary Guarantees........................................................ 24
6.11. When Borrower May Merge, Etc............................................................ 24
6.12. Successor Entity Substituted............................................................ 25
7. SUCCESSORS AND ASSIGNS........................................................................ 26
7.1. Successors and Assigns.................................................................. 26
8. MISCELLANEOUS................................................................................. 26
8.1. Complete Agreement: Modification of Agreement........................................... 26
8.2. Amendments and Waivers.................................................................. 26
8.3. Certain Expenses........................................................................ 26
8.4. No Waiver............................................................................... 27
8.5. Remedies................................................................................ 27
8.6. Severability............................................................................ 27
8.7. Conflict of Terms....................................................................... 27
8.8. Confidentiality......................................................................... 27
8.9. GOVERNING LAW........................................................................... 27
8.10. Notices ................................................................................ 28
8.11. Section Titles.......................................................................... 29
8.12. Counterparts............................................................................ 29
8.13. WAIVER OF JURY TRIAL.................................................................... 29
8.14. Reinstatement........................................................................... 29
8.15. Advice of Counsel....................................................................... 29
8.16. No Strict Construction.................................................................. 30
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INDEX OF APPENDICES
Annex A (Recitals) -- Definitions
Annex B (Section 2. 1 (a)) -- Closing Checklist
Annex C (Section 1.1(b)) -- Wire Transfer Information
Annex D (Section 8.10) -- Notice Addresses
Disclosure Schedule 3.2(A) -- Financial Statements
Disclosure Schedule 3.2(B) -- Pro Forma
Disclosure Schedule 3.2(C) -- Projections
Disclosure Schedule 3.4 -- Unfunded Pension Liabilities
Disclosure Schedule 5.4 -- Insurance
Disclosure Schedule 6.1(B)(ii) -- Existing Indebtedness
Exhibit A -- Form of Senior Credit Agreement
Exhibit 1.1A -- Form of Term 2 Note
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This SENIOR SECURED NOTE PURCHASE AGREEMENT (this "Agreement"),
dated as of May 20, 2004 among REPUBLIC ENGINEERED PRODUCTS INC., a Delaware
corporation ("Borrower"); the other Note Parties signatory hereto; and PERRY
PRINCIPALS INVESTMENTS, L.L.C., a Delaware limited liability company (the "Term
2 Noteholder" and, if such Term 2 Noteholder shall decide to assign all or any
portion of the Obligations pursuant to the terms herein, such term shall include
any assignee of such Term 2 Noteholder).
RECITALS
WHEREAS, the Borrower wishes to sell to the Term 2 Noteholder and
the Term 2 Noteholder wishes to purchase from the Borrower a senior secured
promissory note, due August 20, 2009, in the principal amount of Sixty One
Million Eight Hundred Thousand Dollars ($61,800,000), upon the terms and subject
to the conditions hereinafter set forth; and
WHEREAS, the Borrower has agreed to secure all of its obligations
under the Note Purchase Documents by granting to the Collateral Agent (as
defined herein) a security interest in and lien upon certain of its assets as
more fully described in the Security Documents; and
WHEREAS, PAV Republic, Inc. ("Holdings") and Republic N&T Railroad,
Inc. are willing to guarantee all of the obligations of Borrower to the Term 2
Noteholder under the Note Purchase Documents; and
WHEREAS, it is contemplated that concurrently with the purchase and
sale of the Term 2 Note, (i) the Borrower will enter into a $200,000,000
Revolving Working Capital Credit and Guaranty Agreement (as the same may be
amended, modified, restated, refinanced or replaced in accordance with the terms
of the Subordination Agreement, the "Senior Credit Agreement"), dated as of the
date hereof among the Borrower, General Electric Capital Corporation, as agent
and lender, GECC Capital Markets Group, Inc. and UBS Securities, LLC, as lead
arrangers, UBS Securities, LLC, as syndication agent and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital,
a division of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial Services Inc. and Bank One, NA
(Main Office Chicago), as documentation agents (a copy of which is attached
hereto as Exhibit A, which Senior Credit Agreement shall provide for among other
things, a $200,000,000 secured revolving credit working capital facility (the
"Senior Credit Facility") and (ii) the Borrower will sell to the Term 1
Noteholder a Senior Subordinated Promissory Note due August 20, 2009 (the "Term
1 Note"), in the principal amount of Eight Million Three Hundred Sixty Five
Thousand Three Hundred Sixty Seven Dollars ($8,365,367), upon the terms and
subject to the conditions set forth in the Term 1 Note; and
WHEREAS, it is contemplated that the proceeds From the purchase of
the Term 2 Note, Term 1 Note and the Senior Credit Facility shall be used by the
Company to refinance certain existing indebtedness of the Borrower and provide
working capital to the Borrower; and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A and, for purposes of this Agreement and the
other Note Purchase Documents, the rules of construction set forth in Annex A
shall govern. All Annexes, Disclosure
Schedules, Exhibits and other attachments (collectively, "Appendices") hereto,
or expressly identified to this Agreement, are incorporated herein by reference,
and taken together with this Agreement, shall constitute but a single agreement.
These Recitals shall be construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
1. THE NOTE
1.1. Purchase of Note. The Borrower agrees to issue and sell to the Term 2
Noteholder, and the Term 2 Noteholder agrees to purchase from the Borrower in
reliance upon the representations, warranties, terms and conditions of this
Agreement, a Senior Secured Promissory Note due August 20, 2009 in the aggregate
original principal amount of $61,800,000 in the form attached hereto as Exhibit
l.1(a) (the "Term 2 Note"). The Term 2 Note shall bear interest (based on a
360-day year of twelve 30-day months) on the unpaid principal amount thereof as
set forth in the Term 2 Note. The Term 2 Note shall be purchased at a closing
(the "Closing") to be held at the offices of Winston & ▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such other location as agreed to by the
Borrower and the Term 2 Noteholder, at 10:00 a.m. local time, on the date on
which this Agreement is executed and delivered and upon satisfaction of the
conditions described in Section 2 (the "Closing Date"). At the Closing, the
Borrower will issue the Term 2 Note to the Term 2 Noteholder, payable to Term 2
Noteholder or its registered assigns, against receipt of immediately available
funds by wire transfer to an account or accounts designated by the Borrower
prior to the Closing (or in such other manner as is set forth on Annex C).
1.2. Fees. Borrower shall pay Term 2 Noteholder $1,800,000 on the Closing
Date as a financing fee, to be netted out of the funds advanced at Closing.
1.3. Indemnity. Subject to Section 1.4, each Note party that is a
signatory hereto shall jointly and severally indemnify and hold harmless Term 2
Noteholder and each of its respective Affiliates, and each such Person's
respective officers, directors, employees, attorneys, agents and representatives
(each, an "Indemnified Person"), from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including
reasonable attorneys' fees and disbursements and other costs of investigation or
defense, including those incurred upon any appeal) resulting from or arising out
of any breach of any representation or warranty, covenant or agreement of the
Borrower in the Agreement, the Term 2 Note or the other Transaction Documents or
any legal, administrative or other legal actions, proceedings or investigations,
or written threats thereof, base upon, relating to or arising out of the
Transaction Documents, the transactions contemplated thereby or referred to
therein (collectively. "Indemnified Liabilities"); provided, that no such Note
Party shall be liable for any indemnification to an Indemnified Person to the
extent that any such suit, action, proceeding, claim, damage, loss, liability or
expense results from that Indemnified Person's gross negligence or willful
misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO ANY NOTE PURCHASE DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER
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PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE,
EXEMPLARY, MULTIPLE OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR
AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
1.4. Taxes
(a) Notwithstanding anything to the contrary in the Note Purchase
Documents, any and all payments by the Note Parties hereunder or under the Term
2 Notes shall be made, in accordance with this Section l.4, free and clear of
and without deduction for any and all present or future Taxes, unless otherwise
required by law. Subject to the provisions of Section l.4(c), if any Note Party
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under the Term 2 Notes, (i) the sum payable shall be
increased as much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 1.4) the Term 2 Noteholder receives an amount equal to the sum that
it would have received had no such deductions been made, (ii) such Note Party
shall make such deductions, and (iii) such Note Party shall pay the full amount
deducted to the relevant taxing or other authority in accordance with applicable
law.
(b) Subject to the provisions of Section 1.4(c), each Note Party that is a
signatory hereto shall indemnify and, within ten (10) days of demand therefor,
pay the Term 2 Noteholder for the full amount of Taxes (including any Taxes
imposed by any jurisdiction on amounts payable under this Section 1.4) paid by
such Term 2 Noteholder and any liability (including penalties, interest and
expenses) arising from the extension, suspension, termination of any credit
under this Agreement or any other Note Purchase Document, the administration of
such credit, the execution of this Agreement or any other Note Purchase
Document, the payments under the Term 2 Notes or any other Note Purchase
Document, or as a result of any other transactions contemplated by any of the
Note Purchase Documents, whether or not such Taxes were correctly or legally
asserted.
(c) Each Term 2 Noteholder organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
under this Agreement or under the Term 2 Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to each
Note Party a properly completed and executed IRS Form W 8ECI or Form W 8BEN or
other applicable form, certificate or document prescribed by the IRS or the
United States certifying as to such Foreign Lender's entitlement to such
exemption (a "Certificate of Exemption"). Any foreign Person that seeks to
become a Term 2 Noteholder under this Agreement shall provide a Certificate of
Exemption to each Note Party prior to becoming a Term 2 Noteholder hereunder and
when reasonably requested by a Note Party thereafter. No foreign Person may
become a Term 2 Noteholder hereunder if such Person fails to deliver a
Certificate of Exemption in advance of becoming a Term 2 Noteholder. No Note
Party shall be obligated to make a payment for or in connection with Taxes to
any Foreign Lender under any Note Purchase Document to the extent such Taxes
would have been avoided had the Foreign Lender provided a valid Certificate of
Exemption promptly upon the reasonable request by a Note Party, unless the
Foreign Lender is unable to provide a Certificate of Exemption as a result of
the introduction of or change in law or regulation (or a change in the
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interpretation thereof) or the compliance with any guideline or request from any
Governmental Authority (whether or not having the force of law), in each case,
adopted after the Foreign Lender became a party to this Agreement.
1.5. Note Register. Borrower shall maintain a register (the "Register") on
its books which shall show from time to time with respect to any Term 2
Noteholder the principal amount and interest on the Term 2 Note as provided in
this Agreement. All entries in the Register shall be made in accordance with
Borrower's customary accounting practices as in effect from time to time. The
balance in the Register, shall, absent manifest error, be presumptive evidence
of the amounts due and owing by Borrower; provided that any failure to so record
or any error in so recording shall not limit or otherwise affect Borrower's duty
to pay the Term 2 Notes. Failure to make the recording described in the first
sentence of this Section 1.5, or any error in such recording, shall not affect
Borrower's obligations in respect of the Term 2 Notes. With respect to any Term
2 Noteholder, the assignment of all or part of any Term 2 Note and the rights to
all or part of the principal of, and interest on, any Term 2 Note (i) shall not
be effective until such assignment is recorded on the Register maintained and
until the other requirements pursuant to Article 7 are met and (ii) prior to
such recordation and other requirements being met shall remain owing to the
transferor.
2. CONDITIONS PRECEDENT TO CLOSING
2.1. Conditions to the Term 2 Noteholder Obligations. The Term 2
Noteholder shall not be obligated to purchase the Term 2 Note or to take,
fulfill, or perform any other action hereunder, until the following conditions
have been satisfied or provided for in a manner reasonably satisfactory to Term
2 Noteholder, or waived in writing by Term 2 Noteholder:
(a) Note Purchase Agreement; Note Purchase Documents. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to,
Borrower, each other Note Party and Term 2 Noteholder; and Term 2 Noteholder
shall have received such documents, instruments, agreements and legal opinions
as Term 2 Noteholder shall reasonably request in connection with the
transactions contemplated by this Agreement and the other Note Purchase
Documents, including all those listed in the Closing Checklist attached hereto
as Annex B, each in form and substance reasonably satisfactory to Term 2
Noteholder.
(b) Repayment of Prior Lender Obligations. (i) Term 2 Noteholder shall
have received a fully executed original of a pay-off letter reasonably
satisfactory to Term 2 Noteholder confirming that all of the Prior Lender
Obligations shall have been repaid in full and all Liens upon any of the
property of Borrower or any of its Subsidiaries in favor of Prior Lender shall
be terminated by Prior Lender immediately upon such payment; and (ii) any
letters of credit issued or guaranteed by Prior Lender shall have been cash
collateralized or supported by a letter of credit pursuant to the Senior Credit
Agreement, as mutually agreed upon by Term 2 Noteholder, Borrower and Prior
Lender.
(c) Approvals. Term 2 Noteholder shall have received (i) satisfactory
evidence that the Note Parties have obtained an required consents and approvals
of all Persons including all requisite Governmental Authorities, to the
execution, delivery and performance of this Agreement and the other Note
Purchase Documents and the consummation of the Related
4
Transactions or (ii) an officer's certificate in form and substance reasonably
satisfactory to Term 2 Noteholder affirming that no such consents or approvals
are required.
(d) Senior Loan Facility. The parties to the Senior Credit Agreement shall
have executed and delivered counterparts to the Senior Credit Agreement and the
transactions under or in connection with the Senior Credit Agreement
contemplated to close on the Closing Date shall have been consummated.
(e) Payment of Fees. Borrower shall have paid to Term 2 Noteholder the fee
required to be paid on the Closing Date as set forth in Section 1.2.
(f) Capital Structure; Other Indebtedness. The capital structure of each
Note Party and the terms and conditions of all Indebtedness of each Note Party
shall be acceptable to Term 2 Noteholder in its sole discretion.
3. REPRESENTATIONS AND WARRANTIES
To induce Term 2 Noteholder to purchase the Term 2 Note, the Note
Parties executing this Agreement, jointly and severally, make the following
representations and warranties to Term 2 Noteholder with respect to all Note
Parties, each and all of which shall survive the execution and delivery of this
Agreement.
3.1. Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by each Note Party of the Note Purchase
Documents to which it is a party and the creation of all Liens provided for
therein: (a) are within such Person's power; (b) have been duly authorized by
all necessary corporate, limited liability company or limited partnership
action; (c) do not contravene any provision of such Person's charter, bylaws or
partnership or operating agreement as applicable; (d) do not violate any law or
regulation, or any order or decree of any court or Governmental Authority; (e)
do not conflict with or result in the breach or termination of, constitute a
default under or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which such Person is a party or by which such Person or any of its
property is bound; (f) do not result in the creation or imposition of any Lien
upon any of the property of such Person other than those in favor of Term 2
Noteholder, pursuant to the Note Purchase Documents; and (g) do not require the
consent or approval of any Governmental Authority or any other Person, except
those referred to in Section 2.1(c), all of which will have been duly obtained,
made or complied with prior to the Closing Date. Each of the Note Purchase
Documents shall be duly executed and delivered by each Note Party that is a
party thereto and each such Note Purchase Documents shall constitute a legal,
valid and binding obligation of such Note Party enforceable against it in
accordance with its terms.
3.2. Financial Statements and Projections. Except for the Projections, all
Financial Statements concerning Borrower and its Subsidiaries that are referred
to below have been prepared in accordance with GAAP consistently applied
throughout the periods covered (except as disclosed therein and except, with
respect to unaudited Financial Statements, for the absence of footnotes and
normal year-end audit adjustments) and present fairly in all material respects
the
5
financial position of the Persons covered thereby as at the dates thereof and
the results of their operations and cash flows for the periods then ended.
(a) Financial Statements. The following Financial Statements attached
hereto as Disclosure Schedule (3.2(a)) have been delivered on the date hereof:
(i) The audited consolidated balance sheets at December 31, 2003 and
the related statements of income and cash flows of Borrower and its
Subsidiaries for the Fiscal Years then ended, certified by KPMG.
(ii) The unaudited balance sheet at March 31, 2004 and the related
statement of income and cash flows Borrower and its Subsidiaries for the
three months then ended.
(b) Pro Forma. The Pro Forma delivered on the date hereof and attached
hereto as Disclosure Schedule (3.2(b)) was prepared by Borrower giving pro forma
effect to the Related Transactions, was based on the projected consolidated
balance sheets of Borrower and its Subsidiaries dated April 30, 2004, and was
prepared in accordance with GAAP, with only such adjustments thereto as would be
required in accordance with GAAP.
(c) Projections. The Projections delivered on the date hereof and attached
hereto as Disclosure Schedule (3.2(c)) have been prepared by Borrower in light
of the past operations of its businesses, but including future payments of known
contingent liabilities, and reflect projections for the three (3) year period
beginning on January 1, 2004 on a month-by-month basis. The Projections are
based upon the same accounting principles as those used in the preparation of
the financial statements described above and the estimates and assumptions
stated therein, all of which Borrower believes to be reasonable and fair in
light of current conditions and current facts known to Borrower and, as of the
Closing Date, reflect Borrower's good faith and reasonable estimates of the
future financial performance of Borrower for the period set forth therein. The
Projections are not a guaranty of future performance, and actual results may
differ from the Projections.
3.3. Solvency. Both before and after giving effect to (a) the issuance of
the Term 2 Notes on the Closing Date, (b) the disbursement of the proceeds of
such Term 2 Notes pursuant to the instructions of Borrower, (c) the Refinancing
and the consummation of the other Related Transactions and (d) the payment and
accrual of all transaction costs in connection with the foregoing, each Note
Party is and will be Solvent.
3.4. Unfunded Pension Liabilities. Except as set forth in Disclosure
Schedule (3.4), no Title IV Plan has any material Unfunded Pension Liability.
4. APPLICATION OF TRUST MONEYS
4.1. Trust Moneys. All Trust Moneys shall be held in trust by the
Collateral Agent for the benefit of the holders of Term 1 Notes and Term 2 Notes
as a part of the Noteholder Collateral in accordance with the provisions of this
Agreement and, upon any entry upon or sale or other disposition of the
Noteholder Collateral or any part thereof pursuant to any of the Security
Documents or the Term 1 Security Documents, said Trust Moneys shall be applied
on a pari passu basis among the Term 1 Notes and the Term 2 Notes but, prior to
any such entry, sale
6
or other disposition, all or any part of the Trust Moneys may be withdrawn, and
shall be released, paid or applied by the Collateral Agent from time to time as
provided in Sections 4.2 through 4.6, inclusive. At the Stated Maturity of the
Term 2 Notes, the Collateral Agent shall apply the Trust Moneys by the
Collateral Agent first to any amounts owed by the Note Parties in respect of
principal, interest or premium on the Term 1 Notes or the Term 2 Notes or in
respect of any other Obligations, on a pari passu basis, until such amounts are
paid in full, and then to the Borrower.
4.2. Retirement of Notes. The Collateral Agent shall apply Trust Moneys
from time to time to the payment of the principal of and interest on the Term 1
Notes and the Term 2 Notes, when due or to the redemption thereof or the
purchase thereof upon tender or at private sale or upon any exchange or in
anyone or more of such ways, as the Borrower shall request in writing; provided,
however, that prior to the Stated Maturity of the Term 2 Notes, Trust Moneys in
respect of Noteholder Insurance Proceeds may only be used to pay and/or purchase
the Term 2 Notes; provided further, that subject to the foregoing proviso, all
payments to the holders of the Term 1 Notes and the Term 2 Notes shall be made
on a pari passu basis. The Collateral Agent shall disburse such Trust Moneys
upon receipt by the Collateral Agent of the following:
(a) Board Resolutions of the Borrower directing the application pursuant
to this Section 4.2 of a specified amount of Trust Moneys and, in case any such
moneys are to be applied to payment, designating the Term 1 Notes and the Term 2
Notes so to be paid and, in case any such moneys are to be applied to the
purchase of Term 1 Notes and the Term 2 Notes, prescribing the method of
purchase, the price or prices to be paid and the maximum principal amount of
Term 1 Notes and the Term 2 Notes to be purchased and any other provisions of
this Agreement governing such purchase; and
(b) an Officers' Certificate of the Borrower, dated not more than five
Business Days prior to the date of the relevant application stating that no
Default or Event of Default exists unless such Default or Event of Default would
be cured thereby;
Upon compliance with the foregoing provisions of this Section, the
Collateral Agent shall apply Trust Moneys as directed and specified by such
Board Resolution, up to, but not exceeding, the principal amount of the Term I
Notes and the Term 2 Notes so paid or purchased.
A Board Resolution expressed to be irrevocable directing the
application of Trust Moneys under this Section 4.2 to the payment of the
principal of particular Term 1 Notes and the Term 2 Notes shall for all purposes
of this Agreement be deemed the equivalent of the deposit with the Collateral
Agent in trust for such purpose of money equal to the amount of such Trust
Moneys then held by the Collateral Agent and specified in such resolution, such
Trust Moneys shall not, after compliance with the foregoing provisions of this
Section, be deemed to be part of the Noteholder Collateral or Trust Moneys.
4.3. Withdrawals of Insurance Proceeds and Condemnation Awards. To the
extent that any Trust Moneys consist of either (a) the proceeds of insurance
upon any part of the Noteholder Collateral or (b) any award for or the proceeds
of any of the Noteholder Collateral being taken by eminent domain or sold
pursuant to the exercise by the United States of America or any state,
municipality or other governmental authority of any right which it may then have
to
7
purchase, or to designate a purchaser or to order a sale of any part of the
Noteholder Collateral, the Borrower or any Guarantor may direct the Collateral
Agent by the proper officer or officers of the Borrower or the applicable
Guarantor to (1) reimburse the Borrower or the applicable Guarantor for
expenditures made, or to pay costs incurred, by the Borrower or the applicable
Guarantor to repair, rebuild or replace the property destroyed, damaged or
taken, or (2) remit payment directly to third party contractors or suppliers to
enable the Borrower or any Guarantor to acquire additional property or assets
that constitute Noteholder Collateral (whether or not in replacement of the
property destroyed, damaged or taken). The Collateral Agent shall disburse such
Trust Moneys upon receipt by the Collateral Agent of the following:
(a) an Officers' Certificate of the Borrower or the applicable Guarantor,
setting forth:
(i) that expenditures have been made, or costs incurred, by the
Borrower or the applicable Guarantor in a specified amount for the purpose
of making certain repairs, rebuildings and replacements of the Noteholder
Collateral or to purchase additional property or assets that constitute
Noteholder Collateral, which, in each case, shall be briefly described;
(ii) that no part of such expenditures in any previous or then
pending application, has been or is being made the basis for the
withdrawal of any Trust Moneys pursuant to this Section 4.3;
(iii) that there is no outstanding Indebtedness, other than costs
for which payment is being requested, known to the Borrower or the
applicable Guarantor, after due inquiry, for the purchase price or
construction of such repairs, rebuildings or replacements, or for labor,
wages, materials or supplies in connection with the making thereof, which,
if unpaid, might become the basis of a vendor's, mechanics', laborers'
materialmen's, statutory or other similar Lien upon any of such repairs,
rebuildings or replacement, which Lien might, in the opinion of the
signers of such certificate, materially impair the security afforded by
such repairs, rebuildings or replacement;
(iv) that the property to be repaired, rebuilt, replaced or
purchased is necessary or desirable in the conduct of the Borrower's or
the applicable Guarantor's business; and-
(v) that no Default or Event of Default shall have occurred and be
continuing.
(b) (i) In case any part of such repairs, rebuildings or replacements
constitutes Real Property:
(A) with respect to any such repairs, rebuildings or
replacements that are not encompassed within or are not erected upon
Mortgaged Property, an instrument or instruments in recordable form
sufficient for the Lien of this Agreement and any Mortgage to cover such
repairs, rebuildings or replacements which, if such repairs, rebuildings
or replacements include leasehold or easement interests, shall include
normal and customary provisions with respect thereto and evidence of the
filing of all such documents as may be necessary to perfect such Liens;
8
(B) a policy of title insurance (or a commitment to issue
title insurance) insuring that the Lien of this Agreement and any Mortgage
constitutes a direct and valid and perfected mortgage Lien on such
repairs, rebuildings or replacements (subject to no Prior Liens other than
Prior Liens which were permitted with respect to the Noteholder Collateral
repaired, rebuilt or replaced) in an aggregate amount equal to the amount
expended with respect to such repairs, rebuildings or replacements or
purchase, or with respect to any such repairs, rebuildings or replacements
that are encompassed within or are erected upon Mortgaged Property an
endorsement to the title insurance policy regarding the affected Mortgaged
Property confirming that such repairs, rebuildings or replacements are
encumbered by the Lien of the applicable Mortgage (subject to no Prior
Liens other than Prior Liens which were permitted under the Mortgage with
respect to the Noteholder Collateral repaired, rebuilt or replaced); and
(C) evidence of payment or a closing statement indicating
payments to be made by the Borrower or the applicable Guarantor of all
title premiums, recording charges, transfer taxes and other costs and
expenses, including reasonable legal fees and disbursements of counsel for
the Collateral Agent (and any local counsel), that may be incurred to
validly and effectively subject such repairs, rebuildings or replacements
to the Lien of any applicable Security Document to perfect such Lien; and
(ii) in case any part of such repairs, rebuildings or replacements
constitutes personal property interests:
(A) an instrument in recordable form sufficient for the Lien
of any applicable Security Document to cover such repairs, rebuildings or
replacements; and
(B) evidence of payment or a closing statement indicating
payments to be made by the Borrower or the applicable Guarantor of all
filing fees, recording charges, transfer taxes and other costs and
expenses, including reasonable legal fees and disbursements of counsel for
the Collateral Agent (and any local counsel), that may be incurred to
validly and effectively subject such repairs, rebuildings or replacements
to the Lien of any Security Document.
(c) An Opinion of Counsel substantially stating:
(i) that the instruments that have been or are therewith delivered
to the Collateral Agent conform in all material respects to the
requirements of this Agreement and any other applicable Security Document;
and
(ii) that all of the Borrower's or the applicable Guarantor's right,
title and interest in and to said repairs, rebuildings or replacements, or
combination thereof, are then subject to the Lien of the applicable
Security Documents.
Upon compliance with the foregoing provisions of this Section 4.3, the
Collateral Agent shall pay on the written request of the Borrower an amount of
Trust Moneys of the character aforesaid equal to the amount of the expenditures
or costs stated in the Officers' Certificate required by clause (i) of paragraph
(a) of this Section 4.3; provided, however, that notwithstanding the above, so
long as no Default or Event of Default shall have occurred and be continuing, in
the event that
9
any insurance proceeds or award for such property or proceeds of such sale does
not exceed the lesser of $25,000 or 1 % of the principal amount of the aggregate
outstanding balance of the Term 1 Notes and the Term 2 Notes, and, in the good
faith estimate of the Borrower or the applicable Guarantor, such destruction or
damage resulting in such insurance proceeds or such taking or sale resulting in
such award does not detrimentally affect the value or use of the applicable
Noteholder Collateral in any material respect, upon delivery to the Collateral
Agent of an Officers' Certificate of the Borrower or the applicable Guarantor to
such effect, the Collateral Agent shall release to the Borrower or the
applicable Guarantor such insurance proceeds or award for such property or
proceeds of such sale, free of the Lien hereof and of the applicable Security
Documents; the Borrower shall take all steps necessary to notify the condemning
authority of such assignment.
4.4. Intentionally Omitted.
4.5. Powers Exercisable Notwithstanding Event of Default. In case an Event
of Default shall have occurred and shall be continuing, the Borrower or any
Guarantor, as applicable, while in possession of Noteholder Collateral (other
than cash, Cash Equivalents, and other personal property held by, or required to
be deposited or pledged with, the Collateral Agent hereunder or under the
Security Documents or with the trustee, mortgagee or other holder of a Prior
Lien), may do any of the things enumerated in Sections 4.2 and 4.3 if the
Majority Holders, by appropriate action of such holders, shall consent to such
action, in which event any certificate filed under any of such Sections shall
omit the statement to the effect that no Event of Default has occurred and is
continuing. This Section 4.5 shall not apply, however, during the continuance of
an Event of Default of the type specified in Section 7.1 (a)(i), 7.1 (a)(ii), or
7.1 (a)(iii) of the Term 2 Notes.
4.6. Powers Exercisable by Collateral Agent or Receiver. In case the
Noteholder Collateral (other than any cash, Cash Equivalents and other personal
property held by, or required to be deposited or pledged with, the Collateral
Agent or under the Security Documents or the Subordinated Security Documents or
with the trustee, mortgagee or other holder of a Prior Lien) shall be in the
possession of a receiver or trustee lawfully appointed, the powers hereinbefore
in this Article 4 conferred upon the Borrower and any Guarantor, as applicable,
with respect to the withdrawal or application of Trust Moneys may be exercised
by such receiver or trustee, in which case a certificate signed by such receiver
or trustee shall be deemed the equivalent of any Officers' Certificate required
by this Article IV. If the Collateral Agent shall be in possession of any of the
Noteholder Collateral hereunder or under any of the Security Documents or the
Subordinated Security Documents, such powers may be exercised by the Collateral
Agent in its discretion.
4.7. Disposition of Notes Retired. All Term 1 Notes and Term 2 Notes
received by the Collateral Agent and for whose purchase Trust Moneys are applied
under this Article 4, if not otherwise cancelled, shall be promptly delivered to
the Borrower for cancellation and destruction unless the Collateral Agent shall
be otherwise directed in writing by the Borrower.
4.8. Investment of Trust Moneys. All or any part of any Trust Moneys held
by the Collateral Agent (except such as may be held for the account of any
particular Term 1 Note or Term 2 Note) shall from time to time be invested or
reinvested by the Collateral Agent in any
10
Cash Equivalents pursuant to the written direction of the Borrower which shall
specify the Cash Equivalents in which such Trust Moneys shall be invested,
provided that Trust Moneys designated to redeem the Term 1 Notes and Term 2
Notes cannot be invested in Cash Equivalents having a maturity date later than
the anticipated Stated Maturity. Such Cash Equivalents shall be held by the
Collateral Agent, as a part of the Noteholder Collateral, subject to the same
provisions hereof as the cash used by it to purchase such Cash Equivalents.
Unless an Event of Default occurs and is continuing, any interest on such Cash
Equivalents (in excess of any accrued interest paid at the time of purchase)
which may be received by the Collateral Agent shall be forthwith paid promptly
to the Borrower, provided that interest and dividends accrued and earned or paid
on such investment of Trust Moneys consisting of Net Cash Proceeds from an Asset
Sale of Noteholder Collateral or other disposition of Noteholder Collateral
shall not be paid to the Borrower but shall be Trust Moneys and used to redeem
the Term 1 Notes and the Term 2 Notes in accordance with applicable provisions
of such notes. The Collateral Agent shall not be liable or responsible for any
loss resulting from such investments or sales except only for. its own grossly
negligent action, its own grossly negligent failure to act or its own willful
misconduct in complying with this Section 4.8.
5. AFFIRMATIVE COVENANTS
5.1. Corporate Existence. The Borrower shall do or cause to be done, at
its own cost and expense, all things necessary to and will cause each of its
Restricted Subsidiaries to, preserve and keep in full force and effect the
corporate, limited liability company or partnership existence and material
rights (charter and statutory), licenses and/or franchises of the Borrower and
each of its Restricted Subsidiaries; provided, however, that subject to the
terms of any Security Document, neither the Borrower nor any of its Restricted
Subsidiaries shall be required to preserve any such rights, licenses or
franchises if the Board of Directors of the Borrower shall reasonably determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Borrower and its Restricted Subsidiaries, taken as a whole, and
the loss thereof is not adverse in any material respect to the Term 2
Noteholders; and provided, further, that this covenant shall not prohibit the
combination of any Restricted Subsidiary with the Borrower or with any other
Restricted Subsidiary.
5.2. Payment of Taxes and Other Claims. The Borrower shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon its or its Restricted Subsidiaries' income, profits or property and
(b) all lawful claims for labor, materials and supplies which, if unpaid, might
by law become a Lien upon its property; provided, however, that, subject to the
terms of the applicable Security Documents, the Borrower shall not be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate negotiations or proceedings and for which disputed
amounts adequate reserves (in the good faith judgment of the Board of Directors
of the Borrower) have been made or where the failure to so pay would not have a
material adverse affect upon the Borrower and its Restricted Subsidiaries, taken
as a whole.
5.3. Maintenance of Properties, Books and Records; Compliance with Law;
Inspection Rights.
11
(a) Subject to, and in compliance with, the provisions of each applicable
Security Document, the Borrower shall, and shall cause each of its Restricted
Subsidiaries to, at all times cause all properties used or useful in the conduct
of its business to be maintained and kept in good condition, repair and working
order (reasonable wear and tear and casualty excepted) and supplied with all
necessary equipment, and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereto. The Borrower or any
Restricted Subsidiary may close or shutdown any Specified Facility with the
approval of the Board of Directors of the Borrower, provided that the Borrower
shall notify the Collateral Agent in writing of such closure or shutdown at
least 30 days in advance of the date on which such closure or shutdown is to be
effected.
(b) [INTENTIONALLY OMITTED]
(c) The Borrower shall, and shall cause each of its Restricted
Subsidiaries to, keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Borrower and each Restricted Subsidiary of the Borrower, in
accordance with GAAP.
(d) The Borrower shall and shall cause each of its Restricted Subsidiaries
to comply with all statutes, laws, ordinances, or government rules and
regulations to which it is subject, noncompliance with which would materially
adversely affect the business, earnings, properties, assets or condition
(financial or otherwise) of the Borrower and its Restricted Subsidiaries, taken
as a whole.
(e) Upon the written request of the Collateral Agent delivered by the
Collateral Agent to the Borrower a reasonable period of time in advance of any
proposed inspection, the Borrower will, at reasonable times during ordinary
business hours, permit the Collateral Agent by its representatives to inspect
the books and records of the Borrower and of each of its Subsidiaries and the
plants and properties of the Borrower and of each of its Subsidiaries
constituting Collateral. As a condition to any such inspection, (i) the
Collateral Agent shall execute and deliver in favor of the Borrower a
confidentiality agreement in form and substance reasonably satisfactory to the
Borrower and the Collateral Agent which, among other things shall provide that
the Collateral Agent shall not provide any information obtained by it in the
course of such inspection to any Term 2 Noteholder unless such Term 2 Noteholder
has entered into a confidentiality agreement in form and substance reasonably
satisfactory to the Borrower and the Collateral Agent and (ii) the Collateral
Agent shall agree to comply, and cause its representatives to comply, with all
occupational health and safety rules and regulations governing the operation of
the facilities of the Borrower and its Subsidiaries.
5.4. Insurance; Damage to or Destruction of Collateral.
(a) The Note Parties shall, at their sale cost and expense, maintain
insurance policies of the types and with respect to coverage amounts, deductible
amounts, types of risks covered and quality of insurance, with respect to all of
the real estate, property, plant and Equipment owned or used by the Note
Parties, that is customary for its industry and businesses, including the
property, boiler and machinery, underground storage tanks and such other
policies of insurance maintained by the Borrower in respect of the Noteholder
Collateral, which are described on
12
Disclosure Schedule (5.4) as in effect on the date hereof or otherwise
comparable; provided, that such coverage offers the same or better protection
with respect to coverage amounts, deductible amounts, types of risks covered and
quality of insurance provider (it being understood that a one-time change in the
deductible period from five (5) days to fifteen (15) days with respect to
business interruption insurance shall be permitted hereunder). Such policies of
insurance (or the loss payable and additional insured endorsements delivered to
the Collateral Agent) shall contain provisions pursuant to which the insurer
agrees to provide thirty (30) days prior written notice to Collateral Agent in
the event of any non-renewal, cancellation or amendment of any such insurance
policy. If any Note Party at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required above or to pay all premiums
relating thereto, the Collateral Agent may at any time or times thereafter
obtain and maintain such policies of insurance and pay such premiums and take
any other action with respect thereto that the Collateral Agent deems advisable.
The Collateral Agent shall have no obligation to obtain insurance for any Note
Party or pay any premiums therefor. By doing so, the Collateral Agent shall not
be deemed to have waived any Default or Event of Default arising from any Note
Party's failure to maintain such insurance or pay any premiums therefor. All
sums so disbursed, including reasonable attorneys' fees, court costs and other
charges related thereto, shall be payable on demand by Borrower to the
Collateral Agent and shall be additional Obligations hereunder secured by the
Collateral.
(b) Each Note Party shall deliver to the Collateral Agent, in form and
substance reasonably satisfactory to the Collateral Agent, endorsements to all
"All Risk" and business interruption insurance naming the Collateral Agent, on
behalf of itself and the Term 2 Noteholders, as loss payee, to the extent
related to the Noteholder Collateral. Each Note Party irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent), so long as any Default or Event of
Default has occurred and is continuing or the anticipated insurance proceeds
exceed $1,000,000, as each Note Party's true and lawful agent and attorney in
fact for the purpose of making, settling and adjusting claims under such "All
Risk" policies of insurance, endorsing the name of each Note Party on any check
or other item of payment for the proceeds of such "All Risk" policies of
insurance and for making all determinations and decisions with respect to such
"All Risk" policies of insurance. The Collateral Agent shall have no duty to
exercise any rights or powers granted to it pursuant to the foregoing
power-of-attorney. Borrower shall promptly notify the Collateral Agent of any
loss, damage, or destruction to the Collateral in the amount of $1,500,000 or
more, whether or not covered by insurance.
5.5. Compliance Certificates.
(a) The Borrower shall deliver to the Collateral Agent within 120 days
after the end of each fiscal year and within 45 days after the end of each
fiscal quarter, an Officers' Certificate stating that a review of the activities
of the Borrower during the preceding fiscal year or preceding fiscal quarter, as
the case may be, has been made under the supervision of the signing Officers
with a view to determining whether the Borrower has kept, observed, performed
and fulfilled their respective obligations under this Agreement, and further
stating that, to the best knowledge of each Officer signing such certificate,
the Borrower has kept, observed, performed and fulfilled each and every covenant
contained in this Agreement and are not in default in the performance or
observance of any of the terms, provisions and conditions hereof (or, if a
Default
13
or Event of Default shall have occurred and be continuing, describing all such
Defaults or Events of Default of which such Officers may have knowledge, their
status and what action the Borrower is taking or proposes to take with respect
thereto), and that to the best of his knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal of
or interest, if any, on the Term 2 Notes is prohibited or if such event has
occurred a description of the event and what action the Borrower has taken or
proposes to take with respect thereto.
(b) The Borrower shall, so long as any of the Term 2 Notes are
outstanding, deliver to the Collateral Agent, within 10 days of the Borrower
becoming aware of any Event of Default or any event which may become an Event of
Default after notice from the Collateral Agent, an Officers' Certificate
specifying such Event of Default or event and what action the Borrower is taking
or proposes to take with respect thereto.
5.6. Provision of Financial Information.
(a) Quarterly Financials. The Borrower shall deliver to the Term 2
Noteholder, within forty-five (45) days after the end of each Fiscal Quarter,
consolidated financial information regarding Borrower and its Subsidiaries,
certified by the Chief Financial Officer of Borrower, including unaudited
balance sheets as of the close of such Fiscal Quarter and the related statements
of income and cash flow for that portion of the Fiscal Year ending as of the
close of such Fiscal Quarter, and (ii) unaudited statements of income and cash
flows for such Fiscal Quarter, setting forth in comparative form the figures for
the corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Quarter, in each case in accordance with GAAP
(subject to normal year end adjustments). Such financial information shall be
accompanied by the certification of the Chief Financial Officer of Borrower that
(i) such financial information presents fairly in accordance with GAAP valuing
Inventory on a first in, first out basis (subject to normal year-end
adjustments) the financial position, results of operations and statements of
cash flows of Borrower and its Subsidiaries, on both a consolidated basis, as at
the end of such Fiscal Quarter and for that portion of the Fiscal Year then
ended, and (ii) any other information presented is true, correct and complete in
all material respects and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default has occurred and
is continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default.
(b) Annual Audited Financials. The Borrower shall deliver to the Term 2
Noteholder, within ninety (90) days after the end of each Fiscal Year, audited
Financial Statements for Borrower and its Subsidiaries on a consolidated basis,
consisting of balance sheets and statements of income and retained earnings and
cash flows, setting forth in comparative form in each case the figures for the
previous Fiscal Year, if applicable, which Financial Statements shall be
prepared in accordance with GAAP valuing Inventory on a first in, first out
basis and certified without qualification, by an independent certified public
accounting firm of national standing or otherwise acceptable to Agent. Such
Financial Statements shall be accompanied by (i) the annual letters to such
accountants in connection with their audit examination detailing contingent
liabilities and material litigation matters, and (ii) the certification of the
Chief Executive Officer or Chief Financial Officer of Borrower that all such
Financial Statements present fairly in accordance with GAAP the financial
position, results of operations and statements of cash flows
14
of Borrower and its Subsidiaries on a consolidated basis, as at the end of such
Fiscal Year and for the period then ended, and that there was no Default or
Event of Default in existence as of such time or, if a Default or Event of
Default has occurred and is continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default.
5.7. Further Assurance to the Term 2 Noteholders and Collateral Agent. The
Borrower shall, upon request of the Term 2 Noteholders or the Collateral Agent,
execute and deliver such further instruments and do such further acts as may
reasonably be necessary or proper to carry out more effectively the provisions
of this Agreement and any Security Document.
5.8. Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real
Estate Purchases. Each Note Party shall use commercially reasonable efforts to
obtain a landlord's agreement, mortgagee agreement or bailee letter, as
applicable, from the lessor of each leased property, mortgagee of owned property
or bailee which comprises part of the Collateral or at which Collateral is
stored or located, which agreement or letter shall contain a waiver or
subordination of all Liens or claims that the landlord, mortgagee or bailee may
assert against the Collateral at that location, and shall otherwise be
reasonably satisfactory in form and substance to Term 2 Noteholder. Each Note
Party shall timely and fully pay and perform its obligations under all leases
and other agreements with respect to each leased location where any Collateral
is or may be located; provided that any Note Party may in good faith dispute the
amount or validity of any such obligations in an aggregate amount not to exceed
$100,000 for all Note Parties. To the extent permitted hereunder, if any Note
Party proposes to acquire a fee ownership interest in Real Estate, it shall
first provide to Term 2 Noteholder a mortgage or deed of trust granting Term 2
Noteholder a Lien on such Real Estate, together with environmental audits,
mortgage title insurance commitment, real property survey, local counsel
opinion(s), and, if required by Term 2 Noteholder, supplemental casualty
insurance and flood insurance, and such other documents, instruments or
agreements reasonably requested by Term 2 Noteholder, in each case, in form and
substance reasonably satisfactory to Term 2 Noteholder.
5.9. Mandatory Payments. Subject to the terms and conditions of the
Subordination Agreement including, without limitation, the relative rights of
the Term 1 Noteholder and the Term 2 Noteholder with respect to payments and
prepayments as between the Term 1 Notes and the Term 2 Notes, each Note Party
shall, within 3 days of issuance, repay the Term 2 Notes from (i) all direct
proceeds of the issuance of Acceptable High Yield Notes, (ii) all Indebtedness
permitted by Section 6.3(a)(vii) of the Senior Credit Agreement as in effect on
the date hereof, and (iii) all direct proceeds of an lPO (each of foregoing, a
"Mandatory Payment"; collectively, the "Mandatory Payments").
6. NEGATIVE COVENANTS
6.1. Limitation on Additional Indebtedness and Certain Preferred Stock.
(a) The Borrower will not (A) incur any Indebtedness (including any
Acquired Indebtedness) and (B) permit any of the Restricted Subsidiaries to
incur any Indebtedness (including Acquired Indebtedness) or issue any Preferred
Stock; provided that the Borrower and the Restricted Subsidiaries will be
permitted to incur Indebtedness (including Acquired
15
Indebtedness) if, immediately after giving pro forma effect to the incurrence
thereof, the Consolidated Fixed Charge Coverage Ratio of the Borrower would be
greater than or equal to 2.50 to 1.
(b) The provisions of Section 6.1(a) shall not apply to the incurrence of
any of the following items of Indebtedness:
(i) Indebtedness under the Term 1 Notes, the Term 2 Notes, the
Guarantees and this Agreement;
(ii) Indebtedness of the Borrower and the Restricted Subsidiaries
outstanding on the Issue Date and listed on Schedule 6.1(b)(ii) (including
the Fleet Notes);
(iii) Indebtedness of the Borrower and the Restricted Subsidiaries
under the Senior Debt Documents; provided that the aggregate principal
amount of (x) all Indebtedness of the Borrower and the Restricted
Subsidiaries outstanding under the Senior Debt Documents and (y) all
outstanding Indebtedness of the Borrower or the Restricted Subsidiaries
(including but not limited to Sale-Leasebacks Transactions and
securitizations) secured by working capital of the Borrower or the
Restricted Subsidiaries, inventory of the Borrower or the Restricted
Subsidiaries, accounts receivable of the Borrower or the Restricted
Subsidiaries, and the CAST ROLL Facility, in the aggregate does not exceed
$375.0 million at any time;
(iv) Indebtedness of a Restricted Subsidiary owed to and held by the
Borrower or another Restricted Subsidiary, in each case which is not
subordinated in right of payment to any Indebtedness of such Restricted
Subsidiary, except that (i) any transfer of such Indebtedness by the
Borrower or a Restricted Subsidiary (other than to the Borrower or to a
Restricted Subsidiary) and (ii) the sale, transfer or other disposition by
the Borrower or any Restricted Subsidiary of Stock of or the occurrence of
any other event which results in any Restricted Subsidiary which is owed
Indebtedness of another Restricted Subsidiary ceasing to be a Restricted
Subsidiary shall, in each such event, be deemed an incurrence of
Indebtedness subject to the other provisions of this Section 6.1;
(v) Indebtedness of the Borrower owed to and held by a Restricted
Subsidiary; provided that if such Indebtedness is owed to and held by a
Restricted Subsidiary that is not a Subsidiary Guarantor, it shall be
unsecured and subordinated in right of payment to the payment and
performance of the Borrower's obligations under this Agreement and the
Term 2 Notes; provided, further, in any such case, that (x) any transfer
of such Indebtedness by a Restricted Subsidiary (other than to another
Restricted Subsidiary) and (y) the sale, transfer or other disposition by
the Borrower or any Restricted Subsidiary of Stock or the occurrence of
any other event which results in any Restricted Subsidiary which holds
Indebtedness of the Borrower ceasing to be a Restricted Subsidiary shall,
in each such event, be deemed an incurrence of Indebtedness subject to the
other provisions of this Section 6.1;
(vi) Interest Rate Protection Obligations of the Borrower or a
Restricted Subsidiary relating to Indebtedness of the Borrower or a
Restricted Subsidiary; provided
16
that (x) any Indebtedness to which any such Interest Rate Protection
Obligations relate is otherwise permitted to be incurred under this
Section 6.1 and (y) the notional principal amount of any such Interest
Rate Protection Obligations at the time of incurrence does not exceed the
principal amount of the Indebtedness to which such Interest Rate
Protection Obligations relate;
(vii) Indebtedness of the Borrower or any of the Restricted
Subsidiaries under (x) Currency Agreements relating to Indebtedness or
other obligations of the Borrower or any of the Restricted Subsidiaries
entered into to hedge actual currency exposure or (y) commodities hedging
agreements entered into to hedge actual commodity price exposure;
(viii) Indebtedness of the Borrower or any of the Restricted
Subsidiaries (including Indebtedness represented by letters of credit for
the account of the Borrower or a Restricted Subsidiary) in respect of
financing workers' compensation, health, disability or other employee
benefits, social security payments, property, casualty or liability
insurance or other claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of business;
(ix) Indebtedness of the Borrower or any of the Restricted
Subsidiaries representing obligations in respect of performance bonds, bid
bonds, appeal bonds, surety bonds, completion guarantees and similar
obligations and trade-related letters of credit, in each case provided in
the ordinary course of business, including those incurred to secure
health, safety and environmental obligations in the ordinary course of
business, and any extension, renewal or refinancing thereof to the extent
not provided to secure the repayment of other Indebtedness and to the
extent that the amount of refinancing Indebtedness is not greater than the
amount of Indebtedness being refinanced;
(x) Indebtedness of the Borrower or any of the Restricted
Subsidiaries arising from agreements of the Borrower or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price,
earnouts or similar obligations, in each case, incurred or assumed in
connection with the disposition of any business, assets or a Restricted
Subsidiary, other than guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition;
(xi) Indebtedness of the Borrower or any of the Restricted
Subsidiaries extinguished within five Business Days of incurrence arising
from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds;
(xii) Government Assisted Indebtedness (New York) and Government
Assisted Indebtedness (Ohio), provided that the documentation for such
Government Assisted Indebtedness incorporates the requirements for such
Government Assisted Indebtedness set forth in this Agreement;
(xiii) in addition to the Indebtedness described in clauses (i)
through (xii) above or clauses (xiv) and (xv) below, Indebtedness of the
Borrower or any of the Restricted
17
Subsidiaries (including Indebtedness of the Borrower or any of the
Restricted Subsidiaries which is secured by purchase money liens on
personal property or fixtures or which constitutes Capitalized Lease
Obligations in an aggregate principal amount not to exceed $25.0 million
at any time outstanding), in an aggregate principal amount not to exceed
$50.0 million at any time outstanding;
(xiv) unfunded pension fund and other employee benefit plan
obligations and liabilities to the extent they are permitted to remain
unfunded under applicable law; and
(xv) Refinancing Indebtedness of Indebtedness permitted under any of
clauses (i) through (xii) and (xiv) above.
(c) For purposes of determining compliance with this Section 6.1, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of permitted Indebtedness described in clauses (i) through (xv) of
paragraph (b) above or is entitled to be incurred pursuant to paragraph (a)
above, the Borrower shall, in its sole discretion, classify or reclassify such
item of Indebtedness in any manner that complies with this Section 6.1 and such
item of Indebtedness will be treated as having been incurred pursuant to only
one of clauses (i) through (xv) of paragraph (b) or pursuant to paragraph (a)
above. Accrual of interest, the accretion of accreted value and the payment of
interest in the form of additional Indebtedness will not be deemed to be an
incurrence of Indebtedness for purposes of this Section 6.1.
6.2. Limitation on Sale-Leaseback Transactions. The Borrower will not, and
will not permit any of the Restricted Subsidiaries to, enter into any
Sale-Leaseback Transaction or securitization transaction with respect to any
property or assets of the Borrower or any Restricted Subsidiary constituting
Collateral. Notwithstanding the foregoing, the Borrower and the Restricted
Subsidiaries may enter into Sale-Leaseback Transactions with respect to property
or assets not constituting Collateral; provided that (a) the Attributable Value
of such Sale Leaseback Transaction shall be deemed to be Indebtedness of the
Borrower or such Restricted Subsidiary, as the case may be, and (b) such
Sale-Leaseback Transaction shall be in compliance with Section 6.3.
6.3. Limitation on Liens. The Borrower will not, and will not cause or
permit any of the Restricted Subsidiaries to, directly or indirectly, create,
incur, assume, affirm or permit or suffer to exist or remain in effect any
Liens:
(a) upon any item of Collateral other than Permitted Collateral Liens; and
(b) upon any other properties or assets of the Borrower or of any of the
Restricted Subsidiaries, whether owned on the Issue Date or acquired hereafter,
not constituting Collateral, except (i) Liens existing on the Issue Date to the
extent and in the manner such Liens are in effect on the Issue Date (including
Liens securing the Fleet Notes) and (ii) Permitted Liens.
Notwithstanding the foregoing sentence of this Section 6.3, the Borrower
will be permitted to incur and suffer to exist purchase money Liens to finance
the acquisition or construction of personal property or fixtures of the Borrower
or any Restricted Subsidiary free of the Liens securing the Term 2 Notes under
the Security Documents for so long as the related Indebtedness (and refinancings
thereof) shall be outstanding, notwithstanding any contrary
18
provision of the Security Documents or this Agreement; provided that (i) the
aggregate principal amount of all related purchase money Indebtedness (and
refinancings thereof) contemplated by this sentence shall not exceed $25.0
million at any time outstanding and shall be incurred in compliance with the
requirements of Section 6.1(b)(xiii), (ii) the related Indebtedness shall not be
secured by any property or assets of the Borrower or any of its Subsidiaries
other than the property or assets so acquired or constructed and which do not
constitute Collateral, and (iii) each such purchase money Lien shall either (x)
exist at the time of acquisition or construction or (y) be created within 180
days of such acquisition or construction.
6.4. Limitation on Restricted Payments.
(a) The Borrower will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly do any of the following (such payments
or Investments described in the following clauses (i), (ii), (iii) and (iv) are
collectively referred to as "Restricted Payments");
(i) declare or pay any dividend or make any other distribution or
payment on or in respect of Stock of the Borrower or any payment made to
the direct or indirect holders (in their capacities as such) of Stock of
the Borrower (other than dividends or distributions payable solely in
Stock of the Borrower (other than Disqualified Stock) or in options,
warrants or other rights to purchase Stock of the Borrower (other than
Disqualified Stock));
(ii) purchase, redeem, defease or otherwise acquire or retire for
value any Stock of the Borrower (other than any such Stock owned by a
Restricted Subsidiary);
(iii) make any principal payment on, or purchase, defease,
repurchase, redeem or otherwise acquire or retire for value, in each case,
prior to any scheduled maturity, scheduled repayment, scheduled sinking
fund payment or other Stated Maturity, any Subordinated Indebtedness
(other than (A) the payment, redemption, repurchase, defeasance,
acquisition or retirement of Subordinated Indebtedness in anticipation of
satisfying a sinking fund obligation, principal installment or final
maturity, in any case due within one year of the date of such payment,
redemption, repurchase, defeasance, acquisition or retirement and (B) any
such Subordinated Indebtedness payable to the Borrower or a Restricted
Subsidiary); or
(iv) make any Investment (other than any Permitted Investment) in
any Person; unless, at the time of and after giving effect to the proposed
Restricted Payment (the amount of any such Restricted Payment, if other
than cash, shall be the Fair Market Value on the date of such Restricted
Payment of the asset(s) proposed to be transferred by the Borrower or such
Restricted Subsidiary, as the case may be, pursuant to such Restricted
Payment) each of the following conditions is satisfied:
(A) no Default or Event of Default shall have occurred and be
continuing; and
(B) such Restricted Payment, together with the aggregate amount of
all Restricted Payments made by the Borrower and its Restricted Subsidiaries
from and after the Issue Date would not exceed the sum of, without duplication,
(1) 50% of the Consolidated Net Income of the Borrower for the period (taken as
one accounting period) from the beginning of
19
the first fiscal quarter commencing after the Issue Date and ending on the last
day of the fiscal quarter of the Borrower immediately preceding the date of such
proposed Restricted Payment (or, if such aggregate cumulative Consolidated Net
Income of the Borrower for such period shall be a deficit, minus 100% of such
deficit) plus (2) 100% of the aggregate net cash proceeds and the Fair Market
Value of property other than cash received by the Borrower (x) from the issuance
or sale of Stock (excluding Disqualified Stock, but including Stock issued upon
the conversion of convertible Indebtedness or from the exercise of options,
warrants or rights to purchase Stock (other than Disqualified Stock)) of the
Borrower after the Issue Date, (y) as a capital contribution in respect of Stock
(other than Disqualified Stock) of the Borrower after the Issue Date, in each
case to or from any Person (other than to or from a Restricted Subsidiary), or
(z) from Asset Sales of Collateral plus (3) 100% of the aggregate net cash
proceeds and the Fair Market Value of property (other than property constituting
Investments that would be Restricted Payments or property which constitutes
Collateral) that are received upon the sale, liquidation or other disposition or
other return of capital for cash in respect of any Investment constituting a
Restricted Payment made after the Issue Date to the extent included in the
calculation of this clause (B), less the cost of the disposition of such
Investment.
For purposes of the preceding clause (B)(2), upon the issuance of Stock
either from the conversion of convertible Indebtedness or in exchange for
outstanding Indebtedness or upon the exercise of options, warrants or rights,
the amount counted as net cash proceeds received will be the cash amount
received by the Borrower at the original issuance of the Indebtedness that is so
converted or exchanged or from the issuance of options, warrants or rights, as
the case may be, plus the incremental amount of cash received by the Borrower,
if any, upon the conversion, exchange or exercise thereof, in each case when so
received.
(b) None of the provisions of paragraph (a) above will prohibit:
(i) the payment of any dividend within 60 days after the date of its
declaration, if at the date of declaration such payment would have
complied with the provisions of this Agreement;
(ii) the redemption, repurchase or other acquisition or retirement
of any shares of any class of Stock of the Borrower or any Restricted
Subsidiary in exchange for, or out of the net cash proceeds of, (x) a
substantially concurrent issue and sale of other shares of Stock (other
than Disqualified Stock) of the Borrower to any Person (other than to a
Subsidiary of the Borrower) or (y) a capital contribution in respect of
Stock (other than Disqualified Stock) of the Borrower, provided that the
amount of any such net cash proceeds that are utilized for any such
redemption, repurchase or other acquisition or retirement shall be
excluded from clause (B) of paragraph (a) above;
(iii) any redemption, repurchase or other acquisition or retirement
of (1) Subordinated Indebtedness in exchange for, or out of the net cash
proceeds of (x) a substantially concurrent issue and sale of Stock (other
than Disqualified Stock) of the Borrower to any Person (other than to a
Subsidiary of the Borrower) or (y) a capital contribution to the Borrower;
provided that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase or other acquisition or retirement
shall be excluded from clause (B) of paragraph (a) above; or (2)
Indebtedness of the Borrower
20
issued to any Person (other than a Subsidiary of the Borrower), so long as
such Indebtedness is Subordinated Indebtedness which (x) has no scheduled
principal payments earlier than the 91st day after the final maturity date
of the Term 2 Notes and (y) is subordinated to the Term 2 Notes in the
same manner and at least to the same extent as the Subordinated
Indebtedness so purchased, exchanged, redeemed, acquired or retired;
(iv) Investments made out of the net cash proceeds of a
substantially concurrent issue and sale of shares of Stock (other than
Disqualified Stock) of the Borrower to any Person (other than to a
Subsidiary of the Borrower); provided that the amount of any such net cash
proceeds shall be excluded from clause (B) of paragraph (a) above;
(v) payments to allow Holdings to pay its operating and
administrative expenses, including, without limitation, directors fees,
legal and audit expenses, SEC compliance expenses and its (and its
Subsidiaries) corporate franchise and its consolidated combined or unitary
federal, state, local and other taxes relating to the business of the
Borrower and the Restricted Subsidiaries;
(vi) payments made by the Borrower to permit the purchase or
redemption of its Stock (including related stock appreciation rights or
similar securities) held by present or former officers, employees or
consultants of the Borrower or any of its Subsidiaries or by any employee
pension benefit plan or management equity or stock option plan or
agreement upon such Person's death, disability, retirement or termination
of employment or under the terms of any such employee pension benefit plan
or any other agreement under which such Stock or related rights were
issued; provided that the aggregate amount of such purchases or
redemptions that may be made under this clause (vi) shall not exceed $3.0
million per year (the "Base Amount"); provided that, to the extent that
not all of the Base Amount is utilized in any year, the unused portion of
such Base Amount may be carried forward to and be deemed part of the Base
Amount only for the immediately subsequent year and not any succeeding
year;
(vii) payments in respect of the Term 1 Notes in accordance with the
Note Purchase Agreement (Term 1) and the Subordination Agreement, each as
in effect on the date hereof;
(viii) the declaration and payment of dividends or distributions to
holders of any class or series of Disqualified Stock issued or incurred in
compliance with Section 6.1;
(ix) repurchases of Stock deemed to occur upon exercise of stock
options if such Stock represents a portion of the exercise price of such
options;
(x) the exchange of an Investment constituting a Restricted Payment
which was included in clause (B) of paragraph (a) above for another
Investment which would constitute a Restricted Payment of approximately
equal or greater Fair Market Value; and
21
(xi) management fees payable to affiliates of the Term 2 Noteholder,
subject to compliance with Section 6.13 of the Senior Credit Agreement as
in effect on the date hereof.
In computing the amount of Restricted Payments previously made for
purposes of clause (B) of paragraph (a) above, Restricted Payments made under
clauses (i), (iv), (v), (vi), (viii), and, without duplication to the extent
deducted in arriving at Consolidated Net Income, clauses (ii), (iii), (vii),
(ix) and (x) of this paragraph (b) shall not be so included.
6.5. Disposition of Proceeds of Asset Sales.
(a) The Borrower will not, and will not permit any of the Restricted
Subsidiaries to, consummate an Asset Sale of Collateral unless (i) such Asset
Sale of Collateral is for Fair Market Value, (ii) in the case of an Asset Sale
involving Collateral valued at $2.0 million or more such Fair Market Value is
evidenced by a certificate of an Independent Appraiser or an Independent
Financial Advisor (as applicable), (iii) 100% of the proceeds of such Asset Sale
of Collateral consist of cash and/or Cash Equivalents, (iv) such Asset Sale of
Collateral shall be in compliance with the applicable provisions of the Security
Documents and the Subordination Agreement and (v) the Borrower shall apply the
Net Cash Proceeds of such Asset Sale of Collateral after receipt thereof in
accordance with the priorities set forth in the Subordination Agreement.
6.6. Limitation on Transactions with Affiliates. The Borrower shall not,
and shall not permit, cause or suffer any of the Restricted Subsidiaries to,
conduct any business or enter into any transaction or series of transactions
with or for the benefit of any of their respective Affiliates (each an
"Affiliate Transaction"), unless such transaction or series of related
transactions is on terms reasonably believed to be no less favorable to the
Borrower or such Restricted Subsidiary, as the case may be, than those which
could have been obtained in a comparable transaction at such time with an
unrelated Person.
Notwithstanding the foregoing, this Section 6.6 win not restrict the
Borrower or the Restricted Subsidiaries from: (a) making Restricted Payments
permitted under Section 6.4; (b) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans approved by
the Board of Directors of the Borrower; (c) transactions among the Borrower and
Restricted Subsidiaries and transactions among Restricted Subsidiaries of the
Borrower otherwise permitted by this Agreement; (d) the making of loans and
advances and the payment of fees and indemnities to directors, officers and
employees of the Borrower and the Restricted Subsidiaries in the ordinary course
of business; (e) transactions pursuant to agreements in existence on the Issue
Date or any amendment thereto (so long as any such amendment is not
disadvantageous to the Term 2 Noteholders in any material respect); (f) any
employment agreements entered into by the Borrower or any of the Restricted
Subsidiaries in the ordinary course of business; (g) any sale of Stock (other
than Disqualified Stock) of the Borrower; (h) so long as no Default has occurred
and is continuing, the payment of management fees to the Permitted Holders or
their Affiliates not to exceed $2.0 million in the aggregate in any calendar
year; (i) transactions pursuant to the Senior Debt Documents; (j) transactions
with customers, clients, suppliers, or purchasers or sellers of goods or
services, in each case in the ordinary
22
course of business and otherwise in compliance with the terms of this Agreement,
and (k) payments in respect of the Term 1 Notes and pursuant to the Term 1 Note
Purchase Documents.
6.7. Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Borrower will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or make any
other distributions on or in respect of its Stock or any other interest or
participation in, or measured by, its profits, (b) pay any Indebtedness owed to
the Borrower or any other Restricted Subsidiary, (c) make loans or advances to,
or any investment in, the Borrower or any other Restricted Subsidiary, or (d)
sell, lease or transfer any of its properties or assets to the Borrower or any
other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) this Agreement, the Senior Debt Documents and
the Security Documents, (ii) any restrictions existing under or contemplated by
agreements in effect on the Issue Date (including the Fleet Notes), (iii) with
respect to a Restricted Subsidiary of the Borrower that is not a Restricted
Subsidiary of the Borrower on the Issue Date, in existence at the time such
Person becomes a Restricted Subsidiary of such Borrower (but not created in
contemplation of such Person becoming a Restricted Subsidiary), (iv) applicable
law or any applicable rule, regulation or order, (v) customary restrictions
arising from Liens permitted under Section 6.3 to the extent related to the
assets subject to such Liens, (vi) restrictions on cash or other deposits
imposed by customers under contracts entered into in the ordinary course of
business. (vii) customary provisions contained in leases and other agreements
entered into in the ordinary course of business, (viii) any restrictions
existing under any agreement that refinances or replaces an agreement containing
a restriction permitted by clauses (i), (ii) and (iii) above; provided that the
terms and conditions of any such restrictions under this clause (viii) are not
materially less favorable to the Term 2 Noteholders than those under or pursuant
to the agreement being replaced or the agreement evidencing the Indebtedness
refinanced, (ix) any instrument governing Indebtedness or Stock of a Person
acquired by the Borrower or any of the Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, so acquired: provided, that, in the
case of Indebtedness, such Indebtedness was permitted by the terms of this
Agreement to be incurred, (x) purchase money obligations for property acquired
in the ordinary course of business that impose restrictions of the nature
described in clause (ix) above on the property so acquired, (xi) any agreement
for the sale of a Restricted Subsidiary that restricts distributions by that
Restricted Subsidiary pending its sale, (xii) Refinancing Indebtedness; provided
that the restrictions contained in the agreements governing such Refinancing
Indebtedness are no more restrictive, taken as a whole, than those contained in
the agreements governing the Indebtedness being refinanced, (xiii) secured
Indebtedness otherwise permitted to be incurred pursuant to the provisions of
Section 6.1 that limits the right of the debtor to dispose of the assets
securing such Indebtedness, (xiv) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and other similar
agreements entered into in the ordinary course of business and (xv) Indebtedness
incurred pursuant to clauses (xii) and (xiii) of Section 6.1 (b).
6.8. Impairment of Security Interest. The Borrower shall not, and shall
not permit any of its Subsidiaries to, take or knowingly or negligently omit to
take any action which action or
23
omission might or would have the result of impairing the security interest in
favor of the Collateral Agent with respect to any Property then constituting
Collateral, and the Borrower shall not grant to any Person any interest
whatsoever in such Collateral other than Liens permitted by this Agreement and
the Security Documents.
6.9. Waiver of Stay, Extension or Usury Laws. The Borrower covenants (to
the extent permitted by law) that neither will at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law or any usury law or other law that would prohibit or forgive
the Borrower from paying all or any portion of the principal of or interest on
the Term 2 Notes as contemplated herein, wherever enacted, now or at any time
hereafter in force, or that may affect the covenants or the performance of this
Agreement; and (to the extent permitted by law) the Borrower hereby expressly
waive all benefit or advantage of any such law, and covenant that they will not
hinder, delay or impede the execution of any power herein granted to the Term 2
Noteholders or the Collateral Agent, but will suffer and permit the execution of
every such power as though no such law had been enacted.
6.10. Additional Subsidiary Guarantees.
(a) If the Borrower or any of its Restricted Subsidiaries shall acquire or
create another domestic Subsidiary after the date of this Agreement, then such
newly acquired ar created Subsidiary shall become a Subsidiary Guarantor
hereunder and shall deliver an Opinion of Counsel.
(b) If a Restricted Subsidiary that is not then a Subsidiary Guarantor
guarantees any Indebtedness incurred under the Senior Debt Documents or the Term
1 Note Purchase Documents then that Restricted Subsidiary must become a
Subsidiary Guarantor and execute a guaranty satisfactory to the Term 2
Noteholders and deliver an Opinion of Counsel to the Term 2 Noteholders.
Notwithstanding the foregoing, any Subsidiary Guarantee of a Restricted
Subsidiary that was incurred pursuant to this Section 6.10(b) shall provide by
its terms that it shall be automatically and unconditionally released upon the
release or discharge of the guarantee which resulted in the creation of such
Restricted Subsidiary's Subsidiary Guarantee, except a discharge or release by,
or as a result of payment under, such guarantee.
(c) Notwithstanding anything to the contrary in the Note Purchase
Documents, (a) no amount due from or other obligation of Borrower shall be
(directly or indirectly) guaranteed by, or secured by an asset of any foreign
Subsidiary and (b) to the extent not inconsistent with clause (a), any (direct
or indirect) pledge by a Note party of the ownership interest owned by it in a
foreign Subsidiary shall be limited to 65% of the voting ownership interests in
such foreign Subsidiary.
6.11. When Borrower May Merge, Etc. The Borrower will not, in any
transaction or series of transactions, merge or consolidate with or into, or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets as an entirety to, any Person or
Persons, and the Borrower will not permit any of the Restricted Subsidiaries to
enter into any such transaction or series of transactions if such transaction or
series of transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or other disposition of all or substantially all of
the properties and assets of the Borrower and the Restricted
24
Subsidiaries, taken as a whole, to any other Person or Persons, unless at the
time of and after giving effect thereto:
(a) either (i) if the transaction or series of transactions is a merger or
consolidation, the Borrower shall be the surviving Person of such merger or
consolidation, or (ii) the Person formed by any such consolidation or into which
the Borrower or such Restricted Subsidiary is merged or to which the properties
and assets of the Borrower and/or any Restricted Subsidiary, as the case may be,
are transferred (any such surviving Person or transferee Person being a
"Surviving Entity") shall be a corporation or limited liability company
organized and existing under the laws of the United States of America, any state
thereof or the District of Columbia and shall expressly assume by an assumption
agreement executed and delivered to the Term 2 Noteholders in form reasonably
satisfactory to the Term 2 Noteholders, all the obligations of the Borrower
under the Term 2 Notes, and this Agreement and the Security Documents, and in
each case, this Agreement shall remain in full force and effect;
(b) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (including, without
limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of transactions), no
Default shall have occurred and be continuing;
(c) each Subsidiary Guarantor (other than a Guarantor whose Guarantee is
to be released in accordance with the terms of this Agreement), unless it is the
other party to the transaction, shall, to the extent permitted by applicable
law, have confirmed in writing that after consummation of such transaction its
Subsidiary Guarantee shall apply, as such Subsidiary Guarantee applied on the
date it was granted, to the obligations of the Borrower under the Term 2 Notes,
to the obligations of the Borrower or such Person, as the case may be, under
this Agreement and the Term 2 Notes; and
(d) the Borrower or the Surviving Entity shall have delivered to the Term
2 Noteholders an Officers' Certificate and an Opinion of Counsel stating that
such consolidation, merger, conveyance, transfer or lease and, if an assumption
agreement is required in connection with such transaction or series of
transactions, such assumption agreement comply with this Section 6.11, and that
all conditions precedent in this Agreement relating to the transaction or series
of transactions have been satisfied.
Notwithstanding the foregoing, the Borrower is permitted to reorganize as
a corporation; provided, that the Borrower shall have delivered to the Term 2
Noteholders an Opinion of Counsel in the United States confirming that the
holders of the Term 2 Notes will not recognize income, gain or loss for Federal
income tax purposes as a result of such reorganization and will be subject to
Federal income tax in the same manner and at the same times as would have been
the case if such reorganization had not occurred, and the conditions set forth
in clauses (a) through (d) of this Section 6.11 are satisfied.
6.12. Successor Entity Substituted. Upon any consolidation, or merger or
any transfer of all or substantially all of the assets of the Borrower in
accordance with Section 6.11 in which the Borrower is not the continuing Person,
the successor Person formed by such consolidation or into which the Borrower is
merged or to which such conveyance, lease or transfer is made shall
25
succeed to, and be substituted for, and may exercise every right and power of,
the Borrower under this Agreement and the Term 2 Notes with the same effect as
if such surviving entity had been named as such, provided, however, that in the
case of any transfer of all or substantially all of the assets of the Borrower,
the predecessor Borrower shall not be relieved from the obligation to pay
principal of and interest on the Term 2 Notes except where all of the Borrower's
assets are sold in a transaction that meets the requirements of Section 6.11
hereof.
7. SUCCESSORS AND ASSIGNS
7.1. Successors and Assigns. This Agreement and the other Note Purchase
Documents shall be binding on and shall inure to the benefit of each Note Party
and Term 2 Noteholder and their respective successors and assigns (including, in
the case of any Note Party, a debtor-in-possession on behalf of such Note
Party), except as otherwise provided herein or therein. No Note Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Note Purchase
Documents without the prior express written consent of Term 2 Noteholder. Any
such purported assignment, transfer, hypothecation or other conveyance by any
Note Party without the prior express written consent of Term 2 Noteholder shall
be void. Each assignment shall be subject to the provisions of Section 1.4. The
terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Note Party and Term 2 Noteholder with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Note Purchase Documents. Subject to Section 1.4(c), the Term 2
Noteholder may assign, in whole or part, any of its rights under this Agreement
or any Transaction Document to any Person and any holder of the Term 2 Note may
assign, in whole or part, the Term 2 Note and any rights thereunder to any
Person.
8. MISCELLANEOUS
8.1. Complete Agreement: Modification of Agreement. This Agreement along
with the other Note Purchase Documents constitute the complete agreement between
the parties with respect to the subject matter thereof and may not be modified,
altered or amended except as set forth in Section 8.2. Any agreement, if any,
between any Note Party and Term 2 Noteholder or any of their respective
Affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect or which relates to the subject
matter hereof shall be superseded by this Agreement.
8.2. Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Agreement or any other Note Purchase Documents,
or any consent to any departure by any Note Party therefrom, shall in any event
be effective unless the same shall be in writing and signed by Borrower and the
Term 2 Noteholder.
8.3. Certain Expenses. The Borrower shall pay all expenses of the Term 2
Noteholder (including, without limitation, reasonable fees, charges and
disbursements of counsel) in connection with any amendment, supplement,
modification or waiver of or to any provision of this Agreement or any of the
other Transaction Documents or any documents relating thereto, or consent to or
departure from, the terms of any provision of this Agreement or such other
documents.
26
8.4. No Waiver. No failure or delay on the part of any of the parties
hereto in exercising any right, power or remedy hereunder shall operate as a
waiver hereof, nor shall any single or partial exercise of any such right, power
or remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
8.5. Remedies. Term 2 Noteholder's rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that Term 2 Noteholder may have under any other agreement, including the other
Note Purchase Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required prior to the exercise of any other right, power
or remedy that may be available to the Term 2 Noteholder.
8.6. Severability. Wherever possible, each provision of this Agreement and
the other Note Purchase Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Note Purchase Documents shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement or such other Note Purchase
Documents.
8.7. Conflict of Terms. Except as otherwise provided in this Agreement or
any of the other Note Purchase Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Note Purchase Documents (other
than the Security Documents), the provision contained in this Agreement shall
govern and control.
8.8. Confidentiality. Term 2 Noteholder agrees to use commercially
reasonable efforts (equivalent to the efforts Term 2 Noteholder applies to
maintain the confidentiality of its own confidential information) to maintain as
confidential all confidential information provided to them by the Note Parties
and designated as confidential for a period of two (2) years following receipt
thereof, except that Term 2 Noteholder may disclose such information (a) to
Persons employed or engaged by Term 2 Noteholder; (b) to any bona fide assignee,
participant or potential assignee or participant in or to the Term 2 Note that
has agreed to comply with the covenant contained in this Section 8.8 (and any
such bona fide assignee or participant or potential assignee or participant may
disclose such information to Persons employed or engaged by them as described in
clause (a) above); (c) as required or requested by any Governmental Authority or
reasonably believed by Term 2 Noteholder to be compelled by any court decree,
subpoena or legal or administrative order or process; (d) as, on the advice of
Term 2 Noteholder's counsel, is required by law; (e) in connection with the
exercise of any right or remedy under the Note Purchase Documents or in
connection with any Litigation to which Term 2 Noteholder is a party; or (f)
that becomes generally available to the public or otherwise ceases to be
confidential through no fault of Term 2 Noteholder.
8.9. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
NOTE PURCHASE DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE NOTE PURCHASE DOCUMENTS AND THE OBLIGATIONS SHALL
BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF
27
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH NOTE PARTY HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE NOTE PARTIES AND TERM 2 NOTEHOLDER
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER NOTE PURCHASE DOCUMENTS OR TO
ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER NOTE
PURCHASE DOCUMENTS; PROVIDED THAT TERM 2 NOTEHOLDER AND THE NOTE PARTIES
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF NEW YORK COUNTY AND; PROVIDED, FURTHER THAT NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE TERM 2 NOTEHOLDER FROM BRINGING
SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF TERM 2 NOTEHOLDER. EACH NOTE PARTY EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH NOTE PARTY HEREBY WAIVES ANY OBJECTION
THAT SUCH NOTE PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER
VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL
OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH NOTE PARTY
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH NOTE PARTY AT THE ADDRESS SET FORTH IN ANNEX D OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
SUCH NOTE PARTY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
UNITED STATES MAILS, PROPER POSTAGE PREPAID.
8.10. Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
8.10); (c) one (1) Business Day after deposit with a reputable overnight courier
with all charges prepaid or (d) when delivered, if hand-delivered by messenger,
all of which shall be addressed to the party to be notified and sent to the
address or facsimile number indicated in Annex D or to such other address (or
facsimile
28
number) as may be substituted by notice given as herein provided. The giving of
any notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
Person (other than Borrower) designated in Annex D to receive copies shall in no
way adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
8.11. Section Titles. The Section titles and Table of Contents contained
in this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
8.12. Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
8.13. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG TERM 2 NOTEHOLDER AND ANY NOTE PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
NOTE PURCHASE DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
8.14. Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against any Note
Party for liquidation or reorganization, should any Note Party become insolvent
or make an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of any Note
Party's assets, and shall continue to be effective or to be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a "voidable preference," "fraudulent conveyance," or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
8.15. Advice of Counsel. Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 8.9 and 8.13. with its counsel.
29
8.16. No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
30
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
REPUBLIC ENGINEERED PRODUCTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
PERRY PRINCIPALS INVESTMENTS, L.L.C.,
as Term 2 Noteholder
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Authorized Person
[SIGNATURE PAGE TO PERRY SENIOR SECURED NOTE PURCHASE AGREEMENT]
The following Persons are signatories to this Agreement in their
capacity as Note Parties and not as borrowers.
PAV REPUBLIC, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇▇ III
-------------------------------
Name: ▇.▇. Antonio III
Title: Vice President
REPUBLIC N&T RAILROAD, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
REPUBLIC MACHINE, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
[SIGNATURE PAGE TO PERRY SENIOR SECURED NOTE PURCHASE AGREEMENT]
ANNEX A (RECITALS)
TO
NOTE PURCHASE AGREEMENT
DEFINITIONS
Capitalized terms used in the Note Purchase Documents shall have
(unless otherwise provided elsewhere in the Note Purchase Documents) the
following respective meanings and all references to Sections, Exhibits,
Schedules or Annexes in the following definitions shall refer to Sections,
Exhibits, Schedules or Annexes of or to the Agreement:
"Acceptable High Yield Notes" means notes issued by Borrower on a
one-time basis which notes (a) have an aggregate principal amount of no less
than $125,000,000, (b) mature no earlier than the seventh anniversary of the
Closing Date, (c) have no amortization, (d) are secured by the same Liens, and
with the same priority with respect to the Liens securing the Obligations (as
defined in the Senior Credit Agreement on the date hereof), as the Liens
presently securing the Term 1 Notes and the Term 2 Notes, and (e) are on terms
otherwise reasonably acceptable to the Senior Agent, the proceeds of which notes
must be used immediately to repay the Term 1 Notes, the Term 2 Notes and the
Fleet Notes.
"Account Debtor" means any Person who may become obligated to any
Note party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).
"Accounts" means all "accounts," as such term is defined in the
Code, now owned or hereafter acquired by any Note Party, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper or
Instruments), (including any such obligations that may be characterized as an
account or contract right under the Code), (b) all of each Note Party's rights
in, to and under all purchase orders or receipts for goods or services, (c) all
of each Note Party's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Note Party for property sold, leased, licensed,
assigned or otherwise disposed of, for a policy of insurance issued or to be
issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Note Party or in connection with any
other transaction (whether or not yet earned by performance on the part of such
Note Party), (e) all healthcare insurance receivables, and (f) all collateral
security of any kind, now or hereafter in existence, given by any Account Debtor
or other Person with respect to any of the foregoing.
"Acquisition Agreement" means that Amended and Restated Asset
Purchase Agreement dated as of December 16, 2003 by and among Holdings, as
purchaser, and Republic Engineered Products LLC, N&T Railway Company LLC, and
Blue Steel Capital Corp., as sellers.
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"Acquired Indebtedness" means (i) Indebtedness of any Person
existing at the time such Person is or became a Restricted Subsidiary or is
assumed in an Asset Acquisition by the Borrower excluding Indebtedness incurred
in connection with, or in anticipation of, such Person becoming a Restricted
Subsidiary or such Asset Acquisition and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by the Borrower or any Restricted Subsidiary.
"Affiliate" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 5% or more of the Stock having ordinary voting
power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrower, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of Borrower. For the purposes of
this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall specifically
exclude Term 2 Noteholder.
"Affiliate Transaction" has the meaning provided in Section 6.6.
"Agreement" has the meaning ascribed to it in the recitals hereto.
"Appendices" has the meaning ascribed to it in the recitals to the
Agreement.
"Asset Acquisition" means (a) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), or purchase or
acquisition of Stock, by the Borrower or any of the Restricted Subsidiaries in
any other Person, in either case pursuant to which such Person shall become a
Restricted Subsidiary of the Borrower or shall be merged with or into the
Borrower or any of the Restricted Subsidiaries or (b) any acquisition by the
Borrower or any of the Restricted Subsidiaries of the assets of any Person which
constitute substantially all of an operating unit or business of such Person.
"Asset Sale" means (i) any direct or indirect sale, conveyance,
transfer, lease or other disposition of property or assets (including by way of
a sale and leaseback or securitization) of the Borrower or any Restricted
Subsidiary (each referred to in this definition as a "disposition") or (ii) the
direct or indirect issuance or sale of Stock of any Restricted Subsidiary, in
each case, other than: (a) a disposition of Cash Equivalents, Investment Grade
Securities, or obsolete, worn out or surplus equipment in the ordinary course of
business; (b) the disposition of all or substantially all of the assets of the
Borrower in a manner permitted pursuant to the provisions described in Section
6.11; (c) any Restricted Payment that is permitted to be made, and is made,
under Section 6.4; (d) any disposition or series of related dispositions of
property or assets not constituting Collateral with an aggregate Fair Market
Value of less than $1.0 million; (e) any disposition of property or assets
(including an issuance of Stock) by a Restricted Subsidiary to the Borrower or
by the Borrower or a Restricted Subsidiary to a Restricted Subsidiary; (f) any
financing transaction with respect to the CAST-ROLL Facility and any other
property not constituting Collateral built or acquired by the Borrower or any
Restricted Subsidiary after the Issue Date, including, without limitation,
sale-leasebacks and asset
A-2
securitizations made in compliance with Section 6.2; (g) any disposition of
inventory and work-in-process in the ordinary course of business; (h) issuances
of Stock (other than Disqualified Stock) as directors' qualifying shares or as
investments by foreign nationals mandated by applicable law; (i) the sale or
other disposition of other Equipment and Real Estate Fixtures having a book
value not exceeding $1,000,000 in the aggregate in any Fiscal Year; and (j) the
incurrence of any Permitted Lien. For the avoidance of doubt, the definition of
Asset Sale does not include any sale and leaseback of Collateral or any
securitization of Collateral, both of which are prohibited by Section 6.2 of
this Agreement.
"Attributable Value" means as to any particular lease under which
any Person is at the time liable other than a Capitalized Lease Obligation, and
at any date as of which the amount thereof is to be determined, the total net
amount of rent required to be paid by such Person under such lease during the
initial term thereof as determined in accordance with GAAP, discounted from the
last date of such initial term to the date of determination at a rate per annum
equal to the discount rate which would be applicable to a Capitalized Lease
Obligation with a like term in accordance with GAAP. The net amount of rent
required to be paid under any such lease for any such period shall be the
aggregate amount of rent payable by the lessee with respect to such period after
excluding amounts required to be paid on account of insurance, taxes,
assessments, utility, operating and labor costs and similar charges. In the case
of any lease which is terminable by the lessee upon the payment of a penalty,
such net amount shall also include the amount of such penalty, but no rent shall
be considered as required to be paid under such lease subsequent to the first
date upon which it may be so terminated. "Attributable Value" means, as to a
Capitalized Lease Obligation under which any Person is at the time liable and at
any date as of which the amount thereof is to be determined, the capitalized
amount thereof that would appear on the face of a balance sheet of such Person
in accordance with GAAP.
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar
federal, state or foreign law for the relief of debtors.
"Base Amount" has the meaning provided in Section 6.4(b)(vi).
"Board of Directors" means, with respect to any Person, the Board of
Directors or comparable governing body (which may be the Board of Directors of a
managing general partner of a partnership or managing member of a limited
liability company or the Board of Directors of its managing general partner or
managing member, as the case may be) of such Person or any committee thereof
authorized to act for it hereunder. Unless the context requires otherwise,
"Board of Directors" refers to the Board of Directors of the Borrower.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary or other officer
of such Person to have been duly adopted by the Board of Directors of such
Person and to be in full force and effect on the date of such certification, and
delivered to the Term 2 Noteholders.
"Borrower" has the meaning ascribed thereto in the preamble to the
Agreement.
A-3
"Business Day" means any day except a Saturday, a Sunday or any day
on which banking institutions in New York, New York or Chicago, Illinois are
required or authorized by law or other governmental action to be closed.
"Business Interruption Insurance Proceeds" means direct proceeds of
business interruption insurance solely to the extent attributable to claims
arising as a consequence of events occurring prior to the Closing Date.
"Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP.
"Capitalized Lease Obligation" means any obligation to pay rent or
other amounts under a lease of (or other agreement conveying the right to use)
any property (whether real, personal or mixed) that is required to be classified
and accounted for as a capital lease obligation under GAAP, and, for the
purposes of this Agreement, the amount of such obligation at any date shall be
the capitalized amount thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means, at any time,
(A) with respect to Asset Sales of Collateral: (i) wire transfers of
U.S. dollars in immediately available funds, (ii) certified checks, (iii) any
evidence of Indebtedness with a maturity of 30 days or less issued or directly
and fully guaranteed or issued by the United States of America or any agency or
instrumentality thereof (provided the full faith and credit of the United States
of America is pledged in support thereof), and (iv) repurchase agreements and
reverse repurchase agreements relating to marketable direct obligations issued
or unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 30 days from the date of acquisition; provided,
however, that the terms of such agreements comply with the guidelines set forth
in the Federal Financial Agreements of Depository Institutions with Securities
Dealers and Others, as adopted by the Comptroller of the Currency; or
(B) with respect to any other application: (i) any evidence of
Indebtedness with a maturity of 365 days or less issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof); (ii) certificates of deposit
or acceptances with a maturity of 365 days or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $250.0 million; (iii) commercial
paper with a maturity of 365 days or less issued by a corporation (except an
Affiliate of the Borrower) organized under the laws of any state of the United
States or the District of Columbia and rated at least A-1 by Standard & Poor's
Corporation ("S&P") or at least P-I by ▇▇▇▇▇'▇ Investors Service, Inc.
("Moody's"); (iv) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States Government or issued by
A-4
any agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition; provided,
however, that the terms of such agreements comply with the guidelines set forth
in the Federal Financial Agreements of Depository Institutions with Securities
Dealers and Others, as adopted by the Comptroller of the Currency; (v)
investment funds investing 95% of their assets in securities of the types
described in clauses (i)-(iv) above; and (vi) readily marketable direct
obligations issued by any state of the United States of America or any political
subdivision thereof having one of the two highest rating categories obtainable
from either Moody's or S&P.
"CAST-ROLL Facility" means (i) all now-owned or after-acquired real
property and equipment (including the #4 Melt Shop) of the Borrower used in
connection with the facility commonly known as the "Cast-Roll Facility" and
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇▇, ▇▇▇▇, and used primarily in
connection with the Borrower's business and operations at such location, (ii)
all existing buildings, structures and other improvements located or erected
thereon, (iii) all Real Estate Fixtures, (iv) all permits, licenses, franchises,
certificates, consents, approvals and authorizations furnished in respect of the
real property and improvements located thereon including, without limitation,
building permits, certificates of occupancy and environmental certificates, (v)
all leases, licenses and occupancy and concession agreements in respect of the
real property and improvements located thereon and all rents, receipts, fees and
other amounts payable thereunder, and (vi) all general intangibles, documents
and proceeds (as each such term is defined in the Code) relating to the
foregoing.
"Certificate of Exemption" has the meaning ascribed to it in Section
1.4(c).
"Chattel Paper" means any "chattel paper," as such term is defined
in the Code, including electronic chattel paper, now owned or hereafter acquired
by any Note Party, wherever located.
"Closing" has the meaning ascribed to it in Section 1.1.
"Closing Date" has the meaning ascribed to it in Section 1.1.
"Closing Checklist" means the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Note Purchase Documents
and the transactions contemplated thereunder, substantially in the form attached
hereto as Annex B.
"Code" means the Uniform Commercial Code as the same may, from time
to time, be enacted and in effect in the State of New York; provided, that to
the extent that the Code is used to define any term herein or in any Note
Purchase Documents and such term is defined differently in different Articles or
Divisions of the Code, the definition of such term contained in Article or
Division 9 shall govern; provided further, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to Term 2 Noteholder's Lien on any
Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of New York, the term "Code" shall mean
the Uniform Commercial Code as enacted and in effect in such other
A-5
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions.
"Collateral" means, collectively, all of the property and assets
(including, without limitation, Trust Moneys) that are from time to time subject
or required to be made subject to the Lien of the Security Documents.
"Collateral Agent" means Perry Principals Investments, L.L.C., as
collateral agent under the Security Documents until a successor replaces it in
accordance with the provisions of this Agreement and the Security Documents, and
thereafter, means each such successor.
"Consolidated Cash Flow Available for Fixed Charges" means, with
respect to the Borrower for any period, (a) the sum of, without duplication, the
amounts for such period, taken as a single accounting period, of (i)
Consolidated Net Income, (ii) Consolidated Non-cash Charges, (iii) Consolidated
Interest Expense, (iv) Consolidated Income Tax Expense, (v) any fees, expenses
or non-recurring charges related to any issuance of Stock, Permitted
Investments, acquisitions, the acquisition or recapitalization of Indebtedness
(in each case, whether or not successful) and fees, expenses or charges related
to the Transactions to the extent reducing Consolidated Net Income for such
period, less (b) any non-cash items to the extent increasing Consolidated Net
Income for such period.
"Consolidated Fixed Charge Coverage Ratio" as of any date of
determination means the ratio of (i) the aggregate amount of Consolidated Cash
Flow Available for Fixed Charges for the four quarter period of the most recent
four consecutive fiscal quarters ending prior to the date of such determination
(the "Calculation Date") for which financial statements are available (the "Four
Quarter Period") to (ii) Consolidated Fixed Charges for such Four Quarter
Period. In addition to and without limitation of the foregoing, for purposes of
this definition, "Consolidated Cash Flow Available for Fixed Charges" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to, without duplication, (a) the
incurrence of any Indebtedness by the Borrower or any of the Restricted
Subsidiaries (and the application of the net proceeds thereof) during the period
commencing on the first day of the Four Quarter Period to and including the
Calculation Date (the "Reference Period"), including, without limitation, the
incurrence of the Indebtedness giving rise to the need to make such calculation
(and the application of the net proceeds thereof), as if such incurrence (and
application) occurred on the first date of the Reference Period, (b) an
adjustment to eliminate or include, as the case may be, the Consolidated Cash
Flow Available for Fixed Charges and Consolidated Fixed Charges of such Person
directly or indirectly attributable to assets which are the subject of any Asset
Sale or Asset Acquisition (including, without limitation, any Asset Acquisition
giving rise to the need to make such calculation as a result of the Borrower or
one of the Restricted Subsidiaries (including any person who becomes a
Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming
or otherwise being liable for Acquired Indebtedness) occurring during the
Reference Period, as if such Asset Sale or Asset Acquisition occurred on the
first day of the Reference Period, (c) the retirement of Indebtedness during the
Reference Period which cannot thereafter be reborrowed occurring as if retired
on the first day of the Reference Period, and (d) an adjustment to eliminate any
net after-tax extraordinary gains or losses. For purposes of calculating
"Consolidated Fixed Charges" for
A-6
this "Consolidated Fixed Charge Coverage Ratio," (a) interest on outstanding
Indebtedness determined on a fluctuating basis as of the Calculation Date and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Calculation Date, (b) if interest on any
Indebtedness actually incurred on the Calculation Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
Eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Calculation Date will be deemed to have been in effect during the
Reference Period and (c) notwithstanding clauses (a) and (b) of this sentence,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Rate Protection
Obligations for the twelve month period following the Calculation Date, shall be
deemed to have accrued at the rate per annum resulting after giving effect to
the operation of such agreements to the extent then applicable. If the Borrower
or any of the Restricted Subsidiaries directly or indirectly guarantees
Indebtedness or a third Person, this definition shall give effect to the
incurrence of such guaranteed Indebtedness as if such person or such Restricted
Subsidiary had directly incurred or otherwise assumed such guaranteed
Indebtedness. Notwithstanding the foregoing, for the purposes of making the
computation referred to above, interest on any Indebtedness under a revolving
credit facility computed on a pro forma basis shall be computed based upon the
average daily balance of such Indebtedness during the applicable period. In
addition, for purposes of this definition, whenever pro forma effect is to be
given to an Asset Acquisition or Investment, pro forma calculations (including,
without limitation, with respect to cost savings and synergies) shall be
determined in accordance with Regulation S-X under the Securities Act and the
interpretations thereof by the SEC; provided that such computation shall be
adjusted from time to time following the Asset Acquisition to eliminate cost
savings and synergies that have either been realized (and therefore are
reflected in actual results) or cannot reasonably be expected to be realized
(whether based upon information and results obtained following the applicable
Asset Acquisition or Investment or otherwise) by the Borrower and the Restricted
Subsidiaries.
"Consolidated Fixed Charges" means, with respect to the Borrower for
any period, the sum of, without duplication, the amounts for such period of (a)
the Consolidated Interest Expense of the Borrower and (b) the aggregate amount
of dividends and other distributions paid or accrued during such period in
respect of Disqualified Stock of the Borrower and the Restricted Subsidiaries
and Preferred Stock of Restricted Subsidiaries on a consolidated basis.
"Consolidated Income Tax Expense" means, with respect to the
Borrower for any period, the provision for federal, state, local and foreign
income taxes of the Borrower and the Restricted Subsidiaries for such period as
determined on a consolidated, combined or unitary basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the Borrower
for any period, without duplication, the sum of (i) the interest expense
(whether cash or non-cash) of the Borrower and the Restricted Subsidiaries for
such period as determined on a consolidated basis in accordance with GAAP to the
extent deducted in calculating Consolidated Net Income, including, without
limitation, (a) any amortization of debt discount, (b) the net cost under
Interest Rate Protection Obligations relating to interest (including any
amortization of discounts), (c) the interest portion of any deferred payment
obligation, (d) all commissions, discounts and
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other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and (e) all capitalized interest and all accrued interest
and (ii) the interest component of Capitalized Lease Obligations or any other
obligations representative of interest expense associated with any
Sale-Leaseback Transaction paid, accrued and/or scheduled to be paid or accrued
by the Borrower and the Restricted Subsidiaries during such period as determined
on a consolidated basis in accordance with GAAP to the extent deducted in
calculating Consolidated Net Income.
"Consolidated Net Income" means, with respect to the Borrower, for
any period, the consolidated net income (or loss) of the Borrower and the
Restricted Subsidiaries for such period as determined in accordance with GAAP,
adjusted, to the extent included in calculating such net income, by excluding,
without duplication, (a) all net after-tax extraordinary gains or losses, (b)
the portion of net income (but not losses) of the Borrower and the Restricted
Subsidiaries allocable to minority interests in unconsolidated persons to the
extent that cash dividends or distributions have not actually been received by
the Borrower or one of the Restricted Subsidiaries, (c) net income (or loss) of
any person combined with the Borrower or one of the Restricted Subsidiaries on a
"pooling of interests" basis attributable to any period prior to the date of
combination, (d) any gain or loss realized upon the termination of any employee
pension benefit plan, on an after-tax basis, (e) gains or losses in respect of
any Asset Sales by the Borrower or one of the Restricted Subsidiaries, (f) the
cumulative non-cash effect of any change in any accounting principle, (g) the
non-cash effect of compensation expense related to the contribution of shares
held by any qualified employee stock ownership trust formed for employees of the
Borrower and the Restricted Subsidiaries, and (h) the net income of any
Restricted Subsidiary of such person to the extent that the declaration of
dividends or similar distributions by that Restricted Subsidiary of that income
is not at the time permitted, directly or indirectly, by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
law, rule or governmental regulation applicable to that Restricted Subsidiary or
its stockholder(s).
"Consolidated Non-cash Changes" means, the aggregate depreciation,
amortization and other non-cash expenses of the Borrower and the Restricted
Subsidiaries (including any non-cash charges related to any employee stock
ownership plan and workforce reduction charges) reducing Consolidated Net Income
of the Borrower and the Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which required an
accrual of or a reserve for cash charges for any future period).
"Consolidated Tangible Assets" means, as of any date of
determination, the total assets, less goodwill and other intangibles shown on
the balance sheet of the Borrower and the Restricted Subsidiaries as of the most
recent date for which such a balance sheet is available, determined on a
consolidated basis in accordance with GAAP.
"Contracts" means all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Note Party, in any event, including
all contracts, undertakings, or agreements (other than rights evidenced by
Chattel Paper, Documents or Instruments) in or under which any Note Party may
now or hereafter have any right, title or
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interest, including any agreement relating to the terms of payment or the terms
of performance of any Account.
"Copyright License" means any and all rights now owned or hereafter
acquired by any Note Party under any written agreement granting any right to use
any Copyright or Copyright registration.
"Copyrights" means all of the following now owned or hereafter
adopted or acquired by any Note Party: all copyrights and General Intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
against fluctuations in currency values.
"Default" means any event that, with the passage of time or notice
or both, would, unless cured or waived, become an Event of Default.
"Disclosure Schedules" means the Schedules prepared by Borrower and
denominated as Disclosure Schedules 3.2A, 3.2B, 3.2C, 3.4, 5.4, 6.1B(ii) in the
Index to the Agreement.
"Disqualified Stock" means, with respect to any Person, any Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
final Stated Maturity of the Term 2 Notes, but only to the extent such Stock so
matures or is exchangeable or redeemable.
"Documents" means any "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Note Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of
America.
"Environmental Laws" means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42
U.S.C.Sections 9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C.Sections 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act
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(7 U.S.C. Sections 136 et seq.); the Solid Waste Disposal Act (42 U.S.C.
Sections 6901 et seq.); the Toxic Substance Control Act (15 U.S.C.Sections 2601
et seq.); the Clean Air Act (42 U.S.C.Sections 7401 et seq.); the Federal Water
Pollution Control Act (33 U.S.C.Sections 1251 et seq.); the Occupational Safety
and Health Act (29 U.S.C.Sections 651 et seq.); and the Safe Drinking Water Act
(42 U.S.C. Sections 300(f) et seq.), and any and all regulations promulgated
thereunder, and all analogous state, local and foreign counterparts or
equivalents and any transfer of ownership notification or approval statutes.
"Environmental Liabilities" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, and arising under or related
to any Environmental Laws, Environmental Permits, or in connection with any
Release or threatened Release or presence of a Hazardous Material whether on,
at, in, under, from or about or in the vicinity of any real or personal
property.
"Environmental Permits" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
"Equipment" means all "equipment," as such term is defined in the
Code, now owned or hereafter acquired by any Note Party, wherever located and,
in any event, including all such Note Party's machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Note Party, any trade
or business (whether or not incorporated) that, together with such Note Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.
"Exchange Act Report" has the meaning ascribed to it in Section 5.6.
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"Existing: Liens" has the meaning ascribed to that term under the
definition of "Permitted Collateral Liens."
"Fair Market Value" or "fair value" means, with respect to any asset
or property, the price which could be negotiated in an arm's-length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under undue pressure or compulsion to complete the transaction. Fair
Market Value shall be determined by the Board of Directors of the Borrower
acting in good faith and shall be evidenced by a Board Resolution of the
Borrower delivered to the Term 2 Noteholder except (a) any determination of Fair
Market Value or fair value made with respect to any parcel of real property and
related fixtures constituting a part of, or proposed to be made a part of, the
Collateral shall be made by an Independent Appraiser, (b) any determination of
Fair Market Value with respect to any assets to be valued at $4.0 million or
more that is contributed as or received in exchange for Stock of the Borrower
that is to be included in clause (B) of paragraph (a) of Section 6.4 shall be
made by an Independent Financial Advisor; (c) any determination of Fair Market
Value with respect to any Collateral to be valued at $2.0 million or more that
is to be the subject of an Asset Sale shall be made by an Independent Appraiser
or Independent Financial Advisor, as appropriate, and (d) as otherwise indicated
in this Agreement or the Security Documents.
"Financial Statements" means the consolidated income statements,
statements of cash flows and balance sheets of Borrower delivered in accordance
with Section 3.2.
"Fiscal Quarter" means any of the quarterly accounting periods of
Borrower, ending on March 31, June 30, September 30 and December 31 of each
year.
"Fiscal Year" means any of the annual accounting periods of Borrower
ending on December 31 of each year.
"Fleet Notes" means those certain 10% Senior Notes due August 31,
2009 issued pursuant to that certain Note Purchase Agreement, dated as of
December 19, 2003, among the Borrower, certain Guarantors and the holders of
such notes.
"Fleet Notes Intercreditor Agreement" means the Security Interest
Subordination Agreement, dated as of May 20, 2004, among Borrower, GE Capital,
the holders of the Fleet Notes and the collateral agent for the Fleet Notes.
"Foreign Lender" has the meaning ascribed to it in Section 1.4(c).
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are applicable as of the
Issue Date.
"GE Capital" means General Electric Capital Corporation, a Delaware
corporation.
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"General Intangibles" means "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Note Party,
including all right, title and interest that such Note Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefore
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, chooses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged Stock and. Investment Property, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Note Party or any computer bureau or service company from time to time acting
for such Note Party.
"Goods" means any "goods" as defined in the Code, now owned or
hereafter acquired by any Note Party, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
"Government Assisted Indebtedness" means Indebtedness of the
Borrower or any of the Restricted Subsidiaries incurred from any federal, state
or local Governmental Authority, or for which any such Governmental Authority
provides direct or indirect credit support, including under any industrial
revenue bonds.
"Government Assisted Indebtedness (New York)" means Government
Assisted Indebtedness from any state or local Governmental Authority of the
State of New York in an aggregate principal amount at any time outstanding not
exceeding $5.0 million incurred in connection with (x) the relocation of the
following assets to the Lackawanna Hot Rolled Bar Plant in Blasden, New York:
the quality verification inspection lines, known as the "QVL"s, from the Canton
Plant and the magnetic analysis inspection stands known as the "MACs" or
"ROTOMACs" from the Chicago Finishing Plant and (y) the acquisition of
additional equipment and fixtures for, and the improvement and refurbishment of,
such relocated assets, provided that no principal payments shall be required to
be paid with respect to such Government Assisted Indebtedness prior to the final
Maturity Date of the Term 2 Notes except for de minimus amounts required by (i)
applicable law or regulations or (ii) the rules and practices of the state or
local Governmental Authority providing such Government Assisted Indebtedness.
"Government Assisted Indebtedness (Ohio)" means Government Assisted
Indebtedness from any state or local Governmental Authority of the State of Ohio
in an aggregate principal amount at any time outstanding not exceeding $10.0
million (including that
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principal outstanding on the date hereof) incurred in connection with the
acquisition of equipment and fixtures for, and the improvement and refurbishment
of, the Four Stand facilities situated in the Primary Mill at the Lorain Plant
located in Lorain, Ohio.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" means, as to any Person, any obligation of
such Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness, lease, dividend, or other obligation ("primary obligation") of any
other Person (the "primary obligor") in any manner, including any obligation or
arrangement of such Person to (a) purchase or repurchase any such primary
obligation, (b) advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (c) 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, (d) protect the beneficiary of such arrangement from
loss (other than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect
thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed
to be an amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is incurred and (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"Guarantees" means, collectively, the Holdings Guaranty, each
Subsidiary Guarantee and any other guaranty executed by any Guarantor in favor
of Term 2 Noteholder in respect of the Obligations.
"Guarantors" means Holdings, each Subsidiary Guarantor and each
other Person, if any, that executes a guaranty or other similar agreement in
favor of Term 2 Noteholder in connection with the transactions contemplated by
the Agreement and the other Note Purchase Documents.
"Hazardous Material" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "hazardous substance,
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any traction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's),
or any radioactive substance.
"Holdings" has the meaning ascribed thereto in the recitals to the
Agreement.
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"Holdings Guaranty" means the guaranty of even date herewith
executed by Holdings in favor of Term 2 Noteholder.
"incur" means, with respect to any Indebtedness, to directly or
indirectly, create, incur, assume, issue, guarantee or otherwise become liable
for or with respect to such Indebtedness, and the terms "incurred," "incurrence"
and "incurring" having meanings correlative to the foregoing.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, excluding any trade accounts
payable and other accrued current liabilities incurred in the ordinary course of
business and which are not overdue by more than 6 months unless being contested
in good faith (b) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (c) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even if the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (d) all Capitalized Lease
Obligations of such Person, (e) all Indebtedness referred to in the preceding
clauses of other Persons and all dividends of other Persons, the payment of
which is secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien (other than
statutory Liens) upon property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness (the amount of such
obligation being deemed to be the lesser of the value of such property or asset
or the amount of the obligation so secured), (f) all guarantees of Indebtedness
referred to in this definition by such Person, (g) all Disqualified Stock of
such Person valued at the greater of its voluntary or involuntary maximum fixed
repurchase price plus accrued dividends, (h) all Interest Rate Protection
Obligations of such Person and (i) any amendment, supplement, modification,
deferral, renewal, extension, refinancing or refunding of any liability of the
types referred to in clauses (a) through (h) above. For purposes hereof, the
"maximum fixed repurchase price" of any Disqualified Stock which does not have a
fixed repurchase price shall be calculated in accordance with the terms of such
Disqualified Stock as if such Disqualified Stock were purchased on any date on
which Indebtedness shall be required to be determined pursuant to this
Agreement, and if such price is based upon, or measured by, the fair market
value of such Disqualified Stock, such fair market value shall be determined in
good faith by the Board of Directors of the Borrower of such Disqualified Stock.
When any Person becomes a Restricted Subsidiary, there shall be deemed to have
been an incurrence by such Restricted Subsidiary of all Indebtedness for which
it is liable at the time it becomes a Restricted Subsidiary. If the Borrower or
any of the Restricted Subsidiaries, directly or indirectly, guarantees
Indebtedness of a third Person, there shall be deemed to be an incurrence of
such guaranteed Indebtedness as if the Borrower or such Restricted Subsidiary
had directly incurred or otherwise assumed such guaranteed Indebtedness.
"Indemnified Liabilities" has the meaning ascribed to it in Section
1.3.
"Indemnified Person" has the meaning ascribed to it in Section 1.3.
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"Independent Appraiser" means a reputable, nationally recognized
Person or firm who in the ordinary course of its business appraises property
and, where real property is involved, is a member in good standing of the
American Institute of Real Estate Appraisers, recognized and licensed to do
business in the jurisdiction where such real property is situated who (a) does
not, and whose directors, officers and employees and Affiliates do not, have a
direct or indirect material financial interest in the Borrower or any of its
Subsidiaries, and (b) in the judgment of the Board of Directors of the Borrower,
is otherwise independent and qualified to perform the task for which it is to be
engaged.
"Independent Financial Advisor" means a reputable, nationally
recognized investment banking, appraisal, consulting or public accounting firm
(a) which does not, and whose directors, officers and employees and Affiliates
do not, have a direct or indirect material financial interest in the Borrower or
any of its Subsidiaries and (b) which, in the judgment of the Board of Directors
of the Borrower, is otherwise independent and qualified to perform the task for
which it is to be engaged.
"Instruments" means all "instruments," as such term is defined in
the Code, now owned or hereafter acquired by any Note Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all promissory notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
"Interest Expense" means, with respect to any Person for any fiscal
period, interest expense (whether cash or non-cash) of such Person determined in
accordance with GAAP for the relevant period ended on such date, including
interest expense with respect to any Funded Debt of such Person and interest
expense for the relevant period that has been capitalized on the balance sheet
of such Person.
"Interest Rate Protection Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Inventory" means any "inventory," as such term is defined in the
Code, now owned or hereafter acquired by any Note Party, wherever located, and
in any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Note Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, supplies or
materials of any kind, nature or description used or consumed or to be used or
consumed in such Note Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including all supplies
and embedded software.
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"Investment" means, with respect to any Person, (i) any direct or
indirect loan, advance (other than advances to customers and employees for
moving, entertainment, travel expenses and commissions, drawing accounts and
similar expenditures in the ordinary course of business), extension of credit
(other than trade credit) or capital contribution to any Person (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or (ii) any purchase or acquisition
by such Person of any Stock, bonds, notes, debentures or other securities or
evidences of Indebtedness issued by, any other Person. "Investments" shall not
include (x) accounts receivable and extensions of credit by any Person in the
ordinary course of business and (y) Investments to the extent made with
consideration which consists of Stock (other than Disqualified Stock) of the
Borrower. In addition to the foregoing, any Currency Agreement shall constitute
an Investment hereunder.
"Investment Grade Securities" means (i) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof (other than Cash Equivalents), (ii) debt
securities or debt instruments with a rating of BBB- or higher by S&P or Baa3 or
higher by ▇▇▇▇▇'▇ or the equivalent of such rating by such rating organization,
or, if no rating of S&P or ▇▇▇▇▇'▇ then exists, the equivalent of such rating by
any other nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Borrower and
its Subsidiaries, and (iii) investments in any fund that invests 95% of their
assets in securities in the type described in clauses (i) and (ii) above.
"Investment Property" means all "investment property" as such term
is defined in the Code now owned or hereafter acquired by any Note Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Note Party,
including the rights of such Note Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Note Party;
(iv) all commodity contracts of any Note Party; and (v) all commodity accounts
held by any Note Party.
"IPO" means any fully distributed public offering of Stock of
Holdings.
"IRC" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"Issue Date" means May 20, 2004, the date of original issuance of
the Term 2 Notes.
"Legal Holiday" means any day other than a Business Day.
"Letter-of Credit Rights" means "letter-of-credit rights" as such
term is defined in the Code, now owned or hereafter acquired by any Note Party,
including rights to payment or performance under a letter of credit, whether or
not such Note Party, as beneficiary, has demanded or is entitled to demand
payment or performance.
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"License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Note Party.
"Lien" means any mortgage, charge, lease, lien (statutory or other),
pledge, security interest, encumbrance, claim, hypothecation, assignment for
security, deposit arrangement or preference or other security agreement of any
kind or nature whatsoever. For purposes of this Agreement, a person shall be
deemed to own subject to a Lien any property which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement In no event shall an
operating lease be deemed to constitute a Lien.
"Litigation" means any action, claim, lawsuit, demand, investigation
or proceeding is now pending or, to the knowledge of any Note Party, threatened
against any Note Party, before any Governmental Authority or before any
arbitrator or panel of arbitrators.
"Majority Holders" means at any determination thereof the holders of
more than (a) a majority in aggregate principal amount of the outstanding Term 1
Notes, and (b) a majority in aggregate principal amount of the outstanding Term
2 Notes.
"Mandatory Payment" has the meaning ascribed to it in Section 5.9
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations or financial or other condition of Borrower or the
Note Parties taken as a whole, (b) Borrower's ability to pay any of the Term 2
Notes or any of the other Obligations in accordance with the terms of the
Agreement, (c) the Collateral or Term 2 Noteholder's Liens, on behalf of itself
and Term 2 Noteholder, on the Collateral or the priority of such Liens, or (d)
Term 2 Noteholder's rights and remedies under the Agreement and the other Note
Purchase Documents.
"Mortgage" means each mortgage instrument and assignment of leases
and rents, substantially in the form of those documents entered into on the date
hereof (including such changes to such form as may be necessary or desirable to
conform to applicable local laws or customs regarding property in the
jurisdiction where such instrument is to be recorded), as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof and thereof.
"Mortgaged Property" means any Real Property that is subject to a
Mortgage.
"Multiemplover Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Note Party or ERISA Affiliate is
making, is obligated to make or has made or been obligated to make within the
past six (6) years, contributions on behalf of participants who are or were
employed by any of them.
"Net Business Interruption Insurance Proceeds" means Business
Interruption Insurance Proceeds less taxes payable thereon.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or Cash Equivalents, including payments in
respect of deferred payment
A-17
obligations when received in the form of cash or Cash Equivalents net of (a)
brokerage commissions and other reasonable fees and expenses (including fees and
expenses of counsel and investment bankers) related to such Asset Sale; (b)
provisions for all taxes payable as a result of such Asset Sale, (c) amounts
required to be applied to the repayment of principal and interest on
Indebtedness required, to be paid as a result of such transaction to the extent
secured by a Lien on such Property that is permitted hereunder or under the
applicable Security Document and to the extent the operative agreement relating
to such Indebtedness requires or otherwise permits such a repayment; and (d)
appropriate amounts to be provided by the Borrower or any of the Restricted
Subsidiaries, as the case may be, as a reserve, in accordance with GAAP, against
any liabilities associated with such Asset Sale and retained by the Borrower or
any of the Restricted Subsidiaries, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any representation, warranties or indemnification obligations associated with
such Asset Sale, provided that the aggregate amount provided by the Borrower or
any of the Restricted Subsidiaries, as the case may be, for the reserves
contemplated by this clause (d) in connection with any Asset Sale of Collateral
shall not exceed 10% of the aggregate proceeds received in connection with such
Asset Sale.
"Noteholder Collateral" has the meaning ascribed thereto in the
Subordination Agreement.
"Noteholder Insurance Collateral" has the meaning ascribed thereto
in the Subordination Agreement.
"Note Parties" means Holdings, Borrower, and each of their
respective domestic Subsidiaries.
"Note Purchase Agreement (Term 1)" means that certain Senior
Subordinated Note Purchase Agreement, dated the date hereof, between the
Borrower and the Term 1 Noteholder.
"Note Purchase Documents" means the Agreement, the Term 2 Notes, the
Security Documents, and all other agreements, instruments, documents and
certificates identified in the Closing Checklist executed and delivered to, or
in favor of, Term 2 Noteholder and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, letter of credit agreements
and all other written matter whether heretofore, now or hereafter executed by or
on behalf of any Note Party, or any employee of any Note Party, and delivered to
Term 2 Noteholder in connection with the Agreement or the transactions
contemplated thereby. Any reference in the Agreement or any other Note Purchase
Documents to a Note Purchase Documents shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Note Purchase
Documents as the same may be in effect at any and all times such reference
becomes operative.
"Obligations" means all loans, liabilities and obligations, for the
performance of covenants, tasks or duties or for payment of monetary amounts
(whether or not such performance is then required or contingent, or such amounts
are liquidated or determinable) owing by any
A-18
Note Party to Term 2 Noteholder, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Note Purchase Documents. This term includes all principal and interest
(including all interest that accrues after the commencement of any case or
proceeding by or against any Note Party in bankruptcy, whether or not allowed in
such case or proceeding) and fees, expenses, attorneys' fees and any other sum
chargeable to any Note Party under the Agreement or any of the other Note
Purchase Documents.
"Officer" means, with respect to the Borrower, the Chairman of the
Board of Directors, the President, the Chief Executive Officer, any Vice
President, any General Manager, the General Counsel, the Chief Financial
Officer, the Secretary, the Associate General Counsel, the Treasurer, or the
Controller of the Borrower, as the case may be.
"Officers' Certificate" means a certificate signed by one or more
Officers or by an Officer and an Assistant Treasurer or Assistant Secretary of
each of the Borrower, as the case may be.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Term 2 Noteholder, which may include counsel to
the Borrower.
"Patent License" means rights under any written agreement now owned
or hereafter acquired by any Note Party granting any right with respect to any
invention on which a Patent is in existence.
"Patents" means all of the following in which any Note Party now
holds or hereafter acquires any ownership interest: (a) all letters patent of
the United States or any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or of any
other country, including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"Permitted Collateral Liens" means (i) the Liens created by the Term
2 Notes, the Term 1 Notes, the Senior Debt, the Note Purchase Documents, the
Term 1 Loan Document, and the Senior Loan Documents; (ii) after giving effect to
the Sale Order, Liens on the Collateral existing on the Issue Date to the extent
and in the manner such Liens are in effect on the Issue Date, as such Liens are
more specifically described in the Security Documents ("Existing Liens"); (iii)
Liens for taxes, assessments or other governmental charges or levies not yet
delinquent; (iv) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, laborers' employees' or suppliers' or other like Liens on the
Collateral arising in the ordinary course of business and securing obligations
that are not due and payable; (v) Liens securing Government Assisted
Indebtedness (Ohio) on Collateral that is acquired, refurbished, improved or
relocated utilizing the proceeds of such Government Assisted Indebtedness;
provided that (x) such Liens are pari passu with, or junior in priority to, the
Lien on such Collateral in favor of the Term 2 Noteholder and the Holders and
(y) the holders of such Government Assisted Indebtedness (Ohio) have agreed to
subordinate their right to accelerate such Indebtedness to the prior
A-19
acceleration of the Term 2 Notes; (vi) Liens securing Government Assisted
Indebtedness (New York) on Collateral that is acquired, refurbished, improved or
relocated utilizing the proceeds of such Government Assisted Indebtedness;
provided that (x) such Liens are pari passu with, or junior in priority to, the
Lien on such Collateral in favor of the Term 2 Noteholder and the Holders and
(y) the holders of such Government Assisted Indebtedness (New York) have agreed
to subordinate their right to accelerate such Indebtedness to the prior
acceleration of the Term 2 Notes; (vii) Liens securing the Fleet Notes, and
(viii) any other Liens on the Collateral expressly permitted by the applicable
Security Documents or by the Senior Debt Documents as in effect on the date
hereof.
"Permitted Investments" means any of the following: (a) (i)
Investments in any Restricted Subsidiary (including any Person that pursuant to
such Investment becomes a Restricted Subsidiary) and (ii) Investments in any
Person that is merged or consolidated with or into, or transfers or conveys all
or substantially all of its assets to, the Borrower or any Restricted Subsidiary
at the time such Investment is made; (b) Investments in Cash Equivalents or
Investment Grade Securities; (c) Investments in deposits with respect to leases
or utilities provided to third parties in the ordinary course of business; (d)
Investments in the Term 2 Notes; (e) Investments in Currency Agreements,
Interest Rate Protection Obligations and commodities hedging arrangements
permitted by clause (vi) or (vii) of Section 6.1(b); (f) loans or advances to
officers or employees of the Borrower and the Restricted Subsidiaries in the
ordinary course of business for bona fide business purposes of the Borrower and
the Restricted Subsidiaries (including travel and moving expenses) not in excess
of $2.0 million in the aggregate at anyone time outstanding: (g) Investments in
evidences of Indebtedness, securities or other property received from another
Person by the Borrower or any of the Restricted Subsidiaries in connection with
any bankruptcy proceeding or by reason of a composition or readjustment of debt
or a reorganization of such Person or as a result of foreclosure, perfection or
enforcement of any Lien in exchange for evidences of Indebtedness, securities or
other property of such Person held by the Borrower or any of the Restricted
Subsidiaries, or for other liabilities or obligations of such other Person to
the Borrower or any of the Restricted Subsidiaries that were created in
accordance with the terms of this Agreement; (h) so long as no Default or Event
of Default has occurred and is continuing at the time such Investment is made,
Investments in an amount not to exceed the greater of (i) $20.0 million and (ii)
1.0% of Consolidated Tangible Assets of the Borrower at the time of such
Investment (with the Fair Market Value of each Investment being measured at the
time made and without giving effect to subsequent changes in value); (i) any
Investment constituting a Restricted Payment received pursuant to and in
compliance with Section 6.1; (j) Investments consisting of the licensing or
contribution of intellectual property pursuant to joint marketing arrangements
with other Persons; (k) investments consisting of purchases and acquisitions of
inventory, supplies, materials and equipment or licenses or leases of
intellectual property, in any case, in the ordinary course of business; (1) any
Investment in securities or other assets not constituting cash or Cash
Equivalents and received in connection with an Asset Sale made pursuant to the
provisions of Section 6.5 or any other disposition of assets not constituting an
Asset Sale; (m) any Investment existing on the Issue Date; and (n) other
investments not exceeding $250,000 in the aggregate at any time outstanding.
"Permitted Holders" means Perry Capital, L.P. and Perry Partners
International, Inc. and their respective Affiliates.
A-20
"Permitted Liens" means, with respect to any Person and as to any
property other than the Collateral, (a) Liens to secure the Senior Debt
Documents and the Term 1 Notes Documents, (b) Liens for taxes, assessments or
other governmental charges or levies not yet delinquent, or which are for less
than $10.0 million in the aggregate, or which are being validly contested in
good faith by appropriate proceedings or for property taxes on property that the
Borrower or any of its Restricted Subsidiaries bas determined to abandon if the
sole recourse for such tax, assessment, charge, levy or claim is to such
property; (c) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
laborers', employees' or suppliers' or other like Liens on property of the
Borrower or any of the Restricted Subsidiaries arising in the ordinary course of
business and securing obligations that are not due and payable or that are being
contested in good faith by negotiations or appropriate proceedings and in
respect of which, if applicable, the Borrower or the relevant Restricted
Subsidiary shall have set aside on its books reserves in accordance with GAAP;
(d) pledges and deposits made in the ordinary course of business by the Borrower
or any of the Restricted Subsidiaries in compliance with the Federal Employers
Liability Act or any other workmen's compensation, unemployment insurance and
other social security laws or regulations and deposits securing liability to
insurance carriers under insurance or self-insurance arrangements in respect of
such obligations; (e) deposits by the Borrower or any of the Restricted
Subsidiaries to secure the performance of tenders, bids, contracts (other than
for Indebtedness), leases (other than Capitalized Lease Obligations). statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business, including those
incurred to secure health, safety and environmental obligations in the ordinary
course of business; (f) zoning restrictions, easements, trackage rights, leases
(other than Capitalized Lease Obligations), licenses, special assessments,
rights-of-way, restrictions on use of Real Property and other similar
encumbrances incurred by the Borrower or any of the Restricted Subsidiaries in
the ordinary course of business which, individually and in the aggregate, are
not substantial in amount and do not materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the business
of the Borrower or any of the Restricted Subsidiaries; (g) Liens consisting of
interests of lessors under capital or operating leases; (h) Liens securing
judgments, decrees or orders against the Borrower or any of the Restricted
Subsidiaries, so long as such judgment, decree or order is for less than
$250,000 or such Lien is being contested in good faith and is adequately bonded,
any appropriate legal proceedings which may have been duly initiated for the
review of such judgment, decree or order shall not have been finally terminated
or the period within which such proceedings may be initiated shall not have
expired; (i) any leases or subleases to other Persons of properties or assets
owned or leased by the Borrower or any of the Restricted Subsidiaries; (j) any
Lien arising by operation of law pursuant to Section 107(1) of CERCLA, 42 U.S.C.
Section 9607(1), or pursuant to analogous state law, for costs or damages which
are not yet due (by virtue of a written demand for payment by a government
authority) or which are being contested in good faith by appropriate
proceedings, or on property that the Borrower or any of the Restricted
Subsidiaries has determined to abandon if the sale recourse for such costs or
damages is to such property; provided that the liability of the Borrower and the
Restricted Subsidiaries with respect to the matter giving rise to all such Liens
shall not, in the reasonable estimate of the Borrower (in the light of all
attendant circumstances, including the likelihood of contribution by third
parties), exceed $25.0 million; (k) Liens that are contractual rights of setoff
(1) relating to the establishment by the Borrower or any of its Subsidiaries of
depository relations with banks not given in collection with the issuance of
Indebtedness or (2) pertaining to pooled deposit and/or
A-21
sweep accounts of the Borrower and/or any of the Restricted Subsidiaries to
permit satisfaction of overdraft or similar obligations incurred in the ordinary
course of business of the Borrower and the Restricted Subsidiaries; (1) Liens
securing obligations in respect of trade-related letters of credit and covering
the goods (or the documents of title in respect of such goods) financed by such
letters of credit; (m) the sale of accounts receivable in connection with
collection in the ordinary course of business; (n) construction Liens arising in
the ordinary course of business, including Liens for work performed for which
payment has not been made, securing obligations that are not due and payable or
are being contested in good faith by appropriate proceedings and in respect of
which, if applicable, the Borrower or the relevant Restricted Subsidiary shall
have set aside on its books reserves in accordance with GAAP; (o) Liens securing
Currency Agreements, Interest Rate Protection Obligations and commodity hedging
agreements; (p) any other Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty requirements,
including rights of offset and setoff; (q) purchase money Liens to finance the
acquisition of property or assets of the Borrower or any Restricted Subsidiary
of the Borrower acquired in the ordinary course of business; provided that (1)
the related purchase money Indebtedness shall not be secured by or extend to any
Collateral or any other property or assets of the Borrower or any Restricted
Subsidiary other than the property or assets so acquired, (2) the amount of
Indebtedness secured by any such Lien shall not exceed the purchase price of the
property or assets acquired and (3) Lien securing such Indebtedness either (x)
exists at the time of such acquisition or construction or (y) shall be created
within 180 days of such acquisition; (r) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (s) Liens securing Indebtedness which
is incurred to refinance Indebtedness which has been secured by a Lien or Liens
permitted under this Agreement and which has been incurred in accordance with
the provisions of this Agreement: provided that such Liens do not extend to or
cover any property or assets of the Borrower or any of the Restricted
Subsidiaries not securing the Indebtedness so refinanced: (t) Liens upon
specific items of inventory or other goods and proceeds of any Person securing
such Person's obligations in respect of bankers' acceptances issued or created
for the account of such Person to facilitate the purchase, shipment or storage
of such inventory or other goods; (u) Liens securing reimbursement obligations
with respect to commercial letters of credit which encumber documents and other
property relating to such letters of credit and products and proceeds thereof;
(v) Liens securing Acquired Indebtedness permitted by Section 6.1; provided that
(1) such Liens secured such Acquired Indebtedness at the time of and prior to
the incurrence of such Acquired Indebtedness by the Borrower or a Restricted
Subsidiary thereof and were not granted in connection with, or in anticipation
of, the incurrence of such Acquired Indebtedness by the Borrower or a Restricted
Subsidiary thereof and (2) such Liens do not extend to or cover any property or
assets of the Borrower or any of the Restricted Subsidiaries other than the
property or assets that secured the Acquired Indebtedness prior to the time such
Indebtedness became Acquired Indebtedness of the Borrower or such Restricted
Subsidiary and are no more favorable to the lienholders than those securing the
Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by
the Borrower or such Restricted Subsidiary; (w) Liens on assets acquired or
constructed after the Issue Date and not constituting Collateral securing
Indebtedness not to exceed 70% of the lower of the cost of construction or
acquisition of such assets or the fair market value of such assets, in each case
determined at the time of incurrence of such Indebtedness; and (x) Liens
securing the Fleet Notes.
A-22
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other entity
or government (whether federal, state, county, city, municipal, local, foreign,
or otherwise, including any instrumentality, division, agency, body or
department thereto).
"Plan" means, at any time, an "employee benefit plan," as defined in
Section 3(3) of ERISA, that any Note Party maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were employed
by any Note Party.
"PPE Access" means the right of Term 2 Noteholder or any of its
agents or designees to use any and all property, plant or equipment of any Note
Party to take possession of or fully process Inventory in any manner necessary
or desirable for the Term 2 Noteholder to realize the full value of such
Inventory in connection with the sale or other disposition thereof.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's preferred or preference stock, whether now outstanding or issued
after the date of this Agreement, and including, without limitation, all classes
and series of preferred or preference stock of such Person.
"Prior Credit Agreement" means that certain Credit Agreement, dated
as of December 19, 2003, as amended, among the Borrower, the lenders party
thereto, and Perry Partners, LP., as lender.
"Prior Lender" means Perry Partners, L.P., as lender under the Prior
Credit Agreement.
"Prior Lender Obligations" means the obligations owed to the Prior
Lender pursuant to the Prior Credit Agreement.
"Prior Lien" has the meaning assigned to such term in the applicable
Security Document.
"Proceeds" means "proceeds," as such term is defined in the Code,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Note Party from time to time with respect to any of the
Collateral, (b) any and all payments (in any form whatsoever) made or due and
payable to any Note Party from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any Person acting under color of
governmental authority), (c) any claim of any Note Party against third parties
(i) for past, present or future infringement of any Patent or Patent License, or
(ii) for past, present or future infringement or dilution of any Copyright,
Copyright License, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by any
Note Party against third parties with respect to any litigation or dispute
concerning any of the Collateral including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of
rights in, or damage to, Collateral, (e) all amounts collected on, or
distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Stock, and (f) any and all other
A-23
amounts, rights to payment or other property acquired upon the sale, lease,
license, exchange or other disposition of Collateral and all rights arising out
of Collateral.
"Pro Forma" means the unaudited consolidated balance sheet of
Borrower and its Subsidiaries as of April 1, 2004 after giving pro forma effect
to the Related Transactions.
"Projections" means Borrower's forecasted consolidated: (a) balance
sheets; (b) profit and loss statements; (c) cash flow statements; (d)
capitalization statements; and (e) Borrowing Availability, all prepared on a
Subsidiary by Subsidiary or division-by-division basis, if applicable. and
otherwise consistent with the historical Financial Statements of Borrower,
together with appropriate supporting details and a statement of underlying
assumptions.
"Property" means any right, title or interest in or to property or
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible and including ownership interests of any Person.
"Real Estate" means all of the real property owned, leased,
subleased, or used by any Note Party.
"Real Estate Fixtures" means only such "equipment" as defined in the
Code which is (i) affixed to any Real Property, (ii) considered a fixture or a
part of the Real Property under applicable law and (iii) integral to the
occupancy or customarily used by occupants in connection with the occupancy of
the land or in the operation of the buildings, structures and improvements
thereon as such, as opposed to manufacturing or other business operations
conducted therein or therefrom and, in any event, shall include, without
limitation, all switchboards, utility systems, sprinkler and alarm systems or
other fire prevention or extinguishing apparatus and materials, HVAC equipment,
boilers, oil boilers, telecommunications equipment, refrigeration, electronic
monitoring, water or lighting systems, power, sanitation, waste removal,
pollution abatement or control, elevators, window cleaning, maintenance or other
systems or equipment, appliances or supplies, all heating apparatus, generators,
plumbing, lighting and gas fixtures, laundry, ventilating and air conditioning
equipment, all awnings, blinds, screens, storm sashes, pumping equipment,
electrical equipment, including transformers, radiators and piping, coal
stokers, plumbing and bathroom fixtures, washtubs, sinks, stoves, ranges, window
shades, motors, generators, dynamos, kitchen cabinets, incinerators, plants and
shrubbery and all other articles used or useful in connection with the use,
operation, maintenance or repair of any part of the Real Property, together with
any and all modifications, renewals, improvements, alterations, repairs,
substitutions, attachments, additions, accessions and other property now or
hereafter affixed thereto or used in connection therewith, all replacements and
all parts therefore, and together with all substitutes for any of the foregoing.
"Real Property" means any interest in any real property or any
portion thereof whether owned in fee or leased or otherwise owned.
"Refinancing" means the repayment in full by Borrower of the Prior
Lender Obligations on the Closing Date.
"Refinancing Indebtedness" means (a) Indebtedness of the Borrower or
a Subsidiary Guarantor to the extent the proceeds thereof are used solely to
refinance (whether by
A-24
amendment, renewal, extension or refunding) all or any part of any Indebtedness
of the Borrower or any of the Restricted Subsidiaries and (b) Indebtedness of
any Restricted Subsidiary (other than a Subsidiary Guarantor) to the extent the
proceeds thereof are used solely to refinance (whether by amendment, renewal,
extension or refunding) all or any part of any Indebtedness of a Restricted
Subsidiary (other than a Subsidiary Guarantor), in each such event; provided
that (i) the principal amount of Indebtedness incurred pursuant to this
definition (or, if such Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof, the accreted value of such Indebtedness)
shall not exceed the sum of the principal amount of Indebtedness so refinanced
(less any discount from principal amount due upon payment pursuant to the terms
of such Indebtedness) was not incurred in violation of this Agreement, (ii) in
the case of Indebtedness incurred pursuant to this definition by the Borrower or
any Subsidiary Guarantor, such Indebtedness do not have the effect of increasing
the principal amount thereof or changing the amortization thereof (other than to
extend the same) and that are otherwise on terms and conditions no less
favorable to any Note Party or the Term 2 Noteholders, as determined by the Term
2 Noteholders than the terms of the Indebtedness being refinanced, amended or
modified, and (iii) if the Indebtedness to be refinanced is Subordinated
Indebtedness, the Indebtedness to be incurred pursuant to this definition shall
also be Subordinated Indebtedness.
"Register" has the meaning ascribed to it in Section 1.5.
"Related Transactions" means the initial borrowing under Senior
Credit Agreement, the Note Purchase Agreement (Term 1) and the Refinancing, the
payment of all fees, costs and expenses associated with all of the foregoing and
the execution and delivery of all of the Related Transactions Documents.
"Release" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
"Required Filing Dates" has the meaning ascribed to it in Section
5.6.
"Restricted Payment" has the meaning provided in Section 6.4.
"Restricted Subsidiary" means each Subsidiary of the Borrower.
"Sale-Leaseback Transaction" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person after the acquisition
thereof or the completion of construction or commencement of operation thereof
to such lender or investor or to any Person to whom funds have been or are to be
advanced by such lender or investor on the security of such property or asset.
The stated maturity of such arrangement shall be the date of the last payment of
rent or any other amount due under such arrangement prior to the first date on
which such arrangement may be terminated by the lessee without payment of a
penalty.
A-25
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means the Security Agreement of even date
herewith entered into by and among Term 2 Noteholder and each Note Party that is
a signatory thereto.
"Senior Agent" means General Electric Capital Corporation in its
capacity as Agent for the Senior Lenders or its successor appointed pursuant to
Section 9.7 of the Senior Credit Agreement.
"Senior Credit Agreement" has the meaning set forth in the recitals
to this Agreement.
"Senior Credit Facility" has the meaning ascribed to it in the
recitals hereto.
"Security Documents" means the Security Agreement, the Mortgages,
the Guarantees, the Patent Security Agreement, the Trademark Security Agreement,
the Copyright Security Agreement and all similar agreements entered into
guaranteeing payment of, or granting a Lien upon property as security for
payment of, the Obligations.
"Senior Debt" means any debt incurred under the Senior Credit
Agreement.
"Senior Debt Documents" shall mean the Senior Credit Agreement, the
Revolving Notes, the Swing Line Note, the Security Agreement, the Pledge
Agreement, the Guarantees, the Patent Security Agreement, the Trademark Security
Agreement, the Copyright Security Agreement, the Master Standby Agreement, the
Master Documentary Agreement, and all other agreements, documents and
instruments evidencing or pertaining to all or any portion of the Senior Debt.
"Senior Lenders" means the lenders party from time to time to the
Senior Credit Agreement.
"Solvent" means, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets 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 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
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guaranties and pension plan liabilities) at any time shall
be computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.
"Specified Facility" means each of the following: (i) the Massillon
Cold Finish Bar Plant in Massillon, Ohio; (ii) the ▇▇▇▇ Cold Finished Bar Plant
in Gary, Indiana; (ui) the
A-26
Lackawanna Hot Rolled Bar Plant in Blasdell, New York; (iv) any of the following
facilities at the Canton Plant in Canton, Ohio: the Melt Shop, the Cast Roll, or
the Bar Billet Conditioning facility; and (v) any of the following facilities at
the Lorain Plant in Lorain, Ohio: the Blast Furnace, the BOP Shop, the Billet
Caster, the Bloom Caster, the Primary Mill (includes the four stand), or the
"9/10" Mill.
"Stated Maturity" means, when used with respect to any Term 2 Note
or any installment of interest thereon, the date specified in such Term 2 Note
as the fixed date on which the principal of such Term 2 Note or such installment
of interest is due and payable, and when used with respect to any other
indebtedness, means the date specified in the instrument governing such
Indebtedness as the fixed date on which the principal of such Indebtedness, or
any installment of interest thereon, is due and payable.
"Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).
"Subordinated Indebtedness" means Indebtedness of the Borrower or a
Subsidiary Guarantor which is expressly subordinated in right of payment to the
Term 2 Notes or the Guarantee of such Guarantor, as the case may be.
"Subordination Agreement" means that certain Intercreditor,
Subordination, Lien Priority and Access Agreement, dated of even date herewith,
among Borrower, GE Capital, the Term 1 Noteholder and the Term 2 Noteholder.
"Subsidiary" means, with respect to any Person, (a) any corporation
of which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of the Borrower.
"Subsidiary Guarantee" means the guarantee of the Subsidiary
Guarantors granted at the Issue Date and any additional Subsidiary Guarantee
required to be delivered in accordance with Section 6.10 of this Agreement.
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"Subsidiary Guarantor" means (a) each domestic Subsidiary of the
Borrower that owns or holds any Collateral and (b) any other domestic Subsidiary
of the Borrower that guarantees the Term 2 Notes, but shall not include
Holdings.
"Supporting; Obligations" means all "supporting obligations" as such
term is defined in the Code, including letters of credit and guaranties issued
in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.
"Survey" means a survey of any parcel of real property (and all
improvements thereon): (i) prepared by a surveyor or engineer licensed to
perform surveys in the state or province in which such property is located, (ii)
dated (or redated) not earlier than six months prior to the date of delivery
thereof (unless there shall have occurred within six months prior to such date
of delivery any exterior construction on the site of such property, in which
event such survey shall be dated (or redated) after the completion of such
construction or if such construction shall not have been completed as of such
date of delivery, not earlier than 20 days prior to such date of delivery),
(iii) certified by the surveyor in a manner reasonably acceptable to the title
company providing title insurance in respect of the Liens granted under the
Mortgages and (iv) complying in all respects with the minimum detail
requirements of the American Land Title Association, or local or foreign
equivalent, as such requirements are in effect on the date of preparation of
such survey, or that is otherwise reasonably acceptable to the Collateral Agent
(giving consideration to the applicable transaction).
"Surviving Entity" has the meaning provided in Section 6.11.
"Taxes" means taxes, levies, imposts, deductions, or withholdings,
and all liabilities with respect thereto, excluding taxes imposed on or measured
by the net income of Term 2 Noteholder by the jurisdictions under the laws of
which the Term 2 Noteholder is organized or conduct business or any political
subdivision thereof.
"Term 1 Note" has the meaning ascribed to it in the recitals hereto.
"Term 1 Noteholder" means the holder or holders of the Term 1 Notes.
"Term 1 Notes Documents" means the Note Purchase Agreement (Term 1),
the Term 1 Notes, the Term 1 Security Documents, and all other agreements,
instruments, documents and certificates identified in the Closing Checklist
executed and delivered to, or in favor of, the Term 1 Noteholder and including
all other pledges, powers of attorney, consents, assignments, contracts,
notices, letter of credit agreements and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Note Party, or any
employee of any Note Party, and delivered to the Term 1 Noteholder in connection
with the Agreement or the transactions contemplated thereby.
"Term 1 Security Documents" means the "Security Documents" as
defined in the Note Purchase Agreement (Term 1).
"Term 2 Note" has the meaning ascribed to it in Section 1.
"Term 2 Noteholder" has the meaning set forth in the recitals to
this Agreement.
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"Title IV Plan" means an employee pension benefit plan (other than a
Multiemployer Plan), that is covered by Title IV of ERISA, and that any Note
Party or ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of them.
"Trademark License" means rights under any written agreement now
owned or hereafter acquired by any Note Party granting any right to use any
Trademark.
"Trademarks" means all of the following now owned or hereafter
adopted or acquired by any Note Party: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"Transaction Documents" means the Senior Debt Documents, the Term I
Note Purchase Documents and the Note Purchase Documents.
"Transactions" means the transactions contemplated by the
Acquisition Agreement.
"Trust Moneys" means all cash or Cash Equivalents received by the
Term 1 Noteholder, the Term 2 Noteholder or the Collateral Agent, as the case
may be: (a) upon the release of property from the Lien of any of the Security
Documents or the Term 1 Security Documents, including all moneys received in
respect of the principal of all purchase money, governmental and other
obligations; (b) as compensation for, or proceeds of the sale of all or any part
of the Collateral taken by eminent domain or purchased by, or sold pursuant to
any order of, a governmental authority or otherwise disposed of; (c) as proceeds
of insurance upon any, all or part of the Noteholder Collateral (1) to the
extent attributable to claims arising as a consequence of events occurring prior
to the Closing Date, if, but only if, Borrowing Availability (as defined in the
Senior Credit Agreement on the date hereof) is less than $40,000,000, and (2) to
the extent attributable to claims arising as a consequence of events occurring
on or after the Closing Date, in all such cases (other than any liability
insurance proceeds payable to the Term 1 Noteholder, the Term 2 Noteholder or
the Collateral Agent, as the case may be, for any loss, liability or expense
incurred by it); (d) pursuant to certain provisions of the Mortgages; (e) as
proceeds of any other sale or other disposition of all or any part of the
Collateral by or on behalf of the Term 1 Noteholder, the Term 2 Noteholder or
the Collateral Agent, as the case may be, or any collection, recovery, receipt,
appropriation or other realization of or from all or any part of the Collateral
pursuant to the Security Documents, the Term 1 Security Documents or otherwise;
or (f) for application under this Agreement, any Security Document or any Term 1
Security Documents.
A-29
"Unfunded Pension Liability" means, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of five (5) years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Note Party or any ERISA Affiliate as a result of such transaction.
"U.S. Bank Indenture" means that certain Indenture, dated as of
December 19, 2003 among Borrower, certain guarantors, U.S. Bank National
Association, as trustee and collateral agent
"U.S. Bank Notes" means those certain 10% Senior Notes due August
31, 2009 issued pursuant to the U.S. Bank Indenture.
"Voting Stock" means any class or classes of Stock of a Person
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to vote in the election of the Board of Directors,
managers or trustees of such Person (irrespective of whether or not, at the
time, Stock of any other class or classes shall have, or might have, voting
power by reason of the happening of any contingency).
"Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary
of which 100% of the outstanding Stock is owned by the Borrower or one or more
Wholly-Owned Restricted Subsidiaries of the Borrower. For purposes of this
definition, any directors' qualifying shares or investments by foreign nationals
mandated by applicable law shall be disregarded in determining the ownership of
a Subsidiary.
All undefined terms contained in any of the Note Purchase Documents
shall, unless the context indicates otherwise, have the meanings provided for by
the Code to the extent the same are used or defined therein; in the event that
any term is defined differently in different Articles or Divisions of the Code,
the definition contained in Article or Division 9 shall control. Unless
otherwise specified, references in the Agreement or any of the Appendices to a
Section, subsection or clause refer to such Section, subsection or clause as
contained in the Agreement. The words "herein," "hereof" and "hereunder" and
other words of similar import refer to the Agreement as a whole, including all
Annexes, Exhibits and Schedules, as the same may from time to time be amended,
restated, modified or supplemented, and not to any particular section,
subsection or clause contained in the Agreement or any such Annex, Exhibit or
Schedule.
Wherever from the context it appears appropriate, each term stated
in either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Note Purchase Documents) or, in the case of governmental Persons, Persons
succeeding to the relevant
A-30
functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations. Whenever any provision in any Note Purchase Documents refers to
the knowledge (or an analogous phrase) of any Note Party, such words are
intended to signify that such Note Party has actual knowledge or awareness of a
particular fact or circumstance or that such Note Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.
A-31
ANNEX B (SECTION 2.1(A))
TO
NOTE PURCHASE AGREEMENT
CLOSING CHECKLIST
In addition to, and not in limitation of, the conditions described
in Section 2.1 of the Agreement, pursuant to Section 2.1(a), the following items
must be received by Term 2 Noteholder in form and substance satisfactory to Term
2 Noteholder on or prior to the Closing Date (each capitalized term used but not
otherwise defined herein shall have the meaning ascribed thereto in Annex A to
the Agreement):
A. Appendices. All Appendices to the Agreement, in form and
substance satisfactory to Term 2 Noteholder.
B. Security Documents. Duly executed originals of the Security
Documents, dated the Closing Date, and all instruments, documents and agreements
executed pursuant thereto.
C. Insurance. Satisfactory evidence that the insurance policies
required by Section 5.4 are in full force and effect, together with appropriate
evidence showing loss payable and/or additional insured clauses or endorsements,
as reasonably requested by Term 2 Noteholder, in favor of, and on behalf of Term
2 Noteholder.
D. Security Interests and Code Filings. (a) Evidence satisfactory to
Term 2 Noteholder that Term 2 Noteholder has a valid and perfected first
priority security interest in the Collateral to the extent required under the
Security Documents, including (i) such documents duly executed by each Note
Party (including financing statements under the Code and other applicable
documents under the laws of any jurisdiction with respect to the perfection of
Liens) as Term 2 Noteholder may request in order to perfect its security
interests in the Collateral to the extent required under the Security Documents
and (ii) copies of Code search reports listing all effective financing
statements that name any Note Party as debtor, together with copies of such
financing statements, none of which shall cover the Collateral, except for those
relating to the Prior Lender Obligations (all of which shall be terminated on
the Closing Date) and Permitted Liens.
(b) Evidence reasonably satisfactory to Term 2 Noteholder, including
copies, of all UCC-I and other financing statements filed in favor of any Note
Party with respect to each location, if any, at which Inventory may be
consigned.
E. Payoff Letter; Termination Statements. Copies of a duly executed
payoff letter, in form and substance reasonably satisfactory to Term 2
Noteholder, by and between all parties to the Prior Lender loan documents
evidencing repayment in full of all Prior Lender Obligations, together with (a)
UCC-3 or other appropriate termination statements, in form and substance
satisfactory to Term 2 Noteholder, manually signed by the Prior Lender releasing
all liens of Prior Lender upon any of the personal property of each Note Party,
and (b) termination of all blocked account agreements, bank agency agreements or
other similar agreements or arrangements or
B-1
arrangements in favor of Prior Lender or relating to the Prior Lender
Obligations.
F. Holdings Guaranty. Duly executed originals of the Holdings
Guaranty, dated the Closing Date, and all documents, instruments and agreements
executed pursuant thereto.
G. Subsidiary Guarantees. Guarantees executed by and each direct and
indirect Subsidiary of Borrower in favor of Term 2 Noteholder, for the benefit
of Term 2 Noteholder.
H. Charter and Good Standing. For each Note Party, such Person's (a)
charter and all amendments thereto, (b) good standing certificates (including
verification of tax status) in its state of incorporation and (c) good standing
certificates (including verification of tax status) and certificates of
qualification to conduct business in each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
each dated a recent date prior to the Closing Date and certified by the
applicable Secretary of State or other authorized Governmental Authority.
I. Bylaws and Resolutions. For each Note Party, (a) such Person's
bylaws, together with all amendments thereto and (b) resolutions of such
Person's Board of Directors approving and authorizing the execution, delivery
and performance of the Note Purchase Documents to which such Person is a party
and the transactions to be consummated in connection therewith, each certified
as of the Closing Date by such Person's corporate secretary or an assistant
secretary as being in full force and effect without any modification or
amendment.
J. Incumbency Certificates. For each Note Party, signature and
incumbency certificates of the officers of each such Person executing any of the
Note Purchase Documents, certified as of the Closing Date by such Person's
corporate secretary or an assistant secretary as being true, accurate, correct
..and complete.
K. Opinions of Counsel. Duly executed originals of opinions of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Note Parties, together with any local counsel
opinions reasonably requested by Term 2 Noteholder, each in form and substance
reasonably satisfactory to Term 2 Noteholder and its counsel, dated the Closing
Date, and each accompanied by a letter addressed to such counsel trom the Note
Parties, authorizing and directing such counsel to address its opinion to Term 2
Noteholder, on behalf of Term 2 Noteholder, and to include in such opinion an
express statement to the effect that Term 2 Noteholder is authorized to rely on
such opinion.
L. Accountants' Letter. A letter from the Note Parties to their
independent auditors authorizing the independent certified public accountants of
the Note Parties to communicate with Term 2 Noteholder in accordance with
Section 4.2.
M. Appointment of Term 2 Noteholder for Service. An appointment of
CT Corporation as each Note Party's agent for service of process.
N. Officer's Certificate. Term 2 Noteholder shall have received duly
executed originals of a certificate of the Chief Executive Officer and Chief
Financial Officer of
B-2
Borrower, dated the Closing Date, stating that, since December 31, 2003 (a) no
event or condition has occurred or is existing which could reasonably be
expected to have a Material Adverse Effect; (b) there has been no material
adverse change in the industry in which Borrower operates; (c) no Litigation has
been commenced which, if successful, would have a Material Adverse Effect or
could challenge any of the transactions contemplated by the Agreement and the
other Note Purchase Documents; (d) there have been no Restricted Payments made
by any Note Party; and (e) before and after giving effect to the transactions
contemplated by the Note Purchase Agreement, each Note Party will be Solvent,
and (f) there has been no material increase in liabilities, liquidated or
contingent, and no material decrease in assets of Borrower or any of its
Subsidiaries.
O. Waivers. Term 2 Noteholder shall have received landlord waivers
and consents, bailee letters and mortgagee agreements in form and substance
satisfactory to Term 2 Noteholder, in each case as required pursuant to Section
5.8.
P. Subordination and Intercreditor Agreements. Term 2 Noteholder
shall have received any and all subordination and/or intercreditor agreements,
including the Subordination Agreement and the Fleet Notes Intercreditor
Agreement, all in form and substance reasonably satisfactory to Term 2
Noteholder, in its sole discretion, as Term 2 Noteholder shall have deemed
necessary or appropriate with respect to any Indebtedness of any Note Party.
Q. Appraisals. Term 2 Noteholder shall have received appraisals as
to all Inventory, each of which shall be in form and substance reasonably
satisfactory to Term 2 Noteholder.
R. Audited Financials; Financial Condition. Term 2 Noteholder shall
have received the Financial Statements, Projections and other materials set
forth in Section 3.2 certified by Borrower's Chief Financial Officer, in each
case in form and substance satisfactory to Term 2 Noteholder, and Term 2
Noteholder shall be satisfied, in its sole discretion, with all of the
foregoing. Term 2 Noteholder shall have further received a certificate of the
Chief Executive Officer and/or the Chief Financial Officer of Borrower, based on
such Pro Forma and Projections, to the effect that (a) Borrower will be Solvent
upon the consummation of the transactions contemplated herein; (b) the Pro Forma
fairly presents the financial condition of Borrower as of the date thereof after
giving effect to the transactions contemplated by the Note Purchase Documents;
(c) the Projections are based upon estimates and assumptions stated therein, all
of which Borrower believes to be reasonable and fair in light of current
conditions and current facts known to Borrower and, as of the Closing Date,
reflect Borrower's good faith and reasonable estimates of its future financial
performance and of the other information projected therein for the period set
forth therein; and (d) containing such other statements with respect to the
solvency of Borrower and matters related thereto as Term 2 Noteholder shall
request.
S. Other Documents. Such other certificates, documents and
agreements respecting any Note Party as Term 2 Noteholder may reasonably
request.
B-3
ANNEX D (SECTION 1.1(B))
TO
NOTE PURCHASE AGREEMENT
TERM 2 NOTEHOLDER'S WIRE TRANSFER INFORMATION
Name: PERRY PRINCIPALS INVESTMENTS. L.L.C.
Bank: CITIBANK NY - ▇▇▇▇▇▇▇▇
ABA#: ▇▇▇-▇▇▇-▇▇▇
Account Name: BEAR ▇▇▇▇▇▇▇
Account #: ▇▇▇▇▇▇▇▇
For credit to: PERRY PRINCIPAL INVESTMENT LLC
Account #: ▇▇▇-▇▇▇▇▇-▇▇
D-1
ANNEX D (SECTION 8.10)
TO
NOTE PURCHASE AGREEMENT
NOTICE ADDRESSES
(A) If to Term 2 Noteholder or Perry Partners, L.P., at
c/o Perry Capital
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ Procter LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: L. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (212) 355-333
(B) If to Borrower, at
Republic Engineered Products, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Citigroup Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
G-1