Exhibit 10.2
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Dated as of January 31, 1997
Among
ABC RAIL PRODUCTS CORPORATION
and
ABC DECO INC.,
as Borrowers,
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as Lenders,
and
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
as Agent
TABLE OF CONTENTS
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Page
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1. DEFINITIONS.......................................................... -1-
1.1 General Terms................................................ -1-
1.2 Accounting Terms............................................. -19-
1.3 Other Terms Defined in Illinois Uniform Commercial Code...... -20-
1.4 Other Definitional Provisions; Construction.................. -20-
2. CREDIT............................................................... -20-
[INTENTIONALLY OMITTED.]............................................. -20-
[INTENTIONALLY OMITTED.]............................................. -20-
2.3 Revolving Loan Facility...................................... -20-
2.4 Determination of Borrowing Base.............................. -21-
2.5 Borrowing Mechanics.......................................... -23-
2.6 Settlements Among Agent and the Lenders...................... -26-
2.7 Mandatory Payments; Reduction of Commitments; Increase of
Total Revolving Commitments.................................. -27-
2.8 Payments and Computations.................................... -28-
2.9 Borrower's Loan Account...................................... -29-
2.10 Statements................................................... -30-
2.11 Taxes........................................................ -30-
2.12 Affected Lenders............................................. -32-
2.13 Sharing of Payments.......................................... -33-
2.14 Defaulting Lenders........................................... -34-
2.15 Term of this Agreement....................................... -35-
2.16 Additional Costs, Etc. With Respect to LIBOR Rate Advances... -36-
2.17 Indemnification for Losses................................... -37-
2.18 Capital Adequacy............................................. -38-
2.19 Certificate.................................................. -38-
2.20 Letters of Credit............................................ -38-
(A) Issuance of Letters of Credit............................ -38-
(B) Terms of Letters of Credit............................... -39-
(C) Lenders' Participation................................... -39-
(D) Notice of Issuance....................................... -39-
(E) Payment of Amounts Drawn Under Letters of Credit......... -40-
(F) Payment by Lenders....................................... -40-
(G) Obligations Absolute..................................... -41-
2.21 Interest, Fees and Expenses.................................. -41-
(A) Interest................................................. -41-
(B) Facility Fees............................................ -42-
i
(C) [INTENTIONALLY OMITTED.]................................. -42-
(D) Maximum Lawful Rate...................................... -42-
(E) Early Termination Charge................................. -42-
(F) Reimbursement of Expenses................................ -43-
(G) Letter of Credit Fees.................................... -43-
(H) Additional Fees.......................................... -43-
(I) Authorization to Charge Loan Account..................... -43-
(J) Indemnification in Certain Events........................ -44-
(K) Audit Fees............................................... -44-
2.22 No Novation.................................................. -45-
3. REPORTING AND ELIGIBILITY REQUIREMENTS............................... -45-
3.1 Monthly Reports and Collateral Reports....................... -45-
(A) Monthly Reports.......................................... -45-
(B) Collateral Reports....................................... -46-
(C) Electronic Transmission of Reports....................... -47-
3.2 Eligible Accounts............................................ -48-
3.3 Account Warranties........................................... -49-
3.4 Verification of Accounts..................................... -50-
3.5 Account Covenants............................................ -50-
3.6 Collection of Accounts and Payments.......................... -50-
3.7 Appointment of Agent as Borrower's Attorney-in-Fact.......... -51-
3.8 Instruments and Chattel Paper................................ -51-
3.9 Notice to Account Debtors.................................... -52-
3.10 Eligible Inventory........................................... -52-
3.11 Inventory Warranties......................................... -52-
3.12 Inventory Records............................................ -53-
3.13 Safekeeping of Inventory and Inventory Covenants............. -53-
3.14 Equipment Warranties......................................... -53-
3.15 Equipment Records............................................ -53-
3.16 Safekeeping of Equipment..................................... -54-
3.17 Locations.................................................... -54-
3.18 Certain Rail Mill Provisions................................. -54-
4. CONDITIONS OF LOANS, ADVANCES AND LETTER OF CREDIT.................... -54-
4.1 [INTENTIONALLY OMITTED.]..................................... -54-
4.2 Conditions to Each Revolving Loan and Letter of Credit....... -54-
(A) Letters of Credit....................................... -55-
(B) No Material Adverse Change.............................. -55-
(C) No Default.............................................. -55-
(D) Representations and Warranties True and Correct......... -55-
(E) Other Requirements...................................... -55-
4.3 [INTENTIONALLY OMITTED] -55-
ii
5. COLLATERAL........................................................... -55-
5.1 Security Interest............................................ -55-
5.2. Preservation of Collateral and Perfection of Security
Interests Therein............................................ -56-
5.3 Real Property and Leaseholds................................. -56-
5.4 Loss of Value of Collateral.................................. -58-
5.5 Setoff....................................................... -58-
5.6 Cash Collateral.............................................. -58-
5.7 Carry-Through of Liens in Favor of Agent..................... -59-
6. WARRANTIES........................................................... -60-
6.1 Corporate Existence; Capitalization.......................... -60-
6.2 Corporate Authority.......................................... -60-
6.3 Binding Effect............................................... -60-
6.4 Financial Data............................................... -61-
6.5 Collateral................................................... -61-
6.6 Solvency..................................................... -61-
6.7 Chief Place of Business...................................... -62-
6.8 Other Corporate Names........................................ -62-
6.9 Tax Liabilities.............................................. -62-
6.10 Loans........................................................ -63-
6.11 Use of Proceeds.............................................. -63-
6.12 Subsidiaries................................................. -63-
6.13 Litigation and Proceedings................................... -63-
6.14 Other Agreements............................................. -63-
6.15 Employee Controversies....................................... -63-
6.16 Compliance with Laws and Regulations; Environmental Matters.. -64-
(A) General Compliance...................................... -64-
(B) Health and Safety Compliance............................ -64-
6.17 Patents, Trademarks and Licenses............................. -64-
6.18 ERISA........................................................ -64-
6.19 Financial Condition.......................................... -66-
6.20 Survival of Warranties....................................... -66-
7. AFFIRMATIVE COVENANTS................................................ -66-
7.1 Financial Statements......................................... -66-
(A) Monthly................................................. -66-
(B) Annual.................................................. -67-
(C) Budget.................................................. -67-
(D) Letters from Accountants and Consultants................ -68-
(E) Default Notices......................................... -68-
(F) List of Account Debtors................................. -68-
(G) Reports and Other Information........................... -68-
(H) Joint Ventures; Excluded Subsidiaries................... -68-
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(I) Other Information........................................ -69-
7.2 Inspection................................................... -70-
7.3 Conduct of Business.......................................... -70-
7.4 Claims and Taxes............................................. -71-
7.5 Agent's Closing Costs and Expenses........................... -71-
7.6 Borrower's Liability Insurance............................... -71-
7.7 Borrower's Property Insurance and Business Interruption
Insurance.................................................... -72-
7.8 ERISA Reporting.............................................. -73-
7.9 Notice of Suit or Adverse Change in Business................. -74-
7.10 Supervening Illegality....................................... -75-
7.11 Environmental Safety and Health Laws......................... -75-
7.12 Landlord Consents and Waivers................................ -76-
8. NEGATIVE COVENANTS................................................... -76-
8.1 Encumbrances................................................. -76-
8.2 Indebtedness................................................. -77-
8.3 Consolidations, Mergers or Acquisitions...................... -77-
8.4 Investments or Loans......................................... -79-
8.5 Guarantees................................................... -80-
8.6 Disposal of Property......................................... -80-
8.7 [INTENTIONALLY OMITTED.]..................................... -80-
8.8 Dividends and Stock Redemptions.............................. -80-
8.9 Issuance of Stock............................................ -80-
8.10 Amendment of Articles of Incorporation or By-Laws; Corporate
Name; Places of Business..................................... -81-
8.11 Transactions with Subsidiaries and Affiliates................ -81-
8.12 ERISA........................................................ -81-
8.13 Financial Covenants.......................................... -82-
(A) Interest Coverage Ratio.................................. -82-
(B) Minimum Consolidated Net Worth........................... -82-
(C) Capital Investment Limitations; Lease Limitations........ -82-
8.14 Environmental................................................ -84-
8.15 Fiscal Year.................................................. -84-
8.16 Subsidiaries................................................. -85-
8.17 Subordinated Debt............................................ -85-
9. DEFAULT, RIGHTS AND REMEDIES OF LENDERS AND AGENT.................... -85-
9.1 Defaults..................................................... -85-
9.2 Rights and Remedies Generally................................ -89-
9.3 Entry Upon Premises and Access to Information................ -89-
9.4 Sale or Other Disposition of Collateral by Agent............. -90-
9.5 Waiver of Demand............................................. -90-
9.6 Waiver of Notice............................................. -90-
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10. AGENT................................................................ -91-
10.1 Appointment of Agent......................................... -91-
10.2 Nature of Duties of Agent.................................... -91-
10.3 Lack of Reliance on Agent.................................... -91-
10.4 Certain Rights of Agent...................................... -92-
10.5 Reliance by Agent............................................ -92-
10.6 Indemnification of Agent..................................... -92-
10.7 Agent in its Individual Capacity............................. -93-
10.8 Holders of Revolving Notes................................... -93-
10.9 Successor Agent.............................................. -93-
10.10 Collateral Matters........................................... -94-
10.11 Actions with Respect to Defaults............................. -95-
10.12 Delivery of Information...................................... -95-
10.13 Loans by Lenders............................................. -96-
10.14 Allocation of Payments....................................... -96-
11. MISCELLANEOUS........................................................ -96-
11.1 Waiver, Amendments........................................... -96-
11.2 Costs and Attorneys' Fees.................................... -97-
11.3 Expenditures................................................. -98-
11.4 Custody and Preservation of Collateral....................... -98-
11.5 Reliance by Lenders.......................................... -98-
11.6 Parties; Assignability....................................... -98-
11.7 CHOICE OF LAW................................................-101-
11.8 CONSENT TO JURISDICTION......................................-101-
(A) EXCLUSIVE JURISDICTION...................................-101-
(B) OTHER JURISDICTIONS......................................-101-
11.9 SERVICE OF PROCESS...........................................-102-
11.10 WAIVER OF JURY TRIAL AND BOND................................-102-
(A) WAIVER OF JURY TRIAL.....................................-102-
(B) WAIVER OF BOND...........................................-102-
11.11 ADVICE OF COUNSEL............................................-103-
11.12 SEVERABILITY.................................................-103-
11.13 Application of Payments......................................-103-
11.14 Marshalling; Payments Set Aside..............................-103-
11.15 Section and Subsection Titles................................-104-
11.16 Continuing Effect............................................-104-
11.17 Notices......................................................-104-
11.18 Equitable Relief.............................................-105-
11.19 Indemnification..............................................-105-
11.20 Nonliability of Agent and Lenders............................-106-
11.21 Independent Nature of Lenders' Rights........................-106-
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11.22 Effectiveness................................................ -106-
11.23 Counterparts................................................. -107-
vi
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Second Amended and Restated Loan and Security Agreement (this
"Agreement"), entered into as of the 31st day of January, 1997, by and among ABC
RAIL PRODUCTS CORPORATION, a Delaware corporation with its principal place of
business and chief executive office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Rail"), ABC DECO INC., a Wisconsin corporation with its
principal place of business and chief executive office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Deco"), the financial institutions
identified on Schedule 1 hereto (together with each of their successors and
assigns, referred to individually as a "Lender" and collectively as the
"Lenders"), and AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a national
banking association with its chief executive office in Chicago, Illinois acting
as agent for the Lenders.
W I T N E S S E T H:
WHEREAS, the Lenders, the Borrowers and Agent are parties to that certain
Amended and Restated Loan and Security Agreement, dated as of August 7, 1996 (as
heretofore amended, the "Original Agreement"); and
WHEREAS, the Lenders, the Borrowers and Agent desire to amend and restate
the Original Agreement as herein provided.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and of any loans or extensions of credit heretofore, now or hereafter
made to or for the benefit of the Borrowers by any Lender or Agent, the parties
hereto hereby agree that the Original Agreement is hereby amended and restated
in its entirety to read as follows:
1. DEFINITIONS.
1.1 General Terms. When used herein, the following terms shall have
the following meanings:
"ABC China Guaranty" shall mean that certain Guaranty Agreement dated as of
June 28, 1996 made by ABC Rail Products China in favor of Agent (as amended,
supplemented or otherwise modified from time to time).
"ABC China Joint Venture" shall mean that certain joint venture of ABC Rail
Products China and Datong Locomotive Works created by the ABC China Joint
Venture Agreement.
"ABC China Joint Venture Agreement" shall mean that certain Joint Venture
Contract dated March 27, 1996 between ABC Rail Products China and Datong
Locomotive Works.
"ABC Rail Products China" shall mean ABC Rail Products China Investment
Corporation, a Delaware corporation.
"Acceptance Date" shall have the meaning given such term set forth in
Subsection 11.6(C).
"Account Debtor" shall mean the party who is obligated on or under an
Account.
"Accounting Systems Letters" shall have the meaning given such term set
forth in Subsection 7.1(D)
"Accounts" shall mean, collectively, all present and future rights of any
Borrower, and with respect to each Borrower all present and future rights of
such Borrower, to payment for goods sold or leased or for services rendered,
which are not evidenced by instruments or chattel paper, and whether or not they
have been earned by performance.
"Accounts Trial Balance" shall have the meaning given such term set forth
in Subsection 3.1(A).
"Advance" shall mean a borrowing hereunder consisting of the aggregate
amount of all or a portion of the several Revolving Loans made by the Lenders to
a Borrower of the same type and, in the case of LIBOR Rate Advances, for the
same Interest Period.
"Affiliate" shall mean any Person (a) that directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common
control with a Borrower, (b) that directly or beneficially owns or holds 5% or
more of any class of the voting stock of a Borrower, or (c) 5% or more of the
voting stock (or in the case of a Person which is not a corporation, 5% or more
of the equity interest) of which is owned directly or beneficially or held by a
Borrower. Notwithstanding the foregoing, neither any Lender nor any parent or
subsidiary of any Lender shall be deemed to be an Affiliate of any Borrower.
"Agent" shall mean American National Bank and Trust Company of Chicago in
its capacity as agent for the Lenders and the Issuing Bank hereunder, and not in
its individual capacity as a Lender or the Issuing Bank, and any successor agent
appointed pursuant to Subsection 10.9.
"Agreement" shall have the meaning given such term set forth in the
preamble hereto.
"ANB" shall mean American National Bank and Trust Company of Chicago, in
its individual capacity.
"Applicable BR Margin" shall mean one-half percent (0.5%).
2
"Applicable LIBOR Margin" shall mean two percent (2.0%).
"Asset Acquisition" shall have the meaning set forth for such term in
Subsection 8.3.
"Assignment and Assumption Agreement" shall mean an assignment and
assumption agreement entered into by an assigning Lender and an assignee Lender,
and accepted by Agent, in accordance with Subsection 11.6 substantially in the
form of Exhibit G.
"Auditors" shall have the meaning given such term set forth in Subsection
7.1.
"Authorized Officer" shall mean, with respect to any Borrower, at any time,
an individual whose signature has been certified to Agent on behalf of such
Borrower pursuant to a Signature Authorization Certificate actually received by
Agent at such time and whose authority has not been revoked prior to such time
in the manner prescribed in such Signature Authorization Certificate.
"Availability" means, with respect to any Borrower, at any time, the amount
of Revolving Loans available to such Borrower to borrow at such time after
giving effect to all conditions applicable thereto (including the amount of the
Current Asset Base of such Borrower and the amount of any outstanding Letters of
Credit and the maximum permissible amount of Revolving Loans and Letters of
Credit hereunder) as shown on the records of Agent.
"Bankruptcy Code" shall have the meaning given such term set forth in
Subsection 6.6.
"Base Rate" shall mean the per annum rate of interest announced or
published from time to time by ANB at its principal place of business in
Chicago, Illinois as its base or equivalent rate of interest, which rate is not
necessarily the lowest rate of interest charged by ANB with respect to
commercial loans. Any change in the Base Rate shall be effective as of the
effective date stated in the announcement by ANB of such change.
"Base Rate Advance" shall mean an Advance bearing interest calculated by
reference to the Base Rate.
"Benefit Plan" shall mean a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which any
Borrower or any of its Subsidiaries or an ERISA Affiliate is, or within the
immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.
3
"Blocked Accounts" shall have the meaning given such term set forth in
Subsection 3.6.
"Borrower" shall mean each of Rail and Deco, individually, and "Borrowers"
shall mean Rail and Deco, collectively.
"Brake Shoe JV" shall mean that certain joint venture of Rail and Anchor
Brake Shoe Company (a) created by that certain Joint Venture Agreement dated as
of July 31, 1995 among Rail, Anchor Brake Shoe Company and Anchor Brake Shoe,
L.L.C. and (b) evidenced by Anchor Brake Shoe, L.L.C.
"Business Day" shall mean a day, other than a Saturday or Sunday, on which
banks in Chicago, Illinois are open for the transaction of banking business and,
in the case of borrowing, continuation, payment or interest rate selection of a
LIBOR Rate Advance, on which dealings in Dollars are carried on in the London
interbank market.
"CAPEX Reserve" shall mean, at any time, the sum determined by taking 50%
of the amount, if any, by which (a) the product of $4,000,000 and the number of
Fiscal Years completed at such time since the Fiscal Year ending July 31, 1995,
exceeds (b) the aggregate Unfunded Capital Expenditures for all Fiscal Years
completed at such time since the Fiscal Year ending July 31, 1995.
"Capital Expenditures" shall mean, with respect to any Person, expenditures
of such Person for fixed or capital assets, including, without limitation, the
incurrence of Capitalized Lease Obligations, all as determined in accordance
with GAAP.
"Capitalized Lease" shall mean, at any time, any lease which, in accordance
with GAAP, is required to be capitalized on the consolidated balance sheet of
Rail and its Subsidiaries at such time, and "Capitalized Lease Obligations" of
Rail and its Subsidiaries at any time shall mean the aggregate amount which, in
accordance with GAAP, is required to be reported as a liability on the
consolidated balance sheet of Rail and its Subsidiaries at such time as lessee
under Capitalized Leases.
"Change in Control" means (a) the acquisition (in any one or more
transactions) by any Person, or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of
the outstanding shares of voting stock of Rail; (b) during any period of 25
consecutive calendar months, commencing on the date of this Agreement, the
ceasing of those individuals (the "Continuing Directors") who (i) were directors
of Rail on the first day of each such period or (ii) subsequently became
directors of Rail and whose initial election or initial nomination for election
subsequent to that date was approved by a majority of the Continuing Directors
then on the board of directors of Rail, to constitute a majority of the board of
directors of Rail; or (c) the occurrence of any
4
"Change of Control" as such term is defined in the Subordinated Debt Indenture
as in effect on the date hereof or the occurrence of any "Change of Control" as
such term may hereafter be defined therein.
"Closing Date" shall mean the date of this Agreement as set forth in the
first paragraph hereof.
"Code" shall mean the Uniform Commercial Code of the State of Illinois as
in effect on the date hereof.
"Collateral" shall mean, collectively, all property and interests in
property now owned or hereafter acquired by any or all Borrowers in or upon
which a Lien is granted to Agent or any one or more of the Lenders by any or all
Borrowers whether under this Agreement, the other Financing Agreements, or under
any other documents, instruments or writings executed by any or all Borrowers
and delivered to Agent or any one or more of Lenders it being understood that
the Excluded Property shall not be deemed to be Collateral unless and until so
provided pursuant to Subsection 5.1).
"Collateral Assignment" shall mean that certain Intellectual Property
Pledge Agreement dated as of March 31, 1995 between Rail and Agent, as the same
may be amended, modified or supplemented from time to time.
"Collateral Documents" shall mean all contracts, instruments and other
documents now or hereafter executed and delivered in connection with this
Agreement, pursuant to which Liens are granted to Agent or any one or more of
the Lenders in the Collateral for the benefit of Agent and/or the Lenders and/or
the Issuing Bank.
"Collateral Report" shall have the meaning given such term set forth in
Subsection 3.1(B).
"Collecting Banks" shall have the meaning given such term set forth in
Subsection 3.6.
"Commitment Reduction Fee" shall have the meaning given such term set forth
in Subsection 2.7(C).
"Contingent Obligation" shall mean any contingent obligation of any kind or
nature (including, without limitation, obligations relating to unasserted or
threatened claims) and any liability or indebtedness that would not appear on a
balance sheet prepared in accordance with GAAP.
"Covered Taxes" shall have the meaning given such term set forth in
Subsection 2.11(A).
5
"Current Asset Base" shall have the meaning given such term set forth in
Subsection 2.4.
"Datong ABC Castings" shall mean Datong ABC Castings Company Limited, a
Sino-American joint venture limited liability company formed and established
pursuant to the ABC China Joint Venture Agreement.
"Datong Locomotive Works" shall mean Datong Locomotive Works, an enterprise
duly organized under the laws of the People's Republic of China.
"Deco" shall have the meaning given such term set forth in the preamble
hereto.
"Default" shall mean the occurrence or existence of any one or more of the
events described in Subsection 9.1 hereof.
"Defaulting Lender" shall have the meaning given such term set forth in
Subsection 2.14(A).
"Dollars" and the sign "$" shall mean freely transferable lawful money of
the United States.
"EBITDA" shall have the meaning given such term set forth in Subsection
8.13.
"Eligible Accounts" shall have the meaning given such term set forth in
Subsection 3.2.
"Eligible Inventory" shall have the meaning given such term set forth in
Subsection 3.10.
"Environmental Lien" shall mean a Lien in favor of any governmental entity
for (a) any liability under federal or state environmental laws or regulations
or (b) damages arising from, or costs incurred by such governmental entity in
response to, a release or threatened release of a hazardous or toxic waste,
substance or constituent, or other substance into the environment.
"Equipment" shall mean, collectively, all of the equipment and fixtures (as
such terms are defined in the Code) of any Borrower, and, with respect to each
Borrower, all of such Borrower's equipment and fixtures (as such terms are
defined in the Code), together with any and all accessions, parts and
appurtenances thereto, whether presently owned or hereafter acquired by such
Borrower.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
6
"ERISA Affiliate" shall mean, with respect to any Person, any (i)
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Internal Revenue Code) as such
Person; (ii) partnership, trade or business under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with such Person; and
(iii) solely for purposes of liability under Section 412(c) (11) of the Internal
Revenue Code, for the lien created under Section 412(n) of the Internal Revenue
Code or for a tax imposed for failure to meet minimum funding standards under
Section 4971 of the Internal Revenue Code, member of the same affiliated service
group (within the meaning of Section 414(m) of the Internal Revenue Code) as
such Person, any corporation described in clause (i) above or any partnership,
trade or business described in clause (ii) above.
"Event of Default" shall mean an event which through the passage of time or
the giving of notice or both would mature into a Default.
"Excluded Capital Expenditures" shall have the meaning given such term set
forth in Subsection 8.13.
"Excluded Property" shall mean that Equipment and other personal and real
property which is described on Schedule 5.1 hereto and shall include all
property described in Item 1 of Schedule 8.1.
"Excluded Subsidiary" shall have the meaning set forth for such term in
Subsection 8.3(A).
"Expenses" shall mean all present and future expenses incurred by or on
behalf of Agent in connection with this Agreement, any other Financing Agreement
or otherwise, whether incurred heretofore or hereafter, which expenses shall
include, without being limited to, the cost of record searches, the reasonable
fees and expenses of attorneys (including the allocated cost of internal
counsel) and paralegals, all costs and out-of-pocket expenses incurred by Agent
in opening bank accounts, depositing checks, receiving and transferring funds,
and any charges imposed on Agent due to insufficient funds of deposited checks
and Agent's standard fee relating thereto, collateral examination fees and
expenses, reasonable fees and out-of-pocket expenses of accountants, appraisers
or other consultants, experts or advisors employed or retained by Agent, fees
and taxes relative to the filing or recording of financing statements, mortgages
and other Financing Agreements, costs of preparing financing statements,
mortgages and other Financing Agreements, all expenses, costs and fees set forth
in Section 2 of this Agreement, all other fees and expenses required to be paid
pursuant to the Fee Letter and all fees and out-of-pocket expenses incurred in
connection with releasing Collateral and the amendment or termination of any of
the Financing Agreements.
7
"Extension Letter" shall have the meaning given such term set forth in
Subsection 2.15(B).
"Facility Fee" shall have the meaning given such term set forth in
Subsection 2.21(B).
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
rate per annum equal, for each day during such period, to the weighted average
of the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal Funds brokers of recognized
standing selected by it.
"Fee Letter" shall mean that certain letter agreement captioned "Fee
Letter," dated as of the date hereof, between Agent and Rail.
"Fees" shall mean, collectively, the Facility Fees, the L/C Fee, Issuing
Bank Fees, the Termination Charge, and the other fees provided for herein or in
the Fee Letter.
"Final Termination Date" shall mean the earlier of (a) March 31, 2005, and
(b) the date that is ninety-one (91) days prior to the stated maturity of the
Subordinated Notes.
"Financials" shall have the meaning set forth in Subsection 6.4 hereof.
"Financing Agreements" shall mean, collectively, all agreements,
instruments and documents, including, without limitation, this Agreement and any
security agreements, loan agreements, notes, letter of credit applications,
guarantees, mortgages, deeds of trust, leasehold mortgages, leasehold deeds of
trust, subordination agreements, pledges, powers of attorney, consents,
assignments, intercreditor agreements, mortgagee waivers, reimbursement
agreements, contracts, notices, leases, financing statements and all other
written matter whether heretofore, now or hereafter executed by or on behalf of
any Borrower or any guarantor of any of the Liabilities and delivered to any one
or more of Agent, the Issuing Bank and the Lenders, together with all
agreements, documents and instruments referred to therein or contemplated
thereby, and further including without limitation the Collateral Assignment, the
Mortgages and any other Collateral Documents.
"FIRREA" shall mean the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, as amended from time to time.
"Fiscal Month" shall mean each fiscal month of a Fiscal Year.
8
"Fiscal Quarter" shall mean a quarter (consisting of three Fiscal Months of
a Fiscal Year ending on or about the last day of October, January, April or
July) of each Fiscal Year.
"Fiscal Year" shall mean the fiscal year of the Borrowers, which fiscal
year shall begin on August 1 of each year and shall end on July 31 of the
following year.
"Fixed Overhead Inventory" shall mean that portion of Borrower's
"inventory" account recorded as "fixed overhead inventory" in Borrower's books
of account in accordance with GAAP.
"Funded Debt" shall mean indebtedness for borrowed money, Capitalized Lease
Obligations, and the deferred purchase price of goods and services, all as
determined for Rail and its Subsidiaries (other than Excluded Subsidiaries for
all purposes of this Agreement except Subsection 8.13(D), but including Excluded
Subsidiaries for purposes of Subsection 8.13(D)) on a consolidated basis in
accordance with GAAP.
"GAAP" shall mean generally accepted accounting principles as in effect in
the United States from time to time, applied in a manner consistent with that
used in the preparation of the Financials provided, that (subject to the
provisions of Subsection 1.2 hereof) for purposes of determining compliance with
the financial covenants set forth in Subsection 8.13, "GAAP" shall mean such
accounting principles as in effect on the date of this Agreement, together with
any such other accounting principles which take effect after the date of this
Agreement to the extent agreed to in writing by Borrowers, Agent and the
Required Lenders.
"General Intangibles" shall mean, collectively, all choses in action,
causes of action and all other intangible personal property of any Borrower of
every kind and nature (other than Accounts) now owned or hereafter acquired by
any Borrower, and with respect to each Borrower, all choses in action, causes of
action and all other intangible personal property of such Borrower of every kind
and nature (other than Accounts) now owned or hereafter acquired by such
Borrower, including in each case, without limitation, corporate or other
business records, inventions, designs, patents, patent applications, service
marks, trademarks, trademark applications, trade names, trade styles, trade
secrets, goodwill, registrations, computer software, operational manuals,
product formulas, blueprints, drawings, copyrights, copyright applications,
licenses, franchises, customer lists, tax refunds, tax refund claims, rights and
claims against carriers and shippers, rights to indemnification and the like,
wherever located, proceeds of insurance covering the lives of key employees on
which such Borrower is beneficiary, and any letter of credit, guaranty, security
interest, lien rights or other security held by or granted to such Borrower to
secure payment by an Account Debtor.
"Good Faith" shall have the meaning set forth for that term in Section 1-
201(19) of the Code.
9
"Goodwill" shall mean goodwill, patents, trademarks, trade names,
copyright, franchises and deferred charges (including, without limitation,
unamortized debt discount and expense, organization costs and deferred research
and development expenses) and such other assets as are properly classified as
"intangible assets" in accordance with GAAP.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranty Agreement" shall mean each guaranty and similar arrangement of
any Liabilities including, without limitation, the ABC China Guaranty.
"Indemnified Matters" shall have the meaning given such term set forth in
Subsection 11.19.
"Indemnitees" shall have the meaning given such term set forth in
Subsection 11.19.
"Initial Monthly Report" shall have the meaning given such term set forth
in Subsection 3.1(A).
"Interest Coverage Ratio" shall have the meaning given such term set forth
in Subsection 8.13.
"Interest Expense" shall have the meaning given such term set forth in
Subsection 8.13.
"Interest Period" shall mean with respect to any LIBOR Rate Advance, a
period of one, two, three or six months commencing on a Business Day selected by
a Borrower pursuant to Subsection 2.5 of this Agreement. Each such Interest
Period shall end on (but exclude) the date which numerically corresponds to such
date one, two, three or six months thereafter, provided, however, that if there
is no such numerically corresponding day in such next, second, third or sixth
succeeding month, such Interest Period shall end on the last Business Day of
such next, second, third or sixth succeeding month. If any Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period shall
end on the next succeeding Business Day, provided, however, that if said next
succeeding Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute.
10
"Interim Revolving Loan Period" shall have the meaning given such term set
forth in Subsection 2.5(B).
"Interim Revolving Loans" shall have the meaning given such term set forth
in Subsection 2.5(B).
"Inventory" shall mean, collectively, any and all goods, including, without
limitation, goods in transit, wheresoever located, whether now owned or
hereafter acquired by any Borrower, and with respect to each Borrower, any and
all goods, including, without limitation, goods in transit, wheresoever located,
whether now owned or hereafter acquired by such Borrower, which are held for
sale or lease, furnished under any contract of service or held as raw materials,
work in process or supplies, and all materials used or consumed in such
Borrower's business, and shall include such property the sale or other
disposition of which has given rise to Accounts and which has been returned to
or repossessed or stopped in transit by such Borrower.
"Inventory Sublimit" shall mean, with respect to Rail, the "Rail Inventory
Sublimit" (as defined in Subsection 2.4 hereof) and, with respect to Deco, the
"Deco Inventory Sublimit" (as defined in Subsection 2.4 hereof).
"IRS" shall have the meaning given such term set forth in Subsection
7.8(i).
"Issuing Bank" shall mean ANB and any other Lender that may be designated
by Agent from time to time as an Issuing Bank.
"Issuing Bank Fees" shall have the meaning given such term set forth in
Subsection 2.21(G)(ii).
"Joint Ventures" shall mean, collectively, (a) ABC Rail-Cogifer
Technologies, a general partnership, (b) the Brake Shoe JV, and (c) the ABC
China Joint Venture.
"L/C Fee" shall have the meaning given such term set forth in Subsection
2.21(G)(i).
"Lender" shall have the meaning given that term in the preamble hereto and,
in the case of any Lender, shall include such Lender's successors and permitted
assigns.
"Lending Affiliate" shall mean, as to any Lender, (a) each office and
branch of such Lender, and (b) each entity which, directly or indirectly, is
controlled by or under common control with such Lender or which controls such
Lender and each office and branch thereof.
11
"Letter of Credit Obligations" shall mean, at any time, the sum of (i) the
aggregate undrawn face amount of all Letters of Credit outstanding at such time,
plus (ii) the aggregate amount of all drawings under Letters of Credit for which
the Issuing Bank has not at such time been reimbursed (either by a Borrower, or
by a Revolving Loan made by Agent or the Lenders), plus (iii) the aggregate
amount of all payments made by each Lender to the Issuing Bank with respect to
such Lender's participation in Letters of Credit as provided in Subsection
2.20(C) hereof for which a Borrower has not at such time reimbursed the Lenders,
whether by way of the Revolving Loans or otherwise.
"Letter of Credit Request" shall have the meaning given such term set forth
in Subsection 2.20(D).
"Letters of Credit" shall mean all letters of credit issued for the account
of a Borrower pursuant to Subsection 2.20 hereof and all amendments, renewals,
extensions or replacements thereof.
"Liabilities" shall mean, collectively, all of the Borrowers' liabilities,
obligations and indebtedness to any one or more of Agent, Lenders and the
Issuing Bank, and, with respect to each Borrower, all of such Borrower's
liabilities, obligations and indebtedness to any one or more of Agent, Lenders
and the Issuing Bank, in each case, of any and every kind and nature, whether
heretofore, now or hereafter owing, arising, due or payable and howsoever
evidenced, created, incurred, acquired or owing, whether primary, secondary,
direct, contingent, fixed or otherwise (including obligations of performance)
and whether arising or existing under written agreement, oral agreement or
operation of law, including, without limitation, all of each Borrower's
contingent reimbursement obligations with respect to Letters of Credit, all
other Letter of Credit Obligations and all of each Borrower's other indebtedness
and obligations to any one or more of Agent, any Lender and the Issuing Bank
under this Agreement and the other Financing Agreements.
"LIBOR Base Rate" shall mean, with respect to a LIBOR Rate Advance for the
relevant Interest Period, the rate determined by Agent to be the rate at which
deposits in Dollars are offered by The First National Bank of Chicago (or, if no
such deposits are so offered by such bank, then by such other national bank as
Agent may reasonably select) to prime banks in the London interbank market at
approximately 11:00 a.m. London time two (2) Business Days prior to the first
day of such Interest Period, in the approximate amount of the relevant LIBOR
Rate Advance and having a maturity approximately equal to such Interest Period.
"LIBOR Rate Advance" shall mean an Advance bearing interest calculated by
reference to the LIBOR Rate.
12
"LIBOR Rate" shall mean the annual rate of interest, rounded upward to the
nearest 1/16th of 1% determined by Agent with respect to an Interest Period, in
accordance with the following formula:
LIBOR Rate = LIBOR Base Rate
------------------
(1 - Reserve Rate)
"Lien(s)" shall mean any lien, claim, charge, pledge, security interest,
deed of trust, mortgage, other encumbrance or other arrangement having the
practical effect of the foregoing or other preferential arrangement of any other
kind and shall include the interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention agreement.
"Loan Account" shall have the meaning given such term set forth in
Subsection 2.9.
"Loans" shall mean, collectively, the Revolving Loans and "Loan" shall mean
any Revolving Loan.
"Lock Box Accounts" shall have the meaning given such term set forth in
Subsection 3.6.
"Material Adverse Effect" shall mean a material adverse effect on (i)
Rail's business, operations, condition (financial or otherwise), properties or
prospects, (ii) Rail's ability to pay any Liabilities or otherwise perform its
other obligations under this Agreement and the other Financing Agreements or
(iii) the priority of Agent's security interest in, or the value to Agent of,
any material portion of the Collateral.
"Maximum Facility Amount" shall mean $90,000,000.
"Minimum ANW" shall have the meaning given such term set forth in
Subsection 8.13(B).
"Minimum Pro Forma Ratio" shall have the meaning given such term set forth
in Subsection 4.3(B).
"Monthly Report" shall have the meaning given such term set forth in
Subsection 3.1(A).
"Mortgages" shall have the meaning assigned to such term in Subsection 5.3.
13
"Multiemployer Plan" shall mean an employee benefit plan defined in Section
4001(a) (3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by a Borrower or any of its Subsidiaries or an ERISA
Affiliate of such Person.
"Net Income" shall have the meaning given such term set forth in Subsection
8.13.
"Notes" shall mean, collectively, the Revolving Notes and "Note" shall mean
any thereof.
"Notice of Borrowing" shall have the meaning given that term in Subsection
2.5(A) hereof.
"Notice of Conversion" shall have the meaning given that term in Subsection
2.5(A) hereof.
"Obsolete Equipment" shall mean Equipment which is reasonably determined by
a Borrower to be obsolete or unusable by such Borrower.
"Original Agreement" shall have the meaning given such term set forth in
the recitals hereto.
"Original Guaranty Agreement" shall have the meaning given such term set
forth in the recitals hereto.
"Other Taxes" shall have the meaning given such term set forth in
Subsection 2.11(B).
"Parts Inventory" shall mean Inventory that consists of parts, components
or other accessions.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Permitted Acquisition" shall mean a Stock Acquisition or an Asset
Acquisition, as the case may be.
"Permitted Consignments" shall have the meaning given such term set forth
in Subsection 3.10.
"Permitted Liens" shall have the meaning given such term set forth in
Subsection 8.1.
14
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, party or government (whether
national, federal, state, provincial, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Plan" shall mean any employee benefit plan defined in Section 3(3) of
ERISA (other than a Multiemployer Plan) in respect of which a Borrower or any of
its Subsidiaries or any ERISA Affiliate of such Borrower or such Subsidiary is,
or at any time within the immediately preceding six (6) years was, an "employer"
as defined in Section 3(5) of ERISA.
"Pledge and Security Agreement" shall mean that certain Pledge and Security
Agreement dated as of November 3, 1995 made by ABC Rail Brake Shoe Holdings,
Inc. in favor of Agent (as amended, supplemented or otherwise modified from time
to time).
"Post-Default Rate" shall have the meaning given such term set forth in
Subsection 2.21(A).
"Proportionate Share" shall mean, as to each Lender at any time, the
percentage obtained by dividing (i) the amount of the Revolving Credit
Commitment of such Lender in effect at such time (or, if the Total Revolving
Commitments have been terminated, the sum of the outstanding principal amount of
the Liabilities owed to such Lender at such time (after giving effect to
Subsection 2.6), by (ii) the amount of the Total Revolving Commitments in effect
at such time (or, if the Total Revolving Commitments have been terminated, the
aggregate amount of all Liabilities at such time).
"Rail" shall have the meaning given such term set forth in the preamble
hereto.
"Rail Mill" shall mean the property described on Schedule 1.1A annexed
hereto.
"Reduced Rate" shall have the meaning given such term set forth in
Subsection 2.11(E).
"Reduction Amount" shall have the meaning given such term set forth in
Subsection 2.7(C).
"Register" shall have the meaning given such term set forth in Subsection
11.6(E).
"Required Lenders" shall mean, at any time, one or more Lenders whose
Proportionate Share, in the aggregate, exceed fifty percent (50%).
15
"Requirement of Law" shall mean, as to any Person, the organizational
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Reserve Rate" shall mean the maximum reserve rate (including, without
limitation, basic, supplemental, marginal and emergency reserve requirements),
expressed as a decimal, determined by Agent to be the rate which would be
applicable to the relevant Interest Period under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor or similar regulation
relating to such reserve requirements) with respect to eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D) of a
member of the Federal Reserve System, whether or not such fundings were
outstanding. The Reserve Rate on the Closing Date is zero, but may change
thereafter.
"Revolving Credit Commitment" of any Lender shall mean the amount set forth
opposite such Lender's name on Schedule 1, as such schedule may be amended from
time to time, under the heading "Revolving Credit Commitment," as such Revolving
Credit Commitment may be adjusted from time to time pursuant to the terms of
this Agreement.
"Revolving Loans" shall have the meaning given such term in Subsection
2.3(A) hereof, and "Revolving Loan" shall mean any thereof.
"Revolving Notes" shall have the meaning given such term in Subsection
2.3(A) hereof, and "Revolving Note" shall mean any thereof.
"Settlement Date" shall have the meaning given such term set forth in
Subsection 2.6(B).
"Security Agreement" shall have the meaning given such term set forth in
the recitals hereto.
"Signature Authorization Certificate" shall mean a certificate
substantially in the form attached hereto as Exhibit H now or hereafter executed
on behalf of a Borrower and delivered to Agent.
"SP Agent" shall have the meaning given such term set forth in Subsection
11.9.
"Stock Acquisition" shall have the meaning given to such term in Subsection
8.3.
"Stock Inventory" shall mean Inventory consisting of scrap that is usable
in the production of finished goods.
16
"Sublimit" with respect to any Borrower shall mean that amount, if any,
agreed to by such Borrower, the Agent and the Required Lenders as such
Borrower's "Sublimit" as evidenced by a written instrument to such effect signed
by such Borrower, the Agent and the Required Lenders.
"Subordinated Debt" shall mean the aggregate principal amount of all
Subordinated Notes and all interest (and premiums, if any) thereon and all other
amounts payable in respect thereof (including, without limitation, sinking fund
payments (if any), defeasance payments (if any), and any and all amounts payable
on account of any redemption, repurchase, retirement or other acquisition
thereof).
"Subordinated Debt Documents" shall mean, collectively, the Subordinated
Debt Indenture, the Subordinated Notes and all other instruments, certificates
and agreements delivered by or on behalf of Rail in connection with the
Subordinated Debt Indenture or any Subordinated Note (including, without
limitation, any instrument or agreement evidencing any Subordinated Debt).
"Subordinated Debt Indenture" shall mean that certain Indenture, dated as
of January 15, 1997, between Rail and First Trust National Association, as
trustee (the "Trustee") as supplemented by that certain First Supplemental
Indenture, dated as of January 15, 1997, between Rail and the Trustee, in each
case in the form attached hereto as Exhibit I and Exhibit J, respectively, and
as amended, supplemented or otherwise modified in accordance with Subsection
8.17.
"Subordinated Notes" shall mean, collectively, all promissory notes issued
at any time under, or pursuant to, the Subordinated Debt Indenture.
"Subsequent Monthly Report" shall have the meaning given such term set
forth in Subsection 3.1(A).
"Subsidiary" shall mean, with respect to any Person (i) any corporation of
which more than fifty percent (50%) of the outstanding securities having
ordinary voting power (determined without giving effect to any class of
securities that does not possess ordinary voting power but may have ordinary
voting power by reason of the happening of any contingency) shall be owned or
controlled, directly or indirectly by such Person or by one or more of its
Subsidiaries, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization of which more than fifty percent
(50%) of the ownership interests having ordinary voting power (determined
without giving effect to any class of securities that does not possess ordinary
voting power but may have ordinary voting power by reason of the happening of
any contingency) shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of Rail.
17
"Tax Transferee" shall have the meaning given such term set forth in
Subsection 2.11(A).
"Taxes" shall have the meaning given such term set forth in Subsection
2.11(A).
"Term" shall have the meaning given that term in Subsection 2.15(A) hereof.
"Termination Charge" shall have the meaning given such term set forth in
Subsection 2.21(E).
"Termination Date" shall mean March 31, 2000 or such other date as may be
the end of the Term that is in effect pursuant to Subsection 2.15.
"Termination Event" shall mean (i) a reportable event described in Section
4043 of ERISA or the regulations promulgated thereunder occurring with respect
to any Benefit Plan of a Borrower, any of its Subsidiaries or any ERISA
Affiliate of such Borrower or any of its Subsidiaries for which the 30-day
notice requirement has not been waived, or (ii) the withdrawal of a Borrower,
any of its Subsidiaries or any ERISA Affiliate of such Borrower or any of its
Subsidiaries from a Benefit Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA or the
cessation of operations which results in the termination of employment of 20% of
Benefit Plan participants who are employees of such Borrower, any of its
Subsidiaries or any ERISA Affiliate of such Borrower or any of its Subsidiaries,
or (iii) the occurrence of an obligation of a Borrower, any of its Subsidiaries
or any ERISA Affiliate of such Borrower or any of its Subsidiaries arising under
Section 4041 of ERISA to provide affected parties with a written notice of an
intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA, or (iv) PBGC's institution of proceedings to terminate
a Benefit Plan of a Borrower, any of its Subsidiaries or any ERISA Affiliate of
such Borrower or any of its Subsidiaries, or (v) any event or condition which
would reasonably be expected to constitute grounds under Section 4041A or 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Benefit Plan or Multiemployer Plan of a Borrower, any of its Subsidiaries or
any ERISA Affiliate of such Borrower or any of its Subsidiaries, or (vi) the
partial or complete withdrawal (as defined in Section 4203 and 4205 of ERISA) of
a Borrower, any of its Subsidiaries or any ERISA Affiliate of such Borrower or
any of its Subsidiaries from a Multiemployer Plan, or (vii) the existence in a
Multiemployer Plan of a material potential withdrawal liability of a Borrower,
any of its Subsidiaries or any ERISA Affiliate of such Borrower or any of its
Subsidiaries, or (viii) the occurrence of any nonexempt "prohibited transaction"
with respect to any Plan under Section 406 of ERISA or Section 4975 of the
Internal Revenue Code or (ix) as of the last day of any plan year, the present
value of the benefit liabilities (determined in accordance with Statement of
Financial Accounting Standards No. 35) of any Benefit Plan of a Borrower, any of
its Subsidiaries or any ERISA Affiliate of such Borrower or any of its
Subsidiaries, as determined by the plan's
18
independent actuaries, exceeds the aggregate value as of such date, as
determined by such actuaries, of all assets of such plan by more than $2,600,000
as to all Plans in the aggregate.
"Termination Notice" shall have the meaning given such term set forth in
Subsection 2.2(D).
"Third Party Financed Equipment" shall have the meaning given such term set
forth in Subsection 8.2.
"Total Revolving Commitments" shall mean the aggregate of the Revolving
Credit Commitments of all the Lenders, which in the aggregate shall not exceed
$90,000,000.
"Type of Advance" shall have the meaning given such term set forth in
Subsection 2.1(B).
"UFCA" shall have the meaning given such term set forth in Subsection 6.6.
"UFTA" shall have the meaning given such term set forth in Subsection 6.6.
"Unfunded Capital Expenditure" shall mean Capital Expenditures other than
Capital Expenditures representing Capitalized Leases or funded with proceeds of
Funded Debt received from lenders other than the Lenders.
"Voting Shares" shall mean, with respect to any Person, all classes of
capital stock of such Person then outstanding and normally entitled to vote in
the elections of directors of such Person.
"Wheel Machining Center" shall mean the property described on Schedule
1.1(B) annexed hereto.
"Work-in-Process Inventory Sublimit" shall have the meaning given such term
set forth in Subsection 2.4 hereof.
1.2 Accounting Terms. Any accounting terms used in this Agreement which
are not specifically defined herein shall have the meanings customarily given
them in accordance with GAAP. Calculations and determinations of financial and
accounting terms used and not otherwise specifically defined hereunder and the
preparation of financial statements to be furnished to the Lenders pursuant
hereto shall be made and prepared, both as to classification of items and as to
amount, in accordance with GAAP as used in the preparation of the Financials on
the date of this Agreement. If any changes in accounting principles or practices
from those used in the preparation of the Financials are hereafter occasioned by
the promulgation of rules, regulations, pronouncements and opinions by or
required by the Financial Accounting Standards Board or the American Institute
of Certified Public Accountants (or any successor thereto or agencies with
similar functions), which
19
results in a material change in the method of accounting in the financial
statements required to be furnished to Lenders hereunder or in the calculation
of financial covenants, standards or terms contained in this Agreement or any
other Financing Agreement, the parties hereto agree to enter into negotiations
in Good Faith to amend such provisions so as equitably to reflect such changes
to the end that the criteria for evaluating the financial condition and
performance of Rail and its Subsidiaries will be the same after such changes as
they were before such changes; and if the parties fail to agree on the amendment
of such provisions, Rail and its Subsidiaries will furnish financial statements
in accordance with such changes but shall provide calculations for all financial
covenants, perform all financial covenants and otherwise observe all financial
standards and terms in accordance with applicable accounting principles and
practices in effect immediately prior to such changes. Calculations with respect
to financial covenants required to be stated in accordance with applicable
accounting principles and practices in effect immediately prior to such changes
shall be reviewed and certified by the Rail's accountants.
1.3 Other Terms Defined in Illinois Uniform Commercial Code. All other
terms contained in this Agreement (and which are not otherwise specifically
defined herein) shall have the meanings provided in Article 9 of the Code on the
date hereof to the extent the same are used or defined therein.
1.4 Other Definitional Provisions; Construction. Whenever the context so
requires, the neuter gender includes the masculine and feminine, the singular
number includes the plural, and vice versa. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and references to Article, Section, Subsection, Annex, Schedule,
Exhibit and like references are references to this Agreement unless otherwise
specified. A Default shall "continue" or be "continuing" until such Default has
been waived in accordance with Subsection 11.1 hereof. References in this
Agreement to any Person shall include such Person's successors and permitted
assigns. References to any "Subsection" shall be a reference to such Subsection
of this Agreement unless otherwise stated.
2. CREDIT.
2.1 [INTENTIONALLY OMITTED.]
2.2 [INTENTIONALLY OMITTED.]
2.3 Revolving Loan Facility.
(A) Subject to the terms and conditions set forth in this Agreement, on
and after the Closing Date and to and excluding the Termination Date, upon the
request of a Borrower pursuant to Subsection 2.5, each of the Lenders shall,
severally in proportion to its Proportionate Share, make loans and advances to
such Borrower (including Interim Revolving Loans) on a revolving credit basis
(collectively, for all Borrowers, the "Revolving Loans"). The Revolving
20
Loans advanced by each Lender to each Borrower shall be evidenced, in part, by a
promissory note made by such Borrower in favor of such Lender (each, a
"Revolving Note") substantially in the form attached hereto as Exhibit A with
the blanks appropriately filled and, the provisions of any Revolving Note
notwithstanding, shall become immediately due and payable as provided in
Subsection 9.1 hereof, and, without notice or demand, upon the termination of
this Agreement pursuant to Subsections 2.15 or 2.21(E) hereof.
(B) The Revolving Loans made to a Borrower shall consist of either Base
Rate Advances or LIBOR Rate Advances, as duly requested by such Borrower
pursuant to this Agreement. Each Borrower shall maintain a sufficient amount of
Base Rate Advances so that application of the proceeds of Collateral in
accordance with Subsections 2.8 and 3.6 will not necessitate a payment of a
LIBOR Rate Advance on a day other than the last day of the Interest Period
applicable thereto.
2.4 Determination of Borrowing Base.
(A) Subject to Subsection 2.5(B): (i) the aggregate unpaid principal
amount of the Revolving Loans made to a Borrower shall not in the aggregate
exceed at any time the least of (A) the Total Revolving Commitments then in
effect minus the aggregate amount of all Letter of Credit Obligations with
respect to all Borrowers and minus the aggregate unpaid principal amount of all
Revolving Loans made to all other Borrowers, (B) the "Current Asset Base" (as
defined below) of such Borrower or (C) such Borrower's Sublimit, if any, minus
the aggregate amount of Letter of Credit Obligations with respect to Letters of
Credit issued for the account of such Borrower; and (ii) the aggregate unpaid
principal amount of all Revolving Loans shall not in the aggregate exceed at any
time the least of (A) the Total Revolving Commitments then in effect minus the
aggregate amount of all Letter of Credit Obligations with respect to all
Borrowers, (B) the sum of the "Current Asset Base" (as defined below) of all
Borrowers or (C) if there is a Sublimit for each Borrower, the sum of each
Borrower's Sublimit minus the aggregate amount of all Letter of Credit
Obligations with respect to all Borrowers.
(B) As used herein, "Current Asset Base" shall mean the following with
respect to the Borrower specified:
(i) with respect to Rail, as used herein, "Current Asset Base" shall mean
(i) up to eighty-five percent (85%) of the face amount (less maximum
discounts, credits and allowances which may be taken by or granted to Account
Debtors in connection therewith) then outstanding under existing "Eligible
Accounts" (as defined in Subsection 3.2 hereof), less such other reserves as
Agent in its sole discretion and in Good Faith elects to establish; plus (ii)
the lesser of the "Rail Inventory Sublimit" (as hereinafter defined) and an
amount equal to the sum of (X) up to sixty-five percent (65%) of Rail's
existing "Eligible Inventory" (as defined in Subsection 3.10 hereof), other
than work-in-process and Fixed Overhead Inventory of Rail, valued at the lower
of cost, determined on a first-in, first-out basis, or market, less
obsolescence reserves and such other reserves as Agent in its sole discretion
and
21
in Good Faith elects to establish, plus (Y) the sum of the following for each
plant of Rail, the lesser of the "Work-in-Process Inventory Sublimit" (as
hereinafter defined) for such plant and up to sixty percent (60%) of Rail's
existing Eligible Inventory at such plant consisting of work-in-process (but
excluding Fixed Overhead Inventory of Rail), valued at the lower of cost,
determined on a first-in, first-out basis, or market, less obsolescence
reserves and such other reserves as Agent in its sole discretion and in Good
Faith elects to establish, plus (Z) up to sixty percent (60%) of Rail's
existing Eligible Inventory consisting of Fixed Overhead Inventory of Rail,
valued at the lower of cost, determined on a first-in, first-out basis, or
market, less such reserves as Agent in its sole discretion and in Good Faith
elects to establish, minus (iii) the Letter of Credit Obligations with respect
to Letters of Credit issued for the account of Rail, minus (iv) the CAPEX
Reserve, and plus (v) $10,000,000; and
(ii) with respect to Deco, as used herein, "Current Asset Base" shall mean
(i) up to eighty-five (85%) of the face amount (less maximum discounts,
credits and allowances which may be taken by or granted to Account Debtors in
connection therewith) then outstanding under existing "Eligible Accounts" (as
defined in Subsection 3.2 hereof), less such other reserves as Agent in its
sole discretion and in Good Faith elects to establish; plus (ii) the lesser of
$500,000 and an amount equal to the sum of (X) up to sixty-five percent (65%)
of Deco's existing Eligible Inventory constituting Stock Inventory and (Y) up
to thirty percent (30%) of Deco's existing Eligible Inventory constituting
Parts Inventory, in each case valued at the lower of cost, determined on a
first-in, first-out basis, or market, less obsolescence reserves and such
other reserves as Agent in its sole discretion and in Good Faith elects to
establish.
(C) Notwithstanding the foregoing or anything in Subsection 3.10 to the
contrary, (1) the aggregate amount of Inventory deemed to be Eligible Inventory
of Rail shall not exceed an amount (the "Rail Inventory Sublimit") equal at any
time to the amount determined by taking the quotient determined by dividing (a)
200% of Rail's cost of goods sold (adjusted in an manner satisfactory to the
Agent (in its sole discretion exercised in Good Faith) for Asset Acquisitions
made after the date of the Original Agreement) for the most recent 6 months for
which Lenders have received the financial statements required to be furnished by
Rail pursuant to Subsection 7.1(A) hereof, by (b) 6.0; and (2) the aggregate
amount of work-in-process Inventory at any of the following plants and
"Additional Acceptable Plants" (as hereinafter defined) deemed to be Eligible
Inventory of Rail (and no work-in-process inventory located other than at such
plants shall be deemed to be Eligible Inventory) shall not exceed an amount (the
"Work-in-Process Inventory Sublimit") equal at any time to the amount determined
by taking the product determined by multiplying (a) the quotient determined by
dividing 26 into Rail's cost of goods sold for such plant for the most recent 6
months for which Lenders have received the financial statements required to be
furnished by Rail pursuant to Subsection 7.1(A) hereof, by (b) the number of
weeks set forth opposite such plant (or, in the case of any Additional
Acceptable Plant, such number of weeks as is determined by Agent in its sole
discretion exercised in Good Faith) below, and by (c) the percentage set forth
opposite such plant (or, in the case of any Additional Acceptable Plant, such
percentage as is determined by the Agent in its sole discretion exercised in
Good Faith) below:
22
Plant Weeks Percentage
----- ----- -----------
Calera 2 80%
Chicago Heights 6 75%
Pueblo 6 75%
Superior 2 75%
▇▇▇▇▇▇ 2 75%
▇▇▇▇▇▇▇▇ 2 75%
As used herein, the term "Additional Acceptable Plant" shall mean any plant
acquired by Rail after the date hereof which produces work-in-process inventory
satisfactory to Agent in its sole discretion exercised in Good Faith for
inclusion in determining the Current Asset Base of Rail.
2.5 Borrowing Mechanics.
(A) Base Rate Advances shall be made to a Borrower on irrevocable
telephonic or written notice given to Agent by such Borrower not later than
12:00 noon, Chicago time, on the Business Day on which the proposed Base Rate
Advance is requested to be made. At any time prior to the occurrence of a
Default or an Event of Default, a Borrower may request the continuation of a
LIBOR Rate Advance or the conversion of any Advance from one Type of Advance to
another pursuant to this Agreement; provided that (i) conversions of all or any
portion of a LIBOR Rate Advance may be made only as of the last date of the
Interest Period applicable thereto; (ii) such continuation or conversion would
not violate any other provisions of this Agreement; and (iii) without limiting
Subsections 9.1 or 9.2 or any other rights and remedies of Agent and each
Lender, after the occurrence of a Default or Event of Default, such a
continuation or conversion may only be made with the consent of the Agent. LIBOR
Rate Advances, and any continuations of, or conversions to LIBOR Rate Advances,
shall be in an aggregate principal amount of $1,000,000 or an integral multiple
thereof. LIBOR Rate Advances, or continuation of any LIBOR Rate Advance, or
conversion of any Base Rate Advance to a LIBOR Rate Advance, may be made upon
irrevocable written notice given to Agent by a Borrower no later than 12:00
noon, Chicago time, three Business Days prior to the commencement of the
Interest Period applicable thereto. In each such notice, such Borrower shall
specify, as to continuations and conversions, the amount of the Advance to be so
continued or converted, as to new LIBOR Rate Advances, the requested principal
amount thereof, and in any case the applicable Interest Period, and the first
and last day of the Interest Period, each of which shall be a Business Day.
LIBOR Rate Advances shall automatically convert to Base Rate Advances at the end
of the applicable Interest Period unless such Borrower gives the requisite
notice in accordance with the procedures set forth above to continue the same as
LIBOR Rate Advances. No Borrower shall be entitled to elect any Interest Period
with respect to a LIBOR Rate Advance if the provisions of this Agreement would
require such Borrower to repay or prepay any portion of such LIBOR Rate Advance
prior to the end of such Interest Period.
(i) Each notice described in this Subsection 2.5(A) shall be given by an
Authorized Officer of the Borrower giving such notice either by telephone,
telecopy, telex,
23
or cable, and, if such notice (other than an irrevocable notice of borrowing
of a Base Rate Advance) is by telephone, confirmed in writing, substantially
in the form of Exhibit B in the case of a request for an Advance (the "Notice
of Borrowing") and in the form of Exhibit C (the "Notice of Conversion") in
the case a conversion or continuation of an Advance; provided, however, that
subject to Subsection 2.5(D), telephonic notices requesting a Base Rate
Advance need not be confirmed in writing unless requested by Agent. Each
Notice of Borrowing and Notice of Conversion shall be irrevocable by and
binding on the Borrower giving such Notice of Conversion or Notice of
Borrowing.
(ii) Agent shall be entitled to rely conclusively on each Authorized
Officer's authority to request, convert or continue Advances on behalf of such
Borrower. Agent shall have no duty to verify the authenticity of the signature
appearing on any Notice of Borrowing, Notice of Conversion or other writing
delivered pursuant to this Subsection 2.5(A) and, with respect to an oral
request for an Advance or the conversion or continuation thereof, Agent shall
have no duty to verify the identity of any individual representing himself as
an Authorized Officer. Neither Agent nor any of the Lenders shall incur any
liability to any Borrower as a result of acting upon any telephonic notice
referred to in this Subsection 2.5(A) which notice Agent believes in good
faith to have been given by an Authorized Officer or other individual
authorized to request an Advance or convert or continue an Advance on behalf
of such Borrower or for otherwise acting in good faith under this Subsection
2.5(A) and, upon the funding, conversion or continuation of an Advance by the
Lenders in accordance with this Agreement, pursuant to any such telephonic
notice, such Borrower shall be deemed to have borrowed or converted or
continued such Advance hereunder.
(iii) Borrowers may collectively request one or more (but not more than six
(6)) Advances, conversions of Advances and continuations of Advances on a
single day.
By giving notice as set forth above with respect to a LIBOR Rate Advance or with
respect to a conversion into or continuation of a LIBOR Rate Advance, such
Borrower shall, subject to the other provisions of this Section 2, specify the
applicable Interest Period. The determination of the Interest Period shall be
subject to the following provisions:
(i) the initial Interest Period for any LIBOR Rate Advance shall commence
on the date of such LIBOR Rate Advance which shall be a Business Day and each
Interest Period (if any) occurring thereafter for such LIBOR Rate Advance
shall commence on the day on which the next preceding Interest Period for such
LIBOR Rate Advance expires;
(ii) there shall be no more than six (6) Interest Periods in the aggregate
for all Borrowers in effect at any one time; and
(iii) no Interest Period may be selected which extends beyond the last day
of the Term.
24
(B) In the event a Borrower is unable to comply with (i) the Current Asset
Base limitations applicable to it set forth in Subsection 2.4 or (ii) the
conditions precedent to the making of a Revolving Loan, the Lenders authorize
Agent, in its sole discretion, to make Revolving Loans (and Lenders shall fund
their Proportionate Share of such Revolving Loans upon the request of Agent)
("Interim Revolving Loans") for a period commencing on the date Agent first
receives a Notice of Borrowing requesting an Interim Revolving Loan until the
earlier of (i) the 20th Business Day after such date, or (ii) the date such
Borrower is again able to comply with the Current Asset Base limitations
applicable to it and the conditions precedent to the making of Revolving Loans
set forth in Sections 2.4 and 4.2 hereof, or obtains an amendment or waiver with
respect thereto (in each case, the "Interim Revolving Loan Period"). Agent shall
not, in any event, make any Interim Revolving Loan if at such time the amount of
such Interim Revolving Loan when added to the then aggregate outstanding
principal amount of other Interim Revolving Loans made to all Borrowers would
exceed $5,000,000; provided that, notwithstanding any of the foregoing
limitations in this Subsection 2.5(B), Agent may make Revolving Loans
(consisting of one or more Base Rate Advances) in an amount not to exceed
$2,500,000 outstanding at any one time (and Lenders shall fund their
Proportionate Share of such Revolving Loans upon the request of Agent) intended
to preserve, protect or enhance the liquidation value of the Collateral. All
Interim Revolving Loans shall be Base Rate Advances. An Interim Revolving Loan
shall cease to be an Interim Revolving Loan (and shall be deemed to be an
Advance consisting of Revolving Loans) if the unsatisfied conditions giving rise
to such Interim Revolving Loan shall thereafter be satisfied or the events which
cause such Advance to be an Interim Revolving Loan shall thereafter cease to
exist.
(C) Each Lender shall be entitled to earn interest at the then applicable
rate of interest, calculated in accordance with Subsection 2.21 hereof, on
outstanding Loans which it has funded to Agent.
(D) Notwithstanding the obligation of a Borrower to send written
confirmation of a Notice of Borrowing or Notice of Conversion made by telephone,
in the event that Agent acts upon a Notice of Borrowing or Notice of Conversion
made by telephone, such telephonic notice of borrowing or notice of conversion
shall be binding on such Borrower whether or not written confirmation is sent by
such Borrower or subsequently requested by Agent. Agent may act prior to the
receipt of any written confirmation, without any liability whatsoever, based
upon telephonic notice believed by Agent in good faith to be from such Borrower
or its Authorized Officers. Agent's records of the terms of any telephonic
Notices of Borrowing or Notice of Conversion shall be conclusive on each
Borrower and the Lenders in the absence of gross negligence or willful
misconduct on the part of Agent in connection therewith.
(E) Without limiting Subsection 2.17, or any other provision of this
Agreement, no Borrower may voluntarily prepay any LIBOR Rate Advance prior to
the last day of the Interest Period applicable thereto.
25
2.6 Settlements Among Agent and the Lenders.
(A) Except as provided in Subsection 2.6(B) (which provides for the
settlement by Agent of Revolving Loans made, and payments thereon on a weekly
basis at Agent's discretion to avoid daily settlements between Lenders), Agent
shall give to each Lender prompt notice of each Notice of Borrowing or Notice of
Conversion by telecopy, telex or cable. Except for Advances made as provided
pursuant to Subsection 2.6(B), no later than 2:00 p.m. Chicago time on the date
of each Advance to be made hereunder, each Lender will make available to Agent
at its principal office in Chicago, Illinois in immediately available funds, its
Proportionate Share of each Advance constituting Revolving Loans, whereupon
Agent will make such funds available to the applicable Borrower at account
number ▇▇▇▇▇▇▇▇, at ANB's offices in Chicago Illinois. Unless Agent shall have
been notified by any Lender prior to the date of the Advance that such Lender
does not intend to make available to Agent its portion of the Advance to be made
on such date, Agent may assume that such Lender will make such amount available
to Agent on the Settlement Date (as defined below) and Agent, in reliance upon
such assumption, may but shall not be obligated to make available the amount of
the Advance to be provided by such Lender. Except as provided in Subsection
2.6(B) and subject to Subsection 2.14(C), promptly after its receipt of payments
from or on behalf of any Borrower (other than amounts payable to Agent to
reimburse Agent and the Issuing Bank for fees and expenses payable solely to
them), Agent will cause such payments to be distributed ratably to the Lenders.
The Lenders will apply such payments in accordance with Subsection 2.8(B).
(B) Agent on behalf of the Lenders may (but shall not be obligated to)
make Revolving Loans and receive and retain payments on the Revolving Loans in
accordance with this Subsection 2.6(B) without notice to, or settlement with,
the Lenders; provided, Agent shall settle the amount of the Revolving Loans with
the Lenders at least once a week as follows:
The amount of each Lender's Proportionate Share of outstanding Revolving Loans
shall be computed weekly (or more frequently in Agent's discretion) and shall
be adjusted upward or downward on the basis of the amount of outstanding
Revolving Loans as of 3:00 P.M. Chicago time on the last Business Day of the
period specified by Agent (such date being referred to as the "Settlement
Date"). Agent shall deliver to each of the Lenders promptly after any
Settlement Date a summary statement of the amount of outstanding Revolving
Loans for such period. The Lenders shall transfer to Agent, or, subject to
Subsection 2.14(C), Agent shall transfer to the Lenders, such amounts as are
necessary so that (after giving effect to all such transfers) the amount of
the Revolving Loans made by each Lender shall be equal to such Lender's
Proportionate Share of the aggregate amount of the Revolving Loans outstanding
as of such Settlement Date. If the summary statement is received by the
Lenders prior to 10:00 A.M. Chicago time on any Business Day, each Lender
shall make the transfers described above in immediately available funds no
later than 12:00 noon Chicago time on the day such summary statement was
received; and if such summary statement is received by the Lenders after 10:00
A.M. Chicago time on such day, each Lender shall make such transfers no later
than 12:00 noon Chicago time on the next succeeding Business Day.
26
The obligation of each of the Lenders to transfer such funds shall be
irrevocable and unconditional and without recourse to or warranty by Agent.
Each of Agent and the Lenders agree to ▇▇▇▇ their respective books and records
on the Settlement Date to show at all times the dollar amount of their
respective Proportionate Shares of the outstanding Revolving Loans. To the
extent that the settlement described above shall not yet have occurred, upon
repayment of any part of the Revolving Loans by any Borrower, Agent may first
apply such amounts repaid directly to the amounts made available by Agent
pursuant to this Subsection 2.6(B).
Because Agent on behalf of the Lenders may be advancing and/or may be repaid all
or a portion of the Revolving Loans prior to the time when the Lenders will
actually advance and/or be repaid all or a portion of Revolving Loans, interest
with respect to the Revolving Loans shall be allocated by Agent to each Lender
and Agent in accordance with the amount of the Revolving Loans actually advanced
by and repaid to each Lender and Agent and shall accrue from and including the
date such Revolving Loans are so advanced to but excluding the date such
Revolving Loans are either repaid by any Borrower in accordance with Subsection
2.7 or actually settled by the applicable Lender as described in this Subsection
2.6(B).
2.7 Mandatory Payments; Reduction of Commitments; Increase of Total
Revolving Commitments.
(A) The aggregate outstanding principal amount of the Loans plus Letter of
Credit Obligations may not at any time exceed the Maximum Facility Amount.
Subject to Subsection 2.5(B) and without limiting any provision of Section 9,
(i) the aggregate outstanding principal amount, if any, of any Loans in an
amount in excess of the amount permitted to exist under Subsection 2.4 or this
Subsection 2.7 shall be immediately due and payable without the necessity of any
demand; and (ii) without limiting the foregoing clause (i) and by way of
illustration, (a) the amount of the aggregate balance of the unpaid principal
amount of the Revolving Loans made to a Borrower plus the aggregate amount of
all Letter of Credit Obligations outstanding at any time with respect to Letters
of Credit issued for the account of such Borrower in excess of the lesser of (1)
the Current Asset Base of such Borrower and (2) such Borrower's Sublimit, if
any, and (b) the aggregate balance of the Revolving Loans made to a Borrower
based on Inventory in excess of the Inventory Sublimit for such Borrower, shall
be immediately due and payable without the necessity of any demand. Any amounts
paid in excess of the outstanding balance of the Revolving Loans or Letter of
Credit Obligations otherwise then due and owing may, at Agent's sole discretion,
be held by Agent as cash collateral for the Letter of Credit Obligations not
then due.
(B) On the Termination Date, the Revolving Credit Commitment of each
Lender shall automatically reduce to zero and may not be reinstated.
(C) Rail may permanently reduce the Total Revolving Commitments in whole,
or in part ratably among the Lenders in integral multiples of $5,000,000, upon
at least five Business Days' written notice to Agent, which notice shall specify
the amount of such reduction (the
27
"Reduction Amount") and the effective date thereof, provided, however, that (i)
the amount of the Total Revolving Commitments may not be reduced below the
aggregate principal amount of the outstanding Revolving Loans plus the then
existing Letter of Credit Obligations, and Borrower shall pay to Agent for the
account of the Lenders a commitment reduction fee (the "Commitment Reduction
Fee"), determined without giving effect to any reduction in the Total Revolving
Commitments pursuant to Subsection 2.7(E), in an amount equal to (i) two percent
(2.00%) of the Reduction Amount if such commitment reduction is made on or prior
to ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) one percent (1.00%) of the Reduction Amount if such
commitment reduction occurs after March 31, 1997 but on or prior to March 31,
1999, and (iii) one-half of one percent (1/2%) of the Reduction Amount if such
commitment reduction occurs after March 31, 1999 but prior to March 31, 2000;
provided, further, that reduction in the Total Revolving Commitments in whole
shall be deemed to constitute a concurrent reduction in whole of all commitments
of the Lenders, Agent and the Issuing Bank to each Borrower with respect to
Letters of Credit and each Borrower shall be obligated also to prepay
concurrently all of such Borrower's outstanding Revolving Loans and other
Liabilities, and the date of such reduction in whole of the Revolving Commitment
shall be deemed to be the Termination Date for all purposes of this Agreement.
(D) [INTENTIONALLY OMITTED.]
(E) In the event a Borrower is permitted pursuant to the terms of this
Agreement to, and does, sell or otherwise dispose of any of its Equipment or
real property, concurrently with the consummation of any such sale or other
disposition, such Borrower shall cause the Loans to be immediately prepaid in an
aggregate amount equal to the gross proceeds from such sale or other disposition
net of reasonable expenses incurred by such Borrower incidental to such sale to
the extent the aggregate amount of such proceeds received by such Borrower
(together with proceeds of such sales and other dispositions received by all
other Borrowers) in any Fiscal Year other than from sales of Excluded Property
(determined at the time of sale) is greater than $500,000 (the "Excess Net
Proceeds") and whether or not any Revolving Loans are then outstanding if a
Default then exists the Maximum Facility Amount and Total Revolving Commitments
shall be concurrently and permanently reduced by the amount of such Excess Net
Proceeds; provided, that prepayments made pursuant to this subsection shall (i)
first be applied against the outstanding balance of Revolving Loans of such
Borrower, and (ii) next be applied against any other outstanding Liabilities of
such Borrower or, at Agent's discretion, be held by Agent as cash collateral for
Letter of Credit Obligations or other Liabilities.
2.8 Payments and Computations.
(A) Each Borrower shall make each payment hereunder and under the Notes
not later than 12:00 noon Chicago time on the day when due in Dollars to Agent
at its address referred to in Subsection 11.17 hereof in immediately available
funds. Each Borrower's obligations to the Lenders with respect to such payments
shall be discharged by making such payments to Agent pursuant to this Subsection
2.8.
28
(B) All amounts received by Agent from or for the account of a Borrower
for distribution to Agent, the Lenders or the Issuing Bank hereunder pursuant to
Subsection 3.6 or otherwise shall be distributed and applied as soon as
practicable in the following order: first, to the payment of any Fees, Expenses
or other Liabilities due and payable by such Borrower to Agent under any of the
Financing Agreements, including amounts advanced by Agent on behalf of the
Lenders pursuant to Subsection 2.6(B); second, to the payment of any Fees,
Expenses or other Liabilities due and payable by such Borrower to the Issuing
Bank under any of the Financing Agreements; third, to the ratable payment of any
Fees, Expenses or other Liabilities due and payable by such Borrower to the
Lenders under any of the Financing Agreements other than those Liabilities
specifically referred to below in this Subsection 2.8(B); fourth, to the ratable
payment of interest due by such Borrower on the Loans; and, fifth, to the
ratable payment of principal due by such Borrower on the Loans. Application on
account of the Liabilities constituting Loans shall be made by Agent (i) first
to all Base Rate Advances and (ii) only when no Base Rate Advances are
outstanding to LIBOR Rate Advances; provided, however, prior to expiration of
the Interest Period applicable thereto in lieu of applying amounts to LIBOR Rate
Advances, Agent may in its discretion retain such balances as cash collateral
for the Liabilities until applied to such LIBOR Rate Advances at the expiration
of the Interest Period applicable thereto. Any payment received hereunder as a
distribution in any proceeding referred to in Subsection 9.1(H) or (I) shall,
unless paid with respect to amounts specifically owing to Agent or the Issuing
Bank, be distributed and applied to the payment of the amounts due hereunder and
under the Notes ratably in accordance with such amounts (or, if a court of
competent jurisdiction shall otherwise specify, as specified by such court).
2.9 Borrower's Loan Account. Agent shall maintain a loan account (the
"Loan Account") on its internal data control systems in which shall be recorded
(i) all loans and advances made by Agent or the Lenders to each Borrower or for
each Borrower's account pursuant to this Agreement, including without limitation
all Letter of Credit Obligations, (ii) all payments made by each Borrower or for
each Borrower's account on all such loans and advances and Letter of Credit
Obligations, and (iii) all other appropriate debits and credits as provided in
this Agreement, including, without limitation, all interest, Fees, Expenses, and
other charges, expenses and fees. All entries in each Borrower's Loan Account
shall be made in accordance with Agent's customary accounting practices as in
effect from time to time. Each Borrower will be credited, in accordance with
Subsection 2.8 above, with all amounts received by or on behalf of Agent, the
Lenders or the Issuing Bank from such Borrower or from others for such
Borrower's account, including, as set forth above, all amounts received by Agent
as set forth in Subsection 2.8(B). In no event shall prior recourse to any
Accounts or other Collateral be a prerequisite to Agent's right to demand
payment of any of the Liabilities upon its maturity. Further, Agent shall have
no obligation whatsoever to perform in any respect any of a Borrower's contracts
or obligations relating to the Accounts. Each Borrower promises to pay to Agent
and Lenders the amount reflected as owing by it under its Loan Account and all
of its other obligations hereunder and under any of the other Financing
Agreements as such amounts become due or are declared due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) pursuant to
the terms of this Agreement and the other Financing Agreements. Unless otherwise
agreed in writing from time to time hereafter, all payments which any Borrower
is required to make to the Lenders and Agent under this Agreement
29
or under any of the other Financing Agreements shall be made by appropriate
debits to such Borrower's Loan Account. Agent may in its sole discretion elect
to ▇▇▇▇ such Borrower for such amounts in which case the amount shall be
immediately due and payable with interest thereon as provided herein.
2.10 Statements. All Loans, Advances and other financial accommodations to
any Borrower, and all other debits and credits provided for in this Agreement,
may be evidenced by Agent in its internal data control systems showing the date,
amount and reason for each such debit or credit. Until such time as Agent shall
have rendered to a Borrower written statements of account as provided herein,
the balance in such Borrower's Loan Account, as set forth on Agent's most recent
printout, shall be rebuttably presumptive evidence of the amounts due and owing
to Agent and Lenders by such Borrower. Not more than twenty (20) days after the
last day of each calendar month, Agent shall render to each Borrower a statement
setting forth the balance of such Borrower's Loan Account, including principal,
interest, Expenses, Fees and any other expenses, fees and charges. Each such
statement shall be subject to subsequent adjustment by Agent but shall, absent
manifest errors or omissions, be presumed correct and binding upon such Borrower
and shall constitute an account stated unless, within sixty (60) days after
receipt of any statement from Agent, such Borrower shall deliver to Agent
written objection thereto specifying the error or errors, if any, contained in
such statement.
2.11 Taxes.
(A) Any and all payments by any Borrower hereunder, under the Notes or in
respect of the Letters of Credit which are made to or for the benefit of any
Lender, the Issuing Bank or Agent shall be made, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings and penalties, interests and all other liabilities with
respect thereto ("Taxes"), excluding, (i) in the case of each such Lender, the
Issuing Bank or Agent, taxes imposed on its net income (including, without
limitation, any taxes imposed on branch profits) or capital and franchise taxes
imposed on it by the jurisdiction under the laws of which such Lender, the
Issuing Bank or Agent (as the case may be) is organized or any political
subdivision thereof, (ii) in the case of each such Lender, the Issuing Bank and
Agent, any Taxes that are in effect and that would apply to a payment to such
Lender, the Issuing Bank or Agent, as applicable, as of the date of this
Agreement, and (iii) if any Person acquires any interest in this Agreement, any
Note or Letter of Credit Obligations pursuant to the provisions hereof, or Agent
or any Lender changes the office in which any Loan is made, accounted for or
booked (any such Person or Agent or such Lender in that event being referred to
as a "Tax Transferee"), any Taxes to the extent that they are in effect and
would apply to a payment to such Tax Transferee as of the date of the
acquisition of such interest or change in office, as the case may be (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes"). If any
Borrower shall be required by law to deduct any Covered Taxes from or in respect
of any sum payable hereunder, under any Note or in respect of any Letter of
Credit Obligations to or for the benefit of any Lender, the Issuing Bank, Agent
or any Tax Transferee, (A) the sum payable shall be increased as may be
necessary so that after making all required deductions of Covered Taxes
(including deductions of Covered Taxes
30
applicable to additional sums payable under this Subsection 2.11) such Lender,
the Issuing Bank, Agent or such Tax Transferee, as the case may be, receives an
amount equal to the sum it would have received had no such deductions been made,
(B) such Borrower shall make such deductions and (C) such Borrower shall pay the
full amount so deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(B) In addition, Borrowers agree to pay any present or future stamp,
documentary, excise, privilege, intangible or similar levies that arise at any
time or from time to time (i) from any payment made under any and all Financing
Agreements, (ii) from the transfer of the rights of any Lender under any
Financing Agreements to any transferee, or (iii) from the execution or delivery
by a Borrower of, or from the filing or recording or maintenance of, or
otherwise with respect to the exercise by Agent or the Lenders of their rights
under, any and all Financing Agreements (hereinafter referred to as "Other
Taxes").
(C) The Borrowers will indemnify each Lender, the Issuing Bank, Agent, and
any Tax Transferee for the full amount of (i) Covered Taxes imposed on or with
respect to amounts payable hereunder, and (ii) Other Taxes, and any liability
(including penalties, interest and expenses) arising solely therefrom or with
respect thereto. Payment of this indemnification shall be made within thirty
(30) days from the date such Lender, the Issuing Bank, Agent or such Tax
Transferee provides the Borrowers with a certificate, certifying and setting
forth in reasonable detail the calculation thereof as to the amount and type of
such Taxes. Any such certificate submitted by such Lender, the Issuing Bank,
Agent or such Tax Transferee in good faith to the Borrowers shall, absent
manifest error, be final, conclusive and binding on all parties. The obligations
of the Borrowers under this Subsection 2.11 shall survive payment of the
Liabilities and termination of this Agreement.
(D) Within 30 days after any Borrower having received a receipt for
payment of Covered Taxes or Other Taxes, such Borrower will furnish to Agent, at
its address referred to in Subsection 11.17, the original or a certified copy of
a receipt evidencing payment thereof.
(E) If a Tax Transferee that is organized under the laws of a jurisdiction
outside of the United States acquires an interest in this Agreement or any Note
or Letter of Credit Obligation, the transferor shall cause such Tax Transferee
to agree that on or prior to the effective date of such acquisition, it will
deliver to the Borrowers and Agent (i) two valid, duly completed copies of IRS
Form 1001 or 4224 or successor applicable form, as the case may be, and any
other required form, certifying in each case that such Tax Transferee is
entitled to receive payments under this Agreement and the Notes payable to it
without deduction or withholding of United States federal income tax or with
such withholding imposed at a reduced rate other than the maximum rate otherwise
required under the Internal Revenue Code (the "Reduced Rate"); and (ii) a valid,
duly completed IRS Form W-8 or W-9 or successor applicable form, as the case may
be, to establish an exemption from United States backup withholding tax. Each
Tax Transferee that delivers to the Borrowers and Agent a Form 1001 or 4224, and
Form W-8 or W-9 and any other required form, pursuant to the next preceding
sentence, further undertakes to deliver two further copies of the said
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Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms, or other
manner of required certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or otherwise is required to be
resubmitted as a condition to obtaining an exemption from a required withholding
of United States federal income tax or entitlement to having such withholding
imposed at the Reduced Rate or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrowers and
Agent, and such extensions or renewals thereof as may reasonably be requested by
the Borrowers and Agent, certifying (i) in the case of a Form 1001 or 4224 that
such Tax Transferee is entitled to receive payments under this Agreement or
Notes payable to it without deduction or withholding of any United States
federal income taxes or with such withholding imposed at the Reduced Rate,
unless any change in treaty, law or regulation or official interpretation
thereof has occurred after the effective date of such acquisition or change and
prior to the date on which any such delivery would otherwise be required that
renders all such forms inapplicable or that would prevent such Tax Transferee
from duly completing and delivering any such form with respect to it, and such
Tax Transferee advises the Borrowers and Agent that it is not capable of
receiving payments (a) without any deduction or withholding of United States
federal income tax or (b) with such withholding at the Reduced Rate, as the case
may be, or (ii) in the case of a Form W-8 or W-9, establishing an exemption from
United States backup withholding tax.
(F) If any Taxes for which a Borrower would be required to make payment
under this Subsection 2.11 are imposed, the applicable Lender, the Issuing Bank,
Agent or Tax Transferee, as the case may be, shall use its reasonable efforts to
avoid or reduce such Taxes by taking any appropriate action (including, without
limitation, assigning its rights hereunder to a related entity or a different
office) which would not, in the sole opinion of such Lender, the Issuing Bank,
Agent or Tax Transferee exercised in Good Faith be otherwise disadvantageous to
such Lender, the Issuing Bank, Agent or Tax Transferee, as the case may be.
(G) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in this Subsection 2.11 shall survive the payment in full of the Liabilities and
termination of this Agreement.
2.12 Affected Lenders. If any Borrower is obligated to pay to any Lender
any amount under Subsections 2.11, 2.16, 2.18 or 2.21(J) hereof, or if any
Lender is a Defaulting Lender, Borrowers may, if no Default or Event of Default
then exists, replace such Lender with another lender acceptable to Agent, and
such Lender hereby agrees to be so replaced subject to the following:
(A) The obligations of the Borrowers hereunder to the Lender to be
replaced (including such increased or additional costs incurred from the date of
notice to the Borrowers of such increase or additional costs through the date
such Lender is replaced hereunder) shall be paid in full to such Lender
concurrently with such replacement;
(B) If such replacement is a result of increased costs under Subsections
2.11, 2.16, 2.18 or 2.21(J), the replacement Lender shall be a bank or other
financial institution that is not
32
subject to such increased costs which caused the Borrowers' election to replace
any Lender hereunder, and each such replacement Lender shall execute and deliver
to Agent such documentation satisfactory to Agent pursuant to which such
replacement Lender is to become a party hereto, conforming to the provisions of
Subsection 11.6 hereof, with a Revolving Credit Commitment equal to that of the
Lender being replaced and shall make Loans in the aggregate principal amount
equal to the aggregate outstanding principal amount of the Loans of the Lender
being replaced;
(C) Upon such execution of such documents referred to in clause (B) and
repayment of the amounts referred to in clause (A), the replacement lender shall
be a "Lender" with a Revolving Credit Commitment as specified hereinabove and
the Lender being replaced shall cease to be a "Lender" hereunder, except with
respect to indemnification provisions under this Agreement, which shall survive
as to such replaced Lender;
(D) Agent shall reasonably cooperate in effectuating the replacement of any
Lender under this Subsection 2.12, but at no time shall Agent be obligated to
initiate any such replacement;
(E) Any Lender replaced under this Subsection 2.12 shall be replaced at the
Borrowers' sole cost and expense and at no cost or expense to Agent or any of
the Lenders; and
(F) If the Borrowers propose to replace any Lender pursuant to this
Subsection 2.12 because the Lender seeks reimbursement under either Subsections
2.11, 2.16, 2.18 or 2.21(J), then they must also replace any other Lender who
seeks similar levels of reimbursement (as a percentage of such Lender's
Revolving Credit Commitment under such subsections.
2.13 Sharing of Payments. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off or
otherwise) on account of the Loans made by it or its participation in the Letter
of Credit Obligations in excess of its allocable share pursuant to Subsection
10.14, of payments on account of the Loans or Letter of Credit Obligations
obtained by all the Lenders, such Lender shall forthwith purchase from the other
Lenders such participations in the Loans made by them or in their participation
in Letters of Credit as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and each
such Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
to the total amount so recovered. The Borrowers agree that any Lender so
purchasing a participation from another Lender pursuant to this Subsection 2.13
may, to the fullest extent permitted by law, exercise all of its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of such Borrower in the amount
of such participation.
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2.14 Defaulting Lenders.
(A) If any amount described in Subsection 2.5, Subsection 2.6 or in
Subsection 2.20(F) hereof is not made available to Agent by a Lender (such
Lender being hereinafter referred to as a "Defaulting Lender") and Agent has
made such amount available to a Borrower or the Issuing Bank, as applicable,
Agent shall be entitled to recover such amount on demand from such Defaulting
Lender together with interest as hereinafter provided. If such Defaulting
Lender does not pay such amount forthwith upon Agent's demand therefor, Agent
shall promptly notify such Borrower and such Borrower shall immediately (but in
no event later than five Business Days after such demand) pay such amount to
Agent together with the amounts provided for in the immediately succeeding
sentence. Agent shall also be entitled to recover from such Defaulting Lender
and/or such Borrower, as the case may be, (x) interest on such amount in respect
of each day from the date such corresponding amount was made available by Agent
to such Borrower to the date such amount is recovered by Agent, at a rate per
annum equal to either (i) if paid by such Defaulting Lender, the overnight
Federal Funds Rate or (ii) if paid by such Borrower, the then applicable rate of
interest, calculated in accordance with Subsection 2.21(A) hereof, plus (y) in
each case, an amount equal to any costs (including legal expenses) and losses
incurred as a result of the failure of such Defaulting Lender to provide such
amount as provided in this Agreement. Nothing herein shall be deemed to relieve
any Lender from its duty to fulfill its obligations hereunder or to prejudice
any rights which any Borrower may have against any Lender as a result of any
default by such Lender hereunder, including, without limitation, the right of a
Borrower to seek reimbursement from any Defaulting Lender for any amounts paid
by a Borrower under clause (y) above on account of such Defaulting Lender's
default.
(B) The failure of any Lender to make the Loans to be made by it as part of
any Advance or fund its participation in any drawing under a Letter of Credit
shall not relieve any other Lender of its obligation, if any, hereunder to make
its Loans on the date of such Advance or fund its participation in any drawing
under any Letter of Credit, but no Lender shall be responsible for the failure
of any other Lender to make its Loans to be made by such other Lender on the
date of any Advance or to fund any Lender's participation in any drawing under a
Letter of Credit.
(C) Notwithstanding anything contained herein to the contrary, so long as
any Lender is a Defaulting Lender or has rejected its Revolving Credit
Commitment, Agent shall not be obligated to transfer to such Lender any payments
made by any Borrower to Agent for the benefit of such Lender; and, such Lender
shall not be entitled to the sharing of any payments pursuant to Subsection
2.13. Amounts payable to such Lender under Subsection 2.13 shall instead be
paid to Agent. Agent may hold and, in its discretion, re-lend to a Borrower for
the account of such Lender the amount of all such payments received by it for
the account of such Lender. For purposes of voting or consenting to matters
with respect to the Financing Agreements and determining Proportionate Shares,
such Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Proportionate Share shall be deemed to be zero (O) and each other Lender's
Proportionate Share shall be deemed to be increased pro rata based on its
Proportionate Share theretofore existing. This Subsection 2.14(C) shall remain
effective with respect to such Lender until (x) the Liabilities
34
under this Agreement shall have been declared or shall have become immediately
due and payable or (y) the Required Lenders, Agent and the Borrowers shall have
waived such Lender's default in writing. No Revolving Credit Commitment of any
Lender shall be increased or otherwise affected, and performance by the
Borrowers shall not be excused, by the operation of this Subsection 2.14(C). Any
payments of principal or interest which would, but for this Subsection 2.14, be
paid to any Lender, shall be paid to the Lenders who shall not be in default
under their respective Revolving Credit Commitments and who shall not have
rejected any Revolving Credit Commitment, for application to the Revolving Loans
or to provide cash collateral in such manner and order as shall be determined by
Agent.
2.15 Term of this Agreement.
(A) Subject to Subsection 2.15(B), this Agreement shall be effective until
the Termination Date (the period during which this Agreement is effective being
the "Term") and shall terminate on the Termination Date; provided, however, that
the Required Lenders shall retain the right to terminate this Agreement at any
time upon the occurrence and during the continuance of a Default; and further
provided, however, that (i) all of Agent's and each Lender's rights and remedies
under this Agreement and the other Financing Agreements and (ii) all of Agent's
and each Lender's security interests shall survive such termination until all of
the Liabilities have been fully paid and satisfied and all Letters of Credit
have expired, been canceled or terminated. Upon the effective date of
termination of this Agreement (including without limitation any termination
pursuant to Subsection 2.21(E)), all of the Liabilities shall become immediately
due and payable without notice or demand. Notwithstanding any termination,
until all of the Liabilities shall have been fully paid and satisfied, all
financing arrangements between each Borrower and Agent and Lenders shall have
been terminated and all Letters of Credit shall have expired, been canceled or
terminated, all of Agent's and each Lender's rights and remedies under this
Agreement and the other Financing Agreements shall survive, Agent shall be
entitled to retain its security interest in and to all existing and future
Collateral, and each Borrower shall continue to remit collections of Accounts
and proceeds as provided herein.
(B) The Termination Date in effect from time to time may be extended for
additional periods of one year respectively (but in no event may the Termination
Date be extended to a date after the Final Termination Date, and if the last day
of such period is not a Business Day, the new Termination Date shall be the
first preceding day that is a Business Day), by a written notice executed by
Agent and each Lender (an "Extension Letter") and delivered to the Borrowers
between the 90th and 60th day immediately prior to the Termination Date then in
existence stating that the Termination Date has been extended and setting forth
the new Termination Date, but Agent and the Lenders shall give such notice only
if Agent and the Lenders have received written notice from the Borrowers between
the 150th and 90th day prior to the Termination Date then in existence
requesting such an extension; provided, further, that (i) prior to any extension
of the Termination Date, Agent and each Lender shall have received from the
Borrowers all instruments, agreements, certificates, legal opinions and other
documents and matters as Agent may request, and (ii) the Termination Date may
not be extended if any Lender in its sole discretion determines not to agree
35
to extend the Termination Date. Each Borrower acknowledges that there is no
commitment on the part of Agent or any Lender to extend the Termination Date.
2.16 Additional Costs, Etc. With Respect to LIBOR Rate Advances.
(A) If, in the reasonable determination of any Lender, any applicable
"law," which expression, as used in this Section 2, includes statutes, rules and
regulations thereunder and interpretations thereof by any competent court or by
any Governmental Authority or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to such Lender or any Lending Affiliate by any central bank or
other fiscal, monetary or other authority (whether or not having the force of
law) adopted, becoming effective, or any change in the interpretation or
administration thereof, or compliance by such Lender or any Lending Affiliate
maintaining any LIBOR Rate Advance, in each case after the date hereof, shall:
(i) subject such Lender or any Lending Affiliate to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with respect to
LIBOR Rate Advances (other than taxes imposed on or measured by the overall
net income of such Lender), or
(ii) change the taxation of payments to such Lender or any Lending
Affiliate of principal or interest on or any other amount relating to any
LIBOR Rate Advances (other than taxes imposed on or measured by the overall
net income of such Lender), or
(iii) impose or increase or render applicable any special deposit,
assessment, insurance charge, reserve or liquidity or other similar
requirement (whether or not having the force of law) against assets held by,
or deposits in or for the account of, or loans by such Lender or any Lending
Affiliate, or
(iv) impose on such Lender or any Lending Affiliate any other conditions
or requirements with respect to LIBOR Rate Advances, and the result of any of
the foregoing is:
(I) to increase the cost to such Lender of making, funding or
maintaining its LIBOR Rate Advances, or
(II) to reduce the amount of principal, interest or other amount
payable to such Lender hereunder on account of LIBOR Rate Advances, or
(III) to require such Lender to make any payment or to forego any
interest or other sum payable under this Agreement,
36
then, and in each such case, the Borrowers will, upon demand made by such Lender
at any time and from time to time and as often as the occasion therefor may
arise, pay to such Lender such additional amounts as will be sufficient to
compensate such Lender for such additional cost, reduction, payment or foregone
interest or other sum. The foregoing shall not be deemed to apply to any change
in the Reserve Rate applied in the calculation of the LIBOR Rate.
(B) Neither Agent nor any Lender shall in any event be responsible to any
Borrower in any way if Agent is not able for any reason beyond its control to
quote a LIBOR Rate with respect to any proposed Interest Period. If, on any
proposed date of determination of a LIBOR Rate, Agent shall determine (which
determination shall be conclusive and binding on the Borrowers) that it is
unable to determine the LIBOR Rate with respect to any proposed Interest Period,
Agent shall promptly notify the Borrowers and the Lenders of such determination.
In such event, any then pending notice by a Borrower requesting the making of a
LIBOR Rate Advance, or conversion of any Base Rate Advance to a LIBOR Rate
Advance, or continuation of any LIBOR Rate Advance shall be deemed and shall
constitute a request for the making of a Base Rate Advance or a conversion to a
Base Rate Advance, as the case may be.
(C) If Agent determines that either maintenance of a LIBOR Rate Advance
would violate any applicable law, or that deposits of a type and maturity
appropriate to match fund any LIBOR Rate Advance does not accurately reflect the
cost of making or maintaining such a LIBOR Rate Advance, then Agent shall
suspend the availability of LIBOR Rate Advances so long as any such condition
exists, and all affected LIBOR Rate Advances outstanding shall be immediately
repaid upon notice to the Borrowers from Agent to do so; provided, however, that
if otherwise permitted under this Agreement the Borrowers may reborrow, as a
Base Rate Advance, an amount equal to the principal amount of all such affected
LIBOR Rate Advances so repaid.
2.17 Indemnification for Losses. Without limiting any of the other
provisions of this Agreement, each Borrower will, on demand by any Lender, at
any time and from time to time and as often as the occasion therefor may arise,
indemnify each Lender against any losses, costs or expenses which such Lender
may at any time or from time to time sustain or incur with respect to LIBOR Rate
Advances as a consequence of:
(A) the failure by such Borrower to borrow or continue any LIBOR Rate
Advance on the date of borrowing, conversion or continuation designated by such
Borrower, or
(B) the failure by such Borrower to pay, punctually on the due date
thereof, any amount payable by such Borrower under this Agreement, or
(C) the accelerated payment of such Borrower's obligations under this
Agreement as a result of a Default, or
37
(D) any voluntary repayment or prepayment of any principal of any LIBOR
Rate Advance on a date other than the last day of the Interest Period relating
to the principal so repaid or prepaid or so converted.
Such losses, costs or expenses will include, but will not be limited to,
the reimbursement for any loss, expense or cost in liquidating or employing
deposits acquired to fund any affected LIBOR Rate Advance.
2.18 Capital Adequacy. If, after the date hereof, either (A) the
introduction of or any change in or in the interpretation of any law or (B)
compliance by any Lender or any Lending Affiliate with any guideline or request
from any central bank or Governmental Authority (whether or not having the force
of law) (i) affects or would affect the amount of capital required or expected
to be maintained by any Lender or any of its Lending Affiliates and the
respective Lender reasonably determines that the amount of such capital is
increased by or based upon the existence of the LIBOR Rate Advances then, upon
demand by such Lender, the Borrowers shall immediately pay to such Lender, from
time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender in light of such circumstances, to the extent that such
Lender reasonably determines such increase in capital to be allocable to the
existence of LIBOR Rate Advances or (ii) has or would have the effect of
reducing the rate of return on the capital or assets of such Lender or any
Person controlling such Lender as a consequence of, as determined by the Lender
in its sole discretion and in Good Faith, the existence of such Lender's
commitments or obligations under this Agreement or any of the other Financing
Agreements, then, upon demand by such Lender, the Borrowers immedi ately shall
pay to the Lender, from time to time as specified by the Lender, additional
amounts sufficient to compensate such Lender in light of such circumstances.
The obligations of the Borrowers under this Subsection 2.18 shall survive
payment of the Liabilities and termination of this Agreement.
2.19 Certificate. A certificate signed by an officer of a Lender,
setting forth any additional amount required to be paid by any Borrower to the
Lender under any provision of Subsections 2.16 through 2.18 and the computations
made by such Lender to determine such additional amount, shall be submitted by
such Lender to such Borrower in connection with each demand made at any time by
such Lender upon such Borrower under any of such provisions. Such certificate,
in the absence of manifest error, shall be conclusive as to the additional
amount owed.
2.20 Letters of Credit.
(A) Issuance of Letters of Credit. Subject to the terms and conditions of
this Agreement (including, without limitation, the conditions precedent set
forth in Subsections 4.1 and 4.2) on and after the Closing Date and to and
excluding the Termination Date, Agent shall request the Issuing Bank to issue,
and the Issuing Bank shall issue, standby Letters of Credit hereunder at the
request of any Borrower and for its account, as more specifically described
below; provided, however, that Agent shall not be obligated to request the
Issuing Bank to issue, and the Issuing Bank shall not be obligated to issue, any
Letter of Credit for the account of any Borrower if at the time of
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such requested issuance (a) the face amount of such requested Letter of Credit,
when added to the aggregate outstanding principal amount of the Revolving Loans
made to the Borrower for whose account such Letter of Credit is being issued and
all Letter of Credit Obligations of such Borrower then outstanding would cause
such Revolving Loans and Letter of Credit Obligations to exceed such Borrower's
Sublimit or the Current Asset Base of such Borrower; or (b) (i) the face amount
of such requested Letter of Credit, when added to the aggregate outstanding
principal amount of the Revolving Loans and all Letter of Credit Obligations
then outstanding would cause the sum of the Revolving Loans and Letter of Credit
Obligations to exceed the Total Revolving Commitments then in effect ; (ii) the
face amount of such Letter of Credit when added to the Letter of Credit
Obligations then outstanding, would exceed $7,000,000; or (iii) any order,
judgment or decree of any Governmental Authority shall purport by its terms to
enjoin or restrain the Issuing Bank from issuing such Letter of Credit, or any
law or governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) from any Governmental Authority with jurisdiction
over the Issuing Bank shall prohibit, or request that the Issuing Bank refrain
from, the issuance of Letters of Credit in particular or shall impose upon the
Issuing Bank with respect to any Letter of Credit any restriction or reserve or
capital requirement (for which the Issuing Bank is not otherwise compensated) or
any unreimbursed loss, cost or expense which was not in effect as of the date of
this Agreement and which the Issuing Bank in Good ▇▇▇▇▇ ▇▇▇▇▇ material to it.
(B) Terms of Letters of Credit. Each Letter of Credit shall be in a form
and substance acceptable to Agent and the Issuing Bank. Each Borrower shall
execute the Issuing Bank's standard form of application and reimbursement
agreement for each Letter of Credit to be issued for such Borrower's account.
In no event may the term of any Letter of Credit issued hereunder exceed twenty
four (24) months or such greater period as may be acceptable to the Issuing Bank
in its sole discretion, and all Letters of Credit issued hereunder shall expire
no later than the date that is five (5) Business Days prior to the last day of
the Term. The Borrowers shall cause any Letter of Credit containing an
automatic renewal provision to also contain a provision pursuant to which,
notwithstanding any other provisions thereof, it shall expire no later than the
date that is five (5) Business Days prior to the last day of the Term.
(C) Lenders' Participation. Immediately upon issuance or amendment by the
Issuing Bank of any Letter of Credit in accordance with the procedures set forth
in Subsection 2.20(A), each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Issuing Bank, without recourse
or warranty, an undivided interest and participation to the extent of such
Lender's Proportionate Share in the liability with respect to such Letter of
Credit (including, without limitation, all obligations of a Borrower with
respect thereto, other than amounts owing to the Issuing Bank consisting of
Issuing Bank Fees) and any security therefor or guaranty pertaining thereto.
(D) Notice of Issuance. Whenever any Borrower desires the issuance of a
Letter of Credit, such Borrower shall give Agent a fully completed and duly
executed letter of credit application and agreement in such form as the Issuing
Bank and Agent may require and in accordance with the Issuing Bank's customary
practices for letters of credit of the type requested (a
39
"Letter of Credit Request") no later than 12:00 noon Chicago time at least four
(4) Business Days in advance of the proposed date of issuance of any Letter of
Credit (or, in each case, such shorter period as may be agreed to by the Issuing
Bank). The transmittal by a Borrower of each Letter of Credit Request shall be
deemed to be a representation and warranty by such Borrower that the Letter of
Credit may be issued in accordance with and will not violate any of the
requirements of Subsection 2.20(A). No Letter of Credit shall require payment
against a conforming draft to be made thereunder prior to the second business
day (under the laws of the jurisdiction of the Issuing Bank) after the date on
which such draft is presented, together with all documents and/or certificates
required to be presented in connection therewith under the terms of the
applicable Letter of Credit. A Letter of Credit Request may be given to Agent
telephonically and, if requested by Agent, with prompt confirmation in writing.
(E) Payment of Amounts Drawn Under Letters of Credit. In the event of any
drawing under any Letter of Credit by the beneficiary thereof, the Issuing Bank
shall notify Agent, which shall notify the Borrower for whose account the Letter
of Credit was issued of such draw, not later than 12:00 Noon, Chicago time, on
the Business Day immediately prior to the date on which the Issuing Bank intends
to honor such drawing. Such Borrower shall give notice to be received by Agent
and the Issuing Bank not later than 2:00 P.M., Chicago time, on such Business
Day if it intends to reimburse the Issuing Bank for the amount of such drawing
with funds other than the proceeds of Revolving Loans. Such notice from a
Borrower shall be irrevocable and, if given, such Borrower shall reimburse the
Issuing Bank not later than the close of business Chicago time on the day on
which such drawing is honored in an amount in immediately available funds equal
to the amount of such drawing. If Agent shall not have timely received such
notice (i) such Borrower shall be deemed to have timely given a Notice of
Borrowing to Agent to make a Base Rate Advance on the date on which such drawing
is honored in an amount equal to the amount of such drawing and (ii) subject to
satisfaction or waiver of the conditions specified in Section 2 hereof and the
other terms and conditions of Advances contained herein, the Lenders shall, on
the date of such drawing, make Revolving Loans in the amount of such drawing,
the proceeds of which shall be applied directly by Agent to reimburse the
Issuing Bank for the amount of such drawing or payment. If for any reason,
proceeds of such Revolving Loans are not received by the Issuing Bank on such
date in an amount equal to the amount of such drawing, such Borrower shall be
obligated to and shall reimburse the Issuing Bank, on the business day (under
the laws of the jurisdiction of the Issuing Bank) immediately following the date
of such drawing, in an amount in immediately available funds equal to the excess
of the amount of such drawing over the amount of such Revolving Loans, if any,
which are so received, plus accrued interest on such amount at the rate set
forth in Subsection 2.21(A) hereof for Base Rate Advances on the Revolving
Loans.
(F) Payment by Lenders. In the event that a Borrower does not reimburse
the Issuing Bank for the full amount of any drawing pursuant to Subsection
2.20(E), unless Agent shall elect to make a Revolving Loan in accordance with
Subsection 2.6(B), Agent shall promptly notify each Lender of the unreimbursed
amount of such drawing and of such Lender's respective participation therein.
Unless Agent shall have so elected, each Lender shall make available to Agent
for the benefit of the Issuing Bank an amount equal to such Lender's respective
participation in
40
immediately available funds, not later than 2:00 P.M. Chicago time on the
business day (under the laws of the jurisdiction of the Issuing Bank) after the
date notified by Agent. In addition, in the event that any Lender fails to make
available to Agent the amount of any such Lender's participation in such Letter
of Credit Obligations as provided in this Subsection 2.20(F), Agent may, but
shall not be obligated to, fund the amount of such Defaulting Lender's
participation in such Letter of Credit and recover such amount on demand from
such Defaulting Lender in accordance with Subsection 2.14(A). In the event that
any Lender fails to make available to Agent the amount of such Lender's
participation in such Letter of Credit as provided in this Subsection 2.20(F),
and Agent does not elect to fund to the Issuing Bank such Defaulting Lender's
participation in such Letter of Credit as provided in the immediately preceding
sentence, the Issuing Bank shall be entitled to recover such amount on demand
from such Lender together with interest at the Federal Funds Rate for the first
three Business Days while such amount remains unpaid and thereafter at the Base
Rate. Agent shall distribute to each Lender which has paid all amounts payable
by it under this Subsection 2.20(F) with respect to any Letter of Credit issued
by the Issuing Bank such Lender's Proportionate Share of all payments
subsequently received by Agent from the Borrower for whose account the Letter of
Credit was issued in reimbursement of drawings honored by the Issuing Bank under
such Letter of Credit when such payments are received.
(G) Obligations Absolute. The obligations of the Lenders under Subsection
2.20(F) hereof shall be unconditional and irrevocable and shall be paid strictly
in accordance with the terms of this Agreement under all circumstances,
provided, however, that the Lenders shall have no obligation under Subsection
2.20(F) in the event of the Issuing Bank's willful misconduct or gross
negligence in determining whether documents presented under the Letter of Credit
comply with the terms of such Letter of Credit.
2.21 Interest, Fees and Expenses.
(A) Interest. Each Borrower shall pay to Agent for the account of the
Lenders interest on the outstanding principal balance of its Revolving Loans and
other Liabilities, other than the outstanding principal amount of LIBOR Rate
Advances, at a per annum rate equal to the Base Rate plus the Applicable BR
Margin. Each Borrower shall pay to the Lenders interest on the outstanding
principal balance of LIBOR Rate Advances comprising a portion of its Revolving
Loans at a per annum rate equal to the LIBOR Rate plus the Applicable LIBOR
Margin, it being expressly understood and agreed that interest shall be computed
by charging for the first day in each Interest Period but not for the last day
in such Interest Period. Interest in respect of Base Rate Advances shall be
payable monthly in arrears not later than the first Business Day of each
following month. Interest in respect of LIBOR Rate Advances shall be payable at
the end of the applicable Interest Period, and if the applicable Interest Period
is greater than three months at the end of each three-month period following
commencement of the Interest Period. All interest and fees provided for
hereunder shall be computed on the basis of a 360-day year for the actual number
of days elapsed. Following the occurrence of a Default and during the
continuance thereof, each Borrower shall pay to Agent for the account of the
Lenders interest from the date of such Default (or, in the event of a Default
other than as described in Subsections 9.1(A), (H) or (I) of this Agreement,
from the date
41
of notice to such effect to Borrowers from Agent) at a rate (the "Post-Default
Rate") equal to the rate set forth above for each of the Liabilities plus three
percent (3.00%) per annum on the outstanding principal balance of all of the
Liabilities and such interest shall be payable as provided above or, if sooner,
on demand.
(B) Facility Fees. Rail shall pay to Agent for the account of all of the
Lenders (to be distributed among the Lenders according to their respective
Proportionate Shares) a facility fee (the "Facility Fee") equal to the sum of
three-eighths of one percent (3/8%) per annum of the average daily unused
portion of the first $50 million of the Maximum Facility Amount and one-half of
one percent (1/2%) per annum of the average daily unused portion of the
remaining Maximum Facility Amount. The Facility Fee shall be payable quarterly
in arrears on the first Business Day of each February, May, August and November,
and on the termination of this Agreement. The Facility Fee shall be computed on
the basis of a 360-day year for the actual number of days elapsed.
(C) [INTENTIONALLY OMITTED.]
(D) Maximum Lawful Rate. This Agreement and the Revolving Notes are
hereby limited by this Subsection 2.21(D). In no contingency, whether by reason
of acceleration of the maturity of the amounts due hereunder or otherwise, shall
interest and fees contracted for, charged, received, paid or agreed to be paid
to Agent or any Lender exceed the maximum amount permissible under applicable
law. If, from any circumstance whatsoever, interest and fees would otherwise be
payable to Agent or any Lender in excess of the maximum amount permissible under
applicable law, the interest and fees shall be reduced to the maximum amount
permitted under applicable law. If from any circumstance, Agent or any Lender
shall have received anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excess of interest
shall be applied to the reduction of the principal amount of the Liabilities and
not to the payment of fees or interest, or if such excessive interest exceeds
the unpaid balance of the principal amount of Liabilities, such excess shall be
refunded to the applicable Borrower.
(E) Early Termination Charge. Subject to the provisions contained in
Subsection 2.15, the Borrowers may terminate this Agreement at any time other
than at the end of the Term upon the payment by the Borrowers to Agent for the
account of the Lenders (based on their respective Proportionate Shares), in
addition to payment of the then outstanding principal and accrued interest and
payment and performance of all other Liabilities (including without limitation
any fees due under Section 2 hereof and any other fees owed to Agent or
Lenders), of a termination charge (the "Termination Charge"), determined without
giving effect to any reduction in the Maximum Facility Amount pursuant to
Subsection 2.7(E), in an amount equal to two percent (2.00%) of the Maximum
Facility Amount (minus the amount of any reduction in the Total Revolving
Commitments on which any Borrower has paid the Commitment Reduction Fee due with
respect thereto) if such termination occurs on or prior to March 31, 1997, one
percent (1.00%) of the Maximum Facility Amount (minus the amount of any
reduction in the Total Revolving Commitments on which any Borrower has paid the
Commitment Reduction Fee due with respect thereto) if such termination occurs
after March 31, 1997 but on or prior to March 31, 1999 and one-
42
half of one percent (1/2%) of the Maximum Facility Amount (minus the amount of
any reduction in the Total Revolving Commitments on which any Borrower has paid
the Commitment Reduction Fee due with respect thereto) if such termination
occurs after March 31, 1999 but before March 31, 2000.
(F) Reimbursement of Expenses. From and after the Closing Date, each
Borrower shall promptly reimburse Agent for all reasonable Expenses of Agent as
the same are incurred by Agent and upon receipt of invoices therefor and, if
requested by any Borrower, such reasonable backup materials and information as
such Borrower shall reasonably request.
(G) Letter of Credit Fees.
(i) Agent, for the ratable benefit of the Lenders, shall be entitled to
charge to the account of any Borrower for whose account a Letter of Credit has
been issued on the last day of each month, a fee (the "L/C Fee"), in an amount
equal to one percent (1.00%) per annum of the average daily outstanding Letter
of Credit Obligations of such Borrower for each month (or portion thereof) ,
payable monthly in arrears on the first Business Day of each following month.
Notwithstanding the foregoing, L/C Fees after notice to the Borrowers from Agent
following the occurrence and during the continuance of a Default shall be
payable at a rate equal to the rate at which the L/C Fees are charged pursuant
to the immediately preceding sentence, plus two percent (2.00%) per annum and
shall be payable as provided above or, if sooner, on demand. The L/C Fee shall
be computed on the basis of a 360-day year for actual days elapsed.
(ii) Each Borrower shall pay the Issuing Bank all of the Issuing Bank's
customary charges for out-of-pocket and administrative expenses upon the
issuance of any Letter of Credit for such Borrower's account and for any other
out-of-pocket costs, fees and expenses incurred by the Issuing Bank in
connection with the application for, issuance of or amendment to any Letter of
Credit. Agent shall be entitled to charge to the account of such Borrower
therefor, together with, as and when incurred by Agent or any Lender, any other
charges, fees, costs and expenses charged to Agent or any Lender for such
Borrower's account by the Issuing Bank (other than any fees charged to Agent or
any Lender which would be duplicative of the L/C Fee paid to Agent for the
benefit of the Lenders) (collectively, including the amounts described in the
first sentence of this Subsection 2.21(G)(ii), the "Issuing Bank Fees") in
connection with the issuance of any Letters of Credit by the Issuing Bank. Each
determination by Agent of L/C Fees, Issuing Bank Fees and other fees under this
Subsection 2.21(G) shall be conclusive and binding for all purposes, absent
manifest error.
(H) Additional Fees. In addition, Rail shall pay to Agent, for its own
benefit, the other fees required to be paid in the Fee Letter.
(I) Authorization to Charge Loan Account. Each Borrower hereby authorizes
Agent to charge such Borrower's Loan Account with the amount of all Fees,
Expenses and other payments to be paid hereunder, under the Fee Letter and under
the other Financing Agreements as and when such payments become due. Each
Borrower confirms that any charges which Agent may
43
so make to such Borrower's Loan Account as herein provided will be made as an
accommodation to such Borrower and solely at Agent's discretion. Agent may in
its sole discretion elect to ▇▇▇▇ any Borrower for such amounts in which case
such amounts shall be immediately due and payable with interest as provided
herein.
(J) Indemnification in Certain Events. If after the date of the Original
Agreement, either (i) any change in or in the interpretation of any law or
regulation is introduced, including, without limitation, with respect to reserve
requirements, applicable to Agent, any of the Lenders, the Issuing Bank or any
Lending Affiliate or (ii) Agent, any of the Lenders, the Issuing Bank or any
Lending Affiliate complies with any future guideline or request from any central
bank or other Governmental Authority or (iii) Agent, any of the Lenders, the
Issuing Bank or any Lending Affiliate determines that the adoption after the
date of the Original Agreement of any applicable law, rule or regulation
regarding capital adequacy, or any change therein after the date of the Original
Agreement, or any change after the date of the Original Agreement in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof has or would have the effect described below, or Agent, any of the
Lenders, the Issuing Bank or any Lending Affiliate complies with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, and in the case of any
event set forth in this clause (iii), such adoption, change or compliance has or
would have the direct or indirect effect of reducing the rate of return on
Agent's, any of the Lenders', the Issuing Bank's or any Lending Affiliate's
capital as a consequence of its obligations hereunder to a level below that
which Agent, such Lender, the Issuing Bank, or any Lending Affiliate could have
achieved but for such adoption, change or compliance (taking into consideration
Agent's, such Lender's, the Issuing Bank's or the Lending Affiliate's policies
as the case may be with respect to capital adequacy) by an amount deemed by
Agent, such Lender, the Issuing Bank or the Lending Affiliate to be material,
and any of the foregoing events described in clauses (i), (ii) or (iii)
increases the cost to Agent, the Issuing Bank, any of the Lenders or any Lending
Affiliate of (A) funding or maintaining any of the Total Revolving Commitments
or (B) issuing, making or maintaining any Letter of Credit or of purchasing or
maintaining any participation therein, or reduces the amount receivable in
respect thereof by Agent, the Issuing Bank, any Lender or any Lending Affiliate,
then the Borrowers shall upon demand by Agent, pay to Agent, for the account of
Agent, each applicable Lender or, as applicable, the Issuing Bank or Lending
Affiliate, additional amounts sufficient to indemnify Agent, the Lenders, the
Issuing Bank or the Lending Affiliate against such increase in cost or reduction
in amount receivable. A certificate as to the amount of such increased cost and
setting forth in reasonable detail the calculation thereof shall be submitted to
the Borrowers by Agent, or the applicable Lender, Issuing Bank or Lending
Affiliate, and shall be conclusive absent manifest error. The obligations of the
Borrowers under this Subsection 2.21(J) shall survive payment of the Liabilities
and termination of this Agreement.
(K) Audit Fees. The Borrowers shall pay to Agent, on the last day of each
calendar month during which an audit, inventory analysis or other business
analysis is performed by or for the benefit of Agent, or, if earlier, upon the
completion of such audit or analysis, an audit fee in an amount equal to $500.00
per day for each Person employed to perform such audit or
44
analysis, which Person may be an employee of Agent or an independent contractor;
provided, however, Agent shall not, prior to the occurrence of a Default or
Event of Default, charge any Borrower more than $15,000 in the aggregate in any
year for such audit fees plus, in any event, all reasonable out-of-pocket costs
or expenses incurred by Agent in the performance of such audit or analysis.
2.22 No Novation. This Agreement (i) merely reevidences the indebtedness
heretofore evidenced by the Original Agreement, (ii) is given in substitution
for, and not as payment of, the indebtedness evidenced by the Original Agreement
and (iii) is in no way intended to constitute a novation or discharge of the
indebtedness outstanding evidenced by the Original Agreement or the Notes.
3. REPORTING AND ELIGIBILITY REQUIREMENTS.
3.1 Monthly Reports and Collateral Reports.
(A) Monthly Reports.
Each Borrower shall submit to Agent and to each Lender not later than the
twentieth (20th) day of each Fiscal Month, a report (the "Initial Monthly
Report"), accompanied by a certificate in the form attached hereto as Exhibit D-
1A, which shall be signed by an Authorized Officer of such Borrower. The Initial
Monthly Report shall include, as of the last Business Day of the preceding
month:
(i) an aged trial balance of such Borrower's Accounts ("Accounts Trial
Balance") prepared in a manner reasonably acceptable to Agent; and
(ii) a schedule of Inventory owned by such Borrower and in such Borrower's
possession or otherwise, by location, valued at the lesser of cost, determined
on a first-in, first-out basis, or market, and adjusted for such reserves as
Agent has previously indicated to such Borrower are deemed by Agent to be
appropriate in its sole discretion, together with a statement, showing the
detail as to each plant of such Borrower, of such Borrower's cost of goods
sold for the six month period ending with such Fiscal Month.
In addition, each Borrower shall submit to Agent and to each Lender not later
than the 20th Business Day after each Fiscal Month, a report (the "Subsequent
Monthly Report", and collectively with the Initial Monthly Report, the "Monthly
Report"), accompanied by a certificate in the form attached hereto as Exhibit D-
1B, which shall be signed by an Authorized Officer of such Borrower. The
Subsequent Monthly Report shall include, as of the last Business Day of the
preceding month:
(i) a report summarizing such Borrower's aged trial balance of accounts
payable prepared in a manner and in detail reasonably acceptable to Agent or,
at such Borrower's option, an aged trial balance of accounts payable, in each
case showing the name of each
45
party to whom a payable is due and the amounts, including an aging thereof, in
such form as Agent may reasonably request;
(ii) a reconciliation of such Borrower's Accounts and Inventory between
the amount shown on such Borrower's books and such Borrower's collateral
reports delivered to Agent in the form of Exhibit D-2 and Exhibit D-3 attached
hereto, respectively;
(iii) the outstanding principal balance of the Revolving Loans and the
undrawn face amount of all Letters of Credit;
(iv) a statement that there exists no Default or Event of Default, or, if
any Default or Event of Default exists, a specific description of the nature
and the period of existence thereof and the action such Borrower has taken and
proposes to take with respect thereto;
(v) a statement that no Equipment has been sold, damaged, destroyed,
abandoned, become obsolete (except for (a) ordinary depreciation and wear and
tear and (b) damage to or the destruction or retirement of Equipment with a
value (as such term is used in Subsection 8.6 hereof) not in excess of
$500,000 in the aggregate for all Borrowers in any one calendar year) since
the later of the date of the last Monthly Report or the schedule of Equipment
most recently delivered to Agent by such Borrower or, if any such events have
occurred, describing the same with such specificity as is satisfactory to
Agent; and
(vi) such additional information as Agent shall reasonably require.
(B) Collateral Reports.
In addition, each Borrower shall provide to Agent a written report at least
once every month unless requested more often by Agent (the "Collateral Report"),
substantially in the form attached hereto as Exhibit D-4 describing or
including, in a form and with such specificity as is satisfactory to Agent:
(i) all Accounts created or acquired by such Borrower subsequent to the
immediately preceding Collateral Report; together with copies of any other
reports or information, in a form and with such specificity as is satisfactory
to Agent, concerning Accounts included, described or referred to in the
Collateral Reports and any other documents in connection therewith requested
by Agent, including, without limitation, but only if specifically requested by
Agent, copies of all invoices and bills of lading prepared in connection with
such Accounts;
(ii) any net decrease in the aggregate amount of Eligible Accounts of such
Borrower since that last reported to Agent in the preceding Collateral Report,
and, if specifically requested by Agent, information in connection with (a)
any Account which has ceased to be an Eligible Account (including by reason of
collection thereof) since the most
46
recent Collateral Report and (b) any other Account with respect to which any
setoff, counterclaim or dispute has been asserted by any Account Debtor or any
allegation of delayed performance or nonperformance has been made by any
Account Debtor accompanied by a statement of any modification, adjustment or
compromise with respect to any such Account which affects the amount due or
the time when payment of such Account is to be made; provided such Borrower
shall not be deemed to be in breach of this clause (ii) unless the aggregate
amount of Accounts as to any Account Debtor as to which such Borrower fails to
provide such information exceeds $250,000;
(iii) information on all amounts collected by such Borrower on Accounts
subsequent to the immediately preceding Collateral Report;
(iv) a calculation of such Borrower's Current Asset Base in a form
reasonably acceptable to the Agent; and
(v) such additional information as Agent shall require.
(C) Electronic Transmission of Reports. Notwithstanding anything herein
to the contrary, the Monthly Reports, Collateral Reports and other reports with
respect to Collateral delivered by the Borrowers to Agent may be sent, for
receipt by Agent by the time specified or required pursuant to the terms of this
Agreement, by electronic transmission (in lieu of other written forms), provided
that (i) the form of such electronic transmission shall be reasonably acceptable
to Agent; (ii) the electronic transmission shall contain the electronically
transmitted signature of an Authorized Officer of such Borrower; and (iii) the
form of such electronic transmission shall contain the following legend:
Pursuant to, and in accordance with, the terms and provisions of that
certain Amended and Restated Loan and Security Agreement (the "Agreement")
dated as of August 7, 1996 between American National Bank and Trust Company
of Chicago, as Agent ("Agent"), ABC Rail Products Corporation, a Delaware
corporation and certain other parties, the undersigned Borrower (as defined
in the Agreement), is executing and delivering by electronic transmission
to Agent this report accompanied by supporting data (collectively referred
to as the "Report"). Borrower warrants and represents to Agent that the
Report is true, correct and based on information contained in Borrower's
own financial accounting records. Borrower, by the execution of the Report,
hereby ratifies, confirms and affirms all of the terms, conditions and
provisions of the Agreement, and further certifies on this day of
_______________, ________, that Borrower is in compliance with the
Agreement. The Authorized Officer whose name is
47
written below hereby adopts such written name as his signature with present
intention to authenticate a writing.
3.2 Eligible Accounts. Agent shall have the sole right, in its discretion
exercised in Good Faith, to determine which Accounts are eligible (the "Eligible
Accounts"). Without limiting Agent's discretion, the following Accounts shall
not be Eligible Accounts: (i) Accounts which remain unpaid one hundred twenty
(120) days after the original date of the applicable invoice; (ii) all Accounts
owing by a single Account Debtor, including a currently scheduled Account, if
fifty percent (50%) or more of the balance owing by such Account Debtor to a
Borrower are not, or would not be, Eligible Accounts as a result of the
application of the provisions of the preceding clause (i); (iii) Accounts with
respect to which the Account Debtor is a director, officer, employee, Subsidiary
or Affiliate of any Borrower; (iv) Accounts with respect to which the Account
Debtor is the United States of America or any department, agency or
instrumentality thereof, unless with respect to any such Account, the applicable
Borrower has complied to Agent's satisfaction with the provisions of the Federal
Assignment of Claims Act of 1940, including, without limitation, executing and
delivering to Agent all statements of assignment and/or notification which are
in form and substance acceptable to Agent and which are deemed necessary by
Agent to effectuate the assignment to Agent of such Accounts; (v) Accounts with
respect to which the Account Debtor is not a resident of the United States or
the Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Ottawa or
Saskatchewan Provinces of Canada, unless the Account Debtor has supplied the
applicable Borrower with an irrevocable letter of credit, issued by a financial
institution satisfactory to Agent, sufficient to cover such Account in form and
substance reasonably satisfactory to Agent; (vi) Accounts with respect to which
the Account Debtor has asserted a counterclaim or has a right of setoff (but
only to the extent of such asserted counterclaim or setoff unless the Account
Debtor is refusing to pay the remaining amount of such Account or Accounts);
(vii) Accounts for which the prospect of payment or performance by the Account
Debtor is or may be impaired as determined by Agent in its sole discretion
exercised in Good Faith; (viii) Accounts with respect to which Agent does not
have a first and valid fully perfected security interest; (ix) Accounts with
respect to which the Account Debtor is the subject of bankruptcy or a similar
insolvency proceeding or has made an assignment for the benefit of creditors or
whose assets have been conveyed to a receiver or trustee; (x) Accounts with
respect to which the Account Debtor's obligation to pay the Account is
conditional upon the Account Debtor's approval or is otherwise subject to any
repurchase obligation or return right, as with sales made on a ▇▇▇▇-and-hold,
guaranteed sale, sale-or-return, sale on approval or consignment basis; (xi)
Accounts to the extent that the Account Debtor's indebtedness to the applicable
Borrower exceeds a credit limit determined by Agent in Agent's sole discretion
in Good Faith; and (xii) Accounts from Account Debtors located in a state where
the applicable Borrower has failed to file any required notice of business
activities or similar notice or failed to qualify to do business if one or both
of such actions is a condition to such Borrower's enforcement or collection of
such Account under state law. In the event that any previously scheduled
Eligible Accounts cease to be Eligible Accounts under the above described
criteria, the applicable Borrower shall notify Agent as required in Subsection
3.1(B); provided, however, that if as a result thereof there has been a net
decrease of more than $250,000 (other than as a result of collections of
Accounts received by Agent) in the aggregate amount of Eligible Accounts since
the amount reported to Agent in the preceding Collateral Report,
48
such Borrower shall notify Agent thereof immediately after such Borrower has
obtained knowledge thereof. Notwithstanding the foregoing or the provisions of
Subsection 3.10 hereof, Accounts and Inventory arising (whether before or after
the time of acquisition) from any business acquired by any Borrower shall be
subject to criteria with respect to eligibility and inclusion in the Current
Asset Base of such Borrower, in addition to, or different from the foregoing or
the criteria set forth in Subsection 3.10 hereof or the percentage rates of
advance or other limitations set forth in Subsection 2.4 hereof, as Agent may in
its sole discretion determine from time to time.
3.3 Account Warranties. With respect to Accounts of any Borrower
scheduled, listed or referred to on any Accounts Trial Balance as Eligible
Accounts or which such Borrower wants Agent to consider as Eligible Accounts,
such Borrower warrants and represents to Agent and Lenders that (except as to an
aggregate amount of Accounts of all Borrowers not to exceed $250,000 at any
time): (i) they are genuine, are in all respects what they purport to be, and
are not evidenced by a judgment; (ii) they represent undisputed, bona fide
transactions, completed in accordance with the terms and provisions contained in
the documents, if any, delivered to Agent and Lenders with respect thereto;
(iii) to the best of such Borrower's knowledge the amounts shown on the
respective Accounts Trial Balance, such Borrower's books and records and all
invoices and statements which may be delivered to Agent and Lenders with respect
thereto are actually and absolutely owing to such Borrower and are not in any
way contingent; (iv) no payments have been or shall be made thereon except
payments immediately (except for payments directed to such Borrower in which
event such Borrower shall hold such payments in trust as provided in Subsection
3.6 and so deposit them within one Business Day of such Borrower's receipt
thereof) deposited into Lock Box Accounts (as hereinafter defined) or Blocked
Accounts (as hereafter defined) or delivered to Agent pursuant to this
Agreement; (v) to the best of such Borrower's knowledge there are no setoffs,
counterclaims or disputes existing or asserted with respect thereto (except to
the extent deducted from the amount of the relevant Account in determining the
amount of the relevant Eligible Account) and such Borrower has not made any
agreement with any Account Debtor for any deduction therefrom except a discount
or allowance allowed by such Borrower in the ordinary course of its business for
prompt payment; (vi) to the best of such Borrower's knowledge there are no
facts, events or occurrences which in any way impair the validity or enforcement
thereof or tend to reduce the amount payable thereunder as shown on the Accounts
Trial Balance, such Borrower's books and records and all invoices and statements
delivered to Agent with respect thereto; (vii) to the best of such Borrower's
knowledge, all Account Debtors have the capacity to contract and are solvent;
(viii) the services furnished and/or goods sold giving rise thereto are not
subject to any Lien or claim except that of Agent and except as specifically
permitted in Subsection 8.1 below; (ix) such Borrower has no knowledge of any
fact or circumstance which would impair the validity or collectibility thereof;
and (x) to the best of such Borrower's knowledge, there are no proceedings or
actions which are threatened or pending against any Account Debtor which might
result in any material adverse change in such Account Debtor's financial
condition. Each Borrower agrees to notify Agent with respect to any Accounts
(except as to Accounts not to exceed $250,000 in the aggregate for all Borrowers
at any time outstanding) scheduled on the Accounts Trial Balance with respect to
which the warranties in this Subsection 3.3 are not true and which such
Borrower, therefore, does not want Agent to consider as Eligible Accounts.
49
3.4 Verification of Accounts. Agent shall have the right, at any time or
times hereafter, in Agent's name or in the name of a nominee of Agent, to verify
the validity, amount or any other matter relating to any Accounts, by mail,
telephone, telegraph or otherwise and in any event to sign any Borrower's name
on any verification of Accounts and notices thereof to Account Debtors. Prior to
the occurrence of a Default or Event of Default, Agent shall give the applicable
Borrower telephonic or written notice prior to any such verification.
3.5 Account Covenants. Each Borrower shall promptly upon learning thereof
(except as to Accounts not to exceed $500,000 in the aggregate for all Borrowers
at any time outstanding): (i) inform Agent in writing of any material violation
of such Borrower's contractual obligations to any Account Debtor or of any
assertion of any claims, offsets or counterclaims by any Account Debtor; (ii)
furnish to and inform Agent of all material adverse information relating to the
financial condition of any Account Debtor; and (iii) notify Agent in writing if
any of its then existing Accounts scheduled to Agent with respect to which Agent
or any Lender has made an advance are no longer Eligible Accounts as to which
Agent and each Lender has not previously received notice from such Borrower that
the same have ceased to be Eligible Accounts hereunder.
3.6 Collection of Accounts and Payments. Each Borrower shall establish
lock box accounts ("Lock Box Accounts") and blocked accounts (the "Blocked
Accounts") with Agent and with such banks as are reasonably acceptable to Agent
(collectively, the "Collecting Banks") to which all Account Debtors shall
directly remit all payments on Accounts and in which each Borrower will
immediately deposit all cash and other payments made for Inventory and other
payments constituting proceeds of Collateral in the identical form in which such
payments were made, whether by cash or check. The Collecting Banks shall
acknowledge and agree in a manner satisfactory to Agent that all payments made
to the Lock Box Accounts and the Blocked Accounts are the sole and exclusive
property of Agent, that the Collecting Banks have no right to setoff against the
Lock Box Accounts or Blocked Accounts and that the Collecting Banks will wire or
otherwise transfer immediately available funds in a manner satisfactory to
Agent, funds deposited into the Lock Box Accounts and Blocked Accounts to Agent
on a daily basis as soon as such funds are collected. Each Borrower hereby
agrees that all payments made to the Lock Box Accounts, Blocked Accounts or
otherwise received by the Collecting Banks or Agent, whether on the Accounts or
as proceeds of such Borrower's other Collateral or otherwise will be the sole
and exclusive property of Agent and will be applied on account of such
Borrower's Revolving Loans and the other Liabilities as follows: (i) when the
funds have become available, for collection of checks and other instruments
(including automatic clearing house electronic funds transfers and depository
transfer checks) received by Agent at its offices in Chicago, Illinois, Agent
will credit (conditional upon final collection) all such payments to such
Borrower's Loan Account and (ii) all cash payments received by Agent at its
offices in Chicago, Illinois, including, without limitation, payments made by
wire transfer of immediately available funds received by Agent in time for
posting to the account of Agent on the date received, will be credited to such
Borrower's Loan Account immediately upon receipt. Application on account of the
Liabilities shall be made by Agent (i) first to all Base Rate Advances and (ii)
only when no Base Rate Advances are outstanding to LIBOR Rate Advances. Each
Borrower and each of its Affiliates, Subsidiaries, shareholders, directors,
officers, employees, agents
50
or those Persons acting for or in concert with such Borrower shall, acting as
trustee for Agent, receive, as the sole and exclusive property of Agent, any
monies, checks, notes, drafts or any other payment relating to and/or proceeds
of such Borrower's Accounts or other Collateral which come into the possession
or under the control of such Borrower or any of its Affiliates, Subsidiaries,
shareholders, directors, officers, employees, agents or those Persons acting for
or in concert with such Borrower and immediately upon receipt thereof, such
Borrower shall remit the same or cause the same to be remitted, in kind, to
Agent, at Agent's address set forth below. Each Borrower agrees to pay to Agent
any and all fees, costs and expenses which Agent incurs in connection with
opening and maintaining such Borrower's Lock Box Accounts and Blocked Accounts
and depositing for collection by Agent any check or item of payment received
and/or delivered to any Collecting Bank or Agent, respectively, on account of
the Liabilities and such Borrower further agrees to reimburse Agent for any
claims asserted by the Collecting Banks in connection with such Borrower's
Blocked Accounts and any amounts paid to any Collecting Bank arising out of
Agent's indemnification of such Collecting Bank against damages incurred by such
Person in the operation of any Blocked Account.
3.7 Appointment of Agent as Borrower's Attorney-in-Fact. Each Borrower
hereby irrevocably designates, makes, constitutes and appoints Agent (and all
officers, employees, agents and other Persons designated by Agent) as such
Borrower's true and lawful attorney-in-fact, and authorizes Agent, in such
Borrower's or Agent's name, to: (a) following the occurrence and during the
continuance of a Default (i) demand payment of Accounts; (ii) enforce payment of
Accounts by legal proceedings or otherwise; (iii) exercise all of such
Borrower's rights and remedies with respect to proceedings brought to collect an
Account; (iv) sell or assign any Account upon such terms, for such amount and at
such time or times as Agent deems advisable; (v) settle, adjust, compromise,
extend or renew any Account; (vi) discharge and release any Account; (vii)
prepare, file and sign such Borrower's name on any proof of claim in bankruptcy
or other similar document against an Account Debtor; (viii) notify the post
office authorities to change the address for delivery of such Borrower's mail to
an address designated by Agent, and open and deal with all mail addressed to
such Borrower; and (ix) do all acts and things which are necessary, in Agent's
sole discretion, to fulfill such Borrower's obligations under this Agreement;
and (b) at any time (i) take control in any manner of any item of payment or
proceeds thereof; (ii) have access to any lockbox or postal box into which such
Borrower's mail is deposited; (iii) endorse such Borrower's name upon any items
of payment or proceeds thereof and deposit the same in Agent's account on
account of the Liabilities; (iv) endorse such Borrower's name upon any chattel
paper, document, instrument, invoice, or similar document or agreement relating
to any Account or any goods pertaining thereto; and (v) sign such Borrower's
name on any verification of Accounts and notices thereof to Account Debtors.
3.8 Instruments and Chattel Paper. Immediately upon any Borrower's receipt
thereof, such Borrower shall deliver or cause to be delivered to Agent, with
appropriate endorsement and assignment to vest title and possession in Agent,
for the benefit of the Lenders, all chattel paper and instruments which such
Borrower now owns or may at any time or times hereafter acquire.
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3.9 Notice to Account Debtors. Upon and during the continuance of any
Event of Default or Default, Agent may, in its sole discretion, at any time or
times and without prior notice to any Borrower, notify any or all Account
Debtors that the Accounts have been assigned to Agent and that Agent has a
security interest therein. Agent may direct any or all Account Debtors to make
all payments upon the Accounts directly to Agent. Agent shall furnish the
applicable Borrower with a copy of any such notice.
3.10 Eligible Inventory. Agent shall have the sole right, in its sole
discretion, in Good Faith to determine which Inventory is eligible (the
"Eligible Inventory"). Without limiting Agent's discretion, the following
Inventory shall not be Eligible Inventory: (i) Inventory which is obsolete, not
in good condition, or not either currently usable or currently salable in the
ordinary course of such Borrower's business; (ii) Inventory which Agent
determines, in the exercise of Agent's sole discretion and in accordance with
Agent's customary business practices, to be unacceptable due to age, type,
category and/or quantity; (iii) Inventory which is not subject to internal
control and management procedures acceptable to Agent, in Agent's sole
discretion; (iv) Inventory with respect to which Agent does not have a first
priority and valid fully perfected security interest; (v) Inventory of a
Borrower which is stored or placed with a bailee, warehouseman, supplier, lessor
or similar party other than Inventory with warehousemen, bailees or lessors as
to which such Borrower has notified Agent in writing and which have signed an
agreement in favor of Agent in form and substance satisfactory to Agent; (vi)
Inventory delivered to a Borrower on consignment; (vii) Inventory sold by a
Borrower on consignment, other than such Inventory consisting of railcar wheels
furnished on consignment (each, a "Permitted Consignment"), provided that (a)
such Borrower has notified Agent in writing of such consignment and the location
thereof, (b) Agent has received a written agreement signed by the consignor
thereof as to Agent's rights in and to such Inventory which agreement is in form
and substance satisfactory to Agent, and (c) the amount (valued as provided in
Subsection 2.4) of such Inventory does not exceed $1,500,000 in the aggregate
for all Borrowers; (viii) Inventory constituting supplies; and (ix) Inventory
which is not located at one of the locations designated on Schedule 6.5 (other
than Permitted Consignments). In the event that previously scheduled Inventory
ceases to be Eligible Inventory under the above-described criteria, and as a
result there has been a material net decrease in the aggregate amount of
Eligible Inventory since that last reported in the preceding Collateral Report,
the Borrower experiencing such decrease shall notify Agent and each Lender
thereof immediately after such Borrower has obtained knowledge thereof.
3.11 Inventory Warranties. With respect to Inventory scheduled, listed or
referred to in any Monthly Report or Collateral Report, each Borrower warrants
that (i) it is located at one of the premises listed on Schedule 6.5 or is in
transit between such listed locations; (ii) it is located at the location shown
thereon for it; (iii) it is not subject to any Lien whatsoever except for the
security interest granted to Agent hereunder and except as specifically
permitted in Subsection 8.1 below; and (iv) it is of good and merchantable
quality, free from any defects which would affect the market value of such
Inventory. Each Borrower agrees to notify Agent with respect to any of its
Inventory with respect to which the warranties in this Subsection 3.11 are not
true and which such Borrower, therefore, does not want Agent to consider as
Eligible Inventory if as a result thereof there
52
has been a material net decrease in the aggregate amount of Eligible Inventory
since that last reported in the preceding Collateral Report.
3.12 Inventory Records. Each Borrower shall at all times hereafter maintain
a perpetual inventory, keeping correct and accurate records itemizing and
describing the kind, type, quality and quantity of Inventory and Eligible
Inventory, such Borrower's cost therefor and daily withdrawals therefrom and
additions thereto, all of which records shall be available during Borrower's
usual business hours at the request of any of Agent's or any Lender's officers,
employees or agents. Each Borrower shall conduct a physical count of the
Inventory at least once each year (and, following the occurrence of an Event of
Default or a Default, at such other intervals as may be requested by Agent or
any Lender) and promptly following such physical inventory shall supply Agent
and each Lender with a report in a form and with such specificity as may be
satisfactory to Agent or such Lender concerning such physical count of the
Inventory.
3.13 Safekeeping of Inventory and Inventory Covenants. Neither Agent nor
any Lender shall be responsible for: (i) the safekeeping of the Inventory; (ii)
any loss of or damage to the Inventory; (iii) any diminution in the value of the
Inventory; or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency or any other Person. As between the Borrowers, Agent and
Lenders, all risk of loss, damage, destruction or diminution in value of the
Inventory shall be borne by Borrowers. No Inventory of a Borrower shall be,
without Agent's prior written consent, at any time or times hereafter stored
with a bailee, warehouseman, consignee or similar third party, other than
warehousemen or bailees as to which such Borrower has notified Agent and which
have signed an agreement in favor of Agent in form and substance satisfactory to
Agent. No Borrower shall sell any of its Inventory on a ▇▇▇▇-and-hold,
guaranteed sale, sale-or-return, sale on approval or consignment basis or any
other basis subject to a repurchase obligation or return right (except Permitted
Consignments).
3.14 Equipment Warranties. With respect to Equipment of a Borrower
scheduled, listed or referred to in any Monthly Report or Collateral Report or
which is the subject of any Loan, such Borrower warrants that (i) it is the
lawful owner of the Equipment and it has the right to subject the same to a
security interest in favor of Agent; (ii) it is not subject to any Lien except
for the security interest granted to Agent hereunder and except as specifically
permitted in Subsection 8.1 hereof; and (iii) all such Equipment is in good
condition and repair and is currently used or usable in such Borrower's
business.
3.15 Equipment Records. Each Borrower shall at all times hereafter keep
correct and accurate records itemizing and describing the location, the kind,
type, age and condition of its Equipment, such Borrower's cost therefor and
accumulated depreciation thereof; and retirements, sales, or other dispositions
thereof; all of which records shall be available during such Borrower's usual
business hours on demand to any of Agent's or any Lender's officers, employees
or agents. All Equipment is and shall be kept at the locations specified on
Schedule 6.5.
53
3.16 Safekeeping of Equipment. Neither Agent nor any Lender shall be
responsible for: (i) the safekeeping of the Equipment; (ii) any loss or damage
to the Equipment; (iii) any diminution in the value of the Equipment; or (iv)
any act or default of any repairman, bailee or any other Person with respect to
the Equipment. As between the Borrowers, Agent and Lenders, all risk of loss,
damage, destruction or diminution in value of the Equipment shall be borne by
the Borrowers.
3.17 Locations. All Collateral which is not in transit is, and shall be,
located at the locations set forth on Schedule 6.5 hereto (except for Permitted
Consignments).
3.18 Certain Rail Mill Provisions. Without limiting Subsection 3.17 of the
Agreement, Rail acknowledges and agrees that it shall not permit or cause any
Collateral (other than motor vehicles on a temporary basis) to be located at the
Rail Mill without receiving the prior written consent of the Lenders. Without
limiting Subsection 11.2 of the Agreement, the Borrowers will indemnify the
Agent for all costs and expenses it may incur in connection with the Mortgagee
Waiver and Intercreditor Agreement dated as of September 29, 1995 between Agent
and Creditanstalt Corporate Finance, Inc., which costs and expenses will be
payable on demand. The Purchase Agreement dated as of March 27, 1995 by and
between Automated Machine Tools, Ltd. and Rail is no longer of any force or
effect; no purchases of any property will be made thereunder; and any property
heretofore purchased thereunder has been accurately described to the Agent and
the Lenders in writing. Rail will cause all property constituting part of the
Rail Mill to be maintained separate from all other property of the Borrower and
readily identifiable as distinct therefrom.
4. CONDITIONS OF LOANS, ADVANCES AND LETTER OF CREDIT.
4.1 [INTENTIONALLY OMITTED.]
4.2 Conditions to Each Revolving Loan and Letter of Credit.
Notwithstanding any other provision contained in this Agreement, the making of
any Revolving Loan and the issuance of any Letter of Credit under this
Agreement, including without limitation the continuation of any LIBOR Rate
Advance from one Interest Period to another or conversion of one Type of Advance
to another Type of Advance, shall be conditioned upon receipt by Agent of all
notices and other communications required under Subsection 2.5 and upon the
satisfaction of the following, in each case to the satisfaction of Agent, both
before and after giving effect thereto and to the application of the proceeds
therefrom (and each request for the borrowing of a Revolving Loan or request for
a Letter of Credit, as the case may be, and the continuation of any LIBOR Rate
Advance from one Interest Period to another or conversion of one Type of Advance
to another Type of Advance, and the acceptance by any Borrower of the proceeds
of such Revolving Loan or Advance or issuance of such Letter of Credit, shall
constitute a representation and warranty by such Borrower that on the date of
such Loan or Advance or issuance of such Letter of Credit before and after
giving effect thereto and to the application of the proceeds therefrom, the
following such statements are true); provided, however, that (i) Subsection
4.2(B) shall not apply to a continuation of a LIBOR
54
Rate Advance from one Interest Period to another Interest Period or to a
conversion of one Type of Advance to another Type of Advance and (ii) Subsection
4.2(C) shall not apply to such a continuation or conversion if the Agent
consents (as provided in Subsection 2.5(A)) to the making thereof
notwithstanding the failure of such Borrower to satisfy the conditions set forth
in Subsection 4.2(C):
(A) Letters of Credit. With respect to the issuance of any Letter of
Credit, none of the events set forth in Subsection 2.20(A) hereof which would
prohibit Agent from requesting the Issuing Bank to issue a Letter of Credit has
occurred and is continuing or would result from the issuance of such Letter of
Credit.
(B) No Material Adverse Change. No material adverse change, as determined
by Agent in its sole discretion, in the business, operations, condition
(financial or otherwise), properties or prospects of Rail shall have occurred at
any time or times subsequent to the most recent annual financial statements
provided pursuant to Subsection 7.1(B) hereof or of the Original Agreement.
(C) No Default. There shall not have occurred any Default or Event of
Default which is then continuing, nor shall any such Default or Event of Default
occur after giving effect to the Loan, Advance or Letter of Credit as the case
may be.
(D) Representations and Warranties True and Correct. The representations
and warranties of each Borrower contained in this Agreement and the other
Financing Agreements shall be true and correct in all material respects on and
as of the date of any Loan, Advance or Letter of Credit as though made on and as
of such date other than any such representations or warranties that by their
terms, refer to a specific date.
(E) Other Requirements. Agent shall have received, in form and substance
reasonably satisfactory to Agent, all drafts, certificates, orders, authorities,
consents, opinions, affidavits, applications, schedules, instruments, security
agreements, financing statements, mortgages and other documents which are
provided for hereunder or under the other Financing Agreements, or which Agent
may at any time reasonably request, including without limitation all documents
required to be delivered to Agent under Subsections 5.2 and 7.1, and all Monthly
Reports and Collateral Reports required as set forth in Subsection 3.1 hereof.
4.3 [INTENTIONALLY OMITTED.]
5. COLLATERAL.
5.1 Security Interest. To secure payment and performance of its
Liabilities, each Borrower hereby grants to Agent, for the benefit of Agent, the
Lenders and the Issuing Bank, a right of setoff against and a continuing
security interest (and Rail and Deco hereby confirm, acknowledge, continue and
ratify in all respects the right of setoff and security interest granted under
the Original Agreement and Security Agreement, respectively, and all other
Financing Agreements executed in
55
connection therewith) in and to all of the property, and interests in property,
of such Borrower, whether real or personal, whether now owned or hereafter
acquired by such Borrower and wheresoever located, including without limitation:
(i) Accounts, contract rights, General Intangibles, tax refunds, chattel paper,
instruments, notes, letters of credit, documents, and documents of title; (ii)
Inventory; (iii) Equipment; (iv) such Borrower's deposit accounts (general or
special) with and credits and other claims against Agent or any Lender, or any
other financial institution with which such Borrower maintains deposits; (v)
such Borrower's monies, and any and all other property and interests in property
of such Borrower now or hereafter coming into the actual possession, custody or
control of Agent or any Lender or any agent or affiliate of Agent or any Lender
in any way or for any purpose (whether for safekeeping, deposit, custody,
pledge, transmission, collection or otherwise); (vi) insurance proceeds of or
relating to any of the foregoing; (vii) insurance proceeds relating to any key
man life insurance policy covering the life of any director, officer, employee
or former director, officer or employee of such Borrower; (viii) insurance
proceeds relating to business interruption insurance; (ix) books and records
relating to any of the foregoing; and (x) all accessions and additions to,
substitutions for, and replacements, products and proceeds, of any of the
foregoing; provided, however, that the foregoing property, and interest in
property, shall not include the Excluded Property so long as the Excluded
Property is collateral for indebtedness of Rail permitted to exist under
Subsection 8.2 and the Lien thereon is permitted to exist under Subsection 8.1;
provided, further, that immediately and automatically (without the need for any
further action) upon the repayment of all of the indebtedness and obligations
for which any Excluded Property is collateral, and the release by the holder of
such indebtedness of all of its liens on and security interests in such Excluded
Property, such Excluded Property shall be Collateral securing the Liabilities,
and the Borrowers shall take, or cause to be taken, all such actions as Agent
may request to assure Agent of its first priority perfected security interest
and Lien in such Excluded Property.
5.2. Preservation of Collateral and Perfection of Security Interests
Therein. Each Borrower shall execute and deliver to Agent, concurrently with
the execution of this Agreement, and at any time or times hereafter at the
request of Agent, all financing statements, instruments or other documents (and
pay the cost of filing or recording the same in all public offices reasonably
deemed necessary by Agent), as Agent may request, in a form reasonably
satisfactory to Agent, to perfect and keep, as a first priority perfected
security interest, the security interest and Liens in the Collateral granted by
such Borrower to Agent for the benefit of Agent, the Lenders and the Issuing
Bank to secure the payment and performance of all of the Liabilities, or to
otherwise protect and preserve the Collateral and Agent's security interest and
Liens therein or to enforce Agent's security interests and Liens in the
Collateral. Should any Borrower fail to do so, Agent is authorized to sign any
such financing statements as such Borrower's agent. Each Borrower further
agrees that a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.
5.3 Real Property and Leaseholds. Each Borrower shall, at its own
expense, with respect to any interest in real estate (other than the Excluded
Property) existing on the date of the Original Agreement or acquired after such
date, upon Agent's request therefor (i) as soon as practicable and in any event
within thirty (30) days of such request, duly execute and deliver to
56
Agent any and all mortgages, trust deeds, deeds of trust, leasehold mortgages,
leasehold deeds of trust, pledges, assignments and other security agreements
(collectively, the "Mortgages") as specified by and in form and substance
satisfactory to Agent securing payment in and to the real properties owned by
such Borrower and leaseholds of such Borrower as may be designated by Agent,
(ii) as soon as practicable and in any event within ten (10) days of such
request, deliver to Agent a description of such properties and leaseholds in
detail sufficient for recordation and otherwise satisfactory to Agent, (iii) as
soon as practicable and in any event within thirty (30) days of such request,
deliver to Agent an ALTA survey of said real estate in form and substance
acceptable to Agent and certified to Agent, showing no encroachments or other
exceptions to title which affect marketability of title other than those
permitted in writing by Agent and stating that said real estate is located in an
area of minimal flooding or accompanied by evidence that flood insurance to
cover any flood risk has been obtained, together with flood zone maps for the
area in which the property is located from the Federal Emergency Management
Agency; (iv) as soon as practicable and in any event within thirty (30) days of
such request, deliver to Agent an environmental survey with respect to said real
estate in form and substance satisfactory to Agent and made by an engineer
reasonably satisfactory to Agent which reveals no environmental risk not
acceptable to Agent; (v) as soon as practicable and in any event within thirty
(30) days of such request, if the interest being acquired is a leasehold
interest (other than leases that individually or in the aggregate are not
material to such Borrower as determined by Agent), deliver to Agent the lease
(and a recorded memorandum of the lease or short form lease sufficient to
constitute constructive notice of such lease if such lease is not recorded), and
an agreement from the landlord to Agent, in each case in form and substance
reasonably satisfactory to Agent; (vi) as soon as practicable and in any event
within thirty (30) days of such request, deliver to Agent an ALTA loan policy in
form and substance reasonably satisfactory to Agent and from a title insurance
company reasonably satisfactory to Agent insuring that the Lien of the Mortgages
delivered pursuant to this Subsection 5.3 is a valid, first priority Lien on
such interest in real estate (but subject to the lien of any encumbrance
permitted pursuant to Subsection 8.1 hereof then of record against the property
upon which any such Mortgage is sought) with the following endorsements if such
endorsements are available from such title insurance company (or, if not,
comparable endorsements available from such title insurance company): revolving
credit, contiguity (if applicable), 3.1 zoning, encroachments, comprehensive
mortgage, usury, doing business, location, last dollar, access, tying and such
other endorsements as Agent may require and if such a provision is in the loan
policy, waiver of compulsory arbitration; (vii) as soon as practicable and in
any event within thirty (30) days of such request, deliver to Agent and the
Lenders an opinion of counsel authorized to practice law in the state in which
such real estate is located, as to such matters required by Agent and in form
and substance satisfactory to Agent; and (viii) as soon as practicable and in
any event within thirty (30) days of such request, take whatever action
(including, without limitation, the recording of any Additional Mortgage, the
filing of financing statements, the giving of notices and the endorsement of
notices on title documents) as may be necessary or advisable in the opinion of
Agent to vest in Agent (or in any representative of Agent designated by it), for
the benefit of Agent, the Lenders and the Issuing Bank, valid and subsisting
first priority liens and charges and valid and first priority, perfected
security interests in and to the properties purported to be subject to the
Mortgages delivered pursuant to this Subsection 5.3, enforceable in accordance
with their terms (but subject to the lien of any encumbrance permitted pursuant
to Subsection 8.1
57
hereof then of record against the property upon which any such Mortgage is
sought); provided, however, that such Borrower shall not be required to deliver
a Mortgage covering any Excluded Property, or otherwise comply with clauses (i)
through (viii) of this Subsection with respect to Excluded Property, so long as
such Excluded Property is collateral for indebtedness of such Borrower permitted
under Subsection 8.2 and the Lien thereon is permitted under Subsection 8.1;
provided, further that immediately after repayment of all of the indebtedness
and obligations for which such Excluded Property is collateral and the release
by the holder of such indebtedness of all of its liens on and security interests
in such Excluded Property, such Borrower shall comply with clauses (i) through
(viii) of this Subsection with respect to such Excluded Property. At any time
and from time to time, each Borrower shall promptly execute and deliver any and
all further financing statements, instruments and documents (and pay the cost of
filing or recording the same in all places deemed necessary by Agent) and take
all such other action as Agent may reasonably deem necessary in obtaining the
full benefits of, or in preserving the Liens of, the Mortgages delivered
pursuant to this Subsection 5.3.
5.4 Loss of Value of Collateral. Each Borrower shall immediately notify
Agent of any loss or damage or destruction (other than ordinary wear and tear),
in excess of $500,000 in the aggregate for all Borrowers in the value of the
Collateral in any Fiscal Year.
5.5 Setoff. Each Borrower agrees that Agent, each Lender and the Issuing
Bank has all rights of setoff and banker's lien provided by applicable law and,
in addition thereto, each Borrower agrees that (in addition to Agent's rights
with respect to proceeds of Collateral) at any time (a) any amount owing by it
under this Agreement or any other Financing Agreement is then due or (b) any
Default exists, Agent, each Lender and the Issuing Bank may apply to the payment
of the Liabilities, any and all balances, credits, deposits, accounts or moneys
of such Borrower then or thereafter with the Agent, such Lenders or Issuing
Bank. Without limitation of the foregoing and in addition to Agent's rights with
respect to the proceeds of the Collateral, each Borrower agrees that upon and
after the occurrence of a Default, Agent, each Lender and the Issuing Bank and
each of their respective branches and offices is hereby authorized, at any time
and from time to time, without notice, (i) to setoff against, and to appropriate
and apply to the payment of, the Liabilities (whether matured or unmatured,
fixed or contingent or liquidated or unliquidated) any and all amounts owing by
Agent, any such Lender or Issuing Bank or any such office or branch to such
Borrower (whether matured or unmatured, and, in the case of deposits, whether
general or special, time or demand and however evidenced) and (ii) pending any
such action, to the extent necessary, to hold such amounts as collateral to
secure such Liabilities and to return as unpaid for insufficient funds any and
all checks and other items drawn against any deposits so held as Agent, such
Lender or Issuing Bank may elect in its sole discretion. Each Lender or Issuing
Bank exercising such rights shall notify Agent thereof and any amount received
as a result of the exercise of such rights shall be reallocated among Agent, the
Lenders, and the Issuing Bank as set forth in Subsection 2.13 hereof.
5.6 Cash Collateral. In the event that the Issuing Bank has issued any
Letter of Credit, at any time after (i) the occurrence of a Default, (ii) demand
by Agent for payment of the Liabilities as provided in Subsection 9.1 hereof,
(iii) there exists no unpaid principal balance of the
58
Liabilities, (iv) this Agreement shall terminate for any reason pursuant to
Subsection 2.15 hereof, (v) the amount of (a) the aggregate outstanding
principal balance of the Revolving Loans plus the aggregate undrawn face amount
of Letters of Credit outstanding shall exceed the amount of (b) the Current
Asset Base plus the sum of the undrawn face amount of any Letters of Credit
outstanding, or (vi) termination of the Revolving Commitments, Agent may request
of any Borrower for whose account a Letter of Credit was issued, and such
Borrower thereupon shall deliver to Agent, cash collateral for any or all
outstanding Letters of Credit in an amount equal to the aggregate undrawn face
amount of such Letters of Credit. If any Borrower fails to deliver such cash
collateral to Agent promptly upon Agent's request therefor, Agent may, without
limiting Agent's rights or remedies arising from such failure to deliver cash,
retain, as cash collateral, cash proceeds of the Collateral in an amount equal
to the aggregate undrawn face amount of all Letters of Credit then outstanding.
Agent may at any time apply any or all of such cash and cash collateral to the
payment of any or all of the Liabilities, including, without limitation, to the
payment of any or all of any Borrower's reimbursement obligations with respect
to any Letter of Credit or any other Letter of Credit Obligations. Pending such
application, Agent may (but shall not be obligated to) (i) invest the same in a
savings account, under which deposits are available for immediate withdrawal,
with ANB or such other bank as Agent may, in its sole discretion select, or (ii)
hold the same as a credit balance in an account with ANB in a Borrower's name.
Interest payable on any such savings account described in the foregoing sentence
shall be collected by Agent and shall be paid to such Borrower as it is received
by Agent less any fees or other amounts owing by such Borrower to the Issuing
Bank, Agent and any Lender with respect to any Letter of Credit and less any
amounts necessary to pay any of the Liabilities which may be due and payable at
such time. Agent shall have no obligation to pay interest on any credit
balances in any account opened for any Borrower pursuant to this Agreement.
5.7 Carry-Through of Liens in Favor of Agent. Any lien, security
interest, claim or encumbrance granted to Agent in any Collateral by any
Borrower shall continue in such Collateral and the proceeds thereof upon a sale,
exchange, consignment or other transfer or disposition of such Collateral to any
other Borrower, and no purchase of goods by any Borrower from another Borrower
shall be deemed, as to Agent, to be in the ordinary course of business, and any
contrary provisions of Section 9-306 or Section 9-307 of the Code or any similar
provisions of any other applicable law are hereby expressly waived by each
Borrower in favor of Agent, and each Borrower hereby further agrees that any
lien, security interest, claim or encumbrance in favor of Agent on any goods
purchased by it or otherwise transferred to it from another Borrower shall carry
through to such goods (and acknowledges that any title it receives with respect
to any such goods is and shall continue to be subject to such lien, security
interest, claim or encumbrance) in the hands of such Borrower, and the proceeds
and products thereof (including without limitation Accounts arising from the
sale of such goods), and shall continue to attach thereto until this Agreement
and the other Financing Agreements have been terminated.
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6. WARRANTIES.
Each Borrower represents and warrants that as of the date of the execution
of this Agreement, and continuing so long as any of such Borrower's Liabilities
remain outstanding, and (even if there shall be no Liabilities of such Borrower
outstanding) so long as this Agreement remains in effect as follows:
6.1 Corporate Existence; Capitalization. Such Borrower and each of its
Subsidiaries is a corporation duly organized and in good standing under the laws
of its state of incorporation as set forth on Schedule 6.1 and is duly qualified
as a foreign corporation and in good standing in the states set forth on
Schedule 6.1 and any and all other states where the nature and extent of the
business transacted by it or the ownership of its assets makes such
qualification necessary, except for those jurisdictions in which the failure so
to qualify could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. All of the outstanding capital stock of such
Borrower has been duly and validly issued, and is fully paid and nonassessable.
None of the shares of such Borrower has been issued in violation of, or is
subject to, any preemptive or subscription rights. Except as set forth on
Schedule 6.1, there are no outstanding rights, options, warrants or agreements
for the purchase of, or the sale or issuance by such Borrower of, any capital
stock of such Borrower or securities convertible into or exchangeable for
capital stock of such Borrower as of the date hereof.
6.2 Corporate Authority. The execution and delivery by such Borrower and
each of its Subsidiaries of this Agreement and of each of the other Financing
Agreements to which it is a party and the performance of each such Person's
obligations hereunder and thereunder: (i) are within such Person's corporate
powers; (ii) are duly authorized by the Board of Directors of such Person and,
if necessary, the stockholders of such Person; (iii) are not in contravention of
the terms of such Person's Certificate of Incorporation or Articles of
Incorporation (as the case may be), or By-Laws, or of any indenture, or other
agreement or undertaking to which such Person is a party or by which such Person
or any of its property is bound or any judgment, decree or order applicable to
such Person; (iv) do not, as of the execution hereof or thereof, require any
governmental consent, registration or approval; (v) do not contravene any
contractual or governmental restriction binding upon such Person; and (vi) will
not, except as contemplated herein, result in the imposition of any Lien upon
any property of such Person under any existing indenture, mortgage, deed of
trust, loan or credit agreement or other material agreement or instrument to
which such Person is a party or by which it or any of its property may be bound
or affected.
6.3 Binding Effect. This Agreement and all of the other Financing
Agreements to which such Borrower is a party have been duly executed and
delivered by such Borrower and each of its Subsidiaries that is a party thereto
and constitute the legal, valid and binding obligations of such Borrower and
each such Subsidiary that is a party thereto, enforceable against such Borrower
and each such Subsidiary that is a party thereto in accordance with their
respective terms, except as limited by applicable bankruptcy, reorganization,
insolvency or similar laws affecting the enforcement of creditor's rights
generally and except as limited by general principles of equity.
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6.4 Financial Data. The Borrowers have furnished to each Lender all of
the financial statements required to be so furnished through the Closing Date
pursuant to Subsection 7.1(A) and 7.1(B) of the Original Agreement (the
"Financials"). The Financials are in accordance with the books and records of
Rail and its Subsidiaries and fairly present the financial condition of Rail and
its Subsidiaries at the dates thereof and the results of operations of Rail and
its Subsidiaries for the periods indicated and the Financials have been prepared
in accordance with GAAP. In addition, Deco has furnished to each Lender a
consolidated balance sheet of Deco and its subsidiaries as of June 1, 1996 (the
"Deco Opening Balance Sheet"). To the best of Deco's knowledge, the Deco Opening
Balance Sheet is in accordance with the books and records of Deco and its
subsidiaries and fairly presents the financial condition of Deco and its
subsidiaries at the date hereof, and it has been prepared in accordance with
GAAP. The historical financial statements to be furnished to Lenders in
accordance with Subsection 7.1 hereof will be in accordance with the books and
records of Rail and its Subsidiaries and will fairly present the financial
condition of Rail and its Subsidiaries at the dates thereof and the results of
operations of Rail and its Subsidiaries for the periods indicated (subject, in
the case of unaudited financial statements, to normal year-end adjustments) and
such financial statements will be prepared in conformity with GAAP consistently
applied throughout the periods involved. Since the date of the Financials, there
have been no changes in the condition, financial or otherwise, of Rail and its
Subsidiaries as shown on the Financials, except (a) as contemplated herein, and
(b) for changes in the ordinary course of business (none of which individually
or in the aggregate has been materially adverse). All information, reports and
other papers and data furnished to Agent or any Lender are or will be, at the
time the same are so furnished to Agent or any Lender, accurate and correct in
all material respects and complete insofar as completeness may be necessary to
give Agent and the Lenders a true and accurate knowledge of the subject matter
thereof.
6.5 Collateral. Except for liens permitted pursuant to Subsection 8.1
hereof, all of the Collateral and other property and interests in property of
such Borrower and each of its Subsidiaries is and will continue to be owned or
leased by such Person, as applicable, has been fully paid for and is free and
clear of all Liens. The Collateral and all other property and interests in
property of such Borrower is and shall be located at the locations set forth on
Schedule 6.5 attached hereto, except for Inventory in transit and except for
Permitted Consignments; provided that Schedule 6.5 shall be deemed to be amended
to add or delete locations to the extent such Borrower gives the Agent ten (10)
Business Days prior written notice thereof, the addition of such location does
not cause the occurrence of a Default or Event of Default and Agent has received
such documents as it may reasonably require pursuant to Subsection 5.2, 5.3 and
7.12 with respect to such additional locations and the Collateral located and to
be located at such additional locations.
6.6 Solvency. Such Borrower and each of its Subsidiaries (i) is not
"insolvent" as that term is defined in Section 101(32) of the Federal Bankruptcy
Code (the "Bankruptcy Code") (11 U.S.C. (S) 101(32)), Section 2 of the Uniform
Fraudulent Transfer Act ("UFTA") or Section 2 of the Uniform Fraudulent
Conveyance Act ("UFCA"), (ii) does not have "unreasonably small capital," as
that term is used in Section 548(a)(2)(B)(ii) of the Bankruptcy Code or Section
5 of the UFCA, (iii) is not engaged or about to engage in a business or a
transaction for which its remaining property
61
is "unreasonably small" in relation to the business or transaction as that term
is used in Section 4 of the UFTA, (iv) is not unable to pay its debts as they
mature or become due, within the meaning of Section 548(a)(2)(B) (iii) of the
Bankruptcy Code, Section 4 of the UFTA or Section 6 of the UFCA, and (v) now
owns assets having a value both at "fair valuation" and at "present fair salable
value" greater than the amount required to pay its "debts" as such terms are
used in Section 2 of the UFTA and Section 2 of the UFCA. Neither such Borrower
nor any of its Subsidiaries shall be rendered insolvent (as defined above) by
the execution, delivery and performance of this Agreement or any of the other
Financing Agreements to which it is a party or by the transactions contemplated
hereunder or thereunder.
6.7 Chief Place of Business. As of the execution hereof, the principal
place of business and the chief executive office of such Borrower is located at
the location identified on Schedule 6.7 attached hereto. If any change in any
such location occurs, such Borrower promptly shall notify Agent and each Lender
thereof in accordance with Subsection 8.10 hereof. As of the execution hereof,
the books and records of such Borrower, all records of account and all chattel
paper (to the extent the same have not been delivered to Agent) are located at
the locations specifically identified on Schedule 6.7 as the locations of such
books, records, records of account and chattel paper, and if any change in such
location occurs, such Borrower promptly shall notify Agent thereof in accordance
with Subsection 8.10 hereof.
6.8 Other Corporate Names. Except as disclosed on Schedule 6.8 attached
hereto, such Borrower has not used any corporate or fictitious name other than
the corporate name shown on such Borrower's Articles of Incorporation or
Certificate of Incorporation (as the case may be).
6.9 Tax Liabilities. Such Borrower and each of its Subsidiaries has filed
all federal, state and local tax reports and returns required by any law or
regulation to be filed by it except for extensions duly obtained, and has either
duly paid all taxes, duties and charges indicated due on the basis of such
returns and reports, or made adequate provision for the payment thereof except
for taxes, duties and charges which individually or in the aggregate are
immaterial in amount and as to which the failure to pay would not result in any
adverse consequence to the value of any material portion the Collateral. As of
the date of this Agreement, the assessment of any material amount of additional
taxes in excess of those paid and reported is not reasonably expected. As of the
date hereof, no federal income tax returns of such Borrower or any of its
Subsidiaries have been audited by the Internal Revenue Service. The reserves for
taxes reflected on the balance sheets included in the Financials are, and the
reserves for taxes reflected on the balance sheets of such Borrower submitted to
Agent in accordance with the terms of Subsection 7.1 hereof will be, adequate in
amount for the payment of all liabilities for all federal, state and local taxes
(whether or not disputed) of such Borrower and its Subsidiaries accrued through
the date of such balance sheets. There are no material unresolved questions or
claims concerning any tax liability of such Borrower or any of its Subsidiaries.
62
6.10 Loans. Except as permitted in Subsection 8.2, there are no loans,
other indebtedness for borrowed money of such Borrower or any of its
Subsidiaries or any guaranties made by such Borrower or any of its Subsidiaries.
6.11 Use of Proceeds. Neither such Borrower nor any of its Subsidiaries
owns any margin security. None of the loans advanced or other credit provided
to such Borrower hereunder has been or will be directly or indirectly used for
the purpose of (a) purchasing or carrying any margin security or for the purpose
of reducing or retiring any indebtedness which was originally incurred to
purchase any margin security or for any other purpose not permitted by
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System,
or (b) except as disclosed in writing by Rail to the Lenders and the Agent prior
to August 7, 1996, purchasing any property constituting part of the Rail Mill or
any other property which may constitute Excluded Property; provided, however,
that this Subsection 6.11 shall not prohibit Rail from spending up to $750,000
in any rolling twelve month period for ordinary course maintenance and repair of
property constituting part of the Rail Mill or any other property which may
constitute Excluded Property. Without limiting the foregoing, no Borrower may
use, directly or indirectly, proceeds of any Loans in excess of $25,000,000 in
aggregate principal amount during the term of this Agreement for the purpose of
consummating any one or more Acquisitions.
6.12 Subsidiaries. Except as disclosed on Schedule 6.12 and except for
Excluded Subsidiaries acquired by Rail after the date hereof, such Borrower has
no Subsidiaries.
6.13 Litigation and Proceedings. There are no judgments, orders, writs
or decrees outstanding against such Borrower or any of its Subsidiaries nor is
there now pending or, to the best of such Borrower's or any of its Subsidiaries'
knowledge after diligent inquiry, threatened, any litigation, investigations,
contested claim, arbitration or governmental proceeding by or against such
Borrower or any of its Subsidiaries, except judgments, orders, writs and decrees
and pending or threatened litigation, investigations, contested claims,
arbitration and governmental proceedings which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
6.14 Other Agreements. Neither such Borrower nor any of its Subsidiaries
is in default under any material contract, lease, or commitment to which it is a
party or by which it is bound. Neither such Borrower nor any of its
Subsidiaries knows of any dispute regarding any contract, lease, or commitment
which is material to the continued financial success and well-being of such
Borrower or any of its Subsidiaries.
6.15 Employee Controversies. There are no controversies pending or, to
the best of such Borrower's or any of its Subsidiaries' knowledge after diligent
inquiry, threatened or anticipated, between such Borrower or any of its
Subsidiaries and any of its employees, other than employee grievances arising in
the ordinary course of business which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Neither
such Borrower
63
nor any of its Subsidiaries has any accrued and unpaid liability to any of its
employees arising under the Federal Fair Labor Standards Act, as amended.
6.16 Compliance with Laws and Regulations; Environmental Matters.
(A) General Compliance. The execution and delivery by such Borrower and
each of its Subsidiaries of this Agreement and all of the other Financing
Agreements to which it is a party and the performance of such Person's
obligations hereunder and thereunder are not in contravention of any law or
laws. Such Borrower and each of its Subsidiaries is in compliance with all
laws, orders, regulations and ordinances of all Governmental Authorities
relating to its respective business, operations and assets, except for laws,
orders, regulations and ordinances the violation of which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(B) Health and Safety Compliance. The operations of such Borrower and
each of its Subsidiaries comply in all material respects with all applicable
federal, state or local environmental, health and safety statutes and
regulations, except where the failure to comply with such statutes and
regulations could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Except as disclosed on Schedule 6.16, none
of the operations of such Borrower or any of its Subsidiaries is subject to any
pending or, to the knowledge of such Borrower, judicial or administrative
proceeding threatened in writing and alleging the violation of any federal,
state or local environmental, health or safety statute or regulation or to the
knowledge of such Borrower is the subject of any federal or state investigation
evaluating whether any remedial action is needed to respond to a release of any
hazardous or toxic waste, substance or constituent, or other substance into the
environment or to remedy any occupational safety or health condition. Except as
disclosed on Schedule 6.16 neither such Borrower nor any of its Subsidiaries has
filed any notice under any federal or state law or regulation indicating past or
present treatment, storage or disposal of a hazardous waste or reporting a spill
or release of a hazardous or toxic waste, substance or constituent, or other
substance into the environment. Neither such Borrower nor any of its
Subsidiaries has any contingent liability of which such Borrower or any of its
Subsidiaries has knowledge or reasonably should have knowledge in connection
with any release of any hazardous or toxic waste, substance or constituent, or
any other substance, into the environment that could reasonably be expected to
have a Material Adverse Effect.
6.17 Patents, Trademarks and Licenses. Such Borrower and each of its
Subsidiaries possesses adequate assets, licenses, permits, patents, patent
applications, copyrights, service marks, trademarks, trademark applications,
trade styles and trade names, governmental approvals or other authorizations and
other rights that are necessary for such Borrower and each of its Subsidiaries
to continue to conduct its business as heretofore conducted by it or
contemplated to be conducted by it.
6.18 ERISA. Neither such Borrower, nor any of its Subsidiaries nor any
ERISA Affiliate of such Borrower or any of its Subsidiaries maintains or
contributes to any Benefit Plan
64
other than a Benefit Plan listed on Schedule 6.18 attached hereto. Each Plan
which is intended to be a qualified plan under Section 401(a) of the Internal
Revenue Code has been determined by the Internal Revenue Service to be so
qualified and each trust related to any such Plan has been determined to be
exempt from federal income tax under Subsection 501(a) of the Internal Revenue
Code or an application for such a determination is pending. Except as otherwise
disclosed on Schedule 6.18 attached hereto, neither such Borrower, nor any of
its Subsidiaries nor any ERISA Affiliate of such Borrower or any of its
Subsidiaries maintains or contributes to any employee welfare benefit plan
within the meaning of Subsection 3(1) of ERISA which provides medical benefits
to retirees. Each Plan has been administered in all material respects in
accordance with its terms and the terms of ERISA, the Internal Revenue Code and
all other statutes and regulations applicable thereto. Neither such Borrower,
nor to the best of such Borrower's knowledge any of its Subsidiaries nor any
ERISA Affiliate of such Borrower or any of its Subsidiaries has breached in any
material respect any of the responsibilities, obligations or duties imposed on
it by ERISA or regulations promulgated thereunder with respect to any Plan. No
accumulated funding deficiency (as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Internal Revenue Code) exists in respect to any Benefit
Plan. Neither such Borrower, nor to the best of such Borrower's knowledge any
of its Subsidiaries nor any ERISA Affiliate of such Borrower or any of its
Subsidiaries nor any fiduciary of any Plan has engaged in a nonexempt
"prohibited transaction" described in Section 406 of ERISA or Section 4975 of
the Internal Revenue Code with respect to any Plan. No Termination Event has
occurred which, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect. Schedule B to the most recent annual
report filed with the Internal Revenue Service with respect to each Benefit Plan
has been furnished to Agent and is complete and accurate; since the date of each
such Schedule B, there has been no material adverse change in the funding status
or financial condition of the Benefit Plan relating to such Schedule B. Neither
such Borrower, nor any of its Subsidiaries nor any ERISA Affiliate of such
Borrower or any of its Subsidiaries has incurred any liability to the PBGC which
remains outstanding other than for premium payments not yet due. Neither such
Borrower, nor any of its Subsidiaries nor any ERISA Affiliate of such Borrower
or any of its Subsidiaries has (i) failed to make a required contribution or
payment to a Multiemployer Plan, or (ii) made or to the best of such Borrower's
knowledge expects to make a complete or partial withdrawal under Sections 4203
or 4205 of ERISA from a Multiemployer Plan for which such Borrower, any of its
Subsidiaries or any ERISA Affiliate of such Borrower or any of its Subsidiaries
has any material unpaid liability. Neither such Borrower, nor any of its
Subsidiaries nor any ERISA Affiliate of such Borrower or any of its Subsidiaries
has failed to make a required installment under Subsection (m) of Section 412 of
the Internal Revenue Code or any other payment required under Section 412 of the
Internal Revenue Code on or before the due date for such installment or other
payment which has resulted in a material unpaid interest charge or penalty.
Neither such Borrower, nor any of its Subsidiaries nor any ERISA Affiliate of
such Borrower or any of its Subsidiaries is required to provide security to a
Benefit Plan under Section 401(a) (29) of the Internal Revenue Code due to a
Plan amendment that results in an increase in current liability for the plan
year. The present value of the benefit liabilities (determined in accordance
with Statement of Financial Accounting Standards No. 35) of each Benefit Plan of
such Borrower, each Subsidiary and each ERISA Affiliate of such Borrower as of
the last day of the year for such plan, as determined by such Benefit Plan's
independent actuaries, does not exceed the
65
aggregate value, as determined by such actuaries, of all assets under such
Benefit Plan by more than $2,600,000 in the aggregate as to all such Benefit
Plans. Neither such Borrower nor any ERISA Affiliate of such Borrower is
required to contribute to any Multiemployer Plan except any Multiemployer Plan
specifically identified as such on Schedule 6.18.
6.19 Financial Condition. Since July 31, 1995, there has been no change
or event having a Material Adverse Effect.
6.20 Survival of Warranties. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement.
7. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any Liabilities of such
Borrower remain outstanding, and (even if there shall be no Liabilities of such
Borrower outstanding) so long as this Agreement remains in effect:
7.1 Financial Statements. Such Borrower shall, and shall cause each
of its Subsidiaries to, keep proper books of record and account in which full
and true entries will be made of all dealings or transactions of or in relation
to the business and affairs of such Person, in accordance with GAAP, and such
Borrower shall cause to be furnished to each of the Lenders the following:
(A) Monthly. As soon as practicable, and in any event within thirty (30)
days after the end of each Fiscal Month (including each Fiscal Month occurring
during Rail's final Fiscal Quarter of each Fiscal Year):
(i) consolidated statements of income, retained earnings and cash flow of
such Borrower and its Subsidiaries (other than Excluded Subsidiaries) for
such Fiscal Month and for the period from the beginning of the then current
Fiscal Year to the end of such Fiscal Month and a consolidated balance sheet
of such Borrower and its Subsidiaries (other than Excluded Subsidiaries) as
of the end of such Fiscal Month, all in reasonable detail and certified as
accurate by an Authorized Officer of such Borrower pursuant to a certificate
in the form of Exhibit E attached hereto, subject to changes resulting from
normal year-end adjustments;
(ii) statements in which the actual consolidated cash flow and income of
such Borrower and its Subsidiaries (other than Excluded Subsidiaries) for such
Fiscal Month and for the period from the start of the then current Fiscal Year
to the end of such Fiscal Month, and the actual consolidated balance sheets of
such Borrower and its Subsidiaries (other than Excluded Subsidiaries) at the
end of such Fiscal Month (in each case as required to be delivered pursuant to
Subsection 7.1(A)(i) hereof) are compared with the corresponding
66
consolidated projected statements of income and balance sheet for such periods
and time furnished to the Lenders pursuant to Subsection 7.1(C) below, in each
case in the same format as the audited statement of income and the audited
balance sheet;
(iii) (a) copies of all operating statements for such Fiscal Month
prepared by such Borrower and its Subsidiaries (other than Excluded
Subsidiaries) for internal use, including, without limitation, statements of
cash flow, purchases and sales of inventory and other similar data in each
case as Agent may reasonably request, and (b) a comparison of actual capital
expenditures for such Borrower and its Subsidiaries (other than Excluded
Subsidiaries) with amounts budgeted for such Fiscal Month;
(iv) calculations setting forth the compliance with the financial covenants
set forth in Subsection 8.13 for the most recently completed Fiscal Month; and
(v) in the event that any of the foregoing statements indicate that any
Borrower has varied in any material respect from any financial projections
provided pursuant hereto, a statement of explanation of such deviation from an
Authorized Officer of such Borrower.
In addition, together with the financial statements provided to Lenders pursuant
to the preceding Subsection 7.1(A)(i) for each Fiscal Month constituting the
last month in a Fiscal Quarter, such Borrower shall furnish comparisons (1) in
the case of the consolidated statements of income, retained earnings and cash
flow furnished for such Fiscal Quarter and for the year-to-date, with the
corresponding periods in the prior Fiscal Year, and (2) in the case of the
consolidated balance sheets as of the end of such Fiscal Quarter, with the
corresponding date one year earlier, all in reasonable detail.
(B) Annual. As soon as practicable and in any event within ninety (90)
days after the end of each Fiscal Year, audited consolidated and unaudited
consolidating statements of income, retained earnings and cash flow of Rail and
its Subsidiaries (other than Excluded Subsidiaries) for such Fiscal Year, and an
audited consolidated and unaudited consolidating balance sheet of Rail and its
Subsidiaries (other than Excluded Subsidiaries) as of the end of such Fiscal
Year, setting forth in each case, in comparative form, corresponding figures for
the period covered by the preceding annual balance sheets (in the case of
statements) and as of the end of the preceding Fiscal Year (in the case of
balance sheets), and, in the case of audited statements, all in reasonable
detail and audited by independent certified public accountants selected by Rail
and reasonably satisfactory to Agent (the "Auditors"), whose opinion shall be
satisfactory to Agent, and Rail shall use its best efforts to cause such opinion
to be the subject of a reliance letter from such accountants permitting Agent,
Lenders and the Issuing Bank to rely on the contents thereof as if prepared
specifically for use by Agent, Lenders and the Issuing Bank.
(C) Budget. As soon as practicable and in any event within thirty (30)
days after the start of each Fiscal Year , an annual budget of such Borrower and
its Subsidiaries for the succeeding Fiscal Year in reasonable detail (on a
Fiscal Month basis), including consolidated
67
statements of anticipated income and cash flow of such Borrower and its
Subsidiaries and consolidated balance sheets of such Subsidiary and its
Subsidiaries for the succeeding Fiscal Year (on a Fiscal Month basis) in
reasonable detail, and a detailed statement of the methods and assumptions used
in the preparation of such budget.
(D) Letters from Accountants and Consultants. As soon as practicable and
in any event within ten (10) days of delivery to Rail, a copy of (i) each
"Management Letter" or "Accounting Systems Letter" prepared by the Auditors in
connection with the financial statements referred to in Subsection 7.1(B) hereof
and (ii) to the extent that such letters may from time to time be issued by the
Auditors (collectively, "Accounting Systems Letters"), any letter issued by the
Auditors with respect to recommendations relating to Rail's financial or
accounting systems or controls, and Rail shall use its best efforts to cause
each Management Letter and Accounting Systems Letter to be accompanied by a
reliance letter from such accountants permitting Agent, Lenders and the Issuing
Bank to rely on the contents of each of the above as if prepared specifically
for use by Agent, Lenders and the Issuing Bank.
(E) Default Notices. As soon as practicable (but in any event not more
than five (5) days after any officer of such Borrower obtains knowledge of the
occurrence of an event or the existence of a circumstance giving rise to an
Event of Default or a Default), notice of any and all Events of Default or
Defaults.
(F) List of Account Debtors. Prior to the occurrence of a Default or an
Event of Default at the reasonable request of Agent (which requests shall be not
unduly burdensome) and after the occurrence of a Default or an Event of Default
at the request of Agent, names, addresses and phone numbers of such Borrower's
Account Debtors.
(G) Reports and Other Information. Promptly upon the transmission
thereof, copies of all such financial statements, proxy statements, notices and
reports as such Borrower may send to Borrower's public stockholders and copies
of all registration statements (without exhibits) and all reports which such
Borrower files with the Securities and Exchange Commission (or any governmental
body or agency succeeding to the functions of the Securities and Exchange
Commission) and copies of all press releases such Borrower issues.
(H) Joint Ventures; Excluded Subsidiaries. (i) As soon as practicable,
and in any event within ninety (90) days after the end of each Fiscal Year,
statements of income, retained earnings and cash flow of each Person included in
the Joint Ventures for such Fiscal Year and for the period from the beginning of
the current Fiscal Year to the end of such Fiscal Year, and a balance sheet of
each such Person as of the end of such Fiscal Year, all in reasonable detail,
audited by the Auditors, and certified as accurate by the chief financial
officer or treasurer of such Person, and (ii) as soon as practicable, and in any
event within thirty (30) days after the end of each Fiscal Month, statements of
income, retained earnings and cash flow of each Excluded Subsidiary for such
Fiscal Month and for the period from the beginning of the current Fiscal Year to
the end of such Fiscal Month, and a balance sheet of each Excluded Subsidiary as
of the end of such Fiscal Month, all in
68
reasonable detail and certified as accurate by the chief financial officer or
treasurer of such Excluded Subsidiary.
(I) Other Information. With reasonable promptness, such other business or
financial data as Agent or any Lender may reasonably request.
Rail further agrees that upon receipt by Rail of any "Management Letter"
or "Accounting Systems Letter" referred to in clause (D) above wherein such
accountants have made recommendations for improvements to the financial or
accounting systems or controls of such Borrower, and (2) the reasonable request
of Agent to do the following, such Borrower shall promptly commence actions to
correct any material defects in or make improvements to such financial or
accounting systems or controls unless such Borrower reasonably disagrees with
the need for such actions.
All financial statements delivered to Lenders pursuant to the requirements
of this Subsection 7.1 (except where otherwise expressly indicated) shall be
prepared in accordance with GAAP (subject in the case of interim financial
statements to the lack of footnotes and normal year-end adjustments)
consistently applied, except for changes therein with which the independent
certified public accountants issuing the opinion on the financial statements
delivered pursuant to Subsection 7.1(B) hereof have previously concurred in
writing. Together with each delivery of financial statements required by
Subsections 7.1(A) and 7.1(B) hereof, Rail shall deliver to Lenders a
certificate of an Authorized Officer of Rail in the form attached hereto as
Exhibit E setting forth in such detail as is reasonably acceptable to Agent
calculations with respect to Borrowers' compliance with each of the financial
covenants contained in this Agreement (including without limitation Subsection
8.13 hereof) and stating that there exists no Default or Event of Default, or,
if any Default or Event of Default exists, specifying the nature and the period
of existence thereof and what action Rail proposes to take with respect thereto.
Together with each delivery of financial statements required by Subsection
7.1(B) hereof, Rail shall deliver to Lenders a certificate of the independent
certified public accountants who performed the audit in connection with such
statements stating that in making the audit necessary to the issuance of a
report on such financial statements, they have obtained no knowledge of any
Default or Event of Default, or, if such accountants have obtained knowledge of
a Default or Event of Default, specifying the nature and period of existence
thereof. Such accountants shall not be liable by reason of any failure to obtain
knowledge of any Default or Event of Default which would not be disclosed in the
ordinary course of an audit.
Each Lender shall exercise reasonable efforts to keep such information, and
all information acquired by such Lender in connection with the negotiation,
exclusion and delivery of this Agreement and as a result of any inspection
conducted in accordance with Subsection 7.2 hereof, confidential, provided that
each Lender may communicate such information (a) to any other Person in
accordance with the customary practices of commercial banks or financial
institutions relating to routine trade inquiries, (b) to any regulatory
authority having jurisdiction over Lenders, (c) to any other Person in
connection with such Lender's sale of any participations in the Liabilities or
assignment of any of such Lender's rights and obligations under this Agreement
or any of the other
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Financing Agreements or in connection with any refinancings or all or any
portion of the Liabilities, (d) to any other Person in connection with the
exercise of such Lender's rights hereunder or under any of the other Financing
Agreements, (e) to any Person in any litigation in which such Lender is a party,
(f) to any other Lender, or (g) to any other Person if such Lender believes in
its sole discretion that disclosure is necessary or appropriate to comply with
any applicable law, rule or regulation or in response to a subpoena, order or
other legal process or informal investigative demand, whether issued by a court,
judicial or administrative or legislative body or committee or other
governmental authority. Notwithstanding the foregoing, information shall not be
deemed to be confidential to the extent such information (i) was already
lawfully in the possession of any Lender prior to the date of this Agreement,
(ii) is available in the public domain, (iii) becomes available in the public
domain other than as a result of unauthorized disclosure by such Lender or (iv)
is acquired from a Person not known by such Lender to be in breach of an
obligation of secrecy to any Borrower. Each Borrower authorizes and shall cause
each of its Subsidiaries to authorize Agent and each Lender to discuss the
financial condition of such Borrower and each of its Subsidiaries with such
Persons's independent certified public accountants and agrees that such
discussion or communication shall be without liability to Agent, such Lender or
any such independent certified public accountants.
7.2 Inspection. Agent or any Person designated by Agent in writing and,
with respect to clause (i) below, each Lender, shall have the right, from time
to time hereafter, to call at the place or places of business of such Borrower
or any of its Subsidiaries (or any other place where the Collateral or any
information relating thereto is kept or located) during reasonable business
hours, and, without hindrance or delay, (i) to inspect, audit, check and make
copies of and extracts from such Borrower's and each such Subsidiary's books,
records, journals, orders, receipts and any correspondence and other data
relating to the business of such Borrower and its Subsidiaries or to any
transactions between such Borrower or any of its Subsidiaries and any one or
more of Agent and the Lenders, (ii) to make such verification concerning the
Collateral as Agent may consider reasonable under the circumstances, and (iii)
to discuss the affairs, finances and business of such Borrower and its
Subsidiaries with any officers, employees or directors of such Borrower or its
Subsidiaries. Such Borrower shall cause its Subsidiaries to permit the
inspection contemplated by this Subsection 7.2. Such Borrower shall pay on
demand all photocopying expenses incurred by Agent or the Lenders under this
Subsection 7.2.
7.3 Conduct of Business. Such Borrower shall, and shall cause each of its
Subsidiaries to, maintain its corporate existence (except to the extent such
Borrower shall, upon five (5) days' prior written notice to the Lenders
determine to liquidate or dissolve any such Subsidiary or merge such Subsidiary
with any other Subsidiary or into such Borrower (provided that such Borrower is
the survivor of such merger) and no Default or Event of Default shall occur
before or after giving effect to such liquidation, dissolution or merger),
maintain in full force and effect all licenses, bonds, franchises, leases,
patents, permits, contracts and other rights necessary or desirable to the
profitable conduct of its business, and continue in and limit its operations to
the same general line of business as that presently conducted by it. Such
Borrower shall, and such Borrower shall cause each of its Subsidiaries to,
comply with all laws, orders, regulations and ordinances of any
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federal, foreign, state or local governmental authority, except for such laws,
orders, regulations and ordinances the violation of which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Such Borrower shall, and such Borrower shall cause each of its
Subsidiaries to, pay promptly all liabilities to all of its respective employees
arising under the minimum wage and maximum hour provisions of the Fair Labor
Standards Act, as the same may be amended from time to time.
7.4 Claims and Taxes. Such Borrower agrees to indemnify and hold Agent,
Lenders and the Issuing Bank and each of their respective Lending Affiliates,
officers, directors, employees, attorneys and agents harmless from and against
any and all claims, demands, liabilities, losses, damages, penalties, costs, and
expenses (including, without limitation, reasonable attorneys' and consultants'
fees) relating to or in any way arising out of the possession, use, operation or
control of any of the assets of such Borrower or any of its Subsidiaries. Such
Borrower shall, and shall cause each of its Subsidiaries to, pay or cause to be
paid all license fees, bonding premiums and related taxes and charges, and shall
pay or cause to be paid all of such Person's real and personal property taxes,
assessments and charges and all of such Person's franchise, income,
unemployment, use, excise, old age benefit, withholding, sales and other taxes
and other governmental charges assessed against such Person, or payable by such
Person, at such times and in such manner as to prevent any penalty from accruing
or any Lien from attaching to its property, provided that such Person shall have
the right to contest in good faith, by an appropriate proceeding promptly
initiated and diligently conducted, the validity, amount or imposition of any
such tax, assessment or charge, and during the pendency of such good faith
contest to delay or refuse payment thereof, if (i) such Person establishes
adequate reserves to cover such contested taxes, assessments or charges, and
(ii) such contest could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The obligations of the Borrowers
under this Subsection 7.4 shall survive the payment of the Liabilities and the
termination of this Agreement.
7.5 Agent's Closing Costs and Expenses. Such Borrower shall reimburse
Agent on demand for all allocated costs and reasonable expenses and fees of
Agent's in-house attorneys and paralegals and all reasonable out-of-pocket
expenses and fees paid or incurred in connection with the documentation,
negotiation and closing of the loans and other extensions of credit described
herein, including, without limitation, lien search, filing and recording fees
and taxes and the reasonable fees and expenses of any attorneys and paralegals
of Agent (whether such attorneys and paralegals are employees of Agent or are
separately engaged by such Person), whether such expenses and fees are incurred
prior to or after the date hereof. All reasonable costs and expenses incurred by
Agent with respect to the negotiation, documentation and closing of the loans
and other extensions of credit described herein and the enforcement, collection
and protection of Agent's interest in the Collateral shall be additional
Liabilities, payable on demand, repaid as provided in Subsection 2.9 hereof, and
secured by the Collateral.
7.6 Borrower's Liability Insurance. In addition to insurance required by
Subsection 7.7 hereof, such Borrower shall, and shall cause each of its
Subsidiaries to, maintain, at such Person's expense, such public liability,
third party property damage and other insurance, in such
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amounts and with such deductibles as is ordinarily carried by other businesses
engaged in the same or similar businesses and as is reasonably acceptable to
Agent and shall name Agent and the Lenders as an additional insured on all such
insurance.
7.7 Borrower's Property Insurance and Business Interruption Insurance.
Such Borrower shall, and shall cause each of its Subsidiaries to, at such
Person's expense, keep and maintain such business interruption insurance as is
ordinarily carried by other businesses engaged in the same or similar businesses
and as is reasonably acceptable to Agent. In addition, such Borrower shall, and
shall cause each of its Subsidiaries to, at such Person's expense, keep and
maintain the Collateral and its property insured against loss or damage by fire,
theft, burglary, pilferage, loss in transit, explosion, spoilage and all other
hazards and risks ordinarily insured against by other owners or users of such
properties in similar businesses, in each case (A) with respect to such Borrower
in an amount at least equal to the lesser of (i) the outstanding principal
balance of the Liabilities of such Borrower and (ii) the full insurable value of
all such property and with such deductibles as are ordinarily carried by other
businesses engaged in the same or similar businesses and as are reasonably
acceptable to Agent, and (B) with respect to such Subsidiaries in an amount
ordinarily insured against by other owners or users of such properties in
similar businesses. All such policies of insurance shall be in form and
substance reasonably satisfactory to Agent and issued by an insurance carrier or
carriers reasonably satisfactory to Agent. Such Borrower shall, and shall cause
each of its Subsidiaries to, deliver to Agent the original (or a certified copy)
of each of its policies of insurance and evidence of payment of all premiums
therefor. Such Borrower's policies of insurance shall name Agent as an
additional insured and shall contain an endorsement, substantially in the form
attached hereto as Exhibit F or otherwise reasonably acceptable to Agent. Such
Borrower hereby directs all insurers under such policies of insurance insuring
any Collateral to pay all proceeds of insurance policies directly to Agent.
Agent is authorized to collect all proceeds of insurance insuring any Collateral
and, at Agent's option: (1) apply the proceeds against the Revolving Loans of
such Borrower and the other Liabilities of such Borrower, whether or not then
due or (2) allow such Borrower to use such money, or a part thereof, to repair
any damage or restore, replace or rebuild the property that was the subject of
such proceeds; provided, however, that notwithstanding the foregoing provisions,
as to proceeds of insurance for Equipment constituting Collateral or real
property if all of the following conditions are satisfied (i) no Default or
Event of Default has occurred and is continuing, (ii) in the reasonable judgment
of Agent the damaged Collateral or asset constitutes real property or equipment
that can be repaired, restored, replaced or rebuilt to an architectural and
economical unit of the same character and not less valuable than such Collateral
or asset was prior to such damage and destruction, (iii) in the case such
proceeds in the aggregate are greater than $250,000, such Borrower has delivered
to Agent a business plan in form and substance reasonably satisfactory to Agent
demonstrating, to Agent's reasonable satisfaction, that such Borrower will be
able to continue to operate its business at the same level in all material
respects as operated prior to such damage and destruction and (vi) the
Liabilities of such Borrower will at all times be collateralized to the same
extent as prior to such damage and destruction, then (X) if such proceeds are in
the aggregate less than $500,000, Agent shall release the proceeds of such
insurance as to Equipment or real property to such Borrower and such Borrower
shall immediately repair, restore, replace or rebuild the property that was the
subject of such proceeds to an
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architectural and economic unit of the same character and not less valuable than
such asset was prior to such damage or destruction using such proceeds or (Y) if
such proceeds are equal to or greater in the aggregate than $500,000, Agent
shall hold the proceeds of such insurance as to Equipment or real property as
Collateral and (provided that no Event of Default or Default has occurred and is
continuing or occurs, at which time Agent may in its discretion apply such
proceeds to the Liabilities of such Borrower) make them available to such
Borrower for repair, restoration, replacement or rebuilding of such property,
provided in either case such repaired, restored, replaced or rebuilt property
shall be free and clear of all Liens, and subject to such other terms and
conditions as Agent may reasonably determine; and further provided that while in
possession of such funds Agent shall not be required to invest the same or to
hold such funds separate and apart from Agent's other funds. Notwithstanding
anything herein to the contrary, at any time when a Default or Event of Default
has occurred and is continuing, if Agent receives proceeds of insurance or is
holding proceeds of insurance theretofore received by Agent, Agent may apply the
same to the Liabilities at any time and from time to time as it may determine.
Such Borrower irrevocably makes, constitutes and appoints Agent (and all
officers, employees or agents designated by Agent) as such Borrower's true and
lawful attorney-in-fact for the purpose of making, settling and adjusting claims
under all such policies of insurance, endorsing the name of such Borrower on any
check, draft, instrument or other item of payment received by such Borrower,
Agent or any Lender pursuant to any such policies of insurance and for making
all determinations and decisions with respect to such policies of insurance. If
such Borrower or any of its Subsidiaries at any time or times hereafter shall
fail to obtain or maintain any of the policies of insurance required above or to
pay any premium in whole or in part relating thereto, then Agent without waiving
or releasing any obligation or Default by such Borrower or any such Subsidiary
hereunder, may at any time or times thereafter (but shall be under no obligation
to do so) obtain and maintain such policies of insurance and pay such premiums
and take any other action with respect thereto which Agent deems advisable.
7.8 ERISA Reporting. Such Borrower shall deliver to Agent and Lenders, at
such Borrower's expense, the following information as and when provided below:
(i) as soon as possible, and in any event within ten (10) days after such
Borrower, any of its Subsidiaries or any ERISA Affiliate of such Borrower or
any of its Subsidiaries knows or has reason to know that a Termination Event
has occurred, a written statement of an Authorized Officer of such Borrower
describing such Termination Event and the action, if any, which such Borrower,
such Subsidiary or such ERISA Affiliate has taken, is taking or proposes to
take with respect thereto, and when known, any action taken or threatened by
the Internal Revenue Service ("IRS"), the Department of Labor ("DOL") or PBGC
with respect thereto;
(ii) as soon as possible, and in any event within thirty (30) days, after
such Borrower, any of its Subsidiaries or any ERISA Affiliate of such Borrower
knows or has reason to know that a nonexempt prohibited transaction (defined
in Section 406 of ERISA and Section 4975 of the Internal Revenue Code) has
occurred with respect to any Plan, a statement of an Authorized Officer of
such Borrower describing such transaction;
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(iii) promptly after the filing thereof with the DOL, IRS or PBGC, copies
of each annual report, including schedule B thereto, filed with respect to
each Benefit Plan;
(iv) promptly after the filing thereof with the IRS, a copy of each funding
waiver request filed with respect to any Benefit Plan and all communications
received by such Borrower, any of its Subsidiaries or any ERISA Affiliate of
such Borrower or any of its Subsidiaries with respect to such request;
(v) promptly upon the occurrence thereof, notification of any material
increases in the benefits of any existing Benefit Plan or the commencement of
contributions in excess of $100,000 per annum to any Plan to which such
Borrower, any of its Subsidiaries or any ERISA Affiliate of such Borrower or
any of its Subsidiaries was not previously contributing;
(vi) promptly upon, and in any event within two (2) Business Days after,
receipt by such Borrower, any of its Subsidiaries or any ERISA Affiliate of
such Borrower or any of its Subsidiaries of notice of the PBGC's intention to
terminate a Benefit Plan or to have a trustee appointed to administer a
Benefit Plan or notice is given by such Borrower or an ERISA Affiliate of such
Borrower to terminate any Benefit Plan, which termination could result in a
material liability to such Borrower, copies of each such notice;
(vii) promptly upon, and in any event within two (2) Business Days after,
receipt by such Borrower, any of its Subsidiaries or any ERISA Affiliate of
such Borrower or any of its Subsidiaries of an unfavorable determination
letter from the IRS regarding the qualification of a Plan under Section 401(a)
of the Internal Revenue Code, copies of such letter;
(viii) promptly upon, and in any event within two (2) Business Days after,
receipt by such Borrower, any of its Subsidiaries or any ERISA Affiliate of
such Borrower or any of its Subsidiaries of a notice from a Multiemployer Plan
regarding the imposition of material withdrawal liability, copies of such
notice; and
(ix) promptly upon, and in any event within ten (10) Business Days after,
such Borrower, any of its Subsidiaries or any ERISA Affiliate of such Borrower
or any of its Subsidiaries fails to make a required installment under
Subsection (m) of Section 412 of the Code or any other payment required under
Section 412 on or before the due date for such installment or payment, a
notification of such failure.
7.9 Notice of Suit or Adverse Change in Business. Such Borrower shall, and
shall cause each of its Subsidiaries to, as soon as possible, and in any event
within five (5) Business Days after any officer of such Person learns of the
following, give written notice to the Lenders of (i) any material proceeding(s)
(including, without limitation, litigation, investigations, arbitration or
governmental proceedings) being instituted or threatened to be instituted by or
against such Person in any federal, state, local or foreign court or before any
commission or other regulatory body
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(federal, state, local or foreign), (ii) notice that such Person's operations
are not in full compliance with all requirements of applicable federal, state or
local environmental, health and safety statutes and regulations, except for
notices as to matters which, either individually or in the aggregate, could not
have a Material Adverse Effect on such Person, (iii) notice that such Person is
subject to a federal or state investigation evaluating whether any remedial
action is needed to respond to the release of any hazardous or toxic waste,
substance or constituent, or other substance into the environment, (iv) notice
that any properties or assets of such Person are subject to an Environmental
Lien, (v) any material adverse change in the such Person's business, operations,
condition (financial or otherwise), properties or prospects, and (vi) any
changes in the locations of any Collateral or assets of such Borrower from the
locations listed on Schedule 6.5.
7.10 Supervening Illegality. If, at any time or times hereafter, there
shall become effective any amendment to, deletion from or revision, modification
or other change in any provision of any statute, or any rule, regulation or
interpretation thereunder or any similar rule or regulation adversely affecting,
in Agent's sole determination (which determination shall be conclusive in the
absence of manifest error), any Lender's or the Issuing Bank's extension of
credit described in this Agreement and/or the selling of participations therein,
such Borrower shall, at such Borrower's option, either (i) pay to Lenders the
then outstanding balance of its Liabilities, and hold Lenders harmless from and
against any and all obligations, fees, liabilities, losses, penalties, costs,
expenses and damages, of every kind and nature, imposed upon or incurred by such
Borrower by reason of Agent's, any Lender's or the Issuing Bank's failure or
inability to comply with the terms of this Agreement or any of the other
Financing Agreements, or (ii) indemnify and hold Agent, Lenders and each Issuing
Bank harmless from and against any and all obligations, fees, liabilities,
losses, penalties, costs, expenses and damages, of every kind and nature,
imposed upon or incurred by Agent, any Lender or the Issuing Bank by reason of
such amendment, deletion, revision, modification, or other change. The
obligations of the Borrowers under this Subsection 7.10 shall survive payment of
the Liabilities and termination of this Agreement.
7.11 Environmental Safety and Health Laws. If such Borrower or any of its
Subsidiaries shall (a) receive any written notice that any violation of any
federal, state or local environmental law or regulation may have been committed
or is about to be committed by such Borrower or any of its Subsidiaries, (b)
receive any written notice that any administrative or judicial complaint or
order has been filed or is about to be filed against such Borrower or any of its
Subsidiaries alleging a violation of any federal, state or local environmental
law or regulation or requiring such Borrower or any of its Subsidiaries to take
any action in connection with the release of toxic or hazardous substances into
the environment, or (c) receive any written notice from a federal, state, or
local governmental agency, other Governmental Authority or private party
alleging that such Borrower or any of its Subsidiaries may be liable or
potentially responsible for costs associated with a response to or cleanup of a
release of a toxic or hazardous substance into the environment or any damages
caused thereby which could in any respect be material to such Borrower or have a
Material Adverse Effect, such Borrower shall, and shall cause any such
Subsidiary to, provide Agent with a copy of such notice or, in the event of any
such verbal notice, a written description of such communication within fifteen
(15) days of the receipt thereof. Within
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fifteen (15) days of such Borrower having learned of the enactment or
promulgation of any federal, state or local environmental law or regulation that
could reasonably be expected to have a Material Adverse Effect, such Borrower
shall provide Agent with notice thereof.
7.12 Landlord Consents and Waivers. Such Borrower shall deliver to Agent,
upon the date of the execution of this Agreement with respect to each lease of
premises then in effect and on or before the date of execution of any lease of
premises to such Borrower with respect to any lease in effect thereafter, a
landlord's waiver (including, upon Agent's request therefor, a consent to a
leasehold mortgage) executed by the lessor of each location leased to such
Borrower; provided, however, that the foregoing provisions of this Subsection
shall not apply to any lease by such Borrower of a sales office where no
Collateral is kept other than immaterial office equipment. Each landlord's
waiver so delivered shall be in form and substance reasonably satisfactory to
Agent. Such Borrower shall pay all of its obligations under such leases of real
property when due and promptly shall notify Agent and Lenders of any breach of,
or default under, any such lease.
8. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that so long as any Liabilities of such
Borrower remain outstanding, and (even if there shall be no Liabilities of such
Borrower outstanding) so long as this Agreement remains in effect:
8.1 Encumbrances. Such Borrower shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien or other
encumbrance of any nature whatsoever on any of its assets, including, without
limitation, the Collateral, other than the following (the "Permitted Liens"):
(i) Liens securing the payment of taxes, either not yet due or the validity of
which is being contested in good faith by appropriate proceedings, and as to
which such Borrower or such Subsidiary shall, if appropriate under generally
accepted accounting principles, have set aside on its books and records adequate
reserves; (ii) deposits under workmen's compensation, unemployment insurance,
social security and other similar laws, or to secure the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure indemnity, performance or other similar bonds for the performance of
bids, tenders or contracts (other than for the repayment of borrowed money) or
to secure statutory obligations or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds in the ordinary course of
business; (iii) the Liens in favor of Agent; (iv) Liens which arise by operation
of law, other than Environmental Liens; (v) zoning restrictions, easements,
licenses, reservations, conditions, covenants and other restrictions affecting
the use of real property; (vi) Liens represented by Capitalized Leases permitted
under Subsection 8.2(iii) hereof; (vii) Liens listed on Schedule 8.1 hereto;
(viii) Liens existing on the assets of any Excluded Subsidiary at the time such
Person becomes an Excluded Subsidiary; and (ix) other Liens and encumbrances on
property, which do not, in Agent's sole determination, (a) materially impair the
use of such property for purposes of this Agreement or otherwise, or (b)
materially lessen the value of such property to Agent or otherwise. Such
Borrower shall not, and shall not permit any of its Subsidiaries to, permit the
filing of any financing statement naming such Borrower or any of
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its Subsidiaries as debtor, except for financing statements filed with respect
to liens or security interests expressly permitted by this Agreement.
8.2 Indebtedness. Such Borrower shall not, and such Borrower shall not
permit any of its Subsidiaries to, incur, create, assume, become or be liable in
any manner with respect to, or permit to exist, any obligations of a type which
would appear on a balance sheet of such Borrower or any of its Subsidiaries
prepared in accordance with GAAP as a liability, including Capitalized Lease
Obligations, or indebtedness, except (i) the Liabilities, (ii) trade obligations
and normal accruals in the ordinary course of business not yet due and payable,
or with respect to which such Borrower or such Subsidiary is contesting in good
faith the amount or validity thereof by appropriate proceedings, and then only
to the extent that such Borrower or such Subsidiary has set aside on its books
adequate reserves therefor, if appropriate under generally accepted accounting
principles, (iii) Capitalized Lease Obligations which are incurred in connection
with the purchase of any hereafter acquired Equipment or other Capital
Expenditures, so long as such indebtedness is used to finance not more than 100%
of the purchase price of such property (the "Third Party Financed Equipment")
and the aggregate amount of such Capitalized Lease Obligations incurred in any
Fiscal Year for all Borrowers and all of their Subsidiaries does not exceed
$2,000,000, (iv) indebtedness owed by Rail to any Subsidiary, or by any
Subsidiary to Rail (provided that the aggregate outstanding amount of all such
indebtedness does not at any time exceed $1,000,000) and indebtedness owed by
Deco to Rail permitted under Subsection 8.4(x), (v) indebtedness of any Excluded
Subsidiary existing at the time such Person becomes an Excluded Subsidiary and
any refinancing thereof, (vi) indebtedness listed on Schedule 8.2 hereto and any
refinancings (but not increases) thereof that is on terms no less favorable to
than the terms of the indebtedness being refinanced (provided, however, Rail
shall give Agent at least ten (10) days prior written notice of any such
refinancing and copies of all documents, instruments and agreements with respect
thereto), and (vii) the Subordinated Debt provided that the aggregate principal
amount thereof does not exceed $50,000,000 minus the aggregate amount of all (a)
prepayments, repayments, sinking fund payments, redemption payments, defeasance
payments and other payments of principal made with respect thereto, and (b)
purchases thereof made by any Borrower or any Affiliate of any Borrower. Except
for (i) prepayments made in the ordinary course of business to obtain prompt
payment discounts offered on trade obligations incurred in the ordinary course
of business, (ii) immaterial prepayments of obligations incurred in the ordinary
course and (iii) as otherwise permitted by this Agreement, such Borrower shall
not, and such Borrower shall not permit any of its Subsidiaries to, pay any
obligation or indebtedness before the same is due.
8.3 Consolidations, Mergers or Acquisitions. Such Borrower shall not, and
shall not permit any of its Subsidiaries to, recapitalize, consolidate with,
merge with, or otherwise acquire all or substantially all of the assets or
properties of any other Person or enter into any agreement with respect to any
of the foregoing; provided, however, that (A) Rail may acquire (a "Stock
Acquisition") one hundred percent (100%) of the stock of a corporation (an
"Excluded Subsidiary") if (i) the only consideration paid for the stock of such
Excluded Subsidiary is common stock issued by Rail, (ii) the consideration paid
for such stock of such Excluded Subsidiary together with the consideration paid
for all other Excluded Subsidiaries does not exceed twenty-five percent (25%) of
the common stock of Rail outstanding immediately prior to consummation of such
proposed
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acquisition, (iii) Rail does not assume, or in any way become directly or
contingently liable for (by operation of law or otherwise), any of the debts or
other obligations of such Excluded Subsidiary, (iv) no Default or Event of
Default exists immediately prior to, or would exist immediately after,
consummation of such acquisition of the stock of the Excluded Subsidiary, (v)
each Lender has received written notice of such acquisition as soon as
practicable, but in any event not less than five (5) Business Days prior to the
consummation of such acquisition together with copies of all agreements,
instruments and documents relating thereto, and (vi) on the date of consummation
of such acquisition before consummation thereof, Rail delivers to each Lender a
certificate dated such date and signed by the Chief Financial Officer of Rail
stating that all of the conditions set forth in this Subsection 8.3(A) have been
completely satisfied with respect to such acquisition; and (B) Rail may acquire
all or substantially all of the assets of a going business concern (an "Asset
Acquisition") if (i) Rail does not assume, or in any way become directly or
contingently liable for (by operation of law or otherwise), any Contingent
Obligations in connection with such Asset Acquisition which, individually or
when aggregated with any Contingent Obligations assumed by Rail or for which
Rail may be directly or contingently liable in connection with any other Assets
Acquisitions, exceeds $5,000,000; (ii) no Default exists immediately prior to,
or would exist immediately after, consummation of such Asset Acquisition; (iii)
each Lender has received written notice of such Asset Acquisition as soon as
practicable, but in any event not less than two (2) weeks prior to the
consummation thereof together with (a) copies of all material agreements,
instruments and other documents relating thereto, and (b) if such Asset
Acquisition involves the acquisition of real property, environmental surveys in
form and substance reasonably acceptable, and from a Person reasonably
satisfactory, to the Agent with respect to such real property, (iv) Agent shall
have a valid, first priority (subject to Subsection 8.1) perfected security
interest in all personal property and fixtures acquired pursuant to such Asset
Acquisition and a valid, first priority (subject to Subsection 8.1) Mortgage to
all real property acquired pursuant to such Asset Acquisition, and all necessary
or advisable actions in this regard shall have been completed at or prior to the
time of consummation of such Asset Acquisition to the reasonable satisfaction of
Agent and its counsel (including satisfaction of the requirements of Subsection
5.2 and 5.3 hereof), (v) Availability (with respect to Rail) immediately before
and immediately after giving effect to the Permitted Acquisition is not less
than $10,000,000, (vi) on the date of consummation of such acquisition, Rail
delivers a certificate to each Lender dated such date and signed by the Chief
Financial Officer of Rail stating that all of the conditions set forth in
Subsection 8.3(B)(i) through (v) have been completely satisfied with respect to
such acquisition (except that as to the matters referenced in Subsection
8.3(B)(i) such certificate shall be to the best of such officer's knowledge as
to the facts referenced therein after conducting a reasonable inquiry with
respect thereto), and (vii) within ninety (90) days after consummation of such
Asset Acquisition, Rail shall deliver to Agent written appraisals of the value
(determined on a forced sale basis and an orderly liquidation sale basis) of all
Equipment purchased pursuant to such Asset Acquisition and appraisals of the
value (determined on a fair market value basis) of all real property acquired
pursuant to such Asset Acquisition that comply with all requirements of FIRREA,
in each case prepared by an appraiser selected and retained by Agent at Rail's
expense and reasonably satisfactory in form, scope and methodology to Agent.
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8.4 Investments or Loans. Such Borrower shall not, and shall not permit any
of its Subsidiaries to, make or permit to exist investments or loans in or to
any other Person, except (i) investments in short-term direct obligations of the
United States Government, (ii) investments in negotiable certificates of deposit
maturing within thirty (30) days from the date of issuance, issued by any Lender
or an affiliate of any Lender or by any other federally insured bank (provided
that any such investments do not exceed the limit of any such federal insurance)
satisfactory to Agent, in its reasonable discretion, and payable to the order of
such Borrower or any of its Subsidiaries or to bearer and delivered to Agent,
(iii) investments in commercial paper issued by companies organized under the
laws of the United States or any state thereof, maturing in ninety (90) days or
less from the date of issuance, which at the time of acquisition by such
Borrower or any such Subsidiary is rated A-1/P-1 by Standard & Poor's Rating
Services (a division of ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.) or ▇▇▇▇▇'▇ Investor
Services, Inc., (iv) demand deposits in banks and similar financial institutions
in reasonable amounts necessary to such Borrower's and its Subsidiaries'
operations, (v) advances and reimbursements for travel and expenses to such
Borrower's or its Subsidiaries' officers, directors or employees in the ordinary
course of business and consistent with past practices, (vi) investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in the
ordinary course of business, (vii) investments existing on the date hereof by
such Borrower in its Subsidiaries and the Joint Ventures and described on
Schedule 8.4, (viii) investments made after March 31, 1995 by such Borrower in,
and loans made after March 31, 1995 by such Borrower to, Subsidiaries of such
Borrower (other than Excluded Subsidiaries, it being understood that the
exception in this clause (ix) permitting certain investments in, and loans to,
Subsidiaries shall not permit any such investment in, or loan to, any Excluded
Subsidiary) and the Joint Ventures provided that the aggregate amount of such
investments and outstanding loans does not exceed $1,000,000 in the aggregate at
any time with respect to all Borrowers, (x) an intercompany loan by Rail to Deco
after the date of the Original Agreement in an amount up to $3,500,000, provided
that such intercompany loan is evidenced by a promissory note duly pledged to
Agent to secure payment and performance of Rail's Liabilities, (xi) investments
evidenced by the issuance of Rail's capital stock to consummate the acquisition
of an Excluded Subsidiary in a Stock Acquisition in accordance with Subsection
8.3(A), (xii) intercompany loans by Deco to Rail after the date of the Original
Agreement, provided that (1) the aggregate principal amount of all outstanding
intercompany loans by Deco to Rail cannot at any time exceed the tangible net
worth of Deco at such time (determined in accordance with GAAP, except in no
event shall any account or note receivable due to Deco from Rail be treated as
an asset for purposes of determining such tangible net worth), (2) no such
intercompany loan may be made until such time as the aggregate principal amount
of the intercompany loan by Rail to Deco existing on the date of the Original
Agreement is paid in full and (3) no such loan may be made if, after giving
effect thereto, Deco could reasonably be deemed to (a) be "insolvent" (as such
term is used in Section 548 of the Bankruptcy Code), (b) have "unreasonably
small capital" (as such term is used in Section 548 of the Bankruptcy Code), or
(c) have debts beyond its "ability to pay as such debts matured" (as such term
is used in Section 548 of the Bankruptcy Code), and (xii) additional investments
not to exceed $100,000 in the aggregate for all Borrowers and their Subsidiaries
at any time outstanding.
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8.5 Guarantees. Such Borrower shall not, and shall not permit any of its
Subsidiaries to, guarantee, endorse or otherwise in any way become or be
responsible for obligations of any other Person, whether by agreement to
purchase the indebtedness of any other Person or through the purchase of goods,
supplies or services, or maintenance of working capital or other balance sheet
covenants or conditions, or by way of stock purchase, capital contribution,
advance or loan for the purpose of paying or discharging any indebtedness or
obligation of such other Person or otherwise, except (i) endorsements of
negotiable instruments for collection in the ordinary course of business and
(ii) as listed on Schedule 8.5 hereto.
8.6 Disposal of Property. Such Borrower shall not, and shall not permit any
of its Subsidiaries to, sell, lease, transfer or otherwise dispose of any of the
Collateral or any of its other properties, assets and rights to any Person,
except for (i) sales of Inventory to customers in the ordinary course of
business and (ii) the sale by such Borrower of Obsolete Equipment of such
Borrower, provided that after giving effect to any such sale of Obsolete
Equipment, the aggregate value of all such Obsolete Equipment so sold by the
Borrowers in any Fiscal Year does not exceed $500,000; provided, however, that
such Borrower shall notify Agent at least five days prior to any sale of
Equipment if after giving effect thereto the aggregate value of all Equipment
sold by all Borrowers in any Fiscal Year (other than Obsolete Equipment sold as
part of a trade in for (and credit against the purchase price of) new Equipment
of a similar type (other than Third Party Financed Equipment)) shall exceed
$500,000 and immediately upon the sale of any such Equipment (other than Third
Party Financed Equipment), such Borrower shall make the payments out of such
proceeds as required by Subsection 2.7(E) hereof. For purposes of this
Subsection 8.6, the term "value" shall mean the greater of the book value or
fair market value of such Equipment.
8.7 [INTENTIONALLY OMITTED.]
8.8 Dividends and Stock Redemptions. Such Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, (A) redeem, purchase
or otherwise retire any of its shares of capital stock, (B) declare or pay any
dividends on any class or classes of capital stock, (C) return capital to its
stockholders, or (D) make any other distribution on or in respect of any shares
of any class of capital stock, provided that (i) Rail may declare and pay
dividends on its capital stock if immediately before or immediately after giving
effect thereto no Default or Event of Default exists or would exist as a result
thereof (including, without limitation, any breach of Subsections 8.13(A) or
(B)), and Rail gives to Agent and the Lenders not less than thirty (30) days
prior written notice of any such action and (ii) any Subsidiary of a Borrower
may declare and pay dividends or otherwise make distributions to such Borrower
or any other wholly-owned Subsidiary of such Borrower.
8.9 Issuance of Stock. Such Borrower shall not, and shall not permit any of
its Subsidiaries to, issue or distribute any capital stock or other securities
(or any warrants or rights for the purchase of any capital stock or other
securities of Borrower) for consideration or otherwise except for (A) issuances
of Rail's common stock and options thereon, and (B) issuances of stock to
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Rail by Rail's wholly owned Subsidiaries (provided such stock is pledged to
Agent pursuant to the Securities Pledge Agreement between Rail and Agent dated
as of March 31, 1995).
8.10 Amendment of Articles of Incorporation or By-Laws; Corporate Name;
Places of Business. Without prior written consent of the Required Lenders, such
Borrower shall not amend its Articles or Certificate of Incorporation or By-
Laws, except that such Borrower may amend its By-laws if such amendment could
not reasonably be expected to have a Material Adverse Effect and such Borrower
provides Agent with a copy of the By-laws as so amended within ten (10) Business
Days of such amendment, and such Borrower may amend its Articles or Certificate
of Incorporation to effect a change in its corporate name, provided that such
Borrower furnishes to Agent such financing statements executed by such Borrower
which Agent may request prior to the filing of such amendment and furnishes to
Agent and Lenders a copy of such amendment, certified by the Secretary of State
of its jurisdiction of incorporation, within ten (10) days of the date such
amendment is filed with such Secretary of State. Such Borrower shall not make
any change to the location of its principal place of business, chief executive
office, books and records, chattel paper or records of account unless prior to
the effective date of such change in location, such Borrower delivers to Agent
such financing statements executed by such Borrower which Agent may request to
reflect such change in location. Such Borrower shall deliver such other
documents and instruments as Agent may request in connection with such change in
name or location within ten (10) days of the effectiveness of such change or
Agent's request therefor.
8.11 Transactions with Subsidiaries and Affiliates. Except transactions
described on Schedule 8.11 (or guaranty agreements, security agreements, pledge
agreements or similar agreements made in favor of the Agent (for the benefit of
the Lenders)), such Borrower shall not, and shall not permit any of its
Subsidiaries to, enter into any transaction with any Affiliate, including,
without limitation: (A) the making of any loans to, or the payment of any
bonuses, fees or other money to, any Affiliate, and (B) the purchase, sale or
exchange of property or the rendering of any service to or by any Affiliate.
Unless otherwise expressly stated in Schedule 8.11, all transactions described
on Schedule 8.11 shall be fair and reasonable to each Borrower (as the case may
be) and on terms not less favorable to each such Borrower (as the case may be)
than such Borrower could obtain in such a transaction with a party other than
its Affiliate. The term "Affiliate" as used in this Subsection 8.11 shall have
the meaning given in Subsection 1.1 hereof and also shall include any executive
officer, director, employee or stockholder of any Affiliate of such Borrower or
any Person related to any such Person within the third degree of consanguinity.
8.12 ERISA. Such Borrower shall not, and shall not permit any of its
Subsidiaries, and shall use its best efforts not to permit any ERISA Affiliate
to:
(A) engage, with respect to any Plan, in any prohibited transaction
described in Section 406 of ERISA or Section 4975 of the Internal Revenue Code
for which a statutory or class exemption is not available or a private exemption
has not been previously obtained from the DOL;
81
(B) permit to exist any accumulated funding deficiency for any Benefit
Plan (as defined in Subsection 302 of ERISA and Section 412 of the Internal
Revenue Code), whether or not waived;
(C) fail to pay timely required contributions or annual installments due
with respect to any Plan including without limitation any installments due with
respect to any waived funding deficiency to any Benefit Plan;
(D) terminate any Benefit Plan which would result in any material
liability of such Borrower or any of its Subsidiaries under Title IV of ERISA;
(E) fail to pay to any Benefit Plan any required installment under section
(m) of Section 412 of the Internal Revenue Code or any other payment required
under Section 412 of the Internal Revenue Code on or before the due date for
such installment or other payment;
(F) amend a Benefit Plan resulting in an increase in current liability for
the plan year such that such Borrower or any of its Subsidiaries is required to
provide security to such Plan under Section 401(a) (29) of the Internal Revenue
Code;
(G) withdraw from any Benefit Plan during a plan year for which such
Borrower or any of its Subsidiaries is a "substantial employer" with respect to
such Benefit Plan if such Borrower or any such Subsidiary would incur material
liability to the PBGC with respect to such Benefit Plan under Sections 4063 or
4064 of ERISA; or
(H) withdraw from any Multiemployer Plan if a material withdrawal
liability would result to such Borrower or any Subsidiary of such Borrower
pursuant to Section 4201 of ERISA.
8.13 Financial Covenants. Such Borrowers shall not:
(A) Interest Coverage Ratio. Permit the Interest Coverage Ratio for any
period of four consecutive Fiscal Quarters to be less than 2.60 to 1.00.
(B) Minimum Consolidated Net Worth. Permit Consolidated Net Worth at the
last day of any Fiscal Quarter to be less than (i) $61,530,000, plus (ii) 50% of
Net Income for each completed Fiscal Quarter after October 26, 1996 (or plus
zero for any such Fiscal Quarter if Net Income for such period is negative),
plus (iii) 85% of the fair market value of the net proceeds (whether cash or
otherwise) received by Rail from the issuance, sale or other transfer, after
October 26, 1996, of any capital stock, options or warrants (such increase under
this clause (iii) to occur on the date of Rail's receipt thereof).
(C) Capital Investment Limitations; Lease Limitations. Incur (or permit
its Subsidiaries to incur) (i) Capital Expenditures (other than Excluded Capital
Expenditures and other
82
than Capital Expenditures arising under Capitalized Leases) in any period of
four consecutive Fiscal Quarters ending on or after July 31, 1995 which,
together with Capital Expenditures (other than Excluded Capital Expenditures and
other than Capital Expenditures arising under Capitalized Leases) of all
Borrowers (and their Subsidiaries) for such period, are in the aggregate greater
than the sum of $12,000,000 plus the amount by which Availability with respect
to Rail is greater than $10,000,000 on the last day of such period; or (ii)
Capital Expenditures financed by Capitalized Leases of more than $2,000,000 in
the aggregate for all Borrowers (and their Subsidiaries) in any period of four
consecutive Fiscal Quarters ending on or after July 31, 1995.
(D) Funded Debt to Capitalization Ratio. Permit the ratio of Funded Debt
to Consolidated Capitalization to exceed 70% at the end of any Fiscal Quarter.
The following terms shall have the following meanings:
"Consolidated Capitalization" shall mean, at any time, Funded Debt, plus
(ii) Consolidated Net Worth, at such time.
"Consolidated Net Worth" shall mean the excess, as determined in accordance
with GAAP, after making appropriate deductions for any minority interest in
the net worth of consolidated Subsidiaries, of (i) the assets of Rail and its
consolidated Subsidiaries over (ii) the liabilities of Rail and its
consolidated Subsidiaries; provided, however, that any write-up in the book
value of any assets owned subsequent to the date of this Agreement (other than
a write-up required for assets acquired in connection with the purchase of a
person or business and taken at the time of such acquisition) shall not be
taken into account.
"EBITDA" shall mean, for any period, an amount equal to the following for
Rail and its Subsidiaries (other than Excluded Subsidiaries) for such period,
determined on a consolidated basis:
(i) Net Income plus;
(ii) the sum of the following amounts to the extent deducted in
determining Net Income: (a) depreciation and amortization expense, (b) income
tax expense, and (c) Interest Expense less;
(iii) any amounts included in Net Income for such period attributable to
the Joint Ventures or Excluded Subsidiaries except to the extent of cash
dividends or cash distributions paid to Rail during such period by the Joint
Ventures or Excluded Subsidiaries.
"Excluded Capital Expenditures" shall mean (i) Capital Expenditures, up to
$12,500,000, made by Rail to acquire capital assets consisting of the Rail
Mill to the extent financed by Persons other than Rail and its Affiliates; and
(ii) Capital Expenditures, up to $11,000,000, made by Rail to acquire capital
assets consisting of the Wheel Machining
83
Center in Calera, Alabama, in each case to the extent funded with proceeds of
Funded Debt (other than the Loans).
"Interest Coverage Ratio" shall mean, for any period, an amount equal to
the ratio of EBITDA to Interest Expense for Rail and its Subsidiaries (other
than Excluded Subsidiaries) for such period.
"Interest Expense" shall mean, for any period, (i) the gross interest
expense of Rail and its Subsidiaries (other than Excluded Subsidiaries) for
such period, plus (ii) one-third of the aggregate rent expense of Rail and its
Subsidiaries (other than Excluded Subsidiaries), all as determined on a
consolidated basis in accordance with GAAP.
"Net Income" shall mean, for any period, the net income (or loss) after
taxes of Rail and its Subsidiaries (other than Excluded Subsidiaries for all
purposes of this Agreement except Subsection 8.13(B)(ii), but including
Excluded Subsidiaries for purposes of Subsection 8.13(B)(ii)) for such period,
as determined on a consolidated basis in accordance with GAAP; provided,
however, that there shall not be included in Net Income (i) any net income (or
loss) of a Subsidiary for any period during which it was not a consolidated
Subsidiary, (ii) any net income (or loss) of businesses, properties or assets
acquired or disposed of (by way of merger, consolidation, purchase, sale or
otherwise) by Rail or any Subsidiary for any period prior to the acquisition
thereof or subsequent to the disposition thereof, (iii) the cumulative effect
of accounting changes, (iv) any non-cash extraordinary items during such
period or (v) any non-cash special charges or gains during such period.
8.14 Environmental. Such Borrower shall not, and shall not permit any of
its Subsidiaries to, fail to conduct its business so as to comply in all
respects with all federal, state or local environmental laws and regulations,
including, without limitation, environmental or land use requirements or permits
or occupational safety or health laws, rules or regulations, requirements or
permits in all jurisdictions in which it is or may at any time be doing
business, including, without limitation, the Federal Resource Conservation and
Recovery Act, the Federal Comprehensive Environmental Response, Compensation and
Liability Acts, the Federal Clean Water Act, the Federal Clean Air Act and the
Federal Occupational Safety and Health Act, as the same may be amended from time
to time, and any successor statutes, except where the failure to so comply could
not individually or in the aggregate reasonably be expected to have a Material
Adverse Effect; and provided, however, that nothing contained in this Subsection
8.14 shall prevent such Borrower from contesting, in good faith by appropriate
legal proceedings, any such law, regulation, interpretation thereof or
application thereof; provided, further, that such Borrower shall comply with the
order of any court or other governmental body of applicable jurisdiction
relating to such laws unless such Borrower shall currently be prosecuting an
appeal or proceedings for review and shall have secured a stay of enforcement or
execution or other arrangement postponing enforcement or execution pending such
appeal or proceedings for review.
8.15 Fiscal Year. Such Borrower shall not change its Fiscal Year.
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8.16 Subsidiaries. Such Borrower shall not, and shall not permit any of its
Subsidiaries to, form or acquire any Subsidiaries or permit any such
Subsidiaries to exist other than (A) the Subsidiaries disclosed on Schedule
6.12, and (B) Excluded Subsidiaries acquired after March 31, 1995 in accordance
with Subsection 8.3.
8.17 Subordinated Debt. Such Borrower shall not permit any payment of any
Subordinated Debt; provided, however, that Rail may pay interest on the
Subordinated Notes when due in accordance with the terms of the Subordinated
Notes (as in effect on the date hereof) so long as (A) no Default or Event of
Default exists or would exist as a result thereof, and (B) without limiting the
foregoing, there exists no (1) insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding, relative to Rail (or to its creditors, as such) or to its assets, or
(2) liquidation, dissolution or other winding up of Rail, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy or (3)
assignment for the benefit of creditors or any marshalling of assets and
liabilities of Rail. Rail shall not consent or otherwise agree to any amendment,
supplement or other modification to any Subordinated Debt Document without the
prior written consent of the Required Lenders.
9. DEFAULT, RIGHTS AND REMEDIES OF LENDERS AND AGENT.
9.1 Defaults. If any of the following events ("Defaults") shall occur:
(A) Any Borrower fails to pay any of its Liabilities when such Liabilities
are due or are declared due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise);
(B) Any Borrower (i) fails or neglects to perform, keep or observe any of
its covenants, conditions or agreements contained in any of the subsections of
this Agreement or any of the other Financing Agreements other than the
provisions in Subsection 3.1 of this Agreement which require such Borrower to
deliver a Monthly Report by a particular date, Subsections 7.1 (other than
Subsections 7.1(E) or (G)), 7.3 or 7.4 of this Agreement, (ii) fails or neglects
to deliver a Monthly Report when required pursuant to Subsection 3.1 of this
Agreement and such failure shall continue for two consecutive Business Days,
(iii) fails or neglects to perform, keep or observe any covenants, conditions or
agreements contained in Subsection 7.1 (other than Subsections 7.1(E) or 7.1(G))
of this Agreement and such failure shall continue for five consecutive Business
Days or (iv) fails or neglects to perform, keep or observe any of the covenants,
conditions or agreements contained in Subsections 7.3 or 7.4 of this Agreement
and such failure shall continue for thirty (30) consecutive days, provided that
such 30-day grace period shall not apply and a Default shall be deemed to have
occurred promptly upon such breach if (x) such breach cannot, in Agent's
reasonable determination, be cured by such Borrower during such period, or (y)
such breach shall be deemed by Agent (in its reasonable discretion) to have a
material adverse effect on the Collateral (or Agent's or the Lenders' interest
or rights therein or with respect thereto), the Current Asset Base of any
Borrower or the other rights of Agent or the Lenders under this Agreement or any
other Financing Agreement;
85
(C) any warranty or representation now or hereafter made by any Borrower
or any Subsidiary of a Borrower is untrue or incorrect in any material respect
when made, or any schedule, certificate, statement, report, financial data,
notice, or writing furnished at any time by or on behalf of such Borrower or
such Subsidiary to any of Agent, the Issuing Bank and the Lenders is untrue or
incorrect in any material respect, on the date as of which the facts set forth
therein are stated or certified or any of the foregoing omits to state a fact
necessary to make the statements therein contained not misleading in any
material respect;
(D) a final judgment or final order requiring payment in excess of
$1,000,000 with respect to Rail, or $250,000 with respect to Deco, shall be
rendered against such Borrower and such judgment or order shall remain
unsatisfied or undischarged and in effect for forty (40) consecutive days
without a stay of enforcement or execution, provided that this Subsection 9.1(D)
shall not apply to any judgment for which such Borrower is fully insured (except
for normal deductibles in connection therewith) and with respect to which the
insurer has assumed the defense and is not defending under reservation of right
and with respect to which Agent reasonably believes the insurer will pay the
full amount thereof (except for normal deductibles in connection therewith);
(E) a notice of Lien, levy, or assessment is filed or recorded with
respect to all or a substantial part of the assets of any Borrower by the United
States, or any department, agency or instrumentality thereof, or by any state,
county, municipality or other governmental agency or any taxes or debts owing at
any time or times hereafter to any one or more of them become a Lien upon all or
a substantial part of the Collateral or the assets of such Borrower, and such
Lien, levy or assessment is not discharged or released within thirty (30) days
of the notice or attachment thereof, provided that this Subsection 9.1(E) shall
not apply to Liens, levies or assessments which relate to current taxes not yet
due and payable or Permitted Liens;
(F) there shall occur any loss, theft, substantial damage or destruction
of any item or items of any Borrower's assets for which such Borrower is not
fully insured (a "Loss"), if the amount of such Loss not fully covered by
insurance (including any deductible in connection therewith), together with the
amount of all other Losses incurred by all Borrowers not fully covered by
insurance (including any deductibles in connection therewith) occurring in the
same Fiscal Year, exceeds $1,000,000;
(G) all or any part of any Borrower's assets is attached, seized,
subjected to a writ or distress warrant, or is levied upon, or comes within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors and on or before the forty-fifth (45th) day thereafter such assets are
not returned to such Borrower and/or such writ, distress warrant or levy is not
dismissed, stayed or lifted if the amount of such Collateral or assets, together
with any other such Collateral and assets that is so attached, seized, subjected
to writ or distress warrant or levied upon, exceeds $1,000,000 at any time;
(H) a proceeding under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt or receivership law or statute is filed
(i) against any Borrower and
86
an adjudication or appointment is made or order for relief is entered, or such
proceeding remains undismissed for a period in excess of forty-five (45) days,
or (ii) by any Borrower or any Borrower makes an assignment for the benefit of
creditors or any Borrower takes any corporate action to authorize any of the
foregoing;
(I) a proceeding under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt or receivership law or statute is filed
(i) against any Subsidiary of any Borrower and an adjudication or appointment is
made or order for relief is entered, or such proceeding remains undismissed for
a period in excess of forty-five (45) days, or (ii) any Subsidiary of any
Borrower makes an assignment for the benefit of creditors or any such Subsidiary
takes any action to authorize any of the foregoing;
(J) Any Borrower or any Subsidiary of a Borrower voluntarily or
involuntarily dissolves or is dissolved, terminates or is terminated (except for
a liquidation or dissolution of a Subsidiary permitted by Subsection 7.3
hereof);
(K) Any Borrower or any Subsidiary of a Borrower becomes insolvent or
fails generally to pay its debts as they become due;
(L) Any Borrower is enjoined, restrained, or in any way prevented by the
order of any court or any administrative or regulatory agency from conducting
all or any material part of its business affairs;
(M) a breach by any Borrower shall occur under any material agreement,
document or instrument (other than an agreement, document or instrument
evidencing the lending of money), whether heretofore, now or hereafter existing
between such Borrower and any other Person, and such breach involves an exposure
to such Borrower, or could give rise to liability of such Borrower, in excess of
$1,000,000 with respect to Rail, or $250,000 with respect to Deco, and the same
continues unwaived for more than forty-five (45) days after such breach first
occurs;
(N) as to more than $500,000 individually, or $1,500,000 in the aggregate
for all Borrowers in indebtedness at any one time, (i) any Borrower shall fail
to make any payment due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) on any obligation for borrowed money
(including, without limitation, Subordinated Debt) other than the Liabilities
and such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such indebtedness; (ii) any
other default under any agreement or instrument relating to any such
indebtedness (including, without limitation, Subordinated Debt), or any other
event, shall occur and shall continue after the applicable grace period, if any,
specified in such agreement or instrument if the effect of such default or event
is to accelerate, or to permit the acceleration of, the maturity of such
indebtedness; or (iii) any such indebtedness (including, without limitation,
Subordinated Debt) shall be declared to be due and payable or required to be
prepaid (other than, with respect to indebtedness other than the Subordinated
Debt, by a regularly scheduled required prepayment) prior to the stated maturity
thereof;
87
(O) a material and adverse change shall occur (i) in the present or
reasonably foreseeable prospective operations or financial condition of Rail or
in the value of any material portion of the Collateral, or (ii) which materially
impairs the ability of Rail to perform its obligations under this Agreement and
the other Financing Agreements, in each case as determined by Agent;
(P) the plan administrator of any Benefit Plan applies under Section
412(d) of the Internal Revenue Code for a waiver of the minimum funding
standards of Section 412(a) of the Internal Revenue Code and Agent in good faith
believes that the approval of such waiver could subject any Borrower, any of its
Subsidiaries or an ERISA Affiliate of such Borrower to liability in excess of
$1,000,000;
(Q) a Termination Event occurs which Agent in good faith believes could
individually, or together with any other Termination Events subject any
Borrower, any of its Subsidiaries or an ERISA Affiliate of such Borrower to
liability in excess of $1,000,000;
(R) a Change in Control shall occur;
(S) any guarantor shall fail to comply with the terms of, or otherwise
fail to perform any of its obligations under, any guaranty of the Liabilities or
any security or similar agreement relating thereto or shall take any action to
disaffirm any of its obligations under any such guaranty or agreement or any
such guaranty or agreement shall cease to be valid, enforceable or of effect
without the prior written consent of the Agent and the Lenders; or
(T) a "Default" under the Pledge and Security Agreement (a "Pledge
Default") occurs and shall continue for thirty (30) days, provided that such 30-
day grace period shall not apply and a Default hereunder shall be deemed to have
occurred promptly upon such Pledge Default if (x) such Pledge Default cannot in
Agent's reasonable determination be cured during such period, or (y) such Pledge
Default shall be deemed by Agent (in its reasonable discretion) to have a
material adverse effect on the "Pledged Collateral" (as defined in the Pledge
and Security Agreement) or Agent's or the Lender's interest or rights therein or
with respect thereto, or the rights or Agent or the Lenders under this Agreement
or any other Financing Agreement; or then Agent shall, upon the written,
telecopied or telex request of the Required Lenders, upon notice to Rail take
any or all of the following actions, without prejudice to the rights of Agent,
any Lender or the holder of any Revolving Note to enforce its claim against the
Borrowers, (i) terminate the Lenders' obligations to make Revolving Loans to the
Borrowers pursuant to Subsection 2.2 and the obligation of Agent to request the
Issuing Bank to issue any Letters of Credit and the obligation of the Issuing
Bank to issue any Letter of Credit pursuant to Subsection 2.20, and/or (ii)
declare all of the Liabilities to be immediately due and payable, whereupon all
of the Liabilities shall become immediately due and payable, except that in the
event a Default described in Subsection 9.1(H) or 9.1(I) hereof shall exist or
occur, all of the Liabilities shall automatically, without notice of any kind,
be immediately due and payable.
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If at any time after acceleration of the maturity of the Liabilities, the
Borrowers shall pay all arrears of interest and all payments on account of
principal of the Liabilities which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Defaults (other than nonpayment of principal of and accrued interest
on the Liabilities due and payable solely by virtue of acceleration) shall be
remedied or waived, then by written notice to the Borrowers, the Required
Lenders may elect, in the sole discretion of such Required Lenders, to rescind
and annul the acceleration of its consequences and return any cash collateral;
but such action shall not affect any subsequent Default or Event of Default or
impair any right or remedy consequent thereon. The provisions of the preceding
sentence are intended merely to bind the Lenders to a decision which may be made
at the election of the Required Lenders; they are not intended to benefit the
Borrowers and do not give the Borrowers the right to require the Lenders to
rescind or annul any acceleration hereunder or to return any cash collateral,
even if the conditions set forth herein are met.
9.2 Rights and Remedies Generally. In the event of a Default, Agent shall
have, in addition to any other rights and remedies contained in this Agreement
or in any of the other Financing Agreements, all of the rights and remedies of a
secured party under the Code and other applicable laws. All of the rights and
remedies of Agent and each Lender, whether under this Agreement, the other
Financing Agreements, the Code or other applicable laws or otherwise, shall be
cumulative, and non-exclusive, to the extent permitted by law. In addition to
all such rights and remedies, the sale, lease or other disposition of the
Collateral, or any part thereof, by Agent after Default may be for cash, credit
or any combination thereof, and Agent or any Lender may purchase all or any part
of the Collateral at public or, if permitted by law, private sale, and in lieu
of actual payment of such purchase price, may set-off the amount of such
purchase price against the Liabilities then owing. Any sales of the Collateral
may be adjourned from time to time with or without notice. Agent may, in its
sole discretion, cause the Collateral to remain on premises of a Borrower, at
such Borrower's expense, pending sale or other disposition of the Collateral.
Agent shall have the right to conduct such sales on such premises, at such
Borrower's expense, or elsewhere, on such occasion or occasions as Agent may see
fit.
9.3 Entry Upon Premises and Access to Information. In the event of a
Default, Agent shall have the right to enter upon the premises of any Borrower
where the Collateral is located (or is believed to be located) without any
obligation to pay rent to any Borrower, or any other place or places where the
Collateral is believed to be located and kept, and render the Collateral
unusable or remove the Collateral therefrom to the premises of Agent, any Lender
or any agent of Agent or any Lender, for such time as Agent may desire, in order
effectively to collect or liquidate the Collateral, and/or Agent may require any
Borrower to assemble the Collateral and make it available to Agent or any Lender
at a place or places to be designated by Agent. In the event of a Default, Agent
shall have the right to obtain access to data processing equipment, computer
hardware and software of any Borrower relating to the Collateral and to use all
of the foregoing and the information contained therein in any manner Agent deems
appropriate; and Agent shall have the right to notify post office authorities to
change the address for delivery of mail of any Borrower to
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an address designated by Agent and to receive, open and deal with all mail
addressed to such Borrower.
9.4 Sale or Other Disposition of Collateral by Agent. Any notice required
to be given by Agent of a sale, lease or other disposition or other intended
action by Agent with respect to any of the Collateral which is deposited in the
United States mails, postage prepaid and duly addressed to a Borrower at the
address specified in Subsection 11.17 hereof, at least ten (10) Business Days
prior to such proposed action shall constitute fair and reasonable notice of any
such action. The net proceeds realized by Agent upon any such sale or other
disposition, after deduction for the expense of retaking, holding, preparing for
sale, selling or the like and the reasonable attorneys' fees and legal expenses
incurred by Agent in connection therewith, shall be applied as provided herein
toward satisfaction of the Liabilities, including, without limitation, the
Liabilities described in Subsections 7.5 and 11.2 hereof. Agent and the Lenders
shall account to the Borrowers for any surplus realized upon such sale or other
disposition, and the Borrowers shall remain liable to Agent and each Lender for
any deficiency. The commencement of any action, legal or equitable, or the
rendering of any judgment or decree for any deficiency shall not affect Agent's
security interest in the Collateral until the Liabilities are fully paid. Each
Borrower agrees that neither Agent nor any Lender has any obligation to preserve
rights to the Collateral against any other parties. Agent is hereby granted a
license or other right to use, without charge, labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks, service marks
and advertising matter, or any property of a similar nature of the Borrowers, as
it pertains to the Collateral, in completing production of, advertising for sale
and selling any Collateral and rights under all licenses and all franchise
agreements of the Borrowers shall inure to Agent's benefit until the Liabilities
are paid.
9.5 Waiver of Demand. Demand, presentment, protest and notice of
nonpayment are hereby waived by the Borrowers. Each Borrower also waives the
benefit of all valuation, appraisal and exemption laws.
9.6 Waiver of Notice. UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF A
DEFAULT, EACH BORROWER (PURSUANT TO AUTHORITY GRANTED BY ITS BOARD OF DIRECTORS)
HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE
BY AGENT OR ANY LENDER OF ITS RIGHTS TO REPOSSESS THE COLLATERAL WITHOUT
JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL WITHOUT PRIOR
NOTICE OR HEARING. EACH BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY
COUNSEL OF ITS CHOICE WITH RESPECT TO THIS TRANSACTION AND THIS AGREEMENT.
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10. AGENT
10.1 Appointment of Agent.
(A) Each Lender and the Issuing Bank hereby designates ANB as Agent to act
as herein specified. Each Lender and the Issuing Bank hereby irrevocably
authorizes, and each holder of any Note or participation in any Letter of Credit
by the acceptance of a Note or participation shall be deemed irrevocably to
authorize, Agent to take such action on its behalf under the provisions of this
Agreement and the Notes and any other instruments and agreements referred to
herein and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of Agent by the terms
hereof and thereof and such other powers as are reasonably incidental thereto.
Agent shall hold all Collateral and all payments of principal, interest, Fees,
charges and Expenses received pursuant to this Agreement or any other Financing
Agreements for the benefit of Lenders and the Issuing Bank to be distributed as
provided herein. Agent may perform any of its duties hereunder by or through its
agents or employees.
(B) The provisions of this Section 10 are solely for the benefit of Agent,
Lenders and the Issuing Bank, and no Borrower shall have any rights as a third
party beneficiary of any of the provisions hereof (other than Subsection 10.9)
nor shall any Borrower have any obligations under this Section 10. In performing
its functions and duties under this Agreement, Agent shall act solely as agent
of Lenders the Issuing Bank and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for any
Borrower.
10.2 Nature of Duties of Agent. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
other Financing Agreements. Neither Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted by it as
such hereunder or in connection herewith, unless caused by its or their own
gross negligence or willful misconduct. The duties of Agent shall be mechanical
and administrative in nature; Agent shall not have by reason of this Agreement
or the other Financing Agreements a fiduciary relationship in respect of any
Lender or the Issuing Bank; and nothing in this Agreement or the other Financing
Agreements, expressed or implied, is intended to or shall be so construed as to
impose upon Agent any obligations in respect of this Agreement or the other
Financing Agreements except as expressly set forth herein or therein.
10.3 Lack of Reliance on Agent.
(A) Independently and without reliance upon Agent, each Lender and the
Issuing Bank, to the extent it deems appropriate, has made and shall continue to
make (i) its own independent investigation of the financial or other condition
and affairs of the Borrowers in connection with the taking or not taking of any
action in connection herewith and (ii) its own appraisal of the creditworthiness
of the Borrowers, and, except as expressly provided in this Agreement, Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Lender or the Issuing Bank with any credit or other information
with respect thereto,
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whether coming into its possession before the making of any Loan, Advance or
issuance of any Letter of Credit or at any time or times thereafter.
(B) Agent shall not be responsible to any Lender or the Issuing Bank for
any recitals, statements, information, representations or warranties herein or
in any document, certificate or other writing delivered in connection herewith
or for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, the Notes or other
Financing Agreements or the financial or other condition of the Borrowers.
Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement, the Notes or any of the other Financing Agreements, or the financial
condition of the Borrowers, or the existence or possible existence of any
Default or Event of Default, unless specifically requested to do so in writing
by any Lender or the Issuing Bank.
10.4 Certain Rights of Agent. Agent shall have the right to request
instructions from the Required Lenders at any time. If Agent shall request
instructions from the Required Lenders with respect to any act or action
(including the failure to act) in connection with this Agreement or any of the
other Financing Agreements, Agent shall be entitled to refrain from such act or
taking such action unless and until Agent shall have received instructions from
the Required Lenders, and Agent shall not incur liability to any Person by
reason of so refraining. Without limiting the foregoing, no Lender or the
Issuing Bank shall have any right of action whatsoever against Agent as a result
of Agent acting or refraining from acting hereunder in accordance with the
instructions of the Required Lenders.
10.5 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, radiogram, order
or other documentary, teletransmission or telephone message believed by it to be
genuine and correct and to have been signed, sent or made by the proper person.
Agent may consult with legal counsel (including counsel for any Borrower with
respect to matters concerning such Borrower and any of its Subsidiaries),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.
10.6 Indemnification of Agent. To the extent Agent is not reimbursed and
indemnified by the Borrowers, each Lender will reimburse and indemnify Agent, in
proportion to its Proportionate Share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including counsel fees and disbursements) or disbursements of any kind
or nature whatsoever (including all Expenses) which may be imposed on, incurred
by or asserted against Agent in performing its duties hereunder, in any way
relating to or arising out of this Agreement, provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from Agent's gross negligence or willful misconduct.
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10.7 Agent in its Individual Capacity. With respect to its obligation to
lend under this Agreement, any Loans made by it and the Notes issued to it, and
its participation in Letters of Credit issued hereunder, or its issuance as the
Issuing Bank of any Letter of Credit, Agent in its individual capacity shall
have the same rights and powers hereunder as any other Lender or holder of a
Note or participation interests or the Issuing Bank, as the case may be and may
exercise the same as though it was not performing the duties specified herein;
and the terms "Lenders," "Required Lenders," "holders of Notes," or "Issuing
Bank" or any similar terms shall, unless the context clearly otherwise
indicates, include Agent in its individual capacity. Subject to Subsection 10.13
hereof, Agent in its individual capacity may accept deposits from, lend money
to, acquire equity interests in, and generally engage in any kind of banking,
trust, financial advisory or other business with any Borrower or any Affiliate
of any Borrower as if it were not performing the duties specified herein, and
may accept fees and other consideration from any Borrower for services in
connection with this Agreement and otherwise without having to account for the
same to Lenders.
10.8 Holders of Revolving Notes. Agent may deem and treat the original
named payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof shall have been
filed with Agent. Any request, authority or consent of any Person who, at the
time of making such request or giving such authority or consent, is the holder
of any Note, shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Note or of any Note or Notes issued in exchange
therefor.
10.9 Successor Agent.
(A) Agent may, upon five (5) Business Days' notice to the Lenders and the
Issuing Bank and the Borrowers, resign at any time (effective upon the
appointment of a successor Agent pursuant to the provisions of this Subsection
10.9) by giving written notice thereof to Lenders and the Borrowers. Upon any
such resignation, the Required Lenders shall have the right, upon five (5) days'
notice and approval by Rail (which approval shall not be unreasonably withheld),
to appoint a successor Agent. If no successor Agent (i) shall have been so
appointed by the Required Lenders, and (ii) shall have accepted such
appointment, within thirty (30) days after the retiring Agent's giving of notice
of resignation, then, upon five (5) days' notice, the retiring Agent may, on
behalf of Lenders, appoint a successor Agent. In the event that Agent ceases to
be, in its individual capacity, a Lender whose aggregate holding of outstanding
Revolving Loans plus the amount of its Revolving Loan Commitment (net of the
principal amount of its outstanding Revolving Loans) plus the amount of its
Proportionate Share of Letter of Credit Obligations equals or exceeds
$10,000,000 then such Agent's status as Agent hereunder may be terminated by the
Required Lenders (it being understood that no such termination shall affect
Agent in its capacity as a Lender or as the Issuing Bank or any Loans or
Revolving Credit Commitment made by Agent in its capacity as a Lender or Letter
of Credit issued by Agent in its capacity as the Issuing Bank) provided that the
Required Lenders concurrently appoint a successor Agent to which Rail consents
(which consent shall not be unreasonably withheld).
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(B) Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
(C) In the event of a material breach by Agent of its duties hereunder,
Agent may be removed by the Required Lenders (other than Agent in its capacity
as a Lender or as the Issuing Bank and without giving effect to any portion of
the Loans or Revolving Credit Commitment or Acquisition Loan Commitment made by
Agent in its capacity as a Lender or Letters of Credit issued by Agent in its
capacity as the Issuing Bank) for cause and the provisions of this Subsection
10.9 shall apply to the appointment of a successor Agent.
(D) If ANB is removed or resigns as Agent, ANB shall no longer be required
to act as the Issuing Bank with respect to Letters of Credit issued after the
effective date of its removal or resignation.
10.10 Collateral Matters.
(A) Each Lender and the Issuing Bank authorizes and directs Agent to enter
into the Financing Agreements for the benefit of Lenders and the Issuing Bank.
Each Lender and the Issuing Bank hereby agrees, and each holder of any Note by
the acceptance thereof will be deemed to agree, that, except as otherwise set
forth herein, any action taken by the Required Lenders in accordance with the
provisions of this Agreement or the Financing Agreements and the exercise by the
Required Lenders of the powers set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of Lenders and the Issuing Bank. Agent is hereby authorized on
behalf of all of the Lenders, without the necessity of any notice to or further
consent from any Lender or the Issuing Bank, from time to time prior to a
Default, to take any action with respect to any Collateral or Financing
Agreements which may be necessary to perfect and maintain perfected the security
interest in and Liens upon the Collateral granted pursuant to any of the
Financing Agreements.
(B) The Lenders hereby authorize Agent to release any Lien granted to or
held by Agent upon any Collateral upon termination of this Agreement and the
Revolving Credit Commitments and payment and satisfaction of all of the
Liabilities at any time arising under or in respect of this Agreement and the
other Financing Agreements or the transactions contemplated hereby or thereby.
In addition, the Lenders and the Issuing Bank hereby authorize Agent to release
any Lien granted to or held by Agent upon any Collateral (i) constituting
property being sold or disposed of upon receipt of the proceeds of such sale by
Agent if a Borrower certifies to Agent that the sale or disposition is made in
compliance with Subsection 8.6 hereof (and Agent may rely conclusively on any
such certificate, without further inquiry), or (ii) constituting Collateral with
a value as certified to Agent by a Borrower of less than $1,000,000 in the
aggregate in any Fiscal Year
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(and Agent may rely conclusively on any such certificate, without further
inquiry). Upon request by Agent at any time, the Lenders and the Issuing Bank
will confirm in writing Agent's authority to release particular types or items
of Collateral pursuant to this Subsection 10.10.
(C) Upon the release of any Lien in accordance with Subsection 10.10(B),
and upon at least five (5) Business Days' prior written request by a Borrower,
Agent shall (and is hereby irrevocably authorized by the Lenders and the Issuing
Bank to) execute such documents as may be necessary to evidence the release of
such Liens; provided that (i) Agent shall not be required to execute any such
document on terms which, in Agent's reasonable opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty and (ii) such release shall
not in any manner discharge, affect or impair the Liabilities or any Liens upon
(or obligations of such Borrower in respect of) all interests retained by such
Borrower, including (without limitation) the proceeds of the sale, all of which
shall continue to constitute part of the Collateral. In the event of any sale or
transfer of Collateral, or any foreclosure with respect to any of the
Collateral, Agent shall be authorized to deduct all of the Expenses reasonably
incurred by Agent from the proceeds of any such sale, transfer or foreclosure.
(D) Agent shall have no obligation whatsoever to the Lenders, the Issuing
Bank or to any other Person to assure that the Collateral exists or is owned by
any Borrower or any other Person or is cared for, protected or insured or that
the Liens granted to Agent herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or to continue exercising at
all or in any manner or under any duty of care, disclosure or fidelity any of
the rights, authorities and powers granted or available to Agent in this
Subsection 10.10 or in any of the Financing Agreements it being understood and
agreed that in respect of the Collateral, or any act, omission or event related
thereto, Agent may act in any manner it may deem appropriate, in its sole
discretion, given Agent's own interest in the Collateral as one of the Lenders
and that Agent shall have no duty or liability whatsoever to the Lenders or the
Issuing Bank, except for Agent's gross negligence or willful misconduct.
10.11 Actions with Respect to Defaults. In addition to Agent's right to
take actions on its own accord as permitted under this Agreement, Agent shall
take such action with respect to a Default or Event of Default as shall be
directed by the Required Lenders; provided that until Agent shall have received
such directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable.
10.12 Delivery of Information. Agent shall not be required to deliver to
any Lender or the Issuing Bank originals or copies of any documents,
instruments, notices, communications or other information received by Agent from
the Borrowers, the Required Lenders, any Lender, the Issuing Bank or any other
Person under or in connection with this Agreement or any other Financing
Agreement except (i) as specifically provided in this Agreement or any other
Financing Agreement and (ii) as specifically requested from time to time in
writing by any Lender
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or the Issuing Bank with respect to a specific document, instrument, notice or
other written communication received by and in the possession of Agent at the
time of receipt of such request and then only in accordance with such specific
request.
10.13 Loans by Lenders. Without the prior written consent of the Required
Lenders, no Lender or the Issuing Bank shall extend credit to any Borrower or
any of its Subsidiaries (other than credit that is incidental to the maintenance
of deposit accounts) except pursuant to this Agreement.
10.14 Allocation of Payments. Subject to Subsections 2.6 and 2.8, payments
of principal of, and interest on, all Loans shall be allocated to the Lenders
based on their respective Proportionate Share.
11. MISCELLANEOUS.
11.1 Waiver, Amendments. Any failure by Agent, the Issuing Bank or any
Lender, at any time or times hereafter, to require strict performance by any
Borrower of any provision of this Agreement or any of the other Financing
Agreements shall not waive, affect or diminish any right of Agent, the Issuing
Bank or any Lender thereafter to demand strict compliance and performance
therewith. Any suspension or waiver of a Default by any Borrower under this
Agreement or any of the other Financing Agreements shall not suspend, waive or
affect any other Default by any Borrower under this Agreement or any of the
other Financing Agreements, whether the same is prior or subsequent thereto and
whether of the same or of a different kind or character. No amendment or waiver
of any provision of this Agreement or any other Financing Agreement, nor consent
to any departure by any Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Required Lenders (or by
Agent on their behalf), or if Lenders shall not be parties thereto, by the
parties thereto and consented to by the Required Lenders (or by Agent on their
behalf), and each such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided
that no amendment, waiver or consent shall, unless in writing and signed by all
Lenders, do any of the following: (i) increase the Total Revolving Commitments
of Lenders (except as provided in Subsection 2.7(D)) or subject Lenders to any
additional obligations, (ii) except as otherwise expressly provided in this
Agreement, reduce the principal of, or interest on, the Notes, any Letter of
Credit reimbursement obligations or any fees hereunder, (iii) postpone any date
fixed for any payment in respect of principal of, or interest on, the Notes, any
Letter of Credit reimbursement obligations or any fees hereunder, (iv) change
the percentage of the Revolving Credit Commitments (except as provided in
Subsection 2.7(D)), or any minimum requirement, necessary for Lenders or the
Required Lenders to take any action hereunder, (v) amend or waive this
Subsection 11.1, or change the definition of Required Lenders, (vi) extend the
Termination Date, or (vii) except as otherwise expressly provided in this
Agreement (including without limitation as provided in Subsection 10.10(B)
hereof), and other than in connection with the financing, refinancing, sale or
other disposition of any asset of any Borrower permitted under this Agreement,
release any Liens in favor of Agent on all or any substantial portion of the
Collateral; provided, further, that no amendment, waiver or consent affecting
the rights or
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duties of Agent or the Issuing Bank under any Financing Agreements shall in any
event be effective, unless in writing and signed by Agent or the Issuing Bank
(respectively), in addition to the Lenders required hereinabove to take such
action. Notwithstanding any of the foregoing to the contrary, the consent of the
Borrowers shall not be required for any amendment, modification or waiver of the
provisions of Section 10 (other than the provisions of Subsection 10.9). In
addition, the Borrowers and Lenders hereby authorize Agent to modify this
Agreement by unilaterally amending or supplementing Schedule 1 from time to time
in the manner requested by the Borrowers, Agent or any Lender in order to
reflect any assignments or transfers of the Loans, any increase in the Total
Revolving Commitments under Subsection 2.7(D), and reductions in the Total
Revolving Commitment as provided for hereunder; provided, however, that Agent
shall promptly deliver a copy of any such modification to the Borrowers and each
Lender. All Defaults shall continue until the same are waived in accordance with
this Subsection 11.1. Any Default or Event of Default (as defined in the
Original Agreement) existing on the date hereof is not waived by the execution
of this Agreement or any other Financing Agreement and such Default or Event of
Default shall be a Default or Event of Default hereunder, as the case may be,
until waived in accordance with this Subsection 11.1. This Agreement shall not
operate as a waiver of any right, power or remedy of Lenders or Agent under the
Original Agreement or the Security Agreement.
11.2 Costs and Attorneys' Fees. If at any time or times hereafter Agent
employs counsel in connection with protecting or perfecting Agent's security
interest in the Collateral or in connection with any matters contemplated by or
arising out of this Agreement or any of the other Financing Agreements, whether
(a) to prepare, negotiate or execute (i) any amendment to or modification or
extension of this Agreement, any other Financing Agreements or any instrument,
document or agreement executed by any Person in connection with the transactions
contemplated by this Agreement, (ii) any new or supplemental Financing
Agreements, or any instrument, document or agreement to be executed by any
Person in connection with the transactions contemplated by this Agreement, or
(iii) any instrument, document or agreement in connection with any sale or
attempted sale of any interest herein to any Person, including any participant
(except such a sale by ANB prior to the occurrence of a Default or Event of
Default if after giving effect thereto the aggregate amount of Loans held by
ANB, and its unused Revolving Loan Commitment is less than $25,000,000 in the
aggregate), (b) to commence, defend, or intervene in any litigation or to file a
petition, complaint, answer, motion or other pleadings, (c) to take any other
action in or with respect to any suit or proceeding (bankruptcy or otherwise),
(d) to consult with officers of Agent or to advise Agent, (e) to protect,
collect, lease, sell, take possession of, release or liquidate any of the
Collateral, or (f) to attempt to enforce or to enforce any security interest in
any of the Collateral, or to enforce any rights of Agent or any Lender,
including, without limitation, Agent's or any Lender's rights to collect any of
the Liabilities, then in any of such events, all of the reasonable attorneys'
fees arising from such services, and any expenses, costs and charges relating
thereto, including, without limitation, all reasonable fees of all paralegals
and other staff employed by such attorneys, together with interest following
demand for payment thereof at the from time to time rate applicable to Base Rate
Advances, shall be part of the Liabilities, payable on demand and secured by the
Collateral.
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11.3 Expenditures. In the event any Borrower shall fail to pay taxes,
insurance, assessments, costs or expenses which such Borrower is, under any of
the terms hereof, required to pay, or fail to keep the Collateral free from
other Liens, except as permitted herein, Agent or the Required Lenders may, in
its or their sole discretion, make expenditures for any or all of such purposes,
and the amount so expended, together with interest thereon at the rate
applicable to Base Rate Advances, shall be part of the Liabilities, payable on
demand and secured by the Collateral.
11.4 Custody and Preservation of Collateral. Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any of the
Collateral in its possession if it takes such action for that purpose as any
Borrower shall request in writing, but failure by Agent to comply with any such
request shall not of itself be deemed a failure to exercise reasonable care, and
no failure by Agent to preserve or protect any right with respect to such
Collateral against prior parties, or to do any act with respect to the
preservation of such Collateral not so requested by the Borrowers shall of
itself be deemed a failure to exercise reasonable care in the custody or
preservation of such Collateral.
11.5 Reliance by Lenders. All covenants, agreements, representations and
warranties made herein by the Borrowers shall, notwithstanding any investigation
by Agent or any Lender, be deemed to be material to and to have been relied upon
by Agent and each Lender.
11.6 Parties; Assignability.
(A) Whenever in this Agreement there is reference made to a Borrower,
Agent, the Issuing Bank or any Lender, such reference shall be deemed to
include, wherever applicable, a reference to the successors and permitted
assigns of such Borrower and the successors and permitted assigns of Agent, the
Issuing Bank and such Lender, and the provisions of this Agreement shall be
binding upon and shall inure to the benefit of said successors and permitted
assigns. Notwithstanding anything herein to the contrary, no Borrower may assign
or otherwise transfer its rights or obligations under this Agreement without the
prior written consent of the Lenders.
(B) Any Lender may make, carry or transfer Loans at, to or for the account
of, any of its Lending Affiliates.
(C) Upon 90 days' prior written notice to Agent, each Lender may, with the
consent of Agent (which consent shall not be unreasonably withheld), but without
the consent of any other Lender, assign to one or more banks or other financial
institutions all or a portion of its rights and obligations under this Agreement
and the Notes; provided that (i) such Lender has first offered to assign such
portion of its rights and obligations under this Agreement and the Notes, at
par, to Agent, (ii) for each such assignment, the parties thereto shall execute
and deliver to Agent, for its acceptance and recording in the Register (as
defined below), an Assignment and Assumption Agreement, together with any Notes
subject to such assignment, (iii) the aggregate outstanding Loans, and unused
Total Revolving Commitments so assigned shall not be less than $5,000,000,
unless such assignment is to a then-current holder of a Note or consented to by
Agent in writing, and
98
(iv) subject to Subsection 2.7(D), each assignment shall be of a constant, and
not a varying, percentage interest of the assigning Lender's rights and
obligations and such assignment shall be of the same proportionate amount of the
assigning Lender's rights and obligations with respect to all Borrowers (for
example, no Lender may assign a percentage of its rights and obligations
hereunder with respect to Rail without simultaneously assigning the same
percentage of its rights and obligations hereunder with respect to Deco) and
with respect to each type of Loan hereunder, the Total Revolving Commitments and
the Letter of Credit Obligations. Upon such execution and delivery of the
Assignment and Assumption Agreement to Agent, from and after the date specified
as the effective date in the Assignment and Assumption Agreement (the
"Acceptance Date"), (x) the assignee thereunder shall be a party hereto, and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Assumption Agreement, such assignee shall have
the rights and obligations of a Lender hereunder and (y) the assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Assumption Agreement, relinquish its rights
(other than any rights it may have pursuant to Subsections 2.11, 2.16, 2.17,
2.18, 2.21(J), 7.4, 7.10, 11.2, and 11.19 hereof which will survive) and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption Agreement covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto).
(D) By executing and delivering an Assignment and Assumption Agreement,
the assignee thereunder confirms and agrees as follows: (i) other than as
provided in such Assignment and Assumption Agreement, the assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the Notes or any other instrument or
document furnished pursuant hereto, (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrowers or the performance or observance by the
Borrowers of any of their obligations under this Agreement or any other
instrument or document furnished pursuant hereto, (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Subsection 7.1 hereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Assumption Agreement,
(iv) such assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement, (v) such assignee
appoints and authorizes Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to Agent by the terms
hereof, together with such powers as are reasonably incidental thereto and (vi)
such assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(E) Agent shall maintain at its address referred to in Subsection 11.17
hereof a copy of each Assignment and Assumption Agreement delivered to and
accepted by it and a register
99
for the recordation of the names, addresses and Proportionate Shares of the
Lenders and the Revolving Credit Commitments of each Lender from time to time
(the "Register"). The entries in the Register shall be conclusive and binding
for all purposes absent manifest error, and the Borrowers, Agent and Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register and copies of each Assignment
and Assumption shall be available for inspection by the Borrowers or any Lender
at any reasonable time and from time to time upon reasonable prior notice.
(F) Upon its receipt of an Assignment and Assumption Agreement executed by
an assigning Lender, together with the Notes subject to such assignment, Agent
shall, if such Assignment and Assumption Agreement has been completed and is in
substantially the form of Exhibit G hereto and Agent consents thereto, (i)
accept such Assignment and Assumption Agreement, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Borrowers. Within five (5) Business Days after its receipt of such notice, each
Borrower shall execute and deliver to Agent, in exchange for the surrendered
Notes, new Notes to the order of the assignee in an amount equal to the
Revolving Credit Commitment assumed by it pursuant to such Assignment and
Assumption Agreement and, if the assigning Lender has retained a Revolving
Credit Commitment hereunder, new Notes to the order of the assigning Lender in
an amount equal to the Revolving Credit Commitment retained by it hereunder.
Such new Notes shall re-evidence the Liabilities outstanding under the old Notes
and shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Notes, shall be dated the Closing Date and shall
otherwise be in substantially the form of the Notes subject to such assignments.
(G) Upon 90 days' prior written notice to Agent, each Lender may (provided
such Lender shall have first offered to resell to Agent at par its interest in
the Liabilities) sell participations (without the consent of Agent, any Borrower
or any other Lender) to one or more parties in or to all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Revolving Credit Commitment, the Loans owing to it and the
Notes held by it); provided that (i) such Lender's obligations under this
Agreement (including, without limitation, its Revolving Credit Commitment to the
Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrowers, Agent, and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and (v) such Lender
shall not transfer, grant, assign or sell any participation under which the
participant shall have rights to approve any amendment or waiver of this
Agreement except to the extent such amendment or waiver would (A) extend the
final maturity date or the date for the payments of any installment of fees or
principal or interest of any Loans or Letter of Credit Obligations in which such
participant is participating, (B) reduce the amount of any installment of
principal of the Loans or Letter of Credit Obligations in which such participant
is participating, (C) except as otherwise expressly provided in this Agreement,
reduce the interest rate applicable to the Loans or Letter of Credit
reimbursement obligations in which such participant is participating, or
100
(D) except as otherwise expressly provided in this Agreement, reduce any Fees
payable to Lenders hereunder.
(H) Each Lender agrees that, without the prior written consent of the
Borrowers and Agent, it will not make any assignment hereunder in any manner or
under any circumstances that would require registration or qualification of, or
filings in respect of, any Loan, Note or other Liabilities under the securities
laws of the United States of America or of any jurisdiction.
(I) In connection with the efforts of any Lender to assign its rights or
obligations or to participate interests, such Lender may disclose any
information in its possession regarding the Borrowers, subject to Subsection
7.1.
11.7 CHOICE OF LAW. THIS AGREEMENT SHALL BE DEEMED TO BE EXECUTED AND HAS
BEEN DELIVERED AND ACCEPTED IN CHICAGO, ILLINOIS BY SIGNING AND DELIVERING IT
THERE. ANY DISPUTE BETWEEN THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY,
OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS AND NOT THE
CONFLICTS OF LAW PROVISIONS OF THE STATE OF ILLINOIS.
11.8 CONSENT TO JURISDICTION.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION 11.8(B)
HEREOF, EACH OF THE PARTIES HERETO AGREE THAT ALL DISPUTES BETWEEN THEM ARISING
OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT,
TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS
LOCATED IN ▇▇▇▇ COUNTY, ILLINOIS, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY BE HEARD BY A COURT LOCATED OUTSIDE OF ▇▇▇▇
COUNTY, ILLINOIS. EACH BORROWER WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. EACH BORROWER AGREES THAT AGENT AND ANY LENDER
SHALL HAVE THE RIGHT TO PROCEED AGAINST SUCH BORROWER OR ITS PROPERTY
("PROPERTY") IN A COURT IN ANY LOCATION TO ENABLE AGENT OR ANY LENDER TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE LIABILITIES, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF AGENT OR ANY LENDER. EACH
BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIM IN ANY
PROCEEDING BROUGHT BY AGENT OR ANY LENDER TO REALIZE ON PROPERTY, COLLATERAL OR
101
ANY OTHER SECURITY FOR THE LIABILITIES, OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF AGENT OR ANY LENDER. EACH BORROWER WAIVES ANY OBJECTION THAT
IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH AGENT OR ANY LENDER HAS
COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION 11.8(B).
11.9 SERVICE OF PROCESS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT AND IRREVOCABLY APPOINTS ▇▇▇▇▇▇▇▇-▇▇▇▇ CORPORATION
SYSTEM, INC., SUCH BORROWER'S REGISTERED AGENT, AS BORROWER'S AGENT FOR THE
PURPOSE OF ACCEPTING SERVICE OF PROCESS WITHIN THE STATE OF ILLINOIS (THE "SP
AGENT"). AGENT AND EACH LENDER AGREES TO PROMPTLY FORWARD BY REGISTERED MAIL (NO
RETURN RECEIPT REQUIRED) A COPY OF ANY PROCESS SO SERVED BY IT UPON THE SP AGENT
TO SUCH BORROWER AT ITS ADDRESS SET FORTH IN SUBSECTION 11.17 HEREOF. EACH
BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. EACH BORROWER
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF THE COURTS
REFERRED TO IN SUBSECTION 11.8 HEREOF IN ANY SUCH ACTION OR PROCEEDING BY
MAILING COPIES OF SUCH SERVICE BY REGISTERED MAIL, POSTAGE PREPAID TO SUCH
BORROWER AT SAID ADDRESS. NOTHING IN THIS AGREEMENT SHALL AFFECT THE RIGHT OF
AGENT OR ANY LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW BUT
ANY FAILURE TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH
PROCESS.
11.10 WAIVER OF JURY TRIAL AND BOND.
(A) WAIVER OF JURY TRIAL. THE BORROWERS, AGENT AND LENDERS EACH WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN ANY OF THEM ARISING OUT OF, CONNECTED
WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS RELATED
THERETO. THE BORROWERS, AGENT AND LENDERS HEREBY AGREE AND CONSENT THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(B) WAIVER OF BOND. EACH BORROWER WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF AGENT OR ANY LENDER IN CONNECTION WITH ANY JUDICIAL
PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
102
REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR ANY OTHER SECURITY FOR THE
LIABILITIES, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
AGENT OR ANY LENDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT, OR ANY
OTHER AGREEMENT OR DOCUMENT BETWEEN AGENT OR ANY LENDER AND ANY BORROWER.
11.11 ADVICE OF COUNSEL. EACH BORROWER ACKNOWLEDGES AND REPRESENTS TO AGENT
AND LENDERS THAT SUCH BORROWER HAS DISCUSSED THIS AGREEMENT AND THE OTHER
FINANCING AGREEMENTS WITH ITS LAWYERS AND ANY AND ALL ISSUES WITH RESPECT TO
THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS HAVE BEEN RESOLVED TO SUCH
BORROWER'S SATISFACTION.
11.12 SEVERABILITY. WHEREVER POSSIBLE, EACH PROVISION OF THIS AGREEMENT
SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER
APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT 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.
11.13 Application of Payments. Notwithstanding any contrary provision
contained in this Agreement or in any of the other Financing Agreements, each
Borrower irrevocably waives the right to direct the application of any and all
payments at any time or times hereafter received by Agent or any Lender from
such Borrower or with respect to any of the Collateral, and such Borrower does
hereby irrevocably agree that Agent and each Lender shall have the continuing
exclusive right to apply and reapply any and all payments received at any time
or times hereafter, whether with respect to the Collateral or otherwise, against
the Liabilities in such manner as Agent or such Lender may deem advisable,
notwithstanding any entry by Agent or any Lender upon any of its books and
records.
11.14 Marshalling; Payments Set Aside. Neither Agent nor any Lender shall
be under any obligation to ▇▇▇▇▇▇▇▇ any assets in favor of any Borrower or any
other party or against or in payment of any or all of the Liabilities. To the
extent that any Borrower makes a payment or payments to Agent or any Lender or
Agent or any Lender enforces its security interests or exercises its rights of
setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
103
11.15 Section and Subsection Titles. The section and subsection titles
contained in this Agreement shall be without substantive meaning or content of
any kind whatsoever and are not a part of the agreement between the parties.
11.16 Continuing Effect. This Agreement, Agent's security interests in the
Collateral, and all of the other Financing Agreements shall continue in full
force and effect so long as any Liabilities shall be owed to Agent or any
Lender, and (even if there shall be no Liabilities outstanding) so long as this
Agreement has not been terminated as provided herein.
11.17 Notices. Except as otherwise expressly provided herein, any notice
required or desired to be served, given or delivered hereunder shall be in
writing, and shall be deemed to have been validly served, given or delivered (i)
three (3) Business Days after deposit in the United States mails, with proper
postage prepaid, (ii) when sent after receipt of confirmation or answer back if
sent by telecopy, or other similar facsimile transmission, (iii) one (1)
Business Day after deposited with a reputable overnight courier with all charges
prepaid, or (iv) when delivered, if hand-delivered by messenger, all of which
shall be properly addressed to the party to be notified and sent to the address
or number indicated as follows:
(i) If to Agent at:
American National Bank and
Trust Company of Chicago
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
Telecopy: 312/661-6929
Confirmation: 312/661-5728
(ii) If to any Lender to the address set forth for such Lender on
Schedule 1 hereto:
104
(iii) If to Rail at:
ABC Rail Products Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Senior Vice President
Telecopy: 312/322-0397
Confirmation: 312/322-4579
(iv) If to Deco at:
ABC Rail Products Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇▇▇▇▇▇▇▇ MacDonald
Senior Vice President
Telecopy: 312/322-0397
Confirmation: 312/322-4579
or to such other address or number as each party designates to the other in the
manner herein prescribed.
11.18 Equitable Relief. Each Borrower recognizes that, in the event any
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Agent or any Lender; therefore, each Borrower agrees that Agent or any
Lender, if Agent or such Lender so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages and the granting of any such relief shall not preclude Agent or
any Lender from pursuing any other relief or remedies for such breach.
11.19 Indemnification. Each Borrower agrees to defend, protect, indemnify
and hold harmless Agent, the Issuing Bank and each Lender and each of their
respective officers, directors, employees, attorneys, consultants and agents
(collectively, the "Indemnitees") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for and
consultants of such Indemnitees in connection with any investigative,
administrative or judicial proceeding, whether or not such Indemnitees shall be
designated a party thereto), which may be imposed on, incurred by, or asserted
against such Indemnitees (whether direct, indirect, or consequential and whether
based on any federal or state laws or other statutory regulations, including,
without limitation, securities, environmental and commercial laws and
regulations, under common law or at equitable cause or on contract or otherwise)
in any manner relating to or arising out of this Agreement, the Original
105
Agreement or the other Financing Agreements, or any act, event or transaction
related or attendant thereto, the agreements of Agent, the Issuing Bank and each
Lender contained herein, the making of any Loans or any other advances, the
issuance of any Letter of Credit, the management of such Loans, advances or
Letters of Credit or the Collateral (including any liability under federal,
state or local environmental laws or regulations) or the use or intended use of
the proceeds of such Loans, advances or Letters of Credit (collectively, the
"Indemnified Matters"); provided that the Borrowers shall have no obligation to
any Indemnitee hereunder with respect to Indemnified Matters finally judicially
determined in a proceeding which is binding upon such Indemnitee to have been
caused by or resulting from the willful misconduct or gross negligence of such
Indemnitee or to reimburse any Lender (other than ANB in its capacity as Agent)
for its legal fees and expenses incurred prior to the occurrence of a Default or
Event of Default in connection with the documentation and closing of the matters
contemplated by this Agreement. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this Subsection 11.19 may be unenforceable
because it is violative of any law or public policy, the Borrowers shall
contribute the maximum portion which it is permitted to pay and satisfy under
applicable law, to the payment and satisfaction of all Indemnified Matters
incurred by the Indemnitees. In addition, the Borrowers shall, upon demand, pay
to the Agent, any Lender and the Issuing Bank all costs and expenses (including
the reasonable fees and disbursements of counsel and other professionals) paid
or incurred by the Agent, the Issuing Bank or such Lender in (i) enforcing or
defending its rights under or in respect of this Agreement, the other Financing
Agreements or any other document or instrument now or hereafter executed and
delivered in connection herewith, (ii) in collecting the Loans, (iii) in
foreclosing or otherwise collecting upon the Collateral or any part thereof and
(iv) obtaining any legal, accounting or other advice in connection with any of
the foregoing after the occurrence of a Default or Event of Default. Each
Borrower's obligations hereunder shall survive any termination of this Agreement
and the other Financing Agreements and the payment in full of the Liabilities,
and are in addition to, and not in substitution of, any other of their
obligations set forth in this Agreement.
11.20 Nonliability of Agent and Lenders. The relationship between the
Borrowers and each Lender and Agent shall be solely that of borrower and lender.
Neither Agent nor any Lender shall have any fiduciary responsibilities to any
Borrower. Neither Agent nor any Lender undertakes any responsibility to any
Borrower to review or inform any Borrower of any matter in connection with any
phase of any Borrower's business or operations.
11.21 Independent Nature of Lenders' Rights. The amounts payable at any
time hereunder to each Lender under such Lender's Notes shall be a separate and
independent debt.
11.22 Effectiveness. This Agreement shall become effective on the date on
which all of the parties hereto shall have signed a copy hereof (whether the
same or different copies) and shall have delivered the same to Agent pursuant to
Subsection 11.17 or, in the case of any Lenders which have not executed and
delivered the same as provided above, shall have given to Agent written,
telecopied or telex notice (actually received) at such office that the same has
been signed and mailed to it. After giving effect to this Agreement, all
references to the Original Agreement in
106
any Financing Agreement (other than this Agreement) shall mean and be a
reference to this Agreement.
11.23 Counterparts. This Agreement may be executed and accepted in any
number of counterparts, each of which shall be an original with the same effect
as if the signatures were on the same instrument. The delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this Agreement.
[REMAINDER INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.]
107
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year first above written.
ABC RAIL PRODUCTS CORPORATION
By: /s/ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------
▇. ▇▇▇▇▇▇▇▇ MacDonald
Title: Senior Vice President and Chief
Financial Officer
ABC DECO INC.
By: /s/ ▇. ▇▇▇▇▇▇▇▇ MacDonald
-----------------------------
▇. ▇▇▇▇▇▇▇▇ MacDonald
Title: Vice President and Chief
Financial Officer
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO,
individually and as Agent
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Title: First Vice President
-------------------------
BTM CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. York
----------------------------
Title: First Vice President
-------------------------
LASALLE NATIONAL BANK
By: /s/ ▇. ▇▇▇▇ ▇▇▇▇▇
----------------------------
Title: Senior Vice President
-------------------------
MELLON BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------
Title: Vice President
-------------------------
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Title: Vice President
-------------------------
EXHIBIT A
to
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
FORM OF REVOLVING NOTE
----------------------
See Attached
REVOLVING NOTE
--------------
$____________ Chicago, Illinois
_______________, 199___
FOR VALUE RECEIVED, the undersigned, ________________________________, a
_______________ corporation ("Borrower"), hereby unconditionally promises to pay
to the order of ____________________ ("Lender") on the Termination Date at the
office of American National Bank and Trust Company of Chicago, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, for the account of Lender and in accordance
with the provisions of the Second Amended and Restated Loan and Security
Agreement dated as of _______________, 1997 among Borrower, [insert name(s) of
other borrower(s)], the financial institutions listed on Schedule 1 thereto
(together with their respective successors and assigns, the "Bank") and American
National Bank and Trust Company of Chicago acting as agent for the Banks (in
such capacity, the "Agent"), as amended, modified or supplemented from time to
time (the "Loan Agreement"), in lawful money of the United States of America and
in immediately available funds, the principal sum of _________________________
($_______________), or, if less, the aggregate unpaid principal amount of all
Revolving Loans (as defined in the Loan Agreement) made by Lender to Borrower.
This Note is referred to in and was executed and delivered pursuant to the Loan
Agreement, to which reference is hereby made for a statement of the terms and
conditions under which the loans evidenced hereby were made and are to be
repaid. All terms which are capitalized and used herein (which are not
otherwise specifically defined herein) and which are defined in the Loan
Agreement shall be used in this Note as defined in the Loan Agreement.
Borrower further promises to pay interest at said office on the unpaid
principal amount hereof from time to time outstanding at the rates and on the
dates specified in the Loan Agreement. Interest shall be calculated on the
basis of a 360-day year for the actual number of days elapsed.
Subject to the provisions contained in the Loan Agreement relating to the
determination of Interest Periods for LIBOR Rate Advances, if any payment
hereunder becomes due and payable on a day other than a Business Day, the due
date thereof shall be extended to the next succeeding Business Day, and interest
shall be payable thereon during such extension at the applicable rate specified
in the Loan Agreement. In no contingency or event whatsoever shall interest
charged hereunder, however such interest may be characterized or computed,
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that Lender has received interest hereunder
in excess of the highest rate applicable hereto, Lender shall promptly refund
such excess interest to Borrower.
Payments received by Agent for the account of Lender from Borrower on this
Note shall be applied as provided in the Loan Agreement and may be applied to
the payment of interest which is due and payable before application to the
outstanding principal balance hereof, subject to Agent's rights to otherwise
apply such payments as provided in the Loan Agreement.
Upon and after the occurrence of a Default or as otherwise provided in the
Loan Agreement, this Note may, as provided in the Loan Agreement, and without
prior demand, notice or legal process of any kind (except as otherwise expressly
required in the Loan Agreement), be declared, and thereupon immediately shall
become, due and payable. This Note shall also become immediately due and
payable upon the termination of the Loan Agreement.
Borrower, and all endorsers and other persons obligated hereon, hereby
waive presentment, demand, protest, notice of demand, notice of protest and
notice of nonpayment and agree to pay all costs of collection, including
reasonable attorneys' fees and expenses.
This Note is secured by certain Liens created in favor of Agent for the
benefit of Lender under the Collateral Documents.
This Note has been delivered at and shall be deemed to have been made at
Chicago, Illinois and shall be interpreted and the rights and liabilities of the
parties hereto determined in accordance with the internal laws (as opposed to
conflicts of law provisions) and decisions of the State of Illinois. Whenever
possible each provision of this Note shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Note
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Note.
Whenever in this Note reference is made to Agent, Lender or Borrower, such
reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns. The provisions of this Note shall be binding
upon and shall inure to the benefit of said successors and assigns. Borrower's
successors and assigns shall include, without limitation, a receiver, trustee or
debtor in possession of or for Borrower.
Notwithstanding any of the foregoing provisions of this Note, all principal
of, and accrued interest on, this Note shall become immediately due and payable
as provided in Subsection 9.1 of the Loan Agreement and, without notice or
demand, upon the termination of the Loan Agreement pursuant to Subsections 2.15
or 2.21(E) of the Loan Agreement.
[NAME OF BORROWER]
By:
--------------------------------------------
Name:
--------------------------------------------
Title:
--------------------------------------------
-2-
EXHIBIT B
to
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
NOTICE OF BORROWING
-------------------
See Attached
NOTICE OF BORROWING
-------------------
[Date]
American National Bank and
Trust Company of Chicago,
as Agent
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, ________________________________ [insert name of
applicable Borrower] ("Borrower"), pursuant to subsection 2.5 of the Second
Amended and Restated Loan and Security Agreement dated as of _____________, 1997
(as amended, modified or supplemented from time to time, the "Loan Agreement")
among Borrower, one or more of Borrower's affiliates, the financial institutions
listed on Schedule 1 thereto (together with their respective successors and
assigns (the "Lenders")) and American National Bank and Trust Company of
Chicago, as agent for the Lenders (in such capacity, "Agent"), hereby gives
irrevocable notice to the Agent that the undersigned requests an Advance under
the Loan Agreement as described below:
(i) the Business Day on which such Advance is to be made is
_______________________ (the "Borrowing Date").
(ii) the amount of the Advance to be made on the Borrowing Date is
$___________________.
(iii) the Advance shall be [a Base Rate Advance] [a LIBOR Rate Advance
with an interest period of [one][two][three][six] month[s]
beginning on the Borrowing Date and expiring on ____________,
199__].
(iv) the Advance requested hereby shall consist of Revolving Loans in
accordance with subsection 2.3.
The undersigned hereby certifies that on the date hereof and on the
Borrowing Date, immediately before and after giving effect to the Advance
requested hereby, the conditions set forth in Section 4 have been satisfied.
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in the Loan Agreement to the extent defined
therein.
[INSERT NAME OF APPLICABLE
BORROWER]
By:
----------------------------------------
Title:
-------------------------------------
-2-
EXHIBIT C
to
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
NOTICE OF CONVERSION/CONTINUATION
---------------------------------
See Attached
NOTICE OF CONVERSION/CONTINUATION
---------------------------------
[Date]
American National Bank and
Trust Company of Chicago,
as Agent
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, _____________________________ [insert name of
applicable Borrower] ("Borrower"), pursuant to subsection 2.5 of the Second
Amended and Restated Loan and Security Agreement dated as of _____________, 1997
(as amended, modified or supplemented from time to time, the "Loan Agreement")
among Borrower, one or more of its affiliates, the financial institutions listed
on Schedule 1 thereto (together with their respective successors and assigns
(the "Lenders")) and American National Bank and Trust Company of Chicago, as
agent for the Lenders (in such capacity, "Agent"), hereby gives irrevocable
notice to the Agent that the undersigned requests [a conversion to a Base Rate
Advance][a conversion to a LIBOR Rate Advance][a continuation of a LIBOR Rate
Advance] under the Loan Agreement as described below:
(i) the Business Day to convert or continue such Advance shall be
________________________ (the "Effective Date").
(ii) the amount of the Advance to be converted or continued on the
Effective Date is $___________________.
(iii) the Advance to be converted or continued is [a Base Rate
Advance] [a LIBOR Rate Advance with an interest period of
[one][two][three][six] months expiring on the Effective Date].
(iv) Of such Advance [$____________ is to be converted to a Base Rate
Advance] [and] [$____________ is to be [converted][continued] as
a LIBOR Rate Advance with an interest period of
[one][two][three][six] month[s] beginning on the Effective Date
and expiring on ____________, 199__].
The Borrower hereby certifies that on the date hereof and on the
Effective Date, immediately before and after giving effect to the conversion or
continuation requested hereby, the conditions set forth in Section 4 have been
satisfied.
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in the Loan Agreement to the extent defined
therein.
[INSERT NAME OF APPLICABLE
BORROWER]
By:
Title:
-2-
EXHIBIT D-1A
to
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
FORM OF CERTIFICATE TO ACCOMPANY INITIAL MONTHLY REPORTS
--------------------------------------------------------
See Attached
119
CERTIFICATE TO ACCOMPANY INITIAL MONTHLY REPORTS
------------------------------------------------
Certificate of [___________]
For the Period Ended
-----------------------------
The undersigned hereby certifies, in connection with that certain
Second Amended and Restated Loan and Security Agreement dated as of
_____________, 1997 (as amended, modified or supplemented from time to time, the
"Loan Agreement") among the undersigned, one or more of its affiliates, the
financial institutions listed on Schedule 1 thereto (together with their
respective successors and assigns, the "Lenders") and American National Bank and
Trust Company of Chicago, acting as agent for the Lenders (in such capacity, the
"Agent"), to Agent and each of the Lenders that the person signing this
Certificate is the [__________] of the undersigned and hereby further certifies
to Agent and each of the Lenders that the accompanying:
[describe requisite reports] dated as of _____________, _____
are each true and complete copies of the aforesaid, which constitute part of the
customary books and records of the undersigned, and that, as of the date hereof,
there exist no facts or circumstances which would materially and adversely
affect or vary the information contained in any of the aforesaid.
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in the Loan Agreement to the extent defined
therein.
[INSERT NAME OF APPLICABLE
BORROWER]
By:
Title:
Dated: ____________________
120
EXHIBIT D-1B
to
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
FORM OF CERTIFICATE TO ACCOMPANY SUBSEQUENT MONTHLY REPORTS
-----------------------------------------------------------
See Attached
CERTIFICATE TO ACCOMPANY SUBSEQUENT MONTHLY REPORTS
---------------------------------------------------
Certificate of [___________]
For the Period Ended
----------------------------
The undersigned hereby certifies, in connection with that certain
Second Amended and Restated Loan and Security Agreement dated as of
______________, 1997 (as amended, modified or supplemented from time to time,
the "Loan Agreement") among the undersigned, one or more of its affiliates, the
financial institutions listed on Schedule 1 thereto (together with their
respective successors and assigns, the "Lenders") and American National Bank and
Trust Company of Chicago, acting as agent for the Lenders (in such capacity, the
"Agent"), to Agent and each of the Lenders that the person signing this
Certificate is the [__________] of the undersigned and hereby further certifies
to Agent and each of the Lenders that the accompanying:
[describe requisite reports] dated as of _____________, _____
are each true and complete copies of the aforesaid, which constitute part of the
customary books and records of the undersigned, and that, as of the date hereof,
there exist no facts or circumstances which would materially and adversely
affect or vary the information contained in any of the aforesaid.
The undersigned hereby further certifies to Agent and each of the
Lenders that:
(i) the outstanding principal balance of the Liabilities (other than
the Letter of Credit Obligations) of each Borrower, respectively, as of
___________, _____ was $___________ and $_____________, and the aggregate
amount of all Letter of Credit Obligations of each Borrower, respectively,
was $___________ and $_______________.
(ii) no Default or Event of Default has occurred, except: [describe
the nature of each Default and/or Event of Default, the period of existence
thereof and the action taken or proposed to be taken with respect thereto];
(iii) all of the representations and warranties contained in the Loan
Agreement are true, correct and accurate in all material respects as of the
date hereof as if made on the date hereof;
(iv) no Equipment has been sold, damaged, destroyed, abandoned,
become obsolete or has otherwise diminished in value (except for (a)
ordinary depreciation and wear and tear and (b) damage to or the
destruction or retirement of Equipment with a book value not in excess of
$500,000 in the aggregate in any one calendar year) since the later of the
date of the last Monthly Report or the schedule of
Equipment most recently delivered to Agent and each of the Lenders by the
undersigned, except: [describe the nature of each such event]; and
(v) the information contained in the Collateral Reconciliation Reports
submitted herewith, is true and complete as of the date thereof and that,
as of the date hereof, there exist no facts or circumstances which would
materially adversely affect or vary the information contained therein.
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in the Loan Agreement to the extent defined
therein.
[INSERT NAME OF APPLICABLE
BORROWER]
By:
Title:
Dated: ____________________
-2-
EXHIBIT D-2
to
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
FORM OF RECONCILIATION OF ACCOUNTS
----------------------------------
See Attached
COLLATERAL RECONCILIATION
COMPANY:____________________
MONTH END RECONCILIATIONS
AS OF ____________________
Daily Collateral Detail or General Ledger Financial
Report Summary Statement
(#___________ Report Balance
Date ________)
-----------------------------------------------------------------------------
Accounts
Receivable
-----------------------------------------------------------------------------
Reconciling
Items
-----------------------------------------------------------------------------
1.
-----------------------------------------------------------------------------
2.
-----------------------------------------------------------------------------
3.
-----------------------------------------------------------------------------
4.
-----------------------------------------------------------------------------
5.
-----------------------------------------------------------------------------
6.
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
---------------- --------------- --------------
Detail or General Ledger Financial
Summary Balance (See Statement
Report Balance Note 2) Balance (See
(See Note 1) Note 3)
-------------------------------------------------------------------------------
Date:______________ By:______________
Title:______________
Note: Reconciles
1) Daily Collateral Report to Detail or Summary Report Balance
2) Detail or Summary Balance to General Ledger
3) General Ledger to Financial Statement
EXHIBIT D-3
to
SECONDED AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
FORM OF RECONCILIATION OF INVENTORY
-----------------------------------
See Attached
COLLATERAL RECONCILIATION
COMPANY:_________________
MONTH END RECONCILIATIONS
AS OF _________________
=============================================================================
Daily Collateral Inventory General Ledger Financial
Report Report Balance Statement
(#___________
Date ________)
-----------------------------------------------------------------------------
Inventory
Balance
-----------------------------------------------------------------------------
Reconciling
Items
-----------------------------------------------------------------------------
1. _________ _________ _________ _________ _________
-----------------------------------------------------------------------------
2. _________ _________ _________ _________ ________
-----------------------------------------------------------------------------
3. _________ _________ _________ _________ ________
-----------------------------------------------------------------------------
4. _________ _________ _________ _________ ________
-----------------------------------------------------------------------------
5. _________ _________ _________ _________ ________
-----------------------------------------------------------------------------
6. _________ _________ _________ _________ ________
-----------------------------------------------------------------------------
_________ _________ _________ ________
-----------------------------------------------------------------------------
---------------- --------------- --------------
Inventory General Ledger Financial
Report Balance Balance (See Statement
(See Note 1) Note 2) Balance (See
Note 3)
=============================================================================
Date: By:
----------------- -----------------
Title:
--------------
Note: Reconciles
1) Daily Collateral Report to Detail or Summary Report Balance
2) Detail or Summary Balance to General Ledger
3) General Ledger to Financial Statement
127
EXHIBIT E
to
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
FORM OF CERTIFICATE TO
ACCOMPANY MONTHLY AND ANNUAL STATEMENTS
---------------------------------------
See Attached
CERTIFICATE TO ACCOMPANY MONTHLY AND
ANNUAL FINANCIAL STATEMENTS
------------------------------------
Certificate of [___________]
For the Period Ended
------------------------------------
The undersigned hereby certifies, in connection with that certain
Second Amended and Restated Loan and Security Agreement dated as of
_______________, 1997 (as amended, modified or supplemented from time to time,
the "Loan Agreement") among the undersigned, one or more of its affiliates, the
financial institutions listed on Schedule 1 thereto (together with their
respective successors and assigns, the "Lenders") and American National Bank and
Trust Company of Chicago, acting as agent for the Lenders (in such capacity, the
"Agent"), to Agent and each of the Lenders as follows:
(i) that the person signing this Certificate is the [_________] of
the undersigned;
(ii) that the accompanying [monthly] [annual] financial statements of
the undersigned dated as of ______________, 199__ delivered pursuant to
subsection 7.1 [A][B] of the Loan Agreement, are true and complete copies
of such financial statements, which fairly present the financial condition
and results of operations of the undersigned as of the respective dates and
for the respective periods indicated and that, as of the date hereof, there
exist no facts or circumstances which would materially and adversely affect
or vary the information contained therein;
(iii) that no Default or Event of Default has occurred, except:
[describe the nature of each Default and/or Event of Default, the period of
existence thereof and the action taken or proposed to be taken with respect
thereto];
(iv) that all of the representations and warranties contained in the
Loan Agreement are true, correct and accurate in all material respects as
of the date hereof as if made on the date hereof; and
(v) that following are the calculations required to establish whether
or not the undersigned was in compliance with each of the financial
covenants set forth in Subsection 8.13 of the Loan Agreement:
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in the Loan Agreement to the extent defined
therein.
[INSERT NAME OF APPLICABLE
BORROWER]
By:___________________________
Title:________________________
Dated: ____________________
2
EXHIBIT F
to
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
FORM OF LOSS PAYABLE ENDORSEMENT
--------------------------------
See Attached
LOSS PAYABLE ENDORSEMENT
------------------------
Attached to and forming part of Policy No. _________ of ______________
("this Company") issued to [insert name of applicable Borrower] ("Insured").
Dated _________.
Loss, if any, under this policy shall be payable to American National Bank
and Trust Company of Chicago, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
as agent for certain principals (such principals together with their respective
successors and assigns, the "Lenders"), for the benefit of Agent and the
Lenders, whether as lender, mortgagee or trustee, as their interests may appear.
It is understood that one or more of Agent and the Lenders now has or will
acquire from time to time an insurable interest in certain property insured
under this policy, which interest is established by various financing documents,
warehouse receipts, bills of lading, documentary or other written evidence
heretofore, now or hereafter executed or delivered by Insured to one or more of
Agent and the Lenders.
This insurance, solely as to the interest therein of Agent or any Lender,
shall not be impaired or invalidated by any act or neglect of the Insured or of
the mortgagor or owner of the within described property, nor by any change in
the title or ownership of the property, nor by the occupation of the premises
wherein such property is located for purposes more hazardous than are permitted
by this policy; provided that in case the Insured, mortgagor or owner shall
neglect to pay any premium under this policy, Agent (on behalf of the Lenders)
shall, on demand, pay the same, and provided, also that Agent shall notify this
Company of any change of ownership or occupancy or any material increase of
hazard which shall come to the knowledge of Agent and, unless permitted by this
policy, it shall be noted thereon and Agent (on behalf of the Lenders) shall, on
demand, pay the premium for such increased hazard for the term of the use
thereof.
This Company reserves the right to cancel this policy at any time as
provided by its terms, but if this Company exercises its right to cancel or if
the policy holder cancels this policy, this policy shall continue in force,
without payment of any additional premium, for the benefit only of Agent and
each of the Lenders for thirty (30) days after written notice of such
cancellation to Agent and each Lender identified to this Company and shall then
cease, and this Company shall have the right, on like notice, to cancel this
agreement.
Whenever this Company shall pay Agent any sum for loss or damage under this
policy and shall claim that, as to the Insured, mortgagor or owner no liability
thereof existed, this Company shall, to the extent of such payment, be thereupon
legally subrogated (but subordinate) to all the rights of the party to whom such
payment ultimately shall be made, under all securities held as collateral for
the debt; but no such subrogation shall impair the right of Agent or any Lender
to recover the full amount of its claim against the Insured, mortgagor, owner or
any other party prior to this Company receiving any payment with respect to its
subrogated rights.
It is hereby understood and agreed that (i) the policy to which this
Endorsement is attached will not be changed in any way which may affect Agent's
or any Lender's rights under this policy without prior written notice to Agent
and each Lender identified to this Company, and (ii) that this Company will
provide Agent and each Lender identified to this Company with written notice of
any expiration of this policy or failure by the Insured to renew this policy at
the relevant intervals under the terms of the policy within five (5) business
days of such expiration or failure to renew.
Notices to the Agent are to be sent to the address for Agent set forth
above. Notices to each Lender identified to this Company are to be sent to the
address provided to this Company for such Lender.
-------------------------------------------
Agent
-2
EXHIBIT G
to
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
See Attached
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
This Assignment and Assumption Agreement (this "Assignment Agreement")
between ____________ (the "Assignor") and ____________ (the "Assignee") is dated
as of ____________, 199___. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Second
Amended and Restated Loan and Security Agreement (which, as it may be amended,
modified, renewed or extended from time to time is herein called the "Loan
Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings attributed to them in the Loan Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns
to the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, the percentage interest, specified in Item 3 of Schedule 1, in and to
the Assignor's rights and obligations under the Loan Agreement and all other
Financing Agreements. Schedule 1 also sets forth: (a) the respective
Proportionate Shares of the Assignor and the Assignee after giving effect
hereto, and (b) the principal amount of the Notes to be issued to the Assignor
and the Assignee, respectively, after giving effect hereto.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement
(the "Effective Date") shall be the later of the date specified in Item 6 of
Schedule 1 or two Business Days (or such shorter period agreed to by the Agent)
after a Notice of Assignment substantially in the form of Annex I attached
hereto has been delivered to the Agent. In no event will the Effective Date
occur if the payments required to be made by the Assignee to the Assignor on the
Effective Date under Sections 4 and 5 hereof are not made on the proposed
Effective Date. As of the Effective Date, (i) the Assignee shall have the
rights and obligations of a Lender under the Financing Agreements with respect
to the rights and obligations assigned to the Assignee hereunder and (ii) the
Assignor shall relinquish its rights and be released from its corresponding
obligations under the Financing Agreements with respect to the rights and
obligations assigned to the Assignee hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the
Assignee shall be entitled to receive from the Agent all payments of principal,
interest and fees with respect to the interest assigned hereby. The Assignee
shall advance funds directly to the Agent with respect to all Loans and
reimbursement payments made on or after the Effective Date with respect to the
interest assigned hereby. [In consideration for the sale and assignment of the
Loans hereunder, (i) the Assignee shall pay the Assignor, on the Effective Date,
an amount equal to the principal amount of the portion of all Base Rate Advances
assigned to the Assignee hereunder and (ii) with respect to each LIBOR Rate
Advance made by the Assignor and assigned to the Assignee hereunder which is
outstanding on the Effective Date, (a) on the last day of the Interest Period
therefor or (b) on such earlier date agreed to by the Assignor and the Assignee
or (c) on the date on which any such LIBOR Rate Advance either becomes due (by
acceleration or otherwise) or is prepaid (the date as described in the foregoing
clauses (a), (b) or (c) being hereinafter referred to as the "Payment Date"),
the
Assignee shall pay the Assignor an amount equal to the principal amount of
the portion of such LIBOR Rate Advance assigned to the Assignee which is
outstanding on the Payment Date. If the Assignor and the Assignee agree that
the Payment Date for any such LIBOR Rate Advance shall be the Effective Date,
they shall agree to the interest rate applicable to the portion of such LIBOR
Rate Advance assigned hereunder for the period from the Effective Date to the
end of the existing Interest Period applicable to such LIBOR Rate Advance (the
"Agreed Interest Rate") and any interest received by the Assignee in excess of
the Agreed Interest Rate shall be remitted to the Assignor. In the event
interest for the period from the Effective Date to but not including the Payment
Date is not paid by the Borrower with respect to any LIBOR Rate Advance sold by
the Assignor to the Assignee hereunder, the Assignee shall pay to the Assignor
interest for such period on the portion of such LIBOR Rate Advance sold by the
Assignor to the Assignee hereunder at the applicable rate provided by the Loan
Agreement. In the event a prepayment of any LIBOR Rate Advance which is
existing on the Payment Date and assigned by the Assignor to the Assignee
hereunder occurs after the Payment Date but before the end of the Interest
Period applicable to such LIBOR Rate Advance, the Assignee shall remit to the
Assignor the excess of the prepayment penalty paid with respect to the portion
of such LIBOR Rate Advance assigned to the Assignee hereunder over the amount
which would have been paid if such prepayment penalty was calculated based on
the Agreed Interest Rate. The Assignee will also promptly remit to the Assignor
(i) any principal payments received from the Agent with respect to LIBOR Rate
Advances prior to the Payment Date and (ii) any amounts of interest on Revolving
Loans and fees received from the Agent which relate to the portion of the
Revolving Loans assigned to the Assignee hereunder for periods prior to the
Effective Date, in the case of Base Rate Advances, or the Payment Date, in the
case of LIBOR Rate Advances, and not previously paid by the Assignee to the
Assignor.]/*/ In the event that either party hereto receives any payment to
which the other party hereto is entitled under this Assignment Agreement, then
the party receiving such amount shall promptly remit it to the other party
hereto.
[5. FEES PAYABLE BY THE ASSIGNEE./**/ The Assignee shall pay to the
Assignor a fee on each day on which a payment of interest or commitment fees is
made under the Loan Agreement with respect to the amounts assigned to the
Assignee hereunder (other than a payment of interest or commitment fees for the
period prior to the Effective Date or, in the case of LIBOR Rate Advances, the
Payment Date, which the Assignee is obligated to deliver to the Assignor
pursuant to Section 4 hereof). The amount of such fee shall be the difference
between (i) the interest or commitment fee, as applicable, paid with respect to
the amounts assigned to the Assignee hereunder and (ii) the interest or
commitment fee, as applicable, which would have been paid with respect to the
amounts assigned to the Assignee hereunder if each interest rate was ____ of 1%
less
-------------------------
/*/Each Assignor may insert its standard payment provisions in lieu of the
payment terms included in this Exhibit.
/**/Section 5 is optional and may be inserted if mutually acceptable to the
Assignor and the Assignee with the blanks filled in accordingly.
2
than the interest rate paid by the Borrower or if the commitment fee was
____ of 1% less than the commitment fee paid by the Borrower, as applicable.]
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim. It is understood and agreed
that the assignment and assumption hereunder are made without recourse to the
Assignor and that the Assignor makes no other representation or warranty of any
kind to the Assignee. Neither the Assignor nor any of its officers, directors,
employees, agents or attorneys shall be responsible for (i) the due execution,
legality, validity, enforceability, genuineness, sufficiency, value or
collectibility of any Financing Agreement, including without limitation,
documents granting the Agent a security interest in assets of the Borrower or
any guarantor, (ii) any representation, warranty or statement made in or in
connection with any of the Financing Agreements, (iii) the financial condition
or creditworthiness of the Borrower or any guarantor, (iv) the performance of or
compliance with any of the terms or provisions of any of the Financing
Agreements, (v) inspecting any of the properties, books or records of the
Borrower, (vi) the validity, enforceability, perfection, priority, condition,
value or sufficiency of any collateral securing or purporting to secure the
Liabilities or (vii) any mistake, error of judgment, or action taken or omitted
to be taken in connection with any of the Loans, the Letters of Credit or any of
the Financing Agreements.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that
it has received a copy of the Loan Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Financing Agreements, (iii) appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under the
Financing Agreements as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, (iv) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Financing Agreements are required to be performed by it as a
Lender, (v) agrees that its payment instructions and notice instructions are as
set forth in the attachment to Schedule 1, [and (vi) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying that
the Assignee is entitled to receive payments under the Financing Agreements
without deduction or withholding of any United States federal income
taxes]./***/
---------
/*/To be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.
3
8. INDEMNITY. The Assignee agrees to indemnify and hold the
Assignor harmless against any and all losses, costs and expenses (including,
without limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's non-
performance of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee
shall have the right subject to and pursuant to subsection 11.6 of the Loan
Agreement to assign the rights which are assigned to the Assignee hereunder to
any entity or person, provided that (i) any such subsequent assignment does not
violate any of the terms and conditions of any of the Financing Agreements or
any law, rule, regulation, order, writ, judgment, injunction or decree and that
any consent required under the terms of the Financing Agreements has been
obtained and (ii) unless the prior written consent of the Assignor is obtained,
the Assignee is not thereby released from its obligations to the Assignor
hereunder, if any remain unsatisfied, including, without limitation, its
obligations under Sections 4, [5] and 8 hereof.
10. REDUCTIONS OF TOTAL COMMITMENTS. If any reduction in the
aggregate Revolving Credit Commitments occurs between the date of this
Assignment Agreement and the Effective Date, the percentage interest specified
in Item 3 of Schedule 1 shall remain the same, but the dollar amount purchased
shall be recalculated based on the reduced aggregate amount of the Revolving
Credit Commitments.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between the
parties hereto and supersede all prior agreements and understandings between the
parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by
the internal laws, and not the conflicts of law provisions, of the State of
Illinois.
4
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By:_______________________________________
Title:____________________________________
[NAME OF ASSIGNEE]
By:_______________________________________
Title:____________________________________
5
SCHEDULE 1
to Assignment and Assumption Agreement
1. Description and Date of Loan Agreement:
2. Date of Assignment and Assumption Agreement: ____________, 199___
3. Percentage Interest Purchased
by Assignee Hereunder _____%
4. Proportionate Shares (after giving
effect hereto)
a. Assignor's Proportionate Share _____%
b. Assignee's Proportionate Share _____%
5. Notes (after giving effect hereto)
a. Principal Amount of Revolving Notes
of each Borrower to be issued to Assignor
(i.e., Assignor's Revolving Credit Commitment) $_________
----
b. Principal Amount of Revolving Notes
of each Borrower to be issued to Assignee
(i.e., Assignee's Revolving Credit Commitment) $_________
----
6. Proposed Effective Date: ____________
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
----------------------------- -----------------------------
Title: Title:
-------------------------- --------------------------
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Administrative Information Sheet which must
include notice address for the Assignor and the Assignee
ANNEX I
to
Assignment and Assumption Agreement
NOTICE OF ASSIGNMENT
--------------------
To: [NAMES OF BORROWERS]
--------------------
--------------------
[NAME OF AGENT]
--------------------
--------------------
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Second Amended and Restated Loan and Security
Agreement (the "Loan Agreement") described in Item 1 of Schedule 1 attached
hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined
herein or in such consent shall have the meanings attributed to them in the Loan
Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered
to the Borrowers and the Agent pursuant to subsection 11.6 of the Loan
Agreement.
3. The Assignor and the Assignee have entered into an Assignment and
Assumption Agreement, dated as of ____________, 199___ (the "Assignment"),
pursuant to which, among other things, the Assignor has sold, assigned,
delegated and transferred to the Assignee, and the Assignee has purchased,
accepted and assumed from the Assignor the percentage interest specified in Item
3 of Schedule 1 of all outstandings, rights and obligations under the Loan
Agreement, including, without limitation, such interest in the Assignor's
Revolving Credit Commitment and the Revolving Loans owing to the Assignor
relating to such facilities. The Effective Date of the Assignment shall be the
later of the date specified in Item 6 of Schedule 1 to the Assignment ("Schedule
1") or two Business Days (or such shorter period as agreed to by the Agent)
after this Notice of Assignment has been delivered to the Agent, provided that
the Effective Date shall not occur if any condition precedent agreed to by the
Assignor and the Assignee has not been satisfied.
4. The Assignor and the Assignee hereby give to the Borrowers and
the Agent notice of the assignment and delegation referred to herein. The
Assignor will confer with the Agent before the date specified in Item 6 of
Schedule 1 to determine if the Assignment Agreement will become effective on
such date pursuant to Section 3 hereof, and will confer with the Agent to
determine the Effective Date pursuant to Section 3 hereof if its occurs
thereafter. The Assignor shall
notify the Agent if the Assignment Agreement does not become effective on any
proposed Effective Date as a result of the failure to satisfy the conditions
precedent agreed to by the Assignor and the Assignee. At the request of the
Agent, the Assignor will give the Agent written confirmation of the satisfaction
of the conditions precedent.
5. If Notes are outstanding on the Effective Date, the Assignor and,
if applicable, the Assignee are concurrently herewith delivering to the Agent
the original Notes received by Assignor and, if applicable, the Assignee from
the Borrowers. Assignor and the Assignee request and direct that the Agent
prepare and request the Borrowers to execute and deliver new Notes, as
appropriate, for the Assignor and the Assignee to the Agent. The Assignor and,
if applicable, the Assignee direct the Agent to deliver such original Notes to
the Borrowers upon Agent's receipt of such new Notes in the appropriate amount
or amounts from the Borrowers.
6. The Assignee advises the Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.
7. Each party consenting to the Assignment in the space indicated
below hereby releases the Assignor from any obligations to it which have been
assigned to the Assignee.
NAME OF ASSIGNOR NAME OF ASSIGNEE
By: By:
------------------------------- -------------------------------
Title: Title:
---------------------------- ----------------------------
ACKNOWLEDGED [AND ACKNOWLEDGED [AND
CONSENTED TO] BY [NAME OF CONSENTED TO] BY [NAMES OF
AGENT] BORROWERS]
By: By:
------------------------------- -------------------------------
Title: Title:
---------------------------- ----------------------------
[Attach photocopy of Schedule 1 to Assignment]
-2-
EXHIBIT H
to
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
FORM OF SIGNATURE AUTHORIZATION CERTIFICATE
-------------------------------------------
See Attached
SIGNATURE AUTHORIZATION CERTIFICATE
-----------------------------------
The undersigned, ______________________, [a Vice] President [Treasurer] of
__________________________, a __________________ corporation ("Borrower"), DOES
HEREBY CERTIFY, in connection with that certain Second Amended and Restated Loan
and Security Agreement dated as of _____________, 1996 (as amended, modified or
supplemented from time to time the "Loan Agreement") by and among Borrower, one
or more of its affiliates, the financial institutions listed on Schedule 1
thereto (together with their respective successors and assigns, the "Lenders")
and American National Bank and Trust Company of Chicago acting as agent for the
Lenders (in such capacity, the "Agent"), to Agent and each Lender that each of
the persons listed below is an employee of Borrower and is duly authorized and
empowered to act for and on behalf of Borrower in connection with the Loan
Agreement and the transactions contemplated thereby, including, without
limitation, to execute, deliver and confirm to Agent or any Lender any
collateral or monthly reports relating to Borrower's accounts receivable,
inventory or other "Collateral" (as defined in the Loan Agreement) and to
request or draw down advances on behalf of Borrower or to request letters of
credit for the account of Borrower under the Loan Agreement, whether by
telephone, electronic transmission or other writing.
The undersigned hereby further certifies that the name and title of
each such person is as follows and that the signature set forth opposite each
such person's name is his or her genuine signature:
1. _______________________ ________________________
_______
[Name\Title] [Signature]
2. _______________________ ________________________
_______
[Name\Title] [Signature]
3. _______________________ ________________________
_______
[Name\Title] [Signature]
On behalf of Borrower and pursuant to authority granted to the
undersigned by Borrower's Board of Directors, the undersigned hereby (A)
authorizes and directs Agent and each Lender to honor the instructions (oral or
otherwise) of any person purporting to be one of the above-named persons, even
if such instructions are or may be for the benefit of such person and whether or
not any such oral instruction is subsequently confirmed in writing and, if so
confirmed whether or not such confirmation conflicts with such oral instruction;
(B) agrees that Agent and each Lender shall be fully protected in, and shall
incur no liability to Borrower for, acting in good faith upon any such
instructions; and (C) confirms that Agent or any Lender may, at its option (and
without prior or subsequent notice to Borrower), refuse to honor any instruction
or part thereof without incurring any responsibility for any loss, liability or
expense resulting from such refusal, if Agent or such Lender in good faith
believes that the person delivering such instruction is not one of the above-
named persons.
Unless and until Agent and each Lender has actually received written notice
of any change in the list of persons identified above and has had a reasonable
opportunity to act upon such notice, each of Agent and Lenders are authorized to
act upon instructions of each of such persons, even though the person delivering
such instructions may no longer be actually authorized to do so.
IN WITNESS WHEREOF, the undersigned has signed this certificate this ____
day of ____________________, 199__.
[INSERT NAME OF APPLICABLE BORROWER]
By:
--------------------------------
Title:
-----------------------------
The undersigned ______________________, [Assistant] Secretary of Borrower,
DOES HEREBY CERTIFY that ______________________ has been duly appointed as, and
on this day is, [a Vice] President [Treasurer] of Borrower and the signature
above is his genuine signature.
IN WITNESS WHEREOF, the undersigned has signed this certificate this ____
day of _____________________, 199__.
[INSERT NAME OF APPLICABLE BORROWER]
By:
--------------------------------
Title:
-----------------------------
-2
AMENDMENT NO. 1 TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
-------------------------------------------------------
THIS AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this "Amendment") is entered into as of August 8, 1997 by and among
ABC Rail Products Corporation ("Rail"), ABC Deco Inc. ("Deco"; Rail and Deco are
herein referred to, collectively, as the "Existing Borrowers" and, individually,
as an "Existing Borrower"), American Systems Technologies, Inc., a Wisconsin
corporation ("AST"; AST and the Existing Borrowers are herein referred to,
collectively, as the "Borrowers" and, individually, as a "Borrower"), the
financial institutions named on the signature page hereto (the "Lenders") and
American National Bank and Trust Company of Chicago, as agent for the Lenders
(the "Agent").
WITNESSETH:
----------
WHEREAS, the Existing Borrowers, the Lenders and the Agent have entered
into that certain Second Amended and Restated Loan and Security Agreement dated
as of January 31, 1997 (as heretofore amended, supplemented or otherwise
modified, the "Loan Agreement"); and
WHEREAS, the Borrowers desire to amend the Loan Agreement to add AST as a
"Borrower" thereunder; and
WHEREAS, the Borrowers have requested that the Lenders and the Agent agree
to amend the Loan Agreement as set forth below, and the Lenders and the Agent
are willing to do so on the terms and subject to the conditions herein
contained;
NOW, THEREFORE, in consideration of the premises set forth above, the terms
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions. Terms defined in the Loan Agreement which are used herein
shall have the same meanings as are set forth in the Loan Agreement for such
terms unless otherwise defined herein.
2. Addition of AST as a Borrower. Effective as of the "Effective Time" (as
hereinafter defined) (i) AST shall be a Borrower for all purposes of the Loan
Agreement, (ii) AST shall be bound by and a party to the Loan Agreement as a
Borrower as fully as if it originally executed the Loan Agreement and was named
a "Borrower" therein, and (iii) AST shall no longer be an Excluded Subsidiary.
3. Amendments. Subject to Section 6 below, effective as of the Effective
Time the Loan Agreement is hereby amended as follows:
A. The following definition is added to Subsection 1.1 of the Loan
Agreement in proper alphabetical order:
"AST" shall mean American Systems Technologies, Inc., a Wisconsin
corporation.
B. The definition of the term "Borrower" set forth in Subsection 1.1 of
the Loan Agreement is amended and restated in its entirety as follows:
"Borrower" shall mean each of Rail, AST and Deco, individually, and
"Borrowers" shall mean Rail, AST and Deco, collectively.
C. The period at the end of Subsection 2.4(B) of the Loan Agreement is
deleted, "; and" is inserted in lieu thereof, and there is added a new clause
(iii) immediately thereafter in the form of the following:
(iii) with respect to AST, as used herein, "Current Asset Base" shall
mean up to eighty-five (85%) of the face amount (less maximum discounts,
credits and allowances which may be taken by or granted to Account Debtors in
connection therewith) then outstanding under existing "Eligible Accounts" (as
defined in Subsection 3.2 hereof), less such other reserves as Agent in its
sole discretion and in Good Faith elects to establish.
D. Clause (x) of subsection 3.2 of the Loan Agreement is amended and
restated in its entirety as follows:
(x) Accounts representing progress ▇▇▇▇▇▇▇▇ (except as to AST as to
progress ▇▇▇▇▇▇▇▇ for services theretofore rendered, but in any event
excluding retainages) and Accounts with respect to which the Account
Debtor's obligation to pay the Account is conditional upon the Account
Debtor's approval or is otherwise subject to any repurchase obligation or
return right, as with sales made on a ▇▇▇▇-and-hold, guaranteed sale, sale-
or-return, sale on approval or consignment basis;
-2-
E. Clause (ii) of Subsection 3.3 of the Loan Agreement is amended and
restated in its entirety as follows:
(ii) they represent undisputed, bona fide transactions, completed in
accordance with the terms and provisions contained in the documents, if
any, delivered to Agent and Lenders with respect thereto (except for
progress ▇▇▇▇▇▇▇▇ by AST to the extent of services rendered prior thereto);
F. Clause (x) of Subsection 8.4 is amended and restated in its entirety as
follows:
(x) intercompany loans by Rail to Deco and AST after the date of the
Original Agreement in an aggregate outstanding amount not to exceed
$7,500,000 and $3,000,000, respectively; provided that such intercompany
loans are evidenced by promissory notes duly pledged to Agent to secure
payment and performance of Rail's Labilities,
G. Clauses (D) and (M) of Subsection 9.1 and Subsection 11.6(C) of the
Loan Agreement are amended by inserting immediately after the term "Deco"
contained therein "and AST".
H. Subsection 11.17 is amended by inserting immediately after the term
"Deco" contained therein "or AST".
I. Schedules 1, 6.1, 6.5, 6.7, 6.8, 6.12 and 6.16 to the Loan Agreement
are amended and restated in their entirety as annexed hereto.
4. Confirmatory Grant of a Security Interest and Appoint of Attorney-in-
Fact. In addition to and not in limitation of the security interests granted
pursuant to the Loan Agreement, to secure payment and performance of its
Liabilities, each Borrower hereby grants to Agent, for the benefit of Agent, the
Lenders and the Issuing Bank, a right of setoff against and a continuing
security interest (and Rail and Deco hereby confirm, acknowledge, continue and
ratify in all respects the right of setoff and security interest heretofore
granted under the Loan Agreement, respectively, and all other Financing
Agreements executed in connection therewith) in and to all of the property, and
interests in property, of such Borrower, whether real or personal, whether now
owned or hereafter acquired by such Borrower and wheresoever located, including
without limitation: (i) Accounts, contract rights, General Intangibles, tax
refunds, chattel paper, instruments, notes, letters of credit, documents, and
documents of title; (ii) Inventory; (iii) Equipment; (iv) such Borrower's
deposit accounts (general or special) with and credits and other claims against
Agent or any Lender, or any other financial institution with which such Borrower
maintains deposits; (v) such Borrower's monies,
-3-
and any and all other property and interests in property of such Borrower now or
hereafter coming into the actual possession, custody or control of Agent or any
Lender or any agent or affiliate of Agent or any Lender in any way or for any
purpose (whether for safekeeping, deposit, custody, pledge, transmission,
collection or otherwise); (vi) insurance proceeds of or relating to any of the
foregoing; (vii) insurance proceeds relating to any key man life insurance
policy covering the life of any director, officer, employee or former director,
officer or employee of such Borrower; (viii) insurance proceeds relating to
business interruption insurance; (ix) books and records relating to any of the
foregoing; and (x) all accessions and additions to, substitutions for, and
replacements, products and proceeds, of any of the foregoing; provided, however,
that the foregoing property, and interests in property, shall not include the
Excluded Property so long as the Excluded Property is collateral for
indebtedness of Rail permitted to exist under Subsection 8.2 and the Lien
thereon is permitted to exist under Subsection 8.1; provided, further, that
immediately and automatically (without the need for any further action) upon the
repayment of all of the indebtedness and obligations for which any Excluded
Property is collateral, and the release by the holder of such indebtedness of
all of its liens on and security interests in such Excluded Property, such
Excluded Property shall be Collateral securing the Liabilities, and the
Borrowers shall take, or cause to be taken, all such actions as Agent may
request to assure Agent of its first priority perfected security interest and
Lien in such Excluded Property. In addition to and not in limitation of the
powers of attorney set forth in the Loan Agreement, each Borrower hereby
irrevocably designates, makes, constitutes and appoints Agent (and all officers,
employees, agents and other Persons designated by Agent) as such Borrower's true
and lawful attorney-in-fact, and authorizes Agent, in such Borrower's or Agent's
name, to: (a) following the occurrence and during the continuance of a Default
(i) demand payment of Accounts; (ii) enforce payment of Accounts by legal
proceedings or otherwise; (iii) exercise all of such Borrower's rights and
remedies with respect to proceedings brought to collect an Account; (iv) sell or
assign any Account upon such terms, for such amount and at such time or times as
Agent deems advisable; (v) settle, adjust, compromise, extend or renew any
Account; (vi) discharge and release any Account; (vii) prepare, file and sign
such Borrower's name on any proof of claim in bankruptcy or other similar
document against an Account Debtor; (viii) notify the post office authorities to
change the address for delivery of such Borrower's mail to an address designated
by Agent, and open and deal with all mail addressed to such Borrower; and (ix)
do all acts and things which are necessary, in Agent's sole discretion, to
fulfill such Borrower's obligations under the Loan Agreement; and (b) at any
time (i) take control in any manner of any item of payment or proceeds thereof;
(ii) have access to any lockbox or postal box into which such Borrower's mail is
deposited; (iii) endorse such Borrower's name upon any items of payment or
proceeds thereof and deposit the same in Agent's account on account of the
Liabilities; (iv) endorse such Borrower's name upon any chattel paper, document,
instrument, invoice, or similar document or agreement relating to any Account or
any goods pertaining thereto; and (v) sign such Borrower's name on any
verification of Accounts and notices thereof to Account Debtors.
5. Waiver. Subject to the complete satisfaction of all of the conditions
set forth in Section 6 below, Lender hereby waives the Event of Default existing
as a result of a
-4-
breach of Subsection 8.2(x) of the Loan Agreement as a result of loans by Rail
to Deco in the aggregate outstanding amount of $6,710,135.36 on the date of this
Amendment.
6. Conditions. The terms of Sections 2, 3, 4 and 5 above shall become
effective only when each of the following conditions have been completely, and
substantially concurrently, satisfied as determined by the Agent (the time of
such satisfaction being hereinafter referred to as the "Effective Time"):
(a) Documents. The Agent shall have received each of the following
agreements, instruments and other documents, in each case in form and
substance acceptable to the Agent:
(i) eight (8) copies of the this Amendment duly executed and
delivered by each of the Borrowers and the Lenders;
(ii) eight (8) copies of a "Revolving Note" (as defined in the
Loan Agreement), in the form of Exhibit A to the Loan Agreement, duly
executed and delivered by AST made in favor of each Lender, respectively
(collectively, the "AST Notes"), in the principal amount of each such
Lender's Revolving Credit Commitment (as defined in the Loan Agreement);
(iii) eight (8) copies of an Amended and Restated Pledge and
Security Agreement duly executed and delivered by ABC Rail Brake Shoe
Holdings, Inc. in the form of Exhibit A attached hereto;
(iv) eight (8) copies of an Amended and Restated Guaranty
Agreement duly executed and delivered by ABC Rail Products China Investment
Corporation in the form of Exhibit B attached hereto;
(v) eight (8) copies of a certificate duly executed and
delivered by the Secretary of each of Rail, Deco and AST as to (1) all
representations and warranties of each Borrower set forth herein and in the
Loan Agreement being true and complete, and (2) the absence of any Default
or Event of Default;
(vi) eight (8) copies of a certificate duly executed by the
corporate secretary of each Borrower, respectively, as to: (1) the
resolutions adopted by its Board of Directors (and, if necessary, its
shareholders) authorizing the execution, delivery and performance of this
Amendment and the other agreements and instruments contemplated hereby and
thereby, (2) the names and signatures of the officers of such Borrower who
are duly authorized to execute and deliver the foregoing items, and (3) the
Charter and By-Laws of each such Borrower;
-5-
(vii) certificates of good standing as to each Borrower issued
by the appropriate state office(s) in the jurisdiction of such Borrower's
incorporation, dated as of a date within five (5) days prior to the
Effective Time;
(viii) eight (8) copies of an opinion of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ &
▇▇▇▇▇, special counsel to the Borrower ("▇▇▇▇▇ Day"), in the form of
Exhibit C attached hereto;
(ix) eight (8) copies of a Signature Authorization Certificate
(with the blanks therein appropriately completed) duly executed by the
appropriate officers of AST;
(x) an Amended and Restated Guaranty and Security Agreement, an
Amended and Restated Guaranty Agreement, and a Guaranty Agreement from
Rail, Deco and AST, respectively, in the forms of Exhibits D, E, and F,
respectively;
(xi) the additional items listed on Schedule X annexed hereto;
and
(xii) such other documents, certificates, agreements, opinions
and items as the Agent may reasonably request in connection with this
Amendment.
(b) Representations and Warranties; No Default. As of the Effective
Time, the representations and warranties contained herein and in the Loan
Agreement shall be true and complete, and no Default or Event of Default
thereunder shall exist.
(c) Proceedings. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident thereto shall be in form and substance satisfactory to the Agent , as
determined in its sole and absolute discretion.
7. Representations, Warranties and Agreements of the Borrowers.
(a) Each of the Borrowers represents and warrants that this Amendment
and the Loan Agreement, as amended hereby, constitute legal, valid and binding
obligations of the Borrowers and are enforceable against the Borrowers in
accordance with their terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally or by general equitable principles.
-6-
(b) Each of the Borrowers hereby reaffirms and restates all
covenants, representations and warranties made in the Loan Agreement (after
giving effect hereto). Each of the Borrowers hereby agrees that all covenants,
representations and warranties made in the Loan Agreement shall be deemed to
have been remade as of the date hereof and (if different) the Effective Time.
(c) Each of the Borrowers represents and warrants that as of the date
hereof, and (if different) as of the Effective Time, there exists no Default or
Event of Default.
8. Reference to the Effect on the Loan Agreement.
(a) At and after the Effective Time, (i) each reference in the Loan
Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of like
import shall mean and be a reference to the Loan Agreement as amended hereby,
and (ii) each reference to the Loan Agreement in all other Financing Agreements
shall mean and be a reference to the Loan Agreement, as amended hereby.
(b) Except as specifically amended above, the Loan Agreement, and all
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) Except as specifically stated herein, the execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of the Agent or the Lenders, nor constitute a waiver of, or
consent to and departure from, any provision of the Loan Agreement, or any other
documents, instruments and agreements executed and/or delivered in connection
therewith.
9. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws (as opposed to conflicts of law provisions) of
the State of Illinois.
10. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
11. Counterparts. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery by any party of telecopied copies of executed counterparts
hereof shall constitute execution and delivery hereof by such party.
-7-
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.
ABC RAIL PRODUCTS CORPORATION
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
Title: Vice President and Chief Financial Officer
--------------------------------------------
ABC DECO INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
Title: Vice President and Chief Financial Officer
--------------------------------------------
AMERICAN SYSTEMS TECHNOLOGIES, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
Title: Vice President and Chief Financial Officer
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AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO, individually and as
Agent
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: First Vice President
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BTM CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. York, Jr.
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Title: EVP
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LASALLE NATIONAL BANK
By:
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Title:
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NATIONS BANK OF TEXAS, N.A.
By:
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Title:
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MELLON BANK, N.A.
By:
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Title:
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BTM CAPITAL CORPORATION
By:
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Title:
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LASALLE NATIONAL BANK
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Vice President
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NATIONS BANK OF TEXAS, N.A.
By:
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Title:
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MELLON BANK, N.A.
By:
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Title:
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BTM CAPITAL CORPORATION
By:
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Title:
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LASALLE NATIONAL BANK
By:
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Title:
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NATIONS BANK OF TEXAS, N.A.
By:/s/ J. ▇▇▇▇ ▇▇▇▇▇▇
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Title: Vice President
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MELLON BANK, N.A.
By:
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Title:
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BTM CAPITAL CORPORATION
By:
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Title:
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LASALLE NATIONAL BANK
By:
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Title:
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NATIONS BANK OF TEXAS, N.A.
By:
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Title:
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MELLON BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇. Saserst
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Title: Assistant Vice President
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