Exhibit 10.13
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Between
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.,
as the Borrower
and
PNC BANK, NATIONAL ASSOCIATION,
as the Bank
Dated as of January 30, 1998
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TABLE OF CONTENTS
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Page
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LIST OF EXHIBITS....................................................... iv
LIST OF SCHEDULES...................................................... v
ARTICLE 1. DEFINITIONS................................................ 1
1.1 Defined Terms.............................................. 1
1.2 Other Definitional Provisions.............................. 19
ARTICLE 2. THE LOANS.................................................. 20
2.1 Revolving Credit Commitment................................ 20
2.2 Term Loan Facility......................................... 22
2.3 Interest................................................... 24
2.4 Yield Protection; Indemnity................................ 28
2.5 Capital Adequacy........................................... 28
2.6 Payments................................................... 29
2.7 Loan Account............................................... 29
2.8 Fees....................................................... 29
2.9 Payment From Accounts Maintained by Borrower............... 30
ARTICLE 3. SET-OFF AND SECURITY INTERESTS............................. 30
3.1 Set-Off.................................................... 30
3.2 Personal Property.......................................... 30
3.3 Security Agreement......................................... 31
3.4 Real Property Interests.................................... 31
3.5 Landlord's Waivers......................................... 31
ARTICLE 4. REPRESENTATIONS AND WARRANTIES............................. 31
4.1 Existence.................................................. 31
4.2 Capitalization; Ownership; Title to Shares................. 31
4.3 Subsidiaries and Other Investments......................... 32
4.4 Power and Authority........................................ 32
4.5 Validity and Binding Effect................................ 32
4.6 No Conflict................................................ 32
4.7 Financial Matters.......................................... 32
4.8 Material Adverse Change.................................... 33
4.9 Solvency................................................... 33
4.10 Litigation................................................. 33
4.11 Compliance with Laws....................................... 33
4.12 Labor Matters.............................................. 33
4.13 Title to Properties........................................ 34
4.14 Tax Returns and Payments................................... 35
4.15 Intellectual Property...................................... 35
4.16 Insurance.................................................. 36
4.17 Consents and Approvals..................................... 36
4.18 No Defaults................................................ 36
4.19 Plans and Benefit Arrangements............................. 36
4.20 Environmental Matters...................................... 38
4.21 Margin Stock............................................... 39
4.22 Holdings Business.......................................... 39
4.23 Full Disclosure............................................ 40
ARTICLE 5. AFFIRMATIVE COVENANTS...................................... 40
5.1 Use of Proceeds............................................ 40
5.2 Delivery of Financial Statements and Other Information..... 40
5.3 Preservation of Existence; Qualification................... 44
5.4 Compliance with Laws and Contracts......................... 44
5.5 Accounting System; Books and Records....................... 44
5.6 Payment of Taxes and Other Liabilities..................... 44
5.7 Insurance.................................................. 45
5.8 Maintenance of Properties.................................. 45
5.9 Maintenance of Leases...................................... 45
5.10 Maintenance of Patents, Trademarks, Permits, Etc........... 46
5.11 Bank Accounts.............................................. 46
5.12 Plans and Benefit Arrangements............................. 46
5.13 Environmental Matters and Indemnification.................. 46
5.14 Key Management............................................. 47
5.15 Further Assurances; Power of Attorney...................... 47
ARTICLE 6. NEGATIVE COVENANTS......................................... 48
6.1 Indebtedness............................................... 48
6.2 Guarantees................................................. 48
6.3 Encumbrances............................................... 49
6.4 Financial Covenants........................................ 49
6.5 Capital Expenditures....................................... 50
6.6 Limitation on Dividends.................................... 50
6.7 Liquidations, Mergers, Consolidations, Acquisitions, Etc... 50
6.8 Dispositions of Assets..................................... 51
6.9 Loans and Other Advances................................... 51
6.10 Investments................................................ 51
6.11 Affiliate Transactions..................................... 52
6.12 Use of Proceeds............................................ 52
6.13 Change of Business......................................... 53
6.14 Change of Fiscal Year...................................... 53
6.15 ERISA...................................................... 53
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6.16 Amendments to Certain Documents............................ 53
ARTICLE 7. CONDITIONS TO MAKING EXTENSIONS OF CREDIT.................. 53
7.1 All Loans.................................................. 53
7.2 Initial Extension of Credit................................ 54
ARTICLE 8. EVENTS OF DEFAULT; REMEDIES................................ 56
8.1 Events of Default.......................................... 56
8.2 Remedies................................................... 59
ARTICLE 9. GENERAL PROVISIONS......................................... 60
9.1 Amendments and Waivers..................................... 60
9.2 Taxes...................................................... 60
9.3 Expenses................................................... 60
9.4 Notices.................................................... 61
9.5 Participations............................................. 62
9.6 Successors and Assigns..................................... 63
9.7 Confidentiality............................................ 63
9.8 Severability............................................... 63
9.9 Interest Limitation........................................ 63
9.10 Survival................................................... 64
9.11 GOVERNING LAW.............................................. 64
9.12 FORUM...................................................... 64
9.13 Non-Business Days.......................................... 65
9.14 Integration................................................ 65
9.15 Headings................................................... 65
9.16 Counterparts; Effectiveness................................ 65
9.17 WAIVER OF JURY TRIAL....................................... 65
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LIST OF EXHIBITS
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Principal
Exhibit Section
Designation Exhibit Reference
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A Revolving Credit Note 2.1e
B Lockbox Agreement 2.1g
C Term Note 2.2c
D Security Agreement 3.3
F-1 Mortgage 3.4
F-2 First Amendment to Mortgage 3.4
F-3 Second Amendment to Mortgage 3.4
G Landlord's Waiver 3.5
H Compliance Certificate 5.2c
I Subordination Agreement 7.2(i)
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LIST OF SCHEDULES*
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Schedule Designation
and
Principal Section
Reference Schedule
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4.2 Options, Warrants, Etc.
4.10 Litigation
4.12 Labor Matters
4.13 Real Estate Matters
4.15 Intellectual Property
4.16 Insurance
4.19 Plans and Benefit Arrangements
4.20 Environmental Matters
6.1 Permitted Indebtedness
6.3 Permitted Encumbrances
*Exhibits as listed herein are not included with the SEC filings, however,
copies are readily available upon request.
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of January 30,
1998 (as more fully defined below the "Agreement"), entered into by and between
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC., a Delaware corporation (as more
fully defined below the "Borrower") and PNC BANK, NATIONAL ASSOCIATION, a
national banking association (as more fully defined below the "Bank").
RECITALS:
WHEREAS, the Borrower entered into an Amended and Restated Credit Agreement
with the Bank dated as of January 31, 1996 as amended by the First Amendment to
Amended and Restated Credit Agreement dated as of May 1, 1997 (the "First
Amendment") (the Amended and Restated Credit Agreement as amended by the First
Amendment together with all exhibits and schedules thereto, the "Original
Agreement").
WHEREAS, the Borrower and the Bank have agreed on additional modifications to
the Original Agreement.
WHEREAS, the Borrower and the Bank have agreed to amend and restate the
Original Agreement in its entirety.
WHEREAS, the Borrower desires to borrow, and the Bank desires to make
available to the Borrower from time to time the loans and other extensions of
credit hereinafter set forth, under and subject to the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the premises (each of which is
incorporated herein by reference) and the mutual promises contained herein and
other valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and with the intent to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, including the
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preamble and recitals hereto, the following terms shall have the respective
meanings set forth below or in the Section of this Agreement referred to, unless
the context otherwise requires:
Account: As used (i) in each Loan Document except the Working Cash Sweep
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Agreement and the Trust Agreement, an account, as that term is defined in the
Uniform Commercial Code, due the Borrower, whether now in existence or hereafter
created or acquired, and (ii) in the Working Cash Sweep Agreement and the Trust
Agreement, the account defined in this Agreement as the Parent Account.
Account Debtor: Any Person who is or may become obligated under or with
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respect to an Account as defined in item (i) of the definition of Account above.
Additional Equity Infusion: Receipt by the Borrower on and after March 31,
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1995 of the Net Proceeds of a public offering or private placement of Borrower's
equity securities.
Affiliate: As to any Person, any other Person (i) which directly or
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indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such Person, or (ii) which beneficially owns or holds
25 percent or more of any class of the voting securities of the Borrower or 25
percent or more of the voting stock (or in the case of a Person which is not a
corporation, 25 percent or more of the equity interest) of which is beneficially
owned or held, directly or indirectly, by the Borrower or a Subsidiary. For
purposes of this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, including the power to elect a majority of the directors
of a corporation or trustees of a trust, as the case may be.
Agreement: On and after the Closing Date, as used in each Loan Document
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except the Working Cash Sweep Agreement and the Trust Agreement, this Second
Amended and Restated Credit Agreement, all exhibits and schedules hereto and all
extensions, renewals, amendments, substitutions and replacements hereof and
hereto; and on and after the Closing Date when this Agreement is referred to in
the Working Cash Sweep Agreement and the Trust Agreement it shall be referred to
as the "Line of Credit Agreement".
Applicable Margin: The percentage (expressed in basis points) determined from
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time to time based upon the ratio of the Borrower's Consolidated Total
Indebtedness to the Borrower's Consolidated EBITDA set forth under the relevant
column heading below.
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TERM LOAN
Ratio of Consolidated ------------------
Total Indebtedness to Revolving Credit Euro- Base
Consolidated EBITDA Loans Rate Rate
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LEVEL I Less than 1:0 to 1:00 100 100 0
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Equal to or greater 100 125 0
LEVEL II than 1.0 to 1.0 but
less than 1.5 to 1.0
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Equal to or greater 75 150 0
LEVEL III than 1.5 to 1.0 but
less than 2.0 to 1.0
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LEVEL IV Equal to or greater 75 175 0
than 2.0
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Armco Lease: That certain Lease Agreement and all schedules and exhibits
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thereto by and between the Borrower and Armco Inc. dated as of August 15, 1994.
Asset Purchase Agreement: That certain Asset Purchase Agreement and all
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schedules and exhibits thereto by and between the Borrower and Armco Inc. dated
as of August 15, 1994, as amended by that certain letter dated October 5, 1994
and accepted October 10, 1994.
Authorized Officer: The Chairman of the Board, the President, the Chief
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Executive Officer, the Chief Operating Officer, the Chief Financial Officer, any
Vice President or the Treasurer of the Borrower. The Bank shall be entitled to
rely on the incumbency certificate delivered pursuant to Section 7.2 for the
initial designation of each Authorized Officer. Additions or deletions to the
list of Authorized Officers may be made by the Borrower at any time by
delivering to the Bank a revised, fully-executed incumbency certificate.
Bank: PNC Bank, National Association, a national banking association, and its
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successors and assigns.
Base Rate: A fluctuating rate of interest per annum equal to the greater of
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(i) the Prime Rate or (ii) the sum of (A) the Federal Funds Effective Rate plus
(B) 1/2 of one percent per annum.
Base Rate Option: The ability of the Borrower to elect to have all or any
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portion of the Term Loan bear interest at the Interest Rate Option set forth in
Subsection 2.3a(ii)(A).
Benefit Arrangement: An "employee benefit plan", within the meaning of
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Section 3(3) of ERISA, which is not a Plan or a Multiemployer Plan and which is
maintained or otherwise contributed to by the Borrower or any ERISA Affiliate
for the benefit of employees of the Borrower or any ERISA Affiliate.
BIDP: The Business Infrastructure Development Program established by the
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Commonwealth of Pennsylvania.
BIDP Loan: A term loan from the BIDP or the County of Allegheny through BIDP
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which shall have a final maturity not exceeding 15 years after the date on which
such loan is advanced.
Borrower: Universal Stainless & Alloy Products, Inc., a Delaware corporation,
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and its successors and permitted assigns.
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Borrowing Tranche: Each portion of the Term Loan bearing interest at a
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discrete Euro-Rate Option and that portion of the Term Loan bearing interest at
the Base Rate Option.
Business Day: A day other than a Saturday or a Sunday on which the Bank and
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the Trustee are open for business.
Capital Adequacy Event: This term shall have the meaning given it in Section
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2.5.
Capital Compensation Amount: This term shall have the meaning given it in
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Section 2.5.
Capital Expenditure: Any expenditure which would be classified as a capital
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expenditure in accordance with GAAP.
Capitalized Lease: Any lease of property by the Borrower as lessee which
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would be capitalized on a balance sheet of the Borrower prepared in accordance
with GAAP.
Capitalized Lease Obligations: The amount of the obligations of the Borrower
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under Capitalized Leases which would be shown as a liability on a balance sheet
of the Borrower prepared in accordance with GAAP.
Chattel Paper: Any chattel paper, as that term is defined in the Uniform
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Commercial Code, of the Borrower, whether now owned or hereafter created or
acquired.
Closing Date: January 30, 1998 or such other date as is mutually agreeable to
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the parties hereto.
Closing Fee: A fee equal to the greater of (i) 1/4 of 1% of the Term Loan
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Commitment, or (ii) $25,000.
Collateral: Collectively, all of the property (whether real, personal or
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mixed, and whether tangible or intangible), rights, titles and interests subject
to any Encumbrance in favor of the Bank pursuant to this Agreement or any other
Loan Document, including but not limited to the cash and other assets held by
the Bank in the Lockbox Account, each DDA, the Parent Account and each other
bank account maintained by the Bank in order to implement the Working Cash
Agreements.
Commitment Fee: The fee described in Section 2.8b.
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Compliance Certificate: A certificate substantially in the form of Exhibit
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"H" which has been executed by an Authorized Officer and delivered to the Bank.
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Consolidated: The consolidation in accordance with GAAP of the items as to
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which such term applies.
Consolidated Current Assets: All assets of the Borrower and its Subsidiaries
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which may properly be classified as current assets in accordance with GAAP.
Consolidated Current Liabilities: All liabilities of the Borrower and its
--------------------------------
Subsidiaries which may properly be classified as current liabilities in
accordance with GAAP.
Consolidated Debt Service: The Borrower's Consolidated scheduled payments of
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principal and interest on Indebtedness during the relevant fiscal period.
Consolidated Excess Cash Flow: The amount by which, as the end of the
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relevant fiscal period, the Borrower's EBITDA for such period exceeds the
Borrower's Consolidated Fixed Charges for such period.
Consolidated Fixed Charges: Without duplication, the sum of the Borrower's
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and its Subsidiaries' Consolidated interest expense, Consolidated tax expense
less any deferred portion of such tax expense, scheduled payments of principal
of Consolidated Indebtedness, payments due under Capitalized Leases and Capital
Expenditures which are not Funded Capital Expenditures during the relevant
fiscal period.
Consolidated Net Income: The net income of the Borrower and its Subsidiaries
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for the period in question, after deducting all operating expenses, provisions
for all taxes and all other proper deductions, all determined in accordance with
GAAP.
Consolidated Tangible Net Worth: The Borrower's Consolidated stockholders'
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equity, after subtracting all items properly classified as intangible, as
determined in accordance with GAAP consistently applied.
Contamination: The presence of any Hazardous Substance at any real property
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owned or leased by the Borrower which requires investigation, clean-up or
remediation under any Environmental Law.
Credit: A Credit as defined in the Working Cash Sweep Agreement.
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Customer: The Borrower in its capacity as the customer under the Working Cash
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Sweep Agreement.
Customer's Trust: The trust created pursuant to the Working Cash Sweep
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Agreement.
DDA: Each checking account now or hereafter identified on the Schedule to the
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Working Cash Sweep Agreement.
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Debit: As defined in the Working Cash Sweep Agreement.
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Default: Any condition, event, omission or act which, with the giving of
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notice, the passage of time or both, would constitute an Event of Default.
Default Rate: The rate of interest charged pursuant to Section 2.3b(iv)
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hereof.
Document: Any document, as that term is defined in the Uniform Commercial
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Code, of the Borrower whether now owned or in existence or hereafter created or
acquired.
Dollars or $: The legal tender of the United States of America.
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EBITDA: For each Fiscal Quarter of the Borrower, Consolidated Net Income for
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such Fiscal Quarter, as determined in accordance with GAAP, plus the sum of (i)
Consolidated income tax expense, (ii) Consolidated interest expense, (iii)
Consolidated depreciation expense and (iv) Consolidated amortization expense,
each for such Fiscal Quarter and each determined in accordance with GAAP,
excluding (A) any non-recurring or extraordinary income or losses for such
Fiscal Quarter determined in accordance with GAAP and (B) the Net Income of any
other Person acquired by the Borrower in a transaction accounted for as a
pooling of interests for any period prior to the date of such acquisition.
EDF: The Allegheny County Department of Development, Economic Development
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Fund Business Loan Program.
EDF Loan: Any term loan from EDF which shall have a term of at least fifteen
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years.
EDS: The Economic Development Set Aside Program established by the
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Commonwealth of Pennsylvania.
EDS Loan: Any grant from EDS the proceeds of which will be lent to the
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Borrower as a term loan by the County of Allegheny, which loan shall have a
final maturity of 15 years after the date on which the loan is issued.
Encumbrance: Any security interest, mortgage, charge, pledge, hypothecation,
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assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any Capitalized Lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code) in, upon, or
against any asset of the Borrower or any Subsidiary, whether or not voluntarily
given.
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Environmental Claim: Any written claim, suit notice or order made by a Person
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(including without limitation a Governmental Authority) or any written demand
made by a Governmental Authority with respect to the Borrower or any of its
properties, whether owned or leased, that: (i) asserts a violation of an
Environmental Law; (ii) asserts a liability under an Environmental Law; (iii)
orders investigations, corrective action, remediation or other response under an
Environmental Law; (iv) demands information under an Environmental Law; (v)
alleges personal injury or property damage resulting from Hazardous Substances;
or (vi) alleges that there is or may be Contamination.
Environmental Law: Any Governmental Rule concerning protection or regulation
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of the discharge of substances into the environment, including but not limited
to those concerning air emissions, water discharges and treatment, storage
tanks, and the handling, generation, treatment, storage and disposal of waste
materials, chemical substances, pollutants, contaminants, toxic substances,
pathogens, radioactive materials or hazardous substances of any kind, whether
solid, liquid or gaseous.
Equipment: Any equipment, as that term is defined in the Uniform Commercial
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Code, owned by the Borrower, whether now owned or hereafter acquired and
wherever located.
ERISA: The Employee Retirement Income Security Act of 1974 or any successor
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legislation thereto, and the rules and regulations promulgated thereunder,
including any amendments to any of the foregoing.
ERISA Affiliate: Any member of a controlled group of corporations under
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Section 414(b) of the Internal Revenue Code of which the Borrower is a member,
and any trade or business (whether or not incorporated) under common control
with the Borrower under Section 414(c) of the Internal Revenue Code, and all
other entities which, together with the Borrower, are or were treated as a
single employer under Sections 414(m) or 414(o) of the Internal Revenue Code.
Euro-Rate: With respect to portions of the Term Loan to which the Euro-Rate
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Option applies for any Euro-Rate Interest Period, the interest rate per annum
determined by the Bank by dividing (the resulting quotient rounded upward to the
nearest 1/100th of 1% per annum) (i) the rate of interest determined by the Bank
in accordance with its usual procedures (which determination shall be
conclusive, absent manifest error) to be the "offered" eurodollar rate as quoted
by Exco-▇▇▇▇▇▇ Incorporated (or appropriate successor or, if Exco-▇▇▇▇▇▇ or its
successor ceases to provide such quotes, a comparable replacement determined by
the Bank) as evidenced on Dow ▇▇▇▇▇ Markets Service (formerly known as Telerate)
display page 4756 (or such other display page on the Dow ▇▇▇▇▇ Markets System as
may replace Dow ▇▇▇▇▇ Markets Service display page 4756), two (2) Business Days
prior to the first day of such Euro-Rate Interest Period for an amount
comparable to such Borrowing Tranche and having a borrowing date and a maturity
comparable to such Euro-Rate Interest Period by (ii) a number
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equal to 1.00 minus the Euro-Rate Reserve Percentage. The Euro-Rate may also be
expressed by the following formula:
Dow ▇▇▇▇▇ Markets Service display page 4756
Euro-Rate = as quoted by Exco-▇▇▇▇▇▇ or appropriate successor
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1.00 - Euro-Rate Reserve Percentage
Euro-Rate Interest Period: Any individual period of one, two or three months
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commencing on the date a Euro-Rate Option is exercised; provided, however, that
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(i) any Euro-Rate Interest Period which would otherwise end on a day which is
not a Business Day shall be extended to the next Business Day unless such
Business Day falls in the succeeding calendar month, in which case such Euro-
Rate Interest Period shall end on the next preceding Business Day, (ii) any
Euro-Rate Interest Period which begins on the last day of a calendar month or on
a day for which there is no numerically corresponding day in the subsequent
calendar month during which such Euro-Rate Interest Period is to end shall end
on the last Business Day of such subsequent month, and (iii) no Euro-Rate
Interest Period for the Term Loan may end after the Term Loan Maturity Date.
Euro-Rate Loan: All or any portion of the Term Loan bearing interest under
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the Euro-Rate Option, as set forth in Subsection 2.3(a)(ii).
Euro-Rate Option: The ability of the Borrower to elect Euro-Rate Loans, as
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set forth in Subsection 2.3(a)(ii).
Euro-Rate Reserve Percentage: The maximum percentage (expressed as a decimal
----------------------------
rounded upward to the nearest 1/100th of 1%), as determined by the Bank which is
in effect during any relevant period, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
"Eurocurrency Liabilities") of a member bank in such System.
Event of Default: Any of the events specified in Section 8.1.
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FDIC: The Federal Deposit Insurance Corporation or any entity succeeding to
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its functions.
Federal Funds Effective Rate: For any day shall mean the rate per annum
----------------------------
(based on a year of 360 days and actual days elapsed and rounded upward to the
nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
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Effective Rate" as of the date of this Agreement; provided, if such Federal
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Reserve Bank (or its successor) does not announce such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
Fee: Any of the fees payable or to be payable by the Borrower to the Bank or
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the Trustee pursuant to any of the Loan Documents including but not limited to
the Commitment Fee, the Term Loan Commitment Fee any Letter of Credit Fee and
the Closing Fee.
Fiscal Quarter: Each three-month fiscal period of the Borrower beginning
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respectively on each successive January 1, April 1, July 1 and October 1 during
the term hereof and ending on the immediately succeeding March 31, June 30,
September 30 and December 31.
Fiscal Year: Each 12-month fiscal period of the Borrower, currently January 1
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to December 31.
Fixture: Any fixture, as that term is defined in the Uniform Commercial Code,
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owned by the Borrower, whether now owned or hereafter acquired and wherever
located.
Funded Acquisition: The purchase, lease or other acquisition of all or
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substantially all of the assets of any Person or the purchase or other
acquisition of all or substantially all of the capital stock or other equity
interests of any Person, any of which is funded entirely by (A) Indebtedness
permitted by item (vi) of Section 6.1, (B) an Additional Equity Infusion or (C)
a combination thereof.
Funded Capital Expenditure: That portion of any Capital Expenditure which is
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funded by (w) a Government Loan, (x) an Additional Equity Infusion, (y) the Term
Loan or (z) Indebtedness permitted by item (iv) of Section 6.1 hereof.
Funding Date: The date on which the first extension of credit is made
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hereunder which date may not be the same as the Closing Date.
GAAP: Generally accepted accounting principles which are consistent with the
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principles promulgated or adopted by the Financial Accounting Standards Board,
its predecessors and its successors, including any official interpretations
thereof.
General Intangible: Any general intangible, as that term is defined in the
------------------
Uniform Commercial Code, of the Borrower, whether now owned or in existence or
hereafter created or acquired, including without limitation any chose in action,
cause of action, business records, deposit account, invention, design, patent,
patent application, trademark, trademark application, service ▇▇▇▇, service ▇▇▇▇
application, trade name, trade name application, trade secret, goodwill,
copyright, copyright application, registration, license, franchise, customer
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list, tax refund claim, computer program, claims under guaranties, security
interests, rights to indemnification or any other intangible property of any
kind or nature (other than an Account).
Goods: All goods, as that term is defined in the Uniform Commercial Code, of
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the Borrower, whether now owned or hereafter acquired and wherever located.
Governmental Authority: Any (i) nation, state, government, jurisdiction or
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jurisdictional authority (domestic, foreign or international), any political
subdivision thereof, and any governmental, quasi-governmental, judicial, public,
statutory, administrative or regulatory body, agency, department, bureau,
authority, court, commission, board, office, instrumentality, administrative
tribunal or other entity of any of the foregoing and any official thereof and
(ii) any arbitrator, arbitration tribunal or other non-governmental entity which
has jurisdiction over the Borrower or a Subsidiary as a result of (A) the
written consent of the Borrower or (B) being vested with such jurisdiction by
any Governmental Authority.
Governmental Loan: Any BIDP Loan, EDF Loan, EDS Loan, MELF Loan or
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Redevelopment Authority Loan.
Governmental Rule: Any constitutional provision, law, statute, code, act,
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rule, regulation, permit, license, treaty, ordinance, order, writ, injunction,
decree, judgment, award, standard, directive, decision, determination or holding
of any Governmental Authority, whether in existence on the Closing Date or
whether issued, enacted or adopted after the Closing Date, and any change
therein or in the interpretation or application thereof following the Closing
Date.
Grantor: The Borrower in its capacity as Grantor under the Trust Agreement.
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Guaranty: As to any Person, any obligation, direct or indirect, by which such
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Person undertakes to guaranty, assume or remain liable for the payment of a
second Person's obligations, including but not limited to (i) endorsements of
negotiable instruments, (ii) discounts with recourse, (iii) agreements to pay or
perform upon a second Person's failure to pay or perform, (iv) agreements to
remain liable on obligations assumed by a second Person (other than pursuant to
Letters of Credit permitted hereunder), (v) agreements to maintain the capital,
working capital, solvency or general financial condition of a second Person and
(vi) agreements for the purchase or other acquisition of products, materials,
supplies or services, if in any case payment therefor is to be made regardless
of the nondelivery of such products, materials or supplies or the nonfurnishing
of such services.
Hazardous Substance: Any (i) substance which is defined as such or regulated
-------------------
in any manner by any Environmental Law and (ii) petroleum products, including
crude oil.
Holdings: USAP Holdings, Inc., a Delaware corporation 100% of the outstanding
--------
capital stock of which is owned legally and beneficially by the Borrower.
- 10 -
Holdings Credit Agreement: The credit agreement between the Borrower, as
-------------------------
borrower, and Holdings as lender dated as of November 1, 1995, as the same may
be amended from time to time with the Bank's prior written consent.
Indebtedness: All of the Borrower's and each Subsidiary's (i) obligations and
------------
indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or similar instruments, (iii) obligations under conditional
sale or other title retention agreements relating to property purchased, (iv)
obligations issued or assumed as the deferred purchase price of property or
services, (v) Capitalized Lease Obligations, (vi) obligations (contingent or
matured) with respect to letters of credit, including but not limited to Letters
of Credit whether matured or contingent, (vii) obligations of others secured by
any Encumbrance on property or assets owned or acquired by the Borrower or any
Subsidiary, whether or not the obligations secured thereby have been assumed
exclusive however of any Indebtedness of Armco, Inc. which Indebtedness is
secured by encumbrance on the real property leased to the Borrower under the
Armco Lease, provided such encumbrance is subordinate both to (A) the Borrower's
--------
interest as lessee under the Armco Lease and (B) the Bank's interest as the
mortgagee under the Mortgage), and (viii) Guarantees and all other contingent
liabilities; provided, however, that Indebtedness shall not include the
-------- -------
Borrower's or any Subsidiary's accounts payable and accrued liabilities incurred
in the ordinary course of business if those accounts payable and accrued
liabilities do not constitute obligations to repay borrowed money.
Ineligible Securities: Any security which may not be underwritten or dealt in
---------------------
by member banks of the Federal Reserve System under Section 16 of the Bank Act
of 1933 (12 U.S.C. Section 24, Seventh), as amended.
Instrument: Any instrument, as that term is defined in the Uniform Commercial
----------
Code, owned or held by the Borrower, whether now owned or in existence or
hereafter created or acquired.
Intercreditor Agreement: The Intercreditor Agreement dated as of October 3,
-----------------------
1995 as amended to the date hereof by and among the Bank, MELF, BIDP, the County
of Allegheny acting by and through the EDF and the Redevelopment Authority and
consented to by the Borrower as the same may hereafter be amended, restated or
replaced.
Interest Hedge Agreement: Any interest rate swap agreement, interest rate cap
------------------------
agreement, interest rate collar agreement, interest rate insurance or any other
agreement or arrangement designed to provide protection against fluctuations in
interest rates, together with all extensions, renewals, amendments,
substitutions and replacements to and of any of the foregoing.
Interest Rate Option: Either the Base Rate Option or the Euro Rate Option as it
--------------------
applies to the Term Loan.
- 11 -
Internal Revenue Code: The Internal Revenue Code of 1986 or any successor
---------------------
legislation thereto, and the rules and regulations issued or promulgated
thereunder, including any amendments to any of the foregoing.
Inventory: All inventory, as that term is defined in the Uniform Commercial
---------
Code, including but not limited to any and all new or used goods, merchandise
and other personal property, including but not limited to goods in transit, of
the Borrower and which is or may at any time be held as finished goods, raw
materials, work-in-process, supplies or materials used or consumed in the
Borrower's business or held for sale or lease or furnished under a contract of
service in the ordinary course of the Borrower's business, including but not
limited to ingot molds, universal rolling mill rolls, all returned and
repossessed goods and all supplementary items, packing and shipping supplies and
advertising materials, all of the foregoing whether now owned or hereafter
acquired and wherever located.
Landlord's Waiver: A landlord's waiver substantially in the form of Exhibit
----------------- -------
"G".
---
Letter of Credit: Any letter of credit issued by the Bank pursuant to any
----------------
application for Letter of Credit and/or any Reimbursement Agreement.
Letter of Credit Fee: Any fee due to the Bank for the issuance of or
--------------------
processing of a Letter of Credit or a draw thereunder.
Loan: A Revolving Credit Loan or the Term Loan.
----
Loan Account: The loan account referred to in Section 2.7.
------------
Loan Document: Any of this Agreement, any Note, any Security Document, any
-------------
Letter of Credit, any application for Letter of Credit, any Reimbursement
Agreement, any Lockbox Agreement, the Working Cash Sweep Agreement, the Trust
Agreement, any other cash management agreement, any Interest Hedge Agreement to
which the Borrower is a party thereto and the Bank or an Affiliate of the Bank
is the counterparty, any Subordination Agreement to which the Borrower is a
party as a borrower and the Bank is party as a senior lender and all other
documents and instruments executed and delivered from time to time to govern,
evidence or secure the Obligations, and the exhibits, schedules, statements,
reports, certificates and other documents required by, or related to, any of the
foregoing, and all extensions, renewals, amendments, substitutions and
replacements thereto and thereof.
Lockbox Account: A U.S. Postal Service lockbox in the Borrower's name over
---------------
which, pursuant to the Lockbox Agreement, the Bank has dominion and control to
the exclusion of the Borrower or other Persons acting by or through the
Borrower, and the related account into which the proceeds of the items received
in the Lockbox Account are processed, which may be a DDA.
- 12 -
Lockbox Agreement: That lockbox agreement substantially in the form of
-----------------
Exhibit "B" hereto, together with all extensions, renewals, amendments,
-----------
substitutions and replacements thereto and thereof.
Material Adverse Change: Any circumstance or event which (i) has or could
-----------------------
reasonably be expected to have a material adverse effect upon the validity or
enforceability of this Agreement or any of the other Loan Documents, (ii) is
material and adverse to the business, properties, assets, financial condition,
results of operations or prospects of the Borrower, (iii) impairs materially the
ability of the Borrower to duly and punctually pay or perform the Obligations,
or (iv) impairs materially the ability of the Bank, to the extent permitted, to
enforce the Bank's legal remedies pursuant to this Agreement and the other Loan
Documents.
MELF: The Machinery and Equipment Fund established by the Commonwealth of
----
Pennsylvania.
MELF Loan: A term loan by MELF to the Borrower which shall have a maturity
---------
date of seven (7) years after the date of the check by which the MELF loan funds
are advanced.
Money: Any money, as that term is defined in the Uniform Commercial Code, of
-----
the Borrower, whether now owned or hereafter acquired.
Money Purchase Plan: Any Benefit Arrangement subject to the minimum funding
-------------------
standards under Section 302 of ERISA and Section 412 of the Internal Revenue
Code.
Mortgage: Any mortgage and security agreement substantially in the form of
--------
Exhibit "F-1", together with all extensions, renewals, amendments, substitutions
-------------
and replacements thereto and thereof including without limitation Exhibit "F-2"
-------------
and Exhibit "F-3".
-------------
Multiemployer Plan: A "multiemployer plan" as defined in Section 4001(a)(3)
------------------
of ERISA to which the Borrower or any ERISA Affiliate of the Borrower is making
or accruing an obligation to make contributions or has within any of the
preceding five plan years made or accrued an obligation to make contributions.
Net Cash Proceeds: The cash proceeds to the Borrower of any disposition of
-----------------
assets permitted by items (ii) and (iii) of Section 6.8, less the sum of (i)
reasonable costs associated with such disposition of assets, (ii) all Federal,
state and local taxes assessed against or paid by the Borrower in connection
therewith and (iii) the principal amount of any Indebtedness which is secured by
any asset disposed of and which is required to be repaid in connection
therewith.
Net Credit: As defined in the Working Cash Sweep Agreement.
----------
- 13 -
Net Debit: As defined in the Working Cash Sweep Agreement.
---------
Note: A Revolving Credit Note or a Term Note.
----
Obligations: Collectively, (i) all unpaid principal and accrued and unpaid
-----------
interest under the Loans, (ii) all accrued and unpaid Fees hereunder or under
any of the other Loan Documents, (iii) all obligations (contingent or matured)
due the Bank pursuant to draws on Letters of Credit, (iv) any other amounts due
hereunder or under any of the other Loan Documents, including all
reimbursements, indemnities, Fees, costs, expenses, prepayment premiums, and
other obligations of the Borrower or any Subsidiary to the Bank or any
indemnified party hereunder and thereunder, (v) all other existing and future
obligations of the Borrower or any Subsidiary to the Bank for the payment of
money under any other agreement or instrument between the Borrower or any
Subsidiary and the Bank or among the Borrower or any Subsidiary, the Bank and
any other Person, including without limitation any Interest Hedge Agreement, and
(vi) all reasonable out-of-pocket costs and reasonable expenses incurred by the
Bank in connection with this Agreement and the other Loan Documents, including
but not limited to the reasonable fees and expenses of the Bank's counsel.
Original Agreement: The Amended and Restated Credit Agreement dated as of
------------------
January 31, 1996, as amended, as more fully defined in the recitals hereto.
Outstanding Revolving Credit Amount: The sum of the aggregate principal
-----------------------------------
amount of outstanding Revolving Credit Loans.
Parent Account: The parent account as so designated in the Working Cash Sweep
--------------
Agreement and referred to in the Working Cash Sweep Agreement and Trust
Agreement as the Account.
Participant: Any bank or financial institution which acquires from the Bank
-----------
an undivided interest in the Bank's Revolving Credit Commitment, the Loans or in
the Letters of Credit, pursuant to Section 9.5.
Participation: The sale, made in accordance with the provisions of Section
-------------
9.5, by the Bank to any Participant of an undivided interest in the Bank's
Revolving Credit Commitment, the Loans or in the Letters of Credit.
PBGC: The Pension Benefit Guaranty Corporation established pursuant to ERISA,
----
or any entity succeeding to any or all of its functions under ERISA.
Permitted Encumbrance: Any of the following:
---------------------
(i) The security interests in the Collateral granted to the Bank;
- 14 -
(ii) Liens for taxes, assessments, governmental charges or levies on any of
the Borrower's properties, taxes, assessments, governmental charges or levies
which are at the time due and payable or if they can thereafter be paid without
penalty or are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which the Borrower has created adequate
reserves;
(iii) Pledges or deposits to secure payment of workers' compensation
obligations, unemployment insurance, deposits or indemnities to secure public or
statutory obligations or for similar purposes;
(iv) Liens arising out of judgments or awards against the Borrower with
respect to which enforcement has been stayed and such Person at the time shall
currently be prosecuting an appeal or proceeding for review in good faith by
appropriate proceedings diligently conducted and with respect to which the
Borrower has created adequate reserves or has adequate insurance protection;
provided, however, that at no time may the aggregate Dollar amount of such
-------- -------
liens exceed $100,000;
(v) Mechanics', carriers', workmen's, repairmen's and other similar statutory
liens incurred in the ordinary course of the Borrower's business, so long as the
obligation secured is not overdue or, if overdue, is being contested in good
faith by appropriate actions or proceedings diligently conducted;
(vi) Security interests in favor of lessors of personal property, which
property is the subject of a true lease between such lessor and the Borrower;
(vii) Encumbrances existing on the Closing Date and listed on
Schedule 6.3; provided, however, that the Dollar amount of the obligation
------------ -------- -------
secured by an such Encumbrance shall not exceed the amount shown opposite such
Encumbrance on Schedule 6.3; and
------------
(viii) Security interests in favor of lenders whose loans to the Borrower are
permitted pursuant to Section 6.1.
Person: Any individual, partnership, corporation, association, trust,
------
business trust, joint venture, joint stock company, limited liability company,
unincorporated organization or enterprise or Governmental Authority.
Plan: Any employee pension benefit plan other than a Multiemployer Plan which
----
is covered by Title IV of ERISA and which either (i) is maintained by the
Borrower and/or any ERISA Affiliate of the Borrower for employees of the
Borrower and/or any ERISA Affiliate or (ii) has at any time within the preceding
five years been maintained by the Borrower and/or any entity which was an ERISA
Affiliate at such time for their respective employees.
- 15 -
Prime Rate: For any day, a fluctuating interest rate per annum equal to the
----------
rate of interest which the Bank announces from time to time as its prime lending
rate, which rate may not be the lowest rate then being charged by the Bank to
certain commercial borrowers.
Prohibited Transaction: A "prohibited transaction" as defined under Section
----------------------
406 of ERISA or Section 4975 of the Internal Revenue Code.
Qualified Bank: A bank or trust company organized under the laws of the
--------------
United States of America or any state thereof, having either (i) capital,
surplus and undivided profits aggregating at least $250,000,000 or (ii) total
assets in excess of $1,000,000,000 and whose long-term certificates of deposit
are rated "AA" or better by Standard and Poor's Rating Group, a division of
McGraw Hill, Inc. or "Aa" or better by ▇▇▇▇▇'▇ Investors Service, Inc.
Redevelopment Authority: The Redevelopment Authority of Allegheny County.
-----------------------
Redevelopment Authority Loan: A term loan issued by the Redevelopment
----------------------------
Authority.
Regulation D, G, T, U and X: Regulation D, Regulation G, Regulation T,
---------------------------
Regulation U and Regulation X promulgated by the Board of Governors of the
Federal Reserve System (12 C.F.R. Part 204 et seq.., Part 207 et seq., Part 220
------- ------
et seq., Part 221 et seq., and Part 224 et seq., respectively), as such
------ ------ ------
regulations are now in effect and as may hereafter be amended.
Reimbursement Agreement: Any Reimbursement Agreement relating to a Letter of
-----------------------
Credit issued by the Bank for the account of the Borrower or an Affiliate
pursuant to which the Borrower agrees to reimburse the Bank for any draw against
such Letter of Credit.
Reportable Event: A "reportable event" described in Section 4043(b) of ERISA
----------------
and in 29 C.F.R. Part 2615.
Revolving Credit Commitment: The obligation of the Bank to make available to
---------------------------
the Borrower an amount which shall not exceed the sum of $6,500,000 at any one
time outstanding.
Revolving Credit Loan: An individual borrowing under the Revolving Credit
---------------------
Commitment.
Revolving Credit Note: The Revolving Credit Note, in substantially the form
---------------------
of Exhibit "A" duly executed by the Borrower and delivered to the Bank together
-----------
with all extensions, renewals, amendments, substitutions and replacements
thereto and thereof.
- 16 -
Revolving Credit Termination Date: Initially, April 30, 2001, as such date
----------------------------------
may be extended upon the terms and condition set forth in Section 2.1f, or if
any such day is not a Business Day, the Business Day next preceding such date.
SEC: The Securities and Exchange Commission and any entity succeeding to its
---
functions.
Security Agreement: The security agreement and collateral assignment executed
------------------
by the Borrower substantially in the form of Exhibit "D", together with all
-----------
extensions, renewals, amendments, substitutions and replacements thereto and
thereof.
Section 20 Subsidiary: The Subsidiary of the bank holding company controlling
---------------------
the Bank, which Subsidiary has been granted authority by the Federal Reserve
Board to underwrite and deal in certain Ineligible Securities.
Security Document: Any (i) Security Agreement, (ii) Mortgage, (iii)
-----------------
Landlord's Waiver, (iv) additional documents and instruments entered into from
time to time for the purpose of securing the Obligations, (v) ancillary
documents and instruments relating to any of the foregoing, such as Uniform
Commercial Code financing statements and stock powers and (vi) extensions,
renewals, amendments, substitutions and replacements to and of any of the
foregoing.
Shared Collateral: Shall have the meaning ascribed to it in an Intercreditor
-----------------
Agreement.
Solvent: As to any Person, the condition which exists when such Person (i)
-------
owns assets whose value (both at fair market value and present fair saleable
value) is, on the date of determination, greater than the amount of such
Person's liabilities (including without limitation contingent and unliquidated
liabilities), (ii) is able to pay all of its Indebtedness as such Indebtedness
matures and (iii) has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to engage.
Stated Amount: As to any Letter of Credit, the lower of (i) the face amount
-------------
thereof or (ii) the remaining available undrawn amount thereof (regardless of
whether any conditions for drawing could then be met).
Subordination Agreement: A Subordination Agreement substantially in the form
-----------------------
of Exhibit "I" together with all extensions, renewals, amendments,
-----------
substitutions and replacements thereto and thereof.
Subordinated Indebtedness: Indebtedness subordinated to the Obligations in
-------------------------
a manner satisfactory to the Agent, including without limitation as set forth in
any Subordination Agreement.
- 17 -
Subsidiary: (i) Any corporation or trust of which 50% or more (by number of
----------
shares or number of votes) of the outstanding capital stock or shares of
beneficial interest normally entitled to vote for the election of one or more
directors or trustees (regardless of any contingency which does or may suspend
or dilute the voting rights) is at such time owned directly or indirectly by
another Person or one or more of such other Person's subsidiaries, (ii) any
partnership of which such other Person is a general partner or of which 50% or
more of the partnership interests is at the time directly or indirectly owned by
such other Person or one or more of such other Person's Subsidiaries, (iii) any
limited liability company of which such Person is a member or of which 50% or
more of the limited liability company interests is at the time directly or
indirectly owned by such other Person or one or more of such other Person's
Subsidiaries or (iv) any corporation, trust, partnership, limited liability
company or other entity which is controlled or capable of being controlled by
such other Person or one or more of such other Person's Subsidiaries.
Target Balance: As defined in the Working Cash Sweep Agreement.
--------------
Termination Event: (i) A Reportable Event with respect to a Plan or an event
-----------------
described in Section 4062(e) of ERISA with respect to a Plan, (ii) the
withdrawal of the Borrower or any ERISA Affiliate from a Plan during a Plan year
in which the Borrower or such ERISA Affiliate was a "substantial employer", as
such term is defined in Section 4001(a)(2) of ERISA, (iii) the incurrence of
liability by the Borrower or such ERISA Affiliate under Section 4064 of ERISA
upon the termination of a Plan, (iv) the distribution of a notice of intent to
terminate a Plan pursuant to Section 4041(c) of ERISA or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, (v) the institution of
proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or (vi)
any other event or condition which might reasonably constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.
Term Loan: The Term Loan described in Section 2.2 hereof.
---------
Term Loan Commitment: The obligation of the Bank to make available to the
--------------------
Borrower, pursuant to the terms hereof, the Term Loan.
Term Loan Commitment Fee: The fee described in Section 2.8.c.
------------------------
Term Loan Maturity Date: December 31, 2005.
-----------------------
Term Note: The Term Note substantially in the form of Exhibit "C", duly
--------- -----------
executed by the Borrower and delivered to the Bank together with all extensions,
renewals, amendments, substitutions, and replacements thereto and thereof.
Transfer Difference: As defined in the Working Cash Sweep Agreement.
-------------------
- 18 -
Trust Agreement: The Working Cash(R) Trust Agreement dated as of the First
---------------
Amendment Effective Date by and between the Grantor and the Trustee and all
extensions, renewals, amendments, substitutions and replacements thereto and
thereof.
Trustee: PNC Bank, National Association in its capacity as trustee under the
-------
Trust Agreement.
Unfunded Benefit Liabilities: With respect to any Plan, the amounts described
----------------------------
in Section 4001(a)(18) of ERISA.
Uniform Commercial Code: The Uniform Commercial Code as enacted in the
-----------------------
Commonwealth of Pennsylvania or any other jurisdiction which controls the
perfection of a security interest in the Collateral in favor of the Bank, in
effect on the Closing Date and as amended from time to time.
USWA Agreement: Each of the several Collective Bargaining Agreements between
--------------
the Borrower and the United Steelworkers of America and all appendices in effect
as of the Closing Date.
Value: When used in the context of the Borrower's Qualified Inventory shall
-----
mean the lower of cost (determined on a first-in-first-out basis) or market.
Withdrawal Liability: "Withdrawal liability" as defined by the provisions of
--------------------
Part 1 of Subtitle E to Title IV of ERISA.
Working Cash Agreements: This Agreement, the Working Cash Sweep Agreement and
-----------------------
the Trust Agreement.
Working Cash Sweep Agreement: The Working Cash(R), Line of Credit, Investment
----------------------------
Sweep Agreement dated as of May 1, 1997 by and between the Borrower as the
Customer and the Bank and all extensions, renewals, amendments, substitutions
and replacements thereto and thereof.
1.2 Other Definitional Provisions. (i) Except as otherwise
-----------------------------
specified herein, all references in any Loan Document (A) to any Person shall be
deemed to include such Person's successors and assigns, (B) to any applicable
law or Governmental Rule defined or referred to herein shall be deemed
references to such applicable law or Governmental Rule as the same may have been
or may be amended, supplemented or replaced from time to time and (C) to any
Loan Document defined or referred to herein shall be deemed references to such
Loan Document (and, in the case of the Note or other instrument, any instrument
issued in substitution therefor) as the terms thereof may have been or may be
amended, supplemented, waived or otherwise modified from time to time.
- 19 -
(ii) When used in any Loan Document, the words "herein", "hereof" and
"hereunder" and words of similar import shall refer to such Loan Document as a
whole and not to any particular provision of such Loan Document, and the words
"Article", "Section", "Subsection", "Schedule", "Exhibit" and "Annex" shall
refer to Articles, Sections and Subsections of, and Schedules, Exhibits and
Annexes to, such Loan Document unless otherwise specified.
(iii) Whenever the context so requires, in all Loan Documents the use of or
reference to any gender includes the masculine, feminine, and neuter genders,
and all terms used in the singular shall have comparable meanings when used in
the plural and vice versa.
(iv) All accounting terms used in any Loan Document which are not specifically
defined therein shall be construed in accordance with GAAP consistently applied,
except as otherwise expressly stated therein.
ARTICLE 2. THE LOANS
2.1 Revolving Credit Commitment.
---------------------------
2.1a Revolving Credit Loans. The Bank agrees, subject to the terms
----------------------
and conditions hereof and relying upon the representations and warranties herein
set forth, that the Borrower shall have the right to borrow, repay and reborrow,
from the date hereof until the Revolving Credit Termination Date, an aggregate
principal amount shall not exceed $6,500,000 in the aggregate at any one time
outstanding.
2.1b Voluntary Reductions of Revolving Credit Commitment.
---------------------------------------------------
(i) Voluntary Reductions. Upon at least ten Business Days' prior written
--------------------
notice to the Bank, the Borrower may from time to time permanently reduce the
Revolving Credit Commitment, and, to the extent of such reduction, the portion
of the Revolving Credit Commitment shall no longer be available for borrowing.
Simultaneously with any such voluntary permanent reduction, the Borrower shall
make a payment of the outstanding Loans equal to the excess, if any, of (A) the
Outstanding Revolving Credit Amount over (B) the Revolving Credit Commitment, as
so reduced. Each such reduction shall be in a minimum principal amount of
$500,000 or, if in excess of $500,000, in integral multiples of $250,000. Notice
of a reduction, once given, shall be irrevocable.
(ii) Application of Payments. Any and all Revolving Credit Commitment
-----------------------
reductions or voluntary prepayments made pursuant to any particular item of this
Section 2.1b shall be made in addition to, and not in lieu of, any and all
Revolving Credit Commitment reductions and voluntary prepayments required to be
made pursuant to any other item of this Section 2.1b. All such voluntary
prepayments shall be accompanied by all accrued and unpaid interest thereon, and
all amounts due pursuant to Section 2.4, if any.
- 20 -
2.1c Advance Procedures. In the event that the assets transferred
------------------
into the Parent Account from the Customer's Trust under the Working Cash Sweep
Agreement are insufficient to cover the Net Debit, the Bank shall on behalf of
the Borrower advance an amount equal to the lesser of (i) the remaining amount
of the Net Debit or (ii) the Revolving Credit Commitment.
2.1d Payment Terms. Any Credit in the Parent Account shall, to the
-------------
extent available at the end of any Business Day, be automatically applied to the
repayment of the outstanding balance of the Revolving Credit Loans. In
addition, the outstanding principal balance of the Revolving Credit Loans and
any accrued and unpaid interest thereon shall be due and payable on the
Revolving Credit Termination Date. If any payment hereunder shall become due on
a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in
computing interest with such payment. Borrower hereby authorizes the Bank to
charge the Parent Account or any deposit account maintained by the Borrower,
individually or jointly with others with the Bank for any payment when due
hereunder. Payments received will be applied to charges, fees, expenses,
accrued interest and principal in any order the Bank may choose in its sole
discretion.
2.1e Revolving Credit Note. The obligation of the Borrower to repay
---------------------
on or before the Revolving Credit Termination Date the aggregate unpaid
principal amount of all Revolving Credit Loans shall be evidenced by the
Revolving Credit Note substantially in the form of Exhibit "A" attached hereto,
-----------
executed by the Borrower and delivered to the Bank.
2.1f Extension of Revolving Credit Termination Date. The provisions
----------------------------------------------
of Section 2.1 shall be in effect until, and all Obligations relating to the
Revolving Credit Commitment shall be due and payable on, the Revolving Credit
Termination Date, unless terminated earlier, as provided in Section 8.2. The
Borrower in March of 1999 and in each subsequent month of March during the term
of the Revolving Credit Commitment (whether the original term or any extended
term as provided hereby) when the remaining term of the Revolving Credit
Commitment is approximately twenty-six (26) months, may request, by written
notice executed by an Authorized Officer and delivered to the Bank, an extension
or further extension of the Revolving Credit Commitment and a corresponding
alteration of the Revolving Credit Commitment. The Bank shall inform the
Borrower not later than the last Business Day in April in each year the request
is made whether or not such extension has been agreed to. If the Bank does not
respond to any such request within the specified time period, such request, in
the absence of a written agreement between the Bank and the Borrower to the
contrary, shall be deemed to be denied.
2.1g Lockbox.
-------
(i) Lockbox Account. On or prior to the Closing Date, the Bank and the
---------------
Borrower shall enter into a Lockbox Agreement in the form of Exhibit "B"
-----------
hereto. The
- 21 -
Borrower shall notify all Account Debtors to make payment directly to the
Lockbox Account. All notifications to Account Debtors shall contain such
instructions regarding the address and account number of the Lockbox Account as
may be specified by the Bank to the Borrower from time to time, and shall
otherwise be satisfactory to the Bank. The Bank may also instruct Account
Debtors to make payment to the Lockbox Account at any time. The Bank, pursuant
to the term of the Lockbox Agreement, shall process all items received in the
lockbox and deposit the proceeds of the Lockbox Account into a DDA.
(ii) Other Bank Accounts. The Borrower agrees that it shall not maintain any
-------------------
other depository accounts in which cash or proceeds of Collateral could be
deposited, except for those accounts meeting the requirements of this item (ii).
Pursuant to an agreement satisfactory in form and substance to the Bank, each
bank or other financial institution at which such an account is maintained by
the Borrower shall acknowledge that the Bank has a security interest in and to
such account maintained with it, and shall agree that, either on a daily basis
or upon receipt of instructions from the Bank, it will cause all collected funds
in such account (except for any required minimum balances) to be deposited in a
DDA by wire transfer.
2.1h Termination of Working Cash Sweep Agreement. The Working Cash
-------------------------------------------
Sweep Agreement may be terminated by the Borrower or the Bank on thirty (30)
day's prior written notice from the Person terminating the Working Cash Sweep
Agreement to the other party thereto. During such thirty (30) day period the
Bank and the Borrower shall attempt to agree on an alternative mechanism for
funding Loans under this Agreement. Failure of the Borrower and the Bank to
agree on an alternative funding mechanism shall constitute an Event of Default
hereunder at the end of such thirty (30) day period.
2.2 Term Loan Facility.
------------------
2.2a Term Loan Commitment. The Bank agrees, subject to the terms
--------------------
hereof and relying on the representations and warranties herein set forth, that
the Borrower shall have the right to borrow in one or more disbursements from
the Closing Date to and including December 3, 1998 an aggregate a principal
amount not to exceed $15,000,000.
2.2b Requests for Term Loan Disbursements. Each request for a Term
------------------------------------
Loan disbursement or conversion of an existing Interest Rate Option shall be
made to the Bank orally or in writing, by an Authorized Officer, (i) by 10:00
a.m. (Pittsburgh, Pennsylvania time) on the Business Day of the proposed Term
Loan disbursement or conversion to bear interest at the Base Rate Option and
(ii) by 12:00 noon (Pittsburgh, Pennsylvania time) at least two Business Days
prior to the proposed Term Loan disbursement or conversion to bear interest at
the Euro-Rate Option. Each request shall specify the date on which such
disbursement or conversion of an existing Interest Rate Option is to be made,
the amount thereof and, if applicable, the Euro-Rate Interest Period therefor.
Any oral request for a disbursement or conversion of an existing Interest Rate
Option shall be followed immediately by the Borrower's written request therefor.
A request from the Borrower pursuant to this
- 22 -
Section 2.2b, with respect to the Term Loan or any portion thereof which is to
bear interest at the Euro-Rate Option, shall irrevocably commit the Borrower to
accept such Revolving Credit Loan on the date specified in such request.
2.2c Borrowings. The obligation of the Borrower to repay on or
----------
before the Term Loan Maturity Date, the aggregate unpaid principal amount of all
disbursements made by the Bank under the Term Loan Commitment the Term Loan
shall be evidenced by the Term Note substantially in the form of Exhibit "C"
-----------
hereto, which shall be executed and delivered to the Bank on the Closing Date.
The principal amount actually due and owing the Bank under the Term Note shall
be the aggregate unpaid amount of all disbursements made by the Bank under the
Term Loan Commitment, all as shown on the Loan Account established pursuant to
Section 2.7 hereof. Each Term Loan disbursement or conversion of an Interest
Rate Option shall be in the minimum principal amount of $1,000,000 or if in
excess of $1,000,000 in integral multiples of $500,000.
2.2d Principal Payments on the Term Loan.
-----------------------------------
(i) Scheduled Principal Payments. Principal of the Term Loan shall be repaid
----------------------------
in twenty-eight (28) consecutive quarterly installments beginning March 31,
1999 and continuing thereafter on the last day of each June, September,
December and March to and including the Term Loan Maturity Date. Each of
the first twenty four quarterly installments will be in an amount equal to
three and one half percent (3.5%) of the principal balance of the Term Loan
at the opening of business on January 1, 1999. Each of the twenty-fifth
through twenty-eighth quarterly installments will be in an amount equal to
four percent (4%) of the principal balance of the Term Loan at the opening
of business on January 1, 1999.
(ii) Voluntary Prepayments. The Borrower, subject to the terms hereof, shall
---------------------
have the right, at its option, to prepay the Term Loan in whole at any time
or in part from time to time. Each partial voluntary prepayment of the
Term Loan shall be in the minimum amount of $1,000,000 or, if in excess of
$1,000,000, in integral multiples of $500,000. The Borrower shall give the
Bank not less than two (2) Business Days' prior written notice of each
prepayment specifying the aggregate principal amount to be prepaid and the
date of prepayment. Notice of prepayment having been given as aforesaid,
the principal amount specified in such notice shall be due and payable on
the prepayment date.
(iii) Mandatory Principal Prepayments. In addition to the payments required
-------------------------------
pursuant to Subsection 2.2(c)(i) above, the Borrower shall make the following
prepayments:
(A) Asset Sales. The Borrower shall pay to the Bank, as a mandatory
-----------
prepayment of principal on the Term Loan, the Net Cash Proceeds of any
disposition of assets permitted by items (ii) and (iii) of Section 6.8,
provided, however no such mandatory prepayment of such Net Cash Proceeds need
-------- -------
be made if (I) the Net Cash Proceeds do not exceed in the aggregate $2,500,000
during the term hereof and (II) such Net Cash Proceeds
- 23 -
aggregating not more than $2,500,000 are used within one hundred and eighty days
of receipt to acquire other Equipment in which the Bank is granted a first and
prior Encumbrance.
(B) Excess Cash Flow. On March 31, 1999 and on March 31 of each year
----------------
thereafter during the term hereof when the outstanding principal balance of the
Term Loan is equal to or greater than $7,500,000, the Borrower shall make a
payment on the outstanding principal balance of the Term Loan, in an amount
equal to (i) twenty-five percent (25%) of the Consolidated Excess Cash Flow for
Fiscal Year 1998 for the payment due March 31, 1999 and (ii) fifty percent (50%)
of Consolidated Excess Cash Flow for the immediately preceding Fiscal Year for
payments due on and after March 31, 2000. To the extent that the Borrower, in
such immediately preceding Fiscal Year, has made voluntary prepayments of
principal of the Term Loan, the amount of the mandatory prepayment then due
hereunder shall be reduced by the aggregate amount of such voluntary prepayments
made in such immediately preceding Fiscal Year.
(iv) Application of Payment. Each prepayment of principal of the Term Loan,
----------------------
whether voluntary or mandatory shall be applied against the unpaid principal
installments of the Term Loan in the inverse order of their normal maturity.
2.3 Interest.
--------
2.3a Interest Rate.
-------------
(i) Revolving Credit Loans. During the term hereof, all Revolving Credit
----------------------
Loans outstanding hereunder shall bear interest as a rate per annum equal to
the sum of (i) the Base Rate minus the Applicable Margin.
-----
(ii) Term Loan. During the term hereof, the Borrower, in accordance with the
---------
provisions of this Section 2.3 shall have the option of electing from time to
time one or more Interest Rate Options set forth below to be applied by the Bank
to all or a portion of the Term Loan.
(A) Base Rate Option. Under the Base Rate Option the Borrowing Tranche
----------------
of the Term Loan bearing interest as such Option shall bear interest at the
Base Rate plus the Applicable Margin.
----
(B) Euro-Rate Option. Under the Euro-Rate Option the Borrowing Tranches
----------------
of the Term Loan bearing interest at such Option shall bear interest at a rate
per annum equal to the sum of the Euro Rate plus the Applicable Margin.
----
2.3b Adjustments to Interest Rates.
-----------------------------
(i) Changes in Applicable Margin. The Applicable Margin shall be adjusted as
----------------------------
of the first day of each Fiscal Quarter based upon the ratio of the Borrower's
- 24 -
Consolidated Total Indebtedness to EBITDA Ratio as shown in the Compliance
Certificate for the immediately preceding Fiscal Quarter.
(ii) Changes in Prime Rate or Federal Funds Effective Rate. The Base Rate
-----------------------------------------------------
shall be adjusted from time to time, without notice to the Borrower, as
necessary to reflect any changes in the Prime Rate or in the Federal Effective
Funds Rate, as applicable, which adjustments shall be automatically effective on
the day of any such change.
(iii) Changes in Euro-Rate Reserve Percentage. The Euro-Rate Option shall
---------------------------------------
be adjusted from time to time, without notice to the Borrower, as necessary to
reflect any changes in the Euro-Rate Reserve Percentage, which adjustments shall
be automatically effective on the day of such change.
(iv) Event of Default. Upon the occurrence of and during the continuance of
----------------
an Event of Default, the outstanding principal amount of the Loans shall bear
interest from the date of such occurrence at a rate per annum which is equal to
2% (200 basis points) in excess of the rate or rates which would then otherwise
in effect pursuant to this Section 2.3 with respect to such Loans.
2.3c Interest Payment Dates
(i) Revolving Credit Interest Payment Dates. Interest on the Revolving
---------------------------------------
Credit Loans will be due and payable on or about the last date of each month and
will be charged to the Parent Account or another account created by the Bank to
implement the Working Cash Agreements. In the event that there is insufficient
Credit in the Parent Account or such other account to pay interest, the Bank
will advance funds on behalf of the Borrower as provided by Subsection 2.1c
hereof to the extent the Borrower has availability under the Revolving Credit
Commitment. If not paid by one of the two foregoing alternates interest will be
immediately due and payable by the Borrower. The foregoing notwithstanding,
automatic payments of interest pursuant to this Subsection 2.3c shall be based
exclusively on the Prime Rate less the Applicable Margin. In the event that the
sum, of Federal Funds Effective Rate plus fifty (50) basis points is, for any
----
period during any month, greater than the Prime Rate a separate billing for
additional interest due shall be sent to the Borrower. Such additional interest
shall be due and payable within ten (10) days.
(ii) Term Loan Interest Payment Dates. Interest due on the outstanding Base
--------------------------------
Rate Borrowing Tranche shall be payable monthly in arrears on the last day of
each month for the period just ended, with the first such payment due on
February 28, 1998. Interest due on each outstanding Borrowing Tranche of the
Term Loan bearing interest under the Euro-Rate Option shall be payable on the
last day of the relevant Euro-Rate Interest Period. All accrued and unpaid
interest on the Term Loan shall be due and payable on the Term Loan Maturity
Date. After any maturity of any Note or the Obligations, whether on a scheduled
maturity date, by acceleration or otherwise, all accrued and unpaid interest
shall be due and payable on demand until all amounts due hereunder are paid in
full.
- 25 -
2.3d Method of Calculation. The interest rate shall be calculated
---------------------
on the basis of the actual number of days elapsed, using a year of 360 days.
Interest for any period shall be calculated from and including the first day
thereof to but not including the last day thereof.
2.3e Interest Rate Option Elections, Renewals and Conversions.
--------------------------------------------------------
Subject to the remaining provisions of this Agreement, the Borrower shall have
the option to elect to have all or any Borrowing Tranches bear interest at
either of the Interest Rate Options and shall have the right to renew elections
of Interest Rate Options and convert Borrowing Tranches to other Interest Rate
Options. Notice of the Borrower's election shall be made in accordance with
Section 2.2b. Elections of, conversions to or renewals of the Base Rate Option
shall continue in effect until converted to the Euro-Rate Option. Elections of,
conversions to or renewals of the Euro-Rate Option shall expire as to each such
Euro-Rate Option at the expiration of the applicable Euro-Rate Interest Period.
Any Borrowing Tranches outstanding for which no elections have been made shall
bear interest under the Base Rate Option.
2.3f Limitation on Election of Euro-Rate Options. Each election of the
-------------------------------------------
Euro-Rate Option or the prepayment of all or any Euro-Rate Loans shall be in the
minimum principal amount of $1,000,000 or, if in excess of $1,000,000, in
integral multiples of $500,000. At no time during the term hereof may there be
more than a total of five (5) separate Term Loan Borrowing Tranches in effect,
no more than four (4) of which may bear interest at the Euro-Rate Option. Upon
the occurrence and during the continuance of an Event of Default, the Borrower's
right to elect, renew or convert to Euro-Rate Loans shall be suspended.
2.3g Special Provisions Relating to Euro-Rate Option.
-----------------------------------------------
(i) Euro-Rate Unascertainable. In the event that on any date on which a
-------------------------
Euro-Rate would otherwise be set the Bank shall have determined in good faith
(which determination shall be final and conclusive) that, by reason of
circumstances affecting the London interbank market, adequate and reasonable
means do not exist for ascertaining the Euro-Rate, the Bank shall give prompt
notice of such determination to the Borrower and the other Lenders, and until
the Bank notifies the Borrower that the circumstances giving rise to such
determination no longer exist, the right of the Borrower to borrow under, renew
or convert to the Euro-Rate Option shall be treated as a request to borrow
under, renew or convert to the Base Rate Option.
(ii) Illegality of Offering Euro-Rate. If the Bank shall determine in
--------------------------------
good faith, which determination shall be final and conclusive, that compliance
by the Bank with any applicable Governmental Rule (whether or not having the
force of law), or the interpretation or application thereof by any Governmental
Authority has made it unlawful for the Bank to make or maintain Euro-Rate Loans,
the Bank shall give notice of such determination to the Borrower.
Notwithstanding any provision of this Agreement to the contrary, unless and
until the Bank shall give notice to the Borrower that the circumstances giving
rise to such determination no longer apply:
- 26 -
(A) with respect to any Euro-Rate Interest Periods thereafter
commencing, interest on the corresponding Euro-Rate Loans shall be computed and
payable under the Base Rate Option; and
(B) on such date, if any, as shall be required by law, any Euro-Rate
Loans then outstanding shall be automatically renewed at the Base Rate Option;
and the Borrower shall pay to the Bank the accrued and unpaid interest on such
Euro-Rate Loans to (but not including) such renewal date.
The Borrower shall pay the Bank any additional amounts reasonably
necessary to compensate the Lenders for any out-of-pocket costs incurred by the
Bank as a result of any renewal pursuant to item (B) above on a day other than
the last day of the relevant Euro-Rate Interest Period, including, but not
limited to, any interest or fees payable by the Bank to lenders of funds
obtained by it to loan or maintain the Loans so converted. The Bank shall
furnish to the Borrower a certificate showing the calculation of the amount
necessary to compensate the Bank for such costs (which certificate, in the
absence of manifest error, shall be conclusive), and the Borrower shall pay such
amount to the Bank, as additional consideration hereunder, within ten (10) days
of the Borrower's receipt of such certificate.
(iii) Inability to Offer Euro-Rate. In the event that the Bank shall
----------------------------
determine, in its sole discretion, that it is unable to obtain deposits in the
London interbank market in sufficient amounts and with maturities related to the
Euro-Rate Loans which would enable the Bank to fund such Euro-Rate Loans, then
the Bank shall immediately notify the Borrower that the right of the Borrower to
borrow under, convert to or renew the Euro-Rate Option shall be suspended.
Following notification of the suspension of the Euro-Rate Option, the Borrower
agrees to negotiate with the Bank for a modified Euro-Rate which will allow the
Bank to realize its anticipated and bargained-for yield. In the event that the
Borrower and the Bank cannot agree on a modified Euro-Rate, any notice of
borrowing under, conversion to or renewal of the Euro-Rate Option which was to
become effective during the period of suspension shall be treated as a request
to borrow under, convert to or renew the Base Rate Option with respect to the
principal amount specified therein.
(iv) Indemnity. In addition to the other provisions of this Section 2.3g,
---------
the Borrower hereby agrees to indemnify the Bank against any loss or expense
which the Bank may sustain or incur as a consequence of any default by the
Borrower in failing to make any borrowing, conversion or renewal hereunder to
bear interest at the Euro-Rate Option on the scheduled date, in failing to make
when due (whether by declaration, acceleration or otherwise) any payment of any
Euro-Rate Loan or in making any payment or prepayment of any Euro-Rate Loan or
any part thereof on any day other than the last day of the relevant Euro-Rate
Interest Period, including but not limited to any loss of profit, premium or
penalty incurred by the Bank in respect of funds borrowed by it for the purpose
of making or maintaining any Euro-Rate Loan as determined in good faith by the
Bank in the exercise of its sole but reasonable discretion. The Bank shall
furnish to the Borrower a certificate showing
- 27 -
the calculation of the amount of any such loss or expense (which certificate,
absent manifest error, shall be conclusive), and the Borrower shall pay such
amount to the affected Bank within ten days of the Borrower's receipt of such
certificate.
2.4 Yield Protection; Indemnity.
---------------------------
2.4a Yield Protection. If any Governmental Rule or the
----------------
interpretation or application thereof by any court or any Governmental Authority
charged with the administration thereof, or the compliance with any guideline or
request from any central bank or other Governmental Authority, whether or not
having the force of law:
(i) subjects the Bank to any tax, levy, impost, charge, fee, duty,
deduction or withholding of any kind hereunder (other than any tax imposed or
based upon the income of the Bank and payable to any Governmental Authority or
taxing authority of the United States of America or any state thereof) or
changes the basis of taxation of the Bank with respect to payments by the
Borrower of principal, interest or other amounts due from the Borrower hereunder
(other than any change which affects, and to the extent that it affects, the
taxation by the United States of America or any state thereof of the total net
income of the Bank), or
(ii) imposes, modifies or deems applicable any reserve, special deposit,
special assessment or similar requirements against assets held by, deposits
with or for the account of or credit extended by the Bank, or
(iii) imposes upon the Bank any other condition with respect
to this Agreement,
and the result of any of the foregoing is to increase the cost to the Bank,
reduce the income receivable by the Bank, reduce the rate of return on the
Bank's capital or impose any expense upon the Bank by an amount which the Bank
in its sole but reasonable discretion deems to be material, the Bank shall from
time to time notify the Borrower of the amount determined by the Bank (which
determination, absent manifest error, shall be conclusive) to be reasonably
necessary to compensate the Bank (on an after-tax basis) for such increase in
cost, reduction in income, reduction in rate of return or additional expense,
setting forth the calculations therefor, and the Borrower shall pay such amount
to the Bank, as additional consideration hereunder, within 10 days of the
Borrower's receipt of such notice.
2.4b Method of Calculation. In determining the amount due the Bank
---------------------
hereunder by reason of the application of this Section 2.4, the Bank may use any
reasonable averaging or attribution method; provided, however, that the Bank
-----------------
must use reasonable efforts to minimize such losses and costs.
2.5 Capital Adequacy. If (i) any adoption of, change in or
----------------
interpretation of any Governmental Rule, or (ii) compliance with any guideline,
request or directive of any central bank or other Governmental Authority or
quasi-Governmental Authority exercising control
- 28 -
over banks or financial institutions generally, including but not limited to
regulations set forth at 12 C.F.R. Part 3 (Appendix A), 12 C.F.R. Part 208
(Appendix A), ▇▇ ▇.▇.▇. ▇▇▇▇ ▇▇▇ (▇▇▇▇▇▇▇▇ ▇) and 12 C.F.R. Part 325 (Appendix
A) or any court requires that the commitments of the Bank hereunder be treated
as an asset or otherwise be included for purposes of calculating the appropriate
amount of capital to be maintained by the Bank or any corporation controlling
the Bank (a "Capital Adequacy Event"), the result of which is to reduce the rate
of return on the Bank's capital as a consequence of such commitments to a level
below that which the Bank could have achieved but for such Capital Adequacy
Event, taking into consideration the Bank's policies with respect to capital
adequacy, by an amount which the Bank reasonably deems to be material, the Bank
shall promptly deliver to the Borrower a statement of the amount necessary to
compensate the Bank for the reduction in the rate of return on its capital
attributable to such commitments (the "Capital Compensation Amount"). The Bank
shall determine the Capital Compensation Amount in good faith, using reasonable
attribution and averaging methods. The Bank shall from time to time notify the
Borrower of the amount so determined (which determination, absent manifest
error, shall be conclusive). Such amount shall be due and payable by the
Borrower to the Bank 10 Business Days after such notice is given.
2.6 Payments. All payments of principal, interest, fees, costs
--------
and other amounts due hereunder and under the other Loan Documents not credited
to the Bank directly pursuant to the terms hereof or of the Working Cash Sweep
Agreement shall be made by the Borrower to the Bank at the Bank's principal
office at One PNC Plaza, Fifth Avenue and Wood Street, Pittsburgh, Pennsylvania
15222, Attention: Metals Group, not later than 12:00 noon (Eastern time) on the
due date. All such payments with respect to the Loans shall be immediately good
funds when delivered by the Borrower to the Bank.
2.7 Loan Account. The Bank shall open and maintain on its books
------------
a Loan Account in the Borrower's name with respect to Loans made, repayments,
prepayments, the computation and payment of interest and other amounts due and
sums paid to the Bank hereunder and under the other Loan Documents. Such Loan
Account shall be conclusive and binding on the Borrower as to the amount at any
time due to the Bank from the Borrower except in the case of manifest error in
computation.
2.8 Fees.
----
2.8a Letter of Credit Fees. The Borrower shall pay all Letter of
---------------------
Credit Fees in accordance with the terms of the relevant application for Letter
of Credit or the Reimbursement Agreement, as the case may be.
2.8b Commitment Fee. The Borrower shall pay to the Bank, on the
--------------
last day of each March, June, September and December during the term of the
Revolving Credit Commitment and on the Revolving Credit Termination Date, a
Commitment Fee calculated on the basis of the actual number of days elapsed,
using a year of 360 days, at the rate of 1/2 of 1% per annum on the average
daily (computed at the opening of business) unused amount of the
- 29 -
Revolving Credit Commitment (i.e., the Revolving Credit Commitment less the
Outstanding Revolving Credit Amount) for the Fiscal Quarter then ended. The
first payment of the Commitment Fee under this Agreement shall be due on March
31, 1998, shall be for the period beginning January 1, 1998 and include the
commitment fee due and unpaid under the Original Agreement and the Commitment
Fee hereunder. The Commitment Fee shall no longer accrue with respect to
portions of the Revolving Credit Commitment which became permanently unavailable
to the Borrower as a result of permanent reductions to the Revolving Credit
Commitment made pursuant to Section 2.1b.
2.8c Term Loan Commitment Fee. The Borrower shall pay to the Bank
------------------------
on the last day of March, June and September 1998 a Term Loan Commitment Fee
calculated on the basis of the actual number of days elapsed, using a year of
360 days at a rate of 1/2 of 1% per annum on the average daily (computed at the
opening of business) unused amount of the Term Loan Commitment (i.e., the Term
Loan Commitment less the outstanding principal amount of the Term Loan) for the
period or Fiscal Quarter then ended.
2.8d Closing Fee. The Borrower shall pay the Closing Fee on the
-----------
Closing Date.
2.9 Payment From Accounts Maintained by Borrower. In the event
--------------------------------------------
that any payment of principal, interest, Commitment Fee, Term Loan Commitment
Fee, Letter of Credit Fee, other Fee or expense or any other amount due the Bank
under any of the Loan Documents is not paid when due, the Bank is hereby
authorized to effect such payment by debiting the Parent Account or any deposit
account of the Borrower now or in the future maintained with the Bank by the
Borrower either individually or with another Person. This right of debiting
accounts of the Borrower is in addition to any right of setoff accorded the Bank
hereunder or by operation of law.
ARTICLE 3. SET-OFF AND SECURITY INTERESTS
3.1 Set-Off. To secure the repayment and performance of the
-------
Obligations, the Borrower hereby gives to the Bank and any Participant a lien
and security interest upon and in any of the Borrower's property, credits,
securities or Money which may at any time be delivered to, or be in the
possession of, or owed by the Bank and any Participant in any capacity whatever,
including the balance of any deposit account, maintained by the Borrower with
the Bank or the Participant, as the case may be. The Borrower hereby authorizes
the Bank and any Participant, at any time and from time to time upon the
occurrence and during the continuance of an Event of Default, at the Bank's or
the Participant's option, to apply, at the discretion of the Bank or the
Participant, to the payment of the Obligations, any and all such property,
credits, securities or Money now or hereafter in the hands of the Bank or the
Participant or belonging or owed to the Borrower.
3.2 Personal Property. To secure the repayment of the
-----------------
Obligations, the Borrower hereby grants to the Bank a first and prior lien and
security interest, junior only to Permitted
- 30 -
Encumbrances, in all of its Equipment, Fixtures, Goods, Inventory, Accounts,
Chattel Paper, Documents, General Intangibles and Instruments, all as more fully
described in the Security Documents.
3.3 Security Agreement. To further evidence the grant of the
------------------
first and prior liens and security interests set forth in Section 3.2, the
Borrower, on or prior to the Closing Date, shall execute and deliver to the Bank
(A) a Security Agreement substantially in the form of Exhibit "D", and (B) any
-----------
Uniform Commercial Code financing statements requested by the Bank.
3.4 Real Property Interests. As additional security for the
-----------------------
Obligations, the Borrower, on or prior to the Closing Date, shall grant to the
Bank a first and prior mortgage lien and security interest on certain real
property owned or leased by it, as such property is described in Schedule 4.14,
-------------
and shall evidence the grant of such mortgage lien and security interest by
executing and delivering to the Bank a Mortgage substantially in the form of
Exhibit "F-1" as amended including, without limitation, by amendments
-------------
substantially in the form of Exhibit "F-2" and Exhibit "F-3", together with all
------------- -------------
Uniform Commercial Code financing statements reasonably requested by the Bank.
3.5 Landlord's Waivers. The Borrower shall deliver to the Bank,
------------------
on or prior to the Closing Date, and from time to time during the term hereof, a
fully-executed Landlord's Waiver substantially in the form of Exhibit "G", for
-----------
each of the real property locations leased by the Borrower as lessee from time
to time where any Collateral is located.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement and to make the Loans and the
other extensions of credit herein provided for, the Borrower makes the following
representations and warranties to the Bank:
4.1 Existence. The Borrower is a corporation duly organized,
---------
validly existing and in good standing under the laws of the State of Delaware
and the Borrower is duly qualified or licensed and in good standing as a foreign
corporation authorized to do business in each jurisdiction where the nature of
its activities or the ownership of its properties makes such qualification or
licensing necessary. Holdings is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and Holdings is
duly qualified or licensed and in good standing as a foreign corporation
authorized to do business in each jurisdiction where the nature of its
activities or the ownership of its properties makes such qualification or
licensing necessary.
4.2 Capitalization; Ownership; Title to Shares. The authorized
------------------------------------------
capital stock of the Borrower consists of 10,000,000 shares of common stock and
2,000,000 shares of preferred stock, of which, as of December 31, 1997,
[6,290,832] shares of common stock
- 31 -
were issued and outstanding and no shares of preferred stock were issued and
outstanding. All of the issued and outstanding shares of capital stock of the
Borrower are fully paid and nonassessable. There are no options, warrants or
other rights outstanding to purchase any shares of the Borrower, nor are any
securities of the Borrower convertible into or exchangeable for its capital
stock, except as shown on Schedule 4.2.
------------
4.3 Subsidiaries and Other Investments. The Borrower has no
----------------------------------
Subsidiaries except Holdings, and it has no other ownership interests in any
other Person.
4.4 Power and Authority. The Borrower and Holdings each has the
-------------------
lawful power to own or lease its properties and to engage in the business it now
conducts or proposes to conduct. The Borrower is duly authorized to enter into,
execute, deliver and perform all of the terms and provisions of this Agreement,
the Notes and the other Loan Documents to which it is a party, to incur the
Obligations and to perform its obligations under the Loan Documents to which it
is a party. All necessary corporate action required to authorize the execution,
delivery and performance of this Agreement, the Notes and the other Loan
Documents has been properly taken by the Borrower.
4.5 Validity and Binding Effect. This Agreement has been, and
---------------------------
each other Loan Document will be, duly executed and delivered by the Borrower.
This Agreement and the other Loan Documents, when delivered by the Borrower
pursuant to the provisions hereof, will constitute legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and except as such
enforceability may be limited by the availability of equitable remedies.
4.6 No Conflict. The execution and delivery of this Agreement
-----------
and the other Loan Documents by the Borrower and the consummation of the
transactions herein or therein contemplated or compliance with the terms and
provisions hereof or thereof by it will not conflict with, constitute a default
under or result in any breach of (i) the terms and conditions of the Borrower's
certificate of incorporation, by-laws, or other organizational documents, (ii)
any Governmental Rule or (iii) any material agreement, instrument, order, writ,
judgment, injunction or decree to which the Borrower is a party or by which it
is bound or to which it is subject, or will result in the creation or
enforcement of any Encumbrance whatsoever upon any property, whether now owned
or hereafter acquired, of the Borrower, except for Permitted Encumbrances.
4.7 Financial Matters.
-----------------
4.7a Historical Financial Statements. The Borrower has delivered to
-------------------------------
the Bank its audited financial statements for the Fiscal Year ended December 31,
1996 and its unaudited financial statements for the nine-month period ended
September 30, 1997. Such financial statements are complete and correct in all
material respects, subject to ordinary and usual year-
- 32 -
end adjustments, and fairly present the financial condition of the Borrower in
all material respects and the results of its operations as of the dates and for
the periods referred to, and have been prepared in accordance with GAAP
consistently applied throughout the periods involved. The Borrower has no
material liabilities, whether direct or indirect, fixed or contingent, and no
liability for taxes, long-term leases or unusual forward or long-term
commitments as of the date of such financial statements which are not reflected
in such financial statements or in the notes thereto.
4.7b Financial Projections. The Borrower has delivered to the Bank
---------------------
financial projections of the Borrower the Fiscal Year ending December 31, 1998.
Such projections set forth a reasonable range of possible results in light of
the history of the Borrower's business, present and foreseeable conditions and
the intentions of the Borrower's management. Such projections accurately
reflect the liabilities of the Borrower upon consummation of the transactions
contemplated hereby as of the Closing Date. No material events have occurred
since the preparation of the projections which would cause the projections taken
as a whole, not to be reasonably attainable.
4.8 Material Adverse Change. Since September 30, 1997, no
-----------------------
Material Adverse Change has occurred.
4.9 Solvency. The Borrower is, and after giving effect to the
--------
transactions contemplated pursuant to this Agreement and the other Loan
Documents will be, Solvent.
4.10 Litigation. There are no actions, suits, proceedings or
----------
investigations pending or, to the Borrower's knowledge, threatened against the
Borrower's or Holdings' business, operations, properties, prospects, profits or
condition (financial or otherwise), at law or in equity, before any Governmental
Authority, court or arbitrator which, individually or in the aggregate, if
adversely determined, could reasonably be expected to be material or which
purport to affect the rights and remedies of the Bank pursuant to this Agreement
and the other Loan Documents or which purport to restrain or enjoin (either
temporarily, preliminarily or permanently) the performance by either the
Borrower or Holdings of any action contemplated by any of the Loan Documents.
All pending and, to the Borrower's knowledge, threatened actions, suits,
proceedings and investigations affecting the Borrower and Holdings are set forth
on Schedule 4.10.
-------------
4.11 Compliance with Laws. Each of the Borrower and Holdings
--------------------
has duly complied in all material respects with, and all of their respective
properties, business operations and leaseholds are in compliance in all material
respects with, the provisions of all Governmental Rules applicable to either
Borrower or Holdings, their respective properties and the conduct of their
respective businesses. Neither the Borrower nor Holdings is in material
violation of any Governmental Rule.
4.12 Labor Matters. Except as described in Schedule 4.12, the
------------- -------------
Borrower is not a party to any labor contract or collective bargaining
agreement, and there are no strikes, work
- 33 -
stoppages, material grievances, disputes or controversies with any union or any
other organization of the Borrower's employees, or threats of strikes, work
stoppages or any asserted pending demands for collective bargaining by any union
or organization. Each collective bargaining agreement and labor contract listed
on Schedule 4.12 is in full force and effect as of the date hereof. The
-------------
Borrower has not, within the two-year period preceding the date hereof, taken
any action which would have constituted or resulted in a "plant closing" or
"mass layoff" within the meaning of the Federal Worker Adjustment and Retraining
Notification Act of 1988 or any similar applicable Federal, state or local law.
The procedures by which the Borrower has hired or will hire its employees have
complied and will comply in all respects with each collective bargaining
agreement to which the Borrower is a party and all applicable Governmental
Rules.
4.13 Title to Properties. (i) The Borrower has good and
-------------------
indefeasible title to, or valid leasehold interests in, all properties and
assets purported to be owned or leased by the Borrower, and none of such
properties and assets, including, without limitation any such property and
assets in which the Bank has been granted a lien and security interest pursuant
to the Loan Documents, is subject to any Encumbrance, except for Permitted
Encumbrances in existence on the Closing Date. Except as set forth on Schedule
--------
4.13, the Borrower has received all deeds, assignments, waivers, consents, non-
----
disturbance and recognition or similar agreements, bills of sale and other
documents and instruments, and have duly effected all recordings, filings and
other actions necessary to establish, protect and perfect the Borrower's right,
title and interest in and to all such property.
(ii) All real property leased as of the Closing Date by the Borrower
(as lessee or lessor) is listed in Schedule 4.13, which sets forth information
-------------
regarding the commencement date, termination date, renewal options (if any)
and annual base rents for the years 1998, 1999 and 2000. Each of such
leases is valid and enforceable in accordance with its terms and is in full
force and effect. The Borrower has delivered to the Bank true and complete
copies of each of such leases shown on Schedule 4.13 and all documents
-------------
affecting the rights or obligations of the Borrower, including, without
limitation, any non-disturbance and recognition agreements, subordination
agreements, attornment agreements and agreements regarding the term or
rental of any of the leases. The Borrower is not, and to the best of the
Borrower's knowledge no other party is in default of its obligations
thereunder or has delivered or received any notice of default under any
such lease, nor has any event occurred which, with the giving of notice,
the passage of time or both, would cause a default under any such lease,
except for defaults which individually or in the aggregate are not
material.
(iii) The Borrower does not own or hold, and is not obligated
under or a party to, any option, right of first refusal or other contractual
right to purchase, acquire, sell, assign or dispose of any real estate owned or
leased by the Borrower, except as set forth on Schedule 4.13.
-------------
(iv) All permits, licenses and authorizations required to have been issued or
appropriate to enable all real property owned or leased by the Borrower to
be lawfully
- 34 -
occupied and used for all of the purposes for which they are currently occupied
and used have been lawfully issued and are in full force and effect, other than
those which in the aggregate are not material.
(v) The Borrower has not received any notice, or has any knowledge, of any
pending, threatened or contemplated condemnation proceeding affecting any
real property owned or leased by the Borrower or any part thereof except
those which, in the aggregate, are not material.
(vi) No portion of any real property owned or leased by the Borrower has
suffered any material damage by fire or other casualty loss which has not
heretofore been completely repaired and restored to its original condition.
(vii) The exercise by the Bank of its remedies under any of the Security
Documents will not result in a default under any of the leases for real property
on which any Inventory of the Borrower is located.
(viii) Holdings has good and in defeasible title to all properties and assets
purported to be owned by Holdings and none of such properties and assets,
including without limitation any such property and assets in which the Bank has
been granted a lien and security interest pursuant to the Loan Documents is
subject to any Encumbrance, except for Permitted Encumbrances.
4.14 Tax Returns and Payments. Each of the Borrower and
------------------------
Holdings has filed all Federal, state, local and other tax returns required by
law to be filed. Each of the Borrower and Holdings has paid all taxes,
assessments and other governmental charges levied upon the Borrower or Holdings
or any of their respective properties, assets, income or franchises which are
due and payable, other than (i) those presently payable without penalty or
interest, (ii) those which are being contested in good faith by appropriate
proceedings which are being diligently conducted and (iii) those which, if not
paid, would not, in the aggregate, result in a Material Adverse Change and as to
each of items (i), (ii) and (iii) the Borrower has set aside on its books
reserves for such taxes, assessments or other governmental charges as are
determined to be adequate by application of GAAP consistently applied. The
charges, accruals, and reserves on the books of the Borrower and Holdings in
respect of Federal, state and local taxes for all fiscal periods to date are
adequate, and the Borrower knows of no unpaid assessments for additional
Federal, state, local or other taxes which are now due and payable for any such
fiscal period or any basis therefor.
4.15 Intellectual Property. The Borrower owns or licenses all
---------------------
the material patents, patent applications, trademarks, trademark applications,
permits, service marks, trade names, copyrights, copyright applications,
licenses, franchises, authorizations and other intellectual property rights that
are necessary for the operations of its businesses, without infringement upon or
conflict with the rights of any other Person with respect thereto. To the best
knowledge of the Borrower, no slogan or other advertising, device, product,
process, method,
- 35 -
substance, part or component or other material now employed, or now contemplated
to be employed, by the Borrower infringes upon or conflicts with any rights
owned by any other Person, and no claim or litigation regarding any of the
foregoing is pending or threatened. All of the Borrower's material patents,
trademarks, permits, service marks, trade names, copyrights, licenses,
franchises and authorizations are listed on Schedule 4.15.
-------------
4.16 Insurance. The Borrower currently maintains insurance
---------
which meets or exceeds the requirements of Section 5.7 hereof and the applicable
insurance requirements set forth in the other Loan Documents, and such insurance
is provided by reputable and financially sound insurers and is of such types and
at least in such amounts as are customarily carried by, and insures against such
risks as are customarily insured against by similar businesses similarly
situated and owning, leasing and operating similar properties to those owned,
leased and operated by the Borrower. All of such insurance policies are valid
and in full force and effect. No notice has been given or claim made, and, to
the Borrower's knowledge, no grounds exist to cancel or avoid any of such
policies or to reduce the coverage provided thereby. All of the Borrower's
existing insurance coverage is described on Schedule 4.16.
-------------
4.17 Consents and Approvals. Except for the filing of Security
----------------------
Documents with the appropriate Governmental Authority, no order, authorization,
consent, license, validation or approval of, or notice to, filing, recording, or
registration with any Governmental Authority, or the exemption by any such
Governmental Authority, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance of any of the Loan Documents
or (ii) the legality, binding effect or enforceability of any such Loan
Document.
4.18 No Defaults. No event has occurred and is continuing and
-----------
no condition exists which constitutes a Default or an Event of Default. The
Borrower is not in violation of (i) any term or provision its certificate of
incorporation, by-laws or other organizational documents or (ii) any material
agreement or instrument to which it is a party or by which it or any of its
properties may be bound or subject.
4.19 Plans and Benefit Arrangements . (i) All Plans and Benefit
------------------------------
Arrangements maintained by the Borrower or any ERISA Affiliate for employees are
set forth on Schedule 4.19. Neither the Borrower nor any ERISA Affiliate has
-------------
made any promises of retirement or other benefits to employees or former
employees (A) except as set forth in any Plan or Benefit Arrangement, (B) except
for such promises under unfunded plans maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees, which in the aggregate are not material in amount and (C)
except for any other promises which in the aggregate are not material in amount.
(ii) Each Plan and Benefit Arrangement has been maintained and administered in
all material respects in compliance with ERISA and the Internal Revenue
Code and all rules, orders and regulations issued thereunder.
- 36 -
(iii) Except as set forth on Schedule 4.19, the Internal Revenue Service
-------------
has determined that each Plan and Benefit Arrangement which constitutes an
employee pension benefit plan as defined in Section 3(2) of ERISA and which is
intended to qualify under Section 401(a) of the Internal Revenue Code so
qualifies under Section 401(a) of the Internal Revenue Code, and that the trusts
related thereto are exempt from tax under the provisions of Section 501(a) of
the Internal Revenue Code. Nothing has occurred with respect to any such Plan or
Benefit Arrangement or to the related trusts since the date of the most recent
favorable determination letter issued by the Internal Revenue Service which has
affected or may reasonably be expected to affect adversely such qualification or
exemption.
(iv) The Borrower and each ERISA Affiliate have complied fully in all material
respects with their respective obligations under the minimum funding
standards of ERISA and the Internal Revenue Code with respect to each Plan
and Money Purchase Plan. Neither the Borrower nor any ERISA Affiliate has
sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code or has applied for an extension of any amortization
period under Section 412 of the Code with respect to any Plan or Money
Purchase Plan. Neither the Borrower nor any ERISA Affiliate has failed to
make any contribution or payment to any Plan which has resulted or may
reasonably be expected to result in the imposition of a lien under ERISA or
the Internal Revenue Code against the property or rights to property of the
Borrower or any ERISA Affiliate.
(v) No Unfunded Benefit Liabilities exist with respect to any Plans, and no
Unfunded Benefit Liabilities would exist with respect to any Plan if such
Plan were terminated immediately.
(vi) No Reportable Event (other than a Reportable Event described in Section
4043(b) of ERISA or in PBGC Regulation Section 2615.23) has occurred with
respect to any Plan.
(vii) No Termination Event has occurred or is reasonably anticipated to occur
with respect to any Plan which has resulted in or which will result in the
incurrence by the Borrower or any ERISA Affiliate of any liability to the PBGC
under Title IV of ERISA which has not been discharged or satisfied. No such
Termination Event is reasonably anticipated to occur which will result in an
Encumbrance in favor of the PBGC against the property or rights to property of
the Borrower or any ERISA Affiliate.
(viii) Neither the Borrower nor any ERISA Affiliate which is a "party in
interest" (as that term is defined in Section 3(14) of ERISA) or a "disqualified
person" (as that term is defined in Section 4975 of the Internal Revenue Code)
with respect to any "employee benefit plan" (as defined in Section 3(3) of
ERISA), has engaged in a "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code) involving any such employee
benefit plan which will subject the Borrower or such ERISA Affiliate to the tax
or penalty imposed under Section 502(i) of ERISA and Section 4975 of the
Internal Revenue Code.
- 37 -
(ix) Neither the Borrower nor any ERISA Affiliate currently contributes to, or
is obligated to contribute to, or is a member of, any Multiemployer Plan.
Neither the Borrower nor any ERISA Affiliate has incurred, or is reasonably
expected to incur, any Withdrawal Liability to any Multiemployer Plan.
(x) The Borrower and each ERISA Affiliate has complied in all material
respects with all requirements of Sections 10001 and 10002 of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (Public Law No. 99-272); Title I,
Subtitle B, Part 6 of ERISA; and Section 4980B of the Internal Revenue Code.
(xi) Neither the Borrower nor any ERISA Affiliate has entered into any
transaction described in Section 4069(a) of ERISA.
(xii) No Benefit Arrangement provides postretirement welfare benefits of any
type which will have a material adverse effect on the financial condition of the
Borrower and the ERISA Affiliates taken as a whole and which will required to be
accounted for in the income statement, balance sheet and footnotes of the
financial report of the Borrower or any ERISA Affiliate in the manner described
in the Financial Accounting Standards Board, Proposed Statement of Financial
Accounting Standards, Employer's Accounting for Postretirement Benefits Other
-------------------------------------------------------
Than Pensions, if the same were effective for the current Fiscal Year of the
-------------
Borrower or any ERISA Affiliate.
4.20 Environmental Matters. (i) Except as set forth on
---------------------
Schedule 4.20:
-------------
(A) the Borrower is in material compliance with all applicable
Environmental Laws;
(B) there has been no Contamination or material release of Hazardous
Substances, at, upon, under or within any property owned or leased by the
Borrower since August 15, 1994, and, to the best of the Borrower's
knowledge based exclusively on the Phase I and Phase II environmental site
assessments (the Phase II environmental site assets relates only to the
Borrower's Titusville property) by ▇▇▇▇▇▇▇ Engineers, Inc. and Ground Water
Technology, Inc., copies of which have been delivered to the Bank, there
has been no Contamination or release of Hazardous Substances on any other
property that has migrated or threatens to migrate to any property owned or
leased by the Borrower except as may be set forth in the Phase II
environmental site assessment;
(C) to the best of the Borrower's knowledge there are no above ground
storage tanks at any property owned or leased by the Borrower;
(D) there are no transformers, capacitors or other items of Equipment
containing PCBs at levels in excess of 49 parts per million, violative of
applicable Environmental Law, at any property owned or leased by the
Borrower;
- 38 -
(E) other than materials used or produced, held, transported and disposed
of in accordance with all Environmental Laws, the Borrower has not used in its
operations, nor stored on properties owned or leased by it Hazardous Substances;
(F) no Hazardous Substances are present at any property owned or leased by
the Borrower in any material amount, except those which are transported, used,
stored, disposed of and otherwise handled in accordance with all Environmental
Laws, in proper storage containers; and
(G) All permits and authorizations required under Environmental Laws for
all operations of the Borrower have been duly issued and are in full force and
effect, including but not limited to those for air emissions, water discharges
and treatment, storage tanks and the generation, treatment, storage and disposal
of Hazardous Substances.
(ii) Except as set forth in Schedule 4.20, (A) there are no pending or, to the
-------------
best of the Borrower's knowledge, threatened Environmental Claims against
the Borrower or any property owned or leased by the Borrower; and (B) there
is no condition or occurrence on any property owned or leased by the
Borrower that to the best of the Borrower's knowledge could reasonably be
anticipated (1) to form the basis of an Environmental Claim against the
Borrower or its properties or (2) to cause any property owned or leased by
the Borrower to be subject to any restrictions on its ownership, occupancy
or transferability under any Environmental Law.
(iii) Except as set forth in Schedule 4.20, no notice relating
-------------
to Hazardous Substances is contained in any deed relating to any property owned
or leased by the Borrower and the Borrower is aware of no facts or conditions on
any such property that would require that such a notice be placed in the deed to
any such property.
(iv) Except as set forth in Schedule 4.20, no portion of any property owned or
-------------
leased by the Borrower contains asbestos-containing material that is or
threatens to become friable.
(v) The representations and warranties set forth in this Section 4.20 shall
survive repayment of the Obligations and the termination of this Agreement
and the other Loan Documents.
4.21 Margin Stock. Neither the Borrower nor Holdings is engaged
------------
principally or as one of its important activities in the business of extending
credit for the purpose, immediately, incidentally or ultimately, of purchasing
or carrying margin stock (within the meaning of Regulation U).
4.22 Holdings Business. Holdings is a Delaware corporation and
-----------------
has as its sole business purpose the purchase of, holding of and sale or other
disposition of investments
- 39 -
permitted pursuant to Section 6.10, the advance of funds to the Borrower
pursuant to the Holdings Credit Agreement and the holding of intangible assets.
4.23 Full Disclosure. Neither this Agreement nor any other
---------------
document, certificate or statement furnished to the Bank by or on behalf of the
Borrower pursuant to this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Borrower which
materially and adversely affects the business, property, assets, financial
condition, results of operations or prospects of the Borrower or Holdings which
has not been set forth in this Agreement or in the other documents, certificates
and statements (financial or otherwise) furnished to the Bank by or on behalf of
the Borrower or Holdings prior to or on the date hereof in connection with the
transactions contemplated hereby.
ARTICLE 5. AFFIRMATIVE COVENANTS
From the date hereof and thereafter until the last to occur of (i) the
termination of the Revolving Credit Commitment and (ii) the payment in full of
the Notes and the other Obligations of the Borrower hereunder, the Borrower
agrees, for the benefit of the Bank, that it will comply with each of the
following affirmative covenants:
5.1 Use of Proceeds. Proceeds of the Revolving Credit Loans
---------------
shall be used by the Borrower only for general working capital purposes and
proceeds of the Term Loan shall be used to acquire and install a bar finishing
facility and for general corporate purposes.
5.2 Delivery of Financial Statements and Other Information.
------------------------------------------------------
During the term hereof, the Borrower shall deliver or cause to be delivered to
the Bank the following financial statements and other information:
5.2a Annual Reports. As soon as available and in any event within
--------------
90 days after the end of each Fiscal Year of the Borrower, the Borrower shall
deliver to the Bank an audited Consolidated balance sheet as of the end of such
Fiscal Year and the related audited Consolidated statements of operations and
cash flows for such Fiscal Year, each of which shall be prepared in accordance
with GAAP consistently applied and setting forth in each case in comparative
form the figures for the previous Fiscal Year, when available, all presenting
fairly the financial condition of the Borrower in such reasonable detail as the
Bank may request from time to time, and all to be accompanied by an unqualified
opinion of Price Waterhouse LLP or other certified public accountants acceptable
to the Bank.
5.2b Quarterly Reports. As soon as available and in any event
-----------------
within 30 days after the end of each Fiscal Quarter of each Fiscal Year of the
Borrower, the Borrower shall deliver to the Bank (i) an unaudited Consolidated
balance sheet as of the end of such month and (ii) the related unaudited
Consolidated statements of operations and cash flows for such month and
- 40 -
for the period beginning on the first day of the current Fiscal Year through the
last day of the Fiscal Quarter for which such financial statements are being
delivered, each of which shall be prepared in accordance with GAAP consistently
applied and setting forth in each case in comparative form the figures for the
month in the prior Fiscal Year, when available, which corresponds to the month
for which the statements are being delivered, all presenting fairly the
financial condition of the Borrower in such reasonable detail as the Bank may
request from time to time and certified (subject to normal year-end adjustments)
as to fairness of presentation, GAAP and consistency by the chief financial
officer of the Borrower.
5.2c Compliance Certificate. Simultaneously with the delivery of
----------------------
each set of financial statements referred to in Sections 5.2a and 5.2b, the
Borrower shall deliver to the Bank a completed Compliance Certificate
substantially in the form of Exhibit "H", executed by an Authorized Officer, and
-----------
containing such additional information as the Bank may request from time to
time, (i) stating that the financial statements being delivered with such
Compliance Certificate are true, complete and correct, (ii) setting forth in
reasonable detail the calculations required to establish whether the Borrower
was in compliance with the requirements of Sections 6.4 and 6.5 for the fiscal
period in question, (iii) stating (A) whether any Default or Event of Default
exists on the date of such certificate, (B) whether any Material Adverse Change
has occurred since the date of the previously delivered Compliance Certificate,
(C) whether any event has occurred since the date of the previously delivered
Compliance Certificate which may result in a Material Adverse Change; and (D) if
any Default or Event of Default, or any Material Adverse Change has occurred
during the Fiscal Quarter or Fiscal Year to which the Compliance Certificate
relates or is in existence, setting forth the details thereof and the action
which the Borrower has taken, is taking or proposes to take with respect
thereto.
5.2d Accountant's Certificate. Simultaneously with the delivery of
------------------------
each set of annual financial statements referred to in Section 5.2a, the
Borrower shall deliver to the Bank a certificate of the certified public
accountant preparing such statements stating either that his examination has not
disclosed the occurrence or continuance of a Default or an Event of Default or,
if his examination has disclosed a Default or an Event of Default, a description
of such occurrence.
5.2e Business Plan. As soon as available and in any event not more
-------------
than 30 days after the end of each Fiscal Year, the Borrower shall deliver to
the Bank its annual business plan for the then current Fiscal Year, containing
additional information as the Bank may reasonably request from time to time.
5.2f Other Reports, Information and Notices. The Borrower will
--------------------------------------
deliver or cause to be delivered to the Bank, within the time periods set forth
below, the following other reports, information and notices:
(i) Auditor's Reports. As soon as practicable after they have become
-----------------
available, copies of all other reports and management letters submitted to
the Borrower by its
- 41 -
accountants in connection with any annual or interim audit of the books of the
Borrower made by such accountants.
(ii) Reports to Shareholders. As soon as practicable after they have become
-----------------------
available, all reports, notices and proxy statements sent by the Borrower
to its shareholders.
(iii) Securities Reports. As soon as practicable after they have become
------------------
available, all regular and periodic reports, if any, filed by the Borrower with
the SEC or any other Governmental Authority succeeding to any of the functions
of the SEC or any similar or corresponding board, bureau or agency, or to any
state securities commission.
(iv) Notice of Defaults and Material Adverse Changes. Promptly after any
-----------------------------------------------
officer of the Borrower has learned of the occurrence or existence of a
Default or Event of Default, or of an event or set of circumstances which
has caused or which may cause a Material Adverse Change, telephonic notice
thereof specifying the details thereof, the anticipated effect thereof and
the action which the Borrower has taken, is taking or proposes to take with
respect thereto, which notice shall be promptly confirmed in writing within
five days by the president, any vice president or the chief financial
officer of the Borrower.
(v) Notice of Litigation. (A) Promptly after the commencement thereof,
--------------------
written notice of any action, suit, proceeding or investigation before any
Governmental Authority, court or arbitrator, affecting the Borrower or Holdings,
except for actions, suits, proceedings and investigations which, if adversely
determined, would not and could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change and (B) promptly
after any Authorized Officer has notice thereof, written notice of any decision,
ruling, judgment, appeal, reversal or other significant action in connection
with any existing action, suit, proceeding or investigation before any
Governmental Authority, court or arbitrator affecting the Borrower or Holdings,
which would or could reasonably be expected to result in a Material Adverse
Change.
(vi) Orders, Etc. Promptly after receipt thereof, a copy of any material
------------
order, writ, decree, judgment, decision or injunction issued by any Governmental
Authority in any material proceeding, action, suit or investigation to which
the Borrower or Holdings is a party.
(vii) ERISA Reports.
-------------
(A) As soon as possible, and in any event not later than the date notice is
sent to the PBGC, notice of any Reportable Event regarding any Plan and an
explanation of any action which has been or which is proposed to be taken with
respect thereto;
(B) concurrent with the filing thereof, a copy of any request to the United
States Secretary of the Treasury for a waiver or variance of the minimum funding
- 42 -
standards of Section 302 of ERISA and Section 412 of the Internal Revenue Code
with respect to any Plan or Money Purchase Plan;
(C) as soon as possible, but in no event later than 60 days after an
officer of the Borrower becomes aware of unfunded accumulated benefit
obligations for any Plan, as determined in accordance with the Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 87,
Employer's Accounting for Pensions, (or any superseding statement thereto),
----------------------------------
written notice of the occurrence of such event;
(D) upon the request of the Bank, copies of each annual report (Form 5500
Series) with accompanying schedules filed with respect to any Plan or Money
Purchase Plan;
(E) promptly after receipt thereof, a copy of any notice which the Borrower
or any ERISA Affiliate may receive from the PBGC relating to the intention of
the PBGC to terminate any Plan or Money Purchase Plan, or to appoint a trustee
to administer any Plan or Money Purchase Plan, or to assert any liability under
Title IV of ERISA against the Borrower or any ERISA Affiliate;
(F) a copy of any notice of assessment of Withdrawal Liability received by
the Borrower or any ERISA Affiliate from any Multiemployer Plan;
(G) as soon as possible, and in no event later than the date notification
is sent to the PBGC, notice of the failure by the Borrower or any ERISA
Affiliate to make a required installment or other payment under Section 302 of
ERISA and Section 412 of the Internal Revenue Code;
(H) concurrent with the filing thereof, a copy of any Notice of Intent to
Terminate any Plan filed under Section 4041(c) of ERISA; and
(I) promptly after receipt thereof, but without any obligation or
responsibility to secure the same, copies of any calculations of estimated
Unfunded Benefit Liabilities (or, if applicable, the portions of any
estimated Unfunded Benefit Liabilities that would be allocated to the
Borrower or any ERISA Affiliate under Sections 4063 and 4064 or Section
4062(e) of ERISA) for any Plans.
(ix) Notice of Environmental Claims. Promptly after receipt thereof, the
------------------------------
Borrower shall deliver to the Bank a copy of any Environmental Claim.
(x) Tax Returns. The Borrower shall deliver to the Bank, promptly upon the
-----------
request of the Bank, copies of all Federal, state, local and foreign tax
returns and reports filed by the Borrower in respect of taxes measured by
income (excluding sales, use and like taxes).
- 43 -
(xi) Notices of Tax Audits. Promptly, and in any event within 10 days after
---------------------
receipt thereof by the Borrower, the Borrower shall furnish to the Bank a
copy of each notice from any Governmental Authority received by the
Borrower of such Governmental Authority's intention to audit any Federal,
state, local or foreign tax return of the Borrower and a copy of each
subsequent notice with respect thereto from any such Governmental
Authority.
5.2g Additional Information; Visitation. The Borrower shall deliver
----------------------------------
to the Bank such additional financial statements, reports, financial projections
and other information, whether or not financial in nature, as the Bank may
reasonably request from time to time. The Borrower will permit the Bank and the
Bank's designated employees and agents to have access, at any time and from time
to time, upon reasonable notice and during normal business hours, to visit any
of the properties of the Borrower, to examine and make copies of any of its
books of record and account and such reports and returns as the Borrower may
file with any Governmental Authority and discuss the Borrower's affairs and
accounts with, and be advised about them by, any Authorized Officer and the
Borrower's certified public accountants.
5.3 Preservation of Existence; Qualification. At its own cost
----------------------------------------
and expense, the Borrower will do all things necessary to preserve and keep in
full force and effect its and Holdings respective corporate existence and
qualification under the laws of the state of their respective incorporation and
each state where, due to the nature of their respective activities or the
ownership of their respective properties, qualification to do business is
required or if not so qualified in any state, the lack of such qualification
will not materially affect the Bank's ability to enforce the Agreement, the
Notes or the other Loan Documents or materially affect the Borrower's or
Holdings' ability to carry on its business.
5.4 Compliance with Laws and Contracts. The Borrower shall be
----------------------------------
and shall cause Holdings to be in material compliance with all applicable
Governmental Rules (including, but not limited to, Environmental Laws). The
Borrower shall comply and shall cause Holdings to comply with all material
provisions of each material contract and agreement to which the Borrower or
Holdings is a party.
5.5 Accounting System; Books and Records. The Borrower shall
------------------------------------
maintain a system of accounting established and administered in accordance with
GAAP consistently applied and will set aside on its books all such proper
reserves as shall be required by GAAP. Further, the Borrower will maintain and
will cause Holdings to maintain proper books of record and account in accordance
with GAAP in which full, true and correct entries shall be made of all of its
respective properties and assets, including but not limited to the Collateral,
and its respective dealings and business affairs.
5.6 Payment of Taxes and Other Liabilities. The Borrower shall
--------------------------------------
promptly pay and discharge and cause Holdings to promptly pay and discharge all
obligations, accounts and liabilities to which it is subject, including but not
limited to all taxes, assessments and governmental charges and levies upon it or
upon any of its income, profits, or property, prior to the date on which
penalties attach thereto; provided, however, that for purposes of this
-------- -------
- 44 -
Agreement, neither the Borrower nor Holdings shall be required to pay any tax,
assessment, charge or levy (i) the payment of which is being contested in good
faith by appropriate and lawful proceedings diligently conducted and (ii) as to
which the Borrower shall have set aside on its books reserves for such claims as
are determined to be adequate by the application of GAAP consistently applied,
but only to the extent that failure to discharge any such liabilities would not
result in any additional material liability; and provided, further, that the
-------- -------
Borrower shall pay all such contested liabilities forthwith upon the
commencement of proceedings to foreclose any lien or other Encumbrance which may
have attached as security therefor.
5.7 Insurance. The Borrower shall maintain at all times
---------
adequate insurance to the satisfaction of the Bank with the insurers shown on
Schedule 4.16 or other financially sound and reputable insurers acceptable to
-------------
the Bank against such risks of loss as are customarily insured against and in
amounts customarily carried by Persons owning, leasing or operating similar
properties, including, but not limited to: (i) fire and theft and extended
coverage insurance in an amount at least equal to the total full replacement
cost of its insurable property, (including boiler coverage, if applicable); (ii)
liability insurance on account of injury to persons or property; (iii) insurance
which complies with all applicable workers' compensation, unemployment and
similar laws; (iv) interruption of the Borrower's business and loss of income;
(v) flood insurance, at any time when any real property of the Borrower on which
the Bank has a mortgage is designated to be in an area of special flood hazard;
and (vi) such other insurance as the Bank may reasonably request from time to
time, all of the foregoing to be acceptable to the Bank at all times during the
term hereof. The Borrower shall cause all such insurance to be issued with a
long form lender's and mortgagee's loss payable endorsement in favor of the
Bank, providing for at least 30 days' written notice to the Bank prior to
cancellation and the Borrower shall cause a copy of each policy and an original
certificate of insurance to be delivered to the Bank prior to the first
extension of credit under this Agreement and no later than 30 days prior to the
expiration of any such insurance coverage. The Borrower shall also maintain at
all times life insurance policies in the aggregate amount of $2,000,000 on the
life of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, which policies shall name the Borrower as
beneficiary and which policies may not be assigned to any Person nor borrowed
against. Prior to the first extension of credit under this Agreement and
thereafter within 90 days of the close of each Fiscal Year, the Borrower will
deliver to the Bank a schedule indicating all insurance coverage then in effect
for the Borrower, in such detail as the Bank may reasonably request from time to
time.
5.8 Maintenance of Properties. The Borrower shall maintain,
-------------------------
preserve, protect and keep its properties in good repair, working order and
condition (ordinary wear and tear excepted), and make all necessary and proper
repairs, renewals and replacements so that its business carried on in connection
therewith may be properly and advantageously conducted at all times.
5.9 Maintenance of Leases. The Borrower shall maintain in full
---------------------
force and effect all leases for its real properties, and all other leases for
personal property if the failure to maintain such personal property lease would
constitute a Material Adverse Change.
- 45 -
5.10 Maintenance of Patents, Trademarks, Permits, Etc. The
-------------------------------------------------
Borrower shall maintain in full force and effect, and investigate and prosecute
all infringements of, all patents, trademarks, trade names, copyrights and other
intellectual property and all licenses, franchises, permits and other
authorizations necessary in the judgment of the Borrower for the ownership and
operation of its properties and business.
5.11 Bank Accounts. Except as otherwise provided for herein,
-------------
the Borrower shall maintain all of its bank accounts with the Bank.
5.12 Plans and Benefit Arrangements. The Borrower shall, and
------------------------------
shall cause each ERISA Affiliate to, comply with ERISA, the Internal Revenue
Code and all other applicable Governmental Rules which are applicable to Plans
and Benefit Arrangements, except where the failure to do so, alone or in
conjunction with any other failure, would not result in a Material Adverse
Change.
5.13 Environmental Matters and Indemnification.
-----------------------------------------
(i) The Borrower shall be in material compliance with all Environmental Laws.
(ii) At least annually, the Borrower shall inspect all property owned or
leased by it and audit operations thereon to maintain compliance with all
Environmental Laws.
(iii) The Borrower shall employ appropriate technology in order to maintain
compliance with all applicable Environmental Laws, including without limitation
the replacement or updating, if required, of underground or aboveground storage
tanks owned by the Borrower.
(iv) The Borrower shall investigate and remediate any Contamination in
compliance with Governmental Rules, using a reputable environmental
remediation firm, and shall inform the Bank in writing from time to time as
to the status of any such remediation.
(v) Following the occurrence of an Event of Default the Bank shall have the
right, but not the duty, to enter upon the Collateral and to perform such
inspections, testing, sampling and analysis as it deems fit, invasive or
otherwise, of soil, groundwater, surface water, air or of Collateral, to
ascertain the presence of Contamination or to monitor compliance with the
environmental provisions of this Agreement or any of the other Loan
Documents. Following any Event of Default, or upon the discovery of the
presence of Contamination or a violation of any environmental provision of
this Agreement or the other Loan Documents, the Bank shall have the right,
but not the duty, to enter upon such real estate and perform such
investigation or remediation as it deems fit in order to protect its
security interests and the value of Collateral and such real estate. Any
expenses incurred by the Bank
- 46 -
under this item (v) shall be at the sole expense of Borrower and shall be
indemnified by Borrower pursuant to item (vi) below.
(vi) The Borrower shall defend and indemnify the Bank and hold it harmless
from and against all loss, liability, damage, expense, claims, costs, fines,
penalties, assessments (including without limitation, interest on any of the
foregoing), reasonable attorneys' fees and reasonable consultants' and
contractors' fees, asserted against or suffered or incurred by the Bank which
arise, result from or in any way relate to (A) a breach or violation of any
Environmental Law, (B) the imposition of any Encumbrance on the Borrower's
assets, (C) Contamination or the presence of a Hazardous Substance and (D) an
Environmental Claim. The Borrower's obligations hereunder shall arise at the
inception or upon the discovery of the event giving rise to the obligation to
indemnify, whether or not any Governmental Authority has taken or has threatened
any action, so that the Borrower shall bear all expenses from the outset. The
Borrower's obligations pursuant to this item (vi) shall survive the termination
of this Agreement and the repayment of the Obligations.
5.14 Key Management. The Borrower shall employ ▇▇▇▇▇▇▇▇ ▇.
--------------
▇▇▇▇▇▇▇▇ as President and Chief Executive Officer, and shall use its best
efforts to cause such key manager to continue to serve in such capacity. In the
event of the voluntary or involuntary termination of the key manager for any
reason, the Borrower shall, as soon as practicable, replace such individual with
another qualified manager with comparable management skills and experience in
the Borrower's industry and reasonably satisfactory to the Bank.
5.15 Further Assurances; Power of Attorney. At any time and
-------------------------------------
from time to time, upon the Bank's request, the Borrower shall make, execute and
deliver, and shall cause any other Person to make, execute and deliver, to the
Bank, and where appropriate shall cause to be recorded or filed, and from time
to time thereafter to be re-recorded and refiled, at such time and in such
offices and places as shall be deemed desirable by the Bank, any and all such
further Security Documents, certificates and other documents and instruments as
the Bank may consider necessary or desirable in order to effectuate, complete,
perfect, continue or preserve the obligations of the Borrower hereunder or under
the other Loan Documents and the Encumbrances created hereby and thereby. The
Borrower hereby appoints the Bank, and any of its officers, directors, employees
and authorized agents, with full power of substitution, upon any failure by the
Borrower to take or cause to be taken any action described in the preceding
sentence, to make, execute, record, file, re-record or refile any and each such
Security Document, instrument, certificate and document for and in the name of
the Borrower. The power of attorney granted pursuant to this Section 5.15 is
coupled with an interest and shall be irrevocable until all of the Obligations
are paid in full, the Revolving Credit Commitment is terminated and all Letters
of Credit have expired or have been terminated.
- 47 -
ARTICLE 6. NEGATIVE COVENANTS
From the date hereof and thereafter until the last to occur of (i) the
termination of the Revolving Credit Commitment and (ii) the payment in full of
the Notes and the other Obligations of the Borrower hereunder, the Borrower
agrees, for the benefit of the Bank, that it will comply with each of the
following negative covenants:
6.1 Indebtedness. The Borrower shall not nor shall the Borrower
------------
permit Holdings to create, incur, assume, cause, permit or suffer to exist or
remain outstanding, any Indebtedness, except for:
(i) Indebtedness owed by the Borrower to the Bank;
(ii) Indebtedness in existence as of the date hereof as set forth on Schedule
--------
6.1, including all extensions and renewals thereof; provided, however that
--- -------- -------
no such extension or renewal may involve an increase in the principal
amount of such Indebtedness or any other significant change in the terms
thereof;
(iii) Indebtedness due under Governmental Loans; provided, however
-------- -------
that (A) the outstanding principal amount of all such Indebtedness shall
not exceed, in the aggregate at any one time outstanding, $6,500,000 and (B) all
such Indebtedness (I) must be subject to an Intercreditor Agreement or (II) be
subordinated to the repayment of the Obligations, as to security and repayment,
in a manner in form and substance satisfactory to the Bank;
(iv) Indebtedness incurred by the Borrower, other than Indebtedness enumerated
in items (i) through (iii) above, incurred after the date hereof; provided,
--------
however, that the outstanding principal amount of such Indebtedness shall
-------
not exceed, in the aggregate at any one time, $1,500,000;
(v) Subordinated Indebtedness incurred by the Borrower and due to Holdings
pursuant to the Holdings Credit Agreement; and
(vi) Indebtedness incurred to finance a Funded Acquisition which indebtedness,
if not a Government Loan, must be subordinated to the Bank as to security
and payment in a manner in form and substance reasonably satisfactory to
the Bank.
6.2 Guarantees. The Borrower shall not enter into any
----------
Guarantees nor permit Holdings to enter into any Guarantees, except for (i)
endorsements of negotiable instruments for deposit and collection and similar
transactions in the ordinary course of business and (ii) unsecured Guaranties of
the Borrower to support the obligations of a wholly owned Subsidiary created
pursuant to Section 6.7.
- 48 -
6.3 Encumbrances. The Borrower shall not nor shall the Borrower
------------
permit Holdings to create, assume, incur, permit or suffer to exist any
Encumbrance upon any of their respective assets and properties, whether tangible
or intangible and whether now owned or in existence or hereafter acquired or
created and wherever located, nor acquire nor agree to acquire any assets or
properties subject to an Encumbrance, except for:
(i) The security interests granted to the Bank as security for the
Obligations, pursuant to Article 3 hereof and the Security Documents;
(ii) The Encumbrances in existence as of the date hereof, as listed on
Schedule 6.3;
------------
(iii) Permitted Encumbrances; and
(iv) Encumbrances on real or personal property in favor of sellers, lessors or
lenders, in order to secure indebtedness permitted pursuant to items (ii)
through (v) of Section 6.1.
6.4 Financial Covenants.
-------------------
(i) Current Ratio. At all times during the term hereof, the ratio of the
-------------
Borrower's Consolidated Current Assets to its Consolidated Current
Liabilities shall not be less than 1.5:1.0.
(ii) Minimum Consolidated Tangible Net Worth. At all times during the term
---------------------------------------
hereof, the Borrower's Consolidated Tangible Net Worth shall not be less
than:
Minimum Consolidated
---------------------------------------------------
Period Tangible Net Worth
------ ---------------------------------------------------
---------------------------------------------------------------------------------------------
From the Closing Date to and including $25,000,000
March 30, 1998
---------------------------------------------------------------------------------------------
From March 31, 1998 to and including An amount equal to the sum of (a) the Minimum
June 29, 1998 Consolidated Tangible Net Worth as set forth
immediately above plus (b) 50% of Consolidated Net
Income (if positive) for the Fiscal Quarter ending
March 31, 1998
---------------------------------------------------------------------------------------------
From June 30, 1998 through September An amount equal to the sum of (a) the required
29, 1998 and for each successive Minimum Consolidated Tangible Net Worth for the
fiscal period thereafter, each such immediately preceding period plus (b) 50% of
fiscal period beginning with the last Consolidated Net Income (if positive) earned
date of a Fiscal Quarter and during the Fiscal Quarter ending on the first day
continuing to the penultimate day of of the period being tested.
the next Fiscal Quarter.
---------------------------------------------------------------------------------------------
- 49 -
(iii) Leverage. The Borrower's ratio of Consolidated Total
--------
Indebtedness to EBITDA, shall at all times not exceed 2.50:1.00.
(iv) Consolidated Debt Service Ratio. As at the end of each Fiscal Quarter,
-------------------------------
the ratio of the Borrower's EBITDA to Consolidated Debt Service shall not be
less than 2.0:1.0.
6.5 Capital Expenditures. The Borrower shall not in any Fiscal
--------------------
Year make Capital Expenditures in excess of $10,0000,000; provided however that
for purposes of this Section 6.5 the acquisition and installation of the bar
finishing facility to be financed by the proceeds of the Term Loan shall not be
treated as a Capital Expenditure.
6.6 Limitation on Dividends. The Borrower shall not declare or
-----------------------
pay any dividends on, or make any distributions relating to or returns of
capital on, any of its capital stock; provided, however, that, so long as no
-------- -------
Default or Event of Default exists or would be caused by such distribution, the
Borrower may pay dividends in any Fiscal Year which do not in the aggregate
exceed fifty percent (50%) of the Borrower's Excess Cash Flow for such Fiscal
Year.
6.7 Liquidations, Mergers, Consolidations, Acquisitions, Etc.
---------------------------------------------------------
The Borrower shall not dissolve, liquidate or wind up its affairs, or become a
party to any merger or consolidation, or acquire by purchase, lease or otherwise
all or substantially all of the assets, capital stock or other equity interests
of any other Person, except for:
(i) the consolidation or merger of any wholly-owned Subsidiary with or into
the Borrower or with or into any other wholly-owned Subsidiary;
(ii) the creation of Holdings;
(iii) the creation of a wholly owned Subsidiary to consummate a transaction
permitted in items (iv), (v) and (vi) below;
(iv) mergers, stock acquisitions or asset acquisitions, the cost of which to
the Borrower either in the form of capital investment or assumption of
liabilities (including without limitation (A) the issuance of a Guaranty
permitted by Section 6.2 hereof, (B) a loan or advance permitted by Section 6.9
hereof or (C) investments permitted by Section 6.10 hereof) in the aggregate in
any one Fiscal Year is $2,000,000 or less;
(v) mergers, stock acquisitions or asset acquisitions, the cost of which to
the Borrower either in the form of capital investment or assumption of
liabilities (including without limitation (A) the issuance of a Guaranty
permitted by Section 6.2 hereof (B) a loan or advance permitted by Section
6.9 hereof or (C) investments permitted by Section 6.10 hereof) in the
aggregate in any one Fiscal Year is greater than $2,000,000; provided, that
--------
for each
- 50 -
such merger or acquisition the amount by which such investment or
assumption of liabilities exceeds $2,000,000 in the aggregate in any one
Fiscal Year shall, immediately upon the consummation of such merger or
acquisition, be added to the minimum required amount of the Borrower's
Tangible Net Worth for the purposes of Section 6.4; and
(vi) a Funded Acquisition.
The foregoing notwithstanding, no merger, stock acquisition or asset
acquisition otherwise permitted by items (iii), (iv) or (v) above shall be
permitted unless both immediately prior to and immediately after such merger or
acquisition and taking into account such merger or acquisition no Default or
Event of Default has occurred and is continuing.
6.8 Dispositions of Assets. The Borrower shall not sell,
----------------------
convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily
or involuntarily, any of its properties or assets, whether tangible or
intangible (including but not limited to sales, assignments, discounts or other
dispositions of Accounts, contract rights, Chattel Paper, Equipment or General
Intangibles, with or without recourse, and sale/leaseback transactions), except
for:
(i) any sale of Inventory in the ordinary course of business;
(ii) any sale, transfer or lease in the ordinary course of business of assets
which are no longer necessary or required in the conduct of the Borrower's
business; and
(iii) any sale, transfer or lease of assets in the ordinary
course of business which assets are replaced by substitute assets acquired or
leased by the Borrower; provided, however, that such substitute assets are
-------- -------
subject to a first and prior lien and security interest in favor of the Bank to
the extent they are not subject to an Encumbrance in favor of the seller or
lessor of such assets.
The foregoing notwithstanding, Net Cash Proceeds aggregating during the term
hereof in excess of $2,500,000 derived from a disposition of assets permitted by
items (ii) and (iii) hereof shall be applied to reduce the outstanding principal
balance of the Term Loan in accordance with the provisions of Section 2.2c
hereof.
6.9 Loans and Other Advances. The Borrower shall not, nor shall
------------------------
the Borrower allow Holdings to make loans or other advances of funds, except
that (i) the Borrower may make loans or other advances to a wholly owned
Subsidiary created pursuant to Section 6.7 to fund acquisitions permitted by
Section 6.7 and (ii) Holdings may advance funds to the Borrower under and
pursuant to the Holdings Credit Agreement.
6.10 Investments. The Borrower shall not at any time nor shall
-----------
it allow Holdings at any time purchase, acquire or own any stock, bonds, notes,
or securities of, or any partnership interest (whether general or limited) in,
or any other interest in, or make any capital
- 51 -
contribution to, any other Person, or become a joint venture partner in
any joint venture, or agree, become or remain liable to do any of the foregoing,
except for:
(i) debt securities having a maturity of not more than one year issued or
guaranteed by the United States government or by an agency or
instrumentality thereof;
(ii) certificates of deposit, bankers acceptances and time deposits, which in
each case mature within one year from the date of purchase thereof and
which are issued by a Qualified Bank;
(iii) commercial paper maturing in 270 days or less from the date of issuance
which, at the time of acquisition by the Borrower either (A) is accorded the
highest rating by Standard and Poor's Rating Group, a division of McGraw Hill,
Inc. or ▇▇▇▇▇'▇ Investors Service, Inc. or (B) is issued by the Bank;
(iv) direct obligations of the United States of America or any agency or
instrumentality of the United States of America, the payment or guarantee
of which constitutes a full faith and credit obligation of the United
States of America, in each case maturing in 12 months or less from the date
of acquisition;
(v) ownership of the capital stock of Subsidiaries as permitted by Section
6.7 of this Agreement; provided, however, Holdings shall not own the stock of
-------- -------
any Subsidiary; and
(vi) money market funds or income funds with a history of maintaining a stable
net asset value per share.
6.11 Affiliate Transactions. The Borrower shall not enter into
----------------------
or carry out any transaction with an Affiliate (including, without limitation,
purchasing property or services from or selling property or services to, any
Affiliate or other Person) unless such transaction (i) is not otherwise
prohibited by this Agreement, (ii) is entered into in the ordinary course of
business upon fair and reasonable arm's-length terms and conditions which are
fully disclosed to the Bank and (iii) is in accordance with all applicable
Governmental Rules.
6.12 Use of Proceeds. The Borrower shall not use any proceeds
---------------
of the Loans or any Letter of Credit either directly or indirectly (i) for the
purpose of "purchasing or carrying any margin stock" within the meaning of
Regulations G, T, U or X, or (ii) (x) to knowingly purchase any Ineligible
Securities from a Section 20 Subsidiary during any period in which such Section
20 Subsidiary makes a market in such Ineligible Security, (y) to knowingly
purchase during the underwriting or placement period Ineligible Securities being
underwritten or privately placed by a Section 20 Subsidiary or (z) to make
payments of principal or interest on Ineligible Securities underwritten or
privately placed by a Section 20 Subsidiary and issued by or for the benefit of
the Borrower or an Affiliate of the Borrower.
- 52 -
6.13 Change of Business. The Borrower (i) shall not engage
------------------
directly or indirectly in any business other than the production, conversion or
marketing of specialty and low alloy steels or (ii) shall not allow Holdings to
engage in any business except as set forth in Section 4.23.
6.14 Change of Fiscal Year. The Borrower shall not change its
---------------------
Fiscal Year which now ends on December 31.
6.15 ERISA. The Borrower shall not:
-----
(i) (A) With respect to any Plan or Money Purchase Plan, incur any material
liability for failure to make timely payment of any contribution or
installment required under Section 302 of ERISA and Section 412 of the
Internal Revenue Code, whether or not waived, or otherwise materially fail
to comply with the funding provisions set forth therein, (B) with respect
to any Plan or Money Purchase Plan, suffer to exist any lien under Section
302(f) of ERISA or Section 412(n) of the Internal Revenue Code against the
property and rights to property of the Borrower or any ERISA Affiliate or
(C) terminate, or permit any ERISA Affiliate to terminate, any Plan or
Money Purchase Plan in a manner which could reasonably be expected to
result in the imposition of a lien upon the property or rights to property
of the Borrower or any ERISA Affiliate pursuant to Section 4068 of ERISA;
(ii) Engage in any "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code) with respect to any
"employee benefit plan" (as defined in Section 3(3) of ERISA) for which a
statutory or administrative exemption is not available under Section 408 of
ERISA or Section 4975 of the Internal Revenue Code; or
(iii) Partially or completely withdraw from any Multiemployer Plan where such
withdrawal could reasonably be expected to subject the Borrower or any ERISA
Affiliate to Withdrawal Liability.
6.16 Amendments to Certain Documents. The Borrower shall not
-------------------------------
amend in any material respect its certificate of incorporation, by-laws, or
other organizational documents, or the Asset Purchase Agreement, the Armco
Lease, the several USWA Agreements, the five year power supply contract entered
in between the Borrower and Duquesne Light Company on July 27, 1994, without
providing at least 10 days' prior written notice to the Bank and, in the event
that such amendment would be adverse to the Bank, as determined in the Bank's
sole discretion, obtaining the prior written consent of the Bank.
ARTICLE 7. CONDITIONS TO MAKING EXTENSIONS OF CREDIT
7.1 All Loans. The obligation of the Bank to make any Loan is
---------
subject to the satisfaction of each of the following conditions precedent:
- 53 -
7.1a Work Cash Sweep Agreement. No advance pursuant to Section 2.1
-------------------------
shall occur if either the Borrower or the Bank has terminated the Working Cash
Sweep Agreement.
7.1b Term Loan Disbursement. As to each disbursement under the Term
----------------------
Loan Commitment the Bank shall have received a request satisfying the conditions
of Section 2.2b.
7.1c No Default or Event of Default. The Borrower shall have
------------------------------
performed and complied with all agreements and conditions which are required
hereby or by any other Loan Document to be performed or complied with by it
prior to such Loan being made and, at the time of such Loan, no Default or Event
of Default has occurred and is continuing or will result from the making such
Loan.
7.1d No Material Adverse Change. At the time of making such Loan,
--------------------------
no Material Adverse Change has occurred and is continuing.
7.1e Representations Correct. The representations and warranties
-----------------------
contained in Article 4 hereof and in the other Loan Documents and otherwise made
in writing by or on behalf of the Borrower in connection with the transactions
contemplated by this Agreement shall be (i) correct when made and (ii) correct
in all material respects at the time of such Loan.
Each request for a Loan whether made orally or in writing, shall be deemed to
be, as of the time made, a certification by the Borrower as to the accuracy of
the matters set forth in Sections 7.1c, 7.1d and 7.1e.
7.2 Initial Extension of Credit. The obligation of the Bank to
---------------------------
make the first Loan is subject to the satisfaction of each of the following
conditions precedent, in addition to the conditions precedent set forth in
Section 7.1:
7.2a Credit Agreement. Receipt by the Bank of a fully-executed copy
----------------
of this Agreement.
7.2b Schedules. Receipt by the Bank of all schedules and exhibits
---------
to this Agreement and the other Loan Documents prepared by the Borrower, and a
determination by the Bank that all exceptions shown on such schedules are
satisfactory to it.
7.2c Notes. Receipt by the Bank of the Notes, each executed by
------
the Borrower.
7.2d Security Agreement. Receipt by the Bank of a Security
------------------
Agreement executed by the Borrower.
7.2e Financing Statements. Receipt by the Bank of all Uniform
--------------------
Commercial Code financing statements or amendments to existing financing
statements requested by it, each signed by the Borrower.
- 54 -
7.2f Mortgage. Receipt by the Bank of the Second Amendment to
--------
Mortgage executed by the Borrower and in recordable form.
7.2g Working Cash Agreements. The Bank shall have received duly
-----------------------
executed counterpart originals of the Working Cash Sweep Agreement and the Trust
Agreement.
7.2h Landlord's Waivers. Receipt by the Bank of Landlord's Waivers
------------------
for the real property location leased by the Borrower pursuant to the Armco
Lease executed by the lessor of such location.
7.2i Subordination Agreement. Receipt by the Bank of the
-----------------------
Subordination Agreement duly executed by a Borrower and Holdings.
7.2j Deposit Account; Lockbox Agreements. Receipt by the Bank of
-----------------------------------
(i) evidence satisfactory to it that the Borrower has opened a deposit account
with the Bank, (ii) the fully-executed Lockbox Agreement.
7.2k Hazard Liability Insurance. Receipt by the Bank of (i) copies
--------------------------
of the Borrower's insurance policies, containing long-form lender loss payable
and mortgagee endorsements satisfactory to the Bank and which in all other
respects comply with the requirements of Sections 4.17 and 5.7 and the insurance
requirements set forth in the other Loan Documents, (ii) satisfactory evidence
of flood insurance and (iii) current insurance certificates for all such
policies.
7.2l Lien Searches. Receipt by the Bank of UCC, tax lien and
-------------
judgment searches satisfactory to the Bank.
7.2m Business Plan. Receipt by the Bank of the Borrower's business
-------------
plan for the Fiscal Year ending December 31, 1998 in form and substance
satisfactory to the Bank.
7.2n Corporate Documents of Borrower. Receipt by the Bank of the
-------------------------------
following corporate documents for the Borrower:
(i) a copy of its certificate of incorporation, certified as true and correct
by the Secretary of State of the state of its incorporation not more than
30 days prior to the date hereof;
(ii) good standing certificates issued by the Secretaries of State of the
state where the Borrower is incorporated and each state where the Borrower is
required to be qualified to do business, each dated not more than 30 days prior
to the date hereof;
(iii) resolutions of its board of directors authorizing the execution of the
Loan Documents and the performance by the Borrower pursuant thereto, certified
by the
- 55 -
secretary of the Borrower as being true, correct, complete and in effect
as of the Closing Date and in form and substance satisfactory to the Bank;
(iv) a copy of its by-laws and all amendments thereto, certified by the
secretary of the Borrower as being true, correct, complete and in effect; and
(v) an incumbency certificate for the Borrower, showing the names of the
officers of the Borrower, their respective titles and containing their true
signatures.
7.2o Opinion of Counsel. Receipt by the Bank of an opinion of
------------------
counsel to the Borrower, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire, addressed to the Bank and in
all respects satisfactory to the Bank.
7.2p No Default Certificates. Both on the Closing Date and on the
-----------------------
Funding Date (after giving effect to the Loan or other extension of credit made
on the Funding Date) receipt by the Bank of a certificate executed by an
Authorized Officer, stating that, as of such date, and no Default or Event of
Default exists or will exist after giving effect to the transaction entered into
by the Borrower under the Loan Documents, no Material Adverse Change has
occurred and all representations and warranties made by the Borrower in the
Agreement and the other Loan Documents are true and correct as of such date.
7.2q Cash Management Agreements. Receipt by the Bank of the various
--------------------------
documents each executed by the Borrower required by the Bank to establish the
various accounts required to implement the cash management program agreed upon
between the Borrower and the Bank.
7.2r Request for Initial Disbursement. Receipt by the Bank of
--------------------------------
written instructions addressed to the Bank and executed by the Borrower,
instructing the Bank as to the disbursement of the Loans to be made on the
Funding Date, and containing complete wire transfer instructions, if applicable.
7.2s Closing Fee. Receipt by the Bank of the Closing Fee.
-----------
7.2t Legal Fees. Receipt by the Bank's counsel, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
----------
P.C., of the legal fees and expenses incurred by it in connection with the
preparation and negotiation of the Loan Documents and the closing.
ARTICLE 8. EVENTS OF DEFAULT; REMEDIES
8.1 Events of Default. Each of the following events shall
-----------------
constitute an Event of Default:
- 56 -
8.1a Nonpayment of Obligations. The Borrower shall default (i) in
-------------------------
any payment of principal of either Note when due and such default in the payment
of principal shall have continued for a period of two Business Days after such
due date or (ii) in the payment of interest on either Note when due or in the
payment of any of the Fees, expenses or other amounts due hereunder or under any
of the other Loan Documents when due, and such default in payment of interest,
Fees, expenses or other amounts shall have continued for a period of five
Business Days after such due date.
8.1b Nonpayment of Other Indebtedness. The Borrower shall (i)
--------------------------------
default in the payment of any other Indebtedness, which Indebtedness has an
aggregate principal outstanding balance of $100,000 or more, when such payment
is due (whether by acceleration or otherwise) and any applicable grace periods
with respect thereto have expired, or (ii) default in the performance of any
term of any agreement under which any such Indebtedness is created, if the
effect of any default described in this item (ii), after the expiration of any
grace periods applicable thereto, is to cause such Indebtedness to become, or to
permit the holder or holders of such Indebtedness (or any Person on behalf of
such holder) to declare such Indebtedness due prior to its stated maturity.
8.1c Insolvency, Etc.
----------------
(i) Involuntary Proceedings. A proceeding shall have been instituted in a
-----------------------
court having jurisdiction seeking a decree or order for relief in respect
of the Borrower or Holdings in an involuntary case under the Federal
bankruptcy laws, or any other similar applicable Federal or state law, now
or hereafter in effect, or for the appointment of a receiver, liquidator,
trustee, sequestrator or similar official for the Borrower or Holdings or
for a substantial part of their respective property, or for the winding up
or liquidation of their respective affairs, and such shall remain
undismissed or unstayed and in effect for a period of 60 days.
(ii) Voluntary Proceedings. The Borrower or Holdings shall institute
---------------------
proceedings to be adjudicated a voluntary bankrupt, or shall consent to the
filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under the Federal bankruptcy laws,
or any other similar applicable Federal or state law now or hereinafter in
effect, or shall consent or acquiesce to the filing of any such petition,
or shall consent to or acquiesce in the appointment of a receiver,
liquidator, trustee, sequestrator or similar official for the Borrower or
Holdings or for a substantial part of their respective property, or shall
make an assignment for the benefit of creditors, or shall be generally
unable to pay their respective debts generally as they become due, or
action shall be taken by the Borrower or Holdings in furtherance of any of
the foregoing.
8.1d Dissolution; Cessation of Business. The Borrower shall
----------------------------------
terminate its existence or cease to exist or permanently cease operations.
- 57 -
8.1e ERISA. (i) One or more of the following events occur which
-----
results in or could result in liability to the Borrower:
(A) A Notice of Intent to Terminate any Plan (including any Plan of an
ERISA Affiliate) is filed under Section 4041(c) of ERISA;
(B) Proceedings shall be instituted for the appointment of a trustee by the
appropriate United States court to administer any Plan (including any Plan of an
ERISA Affiliate);
(C) the PBGC shall institute proceedings to terminate any Plan (including
any Plan of an ERISA Affiliate) or to appoint a trustee to administer any such
Plan;
(D) A notice assessing Withdrawal Liability with respect to any
Multiemployer Plan (including any Multiemployer Plan of an ERISA Affiliate)
shall have been received by the Borrower or any ERISA Affiliate; or
(ii) Any Governmental Rule is adopted, changed or interpreted by any
Governmental Authority or agency or court with respect to or otherwise
affecting one or more Plans, Multiemployer Plans or Benefit Arrangements
which, in the reasonable opinion of the Bank, could have a material adverse
effect on the priority of any lien or security interest in favor of the
Bank as established or described in this Agreement or the other Loan
Documents.
8.1f Adverse Judgments. The aggregate amount of final judgments
-----------------
against the Borrower or Holdings for which no further appellate review exists
shall, at any one time, exceed, by $50,000 or more, the aggregate amount of
insurance proceeds available to pay such judgments.
8.1g Failure to Take Certain Action. The Borrower shall fail to
------------------------------
take measures satisfactory to the Bank, within 30 days after notice to the
Borrower by the Bank, with respect to any action, suit, investigation,
proceeding or Environmental Claim then pending or threatened against the
Borrower the outcome of which, in the judgment of the Bank, may be material.
8.1h Failure to Comply with Loan Documents.
-------------------------------------
(i) Failure to Comply with Negative Covenants. The Borrower shall default in
-----------------------------------------
the due performance or observance of any covenant contained in Article 6 of
this Agreement.
(ii) Failure to Comply with Other Covenants and Loan Documents. The Borrower
---------------------------------------------------------
shall default in the due performance or observance of any covenant,
condition or provision set forth in this Agreement or any of the other Loan
Documents which is not set forth elsewhere in this Section 8.1, and such
default described in this item (ii) shall not be
- 58 -
remedied for a period of 30 days after the earlier of (A) such default becoming
known to any Authorized Officer or (B) notice of such default being delivered by
the Bank to the Borrower.
8.1i Misrepresentation. Any representation or warranty made by the
-----------------
Borrower in any Loan Document to which it is a party is untrue in any material
respect as of the date made, or any schedule, statement, report, notice,
certificate or other writing furnished by the Borrower to the Bank is untrue in
any material respect on the date as of which the facts set forth therein are
stated or certified.
8.1j Invalidity, Etc. of Loan Documents. Any material provision of
----------------------------------
this Agreement or any of the other Loan Documents shall at any time for any
reason cease to be valid and binding on the Borrower shall be declared to be
null and void, or the validity or enforceability thereof shall be contested by
the Borrower, or the Borrower shall deny that it has any or further liability or
obligation under any Loan Document to which it is a party.
8.1k Material Adverse Change. The occurrence of any Material
-----------------------
Adverse Change.
8.1l Termination of Working Cash Sweep Agreement. The termination
-------------------------------------------
upon thirty (30) days prior written notice by either the Bank or the Borrower of
the Working Cash Sweep Agreement.
8.2 Remedies.
--------
8.2a Events of Default Under Sections 8.1c and 8.1d. Upon the
----------------------------------------------
occurrence of an Event of Default set forth in Sections 8.1c or 8.1d, the
Revolving Credit Commitment shall automatically terminate and the Notes,
interest accrued thereon and all other Obligations of the Borrower to the Bank
shall become immediately due and payable, without the necessity of demand,
presentation, protest, notice of dishonor or notice of default, all of which are
hereby expressly waived by the Borrower. Thereafter, the Bank shall have no
further obligation to make any additional Loans or other extensions of credit
hereunder. In addition, during any 60-day period described in Section 8.1c(i),
the Bank shall not have any obligation to make additional Loans hereunder.
8.2b Remaining Events of Default. Upon the occurrence and during
---------------------------
the continuance of any Event of Default set forth in Sections 8.1a, 8.1b, 8.1e,
8.1f, 8.1g, 8.1h, 8.1i, 8.1j, 8.1k or 8.1l, the Bank shall have no further
obligation to make any additional Loans hereunder and the Bank may, at its
option, declare the Revolving Credit Commitment terminated and the Notes,
interest accrued thereon and all other Obligations of the Borrower to the Bank
to be due and payable, without the necessity of demand, presentation, protest,
notice of dishonor or notice of default, all of which are hereby expressly
waived by the Borrower. Thereafter, the Bank shall have no further obligation
to make any additional Loans hereunder.
8.2c Additional Remedies. In addition to the remedies set forth
-------------------
above, upon the occurrence of any Event of Default, the Bank shall have all of
the rights and remedies granted
- 59 -
to it under this Agreement and the other Loan Documents and all other rights and
remedies granted to creditors by law, in equity, or otherwise.
8.2d Exercise of Remedies; Remedies Cumulative. No delay on the
-----------------------------------------
part of the Bank or failure by the Bank to exercise any power, right or remedy
under this Agreement or any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any power, right or remedy
or any abandonment or discontinuance of steps to enforce such right, power or
remedy preclude other or further exercises thereof, or the exercise of any other
power, right or remedy. The rights and remedies in this Agreement and the other
Loan Documents are cumulative and not exclusive of any rights or remedies
(including, without limitation, the right of specific performance) which the
Bank would otherwise have.
ARTICLE 9. GENERAL PROVISIONS
9.1 Amendments and Waivers. The Bank and the Borrower may from
----------------------
time to time enter into amendments, extensions, supplements and replacements to
and of this Agreement and the other Loan Documents to which they are parties,
and the Bank may from time to time waive compliance with a provision of any of
such documents. No amendment, extension, supplement, replacement or waiver
shall be effective unless it is in writing and is signed by the Bank and the
Borrower. Each waiver shall be effective only for the specific instance and for
the specific purpose for which it is given. All of the rights of the Bank set
forth in this Agreement or in the other Loan documents shall apply to any
amendment, extension, supplement and replacement to and of this Agreement and
the other Loan Documents.
9.2 Taxes. The Borrower shall pay any and all stamp, document,
-----
transfer and recording taxes, filing fees and similar impositions payable or
hereafter determined by the Bank to be payable in connection with this
Agreement, the other Loan Documents and any other documents, instruments and
transactions pursuant to or in connection with any of the Loan Documents. The
Borrower agrees to save the Bank harmless from and against any and all present
and future claims or liabilities with respect to, or resulting from, any delay
in paying or failure to pay any such taxes or similar impositions. The
obligations of the Borrower pursuant to this Section 9.2 shall survive the
termination of this Agreement and the repayment of the Obligations.
9.3 Expenses. The Borrower shall pay:
--------
(i) All reasonable costs and expenses of the Bank (including without
limitation the reasonable fees and disbursements of the Bank's counsel, which
may include the Bank's in-house counsel) in connection with the preparation,
execution and delivery of this Agreement and the other Loan Documents and any
and all other documents and instruments prepared in connection herewith and
therewith, including but not limited to all amendments,
- 60 -
waivers, consents and other documents and instruments prepared or entered into
from time to time, including after the Closing Date;
(ii) All reasonable costs and expenses of the Bank (including without
limitation the reasonable fees and disbursements of the Bank's counsel) in
connection with (A) the enforcement of this Agreement and the other Loan
Documents arising pursuant to a breach by any Loan Party of any of the terms,
conditions, representations, warranties or covenants of any Loan Document to
which he or it is a party, and (B) defending or prosecuting any actions, suits
or proceedings relating to any of the Loan Documents;
(iii) All reasonable costs and expenses of the Bank (including without
limitation the reasonable fees and disbursements of the Bank's counsel,
consultants and contractors) in connection with environmental investigation,
testing or other due diligence (A) contemplated by this Agreement and the other
Loan Documents, and (B) following the occurrence of an Event of Default; and
(iv) All reasonable costs and expenses incurred by the Bank in connection with
its periodic review and evaluation of the Collateral for the Loans.
All of such costs and expenses shall be payable by the Borrower to the Bank upon
demand or as otherwise agreed upon by the Bank and the Borrower, and shall
constitute Obligations under this Agreement. The Borrower's obligation to pay
such costs and expenses shall survive the termination of this Agreement and the
repayment of the Obligations.
9.4 Notices.
-------
9.4a Notice to the Borrower. All notices required to be delivered
----------------------
to the Borrower pursuant to this Agreement shall be in writing and shall be sent
to the following address, by hand delivery, recognized national overnight
courier service, telecopier or by the United States certified mail, return
receipt requested:
Universal Stainless & Alloy Products, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
9.4b Notice to the Bank. All notices required to be delivered to
------------------
the Bank pursuant to this Agreement shall be in writing and shall be sent to the
following address, by hand delivery, recognized national overnight courier
service, telecopier or by United States certified mail, return receipt
requested:
- 61 -
PNC Bank, National Association
One PNC Plaza, 2nd Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Energy, Metals and Mining Segment
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
9.4c Effectiveness of Notices. All such notices shall be effective
------------------------
three days after mailing, or on the date of telecopy transmission or when
received, whichever is earlier. The Borrower and the Bank may each change the
address for service of notice upon it by a notice in writing to the other party
hereto.
9.5 Participations.
--------------
9.5a Sale of Participations. The Bank may, in the ordinary course
----------------------
of its commercial banking business and in accordance with applicable law, and
without the consent of the Borrower, at any time sell to one or more
Participants (which Participants may be Affiliates of the Bank) Participations
in the Revolving Credit Commitment, the Loans, the Notes, the Letters of Credit
and the other interest of the Bank hereunder provided that each such
Participation shall be in an initial minimum amount of $1,000,000. In the event
of any such sale of a Participation, the Bank's obligations under this Agreement
to the Borrower shall remain unchanged, the Bank shall remain solely responsible
for its performance under this Agreement, the Bank shall remain the holder of
the Notes made payable to it for all purposes under this Agreement and the
Borrower shall continue to deal solely and directly with the Bank in connection
with the Bank's rights and obligations under this Agreement and the other Loan
Documents.
9.5b Right of Setoff. The Borrower agrees that if amounts
---------------
outstanding under this Agreement and the Notes are due and unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have, to the extent
permitted by applicable law, the right of setoff in respect of its Participation
in amounts owing under this Agreement and the Notes to the same extent as if the
amount of its Participation were owing directly to it as a lender under this
Agreement or the Notes.
9.5c Withholding of Income Taxes. At least five Business Days prior
---------------------------
to the first date on which interest or fees are payable hereunder for the
account of any Participant, each Participant that is not incorporated under the
laws of the United States or a state thereof agrees that it will deliver to the
Borrower and the Bank two duly completed and executed copies of either (i)
United States Internal Revenue Service Form W-9, 4224 or 1001 or other
applicable form prescribed by the Internal Revenue Service, certifying in each
case that such Participant is entitled to receive payments under this Agreement
and the Notes without deduction or
- 62 -
withholding of any United States Federal income taxes, or is subject to such tax
at a reduced rate under an applicable tax treaty or (ii) United States Internal
Revenue Service Form W-8, or another applicable form prescribed by the Internal
Revenue Service, or a certificate of such Participant indicating in each case
that no such exemption or reduced rate is allowable with respect to such
payments. Each Participant which delivers a Form W-8, W-9, 4224 or 1001 further
undertakes to deliver to the Borrower and the Bank two additional copies of such
form (or a successor form) on or before the date that such form expires or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent form so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably required by the Borrower or the Bank,
either certifying that such Participant is entitled to receive payments under
this Agreement and the Notes without deduction or withholding of any United
States Federal income taxes or is subject to such tax at a reduced rate under an
applicable tax treaty or stating that no such exemption or reduced rate is
allowable. The Bank shall be entitled to withhold United States Federal income
taxes at the full withholding rate, unless the Participant establishes an
exemption, or at the applicable reduced rate, as established pursuant to this
provisions of this Section 9.5c.
9.6 Successors and Assigns. This Agreement shall be binding
----------------------
upon the Borrower and the Bank and their respective successors and assigns, and
shall inure to the benefit of the Borrower, the Bank and their respective
successors and assigns; provided, however, that the Borrower shall not assign
-----------------
its rights or duties hereunder or under any of the other Loan Documents without
the prior written consent of the Bank.
9.7 Confidentiality. The Bank shall keep confidential and not
---------------
disclose to any Person, other than its directors, officers, employees,
Affiliates and agents, and to actual or potential Participants, all non-public
information concerning the Borrower and the Borrower's Affiliates which comes
into the Bank's possession during the term hereof. Notwithstanding the
foregoing, the Bank may disclose information concerning the Borrower (i) in
accordance with normal banking practices and the Bank's policies concerning
disclosure of such information, (ii) pursuant to what the Bank believes to be
the lawful requirements or request of any Governmental Authority regulating
banks or banking, (iii) as required by any Governmental Rule, judicial process
or subpoena and (iv) to its attorneys, accountants and auditors.
9.8 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or enforceability without
invalidating the remaining portions hereof in such jurisdiction or affecting the
validity or enforceability of such or any other provision hereof in any other
jurisdiction.
9.9 Interest Limitation. Notwithstanding anything to the
-------------------
contrary herein contained, the total liability of the Borrower for payment of
interest pursuant hereto shall not exceed the maximum amount, if any, of such
interest permitted by any applicable Governmental Rule to be contracted for,
charged or received, and if any payment by the
- 63 -
Borrower to the Bank includes interest in excess of such a maximum amount, the
Bank shall apply such excess to the reduction of the unpaid principal amount due
pursuant hereto, or if none is due, such excess shall be refunded to the
Borrower; provided that, to the extent permitted by applicable Governmental
--------
Rules, in the event the interest is not collected, is applied to principal or is
refunded pursuant to this sentence and interest thereafter payable pursuant
hereto shall be less than such maximum amount, then such interest thereafter so
payable shall be increased up to such maximum amount to the extent necessary to
recover the amount of interest, if any, theretofore uncollected, applied top
principal or refunded pursuant to this sentence. Any such application or refund
shall not cure or waive any Default or Event of Default. In determining whether
or not any interest payable under this Agreement exceeds the highest rate
permitted by law, any non-principal payment (except payments specifically stated
in this Agreement to be "interest") shall be deemed, to the extent permitted by
applicable law, to be an expense, fee, premium or penalty rather than interest.
To the extent permitted by applicable law, the Borrower hereby waives any
provision of law which renders any provision hereof prohibited, unenforceable or
not authorized in any respect.
9.10 Survival. Except as otherwise provided in Sections 4.20,
--------
5.13, 9.2 and 9.3, all representations, warranties, covenants and agreements of
the Borrower contained herein or in the other Loan Documents or made in writing
in connection herewith shall survive the issuance of the Notes and shall
continue in full force and effect so long as the Borrower may borrow hereunder
and so long thereafter until all of the Obligations are paid in full.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
-------------
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING
CONFLICT OF LAWS, EXCEPTING APPLICABLE FEDERAL LAW AND EXCEPT ONLY TO THE EXTENT
PRECLUDED BY THE MANDATORY APPLICATION OF THE LAW OF ANOTHER JURISDICTION.
9.12 FORUM. THE PARTIES HERETO AGREE THAT ANY ACTION OR
-----
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS TO WHICH THE BORROWER IS A PARTY MAY BE COMMENCED IN THE COURT OF
COMMON PLEAS OF ALLEGHENY COUNTY, PENNSYLVANIA OR IN ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ FOR THE WESTERN DISTRICT OF PENNSYLVANIA, AND THE PARTIES HERETO
AGREE THAT A SUMMONS AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING IN EITHER
OF SUCH COURTS SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION
IF SERVED PERSONALLY OR BY CERTIFIED MAIL TO THE PARTIES AT THEIR ADDRESSES SET
FORTH IN SECTION 9.4, OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA. FURTHER, THE BORROWER HEREBY SPECIFICALLY
CONSENTS TO THE PERSONAL JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY
COUNTY, PENNSYLVANIA AND THE
- ▇▇ -
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ FOR THE WESTERN DISTRICT OF PENNSYLVANIA AND
WAIVES AND HEREBY ACKNOWLEDGES THAT IT IS ESTOPPED FROM RAISING ANY OBJECTION
BASED ON FORUM NON CONVENIENS, ANY CLAIM THAT EITHER SUCH COURT LACKS PROPER
--------------------
VENUE OR ANY OBJECTION THAT EITHER SUCH COURT LACKS PERSONAL JURISDICTION OVER
THE BORROWER SO AS TO PROHIBIT EITHER SUCH COURT FROM ADJUDICATING ANY ISSUES
RAISED IN A COMPLAINT FILED WITH EITHER SUCH COURT AGAINST THE BORROWER BY THE
BANK CONCERNING THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR PAYMENT TO THE
BANK. THE BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT THE CHOICE OF FORUM
CONTAINED IN THIS SECTION 9.12 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT
OF ANY JUDGMENT OBTAINED IN ANY FORUM OR THE TAKING OF ANY ACTION UNDER THE LOAN
DOCUMENTS TO ENFORCE THE SAME IN ANY APPROPRIATE JURISDICTION.
9.13 Non-Business Days. Whenever any payment hereunder or
-----------------
under the Notes is due and payable on a day which is not a Business Day, such
payment may be made on the next succeeding Business Day (except as specifically
required by the terms of this Agreement), and such extension of time shall in
each such case be included in computing interest in connection with such
payment.
9.14 Integration. This Agreement, together with the other Loan
-----------
Documents, constitutes the entire agreement between the parties hereto relating
to this financing transaction and it supersedes all prior understandings and
agreements, whether written or oral, between the parties hereto relating to the
transactions provided for herein.
9.15 Headings. Article, Section and other headings used in this
--------
Agreement are intended for convenience only and shall not affect the meaning or
construction of this Agreement.
9.16 Counterparts; Effectiveness. This Agreement and any
---------------------------
amendment hereto may be executed in several counterparts and by each party on a
separate counterpart, each of which, when so executed and delivered, shall be an
original, but all of which together shall constitute but one and the same
instrument. In proving this Agreement, it shall not be necessary to produce or
account for more than one such counterpart signed by the other party against
whom enforcement is sought. This Agreement shall become binding when the
parties have delivered (which delivery may be by telecopier) at least one
executed counterpart hereof or of the signature page hereto.
9.17 WAIVER OF JURY TRIAL. IN ORDER TO EXPEDITE THE RESOLUTION
--------------------
OF ANY DISPUTES WHICH MAY ARISE UNDER THIS AGREEMENT OR UNDER ANY OTHER LOAN
DOCUMENT TO WHICH THE BORROWER IS A PARTY, AND IN LIGHT OF THE COMPLEXITY OF THE
- 65 -
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, THE
PARTIES HERETO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF
ANY KIND OR NATURE IN ANY COURT TO WHICH THEY MAY BOTH BE PARTIES, WHETHER
ARISING OUT OF, UNDER, OR BY REASON OF THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR ANY ASSIGNMENT OR OTHER TRANSACTION CONTEMPLATED HEREBY OR BY
REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN THEM OF ANY KIND OR
NATURE. BOTH PARTIES ACKNOWLEDGE THAT THIS WAIVER OF JURY TRIAL HAS BEEN
SPECIFICALLY NEGOTIATED AS A PART OF THIS AGREEMENT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 66 -
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have caused this Second Amended and Restated Credit Agreement to be executed by
their respective duly authorized officers as of the date first written above.
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CFO/Treasurer
PNC BANK, NATIONAL ASSOCIATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (SEAL)
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
- 67 -