EXHIBIT 4.1
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$60,000,000
CREDIT AGREEMENT
dated as of October 18, 1996
among
SPECIAL METALS CORPORATION
as Borrower,
THE FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTY HERETO,
as Lenders,
CREDIT LYONNAIS NEW YORK BRANCH,
as Issuing Bank and Agent
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TABLE OF CONTENTS
This table of contents has been provided for the convenience of the parties and
does not constitute part of the Agreement to which it is attached.
PAGE
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ARTICLE 1 DEFINITIONS..........................................
1.1 Defined Terms........................................
1.2 Other Definitional Provisions........................
ARTICLE 2 THE CREDIT FACILITY..................................
2.1 The Revolving Loans..................................
2.2 The Term Loans ......................................
2.3 Procedure for Borrowing..............................
2.4 Procedure for Conversion and Continuation............
2.5 Minimum Amount and Maximum Number of
Tranches.............................................
2.6 Termination or Reduction of Revolving
Commitments..........................................
2.7 Repayment of Loans...................................
2.8 Evidence of Indebtedness.............................
2.9 Optional and Mandatory Prepayments...................
2.10 Interest Rates and Payment Dates.....................
2.11 The Letters of Credit................................
2.12 Fees.................................................
2.13 Computation of Interest and Fees.....................
2.14 Pro Rata Treatment and Payments......................
2.15 Obligations of Lenders...............................
ARTICLE 3 YIELD PROTECTION AND ILLEGALITY;
TAXES................................................
3.1 Inability to Determine Interest Rate.................
3.2 Illegality...........................................
3.3 Additional Costs; Capital Adequacy...................
3.4 Taxes................................................
3.5 Indemnity............................................
3.6 Lenders' Obligation to Mitigate......................
ARTICLE 4 REPRESENTATIONS AND WARRANTIES.......................
4.1 Organization, Powers, Compliance.....................
4.2 Capital Stock, Subsidiaries, Fiscal Year.............
4.3 Authorization, Absence of Conflicts..................
4.4 Binding Obligations..................................
4.5 Financial Condition and Statements...................
4.6 Taxes................................................
4.7 Title to Properties..................................
4.8 Proceedings..........................................
4.9 Labor Disputes; Collective Bargaining Agreements.....
4.10 Material Agreements and Licenses.....................
4.11 Intangible Assets....................................
4.12 Condition of Assets..................................
4.13 No Defaults, Compliance With Laws....................
4.14 Indebtedness.........................................
4.15 Not an Investment Company or Regulated Company.......
4.16 Use of Proceeds......................................
4.17 Ranking of Loans.....................................
4.18 Burdensome Provisions................................
4.19 ERISA................................................
4.20 Environmental Matters................................
4.21 Deposit Account Balances.............................
4.22 Correct Information..................................
ARTICLE 5 CONDITIONS PRECEDENT.................................
5.1 Conditions Precedent to Initial Credit Event.........
5.2 Conditions Precedent to Each Credit Event............
ARTICLE 6 COVENANTS............................................
6.1 Corporate Existence, Properties......................
6.2 Payment of Indebtedness, Taxes.......................
6.3 Financial Statements, Reports, etc...................
6.4 Notice of Adverse Events and Significant Changes.....
6.5 Books and Records; Inspection........................
6.6 Insurance............................................
6.7 Compliance with Laws.................................
6.8 Environmental Laws...................................
6.9 Use of Proceeds......................................
6.10 Indebtedness.........................................
6.11 Liens................................................
6.12 Contingent Liabilities...............................
6.13 Merger and Consolidation; Acquisition and
Disposition of Assets................................
6.14 Investments..........................................
6.15 Change in Nature of Business.........................
6.16 Transactions with Affiliates.........................
6.17 Restricted Payments..................................
6.18 Consolidated Net Worth...............................
6.19 Consolidated Leverage Ratio..........................
6.20 Consolidated Senior Debt Coverage Ratio..............
6.21 Subsidiaries.........................................
6.22 Leases...............................................
6.23 Cash Flow Support Agreement..........................
6.24 Deposit Account Balances.............................
ARTICLE 7 EVENTS OF DEFAULT....................................
7.1 Events of Default....................................
7.2 Waivers..............................................
ARTICLE 8 THE AGENT............................................
8.1 Appointment..........................................
8.2 Delegation of Duties.................................
8.3 Exculpatory Provisions...............................
8.4 Reliance by Agent....................................
8.5 Notice of Default ...................................
8.6 Non-Reliance on Agent and Other Creditors............
8.7 Indemnification......................................
8.8 Agent in Its Individual Capacity.....................
8.9 Successor Agent......................................
ARTICLE 9 MISCELLANEOUS........................................
9.1 Notices..............................................
9.2 Expenses, Indemnity..................................
9.3 Amendments and Waivers...............................
9.4 No Waiver; Cumulative Remedies.......................
9.5 Survival of Representations and Warranties...........
9.6 Successors and Assigns;
Participations and Assignments.......................
9.7 Adjustments; Set-Off.................................
9.8 GOVERNING LAW........................................
9.9 JUDICIAL PROCEEDINGS.................................
9.10 WAIVER OF JURY TRIAL.................................
9.11 Further Assurances...................................
9.12 Integration Clause...................................
9.13 Severability.........................................
9.14 Counterparts.........................................
9.15 Acknowledgements.....................................
SCHEDULES
Schedule I - Schedule of Commitments and Percentages
Schedule II - Schedule of Offices and Addresses for Notices
Schedule III - Disclosure Schedule
Schedule IV - Schedule of Acceptable Foreign Account Debtors
EXHIBITS
Exhibit A-1 - Form of Revolving Note
Exhibit A-2 - Form of Term Note
Exhibit B-1 - Form of Notice of Borrowing
Exhibit B-2 - Form of Notice of Conversion or Continuation
Exhibit C - Form of Borrower Security Agreement
Exhibit D - Form of Subsidiary Guarantee
Exhibit E - Form of Subsidiary Security Agreement
Exhibit F - Form of Contribution Agreement
Exhibit G - Form of Cash Flow Support Agreement
Exhibit H - Form of Subordination Agreement
Exhibit I - Form of Borrowing Base Certificate
Exhibit J - Form of Assignment and Acceptance Agreement
CREDIT AGREEMENT dated as of October 18, 1996, among SPECIAL METALS
CORPORATION, a Delaware corporation (the "Borrower"), THE FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTY TO THIS AGREEMENT (each a "Lender" and collectively the
"Lenders"), and CREDIT LYONNAIS NEW YORK BRANCH ("CLNY"), a New York-licensed
branch of Credit Lyonnais, S.A. ("Credit Lyonnais"), a banking corporation
organized and existing under the laws of the Republic of France, as Issuing Bank
(in such capacity, the "Issuing Bank"), and as agent for the Issuing Bank and
the Lenders hereunder (in such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrower has requested that the Lenders and the Issuing
Bank extend credit to it in the form of term loans, revolving loans and letters
of credit as provided below, and the Lenders and the Issuing Bank are willing to
extend such credit on the terms and subject to the conditions specified below.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Acceptable Foreign Account Debtor": any account debtor listed on
Schedule IV attached hereto, subject to the additions and deletions set forth
below. The Borrower may request from time to time, but in any event not more
frequently than once every six months, that additional foreign account debtors
be added to Schedule IV, which request shall be made by delivery to the Agent
and each Lender of a replacement Schedule, accompanied by a letter duly executed
by a Responsible Officer of the Borrower identifying the new foreign account
debtors and requesting that the Schedule annexed to said letter replace Schedule
IV then in effect. Each Lender may grant or withhold its approval of the
Borrower's request for replacement in its sole discretion (it being understood
and agreed that any Lender's failure to respond shall constitute withholding by
such Lender of its approval of the Borrower's request for replacement). If the
Majority Lenders approve the replacement Schedule in writing, then the foreign
account debtors listed in such replacement Schedule shall constitute Acceptable
Foreign Account Debtors until another replacement Schedule is presented to and
approved by the Majority Lenders. The Majority Lenders (or the Agent acting
pursuant to their instructions) may at any time notify the Borrower that one or
more foreign account debtors listed in Schedule IV then in effect are no longer
acceptable to them, whereupon such foreign account debtors shall cease to be
Acceptable Foreign Account Debtors.
"Affected Fixed Rate Loans": all Fixed Rate Loans of a particular
Type, which have been affected by the occurrence of any event specified in
Section 3.1, 3.2 or 3.3.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 5% or more of the securities
having ordinary voting power for the election of directors of such Person or (b)
direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise.
"Agent": as defined in the preamble hereto.
"Agreement": this Credit Agreement, as amended, supplemented, waived
or otherwise modified from time to time.
"Aggregate Available Revolving Commitments": at any time, the
aggregate amount of the Available Revolving Commitments of all the Lenders at
such time.
"Aggregate Commitments": at any time, the aggregate amount of the
Revolving Commitments and the Term Commitments of all the Lenders at such time.
"Aggregate LC Exposure": at any time, the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the aggregate
amount drawn under Letters of Credit for which the Issuing Bank or the Lenders,
as the case may be, have not been reimbursed by the Borrower.
"Aggregate Revolving Commitments": at any time, the aggregate amount
of the Revolving Commitments of all the Lenders at such time.
"Aggregate Revolving Exposure": at any time, the sum of (a) the
aggregate principal amount of all Revolving Loans outstanding at such time, plus
(b) the Aggregate LC Exposure at such time.
"Aggregate Term Commitments": at any time, the aggregate amount of the
Term Commitments of all the Lenders at such time.
"Assignee": as defined in Section 9.6(c).
"Available Revolving Commitment": at any time, as to any Lender, the
amount, if any, by which at such time (a) the lesser of (x) such Lender's
Revolving Commitment or (y) such Lender's Percentage of the Borrowing Base,
exceeds (b) such Lender's Revolving Exposure.
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"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the CLNY Base
Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 1/4 of 1%. For purposes hereof: "CLNY Base Rate" shall mean the
rate of interest per annum established by CLNY from time to time as a reference
rate for short-term commercial loans in Dollars to domestic corporate borrowers,
as such rate is in effect on such day (which the Borrower acknowledges is not
necessarily CLNY's lowest rate); and "Federal Funds Effective Rate" shall mean
the overnight cost of funds of CLNY, as determined solely by CLNY. Any change in
the Base Rate due to a change in the CLNY Base Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the CLNY Base Rate or the Federal Funds Effective Rate, as
the case may be.
"Base Rate Loan": at any time, any Revolving Loan, or any portion of a
Lender's Term Loan, which bears interest at such time at a rate which is based
upon the Base Rate.
"Benefitted Lender": as defined in Section 9.7.
"Borrower" as defined in the preamble hereto.
"Borrower Security Agreement": as defined in Section 5.1(a)(iii).
"Borrowing": the aggregate amount of all Loans of a particular Class
and Type made to the Borrower on a particular Borrowing Date.
"Borrowing Base" means, at any time, an amount equal to the sum of:
(i) eighty-five percent (85%) of the aggregate amount owing at
such time on all Eligible Receivables of the Borrower and its
Qualified Subsidiaries, plus
(ii) sixty percent (60%) of the aggregate value (at the lower of
cost or market value) at such time of all Eligible Inventory of the
Borrower and its Qualified Subsidiaries.
"Borrowing Base Certificate": as defined in Section 6.3(e).
"Borrowing Date": any Business Day on which a Loan is made to the
Borrower.
"Business" as defined in Section 4.20(a).
"Business Day": a day (i) other than a Saturday, Sunday or any other
day on which commercial banks in New York, New York are authorized or required
by law to close and (ii) if such day relates to a Fixed Rate Loan, which is also
a day on which dealings in eurodollar deposits are carried out between banks in
the relevant interbank eurodollar market.
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"Capital Expenditures": for any period, the aggregate amount of all
expenditures, whether paid in cash or other assets or accrued as a liability
(including the aggregate amount of all obligations under Capital Leases incurred
during such period) made or to be made by the Borrower or any of its
Subsidiaries during such period to acquire or construct fixed or capital assets,
plant and equipment (including any renewals, improvements and replacements
thereof and all tooling costs, but excluding repairs), computed in accordance
with GAAP.
"Capital Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation),
and any and all warrants or options to purchase any of the foregoing.
"Cash Collateralize": with respect to any outstanding Letter of
Credit, to deposit cash with the Agent in an amount equal to the undrawn amount
of such Letter of Credit, as collateral security for the Borrower's obligation
to reimburse the Issuing Bank or the Lenders, as the case may be, for any
payment made by the Issuing Bank under or pursuant to such Letter of Credit.
"Cash Flow Support Agreement": as defined in Section 5.1(a)(vi).
"Class": as to any Loan or portion thereof, its nature as a Term Loan
or a Revolving Loan.
"CLNY": as defined in the preamble hereto.
"CLNY Base Rate": as set forth in the definition of the term "Base
Rate".
"Closing Date": the date on which this Agreement shall have been
executed by all the parties hereto.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all assets of the Borrower or any Subsidiary of the
Borrower which secure the Obligations from time to time, including all assets
which constitute "Collateral", as such term is defined in any Security Document.
"Commitment": as to any Lender, its Revolving Commitment or its Term
Commitment; and "Commitments" means, as to any Lender, its Revolving Commitment
and its Term Commitment, collectively.
"Commitment Fee": as defined in Section 2.12(b).
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"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group which includes the Borrower and which is
treated as a single employer under Section 414(b) or 414(c) of the Code.
"Consolidated EBITDA": as defined in Section 6.20.
"Consolidated Leverage Ratio": as defined in Section 6.19.
"Consolidated Net Income": as defined in Section 6.17.
"Consolidated Net Worth": as defined in Section 6.18.
"Consolidated Senior Debt Coverage Ratio": as defined in Section 6.20.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Contribution Agreement": a Contribution Agreement substantially in
the form of Exhibit F.
"Credit Lyonnais": as defined in the preamble hereto.
"Creditor": each Lender and the Issuing Bank, individually; and
"Creditors" means the Lenders and the Issuing Bank, collectively.
"Customary Charges": as defined in Section 2.12(c).
"Default": any of the events specified in Section 7.1, whether or not
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Disclosure Schedule": the Disclosure Schedule attached to this
Agreement as Schedule III.
"Dollars: and "$": dollars in lawful currency of the United States of
America.
"Effective Date": the date on which all the conditions precedent set
forth in Section 5.1 shall have been satisfied or waived.
"Eligible Inventory" means, as of any date of determination, all
Inventory of the Borrower or any of its Qualified Subsidiaries
(a) that is of merchantable quality and (other than raw
materials) fit for sale;
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(b) to which the Borrower or such Qualified Subsidiary has good,
marketable and undisputed title, free and clear of any Liens,
other than Liens in favor of the Agent and Permitted Liens; and
(c) in which the Agent holds a perfected security interest for
the benefit of the Lenders and the Issuing Bank;
provided, however, that there shall in any event be excluded from Eligible
Inventory
(1) any goods which are consigned or leased to the Borrower or
such Qualified Subsidiary or are, for any reason, not owned by
the Borrower or such Qualified Subsidiary;
(2) Inventory allocable to contracts with Governmental
Authorities;
(3) all amounts which constitute "scrap" (other than scrap or
"revert" held by the Borrower or such Qualified Subsidiary in the
ordinary course of business consisting of nickel or cobalt or
other metals containing nickel or cobalt as a significant
component);
(4) goods in the possession of third-party processors (other than
processors which have entered into collateral access agreements
satisfactory to the Agent in favor of the Agent);
(5) all amounts which constitute supplies, general ledger
material reserves, unamortized tooling, applied indirect
overhead, reserves for progress payments, costs of procurement,
engineering, manufacturing prototypes and program accounting;
(6) items which are obsolete or are not marketable in the
ordinary course of business of the Borrower or such Qualified
Subsidiary; and
(7) items which are determined by the Majority Lenders, in their
reasonable discretion, to be ineligible for any other reason.
"Eligible Receivable" means a Receivable of the Borrower or a
Qualified Subsidiary in which the Agent holds a first and perfected security
interest for the benefit of the Lenders and the Issuing Bank and which meets
each of the following requirements:
(1) such Receivable arose from a bona fide outright sale of goods
or rendition of services by the Borrower or such Qualified Subsidiary
(and not consignments or "sale or return" transactions) and such goods
have been shipped or services rendered to the respective account
debtors;
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(2) such Receivable is based on an enforceable order or contract
for goods shipped or services rendered and such goods were delivered
or such services were rendered in accordance with such order or
contract;
(3) the amount shown as a Receivable on the Borrower's or such
Qualified Subsidiary's books and any invoice or statement delivered to
the Agent or any Lender is owing to the Borrower or such Qualified
Subsidiary and no partial payment has been made thereon by anyone;
(4) such Receivable is not subject to any discount, credit,
rebate, allowance, set-off, reserve, chargeback, contra, claim of
reduction, counterclaim, recoupment, or any claim for credit,
allowances or adjustments by the account debtor on such Receivable
known to the Borrower because of returned, inferior and/or damaged
goods or unsatisfactory services, or for any other reason, except for
customary discounts allowed for prompt payment;
(5) the Borrower or such Qualified Subsidiary has good,
marketable and undisputed title to such Receivable, free and clear of
any Liens, other than Liens in favor of the Agent and Permitted Liens;
(6) such Receivable is unconditionally payable in Dollars and the
obligations of the account debtor under such Receivable (i) are not
evidenced by a promissory note or other negotiable instrument (except
for any such note or instrument which has been pledged to the Agent
for the benefit of the Lenders and the Issuing Bank) and (ii) are not
in dispute and are not subject to any set-off or counter-claim;
(7) the account debtor on such Receivable (i) is not an Affiliate
of the Borrower and (ii) is not bankrupt or insolvent or the subject
of receivership proceedings, and has not made an assignment for
benefit of creditors or a composition with creditors;
(8) to the extent such Receivable is reflected in any Borrowing
Base Certificate, the account debtor thereon has not as of the
effective date of such Borrowing Base Certificate returned, or refused
to retain, or asserted a right to return or refuse, any of the goods
from the sale of which such Receivable or portion thereof arose;
(9) such Receivable is evidenced by an invoice dated the date
that shipment, delivery or performance was made or rendered to the
account debtor and (i) such Receivable is not more than 60 days past
due from the original due date thereof and (ii) not more than 90 days
(or, in the case of a Receivable from Carmel Forge, 180 days or, in
the case of a Receivable from any other Acceptable Foreign Account
Debtor, 120 days) have elapsed from the invoice date of such invoice;
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(10) the amount of such Receivable reported on a Borrowing Base
Certificate as an Eligible Receivable excludes as of the date of such
Borrowing Base Certificate (i) all partial or total payments received
therefor, (ii) all chargeback ▇▇▇▇▇▇▇▇, (iii) all finance charges,
late charges or other service charges, (iv) any retainages agreed to
by the Borrower or such Qualified Subsidiary or asserted by the
account debtor thereon, (v) reversals of credits previously given to
the account debtor thereon, or (vi) credits received from the account
debtor thereon if the credit has been issued, aged or outstanding 90
days or more;
(11) such Receivable does not represent progress or contract
▇▇▇▇▇▇▇▇;
(12) such Receivable does not arise out of a contract with or
order from an account debtor which by its terms forbids or makes void
or unenforceable the assignment of the Receivable arising with respect
thereto;
(13) if the United States of America, any state, county or
municipality, or any agency, department or instrumentality thereof, is
the account debtor with respect to such Receivable, the Borrower or
such Qualified Subsidiary shall have duly assigned its rights to
payment thereon to the Agent pursuant to the Assignment of Claims Act
of 1940, as amended, or any similar state or local statute or
regulation; and
(14) either (i) the account debtor on such Receivable is a
resident of the United States of America, an entity organized under
the laws of the United States of America or any political subdivision
thereof, or an office or branch located in the United States of
America of an entity organized under the laws of another country, or
(ii) the account debtor on such Receivable is an Acceptable Foreign
Account Debtor, or (iii) such Receivable is backed by a letter of
credit in form and issued by a bank satisfactory to the Majority
Lenders or is credit-insured pursuant to a policy in form and issued
by an insurer satisfactory to the Majority Lenders.
(15) such Receivable is not deemed ineligible, and the account
debtor thereon is not deemed unacceptable, by the Majority Lenders in
their reasonable discretion for any other reason;
"Environmental Costs": any and all costs or expenses (including,
without limitation, attorneys' and consultants' fees, investigation and
laboratory fees, response costs, court costs and litigation expenses) of
whatever kind or nature, known or unknown, contingent or otherwise, arising out
of, or in any way relating to any violation of, noncompliance with or liability
under any Environmental Laws or any orders, requirements, demands, or
investigations of any Person related to any Environmental Laws. Environmental
Costs include any and all of the foregoing, without regard to whether they arise
out of or are related to any past, pending or threatened proceeding of any kind.
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"Environmental Laws": any and all applicable foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or at any time hereafter in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
from time to time thereunder.
"Eurocurrency Reserve Requirements": for any day as applied to a Fixed
Rate Loan, the aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves) under
any regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum equal to the rate
quoted by CLNY to banks in the New York interbank eurodollar market for deposits
in eurodollars in immediately available funds to be delivered on the first day
of such Interest Period in amounts and for durations comparable to the relevant
Eurodollar Loan and Interest Period.
"Eurodollar Loan": at any time, any Revolving Loan, or any portion of
a Lender's Term Loan, which bears interest at such time at a rate which is based
upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward, if necessary, to the
nearest 1/16th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 7.1,
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Existing Agreement": the Amended and Restated Credit Agreement dated
as of December 15, 1994, among the Borrower, the banks party thereto, and CLNY
as agent for such banks, as amended to date.
"Existing Lender": each Lender that was party to the Existing
Agreement.
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"Existing Letters of Credit": as defined in Section 2.11(b).
"Federal Funds Effective Rate": as set forth in the definition of the
term "Base Rate".
"Fee": each of the Commitment Fee, the Letter of Credit Fees, the
Fronting Fees, the fees payable pursuant to the Fee Letter, and the Customary
Charges; and "Fees" means all of the foregoing, collectively.
"Fee Letter": as defined in Section 2.12(d).
"Fixed Rate Loan": any Eurodollar Loan or LIBOR Loan; and "Fixed Rate
Loans" means all Eurodollar Loans and LIBOR Loans, collectively.
"Former Plan": any employee benefit plan in respect of which the
Borrower or a Commonly Controlled Entity could incur liability because of
Section 4069 or Section 4212(c) of ERISA.
"Fronting Fee": as defined in Section 2.12(c); and "Fronting Fees"
means the Fronting Fees payable with respect to all the Letters of Credit issued
hereunder from time to time, collectively.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time, consistently applied; provided, however,
that for purposes of determining compliance with the financial covenants
contained in Sections 6.18, 6.19 and 6.20, the term "GAAP" shall mean generally
accepted accounting principles in the United States of America in effect on the
date of this Agreement, applied on a basis consistent with their application in
the preparation of the financial statements referred to in Section 4.5.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee Obligation": of or by any Person shall mean any obligation,
contingent or otherwise, of such Person, guaranteeing or entered into with the
purpose of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase property, securities or
services for the purpose of assuring the holder of such Indebtedness of the
payment of such Indebtedness, or (c) to maintain working capital, equity or
other financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness, and any other contract
which, in economic effect, is substantially equivalent to a guarantee; provided,
however, that the term "Guarantee
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Obligation" shall not include endorsements for collection or deposit of
instruments in the ordinary course of business.
"Hazardous Substances": any and all wastes, materials and substances,
whether solid, liquid or gaseous, (i) defined as "hazardous substances" or
"toxic substances" in any Environmental Law, (ii) otherwise protected against by
any Environmental Law, or (iii) the discharge, spillage, uncontrolled loss,
seepage or filtration of which constitutes a violation of any Environmental Law,
including, without limitation, radioactive waste, asbestos, asbestos-containing
materials, radon gas, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum products and by-products and oil.
"Indebtedness": of any Person at any date (a) all indebtedness,
liabilities and obligations of such Person for borrowed money (including, in the
case of the Borrower, indebtedness hereunder), (b) all indebtedness evidenced by
notes, bonds, debentures or similar instruments, (c) all obligations of such
Person under Capital Leases, (d) all obligations of such Person in respect of
acceptances (as defined in Section 3-410 of the UCC) issued or created for the
account of such Person, (e) the undrawn amount of all letters of credit issued
for the account of such Person (including, in the case of the Borrower, the
Letters of Credit) and (without duplication) all drafts drawn thereunder, (f)
all indebtedness of such Person for the deferred purchase price of property or
services (other than trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices), (g) all
obligations of such Person, contingent or otherwise, under or in respect of any
interest rate swap, cap or collar agreement, any currency exchange rate swap
agreement, or similar arrangement between such Person and a bank or other
financial institution providing for the transfer or mitigation of interest or
exchange risks either generally or under specific contingencies, (h) all
indebtedness or obligations of the types referred to in the preceding clauses
(a) through (g) above secured by any Lien on any property owned by such Person
even though such Person has not assumed or otherwise become liable for the
payment thereof and (i) all Guarantee Obligations of such Person, in each case
determined as at such date, without duplication and in accordance with GAAP. The
Indebtedness of any Person shall include the Indebtedness of any Partnership in
which such Person is a general partner, unless such partnership Indebtedness is
without recourse to such general partner. The term "Indebtedness", when used
with respect to any Person, shall include all liabilities and obligations of
such Person in respect of any of the items specified above, irrespective of
whether GAAP requires that such liabilities and obligations be reported as
indebtedness on such Person's financial statements or whether such Person
actually reports such liabilities and obligations as indebtedness on its
financial statements.
"Indemnitee": as defined in Section 9.2(b).
"Ineligible Financial Institutions": any banks or other financial
institutions, other than (a) the Lenders and (b) banks or other financial
institutions which have executed and delivered to the Agent letter agreements in
form and substance reasonably satisfactory to the Agent, acknowledging the
security interest of the Agent in any funds or credit balances maintained by
11
them for the account of the Borrower or any of its Subsidiaries and limiting
their set-off rights in a manner reasonably satisfactory to the Agent.
"Interest Period": with respect to any Fixed Rate Loan, the period
commencing on the borrowing or conversion date of such Fixed Rate Loan, or on
the last day of the immediately preceding Interest Period applicable to such
Fixed Rate Loan, as the case may be, and ending one, two or three months
thereafter, as selected by the Borrower in its notice of borrowing, conversion
or continuation, as the case may be, given with respect thereto; provided,
however, that:
(a) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately preceding
Business Day;
(b) no Interest Period may extend beyond the Revolving Commitment
Termination Date;
(c) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the relevant subsequent calendar month) shall end
on the last Business Day of the relevant subsequent calendar month;
and
(d) the Borrower shall ensure that principal payments in respect
of the Term Loans may be made under Section 2.7(b) without requiring
the prepayment of any Fixed Rate Loans prior to the last day of any
Interest Period applicable thereto.
"Inventory": with respect to any Person, all goods and other personal
property owned by such Person which are held for sale or lease or are furnished
or are to be furnished under a contract of service or which constitute raw
materials, work in process or materials used or consumed or to be used or
consumed in such Person's business, or in the processing, packaging or shipping
of the same, and all finished goods, including all inventory as defined in
Section 9-109(4) of the UCC.
"Investments": in any Person means:
(i) the purchase or acquisition (whether for cash, property,
services or securities or otherwise, and whether structured as an
acquisition or as a merger or consolidation or otherwise) of any share
of Capital Stock, any bond, note, debenture or other evidence of
indebtedness, or any other security, issued by such Person, or of any
partnership or other ownership interest in such Person, or any binding
obligation or option to make such purchase or acquisition,
12
(ii) any loan, advance, or extension of credit to, any deposit
with, and any contribution to the capital of, such Person, and any
commitment to make such loan, advance, extension of credit, deposit or
contribution to capital,
(iii) any Guarantee Obligation, or other contingent obligation,
with respect to Indebtedness or other liability of such Person, and
(iv) any purchase of all or any integral part of the business of
such Person or assets comprising such business or part thereof, and
any binding obligation or option to make such purchase;
provided, however, that the term "Investment" shall not include (a) current
trade and customer accounts receivable for services rendered in the ordinary
course of business and payable in accordance with customary trade terms and
other investments in accounts, contract rights and chattel paper arising or
acquired in the ordinary course of business or (b) stock or other securities
acquired in connection with the satisfaction or enforcement of debts or claims
due or owing or as security for any such debts or claims, provided that such
debts or claims were not created for the purpose of or with a view to acquiring
such stock or other securities.
"Issuing Bank": as defined in the preamble hereto.
"LC Application": as defined in Section 2.11(d).
"LC Disbursement": any payment or disbursement made by the Issuing
Bank under or pursuant to a Letter of Credit.
"LC Exposure": with respect to any Lender at any time, such Lender's
Percentage of the Aggregate LC Exposure.
"Lender" and "Lenders": as defined in the preamble hereto.
"Letter of Credit Fee": as defined in Section 2.12(b); and "Letter of
Credit Fees" means the Letter of Credit Fees payable with respect to all the
Letters of Credit issued hereunder from time to time, collectively.
"LIBO Base Rate": with respect to each day during each Interest Period
pertaining to a LIBOR Loan, the rate of interest determined on the basis of the
rate for deposits in Dollars for a period equal to such Interest Period
commencing on the first day of such Interest Period appearing on Page 3750 of
the Telerate Screen as of 11:00 A.M., London time, two Business Days prior to
the beginning of such Interest Period. In the event that such rate does not
appear on Page 3750 of the Telerate Screen (or otherwise on the Telerate
Service), the "LIBO Base Rate" shall instead be a rate per annum equal to the
rate at which deposits in eurodollars in immediately available funds to be
delivered on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of CLNY's
13
LIBOR Loan to be outstanding during such Interest Period are offered by the
principal London office of Credit Lyonnais to banks in the London interbank
eurodollar market at approximately 11:00 a.m. London time two Business Days
prior to the beginning of such Interest Period.
"LIBOR Loan": at any time, any Revolving Loan, or any portion of a
Term Loan, which bears interest at such time at a rate which is based upon the
LIBO Rate.
"LIBO Rate": with respect to each day during each Interest Period
pertaining to a LIBOR Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward, if necessary, to the
nearest 1/16th of 1%):
LIBO Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Lien": any mortgage, pledge, hypothecation, assignment, security
deposit arrangement, encumbrance, lien (whether statutory, consensual or
otherwise), charge or other security interest or any 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 and any Capital Lease having substantially the same economic
effect as any of the foregoing).
"Loan": each Revolving Loan and each portion of a Term Loan that is of
a particular Type; and "Loans" means all of the Revolving Loans and the Term
Loans, collectively.
"Loan Documents": this Agreement, the Notes, the Security Documents,
the Subordination Agreement, the LC Applications, the Subsidiary Guarantee, the
Contribution Agreement, each Supplement to the Subsidiary Guarantee or the
Contribution Agreement, and any other instruments or documents relating hereto
or thereto.
"Losses": as defined in Section 11.2(b)(i).
"LWH": LWH Holding, S.A., a Luxembourg joint stock company (Societe
Anonyme).
"Majority Lenders": at any time, Lenders who have Percentages which
total at least 66 2/3%.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Borrower or the Borrower's ability to perform its obligations under this
Agreement or any other Loan Document or (b) the validity or enforceability
(against the Borrower) of this Agreement or any other Loan Document, or any of
the rights or remedies of the Agent, the Issuing Bank or any Lender hereunder or
thereunder.
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"Material Environmental Amount": any amount payable by the Borrower
and/or any of its Subsidiaries in respect of or under any Environmental Law for
remedial costs, compliance costs, compensatory damages, punitive damages, fines,
penalties or any combination thereof, that has a Material Adverse Effect.
"Material Subsidiary": any Subsidiary of the Borrower which, together
with its Subsidiaries, either (a) has assets constituting 5% or more of the
total assets of the Borrower and its consolidated Subsidiaries on the date of
determination or (b) accounts for 5% or more of the Consolidated EBITDA for the
fiscal quarter of the Borrower ended on, or most recently ended prior to, the
date of determination.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Note" and "Notes": as defined in Section 2.8(c).
"Notice of Borrowing": as defined in Section 2.3(a).
"Notice of Conversion or Continuation": as defined in Section 2.4(a).
"Obligations": all indebtedness and other liabilities and obligations
of the Borrower hereunder or under any other Loan Document including, without
limitation, (i) the obligation to repay the Loans in full when due, (ii) the
obligation to pay interest on the Loans at the rates and on the dates specified
herein, (iii) the obligation to pay the Fees in full when due at the rates and
on the dates specified herein or in the Fee Letter, (iv) the obligation to
reimburse the Issuing Bank in full for any payment made by it under a Letter of
Credit as provided herein or in the relevant LC Application, (v) the obligation
to Cash Collateralize the Letters of Credit as provided herein, (vi) the
obligation to indemnify the Agent, the Issuing Bank and the Lenders as provided
herein or in any other Loan Document, (vii) the obligation to pay costs and
expenses as provided herein or in any other Loan Document, and (viii) the
obligation to pay all other amounts specified herein or in any other Loan
Document.
"Other Taxes": as defined in Section 9.2(a).
"Participants": as defined in Section 9.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA and any successor thereto.
"Percentage": as to any Lender at any time, (a) so long as any
Aggregate Revolving Commitments are in effect, the percentage set forth opposite
such Lender's name in the column entitled "Percentages" on Schedule I, as such
schedule may be amended from time to time and (b) after the Aggregate Revolving
Commitments have been cancelled or terminated, have been reduced to $0 or have
expired, the percentage of the aggregate principal amount of Loans then
15
outstanding represented by the aggregate outstanding principal amount of such
Lender's Loans. Each Lender's Percentage shall initially be equal to the
percentage of the Aggregate Commitments represented by such Lender's Commitments
as of the Closing Date and shall be changed from time to time to reflect any
changes in the relative sizes of the Lenders' respective Revolving Commitments
and outstanding Term Loans, whether by reason of assignments, permitted non-pro
rata repayments of the Loans, or otherwise. The Agent is hereby authorized to
amend Schedule I from time to time to the extent necessary to reflect any such
changes, and the Schedule shall be deemed to have been amended automatically,
without the need for any action by the Agent, to reflect any such changes
recorded in the Register.
"Permitted Liens": the Liens described in clauses (a) through (i) of
Section 6.11.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": any employee benefit plan which is covered by ERISA and in
respect of which the Borrower or a Commonly Controlled Entity is an "employer"
as defined in Section 3(5) of ERISA.
"Properly Contested": as defined in Section 6.2.
"Property" as defined in Section 4.21.
"Qualified Subsidiary": any wholly-owned Subsidiary of the Borrower
all of whose stock has been pledged to the Agent for the benefit of the Lenders
and the Issuing Bank pursuant to a pledge agreement satisfactory in form and
substance to the Agent, which Subsidiary (a) is organized or incorporated under
the laws of the United States of America or any state thereof, (b) has been
approved in advance in writing by the Majority Lenders as a Qualified Subsidiary
under this Agreement, (c) has duly executed and delivered to the Agent, with a
counterpart for each Lender, a Subsidiary Guarantee, a Subsidiary Security
Agreement and a Contribution Agreement (or Supplements to the foregoing
substantially in the forms annexed thereto) and (d) has duly executed and/or
delivered such other certificates, opinions, documents and instruments as may be
reasonably requested by the Agent.
"Receivable" means any right, now existing or hereafter arising, of
the Borrower to payment for goods sold or for services rendered which
constitutes an account receivable of the Borrower under GAAP.
"Register": as defined in Section 9.6(d).
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
16
"Reportable Event": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty-day notice period is
waived under Sections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section 4043
or any successor regulation thereto.
"Requirement of Law": as to any Person, the articles or certificate of
incorporation, declaration of trust, partnership agreement and by-laws or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
material property or to which such Person or any of its material property is
subject.
"Responsible Officer": the president or vice president-administration
of the Borrower or, with respect to financial matters, the chief financial
officer or treasurer of the Borrower or, with respect to any certification of
incumbency of any officer or any resolutions or other matters of corporate
authorization or governance, the secretary of the Borrower.
"Restricted Payment": with respect to any Person, (i) the declaration
or payment by such Person of any dividend (excluding dividends payable solely in
Capital Stock of such Person) or any other distribution on any share of the
Capital Stock of such Person, (ii) the purchase, redemption or retirement by
such Person of any share of any of such Person's Capital Stock, (iii) any
payment by such Person resulting in the reduction of the capital of such Person,
and (iv) the payment by such Person of any amount, including principal and
interest, of subordinated indebtedness of such Person.
"Revolving Commitment": with respect to each Lender, the commitment of
such Lender to make Revolving Loans pursuant to Section 2.1, and to issue or
participate in Letters of Credit pursuant to Section 2.11, in the amount
specified for such Lender in Schedule I, as such Lender's Revolving Commitment
may be terminated or reduced from time to time in accordance with the provisions
of this Agreement.
"Revolving Commitment Period": the period from and including the date
hereof to but excluding the Revolving Commitment Termination Date.
"Revolving Commitment Termination Date": October 17, 2001, or such
earlier date on which the Revolving Commitments shall terminate as provided
herein.
"Revolving Exposure": with respect to any Lender at any time, the sum
of (c) the aggregate principal amount of all Revolving Loans of such Lender
outstanding at such time, plus (d) such Lender's LC Exposure at such time.
"Revolving Loan" and "Revolving Loans": as defined in Section 2.1(a).
17
"SEC": the United States Securities and Exchange Commission or any
successor thereto.
"Security Documents": collectively, the Borrower Security Agreement,
the Subsidiary Security Agreement, each Supplement to the Subsidiary Security
Agreement, and each financing statement or other document executed, filed or
recorded in connection therewith; and "Security Document" means each of the
foregoing, individually.
"SIMA": Societe Industrielle de Materiaux Avances, a societe anonyme
organized under the laws of the Republic of France.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent" and "Solvency": with respect to any Person on a particular
date, the condition that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature, and (d) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small amount of capital.
"Subordinated Indebtedness": all Indebtedness of the Borrower which is
subordinated to the Obligations by an instrument in writing satisfactory in form
and substance to the Agent.
"Subordination Agreement": as defined in Section 5.1(a)(vii).
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person; and "wholly-owned Subsidiary"
means, as to any Person, a corporation, partnership or other entity all of whose
shares of stock or other ownership interests are owned by such Person and/or by
one or more wholly owned Subsidiaries of such Person.
"Subsidiary Guarantee": a Subsidiary Guarantee substantially in the
form of Exhibit D.
"Subsidiary Security Agreement": a Subsidiary Security Agreement
substantially in the form of Exhibit E.
18
"Taxes": as defined in Section 4.4(a).
"Term Commitment": with respect to each Lender, the commitment of such
Lender to make Term Loans pursuant to Section 2.2 in the amount specified for
such Lender in Schedule I, as such Lender's Term Commitment may be terminated or
reduced from time to time in accordance with the provisions of this Agreement.
"Term Loan" and "Term Loans": as defined in Section 2.2(a).
"Tranche": as defined in Section 2.5.
"Transferee": as defined in Section 9.6(g).
"Type": as to any Loan or portion thereof, its nature as a Base Rate
Loan, a Eurodollar Loan, or a LIBOR Loan.
"Underfunding": an excess of the present value of all accumulated
benefits under a Plan (based on those assumptions used to fund such Plan), over
the aggregate market value of the assets of such Plan allocable to such
accumulated benefits, determined in each case as of the most recent annual
valuation date.
"UCC": the Uniform Commercial Code as adopted in New York and from
time to time in effect.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any other Loan Document or any certificate or other document made
or delivered pursuant hereto.
(b) As used herein, in the other Loan Documents, and in any
certificate or other documents made or delivered pursuant hereto or thereto,
accounting terms which are not defined in Section 1.1 and accounting terms which
are partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; references to Articles,
Sections, Schedules and Exhibits are references to Articles and Sections of, and
Schedules and Exhibits to, this Agreement unless otherwise specified; and the
words "this Agreement" refer to this Credit Agreement, together with all
schedules and exhibits hereto, as amended, restated, modified or supplemented
from time to time.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
19
(e) Unless otherwise expressly specified herein, defined terms
denoting the singular number shall, when in the plural form, denote the plural
number of the matter or item to which such defined terms refer, and vice-versa.
Words of the neuter gender mean and include correlative words of the masculine
and feminine gender.
(f) The Table of Contents and Article, Section, Schedule and Exhibit
headings used in this Agreement are for convenience only and shall not affect
the construction or meaning of any provisions of this Agreement.
(g) Except as otherwise specified herein, all references herein (i) to
any Person shall be deemed to include such Person's successors and assigns, (ii)
to any Requirement of Law defined or referred to herein shall be deemed
references to such Requirement of Law or any successor Requirement of Law as the
same may have been or may be amended or supplemented from time to time, and
(iii) to any Loan Document or other document or agreement defined or referred to
herein shall be deemed to refer to such Loan Document or other document or
agreement (and, in the case of any Note or any 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.
(h) Unless otherwise specified, all references to times of day shall
be to New York, New York times.
(i) Unless otherwise specified, the term "including", whenever used in
this Agreement or any other Loan Document, shall be deemed to mean "including
without limitation".
(j) Each authorization in favor of the Agent, the Issuing Bank or any
Lender granted by or pursuant to this Agreement shall be deemed to be
irrevocable and coupled with an interest.
ARTICLE 2
THE CREDIT FACILITY
2.1 The Revolving Loans.
(a) Subject to the terms and conditions hereof, each Lender severally
agrees to make revolving credit loans (each, a "Revolving Loan" and,
collectively, the "Revolving Loans") to the Borrower from time to time during
the Revolving Commitment Period in an aggregate principal amount at any one time
outstanding not exceeding such Lender's Revolving Commitment; provided, however,
that no Revolving Loan shall be made by any Lender hereunder if, after giving
effect thereto, (i) such Lender's Revolving Exposure would exceed such Lender's
Revolving Commitment or (ii) the Aggregate Revolving Exposure would exceed
20
the lesser of (1) the Aggregate Revolving Commitments or (2) the Borrowing Base
then in effect.
(b) Subject to the terms and conditions of this Agreement, during the
Revolving Commitment Period the Borrower may borrow from the Lenders pursuant to
this Article 2, repay or prepay pursuant to Section 2.9 (subject to the
provisions of Section 3.5) and reborrow pursuant to this Article 2 up to the
amount of the Aggregate Revolving Commitments then in effect by means of Base
Rate Loans, Eurodollar Loans or LIBOR Loans; provided that no Revolving Loan
shall be made hereunder as a Eurodollar Loan or a LIBOR Loan after the day that
is one month prior to the Revolving Commitment Termination Date.
2.2 The Term Loans.
(a) Subject to the terms and conditions hereof, each Lender severally
agrees to make a term loan (each Lender's term loan herein called a "Term Loan"
and all of the Lenders' term loans herein collectively called the "Term Loans")
on the Effective Date in a principal amount of up to, but not exceeding, such
Lender's Term Commitment. Subject to the terms and conditions of this Agreement,
each Term Loan shall be made as a Base Rate Loan and may, from time to time
after the Effective Date, be converted into one or more Base Rate Loans,
Eurodollar Loans, or LIBOR Loans or a combination thereof, as determined by the
Borrower and notified to the Agent in accordance with Section 2.4.
(b) The Borrower shall borrow the Term Loans in a single borrowing
hereunder on the Effective Date. In the event that the aggregate principal
amount of Term Loans requested by the Borrower pursuant to Section 2.3(b) is
less than the Aggregate Term Commitments, each Lender's Term Commitment shall be
reduced on the Effective Date, immediately prior to its disbursement of its Term
Loan, to the principal amount of such Term Loan. Amounts repaid or prepaid in
respect of the Term Loans may not be reborrowed.
2.3 Procedure for Borrowing.
(a) The Borrower may borrow under the Revolving Commitments during the
Revolving Commitment Period on any Business Day, provided that the Borrower
shall give the Agent irrevocable notice (which notice must be received by the
Agent (i) prior to 11:00 a.m. on the requested Borrowing Date with respect to
Base Rate Loans, (ii) prior to 4:00 p.m. on the Business Day immediately
preceding the requested Borrowing Date with respect to Eurodollar Loans, and
(iii) prior to 11:00 a.m. on the date three Business Days prior to the requested
Borrowing Date with respect to LIBOR Loans), which notice shall be substantially
in the form of Exhibit B-1 and shall be duly completed by the Borrower (each, a
"Notice of Borrowing"). Each Borrowing consisting of Eurodollar Loans or LIBOR
Loans shall be in an amount equal to $500,000 or any greater amount that is a
whole multiple of $100,000 and each Borrowing consisting of Base Rate Loans
shall be in an amount equal to $100,000 or any whole multiple thereof (or, if
the Aggregate Revolving Commitments on the requested Borrowing Date are less
than $100,000, such lesser amount). If the Type of the requested Loans is not
specified in a
21
Notice of Borrowing, then such Loans shall be made as Base Rate Loans. If no
Interest Period is specified with respect to any requested Fixed Rate Loans in a
Notice of Borrowing, then the Borrower shall be deemed to have selected an
Interest Period of one month's duration. Upon receipt of any such notice from
the Borrower, the Agent shall promptly notify each Lender thereof. Each Lender
will make the amount of its Percentage of each Borrowing available to the Agent
for the account of the Borrower in Dollars and in immediately available funds at
the office of the Agent at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, prior to 12:00 noon on the Borrowing Date requested by the Borrower. The
Agent shall make the amounts received by it from the Lenders available to the
Borrower on the requested Borrowing Date by crediting such amounts to the
account maintained by the Borrower with the Agent.
(b) The Borrower may borrow the Term Loans as Base Rate Loans on the
Effective Date, provided that the Borrower shall give the Agent a Notice of
Borrowing (which notice must be received by the Agent prior to 11:00 a.m. on the
Effective Date). The requested Borrowing shall be in an amount equal to $100,000
or any whole multiple thereof. Upon receipt of a Notice of Borrowing from the
Borrower, the Agent shall promptly notify each Lender thereof. Each Lender will
make the amount of its Term Loan available to the Agent in Dollars and in
immediately available funds for the account of the Borrower at the office of the
Agent at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, prior to 12:00
noon on the Effective Date. The Agent shall make the amounts received by it from
the Lenders available to the Borrower on the Effective Date by crediting such
amounts to the account maintained by the Borrower with the Agent.
2.4 Procedure for Conversion and Continuation.
(a) The Borrower may elect from time to time to convert outstanding
Loans from one Type to another by giving the Agent irrevocable written notice of
such election (i) at least one Business Day prior to the proposed conversion
date, in the case of conversion of Loans of another Type into Eurodollar Loans
or Base Rate Loans and (ii) at least three Business Days prior to the proposed
conversion date, in the case of conversion of Loans of another Type into LIBOR
Loans, which notice shall be substantially in the form of Exhibit B-2 and shall
be duly completed by the Borrower (each, a "Notice of Conversion or
Continuation"); provided, however, that any conversion of Eurodollar Loans or
LIBOR Loans into Loans of another Type may only be made on the last day of an
Interest Period with respect thereto. Any such notice of conversion to Fixed
Rate Loans shall specify the length of the initial Interest Period or Interest
Periods therefor. If such notice fails to specify the length of the initial
Interest Period or Interest Periods therefor, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Upon receipt of any
such notice the Agent shall promptly notify each Lender thereof. All or any part
of any outstanding Loans may be converted as provided herein, provided that (i)
no Loan may be converted into a Fixed Rate Loan when any Event of Default has
occurred and is continuing and the Agent has notified the Borrower that such
conversion option is no longer available, (ii) no Revolving Loan may be
converted into a Fixed Rate Loan after the date that is one month prior to the
Revolving Commitment Termination Date, and (iii) no portion of any Term Loan may
be converted into a Fixed Rate
22
Loan after the date that is one month prior to the date of the final installment
of principal of the Term Loans.
(b) Any Fixed Rate Loans may be continued by the Borrower as such upon
the expiration of the then current Interest Period with respect thereto by
giving a Notice of Conversion or Continuation to the Agent, specifying the
length of the next Interest Period to be applicable to such Loans, determined in
accordance with the applicable provisions of the definition of the term
"Interest Period" set forth in Section 1.1; provided, however, that no Fixed
Rate Loan may be continued as such (i) when any Event of Default has occurred
and is continuing and the Agent has notified the Borrower that such continuation
option is no longer available or (ii) after the date that is one month prior to
the Revolving Commitment Termination Date (if the relevant Fixed Rate Loan is a
Revolving Loan) or the date of the final installment of principal of the Term
Loans (if the relevant Fixed Rate Loan is part of a Term Loan); and provided
further, that if the Borrower shall fail to give any required notice as
described above in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso, such Fixed Rate Loans shall be automatically
converted to Base Rate Loans on the last day of the then expiring Interest
Period.
2.5 Minimum Amount and Maximum Number of Tranches.
All borrowings, conversions and continuations of Loans hereunder and
all selections of Interest Periods hereunder shall be in such amounts and shall
be made pursuant to such elections so that, after giving effect thereto, the
aggregate principal amount of the Fixed Rate Loans comprising each Tranche (as
defined below) shall be equal to $100,000 or any greater amount that is a whole
multiple thereof and so that there shall not be more than 6 Tranches at any one
time outstanding. For purposes of this Section, the term "Tranche" shall mean
any group of Fixed Rate Loans of the same Class and Type, whose Interest Periods
begin on the same day and end on the same day (whether or not such Loans were
originally made as Fixed Rate Loans of such Type or converted into Fixed Rate
Loans of such Type on the same day).
2.6 Termination or Reduction of Revolving Commitments.
(a) The Borrower shall have the right, upon not less than five
Business Days' notice to the Agent, to terminate the Aggregate Revolving
Commitments or, from time to time, to reduce the amount of the unused Aggregate
Revolving Commitments. Any such partial reduction shall be in an aggregate
amount equal to $1,000,000 or a whole multiple thereof and shall reduce
permanently the Aggregate Revolving Commitments then in effect. If the aggregate
principal amount of the Revolving Loans outstanding on the effective date of any
such reduction exceeds the amount of the Aggregate Revolving Commitments after
giving effect to such reduction, the Borrower shall prepay the Revolving Loans
on the date on which such reduction becomes effective, by an amount equal to the
amount of such excess. Any such termination of the Aggregate Revolving
Commitments shall be accompanied by prepayment in full of the Revolving Loans
then outstanding.
23
(b) Interest accrued on the amount of any partial prepayment pursuant
to this Section 2.6 to the date of such partial prepayment shall be paid on the
date of such partial prepayment. In the case of the termination of the Aggregate
Revolving Commitments, interest accrued on the amount of the prepayment relating
thereto and any unpaid Commitment Fees accrued hereunder shall be paid by the
Borrower on the date of such termination. Prepayments made pursuant to this
Section 2.6 shall be accompanied by amounts payable pursuant to Section 3.5, if
any, that are attributable to such prepayments.
2.7 Repayment of Loans.
(a) The Borrower hereby unconditionally promises to repay to each
Lender in full on the Revolving Commitment Termination Date (or such earlier
date on which the Revolving Loans become due and payable pursuant to Section
7.1) the principal amount of all Revolving Loans of such Lender that are then
outstanding.
(b) The Borrower hereby unconditionally promises to repay the
aggregate principal amount of the Term Loans in five (5) consecutive annual
installments payable on the dates set forth below in the respective amounts set
forth below opposite such dates (or, if less, the aggregate principal amount of
the Term Loans then outstanding):
Installment Date Amount of Installment
---------------- ---------------------
October 17, 1997 $4,000,000
October 17, 1998 4,000,000
October 17, 1999 4,000,000
October 17, 2000 4,000,000
October 17, 2001 4,000,000
The outstanding principal balance of the Term Loans shall be repaid in
full on October 17, 2001. Each installment of principal of the Term Loans shall
be made together with payment in full of all interest accrued thereon to the
payment date.
2.8 Evidence of Indebtedness.
(a) Each Lender shall maintain in accordance with its normal practice
an account or accounts evidencing Indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
24
(b) The entries made in the accounts of each Lender maintained
pursuant to this Section 2.8 shall, to the extent permitted by applicable law,
be prima facie evidence of the existence and amounts of the obligations of the
Borrower therein recorded, provided, however, that the failure of any Lender to
maintain any such account, or any error therein, shall not in any manner affect
the obligation of the Borrower to repay (with applicable interest) the Loans
made to the Borrower by such Lender in accordance with the terms of this
Agreement.
(c) The Borrower agrees that, upon request to the Borrower by the
Agent at the behest of any Lender, the Borrower will execute and deliver to such
Lender promissory notes furnished to the Borrower by the Agent, duly executed by
the Borrower, substantially in the form of Exhibits A-1 and A-2, with
appropriate insertions as to date and principal amount (each, a "Note" and,
collectively, the "Notes"), evidencing the Revolving Loans and the Term Loans,
respectively, of such Lender to the Borrower.
2.9 Optional and Mandatory Prepayments.
(a) The Borrower may at any time prepay the Loans made to it, in whole
or in part, without premium or penalty, upon at least one Business Day's
irrevocable notice to the Agent, specifying the date and amount of prepayment.
Upon receipt of any such notice the Agent shall promptly notify each Lender
thereof. If any such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein, together with accrued interest
on the amount prepaid and any amounts payable pursuant to Section 3.5. Optional
partial prepayments shall be in an aggregate principal amount equal to $500,000
or any greater amount that is a whole multiple of $100,000.
(b) If the Aggregate Revolving Exposure exceeds the lesser of (i) the
Aggregate Revolving Commitments or (ii) the Borrowing Base at any time, the
Borrower shall immediately prepay any outstanding Revolving Loans and Cash
Collateralize any outstanding Letters of Credit, to the extent necessary to
eliminate such excess. Any prepayment hereunder shall be accompanied by accrued
interest on the amount prepaid and any amounts payable pursuant to Section 3.5.
(c) Any prepayment under this Section 2.9 shall be applied, first, to
outstanding Base Rate Loans and Fixed Rate Loans with Interest Periods ending on
the day of such prepayment, if any, and thereafter to any other Fixed Rate Loans
then outstanding.
(d) Partial prepayments of the Term Loans shall be applied to the
installments of principal thereof in the inverse order of maturity of such
installments.
2.10 Interest Rates and Payment Dates.
(a) Each Base Rate Loan shall bear interest for each day it is
outstanding at a rate per annum equal to the Base Rate in effect on such day.
25
(b) Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the Eurodollar
Rate applicable to such Interest Period, plus one and one-quarter percent
(1.25%).
(c) Each LIBOR Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the LIBO Rate
applicable to such Interest Period, plus one and one-quarter percent (1.25%).
(d) If all or a portion of (i) the principal amount of any Loan, (ii)
any interest payable thereon or (iii) any Fee or other amount payable hereunder
is not paid when due (whether at the stated maturity thereof, by acceleration or
otherwise), such overdue amount shall bear interest from its due date until it
is paid in full (after as well as before judgment) at a rate per annum equal to
the Eurodollar Rate plus the margin applicable to Eurodollar Loans under
paragraph (b) of this Section 2.10, plus 2%.
(e) Interest (i) on each Base Rate Loan shall be payable monthly in
arrears on the first Business Day of each calendar month, on the Revolving
Credit Termination Date, and on any earlier repayment or conversion of such Loan
and (ii) on each Fixed Rate Loan shall be payable in arrears on the last day of
each Interest Period applicable thereto; provided that interest accruing
pursuant to paragraph (d) of this Section 2.10 shall be payable from time to
time on demand.
(f) It is the intention of the parties hereto to comply strictly with
applicable usury laws; accordingly, it is stipulated and agreed that the
aggregate of all amounts which constitute interest under applicable usury laws,
whether contracted for, charged, taken, reserved, or received, in connection
with the Indebtedness evidenced by this Agreement or any other Loan Document
shall never exceed under any circumstance whatsoever the maximum amount of
interest allowed by applicable usury laws.
2.11 The Letters of Credit.
(a) Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, the Issuing Bank agrees, at any
time and from time to time on or after the Effective Date until the earlier of
(i) the tenth Business Day preceding the Revolving Commitment Termination Date
and (ii) the termination of the Revolving Commitments in accordance with the
terms hereof, to issue Letters of Credit for the account of the Borrower;
provided, however, that no Letter of Credit shall be issued if, after giving
effect thereto:
(x) the Aggregate LC Exposure would exceed Five Million Dollars
($5,000,000); or
(y) the Aggregate Revolving Exposure would exceed the lesser of (1)
the Aggregate Revolving Commitments or (2) the Borrowing Base then in
effect.
26
Each Letter of Credit (i) shall be in a form satisfactory to the Issuing Bank
and (ii) shall permit drawings upon the presentation of such documents as shall
be specified by the Borrower in the LC Application delivered pursuant to
paragraph (d) of this Section 2.11.
(b) All letters of credit issued by the Issuing Bank under the
Existing Agreement and outstanding on the Effective Date (the "Existing Letters
of Credit") shall automatically become Letters of Credit hereunder on the
Closing Date and shall be deemed for all purposes of this Agreement to have been
issued on the Closing Date. All letter of credit applications and reimbursement
agreements executed and delivered by the Borrower in connection with the
issuance, amendment or renewal of any Existing Letter of Credit shall constitute
LC Applications for all purposes of this Agreement and the other Loan Documents.
All Existing Letters of Credit are listed in the Disclosure Schedule.
(c) Each Letter of Credit shall by its terms expire no later than the
earlier to occur of (i) 360 days after the issuance thereof or (ii) the last
Business Day prior to the Revolving Commitment Termination Date. Any Letter of
Credit may provide for the renewal thereof for additional periods (which shall
in no event extend beyond the date referred to in clause (ii) of the preceding
sentence). Each Letter of Credit shall by its terms provide for payment of
drawings in Dollars.
(d) The Borrower shall request the issuance of a Letter of Credit by
submitting to the Issuing Bank, at its address specified in Schedule I, a
properly completed and duly executed counterpart of the Issuing Bank's standard
letter of credit application (an "LC Application") no later than 11:00 a.m.,
five (5) Business Days (or such shorter period as shall be acceptable to the
Issuing Bank) prior to the proposed issuance of the requested Letter of Credit.
Each LC Application shall refer to this Agreement, shall specify (i) the date on
which such Letter of Credit is to be issued (which shall be a Business Day) and
the face amount of such Letter of Credit, (ii) the name and address of the
beneficiary of such Letter of Credit, (iii) whether such Letter of Credit shall
permit a single drawing or multiple drawings, (iv) the form of the documents
required to be presented at the time of any drawing (together with the exact
wording of such documents or copies thereof), and (v) the expiry date of such
Letter of Credit (which shall conform to the provisions of paragraph (c) of this
Section 2.11), and shall be accompanied by such certificates, documents, and
other papers and information as the Issuing Bank may reasonably request. The
Agent shall give to each Lender prompt written or telecopy advice of the
issuance of any Letter of Credit. The Borrower hereby agrees to observe and
perform all of its covenants, duties and obligations under each LC Application.
(e) By the issuance of a Letter of Credit and without any further
action on the part of the Issuing Bank or the Lenders in respect thereof, the
Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from
the Issuing Bank, effective upon the issuance of such Letter of Credit, a
participation in such Letter of Credit equal to such Lender's Percentage at the
time of any drawing thereunder of the stated amount of such Letter of Credit. In
addition, the Issuing Bank hereby grants to each Lender, and each
27
Lender hereby acquires from the Issuing Bank, effective on the Closing Date, a
participation in each Existing Letter of Credit equal to such Lender's
Percentage at the time of any drawing thereunder of the face amount of such
Existing Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender hereby absolutely and unconditionally agrees to pay to the Agent,
for the account of the Issuing Bank, in accordance with paragraph (g) of this
Section 2.11, such Lender's Percentage of each LC Disbursement under a Letter of
Credit that is not paid or reimbursed by the Borrower by 10:00 a.m. on the date
such LC Disbursement is made by the Issuing Bank; provided, however, that the
Lenders shall not be obligated to make any such payment with respect to any
payment or disbursement made under any Letter of Credit to the extent resulting
from the gross negligence or wilful misconduct of the Issuing Bank, as finally
determined by a court of competent jurisdiction.
(f) Each Lender acknowledges and agrees that its acquisition of
participations pursuant to paragraph (e) of this Section 2.11 in respect of
Letters of Credit and its obligation to make the payments specified in paragraph
(g) of this Section 2.11 in respect thereof shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
(i) any setoff, counterclaim, recoupment, defense or other right which such
Lender or the Borrower may have against the Issuing Bank, the Borrower or any
other Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default or an Event of Default or the failure to satisfy any of the conditions
specified in Article 5; (iii) any adverse change in the condition (financial or
otherwise) of the Borrower or any of its Subsidiaries; (iv) any breach of this
Agreement by the Borrower or any Lender; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
(g) On the date on which it shall have ascertained that any documents
presented under a Letter of Credit appear to be in conformity with the terms and
conditions of such Letter of Credit, the Issuing Bank shall give written or
telecopied notice to the Borrower and the Agent of the amount of the drawing and
the date on which payment thereon has been or will be made (the "Drawing Date").
If the Issuing Bank shall not have received from the Borrower the payment
required pursuant to paragraph (h) of this Section 2.11 by 10:00 a.m. on the
relevant Drawing Date, the Issuing Bank shall so notify the Agent, which shall
in turn promptly notify each Lender, specifying in the notice to each Lender
such Lender's Percentage of the amount paid or to be paid by the Issuing Bank
under such Letter of Credit. Each Lender shall pay to the Agent, not later than
12:00 noon on the relevant Drawing Date, such Lender's Percentage of the payment
made or to be made by the Issuing Bank under such Letter of Credit, which the
Agent shall promptly pay to the Issuing Bank. The amount paid by each Lender
pursuant to the preceding sentence shall be deemed to constitute a Base Rate
Loan of such Lender and such payment shall be deemed to have increased the
outstanding principal amount of such Lender's Revolving Loans and reduced such
Lender's L/C Exposure. In the event that any Lender fails to pay its Percentage
of such amount when due in accordance with the preceding sentence, such Lender
shall pay such amount to the Agent for the account of the Issuing Bank on
demand, together with interest thereon at the
28
rates specified in Section 2.14 (b) and the administrative fee specified in said
Section. Promptly upon its receipt from the Borrower of any payment in respect
of a drawing under a Letter of Credit with respect to which the Lenders have
reimbursed the Issuing Bank pursuant to this paragraph (g), the Agent will remit
to each Lender such Lender's Percentage of such payment; provided that (i)
amounts so received for the account of any Lender prior to payment by such
Lender of amounts required to be paid by it hereunder in respect of any drawing
under a Letter of Credit and (ii) amounts representing interest at the rate
provided in paragraph (h) of this Section 2.11 on any payment made by the
Issuing Bank under a Letter of Credit for the period prior to the payment by
such Lender of such amounts shall in each case be remitted to the Issuing Bank.
(h) If any draft shall be presented to the Issuing Bank under a Letter
of Credit, the Borrower shall pay to the Issuing Bank an amount equal to the
amount of such draft before 10:00 a.m. on the date the Issuing Bank proposes to
pay such draft. If such payment is not made when due, it shall bear interest at
a rate per annum equal to the interest rate applicable to Base Rate Loans from
(and including) the date of payment of such draft by the Issuing Bank to (but
excluding) the date on which the Borrower shall have reimbursed the Issuing Bank
in full for such payment and shall be payable, together with accrued interest,
on demand. Each payment made to the Issuing Bank by the Borrower pursuant to
this paragraph (h) shall be made at the Issuing Bank's address specified in
Schedule I (or such other address as the Issuing Bank may specify in writing
from time to time) in lawful money of the United States of America and in
immediately available funds. The obligation of the Borrower to pay the amounts
referred to above in this paragraph (h) (and the obligations of the Lenders
under paragraphs (e) and (g) of this Section 2.11) shall be absolute,
unconditional and irrevocable and shall be satisfied strictly in accordance with
their terms irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit or
of the obligations of the Borrower under this Agreement;
(ii) the existence of any claim, setoff, defense or other right which
the Borrower or any other Person may at any time have against the
beneficiary under any Letter of Credit, the Agent, the Issuing Bank or
any Lender (other than the defense of payment in accordance with the
terms of this Agreement or a defense based on the gross negligence or
wilful misconduct of the Issuing Bank, as finally determined by a
court of competent jurisdiction) or any other Person in connection
with this Agreement or any other transaction;
(iii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect; provided
that payment by the Issuing Bank under such Letter of Credit against
presentation of such draft or document shall not have constituted
gross negligence or wilful misconduct, as finally determined by a
court of competent jurisdiction;
29
(iv) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document which does not comply in any
respect with the terms of such Letter of Credit; or
(v) any other circumstance or event whatsoever, whether or not similar
to any of the foregoing.
It is understood that in making any payment under a Letter of Credit
(x) the Issuing Bank's exclusive reliance on the documents presented to it under
such Letter of Credit as to any and all matters set forth therein, including
reliance on the amount of any draft presented under such Letter of Credit,
whether or not the amount due to the beneficiary thereof equals the amount of
such draft and whether or not any document presented pursuant to such Letter of
Credit proves to be forged, fraudulent or invalid in any respect, if such
document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever, and (y) any noncompliance in any immaterial
respect of the documents presented under a Letter of Credit with the terms
thereof shall, in either case, not, in and of itself, be deemed wilful
misconduct or gross negligence of the Issuing Bank.
2.12 Fees.
(a) The Borrower shall pay to the Agent, for the account of the
Lenders, a commitment fee (the "Commitment Fee") calculated at the rate of
one-quarter of one percent (0.25%) per annum on the average daily unused amount
of the Aggregate Revolving Commitments from the Closing Date through the
Revolving Commitment Termination Date (or, if the Aggregate Revolving
Commitments are terminated pursuant to Section 2.6, through the date of such
termination). The Commitment Fee payable with respect to each month shall be
paid on the last Business Day of such month, starting with October 31, 1996, and
on the Revolving Commitment Termination Date or the date on which the Aggregate
Revolving Commitments shall have been cancelled or terminated.
(b) The Borrower shall pay to the Agent, for the account of the
Lenders, in respect of each Letter of Credit, a letter of credit fee (the
"Letter of Credit Fee") for the period from the issuance of such Letter of
Credit through its expiration date, calculated at the rate of one and one-eighth
percent (1.125%) per annum on the face amount of such Letter of Credit (taking
into account, in calculating such fee, any scheduled reductions in said face
amount). The Letter of Credit Fee payable with respect to each Letter of Credit
shall be paid on the date such Letter of Credit is issued and upon any renewal
thereof.
(c) The Borrower shall pay to the Agent, for the account of the
Issuing Bank, in respect of each Letter of Credit, (i) a fronting fee (the
"Fronting Fee") for the period from the issuance of such Letter of Credit
through its expiration date, calculated at the rate of one-eighth of one percent
(0.125%) per annum on the face amount of such Letter of Credit
30
(taking into account, in calculating such fee, any scheduled reductions in said
face amount) and (ii) the customary administration, issuance, amendment,
transfer, drawing and negotiation fees and charges (the "Customary Charges")
charged by the Issuing Bank from time to time in connection with its issuance,
administration and payment of letters of credit. The Fronting Fee payable with
respect to each Letter of Credit shall be paid on the date such Letter of Credit
is issued and upon any renewal thereof. The Customary Charges shall be paid
promptly upon request therefor by the Issuing Bank.
(d) The Borrower shall pay to the Agent, when and as due, all fees
specified in the letter agreement dated September 24, 1996, between the Agent
and the Borrower (the "Fee Letter").
2.13 Computation of Interest and Fees.
(a) Interest and Fees shall be calculated on the basis of a 360-day
year for the actual number of days elapsed, except that so long as interest on
Base Rate Loans is determined on the basis of the CLNY Base Rate, such interest
shall be calculated on the basis of a 365 or 366-day year, as applicable, for
the actual number of days elapsed. Any change in the interest rate on a Loan
resulting from a change in the CLNY Base Rate or the Federal Funds Rate shall
become effective as of the opening of business on the day on which such change
becomes effective. The Agent shall notify the Borrower and the Lenders as soon
as practicable of the effective date and the amount of each such change in
interest rate.
(b) Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the Borrower
and the Lenders in the absence of manifest error.
2.14 Pro Rata Treatment and Payments.
(a) Each Borrowing, each payment received by the Agent on account of
the Commitment Fee or the Letter of Credit Fees, and any reduction in the
Commitments, shall be allocated by the Agent to the Lenders pro rata according
to their respective Percentages. Each payment and prepayment by the Borrower on
account of principal of or interest on the Loans, each continuation of Loans of
a particular Type, and each conversion of Loans from one Type to another (other
than conversions pursuant to Section 3.2 or 3.3) shall be made pro rata and
shall be allocated by the Agent among the Lenders according to the respective
outstanding principal amounts of their Loans. All payments and prepayments to be
made by the Borrower hereunder, whether on account of principal, interest, fees
or otherwise, shall be made without set-off or counterclaim and shall be made
prior to 12:00 noon (or, in the case of payments under Section 2.11(h), prior to
10:00 a.m.) on the due date thereof to the Agent, for the account of the
Lenders, the Issuing Bank or the Agent, as appropriate, by a transfer in Dollars
and in immediately available funds to the office of the Agent at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other office of the Agent or
any affiliate thereof as the Agent may specify from time to time. The Agent
shall
31
distribute any such payments received by it for the account of the Lenders or
the Issuing Bank to the Lenders or the Issuing Bank, as appropriate, promptly
upon its receipt thereof in like funds as received. If any payment hereunder
becomes due and payable on a day other than a Business Day, such payment due
date shall be extended to the next succeeding Business Day, and, with respect to
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension.
(b) Unless the Agent shall have been notified in writing by any Lender
prior to any Borrowing Date or any Drawing Date that such Lender will not make
its Percentage of the relevant Borrowing or LC Disbursement available to the
Agent, the Agent may assume that such Lender is making such amount available to
the Agent, and the Agent may, in reliance upon such assumption, make available
to the Borrower or the Issuing Bank, as the case may be, a corresponding amount.
If such amount is not made available to the Agent by the required time on the
relevant Borrowing Date or Drawing Date, such Lender shall pay to the Agent, on
demand, (x) such amount with interest thereon at a rate per annum equal to (i)
the Federal Funds Rate for the first three days following the relevant Borrowing
Date or Drawing Date and (ii) the Base Rate thereafter, until such Lender makes
such amount immediately available to the Agent and (y) an administrative fee of
$250. A certificate of the Agent submitted to any Lender with respect to any
amounts owing under this Section shall be conclusive in the absence of manifest
error. If any Lender's Percentage of any Borrowing is not made available to the
Agent by such Lender within three Business Days of the Borrowing Date for such
Borrowing, the Agent shall also be entitled to recover such amount with interest
thereon at the rate or rates per annum applicable to such Borrowing hereunder,
on demand, from the Borrower if and to the extent that the Agent has made such
amount available to the Borrower (without prejudice to any rights the Borrower
may have against such Lender).
2.15 Obligations of Lenders
The Lenders' obligations to make Loans and participate in Letters of
Credit hereunder shall be several and not joint. No Lender shall be responsible
for the obligations of any other Lender and no Lender shall be liable for any
failure by any other Lender to perform any of its obligations hereunder or under
any other Loan Document. The failure by any Lender to perform any of its
obligations hereunder or under any other Loan Document shall not relieve any
other Lender from any of its obligations hereunder or under any other Loan
Document.
32
ARTICLE 3
YIELD PROTECTION AND ILLEGALITY; TAXES.
3.1 Inability to Determine Interest Rate.
If prior to the first day of any Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate or the LIBO
Rate for such Interest Period, or
(b) the Agent shall have received notice from the Majority
Lenders that the Eurodollar Rate or the LIBO Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans
during such Interest Period as Eurodollar Loans or LIBOR Loans, as the
case may be,
the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the Lenders as soon as practicable thereafter. If such notice is given, any
Affected Fixed Rate Loans requested to be made on the first day of such Interest
Period shall be made as Base Rate Loans. Until such notice has been withdrawn by
the Agent, no further Affected Fixed Rate Loans shall be made, nor shall the
Borrower have the right to request any Affected Fixed Rate Loans.
3.2 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof occurring after the date hereof shall make it unlawful for
any Lender to make or maintain Eurodollar Loans or LIBOR Loans as contemplated
by this Agreement, (a) such Lender shall promptly give written notice of such
circumstances to the Borrower and the Agent (which notice shall be withdrawn
whenever such circumstances no longer exist), (b) the obligation of such Lender
hereunder to make any Affected Fixed Rate Loans shall forthwith be canceled and,
until such time as it shall no longer be unlawful for such Lender to make and
maintain Affected Fixed Rate Loans, such Lender shall have no obligation to make
or maintain Affected Fixed Rate Loans, and (c) any Affected Fixed Rate Loans of
such Lender then outstanding shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of an Affected Fixed Rate Loan of a Lender occurs on a day which is
not the last day of the then current Interest Period with respect thereto, the
Borrower shall pay to the Agent for the account of such Lender such amounts, if
any, as may be required pursuant to Section 3.5.
33
3.3 Additional Costs; Capital Adequacy.
(a) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof applicable to any Creditor, or
compliance by any Creditor with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority, in each
case made subsequent to the date hereof (or, if later, the date on which such
Creditor becomes a Creditor hereunder):
(i) shall subject such Creditor to any tax of any kind whatsoever with
respect to any Letter of Credit issued or maintained by it, any Fixed
Rate Loan made or maintained by it, or its obligation to issue or
participate in Letters of Credit or make Fixed Rate Loans, or change
the basis of taxation of payments to such Creditor in respect thereof
(except for Taxes covered by Section 3.4 and changes in taxes measured
by or imposed upon the overall net income, or franchise taxes (imposed
in lieu of such net income tax), of such Creditor or its applicable
lending office, branch, or any affiliate thereof);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances,
loans, letters of credit or other extensions of credit by, or any
other acquisition of funds by, any office of such Creditor, which
requirement is not otherwise included in the determination of the
Eurodollar Rate or the LIBO Rate hereunder; or
(iii) shall impose on such Creditor any other condition;
and the result of any of the foregoing is to increase the cost to such Creditor
of issuing, maintaining or participating in Letters of Credit or of making or
maintaining Fixed Rate Loans or to reduce any amount receivable hereunder in
respect thereof or of its Revolving Commitment hereunder, then from time to
time, within 2 Business Days after submission by such Creditor to the Borrower
(with a copy to the Agent) of a written request therefor, the Borrower shall pay
to such Creditor (i) any additional amounts necessary to compensate such
Creditor for such increased cost or reduced amount receivable attributable to
its issuance, maintenance or participation in any Letters of Credit or its
making or maintaining any Fixed Rate Loans, and such additional amount or
amounts as will compensate such Creditor for such increased cost or reduced
amounts receivable attributable to this Agreement, such Creditor's obligation to
issue, maintain or participate in Letters of Credit, such Creditor's Revolving
Commitment and the credit facilities provided hereunder; provided that, in any
such case, if the compensation required to by provided by it hereunder relates
to a Fixed Rate Loan, the Borrower may elect to convert the Affected Fixed Rate
Loans made by the relevant Lender to it hereunder to Base Rate Loans by giving
the Agent at least one Business Day's notice of such election, in which case the
Borrower shall promptly pay to the Agent for the account of such Lender, upon
demand, without duplication, such amounts, if any, as
34
may be required pursuant to Section 3.5. If any Creditor becomes entitled to
claim any additional amounts pursuant to this Section 3.3, it shall provide
prompt notice thereof to the Borrower, through the Agent. Such notice as to any
additional amounts payable pursuant to this Section 3.3 submitted by such
Creditor, through the Agent, to the Borrower shall be conclusive in the absence
of manifest error. This covenant shall survive the termination of this Agreement
and the other Loan Documents and the payment in full of the Notes and all other
amounts payable hereunder.
(b) If any Creditor shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Creditor or any
corporation controlling such Creditor with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority, in each case made subsequent to the date hereof (or, if later, the
date on which such Creditor becomes a Creditor hereunder), does or shall have
the effect of reducing the rate of return on such Creditor's or such
corporation's capital as a consequence of its obligations hereunder to a level
below that which such Creditor or such corporation could have achieved but for
such change or compliance (taking into consideration such Creditor's or such
corporation's policies with respect to capital adequacy), then from time to
time, within 2 Business Days after submission by such Creditor to the Borrower
(with a copy to the Agent) of a written request therefor, (i) the Borrower shall
pay to such Creditor such additional amount or amounts as will compensate such
Creditor for such reduction attributable to its issuance or maintenance of or
participation in the Letters of Credit hereunder, or its making or maintaining
of Fixed Rate Loans hereunder, and (ii) the Borrower shall pay to such Creditor
such additional amount or amounts as will compensate such Creditor or such
corporation for such reduction attributable to this Agreement, its obligation to
issue or participate in Letters of Credit hereunder, its Revolving Commitment
hereunder and the credit facilities provided hereunder to the Borrower.
(c) If any Creditor requests compensation from the Borrower pursuant
to paragraph (a) or (b) of this Section 3.3, such Creditor will deliver to the
Borrower a certificate setting forth in reasonable detail the basis and amount
of such request (with a copy to the Agent) and such certificate shall be
conclusive as to the amount set forth therein, absent manifest error. In
determining such amount, such Creditor may make such estimates, assumptions,
allocations among its assets and liabilities and the like as it determines in
good faith to be appropriate, and the determinations made by such Creditor on
the basis thereof shall be final, binding and conclusive upon the Borrower,
except, in the case of such determinations, for manifest errors. The covenants
and obligations of the Borrower set forth in this Section 3.3 shall survive the
termination of this Agreement, the expiration of the Letters of Credit and the
payment of the Loans and all other amounts payable hereunder.
3.4 Taxes.
(a) Except as provided below in this Section 3.4, all payments made by
the Borrower under this Agreement and the other Loan Documents shall be made
free and clear
35
of, and without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding, in the case of
the Agent or any Creditor, net income taxes and franchise taxes (imposed in lieu
of net income taxes) imposed on the Agent or such Creditor, as the case may be,
as a result of a present or former connection between the jurisdiction of the
government or taxing authority imposing such tax and the Agent or such Creditor
(excluding a connection arising solely from the Agent or such Creditor having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document) or any political
subdivision or taxing authority thereof or therein (all such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions and withholdings being
hereinafter called "Taxes"). If any such Taxes are required to be withheld from
any amounts payable to the Agent or any Creditor hereunder or under any other
Loan Document, the amounts so payable shall be increased to the extent necessary
to yield to the Agent or such Creditor (after payment of all Taxes) interest,
fees or any other amounts payable hereunder or under any other Loan Document at
the rates or in the amounts specified in this Agreement or such other Loan
Document; provided, however, that the Borrower shall be entitled to deduct and
withhold Taxes from amounts payable to any Creditor that is not organized under
the laws of the United States of America or a state thereof (and shall not be
required to increase amounts payable hereunder to gross up for Taxes) if such
Creditor fails to comply with the requirements of paragraph (b) of this Section
3.4. Whenever any Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Agent for its own account or for the
account of such Creditor, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to pay any Taxes when due to the appropriate taxing authority or
fails to remit to the Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Agent and each Creditor for any
incremental taxes, interest or penalties that may become payable by the Agent or
such Creditor as a result of any such failure. The agreements in this Section
shall survive the termination of this Agreement and the payment of the Notes and
all other amounts payable hereunder.
(b) Each Creditor that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) on or before the date of any payment by the Borrower under
this Agreement or any other Loan Document to such Creditor, deliver to
the Borrower and the Agent (A) two duly completed copies of the United
States Internal Revenue Service Form 1001 or 4224, or any successor
applicable form, as the case may be, certifying that it is entitled to
receive payments under this Agreement and its Notes without deduction
or withholding of any United States federal income taxes and (B) an
Internal Revenue Service Form W-8 or W-9, or any successor applicable
form, as the case may be, certifying that it is entitled to an
exemption from United States backup withholding tax; and
36
(ii) deliver to the Borrower and the Agent two further copies of
any such form or certification on or before the date that any such
form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower and the Agent;
unless in any such case any change in any Requirement of Law has occurred after
the date such Creditor becomes a Creditor hereunder which renders all such forms
inapplicable or which would prevent such Creditor from duly completing and
delivering any such form with respect to it and such Creditor so advises the
Borrower and the Agent. Each Person that becomes a Lender or a Participant
pursuant to Section 9.6 shall, upon the effectiveness of the related transfer,
be required to provide all of the forms, certifications and statements required
pursuant to this Section, provided that in the case of a Participant the
obligations of such Participant pursuant to this paragraph (b) shall be
determined as if the Participant were a Lender except that such Participant
shall furnish all such required forms, certifications and statements to the
Lender from which the related participation shall have been purchased.
3.5 Indemnity.
The Borrower agrees to indemnify each Lender against and to hold each
Lender harmless from any loss or expense which such Lender may sustain or incur
as a consequence of (a) default by the Borrower in making a borrowing of Fixed
Rate Loans, converting any Loans to Fixed Rate Loans or continuing any Fixed
Rate Loans as such, after the Borrower has given a notice requesting the same in
accordance with the provisions of this Agreement, (b) default by the Borrower in
making any payment of a Fixed Rate Loan after the Borrower has given a notice
thereof in accordance with the provisions of this Agreement or (c) the making by
the Borrower of a payment or prepayment of a Fixed Rate Loan on a day which is
not the last day of an Interest Period with respect thereto. Without limiting
the foregoing, such indemnification shall include an amount equal to (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued for the period from the date of such prepayment
or of such failure to borrow, convert or continue to the last day of the
applicable Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the interest rate applicable to such Fixed Rate Loans,
minus (ii) the amount of interest (as reasonably determined by such Lender)
which would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the relevant interbank
eurodollar market. This covenant shall survive the termination of this Agreement
and the other Loan Documents, the expiration of the Letters of Credit and the
payment of the Notes and all other amounts payable hereunder.
37
3.6 Lenders' Obligation to Mitigate.
Each Creditor agrees to use reasonable efforts (including reasonable
efforts to change the booking office for its Loans or the issuing office for the
Letters of Credit) to avoid or minimize any illegality pursuant to Section 3.2
or any amounts which might otherwise be payable pursuant to Sections 3.3 or 3.4;
provided, however, that such efforts shall not (a) cause the imposition on such
Creditor of any additional costs or legal or regulatory burdens deemed by such
Creditor to be material, (b) violate any Requirement of Law applicable to such
Creditor, or (c) violate such Creditor's internal policies.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to make the Loans, the Issuing Bank to issue the
Letters of Credit, and the Agent to act as agent hereunder, the Borrower hereby
represents and warrants to the Agent, the Issuing Bank and each Lender that on
the Closing Date, on and at all times after the Effective Date, and on the date
of any Borrowing or issuance of any Letter of Credit hereunder, as applicable:
4.1 Organization, Powers, Compliance.
Each of the Borrower and its Subsidiaries is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to do business and is in good standing in
each jurisdiction in which the character of its properties or the transaction of
its business makes such qualification necessary. Each of the Borrower and its
Subsidiaries has full corporate power and authority to own the properties and
assets it currently owns and to carry on its business as it is now being
conducted. The Borrower has full corporate power and authority to execute,
deliver and perform this Agreement and the other Loan Documents to be executed
and delivered by it hereunder. Neither the Borrower nor any of its Subsidiaries
is in violation of any Requirement of Law that is applicable to it or any of its
properties.
4.2 Capital Stock, Subsidiaries, Fiscal Year.
(a) The authorized, issued and outstanding shares of Capital Stock of
the Borrower are as set forth in the Disclosure Schedule. All such outstanding
shares have been duly authorized, are validly issued and outstanding and are
fully paid and non-assessable. To the best of the Borrower's knowledge, there
are no outstanding options or other rights pertaining to the Capital Stock of
the Borrower, other than as set forth in the Disclosure Schedule. The Borrower
has no obligation to repurchase or redeem any shares of its Capital Stock.
(b) The Disclosure Schedule sets forth the names and jurisdictions of
incorporation of, and the ownership interest of the Borrower in, all of the
Borrower's Subsidiaries. On the date hereof the Borrower has no Material
Subsidiaries.
38
(c) Special Metals Foreign Sales Corp. is a foreign sales corporation
within the meaning of Section 922(a) of the Code and acts as a commission agent
of the Borrower as described in Treasury Regulation ss.1.924(a)-1T(b).
(d) The Borrower's fiscal year ends on December 31 and its fiscal
quarters end on March 31, June 30, September 30 and December 31, respectively.
4.3 Authorization, Absence of Conflicts.
The execution, delivery and performance by the Borrower of this
Agreement and the other Loan Documents to be executed and delivered by it
hereunder, the borrowings and the requests for issuance of letters of credit
hereunder, and the creation of security interests in favor of the Bank pursuant
to the Security Documents (a) have been duly authorized by all requisite
corporate action of the Borrower, (b) do not require the consent or approval of
any stockholders of the Borrower, and (c) will not (i) violate any Requirement
of Law applicable to the Borrower, (ii) violate or constitute (with due notice
or lapse of time or both) a breach of or a default under any Contractual
Obligation of the Borrower or any of its Subsidiaries, (iii) result in the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of the Borrower or any of its Subsidiaries or (iv) require any
authorization, consent, approval, license, ruling, permit, tariff, rate,
certification, exemption, or filing or registration by or with any Governmental
Authority or any consent or approval of any other Person.
4.4 Binding Obligations.
This Agreement is, and, upon the delivery thereof to the Agent, each
other Loan Document executed and delivered by the Borrower will be, 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
similar laws affecting enforceability of creditors' rights generally at the time
in effect and except as specific performance and rights of acceleration may be
subject to equitable principles of general applicability.
4.5 Financial Condition and Statements.
The consolidated balance sheets of the Borrower and its Subsidiaries
as at December 31, 1995, and the related consolidated statements of income,
retained earnings and cash flows of the Borrower and its Subsidiaries for the
fiscal year ended on said date, with the opinion thereon of Ernst & Young, LLP,
and the unaudited consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at March 31 and June 30, 1996, and the related
consolidated statements of income and cash flows of the Borrower and its
Subsidiaries for the fiscal quarters then ended, heretofore furnished to the
Lenders, are complete and correct and fairly present the consolidated financial
condition of the Borrower and its Subsidiaries as at said dates and the
consolidated results of their operations for the fiscal year
39
and fiscal quarters ended on said dates (subject, in the case of such financial
statements as at March 31 and June 30, 1996, to normal year-end audit
adjustments), all in accordance with GAAP and practices applied on a consistent
basis. On said dates neither the Borrower nor any of its Subsidiaries had any
material obligations or liabilities, direct or contingent (including, without
limitation, any liabilities for Environmental Costs and any liabilities under
Environmental Laws), liabilities for taxes, forward or long-term commitments or
unrealized or anticipated losses from any commitments, except as referred to or
reflected or provided for in said balance sheets as at said dates, and except
for liabilities set forth on the Disclosure Schedule. Since December 31, 1995
(a) there has been no material adverse change in the consolidated financial
condition, operations, business or prospects taken as a whole of the Borrower
and its consolidated Subsidiaries from that set forth in said financial
statements as at said date and (b) there has been no development or event which
has had or could reasonably be expected to have a Material Adverse Effect. As of
the Effective Date, after giving effect to the transactions contemplated hereby,
the Borrower is Solvent.
4.6 Taxes.
The Borrower and its Subsidiaries have filed all United States Federal
income tax returns and all other material tax returns which are required to be
filed by them and have paid all taxes due pursuant to such returns or pursuant
to any assessment made against the Borrower or any of its Subsidiaries or any of
their respective assets and all other taxes, fees and other charges imposed on
the Borrower or any of its Subsidiaries by any Governmental Authority, except
such taxes, if any, as are being Properly Contested. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of taxes
and other governmental charges are, in the opinion of the Borrower, adequate. No
tax Liens other than Permitted Liens have been filed and no claims are being
asserted with respect to any such taxes, fees or other charges. Neither the
Borrower nor any of its Subsidiaries is undergoing any tax audits, other than as
specified in the Disclosure Schedule.
4.7 Title to Properties.
Each of the Borrower and its Subsidiaries owns and has good and
marketable title or leasehold rights to all of its assets, free and clear of any
Liens other than Permitted Liens, and enjoys peaceful and undisturbed possession
under all leases necessary in any material respects for the operation of its
assets. No mortgage or financing statement or other evidence or notice of a
security interest covering all or any part of the assets of the Borrower or any
of its Subsidiaries is on file in any public office, except such as have been
filed in connection with Permitted Liens.
4.8 Proceedings.
Except as set forth in the Disclosure Schedule, there is no action,
suit, proceeding or claim, at law or in equity, by or before any arbitrator,
Governmental Authority or other body (including, without limitation, any
Environmental Proceeding), now pending or, to the
40
knowledge of the Borrower, threatened against or affecting the Borrower or any
Subsidiary of the Borrower or any of their respective properties, rights or
assets, which relates to the transactions contemplated hereby or by the other
Loan Documents or which, if adversely determined, could have a Material Adverse
Effect.
4.9 Labor Disputes; Collective Bargaining Agreements.
Except as set forth in the Disclosure Schedule, as of the date hereof
(a) there are no collective bargaining agreements or other labor contracts
covering the Borrower or any of its Subsidiaries; (b) no such collective
bargaining agreement or other labor contract will expire during the term of this
Agreement; (c) no union or other labor organization is seeking to organize, or
to be recognized as bargaining representative for, a bargaining unit of
employees of the Borrower or any of its Subsidiaries; (d) there is no pending or
threatened strike, work stoppage, material unfair labor practice claim or
charge, arbitration or other material labor dispute against or affecting the
Borrower or any of its Subsidiaries or their respective employees; and (e) there
are no actions, suits, charges, demands, claims, counterclaims or proceedings
pending or, to the knowledge of the Borrower, threatened against the Borrower or
any of its Subsidiaries, by or on behalf of, or with, its employees, other than
employee grievances arising in the ordinary course of business which are not, in
the aggregate, material.
4.10 Material Agreements and Licenses.
To the best of the Borrower's knowledge, the Borrower and its
Subsidiaries have all necessary licenses, permits and approvals (including,
without limitation, all necessary licenses, permits and authorizations relating
to Environmental Laws) to own and operate their respective properties and assets
and to carry on their business as currently conducted, except where the failure
to have such license, permit or authorization would not have a Material Adverse
Effect.
4.11 Intangible Assets.
Each of the Borrower and its Subsidiaries possesses all necessary
patents, know-how, trademarks, service marks, trade names, and copyrights, and
rights with respect to each of the foregoing, necessary to carry on its business
as currently conducted and the possession and use thereof in its business does
not, to the best of the Borrower's knowledge, conflict with the patents,
know-how, trademarks, service marks, trade names, and copyrights, and rights
with respect to the foregoing, of any other Person, except where such conflict
could not have a Material Adverse Effect.
4.12 Condition of Assets.
All of the assets and properties of the Borrower and its Subsidiaries
which are reasonably necessary for the operation of the Borrower's and its
Subsidiaries' respective
41
businesses are in good working condition, ordinary wear and tear excepted, and
are able to serve the function for which they are currently being used or for
which they are intended.
4.13 No Defaults, Compliance With Laws.
To the best of the Borrower's knowledge, neither the Borrower nor any
Subsidiary of the Borrower is in default under any Contractual Obligation, which
default could have a Material Adverse Effect. Each of the Borrower and its
Subsidiaries has complied and is in compliance in all respects with all
Requirements of Law including, without limitation, all applicable Environmental
Laws, non-compliance with which would have a Material Adverse Effect. No Default
or Event of Default has occurred and is continuing.
4.14 Indebtedness.
Neither the Borrower nor any of its Subsidiaries has any Indebtedness,
except (i) Indebtedness set forth in the Disclosure Schedule and (ii)
Indebtedness set forth in the financial statements referred to in Section 4.5.
4.15 Not an Investment Company or Regulated Company.
(a) Neither the Borrower nor any of its Subsidiaries or Affiliates is
subject to regulation under the Investment Company Act of 1940, as amended, or
is subject to any statute or regulation which regulates the incurrence by the
Borrower or such corporation of indebtedness for or with respect to borrowed
money.
(b) Neither the Borrower nor any of its Subsidiaries or other
Affiliates is subject to regulation under the Public Utility Holding Company Act
of 1935, as amended.
(c) Neither the Borrower nor any of its Subsidiaries or other
Affiliates is subject to regulation as a "public utility" or "public service
corporation" or the equivalent under the applicable law of any state relating to
public utilities and/or public service corporations.
4.16 Use of Proceeds.
(a) The Borrower shall use the proceeds of the Loans solely (i) to
refinance the principal of, and to pay all interest, fees and other amounts
payable in respect of, all loans outstanding under the Existing Agreement, (ii)
to pay the transaction costs relating to this Agreement, (iii) to finance the
working capital needs of the Borrower and its Subsidiaries, and (iv) to repay
outstanding Indebtedness of the Borrower to its Affiliates. The Borrower shall
use the Letters of Credit solely to support payment obligations incurred by it
in the ordinary course of its business.
(b) No part of the proceeds of the Loans or the Letters of Credit will
be used for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any
42
"margin stock" (as such term is defined in Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect), or for the payment in full or in part of, or to provide credit
support for, Indebtedness which was or is to be incurred for such purpose, or to
extend credit or support credit extended to others for such purpose. The
Borrower is not engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying "margin stock".
4.17 Ranking of Loans.
The Obligations rank and will rank at least pari passu in priority of
payment with all other Indebtedness of the Borrower.
4.18 Burdensome Provisions.
Neither the Borrower nor any of its Subsidiaries is a party to or
bound by any Requirement of Law or Contractual Obligation, compliance with which
could have a Material Adverse Effect.
4.19 ERISA.
During the five year period ending on the Effective Date (or, with
respect to (vi) or (viii) below, as of the date such representation is made or
deemed made), except as set forth in the Disclosure Schedule or as reflected in
the financial statements referred to in Section 4.5, none of the following
events or conditions has occurred which, either individually or in the
aggregate, has resulted or could reasonably be expected to result in a liability
to the Borrower which could have a Material Adverse Effect: (i) a Reportable
Event; (ii) an "accumulated funding deficiency" (within the meaning of Section
412 of the Code or Section 302 of ERISA); (iii) any material noncompliance with
the applicable provisions of ERISA or the Code; (iv) a termination of a Single
Employer Plan (other than a standard termination pursuant to Section 4041(b) of
ERISA); (v) a Lien in favor of the PBGC or a Plan; (vi) Underfunding with
respect to any Single Employer Plan; (vii) a complete or partial withdrawal from
any Multiemployer Plan by the Borrower or any Commonly Controlled Entity; (viii)
any liability of the Borrower or any Commonly Controlled Entity under ERISA if
the Borrower or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the annual valuation date most closely
preceding the date on which this representation is made or deemed made; (ix) the
Reorganization or insolvency (within the meaning of Section 4245 of ERISA) of
any Multiemployer Plan; (x) the excess of the present value (determined using
actuarial and other assumptions which are reasonable in respect of the benefits
provided and the employees participating) of the aggregate liability of the
Borrower or any of its Subsidiaries for post-retirement benefits to be provided
to their current and former employees under Plans which are welfare benefit
plans (as defined in Section 3(1) of ERISA) over the assets under all such
Plans; and (xi) an event or condition
43
with respect to which the Borrower or any Commonly Controlled Entity could incur
any liability in respect of a Former Plan.
4.20 Environmental Matters.
Except as set forth in the Disclosure Schedule:
(a) To the best of the Borrower's knowledge, (i) the facilities and
properties owned, leased or operated by the Borrower or any of its Subsidiaries
(the "Properties") and all operations at the Properties are in compliance with
all applicable Environmental Laws, (ii) there is no violation of any
Environmental Law with respect to the Properties or the business operated by the
Borrower or any of its Subsidiaries (the "Business"), and (iii) there are no
conditions relating to the Business or Properties that could reasonably be
expected to give rise to liability under any applicable Environmental Law,
except for any failure so to comply or violation or condition, or any
aggregation thereof, that could not reasonably be expected to result in the
payment of a Material Environmental Amount.
(b) To the best of the Borrower's knowledge after diligent inquiry,
the Properties do not contain, and have not previously contained, any Hazardous
Substances at, on or under the Properties in amounts or concentrations that
constitute or constituted a violation of, or could reasonably give rise to
liability under, Environmental Laws except insofar as the presence of any
Hazardous Substances is not reasonably likely to result in the payment of a
Material Environmental Amount.
(c) Neither the Borrower nor any of its Subsidiaries has received any
written or verbal notice of, or inquiry from any Governmental Authority, of any
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Business (including, without limitation,
any notice that any of the Properties has been listed on the national priorities
list or any similar state list), nor does the Borrower have knowledge or reason
to believe that any such notice will be received or is being threatened, except
insofar as such notice or threatened notice, or any aggregation thereof, does
not involve a matter or matters that is or are reasonably likely to result in
the payment of a Material Environmental Amount.
(d) To the best of the Borrower's knowledge, Hazardous Substances have
not been transported or disposed of from the Properties, or generated, treated,
stored or disposed of by or on behalf of the Borrower or any of its Subsidiaries
at, on or under any of the Properties or any other location in violation of, or
in a manner that would be reasonably likely to give rise to liability under, any
applicable Environmental Law, except insofar as any such violation or liability
referred to in this paragraph, or any aggregation thereof, is not reasonably
likely to result in the payment of a Material Environmental Amount.
44
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any of its Subsidiaries is or will be
named as a party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
the Borrower, any of its Subsidiaries, the Properties or the Business, except
insofar as such proceeding, action, decree, order or other requirement, or any
aggregation thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount.
(f) There has been no release or, to the best knowledge of the
Borrower, after diligent inquiry, threat of release of Hazardous Substances at
or from the Properties, or arising from or related to the operations (including,
without limitation, disposal) of the Borrower or any of its Subsidiaries in
connection with the Properties or otherwise in connection with the Business, in
violation of or in amounts or in a manner that would be reasonably likely to
give rise to liability under Environmental Laws, except insofar as any such
violation or liability referred to in this paragraph, or any aggregation
thereof, is not reasonably likely to result in the payment of a Material
Environmental Amount.
(g) Neither the Borrower nor any of its Subsidiaries has knowingly
assumed any liability of any Person under any Environmental Law.
(h) The Borrower is implementing an environmental program reasonably
designed to (i) ensure that the Borrower, its Subsidiaries, any of their
respective operations (including, without limitation, disposal), and any
properties owned or leased by any of them, remain in compliance with applicable
Environmental Laws and (ii) minimize prudently any liabilities or potential
liabilities that the Borrower, any of its Subsidiaries, any of their respective
operations (including, without limitation, disposal), and any properties owned
or leased by any of them, may have under applicable Environmental Laws, except
where the failure to do so could not reasonably be expected to result in the
payment of a Material Environmental Amount.
4.21 Deposit Account Balances. The Borrower and its Subsidiaries do
not maintain balances in excess of $1,000,000 in the aggregate with Ineligible
Financial Institutions.
4.22 Correct Information.
The information, schedules, exhibits and reports furnished by the
Borrower to the Agent in connection with the negotiation and preparation of this
Agreement and the other Loan Documents did not contain any omissions or
misstatements of fact which would make the statements contained therein
misleading or incomplete in any material respect when furnished to the Agent.
The Borrower knows of no fact that has not been disclosed in writing to the
Lenders and which materially and adversely affects, or which could reasonably be
45
expected in the future to materially and adversely affect, the Borrower, any of
its Subsidiaries, or the ability of the Borrower to perform its obligations
hereunder and under the other Loan Documents.
ARTICLE 5
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Initial Credit Event.
The obligation of each Lender to make its initial Loan hereunder, and
the obligation of the Issuing Bank to issue the initial Letter of Credit
hereunder, are subject to the following conditions precedent:
(a) Receipt of Documents. The Agent shall have received each of the
following documents (dated or certified as of the Closing Date unless otherwise
provided herein, in form and substance satisfactory to the Agent, and in number
sufficient for distribution to all the Lenders):
(i) Credit Agreement. Counterparts of this Agreement, duly
executed by each party hereto;
(ii) Notes. Notes in favor of any Lenders who have requested
them, appropriately completed and duly executed by the Borrower;
(iii) Borrower Security Agreement. A security agreement duly
executed by the Borrower substantially in the form of Exhibit C (the
"Borrower Security Agreement");
(iv) Perfection and Priority of Liens. (1) UCC-1 financing
statements duly executed by the Borrower and properly completed for
filing in all public offices specified by the Agent, (2) letters in
form and substance satisfactory to the Agent, duly executed by each
public warehouse in which the Borrower maintains Inventory, and (3)
evidence that no financing statements are currently on record in any
public office specified by the Agent naming the Borrower as debtor,
other than financing statements filed in connection with Permitted
Liens and financing statements with respect to which the Agent shall
have received UCC-3 termination statements duly executed by the
secured party named therein;
(v) Insurance. Certificates of insurance satisfactory in form and
substance to the Agent with respect to the insurance required by the
provisions of Section 6.6, which shall include loss payable clauses
naming the Agent as loss-payee or additional insured, as appropriate;
46
(vi) Cash Flow Support Agreement. A letter from SIMA to the
Agent, the Issuing Bank and the Lenders (the "Cash Flow Support
Agreement"), pursuant to which SIMA shall agree to provide cash flow
support to the Borrower by extending to the Borrower a $6,000,000
committed unsecured line of credit and maintaining such line available
to the Borrower until the payment in full of the Obligations, the
expiration of the Letters of Credit and the termination of the
Aggregate Revolving Commitments, which letter shall be duly executed
by SIMA and shall be substantially in the form of Exhibit G;
(vii) Subordination Agreement. A subordination agreement duly
executed by SIMA and the Borrower substantially in the form of Exhibit
H (the "Subordination Agreement");
(viii) Certificate Regarding Projected Capital Expenditures. A
certificate duly executed by a Responsible Officer of the Borrower,
describing the Borrower's proposed expansion program and setting forth
the Borrower's projected capital expenditures during the twelve-month
period commencing on the Closing Date, all in detail reasonably
satisfactory to the Agent;
(ix) Corporate Authority, Actions and Incumbency. Originals or
copies of such documents as the Agent may require (all of which shall
be certified by such corporate officers or governmental officials as
the Agent may require) relating to the existence and corporate
authority of the Borrower, the taking of all necessary corporate
action to authorize the execution, delivery and performance by the
Borrower of the Loan Documents to which it is a party, and the
incumbency and authenticity of the signature of each officer who
executes a Loan Document on behalf of the Borrower;
(x) Compliance Certificate. A certificate dated the Closing Date,
duly executed by a Responsible Officer of the Borrower, to the effect
that on and as of such date (1) the Borrower has complied and is then
in compliance with all the terms, covenants and conditions of the
Existing Agreement and this Agreement, (2) there exists no Default or
Event of Default under the Existing Agreement or this Agreement, and
(3) the representations and warranties of the Borrower contained in
Article 4 are true with the same effect as though such representations
and warranties had been made on such date, which certificate shall set
forth in detail reasonably satisfactory to the Agent the calculations
upon which the Borrower bases its determination that it is in
compliance with the financial covenants set forth in Sections 6.18,
6.19 and 6.20 on the Effective Date;
(xi) Opinions of Counsel. The favorable legal opinion of Bond,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, LLP, special counsel to the Borrower, as to such
matters as the Agent shall reasonably require;
47
(xii) Financial Statements. Copies, certified to the Agent's
satisfaction, of the Borrower's financial statements specified in
Section 4.5; and
(xiii) Solvency Certificate. A solvency certificate satisfactory
in form and substance to the Agent, duly executed by a Responsible
Officer of the Borrower;
(xiv) Additional Documents. Such other statements, certificates,
documents or information as the Agent or any Lender shall reasonably
specify.
(b) Payment of Fees. The Agent shall have received from the Borrower
payment in full of the Fees required to be paid on the Closing Date pursuant to
the Fee Letter.
(c) Existing Agreement. Prior to or simultaneously with the
disbursement by the Lenders of the first Loans hereunder, (i) the Borrower shall
have paid in full the principal of all loans outstanding under the Existing
Agreement and all interest, fees and other amounts owing to the Existing Lenders
under the Existing Agreement or any related document and (ii) the Agent shall
have received such duly executed documentation as shall be necessary for the
cancellation of all commitments under the Existing Agreement and the
termination, release or discharge of all security interests granted by the
Borrower to the Existing Lenders thereunder.
5.2 Conditions Precedent to Each Credit Event.
The obligation of each Lender to make any Loan hereunder (including
its Term Loan and its initial Revolving Loan, but excluding any Base Rate Loan
required to be made by it pursuant to paragraph (g) of Section 2.11), and the
obligation of the Issuing Bank to issue or renew any Letter of Credit hereunder
(including the initial Letter of Credit), are subject to the following
conditions precedent (it being agreed that any certificates or other documents
required hereunder shall be dated or certified as of the Borrowing Date for such
Loan or Issuance Date for such Letter of Credit unless otherwise provided
herein, and shall be in form and substance satisfactory to the Agent and in
number sufficient for distribution to the Issuing Bank and all the Lenders):
(a) Representations and Warranties. Each of the representations and
warranties set forth in Article 4 shall be true and correct in all material
respects on and as of such date as if made on and as of such date (except to the
extent that such representations and warranties expressly relate to an earlier
date) and, if the Agent so requests, the Agent shall have received a certificate
duly executed by a Responsible Officer of the Borrower to such effect.
(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the Revolving Loans
requested to be made and the Letters of Credit requested to be issued on such
date and, if the Agent so requests,
48
the Agent shall have received a certificate duly executed by a Responsible
Officer of the Borrower to such effect.
(c) Request of Borrowing or Issuance. The Agent shall have received an
appropriate Notice of Borrowing or LC Application, as the case may be, with
respect to the Loans to be made or Letters of Credit to be issued on such date.
(d) Borrowing Base Certificate. If the Borrower requests a Revolving
Loan or a Letter of Credit, the Agent shall have received the most recent
Borrowing Base Certificate required to be delivered by the Borrower to the Agent
pursuant to Section 6.3(e), which certificate shall indicate that the requested
Revolving Loan or Letter of Credit does not exceed the Aggregate Available
Revolving Commitments on such date.
(e) Fees. If the relevant credit event consists of a request for
issuance or renewal of a Letter of Credit, the Agent shall have received payment
in full of the Letter of Credit Fee and Fronting Fee payable pursuant to Section
2.12 in connection with such issuance or renewal.
(f) Additional Matters. The Agent shall have received such additional
instruments, certificates or other documents, and such additional information,
as the Agent may reasonably require.
Each borrowing and each issuance of a Letter of Credit hereunder shall
constitute a representation and warranty by the Borrower that as of the date of
such borrowing or issuance the conditions contained in this Section 5.2 have
been satisfied with respect to such borrowing or issuance.
ARTICLE 6
COVENANTS
The Borrower hereby covenants and agrees that so long as any
Commitment remains in effect or any Letter of Credit remains outstanding and
until the payment in full of the Obligations and the complete performance of all
of the Borrower's other obligations hereunder and under the other Loan
Documents, unless the Agent and the Majority Lenders shall otherwise consent in
writing:
6.1 Corporate Existence, Properties.
The Borrower shall, and shall cause each of its Subsidiaries to, do or
cause to be done all things necessary to:
(a) preserve and keep in full force and effect its legal existence;
49
(b) remain or become a corporation qualified to engage in business in
good standing in all jurisdictions in which the character of its
properties or the transaction of its business make such qualification
necessary;
(c) maintain, preserve and protect all permits, rights and privileges
necessary for the proper conduct of its business and all franchises,
licenses, patents, trade names, trademarks and copyrights owned by or
licensed to it that are necessary or desirable in the normal conduct
of its business;
(d) ensure that all property used or useful in the conduct of its
business is maintained and kept in good repair, working order and
condition, and from time to time take all reasonable action to make,
or cause to be made, all needful and proper repairs, renewals,
replacements, betterments and improvements thereto so that, in the
reasonable judgment of the Borrower or such Subsidiary, the business
carried on in connection therewith may be properly and advantageously
conducted at all times.
6.2 Payment of Indebtedness, Taxes.
The Borrower shall, and shall cause each of its Subsidiaries to, pay
all of its Indebtedness and obligations promptly and in accordance with normal
terms and trade practices and shall promptly pay and discharge or cause to be
paid or discharged all taxes, assessments or other governmental charges or
levies imposed upon it or upon its income and profits or upon its property,
real, personal or mixed, or upon any part thereof, before the date on which
penalties attach thereto, as well as all lawful claims for labor, materials and
supplies or otherwise which, if unpaid, might become a lien or charge upon such
properties or any part thereof; provided, however, that the Borrower shall not
be required to pay and discharge, or cause any of its Subsidiaries to pay or
discharge any such debt, obligation, tax, assessment, charge, levy or claim so
long as it is Properly Contested. For purposes of this Agreement, any debt or
obligation of, any tax, assessment, charge, levy or claim against, and any
litigation or other legal proceeding involving, any Person shall be deemed to be
"Properly Contested" only if (a) it shall be contested diligently and in good
faith by appropriate proceedings, (b) such Person shall have assigned on its
books adequate reserves with respect to any such debt, obligation, tax,
assessment, charge, levy or claim so contested, and (c) no material portion of
such Person's assets shall be subject to encumbrance, loss or forfeiture by
reason of such contest.
6.3 Financial Statements, Reports, etc.
The Borrower shall furnish to each Lender (in reasonable detail
satisfactory to the Agent):
(a) as soon as available and in any event within 30 days after the end
of each fiscal quarter of the Borrower, consolidated and consolidating
statements of cash flows of the Borrower and its Subsidiaries for such period
and for the period from the beginning of the
50
respective fiscal year to the end of such period, the related consolidated and
consolidating statements of income for such period and the related consolidated
and consolidating balance sheets, as at the end of such period, setting forth in
each case in comparative form the corresponding consolidated and consolidating
figures for the corresponding period in the preceding fiscal year, accompanied
by a certificate of a Responsible Officer of the Borrower, which certificate
shall state that said financial statements fairly present the consolidated
financial condition and results of operations, as the case may be, of the
Borrower and its Subsidiaries in accordance with GAAP, consistently applied, as
at the end of, and for, such period (subject to normal year-end audit
adjustments);
(b) as soon as available and in any event within 90 days after the end
of each fiscal year of the Borrower, consolidated statements of cash flows of
the Borrower and its Subsidiaries for such year, the related consolidated
statements of income and retained earnings for such year and the related
consolidated balance sheets as at the end of such year, setting forth in each
case in comparative form the corresponding consolidated figures for the
preceding fiscal year, and accompanied by an opinion thereon of Ernst & Young,
LLP or another firm of independent certified public accountants of recognized
national standing that is satisfactory to the Agent, which opinion shall state
that said consolidated financial statements fairly present the consolidated
financial condition and results of operations of the Borrower and its
Subsidiaries as at the end of, and for, such fiscal year, and a certificate of
such accountants showing whether the Borrower is in compliance with the
financial covenants contained in Sections 6.18, 6.19 and 6.20, which certificate
shall set forth in detail reasonably satisfactory to the Agent the calculations
made to determine such compliance and the information required to make such
calculations;
(c) together with each set of financial statements delivered to the
Lenders pursuant to paragraph (a) or (b) above, a certificate of a Responsible
Officer of the Borrower to the effect that to the best of his knowledge, after
due inquiry, no Default or Event of Default has occurred and is continuing (or,
if any Default or Event of Default has occurred and is continuing, describing
the same in detail reasonably satisfactory to the Agent and describing the
actions, if any, that the Borrower has taken or proposes to take with respect
thereto), which certificate shall set forth in detail reasonably satisfactory to
the Agent the calculations made to determine compliance with the financial
covenants contained in Sections 6.18, 6.19 and 6.20 and the information required
to make such calculations;
(d) together with each set of financial statements delivered to the
Lenders pursuant to paragraph (a) or (b) above, a management letter signed by a
Responsible Officer of the Borrower, discussing in detail reasonably
satisfactory to the Agent the business, operations, property and condition
(financial and otherwise) of the Borrower and its Subsidiaries with respect to
the period covered by such financial statements, including the sales, cost of
goods sold, purchases, backlog and short-term forecasts of the Borrower and its
Subsidiaries, and any material deviations from the Borrower's and its
Subsidiaries' operating budget and cash flow projections for such period, and
describing in detail reasonably satisfactory to the Agent any expansion program
approved or adopted by the Borrower's board of directors or senior management
during such period which entails Capital
51
Expenditures in excess of $10,000,000 in the aggregate for the Borrower and its
Subsidiaries in any fiscal year of the Borrower;
(e) as soon as available, but in any event within 10 Business Days
after the last day of each month, a borrowing base certificate substantially in
the form of Exhibit I (each, a "Borrowing Base Certificate"), setting forth the
information requested therein as of the last day of such month, certified by a
Responsible Officer of the Borrower;
(f) as soon as available and in any event within 90 days after the
beginning of each fiscal year of the Borrower, three-year forecasts prepared by
a Responsible Officer of the Borrower covering such fiscal year and the two
immediately succeeding fiscal years, and certified by such officer to have been
prepared in good faith and based upon reasonable assumptions; and
(g) from time to time such other information regarding the business,
affairs or financial condition of the Borrower or any of its Subsidiaries
(including, without limitation, any Plan and any reports or other information
required to be filed under ERISA) as the Agent, the Issuing Bank or any Lender
may reasonably request.
6.4 Notice of Adverse Events and Significant Changes.
The Borrower shall furnish to the Agent, the Issuing Bank and each
Lender prompt written notice of:
(a) the occurrence of any event which constitutes a Default or Event
of Default hereunder,
(b) the commencement of any action or proceeding involving or
affecting the Borrower or any Subsidiary thereof or any properties or assets of
the Borrower or such Subsidiary an adverse determination of which could
reasonably be expected to have a Material Adverse Effect,
(c) any default or event of default under any material Contractual
Obligation of the Borrower or any of its Subsidiaries,
(d) any litigation, investigation or proceeding which may exist at any
time between the Borrower or any of its Subsidiaries and any Governmental
Authority, which in either case, if not cured or if adversely determined, as the
case may be, could reasonably be expected to have a Material Adverse Effect,
(e) the occurrence of any of the following events: (i) the occurrence
or expected occurrence of any Reportable Event with respect to any Single
Employer Plan which could reasonably be expected to have a Material Adverse
Effect, (ii) a failure on the part of the Borrower or any of its Subsidiaries to
make any required contribution to a Single Employer
52
or Multiemployer Plan (other than a failure to make a contribution which (1)
together with all other contributions that are then past due does not exceed
$100,000 in the aggregate, (2) does not constitute or result in a violation of
any provision of ERISA or the Code or any regulation adopted thereunder, (3)
does not cause an Underfunding of such Plan and (4) does not result in the
imposition of any fees or penalties against the Borrower or any of its
Subsidiaries, other than the requirement to pay interest accrued on such
contribution to the relevant Plan), (iii) the creation of any Lien in favor of
the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or
insolvency (within the meaning of Section 4245 of ERISA) of, any Multiemployer
Plan; (iv) Underfunding with respect to any Single Employer Plan which could
result in a material liability to the Borrower; (v) the institution of
proceedings or the taking of any other action by the PBGC or the Borrower or any
Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the termination, Reorganization or insolvency (within the
meaning of Section 4245 of ERISA) of, any Single Employer or Multiemployer Plan;
or (vi) the occurrence or expected occurrence of any event or condition under
which the Borrower or any Commonly Controlled Entity has incurred or could incur
any liability in respect of a Former Plan which could reasonably be expected to
have a Material Adverse Effect,
(f) any material adverse change in the business, operations, property,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole,
(g) (i) any release or discharge by the Borrower or any Subsidiary of
any Hazardous Substances required to be reported under Environmental Laws to any
Governmental Authority; (ii) any condition, circumstance, occurrence or event
that could result in material Environmental Costs or could result in the
imposition of any lien or other restriction on the title, ownership or
transferability of any Property; and (iii) any proposed action to be taken by
the Borrower or any Subsidiary that could subject the Borrower or any Subsidiary
to any material additional or different requirements or liabilities under
Environmental Laws,
(h) the execution by the Borrower or any of its Subsidiaries of any
new collective bargaining agreement or other labor contract, the recognition of
any union or other labor organization as bargaining representative for a
bargaining unit of employees of the Borrower or any of its Subsidiaries, any
pending or threatened strike, work stoppage, material unfair labor practice
claim or charge, arbitration or other material labor dispute against or
affecting the Borrower or any of its Subsidiaries, and any actions, suits,
charges, demands, claims, counterclaims or proceedings pending or, to the
knowledge of the Borrower, threatened against the Borrower or any of its
Subsidiaries, by or on behalf of, or with, its employees, other than employee
grievances arising in the ordinary course of business which are not, in the
aggregate, material,
(i) any change in the Borrower's fiscal year,
(j) any change in the Borrower's accounting policies, practices or
procedures in effect on the date hereof,
53
(k) the receipt by the Borrower or any of its Subsidiaries of any
communication from the Internal Revenue Service disallowing the status of
Special Metals Foreign Sales Corp. as a foreign sales corporation, if such
disallowance could reasonably be expected to have a Material Adverse Effect, and
(l) the approval or adoption by the Borrower's board of directors or
senior management of any expansion program which entails Capital Expenditures in
excess of $10,000,000 in the aggregate for the Borrower and its Subsidiaries in
any fiscal year of the Borrower. Each notice pursuant to paragraph (e) of this
Section 6.4 shall be accompanied by a statement of a Responsible Officer of the
Borrower (and, if applicable, the relevant Commonly Controlled Entity or
Subsidiary) setting forth details of the occurrence referred to therein and
stating what action the Borrower (or, if applicable, the relevant Commonly
Controlled Entity or Subsidiary) proposes to take with respect thereto.
6.5 Books and Records; Inspection.
The Borrower shall maintain, and shall cause each of its Subsidiaries
to maintain, proper books and records with respect to the operation of its
business in accordance with GAAP consistently applied; the Borrower shall
permit, and shall cause each of its Subsidiaries to permit, authorized
representatives of the Agent to visit and inspect from time to time upon
reasonable notice during business hours (or at any time after the occurrence and
during the continuance of an Event of Default hereunder) any of the offices,
inventory locations and other facilities of the Borrower or such Subsidiary, to
examine the books and records of the Borrower or such Subsidiary and make copies
or extracts therefrom, to examine the Inventory of the Borrower or such
Subsidiary, to conduct field examinations with respect to the assets of the
Borrower and its Subsidiaries, to verify the eligibility of the Inventory and
Receivables of the Borrower and its Subsidiaries for inclusion in the Borrowing
Base, and to discuss the affairs, inventory and accounts of the Borrower or such
Subsidiary with its officers and accountants.
6.6 Insurance.
The Borrower shall, and shall cause each of its Subsidiaries to, (i)
keep its assets that are of an insurable character insured by financially sound
and reputable insurers against loss or damage by fire, explosion and other
hazards insured against by extended coverage in amounts sufficient to prevent it
from becoming a co-insurer (other than maintaining reasonable deductibles) and
in any event not less than 80% of the full insurable value (replacement value if
available) of the property insured, (ii) maintain with financially sound and
reputable insurers, insurance against hazards, risks and liability to persons
and property to the extent and in the manner customary for companies in similar
business similarly situated, and (iii) file with the Agent upon its request a
detailed list of the insurance then in effect and stating the names of the
insurance companies, the amounts of insurance, dates of expiration thereof and
the properties and risks covered thereby.
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6.7 Compliance with Laws.
The Borrower shall, and shall cause each of its Subsidiaries to,
observe and comply in all material respects with all Requirements of Law which
now or at any time hereafter may be applicable to the Borrower or such
Subsidiary (including all applicable provisions of ERISA and the Code).
6.8 Environmental Laws.
The Borrower shall, and shall cause each of its Subsidiaries to, (a)
comply with, and use all reasonable efforts to ensure compliance by all tenants
and subtenants of the Properties, if any, with, all applicable Environmental
Laws and obtain and comply with and maintain and use all reasonable efforts to
ensure that all tenants and subtenants obtain and comply with and maintain, any
and all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws, except in each case to the extent that the
failure to do so could not reasonably be expected to result in the payment of a
Material Environmental Amount, (b) conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and other similar
actions required of the Borrower or any Subsidiary under Environmental Laws and
promptly comply with all orders and directives of all Governmental Authorities
regarding Environmental Laws, except to the extent that the same are being
contested in good faith by appropriate proceedings, and except in each case to
the extent that the failure to do so could not reasonably be expected to result
in the payment of a Material Environmental Amount.
6.9 Use of Proceeds.
The Borrower shall use the Letters of Credit and the proceeds of the
Loans solely in accordance with its representations and warranties in Section
4.16.
6.10 Indebtedness.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, create, incur, assume or suffer to exist any Indebtedness at any time,
except:
(a) Indebtedness owing to the Lenders and the Issuing Bank hereunder
and under the other Loan Documents;
(b) taxes, assessments and governmental charges that are not yet due
and payable;
(c) Indebtedness secured by purchase money liens permitted under
Section 6.11(f) and obligations under Capital Leases, so long as the
total amount of such Indebtedness and obligations does not exceed
$5,000,000 in the aggregate for the Borrower and its Subsidiaries;
55
(d) Subordinated Indebtedness of the Borrower to its Affiliates
(including any Subordinated Indebtedness of the Borrower to SIMA under
the Cash Flow Support Agreement);
(e) Indebtedness specified in the financial statements referred to in
Section 4.5 or in the Disclosure Schedule (provided that, from and
after the Effective Date, Indebtedness to SIMA shall be permitted only
if it constitutes Subordinated Indebtedness);
(f) obligations under metal hedging contracts or interest rate swap,
cap or collar agreements or similar arrangements entered into for
hedging purposes with any Lender or any other financial institution
that is satisfactory to the Majority Lenders;
(g) Indebtedness to the New York Power Authority under the Industrial
Energy Efficiency Program described in the Disclosure Schedule; and
(h) additional unsecured Indebtedness of the Borrower incurred in the
ordinary course of its business and not exceeding $1,000,000 in
aggregate principal amount at any one time outstanding.
6.11 Liens.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, create, incur, assume or suffer to exist any Lien of any kind upon, or any
security interest in, any of its property or assets, whether now owned or
hereafter acquired, except:
(a) Liens in favor of the Agent securing the Obligations;
(b) liens for taxes not delinquent or being contested in good faith
and by appropriate proceedings;
(c) deposits or pledges to secure obligations under workers'
compensation, social security or similar laws, or under unemployment
insurance;
(d) deposits or pledges to secure bids, tenders, contracts (other than
contracts for borrowed money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in the
ordinary course of business;
(e) mechanics', workers', carriers', warehousemen's, materialmen's or
other like liens arising in the ordinary course of business with
respect to obligations which are not due, which are bonded or
discharged within 30 days of the date of filing or which are being
contested in good faith;
(f) purchase money liens on fixed assets of the Borrower or such
Subsidiary, securing Indebtedness permitted under Section 6.10(c),
which liens secure the
56
purchase price of such fixed assets and apply only to the fixed assets
so purchased, provided that the principal amount of the indebtedness
secured by any such lien shall at no time exceed an amount equal to
the lesser of the cost to the Borrower or such Subsidiary of the fixed
assets so purchased and the fair market value of such fixed assets (as
determined in good faith by the board of directors of the Borrower or
such Subsidiary) at the time of such acquisition, and that any such
Lien shall be created within 12 months after, in the case of property,
its acquisition, and in the case of improvements, their completion;
(g) liens arising out of Capital Leases permitted under Section
6.10(c), so long as such liens attach only to the fixed assets subject
to such Capital Leases;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial and do not interfere with the ordinary
conduct of the business of the Borrower; and
(i) the Liens set forth in the Disclosure Schedule, provided that no
such Lien is extended to cover any additional property after the
Closing Date and that the amount of Indebtedness secured thereby is
not increased.
6.12 Contingent Liabilities.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, assume, guarantee, endorse, contingently agree to purchase or otherwise
become liable upon any obligation of any Person, except (a) by the endorsement
of instruments for deposit or collection or similar transactions in the ordinary
course of business, (b) guarantees in favor of the Agent, the Issuing Bank and
the Lenders hereunder and under the other Loan Documents, (c) the guarantees
disclosed in the financial statements referred to in Section 4.5, and (d) the
guarantees listed in the Disclosure Schedule.
6.13 Merger and Consolidation; Acquisition and Disposition of Assets.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, enter into any merger, consolidation or voluntary dissolution, or lease or
acquire all or substantially all of the assets of any Person or of any division
or business unit of any Person, or sell, lease, license or otherwise dispose of
any of its assets, except (a) acquisitions, sales, leases, licenses or
dispositions in the ordinary course of business, (b) mergers and consolidations
with, and acquisitions of all or substantially all of the assets or capital
stock of, any Person or any division or business unit of any Person, provided
that the Borrower or such Subsidiary is the surviving entity of such merger or
consolidation, that no Default or Event of Default has occurred or would occur
after giving effect to such merger, consolidation or acquisition, and that (in
the case of an acquisition of capital stock) such acquisition is permitted under
Section 6.14 and the Borrower complies with Section 6.21, if applicable, (c)
mergers by the Borrower with one of its Subsidiaries (provided that the Borrower
is the
57
surviving entity of such merger) or mergers of Subsidiaries of the Borrower with
each other, (d) the sale of the Borrower's dental division currently located in
Ann Arbor, Michigan, and (e) the sale of a two-story building located in New
Hartford, New York, acquired by the Borrower in 1988 from ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
6.14 Investments.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, make any Investment, except (a) obligations issued or guaranteed by the
United States of America or any agency thereof or short term repurchase
agreements with respect thereto, in each case maturing within 12 months after
the date of acquisition thereof, (b) short-term certificates of deposit issued
by, and deposits in, any Lender or any other commercial bank having a combined
capital and surplus of not less than $500,000,000 or the equivalent thereof in
another currency, in each case maturing within 12 months after the date of
acquisition thereof, (c) short-term commercial paper maturing within 12 months
after the date of acquisition thereof, which has been given the highest rating
by Standard & Poor's Corporation, ▇▇▇▇▇'▇ Investors Service, Inc., or another
nationally recognized credit rating agency of similar standing, (d) shares of
money market mutual funds having net assets of not less than $1,000,000,000,
which invest solely in securities referred to in clauses (a), (b) or (c) above,
(e) loans and advances to employees of the Borrower or any Subsidiary for
travel, entertainment and relocation expenses in the ordinary course of business
in an aggregate amount not to exceed $50,000 at any one time outstanding, (f)
Investments in Subsidiaries, so long as the Borrower shall be in compliance
with, or shall concurrently with the making of such Investments comply with,
Section 6.21 with respect to such Subsidiaries, (g) Investments in joint
ventures formed solely for the purpose of acquiring, maintaining and operating
fixed assets used by the Borrower and/or its Qualified Subsidiaries and their
respective joint venture partners in their respective operations, and (h)
Investments in other joint ventures, so long as the aggregate amount of all
Investments by the Borrower and its Subsidiaries in such other joint ventures
does not exceed $5,000,000.
6.15 Change in Nature of Business.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, engage at any time in any business or business activity other than the
business currently conducted by it and business activities reasonably incidental
thereto.
6.16 Transactions with Affiliates.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, (a) make any Investment in any Affiliate of the
Borrower or any Affiliate of such Subsidiary, (b) transfer, sell, lease, assign
or otherwise dispose of any assets to any Affiliate of the Borrower or any
Affiliate of such Subsidiary, (c) merge into or consolidate with or purchase or
acquire assets from any Affiliate of the Borrower or any Affiliate of such
Subsidiary; or (d) enter into any other transaction directly or indirectly with
or for the benefit of any Affiliate of the Borrower or any Affiliate of such
Subsidiary (including, without
58
limitation, any Guarantee Obligation or assumption of obligations thereof);
provided, however, that: (x) any Affiliate of the Borrower or of a Subsidiary of
the Borrower who is a natural person may serve as an employee or director of the
Borrower or such Subsidiary and receive reasonable compensation for his or her
services in such capacity and (y) the Borrower or any of its Subsidiaries may
enter into any transaction with any of their respective Affiliates providing for
the leasing of property, the rendering or receipt of services or the purchase or
sale of product, inventory or other assets in the ordinary course of business on
terms that are no less favorable to the Borrower or such Subsidiary than those
which might be obtained at the time from Persons who are not Affiliates of the
Borrower or such Subsidiary.
6.17 Restricted Payments.
The Borrower shall not, and shall not permit any of its Subsidiaries
that is not a wholly-owned Subsidiary to, make any Restricted Payment, or set
apart any sum for the purpose of making any Restricted Payment; provided,
however, that (a) so long as no Default or Event of Default has occurred and is
continuing, the Borrower may declare and pay dividends or other distributions on
its shares of Capital Stock in an aggregate amount not exceeding in any fiscal
year of the Borrower an amount equal to fifty percent (50%) of the Consolidated
Net Income of the Borrower for the immediately preceding fiscal year and (b) the
Borrower may make payments of principal and interest on Subordinated
Indebtedness permitted to be made under the subordination provisions relating to
such Subordinated Indebtedness. The provisions of this Section 6.17 shall be in
addition to, and not in lieu of, any restriction contained in the instrument
evidencing, or the instrument of subordination with respect to, any Subordinated
Indebtedness. For purposes of this Agreement, the term "Consolidated Net Income"
shall mean, with respect to any period, the consolidated net income of the
Borrower and its consolidated Subsidiaries for such period, determined in
accordance with GAAP.
6.18 Consolidated Net Worth.
The Borrower shall not permit its Consolidated Net Worth to be less
than $24,000,000 at any time. For purposes of this Agreement, the term
"Consolidated Net Worth" shall mean, as at any date, (a) the total of the
amounts that would be shown on the consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at such date in accordance with GAAP as the
par or stated value of all outstanding shares of Capital Stock, paid-in capital
or capital surplus, and retained earnings (excluding, however, the value of any
treasury stock and any redeemable preferred stock or similar capital stock),
less (b) any accumulated deficit.
6.19 Consolidated Leverage Ratio.
The Borrower shall not permit its Consolidated Leverage Ratio to be
greater than 2.8 to 1 at any time. For purposes of this Agreement, the term
"Consolidated Leverage Ratio" shall mean, as at any date, the ratio of:
59
(a) the aggregate amount of all Indebtedness and trade accounts
payable of the Borrower and its consolidated Subsidiaries outstanding
on such date, other than Subordinated Indebtedness, to
(b) the sum of (i) the Consolidated Net Worth as at such date, plus
(ii) the aggregate principal amount of all Subordinated Indebtedness
of the Borrower and its consolidated Subsidiaries outstanding on such
date.
6.20 Consolidated Senior Debt Coverage Ratio.
The Borrower shall not permit its Consolidated Senior Debt Coverage
Ratio to be greater than 3.5 to 1 at any time. For purposes of this Agreement,
the term "Consolidated Senior Debt Coverage Ratio" shall mean, as at any date,
the ratio of:
(a) the sum of (i) the aggregate principal amount of the Loans
outstanding on such date, plus (ii) the Aggregate LC Exposure on such
date, to
(b) Consolidated EBITDA for the period consisting of the four
consecutive fiscal quarters of the Borrower ended on, or most recently
ended prior to, such date;
and the term "Consolidated EBITDA" shall mean, with respect to any period,
Consolidated Net Income for such period, plus interest expense, income tax
payments, provisions for deferred income taxes, depreciation, amortization and
other non-cash charges (to the extent that such items were included in the
calculation of Consolidated Net Income for such period); and adjusted to exclude
any non-operating gains in excess of $100,000 (including extraordinary or
unusual gains, gains from the discontinuance of operations, gains arising from
the sale of capital assets, gains in respect of earnings of Subsidiaries which
are not available for payment to the Borrower in the form of dividends and other
non-recurring gains) for such period and to include any similar non-operating
losses incurred for such period.
6.21 Subsidiaries.
(a) The Borrower shall not form any direct or indirect Subsidiary,
unless the Borrower has (i) given the Agent and the Lenders not less than 30
days' prior written notice of its intention to form such Subsidiary and (ii)
provided to the Agent and each Lender such information about the Subsidiary, its
assets and its contemplated operations as the Agent or such Lender may
reasonably require.
(b) The Borrower shall cause each Material Subsidiary to execute and
deliver to the Agent, promptly after the Borrower determines that such
Subsidiary is a Material Subsidiary, the Subsidiary Guarantee, the Subsidiary
Security Agreement and the Contribution Agreement (or Supplements to the
foregoing substantially in the forms annexed thereto) and such other
certificates, opinions, documents and instruments as may be reasonably requested
by the Agent.
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(c) The Borrower shall not acquire any direct or indirect Subsidiary
unless such acquisition is permitted under Sections 6.13 and 6.14.
(d) The Borrower shall not transfer any of its Inventory or
Receivables to a foreign sales corporation.
6.22 Leases.
The Borrower shall not, and shall not permit any of its Subsidiaries
to, enter into any operating lease as lessee or guarantee the obligations of any
lessee under an operating lease; provided, however, that so long as no Default
or Event of Default has occurred and is continuing and entering into such leases
would not cause a Default or Event of Default to occur, the Borrower and its
Subsidiaries may enter into operating leases which provide for total scheduled
payments (including base rent, supplemental rent and other amounts, however
characterized) not exceeding $1,500,000 in the aggregate for all such leases in
any fiscal year of the Borrower.
6.23 Cash Flow Support Agreement.
The Borrower (a) shall comply in all material respects with the Cash
Flow Support Agreement (unless such compliance is inconsistent with the terms of
this Agreement or the Subordination Agreement), (b) shall enforce its rights and
remedies and the obligations of SIMA under the Cash Flow Support Agreement, (c)
shall not amend, modify or terminate, or permit SIMA to amend, modify or
terminate, the Cash Flow Support Agreement, and (d) shall not assign its rights
or interests thereunder, or permit SIMA to assign its rights, interests or
obligations thereunder, to any Person.
6.24 Deposit Account Balances. The Borrower shall not, and shall not
permit any of its Subsidiaries to, maintain balances in excess of $1,000,000 in
the aggregate with Ineligible Financial Institutions.
ARTICLE 7
EVENTS OF DEFAULT
7.1 Events of Default.
If one or more of the following events (each, an "Event of Default")
shall occur:
(a) The Borrower shall default in (i) the punctual payment when due
(whether at stated maturity or otherwise) of any principal of any Loan or the
punctual reimbursement when due (whether at the due date thereof or otherwise)
of any LC Disbursement or (ii) the punctual payment when due of any interest on
any Loan or LC Disbursement, any Fees or any other amounts payable by it
hereunder, under any Note or under any other Loan Document and, in the case of a
default in the payment of any amount specified in this clause
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(ii), such default shall continue unremedied for more than three (3) days after
written notice is given by the Agent to the Borrower; or
(b) The Borrower shall default in the due observance or performance of
any term, covenant or agreement contained in Section 6.4(a) or Sections 6.10
through 6.23 (inclusive); or
(c) The Borrower or any of its Subsidiaries shall default in the due
observance or performance of any other term, covenant or agreement contained in
this Agreement or any other Loan Document on its part to be observed or
performed and such default shall continue unremedied for a period of 30 days
after written notice thereof, specifying such default and requiring it to be
remedied, shall have been given to the Borrower by the Agent; or
(d) Any representation or warranty made by the Borrower or any of its
Subsidiaries herein or in any other Loan Document, or any statement or
representation made in any certificate, report or opinion delivered by the
Borrower, any of its Subsidiaries or any officer of the Borrower or any of its
Subsidiaries pursuant to this Agreement or any other Loan Document shall prove
to have been incorrect or misleading in any material respect when made; or
(e) The Borrower or any Subsidiary of the Borrower shall fail to make
any payment when due (after giving effect to any applicable grace periods) on
any Indebtedness of the Borrower or such Subsidiary aggregating at least
$1,000,000 (other than Subordinated Indebtedness owing to an Affiliate of the
Borrower or such Subsidiary); or any Indebtedness of the Borrower or any
Subsidiary of the Borrower (other than Subordinated Indebtedness owing to an
Affiliate of the Borrower or such Subsidiary) aggregating at least $1,000,000
shall be accelerated or shall be required to be paid prior to the stated
maturity thereof or prior to any regularly scheduled dates of payment, or shall
be required to be purchased by the Borrower or any of its Subsidiaries prior to
its stated maturity or regularly scheduled date of payment, or the Borrower or
any of its Subsidiaries shall default in the performance of any term contained
in, or any event or condition shall exist under, any agreement or instrument
pursuant to which it has outstanding any such Indebtedness if the effect of such
default, event or condition is to cause, or permit holder(s) of such
Indebtedness to cause (i) Indebtedness of the Borrower or any of its
Subsidiaries aggregating at least $1,000,000 to become due and payable prior to
its stated maturity or regularly scheduled dates of payment or (ii) the Borrower
or any of its Subsidiaries to be required to purchase or otherwise acquire
Indebtedness aggregating at least $1,000,000; or
(f) The Borrower or any of its Subsidiaries or SIMA shall be insolvent
or shall generally cease paying, or be unable to pay, its debts as they become
due or shall make any admission in writing to the foregoing effect; or a
substantial part of the operations or business of the Borrower or any of its
Subsidiaries or SIMA shall be suspended and such suspension shall, in the
opinion of the Majority Lenders, have a material adverse effect on the condition
(financial or otherwise) or operations of the Borrower or SIMA or on the ability
of the Borrower to repay the Obligations; or the Borrower or any of its
Subsidiaries
62
or SIMA shall make an assignment for the benefit of creditors, or shall commence
(as debtor) a case under the Federal Bankruptcy Code, or shall commence any
proceeding with respect to itself, or a substantial portion of its properties or
assets, under any other insolvency, bankruptcy, arrangement, reorganization,
liquidation, dissolution or similar law of the United States or the Republic of
France or any other jurisdiction, or shall apply for a trustee, receiver or
custodian (however named) for all or a substantial portion of its properties or
assets for the purpose of general administration of such properties or assets
for the benefit of creditors or for any other purpose or shall take any action
to authorize any of the foregoing actions; or a court or competent jurisdiction
in the premises shall enter an order for relief against the Borrower or any of
its Subsidiaries or SIMA as a debtor in a case or proceeding under the Federal
Bankruptcy Code or any similar law of the United States, the Republic of France
or any other jurisdiction; or any case or proceeding under the Federal
Bankruptcy Code or any other insolvency, bankruptcy, reorganization,
arrangement, liquidation, dissolution or similar law of the United States, the
Republic of France or any other jurisdiction shall be commenced against the
Borrower or any of its Subsidiaries or SIMA and such case or proceeding shall
remain undismissed, undischarged or unbonded for 60 days or the Borrower or any
of its Subsidiaries or SIMA shall consent to or admit in writing the material
allegations against it in any such case or proceeding; or any trustee, receiver
or similar officer, however named, shall be appointed for all or a substantial
part of the property of the Borrower or any of its Subsidiaries or SIMA and the
Borrower or such Subsidiary or SIMA, as the case may be, shall consent thereto
or such trusteeship or receivership shall continue for a period of 60 days; or
(g) One or more judgment or judgments for the payment of money the
uninsured portion of which exceeds in the aggregate $1,000,000 shall be rendered
against the Borrower, against one or more Subsidiaries of the Borrower, or
against the Borrower and one or more of its Subsidiaries, and shall not be
stayed, released, discharged or fully bonded within 60 days after the issuance
thereof; or
(h) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 412 of the Code
or Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is reasonably likely to result in the termination of such Plan for
purposes of Title IV of ERISA (other than a standard termination pursuant to
Section 4041(b) of ERISA), (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled
Entity shall, or is reasonably likely to, incur any liability in connection with
a withdrawal from, or the insolvency (within the meaning of Section 4245 of
ERISA) or Reorganization of, a Multiemployer Plan, (vi) the occurrence or
expected occurrence of any event or condition which results or is reasonably
likely to result in the Borrower's or any Commonly Controlled Entity's becoming
responsible
63
for any liability in respect of a Former Plan, or (vii) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vii) above, such event or condition, together with all
other such events or conditions, if any, could result in liability which could
have a Material Adverse Effect; or
(i) SIMA and LWH shall cease to own beneficially, directly or
indirectly, with full control thereof and free and clear of any Liens, shares of
voting Capital Stock of the Borrower having, in the aggregate, at least 51% of
the total voting power of all outstanding shares of Capital Stock of the
Borrower; or
(j) SIMA shall terminate the Cash Flow Support Agreement or shall
default in the performance of any of its obligations thereunder; or
(k) The Borrower, any Qualified Subsidiary or any Material Subsidiary
shall assert, or institute any proceedings seeking to establish, that any
provision of any Loan Document is invalid, not binding or unenforceable; or
(l) any Security Document shall cease to be in full force and effect
or shall cease to be effective to grant to the Agent for the benefit of the
Issuing Bank and the Lenders a perfected security interest in the collateral
described therein, with the priority purported to be created thereby;
then, upon the happening of any of the foregoing Events of Default or at any
time thereafter so long as any such Event of Default shall be continuing, the
Majority Lenders may instruct the Agent to take, and upon receipt of such
instructions from the Majority Lenders the Agent shall take, by a notice to the
Borrower, any one or more of the following actions: (1) terminate the
Commitments, whereupon the Commitments shall immediately terminate and/or (2)
declare the outstanding principal amount of the Loans and all interest accrued
thereon, the reimbursement of the LC Disbursements and all interest accrued
thereon, and all fees and other amounts payable hereunder or under any of the
other Loan Documents to be immediately due and payable, whereupon said
principal, interest, fees and other amounts shall become immediately due and
payable and/or (3) require that the Borrower Cash Collateralize all Letters of
Credit then outstanding, whereupon the amount of such cash collateral shall
become immediately due and payable; provided, however, that upon the happening
of any event specified in clause (f) above the Commitments shall immediately
terminate and the Loans, the LC Disbursements, all accrued interest thereon and
all fees and other amounts payable hereunder or under any other Loan Document,
shall be immediately due and payable, and the Borrower shall immediately Cash
Collateralize all Letters of Credit then outstanding, all without declaration or
other notice to the Borrower.
7.2 Waivers.
The Borrower hereby waives, to the extent permitted by applicable law,
(a) all presentments, demands for performance, notices of nonperformance (except
to the extent required by the provisions of this Agreement or of any other Loan
Document), protests,
64
notices of protest, notices of intent to accelerate and notices of dishonor in
connection with the Notes and the Loans and (b) any requirement of diligence or
promptness on the part of the Agent in the enforcement of its, the Issuing
Bank's or the Lenders' rights under the provisions of this Agreement, the Notes
or any other Loan Document.
ARTICLE 8
THE AGENT
8.1 Appointment.
Each Creditor hereby irrevocably designates and appoints CLNY as the
Agent of such Creditor under this Agreement and the other Loan Documents, and
each Creditor irrevocably authorizes CLNY, as the Agent for such Creditor, to
take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Creditor, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
8.2 Delegation of Duties.
The Agent may execute any of its duties under this Agreement and the
other Loan Documents by or through agents or attorneys-in-fact, and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.
8.3 Exculpatory Provisions.
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except, in the case
of any Person, for its own gross negligence or willful misconduct and, in the
case of the Agent, for the gross negligence or willful misconduct of its
officers, directors or employees) or (ii) responsible in any manner to any of
the Creditors for any recitals, statements, representations or warranties made
by the Borrower, any of its Subsidiaries or SIMA or any officer of any of the
foregoing contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower, any of its Subsidiaries or SIMA to perform its
obligations hereunder or
65
thereunder. The Agent shall not be under any obligation to any Creditor to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower, any of
its Subsidiaries or SIMA.
8.4 Reliance by Agent.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the Agent. The
Agent may deem and treat the payee of any Note as the owner thereof for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Agent. The Agent shall be fully justified as
between itself and the Creditors or any of them in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
and the other Loan Documents in accordance with a request of the Majority
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all present and future Creditors.
8.5 Notice of Default.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Creditor or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the Lenders. The Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Majority Lenders; provided that unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Creditors.
8.6 Non-Reliance on Agent and Other Creditors.
Each Creditor expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents, attorneys, attorneys-in-fact or
Affiliates has made any representations or warranties to it, including any
representations or warranties regarding the Borrower, any of its Subsidiaries,
SIMA or any Creditor, and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower, any of its Subsidiaries
66
or SIMA, shall be deemed to constitute any representation or warranty by the
Agent to any Creditor. Each Creditor represents to the Agent that it has,
independently and without reliance upon the Agent or any other Creditor, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower, its
Subsidiaries and SIMA and made its own decision to make its Loans hereunder and
enter into this Agreement. Each Creditor also represents that it will,
independently and without reliance upon the Agent or any other Creditor, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower, its Subsidiaries and SIMA. Except for notices,
reports and other documents expressly required to be furnished to the Creditors
by the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Creditor with any credit or other information concerning the
business, operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Borrower, any of its Subsidiaries or SIMA which may come
into the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
8.7 Indemnification.
The Lenders agree to indemnify the Agent in its capacity as such (to
the extent not reimbursed by the Borrower and without limiting the obligation of
the Borrower under Section 9.2 of this Agreement or under any other Loan
Document to do so), ratably according to their Percentages in effect on the date
on which indemnification is sought under this Section 8.7, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including, without limitation, at any time following the
payment in full of the Obligations) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement, any
other Loan Document or any document contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing;
provided, however, that no Lender shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Agent's gross negligence or willful misconduct. The agreements in this Section
8.7 shall survive the payment of the Obligations and the termination of the
Letters of Credit.
8.8 Agent in Its Individual Capacity.
The Agent, the other branches of Credit Lyonnais, and the Affiliates
of Credit Lyonnais may make loans to, accept deposits from and generally engage
in any kind of business with the Borrower as though the Agent were not the Agent
hereunder and under the other Loan Documents. With respect to its Loans and LC
Exposure hereunder and any
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Notes issued to it, CLNY shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as though it and the Agent were not branches of the same financial institution,
and the terms "Lenders" and "Creditors" shall include CLNY and any other
branches of Credit Lyonnais who may from time to time be the Issuing Bank or
Lenders hereunder, in their individual capacity.
8.9 Successor Agent.
The Agent may resign as Agent upon 30 days' notice to the Lenders. If
the Agent resigns as Agent under this Agreement and the other Loan Documents,
then the Majority Lenders shall have the right to appoint a successor Agent. If
no successor Agent shall have been so appointed by the Majority Lenders and
shall have accepted such appointment within 30 days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent that shall be a bank which has an office in
New York and has a combined capital and surplus of at least $500,000,000,
whereupon such successor Agent shall succeed to the rights, powers and duties of
the Agent, and the term "Agent" shall mean such successor Agent effective upon
such appointment and approval, and the retiring Agent's rights, powers and
duties as Agent shall be terminated, without any other or further act or deed on
the part of such retiring Agent or any of the parties to this Agreement or any
holders of the Notes. After any retiring Agent's resignation as Agent, the
provisions of this Article 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement and the
other Loan Documents.
ARTICLE 9
MISCELLANEOUS
9.1 Notices.
All notices, requests, demands, instructions, directions and other
communications provided for hereunder shall be in writing (which term shall
include telecopied communications) and shall be mailed (by registered or
certified mail, postage prepaid), telecopied or delivered to the applicable
party at the address or telecopier number specified for such party on Schedule I
or, as to any party, to such other address or telecopier number as such party
shall specify by a notice in writing to the other parties hereto delivered in
accordance with the provisions of this Section 9.1. Each notice, request,
demand, instruction, direction or other communication provided for hereunder
shall be deemed delivered (a) if by mail, five Business Days after being
deposited in the mails, addressed to the applicable party at its address set
forth above, (b) if by hand, when delivered to the applicable party at such
address, and (c) if by telecopy, when sent to the applicable party at such
telecopier number.
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9.2 Expenses, Indemnity.
(a) The Borrower agrees to pay, promptly upon demand of the Agent,
whether or not the transactions contemplated hereby are consummated, the
following fees, disbursements, costs, expenses, taxes and charges: (i) to the
extent specified in the Fee Letter, the reasonable fees and disbursements of
counsel for the Agent (including reasonable fees and disbursement of outside
counsel and reasonable allocated costs of in-house counsel) in connection with
the preparation of this Agreement and the other Loan Documents and the
transactions contemplated hereby and thereby, (ii) the reasonable fees and
disbursements of counsel for the Agent (including reasonable fees and
disbursement of outside counsel and reasonable allocated costs of in-house
counsel) in connection with any amendment, supplement or modification of this
Agreement or of any other Loan Document, and any consent or waiver hereunder or
thereunder (or any such instrument which is proposed but not executed and
delivered); (iii) all reasonable costs and expenses incurred by the Agent in
connection with due diligence or the syndication of the credit facilities
contemplated hereby; and (iv) all recording and release taxes, all transfer
taxes, all documentary, stamp, intangible and similar taxes, all filing and
recording fees and taxes, and any other excise or property taxes, charges, or
similar taxes imposed by the United States of America, the jurisdiction in which
any Lender's applicable lending office is located or any political subdivision
of any of the foregoing, at any time payable in respect of this Agreement or any
other Loan Document, the incurrence of obligations hereunder and under the other
Loan Documents, or any payment made hereunder or under any other Loan Document
(collectively, the "Other Taxes"). The Borrower further agrees to pay, promptly
upon demand by the Agent, all expenses incurred by the Agent, the Issuing Bank
or any Lender in connection with the enforcement or preservation of any rights
and remedies with respect to the Borrower, any of its Subsidiaries or SIMA
hereunder or under any other Loan Document, including all costs of collection,
all reasonable fees and disbursements of outside counsel, all reasonable
allocated costs of in-house counsel, and all out-of-pocket expenses of the
Agent, the Issuing Bank and each Lender.
(b) The Borrower agrees to indemnify the Agent, the Issuing Bank, each
Lender, each Person, if any, controlling the Agent, the Issuing Bank or any
Lender, and each of their respective directors, officers, employees, attorneys
and agents (each of the foregoing herein called an "Indemnitee") against, and to
hold each Indemnitee harmless from (i) any losses, liabilities, damages, claims,
costs and expenses (collectively, "Losses") suffered or incurred by such
Indemnitee arising out of, resulting from or in any manner connected with, the
execution, delivery and performance of this Agreement or any other Loan
Document, the making or maintenance of any Loans, the issuing, maintenance or
participation in any Letter of Credit, or any transaction related to or
consummated in connection with this Agreement, the Loans or the Letters of
Credit, including any Losses suffered or incurred by such Indemnitee arising out
of or related to the violation of, noncompliance with or liability under, any
Environmental Laws or any orders, requirements or demands of Governmental
Authorities related thereto, or in investigating, preparing for, defending
against, or providing evidence, producing documents or taking any other action
in respect of any commenced or threatened litigation, administrative proceeding
or investigation, under any Environmental
69
Laws or any other statute of any jurisdiction, or any regulation, or at common
law or otherwise, other than Losses arising out of or relating to the gross
negligence or willful misconduct of such Indemnitee; (ii) any and all Losses
(including, without limitation, all reasonable fees and disbursements of counsel
with whom any Indemnitee may consult in connection therewith and all expenses of
litigation or preparation therefor) that any Indemnitee may incur or which may
be asserted against any Indemnitee in connection with any litigation or
investigation involving or relating to the Borrower, any of its Subsidiaries or
any of its officers, directors, employees or agents, or any of its assets, other
than Losses arising out of or relating to the gross negligence or willful
misconduct of such Indemnitee; and (iii) (x) the full amount of any Other Taxes
paid by the Agent, the Issuing Bank or any Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Other Taxes were correctly or legally asserted, which relate
to this Agreement or any other Loan Document or the credit facilities provided
hereunder.
(c) The covenants contained in clauses (a) and (b) of this Section 9.2
shall be in addition to any other obligations or liabilities of the Borrower to
the Agent, the Issuing Bank and the Lenders hereunder, under any other Loan
Document, or at common law or otherwise and shall survive the termination of the
Commitments, the expiration of the Letters of Credit and the repayment of the
Obligations.
9.3 Amendments and Waivers.
Neither this Agreement nor any other Loan Document, nor any terms
hereof or thereof may be amended, supplemented or modified except in accordance
with the provisions of this Section 9.3. The Majority Lenders may or, with the
written consent of the Majority Lenders, the Agent may, from time to time, (x)
enter with the Borrower or any of its Subsidiaries into written amendments,
supplements or modifications hereto or to any other Loan Document for the
purpose of adding any provisions to this Agreement or such other Loan Document
or changing in any manner the rights or obligations of the Issuing Bank, the
Lenders, the Borrower, any of its Subsidiaries or SIMA hereunder or thereunder
or (y) waive at the Borrower's request, on such terms and conditions as the
Majority Lenders or the Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or any other Loan Document
or any Default or Event of Default and its consequences; provided, however, that
no such waiver and no such amendment, supplement or modification shall (a) (i)
reduce the amount or extend the scheduled date of maturity of any Loan or of any
scheduled installment or mandatory prepayment thereof, (ii) reduce the stated
rate of interest or fees payable hereunder or extend the scheduled date of any
payment thereof, (iii) increase the amount or extend the expiration date of any
Commitment of any Lender, (iv) reduce the percentage specified in the definition
of Majority Lenders or amend, modify or waive any provision of this Section 9.3,
(v) consent to the assignment or transfer by the Borrower of any of its rights
and obligations under this Agreement or any other Loan Document or to the
release of any portion of the Collateral, in each case without the written
consent of all the Lenders, (b) amend, modify or waive any provision of Section
2.11 or otherwise affect the rights or duties of the Issuing Bank without the
written consent of the
70
Issuing Bank, or (c) amend, modify or waive any provision of Article 8 or
otherwise affect the rights or duties of the Agent without the written consent
of the Agent. Any waiver and any amendment, supplement or modification pursuant
to this Section 9.3 shall apply to the Issuing Bank and each of the Lenders and
shall be binding upon the Borrower, the Issuing Bank, the Lenders and the Agent
and all future Lenders. Any waiver granted hereunder shall be effective only in
the specific instance and for the specific purpose for which given.
9.4 No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of the
Agent, the Issuing Bank or any Lender, any right, remedy, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
9.5 Survival of Representations and Warranties.
All representations and warranties made hereunder and in the other
Loan Documents (or in any amendment, modification or supplement hereto or
thereto) and in any certificate delivered pursuant hereto or such other Loan
Documents shall survive the execution and delivery of this Agreement and the
other Loan Documents and the making of the Loans and issuance of the Letters of
Credit hereunder.
9.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Issuing Bank, the Agent, all future Lenders and
their respective successors and permitted assigns, except that the Borrower may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Issuing Bank and each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants"), participating interests in the Loans
owing to, and the LC Exposure of, such Lender, the Notes held by such Lender or
any other interest of such Lender hereunder and under the other Loan Documents;
provided that no such participating interests shall be in an aggregate principal
amount of less than $5,000,000. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any Loans made by it, any Notes issued to it, and any
participations in Letters of Credit sold to it, hereunder for all purposes of
this Agreement and the other Loan Documents, and the Borrower, the Issuing Bank,
the other Lenders and the Agent shall continue to deal solely
71
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. Any agreement
pursuant to which any Lender shall sell any such participating interest shall
provide that such Lender shall retain the sole right and responsibility to
exercise such Lender's rights and enforce the Borrower's obligations hereunder,
including the right to consent to any amendment, supplement, modification or
waiver of any provision of this Agreement or any other Loan Document, provided
that such participation agreement may provide that without the consent of the
Participant such Lender will not agree to (i) the increase or extension of the
term of such Lender's Commitment, (ii) the extension of any date fixed for the
payment of principal of or interest on any of such Lender's Loans, (iii) the
reduction of any payment of principal of any of such Lender's Loans or (iv) the
reduction of the rate of interest on any of such Lender's Loans below the rate
at which the Participant is entitled to receive interest in respect of its
participation therein. The Borrower agrees that each Lender shall be entitled to
the benefits of Sections 3.3, 3.4 and 3.5 without regard to whether it has
granted any participating interests, and that all amounts payable to a Lender
under Sections 3.3 and 3.4 shall be determined as if such Lender had not granted
any such participating interests. The Borrower agrees that each Participant
shall have the right of setoff in respect of its participating interest in
amounts owing under this Agreement and any Note to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement or any Note, provided that such Participant shall only be
entitled to such right of setoff if it shall have agreed in the agreement
pursuant to which it shall have acquired its participating interest to share
with the Lenders the proceeds thereof as provided in Section 9.7.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time, with the prior written consent of the Agent and the Issuing Bank (which
consent shall not be unreasonably withheld or delayed) assign to any of its
Affiliates or to any other Lender or any Affiliate thereof, or, with the prior
written consent of the Agent and the Issuing Bank and (so long as no Event of
Default shall have occurred and be continuing) the Borrower (which consents
shall not be unreasonably withheld or delayed), to any other bank or financial
institution (each, an "Assignee") all or any part of its rights and obligations
under this Agreement and the other Loan Documents, including its Loans, its LC
Exposure and its Commitments pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit J, executed by such Assignee, such
assigning Lender, the Agent and the Issuing Bank (and, in the case of an
Assignee that is not then a Lender or an Affiliate thereof, by the Borrower) and
delivered to the Agent for its acceptance and recording in the Register;
provided that each such transfer to an Assignee shall be in an aggregate
principal amount of $5,000,000 or any larger amount that is a whole multiple of
$1,000,000 (or, if less, the full amount of such assigning Lender's Loans). Upon
such execution, delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with Loans as set forth therein, and (y) the assigning Lender thereunder shall
be released from its obligations under this Agreement to the extent that such
obligations shall have been expressly assumed by the Assignee pursuant to such
Assignment and Acceptance (and, in the case of an
72
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto; provided, however, that, notwithstanding such
assignment, the provisions of Sections 3.3, 3.4, 3.5 and 9.2 shall continue to
inure to the benefit of such Lender as to any payments made to, any costs or
reductions affecting, and any actions taken or omitted to be taken by, such
Lender prior to the effective date of such assignment). Notwithstanding the
foregoing, no Assignee which as of the date of any assignment to it pursuant to
this Section 9.6(c) would be entitled to receive any greater payment under
Section 3.3 or 3.4 than the assigning Lender would have been entitled to receive
as of such date under such Sections with respect to the rights assigned, shall
be entitled to receive such greater payments unless the Borrower has consented
in writing to the assignment.
(d) The Agent shall maintain at its address referred to on Schedule I
a copy of each Assignment and Acceptance delivered to it and a register (the
"Register") for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amount of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent, the Issuing Bank and the Lenders
may treat each Person whose name is recorded in the Register as the owner of the
Loans recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower, the Issuing Bank or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, an Assignee, the Issuing Bank and the Agent (and, in the case
of an Assignee that is not then a Lender or an Affiliate thereof, by the
Borrower), together with payment by the assigning Lender to the Agent of a
registration and processing fee of $3,000, the Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto (which date shall be no earlier than 5 Business Days after the
Agent's receipt of such Assignment and Acceptance) record the information
contained therein in the Register and give prompt notice of such acceptance and
recordation to the Lenders, the Issuing Bank and the Borrower. On or prior to
such effective date, the assigning Lender shall surrender any outstanding Notes
held by it, and the Borrower, at its own expense, shall execute and deliver to
the Agent, if so requested by the Assignee, one or more new Notes, to the order
of such Assignee in an aggregate amount equal to the portion of the assigning
Lender's Loans that are being acquired by such Assignee and, if the assigning
Lender has retained a portion of its Loans hereunder and requests such Notes,
one or more new Notes, to the order of the assigning Lender in an amount equal
to the amount of the Loans retained by it. Such new Notes shall be dated the
effective date of such assignment and shall otherwise be in the form of the
Notes replaced thereby. The Notes surrendered by the assigning Lender shall be
returned by the Agent to the Borrower marked "canceled".
(f) Notwithstanding anything to the contrary set forth in this Section
9.6, no Lender may assign or sell a participating interest in any of its Loans,
any of its Notes or any of its obligations under this Agreement or any other
Loan Document to the Borrower or any of its Affiliates without the prior written
consent of all the Lenders.
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(g) The Borrower authorizes each Lender to disclose to any Participant
or Assignee (each, a "Transferee") and any prospective Transferee, any and all
financial information in such Lender's possession concerning the Borrower and
its Affiliates which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Borrower in connection with such Lender's credit
evaluation of the Borrower and its Affiliates prior to becoming a party to the
Agreement.
(h) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 9.6, any Lender may assign or pledge
all or any portion of its Loans and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular relating thereto.
9.7 Adjustments; Set-off.
(a) If any Lender (a "Benefitted Lender") shall at any time receive
any payment of all or part of any of its Loans, its LC Exposure or interest on
any of the foregoing (whether voluntarily or involuntarily, through the exercise
of the right of set-off or banker's lien, pursuant to any events or proceedings
of the nature referred to in Section 7.1(f), or otherwise), in a greater
proportion than any such payment to any other Lender, if any, in respect of such
other Lender's Loans, its LC Exposure or interest on any of the foregoing, such
Benefitted Lender shall purchase for cash from each other Lender a participating
interest in such portion of each such other Lender's Loans, LC Exposure and
interest thereon, as shall be necessary to cause such Benefitted Lender to share
the excess payment ratably with each of the Lenders; provided, however, that if
all or any portion of such excess payment or benefits is thereafter recovered
from such Benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
(b) In addition to any rights and remedies of the Issuing Bank and the
Lenders provided by law, the Issuing Bank and each Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower, to the extent permitted by applicable law, upon the occurrence of
an Event of Default to set off and appropriate and apply against any amount then
due and payable by the Borrower to the Issuing Bank or such Lender hereunder or
under any other Loan Document, any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Issuing Bank or such Lender or any branch or agency thereof to or
for the credit or the account of the Borrower.
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9.8 GOVERNING LAW.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS PRINCIPLES OF CONFLICTS OF LAW.
9.9 JUDICIAL PROCEEDINGS.
(A) THE BORROWER HEREBY EXPRESSLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ALL FEDERAL AND STATE COURTS SITTING IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ IN CONNECTION WITH ANY ACTION, SUIT OR PROCEEDING RELATING TO
THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY INSTRUMENT OR DOCUMENT RELATING
HERETO OR THERETO, AND, IN CONNECTION WITH ANY SUCH ACTION, SUIT OR PROCEEDING,
AGREES THAT ANY PROCESS OR NOTICE OF MOTION OR OTHER APPLICATION TO ANY OF SAID
COURTS OR A JUDGE THEREOF MAY BE SERVED UPON THE BORROWER WITHIN OR WITHOUT SUCH
COURT'S JURISDICTION BY REGISTERED OR CERTIFIED MAIL, AT THE ADDRESS OF THE
BORROWER SPECIFIED ON SCHEDULE I HERETO (OR AT SUCH OTHER ADDRESS AS THE
BORROWER SHALL SPECIFY BY A PRIOR NOTICE IN WRITING DELIVERED TO THE AGENT IN
ACCORDANCE WITH SECTION 9.1), PROVIDED A REASONABLE TIME FOR APPEARANCE IS
ALLOWED.
(B) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BROUGHT
IN ANY FEDERAL OR STATE COURT SITTING IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(C) NOTWITHSTANDING THE FOREGOING, THE AGENT, THE ISSUING BANK OR ANY
LENDER MAY ▇▇▇ THE BORROWER IN ANY JURISDICTION WHERE THE BORROWER OR ANY OF ITS
ASSETS MAY BE FOUND AND MAY SERVE LEGAL PROCESS UPON THE BORROWER IN ANY OTHER
MANNER PERMITTED BY LAW.
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9.10 WAIVER OF JURY TRIAL.
THE BORROWER, THE ISSUING BANK, THE AGENT AND EACH LENDER HEREBY
IRREVOCABLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE
ARISING UNDER OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND AGREE
THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
9.11 Further Assurances.
At any time and from time to time, upon the request of the Agent, the
Borrower shall execute, deliver and acknowledge, or cause to be executed,
delivered and acknowledged, such further documents and instruments, and shall
take or refrain from taking such other action, as the Agent may reasonably
request in order to fully effect the purposes of this Agreement, the other Loan
Documents and any other agreements, instruments and documents delivered pursuant
hereto or in connection with the Loans or the Letters of Credit.
9.12 Integration Clause.
This Agreement and the other Loan Documents embody the entire
agreement and understanding among the Borrower, the Agent, the Issuing Bank and
the Lenders and supersede all prior agreements and understandings, whether
written or oral, between the parties hereto relating to the subject matter of
this Agreement.
9.13 Severability.
If any part of this Agreement is contrary to, prohibited by, or deemed
invalid under, any applicable law of any jurisdiction, such provision shall, as
to such jurisdiction, be inapplicable and deemed omitted to the extent so
contrary, prohibited or invalid, without invalidating the remainder hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
9.14 Counterparts.
This Agreement may be simultaneously executed in several counterparts,
each of which shall be an original and all of which shall constitute one and the
same agreement. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Agreement.
9.15 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been represented and advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
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(b) neither the Agent nor the Issuing Bank nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Agent, the Issuing Bank and the Lenders, on one hand, and
the Borrower, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders, the Issuing Bank or the Agent or among the Borrower and any of the
Lenders, the Issuing Bank or the Agent.
9.16 Termination of Existing Agreement. The Borrower and each of the
Existing Lenders hereby terminate the Existing Agreement effective as of the
Closing Date; provided, however, that the provisions of the Existing Agreement
which by their terms survive the repayment of the Borrower's obligations
thereunder and the termination of the Existing Lenders' commitments thereunder
shall survive the termination of the Existing Agreement pursuant hereto. Each of
the Existing Lenders hereby instructs and authorizes CLNY, acting in its
capacity as agent and/or collateral agent for the Existing Lenders under the
Existing Agreement or any related documents, to release all liens granted to
CLNY for the ratable benefit of the Existing Lenders as security for the
obligations of the Borrower to the Existing Lenders under the Existing Agreement
or any related documents and to execute and deliver to the Borrower and to file
or record, or permit the Borrower to file or record, such releases, discharges
and terminations as the Borrower may require in connection therewith.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized officers, as of the day and year first
above written.
SPECIAL METALS CORPORATION
By:______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President - Administration
CREDIT LYONNAIS NEW YORK BRANCH, as
Agent, Issuing Bank and Lender
By:______________________________________
▇▇▇▇▇▇ ▇▇▇▇
First Vice President
MELLON BANK, N.A.
By:______________________________________
Name:
Title:
BANQUE NATIONALE DE PARIS
NEW YORK BRANCH
By:______________________________________
Name:
Title:
By:______________________________________
Name:
Title:
78
BANQUE NATIONALE DE PARIS
GEORGETOWN BRANCH
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Title:
By:______________________________________
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Title:
SOCIETE GENERALE NEW YORK BRANCH
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