EXHIBIT 4.3
LOAN AND SECURITY AGREEMENT
BY AND AMONG
HANDY & ▇▇▇▇▇▇ AND ITS SUBSIDIARIES NAMED
HEREIN AS BORROWERS,
AS BORROWERS,
AND
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES
HERETO AS GUARANTORS,
AS GUARANTORS,
ABLECO FINANCE LLC,
AS AGENT
AND
THE LENDERS FROM TIME TO TIME PARTY HERETO,
AS LENDERS
DATED: MARCH 31, 2004
TABLE OF CONTENTS
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Page
SECTION 1. DEFINITIONS .......................................................2
SECTION 2. CREDIT FACILITIES ................................................24
2.1 THE LOAN......................................................24
2.2 COMMITMENTS...................................................25
2.3 MANDATORY PREPAYMENTS.........................................25
2.4 JOINT AND SEVERAL LIABILITY...................................28
SECTION 3. INTEREST AND FEES ................................................29
3.1 INTEREST......................................................29
3.2 FEES..........................................................30
3.3 CHANGES IN LAWS AND INCREASED COSTS OF LOANS..................30
SECTION 4. CONDITIONS PRECEDENT .............................................31
4.1 CONDITIONS PRECEDENT TO THE LOAN..............................31
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST.........................35
5.1 GRANT OF SECURITY INTEREST....................................35
5.2 PERFECTION OF SECURITY INTERESTS..............................36
SECTION 6. COLLECTION AND ADMINISTRATION.....................................41
6.1 BORROWERS' LOAN ACCOUNTS......................................41
6.2 STATEMENTS....................................................41
6.3 COLLECTION OF ACCOUNTS........................................41
6.4 PAYMENTS......................................................41
6.5 AUTHORIZATION TO MAKE THE LOAN................................43
6.6 USE OF PROCEEDS...............................................43
6.7 APPOINTMENT OF ADMINISTRATIVE BORROWER AS AGENT
FOR REQUESTING THE LOAN AND RECEIPT OF LOAN
AND STATEMENTS ..............................................43
6.8 PRO RATA TREATMENT...........................................44
6.9 SHARING OF PAYMENTS, ETC.....................................44
6.10 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF
LENDERS' RIGHTS..............................................45
SECTION 7. COLLATERAL REPORTING AND COVENANTS................................46
7.1 COLLATERAL REPORTING.........................................46
7.2 ACCOUNTS COVENANTS...........................................47
7.3 INVENTORY COVENANTS..........................................48
7.4 EQUIPMENT AND REAL PROPERTY COVENANTS........................49
7.5 POWER OF ATTORNEY............................................49
7.6 RIGHT TO CURE................................................50
7.7 ACCESS TO PREMISES...........................................51
SECTION 8. REPRESENTATIONS AND WARRANTIES....................................51
8.1 CORPORATE EXISTENCE, POWER AND AUTHORITY.....................51
8.2 NAME; STATE OF ORGANIZATION;
CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS.................52
8.3 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE.............52
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES.......................53
8.5 TAX RETURNS..................................................53
8.6 LITIGATION...................................................53
8.7 COMPLIANCE WITH OTHER AGREEMENTS
AND APPLICABLE LAWS..........................................53
8.8 ENVIRONMENTAL COMPLIANCE.....................................54
8.9 EMPLOYEE BENEFITS............................................55
8.10 BANK ACCOUNTS................................................56
8.11 INTELLECTUAL PROPERTY........................................56
8.12 SUBSIDIARIES; AFFILIATES;
CAPITALIZATION; SOLVENCY.....................................56
8.13 LABOR DISPUTES...............................................57
8.14 RESTRICTIONS ON SUBSIDIARIES.................................57
8.15 MATERIAL CONTRACTS...........................................58
8.16 PAYABLE PRACTICES............................................58
8.17 INTERRELATED BUSINESSES......................................58
8.18 ACCURACY AND COMPLETENESS OF INFORMATION.....................58
8.19 SURVIVAL OF WARRANTIES; CUMULATIVE...........................58
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS................................59
9.1 MAINTENANCE OF EXISTENCE.....................................59
9.2 NEW COLLATERAL LOCATIONS.....................................59
9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC.......................59
9.4 PAYMENT OF TAXES AND CLAIMS..................................61
9.5 INSURANCE....................................................61
9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION...................62
9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC......63
9.8 ENCUMBRANCES.................................................66
9.9 INDEBTEDNESS.................................................68
9.10 LOANS, INVESTMENTS, ETC......................................73
9.11 DIVIDENDS AND REDEMPTIONS....................................75
9.12 TRANSACTIONS WITH AFFILIATES.................................75
9.13 COMPLIANCE WITH ERISA........................................76
9.14 END OF FISCAL YEARS; FISCAL QUARTERS.........................77
9.15 CHANGE IN BUSINESS...........................................77
9.16 LIMITATION OF RESTRICTIONS AFFECTING SUBSIDIARIES............77
9.17 FINANCIAL COVENANTS..........................................78
9.18 LICENSE AGREEMENTS...........................................80
9.19 AFTER ACQUIRED REAL PROPERTY.................................81
9.20 ADDITIONAL GUARANTIES AND COLLATERAL SECURITY................81
9.21 APPLICATIONS UNDER INSOLVENCY STATUTES.......................82
9.22 COSTS AND EXPENSES...........................................82
9.23 FURTHER ASSURANCES...........................................83
SECTION 10. EVENTS OF DEFAULT AND REMEDIES..................................83
10.1 EVENTS OF DEFAULT............................................83
10.2 REMEDIES.....................................................86
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW...................................................90
11.1 GOVERNING LAW; CHOICE OF FORUM;
SERVICE OF PROCESS; JURY TRIAL WAIVER........................90
11.2 WAIVER OF NOTICES............................................91
11.3 AMENDMENTS AND WAIVERS.......................................92
11.4 WAIVER OF COUNTERCLAIMS......................................93
11.5 INDEMNIFICATION..............................................93
11.6 CURRENCY INDEMNITY...........................................94
SECTION 12. THE AGENT.......................................................94
12.1 APPOINTMENT, POWERS AND IMMUNITIES...........................95
12.2 RELIANCE BY AGENT............................................95
12.3 EVENTS OF DEFAULT............................................95
12.4 ABLECO IN ITS INDIVIDUAL CAPACITY............................96
12.5 INDEMNIFICATION..............................................96
12.6 NON-RELIANCE ON AGENT AND OTHER LENDERS......................96
12.7 FAILURE TO ACT...............................................97
12.8 [INTENTIONALLY OMITTED]......................................97
12.9 CONCERNING THE COLLATERAL AND THE
RELATED FINANCING AGREEMENTS.................................97
12.10 FIELD AUDIT, EXAMINATION REPORTS AND OTHER
INFORMATION; DISCLAIMER BY LENDERS..........................97
12.11 COLLATERAL MATTERS..........................................98
12.12 AGENCY FOR PERFECTION......................................100
12.13 SUCCESSOR AGENT............................................100
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS...............................100
13.1 TERM.......................................................100
13.2 INTERPRETATIVE PROVISIONS..................................101
13.3 NOTICES....................................................103
13.4 PARTIAL INVALIDITY.........................................104
13.5 CONFIDENTIALITY............................................104
13.6 SUCCESSORS.................................................105
13.7 ASSIGNMENTS; PARTICIPATIONS................................106
13.8 ENTIRE AGREEMENT...........................................109
13.9 COUNTERPARTS, ETC..........................................109
INDEX TO
EXHIBITS AND SCHEDULES
----------------------
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Compliance Certificate
Schedule 1.30 Historical EBITDA
Schedule 1.43 Existing Lenders
Schedule 1.44 Existing Letters of Credit
Schedule 1.84 Permitted Holders
Schedule 1.129 Working Capital Lender Agreements
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated March 31, 2004 is entered into
by and among Handy & ▇▇▇▇▇▇, a New York corporation ("PARENT"), Olympic
Manufacturing Group, Inc., a Delaware corporation ("OLYMPIC"), Continental
Industries Inc., an Oklahoma corporation ("CONTINENTAL"), Maryland Specialty
Wire, Inc. a Delaware corporation ("MARYLAND WIRE"), Handy & ▇▇▇▇▇▇ Tube
Company, Inc., a Delaware corporation ("H&H TUBE"), Camdel Metals Corporation, a
Delaware corporation ("CAMDEL"), ▇▇▇▇▇▇▇▇ Metal Coating Corporation, a Delaware
corporation ("CANFIELD"), Micro-Tube Fabricators, Inc., a Delaware corporation
("MICRO-TUBE"), Indiana Tube Corporation, a Delaware corporation ("INDIANA
TUBE"), ▇▇▇▇▇-▇▇▇▇▇▇▇▇, Inc., a Wisconsin corporation ("▇▇▇▇▇"), Handy & ▇▇▇▇▇▇
Electronic Materials Corporation, a Florida corporation ("H&H ELECTRONIC"),
Sumco Inc., an Indiana corporation ("SUMCO", and together with Parent, Olympic,
Continental, Maryland Wire, H&H Tube, Camdel, ▇▇▇▇▇▇▇▇, Micro-Tube, Indiana
Tube, ▇▇▇▇▇ and H&H Electronic, each individually a "BORROWER" and collectively,
"BORROWERS"), Handy & ▇▇▇▇▇▇ of Canada, Limited, an Ontario corporation ("H&H
CANADA"), ele Corporation, a California corporation ("ELE"), Alloy Ring Service
Inc., a Delaware corporation ("ALLOY"), ▇▇▇▇▇▇ Radiator Corporation, a Texas
corporation ("▇▇▇▇▇▇"), H&H Productions, Inc., a Delaware corporation ("H&H
PRODUCTIONS"), Handy & ▇▇▇▇▇▇ Automotive Group, Inc., a Delaware corporation
("H&H AUTO"), Handy & ▇▇▇▇▇▇ International, Ltd., a Delaware corporation ("H&H
INTERNATIONAL"), Handy & ▇▇▇▇▇▇ Peru, Inc., a Delaware corporation ("H&H PERU"),
KJ-VMI Realty, Inc., a Delaware corporation ("KVR"), ▇▇▇-▇▇▇▇ Realty, Inc., a
Delaware corporation ("▇▇▇-▇▇▇▇"), Platina Laboratories, Inc., a Delaware
corporation ("PLATINA"), Sheffield Street Corporation, a Connecticut corporation
("SHEFFIELD"), SWM, Inc., a Delaware corporation ("SWM") and Willing B Wire
Corporation, a Delaware corporation ("WILLING" and together with each of H&H
Canada, ele, Alloy, ▇▇▇▇▇▇, H&H Productions, H&H Auto, H&H International, H&H
Peru, KVR, ▇▇▇-▇▇▇▇, Platina, Sheffield and SWM, each individually, a
"GUARANTOR" and collectively, "GUARANTORS"), the parties hereto from time to
time as lenders, whether by execution of this Agreement or an Assignment and
Acceptance (each individually, a "LENDER" and collectively, "LENDERS") and
Ableco Finance LLC, a Delaware limited liability company, in its capacity as
agent for Lenders (in such capacity, "AGENT").
W I T N E S S E T H:
--------------------
Borrowers and Guarantors have asked Lenders to extend credit to
Borrowers consisting of a term loan in the aggregate principal amount of
$71,000,000. The proceeds of the term loan shall be used to refinance existing
indebtedness of Borrowers, for general working capital purposes of Borrowers and
to pay fees and expenses related to this Agreement. Lenders are severally, and
not jointly, willing to extend such credit to Borrowers subject to the terms and
conditions set forth herein and Agent is willing to act as agent for Lenders on
the terms and conditions set forth herein and the other Financing Agreements;
In consideration of the mutual conditions and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
-----------
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "ABLECO" shall mean Ableco Finance LLC, a Delaware limited
liability company, in its individual capacity and its successors and assigns.
1.2 "ACCOUNTS" shall mean, as to each Borrower and Guarantor, all
present and future rights of such Borrower and Guarantor to payment of a
monetary obligation, whether or not earned by performance, which is not
evidenced by chattel paper or an instrument, (a) for property that has been or
is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for
services rendered or to be rendered, (c) for a secondary obligation incurred or
to be incurred, or (d) arising out of the use of a credit or charge card or
information contained on or for use with the card.
1.3 "ACQUISITION" shall mean the acquisition of all of the Capital
Stock of any Person or all or substantially all of the assets of any Person.
1.4 "ADMINISTRATIVE BORROWER" shall mean Handy & ▇▇▇▇▇▇, a New York
corporation in its capacity as Administrative Borrower on behalf of itself and
the other Borrowers pursuant to Section 6.7 hereof and it successors and assigns
in such capacity.
1.5 "AFFILIATE" shall mean, with respect to a specified Person, any
other Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes (a) any Person which
beneficially owns or holds ten (10%) percent or more of any class of Voting
Stock of such Person or other equity interests in such Person, (b) any Person of
which such Person beneficially owns or holds ten (10%) percent or more of any
class of Voting Stock or in which such Person beneficially owns or holds ten
(10%) percent or more of the equity interests and (c) any director or executive
officer of such Person. For the purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by agreement or otherwise.
1.6 "AGENT" shall mean Ableco Finance LLC, in its capacity as agent on
behalf of Lenders pursuant to the terms hereof and any replacement or successor
agent hereunder.
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1.7 "AGENT PAYMENT ACCOUNT" shall mean an account at a bank designated
by Agent from time to time as the account into which Borrowers shall make all
payments to Agent for the benefit of Agent and Lenders under this Agreement and
the other Financing Agreements.
1.8 "APPROVED FUND" shall mean with respect to any Lender that is a
fund or similar investment vehicle that makes or invests in commercial loans,
any other fund or similar investment vehicle that invests in commercial loans
which is managed or advised by the same investment advisor as such Lender or by
an Affiliate of such investment advisor.
1.9 "ASSIGNMENT AND ACCEPTANCE" shall mean an Assignment and
Acceptance substantially in the form of Exhibit A attached hereto or such other
form as shall be acceptable to Agent (with blanks appropriately completed)
delivered to Agent in connection with an assignment of a Lender's interest
hereunder in accordance with the provisions of Section 13.7 hereof.
1.10 "BLOCKED ACCOUNTS" shall have the meaning set forth in Section
6.3 of the Working Capital Loan Agreement as in effect on the date hereof.
1.11 "BORROWING BASE" shall mean the term "Borrowing Base" as defined,
together with the terms used therein, in the Working Capital Loan Agreement as
in effect on the date hereof.
1.12 "BUSINESS DAY" shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close under
the laws of the State of New York or the State of North Carolina, and a day on
which Agent is open for the transaction of business.
1.13 "CANADIAN PENSION PLAN" shall mean any plan, program or
arrangement that is a pension plan for the purposes of any applicable pension
benefits legislation or any tax laws of Canada or a Province thereof, whether or
not registered under any such laws, which is maintained or contributed to by, or
to which there is or may be an obligation to contribute by, any Borrower or
Guarantor in respect of any Person's employment in Canada with such Borrower or
Guarantor.
1.14 "CAPITAL EXPENDITURES" shall mean all expenditures for any fixed
or capital assets (including, but not limited to, tooling) or improvements, or
for replacements, substitutions or additions thereto, which have a useful life
of more than one (1) year, including, but not limited to, the direct or indirect
acquisition of such assets by way of offset items or otherwise and shall include
the principal amount of Capitalized Lease payments.
1.15 "CAPITAL LEASES" shall mean, as applied to any Person, any lease
of (or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
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1.16 "CAPITAL STOCK" shall mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person's capital stock or partnership, limited liability company or
other equity interests at any time outstanding, and any and all rights, warrants
or options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.17 "CASH COLLATERAL AGREEMENT" shall mean that certain Cash
Collateral Agreement, dated as of the date hereof, between WHX and the Agent, as
the same may be amended, supplemented or otherwise modified from time to time.
1.18 "CASH EQUIVALENTS" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof; PROVIDED, THAT, the full faith and credit of the United
States of America is pledged in support thereof; (b) certificates of deposit or
bankers' acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$1,000,000,000; (c) commercial paper (including variable rate demand notes) with
a maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of any Borrower or Guarantor) organized under the laws of any State of
the United States of America or the District of Columbia and rated at least A-1
by Standard & Poor's Ratings Service, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc. or at least P-1 by ▇▇▇▇▇'▇ Investors Service, Inc.; (d) repurchase
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clause (a) above entered into with any
financial institution having combined capital and surplus and undivided profits
of not less than $1,000,000,000; (e) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States of America or issued by any
governmental agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within ninety (90) days or less
from the date of acquisition; PROVIDED, THAT, the terms of such agreements
comply with the guidelines set forth in the Federal Financial Agreements of
Depository Institutions with Securities Dealers and Others, as adopted by the
Comptroller of the Currency on October 31, 1985; and (f) investments in money
market funds and mutual funds which invest substantially all of their assets in
securities of the types described in clauses (a) through (e) above.
1.19 "CHANGE OF CONTROL" shall mean (a) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of any Borrower or Guarantor to any Person or group (as such term is used
in Section 13(d)(3) of the Exchange Act), other than as permitted in Section 9.7
hereof; (b) the liquidation or dissolution of any Borrower or Guarantor or the
adoption of a plan by the stockholders of any Borrower or Guarantor relating to
the dissolution or liquidation of such Borrower or Guarantor, other than as
permitted in Section 9.7 hereof; (c) the acquisition by any Person or group (as
such term is used in Section 13(d)(3) of the Exchange Act), except for one or
more Permitted Holders, of beneficial ownership, directly or indirectly, of a
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majority of the voting power of the total outstanding Voting Stock of any
Borrower or Guarantor or the Board of Directors of any Borrower or Guarantor;
(d) during any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of any Borrower or
Guarantor (together with any new directors who have been appointed by any
Permitted Holder, or whose nomination for election by the stockholders of such
Borrower or Guarantor, as the case may be, was approved by a vote of at least a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of any Borrower or Guarantor then still in office; (e) the
failure of the Permitted Holders to own directly or indirectly one hundred
(100%) percent of the voting power of the total outstanding Voting Stock of
Parent; or (f) the failure of Parent to own directly or indirectly one hundred
(100%) percent of the voting power of the total outstanding Voting Stock of any
other Borrower or Guarantor.
1.20 "CODE" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.21 "COLLATERAL" shall have the meaning set forth in Section 5
hereof.
1.22 "COLLATERAL ACCESS AGREEMENT" shall mean an agreement in writing,
in form and substance satisfactory to Agent, from any lessor of premises to any
Borrower or Guarantor, or any other person to whom any Collateral is consigned
or who has custody, control or possession of any such Collateral or is otherwise
the owner or operator of any premises on which any of such Collateral is
located, in favor of Agent with respect to the Collateral at such premises or
otherwise in the custody, control or possession of such lessor, consignee or
other person.
1.23 "COMMITMENT" shall mean, at any time, as to each Lender, the
principal amount set forth below such Lender's signature on the signatures pages
hereto designated as the Commitment or on Schedule 1 to the Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 13.7 hereof, as the same may be
adjusted from time to time in accordance with the terms hereof; sometimes being
collectively referred to herein as "Commitments".
1.24 "CONGRESS" shall mean Congress Financial Corporation, a Delaware
corporation, and its successors and assigns.
1.25 "CONSOLIDATED NET INCOME" shall mean, with respect to any Person
for any period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary or non recurring gains and extraordinary non
cash charges to property, plant and equipment or goodwill) after deducting all
charges which should be deducted before arriving at the net income (loss) for
such period and after deducting the Provision for Taxes for such period, all as
determined in accordance with GAAP; provided, that, (a) the net income of any
Person that is not a wholly owned Subsidiary or that is accounted for by the
5
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid or payable to such Person or a wholly owned
Subsidiary of such Person; (b) except to the extent included pursuant to the
foregoing clause, the net income of any Person accrued prior to the date it
becomes a wholly owned Subsidiary of such Person or is merged into or
consolidated with such Person or any of its wholly owned Subsidiaries or the
date that Person's assets are acquired by such Person or by any of its wholly
owned Subsidiaries shall be excluded; and (c) the net income (if positive) of
any wholly owned Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such wholly owned Subsidiary to such
Person or to any other wholly owned Subsidiary of such Person is not at the time
permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such wholly owned Subsidiary shall be excluded. For the purposes of this
definition, net income excludes any gain and any non cash loss (but not any cash
loss) together with any related Provision for Taxes for such gain and non cash
loss (but not any cash loss) realized upon the sale or other disposition of any
assets that are not sold in the ordinary course of business (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or of any
Capital Stock of such Person or a Subsidiary of such Person and any net income
or loss realized as a result of changes in accounting principles or the
application thereof to such Person.
1.26 "CONTINUING RESERVE" shall mean the term "Continuing Reserve" as
defined in the Working Capital Loan Agreement as in effect on the date hereof.
1.27 "CREDIT FACILITY" shall mean the Loan provided to or for the
benefit of any Borrower pursuant to Section 2.1 hereof.
1.28 "DEFAULT" shall mean an act, condition or event which with notice
or passage of time or both would constitute an Event of Default.
1.29 "DEPOSIT ACCOUNT CONTROL AGREEMENT" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among the Working
Capital Agent and the Borrower or Guarantor with a deposit account at any bank
and the bank at which such deposit account is at any time maintained, which
provides that such bank will comply with instructions originated by the Working
Capital Agent directing disposition of the funds in the deposit account without
further consent by such Borrower or Guarantor and has such other terms and
conditions as the Working Capital Agent may require.
1.30 "EBITDA" shall mean, as to any Person, with respect to any
period, an amount equal to: (a) the Consolidated Net Income of such Person for
such period, plus (b) depreciation and amortization for such period (to the
extent deducted in the computation of Consolidated Net Income of such Person),
all in accordance with GAAP, plus (c) Interest Expense for such period (to the
extent deducted in the computation of Consolidated Net Income of such Person),
plus (d) the Provision for Taxes for such period (to the extent deducted in the
computation of Consolidated Net Income of such Person), PROVIDED that EBITDA of
the Parent and its Subsidiaries, on a consolidated basis, for the fiscal
quarters ending March 31, September 30, June 30 and December 31, 2003 shall
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equal the applicable amounts set forth on Schedule 1.30 corresponding to such
period.
1.31 "ELIGIBLE TRANSFEREE" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or otherwise) that is engaged in the
business of making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and is
administered or managed by a Lender or with respect to any Lender that is a fund
which invests in commercial loans and similar extensions of credit, any other
fund that invests in commercial loans and similar extensions of credit and is
managed by the same investment advisor as such Lender or by an Affiliate of such
investment advisor, and in each case is approved by Agent; and (d) any other
commercial bank, financial institution or "accredited investor" (as defined in
Regulation D under the Securities Act of 1933) approved by Agent, provided,
that, (i) neither any Borrower nor any Guarantor or any Affiliate of any
Borrower or Guarantor shall qualify as an Eligible Transferee and (ii) no Person
to whom any Indebtedness which is in any way subordinated in right of payment to
any other Indebtedness of any Borrower or Guarantor shall qualify as an Eligible
Transferee, except as Agent may otherwise specifically agree.
1.32 "ENVIRONMENTAL LAWS" shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Borrower or
Guarantor and any Governmental Authority, (a) relating to pollution and the
protection, preservation or restoration of the environment (including air, water
vapor, surface water, ground water, drinking water, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource), or to human health or safety, (b) relating to the exposure to, or the
use, storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or
disposal, or threatened release, of Hazardous Materials, or (c) relating to all
laws with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials. The term "Environmental Laws"
includes (i) the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act,
the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act,
the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Federal Safe Drinking Water Act
of 1974, the Canadian Environmental Assessment Act, the Canadian Environmental
Protection Act, the Environmental Assessment Act (Ontario) and the Environmental
Protection Act (Ontario), (ii) applicable state or provincial counterparts to
such laws and (iii) any common law or equitable doctrine that may impose
liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous Materials.
7
1.33 "EQUIPMENT" shall mean, as to each Borrower and Guarantor, all of
such Borrower's and Guarantor's now owned and hereafter acquired equipment,
wherever located, including machinery, data processing and computer equipment
(whether owned or licensed and including embedded software), vehicles, tools,
furniture, fixtures, all attachments, accessions and property now or hereafter
affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.
1.34 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, together with all rules, regulations and interpretations thereunder or
related thereto.
1.35 "ERISA AFFILIATE" shall mean any person required to be aggregated
with any Borrower, any Guarantor or any of its or their respective Subsidiaries
under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.
1.36 "ERISA EVENT" shall mean (a) any "reportable event", as defined
in Section 4043(c) of ERISA or the regulations issued thereunder, with respect
to a Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which any Borrower, Guarantor or any of its or
their respective Subsidiaries is a "disqualified person" (within the meaning of
Section 4975 of the Code) or with respect to which any Borrower, Guarantor or
any of its or their respective Subsidiaries could otherwise be liable; (f) a
complete or partial withdrawal by any Borrower, Guarantor or any ERISA Affiliate
from a Multiemployer Plan or a cessation of operations which is treated as such
a withdrawal or notification that a Multiemployer Plan is in reorganization; (g)
the filing of a notice of intent to terminate, the treatment of a Plan amendment
as a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; (h)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (i) the imposition of any liability under Title
IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due
but not delinquent under Section 4007 of ERISA, upon any Borrower, Guarantor or
any ERISA Affiliate in excess of $500,000 and (j) any other event or condition
with respect to a Plan including any Plan subject to Title IV of ERISA
maintained, or contributed to, by any ERISA Affiliate that could reasonably be
expected to result in liability of any Borrower in excess of $500,000.
1.37 "EVENT OF DEFAULT" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.38 "EXCESS AVAILABILITY" shall mean the term "Excess Availability"
as defined in the Working Capital Loan Agreement as in effect on the date
hereof, provided that, notwithstanding anything to the contrary set forth in the
8
Working Capital Loan Agreement, for purposes of this Agreement, the term "Excess
Availability" shall be calculated without giving effect to the amount of the
Continuing Reserve under the Working Capital Loan Agreement.
1.39 "EXCESS CASH FLOW" shall mean, with respect to the Borrowers and
their Subsidiaries, for any period, (i) EBITDA of such Persons, PLUS (ii)
extraordinary or non-recurring cash receipts to the extent paid in cash during
such period and not included in EBITDA, PLUS (iii) reductions to Working
Investment other than cash from the beginning to the end of such period, LESS
(iv) the amount of any cash income and franchise taxes paid by such Persons with
respect to such period, LESS (v) all scheduled or mandatory payments on
Indebtedness (other than payments made on the basis of Excess Cash Flow)
permitted hereunder whether principal, interest, fees or otherwise, in each case
during such period, LESS (vi) the cash portion of Capital Expenditures made by
such Persons during such period to the extent permitted to be made under this
Agreement, LESS (vii) extraordinary or non-recurring expenses and losses to the
extent paid in cash during such period and not included in EBITDA, LESS (viii)
additions to Working Investment other than cash from the beginning to the end of
such period, LESS (ix) payments made by such Persons during such period for post
employment benefits and contributions to pensions.
1.40 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.41 "EXCHANGE RATE" shall mean the prevailing spot rate of exchange
of Reference Bank (or, if such rate is not available from Reference Bank, such
other bank as Agent may reasonably select) for the purpose of conversion of one
currency to another, at or around 11:00 a.m. New York City time, on the date on
which any such conversion of currency is to be made under this Agreement.
1.42 "EXCLUDED TAXES" shall mean, with respect to Agent or any Lender,
any income, branch profits or franchise taxes imposed on or measured by its net
income (other than any such Tax imposed solely as a result of a Borrower's
activities in a jurisdiction.
1.43 "EXISTING LENDERS" shall mean the lenders to Borrowers listed on
Schedule 1.43 hereto (and including Citicorp USA, Inc. in its capacity as agent
acting for such lenders) and their respective predecessors, successors and
assigns.
1.44 "EXISTING LETTERS OF CREDIT" shall mean, collectively, the
letters of credit issued for the account of a Borrower or Guarantor or for which
such Borrower or Guarantor is otherwise liable listed on Schedule 1.44 hereto,
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.45 "EXTRAORDINARY RECEIPTS" means any cash received by a Borrower or
any of its Subsidiaries not in the ordinary course of business (and not
consisting of proceeds from the sale of Inventory), including, without
limitation, (i) proceeds of insurance, (ii) condemnation awards (and payments in
9
lieu thereof), (iii) indemnity payments, (iv) foreign, United States, state or
local tax refunds, (v) pension plan reversions and (vi) judgments, proceeds of
settlements or other consideration of any kind in connection with any cause of
action.
1.46 "FAIRFIELD PROPERTY" shall mean the Real Property of Parent
located in Fairfield, Connecticut.
1.47 "FEE LETTER" shall mean the letter agreement, dated of even date
herewith, by and among Borrowers and Agent, setting forth certain fees payable
by Borrowers to Agent for the benefit of itself and Lenders, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.48 "FINANCING AGREEMENTS" shall mean, collectively, this Agreement,
the Cash Collateral Agreement, the WHX Subordination Agreement and all notes,
guarantees, security agreements, deposit account control agreements, investment
property control agreements, intercreditor agreements and all other agreements,
documents and instruments now or at any time hereafter executed and/or delivered
by any Borrower or Obligor in connection with this Agreement.
1.49 "FIXED CHARGE COVERAGE RATIO" shall mean, as to any applicable
period, with respect to Parent and its Subsidiaries, on a consolidated basis,
the ratio of (a) EBITDA of Parent and its Subsidiaries for such period minus all
Capital Expenditures of Parent and its Subsidiaries during such period to (b)
Fixed Charges of Parent and its Subsidiaries for such period.
1.50 "FIXED CHARGES" shall mean, as to any Person and its Subsidiaries
with respect to any period, the sum of, without duplication, (a) all cash
Interest Expense, provided that any annual fees paid to the Working Capital
Lenders or Working Capital Agent will be considered to be a cash Interest
Expense when such amounts are recognized as an expense in the income statement
of any Borrower or Guarantor, (b) all regularly scheduled (as determined at the
beginning of the respective period) principal payments of Indebtedness for
borrowed money (including, without limitation, all regularly scheduled payments
of principal in respect of the Loan) and Indebtedness with respect to
Capitalized Leases (and without duplicating amounts in item (a) of this
definition, the interest component with respect to Indebtedness under
Capitalized Leases), (c) all cash income taxes (including, without limitation,
payments made pursuant to Section 9.12(b)(iii)), (d) cash dividends, repurchases
or redemptions paid by such Person and its Subsidiaries (other than to such
Person or such Person's Subsidiaries) in respect of Capital Stock, (e)
management fees paid in cash (in each case as to such Person and its
Subsidiaries) and (f) all cash payments for pension expenses paid by such Person
and its Subsidiaries during such period to the extent such payments are not
deducted from the determination of Consolidated Net Income.
1.51 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
10
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Sections 9.17 and 9.18 hereof, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with those
used in the preparation of the most recent audited financial statements
delivered to Agent prior to the date hereof.
1.52 "GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.53 "GUARANTORS" shall mean, collectively, the following (together
with their respective successors and assigns): (a) Handy & ▇▇▇▇▇▇ of Canada,
Limited, an Ontario corporation; (b) ele Corporation, a California corporation;
(c) Alloy Ring Service Inc., a Delaware corporation; (d) ▇▇▇▇▇▇ Radiator
Corporation, a Texas corporation; (e) H&H Productions, Inc., a Delaware
corporation; (f) Handy & ▇▇▇▇▇▇ Automotive Group, Inc., a Delaware corporation;
(g) Handy & ▇▇▇▇▇▇ International, Ltd., a Delaware corporation; (h) Handy &
▇▇▇▇▇▇ Peru, Inc., a Delaware corporation; (i) KJ-VMI Realty, Inc., a Delaware
corporation; (j) ▇▇▇-▇▇▇▇ Realty, Inc., a Delaware corporation; (k) Platina
Laboratories, Inc., a Delaware corporation; (l) Sheffield Street Corporation, a
Connecticut corporation; (m) SWM, Inc., a Delaware corporation and (n) Willing B
Wire Corporation, a Delaware corporation; each sometimes being referred to
herein individually as a "Guarantor".
1.54 "GUARANTY" means each guaranty made by any Guarantor in favor of
the Agent for the benefit of the Lenders pursuant to Section 9.21 or otherwise.
1.55 "HAZARDOUS MATERIALS" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants (including materials which
include hazardous constituents), sewage, sludge, industrial slag, solvents
and/or any other similar substances, materials, or wastes and including any
other substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.56 "INDEBTEDNESS" shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the ordinary course
of business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
11
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) all obligations with respect to redeemable stock and redemption or
repurchase obligations under any Capital Stock or other equity securities issued
by such Person; (f) all reimbursement obligations and other liabilities of such
Person with respect to surety bonds (whether bid, performance or otherwise),
letters of credit, banker's acceptances, drafts or similar documents or
instruments issued for such Person's account; (g) all indebtedness of such
Person in respect of indebtedness of another Person for borrowed money or
indebtedness of another Person otherwise described in this definition which is
secured by any consensual lien, security interest, collateral assignment,
conditional sale, mortgage, deed of trust, or other encumbrance on any asset of
such Person, whether or not such obligations, liabilities or indebtedness are
assumed by or are a personal liability of such Person, all as of such time; (h)
all obligations, liabilities and indebtedness of such Person (marked to market)
arising under swap agreements, cap agreements and collar agreements and other
agreements or arrangements designed to protect such person against fluctuations
in interest rates or currency or commodity values; (i) all obligations owed by
such Person under License Agreements with respect to non-refundable, advance or
minimum guarantee royalty payments; and (j) the principal and interest portions
of all rental obligations of such Person under any synthetic lease or similar
off-balance sheet financing where such transaction is considered to be borrowed
money for tax purposes but is classified as an operating lease in accordance
with GAAP.
1.57 "INDEMNIFIED TAXES" shall mean Taxes other than Excluded Taxes.
1.58 "INFORMATION CERTIFICATE" shall mean, the Information Certificate
dated of even date herewith of Borrowers and Guarantors containing information
with respect to Borrowers and Guarantors, their respective businesses and
assets, executed by Borrowers and Guarantors and delivered to Agent in
connection with the preparation of this Agreement and the other Financing
Agreements and the financing arrangements provided for herein.
1.59 "INTELLECTUAL PROPERTY" shall mean, as to each Borrower and
Guarantor, such Borrower's and Guarantor's now owned and hereafter arising or
acquired: patents, patent rights, patent applications, copyrights, works which
are the subject matter of copyrights, copyright applications, copyright
registrations, trademarks, trade names, trade styles, trademark and service ▇▇▇▇
applications, and licenses and rights to use any of the foregoing; all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to ▇▇▇ for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or the license of any trademark); customer and
12
other lists in whatever form maintained; trade secret rights, copyright rights,
rights in works of authorship, domain names and domain name registration;
software and contract rights relating to computer software programs, in whatever
form created or maintained.
1.60 "INTERCREDITOR AGREEMENT" shall mean the Intercreditor Agreement,
dated of even date herewith, by and between Agent (on behalf of Lenders) and
Working Capital Agent (on behalf of the lenders from time to time party to the
Working Capital Loan Agreement), as acknowledged and agreed to by Borrowers and
Guarantors, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.61 "INTEREST EXPENSE" shall mean, for any period, as to any Person,
as determined in accordance with GAAP, the total interest expense of such
Person, whether paid or accrued during such period (including the interest
component of Capitalized Leases for such period), including, without limitation,
discounts in connection with the sale of any Accounts, but excluding interest
paid in property other than cash and any other interest expense not payable in
cash.
1.62 "INTEREST RATE" shall mean,
(a) Subject to clause (b) of this definition below, a rate equal to
eight percent (8%) per annum in excess of the Prime Rate.
(b) Notwithstanding anything to the contrary contained in clause (a)
of this definition, the Interest Rate determined in accordance with clause (a)
above shall mean the rate set forth in clause (a) above plus two (2%) percent
per annum (i) either (A) for the period on and after the effective date of
termination or non-renewal hereof until such time as all Obligations are
indefeasibly paid and satisfied in full in immediately available funds or (B)
for the period from and after the date of the occurrence of any Event of
Default, and for so long as such Event of Default is continuing as determined by
Agent in its reasonable discretion.
1.63 "INVENTORY" shall mean, as to each Borrower and Guarantor, all of
such Borrower's and Guarantor's now owned and hereafter existing or acquired
goods, wherever located, which (a) are leased by such Borrower or Guarantor as
lessor; (b) are held by such Borrower for sale or lease or to be furnished under
a contract of service; (c) are furnished by such Borrower or Guarantor under a
contract of service; or (d) consist of raw materials, work in process, finished
goods or materials used or consumed in its business.
1.64 "INVESTMENT PROPERTY CONTROL AGREEMENT" shall mean an agreement
in writing, in form and substance satisfactory to Agent, by and among Working
Capital Agent, any Borrower or Guarantor (as the case may be) and any securities
intermediary, commodity intermediary or other person who has custody, control or
possession of any investment property of such Borrower or Guarantor
acknowledging that such securities intermediary, commodity intermediary or other
person has custody, control or possession of such investment property on behalf
13
of Working Capital Agent, that it will comply with entitlement orders originated
by Working Capital Agent with respect to such investment property, or other
instructions of Working Capital Agent, and has such other terms and conditions
as Agent may require.
1.65 "JUDGMENT CURRENCY" shall have the meaning set forth in Section
11.6 hereof.
1.66 "LAREDO PROPERTY" shall mean the Real Property of ▇▇▇▇▇▇ located
in Laredo, Texas.
1.67 "LENDERS" shall mean the lenders who are signatories hereto as
Lenders and other persons made a party to this Agreement as a Lender in
accordance with Section 13.7 hereof, and their respective successors and
assigns; each sometimes being referred to herein individually as a "Lender".
1.68 "LEVERAGE RATIO" shall mean, as of any date, the ratio of (a) (i)
the aggregate principal amount of the Loan outstanding on such date plus the
aggregate principal amount of all other Indebtedness (including the amount of
all contingent liabilities in respect of undrawn letters of credit) of the
Parent and its Subsidiaries on such date, minus (ii) the aggregate amount of
cash collateral held by Agent under the Cash Collateral Agreement on such date;
to (b) EBITDA of the Parent and its Subsidiaries for the period of four (4)
consecutive fiscal quarters ended on such date.
1.69 "LICENSE AGREEMENTS" shall have the meaning set forth in Section
8.11 hereof.
1.70 "LOAN" shall mean the loans made by the Lenders to the Borrowers
on the date hereof pursuant to Section 2.1 hereof.
1.71 "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
(a) the financial condition, business, operations or condition (financial or
otherwise) of Borrowers (taken as a whole); (b) the legality, validity or
enforceability of this Agreement or any of the other Financing Agreements; (c)
the legality, validity, enforceability, perfection or priority of the security
interests and liens of Agent upon the Collateral; (d) the Collateral or its
value; (e) the ability of Borrowers to repay the Obligations or perform their
obligations under this Agreement or any of the other Financing Agreements as and
when to be performed; or (f) the ability of Agent or any Lender to enforce the
Obligations or realize upon the Collateral or otherwise with respect to the
rights and remedies of Agent and Lenders under this Agreement or any of the
other Financing Agreements.
1.72 "MATERIAL CONTRACT" shall mean (a) any contract or other
agreement (other than the Financing Agreements), written or oral, of any
Borrower or Guarantor involving monetary liability of or to any Person in an
amount in excess of $500,000 in any fiscal year and (b) any other contract or
other agreement (other than the Financing Agreements), whether written or oral,
to which any Borrower or Guarantor is a party as to which the breach,
nonperformance, cancellation or failure to renew by any party thereto would have
a Material Adverse Effect.
14
1.73 "MAXIMUM CREDIT" shall mean the amount of $71,000,000.
1.74 "MORTGAGES" shall mean, individually and collectively, each of
the following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of
even date herewith, by Sumco in favor of Agent with respect to the Real Property
and related assets of such Borrower located in Indianapolis, Indiana, (b) the
Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing, dated of even date herewith, by H&H Electronic in favor of Agent
with respect to the Real Property and related assets of such Borrower located in
Providence, Rhode Island, (c) the Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Filing, dated of even date herewith, by Camdel in
favor of Agent with respect to the Real Property and related assets of such
Borrower located in Camden, Delaware, (d) the Open-End Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Filing, dated of even date
herewith, by H&H Tube in favor of Agent with respect to the Real Property and
related assets of such Borrower located in Norristown, Pennsylvania, (e) the
Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing,
dated of even date herewith, by Indiana Tube in favor of Agent with respect to
the Real Property and related assets of such Borrower located in Evansville,
Indiana, (f) the Open-End Mortgage Deed, Assignment of Leases and Rents,
Security Agreement and Fixture Filing, dated of even date herewith, by Parent in
favor of Agent with respect to the Real Property and related assets of such
Borrower located in Fairfield Connecticut, (g) the Deed of Trust, Assignment of
Leases and Rents, Security Agreement and Fixture Filing, dated of even date
herewith, by Maryland Wire in favor of Agent with respect to the Real Property
and related assets of such Borrower located in Cockeysville, Maryland, (h) the
Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing, dated of even date herewith, by Canfield in favor of Agent with
respect to the Real Property and related assets of Canfield located in Canfield,
Ohio, (i) the Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing, dated of even date herewith, by such Borrower in favor of Agent
with respect to the Real Property and related assets of such Borrower located in
Tulsa and Broken Arrow, Oklahoma, (j) the Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing, dated of even date herewith, by
Maryland Wire in favor of Agent with respect to the Real Property and related
assets of such Borrower located in Oriskany, New York, (k) the Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of
even date herewith, by ▇▇▇▇▇ in favor of Agent with respect to the Real Property
and related assets of such Borrower located in Cudahy, Wisconsin, (l) the
Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing,
dated of even date herewith, by Olympic in favor of Agent with respect to the
Real Property and related assets of such Borrower located in Agawam,
Massachusetts, (m) the Charge, dated of even date herewith, by H&H Canada in
favor of Agent with respect to the Real Property and related assets of H&H
Canada located in Rexdale, Ontario, Canada, (n) the Open End Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of
even date herewith, by ▇▇▇▇▇▇ in favor of Agent with respect to the Real
Property and related assets of such Guarantor located in Cleveland, Ohio, (o)
the Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture
15
Filing, dated of even date herewith, by ▇▇▇▇▇▇ in favor of Agent with respect to
the Real Property and related assets of such Guarantor located in Maquoketa,
Iowa, (p) the Open-End Mortgage Deed, Assignment of Leases and Rents, Security
Agreement and Fixture Filing, dated of even date herewith, by ▇▇▇▇▇▇ in favor of
Agent with respect to the Real Property and related assets of such Guarantor
located in Waterbury, Connecticut, and (q) the Mortgage, Assignment of Leases
and Rents, Security Agreement and Fixture Filing, dated of even date herewith,
by Parent in favor of Agent with respect to the Real Property and related assets
of such Borrower located in North Attleboro, Massachusetts.
1.75 "MULTIEMPLOYER PLAN" shall mean a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding six (6) years contributed to by any
Borrower, Guarantor or any ERISA Affiliate.
1.76 "NET CASH PROCEEDS" shall mean, with respect to any sale, lease,
transfer or other disposition of any asset or the sale or issuance of any
Indebtedness by any Person, the aggregate amount of cash received from time to
time (whether as initial consideration or through payment or disposition of
deferred consideration) by or on behalf of such Person in connection with such
transaction after deducting therefrom only (without duplication) (a) reasonable
and customary brokerage commissions, underwriting fees and discounts, legal
fees, accountant's fees, investment banking fees, finder's fees, other similar
fees and commissions and reasonable out-of-pocket expenses, (b) the amount of
taxes reasonably estimated by such Person to be actually and reasonably
attributable to such transaction, and (c) the amount of any Indebtedness secured
by a security interest, lien or other encumbrance (other than a security
interest, lien or other encumbrance created under any Financing Agreement) on
such asset that, by the terms of such transaction, is required to be repaid upon
such disposition, in each case to the extent, but only to the extent, that the
amounts so deducted are actually paid to a Person that, except in the case of
reasonable out-of-pocket expenses, is not an Affiliate of such Person or any
Affiliate of any Borrower and, in each case, are properly attributable to such
transaction or to the asset that is the subject thereof.
1.77 "NORTH ATTLEBORO PROPERTY" shall mean the Real Property of Parent
located in North Attleboro, Massachusetts.
1.78 "OBLIGATIONS" shall mean the Loan and all other obligations,
liabilities and indebtedness of every kind, nature and description owing by any
or all of Borrowers to Agent or any Lender and/or any of their Affiliates,
including principal, interest, charges, fees, costs and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
arising under this Agreement or any of the other Financing Agreements, whether
now existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of any
case with respect to such Borrower under the United States Bankruptcy Code, the
Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangement Act
(Canada) or any similar statute (including the payment of interest and other
amounts which would accrue and become due but for the commencement of such case,
16
whether or not such amounts are allowed or allowable in whole or in part in such
case), whether direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, or secured or
unsecured.
1.79 "OBLIGOR" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations (including, without
limitation, Guarantors and WHX), other than Borrowers.
1.80 "PARENT" shall mean Handy & ▇▇▇▇▇▇, a New York corporation, and
its successors and assigns.
1.81 "PARTICIPANT" shall mean any lender that acquires and holds a
participation in the interest of any Lender in any portion of the Loan in
conformity with the provisions of Section 13.7 of this Agreement governing
participations.
1.82 "PARTICIPANT REGISTER" shall have the meaning set forth in
Section 13.7 hereof.
1.83 "PERMITTED ACQUISITION" shall mean any Acquisition by a Borrower
or any Subsidiary of a Borrower to the extent that each of the following
conditions shall have been satisfied:
(a) the Borrowers shall have furnished to the Agent at least 10
Business Days prior to the consummation of such Acquisition (i) an executed term
sheet and/or commitment letter (setting forth in reasonable detail the terms and
conditions of such Acquisition) and, at the request of the Agent, such other
information and documents that the Agent may request, including, without
limitation, executed counterparts of the respective agreements, instruments or
other documents pursuant to which such Acquisition is to be consummated
(including, without limitation, any related management, non-compete, employment,
option or other material agreements), any schedules to such agreements,
instruments or other documents and all other material ancillary agreements,
instruments or other documents to be executed or delivered in connection
therewith, (ii) pro forma financial statements of the Parent and its
Subsidiaries after the consummation of such Acquisition, which shall be in form
and substance satisfactory to Agent, (iii) a certificate of the chief financial
officer of the Parent, demonstrating on a pro forma basis compliance with all
covenants set forth in Section 9.17 hereof as if the consummation of such
Acquisition occurred on the first day of the test period for each of the
covenants set forth in Section 9.17, which shall be in form and substance
satisfactory to Agent, and (iv) copies of such other agreements, instruments or
other documents as the Agent shall reasonably request;
(b) the agreements, instruments and other documents referred to in
paragraph (a) above shall provide that (i) neither the Borrowers nor any of
their Subsidiaries shall, in connection with such Acquisition, assume or remain
liable in respect of any Indebtedness of the Seller or Sellers, or other
obligation of the Seller or Sellers (except for obligations incurred in the
ordinary course of business in operating the property so acquired and necessary
and desirable to the continued operation of such property and except for
Indebtedness that the Agent otherwise expressly consents to in writing after its
17
review of the terms of the proposed Acquisition), and (ii) all property to be so
acquired in connection with such Acquisition shall be free and clear of any and
all Liens, except for Liens permitted under Section 9.8 hereof (and if any such
property is subject to any Lien not permitted by this clause (ii) then
concurrently with such Acquisition such Lien shall be released);
(c) the Subsidiary to be acquired or formed as a result of such
Acquisition shall be engaged in the same general lines of business as the
Borrowers and such Subsidiary will be a direct wholly-owned Subsidiary of a
Borrower;
(d) such Acquisition shall be effected in such a manner so that the
acquired Capital Stock or assets are owned either by a Borrower or a Subsidiary
of a Borrower and, if effected by merger or consolidation involving a Borrower,
such Borrower shall be the continuing or surviving Person;
(e) any such Subsidiary (and its equityholders) shall execute and
deliver the agreements, instruments and other documents required by Agent
pursuant to Section 9.21 to grant Agent a valid and perfected Lien on the assets
and Capital Stock of such Subsidiary, which Lien shall be prior to all other
Liens except for the Liens in favor of the Working Capital Agent;
(f) the maximum aggregate amount of cash consideration paid by the
Borrowers for all such Acquisitions effected after the date hereof shall not
exceed $5,000,000;
(g) no Default or Event of Default shall have occurred and be
continuing immediately before or after giving effect to such Acquisition;
(h) Excess Availability shall be not less than $10,000,000
immediately after giving effect to such Acquisition; and
(i) any cash consideration paid by a Borrower for any such
Acquisition effected after the date hereof shall be deemed to be a Capital
Expenditure for purposes of this Agreement.
1.84 "PERMITTED HOLDERS" shall mean the persons listed on Schedule
1.84 hereto and their respective successors and assigns.
1.85 "PERSON" OR "PERSON" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which elects
subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.86 "PLAN" means an employee benefit plan (as defined in Section 3(3)
of ERISA) which any Borrower or Guarantor sponsors, maintains, or to which it
makes, is making, or is obligated to make contributions, or in the case of a
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Multiemployer Plan has made contributions at any time during the immediately
preceding six (6) plan years.
1.87 "PLEDGE AGREEMENT" means the Pledge and Security Agreement made
by the Borrowers in favor of the Agent for the benefit of the Lenders, securing
the Obligations and delivered to the Agent.
1.88 "PPSA" shall mean the Personal Property Security Act (Ontario),
the Civil Code of Quebec or any other applicable Canadian Federal or Provincial
statute pertaining to the granting, perfecting, priority or ranking of security
interests, liens, hypothecs on personal property, and any successor statutes,
together with any regulations thereunder, in each case as in effect from time to
time. References to sections of the PPSA shall be construed to also refer to any
successor sections.
1.89 "PRECIOUS METALS CONSIGNMENT AGREEMENT" shall mean the agreement
by and between Parent and the Precious Metals Consignor which provides for the
consignment of Precious Metals Inventory from Precious Metals Consignor to
Parent, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.90 "PRECIOUS METALS CONSIGNMENT DOCUMENTS" shall mean, collectively,
the following (as the same may be amended, modified, supplemented, extended,
renewed, restated or replaced): (a) the Precious Metals Consignment Agreement;
and (b) all other agreements, documents and instruments at any time executed
and/or delivered by any Borrower or Guarantor with, to or in favor of the
Precious Metals Consignor in connection therewith or related thereto; sometimes
being referred to herein individually as a "PRECIOUS METALS CONSIGNOR DOCUMENT".
1.91 "PRECIOUS METALS CONSIGNOR" shall mean any precious metals
consignor reasonably acceptable to Agent, together with its successors and
assigns.
1.92 "PRECIOUS METALS CREDITOR AGREEMENT" shall mean an intercreditor
agreement, by and between Working Capital Agent and the Precious Metals
Consignor, as acknowledged and agreed to by Parent, as the same may be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.93 "PRECIOUS METALS INVENTORY" shall mean Inventory of the Borrowers
consisting of gold, silver, palladium or platinum.
1.94 "PRIME RATE" shall mean the greater of (a) the rate from time to
time publicly announced by JPMorgan Chase, or its successors, as its prime rate,
whether or not such announced rate is the best rate available at such bank, and
(b) 4%.
1.95 "PRO RATA SHARE" shall mean as to any Lender, the fraction
(expressed as a percentage) the numerator of which is such Lender's Commitment
and the denominator of which is the aggregate amount of all of the Commitments
of Lenders, as adjusted from time to time in accordance with the provisions of
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Section 13.7 hereof; provided, that, if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender's portion of the Loan
and the denominator shall be the aggregate amount of the unpaid Loan.
1.96 "PROVISION FOR TAXES" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial, county
or local, and whether foreign or domestic, that are paid or payable by any
Person in respect of any period in accordance with GAAP.
1.97 "PURCHASE PRICE" shall have the meaning assigned to such term in
the Precious Metals Creditor Agreement.
1.98 "REAL PROPERTY" shall mean, with respect to any Person, all now
owned and hereafter acquired real property of such Person, including leasehold
interests, together with all buildings, structures, and other improvements
located thereon and all licenses, easements and appurtenances relating thereto,
wherever located, including the real property and related assets more
particularly described in the Mortgages.
1.99 "RECEIVABLES" shall mean all of the following now owned or
hereafter arising or acquired property of each Borrower and Guarantor: (a) all
Accounts; (b) all interest, fees, late charges, penalties, collection fees and
other amounts due or to become due or otherwise payable in connection with any
Account; (c) all payment intangibles of such Borrower or Guarantor; (d) letters
of credit, indemnities, guarantees, security or other deposits and proceeds
thereof issued payable to any Borrower or Guarantor or otherwise in favor of or
delivered to any Borrower or Guarantor in connection with any Account; or (e)
all other accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to any Borrower or Guarantor,
whether from the sale and lease of goods or other property, licensing of any
property (including Intellectual Property or other general intangibles),
rendition of services or from loans or advances by any Borrower or Guarantor or
to or for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise associated
with any Accounts, Inventory or general intangibles of any Borrower or Guarantor
(including, without limitation, choses in action, causes of action, tax refunds,
tax refund claims, any funds which may become payable to any Borrower or
Guarantor in connection with the termination of any Plan or other employee
benefit plan and any other amounts payable to any Borrower or Guarantor from any
Plan or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, casualty or any similar types of insurance and any proceeds
thereof and proceeds of insurance covering the lives of employees on which any
Borrower or Guarantor is a beneficiary).
1.100 "RECORDS" shall mean, as to each Borrower and Guarantor, all of
such Borrower's and Guarantor's present and future books of account of every
kind or nature, purchase and sale agreements, invoices, ledger cards, bills of
lading and other shipping evidence, statements, correspondence, memoranda,
credit files and other data relating to the Collateral or any account debtor,
20
together with the tapes, disks, diskettes and other data and software storage
media and devices, file cabinets or containers in or on which the foregoing are
stored (including any rights of any Borrower or Guarantor with respect to the
foregoing maintained with or by any other person).
1.101 "REFERENCE BANK" shall mean JPMorgan Chase Bank, or such other
bank as Agent may from time to time designate.
1.102 "REFINANCING INDEBTEDNESS" shall have the meaning set forth in
Section 9.9(g) hereof.
1.103 "REGISTER" shall have the meaning set forth in Section 13.7
hereof.
1.104 "REGISTERED LOAN" shall have the meaning set forth in Section
2.1(e) hereof.
1.105 "REGISTERED NOTE" shall have the meaning set forth in Section
2.1(e) hereof.
1.106 "REQUIRED LENDERS" shall mean, at any time, those Lenders whose
Pro Rata Shares aggregate fifty-one (51%) percent or more of the aggregate of
the Commitments of all Lenders, or if the Commitments shall have been
terminated, Lenders to whom at least fifty-one (51%) percent of the then
outstanding Obligations are owing.
1.107 "RESERVES" shall mean the term "Reserves" as defined in the
Working Capital Loan Agreement as in effect as on the date hereof.
1.108 "SECURITY AGREEMENT" means a Security Agreement made by a
Borrower or Guarantor in favor of the Agent for the benefit of the Lenders,
securing the Obligations and delivered to the Agent.
1.109 "SELLER" shall mean any Person that sells Capital Stock or other
property or assets to a Borrower or a Subsidiary of a Borrower in a Permitted
Acquisition.
1.110 "SOLVENT" shall mean, at any time with respect to any Person,
that at such time such Person (a) is able to pay its debts as they mature and
has (and has a reasonable basis to believe it will continue to have) sufficient
capital (and not unreasonably small capital) to carry on its business consistent
with its practices as of the date hereof, and (b) the assets and properties of
such Person at a fair valuation (and including as assets for this purpose at a
fair valuation all rights of subrogation, contribution or indemnification
arising pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).
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1.111 "SPECIAL AGENT ADVANCES" shall have the meaning set forth in
Section 12.11 hereof.
1.112 "SUBSIDIARY" OR "SUBSIDIARY" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other interests entitled to vote in the election of the board
of directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person.
1.113 "TAXES" shall mean any and all present and future taxes, levies,
imposts, deductions and other governmental charges or withholdings, and all
interest, penalties and other liabilities with respect thereto, imposed by any
jurisdiction (or any political subdivision thereof).
1.114 "TERMINATION DATE" shall have the meaning set forth in Section
13.1 hereof.
1.115 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of New York on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).
1.116 "UCC FILING AUTHORIZATION LETTER" shall mean a letter duly
executed by each Borrower authorizing the Agent to file appropriate financing
statements on Form UCC-1 without the signature of each Borrower in such office
or offices as may be necessary or, in the opinion of the Agent, desirable to
perfect the security interests purported to be created by each Security
Agreement, each Pledge Agreement and each Mortgage.
1.117 "US DOLLAR EQUIVALENT" shall mean at any time (a) as to any
amount denominated in US Dollars, the amount thereof at such time, and (b) as to
any amount denominated in any other currency, the equivalent amount in US
Dollars calculated by Agent in good faith at such time using the Exchange Rate
in effect on the Business Day of determination.
1.118 "US DOLLARS", "US$" and "$" shall each mean lawful currency of
the United States of America.
1.119 "VAT" shall mean Value Added Tax imposed in Canada or any other
jurisdiction and any equivalent tax applicable in any jurisdiction (including
Goods and Services Tax, Harmonized Sales Tax and Quebec Sales Tax).
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1.120 "VOTING STOCK" shall mean with respect to any Person, (a) one
(1) or more classes of Capital Stock of such Person having general voting powers
to elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
1.121 "WC REVOLVING LOANS" shall mean the term "Revolving Loans" as
defined in the Working Capital Loan Agreement as in effect on the date hereof.
1.122 "WC TERM LOANS" shall mean the term "Term Loans" as defined in
the Working Capital Loan Agreement as in effect on the date hereof.
1.123 "WEIGHTED AVERAGE LIFE TO MATURITY" shall mean when applied to
any Indebtedness at any date, the number of years obtained by dividing (a) the
then outstanding principal amount of such Indebtedness into (b) the product
obtained by multiplying (i) the amount of each then outstanding installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (ii) the number of years
(calculated to the nearest one twelfth) that will elapse between such date and
the making of such payment.
1.124 "WHX" shall mean WHX Corporation, A Delaware corporation.
1.125 "WHX SUBORDINATED NOTE" shall mean the [Subordinated Promissory
Note], dated on or about the date hereof, by Parent in favor of WHX, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.126 "WHX SUBORDINATION AGREEMENT" shall mean that certain
Subordination Agreement, dated as of the date hereof, between WHX and the Agent,
as the same may be amended, supplemented or otherwise modified from time to
time.
1.127 "WORKING CAPITAL AGENT" shall mean Congress, in its capacity as
agent acting for and on behalf of the Working Capital Lenders pursuant to the
Working Capital Loan Agreement, and its successors and assigns (including any
replacement or successor agent or additional agent acting for and on behalf of
the Working Capital Lenders).
1.128 "WORKING CAPITAL DEBT" shall mean all obligations, liabilities
and indebtedness of every kind, nature and description owing by any Borrower or
Guarantor to Working Capital Agent or any Working Capital Lender, including
principal, interest, charges, fees, premiums, indemnities, costs and expenses,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, arising under the Working Capital Lender Agreements.
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1.129 "WORKING CAPITAL LENDER AGREEMENTS" shall mean, collectively,
the following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the Working Capital
Loan Agreement; (b) the agreements, documents and instruments set forth on
Schedule 1.129 hereto; and (c) all other agreements, documents and instruments
at any time executed and/or delivered by any Borrower or Guarantor with, to or
in favor of Working Capital Agent or any Working Capital Lender in connection
therewith or related thereto; sometimes being referred to herein individually as
a "Working Capital Lender Agreement".
1.130 "WORKING CAPITAL LENDERS" shall mean, collectively, Congress and
the other lenders who are from time to time parties to the Working Capital Loan
Agreement as lenders, and their respective successors and assigns, and the
lenders with respect to any Refinancing Indebtedness; each sometimes referred to
herein individually as a "Working Capital Lender".
1.131 "WORKING CAPITAL LOAN AGREEMENT" shall mean the Loan and
Security Agreement, dated of even date herewith, by and among Congress, as
agent, the lenders from time to time party thereto, Borrowers and Guarantors, as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, including any agreements with respect
to Refinancing Indebtedness.
1.132 "WORKING CAPITAL LOAN TERMINATION DATE" shall have the meaning
ascribed to such term in the Intercreditor Agreement.
1.133 "WORKING INVESTMENT" shall mean, at any date of determination
thereof, (i) the sum, for any Person and its Subsidiaries, of (A) the unpaid
face amount of all Accounts of such Person and its Subsidiaries as at such date
of determination, PLUS (B) the aggregate amount of prepaid expenses and other
current assets of such Person and its Subsidiaries as at such date of
determination, MINUS (ii) the sum, for such Person and its Subsidiaries, of (A)
the unpaid amount of all accounts payable of such Person and its Subsidiaries as
at such date of determination, plus (B) the aggregate amount of all accrued
expenses of such Person and its Subsidiaries as at such date of determination
(but, excluding from accounts payable and accrued expenses, the current portion
of long-term debt and all accrued interest and taxes).
SECTION 2. CREDIT FACILITIES
2.1 THE LOAN.
(a) On the date hereof, each Lender severally (and not jointly) agrees
to fund its Pro Rata Share of the Loan to the Borrowers, in the original
principal amount not to exceed the amount of such Lender's Commitment.
(b) The Loan is (i) to be repaid, together with interest and other
amounts, in accordance with this Agreement and (ii) secured by all of the
Collateral. The unpaid principal amount of the Loan shall be repaid on the
earlier of (i) the Termination Date as set forth in Section 13.1 hereof, and
24
(ii) such earlier date on which the Loan shall become due and payable in
accordance with the terms of this Agreement and the other Financing Agreements.
(c) Borrowers may, upon at least five (5) Business Days' prior written
notice to the Agent, prepay without penalty or premium the principal of the
Loan, in whole or in part. Each prepayment made pursuant to this clause (c)
shall be accompanied by the payment of accrued interest to the date of such
payment on the amount prepaid.
(d) Agent, on behalf of Borrowers, agrees to record each Loan on the
Register referred to in Section 13.7(b). The Loan recorded on the Register (the
"Registered Loan") may not be evidenced by promissory notes other than a
Registered Note (as defined below). Upon the registration of a Loan, any
promissory note (other than a Registered Note) evidencing the same shall be null
and void and shall be returned to Borrowers. Borrowers agree, at the request of
any Lender, to execute and deliver to such Lender a promissory note in
registered form to evidence such Registered Loan (i.e., containing registered
note language) and registered as provided in Section 13.7(b) hereof (a
"Registered Note"), payable to the order of such Lender and otherwise duly
completed. Once recorded on the Register, the Obligations evidenced by such
Registered Note may not be removed from the Register so long as it remains
outstanding, and a Registered Note may not be exchanged for a promissory note
that is not a Registered Note.
2.2 COMMITMENTS. Each Lender's Commitment shall terminate at 5:00 p.m.
(New York City time) on the date hereof.
2.3 MANDATORY PREPAYMENTS. Notwithstanding the provisions of Section
6.4 hereof and subject to the terms of the Intercreditor Agreement, so long as
no Event of Default exists or has occurred and is continuing:
(a) Upon the receipt by any Borrower or any of its Subsidiaries of any
Extraordinary Receipts, Borrowers shall immediately prepay the Working Capital
Debt and the Obligations as set forth below, in an amount equal to 100% of such
Extraordinary Receipts, net of any reasonable expenses incurred in collecting
such Extraordinary Receipts:
(i) if such Extraordinary Receipts are the proceeds of Inventory
or Accounts, then such proceeds shall be applied, FIRST, to the outstanding
principal amount of the WC Revolving Loans, SECOND, to the outstanding principal
amount of the WC Term Loans, and THIRD, to the outstanding principal amount of
the Loan; and
(ii) if such Extraordinary Receipts are the proceeds of any other
Collateral (other than Inventory or Accounts), then such proceeds shall be
applied FIRST, to the outstanding principal amount of the WC Term Loans and,
SECOND, at Borrowers' option, to either (A) the outstanding principal amount of
the Loan or (B) the outstanding principal amount of the WC Revolving Loans so
long as (in the case of clause (B) only) the Working Capital Agent establishes
and maintains a permanent Reserve against the aggregate Borrowing Base of all
25
Borrowers, in an amount equal to the amount of such net proceeds that are so
applied by Borrowers to the prepayment of principal of the WC Revolving Loans;
PROVIDED, HOWEVER, that (A) so long as no Default or an Event of Default has
occurred and is continuing, on the date such Person receives Extraordinary
Receipts consisting of insurance proceeds from one or more policies covering, or
proceeds from any judgment, settlement, condemnation or other cause of action in
respect of, the loss, damage, taking or theft of any property or assets, such
Extraordinary Receipts received by the Borrowers may, at the option of the
Borrowers, be applied to repair, refurbish or replace such property or assets or
acquire replacement property or assets for the property or assets so lost,
damaged or stolen or other property or assets used or useful in the business of
any Borrower for the property or assets so disposed, provided, that (x) the
Agent for the benefit of the Lenders has a first-priority Lien (subject to the
prior liens of the Working Capital Agent) on such replacement (or repaired or
restored) property or assets, (y) the Borrowers deliver a certificate to the
Agent within 10 days after the date of receipt of such Extraordinary Receipts
stating that such Extraordinary Receipts shall be used to repair or refurbish
such property or assets or to acquire such replacement property or assets for
the property or assets so lost, damaged or stolen or such other property or
assets used or useful in the business of any Borrower within 120 days after the
date of receipt of such Extraordinary Receipts (which certificate shall set
forth an estimate of the Extraordinary Receipts to be so expended), and (z) if
such Extraordinary Receipts are the proceeds of Real Property and aggregate
$1,000,000 or more, the Borrowers obtain the prior written consent of the Agent
and (B) if all or any portion of such Extraordinary Receipts are not so used
within the 120-day period, such unused Extraordinary Receipts shall be applied
to prepay the Working Capital Debt and the Obligations in accordance with this
Section 2.3(a). Pending such reinvestment, the Extraordinary Receipts shall be
applied as a prepayment of WC Revolving Loans but not as a permanent reduction
in the Revolving Loan Limit (as defined in the Working Capital Loan Agreement)
and no Reserve shall be taken against the Borrowing Base. Any Extraordinary
Receipts applied to repair, refurbish or replace Collateral pursuant to and in
accordance with this Section 2.3(a) shall not be deemed Capital Expenditures for
purposes of this Agreement.
(b) Upon the issuance or sale by any Borrower or any of its
Subsidiaries of Capital Stock of such Borrower or Subsidiary as permitted in
Sections 9.7(b)(iii) and (iv) hereof, or the issuance or incurrence by any
Borrower or any of its Subsidiaries of any Indebtedness of the type described in
Section 9.9(e), Borrowers shall immediately prepay the Working Capital Debt and
the Obligations, in an amount equal to 100% of the Net Cash Proceeds received by
such Person in connection therewith as follows: FIRST, to the outstanding
principal amount of the WC Term Loans, and SECOND, at Borrower's option to
either (A) the outstanding principal amount of the Loan or (B) the outstanding
principal amount of the WC Revolving Loans so long as (in the case of clause (B)
only) the Working Capital Agent establishes and maintains a permanent Reserve
against the aggregate Borrowing Base of all Borrowers in an amount equal to the
amount of such Net Cash Proceeds that are so applied by Borrowers to the
prepayment of principal of the WC Revolving Loans. The provisions of this
subsection (b) shall not be deemed to be implied consent to any such issuance,
26
incurrence or sale otherwise prohibited by the terms and conditions of this
Agreement.
(c) Upon the sale or disposition of any Collateral by any Borrower or
any of its Subsidiaries as permitted in Section 9.7(b)(ii) or (vi) or upon the
sale or disposition of any Collateral of any Borrower or any of its Subsidiaries
not otherwise permitted by the terms of this Agreement but consented to by
Required Lenders, Borrowers shall immediately prepay the Working Capital Debt
and the Obligations as set forth below, in an amount equal to 100% of the Net
Cash Proceeds received by such Person in connection with such sale or
disposition:
(i) if such sale or disposition is of Inventory or Accounts, then
such Net Cash Proceeds shall be applied, FIRST, to the outstanding principal
amount of the WC Revolving Loans, SECOND, to the outstanding principal amount of
the WC Term Loans, and third, to the outstanding principal amount of the Loan;
and
(ii) if such sale or disposition is of any other Collateral
(other than (x) Inventory or Accounts or (y) the Real Property described in
subsection (c)(iii) below), then such Net Cash Proceeds shall be applied, FIRST,
to the outstanding principal amount of the WC Term Loans, and SECOND, at
Borrower's option to either (A) the outstanding principal amount of the Loan or
(B) the outstanding principal amount of the WC Revolving Loans so long as (in
the case of this clause (B) only) the Working Capital Agent establishes and
maintains a permanent Reserve against the aggregate Borrowing Base of all
Borrowers in an amount equal to the amount of such Net Cash Proceeds that are so
applied by Borrowers to the prepayment of principal of the WC Revolving Loans.
(iii) if such sale or disposition is of any Real Property
described in Section 9.7(b)(vi), then such Net Cash Proceeds shall be applied as
follows:
FIRST, the initial $2,000,000 of the Net Cash Proceeds from
the sale or disposition of all such Real Property shall be split 50/50 between
the Working Capital Loan Agreement and this Agreement, with the portion
allocable to this Agreement being applied to the outstanding principal amount of
the Loan and the portion allocable to the Working Capital Loan Agreement being
applied, at Borrower's option, to either (A) the outstanding principal amount of
the W/C Term Loans or (B) the outstanding principal amount of the WC Revolving
Loans so long as (in the case of this clause (B) only) the Working Capital Agent
establishes and maintains a permanent Reserve against the aggregate Borrowing
Base of all Borrowers in an amount equal to the amount of such Net Cash Proceeds
that are so applied by Borrowers to the prepayment of principal of the WC
Revolving Loans; and
SECOND, all Net Cash Proceeds from the sale or disposition
of all such Real Property in excess of $2,000,000 in the aggregate shall be
applied to the outstanding principal amount of the Loan.
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(d) Within ten (10) days of delivery to the Agent and the Lenders
of audited annual financial statements pursuant to Section 9.6(a)(iii),
commencing with the delivery to the Agent and the Lenders of the financial
statements for the twelve (12) month period ending on December 31, 2004); or, if
such financial statements are not delivered to the Agent and the Lenders on the
date such statements are required to be delivered pursuant to Section
9.6(a)(iii), ten (10) days after the date such statements are required to be
delivered, the Borrowers shall prepay the outstanding principal amount of the
Loan in an amount equal to forty (40%) percent of the Excess Cash Flow for such
fiscal year. Notwithstanding the foregoing, no such prepayment pursuant to this
subsection (d) shall be made on any date if on or prior to such date, the Agent
shall have received written notice from the Working Capital Agent of the
existence of an event of default under the Working Capital Loan Agreement and
such event of default shall be continuing on such prepayment date, except that
such prepayment shall be made if and when such event of default under the
Working Capital Loan Agreement ceases to exist so long as no event of default
under the Working Capital Loan Agreement would arise immediately after giving
effect to such prepayment.
(e) Notwithstanding the foregoing, if the Working Capital Agent
decides not to require Borrowers to make any payment that, pursuant to the terms
of this Section 2.3, is required to be applied to the Working Capital Debt, such
payment shall be applied to prepay the outstanding principal amount of the Loan
instead.
(f) All prepayments of the WC Term Loans and the Loan under this
Section 2.4 shall be applied against the remaining installments (if any) of
principal due on the WC Term Loans or the Loan, as applicable, in the inverse
order of maturity. Notwithstanding anything to the contrary in this Section 2.3,
all prepayments of principal under this Section 2.3 shall be made together with
accrued and unpaid interest thereon to the date of such prepayment.
2.4 JOINT AND SEVERAL LIABILITY. Each Borrower shall be jointly and
severally liable for all amounts due to Agent and Lenders under this Agreement
and the other Financing Agreements, regardless of which Borrower actually
receives the Loan hereunder or the amount of such Loan received or the manner in
which Agent or any Lender accounts for the Loan or other extensions of credit on
its books and records. All references herein or in any of the other Financing
Agreements to any of the obligations of Borrowers to make any payment hereunder
or thereunder shall constitute joint and several obligations of Borrowers. The
Obligations with respect to Loan made to a Borrower, and the Obligations arising
as a result of the joint and several liability of a Borrower hereunder, with
respect to the Loan made to the other Borrower, shall be separate and distinct
obligations, but all such other Obligations shall be primary obligations of all
Borrowers. The Obligations arising as a result of the joint and several
liability of a Borrower hereunder with respect to the Loan or other extensions
of credit made to the other Borrower shall, to the fullest extent permitted by
law, be unconditional irrespective of (a) the validity or enforceability,
avoidance or subordination of the Obligations of the other Borrower or of any
promissory note or other document evidencing all or any part of the Obligations
of the other Borrower, (b) the absence of any attempt to collect the Obligations
from the other Borrower, any Obligor or any other security therefor, or the
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absence of any other action to enforce the same, (c) the waiver, consent,
extension, forbearance or granting of any indulgence by Agent or any Lender with
respect to any provisions of any instrument evidencing the Obligations of the
other Borrower, or any part thereof, or any other agreement now or hereafter
executed by the other Borrower and delivered to Agent or any Lender, (d) the
failure by Agent or any Lender to take any steps to perfect and maintain its
security interest in, or to preserve its rights and maintain its security or
collateral for the Obligations of the other Borrower, (e) the election of Agent
and Lenders in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code, (f) the disallowance
of all or any portion of the claim(s) of Agent or any Lender for the repayment
of the Obligations of the other Borrower under Section 502 of the Bankruptcy
Code, or (g) any other circumstances which might constitute a legal or equitable
discharge or defense of an Obligor or of the other Borrower. With respect to the
Obligations arising as a result of the joint and several liability of a Borrower
hereunder with respect to the Loan or other extensions of credit made to the
other Borrower hereunder, each Borrower waives, until the Obligations shall have
been paid in full and this Agreement shall have been terminated, any right to
enforce any right of subrogation or any remedy which Agent or any Lender now has
or may hereafter have against any Borrower or Obligor and any benefit of, and
any right to participate in, any security or collateral given to Agent or any
Lender. At any time an Event of Default exists or has occurred and is
continuing, Agent may proceed directly and at once, without notice, against any
Borrower to collect and recover the full amount, or any portion of the
Obligations, without first proceeding against the other Borrower or any other
Person, or against any security or collateral for the Obligations. Each Borrower
consents and agrees that Agent and Lenders shall be under no obligation to
marshal any assets in favor of any Borrower or against or in payment of any or
all of the Obligations.
SECTION 3. INTEREST AND FEES
3.1 INTEREST.
(a) Borrowers shall pay to Agent, for the benefit of Lenders, interest
on the outstanding principal amount of the Loan at the Interest Rate. All
interest accruing hereunder on and after the date of any Event of Default or
termination hereof shall be payable on demand.
(b) Interest shall be payable by Borrowers to Agent, for the account
of Lenders, monthly in arrears not later than the first day of each calendar
month and shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed. The interest rate on non-contingent Obligations
shall increase or decrease by an amount equal to each increase or decrease in
the Prime Rate effective on the first day of the month after any change in such
Prime Rate is announced based on the Prime Rate in effect on the last day of the
month in which any such change occurs. In no event shall charges constituting
interest payable by Borrowers to Agent and Lenders exceed the maximum amount or
the rate permitted under any applicable law or regulation, and if any such part
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or provision of this Agreement is in contravention of any such law or
regulation, such part or provision shall be deemed amended to conform thereto.
(c) For purposes of disclosure under the Interest Act (Canada), where
interest is calculated pursuant thereto at a rate based upon a year of 360, 365
or 366 days, as the case may be (the "FIRST RATE"), the rate or percentage of
interest on a yearly basis is equivalent to such First Rate multiplied by the
actual number of days in the year divided by 360, 365 or 366, as the case may
be.
(d) Notwithstanding the provisions of this Section 3 or any other
provision of this Agreement in no event shall the aggregate "interest" (as that
term is defined in Section 347 of the Criminal Code (Canada)) with respect to
any Loans by or on behalf of any Lender result in the receipt by such Lender of
interest with respect of the Obligations at a "criminal rate" (as such term is
construed under the Criminal Code (Canada)). The effective annual rate of
interest for such purpose shall be determined in accordance with generally
accepted actuarial practices and principles over the term of the applicable Loan
by or on behalf of any Lender, and in the event of a dispute, a certificate of a
Fellow of the Canadian Institute of Actuaries appointed by Agent will be
conclusive for the purposes of such determination.
(e) A certificate of an authorized signing officer of Agent as to each
rate of interest payable hereunder from time to time absent manifest error shall
be conclusive evidence of such rate.
(f) For greater certainty, unless otherwise specified in this
Agreement or any of the other Financing Agreements, as applicable, whenever any
amount is payable under this Agreement or any of the other Financing Agreements
by Borrowers as interest or as a fee which requires the calculation of an amount
using a percentage per annum, each party to this Agreement acknowledges and
agrees that such amount shall be calculated as of the date payment is due
without application of the "deemed reinvestment principle" or the "effective
yield method." As an example, when interest is calculated and payable monthly
the rate of interest payable per month is one twelfth (1/12) of the stated rate
of interest per annum.
3.2 FEES.
(a) Borrowers agree to pay to Agent the fees and amounts set forth in
the Fee Letter in the amounts and at the times specified therein.
3.3 CHANGES IN LAWS AND INCREASED COSTS OF LOANS. If after the date
hereof, either (i) any change in, or in the interpretation of, any law or
regulation is introduced, including, without limitation, with respect to reserve
requirements, applicable to Lender or any banking or financial institution from
whom any Lender borrows funds or obtains credit (a "Funding Bank"), or (ii) a
Funding Bank or any Lender complies with any future guideline or request from
any central bank or other Governmental Authority or (iii) a Funding Bank or any
Lender determines that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof has or would have the effect described below, or a Funding Bank or any
Lender complies with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, and in the case of any event set forth in this clause (iii),
such adoption, change or compliance has or would have the direct or indirect
effect of reducing the rate of return on any Lender's capital as a consequence
of its obligations hereunder to a level below that which Lender could have
achieved but for such adoption, change or compliance (taking into consideration
the Funding Bank's or Lender's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, and the result of any of the
foregoing events described in clauses (i), (ii) or (iii) is or results in an
increase in the cost to any Lender of funding or maintaining the Loan, then
Borrowers and Guarantors shall from time to time upon demand by Agent pay to
Agent additional amounts sufficient to indemnify Lenders against such increased
cost on an after-tax basis (after taking into account applicable deductions and
credits in respect of the amount indemnified). A certificate as to the amount of
such increased cost shall be submitted to Administrative Borrower by Agent and
shall be conclusive, absent manifest error.
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SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO THE LOAN. Each of the following is a
condition precedent to Agent and Lenders making the Loan hereunder:
(a) Agent shall have received, in form and substance satisfactory to
Agent, (i) all releases, terminations and such other documents as Agent may
request to evidence and effectuate the termination by the Existing Lenders of
their respective financing arrangements with Borrowers and Guarantors, the
termination by Fleet Precious Metals Inc. of its precious metals consignment
arrangements with Borrowers and Guarantors and the termination and release by it
or them, as the case may be, of any interest in and to any assets and properties
of each Borrower and Guarantor, duly authorized, executed and delivered by it or
each of them, including, but not limited to, (A) UCC termination statements for
all UCC financing statements previously filed by it or any of them or their
predecessors, as secured party and any Borrower or Guarantor, as debtor; (B)
PPSA terminations or discharges for all PPSA financing statements previously
filed by it or any of them or their predecessors as secured party and any
Borrower or Guarantor, as debtor; and (C) satisfactions and discharges of any
mortgages, deeds of trust or deeds to secure debt by any Borrower or Guarantor
in favor of it or any of them, in form acceptable for recording with the
appropriate Governmental Authority, and (ii) evidence that one or more of the
Borrowers has acquired good and marketable title to the precious metals included
in the collateral reports previously delivered to Agent, free and clear of all
liens and encumbrances (except those in favor of Agent);
(b) all requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements shall be satisfactory in form
and substance to Agent, and Agent shall have received all information and copies
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of all documents, including records of requisite corporate action and
proceedings which Agent may have requested in connection therewith, such
documents where requested by Agent or its counsel to be certified by appropriate
corporate officers or Governmental Authority (and including a copy of the
certificate of incorporation of each Borrower and Guarantor certified by the
Secretary of State (or equivalent Governmental Authority) which shall set forth
the same complete corporate name of such Borrower or Guarantor as is set forth
herein and such document as shall set forth the organizational identification
number of each Borrower or Guarantor, if one is issued in its jurisdiction of
incorporation);
(c) no material adverse change shall have occurred in the assets,
business or condition (financial or otherwise) of Borrowers since the date of
Agent's latest field examination (not including for this purpose the field
review referred to in clause (d) below) and no change or event shall have
occurred which would impair the ability of any Borrower or Obligor to perform
its obligations hereunder or under any of the other Financing Agreements to
which it is a party or of Agent or any Lender to enforce the Obligations or
realize upon the Collateral;
(d) Agent shall have received from the Working Capital Agent the
results of its field survey and audit of the Borrowers' Records and such other
information with respect to the Collateral as Working Capital Agent may require,
the results of which shall be satisfactory to Agent;
(e) Agent shall have received, in form and substance satisfactory to
Agent, all consents, waivers, acknowledgments and other agreements from third
persons which Agent may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, Collateral Access Agreements;
(f) the Excess Availability as determined by the Working Capital Agent,
as of the date hereof, shall be not less than $10,000,000 after giving effect to
(i) the Loan to be made in connection with the transactions hereunder and (ii)
the initial Loans (as defined in the Working Capital Loan Agreement) made or to
be made and Letter of Credit Accommodations (as defined in the Working Capital
Loan Agreement) issued or to be issued in connection with the initial
transactions under the Working Capital Loan Agreement;
(g) Agent shall have received, in form and substance satisfactory to
Agent, Deposit Account Control Agreements by and among Working Capital Agent,
Agent, each Borrower and Guarantor, as the case may be and each bank where such
Borrower (or Guarantor) has a deposit account, in each case, duly authorized,
executed and delivered by such bank and Borrower or Guarantor, as the case may
be;
(h) Agent shall have received (i) the Intercreditor Agreement, in form
and substance satisfactory to Agent, duly authorized, executed and delivered by
the parties thereto, and (ii) the WHX Subordination Agreement, in form and
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substance satisfactory to Agent, duly authorized, executed and delivered by the
parties thereto;
(i) Agent shall have received the Cash Collateral Agreement, in form
and substance satisfactory to Agent, duly authorized, executed and delivered by
the parties thereto;
(j) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has a valid perfected first priority security
interest in all of the Collateral, subject (as to priority) only to (i) the
liens of the Working Capital Agent pursuant to the Working Capital Lender
Agreements and (ii) the liens expressly permitted under Sections 9.8(b) through
(g) hereof;
(k) Agent shall have received and reviewed lien and judgment search
results for the jurisdiction of organization of each Borrower and Guarantor, the
jurisdiction of the chief executive office of each Borrower and Guarantor and
all jurisdictions in which assets of Borrowers and Guarantors are located, which
search results shall be in form and substance satisfactory to Agent;
(l) Agent shall have received environmental audits of the Real Property
to be subject to the Mortgages conducted by an independent environmental
engineering firm acceptable to Agent, and in form, scope and methodology
satisfactory to Agent, confirming that (i) each Borrower and Guarantor is in
compliance with all material applicable Environmental Laws and (ii) the absence
of any material potential or actual liabilities of Borrowers or Guarantors with
respect to remediation of such Real Property and the absence of any material
environmental problems;
(m) Agent shall have received, in form and substance satisfactory to
Agent, a valid and effective title insurance policy issued by a company and
agent acceptable to Agent: (i) insuring the priority, amount and sufficiency of
the Mortgages, (ii) insuring against matters that would be disclosed by surveys
and (iii) containing any legally available endorsements, assurances or
affirmative coverage requested by Agent for protection of its interests;
(n) Agent shall have received, in form and substance satisfactory to
Agent, a certificate, dated of even date herewith, of the chief financial
officer of Parent, stating that immediately after giving effect to the
transactions contemplated to occur under this Agreement and the Working Capital
Loan Agreement on the date hereof, each Borrower and H&H Canada (on a
stand-alone basis) is Solvent;
(o) Agent shall have received (i) true, correct and complete copies of
the Working Capital Lender Agreements as duly authorized, executed and delivered
by the parties thereto, which shall each be on terms and conditions acceptable
to Agent and (ii) evidence that the transactions contemplated under the Working
Capital Loan Agreement have been consummated prior to or contemporaneously with
the execution of this Agreement;
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(p) Borrowers shall have issued the WHX Subordinated Note and all other
agreements, instruments and documents related thereto, which shall be in form
and substance satisfactory to Agent, duly authorized, executed and delivered by
the parties thereto;
(q) Agent shall have received evidence satisfactory to it that Parent
shall have received, in immediately available funds $43,449,000 from WHX,
representing the proceeds of the Indebtedness evidenced by the WHX Subordinated
Note, which funds shall be used to repay amounts owing to the Existing Lenders;
(r) Agent shall have received copies of the shares of the stock
certificates representing all of the issued and outstanding shares of the
Capital Stock of each Borrower and Guarantor (other than Parent) and owned by
any Borrower or Guarantor, in each case together with stock powers duly executed
in blank with respect thereto, and shall have received evidence satisfactory to
Agent that the originals of such stock certificates and stock powers have been
delivered to the Working Capital Agent;
(s) Agent shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Agent, and certificates of insurance policies
and/or endorsements naming Agent as additional insured or loss payee as its
interests may appear, as applicable;
(t) Agent shall have received, in form and substance satisfactory to
Agent, such opinion letters of United States and Canadian counsel to Borrowers
and Guarantors with respect to the Financing Agreements and such other matters
as Agent may request;
(u) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Agent,
in form and substance satisfactory to Agent;
(v) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of the Loan and after giving effect thereto,
except to the extent that such representations and warranties expressly relate
solely to an earlier date (in which case such representations and warranties
shall have been true and accurate on and as of such earlier date);
(w) no law, regulation, order, judgment or decree of any Governmental
Authority shall exist, and no action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any arbitrator
or Governmental Authority, which (i) purports to enjoin, prohibit, restrain or
otherwise affect (A) the making of the Loan, or (B) the consummation of the
transactions contemplated pursuant to the terms hereof or the other Financing
Agreements or (ii) has or has a reasonable likelihood of having a Material
Adverse Effect; and
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(x) no Default or Event of Default shall exist or have occurred and be
continuing on and as of the date of the making of the Loan and after giving
effect thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 GRANT OF SECURITY INTEREST. To secure payment and performance of
all Obligations, each Borrower and Guarantor hereby grants to Agent, for itself
and the benefit of Lenders, a continuing security interest in, a lien upon, and
a right of set off against, and hereby assigns to Agent, for itself and the
benefit of Lenders, as security, all personal and real property and fixtures,
and interests in property and fixtures, of each Borrower and Guarantor, whether
now owned or hereafter acquired or existing, and wherever located (together with
all other collateral security for the Obligations at any time granted to or held
or acquired by Agent or any Lender, collectively, the "Collateral"), including:
(a) all Accounts;
(b) all general intangibles, including, without limitation, all
Intellectual Property;
(c) all goods, including, without limitation, Inventory and Equipment;
(d) all Real Property and fixtures;
(e) all chattel paper, including, without limitation, all tangible and
electronic chattel paper;
(f) all instruments, including, without limitation, all promissory
notes;
(g) all documents;
(h) all deposit accounts;
(i) all letters of credit, banker's acceptances and similar instruments
and including all letter-of-credit rights;
(j) all supporting obligations and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
35
(k) all (i) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (ii) monies, credit balances,
deposits and other property of any Borrower or Guarantor now or hereafter held
or received by or in transit to Agent, any Lender or its Affiliates or at any
other depository or other institution from or for the account of any Borrower or
Guarantor, whether for safekeeping, pledge, custody, transmission, collection or
otherwise
(l) all commercial tort claims, including, without limitation, those
identified in the Information Certificate;
(m) to the extent not otherwise described above, all Receivables;
(n) all Records; and
(o) all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.
Notwithstanding anything to the contrary contained in this Section 5.1 above,
the types of Collateral described above shall not include the last day of the
term of any lease agreement to which H&H Canada is a party, but upon enforcement
by Agent of remedies hereunder, Agent shall stand possessed of such last day in
trust to assign the same to any Person acquiring the term of the lease agreement
therefor.
5.2 PERFECTION OF SECURITY INTERESTS.
(a) Each Borrower and Guarantor irrevocably and unconditionally
authorizes Agent (or its agent) to file at any time and from time to time such
financing statements with respect to the Collateral naming Agent or its designee
as the secured party and such Borrower or Guarantor as debtor, as Agent may
require, and including any other information with respect to such Borrower or
Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial
Code or under the PPSA of such jurisdiction as Agent may determine, together
with any amendment and continuations with respect thereto, which authorization
shall apply to all financing statements filed on, prior to or after the date
hereof. Each Borrower and Guarantor hereby ratifies and approves all financing
statements naming Agent or its designee as secured party and such Borrower or
Guarantor, as the case may be, as debtor with respect to the Collateral (and any
amendments with respect to such financing statements) filed by or on behalf of
Agent prior to the date hereof and ratifies and confirms the authorization of
Agent to file such financing statements (and amendments, if any). Each Borrower
and Guarantor hereby authorizes Agent to adopt on behalf of such Borrower and
Guarantor any symbol required for authenticating any electronic filing. In the
event that the description of the collateral in any financing statement naming
Agent or its designee as the secured party and any Borrower or Guarantor as
debtor includes assets and properties of such Borrower or Guarantor that do not
at any time constitute Collateral, whether hereunder, under any of the other
Financing Agreements or otherwise, the filing of such financing statement shall
36
nonetheless be deemed authorized by such Borrower or Guarantor to the extent of
the Collateral included in such description and it shall not render the
financing statement ineffective as to any of the Collateral or otherwise affect
the financing statement as it applies to any of the Collateral. In no event
shall any Borrower or Guarantor at any time file, or permit or cause to be
filed, any correction statement or termination statement with respect to any
financing statement (or amendment or continuation with respect thereto) naming
Agent or its designee as secured party and such Borrower or Guarantor as debtor,
without the prior written consent of Agent.
(b) Each Borrower and Guarantor does not have any chattel paper
(whether tangible or electronic) or instruments as of the date hereof, except as
set forth in the Information Certificate. In the event that any Borrower or
Guarantor shall be entitled to or shall receive any chattel paper or instrument
after the date hereof, Borrowers and Guarantors shall promptly notify Agent
thereof in writing. Promptly upon the receipt thereof by or on behalf of any
Borrower or Guarantor (including by any agent or representative), such Borrower
or Guarantor shall deliver, or cause to be delivered to Agent (or, if the
Working Capital Loan Termination Date has not occurred, to Working Capital
Agent, with copies to Agent), all tangible chattel paper and instruments that
such Borrower or Guarantor has or may at any time acquire, accompanied by such
instruments of transfer or assignment duly executed in blank as Agent may from
time to time specify, in each case except as Agent may otherwise agree. Subject
to the terms of the Intercreditor Agreement, at Agent's option, each Borrower
and Guarantor shall, or Agent may at any time on behalf of any Borrower or
Guarantor, cause the original of any such instrument or chattel paper to be
conspicuously marked in a form and manner acceptable to Agent with the following
legend referring to chattel paper or instruments as applicable: "This [chattel
paper][instrument] is subject to the security interest of Ableco Finance LLC and
any sale, transfer, assignment or encumbrance of this [chattel
paper][instrument] violates the rights of such secured party."
(c) In the event that any Borrower or Guarantor shall at any time hold
or acquire an interest in any electronic chattel paper or any "transferable
record" (as such term is defined in Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction), such
Borrower or Guarantor shall promptly notify Agent thereof in writing. Subject to
the terms of the Intercreditor Agreement, promptly upon Agent's request, such
Borrower or Guarantor shall take, or cause to be taken, such actions as Agent
may request to give Agent (or, if the Working Capital Loan Termination Date has
not occurred, Working Capital Agent) control of such electronic chattel paper
under Section 9-105 of the UCC and control of such transferable record under
Section 201 of the Federal Electronic Signatures in Global and National Commerce
Act or, as the case may be, Section 16 of the Uniform Electronic Transactions
Act, as in effect in such jurisdiction.
(d) Each Borrower and Guarantor does not have any deposit accounts as
of the date hereof, except as set forth in the Information Certificate.
Borrowers and Guarantors shall not, directly or indirectly, after the date
37
hereof open, establish or maintain any deposit account unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
five (5) Business Days prior written notice of the intention of any Borrower or
Guarantor to open or establish such account which notice shall specify in
reasonable detail and specificity acceptable to Agent the name of the account,
the owner of the account, the name and address of the bank at which such account
is to be opened or established, the individual at such bank with whom such
Borrower or Guarantor is dealing and the purpose of the account, (ii) the bank
where such account is opened or maintained shall be acceptable to Agent, and
(iii) on or before the opening of such deposit account, such Borrower or
Guarantor shall as Agent may specify and subject to the terms of the
Intercreditor Agreement either (A) deliver to Agent (or if the Working Capital
Loan Agreement has not been terminated, to Working Capital Agent, with a copy to
Agent) a Deposit Account Control Agreement with respect to such deposit account
duly authorized, executed and delivered by such Borrower or Guarantor and the
bank at which such deposit account is opened and maintained or (B) arrange for
Agent (or if the Working Capital Loan Agreement has not been terminated, Working
Capital Agent) to become the customer of the bank with respect to the deposit
account on terms and conditions acceptable to Agent. The terms of this
subsection (d) shall not apply to deposit accounts specifically and exclusively
used for payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of any Borrower's or Guarantor's salaried employees.
(e) No Borrower or Guarantor owns or holds, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any investment account, securities account, commodity account or
other similar account with any bank or other financial institution or other
securities intermediary or commodity intermediary as of the date hereof, in each
case except as set forth in the Information Certificate.
(i) In the event that any Borrower or Guarantor shall be entitled to or
shall at any time after the date hereof hold or acquire any certificated
securities, such Borrower or Guarantor shall promptly endorse, assign and
deliver the same to Agent (or if the Working Capital Loan Agreement has not been
terminated, to Working Capital Agent, with copies to Agent), accompanied by such
instruments of transfer or assignment duly executed in blank as Agent may from
time to time specify. If any securities, now or hereafter acquired by any
Borrower or Guarantor are uncertificated and are issued to such Borrower or
Guarantor or its nominee directly by the issuer thereof, such Borrower or
Guarantor shall immediately notify Agent thereof and shall as Agent may specify
and subject to the terms of the Intercreditor Agreement, either (A) cause the
issuer to agree to comply with instructions from Agent (or, if the Working
Capital Loan Termination Date has not occurred, Working Capital Agent) as to
such securities, without further consent of any Borrower or Guarantor or such
nominee, or (B) arrange for Agent to become the registered owner of the
securities.
(ii) Borrowers and Guarantors shall not, directly or indirectly, after
the date hereof open, establish or maintain any investment account, securities
account, commodity account or any other similar account (other than a deposit
account) with any securities intermediary or commodity intermediary
38
unless each of the following conditions is satisfied: (A) Agent shall have
received not less than five (5) Business Days prior written notice of the
intention of such Borrower or Guarantor to open or establish such account which
notice shall specify in reasonable detail and specificity acceptable to Agent
the name of the account, the owner of the account, the name and address of the
securities intermediary or commodity intermediary at which such account is to be
opened or established, the individual at such intermediary with whom such
Borrower or Guarantor is dealing and the purpose of the account, (B) the
securities intermediary or commodity intermediary (as the case may be) where
such account is opened or maintained shall be acceptable to Agent, and (C) on or
before the opening of such investment account, securities account or other
similar account with a securities intermediary or commodity intermediary, such
Borrower or Guarantor shall as Agent may specify and subject to the terms of the
Intercreditor Agreement either (i) execute and deliver, and cause to be executed
and delivered to Agent (or if the Working Capital Loan Agreement has not been
terminated to Working Capital Agent, with a copy to Agent), an Investment
Property Control Agreement with respect thereto duly authorized, executed and
delivered by such Borrower or Guarantor and such securities intermediary or
commodity intermediary or (ii) arrange for Agent (or if the Working Capital Loan
Agreement has not been terminated, Working Capital Agent) to become the
entitlement holder with respect to such investment property on terms and
conditions acceptable to Agent.
(f) Borrowers and Guarantors are not the beneficiary or otherwise
entitled to any right to payment under any letter of credit, banker's acceptance
or similar instrument as of the date hereof, except as set forth in the
Information Certificate. In the event that any Borrower or Guarantor shall be
entitled to or shall receive any right to payment under any letter of credit,
banker's acceptance or any similar instrument, whether as beneficiary thereof or
otherwise after the date hereof, such Borrower or Guarantor shall promptly
notify Agent thereof in writing. Such Borrower or Guarantor shall immediately,
as Agent may specify and subject to the terms of the Intercreditor Agreement,
either (i) deliver, or cause to be delivered to Agent (or if the Working Capital
Loan Agreement has not been terminated, to Working Capital Agent, with a copy to
Agent), with respect to any such letter of credit, banker's acceptance or
similar instrument, the written agreement of the issuer and any other nominated
person obligated to make any payment in respect thereof (including any
confirming or negotiating bank), in form and substance satisfactory to Agent,
consenting to the assignment of the proceeds of the letter of credit to Agent
(or, if the Working Capital Loan Termination Date has not occurred, Working
Capital Agent) by such Borrower or Guarantor and agreeing to make all payments
thereon directly to Agent (or, if the Working Capital Loan Termination Date has
not occurred, Working Capital Agent) or as Agent (or, if the Working Capital
Loan Termination Date has not occurred, Working Capital Agent) may be may
otherwise direct or (ii) cause Agent (or if the Working Capital Loan Termination
Date has not occurred, Working Capital Agent) to become, at Borrowers' expense,
the transferee beneficiary of the letter of credit, banker's acceptance or
similar instrument (as the case may be).
39
(g) Borrowers and Guarantors do not have any commercial tort claims
against third parties as of the date hereof, except as set forth in the
Information Certificate. In the event that any Borrower or Guarantor shall at
any time after the date hereof have any commercial tort claims, such Borrower or
Guarantor shall promptly notify Agent thereof in writing, which notice shall (i)
set forth in reasonable detail the basis for and nature of such commercial tort
claim and (ii) include the express grant by such Borrower or Guarantor to Agent
of a security interest in such commercial tort claim (and the proceeds thereof).
In the event that such notice does not include such grant of a security
interest, the sending thereof by such Borrower or Guarantor to Agent shall be
deemed to constitute such grant to Agent. Upon the sending of such notice, any
commercial tort claim described therein shall constitute part of the Collateral
and shall be deemed included therein. Without limiting the authorization of
Agent provided in Section 5.2(a) hereof or otherwise arising by the execution by
such Borrower or Guarantor of this Agreement or any of the other Financing
Agreements, Agent is hereby irrevocably authorized from time to time and at any
time to file such financing statements naming Agent or its designee as secured
party and such Borrower or Guarantor as debtor, or any amendments to any
financing statements, covering any such commercial tort claim as Collateral. In
addition, each Borrower and Guarantor shall promptly upon Agent's request,
execute and deliver, or cause to be executed and delivered, to Agent such other
agreements, documents and instruments as Agent may require in connection with
such commercial tort claim.
(h) Borrowers and Guarantors do not have any goods, documents of title
or other Collateral in the custody, control or possession of a third party as of
the date hereof, except (i) as set forth in the Information Certificate, (ii)
goods located in Canada (in the case of H&H Canada) or the United States (in
the case of all other Borrowers and Guarantors) in transit to a location of a
Borrower or Guarantor permitted herein in the ordinary course of business of
such Borrower or Guarantor in the possession of the carrier transporting such
goods, and (iii) the Pledged Securities (as defined in the Pledge Agreement
dated as of the date hereof, made by the Borrowers in favor of the Agent) in the
possession of the Working Capital Agent. In the event that any goods, documents
of title or other Collateral are at any time after the date hereof in the
custody, control or possession of any other person not referred to in the
Information Certificate or such carriers, Borrowers and Guarantors shall
promptly notify Agent thereof in writing. Promptly upon Agent's request,
Borrowers and Guarantors shall deliver to Agent a Collateral Access Agreement
duly authorized, executed and delivered by such person and the Borrower or
Guarantor that is the owner of such Collateral.
(i) Borrowers and Guarantors shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and
first priority (subject only to the prior liens of the Working Capital Agent
thereon and the liens expressly permitted under Sections 9.8(b) through (g)
hereof) of, and the ability of Agent to enforce, the security interest of Agent
in any and all of the Collateral (subject to the terms of the Intercreditor
Agreement), including, without limitation, (i) executing, delivering and, where
appropriate, filing financing statements and amendments relating thereto under
the UCC, the PPSA or other applicable law, to the extent, if any, that any
Borrower's or Guarantor's signature thereon is required therefor, (ii) causing
40
Agent's name to be noted as secured party on any certificate of title for a
titled good if such notation is a condition to attachment, perfection or
priority of, or ability of Agent to enforce, the security interest of Agent in
such Collateral, (iii) complying with any provision of any statute, regulation
or treaty of the United States or Canada as to any Collateral if compliance with
such provision is a condition to attachment, perfection or priority of, or
ability of Agent to enforce, the security interest of Agent in such Collateral
and (iv) obtaining the consents and approvals of any Governmental Authority or
third party, including, without limitation, any consent of any licensor, lessor
or other person obligated on Collateral, and taking all actions required by any
earlier versions of the UCC or the PPSA or by other law, as applicable in any
relevant jurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 BORROWERS' LOAN ACCOUNTS. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) the Loan and other
Obligations and the Collateral, (b) all payments made by or on behalf of any
Borrower or Guarantor and (c) all other appropriate debits and credits as
provided in this Agreement, including fees, charges, costs, expenses and
interest. All entries in the loan account(s) shall be made in accordance with
Agent's customary practices as in effect from time to time.
6.2 STATEMENTS. Agent shall render to Administrative Borrower each
month a statement setting forth the balance in the Borrowers' loan account(s)
maintained by Agent for Borrowers pursuant to the provisions of this Agreement,
including principal, interest, fees, costs and expenses. Each such statement
shall be subject to subsequent adjustment by Agent but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by Borrowers and
Guarantors and conclusively binding upon Borrowers and Guarantors as an account
stated except to the extent that Agent receives a written notice from
Administrative Borrower of any specific exceptions of Administrative Borrower
thereto within thirty (30) days after the date such statement has been received
by Administrative Borrower. Until such time as Agent shall have rendered to
Administrative Borrower a written statement as provided above, the balance in
any Borrower's loan account(s) shall be presumptive evidence of the amounts due
and owing to Agent and Lenders by Borrowers and Guarantors.
6.3 COLLECTION OF ACCOUNTS. Borrowers shall comply with all terms and
provisions of the Working Capital Loan Agreement (or any successor or
replacement agreement acceptable to Agent) with respect to the cash management
of Borrowers; provided that, if the Working Capital Loan Agreement shall have
been terminated and Borrowers shall not have entered into a successor or
replacement agreement acceptable to Agent, then Borrowers shall enter into
control agreements, lockbox agreements and other similar agreements in form and
substance reasonably satisfactory to Agent.
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6.4 PAYMENTS.
(a) All Obligations shall be payable to the Agent Payment Account or
such other place as Agent may designate from time to time. Subject to the terms
and conditions contained herein and subject to the terms and conditions of the
Intercreditor Agreement, Agent shall apply payments received or collected from
any Borrower or Guarantor or for the account of any Borrower or Guarantor
(including the monetary proceeds of collections or of realization upon any
Collateral) as follows: FIRST, to pay any fees, indemnities or expense
reimbursements then due to Agent and Lenders from any Borrower or Guarantor;
SECOND, to pay interest due in respect of the Loan (and including any Special
Agent Advances); THIRD, to pay or prepay principal in respect of Special Agent
Advances; FOURTH, to pay principal due in respect of the Loan; FIFTH, to pay or
prepay any other Obligations whether or not then due, in such order and manner
as Agent determines.
(b) At Agent's option, all principal, interest, fees, costs, expenses
and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of any Borrower
maintained by Agent. Except as otherwise required by law, Borrowers and
Guarantors shall make all payments to Agent and Lenders on the Obligations free
and clear of, and without deduction or withholding for or on account of, any
setoff, counterclaim, defense, Taxes, restrictions or conditions of any kind. If
any Borrower or Guarantor shall be required by law to deduct or withhold in
respect of any Indemnified Taxes from or in respect of any sum payable hereunder
to Agent or any Lender, then:
(i) the sum payable shall be increased by such additional amount
(the "ADDITIONAL AMOUNT") as necessary so that after making all required
deductions and withholdings (including deductions and withholdings applicable to
such Additional Amount) Agent or such Lender receives an amount equal to the sum
it would have received had no such deductions or withholdings been made;
(ii) such Borrower or Guarantor shall make the appropriate
deductions or withholdings and shall pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance with applicable
law;
(iii) within thirty (30) days after the date of such payment,
upon Agent's request, such Borrower or Guarantor shall furnish to Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment reasonably satisfactory to Agent;
(iv) if such Borrower or Guarantor fails to pay amounts in
accordance with Section 6.4(b)(ii) above, such Borrower or Guarantor shall
indemnify Agent or such Lender for any incremental Indemnified Taxes that is
paid by Agent or such Lender as a result of the failure;
(v) Borrowers will indemnify Agent or such Lender for the full
amount of any Taxes imposed by any jurisdiction and paid by Agent or such Lender
with respect to any Additional Amount payable pursuant to Section 6.4(b)(i)
above and any liability (including penalties, interest and expenses) arising
42
therefrom or with respect thereto, whether or not such Taxes are correctly
asserted; and
(vi) the indemnification contemplated in Section 6.4(b)(iv) or
(v) above shall be made within 30 days from the date Agent or such Lender makes
written demand therefor (which demand shall identify the nature and amount of
Taxes for which indemnification is being sought).
If after receipt of any payment of, or proceeds of Collateral applied to the
payment of, any of the Obligations, Agent or any Lender is required to surrender
or return such payment or proceeds to any Person for any reason, then the
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Agent or such
Lender. Borrowers and Guarantors shall be liable to pay to Agent, and do hereby
indemnify and hold Agent and Lenders harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.4(b) shall remain effective
notwithstanding any contrary action which may be taken by Agent or any Lender in
reliance upon such payment or proceeds. This Section 6.4 shall survive the
payment of the Obligations and the termination of this Agreement.
6.5 AUTHORIZATION TO MAKE THE LOAN. Agent and Lenders are authorized
to make the Loan based upon telephonic or other instructions received from
anyone purporting to be an officer of Administrative Borrower or any Borrower or
other authorized person. The Loan request hereunder shall specify the date on
which the requested advance is to be made (which day shall be the date hereof)
and the amount of the Loan. The Loan under this Agreement shall be conclusively
presumed to have been made to, and at the request of and for the benefit of, any
Borrower or Guarantor when deposited to the credit of any Borrower or Guarantor
or otherwise disbursed or established in accordance with the instructions of any
Borrower or Guarantor or in accordance with the terms and conditions of this
Agreement.
6.6 USE OF PROCEEDS. Borrowers shall use the proceeds of the Loan
provided by Agent and Lenders to Borrowers hereunder only for: (a) payments to
the Existing Lenders and each of the other persons listed in the disbursement
direction letter furnished by Borrowers to Agent on or about the date hereof,
(b) costs, expenses and fees in connection with the preparation, negotiation,
execution and delivery of this Agreement and the other Financing Agreements and
(c) general operating, working capital and other proper corporate purposes of
such Borrower not otherwise prohibited by the terms hereof. None of the proceeds
will be used, directly or indirectly, for the purpose of purchasing or carrying
any margin security or for the purposes of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Loan to be considered a "purpose
credit" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, as amended.
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6.7 APPOINTMENT OF ADMINISTRATIVE BORROWER AS AGENT FOR REQUESTING THE
LOAN AND RECEIPT OF LOAN AND STATEMENTS.
(a) Each Borrower hereby irrevocably appoints and constitutes
Administrative Borrower as its agent to request and receive the Loan pursuant to
this Agreement and the other Financing Agreements from Agent or any Lender in
the name or on behalf of such Borrower. Agent and Lenders may disburse the Loan
to such bank account of Administrative Borrower or a Borrower or otherwise make
the Loan to a Borrower as Administrative Borrower may designate or direct,
without notice to any other Borrower or Obligor. Notwithstanding anything to the
contrary contained herein, Agent may require that the Loan to or for the account
of any Borrower be disbursed directly to an operating account of such Borrower.
(b) Administrative Borrower hereby accepts the appointment by
Borrowers to act as the agent of Borrowers pursuant to this Section 6.7.
Administrative Borrower shall ensure that the disbursement of the Loan to
Borrowers requested by or paid to or for the account of Borrowers, shall be paid
to or for the account of Borrowers.
(c) Each Borrower and other Guarantor hereby irrevocably appoints and
constitutes Administrative Borrower as its agent to receive statements on
account and all other notices from Agent and Lenders with respect to the
Obligations or otherwise under or in connection with this Agreement and the
other Financing Agreements.
(d) Any notice, election, representation, warranty, agreement or
undertaking by or on behalf of any other Borrower or any Guarantor by
Administrative Borrower shall be deemed for all purposes to have been made by
such Borrower or Guarantor, as the case may be, and shall be binding upon and
enforceable against such Borrower or Guarantor to the same extent as if made
directly by such Borrower of Guarantor.
(e) No purported termination of the appointment of Administrative
Borrower as agent as aforesaid shall be effective, except after ten (10) days'
prior written notice to Agent.
6.8 PRO RATA TREATMENT. Except to the extent otherwise provided in
this Agreement: (a) the making of the Loan shall be made among the Lenders based
on their respective Pro Rata Shares as to the Loans and (b) each payment on
account of any Obligations to or for the account of one or more of Lenders in
respect of any Obligations due on a particular day shall be allocated among the
Lenders entitled to such payments based on their respective Pro Rata Shares and
shall be distributed accordingly.
6.9 SHARING OF PAYMENTS, ETC.
(a) Each Borrower and Guarantor agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim Agent
or any Lender may otherwise have, each Lender shall be entitled, at its option
(but subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of such Borrower or
Guarantor at any of its offices, in dollars or in any other currency, against
any principal of or interest on any Loans owed to such Lender or any other
amount payable to such Lender hereunder, that is not paid when due (regardless
of whether such balances are then due to such Borrower or Guarantor), in which
44
case it shall promptly notify Administrative Borrower and Agent thereof;
PROVIDED, THAT, such Lender's failure to give such notice shall not affect the
validity thereof.
(b) If any Lender (including Agent) shall obtain from any Borrower or
Guarantor payment of any principal of or interest on the Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loan or more than its share of
such other amounts then due hereunder or thereunder by any Borrower or Guarantor
to such Lender than the percentage thereof received by any other Lender, it
shall promptly pay to Agent, for the benefit of Lenders, the amount of such
excess and simultaneously purchase from such other Lenders a participation in
the portion of the Loan or such other amounts, respectively, owing to such other
Lenders (or such interest due thereon, as the case may be) in such amounts, and
make such other adjustments from time to time as shall be equitable, to the end
that all Lenders shall share the benefit of such excess payment (net of any
expenses that may be incurred by such Lender in obtaining or preserving such
excess payment) in accordance with their respective Pro Rata Shares or as
otherwise agreed by Lenders. To such end all Lenders shall make appropriate
adjustments among themselves (by the resale of participation sold or otherwise)
if such payment is rescinded or must otherwise be restored.
(c) Each Borrower and Guarantor agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of the Loan or other amounts (as the case may
be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any
right of setoff, banker's lien, counterclaims or similar rights or shall affect
the right of any Lender to exercise, and retain the benefits of exercising, any
such right with respect to any other Indebtedness or obligation of any Borrower
or Guarantor. If, under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.
6.10 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
45
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and subject to Section 12.3
hereof, each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 COLLATERAL REPORTING.
(a) Borrowers shall provide Agent with the following documents in a
form satisfactory to Agent as determined by Agent in good faith; PROVIDED, THAT,
in the case of items (i), (ii) and (iii) below, if such documents are provided
to the Working Capital Agent as well, such documents shall be provided to Agent
in the same form as provided to the Working Capital Agent:
(i) as Agent may reasonably request, schedules of sales made,
credits issued and cash received;
(ii) on a weekly basis or more frequently as Agent may request in
good faith, precious metals inventory reports (broken down by Precious Metals
Inventory that is owned and Precious Metals Inventory that is on consignment) by
location, type and category (and including the amounts of such Inventory and the
value thereof at any leased locations and at premises of warehouses, processors
or other third parties);
(iii) as soon as possible after the end of each month (but in any
event within ten (10) Business Days after the end thereof), on a monthly basis
or more frequently as Agent may request, (A) perpetual inventory reports, (B)
inventory reports (excluding Precious Metals Inventory) by location, type and
category (and including the amounts of such Inventory and the value thereof at
any leased locations and at premises of warehouses, processors or other third
parties), which shall also break down such reports between the inventory of the
H&H Tube, Camdel, Micro-Tube, Strandflex division of Maryland Wire and all other
inventory of Maryland Wire; (C) agings of accounts receivable (together with a
reconciliation to the previous month's aging and general ledger), (D) agings of
accounts payable (and including information indicating the amounts owing to
owners and lessors of leased premises, warehouses, processors and other third
parties from time to time in possession of any Collateral), (E) a borrowing base
certificate (in the form delivered to the Working Capital Agent) setting forth
the calculation of the Borrowing Base as of the last Business Day of the
immediately preceding week as to the Accounts and Precious Metals Inventory and
as of the last Business Day of the immediately preceding month as to Inventory
(other than Precious Metals Inventory), duly completed and executed by the chief
financial officer of Administrative Borrower, together with all schedules
required pursuant to the terms of the borrowing base certificate duly completed
(including a schedule of all Accounts of each Borrowing Base Party (as such term
is defined in the Working Capital Loan Agreement) created, collections received
and credit memos issued on a daily basis); (F) reports of the composition of
alloys of each of the Borrowing Base Parties (as such term is defined in the
46
Working Capital Loan Agreement); and (G) a report of all inventory consigned to
any Borrowing Base Party or otherwise owned by a third party which is in the
possession or control of a Borrowing Base Party;
(iv) upon Agent's request in good faith, (A) copies of customer
statements, purchase orders, sales invoices, credit memos, remittance advices
and reports, and copies of deposit slips and bank statements, (B) copies of
shipping and delivery documents, and (C) copies of purchase orders, invoices and
delivery documents for Inventory and Equipment acquired by any Borrower or
Guarantor;
(v) such other reports as to the Collateral as Agent shall in
good faith request from time to time.
(b) If any Borrower's or Guarantor's records or reports of the
Collateral are prepared or maintained by an accounting service, contractor,
shipper or other agent, subject to the terms of the Intercreditor Agreement,
such Borrower and Guarantor hereby irrevocably authorizes such service,
contractor, shipper or agent to deliver such records, reports, and related
documents to Agent and to follow Agent's instructions with respect to further
services at any time that an Event of Default exists or has occurred and is
continuing.
7.2 ACCOUNTS COVENANTS.
(a) Borrowers shall notify Agent promptly of: (i) any material delay
in any Borrower's performance of any of its material obligations to any material
account debtor or the assertion of any material claims, offsets, defenses or
counterclaims by any material account debtor, or any material disputes with
account debtors, or any settlement, adjustment or compromise thereof and (ii)
all material adverse information known to any Borrower or Guarantor relating to
the financial condition of any material account debtor. No credit, discount,
allowance or extension or agreement for any of the foregoing shall be granted to
any account debtor without Agent's consent, except in the ordinary course of a
Borrower's or Guarantor's business in accordance with practices and policies
previously disclosed in writing to Agent and except as set forth in the
schedules delivered to Agent pursuant to Section 7.1(a) above. So long as no
Event of Default exists or has occurred and is continuing, Borrowers and
Guarantors may settle, adjust or compromise any claim, offset, counterclaim or
dispute with any account debtor. Subject to the terms of the Intercreditor
Agreement, at any time that an Event of Default exists or has occurred and is
continuing, Agent shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any invoice
delivered to Agent or schedule thereof delivered to Agent shall be true and
complete, (ii) no payments shall be made thereon except payments immediately
delivered to Agent pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except as reported to Agent in accordance with
47
this Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of each Borrower's business in accordance with
practices and policies previously disclosed to Agent, (iv) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Agent in accordance with the
terms of this Agreement, (v) none of the transactions giving rise thereto will
violate any applicable foreign, Federal, State, Provincial or local laws or
regulations, all documentation relating thereto will be legally sufficient under
such laws and regulations and all such documentation will be legally enforceable
in accordance with its terms.
(c) Agent shall have the right at any time or times after the
termination of the Working Capital Loan Agreement, in Agent's name or in the
name of a nominee of Agent, to verify the validity, amount or any other matter
relating to any Receivables or other Collateral, by mail, telephone, facsimile
transmission or otherwise.
7.3 INVENTORY COVENANTS. With respect to the Inventory: (a) each
Borrower and Guarantor shall at all times maintain inventory records reasonably
satisfactory to Agent, keeping correct and accurate records itemizing and
describing the kind, type, quality and quantity of Inventory, such Borrower's or
Guarantor's cost therefor and daily withdrawals therefrom and additions thereto;
(b) Borrowers and Guarantors (other than Sumco and H&H Electronic) shall conduct
a physical count of their Inventory at least once each year, and Sumco and H&H
Electronic shall conduct a physical count of their Inventory at least once a
month, but (in any case) at any time or times as Agent may request on or after
an Event of Default, and promptly following such physical inventory shall supply
Agent with a report in the form and with such specificity as may be satisfactory
to Agent concerning such physical count; (c) Borrowers and Guarantors shall not
remove any Inventory from the locations set forth or permitted herein, without
the prior written consent of Agent, except for sales of Inventory in the
ordinary course of its business and except to move Inventory directly from one
location set forth or permitted herein to another such location and except for
Inventory shipped from the manufacturer thereof to such Borrower or Guarantor
which is in transit to the locations set forth or permitted herein; (d) upon
Agent's request, Borrowers shall, at their expense, no more than two (2) times
in any twelve (12) month period, but at any time or times as Agent may request
on or after an Event of Default, deliver or cause to be delivered to Agent
written appraisals as to the Inventory in form, scope and methodology acceptable
to Agent and by an appraiser acceptable to Agent, addressed to Agent and Lenders
and upon which Agent and Lenders are expressly permitted to rely; (e) upon
Agent's request, Borrowers shall, at their expense, no more than two (2) times
in any twelve (12) month period, but at any time or times as Agent may request
on or after an Event of Default, deliver or cause to be delivered to Agent a
written assayer's report as to the Precious Metal Inventory in form, scope and
methodology acceptable to Agent and by an assayer acceptable to Agent, addressed
to Agent and Lenders upon which Agent and Lenders are expressly permitted to
rely; (f) Borrowers and Guarantors shall produce, use, store and maintain the
Inventory with all reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with applicable laws (including the
requirements of the Federal Fair Labor Standards Act of 1938, as amended and all
rules, regulations and orders related thereto); (g) none of the Inventory or
48
other Collateral constitutes farm products or the proceeds thereof; (h) each
Borrower and Guarantor assumes all responsibility and liability arising from or
relating to the production, use, sale or other disposition of the Inventory; (i)
Borrowers and Guarantors shall not sell Inventory to any customer on approval,
or any other basis which entitles the customer to return or may obligate any
Borrower or Guarantor to repurchase such Inventory; (j) Borrowers and Guarantors
shall keep the Inventory in good and marketable condition; and (k) Borrowers and
Guarantors shall not, without prior written notice to Agent or the specific
identification of such Inventory in a report with respect thereto provided by
Administrative Borrower to Agent pursuant to Section 7.1(a) hereof, acquire or
accept any Inventory on consignment or approval.
7.4 EQUIPMENT AND REAL PROPERTY COVENANTS. With respect to the
Equipment and Real Property: (a) upon Agent's request, Borrowers and Guarantors
shall, at their expense, no more than two (2) times in any twelve (12) month
period, but at any time or times as Agent may request on or after an Event of
Default, deliver or cause to be delivered to Agent written appraisals as to the
Equipment and/or the Real Property in form, scope and methodology acceptable to
Agent and by an appraiser acceptable to Agent, addressed to Agent and upon which
Agent is expressly permitted to rely; (b) Borrowers and Guarantors shall keep
the Equipment in good order, repair, running and marketable condition (ordinary
wear and tear excepted); (c) Borrowers and Guarantors shall use the Equipment
and Real Property with reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity in all material respects
with all applicable laws; (d) the Equipment is and shall be used in the business
of Borrowers and Guarantors and not for personal, family, household or farming
use; (e) Borrowers and Guarantors shall not remove any Equipment from the
locations set forth or permitted herein, except for the sale or other
disposition of Equipment in accordance with the terms of this Agreement and
except to the extent necessary to have any Equipment repaired or maintained in
the ordinary course of its business or to move Equipment directly from one
location set forth or permitted herein to another such location and except for
the movement of motor vehicles used by or for the benefit of such Borrower or
Guarantor in the ordinary course of business; (f) the Equipment is now and shall
remain personal property and Borrowers and Guarantors shall not permit any of
the Equipment to be or become a part of or affixed to real property; and (g)
each Borrower and Guarantor assumes all responsibility and liability arising
from the use of the Equipment and Real Property, except that no Borrower or
Guarantor shall be liable for losses or claims directly resulting from acts of
Agent or any Lender with respect to a parcel of Real Property while Agent or
such Lender is the owner or operator of such parcel of Real Property.
7.5 POWER OF ATTORNEY. Each Borrower and Guarantor hereby irrevocably
designates and appoints Agent (and all persons designated by Agent) as such
Borrower's and Guarantor's true and lawful attorney-in-fact, and authorizes
Agent, in such Borrower's, Guarantor's or Agent's name, subject to the terms of
the Intercreditor Agreement, to: (a) at any time an Event of Default exists or
has occurred and is continuing (i) demand payment on Receivables or other
Collateral, (ii) enforce payment of Receivables by legal proceedings or
otherwise, (iii) exercise all of such Borrower's or Guarantor's rights and
remedies to collect any Receivable or other Collateral, (iv) sell or assign any
49
Receivable upon such terms, for such amount and at such time or times as the
Agent deems advisable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Receivable, (vii) prepare, file and sign
such Borrower's or Guarantor's name on any proof of claim in bankruptcy or other
similar document against an account debtor or other obligor in respect of any
Receivables or other Collateral, (viii) notify the post office authorities to
change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an address
designated by Agent, and open and dispose of all mail addressed to such Borrower
or Guarantor and handle and store all mail relating to the Collateral; and (ix)
do all acts and things which are necessary, in Agent's determination, to fulfill
such Borrower's or Guarantor's obligations under this Agreement and the other
Financing Agreements and (b) at any time to (i) take control in any manner of
any item of payment in respect of Receivables or constituting Collateral or
otherwise received in or for deposit in the Blocked Accounts or otherwise
received by Agent or any Lender, (ii) have access to any lockbox or postal box
into which remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral are sent or received, (iii) endorse
such Borrower's or Guarantor's name upon any items of payment in respect of
Receivables or constituting Collateral or otherwise received by Agent and any
Lender and deposit the same in Agent's account for application to the
Obligations, (iv) endorse such Borrower's or Guarantor's name upon any chattel
paper, document, instrument, invoice, or similar document or agreement relating
to any Receivable or any goods pertaining thereto or any other Collateral,
including any warehouse or other receipts, or bills of lading and other
negotiable or non-negotiable documents, and (v) sign such Borrower's or
Guarantor's name on any verification of Receivables and notices thereof to
account debtors or any secondary obligors or other obligors in respect thereof.
Each Borrower and Guarantor hereby releases Agent and Lenders and their
respective officers, employees and designees from any liabilities arising from
any act or acts under this power of attorney and in furtherance thereof, whether
of omission or commission, except as a result of Agent's or any Lender's own
gross negligence or wilful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
7.6 RIGHT TO CURE. Agent may, at its option, upon notice to
Administrative Borrower, (a) cure any default by any Borrower or Guarantor under
any material agreement with a third party that affects the Collateral, its value
or the ability of Agent to collect, sell or otherwise dispose of the Collateral
or the rights and remedies of Agent or any Lender therein or the ability of any
Borrower or Guarantor to perform its obligations hereunder or under any of the
other Financing Agreements, (b) pay or bond on appeal any judgment entered
against any Borrower or Guarantor, (c) discharge delinquent taxes, liens,
security interests or other encumbrances at any time levied on or existing with
respect to the Collateral and pay any amount, incur any expense or perform any
act which, in Agent's judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Agent and Lenders
with respect thereto. Agent may add any amounts so expended to the Obligations
and charge any Borrower's account therefor, such amounts to be repayable by
Borrowers on demand. Agent and Lenders shall be under no obligation to effect
such cure, payment or bonding and shall not, by doing so, be deemed to have
50
assumed any obligation or liability of any Borrower or Guarantor. Any payment
made or other action taken by Agent or any Lender under this Section shall be
without prejudice to any right to assert an Event of Default hereunder and to
proceed accordingly.
7.7 ACCESS TO PREMISES. From time to time as requested by Agent, at
the cost and expense of Borrowers, (a) Agent or its designee shall have complete
access to all of each Borrower's and Guarantor's premises during normal business
hours and after notice to Administrative Borrower, or at any time and without
notice to Administrative Borrower if an Event of Default exists or has occurred
and is continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of each Borrower's and Guarantor's books and records,
including the Records, and (b) each Borrower and Guarantor (or Administrative
Borrower on behalf of each Borrower and Guarantor) shall promptly furnish to
Agent such copies of such books and records or extracts therefrom as Agent may
request, and Agent or any Lender or Agent's designee may, after reasonable
notice to Administrative Borrower (unless an Event of Default exists) use during
normal business hours such of any Borrower's and Guarantor's personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is continuing
(subject to the terms of the Intercreditor Agreement) for the collection of
Receivables and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower and Guarantor hereby represents and warrants to Agent
and Lenders the following (which shall survive the execution and delivery of
this Agreement):
8.1 CORPORATE EXISTENCE, POWER AND AUTHORITY. Each Borrower and
Guarantor is a corporation duly organized and in good standing under the laws of
its jurisdiction of incorporation and is duly qualified as a foreign corporation
and in good standing in all states, provinces or other jurisdictions where the
nature and extent of the business transacted by it or the ownership of assets
makes such qualification necessary, except for those jurisdictions in which the
failure to so qualify would not have a Material Adverse Effect. The execution,
delivery and performance of this Agreement, the other Financing Agreements and
the transactions contemplated hereunder and thereunder (a) are all within each
Borrower's and Guarantor's corporate powers, (b) have been duly authorized, (c)
are not in contravention of law or the terms of any Borrower's or Guarantor's
certificate of incorporation, by-laws, or other organizational documentation, or
any indenture, agreement or undertaking to which any Borrower or Guarantor is a
party or by which any Borrower or Guarantor or its property are bound and (d)
will not result in the creation or imposition of, or require or give rise to any
obligation to grant, any lien, security interest, charge or other encumbrance
upon any property of any Borrower or Guarantor, except for liens in favor of
Agent and Working Capital Agent. This Agreement and the other Financing
Agreements to which any Borrower or Guarantor is a party constitute legal, valid
and binding obligations of such Borrower and Guarantor enforceable in accordance
with their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
51
generally and by general equitable principales.
8.2 NAME; STATE OF ORGANIZATION; CHIEF EXECUTIVE OFFICE; COLLATERAL
LOCATIONS.
(a) The exact legal name of each Borrower and Guarantor as of the date
hereof is as set forth on the signature page of this Agreement and in the
Information Certificate. No Borrower or Guarantor has, during the five years
prior to the date of this Agreement, been known by or used any other corporate
or fictitious name or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its
property or assets out of the ordinary course of business, in each case except
as set forth in the Information Certificate.
(b) Each Borrower and Guarantor is an organization of the type and
organized in the jurisdiction set forth in the Information Certificate. The
Information Certificate accurately sets forth the organizational identification
number of each Borrower and Guarantor or accurately states that such Borrower or
Guarantor has none and accurately sets forth the federal employer identification
number of each Borrower and Guarantor.
(c) As of the date hereof, the chief executive office and mailing
address of each Borrower and Guarantor and each Borrower's and Guarantor's
Records concerning Accounts are located only at the address identified as such
in Schedule 8.2 to the Information Certificate and its only other places of
business and the only other locations of Collateral, if any, are the addresses
set forth in Schedule 8.2 to the Information Certificate, subject to the rights
of any Borrower or Guarantor to establish new locations in accordance with
Section 9.2 below. The Information Certificate correctly identifies any of such
locations which are not owned by a Borrower or Guarantor and sets forth the
owners and/or operators thereof.
8.3 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. All financial
statements relating to any Borrower or Guarantor which have been or may
hereafter be delivered by any Borrower or Guarantor (or Administrative Borrower
on behalf of each Borrower and Guarantor) to Agent and Lenders have been
prepared in accordance with GAAP (except as to any interim financial statements,
to the extent such statements are subject to normal year-end adjustments and do
not include any notes) and fairly present in all material respects the financial
condition and the results of operation of such Borrower and Guarantor as at the
dates and for the periods set forth therein. Except as disclosed in any interim
financial statements furnished by Borrowers and Guarantors to Agent prior to the
date of this Agreement, there has been no act, condition or event which has had
or is reasonably likely to have a Material Adverse Effect since the date of the
most recent audited financial statements of any Borrower or Guarantor furnished
by any Borrower or Guarantor to Agent prior to the date of this Agreement. All
of the obligations and liabilities of Borrowers and Guarantors to Fleet Precious
Metals, Inc. have been paid and satisfied in full, the Consignment Agreement,
dated December 21, 2000, between Parent and Fleet Precious Metals, Inc. has been
cancelled and is of no further force and effect, and all security interests and
52
liens of Fleet Precious Metals, Inc. on any assets or properties of any Borrower
or Guarantor have been terminated and released.
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES. The security interests and
liens granted to Agent under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 8.4 to
the Information Certificate and the other liens permitted under Section 9.8
hereof. Each Borrower and Guarantor has good and marketable fee simple title to
or valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent and such others as are specifically listed
on Schedule 8.4 to the Information Certificate or permitted under Section 9.8
hereof.
8.5 TAX RETURNS. Each Borrower and Guarantor has filed, or caused to
be filed, in a timely manner all tax returns, reports and declarations which are
required to be filed by it. All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Each Borrower
and Guarantor has paid or caused to be paid all taxes due and payable or claimed
due and payable in any assessment received by it, except taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to such Borrower or Guarantor and with respect to which
adequate reserves have been set aside on its books. Adequate provision has been
made for the payment of all accrued and unpaid Federal, State, Provincial,
county, local, foreign and other taxes whether or not yet due and payable and
whether or not disputed.
8.6 LITIGATION. Except as set forth on Schedule 8.6 to the Information
Certificate, (a) there is no investigation by any Governmental Authority
pending, or to the best of any Borrower's or Guarantor's knowledge threatened,
against or affecting any Borrower or Guarantor, its or their assets or business
and (b) there is no action, suit, proceeding or claim by any Person pending, or
to the best of any Borrower's or Guarantor's knowledge threatened, against any
Borrower or Guarantor or its or their assets or goodwill, or against or
affecting any transactions contemplated by this Agreement, in each case, which
if adversely determined against such Borrower or Guarantor has or could
reasonably be expected to have a Material Adverse Effect.
8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS.
(a) Borrowers and Guarantors are not in default in any material
respect under, or in violation in any material respect of the terms of, any
material agreement, contract, instrument, lease or other commitment to which it
is a party or by which it or any of its assets are bound. Borrowers and
Guarantors are in compliance in all material respects with the requirements of
all applicable laws, rules, regulations and orders of any Governmental Authority
relating to their respective businesses, including, without limitation, those
set forth in or promulgated pursuant to the Occupational Safety and Health Act
of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA,
53
the Code, as amended, and the rules and regulations thereunder, and all
Environmental Laws.
(b) Borrowers and Guarantors have obtained all material permits,
licenses, approvals, consents, certificates, orders or authorizations of any
Governmental Authority required for the lawful conduct of its business (the
"Permits"). All of the Permits are valid and subsisting and in full force and
effect. There are no actions, claims or proceedings pending or to the best of
any Borrower's or Guarantor's knowledge, threatened that seek the revocation,
cancellation, suspension or modification of any of the Permits.
8.8 ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrowers, Guarantors and any Subsidiary of any Borrower or
Guarantor have not generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on or off its premises
(whether or not owned by it) in any manner which at any time violates in any
material respect any applicable Environmental Law or Permit, except where such
violation has not had and could not reasonably be expected to have a Material
Adverse Effect, and the operations of Borrowers, Guarantors and any Subsidiary
of any Borrower or Guarantor complies in all respects with all Environmental
Laws and all Permits, except where the failure to so comply has not had and
could not reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 8.8 to the Information
Certificate, there has been no investigation by any Governmental Authority or
any proceeding, complaint, order, directive, claim, citation or notice by any
Governmental Authority or any other person nor is any pending or to the best of
any Borrower's or Guarantor's knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
any Borrower or Guarantor and any Subsidiary of any Borrower or Guarantor or the
release, spill or discharge, threatened or actual, of any Hazardous Material or
the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter in each case which has or had or could be reasonably
expected to have a Material Adverse Effect.
(c) Except as set forth on Schedule 8.8 to the Information
Certificate, Borrowers, Guarantors and their Subsidiaries have no liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials which liability has had or could be
reasonably expected to have a Material Adverse Effect.
(d) Borrowers, Guarantors and their Subsidiaries have all Permits
required to be obtained or filed in connection with the operations of Borrowers
and Guarantors under any Environmental Law and all of such licenses,
certificates, approvals or similar authorizations and other Permits are valid
and in full force and effect.
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8.9 EMPLOYEE BENEFITS.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or State law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the Internal Revenue Service and to the
best of any Borrower's or Guarantor's knowledge, nothing has occurred which
would cause the loss of such qualification. Each Borrower and its ERISA
Affiliates have made all required contributions to any Plan subject to Section
412 of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.
(b) There are no pending, or to the best of any Borrower's or
Guarantor's knowledge, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan. To the best knowledge of any
Borrower or Guarantor, there has been no prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) the current value of each Plan's assets (determined in accordance
with the assumptions used for funding such Plan pursuant to Section 412 of the
Code) are not less than such Plan's liabilities under Section 4001(a)(16) of
ERISA; (iii) each Borrower and Guarantor, and their ERISA Affiliates, have not
incurred and do not reasonably expect to incur, any liability under Title IV of
ERISA with respect to any Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) each Borrower and Guarantor, and their ERISA
Affiliates, have not incurred and do not reasonably expect to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) each Borrower and
Guarantor, and their ERISA Affiliates, have not engaged in a transaction that
would be subject to Section 4069 or 4212(c) of ERISA.
(d) With respect to any Canadian Pension Plan, to the best of the
knowledge of each Borrower and Guarantor, (i) the Canadian Pension Plans are
duly registered under all applicable Federal and Provincial pension benefits
legislation, (ii) all statutory obligations of any Borrower or Guarantor
required to be performed in connection with the Canadian Pension Plans or the
funding agreements therefor have been performed in a timely fashion and there
are no outstanding disputes concerning the assets held pursuant to any such
funding agreement, (iii) all contributions or premiums required to be made by
any Borrower or Guarantor to the Canadian Pension Plans have been made in a
timely fashion in accordance with the terms of the Canadian Pension Plans and
applicable laws and regulations, (iv) all employee contributions to the Canadian
Pension Plans required to be made by way of authorized payroll deduction have
been properly withheld by any Borrower or Guarantor and fully paid into the
Canadian Pension Plans in a timely fashion, (v) all reports and disclosures
relating to the Canadian Pension Plans required by any applicable laws or
regulations have been filed or distributed in a timely fashion, (vi) there have
been no improper withdrawals, or applications of, the assets of any of the
55
Pension Plans, (vii) no amount is owing by any of the Canadian Pension Plans
under the Income Tax Act (Canada) or any provincial taxation statute, (viii) the
Canadian Pension Plans are fully funded in accordance with applicable law both
on an ongoing basis and on a solvency basis (using actuarial assumptions and
methods which are consistent with the valuations last filed with the applicable
governmental authorities and which are consistent with generally accepted
actuarial principles), and (ix) none of the Canadian Pension Plans is the
subject of an investigation, proceeding, action or claim and there exists no
state of facts which after notice or lapse of time or both could reasonably be
expected to give rise to any such proceeding, action or claim.
8.10 BANK ACCOUNTS. As of the date hereof, all of the deposit
accounts, investment accounts or other accounts in the name of or used by any
Borrower or Guarantor maintained at any bank or other financial institution are
set forth on Schedule 8.10 to the Information Certificate, subject to the right
of each Borrower and Guarantor to establish new accounts in accordance with
Section 5.2 hereof.
8.11 INTELLECTUAL PROPERTY. Each Borrower and Guarantor owns or
licenses or otherwise has the right to use all Intellectual Property necessary
for the operation of its business as presently conducted or proposed to be
conducted. As of the date hereof, Borrowers and Guarantors do not have any
Intellectual Property registered, or subject to pending applications, in the
United States Patent and Trademark Office, the Canadian Intellectual Property
Office or any similar office or agency in the United States or Canada, any State
or Province thereof, any political subdivision thereof or in any other country,
other than those described in Schedule 8.11 to the Information Certificate and
has not granted any licenses with respect thereto other than as set forth in
Schedule 8.11 to the Information Certificate. No event has occurred which
permits or would permit after notice or passage of time or both, the revocation,
suspension or termination of such rights. To the best of any Borrower's and
Guarantor's knowledge (a) no slogan or other advertising device, product,
process, method, substance or other Intellectual Property or goods bearing or
using any Intellectual Property presently contemplated to be sold by or employed
by any Borrower or Guarantor infringes any patent, trademark, servicemark,
tradename, copyright, license or other Intellectual Property owned by any other
Person presently and (b) no claim or litigation is pending or threatened against
or affecting any Borrower or Guarantor contesting its right to sell or use any
such Intellectual Property. Schedule 8.11 to the Information Certificate sets
forth all of the agreements or other arrangements of each Borrower and Guarantor
pursuant to which such Borrower or Guarantor has a license or other right to use
any trademarks, logos, designs, representations or other Intellectual Property
owned by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of such Borrower or
Guarantor as in effect on the date hereof (collectively, together with such
agreements or other arrangements as may be entered into by any Borrower or
Guarantor after the date hereof, collectively, the "License Agreements" and
individually, a "License Agreement").
56
8.12 SUBSIDIARIES; AFFILIATES; CAPITALIZATION; SOLVENCY.
(a) As of the date hereof, each Borrower and Guarantor does not have
any direct or indirect Subsidiaries or Affiliates and is not engaged in any
joint venture or partnership except as set forth in Schedule 8.12 to the
Information Certificate.
(b) As of the date hereof, each Borrower and Guarantor is the record
and beneficial owner of all of the issued and outstanding shares of Capital
Stock of each of the Subsidiaries listed on Schedule 8.12 to the Information
Certificate as being owned by such Borrower or Guarantor and there are no
proxies, irrevocable or otherwise, with respect to such shares and no equity
securities of any of the Subsidiaries are or may become required to be issued by
reason of any options, warrants, rights to subscribe to, calls or commitments of
any kind or nature and there are no contracts, commitments, understandings or
arrangements by which any Subsidiary is or may become bound to issue additional
shares of it Capital Stock or securities convertible into or exchangeable for
such shares.
(c) The issued and outstanding shares of Capital Stock of each
Borrower and Guarantor are directly and beneficially owned and held by the
persons indicated in the Information Certificate, and in each case all of such
shares have been duly authorized and are fully paid and non-assessable, free and
clear of all claims, liens, pledges and encumbrances of any kind, except as
disclosed in writing to Agent prior to the date hereof.
(d) Each Borrower and Guarantor is Solvent and will continue to be
Solvent after the creation of the Obligations and the obligations under the
Working Capital Loan Agreement, the security interests of Agent and Working
Capital Agent and the other transactions contemplated hereunder and under the
Working Capital Loan Agreement.
8.13 LABOR DISPUTES.
(a) Set forth on Schedule 8.13 to the Information Certificate is a
list (including dates of termination) of all collective bargaining or similar
agreements between or applicable to each Borrower and Guarantor and any union,
labor organization or other bargaining agent in respect of the employees of any
Borrower or Guarantor on the date hereof.
(b) Except as set forth on Schedule 8.13 to the Information
Certificate, there is (i) no significant unfair labor practice complaint pending
against any Borrower or Guarantor or, to the best of any Borrower's or
Guarantor's knowledge, threatened against it, before the National Labor
Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is
pending on the date hereof against any Borrower or Guarantor or, to best of any
Borrower's or Guarantor's knowledge, threatened against it, and (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against any
Borrower or Guarantor or, to the best of any Borrower's or Guarantor's
knowledge, threatened against any Borrower or Guarantor.
8.14 RESTRICTIONS ON SUBSIDIARIES. Except for restrictions contained
in this Agreement or any other agreement with respect to Indebtedness of any
Borrower or Guarantor permitted hereunder as in effect on the date hereof, there
57
are no contractual or consensual restrictions on any Borrower or Guarantor or
any of its Subsidiaries which prohibit or otherwise restrict (a) the transfer of
cash or other assets (i) between any Borrower or Guarantor and any of its or
their Subsidiaries or (ii) between any Subsidiaries of any Borrower or Guarantor
or (b) the ability of any Borrower or Guarantor or any of its or their
Subsidiaries to incur Indebtedness or grant security interests to Agent or any
Lender in the Collateral.
8.15 MATERIAL CONTRACTS. Schedule 8.15 to the Information Certificate
sets forth all Material Contracts to which any Borrower or Guarantor is a party
or is bound as of the date hereof. Borrowers and Guarantors have delivered true,
correct and complete copies of such Material Contracts to Agent on or before the
date hereof. Borrowers and Guarantors are not in breach or in default in any
material respect of or under any Material Contract and have not received any
notice of the intention of any other party thereto to terminate any Material
Contract.
8.16 PAYABLE PRACTICES. Each Borrower and Guarantor have not made any
material change in the historical accounts payable practices from those in
effect immediately prior to the date hereof.
8.17 INTERRELATED BUSINESSES. Borrowers make up a related organization
of various entities constituting a single economic and business enterprise so
that Borrowers share an identity of interests such that any benefit received by
any one of them benefits the others. Borrowers render services to or for the
benefit of the other Borrowers, purchase or sell and supply goods to or from or
for the benefit of the others, make loans, advances and provide other financial
accommodations to or for the benefit of the other Borrowers (including inter
alia, the payment by Borrowers of creditors of the other Borrowers and
guarantees by Borrowers of indebtedness of the other Borrowers and provide
administrative, marketing, payroll and management services to or for the benefit
of the other Borrowers). Borrowers have the same chief executive office,
centralized accounting and legal services, certain common officers and directors
and generally do not provide consolidating financial statements to creditors.
8.18 ACCURACY AND COMPLETENESS OF INFORMATION. All information
furnished by or on behalf of any Borrower or Guarantor in writing to Agent or
any Lender in connection with this Agreement or any of the other Financing
Agreements or any transaction contemplated hereby or thereby, including all
information on the Information Certificate is true and correct in all material
respects on the date as of which such information is dated or certified and does
not omit any material fact necessary in order to make such information not
misleading. No event or circumstance has occurred which has had or could
reasonably be expected to have a Material Adverse Affect, which has not been
fully and accurately disclosed to Agent in writing prior to the date hereof.
8.19 SURVIVAL OF WARRANTIES; CUMULATIVE. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be
conclusively presumed to have been relied on by Agent and Lenders regardless of
any investigation made or information possessed by Agent or any Lender. The
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representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which any Borrower or
Guarantor shall now or hereafter give, or cause to be given, to Agent or any
Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 MAINTENANCE OF EXISTENCE.
(a) Each Borrower and Guarantor shall at all times preserve, renew and
keep in full force and effect its corporate existence and rights and franchises
with respect thereto and maintain in full force and effect all licenses,
trademarks, tradenames, approvals, authorizations, leases, contracts and Permits
necessary to carry on in all material respects the business as presently or
proposed to be conducted, except as to any Guarantor other than Parent as
permitted in Section 9.7 hereto.
(b) No Borrower or Guarantor shall change its name unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
ten (10) days prior written notice from Administrative Borrower of such proposed
change in its corporate name, which notice shall accurately set forth the new
name; and (ii) Agent shall have received a copy of the amendment to the
Certificate of Incorporation (or other organizational documents) of such
Borrower or Guarantor providing for the name change certified by the Secretary
of State (or similar official) of the jurisdiction of incorporation or
organization of such Borrower or Guarantor as soon as it is available.
(c) No Borrower or Guarantor shall change its chief executive office
or its mailing address or organizational identification number (or if it does
not have one, shall not acquire one) unless Agent shall have received not less
than ten (10) days' prior written notice from Administrative Borrower of such
proposed change, which notice shall set forth such information with respect
thereto as Agent may require and Agent shall have received such agreements as
Agent may reasonably require in connection therewith. No Borrower or Guarantor
shall change its type of organization, jurisdiction of organization or other
legal structure.
9.2 NEW COLLATERAL LOCATIONS. Each Borrower and Guarantor may only
open any new location within Canada (in the case of H&H Canada) or the
continental United States (in the case of all other Borrowers and Guarantors)
provided such Borrower or Guarantor (a) gives Agent thirty (30) days prior
written notice of the intended opening of any such new location (or such shorter
period as Agent may agree) and (b) executes and delivers, or causes to be
executed and delivered, to Agent such agreements, documents, and instruments as
Agent may deem reasonably necessary or desirable to protect its interests in the
Collateral at such location.
9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC.
(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary
to, at all times, comply in all material respects with all laws, rules,
regulations, licenses, approvals, orders and other Permits applicable to it and
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duly observe in all material respects all requirements of any foreign, Federal,
State or local Governmental Authority.
(b) Borrowers and Guarantors shall give written notice to Agent
promptly upon any Borrower's or Guarantor's receipt of any written notice of, or
any Borrower's or Guarantor's otherwise obtaining knowledge of, (i) the
occurrence of any event involving the material release, spill or discharge,
threatened or actual, of any Hazardous Material in violation of Environmental
Laws or (ii) any investigation, proceeding, complaint, order, directive, claims,
citation or notice with respect to: (A) any non-compliance with or violation of
any Environmental Law by any Borrower or Guarantor or (B) the release, spill or
discharge, threatened or actual, of any Hazardous Material other than in the
ordinary course of business and other than as permitted under any applicable
Environmental Law. Copies of all environmental surveys, audits, assessments,
feasibility studies and results of remedial investigations relating to any Real
Property shall be furnished, or caused to be furnished, by such Borrower or
Guarantor to Agent promptly upon such Borrower's or Guarantor's receipt thereof.
Each Borrower and Guarantor shall take prompt action to respond to any material
non-compliance with any of the Environmental Laws and shall regularly report to
Agent on such response.
(c) Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is material non-compliance, or any condition
which requires any action by or on behalf of any Borrower or Guarantor in order
to avoid any material non-compliance, with any Environmental Law, Borrowers
shall, at Agent's request and Borrowers' expense: (i) cause an independent
environmental engineer reasonably acceptable to Agent to conduct such tests of
the site where material non-compliance or alleged material non-compliance with
such Environmental Laws has occurred as to such material non-compliance and
prepare and deliver to Agent a report as to such material non-compliance setting
forth the results of such tests, a proposed plan for responding to any
environmental problems described therein, and an estimate of the costs thereof
and (ii) provide to Agent a supplemental report of such engineer whenever the
scope of such material non-compliance, or such Borrower's or Guarantor's
response thereto or the estimated costs thereof, shall change in any material
respect.
(d) Each Borrower and Guarantor shall indemnify and hold harmless
Agent and Lenders and their respective directors, officers, employees, agents,
invitees, representatives, successors and assigns, from and against any and all
losses, claims, damages, liabilities, costs, and expenses (including reasonable
attorneys' fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of any Borrower or
Guarantor and the preparation and implementation of any closure, remedial or
other required plans; PROVIDED, THAT, Borrowers and Guarantors shall not be
required to indemnify for any such losses, claims, damages, liabilities, costs
or expenses directly resulting from acts of Agent or any Lender with respect to
a parcel of Real Property while Agent or such Lender is the owner or operator of
such parcel of Real Property. All representations, warranties, covenants and
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indemnifications in this Section 9.3 shall survive the payment of the
Obligations and the termination of this Agreement.
9.4 PAYMENT OF TAXES AND CLAIMS. Each Borrower and Guarantor shall,
and shall cause any Subsidiary to, duly pay and discharge when due all taxes,
assessments, contributions and governmental charges upon or against it or its
properties or assets, except for taxes the validity of which are being contested
in good faith by appropriate proceedings diligently pursued and available to
such Borrower, Guarantor or Subsidiary, as the case may be, and with respect to
which adequate reserves have been set aside on its books. Each Borrower and
Guarantor shall be liable for any tax or penalties imposed on Agent or any
Lender as a result of the financing arrangements provided for herein and each
Borrower and Guarantor agrees to indemnify and hold Agent harmless with respect
to the foregoing, and to repay to Agent, for the benefit of Lenders, on demand
the amount thereof, and until paid by such Borrower or Guarantor such amount
shall be added and deemed part of the Loan, provided, that, nothing contained
herein shall be construed to require any Borrower or Guarantor to pay any income
or franchise taxes attributable to the income of Lenders from any amounts
charged or paid hereunder to Lenders. The foregoing indemnity shall survive the
payment of the Obligations and the termination of this Agreement.
9.5 INSURANCE. Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, at all times, maintain with financially sound and reputable
insurers insurance with respect to the Collateral against loss or damage and all
other insurance of the kinds and in the amounts customarily insured against or
carried by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Agent as to form, amount and insurer. Borrowers and
Guarantors shall furnish certificates, policies or endorsements to Agent as
Agent shall reasonably require as proof of such insurance, and, if any Borrower
or Guarantor fails to do so, Agent is authorized, but not required, to obtain
such insurance at the expense of Borrowers. All policies shall provide for at
least thirty (30) days prior written notice to Agent of any cancellation or
reduction of coverage and that Agent may act as attorney for each Borrower and
Guarantor in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Borrowers and Guarantors shall cause Agent to be named as a loss
payee and an additional insured as its interests may appear (but without any
liability for any premiums) under such insurance policies and Borrowers and
Guarantors shall obtain non-contributory lender's loss payable endorsements to
all insurance policies in form and substance satisfactory to Agent. Such
lender's loss payable endorsements shall specify that the proceeds of such
insurance shall be payable to Agent as its interests may appear and further
specify that Agent and Lenders shall be paid regardless of any act or omission
by any Borrower, Guarantor or any of its or their Affiliates. Without limiting
any other rights of Agent or Lenders and subject to the terms of the
Intercreditor Agreement, any and all insurance proceeds received at any time may
be applied to payment of the Obligations and the Working Capital Debt, whether
or not then due, in any order and in such manner as Agent may determine.
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9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary
to, keep proper books and records in which true and accurate entries shall be
made of all dealings or transactions of or in relation to the Collateral and the
business of such Borrower, Guarantor and its Subsidiaries in accordance with
GAAP. Borrowers and Guarantors shall promptly furnish to Agent and Lenders all
such financial and other information as Agent shall reasonably request relating
to the Collateral and the assets, business and operations of Borrowers and
Guarantors, and Borrower shall notify the auditors and accountants of Borrowers
and Guarantors that Agent is authorized to obtain such information directly from
them. Without limiting the foregoing, Borrowers and Guarantors shall furnish or
cause to be furnished to Agent, the following: (i) within thirty (30) days after
the end of each fiscal month, monthly unaudited consolidated financial
statements (including balance sheets, statements of income and loss, statements
of cash flow, and statements of shareholders' equity) and monthly unaudited
consolidating financial statements (including balance sheets and statements of
income and loss) all in reasonable detail, fairly presenting in all material
respects the financial position and the results of the operations of Parent and
its Subsidiaries as of the end of and through such fiscal month, certified to be
correct by the chief financial officer of Parent, subject to normal year-end
adjustments and the absence of footnotes and accompanied by a compliance
certificate substantially in the form of Exhibit B hereto, along with a schedule
in a form satisfactory to Agent of the calculations used in determining, as of
the end of such month, whether Borrowers and Guarantors are in compliance with
the covenants set forth in Sections 9.17 and 9.18 of this Agreement for such
month, (ii) within forty five (45) days after the end of each fiscal quarter,
quarterly unaudited consolidated financial statements (including balance sheets,
statements of income and loss, statements of cash flow, and statements of
shareholders' equity) and quarterly unaudited consolidating financial statements
(including balance sheets and statements of income and loss), all in reasonable
detail, fairly presenting in all material respects the financial position and
the results of the operations of Parent and its Subsidiaries as of the end of
and through such fiscal quarter, certified to be correct by the chief financial
officer of Parent, subject to normal year-end adjustments and the absence of
footnotes and (iii) within one hundred five (105) days after the fiscal year
ended December 31, 2003 and within ninety (90) days after the end of each fiscal
year thereafter, audited consolidated financial statements (including balance
sheets, statements of income, statements of cash flow and statements of
shareholders' equity) and unaudited consolidating financial statements of Parent
and its Subsidiaries (including in each case balance sheets and statements of
income and loss), and the accompanying notes thereto, all in reasonable detail,
fairly presenting in all material respects the financial position and the
results of the operations of Parent and its Subsidiaries as of the end of and
for such fiscal year, together with an unqualified opinion of independent
certified public accountants with respect to the audited consolidated financial
statements, which accountants shall be an independent accounting firm selected
by Borrowers and acceptable to Agent, that such audited consolidated financial
statements have been prepared in accordance with GAAP, and present fairly in all
material respects the results of operations and financial condition of Parent
and its Subsidiaries as of the end of and for the fiscal year then ended.
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(b) Borrowers and Guarantors shall promptly notify Agent in writing of
the details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $250,000 or which if
adversely determined would result in any material adverse change in any
Borrower's or Guarantor's business, properties, assets, goodwill or condition,
financial or otherwise, (ii) any Material Contract being terminated or amended
or any new Material Contract entered into (in which event Borrowers and
Guarantors shall provide Agent with a copy of such Material Contract), (iii) any
order, judgment or decree in excess of $250,000 shall have been entered against
any Borrower or Guarantor any of its or their properties or assets, (iv) any
notification of a material violation of laws or regulations received by any
Borrower or Guarantor, (v) any ERISA Event, and (vi) the occurrence of any
Default or Event of Default.
(c) Borrowers and Guarantors shall promptly after the sending or
filing thereof furnish or cause to be furnished to Agent copies of all reports
which any Borrower or Guarantor sends to its stockholders generally and copies
of all reports and registration statements which any Borrower or Guarantor files
with the Securities and Exchange Commission, any national securities exchange or
the National Association of Securities Dealers, Inc.
(d) Borrowers and Guarantors shall furnish or cause to be furnished to
Agent such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrowers and Guarantors, as Agent may, from time
to time, reasonably request. Agent is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrowers and Guarantors to any court or other Governmental Authority or to any
Lender or Participant or prospective Lender or Participant or any Affiliate of
any Lender or Participant. Each Borrower and Guarantor hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Agent, at
Borrowers' expense, copies of the financial statements of any Borrower and
Guarantor and any reports or management letters prepared by such accountants or
auditors on behalf of any Borrower or Guarantor and to disclose to Agent and
Lenders such information as they may have regarding the business of any Borrower
and Guarantor. Any documents, schedules, invoices or other papers delivered to
Agent or any Lender may be destroyed or otherwise disposed of by Agent or such
Lender one (1) year after the same are delivered to Agent or such Lender, except
as otherwise designated by Administrative Borrower to Agent or such Lender in
writing.
9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC. Each
Borrower and Guarantor shall not, and shall not permit any Subsidiary to,
directly or indirectly,
(a) merge into or with or consolidate or amalgamate with any other
Person or permit any other Person to merge into or with or consolidate with it
except that any wholly-owned Subsidiary of Parent may merge with and into or
consolidate with any other wholly-owned Subsidiary of Parent, provided, that,
each of the following conditions is satisfied as determined by Agent in good
faith: (i) Agent shall have received not less than ten (10) Business Days' prior
written notice of the intention of such Subsidiaries to so merge or consolidate,
which notice shall set forth in reasonable detail satisfactory to Agent, the
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persons that are merging or consolidating, which person will be the surviving
entity, the locations of the assets of the persons that are merging or
consolidating, and the material agreements and documents relating to such merger
or consolidation, (ii) Agent shall have received such other information with
respect to such merger or consolidation as Agent may reasonably request, (iii)
as of the effective date of the merger or consolidation and after giving effect
thereto, no Default or Event of Default shall exist or have occurred, (iv) Agent
shall have received, true, correct and complete copies of all agreements,
documents and instruments relating to such merger or consolidation, including,
but not limited to, the certificate or certificates of merger to be filed with
each appropriate Secretary of State (with a copy as filed promptly after such
filing), (v) the surviving corporation shall expressly confirm, ratify and
assume the Obligations and the Financing Agreements to which it is a party in
writing, in form and substance satisfactory to Agent, and Borrowers and
Guarantors shall execute and deliver such other agreements, documents and
instruments as Agent may request in connection therewith, and (vi) in any
merger, consolidation or amalgamation involving a Borrower, the surviving entity
of such merger, consolidation or amalgamation shall be a Borrower;
(b) sell, issue, assign, lease, license, transfer, abandon or
otherwise dispose of any Capital Stock or Indebtedness to any other Person or
any of its assets to any other Person, except for
(i) sales of Inventory in the ordinary course of business,
(ii) the sale or other disposition of Equipment (including
worn-out or obsolete Equipment or Equipment no longer used or useful in the
business of any Borrower or Guarantor) so long as such sales or other
dispositions do not involve Equipment having an aggregate fair market value in
excess of $350,000 for all such Equipment disposed of in any fiscal year of
Borrowers or as Agent may otherwise agree,
(iii) the issuance and sale by any Borrower or Guarantor of
Capital Stock of such Borrower or Guarantor after the date hereof; provided,
that, (A) Agent shall have received not less than ten (10) Business Days' prior
written notice of such issuance and sale by such Borrower or Guarantor, which
notice shall specify the parties to whom such shares are to be sold, the terms
of such sale, the total amount which it is anticipated will be realized from the
issuance and sale of such stock and the net cash proceeds which it is
anticipated will be received by such Borrower or Guarantor from such sale, (B)
such Borrower or Guarantor shall not be required to pay any cash dividends or
repurchase or redeem such Capital Stock or make any other payments in respect
thereof, except as otherwise permitted in Section 9.11 hereof, (C) the terms of
such Capital Stock, and the terms and conditions of the purchase and sale
thereof, shall not include any terms that include any limitation on the right of
any Borrower to request or receive the Loan or the right of any Borrower and
Guarantor to amend or modify any of the terms and conditions of this Agreement
or any of the other Financing Agreements or otherwise in any way relate to or
affect the arrangements of Borrowers and Guarantors with Agent and Lenders or
64
are more restrictive or burdensome to any Borrower or Guarantor than the terms
of any Capital Stock in effect on the date hereof, (D) except as Agent may
otherwise agree in writing, all of the Net Cash Proceeds of the sale and
issuance of such Capital Stock shall be paid in accordance with the terms of
Sections 2.3 and 6.4 hereof (subject to the terms of the Intercreditor
Agreement),and (E) as of the date of such issuance and sale and after giving
effect thereto, no Default or Event of Default shall exist or have occurred, and
(iv) the issuance of Capital Stock of any Borrower or Guarantor
consisting of common stock pursuant to an employee stock option or grant or
similar equity plan or 401(k) plans of such Borrower or Guarantor for the
benefit of its employees, directors and consultants, PROVIDED, THAT, in no event
shall such Borrower or Guarantor be required to issue, or shall such Borrower or
Guarantor issue, Capital Stock pursuant to such stock plans or 401(k) plans
which would result in a Change of Control or other Event of Default,
(v) the sale or other disposition by Parent to WHX of all of the
issued and outstanding shares of Capital Stock in Indiana Tube Danmark A/S, a
corporation organized under the laws of Denmark; PROVIDED, THAT, as of the date
of such sale or disposition and after giving effect thereto, no Event of Default
shall exist or have occurred and be continuing;
(vi) the sale or other disposition of the Fairfield Property, the
Laredo Property and the North Attleboro Property; PROVIDED, THAT, (A) as of the
date of such sale or disposition and after giving effect thereto, no Event of
Default shall exist or have occurred and be continuing, (B) such sale or
disposition shall be on commercially reasonable terms in a bona fide arm's
length transaction with a Person that is not an Affiliate of a Borrower, (C)
Administrative Borrower shall furnish Agent with prior written notice of such
sale or disposition (together with such information relating thereto as Agent
shall reasonably request), (D) on the closing date of such sale or disposition,
the applicable Borrower shall receive Net Cash Proceeds of not less than
$1,500,000 in the case of the Fairfield Property, $400,000 in the case of the
Laredo Property and $1,000,000 in the case of the North Attleboro Property, and
(E) the Net Cash Proceeds from such sale or disposition are applied in
accordance with Section 2.3(c)(iii);
(c) wind up, liquidate or dissolve except that any Guarantor may wind
up, liquidate and dissolve, provided, that, each of the following conditions is
satisfied, (i) the winding up, liquidation and dissolution of such Guarantor
shall not violate any law or any order or decree of any court or other
Governmental Authority in any material respect and shall not conflict with or
result in the breach of, or constitute a default under, any indenture, mortgage,
deed of trust, or any other agreement or instrument to which any Borrower or
Guarantor is a party or may be bound, (ii) such winding up, liquidation or
dissolution shall be done in accordance with the requirements of all applicable
laws and regulations, (iii) effective upon such winding up, liquidation or
dissolution, all of the assets and properties of such Guarantor shall be duly
and validly transferred and assigned to a Borrower or another Guarantor, free
and clear of any liens, restrictions or encumbrances other than the security
interest and liens of Agent (and Agent shall have received such evidence thereof
as Agent may require) and Agent shall have received such deeds, assignments or
65
other agreements as Agent may request to evidence and confirm the transfer of
such assets to of such Guarantor to a Borrower, (iv) Agent shall have received
all documents and agreements that any Borrower or Guarantor has filed with any
Governmental Authority or as are otherwise required to effectuate such winding
up, liquidation or dissolution, (v) no Borrower or Guarantor shall assume any
Indebtedness, obligations or liabilities as a result of such winding up,
liquidation or dissolution, or otherwise become liable in respect of any
obligations or liabilities of the entity that is winding up, liquidating or
dissolving, unless such Indebtedness is otherwise expressly permitted hereunder,
(vi) Agent shall have received not less than ten (10) Business Days prior
written notice of the intention of such Guarantor to wind up, liquidate or
dissolve, and (vii) as of the date of such winding up, liquidation or
dissolution and after giving effect thereto, no Default or Event of Default
shall exist or have occurred; or
(d) agree to do any of the foregoing.
9.8 ENCUMBRANCES. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, create, incur, assume or suffer to exist any security
interest, mortgage, pledge, lien, charge or other encumbrance of any nature
whatsoever on any of its assets or properties, including the Collateral, or file
or permit the filing of, or permit to remain in effect, any financing statement
or other similar notice of any security interest or lien with respect to any
such assets or properties, except:
(a) the security interests and liens of Agent for itself and the
benefit of Lenders;
(b) liens securing the payment of taxes, assessments or other
governmental charges or levies either not yet overdue or the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower, or Guarantor or Subsidiary, as the case may be
and with respect to which adequate reserves have been set aside on its books;
(c) non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of such Borrower's, Guarantor's
or Subsidiary's business to the extent: (i) such liens secure Indebtedness which
is not overdue or (ii) such liens secure Indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower,
Guarantor or such Subsidiary, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books;
(d) zoning restrictions (including, without limitation, airport zoning
regulations relating to the Real Property of H&H Canada in Rexdale, Ontario),
easements (including unregistered easements), licenses, agreements with
municipalities, covenants and other restrictions affecting the use of Real
Property (including, in the case of the Real Property of H&H Canada located in
Rexdale, Ontario, (i) any rights of expropriation, access of use, or other
rights conferred by any statute of Canada or the Province of Ontario and (ii)
the reservations contained in the original grant from Canada) which do not
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interfere in any material respect with the use of such Real Property or ordinary
conduct of the business of such Borrower, Guarantor or such Subsidiary as
presently conducted thereon or materially impair the value of the Real Property
(or, in the case of leasehold interests, the value of such Borrower's,
Guarantor's or such Subsidiary's interest in the Real Property) which may be
subject thereto;
(e) purchase money security interests in Equipment (including Capital
Leases) and purchase money mortgages on Real Property to secure Indebtedness
permitted under Section 9.9(b) hereof;
(f) pledges and deposits of cash by any Borrower or Guarantor after
the date hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of such Borrower or Guarantor as of the
date hereof;
(g) pledges and deposits of cash by any Borrower or Guarantor after
the date hereof to secure the performance of tenders, bids, leases, trade
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations in each case in the ordinary course of business
consistent with the current practices of such Borrower or Guarantor as of the
date hereof; PROVIDED, THAT, in connection with any performance bonds issued by
a surety or other person, the issuer of such bond shall have waived in writing
any rights in or to, or other interest in, any of the Collateral in an
agreement, in form and substance satisfactory to Agent;
(h) liens arising from (i) operating leases and the precautionary UCC
or PPSA, as applicable, financing statement filings in respect thereof and (ii)
equipment or other materials which are not owned by any Borrower or Guarantor
located on the premises of such Borrower or Guarantor (but not in connection
with, or as part of, the financing thereof) from time to time in the ordinary
course of business and consistent with current practices of such Borrower or
Guarantor and the precautionary UCC, or PPSA, as applicable, financing statement
filings in respect thereof;
(i) judgments and other similar liens arising in connection with court
proceedings that do not constitute an Event of Default, PROVIDED, THAT, (i) such
liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, (iii) a stay of
enforcement of any such liens is in effect and (iv) Agent may establish a
Reserve with respect thereto;
(j) the security interests in and liens upon the Collateral in favor
of the Working Capital Agent to secure the Working Capital Debt, PROVIDED, THAT,
such security interests and liens in favor of the Working Capital Agent are and
shall at all times be subject to the terms of the Intercreditor Agreement;
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(k) the security interests in liens upon the Collateral in favor of
the holder of the Refinancing Indebtedness (or the agent or trustee on behalf of
the holder or holders of the Refinancing Indebtedness) to secure the Refinancing
Indebtedness; PROVIDED, THAT, the security interests and liens upon the
Collateral in favor of such Person are and shall at all times be subject and
subordinate to the security interests and liens therein of Agent pursuant to the
terms of an intercreditor agreement in form and substance satisfactory to Agent;
(l) the security interests in and liens upon Precious Metals Inventory
owned by the Precious Metals Consignor and consigned by the Precious Metals
Consignor to Parent, to secure the Indebtedness permitted under Section 9.9(i)
hereof; provided, that, such security interests and liens are subject to the
terms of the Precious Metals Creditor Agreement; and
(m) the security interests and liens not otherwise expressly permitted
under this Section 9.8 and set forth on Schedule 8.4 to the Information
Certificate.
9.9 INDEBTEDNESS. Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, or guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly),
the Indebtedness, performance, obligations or dividends of any other Person,
except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) arising
after the date hereof to the extent secured by purchase money security interests
in Equipment (including Capital Leases) and purchase money mortgages on Real
Property not to exceed $500,000 in the aggregate at any time outstanding so long
as such security interests and mortgages do not apply to any property of such
Borrower, Guarantor or Subsidiary other than the Equipment or Real Property so
acquired, and the Indebtedness secured thereby does not exceed the cost of the
Equipment or Real Property so acquired, as the case may be;
(c) guarantees by any Borrower or Guarantor of the Obligations of the
other Borrowers or Guarantors in favor of Agent for the benefit of Lenders;
(d) the Indebtedness of any Borrower or Guarantor to any other
Borrower or Guarantor arising after the date hereof pursuant to loans by any
Borrower or Guarantor permitted under Section 9.10(g) hereof;
(e) unsecured Indebtedness of any Borrower or Guarantor arising after
the date hereof to any third person (but not to any other Borrower or
Guarantor), provided, that, each of the following conditions is satisfied as
determined by Agent: (i) such Indebtedness shall be on terms and conditions
acceptable to Agent (in its sole discretion) and shall be subject and
subordinate in right of payment to the right of Agent and Lenders to receive the
prior indefeasible payment and satisfaction in full payment of all of the
Obligations pursuant to the terms of an intercreditor agreement between Agent
68
and such third party, in form and substance satisfactory to Agent, (ii) Agent
shall have received not less than ten (10) days prior written notice of the
intention of such Borrower or Guarantor to incur such Indebtedness, which notice
shall set forth in reasonable detail satisfactory to Agent the amount of such
Indebtedness, the person or persons to whom such Indebtedness will be owed, the
interest rate, the schedule of repayments and maturity date with respect thereto
and such other information as Agent may request with respect thereto, (iii)
Agent shall have received true, correct and complete copies of all agreements,
documents and instruments evidencing or otherwise related to such Indebtedness,
(iv) except as Agent may otherwise agree in writing, all of the proceeds of the
loans or other accommodations giving rise to such Indebtedness shall be paid to
Agent or Working Capital Agent for application to the Obligations and the
Working Capital Debt in accordance with Section 2.4(b) hereof, (v) in no event
shall the aggregate principal amount of such Indebtedness incurred during the
term of this Agreement exceed $5,000,000, (vi) as of the date of incurring such
Indebtedness and after giving effect thereto, no Default or Event of Default
shall exist or have occurred, (vii) such Borrower and Guarantor shall not,
directly or indirectly, (A) amend, modify, alter or change the terms of such
Indebtedness or any agreement, document or instrument related thereto, except,
that, such Borrower or Guarantor may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to extend the maturity
thereof, or defer the timing of any payments in respect thereof, or to forgive
or cancel any portion of such Indebtedness (other than pursuant to payments
thereof), or to reduce the interest rate or any fees in connection therewith, or
(B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness
(except pursuant to regularly scheduled payments permitted herein), or set aside
or otherwise deposit or invest any sums for such purpose, and (viii) Borrowers
and Guarantors shall furnish to Agent all notices or demands in connection with
such Indebtedness either received by any Borrower or Guarantor or on its behalf
promptly after the receipt thereof, or sent by any Borrower or Guarantor or on
its behalf concurrently with the sending thereof, as the case may be;
(f) Indebtedness of Borrowers and Guarantors to the Working Capital
Agent and the lenders party to the Working Capital Loan Agreement evidenced by
or arising under the Working Capital Lender Agreements (as in effect on the date
hereof or as amended in accordance with clause (v) below), PROVIDED, THAT:
(i) the principal amount of such Indebtedness shall not exceed
the sum of (A) the lesser of (1) $70,000,000 and (2) 110% of the Borrowing Base,
plus (B) the WC Term Loans in an amount equal to $22,150,000 as reduced from
time to time by the principal payments and prepayments of the WC Term Loans
whether optional or mandatory,
(ii) as of the date hereof, no event of default, or event which
with notice or passage of time or both would constitute an event of default
exists, or has occurred under the Working Capital Lender Agreements,
69
(iii) Agent shall have received true, correct and complete copies
of all of the Working Capital Lender Agreements, as duly authorized, executed
and delivered by the parties thereto, and
(iv) Borrowers and Guarantors shall furnish to Agent copies of
all notices of default or demands for payment in connection with such
Indebtedness either received by such Borrower or Guarantor or on its behalf
promptly after the receipt thereof, and all such notices or demands sent by any
Borrower or Guarantor or on its behalf concurrently with the sending thereof, as
the case may be;
(g) Indebtedness of Borrowers and Guarantors arising after the date
hereof issued in exchange for, or the proceeds of which are used to refinance,
replace or substitute for, Indebtedness permitted under Section 9.9(f) hereof
(the "REFINANCING INDEBTEDNESS"); PROVIDED, THAT, as to any such Refinancing
Indebtedness, each of the following conditions is satisfied: (i) Agent shall
have received not less than ten (10) Business Days' prior written notice of the
intention to incur such Indebtedness, which notice shall set forth in detail
reasonably satisfactory to Agent, the amount of such Indebtedness, the schedule
of repayments and maturity date with respect thereto and such other information
with respect thereto as Agent may request, (ii) promptly upon Agent's request,
Agent shall have received true, correct and complete copies of all agreements,
documents and instruments evidencing or otherwise related to such Indebtedness,
as duly executed and delivered by the parties thereto, (iii) the holder or
holders of the Refinancing Indebtedness (or the agent on behalf of such holder
or holders) shall execute and deliver an agreement identical to the
Intercreditor Agreement (subject to changing names of parties, documents and
addresses, as appropriate), and (iv) Borrowers and Guarantors shall furnish to
Agent all notices of default or demands for payment in connection with such
Indebtedness either by such Borrower or Guarantor or on its behalf promptly
after the receipt thereof, and all such notices or demands sent by any Borrower
or Guarantor or on its behalf concurrently with the sending thereof, as the case
may be;
(h) Indebtedness of Borrowers and Guarantors under interest rate swap
agreements, interest rate cap agreements, interest rate collar agreements,
interest rate exchange agreements or similar contractual arrangements intended
to protect such Person against fluctuations in interest rates and currency swap
agreements, forward currency purchase agreements or similar contractual
arrangements intended to protect such Person against fluctuations in currency
exchange rates and commodity swap agreements or similar contractual arrangements
intended to protect such Person against fluctuations in precious metal prices;
provided, that, (i) such arrangements are with banks or other financial
institutions that have combined capital and surplus and undivided profits of not
less than $250,000,000 and are not for speculative purposes and (ii) such
Indebtedness shall be unsecured;
(i) Indebtedness of Parent to the Precious Metals Consignor evidenced
by or arising under the Precious Metals Consignment Agreement and the other
Precious Metals Consignment Documents, PROVIDED, THAT:
70
(i) Agent shall have received true, correct and complete copies
of all of the Precious Metals Consignment Documents as duly authorized, executed
and delivered by the parties thereto, which shall be in form and substance
satisfactory to Agent,
(ii) the outstanding amount of such Indebtedness shall not exceed
$15,000,000, plus fees thereon at the rate provided in the Precious Metals
Consignment Documents as in effect on the date hereof,
(iii) such Indebtedness shall be subject to the terms of the
Precious Metals Creditor Agreement and shall not be secured by any assets of any
Borrower or Guarantor, except for Precious Metals Inventory consigned to Parent
by the Precious Metals Consignor for which the Precious Metals Consignor has not
been paid;
(iv) Borrowers and Guarantors shall not, directly or indirectly,
amend, modify, alter or change in any material respect any of the terms of such
Indebtedness or any of the Precious Metals Consignment Documents as in effect on
the date hereof, except, that, Borrowers and Guarantors may, after prior written
notice to Agent, amend, modify, alter or change the terms thereof so as to
extend the maturity thereof or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness other than
pursuant to payments thereof, or to reduce the interest rate or any fees in
connection therewith, or to release any liens on or security interests in any
assets or properties of Borrowers, and
(v) Borrowers and Guarantors shall furnish to Agent all notices
of default or demands for payment in connection with such Indebtedness either
received by such Borrower or Guarantor or on its behalf promptly after the
receipt thereof, and all such notices or demands sent by any Borrower or
Guarantor or on its behalf concurrently with the sending thereof, as the case
may be;
(j) Indebtedness of Parent to WHX evidenced by or arising under the
WHX Subordinated Note (as in effect on the date hereof), PROVIDED, THAT:
(i) the principal amount of such Indebtedness shall not exceed
$43,449,000, plus interest thereon (which may increase the principal amount to
the extent payable in kind) at the rate provided in the WHX Subordinated Note as
in effect on the date hereof,
(ii) Agent shall have received true, correct and complete copies
of the WHX Subordinated Note and all other documents, instruments and agreements
related thereto, as duly authorized, executed and delivered by the parties
thereto, which shall be in form and substance satisfactory to Agent;
(iii) such Indebtedness shall be unsecured and shall be subject
and subordinate in right of payment to the right of Agent and Lenders to receive
the prior indefeasible payment and satisfaction in full of all Obligations
pursuant to the WHX Subordination Agreement,
71
(iv) except as Agent may otherwise agree in writing, all of the
proceeds of such Indebtedness shall be paid over to Working Capital Agent for
application, on the date hereof, to repay amounts owing to the Existing Lenders,
(v) Borrowers and Guarantors shall not, directly or indirectly,
make, or be required to make, any payments in respect of such Indebtedness,
except, that, Parent may make regularly scheduled non-cash capitalized interest
payments in respect of such Indebtedness in accordance with the terms of the WHX
Subordinated Note as in effect as the date hereof, in the form of additional
indebtedness having substantially the same terms,
(vi) Borrowers and Guarantors shall not, directly or indirectly,
(A) amend, modify, alter or change in any material respect any of the terms of
such Indebtedness or the WHX Subordinated Note or any documents, instruments or
agreements related thereto as in effect on the date hereof, except, that, Parent
may, after prior written notice to Agent, amend, modify, alter of change the
terms thereof so as to extend the maturity thereof or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness other than pursuant to payments thereof, or to reduce the interest
rate or any fees in connection therewith, or to release any liens on or security
interests in any assets or properties of Borrowers, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose,
(vii) Borrowers and Guarantors shall furnish to Agent all notices
of default or demands for payment in connection with such Indebtedness either
received by such Borrower or Guarantor or on its behalf promptly after the
receipt thereof, and all such notices or demands sent by any Borrower or
Guarantor or on its behalf concurrently with the sending thereof, as the case
may be; and
(k) the Indebtedness not otherwise expressly permitted under this
Section 9.9 and set forth on Schedule 9.9 to the Information Certificate;
provided, that, (i) Borrowers and Guarantors may only make regularly scheduled
payments of principal and interest in respect of such Indebtedness in accordance
with the terms of the agreement or instrument evidencing or giving rise to such
Indebtedness as in effect on the date hereof, (ii) Borrowers and Guarantors
shall not, directly or indirectly, (A) amend, modify, alter or change the terms
of such Indebtedness or any agreement, document or instrument related thereto as
in effect on the date hereof except, that, Borrowers and Guarantors may, after
prior written notice to Agent, amend, modify, alter or change the terms thereof
so as to extend the maturity thereof, or defer the timing of any payments in
respect thereof, or to forgive or cancel any portion of such Indebtedness (other
than pursuant to payments thereof), or to reduce the interest rate or any fees
in connection therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose (except for regularly scheduled sinking fund payments required
by the agreements governing such Indebtedness as in effect on the date hereof),
and (iii) Borrowers and Guarantors shall furnish to Agent all notices or demands
in connection with such Indebtedness either received by any Borrower or
Guarantor or on its behalf, promptly after the receipt thereof, or sent by any
72
Borrower or Guarantor or on its behalf, concurrently with the sending thereof,
as the case may be.
9.10 LOANS, INVESTMENTS, ETC. Each Borrower and Guarantor shall not,
and shall not permit any Subsidiary to, directly or indirectly, make any loans
or advance money or property to any person, or invest in (by capital
contribution, dividend or otherwise) or purchase or repurchase the Capital Stock
or Indebtedness or all or a substantial part of the assets or property of any
person, or form or acquire any Subsidiaries, or agree to do any of the
foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that, the terms
and conditions of Section 5.2 hereof shall have been satisfied with respect to
the deposit account, investment account or other account in which such cash or
Cash Equivalents are held;
(c) the existing equity investments of each Borrower and Guarantor as
of the date hereof in its Subsidiaries, PROVIDED, THAT, no Borrower or Guarantor
shall have any further obligations or liabilities to make any capital
contributions or other additional investments or other payments to or in or for
the benefit of any of such Subsidiaries;
(d) loans and advances by any Borrower or Guarantor to employees of
such Borrower or Guarantor not to exceed the principal amount of $100,000 in the
aggregate at any time outstanding for: (i) reasonably and necessary work-related
travel or other ordinary business expenses to be incurred by such employee in
connection with their work for such Borrower or Guarantor and (ii) reasonable
and necessary relocation expenses of such employees (including home mortgage
financing for relocated employees);
(e) stock or obligations issued to any Borrower or Guarantor by any
Person (or the representative of such Person) in respect of Indebtedness of such
Person owing to such Borrower or Guarantor in connection with the insolvency,
bankruptcy, receivership or reorganization of such Person or a composition or
readjustment of the debts of such Person; provided, that, the original of any
such stock or instrument evidencing such obligations shall be promptly delivered
to Agent (or if the Working Capital Loan Agreement has not been terminated, to
Working Capital Agent, with copies to Agent), upon Agent's request, together
with such stock power, assignment or endorsement by such Borrower or Guarantor
as Agent may request;
(f) obligations of account debtors to any Borrower or Guarantor
arising from Accounts which are past due evidenced by a promissory note made by
such account debtor payable to such Borrower or Guarantor; provided, that,
promptly upon the receipt of the original of any such promissory note by such
Borrower or Guarantor, such promissory note shall be endorsed to the order of
Agent (or if the Working Capital Loan Agreement has not been terminated, to
Working Capital Agent) by such Borrower or Guarantor and promptly delivered to
73
Agent (or if the Working Capital Loan Agreement has not been terminated, to
Working Capital Agent, with copies to Agent) as so endorsed;
(g) loans by a Borrower or Guarantor to another Borrower or Guarantor
after the date hereof, provided, that,
(i) as to all of such loans, (A) within thirty (30) days after
the end of each fiscal month, Borrowers shall provide to Agent a report in form
and substance satisfactory to Agent of the outstanding amount of such loans as
of the last day of the immediately preceding month and indicating any loans made
and payments received during the immediately preceding month, (B) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Agent (or if the Working Capital Loan
Agreement has not been terminated, to Working Capital Agent, with copies to
Agent) upon its request to hold as part of the Collateral, with such endorsement
and/or assignment by the payee of such note or other instrument as Agent, or
Working Capital Agent, as applicable, may require, (C) as of the date of any
such loan and after giving effect thereto, the Borrower or Guarantor making such
loan shall be Solvent, and (D) as of the date of any such loan and after giving
effect thereto, no Default or Event of Default shall exist or have occurred and
be continuing,
(ii) as to loans by a Guarantor to a Borrower, (A) the
Indebtedness arising pursuant to such loan shall be subject to, and subordinate
in right of payment to, the right of Agent and Lenders to receive the prior
final payment and satisfaction in full of all of the Obligations on terms and
conditions acceptable to Agent, (B) promptly upon Agent's request, Agent shall
have received a subordination agreement, in form and substance satisfactory to
Agent, providing for the terms of the subordination in right of payment of such
Indebtedness of such Borrower to the prior final payment and satisfaction in
full of all of the Obligations, duly authorized, executed and delivered by such
Guarantor and such Borrower, and (C) such Borrower shall not, directly or
indirectly make, or be required to make, any payments in respect of such
Indebtedness prior to the end of the then current term of this Agreement;
(iii) as to loans by a Borrower to a Guarantor, as of the date of
any such loan and after giving effect thereto, (A) the Excess Availability shall
be not less than $5,000,000, (B) the aggregate outstanding amount of all loans
by Borrowers to Guarantors shall not exceed $250,000 at any time and (C) no
Event of Default shall exist or have occurred and be continuing;
(h) the loans and advances set forth on Schedule 9.10 to the
Information Certificate; PROVIDED, THAT, as to such loans and advances,
Borrowers and Guarantors shall not, directly or indirectly, amend, modify, alter
or change the terms of such loans and advances or any agreement, document or
instrument related thereto and Borrowers and Guarantors shall furnish to Agent
all notices or demands in connection with such loans and advances either
received by any Borrower or Guarantor or on its behalf, promptly after the
receipt thereof, or sent by any Borrower or Guarantor or on its behalf,
concurrently with the sending thereof, as the case may be; and
74
(i) Permitted Acquisitions.
9.11 DIVIDENDS AND REDEMPTIONS. Each Borrower and Guarantor shall not,
directly or indirectly, declare or pay any dividends on account of any shares of
class of any Capital Stock of such Borrower or Guarantor now or hereafter
outstanding, or set aside or otherwise deposit or invest any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of
any class of Capital Stock (or set aside or otherwise deposit or invest any sums
for such purpose) for any consideration or apply or set apart any sum, or make
any other distribution (by reduction of capital or otherwise) in respect of any
such shares or agree to do any of the foregoing, except that:
(a) any Borrower or Guarantor may declare and pay such dividends or
redeem, retire, defease, purchase or otherwise acquire any shares of any class
of Capital Stock for consideration in the form of shares of common stock (so
long as after giving effect thereto no Change of Control or other Default or
Event of Default shall exist or occur);
(b) Borrowers and Guarantors may pay dividends to the extent permitted
in Section 9.12 below;
(c) any Subsidiary of a Borrower or Guarantor may pay dividends to a
Borrower;
(d) Borrowers and Guarantors may repurchase Capital Stock consisting
of common stock held by employees pursuant to any employee stock ownership plan
thereof upon the termination, retirement or death of any such employee in
accordance with the provisions of such plan, PROVIDED, THAT, as to any such
repurchase, each of the following conditions is satisfied: (i) as of the date of
the payment for such repurchase and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing, (ii) such
repurchase shall be paid with funds legally available therefor, (iii) such
repurchase shall not violate any law or regulation or the terms of any
indenture, agreement or undertaking to which such Borrower or Guarantor is a
party or by which such Borrower or Guarantor or its or their property are bound,
and (iv) the aggregate amount of all payments for such repurchases in any
calendar year shall not exceed $250,000.
9.12 TRANSACTIONS WITH AFFILIATES. Each Borrower and Guarantor shall
not, directly or indirectly:
(a) purchase, acquire or lease any property from, or sell, transfer or
lease any property to, any officer, director or other Affiliate of such Borrower
or Guarantor, except in the ordinary course of and pursuant to the reasonable
requirements of such Borrower's or Guarantor's business (as the case may be) and
upon fair and reasonable terms no less favorable to such Borrower or Guarantor
than such Borrower or Guarantor would obtain in a comparable arm's length
transaction with an unaffiliated person, except that Parent may sell or
otherwise dispose of all of the issued and outstanding shares of Capital Stock
in Indiana Tube Danmark A/S to WHX in accordance with the terms of Section
9.7(b)(v); or
75
(b) make any payments (whether by dividend, loan or otherwise) of
management, consulting or other fees for management or similar services, or of
any Indebtedness owing to any officer, employee, shareholder, director or any
other Affiliate of such Borrower or Guarantor, EXCEPT:
(i) reasonable compensation to officers, employees and directors
for services rendered to such Borrower or Guarantor in the ordinary course of
business;
(ii) payments by any such Borrower or Guarantor to Parent for
actual and necessary reasonable out-of-pocket legal and accounting, insurance,
marketing, payroll and similar types of services paid for by Parent on behalf of
such Borrower or Guarantor, in the ordinary course of their respective
businesses or as the same may be directly attributable to such Borrower or
Guarantor and for the payment of taxes by or on behalf of Parent, and
(iii) payments by Parent to WHX for the payment of taxes by WHX
that are attributable to the Parent and its Subsidiaries, PROVIDED, THAT, (A)
the aggregate amount of all such payments in any fiscal year shall
not exceed the amount of taxes that Parent would have been obligated to pay
during such fiscal year if Parent was a stand-alone tax payer (on behalf of
itself and its consolidated Subsidiaries), (B) as of the date of any such
payment and after giving effect thereto, no Event of Default shall have occurred
and be continuing, (C) as of the date of any such payment and after giving
effect thereto, the Excess Availability shall not be less than $10,000,000, and
(D) Agent shall have received a certificate from Parent (together with
supporting calculations in reasonable detail), in form and substance
satisfactory to Agent, which demonstrates that Parent and its Subsidiaries would
have been in pro forma compliance with covenants set forth in Section 9.17 for
the most recently ended test periods thereunder, computed as if such payment was
paid on the first day of any such test periods.
9.13 COMPLIANCE WITH ERISA.
(a) Each Borrower and Guarantor shall, and shall cause each of its
ERISA Affiliates, to: (i) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal and
State law; (ii) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (iii) not terminate any of such Plans so as
to incur any material liability to the Pension Benefit Guaranty Corporation;
(iv) not allow or suffer to exist any prohibited transaction involving any of
such Plans or any trust created thereunder which would subject such Borrower,
Guarantor or such ERISA Affiliate to a material tax or penalty or other
liability on prohibited transactions imposed under Section 4975 of the Code or
ERISA; (v) make all required contributions to any Plan which it is obligated to
pay under Section 302 of ERISA, Section 412 of the Code or the terms of such
Plan; (vi) not allow or suffer to exist any accumulated funding deficiency,
whether or not waived, with respect to any such Plan; or (vii) allow or suffer
to exist any occurrence of a reportable event or any other event or condition
which presents a material risk of termination by the Pension Benefit Guaranty
76
Corporation of any such Plan that is a single employer plan, which termination
could result in any material liability to the Pension Benefit Guaranty
Corporation.
(b) Each Borrower and Guarantor shall (i) cause the Canadian Pension
Plans to be administered in accordance with the requirements of the applicable
pension plan texts, funding agreements, the Income Tax Act (Canada) and
applicable provincial pension benefits legislation, (ii) deliver to Agent an
undertaking of the funding agent for such Canadian Pension Plan stating that the
funding agent will notify Agent within seven (7) days of the failure of any
Borrower or US Guarantor to make any required contribution to each Canadian
Pension Plan, (iii) not accept payment of any amount from any Canadian Pension
Plan (other than amounts on account of expenses reasonably incurred in
connection with the operations of such Canadian Pension Plan) without the prior
written consent of Agent, (iv) not terminate, or cause to be terminated, any
Canadian Pension Plan, if such plan would have a solvency deficiency on
termination, (v) shall promptly provide Agent with any documentation relating to
the Canadian Pension Plans as Agent may reasonably request, and (vi) shall
notify Agent within thirty (30) days of (A) a material increase in the
liabilities of any Canadian Pension Plan, (B) the establishment of a new
registered pension plan or (C) the commencement of payments of contributions to
any Canadian Pension Plan to which any Borrower or Guarantor had not previously
been paying or contributing.
9.14 END OF FISCAL YEARS; FISCAL QUARTERS. Each Borrower and Guarantor
shall, for financial reporting purposes, cause its, and each of its
Subsidiaries' (a) fiscal years to end on December 31 of each year and (b) fiscal
quarters to end on or about March 31, June 30, September 30 and December 31 of
each year.
9.15 CHANGE IN BUSINESS. Each Borrower and Guarantor shall not engage
in any business other than the business of such Borrower or Guarantor on the
date hereof and any business reasonably related, ancillary or complimentary to
the business in which such Borrower or Guarantor is engaged on the date hereof.
9.16 LIMITATION OF RESTRICTIONS AFFECTING SUBSIDIARIES. Each Borrower
and Guarantor shall not, directly, or indirectly, create or otherwise cause or
suffer to exist any encumbrance or restriction which prohibits or limits the
ability of any Subsidiary of such Borrower or Guarantor to (a) pay dividends or
make other distributions or pay any Indebtedness owed to such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor; (b) make loans or
advances to such Borrower or Guarantor or any Subsidiary of such Borrower or
Guarantor, (c) transfer any of its properties or assets to such Borrower or
Guarantor or any Subsidiary of such Borrower or Guarantor; or (d) create, incur,
assume or suffer to exist any lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, other than encumbrances and
restrictions arising under (i) applicable law, (ii) this Agreement or the
Working Capital Loan Agreement, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of such
Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (iv)
customary restrictions on dispositions of real property interests found in
reciprocal easement agreements of such Borrower or Guarantor or any Subsidiary
77
of such Borrower or Guarantor, (v) any agreement relating to permitted
Indebtedness incurred by a Subsidiary of such Borrower or Guarantor prior to the
date on which such Subsidiary was acquired by such Borrower or such Guarantor
and outstanding on such acquisition date, and (vi) the extension or continuation
of contractual obligations in existence on the date hereof; provided, that, any
such encumbrances or restrictions contained in such extension or continuation
are no less favorable to Agent and Lenders than those encumbrances and
restrictions under or pursuant to the contractual obligations so extended or
continued.
9.17 FINANCIAL COVENANTS.
(a) EBITDA. Parent and its Subsidiaries shall not permit EBITDA of
Parent and its Subsidiaries, on a consolidated basis, for the four (4)
consecutive fiscal quarters ending on the last day of the fiscal quarter set
forth below to be less than the applicable amount set forth below:
Minimum
Fiscal Quarter End EBITDA
------------------ ------
March 31, 2004 $25,784,000
June 30, 2004 $25,879,000
September 30, 2004 $27,658,000
December 31, 2004 $30,202,000
March 31, 2005 $32,494,000
June 30, 2005 $35,473,000
September 30, 2005 $38,099,000
December 31, 2005 $39,734,000
March 31, 2006 $41,000,000
June 30, 2006 $42,500,000
September 30, 2006 $44,000,000
December 31, 2006 and each fiscal quarter $46,661,000
each fiscal quarter ending
thereafter
(b) FIXED CHARGE COVERAGE RATIO. Parent and its Subsidiaries shall not
permit the Fixed Charge Coverage Ratio for the applicable period set forth below
to be less than the amount set forth opposite such date:
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Minimum Fixed
Applicable Period Charge Coverage Ratio
----------------- ---------------------
For the 3 months ending 0.75 to 1
June 30, 2004
For the 6 months ending 0.90 to 1
September 30, 2004
For the 9 months ending 1 to 1
December 31, 2004
For the 12 months ending 1.1 to 1
March 31, 2005
For the 12 months ending 1.25 to 1
June 30, 2005
For the four (4) consecutive 1.50 to 1
fiscal quarters ending on
the last day of each fiscal
quarter thereafter
(c) MAXIMUM CAPITAL EXPENDITURES. Parent and its Subsidiaries shall
not, directly or indirectly, make or commit to make (whether through purchase,
capital lease or otherwise) Capital Expenditures in the applicable fiscal year
set forth below in excess of the amount corresponding to such fiscal year:
Fiscal Year Maximum Capex
----------- -------------
2004 $16,000,000
2005 $16,900,000
2006 $15,500,000
(d) LEVERAGE RATIO. Parent and its Subsidiaries shall not permit the
Leverage Ratio of the Parent and its Subsidiaries, on a consolidated basis, as
of the last day of the fiscal quarter set forth below to be greater than the
applicable ratio set forth below:
Fiscal Quarter End Maximum Leverage Ratio
------------------ ----------------------
June 30, 2004 4.30 to 1
September 30, 2004 4.20 to 1
December 31, 2004 3.73 to 1
March 31, 2005 3.70 to 1
June 30, 2005 3.41 to 1
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September 30, 2005 3.19 to 1
December 31, 2005 3.07 to 1
March 31, 2006 3.00 to 1
June 30, 2006 3.00 to 1
September 30, 2006 2.75 to 1
December 31, 2006 and 2.63 to 1
each fiscal quarterending
thereafter
9.18 EXCESS AVAILABILITY. Borrowers shall, at all times, maintain
Excess Availability of not less than $5,000,000.
9.19 LICENSE AGREEMENTS.
(a) Each Borrower and Guarantor shall (i) promptly and faithfully
observe and perform all of the material terms, covenants, conditions and
provisions of the material License Agreements to which it is a party to be
observed and performed by it, at the times set forth therein, if any, (ii) not
do, permit, suffer or refrain from doing anything that could reasonably be
expected to result in a default under or breach of any of the terms of any
material License Agreement, (iii) not cancel, surrender, modify, amend, waive or
release any material License Agreement in any material respect or any term,
provision or right of the licensee thereunder in any material respect, or
consent to or permit to occur any of the foregoing; EXCEPT, THAT, subject to
Section 9.19(b) below, such Borrower or Guarantor may cancel, surrender or
release any material License Agreement in the ordinary course of the business of
such Borrower or Guarantor; PROVIDED, THAT, such Borrower or Guarantor (as the
case may be) shall give Agent not less than thirty (30) days prior written
notice of its intention to so cancel, surrender and release any such material
License Agreement, (iv) give Agent prompt written notice of any material License
Agreement entered into by such Borrower or Guarantor after the date hereof,
together with a true, correct and complete copy thereof and such other
information with respect thereto as Agent may request, (v) give Agent prompt
written notice of any material breach of any obligation, or any default, by any
party under any material License Agreement, and deliver to Agent (promptly upon
the receipt thereof by such Borrower or Guarantor in the case of a notice to
such Borrower or Guarantor and concurrently with the sending thereof in the case
of a notice from such Borrower or Guarantor) a copy of each notice of default
and every other notice and other communication received or delivered by such
Borrower or Guarantor in connection with any material License Agreement which
relates to the right of such Borrower or Guarantor to continue to use the
property subject to such License Agreement, and (vi) furnish to Agent, promptly
upon the request of Agent, such information and evidence as Agent may reasonably
require from time to time concerning the observance, performance and compliance
by such Borrower or Guarantor or the other party or parties thereto with the
material terms, covenants or provisions of any material License Agreement.
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(b) Each Borrower and Guarantor will either exercise any option to
renew or extend the term of each material License Agreement to which it is a
party in such manner as will cause the term of such material License Agreement
to be effectively renewed or extended for the period provided by such option and
give prompt written notice thereof to Agent or give Agent prior written notice
that such Borrower or Guarantor does not intend to renew or extend the term of
any such material License Agreement or that the term thereof shall otherwise be
expiring, not less than sixty (60) days prior to the date of any such
non-renewal or expiration. In the event of the failure of such Borrower or
Guarantor to extend or renew any material License Agreement to which it is a
party, Agent shall have, and is hereby granted, the irrevocable right and
authority, at its option, to renew or extend the term of such material License
Agreement, whether in its own name and behalf, or in the name and behalf of a
designee or nominee of Agent or in the name and behalf of such Borrower or
Guarantor, as Agent shall determine at any time that an Event of Default shall
exist or have occurred and be continuing. Agent may, but shall not be required
to, perform any or all of such obligations of such Borrower or Guarantor under
any of the License Agreements, including, but not limited to, the payment of any
or all sums due from such Borrower or Guarantor thereunder. Any sums so paid by
Agent shall constitute part of the Obligations.
9.20 AFTER ACQUIRED REAL PROPERTY. If any Borrower or Guarantor
hereafter acquires any Real Property, fixtures or any other property that is of
the kind or nature described in the Mortgages and such Real Property, fixtures
or other property is adjacent to, contiguous with or necessary or related to or
used in connection with any Real Property then subject to a Mortgage, or if such
Real Property is not adjacent to, contiguous with or related to or used in
connection with such Real Property, then if such Real Property, fixtures or
other property at any location (or series of adjacent, contiguous or related
locations, and regardless of the number of parcels) has a fair market value in
an amount equal to or greater than $250,000 (or if a Default or Event of Default
exists, then regardless of the fair market value of such assets), without
limiting any other rights of Agent or any Lender, or duties or obligations of
any Borrower or Guarantor, promptly upon Agent's request, such Borrower or
Guarantor shall execute and deliver to Agent a mortgage, deed of trust or deed
to secure debt, as Agent may determine, in form and substance substantially
similar to the Mortgages and as to any provisions relating to specific state
laws satisfactory to Agent and in form appropriate for recording in the real
estate records of the jurisdiction in which such Real Property or other property
is located granting to Agent a first and only lien and mortgage on and security
interest in such Real Property, fixtures or other property (except as such
Borrower or Guarantor would otherwise be permitted to incur hereunder or under
the Mortgages or as otherwise consented to in writing by Agent) and such other
agreements, documents and instruments as Agent may require in connection
therewith.
9.21 ADDITIONAL GUARANTIES AND COLLATERAL SECURITY. Each Borrower
shall cause: (a)each Subsidiary of any Borrower not in existence on the date
hereof, to execute and deliver to Agent (or, if the Working Capital Loan
Termination Date has not occurred, Working Capital Agent) promptly and in any
event within 3 days after the formation, acquisition or change in status thereof
(i) a guaranty guaranteeing the Obligations, (ii) a security agreement, (iii) if
such Subsidiary has any Subsidiaries, a pledge agreement together with (x)
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certificates evidencing all of the Capital Stock of any Person owned by such
Subsidiary, (y) undated stock powers executed in blank with signature
guaranteed, and (z) such opinion of counsel and such approving certificate of
such Subsidiary as Agent may reasonably request in respect of complying with any
legend on any such certificate or any other matter relating to such shares, (iv)
one or more Mortgages creating on the Real Property of such Subsidiary a
perfected, first priority lien (subject to the prior lien of the Working Capital
Agent) on such Real Property, a title insurance policy covering such Real
Property, a current ALTA survey thereof and a surveyor's certificate, each in
form and substance reasonably satisfactory to Agent, together with such other
agreements, instruments and documents as the Agent may reasonably require, and
(v) such other agreements, instruments, approvals, legal opinions or other
documents reasonably requested by the Agent in order to create, perfect,
establish the first priority (subject to the prior lien of the Working Capital
Agent) of or otherwise protect any lien purported to be covered by any such
security agreement, pledge agreement or Mortgage or otherwise to effect the
intent that such Subsidiary shall become bound by all of the terms, covenants
and agreements contained in the Financing Agreements and that all property and
assets of such Subsidiary shall become Collateral for the Obligations; and
(b) each owner of the Capital Stock of any such Subsidiary to execute
and deliver to Agent (or, if the Working Capital Loan Termination Date has not
occurred, Working Capital Agent) promptly and in any event within 3 days after
the formation or acquisition of such Subsidiary a pledge agreement, together
with (i) certificates evidencing all of the Capital Stock of such Subsidiary,
(ii) undated stock powers or other appropriate instruments of assignment
executed in blank with signature guaranteed, (iii) such opinion of counsel and
such approving certificate of such Subsidiary as Agent may reasonably request in
respect of complying with any legend on any such certificate or any other matter
relating to such shares and (iv) such other agreements, instruments, approvals,
legal opinions or other documents reasonably requested by Agent.
9.22 APPLICATIONS UNDER INSOLVENCY STATUTES. Each Borrower and
Guarantor acknowledges that its business and financial relationships with Agent
and Lenders are unique from its relationship with any other of its creditors,
and agrees that it shall not file any plan of arrangement under the Companies'
Creditors Arrangement Act (Canada) or make any proposal under the Bankruptcy and
Insolvency Act (Canada) which provides for, or would permit directly or
indirectly, Agent or any Lender to be classified with any other creditor as an
"affected creditor" for purposes of such plan or proposal or otherwise.
9.23 COSTS AND EXPENSES. Borrowers and Guarantors shall pay to Agent
on demand all costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery, recording,
syndication, administration, collection, liquidation, enforcement and defense of
the Obligations, Agent's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code or PPSA financing statement filing taxes and fees,
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documentary taxes, intangibles taxes and mortgage recording taxes and fees, if
applicable); (b) costs and expenses and fees for insurance premiums,
environmental audits, title insurance premiums, surveys, assessments,
engineering reports and inspections, appraisal fees and search fees, costs and
expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
Agent's customary charges and fees with respect thereto; (c) costs and expenses
of preserving and protecting the Collateral; (d) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Agent, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Agent or any Lender arising out of the transactions contemplated hereby and
thereby (including preparations for and consultations concerning any such
matters); (e) all out-of-pocket expenses and costs heretofore and from time to
time hereafter incurred by Agent during the course of periodic field
examinations of the Collateral and such Borrower's or Guarantor's operations,
plus a per diem charge at Agent's then standard rate for Agent's examiners in
the field and office (which rate as of the date hereof is $850 per person per
day); (f) any VAT incurred by Agent or any Lender and (g) the fees and
disbursements of counsel (including legal assistants) to Agent in connection
with any of the foregoing.
9.24 FURTHER ASSURANCES. At the request of Agent at any time and from
time to time, Borrowers and Guarantors shall, at their expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 EVENTS OF DEFAULT. The occurrence or existence of any one or more
of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) any Borrower fails to pay any of the Obligations when due or
(ii) any Borrower or Obligor fails to perform any of the covenants contained in
Sections 9.3, 9.4, 9.13, 9.14, 9.15, and 9.16 of this Agreement and such failure
shall continue for ten (10) days; PROVIDED, THAT, such ten (10) day period shall
not apply in the case of: (A) any failure to observe any such covenant which is
not capable of being cured at all or within such ten (10) day period or which
has been the subject of a prior failure within a six (6) month period or (B) an
intentional breach by any Borrower or Obligor of any such covenant or (iii) any
Borrower or Obligor fails to perform any of the terms, covenants, conditions or
provisions contained in this Agreement or any of the other Financing Agreements
other than those described in Sections 10.1(a)(i) and 10.1(a)(ii) above;
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(b) any representation, warranty or statement of fact made by any
Borrower or Guarantor to Agent in this Agreement, the other Financing Agreements
or any other written agreement, schedule, confirmatory assignment or otherwise
shall when made or deemed made be false or misleading in any material respect;
(c) any Obligor revokes or terminates or purports to revoke or
terminate or fails to perform any of the terms, covenants, conditions or
provisions of any guarantee, endorsement or other agreement of such party in
favor of Agent or any Lender;
(d) any judgment for the payment of money is rendered against any
Borrower or Obligor in excess of $500,000 in any one case or in excess of
$500,000 in the aggregate (to the extent not covered by insurance where the
insurer has assumed responsibility in writing for such judgment) and shall
remain undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against any Borrower or Obligor or any of the Collateral
having a value in excess of $500,000;
(e) any Obligor (being a natural person or a general partner of an
Obligor which is a partnership) dies or any Borrower or Obligor, which is a
partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business;
(f) any Borrower or Obligor makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors in connection with a moratorium or adjustment
of the Indebtedness due to them;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or a petition, case, application or
proceeding under any bankruptcy or insolvency laws of Canada (including the
Bankruptcy and Insolvency Act (Canada) and the Companies' Creditors Arrangement
Act (Canada)) or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in equity) is filed
against any Borrower or Obligor or all or any part of its properties and such
petition, case, application or proceeding is not dismissed within thirty (30)
days after the date of its filing or any Borrower or Obligor shall file any
answer admitting or not contesting such petition, case, application or
proceeding or indicates its consent to, acquiescence in or approval of, any such
action or proceeding or the relief requested is granted sooner;
(h) (i) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower or Obligor or for all or any part of its
property or (ii) a petition, case, application or proceeding under any
bankruptcy or insolvency laws of Canada (including the Bankruptcy and Insolvency
Act (Canada) and the Companies' Creditors Arrangement Act (Canada)), or any
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similar law now or hereafter in effect in any jurisdiction or under any
insolvency, arrangement, reorganization, moratorium, administration,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed, taken or commenced after the date hereof by any Borrower or Obligor or
for all or any part of its property, including, without limitation, if any
Borrower or Obligor shall: (A) apply for, request or consent to the appointment
of a receiver, administrative receiver, receiver and manager, examiner, judicial
custodian, trustee, liquidator, official manager, administrator, controller or
any other similar official of it or of all or a substantial part of its property
and assets, (B) be generally unable, or admit in writing its inability, to pay
its debts as they become due, (C) make a general assignment for the benefit of
creditors, (D) file a voluntary petition or assignment in bankruptcy or a
proposal seeking a reorganization, compromise, moratorium or arrangement with
its creditors, (E) take advantage of any insolvency or other similar law
pertaining to arrangements, moratoriums, compromises or reorganizations, or
admit the material allegations of a petition or application filed in respect of
it in any bankruptcy, reorganization or insolvency proceeding, or (F) take any
corporate action for the purpose of effecting any of the foregoing;
(i) any default in respect of the Working Capital Debt, which default
continues for more than the applicable cure period, if any, with respect
thereto, any default in respect of any other Indebtedness of any Borrower or
Obligor (other than Indebtedness owing to Agent and Lenders hereunder), in any
case in an amount in excess of $500,000, which default continues for more than
the applicable cure period, if any, with respect thereto or any default by any
Borrower or Obligor under any Material Contract, which default continues for
more than the applicable cure period, if any, with respect thereto and/or is not
waived in writing by the other parties thereto;
(j) any material provision hereof or of any of the other Financing
Agreements shall for any reason cease to be valid, binding and enforceable with
respect to any party hereto or thereto (other than Agent) in accordance with its
terms, or any such party shall challenge the enforceability hereof or thereof,
or shall assert in writing, or take any action or fail to take any action based
on the assertion that any provision hereof or of any of the other Financing
Agreements has ceased to be or is otherwise not valid, binding or enforceable in
accordance with its terms, or any security interest provided for herein or in
any of the other Financing Agreements shall cease to be a valid and perfected
first priority security interest in any of the Collateral purported to be
subject thereto (except as otherwise permitted herein or therein);
(k) an ERISA Event shall occur which results in or could reasonably be
expected to result in liability of any Borrower in an aggregate amount in excess
of $500,000;
(l) any Change of Control;
(m) the indictment by any Governmental Authority, or as Agent may
reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of any Borrower or Obligor of which any Borrower, Obligor
or Agent receives notice, in either case, as to which there is a reasonable
85
possibility of an adverse determination, in the good faith determination of
Agent, under any criminal statute, or commencement or threatened commencement of
criminal or civil proceedings against such Borrower or Obligor, pursuant to
which statute or proceedings the penalties or remedies sought or available
include forfeiture of (i) any of the Collateral having a value in excess of
$500,000 or (ii) any other property of any Borrower or Guarantor which is
necessary or material to the conduct of its business;
(n) there shall have occurred any event, circumstance or condition
which has had a Material Adverse Effect;
(o) a requirement from the Minister of National Revenue for payment
pursuant to Section 224 or any successor section of the Income Tax Act (Canada)
or Section 317, or any successor section in respect of any Borrower or Obligor
of the Excise Tax Act (Canada) or any comparable provision of similar
legislation shall have been received by Agent or any Lender or any other Person
in respect of any Borrower or Obligor or otherwise issued in respect of any
Borrower or Obligor involving an amount in excess of the US Dollar Equivalent of
$500,000; or
(p) there shall be an event of default under any of the other
Financing Agreements.
10.2 REMEDIES.
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC, the PPSA and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by any Borrower or Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC, the PPSA or other applicable law, are
cumulative, not exclusive and enforceable, in Agent's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall include,
without limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Borrower or Obligor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, and at the direction of the Required Lenders shall, at any
time or times, proceed directly against any Borrower or Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the generality of the foregoing, at any time an
Event of Default exists or has occurred and is continuing, Agent may, at its
option and shall upon the direction of the Required Lenders, (i) upon notice to
Administrative Borrower, accelerate the payment of all Obligations and demand
immediate payment thereof to Agent for itself and the benefit of Lenders
(provided, that, upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable), and (ii) terminate this Agreement (provided, that,
upon the occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h), all obligations of the Agent or a Lender hereunder shall automatically
terminate).
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(c) Without limiting the foregoing, and subject to the terms of the
Intercreditor Agreement, at any time an Event of Default exists or has occurred
and is continuing, Agent may, in its discretion (i) with or without judicial
process or the aid or assistance of others, enter upon any premises on or in
which any of the Collateral may be located and take possession of the Collateral
or complete processing, manufacturing and repair of all or any portion of the
Collateral, (ii) require any Borrower or Obligor, at Borrowers' expense, to
assemble and make available to Agent any part or all of the Collateral at any
place and time designated by Agent, (iii) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (iv) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (v) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including entering into contracts
with respect thereto, public or private sales at any exchange, broker's board,
at any office of Agent or elsewhere) at such prices or terms as Agent may deem
reasonable, for cash, upon credit or for future delivery, with the Agent having
the right to purchase the whole or any part of the Collateral at any such public
sale, all of the foregoing being free from any right or equity of redemption of
any Borrower or Obligor, which right or equity of redemption is hereby expressly
waived and released by Borrowers and Obligors and/or (vi) terminate this
Agreement. If any of the Collateral is sold or leased by Agent upon credit terms
or for future delivery, the Obligations shall not be reduced as a result thereof
until payment therefor is finally collected by Agent. If notice of disposition
of Collateral is required by law, ten (10) days prior notice by Agent to
Administrative Borrower designating the time and place of any public sale or the
time after which any private sale or other intended disposition of Collateral is
to be made, shall be deemed to be reasonable notice thereof and Borrowers and
Obligors waive any other notice. In the event Agent institutes an action to
recover any Collateral or seeks recovery of any Collateral by way of prejudgment
remedy, each Borrower and Obligor waives the posting of any bond which might
otherwise be required.
(d) Subject to the terms of the Intercreditor Agreement, at any time
or times that an Event of Default exists or has occurred and is continuing,
Agent may, in its discretion, enforce the rights of any Borrower or Obligor
against any account debtor, secondary obligor or other obligor in respect of any
of the Accounts or other Receivables. Without limiting the generality of the
foregoing and subject to the terms of the Intercreditor Agreement, Agent may, in
its discretion, at such time or times (i) notify any or all account debtors,
secondary obligors or other obligors in respect thereof that the Receivables
have been assigned to Agent and that Agent has a security interest therein and
Agent may direct any or all accounts debtors, secondary obligors and other
obligors to make payment of Receivables directly to Agent, (ii) extend the time
of payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any and all
Receivables or other obligations included in the Collateral and thereby
discharge or release the account debtor or any secondary obligors or other
obligors in respect thereof without affecting any of the Obligations, (iii)
demand, collect or enforce payment of any Receivables or such other obligations,
but without any duty to do so, and Agent and Lenders shall not be liable for any
failure to collect or enforce the payment thereof nor for the negligence of its
agents or attorneys with respect thereto and (iv) take whatever other action
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Agent may deem necessary or desirable for the protection of its interests and
the interests of Lenders. At any time that an Event of Default exists or has
occurred and is continuing, at Agent's request and subject to the terms of the
Intercreditor Agreement, all invoices and statements sent to any account debtor
shall state that the Accounts and such other obligations have been assigned to
Agent and are payable directly and only to Agent and Borrowers and Obligors
shall deliver to Agent such originals of documents evidencing the sale and
delivery of goods or the performance of services giving rise to any Accounts as
Agent may require. In the event any account debtor returns Inventory when an
Event of Default exists or has occurred and is continuing, Borrowers shall, upon
Agent's request and subject to the terms of the Intercreditor Agreement, hold
the returned Inventory in trust for Agent, segregate all returned Inventory from
all of its other property, dispose of the returned Inventory solely according to
Agent's instructions, and not issue any credits, discounts or allowances with
respect thereto without Agent's prior written consent.
(e) To the extent that applicable law imposes duties on Agent or any
Lender to exercise remedies in a commercially reasonable manner (which duties
cannot be waived under such law), each Borrower and Guarantor acknowledges and
agrees that it is not commercially unreasonable for Agent or any Lender (i) to
fail to incur expenses reasonably deemed significant by Agent or any Lender to
prepare Collateral for disposition or otherwise to complete raw material or work
in process into finished goods or other finished products for disposition, (ii)
to fail to obtain third party consents for access to Collateral to be disposed
of, or to obtain or, if not required by other law, to fail to obtain consents of
any Governmental Authority or other third party for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against account debtors, secondary obligors or
other persons obligated on Collateral or to remove liens or encumbrances on or
any adverse claims against Collateral, (iv) to exercise collection remedies
against account debtors and other persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other persons, whether or not in the same business as any Borrower or
Guarantor, for expressions of interest in acquiring all or any portion of the
Collateral, (vii) to hire one or more professional auctioneers to assist in the
disposition of Collateral, whether or not the collateral is of a specialized
nature, (viii) to dispose of Collateral by utilizing Internet sites that provide
for the auction of assets of the types included in the Collateral or that have
the reasonable capability of doing so, or that match buyers and sellers of
assets, (ix) to dispose of assets in wholesale rather than retail markets, (x)
to disclaim disposition warranties, (xi) to purchase insurance or credit
enhancements to insure Agent or Lenders against risks of loss, collection or
disposition of Collateral or to provide to Agent or Lenders a guaranteed return
from the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist Agent in the collection
or disposition of any of the Collateral. Each Borrower and Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Agent or any Lender would not be
commercially unreasonable in the exercise by Agent or any Lender of remedies
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against the Collateral and that other actions or omissions by Agent or any
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing
contained in this Section shall be construed to grant any rights to any Borrower
or Guarantor or to impose any duties on Agent or Lenders that would not have
been granted or imposed by this Agreement or by applicable law in the absence of
this Section.
(f) For the purpose of enabling Agent to exercise the rights and
remedies hereunder, each Borrower and Obligor hereby grants to Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable at any
time an Event of Default shall exist or have occurred and for so long as the
same is continuing) without payment of royalty or other compensation to any
Borrower or Obligor, to use, assign, license or sublicense any of the
trademarks, service-marks, trade names, business names, trade styles, designs,
logos and other source of business identifiers and other Intellectual Property
and general intangibles now owned or hereafter acquired by any Borrower or
Obligor, wherever the same maybe located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer programs used for the compilation or printout thereof.
(g) Subject to the terms of the Intercreditor Agreement, at any time
an Event of Default exists or has occurred and is continuing, Agent may apply
the cash proceeds of Collateral actually received by Agent from any sale, lease,
foreclosure or other disposition of the Collateral to payment of the
Obligations, in whole or in part and in accordance with the terms hereof,
whether or not then due or may hold such proceeds as cash collateral for the
Obligations. Borrowers and Guarantors shall remain liable to Agent and Lenders
for the payment of any deficiency with interest at the highest rate provided for
herein and all costs and expenses of collection or enforcement, including
attorneys' fees and expenses.
(h) Without limiting the foregoing, at any time that an Event of
Default shall exist or have occurred and be continuing, Agent may appoint or
reappoint by instrument in writing, any person or persons, whether an officer or
officers or any employee or employees of Agent or not, to be a receiver or
receivers (hereinafter called a "Receiver", which term when used herein shall
include a receiver and manager) of any Collateral of any Borrower or Guarantor
(including any interest, income or profits therefrom) and may remove any
Receiver so appointed and appoint another in his/her stead. Any such Receiver
shall, so far as concerns responsibility for his/her acts, be deemed the agent
of the applicable Borrower or Guarantor and not Agent, and Agent shall not be in
any way responsible for any misconduct, negligence or non-feasance on the part
of any such Receiver, his/her servants, agents or employees. Subject to the
provisions of the instrument appointing him/her, any such Receiver shall have
power to take possession of Collateral, to preserve Collateral or its value, to
carry on or concur in carrying on all or any part of the business of the
applicable Borrower or Guarantor and to sell, lease, license or otherwise
dispose of or concur in selling, leasing, licensing or otherwise disposing of
Collateral. To facilitate the foregoing powers, any such Receiver may, to the
exclusion of all others, including the Agent, enter upon, use and occupy all
premises owned or occupied by the applicable Borrower or Guarantor wherein
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Collateral may be located, maintain Collateral upon such premises, borrow money
on a secured or unsecured basis and use Collateral directly in carrying on the
applicable Borrower's or Guarantor's business or as security for loans or
advances to enable the Receiver to carry on the applicable Borrower's or
Guarantor's business or otherwise, as such Receiver shall, in its discretion,
determine. Except as may be otherwise directed by Agent, all proceeds of
Collateral received from time to time by such Receiver in carrying out his/her
appointment shall be received in trust for and paid over to Agent. Every such
Receiver may, in the discretion of the Agent be vested with all or any of the
rights and powers of the Agent. Agent may, either directly or through its agents
or nominees, exercise any or all powers and rights given to a Receiver by virtue
of the foregoing provisions of this paragraph.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING
LAW
11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL
WAIVER.
(a) The validity, interpretation and enforcement of this Agreement and
the other Financing Agreements (except as otherwise provided therein) and any
dispute arising out of the relationship between the parties hereto, whether in
contract, tort, equity or otherwise, shall be governed by the internal laws of
the State of New York but excluding any principles of conflicts of law or other
rule of law that would cause the application of the law of any jurisdiction
other than the laws of the State of New York.
(b) Borrowers, Guarantors, Agent and Lenders irrevocably consent and
submit to the non-exclusive jurisdiction of the Supreme Court of the State of
New York and the United States District Court for the Southern District of New
York, and, in addition, H&H Canada irrevocably consents and submits to the
non-exclusive jurisdiction of the Ontario Superior Court of Justice, in each
case, whichever Agent may elect, and waive any objection based on venue or forum
non conveniens with respect to any action instituted therein arising under this
Agreement or any of the other Financing Agreements or in any way connected with
or related or incidental to the dealings of the parties hereto in respect of
this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Agent and Lenders shall have the right to bring any
action or proceeding against any Borrower or Guarantor or its or their property
in the courts of any other jurisdiction which Agent deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against any Borrower or Guarantor or its or their property).
(c) Each Borrower and Guarantor hereby waives personal service of any
and all process upon it and consents that all such service of process may be
made by certified mail (return receipt requested) directed to its address set
forth herein and service so made shall be deemed to be completed five (5) days
after the same shall have been so deposited in the U.S. mails, or, at Agent's
option, by service upon any Borrower or Guarantor (or Administrative Borrower on
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behalf of such Borrower or Guarantor) in any other manner provided under the
rules of any such courts. Within thirty (30) days after such service, such
Borrower or Guarantor shall appear in answer to such process, failing which such
Borrower or Guarantor shall be deemed in default and judgment may be entered by
Agent against such Borrower or Guarantor for the amount of the claim and other
relief requested.
(d) BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT ANY BORROWER, ANY GUARANTOR, AGENT OR ANY LENDER
MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
(e) Agent and Lenders shall not have any liability to any Borrower or
Guarantor (whether in tort, contract, equity or otherwise) for losses suffered
by such Borrower or Guarantor in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Agreement, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
Agent and such Lender, that the losses were the result of acts or omissions
constituting gross negligence or willful misconduct. In any such litigation,
Agent and Lenders shall be entitled to the benefit of the rebuttable presumption
that it acted in good faith and with the exercise of ordinary care in the
performance by it of the terms of this Agreement. Each Borrower and Guarantor:
(i) certifies that neither Agent, any Lender nor any representative, agent or
attorney acting for or on behalf of Agent or any Lender has represented,
expressly or otherwise, that Agent and Lenders would not, in the event of
litigation, seek to enforce any of the waivers provided for in this Agreement or
any of the other Financing Agreements and (ii) acknowledges that in entering
into this Agreement and the other Financing Agreements, Agent and Lenders are
relying upon, among other things, the waivers and certifications set forth in
this Section 11.1 and elsewhere herein and therein.
11.2 WAIVER OF NOTICES. Each Borrower and Guarantor hereby expressly
waives demand, presentment, protest and notice of protest and notice of dishonor
with respect to any and all instruments and chattel paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
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Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on any Borrower or Guarantor which
Agent or any Lender may elect to give shall entitle such Borrower or Guarantor
to any other or further notice or demand in the same, similar or other
circumstances.
11.3 AMENDMENTS AND WAIVERS.
(a) Neither this Agreement nor any other Financing Agreement nor any
terms hereof or thereof may be amended, waived, discharged or terminated unless
such amendment, waiver, discharge or termination is in writing signed by Agent
and the Required Lenders or at Agent's option, by Agent with the authorization
of the Required Lenders, and as to amendments to any of the Financing Agreements
(other than with respect to any provision of Section 12 hereof), by any
Borrower; except, that, no such amendment, waiver, discharge or termination
shall:
(i) reduce the interest rate or any fees or extend the time of
payment of principal, interest or any fees or reduce the principal amount of the
Loan, in each case without the consent of each Lender directly affected thereby,
(ii) release any Collateral (except as expressly required
hereunder or under any of the other Financing Agreements or applicable law and
except as permitted under Section 12.11(b) hereof), without the consent of Agent
and all Lenders,
(iii) reduce any percentage specified in the definition of
Required Lenders, without the consent of Agent and all of Lenders,
(iv) consent to the assignment or transfer by any Borrower or
Guarantor of any of their rights and obligations under this Agreement, without
the consent of Agent and all of Lenders, or
(v) amend, modify or waive any terms of this Section 11.3 hereof,
without the consent of Agent and all of Lenders.
(b) Agent and Lenders shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its or their
rights, powers and/or remedies unless such waiver shall be in writing and signed
as provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent or any Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in Section
11.3(a) above, in connection with any amendment, waiver, discharge or
termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a "Non-Consenting Lender"), but the consent of any other
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Lenders to such amendment, waiver, discharge or termination that is required are
obtained, if any, then Ableco shall have the right, but not the obligation, at
any time thereafter, and upon the exercise by Ableco of such right, such
Non-Consenting Lender shall have the obligation, to sell, assign and transfer to
Ableco or such Eligible Transferee as Ableco may specify, such Non-Consenting
Lender's portion of the Loan and all rights and interests of such Non-Consenting
Lender pursuant thereto. Ableco shall provide the Non-Consenting Lender with
prior written notice of its intent to exercise its right under this Section,
which notice shall specify on date on which such purchase and sale shall occur.
Such purchase and sale shall be pursuant to the terms of an Assignment and
Acceptance (whether or not executed by the Non-Consenting Lender), except that
on the date of such purchase and sale, Ableco, or such Eligible Transferee
specified by Ableco, shall pay to the Non-Consenting Lender (except as Ableco
and such Non-Consenting Lender may otherwise agree) the amount equal to: (i) the
principal balance of the Loan held by the Non-Consenting Lender outstanding as
of the close of business on the business day immediately preceding the effective
date of such purchase and sale, plus (ii) amounts accrued and unpaid in respect
of interest and fees payable to the Non-Consenting Lender to the effective date
of the purchase (but in no event shall the Non-Consenting Lender be deemed
entitled to any early termination fee), minus (iii) the amount of the closing
fee received by the Non-Consenting Lender pursuant to the terms hereof or of any
of the other Financing Agreements multiplied by the fraction, the numerator of
which is the number of months remaining in the then current term of the Credit
Facility and the denominator of which is the number of months in the then
current term thereof. Such purchase and sale shall be effective on the date of
the payment of such amount to the Non-Consenting Lender.
(d) The consent of Agent shall be required for any amendment, waiver
or consent affecting the rights or duties of Agent hereunder or under any of the
other Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section.
11.4 WAIVER OF COUNTERCLAIMS. Each Borrower and Guarantor waives all
rights to interpose any claims, deductions, setoffs or counterclaims of any
nature (other then compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.
11.5 INDEMNIFICATION. Each Borrower and Guarantor shall, jointly and
severally, indemnify and hold Agent and each Lender, and its officers,
directors, agents, employees, advisors and counsel and their respective
Affiliates (each such person being an "Indemnitee"), harmless from and against
any and all losses, claims, damages, liabilities, costs or expenses (including
attorneys' fees and expenses) imposed on, incurred by or asserted against any of
them in connection with any litigation, investigation, claim or proceeding
commenced or threatened related to the negotiation, preparation, execution,
delivery, enforcement, performance or administration of this Agreement, any
other Financing Agreements, or any undertaking or proceeding related to any of
the transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including amounts paid in settlement, court costs,
and the fees and expenses of counsel except that Borrowers and Guarantors shall
not have any obligation under this Section 11.5 to indemnify an Indemnitee with
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respect to a matter covered hereby resulting from the gross negligence or wilful
misconduct of such Indemnitee as determined pursuant to a final, non-appealable
order of a court of competent jurisdiction (but without limiting the obligations
of Borrowers or Guarantors as to any other Indemnitee). To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section may be
unenforceable because it violates any law or public policy, Borrowers and
Guarantors shall pay the maximum portion which it is permitted to pay under
applicable law to Agent and Lenders in satisfaction of indemnified matters under
this Section. To the extent permitted by applicable law, no Borrower or
Guarantor shall assert, and each Borrower and Guarantor hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any of
the other Financing Agreements or any undertaking or transaction contemplated
hereby. All amounts due under this Section shall be payable upon demand. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
11.6 CURRENCY INDEMNITY. If, for the purposes of obtaining judgment in
any court in any jurisdiction with respect to this Agreement or any of the other
Financing Agreements, it becomes necessary to convert into the currency of such
jurisdiction (the "Judgment Currency") any amount due under this Agreement or
under any of the other Financing Agreements in any currency other than the
Judgment Currency (the "Currency Due"), then conversion shall be made at the
Exchange Rate at which Agent is able, on the relevant date, to purchase the
Currency Due with the Judgment Currency prevailing on the Business Day before
the day on which judgment is given. In the event that there is a change in the
rate of Exchange Rate prevailing between the Business Day before the day on
which the judgment is given and the date of receipt by Agent of the amount due,
Borrowers will, on the date of receipt by Agent, pay such additional amounts, if
any, or be entitled to receive reimbursement of such amount, if any, as may be
necessary to ensure that the amount received by Agent on such date is the amount
in the Judgment Currency which when converted at the rate of exchange prevailing
on the date of receipt by Agent is the amount then due under this Agreement or
such other of the Financing Agreements in the Currency Due. If the amount of the
Currency Due which Agent is able to purchase is less than the amount of the
Currency Due originally due to it, Borrowers shall indemnify and save Agent
harmless from and against loss or damage arising as a result of such deficiency.
The indemnity contained herein shall constitute an obligation separate and
independent from the other obligations contained in this Agreement and the other
Financing Agreements, shall give rise to a separate and independent cause of
action, shall apply irrespective of any indulgence granted by Agent from time to
time and shall continue in full force and effect notwithstanding any judgment or
order for a liquidated sum in respect of an amount due under this Agreement or
any of the other Financing Agreements or under any judgment or order.
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SECTION 12. THE AGENT
12.1 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender irrevocably
designates, appoints and authorizes Ableco to act as Agent hereunder and under
the other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto. Agent (a)
shall have no duties or responsibilities except those expressly set forth in
this Agreement and in the other Financing Agreements, and shall not by reason of
this Agreement or any other Financing Agreement be a trustee or fiduciary for
any Lender; (b) shall not be responsible to Lenders for any recitals,
statements, representations or warranties contained in this Agreement or in any
of the other Financing Agreements, or in any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or any other Financing Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Financing Agreement or any other document referred to or provided for herein or
therein or for any failure by any Borrower or any Obligor or any other Person to
perform any of its obligations hereunder or thereunder; and (c) shall not be
responsible to Lenders for any action taken or omitted to be taken by it
hereunder or under any other Financing Agreement or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful misconduct
as determined by a final non-appealable judgment of a court of competent
jurisdiction. Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. Agent may deem and treat the
payee of any note as the holder thereof for all purposes hereof unless and until
the assignment thereof pursuant to an agreement (if and to the extent permitted
herein) in form and substance satisfactory to Agent shall have been delivered to
and acknowledged by Agent.
12.2 RELIANCE BY AGENT. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not expressly
provided for by this Agreement or any other Financing Agreement, Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Lenders or
all of Lenders as is required in such circumstance, and such instructions of
such Agents and any action taken or failure to act pursuant thereto shall be
binding on all Lenders.
12.3 EVENTS OF DEFAULT.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or an Event of Default or other failure of a condition
precedent to the Loan hereunder, unless and until Agent has received written
notice from a Lender, or a Borrower specifying such Event of Default or any
unfulfilled condition precedent, and stating that such notice is a "Notice of
Default or Failure of Condition". In the event that Agent receives such a Notice
of Default or Failure of Condition, Agent shall give prompt notice thereof to
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the Lenders. Agent shall (subject to Section 12.7) take such action with respect
to any such Event of Default or failure of condition precedent as shall be
directed by the Required Lenders to the extent provided for herein; provided,
that, unless and until Agent shall have received such directions, Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to or by reason of such Event of Default or failure of condition
precedent, as it shall deem advisable in the best interest of Lenders.
(b) Except with the prior written consent of Agent, no Lender may
assert or exercise any enforcement right or remedy in respect of the Loan or
other Obligations, as against any Borrower or Obligor or any of the Collateral
or other property of any Borrower or Obligor.
12.4 ABLECO IN ITS INDIVIDUAL CAPACITY. With respect to its Commitment
and portion of the Loan made by it (and any successor acting as Agent), so long
as Ableco shall be a Lender hereunder, it shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include Ableco in its individual capacity as Lender
hereunder. Ableco (and any successor acting as Agent) and its Affiliates may
(without having to account therefor to any Lender) lend money to, make
investments in and generally engage in any kind of business with Borrowers (and
any of its Subsidiaries or Affiliates) as if it were not acting as Agent, and
Ableco and its Affiliates may accept fees and other consideration from any
Borrower or Guarantor and any of its Subsidiaries and Affiliates for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders.
12.5 INDEMNIFICATION. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrowers hereunder and without limiting any obligations of
Borrowers hereunder) ratably, in accordance with their Pro Rata Shares, for any
and all claims of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out of
this Agreement or any other Financing Agreement or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
12.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees that
it has, independently and without reliance on Agent or other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of Borrowers and Obligors and has made its own decision to enter
into this Agreement and that it will, independently and without reliance upon
Agent or any other Lender, and based on such documents and information as it
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shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Financing Agreements. Agent shall not be required to keep itself informed
as to the performance or observance by any Borrower or Obligor of any term or
provision of this Agreement or any of the other Financing Agreements or any
other document referred to or provided for herein or therein or to inspect the
properties or books of any Borrower or Obligor. Agent will use reasonable
efforts to provide Lenders with any information received by Agent from any
Borrower or Obligor which is required to be provided to Lenders or deemed to be
requested by Lenders hereunder and with a copy of any Notice of Default or
Failure of Condition received by Agent from any Borrower or any Lender;
provided, that, Agent shall not be liable to any Lender for any failure to do
so, except to the extent that such failure is attributable to Agent's own gross
negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Except for notices, reports and
other documents expressly required to be furnished to Lenders by Agent or deemed
requested by Lenders hereunder, Agent shall not have any duty or responsibility
to provide any Lender with any other credit or other information concerning the
affairs, financial condition or business of any Borrower or Obligor that may
come into the possession of Agent.
12.7 FAILURE TO ACT. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
12.8 [INTENTIONALLY OMITTED].
12.9 CONCERNING THE COLLATERAL AND THE RELATED FINANCING AGREEMENTS.
Each Lender authorizes and directs Agent to enter into this Agreement and the
other Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
12.10 FIELD AUDIT, EXAMINATION REPORTS AND OTHER INFORMATION;
DISCLAIMER BY LENDERS. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report and report with respect to the Borrowing Base prepared or received by
Agent (each field audit or examination report and report with respect to the
Borrowing Base being referred to herein as a "Report" and collectively,
"Reports"), appraisals with respect to the Collateral and financial statements
with respect to Parent and its Subsidiaries received by Agent;
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(b) expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report, appraisal or
financial statement or (ii) shall not be liable for any information contained in
any Report, appraisal or financial statement;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding
Borrowers and Guarantors and will rely significantly upon Borrowers' and
Guarantors' books and records, as well as on representations of Borrowers' and
Guarantors' personnel; and
(d) agrees to keep all Reports confidential and strictly for its
internal use in accordance with the terms of Section 13.5 hereof, and not to
distribute or use any Report in any other manner.
12.11 COLLATERAL MATTERS.
(a) Agent may, at its option, from time to time, at any time on or
after an Event of Default and for so long as the same is continuing or upon any
other failure of a condition precedent to the Loan hereunder, make such
disbursements and advances ("Special Agent Advances") which Agent, in its sole
discretion, (i) deems necessary or desirable either to preserve or protect the
Collateral or any portion thereof or (ii) to enhance the likelihood or maximize
the amount of repayment by Borrowers and Guarantors of the Loan and other
Obligations, provided, that, the aggregate principal amount of the Special Agent
Advances pursuant to this clause (ii) shall not exceed the aggregate amount of
ten (10%) percent of the Maximum Credit or (iii) to pay any other amount
chargeable to any Borrower or Guarantor pursuant to the terms of this Agreement
or any of the other Financing Agreements consisting of costs, fees and expenses.
Special Agent Advances shall be repayable on demand and together with all
interest thereon shall constitute Obligations secured by the Collateral. Special
Agent Advances shall not constitute a portion of the Loan but shall otherwise
constitute Obligations hereunder. Interest on Special Agent Advances shall be
payable at the Interest Rate then applicable to the Loan and shall be payable on
demand. Each Lender agrees that it shall make available to Agent, upon Agent's
demand, in immediately available funds, the amount equal to such Lender's Pro
Rata Share of each such Special Agent Advance. If such funds are not made
available to Agent by such Lender, Agent shall be entitled to recover such
funds, on demand from such Lender together with interest thereon for each day
from the date such payment was due until the date such amount is paid to Agent
at the Federal Funds Rate for each day during such period (as published by the
Federal Reserve Bank of New York or at Agent's option based on the arithmetic
mean determined by Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by
each of the three leading brokers of Federal funds transactions in New York City
selected by Agent) and if such amounts are not paid within three (3) days of
Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof
applicable to the Loan.
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(b) Lenders hereby irrevocably authorize Agent, at its option and in
its discretion to release any security interest in, mortgage or lien upon, any
of the Collateral (i) upon payment and satisfaction of all of the Obligations
and delivery of cash collateral to the extent required under Section 13.1 below,
or (ii) constituting property being sold or disposed of if Administrative
Borrower or any Borrower or Guarantor certifies to Agent that the sale or
disposition is made in compliance with Section 9.7 hereof (and Agent may rely
conclusively on any such certificate, without further inquiry), or (iii)
constituting property in which any Borrower or Guarantor did not own an interest
at the time the security interest, mortgage or lien was granted or at any time
thereafter, or (iv) having a value in the aggregate in any twelve (12) month
period of less than $1,000,000, and to the extent Agent may release its security
interest in and lien upon any such Collateral pursuant to the sale or other
disposition thereof, such sale or other disposition shall be deemed consented to
by Lenders, or (v) if required or permitted under the terms of any of the other
Financing Agreements, including any intercreditor agreement, or (vi) approved,
authorized or ratified in writing by all of Lenders. Except as provided above,
Agent will not release any security interest in, mortgage or lien upon, any of
the Collateral without the prior written authorization of all of Lenders. Upon
request by Agent at any time, Lenders will promptly confirm in writing Agent's
authority to release particular types or items of Collateral pursuant to this
Section.
(c) Without any manner limiting Agent's authority to act without any
specific or further authorization or consent by the Required Lenders, each
Lender agrees to confirm in writing, upon request by Agent, the authority to
release Collateral conferred upon Agent under this Section. Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest, mortgage or liens
granted to Agent upon any Collateral to the extent set forth above; provided,
that, (i) Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligations or entail any consequence other than the release of such security
interest, mortgage or liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
security interest, mortgage or lien upon (or obligations of any Borrower or
Guarantor in respect of) the Collateral retained by such Borrower or Guarantor.
(d) Agent shall have no obligation whatsoever to any Lender or any
other Person to investigate, confirm or assure that the Collateral exists or is
owned by any Borrower or Guarantor or is cared for, protected or insured or has
been encumbered, or that the liens and security interests granted to Agent
pursuant hereto or any of the Financing Agreements or otherwise have been
properly or sufficiently or lawfully created, perfected, protected or enforced
or are entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this Agreement or in any of the other Financing
Agreements, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, subject to the other terms and
conditions contained herein, Agent may act in any manner it may deem
appropriate, in its discretion, given Agent's own interest in the Collateral as
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a Lender and that Agent shall have no duty or liability whatsoever to any other
Lender.
(e) Without limiting the generality of the foregoing, each Lender (i)
authorizes Agent to enter into the Intercreditor Agreement, the WHX
Subordination Agreement and the Precious Metals Creditor Agreement on behalf of
such Lender and (ii) agrees that it will be bound (as a Lender) by the terms and
conditions of the Intercreditor Agreement, the WHX Subordination Agreement and
the Precious Metals Creditor Agreement, whether or not such Lender executes any
such agreement.
12.12 AGENCY FOR PERFECTION. Each Lender hereby appoints Agent and
each other Lender as agent and bailee for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent in assets which, in
accordance with Article 9 of the UCC can be perfected only by possession (or
where the security interest of a secured party with possession has priority over
the security interest of another secured party) and Agent and each Lender hereby
acknowledges that it holds possession of any such Collateral for the benefit of
Agent as secured party. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor shall deliver such Collateral to Agent or in accordance with
Agent's instructions.
12.13 SUCCESSOR AGENT. Agent may resign as Agent upon thirty (30)
days' notice to Lenders and Administrative Borrower. If Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor
agent for Lenders. If no successor agent is appointed prior to the effective
date of the resignation of Agent, Agent may appoint, after consulting with
Lenders and Administrative Borrower, a successor agent from among Lenders. Upon
the acceptance by the Lender so selected of its appointment as successor agent
hereunder, such successor agent shall succeed to all of the rights, powers and
duties of the retiring Agent and the term "Agent" as used herein and in the
other Financing Agreements shall mean such successor agent and the retiring
Agent's appointment, powers and duties as Agent shall be terminated. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Section
12 shall inure to its benefit as to any actions taken or omitted by it while it
was Agent under this Agreement. If no successor agent has accepted appointment
as Agent by the date which is thirty (30) days after the date of a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nonetheless thereupon become effective and Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 TERM. (a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3) years
from the date hereof (the "Termination Date"), unless sooner terminated pursuant
to the terms hereof. In addition, Borrowers may terminate this Agreement at any
time upon ten (10) days prior written notice to Agent (which notice shall be
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irrevocable) and Agent may, at its option, and shall at the direction of
Required Lenders, terminate this Agreement at any time on or after an Event of
Default. Upon the Termination Date or any other effective date of termination of
the Financing Agreements, Borrowers shall pay to Agent all outstanding and
unpaid Obligations and shall furnish cash collateral to Agent (or at Agent's
option, a letter of credit issued for the account of Borrowers and at Borrowers'
expense, in form and substance satisfactory to Agent, by an issuer acceptable to
Agent and payable to Agent as beneficiary) in such amounts as Agent determines
are reasonably necessary to secure Agent and Lenders from loss, cost, damage or
expense, including attorneys' fees and expenses, in connection with any
contingent Obligations, including checks or other payments provisionally
credited to the Obligations and/or as to which Agent or any Lender has not yet
received final and indefeasible payment and any continuing obligations of Agent
or any Lender pursuant to any Deposit Account Control Agreement. Such payments
in respect of the Obligations and cash collateral shall be remitted by wire
transfer in Federal funds to the Agent Payment Account or such other bank
account of Agent, as Agent may, in its discretion, designate in writing to
Administrative Borrower for such purpose. Interest shall be due until and
including the next Business Day, if the amounts so paid by Borrowers to the
Agent Payment Account or other bank account designated by Agent are received in
such bank account later than 12:00 noon, New York time.
(b) No termination of this Agreement or the other Financing Agreements
shall relieve or discharge any Borrower or Guarantor of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Agent's continuing security interest in the Collateral and the rights and
remedies of Agent and Lenders hereunder, under the other Financing Agreements
and applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid. Accordingly, each Borrower and Guarantor
waives any rights it may have under the UCC to demand the filing of termination
statements with respect to the Collateral and Agent shall not be required to
send such termination statements to Borrowers or Guarantors, or to file them
with any filing office, unless and until this Agreement shall have been
terminated in accordance with its terms and all Obligations paid and satisfied
in full in immediately available funds.
13.2 INTERPRETATIVE PROVISIONS.
(a) All terms used herein which are defined in Article 1, Article 8 or
Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean the singular
and to the singular shall also mean the plural unless the context otherwise
requires.
(c) All references to any Borrower, Guarantor, Agent and Lenders
pursuant to the definitions set forth in the recitals hereto, or to any other
person herein, shall include their respective successors and assigns.
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(d) The words "hereof", "herein", "hereunder", "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation" and the word "will" when used in this Agreement
shall be construed to have the same meaning and effect as the word "shall".
(f) An Event of Default shall exist or continue or be continuing until
such Event of Default is waived in accordance with Section 11.3 or is cured in a
manner satisfactory to Agent, if such Event of Default is capable of being cured
as determined by Agent.
(g) All references to the term "good faith" used herein when
applicable to Agent or any Lender shall mean, notwithstanding anything to the
contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned. Borrowers and Guarantors shall have the burden of proving
any lack of good faith on the part of Agent or any Lender alleged by any
Borrower or Guarantor at any time.
(h) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Parent most recently received
by Agent prior to the date hereof. Notwithstanding anything to the contrary
contained in GAAP or any interpretations or other pronouncements by the
Financial Accounting Standards Board or otherwise, the term "unqualified
opinion" as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that is not only unqualified but also does not
include any explanation, supplemental comment or other comment concerning the
ability of the applicable person to continue as a going concern or the scope of
the audit.
(i) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including", the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including".
(j) Unless otherwise expressly provided herein, (i) references herein
to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
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(k) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(l) This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are the result
of negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent's or any Lender's involvement in their preparation.
13.3 NOTICES. All notices, requests and demands hereunder shall be in
writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests and
demands upon the parties are to be given to the following addresses (or to such
other address as any party may designate by notice in accordance with this
Section):
If to any Borrower or Guarantor: ▇/▇ ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Avenue
Rye, New York 10580
Attention: Chief Financial Officer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ &
Wolosky LLP
Park Avenue Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent: Ableco Finance LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
13.4 PARTIAL INVALIDITY. If any provision of this Agreement is held to
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13.5 CONFIDENTIALITY.
(a) Agent and each Lender shall use all reasonable efforts to keep
confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by any Borrower pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information is
furnished by such Borrower to Agent or such Lender, PROVIDED, THAT, nothing
contained herein shall limit the disclosure of any such information: (i) to the
extent required by statute, rule, regulation, subpoena or court order, (ii) to
bank examiners and other regulators, auditors and/or accountants, in connection
with any litigation to which Agent or such Lender is a party, (iii) to any
Lender or Participant (or prospective Lender or Participant) or to any Affiliate
of any Lender so long as such Lender or Participant (or prospective Lender or
Participant) or Affiliate shall have been instructed to treat such information
as confidential in accordance with this Section 13.5, or (iv) to counsel for
Agent or any Lender or Participant (or prospective Lender or Participant).
(b) In the event that Agent or any Lender receives a request or demand
to disclose any confidential information pursuant to any subpoena or court
order, Agent or such Lender, as the case may be, agrees (i) to the extent
permitted by applicable law or if permitted by applicable law, to the extent
Agent or such Lender determines in good faith that it will not create any risk
of liability to Agent or such Lender, Agent or such Lender will promptly notify
Administrative Borrower of such request so that Administrative Borrower may seek
a protective order or other appropriate relief or remedy and (ii) if disclosure
of such information is required, disclose such information and, subject to
reimbursement by Borrowers of Agent's or such Lender's expenses, cooperate with
Administrative Borrower in the reasonable efforts to obtain an order or other
reliable assurance that confidential treatment will be accorded to such portion
of the disclosed information which Administrative Borrower so designates, to the
extent permitted by applicable law or if permitted by applicable law, to the
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extent Agent or such Lender determines in good faith that it will not create any
risk of liability to Agent or such Lender.
(c) In no event shall this Section 13.5 or any other provision of this
Agreement, any of the other Financing Agreements or applicable law be deemed:
(i) to apply to or restrict disclosure of information that has been or is made
public by any Borrower, Guarantor or any third party or otherwise becomes
generally available to the public other than as a result of a disclosure in
violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to Agent or any Lender (or any Affiliate of any Lender)
on a non-confidential basis from a person other than a Borrower or Guarantor,
(iii) to require Agent or any Lender to return any materials furnished by a
Borrower or Guarantor to Agent or a Lender or prevent Agent or a Lender from
responding to routine informational requests in accordance with the CODE OF
ETHICS FOR THE EXCHANGE OF CREDIT INFORMATION promulgated by The ▇▇▇▇▇▇ ▇▇▇▇▇▇
Associates or other applicable industry standards relating to the exchange of
credit information. The obligations of Agent and Lenders under this Section 13.5
shall supersede and replace the obligations of Agent and Lenders under any
confidentiality letter signed prior to the date hereof.
(d) Notwithstanding anything to the contrary set forth herein or in
any of the other Financing Agreements or any other written or oral understanding
or agreement, (i) any obligations of confidentiality contained herein, in any of
the other Financing Agreements or any such other understanding or agreement do
not apply and have not applied from the commencement of discussions between the
parties to the tax treatment and tax structure of the transactions contemplated
herein (and any related transactions or arrangements), and (ii) each party (and
each of its employees, representatives, or other agents) may disclose to any and
all persons the tax treatment and tax structuring of the transactions
contemplated herein and all materials of any kind (including opinions or other
tax analyses) that are provided to such party relating to such tax treatment and
tax structure, all within the meaning of Treasury Regulation Section 1.6011-4;
provided, that, each party recognizes that the privilege that it may, in its
discretion, maintain with respect to the confidentiality of a communication
relating to the transactions contemplated herein, including a confidential
communication with its attorney or a confidential communication with a federally
authorized tax practitioner under Section 7525 of the Internal Revenue Code, is
not intended to be affected by the foregoing. Borrowers and Guarantors do not
intend to treat the Loan and related transactions as being a "reportable
transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In
the event Borrowers or Guarantors determine to take any action inconsistent with
such intention, it will promptly notify Agent thereof. Each Borrower and
Guarantor acknowledges that one or more of Lenders may treat its portion of the
Loan as part of a transaction that is subject to Treasury Regulation Section
1.6011-4 or Section 301.6112-1, and the Agent and such Lender or Lenders, as
applicable, may file such IRS forms or maintain such lists and other records as
they may determine is required by such Treasury Regulations.
13.6 SUCCESSORS. This Agreement, the other Financing Agreements and
any other document referred to herein or therein shall be binding upon and inure
to the benefit of and be enforceable by Agent, Lenders, Borrowers, Guarantors
and their respective successors and assigns, except that Borrower may not assign
its rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Agent and Lenders. Any such purported assignment without such express prior
written consent shall be void. No Lender may assign its rights and obligations
under this Agreement without the prior written consent of Agent, except as
provided in Section 13.7 below. The terms and provisions of this Agreement and
the other Financing Agreements are for the purpose of defining the relative
rights and obligations of Borrowers, Guarantors, Agent and Lenders with respect
to the transactions contemplated hereby and there shall be no third party
beneficiaries of any of the terms and provisions of this Agreement or any of the
other Financing Agreements.
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13.7 ASSIGNMENTS; PARTICIPATIONS.
(a) Each Lender may, with the prior written consent of Agent, assign
all or, if less than all, a portion equal to at least $5,000,000 in the
aggregate for the assigning Lender (except such minimum amount shall not apply
to an assignment by a Lender to an Affiliate of such Lender or an Approved
Fund), of such rights and obligations under this Agreement to one or more
Eligible Transferees or Approved Funds (but not including for this purpose any
assignments in the form of a participation), each of which assignees shall
become a party to this Agreement as a Lender by execution of an Assignment and
Acceptance; provided, that, (i) Borrowers and Agent may continue to deal solely
and directly with such Lender in connection with the interest so assigned to an
assignee until such Lender and its assignee have delivered to Agent a fully
executed Assignment and Acceptance and (ii) Agent shall have received for its
sole account payment of a processing fee from the assigning Lender or the
assignee in the amount of $5,000 (except the payment of such fee shall not be
required in connection with an assignment by a Lender to an Affiliate of such
Lender or an Approved Fund).
(b) Agent shall maintain a register of the names and addresses of
Lenders, their Commitments and the principal amount of their portion of the Loan
(the "Register"). Agent shall also maintain a copy of each Assignment and
Acceptance delivered to and accepted by it and shall modify the Register to give
effect to each Assignment and Acceptance. The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and any
Borrowers, Obligors, Agent and Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by Administrative
Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice. In the case of an assignment by a Lender to any of its
Approved Funds that is not reflected in Agent's Register, the assigning Lender
shall maintain a comparable register on behalf of Agent.
(c) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
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assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and thereunder and the assigning Lender shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance, the
assignor and assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (i) other than as provided in such Assignment
and Acceptance, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the other
Financing Agreements or the execution, legality, enforceability, genuineness,
sufficiency or value of this Agreement or any of the other Financing Agreements
furnished pursuant hereto, (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Borrower, Obligor or any of their Subsidiaries or the performance or
observance by any Borrower or Obligor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Financing Agreements, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender. Agent
and Lenders may furnish any information concerning any Borrower or Obligor in
the possession of Agent or any Lender from time to time to assignees and
Participants.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement and the other Financing Agreements (including, without limitation, all
or a portion of the Loan owing to it, without the consent of Agent or the other
Lenders); provided, that, (i) such Lender's obligations under this Agreement and
the other Financing Agreements shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, and Borrowers, Guarantors, the other Lenders and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Financing
Agreements, and (iii) the Participant shall not have any rights under this
Agreement or any of the other Financing Agreements (the Participant's rights
against such Lender in respect of such participation to be those set forth in
the agreement executed by such Lender in favor of the Participant relating
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thereto) and all amounts payable by any Borrower or Obligor hereunder shall be
determined as if such Lender had not sold such participation.
(f) Nothing in this Agreement shall prevent or prohibit any Lender
from pledging its portion of the Loan hereunder to a Federal Reserve Bank in
support of borrowings made by such Lenders from such Federal Reserve Bank;
provided, that, no such pledge shall release such Lender from any of its
obligations hereunder or substitute any such pledgee for such Lender as a party
hereto.
(g) Borrowers and Guarantors shall assist Agent or any Lender
permitted to sell assignments or participations under this Section 13.7 in
whatever manner reasonably necessary in order to enable or effect any such
assignment or participation, including (but not limited to) the execution and
delivery of any and all agreements, notes and other documents and instruments as
shall be requested and the delivery of informational materials, appraisals or
other documents for, and the participation of relevant management in meetings
and conference calls with, potential Lenders or Participants. Borrowers shall
certify the correctness, completeness and accuracy, in all material respects, of
all descriptions of Borrowers and Guarantors and their affairs provided,
prepared or reviewed by any Borrower or Guarantor that are contained in any
selling materials and all other information provided by it and included in such
materials.
(h) A Registered Loan (and the Registered Note, if any, evidencing the
same) may be assigned or sold in whole or in part only by registration of such
assignment or sale on the Register (and each Registered Note shall expressly so
provide). Any assignment or sale of all or part of such Registered Loan (and the
Registered Note, if any, evidencing the same) may be effected only by
registration of such assignment or sale on the Register, together with the
surrender of the Registered Note, if any, evidencing the same duly endorsed by
(or accompanied by a written instrument of assignment or sale duly executed by)
the holder of such Registered Note, whereupon, at the request of the designated
assignee(s) or transferee(s), one or more new Registered Notes in the same
aggregate principal amount shall be issued to the designated assignee(s) or
transferee(s). Prior to the registration of assignment or sale of any Registered
Loan (and the Registered Note, if any evidencing the same), Agent and Borrowers
shall treat the Person in whose name such Loan (and the Registered Note, if any,
evidencing the same) is registered as the owner thereof for the purpose of
receiving all payments thereon and for all other purposes, notwithstanding
notice to the contrary. In the case of an assignment by a Lender to any of its
Approved Funds that is not reflected in Agent's Register, the assigning Lender
shall maintain a comparable register on behalf of Agent.
(i) In the event that any Lender sells participations in a Registered
Loan, such Lender shall maintain a register on which it enters the name of all
participants in such Registered Loan (the "Participant Register"). A Registered
Loan (and the Registered Note, if any, evidencing the same) may be participated
in whole or in part only by registration of such participation on the
Participant Register (and each Registered Note shall expressly so provide). Any
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participation of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.
13.8 ENTIRE AGREEMENT. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
13.9 COUNTERPARTS, ETC. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other Financing Agreements. Any party delivering an executed counterpart of
any such agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
109
IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have
caused these presents to be duly executed as of the day and year first above
written.
AGENT BORROWERS
----- ---------
ABLECO FINANCE LLC, HANDY & ▇▇▇▇▇▇
as Agent
By: By:
---------------------------- ------------------------------
Title: Title:
------------------------- ---------------------------
LENDERS OLYMPIC MANUFACTURING GROUP, INC.
-------
ABLECO FINANCE LLC By:
------------------------------
By: Title:
---------------------------- ---------------------------
By: CONTINENTAL INDUSTRIES, INC.
----------------------------
Title: By:
------------------------- ------------------------------
Title:
Commitment: $71,000,000 ---------------------------
MARYLAND SPECIALTY WIRE, INC.
By:
------------------------------
Title:
---------------------------
HANDY & ▇▇▇▇▇▇ TUBE COMPANY, INC.
By:
------------------------------
Title:
---------------------------
CAMDEL METALS CORPORATION
By:
------------------------------
Title:
---------------------------
▇▇▇▇▇▇▇▇ METAL COATING
CORPORATION
By:
------------------------------
Title:
---------------------------
110
MICRO-TUBE FABRICATORS, INC.
By:
------------------------------
Title:
---------------------------
INDIANA TUBE CORPORATION
By:
------------------------------
Title:
---------------------------
▇▇▇▇▇-▇▇▇▇▇▇▇▇, INC.
By:
------------------------------
Title:
---------------------------
HANDY & ▇▇▇▇▇▇ ELECTRONIC
MATERIALS CORPORATION
By:
------------------------------
Title:
---------------------------
SUMCO INC.
By:
------------------------------
Title:
---------------------------
GUARANTORS
----------
HANDY & ▇▇▇▇▇▇ OF CANADA, LIMITED
By:
------------------------------
Title:
---------------------------
ELE CORPORATION
By:
------------------------------
Title:
---------------------------
111
ALLOY RING SERVICE INC.
By:
------------------------------
Title:
---------------------------
▇▇▇▇▇▇ RADIATOR CORPORATION
By:
------------------------------
Title:
---------------------------
H&H PRODUCTIONS, INC.
By:
------------------------------
Title:
---------------------------
HANDY & ▇▇▇▇▇▇ AUTOMOTIVE
GROUP, INC.
By:
------------------------------
Title:
---------------------------
HANDY & ▇▇▇▇▇▇
INTERNATIONAL, LTD.
By:
------------------------------
Title:
---------------------------
HANDY & ▇▇▇▇▇▇ PERU, INC.
By:
------------------------------
Title:
---------------------------
KJ-VMI REALTY, INC.
By:
------------------------------
Title:
---------------------------
▇▇▇-▇▇▇▇ REALTY, INC.
By:
------------------------------
Title:
---------------------------
112
PLATINA LABORATORIES, INC.
By:
------------------------------
Title:
---------------------------
SHEFFIELD STREET CORPORATION
By:
------------------------------
Title:
---------------------------
SWM, INC.
By:
------------------------------
Title:
---------------------------
WILLING B WIRE CORPORATION
By:
------------------------------
Title:
---------------------------
113
EXHIBIT A
to
LOAN AND SECURITY AGREEMENT
ASSIGNMENT AND ACCEPTANCE AGREEMENT
-----------------------------------
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of _____________, 200_ is made between
________________________ (the "Assignor") and ____________________ (the
"Assignee").
W I T N E S S E T H:
--------------------
WHEREAS, Ableco Finance LLC, in its capacity as agent pursuant to the
Loan Agreement (as hereinafter defined) acting for and on behalf of the parties
thereto as lenders (in such capacity, "Agent"), and the parties to the Loan
Agreement as lenders (individually, each a "Lender" and collectively, "Lenders")
have entered or are about to enter into financing arrangements pursuant to which
Agent and Lenders may make loans to Handy & ▇▇▇▇▇▇ and certain of its affiliates
(collectively, "Borrowers") as set forth in the Loan and Security Agreement,
dated March __, 2004, by and among Borrowers, Agent and Lenders (as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced, the "Loan Agreement"), and the other agreements, documents
and instruments referred to therein or at any time executed and/or delivered in
connection therewith or related thereto (all of the foregoing, together with the
Loan Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements");
WHEREAS, as provided under the Loan Agreement, Assignor has made a
Loan (the "Committed Loan") to Borrowers in an aggregate amount of $___________
(the "Loan Amount");
WHEREAS, Assignor wishes to assign to Assignee [part of the] [all]
rights and obligations of Assignor under the Loan Agreement in respect of its
Committed Loan in an amount equal to $______________ (the "Assigned Committed
Loan Amount") on the terms and subject to the conditions set forth herein and
Assignee wishes to accept assignment of such rights and to assume such
obligations from Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. ASSIGNMENT AND ACCEPTANCE.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, Assignor hereby sells, transfers and assigns to Assignee, and
Assignee hereby purchases, assumes and undertakes from Assignor, without
recourse and without representation or warranty (except as provided in this
A-1
Assignment and Acceptance) an interest in (i) the Committed Loan of Assignor and
(ii) all related rights, benefits, obligations, liabilities and indemnities of
the Assignor (in its capacity as Lender) under and in connection with the Loan
Agreement and the other Financing Agreements, so that after giving effect
thereto, the Committed Loan of Assignee shall be as set forth below and the Pro
Rata Share of Assignee shall be _______ (__%) percent.
(b) With effect on and after the Effective Date (as defined in Section
5 hereof), Assignee shall be a party to the Loan Agreement and succeed to all of
the rights and be obligated to perform all of the obligations of a Lender under
the Loan Agreement, including the requirements concerning confidentiality and
the payment of indemnification. Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Agreement are required to be performed by it as a Lender. It is the intent
of the parties hereto that the Committed Loan of Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Committed Loan
Amount and Assignor shall relinquish its rights and be released from its
obligations under the Loan Agreement to the extent such obligations have been
assumed by Assignee; PROVIDED, THAT, Assignor shall not relinquish its rights
under Sections 2.1, 6.4, 6.8, 11.5 and 12.5 of the Loan Agreement to the extent
such rights relate to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth
herein, on the Effective Date Assignee's Committed Loan will be $_____________.
(d) After giving effect to the assignment and assumption set forth
herein, on the Effective Date Assignor's Committed Loan will be $______________
(as such amount may be further reduced by any other assignments by Assignor on
or after the date hereof).
2. PAYMENTS.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the
Effective Date in immediately available funds an amount equal to $____________,
representing Assignee's Pro Rata Share of the principal amount of the Committed
Loan.
(b) Assignee shall pay to Agent the processing fee in the amount
specified in Section 13.7(a) of the Loan Agreement.
3. REALLOCATION OF PAYMENTS. Any interest, fees and other payments
accrued to the Effective Date with respect to the Committed Loan shall be for
the account of Assignor. Any interest, fees and other payments accrued on and
after the Effective Date with respect to the Assigned Committed Loan Amount
shall be for the account of Assignee. Each of Assignor and Assignee agrees that
it will hold in trust for the other party any interest, fees and other amounts
which it may receive to which the other party is entitled pursuant to the
preceding sentence and pay to the other party any such amounts which it may
receive promptly upon receipt.
A-2
4. INDEPENDENT CREDIT DECISION. Assignee acknowledges that it has
received a copy of the Loan Agreement and the Schedules and Exhibits thereto,
together with copies of the most recent financial statements of Parent and its
Subsidiaries, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into
this Assignment and Acceptance and agrees that it will, independently and
without reliance upon Assignor, Agent or any Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit and legal decisions in taking or not taking action under the Loan
Agreement.
5. EFFECTIVE DATE; NOTICES.
(a) As between Assignor and Assignee, the effective date for this
Assignment and Acceptance shall be _______________, 200_ (the "Effective Date");
PROVIDED, THAT, the following conditions precedent have been satisfied on or
before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by Assignor and Assignee;
(ii) the consent of Agent as required for an effective assignment
of the Assigned Committed Loan by Assignor to Assignee shall have been duly
obtained and shall be in full force and effect as of the Effective Date;
(iii) written notice of such assignment, together with payment
instructions, addresses and related information with respect to Assignee, shall
have been given to Agent;
(iv) Assignee shall pay to Assignor all amounts due to Assignor
under this Assignment and Acceptance; and
(v) the processing fee referred to in Section 2(b) hereof shall
have been paid to Agent.
(b) Promptly following the execution of this Assignment and
Acceptance, Assignor shall deliver to Agent for acknowledgment by Agent, a
Notice of Assignment in the form attached hereto as Schedule 1.
6. AGENT. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]
(a) Assignee hereby appoints and authorizes Assignor in its capacity
as Agent to take such action as agent on its behalf to exercise such powers
under the Loan Agreement as are delegated to Agent by Lenders pursuant to the
terms of the Loan Agreement.
(b) Assignee shall assume no duties or obligations held by Assignor in
its capacity as Agent under the Loan Agreement.]
A-3
7. WITHHOLDING TAX. Assignee (a) represents and warrants to Assignor,
Agent and Borrowers that under applicable law and treaties no tax will be
required to be withheld by Assignee, Agent or Borrowers with respect to any
payments to be made to Assignee hereunder or under any of the Financing
Agreements, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to Agent and
Borrowers prior to the time that Agent or Borrowers are required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form W-8BEN or W-8ECI, as applicable
(wherein Assignee claims entitlement to the benefits of a tax treaty that
provides for a complete exemption from U.S. federal income withholding tax on
all payments hereunder) and agrees to provide new such forms upon the expiration
of any previously delivered form or comparable statements in accordance with
applicable U.S. law and regulations and amendments thereto, duly executed and
completed by Assignee, and (c) agrees to comply with all applicable U.S. laws
and regulations with regard to such withholding tax exemption.
8. REPRESENTATIONS AND WARRANTIES.
(a) Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any security interest, lien, encumbrance or other
adverse claim, (ii) it is duly organized and existing and it has the full power
and authority to take, and has taken, all action necessary to execute and
deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this Assignment
and Acceptance and to fulfill its obligations hereunder, (iii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Assignment and Acceptance, and apart from any agreements or undertakings
or filings required by the Loan Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance, and (iv) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignor, enforceable against Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(b) Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or any of the other Financing
Agreements or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto. Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of Borrowers, Guarantors or any of their
respective Affiliates, or the performance or observance by Borrowers, Guarantors
or any other Person, of any of its respective obligations under the Loan
Agreement or any other instrument or document furnished in connection therewith.
A-4
(c) Assignee represents and warrants that (i) it is duly organized and
existing and it has full power and authority to take, and has taken, all action
necessary to execute and deliver this Assignment and Acceptance and any other
documents required or permitted to be executed or delivered by it in connection
with this Assignment and Acceptance, and to fulfill its obligations hereunder,
(ii) no notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution,
delivery and performance of this Assignment and Acceptance, and apart from any
agreements or undertakings or filings required by the Loan Agreement, no further
action by, or notice to, or filing with, any Person is required of it for such
execution, delivery or performance; and (iii) this Assignment and Acceptance has
been duly executed and delivered by it and constitutes the legal, valid and
binding obligation of Assignee, enforceable against Assignee in accordance with
the terms hereof, subject, as to enforcement, to bankruptcy, insolvency,
moratorium, reorganization and other laws of general application relating to or
affecting creditors' rights to general equitable principles.
9. FURTHER ASSURANCES. Assignor and Assignee each hereby agree to
execute and deliver such other instruments, and take such other action, as
either party may reasonably request in connection with the transactions
contemplated by this Assignment and Acceptance, including the delivery of any
notices or other documents or instruments to Borrowers or Agent, which may be
required in connection with the assignment and assumption contemplated hereby.
10. MISCELLANEOUS
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other for further breach thereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) Assignor and Assignee shall each pay its own costs and expenses
incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Assignor and Assignee each
irrevocably submits to the non-exclusive jurisdiction of any State or Federal
A-5
court sitting in New York County, New York over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
(f) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING
AGREEMENTS OR ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment
and Acceptance to be executed and delivered by their duly authorized officers as
of the date first above written.
[ASSIGNOR]
By:
------------------------------
Title:
---------------------------
[ASSIGNEE]
By:
------------------------------
Title:
---------------------------
A-6
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
___, 20__
Attn.:
------------------------------------------
Re:
-------------------------------------------------------
Ladies and Gentlemen:
Ableco Finance LLC, in its capacity as agent pursuant to the Loan
Agreement (as hereinafter defined) acting for and on behalf of the parties
thereto as lenders (in such capacity, "Agent"), and the parties to the Loan
Agreement as lenders (individually, each a "Lender" and collectively, "Lenders")
have entered or are about to enter into financing arrangements pursuant to which
Agent and Lenders may make loans to Handy & ▇▇▇▇▇▇ and certain of its affiliates
(collectively, "Borrowers") as set forth in the Loan and Security Agreement,
dated _____________, 2004, by and among Borrowers, Agent and Lenders (as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, the "Loan Agreement"), and the other agreements,
documents and instruments referred to therein or at any time executed and/or
delivered in connection therewith or related thereto (all of the foregoing,
together with the Loan Agreement, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, being
collectively referred to herein as the "Financing Agreements"). Capitalized
terms not otherwise defined herein shall have the respective meanings ascribed
thereto in the Loan Agreement.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________________ (the "Assignor") to
___________________________ (the "Assignee") such that after giving effect to
the assignment Assignee shall have an interest equal to ________ (__%) percent
of the total Loan pursuant to the Assignment and Acceptance Agreement attached
hereto (the "Assignment and Acceptance"). We understand that the Assignor's
portion of the Loan shall be reduced by $_____________, as the same may be
further reduced by other assignments on or after the date hereof.
2. Assignee agrees that, upon receiving the consent of Agent to such
assignment, Assignee will be bound by the terms of the Loan Agreement as fully
and to the same extent as if the Assignee were the Lender originally holding
such interest under the Loan Agreement.
3. The following administrative details apply to Assignee:
(A) Notice address:
Assignee name:
-----------------------
Address:
-----------------------------
A-1
Attention:
--------------------------
Telephone:
--------------------------
Telecopier:
--------------------------
(B) Payment instructions:
Account No.:
-----------------------------
At:
--------------------------------------
Reference:
-------------------------------
Attention:
-------------------------------
4. You are entitled to rely upon the representations, warranties and
covenants of each of Assignor and Assignee contained in the Assignment and
Acceptance.
A-2
IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of
Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
------------------------------------
Title:
------------------------------------
[NAME OF ASSIGNEE]
By:
------------------------------------
Title:
---------------------------------
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
ABLECO FINANCE LLC,
as Agent
By:
-------------------------
Title:
----------------------
A-3
EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT
---------------------------
Compliance Certificate
----------------------
To: Ableco Finance LLC,
as Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I hereby certify to you pursuant to Section 9.6 of the Loan Agreement
(as defined below) as follows:
1. I am the duly elected Chief Financial Officer of Handy & ▇▇▇▇▇▇, a
New York corporation ("Parent"). Capitalized terms used herein without
definition shall have the meanings given to such terms in the Loan and Security
Agreement, dated March __, 2004, by and among Ableco Finance LLC, as agent for
the parties thereto as lenders (in such capacity, "Agent") and the parties
thereto as lenders (collectively, "Lenders"), Parent and certain of its
Subsidiaries (as such Loan and Security Agreement is amended, modified or
supplemented, from time to time, the "Loan Agreement").
2. I have reviewed the terms of the Loan Agreement, and have made, or
have caused to be made under my supervision, a review in reasonable detail of
the transactions and the financial condition of Parent and its Subsidiaries,
during the immediately preceding fiscal month.
3. The review described in Section 2 above did not disclose the
existence during or at the end of such fiscal month, and I have no knowledge of
the existence and continuance on the date hereof, of any condition or event
which constitutes a Default or an Event of Default, except as set forth on
Schedule I attached hereto. Described on Schedule I attached hereto are the
exceptions, if any, to this Section 3 listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
any Borrower or Guarantor has taken, is taking, or proposes to take with respect
to such condition or event.
4. I further certify that, based on the review described in Section 2
above, no Borrower or Guarantor has not at any time during or at the end of such
fiscal month, except as specifically described on Schedule II attached hereto or
as permitted by the Loan Agreement, done any of the following:
(a) Changed its respective corporate name, or transacted
business under any trade name, style, or fictitious name,
other than those previously described to you and set forth
in the Financing Agreements.
(b) Changed the location of its chief executive office, changed
its jurisdiction of incorporation, changed its type of
organization or changed the location of or disposed of any
of its properties or assets (other than pursuant to the sale
of Inventory in the ordinary course of its business or as
otherwise permitted by Section 9.7 of the Loan Agreement),
or established any new asset locations.
(c) Materially changed the terms upon which it sells goods
(including sales on consignment) or provides services, nor
has any vendor or trade supplier to any Borrower or
Guarantor during or at the end of such period materially
adversely changed the terms upon which it supplies goods to
any Borrower or Guarantor.
(d) Permitted or suffered to exist any security interest in or
liens on any of its properties, whether real or personal,
other than as specifically permitted in the Financing
Agreements.
(e) Received any notice of, or obtained knowledge of any of the
following not previously disclosed to Agent: (i) the
occurrence of any event involving the release, spill or
discharge of any Hazardous Material in violation of
applicable Environmental Law in a material respect or (ii)
any investigation, proceeding, complaint, order, directive,
claims, citation or notice with respect to: (A) any
non-compliance with or violation of any applicable
Environmental Law by any Borrower or Guarantor in any
material respect or (B) the release, spill or discharge of
any Hazardous Material in violation of applicable
Environmental Law in a material respect or (C) the
generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any
Hazardous Materials in violation of applicable Environmental
Laws in a material respect or (D) any other environmental,
health or safety matter, which has a material adverse effect
on any Borrower or Guarantor or its business, operations or
assets or any properties at which such Borrower or Guarantor
transported, stored or disposed of any Hazardous Materials.
(f) Become aware of, obtained knowledge of, or received
notification of, any breach or violation of any material
covenant contained in any instrument or agreement in respect
of Indebtedness for money borrowed by any Borrower or
Guarantor.
5. Attached hereto as Schedule III are the calculations used in
determining, as of the end of such fiscal month whether Parent and its
Subsidiaries are in compliance with the covenants set forth in Section 9.17 and
Section 9.18 of the Loan Agreement for such fiscal month.
The foregoing certifications are made and delivered this __ day of
March, 2004.
Very truly yours,
HANDY & ▇▇▇▇▇▇
By:
------------------------------
Title:
---------------------------
SCHEDULE 1.30
HISTORICAL EBITDA
-----------------
Fiscal Quarter: EBITDA:
-------------- ------
March 31, 2003 $7,889,000
June 30, 2003 $9,237,000
September 30, 2003 $8,119,000
December 31, 2003 $5,589,000
Schedule 1.43
Existing Lenders
Citicorp USA, Inc.
Fleet Precious Metals, Inc.
Schedule 1.44
Existing Letters of Credit
--------------------------
Description Amount Expiry Date
----------- ------ -----------
Evansville, IN - IRB $2,669, 521 5/30/04
Montvale, NJ - EPA $ 878,000 5/30/04
HHEM - EPA $ 135,000 5/30/04
Reliance 7/10/99 - 7/10/00 $ 350,000 4/30/04
Conn. Dept. of EPA $66,000 5/30/04
Liberty Mutual $2,250,000 4/26/04
Zurich $ 954,267 5/30/04
Schedule 1.84
Permitted Holders
WHX Corporation