EXHIBIT 99.1
LOAN AGREEMENT
dated as of December 4, 2003
by and among
BRUSH ENGINEERED MATERIALS INC.,
as BORROWER
and
THE OTHER ENTITIES PARTY HERETO, as GUARANTORS
and
THE LENDERS PARTY HERETO
and
GUGGENHEIM CORPORATE FUNDING, LLC, as COLLATERAL AGENT
TABLE OF CONTENTS
LOAN AGREEMENT
Section Page
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1. DEFINITIONS................................................................................... 1
2. LOAN FACILITY AND WARRANTS.................................................................... 15
2.1. The Loans and Warrants............................................................... 15
2.2. Closing.............................................................................. 16
2.3. Interest............................................................................. 16
2.4. Optional Prepayment.................................................................. 17
2.5. Repayment of Loans................................................................... 17
2.6. Use of Proceeds...................................................................... 18
2.7. Receipt of Payments.................................................................. 18
2.8. Application of Payments.............................................................. 18
2.9. Sharing of Payments.................................................................. 18
2.10. Taxes................................................................................ 19
2.11. Original Issue Discount.............................................................. 19
3. CREDIT PARTIES' REPRESENTATIONS AND WARRANTIES................................................ 20
3.1. Existence and Standing............................................................... 20
3.2. Authorization and Validity........................................................... 20
3.3. No Conflict; Government Consent...................................................... 20
3.4. Security Interest in Collateral...................................................... 20
3.5. Financial Statements................................................................. 21
3.6. Material Adverse Change.............................................................. 21
3.7. Taxes................................................................................ 21
3.8. Litigation and Contingent Obligations................................................ 22
3.9. Subsidiaries and Capitalization...................................................... 22
3.10. ERISA................................................................................ 22
3.11. Accuracy of Information.............................................................. 22
3.12. Names; Prior Transactions............................................................ 23
3.13. Regulation U......................................................................... 23
3.14. Material Agreements.................................................................. 23
3.15. Compliance With Laws................................................................. 23
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3.16. Ownership of Properties.............................................................. 23
3.17. Plan Assets; Prohibited Transactions................................................. 23
3.18. Environmental Matters................................................................ 24
3.19. Investment Company Act............................................................... 24
3.20. Public Utility Holding Company Act................................................... 24
3.21. Bank Accounts........................................................................ 24
3.22. Indebtedness......................................................................... 24
3.23. Affiliate Transactions............................................................... 24
3.24. Real Property; Leases................................................................ 24
3.25. Intellectual Property Rights......................................................... 25
3.26. Insurance............................................................................ 25
3.27. Solvency............................................................................. 25
3.28. Subordinated Indebtedness............................................................ 25
3.29. Post-Retirement Benefits............................................................. 26
3.30. Common Enterprise.................................................................... 26
3.31. Reportable Transaction............................................................... 26
3.32. Labor Disputes....................................................................... 26
3.33. Specifically Designated National and Blocked Persons................................. 26
3.34. Issuance of Warrants................................................................. 26
3.35. Securities Laws...................................................................... 27
3.36. Brokers.............................................................................. 27
4. LENDERS' REPRESENTATIONS AND WARRANTIES....................................................... 27
4.1. Investment Intention................................................................. 27
4.2. Accredited Investor.................................................................. 27
4.3. Restricted Securities................................................................ 27
5. COVENANTS..................................................................................... 28
5.1. Affirmative Covenants................................................................ 28
5.2. Negative Covenants................................................................... 35
5.3. Subordination of Intercompany Notes.................................................. 43
6. CONDITIONS PRECEDENT.......................................................................... 44
6.1. Conditions Precedent................................................................. 44
6.2. Additional Conditions................................................................ 46
7. EVENTS OF DEFAULT; RIGHTS AND REMEDIES........................................................ 47
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7.1. Events of Default.................................................................... 47
7.2. Remedies............................................................................. 50
7.3. Waivers by the Credit Parties........................................................ 50
7.4. Right of Set-Off..................................................................... 50
8. INDEMNIFICATION............................................................................... 51
9. COLLATERAL AGENT.............................................................................. 51
9.1. Collateral Agency Provisions......................................................... 51
10. MISCELLANEOUS................................................................................. 53
10.1. Complete Agreement; Modification of Agreement; Sale of Interest...................... 53
10.2. Fees and Expenses.................................................................... 55
10.3. No Waiver by Lender.................................................................. 55
10.4. Remedies............................................................................. 56
10.5. Waiver of Jury Trial................................................................. 56
10.6. Severability......................................................................... 56
10.7. Binding Effect; Benefits............................................................. 56
10.8. Conflict of Terms.................................................................... 56
10.9. Governing Law........................................................................ 56
10.10. Notices.............................................................................. 56
10.11. Survival............................................................................. 57
10.12. Section and Other Headings........................................................... 57
10.13. Counterparts......................................................................... 57
10.14. Publicity............................................................................ 57
10.15. Confidentiality...................................................................... 57
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Schedules
Schedule A - Lenders and Allocations of Loans and Warrants
Schedule B - Credit Parties
Schedule 3.8 - Litigation and Contingent Obligations
Schedule 3.9 - Subsidiaries and Capitalization
Schedule 3.12 - Names, Prior Transactions
Schedule 3.14 - Material Agreements
Schedule 3.16 - Ownership of Properties
Schedule 3.18 - Environmental
Schedule 3.22 - Indebtedness
Schedule 3.23 - Affiliate Transactions
Schedule 3.24 - Real Property; Leases
Schedule 3.25 - Intellectual Property Rights
Schedule 3.26 - Insurance
Schedule 3.32 - Labor Disputes
Schedule 5.2(f) - Other Investments
Schedule 5.2(g) - Liens
Schedule 5.2(o) - Nonrecourse Liabilities
Exhibits
Exhibit A - Form of Note
Exhibit B - Form of Guaranty
Exhibit C - Form of Pledge and Security Agreement
Exhibit D - Form of Warrant
Exhibit E - Form of Monthly Reporting
Exhibit F - Form of Opinion of Credit Parties' Counsel
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LOAN AGREEMENT
Loan Agreement, dated as of December 4, 2003, by and among Brush
Engineered Materials Inc., an Ohio corporation (the "Borrower"), each of the
entities listed as a guarantor on the signature pages hereto, as guarantors
(each such entity, each a "Guarantor" and collectively, the "Guarantors"; each
Guarantor and the Borrower individually, a "Credit Party" and collectively, the
"Credit Parties"), and each of the entities listed as a lender on the signature
pages hereto (individually, a "Lender" and, collectively, the "Lenders") and
Guggenheim Corporate Funding, LLC, as collateral agent (the "Collateral Agent").
W I T N E S S E T H :
WHEREAS, the Borrower has requested that the Lenders provide loans (the
"Loans") in an aggregate principal amount of $35,000,000, upon the terms and
conditions hereinafter provided, to be evidenced by promissory notes (as
amended, modified or replaced, the "Notes") substantially in the form of Exhibit
A hereto; and
WHEREAS, the Borrower has agreed to issue to the Lenders, upon the
terms and conditions hereinafter provided, warrants to purchase Common Stock (as
defined herein) of the Borrower;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. DEFINITIONS
"Accounts" shall have the meaning given to such term in the Security
Agreement.
"Acquisition" shall mean any transaction, or any series of related
transactions, consummated on or after the Closing Date, by which any Credit
Party (a) acquires any going business or all or substantially all of the assets
of any Person, whether through purchase of assets, merger or otherwise or (b)
directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the Stock of a Person which has ordinary voting power for the election
of directors or other similar management personnel of a Person (other than Stock
having such power only by reason of the happening of a contingency) or a
majority of the outstanding Stock of a Person.
"Additional Interest" shall mean a per annum rate equal to 1.00%.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. A Person shall be deemed to control another Person if the
controlling Person owns 20% or more of the outstanding voting power of the Stock
of the controlled Person or possesses, directly or indirectly, the power to
direct or cause the direction of the management or policies of the controlled
Person, whether through ownership of Stock, by contract or
otherwise. Notwithstanding the foregoing, a director, officer or employee of a
Person shall not, solely because of such status, be deemed an Affiliate of such
Person.
"Agreement" shall mean this Loan Agreement including all amendments,
modifications and supplements hereto and any appendices, exhibits and schedules
hereto or thereto, and shall refer to the Agreement as the same may be in effect
at the time such reference becomes operative.
"Banking Services" shall mean each and any of the following bank
services provided to any Credit Party by any Bank One Lender or any of its
Affiliates (as defined in the Bank One Credit Agreement): (a) commercial credit
cards, (b) stored value cards, (c) treasury management services (including,
without limitation, controlled disbursement, automated clearinghouse
transactions, return items, overdrafts and interstate depository network
services) and (d) leasing services.
"Banking Services Obligations" shall mean any and all obligations of
the Credit Parties, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.
"Bank One Credit Agreement" shall mean the Credit Agreement, dated as
of December 4, 2003, by and among the Borrower and the other parties thereto as
borrowers, the Bank One Lenders, Bank One, NA, as agent, La Salle Bank National
Association, as documentation agent, and Banc One Capital Markets, Inc., as lead
arranger and sole book runner, as the same may be amended, supplemented,
restated or otherwise modified from time to time.
"Bank One Debt" shall mean any and all obligations, liabilities and
indebtedness of every kind, nature and description now or hereafter owing by any
Credit Party (including, without limitation, Rate Management Obligations,
Banking Services Obligations and the Export-Import Loan) to the Bank One Lenders
evidenced by or arising under the Bank One Debt Documents, provided that, for
purposes of this Agreement, the term "Bank One Debt" shall not include (i)
loans, letter of credit accommodations, Rate Management Obligations, Banking
Services Obligations and the Export-Import Loan in excess of the Maximum Bank
One Debt and (ii) the early termination fee payable pursuant to Section 2.16(b)
of the Bank One Credit Agreement, except to the extent provided in Section 3.3
of the Bank One Intercreditor Agreement. The foregoing limitation shall not
apply to, and the term "Bank One Debt" shall include, obligations consisting of
fees, interest, costs and expenses owing by the Credit Parties to Bank One, NA,
as agent under the Bank One Credit Agreement, or to any Bank One Lender pursuant
to the Bank One Debt Documents.
"Bank One Debt Documents" shall mean the Bank One Credit Agreement and
all other documents, agreements and instruments that evidence, secure, guarantee
or are otherwise executed and delivered by a Credit Party in connection with the
Bank One Debt, as they may be amended, supplemented, restated or otherwise
modified from time to time, in accordance with the terms of the Bank One
Intercreditor Agreement.
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"Bank One Intercreditor Agreement" shall mean the Intercreditor
Agreement, dated as of the date hereof, between the Collateral Agent and Bank
One, NA, as agent for the Bank One Lenders, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Bank One Lenders" shall mean each of the lenders now or hereafter
party to the Bank One Credit Agreement and their respective successors and
assigns (including any other lender or group of lenders that at any time
succeeds to or refinances, replaces or substitutes for all of any portion of the
Bank One Debt at any time and from time to time).
"Bank One Revolving Loans" shall mean the revolving loans extended by
the Bank One Lenders to the Credit Parties pursuant to the Bank One Credit
Agreement.
"Bank One Term Loans" shall mean the term loans extended by the Bank
One Lenders to the Credit Parties pursuant to the Bank One Credit Agreement in
the aggregate principal amount of up to $20,000,000.
"Bankruptcy Code" shall mean, as applicable, Title 11 of the U.S. Code
(11 U.S.C. Section 101 et seq.) or any other bankruptcy, insolvency,
liquidation, winding-up, corporate or similar statute or law in any applicable
jurisdiction, now or hereafter existing, as any of the foregoing may be amended
from time to time, or other applicable statute for jurisdictions outside of the
United States, as the case may be, and any rule or regulation issued thereunder.
"Borrower" shall have the meaning set forth in the first paragraph of
this Agreement.
"Business Day" shall mean a day (other than a Saturday or Sunday) on
which banks generally are open in New York for the conduct of substantially all
of their commercial lending activities and interbank wire transfers can be made
on the fedwire system.
"Capital Expenditures" means, without duplication, any expenditure of
money for any purchase or other acquisition or development of any asset which
would be classified as a fixed or capital asset on a consolidated balance sheet
of the Borrower and its Subsidiaries prepared in accordance with GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of
Property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.
"Capitalized Lease Obligation" shall mean, with respect to any Person,
the aggregate amount of the obligations of such Person under Capital Leases
which would be shown as a liability on a balance sheet of such Person prepared
in accordance with GAAP.
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"Cash Equivalents" shall mean (a) direct obligations of, or fully
guaranteed by, the United States of America maturing within one year from the
date of acquisition thereof, (b) commercial paper rated A-1 or better by
Standard & Poor's Corporate or P-1 or better by ▇▇▇▇▇'▇ Investors Service, Inc.,
(c) demand deposit accounts maintained in the ordinary course of business, and
(d) certificates of deposit issued by and time deposits with commercial bank
(whether domestic or foreign) having capital and surplus in excess of
$100,000,000; provided that, in each case, the same provides for payment of both
principal and interest (and not principal alone or interest alone) and is not
subject to any contingency regarding the payment of principal or interest.
"Cash Interest" shall mean a rate per annum equal to the sum of (i) the
Prime Rate as in effect from time to time plus (ii) 9.25%.
"Change of Control" shall mean any of the following: (a) any person or
group of persons (within the meaning of the Exchange Act) shall have acquired
beneficial ownership of 20% or more of the issued and outstanding shares of
Common Stock of the Borrower and (b) the Borrower ceases to own 100% of the
issued and outstanding shares of common stock of WAM.
"Closing" shall have the meaning set forth in Section 2.2 hereof.
"Closing Date" shall have the meaning set forth in Section 2.2 hereof.
"Closing Fee" shall mean a fee in an amount equal to $1,050,000,
payable by the Borrower to the Lenders on a pro-rata basis based upon the
respective principal amounts of the Loans of such Lenders set forth on Schedule
A.
"Collateral" shall mean any and all Property covered by the Collateral
Documents and any and all other Property of any Credit Party, now existing or
hereafter acquired, that may at any time be or become subject to a security
interest or Lien in favor of the Collateral Agent, on behalf of itself and the
Lenders, to secure the Obligations, or any portion thereof as the case may be.
"Collateral Access Agreement" shall mean any landlord waiver or other
agreement, in form and substance satisfactory to the Collateral Agent, between
the Collateral Agent and any third party (including any bailee, consignee,
customs broker, or other similar Person) in possession of any Collateral or any
landlord of any Credit Party for any real Property where any Collateral is
located, as such landlord waiver or other agreement may be amended, restated, or
otherwise modified from time to time.
"Collateral Agent" shall have the meaning set forth in the first
paragraph of this Agreement.
"Collateral Documents" shall mean the Guaranty, the Security Agreement
and the Mortgages.
"Common Stock" shall mean the common stock, no par value, of the
Borrower.
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"Consolidated Capital Expenditures" shall mean, with reference to any
period, the Capital Expenditures of the Borrower and its Subsidiaries calculated
on a consolidated basis for such period.
"Consolidated EBITDA" shall mean Consolidated Net Income plus, to the
extent deducted from revenues in determining Consolidated Net Income, (a)
Consolidated Interest Expense, (b) Consolidated Tax Expense, (c) depreciation,
(d) amortization, (e) depletion expense and (f) nonrecurring losses incurred
other than in the ordinary course of business, minus, to the extent included in
Consolidated Net Income, nonrecurring gains realized other than in the ordinary
course of business, all calculated for the Borrower and its Subsidiaries on a
consolidated basis.
"Consolidated EBITDAR" shall mean Consolidated Net Income plus, to the
extent deducted from revenues in determining Consolidated Net Income, (a)
Consolidated Interest Expense, (b) Consolidated Tax Expense, (c) depreciation,
(d) amortization, (e) rental expense, (f) depletion expense and (g) nonrecurring
losses incurred other than in the ordinary course of business, minus, to the
extent included in Consolidated Net Income, nonrecurring gains realized other
than in the ordinary course of business, all calculated for the Borrower and its
Subsidiaries on a consolidated basis. For purposes of this definition, "rental
expense" shall mean, for any period, total rental expense under that certain
Master Lease Agreement, dated December 30, 1996, among Brush ▇▇▇▇▇▇▇, Inc.,
National City Bank and certain participants.
"Consolidated Fixed Charges" shall mean, with reference to any period,
without duplication, Consolidated Interest Expense to the extent paid in cash
during such period, plus scheduled principal payments on Indebtedness made
during such period, plus Capitalized Lease payments made during such period, all
calculated for the Borrower and its Subsidiaries on a consolidated basis.
"Consolidated Funded Debt" shall mean all Indebtedness for borrowed
money and Capitalized Leases, including, without limitation, current, long-term
and Subordinated Indebtedness, for the Borrower and its Subsidiaries on a
consolidated basis; provided that, for purposes of this definition, obligations
under the following will not be considered in calculating Consolidated Funded
Debt: (a) obligations under Rate Management Transactions permitted by this
Agreement, (b) Permitted Precious Metals Agreements; (c) the Kazakhstan
Contract, and (d) Indebtedness under any Sale and Leaseback Transaction
permitted by this Agreement.
"Consolidated Interest Expense" shall mean, with reference to any
period, the interest expense of the Borrower and its Subsidiaries calculated on
a consolidated basis for such period (but not including any up-front fees paid
in connection with this Agreement or the Bank One Credit Agreement).
"Consolidated Net Income" shall mean, with reference to any period, the
net income (or loss) of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
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"Consolidated Tax Expense" shall mean, with reference to any period,
the tax expense of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"Contingent Obligation" of a Person shall mean any agreement,
undertaking or arrangement by which such Person assumes, guarantees, endorses,
contingently agrees to purchase or provide funds for the payment of, or
otherwise becomes or is contingently liable upon, the obligation or liability of
any other Person, or agrees to maintain the net worth or working capital or
other financial condition of any other Person, or otherwise assures any creditor
of such other Person against loss, including, without limitation, any comfort
letter, operating agreement, take-or-pay contract or the obligations of any such
Person as general partner of a partnership with respect to the liabilities of
the partnership.
"Controlled Group" shall mean all members of a controlled group of
corporations or other business entities and all trades or businesses (whether or
not incorporated) under common control which, together with the a Credit Party
or any of its Subsidiaries, are treated as a single employer under Section 414
of the IRC.
"Copyrights" shall have the meaning given to such term in the Security
Agreement.
"Credit Party" shall have the meaning set forth in the first paragraph
of this Agreement.
"Default" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Default Rates" shall have the meaning set forth in Section 2.3(c)
hereof.
"Deposit Account Control Agreement" shall mean an agreement, in form
and substance satisfactory to the Collateral Agent, among any Credit Party, a
banking institution holding such Credit Party's funds, and the Collateral Agent
with respect to collection and control of all deposits and balances held in a
deposit account maintained by any Credit Party with such banking institution.
"Dollar" and the sign "$" shall mean lawful money of the United States
of America.
"Dollar Equivalent" shall mean, with respect to any amount, if such
amount is determined in Dollars, then such amount in Dollars and, if such amount
is not determined in Dollars, the Dollar equivalent of such amount, determined
by the Collateral Agent on the basis of its spot rate at 10:00 a.m. (New York
time) on the date for which the Dollar equivalent amount of such amount is being
determined.
"Domestic Credit Party" shall mean any Credit Party which is organized
under the laws of the United States of America or any state of the United States
of America.
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"Environmental Law" shall mean any and all federal, state, provincial,
local and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and other legally enforceable
governmental restrictions relating to (a) the protection of the environment from
pollutants, contaminants, hazardous substances or wastes, (b) the effect of
pollutants, contaminants, hazardous substances or wastes on human health, (c)
emissions, discharges or releases of pollutants, contaminants, hazardous
substances or wastes into surface water, ground water or land, or (d) the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous substances or
wastes or the clean-up or other remediation thereof.
"Equipment" shall have the meaning given to such term in the Security
Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time, and any
rule or regulation issued thereunder.
"ERISA Plan" shall mean each "employee benefit plan" (within the
meaning of ERISA Section 3(3)) that a Credit Party or any member of its
Controlled Group at any time sponsors, maintains, contributes to, has liability
with respect to or has an obligation to contribute to such plan.
"Event of Default" shall have the meaning set forth in Section 7.1
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.
"Export-Import Loan" shall mean the revolving loan extended to the
Credit Parties by Bank One, NA pursuant to the Export-Import Loan Documents.
"Export-Import Loan Documents" shall mean the Export-Import Bank of the
United States Working Capital Guarantee Program Borrower Agreement, the Export
Loan Agreement, the Loan Authorization Notice, the Intracreditor Subordination
and Confirmation, the Intercreditor Subordination and Confirmation, the
Export-Import Revolving Note and any other documents as may be requested by the
agent under the Bank One Credit Agreement in connection with the Export-Import
Loan executed by the Credit Parties and delivered to Bank One, NA pursuant to
the Bank One Credit Agreement.
"Fiscal Month" shall mean any of the monthly accounting periods of any
Credit Party.
"Fiscal Quarter" shall mean any of the quarterly accounting periods of
any Credit Party.
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"Fiscal Year" shall mean any of the annual accounting periods of any
Credit Party ending on December 31 of each year.
"Fixed Charge Coverage Ratio" shall mean, the ratio, determined as of
the end of each Fiscal Quarter of the Borrower for the then most-recently ended
four Fiscal Quarters of (a) Consolidated EBITDA, minus cash taxes paid, minus
the unfinanced portion of Consolidated Capital Expenditures, minus cash
dividends, plus cash tax refunds to (b) Consolidated Fixed Charges, all
calculated for the Borrower and its Subsidiaries on a consolidated basis.
Notwithstanding the foregoing, for the Fixed Charge Coverage Ratio, the Borrower
shall use Consolidated EBITDAR instead of Consolidated EBITDA in its financial
statements for the period up to and including December 4, 2003 for the basis of
such calculation.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time, applied in a manner
consistent with that used in preparing the financial statements referred to in
Section 3.5.
"Guarantor" shall have the meaning set forth in the first paragraph of
this Agreement.
"Guaranty" shall mean that certain Guaranty, dated as of the Closing
Date, executed by the Guarantors in favor of the Collateral Agent, for the
benefit of the Lenders in the form of Exhibit B attached hereto.
"Indebtedness" of a Person shall mean, without duplication, such
Person's (a) obligations for borrowed money, (b) obligations representing the
deferred purchase price of Property or services (other than accounts payable
arising in the ordinary course of such Person's business payable on terms
customary in the trade), (c) obligations, whether or not assumed, secured by
Liens or payable out of the proceeds or production from Property now or
hereafter owned or acquired by such Person, (d) obligations which are evidenced
by notes, acceptances, or other instruments, (e) obligations of such Person to
purchase securities or other Property arising out of or in connection with the
sale of the same or substantially similar securities or Property or any other
Off-Balance Sheet Liabilities, (f) Capitalized Lease Obligations, (g) Contingent
Obligations for which the underlying transaction constitutes Indebtedness under
this definition, (h) the stated face amount of all letters of credit or bankers'
acceptances issued for the account of such Person and, without duplication, all
reimbursement obligations with respect to such issued letters of credit, (i) any
and all obligations, contingent or otherwise, whether now existing or hereafter
arising, under or in connection with Rate Management Transactions, including,
without limitation, Net ▇▇▇▇-to-Market Exposure, and (j) obligations of such
Person under any Sale and Leaseback Transaction.
"Intellectual Property Rights" shall mean, with respect to any Person,
all of such Person's Patents, Copyrights, Trademarks, and Licenses, all other
rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations and continuations-in-part of any of the foregoing, and
all rights to ▇▇▇ for past, present, and future infringement of any of the
foregoing.
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"Intercompany Note" shall have the meaning assigned to such term
Section 5.2(b)(vi) hereof.
"Interest Payment Date" shall have the meaning assigned to such term in
Section 2.3(a) hereof.
"Inventory" shall have the meaning given to such term in the Security
Agreement.
"Investment" of a Person shall mean any (a) loan or advance, (b)
extension of credit (other than accounts receivable arising in the ordinary
course of business on terms customary in the trade), (c) contribution of capital
by such Person, (d) stocks, bonds, mutual funds, partnership interests, notes,
debentures, securities or other Stock owned by such Person, (e) any deposit
accounts and certificate of deposit owned by such Person, and (f) structured
notes, derivative financial instruments and other similar instruments or
contracts owned by such Person.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"Kazakhstan Contract" shall mean that certain agreement, dated as of
December 21, 1999, among Brush ▇▇▇▇▇▇▇ Inc., Kazatomprom, Ulba Metallurgical
Plant, and NUKEM, Inc. as amended from time to time, but only to the extent that
the Dollar Equivalent of any Indebtedness related thereto does not exceed
$9,000,000 during any consecutive 12-month period.
"Lender" shall have the meaning set forth in the first paragraph of
this Agreement and shall include any permitted assignee of a Note in accordance
with Section 10.1 hereof.
"Leverage Ratio" shall mean, the ratio, determined as of the end of
each Fiscal Quarter of the Borrower for the then most-recently ended four Fiscal
Quarters of (a) Consolidated Funded Debt to (b) Consolidated EBITDA.
Notwithstanding the foregoing, for the Leverage Ratio calculations that require
the Borrower to include financial information from any Fiscal Quarter occurring
in 2003, the Borrower shall use Consolidated EBITDAR instead of Consolidated
EBITDA for such calculation.
"Licenses" shall have the meaning given to such term in the Security
Agreement.
"Lien" means any lien (statutory or other), mortgage, security
interest, pledge, hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, the interest of a
vendor or lessor under any conditional sale, Capital Lease or other title
retention agreement).
"Loan Documents" shall mean this Agreement, the Notes, the Collateral
Documents and all other agreements, instruments, documents and certificates,
including,
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without limitation, pledges, powers of attorney, consents, assignments,
contracts, notices, and all other written matter whether heretofore, now or
hereafter executed by or on behalf of any Credit Party, and delivered to the
Collateral Agent or the Lenders in connection with this Agreement or the
transactions contemplated hereby. Any reference in this Agreement or any other
Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to this Agreement or such Loan Document
as the same may be in effect at any and all times such reference becomes
operative.
"Margin Stock" shall have the meaning set forth in Section 3.13 hereof.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, Property, condition (financial or otherwise), or results of
operations of the Borrower and its Subsidiaries taken as a whole, (b) the
ability of any Credit Party to perform its material obligations under the
Transaction Documents to which it is a party, (c) a material portion of the
Collateral, or the Collateral Agent's Liens (on behalf of itself and the
Lenders) on the Collateral or the priority of such Liens or (d) the validity or
enforceability of any of the Transaction Documents or the rights or remedies of
the Collateral Agent or the Lenders thereunder.
"Material Indebtedness" shall mean Indebtedness in an outstanding
principal amount of $5,000,000 or more in the aggregate (or the equivalent
thereof in any currency other than Dollars).
"Material Indebtedness Agreement" means any agreement under which any
Material Indebtedness was created or is governed or which provides for the
incurrence of Indebtedness in an amount which would constitute Material
Indebtedness (whether or not an amount of Indebtedness constituting Material
Indebtedness is outstanding thereunder).
"Maturity Date" shall mean December 5, 2008.
"Maximum Bank One Debt" shall mean the sum of (i) the aggregate
outstanding principal amount of Bank One Revolving Loans and letter of credit
accommodations made or issued pursuant to the Bank One Debt Documents, Rate
Management Obligations owing by the Credit Parties to the Bank One Lenders and
Banking Services Obligations equal to the lesser of (A) $97,500,000 and (B) 105%
of Availability (as such term is defined in the Bank One Credit Agreement as in
effect on the date hereof) in effect as of the date of the last Advance or
issuance of a Letter of Credit (as such terms are defined in the Bank One Credit
Agreement) under the Bank One Credit Agreement plus (ii) the aggregate
outstanding principal of the Export-Import Loan made pursuant to the Bank One
Credit Agreement equal to the lesser of (A) the principal amount of the
Export-Import Loan outstanding at any time and (B) $7,500,000 plus (iii) the
aggregate outstanding principal amount of the Bank One Term Loans made pursuant
to the Bank One Debt Documents equal to the principal amount of such Term Loans
outstanding on the date hereof as reduced from time to time by voluntary or
scheduled principal payments and prepayments of such term loans pursuant to the
terms set forth in the Bank One Debt Documents (as in effect on the date
hereof).
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"Maximum Lawful Rate" shall have the meaning set forth in Section
2.3(d) hereof.
"Mortgages" shall mean any mortgage, deed of trust or other agreement
which conveys or evidences a Lien, for the benefit of the Collateral Agent and
the Lenders, on real Property of a Credit Party, including any amendment,
modification or supplement thereto.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which a Credit Party or any member of a
Controlled Group is a party or which it is obligated to make contributions.
"Net ▇▇▇▇-to-Market Exposure" of a Person shall mean, as of any date of
determination, the excess (if any) of all unrealized losses over all unrealized
profits of such Person arising from Rate Management Transactions. As used in
this definition, "unrealized losses" shall mean the fair market value of the
cost to such Person of replacing such Rate Management Transaction as of the date
of determination (assuming the Rate Management Transaction were to be terminated
as of that date), and "unrealized profits" shall mean the fair market value of
the gain to such Person of replacing such Rate Management Transaction as of the
date of determination (assuming such Rate Management Transaction were to be
terminated as of that date).
"Notes" shall have the meaning set forth in the recitals.
"Obligations" shall mean all amounts owing by the Credit Parties to the
Lenders (and any of their respective assignees) pursuant to any of the Loan
Documents, including all principal, interest, fees, expenses, attorneys' fees
and any other sum payable by the Credit Parties under any of the Loan Documents.
"Off-Balance Sheet Liability" of a Person shall mean (a) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (b) any indebtedness, liability or obligation
under any Sale and Leaseback Transaction to which such Person is a party which
is not a Capital Lease, (c) any indebtedness, liability or obligation under any
so-called "synthetic lease" transaction entered into by such Person, or (d) any
indebtedness, liability or obligation arising with respect to any other
transaction to which such Person is a party which is the functional equivalent
of or takes the place of borrowing but which does not constitute a liability on
the balance sheets of such Person, but excluding obligations with respect to
Operating Leases.
"Operating Lease" of a Person shall mean any lease of Property (other
than a Capital Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of the
lessor) of one year or more.
"Operating Lease Obligations" shall mean, as at any date of
determination, the amount obtained by aggregating the present values, determined
in the case of each particular Operating Lease by applying a discount rate
(which discount rate shall equal
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the discount rate which would be applied under GAAP if such Operating Lease were
a Capital Lease) from the date on which each fixed lease payment is due under
such Operating Lease to such date of determination, of all fixed lease payments
due under all Operating Leases of the Borrower and its Subsidiaries.
"Other Taxes" shall have the meaning set forth in Section 2.10(b).
"Patents" shall have the meaning given to such term in the Security
Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Liens" shall have the meaning set forth in Section 5.2(g)
hereof.
"Permitted Precious Metals Agreements" means precious metals agreements
and arrangements (whether styled as debt, a lease, a consignment or otherwise)
entered into from time to time by any Credit Party, but only to the extent that
the aggregate Dollar Equivalent of the precious metals subject thereto does not
exceed $60,000,000. For purposes of this definition, "precious metals" shall
include, without limitation, gold, silver, platinum, palladium and copper (even
though copper is not generally deemed to be a precious metal).
"Person" shall mean any natural person, corporation, firm, joint
venture, partnership, limited liability company, association, enterprise, trust
or other entity or organization, or any government or political subdivision or
any agency, department or instrumentality thereof.
"Plan" shall mean an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the IRC as to which a Credit Party or any member of a Controlled Group may
have any liability.
"Prime Rate" shall mean, with respect to any period commencing on any
Interest Payment Date and ending on the day immediately before the Interest
Payment Date immediately following such date, the prime rate of interest
specified under the Bloomberg reference identified as "PRIMBB Index" on the date
that is two Business Days prior to the first day of such period; provided,
however, that if such rate is not available, "Prime Rate" shall mean such rate
of interest as is publicly announced by Citibank, N.A. in New York, New York on
such day as its prime or base rate.
"Prior Agreements" shall have the meaning set forth in Section 6.1(k)
hereof.
"Projections" shall have the meaning set forth in Section 5.1(a)(iv)
hereof.
"Property" of a Person shall mean any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person; other assets owned by
such Person; and to the extent of such Person's interest therein, other assets
leased or operated by such Person.
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"Rate Management Obligations" shall mean any and all obligations of the
Credit Parties, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all Rate
Management Transactions, and (b) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.
"Rate Management Transaction" shall mean any transaction (including an
agreement with respect thereto) now existing or hereafter entered into by any
Credit Party on market terms which is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
forward transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction (including any
option with respect to any of these transactions) or any combination thereof,
whether linked to one or more interest rates, foreign currencies, commodity
prices, equity prices or other financial measures.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Reportable Event" shall mean a reportable event as defined in Section
4043 of ERISA and the regulations issued under such section, with respect to a
Plan, excluding, however, such events as to which the PBGC has by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified within
thirty days of the occurrence of such event; provided, however, that a failure
to meet the minimum funding standard of Section 412 of the IRC and of Section
302 of ERISA shall be a Reportable Event regardless of the issuance of any such
waiver of the notice requirement in accordance with either Section 4043(a) of
ERISA or Section 412(d) of the IRC.
"Required Lenders" shall mean, at any time, Lenders holding Loans
representing greater than 50% of the sum of the aggregate principal amount of
all Loans outstanding at such time.
"Sale and Leaseback Transaction" shall mean any sale or other transfer
of Property by any Person with the intent to lease such Property as lessee.
"SEC" shall mean the U.S. Securities and Exchange Commission, or any
successor thereto.
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"Securities Act" shall mean the Securities Act of 1933, as amended, and
all rules and regulations promulgated thereunder.
"Security Agreement" shall mean that certain Pledge and Security
Agreement, dated as of the date hereof, between the Credit Parties and the
Collateral Agent, for the benefit of the Collateral Agent and the Lenders in the
form of Exhibit C attached hereto, and any other pledge or security agreement
entered into, after the Closing Date by any other Credit Party (as required by
this Agreement or any other Loan Document), or any other Person, as the same may
be amended, restated or otherwise modified from time to time.
"Single Employer Plan" shall mean a Plan maintained by a Credit Party
or any member of a Controlled Group for employees of such Credit Party or any
member of a Controlled Group.
"Special Default" shall mean any Event of Default triggered by Section
7.1(a) or the breach of the terms and provisions of Section 5.1(i), Section
5.1(k) or Section 5.2(n).
"Stock" shall mean any and all corporate stock, units, shares,
partnership interests, membership interests, equity interests, rights,
securities, or other equivalent evidences of ownership (howsoever designated)
issued by any Person.
"Subordinated Indebtedness" of a Person means any Indebtedness of such
Person the payment of which is contractually subordinated to payment of the
Obligations to the written satisfaction of the Collateral Agent.
"Subsidiary" of a Person shall mean any corporation, partnership,
limited liability company, association, joint venture or similar business
organization more than 50% of the outstanding Stock having ordinary voting power
of which shall at the time be owned or controlled by such Person. Unless
otherwise expressly provided, all references herein to a "Subsidiary" shall mean
a Subsidiary of the Borrower.
"Substantial Portion" shall mean Property which represents more than
the greater of (a) $5,000,000 or (b) 10% of the consolidated assets of a Credit
Party or property which is responsible for more than 10% of the consolidated net
sales or of the consolidated net income of such Credit Party, as would be shown
in the consolidated financial statements of such Credit Party as at the
beginning of the twelve-month period ending with the month in which such
determination is made (or if financial statements have not been delivered
hereunder for that month which begins the twelve-month period, then the
financial statements delivered hereunder for the quarter ending immediately
prior to that month).
"Taxes" shall have the meaning set forth in Section 2.10(a) hereof.
"Trademarks" shall have the meaning given to such term in the Security
Agreement.
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"Transaction Documents" shall mean this Agreement, the Notes, the
Warrants and the Collateral Documents.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of Ohio or any other state the laws of which are required to
be applied in connection with the issue of perfection of security interests.
"Unfunded Liabilities" shall mean the aggregate "unfunded current
liabilities" of all Single Employer Plans as defined under Section 412(l)(8)(A)
of the IRC.
"WAM" shall mean ▇▇▇▇▇▇▇▇ Advanced Materials, Inc., a New York
corporation.
"Warrant" shall mean a Warrant to purchase Common Stock of the Borrower
to be issued to each of the Lenders hereunder, substantially in the form of
Exhibit D hereto.
"Wholly-Owned Subsidiary" of a Person shall mean, any Subsidiary all of
the outstanding Stock of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person.
References to this "Agreement" shall mean this Loan Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. The words "herein," "hereof' and "hereunder" and other words of
similar import refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement. Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter.
2. LOAN FACILITY AND WARRANTS
2.1. The Loans and Warrants. (a) Subject to the terms and
conditions set forth in this Agreement, each Lender hereby severally, and not
jointly, agrees to make a Loan to the Borrower on the Closing Date in the
principal amount set forth opposite such Lender's name on Schedule A. The
aggregate principal amount of the Loans to be advanced by the Lenders on the
Closing Date shall be $35,000,000.
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(b) Subject to the terms and conditions set forth in this
Agreement, the Borrower agrees to issue to the Lenders, on the Closing Date, the
Warrants set forth opposite each such Lenders name on Schedule A. Each such
Warrant shall be substantially in the form of Exhibit D hereto.
2.2. Closing. The making of the Loans and the issuance of the
Warrants (the "Closing") shall take place on December 4, 2003 or such date and
time as shall be mutually agreed to by the parties hereto (the "Closing Date")
at such place as shall be mutually agreed to by the parties hereto. On the
Closing Date, the Borrower will deliver to each Lender (i) a Note payable to
such Lender in an aggregate principal amount equal to the amount of the Loan
advanced by such Lender (as set forth on Schedule A), (ii) the Warrants and
(iii) the Closing Fee (on a pro rata basis based upon each Lender's respective
principal amount of the Loans set forth on Schedule A).
2.3. Interest. (a) The Borrower shall pay accrued Cash Interest on
the Loans to each Lender, quarterly in arrears on the first day of each calendar
quarter commencing on January 1, 2004 through the date of repayment in full
(each, an "Interest Payment Date"), on such Lender's ratable share of the
outstanding principal amount of the Loans. The unpaid principal balance of the
Loans shall also bear Additional Interest, which shall be compounded and become
part of the outstanding principal balance of the Loans on each Interest Payment
Date and shall be payable in cash on the earlier of (x) any prepayment of the
Loans (as to the Loans and the amount prepaid) and (y) the Maturity Date. All
interest on the Loans will be computed on the basis of a year of 360 days,
composed of twelve 30-day months and the actual number of days elapsed.
(b) If any payment on any Loan becomes due and payable on
a day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate for such Loan
during such extension.
(c) So long as any Event of Default arising out of a
breach of Section 7.1(a) or Section 5.2(n) shall be continuing, the rate of Cash
Interest applicable to the Loans shall be increased by (i) 1% per annum above
the rate of Cash Interest otherwise applicable to the Loans to the extent such
Event of Default is the first occurrence of any Event of Default under Section
7.1(a) or Section 5.2(n) and (ii) 2% per annum above the rate of Cash Interest
otherwise applicable to the Loans to the extent such Event of Default is an
Event of Default not described in clause (i) above (such interest rates in
clauses (i) and (ii), the "Default Rates"). In no event will any deemed waiver
of any Event of Default arising out of a breach of Section 5.2(n) by the
Collateral Agent or the Lenders as a result of any waiver of the corresponding
default under the Bank One Credit Agreement prohibit the Lenders from receiving
the Default Rates specified in this Section at the times permitted by this
Section.
(d) Notwithstanding anything to the contrary set forth in
this Section 2.3, if at any time until payment in full of the Loans, the
interest rate payable on any Loan exceeds the highest rate of interest
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto (the
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"Maximum Lawful Rate"), then in such event and so long as the Maximum Lawful
Rate would be so exceeded, the rate of interest payable on such Loans shall be
equal to the Maximum Lawful Rate. Thereafter, the interest rate payable on such
Loans shall be the applicable interest rate pursuant to clauses (a) through (c)
above unless and until such rate again exceeds the Maximum Lawful Rate, in which
event this paragraph shall again apply. In no event shall the total interest
received by any Lender for any Loan pursuant to the terms hereof exceed the
amount which it could lawfully have received for such Loan had the interest due
hereunder for such Loan been calculated for the full term thereof at the Maximum
Lawful Rate. In the event the Maximum Lawful Rate is calculated pursuant to this
paragraph, such interest shall be calculated at a daily rate equal to the
Maximum Lawful Rate divided by the number of days in the year in which such
calculation is made. In the event that a court of competent jurisdiction,
notwithstanding the provisions of this Section 2.3(d), shall make a final
determination that a Lender has received interest hereunder or under any of the
Loan Documents in excess of the Maximum Lawful Rate, such Lender shall, to the
extent permitted by applicable law, promptly apply such excess first to any Cash
Interest due or accrued and not yet paid under the Loans, then to any Additional
Interest due or accrued and not yet paid under the Loans, then to the
outstanding principal of the Loans, then to other unpaid Obligations and
thereafter shall refund any excess to the Borrower or as a court of competent
jurisdiction may otherwise order.
2.4. Optional Prepayment. (a) Subject to Section 2.4(b) below, the
Borrower may not prepay the outstanding principal amount of any of the Loans, in
whole or in part, prior to December 4, 2005. From and after December 5, 2005,
the Borrower may, upon at least 10 days' prior written notice to the Lenders
stating the proposed date and the aggregate principal amount of the prepayment,
from time to time, prepay the outstanding principal amount of the Loans, in
whole or in part (in multiples of not less than $500,000 or the amount of the
Loans outstanding and on a pro rata basis among the Loans). Each prepayment
shall be accompanied by the payment of accrued and unpaid Additional Interest on
the amount being prepaid with respect to the applicable Loan and all accrued and
unpaid Cash Interest with respect to the applicable Loan, each through the date
of payment, together with a prepayment premium equal to the principal amount
prepaid multiplied by the percentage set forth below corresponding to the date
of such prepayment:
Date of Prepayment Percentage
------------------ ----------
December 5, 2005 - December 4, 2006 6%
December 5, 2006 - December 4, 2007 3%
December 5, 2007 and thereafter 0%
(b) The Borrower may, at any time prior to the date that
is 9 months after the Closing Date, upon at least 10 days' prior written notice
to the Lenders stating the proposed date and the aggregate principal amount of
the prepayment, prepay up to $5,000,000 of the outstanding principal amount of
the Loans, in whole or in part (in multiples of not less than $500,000 and on a
pro rata basis among the Loans), without any prepayment premium or penalty.
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2.5. Repayment of Loans. The Borrower promises to repay the entire
unpaid principal amount of, and any unpaid and accrued Cash Interest and
Additional Interest on, the Loans on the Maturity Date.
2.6. Use of Proceeds. The Borrower will use the proceeds of the
issuance of the Notes hereunder to (i) repay existing indebtedness of the Credit
Parties and their Subsidiaries, (ii) pay related transaction costs and fees and
(iii) for working capital needs of the Credit Parties.
2.7. Receipt of Payments. The Borrower shall make each payment
under the Notes not later than 5:00 P.M. (New York City time) on the day when
due in lawful money of the United States of America in immediately available
funds to each Lender's respective depository bank in the United States as
designated by such Lender from time to time for deposit in such Lender's
depositary account. For purposes only of computing interest under the Notes, all
payments shall be applied by each Lender to the Notes on the day payment has
been credited by such Lender's depository bank to such Lender's account in
immediately available funds.
2.8. Application of Payments. All payments hereunder shall be
applied in the following order: (i) then due and payable fees and expenses; (ii)
then due and payable or accrued Cash Interest payments on the Notes; (iii) then
due and payable or accrued Additional Interest payments on the Notes; (iv) then
outstanding principal of the Notes; (v) then other unpaid Obligations.
2.9. Sharing of Payments. If any holder of the Notes or a portion
thereof shall obtain any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) on account of the Notes held by
it in excess of its ratable share of payments on account of the Notes, held by
all holders thereof, such holder shall forthwith purchase from each other holder
of Notes, as applicable, such participations in the Note held by it as shall be
necessary to cause such purchasing holder to share the excess payment ratably
with each other holder of Notes; provided, however, that if all or any portion
of such excess payment is thereafter recovered from such purchasing holder, such
purchase shall be rescinded and such holder shall repay to the purchasing holder
the purchase price to the extent of such recovery together with an amount equal
to such holder's ratable share (according to the proportion of (i) the amount of
such holder's required repayment to (ii) the total amount so recovered from the
purchasing holder) of any interest or other amount paid or payable by the
purchasing holder in respect of the total amount so recovered. The Borrower
agrees that any holder so purchasing a participation may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such holder were the
direct creditor of the Borrower in the amount of such participation. The
Borrower further agrees to make all payments on the Notes to all holders thereof
on a pro rata basis, based on the principal amount of the Notes held by each;
provided, however, that the Borrower will continue to make payments to the
original Lenders until it receives at least 2 Business Days prior notice of any
participations in any Note.
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2.10. Taxes. (a) Any and all payments by the Borrower hereunder or
under the Notes shall be made, in accordance with this Section 2.10, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on or measured by the net income of the
respective Lender, by the jurisdiction under the laws of which such Lender is
organized or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under the
Notes to any Lender, (i) the Borrower shall make such deductions and (ii) the
Borrower shall pay the full amount deducted to the relevant taxing or other
authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present
or future stamp or documentary taxes or any other sales, transfer, exercise,
mortgage recording or property taxes, charges or similar levies that arise from
any payment made hereunder or under the Notes or from the execution, sale,
transfer, delivery or registration of, or otherwise with respect to, any of the
Transaction Documents (hereinafter referred to as "Other Taxes").
(c) The Borrower shall indemnify each Lender for the full
amount of Taxes or Other Taxes (including without limitation, any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section 2.10)
paid by such Lender and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. This indemnification shall be
made within 30 days from the date such Lender makes written demand therefor.
(d) Within 30 days after the date of any payment of
Taxes, the Borrower shall furnish to each Lender the original or a certified
copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement of any Credit Party hereunder, the agreements and obligations of the
Borrower contained in this Section 2.10 shall survive the payment in full of the
Notes.
2.11. Original Issue Discount. The Borrower and the Lenders hereby
acknowledge and agree that each Warrant is part of an investment unit within the
meaning of Section 1273(c)(2) of the IRC, which includes the Note being issued
to each Lender. Notwithstanding anything to the contrary contained herein, the
Borrower and the Lenders hereby further acknowledge and agree that for United
States federal, state and local income tax purposes the "issue price" of the
Warrants under Section 1273(b) of the IRC shall equal $1,242,500. The Borrower
and the Lenders agree to use the foregoing issue price for all income tax
purposes with respect to this transaction.
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3. CREDIT PARTIES' REPRESENTATIONS AND WARRANTIES
Each Credit Party, jointly and severally, makes the following
representations and warranties to each Lender, each and all of which shall
survive the execution and delivery of this Agreement and the Closing hereunder:
3.1. Existence and Standing. Each Credit Party is a corporation,
partnership (in the case of Subsidiaries only) or limited liability company duly
and properly incorporated or organized, as the case may be, validly existing and
(to the extent such concept applies to such entity) in good standing or full
force and effect under the laws of its jurisdiction of incorporation or
organization and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.
3.2. Authorization and Validity. Each Credit Party has the power
and authority and legal right to execute and deliver the Transaction Documents
to which it is a party and to perform its obligations thereunder. The execution
and delivery by each Credit Party of the Transaction Documents to which it is a
party and the performance of its obligations thereunder have been duly
authorized by proper proceedings, and the Transaction Documents to which such
Credit Party is a party constitute legal, valid and binding obligations of such
Credit Party enforceable against such Credit Party in accordance with their
terms, except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and except
as the same may be subject to general principles of equity.
3.3. No Conflict; Government Consent. Neither the execution and
delivery by any Credit Party of the Loan Documents to which it is a party, nor
the consummation of the transactions therein contemplated, nor compliance with
the provisions thereof will violate (i) any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on such Credit Party or (ii) any
Credit Party's memorandum, articles or certificate of incorporation, partnership
agreement, certificate of partnership, articles or certificate of organization,
by-laws, code of regulations, or operating or other management agreement, as the
case may be, or (iii) the provisions of any indenture, instrument or agreement
to which any Credit Party is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default thereunder, or
result in, or require, the creation or imposition of any Lien (other than a
Permitted Lien) in, of or on the Property of such Credit Party pursuant to the
terms of any such indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of, or filing
(other than appropriate filings under the UCC or other applicable law),
recording or registration with, or exemption by, or other action in respect of
any governmental or public body or authority, or any subdivision thereof, which
has not been obtained by a Credit Party, is required to be obtained by any
Credit Party in connection with the execution and delivery of the Loan
Documents, the borrowings under this Agreement, the payment and performance by
the Credit Parties of the Obligations or the legality, validity, binding effect
or enforceability of any of the Loan Documents.
3.4. Security Interest in Collateral. The provisions of this
Agreement and the other Loan Documents create legal and valid Liens on all the
Collateral in favor of the
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Collateral Agent, for the benefit of the Collateral Agent and the Lenders, and
provided that the Collateral Agent does what is required to continue the
perfection of such Liens under the UCC such Liens constitute perfected and
continuing Liens on the Collateral, securing the Obligations, enforceable
against the applicable Credit Party and all third parties, and having priority
over all other Liens on the Collateral except in the case of (a) Permitted
Liens, to the extent any such Permitted Liens would have priority over the Liens
in favor of the applicable agent and Lenders pursuant to any applicable law or
agreement and (b) Liens perfected only by possession (including possession of
any certificate of title) to the extent the Collateral Agent has not obtained or
does not maintain possession of such Collateral.
3.5. Financial Statements. (a) The audited consolidated financial
statements of the Borrower and its Subsidiaries for the period ending on
December 31, 2002 heretofore delivered to the Collateral Agent and each of the
other financial statements now or hereafter delivered pursuant to Section 5.1(a)
were prepared in accordance with GAAP (as in effect on the date such statements
were prepared) and fairly present the consolidated financial condition and
operations of the Borrower and its Subsidiaries at such date and the
consolidated results of their operations for the period then ended. The
unaudited consolidated financial statements of the Borrower and its Subsidiaries
for the Fiscal Quarter ended September 26, 2003 heretofore delivered by the
Borrower to the Collateral Agent and the Lenders were prepared in accordance
with GAAP (as in effect on the date such statements were prepared except for the
presentation of footnotes and for applicable normal year-end audit adjustments)
and fairly present the consolidated financial condition and operations of the
Borrower and its Subsidiaries at such date and the consolidated results of their
operations for the period then ended.
(b) The most recent Projections delivered to the
Collateral Agent pursuant to Section 5.1(a)(iv), represent the Borrower's good
faith estimate (based on assumptions that the Borrower believed at the time to
be reasonable) of the future consolidated financial performance of the Borrower
and its Subsidiaries for the period set forth therein.
3.6. Material Adverse Change. Since December 31, 2002, there has
been no change in the business, Property, condition (financial or otherwise) or
results of operations of the Credit Parties which could reasonably be expected
to have a Material Adverse Effect.
3.7. Taxes. The Credit Parties have filed all U.S. federal, state
and local tax returns and all other tax returns which are required to be filed
and have paid all material taxes due pursuant to said returns or pursuant to any
assessment received by any Credit Party, except such taxes, if any, as are being
contested in good faith and as to which adequate reserves have been provided in
accordance with GAAP and as to which no Lien exists. No tax liens have been
filed and no claims are being asserted with respect to any such taxes. The
charges, accruals and reserves on the books of the Credit Parties in respect of
any taxes or other governmental charges are adequate. If any Credit Party is a
limited liability company, each such limited liability company qualifies for
partnership tax treatment under U.S. federal tax law.
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3.8. Litigation and Contingent Obligations. Except as set forth on
Schedule 3.8, there is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the knowledge of any of their officers,
threatened against or affecting any Credit Party or ERISA Plan which could
reasonably be expected to have a Material Adverse Effect. Other than any
liability incident to any litigation, arbitration or proceeding which (i) could
not reasonably be expected to have a Material Adverse Effect or (ii) is set
forth on Schedule 3.8, no Credit Party has any material Contingent Obligations
not provided for or disclosed in the financial statements referred to in Section
3.5.
3.9. Subsidiaries and Capitalization. Schedule 3.9 sets forth (i) a
correct and complete list of the name and relationship to each Credit Party of
each and other Credit Party and all of their Subsidiaries, (ii) the location of
the chief executive office of each Credit Party and each of its Subsidiaries and
each other location where any of them have maintained their chief executive
office in the past five years, (iii) a true and complete listing of each class
of each Credit Party's authorized Stock, of which all of such issued shares are
validly issued, outstanding, fully paid and non-assessable, and owned
beneficially and of record by the Persons identified on Schedule 3.9, and (iv)
the type of entity of each Credit Party and each of its Subsidiaries. With
respect to each Credit Party, Schedule 3.9 also sets forth the employer or
taxpayer identification number of each Credit Party and the organizational
identification number issued by each Credit Party's jurisdiction of organization
or a statement that no such number has been issued. All of the issued and
outstanding Stock owned by any Credit Party has been (to the extent such
concepts are relevant with respect to such ownership interests) duly authorized
and issued and is fully paid and non-assessable.
3.10. ERISA. As of May 31, 2003, the Unfunded Liabilities of all
Single Employer Plans do not in the aggregate exceed $30,000,000 for the
Domestic Credit Parties. No Credit Party or any other member of the Controlled
Group is party to, or had an obligation with respect to, and Multiemployer Plan.
No Credit Party or any other member of the Controlled Group has incurred, or is
reasonably expected to incur, any excise tax or penalty relating to an ERISA
Plan, any material liability to the PBGC or any withdrawal liability to
Multiemployer Plans. Each ERISA Plan complies and has been administered in all
material respects with all applicable requirements of law and regulations, no
Reportable Event, prohibited transaction (as defined in ERISA Section 406 or IRC
Section 4975) or breach of fiduciary duty under ERISA has occurred with respect
to any Plan, no Credit Party or any other member of a Controlled Group has
withdrawn from any Plan or initiated steps to do so, and no steps have been
taken to terminate any Plan.
3.11. Accuracy of Information. No information, exhibit or report
furnished by any Credit Party to the Collateral Agent or to any Lender in
connection with the negotiation of, or compliance with, the Loan Documents taken
as a whole contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein not
misleading at the time made and in light of the circumstances in which such
facts were presented.
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3.12. Names; Prior Transactions. Except as set forth on Schedule
3.12, the Credit Parties have not, during the past five years, been known by or
used any other corporate or fictitious name, or been a party to any merger or
consolidation, or been a party to any Acquisition.
3.13. Regulation U. No Credit Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" as such
terms are defined in Regulation U of the Federal Reserve Board as now and from
time to time hereafter in effect (such securities being referred to herein as
"Margin Stock"). No Credit Party owns any Margin Stock, and none of the proceeds
of the Loans or other extensions of credit under this Agreement will be used,
directly or indirectly, for the purpose of purchasing or carrying any Margin
Stock, for the purpose of reducing or retiring any Indebtedness that was
originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action that might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.14. Material Agreements. Schedule 3.14 hereto sets forth as of the
Closing Date all material agreements and contracts (for purposes of this
Section, defined as those agreements and contracts required to be filed by the
Borrower with the SEC with the Borrower's periodic reports) to which any Credit
Party is a party or is bound as of the date hereof. No Credit Party is subject
to any charter or other corporate restriction which could reasonably be expected
to have a Material Adverse Effect. No Credit Party is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any material agreement to which it is a party or
(ii) any agreement or instrument evidencing or governing Material Indebtedness.
3.15. Compliance With Laws. The Credit Parties have complied in all
material respects with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property.
3.16. Ownership of Properties. Except as set forth on Schedule 3.16,
on the date of this Agreement, the Credit Parties will have good title, free of
all Liens other than those permitted by Section 5.2(b), to all of the Property
reflected in the Credit Parties' most recent consolidated financial statements
provided to the Collateral Agent as owned by the Credit Parties.
3.17. Plan Assets; Prohibited Transactions. No Borrower is an entity
deemed to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101
of an employee benefit plan (as defined in Section 3(3) of ERISA) which is
subject to Title I of ERISA or any plan (within the meaning of Section 4975 of
the IRC), and neither the execution of this Agreement nor the making of the
Loans hereunder gives rise to a prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the IRC.
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3.18. Environmental Matters. In the ordinary course of its business,
the officers of each Credit Party consider the effect of Environmental Laws on
the business of such Credit Party, in the course of which they identify and
evaluate potential risks and liabilities accruing to such Credit Party due to
Environmental Laws. Except as set forth in Schedule 3.18, the Credit Parties
have complied with all Environmental Laws in all material respects, and no
Credit Party has received any notice to the effect that its operations are not
in material compliance with any of the requirements of applicable Environmental
Laws or are the subject of any federal or state investigation evaluating whether
any remedial action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment.
3.19. Investment Company Act. No Credit Party is an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
3.20. Public Utility Holding Company Act. No Credit Party is a
"holding company" or a "subsidiary company" of a "holding company," or an
"Affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
3.21. Bank Accounts. Exhibit B to the Security Agreement contains a
complete and accurate list of all bank accounts (other than ▇▇▇▇▇ cash accounts
with a balance of less than $5,000) maintained by each Credit Party with any
bank or other financial institution.
3.22. Indebtedness. The Credit Parties have no Indebtedness, except
for (a) the Obligations, (b) the Indebtedness described on Schedule 3.22 and (c)
the Indebtedness pursuant to the Permitted Precious Metals Agreements existing
on the date hereof.
3.23. Affiliate Transactions. Except as set forth on Schedule 3.23,
there are no existing or proposed agreements, arrangements, understandings, or
transactions between any Credit Party and any of the officers, members,
managers, directors, stockholders, parents, other interest holders, employees,
or Affiliates (other than Subsidiaries) of any Credit Party or any members of
their respective immediate families, and none of the foregoing Persons are
directly or indirectly indebted to or have any direct or indirect ownership,
partnership, or voting interest in any Affiliate of any Credit Party or any
Person with which any Credit Party has a business relationship or which competes
with any Credit Party.
3.24. Real Property; Leases. Schedule 3.24 sets forth a correct and
complete list of all real Property owned by each Credit Party, all material
leases and subleases of real Property by each Credit Party as lessee or
sublessee, and all leases and subleases of real Property by each Credit Party as
lessor or sublessor. For purposes of the foregoing sentence, "material" shall
mean a lease or sublease related to a location where Inventory in excess of
$1,000,000 is located. Each of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and effect, and no
default by any Credit Party, or to the knowledge of the Credit Parties, by any
other party to any such
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lease or sublease exists. Each Credit Party has good and indefeasible title in
fee simple to the real Property identified on Schedule 3.24 as owned by such
Credit Party, or valid leasehold interests in all real Property designated
therein as "leased" by such Credit Party.
3.25. Intellectual Property Rights. (a) Schedule 3.25 sets forth a
correct and complete list of all registered Intellectual Property Rights of each
Credit Party; (b) none of the Intellectual Property Rights listed in Schedule
3.25 is subject to any material licensing agreement or similar arrangement
except as set forth in Schedule 3.25; (c) the Intellectual Property Rights
described in Schedule 3.25 constitute all of the material property of such type
necessary to the current and anticipated future conduct of the Credit Parties'
business; (d) to each Credit Party's knowledge, no Intellectual Property Right
now contemplated to be employed, by any Credit Party infringes in any material
respect upon any rights held by any other Person; and (e) no claim or litigation
regarding any of the foregoing is pending or, to the knowledge of any Credit
Party, threatened.
3.26. Insurance. The Credit Parties maintain, with financially sound
and reputable Insurers, insurance with coverage and limits as required by law
and (except to the extent self-insured by the Credit Parties) as is customary
with Persons engaged in the same or substantially similar lines of business as
the Credit Parties. Schedule 3.26 lists all insurance policies of any nature
maintained by each Credit Party, as well as a summary of the terms of each such
policy.
3.27. Solvency.
(a) Immediately after the making of the Loans, and after
giving effect to the application of the proceeds of such Loans, (i) the fair
value of the assets of each Credit Party, at a fair valuation, will exceed the
debts and liabilities, subordinated, contingent or otherwise, of each Credit
Party; (ii) the present fair saleable value of the Property of each Credit Party
will be greater than the amount that will be required to pay the probable
liability of each Credit Party on its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured; (iii) each Credit Party will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) each Credit Party will not have unreasonably
small capital with which to conduct the businesses in which it is engaged as
such businesses are now conducted and are proposed to be conducted after the
date hereof.
(b) The Borrower does not intend to, or to permit any of
its Subsidiaries to, and do not believe that it or any of the Subsidiaries will,
incur debts beyond its ability to pay such debts as they mature, taking into
account the timing of and amounts of cash to be received by them or any such
Subsidiary and the timing of the amounts of cash to be payable on or in respect
of its Indebtedness or the Indebtedness of any such Subsidiary.
3.28. Subordinated Indebtedness. The Obligations constitute senior,
subordinated indebtedness which is entitled to the benefits of the subordination
provisions of all outstanding Subordinated Indebtedness.
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3.29. Post-Retirement Benefits. As of January 1, 2003, the aggregate
present actuarial value of the expected cost of post-retirement medical and
insurance benefits payable by each Domestic Credit Party to its employees and
former employees, as estimated by such Domestic Credit Party in accordance with
procedures and assumptions deemed reasonable by the Required Lenders, does not
exceed $46,000,000.
3.30. Common Enterprise. The successful operation and condition of
each of the Credit Parties is dependent on the continued successful performance
of the functions of the group of the Credit Parties as a whole and the
successful operation of each of the Credit Parties is dependent on the
successful performance and operation of each other Credit Party. Each Credit
Party expects to derive benefit (and its board of directors or other governing
body has determined that it may reasonably be expected to derive benefit),
directly and indirectly, from (i) successful operations of each of the other
Credit Parties and (ii) the credit extended by the Lenders to the Borrower
hereunder, both in their separate capacities and as members of the group of
companies. Each Credit Party has determined that execution, delivery, and
performance of this Agreement and any other Loan Documents to be executed by
such Credit Party is within its purpose, will be of direct and indirect benefit
to such Credit Party, and is in its best interest.
3.31. Reportable Transaction. The Borrower does not intend to treat
the Loans and related transactions as being a "reportable transaction" (within
the meaning of Treasury Regulation Section 1.6011-4). In the event the Borrower
determines to take any action inconsistent with such intention, they will
promptly notify the Collateral Agent thereof.
3.32. Labor Disputes. Except as set forth on Schedule 3.32, as of
the Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of the Borrower or any of its Subsidiaries, (b) no
such collective bargaining agreement or other labor contract is scheduled to
expire during the term of this Agreement, (c) no union or other labor
organization is seeking to organize, or to be recognized as, a collective
bargaining unit of employees of the Borrower or any of its Subsidiaries or for
any similar purpose, and (d) there is no pending or (to the Borrower's
knowledge) threatened, strike, work stoppage, material unfair labor practice
claim, or other material labor dispute against or affecting the Borrower or its
Subsidiaries or their employees.
3.33. Specifically Designated National and Blocked Persons. No
Credit Party or any of its Affiliates is a country, individual or entity named
on the Specifically Designated National and Blocked Persons (SDN) list issued by
the Office of Foreign Asset Control of the Department of the Treasury of the
United States of America.
3.34. Issuance of Warrants. The issuance of the Warrants has been
duly authorized by all necessary corporate action on the part of the Borrower
and, upon delivery of the Warrants, the Warrants will have been validly issued,
free and clear of all pledges, liens, encumbrances and preemptive rights. The
issuance of shares of Common Stock upon exercise of the Warrants has been duly
authorized by all necessary corporate action on the part of the Borrower and,
when issued upon exercise of the Warrants, such
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Common Stock will have been validly issued and fully paid and non-assessable.
The Borrower has duly reserved 115,000 shares of Common Stock for issuance
pursuant to the terms of the Warrants.
3.35. Securities Laws. Subject to the representations and warranties
of each Lender set forth in Section 4, the offer, issuance, sale and delivery of
the Warrants, as provided in this Agreement, are exempt from the registration
requirements of the Securities Act and all applicable state securities laws, and
are otherwise in compliance with such laws. Neither the Borrower nor any Person
acting on its behalf has taken or will take any action (including, without
limitation, any offering of any securities of Borrower under circumstances which
would require the integration of such offering with the offering of the Warrants
under the Securities Act and the rules and regulations of the SEC thereunder)
which could reasonably be expected to subject the offering, issuance or sale of
the Warrants to the registration requirements of Section 5 of the Securities
Act.
3.36. Brokers. Except for Durham Capital Corp., the fees of which
will be the sole responsibility of the Borrower, no broker or finder acting on
behalf of any Credit Party or any of its Subsidiaries brought about the
consummation of the transactions contemplated pursuant to this Agreement and
neither such Credit Party nor any of its Subsidiaries has any obligation to any
Person in respect of any finder's or brokerage fees (or any similar obligation)
in connection with the transactions contemplated by this Agreement.
4. LENDERS' REPRESENTATIONS AND WARRANTIES
Each Lender, severally and not jointly, makes the following
representations and warranties to the Borrower, each and all of which shall
survive the execution and delivery of this Agreement and the closings hereunder:
4.1. Investment Intention. Such Lender is purchasing the Warrants
for its own account, for investment purposes and not with a view to the
distribution thereof. Such Lender will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of the Warrants
(or solicit any offers to buy, purchase, or otherwise acquire any of the
Warrants), except in compliance with the Securities Act and any other applicable
law.
4.2. Accredited Investor. Such Lender is an "accredited investor"
(as that term is defined in Rule 501 of Regulation D under the Securities Act)
and by reason of its business and financial experience, it has such knowledge,
sophistication and experience in business and financial matters as to be capable
of evaluating the merits and risks of the prospective investment, is able to
bear the economic risk of such investment and is able to afford a complete loss
of such investment.
4.3. Restricted Securities. Each Lender understands that the
Warrants it is purchasing may be characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the
Borrower in a transaction not involving a public offering and that under such
laws and applicable regulations such
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Warrants may be resold without registration under the Securities Act, only in
certain limited circumstances. In this connection, such Lender represents that
it is familiar with Rule 144 of the Securities Act, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
4.4. Brokers. Except for Durham Capital Corp., the fees of which
will be the sole responsibility of the Borrower, no broker or finder acting on
behalf of any Lender brought about the consummation of the transactions
contemplated pursuant to this Agreement and such Lenders have no obligation to
any Person in respect of any finder's or brokerage fees (or any similar
obligation) in connection with the transactions contemplated by this Agreement.
5. COVENANTS
5.1. Affirmative Covenants. Each Credit Party, jointly and
severally, covenants and agrees that from and after the date hereof (except as
otherwise provided herein, or unless the Required Lenders have given their prior
written consent) so long as the Notes are outstanding, it shall:
(a) Financial Statements, Reports, Certificates. Provide
to each Lender:
(i) within 90 days after the close of each
Fiscal Year of the Borrower and its Subsidiaries, an unqualified audit report
certified by independent certified public accountants acceptable to the Required
Lenders, prepared in accordance with GAAP on a consolidated and consolidating
basis (consolidating statements need not be certified by such accountants),
including balance sheets as of the end of such Fiscal Year, related profit and
loss statements, and a statement of cash flows, accompanied by (1) a management
letter prepared by said accountants, if any, and (2) a certificate of said
accountants that, in the course of their examination necessary for their
certification of the foregoing, they have obtained no knowledge of any Default
or Event of Default, or if, in the opinion of such accountants, any Default or
Event of Default shall exist, stating the nature and status thereof;
(ii) within 45 days after the close of the first
three Fiscal Quarters of each Fiscal Year of the Borrower and its Subsidiaries
(commencing with the first Fiscal Quarter of 2004), consolidated and
consolidating unaudited balance sheets as at the close of each such Fiscal
Quarter and consolidated and consolidating profit and loss statements and a
statement of cash flows for the period from the beginning of the applicable
Fiscal Year to the end of such Fiscal Quarter, all certified by its chief
financial officer in a manner consistent with certifications filed with the
Securities and Exchange Commission with respect to such statements and prepared
in accordance with GAAP (except for exclusion of footnotes and subject to normal
year-end audit adjustments);
(iii) within 20 days after the close of each
Fiscal Month of the Borrower and its Subsidiaries, consolidated and
consolidating unaudited balance sheets as at the close of each such Fiscal Month
and consolidated and consolidating profit and
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loss and reconciliation of surplus statements and a statement of cash flows for
the period from the beginning of the applicable Fiscal Year to the end of such
Fiscal Month, all prepared in accordance with GAAP (except for exclusion of
footnotes and subject to normal year-end audit adjustments);
(iv) as soon as available, but in any event not more
than 60 days prior to the end of each Fiscal Year of the Borrower, but not less
than 30 days prior to the end of such Fiscal Year, a copy of the forecast
(including a projected consolidated and consolidating balance sheet, income
statement and funds flow statement) of the Borrower for each Fiscal Quarter of
the following Fiscal Year (the "Projections") in form reasonably satisfactory to
the Collateral Agent;
(v) within 2 Business Days of delivery to the
Borrower and, in any event within 40 days after the end of each Fiscal Month, a
copy of the "Operating Financial Package" for the immediately preceding Fiscal
Month substantially in the form of, and containing the information set forth in,
Exhibit E hereto (including, but not limited to, a Consolidated Income
Statement, Statement of Cash Flows, Balance Sheet, Analysis of Net Sales and
Value Added and a comparison of Forecasted and Actual Performance); and
(vi) simultaneously with any such delivery to Bank
One, NA pursuant to the Bank One Credit Agreement, a copy of the Aggregate
Borrowing Base Certificate (as such term is defined in the Bank One Credit
Agreement), which Certificate shall specifically identify the Inventory and
Accounts of WAM used in such Certificate.
(b) Use of Proceeds. (i) Use the proceeds of the Loans (1) to
repay existing indebtedness, (2) pay related transaction costs and fees and (3)
for working capital needs (not otherwise prohibited by this Agreement).
(ii) The Borrower will not, nor will it permit any
Credit Party to, use any of the proceeds of the Loans to (1) purchase or carry
any Margin Stock in violation of Regulation U, (2) repay or refinance any
Indebtedness of any Person incurred to buy or carry any Margin Stock, or (3)
acquire any security in any transaction that is subject to Section 13 or Section
14 of the Exchange Act.
(c) Notices. Through the Borrower, give prompt notice in
writing to the Collateral Agent and the Lenders of:
(i) the occurrence of any Default or Event of Default
(which notice shall comply with Section 10.10);
(ii) any other development, financial or otherwise,
which could reasonably be expected to have a Material Adverse Effect;
(iii) the assertion by the holder of any Stock of any
Credit Party or the holder of any Indebtedness of any Credit Party in excess of
$2,000,000 that any default exists with respect thereto or that any Credit Party
is not in compliance therewith;
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(iv) receipt of any written notice that any Credit
Party is subject to any non-routine investigation by any governmental entity
with respect to any potential or alleged violation of any applicable
Environmental Law or of imposition of any Lien against any Property of any
Credit Party for any liability with respect to damages arising from, or costs
resulting from, any violation of any Environmental Laws;
(v) receipt of any notice of litigation commenced or
threatened against any Credit Party that (i) seeks damages in excess of
$2,000,000, (ii) seeks injunctive relief, (iii) is asserted or instituted
against any Multiemployer Plan or ERISA Plan, its fiduciaries or its assets,
(iv) alleges criminal misconduct by any Credit Party, (v) alleges the violation
of any law regarding, or seeks remedies in connection with, any Multiemployer
Plan, ERISA Plan, or Environmental Laws; or (vi) involves any product recall to
the extent such product recall could reasonably be expected to have a Material
Adverse Effect;
(vi) any Lien (other than Permitted Liens) or claim
made or asserted against any material portion of the Collateral;
(vii) unless otherwise permitted hereunder, its
decision to change, (1) such Credit Party's name or type of entity, (2) such
Credit Party's articles or certificate of incorporation, partnership agreement,
certificate of partnership, articles or certificate of organization, by-laws, or
operating or other management agreement, and (3) the location where any
Collateral is held or maintained; provided that, in no event shall the
Collateral Agent receive notice of such change less than thirty days prior
thereto;
(viii) commencement of any proceedings contesting any
tax, fee, assessment, or other governmental charge in excess of $1,000,000;
(ix) any loss, damage, or destruction to the
Collateral in the amount of $500,000 or more, whether or not covered by
insurance;
(x) any and all payment or other material default
notices received under or with respect to any leased location or public
warehouse where Collateral with a value in excess of $1,000,000 is located
(which shall be delivered within two Business Days after receipt thereof);
(xi) all material amendments to real estate leases
where Collateral with a value in excess of $1,000,000 is located, together with
a copy of each such amendment;
(xii) immediately after becoming aware of any pending
or threatened strike, work stoppage, unfair labor practice claim, or other labor
dispute affecting the Borrower or any of its Subsidiaries, in the case of any of
the foregoing, which could reasonably be expected to have a Material Adverse
Effect;
(xiii) evidence of payment of monthly lease or rental
payments as to each leased or rented location where Collateral with a value in
excess of $1,000,000
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is located and for which a landlord or bailee waiver has not been obtained
(which shall be delivered within 10 Business Days after payment thereof);
(xiv) the fact that such Credit Party has entered
into a Rate Management Transaction or an amendment to a Rate Management
Transaction, which notice may be made via email to the Collateral Agent, and, if
requested by the Collateral Agent, together with copies of all agreements
evidencing such Rate Management Transactions or amendments thereto (which shall
be delivered within 30 days);
(xv) the fact that the Indebtedness of any Foreign
Subsidiary (other than a Credit Party) exceeds $5,000,000; and
(xvi) any other matter as the Collateral Agent may
reasonably request.
(d) Conduct of Business. (i) Carry on and conduct its business
in substantially the same manner and in substantially the same or related fields
of enterprise as it is presently conducted;
(ii) do all things necessary to remain duly
incorporated or organized, validly existing and (to the extent such concept
applies to such entity) in good standing as a domestic corporation, partnership
or limited liability company in its jurisdiction of incorporation or
organization, as the case may be, and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted;
(iii) keep adequate books and records with respect to
its business activities in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financial Statements delivered to the Collateral Agent pursuant to Section
5.1(a);
(iv) at all times maintain, preserve and protect all
of its assets and properties used or useful in the conduct of its business, and
keep the same in good repair, working order and condition in all material
respects (taking into consideration ordinary wear and tear) and from time to
time make, or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry practices; and
(v) transact business only in such corporate and
trade names as are set forth in Schedule 3.12 or in any notice delivered to the
Collateral Agent in accordance with Section 5.1(c)(viii).
(e) Taxes. Timely file complete and correct U.S. federal and
applicable foreign, state and local tax returns required by law and pay when due
all taxes, assessments and governmental charges and levies upon it or its
income, profits, Property or Collateral, except those which are being contested
in good faith by appropriate proceedings and with respect to which adequate
reserves have been set aside in accordance with GAAP on the Borrower's
consolidated financial statements. At any time
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that any Credit Party is organized as a limited liability company, each such
limited liability company will qualify for partnership tax treatment under U.S.
federal tax law. The Credit Parties shall pay all transfer, excise or similar
taxes (not including income or franchise taxes) in connection with the issuance,
sale, delivery or transfer by the Credit Parties to the Lenders of the Warrants,
and shall indemnify and save the Lenders harmless without limitation as to time
against any and all liabilities with respect to such taxes. The Credit Parties
shall not be responsible for any taxes in connection with the transfer of the
Warrants by the holder thereof. The obligations of the Credit Parties under this
Section 5.1(e) shall survive the payment, prepayment or redemption of the Notes
and the termination of this Agreement.
(f) Payment of Indebtedness and Other Liabilities. Pay or
discharge when due all Material Indebtedness permitted by Section 5.2(b) owed by
such Credit Party and all other liabilities and obligations due to materialmen,
mechanics, carriers, warehousemen, and landlords, except that the Credit Parties
may in good faith contest, by appropriate proceedings diligently pursued, any
such obligations; provided that, (i) adequate reserves have been set aside for
such liabilities in accordance with GAAP, (ii) such liabilities would not result
in aggregate liabilities in excess of $1,000,000, (iii) no Lien shall be imposed
to secure payment of such liabilities that is superior to the Collateral Agent's
Liens securing the Obligations, (iv) none of the Collateral becomes subject to
forfeiture or loss as a result of the contest and (v) such Credit Party shall
promptly pay or discharge such contested liabilities, if any, and shall deliver
to the Collateral Agent evidence reasonably acceptable to the Collateral Agent
of such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Credit Party or the conditions set forth in this
proviso are no longer met.
(g) Insurance. (i) At all times maintain, with financially
sound and reputable carriers having a Financial Strength rating of at least A-
by A.M. Best Company, insurance against: (1) loss or damage by fire and loss in
transit; (2) theft, burglary, pilferage, larceny, embezzlement, and other
criminal activities; (3) business interruption; and (4) such other hazards, as
is customary in the business of such Credit Party (it being agreed that the
Credit Parties need not obtain or maintain general liability insurance,
including, specifically with respect to environmental matters of chronic
beryllium disease, on terms that the Credit Parties, in their reasonable
business judgment, determine unnecessary or prohibitively expensive). All such
insurance shall be in amounts, cover such assets and be under policies generally
consistent with the insurance maintained by the Credit Parties on the date
hereof. In the event any Collateral is located in any area that has been
designated by the Federal Emergency Management Agency as a "Special Flood Hazard
Area," the applicable Credit Party shall purchase and maintain flood insurance
on such Collateral (including any personal Property which is located on any real
Property leased by such Credit Party within a "Special Flood Hazard Area"). The
amount of all insurance required by this Section shall at a minimum comply with
applicable law, including the Flood Disaster Protection Act of 1973, as amended.
All premiums on such insurance shall be paid when due by the applicable Credit
Party, and copies of the policies delivered to the Collateral Agent. If, at any
time, any portion of the Collateral is not insured as required by this Section
(either as obtained by the Credit Parties or Bank One, NA, as agent under the
Bank One Credit Agreement), the Collateral
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Agent at the direction of the Required Lenders may obtain such insurance at the
Borrower's expense.
(ii) With respect to each parcel of real Property
which is required to be subject to a Lien in favor of the Collateral Agent, at
all times maintain ALTA or other mortgagee's title policy insurance on such real
Property, endorsed in favor of Bank One, NA, as agent under the Bank One Credit
Agreement and, after the payment in full of the Bank One Debt, maintain such
insurance on such real Property, endorsed in favor of the Collateral Agent.
(iii) All insurance policies required under Section
5.1(g)(i) shall name the Collateral Agent (for the benefit of the Collateral
Agent and the Lenders) as an additional insured or as loss payee, as applicable,
as its interests may appear and, after the payment in full of the Bank One Debt,
shall provide that, or contain loss payable clauses or mortgagee clauses, in
form and substance reasonably satisfactory to the Collateral Agent, which
provide that:
(1) all proceeds thereunder with respect to any
Collateral shall be payable to the
Collateral Agent;
(2) no such insurance shall be affected by any
act or neglect of the insured or owner of
the Property described in such policy; and
(3) such policy and loss payable clauses may be
canceled, amended, or terminated only upon
at least thirty days prior written notice
given to the Collateral Agent.
(iv) Notwithstanding the foregoing, after the payment
in full of the Bank One Debt, any insurance or condemnation proceeds received by
the Credit Parties shall be immediately forwarded to the Collateral Agent and
the Collateral Agent may, at its option, apply any such proceeds to the
reduction of the Obligations.
(h) Compliance with Laws. Except where the failure to comply
would not have a Material Adverse Effect, comply with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject including, without limitation, all Environmental Laws.
(i) Inspection. Permit the Collateral Agent, on behalf of the
Lenders, and its respective employees, representatives and agents, from time to
time upon two Business Days' prior notice as frequently as the Collateral Agent
reasonably determines to be appropriate, to (1) inspect any of the Property, the
Collateral, and the books and financial records of such Credit Party, (2)
examine, audit and make extracts or copies of the books of accounts and other
financial records of such Credit Party, (3) have access to its properties,
facilities, the Collateral and its advisors, officers, directors and employees
to discuss the affairs, finances and accounts of such Credit Party and (4)
review, evaluate and make test verifications and counts of the Accounts,
Inventory and other Collateral of such Credit Party. If a Default has occurred
and is continuing, each Credit Party shall
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provide such access to the Collateral Agent and to each Lender at all times and
without advance notice. During any inspection, the Collateral Agent and each
Lender will, and will cause their respective employees, representatives and
agents to, comply with all health, safety and security requirements in effect at
any such Property or location where Collateral or books or records are located.
Furthermore, so long as any Default has occurred and is continuing, each Credit
Party shall provide the Collateral Agent and each Lender with access to its
suppliers. Each Credit Party shall promptly make available to the Collateral
Agent and its counsel originals or copies of all books and records that the
Collateral Agent may reasonably request. The Credit Parties acknowledge that
from time to time the Collateral Agent may prepare and may distribute to the
Lenders certain audit reports pertaining to the Credit Parties' assets for
internal use by the Collateral Agent and the Lenders from information furnished
to it by or on behalf of the Credit Parties, after the Collateral Agent has
exercised its rights of inspection pursuant to this Agreement.
(j) Appraisals and Annual Update. (i) Whenever an Event of
Default has occurred and is continuing, and at such other times commencing after
April 1, 2004 (not more frequently than twice per Fiscal Year) as the Collateral
Agent requests, at their sole expense, provide the Collateral Agent with such
reports as it provides Bank One, NA, as agent under the Bank One Credit
Agreement, with respect to appraisals of the Credit Parties' Inventory,
Equipment and real Property and updates thereof, such appraisals and updates to
include, without limitation, information required by applicable law and
regulations and by the internal policies of the Lenders.
(ii) Upon the Collateral Agent's request, but not
more than once per Fiscal Year, provide an update, in form and substance
satisfactory to the Collateral Agent, of the Financial Due Diligence Report
dated October 2003 prepared by Ernst & Young relating to the financial condition
of WAM and its Subsidiaries.
(k) Communications with Accountants. Authorize (i) the
Collateral Agent and (ii) so long as an Event of Default has occurred and is
continuing, each Lender, to communicate directly with its independent certified
public accountants and authorizes and shall instruct those accountants and
advisors to communicate to the Collateral Agent and each Lender information
relating to any Credit Party with respect to the business, results of operations
and financial condition of any Credit Party.
(l) Collateral Access Agreements and Real Estate Purchases.
Use commercially reasonable efforts to obtain a Collateral Access Agreement,
from the lessor of each leased property, mortgagee of owned property or bailee
or consignee with respect to any warehouse, processor or converter facility or
other location where Collateral is stored or located, which agreement or letter
shall contain a waiver or subordination of all Liens or claims that the
landlord, mortgagee or bailee or consignee may assert against the Collateral at
that location, and shall otherwise be reasonably satisfactory in form and
substance to the Collateral Agent. After the Closing Date, no real Property or
warehouse space shall be leased by any Credit Party and no Inventory shall be
shipped to a processor or converter under arrangements established after the
Closing Date without the prior written consent of the Collateral Agent or,
unless and until a Collateral Access Agreement satisfactory to the Collateral
Agent shall first have been obtained with respect
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to such location. Each Credit Party shall timely and fully pay and perform in
all material respects its obligations under all leases and other agreements with
respect to each leased location or third party warehouse where any Collateral is
or may be located. To the extent permitted hereunder, if any Credit Party
proposes to acquire a fee ownership interest in real Property after the Closing
Date, it shall first provide to the Collateral Agent a mortgage or deed of trust
(which shall be filed one day after any similar mortgage or deed of trust
executed in favor of the agent under the Bank One Credit Agreement) granting the
Collateral Agent a Lien on such real Property subject to no other Liens other
than Permitted Liens, together with environmental audits, mortgage title
insurance commitment, real property survey, local counsel opinion(s), and, if
required by the Collateral Agent, supplemental casualty insurance and flood
insurance, and such other documents, instruments or agreements reasonably
requested by the Collateral Agent, in each case, in form and substance
reasonably satisfactory to the Collateral Agent.
(m) Deposit Account Control Agreements. Subject to the prior
rights of Bank One pursuant to the Bank One Credit Agreement, provide to the
Collateral Agent, upon such Agent's request, a Deposit Account Control Agreement
duly executed on behalf of each financial institution holding a deposit account
of a Credit Party as set forth in the Security Agreement.
(n) Observer. Upon the occurrence and during the continuation
of any Special Default, (i) provide the Collateral Agent with the right to
designate an observer, without voting rights, who will be entitled to attend all
meetings of the Borrower's Board of Directors (including audit committee
meetings but no other committee meetings) and (ii) provide the Collateral Agent
with copies of the minutes of all committee meetings of the Borrower's Board of
Directors. Any observer designated pursuant to this Section shall be entitled to
notice of all such meetings and to all information provided to participants in
such meetings subject to the confidentiality provisions in Section 10.15 hereof.
Such observer shall be reimbursed for reasonable out-of-pocket expenses incurred
in connection with attendance at such meetings. If any Special Default is cured
prior to the time the Collateral Agent is able to exercise its rights pursuant
to this Section, the observer designated pursuant to this Section shall, in any
event, have the right to attend one Board of Directors meeting and one audit
committee meeting after the date such Special Default is cured.
(o) Key Man Life Insurance. Within 120 days of the Closing
Date, obtain as owner and beneficiary a key man life insurance contract on
▇▇▇▇▇▇▇ ▇▇▇▇▇ in an amount not less than $10,000,000 and execute in favor of the
Collateral Agent for the benefit of the Lenders, a collateral assignment in form
and substance satisfactory to the Collateral Agent of such contract; provided
that any proceeds of such contract received by the Collateral Agent shall be
applied to repay the Obligations without any prepayment premium or penalty.
5.2. Negative Covenants. Each Credit Party covenants and agrees that
from and after the date hereof (except as otherwise provided herein, or unless
the Required
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Lenders have given their prior written consent) so long as the
Notes are outstanding it shall not:
(a) Dividends. (i) Directly or indirectly, declare or pay any
dividends or make any distributions on its Stock (other than dividends or
distributions payable in its own common stock) or redeem, repurchase or
otherwise acquire or retire any of its Stock at any time outstanding, except
that, if no Default or Event of Default has occurred and is continuing or would
result after giving effect to such payment, any Subsidiary may declare and pay
dividends or make distributions to the Borrower or to a Credit Party.
(ii) Directly or indirectly enter into or become
bound by any agreement, instrument, indenture or other obligation (other than
this Agreement, the other Loan Documents and the Bank One Debt Documents) that
could directly or indirectly restrict, prohibit or require the consent of any
Person with respect to the payment of dividends or distributions or the making
or repayment of intercompany loans by a Subsidiary of the Borrower to the
Borrower.
(b) Indebtedness. Directly or indirectly, create, incur or
suffer to exist any Indebtedness, except:
(i) Indebtedness evidenced by this Agreement and the
other Loan Documents;
(ii) the Bank One Debt;
(iii) Indebtedness existing on the date hereof and
described in Schedule 3.22;
(iv) purchase money Indebtedness or Capitalized Lease
Obligations incurred in connection with the purchase of any Equipment; provided
that, the amount of such purchase money Indebtedness or Capitalized Lease
Obligations shall be limited to an amount not in excess of the purchase price of
such Equipment and the aggregate of all such purchase money Indebtedness and
Capitalized Lease Obligations incurred in any Fiscal Year shall not exceed
$2,500,000;
(v) Indebtedness which represents an extension,
refinancing, or renewal of any of the Indebtedness described in clauses (iii),
(iv) and (viii) hereof; provided that, (1) the then outstanding principal amount
or interest rate of such Indebtedness is not increased, (2) any Liens securing
such Indebtedness are not extended to any additional Property of any Credit
Party, (3) no Credit Party that is not originally obligated with respect to
repayment of such Indebtedness is required to become obligated with respect
thereto, (4) such extension, refinancing or renewal does not result in a
shortening of the average weighted maturity of the Indebtedness so extended,
refinanced, renewed, (5) the terms of any such extension, refinancing, or
renewal are not less favorable in any material respect to the obligor thereunder
than the original terms of such Indebtedness, and (6) if the Indebtedness that
is refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness shall include subordination terms and
- 36 -
conditions that are at least as favorable to the Collateral Agent and the
Lenders as those that were applicable to the refinanced, renewed, or extended
Indebtedness;
(vi) Indebtedness owing by any Credit Party to any
other Credit Party with respect to intercompany loans, provided that:
(1) the applicable Credit Parties shall have
executed and delivered to the other Credit
Parties, on the Closing Date, a demand note
(collectively, the "Intercompany Notes") to
evidence any such intercompany Indebtedness
owing at any time by any Credit Party to any
other Credit Party, which Intercompany Notes
shall be in form and substance reasonably
satisfactory to the Collateral Agent and
shall be pledged to the Collateral Agent
pursuant to the Security Agreement as
additional collateral security for the
Obligations;
(2) the Credit Parties shall record all
intercompany transactions on its books and
records in a manner reasonably satisfactory
to the Collateral Agent;
(3) the obligations of the Credit Parties under
any such Intercompany Notes shall be
subordinated to the Obligations of the
Credit Parties hereunder in a manner
reasonably satisfactory to the Collateral
Agent; provided that so long as no Event of
Default has occurred and is continuing, the
Credit Parties may repay the obligations
under the Intercompany Notes;
(4) at the time any such intercompany loan or
advance is made by the Credit Parties and
after giving effect thereto, such Credit
Party shall be solvent (as measured pursuant
clauses (i) through (iv) of Section 3.27(a)
hereof); and
(5) no Default or Event of Default would occur
and be continuing after giving effect to any
such proposed intercompany loan.
(vii) Contingent Obligations (A) by endorsement of
instruments for deposit or collection in the ordinary course of business, (B)
consisting of the Guaranty and guarantees of Indebtedness incurred for the
benefit of any other Credit Party if the primary obligation is expressly
permitted elsewhere in this Section 5.2(b), and (C) under the Kazakhstan
Contract;
(viii) Indebtedness arising under Rate Management
Transactions (including any Rate Management Transactions permitted by clause
(iii) above) having an aggregate Net ▇▇▇▇-to-Market Exposure not exceeding
$15,000,000;
- 37 -
(ix) other unsecured Indebtedness in an amount not in
excess of $1,000,000; and
(x) Indebtedness arising under any Permitted Precious
Metals Agreement.
(c) Capital Structure. If all or any part of a Credit Party's
Stock has been pledged to the Collateral Agent, issue additional Stock.
(d) Mergers. Merge or consolidate with or into any other
Person, except that (a) any Subsidiary of the Borrower may merge into the
Borrower or a Wholly-Owned Subsidiary of the Borrower and (b) any Credit Party
may merge with any other Credit Party.
(e) Sales of Assets. Lease, sell or otherwise dispose of its
Property (including any Stock owned by it) to any other Person (other than
another Credit Party), except:
(i) sales of Inventory in the ordinary course of
business;
(ii) the sale or other disposition of Equipment that
is obsolete or no longer useful in any way in such Credit Party's business; and
(iii) the sale or disposition of other assets having
a book value not exceeding $250,000 in the aggregate in any Fiscal Year,
so long as the Net Cash Proceeds of any sale or disposition permitted pursuant
to this Section 5.2(e) (other than pursuant to clause (i)) shall be used to
repay the obligations under the Bank One Credit Agreement, or if the Bank One
Debt has been paid in full, the Obligations.
(f) Investments and Acquisitions. Directly or indirectly in
any transaction or related series of transactions, (i) make or suffer to exist
any Investments (including without limitation, loans and advances to, and other
Investments in, Subsidiaries), or commitments therefor, (ii) create any
Subsidiary or (iii) become or remain a partner in any partnership or joint
venture, or (iv) make any Acquisition, except:
(1) Investments in Cash Equivalents, subject to
control agreements in favor of the
Collateral Agent for the benefit of the
Lenders or otherwise subject to a perfected
security interest in favor of the Collateral
Agent for the benefit of the Lenders,
subject in each case to the control
agreements and security interest in favor of
Bank One, NA, as agent for the lenders under
the Bank One Credit Agreement;
(2) Investments in Subsidiaries existing as of
the Closing Date;
- 38 -
(3) other Investments in existence on the
Closing Date and described in Schedule
5.2(f);
(4) Investments consisting of loans or advances
made to employees of such Credit Party on an
arms-length basis in the ordinary course of
business consistent with past practices for
travel and entertainment expenses and
similar purposes up to a maximum of $10,000
to any employee and up to a maximum of
$50,000 in the aggregate at any one time
outstanding;
(5) subject to the Security Agreement,
Investments comprised of notes payable, or
stock or other securities issued by account
debtors to such Credit Party pursuant to
negotiated agreements with respect to
settlement of such Customer's Accounts in
the ordinary course of business, consistent
with past practices;
(6) additional Investments in Subsidiaries which
are Credit Parties;
(7) other Investments not to exceed $2,500,000
each, and $7,500,000 in the aggregate during
the term of this Agreement;
(8) Acquisitions in which the cash portion of
the purchase price does not exceed
$2,500,000 per Acquisition and $7,500,000 in
aggregate for all Acquisitions during any
Fiscal Year (it being understood that there
shall be no limit on Acquisitions using
common stock of the Borrower);
(9) Investments up to an aggregate amount of
$5,000,000 made in connection with
compensation arrangements, employee option
plans or deferred director compensation
arrangements consistent with the past
practices of such Credit Party;
(10) Investments under Permitted Precious Metals
Agreements;
(11) Investments in an aggregate amount not to
exceed $2,000,000 at any time in ▇▇▇▇▇▇
Corp., a Subsidiary of the Borrower, in
connection with any required environmental
remedial action taken by ▇▇▇▇▇▇ Corp.;
(12) Investments in an aggregate amount not to
exceed $2,000,000 in any Fiscal Year and
$4,000,000 at any time in ▇▇▇▇▇▇ Corp. in
connection with any retiree medical benefits
that are required to be payable to former
- 39 -
employees of ▇▇▇▇▇▇ Corp. pursuant to their
existing benefits arrangements with ▇▇▇▇▇▇
Corp.; and
(13) Investments in Subsidiaries other than
Credit Parties in an aggregate amount not to
exceed $500,000 in any Fiscal Year and
$1,000,000 at any time in connection with
any administrative or ministerial expenses
including, without limitation, any franchise
taxes, payable by such Subsidiaries.
(g) Liens. Create, incur or suffer to exist any Lien in, of,
or on the Property of any Credit Party, except the following (collectively,
"Permitted Liens"):
(i) Liens existing on the date hereof in and to the
Collateral securing the Bank One Debt;
(ii) Liens for taxes, fees, assessments, or other
governmental charges or levies on the Property of such Credit Party if such
Liens (i) shall not at the time be delinquent or (ii) subject to the provisions
of Section 5.1(e), do not secure obligations in excess of $1,000,000, are being
contested in good faith and by appropriate proceedings diligently pursued,
adequate reserves in accordance with GAAP have been provided on the books of
such Credit Party, and a stay of enforcement of such Lien is in effect;
(iii) Liens imposed by law, such as carrier's,
warehousemen's, and mechanic's Liens and other similar Liens arising in the
ordinary course of business which secure payment of obligations not more than
ten days past due or which are being contested in good faith by appropriate
proceedings diligently pursued and for which adequate reserves shall have been
provided on such Credit Party's books;
(iv) statutory Liens in favor of landlords of real
Property leased by such Credit Party; provided that, such Credit Party is
current with respect to payment of all rent and other material amounts due to
such landlord under any lease of such real Property;
(v) Liens arising out of pledges or deposits under
worker's compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation or to secure the
performance of bids, tenders, or contracts (other than for the repayment of
Indebtedness) or to secure indemnity, performance, or other similar bonds for
the performance of bids, tenders, or contracts (other than for the repayment of
Indebtedness) or to secure statutory obligations (other than liens arising under
ERISA or Environmental Laws) or surety or appeal bonds, or to secure indemnity,
performance, or other similar bonds;
(vi) utility easements, building restrictions, and
such other encumbrances or charges against real Property as are of a nature
generally existing with respect to properties of a similar character and which
do not in any material way affect
- 40 -
the marketability of such real Property or interfere in any material respect
with the use thereof in the business of such Credit Party;
(vii) the equivalent of the types of Liens discussed
in clauses (ii) through (vi) above, inclusive, in any jurisdiction in which any
Credit Party is engaged in business or owns Property or assets;
(viii) Liens existing on the Closing Date and
described in Schedule 5.2(g) or existing in connection with Indebtedness
described on Schedule 3.22;
(ix) Liens resulting from any extension, refinancing,
or renewal of the related Indebtedness as permitted pursuant to Section
5.2(b)(v); provided that, the Liens evidenced thereby are not increased to cover
any additional Property not originally covered thereby;
(x) Liens securing purchase money Indebtedness of
such Credit Party permitted pursuant to Section 5.2(b)(iv); provided that, such
Liens attach only to the Property which was purchased with the proceeds of such
purchase money Indebtedness;
(xi) Liens arising from judgments or orders under
circumstances that do not constitute a Default under Section 7.1(j);
(xii) Liens arising in connection with Permitted
Precious Metals Agreements; and
(xiii) Liens in favor of the Collateral Agent granted
pursuant to any Loan Document.
(h) Change of Name or Location; Change of Fiscal Year. Change
(i) its name as it appears in official filings in the state of its incorporation
or organization, (ii) its chief executive office, principal place of business,
mailing address, corporate offices or warehouses or locations at which
Collateral is held or stored, or the location of its records concerning the
Collateral as set forth in the Security Agreement, (iii) the type of entity that
it is, (iv) its organization identification number, if any, issued by its state
of incorporation or other organization, or (v) its state of incorporation or
organization, in each case, without at least 30 days prior written notice to the
Collateral Agent and the Collateral Agent shall have either (i) determined that
such event or occurrence will not adversely affect the validity, perfection or
priority of the Collateral Agent's security interest in the Collateral, or (ii)
after the Collateral Agent's written acknowledgment that any reasonable action
requested by the Collateral Agent in connection therewith, including to continue
the perfection of any Liens in favor of the Collateral Agent, on behalf of
Lenders, in any Collateral, has been completed or taken, and, provided that,
with respect to any Domestic Credit Party, any new location shall be in the
continental U.S. No Credit Party shall change its Fiscal Year.
(i) Transactions with Affiliates. Except as set forth on
Schedule 3.22, enter into any transaction (including, without limitation, the
purchase or sale of any
-41-
Property or service) with, or make any payment or transfer (including, without
limitation, any payment or transfer with respect to any fees or expenses for
management services) to, any Affiliate except in the ordinary course of business
and pursuant to the reasonable requirements of such Credit Party's business and
upon fair and reasonable terms no less favorable to such Credit Party than such
Credit Party would obtain in a comparable arms-length transaction.
(j) Amendments to Organizational Documents. Except as required
in connection with a transaction or circumstance described in Sections 5.2(d) or
(h), no Credit Party will, nor will any Credit Party permit its Subsidiary to,
amend or terminate its articles of incorporation, charter, certificate of
formation, by-laws, operating, management or partnership agreement or other
organizational document in any manner that could reasonably be expected to
adversely affect the Lenders.
(k) Prepayments. (i) Directly or indirectly, voluntarily
purchase, redeem, defease, acquire or prepay any principal of, premium, if any,
interest or other amount payable in respect of any Indebtedness of any Credit
Party prior to its scheduled maturity, other than (1) the Obligations in
accordance with this Agreement, (2) the Bank One Debt, (3) Indebtedness secured
by a Permitted Lien if the asset securing such Indebtedness has been sold or
otherwise disposed of in accordance with Section 5.2(e), (4) Indebtedness
permitted by Section 5.2(b)(v) upon any refinancing thereof in accordance
therewith, (5) Indebtedness permitted by Section 5.2(b)(vi) at times permitted
by such Section and (6) Indebtedness permitted by Section 5.2(b)(x).
(ii) Make any amendment or modification to the
indenture, note or other agreement evidencing or governing any Subordinated
Indebtedness.
(l) Financial Contracts. Enter into or remain liable upon any
Financial Contract, except for Rate Management Transactions permitted by Section
5.2(b)(viii).
(m) Capital Expenditures. No Credit Party shall expend, in the
aggregate for the Credit Parties, in excess of (a) $9,000,000 for Fiscal Year
2003; (b) $15,000,000 for Fiscal Year 2004; (c) $20,000,000 for Fiscal Year
2005; and (d) $25,000,000 for Fiscal Year 2006 for Capital Expenditures for the
Borrower and its Subsidiaries; provided that, to the extent that the Credit
Parties do not expend the amount permitted by this Section 5.2(m) in any Fiscal
Year, such unexpended amount, up to a maximum of 50% of the permitted amount for
such Fiscal Year, may be carried forward to the immediately succeeding Fiscal
Year.
(n) Financial Covenants.
(i) Leverage Ratio. Permit the Leverage Ratio,
determined as of the end of each of its Fiscal Quarters for the then
most-recently ended four Fiscal Quarters, to be greater than:
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MEASUREMENT PERIOD LEVERAGE RATIO
------------------ --------------
Closing Date through March 31, 2004 6.00 to 1.00
April 1, 2004 through June 30, 2004 5.75 to 1.00
July 1, 2004 through September 30, 2004 5.50 to 1.00
October 1, 2004 through June 30, 2005 5.25 to 1.00
July 1, 2005 through September 30, 2005 5.00 to 1.00
October 1, 2005 through June 30, 2006 4.75 to 1.00
July 1, 2006 through September 30, 2006 4.50 to 1.00
October 1, 2006 and at all times thereafter 4.25 to 1.00
(ii) Fixed Charge Coverage Ratio. Permit the Fixed
Charge Coverage Ratio, determined as of the end of each of its Fiscal Quarters
for the then most-recently ended four Fiscal Quarters, to be less than (a) 1.25
to 1.00 on the Closing Date through September 30, 2005 and (b) 1.50 to 1.00 at
all times thereafter.
(o) Off-Balance Sheet Liabilities; Sale and Leaseback
Transactions. Except for those liabilities set forth on Schedule 5.2(o) and for
Permitted Precious Metals Agreements, have any Off-Balance Sheet Liabilities or
engage in any Sale and Leaseback Transactions.
(p) Sales of Accounts. Sell or otherwise dispose of any
Accounts, with or without recourse.
(q) Accounting Methods. Modify or change its method of
accounting (other than as may be required to conform to GAAP) or enter into,
modify, or terminate any agreement currently existing, or at any time hereafter
enter into with any third party accounting firm or service bureau for the
preparation or storage of Credit Parties' accounting records without said
accounting firm or service bureau agreeing to provide the Collateral Agent and
Lenders information regarding (i) the Credit Parties' financial condition or
(ii) the assets with respect to which the Lenders have a Lien.
5.3. Subordination of Intercompany Notes.
(a) All Indebtedness evidenced by an Intercompany Note,
together with all accrued interest thereon, and any other indebtedness for
borrowed money now owing or which hereafter may become owing by or from a Credit
Party to any other
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Credit Party, howsoever such indebtedness may be hereafter created, extended,
renewed or evidenced, together with all accrued interest thereon and any and all
other obligations and liabilities of any kind owing by or from a Credit Party to
any other Credit Party shall at all times and in all respects be subordinate and
junior in right of payment to any and all obligations, liabilities and
indebtedness of any kind of the Credit Parties to the Lenders, and their
respective successors and assigns, including, without limitation, the
Obligations and any extensions, renewals, modifications, and amendments thereof
and all accrued interest thereon and any fees owing by the Credit Parties to the
Lenders; provided, however, that payments on Intercompany Notes may be made as
permitted under Section 5.2(k).
(b) Unless and until (i) all of the Obligations shall have
been fully and finally paid and satisfied and (ii) all financing arrangements,
including, but not limited to this Agreement, between the Borrower, the other
Credit Parties and the Lenders have been terminated, no Credit Party shall: (A)
enforce or exercise any right of demand or setoff or commence any legal or other
action against any other Credit Party to collect upon any Intercompany Note; (B)
take or accept any collateral or security with respect to the obligations
evidenced by any Intercompany Note without the prior written consent of the
Collateral Agent; (C) commence foreclosure or any other similar type of
proceedings or exercise any similar remedies in respect of any collateral for
the obligations evidenced by any Intercompany Note; (D) enforce any judgment
that it might obtain with respect to the obligations evidenced by the
Intercompany Notes without obtaining the prior written consent of the Collateral
Agent; or (E) commence or join with any other creditor or creditors of the
Credit Parties in commencing any bankruptcy, reorganization or insolvency
proceedings against such Credit Party. All rights, liens and security interests
of each Credit Party in any assets of any other Credit Party and/or any other
person securing the obligations evidenced by any Intercompany Note, whether now
or hereafter arising and howsoever existing, shall be and hereby are
subordinated to the rights and interests of the Collateral Agent under this
Agreement and in those assets. The Credit Parties shall have no right to
possession of any such assets or to foreclose or execute upon any such assets,
whether by judicial action or otherwise.
(c) The Credit Parties represent and warrant that all
Intercompany Notes (i) are and will remain unsecured, and (ii) shall not be
subordinated to any Indebtedness other than the Obligations as set forth in
Section 5.2(b).
6. CONDITIONS PRECEDENT
6.1. Conditions Precedent. The obligation of each Lender to make the
Loans and purchase the Warrants at the Closing pursuant to Section 2.1 hereof,
is subject to the condition that the Collateral Agent shall have received, on
the Closing Date, the following, each dated the Closing Date unless otherwise
indicated, in form and substance reasonably satisfactory to the Collateral
Agent:
(a) An opinion of ▇▇▇▇▇ Day, counsel to the Credit Parties,
substantially in the form attached hereto as Exhibit F, it being understood that
to the extent that such opinion of counsel to the Credit Parties shall rely upon
any other opinion
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of counsel, each such other opinion shall be in form and substance reasonably
satisfactory to the Collateral Agent and the Lenders and shall provide that the
Collateral Agent and the Lenders may rely thereon.
(b) Resolutions of the board of directors or Written Consent
of the partners, as applicable, of each Credit Party, certified by the
secretary, assistant secretary, treasurer, assistant treasurer or general
partner, as applicable, of such Credit Party, as of the Closing Date, to be duly
adopted and in full force and effect on such date, authorizing (i) the
consummation of each of the transactions contemplated by this Agreement and (ii)
specific officers to execute and deliver this Agreement and each other
Transaction Document to which it is a party.
(c) Governmental certificates, dated the most recent
practicable date prior to the Closing Date, with telegram updates where
available, showing that each Credit Party is organized and in good standing in
the state of its organization, and is qualified as a foreign corporation and in
good standing in all other jurisdictions in which it is qualified to transact
business.
(d) A copy of the certificate of incorporation or certificate
of formation, as applicable, and all amendments thereto of each Credit Party,
certified as of a recent date by the Secretary of State of the state of its
organization, and copies of each Credit Party's by-laws or limited partnership
agreement, as applicable, certified by the secretary, assistant secretary or
general partner, as applicable, of such Credit Party as true and correct as of
the Closing Date.
(e) Each of the Notes duly executed by the Borrower.
(f) Each of the Warrants duly executed by the Borrower.
(g) Each of the Collateral Documents, duly executed by the
parties thereto.
(h) UCC-1 financing statements reflecting each Credit Party as
the debtor in favor of Collateral Agent for the benefit of the Lenders, in form
and substance satisfactory to the Lenders.
(i) Certificates of the secretary, assistant secretary,
treasurer, assistant treasurer or general partner, as applicable, of each Credit
Party, dated the Closing Date, as to the incumbency and signatures of the
officers of such Credit Party executing this Agreement, the Notes, each other
Transaction Document to which it is a party and any other certificate or other
document to be delivered pursuant hereto or thereto and stating that all of the
representations and warranties of such Credit Party contained herein or in the
other Transaction Documents are true and correct on and as of the Closing Date
as if made on such date and that no breach of any covenant contained in Section
5 has occurred or would result from the Closing hereunder.
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(j) With respect to each parcel of real Property which is
required to be subject to a Lien in favor of the Collateral Agent, each of the
following, in form and substance reasonably satisfactory to the Collateral
Agent:
(i) a Mortgage on such real Property to be filed one
day after any mortgage on such Property is executed in
connection with the Bank One Credit Agreement;
(ii) an ALTA survey prepared and certified to the
Collateral Agent by a surveyor acceptable to the Collateral
Agent;
(iii) an opinion of counsel in the state in which
such parcel of real Property is located in form and substance
and from counsel reasonably satisfactory to the Collateral
Agent; and
(iv) such other information, documentation, and
certifications as may be reasonably required by the Collateral
Agent.
(k) A fully executed original of a pay-off letter reasonably
satisfactory to the Collateral Agent confirming that all of the Credit Parties'
obligations under that certain Credit Agreement among the Borrower, Brush
▇▇▇▇▇▇▇ Inc. and National City Bank, and the Master Lease Agreement dated
December 30, 1996, among Brush ▇▇▇▇▇▇▇ Inc., National City Bank and the
participants thereto (together, as amended, the "Prior Agreements") will be
repaid in full from the proceeds of Bank One Debt, all Liens upon any of the
property of the Credit Parties constituting Collateral will be terminated
immediately upon such payment and all letters of credit issued or guaranteed
under the Prior Agreements shall have been cash collateralized or supported by
the Bank One Debt;
(l) All Lien and other searches that the Collateral Agent
deems necessary, the Credit Parties shall have delivered UCC termination
statements or amendments to existing UCC financing statements with respect to
any filings against the Collateral (other than by The Bank of Nova Scotia in
connection with a Permitted Precious Metals Agreement) as may be requested by
the Collateral Agent and shall have authorized the filing of such termination
statements or amendments.
(m) Each Collateral Access Agreement required to be provided
pursuant to Section 5.1(l), duly executed by the parties thereto.
(n) Such other documents as the Collateral Agent, any Lender
or their counsel shall reasonably request.
6.2. Additional Conditions. The obligation of each Lender to purchase
the Notes at the Closing pursuant to Section 2.1 is subject to the additional
conditions precedent that:
(a) The Collateral Agent shall have received evidence that the
Availability (as such term is defined in the Bank One Credit Agreement) under
the Bank
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One Credit Agreement as of the Closing Date, after giving effect to all of the
transactions contemplated hereby and in the Bank One Credit Agreement, is at
least $15,000,000.
(b) Each Credit Party shall have delivered evidence of
insurance coverage in form, scope, and substance reasonably satisfactory to the
Collateral Agent and otherwise in compliance with the terms of Section 5.1(g).
(c) Each Credit Party shall have delivered to the Collateral
Agent its most recent statement of the Unfunded Liabilities of each Single
Employer Plan, certified as correct by an actuary enrolled under ERISA.
(d) The Credit Parties shall have paid the Closing Fee and all
fees required to be paid by them pursuant to Section 10.2 hereof for which the
Credit Parties shall have received an invoice on or prior to the Closing Date.
(e) All of the representations and warranties of the Credit
Parties contained herein or in the other Transaction Documents shall be true and
correct in all material respects on and as of the Closing Date as if made on
such date and no breach of any covenant contained in Section 5 and no Default or
Event of Default shall have occurred or would result from the Closing hereunder.
7. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
7.1. Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder and under the Notes:
(a) Nonpayment when due of:
(i) principal on the Notes (whether upon demand or
otherwise), or
(ii) any interest, fee or other payment obligation
(other than principal) owing under any of the Transaction Documents, which
nonpayment remains unremedied for a period of 10 days;
(b) any representation or warranty made or deemed made by or
on behalf of any Credit Party to any Lender or the Collateral Agent under or in
connection with this Agreement, any other Transaction Document, any Loan, or any
certificate or information delivered in connection with any of the foregoing
shall be materially false on the date as of which made;
(c) the breach by any Credit Party of any of the terms or
provisions of Sections 5.1(b), 5.2(a) through 5.2(h) or 5.2(j) through 5.2 (o);
(d) the breach by any Credit Party (other than a breach which
constitutes a Default under another Section of this Section 7) of any of the
terms or provisions of (i) Sections 5.1(a), 5.1(c) through 5.1(g), 5.1(i)
through 5.1(m) or 5.2(i) of
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this Agreement which is not remedied within 5 days after the earlier of such
breach or written notice from the Collateral Agent or any Lender or (ii) any
other Section of this Agreement which is not remedied within 30 days after
receipt by the Borrower of written notice from the Collateral Agent or any
Lender;
(e) (i) failure of any Credit Party to pay when due any
Material Indebtedness; (ii) a default, breach or other event occurs under any
term, provision or condition contained in any Material Indebtedness Agreement of
any Credit Party, the effect of which default, event or condition is to cause,
or to permit the holder(s) of such Material Indebtedness or the lender(s) under
any Material Indebtedness Agreement to cause, such Material Indebtedness to
become due prior to its stated maturity or any irrevocable commitment to lend
under any Material Indebtedness Agreement to be terminated prior to its stated
expiration date; (iii) any Material Indebtedness of any Credit Party shall be
declared to be due and payable or required to be prepaid or repurchased (other
than by a regularly scheduled payment) prior to the stated maturity thereof; or
(iv) any Credit Party shall not pay, or admit in writing its inability to pay,
its debts generally as they become due;
(f) Any Credit Party shall (i) have an order for relief
entered with respect to it under the Bankruptcy Code as now or hereafter in
effect, (ii) make an assignment for the benefit of creditors, (iii) apply for,
seek, consent to, or acquiesce in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it or any Substantial
Portion of Property, (iv) institute any proceeding seeking an order for relief
under the Bankruptcy Code as now or hereafter in effect or seeking to adjudicate
it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any corporate,
partnership or limited liability company action to authorize or effect any of
the foregoing actions set forth in this subsection (f) or (vi) fail to contest
in good faith any appointment or proceeding described in subsection (g) below;
(g) a receiver, trustee, examiner, liquidator or similar
official shall be appointed for any Credit Party or any Substantial Portion of
its Property, or a proceeding described in subsection (f)(iv) of this Section 7
shall be instituted against any Credit Party and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a period
of sixty consecutive days;
(h) any court, government or governmental agency shall
condemn, seize or otherwise appropriate, or take custody or control of, all or
any portion of the Property of any Credit Party which, when taken together with
all other Property of any Credit Party so condemned, seized, appropriated, or
taken custody or control of, during the twelve-month period ending with the
month in which any such action occurs, constitutes a Substantial Portion;
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(i) any loss, theft, damage or destruction of any item or
items of Collateral or other property of any Credit Party occurs which could
reasonably be expected to cause a Material Adverse Effect and is not adequately
covered by insurance;
(j) any Credit Party shall fail within 30 days when due to
pay, bond or otherwise discharge one or more (i) judgments or orders for the
payment of money in excess of $2,000,000 (or the equivalent thereof in
currencies other than U.S. Dollars) in the aggregate, or (ii) nonmonetary
judgments or orders which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, which judgments or orders, in any
such case, are not stayed on appeal or otherwise being appropriately contested
in good faith by proper proceedings diligently pursued;
(k) any Change in Control shall occur;
(l) (i) the Unfunded Liabilities of all Single Employer Plans
shall exceed in the aggregate $30,000,000 or (ii) any Reportable Event shall
occur;
(m) a Credit Party or any other member of a Controlled Group
has incurred or shall have been notified by the sponsor of a Multiemployer Plan
that it has incurred withdrawal liability to such Multiemployer Plan;
(n) the occurrence of any "Default" or "Event of Default" as
defined in any Transaction Document (other than this Agreement) or, for any
Transaction Document in which "Default" or "Event of Default" is not defined,
the breach of any of the terms or provisions of such Transaction Document, which
default or breach continues beyond any period of grace therein provided;
(o) the Guaranty shall fail to remain in full force or effect
or any action shall be taken to discontinue or to assert the invalidity or
unenforceability of the Guaranty, or any Guarantor shall fail to comply with any
of the material terms or provisions of the Guaranty to which it is a party, or
any Guarantor shall deny that it has any further liability under the Guaranty to
which it is a party, or shall give notice to such effect;
(p) any Collateral Document shall for any reason fail to
create a valid and perfected security interest in any material portion of the
Collateral purported to be covered thereby, except as permitted by the terms of
any Collateral Document, or any Collateral Document shall fail to remain in full
force or effect or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of any Collateral Document, or any Credit Party
shall fail to comply with any material term or provision of any Collateral
Document;
(q) any material provision of any Transaction Document for any
reason ceases to be valid, binding and enforceable in accordance with its terms
(or any Credit Party shall challenge the enforceability of any Transaction
Document or shall assert in writing, or engage in any action or inaction based
on any such assertion, that any provision of any of the Transaction Documents
has ceased to be or otherwise is not valid, binding and enforceable in
accordance with its terms); or
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(r) any Credit Party is criminally indicted or convicted under
any law that may reasonably be expected to lead to a forfeiture of any Property
of such Credit Party having a fair market value in excess of $1,000,000.
7.2. Remedies.
(a) Subject to the terms of the Bank One Intercreditor
Agreement, if any Event of Default specified in Section 7.1 shall have occurred
and be continuing, the Required Lenders may, without notice, declare all
Obligations to be forthwith due and payable, whereupon all such Obligations
shall become and be due and payable, without presentment, demand, protest or
further notice of any kind, all of which are expressly waived by the Borrower;
provided, however, that upon the occurrence of an Event of Default specified in
Section 7.1(f), (g) or (h) hereof, all Obligations shall become due and payable
without declaration, notice or demand by any Lender.
(b) Any Lender may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in its best interests, including any
action (or the failure to act) pursuant to the Loan Documents.
7.3. Waivers by the Credit Parties. Except as otherwise provided
for in this Agreement and applicable law, the Credit Parties waive (i)
presentment, demand and protest and notice of presentment, dishonor notice of
intent to accelerate and notice of acceleration, (ii) all rights to notice and a
hearing prior to the Lenders' taking possession or control of, or to the
Lenders' replevy, attachment or levy upon, any collateral securing the
Obligations or any bond or security which might be required by any court prior
to allowing such Lenders to exercise any of their remedies, and (iii) the
benefit of all valuation, appraisal and exemption laws. The Credit Parties
acknowledge that they has been advised by counsel of their choice with respect
to this Agreement, the other Loan Documents and the transactions evidenced by
this Agreement and the other Loan Documents.
7.4. Right of Set-Off. Subject to the terms of the Bank One
Intercreditor Agreement, upon the occurrence and during the continuance of any
Event of Default, each Lender, with the prior consent of the Collateral Agent,
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or hereafter
existing under this Agreement and the Notes held by Lender irrespective of
whether or not such Lender shall have made any demand under this Agreement or
any Note and although such obligations may be unmatured. Each Lender agrees
promptly to notify the Borrower after any such set-off and application made by
such Lender; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Lenders
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Lenders may have.
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8. INDEMNIFICATION
Each Credit Party agrees to indemnify and hold harmless each Lender,
the Collateral Agent and their Affiliates and their respective officers,
directors and employees from and against any losses, liabilities, obligations,
damages, penalties, actions, proceedings, judgments, suits, claims, costs, fees,
expenses and disbursements (including, without limitation, reasonable attorneys'
fees and disbursements) of any kind ("Losses") which are imposed upon, incurred
by or asserted against such Lender, Collateral Agent or such other indemnified
Persons as a result of such Lender or Collateral Agent having entered into this
Agreement or any of the other Loan Documents or relating to or arising out of
any untrue representation, breach of warranty or failure to perform any
covenants or agreement by any Credit Party contained herein or in any
certificate or document delivered pursuant hereto; provided, however, that the
Borrower shall not be liable for such indemnification to such indemnified Person
to the extent that any such Losses result from such indemnified Person's gross
negligence or willful misconduct.
9. COLLATERAL AGENT
9.1. Collateral Agency Provisions.
(a) Appointment. Guggenheim Corporate Funding, LLC is hereby
appointed to act on behalf of all the Lenders as the Collateral Agent under this
Agreement, and the other Loan Documents. The provisions of this Section 9.1 are
solely for the benefit of the Collateral Agent and such Lenders, and no Credit
Party nor any other Person shall have any rights as a third party beneficiary of
any of the provisions hereof. In performing its functions and duties under this
Agreement, the Collateral Agent shall act solely as an agent of the respective
Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for any Credit
Party or any other Person. The Collateral Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement. The
duties of the Collateral Agent shall be mechanical and administrative in nature
and the Collateral Agent shall not have, or be deemed to have, by reason of this
Agreement or otherwise a fiduciary relationship in respect of any Lender. The
Lenders hereby authorize the Collateral Agent to execute the Bank One
Intercreditor Agreement.
(b) Actions. If the Collateral Agent shall request
instructions from the Required Lenders or all Lenders affected thereby with
respect to any act or action (including failure to act) in connection with this
Agreement, then the Collateral Agent shall be entitled to refrain from such act
or taking such action unless and until the Collateral Agent shall have received
instructions from the Required Lenders or all Lenders affected thereby, as the
case may be, and the Collateral Agent shall not incur liability to any Person by
reason of so refraining. The Collateral Agent shall be fully justified in
failing or refusing to take any action hereunder (i) if such action would, in
the opinion of the Collateral Agent, be contrary to law or the terms of this
Agreement, (ii) if such action would, in the opinion of the Collateral Agent,
expose the Collateral Agent to any liability or (iii) if the Collateral Agent
shall not first be indemnified to its satisfaction
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against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Without limiting the foregoing,
no Lender shall have any right of action whatsoever against the Collateral Agent
as a result of the Collateral Agent acting or refraining from acting hereunder
in accordance with the instructions of the Required Lenders or all affected
Lenders, as applicable.
(c) Collateral Agent's Reliance, etc. Neither the Collateral
Agent nor any of its Affiliates nor any of their respective directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or them under or in connection with this Agreement, except for damages
caused by its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Collateral Agent: (i) may
treat the payee of any Note as the holder thereof until the Collateral Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to the Collateral Agent; (ii) may consult with
legal counsel, independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or representation to any Lender and shall not
be responsible to any Lender for any statements, warranties or representations
made in or in connection with this Agreement; (iv) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement on the part of any Credit Party or to
inspect the Collateral including the books and records of any Credit Party; (v)
shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto or thereto; and (vi)
shall incur no liability under or in respect of this Agreement by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
(d) Lender Credit Decisions. Each Lender acknowledges that it
has, independently and without reliance upon the Collateral Agent or any other
Lender and based on such financial statements and other documents and
information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Collateral Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement. Each Lender acknowledges the potential conflict of interest of each
other Lender as a result of the Lenders holding disproportionate interests in
the Notes, and expressly consents to, and waives any claim based upon, such
conflict of interest.
(e) Successor Collateral Agent. The Collateral Agent may
resign at any time by giving not less than 30 days' prior written notice thereof
to the Lenders and the Borrower. Upon any such resignation, the Required Lenders
shall have the right to appoint a successor Collateral Agent. If no successor
Collateral Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the resigning Collateral
Agent's giving notice of resignation, then the resigning
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Collateral Agent may, on behalf of the Lenders, appoint a successor Collateral
Agent, which shall be a Lender, if a Lender is willing to accept such
appointment, or otherwise shall be a commercial bank or financial institution or
a subsidiary of a commercial bank or financial institution if such commercial
bank or financial institution is organized under the laws of the United States
of America or of any State thereof and has a combined capital and surplus of at
least $300,000,000. If no successor Collateral Agent has been appointed pursuant
to the foregoing by the 30th day after the date such notice of resignation was
given by the resigning Collateral Agent, such resignation shall become effective
and the Required Lenders shall thereafter perform all the duties of the
Collateral Agent hereunder until such time, if any, as the Required Lenders
appoint a successor Collateral Agent as provided above. Prior to the occurrence
and continuation of an Event of Default any successor Collateral Agent appointed
by the Collateral Agent or the Required Lenders shall be subject to the prior
approval of the Borrower, such approval not to be unreasonably withheld or
delayed. Upon the acceptance of any appointment as the Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning Collateral Agent. Upon the earlier of the acceptance of any
appointment as the Collateral Agent hereunder by a successor Collateral Agent or
the effective date of the resigning Collateral Agent's resignation, the
resigning Collateral Agent shall be discharged from its duties and obligations
under this Agreement, except that any indemnity rights or other rights in favor
of such resigning Collateral Agent shall continue. After any resigning
Collateral Agent's resignation hereunder, the provisions of this Section 9.1
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Collateral Agent under this Agreement.
(f) Indemnification by the Lenders. The Lenders agree to
indemnify the Collateral Agent (to the extent the Collateral Agent is not
reimbursed by the Credit Parties and without limiting the obligations of the
Borrower hereunder), ratably on a pro rata basis based on the principal amount
outstanding under the Notes from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Collateral Agent in any way relating to
or arising out of this Agreement or any other Loan Document or any action taken
or omitted by the Collateral Agent in connection therewith; provided, however,
that no Lender shall be liable to the extent it is finally judicially determined
that such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements arose primarily from the
Collateral Agent's gross negligence or willful misconduct.
10. MISCELLANEOUS
10.1. Complete Agreement; Modification of Agreement; Sale of Interest.
(a) The Transaction Documents constitute the complete agreement between the
parties with respect to the subject matter hereof and thereof, supercede any
previous agreement or understanding between them relating hereto or thereto and
may not be modified, altered or amended except as provided therein, or in the
case of the Loan Documents by an agreement in writing signed by the Credit
Parties and the Lenders in accordance with
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Section 10.1 (d) hereof. The Credit Parties may not sell, assign or transfer any
of the Loan Documents or any portion thereof, including, without limitation,
their rights, title, interests, remedies, powers and duties hereunder or
thereunder. The Credit Parties hereby consent to any Lender's sale of
participations, assignment, transfer or other disposition, at any time or times,
of any of the Loan Documents or of any portion thereof or interest therein,
including, without limitation, such Lender's rights, title, interests, remedies,
powers or duties thereunder, whether evidenced by a writing or not.
(b) In the event any Lender assigns or otherwise transfers all
or any part of any of the Notes, the Borrower shall, upon the request of such
Lender issue new Notes to effectuate such assignment or transfer.
(c) Any Lender may sell, assign, transfer or negotiate to one
or more other lenders, commercial banks, insurance companies, other financial
institutions or any other Person acceptable to such Lender all or a portion of
its rights and obligations under the Notes held by such Lender and this
Agreement; provided, however, that (i) acceptance of such assignment by any
assignee shall constitute the agreement of such assignee to be bound by the
terms of this Agreement applicable to such Lender and (ii) the Lenders may not
assign any interest in the Notes to any Person who is a competitor of the
Borrower without the Borrower's prior consent, except that such consent shall
not be required if an Event of Default has occurred and is continuing. A
financial institution shall be deemed not to be a competitor of the Borrower for
the purposes of this Section. From and after the effective date of such an
assignment, (x) the assignees thereunder shall, in addition to the rights and
obligations hereunder held by it immediately prior to such effective date, have
the rights and obligations hereunder that have been assigned to it pursuant to
such assignment and (y) the assignor thereunder shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such assignment,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an assignment and acceptance covering all or the remaining
portion of an assignor's rights and obligations under this Agreement, such
assignor shall cease to be a party hereto).
(d) No amendment or waiver of any provision of this Agreement,
any Note or any other Loan Document, nor consent to any departure by any Credit
Party therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by each holder of a Note affected thereby do any of
the following: (i) subject such holder to any additional non-ministerial
obligations, (ii) reduce the principal of, or interest on, any Note or other
amounts payable hereunder or release or discharge any Credit Party from its
obligations to make such payments, (iii) postpone any date fixed for any payment
of principal of, or interest on, any Note or other amounts payable hereunder,
(iv) change the aggregate unpaid principal amount of any Note, or the number of
holders thereof, which shall be required for such holders or any of them to take
any action hereunder, or (v) amend this Section 10.1(d).
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10.2. Fees and Expenses. The Credit Parties shall pay all reasonable
out-of-pocket costs, fees and expenses of the Collateral Agent in connection
with the preparation of the Transaction Documents and the transactions
contemplated thereby, including, without limitation, all reasonable legal fees
and expenses of ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP. If, at any time or times,
regardless of the existence of an Event of Default (except with respect to
paragraph (iii) below, which shall be subject to an Event of Default having
occurred and be continuing), the Collateral Agent shall employ counsel or other
advisors for advice or other representation or shall incur reasonable legal or
other costs and expenses in connection with:
(i) any amendment, modification or waiver, or consent
with respect to, any of the Loan Documents;
(ii) any litigation, contest, dispute, suit,
proceeding or action instituted by a third party against such Lender in any way
relating to any of the Loan Documents or any other agreements to be executed or
delivered in connection herewith; or
(iii) any attempt to enforce any rights of such
Lender against any Credit Party by virtue of any of the Loan Documents;
then, and in any such event, the reasonable attorneys' and other parties' fees
arising from such services, including those of any appellate proceedings, and
all expenses, costs, charges and other fees reasonably incurred by such counsel
and others arising in connection with or relating to any of the events or
actions described in this Section shall be payable, on demand, by the Credit
Parties to such Lender and shall be additional Obligations under this Agreement
and the other Loan Documents. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: paralegal fees, costs and
expenses; accountants' and investment bankers' fees, costs and expenses; court
costs and expenses; photocopying and duplicating expenses; court reporter fees,
costs and expenses; long distance telephone charges; air express charges;
telegram charges; secretarial overtime charges; expenses for travel, lodging and
food paid or incurred in connection with the performance of such legal services;
and costs and expenses of the Collateral Agent.
10.3. No Waiver by Lender. Any Lender's failure, at any time or times,
to require strict performance by any Credit Party of any provision of this
Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of such Lender thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by such Lender of an Event of
Default by any Credit Party under the Loan Documents shall not suspend, waive or
affect any other Event of Default by any Credit Party under this Agreement and
any of the other Loan Documents whether the same is prior or subsequent thereto
and whether of the same or of a different type. None of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Event of
Default by any Credit Party under this Agreement and no defaults by any Credit
Party under any of the other Loan Documents shall be deemed to have been
suspended or
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waived by any Lender, unless such suspension or waiver is by an instrument in
writing signed by an officer of such Lender and the Required Lenders and
directed to any Credit Party specifying such suspension or waiver.
10.4. Remedies. Each Lender's rights and remedies under this Agreement
shall be cumulative and nonexclusive of any other rights and remedies which such
Lender may have under any other agreement, including without limitation, the
Loan Documents, the other Transaction Documents, by operation of law or
otherwise.
10.5. Waiver of Jury Trial. The parties hereto waive all right to trial
by jury in any action or proceeding to enforce or defend any rights under the
Transaction Documents.
10.6. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
10.7. Binding Effect; Benefits. This Agreement and the other
Transaction Documents shall be binding upon, and inure to the benefit of, the
successors of each Credit Party and each Lender and the assigns, transferees and
endorsees of each Lender.
10.8. Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
10.9. Governing Law. Except as otherwise expressly provided in any of
the Transaction Documents, in all respects, including all matters of
construction, validity and performance, this Agreement and the Obligations
arising hereunder shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York applicable to contracts made and
performed in such state, without regard to the principles thereof regarding
conflict of laws, and any applicable laws of the United States of America. Each
Lender and each Credit Party agree to submit to personal jurisdiction and to
waive any objection as to venue in the federal or New York State courts located
in the County of New York, State of New York. Service of process on a Lender or
the Borrower in any action arising out of or relating to any of the Transaction
Documents shall be effective if mailed to such party at the address listed in
Section 10.10 hereof. Nothing herein shall preclude any Lender or any Credit
Party from bringing suit or taking other legal action in any other jurisdiction.
10.10. Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by another, or
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whenever any of the parties desires to give or serve upon another any such
communication with respect to this Agreement, each such notice, demand, request,
consent, approval, declaration or other communication shall be in writing and
either shall be delivered in person with receipt acknowledged or by registered
or certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback addressed to the respective party hereto at the
address indicated for such party on Schedule A and Schedule B; provided,
however, any party may substitute such other address by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) Business Days after the same shall have been deposited with the United
States mail. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the persons
designated above to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
10.11. Survival. The representations and warranties of the Credit
Parties and the Lenders in this Agreement shall survive the execution, delivery
and acceptance hereof by the parties hereto and the closing of the transactions
described herein or related hereto.
10.12. Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
10.13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
10.14. Publicity. Neither any Credit Party nor its Subsidiaries nor any
Lender shall issue any press release or make any public disclosure regarding the
transactions contemplated hereby unless such press release or public disclosure
is approved by the other parties hereto in advance; provided, however, that the
Borrower may make any public disclosure regarding the transactions contemplated
hereby in compliance with its reporting obligations under the Exchange Act,
including the issuance of a press release or the filing of a Form 8-K with the
SEC. Notwithstanding the foregoing, each of the parties hereto may, in documents
required to be filed by it with regulatory bodies, make such statements with
respect to the transactions contemplated hereby as each may be advised by
counsel is legally necessary or advisable, and may make such disclosure as it is
advised by its counsel is required by law, subject to advance notice to the
Lenders.
10.15. Confidentiality. Subject to the Borrower's reporting
requirements under the Exchange Act, each of the Credit Parties and Lenders
agrees to keep confidential and not to disclose to or use for the benefit of any
third party the terms of this Agreement or any other information which at any
time is communicated by any other party hereto as being confidential without the
prior written approval of such other party; provided,
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however, that this provision shall not apply to (a) information which, at the
time of disclosure, is already part of the public domain (except by breach of
this Agreement), (b) information which is required to be disclosed by law
(including, without limitation, pursuant to Item 10 of Rule 601 of Regulation
S-K under the Securities Act and the Exchange Act), (c) any disclosure of
information to assignees or prospective assignees of any Notes or Warrants or to
participants or prospective participants in any Notes or Warrants, (d) any
disclosure of information by a Lender to its Affiliates and to other Lenders and
their respective Affiliates, (e) any disclosure of information by a Lender to
legal counsel, accountants, and other professional advisors to such Lender, (f)
any disclosure of information to regulatory officials and (g) any disclosure of
information by a Lender to such Lender's direct or indirect contractual
counterparties in swap agreements or to legal counsel, accountants and other
professional advisors to such counterparties. Notwithstanding anything herein to
the contrary, confidential information shall not include, and each party to any
of the Loan Documents and their respective Affiliates (and the respective
partners, directors, officers, employees, advisors, representatives and other
agents of each of the foregoing and their Affiliates) may disclose to any and
all Persons, without limitation of any kind, (i) any information with respect to
the U.S. federal and state income tax treatment of the transactions contemplated
hereby and any facts that may be relevant to understanding such tax treatment,
which facts shall not include for this purpose the names of the parties or any
other Person named herein, or information that would permit identification of
the parties or such other Persons, or any pricing terms or other nonpublic
business or financial information that is unrelated to such tax treatment or
facts, and (ii) all materials of any kind (including opinions or other tax
analyses) relating to such tax treatment or facts that are provided to any of
the Persons referred to above, and it is hereby confirmed that each of the
Persons referred to above has been authorized to make such disclosures since the
commencement of discussions regarding the transactions contemplated hereby.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the Credit Parties and the Lenders have executed
this Agreement as of the day and year first above written.
BORROWER:
BRUSH ENGINEERED MATERIALS INC.
By:_________________________________
Name:
Title:
GUARANTORS:
BRUSH ▇▇▇▇▇▇▇ INC.
By:_________________________________
Name:
Title:
BEM SERVICES, INC.
By:_________________________________
Name:
Title:
BRUSH CERAMIC PRODUCTS, INC.
By:_________________________________
Name:
Title:
BRUSH INTERNATIONAL, INC.
By:_________________________________
Name:
Title:
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▇▇▇▇▇▇▇▇ ADVANCED MATERIALS INC.
By:_________________________________
Name:
Title:
▇▇▇▇▇▇▇▇ ACQUISITION LLC
By:_________________________________
Name:
Title:
TECHNICAL MATERIALS, INC.
By:_________________________________
Name:
Title:
BRUSH RESOURCES INC.
By:_________________________________
Name:
Title:
ZENTRIX TECHNOLOGIES INC.
By:_________________________________
Name:
Title:
CIRCUITS PROCESSING TECHNOLOGY, INC.
By:_________________________________
Name:
Title:
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BRUSH ▇▇▇▇▇▇▇ (SINGAPORE) PTE LTD.
By:_________________________________
Name:
Title:
- 61 -
LENDERS:
UPPER COLUMBIA CAPITAL COMPANY, LLC
By:_________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager
BANK ONE, NA
By:_________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
COLLATERAL AGENT:
GUGGENHEIM CORPORATE FUNDING, LLC,
as Collateral Agent
By:_________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
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Schedule A
Lenders and Allocations of Loans and Warrants
Lender: Loan Advanced: Warrants Issued
------- -------------- ---------------
Upper Columbia Capital Company, LLC $ 30,000,000 98,566
Bank One, NA $ 5,000,000 16,434
Total $ 35,000,000 115,000
============= =======
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Schedule B
Credit Parties
- 64 -