Exhibit 10.12
Execution Copy
LOAN AND SECURITY AGREEMENT
by and among
CONGRESS FINANCIAL CORPORATION (SOUTHWEST)
as Lender
and
TITANIUM METALS CORPORATION
TITANIUM HEARTH TECHNOLOGIES, INC.
as Borrowers
Dated: February 25, 2000
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS..........................................................................................1
SECTION 2. CREDIT FACILITIES...................................................................................28
2.1 Loans..........................................................................................28
2.2 Letter of Credit Accommodations................................................................29
2.3 Joint and Several Liability....................................................................32
SECTION 3. INTEREST AND FEES...................................................................................33
3.1 Interest.......................................................................................33
3.2 Closing Fee....................................................................................35
3.3 Syndication Fee................................................................................35
3.4 Servicing Fee..................................................................................35
3.5 Unused Line Fee................................................................................35
3.6 Changes in Laws and Increased Costs of Loans...................................................36
SECTION 4. CONDITIONS PRECEDENT................................................................................37
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations.................................................................................37
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations.................................................................................39
SECTION 5. GRANT OF SECURITY INTEREST..........................................................................40
SECTION 6. COLLECTION AND ADMINISTRATION.......................................................................42
6.1 Borrowers' Loan Accounts.......................................................................42
6.2 Statements.....................................................................................42
6.3 Collection of Accounts.........................................................................43
6.4 Payments.......................................................................................44
6.5 Taxes..........................................................................................45
6.6 Authorization to Make Loans....................................................................46
6.7 Use of Proceeds................................................................................46
6.8 Regulation U...................................................................................47
6.9 Appointment of Agent for Requesting Loans and Receipts of
Loans and Statements...........................................................................48
SECTION 7. COLLATERAL REPORTING AND COVENANTS.................................................................48
7.1 Collateral Reporting...........................................................................48
7.2 Accounts Covenants.............................................................................49
7.3 Inventory Covenants............................................................................51
7.4 Equipment and Real Property Covenants..........................................................52
7.5 Power of Attorney..............................................................................53
7.6 Right to Cure..................................................................................53
7.7 Access to Premises.............................................................................54
SECTION 8. REPRESENTATIONS AND WARRANTIES......................................................................54
8.1 Corporate Existence, Power and Authority; Subsidiaries.........................................54
8.2 Financial Statements; No Material Adverse Change...............................................55
8.3 Chief Executive Office; Collateral Locations...................................................55
8.4 Priority of Liens; Title to Properties.........................................................55
8.5 Tax Returns....................................................................................56
8.6 Litigation.....................................................................................56
8.7 Compliance with Other Agreements and Applicable Laws...........................................56
8.8 Environmental Compliance.......................................................................56
8.9 Employee Benefits..............................................................................57
8.10 Bank Accounts..................................................................................58
8.11 Intellectual Property..........................................................................58
8.12 Capitalization.................................................................................58
8.13 Labor Disputes.................................................................................59
8.14 Corporate Name; Prior Transactions.............................................................59
8.15 Restrictions on Restricted Subsidiaries........................................................59
8.16 Material Contracts.............................................................................60
8.17 Treco Property; BMI Property...................................................................60
8.18 Interrelated Businesses........................................................................60
8.19 Accuracy and Completeness of Information.......................................................61
8.20 Survival of Warranties; Cumulative.............................................................61
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS..................................................................61
9.1 Maintenance of Existence.......................................................................61
9.2 New Collateral Locations.......................................................................62
9.3 Compliance with Laws, Regulations, Etc.........................................................62
9.4 Payment of Taxes and Claims....................................................................63
9.5 Insurance......................................................................................63
9.6 Financial Statements and Other Information.....................................................64
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc........................................66
9.8 Encumbrances...................................................................................72
9.9 Indebtedness...................................................................................73
9.10 Loans and Investments, Etc.....................................................................79
9.11 Dividends and Redemptions......................................................................84
9.12 Transactions with Affiliates...................................................................85
9.13 Additional Bank Accounts.......................................................................86
9.14 Compliance with ERISA..........................................................................86
9.15 End of Fiscal Years; Fiscal Quarters...........................................................86
9.16 Change in Business.............................................................................87
9.17 Limitation of Restrictions Affecting Restricted Subsidiaries...................................87
9.18 Adjusted Net Worth.............................................................................88
9.19 After Acquired Real Property...................................................................88
9.20 Costs and Expenses.............................................................................88
9.21 Further Assurances.............................................................................89
SECTION 10. EVENTS OF DEFAULT AND REMEDIES.....................................................................89
10.1 Events of Default..............................................................................89
10.2 Remedies.......................................................................................91
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS...................................AND CONSENTS; GOVERNING LAW
93
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver..............................................................................93
11.2 Waiver of Notices..............................................................................94
11.3 Amendments and Waivers.........................................................................94
11.4 Waiver of Counterclaims........................................................................94
11.5 Indemnification................................................................................95
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS...................................................................95
12.1 Term...........................................................................................95
12.2 Interpretative Provisions......................................................................98
12.3 Notices........................................................................................99
12.4 Partial Invalidity.............................................................................99
12.5 Successors.....................................................................................99
12.6 Confidentiality...............................................................................100
12.7 Participant=s Security Interest...............................................................100
12.8 Partial Releases of Collateral by Lender for Permitted Sales or
Other Disposition.............................................................................101
12.9 Entire Agreement..............................................................................101
12.10 Nonapplicability of Chapter 346; Selection of Optional Interest
Rate Ceilings.................................................................................101
12.11 DTPA Waiver...................................................................................102
12.12 Oral Agreements Ineffective...................................................................102
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate
Exhibit B Compliance Certificate
Exhibit C Initial Availability Status Report
Exhibit D Form of Subordination Agreement
Schedule 1.7 BMI Property
Schedule 1.40 Existing Letters of Credit
Schedule 1.99 Treco Property
Schedule 8.4 Existing Liens
Schedule 8.8 Environmental Matters
Schedule 8.9 ERISA Matters
Schedule 8.10 Bank Accounts
Schedule 8.11 Intellectual Property
Schedule 8.13 Labor Matters
Schedule 8.16 Material Contracts
Schedule 9.5 Insurance Coverages
Schedule 9.9 Existing Indebtedness
Schedule 9.10 Existing Loans, Advances and Guarantees
Schedule 9.12 Existing Intercompany Agreements
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated February 25, 2000 is entered
into by and among Congress Financial Corporation (Southwest), a Texas
corporation ("Lender"), Titanium Metals Corporation, a Delaware corporation
("Timet") and Titanium Hearth Technologies, Inc., a Delaware corporation ("THT",
and together with Timet, each individually a "Borrower" and collectively,
"Borrowers").
W I T N E S S E T H:
WHEREAS, Borrowers have requested that Lender enter into financing
arrangements with Borrowers pursuant to which Lender may make loans and provide
other financial accommodations to Borrowers; and
WHEREAS, Lender is willing to make such loans and provide such
financial accommodations on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONSSECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean, as to each Borrower, all present and future
rights of such Borrower to payment for goods sold or leased or for services
rendered, whether or not evidenced by instruments or chattel paper, and whether
or not earned by performance.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.
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1.3 "Adjusted Net Worth" shall mean as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on a
consolidated basis for such Person and its Subsidiaries (if any), the amount
equal to (a) the difference between: (i) the aggregate net book value of all
assets of such Person and its Subsidiaries, calculating the book value of
inventory for this purpose on a first-in-first-out or average cost basis, after
deducting from such book values all appropriate reserves in accordance with GAAP
(including all reserves for doubtful receivables and obsolescence) and (ii) the
aggregate amount of the Indebtedness and other liabilities of such Person and
its Subsidiaries (including tax and other proper accruals), minus (b) the amount
of the BUCS. For purposes of Section 9.18 hereof, the calculation of Adjusted
Net Worth for any period (commencing after the date hereof) shall exclude: (i)
all extraordinary non-cash charges and one-time non-cash charges of Timet and
its Subsidiaries in each case arising after the date hereof for the applicable
period, (ii) the amount equal to: (A) the sum of: (1) the depreciation expense
of Timet and its Subsidiaries after the date hereof for such period plus (2) the
amortization of goodwill of Timet and its Subsidiaries after the date hereof for
such period minus (B) Capital Expenditures paid by Timet and its Subsidiaries
after the date hereof during such period, and (iii) non-cash dividends accrued
but unpaid in respect of the BUCS after the date hereof which have reduced
Consolidated Net Income of Timet and its Subsidiaries for the applicable period.
1.4 "Affiliate" shall mean, with respect to a specified Person, any
other Person (a) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
person; (b) which beneficially owns or holds ten (10%) percent or more of any
class of the Voting Stock or other equity interest of such specified person; or
(c) of which ten (10%) percent or more of the Voting Stock or other equity
interest is beneficially owned or held by such specified person or a Subsidiary
of such specified person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with") when used with respect to any specified person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of Voting Stock, by agreement or otherwise.
1.5 "Applicable Margin" shall mean, at any time, as to the Interest
Rate for Prime Rate Loans and the Interest Rate for Eurodollar Rate Loans, the
applicable percentage (on a per annum basis) set forth below if either the
Quarterly Average Excess Availability for the immediately preceding fiscal
quarter is in the amount indicated for such percentage or the Fixed Charge
Coverage Ratio as of the last day of the immediately preceding fiscal quarter
(which ratio for this purpose shall be calculated based on the four (4)
immediately preceding fiscal quarters) is at the level indicated for such
percentage:
FIXED CHARGE APPLICABLE PRIME Applicable Euro-
EXCESS AVAILABILITY COVERAGE RATIO RATE MARGIN DOLLAR RATE MARGIN
(a) $75,000,000 or 1.75 or more to 1 1/2% 2%
more
(b) $25,000,000 to 1.25 to 1.75 to 1 3/4% 2 1/4%
$75,000,000
(c) Less than Less than 1.25 to 1 1% 2 1/2%
$25,000,000
PROVIDED, THAT, (i) the Applicable Margin shall be calculated and established
once each fiscal quarter (commencing with the fiscal quarter ending June 30,
2000) and (ii) the Applicable Margin shall be the lower percentage set forth
above based on the Quarterly Average Excess Availability or the Fixed Charge
Coverage Ratio.
1.6 "Blocked Accounts" shall have the meaning set forth in Section
6.3 hereof.
1.7 "BMI Property" shall mean the three contiguous parcels of Real
Property owned by Timet adjacent to and to the east of Pabco Road, northeast of
Borrower=s main plant described on Schedule 1.7 hereto located in Henderson,
Nevada (sometimes referred to as the "Pabco/Warm Springs") and subject to the
Agreement for Reconveyance of Pabco/Warm Springs, dated June 30, 1999, by and
among Timet, Basic Environmental Company LLC and Basic Remediation Company LLC,
as in effect on the date hereof.
1.8 ABorrowers@ shall mean, collectively, the following (and their
respective successors and assigns): (a) Titanium Metals Corporation, a Delaware
corporation, and (b) Titanium Hearth Technologies, Inc., a Delaware corporation;
sometimes being referred to herein individually as a "Borrower".
1.9 "Borrowing Base" shall mean, at any time, as to Borrowers, the
amount equal to:
(a) eighty-five (85%) percent of the Net Amount of Eligible
Accounts of Borrowers; plus
(b) the lesser of: (i) fifty-five (55%) percent of the Value
of Eligible Inventory of Borrowers OR (II) THE INVENTORY
LOAN LIMIT; PLUS
(C) THE EQUIPMENT AVAILABILITY OF BORROWERS (AS THEN IN EFFECT),
LESS
(d) any Reserves.
For purposes only of applying the Inventory Loan Limit, Lender may treat the
then undrawn amounts of outstanding Letter of Credit Accommodations for the
purpose of purchasing Eligible Inventory as Loans to the extent Lender is in
effect basing the issuance of the Letter of Credit Accommodations on the Value
of the Eligible Inventory being purchased with such Letter of Credit
Accommodations. In determining the actual amounts of such Letter of Credit
Accommodations to be so treated for purposes of the sublimit, the outstanding
Loans and Reserves shall be attributed first to any components of the lending
formulas set forth above that are not subject to such sublimit, before being
attributed to the components of the lending formulas subject to such sublimit.
As of the date hereof, the Borrowing Base has been calculated as set forth on
Exhibit C hereto. Nothing contained in Exhibit C hereto shall be construed to
limit or otherwise affect any of the rights of Lender hereunder with respect to
the establishment of Reserves, the criteria for Eligible Accounts, Eligible
Inventory, Eligible Equipment or otherwise in accordance with the terms hereof.
The amounts set forth on Exhibit C are subject to adjustment in accordance with
the terms hereof.
1.10 ABUCS@ shall mean, collectively, the convertible preferred
securities designated the 6 5/8% Convertible Preferred Securities, Beneficial
Unsecured Convertible Securities issued by the Trust, as the same now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.11 "BUCS Guarantee" shall mean the Convertible Preferred Securities
Guarantee Agreement, dated as of November 20, 1996, by Timet in favor of the
holders of the BUCS with respect to any distribution or redemptions required to
be made pursuant to the BUCS, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.12 "Business Day" shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close under
the laws of the State of New York, the State of Texas or the State of North
Carolina, and a day on which the Reference Bank and Lender are open for the
transaction of business, except that if a determination of a Business Day shall
relate to any Eurodollar Rate Loans, the term Business Day shall also exclude
any day on which banks are closed for dealings in dollar deposits in the London
interbank market or other applicable Eurodollar Rate market.
1.13 "Capital Leases" shall mean, as applied to any Person, any lease
of (or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.14 "Capital Stock" shall mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person's capital stock, partnership interests, membership interests or
equivalent interests at any time outstanding, and any and all rights, warrants
or options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.15 "Cash Equivalents" shall mean, at any time, (a) any evidence of
indebtedness with a maturity date of one hundred eighty (180) days or less
issued or directly and fully guaranteed or insured by the United States OF
AMERICA OR ANY AGENCY OR INSTRUMENTALITY THEREOF; PROVIDED, THAT, the full faith
and credit of the United States of America is pledged in support thereof; (b)
certificates of deposit or bankers' acceptances with a maturity of one hundred
eighty (180) days or less of any financial institution that is a member of the
Federal Reserve System having combined capital and surplus and undivided profits
of not less than $200,000,000; (c) commercial paper (including variable rate
demand notes) with a maturity of one hundred eighty (180) days or less issued by
a corporation (except any Subsidiary or Affiliate of a Borrower) organized under
the laws of any State of the United States of America or the District of
Columbia and rated at least A-1 by Standard & Poor's Ratings Service, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or at least P-1 by ▇▇▇▇▇'▇ Investors Service,
Inc.; (d) repurchase and reverse repurchase obligations with a term of not more
than thirty (30) days for underlying securities of the types described in clause
(a) above entered into with any financial institution having combined capital
and surplus and undivided profits of not less than $200,000,000; (e) repurchase
agreements and reverse repurchase agreements relating to marketable direct
obligations issued or unconditionally guaranteed by the United States of America
or issued by any governmental agency thereof and backed by the full faith and
credit to the United States of America, in each case maturing within one hundred
eighty (180) days or LESS FROM THE DATE OF ACQUISITION; PROVIDED, THAT, the
terms of such agreements comply with the guidelines set forth in the Federal
Financial Agreements of Depository Institutions with Securities Dealers and
Others, as adopted by the Comptroller of the Currency on October 31, 1985; (f)
investments in money market funds and mutual funds which invest substantially
all of their assets in securities of the types described in clauses (a) through
(e) above; and (g) funds maintained by such Person in demand deposit accounts at
any national or state bank or trust company.
1.16 "Change of Control" shall mean (a) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of a Borrower to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act, other than the transfer by THT to Timet of all or
substantially all of the assets of THT, including any such transfer pursuant to
a merger or consolidation permitted hereunder); (b) the liquidation or
dissolution of a Borrower or the adoption of a plan by the stockholders of such
Borrower relating to the dissolution or liquidation of such Borrower other than
(i) the adoption of a plan by Timet as the sole stockholder of THT relating to
the liquidation or dissolution of THT and transfer of its assets and liabilities
to Timet to the extent permitted hereunder, and (ii) the liquidation or
dissolution of THT and transfer of its assets and liabilities to Timet to the
extent permitted hereunder; (c) the acquisition by any Person or group (as such
term is used in Section 13(d)(3) of the Exchange Act), except for one or more
Permitted Holders, of beneficial ownership, directly or indirectly, of thirty
(30%) percent or more of the voting power of the total outstanding Voting Stock
of Timet and such Person or group shall beneficially own more of the total
voting power of the total outstanding Voting Stock of Timet than is beneficially
owned directly or indirectly, in the aggregate, by Permitted Holders; (d) during
any period of two (2) consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of Timet (together with any new
directors who have been appointed by any Permitted Holder, or whose nomination
for election by the stockholders of Timet, as the case may be, was approved by a
vote of at least sixty-six and two-thirds (66 2/3%) percent of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of Timet then
still in office; or (e) the failure of Timet to own one hundred (100%) percent
of the voting power of the total outstanding Voting Stock of THT (other than as
the result of the merger or consolidation of THT with and into Timet to the
extent permitted hereunder or as the result of the liquidation or dissolution of
THT to the extent permitted hereunder).
1.17 "Code" shall mean the Internal Revenue Code of 1986, together with
all rules, regulations and interpretations thereunder or related thereto, as
amended from time to time.
1.18 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.19 "Collateral Access Agreement" shall mean an agreement in writing,
in form and substance satisfactory to Lender, from any lessor of premises to a
Borrower, or any other person to whom any Collateral (including Inventory,
Equipment, bills of lading or other documents of title) is consigned or who has
custody, control or possession of any Collateral or is otherwise the owner or
operator of any premises on which any of such Collateral is located, duly
authorized, executed and delivered by such lessor, consignee or other person.
1.20 "Consolidated Net Income"shall mean, with respect to any Person
for any period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary or non-recurring gains) after deducting all
charges which should be deducted before arriving at the net income (loss) for
such period and, without duplication, after deducting the PROVISION FOR TAXES
FOR SUCH PERIOD, ALL AS DETERMINED IN ACCORDANCE WITH GAAP; PROVIDED, THAT, (a)
the net income of any Person that is not a consolidated Subsidiary or that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid or payable to such
Person or a consolidated Subsidiary of such Person; (b) except to the extent
included pursuant to the foregoing clause, the net income of any Person accrued
prior to the date it becomes a consolidated Subsidiary of such Person or is
merged into or consolidated with such Person or any of its consolidated
Subsidiaries or that Person's assets are acquired by such Person or by its
consolidated Subsidiaries shall be excluded; (c) the net income (if positive) of
any consolidated Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such consolidated Subsidiary to such
Person or to any other consolidated Subsidiary of such Person is not at the time
permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such consolidated Subsidiary shall be excluded; and (d) the effect of any change
in accounting principles adopted by such person or its Subsidiaries after the
date hereof shall be excluded. For the purposes of this definition, (i) net
income excludes any gain together with any related Provision for Taxes for such
gain realized upon the sale or other disposition of any assets that are not sold
in the ordinary course of business (including, without limitation, dispositions
pursuant to sale and leaseback transactions) or of any Capital Stock of such
Person or a Subsidiary of such Person, and (ii) the term "Provision for Taxes"
shall mean an amount equal to all taxes imposed on or measured by net income,
whether Federal, State, Provincial, county or local, and whether foreign or
domestic, that are paid or payable by any Person in respect of any period in
accordance with GAAP.
1.21 "Customary Permitted Liens" shall mean as to any Person:
(a) liens for taxes not yet due and payable or which are being
contested in good faith by appropriate proceedings diligently pursued, provided
that provision for the payment of all such taxes has been made on the books of
such Person to the extent required by GAAP;
(b) mechanics', processor's, materialmen's, carriers',
warehousemen's, repairmen's, landlord's and similar liens (other than liens
securing the payment of taxes) arising by operation of law and arising in the
ordinary course of business and securing obligations of such Person that are not
overdue or are being contested in good faith by appropriate proceedings
diligently pursued in each case prior to the commencement of foreclosure or
similar proceedings (or if such foreclosure or other proceeding has been
commenced, then so long as any foreclosure or similar actions are effectively
stayed), provided that in each case provision for the payment of the obligations
secured by such liens has been made on the books of such Person to the extent
required by GAAP;
(c) pledges and deposits of cash in the ordinary course of
business of such Person consistent with the current practices of such Person as
of the date hereof arising in connection with worker's compensation,
unemployment, insurance, old age pensions and social security benefits, provided
that provisions for the payment of the obligations secured by such liens has
been made on the books of such Person to the extent required by GAAP;
(d) (i) pledges and deposits of cash made in the ordinary course
of business to secure the performance of bids, tenders, statutory or
obligations, fee and expense arrangements with trustees and fiscal agents
(exclusive of obligations incurred in connection with the borrowing of money or
the payment of the deferred purchase price of property which, in either case,
constitutes Indebtedness) in each case consistent with the current practices of
such Person and (ii) pledges and deposits of cash by such Person securing
surety, INDEMNITY, PERFORMANCE, APPEAL AND RELEASE BONDS, PROVIDED, THAT (A)
full provision for the payment of all such obligations has been made on the
books of such Person to the extent required by GAAP and (B) in connection with
any bonds issued by a surety or other person pursuant to which such surety or
other person may, in the good faith determination of Lender, have any basis for
any claim or right to any Collateral in the event such surety or other person is
required to fulfill its obligations pursuant to such bonds (whether pursuant to
equitable rights of subrogation, contract or otherwise) or otherwise may have
any claim or right to any Collateral, then the issuer of such bond shall have
waived in writing any rights in or to, or other interest in, any of the
Collateral, in form and substance satisfactory to Lender;
(e) Permitted Real Property Encumbrances;
(f) attachment, judgment, levy, distraint or other similar liens
that do not constitute an EVENT OF DEFAULT ARISING IN CONNECTION WITH COURT OR
ARBITRATION PROCEEDINGS PROVIDED, THAT, (i) such liens are being contested in
good faith and by appropriate proceedings diligently pursued, (ii) adequate
reserves or other appropriate provision, if any, as are required by GAAP have
been made therefor, (iii) a stay of enforcement of any such attachment,
judgment, levy, distraint or other similar lien is in effect or in the case of
any of the foregoing, a stay is obtained within five (5) Business Days so long
as in the case of any properties or assets of any Borrower or Obligor, at all
times during such five (5) Business Day period, such Borrower or Obligor
continues to have possession and control of all assets or properties which might
be subject to any of the foregoing and no notice of such attachment, judgment,
levy, distraint or other similar lien has been delivered to any third party in
possession or control of any assets or properties of any Borrower or Obligor,
and no action has been taken by any Governmental Authority in connection with
such attachment, judgment, levy, distraint or other similar lien to take
possession, or deprive any Borrower or Obligor of possession or control, of any
assets or property, and (iv) such attachment, judgment, levy, distraint or other
similar lien does not apply to the Blocked Accounts;
(g) customary rights of set off, revocation or refund under
deposit agreements or under the UCC of banks or other financial institutions
where a Borrower maintains deposits in the ordinary course of business permitted
by this Agreement and similar rights of sellers under Article 2 of the UCC,
except to the extent such banks or other financial institutions may have agreed
to waive or limit any of such rights either pursuant to arrangements in
connection with the Blocked Accounts or otherwise.
1.22 "EBITDA" shall mean, as to any Person, with respect to any period,
an amount equal to: (a) the Consolidated Net Income of such Person and its
Subsidiaries for such period determined in accordance with GAAP, PLUS (b)
depreciation, amortization and other non-cash charges (including, but not
limited to, amortization of discount and amortization of deferred financing fees
and closing costs, imputed interest and deferred compensation) for such period
(to the extent deducted in the computation of Consolidated Net Income of such
PERSON), ALL IN ACCORDANCE WITH GAAP, PLUS (c) Interest Expense for such period
(to the extent deducted in the COMPUTATION OF CONSOLIDATED NET INCOME OF SUCH
PERSON), PLUS (d) dividends in respect of the BUCS for such period (to the
extent deducted in the computation of Consolidated Net Income of such Person)
plus (e) charges for Federal, State, local and foreign income taxes for such
period (to the extent deducted in the computation of Consolidated Net Income of
such Person).
1.23 "Eligible Accounts" shall mean Accounts created by a Borrower
which are and continue to be acceptable to Lender based on the criteria set
forth below. In general, Accounts shall be Eligible Accounts if:
(A) SUCH ACCOUNTS ARISE FROM THE ACTUAL AND BONA FIDE sale and
delivery of goods by such Borrower (except as to ▇▇▇▇ and hold goods to the
extent provided for in clause (f) of this definition) or rendition of services
by such Borrower in the ordinary course of its business which transactions are
completed in accordance with the terms and provisions contained in any documents
related thereto to the extent required in order for the account debtors or other
persons obligated on or in respect of such Accounts to be absolutely and
unconditionally obligated to make payment thereon in the good faith
determination of Lender and as is otherwise required so as not to otherwise
adversely affect the validity, enforceability or collectability of the
obligations of such account debtor or other persons obligated on or in respect
of such Accounts;
(b) such Accounts are not unpaid more than sixty (60) days after
the original due date thereof, but in any event one hundred twenty (120) days
after the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions contained
in Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sale and return, sale on
approval, or other terms under which payment by the account debtor may be
conditional or contingent (other than pursuant to the quality review in the
ordinary course of business by such account debtor of the products sold by such
Borrower to it giving rise to such Accounts);
(e) the chief executive office of the account debtor with respect
to such Accounts is located in the United States of America, or subject to
clause (i) of this definition, the United Kingdom, Japan, Canada, France,
Germany or Israel or, at Lender's option, if the chief executive office and
principal place of business of the account debtor with respect to such Accounts
is located other than in the United States of America, the United Kingdom,
Japan, Canada, France, Germany or Israel, then if either: (i) the account debtor
has delivered to such Borrower an irrevocable letter of credit issued or
confirmed by a bank satisfactory to Lender and payable only in the United States
of America and in U.S. dollars, sufficient to cover such Account, in form and
substance satisfactory to Lender and if required by Lender, the original of such
letter of credit has been delivered to Lender or Lender's agent and the issuer
thereof notified of the assignment of the proceeds of such letter of credit to
Lender, or (ii) such Account is subject to credit insurance payable to Lender
issued by an insurer and on terms and in an amount acceptable to Lender, or such
Account is otherwise acceptable in all respects to Lender (subject to such
lending formula with respect thereto as Lender may determine);
(f) such Accounts do not consist of progress ▇▇▇▇▇▇▇▇ (such that
the obligation of the account debtors with respect to such Accounts is
conditioned upon such Borrower's satisfactory completion of any further
performance under the agreement giving rise thereto), ▇▇▇▇ and hold invoices or
retainage invoices, except (i) ▇▇▇▇ and hold sales to The Boeing Company
pursuant to the Purchase and Sale Agreement, dated November 5, 1997, between
Timet and The Boeing Company as in effect on the date hereof (a true, correct
and complete copy of which has been provided by Borrowers to Lender prior to the
date hereof) and no default exists under such arrangements which would affect
the obligation of The Boeing Company to make payment in respect of such
Accounts, in the good faith determination of Lender, or otherwise adversely
affect the validity, enforceability or collectability of all or any portion of
the Accounts arising from such sales and (ii) as to other ▇▇▇▇ and hold sales,
if Lender shall have received an agreement in writing from the account debtor,
in form and substance satisfactory to Lender, confirming the unconditional
obligation of the account debtor (other than pursuant to the quality review in
the ordinary course of business by such account debtor of the products sold by
such Borrower to it giving rise to such Accounts) to take the goods related
thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to any right of setoff or recoupment
against such Accounts (but the portion of the Accounts of such account debtor in
excess of the amount at any time and from time to time owed by such Borrower to
such account debtor or claimed owed by such account debtor may be deemed
Eligible Accounts);
(h) there are no facts, events or occurrences which would impair
the validity, enforceability or collectability of such Accounts or reduce the
amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Lender (and as to Accounts owing by account
debtors with chief executive offices other than in the United States of America
or Canada, at any time promptly upon Lender's request, such Borrower shall
execute and deliver, or cause to be executed and delivered, such other
agreements, documents and instruments as may be required by Lender to perfect
the security interests and liens of Lender (or to provide Lender with rights
equivalent thereto) in those Accounts of such account debtors in accordance with
the applicable laws of the jurisdiction in which such account debtor's chief
executive office is located and take or cause to be taken such other and further
actions as Lender may request to enable Lender as secured party with respect
thereto to collect such Accounts under the applicable laws of such
jurisdictions, including (i) in the case of Accounts owing by account debtors in
France, compliance with Law no 81.1 of 2 January 1981 and other applicable laws
in a manner satisfactory to Lender so that Lender has such rights with respect
thereto as Lender requires, (ii) in the case of Accounts owing by account
debtors in Germany, providing for such Accounts to be subject to a security
assignment in favor of Lender in form and substance satisfactory to Lender and
enforceable under German law, (iii) in the case of Accounts owing by account
debtors in Japan, the filing of a claim assignment registration and compliance
with The Law prescribing Exceptions, etc. to The Civil Code Requirements for
Setting Up Against a Third Party to an Assignment of Claims, and (iv) in the
case of Accounts owing by account debtors in the United Kingdom and Israel,
providing for such Accounts to be subject to a first ranking fixed and floating
charge in favor of Lender pursuant to a debenture) and any goods giving rise
thereto are not, and were not at the time of the sale thereof, subject to any
liens except those permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee, agent or
other Affiliate of such Borrower, except if the account debtor is ValTimet;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, upon Lender's
request, the Federal Assignment of Claims Act of 1940, as amended or any similar
State or local law, if applicable, has been complied with in a manner
satisfactory to Lender;
(l) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which could
reasonably be expected to result in any material adverse change in any such
account debtor's financial condition;
(m) such Accounts of a single account debtor or its Affiliates
(other than The Boeing Company, ▇▇▇▇▇-▇▇▇▇▇▇ Company, Rolls-Royce plc or United
Technologies (and including for this purpose its Subsidiaries referred to below)
do not constitute more than fifteen (15%) percent of all otherwise Eligible
Accounts, or in the case of each of ▇▇▇▇▇-▇▇▇▇▇▇ Company, Rolls-Royce plc or
United Technologies Corporation acting through its ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Division (and
including for this purpose the following Subsidiaries of United Technologies
Corporation: Sikorsky Aircraft, Inc., Blades Technology Ltd., Carmel Forge Ltd.,
Precision Components International, Inc., ▇▇▇▇▇▇▇▇ Sundstrand Corporation and
▇▇▇▇▇ & ▇▇▇▇▇▇▇ Canada, Inc.), in each case, such Accounts of each such Person
do not constitute more than twenty-five (25%) percent of all otherwise Eligible
Accounts, or in the case of The Boeing Company, such Accounts of The Boeing
Company, together with such Accounts of any Recognized Boeing Subcontractor
under the Purchase and Sale Agreement, dated as of November 5, 1997, between The
Boeing Company and Timet where the Account arises under such Purchase and Sale
Agreement, do not constitute more than thirty-five (35%) percent of all
otherwise Eligible Accounts (but the portion of the Accounts not in excess of
such percentage may be deemed Eligible Accounts);
(n) such Accounts are not owed by an account debtor who has
Accounts unpaid more sixty (60) days after the original due date for them (but
in any event more than one hundred twenty (120) days after the original invoice
date for them) which constitute more than fifty (50%) percent of the total
Accounts of such account debtor;
(o) such Accounts are not evidenced by instruments or chattel
paper;
(p) such Accounts are owed by account debtors whose total
indebtedness to such Borrower does not exceed the credit limit with respect to
such account debtors as determined by such Borrower from time to time and as is
reasonably acceptable to Lender (but the portion of the Accounts not in excess
of such credit limit may be deemed Eligible Accounts); and
(q) such Accounts are owed by account debtors deemed creditworthy
at all times by such Borrower consistent with its current practice and who are
reasonably acceptable to Lender.
General criteria for Eligible Accounts may be established and revised from time
to time by Lender in good faith based on an event, condition or other
circumstance arising after the date hereof, or existing on the date hereof to
the extent Lender has no written notice thereof from such Borrower, which
adversely affects or could reasonably be expected to adversely affect the
Accounts in the good faith determination of Lender. Any Accounts which are not
Eligible Accounts shall nevertheless be part of the Collateral.
1.24 "Eligible Equipment" shall mean, as to Borrowers, manufacturing
Equipment owned by a Borrower as of the date hereof and included in the
appraisal of the Equipment by ▇▇▇▇▇▇ ▇▇▇▇ & Associates received by Lender on or
before the date hereof and which is addressed to Lender and upon which Lender is
expressly permitted to rely, which is in good order, repair, running and
marketable condition, located at such Borrower's premises and acceptable to
Lender in all respects. In general, Eligible Equipment shall not include, unless
otherwise approved by Lender: (a) Equipment at premises other than those owned
or leased and controlled by such Borrower, except as to premises that are leased
by such Borrower, only if Lender shall have received a Collateral Access
Agreement duly authorized, executed and delivered by the owner or operator of
such premises in form and substance SATISFACTORY TO LENDER, EXCEPT THAT
notwithstanding that Lender shall not have received such an agreement for a
particular leased location, Lender may consider Equipment at such leased
location which would otherwise be Eligible Equipment to be Eligible Equipment
and in such event, Lender may establish such Reserves as Lender may determine in
respect of amounts at any time payable by such Borrower to the owner or lessor
of such location, without limiting any other rights of Lender under this
Agreement or under the other Financing Agreements with respect to the
establishment of Reserves or otherwise; (b) Equipment subject to a security
interest or lien in favor of any person other than Lender except those permitted
in this Agreement; (c) Equipment which is not located in the continental United
States of America; (d) Equipment which is not subject to the first priority,
valid and perfected security interest of Lender; (e) worn-out, obsolete, damaged
or defective Equipment or Equipment not used or usable in the ordinary course of
such Borrower's business as presently conducted; (f) computer hardware; (g)
tooling or (h) Equipment not used for the manufacturing of Inventory in the
ordinary course of the business of such Borrower. Any Equipment which is not
Eligible Equipment shall nevertheless be part of the Collateral.
1.25 "Eligible Inventory" shall mean, as to Borrowers, Inventory of a
Borrower consisting of semi-finished and finished goods held for resale in the
ordinary course of the business of such Borrower and raw materials for such
semi-finished and finished goods, in each case which are acceptable to Lender
based on the criteria set forth below. In general, Eligible Inventory shall not
include:
(a) work-in-process (other than Inventory which is in a form that
is generally saleable and semi-finished goods);
(b) components which are not part of semi-finished or finished
goods;
(c) spares;
(d) packaging and shipping materials;
(e) supplies used or consumed in such Borrower's business;
(F) INVENTORY AT PREMISES OTHER THAN THOSE OWNED AND CONTROLLED
BY SUCH BORROWER, EXCEPT any Inventory which would otherwise be deemed Eligible
Inventory at locations in the United States of America or Canada which are not
owned and operated by such Borrower may nevertheless be considered Eligible
Inventory: (i) as to locations which are leased by such Borrower if Lender shall
have received a Collateral Access Agreement from the owner and lessor of such
location, duly authorized, executed and delivered by such owner and lessor,
EXCEPT THAT notwithstanding that Lender shall not have received such an
agreement for a particular leased location, Lender may consider Inventory at
such leased location which would otherwise be Eligible Inventory to be Eligible
Inventory and in such event, Lender may at any time establish such Reserves as
Lender may determine in respect of amounts at any time payable by such Borrower
to the owner or lessor of such location, without limiting any other rights and
remedies of Lender under this Agreement or under the other Financing Agreements
with respect to the establishment of Reserves or otherwise and (ii) as to
premises of third parties (including sales agents, consignees and processors),
Lender shall have received a Collateral Access Agreement duly authorized,
executed and delivered by the owner and operator of such premises (except that
notwithstanding that Lender shall not have received such an agreement as to a
particular third party location, Lender may consider Inventory at such location
which would otherwise be Eligible Inventory to be Eligible Inventory and in such
event, Lender may at any time establish such Reserves as Lender may determine in
respect of amounts at any time payable by such Borrower to such third party,
without limiting any other rights or remedies of Lender under this Agreement or
under the other Financing Agreements with respect to the establishment of
Reserves or otherwise), and in addition, if required by Lender, as to premises
of third parties where assets of a Borrower are located: (A) the owner and
operator executes appropriate UCC-1 financing statements in favor of such
Borrower, which are duly assigned to Lender and (B) any secured lender to the
owner and operator is properly notified of the first priority lien on such
Inventory of Lender;
(g) Inventory located outside the continental United States of
America or Canada;
(h) Inventory subject to a security interest, hypothec or lien in
favor of any person other than Lender, except those permitted in this Agreement;
(i) ▇▇▇▇ and hold goods;
(j) unserviceable, obsolete or slow moving Inventory;
(k) Inventory which is not subject to the first priority, valid
and perfected security interest of Lender as to Inventory in the United States
of America and the first priority, valid and perfected security interest, lien
and first ranking hypothec as to Inventory in Canada;
(l) damaged and/or defective Inventory; and
(m) Inventory purchased or sold on consignment.
General criteria for Eligible Inventory may be established and revised from time
to time by Lender in good faith based on an event, condition or other
circumstance arising after the date hereof, or existing on the date hereof to
the extent Lender has no written notice thereof from such Borrower, which
adversely affects or could reasonably be expected to adversely affect the
Inventory in the good faith determination of Lender. Any Inventory which is not
Eligible Inventory shall nevertheless be part of the Collateral.
1.26 "Environmental Laws" shall mean all applicable foreign, Federal,
State and local laws (including common law), legislation, rules, codes,
licenses, permits (including any conditions imposed therein), authorizations,
judicial or administrative decisions, injunctions or agreements between a
Borrower and any Governmental Authority, (a) relating to pollution and the
protection, preservation or restoration of the environment (including air, water
vapor, surface water, ground water, drinking water, drinking water supply,
surface land, subsurface, land, plant, and animal life or any other natural
resource), or to human health, (b) relating to the exposure to, or the use,
storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or
disposal, or threatened release, of Hazardous Materials, or (c) relating to all
laws with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials. The term "Environmental Laws"
includes (i) the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act,
the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act,
the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws, and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.27 "Equipment" shall mean, as to each Borrower, all of such
Borrower's now owned and hereafter acquired equipment, machinery, computers and
computer hardware and software (whether owned or licensed), tools, furniture,
fixtures, all attachments, accessions and property now or hereafter affixed
thereto or used in CONNECTION THEREWITH, AND SUBSTITUTIONS AND REPLACEMENTS
THEREOF, WHEREVER LOCATED, PROVIDED, THAT, the term Equipment shall not include
motor vehicles.
1.28 "EQUIPMENT AVAILABILITY" SHALL MEAN, AS TO BORROWERS, THE AMOUNT
EQUAL TO $30,890,000, PROVIDED, THAT, commencing on March 1, 2000, such amount
shall be reduced effective as of the first day of each month by an amount equal
to $429,028.
1.29 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, together with all rules, regulations and interpretations
thereunder or related thereto.
1.30 "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.31 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which Borrower or any of its ERISA Affiliates is a
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which a Borrower or any of its ERISA Affiliates could otherwise be
liable for amounts in excess of $250,000; (f) a complete or partial withdrawal
by a Borrower or any ERISA Affiliate from a Multiemployer Plan or a cessation of
operations which is treated as such a withdrawal or notification that a
Multiemployer Plan is in reorganization; (g) the filing of a notice of intent to
terminate in any termination other than a standard termination, the treatment of
a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the
commencement of proceedings by the Pension Benefit Guaranty Corporation to
terminate a Plan or Multiemployer Plan; (h) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan; (i) the imposition of any liability under Title IV of ERISA
in excess of $250,000 (other than the Pension Benefit Guaranty Corporation
premiums due but not delinquent under Section 4007 of ERISA, upon a Borrower or
any ERISA Affiliate); and (j) any other event or condition with respect to a
Plan or Multiemployer Plan or any Plan subject to Title IV of ERISA maintained,
or contributed to, by any ERISA Affiliate that could reasonably be expected to
result in liability of a Borrower in excess of $250,000.
1.32 "Eurodollar Rate" shall mean with respect to the Interest Period
for a Eurodollar Rate Loan to a Borrower, the interest rate per annum equal to
the arithmetic average of the rates of interest per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) at which
Reference Bank is offered deposits of United States dollars in the London
interbank market (or other Eurodollar Rate market selected by such Borrower and
approved by Lender) on or about 9:00 a.m. (New York time) two (2) Business Days
prior to the commencement of such Interest Period in amounts substantially equal
to the principal amount of the Eurodollar Rate Loans requested by and available
to such Borrower in accordance with this Agreement, with a maturity of
comparable duration to the Interest Period selected by such Borrower.
1.33 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.34 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.35 "Excess Availability" shall mean the amount, as determined by
Lender, calculated at any time, EQUAL TO: (A) THE LESSER OF: (I) THE BORROWING
BASE AND (II) THE MAXIMUM CREDIT, MINUS (b the sum of: (i) the amount of all
then outstanding and unpaid Obligations plus (ii) the aggregate amount of all
then outstanding and unpaid trade payables and other obligations of Borrowers
which are more than sixty (60) days past due as of such time (unless the trade
payable or other obligation is being contested in good faith), including the
amount of checks issued by Borrowers to pay trade payables and other obligations
which are more than sixty (60) days past due as of such time, but not yet sent.
So long as Lender is only receiving reports with respect to sales made, credits
issued and cash received pursuant to Section 7.1(a)(i) every two (2) weeks,
reports with respect to Inventory pursuant to Section 7.1(a)(ii) every month and
agings of the accounts payable pursuant to Section 7.1(a)(ii) every month, the
Borrowing Base used for determining Excess Availability at any time shall be
calculated based on the sales made, credits issued and cash received as of the
end of each such immediately preceding two (2) week period and Inventory as of
the end of the immediately preceding month and the outstanding and unpaid trade
payables which are more than sixty (60) days past due for purposes of
determining Excess Availability at any time shall be based on such agings of
accounts payable as of the end of the immediately preceding month. If Lender
does not receive any of the reports or agings referred to above, the Borrowing
Base used for determining Excess Availability shall be calculated in such other
manner as Lender may determine, without limiting any other rights or remedies of
Lender.
1.36 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.37 "Exchange Rate" shall mean the prevailing spot rate of exchange of
such bank as Lender may select for the purpose of conversion of one currency to
another, at or around 11 a.m. Dallas, Texas time, on the date on which such any
conversion of currency is to be made under this Agreement.
1.38 "Existing Credit Agreement" shall mean the Credit Agreement, dated
as of July 30, 1997, by and among Timet, Bankers Trust Company, as
Administrative Agent, First Union National Bank and Fleet Capital Corporation,
as Co-Agents and the other Existing Lenders, as amended prior to the date
hereof.
1.39 AExisting Lenders@ shall mean, collectively, (a) the financial
institutions parties to the Existing Credit Agreement as lenders, (b) Bankers
Trust Company, as Administrative Agent pursuant to the Existing Credit
Agreement, (c) First Union National Bank, as Co-Agent pursuant to the Existing
Credit Agreement and (d) Fleet Capital Corporation, as Co-Agent pursuant to the
Existing Credit Agreement.
1.40 AExisting Letter of Credit@ shall mean the letter of credit issued
for the account of Timet by Bankers Trust Company listed on Schedule 1.40
hereto.
1.41 "Financing Agreements" shall mean, collectively, this Agreement
and all notes, guarantees, security agreements and other agreements, documents
and instruments now or at any time hereafter executed and/or delivered by any
Borrower or Obligor in connection with this Agreement.
1.42 "Fixed Charge Coverage Ratio" for any period shall mean the ratio
of (a) EBITDA of Timet and its SUBSIDIARIES FOR SUCH PERIOD TO (B) FIXED CHARGES
OF TIMET AND ITS SUBSIDIARIES FOR SUCH PERIOD, PROVIDED, THAT, any dividends
paid by the Trust in respect of the BUCS shall be excluded from the calculation
of the Fixed Charge Coverage Ratio for purposes of Section 1.5 hereof to the
extent included as a Fixed Charge so long as the Trust shall have the right
under the terms of the BUCS at any time and from time to time to defer the
payment of any such dividends, at its option, without restriction (other than
due notice), for successive periods of up to not less than twenty (20)
consecutive quarters for each such period.
1.43 "Fixed Charges" for any period shall mean the sum of, without
duplication, (a) all Consolidated Interest Expense, (b) all Capital
Expenditures, (c) all scheduled (as determined at the beginning of the
respective period) mandatory principal payments of Indebtedness (including
principal payments with respect to all Capital Leases) made by a Borrower or its
Subsidiaries during such period. The foregoing shall not be construed to include
mandatory principal payments on Indebtedness arising pursuant to revolving loans
and advances.
1.44 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
if any change in generally accepted accounting principles after the date hereof
affects the calculation of compliance with the financial covenant in Section
9.18 hereof, Timet may by notice to Lender, or Lender may, by notice to Timet,
require that such covenant thereafter be calculated in accordance with generally
accepted accounting principles as in effect and applied by Timet immediately
before such change in generally accepted accounting principles occurred. If such
notice is given by Timet (or if such notice is given by Lender then only upon
Lender's request), the financial statements delivered pursuant to Section 9.6
hereof after such change occurs shall be accompanied by a calculation of such
covenant made in accordance with generally accepted accounting principles as in
effect from time to time after such change occurs.
1.45 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
1.46 AGuarantors@ shall mean, collectively, each of the following (and
their respective successors and assigns): (a) TIMET Millbury Corporation, an
Oregon corporation; (b) TIMET Castings Corporation, a Delaware corporation; (c)
on and after March 31, 2000, TMCA International, Inc., a Delaware corporation
(unless Lender has received such evidence as Lender may require that such person
has been liquidated and dissolved to the extent permitted hereunder prior to
such date); and (d) TIMET Finance Management Company, a Delaware corporation;
sometimes being referred to herein individually as a "Guarantor".
1.47 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.48 "Indebtedness" shall mean, with respect to any Person, any
liability, whether or not contingent (without duplication), (a) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof) or evidenced by bonds,
notes, debentures or similar instruments; (b) representing the balance deferred
and unpaid of the purchase price of any property or services (except (i) any
such balance that constitutes an account payable to a trade creditor (whether or
not an Affiliate) created, incurred, assumed or guaranteed by such Person in the
ordinary course of business of such Person in connection with obtaining goods,
materials or services that is not overdue by more than one hundred twenty (120)
days, unless the trade payable is being contested in good faith or (ii any such
balance that constitutes an accrued liability in respect of the purchase price
of any property or services); (c) all obligations as lessee under leases which
have been, or should be, in accordance with GAAP recorded as Capital Leases; (d)
any contractual obligation, contingent or otherwise, of such Person to pay or be
liable for the payment of any indebtedness described in this definition of
another Person, including, without limitation, any such indebtedness, directly
or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof, or to maintain solvency,
assets, level of income, or other financial condition; (e) all obligations with
respect to redeemable stock and redemption or repurchase obligations under any
Capital Stock or other equity securities issued by such Person which are
redeemable or subject to mandatory repurchase at the option of the holder; (f)
all reimbursement obligations and other liabilities of such Person with respect
to surety bonds (whether bid, performance or otherwise), letters of credit,
banker's acceptances or similar documents or instruments issued for such
Person's account; and (g) all indebtedness of such Person in respect of
indebtedness of another Person for borrowed money or indebtedness of another
Person otherwise described in this definition which is secured by any consensual
lien, security interest, collateral assignment, conditional sale, mortgage, deed
of trust, or other encumbrance on any asset of such Person, whether or not such
obligations, liabilities or indebtedness are assumed by or are a personal
liability of such Person, all as of such time.
1.49 "Information Certificate" shall mean the Information Certificate
of Borrowers constituting Exhibit A hereto containing material information with
respect to each Borrower, its business and assets provided by or on behalf of
Borrowers to Lender in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
1.50 "Intellectual Property@ shall mean, as to each Borrower, such
Borrower's now owned and hereafter arising or acquired: patents, patent rights,
patent applications, copyrights, works which are the subject matter of
copyrights, copyright registrations, trademarks, trade names, trade styles,
trademark and service ▇▇▇▇ applications, and licenses and rights to use any of
the foregoing; all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to ▇▇▇ for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill; customer and other lists in
whatever form maintained; and trade secret rights, copyright rights, rights in
works of authorship, and contract rights relating to computer software programs,
in whatever form created or maintained.
1.51 "Interest Expense" shall mean, for any period, as to any Person
and its Subsidiaries, as determined in accordance with GAAP, the total interest
expense of such Person and its Subsidiaries for such period, whether paid or
accrued (including the interest component of Capital Leases for such period),
including, without limitation, all bank fees, commissions, discounts and other
fees and charges owed with respect to letters of credit, banker's acceptances or
similar instruments, but excluding (a) amortization of discount and amortization
of deferred financing fees and closing costs, (b) interest paid in property
other than cash and (c) any other interest expense not payable in cash.
1.52 "Interest Period" shall mean for any Eurodollar Rate Loan to a
Borrower, a period of approximately one (1), two (2), three (3) or six (6)
months duration as such Borrower may elect, the exact duration to be DETERMINED
IN ACCORDANCE WITH THE CUSTOMARY PRACTICE IN THE APPLICABLE EURODOLLAR RATE
MARKET; PROVIDED, THAT, (a) Borrowers may not elect an Interest Period which
will end after the last day of the then-current term of this Agreement and (b)
in no event shall the aggregate amount of all Eurodollar Rate Loans requested
with six (6) months duration (regardless of the amount of time remaining for
such Eurodollar Rate Loans) outstanding at any one time exceed $20,000,000,
except as Lender may otherwise agree.
1.53 "Interest Rate" shall mean,
(a Subject to clauses (b) and (c) of this definition below:
(i as to Prime Rate Loans, a rate equal to one-half (2%)
percent per annum in excess of the US Prime Rate,
(ii as to Eurodollar Rate Loans, a rate of two (2%)
percent per annum in excess of the
Adjusted Eurodollar Rate (in each case, based on the Eurodollar Rate applicable
for the Interest Period selected by a Borrower as in effect three (3) Business
Days after the date of receipt by Lender of the request of such Borrower for
such Eurodollar Rate Loans in accordance with the terms hereof, whether such
rate is higher or lower than any rate previously quoted to such Borrower).
(b Subject to clause (c) of this definition below, effective as
of the fifteenth (15th) day of the second month of each fiscal quarter
(commencing with the fiscal quarter ending June 30, 2000), the Interest Rate
payable by Borrowers shall be increased or decreased, as the case may be, (i) as
to Prime Rate Loans, to the rate equal to the Applicable Margin on a per annum
basis in excess of the Prime Rate, and (ii) as to Eurodollar Rate Loans, to the
rate equal to the Applicable Margin on a per annum basis in excess of the
Adjusted Eurodollar Rate.
(c Notwithstanding anything to the contrary contained in clauses
(a) and (b) of this definition, the Applicable Margin otherwise used to
calculate the Interest Rate for Prime Rate Loans and Eurodollar Rate Loans shall
be the highest percentage set forth in the definition of the term Applicable
Margin for each category of Loans (without regard to the amount of Excess
Availability or the Fixed Charge Coverage Ratio) plus two (2%) percent per
annum, at Lender=s option, after five (5) Business Days= notice to any Borrower,
(i) for the period (A) from and after the effective date of termination or
non-renewal hereof until Lender has received full and final payment of all
outstanding and unpaid Obligations or as to contingent Obligations, cash
collateral in the amount and on the terms required under Section 12.1 hereof
(notwithstanding entry of a judgment against a Borrower) and (B) from and after
the date of the occurrence of an Event of Default for so long as such Event of
Default is continuing, and (ii) on Loans to any Borrower at any time outstanding
in excess of the Borrowing Base of such Borrower (whether or not such
excess(es), arise or are made with or without Lender's knowledge or consent and
whether made before or after an Event of Default).
1.54 "Inventory" shall mean, as to each Borrower, all of such
Borrower's now owned and hereafter existing or acquired raw materials, work in
process, semi-finished goods, finished goods and all other inventory of
whatsoever kind or nature, wherever located.
1.55 "INVENTORY LOAN LIMIT" SHALL MEAN $65,000,000, PROVIDED, THAT,
such amount shall be increased to $70,000,000 effective January 1, 2001 and
increased to $75,000,000 effective January 1, 2002, so long as the number of
days of the turnover of the Inventory as determined by Lender for any period of
time has not increased in any material respect in the good faith determination
of Lender, and no Event of Default, or act, condition or event which with
notice, passage of time or both, would constitute an Event of Default, shall
exist or have occurred.
1.56 "Letter of Credit Accommodations" shall mean the letters of
credit, merchandise purchase or other guaranties which are from time to time
either issued or opened by Lender for the account of a Borrower or any Obligor
or with respect to which Lender has agreed to indemnify the issuer or guaranteed
to the issuer the performance by a Borrower or Obligor of its obligations to
such issuer (including the Existing Letter of Credit).
1.57 "Loans" shall mean the loans now or hereafter made by Lender to or
for the benefit of a Borrower on a revolving basis (involving advances,
repayments and readvances) as set forth in Section 2.1 hereof.
1.58 "Material Adverse Effect" shall mean a material adverse effect on
(a) the condition (financial or otherwise), business, performance, operations or
properties of Borrowers and Guarantors taken as a whole; (b) the legality,
validity or enforceability of this Agreement or any of the other Financing
Agreements; (c) the legality, validity, enforceability, perfection or priority
of the security interests and liens of Lender upon the Collateral taken as a
whole; (d) the Collateral or the value of the Collateral taken as a whole; (e)
the ability of a Borrower to repay the Obligations or of a Borrower to perform
its obligations under this Agreement or any of the other Financing Agreements;
or (f) the ability of Lender to enforce the Obligations or realize upon the
Collateral or otherwise with respect to the rights and remedies of Lender under
this Agreement or any of the other Financing Agreements. Notwithstanding
anything to the contrary in this Agreement, no decrease in the value of or
disposition with respect to the SMC Stock shall be deemed to have a Material
Adverse Effect.
1.59 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of a Borrower involving
monetary liability of or to any Person in an amount in excess of $10,000,000 in
any fiscal year and (b) any other contract or other agreement (other than the
Financing Agreements), whether written or oral, to which a Borrower is a party
as to which the breach, nonperformance, cancellation or failure to renew by any
party thereto would have a Material Adverse Effect.
1.60 "Maximum Credit" shall mean the amount of $125,000,000.
1.61 "Mortgages" shall mean, individually and collectively, each of the
following: (a) the Deed of Trust and Assignment of Rents, Leases and Leasehold
Interests, dated of even date herewith, by Timet in favor of the trustee with
respect thereto for the benefit of Lender, with respect to the Real Property and
related assets of Timet located in Henderson, Nevada, (b) the Open-End Mortgage
and Assignment of Rents, Leases and Leasehold Interests, dated of even date
herewith, by Timet in favor of Lender with respect to the Real Property and
related assets of Timet located in Toronto, Ohio and (c) the Mortgage and
Security Agreement, dated of even date herewith, by THT in favor of Lender with
respect to the Real Property and related assets of THT located in Morgantown,
Pennsylvania.
1.62 "Multiemployer Plan" shall mean a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by a Borrower or
any ERISA Affiliate.
1.63 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof, (b) returns and (c discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or claimed in
writing with respect thereto to the extent that the aggregate amount of
discounts, claims, credits and allowances on all of the Eligible Accounts exceed
one (1%) percent of the gross amount of all such Eligible Accounts.
1.64 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by either or both of Borrowers to Lender
and/or its Affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether arising under this Agreement or any of the other Financing
Agreements, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to a Borrower under the United States
Bankruptcy Code or any similar statute (including the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in part
in such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, and however acquired by Lender.
1.65 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrowers.
1.66 "Other Taxes" shall mean any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
of the other Financing Agreements.
1.67 "Participant" shall mean any person which at any time participates
with Lender in any of the Obligations pursuant to an agreement entered into
pursuant to Section 12.5.
1.68 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.69 "Permitted Holders" shall mean (a) any Person controlled, in the
aggregate by any one or more of Tremont Corporation, The Combined Master
Retirement Trust, ▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇ Trusts and the ▇▇▇▇▇▇▇ Trust
Beneficiaries and Trustees; (b) any managing director, general partner,
director, limited partner, principal, officer or employee of Tremont Corporation
or its Affiliates (collectively "Tremont Associates"); (c) ▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇
Trusts, the ▇▇▇▇▇▇▇ Trust Beneficiaries and Trustees, The Combined Master
Retirement Trust and the heirs, executors, administrators, testamentary
trustees, legatees or beneficiaries of any Tremont Associates; or (d) a trust or
custodianship, to the extent that the beneficiaries of which, or a corporation
or partnership, the stockholders or general or limited partners of which,
include only ▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇ Trusts, the ▇▇▇▇▇▇▇ Trust Beneficiaries and
Trustees, The Combined Master Retirement Trust, any Tremont Associates, their
respective spouses and former spouses and ancestors or lineal descendants (by
blood or adoption). For purposes of this definition, the term "control"
(including the correlative meanings, the terms "controlled by" and "under common
control with"), as used with respect to any Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person whether through the ownership of voting
securities or by contract or otherwise.
1.70 "Permitted Real Property Encumbrances" shall mean (a) those liens,
encumbrances and other matters affecting title to any Real Property listed in
the title policies in respect thereof which are as of the date of delivery of
such title policies to Lender in accordance with the terms hereof, reasonably
acceptable to Lender, (b) as to any particular Real Property at any time, such
zoning restrictions, minor or customary easements, encroachments, covenants,
rights of way, minor defects, irregularities or encumbrances on title which do
not arise out of the incurrence of any Indebtedness and which do not interfere
in any material respect with the use of such Real Property or the ordinary
conduct of business thereon for the purpose for which it is held by the
mortgagor thereof, or impair the value of the Real Property subject thereto in
any material respect or impair the rights of Lender with respect to such Real
Property in any material respect or the ability of Lender to realize thereon in
any material respect, (c) general real estate taxes and assessments not yet
delinquent or which are being contested in good faith by appropriate proceedings
diligently pursued, provided that provision for the payment of all such taxes
and assessments has been made on the books of such Borrower and such Restricted
Subsidiary to the extent required by GAAP, and (d) such other minor or customary
liens or encumbrances with respect to the Real Property to which the Lender may
consent in writing.
1.71 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which elects
subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.72 "Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412(l) of the Code or Section 307 of ERISA, and in respect of which any Borrower
or Guarantor is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
1.73 "Prime Rate" shall mean the rate from time to time publicly
announced by First Union National Bank, or its successors, as its prime rate,
whether or not such announced rate is the best rate available at such bank.
1.74 "Prime Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.75 "Quarterly Average Excess Availability" shall mean, at any time,
the daily average of the Excess Availability for the immediately preceding
fiscal quarter as calculated by Lender in good faith.
1.76 "Real Property" shall mean, as to each Borrower, all now owned and
hereafter acquired real property of such Borrower, including leasehold
interests, together with all buildings, structures, and other improvements
located thereon and all licenses, easements and appurtenances relating thereto,
wherever located, including the real property and related assets more
particularly described in the Mortgages located in Henderson, NEVADA, TORONTO,
OHIO AND MORGANTOWN, PENNSYLVANIA, PROVIDED, THAT, the term "Real Property"
shall not include the Treco Property.
1.77 "Receivables" shall mean: (a) all Accounts; (b) all amounts at any
time payable to a Borrower in respect of the sale or other disposition by a
Borrower of any Account or other obligation for the payment of money; (c) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Account; (d all
letters of credit, indemnities, guarantees, security or other deposits and
proceeds thereof issued payable to a Borrower or otherwise in favor of or
delivered to a Borrower in connection with any Account; and (e) all other
contract rights, chattel paper, instruments, notes, general intangibles and
other forms of obligations owing to a Borrower, whether from the sale and lease
of goods or other property, licensing of any property (including Intellectual
Property or other general intangibles), rendition of services or from loans or
advances by a Borrower or to or for the benefit of any third person (including
loans or advances to any Affiliates or Subsidiaries) or otherwise associated
with any Accounts, Inventory or general intangibles of a Borrower (including,
without limitation, choses in action, causes of action, tax refunds, tax refund
claims, any funds which may become payable to a Borrower in connection with the
termination of any Plan or other employee benefit plan and any other amounts
payable to a Borrower from any Plan or other employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, casualty or any similar types of
insurance and any proceeds thereof and proceeds of insurance covering the lives
of employees on which a Borrower is beneficiary.
1.78 "Records" shall mean, as to each Borrower, all of such Borrower's
present and future books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to
the Collateral or any account debtor, together with the tapes, disks, diskettes
and other data and software storage media and devices, file cabinets or
containers in or on which the foregoing are stored (including any rights of such
Borrower with respect to the foregoing maintained with or by any other person).
1.79 "Reference Bank" shall mean First Union National Bank, or such
other bank as Lender may from time to time designate.
1.80 "Regulation U" shall mean Regulation U of the Board of Governors
of the Federal Reserve System, as amended from time to time.
1.81 "Renewal Date" shall the meaning set forth in Section 12.1 hereof.
1.82 "Reserves" shall mean, as to each Borrower, as of any date of
determination, such amounts as Lender may from time to time establish and revise
in good faith reducing the amount of Loans and Letter of Credit Accommodations
which would otherwise be available to such Borrower under the lending formula(s)
provided for herein: (a) to reflect events, conditions, contingencies or risks
which, as determined by Lender in good faith, adversely affect, or would have a
reasonable likelihood of adversely affecting, either (i) the Collateral or any
other property which is security for the Obligations or its value, (ii) the
assets, business or financial condition of such Borrower or any Obligor or (iii)
the security interests and other rights of Lender in the Collateral (including
the enforceability, perfection and priority thereof) or (b) to reflect Lender's
good faith belief that any collateral report or financial information furnished
by or on behalf of such Borrower or any Obligor to Lender is or may have been
incomplete, inaccurate or misleading in any material respect or (c) to reflect
outstanding Letter of Credit Accommodations as provided in Section 2.2 hereof or
(d) in respect of any state of facts which Lender determines in good faith
constitutes an Event of Default or may, with notice or passage of time or both,
constitute an Event of Default. To the extent Lender may revise the lending
formulas used to determine the Borrowing Base or establish new criteria or
revise existing criteria for Eligible Accounts or Eligible Inventory so as to
address any circumstances, condition, event or contingency in an manner
satisfactory to Lender, Lender shall not establish a Reserve for the same
purpose. The amount of any Reserve established by Lender shall have a reasonable
relationship to the event, condition or other matter which is the basis for such
reserve as determined by Lender in good faith.
1.83 "Restricted Subsidiaries" shall mean, collectively, each of the
following (and their respective successors and assigns): (a) TIMET Millbury
Corporation, an Oregon corporation; (b TIMET Castings Corporation, a Delaware
corporation; (c) TMCA International, Inc., a Delaware corporation; (d) TIMET
Finance Management Company, a Delaware corporation; (e TIMET Colorado
Corporation, a Colorado corporation; (f) TIMET Real Estate Corporation, a
Colorado corporation; (g) the Trust; (h) TIMET FSC, Ltd., a Barbados
corporation; and (i) any other direct or indirect Subsidiary of Timet, THT or
any of the foregoing Persons, however formed or acquired; sometimes being
REFERRED TO HEREIN INDIVIDUALLY AS A "RESTRICTED SUBSIDIARY", PROVIDED, THAT,
the term "Restricted Subsidiaries" shall not include the Unrestricted
Subsidiaries or the Timet Affiliates.
1.84 "▇▇▇▇▇▇▇" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and his heirs, executors,
administrators, successors and assigns.
1.85 "▇▇▇▇▇▇▇ Trust" means any trust established for the benefit of
▇▇▇▇▇▇▇ or members of his family or both.
1.86 "▇▇▇▇▇▇▇ Trust Beneficiaries and Trustees" means trustees, acting
in such capacity, or beneficiaries of ▇▇▇▇▇▇▇ Trust to the extent of the
beneficial interest therein and for so long as such ▇▇▇▇▇▇▇ Trust exists.
1.87 "SMC" shall mean Special Metals Corporation, a Delaware
corporation, and its successors and assigns.
1.88 "SMC Stock" shall mean, collectively, the Class A 6.625% Senior
Convertible Preferred Stock, par value $.01 per share, of SMC at any time owned,
directly or indirectly, by TFMC, and any common stock or other securities into
which such Class A 6.625% Senior Convertible Preferred Stock may from time to
time be converted or exchanged.
1.89 "Solvent" shall mean, at any time with respect to any Person, that
at such time such Person (a) is able to pay its debts as they mature and has
(and has reason to believe it will continue to have) sufficient capital (and not
unreasonably small capital) to carry on its business consistent with its
practices as of the date hereof, and (b) the assets and properties of such
Person at a fair valuation and at their present fair salable value are greater
than the Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, to the best of such Person=s
knowledge, represents an amount which can reasonably be expected to become an
actual or matured liability.
1.90 "Subordinated Debentures" shall mean, collectively, the 6 5/8%
Convertible Junior Subordinated Debentures due 2026 of Timet issued pursuant to
the Subordinated Debenture Indenture, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
1.91 "Subordinated Debenture Indenture" shall mean the Indenture, dated
as of November 20, 1996, between Timet, as issuer, and the Subordinated
Debenture Trustee, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.92 "Subordinated Debenture Trustee" shall mean The Chase Manhattan
Bank, as trustee under the Subordinated Debenture Indenture and any successor,
replacement or additional trustee and their respective successors and assigns.
1.93 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other interests entitled to vote in the election of the board
of directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person.
1.94 "Taxes" shall mean any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of Lender, such taxes (including income taxes,
franchise taxes or capital taxes) as are imposed on or measured by Lender's net
income or capital by any jurisdiction (or any political subdivision thereof).
1.95 "TFMC" shall mean TIMET Finance Management Company, a Delaware
corporation, and its successors and assigns.
1.96 "THT" shall mean Titanium Hearth Technologies, Inc., a Delaware
corporation, and its successors and assigns.
1.97 "Timet" shall mean Titanium Metals Corporation, a Delaware
corporation, and its successors and assigns.
1.98 "Timet Affiliates" shall mean, collectively, each of the following
(and their respective successors and assigns): (a) Titanium Memory Systems,
Inc., a California corporation; (b) TICOMP, Inc., a Delaware Corporation; (c)
MZI, LLC, a Delaware corporation; (d Ti$Pro, LLC, a Nevada limited liability
company; and (e) ValTimet SAS, a corporation organized under the laws of France;
sometimes being referred to herein individually as a "Timet Affiliate".
1.99 "Treco Property" shall mean the Real Property located in
Henderson, Nevada more particularly described in Schedule 1.99 hereto,
identified as parcels 7 and 8 and a portion of parcel 6 on the vicinity map
included in Schedule 1.99 and beneficially owned by Treco LLC.
1.100 "Trust" shall mean the TIMET Capital Trust I, a Delaware business
trust, and its successors and assigns.
1.101 "Unrestricted Subsidiaries" shall mean, collectively, each of the
following (and their respective successors and assigns): (a) Timet UK Limited, a
corporation organized under the laws of the United Kingdom; (b) Loterios SpA, a
corporation organized under the laws of Italy; and (c) any other Subsidiary of
Timet UK Limited or Loterios SpA now or hereafter existing during the term of
this Agreement; sometimes being referred to HEREIN INDIVIDUALLY AS AN
"UNRESTRICTED SUBSIDIARY"; PROVIDED, THAT, the term "Unrestricted Subsidiaries"
shall not include the Restricted Subsidiaries.
1.102 "US Dollars", "US$" or "$" shall mean the lawful currency of the
United States of America.
1.103 "Value" shall mean, as determined by Lender in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in first-out
basis or average cost basis in accordance with GAAP (and consistent WITH THE
CURRENT PRACTICES OF BORROWERS) OR (B) MARKET VALUE AS DETERMINED IN ACCORDANCE
WITH GAAP, PROVIDED, that, for purposes of the calculation of the Borrowing
Base, the Value of the Inventory shall not include: (i) the portion of the value
of Inventory equal to the profit earned by any Affiliate on the sale thereof to
a Borrower or Guarantor or (ii) write-ups in value with respect to currency
exchange rates.
1.104 "ValTimet" shall man ValTimet SAS, a corporation organized under
the laws of France, and its successors and assigns.
1.105 "Voting Stock" shall mean with respect to any Person, (a) one (1)
or more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
SECTION 2. CREDIT FACILITIES SECTION 2. CREDIT FACILITIES
2.1 LOANS.1 LOANS.
(a Subject to and upon the terms and conditions contained herein,
Lender agrees to make Loans to Borrowers from time to time in amounts requested
by a Borrower or Timet on behalf of Borrowers up to the amount equal to the
lesser of: (i) the Borrowing Base or (ii) the Maximum Credit.
(b Lender may, in its discretion, from time to time, upon not
less than five (5) days prior notice to a Borrower or Timet on behalf of
Borrowers, (i) reduce the lending formula with respect to Eligible Accounts to
the extent that Lender determines in good faith that: (A) the dilution with
respect to the Accounts for any period (based on the ratio of (1) the aggregate
amount of reductions in Accounts other than as a result of payments in cash to
(2) the aggregate amount of total sales) has increased in any material respect
or may be reasonably anticipated to increase in any material respect above
historical levels, or (B) the general creditworthiness of account debtors has
declined in any material respect, or (ii) reduce the lending formula(s) with
respect to Eligible Inventory to the extent that Lender determines that: (A) the
number of days of the turnover of the Inventory for any period has increased in
any material respect, or (B) the liquidation value of the Eligible Inventory, or
any category thereof, has decreased in any material respect, or (C) the nature,
quality or mix of the Inventory has deteriorated in any material respect. The
amount of any decrease in the lending formulas shall have a reasonable
relationship to the event, condition or circumstance which is the basis for such
decrease as determined by Lender in good faith. In determining whether to reduce
the lending formula(s), Lender may consider events, conditions, contingencies or
risks which are also considered in determining Eligible Accounts, Eligible
Inventory or in establishing Reserves (but without duplication in reducing the
lending formula(s) and determining Eligible Accounts, Eligible Inventory or
Reserves).
(c Except in Lender's discretion, (i) the aggregate amount of the
Loans and the Letter of Credit Accommodations outstanding at any time shall not
exceed the Maximum Credit, (ii the aggregate amount of the Loans outstanding at
any time based on Accounts owing by account debtors whose chief executive office
is LOCATED OTHER THAN IN THE UNITED STATES OF AMERICA OR CANADA SHALL NOT EXCEED
$5,000,000 (PROVIDED, THAT, Loans based upon Accounts owing by such account
debtors shall not be considered for purposes of this clause (c)(ii) if Lender
has obtained a perfected security interest and lien (or equivalent thereof
satisfactory to Lender) under the laws of the jurisdiction in which the chief
executive office of such account debtor is located, (iii) the aggregate amount
of the Loans outstanding at any time based on Accounts subject to ▇▇▇▇ and hold
arrangements with The Boeing Company (or any Boeing Recognized Subcontractor
under the Purchase and Sale Agreement, dated as of November 5, 1997, of Timet
with The Boeing Company where the Accounts arise under such Purchase and Sale
Agreement) shall not exceed $5,000,000, and (iv) the aggregate amount of the
Loans outstanding at any time based on Accounts owing by ValTimet which may be
Eligible Accounts shall not exceed $5,000,000. In the event that the outstanding
amount of any component of the Loans as set forth above and in the definition of
the Borrowing Base, or the aggregate amount of the outstanding Loans and Letter
of Credit Accommodations, exceed the amounts available under the lending
formulas, the sublimits for Letter of Credit Accommodations set forth in Section
2.2(e) or the Maximum Credit, as applicable, such event shall not limit, waive
or otherwise affect any rights of Lender in that circumstance or on any future
occasions and Borrowers shall, upon demand by Lender, which may be made at any
time or from time to time, immediately repay to Lender the entire amount of any
such excess(es) for which payment is demanded.
2.2 LETTER OF CREDIT ACCOMMODATIONS 2.2 LETTER OF CREDIT ACCOMMODATIONS.
(a Subject to and upon the terms and conditions contained herein,
at the request of a Borrower, or Timet on behalf of Borrowers, Lender agrees to
provide or arrange for Letter of Credit Accommodations for the account of
Borrowers containing terms and conditions acceptable to Lender and the issuer
thereof. Any payments made by Lender to any issuer thereof and/or related
parties in connection with the Letter of Credit Accommodations shall constitute
additional Loans to Borrowers pursuant to this Section 2.
(b In addition to any charges, fees or expenses charged by any
bank or issuer in connection with the Letter of Credit Accommodations, Borrowers
shall pay to Lender a letter of credit fee at a rate equal to one and one-half
(1 2%) percent per annum on the daily outstanding balance of the Letter of
Credit Accommodations for the immediately preceding month (or part thereof),
payable in arrears as of the first day of each succeeding month, except that
Borrowers shall pay to Lender such letter of credit fee, at Lender's option,
without notice, at a rate equal to three and one-half (3 2%) percent per annum
on such daily outstanding balance for: (i) the period from and after the date of
termination or non-renewal of this Agreement until Lender has received full and
final payment of all Obligations (notwithstanding entry of a judgment against a
Borrower) and (ii) the period from and after the date of the occurrence of an
Event of Default for so long as such Event of Default is continuing as
determined by Lender. Such letter of credit fee shall be calculated on the basis
of a three hundred sixty (360) day year and actual days elapsed and the
obligation of Borrowers to pay such fee shall survive the termination or
non-renewal of this Agreement.
(c) Borrowers shall give Lender three (3) Business Days= prior
written of Borrowers' request for the issuance of a Letter of Credit
Accommodation. Such notice shall be irrevocable and shall specify the original
face amount of the Letter of Credit Accommodation requested, the effective date
(which date shall be a Business Day) of issuance of such requested Letter of
Credit Accommodation, whether such Letter of Credit Accommodations may be drawn
in a single or in partial draws, the date on which such requested Letter of
Credit Accommodation is to expire (which date shall be a Business Day), the
purpose for which such Letter of Credit Accommodation is to be issued, and the
beneficiary of the requested Letter of Credit Accommodation. Borrowers shall
send to Lender with such notice the proposed form of the Letter of Credit
Accommodation.
(d) In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit Accommodations shall
be available unless each of the following conditions precedent have been
satisfied in a manner satisfactory to Lender: (i) Borrowers shall have delivered
to the proposed issuer of such Letter of Credit Accommodation at such times and
in such manner as such proposed issuer may require, an application in form and
substance satisfactory to such proposed issuer and Lender for the issuance of
the Letter of Credit Accommodation and such other documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed Letter of
Credit Accommodation shall be satisfactory to Lender and such proposed issuer,
(ii) as of the date of issuance, no order of any court, arbitrator or other
Governmental Authority shall purport by its terms to enjoin or restrain money
center banks generally from issuing letters of credit of the type and in the
amount of the proposed Letter of Credit Accommodation, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed issuer of such Letter of Credit Accommodation refrain
from, the issuance of letters of credit generally or the issuance of such
Letters of Credit Accommodation; and (iii) the Excess Availability, prior to
giving effect to any Reserves with respect to such Letter of Credit
Accommodations requested by Borrowers, on the date of the proposed issuance of
any Letter of Credit Accommodations, shall be equal to or greater than: (A) if
the proposed Letter of Credit Accommodation is for the purpose of purchasing
Eligible Inventory, the sum of (1) forty-five (45%) multiplied by the Value of
such Eligible Inventory, plus (2) freight, taxes, duty and other amounts which
Lender estimates must be paid in connection with such Inventory upon arrival and
for delivery to one of a Borrower 's locations for Eligible Inventory within the
United States of America and (iv) if the proposed Letter of Credit Accommodation
is for any other purpose, an amount equal to one hundred (100%) percent of the
face amount thereof and all other commitments and obligations made or incurred
by Lender with respect thereto. Effective on the issuance of each Letter of
Credit Accommodation, a Reserve shall be established in the applicable amount
set forth in Section 2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).
(e) Except in Lender's discretion, the amount of all outstanding
Letter of Credit Accommodations and all other commitments and obligations made
or incurred by Lender in connection therewith shall not at any time exceed
$20,000,000. At any time an Event of Default exists or has occurred and is
continuing, upon Lender's request, Borrowers will either furnish cash collateral
to secure the reimbursement obligations to the issuer in connection with any
Letter of Credit Accommodations or furnish cash collateral to Lender for the
Letter of Credit Accommodations.
(f) Each Borrower shall indemnify and hold Lender harmless from
and against any and all losses, claims, damages, liabilities, costs and expenses
which Lender may suffer or incur in connection with any Letter of Credit
Accommodations and any documents, drafts or acceptances relating thereto,
including any losses, claims, damages, liabilities, costs and expenses due to
any action taken by any issuer or correspondent with respect to any Letter of
Credit Accommodation, except for any losses, claims, damages, liabilities, costs
and expenses as a result of the gross negligence or wilful misconduct of Lender
as determined pursuant to a final, non-applicable order of a court of competent
jurisdiction. Each Borrower assumes all risks with respect to the acts or
omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed
such Borrower's agent. Each Borrower assumes all risks for, and agrees to pay,
all foreign, Federal, State and local taxes, duties and levies relating to any
goods subject to any Letter of Credit Accommodations or any documents, drafts or
acceptances thereunder. Each Borrower hereby releases and holds Lender harmless
from and against any acts, waivers, errors, delays or omissions, whether caused
by a Borrower, by any issuer or correspondent or otherwise with respect to or
relating to any Letter of Credit Accommodation, except for the gross negligence
or wilful misconduct of Lender as determined pursuant to a final, non-appealable
order of a court of competent jurisdiction. The provisions of this Section
2.2(e) shall survive the payment of Obligations and the termination or
non-renewal of this Agreement.
(g) In connection with Inventory purchased pursuant to Letter of
Credit Accommodations, Borrowers will, at Lender=s request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash, checks, Inventory, documents or instruments in which Lender
holds a security interest to deliver them to Lender and/or subject to Lender=s
order, and if they shall come into a Borrower=s possession, to deliver them,
upon Lender's request, to Lender in their original form. Borrowers shall also,
at Lender=s request, designate Lender (or such other person as Lender may
designate) as the consignee on all bills of lading and other negotiable and
non-negotiable documents.
(h) Each Borrower hereby irrevocably authorizes and directs any
issuer of a Letter of Credit Accommodation to name Borrowers as the account
party therein and to deliver to Lender all instruments, documents and other
writings and property received by issuer pursuant to the Letter of Credit
Accommodations and to accept and rely upon Lender=s instructions and agreements
with respect to all matters arising in connection with the Letter of Credit
Accommodations or the applications therefor (subject to the limitations on
Lender=s rights provided for below). Nothing contained herein shall be deemed or
construed to grant Borrowers any right or authority to pledge the credit of
Lender in any manner. Lender shall have no liability of any kind with respect to
any Letter of Credit Accommodation provided by an issuer other than Lender
unless Lender has duly executed and delivered to such issuer the application or
a guarantee or indemnification in writing with respect to such Letter of Credit
Accommodation.
(i) At any time an Event of Default exists or has occurred and is
continuing, Borrowers shall not, without the prior written consent of Lender,
and Lender shall have the right and authority to (i) approve or resolve any
questions of non-compliance of documents, (ii) give any instructions as to
acceptance or rejection of any documents or goods, (iii) execute any and all
applications for steamship or airway guaranties, indemnities or delivery orders,
(iv) grant any extensions of the maturity of, time of payments for, or time of
presentation of, any drafts, acceptances, or documents, and (v) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Lender may take such actions either in its
own name or in any Borrower's name.
(j) At any time, so long as no Event of Default exists or has
occurred and is continuing, each Borrower may, with Lender's prior approval (i)
grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents, and (ii) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Each Borrower shall be bound by any
interpretation made in good faith by Lender, or any other issuer or
correspondent under or in connection with any Letter of Credit Accommodation or
any documents, drafts or acceptances thereunder, notwithstanding that such
interpretation may be inconsistent with any instructions of such Borrower.
(k) Any rights, remedies, duties or obligations granted or
undertaken by a Borrower to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by such Borrower to Lender. Any duties
or obligations undertaken by Lender to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement by
Lender in favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by Borrowers to Lender
and to apply in all respects to Borrowers.
2.3 JOINT AND SEVERAL LIABILITY..3 JOINT AND SEVERAL LIABILITY. Both
Borrowers shall be liable for all amounts due to Lenders under this Agreement,
regardless of which Borrower actually receives the Loans or Letter of Credit
Accommodations hereunder or the amount of such Loans received or the manner in
which Lender accounts for such Loans, Letter of Credit Accommodations or other
extensions of credit on its books and records. The Obligations with respect to
Loans made to a Borrower, and the Obligations arising as a result of the joint
and several liability of a Borrower hereunder, with respect to Loans made to the
other Borrower hereunder, shall be separate and distinct obligations, but all
such other Obligations shall be primary obligations of all Borrowers. The
Obligations arising as a result of the joint and several liability of a Borrower
hereunder with respect to Loans, Letter of Credit Accommodations or other
extensions of credit made to the other Borrower hereunder shall, to the fullest
extent permitted by law, be unconditional irrespective of (a) the validity or
enforceability, avoidance or subordination of the Obligations of the other
Borrower or of any promissory note or other document evidencing all or any part
of the Obligations of the other Borrower, (b) the absence of any attempt to
collect the Obligations from the other Borrower, any Guarantor or any other
security therefor, or the absence of any other action to enforce the same, (c)
the waiver, consent, extension, forbearance or granting of any indulgence by
Lender with respect to any provisions of any instrument evidencing the
Obligations of the other Borrower, or any part thereof, or any other agreement
now or hereafter executed by the other Borrower and delivered to Lender, (d) the
failure by Lender to take any steps to perfect and maintain its security
interest in, or to preserve its rights and maintain its security or collateral
for the Obligations of the other Borrower, (e) the election of Lender in any
proceeding instituted under the Bankruptcy Code, of the application of Section
1111(b)(2) of the Bankruptcy Code, (f) the disallowance of all or any portion of
the claim(s) of Lender for the repayment of the Obligations of the other
Borrower under Section 502 of the Bankruptcy Code, or (g) any other
circumstances which might constitute a legal or equitable discharge or defense
of a Guarantor or of the other Borrower, other than the wilful misconduct or
gross negligence of Lender as determined pursuant to a final, non-appealable
order of a court of competent jurisdiction. With respect to the Obligations
arising as a result of the joint and several liability of a Borrower hereunder
with respect to Loans, Letter of Credit Accommodations or other extensions of
credit made to the other Borrower hereunder, each Borrower waives, until the
Obligations shall have been paid in full and this Agreement shall have been
terminated, any right to enforce any right of subrogation or any remedy which
Lender now has or may hereafter have against Borrower, any endorser or any
guarantor of all or any part of the Obligations, and any benefit of, and any
right to participate in, any security or collateral given to Lender. Upon any
Event of Default, Lender may proceed directly and at once, without notice,
against any Borrower to collect and recover the full amount, or any portion of
the Obligations, without first proceeding against the other Borrower or any
other Person, or against any security or collateral for the Obligations. Each
Borrower consents and agrees that Lender shall be under no obligation to
▇▇▇▇▇▇▇▇ any assets in favor of Borrower(s) or against or in payment of any or
all of the Obligations.
SECTION 3. INTEREST AND FEESSECTION 3. INTEREST AND FEES
3.1 INTEREST.3.1 INTEREST.
(a) Borrowers shall pay to Lender interest on the outstanding
principal amount of the Loans at the Interest Rate. All interest accruing
hereunder on and after the date of any Event of Default or termination or
non-renewal hereof shall be payable on demand.
(b) Each Borrower or Timet on behalf of Borrowers may from time
to time request that Prime Rate Loans be converted to Eurodollar Rate Loans or
that any existing Eurodollar Rate Loans continue for an additional Interest
Period. Such request from a Borrower (or Timet on behalf of Borrowers shall
specify the amount of the Prime Rate Loans which will constitute Eurodollar Rate
Loans (subject to the limits set forth below) and the Interest Period to be
applicable to such Eurodollar Rate Loans. Subject to the terms and conditions
contained herein, two (2) Business Days after receipt by Lender of such a
request from a Borrower (or Timet on behalf of Borrowers), such Prime Rate Loans
shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall
CONTINUE, AS THE CASE MAY BE, PROVIDED, THAT, (i) no Event of Default, or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default shall exist or have occurred and be continuing, (ii) no
party hereto shall have sent any notice of termination or non-renewal of this
Agreement, (iii) Borrowers shall have complied with such customary procedures as
are established by Lender and specified by Lender to Borrowers from time to time
for requests by Borrowers for Eurodollar Rate Loans, (iv) no more than four (4)
Interest Periods may be in effect at any one time, (v) the aggregate amount of
the Eurodollar Rate Loans must be in an amount not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof, and (vi) Lender shall have
determined that the Interest Period or Adjusted Eurodollar Rate is available to
Lender through the Reference Bank and can be readily determined as of the date
of the request for such Eurodollar Rate Loan by such Borrower. Any request by a
Borrower or Timet on behalf of Borrowers to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be
irrevocable. Notwithstanding anything to the contrary contained herein, Lender,
Reference Bank and any Participant shall not be required to purchase United
States Dollar deposits in the London interbank market or other applicable
Eurodollar Rate market to fund any Eurodollar Rate Loans, but the provisions
hereof shall be deemed to apply as if Lender, Reference Bank or such Participant
had purchased such deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable Interest Period, unless
Lender has received and approved a request to continue such Eurodollar Rate Loan
at least two (2) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Lender's option, upon notice
by Lender to Timet, convert to Prime Rate Loans in the event that this Agreement
shall terminate or not be renewed. Borrowers shall pay to Lender, upon demand by
Lender (or Lender may, at its option, charge any loan account of a Borrower) any
amounts required to compensate Lender for any loss, cost or expense incurred by
Lender (or any person providing funds to Lender used in connection with the
Loans and Letter of Credit Accommodations which results in such loss, cost or
expense to Lender) as a result of the conversion of Eurodollar Rate Loans to
Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to Lender monthly in
arrears not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed. The interest rate on non-contingent Obligations (other than Eurodollar
Rate Loans) shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the first day of the month after any
change in such Prime Rate is announced based on the Prime Rate in effect on the
last day of the month in which any such change occurs.
(e) No agreements, conditions, provisions or stipulations
contained in this Agreement or any of the other Financing Agreements or any
Event of Default, or the exercise by Lender of the right to accelerate the
payment or the maturity of all or any portion of the Obligations, or the
exercise by Lender of any option whatsoever contained in this Agreement or any
of the other Financing Agreements, or the prepayment by or on behalf of any
Borrower of any of the Obligations, or the occurrence of any event or
contingency whatsoever, shall entitle Lender to contract for, charge or receive,
in any event, interest exceeding the maximum non-usurious rate of interest under
applicable Federal or State Law as in effect from time to time that may be
contracted for, taken, reserved, charged or received in respect of Indebtedness
of any Borrower to Lender (the "Maximum Interest Rate"). In no event shall any
Borrower be obligated to pay interest exceeding such Maximum Interest Rate. All
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel such Borrower to pay
a rate of interest exceeding the Maximum Interest Rate shall be without binding
force or effect, at law or in equity, to the extent of the excess of interest
over such Maximum Interest Rate. In the event any interest is contracted for,
charged or received in excess of the Maximum Interest Rate ("Excess"), each
Borrower acknowledges and stipulates that any such contract, charge or receipt
shall be the RESULT OF AN ACCIDENT AND BONA FIDE error, and that any Excess
received by Lender shall be applied, first, to the payment of the then
outstanding and unpaid principal hereunder; second, to the payment of the other
Obligations then outstanding and unpaid; and third, returned to such Borrower
(or Timet on behalf of such Borrower), it being the intent of the parties hereto
not to enter at any time into a usurious or otherwise illegal relationship. Each
Borrower recognizes that, with fluctuations in the rate of interest set forth in
this Section 3.1 and the Maximum Interest Rate, such an unintentional result
could inadvertently occur. By the execution of this Agreement, each Borrower
agrees that (i) the credit or return of any Excess shall constitute the
acceptance by such Borrower of such Excess, and (ii) each Borrower shall not
seek or pursue any other remedy, legal or equitable, against Lender, based in
whole or in part upon contracting for, charging or receiving of any interest in
excess of the Maximum Interest Rate. For the purpose of determining whether or
not any Excess has been contracted for, charged or received by Lender, all
interest at any time contracted for, charged or received by Lender in connection
with this Agreement or any of the other Financing Agreements shall be amortized,
prorated, allocated and spread in equal parts during the entire term of this
Agreement.
3.2 CLOSING FEE.2 CLOSING FEE. Borrowers shall pay to Lender as a
closing fee the amount of $937,500, which shall be fully earned and payable as
of the date hereof.
3.3 SYNDICATION FEE3.3 SYNDICATION FEE. Borrowers shall pay to Lender a
syndication fee in the amount of $625,000, which fee shall be fully earned and
payable as of the date hereof.
3.4 SERVICING FEE3.4 SERVICING FEE. Borrowers shall pay to Lender
monthly a servicing fee in an amount equal to $4,000 in respect of Lender's
services for each month (or part thereof) while this Agreement remains in effect
and for so long thereafter as any of the Obligations are outstanding, which fee
shall be fully earned as of and payable in advance on the date hereof and on the
first day of each month hereafter.
3.5 UNUSED LINE FEE3.5 UNUSED LINE FEE. Borrowers shall pay to Lender
monthly an unused line fee at a rate equal to the percentage (on a per annum
basis) set forth below calculated upon the amount by which the Maximum Credit
exceeds the average daily principal balance of the outstanding Loans and Letter
of Credit Accommodations during the immediately preceding month (or part
thereof) while this Agreement is in effect and for so long thereafter as any of
the Obligations are outstanding, which fee shall be payable on the first day of
each month in arrears. The percentage used for determining the unused line fee
shall be as set forth below if either the Quarterly Average Excess Availability
for the immediately preceding fiscal quarter is in the amount indicated for such
percentage or the Fixed Charge Coverage Ratio as of the last day of the
immediately preceding fiscal quarter (which ratio for this purpose shall be
calculated based on the four (4) immediately preceding fiscal quarters) is at
the level indicated for such percentage:
Fixed Charge Unused Line
EXCESS AVAILABILITY COVERAGE RATIO FEE PERCENTAGE
(a) $75,000,000 or more 1.75 or more to 1 1/4%
(b) $25,000,000 to $75,000,000 1.25 to 1.75 to 1 3/8%
(c) Less than $25,000,000 Less than 1.25 to 1 1/2%
PROVIDED, THAT, (i) the unused line fee percentage shall be calculated and
established once each fiscal quarter and (ii) the unused line fee percentage
shall be the lower percentage set forth above based on the Quarterly Average
Excess Availability or the Fixed Charge Coverage Ratio.
3.6 CHANGES IN LAWS AND INCREASED COSTS OF LOANS
3.6 CHANGES IN LAWS AND INCREASED COSTS OF LOANS.
(a) Notwithstanding anything to the contrary contained herein,
all Eurodollar Rate Loans shall, upon notice by Lender to a Borrower, convert to
Prime Rate Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof) shall either (A)
make it unlawful for Lender, Reference Bank or any Participant with Lender to
make or maintain Eurodollar Rate Loans or to comply with the terms hereof in
connection with the Eurodollar Rate Loans, or (B) shall result in the increase
in the costs to Lender, Reference Bank or any Participant of making or
maintaining any Eurodollar Rate Loans by an amount deemed by Lender to be
material, or (C) reduce the amounts received or receivable by Lender Reference
Bank or Participant in respect thereof, by an amount deemed by Lender to be
material or (ii) the cost to Lender, Reference Bank or any Participant of making
or maintaining any Eurodollar Rate Loans shall otherwise increase by AN AMOUNT
DEEMED BY LENDER TO BE MATERIAL, PROVIDED, THAT, in the event that it becomes
unlawful for any Participant to make or maintain its interest in the Eurodollar
Rate Loans, or there is an increase in the costs as to any Participant or a
reduction in the amount receivable by any Participant in respect of its
interests in the Eurodollar Loans, as the case may be, then only the portion of
the Eurodollar Rate Loans equal to the pro rata share of the Participant in the
Loans shall be converted to Prime Rate Loans and thereafter such portion of the
Loans shall not be available as Eurodollar Rate Loans. Borrowers shall pay to
Lender, upon demand by Lender (or Lender may, at its option, charge any loan
account of a Borrower) any amounts required to compensate Lender for any loss,
cost or expense incurred by Lender as a result of the foregoing, including,
without limitation, any such loss, cost or expense incurred by Lender (or any
person providing funds to Lender in connection with the Loans and Letter of
Credit Accommodations which results in such loss, cost or expense to Lender) by
reason of the liquidation or reemployment of deposits or other funds acquired by
such person to make or maintain the Eurodollar Rate Loans or any portion
thereof. In determining such additional amounts, Lender will act reasonably and
in good faith and will use averaging and attribution methods which are
reasonable and which will, to the extent the increased costs or reduction in the
rate of return relates to Lender's commitments or obligations in general and are
not specifically attributable to the financing arrangements hereunder, cover all
financing arrangements similar to the financing arrangements of Lender hereunder
whether or not the loan documentation for such other commitments or obligations
permits Lender to make the determination specified in this Section 3.6, and
Lender's determination of compensation owing under this Section 3.6 shall be
final, conclusive and binding on all parties hereto absent manifest error. A
certificate of Lender setting forth the basis for the determination of such
amount necessary to compensate Lender as aforesaid shall be delivered to a
Borrower and shall be conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar
Rate Loans are received by Lender other than on the last day of the applicable
Interest Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections under Section
6.3 or any other payments made with the proceeds of Collateral, Borrowers shall
pay to Lender upon demand by Lender (or Lender may, at its option, charge any
loan account of a Borrower) any amounts required to compensate Lender for any
additional loss, cost or expense incurred by Lender (or any person providing
funds to Lender in connection with the Loans and Letter of Credit Accommodations
which results in such loss, cost or expense to Lender as a result of such
prepayment or payment, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by Lender or such person) to make or maintain such Eurodollar Rate
Loans or any portion thereof.
SECTION 4. CONDITIONS PRECEDENTSECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS. Each of the following is a condition precedent to Lender making
the initial Loans and providing the initial Letter of Credit Accommodations
hereunder:
(a) Lender shall have received concurrently, in form and
substance satisfactory to Lender, all releases, terminations and such other
documents as Lender may request to evidence and effectuate the termination by
the Existing Lenders to Timet of their respective financing arrangements with
Timet and the termination and release by it or them, as the case may be, of any
interest in and to any assets and properties of Borrowers and Obligors, duly
authorized, executed and delivered by it or each of them, including, but not
limited to, (i) UCC termination statements for all UCC financing statements
previously filed by it or any of them or their predecessors, as secured party
and any Borrower or Obligor, as debtor and (ii) satisfactions and discharges of
any mortgages, deeds of trust or deeds to secure debt by any Borrower or Obligor
in favor of such Existing Lenders, in form acceptable for recording with the
appropriate Governmental Authority;
(b) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be reasonably
satisfactory in form and substance to Lender, and Lender shall have received all
information and copies of all documents, including records of requisite
corporate action and proceedings which Lender may have requested in connection
therewith, such documents where requested by Lender or its counsel to be
certified by appropriate corporate officers or Governmental Authority;
(c) no material adverse change shall have occurred in the assets,
business or financial condition of Borrowers since the date of Lender's latest
field examination and no change or event shall have occurred which would impair
the ability of any Borrower to perform its obligations hereunder or under any of
the other Financing Agreements to which it is a party or of Lender to enforce
the Obligations or realize upon the Collateral;
(d) Lender shall have completed a field review of the Records and
such other information with respect to the Collateral as Lender may require to
determine the amount of Loans available to Borrowers (including, without
limitation, current perpetual inventory records and/or roll-forwards of Accounts
and Inventory through the date of closing and test counts of the Inventory in a
manner satisfactory to Lender, together with such supporting documentation as
may be necessary or appropriate, and other documents and information that will
enable Lender to accurately identify and verify the Collateral), the results of
which each case shall be satisfactory to Lender, not more than three (3)
Business Days prior to the date hereof;
(e) Lender shall have received, in form and substance reasonably
satisfactory to Lender, all consents, waivers, acknowledgments and other
agreements from third persons which Lender may deem necessary or desirable in
order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements, including, without limitation, Collateral Access
Agreements by owners and lessors of leased premises of Borrowers and by
warehouses at which Collateral is located;
(f) the aggregate amount of the Excess Availability of Borrowers
as determined by Lender, as of the date hereof, shall be not less than
$50,000,000 after giving effect to the initial Loans made or to be made and
Letter of Credit Accommodations issued or to be issued in connection with the
initial transactions hereunder;
(g) Lender shall have received evidence, in form and substance
satisfactory to Lender, that (i) Timet UK Limited shall have concurrently
herewith entered into financing arrangements with Lloyds TSB Bank plc to provide
loans and other financial accommodations to Timet UK Limited of not less than
$45,000,000 (or the equivalent in pounds sterling as of the date hereof), on
terms and conditions reasonably acceptable to Lender, (ii) not less than
$15,000,000 of the initial proceeds of the loans received by Timet UK Limited
pursuant to such financing arrangements shall have been used to repay the
remaining principal amount outstanding evidenced by the Promissory Note, dated
January 1, 1996, issued by Timet UK Limited payable to TFMC, (iii) TFMC shall
have used the proceeds of such repayment to pay a dividend to Timet and (iv) not
less than $15,000,000 in immediately available funds are being held in an
account of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ with irrevocable instructions, satisfactory to
Lender and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, to remit such funds on the next Business Day to the
Payment Account (as defined in Section 6.3 hereof);
(h) Lender shall have received a Statement of Purpose for an
Extension of Credit Secured by Margin Stock by a Person subject to Registration
under Regulation U (Federal Reserve Form G-3) properly completed by Borrowers
and TFMC, in form and substance satisfactory to Lender, duly authorized,
executed and delivered by Borrowers and TFMC;
(i) Lender shall have received originals of the shares of the
stock certificates representing all of the issued and outstanding shares of the
Capital Stock of the Restricted Subsidiaries of Timet incorporated under the
laws of any State of the United States of America and stock certificates
representing sixty-five (65%) percent of the issued and outstanding shares of
Capital Stock of Timet UK Limited, in each case together with stock powers duly
executed in blank with respect thereto;
(j) Lender shall have received originals of the certificates
representing the SMC Stock owned by TFMC, together with stock powers duly
executed in blank with respect thereto;
(k) Lender shall have received, in form and substance reasonably
satisfactory to Lender, all agreements with the depository banks and Borrowers
with respect to the Blocked Accounts as Lender may require pursuant to Section
6.3 hereof, duly authorized, executed and delivered by such depository banks and
Borrowers;
(l) Lender shall have received evidence, in form and substance
satisfactory to Lender, that Lender has a valid perfected first priority
security interest in all of the Collateral (other than such deposit accounts of
Borrowers and Guarantors or such other assets for which Lender has not required
that its security interest be perfected as of the date hereof), subject to such
liens as are permitted hereunder and which by their terms may have priority over
the security interests of Lender;
(m) Lender shall have received and reviewed UCC, tax lien and
judgment search results for all jurisdictions in which assets of Borrowers and
Guarantors are located or as Lender may otherwise agree, which search results
shall be in form and substance satisfactory to Lender;
(n) Lender shall have received, in form and substance reasonably
satisfactory to Lender, a valid and effective title insurance policy issued by a
company and agent acceptable to Lender (i) insuring the priority, amount and
sufficiency of the Mortgages, (ii) insuring against matters that would be
disclosed by surveys and (iii) containing any legally available endorsements,
assurances or affirmative coverage requested by Lender for protection of its
interests;
(o) Lender shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements,
in form and substance reasonably satisfactory to Lender, and certificates of
insurance policies and/or endorsements naming Lender as loss payee;
(p) Lender shall have received, in form and substance reasonably
satisfactory to Lender, such opinion letters of counsel to Borrowers with
respect to the Financing Agreements and such other matters as Lender may
request; and
(q) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Lender, in form and substance satisfactory to Lender.
4.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS4.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS. Each of the following is an additional condition precedent to
Lender making Loans and/or providing Letter of Credit Accommodations to each
Borrower, including the initial Loans and Letter of Credit Accommodations and
any future Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of the making of each such Loan or providing
each such Letter of Credit Accommodation and after giving effect thereto, except
to the extent that such representations and warranties expressly relate solely
to an earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loans or providing
the Letter of Credit Accommodations, or (B) the consummation of the transactions
contemplated pursuant to the terms hereof or the other Financing Agreements or
(ii) has or would reasonably be expected to have a Material Adverse Effect; and
(c) no Event of Default and no act, condition or event which,
with notice or passage of time or both, would constitute an Event of Default,
shall exist or have occurred and be continuing on and as of the date of the
making of such Loan or providing each such Letter of Credit Accommodation and
after giving effect thereto.
SECTION 5. GRANT OF SECURITY INTERESTSECTION 5. GRANT OF SECURITY INTEREST
5.1 To secure payment and performance of all Obligations, each Borrower
hereby grants to Lender a continuing security interest in, a lien upon, and a
right of set off against, and hereby assigns to Lender as security, the
following property and interests in property of such Borrower, whether now owned
or hereafter acquired or existing, and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by Lender, collectively, the "Collateral"):
(a) Receivables;
(b) all other present and future general intangibles (including
Intellectual Property and existing and future leasehold interests in equipment,
real estate and fixtures), chattel paper, documents, instruments, investment
property (including securities, whether certificated or uncertificated,
securities accounts, security entitlements, commodity contracts or commodity
accounts), letters of credit, bankers' acceptances and guaranties;
(c) all present and future monies, securities and other
investment property, credit balances, deposits, deposit accounts and other
property of such Borrower now or hereafter held or received by or in transit to
Lender or its Affiliates or at any other depository or other institution from or
for the account of such Borrower, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lien or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(d) Inventory;
(e) Equipment;
(f) Real Property;
(g) Records; and
(h) all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of any or all of the foregoing.
5.2 Notwithstanding anything to the contrary set forth in Section 5.1
above, the types or items of Collateral described in such Section shall not
include any rights or interests in any contract, lease, permit, license, charter
or license agreement covering real or personal property, as such, if under the
terms of such contract, lease, permit, license, charter or license agreement, or
applicable law with respect thereto, the valid grant of a security interest or
lien therein to Lender is prohibited and such prohibition has not been or is not
waived or the consent of the other party to such contract, lease, permit,
license, charter or license agreement HAS NOT BEEN OR IS NOT OTHERWISE OBTAINED
OR UNDER APPLICABLE LAW SUCH PROHIBITION CANNOT BE WAIVED; PROVIDED, THAT, the
foregoing exclusion shall in no way be construed (a) to apply if any such
prohibition is unenforceable under Section 9-318 of the UCC or other applicable
law or (b) so as to limit, impair or otherwise affect Lender's unconditional
continuing security interests in and liens upon any rights or interests of any
Borrower in or to monies due or to become due under any such contract, lease,
permit, license, charter or license agreement (including any Receivables).
5.3 Notwithstanding anything to the contrary contained in Section 5.1
above, the types or items of Collateral described in such Section shall not
include any Equipment of a Borrower which is, or at the time of such Borrower's
acquisition thereof shall be, subject to a purchase money mortgage or other
purchase money lien or security interest (including Capital Leases) permitted
under Section 9.8 hereof if: (a) the valid grant of a security interest or lien
to Lender in such item of Equipment is prohibited by the terms of the agreement
between such Borrower and the holder of such purchase money mortgage or other
purchase money lien or security interest or under applicable law and such
prohibition has not been or is not waived, or the consent of the holder of the
purchase money mortgage or other purchase money lien or security interest has
not been or is not otherwise obtained, or under applicable law such prohibition
cannot be waived and (b) the purchase money mortgage or other purchase money
lien or security interest on such item of Equipment is or shall become valid and
perfected.
5.4 In the event that at any time Excess Availability shall be less
than $25,000,000, Timet shall, promptly upon Lender=s request, execute and
deliver to Lender in form and substance satisfactory to Lender, a pledge and
security agreement granting to Lender a first pledge of and lien on all of the
issued and outstanding shares of Capital Stock of ValTimet owned or held by
Timet or any of its Subsidiaries, together with original stock certificates
evidencing such shares of Capital Stock, if any, and such other agreements,
documents and instruments as Lender may require in connection therewith,
including opinion letters of counsel in France and the United States of America.
5.5 In the event that Lender has not received evidence, in form and
substance satisfactory to Lender, that TMCA International, Inc. has been
liquidated and dissolved to the extent permitted hereunder by June 30, 2000 and
the assets thereof validly transferred and assigned to Timet by such date,
promptly upon Lender=s request, Borrowers shall cause TMCA International Inc. to
execute and deliver to Lender, in form and substance satisfactory to Lender, (a)
an absolute and unconditional guarantee of payment of any and all Obligations,
(b) a security agreement granting to Lender a first security interest and lien
(except as otherwise consented to in writing by Lender) upon all of the assets
of such Subsidiary, (c) related Uniform Commercial Code Financing Statements,
(d) such other agreements, documents and instruments as Lender may require,
including, but not limited to, supplements and amendments hereto and other loan
agreements or instruments evidencing indebtedness of such Subsidiary to Lender,
and (e) an opinion letter of counsel with respect to such guarantee, security
agreement and related matters as Lender may request.
SECTION 6.COLLECTION AND ADMINISTRATIO SECTION 6.COLLECTION AND ADMINISTRATION
6.1 BORROWERS' LOAN ACCOUNTS.1 BORROWERS' LOAN ACCOUNTS. Lender shall
maintain one or more loan account(s) on its books in which shall be recorded (a)
all Loans, Letter of Credit Accommodations and other Obligations and the
Collateral, (b) all payments made by or on behalf of a Borrower and (c) all
other appropriate debits and credits as provided in this Agreement, including
fees, charges, costs, expenses and interest. All entries in the loan account(s)
shall be made in accordance with Lender's customary practices as in effect from
time to time.
6.2 STATEMENTS6.2 STATEMENTS. Lender shall render to Timet each month a
statement setting forth the balance in each Borrower's loan account(s)
maintained by Lender for such Borrower pursuant to the provisions of this
Agreement, including principal, interest, fees, costs and expenses. Each such
statement shall be subject to subsequent adjustment by Lender but shall, absent
manifest errors or omissions, be considered correct and deemed accepted by
Borrowers and conclusively binding upon Borrowers as an account stated except to
the extent that Lender receives a written notice from Timet of any specific
exceptions of Borrowers thereto within thirty (30) days after the date such
statement has been mailed by Lender. Until such time as Lender shall have
rendered to Timet a written statement as provided above, the balance in each
Borrower's loan account(s) shall be presumptive evidence of the amounts due and
owing to Lender by such Borrower.
6.3 COLLECTION OF ACCOUNTS 6.3 COLLECTION OF ACCOUNTS.
(a) Borrowers shall establish and maintain, at their expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Lender may specify, with such banks as are acceptable to
Lender into which Borrowers shall promptly deposit and direct their account
debtors to directly remit all payments on Receivables and all payments
constituting proceeds of Inventory or other Collateral in the identical form in
which such payments are made, whether by cash, check or other manner. The banks
at which the Blocked Accounts are established shall enter into an agreement, in
form and substance satisfactory to Lender, providing that all items received or
deposited in the Blocked Accounts are the property of Lender, that the
depository bank has no lien upon, or right to setoff against, the Blocked
Accounts, the items received for deposit therein, or the funds from time to time
on deposit therein and that the depository bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis, all funds received
or deposited into the Blocked Accounts to such bank account of Lender as Lender
may from time to time designate for such purpose ("Payment Account"). Each
Borrower agrees that all payments made to such Blocked Accounts or other funds
received and collected by Lender, whether in respect of the Receivables, as
proceeds of Inventory or other Collateral or otherwise shall be treated as
payments to Lender in respect of the Obligations and therefore shall constitute
the property of Lender to the extent of the then outstanding Obligations.
(b) For purposes of calculating the amount of the Loans available
to each Borrower, such payments will be applied (conditional upon final
collection) to the Obligations on the Business Day of receipt by Lender of
immediately available funds in the Payment Account provided such payments and
notice thereof are received in accordance with Lender's usual and customary
practices as in effect from time to time and within sufficient time to credit
such Borrower's loan account on such day, and if not, then on the next Business
Day. For the purposes of calculating interest on the Obligations, such payments
or other funds received will be applied (conditional upon final collection) to
the Obligations one (1) Business Day following the date of receipt of
immediately available funds by Lender in the Payment Account provided such
payments or other funds and notice thereof are received in accordance with
Lender's usual and customary practices as in effect from time to time and within
sufficient time to credit such Borrower's loan account on such day, and if not,
then on the next Business Day.
(c) Each Borrower and its employees, agents and Subsidiaries
shall, acting as trustee for Lender, receive, as the property of Lender, any
monies, checks, notes, drafts or any other payment relating to and/or proceeds
of Receivables or other Collateral which come into its possession or under its
control and immediately upon receipt thereof, shall deposit or cause the same to
be deposited in the Blocked Accounts, or remit the same or cause the same to be
remitted, in kind, to Lender. In no event shall the same be commingled with a
Borrower's own funds. Each Borrower agrees to reimburse Lender on demand for any
amounts owed or paid to any bank at which a Blocked Account is established or
any other bank or person involved in the transfer of funds to or from the
Blocked Accounts arising out of Lender's payments to or indemnification of such
bank or person. The obligation of Borrowers to reimburse Lender for such amounts
pursuant to this Section 6.3 shall survive the termination or non-renewal of
this Agreement.
6.4 PAYMENTS 6.4 PAYMENTS.
(a) All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place as Lender may designate from time to
time. Lender shall apply payments received or collected from Borrowers or for
the account of Borrowers (including the monetary proceeds of collections or of
realization upon ANY COLLATERAL) AS FOLLOWS: FIRST, to pay any fees, indemnities
or expense reimbursements then due to Lender from BORROWERS; SECOND, TO PAY
INTEREST DUE IN RESPECT OF ANY LOANS; THIRD, to pay principal due in respect of
the LOANS; FOURTH, to pay or prepay any other Obligations whether or not then
due, in such order and manner as Lender determines. Notwithstanding anything to
the contrary contained in this Agreement, unless so directed by Timet, or unless
an Event of Default shall exist or have occurred and be continuing, Lender shall
not apply any payments which it receives to any Eurodollar Rate Loans, except
(i) on the expiration date of the Interest Period applicable to any such
Eurodollar Rate Loans, or (ii) in the event that there are no outstanding Prime
Rate Loans. To the extent Lender receives any payments or collections in respect
of the Obligations in a currency other than US Dollars, Lender may, at its
option (but is not obligated to), convert such other currency to US Dollars at
the Exchange Rate on such date and in such market as Lender may select
(regardless as to whether such rate is the best available rate). Borrowers shall
pay the costs of such conversion (or Lender may, at its option, charge such
costs to the loan account of Borrower maintained by Lender). Payments and
collections received in any currency other than in which any outstanding
Obligations are denominated will be accepted and/or applied at the discretion of
Lender. All payments from account debtors (including account debtors whose chief
executive offices are located outside the United States of America) are and
shall only be remitted to the Blocked Accounts. At Lender's option, all
principal, interest, fees, costs, expenses and other charges provided for in
this Agreement or the other Financing Agreements may be charged directly to the
loan account(s) of a Borrower. Borrowers shall make all payments to Lender on
the Obligations free and clear of, and without deduction or withholding for or
on account of, any setoff, counterclaim, defense, restrictions or conditions of
any kind. If after receipt of any payment of, or proceeds of Collateral applied
to the payment of, any of the Obligations, Lender is required to surrender or
return such payment or proceeds to any Person for any reason, then the
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Lender. Borrowers
shall be liable to pay to Lender, and do hereby indemnify and hold Lender
harmless for the amount of any payments or proceeds surrendered or returned.
This Section 6.4(a) shall remain effective notwithstanding any contrary action
which may be taken by Lender in reliance upon such payment or proceeds. This
Section 6.4(a) shall survive the payment of the Obligations and the termination
or non-renewal of this Agreement.
(b) Borrowers may, in accordance with the terms of this
Agreement, borrow, prepay and reborrow Loans.
6.5 TAXES 6.5 TAXES.
(a) Any and all payments by Borrowers to Lender under this
Agreement and any of the other Financing Agreements shall be made free and clear
of, and without deduction or withholding for any Taxes. In addition, Borrowers
shall pay all Other Taxes (or Lender may, at its option, pay such Other Taxes
and charge the loan account of a Borrower for such amounts so paid).
(b) Borrowers shall indemnify and hold harmless Lender for the
full amount of Taxes or Other Taxes paid by Lender (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section, but not
including Other Taxes that arise as a result of Lender=s arrangements with the
applicable taxing jurisdiction, if any, and not as a result of this Agreement)
and any liability (including penalties, interest and expenses (including
reasonable attorney's fees and expenses) other than those resulting solely from
a failure by Lender to pay any Taxes or Other Taxes which it is required to pay
and for which it received an indemnity payment) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted by the relevant Governmental Authority. Payment under this
indemnification shall be made within ten (10) days after the date Lender makes
written demand therefor. If such Taxes or Other Taxes were not correctly or
legally asserted, Lender shall, upon Timet's request and at Borrowers' expense,
provide such documents to Timet, in form and substance satisfactory to Lender,
as Timet may reasonably request, to enable Timet to contest such Taxes or Other
Taxes pursuant to appropriate proceedings then available to Borrowers (so long
as providing such documents shall not, in the good faith determination of
Lender, have a reasonable likelihood of resulting in any liability of Lender).
(c) If Borrowers shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to
Lender, then:
(i) the sum payable shall be increased as necessary so
that after making all required
deductions and withholdings (including deductions and withholdings applicable to
additional sums payable under this Section) Lender receives an amount equal to
the sum it would have received had no such deductions or withholdings been made;
(ii) Borrowers shall make such deductions and withholdings;
(iii)Borrowers shall pay the full amount deducted or
withheld to the relevant taxing authority or other
authority in accordance with applicable law; and
(iv) Borrower or Guarantor shall also pay to Lender, at the
time interest is paid, all additional amounts which
Lender specifies as necessary to preserve the
after-tax yield Lender would have received if such
Taxes or Other Taxes had not been imposed.
(d) Within thirty (30) days after the date of any payment by a
Borrower of Taxes or Other Taxes, Borrowers shall furnish to Lender the original
or a certified copy of a receipt evidencing payment thereof, or other evidence
of payment satisfactory to Lender.
(e) If Borrowers otherwise would be required to pay additional
amounts to Lender pursuant to subsection (c) of this Section, then upon Timet's
written request Lender shall use reasonable efforts at Borrowers' expense
(consistent with legal and regulatory restrictions) to file such forms or
documents and take such other action, including changing the jurisdiction of its
lending office so as to eliminate any such additional payment by such Borrower
which may thereafter accrue.
(f) In the event Lender shall assign the Obligations and its
rights hereunder to an assignee which is organized under the laws of a
jurisdiction outside the United States, such assignee of Lender shall provide
Timet with an IRS Form 4224 or Form 1001 or other applicable form, certificate
or document prescribed by the Internal Revenue Service certifying as to such
assignee's being entitled to full exemption from United States withholding tax
with respect to all payments to be made to such assignee hereunder and under any
of the other Financing Agreements. Notwithstanding any other provision of this
Section 6.5, such assignee shall not be required to deliver any form pursuant to
this Section 6.5 that such assignee is not legally able to deliver.
Notwithstanding Sections 6.5(b) and 6.5(c), Borrowers shall not be required to
indemnify any such assignee or to pay any additional amounts to any such
assignee in respect of United Sates Federal withholding tax to the extent that
(i) the obligation to withhold amounts with respect to United States Federal
withholding tax was applicable on the date such assignee became a party to this
Agreement, provided, that, the foregoing shall not apply (A) to an assignee that
becomes an assignee as a result of an assignment or transfer made at the request
of Borrowers and (B) to the extent the indemnity payment or additional amounts
any assignee would be entitled to receive (without regard to this sentence of
Section 6.5(f)) do not exceed the indemnity payment or additional amounts that
the person making the assignment or transfer to such assignee would have been
entitled to receive in the absence of such assignment or transfer or (ii) the
obligation to pay such additional amounts would not have arisen but for a
failure by such assignee to comply with the first sentence of this clause (f).
6.6 AUTHORIZATION TO MAKE LOANS.6AUTHORIZATION TO MAKE LOANS. Lender is
authorized to make the Loans and provide the Letter of Credit Accommodations
based upon telephonic or other instructions received from anyone purporting to
be an officer of a Borrower or other authorized person or, at the discretion of
Lender, if such Loans are necessary to satisfy any Obligations. All requests for
Loans or Letter of Credit Accommodations hereunder shall specify the date on
which the requested advance is to be made or Letter of Credit Accommodations
established (which day shall be a Business Day) and the amount of the requested
Loan. Requests received after 11:00 a.m. Dallas time on any day shall be deemed
to have been made as of the opening of business on the immediately following
Business Day. All Loans and Letter of Credit Accommodations under this Agreement
shall be conclusively presumed to have been made to, and at the request of and
for the benefit of, a Borrower when deposited to the credit of such Borrower or
otherwise disbursed or established in accordance with the instructions of such
Borrower or in accordance with the terms and conditions of this Agreement.
6.7 USE OF PROCEEDS.7 USE OF PROCEEDS. Borrowers shall use the proceeds
of the initial Loans provided by Lender to Borrowers hereunder only for: (a)
payments to each of the persons listed in the disbursement direction letter
furnished by Borrowers to Lender on or about the date hereof, (b) costs,
expenses and fees in connection with the preparation, negotiation, execution and
delivery of this Agreement and the other Financing Agreements and (c) working
capital of Borrowers, to the extent requested by Borrowers. All other Loans made
or Letter of Credit Accommodations provided by Lender to Borrowers pursuant to
the provisions hereof shall be used by Borrowers only for general operating,
working capital and other proper corporate purposes of Borrowers not otherwise
prohibited by the terms hereof.
6.8 REGULATION U 6.8 REGULATION U.
(a) A portion of the proceeds of the initial Loans are being used
to repay Indebtedness of Timet to the Existing Lenders arising from loans made
to Timet which may have been used by Timet to purchase or carry the SMC Stock
and a portion of the proceeds of the initial Loans are being used to repay
Indebtedness of Timet to the Existing Lenders arising from loans made to Timet
which were used by Timet for working capital. For purposes of Regulation U, the
Loans shall be treated as two separate extensions of credit. The portion of the
Loans used to repay Indebtedness arising from loans used for working capital and
the Loans otherwise hereafter used for working capital are referred to herein
individually as an "A Credit" and collectively, as the "A Credits". The portion
of the Loans used to repay Indebtedness arising from loans used to purchase or
carry the SMC Stock are referred to herein individually as a "B Credit" and
collectively, as "B Credits". Borrowers represent to Lender that a reasonable
estimate of the current market value of the SMC Stock, determined in accordance
with Regulation U, is $87,400,000. The aggregate amount of the B Credits shall
not exceed $43,700,000, which represents the maximum loan value as of the date
hereof (as determined in accordance with Regulation U) of the SMC Stock (such
SMC Stock being referred to herein as the "Margin Stock Collateral"). The
aggregate amount of the A Credits shall not exceed the amount equal to all Loans
minus the amount of the B Credits. In the event that any Margin Stock Collateral
is acquired or sold, the amount of the B Credits shall be adjusted (if
necessary), to the extent necessary through prepayment by Borrowers, to an
amount equal to the maximum loan value (determined in accordance with Regulation
U as of the date of such acquisition or sale) of the Margin Stock Collateral
immediately after giving effect to such acquisition or sale. Nothing contained
in this Section 6.8 shall be deemed to permit any sale of Margin Stock
Collateral in violation of the terms of this Agreement.
(b) The benefits of the security in the Margin Stock Collateral
granted to Lender shall be ALLOCATED FIRST to the benefit and security of the
payment of the principal of and interest on the B Credits and of all other
amounts payable by Borrower under this Agreement in connection with the B
Credits (collectively, the "B CREDIT AMOUNTS") AND SECOND, only after the
payment in full of the B Credit Amounts, to the benefit and security of the
payment of the principal of and interest on the A Credits and of all other
amounts payable by Borrowers under this Agreement in connection with the A
Credits (collectively, the "A Credit Amounts"). The benefits of the security in
the Collateral other than Margin Stock Collateral created hereunder and under
the other Financing Agreements and the benefits of the indirect security in
Collateral other than Margin Stock Collateral created by this Agreement, shall
be allocated first to the benefit and security of the payment of the B Credit
Amounts and second, only after the payment in full of the B Credit Amounts, to
the benefit and security of the payment of the A Credit Amounts.
(c) Borrowers shall furnish to Lender at the time of any
acquisition and sale of Margin Stock Collateral such information and documents
as Lender may require to determine the A and B Credits, and at any time and from
time to time, such other information and documents as Lender may reasonably
require to determine compliance with Regulation U.
6.9 APPOINTMENT OF AGENT FOR REQUESTING LOANS AND RECEIPTS OF LOANS AND
STATEMENTS6.9 APPOINTMENT OF AGENT FOR REQUESTING LOANS AND RECEIPTS OF LOANS
AND STATEMENTS.
(a) THT hereby irrevocably appoints and constitutes Timet as its
agent to request and receive Loans and Letter of Credit Accommodations pursuant
to this Agreement and the other Financing Agreements from Lender in the name or
on behalf of THT. Subject to the terms and conditions contained herein, Lender
may disburse the Loans to such bank account of THT or Timet or otherwise make
such Loans to a Borrower and provide such Letter of Credit Accommodations to a
Borrower as Timet may designate or direct, without notice to any other Borrower
or Obligor.
(b) Timet hereby accepts the appointment by THT to act as the
agent of THT pursuant to this Section 6.9.
(c) THT hereby irrevocably appoints and constitutes Timet as its
agent to receive statements on account and all other notices from Lender with
respect to the Obligations or otherwise under or in connection with this
Agreement and the other Financing Agreements.
(d) No purported termination of the appointment of Timet as agent
as aforesaid shall be effective, except after ten (10) Business Days' prior
written notice to Agent.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 COLLATERAL REPORTING 7.1 COLLATERAL REPORTING.
(a) Borrowers shall provide Lender with the following documents
in a form satisfactory to Lender:
(i) as soon as possible every two (2) weeks (but in any
event within five (5) Business Days after the end of each two (2) week period)
so long as Excess Availability is greater than $25,000,000 or more frequently
as Lender may reasonably request if at any time Excess Availability is equal to
or less than $25,000,000, a schedule of sales made, credits issued and cash
received (and including information with respect to Accounts owing by ValTimet,
Accounts owing by account debtors located other than in the United States of
America and Accounts subject to ▇▇▇▇ and hold arrangements);
(ii) as soon as possible after the end of each month (but
in any event within ten (10)
Business Days after the end of each month) so long as Excess Availability is
greater than $25,000,000, or more frequently as Lender may reasonably request if
at any time Excess Availability is equal to or less than $25,000,000, (A)
perpetual inventory reports, including inventory reports by location and
category as of the last day of the immediately preceding month, (B) reports with
respect to Inventory sold or purchased on consignments as of the last day of the
immediately preceding month, (C) agings of accounts payable (and including
information indicating the status of payments to owners and lessors of the
leased premises of Borrowers) as of the last day of the immediately preceding
month, and (D) agings of accounts receivable as of the last day of the
immediately preceding month (together with a reconciliation to the then current
month's general ledger);
(iii)on a monthly basis (but in any event within ten (10)
Business Days after the end of
each month) or more frequently as Lender may reasonably request, Timet's
internal price list with respect to such products;
(iv) upon Lender's request, (A) copies of customer
statements and credit memos, remittance
advices and reports, and copies of deposit slips and bank statements, (B) copies
of shipping and delivery documents, and (C) copies of purchase orders, invoices
and delivery documents for Inventory and Equipment acquired by a Borrower;
(v) such other reports as to the Collateral as Lender shall
reasonably request from time to
time.
(b) From time to time, as Timet may reasonably request, Lender
will provide Timet with the amount of the Borrowing Base, the Excess
Availability and the most recent Quarterly Average Excess Availability as of the
date of such request by Timet, as then reflected in the books and records of
Lender (recognizing that any such amounts may from time to time be subject to
adjustment in accordance with the terms hereof).
(c) If any of a Borrower's records or reports of the Collateral
are prepared or maintained by an accounting service, contractor, shipper or
other agent, such Borrower hereby irrevocably authorizes such service,
contractor, shipper or agent to deliver such records, reports, and related
documents to Lender and to follow Lender's instructions with respect to further
services at any time that an Event of Default exists or has occurred and is
continuing.
7.2 ACCOUNTS COVENANTS 7.2 ACCOUNTS COVENANTS.
(a) Borrowers shall notify Lender promptly upon receipt of any
notice of: (i) any material delay in a Borrower's performance of any of its
obligations to any account debtor or the assertion of any material claims,
offsets, defenses or counterclaims by any account debtor, or any material
disputes with account debtors, or any settlement, adjustment or compromise
thereof, (ii) all material adverse information relating to the financial
condition of any account debtor and (iii) any event or circumstance which, to a
Borrower's knowledge would cause Lender to consider any then existing Accounts
as no longer constituting Eligible Accounts. No credit, discount, allowance or
extension or agreement for any of the foregoing shall be granted to any account
debtor by a Borrower without Lender's consent, except in the ordinary course of
such Borrower's business in accordance with the current practices and policies
as of the date hereof. So long as no Event of Default exists or has occurred and
is continuing, Borrowers shall settle, adjust or compromise any claim, offset,
counterclaim or dispute with any account debtor. At any time that an Event of
Default exists or has occurred and is continuing, Lender shall, at its option,
have the exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with account debtors or grant any credits, discounts or
allowances.
(b) Without limiting the obligation of Borrowers to deliver any
other information to Lender, Borrowers shall promptly report to Lender any
return of Inventory by any one account debtor if the Inventory so returned in
such case has a value in excess of $1,000,000 if Excess Availability at such
time is greater than $25,000,000 or if the Inventory so returned in such case
has a value in excess of $500,000 if Excess Availability at such time is equal
to or less than $25,000,000. At any time that Inventory is returned, reclaimed
or repossessed, the Account (or portion thereof) which arose from the sale of
such returned, reclaimed or repossessed Inventory shall not be deemed an
Eligible Account. In the event any account debtor returns Inventory when an
Event of Default exists or has occurred and is continuing, Borrowers shall, upon
Lender's request, (i) hold the returned Inventory in trust for Lender, (ii)
segregate all returned Inventory from all of its other property, (iii) dispose
of the returned Inventory solely according to Lender's instructions, and (iv)
not issue any credits, discounts or allowances with respect thereto without
Lender's prior written consent.
(c) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lender or schedule thereof delivered to Lender shall be
true and complete, (ii) no payments shall be made thereon except payments
promptly delivered to Lender pursuant to the terms of this Agreement, (iii) no
credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor by a Borrower except as reported to
Lender in accordance with this Agreement and except for credits, discounts,
allowances or extensions made or given in the ordinary course of such Borrower's
business in accordance with current practices and policies of Borrower as of the
date hereof, previously disclosed to Lender, (iv) there shall be no setoffs,
deductions, contras, defenses, counterclaims or disputes existing or asserted
with respect thereto except as reported to Lender in accordance with the terms
of this Agreement, (v) none of the transactions giving rise thereto will violate
any applicable State or Federal laws or regulations in any material respect, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms.
(d) Lender shall have the right at any time or times, in Lender's
name or in the name of a nominee of Lender, to verify the validity, amount or
any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
(e) Borrowers shall deliver or cause to be delivered to Lender,
with appropriate endorsement and assignment, with full recourse to Borrowers,
any chattel paper or instrument which a Borrower now owns or may at any time
acquire within five (5) Business Days upon such Borrower's receipt thereof,
prior to an Event of Default, or act, condition or event which with notice or
passage of time or both would constitute an Event of Default, if the amount of
any such chattel paper or instrument equals or exceeds $50,000, or all chattel
paper and instruments if the aggregate amount of all such chattel paper and
instruments equals or exceeds $500,000, and after an Event of Default, or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default, all such chattel paper and other instruments regardless of
the amount thereof, in each case except as Lender may otherwise agree.
(f) Lender may, at any time or times that an Event of Default
exists or has occurred and is continuing, (i) notify any or all account debtors
or other obligors that the Receivables have been assigned to Lender and that
Lender has a security interest therein and Lender may direct any or all accounts
debtors or other obligors to make payment of Receivables directly to Lender,
(ii) extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or conditions,
any and all Receivables or other obligations included in the Collateral and
thereby discharge or release the account debtor or any other party or parties in
any way liable for payment thereof without affecting any of the Obligations,
(iii) demand, collect or enforce payment of any Receivables or such other
obligations, but without any duty to do so, and Lender shall not be liable for
its failure to collect or enforce the payment thereof nor for the negligence of
its agents or attorneys with respect thereto and (iv) take whatever other action
Lender may deem necessary or desirable for the protection of its interests. At
any time that an Event of Default exists or has occurred and is continuing, at
Lender's request, all invoices and statements sent to any account debtor or
other obligor shall state that the Receivables and such other obligations have
been assigned to Lender and are payable directly and only to Lender and
Borrowers shall deliver to Lender such originals of documents evidencing the
sale and delivery of goods or the performance of services giving rise to any
Accounts as Lender may require.
7.3 INVENTORY COVENANTS 7.3 INVENTORY COVENANTS. With respect to the
Inventory: (a) Borrowers shall at all times maintain inventory records, keeping
correct and accurate records itemizing and describing the kind, type, quality
and quantity of Inventory, such Borrower's cost therefor and daily withdrawals
therefrom and additions thereto consistent with the current practices of
Borrowers as of the date hereof; (b) Borrowers shall conduct a physical count of
the Inventory either through periodic cycle counts or otherwise so that such
Inventory as is required by the independent certified public accountants of
Timet in connection with the opinion of such accountants to be delivered to
Lender pursuant to Section 9.6(a)(ii) hereof to be covered by such counts is
subject to such counts at least once each year, but at any time or times as
Lender may request on or after an Event of Default, and promptly following such
physical inventory (whether pursuant to periodic cycle counts or otherwise)
shall supply Lender with a report in the form and with such specificity as may
be reasonably satisfactory to Lender concerning such physical count; (c)
Borrowers shall not remove any Inventory from the LOCATIONS SET FORTH OR
PERMITTED HEREIN, WITHOUT THE PRIOR WRITTEN CONSENT OF LENDER, EXCEPT (i) for
sales of Inventory in the ordinary course of a Borrower's business, (ii) to move
Inventory directly from one location set forth or permitted herein to another
such location, (iii) for Inventory shipped from the manufacturer thereof to a
Borrower which is in transit to the locations set forth or permitted herein and
(iv) to have material processed or tested by a subcontractor in the ordinary
course of a Borrower=s business; (d) upon Lender's request, at any time after
August 30, 2000, each Borrower shall, at its expense, no more than twice in any
twelve (12) month period, but at any time or times as Lender may request on or
after an Event of Default, deliver or cause to be delivered to Lender written
appraisals as to the Inventory in form, scope and methodology acceptable to
Lender and by an appraiser acceptable to Lender, addressed to Lender and upon
which Lender is expressly permitted to rely (and to the extent possible, Lender
shall use reasonable efforts to have the same appraisal firm as had previously
done appraisals of the Inventory of Borrowers conduct any such subsequent
appraisals, so long as it does not result in any material delay); (e) Borrowers
shall produce, use, store and maintain the Inventory with all reasonable care
and caution and in accordance with applicable standards of any insurance and in
conformity in all material respects with applicable laws (including the
requirements of the Federal Fair Labor Standards Act of 1938, as amended and all
rules, regulations and orders related thereto); (f) each Borrower assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; (g) each Borrower shall not sell
Inventory to any customer on approval, or any other basis which entitles the
customer to return or may obligate such Borrower to repurchase such Inventory
(except for the right of return of customers for Inventory which is defective or
non-conforming); and (h) each Borrower shall keep the Inventory in good and
marketable condition in all material respects.
7.4 EQUIPMENT AND REAL PROPERTY COVENANTS.4 EQUIPMENT AND REAL PROPERTY
COVENANTS. With respect to the Equipment and Real Property: (a) upon Lender's
request, each Borrower shall, at its expense, no more than once in any twelve
(12) month period, but at any time or times as Lender may request on or after an
Event of Default, deliver or cause to be delivered to Lender written appraisals
as to the Equipment in form, scope and methodology acceptable to Lender and by
an appraiser acceptable to Lender, addressed to Lender and upon which Lender is
expressly permitted to rely (and to the extent possible, Lender shall use
reasonable efforts to have the same appraisal firm as had previously done
appraisals of the Equipment of Borrowers conduct any such subsequent appraisals,
so long as it does not result in any material delay); (b) upon Lender's request,
each Borrower shall, at its expense, at any time or times as Lender may request
on or after an Event of Default, deliver or cause to be delivered to Lender
written appraisals as to the Real Property in form, scope and methodology
acceptable to Lender and by an appraiser acceptable to Lender, addressed to
Lender, and upon which Lender is expressly permitted to rely, each Borrower
shall keep its Equipment in good order, repair, running and marketable condition
(ordinary wear and tear excepted); (c) each Borrower shall use its Equipment and
Real Property with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity in all material respects
with all applicable laws; (d) the Equipment is and shall be used in Borrowers'
businesses and not for personal, family, household or farming use; (e) each
Borrower shall not remove any Equipment from the locations set forth or
permitted herein, except to the extent necessary to have any Equipment repaired
or maintained in the ordinary course of the business of such Borrower or to move
Equipment directly from one location set forth or permitted herein to another
such location; (f) the Equipment is now and shall remain personal property and
each Borrower shall not permit any of the Equipment to be or become a part of or
affixed to real property; and (g) each Borrower assumes all responsibility and
liability arising from the use of the Equipment and Real Property.
7.5 POWER OF ATTORNEY.5 POWER OF ATTORNEY. Each Borrower hereby
irrevocably designates and appoints Lender (and all persons designated by
Lender) as such Borrower's true and lawful attorney-in-fact, and authorizes
Lender, in such Borrower's or Lender's name, to: (a) at any time an Event of
Default exists or has occurred and is continuing (i) demand payment on
Receivables or other Collateral, (ii) enforce payment of Receivables by legal
proceedings or otherwise, (iii) exercise all of such Borrower's rights and
remedies to collect any Receivable or other Collateral, (iv) sell or assign any
Receivable upon such terms, for such amount and at such time or times as the
Lender deems advisable, (v) settle, adjust, compromise, extend or renew a
Receivable, (vi) discharge and release any Receivable, (vii) prepare, file and
sign a Borrower's name on any proof of claim in bankruptcy or other similar
document against an account debtor other obligor in respect of any Receivables
or other Collateral, (viii) notify the post office authorities to change the
address for delivery of remittances from account debtors or other obligors in
respect of Receivables or other proceeds of Collateral to an address designated
by Lender, and open and dispose of all mail addressed to a Borrower and handle
and store all mail relating to the Collateral; and (ix) do all acts and things
which are necessary, in Lender's determination, to fulfill a Borrower's
obligations under this Agreement and the other Financing Agreements and (b) at
any time to (i) take control in any manner of any item of payment in respect of
Receivables or constituting Collateral or otherwise received in or for deposit
in the Blocked Accounts or otherwise received by Lender, (ii) have access to any
lockbox or postal box into which remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral are sent or
received, (iii) endorse a Borrower's name upon any items of payment in respect
of Receivables or constituting Collateral or otherwise received by Lender and
deposit the same in Lender's account for application to the Obligations, (iv)
endorse a Borrower's name upon any chattel paper, document, instrument, invoice,
or similar document or agreement relating to any Receivable or any goods
pertaining thereto or any other Collateral, including any warehouse or other
receipts, or bills of lading and other negotiable or non-negotiable documents,
(v) clear Inventory the purchase of which was financed with Letter of Credit
Accommodations through U.S. Customs in a Borrower=s name, Lender=s name or the
name of Lender=s designee, and to sign and deliver to customs officials powers
of attorney in such Borrower=s name for such purpose, and to complete in such
Borrower=s or Lender=s name, any order, sale or transaction, obtain the
necessary documents in connection therewith and collect the proceeds thereof,
(vi) sign a Borrower's name on any verification of Receivables and notices
thereof to account debtors or other obligors in respect thereof and (vii)
execute in a Borrower's name and file any UCC financing statements or amendments
thereto. Each Borrower hereby releases Lender and its officers, employees and
designees from any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or commission, except
as a result of Lender's own gross negligence or wilful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction.
7.6 RIGHT TO CURE.6 RIGHT TO CURE. Lender may, at its option, (a) upon
notice to a Borrower, cure any default by a Borrower under any material
agreement with a third party which adversely affects the Collateral, its value
or the ability of Lender to collect, sell or otherwise dispose of the Collateral
or the rights and remedies of Lender therein or the ability of a Borrower to
perform its obligations hereunder or under the other Financing Agreements, (b)
pay or bond on appeal any judgment entered against a Borrower, (c) discharge
taxes, liens, security interests or other encumbrances at any time levied on or
existing with respect to the Collateral (except liens, security interests or
other encumbrances permitted hereunder) and (d) pay any amount, incur any
expense or perform any act which, in Lender's judgment, is reasonably necessary
or appropriate to preserve, protect, insure or maintain the Collateral and the
rights of Lender with respect thereto. Lender may add any amounts so expended to
the Obligations and charge a Borrower's account therefor, such amounts to be
repayable by Borrowers on demand. Lender shall be under no obligation to effect
such cure, payment or bonding and shall not, by doing so, be deemed to have
assumed any obligation or liability of a Borrower. Any payment made or other
action taken by Lender under this Section shall be without prejudice to any
right to assert an Event of Default hereunder and to proceed accordingly.
7.7 ACCESS TO PREMISES.7 ACCESS TO PREMISES. From time to time as
reasonably requested by Lender, at the cost and expense of Borrowers, (a) Lender
or its designee shall have complete access to all of each Borrower's premises
during normal business hours and after notice to Timet, or at any time and
without notice to Timet, if an Event of Default exists or has occurred and is
continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of each Borrower's books and records, including the Records,
and (b) each Borrower shall promptly furnish to Lender such copies of such books
and records or extracts therefrom as Lender may request, and (c) Lender or its
designee may use during normal business hours such of each Borrower's personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is continuing
for the collection of Accounts and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIE
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower hereby jointly and severally represents and warrants to
Lender the following (which shall survive the execution and delivery of this
Agreement), the truth and accuracy of which are a continuing condition of the
making of Loans and providing Letter of Credit Accommodations by Lender to
Borrowers:
8.1 CORPORATE EXISTENCE, POWER AND AUTHORITY; SUBSIDIARIES 8.1 CORPORATE
EXISTENCE, POWER AND AUTHORITY; SUBSIDIARIES. Each Borrower is a corporation
duly organized and in good standing under the laws of its state of incorporation
and is duly qualified as a foreign corporation and in good standing in all
states or other jurisdictions where the nature and extent of the business
transacted by it or the ownership of assets makes such qualification necessary,
where the failure to so qualify would have a Material Adverse Effect. The
execution, delivery and performance of this Agreement, the other Financing
Agreements and the transactions contemplated hereunder and thereunder are all
within each Borrower's corporate powers, have been duly authorized and are not
in contravention of law or the terms of such Borrower's certificate of
incorporation, by-laws, or other organizational documentation, or any indenture,
agreement or undertaking to which such Borrower is a party or by which such
Borrower or its property are bound. This Agreement and the other Financing
Agreements constitute legal, valid and binding obligations of each Borrower
enforceable in accordance with their respective terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium, or similar law affecting creditor's rights generally
and by general principles of equity. Borrowers do not have any Subsidiaries
except as set forth on the Information Certificate or as are permitted under
Section 9.10 hereto.
8.2 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE8.2 FINANCIAL
STATEMENTS; NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrowers which have been or may hereafter be delivered by a Borrower to Lender
have been prepared in accordance with GAAP and fairly present the financial
condition and the RESULTS OF OPERATION OF BORROWERS AS AT THE DATES AND FOR THE
PERIODS SET FORTH THEREIN (PROVIDED, THAT, monthly or quarterly statements are
subject to normal year-end adjustments and may not contain footnotes required by
GAAP). Except as disclosed in any interim financial statements furnished by
Borrowers to Lender prior to the date of this Agreement, there has been no
material adverse change in the assets, liabilities, properties and condition,
financial or otherwise, of a Borrower, since the date of the most recent audited
financial statements furnished by Borrowers to Lender prior to the date of this
Agreement.
8.3 CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS 8.3 CHIEF EXECUTIVE
OFFICE; COLLATERAL LOCATIONS. The chief executive office of each Borrower and
each Borrower's Records concerning Accounts are located only at the addresses
set forth on the signature page hereto and its only other places of business and
the only other locations of Collateral, if any, are: (a) the addresses set forth
in the Information Certificate, (b) Inventory and Equipment purchased by
Borrowers in the ordinary course of business which is in transit to a location
of Borrowers permitted herein (and the amount of which is separately identified
as in-transit in any report with respect to Inventory and Equipment provided by
or on behalf of any Borrower to Lender), (c) other locations to the extent the
aggregate amount of the value at all of such other locations does NOT EXCEED
$250,000, PROVIDED, THAT, at any time upon Lender's request Borrowers shall give
Lender prompt written notice of the addresses of such other locations and such
other information with respect thereto as Lender may request, and (d) locations
established after the date hereof in accordance with Section 9.2 hereof. The
Information Certificate correctly identifies any of such locations which are not
owned by Borrowers and sets forth the owners and/or operators thereof, subject
to such information with respect to locations established after the date hereof
as is provided to Lender in accordance with Section 9.2 hereof.
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES 8.4 PRIORITY OF LIENS; TITLE
TO PROPERTIES. The security interests and liens granted to Lender under this
Agreement and the other Financing Agreements constitute valid liens and security
interests in and upon the Collateral. Such security interests in the Collateral
are duly perfected (except (a) such liens and security interests which may not
be perfected under the UCC or the Personal Property Security Act or similar
statutes in the Canadian Provinces of Ontario, Manitoba, British Columbia or
Quebec and (b) interests in Real Property not subject to the Mortgages) and are
subject only to the LIENS INDICATED ON SCHEDULE 8.4 HERETO AND THE OTHER LIENS
PERMITTED UNDER SECTION 9.8 HEREOF, PROVIDED, THAT, security interests which
require perfection by the filing of financing statements shall only be perfected
upon the filing thereof, mortgages and liens which require perfection by the
filing of Mortgages shall only be perfected upon the filing thereof and security
interests in trademarks and patents which require the filing of security
interests with the Patent and Trademark Office shall only be perfected upon the
filing thereof. Each Borrower has good and marketable title to all of the
Collateral subject to no liens, mortgages, pledges, security interests,
encumbrances or charges of any kind, except those granted to Lender and such
others as are specifically listed on Schedule 8.4 hereto or permitted under
Section 9.8 hereof.
8.5 TAX RETURNS 8.5 TAX RETURNS. Each Borrower has filed, or caused to
be filed, in a timely manner all tax returns, reports and declarations which are
required to be filed by it and are material to such Borrower. All information in
such material tax returns, reports and declarations is complete and accurate in
all material respects. Each Borrower has paid or caused to be paid all taxes due
and payable or claimed due and payable in any assessment received by it, except
taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to such Borrower and with respect
to which adequate reserves have been set aside on its books in accordance with
GAAP. Adequate resources have been set aside on its books in accordance with
GAAP for all accrued and unpaid Federal, State, county, local, foreign and other
taxes whether or not yet due and payable and whether or not disputed.
8.6 LITIGATION 8.6 LITIGATION. Except as set forth on the Information
Certificate, there is no present investigation by any Governmental Authority
pending, or to the best of Borrowers' knowledge threatened in writing, against
or affecting a Borrower, its assets or business and there is no action, suit,
proceeding or claim by any Person pending, or to the best of Borrowers'
knowledge threatened in writing, against a Borrower or its assets or goodwill,
or against or affecting any transactions contemplated by this Agreement, which
if adversely determined against such Borrower would have a Material Adverse
Effect.
8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS 8.7 COMPLIANCE
WITH OTHER AGREEMENTS AND APPLICABLE LAWS. Each Borrower is not in default in
any respect under, or in violation in any respect of any of the terms of, any
agreement, contract, instrument, lease or other commitment to which it is a
party or by which it or any of its assets are bound where such default or
violation would be reasonably expected to have a Material Adverse Effect and
each Borrower is in compliance in all respects with all applicable provisions of
laws, rules, regulations, licenses, permits, approvals and orders of any
foreign, Federal, State or local Governmental Authority where the failure to so
comply would reasonably be expected to have a Material Adverse Effect.
8.8 ENVIRONMENTAL COMPLIANCE 8.8 ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth on Schedule 8.8 hereto, Borrowers and
each Restricted Subsidiary have not generated, used, stored, treated,
transported, manufactured, handled, produced or disposed of any Hazardous
Materials, on or off its premises (whether or not owned by it) in any manner
which at any time violates any applicable Environmental Law or any license,
permit, certificate, approval or similar authorization thereunder where such
violation would be reasonably expected to have a Material Adverse Effect and the
operations of Borrowers and any Subsidiary comply in all respects with all
Environmental Laws and all licenses, permits, certificates, approvals and
similar authorizations thereunder where the failure to so comply would
reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 8.8 hereto, there has not
been (i) any investigation, proceeding, complaint, order, directive, claim,
citation or notice by any Governmental Authority or any other person nor is any
pending or to the best of Borrowers' knowledge threatened in writing, with
respect to any non-compliance with or violation of the requirements of any
Environmental Law by a Borrower and any Restricted Subsidiary where such
non-compliance or violation would reasonably be expected to have a Material
Adverse Effect or (ii) any release, spill or discharge, threatened or actual, of
any Hazardous Material or generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which affects a Borrower or its
business, operations or assets or any properties at which a Borrower or
Subsidiary has transported, stored or disposed of any Hazardous Materials where
such non-compliance or violation would reasonably be expected to have a Material
Adverse Effect.
(c) Borrowers and their Subsidiaries have no liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials which would reasonably be expected to have a
Material Adverse Effect.
(d) Borrowers and the Restricted Subsidiaries have all material
licenses, permits, certificates, approvals or similar authorizations required to
be obtained or filed in connection with the operations of Borrowers under any
Environmental Law and all of such licenses, permits, certificates, approvals or
similar authorizations are valid and in full force and effect in all material
respects.
8.9 EMPLOYEE BENEFITS 8.9 EMPLOYEE BENEFITS.
(a) Each Plan is in material compliance with the applicable
provisions of ERISA, the Code and other Federal or State law. Each Plan which is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and to the best knowledge
of Borrowers, nothing has occurred which would cause the loss of such
qualification. Each Borrower and its ERISA Affiliates have made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or to the best of Borrowers= knowledge,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) the current value of each Plan's assets (determined in accordance
with the assumptions used for funding such Plan pursuant to Section 412 of the
Code) exceed such Plan's liabilities under Section 4001(a)(16) of ERISA, except
as set forth on Schedule 8.9 hereto; (iii) each Borrower and its ERISA Affiliate
have not incurred and do not reasonably expect to incur, any liability under
Title IV of ERISA with respect to any Plan (other than premiums due and not
delinquent under Section 4007 of ERISA) in excess of $250,000; (iv) each
Borrower and its ERISA Affiliates have not incurred and do not reasonably expect
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan in excess of
$250,000; and (v) each Borrower and its ERISA Affiliates have not engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
8.10 BANK ACCOUNT S8.10 BANK ACCOUNTS. All of the deposit accounts,
investment accounts or other accounts in the name of or used by Borrowers
maintained at any bank or other financial institution are set forth on Schedule
8.10 hereto, subject to the rights of Borrowers to establish new accounts in
accordance with Section 9.13 below.
8.11 INTELLECTUAL PROPERTY 8.11 INTELLECTUAL PROPERTY. Each Borrower
owns or licenses or otherwise has the right to use all Intellectual Property
necessary for the operation of its business as presently conducted or proposed
to be conducted. As of the date hereof, Borrowers do not have any Intellectual
Property registered, or subject to pending applications, in the United States
Patent and Trademark Office or any similar office or agency in the United
States, any State thereof, any political subdivision thereof or in any other
country, other than those described in Schedule 8.11 hereto and has not granted
any licenses with respect thereto other than as set forth in Schedule 8.11
hereto. To the best of Borrowers= knowledge, no slogan or other advertising
device, product, process, method, substance or other Intellectual Property or
goods bearing or using any Intellectual Property presently contemplated to be
sold by or employed by a Borrower infringes any patent, trademark, servicemark,
tradename, copyright, license or other Intellectual Property owned by any other
Person presently and as of the date hereof, no claim or litigation is pending or
threatened against or affecting a Borrower contesting its right to sell or use
any such Intellectual Property. Schedule 8.11 sets forth all of the agreements
or other arrangements of Borrowers pursuant to which a Borrower has a license or
other right to use any trademarks, logos, designs, representations or other
Intellectual Property owned by another person as in effect on the date hereof
and the dates of the expiration of such agreements or other arrangements of such
Borrower as in effect on the date hereof. No trademark, servicemark or other
Intellectual Property at any time used by a Borrower which is owned by another
person, or owned by a Borrower subject to any security interest, lien,
collateral assignment, pledge or other encumbrance in favor of any person other
than Lender, is affixed to any Eligible Inventory, except to the extent
permitted under the term of the license agreements listed on Schedule 8.11
hereto or any license agreements entered into by such Borrower after the date
hereof.
8.12 CAPITALIZATION 8.12 CAPITALIZATION.
(a) All of the issued and outstanding: (i) shares of Capital
Stock of Timet, as of the date hereof, are directly and beneficially owned and
held by the persons listed on the Information Certificate, (ii) shares of
Capital Stock of Timet UK Limited, THT, TIMET Millbury Corporation, TMCA
International Inc., the Trust, TFMC, TIMET FSC, Ltd., TIMET Colorado Corporation
and TIMET Real Estate Corporation are directly and beneficially owned and held
by Timet (subject to transfers thereof as a result of mergers or consolidations,
or liquidations or dissolutions, in each case permitted hereunder), and (iii)
shares of Capital Stock of TIMET Castings Corporation are directly and
beneficially owned and held by TIMET Millbury Corporation (subject to transfers
thereof as a result of mergers or consolidations, or liquidations or
dissolutions, in each case, permitted hereunder) , and in each case under
clauses (i), (ii) and (iii) above all of such shares referred to above have been
duly authorized and are fully paid and non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except as disclosed in
writing to Lender.
(b) Each Borrower is, as of the date hereof, Solvent after the
creation of the Obligations, the security interests of Lender and the other
transactions contemplated hereunder.
8.13 LABOR DISPUTES 8.13 LABOR DISPUTES.
(a) Set forth on Schedule 8.13 hereto is a list (including dates
of termination) of all collective bargaining or similar agreements between or
applicable to a Borrower and any union, labor organization or other bargaining
agent in respect of the employees of such Borrower on the date hereof.
(b) There is (i) no unfair labor practice complaint pending
against a Borrower or, to the best of Borrowers= knowledge, threatened against
it, before the National Labor Relations Board, which if adversely determined
against such Borrower would have a Material Adverse Effect and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is pending on the date hereof against a Borrower or, to best of
Borrowers= knowledge, threatened in writing against it which if adversely
determined against such Borrower would have a Material Adverse Effect, and (ii)
no strike, labor dispute, slowdown or stoppage is pending against a Borrower or,
to the best of Borrowers= knowledge, threatened against a Borrower as of the
date hereof or any such strike, labor dispute, slowdown or stoppage after the
date hereof which would reasonably be expected to have a Material Adverse
Effect.
8.14 CORPORATE NAME; PRIOR TRANSACTIONS 8.14CORPORATE NAME; PRIOR
TRANSACTIONS. Each Borrower has not, during the past five years, been known by
or used by any other corporate or fictitious name (except as permitted in
Section 9.1 hereof) or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its
property or assets out of the ordinary course of business, except as set forth
in the Information Certificate or as permitted in Section 9.7(a) or Section
9.10(e) hereof.
8.15 RESTRICTIONS ON RESTRICTED SUBSIDIARIES 8.15 RESTRICTIONS ON
RESTRICTED SUBSIDIARIES. Except for restrictions contained in this Agreement or
any other agreement with respect to Indebtedness or Capital Stock of Borrowers
permitted hereunder as in effect on the date hereof, there are no contractual or
consensual restrictions on a Borrower or any of its Restricted Subsidiaries
which prohibit or otherwise restrict (a) the transfer of cash or other assets
(i) between a Borrower and any of its Restricted Subsidiaries or (ii) between
any Restricted Subsidiaries of Borrower or (b) the ability of a Borrower or any
of its Restricted Subsidiaries to incur Indebtedness or grant security interests
to Lender in the Collateral.
8.16 MATERIAL CONTRACTS 8.16 MATERIAL CONTRACTS. Schedule 8.16 hereto
sets forth all Material Contracts to which each Borrower is a party or is bound
as of the date hereof. Borrowers have delivered true, correct and complete
copies of such Material Contracts to Lender on or before the date hereof. Each
Borrower is not in breach of or in default under any Material Contract and has
not received any notice of the intention of any other party thereto to terminate
any Material Contract (which for this purpose shall only mean those Material
Contracts specified in Schedule 8.16 or other Material Contracts entered after
the date hereof, in each case where the breach, nonperformance, cancellation,
termination or failure to renew would be reasonably expected to have a Material
Adverse Affect).
8.17 TRECO PROPERTY; BMI PROPERTY 8.17 TRECO PROPERTY; BMI PROPERTY.
(a) Schedule 1.99 hereto contains a true, correct and complete
description of the Treco Property. The real property described on Schedule 1.99
does not include the portion of parcel 6 that is to be retained by Timet after
the proposed transfer of legal title by Timet to Treco LLC. Seventy-five (75%)
percent of the membership interests of Treco LLC are owned by Tremont
Corporation. Timet authorized the transfer of the Treco Property to Treco LLC in
October of 1995. As of the date hereof, the Treco Property is beneficially owned
by Treco LLC and Timet has record ownership thereof. The Treco Property is not
material to or necessary or desirable for the conduct by any Borrower of its
operations or business or the operation and use of any other Real Property and
the transfer thereof shall not have an adverse affect on the value, or the
ability to use, any of the remaining assets of Borrowers in a manner consistent
with the current uses thereof or the ability of Lender to realize on the other
assets of Borrowers.
(b) Schedule 1.7 hereto contains a true, correct and complete
description of the BMI Property. Timet is not obligated to transfer the BMI
Property until such time as the BMI Property is no longer required by Timet for
pollution abatement. Timet does not have any liability for and does not intend
to pay any of the costs and expenses required so that the BMI Real Property is
no longer required by Timet for pollution abatement, except that under certain
circumstances, Timet may be required to pay up to $2,000,000 for such costs and
expenses which exceed $15,900,000. As of the date of any transfer of the BMI
Real Property, such Real Property will not be material to or necessary or
desirable for the conduct by any Borrower of its operations or business or the
operation and use of any other Real Property and the transfer thereof shall not
have an adverse affect on the value, or the ability to use, any of the remaining
assets of Borrowers in a manner consistent with the current uses thereof or the
ability of Lender to realize on the other assets of Borrowers.
8.18 INTERRELATED BUSINESSES 8.18 INTERRELATED BUSINESSES. Timet is the
direct and beneficial owner and holder of all of the issued and outstanding
shares of Capital Stock of THT, each Restricted Subsidiary (other than Timet
Castings Corporation) and Timet UK Limited. Timet Millbury Corporation, a
wholly-owned Subsidiary of Timet is the direct and beneficial owner and holder
of all of the issued and outstanding shares of Capital Stock of Timet Castings
Corporation. Borrowers, Guarantors and the other Restricted Subsidiaries make up
a related organization of various entities constituting a single economic and
business enterprise so that Borrowers, Guarantors and the other Restricted
Subsidiaries share an identity of interests such that any benefit received by
any one of them benefits the others. Borrowers, Guarantors and the other
Restricted Subsidiaries render services to or for the benefit of the other
Borrower and/or Guarantors and other Restricted Subsidiaries, as the case may
be, purchase or sell and supply goods to or from or for the benefit of the
others, make loans, advances and provide other financial accommodations to or
for the benefit of the other Borrowers, Guarantors and the other RESTRICTED
SUBSIDIARIES (INCLUDING INTER ALIA, the payment by Borrowers and Guarantors of
creditors of the other Borrowers or Guarantors and guarantees by Borrowers and
Guarantors of indebtedness of the other Borrowers and Guarantors and provide
administrative, marketing, payroll and management services to or for the benefit
of the other Borrowers and Guarantors). Borrowers, Guarantors and the other
Restricted Subsidiaries have centralized accounting and legal services, common
officers and directors and are identified to creditors as a single economic and
business enterprise.
8.19 ACCURACY AND COMPLETENESS OF INFORMATION 8.19 ACCURACY AND
COMPLETENESS OF INFORMATION. All information furnished by or on behalf of a
Borrower in writing to Lender in connection with this Agreement or any of the
other Financing Agreements or any transaction contemplated hereby or thereby,
including all information on the Information Certificate is true and correct in
all material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make such
information not misleading. No event or circumstance has occurred which has had
or could reasonably be expected to have a Material Adverse Effect, which has not
been fully and accurately disclosed to Lender in writing.
8.20 SURVIVAL OF WARRANTIES; CUMULATIVE 8.20 SURVIVAL OF WARRANTIES;
CUMULATIVE. All representations and warranties contained in this Agreement or
any of the other Financing Agreements shall survive the execution and delivery
of this Agreement and shall be deemed to have been made again to Lender on the
date of each additional borrowing or other credit accommodation hereunder,
except to the extent that such representations and warranties expressly relate
solely to an earlier date (in which case such representations and warranties
shall have been true and accurate on and as of such earlier date) and shall be
conclusively presumed to have been relied on by Lender regardless of any
investigation made or information possessed by Lender. The representations and
warranties set forth herein shall be cumulative and in addition to any other
representations or warranties which a Borrower shall now or hereafter give, or
cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 MAINTENANCE OF EXISTENCE.1 MAINTENANCE OF EXISTENCE. Each Borrower
shall at all times preserve, renew and keep in full, force and effect its
corporate existence and rights (other than pursuant to a merger permitted
hereunder or a liquidation or dissolution permitted hereunder) and franchises
with respect thereto and maintain in full force and effect all material permits,
licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to be
conducted where the failure to maintain any of the same would have a Material
Adverse Effect. Each Borrower shall give Lender thirty (30) days prior written
notice of any proposed change in its corporate name, which notice shall set
forth the new name and each Borrower shall deliver to Lender a copy of the
amendment to the Certificate of Incorporation of such Borrower providing for the
name change certified by the Secretary of State of the jurisdiction of
incorporation of such Borrower as soon as it is available.
9.2 NEW COLLATERAL LOCATIONS 9.2 NEW COLLATERAL LOCATIONS. Each Borrower
may open any new location within the continental United States provided such
Borrower (a) gives Lender thirty (30) days prior written notice of the intended
opening of any such new location (and if it is a location which is not owned by
Borrowers, the names and addresses of the owners and/or operators thereof) and
(b) executes and delivers, or causes to be executed and delivered, to Lender
such agreements, documents, and instruments as Lender may deem reasonably
necessary or desirable to protect its interests in the Collateral at such
location, including UCC or PPSA financing statements. For purposes hereof, a
"new location" shall mean any location of Collateral other than those set forth
in the Information Certificate.
9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC
9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC.
(a) Each Borrower shall, and shall cause any Restricted
Subsidiary to, at all times, comply in all respects with all laws, rules,
regulations, licenses, permits, approvals and orders applicable to it and duly
observe all requirements of any Federal, State or local Governmental Authority,
including ERISA, the Code, the Occupational Safety and Health Act of 1970, as
amended, the Fair Labor Standards Act of 1938, as amended, and all statutes,
rules, regulations, orders, permits and stipulations relating to environmental
pollution and employee health and safety, including all of the Environmental
Laws, where the failure to so comply would have a Material Adverse Effect.
(b) Each Borrower shall establish and maintain, at its expense, a
system to assure and monitor its continued compliance in all material respects
with all Environmental Laws in all of its operations, which system shall include
annual reviews of such compliance by employees or agents of such Borrower or its
Affiliates who are familiar with the requirements of the Environmental Laws.
Upon Lender=s request, copies of all environmental surveys, audits, assessments,
feasibility studies and results of remedial investigations shall be promptly
furnished, or caused to be furnished, by Borrowers to Lender. Each Borrower
shall take prompt and appropriate action to respond to any non-compliance with
any of the Environmental Laws and upon Lender=s request, shall regularly report
to Lender on such response.
(c) Each Borrower shall give both oral and written notice to
Lender promptly upon such Borrower's receipt of any notice of, or such
Borrower's otherwise obtaining knowledge of, (i) the occurrence of any event
involving the release, spill or discharge, threatened or actual, of any
Hazardous Material which would reasonably be expected to have a Material Adverse
Effect or (ii) any investigation, proceeding, complaint, order, directive,
claims, citation or notice with respect to: (A) any material non-compliance with
or violation of any Environmental Law by a Borrower or (B) the material release,
spill or discharge, threatened or actual, of any Hazardous Material or (C) the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials which would reasonably be
expected to have a Material Adverse Effect or (D) any other environmental,
health or safety matter, which affects a Borrower or its business, operations or
assets or any properties at which a Borrower transported, stored or disposed of
any Hazardous Materials which would reasonably be expected to have a Material
Adverse Effect.
(d) Without limiting the generality of the foregoing, whenever
Lender reasonably determines that there is material non-compliance, or any
condition which requires any action by or on behalf of a Borrower in order to
avoid any material non-compliance, with any Environmental Law, Borrowers shall,
at Lender's request and Borrowers' expense: (i) cause an independent
environmental engineer acceptable to Lender to conduct such tests of the site
where such Borrower's non-compliance or alleged non-compliance with such
Environmental Laws has occurred as to such non-compliance and prepare and
deliver to Lender a report as to such non-compliance setting forth the results
of such tests, a proposed plan for responding to any environmental problems
described therein, and an estimate of the costs thereof and (ii) provide to
Lender a supplemental report of such engineer whenever the scope of such
non-compliance, or such Borrower's response thereto or the estimated costs
thereof, shall change in any material respect.
(e) Each Borrower shall indemnify and hold harmless Lender, its
directors, officers, employees, agents, invitees, representatives, successors
and assigns, from and against any and all losses, claims, damages, liabilities,
costs, and expenses (including attorneys' fees and legal expenses) directly or
indirectly arising out of or attributable to the use, generation, manufacture,
reproduction, storage, release, threatened release, spill, discharge, disposal
or presence of a Hazardous Material, including the costs of any required or
necessary repair, cleanup or other remedial work with respect to any property of
a Borrower and the preparation and implementation of any closure, remedial or
other required plans except for losses, claims, damages, liabilities, costs and
expenses as a result of Lender's own gross negligence or wilful misconduct as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. All representations, warranties, covenants and indemnifications in
this Section 9.3 shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
9.4 PAYMENT OF TAXES AND CLAIMS 9.4 PAYMENT OF TAXES AND CLAIMS. Each
Borrower shall, and shall cause any Restricted Subsidiary to, duly pay and
discharge all taxes, assessments, contributions and governmental charges upon or
against it or its properties or assets, except for taxes the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower or such Restricted Subsidiary, as the case may
be, and with respect to which adequate reserves have been set aside on its books
in accordance with GAAP. Each Borrower shall be liable for any tax or penalties
imposed on Lender as a result of the financing arrangements provided for herein
to the extent provided in Section 6.5 hereof, and Borrower agrees to indemnify
and hold Lender harmless with respect to the foregoing, and to repay to Lender
on demand the amount thereof, and until paid by Borrowers such amount shall be
added and deemed part of the Loans. The foregoing indemnity shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.
9.5 INSURANCE 9.5 INSURANCE. Each Borrower shall, and shall cause any
Restricted Subsidiary to, at all times, maintain with financially sound and
reputable insurers insurance with respect to the Collateral against loss or
damage and all other insurance of the kinds and in the amounts customarily
insured against or carried by corporations of established reputation engaged in
the same or similar businesses and similarly situated. Said policies of
insurance shall be satisfactory to Lender as to form, amount and insurer. Lender
acknowledges that as of the date hereof Borrowers' current insurance coverages
set forth on Schedule 9.5 hereto are reasonably satisfactory to Lender as to
form, amount and insurer based on the circumstances of Borrowers as of the date
hereof disclosed to Lender in writing. Borrowers shall furnish certificates,
policies or endorsements to Lender as Lender shall reasonably require as proof
of such insurance, and, if a Borrower fails to do so, Lender is authorized, but
not required, to obtain such insurance at the expense of Borrowers. All policies
shall provide for at least thirty (30) days prior written notice to Lender of
any cancellation or reduction of coverage as to Borrower or the Restricted
Subsidiaries and that Lender may act as attorney for such Borrower or the
Restricted Subsidiaries in obtaining, and at any time an Event of Default exists
or has occurred and is continuing, adjusting, settling, amending and canceling
such insurance as to any Borrower or Restricted Subsidiary. Each Borrower shall
cause Lender to be named as a loss payee under all policies providing coverage
for any loss of, or damage to, any assets of any Borrower or Restricted
Subsidiary and an additional insured (but without any liability for any
premiums) under such insurance policies and each Borrower shall obtain
non-contributory lender's loss payable endorsements to all insurance policies in
form and substance satisfactory to Lender. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance to the extent
relating to any loss or damage to any assets of any Borrower or Restricted
Subsidiary, or as may otherwise constitute Collateral, shall be payable to
Lender as its interests may appear and further specify that Lender shall be paid
regardless of any act or omission by a Borrower or any of its Affiliates. At its
option, Lender may apply any insurance proceeds received by Lender at any time
to the cost of repairs or replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such manner as Lender
may determine or hold such proceeds as cash collateral for the Obligations.
9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION
9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Each Borrower shall, and shall cause any Restricted
Subsidiary to, keep proper books and records in which true and complete entries
shall be made of all dealings or transactions of or in relation to the
Collateral and the business of such Borrower and its Subsidiaries in accordance
with GAAP. Borrowers shall promptly furnish to Lender all such financial and
other information as Lender shall reasonably request relating to the Collateral
and the assets, business and operations of Borrowers and the Restricted
Subsidiaries, and to notify the auditors and accountants of Borrowers that
Lender is authorized to obtain such information directly from them. Without
limiting the foregoing, Borrowers shall furnish or cause to be furnished to
Lender, the following: (i) within thirty (30) days after the end of each fiscal
month (except that, if a month is the last month in a fiscal quarter, within
forty-five (45) days after the end of such fiscal month), monthly unaudited
consolidated financial information (including in each case balance sheets,
statements of income and loss and statements of shareholders' equity), and in
addition, upon Lender's request, at any time that Excess Availability may be
equal to or less than $25,000,000, unaudited consolidating financial information
(including in each case balance sheets, statements of income and loss and
statements of shareholders' equity), all in reasonable detail, fairly presenting
the financial position and the results of the operations of Timet and its
Subsidiaries as of the end of and through such fiscal month, certified to be
correct by the chief financial officer of Timet, subject to normal year-end
adjustments and accompanied by a compliance certificate substantially in the
form of Exhibit B hereto, along with a schedule in form reasonably satisfactory
to Lender of the calculations used in determining, as of the end of such month,
whether Borrowers were in compliance with the covenants set forth in Section
9.18 of this Agreement for such month and the calculations used in determining
the Fixed Charge Coverage Ratio for purposes of determining the Interest Rate as
of the last day of the immediately preceding fiscal quarter (provided that
Borrower shall not be required to include such calculations if Borrowers shall
state in the compliance certificate that Borrowers agree that for purposes of
determining the Interest Rate and the unused line fee the Fixed Charge Coverage
Ratio for such fiscal quarter shall be deemed to be less than 1.25 to 1,
regardless of the actual Fixed Charge Coverage Ratio as of such date), (ii)
within forty-five (45) days after the end of each fiscal quarter, quarterly
unaudited consolidated statements of cash flow of Timet and its Subsidiaries and
in addition, upon Lender=s request, at any time that Excess Availability may be
equal to or less than $25,000,000, quarterly unaudited consolidating statements
of cash flow of Timet, in each case, all in reasonable detail, fairly presenting
the cash flow and results of the operations of Timet and its Subsidiaries as of
the end of and for such fiscal quarter, and (iii) within ninety (90) days after
the end of each fiscal year, audited consolidated financial statements and
unaudited consolidating financial information of Timet and its Subsidiaries
(including in each case balance sheets, statements of income and loss,
statements of cash flow and statements of shareholders' equity), and the
accompanying notes thereto, all in reasonable detail, fairly presenting the
financial position and the results of the operations of Timet and its
Subsidiaries as of the end of and for such fiscal year, together with the
unqualified opinion of independent certified public accountants, which
accountants shall be an independent accounting firm selected by Timet and if
other than such accountants retained for such purposes as of the date hereof,
reasonably acceptable to Lender, that such financial statements have been
prepared in accordance with GAAP, and present fairly the results of operations
and financial condition of Timet and its Subsidiaries as of the end of and for
the fiscal year then ended.
(b) Borrowers shall promptly notify Lender in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim that involves amounts in excess of $1,000,000 relating to any Collateral
or which would result in any material adverse change in a Borrower's business,
properties, assets, goodwill or condition, financial or otherwise, (ii) any
Material Contract of a Borrower being terminated (other than at the end of the
scheduled term of such Material Contract, so long as Borrowers shall have
previously provided to Lender in writing a copy of such Material Contract) or
amended in writing in any material respect, or any new Material Contract being
entered into (in which event Borrowers shall provide Lender with a copy of such
Material Contract), (iii) any order, judgment or decree in excess of $5,000,000
shall have been entered against a Borrower or any of its properties or assets,
(iv) any notification of violation of laws or regulations received by or on
behalf of a Borrower where such violation would reasonably be expected to have a
Material Adverse Effect, (v) any ERISA Event, and (vi) the occurrence of any
Event of Default or act, condition or event which, with notice or the passage of
time or giving of notice or both, would constitute an Event of Default. In
addition, Borrowers shall provide Lender monthly with a report of all locations
of Inventory at consignees, processors, subcontractors, warehouses, bailees or
other third parties indicating the name and address of such person and the
approximate amount of the Inventory at such location.
(c) Borrowers shall promptly after the sending or filing thereof
furnish or cause to be furnished to Lender copies of all reports which a
Borrower sends to its stockholders generally and copies of all reports and
registration statements which a Borrower files with the Securities and Exchange
Commission, any national securities exchange or the National Association of
Securities Dealers, Inc.
(d) Each Borrower shall furnish or cause to be furnished to
Lender such budgets, forecasts, projections and other information respecting the
Collateral and the business of Timet and its Subsidiaries, as Lender may, from
time to time, reasonably request. Lender is hereby authorized to deliver a copy
of any financial statement or any other information relating to the business of
such Borrower to any court or other Government Authority or to any participant
or assignee or prospective participant or assignee, subject to Section 12.6
hereof. Each Borrower hereby irrevocably authorizes and directs all accountants
or auditors to deliver to Lender, at such Borrower's expense, to the extent not
already provided to Lender by Borrowers, copies of the financial statements of
such Borrower and any reports or management letters prepared by such accountants
or auditors on behalf of such Borrower and delivered or to be delivered to the
audit committee of Timet consistent with the current practices of Timet as of
the date hereof or as otherwise required by applicable law. Any documents,
schedules, invoices or other papers delivered to Lender may be destroyed or
otherwise disposed of by Lender one (1) year after the same are delivered to
Lender, except as otherwise designated by Borrowers to Lender in writing.
9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC.
9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC.
Each Borrower shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly,
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge INTO OR WITH OR CONSOLIDATE WITH IT, EXCEPT,
THAT, any Borrower, Guarantor or other Restricted Subsidiary may MERGE WITH AND
INTO OR CONSOLIDATE WITH ANY OTHER BORROWER, GUARANTOR OR OTHER RESTRICTED
SUBSIDIARY, PROVIDED, THAT, each of the following conditions is satisfied as
determined by Lender: (i) Lender shall have received not less than ten (10)
Business Days prior written notice of the intention of such Borrower or
Guarantor to so merge or consolidate and such information with respect thereto
as Lender may request, (ii) as of the effective date of the merger or
consolidation and after giving effect thereto, no Event of Default or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default, shall exist or have occurred, (iii) Lender shall have
received true, correct and complete copies of all agreements, documents and
instruments relating to such merger, including, but not limited to, the
certificate or certificates of merger as filed with each appropriate Secretary
of State, (iv) the surviving entity shall immediately upon the effectiveness of
the merger expressly confirm in writing pursuant to an agreement, in form and
substance satisfactory to Lender, its continuing liability in respect of the
Obligations and Financing Agreements and execute and deliver such other
agreements, documents and instruments as Lender may reasonably request in
connection therewith, (v) the surviving entity shall, immediately before and
immediately after giving effect to such transaction or series of transactions
have an Adjusted Net Worth (including, without limitation, any Indebtedness
incurred or anticipated to be incurred in connection with or in respect of such
transaction or series of transactions) equal to or greater than the Adjusted Net
Worth of the entities involved in such merger or consolidation immediately prior
to such transaction or series of transactions (as reduced by any reasonable
costs and expenses directly related to such merger), (vi) if the merger or
consolidation involves a Borrower with a Restricted Subsidiary, such Borrower
shall be the surviving entity or in the case of a merger or consolidation
between Timet and THT, Timet shall be the surviving corporation, (vii) such
merger or consolidation shall not violate any law or any order or decree of any
court or other Governmental Authority in any material respect and shall not
conflict with or result in the breach of, or constitute a default under, any
indenture, mortgage, deed of trust, or any other agreement or instrument to
which any Borrower, Guarantor or such other Restricted Subsidiary is a party or
may be bound, (viii) such merger or consolidation shall be done in accordance
with the requirements of all applicable laws and regulations, (ix) effective
upon such merger or consolidation, all of the assets and properties of Guarantor
or other Restricted Subsidiary involved in such merger or consolidation shall be
duly and validly transferred and assigned to the Borrower in the case of any
merger or consolidation involving a Borrower, or otherwise to the surviving
entity, free and clear of any liens, restrictions or encumbrances other than the
security interests and liens of Lender or other security interests expressly
permitted hereunder (and Lender shall have received such evidence thereof as
Lender may require), (x) Lender shall have received such deeds, assignments or
other agreements as Lender may request to evidence and confirm the transfer of
such assets to the surviving entity of such merger or consolidation, (xi) to the
extent the assets transferred are of a Guarantor, the Borrower, Guarantor or
other Restricted Subsidiary shall acquire such assets subject to the security
interests and liens of Lender which shall continue in full force and effect as
to the assets transferred and upon Lender's request, the Borrower, Guarantor or
other Restricted Subsidiary shall acknowledge the same in writing pursuant to an
agreement in form and substance satisfactory to Lender and shall execute and
deliver to Lender such agreements, documents and instruments as Lender may
require (including guarantees, security agreements, UCC and PPSA financing
statements), (xii) no Borrower or Guarantor shall assume any Indebtedness,
obligations or liabilities as a result of such merger or consolidation or
otherwise become liable in respect of any obligation or liabilities of the
Person with whom it is merging or consolidating, unless such Indebtedness is
expressly permitted hereunder and such obligations and liabilities are not
prohibited under this Agreement or any of the other Financing Agreements, and
(xiii) each Obligor shall ratify and confirm that its guarantees of the
Obligations shall apply to the Obligations as assumed by such surviving entity;
or
(b) sell, assign, lease, transfer, abandon or otherwise dispose
of any Capital Stock to any OTHER PERSON OR ANY OF ITS ASSETS TO ANY OTHER
PERSON, EXCEPT FOR
(i) sales of Inventory in the ordinary course of business
(including sales of Inventory to Unrestricted Subsidiaries and the Timet
Affiliates, but subject to Section 9.12 hereof);
(ii) the disposition of worn-out or obsolete Equipment so
long as (A) any proceeds are paid to Lender for application to the Obligations
(without any permanent reduction in the Maximum Credit as a result of such
application) and (B) such sales do not involve Equipment having an appraised or
▇▇▇▇▇ liquidation value (as set forth in the most recent acceptable appraisal
thereof received by Lender), or in the case of any such Equipment which is not
included in such appraisal, having a fair market value, in the aggregate in
excess of $750,000 for all such Equipment disposed of in any fiscal year of
Borrowers;
(III) THE SALE, WRITE-OFF OR OTHER DISPOSITION BY TFMC OF
THE SMC STOCK, PROVIDED, THAT, as
to any such sale or other disposition each of the following conditions is
satisfied: (A) Lender shall have received not less than ten (10) Business Days
prior written notice of any such sale or other disposition, which notice shall
set forth in reasonable detail satisfactory to Lender, the parties to such sale
or other disposition, the purchase price and the manner of payment thereof and
such other information with respect thereto as Lender may request, (B) the
consideration received in connection with any such sale or other disposition
shall be at least equal to the fair market value of the SMC Stock, (C) in the
case of a sale or other disposition, not less than eighty (80%) percent of such
consideration shall be payable in cash or Cash Equivalents, (D) in the case of a
sale or other disposition, such sale or other disposition shall be on fair and
reasonable prices and terms no less favorable than would be obtained in a bona
fide arm=s length transaction and if to a Borrower or other Restricted
Subsidiary, such a sale or other disposition shall be subject to the pledge and
security interest of Lender therein, (E) all net proceeds payable or delivered
to TFMC or any Borrower or any Affiliate of Borrower pursuant to such sale shall
be paid or delivered, or caused to be paid or delivered to Lender for
application to the Obligations (without any permanent reduction in the Maximum
Credit as a result of such application) or if no Obligations pursuant to or in
connection with any Loans are then outstanding, then to be held as cash
collateral for the Obligations arising pursuant to or in connection with any
Letter of Credit Accommodations on terms and conditions acceptable to Lender
(and if no Obligations arising pursuant to or in connection with any Loans or
Letter of Credit Accommodations are then outstanding, and no Event of Default
shall exist or have occurred, then upon Timet's request, such proceeds shall be
delivered to Timet, subject to applicable law or court order or order of any
other Governmental Authority);
(iv) the grant by Timet after the date hereof of a
non-exclusive license to any person for THE USE OF ANY INTELLECTUAL PROPERTY
CONSISTING OF TRADEMARKS OR PATENTS OWNED BY TIMET, PROVIDED, THAT, as to
each and all of such licenses, each of the following conditions is satisfied,
(A) at the time of the grant of the license and after giving effect thereto, no
Event of Default, or act, condition or event which with notice or passage of
time or both would constitute an Event of Default, shall exist or have
occurred, (B) the rights of the licensee in the trademarks or patents subject
to such license shall be subject and subordinate in all respects to the rights
therein of Lender, (C) such licenses shall not include any limitations or
restrictions on the use of such trademarks or patents by any Borrower or
Guarantor or which would limit or restrict the ability of Lender to use such
trademarks or patents pursuant to its rights hereunder or under any of the
other Financing Agreements or to sell or otherwise realize on such trademarks
or patents, and (D) Lender shall have received true, correct and complete copies
of the executed license agreement, promptly after the execution thereof;
(v) the disposition through the abandonment, cancellation or other failure
to maintain any trademark or other Intellectual Property which is no longer used
or useful in the business of Borrowers, Guarantors and their Subsidiaries (and
does not appear on, or is otherwise not affixed to or incorporated in, any
Inventory or Equipment or is necessary in connection with the Records of Timet)
and has a value of less than $250,000;
(vi) the transfer, directly or by one or more intermediate transfers to
Timet or another Restricted Subsidiary, of the Capital Stock of Loterios SpA to
Timet UK Limited or any Subsidiary of Timet UK Limited;
(VII) THE TRANSFER OF LEGAL TITLE BY TIMET TO TRECO LLC OF THE TRECO
PROPERTY; PROVIDED,THAT, Lender shall have received true, correct and complete
copies of the agreements relating to such transfer;
(viii) the sale or transfer by Timet of the BMI Property to Basic
Environmental Company
LLC and Basic Remediation Company LLC pursuant to the terms of the Pabco/Warm
Springs Agreement for Reconveyance of Property, dated as of June 30, 1999, by
and among Timet, Basic Environmental Company LLC and Basic Remediation COMPANY
LLC (AS IN EFFECT ON THE DATE HEREOF), PROVIDED, THAT, (A) Lender shall have
received a true, correct and complete copy of such Agreement for Reconveyance of
Property and all agreements, documents and instruments related thereto, and (B)
all proceeds from such sale or transfer, if any, shall be paid or delivered to
Lender for application to the Obligations (without any permanent reduction in
the Maximum Credit as a result of such application);
(ix) the sale or transfer by Timet, including by a grant of easement or
other transfer
(with right of reversion) of approximately 9,800 square feet of undeveloped,
vacant land in Henderson, Nevada adjacent to the existing Federal government
property interests to the Colorado River Commission for purposes of CONSTRUCTION
AND MAINTENANCE OF A NEW ELECTRIC FACILITY STEPDOWN YARD; PROVIDED, THAT, (A)
Lender shall have received not less than ten (10) Business Days prior written
notice of such sale or transfer, (B) the transfer thereof shall not in the good
faith determination of Lender have an adverse affect on the value, or the
ability to use, any of the remaining assets of Borrowers in a manner consistent
with current uses thereof or the ability of Lender to realize on the remaining
assets of Borrowers and (C) all proceeds from such sale or transfer, if any,
shall be paid to Lender for application to the Obligations (without any
permanent reduction in the Maximum Credit as a result of such application);
(x) the sale or transfer by Timet of any land (other than the Treco
Property, and the BMI Property or as provided in Section 9.7(b)(xi) above) in
the vicinity of Timet=s Henderson, Nevada plant which land is not currently used
or reasonably expected to be used in the forseeable future for Timet=s titanium
metals OPERATIONS (CONSTITUTING APPROXIMATELY 130 ACRES), PROVIDED, THAT, as to
any such sale or transfer, each of the following conditions is satisfied as
determined by Lender in good faith: (A) Lender shall have received not less than
ten (10) Business Days' prior written notice of the proposed sale by Timet of
any such property, which notice shall specify the parties to any proposed
agreement with respect thereto and the total amount of all cash or other
proceeds (including the net proceeds) which it is anticipated will be received
by Timet with respect to such sale or transfer and such other matters as Lender
may request, (B) all proceeds are paid to Lender for application to the
Obligations (without any permanent reduction in the Maximum Credit as a result
of such application), (C) each such sale or transfer shall be on fair and
reasonable prices and terms on terms no less FAVORABLE THAN WOULD BE OBTAINED IN
A BONA FIDE arms'-length transaction with a person that is not an Affiliate,
PROVIDED, THAT, if such sale or transfer is to the other Borrower or a
Restricted Subsidiary, such Borrower or Restricted Subsidiary shall acquire such
property subject to the mortgage and lien thereon of Lender and shall promptly
execute and deliver such agreements with respect thereto as Lender may request,
and (D) as of the date of such sale or transfer and after giving effect thereto,
no Event of Default shall exist or have occurred or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default shall exist or have occurred;
(xi) the issuance and sale by Timet of Capital Stock of Timet after the
date hereof or the issuance and sale by any Restricted Subsidiary of Capital
Stock of such Restricted Subsidiary to Timet or another RESTRICTED SUBSIDIARY;
PROVIDED, THAT, (A) Lender shall have received not less than ten (10) Business
Days prior written notice of such issuance and sale by Timet or such Restricted
Subsidiary, which notice shall specify the parties to whom such shares are to be
sold, the terms of such sale, the total amount which it is anticipated will be
realized from the issuance and sale of such stock and the net cash proceeds
which it is anticipated will be received by Timet or such Restricted Subsidiary
from such sale, (B) Borrowers shall not be required to pay any cash dividends or
repurchase or redeem such Capital Stock or make any other payments in respect
thereof (except (1) in the case where THT is the issuer of such Capital Stock,
to the extent permitted under Section 9.11 hereof and (2) Borrowers may make
payments as capital contributions in exchange for such Capital Stock upon its
issuance to the extent Borrowers are permitted to make such capital
contributions under Section 9.10 hereof), (C) the terms of such Capital Stock,
and the terms and conditions of the purchase and sale thereof, shall not include
any terms that include any limitation on the right of Borrowers to request or
receive Loans or Letter of Credit Accommodations or the right of Borrowers to
amend or modify any of the terms and conditions of this Agreement or any of the
other Financing Agreements or otherwise in any way relate to or affect the
arrangements of Borrowers with Lender or are more restrictive or burdensome to
Borrowers than the terms of any Capital Stock in effect on the date hereof, (D)
in the case of the issuance by any Restricted Subsidiary of Capital Stock,
promptly upon Lender's request (1) Timet or the Restricted Subsidiary receiving
such Capital Stock, as the case may be, shall execute and deliver to Lender in
form and substance satisfactory to Lender, a pledge and security agreement
granting to Lender a first pledge of and lien on all of the issued and
outstanding shares of Capital Stock of such Restricted Subsidiary, and (2) Timet
or the Restricted Subsidiary receiving such Capital Stock, as the case may be,
shall deliver the original stock certificates evidencing such shares of Capital
Stock (or such other evidence as may be issued in the case of a limited
liability company) together with stock powers with respect thereto duly executed
in blank (or the equivalent thereof in the case of a limited liability company),
(E) any proceeds payable to Timet or any Restricted Subsidiary in connection
with the issuance and sale of such Capital Stock shall be paid to Lender for
application to the Obligations (without any permanent reduction in the Maximum
Credit as a result of such application) or if no Obligations pursuant to or in
connection with any Loans are then outstanding, then to be held as cash
collateral for the Obligations arising pursuant to or in connection with any
Letter of Credit Accommodations on terms and conditions acceptable to Lender
(and if no Obligations arising pursuant to or in connection with any Loans or
Letter of Credit Accommodations are then outstanding, and no Event of Default
shall exist or have occurred, then upon Timet's request, such proceeds shall be
delivered to Timet, subject to applicable law or court order or order of any
other Governmental Authority), and (F) as of the date of such issuance and sale
and after giving effect thereto, no Event of Default or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default shall exist or have occurred;
(xii) the issuance of Capital Stock of Timet consisting of common stock
pursuant to any stock option plan or restricted stock plan of Timet for the
benefit of its employees, directors and consultants, PROVIDED, THAT, (A) in no
event shall Timet be required to issue, or shall Timet issue, Capital Stock
pursuant to such stock or restricted stock option if it would result in a Change
of Control or other Event of Default and (B) Borrowers shall give Lender prior
written notice of the terms of such stock option or restricted stock plan and
such other information with respect thereto as Lender may reasonably request;
(xiii) the sale by Timet of the Capital Stock of ValTimet, Timet ▇▇▇▇▇▇,
▇.▇. or MZI, LLC to the other holders of Capital Stock of such person pursuant
to the terms of agreements of Timet with such other HOLDERS AS IN EFFECT ON THE
DATE HEREOF, PROVIDED, THAT, all proceeds from such sale shall be paid to Lender
for application to the Obligations (without any permanent reduction in the
Maximum Credit as a result of such application);
(xiv) the transfer by Timet to Timet UK Limited in the ordinary course of
business consistent with current practices as of the date hereof of a
non-exclusive right to use certain Intellectual Property consisting of software
for maintaining books and records developed by Timet for use by Timet UK
Limited, PROVIDED, THAT, legal title to such Intellectual Property remains
vested in Timet;
(xv) transfers of assets or properties to the extent such transfers may be
permitted under Section 9.9, Section 9.10 or Section 9.11 hereof;
(c) wind up, liquidate or dissolve, except that THT or any other
Restricted Subsidiary may wind UP, LIQUIDATE AND DISSOLVE, PROVIDED, THAT, each
of the following conditions is satisfied, (i) the winding up, liquidation and
dissolution of such Restricted Subsidiary shall not violate any law or any order
or decree of any court or other Governmental Authority in any material respect
and shall not conflict with or result in the breach of, or constitute a default
under, any indenture, mortgage, deed of trust, or any other agreement or
instrument to which any Borrower or such Restricted Subsidiary is a party or may
be bound, (ii) such winding up, liquidation or dissolution shall be done in
accordance with the requirements of all applicable laws and regulations, (iii)
effective upon such winding up, liquidation or dissolution, all of the assets
and properties of THT or such Subsidiary (as the case may be) shall be duly and
validly transferred and assigned to Timet, free and clear of any liens,
restrictions or encumbrances other than the security interests and liens of
Lender or other security interests expressly permitted hereunder (and Lender
shall have received such evidence thereof as Lender may require), (iv) Lender
shall have received all documents and agreements of Borrower or such Restricted
Subsidiary as filed with any Governmental Authority or otherwise required to
effectuate such winding up, liquidation or dissolution, (v) no Borrower or
Guarantor shall assume any Indebtedness, obligations or liabilities as a result
of such winding up, liquidation or dissolution, or otherwise become liable in
respect of any obligations or liabilities of the Person which is winding up,
liquidating or dissolving, unless such Indebtedness is otherwise expressly
permitted hereunder or such obligations or liabilities are not prohibited under
this Agreement or any of the other Financing Agreements, (vi) Lender shall have
received not less than ten (10) Business Days prior written notice of the
intention of THT or such Restricted Subsidiary to wind up, liquidate or
dissolve, (vii) Lender shall have received such deeds, assignments or other
agreements as Lender may request to evidence and confirm the transfer of such
assets to Timet, (viii) to the extent the assets transferred are of THT or a
Guarantor, Timet shall acquire such assets subject to the security interests and
liens of Lender which shall continue in full force and effect as to the assets
transferred and upon Lender's request, Timet shall acknowledge the same in
writing pursuant to an agreement in form and substance satisfactory to Lender
and shall execute and deliver to Lender such agreements, documents and
instruments as Lender may require (including UCC and PPSA financing statements),
and (ix) as of the date of such winding up, liquidation or dissolution and after
giving effect thereto, no Event of Default or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred; or
(d) agree to do any of the foregoing (unless such agreement has
been consented to in writing by Lender or includes as a condition to the
effectiveness of such agreement that Lender's consent thereto be obtained).
9.8 ENCUMBRANCES9.8 ENCUMBRANCES. Each Borrower shall not, and shall
not permit any Restricted Subsidiary to, create, incur, assume or suffer to
exist any security interest, mortgage, pledge, lien, charge or OTHER ENCUMBRANCE
OF ANY NATURE WHATSOEVER ON ANY OF ITS ASSETS OR PROPERTIES, INCLUDING THE
COLLATERAL, EXCEPT: (a) the security interests and liens of Lender; (b)
Customary Permitted Liens; (c) purchase money security interests in Equipment
(including Capital Leases) and purchase money mortgages on Real Property to
secure Indebtedness permitted under Section 9.9(b) hereof; (d) liens arising
from (i) operating leases and the precautionary UCC or PPSA financing statement
filings or registrations in respect thereof and (ii) equipment or other
materials which are not owned by a Borrower located on the premises of such
Borrower (but not in connection with, or as part of, the financing thereof) from
time to time in the ordinary course of business and consistent with current
practices of Borrowers and the precautionary UCC or PPSA financing statement
filings in respect thereof; (e) leases or subleases of any portion of the Real
Property granted to others to the extent permitted under the Mortgages; (f) the
security interests and liens set forth on Schedule 8.4 hereto; and (g) liens on
assets of a Borrower or other Restricted Subsidiary (other than any Receivables,
Inventory or Equipment or other assets which if not available to Lender would
impair Lender=s rights or remedies as to any other Collateral), which liens
secure obligations of such Borrower or Restricted Subsidiary other than
Indebtedness, if any, which obligations in the aggregate do not exceed $500,000
(provided, that, Borrowers shall promptly provide notice of any such liens to
Lender).
9.9 INDEBTEDNESS9.9 INDEBTEDNESS. Each Borrower shall not, and shall
not permit any Restricted Subsidiary to, incur, create, assume, become or be
liable in any manner with respect to, or permit to exist, any Indebtedness, (and
including any guarantee or otherwise becoming responsible for (directly or
indirectly) the INDEBTEDNESS, OBLIGATIONS OR DIVIDENDS OF ANY OTHER PERSON),
EXCEPT:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) to the
extent secured by purchase money security interests in Equipment (including
Capital Leases) and purchase money mortgages on real estate not to exceed
$5,000,000 in the aggregate at any time outstanding so long as such security
interests and mortgages do not apply to any property of such Borrower or
Restricted Subsidiary other than the Equipment or real estate so acquired, and
the Indebtedness secured thereby does not exceed the cost of the Equipment or
real estate so acquired, as the case may be;
(c) Indebtedness of Borrowers under interest swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
exchange agreements and similar contractual agreements entered INTO FOR THE
PURPOSE OF PROTECTING A PERSON AGAINST FLUCTUATIONS IN INTEREST RATES; PROVIDED,
THAT, such arrangements are with banks or other financial institutions that have
combined capital and surplus and undivided profits of not less than $250,000,000
and are not for speculative purposes and such Indebtedness shall be unsecured;
(d) unsecured Indebtedness of Timet evidenced by or arising under
the Subordinated Debentures (AS IN EFFECT ON THE DATE HEREOF) AND THE BUCS
GUARANTEE (AS IN EFFECT ON THE DATE HEREOF); PROVIDED, THAT:
(i) the principal amount of such Indebtedness shall not exceed
$201,250,000, less the aggregate amount of all repayments, repurchases or
redemptions thereof, whether optional or mandatory, plus interest thereon at the
rate provided for in the Subordinated Debentures as in effect on the date
hereof,
(ii) such Indebtedness of Timet is subject to, and subordinate in right of
payment to, the right of Lender to receive the prior indefeasible payment and
satisfaction in full of all of the Obligations as set forth in the Subordinated
Debenture Indenture and the BUCS Guarantee,
(iii) Borrowers shall not, directly or indirectly, make any
payments in respect of such
INDEBTEDNESS, EXCEPT THAT:
(A) Timet may make regularly scheduled payments of interest when due in
accordance with the terms of the Subordinated Debentures as in effect on the
date hereof and after not less than one (1) Business Day prior written notice to
Lender, may otherwise pay any accrued and unpaid interest in respect of such
INDEBTEDNESS, PROVIDED, THAT, in each case as to any such payment, each of the
following conditions is satisfied as determined by Lender (except as Lender may
otherwise agree): (1) as of the date three (3) Business Days prior to the date
specified in Section 3.12 of the Subordinated Debenture Indenture, if any, by
which Timet must notify the Subordinated Debenture Trustee of the exercise by
Timet of its option to defer the next interest payment to become due and payable
(and if no such date is specified, then as of the date three (3) Business Days
prior to the date of the payment of such interest), the daily average of the
Excess Availability for the immediately preceding thirty (30) consecutive days
shall have been not less than $25,000,000, (2) as of the date three (3) Business
Days prior to the date specified in Section 3.12 of the Subordinated Debenture
Indenture, if any, by which Timet must notify the Subordinated Debenture Trustee
of the exercise by Timet of its option to defer the next interest payment to
become due and payable (or if no such date is specified, then as of the date
three (3) Business Days prior to the date of the payment of such interest) and
after giving effect to the amount to be paid in respect of such interest
payment, (aa) the Excess Availability shall be not less than $25,000,000, and
(bb) no Event of Default, or act, condition or event which with notice or
passage of time or both would constitute an Event of Default, shall exist or
have occurred and be continuing,
(B) Timet may from time to time purchase BUCS in the open market or
pursuant to PRIVATELY NEGOTIATED PURCHASES, PROVIDED, THAT, as to any such
purchase each of the following conditions is satisfied as determined by Lender
(except as Lender may otherwise agree): (1) as of the date three (3) Business
Days prior to the date of any payment in respect of such purchase, the daily
average of the Excess Availability for the immediately preceding thirty (30)
consecutive days shall have been not less than $25,000,000, (2) as of the date
three (3) Business Days prior to any such payment and after giving effect to the
amount to be paid in respect of such purchase, the Excess Availability shall be
not less than $25,000,000, (3) as of the date three (3) Business Days prior to
any such payment and after giving effect to the amount to be paid in respect of
such purchase, no Event of Default, or act, condition or event which with notice
or passage of time or both would constitute an Event of Default, shall exist or
have occurred and be continuing, and (4) Lender shall have received not less
than one (1) Business Day prior written notice of the intention of Timet to make
any such purchase, which notice shall specify the amount of BUCS to be
purchased, the price thereof and such other information with respect thereto as
Lender may request,
(C) in addition to purchases permitted under clause (iii)(B) above, Timet
may from TIME TO TIME PURCHASE BUCS IN THE OPEN MARKET OR PURSUANT TO PRIVATELY
NEGOTIATED PURCHASE, PROVIDED, THAT, the only consideration paid or payable by
Timet in respect of any such purchase is Capital Stock of Timet permitted to be
issued hereunder or Capital Stock constituting treasury stock of Timet,
(iv) Borrowers shall not, directly or indirectly, (A) amend, modify, alter
or change any ofthe material terms of such Indebtedness or any of the
Subordinated Debentures, the Subordinated Debenture Indenture, the BUCS
Guarantee and any related agreements, documents or instruments, as in effect on
the date HEREOF, EXCEPT THAT, Borrowers may, after prior written notice to
Lender, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such indebtedness other than pursuant to
payments thereof, or to reduce the interest rate or any fees in connection
therewith, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness (except for purchases permitted under clause (iii)(B) and clause
(iii)(C) above), or set aside or otherwise deposit or invest any sums for such
purpose, and
(v) Borrowers shall furnish to Lender all notices or demands in connection
with such Indebtedness either received by a Borrower or on its behalf promptly
after the receipt thereof, or sent by a Borrower or on its behalf concurrently
with the sending thereof, as the case may be;
(e) unsecured Indebtedness of any Borrower to the other Borrower
arising after the date hereof PURSUANT TO LOANS OR ADVANCES BY SUCH BORROWER TO
SUCH OTHER BORROWER, PROVIDED, THAT, as to any such loan or advance, (i) each
month Borrowers shall provide to Lender a report in form and substance
satisfactory to Lender of any change in the outstanding amount of such loans or
advances from the amount set forth in the most recent report thereof previously
provided to Lender under this clause (e) (and a report for the first month after
the date hereof of the outstanding amount of such loans), (ii) the Indebtedness
arising pursuant to any such loan or advance shall not be evidenced by a
promissory note or other instrument, unless all originals of such note or other
instruments are delivered to Lender to hold as part of the Collateral, with such
endorsement and/or assignment by the payee of such note or other instrument as
Lender may require, and (iii) as of the date of such loan and after giving
effect thereto, no Event of Default or act, condition or event which with notice
or passage of time or both would constitute an Event of Default shall exist or
have occurred;
(f) Indebtedness of any Restricted Subsidiary to Timet arising
after the date hereof pursuant to loans or advances by Timet to such Restricted
Subsidiary, the proceeds of which are used to pay actual and necessary
out-of-pocket administrative and operating expenses of such Restricted
Subsidiary in the ordinary course of business in connection with its business as
currently conducted as of the date hereof (including lease PAYMENTS, INSURANCE,
FRANCHISE AND OTHER TAXES AND SIMILAR ITEMS), PROVIDED, THAT, the aggregate
amount of all such loans and advances in any calendar year, together with the
aggregate amount of the capital contributions by Timet to all Restricted
Subsidiaries in such calendar year used for the payment of such items, shall not
exceed $5,000,000 in the aggregate;
(g) Indebtedness of any Restricted Subsidiary to Timet arising
after the date hereof pursuant to loans or advances by Timet to such Restricted
Subsidiary (other than loans and advances the proceeds of which are USED FOR THE
PAYMENT OF ITEMS DESCRIBED IN CLAUSE (F) ABOVE), PROVIDED, THAT, as to any such
loan or advance, each of the following conditions is satisfied as determined by
Lender (except as Lender may otherwise agree), (i) each month Borrowers shall
provide to Lender a report in form and substance satisfactory to Lender of any
change in the outstanding amounts of such loans or advances from the amount set
forth in the most recent report thereof previously provided to Lender under this
clause (g) (and Borrowers shall provide to Lender a report for the first month
after the date hereof of the outstanding amounts of such loans), (ii) the
Indebtedness arising pursuant to any such loan or advance shall not be evidenced
by a promissory note or other instrument, unless all originals of such notes or
other instruments are delivered to Lender to hold as part of the Collateral,
with such endorsement and/or assignment by the payee of such notes as Lender may
require, (iii) at any time, the aggregate amount of all such loans by Timet to
all Restricted Subsidiaries outstanding at such time, together with the
aggregate amount of all capital contributions by Timet to all Restricted
Subsidiaries in the then current calendar year (other than those used for the
payment of the items described in clause (f) above), shall not exceed
$5,000,000, (iv) as of the date of such loan or advance and after giving effect
thereto, the Excess Availability for each of the immediately preceding thirty
(30) consecutive days shall have been not less than $25,000,000, (v) as of the
date of such loan or advance and after giving effect thereto, the Excess
Availability shall be not less than $25,000,000 and (vi) as of the date of such
loan or advance and after giving effect thereto, no Event of Default or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default shall exist or have occurred;
(h) Indebtedness of any Borrower or Restricted Subsidiary to any
Unrestricted Subsidiary or Timet Affiliate arising after the date hereof
pursuant to loans or advances by such Unrestricted Subsidiary or TIMET AFFILIATE
TO SUCH BORROWER OR RESTRICTED SUBSIDIARY; PROVIDED, THAT, as to any such loan
or advance each of the following conditions is satisfied as determined by Lender
(except as Lender may otherwise agree), (i) if such Indebtedness is owing by any
Borrower or Guarantor, Lender shall have received, in form and substance
satisfactory to Lender, a subordination agreement duly authorized, executed and
delivered by the Unrestricted Subsidiary or Timet Affiliate making such loan or
advance and the Borrower or Guarantor receiving such loan or advance in the form
of Exhibit D hereto or as may otherwise be acceptable to Lender, providing that,
among other things, (A) the Indebtedness arising pursuant to such loan or
advance shall be subject to, and subordinate in right of payment to, the right
of Lender to receive the prior final payment and satisfaction in full of all of
the Obligations on terms and conditions acceptable to Lender, and (B) such
Borrower or Restricted Subsidiary, as the case may be, may only make regularly
scheduled or other mandatory payments of principal and interest in RESPECT OF
SUCH INDEBTEDNESS IN ACCORDANCE WITH THE TERMS THEREOF, PROVIDED, THAT, as to
any such payment each of the following conditions is satisfied as determined by
Lender (except as Lender may otherwise agree): (1) as of the date of such
payment and after giving effect thereto, the Excess Availability for each of the
immediately preceding thirty (30) consecutive days shall have been not less than
$25,000,000, (2) as of the date of such payment and after giving effect thereto,
the Excess Availability shall be not less than $25,000,000 and (3) as of the
date of such payment and after giving effect thereto, no Event of Default or
act, condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred, and (ii) each month
Borrowers shall provide to Lender a report in form and substance satisfactory to
Lender of any change in the outstanding amount of such loans or advances from
the amount set forth in the most recent report thereof previously provided to
Lender under this clause (h) (and Borrowers shall provide to Lender a report for
the first month after the date hereof of the outstanding amounts of such loans);
(i) Indebtedness of any Borrower or Restricted Subsidiary to any
other Restricted Subsidiary arising after the date hereof pursuant to loans or
advances by such Restricted Subsidiary to such Borrower or SUCH OTHER RESTRICTED
SUBSIDIARY; PROVIDED, THAT, as to any such loan or advance, (i) if such
Indebtedness is owing by a Borrower or Guarantor, Lender shall have received, in
form and substance satisfactory to Lender, a subordination agreement, duly
authorized, executed and delivered by the Restricted Subsidiary making such loan
or advance and the Borrower or Guarantor receiving such loan or advance in the
form of Exhibit D hereto or as may otherwise be acceptable to Lender, providing
that, among other things, (A) the Indebtedness arising pursuant to such loan or
advance shall be subject to, and subordinate in right of payment to, the right
of Lender to receive the prior final payment and satisfaction in full of all of
the Obligations on terms and conditions acceptable to Lender, and (B) such
Borrower or Restricted Subsidiary, as the case may be, may only make regularly
scheduled or other mandatory payments of principal and interest in respect of
such Indebtedness in accordance with the terms THEREOF, PROVIDED, THAT, as to
any such payment each of the following conditions is satisfied as determined by
Lender (except as Lender may otherwise agree): (1) as of the date of such
payment and after giving effect thereto, the Excess Availability for each of the
immediately preceding thirty (30) consecutive days shall have been not less than
$25,000,000, (2) as of the date of such payment and after giving effect thereto,
the Excess Availability shall be not less than $25,000,000 and (3) as of the
date of such payment and after giving effect thereto, no Event of Default or
act, condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred, (ii) if such
Indebtedness is owing to a Restricted Subsidiary that is a Guarantor, the
Indebtedness arising pursuant to such loan or advance shall not be evidenced by
a promissory note or other instrument, unless the originals of all notes or
other instruments are delivered to Lender to hold as part of the Collateral,
with such endorsement and/or assignment by the payee of such notes as Lender may
require, and (iii) each month Borrowers shall provide to Lender a report in form
and substance satisfactory to Lender of any change in the outstanding amount of
such loans or advances from the amount set forth in the most recent report
thereof previously provided to Lender under this clause (i) (and Borrowers shall
provide to Lender a report for the first month after the date hereof of the
outstanding amounts of such loans);
(j) Indebtedness of Subsidiaries of Timet arising pursuant to
guarantees by any Subsidiaries of Timet of the Obligations in favor of Lender;
(k) unsecured Indebtedness of Timet consisting of the contingent
reimbursement obligations of Timet to Bankers Trust Company in respect of the
Existing Letter of Credit (as in effect on the date hereof), together with
certain breakage fees related to borrowings by Timet prior to the date hereof
from the Existing Lenders under the arrangements of Timet with the Existing
Lenders which are being terminated as of the date hereof, and amounts owing to
the Existing Lenders for legal fees and expenses and the unsecured Indebtedness
of Timet consisting of the contingent reimbursement obligations of Timet to
Nevada State Bank in respect of letter of credit no. 199903 dated March 17, 1999
issued by the Nevada State Bank for the account of Timet payable to the STATE OF
NEVADA, DEPT. OF INSURANCE AS BENEFICIARY IN THE AMOUNT OF $1,289,000, PROVIDED,
THAT, (i) Borrowers shall not, directly or indirectly, amend, modify, alter or
change the terms of such Indebtedness, the Existing Letters of Credit, the
letter of credit issued by Nevada State Bank referred to above or any
reimbursement agreement or other agreement related thereto (except to the extent
required in connection with the replacement of the Existing Letter of Credit),
(ii) the State of Nevada, Dept. of Insurance has and shall have the right to
draw on the Existing Letter of Credit (or any Letter of Credit Accommodation
issued after the date hereof to replace the Existing Letter of Credit) for all
amounts owing to it, and (iii) Borrowers shall furnish to Lender all notices or
demands in connection with such Indebtedness, either received by any Borrower or
on its behalf, promptly after the receipt thereof, or sent by any Borrower or on
its behalf, concurrently with the sending thereof, as the case may be;
(l) unsecured Indebtedness of any Borrower or Restricted
Subsidiary arising after the date hereof to any person other than another
Borrower, or Restricted Subsidiary or any Unrestricted Subsidiary or TIMET
AFFILIATE, PROVIDED, THAT, as to each and all of such Indebtedness, each of the
following conditions is satisfied as determined by Lender (except as Lender may
otherwise agree): (i) Lender shall have received not less than ten (10) Business
Days prior written notice of the intention of such Borrower or Restricted
Subsidiary, as the case may be, to incur such Indebtedness, which notice shall
set forth in reasonable detail satisfactory to Lender the amount of such
Indebtedness, the person or persons to whom such Indebtedness will be owed, the
interest rate, the schedule of repayments and maturity date with respect thereto
and such other information as Lender may reasonably request with respect
thereto, (ii) Lender shall have received true, correct and complete copies of
all agreements, documents and instruments evidencing or otherwise related to
such Indebtedness, (iii) on and before the date of incurring such Indebtedness
and after giving effect thereto, no Event of Default, or act, condition or event
which with the passage of time or both would constitute an Event of Default,
shall exist or have occurred, (iv) such Indebtedness shall be incurred by such
Borrower or Restricted Subsidiary, as the case may be, at commercially
reasonable rates and terms in an arm's length transaction or with an Affiliate,
but if with an Affiliate at rates and on terms no less favorable to Borrowers
than Borrowers would obtain in a comparable arm's length transaction with a
person who is not an Affiliate, (v) such Indebtedness shall not at any time
include any terms that include any limitation on the right of Borrowers to
request or receive Loans or Letter of Credit Accommodations or the right of
Borrowers to amend, modify, supplement, replace, renew or extend any of the
terms or conditions of this Agreement or any of the other Financing Agreements
or otherwise in any way relate to or adversely affect the arrangements of
Borrowers with Lender and such Indebtedness shall not at any time include terms
and conditions which in any manner adversely affect Lender or any rights of
Lender as determined in good faith by Lender and confirmed by Lender to such
Borrower in writing, (vi) the aggregate amount of such Indebtedness shall not
exceed $5,000,000, (vii) such Borrower or Restricted Subsidiary, as the case may
be, shall not, directly or indirectly, (A) amend, modify, alter or change the
terms of such Indebtedness or any AGREEMENT, DOCUMENT OR INSTRUMENT RELATED
THERETO, EXCEPT, THAT, such Borrower or Restricted Subsidiary may, after prior
written notice to Lender, amend, modify, alter or change the terms thereof so as
to extend the maturity thereof, or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith or to make any provision thereof less restrictive or
burdensome to any Borrower or Restricted Subsidiary, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness (except pursuant to
regularly scheduled or other mandatory payments permitted herein), or set aside
or otherwise deposit or invest any sums for such purpose, and (viii) such
Borrower or Restricted Subsidiary shall furnish to Lender all notices or demands
in connection with such Indebtedness either received by such Borrower or
Restricted Subsidiary or on its behalf promptly after the receipt thereof, or
sent by such Borrower or Restricted Subsidiary or on its behalf concurrently
with the sending thereof, as the case may be;
(M) THE INDEBTEDNESS SET FORTH ON SCHEDULE 9.9 HERETO; PROVIDED,
THAT, (i) Borrowers may only make regularly scheduled or other mandatory
payments of principal and interest in respect of such Indebtedness in accordance
with the terms of the agreement or instrument evidencing or giving rise to such
Indebtedness as in EFFECT ON THE DATE HEREOF, PROVIDED, THAT, as to any
Indebtedness set forth on Schedule 9.9 of a Borrower owing to any Affiliate
(other than in the case of a Borrower, Indebtedness owing to the other Borrower
or to TFMC, or in the case of a Guarantor, Indebtedness owing to a Borrower or
to TFMC), such Borrower or Guarantor shall not make, or be required to make, any
payment in respect of such Indebtedness unless as to any such payment each of
the following conditions is satisfied as determined by Lender (except as Lender
may otherwise agree): (A) as of the date of such payment and after giving effect
thereto, the Excess Availability for each of the immediately preceding thirty
(30) consecutive days shall have been not less than $25,000,000, (B) as of the
date of such payment and after giving effect thereto, the Excess Availability
shall be not less than $25,000,000 and (C) as of the date of such payment and
after giving effect thereto, no Event of Default or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default shall exist or have occurred, (ii) Borrowers shall not, directly or
indirectly, (A) amend, modify, alter or change the terms of such Indebtedness or
ANY AGREEMENT, DOCUMENT OR INSTRUMENT RELATED THERETO AS IN EFFECT ON THE DATE
HEREOF EXCEPT, THAT, Borrowers may, after prior written notice to Lender, amend,
modify, alter or change the terms thereof so as to extend the maturity thereof,
or defer the timing of any payments in respect thereof, or to forgive or cancel
any portion of such Indebtedness (other than pursuant to payments thereof), or
to reduce the interest rate or any fees in connection therewith, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness, or set aside
or otherwise deposit or invest any sums for such purpose, and (iii) Borrowers
shall furnish to Lender all notices or demands in connection with such
Indebtedness either received by a Borrower or on its behalf, promptly after the
receipt thereof, or sent by a Borrower or on its behalf, concurrently with the
sending thereof, as the case may be; and
(n) any other Indebtedness which is not permitted under this
Section 9.9, to the extent such Indebtedness, if any, is permitted under Section
9.7, Section 9.10 or Section 9.11 hereof.
9.10 LOANS AND INVESTMENTS, ETC.9.10 LOANS AND INVESTMENTS, ETC. Each
Borrower shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, make any loans or advance money or property to any person, or
invest in any person (by capital contribution, dividend or otherwise) or
purchase or repurchase the Capital Stock or Indebtedness or all or a substantial
part of the assets or property of any PERSON, OR FORM OR ACQUIRE ANY
SUBSIDIARIES, OR AGREE TO DO ANY OF THE FOREGOING, EXCEPT:
(a) the extension of trade credit in the ordinary course of
business and the endorsement of instruments for collection or deposit in the
ordinary course of business;
(B) INVESTMENTS IN CASH OR CASH EQUIVALENTS, PROVIDED, THAT, (i)
no Loans are then outstanding, EXCEPT THAT, notwithstanding that any Loans are
outstanding, (A) Borrowers or any Restricted Subsidiary may from time to time in
the ordinary course of business consistent with the current practices of
Borrowers or such Restricted Subsidiary as of the date hereof have Cash
Equivalents consisting of overnight investments purchased with amounts received
by such Borrower in the Blocked Accounts (or in the case of a Restricted
Subsidiary, the applicable bank account), in each case to the extent required as
part of the cash management of Borrowers or such Restricted Subsidiary so long
as the aggregate amount of such Cash Equivalents does not exceed $1,000,000 at
any time, and (B) Borrowers or any Restricted Subsidiary may from time to time
in the ordinary course of business consistent with the current practices of
Borrowers or such Restricted Subsidiary as of the date hereof make deposits of
cash or other immediately available funds in operating demand deposit accounts
used for disbursements to the extent required to provide funds for amounts drawn
or anticipated to be drawn shortly on such accounts and such funds may be held
in Cash Equivalents consisting of overnight investments until so drawn (so long
as such funds and Cash Equivalents are not held more than five (5) Business Days
from the date of the initial deposit thereof and do not exceed $1,000,000 at any
time) and (C) TFMC may hold cash or Cash Equivalents purchased with amounts
received by TFMC constituting payment in respect of Indebtedness owing by
certain of its Affiliates to it, so long as such funds and Cash Equivalents are
not held for more than five (5) Business Days from the date of the initial
deposit thereof, and TFMC shall promptly use such funds only to make loans,
dividends, capital contributions or other payments to a Borrower, and (ii) as to
any of the foregoing, promptly upon Lender's request, Borrowers shall take such
actions as are deemed necessary by Lender to perfect the security interest of
Lender in such investments;
(c) the existing equity investments of Timet as of the date
hereof in its Subsidiaries and the TIMET AFFILIATES PROVIDED, THAT, the
investment of Timet in ValTimet or MZI, LLC may increase as the result of the
purchase by Timet of the Capital Stock of any such person which Timet is
required to purchase from the other holders of Capital Stock in any such person
pursuant to the terms of such agreements of Timet with such persons as in effect
on the date hereof;
(d) the formation or acquisition by Timet after the date hereof
of one or more Subsidiaries INCORPORATED OR ORGANIZED UNDER THE LAWS OF ANY
STATE OF THE UNITED STATES OF AMERICA; PROVIDED, THAT, promptly after the
aggregate amount of all loans, advances, capital contributions or other
investments or payments by Timet to, or for the acquisition of, such
Subsidiaries or otherwise in connection therewith exceeds $1,000,000 (except as
Lender may otherwise agree): (i) Timet shall cause such Subsidiaries to execute
and deliver to Lender, in form and substance satisfactory to Lender, (A) an
absolute and unconditional guarantee of payment of the Obligations, (B) a
security agreement granting to Lender a first security interest and lien (except
as otherwise consented to in writing by Lender) upon all of the assets of such
Subsidiaries, (C) related Uniform Commercial Code Financing Statements, and (D)
such other agreements, documents and instruments as Lender may require,
including, but not limited to, supplements and amendments hereto and other loan
agreements or instruments evidencing Indebtedness of such new Subsidiaries to
Lender, and (ii) Timet shall (A) execute and deliver to Lender, in form and
substance satisfactory to Lender, a pledge and security agreement granting to
Lender a first pledge of and lien on all of the issued and outstanding shares of
Capital Stock of such Subsidiaries, and (B) deliver the original stock
certificates evidencing such shares of Capital Stock (or such other evidence as
may be issued in the case of a limited liability company) together with stock
powers with respect thereto duly executed in blank (or the equivalent thereof in
the case of a limited liability company in which such interests are
certificated, or otherwise take such actions as Lender shall require with
respect to the perfection of Lender's security interests therein), (iii) the
aggregate amount of all loans, advances, capital contributions or other
investments or payments by Timet to, or for the acquisition of, such
Subsidiaries or otherwise in connection therewith, together with the aggregate
amount of all loans or investments made which are permitted under clause (e)
below, shall not in the aggregate exceed $10,000,000, (iv) in the case of loans
and advances, the original of any promissory note or other instrument evidencing
the Indebtedness arising pursuant to such loans and advances shall be delivered,
or caused to be delivered, to Lender, at Lender's option, together with an
appropriate endorsement and with full recourse to the payee thereof, (v) as of
the date of any such loan, advance, capital contribution or other investment or
payment by Timet to, or for the acquisition of, such Subsidiaries or otherwise
in connection therewith and after giving effect thereto, the Excess Availability
for each of the immediately preceding thirty (30) consecutive days shall have
been not less than $25,000,000, and as of the date of any such loan, advance,
capital contribution or other investment or payment by Timet to or for the
acquisition of such Subsidiaries or otherwise in connection therewith and after
giving effect thereto, the Excess Availability shall be not less than
$25,000,000 and (vi) Lender shall have received (A) not less than ten (10)
Business Days prior written notice of the formation or acquisition of such
Subsidiaries and such information with respect thereto as Lender may request,
and (B) true, correct and complete copies of all agreements, documents and
instruments relating thereto;
(e) loans of money or property (other than Collateral) by Timet
to any Person or investment by TIMET BY CAPITAL CONTRIBUTION IN ANY PERSON WHICH
IS NOT OTHERWISE PERMITTED ABOVE; PROVIDED, THAT, as to any such loans or
investments, each of the following conditions is satisfied as determined by
Lender (except as Lender may otherwise agree): (i) the Person receiving such
loan or investment is engaged in a business related, ancillary or complimentary
to the businesses of Borrowers as conducted on the date hereof, (ii) the total
amount of any such loans or investments, together with the aggregate amount of
all loans, advances, capital contributions or other investments or payments by
Timet to, or for the acquisition of, all Subsidiaries permitted to be formed
pursuant to clause (d) above or otherwise in connection therewith, shall not
exceed $10,000,000 in the aggregate, (iii) as of the date of any such loan or
investment and after giving effect thereto, no Event of Default, or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default, shall exist or have occurred, (iv) in the case of an
investment by capital contribution, at Lender's option, the original of any
stock or other instrument evidencing such capital contribution shall be promptly
delivered to Lender, together with such stock power, assignment or endorsement
as Lender may request, and promptly upon Lender=s request, Timet shall execute
and deliver to Lender in form and substance satisfactory to Lender, a pledge and
security agreement granting to Lender a first pledge of and lien on all of the
issued and outstanding shares of such stock, (v) in the case of loans of money
or property, the original of any promissory note or other instrument evidencing
the Indebtedness arising pursuant to such loans shall be delivered, or caused to
be delivered, to Lender, at Lender's option, together with an appropriate
endorsement and with full recourse to the payee thereof, (vi) as of the date of
any loan or investment and after giving effect thereto, the Excess Availability
for each of the immediately preceding thirty (30) consecutive days shall have
been not less than $25,000,000, and as of the date of any such loan or
investment and after giving effect thereto, the Excess Availability shall be not
less than $25,000,000 and (vii) Lender shall have received (A) not less than ten
(10) Business Days prior written notice thereof setting forth in reasonable
detail the nature and terms thereof, (B) true, correct and complete copies of
all agreements, documents and instruments relating thereto and (C) such other
information with respect thereto as Lender may request;
(f) stock or obligations issued to any Borrower or Restricted
Subsidiary by any Person (or the representative of such Person) in respect of
Indebtedness of such Person owing to any Borrower or Restricted Subsidiary in
connection with the insolvency, bankruptcy, receivership or reorganization of
such Person or a COMPOSITION OR READJUSTMENT OF THE DEBTS OF SUCH PERSON;
PROVIDED, THAT, prior to an Event of Default, if the amount or value thereof is
greater than $100,000, or the amount or value of all of such stock and
instruments in the aggregate is greater than $250,000, and after an Event of
Default, regardless of the amount or value thereof, the original of any such
stock or instrument evidencing such obligations to a Borrower, Guarantor or any
Restricted Subsidiary shall be promptly delivered to Lender, upon Lender's
request, together with such stock power, assignment or endorsement by such
Borrower or as Lender may request;
(g) obligations of account debtors to any Borrower or Restricted
Subsidiary arising from Accounts which are past due evidenced by a promissory
note made by such account debtor payable to such Borrower OR RESTRICTED
SUBSIDIARY, AS THE CASE MAY BE; PROVIDED, THAT, prior to an Event of Default, if
the amount of such note is greater than $100,000, or the amount of all of such
notes in the aggregate is greater than $250,000 and after an Event of Default,
regardless of the amount thereof, promptly upon the receipt of the original of
any such promissory note by a Borrower to a Borrower, Guarantor or any
Subsidiary incorporated in the United States of America, such promissory note
shall be endorsed to the order of Lender by such Borrower to a Borrower,
Guarantor or any Subsidiary incorporated in the United States of America and
promptly delivered to Lender as so endorsed;
(h) capital contributions by Timet to TIMET Colorado Corporation
the proceeds of which are used by TIMET Colorado Corporation to make a
substantially contemporaneous loan to officers or former officers of Timet the
proceeds of which are used by such officers or former officers solely for the
purpose of purchasing COMMON STOCK OF TIMET OR BUCS; PROVIDED, THAT, except as
Lender may otherwise agree, (i) the aggregate amount of such loans outstanding
at any time shall not exceed $5,000,000, except that Timet shall not make any
such loans that would cause the outstanding amount thereof to exceed $2,000,000
in the aggregate unless as of the date of any such loan and after giving effect
thereto, the Excess Availability for each of the immediately preceding thirty
(30) consecutive days shall have been not less than $25,000,000 and as of the
date of any such loan and after giving effect thereto, the Excess Availability
shall be not less than $25,000,000 and (ii) any repayment of such loans from or
on behalf of such officers or former officers received by TIMET Colorado
Corporation shall be promptly paid as dividends to Timet;
(i) loans and advances by any Borrower or any Restricted
Subsidiary to employees of such Borrower or Restricted Subsidiary not to exceed
the principal amount of $1,000,000 in the aggregate at any time outstanding for:
(i) reasonably and necessary work-related travel or other ordinary business
expenses to be incurred by such employee in connection with their work for such
Borrower or Restricted Subsidiary and (ii) reasonable and necessary relocation
expenses of such employees (including home mortgage financing for relocated
employees);
(j) loans or advances of money or property to any person, or
investments in any person (by capital contribution, dividend or otherwise) or
the purchase or repurchase of Capital Stock or Indebtedness of any person, in
each case to the extent it may be permitted under Section 9.7, Section 9.9 or
Section 9.11 hereof;
(K) CAPITAL CONTRIBUTIONS BY TIMET TO THT AFTER THE DATE HEREOF,
PROVIDED, THAT, as of the date of such capital contribution and after giving
effect thereto, no Event of Default or act, condition or event which with notice
or passage of time or both would constitute an Event of Default shall exist or
have occurred;
(l) capital contributions after the date hereof by Timet to any
Restricted Subsidiary, the proceeds of which are used to pay actual and
necessary out-of-pocket administrative and operating expenses of such Restricted
Subsidiary in the ordinary course of business in connection with its business as
currently conducted as of the date hereof (including lease payments, insurance,
franchise and other taxes and similar ITEMS), PROVIDED, THAT, except as Lender
may otherwise agree, at any time, the aggregate amount of all such capital
contributions by Timet to all Restricted Subsidiaries in the then current year,
together with the aggregate amount of loans or advances by Timet to all
Restricted Subsidiaries outstanding at such time used for the payment of such
items, shall not exceed $5,000,000;
(m) capital contributions after the date hereof by Timet to any
Restricted Subsidiary (other than capital contributions the proceeds of which
are used for the payment of items described in clause (l) ABOVE), PROVIDED,
THAT, except as Lender may otherwise agree, (i) at any time, the aggregate
amount of all such capital contributions by Timet to all Restricted Subsidiaries
in the then current year, together with the aggregate amount of loans or
advances by Timet to all Restricted Subsidiaries outstanding at such time (other
than those used for the payment of the items described in clause (1) above),
shall not exceed $5,000,000, (ii) as of the date of such capital contribution
and after giving effect thereto, the Excess Availability for each of the
immediately preceding thirty (30) consecutive days shall have been not less than
$25,000,000, (iii) as of the date of such capital contribution and after giving
effect thereto, the Excess Availability shall have been not less than
$25,000,000, and (iv) as of the date of such capital contribution and after
giving effect thereto, no Event of Default or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred;
(N) THE LOANS, ADVANCES AND INVESTMENTS SET FORTH ON SCHEDULE
9.10 HERETO; PROVIDED, THAT, as to such loans, advances and investments, (i)
Borrowers and Restricted Subsidiaries shall not, directly or indirectly, (A)
amend, modify, alter or change in any material respect the terms of such loans,
advances and investments or any agreement, document or instrument related
thereto and (ii) Borrowers and Restricted Subsidiaries shall furnish to Lender
all notices or demands in connection with such loans, advances and investments
either received by a Borrower or Restricted Subsidiary or on its behalf,
promptly after the receipt thereof, or sent by a Borrower or Restricted
Subsidiary or on its behalf, concurrently with the sending thereof, as the case
may be.
9.11 DIVIDENDS AND REDEMPTIONS9.11DIVIDENDS AND REDEMPTIONS. Each
Borrower shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, declare or pay any dividends on account of any shares of class of
Capital Stock of such Borrower or Restricted Subsidiary now or hereafter
outstanding, or set aside or otherwise deposit or invest any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of
any class of Capital Stock (or set aside or otherwise deposit or invest any sums
for such purpose) for any consideration other than common stock or apply or set
apart any sum, or make any other distribution (by reduction of capital or
otherwise) in respect of any such shares or agree to do any of the FOREGOING,
EXCEPT, THAT:
(a) any Restricted Subsidiary of a Borrower may pay dividends to
such Borrower or another Restricted Subsidiary and any Restricted Subsidiary may
redeem or repurchase any of its Capital Stock by making payments to a Borrower
or if such Restricted Subsidiary is a Subsidiary of a Guarantor, by making
payments to such Guarantor;
(B) THT MAY PAY DIVIDENDS TO TIMET, PROVIDED, THAT, as to any
such dividend, (i) such payment shall be made with funds legally available
therefor, (ii) such dividend shall not violate any law or regulation or the
terms of any indenture, agreement or undertaking to which a Borrower is a party
or by which a Borrower or its property are bound, and (iii) as of the date of
such dividend and after giving effect thereto, no Event of Default or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default shall exist or have occurred;
(c) Timet may make payments with respect to stock option plans
(including restricted stock plans) and stock appreciation rights programs of
Timet and repurchase options for common stock (and including restricted stock)
upon the termination of employment, death, permanent disability or retirement of
its employees, MANAGEMENT OR CONSULTANTS, PROVIDED, THAT, as to any such
repurchase, each of the following conditions is satisfied: (i) as of the date of
the payment for such repurchase and after giving effect thereto, no Event of
Default shall exist or have occurred and be continuing, (ii) such repurchase
shall be paid with funds legally available therefor, (iii) such repurchase shall
not violate any law or regulation or the terms of any indenture, agreement or
undertaking to which Timet is a party or by which Timet or its property are
bound, and (iv) the aggregate amount of all payments for such repurchases in any
fiscal year shall not exceed $250,000;
(d) Timet may purchase fractional interests in shares of its
Capital Stock pursuant to the conversion or exchange provisions of such Capital
Stock or the security being converted or exchanged, in an amount not to exceed
$200,000 in any fiscal year of Timet;
(e) Timet may exchange any class or series of its Capital Stock
for another class or series of Capital Stock of Timet (other than (i) stock
which is redeemable at the option of the holder thereof or which provides for
any mandatory redemption or similar terms by Timet or (ii) stock which may be
exchanged or converted into either Indebtedness or into other stock which is
redeemable at the option of the holder thereof or which PROVIDES FOR ANY
MANDATORY REDEMPTION), PROVIDED, THAT, Timet is permitted to issue such other
class or series of Capital Stock pursuant to Section 9.7 hereof;
(f) Timet may exchange Capital Stock for BUCS to the extent
permitted in Section 9.9(d) hereof; and
(g) the Trust may make distributions in respect of the BUCS to
the extent permitted or required under the Amended and Restated Declaration of
Trust, dated as of November 20, 1996, for the Trust as in effect on the date
hereof.
9.12 TRANSACTIONS WITH AFFILIATES9.12 TRANSACTIONS WITH AFFILIATES.
Each Borrower shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly,
(a) purchase, acquire or lease any property from, or sell,
transfer or lease any property to, any officer, director, agent or other
Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of such Borrower's or Restricted Subsidiary's business and either:
(i) upon fair and reasonable terms no less favorable to such Borrower or
Restricted Subsidiary than such Borrower or Restricted Subsidiary would obtain
in a comparable arm's length transaction with a person that is not an Affiliate
or (ii) upon fair and reasonable terms consistent with the current practices of
such Borrower or Restricted Subsidiary as of the date hereof or (iii) in
accordance with the terms of the agreements listed on Schedule 9.12 hereto, as
such agreements are in effect on the date hereof, or on substantially consistent
terms and in any event, consistent or substantially consistent with the current
practices of the parties thereto as of the date hereof (provided, that, LENDER
SHALL HAVE RECEIVED TRUE, CORRECT AND COMPLETE COPIES OF SUCH AGREEMENTS),
PROVIDED, THAT, this Section 9.12(a) shall not apply to any transaction between
Borrowers and Restricted Subsidiaries otherwise permitted under any provision of
this Agreement other than sales of Inventory by any Borrower to a Restricted
Subsidiary, or
(b) make any payments of management, consulting or other fees for
management or similar services, or of any Indebtedness owing to any officer,
employee, shareholder, director or other Affiliate of Borrowers except (i)
compensation, directors' fees, tax equalization payments, housing allowances,
relocation expenses, expense reimbursement payments, severance payments and
similar payments to officers, employees and directors in respect of services
rendered to Borrowers, or their respective Subsidiaries in the ordinary course
of business consistent with the practices of Borrowers and such Subsidiaries as
of the date hereof, (ii) a Borrower or Restricted Subsidiary may repay the
Indebtedness of such Borrower or Restricted Subsidiary to the other Borrower or
Restricted Subsidiary arising pursuant to loans made by such other Borrower or
Restricted Subsidiary permitted under Section 9.8 hereof to the extent permitted
thereunder, (iii) any Subsidiary of Timet may make payments to Timet for
information technology, telecommunication services, legal, accounting, insurance
(including premiums for such insurance), marketing, payroll and similar types of
services paid for by Timet or as the same may be attributable to any such
Subsidiary, (iv) any Subsidiary of Timet may make payment to Timet pursuant to
the tax sharing arrangements among Timet and its Subsidiaries, (v) payment of
management, consulting or other fees for management or similar services in
accordance with the agreements listed on Schedule 9.12 hereto, as such
agreements are in effect on the date hereof, or on substantially consistent
terms and in any event, consistent or substantially consistent with the current
practices of the parties thereto as of the date hereof, and (vi) the payment of
fees by Borrowers and the Restricted Subsidiaries to TFMC in connection with the
LOANS PROVIDED BY TFMC TO ANY BORROWER OR RESTRICTED SUBSIDIARY, PROVIDED, THAT,
any fees so paid to TFMC are promptly used to make loans, dividends, capital
contributions or other payments to a Borrower.
9.13 ADDITIONAL BANK ACCOUNTS9.13 ADDITIONAL BANK ACCOUNTS. Each
Borrower shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, open, establish or maintain any deposit account, investment
account or any other account with any bank or other financial institution, other
than the Blocked Accounts and the accounts set forth in Schedule 8.10 hereto,
except: (a) as to any new or additional Blocked Accounts and other such new or
additional accounts which contain any Collateral or proceeds thereof, with the
prior written consent of Lender and subject to such conditions thereto as Lender
may establish and (b) as to any accounts used by such Borrower or Restricted
Subsidiary to make payments of payroll, taxes or other obligations to third
parties, after prior written notice to Lender.
9.14 COMPLIANCE WITH ERISA9.14 COMPLIANCE WITH ERISA. Each Borrower
shall and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other Federal and State law; (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; (c) not
terminate any of such Plans so as to incur any liability to the Pension Benefit
Guaranty Corporation; (d) not allow or suffer to exist any prohibited
transaction involving any of such Plans or any trust created thereunder which
reasonably could subject such Borrower or such ERISA Affiliate to a material tax
or penalty or other material liability on prohibited transactions imposed under
Section 4975 of the Code or ERISA; (e) make all required contributions to any
Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of the
Code or the terms of such Plan; (f) not allow or suffer to exist any accumulated
funding deficiency, whether or not waived, with respect to any such Plan; or (g)
allow or suffer to exist any occurrence of a reportable event or any other event
or condition which presents a material risk of termination by the Pension
Benefit Guaranty Corporation of any such Plan that is a single employer plan,
which termination could result in any liability to the Pension Benefit Guaranty
Corporation in excess of $250,000.
9.15 END OF FISCAL YEARS; FISCAL QUARTERS9.15 END OF FISCAL YEARS;
FISCAL QUARTERS. Each Borrower shall, for financial reporting purposes, cause
its, and each of its Subsidiaries= (a) fiscal years to end on December 31 of
each year and (b) fiscal quarters to end on or about March 31, June 30,
September 30 and December 31 of each year.
9.16 CHANGE IN BUSINESS9.16 CHANGE IN BUSINESS.
(a) Timet and the Restricted Subsidiaries shall not engage in any
business other than the businesses of Timet and its Restricted Subsidiaries on
the date hereof and any businesses reasonably related, ancillary or
complimentary to the businesses in which Timet and its Restricted Subsidiaries
are engaged on the date hereof.
(b) TIMET Real Estate Corporation shall not engage in any
business or commercial activity or own or hold any material assets or properties
other than the undeveloped vacant land consisting of approximately 54.5603 acres
located in ▇▇▇▇▇▇▇ County, Tennessee, which it owns as of the date hereof and
such activities and assets as are incidental to the ownership of such land.
TIMET Colorado Corporation shall not engage in any business or commercial
activity or own or hold any assets or properties, other than the making of loans
to employees or former employees of Timet the proceeds of which are used solely
for the purchase by such employee or former employee of Capital Stock of Timet
or BUCS consistent with the current policies and practices of TIMET Colorado
Corporation as of the date hereof (and solely to the extent permitted herein)
and such activities as are incidental to the making of such loans. TMCA
International, Inc. shall not engage in any business or commercial activity or
own or hold any assets or properties other than the Capital Stock of Loterios
SpA that it owns as of the date hereof, which upon the liquidation or
dissolution of TMCA International, Inc. (to the extent permitted hereunder)
shall be transferred and assigned to Timet and promptly thereafter transferred
and assigned to Timet UK Limited or one of its Subsidiaries. TFMC shall not
engage in any business or commercial activity or own or hold any assets or
properties other than the SMC Stock and the Indebtedness owing by certain
Subsidiaries of Timet to TFMC as set forth on Schedule 9.9 hereof or arising
after the date hereof (to the extent such INDEBTEDNESS IS PERMITTED HEREUNDER),
PROVIDED, THAT, any funds received by TFMC in respect of such Indebtedness shall
be promptly used by TFMC to make loans, dividends, capital contributions or
other payments to a Borrower (in each case to the extent permitted hereunder).
Timet Millbury Corporation shall not engage in any business or commercial
activity or own or hold any material assets or properties other than the Capital
Stock of Timet Castings Corporation and certain existing owned equipment located
in Millbury, Massachusetts as of the date hereof.
9.17 LIMITATION OF RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES9.17
LIMITATION OF RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES. Each Borrower
shall not, directly, or indirectly, create or otherwise cause or suffer to exist
any consensual encumbrance or restriction which prohibits or limits the ability
of any Restricted Subsidiary of such Borrower to (a) pay dividends or make other
distributions or pay any Indebtedness owed to such Borrower or any Restricted
Subsidiary of such Borrower; (b) make loans or advances to such Borrower or any
Restricted Subsidiary of such Borrower, or (c) transfer any of its properties or
assets to such Borrower or any Restricted Subsidiary of such Borrower (other
than any restrictions contained in security agreements related to secured
Indebtedness permitted under this Agreement limiting the transfer of the
collateral subject to such security agreements), other than encumbrances and
restrictions arising under (i) applicable law, (ii) this Agreement, (iii)
customary provisions restricting transfer or assignment of a contract, or
subletting or assignment of any lease governing a leasehold interest of such
Borrower or Restricted Subsidiary, (iv) customary restrictions on dispositions
of real property interests found in reciprocal easement agreements of such
Borrower or its Restricted Subsidiary, (v) any agreement relating to permitted
Indebtedness incurred by a Restricted Subsidiary of such Borrower prior to the
date on which such Restricted Subsidiary was acquired by such Borrower and
outstanding on such acquisition date, and (vi) the extension or continuation of
contractual obligations in EXISTENCE ON THE DATE HEREOF; PROVIDED, THAT, any
such encumbrances or restrictions contained in such extension or continuation
are no less favorable to Lender than those encumbrances and restrictions under
or pursuant to the contractual obligations so extended or continued.
9.18 ADJUSTED NET WORTH9.18 ADJUSTED NET WORTH. At any time on and
after Excess Availability (which for purposes of this Section 9.18 shall be
determined without regard to the Maximum Credit) is equal to or less than
$35,000,000, Timet shall, at all times, maintain Adjusted Net Worth of not less
than $347,000,000.
9.19 AFTER ACQUIRED REAL PROPERTY9.19 AFTER ACQUIRED REAL PROPERTY. If
a Borrower hereafter acquires any Real Property, fixtures or any other property
that is of the kind or nature described in the Mortgages and such Real Property,
fixtures or other property at any one location has a fair market value in an
amount equal to or greater than $1,000,000 (or if an Event of Default, or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default exists, then regardless of the fair market value of such
assets), without limiting any other rights of Lender, or duties or obligations
of such Borrower, upon Lender's request, such Borrower shall execute and deliver
to Lender a mortgage, deed of trust or deed to secure debt, as Lender may
determine, in form and substance substantially similar to the Mortgages and as
to any provisions relating to specific state laws satisfactory to Lender and in
form appropriate for recording in the real estate records of the jurisdiction in
which such Real Property or other property is located granting to Lender a first
and only lien and mortgage on and security interest in such Real Property,
fixtures or other property (except as such Borrower would otherwise be permitted
to incur hereunder or under the Mortgages or as otherwise consented to in
writing by Lender) and such other agreements, documents and instruments as
Lender may require in connection therewith.
9.20 COSTS AND EXPENSES9.20 COSTS AND EXPENSES. Borrowers shall pay to
Lender on demand all costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) costs and expenses and fees for insurance premiums, environmental audits,
surveys, assessments, engineering reports and inspections, appraisal fees and
search fees, costs and expenses of remitting loan proceeds, collecting checks
and other items of payment, and establishing and maintaining the Blocked
Accounts, together with Lender's customary charges and fees with respect
thereto; (c) charges, fees or expenses charged by any bank or issuer in
connection with the Letter of Credit Accommodations; (d) costs and expenses of
preserving and protecting the Collateral; (e) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Lender, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Lender arising out of the transactions contemplated hereby and thereby
(including preparations for and consultations concerning any such matters); (f)
all out-of-pocket expenses and costs heretofore and from time to time hereafter
incurred by Lender during the course of periodic field examinations of the
Collateral and a Borrower's operations, plus a per diem charge at the rate of
$650 per person per day for Lender's examiners in the field and office; and (g)
the fees and disbursements of counsel (including legal assistants) to Lender in
connection with any of the foregoing.
9.21 FURTHER ASSURANCES9.21 FURTHER ASSURANCES. At the request of
Lender at any time and from time to time, each Borrower shall, at its expense,
duly execute and deliver, or cause to be duly executed and delivered, such
further agreements, documents and instruments, and do or cause to be done such
further acts as may be necessary or proper to evidence, perfect, maintain and
enforce the security interests and the priority thereof in the Collateral and to
otherwise effectuate the provisions or purposes of this Agreement or any of the
other Financing Agreements. Lender may at any time and from time to time request
a certificate from an officer of a Borrower representing that all conditions
precedent to the making of Loans and providing Letter of Credit Accommodations
contained herein are satisfied. In the event of such request by Lender, Lender
may, at its option, cease to make any further Loans or provide any further
Letter of Credit Accommodations until Lender has received such certificate and,
in addition, Lender has determined that such conditions are satisfied. Where
permitted by law, each Borrower hereby authorizes Lender to execute and file one
or more UCC financing statements signed only by Lender.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 EVENTS OF DEFAULT10.1 EVENTS OF DEFAULT. The occurrence or
existence of any one or more of the following events are referred to herein
individually as an "Event of Default", and collectively as "Events of Default":
(a) (i) any Borrower fails to pay any of the Obligations within
three (3) days after the due date thereof or (ii) any Borrower or Obligor fails
to perform any of the covenants contained in Sections 9.3, 9.4, 9.6, 9.14, 9.15,
9.16, 9.17, 9.19 or 9.20 of this Agreement and such failure shall continue for
ten (10) days; PROVIDED, THAT, such ten (10) day period shall not apply in the
case of: (A) any failure to observe any such covenant which is not capable of
being cured at all or within such ten (10) day period or which has been the
subject of a prior failure within a six (6) month period or (B) an intentional
breach by any Borrower or Obligor of any such covenant or (iii) any Borrower or
Obligor fails to perform, or otherwise breaches or violates, any of the terms,
covenants, conditions or provisions contained in this Agreement or any of the
other Financing Agreements (or any other default under any of the other
Financing Agreements shall occur), other than those DESCRIBED IN SECTIONS
10.1(A)(I) AND 10.1(A)(II) ABOVE, PROVIDED, THAT, without limiting the
obligation of Borrowers to notify Lender of any such event under Section 9.6(b)
hereof, any such failure, breach or violation described in Section 10.1(a)(ii)
or this Section 10.1(a)(iii) shall only constitute an Event of Default at
Lender's option upon notice at any time by Lender to Timet that Lender deems
such failure, breach or violation to constitute an Event of Default;
(b) any representation, warranty or statement of fact made by a
Borrower to Lender in this Agreement, the other Financing Agreements or any
other agreement, schedule, confirmatory assignment or otherwise shall when made
or deemed made be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to perform any of
the terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Lender;
(d) any judgment for the payment of money is rendered against a
Borrower or any Obligor in excess of $2,500,000 in any one case or in excess of
$5,000,000 in the aggregate and shall remain undischarged or unvacated for a
period in excess of thirty (30) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against a Borrower
or any Obligor or any of their assets;
(e) any Borrower or Obligor dissolves or suspends or discontinues
doing business (except to the extent permitted under this Agreement);
(f) any Borrower or Obligor becomes insolvent (however defined or
evidenced), makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against any Borrower or Obligor or all or any part of its
properties and such petition or application is not dismissed within forty-five
(45) days after the date of its filing or any Borrower or Obligor shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower or Obligor or for all or any part of its
property;
(i) any default by any Borrower or Obligor under any agreement,
document or instrument relating to any Indebtedness for borrowed money owing to
any person other than Lender (including the Subordinated Debenture Agreements),
or any Capital Leases, contingent Indebtedness in connection with any guarantee
(including the BUCS Guarantee), letter of credit, indemnity or similar type of
instrument in favor of any person other than Lender, in any case in an amount in
excess of $5,000,000;
(j) the failure of Timet UK Limited to make any payment under the
financing arrangements of Timet UK Limited with Lloyds TSB Bank plc when due or
any other default under the financing arrangements of Timet UK Limited with
Lloyds TSB Bank plc which results in any notice thereof by or on behalf of
Lloyds TSB Bank plc to Timet UK Limited or any agent or representative of Timet
UK Limited or the acceleration of the Indebtedness or other obligations of Timet
UK Limited under such financing arrangements;
(k) an ERISA Event shall occur which results in or could
reasonably be expected to result in liability of a Borrower in an aggregate
amount in excess of $2,500,000;
(l) any Change of Control;
(m) the indictment by any Governmental Authority, or as Lender
may reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of a Borrower of which a Borrower or Lender receives
notice, in either case, as to which there is a reasonable possibility of an
adverse determination, in the good faith determination of Lender, under any
criminal statute, or commencement or threatened commencement of criminal or
civil proceedings by any Governmental Authority against such Borrower, pursuant
to which statute or proceedings the penalties or remedies sought or available
include forfeiture of (i) any of the Collateral or (ii) any other property of
Borrower which is necessary or material to the conduct of its business; or
(n) there shall be a material adverse change in the business,
assets or financial condition of Timet and its Restricted Subsidiaries taken as
a whole after the date hereof.
10.2 REMEDIES.2 REMEDIES.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by any Borrower or Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by a Borrower of this
Agreement or any of the other Financing Agreements. Lender may, at any time or
times, proceed directly against any Borrower or Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Lender may, in its discretion
and without limitation, (i) accelerate the payment of all OBLIGATIONS AND DEMAND
IMMEDIATE PAYMENT THEREOF TO LENDER (PROVIDED, THAT, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations
shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrowers, at Borrowers' expense, to
assemble and make available to Lender any part or all of the Collateral at any
place and time designated by Lender, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including entering into contracts
with respect thereto, public or private sales at any exchange, broker's board,
at any office of Lender or elsewhere) at such prices or terms as Lender may deem
reasonable, for cash, upon credit or for future delivery, with the Lender having
the right to purchase the whole or any part of the Collateral at any such public
sale, all of the foregoing being free from any right or equity of redemption of
a Borrower, which right or equity of redemption is hereby expressly waived and
released by a Borrower and/or (vii) terminate this Agreement. If any of the
Collateral is sold or leased by Lender upon credit terms or for future delivery,
the Obligations shall not be reduced as a result thereof until payment therefor
is finally collected by Lender. If notice of disposition of Collateral is
required by law, ten (10) days prior notice by Lender to a Borrower designating
the time and place of any public sale or the time after which any private sale
or other intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and each Borrower waives any other notice. In the
event Lender institutes an action to recover any Collateral or seeks recovery of
any Collateral by way of prejudgment remedy, each Borrower waives the posting of
any bond which might otherwise be required.
(c) For the purpose of enabling Lender to exercise the rights and
remedies hereunder, each Borrower hereby grants to Lender, to the extent
assignable, an irrevocable, non-exclusive license (exercisable without payment
of royalty or other compensation to Borrowers) to use, assign, license or
sublicense any of the trademarks, service-marks, trade names, business names,
trade styles, designs, logos and other source of business identifiers and other
Intellectual Property and general intangibles now owned or hereafter acquired by
such Borrower, wherever the same maybe located, including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof.
(d) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Each Borrower shall remain liable
to Lender for the payment of any deficiency with interest at the highest rate
provided for herein and all costs and expenses of collection or enforcement,
including attorneys' fees and legal expenses.
(e) Without limiting the foregoing, upon the occurrence of an
Event of Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice, (i)
cease making Loans or arranging for Letter of Credit Accommodations or reduce
the lending formulas or amounts of Loans and Letter of Credit Accommodations
available to a Borrower and/or (ii) terminate any provision of this Agreement
providing for any future Loans or Letter of Credit Accommodations to be made by
Lender to a Borrower.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL
WAIVER.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL WAIVER.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of Texas (without
giving effect to principles of conflicts of law), except as otherwise expressly
provided in the Mortgages.
(b) Borrower and Lender irrevocably consent and submit to the
non-exclusive jurisdiction of the District Court of the State of Texas and the
United States District Court for the Northern District of Texas and WAIVE ANY
OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Lender shall have the
right to bring any action or proceeding against a Borrower or its property in
the courts of any other jurisdiction which Lender deems necessary or appropriate
in order to realize on the Collateral or to otherwise enforce its rights against
a Borrower or its property).
(c) Each Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails, or,
at Lender's option, by service upon a Borrower in any other manner provided
under the rules of any such courts. Within thirty (30) days after such service,
such Borrower shall appear in answer to such process, failing which Borrower
shall be deemed in default and judgment may be entered by Lender against such
Borrower for the amount of the claim and other relief requested.
(d) BORROWERS AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS AND
LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT
BORROWERS OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to a Borrower (whether in
tort, contract, equity or otherwise) for losses suffered by such Borrower in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Lender, that the losses were
the result of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Lender shall be entitled to the benefit of
the rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement.
11.2 WAIVER OF NOTICES11.2 WAIVER OF NOTICES. Each Borrower hereby
expressly waives demand, presentment, protest and notice of protest and notice
of dishonor with respect to any and all instruments and commercial paper,
included in or evidencing any of the Obligations or the Collateral, and any and
all other demands and notices of any kind or nature whatsoever with respect to
the Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on a Borrower which Lender may elect
to give shall entitle such Borrower to any other or further notice or demand in
the same, similar or other circumstances.
11.3 AMENDMENTS AND WAIVERS.3 AMENDMENTS AND WAIVERS. Neither this
Agreement nor any provision hereof shall be amended, modified, waived or
discharged orally or by course of conduct, but only by a written agreement
signed by an authorized officer of Lender, and as to amendments, as also signed
by an authorized officer of a Borrower. Lender shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any of its
rights, powers and/or remedies unless such waiver shall be in writing and signed
by an authorized officer of Lender. Any such waiver shall be enforceable only to
the extent specifically set forth therein. A waiver by Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Lender would otherwise have
on any future occasion, whether similar in kind or otherwise.
11.4 WAIVER OF COUNTERCLAIMS.4 WAIVER OF COUNTERCLAIMS. Each Borrower
waives all rights to interpose any claims, deductions, setoffs or counterclaims
of any nature (other then compulsory counterclaims) in any action or proceeding
with respect to this Agreement, the Obligations, the Collateral or any matter
arising therefrom or relating hereto or thereto.
11.5 INDEMNIFICATION.5 INDEMNIFICATION. Each Borrower shall indemnify
and hold Lender, and its directors, agents, employees and counsel, harmless from
and against any and all losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel, except for losses, claims, damages, liabilities, costs and expenses as
a result of the gross negligence or wilful misconduct of Lender as determined
pursuant to a final, non-appealable order of a court of competent jurisdiction.
To the extent that the undertaking to indemnify, pay and hold harmless set forth
in this Section may be unenforceable because it violates any law or public
policy, each Borrower shall pay the maximum portion which it is permitted to pay
under applicable law to Lender in satisfaction of indemnified matters under this
Section. The foregoing indemnity shall survive the payment of the Obligations
and the termination or non-renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 TERM 12.1 TERM.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3) years
from the date hereof (the "Renewal Date"), and from year to year thereafter,
unless sooner terminated pursuant to the terms hereof. Lender or Borrowers may
terminate this Agreement and the other Financing Agreements effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving to
the other party at least ninety (90) days prior written notice and in addition,
Borrowers may, at any time, upon ten (10) BUSINESS DAYS PRIOR WRITTEN NOTICE TO
LENDER, TERMINATE THIS AGREEMENT; PROVIDED, THAT, in each case, this Agreement
and all other Financing Agreements must be terminated simultaneously. Upon the
effective date of termination or non-renewal of the Financing Agreements,
Borrowers shall pay to Lender, in full, all outstanding and unpaid Obligations
and shall furnish cash collateral to Lender in such amounts as Lender determines
are reasonably necessary to secure Lender from loss, cost, damage or expense,
including attorneys' fees and legal expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Lender has not yet received final and indefeasible payment. Such
payments in respect of the Obligations and cash collateral shall be remitted by
wire transfer in Federal funds to such bank account of Lender, as Lender may, in
its discretion, designate in writing to Borrowers for such purpose. Interest
shall be due until and including the next business day, if the amounts so paid
by Borrower to the bank account designated by Lender are received in such bank
account later than 12:00 noon, Dallas time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge a Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Lender's continuing security interest in the Collateral and the rights and
remedies of Lender hereunder, under the other Financing Agreements and
applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid.
(c) If for any reason this Agreement is terminated prior to the
end of the then current term or renewal term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lender's lost
profits as a result thereof, each Borrower agrees to pay to Lender, upon the
effective date of such termination, an early termination fee in the amount set
forth below if such termination is effective in the period indicated:
AMOUNT PERIOD
----------------------------------
(i) One (1%) percent of From the date hereof to and including the
the Maximum Credit first anniversary of the date hereof
----------------------------------
(ii) One-half (1/2%) percent From the first anniversary of the date hereof
of the Maximum Credit to and including the second anniversary of the
date hereof
----------------------------------
(iii) One-quarter (1/4%) of From the second anniversary of the date hereof
the Maximum Credit to but not including the third anniversary of
the date hereof.
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrower agrees
that it is reasonable under the circumstances currently existing. In addition,
Lender shall be entitled to such early termination fee upon the occurrence of
any Event of Default described in Sections 10.1(g) and 10.1(h) hereof, even if
Lender does not exercise its right to terminate this Agreement, but elects, at
its option, to provide financing to a Borrower or permit the use of cash
collateral under the United States Bankruptcy Code. The early termination fee
provided for in this Section 12.1 shall be deemed included in the Obligations.
(d) Notwithstanding anything to contrary contained in Section
12.1(c) above, in the event of the termination of this Agreement by Borrowers
prior to the end of the then current term or renewal term of this Agreement and
the full and final repayment of all of the Obligations and the receipt by Lender
of cash collateral all as provided in Section 12.1(c) with the proceeds of
initial loans and advances to Borrowers pursuant to a revolving credit facility
provided by First Union National Bank or its Affiliates (or for which First
Union National Bank is acting as agent) to Borrowers to replace the financing
arrangements provided for herein, and as to which Lender shall not be acting on
behalf of First Union National Bank, Borrowers shall not be required to pay the
early termination fee provided for above.
(e) Notwithstanding anything to the contrary contained in Section
12.1(c) above, in the event that Lender shall decrease the percentages
applicable to Eligible Accounts or Eligible Inventory set forth in the
definition of the term Borrowing Base pursuant to Section 2.1(b) hereof and/or
shall establish new Reserves after THE DATE HEREOF PURSUANT TO SECTION 1.82
HEREOF (OTHER THAN THE RESERVES SET FORTH ON EXHIBIT C HERETO, PROVIDED, THAT,
any increase in the amount of the Reserves set forth in Exhibit C shall not be
considered a new Reserve), such that after giving effect to such decrease in the
percentages and/or the establishment of such new Reserves the amount of the
Borrowing Base immediately after giving effect thereto is decreased by more than
twelve (12%) percent of the Maximum Credit from the amount of the Borrowing Base
immediately prior to giving effect to such decrease and/or Reserves, then
Borrowers may terminate this Agreement and shall not be required to pay an early
termination fee if each of the following conditions is satisfied: (i) Borrowers
shall have notified Lender of their intention to terminate this Agreement within
thirty (30) days of the earlier of (A) such decrease in such percentages and/or
establishment of such Reserves or (B) the date of the notice by Lender to Timet
of Lender's intention to so decrease the percentages or establish such Reserves,
(ii) Lender shall have received full and final repayment of all Obligations and
cash collateral as provided in Section 12.1(a) above within one hundred twenty
(120) days after the date of the receipt by Lender of the notice from Borrowers
to Lender of the intention of Borrowers to terminate this Agreement as a result
of such decrease in percentages or establishment of such Reserves, (iii) Lender
shall not have sent any notice of its intention to terminate this Agreement in
accordance with its rights hereunder, and (iv) no Event of Default or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default shall exist or have occurred and be continuing.
(f) Notwithstanding anything to the contrary contained in Section
12.1(c) above, in the event that Participants with interests in the Loans,
either singly or in the aggregate, which exceed twenty-five (25%) percent of the
Maximum Credit shall only be able to provide funds to be used for Prime Rate
Loans as a result of events described in Sections 3.6(a)(i) or 3.6(a)(ii)
hereof, and as a result Eurodollar Rate Loans which would otherwise be available
to Borrowers are converted to Prime Rate Loans and thereafter Eurodollar Rate
Loans for more than twenty-five (25%) percent of all outstanding Loans are not
available for a period of more than thirty (30) days, then Borrowers may
terminate this Agreement and shall not be required to pay an early termination
fee if each of the following conditions is satisfied: (i) Borrowers shall have
notified Lender of their intention to terminate this Agreement within thirty
(30) days after the end of the thirty (30) day period referred to above, (ii)
Lender shall have received full and final repayment of all Obligations and cash
collateral as provided in Section 12.1(a) above within one hundred twenty (120)
days after the date of the receipt by Lender of the notice from Borrowers to
Lender of the intention of Borrowers to terminate this Agreement as a result of
such conversion of Eurodollar Rate Loans and the continuing lack of availability
thereof, (iii) the events described in Section 3.6(a)(i) and 3.6(a)(ii) are not
applicable generally to banks and other financial institutions comparable to
Lender and/or Reference Bank in the United States, (iv) Lender shall not have
sent any notice of its intention to terminate this Agreement in accordance with
its rights hereunder, and (v) no Event of Default or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default shall exist or have occurred and be continuing.
12.2 INTERPRETATIVE PROVISIONS 12.2 INTERPRETATIVE PROVISIONS.
(a) All terms used herein which are defined in Article 1 or
Article 9 of the Uniform Commercial Code shall have the meanings given therein
unless otherwise defined in this Agreement.
(b) All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to a Borrower and Lender pursuant to the
definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation".
(f) An Event of Default shall exist or continue or be continuing
until such Event of Default is waived in accordance with Section 11.3 or is
cured in a manner satisfactory to Lender, if such Event of Default is capable of
being cured as determined by Lender.
(g) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Borrowers most recently
received by Lender prior to the date hereof.
(h) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including", the words
"to" and "until" each mean "to but excluding" and the word "through" means "to
and including".
(i) Unless otherwise expressly provided herein, (i) references
herein to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(j) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(k) This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(l) This Agreement and the other Financing Agreements are the
result of negotiations among and have been reviewed by counsel to Lender and the
other parties, and are the products of all parties. Accordingly, this Agreement
and the other Financing Agreements shall not be construed against Lender merely
because of Lender's involvement in their preparation.
12.3 NOTICES 12.3NOTICES. All notices, requests and demands hereunder
shall be in writing and (a) made to Lender at its address set forth below and to
Borrowers at their chief executive office set forth below, or to such other
address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex, telegram, facsimile
transmission, or electronic mail, immediately upon sending and upon confirmation
of receipt; if by nationally recognized overnight courier service with
instructions to deliver the next Business Day, one (1) Business Day after
sending; and if by certified mail, return receipt requested, five (5) days after
mailing.
12.4 PARTIAL INVALIDITY 12.4 PARTIAL INVALIDITY. If any provision of
this Agreement is held to be invalid or unenforceable, such invalidity or
unenforceability shall not invalidate this Agreement as a whole, but this
Agreement shall be construed as though it did not contain the particular
provision held to be invalid or unenforceable and the rights and obligations of
the parties shall be construed and enforced only to such extent as shall be
permitted by applicable law.
12.5 SUCCESSORS 12.5 SUCCESSORS. This Agreement, the other Financing
Agreements and any other document referred to herein or therein shall be binding
upon and inure to the benefit of and be enforceable by Lender, Borrowers and
their respective successors and assigns, except that Borrowers may not assign
their rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Lender. Lender may, after notice to Timet, assign its rights and delegate its
obligations under this Agreement and the other Financing Agreements and further
may assign, or sell participations in, all or any part of the Loans, the Letter
of Credit Accommodations or any other interest herein to another financial
institution or other person, in which event, the assignee or participant shall
have, to the extent of such assignment or participation, the same rights and
benefits as it would have if it were the Lender HEREUNDER, EXCEPT AS OTHERWISE
PROVIDED BY THE TERMS OF SUCH ASSIGNMENT OR PARTICIPATION, PROVIDED, THAT,
Lender shall not assign (or sell participations in) the financing arrangements
provided for herein so that the interests of Lender for its own account are less
than the lesser of $20,000,000 or twenty-five (25%) percent of the Maximum
Credit, or sell participations to more than twelve (12) Participants or sell
participations where the maximum AMOUNT OF THE PARTICIPANT=S INTEREST IS LESS
THAN $5,000,000, EXCEPT THAT, notwithstanding the foregoing, Lender may assign
or sell participations without such limitations (a) to any of its present and
future Subsidiaries or Affiliates or (b) upon the merger, consolidation, sale,
transfer or other disposition of all or any substantial portion of its business,
loan portfolio or other assets or (c) at any time after an Event of Default
shall exist or have occurred or (d) with the consent of Timet, which shall not
be unreasonably withheld, delayed or conditioned,
12.6 CONFIDENTIALITY 12.6 CONFIDENTIALITY.
(a) Lender shall use all reasonable efforts to keep confidential,
in accordance with its customary procedures for handling confidential
information and safe and sound lending practices, any non-public INFORMATION
SUPPLIED TO IT BY BORROWERS OR GUARANTORS PURSUANT TO THIS AGREEMENT, PROVIDED,
THAT, nothing contained herein shall limit the disclosure of any such
information: (i) to the extent required by statute, rule, regulation, subpoena
or court order, (ii) to bank examiners and other regulators, auditors and/or
accountants, (iii) in connection with any litigation to which Lender is a party,
(iv) to any assignee or participant (or prospective assignee or participant) so
long as such assignee or participant (or prospective assignee or participant)
shall have first agreed in writing to treat such information as confidential in
accordance with this Section 12.6, or (v) to counsel for Lender or any
participant or assignee (or prospective participant or assignee).
(b) In no event shall this Section 12.6 or any other provision of
this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of information that has been or is made public by a Borrower or any
third party without breach of this Section 12.6 or otherwise become generally
available to the public other than as a result of a disclosure in violation
hereof, (ii) to apply to or restrict disclosure of information that was or
becomes available to Lender on a non-confidential basis from a person other than
a Borrower or a Guarantor, (iii) require Lender to return any materials
furnished by Borrowers to Lender or (iv) PREVENT LENDER FROM RESPONDING TO
ROUTINE INFORMATIONAL REQUESTS IN ACCORDANCE WITH THE CODE OF ETHICS FOR THE
EXCHANGE OF CREDIT INFORMATION promulgated by The ▇▇▇▇▇▇ ▇▇▇▇▇▇ Associates or
other applicable industry standards relating to the exchange of credit
information. The obligations of Lender under this Section 12.6 shall supersede
and replace the obligations of Lender under any confidentiality letter signed
prior to the date hereof.
12.7 PARTICIPANT'S SECURITY INTEREST 12.7 PARTICIPANT'S SECURITY
INTEREST. If any Participant shall at any time participate with Lender in the
Loans, Letter of Credit Accommodations or other Obligations, each Borrower
hereby grants to such Participant and such Participant shall have and is hereby
given, a continuing lien on and security interest in any money, securities and
other property of such Borrower in the custody or possession of such
Participant, including the right of setoff, to the extent of the Participant=s
participation in the Obligations, and such Participant shall be deemed to have
the same right of setoff to the extent of its participation in the Obligations,
as it would have if it were a direct lender.
12.8 PARTIAL RELEASES OF COLLATERAL BY LENDER FOR PERMITTED
SALES OR OTHER DISPOSITION
12.8 PARTIAL RELEASES OF COLLATERAL BY LENDER FOR PERMITTED
SALES OR OTHER DISPOSITION.
(a) To the extent of any sale or other disposition of any assets
or properties of a Borrower or Restricted Subsidiary permitted under Section 9.7
hereof, so long as each of the conditions to any such sale as set forth in the
applicable clauses of Section 9.7 are satisfied as determined by Lender, as to
each such sale, Lender shall promptly upon the written request of Timet, at the
expense of Borrowers, execute and deliver to Timet such partial releases, in
form and substance reasonably satisfactory to Lender, to evidence the release of
any such assets so sold or otherwise disposed of by such Borrower or Restricted
Subsidiary from the security interests granted by such Borrower or Restricted
Subsidiary to Lender under this Agreement, such release to only be effective
upon the consummation of such sale or other disposition and the satisfaction of
each of the conditions with respect thereto set forth herein.
(b) Upon the written request of Timet, Lender shall, at the
expense of Borrowers, execute and deliver to Timet an authorization and request
for partial reconveyance in customary and appropriate form (including a
provision that no obligations are deemed to have been paid or satisfied) to
release from the Mortgage with respect to the Real Property in Henderson, Nevada
the portion of parcel 6 on the vicinity map included in Schedule 1.99 hereto
constituting Treco Property upon the receipt by Lender of evidence, in form and
substance satisfactory to Lender, that all applicable laws and regulations have
been complied with in order to permit the legal and valid transfer of such
portion of parcel 6 by Timet to Treco LLC. Concurrently with the request for
partial reconveyance, including mutual obligations of repair and maintenance, of
such property or at any time thereafter, upon Timet=s request, Lender will (i)
consent to the grant by Timet to Treco LLC of a non-exclusive right of access
and use or easement for the use of the portion of the Real Property of Timet
located in Henderson, Nevada described as parcel 5 on the vicinity map included
in Schedule 1.99 hereto for access to the portion of parcel 6 constituting Treco
Property and (ii) execute and deliver to Timet a subordination of the interest
of Lender in the property subject to such easement.
12.9 ENTIRE AGREEMENT 12.9 ENTIRE AGREEMENT. This Agreement, the other
Financing Agreements, any supplements hereto or thereto, and any instruments or
documents delivered or to be delivered in connection herewith or therewith
represents the entire agreement and understanding concerning the subject matter
hereof and thereof between the parties hereto, and supersede all other prior
agreements, understandings, negotiations and discussions, representations,
warranties, commitments, proposals, offers and contracts concerning the subject
matter hereof, whether oral or written. In the event of any inconsistency
between the terms of this Agreement and any schedule or exhibit hereto, the
terms of this Agreement shall govern.
12.10 NONAPPLICABILITY OF CHAPTER 346; SELECTION OF OPTIONAL INTEREST RATE
CEILINGS 12.10 NONAPPLICABILITY OF CHAPTER 346; SELECTION OF OPTIONAL
INTEREST RATE CEILINGS. Borrowers, Guarantors and Lender hereby agree that,
except for Section 346.004 thereof, the provisions of Chapter 346 of the Texas
Finance Code (Vernon=s Texas Code Annotated), as amended from time to time (as
amended, the ATexas Finance Code@) shall not apply to this Agreement or any of
the other Financing Agreements. To the extent that any of the optional interest
rate ceilings provided in Chapter 303 of the Texas Finance Code may be available
for application to any loan(s) or extension(s) of credit under this Agreement
for the purpose of determining the maximum allowable interest hereunder pursuant
to the Texas Finance Code, the applicable Amonthly ceiling@ (as such term is
defined in Chapter 303 of the Texas Finance Code) from time to time in effect
shall be used to the extent that it is so available, and if such Amonthly
ceiling@ at any time is not so available then the applicable Aweekly ceiling@
(as such term is defined in Chapter 303 of the Texas Finance Code) from time to
time in effect shall be used to the extent that it is so available.
12.11 DTPA WAIVER 12.11 DTPA WAIVER. BORROWERS AND GUARANTORS HEREBY WAIVE
ALL PROVISIONS OF THE DECEPTIVE TRADE PRACTICES -- CONSUMER PROTECTION ACT (TEX.
BUS. & COM. CODE ▇▇▇. ' 17.41 ET SEQ. AND EXPRESSLY WARRANTS AND REPRESENTS THAT
BORROWERS AND GUARANTORS EACH (a) HAVE KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND
BUSINESS MATTERS THAT ENABLE BORROWERS TO EVALUATE THE MERITS AND RISKS OF THIS
TRANSACTION, (b) ARE NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION
RELATIVE TO LENDER, AND (c) HAVE BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
12.12 ORAL AGREEMENTS INEFFECTIVE 12.12 ORAL AGREEMENTS INEFFECTIVE. THIS
AGREEMENT AND THE OTHER FINANCING AGREEMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES, AND THE SAME MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Lender and Borrowers have caused these presents to
be duly executed as of the day and year first above written.
LENDER BORROWERS
CONGRESS FINANCIAL CORPORATION (SOUTHWEST) TITANIUM METALS CORPORATION
BY: /S/ ▇▇▇ ▇▇▇▇▇ BY: /S/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇.
TITLE: EXECUTIVE V.P. TITLE: V.P. FINANCE
ADDRESS: CHIEF EXECUTIVE OFFICE:
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
TITANIUM HEARTH TECHNOLOGIES, INC.
BY: /S/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇.
TITLE:V.P. FINANCE
CHIEF EXECUTIVE OFFICE:
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