EXHIBIT 4.1
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$130,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
METAL MANAGEMENT, INC.
AND
THOSE OF ITS SUBSIDIARIES PARTIES HERETO
AS BORROWERS
THE FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTIES HERETO
AS LENDERS
WITH
METAL MANAGEMENT, INC.,
AS FUNDS ADMINISTRATOR
AND
DEUTSCHE BANK TRUST COMPANY AMERICAS,
AS AGENT
DATED AS OF AUGUST 13, 2003
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ARTICLE 1. DEFINITIONS...........................................................................................1
1.1 General Definitions.............................................................................1
1.2 Amendment and Restatement of Original Credit Agreement; No Novation............................21
1.3 Reaffirmation of Original Credit Documents.....................................................22
1.4 Accounting Terms and Determinations............................................................22
1.5 Other Terms; Headings..........................................................................23
ARTICLE 2. LOANS................................................................................................23
2.1 Commitments....................................................................................23
2.2 Borrowing of Loans.............................................................................24
2.3 Notice of Request for Lender Advances..........................................................25
2.4 Periodic Settlement of Agent Advances; Interest and Fees; Statements...........................25
2.5 Sharing of Payments............................................................................26
2.6 Defaulting Lenders.............................................................................26
2.7 Allocation of Loans and Expenses...............................................................27
ARTICLE 3. LETTERS OF CREDIT....................................................................................28
3.1 Letters of Credit..............................................................................28
3.2 Maximum Letter of Credit Obligations; Final Maturities.........................................29
3.3 Letter of Credit Requests......................................................................30
3.4 Letter of Credit Participations................................................................30
3.5 Agreement to Repay Letter of Credit Drawings...................................................32
3.6 Increased Costs................................................................................33
ARTICLE 4. COMPENSATION, REPAYMENT AND REDUCTION OF COMMITMENTS.................................................34
4.1 Interest on Loans..............................................................................34
4.2 Unused Line Fee................................................................................35
4.3 Letter of Credit Fees..........................................................................35
4.4 Interest and Letter of Credit Fees After Event of Default......................................36
4.5 Collateral Monitoring Fee......................................................................36
4.6 This Section Intentionally Left Blank..........................................................36
4.7 Expenses.......................................................................................36
4.8 Mandatory Payment of Loans; Voluntary Prepayments of Loans; Reductions of Commitments..........36
4.9 Maintenance of Loan Account; Statements of Account.............................................38
4.10 Payment Procedures.............................................................................38
4.11 Collection of Accounts.........................................................................38
4.12 Distribution and Application of Collections and other Amounts..................................39
4.13 Calculations...................................................................................39
4.14 Special Provisions Relating to LIBOR Rate Loans................................................39
4.15 Indemnification in Certain Events..............................................................42
4.16 Substitution of Lenders........................................................................43
ARTICLE 5. CONDITIONS PRECEDENT.................................................................................44
5.1 Conditions Precedent to Initial Loans and Letter of Credit.....................................44
5.2 Conditions Precedent to All Term Loans and Certain Revolving Loans.............................44
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5.3 Conditions Precedent to the Funding of Revolving Loans to Redeem the Remaining Junior Secured
Notes..........................................................................................45
5.4 Conditions Precedent to All Revolving Loans and Letters of Credit..............................45
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.......................................................................46
6.1 Organization and Qualification.................................................................46
6.2 Authority......................................................................................46
6.3 Enforceability.................................................................................46
6.4 No Conflicts...................................................................................47
6.5 Consents and Filings...........................................................................47
6.6 Government Regulation..........................................................................47
6.7 Solvency.......................................................................................47
6.8 Rights in Collateral Priority of Liens.........................................................47
6.9 Financial Data.................................................................................48
6.10 Locations of Offices, Records and Inventory....................................................48
6.11 Subsidiaries; Ownership of Equity..............................................................48
6.12 No Judgments or Litigation.....................................................................49
6.13 No Defaults....................................................................................49
6.14 Labor Matters..................................................................................49
6.15 Compliance with Law............................................................................49
6.16 ERISA..........................................................................................49
6.17 Compliance with Environmental Laws.............................................................50
6.18 Intellectual Property..........................................................................50
6.19 Licenses and Permits...........................................................................50
6.20 Taxes and Tax Returns..........................................................................51
6.21 Material Contracts.............................................................................51
6.22 Accuracy and Completeness of Information.......................................................51
6.23 No Change......................................................................................52
ARTICLE 7. AFFIRMATIVE COVENANTS................................................................................52
7.1 Financial Reporting............................................................................52
7.2 Collateral Reporting...........................................................................53
7.3 Notification Requirements......................................................................54
7.4 Corporate Existence............................................................................55
7.5 Books and Records; Inspections.................................................................55
7.6 Insurance......................................................................................56
7.7 Taxes..........................................................................................57
7.8 Compliance with Laws...........................................................................57
7.9 Use of Proceeds................................................................................57
7.10 Fiscal Year....................................................................................57
7.11 Maintenance of Property........................................................................57
7.12 ERISA Documents................................................................................58
7.13 Environmental and Other Matters................................................................58
7.14 Further Actions................................................................................58
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7.15 Deposit of Collections and Other Proceeds of Collateral........................................58
7.16 Cancellation of Repurchased Junior Secured Notes...............................................59
7.17 Redemption of Junior Secured Notes.............................................................59
ARTICLE 8. NEGATIVE COVENANTS...................................................................................59
8.1 Financial Covenants............................................................................59
8.2 Capital Expenditures...........................................................................60
8.3 Additional Indebtedness........................................................................60
8.4 Liens..........................................................................................61
8.5 Contingent Obligations.........................................................................63
8.6 Sale of Assets.................................................................................63
8.7 Restricted Payments............................................................................63
8.8 Investments....................................................................................64
8.9 Affiliate Transactions.........................................................................64
8.10 Bank Accounts..................................................................................65
8.11 Additional Negative Pledges....................................................................65
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES.......................................................................65
9.1 Events of Default..............................................................................65
9.2 Acceleration, Termination of Commitments and Cash Collateralization............................66
9.3 Rescission of Acceleration.....................................................................67
9.4 Remedies.......................................................................................67
9.5 Right of Setoff................................................................................67
9.6 License of Use of Software and Other Intellectual Property.....................................68
9.7 Application of Proceeds; Surplus, Deficiencies.................................................68
ARTICLE 10. THE AGENT...........................................................................................68
10.1 Appointment of Agent...........................................................................68
10.2 Nature of Duties of Agent......................................................................69
10.3 Lack of Reliance on Agent......................................................................69
10.4 Certain Rights of the Agent....................................................................69
10.5 Reliance by Agent..............................................................................70
10.6 Indemnification of Agent.......................................................................70
10.7 The Agent in its Individual Capacity...........................................................70
10.8 Holders of Notes...............................................................................70
10.9 Successor Agent................................................................................71
10.10 Collateral Matters.............................................................................71
10.11 Actions with Respect to Defaults...............................................................72
10.12 Delivery of Information........................................................................72
ARTICLE 11. MISCELLANEOUS.......................................................................................73
11.1 GOVERNING LAW..................................................................................73
11.2 SUBMISSION TO JURISDICTION.....................................................................73
11.3 SERVICE OF PROCESS.............................................................................73
11.4 JURY TRIAL.....................................................................................74
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11.5 LIMITATION OF LIABILITY........................................................................74
11.6 Delays.........................................................................................74
11.7 Notices........................................................................................74
11.8 Assignments and Participations.................................................................75
11.9 Confidentiality................................................................................76
11.10 Indemnification................................................................................77
11.11 Amendments and Waivers.........................................................................78
11.12 Counterparts and Effectiveness.................................................................79
11.13 Severability...................................................................................79
11.14 Maximum Rate...................................................................................79
11.15 Entire Agreement; Successors and Assigns.......................................................80
11.16 Joint and Several Liability of Borrowers.......................................................80
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ANNEXES
ANNEX I List of Lenders; Commitment Amounts;
Applicable Lending Offices
SCHEDULES
SCHEDULE A Closing Document List
SCHEDULE B Disclosure Schedules
SCHEDULE B, PART 1.2(b) Existing Letters of Credit
SCHEDULE B, PART 6.1 States in which Qualified
SCHEDULE B, PART 6.9 Contingent Obligations and Other Liabilities
SCHEDULE B, PART 6.10(a) Chief Executive Offices
SCHEDULE B, PART 6.10(b) Locations of Collateral
SCHEDULE B, PART 6.11 Subsidiaries
SCHEDULE B, PART 6.12 Pending Judgments, Litigation and
other Claims
SCHEDULE B, PART 6.14 Labor Matters
SCHEDULE B, PART 6.15 Compliance with Laws Matters
SCHEDULE B, PART 6.16 ERISA Matters
SCHEDULE B, PART 6.17 Environmental Matters
SCHEDULE B, PART 6.20 Tax Matters; Tax Sharing Agreements
SCHEDULE B, PART 6.21 Defaults Under Material Contracts
SCHEDULE B, PART 8.3 Existing Indebtedness
SCHEDULE B, PART 8.4 Existing Liens
SCHEDULE B, PART 8.8(f) Existing Investments
SCHEDULE B, PART 8.10 Bank Accounts
EXHIBITS
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B-1 Form of Revolving Loan Note
EXHIBIT B-2 Form of Term Loan Note
EXHIBIT C Form of Letter of Credit Request
EXHIBIT D Form of Notice of Continuation
EXHIBIT D-1 Form of Notice of Conversion
EXHIBIT E Form of Compliance Certificate
EXHIBIT F Form of Assignment and Assumption Agreement
THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of August
13, 2003, among each of the Borrowers; each financial institution identified on
ANNEX I (together with its successors and permitted assigns, hereinafter
referred to individually as a "LENDER" and collectively as the "LENDERS"); MTLM,
acting in its capacity as borrowing agent and funds administrator for the
Borrowers (in such capacity, the "FUNDS ADMINISTRATOR"); and DEUTSCHE BANK TRUST
COMPANY AMERICAS, a New York banking corporation, formerly known as Bankers
Trust Company (in its individual capacity, hereinafter referred to as "DBTCO"),
acting in its capacity as agent for the Lenders pursuant to ARTICLE 10 (in such
capacity, together with its successors in such capacity, hereinafter referred to
as the "AGENT").
PRELIMINARY STATEMENTS:
1. The Borrowers, the Funds Administrator, the Lenders and the Agent
are parties to that certain Credit Agreement dated as of June 29, 2001, as
amended pursuant to a letter agreement dated November 26, 2002, an Amendment No.
2 dated as of February 13, 2003 and an Amendment No. 3 dated as of May 23, 2003,
respectively (such Credit Agreement, as so amended, being hereinafter referred
to as the "ORIGINAL CREDIT AGREEMENT").
2. The Borrowers, the Funds Administrator, the Lenders and the Agent
have agreed to enter into this Credit Agreement in order to, among other things,
(a) amend and restate the Original Credit Agreement in its entirety; (b)
re-evidence, ratify and reaffirm the "Original Obligations" (as such term is
defined in SECTION 1.2(b) herein below); and (c) set forth the terms and
conditions under which the Agent and the Lenders will from time to time
hereafter make further loans and other extensions of credit to or for the
account of the Borrowers.
3. The Borrowers, the Funds Administrator, the Lenders and the Agent do
not intend that this Credit Agreement shall constitute a novation of the
Original Credit Agreement.
4. Accordingly, in consideration of the mutual agreements set forth
herein, and subject to the terms and provisions hereof, the parties hereto
hereby agree as follows:
ARTICLE 1. DEFINITIONS.
1.1 GENERAL DEFINITIONS.
ACCOUNT has the meaning set forth in the Security Agreement.
AFFILIATE of a Person means another Person who directly or indirectly
controls, is controlled by, is under common control with or is a director or
officer of, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to vote ten percent (10%) or
more of the securities having ordinary voting power for the election of
directors or the direct or indirect power to direct the management and policies
of a business.
AGENT has the meaning set forth in the Preamble.
AGENT ADVANCES has the meaning set forth in SECTION 2.2.
AGGREGATE COMMITMENT of a Lender means the amount set forth below such
Lender's name on ANNEX I opposite the heading "Aggregate Commitment," as such
amount may be reduced from time to time or terminated pursuant to the terms of
this Credit Agreement.
ALLOCATION ACCOUNT has the meaning set forth in SECTION 2.7(b).
APPLICABLE LENDING OFFICE means, with respect to each Lender, such
Lender's LIBOR Lending Office in the case of a LIBOR Rate Loan, and such
Lender's Domestic Lending Office in the case of a Prime Rate Loan.
APPLICABLE MARGIN means, at any time with respect to any LIBOR Rate
Loan or Prime Rate Loan which is a Revolving Loan, as the case may be, a
percentage per annum equal to the applicable percentage amount set forth below
with respect to LEVEL I, PROVIDED that from and after any Start Date to and
including the corresponding End Date, the Applicable Margin with respect to such
LIBOR Rate Loans and Prime Rate Loans, respectively, shall be a percentage per
annum equal to the applicable percentage per annum set forth below if, in each
case as determined as of the Test Date for such Start Date, the Consolidated
Entity shall have the Leverage Ratio set forth below:
APPLICABLE
MARGIN
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LEVERAGE RATIO PRIME RATE LIBOR RATE
LOANS LOANS
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I Equal to or greater than 2.50 to 1.00 1.00% 3.00%
II Equal to or greater than 2.00 to 1.00
but less than 2.50 to 1.00 0.75% 2.75%
III Less than 2.00 to 1.00 0.50% 2.50%
PROVIDED, that, if the Borrowers shall fail to deliver the Financial Statements
that are required to be delivered pursuant to SECTIONS 7.1(b) OR (d), as
applicable, and the Agent in its sole discretion shall so elect, from the date
which is three (3) Business Days after the date on which such Financial
Statements were so required to be delivered until the date of actual delivery
thereof, the Applicable Margin shall be a percentage per annum equal to the
applicable percentage amount set forth above with respect to LEVEL I.
APPLICABLE MARGIN PERIOD means each period which shall commence on the
first day of the month immediately following a date on which the Financial
Statements are delivered pursuant to SECTIONS 7.1(b) OR (d), as applicable, and
which shall end on the earlier of (i) the first day of the month immediately
following the date of actual delivery of the next Financial Statements pursuant
to SECTIONS 7.1(b) OR (d), as applicable, and (ii) the latest date on which the
next Financial Statements are required to be delivered pursuant to SECTIONS
7.1(b) OR (d), as applicable, PROVIDED that the first Applicable Margin Period
shall commence with the delivery of the Financial Statements in respect of the
Test Period ending on September 30, 2003.
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ARIZONA LLC means Metal Management Arizona, L.L.C., an Arizona limited
liability company.
ASSIGNMENT AND ASSUMPTION AGREEMENT has the meaning set forth in
SECTION 11.8(b).
AUDITORS means a nationally recognized firm of independent public
accountants selected by the Borrowers and reasonably satisfactory to the Agent;
PROVIDED, THAT for purposes of this Credit Agreement, the firm of
PricewaterhouseCoopers L.L.P. shall be deemed to be satisfactory to the Agent.
BENEFIT PLAN means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which any Borrower, any Subsidiary of any Borrower or any
ERISA Affiliate has been an "employer" (as defined in Section 3(5) of ERISA)
within the past six years.
BORROWERS means, collectively, (1) Arizona LLC, (2) CIM, (3) Firma, (4)
Firma Plastic, (5) ▇▇▇▇▇▇▇, (6) MTLM, (7) ▇▇▇▇.▇▇▇, (8) MTLM Aerospace, (9) MTLM
Alabama, (10) MTLM Arizona, (11) MTLM Connecticut, (12) MTLM Gulf Coast, (13)
MTLM Indiana, (14) MTLM Memphis, (15) MTLM Midwest, (16) MTLM Mississippi, (17)
MTLM Northeast, (18) MTLM, Ohio, (19) MTLM Pittsburgh, (20) MTLM Realty, (21)
MTLM Services, (22) MTLM Stainless & Alloy, (23) MTLM West, (24) MTLM West Coast
Holdings, (25) Proler, (26) Reserve, (27) S&A Holdings and (28) Trojan.
BORROWING means a borrowing of Loans by the Funds Administrator for the
joint and several account of the Borrowers from each of the Lenders (or, in the
case of Agent Advances, Agent on behalf of each of the Lenders) on a pro rata
basis on a given date (whether pursuant to SECTION 2.2 or resulting from
continuations or conversions of Loans on a given date pursuant to SECTIONS
4.14(a) and (b), respectively) having, in the case of LIBOR Rate Loans, the same
Interest Period.
BORROWING BASE means, at any time, the sum at such time of:
(a) the Fixed Asset Sublimit, which may be a negative number,
PLUS
(b) eighty-five percent (85%) of Eligible Accounts Receivable,
PLUS
(c) the lesser of $45,000,000 and seventy percent (70%) of
Eligible Inventory.
In addition, in the exercise of its Permitted Discretion, upon one Business
Day's prior written notice to the Funds Administrator, the Agent may (i)
establish and increase or decrease reserves against Eligible Accounts Receivable
and Eligible Inventory, (ii) reduce the advance rates provided for in this
definition, or restore such advance rates to any level equal to or below the
advance rates in effect as of the date of this Credit Agreement, and (iii)
impose additional restrictions (or eliminate the same) to the standards of
eligibility set forth in the definitions of "ELIGIBLE ACCOUNTS RECEIVABLE" and
"ELIGIBLE INVENTORY." In addition to any other reserve established against the
Borrowing Base by the Agent, the Agent shall in any event on the Closing Date
establish a reserve in the amount of $1,000,000 against the Borrowing Base until
such time as all Indebtedness evidenced by the Junior Secured Notes is repaid in
full.
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BORROWING BASE CERTIFICATE means a certificate of the Funds
Administrator concerning the Borrowing Base, in each case provided under SECTION
7.2 and in form and substance reasonably satisfactory to the Agent.
BUSINESS DAY means any day that is neither a Saturday nor a Sunday nor
a day on which commercial banks in Chicago, Illinois or New York, New York are
required or permitted by law to be closed. When used in connection with any
Letter of Credit, the term "BUSINESS DAY" means any day other than a Saturday,
Sunday or legal holiday on which commercial banks in the domicile of the
applicable Issuing Bank are generally closed or authorized to close.
CAPITAL EXPENDITURES means, for any Person for any period, the sum of
all expenditures which have been, or should have been, capitalized by such
Person for financial statement purposes in accordance with GAAP during such
period (whether payable in cash or other property or accrued as a liability),
including the capitalized portion of capital leases and that portion of
Investments made by such Person allocable to property, plant or equipment.
Capital Expenditures shall exclude proceeds of a casualty loss applied to the
repair or replacement of the property affected by such casualty loss. "CASUALTY
LOSS," as used herein, means, for any Person, (i) the loss, damage, or
destruction of any asset or property owned or used by such Person, (ii) the
condemnation, confiscation, or other taking, in whole or in part, of any such
asset or property, or (iii) the diminishment of the use of any such asset or
property so as to render impracticable or unreasonable the use thereof for its
intended purpose.
CASH EQUIVALENTS means either of the following, so long as the same are
maintained in accounts in which the Agent has a perfected security interest: (i)
securities issued, guarantied or insured by the United States, or any of its
agencies and having maturities of not more than one year; (ii) time deposits or
certificates of deposit having maturities of not more than one year issued by
any Lender or a United States national or state chartered commercial bank of
recognized standing whose combined capital and unimpaired surplus is in excess
of $250,000,000 and whose short-term commercial paper rating, or that of its
parent holding company, is at least "A-1" or the equivalent by S&P and at least
"Prime-1" or the equivalent by ▇▇▇▇▇'▇; (iii) shares of money market or similar
funds which comply with Rule 2a-7 or any successor rule of the SEC; (iv)
repurchase agreements with any Lender or any commercial bank satisfying the
requirements of CLAUSE (ii) of this definition with respect to securities
described in CLAUSE (i) of this definition.
CIM means CIM Trucking, Inc., an Illinois corporation.
CHANGE OF CONTROL shall mean one or more of the following events:
(a) less than a majority of the members of the Board of
Directors of MTLM shall be persons who either (i) were serving as
directors on the Closing Date or (ii) were nominated as directors and
approved by the vote of the majority of the directors who are directors
referred to in CLAUSE (i) above or this CLAUSE (ii); or
(b) the stockholders of any Credit Party shall approve any
plan or proposal for the liquidation or dissolution of such Credit
Party; or
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(c) a Person or group of Persons acting in concert (other than
the direct or indirect beneficial owners of the equity Securities of
MTLM as of the Closing Date) shall, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or
otherwise, have become the direct or indirect beneficial owner (within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended from time to time) of equity Securities of the Parent
representing more than thirty-five percent (35%) of the combined voting
power of the outstanding voting equity Securities or other ownership
interests for the election of directors or shall have the right to
elect a majority of the Board of Directors of MTLM; or
(d) MTLM shall cease to be the legal and beneficial owner of
one hundred percent (100%) of the Securities of each of the other
Borrowers.
CLOSING DATE means August 13, 2003.
CLOSING DOCUMENT LIST has the meaning set forth in SECTION 5.1(a).
CODE has the meaning set forth in SECTION 1.5.
COLLATERAL means the Accounts, Inventory, Equipment and other real,
personal and mixed property identified in the Collateral Documents as security
for any or all of the Obligations.
COLLATERAL ACCESS AGREEMENT means an agreement in form and substance
reasonably satisfactory to the Agent pursuant to which a mortgagee or lessor of
real property on which Collateral is stored or otherwise located, or a
warehouseman, processor or other bailee of Inventory, or a consignee of
Inventory, acknowledges the Liens of the Agent and, in the case of any such
agreement with a mortgagee or lessor, permits the Agent access to and use of
such real property for a reasonable amount of time following the occurrence and
during the continuance of an Event of Default to assemble, complete and sell any
Collateral stored or otherwise located thereon.
COLLATERAL DOCUMENTS means, collectively, the Security Agreement and
all other documents, agreements and instruments pursuant to which Liens are now
or hereafter granted to the Agent to secure any or all of the Obligations.
COLLATERAL MONITORING FEE has the meaning set forth in SECTION 4.5.
COLLECTION ACCOUNT has the meaning set forth in SECTION 4.11.
COLLECTION BANKS has the meaning set forth in SECTION 4.11.
COLLECTIONS means all cash, funds, checks, notes, instruments and any
other form of remittance tendered by account debtors in payment of Accounts of
any Borrower.
CONSOLIDATED EBITDA means, for any fiscal period of the Consolidated
Entity, Consolidated Net Income (excluding extraordinary and non-recurring
items) for such period, plus (a) all Interest Expense, amortization or writeoff
of debt discount and issuance costs and other fees and charges associated with
Indebtedness, income tax expense, depreciation and
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amortization (including amortization of any goodwill or other intangibles) for
such period; PLUS or minus (without double counting) (b) gains and losses
attributable to any fixed asset sales; PLUS or MINUS (c) any other non-cash
charges or gains which have been subtracted or added in calculating such
Consolidated Net Income.
CONSOLIDATED ENTITY means MTLM and each of its consolidated
Subsidiaries and shall include in any event each Borrower.
CONSOLIDATED FIXED CHARGE COVERAGE RATIO means, as determined as of any
date for any period ending on such date, the ratio of (a) Consolidated EBITDA
for such period MINUS aggregate Capital Expenditures made during such period (to
the extent permitted pursuant to SECTION 8.2), to (b) the sum of the following,
in each case of the Consolidated Entity, as determined without duplication in
accordance with GAAP for such period, (i) income tax expense paid in cash, (ii)
Interest Expense paid or payable in cash, (iii) regularly scheduled payments of
principal on Indebtedness, including, without limitation, regularly scheduled
installments of principal on the Term Loans to the extent payable pursuant to
SECTION 4.8(d) (other than repayments in the ordinary course of the Revolving
Loans which do not permanently reduce the aggregate Commitments); and (iv) (1)
if such period is the fiscal quarter ending September 30, 2003 or any fiscal
quarter ending prior thereto, $2,400,000 and (2) in such period is the fiscal
quarter ending December 31, 2003 or any fiscal quarter ending thereafter,
reductions in the Fixed Asset Sublimit pursuant to CLAUSE (i) of the definition
thereof.
CONSOLIDATED NET INCOME means the consolidated net income of the
Consolidated Entity.
CONTINGENT OBLIGATION means, with respect to any Person, any direct or
indirect guaranty or obligation of such Person for the Indebtedness of another
Person, except for endorsements in the ordinary course of business.
CREDIT AGREEMENT means this Amended and Restated Credit Agreement, as
amended, restated, supplemented, extended or otherwise modified and in effect
from time to time.
CREDIT DOCUMENTS means, collectively, this Credit Agreement, the Notes,
the Letters of Credit, each of the Collateral Documents and all other documents,
agreements and instruments now or hereafter executed in connection herewith or
therewith, in each case as amended, restated, supplemented, extended or
otherwise modified from time to time.
CREDIT PARTY INFORMATION has the meaning set forth in SECTION 11.9(a).
CREDIT PARTIES means, collectively, the Borrowers, the Funds
Administrator, any Subsidiary of any Borrower and each other party to any of the
Credit Documents (other than the Lenders, the Agent or any Issuing Bank).
DB SECURITIES ACCOUNT means a brokerage account maintained by MTLM at
Deutsche Bank Securities.
DBTCO has the meaning set forth in the Preamble.
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DBTCO ACCOUNT has the meaning set forth in SECTION 4.11.
DEFAULT means an event, condition or default which with the giving of
notice, the passage of time or both would be an Event of Default.
DEFAULTING LENDER has the meaning set forth in SECTION 2.6(a).
DEPOSITARY ACCOUNT AGREEMENTS has the meaning set forth in SECTION
4.11.
DISBURSEMENT ACCOUNT means the operating account of the Funds
Administrator maintained with the Disbursement Account Bank.
DISBURSEMENT ACCOUNT BANK means DBTCo or any other financial
institution selected from time to time by the Agent and reasonably acceptable to
the Funds Administrator.
DOMESTIC LENDING OFFICE means, with respect to any Lender, the office
of such Lender specified as its "DOMESTIC LENDING OFFICE" on ANNEX I, as such
annex may be amended from time to time pursuant to SECTION 11.8(b), which office
shall in any event be located in the United States.
DRAWING has the meaning set forth in SECTION 3.5(b).
ELIGIBLE ACCOUNTS RECEIVABLE means Accounts of the respective Borrowers
deemed by the Agent in the exercise of its Permitted Discretion to be eligible
for inclusion in the calculation of the Borrowing Base. In determining the
amount to be so included, the face amount of such Accounts shall be reduced by
the amount of all returns, discounts, deductions, claims, credits, charges, or
other allowances. Unless otherwise approved in writing by the Agent, no Account
of any Borrower shall be deemed to be an Eligible Account Receivable if:
(a) it arises out of a sale made by such Borrower to an
Affiliate of such Borrower or to any other Borrower; or
(b) its payment terms are longer than 60 days from date of
invoice; or
(c) it is unpaid (i) more than 60 days after the original
payment due date on payment terms of 30 days or less from date of
invoice, or (ii) more than 30 days after the original payment due date
on payment terms of or more than 30 days from date of invoice; or
(d) it is from the same account debtor or its Affiliate and
fifty percent (50%) or more of all Accounts from that account debtor
(and its Affiliates) are ineligible under (c) above; or
(e) when aggregated with all other Accounts of an account
debtor, the Account exceeds forty percent (40%) in face value of all
Accounts of all Borrowers then outstanding, to the extent of such
excess, unless supported by an irrevocable letter of credit
satisfactory to the Agent (as to form, substance and issuer) and
assigned to and directly drawable by the Agent; or
7
(f) the account debtor for the Account is a creditor of such
Borrower, has or has asserted a right of setoff against such Borrower,
has disputed its liability or made any claim with respect to the
Account or any other Account which has not been resolved, but in each
of the foregoing cases, solely to the extent of the amount of such
actual or asserted right of setoff, or the amount of such dispute or
claim, as the case may be; or
(g) except to the extent otherwise consented to in writing by
the Agent, the account debtor is (or the assets of the account debtor
are) the subject of an Insolvency Event; or
(h) the Account is not payable in United States dollars or the
account debtor for the Account is located outside the United States or
Canada (other than the Northwest Territories and the Provinces of
Newfoundland and Quebec), unless the Account is supported by (i) an
irrevocable letter of credit satisfactory to the Agent (as to form,
substance and issuer) and assigned to and directly drawable by the
Agent or (ii) credit insurance satisfactory to the Agent and assigned
and payable to the Agent; or
(i) the sale to the account debtor is on a guaranteed sale,
sale-and-return, sale on approval or consignment basis or made pursuant
to any other written agreement providing for repurchase or return; or
(j) the Agent determines by its own credit analysis that
collection of the Account is uncertain or the Account may not be paid;
or
(k) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless such Borrower
duly assigns its rights to payment of such Account to the Agent
pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C.
Sections 3727 et seq.); or
(l) the goods giving rise to such Account have not been
shipped and delivered to and accepted by the account debtor, the
services giving rise to such Account have not been performed and
accepted or the Account otherwise does not represent a final sale; or
(m) the Account does not comply with all Requirements of Law
with respect to such Borrower, including, without limitation, the
Federal Consumer Protection Act, the Federal Truth-in-Lending Act and
Regulation Z; or
(n) the Account is subject to any adverse security deposit,
progress payment or other similar advance made by or for the benefit of
the applicable account debtor; or
(o) the Account is not subject to a valid and perfected first
priority Lien in favor of the Agent or does not otherwise conform to
the representations and warranties with respect thereto contained in
the Credit Documents.
ELIGIBLE INVENTORY means the aggregate amount of Inventory of the
respective Borrowers deemed by the Agent in the exercise of its Permitted
Discretion to be eligible for inclusion in the calculation of the Borrowing
Base. In determining the amount to be so included, Inventory shall be valued at
the lower of cost or market on a basis consistent with the Borrowers' current
and
8
historical accounting practice. Unless otherwise approved in writing by the
Agent, no Inventory of any Borrower shall be deemed Eligible Inventory if:
(a) it is not owned solely by such Borrower or such Borrower
does not have good and valid title thereto; or
(b) it is not located in the United States; or
(c) it is not located on property owned by a Borrower or by a
third party that has executed and delivered a Collateral Access
Agreement and, in the case of Inventory located on property owned by
such a third party, it is segregated or otherwise separately
identifiable from goods of others, if any, stored on such property; or
(d) it is not subject to a valid and perfected first priority
Lien in favor of the Agent, except, with respect to such Inventory
stored at locations other than locations owned by a Borrower, for Liens
for unpaid rent or normal and customary warehousing charges; or
(e) it consists of goods returned or rejected by such
Borrower's customers or goods in transit to third parties (other than
to warehouse sites covered by a Collateral Access Agreement); or
(f) it could not reasonably be expected to be sold within
twelve (12) months after the date of its initial processing, or does
not otherwise conform to the representations and warranties contained
in the Credit Documents;
PROVIDED, however, that notwithstanding the foregoing, Inventory of any Borrower
which has been sold and shipped to the applicable Account Debtor but with
respect to which such Account Debtor has not yet been invoiced shall be deemed
Eligible Inventory until issuance of such invoice, PROVIDED, FURTHER that such
Inventory constituted Eligible Inventory immediately prior to such sale.
END DATE means, for any Applicable Margin Period, the last day of such
Applicable Margin Period.
EQUIPMENT has the meaning set forth in the Security Agreement.
ERISA means the Employee Retirement Income Security Act of 1974, 29
U.S.C. Sections 1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
ERISA AFFILIATE means any entity required to be aggregated with any
Borrower or any Subsidiary of any Borrower under Sections 414 (b) or (c) of the
Internal Revenue Code (or, for purposes of Section 412 of the Internal Revenue
Code, Sections 414 (m) or (o) of the Internal Revenue Code).
EVENT OF DEFAULT has the meaning set forth in ARTICLE 9.
9
EXCESS AVAILABILITY means, at any time of determination thereof, an
amount (which may be a negative number) equal at such time to (i) the Borrowing
Base MINUS (ii) the aggregate amount outstanding with respect to the Revolving
Loans (including Fees, Expenses, interest and principal) MINUS (iii) the Letter
of Credit Obligations.
EXCESS CASH FLOW means, for any period, the following, in each case for
the Consolidated Entity, determined in accordance with GAAP for such period: (a)
Consolidated EBITDA; MINUS (b) the sum of (i) Interest Expense, (ii) income
taxes paid in cash, (iii) principal payments on or mandatory redemptions of
Indebtedness, to the extent expressly permitted hereunder, including, without
limitation, regularly scheduled installments of principal on the Term Loans,
each in the amount of $2,500,000, to the extent payable pursuant to SECTION
4.8(d) (other than repayments of Revolving Loans in the ordinary course of
business which do not result in a permanent reduction of the Revolving Loan
Commitments), (iv) scheduled reductions in the Fixed Asset Sublimit, (v) Capital
Expenditures, to the extent expressly permitted under this Credit Agreement and
(vi) non-recurring items, including fees payable under the Fee Letter, to the
extent paid in cash during such period.
EXCHANGE ACT means the Securities and Exchange Act of 1934, amendments
thereto, successor statutes, and regulations or guidance promulgated thereunder.
EXISTING LETTERS OF CREDIT has the meaning set forth in SECTION 1.2(b).
EXPENSES means all reasonable costs and expenses of the Agent incurred
in connection with the Credit Documents and the transactions contemplated
therein, including, without limitation, (i) the costs of conducting record
searches, examining collateral, opening bank accounts and lockboxes, depositing
checks, and receiving and transferring funds (including charges for checks for
which there are insufficient funds), (ii) the reasonable fees and expenses of
legal counsel and paralegals (including the allocated cost of internal counsel
and paralegals), accountants, appraisers and other consultants, experts or
advisors retained by the Agent, (iii) reasonable fees and expenses of legal
counsel incurred in connection with the documentation of assignments of or sales
of participations in the Loans, (iv) the cost of title insurance premiums, real
estate survey costs, and fees and taxes in connection with the filing of
financing statements, and (v) the costs of preparing and recording Collateral
Documents, releases of Collateral, and waivers, amendments, and terminations of
any of the Credit Documents. EXPENSES also means all reasonable costs and
expenses (including the reasonable fees and expenses of legal counsel and other
professionals) paid or incurred in connection with the Credit Documents and the
transactions contemplated therein, (a) by the Agent during the continuance of an
Event of Default and (b) by the Agent and any Lender in (i) enforcing or
defending its respective rights under or in respect of this Credit Agreement,
the Credit Documents or any other document or instrument now or hereafter
executed and delivered in connection herewith or therewith, (ii) collecting the
Loans, (iii) foreclosing or otherwise collecting upon the Collateral or any part
thereof and (iv) obtaining any legal, accounting or other advice in connection
with any of the foregoing.
EXPIRATION DATE means the earlier of (i) July 1, 2007 and (ii) the date
on which this Credit Agreement is terminated pursuant to SECTION 9.2(b).
10
FEDERAL FUNDS RATE means, for any period, a fluctuating interest rate
per annum for each day during such period equal to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
FEDERAL RESERVE BOARD means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
FEE LETTER means the fee letter agreement of even date herewith between
Deutsche Bank Securities Inc. and the Borrowers providing for the payment of
certain fees by the Borrowers in connection with this Credit Agreement.
FEES means, collectively, the Unused Line Fee, the Letter of Credit
Fees, the L/C Facing Fee, the Issuing Bank Fees and the Collateral Monitoring
Fee and, without duplication, all fees payable by the Borrower under the Fee
Letter.
FINANCIAL STATEMENTS means the consolidated and consolidating balance
sheets, statements of operations, statements of cash flows and statements of
changes in shareholder's equity of the Consolidated Entity for the period
specified, prepared in accordance with GAAP and consistently with prior
practices.
FIRMA means Firma, Inc., a California corporation.
FIRMA PLASTIC means Firma Plastic Co., Inc., a California corporation.
FIXED ASSET SUBLIMIT means an amount equal to $12,739,564; PROVIDED,
that the Fixed Asset Sublimit shall be automatically and permanently reduced (i)
on October 1, 2003 and the first business day of each consecutive calendar
quarter ending thereafter, in each case by an amount equal to $2,500,000; (ii)
on each date on which Net Proceeds of Sale are received by or for the account of
any Borrower (other than from any other Borrower), by an amount equal to such
Net Proceeds of Sale; and (iii) on the date which is ninety (90) days after the
end of (a) the fiscal year of the Consolidated Entity ending on March 31, 2004
and (b) each fiscal year of the Consolidated Entity ending thereafter, in each
case by an amount equal to fifty percent (50%) of Excess Cash Flow for such
fiscal year.
FUNDS ADMINISTRATOR has the meaning set forth in the Preamble.
GAAP means generally accepted accounting principles in the United
States as in effect from time to time.
GOVERNING DOCUMENTS means certificates or articles of incorporation,
certificates or articles of formation, by-laws, operating agreements and any
other similar organizational or governing documents.
11
GOVERNMENTAL AUTHORITY means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
HIGHEST LAWFUL RATE means, at any given time during which any
Obligations shall be outstanding hereunder, the maximum nonusurious interest
rate that at any time or from time to time may be contracted for, taken,
reserved, charged or received on such Obligations, under the laws of the State
of New York (or the law of any other jurisdiction whose laws may be mandatorily
applicable notwithstanding other provisions of this Credit Agreement and any of
the other Credit Documents), or under applicable federal laws which may
presently or hereafter be in effect and which allow a higher maximum nonusurious
interest rate than under the State of New York's (or such other jurisdiction's)
law, in any case after taking into account, to the extent permitted by
applicable law, any and all relevant payments or charges under this Credit
Agreement and any other Credit Documents executed in connection herewith, and
any available exemptions, exceptions and exclusions.
INDEBTEDNESS of a Person means, without duplication, (a) indebtedness
for borrowed money or for the deferred purchase price of property or services
(other than trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices), whether on open account or
evidenced by a note, bond, debenture or similar instrument, (b) obligations
under capital leases, (c) reimbursement obligations for letters of credit,
banker's acceptances or other credit accommodations, whether drawn or undrawn,
(d) liabilities, as determined by the Agent, under any Interest Rate Agreement,
(e) Contingent Obligations and (f) Indebtedness secured by any Lien on any
property of that Person, even if that Person has not assumed such Indebtedness.
INSOLVENCY EVENT means, with respect to any Person, the occurrence of
any of the following: (a) such Person shall be adjudicated insolvent or
bankrupt, or generally fail to pay, or admit in writing its inability to pay,
its debts as they become due, (b) the voluntary commencement of any proceeding
or the filing of any petition under any bankruptcy, insolvency or similar law,
(c) the seeking of dissolution or reorganization or the appointment of a
receiver, trustee, custodian or liquidator for it or a substantial portion of
its property, assets or business or to effect a plan or other arrangement with
its creditors, (d) the filing of any answer admitting the jurisdiction of the
court and the material allegations of an involuntary petition filed against it
in any bankruptcy, insolvency or similar proceeding, (e) the making by such
Person of a general assignment for the benefit of its creditors, or the consent
to, or acquiescence in the appointment of, a receiver, trustee, custodian or
liquidator for a substantial portion of such Person's property, assets or
business. INSOLVENCY EVENT shall also mean, with respect to any Person, the
occurrence of any of the following: an involuntary proceeding or involuntary
petition shall be commenced or filed against such Person under any bankruptcy,
insolvency or similar law seeking the dissolution or reorganization of it or the
appointment of a receiver, trustee, custodian or liquidator for it or of a
substantial part of its property, assets or business, or any writ, judgment,
warrant of attachment, execution or similar process shall be issued or levied
against a substantial part of its property, assets or business, and such
proceedings or petitions shall not be dismissed, or such writ, judgment, warrant
of attachment, execution or similar process shall not be released, vacated or
fully bonded, within sixty (60) days after commencement, filing, or levy, as the
case may be, or any order for relief shall be entered in any such proceeding.
12
INTEREST EXPENSE means, for any period, the aggregate consolidated cash
expense of the Consolidated Entity for interest on Indebtedness for such period,
including, without limitation, (i) amortization of original issue discount, (ii)
incurrence fees (to the extent included in interest expense but excluding in any
event any fees payable by the Borrowers pursuant to the Fee Letter and other
fees paid or payable to the Lenders), (iii) the interest portion of any deferred
payment obligation and (iv) the interest component of any capital lease
obligation.
INTEREST PERIOD means, for any LIBOR Rate Loan, the period commencing
on the date of such Borrowing and ending on the last day of the period selected
by the Funds Administrator pursuant to the provisions below. The duration of
each such Interest Period shall be one, two, three or six months, in each case
as the Funds Administrator may, in an appropriate Notice of Borrowing, Notice of
Continuation or Notice of Conversion, select; PROVIDED, THAT the Funds
Administrator may not select any Interest Period that ends after the Expiration
Date. Whenever the last day of any Interest Period would otherwise occur on a
day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day; PROVIDED, THAT if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day.
INTEREST RATE AGREEMENT means any interest rate protection or hedge
agreement, including, without limitation, interest rate future, option, swap,
and cap agreements.
INTERNAL REVENUE CODE means the Internal Revenue Code of 1986,
amendments thereto, successor statutes, and regulations or guidance promulgated
thereunder.
INVENTORY has the meaning set forth in the Security Agreement.
INVESTMENT means all expenditures made and all liabilities incurred
(contingently or otherwise) for or in connection with the acquisition of stock
or Indebtedness of, or for loans, advances, capital contributions or similar
transfers of property to, or acquisition of substantially all the assets of, a
Person. In determining the aggregate amount of Investments outstanding at any
particular time, (i) the amount of any Investment represented by a guaranty
shall be taken at not less than the principal amount of the obligations
guaranteed and outstanding; (ii) there shall be deducted in respect of each such
Investment amounts received in cash as a return of capital or as earnings on
such Investment, whether as dividends, interest or otherwise; and (iii) there
shall not be deducted from the aggregate amount of Investments any decrease in
the market value thereof.
ISSUING BANK means DBTCo, Deutsche Bank AG, New York Branch, or any
Lender or other financial institution that is acceptable to the Agent and the
Funds Administrator which may at any time issue or be requested to issue a
Letter of Credit for the account of any Borrower.
ISSUING BANK FEES has the meaning set forth in SECTION 4.3(b).
JUNIOR SECURED NOTE INDENTURE means the Amended and Restated Indenture
dated as of June 29, 2001 among MTLM, as issuer, the other Borrowers, as
guarantors, and BNY Midwest Trust Company, as Trustee.
13
JUNIOR SECURED NOTES means the 12 3/4% Secured Notes due 2004 of MTLM
in an aggregate principal amount not exceeding $34,000,000, issued pursuant to
the Junior Secured Note Indenture.
JUNIOR SECURED NOTE PURCHASE AGREEMENTS means those certain Note
Repurchase Agreements dated of even date herewith by and between MTLM and the
respective "Sellers" referred to therein, pursuant to which the Repurchased
Junior Secured Notes will be repurchased by MTLM.
L/C FACING FEE has the meaning set forth in SECTION 4.3(a).
LC PARTICIPANT has the meaning ascribed to that term in SECTION 3.4.
LC SUPPORTABLE OBLIGATIONS means (a) obligations of any Borrower or any
Subsidiary of any Borrower with respect to workers' compensation, surety bonds
and other similar statutory obligations, (b) such other obligations of any
Borrower or any Subsidiary of any Borrower as are reasonably acceptable to the
Agent and (c) any obligations supported by an Existing Letter of Credit.
LENDER AND LENDERS have the respective meanings set forth in the
Preamble.
LENDER ADVANCES has the meaning set forth in SECTION 2.2.
LETTER OF CREDIT FEE has the meaning set forth in SECTION 4.3(a).
LETTER OF CREDIT OBLIGATIONS means, without duplication, the sum of the
aggregate Stated Amount of all Letters of Credit outstanding, PLUS the aggregate
amount of all Drawings for which the Borrowers have not reimbursed any Issuing
Bank, PLUS the aggregate amount of all payments made by the Lenders to any
Issuing Bank for their participations in Letters of Credit for which the
Borrowers have not reimbursed the Lenders.
LETTER OF CREDIT REQUEST has the meaning ascribed to that term in
SECTION 3.3(a).
LETTERS OF CREDIT means (i) the Existing Letters of Credit and (ii) all
letters of credit issued for the account of any Borrower under ARTICLE 3, and
all amendments, renewals, extensions or replacements thereof.
LEVERAGE RATIO means, as of any date of determination thereof, the
ratio of (a) Indebtedness of the Consolidated Entity as of such date, to (b)
Consolidated EBITDA for the twelve (12) month period ending on such date.
LIBOR LENDING OFFICE means, with respect to any Lender, the office of
such Lender specified as its "LIBOR LENDING OFFICE" on ANNEX I, as such annex
may be amended from time to time pursuant to SECTION 11.8(b) (or, if no such
office is specified, its Domestic Lending Office).
LIBOR RATE means, with respect to any Interest Period for each LIBOR
Rate Loan comprising part of the same Borrowing, an interest rate per annum
equal to the rate (rounded
14
upward to the nearest whole multiple of one-sixteenth (1/16) of one percent
(1.00%) per annum, if such rate is not such a whole multiple of one-sixteenth
(1/16) of one percent (1.00%)) of the offered quotation, if any, to first class
banks in the London (U.K.) interbank market by DBTCo for United States dollar
deposits of amounts in immediately available funds comparable to the principal
amount of the LIBOR Rate Loan of DBTCo for which the LIBOR Rate is being
determined with maturities comparable to the Interest Period for which such
LIBOR Rate will apply as of approximately 10:00 a.m. Chicago time three (3)
Business Days prior to the commencement of such Interest Period.
LIBOR RATE LOAN means a Loan that bears interest by reference to the
LIBOR Rate; PROVIDED, that the Terms Loans shall in any event be LIBOR Rate
Loans.
LIEN means any lien, claim, charge, pledge, security interest,
assignment, hypothecation, deed of trust, mortgage, lease, conditional sale,
retention of title, or other preferential arrangement having substantially the
same economic effect as any of the foregoing, whether voluntary or imposed by
law.
LINE OF CREDIT means, at any time, an amount equal to the Aggregate
Commitments of all Lenders at such time, which amount shall not exceed
$130,000,000.
LOAN means a Revolving Loan or a Term Loan.
LOAN ACCOUNT has the meaning set forth in SECTION 4.9.
▇▇▇▇▇▇▇ means ▇▇▇ ▇▇▇▇ Metals Co., a California corporation.
MAJORITY LENDERS means those Lenders holding in the aggregate more than
fifty percent (50%) of the total Aggregate Commitments, or if the Aggregate
Commitments are terminated, those Lenders owed more than fifty percent (50%) of
the Loans and Letter of Credit Obligations then outstanding.
MAJORITY REVOLVING LENDERS means those Revolving Lenders holding in the
aggregate more than fifty percent (50%) of the total Revolving Loan Commitments,
or if the Revolving Loan Commitments are terminated, those Revolving Lenders
owed more than fifty percent (50%) of the Revolving Loans and Letter of Credit
Obligations then outstanding.
MAJORITY TERM LENDERS means those Term Lenders owed more than fifty
percent (50%) of the Term Loans then outstanding.
MATERIAL ADVERSE EFFECT means a material adverse effect on (i) the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of the Credit Parties taken as a whole, (ii)
the ability of any Credit Party to perform its obligations under the Credit
Documents to which it is a party, or on the ability of the Agent or the Lenders
to enforce the Obligations or realize upon the Collateral, or (iii) the value of
the Collateral taken as a whole.
MATERIAL CONTRACT means any contract or other arrangement (i) to which
a Credit Party or any Subsidiary of a Credit Party is a party (other than the
Credit Documents) or by which the
15
property or assets of any Credit Party or any Subsidiary of a Credit Party are
bound and (ii) which is material to the business, assets, properties or
prospects of the Consolidated Entity.
MOODY'S means ▇▇▇▇▇'▇ Investors Services, Inc., or any successor
thereto.
MTLM means Metal Management, Inc., a Delaware corporation.
▇▇▇▇.▇▇▇ means ▇▇▇▇▇▇.▇▇▇, inc., a Delaware corporation.
MTLM AEROSPACE means Metal Management Aerospace, Inc., a Delaware
corporation.
MTLM ALABAMA means Metal Management Alabama, Inc., a Delaware
corporation.
MTLM ARIZONA means MTLM Arizona, Inc., an Arizona corporation.
MTLM CONNECTICUT means Metal Management Connecticut, Inc., a Delaware
corporation.
MTLM GULF COAST means Metal Management Gulf Coast, Inc., a Delaware
corporation.
MTLM INDIANA means Metal Management Indiana, Inc., an Illinois
corporation.
MTLM MEMPHIS means Metal Management Memphis, L.L.C., a Tennessee
limited liability company.
MTLM MIDWEST means Metal Management Midwest, Inc., an Illinois
corporation.
MTLM MISSISSIPPI means Metal Management Mississippi, L.L.C., a Delaware
limited liability company.
MTLM NORTHEAST means Metal Management Northeast, Inc., a New Jersey
corporation.
MTLM OHIO means Metal Management Ohio., Inc., an Ohio corporation.
MTLM PITTSBURGH means Metal Management Pittsburgh, Inc., a Delaware
corporation.
MTLM REALTY means Metal Management Realty, Inc., an Arizona
corporation.
MTLM SERVICES means Metal Management Services, Inc., a Delaware
corporation.
MTLM STAINLESS & ALLOY means Metal Management Stainless & Alloy, Inc.,
a Delaware corporation.
MTLM WEST means Metal Management West, Inc., a Colorado corporation.
MTLM WEST COAST HOLDINGS means Metal Management West Coast Holdings,
Inc., a Delaware corporation.
16
MULTIEMPLOYER PLAN means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which a Borrower, any Subsidiary of Borrower or any
ERISA Affiliate has contributed within the past six years or with respect to
which a Borrower or any Subsidiary of a Borrower could reasonably be expected to
incur any liability.
NET ISSUANCE PROCEEDS means cash proceeds of the issuance by MTLM of
common or preferred equity, net of costs and expenses paid or incurred in
connection therewith.
NET PROCEEDS OF SALE means proceeds (including any notes, Securities,
warrants and other non-cash items and money paid into escrow accounts, together,
with or reduced by, all interest paid thereon and capital gains, or capital
losses, realized in connection with the investment thereof) received as
consideration by a Borrower or any Subsidiary of a Borrower (to the extent of
such Borrower's ownership interest in such Subsidiary) from the sale, lease,
transfer or other disposition of any fixed asset, net of (a) the cost of such
sale, lease, transfer or other disposition, taxes payable as a result thereof
and reasonable reserves associated therewith, (b) amounts applied to the
repayment of Indebtedness (other than Obligations) secured by a Lien on the
fixed asset disposed of and (c) amounts expressly permitted to be used
hereunder, and in fact used, to purchase a replacement asset. For the purposes
hereof, all proceeds of insurance coverage paid or other recoveries or awards of
compensation for any such fixed asset, or group of fixed assets, taken by
condemnation or eminent domain shall be deemed proceeds of the disposition of
that fixed asset.
NOTE means a Revolving Loan Note or a Term Loan Note.
NOTICE OF BORROWING means an irrevocable and binding notice delivered
by the Funds Administrator to the Agent either by telephone or by facsimile
transmission (and if by telephone, promptly confirmed in writing) of the request
by the Funds Administrator, for and on behalf of the Borrowers, for a Borrowing,
which notice shall be substantially in the form of EXHIBIT A.
NOTICE OF CONTINUATION has the meaning set forth in SECTION 4.14(a).
NOTICE OF CONVERSION has the meaning set forth in SECTION 4.14(b).
OBLIGATIONS means unpaid principal and interest hereunder (including
interest accruing on or after the occurrence of an Insolvency Event) in respect
of Loans, reimbursement obligations in respect of Letters of Credit, Fees,
Expenses and all other obligations and liabilities of any kind whatsoever of the
Borrowers to the Agent, the Issuing Bank or any of the Lenders under this Credit
Agreement, the Notes and any of the other Credit Documents.
ORIGINAL CREDIT AGREEMENT has the meaning set forth in the Preliminary
Statements.
ORIGINAL OBLIGATIONS has the meaning set forth in SECTION 1.2(b).
PBGC means the Pension Benefit Guaranty Corporation, and any entity
succeeding to any or all of its functions.
17
PAYMENT OFFICE means the office of the Agent located at ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, or such other office of the Agent as shall be
specified by the Agent from time to time in a notice to the Funds Administrator
and each of the Lenders.
PERMITTED DISCRETION means the Agent's judgment exercised in good faith
and not in an irrational manner based upon its consideration of any factor which
the Agent believes in good faith could affect the value of any Collateral,
including any Inventory or Accounts of any Borrower, or the amount which the
Agent and the Lenders would be likely to receive (after giving consideration to
delays in payment and costs of enforcement) in the liquidation of such
Collateral. In exercising such judgment, the Agent may consider such factors
which are already included in or tested by the definition of Eligible Accounts
Receivable or Eligible Inventory, as well as any of the following: (i) the
financial and business climate of any Borrower's industry, (ii) changes in
collection history and dilution with respect to the Accounts of any Borrower,
(iii) demand for, and pricing of, Inventory of any Borrower, (iv) changes in any
concentration of risk with respect to Accounts and Inventory of any Borrower,
and (v) any other factors that change the credit risk of lending to the
Borrowers on the security of the Accounts, Inventory and other property of the
Borrowers.
PERMITTED LIENS means the Liens referred to in CLAUSES (a) through (m)
of SECTION 8.4.
PERSON means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, entity, party or government (including any
division, agency or department thereof), and its successors, heirs and assigns.
PRIME LENDING RATE means the rate which Deutsche Bank AG, New York
Branch, announces as its prime lending rate, from time to time. The Prime
Lending Rate is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer. Deutsche Bank AG, New York
Branch, DBTCo and each of the other Lenders may make commercial loans or other
loans at rates of interest at, above or below the Prime Lending Rate.
PRIME RATE LOAN means a Loan that bears interest by reference to the
Prime Rate, which Loan shall in any event be a Revolving Loan.
PROLER means Proler Southwest, Inc., a Texas corporation.
PROPORTIONATE SHARE of a Lender means, with respect to all matters
relating to any Lender (a) with respect to the Revolving Loans, a fraction
expressed as a percentage obtained by dividing the Revolving Loan Commitment of
such Lender by the aggregate Revolving Loan Commitments of all Lenders, (b) with
respect to the Term Loans, a fraction expressed as a percentage obtained by
dividing the Term Loan Commitment of such Lender by the aggregate Term Loan
Commitments of all Lenders, or if the Term Loan Commitments are terminated, a
fraction expressed as a percentage obtained by dividing the outstanding Term
Loans of such Lender by the aggregate outstanding Term Loans of all Lenders, (c)
with respect to all Loans and Letter of Credit Obligations, a fraction expressed
as a percentage obtained by dividing the Aggregate Commitment of such Lender by
the Line of Credit, and (d) with respect to all Loans and Letter of Credit
Obligations after termination of the Aggregate Commitments, a fraction
18
expressed as a percentage obtained by dividing such Lenders then outstanding
Loans and Letter of Credit Obligations by the aggregate their outstanding Loans
and Letter of Credit Obligations of all Lenders, in each case as any such
percentage may be adjusted from time to time pursuant to SECTION 11.8.
PURCHASE MONEY LIENS has the meaning set forth in SECTION 8.3(e).
REGISTER has the meaning set forth in SECTION 11.8(c).
REGULATION D means Regulation D of the Federal Reserve Board, as in
effect from time to time.
REGULATION U means Regulation U of the Federal Reserve Board, as in
effect from time to time.
REGULATION Z means Regulation Z of the Federal Reserve Board, as in
effect from time to time.
REPORTABLE EVENT means any of the events described in Section 4043 of
ERISA and the regulations thereunder (other than any such event for which the
notice requirement under ERISA has been waived).
REPURCHASED JUNIOR SECURED NOTES means those certain Junior Secured
Notes evidencing not less than ninety seven percent (97%) of all Junior Secured
Notes, to be repurchased by MTLM on the Repurchased Note Settlement Date.
REPURCHASED NOTE SETTLEMENT DATE means the date on which the
transactions contemplated by the respective Junior Secured Note Purchase
Agreements are consummated pursuant to the Junior Secured Note Purchase
Agreements.
REQUIREMENT OF LAW means, with respect to any Person, (a) the Governing
Documents of such Person, (b) any law, treaty, rule or regulation or
determination of an arbitrator, court or other Governmental Authority binding on
such Person, or (c) any franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, right or approval binding
on a Person or any of its property.
RESERVE means Reserve Iron & Metal Limited Partnership, a Delaware
limited partnership.
RESPONSIBLE OFFICER means, with respect to any Person, the president,
chief executive officer, chief financial officer, any vice president or
treasurer of such Person.
RETIREE HEALTH PLAN means an "employee welfare benefit plan" within the
meaning of Section 3(1) of ERISA, and any other plan, program or arrangement,
whether oral or written, that provides benefits to persons after termination of
employment, other than as required by Section 601 of ERISA.
REVOLVING LENDER means each Lender having a Revolving Loan Commitment.
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REVOLVING LOAN has the meaning set forth in SECTION 2.1(a).
REVOLVING LOAN COMMITMENT of any Lender means the amount set forth
below such Lender's name on ANNEX I, opposite the heading "Revolving Loan
Commitment," as such amount may be reduced from time to time or terminated
pursuant to the terms of this Credit Agreement.
REVOLVING LOAN NOTE has the meaning set forth in SECTION 2.1.
S&A HOLDINGS means Metal Management S & A Holdings, Inc., a Delaware
corporation.
S&P means Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereto.
SEC means the Securities and Exchange Commission, and any Governmental
Authority succeeding to any or all of its functions.
SECURITIES means any stock, shares, voting trust certificates, bonds,
debentures, notes or other evidences of Indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly
known as "securities," or any certificates of interest, shares, or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing, but shall not include the Notes or any other evidence of the
Obligations.
SECURITY AGREEMENT means the General Security Agreement dated as of
June 29, 2001, as amended, modified or supplemented from time to time, executed
by each of the Borrowers in favor of the Agent for the benefit of the Agent and
the Lenders.
SETTLEMENT DATE has the meaning set forth in SECTION 2.4.
START DATE means, with respect to any Applicable Margin Period, the
first day of such Applicable Margin Period.
STATED AMOUNT of each Letter of Credit means, at any, time, the maximum
amount available to be drawn thereunder at such time (in each case determined
without regard to whether any conditions to drawing could then be met).
SUBSIDIARY of a Person means a corporation or other Person in which
that Person directly or indirectly owns or controls the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or appoint other managers of such corporation or other
entity.
TERM LENDER means each Lender having a Term Loan Commitment.
TERM LOAN has the meaning ascribed to that term in SECTION 2.1(b).
20
TERM LOAN COMMITMENT of any Lender means the amount set forth below
such Lender's name on ANNEX I, opposite the heading "Term Loan Commitment," as
such amount may be reduced from time to time or terminated pursuant to the terms
of this Credit Agreement.
TERM LOAN NOTE has the meaning set forth in SECTION 2.1(b).
TERMINATION EVENT means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of any Borrower, any Subsidiary of any
Borrower or any ERISA Affiliate from a Benefit Plan during a plan year in which
it was a "substantial employer" (as defined in Section 4001(a) (2) of ERISA);
(iii) the providing of notice of intent to terminate a Benefit Plan in a
distress termination (as described in Section 4041 (c) of ERISA); (iv) the
institution by the PBGC of proceedings to terminate a Benefit Plan or
Multiemployer Plan; (v) any event or condition (a) which could reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Benefit Plan or
Multiemployer Plan, or (b) that would result in termination of a Multiemployer
Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete
withdrawal, within the meaning of Sections 4203 and 4205 of ERISA, of a
Borrower, any Subsidiary of a Borrower or any ERISA Affiliate from a
Multiemployer Plan.
TEST DATE means, with respect to any Start Date, the last day of the
most recent fiscal quarter ended immediately prior to such Start Date.
TEST PERIOD means each period of four consecutive fiscal quarters then
last ended (in each case taken as one accounting period).
TROJAN means Trojan Trading Co., a California corporation.
TYPE means a LIBOR Rate Loan or a Prime Rate Loan.
UNUSED LINE FEE has the meaning set forth in SECTION 4.2.
1.2 AMENDMENT AND RESTATEMENT OF ORIGINAL CREDIT AGREEMENT; NO
NOVATION.
(a) Subject to the terms and conditions set forth in this Credit
Agreement, and in reliance upon the representations and warranties of the
respective Credit Parties set forth herein and in the other Credit Documents,
effective as of the date hereof, the Original Credit Agreement is hereby amended
and restated in its entirety.
(b) It is expressly understood and agreed by each of the parties hereto
that (i) the "Obligations" (as such term is defined in this Credit Agreement)
mean and include all "Obligations" (as such term is defined in the Original
Credit Agreement) outstanding or otherwise existing on and as of the date hereof
(such Obligations being herein referred to as the "ORIGINAL OBLIGATIONS"); (ii)
the Original Obligations shall be payable hereafter in accordance with the
respective terms and provisions hereof; and (iii) this Credit Agreement and any
Notes issued hereunder (1) merely re-evidence, ratify and confirm the Original
Obligations, (2) in the case of any such Notes, are given in substitution for
and not in repayment of any Revolving Notes issued under the Original Credit
Agreement, and (3) are in no way intended and shall not be deemed or construed
to constitute a novation of the Original Credit Agreement or any
21
Revolving Notes issued thereunder. All letters of credit outstanding under the
Original Credit Agreement and set forth on SCHEDULE B, PART 1.2(b)
(collectively, the "EXISTING LETTERS OF CREDIT") shall for all purposes of this
Credit Agreement and each of the other Credit Documents be deemed issued and
outstanding under, and otherwise governed in all respects by, the applicable
terms and provisions of, this Credit Agreement.
1.3 REAFFIRMATION OF ORIGINAL CREDIT DOCUMENTS.
Each Borrower, in the respective capacities of such Borrower (and any
predecessor in interest to such Borrower) under the Original Credit Agreement
and each of the other "Credit Documents" (as such term is defined in the
Original Credit Agreement, and herein referred to as the "Original Credit
Documents") to which such Borrower (or any predecessor in interest to such
Borrower) is a party (including the respective capacities of accommodation
party, assignor, grantor, guarantor, indemnitor, mortgagor, obligor and pledgor,
as applicable, and each other similar capacity, if any, in which such Borrower
(or any predecessor in interest to such Borrower) granted Liens on all or any
part of its properties and assets, or otherwise acted as an accommodation party,
guarantor, indemnitor or surety with respect to all or any part of the Original
Obligations), hereby (a) agrees that, except as otherwise expressly set forth
herein, the terms and provisions hereof shall not affect in any way any payment,
performance, observance or other obligations or liabilities of such Borrower
hereunder or under any of the other Original Credit Documents, all of which
obligations and liabilities are hereby ratified, confirmed and reaffirmed in all
respects, and (b) to the extent such Borrower has granted Liens on any of its
properties or assets pursuant to any of the Original Credit Documents to secure
the payment, performance and/or observance of all or any part of the Original
Obligations, acknowledges, ratifies, confirms and reaffirms such grant of Liens,
and acknowledges and agrees that all of such Liens are intended and shall be
deemed and construed to secure to the fullest extent set forth therein all now
existing and hereafter arising Obligations under and as defined in this Credit
Agreement, as hereafter amended, restated, supplemented and otherwise modified
and in effect from time to time.
1.4 ACCOUNTING TERMS AND DETERMINATIONS.
Unless otherwise defined or specified herein, all accounting terms used
in this Credit Agreement shall be construed in accordance with GAAP, applied on
a basis consistent in all material respects with the Financial Statements
referred to in SECTION 6.9. All accounting determinations for purposes of
determining compliance with the financial covenants contained in ARTICLE 8 shall
be made in accordance with GAAP as in effect on the Closing Date and applied on
a basis consistent in all material respects with the audited Financial
Statements delivered to the Agent on or before the Closing Date. The Financial
Statements required to be delivered hereunder from and after the Closing Date,
and all financial records, shall be prepared or maintained, as the case may be,
in accordance with GAAP. If GAAP shall change from the basis used in preparing
the audited Financial Statements delivered to the Agent on or before the Closing
Date, the certificates required to be delivered pursuant to SECTION 7.1
demonstrating compliance with the covenants contained herein shall include, at
the election of the Borrowers or upon the request of the Majority Lenders,
calculations setting forth the adjustments necessary to demonstrate that the
Borrowers are in compliance with the financial covenants based upon GAAP as in
effect on the Closing Date.
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1.5 OTHER TERMS; HEADINGS.
Terms used herein and not otherwise defined in ARTICLE 1 that are
defined in the Uniform Commercial Code in effect from time to time in the State
of New York (the "CODE") shall have the meanings given in the Code. Each of the
words "hereof," "herein," and "hereunder" refer to this Credit Agreement as a
whole. An Event of Default shall "continue" or be "continuing" until such Event
of Default has been waived in accordance with SECTION 11.11 hereof. References
to Articles, Sections, Annexes, Schedules, and Exhibits are internal references
to this Credit Agreement, and to its attachments, unless otherwise specified.
The headings and the Table of Contents are for convenience only and shall not
affect the meaning or construction of any provision of this Credit Agreement.
ARTICLE 2. LOANS
2.1 COMMITMENTS.
(a) Subject to the terms and conditions set forth in this
Credit Agreement, and in reliance on the representations and warranties
of the Borrowers set forth herein, each Revolving Lender severally
agrees (i) to continue as Revolving Loans hereunder all of the
"Revolving Loans" (as such term is defined in the Original Credit
Agreement) outstanding on the Closing Date, and (ii) on and after the
Closing Date and to but excluding the Expiration Date, to make loans
and advances to the Borrowers on a joint and several basis (each a
"REVOLVING LOAN") in an amount not to exceed at any time its
Proportionate Share of the lesser at such time of (a) the aggregate
Revolving Loan Commitments of all Revolving Lenders and (b) the
Borrowing Base MINUS, in the case of both CLAUSES (a) and (b) above,
the then outstanding Letter of Credit Obligations. The Revolving Loans
shall be evidenced by a Revolving Loan Note substantially in the form
of EXHIBIT B-1, dated as of June 29, 2001 and substituted and amended
as of the Closing Date, issued to each Revolving Lender and executed by
each of the Borrowers in the amount of such Revolving Lender's
Commitment (each a "REVOLVING LOAN NOTE").
(b) Subject to the terms and conditions set forth in this
Credit Agreement, and in reliance on the representations and warranties
of the Borrowers set forth herein, each Term Lender severally agrees to
make a term loan (each a "TERM LOAN") in an amount equal to such Term
Lender's Term Loan Commitment. The aggregate Term Loan Commitment of
all Term Lenders shall initially be $20,000,000. Each Term Loan shall
be funded in a single drawing on the Repurchased Note Settlement Date
and all proceeds of the Term Loan shall be disbursed by the Agent on
behalf of the Lenders directly to the DB Securities Account, and used
solely to repurchase the Repurchased Junior Secured Notes. Amounts
borrowed under this SECTION 2.1(b) and repaid may not be reborrowed
thereafter, and shall be repaid in accordance with SECTION 4.8 and all
other applicable terms and provisions of this Credit Agreement. The
Term Loans shall be evidenced by a Term Loan Note substantially in the
form of EXHIBIT B-2, dated as of the Closing Date, issued to each Term
Lender and executed by each of the Borrowers in the amount of such Term
Lender's Term Loan Commitment (each a "TERM LOAN NOTE"). Each Term
Lender's Term Loan Commitment shall terminate upon the funding of the
Term Loans on the Repurchased Note Settlement Date.
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2.2 BORROWING OF LOANS.
Revolving Loans may be made available to the Funds Administrator for
the account of the Borrowers directly by the Revolving Lenders ("LENDER
ADVANCES") or, in the circumstances described in SECTION 2.2(b), from the Agent
acting on behalf of the Revolving Lenders ("AGENT ADVANCES").
(a) LENDER ADVANCES. Subject to the determination by the Agent
and the Revolving Lenders that the conditions for borrowing contained
in SECTION 5.2 are satisfied, upon receipt of a Notice of Borrowing
from the Funds Administrator received by the Agent before 12:00 noon
Chicago time on a Business Day, Lender Advances of Revolving Loans
shall be made to the extent of each Revolving Lender's Proportionate
Share of the requested Borrowing.
(b) AGENT ADVANCES. The Agent is authorized by the Revolving
Lenders, but is not obligated, to make Agent Advances upon a receipt of
any Notice of Borrowing received by the Agent before 3:00 P.M. Chicago
time on a Business Day. Agent Advances shall be subject to periodic
settlement with the Revolving Lenders under SECTION 2.4. Agent Advances
may be made only in the following circumstances:
(i) NORMAL COURSE AGENT ADVANCES. For administrative
convenience, the Agent may, but is not obligated, to make
Agent Advances up to the amount available for borrowing under
SECTION 2.1 in reliance upon the actual or deemed
representations of the Borrowers under SECTION 5.2 that the
conditions for borrowing are satisfied.
(ii) OTHER AGENT ADVANCES. When the conditions for
borrowing under SECTION 5.2 cannot be fulfilled, and
notwithstanding the Borrowing Base limitation of SECTION 2.1,
the Agent may, but is not obligated to, continue to make Agent
Advances for seven (7) Business Days or until sooner
instructed by the Majority Revolving Lenders to cease, in an
aggregate amount at any time not to exceed $5,000,000.
(c) DISBURSEMENT OF REVOLVING LOANS. The proceeds of Revolving
Loans shall be transmitted by the Agent or Revolving Lenders, as the
case may be, to the Disbursement Account.
(d) NOTICES OF BORROWING. Notices of Borrowing may be given
under this Section by telephone or facsimile transmission, and, if by
telephone, promptly shall be confirmed in writing. The Funds
Administrator shall specify in each Notice of Borrowing whether the
conditions for the requested Borrowing are satisfied. The Borrowers may
request one or more Borrowings of Loans constituting Prime Rate Loans
on the same Business Day. Each Notice of Borrowing for LIBOR Rate Loans
shall be given not later than 12:00 noon Chicago time on the third
Business Day prior to the proposed Borrowing. Each Notice of Borrowing
shall, unless otherwise specifically provided herein, consist entirely
of Loans of the same Type and, if such Borrowing is to consist of LIBOR
Rate Loans, shall be in an aggregate amount of not less than $5,000,000
or an
24
integral multiple of $1,000,000 in excess thereof. The right of the
Borrowers to choose LIBOR Rate Loans is subject to the provisions of
SECTION 4.14. Once given, a Notice of Borrowing is irrevocable and
binding on the Borrowers. The Funds Administrator shall provide to the
Agent a list, with specimen signatures, of officers and other Persons,
if any, authorized to request Loans. The Agent is entitled to rely upon
such list until it is replaced by the Funds Administrator.
2.3 NOTICE OF REQUEST FOR LENDER ADVANCES.
Subject to the last sentence of this Section, the Agent shall give each
Revolving Lender prompt notice by telephone or facsimile transmission of a
Notice of Borrowing that is received pursuant to SECTION 2.2(a) and is to be
satisfied by Lender Advances. No later than 3:00 P.M. Chicago time on the date
of receipt of such notice, each Revolving Lender shall make available for the
account of its Applicable Lending Office to an account specified by the Agent
for deposit into the Disbursement Account, its Proportionate Share of such
Borrowing in immediately available funds. Unless the Agent receives contrary
written notice prior to any such Borrowing, it is entitled to assume that each
Revolving Lender will make available its Proportionate Share of the Borrowing
and in reliance upon that assumption, but without any obligation to do so, may
advance such Proportionate Share on behalf of such Revolving Lender, without the
necessity of giving daily notice to each Revolving Lender of the receipt of a
Notice of Borrowing.
2.4 PERIODIC SETTLEMENT OF AGENT ADVANCES; INTEREST AND FEES;
STATEMENTS.
(a) THE SETTLEMENT DATE; ALLOCATION OF INTEREST AND FEES. The
amount of each Lender's Proportionate Share of Loans shall be computed
weekly (or more frequently in the Agent's discretion) and shall be
adjusted upward or downward based on all Revolving Loans (including
Agent Advances) and repayments received by the Agent as of 5:00 P.M.
Chicago time on the last Business Day of the period specified by the
Agent (such date, the "SETTLEMENT DATE").
(b) SUMMARY STATEMENTS; SETTLEMENTS. The Agent shall deliver
to each of the Lenders promptly after the Settlement Date a summary
statement of the account of outstanding Loans (including Agent
Advances) for the period, the amount of repayments received for the
period, and the amount allocated to each Lender of the interest and
Unused Line Fee for the period. After application of payments under
SECTION 4.12, as reflected on the summary statement, (i) the Agent
shall transfer to each Lender its allocated share of interest and
Unused Line Fee, and its Proportionate Share of repayments received by
the Agent in respect of the period covered by such summary statement;
and (ii) each Lender shall transfer to the Agent, or the Agent shall
transfer to each Lender, such amounts as are necessary to insure that,
after giving effect to all such transfers, the amount of Revolving
Loans made by each Lender shall be equal to such Lender's Proportionate
Share of the aggregate amount of Revolving Loans outstanding as of such
Settlement Date. If the summary statement requires transfers to be made
to the Agent by the Lenders and is received by the Lenders prior to
12:00 noon Chicago time on a Business Day, such transfers shall be made
in immediately available funds no later than 3:00 P.M. Chicago time
that day; and, if received after 12:00 noon Chicago time, then no later
than 3:00 P.M. Chicago time on the next Business Day. The obligation of
each
25
Lender to transfer such funds is irrevocable, unconditional and without
recourse to or warranty by the Agent.
(c) DISTRIBUTION OF INTEREST AND UNUSED LINE FEES. Interest on
the Loans (including Agent Advances) and the Unused Line Fee shall be
allocated by the Agent to each Lender (i) in the case of interest, in
accordance with the Loans actually advanced by and repaid to such
Lender and (ii) in the case of the Unused Line Fee, in accordance with
the Proportionate Share of such Lender. Interest shall accrue from and
including the date Loans are advanced and to but excluding the date
such Loans are either repaid by the Borrowers or, if later, actually
settled under this Section. Promptly after the end of each month, the
Agent shall distribute to each Lender its portion, allocated as
provided above, of the interest and Unused Line Fee which has been
received by the Agent during such month.
2.5 SHARING OF PAYMENTS.
If any Lender shall obtain any payment (whether made voluntarily or
involuntarily, or through the exercise of any right of set-off, or otherwise) on
account of the Loans made by it or its participations in the Letter of Credit
Obligations in excess of its Proportionate Share of payments on account of the
Loans or Letter of Credit Obligations obtained by all the Lenders, such Lender
shall forthwith purchase from the other Lenders such participations in the Loans
made by them or in their participation in Letters of Credit as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; PROVIDED, that if all or any portion of such excess payment
is thereafter recovered from such purchasing Lender, such purchase from each
other Lender shall be rescinded and each such other Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery, together
with an amount equal to such other Lender's ratable share (according to the
proportion of (i) the amount of such Lender's required repayment to (ii) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect to the total amount
so recovered. The Borrowers agree that any Lender so purchasing a participation
from another Lender pursuant to this SECTION 2.5, to the fullest extent
permitted by law, may exercise all of its rights of payment (including the right
of set-off) with respect to such participation as fully as if such Lender were
the direct creditor of the Borrowers in the amount of such participation.
2.6 DEFAULTING LENDERS.
(a) A Lender who fails to pay the Agent its Proportionate
Share of any Loans (including Agent Advances) made available by the
Agent on such Lender's behalf, or who fails to pay any other amounts
owing by it hereunder to the Agent, is a "DEFAULTING LENDER." The Agent
is entitled to recover from such Defaulting Lender all such amounts
owing by such Defaulting Lender on demand. If the Defaulting Lender
does not pay such amounts on the Agent's demand, the Agent shall
promptly notify the Funds Administrator and the Borrowers shall pay
such amounts to the Agent (to the extent the Agent has made such
amounts available to or for the account of the Borrowers) within 5
Business Days of the receipt by the Funds Administrator of such notice.
In addition, the Defaulting Lender or the Borrowers shall pay to the
Agent for its own account interest on
26
such amount for each day from the date it was made available by the
Agent to the Borrowers to the date it is recovered by the Agent at a
rate per annum equal to (x) the overnight Federal Funds Rate if paid by
the Defaulting Lender, or (y) the then applicable rate of interest
calculated under SECTION 4.1, if paid by the Borrowers; plus, in each
case, the Expenses and losses, if any, incurred as a result of the
Defaulting Lender's failure to perform its obligations. Nothing herein
shall be deemed to relieve any Lender of its obligation to fulfill its
commitments hereunder or to prejudice any rights which the Borrowers
may have against any Lender as a result of any default by such Lender
hereunder, including, without limitation, the right of the Borrowers to
seek reimbursement from any Defaulting Lender for any amounts paid by
the Borrowers under CLAUSE (y) above on account of such Defaulting
Lender's default.
(b) The failure of any Lender to fund its Proportionate Share
of a Loan shall not relieve any other Lender of its obligation to fund
its Proportionate Share of a Loan. Conversely, no Lender shall be
responsible for the failure of another Lender to fund its Proportionate
Share of a Loan.
(c) The Agent shall not be obligated to transfer to a
Defaulting Lender any payment made by the Borrowers to the Agent for
the Defaulting Lender's benefit; nor shall a Defaulting Lender be
entitled to the sharing of any payment hereunder. Amounts payable to a
Defaulting Lender shall instead be paid to or retained by the Agent.
The Agent may hold and, in its discretion, re-lend to the Borrowers the
amount of all such payments received by it for the account of such
Lender. For purposes of voting or consenting to matters with respect to
the Credit Documents and determining Proportionate Shares, such
Defaulting Lender shall be deemed not to be a "LENDER" and such
Lender's Revolving Commitment or Term Commitment shall be deemed to be
zero (-0-). This section shall remain effective with respect to such
Lender until (x) the Obligations shall have been declared or shall have
become immediately due and payable or (y) the Majority Revolving
Lenders or Majority Term Lenders, as applicable, the Agent and the
Borrowers shall have waived such Lender's default in writing. The
operation of this Section shall not be construed to increase or
otherwise affect the Revolving Loan Commitment or Term Loan Commitment
of any Lender, or relieve or excuse the performance by the Borrowers of
their respective duties and obligations hereunder.
2.7 ALLOCATION OF LOANS AND EXPENSES.
(a) The Borrowers maintain an integrated cash management
system reflecting their interdependence on one another and the mutual
benefits shared among them as a result of their respective operations.
In order to efficiently fund and operate their respective businesses
and minimize the number of Borrowings which they will make under this
Credit Agreement and thereby reduce the administrative costs and record
keeping required in connection therewith, including the necessity to
enter into and maintain separately identified and monitored borrowing
facilities, the Borrowers have requested, and the Agent and the Lenders
have agreed that, subject to SECTION 11.16, (i) all Revolving Loans
will be advanced to and for the account of the Borrowers on a joint and
several basis to the Disbursement Account and (ii) all Letters of
Credit will be issued
27
pursuant to an application therefor executed by the Funds Administrator
on behalf and for the account of the Borrower or Borrowers specified by
the Funds Administrator in such application. Each of the Borrowers
hereby acknowledges that it will be receiving a direct benefit from
each Loan made and each Letter of Credit issued pursuant to this Credit
Agreement.
(b) In order to track more precisely the respective recipients
of the proceeds of each Loan and the Borrower receiving the primary
benefit from the issuance of each Letter of Credit, and to assist the
Funds Administrator, the Borrowers, the Agent and the Lenders in
administering the Loans and the Letters of Credit, each of the
Borrowers has agreed with the Agent and the Lenders to cause the Funds
Administrator to establish and maintain, and the Funds Administrator
hereby agrees to establish and maintain, accounts with respect to each
Borrower (each Borrower's "ALLOCATION ACCOUNT") in which the Funds
Administrator shall record its good faith allocation to each of the
Borrowers of (w) the proceeds, if any, of each Loan received by or for
the account of such Borrower, (x) payments made to the Agent on account
of the Obligations of such Borrower, (y) the aggregate face amount of
all outstanding Letters of Credit covering goods which such Borrower
will receive and (z) all previously unallocated Expenses.
(c) As soon as available, but not later than fifteen (15)
Business Days after the last Business Day of each month ending after
the Closing Date, the Funds Administrator shall deliver to the Agent
and each Borrower a report prepared by or under the supervision of the
chief financial officer of the Funds Administrator, and certified by
such officer, setting forth with respect to each Borrower the balance
of the Allocation Account of such Borrower as of the end of, and all
activity occurring in such Allocation Account during, such month.
Absent demonstrable error, each such monthly statement shall be final,
conclusive and binding on the respective Borrowers.
ARTICLE 3. LETTERS OF CREDIT.
3.1 LETTERS OF CREDIT.
(a) Subject to and upon the terms and conditions set forth
herein, the Funds Administrator may, for and on behalf of any Borrower,
at any time and from time to time on and after the Closing Date,
request the Agent either to (i) direct an Issuing Bank to issue for the
account of the Funds Administrator and for the benefit of (A) any
holder (or any trustee, agent or other similar representative for any
such holders) of LC Supportable Obligations of any Borrower, an
irrevocable standby letter of credit, in a form customarily used by
such Issuing Bank or in such other form as has been approved by such
Issuing Bank, and (B) sellers of goods to any Borrower, an irrevocable
trade letter of credit, or (ii) approve the issuance by an Issuing Bank
of an irrevocable trade letter of credit upon application made by any
Borrower directly to such Issuing Bank pursuant to an application
procedure previously approved by the Agent, in each case in a form
customarily used by such Issuing Bank or in such other form as has been
approved by such Issuing Bank (PROVIDED, that, in the event of any
conflict between the terms of this Credit Agreement and such form, the
terms of this Credit Agreement shall govern and control). All Letters
of Credit shall be denominated in United States dollars and shall be
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issued on a sight basis only. Notwithstanding anything to the contrary contained
in this Credit Agreement or any of the other Credit Documents, all Existing
Letters of Credit shall for all purposes constitute and be deemed and construed
to be Letters of Credit issued under this Credit Agreement and each of the
Borrowers hereby expressly assumes all Letter of Credit Obligations in respect
thereof.
(b) Subject to and upon the terms and conditions set forth
herein, the Agent agrees that it will, at any time and from time to
time on and after the Closing Date, following its receipt of the
respective Letter of Credit Request, direct the applicable Issuing Bank
to issue (or approve the issuance for the account of Borrowers of), one
or more Letters of Credit as are permitted to remain outstanding
hereunder without giving rise to a Default or an Event of Default,
PROVIDED, that the Agent shall not be under any obligation to direct
any Issuing Bank to issue (or to approve the issuance by any Issuing
Bank of) any Letter of Credit if at the time of such issuance any
order, judgment or decree of any Governmental Authority or arbitrator
shall purport by its terms to enjoin or restrain such Issuing Bank from
issuing such Letter of Credit or any Requirement of Law applicable to
such Issuing Bank or any request or directive (whether or not having
the force of law) from any Governmental Authority with jurisdiction
over such Issuing Bank shall prohibit, or request that such Issuing
Bank refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon such Issuing Bank
with respect to such Letter of Credit any restriction or reserve or
capital requirement (for which such Issuing Bank is not otherwise
compensated hereunder) not in effect with respect to such Issuing Bank
on the date hereof, or any unreimbursed loss, cost or expense which was
not applicable or in effect with respect to such Issuing Bank as of the
date hereof and which such Issuing Bank reasonably and in good ▇▇▇▇▇
▇▇▇▇▇ material to it. The transmittal by the Funds Administrator on
behalf of any Borrower or Borrowers of any Letter of Credit Request
shall be deemed to be a representation and warranty made by all
Borrowers, both at the time of such transmittal and at the time of the
issuance of the requested Letter of Credit, that the Letter of Credit
may be issued in accordance with and will not violate any of the
requirements of this Credit Agreement, including, without limitation,
this ARTICLE 3.
3.2 MAXIMUM LETTER OF CREDIT OBLIGATIONS; FINAL MATURITIES.
Notwithstanding anything to the contrary contained in this Credit
Agreement, (a) no Letter of Credit shall be issued if (x) the Stated Amount
thereof, when added to the Letter of Credit Obligations outstanding at such
time, would exceed $20,000,000, or (y) after giving effect to such issuance, the
sum of the Revolving Loans plus the Letter of Credit Obligations, in each case
outstanding at such time would exceed the lesser at such time of (I) the
aggregate Revolving Loan Commitments of all Lenders and (II) the Borrowing Base;
and (b) each Letter of Credit shall by its terms terminate on or before (A) in
the case of standby Letters of Credit, the date which occurs 12 months after the
date of the issuance thereof (although any such standby Letter of Credit may be
extendible for successive periods of up to 12 months on terms acceptable to the
Agent and the Issuing Bank), but in no event later than 10 Business Days prior
to the Expiration Date, and (B) in the case of trade Letters of Credit, on or
before the date which occurs 120 days after the date of issuance thereof, but in
no event later than 30 Business Days prior to the Expiration Date.
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3.3 LETTER OF CREDIT REQUESTS.
(a) Whenever the Funds Administrator, for and on behalf of any
Borrower, desires the Agent to direct or approve the issuance of a
Letter of Credit for the account of the Funds Administrator (or to
amend or modify any existing Letter of Credit), the Funds Administrator
shall give the Agent at least five Business Days' (or such shorter
period as is acceptable to the Agent) written notice thereof (including
by way of facsimile). Each such notice shall be given to Agent in the
form of EXHIBIT C hereto (each a "LETTER OF CREDIT REQUEST").
(b) The making of each Letter of Credit Request shall be
deemed to be a representation and warranty by Borrowers to Agent and
the Lenders that such Letter of Credit may be issued in accordance
with, and will not violate the requirements of, this Credit Agreement,
including, without limitation, this ARTICLE 3. Upon receipt by the
Agent of a Letter of Credit Request, then the Agent shall, subject to
the terms and conditions of this Credit Agreement, either direct an
Issuing Bank to issue (or amend or modify, as the case may be), or,
approve the issuance of (or the amendment or modification of, as the
case may be), the requested Letter of Credit for the account of the
Funds Administrator in accordance with such Issuing Bank's usual and
customary practices. Upon the issuance or modification of, or amendment
to, any standby Letter of Credit, the Issuing Bank shall promptly
provide written confirmation of such issuance, amendment or
modification, as the case may be, to the Funds Administrator and the
Agent, and such notice shall be accompanied by a copy of such issuance,
modification or amendment, as the case may be. Upon receipt of such
notice, the Agent shall promptly provide written notice to the LC
Participants of such issuance, modification or amendment, and if
requested, the Agent shall provide such LC Participant, with copies of
any such issuance, modification or amendment. With regard to trade
Letters of Credit, the Issuing Bank shall, on the first Business Day of
each week, provide the Agent with a report, by facsimile transmission,
of the daily aggregate outstanding trade Letters of Credit during the
previous week. Upon receipt of such report, the Agent shall provide the
LC Participants with the contents of such report. Notwithstanding
anything to the contrary contained in this Credit Agreement, in the
event that any Lender is a Defaulting Lender, no Issuing Bank shall be
required to issue any Letter of Credit unless such Issuing Bank has
entered into arrangements satisfactory to it and the Borrowers to
eliminate such Issuing Bank's risk with respect to the participation in
Letters of Credit by such Defaulting Lender, including by cash
collateralizing such Defaulting Lender's Proportionate Share of the
Letter of Credit Obligations.
3.4 LETTER OF CREDIT PARTICIPATIONS.
(a) Immediately upon the issuance by an Issuing Bank of any
Letter of Credit, such Issuing Bank shall be deemed to have sold and
transferred to each Revolving Lender (other than such Issuing Bank in
its capacity (if any) as a Revolving Lender) and each such Revolving
Lender (in its capacity under this SECTION 3.4, an "LC PARTICIPANT"),
shall be deemed irrevocably and unconditionally to have purchased and
received from such Issuing Bank, without recourse or warranty, an
undivided interest and participation, to the extent of such LC
Participant's Proportionate Share, in such Letter of Credit, each
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Drawing or payment made thereunder and the joint and several
obligations of the respective Borrowers under this Credit Agreement
with respect thereto, and any security therefor or guaranty pertaining
thereto. Upon any change in the aggregate Revolving Loan Commitments or
Proportionate Shares of the respective Revolving Lenders pursuant to
the terms of this Credit Agreement, it is hereby agreed that, with
respect to all Letter of Credit Obligations, there shall be an
automatic adjustment to the participations pursuant to this SECTION 3.4
to reflect the new Proportionate Shares of the assignor and assignee
Lender, as the case may be.
(b) In determining whether to pay under any Letter of Credit,
no Issuing Bank shall have any obligation relative to the Lenders other
than to confirm that any documents required to be delivered under such
Letter of Credit appear to have been delivered and that they appear to
substantially comply on their face with the requirements of such Letter
of Credit. Any action taken or omitted to be taken by an Issuing Bank
under or in connection with any Letter of Credit issued by it shall not
create for such Issuing Bank any resulting liability to any Borrower,
any other Credit Party, any Lender or any other Person unless such
action is taken or omitted to be taken with gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable decision).
(c) In the event that any Issuing Bank makes any payment under
any Letter of Credit issued by it, such Issuing Bank shall promptly
notify the Agent, which shall promptly notify each LC Participant of
such failure, and each LC Participant shall promptly and
unconditionally pay to such Issuing Bank the amount of such LC
Participant's Proportionate Share of such unreimbursed payment in
United States dollars and in same day funds. If the Agent so notifies,
prior to 12:00 Noon (New York time) on any Business Day, any LC
Participant required to fund a payment under a Letter of Credit, such
LC Participant shall make available to such Issuing Bank in United
States dollars such LC Participant's Proportionate Share of the amount
of such payment on such Business Day in same day funds. If and to the
extent such LC Participant shall not have so made its Proportionate
Share of the amount of such payment available to the Issuing Bank, such
LC Participant agrees to pay to such Issuing Bank, forthwith on demand
such amount, together with interest thereon, for each day from such
date until the date such amount is paid to such Issuing Bank at the
overnight Federal Funds Rate for the first 3 days and at the interest
rate applicable to Revolving Loans for each day thereafter. The failure
of any LC Participant to make available to an Issuing Bank its
Proportionate Share of any payment under any Letter of Credit shall not
relieve any other LC Participant of its obligation hereunder to make
available to such Issuing Bank its Proportionate Share of any payment
under any Letter of Credit on the date required, as specified above,
but no LC Participant shall be responsible for the failure of any other
LC Participant to make available to such Issuing Bank such other LC
Participant's Proportionate Share of any such payment.
(d) Whenever an Issuing Bank receives a payment of a
reimbursement obligation as to which it has received any payments from
the LC Participants pursuant to CLAUSE (c) above, such Issuing Bank
shall pay to each such LC Participant which has paid its Proportionate
Share thereof, in United States dollars and in same day funds, an
amount
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equal to such LC Participant's share (based upon the proportionate
aggregate amount originally funded by such LC Participant to the
aggregate amount funded by all LC Participants) of the principal amount
of such reimbursement obligation and interest thereon accruing after
the purchase of the respective participations.
(e) Upon the request of any LC Participant, each Issuing Bank
shall furnish to such LC Participant such documentation as may
reasonably be requested by such LC Participant.
(f) The obligations of the LC Participants to make payments to
any Issuing Bank with respect to Letters of Credit issued by it shall
be irrevocable and not subject to any qualification or exception
whatsoever and shall be made in accordance with the terms and
conditions of this Credit Agreement under all circumstances, including,
without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this
Credit Agreement or any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or
other right which any Credit Party or any Subsidiary of any
Credit Party may have at any time against a beneficiary named
in a Letter of Credit, any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting),
the Agent, any LC Participant, or any other Person, whether in
connection with this Credit Agreement, any Letter of Credit,
the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between any
Credit Party or any Subsidiary of any Credit Party and the
beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document
presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) surrender or impairment of any security for the
performance or observance of any of the terms of any of the
Credit Documents; or
(v) the occurrence of any Default or Event of
Default.
3.5 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS.
(a) Borrowers jointly and severally agree to reimburse each
Issuing Bank, by making payment to the Agent in immediately available
funds, for any payment or disbursement made by such Issuing Bank under
any Letter of Credit issued by it, not later than one Business Day
following receipt by the Funds Administrator of notice from the Agent
of such payment or disbursement, with interest on the amount so paid or
disbursed by such Issuing Bank, to the extent not reimbursed prior to
12:00 Noon on the date of such payment or disbursement, from and
including the date paid or disbursed to but excluding the date such
Issuing Bank is reimbursed therefor at a rate per annum equal to the
Prime Lending Rate in effect from time to time PLUS one and one-half
percent
32
(1.50%); PROVIDED, that, to the extent such amounts are not reimbursed
prior to 12:00 Noon on the third Business Day following the receipt by
the Funds Administrator of notice of such payment or disbursement or
following the occurrence and during the continuance of a Default or an
Event of Default, interest shall thereafter accrue on the amounts so
paid or disbursed by the Issuing Bank (and until reimbursed by
Borrowers) at a rate per annum equal to the Prime Lending Rate in
effect from time to time PLUS one and one-half percent (1.50%) PLUS two
percent (2.00%), with such interest to be payable on demand. The
Issuing Bank shall give the Funds Administrator prompt written notice
of each Drawing under any Letter of Credit issued by it, PROVIDED, that
the failure to give any such notice shall in no way affect, impair or
diminish any Borrower's obligations hereunder.
(b) The joint and several obligations of the Borrowers under
this SECTION 3.5 to reimburse the Issuing Bank with respect to drawings
under Letters of Credit issued by it (each a "DRAWING") (including, in
each case, interest thereon) shall be absolute and unconditional under
any and all circumstances and irrespective of any setoff, counterclaim
or defense to payment which any Borrower or any Subsidiary of any
Borrower may have or have had against any Lender (including in its
capacity as an Issuing Bank or as a LC Participant), including, without
limitation, any defense based upon the failure of any Drawing under a
Letter of Credit to conform to the terms of the Letter of Credit or any
nonapplication or misapplication by the beneficiary of the proceeds of
such Drawing; PROVIDED, that Borrowers shall not be obligated to
reimburse any Issuing Bank for any wrongful payment made by such
Issuing Bank under a Letter of Credit issued by it as a result of acts
or omissions constituting willful misconduct or gross negligence on the
part of such Issuing Bank (as determined by a court of competent
jurisdiction in a final and non-appealable decision).
3.6 INCREASED COSTS.
If, at any time after the Closing Date, the introduction of or any
change in any applicable law, rule, regulation, order, guideline or request or
in the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by any
Issuing Bank or any LC Participant with any request or directive by any such
Governmental Authority (whether or not having the force of law), shall either
(i) impose, modify or make applicable any reserve, deposit, capital adequacy or
similar requirement against letters of credit issued by such Issuing Bank or
participated in by such LC Participant, or (ii) impose on such Issuing Bank or
such LC Participant any other conditions relating, directly or indirectly, to
this Credit Agreement or any Letter of Credit; and the result of any of the
foregoing is to increase the cost to such Issuing Bank or such LC Participant of
issuing, maintaining or participating in any Letter of Credit, or reduce the
amount of any sum received or receivable by such Issuing Bank or such LC
Participant hereunder or reduce the rate of return on its capital with respect
to Letters of Credit (except for changes in the rate of tax on, or determined by
reference to, the net income or profits of such Issuing Bank or such LC
Participant pursuant to the laws of the jurisdiction in which it is organized or
in which its principal office or applicable lending office is located or any
subdivision thereof or therein), then, upon the delivery at any time within 180
days after the date on which an officer of the Issuing Bank or LC Participant,
as the case may be, responsible for overseeing this Credit Agreement knows or
has reason to know of its right to
33
additional compensation under this SECTION 3.6, of the certificate referred to
below to the Funds Administrator by such Issuing Bank or such LC Participant, as
the case may be (a copy of which certificate shall be sent by such Issuing Bank
or such LC Participant to the Agent), Borrowers jointly and severally agree to
pay to such Issuing Bank or such LC Participant such additional amount or
amounts as will compensate such Issuing Bank or such LC Participant for such
increased cost or reduction in the amount receivable or reduction on the rate of
return on its capital; PROVIDED, that if such Issuing Bank or such LC
Participant, as the case may be, fails to deliver such demand within such
180-day period, such entity shall only be entitled to additional compensation
for any such costs incurred from and after the date that is 180 days prior to
the date the Borrowers received such demand. Any Issuing Bank or any LC
Participant, upon determining that any additional amounts will be payable
pursuant to this SECTION 3.6, will give prompt written notice thereof to the
Funds Administrator, which notice shall include a certificate submitted to the
Funds Administrator by the Issuing Bank or such LC Participant (a copy of which
certificate shall be sent by such Issuing Bank or such LC Participant to the
Agent), setting forth in reasonable detail the basis for the calculation of such
additional amount or amounts necessary to compensate such Issuing Bank or such
LC Participant. Any certificate required to be delivered pursuant to this
SECTION 3.6 shall, absent demonstrable error, be final and conclusive and
binding on Borrowers.
ARTICLE 4. COMPENSATION, REPAYMENT AND
REDUCTION OF COMMITMENTS.
4.1 INTEREST ON LOANS.
(a) Interest on the unpaid principal amount of Revolving Loans
which are Prime Rate Loans shall be payable monthly in arrears on the
first Business Day of each month, at an interest rate per annum equal
to the Prime Lending Rate PLUS the Applicable Margin, as the same may
be adjusted pursuant to the provisions of the definition of Applicable
Margin.
(b) Interest on the unpaid principal amount of Loans which are
LIBOR Rate Loans shall be payable on the earliest to occur of (i) the
last day of each Interest Period with respect to such LIBOR Rate Loans,
(ii) ninety (90) days following the commencement of the applicable
Interest Period for such LIBOR Rate Loans, (iii) in the case of
Revolving Loans, the date of conversion of such LIBOR Rate Loans (or a
portion thereof) to a Prime Rate Loan (on the portion so converted) and
(iv) the maturity of such LIBOR Rate Loans, at an interest rate per
annum equal during the Interest Period for such LIBOR Rate Loans to (A)
in the case of LIBOR Rate Loans which are Revolving Loans, the LIBOR
Rate for the Interest Period in effect for such LIBOR Rate Loans PLUS
the Applicable Margin, as the same may be adjusted pursuant to the
provisions of the definition of Applicable Margin, and (B) in the case
of LIBOR Rate Loans constituting all or a portion of the Term Loans,
six percent (6.00%) PLUS the greater of (x) the LIBOR Rate for the
Interest Period in effect for such LIBOR Rate Loans or (y) two and one
half percent (2.50%). After maturity of such LIBOR Rate Loans (whether
by acceleration or otherwise), interest shall be payable upon demand.
The Agent upon determining the LIBOR Rate for any Interest Period shall
promptly notify the Funds Administrator and the Lenders by telephone
(confirmed promptly in writing) or in writing thereof.
34
(c) Each determination by the Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent
demonstrable error.
(d) Notwithstanding the provisions of SECTION 4.1(b), the
Borrowers shall pay to each Lender, so long as and to the extent such
Lender shall be required under regulations of the Board of Governors of
the Federal Reserve System to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency
liabilities (as defined in Regulation D), additional interest on the
unpaid principal amount of each Revolving Loan comprised of LIBOR Rate
Loans of such Lender, from the date of such LIBOR Rate Loan until such
principal amount is paid in full, at an interest rate per annum equal
at all times to the remainder obtained by subtracting (i) the LIBOR
Rate for the applicable Interest Period for such LIBOR Rate Loan from
(ii) the rate obtained by dividing such LIBOR Rate by a percentage
equal to 1 MINUS the stated maximum rate (stated as a decimal)
applicable two (2) Business Days before the first day of such Interest
Period of all reserves, if any, required to be maintained against
Eurocurrency liabilities as specified in Regulation D (or against any
other category of liabilities which includes deposits by reference to
which the interest rate on LIBOR Rate Loans is determined or any
category of extensions of credit or other assets which includes loans
by a non-United States office of any Lender to United States residents)
having a term equal to the Interest Period applicable to such LIBOR
Rate Loan. Such Lender shall as soon as practicable provide notice to
the Agent and the Funds Administrator of any such additional interest
arising in connection with such LIBOR Rate Loan, which notice shall be
conclusive and binding, absent demonstrable error.
4.2 UNUSED LINE FEE.
The Borrowers shall pay to the Agent, for the ratable benefit of the
Lenders, a non-refundable fee (the "UNUSED LINE FEE") equal to three-eighths of
one percent (0.375%) per annum of the unused portion of the aggregate Revolving
Loan Commitments of all Lenders (with any outstanding Letters of Credit
constituting usage of the Revolving Loan Commitments). The Unused Line Fee shall
accrue daily from the Closing Date until the Expiration Date, and shall be due
and payable monthly in arrears, on the first Business Day of each month and on
the Expiration Date.
4.3 LETTER OF CREDIT FEES.
(a) The Agent, for the ratable benefit of the LC Participants,
shall be entitled to charge to the account of the Funds Administrator
on the first Business Day of each month, a fee (the "LETTER OF CREDIT
FEE"), in an amount equal to the Applicable Margin with respect to
LIBOR Rate Loans in effect from time to time of the Stated Amount of
Letters of Credit outstanding during the immediately preceding month.
In addition, the Agent shall be entitled to charge to the account of
the Funds Administrator on the first Business Day of each month, for
the account of the Agent, a fee (the "L/C FACING FEE") in an amount
equal to one-half percent (0.5%) per annum (or a minimum of US$500.00
per year per Letter of Credit) of the Stated Amount of Letters of
Credit outstanding during the immediately preceding month.
35
(b) In addition to the above described fees, the Borrowers
agree to pay to the Issuing Bank such bank's charges, fees, costs and
expenses in connection with the issuance, transfer, amendment and
payment of any Letter of Credit (the "ISSUING BANK FEES"). Each Issuing
Bank shall be entitled to request the Agent to charge the account of
the Borrowers for Issuing Bank Fees incurred by such Issuing Bank. Such
charges, fees, costs and expenses shall be payable as and when incurred
by the Issuing Bank. Each determination by the Agent or the Issuing
Bank, as the case may be, of the Letter of Credit Fees, LC Facing Fees,
Issuing Bank Fees and other fees, costs and expenses charged under this
Section shall be conclusive and binding for all purposes, absent
demonstrable error.
4.4 INTEREST AND LETTER OF CREDIT FEES AFTER EVENT OF DEFAULT.
From the date of occurrence of an Event of Default (after giving effect
to any applicable grace period) until the earlier of the date upon which (i) all
Obligations shall have been paid and satisfied in full or (ii) such Event of
Default shall have been cured or waived, interest on the Loans and Letter of
Credit Fees on Letter of Credit Obligations shall each be payable on demand at a
rate per annum equal to, with respect to the Loans, the rate in effect under
SECTION 4.1, PLUS two percent (2%), and with respect to the Letter of Credit
Obligations, the rate at which Letter of Credit Fees are charged pursuant to the
first sentence of SECTION 4.3(a), PLUS two percent (2%).
4.5 COLLATERAL MONITORING FEE.
On September 1, 2003 and the first day of each calendar month ending
thereafter, the Borrowers shall pay to the Agent, for its own account, a
non-refundable monthly collateral monitoring fee (the "COLLATERAL MONITORING
FEE") in the amount of $15,000.
4.6 THIS SECTION INTENTIONALLY LEFT BLANK.
4.7 EXPENSES.
The Borrowers shall reimburse the Expenses of the Agent or any Lender,
as the case may be, promptly upon demand.
4.8 MANDATORY PAYMENT OF LOANS; VOLUNTARY PREPAYMENTS OF LOANS;
REDUCTIONS OF COMMITMENTS.
(a) Except during the period described in SECTION 2.2(b)(ii),
the aggregate outstanding principal amount of Revolving Loans PLUS
Letter of Credit Obligations at any time in excess of the lesser at
such time of (i) the aggregate Revolving Loan Commitments of the
Revolving Loan Lenders or (ii) the Borrowing Base, shall be immediately
due and payable without the necessity of any demand.
(b) On the Expiration Date, the Revolving Loan Commitment of
each Lender shall automatically reduce to zero (-0-).
(c) The Borrowers may reduce or terminate the Line of Credit
in whole, or in part at any time and from time to time; PROVIDED, that
each such reduction must be in an
36
amount not less than $5,000,000 (and in increments of $1,000,000 in
excess thereof). Once reduced, no portion of the Line of Credit may be
reinstated. If the Borrowers seek to reduce the Line of Credit to less
than $25,000,000, then the Line of Credit shall be automatically and
permanently reduced to zero ($0).
(d) Commencing on the first day of each consecutive calendar
quarter ending after reduction of the Fixed Asset Sublimit to zero
(-0-), the Term Loans shall amortize in equal installments of
$2,500,000, with the then remaining principal balance thereof, if any,
being due and payable in full on the Expiration Date. In addition, upon
reduction of the Fixed Asset Sublimit to zero (-0-), the Borrowers
shall prepay the outstanding principal balance of the Term Loans on the
date which is ninety (90) days after the end of (i) the fiscal year of
the Consolidated Entity ending on March 31, 2004, and (ii) each fiscal
year of the Consolidated Entity ending thereafter, in each case by an
amount equal to fifty percent (50%) of Excess Cash Flow for such fiscal
year. All mandatory repayments of the Term Loans required pursuant to
this CLAUSE (d) shall be applied in each case to the then remaining
scheduled installments of principal on the Term Loans in the inverse
order of their maturity.
(e) Upon receipt by MTLM of any Net Issuance Proceeds, the
Borrowers may prepay the Term Loans in an amount less than or equal to
such Net Issuance Proceeds, without premium or penalty (except for any
premiums or penalties required to be paid by the Borrowers pursuant to
SECTION 4.14(d)(ii)); PROVIDED that immediately before and after giving
effect to each such prepayment, no Default or Event of Default shall
have occurred and be continuing. All prepayments of Term Loans
permitted pursuant to this CLAUSE (e) shall be applied to the then
remaining scheduled installments of principal on the Term Loans in the
inverse order of their maturity;
(f) Upon reduction of the Fixed Asset Sublimit to zero (-0-),
and in addition to the rights of the Borrowers pursuant to CLAUSE (e)
above, the Borrowers may, no more than two (2) times in any Fiscal
Year, upon at least three (3) Business Day's prior written notice to
the Agent, prepay the Term Loans in an amount greater than or equal to
$1,000,000, without premium or penalty (except for any premiums or
penalties required to be paid by the Borrowers pursuant to SECTION
4.14(d)(ii)); PROVIDED, HOWEVER, each of the following conditions must
be satisfied with respect to each such prepayment: (i) immediately
before and after giving effect to such prepayment, no Default or Event
of Default shall have occurred and be continuing, (ii) immediately
after giving effect to such prepayment, Excess Availability shall be at
least $25,000,000, (iii) after giving pro forma effect to such
prepayment, Excess Availability on each day during the thirty (30)
calendar day period immediately preceding the date of such prepayment
shall be at least $25,000,000 and (iv) the Funds Administrator shall
have duly executed and delivered to the Agent a certificate of a
Responsible Officer of the Funds Administrator stating for and on
behalf of each of the Borrowers that, after giving effect to such
prepayment, the Borrowers reasonably believe that Excess Availability
on each day during the thirty (30) calendar day period immediately
following the date of such prepayment shall be at least $25,000,000.
All prepayments of Term Loans permitted pursuant to this CLAUSE (f)
shall
37
be applied to the then remaining scheduled installments of principal on
the Term Loans in the inverse order of their maturity.
4.9 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF ACCOUNT.
The Agent shall maintain an account on its books in the name of the
Borrowers (the "LOAN ACCOUNT") in which the Borrowers will be charged with all
loans and advances made by the Lenders to the Borrowers or for the account of
the Borrowers, including the Revolving Loans and all Letter of Credit
Obligations, the Fees, the Expenses and any other Obligations, as and when such
payments become due. The Loan Account will be credited with all payments
received by the Agent from the Borrowers or for the account of the Borrowers,
including all amounts received in the DBTCo Account from the Collection Banks.
After the end of each month, the Agent shall send the Funds Administrator a
monthly statement accounting for the charges, loans, advances and other
transactions occurring among and between the Agent, the Lenders and the
Borrowers during that month, PROVIDED, that the failure of the Agent to send
such statement to the Funds Administrator shall not relieve the Borrowers of any
Obligations. Absent demonstrable error, each monthly statement shall be an
account stated and shall be final, conclusive and binding on the Borrowers.
4.10 PAYMENT PROCEDURES.
Payments of Fees, principal of and interest on the Loans and Expenses
payable to the Agent or any Lender shall be made in each case not later than
2:00 P.M. Chicago time on the day when due, in immediately available United
States dollars, to the Payment Office. The Borrowers hereby authorize the Agent
to charge the Loan Account with the amount of all payments to be made hereunder
and under the other Credit Documents, including all Fees and Expenses, as and
when such payments become due. The joint and several obligations of the
Borrowers to the Lenders with respect to such payments shall be discharged by
making such payments to the Agent pursuant to this Section or, at the Agent's
option, by the charging of the Loan Account by the Agent.
4.11 COLLECTION OF ACCOUNTS.
Until instructed otherwise by the Agent, each Borrower shall be
entitled to receive Collections directly from account debtors in accordance with
its historical practices. On or prior to the Closing Date, each Borrower, the
Agent and financial institutions selected by such Borrower and reasonably
acceptable to the Agent (the "COLLECTION BANKS") shall enter into agreements in
form and substance satisfactory to Agent (the "DEPOSITARY ACCOUNT AGREEMENTS"),
which among other things shall provide for the opening of an account for the
deposit of Collections (a "COLLECTION ACCOUNT") at a Collection Bank. All
Collections and other amounts received by each Borrower from any account debtor,
in addition to all other cash received by any Borrower in respect of any other
Collateral, shall upon receipt be deposited into a Collection Account.
Termination of such arrangements shall also be subject to prior written approval
by the Agent. Upon the terms and subject to the conditions set forth in the
Depositary Account Agreements, all available amounts held in each Collection
Account shall be wired each Business Day into an account (the "DBTCO ACCOUNT")
maintained by the Agent at DBTCo.
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Amounts received in the DBTCo Account from the Collection Banks shall be
credited to the Loan Account and distributed and applied as set forth in SECTION
4.12.
4.12 DISTRIBUTION AND APPLICATION OF COLLECTIONS AND OTHER AMOUNTS.
All Collections received by the Agent, and all other amounts received
by the Borrowers and delivered to the Agent, shall be credited to the Loan
Account; PROVIDED, that if an Event of Default has occurred and is continuing,
all Collections and other amounts received by Agent shall be distributed and
applied in the following order: FIRST, to the payment of any Fees, Expenses or
other Obligations due and payable to the Agent under any of the Credit
Documents, including Agent Advances and any other amounts advanced by the Agent
on behalf of the Lenders; SECOND, to the payment of any Fees, Expenses or other
Obligations due and payable to any Issuing Bank under any of the Credit
Documents; THIRD, to the ratable payment of any Fees, Expenses or other
Obligations due and payable to the Lenders under any of the Credit Documents
other than those Obligations specifically referred to in this Section; FOURTH,
to the ratable payment of interest due on the Revolving Loans; FIFTH, to the
ratable payment of principal due on the Revolving Loans; SIXTH, to the ratable
payment of interest due on the Term Loans; and, SEVENTH, to the ratable payment
of principal due on the Term Loans.
4.13 CALCULATIONS.
All calculations of (i) interest hereunder and (ii) Fees, including,
without limitation, Unused Line Fees and Letter of Credit Fees, shall be made by
the Agent, on the basis of a year of 360 days, or, if such computation would
cause the interest and Fees chargeable hereunder to exceed the Highest Lawful
Rate, 365/366 days, in each case for the actual number of days elapsed
(including the first day but excluding the last day) occurring in the period for
which such interest or Fees are payable. Each determination by the Agent of an
interest rate, Fee or other payment hereunder shall be conclusive and binding
for all purposes, absent demonstrable error.
4.14 SPECIAL PROVISIONS RELATING TO LIBOR RATE LOANS
(a) CONTINUATION. With respect to any Borrowing consisting of
LIBOR Rate Loans, the Borrowers may, subject to the provisions of
SECTION 4.14(c), elect to maintain such Borrowing or any portion
thereof as consisting of LIBOR Rate Loans by selecting a new Interest
Period for such Borrowing, which new Interest Period shall commence on
the last day of the immediately preceding Interest Period. Each
selection of a new Interest Period shall be made by notice given not
later than noon Chicago time on the third Business Day prior to the
date of any such continuation relating to LIBOR Rate Loans, by the
Funds Administrator to the Agent. Such notice by the Funds
Administrator of a continuation (a "NOTICE OF CONTINUATION") shall be
by telephone or facsimile transmission, and if by telephone, promptly
confirmed in writing, substantially in the form of EXHIBIT D, in each
case specifying (i) the date of such continuation, (ii) the aggregate
amount of Revolving Loans subject to such continuation and (iii) the
duration of the selected Interest Period. The Borrowers may elect to
maintain more than one Borrowing consisting of LIBOR Rate Loans by
combining such Borrowings into one Borrowing and selecting a new
Interest Period pursuant to this SECTION 4.14(a). If the Borrowers
shall fail to select a new Interest Period for any Borrowing consisting
of
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LIBOR Rate Loans in accordance with this SECTION 4.14(a), such
Revolving Loans will automatically, on the last day of the then
existing Interest Period therefor, convert into Prime Rate Loans. The
Agent shall give each Lender prompt notice by telephone or facsimile
transmission of each Notice of Continuation.
(b) CONVERSION. The Borrowers may on any Business Day (so long
as no Default or Event of Default has occurred and is continuing), upon
notice (each such notice, a "NOTICE OF CONVERSION") given to the Agent,
and subject to the provisions of SECTION 4.14(c), convert the entire
amount of or a portion of all Revolving Loans of one Type comprising
the same Borrowing into Revolving Loans of the other Type; PROVIDED,
THAT any conversion of any LIBOR Rate Loans into Prime Rate Loans shall
be made on, and only on, the last day of an Interest Period for such
LIBOR Rate Loans and, upon conversion of any Prime Rate Loans into
LIBOR Rate Loans, the Borrowers shall pay accrued interest to the date
of conversion on the principal amount converted. Each such Notice of
Conversion shall be given not later than noon Chicago time on the
Business Day prior to the date of any proposed conversion into Prime
Rate Loans and on the third Business Day prior to the date of any
proposed conversion into LIBOR Rate Loans. Subject to the restrictions
specified above, each Notice of Conversion shall be by telephone or
facsimile transmission, and if by telephone, promptly confirmed in
writing, substantially in the form of EXHIBIT D-1, in each case
specifying (i) the requested date of such conversion, (ii) the Type of
Revolving Loans to be converted, (iii) the portion of such Type of
Revolving Loan to be converted, (iv) the Type of Revolving Loans such
Revolving Loans are to be converted into and (v) if such conversion is
into LIBOR Rate Loans, the duration of the Interest Period of such
Revolving Loan. Each conversion shall be in an aggregate amount of not
less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof. The Borrowers may elect to convert the entire amount of or a
portion of all Revolving Loans of one Type comprising more than one
Borrowing into Revolving Loans of another Type by combining such
Borrowings into one Borrowing; PROVIDED, THAT if the Borrowings so
combined consist of LIBOR Rate Loans, such Loans shall have Interest
Periods ending on the same date.
(c) CERTAIN LIMITATIONS ON LIBOR RATE LOANS. The right of the
Borrowers to maintain, select, continue or convert LIBOR Rate Loans
shall be limited as follows:
(i) If the Agent is not offering United States
dollar deposits (in the applicable amounts) in the London
interbank market, or the Agent determines that adequate and
fair means do not otherwise exist for ascertaining the LIBOR
Rate or LIBOR Rate Loans comprising any requested Borrowing,
continuation or conversion, the right of the Borrowers to
select or maintain LIBOR Rate Loans for such Borrowing or any
subsequent Borrowing shall be suspended until the Agent shall
notify the Funds Administrator and the Lenders that the
circumstances causing such suspension no longer exist, and
each Revolving Loan shall be made as a Prime Rate Loan.
(ii) If the Majority Lenders shall, at least two (2)
Business Days before the date of any requested Borrowing,
continuation or conversion, notify the Agent that the LIBOR
Rate for Revolving Loans comprising such Borrowing will not
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adequately reflect the cost to such Lenders of making or
funding their respective Revolving Loans for such Borrowing,
the right of the Borrowers to select LIBOR Rate Loans for such
Borrowing shall be suspended until the Agent shall notify the
Funds Administrator and the Lenders that the circumstances
causing such suspension no longer exist, and each Revolving
Loan comprising such Borrowing and each other Borrowing
requested during such period of suspension shall be made as a
Prime Rate Loan.
(iii) If at any time any Lender determines (which
determination shall, absent demonstrable error, be conclusive
and binding on all parties) that the making, continuation or
conversion of any Revolving Loan as a LIBOR Rate Loan by such
Lender has become unlawful or impermissible by reason of
compliance by that Lender with any law, governmental rule,
regulation or order of any Governmental Authority (whether or
not having the force of law), then, and in any such event,
such Lender may give notice of that determination in writing,
to the Agent and the Funds Administrator and the Agent shall
promptly transmit the notice to each other Lender. Until such
Lender gives notice otherwise, the right of the Borrowers to
select LIBOR Rate Loans from that Lender shall be suspended
and each Revolving Loan made by that Lender, notwithstanding
the Type of Revolving Loan made by the other Lenders, shall be
a Prime Rate Loan and each LIBOR Rate Loan outstanding from
that Lender shall automatically, on the last day of the
existing Interest Period therefor (or earlier, if so required
under such law, rule, regulation or order), convert to a Prime
Rate Loan.
(iv) No Agent Advance shall be made as a LIBOR Rate
Loan.
(v) no more than five (5) Interest Periods with
respect to LIBOR Rate Loans may be in effect at any time.
(vi) No Revolving Loans may be made, continued or
converted as or to LIBOR Rate Loans at any time that a Default
or Event of Default shall have occurred and be continuing.
(d) COMPENSATION.
(i) Each Notice of Continuation and Notice of
Conversion shall be irrevocable by and binding on the
Borrowers. In the case of any Borrowing, continuation or
conversion that the related Notice of Borrowing, Notice of
Continuation or Notice of Conversion specifies is to be
comprised of LIBOR Rate Loans, the Borrowers shall indemnify
each Lender against any loss, cost or expense incurred by such
Person as a result of any failure to fulfill, on or before the
date for such Borrowing, continuation or conversion specified
in such Notice of Borrowing, Notice of Continuation or Notice
of Conversion, the applicable conditions set forth in ARTICLE
5, including, without limitation, any loss (excluding loss of
anticipated profits), cost or expense incurred by reason of
the liquidation or re-employment of deposits or other funds
acquired by such Lender to fund the
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Revolving Loan to be made by such Lender as part of such
Borrowing, continuation or conversion.
(ii) If any payment or prepayment of principal of,
or conversion or continuation of, any LIBOR Rate Loan is made
other than on the last day of the Interest Period for such
Loan as a result of a payment, prepayment, conversion or
continuation of such Loan or acceleration of the maturity of
the Notes or for any other reason, the Borrowers shall, upon
demand by any Lender (with a copy of such demand to the
Agent), pay to the Agent for the account of such Lender any
amounts required to compensate such Lender for any additional
losses, costs or expenses which it may reasonably incur as a
result of such payment, including, without limitation, any
loss (excluding loss of anticipated profits), cost or expense
incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by any Lender to fund or
maintain such Loan.
(iii) Calculation of all amounts payable to a Lender
under this SECTION 4.14(d) shall be made as though such Lender
elected to fund all LIBOR Rate Loans by purchasing United
State dollar deposits in its LIBOR Lending Office's interbank
eurodollar market.
4.15 INDEMNIFICATION IN CERTAIN EVENTS.
(a) INCREASED COSTS. If after the Closing Date, either (i) any
change in or in the interpretation of any law or regulation is
introduced, including, without limitation, with respect to reserve
requirements applicable to the Agent, to any of the Lenders, Deutsche
Bank, AG or any other affiliated banking or financial institution from
whom any of the Lenders borrows funds or obtains credit (a "FUNDING
BANK"), or (ii) the Agent, a Funding Bank or any of the Lenders
complies with any future guideline or request from any central bank or
other Governmental Authority proposed or promulgated after the date of
the Agreement or (iii) the Agent, a Funding Bank or any of the Lenders
reasonably determines that the adoption of any applicable law, rule or
regulation regarding capital adequacy or any change therein, or any
change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof announced after the date
of this Credit Agreement has or would have the effect described below,
or the Agent, a Funding Bank or any of the Lenders complies with any
request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable
agency announced after the date of this Credit Agreement and in the
case of any event set forth in this clause (iii), such adoption, change
or compliance has or would have the effect of reducing the rate of
return on any of such Person's capital as a consequence of its
obligations hereunder to a level below that which such Person could
have achieved but for such adoption, change or compliance (taking into
consideration such Person's policies with respect to capital adequacy)
by an amount reasonably deemed by such Person to be material, and any
of the foregoing events described in CLAUSES (i), (ii) OR (iii)
increases the cost to the Agent, or any of the Lenders of (A) funding
or maintaining any Commitment or (B) issuing, causing the issuance of
making or maintaining any Letter of Credit or of purchasing or
maintaining any participation
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therein, or reduces the amount receivable in respect thereof by the
Agent or any Lender, then the Borrowers shall upon demand by the Agent
at any time within 180 days after the date on which an officer of the
Agent, such Funding Bank or such Lender, as the case may be,
responsible for overseeing this Credit Agreement knows or has reason to
know of its right to additional compensation under this SECTION
4.15(a), pay to the Agent, for the account of such Lender or, as
applicable, the Agent or a Funding Bank, additional amounts sufficient
to reimburse the Agent, such Funding Bank and such Lender against such
increase in cost or reduction in amount receivable; PROVIDED, HOWEVER,
that if the Agent or any such Lender or Funding Bank, as the case may
be, fails to deliver such demand within such 180-day period, such
entity shall only be entitled to additional compensation for any such
costs incurred from and after the date that is 180 days prior to the
date the Borrowers received such demand; and PROVIDED FURTHER, HOWEVER,
that before making any such demand, the Agent and each Lender agree to
use reasonable efforts (consistent with such Person's internal policy
and legal and regulatory restrictions) to mitigate or avoid such
increased costs, including, without limitation, designating a different
Applicable Lending Office if the making of such a designation would
avoid the need for, or reduce the amount of, such increased cost and so
long as such efforts would not, in the reasonable judgment of such
Person, be otherwise disadvantageous to such Person. A certificate as
to the amount of such increased cost, and setting forth in reasonable
detail the calculation thereof, shall be submitted to the Funds
Administrator by the Agent, or the applicable Lender or Funding Bank,
and shall be conclusive absent demonstrable error.
(b) Each Lender will promptly notify the Agent, and the Agent
will promptly notify the Funds Administrator, of any event of which it
has knowledge that would entitle such entity to additional compensation
under this SECTION 4.15. Neither the Agent nor any Lender shall request
any additional compensation under this SECTION 4.15 unless it is
generally making similar requests of other borrowers similarly
situated, and the Agent and each Lender agrees to use a reasonable
basis for calculating amounts allocable to its commitment to lend or
its Loans and Letter of Credit Obligations, if any, hereunder.
4.16 SUBSTITUTION OF LENDERS.
In the event the Borrowers become obligated to pay additional amounts
to any Lender pursuant to SECTION 4.15, or any Lender is a Defaulting Lender,
the Funds Administrator may designate another Lender (with such other Lender's
consent) reasonably acceptable to the Agent (such other Lender herein called a
"REPLACEMENT LENDER") to purchase the Loans and other Obligations of such Lender
and such Lender's rights hereunder, without recourse to or warranty by, or
expense to, such Lender for a purchase price equal to the outstanding principal
amount of the Loans owing to such Lender PLUS any accrued but unpaid interest on
such Loans and other Obligations and accrued but unpaid Unused Line Fees in
respect of such Lender's Commitment and any other amounts payable to such Lender
under this Credit Agreement, and to assume all the obligations of such Lender
hereunder and, upon such purchase, such Lender shall on longer be a party hereto
or have any rights hereunder (other than indemnities and other similar rights
applicable to such Lender prior to the date of such assignment and assumption)
and shall be relieved from all obligations to the Borrowers hereunder, and the
Replacement Lender shall succeed to the rights and obligations of such Lender
hereunder.
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ARTICLE 5. CONDITIONS PRECEDENT.
5.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT.
The obligation of each Lender to fund its Proportionate Share of the
initial Borrowing (or, if it shall occur earlier, the obligation of the Agent to
cause the issuance by the Issuing Bank of the initial Letter of Credit and of
each Lender to purchase a participation therein) is in each case subject to the
satisfaction or waiver of the following conditions precedent:
(a) EXCESS AVAILABILITY. Excess Availability shall be no less
than $20,000,000, after giving effect to payment of all amounts due and
payable by the respective Borrowers on the Closing Date and after
giving pro forma effect to the repayment of the Indebtedness evidenced
by the Repurchased Junior Secured Notes and the redemption of the
remaining Junior Secured Notes with the proceeds of the Loans.
(b) CLOSING DOCUMENTS. The Agent and the Lenders shall have
received each of the agreements, opinions, reports, approvals,
consents, certificates and other documents set forth on the List of
Closing Documents attached hereto as SCHEDULE A (the "CLOSING DOCUMENT
LIST").
(c) FEES AND EXPENSES. All Fees and Expenses payable by the
Borrowers hereunder and under the Fee Letter on or before the Closing
Date shall have been paid in full.
(d) MATERIAL CONSENTS AND APPROVALS. All governmental and
material third party approvals necessary or, in the sole discretion of
the Agent, advisable in connection with this Credit Agreement and other
Credit Documents shall have been obtained and shall be in full force
and effect.
(e) OTHER DOCUMENTS. Borrowers shall have delivered or caused
to be delivered to the Agent, in each case in form and substance
satisfactory to Agent, (i) all information required pursuant to SECTION
7.2 and (ii) such other business and/or financial and data and other
information as the Agent shall reasonably request.
(f) OFFICER'S CERTIFICATE. The Agent shall have received a
certificate dated the Closing Date signed on behalf of the Funds
Administrator and each of the Borrowers by a Responsible Officer of the
Funds Administrator stating that all of the conditions set forth in
SECTIONS 5.4(a) and (b) have been satisfied on and as of such date.
(g) DELIVERY OF PURCHASE AGREEMENTS. Borrowers shall have
delivered or caused to be delivered to the Agent, in form and substance
satisfactory to Agent, fully executed copies of each Junior Secured
Note Purchase Agreement.
5.2 CONDITIONS PRECEDENT TO ALL TERM LOANS AND CERTAIN REVOLVING
LOANS.
The obligation of each Lender to fund its Proportionate Share of the
Term Loans and any Revolving Loans, the proceeds of which are used to repurchase
the Repurchase Junior Secured Notes is in each case subject to the satisfaction
or waiver of the following conditions precedent:
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(a) EXCESS AVAILABILITY. Excess Availability shall be no less
than $20,000,000, after giving effect to payment of all amounts due and
payable by the respective Borrowers on the Closing Date and after
giving effect to the repayment of the Indebtedness evidenced by the
Repurchased Junior Secured Notes and after giving pro forma effect to
the redemption of the remaining Junior Secured Notes, in each case,
with the proceeds of the Loans.
(b) DELIVERY OF NOTICE OF TERM LOAN BORROWING. The Agent shall
have received a notice of borrowing dated as of the Repurchased Note
Settlement Date signed on behalf of the Funds Administrator and each of
the Borrowers by a Responsible Officer of the Funds Administrator
requesting the disbursement of the Term Loans and to the DB Securities
Account.
5.3 CONDITIONS PRECEDENT TO THE FUNDING OF REVOLVING LOANS TO
REDEEM THE REMAINING JUNIOR SECURED NOTES.
The obligation of each Lender to fund its Proportionate Share of any
Borrowing, the proceeds of which are used to redeem the Junior Secured Notes
(other than the Repurchased Junior Secured Notes) is in each case subject to the
satisfaction or waiver of the following conditions precedent:
(a) REDEMPTION DOCUMENTS. Borrowers shall have delivered or
caused to be delivered to the Agent, in form and substance satisfactory
to Agent, all documents, agreements and instruments in connection with
the redemption of the Junior Secured Notes that the Agent shall
reasonably request.
5.4 CONDITIONS PRECEDENT TO ALL REVOLVING LOANS AND LETTERS OF
CREDIT.
The obligation of each Lender to fund its Proportionate Share of any
requested Revolving Loan (or of the Agent to cause the Issuing Bank to issue any
requested Letter of Credit and of each LC Participant to purchase a
participation therein) is in each case subject to the satisfaction of the
conditions precedent set forth below. Each Notice of Borrowing, each Letter of
Credit Request and each issuance by any Borrower of a check drawn against, or
request for transfer from, the Disbursement Account shall constitute a
representation and warranty to the Agent and each Lender by the Borrowers that
such conditions are satisfied.
(a) All representations and warranties contained in this
Credit Agreement and the other Credit Documents are true and correct in
all material respects on and as of the date of such Notice of
Borrowing, Letter of Credit Request, or issuance of a check drawn
against, or request for transfer from, the Disbursement Account both
before and after giving effect thereto and to the application of the
proceeds thereof, in each case as if then made, other than
representations and warranties that expressly relate solely to an
earlier date (in which case such representations and warranties shall
have been true and accurate in all material respects on and as of such
earlier date); and
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(b) No Default or Event of Default shall have occurred and be
continuing or could reasonably be expected to result from the making of
the requested Revolving Loan or the issuance of the requested Letter of
Credit.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.
To induce the Agent and the Lenders to enter into this Credit Agreement
and to induce the Lenders to make the Loans and other financial accommodations
described herein, each of the Borrowers hereby represents and warrants to the
Agent and the Lenders that the representations and warranties contained in this
ARTICLE 6 are true and correct. Such representations and warranties, and all
other representations and warranties made by the Borrowers in any other Credit
Documents, shall survive the execution and delivery of this Credit Agreement and
such other Credit Documents.
6.1 ORGANIZATION AND QUALIFICATION.
Each Credit Party and each Subsidiary of each Credit Party (i) are
corporations, limited partnerships or limited liability companies, as the case
may be, duly organized, validly existing and in good standing under the laws of
the respective states or other jurisdictions of their formation, (ii) have the
power and authority to own their respective properties and assets and to
transact their respective businesses in which they presently are, or propose to
be, engaged and (iii) are duly qualified and are authorized to do business and
are in good standing in each of the respective jurisdictions where they
presently are, or propose to be, engaged in business, in each case, except where
any failures to be so qualified, authorized and in good standing could not
reasonably be expected singly or in the aggregate to have a Material Adverse
Effect. SCHEDULE B, PART 6.1 lists all jurisdictions in which each Credit Party
and each Subsidiary of each Credit Party are qualified to do business as foreign
corporations, limited partnerships or limited liability companies, as the case
may be.
6.2 AUTHORITY.
Each Credit Party and each Subsidiary of each Credit Party has the
requisite power and authority to execute, deliver and perform the respective
Credit Documents to which they are parties. All corporate, partnership, limited
liability company, or similar action necessary for the execution, delivery and
performance of any of the Credit Documents by each Credit Party and each
Subsidiary of each Credit Party which is a party thereto has been taken.
6.3 ENFORCEABILITY.
This Credit Agreement and each of the other Credit Documents are the
legal, valid and binding obligations of each Credit Party and each Subsidiary of
each Credit Party which are parties thereto, enforceable in accordance with
their respective terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency or similar laws affecting creditors' rights generally,
and (ii) general principles of equity.
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6.4 NO CONFLICTS.
The execution, delivery and performance of each Credit Document by each
Credit Party and each Subsidiary of each Credit Party which are parties thereto
are not in contravention of (i) the Governing Documents of such Persons, or (ii)
any Requirement of Law, or (iii) any indenture, contract, agreement or
instrument or other commitment to which any or all of such Persons are parties
or by which any of such Persons or any of its properties are bound, and will not
result in the imposition of any Liens upon any of the properties of any of such
Persons.
6.5 CONSENTS AND FILINGS.
No consent, authorization, permit or filing is required in connection
with the execution, delivery and performance of this Credit Agreement or any
other Credit Document by any Credit Party or any Subsidiary of any Credit Party
which are parties thereto, or in connection with the continuing operations of
such Persons, except (i) those that have been obtained or made and (ii) filings
necessary to create, perfect or retain the perfection of Liens granted by the
respective Credit Parties in favor of the Agent on the Collateral.
6.6 GOVERNMENT REGULATION.
No Borrower nor any Subsidiary of any Borrower is subject to regulation
under the Public Utility Holding Company Act of 1935, the Investment Company Act
of 1940, the Federal Power Act or any other similar Requirement of Law that
limits the respective abilities of such Persons to incur indebtedness or
consummate the transactions contemplated in this Credit Agreement and the other
Credit Documents.
6.7 SOLVENCY.
The present fair saleable value of the assets of each Borrower exceeds
all its probable liability on its existing debts as they become absolute and
matured, including those to be incurred pursuant to this Credit Agreement and
the other Credit Documents. No Borrower (i) has unreasonably small capital in
relation to the business in which it is or proposes to be engaged and (ii) has
incurred and believes that it will incur, after giving effect to the
transactions contemplated by this Credit Agreement, debts beyond its ability to
pay as such debts become due.
6.8 RIGHTS IN COLLATERAL PRIORITY OF LIENS.
All property constituting Collateral is owned or leased by the
respective Borrowers, free and clear of any and all Liens in favor of third
parties, other than Permitted Liens. Upon the proper filing of the UCC financing
and termination statements, in each case listed in the Closing Document List,
the security interests granted pursuant to the Credit Documents constitute valid
and enforceable first, prior (subject to Permitted Liens) and perfected Liens on
the Collateral, to the extent such Liens can be perfected by the filing of such
financing statements.
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6.9 FINANCIAL DATA.
(a) The Borrowers have provided or caused to be provided to
the Agent and each of the Lenders complete and accurate copies of the
following Financial Statements: (i) audited Financial Statements as of
March 31, 2003, and (ii) unaudited internally prepared Financial
Statements as of May 31, 2003. All such Financial Statements have been
prepared in accordance with GAAP consistently applied throughout the
periods involved and fairly present the respective consolidated
financial positions, results of operations and cash flows of Persons
indicated for each of the periods covered subject, in the case of
interim Financial Statements, to normal year-end audit adjustments and
the absence of footnotes.
(b) The Consolidated Entity has no material Contingent
Obligation (or any other material liability which was not incurred in
the ordinary course of business) which is not reflected in such
Financial Statements or the footnotes thereto (or Forms 10-K and 10-Q
of which such Financial Statements form a part), or is not otherwise
disclosed on SCHEDULE B, PART 6.9.
6.10 LOCATIONS OF OFFICES, RECORDS AND INVENTORY.
(a) The address of the principal place of business and, if
there is more than one principal place of business, the chief executive
office, of each Credit Party is set forth on SCHEDULE B, PART 6.10(a),
as the same may be amended after the Closing Date in accordance with
SECTION 11.11. The books and records of each Credit Party, and all its
chattel paper, if any, and records of Accounts, are maintained
exclusively at one or more of such locations.
(b) There is no location in which any Borrower has any
Collateral (except for vehicles and Inventory in transit), other than
those locations identified on SCHEDULE B, PART 6.10(a) and on SCHEDULE
B, PART 6.10(b), as the same may be amended after the Closing Date in
accordance with SECTION 11.11. A complete list of the legal name and
address of each warehouse, processor or other bailee location at which
Inventory of any Borrower is stored is set forth on SCHEDULE B, PART
6.10(b), as the same may be amended after the Closing Date in
accordance with SECTION 11.11. None of the receipts received and to be
received by any Borrower from any warehouseman state that the Inventory
covered thereby is to be delivered to bearer or to the order of a named
Person or to a named Person and such named Person's assigns, in each
case other than such Borrower.
6.11 SUBSIDIARIES; OWNERSHIP OF EQUITY.
As of the Closing Date, (i) the only direct or indirect Subsidiaries of
the respective Credit Parties are those listed on SCHEDULE B, PART 6.11, (ii)
each Credit Party is the record and beneficial owner of all of the respective
equity Securities of each of its Subsidiaries listed on SCHEDULE B, PART 6.11,
(iii) there are no proxies, irrevocable or otherwise, with respect to such
equity Securities and, no equity Securities of any of such equity Subsidiaries
are or may become required to be issued by reason of any options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or equity Securities or rights convertible
48
into or exchangeable for equity Securities of any such equity Subsidiary, and
(iv) there are no contracts, commitments, understandings or arrangements by
which any such Subsidiary is or may become bound to issue additional equity
Securities or equity Securities convertible into or exchangeable therefor. All
of such equity Securities so owned by any Credit Party are owned by such Credit
Party free and clear of any Liens other than Liens in favor of the Agent.
6.12 NO JUDGMENTS OR LITIGATION.
No judgments, orders, writs or decrees are outstanding against any
Credit Party or any Subsidiary of any Credit Party, nor is there now pending or,
to any Credit Party's knowledge, threatened, any litigation, contested claim,
investigation, arbitration, or governmental proceeding by or against any Credit
Party or any Subsidiary of any Credit Party other than (i) as of the Closing
Date, as set forth on SCHEDULE B, PART 6.12, or (ii) with respect to matters
arising after the Closing Date, that singly or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
6.13 NO DEFAULTS.
No Credit Party nor any Subsidiary of any Credit Party is in default
under any term of any other indenture, contract, lease, agreement, instrument or
commitment to which any of them is a party or by which any of them is bound,
defaults under which singly or in the aggregate could reasonably be expected to
have a Material Adverse Effect. No Credit Party knows of any disputes regarding
any such indenture, contract, lease, agreement, instrument or other commitment
which singly or in the aggregate could reasonably be expected to have a Material
Adverse Effect.
6.14 LABOR MATTERS.
SCHEDULE B, PART 6.14 accurately sets forth all labor union contracts
to which any Borrower or any Subsidiary of any Borrower is a party as of the
Closing Date (including their respective dates of expiration). There are no
existing or, to the knowledge of any Borrower, threatened strikes, lockouts or
other disputes relating to any collective bargaining or similar agreement to
which any Borrower or any Subsidiary of any Borrower is a party that singly or
in the aggregate could reasonably be expected to have a Material Adverse Effect.
6.15 COMPLIANCE WITH LAW.
Except as set forth on SCHEDULE B, PART 6.15, no Credit Party nor any
Subsidiary of any Credit Party has violated or failed to comply in any material
respect with any Requirements of Law, the violation of or failure to comply with
which could singly or in the aggregate reasonably be expected to have a Material
Adverse Effect.
6.16 ERISA.
No Borrower, no Subsidiary of any Borrower and no ERISA Affiliate
maintains or contributes to any Benefit Plan other than those listed on SCHEDULE
B PART 6.16. Each Benefit Plan has been and is maintained and funded in all
material respects in accordance with its terms and in compliance with all
applicable provisions of ERISA and the Internal Revenue Code. Each
49
Borrower, each Subsidiary of a Borrower and each ERISA Affiliate has fulfilled
all contribution obligations for each Benefit Plan (including obligations
related to the minimum funding standards of ERISA and the Internal Revenue
Code). No Termination Events have occurred which singly or in the aggregate
could reasonably be expected to have a Material Adverse Effect. No Borrower, no
Subsidiary of a Borrower and no ERISA Affiliate is required to provide security
to any Benefit Plan under Section 401(a)(29) of the Internal Revenue Code.
6.17 COMPLIANCE WITH ENVIRONMENTAL LAWS.
Except for matters disclosed on SCHEDULE B, PART 6.17 and for matters
arising after the Closing Date, in each case none of which matters could singly
or in the aggregate reasonably be expected to have a Material Adverse Effect,
(i) the operations of each Borrower and each Subsidiary of each Borrower comply
in all material respects with all applicable federal, state and local
environmental, health and safety statutes, regulations, directions, ordinances,
criteria and guidelines; (ii) no Borrower has received notice that any of the
operations of such Borrower or any of its Subsidiaries is the subject of any
judicial or administrative proceeding alleging the violation of any federal,
state or local environmental, health or safety statute, regulation, direction,
ordinance, criteria or guideline; (iii) none of the operations of such Borrower
or any of its Subsidiaries is the subject of any federal or state investigation
evaluating whether such Borrower or any of its Subsidiaries disposed of any
hazardous or toxic waste, substance or constituent or other substance at any
site that may require remedial action, or any federal or state investigation
evaluating whether any remedial action is needed to respond to a release of any
hazardous or toxic waste, substance or constituent or other substance into the
environment; (iv) no Borrower nor any Subsidiary of any Borrower has filed any
notice under any federal or state law indicating past or present treatment,
storage or disposal of a hazardous or toxic waste, substance or constituent or
reporting a spill or release of a hazardous or toxic waste, substance or
constituent or other substance into the environment; and (v) no Borrower nor any
Subsidiary of any Borrower has any contingent liability of which the Borrower
has knowledge, or reasonably should have knowledge, in connection with any
release or potential release of any hazardous or toxic waste, substance or
constituent or other substance into the environment, nor has the Borrower or any
of its Subsidiaries received any notice, letter or other indication of potential
liability arising from the disposal of any hazardous or toxic waste, substance
or constituent or other substance into the environment.
6.18 INTELLECTUAL PROPERTY.
Each Borrower and each Subsidiary of each Borrower possesses such
assets, licenses, patents, patent applications, copyrights, service marks,
trademarks and trade names as are necessary or advisable to continue to conduct
their respective present and proposed business activities.
6.19 LICENSES AND PERMITS.
Each Borrower and each Subsidiary of each Borrower has obtained and
holds in full force and effect, all franchises, licenses, leases, permits,
certificates, authorizations, qualifications, easements, rights of way and other
rights and approvals which are necessary or advisable for the operation of its
business as presently conducted and as proposed to be conducted, except for such
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licenses, permits, authorizations, qualifications, easements, rights of way and
other rights the failure to obtain or hold in full force and effect could not
reasonably be expected singly or in the aggregate to have a Material Adverse
Effect.
6.20 TAXES AND TAX RETURNS.
(a) Except as set forth on SCHEDULE B, PART 6.20, all income
tax returns required to be filed by each Credit Party and each
Subsidiary of each Credit Party have been timely filed (or extensions
with respect to such filings have been timely obtained). The
information filed is complete and accurate in all material respects.
(b) All taxes, assessments, fees and other governmental
charges for periods beginning prior to the date hereof (other than such
taxes, assessments, fees and other governmental charges that are not
yet due and payable and taxes, assessments, fees and charges being
contested in good faith and for which adequate reserves have been made
in accordance with GAAP) have been timely paid and no Credit Party nor
any Subsidiary of any Credit Party has any material liability for taxes
in excess of the amounts so paid or reserves so established.
(c) Except as set forth on SCHEDULE B, PART 6.20, no Credit
Party nor any Subsidiary of any Credit Party has any obligation under
any written tax sharing agreement or agreement regarding payments in
lieu of taxes.
6.21 MATERIAL CONTRACTS.
SCHEDULE B, PART 6.21, contains a true, correct and complete list of
all the Material Contracts in effect on the Closing Date. Except as described on
SCHEDULE B, PART 6.21, and, except to the extent that any such restrictions
singly or in the aggregate could not reasonably be expected to have a Material
Adverse Effect, no Material Contract contains any burdensome restrictions on any
Credit Party or any Subsidiary of any Credit Party or any of their respective
properties that singly or in the aggregate could reasonably be expected to
prevent such Credit Party or Subsidiary from conducting its business as
conducted on the Closing Date. As of the Closing Date, all of the Material
Contracts are in full force and effect, and no defaults currently exist
thereunder by any Credit Party or Subsidiary of a Credit Party that is a party
thereto (except for disputed claims set forth on SCHEDULE B, PART 6.21) or, to
the knowledge of any Credit Party, any other party thereto.
6.22 ACCURACY AND COMPLETENESS OF INFORMATION.
All factual information (other than financial information or forecasts)
furnished by or on behalf of any Credit Party or any Subsidiary of any Credit
Party in writing to the Agent or any Lender for purposes of or in connection
with this Credit Agreement or any Credit Documents or any transaction
contemplated hereby or thereby, is or will be true and accurate in all material
respects on the date as of which such information is dated or certified and,
taken as a whole and in the context in which so furnished, is not incomplete by
omitting to state any material fact necessary to make such information not
misleading at such time.
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6.23 NO CHANGE.
Since the last day of the fiscal year ended March 31, 2003, no event
has occurred which has had or could reasonably be expected to have a Material
Adverse Effect.
ARTICLE 7. AFFIRMATIVE COVENANTS.
Until termination of this Credit Agreement and payment and satisfaction
of all Obligations due hereunder:
7.1 FINANCIAL REPORTING.
The Borrowers shall timely deliver or cause to be timely delivered to
the Agent the following information:
(a) LETTER TO AUDITORS. No later than the date on which the
Auditors commence work on the preparation of the annual audited
Financial Statements, a copy of a letter delivered by MTLM to the
Auditors notifying the Auditors that (x) such Financial Statements will
be delivered by MTLM to the Agent (and thereafter by the Agent to each
of the Lenders) under this Credit Agreement, (y) it is a primary
intention of MTLM in engaging the Auditors' services in connection with
its audit of the Financial Statements for such fiscal year, to satisfy
the financial reporting requirements set forth herein and (z) stating
that the Agent and each of the Lenders intend to rely thereon with
respect to the transactions which are the subject of this Agreement.
(b) ANNUAL FINANCIAL STATEMENTS. As soon as available, but not
later than 90 days after each fiscal year end: (i) the annual Financial
Statements of the Consolidated Entity; (ii) a comparison in reasonable
detail to the prior year Financial Statements; (iii) the Auditors'
unqualified opinion, "Management Letter" (if any, and only upon receipt
by MTLM) and statement indicating whether the Auditors have obtained
knowledge of the existence of any Default or Event of Default during
their audit; (iv) a narrative discussion of the consolidated financial
condition and results of operations and the consolidated liquidity and
capital resources of the Consolidated Entity for such fiscal year,
prepared by the chief financial officer of MTLM; and (v) a compliance
certificate substantially in the form of EXHIBIT E with an attached
schedule of calculations demonstrating compliance with the financial
covenants set forth in ARTICLE 8.
(c) MONTHLY AND ANNUAL PROJECTIONS. Not later than 30 days
prior to each fiscal year end, beginning with the fiscal year ended
March 31, 2004, monthly projections of the financial condition and
results of operations of the Consolidated Entity for the next
succeeding year and annual projections for each succeeding fiscal year
thereafter, through and including the fiscal year in which the
Expiration Date will occur, in each case containing projected
consolidating balance sheets, statements of operations, statements of
cash flows and statements of changes in shareholders' equity.
52
(d) QUARTERLY FINANCIAL STATEMENTS. As soon as available, but
not later than 45 days after each end of each of the first three fiscal
quarters in any fiscal year (i) Financial Statements of the
Consolidated Entity, as of the fiscal quarter then ended, and for the
fiscal year to date; (ii) a comparison in reasonable detail to the
Financial Statements for the corresponding periods of the prior fiscal
year; (iii) the certification of the chief executive officer, chief
financial officer or treasurer of MTLM that such Financial Statements
have been prepared in accordance with GAAP (subject to year-end audit
adjustments and the absence of footnotes); (iv) a narrative discussion
of the consolidated financial condition and results of operations and
the consolidated liquidity and capital resources of the Consolidated
Entity for such fiscal quarter and fiscal year to date, prepared by the
chief financial officer of MTLM; and (v) a compliance certificate
substantially in the form of EXHIBIT E with an attached schedule of
calculations demonstrating compliance with the financial covenants set
forth in ARTICLE 8.
(e) MONTHLY FINANCIAL STATEMENTS. As soon as available, but
not later than 30 days after the end of each month (other than the last
month in each fiscal quarter of the Consolidated Entity): (A) a balance
sheet for the Consolidated Entity as at the end of such month and for
the fiscal year to date and statements of operations and cash flows for
such month and for the fiscal year to date; (B) a comparison to the
balance sheet, statement of operations and statement of cash flows for
the same periods in the prior year; and (C) a certification by the
chief executive officer, chief financial officer or treasurer or MTLM
that such balance sheet, statement of operations and statement of cash
flows have been prepared in accordance with GAAP (subject to year-end
audit adjustments and the absence of footnotes).
(f) MONTHLY COMPARISON TO PRIOR PROJECTIONS. As soon as
available, but not later than 30 days after the end of each month
(other than the last month in each fiscal year of the Consolidated
Entity), a comparison of actual results of operations, cash flows and
capital expenditures for the Consolidated Entity for such month and for
the period from the beginning of the current fiscal year through the
end of such month with amounts previously projected for those periods
in the most recent projections delivered pursuant to SECTION 7.1(c).
(g) PUBLIC REPORTING. Promptly upon their becoming available,
copies of all regular and periodic reports, proxy statements and other
materials, if any, filed by any Borrower with the SEC, or with any
national securities exchange, or distributed to the public stockholders
of MTLM.
7.2 COLLATERAL REPORTING.
The Borrowers shall timely deliver or cause to be delivered to the
Agent the following certificates and reports:
(a) WEEKLY AND MONTHLY BORROWING BASE CERTIFICATES. Weekly,
before 12:00 noon on the third Business Day of each week (except the
last week of each month), monthly, within 5 Business Days after the
last Business Day of each month, and at any other time reasonably
requested by the Agent, a Borrowing Base Certificate, which shall
53
be: (i) in form and substance satisfactory to the Agent, detailing the
Eligible Accounts Receivable and Eligible Inventory, in each case of
each of the Borrowers; and (ii) prepared by or under the supervision of
the chief executive officer or chief financial officers of each
Borrower and certified by such officer subject only to adjustment upon
completion of the normal annual audit of physical inventory. Each
Borrowing Base Certificate shall have attached to it such additional
schedules and other information as the Agent may reasonably request,
including, without limitation, an aging of Accounts.
(b) APPRAISALS. When requested by the Agent, (i) so long as an
Event of Default shall not have occurred and be continuing, not more
than once in any fiscal year of the Consolidated Entity and (ii)
following the occurrence and during the continuance of an Event of
Default, at any time, a report of Inventory of each Borrower, prepared
on a test or cycle basis, which shall describe each Borrower's
Inventory by category and by item (in reasonable detail) and report the
then appraised value (at lower of cost or market) of such Inventory.
(c) FURTHER ASSURANCES. When and as reasonably requested by
the Agent, any further information regarding the Collateral, business
affairs and financial condition of any Credit Party or any Subsidiary
of any Credit Party.
7.3 NOTIFICATION REQUIREMENTS.
The Borrowers shall timely give to the Agent and each of the Lenders
the following notices:
(a) NOTICE OF DEFAULTS. Promptly, and in any event within 5
Business Days after becoming aware of the occurrence of a Default or
Event of Default, a certificate of the chief executive officer or chief
financial officer of the Funds Administrator specifying the nature
thereof and the proposed response of the Credit Parties with respect
thereto, each in reasonable detail.
(b) PROCEEDINGS OR ADVERSE CHANGES. Promptly, and in any event
within 5 Business Days after any Credit Party becomes aware of (i) any
proceedings being instituted or threatened to be instituted by or
against such Credit Party or any of its Subsidiaries in any federal,
state, local or foreign court or before any commission or other
regulatory body (federal, state, local or foreign) which, if adversely
determined, singly or in the aggregate could reasonably be expected to
have a Material Adverse Effect, (ii) any order, judgment or decree in
excess of $3,000,000 being entered against such Credit Party or any of
its Subsidiaries or any of their respective properties or assets or
(iii) any actual or prospective change, development or event which has
had or could reasonably be expected to have a Material Adverse Effect,
a written statement describing such proceeding, order, judgment,
decree, change, development or event and any action being taken with
respect thereto by such Credit Party or such Subsidiary.
(c) ERISA NOTICES. (i) Promptly, and in any event within 10
Business Days after any Borrower, any Subsidiary of any Borrower or any
ERISA Affiliate knows that a Termination Event has occurred, a written
statement of the chief financial officer of
54
Funds Administrator describing such Termination Event and any action
that is being taken with respect thereto by such Borrower, such
Subsidiary or such ERISA Affiliate, and any action taken or threatened
by the Internal Revenue Service, Department of Labor or PBGC; and (ii)
promptly, and in any event within 3 Business Days after the filing
thereof with the Internal Revenue Service, a copy of each funding
waiver request filed with respect to any Benefit Plan and all
communications received by any Borrower, any Subsidiary of any Borrower
or any ERISA Affiliate with respect to such request.
(d) ENVIRONMENTAL AND HEALTH AND SAFETY NOTICES. Promptly, and
in any event within 10 Business Days after receipt by any Credit Party
or any Subsidiary of any Credit Party of any written notice, complaint
or order alleging any actual or prospective material violation of any
environmental, health or safety Requirement of Law or alleging
responsibility for material costs of a cleanup, together with a copy of
such notice, complaint, or order and a written statement describing any
action being taken with respect thereto by such Credit Party or
Subsidiary.
(e) MATERIAL CONTRACTS. Promptly, and in any event within 10
Business Days after any Material Contract of any Credit Party or any
Subsidiary of any Credit Party is terminated or amended or any new
Material Contract is entered into, a written statement describing such
event, with copies of amendments or new contracts, and an explanation
of any actions being taken with respect thereto.
(f) COLLATERAL MATTERS. At least 15 Business Days' prior
written notice to the Agent of any additional location of any
Collateral of any Borrower or in the location of the chief executive
office or places of business of any Borrower or any Subsidiary of any
Borrower from the respective locations specified in SCHEDULE B, PART
6.10. At least 10 Business Days prior to any such change, the Borrowers
shall cause to be executed and delivered to the Agent any financing
statements or other documents reasonably required by the Agent, all in
form and substance reasonably satisfactory to the Agent.
7.4 CORPORATE EXISTENCE.
Each Borrower shall, and shall cause each of its Subsidiaries to, (i)
maintain its corporate existence (except that any Borrower or any wholly-owned
Subsidiary of any Borrower may merge with, or be dissolved into, any other
Borrower, PROVIDED, that the Agent receives 5 Business Days' prior written
notice thereof), (ii) except for failures to so maintain which singly or in the
aggregate could not reasonably be expected to have a Material Adverse Effect,
maintain in full force and effect all licenses, bonds, franchises, leases,
trademarks and qualifications to do business, and all patents, contracts and
other similar rights and (iii) continue in, and limit their operations to, the
same general lines of business as presently conducted by them and other
businesses in the metals industry.
7.5 BOOKS AND RECORDS; INSPECTIONS.
Each Borrower agrees to maintain, and to cause each of its Subsidiaries
to maintain, books and records pertaining to the Collateral in such detail, form
and scope as is consistent with good business practice. Each Borrower agrees
that the Agent, or its agents, may enter upon the
55
premises of such Borrower or any of its Subsidiaries at any time and from time
to time, during normal business hours and upon reasonable advance notice, and at
any time at all upon the occurrence and during the continuance of an Event of
Default, for the purposes of (i) inspecting and verifying the existence and
value of the Collateral, (ii) inspecting and/or copying (at the expense of such
Borrower) any and all records pertaining thereto, and (iii) discussing the
affairs, finances and business of such Borrower with the Auditors or any
Responsible Officer of such Borrower, PROVIDED, that a Responsible Officer of
MTLM shall have the right to be present at any such discussions with the
Auditors.
7.6 INSURANCE.
(a) Each Borrower agrees to maintain, and to cause each of its
Subsidiaries to maintain, public liability insurance, fire and extended
coverage insurance and replacement value insurance on the Collateral
under such policies of insurance, with such insurance companies, in
such amounts and covering such risks as are customarily maintained by
Persons engaged in the same or similar businesses, PROVIDED, that the
Agent acknowledges that the insurance coverage maintained by the
Borrowers and disclosed in writing to the Agent, in each case on or
prior to the Closing Date, satisfies the foregoing requirements. All
policies covering the Collateral are to name the Agent as an additional
insured and/or the loss payee in case of loss, and are to contain such
other provisions as the Agent may reasonably require to fully protect
the Agent's interest in the Collateral and to any payments to be made
under such policies.
(b) UNLESS THE BORROWERS PROVIDE THE AGENT WITH EVIDENCE OF
THE INSURANCE COVERAGE REQUIRED BY THIS CREDIT AGREEMENT, THE AGENT MAY
PURCHASE INSURANCE AT THE BORROWERS' EXPENSE TO PROTECT THE AGENT'S
INTERESTS IN THE COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT
THE BORROWERS' INTERESTS. THE COVERAGE THAT THE AGENT PURCHASES MAY NOT
PAY ANY CLAIM THAT THE BORROWERS MAY MAKE OR ANY CLAIM THAT IS MADE
AGAINST ANY BORROWER IN CONNECTION WITH THE COLLATERAL. THE BORROWERS
MAY LATER CANCEL ANY INSURANCE PURCHASED BY THE AGENT, BUT ONLY AFTER
PROVIDING THE AGENT WITH EVIDENCE THAT THE BORROWERS HAVE OBTAINED
INSURANCE AS REQUIRED BY THIS CREDIT AGREEMENT. IF THE AGENT PURCHASES
INSURANCE FOR THE COLLATERAL, THE BORROWERS WILL BE RESPONSIBLE FOR THE
COSTS OF THAT INSURANCE, INCLUDING INTEREST AND ANY OTHER CHARGES THAT
MAY BE IMPOSED IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE, UNTIL
THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE.
THE COSTS OF THE INSURANCE MAY BE ADDED TO THE OBLIGATIONS. THE COSTS
OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE THE BORROWERS
MAY BE ABLE TO OBTAIN ON THEIR OWN.
56
7.7 TAXES.
Each Borrower agrees to pay, when due, and to cause each of its
Subsidiaries to pay when due, all taxes lawfully levied or assessed against such
Borrower, such Subsidiary or any of the Collateral before any penalty or
interest accrues thereon; PROVIDED, that, unless such taxes have become a
federal tax or ERISA Lien on any of the assets of such Credit Party or such
Subsidiary, no such tax need be paid if the same is being contested, in good
faith, by appropriate proceedings promptly instituted and diligently conducted
and if an adequate reserve or other appropriate provision shall have been made
therefor as required in order to be in conformity with GAAP.
7.8 COMPLIANCE WITH LAWS.
Each Borrower agrees to comply, and to cause each of its Subsidiaries
to comply, in all material respects with all Requirements of Law applicable to
the Collateral or any part thereof, or to the operation of its business or its
assets generally, unless such Credit Party contests any such Requirements of Law
in a reasonable manner and in good faith.
7.9 USE OF PROCEEDS.
The initial Loans made to the Borrowers hereunder shall be used by the
Borrowers to (a) repay in full the Indebtedness evidenced by the Junior Secured
Notes, to the extent outstanding on the Closing Date, and (b) pay costs and
expenses with respect to this Credit Agreement, which are due and payable on the
Closing Date, including the Fees and Expenses payable pursuant to ARTICLE 4
hereof. The proceeds of subsequent Revolving Loans and other extensions of
credit made hereunder shall be used by the Borrowers solely for ongoing working
capital requirements and other general corporate purposes, including, without
limitation, Investments permitted pursuant to SECTION 8.8. No Borrower shall use
any portion of the proceeds of any Revolving Loans for the purpose of purchasing
or carrying any "margin stock" (as defined in Regulation U) in any manner which
violates the provisions of Regulation U or X or of the terms and conditions of
this Credit Agreement or any other Credit Document.
7.10 FISCAL YEAR.
Each Borrower agrees to maintain, and to cause each of its Subsidiaries
to maintain, its fiscal year as a year ending March 31st.
7.11 MAINTENANCE OF PROPERTY.
Except to the extent otherwise expressly permitted pursuant to SECTION
8.6, each Borrower agrees to keep, and to cause each of its Subsidiaries to
keep, all property useful and necessary to their respective businesses in good
working order and condition (ordinary wear and tear excepted) in accordance with
their past operating practices and not to commit or suffer any waste with
respect to any of their properties.
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7.12 ERISA DOCUMENTS.
Each Borrower will cause to be delivered to the Agent, upon the Agent's
request, each of the following: (I) a copy of each Plan (or, where any such plan
is not in writing, a complete description thereof) (and if applicable, related
trust agreements or other funding instruments) and all amendments thereto, all
written interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of such Borrower or any of its
Subsidiaries; (II) the most recent determination letter issued by the Internal
Revenue Service with respect to each Benefit Plan; (III) for the three most
recent plan years, Annual Reports on Form 5500 Series required to be filed with
any governmental agency for each Benefit Plan; (IV) all actuarial reports
prepared for the last three plan years for each Benefit Plan; (V) a listing of
all Multiemployer Plans, with the aggregate amount of the most recent annual
contributions required to be made by such Borrower or any ERISA Affiliate to
each such plan and copies of the collective bargaining agreements requiring such
contributions; (VI) any information that has been provided to such Borrower or
any ERISA Affiliate regarding withdrawal liability under any Multiemployer Plan;
and (VII) the aggregate amount of the most recent annual payments made to former
employees of such Borrower or any ERISA Affiliate under any Retiree Health Plan.
7.13 ENVIRONMENTAL AND OTHER MATTERS.
Each Borrower shall, and shall cause each of its Subsidiaries to,
conduct their businesses so as to comply in all material respects with all
environmental, land use, occupational, safety or health laws, regulations,
directions, ordinances, criteria and guidelines in all jurisdictions in which
any of them is or may at any time be doing business, except to the extent that
such Borrower or such Subsidiary is contesting, in good faith by appropriate
legal proceedings, any such law, regulation, direction, ordinance, criteria,
guideline, or interpretation thereof or application thereof; PROVIDED, that such
Borrower and each of its Subsidiaries shall comply with the order of any court
or other Governmental Authority relating to such laws unless such Borrower or
such Subsidiary shall currently be prosecuting an appeal or proceedings for
review and shall have secured a stay of enforcement or execution or other
arrangement postponing enforcement or execution pending such appeal or
proceedings for review.
7.14 FURTHER ACTIONS.
Each Borrower shall take, and shall cause each of its Subsidiaries to
take, all such further actions and execute all such further documents and
instruments as the Agent may at any time reasonably determine to be necessary or
desirable to further carry out and consummate the transactions contemplated by
the Credit Documents, to cause the execution, delivery and performance of the
Credit Documents to be duly authorized and to perfect or protect the Liens (and
the priority status thereof) of the Agent on the Collateral.
7.15 DEPOSIT OF COLLECTIONS AND OTHER PROCEEDS OF COLLATERAL.
From and after the Closing Date, Borrowers shall cause all Collections
on all Accounts of Borrowers, and all other cash payments made for Inventory of
Borrowers, and all other payments of any kind constituting proceeds of
Collateral received by or for the account any Borrower from any Person, promptly
upon receipt thereof to be deposited into a Collection Account or the
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DBTCo Account in the identical form in which such payment was made, whether by
cash or check.
7.16 CANCELLATION OF REPURCHASED JUNIOR SECURED NOTES.
As soon as available, but in no event later than two (2) days following
the Closing Date, the Borrowers shall have delivered or caused to be delivered
to Agent evidence satisfactory to Agent that the repurchase of the Repurchased
Junior Secured Notes has been consummated. As soon as available, but in no event
later than five (5) Business Days following the Closing Date, the Borrowers
shall deliver, or cause to be delivered, to the Agent a certificate executed by
BNY Midwest Trust Company, as Trustee under the Junior Secured Note Indenture,
certifying to MTLM that all Repurchased Junior Secured Notes have been cancelled
in accordance with the terms of the Junior Secured Note Indenture.
7.17 REDEMPTION OF JUNIOR SECURED NOTES.
On or before October 15, 2003, MTLM shall cause all outstanding Junior
Secured Notes to be optionally redeemed pursuant to and in accordance with the
Junior Secured Note Indenture. In connection with such redemption, the Borrowers
shall deliver or cause to be delivered to the Agent all pay-off letters, UCC
termination statements, mortgage releases and other releases, documents,
instruments and agreements as the Agent shall request to evidence the payment in
full of all Indebtedness and other obligations evidenced by the Junior Secured
Notes and the Junior Secured Indenture and the release of all Liens securing
such Indebtedness and obligations.
ARTICLE 8. NEGATIVE COVENANTS.
Until termination of this Credit Agreement and payment and satisfaction
of all Obligations due hereunder, each Borrower shall comply with, and, where
required, shall cause each of its Subsidiaries to comply with, the following
covenants:
8.1 FINANCIAL COVENANTS.
(a) LEVERAGE RATIO. The Borrower shall not permit the Leverage
Ratio, as determined as of each date set forth below, for the Test
Period ending on such date, to be greater than the ratio set forth
below opposite such date:
DATE MAXIMUM RATIO
------------------------------------------ -------------
September 30, 2003, and the last day
of each consecutive fiscal quarter of
the Consolidated Entity ending
thereafter through and including
December 31, 2004
3.00 to 1.00
March 31, 2005, and the last day of
each consecutive fiscal quarter of the
Consolidated Entity ending thereafter 2.25 to 1.00
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(b) CONSOLIDATED FIXED CHARGE COVERAGE RATIO.
The Borrower shall not permit the Consolidated Fixed Charge Coverage
Ratio, as determined as of September 30, 2003 and the last day of each fiscal
quarter of the Consolidated Entity ending thereafter, for the Test Period ending
on such date, to be less than 1.25 to 1.00.
8.2 CAPITAL EXPENDITURES.
The Borrowers shall not permit Capital Expenditures for the
Consolidated Entity, determined as of September 30, 2003 and as of the last day
of each fiscal quarter of the Consolidated Entity ending thereafter, for the
Test Period ending on such date, to exceed $16,000,000.
8.3 ADDITIONAL INDEBTEDNESS.
No Borrower and no Subsidiary of any Borrower shall directly or
indirectly incur, create, assume or suffer to exist any Indebtedness other than:
(a) the Obligations;
(b) unsecured Indebtedness in the ordinary course of business
under Interest Rate Agreements, in each case in form and substance
reasonably satisfactory to the Agent;
(c) Indebtedness of any Borrower to any other Borrower;
PROVIDED, that, if and to the extent any of such Indebtedness is
evidenced by a promissory note or any other instrument, such note or
other instrument shall be endorsed and delivered to the Agent as
additional Collateral;
(d) Indebtedness described on SCHEDULE B, PART 8.3 and any
refinancing of such Indebtedness, so long as the aggregate principal
amount of the Indebtedness so refinanced shall not be increased and the
refinancing shall be on terms and conditions no more restrictive than
the terms and conditions of the Indebtedness to be refinanced;
(e) Indebtedness secured by purchase money Liens on equipment
acquired after the date of this Credit Agreement in an outstanding
principal amount not exceeding at any time (when added to the aggregate
imputed amount of all then outstanding capital leases of the Borrowers
and their respective Subsidiaries which are entered into after the
Closing Date pursuant to CLAUSE (h) below) $2,500,000 in the aggregate
for all of the Credit Parties combined ("PURCHASE MONEY LIENS"), so
long as (i) each Purchase Money Lien shall attach only to the property
to be acquired, (ii) a description shall have been furnished to the
Agent for any item of equipment for which the purchase price is greater
than $250,000 and (iii) the Indebtedness incurred shall not exceed one
hundred percent (100%) of the purchase price of the item or items of
equipment purchased;
(f) Indebtedness in an outstanding principal amount not
exceeding $3,000,000, incurred in connection with the purchase by
Proler of certain real property currently leased by Proler and located
on Japhaet Street, Houston, Texas, so long as (i)
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the Lien granted in connection with such Indebtedness attaches only to
such real property to be acquired and (ii) such Indebtedness shall be
on such other terms and conditions satisfactory to the Agent;
(g) Indebtedness consisting of Contingent Obligations
permitted pursuant to SECTION 8.5;
(h) Indebtedness consisting of obligations under capital
leases entered into after the Closing Date in an outstanding principal
amount not exceeding at any time (when added to the aggregate imputed
amount of all then outstanding Indebtedness secured by Purchase Money
Liens of the Borrowers and their respective Subsidiaries which are
entered into after the Closing Date pursuant to CLAUSE (e) above)
$2,500,000 in the aggregate for all of the Credit Parties combined;
(i) surety bonds and appeal bonds required in the ordinary
course of business in an amount not exceeding at any time $1,500,000
in the aggregate for all of the Credit Parties combined;
(j) Indebtedness incurred to finance the payment of insurance
premiums in an amount not exceeding at any time the aggregate unpaid
amount of all such premiums at such time for all of the Credit Parties
combined;
(k) Indebtedness evidenced by the Repurchased Junior
Subordinated Notes; provided, that such Indebtedness shall only be
permitted for five (5) Business Days following the Closing Date, on or
before which date such Indebtedness is to be required to be paid and
satisfied in full pursuant to SECTION 7.16;
(l) Indebtedness evidenced by Junior Subordinated Notes (other
than the Repurchased Junior Subordinated Notes); provided, that such
Indebtedness shall only be permitted until October 15, 2003, on or
before which date such Junior Subordinated Notes are required to be
redeemed in full pursuant to SECTION 7.17; and
(m) unsecured Indebtedness in respect of hedging agreements
entered into by Borrowers in the ordinary course of business.
8.4 LIENS.
No Borrower nor any Subsidiary of any Borrower shall directly or
indirectly create, incur, assume, or suffer to exist any Lien on any of its
property now owned or hereafter acquired except:
(a) Liens on the Collateral granted to the Agent;
(b) Liens existing on the Closing Date and set forth on
SCHEDULE B, PART 8.4;
(c) Purchase Money Liens and the interests of lessors under
capital leases, in each case to the extent permitted under SECTION
8.3(e);
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(d) Liens of warehousemen, mechanics, materialmen, workers,
repairmen, common carriers or landlords and other similar Liens arising
by operation of law, Liens for taxes, assessments or other governmental
charges and other similar Liens arising by operation of law, in each
case for amounts that are not yet due and payable or that are being
diligently contested in good faith by a Borrower or a Subsidiary of a
Borrower, so long as adequate reserves are maintained by such Person
for their payment in accordance with GAAP;
(e) Attachment or judgment Liens not to exceed an aggregate of
$1,000,000 for the Borrowers and their Subsidiaries, excluding amounts
(i) bonded to the reasonable satisfaction of the Agent or (ii) covered
by insurance to the reasonable satisfaction of the Agent;
(f) Deposits or pledges made in the ordinary course of
business to secure obligations under workmen's compensation, social
security or similar laws, under unemployment insurance, or to secure
public or statutory obligations;
(g) Deposits or pledges made to secure bids, tenders,
contracts (other than contracts for the payment of money), leases,
statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the ordinary course of business not to exceed an
aggregate of $2,000,000 for all Credit Parties combined;
(h) Easements, rights-of-way, restrictions and other similar
encumbrances on title to, or restrictions on the use of, real property,
which, in the aggregate, do not materially detract from the value of
the item of property subject thereto or materially interfere with the
ordinary conduct of the business of any Borrower or any of its
Subsidiaries;
(i) retained interests of lessors under operating leases;
(j) Liens, defects and other matters specifically disclosed on
the title insurance policies previously delivered to and accepted by
the Agent in connection with the owned real properties of the
respective Borrowers subjected to a mortgage Lien in favor of the Agent
on the Closing Date;
(k) leases and subleases granted in the ordinary course of
business;
(l) Liens arising solely out of any statutory or common law
provision consisting of banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained
with a depository institution;
(m) Liens on certain real property located on Japhaet Street,
Houston, Texas, to the extent securing Indebtedness permitted under
SECTION 8.3(f);
(n) Extensions, replacements and renewals of any of the
foregoing so long as the aggregate amount of Indebtedness secured by
such extended, replaced or renewed Liens is not increased and is on
terms and conditions no more restrictive than the terms
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and conditions of the Indebtedness secured by such extended, replaced
or renewed Liens; and
(o) Liens securing Indebtedness evidenced by the Junior
Secured Notes.
8.5 CONTINGENT OBLIGATIONS.
No Borrower nor any Subsidiary of any Borrower shall directly or
indirectly incur, assume, or suffer to exist any Contingent Obligation,
excluding Contingent Obligations for Indebtedness permitted to be incurred under
SECTION 8.3, and Investments permitted under SECTION 8.8.
8.6 SALE OF ASSETS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, sell, lease, assign, transfer or otherwise dispose of any assets,
other than: (a) Inventory in the ordinary course of business; (b) redundant,
obsolete or worn out property disposed of in the ordinary course of business;
(c) in connection with the merger or dissolution of any Borrower or any
wholly-owned Subsidiary of any Borrower into any other Borrower; (d) assets of a
Borrower or any Subsidiary of a Borrower sold, leased, assigned or otherwise
transferred to such or any other Borrower; and (e) assets the disposition of
which is not otherwise permitted under this SECTION 8.6, PROVIDED, that, as to
dispositions referred to in clauses (b) (except for dispositions of redundant,
obsolete or worn out equipment with a value not exceeding $100,000 in the
aggregate) and (e) above, (i) such dispositions are for fair value, (ii) at
least seventy-five percent (75%) of the aggregate consideration is paid in cash
at the time of disposition and is thereupon delivered to the Agent for
application to the outstanding principal balance of the Revolving Loans and
(iii) the aggregate amount of all such dispositions does not exceed $2,500,000
in the aggregate for any fiscal year of the Consolidated Entity.
8.7 RESTRICTED PAYMENTS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, (a) declare or pay any dividend (other than dividends payable
solely in capital stock of such Person) on, or make any payment on account of,
or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any shares of any
class of capital stock of such Person or any warrants, options or rights to
purchase any such capital stock, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of such Person or any of its
Subsidiaries; or (b) make any optional or mandatory payment of principal of or
interest on, or any optional or mandatory prepayment of principal of or interest
on, or redemption (including, without limitation, by making payments to a
sinking or analogous fund) or repurchase of, in each case any Indebtedness
subordinated to the Obligations; PROVIDED, that, notwithstanding the foregoing:
(i) any Borrower and any Subsidiary of any Borrower
may make payments or prepayments on account of Indebtedness
owing to such or any other Borrower; and
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(ii) any Subsidiary of any Borrower may declare and
pay dividends to such Borrower or any other Borrower.
8.8 INVESTMENTS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, make any Investment in any Person, whether in cash, Securities,
or other property of any kind including, without limitation, any Subsidiary or
Affiliate of any Credit Party, other than:
(a) Advances or loans made in the ordinary course of business
not to exceed $2,500,000 in the aggregate for all Credit Parties
combined outstanding at any one time (PROVIDED, that the aggregate
amount of all advances and loans made to officers, directors, employees
or other Affiliates of any Borrower or any Subsidiary of any Borrower
outstanding at any one time shall not exceed $250,000);
(b) loans, investments and advances between a Borrower and any
other Borrower;
(c) Cash Equivalents;
(d) Investments in account debtors received in connection with
the bankruptcy or reorganization, or in settlement of delinquent
obligations, of customers in the ordinary course of business and in
accordance with applicable collection and credit policies established
by such Borrower or such Subsidiary, as the case may be;
(e) extensions of credit in the nature of accounts receivable
or notes receivable arising from the sale or lease of goods and
services in the ordinary course of business;
(f) Investments existing on the Closing Date and set forth on
SCHEDULE 8.8(f);
(g) Investments constituting hedging agreements entered into
by Borrowers in the ordinary course of business; and
(h) such other Investments as the Agent may approve in writing
in the exercise of its sole discretion.
8.9 AFFILIATE TRANSACTIONS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, enter into any transaction with (including, without limitation,
the purchase, sale or exchange of property or the rendering of any service to)
any Subsidiary or Affiliate of any Borrower, except in the ordinary course of
and pursuant to the reasonable requirements of such Borrower's or such
Subsidiary's business, as the case may be, and upon fair and reasonable terms no
less favorable in any material respect to such Borrower or such Subsidiary than
could be obtained in a comparable arm's-length transaction with an unaffiliated
Person, except for such transactions otherwise expressly permitted under
SECTIONS 8.7 and 8.8, respectively.
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8.10 BANK ACCOUNTS.
Except for accounts set forth on SCHEDULE B, PART 8.10 and other
accounts approved by the Agent, no Borrower shall, or shall permit any of its
Subsidiaries to, directly or indirectly, open, maintain or otherwise have any
checking, savings or other accounts at any bank or other financial institution,
or any other account where money is or may be deposited or maintained with any
Person, other than (a) the Disbursement Account, (b) ▇▇▇▇▇-▇▇▇▇ accounts,
PROVIDED, that the aggregate balance of funds in such accounts shall not exceed
at any time $1,000,000, and (c) payroll, imprest or medical insurance
disbursement accounts, PROVIDED, that the aggregate balance of funds in each of
such accounts shall not exceed at any time that amount which the Borrower on
whose behalf such account is maintained deems reasonably necessary to satisfy
ordinary course disbursements therefrom during the next ten (10) Business Days.
8.11 ADDITIONAL NEGATIVE PLEDGES.
Except as otherwise disclosed on SCHEDULE B, PARTS 8.3 or 8.4,
respectively, no Borrower shall, or shall permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective, any prohibition or restriction (including any agreement to provide
equal and ratable security to any other Person in the event a Lien is granted to
or for the benefit of the Agent and the Lenders) on the creation or existence of
any Lien upon the assets of such Borrower or any of its Subsidiaries, other than
assets subject to capital leases or Purchase Money Liens, in each case permitted
hereunder, and other than pursuant to (a) this Credit Agreement and the other
Credit Documents, or (b) any contractual obligation (other than contractual
obligations arising in connection with Permitted Liens) which may restrict or
inhibit the Agent's rights or ability to sell or otherwise dispose of the
Collateral or any part thereof after the occurrence of an Event of Default.
ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES.
9.1 EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute an event
of default (each an "EVENT OF DEFAULT") hereunder:
(a) FAILURE TO PAY. The Borrowers shall fail to pay any
Obligations in respect of principal or interest on the Revolving Loans,
in each case when the same shall become due and payable, or shall fail
to pay, within five (5) days after the same shall become due and
payable, any other amount due under this Credit Agreement or any of the
other Credit Documents.
(b) BREACH OF CERTAIN COVENANTS. Any Borrower shall fail to
comply with any covenant contained in ARTICLE 7 (other than SECTION
7.4(i), 7.8, 7.9, 7.12, 7.13 and 7.14) or ARTICLE 8.
(c) BREACH OF REPRESENTATION OR WARRANTY. Any representation
or warranty made or deemed to be made by any Credit Party in this
Credit Agreement or in any other Credit Document (and in any statement
or certificate given under this Credit Agreement
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or any other Credit Document), shall be false or misleading in any
material respect when made or deemed to be made.
(d) BREACH OF OTHER COVENANTS. Any Credit Party shall fail to
comply with any covenant contained in this Credit Agreement or any
other Credit Document, other than as set forth in SECTION 9.1(b), and
such failure shall continue for 10 days after the Funds Administrator
receives notice of such failure from Agent.
(e) DISSOLUTION. Any Credit Party shall dissolve, wind up or
otherwise cease its business (other than pursuant to a transaction
expressly permitted hereunder).
(f) INSOLVENCY EVENT. Any Credit Party shall become the
subject of an Insolvency Event.
(g) CHANGE OF CONTROL. A Change of Control shall occur.
(h) CROSS DEFAULT. A default or event of default shall occur
(and continue beyond any applicable grace period) under any note,
agreement or instrument evidencing any other Indebtedness of any Credit
Party or any Subsidiary of any Credit Party, which default or event of
default permits the acceleration of its maturity, provided that the
aggregate principal amount of all such other Indebtedness for which the
default or event of default has occurred exceeds $5,000,000.
(i) FAILURE OF ENFORCEABILITY OF CREDIT DOCUMENTS; SECURITY.
Any covenant, agreement or obligation of any Credit Party contained in
or evidenced by any of the Credit Documents shall cease to be
enforceable, or shall be determined by a court of competent
jurisdiction to be unenforceable, in each case in accordance with its
terms (otherwise than pursuant to its terms or as expressly permitted
hereunder); any Credit Party shall deny or disaffirm its obligations
under any of the Credit Documents or any Liens granted in connection
therewith; or, any Liens granted on any of the Collateral shall be
determined to be void, voidable, invalid or unperfected, are
subordinated or not given the priority contemplated by this Credit
Agreement.
9.2 ACCELERATION, TERMINATION OF COMMITMENTS AND CASH
COLLATERALIZATION.
Upon the occurrence and during a continuance of any Event of Default,
without prejudice, to the rights of the Agent or any Lender to enforce its
claims against the Credit Parties:
(a) ACCELERATION. Upon the written request of the Majority
Lenders and by delivery of written notice to the Funds Administrator
from the Agent, all Obligations shall be immediately due and payable
(except with respect to any Event of Default set forth in SECTION
9.1(f), in which case all Obligations shall automatically become
immediately due and payable without the necessity of any request of the
Majority Lenders or notice or other demand to the Funds Administrator
or any of the Borrowers) without presentment, demand, protest or any
other action or obligation of the Agent or any Lender.
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(b) TERMINATION OF COMMITMENTS. Upon the written request of
the Majority Lenders, and by delivery of written notice to the Funds
Administrator from the Agent (except with respect to any Event of
Default set forth in SECTION 9.1(f)), in which case all of the
Commitments shall automatically and immediately terminate without the
necessity of any request of the Majority Lenders or notice or other
demand to the Funds Administrator or any of the Borrowers) the
Commitments shall be immediately terminated and, at all times
thereafter, all Revolving Loans made by any Lender pursuant to this
Credit Agreement shall be at such Lender's sole discretion, unless such
Event of Default is waived in accordance with SECTION 11.11, in which
case the Commitments shall be automatically reinstated.
(c) CASH COLLATERALIZATION. On demand of the Agent or the
Majority Lenders, the Borrowers shall immediately deposit with the
Agent for each Letter of Credit then outstanding, cash or Cash
Equivalents in an amount equal to 110% of the greatest amount drawable
thereunder. Such deposit shall be held by the Agent and used to
reimburse the Issuing Bank for the amount of each drawing made under
such Letters of Credit, as and when each such drawing is made.
9.3 RESCISSION OF ACCELERATION.
After acceleration of the maturity of all or any part of the
Obligations, if the Borrowers pay all accrued interest and all principal due
(other than by reason of the acceleration) and all Events of Default are waived
in accordance with SECTION 11.11, the Majority Lenders may elect in their sole
discretion, to rescind the acceleration and return to the Borrowers any cash
collateral, if any, deposited with the Agent pursuant to SECTION 9.2(c). (This
Section is intended only to bind all of the Lenders to a decision of the
Majority Lenders and not to confer any right on the Borrowers, even if the
described conditions for the Majority Lenders' election may be met.)
9.4 REMEDIES.
Upon the occurrence and during the continuance of an Event of Default,
upon the written request and at the direction of the Majority Lenders, the Agent
may exercise any rights and remedies available to it under applicable law
(including under the Code) and under the Collateral Documents. The foregoing
rights and remedies are not intended to be exhaustive and the full or partial
exercise of any right or remedy shall not preclude the full or partial exercise
of any other right or remedy available under this Credit Agreement, any other
Credit Document, at equity or at law.
9.5 RIGHT OF SETOFF.
In addition to and not in limitation of all rights of offset that any
Lender may have under applicable law, upon the occurrence and during the
continuance of any Event of Default, and regardless of whether any Lender has
made any demand or the Obligations of any Borrower have matured, each Lender
shall have the right to appropriate and apply to the payment of the Obligations
of such Borrower all deposits and other obligations then or thereafter owing by
such Lender to such Borrower. Each Lender exercising such rights shall notify
the Agent thereof and
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any amount received as a result of the exercise of such rights shall be shared
by the Lenders in accordance with SECTION 2.5.
9.6 LICENSE OF USE OF SOFTWARE AND OTHER INTELLECTUAL PROPERTY.
Unless expressly prohibited by the licensor thereof, if any, the Agent
is hereby granted a license to use all computer software programs, data bases,
processes and materials used by the Borrowers in connection with their
respective businesses or in connection with any Collateral. The Agent agrees not
to use any such license other than after the occurrence and during the
continuance of an Event of Default.
9.7 APPLICATION OF PROCEEDS; SURPLUS, DEFICIENCIES.
The net cash proceeds resulting from the Agent's exercise of any of the
foregoing rights against any Collateral (after deducting all of the Agent's
Expenses related thereto) shall be applied by the Agent to the payment of the
Obligations, whether due or to become due, in the order set forth in SECTION
4.12. The Borrowers shall remain jointly and severally liable to the Agent and
the Lenders for any deficiencies, and the Agent and the Lenders in turn agree to
remit to the Borrowers or their successors or assigns, any surplus resulting
therefrom.
ARTICLE 10. THE AGENT.
10.1 APPOINTMENT OF AGENT.
(a) Each Lender hereby designates DBTCo as Agent to act as
herein specified. Each Lender hereby irrevocably authorizes, and each
holder of any Note, by the acceptance of such Note, shall be deemed
irrevocably to authorize the Agent to take such action on its behalf
under the provisions of this Credit Agreement and the other Credit
Documents and any other instruments and agreements referred to herein
and therein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required
of the Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. The Agent shall hold all Collateral
and all payments of principal, interest, Fees (other than Fees that are
exclusively for the account of the Agent), charges and Expenses
received pursuant to this Credit Agreement or any other Credit Document
for the ratable benefit of the Lenders. The Agent may perform any of
its duties hereunder by or through its agents or employees.
(b) Other than rights of the Credit Parties under SECTION
10.9, the provisions of this ARTICLE 10 are for the benefit of the
Agent and the Lenders only and none of the Credit Parties or any other
Persons shall have any rights as a third party beneficiary of any of
the provisions hereof. In performing its functions and duties under
this Credit Agreement and the other Credit Documents, the Agent shall
act only for the Lenders and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party.
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10.2 NATURE OF DUTIES OF AGENT.
The Agent has no duties or responsibilities except those expressly set
forth in the Credit Documents. Neither the Agent nor any of its officers,
directors, employees or agents shall be liable for any action taken or omitted
hereunder or in connection herewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be mechanical
and administrative in nature; the Agent shall not have by reason of this Credit
Agreement or any of the other Credit Documents a fiduciary relationship in
respect of any Lender or any participant of any Lender; and nothing in this
Credit Agreement or any other Credit Document, expressed or implied, is intended
to or shall be so construed as to impose upon the Agent any obligations in
respect of this Credit Agreement or any other Credit Document, except as
expressly set forth herein or therein.
10.3 LACK OF RELIANCE ON AGENT.
(a) Independently and without reliance upon the Agent, each
Lender, to the extent it deems appropriate, has made and shall continue
to make (i) its own independent investigation of the financial or other
condition and affairs of each Credit Party in connection with the
taking or not taking of any action in connection herewith and (ii) its
own appraisal of the creditworthiness of each Credit Party, and, except
as expressly provided in this Credit Agreement, the Agent shall have no
duty or responsibility, either initially or on a continuing basis, to
provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the
Revolving Loans or at any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein
or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility, priority or sufficiency of
this Credit Agreement or any of the other Credit Documents or the
financial or other condition of any Credit Party. The Agent shall not
be required to make any inquiry concerning either the performance or
observance of any other terms, provisions or conditions of this Credit
Agreement or any of the other Credit Documents, or the financial
condition of any Credit Party, or the existence or possible existence
of any Default or Event of Default, unless specifically requested to do
so in writing by any Lender.
10.4 CERTAIN RIGHTS OF THE AGENT.
The Agent shall have the right to request instructions from the Lenders
by notice to each of such Lenders. If the Agent shall request instructions from
the Lenders with respect to any act or action (including the failure to act) in
connection with this Credit Agreement, the Agent shall be entitled to refrain
from such act or taking such action unless and until the Agent shall have
received instructions from such Lenders, and the Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Agent as a result
of the Agent acting or refraining from acting hereunder in accordance with the
instructions of the requisite Lenders required to give such instructions
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hereunder. The Agent may give any notice required under ARTICLE 9 hereof without
the consent of any of the Lenders unless otherwise directed by the Majority
Lenders in writing and will, at the direction of the Majority Lenders, give any
such notice required under ARTICLE 9.
10.5 RELIANCE BY AGENT.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, radiogram, order or other
documentary, facsimile or telephone message believed by it to be genuine and
correct and to have been signed, sent or made by the proper person. The Agent
may consult with legal counsel (including counsel for the Credit Parties with
respect to matters concerning the Credit Parties), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
10.6 INDEMNIFICATION OF AGENT.
To the extent the Agent is not reimbursed and indemnified by the
Borrowers, each Lender will reimburse and indemnify the Agent, in proportion to
its respective Commitment, for and against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
counsel fees and disbursements) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
performing its duties hereunder, in any way relating to or arising out of this
Credit Agreement; PROVIDED, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct.
10.7 THE AGENT IN ITS INDIVIDUAL CAPACITY.
With respect to its obligation to lend under this Credit Agreement, the
Loans made by it and the Notes issued to it and its participation in Letters of
Credit issued hereunder, the Agent shall have the same rights and powers
hereunder as any other Lender or holder of a Note or participation interests and
may exercise the same as though it was not performing the duties specified
herein; and the terms "Lenders," "Lenders," "Majority Lenders," "holders of
Revolving Loan Notes," "holders of Term Loan Notes," "Majority Revolving
Lenders," "Majority Term Loan Lenders" or any similar terms shall, unless the
context clearly otherwise indicates, include the Agent in its individual
capacity. The Agent may accept deposits from, lend money to, acquire equity
interests in, and generally engage in any kind of banking, financial advisory or
other business with any Credit Party or any Affiliate of any Credit Party as if
it were not performing the duties specified herein, and may accept fees and
other consideration from any Credit Party for services in connection with this
Credit Agreement and otherwise without having to account for the same to the
Lenders.
10.8 HOLDERS OF NOTES.
The Agent may deem and treat the payee of any Note as the owner thereof
for all purposes hereof unless and until a written notice of the assignment or
transfer thereof shall have been filed with the Agent. Any request, authority or
consent of any Person who, at the time of
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making such request or giving such authority or consent, is the holder of any
Note, shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
10.9 SUCCESSOR AGENT.
(a) The Agent may, upon 5 Business Days' notice to the Lenders
and the Funds Administrator, resign at any time (effective upon the
appointment of a successor Agent pursuant to the provisions of this
SECTION 10.9) by giving written notice thereof to the Lenders and the
Funds Administrator. Upon any such resignation, the Majority Lenders
shall have the right, upon 5 days' notice and approval by the Credit
Parties (which approval shall not be unreasonably withheld or delayed)
to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Majority Lenders and accepted such appointment, within
30 days after the retiring Agent's giving of notice of resignation,
then the retiring Agent may, on behalf of the Lenders (and with the
approval of the Funds Administrator, which approval shall not be
unreasonably withheld or delayed), appoint a successor Agent, which
shall be a bank or a trust company or other financial institution which
maintains an office in the United States, or a commercial bank
organized under the laws of the United States of America or of any
State thereof, or any Affiliate of such bank or trust company or other
financial institution which is engaged in the banking business, having
a combined capital and surplus of at least $500,000,000.
(b) Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Credit Agreement and the other Credit
Documents. After any retiring Agent's resignation hereunder as Agent,
the provisions of this ARTICLE 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under or
in connection with this Credit Agreement.
10.10 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs the Agent to enter into
the Collateral Documents for the benefit of the Lenders. Each Lender
hereby agrees, and each holder of any Note by the acceptance thereof
will be deemed to agree, that, except as otherwise set forth herein or
in the other Credit Documents, any action taken by the Majority Lenders
in accordance with the provisions of this Credit Agreement and the
other Credit Documents, and the exercise by the Majority Lenders of the
powers set forth herein or therein, together with such other powers as
are reasonably incidental thereto, shall be authorized and binding upon
all of the Lenders. The Agent is hereby authorized on behalf of all of
the Lenders, without the necessity of any notice to or further consent
from any Lender, from time to time so long as an Event of Default shall
not then exist, to take any action with respect to any Collateral or
Collateral Documents which may be necessary to perfect and maintain the
perfection of the Liens upon the Collateral granted pursuant to the
Collateral Documents.
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(b) The Lenders hereby authorize the Agent, at its option and
in its discretion, to release any Lien granted to or held by the Agent
upon any Collateral (i) upon termination of the Commitments and payment
and satisfaction of all of the Obligations at any time arising under or
in respect of this Credit Agreement or the other Credit Documents or
the transactions contemplated hereby or thereby, (ii) if approved,
authorized or ratified in writing by the Majority Lenders, unless such
release is required to be approved by all of the Lenders pursuant to
SECTION 11.11; or (iii) constituting property sold or to be sold or
disposed of as part of or in connection with any disposition thereof
permitted hereunder. Upon request by the Agent at any time, the Lenders
will confirm in writing the Agent's authority to release particular
types or items of Collateral pursuant to this SECTION 10.10.
(c) The Agent shall have no obligation whatsoever to the
Lenders or to any other Person to assure that the Collateral exists or
is owned by any Borrower or is cared for, protected or insured or that
the Liens granted to the Agent in or pursuant to any of the Collateral
Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular
priority, or to exercise or to continue exercising at all or in any
manner or under any duty of care, disclosure or fidelity any of the
rights, authorities and powers granted or available to the Agent in
this SECTION 10.10 or in any of the Collateral Documents, it being
understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it
may deem appropriate, in its sole discretion, given the Agent's own
interest in the Collateral as one of the Lenders and that the Agent
shall have no duty or liability whatsoever to the Lenders, except for
its gross negligence or willful misconduct. The Agent agrees to conduct
or cause to be conducted at least one audit of the Collateral during
each year that this Credit Agreement shall remain in effect.
10.11 ACTIONS WITH RESPECT TO DEFAULTS.
In addition to the Agent's right to take actions on its own accord as
permitted under this Credit Agreement, the Agent shall take such action with
respect to a Default or Event of Default as shall be directed by the Majority
Lenders; PROVIDED, that until the Agent shall have received such directions, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable and in the best interests of the Lenders.
10.12 DELIVERY OF INFORMATION.
The Agent shall not: be required to deliver to any Lender originals or
copies of any documents, instruments, notices, communications or other
information received by the Agent from any of the Credit Parties or any
Subsidiary of any of the Credit Parties, any Lender or any other Person under or
in connection with this Credit Agreement or any other Credit Document except (i)
as specifically provided in this Credit Agreement or any other Credit Document
and (ii) as specifically requested from time to time in writing by any Lender
with respect to a specific document, instrument, notice or other written
communication received by and in the possession of the Agent at the time of
receipt of such request and then only in accordance with such specific request.
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ARTICLE 11. MISCELLANEOUS.
11.1 GOVERNING LAW.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS CREDIT AGREEMENT
AND EACH OF THE NOTES SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1401, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS AND DECISIONS OF THE STATE OF NEW YORK.
11.2 SUBMISSION TO JURISDICTION.
ALL DISPUTES AMONG THE LENDERS AND THE CREDIT PARTIES (OR THE AGENT OR
FUNDS ADMINISTRATOR, RESPECTIVELY, ACTING ON THEIR BEHALF), WHETHER SOUNDING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL
COURTS LOCATED IN NEW YORK, NEW YORK, AND THE COURTS TO WHICH AN APPEAL
THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE AGENT ON BEHALF OF THE
LENDERS, SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE FUNDS ADMINISTRATOR OR ANY CREDIT PARTY OR THEIR RESPECTIVE
PROPERTIES IN ANY LOCATION REASONABLY SELECTED BY THE AGENT IN GOOD FAITH TO
ENABLE THE AGENT TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF THE AGENT. THE FUNDS ADMINISTRATOR AND EACH OF THE OTHER
CREDIT PARTIES WAIVE ANY OBJECTION THAT ANY OF SUCH PERSONS MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH THE AGENT OR ANY LENDER HAS COMMENCED A
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON FORUM NON CONVENIENS.
11.3 SERVICE OF PROCESS.
EACH OF THE FUNDS ADMINISTRATOR AND THE OTHER CREDIT PARTIES HEREBY
WAIVES PERSONAL SERVICE UPON IT AND, AS ADDITIONAL SECURITY FOR THE OBLIGATIONS,
HEREBY IRREVOCABLY DESIGNATES AND APPOINTS ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, WITH AN OFFICE ON
THE DATE HEREOF AT C/O METAL MANAGEMENT, INC., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY
SUCH PERSON WHICH IRREVOCABLY AGREE IN WRITING TO SO SERVE AS ITS AGENT, TO
RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS ISSUED BY ANY COURT IN ANY LEGAL
ACTION OR OTHER PROCEEDING WITH RESPECT TO THIS CREDIT AGREEMENT OR ANY OTHER
CREDIT DOCUMENT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY SUCH PERSON TO BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO
SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE FUNDS ADMINISTRATOR AT ITS
ADDRESS
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PROVIDED HEREIN EXCEPT THAT, UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY
FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS.
IF ANY AGENT APPOINTED BY THE FUNDS ADMINISTRATOR OR ANY OTHER CREDIT PARTIES
REFUSES TO ACCEPT SERVICE, EACH SUCH PERSON HEREBY AGREES THAT SERVICE UPON IT
BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE AND EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF AGENT OR ANY LENDER TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR SHALL LIMIT THE
RIGHT OF AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE FUNDS
ADMINISTRATOR OR ANY OTHER CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.
11.4 JURY TRIAL.
THE FUNDS ADMINISTRATOR, EACH OF THE OTHER CREDIT PARTIES, THE AGENT
AND THE LENDERS HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY DISPUTES
WILL BE RESOLVED IN A BENCH TRIAL.
11.5 LIMITATION OF LIABILITY.
NEITHER THE AGENT NOR ANY LENDER SHALL HAVE ANY LIABILITY TO THE FUNDS
ADMINISTRATOR OR ANY OTHER CREDIT PARTY (WHETHER SOUNDING IN TORT, CONTRACT, OR
OTHERWISE) FOR LOSSES SUFFERED BY ANY SUCH PERSON IN CONNECTION WITH, ARISING
OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED
BY THIS CREDIT AGREEMENT, OR ANY OF THE OTHER CREDIT DOCUMENTS, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY
A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON THE AGENT OR ANY
SUCH LENDER, THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
11.6 DELAYS.
No delay or omission of the Agent or the Lenders in exercising any
right or remedy hereunder shall impair any such right or operate as a waiver
thereof.
11.7 NOTICES.
Except as otherwise provided herein, all notices and correspondences
hereunder shall be in writing and sent by certified or registered mail, return
receipt requested, or by overnight delivery service, with all charges prepaid,
if to the Agent or any of the Lenders, then to Deutsche Bank Trust Company
Americas, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Credit
Department (with a copy to Deutsche Bank Trust Company Americas, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Credit
Department), if to the Funds Administrator or any other Credit Party, then to
Metal Management, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial Officer, or
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by facsimile transmission, promptly confirmed in writing sent by first class
mail, if to the Agent, or any of the Lenders, at (▇▇▇) ▇▇▇-▇▇▇▇ (with a copy to
(▇▇▇) ▇▇▇-▇▇▇▇ and if to the Funds Administrator or any other Credit Party at
(▇▇▇) ▇▇▇-▇▇▇▇. All such notices and correspondence shall be deemed given (i) if
sent by certified or registered mail, 3 Business Days after being postmarked,
(ii) if sent by overnight delivery service, when received at the above stated
addresses or when delivery is refused and (iii) if sent by telex or facsimile
transmission, when receipt of such transmission is acknowledged PROVIDED, that
failure or delay in delivering copies of any notices to any persons designated
above to receive copies thereof shall in no way adversely affect the
effectiveness of such notice.
11.8 ASSIGNMENTS AND PARTICIPATIONS.
(a) BORROWER ASSIGNMENT. Neither the Funds Administrator nor
any of the other Credit Parties shall have any right to assign this
Credit Agreement or any of the other Credit Documents, or any rights or
obligations hereunder or thereunder, without the prior written consent
of the Agent and the Lenders.
(b) LENDER ASSIGNMENTS. Each Lender may assign to one or more
banks or other financial institutions all or a portion of its rights
and obligations under this Credit Agreement, the Notes and the other
Credit Documents (which shall be of a constant and not a varying
percentage of the Loans and Commitment assigned), with the consent of
the Agent and upon execution and delivery to the Agent, for its
acceptance and recording in the Register, of an agreement in
substantially the form of EXHIBIT F (an "ASSIGNMENT AND ASSUMPTION
AGREEMENT"), together with surrender of any Note or Notes subject to
such assignment and a processing and recordation fee of $5,000, such
assignment shall be effective and ANNEX I hereto shall be deemed to be
modified accordingly. No such assignment of (i) Revolving Loans shall
be for less than $10,000,000 of the Revolving Loan Commitments or (ii)
Term Loans shall be for less than $1,000,000 of the Term Loan
Commitment, in each case, unless it is to another Lender or is an
assignment of all of such Lender's rights and obligations under this
Credit Agreement. (This Section does not apply to branches and
Affiliates of a Lender, it being understood that a Lender may make,
carry or transfer Loans at or for the account of any of its branch
offices or Affiliates without consent of the Borrowers, the Agent or
any other Lender.)
(c) AGENT'S REGISTER. The Agent shall maintain a register of
the names and addresses of the Lenders, their Commitments, and the
principal amount of their Loans (the "REGISTER") at the address
specified for the Agent in SECTION 11.7. The Agent shall also maintain
a copy of each Assignment and Assumption Agreement delivered to and
accepted by it, and modify the Register to give effect to each
Assignment and Assumption Agreement. Upon its receipt of each
Assignment and Assumption Agreement and surrender of the affected Note
or Notes, the Agent will give prompt notice thereof to the Funds
Administrator and deliver to the Funds Administrator a copy of the
Assignment and Assumption Agreement and the surrendered Note or Notes.
Within 5 Business Days after its receipt of such notice, the Borrowers
shall execute and deliver to the Agent a substitute Note or Notes to
the order of the assignee in the amount of the Commitment or
Commitments assumed by it and to the assignor in the amount of the
Commitment or Commitments retained by it, if any. Such substitute Note
or Notes
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shall re-evidence the Indebtedness outstanding under the surrendered
Note or Notes and shall be dated as of the Closing Date. The Agent
shall be entitled to rely upon the Register exclusively for purposes of
identifying the Lenders hereunder. The Register shall be available for
inspection by the Credit Parties and the Lenders (or any of them) at
any reasonable time and from time to time upon reasonable notice to the
Agent.
(d) PARTICIPATIONS. Each Lender may sell participations
(without the consent of the Agent, any Credit Party or any other
Lender) to one or more parties in or to all or a portion of its rights
and obligations under this Credit Agreement, the Notes and the other
Credit Documents. Notwithstanding a Lender's sale of a participation
interest, its obligations hereunder shall remain unchanged. The Credit
Parties, the Agent, and the other Lenders shall continue to deal solely
and directly with such Lender. No participant shall have rights to
approve any amendment or waiver of this Credit Agreement or any of the
other Credit Documents except to the extent such amendment or waiver
would (i) increase the participant's obligation in respect of the
Commitment of the Lender from whom the participant purchased its
participation interest; (ii) reduce the principal of, or stated rate or
amount of interest on, the Loans subject to such participation, (iii)
postpone any maturity date fixed for final payment of principal of the
Revolving Loans subject to the participation interest and (iv) release
any guarantor of the Obligations or all or a substantial portion of the
Collateral, other than when otherwise permitted hereunder.
11.9 CONFIDENTIALITY.
(a) Each Lender agrees that it will use its best efforts not
disclose to any Person, without the prior consent of the Funds
Administrator, any information with respect to any of the Credit
Parties or any Subsidiary of any of the Credit Parties which is
furnished pursuant to this Credit Agreement and which is designated by
the respective Credit Parties to the Lenders in writing as confidential
(the "CREDIT PARTY INFORMATION"), PROVIDED, that, each Lender may
disclose any such information (i) to its employees, auditors, or
counsel, or to another Lender if the disclosing Lender or such
disclosing Lender's holding or parent company in its sole discretion
determines that any such party should have access to such information,
(ii) to its Affiliates, on a need to know basis, (iii) as has become
generally available to the public, (iv) as may be required in any
report, statement or testimony submitted to any Governmental Authority
having or claiming to have jurisdiction over such Lender, (v) as may be
required in response to any summons or subpoena or in connection with
any litigation, (vi) in order to comply with any Requirement of Law,
and (vii) to any actual or prospective transferee or participant in
connection with any contemplated transfer or participation of any of
the Notes or Commitments or any interest therein by such Lender, so
long as prior to such disclosure such prospective or actual transferee
or participant has agreed to preserve the confidentiality of such
information on terms substantially similar to those set forth in this
SECTION 11.9 or on terms otherwise satisfactory to the Funds
Administrator.
(b) In the event that the Agent or any Lender is requested or
becomes legally compelled (by interrogatories, requests for information
or documents, subpoena, civil investigative demand or similar process)
to disclose any of the Credit Party Information, such Person will (i)
provide the Funds Administrator with prompt written notice so that
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the Credit Parties may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this SECTION
11.9; (ii) unless the Credit Parties waive compliance by such Person
with the provisions of this SECTION 11.9, make a timely objection to
the request or compulsion to provide such Credit Party Information on
the basis that such Credit Party Information is confidential and
subject to the agreements contained in this SECTION 11.9; and (iii)
take action as is necessary to preserve such confidentiality, such as
seeking a protective order or other appropriate remedy.
In the event that a protective order or other remedy is not obtained,
or the Credit Parties waive compliance with the provisions of this SECTION 11.9,
such Person will furnish only that portion of the Credit Party Information which
is legally required to be furnished and will exercise such Person's best efforts
to obtain reliable assurance that confidential treatment will be accorded to the
Credit Party Information.
Notwithstanding anything herein to the contrary, the
information subject to this SECTION 11.9 shall not include, and the Agent and
each Lender may disclose without limitation of any kind, any information with
respect to the "tax treatment" and "tax structure" (in each case, within the
meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated herein or in any of the other Credit Documents and all materials of
any kind (including opinions or other tax analyses) that are provided to the
Agent or such Lender relating to such tax treatment and tax structure (it being
understood that this authorization is retroactively effective to the
commencement of the first discussions between or among any of the parties
regarding the transactions contemplated hereby or by any of the other Credit
Documents); PROVIDED that with respect to any document or similar item that in
either case contains information concerning the "tax treatment" or "tax
structure" of the transactions as well as other information, this sentence shall
only apply to such portions of the document or similar item that relate to the
"tax treatment" or "tax structure" of the transactions contemplated herein or by
any of the other Credit Documents.
11.10 INDEMNIFICATION.
The Borrowers hereby jointly and severally indemnify and agree to
defend and hold harmless the Agent and each of the Lenders and their respective
directors, officers, agents, employees and counsel from and against any and all
losses, claims, damages, liabilities, deficiencies, judgments or expenses
incurred by any of them (except to the extent that it is finally judicially
determined to have resulted from their own gross negligence or willful
misconduct) arising out of or by reason of (a) any litigations, investigations,
claims or proceedings which arise out of (i) this Credit Agreement or the
transactions contemplated hereby, (ii) the issuance of the Letters of Credit,
(iii) the failure of the Issuing Bank to honor a Drawing under any Letter of
Credit, as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or Governmental Authority, (iv)
any actual or proposed use by any Borrower of the proceeds of the Revolving
Loans or (v) the Agent's or the Lenders' entering into this Credit Agreement,
the other Credit Documents or any other agreements and documents relating
hereto, including, without limitation, amounts paid in settlement, court costs
and the fees and disbursements of counsel incurred in connection with any such
litigation, investigation, claim or proceeding or any advice rendered in
connection with any of the foregoing and (b) any remedial or other action taken
by any of the Borrowers or any of the Lenders in connection with
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compliance by any of the Borrowers or any Subsidiary of any of the Borrowers, or
any of their respective properties, with any federal, state or local
environmental laws, acts, rules, regulations, orders, directions, ordinances,
criteria or guidelines.
11.11 AMENDMENTS AND WAIVERS.
No amendment or waiver of any provision of this Credit Agreement, any
part of SCHEDULE B, or any other Credit Document shall be effective unless in
writing and signed by the Majority Lenders (or by the Agent on their behalf),
except that:
(a) the consent of all the Revolving Lenders only shall be
required to (i) increase the respective Revolving Loan Commitments,
(ii) reduce the principal of, or interest on, any Revolving Loan Note,
any Letter of Credit Obligations or any Fees payable in respect of
Revolving Loans or Letter of Credit Obligations, (iii) postpone any
date fixed for any payment in respect of principal of, or interest on,
any Revolving Note, any Letter of Credit Obligations or any Fees
payable in respect of Revolving Loans or Letter of Credit Obligations,
(iv) amend or waive this SECTION 11.11(a), (v) change the percentage of
the Revolving Loan Commitments or any minimum requirement necessary for
the Revolving Lenders or the Majority Revolving Lenders to take any
action hereunder, (vi) change the definition of Majority Revolving
Lenders, (vii) increase the advance rates set forth in CLAUSE (b) OR
(c) of the definition of the term Borrowing Base, (VIII) increase the
Fixed Asset Sublimit or (ix) amend or waive this SECTION 11.11(a);
(b) the consent of all the Term Lenders only is required to
(i) reduce the principal of, or interest on, any Term Loan Note or any
Fees payable in respect of the Term Loans, (ii) postpone any date fixed
for any payment in respect of principal of, or interest on, any Term
Loan Note or any Fees payable in respect of the Term Loans, (iii) amend
or waive this SECTION 11.11(b), (iv) change any minimum requirement
necessary for the Term Lenders or the Majority Term Lenders to take any
action hereunder or (v) change the respective definitions of Term
Lender or Majority Term Lenders;
(c) the consent of all the Lenders is required to (i) increase
the Aggregate Commitments of the Lenders, (ii) amend or waive this
SECTION 11.11(c) or (iii) except as otherwise expressly provided in
this Credit Agreement, and other than in connection with the financing,
refinancing, sale or other disposition of any asset of a Borrower
permitted under this Credit Agreement, release all or substantially all
of the Liens in favor of the Agent on any Collateral; and
(d) the consent of the Agent shall be required for any
amendment, waiver or consent affecting the rights or duties of the
Agent under any Credit Document, in addition to the consent of the
Lenders otherwise required by this Section.
Neither the consent of the Funds Administrator nor any other Credit
Party shall be required for any amendment, modification or waiver of the
provisions of ARTICLE 10 (other than SECTION 10.9). The Funds Administrator, the
other Credit Parties and the Lenders each hereby authorize the Agent to modify
this Credit Agreement by unilaterally amending or supplementing ANNEX I to
reflect assignments of the Commitments. Notwithstanding the foregoing, the
Credit
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Parties may amend SCHEDULE B, PARTS 6.1, 6.10, 6.14, 6.16 and 8.10, without the
consent of the Majority Lenders.
11.12 COUNTERPARTS AND EFFECTIVENESS.
This Credit Agreement and any waiver or amendment hereto may be
executed in any number of counterparts and by the different parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. This Credit Agreement shall become effective on the date on which
all of the parties hereto shall have signed a copy hereof (whether the same or
different copies) and shall have delivered the same to the Agent.
11.13 SEVERABILITY.
In case any provision in or obligation under this Credit Agreement, the
Notes or any of the other Credit Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
11.14 MAXIMUM RATE.
Notwithstanding anything to the contrary contained elsewhere in this
Credit Agreement or in any other Credit Document, the Borrowers, the Agent, and
the Lenders hereby agree that all agreements among them under this Credit
Agreement and the other Credit Documents, whether now existing or hereafter
arising and whether written or oral, are expressly limited so that in no
contingency or event whatsoever shall the amount paid, or agreed to be paid, to
the Agent or any Lender for the use, forbearance, or detention of the money
loaned to the Borrowers and evidenced hereby or thereby or for the performance
or payment of any covenant or obligation contained herein or therein, exceed the
Highest Lawful Rate. If due to any circumstance whatsoever, fulfillment of any
provisions of this Credit Agreement or any of the other Credit Documents at the
time performance of such provision shall be due shall exceed the Highest Lawful
Rate, then, automatically, the obligation to be fulfilled shall be modified or
reduced to the extent necessary to limit such interest to the Highest Lawful
Rate, and if from any such circumstance any Lender should ever receive anything
of value deemed interest by applicable law which would exceed the Highest Lawful
Rate, such excessive interest shall be applied pursuant to the terms hereof to
the reduction of the principal amount then outstanding hereunder or on account
of any other then outstanding Obligations and not to the payment of interest, or
if such excessive interest exceeds the principal unpaid balance then outstanding
hereunder and such other then outstanding Obligations, such excess shall be
refunded to the Borrowers. All sums paid or agreed to be paid to the Agent or
any Lender for the use, forbearance, or detention of the Obligations and other
Indebtedness of the Borrowers to the Agent or any Lender, to the extent
permitted by applicable law, shall be amortized, prorated, allocated and spread
throughout the full term of such Indebtedness, until payment in full thereof, so
that the actual rate of interest on account of all such Indebtedness does not
exceed the Highest Lawful Rate throughout the entire term of such Indebtedness.
The terms and provisions of this SECTION 11.14 shall control over
79
every other provision of this Credit Agreement, the other Credit Documents, and
all agreements among the Borrowers, the Agent and the Lenders.
11.15 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS.
This Credit Agreement and the other Credit Documents constitute the
entire agreement among the Credit Parties, the Agent and the Lenders, supersede
any prior agreements among them, and shall bind and benefit each of such Persons
and their respective successors and permitted assigns.
11.16 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each of the Borrowers shall be jointly and severally
liable hereunder and under each of the other Credit Documents with
respect to all Obligations, regardless of which of the Borrowers
actually receives the proceeds of the Loans or the benefit of any other
extensions of credit hereunder, or the manner in which the Funds
Administrator, the Borrowers, the Agent or the Lenders account therefor
in their respective books and records. Notwithstanding the foregoing,
(i) each Borrower's obligations and liabilities with respect to
proceeds of Loans which it receives or Letters of Credit issued for its
account, and related fees, costs and expenses, and (ii) each Borrower's
obligations and liabilities arising as a result of the joint and
several liability of the Borrowers hereunder with respect to proceeds
of Loans received by, or Letters of Credit issued for the account of,
any of the other Borrowers, together with the related fees, costs and
expenses, shall be separate and distinct obligations, both of which are
primary obligations of such Borrower. Neither the joint and several
liability of, nor the Liens granted to the Agent under the Collateral
Documents by, any of the Borrowers shall be impaired or released by (A)
the failure of Agent or any Lender, any successors or assigns thereof,
or any holder of any Note or any of the Obligations to assert any claim
or demand or to exercise or enforce any right, power or remedy against
the Funds Administrator, any Borrower, any Subsidiary of any Borrower,
any other Person, the Collateral or otherwise; (B) any extension or
renewal for any period (whether or not longer than the original period)
or exchange of any of the Obligations or the release or compromise of
any obligation of any nature of any Person with respect thereto; (C)
the surrender, release or exchange of all or any part of any property
(including without limitation the Collateral) securing payment,
performance and/or observance of any of the Obligations or the
compromise or extension or renewal for any period (whether or not
longer than the original period) of any obligations of any nature of
any Person with respect to any such property; (D) any action or
inaction on the part of the Agent or any Lender, or any other event or
condition with respect to any other Borrower, including any such action
or inaction or other event or condition, which might otherwise
constitute a defense available to, or a discharge of, such other
Borrower, or a guarantor or surety of or for any or all of the
Obligations; and (E) any other act, matter or thing (other than payment
or performance of the Obligations) which would or might, in the absence
of this provision, operate to release, discharge or otherwise
prejudicially affect the obligations of such or any other Borrower.
(b) Each Borrower understands and acknowledges that, if the
Agent forecloses judicially or nonjudicially against any Collateral
consisting of real property,
80
such foreclosure could impair or destroy any ability that such Borrower
may have to seek reimbursement, contribution or indemnification from
any other Borrower or Borrowers or from others based on any right such
Borrower may have of subrogation, reimbursement, contribution or
indemnification in respect of its joint and several liability
hereunder. Each Borrower further understands and acknowledges that in
the absence of this SECTION 11.16(b), such potential impairment or
destruction of such Borrower's rights, if any, may entitle such
Borrower to assert a defense to its joint and several liability
hereunder based on Section 580d of the California Code of Civil
Procedure as interpreted in Union Bank ▇. ▇▇▇▇▇▇▇, 265 Cal.App.2d 40
(1968). By executing this Agreement, each Borrower freely, irrevocably
and unconditionally: (i) waives and relinquishes that defense and
agrees that such Borrower will be fully liable hereunder and under the
other Credit Documents even though the Agent may foreclose judicially
or nonjudicially against any real property security for the
Obligations; (ii) agrees that such Borrower will not assert that
defense in any action or proceeding which the Agent or any of the
Lenders may commence to enforce this Agreement; (iii) acknowledges and
agrees that the rights and defenses waived by such Borrower hereunder
include any right or defense that such Borrower may have or be entitled
to assert based upon or arising out of any one or more of Sections
580a, 580b, 580d or 726 of the California Code of Civil Procedure or
Section 2848 of the California Civil Code; and (iv) acknowledges and
agrees that the Agent and each of the Lenders is relying on this waiver
in making the Revolving Loans and other extensions of credit hereunder,
and that this waiver is a material part of the consideration which the
Agent and each Lender is receiving therefor.
(c) Each Borrower waives any rights and defenses that are or
may become available to such Borrower by reason of Sections 2787 to
2855, inclusive, of the California Civil Code.
(d) Each Borrower waives all rights and defenses that such
Borrower may have because the Revolving Loans and other Obligations are
secured in part by real property. This means, among other things, that:
(i) the Lenders may collect from such Borrower,
without first foreclosing on any real or personal property
Collateral pledged by such or any other Borrower or any other
Person; and
(ii) If the Agent forecloses on any real property
Collateral pledged by any Borrower or any other Person:
(A) The amount of the Obligations may be
reduced only by the price for which that Collateral
is sold at the foreclosure sale, even if the
Collateral is worth more than the sale price; and
(B) Lenders may collect from such Borrower
even if the Agent, by foreclosing on the real
property Collateral, has destroyed any right such
Borrower may have to collect from any other Borrower
or Person.
81
This SECTION 11.16(d) is an unconditional and irrevocable waiver of any
rights and defenses any Borrower may have because the Obligations are secured in
part by real property. These rights and defenses include, but are not limited
to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGES FOLLOW]
82
IN WITNESS WHEREOF, the respective parties hereto have caused this
Credit Agreement to be executed and delivered by their duly authorized officers
as of the date first set forth above.
METAL MANAGEMENT, INC.,
as Funds Administrator and in its
individual capacity as a Borrower
By: ____________________________________
Name: __________________________________
Title: _________________________________
BORROWERS:
CIM TRUCKING, INC.
FIRMA, INC.
FIRMA PLASTIC CO., INC.
MAC LEOD METALS CO.
MTLM ARIZONA, INC.
METAL MANAGEMENT AEROSPACE, INC.
METAL MANAGEMENT ALABAMA, INC.
METAL MANAGEMENT ARIZONA, L.L.C.
METAL MANAGEMENT CONNECTICUT, INC.
METAL MANAGEMENT INDIANA, INC.
METAL MANAGEMENT GULF COAST, INC.
METAL MANAGEMENT MEMPHIS, L.L.C.
METAL MANAGEMENT MIDWEST, INC.
METAL MANAGEMENT MISSISSIPPI, L.L.C.
METAL MANAGEMENT NORTHEAST, INC.
METAL MANAGEMENT OHIO, INC.
METAL MANAGEMENT PITTSBURGH, INC.
METAL MANAGEMENT REALTY, INC.
METAL MANAGEMENT SERVICES, INC.
METAL MANAGEMENT STAINLESS & ALLOY, INC.
METAL MANAGEMENT WEST, INC.
METAL MANAGEMENT WEST COAST HOLDINGS, INC.
METAL MANAGEMENT S&A HOLDINGS, INC.
▇▇▇▇▇▇.▇▇▇, INC.
PROLER SOUTHWEST INC.
TROJAN TRADING CO.
By: ____________________________________
Name: __________________________________
Title: _________________________________
RESERVE IRON & METAL LIMITED
PARTNERSHIP
By: METAL MANAGEMENT OHIO,
INC., its general partner
By: ____________________________________
Name: __________________________________
Title: _________________________________
AGENT:
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Agent
By: ____________________________________
Name: __________________________________
Title: _________________________________
LENDERS:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: _________________________________
Name: _________________________________
Title: _________________________________
CONGRESS FINANCIAL CORP. (CENTRAL)
By: _________________________________
Name: _________________________________
Title: _________________________________
FLEET CAPITAL CORPORATION
By: _________________________________
Name: _________________________________
Title: _________________________________
▇▇▇▇▇▇ FINANCIAL, INC.
By: _________________________________
Name: _________________________________
Title: _________________________________
LASALLE BANK NATIONAL ASSOCIATION
By: _________________________________
Name: _________________________________
Title: _________________________________
PNC BUSINESS CREDIT CORPORATION
By: _________________________________
Name: _________________________________
Title: _________________________________
IBJ WHITEHALL BUSINESS CREDIT CORPORATION
By: _________________________________
Name: _________________________________
Title: _________________________________
U.S. BANK NATIONAL ASSOCIATION (FORMERLY
KNOWN AS FIRSTAR BANK N.A.)
By: _________________________________
Name: _________________________________
Title: _________________________________
ANNEX I
TO
CREDIT AGREEMENT
DATED AS OF AUGUST 13, 2003
LIST OF LENDERS; COMMITMENT
AMOUNTS; APPLICABLE LENDING OFFICES
1. DEUTSCHE BANK TRUST COMPANY AMERICAS
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
TOTAL COMMITMENT AMOUNT: $17,250,000.00
REVOLVING LOAN COMMITMENT: $14,596,154.00
TERM LOAN COMMITMENT: $ 2,653,846.00
2. FLEET CAPITAL CORPORATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
TOTAL COMMITMENT AMOUNT: $17,250,000.00
REVOLVING LOAN COMMITMENT: $14,596,154.00
TERM LOAN COMMITMENT: $ 2,653,846.00
3. LASALLE BANK NATIONAL
ASSOCIATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TOTAL COMMITMENT AMOUNT: $17,250,000.00
REVOLVING LOAN COMMITMENT: $14,596,154.00
TERM LOAN COMMITMENT: $ 2,653,846.00
4. CONGRESS FINANCIAL CORP.
(CENTRAL)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
TOTAL COMMITMENT AMOUNT: $17,250,000.00
REVOLVING LOAN COMMITMENT: $14,596,154.00
TERM LOAN COMMITMENT: $ 2,653,846.00
5. ▇▇▇▇▇▇ FINANCIAL, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
TOTAL COMMITMENT AMOUNT: $16,500,000.00
REVOLVING LOAN COMMITMENT: $13,961,538.00
TERM LOAN COMMITMENT: $ 2,538,462.00
6. U.S. BANK NATIONAL ASSOCIATION (FORMERLY KNOWN AS FIRSTAR BANK N.A.)
7th and Washington
▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
TOTAL COMMITMENT AMOUNT: $17,250,000.00
REVOLVING LOAN COMMITMENT: $14,596,154.00
TERM LOAN COMMITMENT: $ 2,653,846.00
7. PNC BUSINESS CREDIT CORPORATION
Two PNC Plaza, 18th Floor
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TOTAL COMMITMENT AMOUNT: $17,250,000.00
REVOLVING LOAN COMMITMENT: $14,596,154.00
TERM LOAN COMMITMENT: $ 2,653,846.00
8. WHITEHALL BUSINESS CREDIT
CORPORATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
TOTAL COMMITMENT AMOUNT: $10,000,000.00
REVOLVING LOAN COMMITMENT: $ 8,461,538.00
TERM LOAN COMMITMENT: $ 1,538,462.00
SCHEDULE A
TO
CREDIT AGREEMENT
DATED AS OF AUGUST 13, 2003
CLOSING DOCUMENT LIST
Attached
SCHEDULE B
TO
CREDIT AGREEMENT
DATED AS OF AUGUST 13, 2003
DISCLOSURE SCHEDULES
Attached