EXHIBIT 4.1
EXECUTION COPY
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,
METAL MANAGEMENT, INC.,
AS FUNDS ADMINISTRATOR
AND
LASALLE BANK NATIONAL ASSOCIATION
AS AGENT
WITH
PNC BANK NATIONAL ASSOCIATION AS CO-SYNDICATION AGENT
U.S. BANK, NATIONAL ASSOCIATION AS CO-SYNDICATION AGENT
SOVEREIGN BANK AS CO-DOCUMENTATION AGENT
NATIONAL CITY BANK OF THE MIDWEST AS CO-DOCUMENTATION AGENT
DATED AS OF JUNE 28, 2004
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS.................................................................................. 1
1.1 General Definitions.......................................................................... 1
1.2 Accounting Terms and Determinations.......................................................... 23
1.3 Other Terms; Headings........................................................................ 23
ARTICLE II REVOLVING LOANS.............................................................................. 24
2.1 Commitments.................................................................................. 24
2.2 Borrowing of Revolving 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 Revolving Loans and Expenses................................................... 27
2.8 Increase in Revolving Credit Commitments..................................................... 28
ARTICLE III LETTERS OF CREDIT............................................................................ 29
3.1 Letters of Credit............................................................................ 29
3.2 Maximum Letter of Credit Obligations; Final Maturities....................................... 30
3.3 Letter of Credit Requests.................................................................... 30
3.4 Letter of Credit Participations.............................................................. 31
3.5 Agreement to Repay Letter of Credit Drawings................................................. 33
3.6 Capital Adequacy............................................................................. 34
ARTICLE IV COMPENSATION, REPAYMENT AND REDUCTION OF COMMITMENTS........................................ 35
4.1 Interest on Revolving Loans.................................................................. 35
4.2 Unused Line Fee.............................................................................. 36
4.3 Letter of Credit Fees........................................................................ 36
4.4 Interest and Letter of Credit Fees After Event of Default.................................... 36
4.5 [This Section Intentionally Left Blank]...................................................... 36
4.6 [This Section Intentionally Left Blank]...................................................... 36
4.7 Expenses..................................................................................... 36
4.8 Mandatory Payment of Revolving Loans; Reductions of Commitments.............................. 37
4.9 Maintenance of Loan Account, Statements of Account........................................... 37
4.10 Payment Procedures........................................................................... 37
4.11 Collection of Accounts....................................................................... 37
4.12 Distribution and Application of Collections and Other Amounts................................ 38
4.13 Calculations................................................................................. 38
4.14 Special Provisions Relating to LIBOR Rate Loans.............................................. 38
4.15 Indemnification in Certain Events............................................................ 41
4.16 Substitution of Lenders...................................................................... 42
4.17 Taxes........................................................................................ 42
ARTICLE V CONDITIONS PRECEDENT......................................................................... 45
5.1 Conditions Precedent to Initial Revolving Loan and Letter of Credit.......................... 45
5.2 Conditions Precedent to All Revolving Loans and Letters of Credit............................ 47
ARTICLE VI REPRESENTATIONS AND WARRANTIES............................................................... 47
6.1 Organization and Qualification............................................................... 48
6.2 Authority.................................................................................... 48
6.3 Enforceability............................................................................... 48
6.4 No Conflicts................................................................................. 48
6.5 Consents And Filings......................................................................... 48
6.6 Government Regulation........................................................................ 49
6.7 Solvency..................................................................................... 49
6.8 Rights in Collateral; Priority of Liens...................................................... 49
6.9 Financial Data............................................................................... 49
6.10 Locations of Offices, Records and Inventory.................................................. 49
6.11 Subsidiaries; Ownership of Equity............................................................ 50
6.12 No Judgments or Litigation................................................................... 50
6.13 No Defaults.................................................................................. 50
6.14 Labor Matters................................................................................ 50
6.15 Compliance With Law.......................................................................... 51
6.16 ERISA........................................................................................ 51
6.17 Compliance with Environmental Laws........................................................... 51
6.18 Intellectual Property........................................................................ 52
6.19 Licenses and Permits......................................................................... 52
6.20 Taxes and Tax Returns........................................................................ 52
6.21 Material Contracts........................................................................... 52
6.22 Accuracy and Completeness of Information..................................................... 52
6.23 No Change.................................................................................... 53
ARTICLE VII AFFIRMATIVE COVENANTS........................................................................ 53
7.1 Financial Reporting.......................................................................... 53
7.2 Collateral Reporting......................................................................... 54
7.3 Notification Requirements.................................................................... 55
7.4 Corporate Existence.......................................................................... 56
7.5 Books and Records; Inspections............................................................... 56
7.6 Insurance.................................................................................... 57
7.7 Taxes........................................................................................ 57
7.8 Compliance with Laws......................................................................... 58
7.9 Use of Proceeds.............................................................................. 58
7.10 Fiscal Year.................................................................................. 58
7.11 Maintenance of Property...................................................................... 58
7.12 ERISA Documents.............................................................................. 58
7.13 Environmental and Other Matters.............................................................. 59
7.14 Further Actions.............................................................................. 59
7.15 Deposit of Collections and Other Proceeds of Collateral...................................... 59
7.16 Additional Collateralization................................................................. 59
7.17 OFAC; BSA.................................................................................... 60
ARTICLE VIII NEGATIVE COVENANTS........................................................................... 60
8.1 Financial Covenants.......................................................................... 60
8.2 Capital Expenditures......................................................................... 61
8.3 Additional Indebtedness...................................................................... 61
8.4 Liens........................................................................................ 62
8.5 Contingent Obligations....................................................................... 63
8.6 Sale of Assets............................................................................... 63
8.7 Restricted Payments.......................................................................... 64
8.8 Investments and Acquisitions................................................................. 64
8.9 Affiliate Transactions....................................................................... 65
8.10 Bank Accounts................................................................................ 65
8.11 Additional Negative Pledges.................................................................. 65
8.12 Merger....................................................................................... 66
8.13 Sale and Leaseback Transactions and Other Off-Balance Sheet Liabilities...................... 66
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES............................................................... 66
9.1 Events of Default............................................................................ 66
9.2 Acceleration, Termination of Commitments and Cash Collateralization.......................... 68
9.3 Rescission of Acceleration................................................................... 68
9.4 Remedies..................................................................................... 68
9.5 Right of Setoff.............................................................................. 69
9.6 License of Use of Software and Other Intellectual Property................................... 69
9.7 Application of Proceeds; Surplus, Deficiencies............................................... 69
ARTICLE X THE AGENT.................................................................................... 69
10.1 Appointment of Agent......................................................................... 69
10.2 Nature of Duties of Agent.................................................................... 70
10.3 Lack of Reliance on Agent.................................................................... 70
10.4 Certain Rights of the Agent.................................................................. 70
10.5 Reliance by Agent............................................................................ 71
10.6 Indemnification of Agent..................................................................... 71
10.7 The Agent in its Individual Capacity......................................................... 71
10.8 Holders of Revolving Notes................................................................... 71
10.9 Successor Agent.............................................................................. 71
10.10 Collateral Matters........................................................................... 72
10.11 Actions with Respect to Defaults............................................................. 73
10.12 Delivery of Information...................................................................... 73
10.13 Designation of Co-Syndication Agents and Co-Documentation Agents............................. 73
ARTICLE XI MISCELLANEOUS................................................................................ 74
11.1 Governing Law................................................................................ 74
11.2 Submission to Jurisdiction................................................................... 74
11.3 Service of Process........................................................................... 74
11.4 Jury Trial................................................................................... 75
11.5 Limitation of Liability...................................................................... 75
11.6 Delays....................................................................................... 75
11.7 Notices...................................................................................... 75
11.8 Assignments and Participations............................................................... 75
11.9 Confidentiality.............................................................................. 77
11.10 Indemnification.............................................................................. 78
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
11.17 Customer Identification - USA Patriot Act Notice............................................. 82
ANNEXES
Annex I List of Lenders; Commitment Amounts; Applicable Lending Offices
Annex II Pricing Schedule
SCHEDULES
Schedule A Closing Document List
Schedule B Disclosure Schedules
Schedule B, Part 1.1 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 Form Of Revolving 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
Exhibit G Form Of Commitment Amount Increase Request
THIS CREDIT AGREEMENT is entered into as of June 28, 2004, 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 LASALLE BANK NATIONAL ASSOCIATION, a national
banking association (in its individual capacity, hereinafter referred to as
"LaSalle Bank"), acting in its capacity as agent for the Lenders pursuant to
Article X hereof.
ARTICLE I
DEFINITIONS
1.1 General Definitions.
"Account" has the meaning set forth in the Security Agreement.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the Closing Date, by which any of the
Borrowers or any of their Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or limited liability
company, or division thereof, whether through purchase of assets, merger or
otherwise or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a majority (in
number of votes) of the securities of a corporation which have ordinary voting
power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) or a majority (by percentage
of voting power) of the outstanding ownership interests of a partnership or
limited liability company.
"Additional Collateral Date" means the date that Borrowers have delivered
a compliance certificate as set forth in Section 7.1.5 hereof indicating that an
Additional Collateral Event has occurred, or, if earlier, the date upon which
the Agent has determined, which determination shall be conclusive absent
demonstrable error, that an Additional Collateral Event has occurred.
"Additional Collateral Event" means that the average Excess Availability
as of the last Business Day of any two (2) consecutive months is less than
$10,000,000.
"Additional Collateral Notice" has the meaning set forth in Section 7.16.
"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" means LaSalle Bank in its capacity as contractual representative
of the Lenders pursuant to Article X, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article X.
"Agent Advances" has the meaning set forth in Section 2.2.
"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 Base Rate Loan.
"Applicable Margin" means, with respect to a Revolving Loan of any Type at
any time, the percentage rate per annum which is applicable at such time with
respect to Revolving Loans of such Type as set forth in the Pricing Schedule.
"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.
"Base Rate" means, for any day, a fluctuating rate of interest per annum
equal to the higher of (a) the Prime Rate for such day, and (b) the sum of (i)
the Federal Funds Rate for such day and (ii) one-half of one percent (0.5%) per
annum.
"Base Rate Loan" means a Revolving Loan that bears interest as provided in
Section 4.1(a) hereof.
"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) ▇▇▇▇▇▇▇,
(4) MTLM, (5) MTLM New Haven, (6) MTLM Aerospace, (7) MTLM Alabama, (8) MTLM
Arizona, (9) MTLM Connecticut, (10) MTLM Gulf Coast, (11) MTLM Indiana, (12)
MTLM Memphis, (13) MTLM Midwest, (14) MTLM Mississippi, (15) MTLM Northeast,
(16) MTLM Ohio, (17) MTLM Pittsburgh, (18) MTLM Realty, (19) MTLM Services, (20)
MTLM Stainless & Alloy, (21) MTLM West, (22) MTLM West Coast Holdings, (23)
Proler, (24) Reserve, and (25) S&A Holdings.
"Borrowing" means a borrowing of Revolving 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 Revolving 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)
eighty-five percent (85%) of Eligible Accounts Receivable, plus (b) the lesser
of $65,000,000 and seventy percent (70%) of Eligible Inventory; provided,
however, that in no event shall more than forty percent (40%) of the total
Borrowing Base be derived from Eligible Inventory. In addition, in the
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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."
"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: (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.
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"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
(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 MTLM 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 direct or indirect legal and
beneficial owner of one hundred percent (100%) of the equity securities,
membership interests, partnership interests or ownership interests, as
applicable, of each of the other Borrowers.
"Closing Date" means the date of execution and delivery of this Credit
Agreement by all of the parties hereto or, if later, the date on which the
initial Revolving Loan is made or the initial Letter of Credit is issued
hereunder, whichever occurs earlier.
"Closing Document List" has the meaning set forth in Section 5.1(a).
"Code" has the meaning set forth in Section 1.3.
"Collateral" means all Accounts, Inventory and other property and assets
of any kind, whether now owned or hereafter acquired by any of the Borrowers;
provided, however, that until such time, if any, that an Additional Collateral
Notice has been delivered to the Funds Administrator in accordance with Section
7.16 hereof, the Collateral shall not include any Equipment, Fixtures or Real
Property.
"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.
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"Collateral Documents" means, collectively, the Security Agreement and all
other agreements, instruments and documents executed in connection with this
Agreement that are intended to create or evidence Liens to secure the
Obligations and the Rate Management Obligations, including, without limitation,
all security agreements, mortgages, deeds of trust, loan agreements, notes,
guarantees, subordination agreements, pledges, powers of attorney, consents,
assignments, contracts, fee letters, notices, leases, financing statements and
all other written matter whether heretofore, now, or hereafter executed by or on
behalf of any of the Borrowers or other Credit Parties and delivered to the
Agent or any of the Lenders, together with all agreements and documents referred
to therein or contemplated thereby.
"Collection Account" has the meaning set forth in Section 4.11.
"Collection Account Triggering Event" means (a) the occurrence of an Event
of Default, or (b) Excess Availability shall be equal to or less than
$10,000,000.
"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.
"Commitment" of a Lender means such Lender's commitment, on the terms and
subject to the conditions set forth herein, to make Revolving Loans and to
participate in Letters of Credit, up to the amount set forth below its name on
Annex I (as amended from time to time pursuant to Section 2.8 or Section
11.8(b)), as such amount may be reduced from time to time in accordance with the
terms and provisions of this Credit Agreement.
"Commitment Amount Increase" has the meaning set forth in Section 2.8.
"Commitment Amount Increase Request" means a Commitment Amount Increase
Request in the form of Exhibit G hereto.
"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 (net of interest income),
amortization or writeoff of debt discount and issuance costs and other fees and
charges associated with Indebtedness, income tax expense, depreciation and
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 (including, without limitation, stock based compensation and
joint venture income) 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), and minus dividends or
distributions paid during such period by any Borrower to
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any Person other than a member of the Consolidated Entity (to the extent
permitted pursuant to Section 8.7), 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, and (iii) regularly scheduled payments of
principal on Indebtedness (other than repayments in the ordinary course of the
Revolving Loans which do not permanently reduce the aggregate Commitments).
"Consolidated Net Income" means, with reference to any period, the
consolidated net income of the Consolidated Entity for such period, as
determined in accordance with GAAP applied on a basis consistent with the
audited Financial Statements as of March 31, 2004.
"Consolidated Tangible Net Worth" means at any time the stockholders'
equity of the Consolidated Entity as of such time, minus the book value of all
Intangible Assets as of such time, all as determined in accordance with GAAP
applied on a basis consistent with the audited Financial Statements as of March
31, 2004.
"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 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
Revolving Notes, the Letters of Credit, each of the Collateral Documents,
documents evidencing Rate Management Transactions, 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).
"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 LaSalle Bank or any other financial
institution selected from time to time by the Agent and reasonably acceptable to
the Funds Administrator.
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"Dollar" and "$" means the lawful currency of the United States of
America.
"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 fifty percent (50%) 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
(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 credit, 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
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(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 in the
exercise of its Permitted Discretion 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 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
8
(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.
"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 IX.
"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.
"Exchange Act" means the Securities and Exchange Act of 1934, amendments
thereto, successor statutes, and regulations or guidance promulgated thereunder.
"Excluded Taxes" means, in the case of each Lender or Applicable Lending
Office and the Agent, taxes imposed on its overall net income, and franchise
taxes imposed on it, by (i) the jurisdiction under the laws of which such Lender
or Agent is incorporated or organized or any
9
subdivision or taxing authority thereof, or (ii) the jurisdiction in which the
Agent's or Lender's principal executive office or such Lender's Applicable
Lending Office is located or in which, other than as a result of the transaction
evidenced by this Credit Agreement, the Agent or Lender otherwise is, or at any
time was, engaged in business.
"Existing Letters of Credit" means those certain Letters of Credit issued
and outstanding on the Closing Date and set forth on Schedule B, Part 1.1.
"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 Revolving Loans, (iv) after the occurrence of an
Additional Collateral Event, the cost of title insurance premiums and real
estate survey costs, (v) fees and taxes in connection with the filing of
financing statements, and (vi) 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
Revolving 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) June 28, 2008 and (ii) the date
on which this Credit Agreement is terminated pursuant to Section 9.2(b).
"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, at approximately
10:00 a.m. (Chicago time) for such day on such transactions received by the
Agent from three Federal Funds brokers of recognized standing selected by the
Agent in its sole discretion.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
10
"Fee Letter" means the fee letter agreement dated as of April 19, 2004
between LaSalle Bank and the Borrowers providing for the payment of certain fees
in connection with this Credit Agreement.
"Fees" means, collectively, the Unused Line Fee, the Letter of Credit
Fees, the Issuing Bank Fees and all fees payable by 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.
"Fixtures" has the meaning set forth in the Security Agreement.
"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.
"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 Illinois (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 Illinois' (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 Rate Management
Transaction, (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.
11
"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.
"Intangible Assets" means all assets properly classified as "intangible
assets" in accordance with GAAP, including, without limitation, all good will,
patents, trade names, trade marks, copyrights, franchises, deferred taxes,
experimental expense, organization expense, unamortized debt discount and
expense, deferred assets other than prepaid insurance and prepaid taxes and the
excess of cost of shares acquired over book value of related assets.
"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, a period of one, two,
three or six months commencing on a Business Day selected by the Funds
Administrator in accordance with this Agreement. Such Interest Period shall end
on but exclude the day which corresponds numerically to such date one, two,
three or six months thereafter, provided, however, that if there is no such
numerically corresponding day in such next, second, third or sixth succeeding
month or such other succeeding period, such Interest Period shall end on the
last Business Day of such next, second, third or sixth succeeding month or such
other succeeding period. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
12
"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, including, without limitation, all expenditures made and liabilities
incurred (contingently or otherwise) for or in connection with any Acquisition.
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 LaSalle Bank, an Affiliate of LaSalle Bank, 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).
"LaSalle Bank" has the meaning set forth in the Preamble.
"LaSalle Bank Account" has the meaning set forth in Section 4.11.
"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 Fee Rate" means the percentage rate per annum applicable
to Letters of Credit from time to time as set forth in the Pricing Schedule.
"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
13
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).
"Letter of Credit" means all letters of credit issued for the account of
any Borrower under Article III, 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 Base Rate" means, with respect to a LIBOR Rate Loan for the
relevant Interest Period, the applicable London interbank offered rate for
deposits in Dollars as displayed on the Bloomberg Financial Markets System as of
11:00 a.m. (London time) two (2) Business Days prior to the first day of such
Interest Period, and having a maturity equal to such Interest Period, provided
that, if the Bloomberg Financial Markets System rate is not available for any
reason, the applicable LIBOR Base Rate for the relevant Interest Period shall
instead be the applicable British Bankers' Association Interest Settlement Rate
for deposits in Dollars appearing on Reuters Screen FRBD as of 11:00 a.m.
(London time) two (2) Business Days prior to the first day of such Interest
Period, and having a maturity equal to such Interest Period. Any LIBOR Base Rate
determined on the basis of the rate displayed on Bloomberg Financial Markets
System in accordance with the foregoing provisions of this subparagraph shall be
subject to corrections, if any, made in such rate and displayed on the Bloomberg
Financial Markets System within one hour of the time when such rate is first
displayed by such service.
"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 a LIBOR Advance for the relevant
Interest Period, the sum of (i) the quotient of (a) the LIBOR Base Rate
applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period.
"LIBOR Rate Loan" means a Revolving Loan that bears interest as provided
in Section 4.1(b) hereof.
"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
$150,000,000, except as otherwise permitted by Section 2.8.
14
"Loan Account" has the meaning set forth in Section 4.9.
"Mac Leod" means Mac Leod Metals Co., a California corporation.
"Material Adverse Effect" means a material adverse effect on (i) the
business, 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 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 Service, Inc., or any successor thereto.
"MTLM" means Metal Management, 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 New Haven" means Metal Management New Haven, Inc., a Delaware
corporation.
"MTLM Northeast" means Metal Management Northeast, Inc., a New Jersey
corporation.
"MTLM Ohio" means Metal Management Ohio., Inc., an Ohio corporation.
15
"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.
"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.
"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 4.14.1.
"Notice of Conversion" has the meaning set forth in Section 4.14.2.
"Obligations" means unpaid principal and interest hereunder (including
interest accruing on or after the occurrence of an Insolvency Event) in respect
of Revolving 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 Revolving Notes and any of the other Credit Documents.
"Off-Balance Sheet Liability" of a Person means (i) any repurchase
obligation or liability of such Person or any of its Subsidiaries with respect
to accounts or notes receivable sold by such Person or any of its Subsidiaries,
(ii) any liability under any Sale and Leaseback transaction which is not a
capitalized lease in accordance with GAAP, or (iii) any liability under any
so-called "synthetic lease" transaction entered into by such Person or similar
off-balance sheet financing arrangement.
"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.
"PBGC" means the Pension Benefit Guaranty Corporation, and any entity
succeeding to any or all of its functions.
16
"Perfection Certificate" means that certain Perfection Certificate dated
as of even date herewith executed and delivered by the Borrowers and the Funds
Administrator to the Agent.
"Permitted Acquisition" means any Acquisition that satisfies the following
requirements:
(i) no Default or Event of Default shall have occurred and be
continuing or would result from or in connection with such
Acquisition;
(ii) the businesses being acquired shall be substantially similar
to the businesses or activities engaged in by the Borrowers on
the Closing Date;
(iii) the aggregate amount of consideration and transaction expenses
incurred by Borrowers in connection with such Acquisition does
not exceed $20,000,000 for any single such Acquisition and
does not exceed $40,000,000 in the aggregate for all such
Acquisitions during any fiscal year, as certified to Agent and
Lenders by the chief financial officer of the Funds
Administrator;
(iv) effective as of the date of each such Acquisition (taking into
account the effect of such Acquisition and any Indebtedness
incurred in connection therewith), the Excess Availability
shall not be less than $30,000,000 and the Borrowers shall be
in compliance with the financial covenants set forth in
Sections 8.1 and 8.2 hereof, all as demonstrated by a
certificate and supporting financial information delivered to
the Agent on behalf of the Lenders from the chief financial
officer of the Funds Administrator, demonstrating such
compliance to the satisfaction of the Agent on a pro forma
basis using historical audited (if any) or reviewed unaudited
financial statements obtained from the seller(s) in respect of
each such Acquisition as if the Acquisition and such
incurrence of Indebtedness had occurred on the first day of
the twelve-month period ending on the last day of the
Borrower's most recently completed fiscal quarter;
(v) the Acquisition is consummated pursuant to a negotiated
acquisition agreement on a non-hostile basis and approved by
the target company's board of directors or equivalent body
(and shareholders or equivalent equity holders, if necessary)
prior to the consummation of the Acquisition, and the
Borrowers shall have delivered or caused to be delivered to
the Agent all Collateral Documents necessary or requested by
the Agent for the creation and perfection of a first priority
security interest in the Collateral to be acquired and all of
the equity interests of the entity to be acquired, together
with copies of all acquisition documents, collateral
assignments of rights under acquisition documents, lien
17
searches, opinions of counsel, title insurance policies,
reliance letters, certificates and other documents,
instruments and agreements as requested by the Agent in order
to confirm, create, perfect and protect all rights of the
Agent and the Lenders in and to the Collateral and under and
in connection with the Credit Documents, in each case in form
and substance reasonably acceptable to the Agent;
(vi) in the case of an Acquisition of the capital stock or other
equity, ownership or partnership interests of a Person, as
applicable, either (x) the Acquisition results in Borrowers
owning 100% of such capital stock or other equity, ownership
or partnership interests, as applicable, of such Person, or
(y) if the Acquisition results in Borrowers owning less than
100% of such capital stock or other equity, ownership or
partnership interests, as applicable, of such Person (a
"non-wholly owned acquisition"), the consideration paid and
transaction costs incurred by Borrowers for such non-wholly
owned acquisition, together with the consideration paid and
transaction costs incurred by Borrowers for all other
non-wholly owned acquisitions and all Permitted Investments In
Non-Majority Interests during the term of this Agreement, as
certified to Agent and Lenders by the chief financial officer
of the Funds Administrator, does not exceed $10,000,000; and
(vii) if the Acquisition results in a new Subsidiary of any
Borrower, such Subsidiary shall join and agree to be bound by
and perform the terms of this Credit Agreement in the capacity
as a "Borrower" hereunder and the terms of each other Credit
Document in a similar capacity, and such Subsidiary, the other
Borrowers and the Funds Administrator shall execute and
deliver to the Agent such joinders, consents, certificates,
opinions of counsel, collateral documents, and other
agreements, instruments and documents as the Agent may request
in connection therewith.
"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) changes
in collection history and dilution with respect to the Accounts of any Borrower,
(ii) demand for, and pricing of, Inventory of any Borrower, (iii) changes in any
concentration of risk with respect to Accounts and Inventory of any Borrower,
and (iv) 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.
18
"Permitted Investment In Non-Majority Interest" means an Investment by any
Borrower resulting in the acquisition by such Borrower of less than the majority
(in number of votes) of the securities of a corporation which have ordinary
voting power for the election of directors (other than securities having such
power only by reason of the happening of a contingency) or less than a majority
of the voting or equity interests of a partnership, limited liability company or
joint venture, in each case satisfying the following conditions:
(i) no Default or Event of Default shall have occurred and be
continuing or would result from or in connection with such
Investment;
(ii) the corporation, partnership, limited liability company or
other entity in which such Investment is made engages in
business which is substantially similar to the businesses or
activities engaged in by the Borrowers on the Closing Date;
(iii) effective as of the date of such Investment (taking into
account the effect of such Investment and any Indebtedness
incurred in connection therewith), the Excess Availability
shall not be less than $30,000,000 and the Borrowers shall be
in compliance with the financial covenants set forth in
Sections 8.1 and 8.2 hereof, all as demonstrated by a
certificate and supporting financial information delivered to
the Agent on behalf of the Lenders from the chief financial
officer of the Funds Administrator, demonstrating such
compliance to the satisfaction of the Agent;
(iv) the Investment is consummated on a non-hostile basis and
approved by the target company's board of directors or
equivalent body (and shareholders or equivalent equity
holders, if necessary) prior to the consummation of the
Investment, and the Borrowers shall have delivered or caused
to be delivered to the Agent all Collateral Documents
necessary or requested by the Agent for the creation and
perfection of a first priority security interest in the equity
interests of the entity to be acquired, together with copies
of all other documents and instruments reasonably requested by
Agent, in each case in form and substance reasonably
acceptable to the Agent; and
(v) the consideration paid and transaction costs incurred by
Borrowers for such Investment, together with the consideration
paid and transaction costs incurred by Borrowers for all other
such Investments and all non-wholly owned acquisitions (as
such term is defined in the definition of Permitted
Acquisition) during the term of this Agreement, as certified
to Agent and Lenders by the chief financial officer of the
Funds Administrator, does not exceed $10,000,000.
19
"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.
"Pricing Schedule" means the Schedule identifying the Applicable Margin,
the Letter of Credit Fee Rate and the Unused Line Fee Rate attached hereto as
Annex II.
"Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by LaSalle Bank or its parent (which is not
necessarily the lowest rate charged to any customer), changing when and as said
prime rate changes.
"Proler" means Proler Southwest, Inc., a Texas corporation.
"Proportionate Share" of a Lender means a fraction, expressed as a
percentage, obtained by dividing its Commitment by the Line of Credit or, if the
Commitments are terminated, by dividing its then outstanding Revolving Loans and
Letter of Credit participations by the then outstanding aggregate Revolving
Loans and Letter of Credit Obligations.
"Purchase Money Liens" has the meaning set forth in Section 8.3(e).
"Rate Management Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Management Transactions, and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.
"Rate Management Transaction" means any transaction (including an
agreement with respect thereto) now existing or hereafter entered into between
MTLM or the other Borrowers, on one hand, and the Agent or any Lender or
Affiliate thereof, on the other hand, with respect to or in connection with all
or any portion of the Revolving Loans or this Credit Agreement, which is a rate
swap, basis swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, forward transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions) or
any combination thereof, whether linked to one or more interest rates, foreign
currencies, commodity prices, equity prices or other financial measures.
"Real Property" means all real property owned by Borrowers as of the date
hereof or hereafter acquired.
"Register" has the meaning set forth in Section 11.8(c).
20
"Regulation D" means Regulation D of the Federal Reserve Board as from
time to time in effect and any successor or other regulation or official
interpretation of said Board.
"Regulation U" means Regulation U of the Federal Reserve Board as from
time to time in effect and any successor or other regulation or official
interpretation of said Board relating to the extension of credit by banks,
non-banks and non-broker lenders for the purpose of purchasing or carrying
margin stocks applicable to member banks of the Federal Reserve Board.
"Regulation X" means Regulation X of the Federal Reserve Board as from
time to time in effect and any successor or other regulation or official
interpretation of said Board relating to the extension of credit by foreign
lenders for the purpose of purchasing or carrying margin stock (as defined
therein).
"Regulation Z" means Regulation Z of the Federal Reserve Board as from
time to time in effect and any successor or other regulation or official
interpretation of said Board.
"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).
"Required Lenders" means those Lenders holding in the aggregate more than
fifty-one percent (51%) of the total Commitments, or if the Commitments are
terminated, those Lenders owed more than fifty-one percent (51%) of the
Revolving Loans and Letter of Credit Obligations then outstanding.
"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.
"Reserve Requirement" means the maximum aggregate reserve requirement
(including all basic supplemental, marginal and other reserves), stated as a
decimal, as prescribed by the Federal Reserve Board (or any successor) with
respect to "Eurocurrency liabilities" or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Rate Loans is determined or category of extensions of credit or other
assets which includes loans by a non-United States office of any Lender to
United States residents.
"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.
21
"Revolving Loan" has the meaning set forth in Section 2.1.
"Revolving 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.
"Sale And Leaseback Transaction" means any sale or other transfer of
property by any Credit Party with the intent to lease such property as lessee.
"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 Revolving Notes or any other evidence of
the Obligations.
"Security Agreement" means the Security Agreement of even date herewith
executed by each of the Borrowers in favor of the Agent for the benefit of the
Agent and the Lenders, as amended, restated, supplemented, extended or otherwise
modified and in effect from time to time.
"Settlement Date" has the meaning set forth in Section 2.4.
"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.
"Taxes" means any present or future stamp or documentary taxes or other
excise or property taxes, charges or similar levies which arise from any payment
made under this Credit Agreement, any Revolving Note or any other Credit
Document, or from the execution or delivery of, or otherwise with respect
thereto, and any other present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, but excluding in any case Excluded Taxes.
"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
22
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.
"Type" means a LIBOR Rate Loan or a Base Rate Loan.
"Unused Line Fee" has the meaning set forth in Section 4.2.
"Unused Line Fee Rate" means the percentage rate per annum applicable from
time to time as set forth in the Pricing Schedule.
1.2 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 VIII 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 Required 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.
1.3 Other Terms; Headings. Terms used herein and not otherwise defined
in Article I that are defined in the Uniform Commercial Code in effect from time
to time in the State of Illinois (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.
23
ARTICLE II
REVOLVING LOANS
2.1 Commitments. 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, on and after the Closing Date and to but excluding
the Expiration Date, each Lender severally agrees to make loans and advances to
the Borrowers (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 Line of Credit 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 Note substantially in the form of Exhibit B, dated as
of the Closing Date, issued to each Lender and executed by each of the Borrowers
in the amount of such Lender's Commitment (each a "Revolving Note").
2.2 Borrowing of Revolving Loans. Revolving Loans may be made available
to the Funds Administrator for the account of the Borrowers directly by the
Lenders ("Lender Advances") or, in the circumstances described in Section 2.2.2,
from the Agent acting on behalf of the Lenders ("Agent Advances").
2.2.1 Lender Advances. Subject to the determination by the Agent and
the 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 Lender's
Proportionate Share of the requested Borrowing.
2.2.2 Agent Advances. The Agent is authorized by the 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 Lenders under Section
2.4. Agent Advances may be made only in the following circumstances:
(a) 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.
(b) 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 Required Lenders to cease, in an aggregate amount
at any time not to exceed $5,000,000.
2.2.3 Disbursement of Revolving Loans. The proceeds of Revolving
Loans shall be transmitted by the Agent or Lenders, as the case may be, to the
Disbursement Account.
2.2.4 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
24
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 Revolving Loans constituting Base 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 Revolving 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 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 Revolving 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 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 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 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 the
Lender, without the necessity of giving daily notice to each Lender of the
receipt of a Notice of Borrowing.
2.4 Periodic Settlement of Agent Advances; Interest and Fees;
Statements.
2.4.1 The Settlement Date; Allocation of Interest and Fees. The
amount of each Lender's Proportionate Share of Revolving 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").
2.4.2 Summary Statements; Settlements. The Agent shall deliver to
each of the Lenders promptly after the Settlement Date a summary statement of
the current account activity, if any, of outstanding Revolving 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
25
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 Lender to transfer
such funds is irrevocable, unconditional and without recourse to or warranty by
the Agent.
2.4.3 Distribution of Interest and Unused Line Fees. Interest on the
Revolving 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 Revolving 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 Revolving
Loans are advanced and to but excluding the date such Revolving Loans are either
repaid by the Borrowers or, if later, actually settled under this Section.
Promptly after the date of each such scheduled payment, the Agent shall
distribute to each Lender its portion, allocated as provided above, of interest
and Unused Line Fee which has been received by the Agent.
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 Revolving 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 Revolving Loans or Letter of
Credit Obligations obtained by all the Lenders, such Lender shall forthwith
purchase from the other Lenders such participations in the Revolving 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 Revolving 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
26
notice. In addition, the Defaulting Lender or the Borrowers shall pay to
the Agent for its own account interest on 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
Revolving Loan shall not relieve any other Lender of its obligation to
fund its Proportionate Share of a Revolving Loan. Conversely, no Lender
shall be responsible for the failure of another Lender to fund its
Proportionate Share of a Revolving 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 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 Required Lenders, 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
Commitment of any Lender, or relieve or excuse the performance by the
Borrowers of their respective duties and obligations hereunder.
2.7 Allocation of Revolving 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 pursuant to an
application therefor executed by the Funds Administrator on behalf and for
27
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
Revolving 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 Revolving 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 Revolving 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 Revolving 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.
2.8 Increase in Revolving Credit Commitments. So long as no Default or
Event of Default shall have occurred and be continuing, the Funds Administrator
may, on any Business Day prior to the Expiration Date, with the written consent
of the Agent (which consent shall not be unreasonably withheld or delayed),
increase the aggregate amount of the Commitments by delivering a Commitment
Amount Increase Request at least ten (10) Business Days prior to the desired
effective date of such increase (the "Commitment Amount Increase") identifying
an additional Lender or Lenders (or additional Commitments for existing
Lender(s)) and the amount of its Commitment(s) (or additional amount of its
Commitment(s)); provided, however, that (i) any increase of the aggregate amount
of the Commitments to an amount in excess of $200,000,000 will require the
approval of all the Lenders, and (ii) any increase of the aggregate amount of
the Commitments shall be in an amount not less than $10,000,000. The effective
date of the Commitment Amount Increase shall be agreed upon by the Borrower and
the Agent. Upon the effectiveness thereof, the new Lender(s) (or, if applicable,
existing Lender(s)) shall advance Revolving Loans in an amount sufficient such
that after giving effect to its Revolving Loans each Lender shall have
outstanding its Proportionate Share of Revolving Loans. It shall be a condition
to such effectiveness that (i) either (A) no LIBOR Rate Loans be outstanding on
the date of such effectiveness, (B) such date of effectiveness shall coincide
with the last day of the Interest Period of all LIBOR Rate Loans outstanding, or
(C) any LIBOR Rate Loans outstanding shall be prepaid and reborrowed on such
effective date and the Borrowers shall have
28
paid to the Lenders pursuant to Section 4.14.4 all costs and expenses associated
with such prepayment and reborrowing, and (ii) the Borrower shall not have
terminated any portion of the Commitments pursuant to Section 4.8(c) hereof. The
Borrower agrees to pay any reasonable expenses of the Agent relating to any
Commitment Amount Increase. Upon the effectiveness of any such increase in the
Commitments, the Agent is hereby authorized to issue an amended Annex I to this
Agreement reflecting such revised Commitments. Notwithstanding anything herein
to the contrary, no Lender shall have any obligation to increase its Commitment
and no Lender's Commitment shall be increased without its consent thereto, and
each Lender may at its option, unconditionally and without cause, decline to
increase its Commitment.
ARTICLE III
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 issued on a sight basis only.
(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
29
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 III.
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 Line of Credit 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 25 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 25 Business Days prior to
the Expiration Date.
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 III. 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. The issuance or modification
of any Letter of Credit by the applicable Issuing Bank shall, in addition
to the conditions precedent set forth in this Agreement (the
30
satisfaction of which the applicable Issuing Bank shall have no duty to
ascertain), be subject to the conditions precedent that such Letter of
Credit shall be satisfactory to the applicable Issuing Bank and that the
Borrowers shall have executed and delivered such application agreement
and/or such other instruments and agreements relating to such Letter of
Credit as the applicable Issuing Bank shall have reasonably requested
(including, with respect to any Letter of Credit issued by LaSalle Bank or
its Affiliates, in its capacity as an Issuing Bank, the LBNA Master Letter
of Credit Agreement). 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. 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 Lender (other than such Issuing Bank in its capacity (if any) as a
Lender) and each such 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
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 Commitments or Proportionate Shares of the respective
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
31
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 (Chicago 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 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;
32
(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 Base Rate in effect from time to
time plus the Applicable Margin for Base Rate Loans; 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 Base
Rate in effect from time to time plus the Applicable Margin for Base Rate
Loans 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
33
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 Capital Adequacy. 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 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
34
be delivered pursuant to this Section 3.6 shall, absent demonstrable error, be
final and conclusive and binding on Borrowers.
ARTICLE IV
COMPENSATION, REPAYMENT AND REDUCTION OF COMMITMENTS
4.1 Interest on Revolving Loans.
(a) Interest on the unpaid principal amount of Revolving Loans
which are Base 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
Base Rate in effect from time to time plus the Applicable Margin, in
effect from time to time, for such Loans.
(b) Interest on the unpaid principal amount of Revolving 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) the date of conversion of
such LIBOR Rate Loans (or a portion thereof) to a Base 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 the LIBOR Rate for the Interest Period in effect for such
LIBOR Rate Loans plus the Applicable Margin, in effect from time to time,
with respect to such Loans. 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.
(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 Federal Reserve Board 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
35
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 the Unused Line Fee Rate in effect from time to time multiplied by the
unused portion of the aggregate Commitments of all Lenders (with any outstanding
Letters of Credit constituting usage of the Line of Credit). 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 Letter of Credit Fee Rate in effect from time to
time multiplied by the Stated Amount of Letters of Credit outstanding
during the immediately preceding month.
(b) In addition to the above described fees, the Borrowers agree
to pay to the Issuing Bank, for the account of 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,
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 Revolving 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 Revolving 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 [This Section Intentionally Left Blank]
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.
36
4.8 Mandatory Payment of Revolving Loans; Reductions of Commitments.
(a) Except during the period described in Section 2.2.2(b), 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 Commitments of the Lenders or (ii) the Borrowing Base, shall
be immediately due and payable without the necessity of any demand.
(b) On the Expiration Date, the 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 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).
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 LaSalle Bank 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 Revolving 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. If any such
payment becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day, and with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension. 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. Each Borrower shall be entitled to receive
Collections directly from account debtors in accordance with its historical
practices. Borrowers shall from
37
time to time establish accounts for the deposit of Collections (each, a
"Collection Account") at financial institutions selected by such Borrowers and
reasonably acceptable to the Agent (the "Collection Banks") and shall enter
into, and cause the Collection Banks to enter into, agreements in form and
substance satisfactory to Agent (the "Depositary Account Agreements"), in each
case (i) within 60 days of the date such Collection Account is established for
Collection Accounts established after the Closing Date, and (ii) within 60 days
of the Closing Date for Collection Accounts in existence as of the Closing Date
and maintained for more than 60 days thereafter. 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. The
Agent may by notice to the applicable Collection Bank given in the Agent's sole
and absolute discretion at any time following the occurrence of a Collection
Account Triggering Event, require that thereafter all available amounts held in
each Collection Account shall be wired each Business Day into an account (the
"LaSalle Bank Account") maintained by the Agent at LaSalle Bank. Amounts
received in the LaSalle Bank 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; and, fifth, to
the ratable payment of principal due on the Revolving 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, 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.
4.14.1 Continuation. With respect to any Borrowing consisting of
LIBOR Rate Loans, the Borrowers may, subject to the provisions of Section
4.14.3, 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
38
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 4.14.1.
If the Borrowers shall fail to select a new Interest Period for any Borrowing
consisting of LIBOR Rate Loans in accordance with this Section 4.14.1, such
Revolving Loans will automatically, on the last day of the then existing
Interest Period therefor, convert into Base Rate Loans. The Agent shall give
each Lender prompt notice by telephone or facsimile transmission of each Notice
of Continuation.
4.14.2 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 4.14.3, 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 Base 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 Base 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 Base 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.
4.14.3 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:
(a) 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
Base Rate Loan.
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(b) If the Required 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 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 Base Rate
Loan.
(c) 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 Base 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 Base
Rate Loan.
(d) No Agent Advance shall be made as a LIBOR Rate Loan.
(e) No more than eight (8) Interest Periods with respect to LIBOR
Rate Loans may be in effect at any time.
(f) 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.
4.14.4 Compensation.
(a) 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 V,
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
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the Revolving Loan to be made by such Lender as part of such Borrowing,
continuation or conversion.
(b) If any payment 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 Revolving
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.
(c) Calculation of all amounts payable to a Lender under this
Section 4.14.4 shall be made as though such Lender elected to fund all
LIBOR Rate Loans by purchasing United States Dollar deposits in its LIBOR
Lending Office's interbank eurodollar market.
4.15 Indemnification in Certain Events.
4.15.1 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 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 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
41
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 4.15.1, 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.
4.15.2 Notification of Increased Costs. 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 Revolving 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 no 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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4.17 Taxes.
(a) All payments by the Borrowers to or for the account of any
Lender, any Issuing Bank or the Agent hereunder or under any other Credit
Document shall be made free and clear of and without deduction for any and
all Taxes. If the Borrowers shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder to any Lender, any Issuing
Bank or the Agent, (a) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable
to additional sums payable under this Section 4.17), such Lender, such
Issuing Bank or the Agent (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (b) the
Borrowers shall make all required deductions, (c) the Borrowers shall pay
the full amount deducted to the relevant authority in accordance with
applicable law, and (d) the Borrowers shall furnish to the Agent the
original or certified copy of a receipt evidencing payment thereof, or, if
such receipt is not obtainable, other evidence of payment reasonably
satisfactory to the applicable Lender, Issuing Bank or Agent, within
thirty (30) days after such payment is made. The Borrowers hereby agree to
indemnify the Agent, each Issuing Bank and each Lender for the full amount
of any Taxes (including, without limitation, any Taxes imposed on amounts
payable under this Section 4.17) paid by the Agent, such Issuing Bank or
such Lender and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto (without duplication of such
amounts to which such Person is entitled to indemnification under any
other provisions of this Agreement and except to the extent it is finally
and judicially determined to have resulted from such Person's own willful
misconduct). Payments due under this indemnification shall be made within
thirty (30) days of the date the Agent, such Issuing Bank or such Lender
makes written demand therefor. The obligations of the Borrowers under this
Section 4.17 shall survive payment of the Obligations and termination of
this Agreement.
(b) Each Lender, Agent or Issuing Bank that is not a United States
person (as such term is defined in Section 7701(a)(30) of the Internal
Revenue Code) (a "Non-U.S. Lender") shall submit to the Funds
Administrator and the Agent on or before the date the initial Borrowing is
made hereunder or, if later, the date such Non-U.S. Lender becomes a party
to this Agreement (or in the case of an assignment, including any
assignment to a new Applicable Lending Office, on or before the date of
such assignment), two duly completed and signed copies of (i) either
Internal Revenue Service Form W-8 BEN or W-8 ECI (or successor applicable
form), as the case may be, certifying in each case that such Non-U.S.
Lender is entitled to a complete exemption from withholding under the
Internal Revenue Code on all amounts to be received by such Non-U.S.
Lender, including fees, pursuant to the Credit Documents) or (ii) solely
if such Non-U.S. Lender is claiming exemption from United States
withholding tax under Section 871(h) or 881(c) of the Internal Revenue
Code with respect to payments of "portfolio interest," a Form W-8 BEN, or
any successor form prescribed by the Internal Revenue Service, and a
certificate representing that such Non U.S. Lender is not a bank for
purposes of Section 881(c) of the Internal Revenue Code, is not a
10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code) of any of the Borrowers and is not a controlled
foreign corporation related to the Borrowers (within the meaning of
Section 864(d)(4) of the Internal Revenue Code). Thereafter and from time
to time, each Non U.S. Lender shall submit to the Funds Administrator and
the Agent such additional duly completed and signed copies of one or the
other of such Forms (or such
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successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) and such other certificates as may be
(i) requested by the Funds Administrator in a written notice, directly or
through the Agent, to such Non U.S. Lender and (ii) required under
then-current United States law or regulations to avoid or reduce United
States withholding taxes on payments in respect of all amounts to be
received by such Non U.S. Lender, including fees, pursuant to the Credit
Documents. Upon the request of the Funds Administrator or the Agent, each
Lender that is a United States person (as such term is defined in Section
7701(a)(30) of the Internal Revenue Code) shall submit to the Funds
Administrator and the Agent a certificate to the effect that it is such a
United States person. For any period during which a Non-U.S. Lender has
failed to provide the Funds Administrator with an appropriate form or
certificate pursuant to this subsection (unless such failure is due to a
change in treaty, law or regulation, or any change in the interpretation
or administration thereof by any governmental authority, occurring
subsequent to the date on which a form originally was required to be
provided), then notwithstanding anything to the contrary in this Section
4.17, such Non-U.S. Lender shall not be entitled to additional amounts or
indemnification under this Section 4.17 with respect to Taxes imposed by
the United States; provided that, should a Non-U.S. Lender which is
otherwise exempt from or subject to a reduced rate of withholding tax
become subject to Taxes because of its failure to deliver a form required
under this subsection, the Borrowers shall take such steps as such
Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to
recover such Taxes.
(c) To the extent reasonably possible, each Lender, Issuing Bank
or Agent claiming any additional amounts payable pursuant to this Section
4.17 shall use reasonable efforts (consistent with such Person's internal
policies and legal and regulatory restrictions) to file any certificate or
document reasonably requested by Borrowers or to designate a different
Applicable Lending Office, if the making of such a filing or change in
designation would avoid the need for or reduce the amount of any amounts
which would be payable by Borrowers under the terms of this Section 4.17
and would not, in the reasonable determination of such Lender, Issuing
Bank or Agent, as applicable, be otherwise disadvantageous to such Person.
(d) If a Lender, Agent or Issuing Bank determines, in its sole
discretion, that it has received a refund in respect of any Taxes as to
which it has been indemnified by any Borrower or with respect to which any
Borrower has paid additional amounts pursuant to this Section 4.17, it
shall pay over such refund to such Borrower (but only to the extent of the
indemnity payments made, or additional amounts paid, by such Borrower
under this Section 4.17 with respect to the Taxes giving rise to such
refund), net of all out-of-pocket expenses of such Person and without
interest (other than interest paid by the relevant Governmental Authority
with respect to such refund); provided, however, that such Borrower, upon
the request of such Lender, Agent or Issuing Bank, agrees to repay the
amount paid over to such Borrower (plus penalties, interest or other
charges) to such Person in the event such Person is required to repay such
refund to such Governmental Authority. Nothing contained in this Section
4.17 shall require any Lender, Agent or Issuing Bank to make available any
of its tax returns (or any other information that it deems to be
confidential or proprietary).
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(e) If the U.S. Internal Revenue Service or any other Governmental
Authority of the United States or any other country or any political
subdivision thereof asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered or properly completed,
because such Lender failed to notify the Agent of a change in
circumstances which rendered its exemption from withholding ineffective,
or for any other reason), such Lender shall indemnify the Agent fully for
all amounts paid, directly or indirectly, by the Agent as tax, withholding
therefor, or otherwise, including penalties and interest, and including
taxes imposed by any jurisdiction on amounts payable to the Agent under
this subsection, together with all costs and expenses related thereto
(including reasonable attorneys' fees). The obligations of the Lenders
under this subsection shall survive the payment of the Obligations and
termination of this Agreement.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions Precedent to Initial Revolving Loan 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:
5.1.1 Borrowing Base Certificate. The Agent shall have received a
Borrowing Base Certificate in accordance with Section 7.2.1 hereof detailing the
Borrowing Base as of May 30, 2004.
5.1.2 Excess Availability. Excess Availability shall be no less than
$10,000,000 after giving effect to payment of all amounts due and payable by the
respective Borrowers on the Closing Date.
5.1.3 Notice of Borrowing. The Agent shall have received a written
Notice of Borrowing in accordance with the terms of Section 2.3 hereof for such
initial Borrowing.
5.1.4 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"), including, without
limitation, the following:
(i) Charter Documents; Borrowing Resolutions; Etc. Certified
resolutions (corporate or otherwise) of each Borrower,
certificate(s) of good standing, foreign qualification
or full force and effect for each Borrower from such
Borrower's state of incorporation, organization or
formation and each other state in which such Borrower is
qualified to do business, incumbency certificates for
each Borrower, and certified copies of the Governing
Documents of each Borrower;
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(ii) Financing Statements. Evidence that such Uniform
Commercial Code Financing Statements as may be required
by the Agent in connection with Agent's security
interest in the Collateral have been filed in the
appropriate filing offices and jurisdictions;
(iii) Lien Searches. UCC-11 lien searches (including tax and
judgment lien searches) from such filing offices and
jurisdictions as the Agent shall specify, evidencing
that on the Closing Date, the Liens granted to the
Agent in connection herewith shall have a first
priority over any other Liens reflected in such lien
searches, except for Permitted Liens, and that there
are no other Liens on the assets or properties of any
of the Borrowers, except for Permitted Liens;
(iv) Evidence of Insurance. Evidence of the insurance as
required under this Agreement naming the Agent as a
lender's loss payee or additional insured, as the case
may be, in form and substance satisfactory to the
Agent;
(v) Collateral Access Agreements. Collateral Access
Agreements from each mortgagee or lessor of real
property on which Collateral is stored or otherwise
located and each warehouseman, processor, cosignee or
other bailee of Inventory;
(vi) Opinion Letters. Opinions of counsel in form and
substance satisfactory to the Agent and the Lenders;
(vii) Updated Field Audit Report. An updated field audit
report with respect to the Borrowers prepared by a
nationally recognized accounting firm, which shall be
satisfactory to the Agent and the Lenders.
(viii) Closing Certificate. A certificate dated as of the
Closing Date by a Responsible Officer of each of the
Borrowers stating that (i) no Default or Event of
Default has occurred and is continuing as of such date,
(ii) all of the representations and warranties in
Article VI hereof and in the other Credit Documents are
true and correct as of such date, and (iii) all of the
conditions set forth in Sections 5.1 and 5.2 have been
satisfied on and as of such date; and
(ix) Compliance Certificate. A certificate from the chief
financial officer of the Funds Administrator on behalf
of the Borrowers with attached schedule of calculations
demonstrating compliance with the financial covenants
set forth in Article VIII as of March 31, 2004.
5.1.5 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.
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5.1.6 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.
5.1.7 Payoff of Existing Credit Agreement. All Indebtedness under or
in connection with that certain Amended and Restated Credit Agreement dated as
of August 13, 2003 among Metal Management, Inc. and its Subsidiaries, the
Lenders named therein, and Deutsche Bank Trust Company Americas, as Agent, as
amended, shall have been paid and discharged in full (other than letters of
credit issued by Deutsche Bank Trust Company Americas or its Affiliates existing
as of the Closing Date, if any, and remaining outstanding after the Closing Date
under terms and conditions satisfactory to Agent), and all Liens securing such
Indebtedness shall have been, or will, on the Closing Date, be terminated and
the Agent and the Lenders shall have received such payoff letters and other
evidence of such payment in full and termination of Liens satisfactory to the
Agent and the Lenders.
5.1.8 Other Documents. Such other documents as any Lender or its
counsel may have reasonably requested.
5.2 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
(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 VI
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
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Borrowers hereby represents and warrants to the Agent and the Lenders that the
representations and warranties contained in this Article VI 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.
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.
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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 real and personal
property of any kind of the Borrowers 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. The Collateral Documents create, as security for the
Obligations and the Rate Management Obligations, 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 financing statements.
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
▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) unaudited internally prepared Financial Statements as
of March 31, 2004, and (iii) unaudited internally prepared Financial
Statements as of April 30, 2004. 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
49
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 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
50
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 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.
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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 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
52
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.
6.23 No Change. Since the last day of the fiscal year ended March 31,
2004, no event has occurred which has had or could reasonably be expected to
have a Material Adverse Effect.
ARTICLE VII
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:
7.1.1 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.
7.1.2 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 VIII and stating whether an Additional Collateral Event has
occurred.
7.1.3 Monthly and Annual Projections. Not later than 15 days prior
to each fiscal year end, beginning with the fiscal year ended March 31, 2005,
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
53
consolidating balance sheets, statements of operations, statements of cash flows
and statements of changes in shareholders' equity.
7.1.4 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 VIII and stating whether an Additional Collateral Event has
occurred.
7.1.5 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): (i) 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; (ii) a comparison to the balance sheet, statement of operations
and statement of cash flows for the same periods in the prior year; (iii) 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); and (iv) a certificate stating
whether an Additional Collateral Event has occurred.
7.1.6 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
7.1.3.
7.1.7 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:
7.2.1 Monthly Borrowing Base Certificates. 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 be:
(i) in form and substance satisfactory to the Agent, detailing the Eligible
Accounts Receivable and Eligible Inventory as of the last Business
54
Day of such month, 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 the chief executive officer or chief
financial officer of the Funds Administrator on behalf of the Borrowers, 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.
7.2.2 Collateral Audits. When requested by the Agent, (i) so long as
no Event of Default shall 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.
7.2.3 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:
7.3.1 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.
7.3.2 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.
7.3.3 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 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
55
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.
7.3.4 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.
7.3.5 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.
7.3.6 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.
7.3.7 Additional Collateral Event. Promptly, but in any event within
5 Business Days of the occurrence of an Additional Collateral Event, a
certificate of the chief financial officer of the Funds Administrator specifying
that an Additional Collateral Event has occurred.
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 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,
56
(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. 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.
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.
57
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 Revolving Loans made to the Borrowers
hereunder shall be used by the Borrowers to (a) repay in full the Indebtedness
outstanding on the Closing Date under that certain Amended and Restated Credit
Agreement dated as of August 13, 2003 among Metal Management, Inc. and its
Subsidiaries, the Lenders named therein, and Deutsche Bank Trust Company
Americas, as Agent, as amended, and (b) pay costs and expenses with respect to
the foregoing and this Credit Agreement, which are due and payable on the
Closing Date, including the Fees and Expenses payable pursuant to Article IV
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, Permitted Acquisitions and other 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.
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
Benefit 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.
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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 evidence,
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 LaSalle Bank Account in the
identical form in which such payment was made, whether by cash or check.
7.16 Additional Collateralization. Upon written notice from the Agent or
the Required Lenders to the Funds Administrator at any time on or after the
Additional Collateral Date (such notice, the "Additional Collateral Notice"),
each of the Borrowers shall as soon as practicable and in any case within thirty
(30) days after the date of the Additional Collateral Notice, cause all of their
respective right, title and interest in and to all Equipment, Fixtures and Real
Property, whether then owned or thereafter acquired, to be subject at all times
to a first-priority and perfected Lien in favor of the Agent as collateral
security for the Obligations and the Rate Management Obligations, subject only
to Permitted Liens (provided, however, that with respect to mortgages on Real
Property, if such mortgages and accompanying title policies, surveys and
associated documentation cannot be completed by Borrowers within such 30-day
period despite the diligent efforts of Borrowers, then Borrowers shall have up
to an additional 30-day period to complete such matters so long as Borrowers
continue to use diligent efforts with respect thereto). In connection with the
foregoing, the Borrowers shall cause to be delivered to the Agent such
documents, agreements, instruments and Collateral Documents as the Agent shall
request, including, without limitation, mortgages, deeds of trust, security
agreements, pledges, financing statements, lien searches, insurance (which shall
name the Agent as sole loss payee), necessary third party consents, real estate
title insurance policies, surveys, environmental indemnities, environmental
reports, copies of flood insurance policies where applicable (which shall name
the Agent as sole loss payee), landlord's waivers, certificates of title,
certified resolutions and other
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organizational and authorizing documents, and favorable opinions of counsel
(which shall cover, among other things, the legality, validity, binding effect
and enforceability of the documentation referred to above and the perfection of
the Agent's Liens thereunder), in each case in form and substance satisfactory
to the Agent and Agent shall be satisfied that it has a first priority perfected
Lien on the collateral referred to herein. Promptly upon the occurrence of an
Additional Collateral Date, the Borrowers shall deliver to the Agent (i) a list
of all real properties owned or leased by the Borrowers, (ii) a list of all
locations where any Equipment, Fixtures or other tangible property of a Credit
Party is located, and (iii) such other information and certificates concerning
the Equipment, Fixtures and Real Estate as the Agent may reasonably request. If,
subsequent to the Additional Collateral Date, any Borrower shall acquire any
right, title or interest in any Equipment, Fixtures or Real Estate which is not
then subject to the Lien in favor of the Agent hereunder, such Borrower shall
promptly but in any case within five (5) days notify Agent of the same and take
such actions (including the actions set forth in this Section 7.16) necessary or
reasonably requested by Agent to subject such assets at all times to a
first-priority and perfected Lien in favor of the Agent as collateral security
for the Obligations and the Rate Management Obligations, subject only to
Permitted Liens. Each Borrower authorizes the Agent to file all financing
statements that may be necessary or desirable in connection with the provisions
of this Section 7.16.
7.17 OFAC; BSA. Each Borrower shall (a) ensure, and cause each other
Credit Party to ensure, that no person who owns a controlling interest in or
otherwise controls a Credit Party is or shall be (i) listed on the Specially
Designated Nationals and Blocked Person List maintained by the Office of Foreign
Assets Control ("OFAC"), Department of the Treasury, and/or any other similar
lists maintained by OFAC pursuant to any authorizing statute, Executive Order or
regulation or (ii) a person designated under Section 1(b), (c) or (d) of
Executive Order No. 13224 (September 23, 2001), any related enabling legislation
or any other similar Executive Orders, and (b) comply, and cause each other
Credit Party to comply, with all applicable Bank Secrecy Act ("BSA") and
anti-money laundering laws and regulations.
ARTICLE VIII
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.
8.1.1 Leverage Ratio. The Borrowers shall not permit the Leverage
Ratio to be greater than 2.50 to 1.00, as determined as of the last day of each
fiscal quarter of the Consolidated Entity, for the twelve (12) month period
ending on such date.
8.1.2 Consolidated Fixed Charge Coverage Ratio. The Borrowers shall
not permit the Consolidated Fixed Charge Coverage Ratio to be less than 1.50 to
1.00, as determined as of the last day of each fiscal quarter of the
Consolidated Entity, for the twelve (12) month period ending on such date.
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8.1.3 Minimum Tangible Net Worth. The Borrowers shall at all times
maintain Consolidated Tangible Net Worth of not less than the sum of (i)
$110,000,000 plus (ii) 25% of Consolidated Net Income (if positive) earned in
each fiscal quarter of the Consolidated Entity beginning with such fiscal
quarter ending June 30, 2004.
8.2 Capital Expenditures. The Borrowers shall not permit Capital
Expenditures for the Consolidated Entity to exceed $20,000,000 during any
consecutive twelve (12) month period.
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
Rate Management Transactions, 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 Japhet Street,
Houston, Texas, so long as (i) 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;
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(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) Unsecured Indebtedness in respect of hedging agreements entered
into by Borrowers in the ordinary course of business; and
(l) additional unsecured Indebtedness in an aggregate principal
amount not in excess of $15,000,000 at any time outstanding.
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);
(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;
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(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) leases and subleases granted in the ordinary course of business;
(k) 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;
(l) Liens on certain real property located on ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇, to the extent securing Indebtedness permitted under
Section 8.3(f); and
(m) 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 and conditions of the Indebtedness
secured by such extended, replaced or renewed Liens.
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) if an Additional Collateral Event has
occurred, 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 $10,000,000
in the aggregate for any fiscal year of the Consolidated Entity.
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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;
(ii) any Subsidiary of any Borrower may declare and pay
dividends to such Borrower or any other Borrower; and
(iii) MTLM may declare and pay dividends or redeem, repurchase
or otherwise acquire or retire any of its capital stock
so long as, (A) before and after giving effect to all
payments in connection therewith, the Borrowers shall
have Excess Availability in excess of $30,000,000 and
shall be in compliance with the financial covenants
contained in Sections 8.1 and 8.2 hereof, as
demonstrated by a certificate of the chief executive
officer, chief financial officer or treasurer of MTLM
delivered to the Agent and the Lenders prior to such
payment; (B) no Default or Event of Default shall have
occurred and be continuing or would result from such
payments; and (C) the aggregate amount of all such
payments in any consecutive twelve (12) month period
does not exceed $10,000,000.
8.8 Investments and Acquisitions. No Borrower shall, or shall permit any
of its Subsidiaries to, directly or indirectly, make any Acquisition of any
Person or 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) Permitted Acquisitions and Permitted Investments in Non-Majority
Interests;
(b) 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);
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(c) loans, investments and advances between a Borrower and any other
Borrower;
(d) Cash Equivalents;
(e) 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;
(f) 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;
(g) Investments existing on the Closing Date and set forth on
Schedule 8.8(f); 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.
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 $2,000,000, 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
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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.
8.12 Merger. No Borrower shall merge or consolidate with or into any other
Person, except (i) a Subsidiary of MTLM may merge into MTLM or a wholly-owned
Subsidiary of MTLM, and (ii) in connection with a Permitted Acquisition,
provided however in any such case, the Borrower or the applicable wholly-owned
Subsidiary must be the surviving entity and after giving effect thereto no
Default or Event of Default shall exist.
8.13 Sale and Leaseback Transactions and Other Off-Balance Sheet
Liabilities. None of the Borrowers will, nor will they permit any Subsidiary to,
enter into or suffer to exist any Sale and Leaseback Transaction or any other
Off-Balance Sheet Liability.
ARTICLE IX
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:
9.1.1 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.
9.1.2 Breach of Certain Covenants. Any Borrower shall fail to comply
with any covenant contained in Article VII (other than Section 7.4(i), 7.8, 7.9,
7.12, 7.13 and 7.14) or Article VIII.
9.1.3 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 or any other Credit Document), shall be false or
misleading in any material respect when made or deemed to be made.
9.1.4 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 9.1.2, and such failure shall
continue for 10 days after the Funds Administrator receives notice of such
failure from Agent.
9.1.5 Dissolution. Any Credit Party shall dissolve, wind up or
otherwise cease its business (other than pursuant to a transaction expressly
permitted hereunder).
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9.1.6 Insolvency Event. Any Credit Party shall become the subject of
an Insolvency Event.
9.1.7 Change of Control. A Change of Control shall occur.
9.1.8 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.
9.1.9 Rate Management Obligation. Any Borrower or any Subsidiary of
any Borrower shall fail to pay any Rate Management Obligation when due or shall
breach any term, provision or condition contained in any Rate Management
Transaction, and such default shall continue after the applicable grace period,
if any.
9.1.10 Judgments. Any judgment or judgments, writ or writs or
warrant or warrants of attachment, or any similar process or processes, shall be
entered or filed against any Borrower or any other Credit Party or any of their
respective properties in an aggregate amount in excess of $5,000,000 (except to
the extent fully covered by insurance pursuant to which the insurer has accepted
liability therefor in writing), and which remains undischarged, unvacated,
unbonded or unstayed for a period of thirty (30) days.
9.1.11 Criminal Penalties. Any criminal or civil fines or penalties,
or settlement payments or judgments relating to any state or federal crime,
shall be paid by or imposed or assessed against, any of the Borrowers or any
other Credit Party or any of their respective assets, in an amount, together
with any other such fines, penalties and other amounts imposed, paid or assessed
during the term of this Agreement, in excess of $5,000,000 in the aggregate.
9.1.12 ERISA. Any Borrower or any of its ERISA Affiliates or any
other Person institutes any steps to terminate or withdraw from a Benefit Plan
and, as a result of such termination or withdrawal, such Borrower or ERISA
Affiliate is or could reasonably be expected to be required to make a
contribution to such Benefit Plan in excess of $5,000,000 or such Borrower or
ERISA Affiliate fails to make a contribution to any Employee Benefit Plan which
failure would be sufficient to give rise to a Lien under Section 302(f) of ERISA
in an amount in excess of $5,000,000.
9.1.13 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.
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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:
9.2.1 Acceleration. Upon the written request of the Required 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 9.1.6, in which case all Obligations shall
automatically become immediately due and payable without the necessity of any
request of the Required 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.
9.2.2 Termination of Commitments. Upon the written request of the
Required 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
9.1.6, in which case all of the Commitments shall automatically and immediately
terminate without the necessity of any request of the Required 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.
9.2.3 Cash Collateralization. On demand of the Agent or the Required
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 Required 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 9.2.3. (This Section is intended only to bind all of the Lenders to a
decision of the Required Lenders and not to confer any right on the Borrowers,
even if the described conditions for the Required 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 Required
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.
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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 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 X
THE AGENT
10.1 Appointment of Agent. Each Lender hereby designates LaSalle Bank as
Agent to act as herein specified. Each Lender hereby irrevocably authorizes, and
each holder of any Revolving 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.
Other than rights of the Credit Parties under Section 10.9, the provisions
of this Article X 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 hereunder. The Agent may
give any notice required under Article IX hereof without the consent of any of
the Lenders unless otherwise directed by the Required Lenders in writing and
will, at the direction of the Required Lenders, give any such notice required
under Article IX.
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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 Revolving Loans made by it and the
Revolving Note 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 Revolving Note or participation interests and may
exercise the same as though it was not performing the duties specified herein;
and the terms "Lenders," "Required Lenders," "holders of Revolving Notes," 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 Revolving Notes. The Agent may deem and treat the payee of
any Revolving 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 making such request or giving such authority or consent, is the holder of any
Revolving Note, shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Revolving Note or of any Revolving Note or
Revolving Notes issued in exchange therefor.
10.9 Successor Agent.
(a) The Agent may, upon 15 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 Required
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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 Required 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 X 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 Revolving 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 Required Lenders in
accordance with the provisions of this Credit Agreement and the other
Credit Documents, and the exercise by the Required 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.
(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 Required 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
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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.
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 Required 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.
10.13 Designation of Co-Syndication Agents and Co-Documentation Agents.
PNC Bank National Association and U.S. Bank, National Association are hereby
designated as co-syndication agents ("Co-Syndication Agents") hereunder.
Sovereign Bank and National City Bank of the Midwest are hereby designated as
co-documentation agents ("Co-Documentation Agents") hereunder. The
Co-Syndication Agents and the Co-Documentation Agents shall not have any rights,
powers or obligations of the Agent hereunder or under any other Credit Document,
nor shall the Co-Syndication Agents or the Co-Documentation Agents have any
right or claim to any funds, fees or payments due to the account of the Agent
hereunder or under any other Credit Document.
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ARTICLE XI
MISCELLANEOUS
11.1 Governing Law. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
CREDIT AGREEMENT AND EACH OF THE REVOLVING NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
ILLINOIS.
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 ▇▇▇▇ COUNTY, ILLINOIS 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 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
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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 LaSalle
Bank National Association, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, if to the Funds Administrator or any other Credit
Party, then to Metal Management, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer, or by facsimile
transmission, promptly confirmed in writing sent by first class mail, if to the
Agent, or any of the Lenders, at (▇▇▇) ▇▇▇-▇▇▇▇ 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.
11.8.1 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
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Credit Documents, or any rights or obligations hereunder or thereunder, without
the prior written consent of the Agent and the Lenders.
11.8.2 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 Revolving 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 (such consent
not to be unreasonably withheld or delayed) 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 Revolving Note or Revolving 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 shall be for less than $5,000,000 of the Commitments 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 Revolving 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.)
11.8.3 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 Revolving 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 Revolving
Note or Revolving 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 Revolving Note or Revolving Notes.
Within 5 Business Days after its receipt of such notice, the Borrowers shall
execute and deliver to the Agent a substitute Revolving Note or Revolving 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 Revolving Note or Revolving Notes shall
re-evidence the Indebtedness outstanding under the surrendered Revolving Note or
Revolving 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.
11.8.4 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 Revolving 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
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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 Revolving 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 to
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,
other than by disclosure thereof by such Lender, (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
Revolving 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 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.
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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 litigation,
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 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 Required Lenders (or by
the Agent on their behalf), except that:
(a) the consent of all Lenders shall be required to (i) increase the
advance rates set forth in clause (a) or (b) of the definition of the term
Borrowing Base, or (ii) amend or waive this Section 11.11(a);
(b) the consent of all the Lenders is required to (i) except as
otherwise set forth in Section 2.8, increase the Commitments, (ii) reduce
the principal of, or interest on, any Revolving Note, any Letter of Credit
reimbursement obligations or any Fees hereunder (other than Fees that are
exclusively for the account of the Agent), (iii) postpone any date fixed
for any payment in respect of principal of, or interest on, any Revolving
Note, any Letter of Credit reimbursement obligations or any Fees
hereunder, (iv) change the percentage of the Commitments, or any minimum
requirement necessary for the Lenders or the Required Lenders to take any
action hereunder, (v) amend or waive this Section 11.11(b), or change the
definition of Required Lenders or (vi) 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 of the
Collateral; and
(c) 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.
78
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 X (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 or any increases or decreases in the Commitments
in accordance with the terms of this Agreement. Notwithstanding the foregoing,
the Credit Parties may amend Schedule B, Parts 6.1, 6.10, 6.14, 6.16 and 8.10,
without the consent of the Required Lenders. Upon the occurrence of a Permitted
Acquisition which results in a new Subsidiary of any Borrower as permitted by
the terms of this Credit Agreement, the Agent is authorized to accept any
joinder or agreement of such Subsidiary to be bound as a "Borrower" hereunder
and in a similar capacity under the other Credit Documents without the further
consent of any Lender, Borrower or Funds Administrator, although each of the
Lenders, the other Borrowers and the Funds Administrator will promptly confirm
in writing, if requested by Agent, such joinder and agreement by such new
Subsidiary.
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 Revolving 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
79
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 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 Revolving 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 Revolving 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 Revolving 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 Revolving
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)
80
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, 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
81
(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.
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.
11.17 Customer Identification - USA Patriot Act Notice. Each Lender and
LaSalle Bank (for itself and not on behalf of any other party) hereby notifies
the Credit Parties that, pursuant to the requirements of the USA Patriot Act,
Title III of Pub. L. 107-56, signed into law October 26, 2001 (the "Act"), it is
required to obtain, verify and record information that identifies the Credit
Parties, which information includes the name and address of the Credit Parties
and other information that will allow such Lender or LaSalle Bank, as
applicable, to identify the Credit Parties in accordance with the Act.
[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 as Borrower
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and Chief Financial Officer
ADDITIONAL BORROWERS:
CIM TRUCKING, INC.
▇▇▇▇▇▇▇ 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 NEW HAVEN, INC.
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.
PROLER SOUTHWEST INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
RESERVE IRON & METAL LIMITED PARTNERSHIP
By: METAL MANAGEMENT OHIO, INC., its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
[Signature Page Continues]
[Signature Page to Credit Agreement, Continued]
AGENT:
LASALLE BANK NATIONAL ASSOCIATION, as Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: First Vice President
LENDERS:
LASALLE BANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: First Vice President
[Signature Page Continues]
[Signature Page to Credit Agreement, Continued]
PNC BANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
[Signature Page Continues]
[Signature Page to Credit Agreement, Continued]
SOVEREIGN BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
[Signature Page Continues]
[Signature Page to Credit Agreement, Continued]
U.S. BANK, NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
[Signature Page Continues]
[Signature Page to Credit Agreement, Continued]
NATIONAL CITY BANK OF THE MIDWEST
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
[Signature Page Continues]
[Signature Page to Credit Agreement, Continued]
FIFTH THIRD BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
[Signature Page Continues]
[Signature Page to Credit Agreement, Continued]
KEYBANK NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
[Signature Page Continues]
[Signature Page to Credit Agreement, Continued]
RZB FINANCE LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Group Vice President
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
[Signature Page Continues]
[Signature Page to Credit Agreement, Continued]
CHARTER ONE BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Title: Vice President
ANNEX I TO CREDIT AGREEMENT
LIST OF LENDERS; COMMITMENT AMOUNTS; APPLICABLE LENDING
OFFICES
LENDER AND LENDING OFFICE COMMITMENT
------------------------- ----------
1. LaSalle Bank National Association $40,000,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2. PNC Bank National Association $30,000,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
3. Sovereign Bank $25,000,000
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
4. U.S. Bank, National Association $25,000,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
5. National City Bank of the Midwest $24,000,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
6. Fifth Third Bank $14,000,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
7. KeyBank National Association $14,000,000
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
8. RZB Finance LLC $14,000,000
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
9. Charter One Bank, N.A. $14,000,000
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
I-1
ANNEX II
PRICING SCHEDULE
Applicable Margin, Unused Line Fee Rate and Letter of Credit Fee Rate
under and in accordance with the terms of this Agreement shall mean, until the
first Pricing Date, the rates per annum shown opposite Level IV below, and
thereafter, from one Pricing Date to the next, the Applicable Margin, Unused
Line Fee Rate and Letter of Credit Fee Rate mean the rates per annum determined
in accordance with the following schedule:
UNUSED LETTER OF
LEVERAGE RATIO APPLICABLE MARGIN FOR APPLICABLE MARGIN LINE FEE CREDIT
LEVEL FOR SUCH PRICING DATE BASE RATE LOANS: FOR LIBOR RATE LOANS RATE FEE RATE
I Greater than or equal to 0.750% 2.250% 0.375% 2.250%
2.0 to 1.0
II Less than 2.0 to 1.0, 0.500% 2.000% 0.375% 2.000%
but greater than or
equal to 1.5 to 1.0
III Less than 1.5 to 1.0, 0.250% 1.750% 0.350% 1.750%
but greater than or
equal to 1.0 to 1.0
IV Less than 1.0 to 1.0, 0% 1.500% 0.300% 1.500%
but greater than or
equal to 0.50 to 1.0
V Less than 0.50 to 1.0 0% 1.250% 0.250% 1.250%
For purposes hereof, the term "Pricing Date" means, for any fiscal quarter of
MTLM ending on or after September 30, 2004, the date on which the Agent is in
receipt of the MTLM's most recent financial statements (and, in the case of the
year-end financial statements, audit report) for the fiscal quarter then ended,
pursuant to Section 7.1 of this Agreement. The Applicable Margin, Unused Line
Fee Rate and Letter of Credit Fee Rate shall be established based on the
Leverage Ratio for the most recently completed fiscal quarter, and the
Applicable Margin, Unused Line Fee Rate and Letter of Credit Fee Rate
established on a Pricing Date shall remain in effect until the next Pricing
Date. If MTLM has not delivered its financial statements by the date such
financial statements (and, in the case of the year-end financial statements,
audit report) are required to be delivered under Section 7.1 of this Agreement,
then from and after the date such financial statements and audit report, as
applicable, are due until such financial statements and audit report are
delivered, the Applicable Margin, Unused Line Fee Rate and Letter of Credit Fee
Rate shall be the highest Applicable Margin, Unused Line Fee Rate and Letter of
Credit Fee Rate (i.e., Level I shall apply). If MTLM subsequently delivers such
financial statements before the next Pricing Date, the Applicable Margin, Unused
Line Fee Rate and Letter of Credit Fee Rate established by such late delivered
financial statements shall take effect from the date of delivery until the next
Pricing Date. In all other circumstances, the Applicable Margin, Unused Line Fee
II-1
Rate and Letter of Credit Fee Rate established by such financial statements
shall be in effect from the Pricing Date that occurs immediately after the end
of the fiscal quarter covered by such financial statements until the next
Pricing Date. Each determination of the Applicable Margin, Unused Line Fee Rate
and Letter of Credit Fee Rate made by the Agent in accordance with the foregoing
shall be conclusive and binding on the Borrowers and the Lenders absent
demonstrable error.
II-2
[SCHEDULES]
EXHIBIT A
TO
CREDIT AGREEMENT
DATED AS OF JUNE 28, 2004
FORM OF NOTICE OF BORROWING
___________ ___, 200_
LASALLE BANK NATIONAL ASSOCIATION
as Agent for the Lenders
parties to the Credit
Agreement referred to below
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, Metal Management, Inc., a Delaware corporation
(individually, "MTLM"), in its capacity as borrowing agent and funds
administrator (in such capacity, the "FUNDS ADMINISTRATOR"), under the Credit
Agreement dated as of June 28, 2004 (as the same may be amended, restated,
supplemented, extended or otherwise modified and in effect from time to time,
the "CREDIT AGREEMENT"; capitalized terms used herein but not elsewhere defined
herein shall have the respective meanings ascribed to such terms in the Credit
Agreement), among the Funds Administrator, MTLM and certain of its affiliates as
borrowers thereunder (collectively, the "BORROWERS"), the financial institutions
from time to time parties thereto as lenders thereunder ("LENDERS") and LaSalle
Bank National Association, a national banking association, in its capacity as
Agent for the Lenders, hereby gives you notice, for and on behalf of the
Borrowers, irrevocably, pursuant to SECTION 2.2.4 of the Credit Agreement, that
the Funds Administrator, for and on behalf of the Borrowers, hereby requests a
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Borrowing (the "PROPOSED BORROWING") as
required by SECTION 2.2.4 of the Credit Agreement:
(i) The requested date of the Proposed Borrowing is ___________________.
(ii) The Type of Revolving Loans comprising the Proposed Borrowing are
[BASE RATE] [LIBOR RATE] Loans.
(iii) The aggregate amount of the Proposed Borrowing is $__________.
(iv) The Interest Period for each Revolving Loan comprising the Proposed
Borrowing is _________. [ONLY IN THE CASE OF A PROPOSED BORROWING
CONSISTING OF LIBOR RATE LOANS]
A-1
The Funds Administrator, for and on behalf of the Borrowers, hereby (i)
represents and warrants that all of the conditions contained in SECTION 5.2 of
the Credit Agreement have been satisfied on and as of the date hereof, and will
continue to be satisfied on and as of the date of the Proposed Borrowing, before
and after giving effect thereto and to the application of the proceeds thereof;
and (ii) reaffirms the continuance of Agent's Liens on the Collateral, for the
benefit of Agent and Lenders, pursuant to the Collateral Documents.
If notice of this Proposed Borrowing has been given previously by
telephone, then this notice should be considered a written confirmation of such
telephone notice as required by SECTION 2.2.4 of the Credit Agreement.
IN WITNESS WHEREOF, the Funds Administrator has caused this Notice of
Borrowing to be executed and delivered, for and on behalf of the Borrowers, by a
duly authorized officer of the Funds Administrator as of the date first set
forth above.
METAL MANAGEMENT, INC., a Delaware
corporation, in its capacity as Funds Administrator
BY:_____________________________________________________
NAME:___________________________________________________
TITLE:__________________________________________________
A-2
EXHIBIT B
TO
CREDIT AGREEMENT
DATED AS OF JUNE 28, 2004
FORM OF REVOLVING NOTE
$______________ ______ ___, 2004
FOR VALUE RECEIVED, each of the undersigned CIM TRUCKING, INC., an
Illinois corporation, MTLM ARIZONA, INC., an Arizona corporation, MAC LEOD
METALS CO., a California corporation, METAL MANAGEMENT AEROSPACE, INC., a
Delaware corporation, METAL MANAGEMENT ALABAMA, INC., a Delaware corporation,
METAL MANAGEMENT ARIZONA, L.L.C., an Arizona limited liability company, METAL
MANAGEMENT CONNECTICUT, INC., a Delaware corporation, METAL MANAGEMENT GULF
COAST, INC., a Delaware corporation, METAL MANAGEMENT, INC., a Delaware
corporation, METAL MANAGEMENT INDIANA, INC., an Illinois corporation, METAL
MANAGEMENT MEMPHIS, L.L.C., a Tennessee limited liability company, METAL
MANAGEMENT MIDWEST, INC., an Illinois corporation, METAL MANAGEMENT MISSISSIPPI,
L.L.C., a Delaware limited liability company, METAL MANAGEMENT NEW HAVEN, INC.,
a Delaware corporation, METAL MANAGEMENT NORTHEAST, INC., a New Jersey
corporation, METAL MANAGEMENT OHIO, INC., an Ohio corporation, METAL MANAGEMENT
PITTSBURGH, INC., a Delaware corporation, METAL MANAGEMENT REALTY, INC., an
Arizona corporation, METAL MANAGEMENT S&A HOLDINGS, INC., a Delaware
corporation, METAL MANAGEMENT SERVICES, INC., a Delaware corporation, METAL
MANAGEMENT STAINLESS & ALLOY, INC., a Delaware corporation, METAL MANAGEMENT
WEST, INC., a Colorado corporation, METAL MANAGEMENT WEST COAST HOLDINGS, INC.,
a Delaware corporation, PROLER SOUTHWEST INC., a Texas corporation, and RESERVE
IRON & METAL LIMITED PARTNERSHIP, a Delaware limited partnership (collectively,
the "BORROWERS"), jointly and severally promise to pay to the order of
[_____________________], at c/o LaSalle Bank National Association, in its
capacity as agent (in such capacity, the "AGENT"), ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "PAYMENT OFFICE"), in lawful money of the United
States of America and in immediately available funds, the principal amount of
[________________] AND [___]/100 DOLLARS ($______________), or such lesser
amount as may then constitute the unpaid aggregate principal amount of the
Revolving Loans made by such Person, on the Expiration Date or such earlier date
as this Revolving Note may become due in accordance with the terms of the Credit
Agreement referred to below. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings assigned thereto in the Credit
Agreement.
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The Borrowers further agree to pay, on a joint and several basis, interest
at the Payment Office, in like money, on the unpaid principal amount owing
hereunder from time to time from the date hereof on the dates and at the rates
specified in and calculated pursuant to ARTICLE IV of the Credit Agreement.
If any payment on this Revolving Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day, and with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
This Revolving Note is a Revolving Note referred to in and executed and
delivered pursuant to that certain Credit Agreement dated as of June 28, 2004
(as the same may be amended, restated, supplemented, extended or otherwise
modified and in effect from time to time, the "CREDIT AGREEMENT"), among the
Borrowers, Metal Management, Inc., a Delaware corporation, in its capacity as
borrowing agent and funds administrator for the Borrowers, the Lenders and the
Agent, to which reference is hereby made for a statement of the terms and
conditions under which the Revolving Loans evidenced hereby are to be made and
repaid.
This Revolving Note is secured by certain Collateral Documents. Reference
is made to such Collateral Documents and to the Credit Agreement for the terms
and conditions governing the Collateral which secures the Obligations.
Each Borrower (and each endorser, guarantor or surety hereof) hereby
waives presentment, demand, protest and notice of any kind. No failure to
exercise and no delay in exercising any rights hereunder on the part of the
holder hereof shall operate as a waiver of such rights.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS REVOLVING NOTE SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS
OF THE STATE OF ILLINOIS.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, each Borrower has caused this Revolving Note to be
executed and delivered by such Borrower's duly authorized officer or similar
representative as of the date first set forth above.
CIM TRUCKING, INC.
MTLM ARIZONA, INC.
MAC LEOD METALS CO.
METAL MANAGEMENT AEROSPACE, INC.
METAL MANAGEMENT ALABAMA, INC.
METAL MANAGEMENT ARIZONA, L.L.C.
METAL MANAGEMENT CONNECTICUT, INC.
METAL MANAGEMENT GULF COAST, INC.
METAL MANAGEMENT, INC.
METAL MANAGEMENT INDIANA, INC.
METAL MANAGEMENT MEMPHIS, L.L.C.
METAL MANAGEMENT MIDWEST, INC.
METAL MANAGEMENT MISSISSIPPI, L.L.C.
METAL MANAGEMENT NEW HAVEN, INC.
METAL MANAGEMENT NORTHEAST, INC.
METAL MANAGEMENT OHIO, INC.
METAL MANAGEMENT PITTSBURGH, INC.
METAL MANAGEMENT REALTY, INC.
METAL MANAGEMENT S&A HOLDINGS, INC.
METAL MANAGEMENT SERVICES, INC.
METAL MANAGEMENT STAINLESS & ALLOY, INC.
METAL MANAGEMENT WEST, INC.
METAL MANAGEMENT WEST COAST HOLDINGS, INC.
PROLER SOUTHWEST INC.
By:___________________________________
Name:_________________________________
Title:________________________________
RESERVE IRON & METAL LIMITED PARTNERSHIP
By: METAL MANAGEMENT OHIO, INC., its general partner
By: __________________________________________
Name: __________________________________________
Title: __________________________________________
B-3
EXHIBIT C
TO
CREDIT AGREEMENT
DATED AS OF JUNE 28, 2004
FORM OF LETTER OF CREDIT REQUEST
Dated: _____(1)_______
LASALLE BANK NATIONAL ASSOCIATION
as Agent for the Lenders
parties to the Credit
Agreement referred to below
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Issuing Bank: [ ______________(2)/______________ ]
[ Address ]
Ladies and Gentlemen:
The undersigned, Metal Management, Inc., a Delaware corporation
(individually, "MTLM"), in its capacity as borrowing agent and funds
administrator (in such capacity, the "FUNDS ADMINISTRATOR"), under the Credit
Agreement dated as of June 28, 2004 (as the same may be amended, restated,
supplemented, extended or otherwise modified and in effect from time to time,
the "CREDIT AGREEMENT"; capitalized terms used herein but not elsewhere defined
herein shall have the respective meanings ascribed to such terms in the Credit
Agreement), among the Funds Administrator, MTLM and certain of its affiliates as
borrowers thereunder (collectively, the "BORROWERS"), the financial institutions
from time to time parties thereto as lenders thereunder ("LENDERS") and LaSalle
Bank National Association, a national banking association, in its capacity as
Agent for the Lenders, hereby gives you notice, for and on behalf of the
Borrowers, irrevocably, pursuant to SECTION 3.3(A) of the Credit Agreement, that
the Funds Administrator, for and on behalf of the Borrowers, hereby requests the
Agent to direct the Issuing Bank to issue a [trade] [standby] Letter of Credit
on ____(3)_____ in the aggregate Stated Amount of $_____(4)_____ for the account
of the Funds Administrator.
----------
(1) Insert date of Letter of Credit Request.
(2) Insert name/address of Issuing Bank.
(3) Insert date of issuance which shall be a Business Day at least five (5)
Business Days from the date of the Letter of Credit Request (or such
shorter period as is acceptable to the Agent).
(4) Insert aggregate initial Stated Amount of Letter of Credit.
C-1
The beneficiary of the requested Letter of Credit will be ______(5)_______
and such Letter of Credit will be in support of _____________(6)___________ and
will have a stated expiration date of _______(7)________.
The Funds Administrator, for and on behalf of the Borrowers, hereby (i)
represents and warrants that all of the conditions contained in SECTION 5.2 of
the Credit Agreement have been satisfied on and as of the date hereof, and will
continue to be satisfied on and as of the proposed date of issuance of the
requested Letter of Credit, before and after giving effect thereto and to the
application of the proceeds thereof; and (ii) reaffirms the continuance of
Agent's Liens on the Collateral, for the benefit of Agent and Lenders, pursuant
to the Collateral Documents
Copies of all documentation with respect to the supported transaction are
attached hereto.
METAL MANAGEMENT, INC., a Delaware
corporation, as Funds Administrator
By: ________________________________
Name: ________________________________
Title: ________________________________
----------
(5) Insert name and address of beneficiary.
(6) Insert brief description of supported transaction.
(7) Insert last date upon which drafts may be presented, which may not be
later than (i) in the case of standby Letters of Credit, twelve (12) months
after the date of issuance and (ii) in the case of trade Letters of Credit, one
hundred twenty (120) days after the date of issuance.
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EXHIBIT D
TO
CREDIT AGREEMENT
DATED AS OF JUNE 28, 2004
FORM OF NOTICE OF CONTINUATION
_____________, ____
LASALLE BANK NATIONAL ASSOCIATION,
as Agent for the Lenders
parties to the Credit
Agreement referred to below
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, Metal Management, Inc., a Delaware corporation
(individually, "MTLM"), in its capacity as borrowing agent and funds
administrator (in such capacity, the "FUNDS ADMINISTRATOR"), under the Credit
Agreement dated as of June 28, 2004 (as the same may be amended, restated,
supplemented, extended or otherwise modified and in effect from time to time,
the "CREDIT AGREEMENT"; capitalized terms used herein but not elsewhere defined
herein shall have the respective meanings ascribed to such terms in the Credit
Agreement), among the Funds Administrator, MTLM and certain of its affiliates as
borrowers thereunder (collectively, the "BORROWERS"), the financial institutions
from time to time parties thereto as lenders thereunder ("LENDERS") and LaSalle
Bank National Association, a national banking association, in its capacity as
Agent for the Lenders, hereby gives you notice, for and on behalf of the
Borrowers, irrevocably, pursuant to SECTION 4.14.1 of the Credit Agreement, that
the Funds Administrator, for and on behalf of the Borrowers, hereby requests a
continuation of a Borrowing consisting of LIBOR Rate Loans under the Credit
Agreement, and in that connection sets forth below the information relating to
such continuation (the "PROPOSED CONTINUATION") as required by SECTION 4.14.1 of
the Credit Agreement:
(i) The requested date of the Proposed Continuation is
_______________________.
(ii) The aggregate amount of Loans subject to such Proposed Continuation
is $______________.
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(iii) The duration of the new Interest Period for each Loan that is the
subject of such Proposed Continuation is: ________________________.
The Funds Administrator, for and on behalf of itself and each of the
Borrowers, hereby certifies that on the date hereof, and on the date of the
Proposed Continuation, the Proposed Continuation satisfies all applicable
limitations with respect thereto set forth in the Credit Agreement.
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[Signature Page Follows]
D-2
IN WITNESS WHEREOF, the Funds Administrator has caused this Notice of
Continuation to be executed and delivered by a duly authorized officer of such
Funds Administrator as of the date first set forth above.
METAL MANAGEMENT, INC., a Delaware
corporation, as Funds Administrator
By: _______________________________
Name: _______________________________
Title: _______________________________
▇-▇
▇▇▇▇▇▇▇ ▇-▇
TO
CREDIT AGREEMENT
DATED AS OF JUNE 28, 2004
FORM OF NOTICE OF CONVERSION
_____________, ___
LASALLE BANK NATIONAL ASSOCIATION,
as Agent for the Lenders
parties to the Credit
Agreement referred to below
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, Metal Management, Inc., a Delaware corporation
(individually, "MTLM"), in its capacity as borrowing agent and funds
administrator (in such capacity, the "FUNDS ADMINISTRATOR"), under the Credit
Agreement dated as of June 28, 2004 (as the same may be amended, restated,
supplemented, extended or otherwise modified and in effect from time to time,
the "CREDIT AGREEMENT"; capitalized terms used herein but not elsewhere defined
herein shall have the respective meanings ascribed to such terms in the Credit
Agreement), among the Funds Administrator, MTLM and certain of its affiliates as
borrowers thereunder (collectively, the "BORROWERS"), the financial institutions
from time to time parties thereto as lenders thereunder ("LENDERS") and LaSalle
Bank National Association, a national banking association, in its capacity as
Agent for the Lenders, hereby gives you notice, for and on behalf of the
Borrowers, irrevocably, pursuant to SECTION 4.14.2 of the Credit Agreement, that
the Funds Administrator, for and on behalf of the Borrowers, hereby requests a
conversion of a Borrowing consisting of LIBOR Rate Loans under the Credit
Agreement, and in that connection sets forth below the information relating to
such conversion (the "PROPOSED CONVERSION") as required by SECTION 4.14.2 of the
Credit Agreement:
(i) The requested date of the Proposed Conversion is
_______________________.
(ii) The aggregate amount of Loans subject to such Proposed Conversion is
$______________.
(iii) The duration of the new Interest Period for each Loan that is the
subject of such Proposed Conversion is:
___________________.
D-1/1
The Funds Administrator, for and on behalf of itself and each of the
Borrowers, hereby certifies that on the date hereof, and on the date of the
Proposed Conversion, the Proposed Conversion satisfies all applicable
limitations with respect thereto set forth in the Credit Agreement.
- Remainder of Page Intentionally Left Blank -
[Signature Page Follows]
D-1/2
IN WITNESS WHEREOF, the Funds Administrator has caused this Notice of
Conversion to be executed and delivered by a duly authorized officer of such
Funds Administrator as of the date first set forth above.
METAL MANAGEMENT, INC., a Delaware
corporation, as Funds Administrator
By: _______________________________
Name: _______________________________
Title: _______________________________
D-1/3
EXHIBIT E
TO
CREDIT AGREEMENT
DATED AS OF JUNE 28, 2004
FORM OF COMPLIANCE CERTIFICATE
______________, ____
LASALLE BANK NATIONAL ASSOCIATION
Agent for the Lenders parties to the
Credit Agreement referred to below
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In order to assist you, as Agent, in the continuing evaluation of the
credit accommodations which the Lenders may extend to the Borrowers or for the
Borrowers' benefit, and pursuant to SECTION 7.1 of the Credit Agreement (as
hereinafter defined), I hereby certify to you on behalf of Metal Management,
Inc. a Delaware corporation ("MTLM"), individually as a Borrower and in its
capacity as the Funds Administrator, for and on behalf of the Borrowers, as
follows:
(a) I am the duly elected Chief Financial Officer of MTLM. Capitalized
but undefined terms used in this Certificate shall have the meanings
assigned to them in the Credit Agreement dated as of June 28, 2004
(as the same may be amended, restated, supplemented, extended or
otherwise modified from time to time, the "CREDIT AGREEMENT") among
MTLM and certain of its affiliates, as borrowers thereunder
("BORROWERS"), the financial institutions from time to time parties
thereto as lenders thereunder ("LENDERS"), LaSalle Bank National
Association, a national banking association in its capacity as agent
for the Lenders (in such capacity, the "AGENT") and MTLM in its
capacity as borrowing agent and funds administrator (in such
capacity, the "FUNDS ADMINISTRATOR").
(b) I have reviewed the terms of the Credit Agreement, and have made, or
have caused to be made under my supervision, a review in reasonable
detail of the respective transactions and the conditions of the
Borrowers during the period commencing _____________ and continuing
through the [FISCAL YEAR] [FISCAL QUARTER] ending _____________ (the
"COMPLIANCE PERIOD").
(c) The review described in paragraph (b) above did not disclose the
existence during or at the end of the Compliance Period, and I have
no knowledge of the existence as of the date hereof, of any
condition or event which constitutes an Event of Default or
E-1
Default, except as hereinafter set forth. Described in a separate
attachment to this Certificate are the exceptions, if any, to this
paragraph (c) listing, in reasonable detail, the nature of the
condition or event, the period during which it has existed and the
action which the Borrowers have taken, are taking, or propose to
take with respect to such condition or event.
Based on the review described in paragraph (b) above, I further
certify on behalf of the Funds Administrator and the Borrowers that,
except as specifically described in subparagraph (xiv) below, at no
time during or at the end of the Compliance Period:
(i) did any material adverse change occur in any Borrower's
credit and collection policy;
(ii) did any material adverse change occur relating to the
type, quantity or quality of the Inventory, Accounts or
any other material portion of the Collateral, nor did
any event occur which could have a Material Adverse
Effect on the value of such Collateral nor did any event
occur affecting the validity or priority of the security
interests granted to Agent and the Lenders in such
Collateral;
(iii) did any event occur which has had or could reasonably be
expected to have a Material Adverse Effect;
(iv) did any casualty loss occur since the date of the last
Compliance Certificate delivered to the Agent;
(v) were any new or additional locations of any Collateral
established at which locations Collateral is or will be
located which have not been previously disclosed to you;
(vi) did any of the Borrowers change the location of their
respective chief executive offices or their respective
state of organization, organizational number, name or
type of entity;
(vii) did any of the Borrowers change their respective
corporate, limited liability company, partnership or
other names or conduct any material amount of business
under any corporate, limited liability company,
partnership or fictitious name other than the respective
names shown on their respective articles or certificate
of incorporation or other constituent documents, or as
previously disclosed to the Agent in writing;
(viii) did any Borrower (A) receive any 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 material violation of any
federal, state or local environmental, health or safety
statute, regulation, direction, ordinance, criteria or
guideline or (B) receive any notice that under any
E-2
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;
(ix) did any Borrower become aware of (A) any default under
any term or provision of any charter, by-law, mortgage,
indenture, agreement, instrument, statute, rule,
regulation, judgment, decree, order, writ, injunction,
contract, lease or other commitment to which any of them
is a party or by which any of them is bound such that
such violations or defaults singly or in the aggregate
could reasonably be expected to have a Material Adverse
Effect or (B) any dispute regarding any indenture,
contract, lease, agreement instrument or other
commitment which would individually, or when aggregated
with other such disputes, be reasonably likely to have a
Material Adverse Effect;
(x) did any Borrower create, assume or suffer to exist any
Lien on any asset now owned or hereafter acquired by it
other than as specifically permitted in the Credit
Agreement;
(xi) did any Borrower receive, obtain or enter into any of
the following:
(1) any Documents, Chattel Paper, Instruments,
Securities or Investment Property constituting
Collateral;
(2) any Commercial Tort Claim in excess of $50,000;
(3) any Letter of Credit Rights in excess of $50,000;
(4) any claim against the United States government or
any state or local government or any
instrumentality or agency thereof, in each case in
excess of $50,000, the assignment of which is
restricted by federal, state or municipal law;
(5) any Patent, Trademark or Copyright, the loss of
which would reasonably be expected to have a
Material Adverse Effect;
(6) any Material Contract; or
(7) any negotiable Document with respect to any
Collateral;
(xii) did any Borrower enter into or make a Permitted
Acquisition or a Permitted Investment in Non-Majority
Interest;
(xiii) did an Additional Collateral Event occur;
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(xiv) [LIST EXCEPTIONS, IF ANY, TO PARAGRAPHS (i) THROUGH
(xiii) ABOVE].
(d) I hereby certify and warrant to you that SCHEDULE I attached hereto
is a true and correct computation for the Compliance Period of the
ratios and/or financial restrictions contained in and pursuant to
SECTIONS 8.1 and 8.2 of the Credit Agreement.
The foregoing certifications are made and delivered this _____ day of
________, ____.
Very truly yours,
METAL MANAGEMENT, INC., a Delaware
corporation, individually and in its capacity as Funds
Administrator
By: _______________________________
Name: _______________________________
Chief Financial Officer
E-4
EXHIBIT F
TO
CREDIT AGREEMENT
DATED AS OF JUNE 28, 2004
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
_______________, ____
Reference is made to the Credit Agreement described in ITEM 2 of ANNEX I
annexed hereto (as amended through the date hereof, the "CREDIT AGREEMENT").
[ASSIGNOR] (the "ASSIGNOR") and [ASSIGNEE] (the "ASSIGNEE") agree as follows:
1. When capitalized and used herein, terms defined in the Credit Agreement
and not otherwise defined herein shall have the meanings ascribed to them in the
Credit Agreement.
2. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, that interest in and to all of
the Assignor's rights and obligations under the Credit Agreement as of the date
hereof which represents the percentage interest specified in ITEM 4(b) of ANNEX
I of all outstanding rights and obligations under the Credit Agreement relating
to the facility set forth in ITEM 2 of ANNEX I, including, without limitation,
such interest in (i) the Assignor's Commitment, (ii) the Assignor's interest in
the Letters of Credit and (iii) the Revolving Loans owing to the Assignor
relating to such facilities. After giving effect to such sale and assignment,
the Assignee's Commitment and the amount of the Revolving Loans and obligations
in respect of Letters of Credit Outstanding owing to the Assignee will be as set
forth in ITEM 4 of ANNEX I.
3. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
of the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement, the Revolving Notes, or any other instrument
or document furnished pursuant thereto; and (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any of the Borrowers or the performance or observance by any of the Borrowers
of any of such Borrower's obligations under the Credit Agreement, the Revolving
Notes, or any other instrument or document furnished pursuant thereto.
4. The Assignee (i) represents that it is either (A) a Person organized
under the laws of the United States or a state thereof or (B) if it is a Person
organized under the laws of any jurisdiction other than the United States or any
state thereof (a "FOREIGN LENDER"), the information set forth in the documents
delivered pursuant to clause (vii) of this SECTION 4 is true and correct as
F-1
of the date hereof; (ii) confirms that it is either a commercial lender, other
financial institution or "accredited investor" (as defined in Regulation D
promulgated under the Securities Act of 1933, as amended) which makes loans or
purchases notes in the ordinary course of business and that it will make all
Loans under the Credit Agreement solely for its own account in the ordinary
course of business and not with a view to or for sale in connection with any
distribution of the Revolving Notes; PROVIDED, HOWEVER, that (x) the Assignee
shall not be deemed to have breached this representation by making assignments
or granting participations as permitted in the Credit Agreement and (y) the
disposition of the Revolving Notes, or other evidence of debt held by the
Assignee shall at all times be within its exclusive control; (iii) confirms that
it has received a copy of the Credit Agreement, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption Agreement; (iv) agrees
that it will independently and without reliance upon the Agent, the Assignor or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement; (v) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (vi) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a
Lender; and (vii) if it is a Foreign Lender, attaches two accurate and complete
original signed copies of forms prescribed by the Internal Revenue Service of
the United States certifying that such Foreign Lender is exempt from United
States withholding taxes with respect to all payments to be made to the Assignee
under the Credit Agreement.
5. Following the execution of this Assignment and Assumption Agreement by
the Assignor and the Assignee, it will be delivered to the Agent for acceptance
and recording by the Agent in the Register. The effective date of this
Assignment and Assumption Agreement shall be the date of execution and delivery
hereof to the Agent by the Assignor and the Assignee unless otherwise specified
on ITEM 6 of ANNEX I hereto (the "EFFECTIVE DATE").
6. Upon such acceptance by the Agent and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Assumption Agreement, have the
rights and obligations of a Lender thereunder and (ii) the Assignor shall, to
the extent provided in this Assignment and Assumption Agreement, relinquish its
rights and be released from its obligations under the Credit Agreement.
7. Upon such acceptance by the Agent and recording by the Agent, from and
after the Effective Date, the Agent shall make all payments under the Credit
Agreement in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and fees (if applicable) with
respect thereto) to the Assignee. Upon the Effective Date, the Assignee shall
pay to the Assignor the principal amount of any outstanding Loans under the
Credit Agreement which are being assigned hereunder, net of any closing costs.
The Assignor and the Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Effective Date directly
between themselves on the Effective Date.
F-2
8. This Assignment and Assumption Agreement shall be governed by, and
construed in accordance with, the internal laws (as opposed to conflict of laws
provisions) of the State of Illinois.
9. This Assignment and Assumption 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.
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[SIGNATURE PAGE FOLLOWS]
F-3
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement and ANNEX I hereto be executed by their respective officers
thereunto duly authorized, as of the date first above written.
[NAME OF ASSIGNOR], as Assignor
By: _____________________________
Name: _____________________________
Title: _____________________________
[NAME OF ASSIGNEE], as Assignee
By: _____________________________
Name: _____________________________
Title: _____________________________
Accepted:
LASALLE BANK NATIONAL ASSOCIATION,
as Agent
By: _____________________________
Name: _____________________________
Title: _____________________________
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ANNEX I
1. Borrowers: METAL MANAGEMENT, INC., a Delaware
corporation, and certain of its
subsidiaries
2. Name and Date of Credit Credit Agreement dated as of June 28,
Agreement: 2004 among Borrowers, Metal Management,
Inc, as borrowing agent and funds
administrator for the Borrowers, each
of the financial institutions initially
a signatory thereto as a lender
thereunder, together with those
assignees thereof pursuant to SECTION
11.8, and LaSalle Bank National
Association, as Agent.
3. Date of Assignment Agreement: __________, __
4. Amounts (as of Date in Item #3 above):
a. Commitment $_________
b. Assigned Percentage __________%
c. Amount of Assigned Commitment $_________
d. Aggregate Amounts Outstanding as $_________
of the Assignment Effective Date
(of Assignor)
e. Aggregate Amounts Assigned to $_________
Assignee
5. Assignee's Commitment Amount: $_________
6. Effective Date: __________, __
7. Notice and Payment Instructions:
ASSIGNOR:
PAYMENT NOTICE
------- ------
_____________________________ _________________________________
_____________________________ _________________________________
_____________________________ _________________________________
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Attention: Attention:
Reference: Telephone:
Facsimile:
Reference:
ASSIGNEE:
PAYMENT NOTICE
_____________________________ _________________________________
_____________________________ _________________________________
_____________________________ _________________________________
Attention: Attention:
Reference: Telephone:
Facsimile:
Reference:
Accepted and Agreed:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By: _____________________ By: _____________________
Name: ____________________ Name: ____________________
Title: _________________ Title: _________________
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EXHIBIT G
TO
CREDIT AGREEMENT
DATED AS OF JUNE 28, 2004
FORM OF COMMITMENT AMOUNT INCREASE REQUEST
_______________, ___
LASALLE BANK NATIONAL ASSOCIATION,
as Agent for the Lenders
parties to the Credit
Agreement referred to below
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Credit Agreement dated as of June 28, 2004 (as the same may be
amended, restated, supplemented, extended or otherwise modified from time
to time, the "CREDIT AGREEMENT") among Metal Management, Inc., a Delaware
Corporation ("MTML") and certain of its affiliates, as borrowers
thereunder ("BORROWERS"), the financial institutions from time to time
parties thereto as lenders thereunder ("LENDERS"), LaSalle Bank National
Association, a national banking association in its capacity as agent for
the Lenders (in such capacity, the "AGENT") and MTLM in its capacity as
borrowing agent and funds administrator (in such capacity, the "FUNDS
ADMINISTRATOR").
Ladies and Gentlemen:
In accordance with the Credit Agreement, the Funds Administrator hereby
requests that the Agent consent to an increase in the aggregate Commitments (the
"COMMITMENT AMOUNT INCREASE"), in accordance with Section 2.8 of the Credit
Agreement, to be effected by [AN INCREASE IN THE COMMITMENT OF [NAME OF EXISTING
LENDERS] [THE ADDITION OF [NAME OF NEW LENDER] (THE "NEW LENDER") AS A LENDER
UNDER THE TERMS OF THE CREDIT AGREEMENT]. Capitalized terms used herein without
definition shall have the same meanings herein as such terms have in the Credit
Agreement.
After giving effect to such Commitment Amount Increase, the Commitment of
the [LENDERS] [NEW LENDER] shall be $_____________.
[INCLUDE PARAGRAPHS 1-4 FOR A NEW LENDER]
1. The New Lender hereby confirms that it has received a copy of the
Credit Documents and the exhibits related thereto, together with copies of the
documents which were required to be delivered under the Credit Agreement as a
condition to the making of the
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Revolving Loans and any other extensions of credit thereunder. The New Lender
acknowledges and agrees that it has made and will continue to make,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, its own credit
analysis and decisions relating to the Credit Agreement. The New Lender further
acknowledges and agrees that the Agent has not made any representations or
warranties about the credit worthiness of the Borrowers or any other party to
the Credit Agreement or any other Credit Document or with respect to the
legality, validity, sufficiency or enforceability of the Credit Agreement or any
other Credit Documents or the value of any security therefor.
2. Except as otherwise provided in the Credit Agreement, effective as of
the date of acceptance hereof by the Agent, the New Lender (i) shall be deemed
automatically to have become a party to the Credit Agreement and have all the
rights and obligations of a "Lender" under the Credit Agreement as if it were an
original signatory thereto and (ii) agrees to be bound by the terms and
conditions set forth in the Credit Agreement as if it were an original signatory
thereto.
3. The New Lender hereby advises you of the following administrative
details with respect to its Revolving Loans and Commitments:
(A) Notices:
Institution Name:_________________
Address: _________________________
_________________________
Telephone: ________________________
Facsimile: ________________________
(B) Payment Instructions:
[4. THE NEW LENDER HAS DELIVERED, IF APPROPRIATE, TO THE BORROWERS AND THE
AGENT (OR IS DELIVERING TO THE BORROWERS AND THE AGENT CONCURRENTLY HEREWITH)
THE TAX FORMS REFERRED TO IN SECTION 4.18 OF THE CREDIT AGREEMENT.]*
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL OBLIGATION UNDER, AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ILLINOIS.
The Commitment Amount Increase shall be effective when the executed
consent of the Agent is received or otherwise in accordance with Section 2.8 of
the Credit Agreement, but not in any case prior to ___________________, ____. It
shall be a condition to the effectiveness of the Commitment Amount Increase that
all expenses referred to in Section 2.8 of the Credit Agreement shall have been
paid.
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* Insert bracketed paragraph if New Lender is organized under the law of a
jurisdiction other than the United States of America or a state thereof. The
Borrower hereby certifies that no Default or Event of Default has occurred
and is continuing.
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The Borrower hereby certifies that no Default or Event of Default has
occurred and is continuing.
Please indicate the Agent's consent to such Commitment Amount Increase by
signing the enclosed copy of this letter in the space provided below.
Very truly yours,
METAL MANAGEMENT, INC., a Delaware
corporation, as Funds Administrator
By _________________________________
Name: __________________________
Title: __________________________
[NEW BANK/BANK INCREASING
COMMITMENTS]
By: _________________________________
Name: __________________________
Title: __________________________
The undersigned hereby consents
on this __ day of _____________,
_____ to the above-requested Commitment
Amount Increase.
LASALLE BANK NATIONAL ASSOCIATION,
as Agent
By: ________________________________
Name: ____________________________
Title: ____________________________
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