Exhibit 10.1
AMENDED AND RESTATED
FINANCING AGREEMENT
THE CIT GROUP/BUSINESS CREDIT, INC.
(AS AGENT AND LENDER)
THE LENDERS PARTY HERETO,
LONE STAR TECHNOLOGIES, INC.,
LONE STAR STEEL COMPANY, FINTUBE TECHNOLOGIES, INC.,
LONE STAR LOGISTICS, INC., T&N LONE STAR WAREHOUSE CO.,
TEXAS & NORTHERN RAILWAY COMPANY, FINTUBE CANADA, INC. AND
BELLVILLE TUBE CORPORATION
(AS BORROWERS)
AND
ENVIRONMENTAL HOLDINGS, INC., ZINKLAHOMA, INC.,
LONE STAR STEEL INTERNATIONAL, INC., LONE STAR STEEL SALES COMPANY,
ROTAC, INC., AND LONE STAR ST HOLDINGS, INC.
(AS GUARANTORS)
DATED: OCTOBER 8, 2001
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS...........................................................................................1
SECTION 2. CONDITIONS PRECEDENT.................................................................................23
SECTION 3. REVOLVING LOANS......................................................................................27
SECTION 4. ACQUISITION FACILITY LOANS AND PERMITTED ACQUISITIONS................................................31
SECTION 5. LETTERS OF CREDIT....................................................................................34
SECTION 6. COLLATERAL...........................................................................................37
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS............................................................41
SECTION 8. INTEREST, FEES AND EXPENSES..........................................................................54
SECTION 9. POWERS...............................................................................................60
SECTION 10. EVENTS OF DEFAULT AND REMEDIES......................................................................61
SECTION 11. TERMINATION..........................................................................................65
SECTION 12. MISCELLANEOUS.......................................................................................66
SECTION 13. AGREEMENT BETWEEN THE LENDERS.......................................................................69
SECTION 14. AGENCY..............................................................................................71
EXHIBIT
Exhibit A - Form of Assignment and Acceptance
SCHEDULES
Schedule 1 - Existing Liens
Schedule 2 - List of Eligible Rack Transfer Sales to Customers
Schedule 7(1) - Company Information
Schedule 7(5)(a) - Insurance Coverage
Schedule 7(14)(e) - Other Lending Agreements
Schedule 7(14)(f) - Real Property Owned and Leased/Collateral Locations
Schedule 7(14)(g) - Litigation
Schedule 7(14)(l)) - Environmental Matters
Schedule 7(14)(o) - Subsidiaries
Schedule 7(14)(p - Intellectual Property
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THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation,
(hereinafter "CITBC") with offices located at Two Lincoln Centre, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, and CITBC as agent for the Lenders
(the "AGENT"), and any other party which now or hereafter becomes a lender
hereunder pursuant to Section 13 hereof (individually a "LENDER" and
collectively the "LENDERS") are pleased to confirm the terms and conditions
under which the Agent on behalf of the Lenders and the Lenders shall make
revolving loans and other financial accommodations to LONE STAR TECHNOLOGIES,
INC. (herein "PARENT"), a Delaware corporation, LONE STAR STEEL COMPANY
(herein "LSSC"), a Delaware corporation, FINTUBE TECHNOLOGIES, INC. (herein
"FTI"), an Oklahoma corporation, LONE STAR LOGISTICS, INC., a Texas
corporation ("LOGISTICS"), T&N LONE STAR WAREHOUSE CO., a Texas corporation
("T&N WAREHOUSE"), TEXAS & NORTHERN RAILWAY COMPANY, a Texas corporation ("T&N
RAILWAY"), FINTUBE CANADA, INC., a Delaware corporation ("FCI") and BELLVILLE
TUBE CORPORATION, a Texas corporation ("BTC"), each with its principal place
of business at ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (herein
Parent, LSSC, FTI, Logistics, T&N Warehouse, T&N Railway, FCI and BTC each
individually a "COMPANY" and collectively the "COMPANIES"), supported by the
guaranties of ENVIRONMENTAL HOLDINGS, INC., a Delaware corporation ("EHI"),
ZINKLAHOMA, INC., a Delaware corporation ("ZINKLAHOMA"), LONE STAR STEEL
INTERNATIONAL, INC., a Delaware corporation ("STEEL INTERNATIONAL"), LONE STAR
STEEL SALES COMPANY, a Delaware corporation ("STEEL SALES"), ROTAC, INC., a
Texas corporation ("ROTAC"), and, LONE STAR ST HOLDINGS, INC., a Delaware
corporation ("ST HOLDINGS"), (herein EHI, Zinklahoma, Steel International,
Steel Sales, Rotac, and ST Holdings each individually as "GUARANTOR" and
collectively, the "GUARANTORS"), each with its principal place of business at
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
The parties agree that the
Financing Agreement dated March 12, 1999,
as amended, among CITBC, as Agent and Lender, and LSSC, T&N Warehouse and
Logistics, as Borrowers, should be, and it is hereby amended and restated in
its entirety as follows:
SECTION 1. DEFINITIONS
ACCOUNTS shall mean all of the Obligors' now existing and future: (a) accounts
(as defined in the UCC), and any and all other receivables (whether or not
specifically listed on schedules furnished to the Agent), including, without
limitation, all accounts created by or arising from all of the Obligors'
sales, leases, rentals of goods or renditions of services to each Obligors'
customers, and all accounts arising from sales, leases, rentals of goods or
renditions of services made under any of the Obligors' trade names or styles,
or through any of the Obligors' divisions; (b) any and all instruments,
documents, contract rights and chattel paper, all as defined in the UCC; (c)
unpaid seller's or lessor's rights (including rescission, replevin,
reclamation, repossession and stoppage in transit) relating to the foregoing
or arising therefrom; (d) rights to any goods represented by any of the
foregoing, including rights to returned, reclaimed or repossessed goods; (e)
deposit accounts, reserves and credit balances arising in connection with or
pursuant hereto; (f) guarantees, supporting obligations, payment intangibles
and letter of credit rights (all as defined in the UCC) or collateral for any
of the foregoing; (g) insurance policies or rights relating to any of the
foregoing (h) General Intangibles (including all rights to payment, including
those arising in connection with bank and non-bank credit cards) pertaining to
any and all of the foregoing; (i) notes, deposits or property of
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account debtors securing the obligations of any such account debtors to the
Obligors, and (j) cash and non-cash proceeds of any and all of the foregoing.
ACQUISITION shall mean the purchase or other acquisition of any or all of the
following: (a) more than 50% of the Capital Stock of any Person; and (b) all
or a part of the assets of, or all or any part of a division of, any Person.
AFFILIATE means, as applied to any Person, any other Person who, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct the management and policies of
a Person, whether through the ownership of Stock, by contract, or otherwise;
PROVIDED, HOWEVER, that, in any event: (a) any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or
10% or more of the partnership or other ownership interests of a Person (other
than as a limited partner of such Person) shall be deemed to control such
Person; (b) each director (or comparable manager) of a Person shall be deemed
to be an Affiliate of such Person; and (c) each partnership or joint venture
in which a Person is a partner or joint venturer shall be deemed to be an
Affiliate of such Person.
ACQUISITION AGREEMENTS shall have the meaning assigned to such term in SECTION
4 hereof.
ACQUISITION FACILITY LOANS shall have the meaning assigned to such term in
SECTION 4 hereof.
ADJUSTMENT DATE shall mean the first day of the calendar month following the
applicable Financial Statement Delivery Date.
ANNIVERSARY DATE shall mean the date occurring three (3) years from the
Closing Date and the same date in every year thereafter.
APPLICABLE MARGIN means, with respect to any amount outstanding made under any
LIBOR Loans or Chase Bank Rate Loans, as the case may be, the rate of interest
per annum determined as set forth below:
(a) during the period from the Closing Date through the
Adjustment Date immediately following the Financial Statement Delivery Date (as
defined below) for the Fiscal Year ending on December 31, 2001:
AS TO AS TO
CHASE BANK RATE LOANS LIBOR LOANS
1.0% 2.50%
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(b) for any new Margin Period occurring after December 31,
2001, the rate determined by reference to the pricing grid below based on the
Companies' Total Leverage Ratio (on the last day of the Fiscal Year most
recently ended prior to the commencement of such Margin Period):
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AS TO AS TO
TOTAL RATIO CHASE BANK RATE LOANS LIBOR LOANS
----------- --------------------- -----------
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Less than 1.5 to 1.0 0.75% 2.25%
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Greater than or equal to 1.5 to 1.0 but less than 2.0 to 1.0 1.00% 2.50%
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Greater than or equal to 2.0 to 1.0 but less than 2.5 to 1.0 1.25% 2.75%
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Greater than or equal to 2.5 to 1.0 but less than 3.0 to 1.0 1.50% 3.00%
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Greater than 3.0 to 1.0 1.75% 3.25%
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As used herein, "FINANCIAL STATEMENT DELIVERY DATE" means the earlier of (i)
the last day on which the annual financial statements of the Companies are to
be delivered to CIT pursuant to PARAGRAPH 7.8 of SECTION 7 hereof, or (ii) the
date upon which such financial statements actually are delivered to CIT. As
used herein, "MARGIN PERIOD" means a period commencing on the most recent
Financial Statement Delivery Date and ending on the next Financial Statement
Delivery Date. Each change in the Applicable Margin shall become effective on
the Adjustment Date for all Chase Bank Rate Loans. There will be no change in
the Applicable Margin for any LIBOR Loans which became a LIBOR Loan prior to
the subject Adjustment Date until such time as such LIBOR Loan's Interest
Period expires.
ASSIGNMENT AND TRANSFER AGREEMENT shall mean the Assignment and Transfer
Agreement in the form of Exhibit A hereto.
ATTRIBUTABLE DEBT in respect of a sale and leaseback transaction means, at the
time of determination, the present value of the obligation of the lessee for
net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
AVAILABILITY shall mean as to any Company at any time the positive difference
between: (a) such Company's Borrowing Base, and (b) the sum of (i) the
outstanding aggregate amount of all Obligations, including without limitation,
all Obligations with respect to Revolving Loans, but excluding the Letters of
Credit, and (ii) the Availability Reserve.
AVAILABILITY RESERVE shall mean as to any Company any reserve which the Agent
may reasonably require from time to time, including without limitation, for
Letters of Credit issued pursuant to Paragraph 5.1 of Section 5 hereof.
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BORROWING BASE shall mean as to any Company the sum of (a) eighty five percent
(85%) of such Company's outstanding Eligible Accounts Receivable, plus (b) the
lesser of (i) sixty percent (60%) of value of such Company's Eligible
Inventory, valued at the lower of cost or market, on a first in, first out
basis; PROVIDED, however, the aggregate amount advanced hereunder to all of
Companies against Eligible Inventory shall not exceed an aggregate amount
equal to the Inventory Loan Cap.
BUSINESS DAY shall mean any day on which the Agent is open for business in New
York, New York, which is not (i) a Saturday, Sunday or legal holiday in the
state of New York or (ii) a day on which banking institutions chartered by the
State of New York, the State of Texas or the United States are legally
required to close.
CANADIAN ACQUISITION shall mean the Acquisition (a) with respect to a Person,
of a Person formed under the laws of Canada or any province thereof, and (b)
with respect to assets, of assets located in Canada.
CANADIAN SUBSIDIARY shall mean a direct or indirect Subsidiary of a Company,
which is organized under Canadian law, and 65% of the Capital Stock of which
is pledged to the Agent.
CAPITAL EXPENDITURES for any period shall mean the aggregate of all
expenditures of the Obligors during such period that, in conformity with GAAP,
are required to be included in or reflected by the property, plant or
equipment or similar fixed asset account reflected in the balance sheets of
the Obligors.
CAPITAL LEASE shall mean any lease of property (whether real, personal or
mixed) which, in conformity with GAAP, is accounted for as a capital lease or
a Capital Expenditure on the balance sheets of the Companies.
CAPITAL STOCK means, with respect to any Person, any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents (however designated) of such Person's equity, including all common
stock and preferred stock, any limited or general partnership interest and any
limited liability company membership interest.
CHASE BANK RATE shall mean the rate of interest per annum announced by The
Chase Manhattan Bank, from time to time, as its prime rate in effect at its
principal office in New York City. (The prime rate is not intended to be the
lowest rate of interest charged by The Chase Manhattan Bank to its borrowers).
CHASE BANK RATE LOANS shall mean any loans or advances pursuant to this
Financing Agreement made or maintained at a rate of interest based upon the
Chase Bank Rate.
CLOSING DATE shall mean the date that this
Financing Agreement has been duly
executed by the parties hereto and delivered to the Agent.
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COLLATERAL shall mean all present and future Accounts, Equipment, Inventory,
Documents of Title, General Intangibles, Pledged Stock of the Companies
(excluding Parent) and the Guarantors, and Other Collateral of the Obligors.
COLLATERAL MANAGEMENT FEE shall mean the sum paid to the Agent in accordance
with Paragraph 8.8 of Section 8 of this
Financing Agreement to offset the
costs (excluding Out-of-Pocket expenses) of the Agent's personnel in
connection with record keeping, periodic examinations, analyzing and
evaluating the Collateral.
COMMITMENT shall mean each Lender's commitment in accordance with this
Financing Agreement to make Revolving Loans (the "Revolving Credit
Commitment"), in the amount of their respective pro rata share, as set forth
herein or in the Assignment and Acceptance Agreement executed by each such
Lender which becomes a Lender after the Closing Date.
COMMITMENT LETTER shall mean the commitment letter dated August 14, 2001
issued by Agent to, and accepted by, Parent.
COMPANY GROUP means each of (i) LSSC and its consolidated subsidiaries, (ii)
FTI and its consolidated subsidiaries and (iii) BTC and its consolidated
subsidiaries.
CONSOLIDATED BALANCE SHEET shall mean a consolidated or compiled, as
applicable, balance sheet for the Companies and their consolidated
subsidiaries, eliminating all inter-company transactions and prepared in
accordance with GAAP.
CONSOLIDATING BALANCE SHEET shall mean a Consolidated Balance Sheet plus
consolidating balance sheets for each Company Group, showing all eliminations
of inter-company transactions and prepared in accordance with GAAP, and
including a balance sheet for each Company Group exclusively.
COPYRIGHTS shall mean all of the Obligors' present and hereafter acquired
copyrights, registrations, recordings, applications, designs, styles,
licenses, marks, prints and labels bearing any of the foregoing, goodwill,
general intangible, intellectual property and copyright rights and all
royalties, cash and non-cash proceeds thereof.
DEFAULT shall mean any event specified in Section 10 hereof which has occurred
and is continuing, whether or not any requirement for the giving of notice,
the lapse of time, or both, or any other condition, event or act, has been
satisfied.
DEFAULT RATE OF INTEREST shall mean a rate of interest per annum on any
Obligations hereunder, equal to the lesser of (a) the Maximum Legal Rate or
(b) the sum of (i) two percent (2%), (ii) the Applicable Margin for Chase Bank
Rate, and (iii) the Chase Bank Rate, which the Agent shall be entitled to
charge the Companies on all Obligations due the Agent and the Lenders by the
Companies, as further set forth in Paragraph 10.2 of Section 10 of this
Financing Agreement.
DEPOSITORY ACCOUNTS shall mean the collection accounts, which are subject to
the Agent's instructions, as specified in Paragraph 3.4 of Section 3 of this
Financing Agreement.
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DESIGNATED SUBSIDIARY means any direct or indirect Subsidiary of Parent formed
under the laws of the United States, any state thereof or the District of
Columbia with respect to which Parent sends notice to the Agent that such
Subsidiary is a "Designated Subsidiary".
DOCUMENTATION FEE shall mean subsequent to the Closing Date the Agent's
standard fees intended to compensate Agent for the use of inside counsel for
matters relating to any and all modifications, waivers, releases, amendments
or additional collateral with respect to this
Financing Agreement, the
Collateral and/or the Obligations.
DOCUMENTS OF TITLE shall mean all of the Obligors' present and future
documents (as defined in the UCC), and any and all warehouse receipts, bills
of lading, shipping documents, chattel paper, instruments and similar
documents, all whether negotiable or not and all goods and Inventory relating
thereto and all cash and non-cash proceeds of the foregoing.
DOMESTIC ACQUISITION shall mean the Acquisition (a) with respect to a Person,
of a Person formed under the laws of the United States or any state thereof,
and (b) with respect to assets, of assets located in the continental United
States, Alaska or Hawaii and the acquisition of such assets is made by a
Domestic Subsidiary other than a Designated Subsidiary.
DOMESTIC SUBSIDIARY shall mean a direct or indirect Subsidiary of a Company
formed under the laws of the United States, any state thereof or the District
of Columbia.
EARLY TERMINATION DATE shall mean the date on which the Parent terminates this
Financing Agreement or the Revolving Line of Credit which date is prior to an
Anniversary Date.
EARLY TERMINATION FEE shall: (A) mean the fee the Agent on behalf of the
Lenders is entitled to charge the Companies in the event the Parent terminates
the Revolving Line of Credit or this Financing Agreement on a date prior to an
Anniversary Date (the period from the Early Termination Date to the
Anniversary Date being herein called the "EARLY TERMINATION PERIOD"); and (B)
be determined by multiplying the Revolving Line of Credit by (x) two percent
(2%) per annum for the portion, if any, of the Early Termination Period
occurring on or before one (1) year from the Closing Date, (y) one percent
(1%) per annum for the portion, if any, of the Early Termination Period
occurring after one (1) year from the Closing Date but on or before two (2)
years from the Closing Date; and (z) one-half of one percent 1/2%) per annum
for the portion, if any, of the Early Termination Period occurring after two
(2) years from the Closing Date but prior to an Anniversary Date, in each case
for partial years, prorated on the basis of the number of days from the Early
Termination Date to the end of such partial year.
EBITDA shall mean, in any period, all consolidated earnings of the Companies
and their consolidated Subsidiaries, before all (i) interest and tax expenses,
accrued or paid and whether or not capitalized (including amortization of debt
issuance costs and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Leases, imputed interest with respect
to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net of the effect of all payments made or received
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pursuant to Financial ▇▇▇▇▇▇), (ii) depreciation and (iii) amortization
(including amortization of goodwill and other intangibles) and other non-cash
expenses for said period, all determined in accordance with GAAP on a
consistent basis with the latest audited financial statements of the
Companies, but excluding the effect of extraordinary and/or non-recurring
gains or losses for such period.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean, as to any Company, the gross amount
of such Company's Trade Accounts Receivable that are subject to a valid, first
priority and fully perfected security interest in favor of the Agent on behalf
of the Lenders, subject to Permitted Encumbrances which conform to the
warranties contained herein and at all times continue to be acceptable to the
Agent in the exercise of its reasonable business judgment, less, without
duplication, the sum of: (a) any returns, discounts, claims, credits and
allowances of any nature (whether issued, owing, granted, claimed or
outstanding), and (b) reserves for any such Trade Accounts Receivable that
arise from or are subject to or include: (i) sales to the United States of
America, any state or other governmental entity or to any agency, department
or division thereof, except for any such sales as to which such Company's has
complied with the Assignment of Claims Act of 1940 or any other applicable
statute, rules or regulation, to the Agent's satisfaction in the exercise of
its reasonable business judgment; (ii) foreign sales other than sales (x)
secured by letters of credit (in form and substance satisfactory to the Agent)
issued or confirmed by, and payable at, banks having a place of business in
the United States of America and payable in United States currency, or (y) to
customers residing in Canada provided such sales otherwise comply with all of
the other criteria for eligibility hereunder, are payable in United States
currency or not more than $7,500,000 in Canadian currency and such accounts
receivable do not exceed $7,500,000.00 in the aggregate at any one time for
all Companies; (iii) accounts that remain unpaid more than sixty (60) days
from the due date or ninety (90) days from invoice date; (iv) contra accounts;
(v) sales to any subsidiary, or to any company affiliated with any of the
Companies in any way; (vi) ▇▇▇▇ and hold (deferred shipment) or consignment
sales, except that Rack Transfer Sales to those customers listed on Schedule 2
hereto (as such Schedule 2 may be supplemented from time to time hereafter by
the Companies upon written notice to Agent) shall be eligible; (vii) sales to
any customer which is (A) insolvent, (B) the debtor in any bankruptcy,
insolvency, arrangement, reorganization, receivership or similar proceedings
under any federal or state law, (C) negotiating, or has called a meeting of
its creditors for purposes of negotiating, a compromise of its debts or (D)
financially unacceptable to the Agent or has a credit rating unacceptable to
the Agent all as determined in Agent's reasonable business judgment; (viii)
all sales to any customer if fifty percent (50%) or more of either (y) all
outstanding invoices to such customer or (z) the aggregate dollar amount of
all outstanding invoices to such customer, are unpaid more than ninety (90)
days from invoice date; (ix) pre-billed receivables and receivables arising
from progress billing; (x) an amount representing, historically, returns,
discounts, claims, credits and allowances, credit balances, cross aged
balances, and applicable terms; (xi) sales not payable in United States
currency (except up to $47,500,000 in the aggregate at any one time of
accounts receivable of all of the Companies payable in Canadian currency); and
(xii) any other reasons deemed necessary by the Agent in its reasonable
business judgment, including those which are customary either in the
commercial finance industry or in the lending practices of the Agent or the
Lenders.
ELIGIBLE INVENTORY shall mean, as to any Company, the gross amount of such
Company's Inventory that is subject to a valid, first priority and fully
perfected security interest in favor of the Agent on
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behalf of the Lenders, subject to Permitted Encumbrances, and which conforms
to the warranties contained herein and which at all times continue to be
acceptable to the Agent in the exercise of its reasonable business judgment,
excluding, without duplication, any (a) materials and supplies (other than raw
materials), (b) goods not present in the United States of America other than
goods in Canada in which Agent on behalf of Lenders has a valid, first
priority perfected security interest, (c) goods returned or rejected by the
Companies' customers (other than goods that are undamaged and resalable in the
normal course of business and goods to be returned to the Companies'
suppliers), (d) goods in transit to third parties (other than the goods in
transit to agents, warehouses, finishers and processors for the Companies for
which such warehouseman or third party finisher or processor has executed a
notice of security interest agreement (in form and substance reasonably
satisfactory to the Agent)), or Inventory in possession of a warehouseman,
bailee, third party processor or other third party, unless such warehouseman,
bailee, processor or other third party has executed a notice of security
interest agreement (in form and substance reasonably satisfactory to the
Agent) and the Agent shall have a first priority perfected security interest
in such Inventory, and (e) less any reserves required by the Agent in its
reasonable discretion determined in accordance with Agent's customary
practices, including for, any Inventory purchased or sold to any affiliate of
the Company, special order goods, mill rejects, discontinued, slow-moving and
obsolete Inventory, market value declines, ▇▇▇▇ and hold (deferred shipment),
consignment sales, shrinkage and any applicable customs, freight, duties or
taxes and for Inventory located at Real Estate leased by any Obligor for which
the Agent has not received a landlord lien waiver acceptable to Agent;
provided, however, FTI shall have a period of sixty (60) days subsequent to
the Closing Date to obtain a landlord waiver from the City of Tulsa - ▇▇▇▇▇▇
County Port Authority.
EMPLOYEE PLAN shall means any employee benefit plan, program or policy with
respect to which each Company or any ERISA Affiliate may have any liability or
any obligation to contribute, other than a Plan or a Multiemployer Plan.
ENVIRONMENTAL LAWS shall mean applicable federal, state or local laws, rules
or regulations, and any applicable judicial interpretations thereof, including
any judicial or administrative order, judgment, permit, approval decision or
determination, in each case pertaining to conservation or protection of the
environment, in effect at the time in question, including the Clean Air Act,
the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), the Federal Water Pollution Control Act, the Occupational Safety
and Health Act, the Resource Conservation and Recovery Act, the Safe Drinking
Water Act, the Toxic Substances Control Act, the Superfund Amendments and
Reauthorization Act of 1986, the Hazardous Materials Transportation Act and
analogous state and local laws as may be amended from time to time thereby
imposing either more or less stringent requirements as relates to activity
occurring after the date hereof of any such amendments.
EQUIPMENT shall mean all of the Obligors' present and hereafter acquired
equipment (as defined in the UCC) including, without limitation, all
machinery, equipment, furnishings and fixtures, and all additions,
substitutions and replacements thereof, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto and all proceeds of whatever sort.
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ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and the rules and regulations promulgated thereunder
from time to time.
ERISA AFFILIATE shall mean (a) any Person which, together with any Obligor, is
treated as a "single employer" under Section 414 of the Internal Revenue Code
of 1986, as amended, and the regulations thereunder, and (b) any Subsidiary of
any Obligor.
EUROCURRENCY RESERVE REQUIREMENTS for any day, as applied to a LIBOR Loan,
shall mean the aggregate (without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect with respect to the Agent
and/or any present or future Lender on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
governmental authority having jurisdiction with respect thereto, as now and
from time to time in effect), dealing with reserve requirements prescribed for
Eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of such Board) maintained by the Agent and/or any such Lenders
(such rate to be adjusted to the nearest one sixteenth of one percent (1/16 of
1%) or, if there is not a nearest one sixteenth of one percent (1/16 of 1%),
to the next higher one sixteenth of one percent (1/16 of 1%)).
EXCLUDED PRINCIPAL PAYMENTS means (i) principal payments and prepayments of
the Obligations, (ii) Permitted Refinancings, and (iii) prepayments,
redemptions and/or purchases of Subordinated Debt by one or more Obligors in
an amount equal to the aggregate net proceeds of the sale of Capital Stock to
third parties made by one or more Obligors after the Closing Date plus any
additional amount as long as the aggregate Availability of all Companies
immediately after any such prepayments, redemptions and/or purchases of
Subordinated Debt is at least $30,000,000.
EVENT(S) OF DEFAULT shall have the meaning provided for in Section 10 of this
Financing Agreement.
FEE LETTER shall mean that certain letter dated of the date hereof from the
Companies to Agent.
FINANCIAL HEDGE means (a) a swap, collar, floor, cap or other contract which
is intended to reduce or eliminate the risk of fluctuations in interest rates,
(b) a foreign exchange, currency hedging, commodity hedging or other contract
which is intended to reduce or eliminate the market risk of holding currency
or a commodity in either the cash or future markets, or (c) any contract or
agreement involving a dollar-denominated or cross-currency interest rate
exchange, forward currency exchange, interest rate cap, collar protection,
rate swap, basis swap, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, floor, forward rate
currency or interest rate options, puts and warrants or any combination of any
of the foregoing, which Financial Hedge is entered into by any Obligors with
any Person under the laws of a jurisdiction in which such contracts are legal
and enforceable (EXCEPT as enforceability may be limited by the United States
Bankruptcy Code and all applicable similar laws affecting the rights of
creditors and general principles of equity); PROVIDED THAT, (i) all
documentation for Financial ▇▇▇▇▇▇ must substantially conform to ISDA
standards and (ii) each such Financial Hedge shall be or shall have been
incurred in the ordinary course of business of the Obligors.
9
FINANCING AGREEMENT shall mean the Amended and Restated Financing Agreement
(as same may be amended, modified or restated from time to time).
FISCAL QUARTER shall mean, with respect to the Companies, each three (3) month
period ending on March 31st, June 30th, September 30th and December 31st of
each Fiscal Year.
FISCAL YEAR shall mean each twelve (12) month period commencing on January 1st
of each year and ending on the following December 31st.
FIXED CHARGE COVERAGE RATIO shall mean, for the relevant period, without
duplication and on a consolidated basis, the ratio determined by dividing (a)
EBITDA less Capital Expenditures and cash taxes for such period, by (b) the
sum of the following ("FIXED CHARGES") (i) all cash interest expense, cash
dividends and cash distributions for such period (other than Permitted
Intercompany Balances), and (ii) the amount of principal repaid or scheduled
to be repaid on the Indebtedness during such period other than Excluded
Principal Payments. In the event that an Obligor incurs, assumes, guarantees,
repays, repurchases or redeems any Indebtedness (other than ordinary working
capital borrowings) or issues, repurchases or redeems common or preferred
stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated and on or prior to the date on which the
event for which the calculation of the Fixed Charge Coverage Ratio is made
(the "Calculation Date"), then the Fixed Charge Coverage Ratio will be
calculated giving pro forma effect to such incurrence, assumption, guarantee,
repayment, repurchase or redemption of Indebtedness, or such issuance,
repurchase or redemption of common or preferred stock, and the use of the
proceeds as if the same had occurred at the beginning of the applicable
four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by an Obligor, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to
such reference period and on or prior to the Calculation Date will be
given pro forma effect as if they had occurred on the first day of the
four-quarter reference period and EBITDA for such reference period will
be calculated on a pro forma basis in accordance with Regulation S-X
under the Securities Act;
(2) the EBITDA attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, will be excluded; and
(3) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, will be excluded, but only
to the extent that the obligations giving rise to such Fixed Charges
will not be obligations of the Companies following the Calculation
Date.
10
FOREIGN ACQUISITION shall mean (a) with respect to a Person, the Acquisition
of a Person formed under laws other than of the United States or Canada, and
(b) with respect to assets, the Acquisition of assets not located in the
continental United States, Alaska, Hawaii or Canada. A Canadian Acquisition
shall also be deemed to be a Foreign Acquisition unless Parent elects by
notice in writing to the Agent to include the Person acquired or the
Subsidiary of Parent which acquires the Canadian assets as an "Obligor"
hereunder.
FOREIGN SUBSIDIARY shall mean a direct or indirect Subsidiary of a Company
which is not a Domestic Subsidiary or a Canadian Subsidiary.
GAAP shall mean generally accepted accounting principles in the United States
of America as in effect from time to time and for the period as to which such
accounting principles are to apply, provided that in the event the Companies
modify their accounting principles and procedures as applied as of the Closing
Date, the Companies shall provide such statements of reconciliation as shall
be in form and substance reasonably acceptable to the Agent and the Required
Lenders. If any changes in GAAP require any changes in the accounting methods
or results of the Companies, Agent will, upon request by Parent, analyze the
circumstances and the changes and make a good-faith proposal to Parent and the
other Lenders with respect to appropriate adjustments to the financial
covenants herein to take into account such GAAP changes.
GENERAL INTANGIBLES shall mean all of the Obligors' present and hereafter
acquired general intangibles (as defined in the UCC), and shall include,
without limitation, all present and future right, title and interest in and
to: (a) all Trademarks, tradenames, corporate names, business names,
fictitious business names, logos and any other designs or sources of business
identities, indicative of origin, (b) Patents, together with any improvements
on said Patents, utility models, industrial models, and designs, (c)
Copyrights, (d) trade secrets, (e) licenses, permits and franchises, except to
the extent the granting of a security interest therein by any Obligor to Agent
is prohibited by applicable law or by the terms and provisions of the written
agreement, document or instrument creating or evidencing such licenses,
permits or franchises (other than to the extent that such prohibition, or the
term or provision for such prohibition, is rendered ineffective pursuant to
Section 9-406(6) of the Code or other applicable law, including the United
States Bankruptcy Code or principles of equity); provided, however, that (i)
immediately upon the ineffectiveness, lapse or termination of any such
prohibition or term or provision providing for such prohibition, the
Collateral shall include, and such Obligor shall be deemed to have granted a
security interest to Agent in, all such licenses, permits or franchises as if
such prohibition, or term or provision providing for such prohibition, had
never been in effect, and (ii) in no event under any circumstances shall
"accounts" (as such term is defined in the Code) or "inventory" (as such term
is defined in the Code) of any Obligor or any contract rights or license
agreements necessary for any Obligor to sell, license or manufacture its
Inventory or for Agent and Lenders to fully realize on the Collateral upon the
occurrence of an Event of Default be excluded from Collateral, (f) all
applications with respect to the foregoing, (g) all right, title and interest
in and to any and all extensions and renewals, (h) goodwill with respect to
any of the foregoing, (i) any other forms of similar intellectual property,
and (j) all customer lists, distribution agreements, supply agreements,
indemnification rights and tax refunds, together with all monies and claims
for monies now or hereafter due and payable in connection with any of the
foregoing or otherwise, and all cash and non-cash proceeds thereof,
11
including, without limitation, the proceeds or royalties of any licensing
agreements between any Obligor and any licensee of any of such Obligor's
General Intangibles.
GUARANTIES shall mean the guaranty documents executed and delivered by the
Guarantors guaranteeing the Obligations.
GUARANTORS shall mean (i) each of the Companies, (ii) each of the Guarantors
(as defined in the first paragraph of this Financing Agreement), and (iii) any
other Person who now or may hereafter guarantee payment or performance of all
or any part of the Obligations.
INDEBTEDNESS shall mean, without duplication, all liabilities, contingent or
otherwise, which are any of the following: (a) obligations in respect of money
(borrowed or otherwise) or for the deferred purchase price of property,
services or assets, other than accounts payable included in current
liabilities and incurred in the ordinary course of business, or (b) lease
obligations which, in accordance with GAAP, have been, or which should be
capitalized.
INSURANCE PROCEEDS shall mean proceeds or payments from an insurance carrier
with respect to any loss, casualty or damage to Collateral.
INTEREST PERIOD shall mean:
(a) initially (but subsequent to seven days from the Closing Date),
as the case may be a one month, two month, three month or six month period
commencing on the borrowing or conversion date with respect to a LIBOR Loan
and ending one, two, three or six months thereafter, as applicable; and
(b) thereafter, at the option of the Companies, any one month, two
month, three month or six month period commencing on the last day of the
immediately preceding Interest Period applicable to such LIBOR Loan and ending
one, two, three or six months thereafter, as applicable;
PROVIDED THAT, the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period would otherwise end on a day which is not a
Working Day, that Interest Period shall be extended to the next
succeeding Working Day, unless the result of such extension would
extend such payment into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that begins on the last Working Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month, at the end of such Interest
Period) shall end on the last Working Day of a calendar month; and
(iii) for purposes of determining the availability of Interest Periods,
such Interest Periods shall be deemed available if (x) The Chase
Manhattan Bank quotes an applicable rate to the Agent or the Agent
determines the LIBO Rate, as provided in the definition of LIBOR, (y)
the LIBO Rate determined by The Chase Manhattan Bank or the Agent on
the basis of such quote will adequately and fairly reflect the cost of
maintaining or funding its loans bearing
12
interest at LIBOR, for such Interest Period, and (z) such Interest
Period will end on or before the earlier of the Anniversary Date or
the last day of the then current term of this Financing Agreement.
If a requested Interest Period shall be unavailable in accordance
with the foregoing sentence, the Companies shall continue to pay
interest on the Obligations at the applicable per annum rate based
upon the Chase Bank Rate.
INVENTORY shall mean all of the Obligors' present and hereafter acquired
inventory (as defined in the UCC) and including, without limitation, all
oilfield products, oil country tubular goods, specialty tubing, rolled steel
tubular products, raw steel, steel tubing, pipe, casing, line pipe, standard
pipe, mechanical pipe, coupling pipe, structural tubing and blooms, raw
materials, including steel slabs, coils and ingots, and all other merchandise,
inventory and goods, and all additions, substitutions and replacements
thereof, wherever located, together with all goods and materials used or
usable in manufacturing, processing, packaging or shipping same; in all stages
of production - from raw materials through work-in-process to finished goods -
and all proceeds thereof of whatever sort.
INVENTORY LOAN CAP shall mean an amount equal to $85,000,000.
INVESTMENT PROPERTY shall mean all now owned or hereafter acquired investment
property (as defined in the UCC) and all proceeds thereof.
ISSUING BANK shall mean the bank issuing Letters of Credit for the Companies.
LETTERS OF CREDIT shall mean all letters of credit issued with the assistance
of the Agent in accordance with Section 5 hereof by the Issuing Bank for or on
behalf of any of the Companies.
LETTER OF CREDIT GUARANTY shall mean the guaranty delivered by the Agent to
the Issuing Bank of any Company's reimbursement obligations under the Issuing
Bank's reimbursement agreement, application for Letter of Credit or other like
document.
LETTER OF CREDIT GUARANTY FEE shall mean the fee the Agent may charge the
Companies under Paragraph 8.3 of Section 8 of this Financing Agreement for: a)
issuing a Letter of Credit Guaranty and/or b) otherwise aiding the Companies
in obtaining Letters of Credit, all pursuant to Section 5 hereof.
LETTER OF CREDIT SUB-LINE shall mean the aggregate amount of $5,000,000,
consisting of a line for standby Letters of Credit and for documentary Letters
of Credit.
LEVERAGE RATIO shall mean, for the relevant period, the ratio obtained by
dividing Total Funded Debt outstanding as of the end of such period by EBITDA
for such period.
LIBOR shall mean at any time of determination, and subject to availability,
for each applicable Interest Period, a variable rate of interest (the "LIBOR
Rate" or "LIBO Rate") equal to: (a) at the Agent's election (i) the applicable
LIBOR quoted to the Agent by The Chase Manhattan Bank (or any successor
thereof), or (ii) the rate of interest determined by the Agent at which
deposits in U.S. Dollars are offered for the relevant Interest Period based on
information presented on Telerate Systems at Page 3750 as of 11:00 A.M.
(London time) on the day which is two (2) Business Days
13
prior to the first day of such interest period; PROVIDED THAT if at least two
such offered rates appear on the Telerate System at Page 3750 in respect of
such Interest Period, the arithmetic mean of all such rates (as determined by
the Agent) will be the rate used; divided by (b) a number equal to 1.0 minus
the aggregate (but without duplication) of the rates (expressed as decimal
fraction) of Eurocurrency Reserve Requirements in effect on the day which is
two (2) Business Days prior to the beginning of such Interest Period.
LIBOR LENDING OFFICE with respect to the Agent, shall mean the office of The
Chase Manhattan Bank or any successor thereof maintained at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
LIBOR LOAN shall mean any loans made pursuant to this Financing Agreement at
such time as they are made and/or are being maintained at a rate of interest
based upon LIBOR, provided that (i) no Default or Event of Default has
occurred hereunder, which has not been waived in writing by the Required
Lenders or any Default has occurred which has not been cured to the
satisfaction of Agent prior to becoming an Event of Default, and (ii) no LIBOR
Loan shall be made with an Interest Period that ends after the Anniversary
Date or any other applicable Early Termination Date.
LINE OF CREDIT FEE shall: (a) mean the fee due the Agent at the end of each
month for the Revolving Line of Credit, and (b) be determined by multiplying
the difference between (i) the Revolving Line of Credit and (ii) the sum of
(x) the average daily balance of Revolving Loans of the Companies plus (y) the
average daily balance of Letters of Credit outstanding for said month, by
0.375% per annum for the number of days in said month.
LOAN DOCUMENTS shall mean this Financing Agreement, the other closing
documents and any other ancillary loan and security agreements executed from
time to time by any Obligor in connection with this Financing Agreement, all
as may be renewed, amended, extended, increased or supplemented from time to
time.
LOAN FACILITY FEE shall mean the fee payable to the Agent and the Lenders (as
applicable) in accordance with, and pursuant to, the provisions of Paragraph
8.7 of Section 8 of this Financing Agreement.
MATERIAL ACQUISITION means a Permitted Acquisition for which the aggregate
amount of cash (whether cash on hand or cash provided for Revolving Loans) and
assumed debt consideration exceeds $10,000,000.
MATERIAL ADVERSE EFFECT shall mean, relative to any occurrence of whatever
nature (including any adverse determination in any litigation, arbitration or
governmental investigation or proceeding), (a) a material adverse effect on
the financial condition, business, operations, or assets of the Obligors,
taken as a whole, or (b) a material impairment of the ability of the Obligors,
taken as a whole, to perform the obligations of the Obligors under the Loan
Documents or (c) an impairment of the validity or enforceability of any Loan
Document in any manner which materially affects the collective material rights
and/or material benefits intended to be bestowed on the Agent and Lenders
under the Loan Documents.
14
MATERIAL OBLIGOR means each Obligor (other than a Company) which has assets
with a book value of Five Hundred Thousand Dollars ($500,000) or more as of
the date in question or which had revenues of Five Hundred Thousand Dollars
($500,000) or more for the calendar year preceding the date in question;
provided that an intermediate holding company shall not be deemed to be a
Material Obligor unless it has assets other than stock of Subsidiaries or
revenues independent of its Subsidiaries which meet the foregoing criteria.
MAXIMUM LEGAL RATE shall mean the maximum lawful interest rate which may be
contracted for, charged, taken, received or reserved under this Financing
Agreement by the Agent and/or the Lenders in accordance with applicable state
or federal law (whichever provides for the highest permitted rate), taking
into account all items contracted for, charged or received in connection with
the Obligations evidenced hereby which are treated as interest under the
applicable state or federal law, as such rate may change from time to time. To
the extent that any of the optional interest rate ceilings provided in Chapter
303 of the Texas Finance Code (Vernon's Texas Code Annotated), as amended from
time to time (as amended, the "Texas Finance Code"), apply and may be
available for application to any loan(s) or extension(s) of credit evidenced
by this Financing Agreement and/or the Promissory Notes for the purpose of
determining the maximum allowable interest hereunder pursuant to the Texas
Finance Code, the applicable "weekly ceiling" with respect to LIBOR Loans (as
such term is defined in Section 303.003 of the Texas Finance Code) from time
to time in effect; provided, however, that at any time the "Weekly" ceiling
shall be less that 18% or more than 24% per annum, the provisions of section
303.009 (a) and Section 303.009 (b) of the Texas Finance Code, as amended,
shall control for purposes of such determination, as applicable.
MULTIEMPLOYER PLAN shall mean any plan which is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA) to which each Company or
any ERISA Affiliate contributes or has any obligation or liability to make
contributions, including any withdrawal liability, contingent or otherwise.
NET WORTH shall mean, at any date of determination, an amount equal to (a)
Total Assets minus (b) Total Liabilities, and shall be determined in
accordance with GAAP, on a consistent basis with the latest audited financial
statements of the Companies.
NORTH STAR ACQUISITION means the acquisition of North Star Steel Company's
Tubular Products Division by a Subsidiary of Parent.
OBLIGATIONS shall mean all loans, advances and extensions of credit made or to
be made by the Agent and/or the Lenders to the Companies, or any one of them, or
to others for any of the Companies' account (including, without limitation, all
Revolving Loans and Letter of Credit Guaranties) at the Companies' request or as
otherwise permitted under this Financing Agreement; any and all indebtedness and
obligations which may at any time be owing by the Obligors, or any one of them,
to the Agent and/or the Lenders under any Loan Document, whether now in
existence or incurred by any of the Obligors from time to time hereafter while
still a Subsidiary of Parent; whether secured by pledge, lien upon or security
interest in any of the Obligors' Collateral, assets or property or the assets or
property of any other person, firm, entity or corporation; whether such
indebtedness is absolute or contingent, joint or several, matured or unmatured,
direct or indirect and whether the Obligors, or any one of them, are liable to
the Agent and/or the Lenders for such
15
indebtedness as principal, surety, endorser, guarantor or otherwise.
Obligations shall also include indebtedness or obligations incurred by, or
imposed on, the Agent and/or the Lenders as a result of environmental claims
arising out of any of the Obligors' operations, premises or waste disposal
practices or sites to the extent solely and directly caused by the gross
negligence or willful misconduct of Agent or Lenders; any of the Obligors'
liability to the Agent and the Lenders as maker or endorser of any promissory
note or other instrument for the payment of money if incurred while still a
Subsidiary of Parent; the liability to the Agent and/or the Lenders of any
Obligor under any instrument of guaranty or indemnity if incurred while such
Obligor is still a Subsidiary of Parent, or arising under any guaranty,
endorsement or undertaking which the Agent and/or the Lenders may make or
issue to others for the account of any Obligors if incurred while such Obligor
is still a Subsidiary of Parent, including any accommodation extended with
respect to applications for Letters of Credit, the Agent's acceptance of
drafts or the Agent's endorsement of notes or other instruments for the
Companies' account and benefit.
OBLIGOR shall mean each Company and each Guarantor, and OBLIGORS shall mean,
collectively, all of the Companies and all of the Guarantors.
OPERATING LEASES shall mean all leases of property (whether real, personal or
mixed) other than Capital Leases.
OTHER COLLATERAL shall mean all of the Obligors' now owned and hereafter
acquired lockbox, blocked account and any other deposit accounts maintained
with any bank or financial institutions into which the proceeds of Collateral
are or may be deposited and all other deposit accounts; all Investment
Property (including, without limitation, the Pledged Stock), provided that
only 65% of the Capital Stock and none of the assets of Foreign Subsidiaries
will be included as Other Collateral; all cash and other monies and property
in the possession or control of the Agent and/or the Lenders; all books,
records, ledger cards, disks and related data processing software at any time
evidencing or containing information relating to any of the Collateral
described herein or otherwise necessary or helpful in the collection thereof
or realization thereon; all investment property, and all cash and non-cash
proceeds of the foregoing.
OUT-OF-POCKET EXPENSES shall mean all of the Agent's (and the Lenders upon the
occurrence and during the continuance of an Event of Default which is not
waived by the Required Lenders), reasonable, reasonably documented, present
and future expenses incurred relative to this Financing Agreement or any other
Loan Documents, whether incurred heretofore or hereafter, which expenses shall
include, without being limited to: the cost of record searches, all costs and
expenses incurred by the Agent in opening bank accounts, depositing checks,
receiving and transferring funds, and wire transfer charges, any charges
imposed on the Agent due to returned items and "insufficient funds" of
deposited checks and the Agent's standard fee relating thereto, any amounts
paid by the Agent, incurred by or charged to the Agent and/or the Lenders by
the Issuing Bank under the Letter of Credit Guaranty or any of the Companies'
reimbursement agreement, application for Letter of Credit or other like
document which pertains either directly or indirectly to such Letters of
Credit, travel, lodging and similar expenses of the Agent's personnel in
inspecting and monitoring the Collateral from time to time hereunder, any
applicable counsel fees and disbursements, fees and taxes relative to the
filing of financing statements, and all expenses, costs and fees set forth in
Paragraph 10.3 of Section 10 of this Financing Agreement.
16
PATENTS shall mean all of the Obligors' present and hereafter acquired
patents, patent applications, registrations, any reissues or renewals thereof,
licenses, any inventions and improvements claimed thereunder, and all general
intangible, intellectual property and patent rights with respect thereto of
the Obligors and all income, royalties, cash and non-cash proceeds thereof.
PERMITTED ACQUISITION shall mean (a) an Acquisition of 90% or more of the
Capital Stock of a Person, or all or a part of the assets of, or all or a part
of a division of a Person, if the Person, assets and/or division acquired are
engaged primarily in a Qualified Business that meets the conditions precedent
and other criteria for an Acquisition Facility Loan set forth in Section 4 of
this Agreement (whether or not the proceeds of any Acquisition Facility Loan
will be used in connection with such Acquisition), (b) the creation of one or
more Domestic Subsidiaries engaged in a Qualified Business as long as any such
new Domestic Subsidiary other than a Designated Subsidiary executes such
documentation as if such Subsidiary was a Domestic Acquisition as required by
Paragraph 4.5 of Section 4 hereof, (c) the creation of a Foreign Subsidiary
engaged in a Qualified Business, and (d) the North Star Acquisition as long as
(i) the purchase price (excluding assumed debt consideration) does not exceed
$430,000,000 and the assumed debt consideration does not exceed $35,000,000,
and (ii) the terms of such sale are otherwise substantially similar to the
terms set forth in the Purchase and Sale Agreement dated August 16, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ Star Steel Company, Universal Tubular Services, Inc.,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ and Star Seamless, Inc.; PROVIDED, HOWEVER, no more than
$10,000,000 in the aggregate of cash (whether as equity or loans), assumed
debt and assets may be used to invest in any Foreign Acquisitions, Foreign
Subsidiaries or Designated Subsidiaries during any Fiscal Year.
PERMITTED BRIDGE FINANCING means financing in an amount up to $150,000,0000 to
be used to consummate the North Star Acquisition which (i) is substantially
similar to the Senior Subordinated Debt and the Senior Subordinated Notes
Indenture existing as of the date hereof, (ii) has a maturity of at least 18
months from the closing thereof, (iii) is subject to a Subordination
Agreement, (iv) is unsecured, and (v) is otherwise reasonably satisfactory to
Agent.
PERMITTED ENCUMBRANCES shall mean: (a) liens existing on the date hereof on
specific items of Equipment and listed on Schedule 1 hereto and other liens
expressly permitted, or consented to in writing by the Agent and/or the
Required Lenders; (b) Purchase Money Liens; (c) liens of local or state
authorities for franchise or other like taxes, provided that the aggregate
amounts of such liens shall not exceed $250,000.00 in the aggregate at any one
time; (d) statutory and contractual liens of landlords and of mortgagees of
landlords and liens of carriers, warehousemen, mechanics, materialmen and
other like liens imposed by law or otherwise, created in the ordinary course
of business and for amounts not yet due (or which are being disputed or
contested in good faith, by appropriate proceedings or other appropriate
actions which are sufficient to prevent imminent foreclosure of such liens)
and with respect to which adequate reserves or other appropriate provisions
are being maintained by each of the Obligors, as applicable, in accordance
with GAAP; (e) deposits made (and the liens thereon) in the ordinary course of
business of any of the Obligors (including, without limitation, security
deposits for leases, indemnity bonds, surety bonds and performance and appeal
bonds and letters of credit serving such purposes) in connection with workers'
compensation, unemployment insurance and other types of social security
benefits or to secure the performance of tenders, bids, contracts (other than
for the repayment or guarantee of borrowed money or purchase
17
money obligations), statutory obligations and other similar obligations; (f)
easements (including, without limitation, reciprocal easement agreements and
utility agreements), zoning restrictions, encroachments, minor defects or
irregularities in title, variation and other restrictions, charges or
encumbrances (whether or not recorded) affecting the Real Estate, if
applicable, and which in the aggregate (A) do not materially interfere with
the occupation, use or enjoyment by the Obligors in their business of the
property so encumbered and (B) in the reasonable business judgment of the
Agent do not materially and adversely affect the value of such Real Estate;
and (g) liens granted the Agent by the Obligors or any one of them; (h) liens
of judgment creditors provided such liens do not exceed, in the aggregate, at
any time, $250,000.00 (other than liens bonded or insured to the reasonable
satisfaction of the Agent); (i) liens for taxes not yet due and payable; (j)
liens for taxes which are being diligently disputed or contested in good faith
by the Obligors by appropriate proceedings and which liens are not (y) senior
to the liens of the Agent or (z) for taxes due the United States of America or
any state thereof having similar priority statutes, as further set forth in
paragraph 7.6 hereof; (k) without duplication of any of the foregoing,
statutory, common law and contractual warranty claims in favor of purchasers
of the Obligors' Inventory; and (l) liens on assets acquired in a Permitted
Acquisition that secure only indebtedness permitted to be assumed in such
Permitted Acquisition.
PERMITTED FINANCIAL INVESTMENTS means the following kinds of investments:
(a) investments in certificates of deposit in United States
dollars maturing within one year from the date of issuance thereof, and
overnight investments, (i) issued by a bank or trust organized under the laws
of the United States or any state thereof, having capital, surplus and
undivided profits aggregating at least $500,000,000, or (ii) which are fully
insured by the Federal Deposit Insurance Corporation;
(b) commercial paper maturing in one year or less from the
date of issuance and which is, at the time of acquisition thereof, rated A-1
or better by Standard & Poor's Rating Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. or P-1 or better by ▇▇▇▇▇'▇ Investors Service, Inc.;
(c) debt instruments of a domestic issuer which matures in
one year or less and which are, at the time of acquisition thereof, rated A-1
or better by Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. of P-1 or better by ▇▇▇▇▇'▇ Investors Service, Inc.;
(d) marketable direct obligations issued or unconditionally
guaranteed by the United States government or issued by any agency thereof and
backed by the full faith and credit of the United States, as the case may be,
in each case maturing no later than one year from the date of acquisition;
(e) money market, mutual or similar funds that invest in
obligations referred to in CLAUSES (a) through (d) of this definition, in each
case having assets in excess of $500,000,000;
(f) demand deposit accounts which are maintained in the
ordinary course of business; and
18
(g) Repurchase obligations of any Qualified Commercial Bank
with a term of not more than seven days for underlying securities of the types
described in subparagraphs (a), (b), (c), and (d) above.
PERMITTED INDEBTEDNESS shall mean: (a) current Indebtedness maturing in less
than one year and incurred in the ordinary course of business for raw
materials, supplies, equipment, services, taxes or labor; (b) the indebtedness
secured by Purchase Money Liens; (c) Subordinated Debt; (d) indebtedness
arising under the Letters of Credit and this Financing Agreement; (e) deferred
taxes and other expenses incurred in the ordinary course of business; (f)
Permitted Refinancings; (g) Permitted Intercompany Balances; and (h) other
indebtedness existing on the date of execution of this Financing Agreement and
listed in the most recent financial statement delivered to the Agent and/or
the Lenders or otherwise disclosed to the Agent and/or the Lenders in writing
prior to the Closing Date.
PERMITTED INTERCOMPANY BALANCES means loans, advances, dividends,
distributions inter-company accounts, transfers and investments (including,
but not limited to, loans made pursuant to the concentrated cash management
system for collections of accounts receivable or disbursements to trade
creditors) by any Obligor in, with or to any other Obligor; PROVIDED that the
Company Group of which such lender and borrower (or transferor and transferee,
as the case may be) is a part is Solvent immediately before and after giving
effect thereto.
PERMITTED MERGER shall mean (a) the merger or consolidation of any Guarantor
with or into any other Guarantor, (b) the merger or consolidation of any
Guarantor with or into any Company as long as such Company is the surviving
Person, (c) the merger or consolidation of a Company into another Company, and
(d) conversion of an Obligor into a different type of entity.
PERMITTED REFINANCING means a refinancing of any Indebtedness otherwise
permitted hereunder (either with the same payees or different financing
sources), including a restructure or restatement of such existing Indebtedness
or a new loan to repay such existing Indebtedness, so long as (a) the terms of
the refinanced Indebtedness are not materially more favorable to the payee(s)
and are not less favorable to the Lenders than the existing Indebtedness which
was refinanced, (b) no Default or Event of Default will exist immediately
after the completion of such refinancing, and (c) if the Indebtedness being
refinanced is subordinated in right of payment to the Obligations, such
refinancing Indebtedness is subordinated in right of payment to the
Obligations at least to the same extent as the Indebtedness being refinanced.
PERSON shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company or partnership, association, trust or
other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
PLAN shall mean any employee pension benefit plan (as defined in Section 3(2)
of ERISA), subject to Title IV of ERISA or Section 412 of the Internal Revenue
Code of 1986, as amended, other than a Multiemployer Plan, with respect to
which Parent, its Subsidiaries or an ERISA Affiliate contributes or has an
obligation or liability to contribute, including any such plan that may have
been terminated.
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PLEDGED STOCK shall mean the Capital Stock of LSSC, FTI and the Guarantors
pledged as Collateral for the Obligations.
PURCHASE MONEY LIENS shall mean liens on any item of equipment acquired after
the date of this Financing Agreement provided that (a) each such lien shall
attach only to the property to be acquired, and additions and accessions
thereto, (b) a description of the property so acquired is furnished to the
Agent, and (c) the debt incurred in connection with such acquisitions shall
not exceed in the aggregate $5,000,000.00 in any Fiscal Year.
QUALIFIED BUSINESS means any business that derives a majority of its revenues
from one or more of the types of businesses engaged in by the Companies on the
date of this Financing Agreement, and any business reasonably related thereto.
QUALIFIED COMMERCIAL BANK means a domestic commercial bank or other domestic
financial institution having a combined capital and surplus of at least Five
Hundred Million Dollars ($500,000,000).
RACK TRANSFER SALES shall mean those certain sales of Inventory by the
Companies to their customers which are evidenced by invoices on regular terms
and although title thereto has transferred to such customers, the Companies
are requested by such customers to store such inventory at the bonded
warehouse of T & N Warehouse or at another bonded location other than
customers' premises.
REAL ESTATE shall mean the Obligors' fee and/or leasehold interests in the
real property.
REQUIRED LENDERS shall mean the Lenders holding aggregate commitments under
this Financing Agreement in an amount of 66 2/3% or more.
RESTRICTED PAYMENT means (a) any dividend or other distribution, direct or
indirect, on account of any shares of any class of Capital Stock of any of the
Obligors now or hereafter outstanding, and (b) any redemption, retirement,
purchase or other acquisition, direct or indirect, of any shares of any class
of Capital Stock of any of the Obligors, now or hereafter outstanding, or of
any warrants, rights or options to acquire any such shares, except to the
extent that the consideration therefor consists of shares of Capital Stock
(including warrants, rights or options relating thereto) of the Parent.
REVOLVING LINE OF CREDIT shall mean the aggregate commitment of the Lenders to
make loans and advances pursuant to Section 3 of this Financing Agreement and
issue Letters of Credit Guaranties pursuant to Section 5 hereof to the
Companies, in the aggregate amount of $100,000,000.
REVOLVING LOANS shall mean the loans and advances made, from time to time, to
or for the account of the Companies, or any of them, by the Agent on behalf of
the Lenders pursuant to Section 3 of this Financing Agreement.
REVOLVING LOAN ACCOUNT shall have the meaning specified in Paragraph 3.6 of
Section 3 of this Financing Agreement.
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SENIOR DEBT LEVERAGE RATIO shall mean, as to the Companies and their
Subsidiaries, on a consolidated basis, at any date of determination thereof
with respect to the most recently ended Fiscal Quarter, the ratio of (a) Total
Funded Senior Debt outstanding on such date, to (b) EBITDA for the 12 month
period ending with the last day of such Fiscal Quarter.
SENIOR SUBORDINATED DEBT means the indebtedness, obligation and liabilities
arising under (i) the $150,000,000 9% Senior Subordinated Notes issued by
Parent, dated May 29, 2001, due May 2011 (including the guaranties thereof),
(ii) $150,000,000 of Senior Subordinated Notes expected to be issued by Parent
to finance a part of the North Star Acquisition, due not less than eight years
after the date of issuance thereof (including the guaranties thereof) (the
"NORTH STAR SUBORDINATED NOTES") or, in lieu thereof, the Permitted Bridge
Financing, and (iii) the Senior Subordinated Debt Indentures, including,
without limitation, all additional subordinated notes issued under such
indenture or a substantially similar indenture.
SENIOR SUBORDINATED NOTES INDENTURES means (i) that certain Indenture dated as
of May 29, 2001 between Parent and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as Trustee, pursuant to which Parent issued the Senior
Subordinated Debt, and (ii) an Indenture (substantially similar to the May 29,
2001 Indenture) pursuant to which Parent will issue the North Star
Subordinated Notes, as each may be amended, modified and/or supplemented from
time to time.
SETTLEMENT DATE shall mean the date, weekly, and more frequently, at the
discretion of the Agent, upon the occurrence of an Event of Default or a
continuing decline or increase of the Revolving Loans that the Agent and the
Lenders shall settle amongst themselves so that x) the Agent shall not have,
as The Agent, any money at risk and y) on such Settlement Date the Lenders
shall have a pro rata amount of all outstanding Revolving Loans and Letters of
Credit, provided that each Settlement Date for a Lender shall be a Business
Day on which such Lender and its bank are open for business.
SOLVENT shall mean that, with respect to any Person, (i) the fair value of
such Person's assets (including the value of rights of indemnification or
contribution which such Person may have from other Persons) exceeds the fair
value of such Person's liabilities; (ii) such Person is generally able to pay
its debts as they become due and payable; and (iii) such Person does not have
unreasonably small capital to carry on its business as it is currently
conducted absent extraordinary and unforeseen circumstances.
SUBORDINATED DEBT shall mean the Senior Subordinated Debt and any debt due a
Subordinating Creditor (and the note(s) evidencing such) which has been
subordinated, by a Subordination Agreement, to the prior payment and
satisfaction of the Obligations of each of the Obligors to the Agent and the
Lenders (in form and substance reasonably satisfactory to the Agent and the
Required Lenders). Subordination terms and provisions substantially similar to
those contained in the Senior Subordinated Notes Indenture dated May 29, 2001,
shall be deemed to be satisfactory to the Agent and the Lenders.
SUBORDINATING CREDITOR shall mean the holders of the Senior Subordinated Debt
and any party hereafter executing a Subordination Agreement.
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SUBORDINATION AGREEMENT shall mean (a) any agreement among the Obligors, a
Subordinating Creditor and the Agent, or (b) any agreement among all of the
Obligors, as the Subordinating Creditor, and the Agent, pursuant to which, in
either case, Subordinated Debt is subordinated to the prior payment and
satisfaction of all of the Obligations to the Agent and the Lenders (the
"INTERCOMPANY SUBORDINATION AGREEMENT"), in form and substance satisfactory
to the Agent. Except with respect to the Intercompany Subordination
Agreement, subordination terms and provisions substantially similar to those
contained in the Senior Subordinated Notes Indenture dated May 29, 2001,
shall be deemed to be satisfactory to the Agent and the Lenders.
SUBSIDIARY shall mean any corporation or other entity of which a Person owns,
directly or indirectly, through one or more intermediaries, more than 50% of
the Capital Stock at the time of determination.
TARGET shall have the meaning assigned to such term in SECTION 4 of this
Agreement.
TOTAL ASSETS shall mean total assets determined in accordance with GAAP, on a
basis consistent with the latest audited financial statements of the
Companies.
TOTAL FUNDED DEBT shall mean, as to the Companies and their Subsidiaries on a
consolidated basis at any time without duplication, the sum of (a) all
Indebtedness for borrowed money (including the aggregate undrawn amount of
all outstanding Letters of Credit), (b) all obligations evidenced by bonds,
debentures, notes, or other similar instruments, (c) all Capitalized Lease
Obligations, (d) all guaranties of Indebtedness (without regard to maturity)
of other persons, and (e) all other Indebtedness which by its terms or by the
terms of any instrument or agreement relating thereto matures, or which is
otherwise payable or unpaid, one year or more from or is directly renewable
or extendable at the option of the obligor in respect thereof to a date one
year or more (including an option of such obligor under a revolving credit or
similar agreement obligating the lender or lenders to extend credit over a
period of one year or more) from, the date of creation thereof.
TOTAL FUNDED SENIOR DEBT shall mean, as to the Companies and their
Subsidiaries on a consolidated basis at any time without duplication, Total
Funded Debt less Subordinated Debt.
TOTAL LEVERAGE RATIO shall mean, as to the Companies and their Subsidiaries,
on a consolidated basis, at any date of determination thereof with respect to
the most recently ended Fiscal Quarter, the ratio of (a) Total Funded Debt
outstanding on such date, to (b) EBITDA for the 12 month period ending with
the last day of such Fiscal Quarter.
TOTAL LIABILITIES shall mean total liabilities determined in accordance with
GAAP, on a basis consistent with the latest audited financial statements of
the Companies.
TRADE ACCOUNTS RECEIVABLE shall mean that portion of each of the Companies'
Accounts which arises from the sale of Inventory or the rendition of services
in the ordinary course of the Companies' business.
TRADEMARKS shall mean all of the Obligors' present and hereafter acquired
trademarks, trademark registrations, recordings, applications, tradenames,
trade styles, service marks, prints and labels (on
22
which any of the foregoing may appear), licenses, reissues, renewals, general
intangibles, and intellectual property and trademark rights pertaining to any
of the foregoing, together with the goodwill associated therewith, and all
cash, income, royalties, and non-cash proceeds thereof.
UCC shall mean the Uniform Commercial Code as in effect from time to time in
the state of New York.
WORKING DAY shall mean any Business Day on which dealings in foreign
currencies and exchange between banks may be carried on in the place where
the Agent's LIBOR Lending Office is located in New York, New York.
SECTION 2. CONDITIONS PRECEDENT
2.1 The obligation of the Agent and the Lenders to make the initial
loans hereunder is subject to the satisfaction of, or waiver of, immediately
prior to or concurrently with the making of such loans, the following
conditions precedent:
(a) LIEN SEARCHES - The Agent shall have received tax, judgment and
Uniform Commercial Code searches satisfactory to the Agent in each Obligor's
state of formation and for all locations presently occupied or used by the
Obligors.
(b) CASUALTY INSURANCE - Each of the Obligors shall have delivered
to the Agent evidence satisfactory to the Agent that casualty insurance
policies listing the Agent on behalf of the Lenders as loss payee or
mortgagee, as the case may be, are in full force and effect, all as set forth
in Paragraph 7.5 of Section 7 of this Financing Agreement.
(c) UCC FILINGS - Any documents (including without limitation,
financing statements) required to be filed in order to create, in favor of
the Agent on behalf of the Lenders, a first perfected security interest in
the Collateral with respect to which a security interest may be perfected by
a filing under the UCC shall have been properly filed in each office in each
jurisdiction required in order to create in favor of the Agent a perfected
lien on the Collateral. The Agent shall have received acknowledgment copies
of all such filings (or, in lieu thereof, the Agent shall have received other
evidence satisfactory to the Agent that all such filings have been made); and
the Agent shall have received evidence that all necessary filing fees and all
taxes or other expenses related to such filings have been paid in full.
(d) BOARD RESOLUTION - The Agent shall have received a copy of the
resolutions of the Board of Directors of each of the Companies and the
Guarantors (as the case may be) authorizing the execution, delivery and
performance of (i) this Financing Agreement, (ii) the Guaranties, and (iii)
any related agreements, in each case certified by the Secretary or Assistant
Secretary of each of the Companies and the Guarantors (as the case may be) as
of the date hereof, together with a certificate of the Secretary or Assistant
Secretary of each of the Companies and the Guarantors (as the case may be) as
to the incumbency and signature of the officers of the Companies and/or the
Guarantors executing such Loan Documents and any certificate or other
documents to be delivered by them pursuant hereto, together with evidence of
the incumbency of such Secretary or Assistant Secretary.
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(e) CORPORATE ORGANIZATION - The Agent shall have received (i) a
copy of the Certificate of Incorporation of each of the Companies and the
Guarantors certified by the Secretary of State of its incorporation, and (ii)
a copy of the By-Laws of each of the Companies and the Guarantors certified
by the Secretary or Assistant Secretary thereof, all as amended through the
date hereof.
(f) OFFICER'S CERTIFICATE - The Agent shall have received an
executed Officer's Certificate of each of the Companies, satisfactory in form
and substance to the Agent, certifying that (i) the representations and
warranties contained herein are true and correct in all material respects on
and as of the date hereof; (ii) each of the Companies is in compliance with
all of the terms and provisions set forth herein; and (iii) no Default or
Event of Default has occurred and is continuing.
(g) OPINIONS - Counsel for the Companies and the Guarantors shall
have delivered to the Agent on behalf of the Lenders opinions satisfactory to
the Agent opining to such matters incident to the transactions covered by
this Financing Agreement and the other Loan Documents as Agent may require
and the Companies and Guarantors authorize and direct such counsel to deliver
such opinions to Agent.
(h) ABSENCE OF DEFAULT - No Default, Event of Default shall have
occurred and be continuing and no material adverse change shall have occurred
in the financial condition, business, prospects, profits, operations or
assets of the Companies taken as a whole.
(i) LEGAL RESTRAINTS/LITIGATION - As of the Closing Date, there
shall be no x) litigation, investigation or proceeding (judicial or
administrative) pending or threatened against any of the Companies or the
Guarantors or their assets, by any agency, division or department of any
county, city, state or federal government arising out of this Financing
Agreement, y) injunction, writ or restraining order restraining or
prohibiting the financing arrangements contemplated under this Financing
Agreement or z) to the best knowledge of the Companies, suit, action,
investigation or proceeding (judicial or administrative) pending or
threatened against the Parent, any of the Companies or the Guarantors or
their assets, which, in the reasonable opinion of the Agent, if adversely
determined could reasonably be expected to have a material adverse effect on
the business, operation, assets, financial condition or Collateral of the
Parent, or the Companies taken as a whole.
(j) GUARANTIES - The Guarantors shall have executed and delivered to
the Agent, Guaranties, in form acceptable to the Agent, guaranteeing all
present and future obligations of the Companies to the Agent and the Lenders.
(k) SUBORDINATION AGREEMENT - The Subordinating Creditors (other
than the holders of the Senior Subordinated Debt), which shall include each
Obligor in one Subordination Agreement, shall have executed and delivered to
the Agent on behalf of the Lenders a Subordination Agreement subordinating
the Subordinated Debt due the Subordinated Creditor by any Obligor to the
prior payment and satisfaction of the Obligations to the Agent and the
Lenders.
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(l) CASH BUDGET PROJECTIONS - The Agent shall have received,
reviewed and be satisfied with a 12 month financial plan and cash budget
projection prepared by the Companies in the form provided by the Agent.
(m) PLEDGE AGREEMENT - The Obligors shall (i) execute and deliver to
the Agent on behalf of the Lenders a pledge and security agreement pledging
to the Agent on behalf of the Lenders as additional collateral for the
Obligations of the Companies not less than 100% of the issued and outstanding
Capital Stock of each of the Obligors (excluding Parent) and (ii) deliver to
the Agent on behalf of the Lenders the stock certificates evidencing such
stock together with duly executed stock powers (undated and in-blank) with
respect thereto.
(n) INTELLECTUAL PROPERTY SECURITY AGREEMENTS - Each Obligor which
owns Patents or Trademarks will execute and deliver to Agent on behalf of the
Lenders a Patent and Trademark Security Agreement pledging to the Agent on
behalf of the Lenders as Collateral for the Obligations all of the Patents
and Trademarks owned by each such Obligor, all in form and substance
satisfactory to Agent.
(o) ADDITIONAL DOCUMENTS - Each of the Obligors shall have executed
and delivered to the Agent all Loan Documents necessary to consummate the
lending arrangement contemplated between the Obligors, the Agent and the
Lenders.
(p) DISBURSEMENT AUTHORIZATION - The Companies shall have delivered
to the Agent all information necessary for the Agent and the Lenders to issue
wire transfer instructions on behalf of the Companies for the initial and
subsequent loans and/or advances to be made under this Financing Agreement
including, but not limited to, disbursement authorizations in form acceptable
to the Agent.
(q) EXAMINATION & VERIFICATION - The Agent and the Lenders shall
have completed to the satisfaction of the Agent and the Lenders an
examination and verification of the Accounts, Inventory, books and records of
the Companies and the Guarantors, and which examination shall indicate that,
after giving effect to all Revolving Loans advances and extensions of credit
to be made at closing, the Companies shall have an opening additional
Availability of at least $100,000,000, as evidenced by a borrowing base
certificate delivered by the Companies to the Agent as of a date not more
than ten (10) days before the Closing Date, all as more fully required by the
Agent's Commitment Letter. It is understood that such requirement
contemplates that all debts and obligations are current except to the extent
being contested or disputed in good faith, and that all payables are being
handled in the normal course of each of the Companies' business and
consistent with its past practice.
(r) DEPOSITORY ACCOUNTS - Each of the Companies shall have
established a system of lockbox and bank accounts with respect to the
collection of Accounts and the deposit of proceeds of Inventory as shall be
reasonably acceptable to the Agent in accordance with Agent's customary
practices. Such accounts shall be subject to three party agreements (between
the Companies, the Agent and the depository bank), which shall be in form and
substance satisfactory to the Agent.
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(s) EXISTING REVOLVING CREDIT AGREEMENT - FTI's existing credit
agreement with Bank of America, NA (the "Existing Lender") shall be (x)
terminated, (y) all loans and obligations of each of the Companies and/or the
Guarantors thereunder shall be refinanced and paid or satisfied in full,
including thorough utilization of the proceeds of the initial Revolving Loans
to be made under this Financing Agreement and (z) all liens upon or security
interests in favor of the Existing Lender on the Collateral and otherwise in
connection therewith shall be terminated and/or released upon such payment.
2.2 CONDITIONS TO EACH REQUEST FOR EXTENSION OF CREDIT
Except to the extent expressly set forth in this Financing
Agreement, the Companies on any date (including without limitation, the
initial extension of credit) on which they request any loan or extension of
credit hereunder make the following representations and warranties:
a) REPRESENTATIONS AND WARRANTIES - Each of the representations and
warranties made by each of the Obligors in or pursuant to this Financing
Agreement shall be true and correct in all material respects on and as of
such date as if made on and as of such date (except to the extent such
representations and warranties relate solely to an earlier date).
b) NO DEFAULT - No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extension of
credit requested to be made on such date.
c) BORROWING BASE - Except as may be otherwise agreed to from time
to time by the Agent and/or the Required Lenders and the Companies or any one
of them in writing, after giving effect to the extension of credit requested
to be made by any of the Companies on such date, (a) the aggregate
outstanding balance of the Revolving Loans and outstanding Letters of Credit
owing by all of the Companies will not exceed the Revolving Line of Credit,
and the (b) the aggregate outstanding balance of the Revolving Loans and
outstanding Letters of Credit owing solely by such Company shall not exceed
such Company's Borrowing Base.
d) ADDITIONAL MATTERS - All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Financing Agreement and the other Loan
Documents shall be reasonably satisfactory in form and substance to the Agent
and/or the Required Lenders and (to the extent that such proceedings
documents, instruments and other matters relate to the Collateral or the
Agent) the Agent shall have received such other documents and legal opinions
in respect of any aspect or consequence of the transactions contemplated
hereby or thereby, as the Agent shall reasonably request.
Each borrowing by the Companies hereunder shall constitute a representation
and warranty by each of the Companies as of the date of such loan or advance
that each of the representations, warranties and covenants contained in the
Financing Agreement has been satisfied and is true and correct in all
material respects, except as the Companies and the Agent and/or the Required
Lenders shall otherwise agree herein or in a separate writing (except to the
extent such representations and warranties relate solely to an earlier date).
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SECTION 3. REVOLVING LOANS
3.1 (a) The Lenders agree, subject to the terms and conditions of
this Financing Agreement from time to time, and within the Availability but
subject to the Agent's and the Lenders' rights to make "Overadvances", as
further set forth in this Financing Agreement, to make loans and advances to
each Company on a revolving basis (i.e. subject to the limitations set forth
herein, each of the Companies may borrow, repay and re-borrow Revolving
Loans). Such outstanding loans and advances and the outstanding Letters of
Credit for each Company shall not exceed such Company's Borrowing Base. Such
outstanding loans and advances and outstanding Letters of Credit for all of
the Companies shall not in the aggregate exceed the Revolving Line of Credit.
Each request for an advance shall constitute a representation and warranty by
each Company that (i) after giving effect to the requested advance, no
Default or Event of Default has or will have occurred and be continuing, and
(ii) the proceeds of such Revolving Loan shall be used solely for Permitted
Acquisitions, to refinance current debt or for working capital purposes. All
requests for loans and advances must be received by an officer of the Agent
no later than 1:00 p.m., New York time, of the day on which such loans and
advances are required. Should the Agent for any reason honor requests for
advances in excess of the limitations set forth herein, such advances shall
be considered "Overadvances" and shall be made in the Agent's sole
discretion, subject to any additional terms the Agent deems necessary.
(b) (i) Whenever the Companies desire the Agent, on behalf of the
Lenders, to make a Revolving Loan pursuant to this Section 3, it shall give
the Agent notice in writing or irrevocable telephonic notice confirmed
promptly in writing, specifying (A) the amount to be borrowed, and (B) the
requested borrowing date (which shall be a Business Day and shall be prior
to: the Anniversary Date, and if applicable, any Early Termination Date, or
prior to any effective termination date of this Financing Agreement, all as
further set forth herein), and (C) specify whether the requested Revolving
Loan shall bear interest at the Chase Bank Rate or at the LIBO Rate, as
further set forth herein. All requests for loans and advances must be
received by an officer of the Agent no later than 1:00 P.M. New York time on
any borrowing date. The procedure for Revolving Loans to be made on a
requested borrowing date may be such other procedure as is mutually
satisfactory to the Companies, the Agent and the Lenders. The Agent shall
make loans and advances to the Depository Account (as hereinafter defined) of
the Companies.
(ii) Subject to Paragraph 14.10 of Section 14 hereof, should the
Agent, on behalf of the Lenders, for any reason honor requests for advances
in excess of the limitations set forth herein, such advances shall be
considered "Overadvances" and shall be made in the Agent's sole discretion,
subject to any additional terms the Agent or the Required Lenders deem
necessary. Requests for loans and advances shall be made solely by the
Companies and shall be directed solely to the Agent.
(c) The Agent shall on any Settlement Date, and upon notice given by
the Agent no later than 2:00 P.M. New York time, request each Lender to make,
and each Lender hereby agrees to make, a Revolving Loan in an amount equal to
such Lender's Revolving Credit Commitment percentage (calculated with respect
to the aggregate Revolving Credit Commitments then outstanding) of the
aggregate amount of the Revolving Loans made by the Agent from the preceding
Settlement Date to the date of such notice. Each Lender's obligation to make
the Revolving Loans referred to in
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subsection (a) and to make the settlements pursuant to this subsection (c)
shall be absolute and unconditional and shall not be affected by any
circumstance, including without limitation (i) any set-off, counterclaim,
recoupment, defense or other right which any such Lender or the Companies may
have against the Agent, the Companies, any other Lender or any other person
for any reason whatsoever; (ii) the occurrence or continuance of a Default or
an Event of Default; (iii) any adverse change in the condition (financial or
otherwise) of the Companies; (iv) any breach of this Financing Agreement or
any other loan document by the Companies or any other Lender; or (v) any
other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing. Without limiting the liability and obligation of each
Lender to make such advances, the Companies authorize the Agent to charge the
Companies' account with the Agent to the extent amounts received from the
Lenders are not sufficient to repay in full the amount of any such deficiency.
3.2 Each Company will deliver on a monthly basis to the Agent, in
such form and manner as the Agent may reasonably require, schedules of
Accounts and Inventory designating, identifying and describing the Accounts
and Inventory of such Company. Subsequent to the occurrence of an Event of
Default, the Agent shall be entitled to request and receive more frequent
reporting as to Accounts and/or Inventory. In addition, upon the Agent's
prior reasonable request, each of the Companies shall make available for
review and copying by the Agent copies of agreements with, or purchase orders
from, the Companies' customers, and copies of invoices to customers, proof of
shipment or delivery and such other documentation and information relating to
said Accounts and other collateral as the Agent may reasonably require.
Failure to provide the Agent with any of the foregoing shall in no way
affect, diminish, modify or otherwise limit the security interests granted
herein. Each of the Companies hereby authorizes the Agent to regard the
Companies' printed name or rubber stamp signature on assignment schedules or
invoices as the equivalent of a manual signature by one of the Companies'
authorized officers or agents.
3.3 Each of the Companies hereby represents and warrants that: each
Trade Account Receivable that constitutes an Eligible Account is based on an
actual and bona fide sale and delivery of goods or rendition of services to
their respective customers, made by the Companies in the ordinary course of
their business; the goods and Inventory being sold and the Trade Accounts
Receivable created are the exclusive property of the Companies and are not
and shall not be subject to any lien, consignment arrangement, encumbrance,
security interest or financing statement whatsoever, other than the Permitted
Encumbrances; the invoices evidencing such Trade Accounts Receivable are in
the name of the respective Companies; and the customers of such Companies
have accepted the goods or services, owe and are obligated to pay the full
amounts stated in the invoices according to their terms, without dispute,
offset, defense, counterclaim or contra, except for disputes and other
matters arising in the ordinary course of business with respect to which the
Companies have complied with the notification requirements of Paragraph 3.5
of Section 3 of this Financing Agreement. Subject to Paragraph 7.6 of Section
7 hereof, each of the Companies confirms to the Agent that any and all taxes
or fees relating to its business, its sales, the Accounts or goods relating
thereto, are its sole responsibility and that same will be paid by such
Company when due and that none of said taxes or fees represent a lien on or
claim against the Accounts. Each of the Companies hereby further represents
and warrants that each such Company owns its Inventory free and clear of any
security interest, encumbrances, liens or financing statements whatsoever
other than Permitted Encumbrances, and if it acquires any Inventory on a
consignment basis it shall so notify the Agent in writing on its monthly
Inventory statement and as further required by the Agent from time to time
28
with respect thereto, nor, except for Rack Transfer Sales, co-mingle its
Inventory with any of its customers or any other person, including pursuant
to any ▇▇▇▇ and hold sale, consignment Inventory, or otherwise, and that its
Inventory is marketable to its customers in the ordinary course of its
business, except as it may otherwise report in writing to the Agent pursuant
to Paragraph 3.5 of Section 3 hereof from time to time. Each of the Companies
also warrants and represents that it is a duly and validly existing
corporation and is qualified in all states where the failure to so qualify
would have a Material Adverse Effect, provided that the Agent may exclude
from Eligible Accounts Receivable any Accounts due from customers residing in
any state where such Company's failure to so qualify would adversely affect
the Company's ability to enforce collection of such Account. Each of the
Companies agrees to maintain such books and records regarding Accounts and
Inventory as the Agent may reasonably require. All of the books and records
of the Companies will be available to the Agent at normal business hours,
including any records handled or maintained for any of the Companies by any
other Company or entity, upon reasonable prior notice or at any time upon the
occurrence of a Default or Event of Default.
3.4 Until the Agent has advised the Companies to the contrary after
the occurrence of an Event of Default, each of the Companies may and will
enforce, collect and receive all amounts owing on the Accounts for the
Agent's and Lenders' benefit and on the Agent's behalf, but at the Companies'
joint and several expense; such privilege shall terminate automatically upon
the institution by or against any of the Companies of any proceeding under
any bankruptcy or insolvency law (unless such proceeding is involuntary and
stayed by the applicable Company within thirty (30) days and the Agent
consents thereto) or, at the election of the Agent, upon the occurrence of
any other Event of Default and until such Event of Default is waived in
writing by the Required Lenders or cured to the Required Lenders'
satisfaction. Any checks, cash, credit card sales and receipts, notes or
other instruments or property received by the Companies with respect to any
Accounts shall be held by each of the Companies in trust for the Agent, on
behalf of the Lenders, separate from the Companies' own property and funds,
and immediately turned over to the Agent with proper assignments or
endorsements by deposit to the special depository accounts in the Agent's
name (whether lockbox accounts or otherwise) designated by the Agent for such
purposes (the "DEPOSITORY ACCOUNTS"). Each of the Companies shall: (i) direct
all of its account debtors to deposit any and all proceeds of Collateral into
the Depository Accounts; (ii) irrevocably authorize and direct any banks
which maintain the Companies' initial receipt of cash, checks and other items
to promptly wire transfer all available funds to a Depository Account; (iii)
advise all such banks of the Agent's security interest in such funds; and
(iv) indicate on all of its invoices that funds should be delivered to and
deposited in a Depository Account. The Companies shall provide the Agent with
written notice of any and all deposit accounts opened or to be opened
subsequent to the Closing Date within ten (10) days after any such opening.
All amounts received by the Agent in payment of Accounts will be credited to
such Company's Revolving Loan Account (as further set forth in Paragraph 3.6
of Section 3 below) upon the Agent's receipt of "collected funds" at the
Agent's bank account in New York, New York on the Business Day of receipt if
received no later than 1:00 p.m. New York time or on the next succeeding
Business Day if received after 1:00 PM New York time. No checks, drafts or
other instrument received by the Agent shall constitute final payment to the
Agent and/or the Lenders unless and until such instruments have actually been
collected. If any Company's Revolving Loan Account reflects a zero Loan
balance for fifteen consecutive business days and there is then no Default or
Event of Default and the outstanding Letters of Credit do not exceed
Availability for such Company, then the Agent shall upon the written request
of such
29
Company instruct the banks in which Depository Accounts are maintained to
remit to such Company's operating account or to such other account, as such
Company may designate in the United States of America (other than any payroll
account), any balances in such Depository Accounts; PROVIDED, HOWEVER, that
upon the occurrence of a Default or Event of Default or in the event that at
any time thereafter there is a Revolving Loan balance or the outstanding
Letters of Credit exceed Availability for such Company, the Agent shall have
the right to immediately instruct such banks to begin to remit any balances
in such Depository Accounts directly to the Agent.
3.5 After the occurrence and during the continuance of an Event of
Default, Agent may notify the Companies that all future credits or allowances
are to be made only after the Agent's prior written approval. At the Agent's
election, upon the occurrence of an Event of Default and until such time as
such Event of Default is waived in writing by the Required Lenders or cured
to the Required Lenders' satisfaction, and on notice from the Agent, the
Companies agree that all returned, reclaimed or repossessed merchandise or
goods shall be set aside by the Companies, marked with the Agent's name (as
secured party) and held by the Companies for the Agent's account.
3.6 Revolving Loans shall be made to each Company based on such
Company's respective Borrowing Base; PROVIDED, HOWEVER, for ease of
administration, all Revolving Loans shall be disbursed to an account of
Parent. Parent shall distribute the proceeds of each Revolving Loan to, or
pursuant to the direction of, the applicable Company. The Agent shall
maintain a separate account on its books in such Company name (herein each a
"Revolving Loan Account" and collectively the "Revolving Loan Accounts") in
which each Company will be charged with loans and advances made by the Agent
to them or for their account, and with any other Obligations, including any
and all costs, expenses and reasonable attorney's fees which the Agent may
incur in connection with the exercise by or for the Agent of any of the
rights or powers herein conferred upon the Agent, or in the prosecution or
defense of any action or proceeding to enforce or protect any rights of the
Agent in connection with this Financing Agreement or the Collateral assigned
hereunder, or any Obligations owing to the Agent and the Lenders by such
Company. Each of the Companies will be credited with all amounts received by
the Agent and/or the Lenders from them or from others for their account,
including, as above set forth, all amounts received by the Agent in payment
of assigned Accounts and such amounts will be applied to payment of the
Obligations. In no event shall prior recourse to any Accounts or other
security granted to or by the Companies be a prerequisite to the Agent's
right to demand payment of any Obligation. Further, it is understood that the
Agent and/or the Lenders shall have no obligation whatsoever to perform in
any respect any of the Companies' contracts or obligations relating to the
Accounts.
3.7 After the end of each month, the Agent shall promptly send the
Companies, or such Company as they may designate (as set forth in paragraph
3.6 hereof) a statement showing the accounting for the charges, loans,
advances and other transactions occurring between the Agent and the Companies
during that month. The monthly statements shall be deemed correct and binding
upon the Companies and shall constitute an account stated between the
Companies and the Agent unless the Agent receives a written statement of the
exceptions within thirty (30) days of the date of the monthly statement.
3.8 In the event that any requested advance or Letter of Credit
exceeds Availability or that (a) the sum of (i) the outstanding balance of
Revolving Loans and (ii) outstanding balance of
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Letters of Credit exceeds (b)(x) the Borrowing Base or (y) the Revolving Line
of Credit or (z) the applicable amounts set forth in Sections 3 and 5 hereof
(herein the amount of any such excess shall be referred to as the "Excess")
such Excess shall be due and payable to the Agent on behalf of the Lenders
immediately upon the Agent's demand therefor.
SECTION 4. ACQUISITION FACILITY LOANS AND PERMITTED ACQUISITIONS
4.1 PERMITTED ACQUISITIONS. The Companies shall be permitted
to borrow Revolving Loans for the purpose of consummating Permitted
Acquisitions ("ACQUISITION FACILITY LOANS") subject to the following
conditions:
(a) The aggregate amount of cash (whether cash on hand or
cash provided from Revolving Loans) and assumed debt consideration used to
make a Permitted Acquisition shall not exceed in any Fiscal year the lesser
of (i) $85,000,000, or (ii) an amount equal to the EBITDA for the 12 month
period ending on the last day of the calendar month immediately preceding the
earlier to occur of the funding of the subject Acquisition Loan or the
consummation of the subject Permitted Acquisition; PROVIDED, HOWEVER, in any
Fiscal Year in which the North Star Acquisition is consummated, the aggregate
amount of cash (whether cash on hand or cash provided from Revolving Loans)
and assumed debt consideration used to make Permitted Acquisitions (excluding
such cash and assumed debt used to make the North Star Acquisition) shall not
exceed $15,000,000 and shall not exceed $15,000,000 in any Fiscal Year
thereafter;
(b) If, after giving effect to a Permitted Acquisition, the
aggregate of the Availability and the Companies' cash on hand is or would be
less than $50,000,000, then, except with respect to the North Star
Acquisition, the acquiring Company must receive the prior written approval of
the Agent and the Required Lenders, which approval shall be given or not
given in the reasonable discretion of Agent and the Required Lenders; and
(c) As of the closing of any such Permitted Acquisition, no
Default or Event of Default shall exist or occur as a result of, after giving
effect to, such Acquisition; provided that, if an Obligor enters into a
binding agreement to make a Permitted Acquisition (the "SUBJECT ACQUISITION")
at a time when no Default or Event of Default exists (and, on a pro forma
basis, none would result from the consummation of the Subject Acquisition),
then such Obligor shall be entitled to consummate the Subject Acquisition in
order to avoid material liability to the other parties to the relevant
acquisition documents even though a Default or Event of Default unrelated to
the Subject Acquisition exists at the time of the consummation of the Subject
Acquisition; PROVIDED, HOWEVER, pursuant to Paragraph 10.2 of Section 10
hereof, Lenders shall not be obligated to make any loans or advances
hereunder to consummate the Subject Acquisition.
4.2 ACQUISITION REQUEST. In addition, the Companies' ability to
consummate any Material Acquisition and to borrow Revolving Loans for the
purpose of consummating any Material Acquisition is subject to the Parent
providing to the Agent at least thirty (30) Business Days (except as
otherwise stated below or the context otherwise requires) prior to the
consummation of any Material Acquisition the following:
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(a) (i) in the case of an acquisition of Capital Stock of a
Person or all or substantially all of the assets or a division of a Person,
(A) the name of the Person (the "TARGET") which is to be acquired or whose
assets are to be acquired, and (B) a description of the nature of the
Target's business;
(b) copies of the current drafts of documentation as and
when prepared;
(c) copies of substantially final drafts of such
documentation at least one (1) Business Day prior to the earlier to occur of
(i) the proposed funding date of the Acquisition Facility Loan intended to
effect the proposed acquisition or (ii) the date such proposed acquisition is
expected to be consummated (the "ACQUISITION AGREEMENTS");
(d) a summary of the terms and conditions of the proposed
acquisition;
(e) a certificate of the chief financial officer or chief
executive officer of the Parent dated on or within two (2) days prior to the
earlier to occur of the proposed funding date of the Acquisition Facility
Loan or date such Permitted Acquisition is expected to be consummated
certifying that no Default or Event of Default exists that is continuing or
could reasonably be expected to occur as a result of the proposed Acquisition
(except to the extent the proviso of Subparagraph 4.1(c) of Section 4 hereof
is applicable); and
(f) any other information the Agent may reasonably request
from time to time prior to such funding or date such Permitted Acquisition is
expected to be consummated that is available to Parent.
In addition, at least three (3) Business Days prior to the date such proposed
Material Acquisition is expected to be consummated, the Parent must have been
available to the Agent and the Lenders to answer questions regarding the
proposed acquisition and the documentation related thereto.
4.3 ACQUISITION CRITERIA. In addition, the Companies' ability to
consummate any Permitted Acquisition and to borrow Revolving Loans for the
purpose of consummating any Permitted Acquisition is subject to the Parent
providing the Agent with evidence of the following, as applicable:
(a) Parent has completed due diligence on the Target and
the assets to be acquired, as the case may be, reasonably satisfactory to
Parent, including, without limitation, if applicable, a due diligence
investigation as to the compliance with all Environmental Laws by the Target
and the assets to be acquired;
(b) Target's material business activities are in a
Qualified Business;
(c) Unless the Agent otherwise consents, (i) if the
proposed Acquisition is an acquisition of the Capital Stock of a Target, the
acquisition will be structured so that the Target will become a direct
Subsidiary of one of the Companies, and (ii) if the proposed Acquisition is
an acquisition of assets, one of the Companies or a wholly-owned subsidiary
of one of the Companies shall acquire the assets; PROVIDED, HOWEVER, any
Trade Accounts Receivable or Inventory acquired
32
in connection with any Permitted Acquisition of assets by a Company will not
be considered Eligible Accounts or Eligible Inventory until such time as the
Agent shall have conducted an examination and verification of such Trade
Accounts Receivable and Inventory and the results thereof are reasonably
satisfactory to Agent.
(d) Neither the Target nor its assets nor the acquired
assets, as the case may be, shall be subject to any contingent obligations
(including contingent obligations arising from any environmental
liabilities), environmental liabilities, unsatisfied judgments or any pending
action, charge, claim, demand, suit, proceeding, petition, governmental
investigation or arbitration that (A) the Agent reasonably determines could
be expected to have a Material Adverse Effect, and (B) are not subject to
indemnification or adjustment to acquisition consideration (or taken into
account in the determination of acquisition consideration) or other remedy
reasonably satisfactory to the Agent.
(e) The Parent shall have provided to the Agent each of the
following at least thirty (30) days prior to the closing of any proposed
Material Acquisition: (A) copies of (x) the internally prepared financial
statements of the Target, for the twelve (12) month period prior to the
closing of the proposed Acquisition for which financial statements are
available (which reflect compliance with financial covenants contained in
this Financing Agreement) and (y) audited or reviewed financial statements to
the extent they exist for the two (2) most recently completed fiscal years of
the Target, (B) a pro forma financial projection of the Parent and its
Subsidiaries (including the Target) for the period following the date of the
consummation of the proposed Acquisition through the end of the next
succeeding Fiscal Year which reflects compliance with the financial covenants
set forth in this Financing Agreement, and (C) a business plan containing
such information as the Agent may reasonably request.
4.4 ACQUISITION AGREEMENTS. As soon as practicable following the
earlier to occur of the consummation of the proposed acquisition or the
funding of an Acquisition Facility Loan to be used for the proposed
acquisition: (a) Agent shall have received executed copies of the Acquisition
Agreements relating to the proposed acquisition and shall, in the ordinary
course of business, have forwarded copies thereof to the Lenders; (b) the
Acquisition Agreements shall be in full force and effect and no material term
or condition thereof shall have been materially amended, modified, or waived
after the execution thereof (other than solely to extend the date by which
the proposed acquisition is required to occur) except those for which prior
written notice was provided to Agent; (c) none of the parties to the
Acquisition Agreements shall have failed to substantially perform any
material obligation or covenant required by the Acquisition Agreement to be
performed or complied with by it on or before the date of the closing of the
proposed acquisition unless waived with the consent of the Agent; and (d)
Agent shall have received a certificate from the acquiring Company's chief
executive officer or chief financial officer to the effect set forth in
clauses (a), (b) and, to his knowledge, (c) above.
4.5 ACQUISITION LOAN DOCUMENTS. If the proposed Acquisition is to be
a Domestic Acquisition or Canadian Acquisition (which does not also
constitute a Foreign Acquisition) of the Capital Stock of the Target, then,
unless the Target is a Designated Subsidiary: (i) the Target shall, upon
consummation of such acquisition, become a "Company" or "Guarantor", as
determined by Agent and the Required Lenders, for all purposes under the Loan
Documents and shall execute and deliver to Agent documentation reasonably
required by the Agent in connection therewith (including,
33
without limitation, (1) documentation confirming that such Person is or will
be a Company or a Guarantor under the Loan Documents, (2) documentation
granting to Agent for the benefit of Lenders a first, priority lien in all
assets of the Person, other than Permitted Encumbrances, (3) an agreement in
writing (in form and substance reasonably satisfactory to the Agent)
providing for the subordination of inter-company indebtedness to the
Obligations owed to the Agent and the Lenders, (4) documentation
demonstrating such Person's authority from its Board of Directors or other
appropriate governing body to execute all documentation with or for the
Lenders as Agent and the other Lenders, and (5) certificates of insurance for
and policy of insurance maintained by such Person which satisfy the
requirements of Paragraph 7.5 of Section 7 hereof); (ii) the Obligors shall
execute and deliver to the Agent an amendment to the relevant Loan Documents
describing as collateral thereunder the Capital Stock of the acquired Person
and other Collateral owned by such Person (together with documents incident
thereto); and (iii) the acquiring Obligor shall deliver to the Agent the
certificates representing 100% of the Capital Stock of such Person (or 65% of
each new Canadian Subsidiary) together with undated stock powers duly
executed in blank. If the proposed Acquisition is a Domestic Acquisition or a
Canadian Acquisition (which does not also constitute a Foreign Acquisition)
of assets, the acquiring Company shall execute and deliver the Agent such
documentation requested by Agent to cause the property acquired to be subject
to a fully perfected lien and security interest in favor of Agent for the
benefit of the Lenders and for such lien to have priority over all other
liens other than Permitted Encumbrances.
SECTION 5. LETTERS OF CREDIT
In order to assist the Companies, or any one of them, in
establishing or opening documentary and standby Letters of Credit with an
Issuing Bank to cover the purchase of inventory, equipment or otherwise, the
Companies have requested the Agent, on behalf of the Lenders, to join in the
applications for such Letters of Credit, and/or guarantee payment or
performance of such Letters of Credit and any drafts or acceptances
thereunder through the issuance of the Letters of Credit Guaranty, thereby
lending the Agent's credit to the Companies and the Agent and the Lenders
have agreed to do so. These arrangements shall be handled by the Agent
subject to the terms and conditions set forth below.
5.1 Within the Revolving Line of Credit and the Availability for
each Company, upon request by Parent, the Agent shall assist each of the
Companies, or any one of them, in obtaining Letter(s) of Credit; provided,
however, the aggregate outstanding Letters of Credit to all of the Companies
shall not exceed the Letter of Credit Sub-Line. The Agent's assistance for
amounts in excess of the limitation set forth herein shall at all times and
in all respects be in the Agent's sole discretion (subject to Paragraph 14.10
of Section 14 hereof). It is understood that the form of each Letter of
Credit and all documentation in connection therewith, and any amendments,
modifications or extensions thereof, must be mutually acceptable to the
Agent, the Issuing Bank and the applicable Companies. Any and all outstanding
Letters of Credit issued hereunder for any Company shall be reserved dollar
for dollar from such Company's Availability as an Availability Reserve. Any
Letter of Credit issued hereunder shall not have an expiry date subsequent to
the Anniversary Date, unless otherwise agreed to by the Agent or unless the
Parent deposits with Agent cash collateral therefor equal to 110% of the face
amount of any such Letter(s) of Credit, and upon any termination of the
Revolving Line of Credit or this Financing Agreement in accordance with
Section 11 hereof, the
34
Agent may establish a reserve equal to 110% of the face amount of any such
outstanding Letters of Credit. Notwithstanding anything herein to the
contrary, upon the occurrence of an Event of Default, the Agent's assistance
in connection with the Letter of Credit Guaranty shall be in the Agent's sole
discretion and the Agent may reserve 110% of the face amount of outstanding
Letters of Credit, unless such Event of Default is cured to the Agent's
satisfaction in the exercise of the Agent's reasonable business judgement or
waived by the Required Lenders in writing at which time any portion of such
reserve in excess of the typical reserve maintained for a Letter of Credit
shall be released.
5.2 The Agent shall have the right, without notice to the Companies,
to charge any of the Companies' Revolving Loan Accounts on the Agent's books
or establish cash reserve(s) in the amount of any and all indebtedness,
liability or obligation of any kind incurred by the Agent and/or the Lenders
under the Letters of Credit Guaranty at the earlier of a) payment by the
Agent under any Letters of Credit Guaranty, or b) the occurrence of any Event
of Default which has not been waived in writing by the Required Lenders. Any
amount charged to Companies' Revolving Loan Account, after payment by the
Agent under any Letters of Credit Guaranty or upon notice from or at the
request of the Issuing Bank, shall be deemed a Revolving Loan hereunder and
shall incur interest at the rate provided in Paragraph 8.1 of Section 8 of
this Financing Agreement.
5.3 Each of the Companies jointly and severally unconditionally
indemnifies the Agent and the Lenders and holds the Agent and the Lenders
harmless from any and all loss, claim or liability incurred by the Agent
arising from any transactions or occurrences relating to Letters of Credit
established or opened for any Company's account, the collateral relating
thereto and any drafts or acceptances thereunder, and all Obligations
thereunder, including any such loss or claim due to any action taken by any
Issuing Bank, other than for any such loss, claim or liability arising out of
the gross negligence or willful misconduct by the Agent and the Lenders. Each
of the Companies further agrees to hold the Agent and/or the Lenders harmless
from any errors or omission, negligence or misconduct by the Issuing Bank.
The Companies' unconditional obligation to the Agent and/or the Lenders
hereunder shall not be modified or diminished for any reason or in any manner
whatsoever, other than as a result of the Agent's and/or the Lenders' gross
negligence or willful misconduct. The Companies agree that any charges
incurred by the Agent and the Lenders for the Companies account by the
Issuing Bank shall be conclusive on the Agent and/or the Lenders and may be
charged to any of the Companies' Revolving Loan Accounts, provided that
nothing contained herein shall, or shall be deemed, to affect, waive or
modify any right the Companies may have against the Issuing Bank.
5.4 In connection with any Letters of Credit, the Agent and the
Lenders shall not be responsible for: the existence, character, quality,
quantity, condition, packing, value or delivery of the goods purporting to be
represented by any documents presented to the Issuing Bank; any difference or
variation in the character, quality, quantity, condition, packing, value or
delivery of the goods from that expressed in the documents; the validity,
sufficiency or genuineness of any documents or of any endorsements thereon,
even if such documents should in fact prove to be in any or all respects
invalid, insufficient, fraudulent or forged; the time, place, manner or order
in which shipment is made; partial or incomplete shipment, or failure or
omission to ship any or all of the goods referred to in the Letters of Credit
or documents; any deviation from instructions; delay, default, or fraud by
the shipper and/or anyone else in connection with the Collateral or the
shipping
35
thereof; or any breach of contract between the shipper or vendors and the
Companies or any one of them. Furthermore, without being limited by the
foregoing, the Agent and/or the Lenders shall not be responsible for any act
or omission with respect to or in connection with any Collateral arising in
connection with or created by any Letter of Credit, other than as the result
of the Agent's and/or the Lenders' own gross negligence or willful misconduct.
5.5 The Companies agree that any action taken by the Agent and/or
the Lenders, absent the gross negligence or willful misconduct by the Agent
and/or the Lenders, or any action taken by any Issuing Bank, under or in
connection with the Letters of Credit, the Letters of Credit Guarantees, the
drafts or acceptances relating to the Letters of Credit, or the Collateral,
shall be binding on each of the Companies and shall not put the Agent and/or
the Lenders in any resulting liability to any of the Companies, provided that
nothing contained in this Paragraph 5.5 of Section 5 of this Financing
Agreement shall, or shall be deemed to, affect, waive or modify any right the
Company may have against the Issuing Bank in connection with any Letters of
Credit. In furtherance thereof, the Agent shall have the full right and
authority to clear and resolve any questions of non-compliance of documents;
to give any instructions as to acceptance or rejection of any documents or
goods; to execute any and all steamship or airways guaranties (and
applications therefor), indemnities or delivery orders; to grant any
extensions of the maturity of, time of payment for, or time of presentation
of, any drafts, acceptances, or documents; and to give or withhold its
consent to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letters of Credit, drafts or acceptances; all in the Agent's sole name, and
the Issuing Bank shall be entitled to comply with and honor any and all such
documents or instruments executed by or received solely from the Agent, all
without any notice to or any consent from the Companies or any one of them.
Notwithstanding any prior course of conduct or dealing with respect to the
foregoing including amendments and non-compliance with documents and/or the
Companies' instructions with respect thereto, the Agent may exercise its
rights hereunder in its sole and reasonable business judgement.
5.6 Without the Agent's express consent and endorsement in writing,
the Companies agree, in connection with any Letters of Credit: (a) not to (i)
execute any and all applications for steamship or airway guaranties,
indemnities or delivery orders; (ii) grant any extensions of the maturity of,
time of payment for, or time of presentation of, any drafts, acceptances or
documents; or (iii) agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of
any of the applications, Letters of Credit, drafts or acceptances; and (b) at
the Agent's discretion after the occurrence of an Event of Default which is
not cured within any applicable grace period, if any, not to (i) clear and
resolve any questions of non-compliance of documents, or (ii) give any
instructions as to acceptance or rejection of any documents or goods.
5.7 The Companies agree that any necessary import, export or other
licenses or certificates for the import or handling of the Collateral will
have been promptly procured; all foreign and domestic governmental laws and
regulations in regard to the shipment and importation of goods related to
each Letter of Credit will have been promptly and fully complied with in all
material respects; and any certificates in that regard that the Agent may at
any time request will be promptly furnished. In this connection, each of the
Companies warrants and represents that all shipments made under any such
Letters of Credit are in accordance in all material respects with the laws
and regulations of the countries in which the shipments originate and
terminate, and are not prohibited
36
by any such laws and regulations. The Companies assume all risk, liability
and responsibility for, and agree to pay and discharge, all present and
future local, state, federal or foreign taxes, duties, or levies. Any
embargo, restriction, laws, customs or regulations of any country, state,
city, or other political subdivision, where the goods related to each Letter
of Credit is or may be located, or wherein payments are to be made, or
wherein drafts may be drawn, negotiated, accepted, or paid, shall be solely
at the Companies' risk, liability and responsibility.
5.8 Upon any payments made to the Issuing Bank under the Letter of
Credit Guaranty, the Agent on behalf of the Lenders shall acquire by
subrogation, any rights, remedies, duties or obligations granted or
undertaken by any of the Companies to the Issuing Bank in any application for
Letters of Credit, any standing agreement relating to Letters of Credit or
otherwise, all of which shall be deemed to have been granted to the Agent and
apply in all respects to the Agent and shall be in addition to any rights,
remedies, duties or obligations contained herein.
5.9 Notwithstanding any provision to the contrary contained in this
Financing Agreement, nothing contained herein shall, or shall be deemed to,
affect, waive or modify any rights the Companies may have against the Issuing
Bank in connection with any Letters of Credit.
SECTION 6. COLLATERAL
6.1 As security for the prompt payment in full of all loans and
advances made and to be made to the Companies or any one of them from time to
time by the Agent and/or the Lenders pursuant hereto, as well as to secure
the payment in full of the other Obligations of any of the Obligors, each of
the Obligors hereby, and pursuant to the Loan Documents, pledges and grants
to the Agent on behalf of the Lenders a continuing general lien upon and
security interest in all of its:
(a) Accounts;
(b) Inventory;
(c) General Intangibles;
(d) Documents of Title;
(e) Other Collateral; and
(f) Equipment.
6.2A The security interests granted hereunder shall extend and
attach to:
(a) All Collateral which is presently in existence and which is
owned by any of the Obligors or in which any of the Obligors has any
interest, whether held by the Obligors or others for its account, and, if any
Collateral is Equipment, whether such Obligors' interest in such Equipment is
as owner or lessee or conditional vendee;
37
(b) All Equipment whether the same constitutes personal property or
fixtures, including, but without limiting the generality of the foregoing,
all dies, jigs, tools, benches, molds, tables, accretions, component parts
thereof and additions thereto, as well as all accessories, motors, engines
and auxiliary parts used in connection with or attached to the Equipment; and
(c) All Inventory and any portion thereof which may be returned,
rejected, reclaimed or repossessed by the Agent, the Lenders or any of the
Obligors from the Obligors' customers, as well as to all supplies, goods,
incidentals, packaging materials, labels and any other items which contribute
to the finished goods or products manufactured or processed by the Obligors,
or to the sale, promotion or shipment thereof.
6.2B As security for the prompt payment in full of all loans and
advances made and to be made to the Companies or any one of them from time to
time by the Agent and/or the Lenders pursuant hereto, as well as to secure
the payment in full of the other Obligations, each Obligor hereby grants a
movable hypothec to the Agent on behalf of the Lenders for a principal amount
of Two Hundred Million Canadian Dollars (CAN $200,000,000) in money having
legal tender in Canada bearing interest at a rate per annum equal to the rate
for Revolving Loans set forth in Paragraph 8.1 of Section 8 hereof, on the
universality of such Obligor's movable property, present and future,
corporeal and incorporeal, wherever situate and of whatever nature, including
without limitations the Collateral. The above amount is for the purpose of
the hypothec only in order to comply with Article 2689 of the CIVIL CODE OF
QUEBEC and does not change nor affect the amount of the Obligations. Any
future Obligations hereby secured shall be deemed to be one in respect of
which each Obligor has once again obligated itself hereunder according to the
provisions of Article 2797 of the CIVIL CODE OF
QUEBEC.
6.3 Each of the Obligors agrees to safeguard, protect and hold all
Inventory for the Agent's account and make no disposition thereof except in
the regular course of the business of the Obligors as herein provided. Unless
the Agent, at its election, has given the Obligors notice to the contrary
after the occurrence of an Event of Default, any Inventory (including
Inventory in possession of any third party warehouseman or processor) may be
sold and shipped by the Obligors to their customers in the ordinary course of
said Obligors' business, on open account and on terms then currently being
extended by the Obligors to their customers, provided that all proceeds of
all sales (including cash, accounts receivable, checks, notes, instruments
for the payment of money and similar proceeds) are forthwith transferred,
endorsed, and turned over and delivered to the Agent, on behalf of the
Lenders, in accordance with Paragraph 3.4 of Section 3 of this Financing
Agreement. The Agent, at its election, shall have the right to withdraw this
permission at any time upon the occurrence of an Event of Default and until
such time as such Event of Default is waived in writing by the Required
Lenders or cured to the Required Lenders' satisfaction, and/or give
instructions to any third party warehouseman or processor to cease following
the Obligors' instructions with respect to any Inventory in possession of
such third parties, in which event no further disposition shall be made of
the Inventory by any of the Obligors without the Agent's prior written
approval (other than sales previously contracted for in the ordinary course
of business which sales any such Company is legally obligated to make). Upon
the sale, exchange, or other disposition of Inventory, as herein provided,
the security interest in each of the Obligors' Inventory provided for herein
shall, without break in continuity and without further formality or act,
continue in, and attach to, all proceeds, including any instruments for the
payment of money, accounts receivable,
38
contract rights, documents of title, shipping documents, chattel paper and
all other cash and non-cash proceeds of such sale, exchange or disposition.
As to any such sale, exchange or other disposition, the Agent and the Lenders
shall have all of the rights of an unpaid seller, including stoppage in
transit, replevin, rescission and reclamation. The Companies agree that any
and all proceeds of Collateral shall be held in trust for the Agent, on
behalf of the Lenders, and promptly turned over to the Agent by deposit in
the Depository Accounts. Irrespective of the Agent's perfection status in any
and all of the Obligors' General Intangibles, including without limitation,
any Trademarks, Copyrights or licenses with respect thereto, each of the
Obligors hereby irrevocably grants the Agent a royalty free license to sell
or otherwise dispose or transfer, in accordance with Paragraph 10.3 and the
applicable terms hereof, any of the Obligors' Inventory upon the occurrence
of an Event of Default which has not been waived in writing by the Required
Lenders.
6.4 Each of the Obligors agrees at its own cost and expense to keep
the Equipment in as good and substantial repair and condition as the same is
now or at the time the lien and security interest granted herein shall attach
thereto, reasonable wear and tear excepted, making any and all repairs and
replacements when and where necessary; provided that the Obligors shall not
be obligated to make repairs and replacements if, in the good faith business
judgement of the Parent, just repairs and replacements are not necessary for
the continued use of the Equipment in the business of the Obligors or are not
economically justified. Each Obligor also agrees to safeguard, protect and
hold all Equipment for the Agent's account and make no disposition thereof
unless such Company first obtains the prior written approval of the Agent or
except as otherwise provided below in this Subparagraph 6.4. The proceeds of
any sale, exchange or other disposition of any Equipment permitted under this
Subparagraph 6.4 shall not be commingled with the Obligors' other property,
but shall be segregated, held by the Obligor in trust for the Agent, on
behalf of the Lenders, as the Agent's exclusive property, and shall be
delivered immediately by the Obligor to the Agent in the identical form
received by the Obligor by deposit to the Depository Accounts. Upon the sale,
exchange, or other disposition of the Equipment, as herein provided, the
security interest provided for herein shall, without break in continuity and
without further formality or act, continue in, and attach to, all proceeds,
including any instruments for the payment of money, accounts receivable,
contract rights, documents of title, shipping documents, chattel paper and
all other cash and non-cash proceeds of such sales, exchange or disposition.
As to any such sale, exchange or other disposition, the Agent and the Lenders
shall have all of the rights of unpaid sellers, including stoppage in
transit, replevin, rescission and reclamation. Notwithstanding anything
herein above contained to the contrary, the Obligor may sell, exchange or
otherwise dispose of obsolete Equipment or Equipment no longer needed in the
Obligors' operations, provided, however, that (a) the then market value of
the Equipment so disposed of does not exceed $3,000,000 in the aggregate in
any Fiscal Year for all Obligors and (b) the proceeds of such sales or
dispositions are delivered to the Agent in accordance with the foregoing
provisions of this paragraph, except that any such Obligor may retain and use
such proceeds to purchase forthwith replacement Equipment which said Obligor
determine in their reasonable business judgment to have a collateral value at
least equal to the Equipment so disposed of or sold, provided, however, that
the aforesaid right shall automatically cease upon the occurrence of an Event
of Default which is not cured within any applicable grace period or waived in
writing by Agent, provided further that if such Obligor does not promptly
replace such Equipment the Agent may apply such proceeds to the Revolving
Loans, in its sole discretion.
39
6.5 The rights and security interests granted to the Agent and the
Lenders hereunder are to continue in full force and effect, notwithstanding
any notice of termination of this Financing Agreement or the fact that the
Revolving Loan Account maintained in each Company's name on the books of the
Agent may from time to time be temporarily in a credit position, until the
final payment in cash in full to the Agent on behalf of the Lenders of all
Obligations and the termination of the Agent's and Lenders' obligations under
this Financing Agreement. Any delay, or omission by the Agent and/or the
Lenders to exercise any right hereunder, shall not be deemed a waiver
thereof, or be deemed a waiver of any other right, unless such waiver shall
be in writing and signed by Required Lenders. A waiver on any one occasion
shall not be construed as a bar to or waiver of any right or remedy on any
future occasion.
6.6 Notwithstanding the Agent's security interest in the various
assets constituting Collateral and to the extent that the Obligations are now
or hereafter secured by any assets or property other than the Collateral or
by the guarantee, endorsement, assets or property of any other person, the
Agent shall have the right in its sole discretion to determine which rights,
security, liens, security interests or remedies the Agent shall at any time
pursue, foreclose upon, relinquish, subordinate, modify or take any other
action with respect to, without in any way modifying or affecting any of
them, or any of the Agent's and/or the Lenders' rights hereunder.
6.7 Any reserves or balances to the credit of the Obligors, or any
one of them, and any other property or assets of the Obligors, or any one of
them, in the possession or control of the Agent and/or the Lenders may be
held by the Agent as security for any Obligations and applied in whole or
partial satisfaction of such Obligations when due but will be released to
Parent upon Parent's written request if no Default or Event of Default has
occurred and is continuing. The liens and security interests granted herein
and any other lien or security interest the Agent and/or the Lenders may have
in any other assets of the Obligor, shall secure payment and performance of
all now existing and future Obligations. The Agent may in its discretion
charge any or all of the Obligations to the Revolving Loan Account of each
Company, or any one of them, when due.
6.8 The Companies shall deliver to the Agent on behalf of the
Lenders, and/or shall cause the appropriate party to deliver to the Agent,
from time to time such pledge or security agreements with respect to General
Intangibles (now or hereafter acquired) of each of the Companies and all of
its or their subsidiaries (other than Designated Subsidiaries and Foreign
Subsidiaries) as the Agent shall require to obtain valid first liens thereon.
In furtherance of the foregoing, the Companies shall provide timely notice to
the Agent of any additional Patents, Trademarks, tradenames, service marks,
Copyrights, brand names, trade names, logos and other trade designations
acquired or applied for subsequent to the Closing Date and such Companies
shall execute such documentation as the Agent may reasonably require to
obtain and perfect its lien thereon. Each of the Companies hereby confirms
that it shall hold any stock pledged pursuant to the Loan Documents, in trust
for the Agent and deliver or cause to be delivered any stock issued
subsequent to the Closing Date, to the Agent on behalf of the Lenders in
accordance with the applicable Pledge Agreement. In the absence of an Event
of Default, the owner of any pledged stock shall be entitled to vote such
stock (in a manner which is not detrimental to the Agent and/or the Lenders,
or inconsistent with the terms of the Pledge Agreement) and to receive any
dividend thereon. Each of the Companies hereby irrevocably grants to the
Agent a royalty-free, non-exclusive license in the General Intangibles,
including tradenames, Trademarks, Copyrights, Patents, licenses, and any
other proprietary and intellectual property rights
40
and any and all right, title and interest in any of the foregoing, for the
sole purpose, upon the occurrence of an Event of Default, of the right to:
(i) advertise for sale and sell or transfer any Inventory bearing any of the
General Intangibles, and (ii) make, assemble, prepare for sale or complete,
or cause others to do so, any applicable raw materials or Inventory bearing
any of the General Intangibles, including use of the Equipment and Real
Estate for the purpose of completing the manufacture of unfinished goods, raw
materials or work-in-process comprising Inventory, and apply the proceeds
thereof to the Obligations hereunder, all as further set forth in this
Financing Agreement and irrespective of the Agent's lien and perfection in
any General Intangibles.
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1 Each of the Obligors hereby warrants, represents and covenants
that with respect to itself and each other Obligor, that each Company is
Solvent and the Obligors taken as a whole are Solvent. Each Company further
warrants and represents that: (i) SCHEDULE 7.1 hereto correctly and
completely sets forth such Company's (A) legal name in its state of
organization, (B) state of organization, (C) Federal Tax Identification
Number, (D) chief executive office, (E) tradenames used by the Company in
connection with the sale of Inventory or providing services to its customers,
(F) prior names used in the last five (5) years (including, such names of
such Company's predecessors in interest as a result of a merger or
consolidation) and (G) charter or other similar number for such Company in
its state of organization; (ii) except for the Permitted Encumbrances, after
filing of financing statements with such Obligor's state of organization,
this Financing Agreement creates a valid, perfected and first priority
security interest upon and security interests in the Collateral and the
security interests granted herein constitute and shall at all times
constitute the first and only liens on the Collateral, except for Permitted
Encumbrances; that, except for the Permitted Encumbrances, any such Obligor
is or will be at the time additional Collateral is acquired by it, the
absolute owner or lessee of the Collateral with full right to pledge, sell,
consign, transfer and create a security interest in such Obligor's interest
in the Collateral, free and clear of any and all claims or liens in favor of
others, other than Permitted Encumbrances; that each of the Obligors will at
its expense forever warrant and, at the Agent's request, defend the same from
any and all claims and demands of any other person other than the Permitted
Encumbrances; that the Obligors, or any one of them, will not grant, create
or permit to exist, any lien upon or security interest in the Collateral, or
any proceeds thereof, in favor of any other person other than the holders of
the Permitted Encumbrances; and that the Equipment does not comprise a part
of the Inventory of any of the Obligors and that the Equipment is and will
only be used by the Obligors in their business and will not be held for sale
or lease, or removed from their premises, or otherwise disposed of by the
Obligors without the prior written approval of the Agent except as otherwise
permitted in Paragraph 6.4 of Section 6 and Subparagraph 7.9(d) of Section 7
of this Financing Agreement.
7.2 Each of the Obligors agrees to maintain books and records
pertaining to the Collateral in detail, form and scope consistent with the
manner in which the Obligors have historically maintained the same. Each of
the Obligors agrees that the Agent or its agents, and any of the Lenders who
may wish to accompany the Agent at their own cost and expense, may enter upon
the Obligors' premises, upon reasonable prior notice, at any time during
normal business hours, and from time to time in its reasonable business
judgement, for the purpose of inspecting the Collateral, and any and all
records pertaining thereto. Each of the Obligors agrees to provide the Agent
with
41
monthly Collateral reports, including notice of all locations of Inventory
(and specifically indicating any new locations or locations on which the
Agent does not have any applicable landlord or warehouseman waiver), and (y)
to promptly execute and deliver to the Agent upon the Agent's request
appropriate Uniform Commercial Code financing statements and, with respect to
assets that a Company wants to include as Eligible Inventory, to deliver
executed landlord or warehouseman liens waivers, in form and substance
reasonably satisfactory to Agent, for any new Collateral locations in the
United States. Each of the Obligors is also to advise the Agent promptly, in
sufficient detail, of any material adverse change relating to the type,
quantity or quality of the Collateral or on the security interests granted to
the Agent therein. The Obligors shall advise the Lenders of any material
adverse change in the Collateral or financial condition of the Obligors,
taken as a whole.
7.3 Each of the Obligors agrees to execute and deliver to the Agent,
from time to time, solely for the Agent's convenience in maintaining a record
of the Collateral, such written statements, and schedules as the Agent may
reasonably require, designating, identifying or describing the Collateral
pledged to the Agent hereunder, provided that prior to the occurrence of an
Event of Default hereunder the Obligors shall not be required to report as to
(i) Accounts more frequently than monthly and (ii) Inventory more frequently
than monthly. Subsequent to the occurrence of an Event of Default the Agent
shall be entitled to request and receive more frequent reporting as to
Accounts and/or Inventory. The Obligors' or an Obligor's failure, however, to
promptly give the Agent such statements, or schedules shall not affect,
diminish, modify or otherwise limit the Agent's and/or the Lenders' security
interests in the Collateral. Each of the Obligors also agrees to provide
Agent, upon request by Agent not more than once each Fiscal Year, with an
appraisal of its Inventory, any such appraisal to be at the Obligors' expense
and otherwise acceptable to Agent; PROVIDED, HOWEVER, subsequent to the
occurrence of a Default or Event of Default, Agent may request additional
appraisals of Inventory at the Agent's expense.
7.4 Each of the Obligors agrees to comply in all material respects
with the requirements of all state and federal laws in order to grant to the
Agent on behalf of the Lenders valid and perfected first security interests
in the Collateral, subject only to the Permitted Encumbrances. The Agent is
hereby authorized by the Obligors to file from time to time any financing or
continuation statements, or amendments thereto, covering the Collateral
whether or not any of the Obligors' signatures appear thereon. Agent will
give Parent copies of and filing information for each of the same and will
correct any material errors upon the reasonable request of Parent. Each
Obligor hereby consents to and ratifies any such filings made by Agent prior
to the Closing Date. Each of the Obligors agrees to do whatever the Agent may
reasonably request, from time to time, by way of: filing notices of liens,
financing statements, amendments, renewals and continuations thereof;
cooperating with the Agent's custodians; keeping stock records; transferring
proceeds of Collateral to the Agent's possession if otherwise required
hereunder or under any of the other Loan Documents; and performing such
further acts as the Agent and/or the Lenders may reasonably require in order
to effect the purposes of this Financing Agreement.
7.5(a) Each of the Obligors agrees to maintain insurance on its Real
Estate (other than undeveloped acreage), Equipment and Inventory under such
policies of insurance, with such insurance companies, in such reasonable
amounts and covering such insurable risks as are at all times reasonably
satisfactory to the Agent. The Agent acknowledges and agrees that the
insurance
42
coverage maintained by each of the Obligors on the date hereof described in
SCHEDULE 7.5(a) attached hereto is satisfactory to each of the Lenders on the
date hereof. All policies covering the Equipment and Inventory are, subject
to the rights of any holders of Permitted Encumbrances holding claims senior
to the Agent, to be made payable to the Agent on behalf of the Lenders, in
case of loss, under a standard non-contributory "mortgagee", "lender" or
"secured party" clause and are to contain such other provisions as the Agent
may reasonably require to fully protect the Agent's interest in the Inventory
and Equipment and to any payments to be made under such policies.,
Certificates of insurance, or at the Agent's prior reasonable request all
original policies, are to be delivered to the Agent, premium prepaid, with
the loss payable endorsement in the Agent's favor, and shall provide for not
less than thirty (30) days prior written notice to the Agent of the exercise
of any right of cancellation. At any of the Obligor's request, or if any
Obligor fails to maintain such insurance, the Agent may arrange for such
insurance, but at the Obligors' expense and without any responsibility on the
Agent's part for obtaining the insurance, the solvency of the insurance
Obligors, the adequacy of the coverage, or the collection of claims. Upon the
occurrence of an Event of Default which is not waived or cured to the Agent's
satisfaction, the Agent shall, subject to the rights of any holders of
Permitted Encumbrances holding claims senior to the Agent, have the sole
right, in the name of the Agent or the Obligors or any one of them, to file
claims under any insurance policies, to receive, receipt and give acquittance
for any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other
documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
(b)(i) In the event of any loss or damage by fire or other casualty,
Insurance Proceeds relating to a Obligor's Inventory shall first reduce the
Revolving Loans to the extent any Revolving Loans are outstanding, and the
balance, if any, shall be remitted to Parent. Upon the occurrence of an Event
of Default, such Proceeds shall be applied to the Obligations in such order
as the Agent may reasonably elect.
(ii) In the event any part of any Obligor's Equipment is damaged by
fire or other casualty and the Insurance Proceeds for such damage or other
casualty are less than or equal to $100,000.00, the Agent shall promptly
apply such Insurance Proceeds to reduce the Obligor's Revolving Loans and any
excess shall be remitted to Parent. Upon the occurrence of an Event of
Default, such Insurance Proceeds shall be applied to the Obligations in such
order as the Agent may reasonably elect and any excess shall be remitted to
Parent.
(iii) As long as an Event of Default has not occurred (which is not
cured to the Required Lenders' satisfaction), the Obligors have sufficient
business interruption insurance generally to replace the lost profits of any
of the Obligors' facilities, and the Proceeds are in excess of $100,000.00,
the Obligors may elect (by delivering written notice to the Agent) to
replace, repair or restore such Equipment to substantially the equivalent
condition prior to such fire or other casualty as set forth herein. If the
Obligors do not, or cannot, elect to use the Insurance Proceeds as set forth
above, the Agent may, subject to the rights of any holders of Permitted
Encumbrances holding claims senior to the Agent, apply the Insurance Proceeds
to the payment of the Obligations in such manner and in such order as the
Agent may reasonably elect and any excess shall be remitted to Parent.
43
(iv) If the Obligors elect to use the Insurance Proceeds for the
repair, replacement or restoration of any Equipment, and there is then no Event
of Default, i) Insurance Proceeds on Equipment in excess of $100,000.00 will be
applied to the reduction of the Revolving Loans and ii) the Agent may set up a
reserve against Availability for an amount equal to the said Insurance Proceeds
referred to in clause i) hereof. The reserve will be reduced dollar-for-dollar
upon receipt of non-cancelable executed purchase orders, delivery receipts or
contracts for the replacement, repair or restoration of Equipment and
disbursements in connection therewith. Upon completion of the restoration or
repair, any remaining reserve as established hereunder will be automatically
released.
(v) The Obligors agree to pay any reasonable costs, fees or expenses
that the Agent may reasonably incur in connection herewith.
(c) In the event any of the Obligors fail to provide the Agent with
timely evidence, acceptable to the Agent, of their maintenance of insurance
coverage required pursuant to paragraph 7.5(a) above, the Agent may purchase, at
such Obligors' expense, insurance to protect the Agent's interests in the
Collateral. Agent shall promptly notify Parent of Agent's purchase of any such
insurance coverage. The insurance acquired by the Agent may, but need not,
protect the Obligors' interest in the Collateral, and therefore such insurance
may not pay claims which the Obligors, or any one of them, may have with respect
to the Collateral or pay any claim which may be made against the Obligors in
connection with the Collateral. The Obligors may request cancellation of any
such insurance obtained by the Agent, but only after providing the Agent with
satisfactory evidence that the Obligors have applicable insurance. In the event
the Agent purchases, obtains or acquires insurance covering all or any portion
of the Collateral, the Obligors shall be responsible for all of the applicable
costs of such insurance, including premiums, interest (at the applicable Chase
Bank Rate for Revolving Loans set forth in paragraph 8.1 of Section 8 hereof),
fees and any other charges with respect thereto, until the effective date of the
cancellation or the expiration of such insurance. The Agent may charge all of
such premiums, fees, costs, interest and other charges to the Obligors'
Revolving Loan Accounts. Each of the Obligors hereby acknowledges that the costs
of the premiums of any insurance acquired by the Agent may exceed the costs of
insurance which the Obligors may be able to purchase on their own. In the event
that the Agent purchases such insurance, the Agent will notify the Obligors or
the applicable Obligor of said purchase within thirty (30) days after the date
of such purchase. If, within thirty (30) days of the date of such notice, the
Obligors provide the Agent with proof that the Obligors had the insurance
coverage required pursuant to 7.5(a) above (in form and substance satisfactory
to the Agent), as of the date on which the Agent purchased insurance and the
Obligors continued at all times to have such insurance, then the Agent agrees to
cancel the insurance purchased by the Agent and credit the Obligors' Revolving
Loan Accounts with the amount of all costs, interest and other charges
associated with such insurance, including with any amounts previously charged by
the Agent to the Revolving Loan Accounts.
7.6 Each of the Obligors agrees to pay, when due, all taxes, sales
taxes, assessments, claims and other charges (herein "taxes") lawfully levied or
assessed upon an Obligor, the Obligors or the Collateral unless such taxes are
being disputed or diligently contested in good faith by the applicable Obligors
by appropriate proceedings and adequate reserves are established in accordance
with GAAP. Notwithstanding the foregoing, if any lien shall be filed or claimed
thereunder x) for taxes due the United States of America or y) which in the
Agent's opinion might create a valid
44
obligation having priority over the rights granted to the Agent herein, such
lien shall not be deemed to be a Permitted Encumbrance hereunder and the
Obligors shall immediately pay such tax and remove the lien of record unless
the enforcement of such lien against assets of the Obligors has been
effectively stayed by operation of law or legal proceeding. If the Obligors
fail to do so promptly, then at the Agent's election, the Agent may (i)
create an Availability Reserve in such amount as it may deem appropriate in
its business judgement, or (ii) on the Obligor's or the Obligors' behalf, as
applicable, pay such taxes, and the amount thereof shall be an Obligation
secured hereby and due to the Agent by the Obligors on demand.
7.7 Each of the Obligors: (a) agrees to comply in all material
respects with all acts, rules, regulations and orders of any legislative,
administrative or judicial body or official, which the failure to comply with
would have a material and adverse impact on the Collateral as a whole, or any
material part thereof, or on the business or operations of the Obligors taken
as a whole; provided that the Obligors may dispute or contest any acts,
rules, regulations, orders and directions of such bodies or officials in any
reasonable manner which will not, in the Agent's reasonable opinion, materially
and adversely effect the Agent's and/or the Lenders' rights or priority in
any material part of the Collateral; (b) agrees to comply in all material
respects with all environmental statutes, acts, rules, regulations or orders
as presently existing or as adopted or amended in the future, applicable to
the Collateral, the ownership and/or use of its real property and operation
of its business, which the failure to comply with would have a material and
adverse impact on the Collateral as a whole, or any material part thereof, or
on the operation of the business of the Obligors taken as a whole; and (c)
shall not be deemed to have breached any provision of this Paragraph 7.7 if
(i) the failure to comply with the requirements of this Paragraph 7.7
resulted from good faith error or innocent omission, (ii) the Obligors
promptly commence and diligently pursue a cure of such breach, and (iii) such
failure is cured within sixty (60) business days following any of the
Obligors' receipt of notice of such failure. Each of the Obligors hereby
indemnifies the Agent and the Lenders and agrees to defend and hold the Agent
and the Lenders harmless from and against any and all loss, damage, claim,
liability, injury or expense which the Agent may sustain or incur (other than
solely as a result of the physical actions of the Agent on the Obligors'
premises which are finally determined to constitute gross negligence or
willful misconduct by a court of competent jurisdiction) in connection with:
any and all claims or expenses asserted against the Agent and/or the Lenders
as a result of any environmental pollution, hazardous material or
environmental clean-up of any of the Obligors' Real Property; or any claim or
expense which results from the Obligors' operations (including, but not
limited to, any of the Obligors' off-site disposal practices), and each of
the Obligors further agrees that this indemnification shall survive
termination of this Financing Agreement as well as the payment of all
Obligations or amounts payable hereunder.
7.8 Until termination of this Financing Agreement and payment and
satisfaction of all Obligations due hereunder, each of the Companies agrees
that, unless the Agent shall have otherwise consented in writing, the
Companies will furnish to the Agent and each Lender: (a) within ninety (90)
days after the end of each Fiscal Year of each of the Companies, an audited
Consolidated Balance Sheet, as at the close of such year, and statements of
profit and loss, cash flow and shareholders' equity, of the Companies and
their consolidated subsidiaries for such year, audited by independent public
accountants selected by the Companies and reasonably satisfactory to the
Agent accompanied by the unqualified opinion of such accountants, that such
Consolidated Balance Sheet was prepared in accordance with GAAP, and with a
Consolidating Balance Sheet attached thereto
45
which will not be covered by such opinion; (b) within forty five (45) days
after the end of each Fiscal Quarter a Consolidated Balance Sheet and
Consolidating Balance Sheet as at the end of such period and statements of
profit and loss, cash flow and shareholders' equity of the Companies and
their consolidated subsidiaries, certified by an authorized financial or
accounting officer of the Companies; (c) prior to any Fiscal Year End,
projections for the next succeeding four quarter period, including balance
sheets, income statements and cash flow for such period, all in form
reasonably satisfactory to the Agent; and (d) from time to time, such further
information regarding the business affairs and financial condition of the
Companies and/or any subsidiaries thereof as the Agent may reasonably request,
including without limitation (i) the accountant's management practice letter
and (ii) copies of all of the Parent's 10K, 10Q and Proxy Statements. In
conjunction with such financial statements the Companies shall deliver the
internal management letters (prepared by financial officers of such
Companies), if any, and the accountants management practice letter. Each
financial statement which the Companies are required to submit hereunder must
be accompanied by an officer's certificate, signed by the President, Vice
President, Controller, or Treasurer, pursuant to which any one such officer
must certify that, to the best of such officer's knowledge after due inquiry:
(x) the financial statement(s) fairly and accurately represent(s) such
Company's or the Companies consolidated as applicable, financial condition at
the end of the particular accounting period, as well as such Company's or the
Companies consolidated operating results during such accounting period,
subject to year-end audit adjustments and the omission of footnotes; and (y)
during the particular accounting period: (A) there has been no Default or
Event of Default under this Financing Agreement, PROVIDED, HOWEVER, that if
any such officer has knowledge that any such Default or Event of Default, has
occurred during such period, the existence of and a detailed description of
same shall be set forth in such officer's certificate; (B) any of the
Companies have not received any notice of cancellation with respect to its
property insurance policies; (C) the Companies have not received any notice
that could result in a material adverse effect on the value of the Collateral
taken as a whole; and (D) the exhibits attached to such certificate
constitutes detailed calculations showing compliance with all financial
covenants contained in this Financing Agreement.
7.9 Until termination of the Financing Agreement and payment and
satisfaction of all Obligations due hereunder, each of the Obligors agrees that,
without the prior written consent of the Agent, except as otherwise herein
provided, each such Obligor will not, nor will the Obligors permit any Domestic
subsidiary, to:
(a) Mortgage, assign, pledge, transfer or otherwise permit any
lien, charge, security interest, encumbrance or judgment,
(whether as a result of a purchase money or title retention
transaction, or other security interest, or otherwise) to
exist on any of its assets or goods, whether real, personal
or mixed, whether now owned or hereafter acquired, except
for the Permitted Encumbrances;
(b) Incur or create any Indebtedness other than the Permitted
Indebtedness;
(c) Borrow any money on the security of any of the Collateral or
any other assets or stock of the Obligors from sources other
than the Agent and the Lenders, except for Permitted
Indebtedness secured by Permitted Encumbrances;
46
(d) Sell, lease, assign, transfer or otherwise dispose of (i)
Collateral, except as otherwise specifically permitted by this
Financing Agreement, or (ii) either all or substantially all
of any Obligor's or the Obligors' assets, which do not
constitute Collateral; PROVIDED, HOWEVER, that as long as
there has not occurred an Event of Default that is continuing
which has not been waived in writing by Agent and no Default
or Event of Default would occur after giving effect thereto,
neither this Subparagraph 7.9(d) nor any other provisions of
this Financing Agreement shall prohibit:
(i) the sale or lease of Inventory in the ordinary
course of business;
(ii) the sale, lease or other disposition of Equipment
permitted under Paragraph 6.4 of Section 6 hereof;
and
(iii) the sale or other disposition approved by the Board
of Directors of Parent to a Person who is not an
Affiliate of the Obligors of all of the Capital Stock
or all or substantially all of the assets of any
Obligor which is not a Material Obligor;
(e) Merge, consolidate or otherwise alter or modify its
corporate name, state of formation or organization,
structure, status or existence, or enter into or engage in
any operation that is not a Qualified Business, EXCEPT THAT
an Obligor may change its corporate name or principal place
of business or address within the 48 contiguous States of
the United States of America, provided that in any such case
(x) such Obligor shall give the Agent thirty (30) days prior
written notice thereof and (y) such Obligor and the other
Obligors shall execute and deliver prior to or
simultaneously with any such action any and all applicable
documents and agreements requested by the Agent (including,
without limitation, any and all U.C.C. financing statements)
to confirm the continuation and preservation of all security
interests and liens granted to the Agent for the benefit of
the Lenders hereunder; PROVIDED, HOWEVER, as long as no
Default or Event of Default has occurred and is continuing
and no Default or Event of Default would occur or exist
after giving effect thereto, and such Obligor has complied
with clause (x) and (y) immediately above, this Subparagraph
(e) shall not prohibit a Permitted Merger, except to the
extent the Agent reasonably determines, during the thirty
(30) day period following Agent's receipt of the notice
referred to in clause (x) above, that the liabilities and
other obligations (contingent or otherwise) of any Obligor
resulting therefrom or associated therewith could readily be
expected to have a Material Adverse Effect on the Company
Group of which the surviving Obligor is a part or cause such
Company Group to not be Solvent;
(f) Assume, guarantee, endorse, or otherwise become liable upon
the obligations of any person, firm, entity or corporation,
except by the endorsement of negotiable instruments for
deposit or collection or similar transactions in the
ordinary course of business and except for assumptions or
guaranties of Permitted Indebtedness;
47
(g) Declare or pay any Restricted Payments, except the (i)
Obligors (other than Parent) may make Restricted Payments as
permitted under Section 4.07 of the Senior Subordinated
Notes Indenture dated May 29, 200, and (ii) the Parent may
make Restricted Payments as long as the aggregate
Availability of the Companies is at least $30,000,000 after
any such payment, provided that, in any instance under this
subparagraph (g), such Restricted Payments may only be made
if (x) a Default or Event of Default has not occurred
hereunder, (y) after giving effect to such payment, no
Default and/or Event of Default has occurred or would occur
hereunder and (z) the Obligor making such Restricted
Payments has sufficient working capital to pay its debts as
they come due;
(h) Make any advance or loan to, or any investment in, any
Person or make any Acquisitions; PROVIDED, HOWEVER, that as
long as there has not occurred any Default or Event of
Default that is continuing which has not been waived in
writing by Agent and a Default or Event of Default would not
occur or exist after giving effect thereto, this
Subparagraph (h) shall not prohibit: (i) Permitted
Acquisitions, (ii) loans, deposits, prepayments and advances
by the Companies to their employees or non-Affiliates of
Obligors in the ordinary course of their business in an
amount not to exceed $3,000,000 in the aggregate at any one
time outstanding, (iii) Permitted Intercompany Balances,
(iv) mergers permitted under Subparagraph 7.9(e) of Section
7 hereof, (v) Permitted Financial Investments, and (vi)
Trade Account Receivable which are for goods furnished or
services rendered in the ordinary course of business and are
payable in accordance with customary trade terms.
(i) Directly or indirectly conduct any business or enter into,
renew, extend or permit to exist any transaction (including
the purchase, sale, lease or exchange of any assets or the
rendering of any service) or series of related transactions
with any Affiliate of any Obligor (an "AFFILIATE TRANSACTION")
on terms that are less favorable to the Obligor party to such
transaction, than would be available in a comparable arm's
length transaction with a Person who is not an Affiliate of
any Obligor, except for:
(i) the payment of reasonable and customary regular fees
to directors of the Obligor who are not employees of
the Obligor;
(ii) loans and advances to employees permitted under
Subparagraph 7.9(h) of Section 7 hereof;
(iii) any transaction entered into in the ordinary
course of business with the Obligor which is for
inter-company charges for administrative services,
allocations of overhead, concentrated cash management
systems for collections and disbursements, and sales
of goods and services in connection with the business
of the Obligors in the ordinary course of business of
such Persons;
48
(iv) licenses and other transfers of patents,
trademarks, trade names, copyrights, trade secrets,
know-how and other intellectual property between and
among any two or more of the Obligors; and
(v) transactions which qualify as Permitted Intercompany
Balances.
7.10 Until termination of the Financing Agreement and payment and
satisfaction in full of all Obligations hereunder, unless a written waiver or
consent is granted by Agent, the Obligors on a consolidated basis shall:
(a) maintain at all times during each Fiscal Quarter a Net
Worth of not less than $272,000,000, such amount to be
increased on the last day of each successive Fiscal Quarter,
beginning with the Fiscal Quarter ending September 30, 2001,
by an amount equal to the sum of (i) seventy-five percent
(75%) of the net income as defined by GAAP (with no
deductions for net losses) of the Companies and their
consolidated subsidiaries during such Fiscal Quarter (income
of Subsidiaries acquired during any Fiscal Quarter shall be
included for only the period from the date of acquisition to
the end of such Fiscal Quarter), plus (ii) seventy-five
percent (75%) of the net proceeds of any equity issuance
received by any Company during such Fiscal Quarter (other
than the proceeds of the issuance of equity in connection
with the North Star Acquisition, minus (iii) the amount of
any write-down of goodwill subsequent to June 30, 2001, as a
result of a determination that the value of the goodwill or
the acquired business related thereto is impaired).
(b) maintain at the end of each Fiscal Quarter for the 12 month
period ending with each such Fiscal Quarter a Fixed Charge
Coverage Ratio of not less than 1.25 to 1.00.
(c) maintain at the end of each Fiscal Quarter for the 12 month
period ending with each such Fiscal Quarter a Leverage Ratio
not to exceed 3.5 to 1.0.
(d) maintain at the end of each Fiscal Quarter for the 12 month
period ending with each such Fiscal Quarter a Senior Debt
Leverage Ratio not to exceed 2.0 to 1.0.
7.11 Without the prior written consent of the Agent, the Obligors will
not contract for amounts due and payable pursuant to all Capital Lease and
contract for purchase, otherwise incur obligations with respect to Capital
Expenditures (whether subject to a security interest or otherwise) during any
period below in the aggregate amount in excess of the amount set forth for such
period: $26,000,000.00 for the Fiscal Year ending December 31, 2001, and for
each Fiscal Year thereafter.
7.12 The Obligors agree to advise the Agent and each Lender in writing
of any notices any of the Obligors receive from any local, state or federal
authority advising such Obligors, or any one of them, of any environmental
liability (real or potential) stemming from such Obligors' operations, their
premises, their waste disposal practices, or waste disposal sites used by the
Obligors, or any one of them, and to provide the Agent with copies of all such
notices if so required.
49
7.13 Each of the Obligors, jointly and severally, hereby agrees to pay
any and all fees, costs, expenses, charges, liabilities, obligations and other
amounts relating to, or contemplated by, any Lockbox Agreement and any ancillary
agreements entered in connection therewith from time to time, including for the
establishment and maintenance of post office boxes and depository and collection
accounts. In furtherance thereof, each of the Companies hereby agrees that any
and all such payments shall be deemed Obligations and irrevocably instructs the
Agent to charge their Revolving Loan Accounts under this Financing Agreement
with any and all payments which the Agent may, in its sole discretion, make from
time to time with respect to any such Lockbox Agreement. Each of the Obligors,
jointly and severally, hereby agrees to indemnify and hold harmless the Agent,
the Lenders and their officers, directors, employees, attorneys and agents (each
an "INDEMNIFIED PARTY") from, and holds each of them harmless against, any and
all losses arising under this Financing Agreement and the Loan Documents,
including, without limitation, losses resulting from items deposited and
returned unpaid or returned under a claim that a presentment of warranty has
been breached, liabilities, obligations, claims, actions, damages, costs and
expenses (including attorney's fees) and any payments made by the Agent pursuant
to any indemnity provided by the Agent with respect to or to which any
Indemnified Party could be subject insofar as such losses, liabilities,
obligations, claims, actions, damages, costs, fees or expenses arise from or
relate to the lockbox and/or the depository account and/or the agreements
executed in connection therewith, whether through the alleged or actual
negligence of such person or otherwise, except and to the extent that the same
results solely and directly from the gross negligence or willful misconduct of
such Indemnified Party as finally determined by a court of competent
jurisdiction. This indemnity shall survive termination of this Financing
Agreement. The Agent may, in its reasonable business judgement, establish such
Availability Reserves with respect thereto as it may deem advisable under the
circumstances and, upon any termination hereof, hold such reserves as cash
reserves for any such contingent liabilities for the applicable duration of the
Agent's indemnity under any such Lockbox or Depository Account Agreements.
7.14 In order to induce Agent and the other Lenders to enter into this
Financing Agreement and to make the loans and advances provided for herein, the
Obligors make, on or as of the occurrence of each such loan or advance (except
to the extent such representations or warranties relate to an earlier date or
are no longer true and correct in all material respects solely as a result of
transactions not prohibited by the Loan Documents), the following
representations and warranties to the Agent and the other Lenders.
(a) ORGANIZATION AND QUALIFICATION. Each Obligor (i) is duly
organized validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, (ii) has the corporate or
partnership power, as the case may be, to own its property and to carry on its
business as now conducted and (iii) is duly qualified to do business and is in
good standing, in each case in each jurisdiction in which the failure to be so
qualified or in good standing would reasonably be expected to have a Material
Adverse Effect.
(b) AUTHORIZATION AND VALIDITY. Each Obligor has the corporate
or partnership power, as the case may be, and authority to execute, deliver and
perform its obligations hereunder and under the other Loan Documents to which
each such Obligor is a party and all such action has been duly authorized by all
necessary corporate proceedings on its part. The Loan Documents to which it is a
party have been duly and validly executed and delivered by each such Obligor and
50
constitute valid and legally binding agreements of each such Obligor enforceable
in accordance with the respective terms thereof, except, in each case, as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or affecting
the enforcement of creditors' rights generally and general principles of equity.
(c) CONSENTS. No authorization, consent, approval, license or
exemption (other than such exemptions that exist under applicable law, that are
permitted, or that have been obtained) of any person or filing or registration
with any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is necessary for the valid, delivery or
performance by any Obligor of any Loan Document to which it is a party or for
the grant of a security interest in or mortgage on the collateral covered by the
Loan Documents, except such matters relating to performance as would ordinarily
be done in the ordinary course of business after the date hereof.
(d) CONFLICTING OR ADVERSE AGREEMENTS OR RATIFICATIONS.
Neither the delivery of the Loan Documents nor compliance with the terms and
provisions hereof or thereof will be contrary to the provisions of, or
constitute a default under (i) the charter or bylaws of any corporate Obligor or
the Certificate of limited partnership or partnership agreement for any Obligor
that is a partnership or (ii) any applicable law or any applicable regulation,
order, writ, injunction or decree of any court or governmental instrumentality
or (iii) the Senior Subordinated Notes Indentures or any other material
agreement to which any Obligor is a party or by which any Obligor is bound or to
which any Obligor is subject.
(e) OTHER LENDING AGREEMENTS. As of the date hereof, all
agreements of the Obligors (other than this Financing Agreement and the other
Loan Documents) relating to the borrowing of money, or the issuance of letters
of credit to or for the account of any party or any contractually assumed
contingent obligations are described on SCHEDULE 7(14)(e) hereto.
(f) TITLE TO ASSETS; COLLATERAL LOCATIONS; LICENSES AND
PERMITS. The Obligors each have good and marketable title to all personal
property and good and indefeasible title to or a subsisting leasehold interest
in, all realty as reflected as of the date hereof on its books and records as
being owned or leased by it after giving effect to the transaction contemplated
herein, subject to no Liens except Permitted Encumbrances. All of such assets
are being maintained by the appropriate person in good working condition in
accordance with historical practice of the Obligors. All real property owned and
leased by the Obligors as of the date hereof is set forth in SCHEDULE 7(14)(f)
hereto. All of the Collateral is located on the owned and leased premises set
forth in SCHEDULE 7(14)(f) hereto. To the knowledge of the Obligors there are no
actual, threatened or alleged defaults of a material nature with respect to any
leases of real property under which any Obligor is bound after giving effect to
the transaction contemplated herein the consequences of which would reasonably
be expected to have a Material Adverse Effect. After giving effect to the
transaction contemplated herein, each Obligor is current and in good standing
with respect to all governmental approvals, permits, certificates, licenses,
consents and franchises necessary to continue to conduct its business and to own
or lease and operate its properties as heretofore conducted, owned, leased or
operated except where any such failure to maintain or file approvals, permits,
certificates, licenses, consents and franchises would not reasonably be expected
to have a Material Adverse Effect.
51
(g) LITIGATION. Except as set forth in SCHEDULE 7(14)(f)
hereof, as of the date hereof, no proceedings against or affecting any Obligor
are pending or, to the knowledge of the Obligors, threatened before any court or
governmental agency or department which could reasonably be expected to have a
Material Adverse Effect.
(h) FINANCIAL STATEMENTS. Prior to the date hereof, the
Obligors have furnished to the Lenders the audited, consolidated financial
statements of the Obligors as of December 31, 2000 and the consolidated
financial statements of the Obligors as of June 30, 2001 (such financial
statements, collectively, are referred to as "FINANCIALS"). The Financials have
been prepared in conformity with GAAP consistently applied (except for year-end
adjustments and omissions of footnotes with respect to the June 30, 2001
financial statements) and present fairly, in all material respects, the
financial condition of Obligors as of the dates thereof. Since such dates, there
has not occurred any event which would reasonably be expected have a Material
Adverse Effect.
(i) NO DEFAULTS. The Obligors are not in default (i) under any
material provisions of any instrument evidencing any Indebtedness or of any
agreement relating thereto in such manner as to cause a Material Adverse Effect
or (ii) in any respect under or in violation of any order, writ, injunction or
decree of any court or governmental instrumentality, in such manner as to cause
a Material Adverse Effect or (iii) under any provision of any material contract
to which any Obligor is a party, which default would reasonably be expected to
have a Material Adverse Effect. The Obligors will give the Agent prompt written
notice of any event or circumstance that may constitute such a default if it
could reasonably be expected to cause a Default or Event of Default or otherwise
have a Material Adverse Effect.
(j) INVESTMENT COMPANY ACT. The Obligors are not, nor are the
Obligors directly or indirectly controlled by or acting on behalf of any person
which is, an "investment company," as such term is defined in the Investment
Company Act of 1940, as amended.
(k) ERISA. (i) The Obligor and each ERISA Affiliate have
operated and administered each Plan and Employee Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and would not reasonably be expected to have a Material Adverse Effect.
Neither any Obligor nor any ERISA Affiliate has incurred any liability pursuant
to Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in Section 3 of ERISA) which
would individually or in the aggregate reasonably be expected to have a Material
Adverse Effect and no event, transaction or condition has occurred or exists
that would reasonably be expected to result in the incurrence of any such
liability by the Obligors or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Obligors or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such liabilities or liens as would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect;
(ii) No accumulated funding deficiency (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived, exists or is expected to be incurred with respect to any Plan.
52
(iii) The Obligors and each ERISA Affiliate have not
incurred withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under Section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate would reasonably be expected to
have a Material Adverse Effect.
(iv) The expected post-retirement benefit obligation
(determined as of the last day of the Obligors' most recently ended fiscal
year in accordance with Financial Accounting Standards Board Statement No.
106, without regard to liabilities attributable to continuation coverage
mandated by Section 4980B of the Code) of the Obligors and their Subsidiaries
would not reasonably be expected to have a Material Adverse Effect.
(l) ENVIRONMENTAL MATTERS. To the best of the Obligors
knowledge, the Obligors (a) possess all environmental, health and safety
licenses, permits, authorizations, registrations, approvals and similar rights
necessary under Environmental Laws for the Obligors to conduct their respective
operations as now being conducted, except where failure to have such licenses,
permits, authorizations, registrations, approvals, and similar rights would not
reasonably be expected to have a Material Adverse Effect, and (b) each of such
licenses, permits, authorizations, registrations, approvals and similar rights
is valid and subsisting, in full force and effect and enforceable by the
Obligors, and the Obligors are in compliance with all terms, conditions or other
provisions of such permits, authorizations, regulations, approvals and similar
rights except for such failure or noncompliance that, individually or in the
aggregate for the Obligors, would not reasonably be expected to have a Material
Adverse Effect. Except as disclosed in SCHEDULE 7(14)(l) hereto, none of the
Obligors has received any written notices of any violation or noncompliance
with, or remedial obligation under, any Environmental Laws (which violation,
non-compliance, or remedial obligation has not been cured or would not
reasonably be expected to have a Material Adverse Effect) and there are no
writs, injunctions, decrees, orders or judgments outstanding under the
Environmental Laws, or lawsuits, claims, proceedings, or, to the knowledge of
the Obligors, investigations or inquiries pending or threatened under
Environmental Laws, relating to the ownership, use, condition, maintenance or
operation of, or conduct of business related to, any property owned, leased or
operated by the any Obligor or other assets of any Obligor other than those
violations, instances of noncompliance, obligations, writs, injunctions,
decrees, orders, judgments, lawsuits, claims, proceedings, investigations or
inquiries that individually or in the aggregate for any Obligor, would not
reasonably be expected to have a Material Adverse Effect. Except as disclosed in
SCHEDULE 7(14)(l) hereto, there are no obligations, undertakings or liabilities
arising out of or relating to Environmental Laws which the Obligors have agreed
to, assumed or retained, or to the best of the Obligors' knowledge by which the
Obligors are adversely affected, by contract or otherwise, except such
obligations, undertakings or liabilities as would not reasonably be expected to
have a Material Adverse Effect. Except as disclosed in SCHEDULE 7(14)(l) hereto,
none of the Obligors have received a written notice or claim to the effect that
any of them are or may be liable to any other person as the result of a release
or threatened release of a Hazardous Material except such notice or claim that
would not reasonably be expected to have a Material Adverse Effect. The Obligors
have complied with all Environmental Laws and the requirements of any permits,
licenses or other authorizations issued under any Environmental Laws.
(m) PURPOSE OF LOANS. The proceeds of the Revolving Loans will
be used by the Obligors for Permitted Acquisitions, to refinance current debt,
and for working capital purposes.
53
None of the proceeds of any Revolving Loans or the Term Loans will be used
directly or indirectly for the purpose of purchasing or carrying any "margin
stock" within the meaning of Regulation U (herein called "MARGIN STOCK") or
for the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry margin stock, or for any other purpose which
might constitute this transaction as a "purpose credit" within the meaning of
Regulation U. Neither the Obligors nor any agent acting on their behalf has
taken or will take any action which might cause this Financing Agreement or
any other Loan Document to violate, or involve the Lenders in a violation of,
Regulation U, Regulation X or any other regulation of the Board of Governors
or to violate the Securities Exchange Act of 1934.
(n) SECURITY INTERESTS IN FAVOR OF AGENT. This Financing
Agreement and the other Loan Documents create valid security interest and liens
in all of the Collateral described therein in favor of Agent on behalf of the
Lenders securing the Obligations and constitute (subject to (i) the filing of
financing statements, recording of the mortgages/deeds of trust delivered to
Agent on the date hereof and thereafter from time to time on the Agent's request
therefor and (ii) delivery of any collateral after the date hereof as provided
herein or any other Loan Document) and, except for Permitted Encumbrances,
perfected first priority liens and security interests in substantially all of
such collateral described therein subject to no liens other than Permitted
Encumbrances.
(o) SUBSIDIARIES. Except as disclosed on SCHEDULE 7(14)(o)
attached hereto, the Obligors do not have any Subsidiaries and are not a
party to any joint venture, partnership, or similar organization.
(p) INTELLECTUAL PROPERTY. All Patents, Trademarks and
Copyrights which the Obligors and their Subsidiaries own or have a license or
other right to use in connection with conducting the Obligors' business are
listed on SCHEDULE 7(14)(p) hereto.
SECTION 8. INTEREST, FEES AND EXPENSES
8.1 Interest on the Revolving Loans shall be payable monthly as of
the end of each month and with respect to Chase Bank Rate Loans shall be an
amount equal to the lesser of (a) the Maximum Legal Rate or (b) the Chase
Bank Rate plus the Applicable Margin for Chase Bank Rate Loans, on the
average of the net balances owing by each of the Companies to the Agent
and/or the Lenders in their Revolving Loan Accounts at the close of each day
during such month. In the event of any change in said Chase Bank Rate, the
rate hereunder for Chase Bank Rate Loans shall change, as of the date of such
change, so as to remain an amount equal to the Applicable Margin for Chase
Bank Rate Loans above the Chase Bank Rate. The rate hereunder for Chase Bank
Rate Loans shall be calculated based on a 360-day year. The Agent shall be
entitled to charge each of the Companies Revolving Loan Account at the rate
provided for herein when due until all Obligations have been paid in full.
8.2 [INTENTIONALLY OMITTED]
8.3 In consideration of the Letter of Credit Guaranty of the
Agent, the Companies shall pay the Agent on behalf of the Lenders the Letter
of Credit Guaranty Fee which shall be an amount
54
equal to (a) one and three-quarters percent (1.75%) on the face amount of
each documentary Letter of Credit payable upon issuance thereof and (b) one
and three-quarters percent (1.75%) per annum, payable monthly, on the face
amount of each standby Letter of Credit less the amount of any and all
amounts previously drawn under such standby Letter of Credit.
8.4 Any and all charges, fees, commissions, costs and expenses
charged to the Agent and/or the Lenders for the Companies' account by any
Issuing Bank in connection with or arising out of Letters of Credit issued
pursuant to this Financing Agreement or out of transactions relating thereto
will be charged to the Companies' or any one of their Revolving Loan
Account(s) in full when charged to or paid by the Agent and/or the Lenders,
or as may be due upon any early termination hereof, and when made by any such
Issuing Bank shall be conclusive on the Agent and/or the Lenders.
8.5 The Companies shall, jointly and severally, reimburse or
pay the Agent, as the case may be, for: (a) all Out-of-Pocket Expenses of the
Agent and (b) any applicable Documentation Fee.
8.6 Upon the last Business Day of each month, commencing on September
30, 2001, the Companies shall pay the Agent the Line of Credit Fee.
8.7 To induce the Agent and the Lenders to enter into this Financing
Agreement and to extend to the Companies the Revolving Loan and Letters of
Credit Guaranties, the Companies shall pay to the Agent (to be allocated among
the Agent and the Lenders based on Agent's sole discretion) a Loan Facility Fee
in accordance with and subject to the Fee Letter payable upon execution of this
Financing Agreement and thereafter in accordance with the terms of the Fee
Letter. The Commitment Fee shall, at the Agent's election, be refunded or
credited (less Out-of-Pocket Expenses) toward the Loan Facility Fee upon
consummation of this financing transaction on the Closing Date. The Companies
shall also pay the Agent solely for its own account, as of the Closing Date and
otherwise, the Syndication Fee in accordance with the Fee Letter.
8.8 On the Closing Date and each anniversary of the Closing Date
thereafter, the Companies shall pay to the Agent, for its account, the
Collateral Management Fee in the amount of $50,000, which shall be deemed fully
earned when paid.
8.9 Upon the occurrence of an Event of Default, which is not waived
in writing by the Agent, the Companies shall, jointly and severally, for its
account, pay the Agent's standard charges and the fees for the Agent's personnel
used by the Agent for reviewing the books and records of the Companies and for
verifying, testing, protecting, safeguarding, preserving or disposing of all or
any part of the Collateral (which fees shall be in addition to the Collateral
Management Fee and any Out-of-Pocket Expenses).
8.10 Each of the Companies hereby authorizes the Agent to charge the
Companies' Revolving Loan Account(s) with the Agent with the amount of all
payments due hereunder as such payments become due. Each of the Companies
confirms that (i) its liability for any and all of the Obligations under this
Financing Agreement and the Loan Documents is joint and several, (ii) the
Companies, as between themselves, shall determine how to pro-rate any payments
due hereunder, and (iii) any charges which the Agent may so make to any of the
Companies' Revolving Loan
55
Account(s) as herein provided will be made as an accommodation to the
Companies and solely at the Agent's discretion.
8.11 In the event that the Agent shall have determined in the exercise
of its reasonable business judgement that subsequent to the Closing Date any
change in applicable law, rule, regulation or guideline regarding capital
adequacy, or any change in the interpretation or administration thereof, or
compliance by the Agent (or any financial institution which may become a
participant or Lender hereunder) with any new request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on the Agent's or any Lender's capital as a consequence of its
obligations hereunder to a level below that which the Agent or such Lender could
have achieved but for such adoption, change or compliance (taking into
consideration the Agent's or such Lender's policies with respect to capital
adequacy) by an amount reasonably deemed by the Agent to be material, then, from
time to time, the Companies shall pay no later than five (5) days following
demand to the Agent such additional amount or amounts as will compensate the
Agent for such reduction. In determining such amount or amounts, the Agent or
such Lender may use any reasonable averaging or attribution methods. The
protection of this Paragraph 8.11 shall be available to the Agent and the
Lenders regardless of any possible contention of invalidity or inapplicability
with respect to the applicable law, regulation or condition. A certificate of
the Agent setting forth such amount or amounts as shall be necessary to
compensate the Agent or any Lender with respect to this Section 8 and the
calculation thereof when delivered to the Companies shall be conclusive on the
Companies absent manifest error. Notwithstanding anything in this paragraph to
the contrary, in the event the Agent or any Lender has exercised its rights
pursuant to this paragraph, and subsequent thereto determines that the
additional amounts paid by the Companies in whole or in part exceed the amount
which the Agent or such Lender actually required pursuant hereto, the excess, if
any, shall be returned to the Companies by the Agent or such Lender.
8.12. In the event that subsequent to the Closing Date any change in
applicable law, treaty or governmental regulation, or any change there in or in
the interpretation or application thereof, or compliance by the Agent or any
Lender with any new request or directive (whether or not having the force of
law) from any central bank or other financial, monetary or other authority,
shall:
(a) subject the Agent or such Lender to any tax of any kind
whatsoever with respect to this Financing Agreement or change the basis of
taxation of payments to the Agent and/or any such Lender of principal, fees,
interest or any other amount payable hereunder or under any other documents
(except for changes in the rate of tax on the overall net income of the Agent
or such Lender by the federal government or the jurisdiction in which it
maintains its principal office, and except for changes in franchise taxes
applicable to the Lenders);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office of
the Agent or such Lender by reason of or in respect to this Financing Agreement
and the Loan Documents, including (without limitation) pursuant to Regulation D
of the Board of Governors of the Federal Reserve System; or
56
(c) impose on the Agent and/or any such Lender any other condition
with respect to this Financing Agreement or any other document, and the
result of any of the foregoing is to increase the cost to the Agent and/or
any such Lender of making, renewing or maintaining its LIBOR loans hereunder
by an amount that the Agent or such Lender deems to be material in the
exercise of its reasonable business judgement or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of
the LIBOR Loans by an amount that the Agent or such Lenders deem to be
material in the exercise of its or their reasonable business judgement, then,
in any case the Companies shall pay the Agent on behalf of such Lenders,
within five (5) days following its demand, such additional cost or such
reduction, as the case may be. The applicable Lenders shall certify the
amount of such additional cost or reduced amount to the Companies and the
calculation thereof and such certification shall be conclusive upon the
Companies absent manifest error. No amount paid by the Companies under this
Paragraph 8.12 shall be duplicative of any amount paid by the Companies under
Paragraph 8.11. Notwithstanding anything in this paragraph to the contrary,
in the event such Lender has exercised its rights pursuant to this paragraph,
and subsequent thereto determine that the additional amounts paid by the
Companies in whole or in part exceed the amount which the Agent actually
required pursuant hereto, the excess, if any, shall be returned to the
Companies by such Lender.
8.13 LIBOR CONVERSION OPTIONS
(a) The Companies, or any one of them, may elect, subsequent
to seven (7) days from the Closing Date and from time to time thereafter, (i) to
request any loan made hereunder to be a LIBOR Loan as of the date of such loan
or (ii) to convert Chase Bank Rate Loans to LIBOR Loans, and may elect from time
to time to convert LIBOR Loans to Chase Bank Rate Loans by giving the Agent at
least three (3) Business Days' prior irrevocable notice of such election,
PROVIDED that any such conversion of LIBOR Loans to Chase Bank Rate Loans shall
only be made, subject to the second following sentence, on the last day of an
Interest Period with respect thereto. Should the Companies elect to convert
Chase Bank Rate Loans to LIBOR Loans, they shall give the Agent at least four
(4) Business Days' prior irrevocable notice of such election. If the last day of
an Interest Period with respect to a loan that is to be converted to a LIBOR
Loan is not a Business Day, then such conversion shall be made on the next
succeeding Business Day , and during the period from such last day of an
Interest Period to such succeeding Business Day, such loan shall bear interest
as if it were a Chase Bank Rate Loan. All or any part of outstanding Chase Bank
Rate Loans then outstanding with respect to Revolving Loans may be converted to
LIBOR Loans as provided herein, PROVIDED that partial conversions shall be in
multiples in an aggregate principal amount of $1,000,000 or more. The Agent
shall be entitled to charge the Companies, for its own account, a $500
processing fee, for its own account, upon the first effective day of any such
election for a LIBOR Loan.
(b) Any LIBOR Loans may be continued as such upon the expiration of
an Interest Period, PROVIDED the applicable Company so notifies the Agent, at
least three (3) Business Days prior to the expiration of said Interest
Period, and PROVIDED FURTHER that no LIBOR Loan may be continued as such upon
the occurrence of any Default or Event of Default under this Financing
Agreement, but shall be automatically converted to an Chase Bank Rate Loan on
the last day of the Interest Period during which occurred such Default or
Event of Default. Absent such notification,
57
LIBOR Rate Loans shall convert to Chase Bank Rate Loans on the last day of
the applicable Interest Period. Each notice of election, conversion or
continuation furnished by the Companies pursuant hereto shall specify whether
such election, conversion or continuation is for a one, two or three month
period. Notwithstanding anything to the contrary contained herein, the Agent
and the Lenders (and any participant or co-lender, if applicable) shall not
be required to purchase United States Dollar deposits in the London interbank
market or from any other applicable LIBOR Rate market or source or otherwise
"match fund" to fund LIBOR Rate Loans, but any and all provisions hereof
relating to LIBOR Rate Loans shall be deemed to apply as if the Agent (and
any such other Lender or participant, if applicable) had purchased such
deposits to fund any LIBOR Rate Loans.
(c) The Companies may request a LIBOR Loan, convert any Chase Rate
Loan or continue any LIBOR Loan provided that no Default or Event of Default
has occurred hereunder, which has not been waived in writing by the Required
Lenders.
8.14 INTEREST RATE.
(a) The LIBOR Loans shall bear interest for each Interest Period with
respect thereto on the unpaid principal amount thereof at a rate per annum equal
to the lesser of (1) the Maximum Legal Rate or (2) the LIBOR determined for each
Interest Period in accordance with the terms hereof plus the Applicable Margin
for LIBOR Loans.
(b) If all or a portion of the outstanding principal amount of the
Obligations shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such outstanding amount, to the extent it is a LIBOR
Loan, shall be converted to a Chase Bank Rate Loan at the end of the last
Interest Period therefor for which the Agent on or prior to the date such unpaid
principal amount became due, shall have determined LIBOR.
(c) The Companies in the aggregate may not have more than five (5)
LIBOR Loans outstanding at any given time.
8.15 COMPUTATION AND PAYMENT OF INTEREST.
(a) Interest in respect of the LIBOR Loans shall be calculated on the
basis of a 360 day year and shall be payable monthly as of the end of each month
(although the applicable LIBOR shall apply to each tranch for each Interest
Period).
(b) the Agent shall, at the written request of the Companies, deliver
to the Companies a statement showing the quotations given by The Chase Manhattan
Bank and the computations used by the Agent in determining any interest rate
pursuant to Paragraph 8.14 of Section 8 hereof.
8.16 INABILITY TO DETERMINE INTEREST RATE.
As further set forth in Paragraph 8.11 of Section 8 hereof, in the
event that the Agent shall determine, or any Lender notifies the Agent in
writing that it has determined, in the exercise of its reasonable business
judgement (which determination shall be conclusive and binding upon the
Companies), that by reason of circumstances affecting the interbank LIBOR
market, adequate and
58
reasonable means do not exist for ascertaining LIBOR applicable for any
Interest Period with respect to (a) a proposed loan that any of the Companies
have requested be made as a LIBOR Loan, (b) a LIBOR Loan that will result
from the requested conversion of a Chase Bank Rate Loan into a LIBOR Loan or
(c) the continuation of LIBOR Loans beyond the expiration of the then current
Interest Period with respect thereto, the Agent or such Lender, as
applicable, shall forthwith give written notice of such determination to the
Companies at least one (1) day prior to, as the case may be, the requested
borrowing date for such LIBOR Loan, the conversion date of such Chase Bank
Rate Loan or the last day of such Interest Period. If such notice is given
(i) any requested LIBOR Loan shall be made as a Chase Bank Rate Loan, (ii)
any Chase Bank Rate Loan that was to have been converted to a LIBOR Loan
shall be continued as a Chase Bank Rate Loan, and (iii) any outstanding LIBOR
Loan shall be converted, on the last day of then current Interest Period with
respect thereto, to a Chase Bank Rate Loan. Until the Agent or such Lender
has withdrawn such notice, no further LIBOR Loan shall be made nor shall the
Companies have the right to convert a Chase Bank Rate Loan to a LIBOR Loan.
8.17 PAYMENTS.
If any payment on a LIBOR Loan becomes due and payable on a day other
than a Working Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would be to extend
such payment into another calendar month in which event such payment shall be
made on the immediately preceding Working Day.
8.18 ILLEGALITY.
Notwithstanding any other provisions herein, if any law, regulation,
treaty or directive or any change therein or in the interpretation or
application thereof, shall make it unlawful for the Agent or any Lender to make
or maintain LIBOR Loans as contemplated herein, the then outstanding LIBOR Loans
so affected, if any, shall be converted automatically to Chase Bank Rate Loans
on the next succeeding Interest Payment Date or within such earlier period as
required by law. Each of the Companies hereby agrees promptly to pay the Agent,
upon its demand, any additional amounts necessary to compensate the Agent or any
Lender for any costs incurred by the Agent or any Lender in making any
conversion in accordance with this Paragraph 8.18 including, but not limited to,
any interest or fees payable by the Agent or any Lender or The Chase Manhattan
Bank to lenders of funds obtained by either of them in order to make or maintain
LIBOR Loans hereunder.
8.19 INDEMNITY
Each of the Companies agrees to indemnify and to hold the Agent and the
Lenders (including any participant or co-lender, if applicable) harmless from
any loss or expense which the Agent or any Lender may sustain or incur as a
consequence of (a) default by the Companies in payment of the principal amount
of or interest on any LIBOR Loans, as and when the same shall be due and payable
in accordance with the terms of this Financing Agreement, including, but not
limited to, any such loss or expense arising from interest or fees payable by
the Agent or any Lender to lenders of funds obtained by either of them in order
to maintain the Agent's and the Lenders LIBOR Loans hereunder, (b) default by
any of the Companies in making a borrowing or conversion after any such the
Company has given a notice in accordance with Paragraph 8.13 of Section 8
59
hereof, (c) any prepayment of LIBOR Loans on a day which is not the last day of
the Interest Period applicable thereto, including without limitation prepayments
arising as a result of the application of the collection of Accounts to the
Revolving Loans and (d) default by any of the Companies in making any prepayment
after any such Company had given notice to the Agent thereof. This covenant
shall survive termination of this Financing Agreement and payment of the
outstanding Obligations.
8.20 LIBOR PROVISIONS
Notwithstanding anything to the contrary in this Agreement, in the
event that, by reason of any Regulatory Change (for purposes hereof "Regulatory
Change" shall mean, with respect to the Agent or any Lender, any change after
the date of this Agreement in United States Federal, state or foreign law or
regulations (including, without limitation, Regulation D) or the adoption or
making after such date of any interpretation, directive or request applying to a
class of banks including the Agent or any Lender of or under any United States
Federal, state or foreign law or regulations (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful)), the
Agent or any Lender either (a) incurs any material additional costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such bank which includes deposits by reference
to which the interest rate on LIBOR Loans is determined as provided in this
Financing Agreement or a category of extensions of credit or other assets of the
Agent or any Lender which includes LIBOR Loans or (b) becomes subject to any
material restrictions on the amount of such a category of liabilities or assets
which it may hold, then, if the Agent or the Required Lenders so elect by notice
to the Companies the obligation of the Agent and the Lenders to make or
continue, or to convert Chase Bank Rate Loans into LIBOR Loans hereunder shall
be suspended until such Regulatory Change ceases to be in effect.
8.21 APPLICATION
For purposes of this Financing Agreement and Section 8 thereof, any
reference to the Agent or the Lenders shall include any financial institution
which may become a Lender subsequent to the Closing Date.
SECTION 9. POWERS
Each of the Obligors hereby constitutes the Agent or any person or
agent the Agent may designate as its attorney-in-fact, at the Obligors' cost and
expense, to exercise all of the following powers, which being coupled with an
interest, shall be irrevocable until all of the Obligors' Obligations to the
Agent and the Lenders have been paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all in the
name of the Agent or the Obligors or any one of them, any and all checks, notes,
drafts, and other documents or instruments relating to the Collateral;
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(b) To receive, open and dispose of all mail addressed to the
Obligors or any one of them and to notify postal authorities to change the
address for delivery thereof to such address as the Agent may designate;
(c) To request from customers indebted on Accounts at any time, in
the name of the Agent or the Obligors or any one of them or that of the Agent's
designee, information concerning the amounts owing on the Accounts;
(d) To transmit to customers indebted on Accounts notice of the
Agent's interest therein and to notify customers indebted on Accounts to make
payment directly to the Agent for the Obligors' account; and
(e) To take or bring, in the name of the Agent or the Obligors or
any one of them, all steps, actions, suits or proceedings deemed by the Agent
necessary or desirable to enforce or effect collection of the Accounts.
Notwithstanding anything herein above contained to the contrary, the
powers set forth in (b), (d) and (e) above may only be exercised after the
occurrence and continuance of an Event of Default and until such time as such
Event of Default is waived in writing by the Required Lenders or cured to the
Required Lenders' satisfaction. In addition, absent the occurrence of an Event
of Default or the consent of such Obligors, the powers set forth in (c) above
will be exercised in the name of such Obligors or in the name of a certified
public accountant designated by the Agent.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Notwithstanding anything herein above to the contrary, the Agent,
with the concurrence of the Required Lenders, may terminate this Financing
Agreement immediately upon the occurrence of any of the following (herein
"Events of Default"):
(a) cessation of the business of the Material Obligors or any
one of them, except pursuant to a Permitted Merger
hereunder, or the calling of a meeting of the creditors of
any of the Material Obligors for purposes of compromising
the debts and obligations of such Material Obligors;
(b) the failure of any of the Material Obligors to generally
meet debts as they mature;
(c) (i) the commencement by any of the Material Obligors of any
bankruptcy, insolvency, arrangement, reorganization,
receivership or similar proceedings under any federal or
state law; (ii) the commencement against any of the Material
Obligors, of any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceeding under any
federal or state law by creditors of any of the Material
Obligors, as applicable, provided that such involuntary
proceeding shall not have been controverted within ten (10)
days or shall not have been dismissed and vacated within
sixty (60) days of commencement, or any of the actions
sought
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in any such proceeding shall occur or such Material Obligors
shall take action to authorize or effect any of the actions
in any such proceeding;
(d) breach by any of the Obligors in any material respect of
any warranty, representation or covenant contained herein
(other than those referred to in sub-paragraph (e) below),
in the other Loan Documents or in any other written
agreement between such Obligors or the Agent, provided that
such breach by such Obligors of any of the warranties,
representations or covenants referred in this clause (d)
shall not be deemed to be an Event of Default unless and
until such breach shall remain unremedied to the Agent's or
the Required Lenders' satisfaction for a period of twenty
(20) Business Days from the date of such breach; PROVIDED,
HOWEVER, any breach by any Obligor of the covenants
contained in Paragraph 7.8 of Section 7 hereof shall not be
deemed to be an Event of Default unless and until such
breach remains unremedied to the Agent's or Required
Lenders' satisfaction for a period of ten (10) Business Days
from the date of written notice of such breach from Agent to
Parent;
(e) breach by any of the Obligors of any warranty,
representation or covenant of Paragraphs 3.3 (other than the
third sentence of Paragraph 3.3) and 3.4 of Section 3
hereof; Paragraphs 6.3 and 6.4 (other than the first
sentence of Paragraph 6.4) of Section 6 hereof; Paragraphs
7.1, 7.5, 7.6, 7.9 through 7.11, 7.13 and 7.14 of Section 7
hereof;
(f) failure of any of the Obligors to pay any of the Obligations
within five (5) Business Days of the due date thereof,
provided that nothing contained herein shall prohibit the
Agent from charging such amounts to any of the Companies'
Revolving Loan Accounts on the due date thereof;
(g) a Change of Control (as defined in the May 29, 2001 Senior
Subordinated Notes Indenture);
(h) any of the Obligors shall (i) engage in any "prohibited
transaction" as defined in ERISA, (ii) have any "accumulated
funding deficiency" as defined in ERISA, (iii) have any
"reportable event" as defined in ERISA, for which the
requirement to provide notice to the Pension Benefit
Guaranty Corporation ("PBGC") has not been waived by the
PBGC, (iv) terminate any "plan", as defined in ERISA, that
is subject to title IV of ERISA, or (v) be engaged in any
proceeding in which the Pension Benefit Guaranty Corporation
shall seek appointment, or is appointed, as trustee or
administrator of any "plan", as defined in ERISA, and with
respect to this sub-paragraph (h) such event or condition
(x) remains uncured for a period of thirty (30) days from
date of occurrence and (y) subjects the Obligors to any tax,
penalty or other liability which could reasonably be
expected to have a Material Adverse Effect;
(i) without the prior written consent of the Agent, any of the
Obligors shall (x) amend or modify the Subordinated Debt in
any respect which materially and adversely
62
affects the rights of the Lenders or of any other holders
of Senior Debt (as defined therein), (y) except for
Excluded Payments, make any payment on account of the
Subordinated Debt except as permitted under the Senior
Subordinated Notes Indentures or in a Subordination
Agreement, or (z) except for Excluded Payments, prepay,
in whole or in part, any of the Senior Subordinated Debt;
(j) the occurrence of any default or event of default (after
giving effect to any applicable grace or cure periods) under
any instrument or agreement evidencing (x) Subordinated Debt
or (y) any other Indebtedness of the Obligors, or any one of
them, having a principal amount in excess of $250,000;
PROVIDED, HOWEVER, any such default or event of default
shall not be deemed an Event of Default hereunder unless and
until (i) the holders of such debt accelerate the maturity
thereof, or (ii) the Parent fails to deliver to Agent a
written waiver of such default or event of default from the
holders of such debt within twenty (20) Business Days after
the occurrence of such default or event of default; or
(k) all of the Capital Stock of Obligors (other than Parent)
ceases to be beneficially owned by another Obligor, except
as otherwise permitted hereunder; or
(l) if any Guarantor terminates its obligations under the
Guaranty or otherwise fails to perform any of the terms of
its Guaranty, all prior to termination of this Financing
Agreement and payment in full of all Obligations except in
connection with or as a result of a transaction permitted;
(m) any judgment or judgments aggregating in excess of
$5,000,000 or any injunction or attachment is obtained or
enforced against any Material Obligor and which remains
unstayed for more than ten (10) Business Days and which
could reasonably be expected to have a Material Adverse
Effect.
10.2 Upon the occurrence and during the continuance of a Default
and/or an Event of Default, upon the written direction of the Required
Lenders the Agent shall declare that, all loans, advances and extensions of
credit provided for in Sections 3, 4 and 5 of this Financing Agreement shall
be thereafter in the Agent's or the Required Lenders' sole discretion and the
obligation of the Agent and the Lenders to make Revolving Loans and open
Letters of Credit shall cease unless such Default or Event of Default is
waived in writing by the Required Lenders or cured to the Agent's or the
Required Lenders' satisfaction in the exercise of the Agent's and the
Lenders' reasonable business judgement, and the Agent, upon the written
direction of the Required Lenders after the occurrence and during the
continuance of an Event of Default: (a) all Obligations shall become
immediately due and payable; (b) the Agent may charge the Companies the
lesser of (i) the Default Rate of Interest or (ii) the Maximum Legal Rate on
all then outstanding or thereafter incurred Obligations in lieu of the
interest provided for in Section 8 of this Financing Agreement, provided
that, with respect to this clause "(b)" (i) the Agent has given the Companies
written notice of the Event of Default, provided, however, that no notice is
required if the Event of Default is the Event listed in Paragraph 10.1(c) of
this Section 10, and (ii) the Companies have failed to cure the Event of
Default within ten (10) days after (x) the Agent gave such notice pursuant to
paragraph 12.6 below or (y) the occurrence of the Event of Default listed in
Paragraph 10.1 (c) of this Section 10; and (c)
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the Agent shall, upon the written direction of the Required Lenders,
immediately terminate this Financing Agreement upon notice to the Companies,
provided, however, that no notice of termination is required if the Event of
Default is the Event listed in Paragraph 10.1(c) of this Section 10. The
exercise of any option is not exclusive of any other option which may be
exercised at any time by the Agent and/or the Lenders.
10.3 Immediately upon the occurrence of any Event of Default, the
Agent may at its option, or shall at the direction of the Required Lenders,
to the extent permitted by law: (a) remove from any premises where same may
be located any and all books and records, software, documents, instruments,
files and records, and any receptacles or cabinets containing same, relating
to the Accounts, or the Agent may use, at the Obligors' expense, such of the
Obligors' personnel, supplies or space at the Companies' places of business
or otherwise, as may be necessary to properly collect and realize upon the
Accounts; (b) bring suit, in the name of any of the Companies or the Agent,
and generally shall have all other rights respecting said Accounts, including
without limitation the right to: accelerate or extend the time of payment,
settle, compromise, release in whole or in part any amounts owing on any
Accounts and issue credits in the name of any of the Companies or the Agent;
(c) sell, assign and deliver the Collateral and any returned, reclaimed or
repossessed merchandise, with or without advertisement, at public or private
sale, for cash, on credit or otherwise, at the Agent's sole option and
discretion, and the Agent or the Lenders may bid or become a purchaser at any
such sale, free from any right of redemption, which right is hereby expressly
waived by each of the Companies; (d) foreclose the security interests in the
Collateral created herein or by the Loan Documents by any available judicial
procedure, or to take possession of any or all of the Collateral, including
any Inventory, Equipment and/or Other Collateral without judicial process,
and to enter any premises where any Inventory and Equipment and/or Other
Collateral may be located for the purpose of taking possession of or removing
the same and (e) exercise any other rights and remedies provided in law, in
equity, by contract or otherwise. The Agent shall have the right, without
notice or advertisement (other than notice required by law), to sell, lease,
or otherwise dispose of all or any part of the Collateral whether in its then
condition or after further preparation or processing, in the name of any of
the Companies or the Agent, or in the name of such other party as the Agent
may designate, either at public or private sale or at any broker's board, in
lots or in bulk, for cash or for credit, with or without warranties or
representations, and upon such other terms and conditions as the Agent in its
sole discretion may deem advisable, and the Agent and the Lenders shall have
the right to purchase at any such sale. If any Inventory and Equipment shall
require rebuilding, repairing, maintenance or preparation, the Agent shall
have the right, at its option, to do such of the aforesaid as is necessary,
for the purpose of putting the Inventory and Equipment in such saleable form
as the Agent shall deem appropriate. Each of the Obligors agree, at the
request of the Agent, to make the Inventory and Equipment available to the
Agent at the premises where such Equipment and Inventory is then located and
to make available to the Agent the premises and facilities of any of the
Companies for the purpose of the Agent's taking possession of, removing or
putting the Inventory and Equipment in saleable form. However, if notice of
intended disposition of any Collateral is required by law, it is agreed that
ten (10) days' notice shall constitute reasonable notification and full
compliance with the law. The net cash proceeds resulting from the Agent's
exercise of any of the foregoing rights, (after deducting all charges, costs
and expenses, including reasonable attorneys' fees) shall be applied by the
Agent to the payment of any of the Companies' Obligations, whether due or to
become due, in such order as the Agent may elect, and each of the Companies
shall remain liable to the Agent for any deficiencies, and the Agent in turn
agrees to
64
remit to the Companies or its successors or assigns, any surplus resulting
therefrom. The enumeration of the foregoing rights is not intended to be
exhaustive and the exercise of any right shall not preclude the exercise of
any other rights, all of which shall be cumulative. Each of the Companies
hereby indemnifies the Agent and the Lenders and holds the Agent and the
Lenders harmless from any and all costs, expenses, claims, liabilities,
Out-of-Pocket Expenses or otherwise, incurred or imposed on the Agent and/or
the Lenders by reason of exercise of any rights, remedies and interests
hereunder, including without limitation from any sale or transfer of
Collateral, preserving, maintaining or securing the Collateral, defending
its, the Agent's and/or the Lenders' interests in Collateral (including
pursuant to any claims brought by any of the Companies, any of the Companies
as debtor-in-possession, any secured or unsecured creditors of any of the
Companies, any trustee or receiver in bankruptcy, or otherwise), and each of
the Companies hereby agrees to so indemnify and hold the Agent and the
Lenders harmless, absent the Agent's, or the Lenders', as applicable, gross
negligence or willful misconduct as finally determined by a court of
competent jurisdiction. The foregoing indemnification shall survive
termination of this Financing Agreement until such time as all Obligations
(including without limitation the foregoing and any contingent obligations)
have been finally and indefeasibly paid in full. In furtherance thereof the
Agent may establish such reserves for Obligations hereunder (including any
contingent Obligations) as it may deem advisable in its reasonable business
judgement.
SECTION 11. TERMINATION
Except as otherwise permitted herein, the Companies or the Agent may
terminate this Financing Agreement and the Revolving Line of Credit only as of
the initial or any subsequent Anniversary Date and then only by giving the other
at least sixty (60) days prior written notice of termination. Notwithstanding
the foregoing the Agent, upon the direction of the Required Lenders, may
terminate the Financing Agreement immediately upon the occurrence of an Event of
Default, provided, however, that if the Event of Default is an event listed in
Paragraph 10.1(c) of Section 10 of this Financing Agreement, the Agent may
regard the Financing Agreement as terminated and notice to that effect is not
required. This Financing Agreement, unless terminated as herein provided, shall
automatically continue from Anniversary Date to Anniversary Date.
Notwithstanding the foregoing, the Parent may terminate this Financing Agreement
and the Revolving Line of Credit prior to any applicable Anniversary Date upon
sixty (60) days' prior written notice to the Agent, provided that the Companies,
jointly and severally, agree to pay to the Agent immediately on demand, an Early
Termination Fee, if applicable. All Obligations shall become due and payable as
of any termination hereunder or under Section 10 hereof and, pending a final
accounting, the Agent may withhold any balances in the Companies' accounts
(unless supplied with an indemnity satisfactory to the Agent) to cover all of
the Companies' or any of their Obligations, whether absolute or contingent. All
of the Agent's and the Lenders' rights, liens and security interests shall
continue after termination of this Financing Agreement until full and final
payment or satisfaction (which in the case of Letters of Credit may be in the
form of a pledge and deposit with the Agent, in form and substance satisfactory
to the Agent, of an amount in cash equal to 110% of the outstanding and undrawn
Letters of Credit) of all Obligations hereunder (other than the Companies'
Obligations with respect to any indemnity set forth in this Financing Agreement)
provided the Agent has not prior thereto made a demand for payment thereunder,
the Agent agrees to release its liens upon the Collateral (other than cash
collateral for the outstanding and undrawn
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Letter of Credit) and execute and deliver (at the Companies' cost and
expense) appropriate releases for such liens.
SECTION 12. MISCELLANEOUS
12.1 Each of the Obligors hereby waives diligence, demand, presentment
and protest and any notices thereof as well as notice of nonpayment, notice of
intent to accelerate, notice of acceleration, and notice of dishonor, and any
and all defenses based on suretyship. No delay or omission of the Agent and/or
the Lenders or the Obligors to exercise any right or remedy hereunder, whether
before or after the happening of any Event of Default, shall impair any such
right or shall operate as a waiver thereof or as a waiver of any such Event of
Default. No single or partial exercise by the Agent and/or the Lenders of any
right or remedy precludes any other or further exercises thereof, or precludes
any other right or remedy.
12.2 THIS FINANCING AGREEMENT, THE LOAN DOCUMENTS EXECUTED AND
DELIVERED IN CONNECTION THEREWITH AND THE CONFIDENTIALITY AGREEMENT SIGNED BY
AGENT AND ANY CONFIDENTIALITY AGREEMENT SIGNED BY THE PROSPECTIVE LENDERS,
CONSTITUTE THE FINAL AND ENTIRE AGREEMENT BETWEEN EACH OF THE OBLIGORS, THE
LENDERS AND THE AGENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES; SUPERSEDE ANY
PRIOR AGREEMENTS; CAN BE CHANGED ONLY BY A WRITING SIGNED BY THE OBLIGORS, THE
LENDERS AND THE AGENT; AND SHALL BIND AND BENEFIT THE OBLIGORS, THE LENDERS AND
THE AGENT AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. For purposes of this
Financing Agreement and the Loan Documents "Obligors" and "Obligor" shall be
used in the broadest possible use and as applicable in order to give use to the
intent hereof to apply the terms and provisions hereof to all of the applicable
Obligors to which such provisions relate.
12.3 It is the intent of the Companies, the other Obligors, the
Lenders and the Agent to conform strictly to all applicable state and federal
usury laws. All agreements between the Companies, the other Obligors, and the
Agent and/or the Lenders whether now existing or hereafter arising and
whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of acceleration of the
maturity hereof or otherwise, shall the amount contracted for, charged or
received by the Agent and/or the Lenders for the use, forbearance, or
detention of the money loaned hereunder or otherwise, or for the payment or
performance of any covenant or obligation contained herein or in any other
document evidencing, securing or pertaining to the Obligations evidenced
hereby which may be legally deemed to be for the use, forbearance or
detention of money, exceed the maximum amount which the Agent and the Lenders
are legally entitled to contract for, charge or collect under applicable
state or federal law. If from any circumstances whatsoever fulfillment of any
provision hereof or such other documents, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then the obligation to be fulfilled shall be automatically
reduced to the limit of such validity, and if from any such circumstance the
Agent and/or the Lenders shall ever receive as interest or otherwise an
amount in excess of the maximum that can be legally collected, then such
amount which would be excessive interest shall be applied to the reduction of
the principal indebtedness hereof and any other amounts due with respect to
the Obligations evidenced hereby, but not to the payment of interest and if
such amount which would be excess interest exceeds the
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Obligations and all other non interest indebtedness described above, then
such additional amount shall be refunded to the Companies. In determining
whether or not all sums paid or agreed to be paid by the Companies for the
use, forbearance or detention of the Obligations of the Companies to the
Agent and/or the Lenders, under any specific contingency, exceeds the maximum
amount permitted by applicable law, the Companies and the Agent and/or the
Lenders shall to the maximum extent permitted under applicable law, (a) treat
all Obligations as but a single extension of credit, (b) characterize any
nonprincipal payment as an expense, fee or premium rather than as sums paid
or agreed to be paid by the Companies for the use, forbearance or detention
of money, (c) exclude voluntary prepayments and the effect thereof, and (d)
amortize, prorate, allocate and spread the total amount of such sums paid or
agreed to be paid by the Companies for the use, forbearance or detention of
money throughout the entire contemplated term of the Obligations in
accordance with all legal limits. The terms and provisions of this paragraph
shall control and supersede every other provision hereof and all other
agreements between the Companies and the Agent and/or the Lenders.
12.4 If any provision hereof or of any other agreement made in
connection herewith is held to be illegal or unenforceable, such provision shall
be fully severable, and the remaining provisions of the applicable agreement
shall remain in full force and effect and shall not be affected by such
provision's severance. Furthermore, in lieu of any such provision, there shall
be added automatically as a part of the applicable agreement a legal and
enforceable provision as similar in terms to the severed provision as may be
possible.
12.5 TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
OBLIGORS, THE LENDERS AND THE AGENT HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ARISING OUT OF THIS FINANCING AGREEMENT. TO THE MAXIMUM
EXTENT PERMITTED BY LAW, EACH OF THE OBLIGORS HEREBY IRREVOCABLY WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS TO SERVICE OF PROCESS BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED.
12.6 Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing, and shall be deemed to
have been validly served, given or delivered when hand delivered or sent by
telegram or telex, or three days after deposit in the United States mails, with
proper first class postage prepaid and addressed to the party to be notified as
follows:
(a) if to the Agent, at:
THE CIT GROUP/BUSINESS CREDIT, INC., AS AGENT
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Regional Credit Manager
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With a courtesy copy of any material notice to Agent's counsel at:
▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) if to the Obligors at:
c/o LONE STAR TECHNOLOGIES, INC.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a courtesy copy of any material notice to the Obligors' counsel
at:
FULBRIGHT & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(C) if to the Guarantors at:
C/O ENVIRONMENTAL HOLDINGS, INC.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a courtesy copy of any material notice to the Guarantors' counsel
at:
FULBRIGHT & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(D) if to any other Lender hereunder, at the address set forth
therefor in the applicable Assignment and Assumption Agreement
or to such other address as any party may designate for itself by like notice.
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12.7 THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK TO THE EXTENT THAT TEXAS LAW MAY EVER APPLY, NOTWITHSTANDING
THE FOREGOING CHOICE OF LAW, THE PROVISIONS OF CHAPTER 346 (OTHER THAN SECTION
346.004 THEREOF) OF THE TEXAS FINANCE CODE (VERNONS TEXAS CODE ANNOTATED), AS
AMENDED FROM TIME TO TIME (AS AMENDED, THE "TEXAS FINANCE CODE"), SHALL NOT BE
APPLICABLE TO ANY LOAN(S) OR EXTENSIONS OF CREDIT EVIDENCED BY THIS FINANCING
AGREEMENT. HOWEVER, THE PROVISIONS SETTING FORTH THE HYPOTHEC GRANTED PURSUANT
TO PARAGRAPH 6.2B OF SECTION 6 HEREOF ARE GOVERNED BY AND SHALL BE CONSTRUED
UNDER THE LAWS OF THE PROVINCE OF
QUEBEC, INCLUDING THE CONFLICT OF LAWS RULES
PROVIDED FOR THEREIN.
12.8 This Financing Agreement is an amendment and restatement of that
certain Financing Agreement dated March 12, 1999 by and among Agent, the Lenders
(as defined therein), LSSC, T&N Warehouse and Lone Star Logistics, Inc. (the
"MARCH 1999 AGREEMENT"), and is a refinancing of any outstanding amounts under
that certain Credit Agreement dated January 3, 2000 by and among FTI, Bank of
America, N.A., as Agent, Swing Line Lender and Lender, and Bank One, Texas,
N.A., as Documentation Agent, and the other financial institution parties
thereto.
SECTION 13. AGREEMENT BETWEEN THE LENDERS
13.1 a) The Agent, for the account of the Lenders, shall disburse all
loans and advances to the Obligors and shall handle all collections of
Collateral and repayment of Obligations. It is understood that for purposes of
advances to the Obligors and for purposes of this Section 13 the Agent is using
the funds of the Agent.
b) Unless the Agent shall have been notified in writing by any Lender
prior to any advance to the Obligors that such Lender will not make the amount
which would constitute its share of the borrowing on such date available to the
Agent, the Agent may assume that such Lender shall make such amount available to
the Agent on a Settlement Date, and the Agent may, in reliance upon such
assumption, make available to the Obligors a corresponding amount. A certificate
of the Agent submitted to any Lender with respect to any amount owing under this
subsection shall be conclusive, absent manifest error. If such Lender's share of
such borrowing is not in fact made available to the Agent by such Lender on the
Settlement Date, the Agent shall be entitled to recover such amount with
interest thereon at the rate per annum applicable to Revolving Loans hereunder,
on demand, from the Obligors without prejudice to any rights which the Agent may
have against such Lender hereunder. Nothing contained in this subsection shall
relieve any Lender which has failed to make available its ratable portion of any
borrowing hereunder from its obligation to do so in accordance with the terms
hereof. Nothing contained herein shall be deemed to obligate the Agent to make
available to the Obligors the full amount of a requested advance when the Agent
has any notice (written or otherwise) that any of the Lenders will not advance
its ratable portion thereof.
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13.2 On the Settlement Date, the Agent and the Lenders shall each remit
to the other, in immediately available funds, all amounts necessary so as to
ensure that, as of the Settlement Date, the Lenders shall have their
proportionate share of all outstanding Obligations.
13.3 The Agent shall forward to each Lender, at the end of each month,
a copy of the account statement rendered by the Agent to the Obligors.
13.4 The Agent shall, after receipt of any interest and fees earned
under this Financing Agreement, promptly remit to the Lenders: a) their pro rata
portion of all fees, provided, however, that the Lenders (other than CITBC in
its role as the Agent) shall x) not share in the Collateral Management Fee or
Documentation Fees or the fees provided for in Section 8, Paragraph 8.12; and y)
receive their share of the Loan Facility Fee in accordance with their respective
agreements with the Agent; and b) interest computed at the rate and as provided
for in Section 8 of this Financing Agreement on all outstanding amounts advanced
by the Lenders on each Settlement Date, prior to adjustment, that are subsequent
to the last remittance by the Agent to the Lenders of the Obligors' interest.
13.5 (a) The Obligors acknowledge that the Lenders with the prior
written consent of the Agent may sell participation in the loans and extensions
of credit made and to be made to the Obligors hereunder. The Obligors further
acknowledge that in doing so, the Lenders may grant to such participants certain
rights which would require the participant's consent to certain waivers,
amendments and other actions with respect to the provisions of this Financing
Agreement, provided that the consent of any such participant shall not be
required except for matters requiring the consent of all Lenders hereunder as
set forth in Section 14, Paragraph 14.10 hereof.
(b) The Obligors authorize each Lender to disclose to any
participant or purchasing lender (each, a "TRANSFEREE") and any prospective
Transferee any and all financial information in such Lender's possession
concerning the Obligors and their affiliates which has been delivered to such
Lender by or on behalf of the Obligors pursuant to this Agreement or which has
been delivered to such Lender by or on behalf of the Obligors in connection with
such Lender's credit evaluation of the Obligors and their affiliates prior to
entering into this Agreement, provided that such Transferee agrees to hold such
information in confidence in the ordinary course of its business.
13.6 The Obligors hereby agree that each Lender is solely responsible
for its portion of the Line of Credit and that neither the Agent nor any Lender
shall be responsible for, nor assume any obligations for the failure of any
Lender to make available its portion of the Revolving Line of Credit. Further,
should any Lender refuse to make available its portion of the Revolving Line of
Credit, then the other Lender may, but without obligation to do so, increase,
unilaterally, its portion of the Revolving Line of Credit in which event the
Obligors are so obligated to that other Lender.
13.7 In the event that the Agent, the Lenders or any one of them is
sued or threatened with suit by the Obligors or any one of them, or by any
receiver, trustee, creditor or any committee of creditors on account of any
preference, voidable transfer or lender liability issue, alleged to have
occurred or been received as a result of, or during the transactions
contemplated under this Financing Agreement, then in such event any money
paid in satisfaction or compromise of such suit, action, claim or demand and
any expenses, costs and attorneys' fees paid or incurred in connection
70
therewith, whether by the Agent, the Lenders or any one of them, shall be
shared proportionately by the Lenders. In addition, any costs, expenses, fees
or disbursements incurred by outside agencies or attorneys retained by the
Agent to effect collection or enforcement of any rights in the Collateral,
including enforcing, preserving or maintaining rights under this Financing
Agreement shall be shared proportionately between and among the Lenders to
the extent not reimbursed by the Obligors or from the proceeds of Collateral.
The provisions of this paragraph shall not apply to any suits, actions,
proceedings or claims that x) predate the date of this Financing Agreement or
y) are based on transactions, actions or omissions that predate the date of
this Financing Agreement.
13.8 Each of the Lenders agrees with each other Lender that any money
or assets of the Obligors held or received by such Lender, no matter how or when
received, shall be applied to the reduction of the Obligations (to the extent
permitted hereunder) after x) the occurrence of an Event of Default and y) the
election by the Required Lenders to accelerate the Obligations. In addition, the
Obligors authorize, and the Lenders shall have the right, without notice, upon
any amount becoming due and payable hereunder, to set-off and apply against any
and all property held by, or in the possession of such Lender the Obligations
due such Lenders.
13.9 The Agent shall have the right at any time to assign to one or
more commercial banks, commercial finance lenders or other financial
institutions all or a portion of its rights and obligations under this Financing
Agreement (including, without limitation, its obligations under the Revolving
Loans and its rights and obligations with respect to Letters of Credit). Upon
execution of an Assignment and Transfer Agreement, (a) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such assignment, have the rights and
obligations of the Agent as the case may be hereunder and (b) the Agent shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such assignment, relinquish its rights and be released from its
obligations under this Financing Agreement. The Obligors shall, if necessary,
execute any documents reasonably required to effectuate the assignments. No
other Lender may assign its interest in the loans and advances and extensions of
credit hereunder without the prior written consent of the Agent. In the event
that the Agent consents to any such assignment by any other Lenders (i) the
amount being assigned shall in no event be less than the lesser of (x)
$5,000,000 or (y) the entire interest of such Lender hereunder, (ii) such
assignment shall be of a pro-rata portion of all of such assigning Lender's
loans and commitments hereunder and (iii) the parties to such assignment shall
execute and deliver to the Agent an Assignment and Transfer Agreement, and, at
the Agent's election, a processing and recording fee of $1,000 payable by the
Obligors to the Agent for its own account.
SECTION 14. AGENCY
14.1 Each Lender hereby irrevocably designates and appoints CITBC as
the Agent for the Lenders under this Financing Agreement and any ancillary
loan documents and irrevocably authorizes CITBC as the Agent for such Lender,
to take such action on its behalf under the provisions of this Financing
Agreement and all ancillary documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Financing Agreement and all ancillary documents together with such other
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Financing Agreement, the
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Agent shall not have any duties or responsibilities, except those expressly
set forth herein, or any fiduciary relationship with any Lender and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Financing Agreement and the ancillary
documents or otherwise exist against the Agent.
14.2 The Agent may execute any of its duties under this Financing
Agreement and all ancillary documents by or through agents or attorneys-in-fact
and shall be entitled to the advice of counsel concerning all matters pertaining
to such duties.
14.3 Neither the Agent nor any of its officers, directors, employees,
agents, or attorneys-in-fact shall be (i) liable to any Lender for any action
lawfully taken or omitted to be taken by it or such person under or in
connection with this Financing Agreement and all ancillary documents (except for
its or such person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Obligors or any officer thereof
contained in this Financing Agreement and all ancillary documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Financing Agreement
and all ancillary documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Financing Agreement and all
ancillary documents or for any failure of the Obligors to perform their
obligations thereunder. The Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Financing Agreement and all
ancillary documents or to inspect the properties, books or records of the
Obligors.
14.4 The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper person or
persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Obligors), independent accountants and other experts
selected by the Agent. The Agent shall be fully justified in failing or refusing
to take any action under this Financing Agreement and all ancillary documents
unless it shall first receive such advice or concurrence of the Lenders, or the
Required Lenders, as the case may be, as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Financing Agreement and all ancillary
documents in accordance with a request of the Lenders, or the Required Lenders,
as the case may be, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.
14.5 The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received written notice from a Lender or the Obligors describing such Default or
Event of Default. In the event that the Agent receives such a notice, the Agent
shall promptly give notice thereof to the Lenders. The Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Lenders, or Required Lenders, as the case may be; PROVIDED that
unless and until the Agent shall have received such direction, the Agent may in
the interim (but shall not be obligated to) take such
72
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.
14.6 Each Lender expressly acknowledges that neither the Agent nor any
of its officers, directors, employees, agents or attorneys-in-fact has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Obligors shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Obligors and made its own decision to enter into this
Financing Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under the Financing Agreement and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition or creditworthiness of the Obligors. The Agent, however,
shall provide the Lenders with copies of all financial statements, projections
and business plans which come into the possession of the Agent or any of its
officers, employees, agents or attorneys-in-fact.
14.7 (a) The Lenders agree to indemnify the Agent in its capacity as
such (to the extent not reimbursed by the Obligors and without limiting the
obligation of the Obligors to do so), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (including, without limitation, all Out-of-Pocket
Expenses) of any kind whatsoever (including negligence on the part of the Agent)
which may at any time be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of this Financing Agreement or any
ancillary documents or any documents contemplated by or referred to herein or
the transactions contemplated hereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; PROVIDED that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Agent's gross negligence or willful
misconduct. The agreements in this paragraph shall survive the payment of the
Obligations.
(b) The Agent will use its reasonable business judgement in handling
the collection of the Accounts, enforcement of its rights hereunder and
realization upon the Collateral but shall not be liable to the Lenders for any
action taken or omitted to be taken in good faith or on the written advice of
counsel. The Lenders expressly release the Agent from any and all liability and
responsibility (express or implied), for any loss, depreciation of or delay in
collecting or failing to realize on any Collateral, the Obligations or any
guaranties therefor and for any mistake, omission or error in judgment in
passing upon or accepting any Collateral or in making (or in failing to make)
examinations or audits or for granting indulgences or extensions to the
Obligors, any account debtor or any guarantor, other than resulting from the
Agent's gross negligence or willful misconduct.
14.8 The Agent may make loans to, and generally engage in any kind of
business with the Obligors as though the Agent were not the Agent hereunder.
With respect to its loans made or renewed by it or loan obligations hereunder as
Lender, the Agent shall have the same rights and
73
powers, duties and liabilities under this Financing Agreement as any Lender
and may exercise the same as though it was not the Agent and the terms
"Lender" and "Lenders" shall include the Agent in its individual capacity.
14.9 The Agent may resign as the Agent upon 30 days' notice to the
Lenders and such resignation shall be effective upon the appointment of a
successor Agent. If the Agent shall resign as Agent, then the Lenders shall
appoint a successor Agent for the Lenders whereupon such successor Agent shall
succeed to the rights, powers and duties of the Agent and the term "Agent" shall
mean such successor agent effective upon its appointment, and the former Agent's
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any of the parties to
this Financing Agreement. After any retiring Agent's resignation hereunder as
the Agent the provisions of this Section 14 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Agent.
14.10 Notwithstanding anything contained in this Financing Agreement to
the contrary, the Agent will not, without the prior written consent of all
Lenders: (a) amend the Financing Agreement to (i) increase the Revolving Line of
Credit; (ii) reduce the interest rates; (iii) reduce or waive (x) any fees in
which the Lenders share hereunder, or (y) the repayment of any Obligations due
the Lenders; (iv) extend the maturity of the Obligations; or (v) alter or amend
(x) this Paragraph 14.10 or (y) the definitions of Eligible Accounts Receivable,
Eligible Inventory, Inventory Loan Cap, Collateral or Required Lenders, or (vi)
increase the advance percentages against Eligible Accounts Receivable or
Eligible Inventory or alter or amend the Agent's criteria for determining
compliance with such definitions of Eligible Accounts Receivable and/or Eligible
Inventory if the effect thereof is to increase Availability; (b) except as
otherwise required in this Financing Agreement, release any guaranty or
Collateral in excess of $500,000 during any year, or (c) knowingly make any
Revolving Loan or assist in opening any Letter of Credit hereunder if after
giving effect thereto the total of Revolving Loans and Letters of Credit
hereunder for the Obligor would exceed one hundred and ten percent (110%) of the
maximum amount available under this Financing Agreement (the portion in excess
of 100% of such maximum available amount shall be referred to herein as the
"Agent Permitted Overadvances"), provided that the Agent shall not be entitled
to continue to knowingly make such Agent Permitted Overadvances for a period in
excess of ninety (90) days without the Lenders' consent, and provided further
that the foregoing limitations shall not prohibit or restrict advances by the
Agent to preserve and protect Collateral. Subject to the provisions of Section
12, Paragraph 12.2 and the provisions of this Paragraph 14.10 of Section 14 of
this Financing Agreement, in all other respects the Agent is authorized by each
of the Lenders to take such actions or fail to take such actions under this
Financing Agreement if the Agent, in its reasonable discretion, deems such to be
advisable and in the best interest of the Lenders. Notwithstanding any provision
to the contrary contained in this Financing Agreement (including the provisions
of Section 12, Paragraph 12.2 and Section 14, Paragraph 14.10 hereof) the Agent
is authorized to take such actions or fail to take such actions in connection
with (a) the exercise of (i) any and all rights and remedies under this
Financing Agreement (including but not limited to the exercise of rights and
remedies under Section 10, Paragraph 10.2 of this Financing Agreement) and (ii)
its discretion in (x) determining compliance with the eligibility requirements
of Eligible Accounts Receivable and/or Eligible Inventory and establishing
reserves against Availability in connection therewith and/or (y) the making of
Agent Permitted Overadvances, and/or (b) the release of Collateral not to exceed
$250,000 in the aggregate during any Fiscal Year, and/or (c) curing any
ambiguity, defect or
74
inconsistency in the terms of this Financing Agreement; provided that the
Agent, in its reasonable discretion, deems such to be advisable and in the
best interests of the Lenders.
14.11 In the event any Lender's consent is required pursuant to the
provisions of this Financing Agreement and such Lender does not respond to any
request by the Agent for such consent within 10 days after such request is made
to such Lender, such failure to respond shall be deemed a consent. In addition,
in the event that any Lender declines to give its consent to any such request,
it is hereby mutually agreed that the Agent and/or any other Lender shall have
the right (but not the obligation) to purchase such Lender's share of the Loans
for the full amount thereof together with accrued interest thereon to the date
of such purchase.
14.12 Each Lender agrees that notwithstanding the provisions of Section
11 of this Financing Agreement any Lender may terminate this Financing Agreement
and the Revolving Line of Credit only as of the initial or any subsequent
Anniversary Date and then only by giving the Agent 90 days prior written notice
thereof. Within 30 days after receipt of any such termination notice, the Agent
shall, at its option, either (i) give notice of termination to the Company
hereunder or (ii) purchase, or arrange for the purchase of, the Lender's share
of the Obligations hereunder for the full amount thereof plus accrued interest
thereon. Unless so terminated this Financing Agreement and the Revolving Line of
Credit shall be automatically extended from Anniversary Date to Anniversary
Date. Termination of this Financing Agreement by any of the Lenders as herein
provided shall not affect the Lenders' respective rights and obligations under
this Financing Agreement incurred prior to the effective date of termination as
set forth in the preceding sentence.
14.13 If the Agent is required at any time to return to the Companies
or to a trustee, receiver, liquidator, custodian or other similar official any
portion of the payments made by the Companies to the Agent as result of a
bankruptcy or similar proceeding with respect to the Companies, any guarantor or
any other person or entity or otherwise, then each Lender shall, on demand of
the Agent, forthwith return to the Agent its ratable share of any such payments
made to such Lender by the Agent, together with its ratable share of interest
and/or penalties, if any, payable by the Lenders; this provision shall survive
the termination of this Financing Agreement.
14.14 The Lenders agree to maintain the confidentiality of any
non-public information provided by the Companies to them, in the ordinary course
of their business, provided that the foregoing confidentiality provision shall
terminate one (1) year after the termination date of this Financing Agreement,
and provided further that any such Lenders may disclose such information (i) to
any applicable bank regulatory and auditor personnel and (ii) upon the advice of
their counsel after giving reasonable notice to Parent (unless prohibited by law
or otherwise) and an opportunity for Parent to consult with the Lender preparing
to make a disclosure and such Lender's counsel.
In the event the Agent terminates this Financing Agreement pursuant to clause
(a) above, the Agent will cease making any loans or advances upon the Effective
Date of Termination except for any loans or advances which are reasonably
required to maintain, protect or realize upon the Collateral.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
75
IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be executed and delivered by their proper and duly authorized
officers as of the date set forth above.
COMPANIES:
LONE STAR TECHNOLOGIES, INC. THE CIT GROUP/BUSINESS
CREDIT, INC., AS AGENT
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------- -----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇
------------------------------- ---------------------------
Title: Vice President and Chief Title: Vice President &
------------------------------- --------------------------
Financial Officer Regional Credit Manager
------------------------------- --------------------------
FINTUBE TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
LONE STAR STEEL COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
LONE STAR LOGISTICS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
T&N LONE STAR WAREHOUSE CO.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
TEXAS & NORTHERN RAILWAY COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
FINTUBE CANADA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
BELLVILLE TUBE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
GUARANTORS:
ENVIRONMENTAL HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
ZINKLAHOMA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
LONE STAR STEEL INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
LONE STAR STEEL SALES COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
ROTAC, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------
LONE STAR ST HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: Vice President
----------------------------------