EXHIBIT 10.14
$150,000,000
SENIOR SUBORDINATED CREDIT AGREEMENT
dated as of
September 30, 1998
among
ADVANCED GLASSFIBER YARNS LLC
AGY CAPITAL CORP.
as Borrowers,
CERTAIN SUBSIDIARIES
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE LENDERS PARTIES HERETO
AND
FIRST UNION INVESTORS, INC.
WARBURG DILLON READ LLC,
as Co-Agents
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS.......................................................................................... 1
1.1 Certain Defined Terms............................................................................. 1
1.2 Accounting Terms.................................................................................. 28
1.3 Other Definitional Provisions..................................................................... 28
SECTION 2 AMOUNT AND TERMS OF BRIDGE LOAN COMMITMENT AND LOANS; BRIDGE NOTES................................... 28
2.1 Bridge Loan and Bridge Note....................................................................... 28
2.2 Interest on the Bridge Loan....................................................................... 30
2.3 Fees.............................................................................................. 31
2.4 Prepayments and Payments.......................................................................... 31
2.5 Use of Proceeds................................................................................... 35
SECTION 3 CONDITIONS........................................................................................... 35
3.1 Conditions to Bridge Loan......................................................................... 35
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE BORROWERS...................................................... 41
4.1 Organization and Good Standing; Capitalization.................................................... 41
4.2 Authorization and Power........................................................................... 41
4.3 No Conflicts or Consents.......................................................................... 41
4.4 Enforceable Obligations........................................................................... 42
4.5 Properties; Liens................................................................................. 42
4.6 Financial Condition............................................................................... 43
4.7 Full Disclosure................................................................................... 44
4.8 No Default........................................................................................ 44
4.9 Compliance with Contracts, Etc.................................................................... 44
4.10 No Litigation.................................................................................... 45
4.11 Use of Proceeds; Margin Stock, Etc............................................................... 45
4.12 Taxes............................................................................................ 45
4.13 ERISA............................................................................................ 45
4.14 Compliance with Law.............................................................................. 46
4.15 Government Regulation............................................................................ 46
4.16 Intellectual Property............................................................................ 46
4.17 Environmental Matters............................................................................ 46
4.18 Survival of Representations and Warranties....................................................... 48
4.19 Permits.......................................................................................... 48
4.20 Insurance........................................................................................ 48
4.21 Labor Matters.................................................................................... 49
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4.22 Guarantees....................................................................................... 49
4.23 Senior Subordinated Indenture; Etc............................................................... 49
4.24 Broker's or Finder's Fees........................................................................ 50
4.25 JV Supply and Service Agreements................................................................. 50
4.26 Year 2000 Compliance............................................................................. 50
4.27 Entire Business.................................................................................. 51
4.28 Representations and Warranties in Other Agreements............................................... 51
SECTION 5 AFFIRMATIVE COVENANTS................................................................................ 51
5.1 Financial Statements and Other Reports............................................................ 51
5.2 Corporate Existence, Etc.......................................................................... 56
5.3 Payment of Taxes and Claims; Tax Consolidation.................................................... 56
5.4 Maintenance of Properties; Insurance.............................................................. 56
5.5 Inspection........................................................................................ 57
5.6 Equal Security for Bridge Loan.................................................................... 57
5.7 Compliance with Laws, Etc......................................................................... 57
5.8 Maintenance of Accurate Records, Etc.............................................................. 57
5.9 Take-Out Financing................................................................................ 57
5.10 Exchange of Bridge Notes......................................................................... 58
5.11 ERISA Compliance................................................................................. 59
5.12 Payments in U.S. Dollars......................................................................... 60
5.13 Register......................................................................................... 60
5.14 Lenders Meeting.................................................................................. 60
5.15 Additional Guarantors............................................................................ 60
5.16 Marketing Take-Out Securities.................................................................... 61
5.17 Environmental Matters............................................................................ 61
SECTION 6 NEGATIVE COVENANTS................................................................................... 61
6.1 Indebtedness...................................................................................... 61
6.2 Liens............................................................................................. 63
6.3 Restricted Payments............................................................................... 65
6.4 Contingent Obligations............................................................................ 66
6.5 Layering of Indebtedness.......................................................................... 67
6.6 Restriction on Fundamental Changes................................................................ 67
6.7 Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries...................... 68
6.8 Transactions with Shareholders and Affiliates..................................................... 68
6.9 Subsidiary Stock; Borrower Restrictions........................................................... 69
6.10 Business Activities.............................................................................. 70
6.11 Amendment or Waivers of Certain Documents........................................................ 70
6.12 Amendment to Charter Documents................................................................... 70
6.13 Asset Sales...................................................................................... 70
6.14 Transfer of Assets to Subsidiaries............................................................... 71
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6.15 Sale and Leaseback Transactions.................................................................. 71
6.16 Refinancing of the Bridge Loan in Part........................................................... 71
SECTION 7 EVENTS OF DEFAULT.................................................................................... 71
7.1 Failure to Make Payments When Due................................................................. 71
7.2 Default in Other Agreements....................................................................... 71
7.3 Breach of Certain Covenants....................................................................... 72
7.4 Breach of Warranty................................................................................ 72
7.5 Other Defaults Under Agreement or Loan Documents.................................................. 72
7.6 Involuntary Bankruptcy; Appointment of Custodian, Etc............................................. 72
7.7 Voluntary Bankruptcy; Appointment of Custodian, Etc............................................... 73
7.8 Judgments and Attachments......................................................................... 73
7.9 Dissolution....................................................................................... 73
7.10 Guarantee........................................................................................ 73
7.11 ERISA............................................................................................ 74
7.12 Foreclosure...................................................................................... 74
7.13 Termination of Certain Agreements................................................................ 74
7.14 Amendment of Keep Well Agreement................................................................. 74
SECTION 8 SUBORDINATION........................................................................................ 75
8.1 Obligations Subordinated to Senior Indebtedness of the Borrowers.................................. 75
8.2 Priority and Payment Over of Proceeds in Certain Events........................................... 75
8.3 Payments May Be Paid Prior to Dissolution......................................................... 77
8.4 Rights of Holders of Senior Indebtedness of the Borrowers Not To Be Impaired...................... 78
8.5 Subrogation....................................................................................... 78
8.6 Obligations of the Borrowers Unconditional........................................................ 79
8.7 Lenders Authorize Agent to Effectuate Subordination............................................... 79
SECTION 9 THE AGENT............................................................................................ 80
9.1 Appointment....................................................................................... 80
9.2 Delegation of Duties.............................................................................. 80
9.3 Exculpatory Provisions............................................................................ 80
9.4 Reliance by Agent................................................................................. 81
9.5 Notice of Default................................................................................. 81
9.6 Non-Reliance on Agent and Other Lenders........................................................... 82
9.7 Indemnification................................................................................... 82
9.8 Agents in Their Individual Capacity............................................................... 83
9.9 Resignation of the Agents; Successor Agents....................................................... 83
SECTION 10 GUARANTEE........................................................................................... 83
10.1 Unconditional Guarantee.......................................................................... 83
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10.2 Subordination of Guarantee....................................................................... 84
10.3 Severability..................................................................................... 84
10.4 Limitation of Guarantor's Liability.............................................................. 84
10.5 Guarantors May Consolidate, etc., on Certain Terms............................................... 85
10.6 Contribution..................................................................................... 85
10.7 Waiver of Subrogation............................................................................ 86
10.8 Evidence Guarantee............................................................................... 86
10.9 Waiver of Stay, Extension or Usury Laws.......................................................... 87
SECTION 11 SUBORDINATION OF GUARANTEE OBLIGATIONS.............................................................. 87
11.1 Guarantee Obligations Subordinated to Guarantor Senior Indebtedness.............................. 87
11.2 Priority and Payment Over of Proceeds in Certain Events.......................................... 87
11.3 Payments May Be Paid Prior to Dissolution........................................................ 89
11.4 Rights of Holders of Guarantor Senior Indebtedness Not To Be Impaired............................ 90
11.5 Subrogation...................................................................................... 90
11.6 Obligations of the Guarantors Unconditional...................................................... 91
11.7 Lenders Authorize Agent to Effectuate Subordination.............................................. 91
SECTION 12 MISCELLANEOUS........................................................................................ 92
12.1 Representation of the Lenders.................................................................... 92
12.2 Participations in and Assignments of Bridge Loan................................................. 92
12.3 Expenses......................................................................................... 94
12.4 Indemnitee....................................................................................... 94
12.5 Setoff........................................................................................... 95
12.6 Amendments and Waivers........................................................................... 95
12.7 Independence of Covenants........................................................................ 96
12.8 Entirety......................................................................................... 97
12.9 Notices.......................................................................................... 97
12.10 Survival of Warranties and Certain Agreements................................................... 97
12.11 Failure or Indulgence Not Waiver; Remedies Cumulative........................................... 97
12.12 Severability.................................................................................... 98
12.13 Headings........................................................................................ 98
12.14 Applicable Law.................................................................................. 98
12.15 Successors and Assigns; Subsequent Holders of Bridge Notes...................................... 98
12.16 Counterparts; Effectiveness..................................................................... 98
12.17 Consent to Jurisdiction; Venue; Waiver of Jury Trial............................................ 99
12.18 Payments Pro Rata............................................................................... 99
12.19 Taxes........................................................................................... 100
12.20 Waiver of Stay, Extension or Usury Laws......................................................... 101
12.21 Requirements of Law............................................................................. 101
12.22 Confidentiality................................................................................. 102
12.23 Compensation.................................................................................... 102
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SCHEDULES
A EXISTING LIENS
B ENVIRONMENTAL MATTERS
C EXISTING INDEBTEDNESS
D JV SUPPLY AND SERVICE AGREEMENTS
E AFFILIATE TRANSACTIONS
F FORM OF KEEP WELL AGREEMENT
G LITIGATION
EXHIBITS
I FORM OF BRIDGE NOTE
II FORM OF COMPLIANCE CERTIFICATE
III FORM OF NOTICE OF BORROWING
IV FORM OF REGISTRATION RIGHTS AGREEMENT
V FORM OF OPINION OF ▇▇▇▇▇▇ & BIRD- COUNSEL
FOR THE COMPANY AND THE GUARANTORS
VI FORM OF OPINION OF CLEARY, GOTTLIEB, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ -
COUNSEL FOR THE LENDERS
VII FORM OF NOTATION OF GUARANTEE
VIII FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
IX FORM OF SECTION 12.2E(ii) CERTIFICATE
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This Senior Subordinated Credit Agreement is dated as of September 30,
1998, and entered into by and among Advanced Glassfiber Yarns LLC, a limited
liability company formed under the Delaware Limited Liability Company Act (the
"Company") and AGY Capital Corp., a Delaware corporation ("Capital") and
together with the Company, the "Borrowers"), as joint and several obligors, such
Subsidiaries of the Company as may from time to time become a party hereto (the
"Guarantors"), the banks and other financial institutions from time to time
parties hereto (the "Lenders" and individually a "Lender") and First Union
Investors, Inc. ("First Union") and Warburg Dillon Read LLC ("Warburg"), as co-
agents for the Lenders (in such capacity, the "Agents").
RECITALS
WHEREAS, the Borrowers desire that the Lenders extend a senior subordinated
credit facility to the Borrowers in connection with the JV Transactions (as
defined herein);
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms
---------------------
The following terms used in this Agreement shall have the following
meanings:
"Acquired Assets" means all or substantially all of the assets constituting
the Business.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary of the
Company or such acquisition, merger or consolidation. Such Indebtedness shall be
deemed to have been Incurred at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or a
Subsidiary of the Company or at the time such Indebtedness is assumed in
connection with the acquisition of assets from such Person.
"Acquisition" means, collectively, (i) the acquisition by the Company of
the Acquired Assets pursuant to the Asset Contribution and Sale Agreements and
(ii) the AGY Holdings Acquisition.
"Adjusted Net Assets" shall have the meaning provided in Section 10.6.
"Affiliate," means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling", "controlled by" and "under common
control with" have meanings correlative of the foregoing; provided, however,
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that beneficial ownership of 10% or more of the Voting Stock of a Person shall
be deemed to be control; provided that none of First Union or any of its
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Affiliates shall be treated as an Affiliate of the Company or of any Subsidiary
of the Company.
"Affiliate Transaction" has the meaning ascribed to it in Section 6.8.
"Agents" has the meaning ascribed to it in the introduction to this
Agreement.
"Agreement" means this Senior Subordinated Credit Agreement dated as of
September 30, 1998, as it may be amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof.
"AG Yarns" means AG Yarns Canada Inc., a Canadian corporation and Wholly-
Owned Subsidiary of the Company.
"AGY Holdings" means AGY Holdings, Inc., a Delaware corporation and Wholly-
Owned Subsidiary of Glass Holdings.
"AGY Holdings Acquisition" means the acquisition by AGY Holdings of a 51%
interest in the Company pursuant to the LLC Sale and Purchase Agreement at a
purchase price of approximately $332.0 million.
"AGY Holdings Distribution" means the cash payment of approximately $199.0
million made by the Company to AGY Holdings concurrently with the consummation
of the other JV Transactions.
"Alloy Services Agreement" means the Alloy Services Agreement dated as of
the Closing Date, by and between ▇▇▇▇▇ Corning and the Company.
"Amended and Restated Commitment Letter" means the (i) letter agreement
dated September 30, 1998, between BGF, ▇▇▇▇▇ Corning, FUCM, First Union and
Warburg pursuant to which First Union and Warburg committed to provide the
Bridge Loan to the Borrowers, subject to the terms and conditions thereof and
(ii) the letter agreement dated September 30, 1998 between BGF, ▇▇▇▇▇ Corning,
FUCM, First Union and Warburg pursuant to which the Borrowers are committed to
pay First Union, Warburg and their respective Affiliates certain fees and to
satisfy certain other obligations to First Union, Warburg and their Affiliates
in respect of the commitment set forth in (i) above.
"Amount of Unfunded Benefit Liability" means, with respect to any Pension
Plan, (i) if set forth on the most recent actuarial valuation report with
respect to such Pension Plan, the amount of unfunded benefit liabilities (as
defined in Section 4001(a) (18) of ERISA) and (ii) otherwise, the excess of (a)
the greater of the current liability (as defined in Section 412(1) (7) of the
Internal Revenue Code) or the actuarial present value of the accrued
2
benefits with respect to such Pension Plan over (b) the market value of the
assets of such Pension Plan.
"Applicable Interest Rate" means for each Interest Period, (i) the greater
of the Applicable LIBOR Based Rate and the Applicable Treasury Based Rate plus
(ii) the Applicable Spread; provided, however, that in no event shall the
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Applicable Interest Rate exceed 18% per annum.
"Applicable LIBOR Based Rate" means for any Interest Period, (i) an
interest rate per annum equal to the rate of interest appearing on Telerate Page
3750 (or any successor page) or if no such rate is available, the rate of
interest determined by First Union to be the rate or the arithmetic mean of
rates (rounded upward, if necessary, to the nearest 1/16 of one percentage
point) at which Dollar deposits in immediately available funds are offered by
First Union to first-tier banks in the London interbank Euro-dollar market, at
approximately 11:00 a.m., London time, on the Interest Rate Determination Date
for such Interest Period in the amount of the Bridge Loan outstanding plus (ii)
the Pricing Spread as of the Interest Payment Date that is the last day of such
Interest Period.
"Applicable Redemption Premium" means, (i) with respect to any redemption
of Exchange Notes occurring in the first year following the fifth anniversary of
the Closing Date, a redemption premium equal to 50.0% of the interest rate borne
by the Exchange Notes, (ii) with respect to any redemption of Exchange Notes
occurring in the second year following the fifth anniversary of the Closing
Date, a redemption premium equal to 33.3% of the interest rate borne by the
Exchange Notes, (iii) with respect to any redemption of Exchange Notes occurring
in the third year following the fifth anniversary of the Closing Date, a
redemption premium equal to 16.6% of the interest rate borne by the Exchange
Notes and (iv) with respect to any redemption of Exchange Notes occurring in or
after the fourth year following the fifth anniversary of the Closing Date, a
redemption premium equal to 0.0% of the interest rate borne by the Exchange
Notes.
"Applicable Spread" means (i) 0.0% per annum for the Interest Period
commencing on the Closing Date, (ii) 0.25% per annum for the Interest Period
commencing on the last day of the Interest Period referred to in clause (i), and
(iii) for each subsequent Interest Period, the Applicable Spread in effect for
the immediately preceding Interest Period plus 0.25% per annum.
"Applicable Treasury Based Rate" means for any Interest Period, (i) a rate
per annum determined by First Union on the Interest Rate Determination Date for
such Interest Period (such determination to be based upon quotes obtained by
First Union from established dealers in such market) to be the yield expressed
as a rate in the secondary market on United States Treasury securities of
substantially the same principal amount as the Bridge Notes and having a
maturity of one, three, five or ten years, whichever maturity produces the
highest yield for such Interest Period plus (ii) the Pricing Spread as of the
Interest Payment Date that is the last day of such Interest Period.
"Asset Acquisition" means (a) an Investment by the Company or any
Subsidiary of the Company in any other person pursuant to which such Person
shall be merged with or into the
3
Company or any Subsidiary of the Company, or (b) the acquisition by the Company
or any Subsidiary of the Company of the assets of any person (other than a
Subsidiary of the Company) which constitute all or substantially all of the
assets of such Person or comprises any division or line of business of such
Person or any other properties or assets of such Person other than in the
ordinary course of business.
"Asset Contribution Agreement" means the Amended and Restated Asset
Purchase Agreement, dated as of July 31, 1998, between ▇▇▇▇▇ Corning and the
Company.
"Asset Contribution and Sale Agreements" means, collectively, (i) the Asset
Contribution Agreement, (ii) the NVOC Asset Purchase Agreement, (iii) the OCC
Asset Purchase Agreement and (iv) the OC Japan Asset Purchase Agreement.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
lease, assignment, transfer or other disposition for value (including, without
limitation, pursuant to any amalgamation, merger or consolidation or pursuant to
any Sale and Leaseback Transaction) by the Borrowers or by any of its
Subsidiaries to any Person other than the Company or any of its Wholly-Owned
Subsidiaries (any such transaction, a "disposition") of (i) any of the stock of
any of the Company's Subsidiaries, (ii) substantially all of the assets of any
division or line of business of the Company or of any of its Subsidiaries, or
(iii) any other assets (whether tangible or intangible) of the Company or of any
of its Subsidiaries; excluding (a) any disposition of Cash Equivalents or
---------
inventory in the ordinary course of business or obsolete equipment in the
ordinary course of business consistent with past practices of the Company or any
of its Subsidiaries or the lease or sublease of any real or personal property in
the ordinary course of business, (b) any disposition of stock or assets in any
single transaction or related series of transactions the aggregate value of
which does not exceed $2.0 million.
"Asset Sale Transaction" means Asset Sales and, whether or not constituting
an Asset Sale, (i) any sale or other disposition of Capital Stock and (ii) any
sale or other disposition excluded from the definition set forth herein of
"Asset Sale" by clause (iii)(b) of such definition.
"Assignment and Assumption Agreement" means the Assignment and Assumption
Agreement, dated the Closing Date, between AGY and AGY Holdings.
"Bankruptcy Law" means Title 11 of the United States Code entitled
"bankruptcy", as now and hereafter in effect, or any successor statute or any
other United States federal, state or local law or the law of any other
jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors, whether in effect on the date hereof or
hereafter.
"Bankruptcy Order" means any court order made in a proceeding pursuant to
or within the meaning of any Bankruptcy Law, containing an adjudication of
bankruptcy or insolvency, or providing for liquidation, winding up, dissolution
or reorganization, or appointing a custodian of- a debtor or of all or any
substantial part of a debtor's property, or providing for the staying,
arrangement, adjustment or composition of indebtedness or other relief of a
debtor.
"Belmont" shall mean Belmont of America, Inc., a Delaware corporation.
4
"BGF" means BGF Industries, Inc., a Delaware corporation.
"BGF Bridge Loan Facility" means that certain credit agreement to be
entered into on or before the Closing Date between BGF, the guarantors from time
to time a party thereto, the lenders from time to time a party thereto and First
Union, as agent, pursuant to which BGF may borrow up to $65,000,000 in the
aggregate at any one time outstanding together with the documents related
thereto (including, without limitation, any guarantee agreements), as such
agreements may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including adding Subsidiaries of BGF as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"BGF Loan" means the secured loan of approximately $135.0 million from BGF
to Glass Holdings pursuant to the BGF Loan Agreement to fund a portion of the
Purchase Price Loan and to pay certain fees payable by Glass Holdings in
connection with the Acquisition.
"BGF Loan Agreement" means the definitive documentation as executed on the
Closing Date evidencing the BGF Loan, including, without limitation, all related
instruments and documents (including security documents).
"BGF Senior Credit Facility" means that certain credit agreement to be
entered into on or before the Closing Date between BGF, the guarantors from time
to time a party thereto, the lenders from time to time a party thereto and First
Union National Bank, as agent, pursuant to which BGF may borrow up to
$125,000,000 in the aggregate at any one time outstanding together with the
documents related thereto (including, without limitation, any guarantee
agreements and security documents), as such agreements may be amended (including
any amendment and restatement thereof), supplemented or otherwise modified from
time to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including adding Subsidiaries of BGF as
additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.
"Board of Directors" means, (i) in the case of a Person that is a
corporation, the board of directors of such person or any committee authorized
to act therefor and (ii) in the case of any other person, the board of
directors, management committee, or similar governing body or any authorized
committee thereof responsible for the management and affairs of such Person.
"Borates Supply Agreement" means the Borates Supply Agreement dated as of
the Closing Date, by and between ▇▇▇▇▇ Corning and the Company.
"Borrower Transactions" means, collectively, (i) the incurrence by the
Borrowers of the Bridge Loan hereunder on the Closing Date, (ii) the incurrence
by the Company of the Senior Credit Facility on or prior to the Closing Date,
(iii) the entering into by the Company of (A) the LLC Sale and Purchase
Agreement, (B) the LLC Operating Agreement, (C) the Asset
5
Contribution and Sale Agreements and (D) the JV Supply and Service Agreements,
(iv) the AGY Holdings Distribution, (v) the Jefferson Distribution, (vi) any
other transactions on or prior to the Closing Date contemplated in relation to
any of the foregoing and (vii) the payment of fees and expenses in connection
with any of the foregoing.
"Borrowers" has the meaning ascribed to it in the introduction to this
Agreement.
"Bridge Loan" has the meaning ascribed to it in Section 2.1A
"Bridge Loan Commitment" means the commitment of the Lenders to make the
Bridge Loan as set forth in Section 2.1A.
"Bridge Notes" has the meaning ascribed to it in Section 2.1D.
"Business" means the glass yarns and specialty materials business of ▇▇▇▇▇
Corning.
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of Charlotte, North Carolina or New York, New
York or is a day on which banking institutions therein located are authorized or
required by law or other governmental action to close; provided, however, that
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when used in connection with a rate determination, borrowing or payment with
respect to the Bridge Notes, the term "Business Day" shall also exclude any day
on which banks in London, England are not open for dealings in Dollar deposits
in the London interbank market.
"Capital Lease," as applied to any person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is required to be accounted for as a capital lease on the balance
sheet of that Person.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including, without
limitation, each class of Common Stock and Preferred Stock of such Person and
(ii) with respect to any Person that is not a corporation, any and all
partnership or other equity interests of such Person.
"Capitalized Lease Obligation" means obligations under a Capital Lease, and
the amount of Indebtedness represented by such obligations shall be the
capitalized amount of such obligations determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by, 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, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no
6
more than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia or any U.S. branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $500 million; (v)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (iv) above; and (vi) investments
in money market funds which invest substantially all their assets in securities
of the types described in clauses (i) through (v) above.
"Cash Proceeds" means, with respect to any Asset Sale, cash payments
(including any cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise but only as and when so
received) received from such Asset Sale.
"Change of Control" means, at any time that any Bridge Notes or Exchange
Notes are outstanding, the occurrence of any of the following: (A) ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and members of his immediate family, or trusts solely for their benefit,
shall fail to own and control, directly or indirectly, at least 69.6% of the
issued and outstanding Capital Stock and of the voting power of the issued and
outstanding Voting Stock of Societe Saumuroise de Participations S.A. ("SSP");
(B) SSP shall fail to own and control, directly or indirectly, at least 63.3% of
the Capital Stock and of the voting power of the issued and outstanding Voting
Stock of Porcher Industries S.A. ("Porcher"); (C) Porcher shall fail to own and
control, directly or indirectly, at least 100% of the Capital Stock and of the
voting power of the issued and outstanding Voting Stock of Glass Holdings; (D)
Glass Holdings shall fail to own and control, directly or indirectly, at least
51.0% of the Capital Stock and of the voting power of the issued and outstanding
Voting Stock of the of the Company or (E) the failure by ▇▇▇▇▇ Corning to own
and control, directly or indirectly, 49.0% of the Capital Stock and of the
voting power of the Voting Stock of the Company; provided, however, that the
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failure by Glass Holdings or ▇▇▇▇▇ Corning to own and control the percentages of
the Capital Stock and of the voting power of the Voting Stock of the Company
specified in clauses (D) and (E), respectively, shall not be deemed to
constitute a Change of Control if such failure, in either case, results solely
from the issuance to First Union, Warburg or any of their assignees of warrants
to purchase Capital Stock of the Company issued pursuant to the Amended and
Restated Commitment Letter. Each percentage in the preceding sentence shall be
calculated on a fully diluted basis after giving effect to the conversion,
exchange or exercise of all outstanding warrants, options and other similar
agreements or obligations of the relevant Person that are or could become
convertible, exchangeable or exercisable for Capital Stock or Voting Stock of
the relevant Person.
"Change of Control Date" has the meaning ascribed to it in Section
2.4A(iv).
"Change of Control Offer" has the meaning ascribed to it in Section
2.4A(iv).
"Change of Control Payment Date" has the meaning ascribed to it in Section
2.4A(iv).
"Change of Control Purchase Price" has the meaning ascribed to it in
Section 2.4A(iv).
7
"Closing Date" has the meaning ascribed to it in Section 2.1B.
"Commission" means the Securities and Exchange Commission.
"Common Stock" of any person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of, such Person's common stock, whether outstanding on the
Closing Date or issued after the Closing Date, and includes, without limitation,
all series and classes of such common stock
"Compliance Certificate" means a certificate substantially in the form of
Exhibit II delivered to the Agents by the Borrowers pursuant to Section 5.1.
----------
"Consolidated EBITDA" means, for any period, Consolidated Net Income for
such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) Consolidated Income Tax Expense for such period;
(ii) Consolidated Interest Expense for such period; and (iii) Consolidated Non-
cash Charges for such period; less (A) all non-cash items increasing
Consolidated Net Income for such period and (B) all cash payments during such
period relating to non-cash charges that were added back in determining
Consolidated EBITDA in any prior period.
"Consolidated Fixed Charge Coverage Ratio" means, as of any date of
determination, the ratio of the aggregate amount of Consolidated EBITDA for the
four most recent full fiscal quarters for which financial statements are
available ending prior to the date of such determination (the "Four Quarter
Period") to Consolidated Fixed Charges for such Four Quarter Period. In addition
to and without limitation of the foregoing, for purposes of this definition,
"Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after
giving effect on a pro forma basis for the period of such calculation to (i) the
Incurrence or repayment of any Indebtedness of the Company or any of its
Subsidiaries (and the application of the proceeds thereof), including the
Incurrence of any Indebtedness (and the application of the proceeds thereof)
giving rise to the need to make such determination, occurring during such Four
Quarter Period or at any time subsequent to the last day of such Four Quarter
Period and on or prior to such date of determination, as if such Incurrence or
repayment, as the case may be (and the application of the proceeds thereof),
occurred on the first day of such Four Quarter Period and (ii) any Asset Sale
Transactions or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such determination as a result of
the Company or one of its Subsidiaries (including any Person who becomes a
Subsidiary as a result of the Asset Acquisition) Incurring Acquired Indebtedness
and including, without limitation, by giving pro forma effect to any
Consolidated EBITDA (provided that such pro forma Consolidated EBITDA shall be
calculated in a manner consistent with the exclusions in the definition of
"Consolidated Net Income" but without giving effect to clause (c) of the
definition of Consolidated Net Income) attributable to the assets which are the
subject of the Asset Sale Transaction or Asset Acquisition during the Four
Quarter Period) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to such
date of determination, as if such Asset Sale Transaction or Asset Acquisition
(including the Incurrence of any such Acquired Indebtedness) occurred on the
first day of the Four Quarter Period. If the
8
Company or any of its Subsidiaries directly or indirectly guarantees
Indebtedness of a third Person, the preceding sentence shall give effect to the
Incurrence of such guaranteed Indebtedness as if the Company or any of its
Subsidiaries had directly Incurred such guaranteed Indebtedness. Furthermore, in
calculating "Consolidated Fixed Charges" for purposes of determining the
denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage
Ratio," (1) interest on outstanding Indebtedness determined on a fluctuating
basis as of the date of determination and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest on such Indebtedness in effect on such date of
determination; (2) if interest on any Indebtedness actually Incurred on such
date of determination may optionally be determined at an interest rate based
upon a factor of a prime or similar rate, a eurocurrency interbank offered rate,
or other rates, then the interest rate in effect on such date of determination
will be deemed to have been in effect during the Four Quarter Period; and (3)
notwithstanding clause (1) above, interest on Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by Hedging
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, for any period, the sum, without
duplication, of (i) Consolidated Interest Expense, plus (ii) the product of (x)
the amount of all dividend payments on any series of Preferred Stock of the
Company (other than dividends paid in Qualified Capital Stock) paid, accrued or
scheduled to be paid or accrued during such period times (y) a fraction, the
numerator of which is one and the denominator of which is one minus the sum of
(A) the maximum federal corporate income tax rate in effect during such taxable
year and (B) six percent.
"Consolidated Income Tax Expense" means, with respect to the Company for
any period, the product of (i) the net income of the Company and its
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP and (ii) the sum of (x) the maximum federal corporate income tax rate
in effect during such period and (y) six percent.
"Consolidated Interest Expense" means, for any period, the sum of, without
duplication: (i) the aggregate of cash and non-cash interest expense of the
Company and its Subsidiaries for such period determined on a consolidated basis
in accordance with GAAP, including, without limitation (whether or not interest
expense in accordance with GAAP), (a) any amortization of debt discount and any
amortization or write off of deferred financing costs, (b) the net costs under
Hedging Obligations related to Indebtedness (including amortization of fees),
(c) all capitalized interest, (d) the interest portion of any deferred payment
obligation, (e) commissions, discounts and other fees and charges Incurred in
respect of letters of credit or bankers' acceptances and (f) any interest
expense on Indebtedness of another Person that is guaranteed by such Person or
one of its Subsidiaries or secured by a Lien on the assets of such Person or one
of its Subsidiaries (whether or not such guarantee or Lien is called upon); and
(ii) the interest component of Capitalized Lease Obligations paid, accrued
and/or scheduled to be paid or accrued by the Company and its Subsidiaries
during such period as determined on a consolidated basis in accordance with
GAAP.
9
"Consolidated Net Income" means, for any period, the aggregate net income
(or loss) of the Company and its Subsidiaries for such period on a consolidated
basis (after giving effect to any decrease (but not increase) attributable to
minority interests in Subsidiaries), determined in accordance with GAAP;
provided, however, that there shall be excluded therefrom (a) net after-tax
-------- -------
gains and losses (assuming for tax purposes that no special allocations are made
to any member of the Company under Section 743 of the Code) from Asset Sale
Transactions or abandonments or reserves relating thereto, (b) net after-tax
items (assuming for tax purposes that no special allocations are made to any
member of the Company under Section 743 of the Code) classified as extraordinary
gains or losses, (c) the net income of any Person acquired in a "pooling of
interests" transaction accrued prior to the date it becomes a Subsidiary or is
merged or consolidated with the Company or any Subsidiary, (d) the net income
(but not loss) of any Subsidiary to the extent that the declaration of
dividends or similar distributions by that Subsidiary of that income is
restricted by contract, operation of law or otherwise, (e) the net income of any
Person, other than a Subsidiary, except to the extent of cash dividends or
distributions paid to the Company or to a Subsidiary by such Person and (f) any
restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of Consolidated Net Income accrued at
any time following the Exchange Date.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Capital
Stock of such Person.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash expenses of the Company and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP (excluding any such charge which requires an accrual of or a reserve
for cash charges for any future period).
"Contested Claim" means any Tax, Indebtedness or other claim or liability
(i) the validity or amount of which is being diligently contested in good faith,
(ii) for which adequate reserve, or other appropriate provision, if any, as
required in conformity with GAAP shall have been made, and (iii) with respect to
which any right to execute upon or sell any assets of the Company or of any of
its Subsidiaries has not matured or has been and continues to be effectively
enjoined, superseded or stayed.
"Contingent Obligation," as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of such
other Person that such obligation of such other Person will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected (in whole or in part)
against loss in respect thereof, (ii) with respect to any letter of credit
issued for the account of that Person or as to which that Person is otherwise
liable for reimbursement of drawings, or (iii) under Hedging Obligations.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or
10
sale with recourse by the referent Person of the obligation of another, (b) the
obligation to make take-or-pay or similar payments if required regardless of
non-performance by any other party or parties to an agreement, and (c) any
liability of the referent Person for the obligation of another through any
agreement (contingent or otherwise) (X) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise) or (Y) to maintain the
solvency or any balance sheet item, level of income or financial condition of
another if, in the case of any agreement described under subclauses (X) or (Y)
of this sentence, the primary purpose or intent thereof is as described in the
preceding sentence. The amount of any Contingent Obligation shall be equal to
the amount of the obligation so guaranteed or otherwise supported or, if less,
the amount to which such Contingent Obligation is specifically limited.
"Contractual Obligation", as applied to any Person, means any provision of
any Security issued by that Person or of any indenture, mortgage, deed of trust,
contract, undertaking, agreement or other instrument to which that Person is a
party or by which it or any of its properties is bound or to which it or any of
its properties is subject.
"CSG" means Compagnie Saint-Gobain, a corporation organized under the laws
of France.
"Currency Agreement" means, in respect of any Person, any foreign exchange
contract, currency swap agreement other similar agreement or arrangement as to
which such Person is a party.
"Custodian" means any receiver, interim receiver, receiver and manager,
trustee, assignee, liquidator, sequestrator or similar official charged with
maintaining possession or control over property for one or more creditors,
whether under any Bankruptcy Law or otherwise.
"Daylight Loan" means the loan of approximately $199.0 million from First
Union National Bank to the AGY Holdings pursuant to the Daylight Loan Agreement.
"Daylight Loan Agreement" means the definitive documentation executed on
the Closing Date evidencing the Daylight Loan including, without limitation, all
related instruments and documents (including security documents).
"Demand Take-Out Notes" means senior subordinated notes of the Borrowers
issued under an indenture to be negotiated by the Company and the Take-Out Bank
the proceeds of which shall be used to repay the Bridge Notes in whole or in
part, which Demand Take-Out Notes shall be guaranteed by each entity that
guarantees the Bridge Notes.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily
11
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder thereof, in any case, on or prior to the 91st
day after the Maturity Date.
"Dollars" or the sign "$" means the lawful money of the United States of
America.
"Eligible Assignee" means (A) (i) a commercial bank organized under the
laws of the United States of America or any state thereof; (ii) a savings and
loan association or savings bank organized under the laws of the United States
or any state thereof; (iii) a commercial bank organized under the laws of any
other country or a political subdivision thereof; provided that (x) such bank is
--------
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; provided, however, that, at the time of determination, the Lender
--------- -------
making the assignment or transfer to such bank, believes that such bank will be
entitled to an exemption from U.S. withholding tax (assuming compliance with the
first sentence of Section 12.2E); and (iv) any other entity which is an
"accredited investor" (as defined in Regulation D under the Securities Act of
1933) which extends credit or buys loans as one of its businesses including, but
not limited to, insurance companies, mutual funds and lease financing companies,
in each case (under clauses (i) through (iv) above) that is reasonably
acceptable to the Agents; and (B) any Lender and any Affiliate of any Lender;
provided, however, that the term "Eligible Assignee" shall not include CSG.
-------- -------
"Employee Pension Benefit Plan" means any "employee pension benefit plan"
as defined in Section 3(2) of ERISA (i) which is, or, at any time within the
five calendar years immediately preceding the date hereof, was at any time,
sponsored, maintained or contributed to by the Borrowers or their Subsidiaries
or any of their respective ERISA Affiliates or (ii) with respect to which the
Borrowers or their Subsidiaries retains any liability, including any potential
joint and several liability as a result of an affiliation with an ERISA
Affiliate or a party that would be an ERISA Affiliate except for the fact the
affiliation ceased more than five calendar years prior to the date hereof.
"Environmental Claim" means any allegation, notice of violation, claim,
demand, abatement order or other order or direction (conditional or otherwise)
by any governmental authority or any person for any response or corrective
action, any damage, including, without limitation, personal injury (including
sickness, disease or death), property damage, contribution, indemnity, indirect
or consequential damages, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or restrictions, in each case arising under any Environmental Law,
including without limitation, relating to, resulting from or in connection with
Hazardous Materials and relating to the Borrowers, any of their Subsidiaries or
any of their respective Facilities or predecessors in interest.
"Environmental Laws" means the common law and all statutes, ordinances,
orders, rules, regulations, requirements, judgments, plans, policies or decrees
and the like relating to (i) environmental matters, including, without
limitation, those relating to fines, injunctions, penalties, damages,
contribution, cost recovery compensation, losses or injuries resulting from the
Release or threatened Release of Hazardous Materials, (ii) the generation, use,
storage,
12
transportation or disposal of Hazardous Materials including, without limitation,
investigation, study, assessment, testing, monitoring, containment, removal,
remediation, or clean-up of any such Release, or (iii) occupational safety and
health, industrial hygiene or the protection of the environment, natural
resources, human, plant or animal health or welfare, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. (S) 9601 et. seq.), the Hazardous Materials
-- ---
Transportation Act (49 U.S.C. (S) 1801 et seq.), the Resource Conservation and
-- ---
Recovery Act (42 U.S.C. (S) 6901 et seq.), the Federal Water Pollution Control
-- ---
Act (33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42 U.S.C. (S) 7401 et
-- --- --
seq.), the Toxic Substances Control Act (15 U.S.C. (S) 2601 et seq.), the
--- -- ---
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. (S) 136 et seq.),
-- ---
the Occupational Safety and Health Act (29 U.S.C. (S) 651 et seq.) and the
-- ---
Emergency Planning and Community Right-to-Know Act (42 U.S.C. (S) 11001 et
--
seq.), each as amended or supplemented, and any analogous future or present
---
statutes, orders, rules, regulations, requirements, judgments or decrees
promulgated pursuant thereto, each as in effect as of the date of determination.
"Environmental Liabilities and Costs" means any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the actual and reasonable fees and disbursements of counsel
in connection with any investigative, administrative or judicial proceeding
commenced or threatened), suffered by, imposed on, incurred by or asserted
against the Lenders, the Agents, and any holders of the Bridge Notes and their
respective officers, directors, employees, agents, representatives and
affiliates arising from or relating to any: (1) Environmental Claim; (2) failure
of the Borrowers and their Subsidiaries (including, without limitation, all
operations and conditions at or in the Facilities) to comply with applicable
Environmental Laws, including without limitation fines, penalties, and costs or
expenses incurred to achieve compliance with applicable Environmental Laws; (3)
presence of Hazardous Materials on or related to or generated by the operations
at or in the Facilities; or (4) assertion or attachment of any lien under
Environmental Laws on any of the Facilities.
"Environmental Lien" means a Lien in favor of a Tribunal or other Person
(i) for any liability under an Environmental Law or (ii) for damages arising
from or costs incurred by such Tribunal or other Person in response to a release
or threatened release of Hazardous Materials into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder and any successor statute, regulations and rulings.
"ERISA Affiliate," as applied to any Person, means (i) any corporation
which is, or was at any time within the five calendar years immediately
preceding the date hereof, a member of a controlled group of corporations within
the meaning of Section 414(b) of the Internal Revenue Code of which that Person
is, or was at any time within the five calendar years immediately preceding the
date hereof, a member; (ii) any trade or business (whether or not incorporated)
which is, or was at any time within the five calendar years immediately
preceding the date hereof, a member of a group of trades or businesses under
common control within the meaning
13
of Section 414(c) of the Internal Revenue Code of which that Person is, or was
at any time within the five calendar years immediately preceding the date
hereof, a member; and (iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is, or was at any time within the five calendar
years immediately preceding the date hereof, a member.
"ERISA Event" means (i) a "reportable event" within the meaning of Section
4043 of ERISA and the regulations issued thereunder with respect to any Pension
Plan (excluding those for which the provision for 30-day notice to the PBGC has
been waived by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect to any Pension
Plan (whether or not waived) or the failure to make any required contribution
within 30 days of its due date with respect to any Multiemployer Plan; (iii) the
provision by the administrator of any Pension Plan pursuant to Section 4041 (a)
(2) of ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the withdrawal by the
Company or any of its Subsidiaries or any of their respective ERISA Affiliates
from any Multiple Employer Plan or the termination of any such Multiple Employer
Plan resulting in liability pursuant to Sections 4063 or 4064 of ERISA; (v) the
institution by the PBGC of proceedings to terminate any Pension Plan, or the
occurrence of any event or condition which might reasonably be expected to
constitute grounds under ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; (vi) the imposition of liability on the
Company or any of its Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal by the Company or any of its
Subsidiaries or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential liability therefor, or the
receipt by the Company or any of its Subsidiaries or any of their respective
ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could reasonably be expected
to give rise to the imposition on the Borrowers or any of their Subsidiaries or
any of their respective ERISA Affiliates of fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under Section 406, 409
or 502(i) or (1) of ERISA in respect of any Employee Benefit Pension Plan; (ix)
receipt from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Pension Benefit Plan intended to be
qualified under Section 401(a) of the Internal Revenue Code) to qualify under
Section 401(a) of the Internal Revenue Code, or the failure of any trust forming
part of any Pension Plan or Employee Pension Benefit Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue Code; or
(x) the imposition of a Lien pursuant to Section 401(a) (29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"Event of Default" means each of the events set forth in Section 7.
14
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time and any successor statute.
"Exchange Date" means the eighteen month anniversary of the Closing Date.
"Exchange Notes" has the meaning ascribed to it in Section 5.10(b)(i).
"Exchange Request" has the meaning ascribed to it in Section 5.10.
"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by the Company, its
Subsidiaries or any of their respective predecessors in interest.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
equal for each day during such period to the weighted average of the rates on
overnight Federal Funds transactions with members of the Federal Reserve System
arranged by Federal Funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by First Union from three Federal Funds brokers of recognized standing
selected by First Union.
"First Union" has the meaning assigned to it in the first paragraph hereto.
"Foreign Plan" means any employee benefit plan maintained outside the U.S.
by the Company, any of its Subsidiaries or any of their respective Affiliates
for employees substantially all of whom are non-resident aliens of the U.S. and
for which the Company or any of its Subsidiaries may be directly or indirectly
liable.
"Four Quarter Period" has the meaning set forth in the definition of
"Consolidated Fixed Charge Coverage Ratio" above.
"FUCM" means First Union Capital Markets.
"Funding Guarantor" has the meaning ascribed to it in Section 10.6.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Closing Date.
"Glass Holdings" means Glass Holdings Corp., a Delaware corporation.
"Glass Holdings Pledge" shall mean the pledge by Glass Holdings to BGF of
all of the Capital Stock of AGY Holdings and Belmont as security for the BGF
Loan.
15
"Glass Marbles Supply Agreement" means the Glass Marbles Supply Agreement,
dated as of the Closing Date, by and between ▇▇▇▇▇ Corning and the Company.
"Guarantee Obligations" has the meaning ascribed to it in Section 11.1.
"Guarantees" means, collectively, the guarantees delivered to the Lenders
by the Guarantors pursuant to Section 11 which guarantees shall be evidenced by
notations of guarantee substantially in the form of Exhibit VII.
-----------
"Guarantor Payment Blockage Period" has the meaning ascribed to it in
Section 11.2(b).
"Guarantor Senior Indebtedness" means, with respect to any Guarantor, the
principal of, premium, if any, and interest on, and all amounts payable in
respect of, all obligations of every nature of such Guarantor from time to time
owed to the lenders under the Senior Credit Facility, including, without
limitation, all obligations with respect to letters of credit and principal of
and interest on, and all fees, indemnities and expenses payable under, the
Senior Credit Facility and all obligations under Interest Rate Agreements
entered into with lenders under the Senior Credit Facility and their respective
Affiliates and any guarantees thereof including any agreement refinancing all or
any portion of the Indebtedness under such Senior Credit Facility but only to
the extent such Indebtedness is fully and adequately secured. Without limiting
the generality of the foregoing, "Guarantor Senior Indebtedness" shall include
interest accruing thereon subsequent to the occurrence of any Event of Default
specified in Sections 7.6 and 7.7 relating to the Guarantors, whether or not the
claim for such interest is allowed under any applicable Bankruptcy Law.
Notwithstanding the foregoing, "Guarantor Senior Indebtedness" shall not include
that portion of any Indebtedness which is incurred by such Guarantor in
violation of this Agreement.
"Guarantors" means each future Wholly-Owned Subsidiary of the Company
(other than Capital) that is organized under the laws of the United States or
any state or commonwealth thereof or under the laws of the District of Columbia.
"Hazardous Materials" means (i) any chemical, material or substance at any
time defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," "infectious waste," "toxic substances" or any
other formulations intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto; (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any drilling fluids, produced
waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iv) any flammable
substances or explosives; (v) any radioactive materials; (vi) asbestos in any
form; (vii) urea formaldehyde foam insulation; (viii) electrical equipment which
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million; (ix) pesticides; and (x) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any
16
governmental authority or which may or could pose a hazard to human health or
safety or the environment.
"Hedging Obligations" means the obligations of any Person pursuant to any
Interest Rate Agreement or Currency Agreement.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become directly or indirectly liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred," "Incurrable" and "Incurring" shall
have meanings correlative to the foregoing); provided that any amendment,
--------
modification or waiver of any document pursuant to which Indebtedness was
previously Incurred shall only be deemed to be an Incurrence of Indebtedness if
and to the extent such amendment, modification or waiver (i) increases the
principal thereof or interest rate or premium payable thereon or (ii) changes to
an earlier date the stated maturity thereof or the date of any scheduled or
required principal payment thereon or the time or circumstances under which such
Indebtedness shall be redeemed; provided, further, that any Indebtedness of a
-------- -------
Person existing at the time such Person becomes a Subsidiary of the Company
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Subsidiary at the time it becomes a Subsidiary of the
Company.
"Indebtedness" means, with respect to any Person, (i) all indebtedness,
obligations and liabilities of such Person for borrowed money, (ii) that portion
of obligations with respect to Capital Leases that is properly classified as a
liability on a balance sheet of such person in conformity with GAAP, (iii) notes
payable and drafts accepted representing extensions of credit, whether or not
representing obligations for borrowed money, of such Person, (iv) any
indebtedness, obligation or liability of such Person owed for all or any part of
the deferred purchase price of property or services (excluding any such
obligations incurred under ERISA), which purchase price is (a) due more than six
months (or a longer period of up to one year, if such terms are available from
suppliers in the ordinary course of business) from the date of incurrence of the
obligation in respect thereof or (b) evidenced by a note or similar written
instrument, (v) all indebtedness, obligations and liabilities secured by any
Lien on any property or asset owned or held by that Person regardless of whether
the indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person except that "Indebtedness" shall not
include trade payables and accrued liabilities Incurred in the ordinary course
of business for the purchase of goods or services which are not secured by a
Lien other than a Lien permitted pursuant to Section 6.2(ii) and Hedging
Obligations (which constitute Contingent Obligations, not Indebtedness), (vi)
guarantees of such Person in respect of Indebtedness of other Persons and (vii)
all Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends, if any. For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Capital Stock as if such
17
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Agreement, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value to be determined reasonably and in good
faith by the board of directors of the issuer of such Disqualified Capital
Stock.
"Indemnified Liabilities" has the meaning ascribed to it in Section 12.4.
"Indemnitees" has the meaning ascribed to it in Section 12.4.
"Independent Financial Advisor" means an accounting firm, appraisal firm or
investment banking firm (i) which does not, and whose directors, officers and
employees or Affiliates do not, have a direct or indirect financial interest in
the Company or any of its Subsidiaries and (ii) which, in the judgment of the
Board of Directors of the Company or any of its Subsidiaries is otherwise
independent and qualified to perform the task for which it is to be engaged.
"Initial Exchange Request" has the meaning ascribed to it in Section 5.10.
"Initial Request Date" has the meaning ascribed to it in Section 5.9.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of the Company or any of its Subsidiaries as currently
conducted that are material to the condition (financial or otherwise), business,
operations or prospects of the Company and its Subsidiaries, taken as a whole.
"Interest Payment Date" means the last day of each Interest Period.
"Interest Period" shall mean, in respect of the Bridge Loan and subject to
Section 2.2E, (a) the period commencing on the Closing Date and ending three
months thereafter on the same numerical day of the month as the Closing Date and
(b) each subsequent period beginning on the last day of the preceding Interest
Period and ending three months thereafter on the same numerical day of the month
as that last day.
"Interest Rate Agreement" of any Person means any interest rate protection
agreement (including, without limitation, interest rate swaps, caps, floors,
collars, derivative instruments and similar agreements) and/or other types of
interest hedging agreements.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day on which banks in New York and London are open
prior to the first Business Day of such Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor code or statute.
"Investment" means (i) any direct or indirect purchase or other acquisition
of, or of a beneficial interest in, any Securities of any other Person or (ii)
any direct or indirect loan,
18
advance (other than advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary course of
business), extension of credit or capital contribution to any other Person,
including all indebtedness and accounts receivable from that other Person that
are not current assets or did not arise from sales to that other Person in the
ordinary course of business. The amount of any Investment shall be the original
cost of such Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment. "Investment" shall not include bank
demand deposit accounts.
"Jefferson" means Jefferson Holdings, Inc., a Delaware corporation.
"Jefferson Distribution" means the cash payment of approximately $191.0
million made by the Company to Jefferson concurrently with the consummation of
other JV Transactions.
"JV Supply and Service Agreements" has the meaning ascribed to it in
Section 4.25.
"JV Transaction Documents" means, collectively, (i) the LLC Sale and
Purchase Agreement, (ii) the LLC Operating Agreement, (iii) the Asset
Contribution and Sale Agreements, (iv) the JV Supply and Service Agreements, (v)
the Purchase Price Loan Agreement, (vi) the Daylight Loan Agreement, (vii) the
BGF Loan Agreement, (viii) the Senior Credit Facility, (ix) the BGF Loan, (x)
the BGF Bridge Loan Facility, (xi) the BGF Senior Credit Facility and (xii) the
Assignment and Assumption Agreement.
"JV Transactions" means, collectively, (i) the Borrower Transactions, (ii)
the Acquisition, (iii) the Purchase Price Loan, (iv) the BGF Bridge Loan
Facility, (v) the BGF Senior Credit Facility, (vi) each of the transactions
contemplated to occur on or prior to the Closing Date by the JV Supply and
Service Agreements, (vii) the incurrence by AGY Holdings of the Daylight Loan on
or prior to the Closing Date, (viii) the Assignment and Assumption Agreement and
(ix) any other transactions on or prior to the Closing Date contemplated in
relation to any of the foregoing.
"Keep Well Agreement" means an agreement between ▇▇▇▇▇ Corning and the
Company substantially in the form of Exhibit F hereto.
"Laws" means all applicable statutes, laws, ordinances, regulations, rules,
orders, judgments, writs, injunctions or decrees of any state, commonwealth,
nation, territory, possession, province, county, parish, township, village,
municipality or Tribunal, and "Law" means each of the foregoing.
"Lenders" has the meaning ascribed to that term in the introduction to this
Agreement and shall include any assignee of any Bridge Loan, Bridge Note or
Bridge Loan Commitment to the extent of such assignment.
"Lien" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any
19
lease in the nature thereof, and any agreement to give any security interest)
and any option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"Litigation" means any action, suit, proceeding, claim, lawsuit and/or
investigation conducted or threatened by or before any Tribunal.
"LLC Operating Agreement" means the Amended and Restated Limited Liability
Operating Agreement for the Company, dated as of the Closing Date, by and
between AGY Holdings and Jefferson, as amended by Amendment No. 1 to the LLC
Interest Sale and Purchase Agreement, dated as of the Closing Date.
"LLC Sale and Purchase Agreement" means the LLC Interest Sale and Purchase
Agreement dated as of July 31, 1998 among ▇▇▇▇▇ Corning, the Company and Glass
Holdings and all instruments and documents related thereto.
"Loan Documents" means this Agreement, the Bridge Notes, the Guarantees,
the Senior Subordinated Indenture, the Exchange Notes and the Registration
Rights Agreement.
"Margin Stock" has the meaning assigned to that term in Regulation U and
Regulation G of the Board of Governors of the Federal Reserve System as in
effect from time to time.
"Material Adverse Change" means a material adverse change in the business,
operations, properties, assets, condition (financial or otherwise) or prospects
of the Company and its Subsidiaries, taken as a whole.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, taken as a whole, whether before
or after giving effect to the Borrower Transactions or (ii) a material
impairment of the ability of the Company and its Subsidiaries, taken as a whole,
to perform or consummate, or the material impairment of the ability of the
Agents or Lenders to enforce, the Obligations or the Borrower Transactions.
"Maturity Date" means the tenth anniversary of the Closing Date.
"Maximum Cash Interest Rate" means an interest rate of 14% per annum;
provided that in computing such interest rate, fees paid to the Lenders shall
--------
not be deemed an interest payment.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Company, its Subsidiaries or any of its ERISA
Affiliates is making or accruing an obligation to make contributions, or has
within any of the preceding five years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Company, its Subsidiaries or any of their ERISA Affiliates and at least one
Person other than the Company, its Subsidiaries and their ERISA Affiliates or
(ii) was so maintained and in respect of which such
20
Company, Subsidiaries or ERISA Affiliates could have liability under Section
4064 or Section 4069 of ERISA in the event such plan has been or were to be
terminated.
"Net Cash Proceeds" means, with respect to any Asset Sale, Cash Proceeds of
such Asset Sale net of bona fide direct costs of sale including, but not limited
to, (i) the amount of tax distributions reasonably estimated to be required to
be made to Jefferson and AGY Holdings as a result of such Asset Sale within two
years of the date of such Asset Sale, (ii) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on, any Indebtedness that is
secured by a Lien on the stock or assets in question and that is required to be
repaid under the terms thereof as a result of such Asset Sale, (iii) out-of-
pocket expenses and fees relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees and sales commissions)
and (iv) any portion of Cash Proceeds which the Company determines in good faith
should be reserved for post-closing adjustments or liabilities relating to the
Asset Sale retained by the Company or any of its Subsidiaries, it being
understood and agreed that on the day that all such post-closing adjustments
have been determined, the amount (if any) by which the reserved amount in
respect of such Asset Sale exceeds the actual post-closing adjustments, payable
by the Company or any of its Subsidiaries, shall constitute Net Cash Proceeds on
such date.
"Non-Payment Default" means any event (other than a Payment Default) the
occurrence of which entitles one or more Persons to act to accelerate the
maturity of any Senior Indebtedness.
"Notice of Borrowing" means a notice substantially in the form of Exhibit
-------
III hereto with respect to a proposed borrowing.
---
"NVOC Asset Purchase Agreement" means the NVOC Asset Purchase Agreement,
dated as of September 29, 1998, between N.V. ▇▇▇▇▇ Corning S.A. and the Company
and all instruments and documents related thereto.
"Obligations" means all obligations of every nature of the Borrowers from
time to time owed to the Lenders and the Agents under the Loan Documents,
whether for principal, reimbursements, interest, fees, expenses, indemnities or
otherwise, and whether primary, secondary, direct, indirect, contingent, fixed
or otherwise (including obligations of performance).
"OC Japan Asset Purchase Agreement" means the Asset Purchase Agreement
dated as of the Closing Date, by and between ▇▇▇▇▇-▇▇▇▇▇▇▇ (Japan) Ltd. and the
Company.
"OCC Asset Purchase Agreement" means the OCC Asset Purchase Agreement,
dated as of September 29, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and AG Yarns.
"Officer" means the Chairman of the Board, the Chief Executive Officer, the
Chief Operating Officer, the General Manager, the Chief Financial Officer, the
Treasurer or the Secretary of each of the Borrowers and their Subsidiaries.
21
"Officers' Certificate" means, as applied to any corporation, a certificate
executed on behalf of such corporation by two Officers; provided that every
Officers' Certificate with respect to the compliance with a condition precedent
to the making of the Bridge Loans hereunder shall include (i) a statement that
the officer or officers making or giving such Officers' Certificate have read
such condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed opinion as
to whether or not such condition has been complied with, and (iii) a statement
as to whether, in the opinion of the signers, such condition has been complied
with.
"Original Bridge Notes" has the meaning assigned to it in Section 2.1D.
"▇▇▇▇▇ Corning" means ▇▇▇▇▇ Corning, a Delaware corporation.
"Payment Blockage Period" has the meaning ascribed to it in Section 8.2(b).
"Payment Default" means any default in the payment of principal, premium,
if any, or interest on any Senior Indebtedness beyond any applicable grace
period with respect thereto.
"Payment Office" shall mean the office of First Union located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇-▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ or such other office as First
Union may designate to the Borrowers and the Lenders from time to time.
"Payment Restriction" has the meaning ascribed to it in Section 6.7.
"PBGC" means the Pension Benefit Guaranty Corporation, and any successor to
all or any of the Pension Benefit Guaranty Corporation's functions under ERISA.
"Pension Plan" means a Single Employer Plan or Multiple Employer Plan.
"Permits" has the meaning ascribed to it in Section 4.19.
"Permitted Business" means the business conducted by the Company on the
Closing Date and any business reasonably related thereto.
"Permitted Indebtedness" has the meaning ascribed to it in Section 6.1.
"Permitted Investments" means:
(i) Investments by the Company or any Subsidiary of the Company
(other than Capital) in any Person that is or will become immediately after
such Investment a Wholly-Owned Subsidiary of the Company or that will merge
or consolidate into the Company or a Wholly-Owned Subsidiary of the Company
(other than Capital);
(ii) Investments in the Company by any Subsidiary of the Company
(other than Capital); provided that any Indebtedness evidencing such
--------
Investment is unsecured
22
and subordinated, pursuant to a written agreement, to the Company's
obligations under the Bridge Notes and the Exchange Notes;
(iii) Investments in cash and Cash Equivalents;
(iv) loans and advances to employees and officers of the Company and
its Subsidiaries in the ordinary course of business for bona fide business
purposes not in excess of $1,500,000 at any one time outstanding;
(v) Hedging Obligations entered into in the ordinary course of the
Company's or its Subsidiaries' (other than Capital) businesses and not for
speculative purposes and otherwise in compliance with this Agreement; and
(vi) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon
the bankruptcy or insolvency of such trade creditors or customers;
(vii) Investments made by the Company or its Subsidiaries (other than
Capital) as a result of consideration received in connection with an Asset
Sale made in compliance with Section 6.13; and
(viii) Investments permitted pursuant to Section 6.8(c)(5).
"Permitted Liens" has the meaning ascribed to it in Section 6.2.
"Permitted Refinancing Indebtedness" means (A) any Refinancing by the
Company of Indebtedness of the Company or of its Subsidiaries (other than
Indebtedness Incurred or outstanding pursuant to clause (ii), (iv), (v), (vi),
(vii), (viii), (ix) or (xi) of Section 6.1) and (B) any Indebtedness incurred
pursuant to a Refinancing by any Subsidiary of the Company of Indebtedness
Incurred by such Subsidiary (other than Indebtedness Incurred or outstanding
pursuant to clause (ii), (iv), (v), (vi), (vii), (viii), (ix) or (xi) of Section
6.1), in the case of each of (A) and (B), that does not (1) result in an
increase in the total of the aggregate principal amount of the Indebtedness of
such Person being Refinanced as of the date of such proposed Refinancing (if
such Indebtedness that is Refinancing the existing Indebtedness is issued at a
price less than 100% of the principal amount thereof, an increase shall not be
deemed to have occurred unless the gross proceeds of such Indebtedness that is
Refinancing the existing Indebtedness is in excess of the total of the aggregate
principal amount of the Indebtedness being Refinanced as of the date of such
proposed Refinancing) or (2) create Indebtedness with a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced; provided that (x) if such Indebtedness being
--------
Refinanced is Indebtedness of the Borrowers, then such Refinancing Indebtedness
shall be Indebtedness solely of the Borrowers, (y) if such Indebtedness being
Refinanced is subordinate or junior in right of payment to the Bridge Loan or
the Guarantees, as the case may be, or if recourse in respect of the
Indebtedness being Refinanced is limited in any respect, then such Indebtedness
proposed to be Incurred to Refinance the existing Indebtedness shall be
subordinate in right of payment to the Bridge Loan or the Guarantees, as the
case may be, and recourse with respect thereto, as the case may be, shall
23
be limited at least to the same extent and in the same manner as the
Indebtedness being Refinanced and (z) if such Indebtedness being Refinanced is
Senior Subordinated Indebtedness, then such Indebtedness proposed to be incurred
to Refinance the existing Indebtedness shall be Senior Subordinated
Indebtedness; provided, further, that Permitted Refinancing Indebtedness shall
-------- -------
include any Indebtedness Incurred concurrently with an irrevocable offer to
purchase, on a date not more than 60 days from the date of the Incurrence of
such Indebtedness, an amount of Bridge Notes equal to such Indebtedness.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities and governments and agencies and political subdivisions thereof.
"PIK Interest Amount" has the meaning ascribed to it in Section 2.2B.
"Potential Event of Default" means a condition or event which, after notice
or lapse of time or both, would constitute an Event of Default if that condition
or event were not cured or removed within any applicable grace or cure period.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights over any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Pricing Spread" means, as of an Interest Payment Date, (a) in the event
that the Keep Well Agreement becomes a binding agreement of ▇▇▇▇▇ Corning and
the Company on or prior to the thirtieth day following the Closing Date, 4.25%
per annum or (b) in all other cases, 4.75% per annum.
--- ----- --- -----
"Pro forma" means, with respect to any calculation made or required to be
made pursuant to the terms of this Agreement, a calculation in accordance with
Article 11 of Regulation S-X under the Securities Act as interpreted by the
Company's chief financial officer or Board of Directors in consultation with its
independent certified public accountants.
"Purchase Price Loan" means the loan of approximately $133.0 million from
Glass Holdings to AGY Holdings to fund the AGY Holdings Acquisition.
"Purchase Price Loan Agreement" means the definitive documentation as
executed on the Closing Date evidencing the Purchase Price loan including,
without limitation, all related instruments and documents (including all
security documents).
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Recovery Event" means the receipt by the Borrowers or any of their
Subsidiaries of any cash insurance proceeds or condemnation award payable by
reason of theft, loss, physical destruction or damage, taking or similar event
with respect to any of their respective properties or assets.
24
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund or defease, or to issue a security or
Indebtedness in exchange or replacement for, such security or Indebtedness in
whole or in part. "Refinanced" and "Refinancing" shall have correlative
meanings.
"Register" has the meaning ascribed to it in Section 5.12.
"Registration Rights Agreement" means a registration rights agreement
substantially in the form contemplated by Exhibit V (with such changes therein
---------
as the Agents and the Borrowers shall approve).
"Release" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Materials), or
onto or out of any Facility, including the movement of any Hazardous Material
through the air, soil, surface water, groundwater or property.
"Required Lenders" means the Lender or Lenders holding at least 51% of the
aggregate outstanding principal amount of Bridge Notes.
"Restricted Payment" has the meaning ascribed to it in Section 6.3.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party providing for the leasing
to the Company or a Subsidiary of the Company of any property, whether owned by
the Company or any Subsidiary of the Company at the Closing Date or later
acquired, which has been or is to be sold or transferred by the Company or such
Subsidiary to such Person or to any other Person by whom funds have been or are
to be advanced on the security of such Property.
"Securities" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit sharing
agreement or arrangement, bonds, debentures, options, warrants, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Senior Credit Facility" means that certain credit agreement to be entered
into on or before the Closing Date between the Company, the guarantors from time
to time a party thereto, the lenders from time to time a party thereto and First
Union National Bank, as agent, pursuant to which the Company may, as of the
Closing Date, borrow up to $315,000,000 in the aggregate at any one time
outstanding together with the documents related thereto (including, without
limitation, any guarantee agreements and security documents), as such agreements
may be amended (including any amendment and restatement thereof), supplemented
or otherwise modified from time to time, including any agreement extending the
maturity of, refinancing,
25
replacing or otherwise restructuring (including adding Subsidiaries of the
Company as additional borrowers or guarantors thereunder or increasing the
principal amount available thereunder) all or any portion of the Indebtedness
under such agreement or any successor or replacement agreement and whether by
the same or any other agent, lender or group of lenders.
"Senior Indebtedness" means for any Person the principal of, premium, if
any, and interest on, and all amounts payable in respect of, all obligations of
every nature of the Company from time to time owed to the lenders under the
Senior Credit Facility; including, without limitation, all obligations in
respect of letters of credit and principal of and interest on and all fees,
indemnities, and expenses payable under the Senior Credit Facility and all
obligations under Interest Rate Agreements entered into with lenders under the
Senior Credit Facility and their respective Affiliates and any guarantees
thereof including any agreement refinancing all or any portion of the
Indebtedness under such Senior Credit Facility. Without limiting the generality
of the foregoing "Senior Indebtedness" shall include interest accruing thereon
subsequent to the occurrence of any Event of Default specified in Sections 7.6
and 7.7 relating to the Borrowers, whether or not the claim for such interest is
allowed under any applicable Bankruptcy Law. Notwithstanding the foregoing,
"Senior Indebtedness" of any Person shall not include that portion of any
Indebtedness which is incurred by such Person in violation of this Agreement.
"Senior Subordinated Indebtedness" means, with respect to the Borrowers or
any Guarantor, Indebtedness of such Person that specifically provides that such
Indebtedness is to rank pari passu in right of payment with the terms set forth
in this Agreement and the Bridge Loan or the Guarantee of such Guarantor, as the
case may be, and is not subordinated by its terms in right of payment to any
Indebtedness or other obligation of the Borrowers or such Guarantor which is not
Senior Indebtedness in the case of the Borrowers or Guarantor Senior
Indebtedness in the case of such Guarantor.
"Senior Subordinated Indenture" means an indenture among the Borrowers, the
Guarantors and a trustee having terms substantially similar to the terms set
forth in this Agreement and the Bridge Notes except where the context of this
Agreement provides otherwise (with such changes therein as the Agents and the
Borrowers shall approve, and at such time as notes issued thereunder are sold in
a public offering, with other appropriate changes to reflect such public
offering), as the same may at any time be amended, modified and supplemented and
in effect.
"Single Employer Plan" means a "single-employer plan," as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Company, any of its Subsidiaries or any of their ERISA Affiliates and no Person
other than the Company, any of its Subsidiaries or any of their ERISA Affiliates
or (ii) was so maintained and in respect of which the Company, its Subsidiaries
or their ERISA Affiliates could have liability under Section 4069 of ERISA in
the event such plan has been or were to be terminated.
"Subordinated Indebtedness" means Indebtedness of the Borrowers or any
Guarantor which is expressly subordinated in right of payment to the Bridge
Notes or the Guarantee of such Guarantor, as the case may be.
26
"Subsequent Bridge Note" has the meaning ascribed to it in Section 2.1D.
"Subsequent Exchange Request" has the meaning ascribed to it in Section
5.10.
"Subsidiary" with respect to any Person, means (i) any corporation of which
the outstanding Capital Stock having at least a majority of the votes entitled
to be cast in the election of directors under ordinary circumstances shall at
the time be owned, directly or indirectly, by such Person; or (ii) any other
Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Take-Out Bank" means FUCM.
"Take-Out Request" has the meaning ascribed to it in Section 5.9.
"Take-Out Securities" means (i) any debt securities of the Borrowers and/or
the Guarantors the proceeds of which are used to repay the Bridge Loan in full
and (ii) any debt securities of the Borrowers issued in accordance with Section
5.9, the proceeds of which are used to Refinance the Bridge Notes in part,
including, without limitation, the Demand Take-Out Notes.
"Tax Return" means a report, return or other information (including any
amendments) required to be supplied to a Tribunal with respect to Taxes
including, where permitted or required, combined or consolidated returns for any
group of entities that includes the Borrowers or any Subsidiary.
"Taxes" means any present or future taxes, assessments, fees, levies,
imposts, duties, deductions, liabilities, withholdings or other charges of any
nature whatsoever, including interest, penalties and additions thereto from time
to time or at any time imposed by any Law or any Tribunal.
"Transaction Date" means the date on which any transaction that would give
rise to the need to calculate the Consolidated Fixed Change Coverage Ratio
occurs.
"Tribunal" means any government, any arbitration panel, any court or any
governmental department, commission, board, bureau, agency, authority or
instrumentality of any state, province, commonwealth, nation, territory,
possession, county, parish, town, township, village or municipality, whether now
or hereafter constituted and/or existing.
"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Voting Stock" means, with respect to any Person, securities of any class
or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members of the
board of directors or the governing body of such Person.
27
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the total of the
products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
"Wholly-Owned Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which 100% of the total
voting power of shares of stock or other equity interest entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled
directly or indirectly, by that Person or one or more of the other Wholly-Owned
Subsidiaries of that Person or a combination thereof.
"Year 2000 Compliant" has the meaning ascribed to it in Section 4.26.
1.2 Accounting Terms
----------------
For the purposes of this Agreement, all accounting terms not otherwise
defined herein shall have the meanings assigned to them in conformity with GAAP.
1.3 Other Definitional Provisions
-----------------------------
Any of the terms defined in Section 1.1 may, unless the context otherwise
requires, be used in the singular or the plural depending on the reference.
SECTION 2 AMOUNT AND TERMS OF BRIDGE LOAN COMMITMENT AND LOANS; BRIDGE NOTES
2.1 Bridge Loan and Bridge Note
---------------------------
A. Bridge Loan Commitment. Subject to the terms and conditions of this
----------------------
Agreement and in reliance upon the representations and warranties of the
Borrowers herein set forth, the Lenders hereby agree to lend to the Borrowers on
the Closing Date $150,000,000 in the aggregate (the "Bridge Loan"), each such
Lender committing to lend the aggregate amount set forth next to such Lender's
name on the signature pages hereto. The Lenders' commitments to make the Bridge
Loan to the Borrowers pursuant to this Section 2.1 A are herein called
individually, the "Bridge Loan Commitment" and collectively, the "Bridge Loan
Commitments."
B. Notice of Borrowing. When the Borrowers desire to borrow under this
-------------------
Section 2.1, they shall deliver to First Union a Notice of Borrowing no later
than 11:00 A.M. (New York time), at least two Business Days in advance of the
date of funding of the Bridge Loan (the "Closing Date") or such later date as
shall be agreed to by First Union. Upon receipt of such Notice of Borrowing,
First Union shall promptly notify each Lender of its share of the Bridge Loan
and the matters covered by the Notice of Borrowing.
28
C. Disbursement of Funds. (a) No later than 5:00 p.m. (New York time) on
---------------------
the Closing Date, each Lender will make available its pro rata share of the
Bridge Loan requested to be made on such date in the manner provided below. All
amounts shall be made available to First Union in U.S. Legal Tender and
immediately available funds at the Payment Office and First Union promptly will
make available to the Borrowers by depositing to their account at the Payment
Office the aggregate of the amounts so made available in the type of funds
received. Unless First Union shall have been notified by any Lender prior to the
Closing Date that such Lender does not intend to make available to First Union
its pro rata share of the Bridge Loan to be made on such date, First Union may
assume that such Lender has made such amount available to First Union on such
date, and First Union, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrowers
a corresponding amount. If such corresponding amount is not in fact made
available to First Union by such Lender and First Union has made available same
to the Borrowers, First Union shall be entitled to recover such corresponding
amount from such Lender. If such Lender does not pay such corresponding amount
forthwith upon First Union's demand therefor, First Union shall promptly notify
the Borrowers, and the Borrowers shall immediately pay such corresponding amount
to First Union. First Union shall also be entitled to recover from such Lender
or the Borrowers, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made available
by First Union to the Borrowers to the date such corresponding amount is
recovered by First Union, at a rate per annum equal to (x) if paid by such
Lender, the overnight Federal Funds Rate or (y) if paid by the Borrowers, the
then applicable rate of interest on the Bridge Loan.
(b) Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Bridge Loan Commitment hereunder or to prejudice any
rights which the Borrowers may have against any Lender as a result of any
default by such Lender hereunder.
D. Bridge Notes. The Borrowers shall execute and deliver to each Lender
on the Closing Date, a note dated the Closing Date, substantially in the form of
Exhibit I to evidence such Lender's portion of its Bridge Loan Commitment and
---------
with appropriate insertions (the "Original Bridge Notes"). On each interest
payment date on which the Borrowers elect to pay a PIK Interest Amount pursuant
to Section 2.2B, the Borrowers shall execute and deliver to each Lender on such
interest payment date a note dated such interest payment date substantially in
the form of Exhibit I in a principal amount equal to such Lender's pro rata
---------
portion of such PIK Interest Amount and with other appropriate insertions (each
a "Subsequent Bridge Note" and, together with the Original Bridge Notes, the
"Bridge Notes"). A Subsequent Bridge Note shall bear interest from the date of
its issuance at the same rate borne by all Bridge Notes.
E. Maturity of Bridge Loan. The Bridge Loan shall mature and the
-----------------------
Borrowers shall pay in full the outstanding principal amount thereof and accrued
interest thereon on the Maturity Date.
F. Termination of Bridge Loan Commitment. The Bridge Loan Commitment
-------------------------------------
hereunder shall terminate on the earlier of (i) consummation of the Acquisition
or another transaction or series of transactions in which the Borrowers or any
of their Affiliates acquires the
29
Acquired Assets, (ii) the termination of the LLC Sale and Purchase Agreement
(iii) the occurrence of any event that First Union reasonably believes in good
faith has, or could reasonably be expected to have, a Material Adverse Effect
and (iv) 5:00 p.m. (Charlotte time) on October 15, 1998, if the closing of the
Acquisition shall not have occurred by such time.
G. Pro Rata Borrowings. The Bridge Loan made under this Agreement shall
-------------------
be made by the Lenders pro rata on the basis of their respective Bridge Loan
Commitments. It is understood that no Lender shall be responsible for any
default by any other Lender of its obligation to make its portion of the Bridge
Loan hereunder and that each Lender shall be obligated to make its portion of
the Bridge Loan hereunder, regardless of the failure of any other Lender to
fulfill its commitments hereunder.
2.2 Interest on the Bridge Loan
---------------------------
A. Rate of Interest. The Bridge Loan shall bear interest on the unpaid
----------------
principal amount thereof from the date made through maturity (whether by
prepayment, acceleration or otherwise) at a rate per annum equal to the
Applicable Interest Rate for each Interest Period.
Notwithstanding this Section 2.2A or any other provision herein, in no
event will the combined sum of interest (cash or otherwise) on the Bridge Loan
exceed 18.00% per annum.
B. Interest Payments. Interest shall be payable with respect to the
-----------------
Bridge Loan, in arrears, on each Interest Payment Date, commencing on the first
Interest Payment Date following the Closing Date and upon any prepayment of the
Bridge Loan (to the extent accrued on the amount being prepaid) and at maturity
(whether by prepayment, acceleration or otherwise); provided, however, that if,
-------- -------
on any Interest Payment Date on which interest is required to be paid (other
than at maturity), the interest rate borne by the Bridge Loan exceeds the
Maximum Cash Interest Rate, the Borrowers may pay all or a portion of the
interest payable in excess of the amount of interest that would be payable on
such date at the Maximum Cash Interest Rate by issuance of Subsequent Bridge
Notes, in an aggregate principal amount equal to the amount of such interest
being so paid (the "PIK Interest Amount").
C. Post-Maturity Interest. Any principal payments on the Bridge Loan not
----------------------
paid when due and, to the extent permitted by applicable law, any interest
payment on the Bridge Loan not paid when due, in each case whether at maturity,
by notice of prepayment, by acceleration or otherwise, shall thereafter bear
interest payable upon demand at a rate which is 2.00% per annum in excess of the
rate of interest otherwise payable under this Agreement for the Bridge Loan.
D. Computation of Interest. Interest on the Bridge Loan shall be computed
-----------------------
on the basis of a 360-day year and the actual number of days elapsed in the
period during which it accrues. In computing interest on the Bridge Loan, the
date of the making of the Bridge Loan shall be included and the date of payment
shall be excluded; provided that if the Bridge Loan is repaid on the same day on
--------
which it is made, one day's interest shall be paid on the Bridge Loan.
30
E. Making of Payments. Any payment stated to be due in respect of any
------------------
Bridge Loan, and any Interest Period stated to end, on a given day in a
specified month shall instead be made or end (as the case may be) (i) if there
is no such day in that month, on the last Business Day of that month or (ii) if
that day is not a Business Day, on the following Business Day, unless that
following Business Day falls in a different calendar month, in which case that
payment shall be made or that Interest Period shall end (as the case may be) on
the preceding Business Day.
2.3 Fees
----
The Borrowers agree to pay to First Union and its Affiliates all fees and
other obligations in accordance with, and at the times specified by, the Amended
and Restated Commitment Letter.
2.4 Prepayments and Payments
------------------------
A. Prepayments
-----------
(i) Voluntary Prepayments. The Borrowers may prepay the Bridge Loan
---------------------
at any time or from time to time in whole or in part upon not less than
three Business Days' prior written notice to First Union which notice shall
specify the effective date thereof and the amount of any such prepayment,
which shall be in a minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess of that amount, or shall be in the amount of the
balance outstanding, at a prepayment price equal to the principal amount to
be prepaid plus accrued and unpaid interest thereon to the date of
prepayment.
Notice of prepayment having been given as aforesaid, the principal
amount of the Bridge Loan to be prepaid shall become due and payable on the
prepayment date. Amounts of the Bridge Loan so prepaid may not be
reborrowed.
(ii) Mandatory Prepayments.
---------------------
(a) Prepayments from Asset Sales. Upon receipt by the Company or any
----------------------------
Subsidiary of the Company of Cash Proceeds of any Asset Sale occurring
after the Closing Date, the Borrowers shall, or shall cause the Company's
Subsidiaries to, apply an amount equal to the Net Cash Proceeds of such
Asset Sale to prepay loans outstanding under the Senior Credit Facility;
provided that the commitment thereunder is permanently reduced to the
--------
extent of the prepayment. Concurrently with the consummation of any such
Asset Sale, the Borrowers shall deliver to First Union an Officer's
Certificate demonstrating the derivation of Net Cash Proceeds from the
gross sales price of such Asset Sale.
The Borrowers shall, or shall cause the Company's Subsidiaries to,
prepay the Bridge Loan in an amount equal to the Net Cash Proceeds not used
as provided in the preceding paragraph on a date not later than the
Business Day next succeeding the 30th day after the consummation of such
Asset Sale.
31
(b) Prepayments from Capital Contributions and Sales or Issuances of
----------------------------------------------------------------
Capital Stock. Concurrently with the receipt by the Company or any
-------------
Subsidiary of the Company of cash proceeds from any capital contribution or
any sale or issuance of its Capital Stock, other than any cash proceeds
from any capital contribution by, or any sale of Capital Stock to
Jefferson, AGY Holdings or any of their Subsidiaries or any of the
Company's Subsidiaries, the Borrowers shall, or shall cause the Company's
Subsidiaries to, to the extent that such proceeds are not required by the
Senior Credit Facility to prepay any amounts outstanding thereunder, prepay
the Bridge Loan in a principal amount equal to the lesser of the cash
proceeds thereof (net of underwriting or placement discounts or commissions
and other reasonable costs associated therewith) or the aggregate principal
amount of the Bridge Loan then outstanding.
(c) Prepayments from Issuances of Certain Indebtedness. Concurrently
--------------------------------------------------
with the receipt by the Borrowers of proceeds from the issuance or
incurrence of Indebtedness for borrowed money (other than the Senior Credit
Facility and other than Indebtedness represented by Take-Out Securities),
the Borrowers shall, to the extent that such proceeds are not required by
the Senior Credit Facility to prepay any amounts outstanding thereunder,
prepay the Bridge Loan in an amount equal to the lesser of the cash
proceeds thereof (net of underwriting or placement discounts or commissions
and other reasonable costs associated therewith) or the aggregate principal
amount of the Bridge Loan then outstanding.
(d) Prepayments from Issuances of Take-Out Securities. Concurrently
-------------------------------------------------
with the receipt by the Borrowers of proceeds from the issuance or
incurrence of Take-Out Securities, the Borrowers shall, or shall cause the
Company's Subsidiaries to prepay the Bridge Loan in an amount equal to the
lesser of the cash proceeds thereof (net of underwriting or placement
discounts or commissions and other reasonable costs associated therewith)
or the aggregate principal amount of the Bridge Loan then outstanding.
(e) Prepayments from Recovery Events. Concurrently with the
--------------------------------
occurrence of a Recovery Event, the Borrowers shall, or shall cause the
Company's Subsidiaries to, to the extent that such proceeds are not (A)
required by the Senior Credit Facility to prepay any amounts outstanding
thereunder or (B) used to repair such damaged assets or to purchase or
otherwise acquire replacement assets or property, provided that such
repair, purchase or acquisition is committed within 30 days after receipt
of such cash proceeds and consummated within 180 days thereof, prepay the
Bridge Loan in an aggregate amount equal to the lesser of the cash proceeds
thereof or the aggregate amount of the Bridge Loan then outstanding.
Notwithstanding anything to the contrary contained herein, after the
occurrence and during the continuation of an Event of Default, First Union
shall have the option to require such cash proceeds, to the extent not
required by the Senior Credit Facility to prepay amounts outstanding
thereunder, to be applied immediately to prepay the Bridge Loan in an
aggregate amount equal to the lesser of the cash proceeds thereof or the
aggregate amount of the Bridge Loan then outstanding.
32
(f) Any prepayment of the Bridge Loan pursuant to clause (a), (b),
(c), (d) or (e) of this Section 2.4A(ii) shall be made at a prepayment
price equal to the principal amount of the Bridge Loan so prepaid plus
accrued and unpaid interest thereon to the date of prepayment.
(g) Notice. The Borrowers shall notify First Union in writing of any
------
prepayment to be made pursuant to this Section 2.4A(ii) at least three
Business Days prior to such prepayment date (unless shorter notice is
satisfactory to First Union).
(iii) Application of Prepayments. All prepayments shall include
--------------------------
payment of accrued interest on the principal amount so prepaid and shall be
applied to payment of interest before application to principal.
(iv) Mandatory Offer to Purchase Notes.
---------------------------------
(a) Upon the occurrence of a Change of Control (the date of such
occurrence, the "Change of Control Date"), the Lenders shall have the right
to require the Borrowers to purchase (the "Change of Control Offer") all of
the Bridge Notes at a purchase price equal to 103% of the aggregate
principal amount thereof plus accrued and unpaid interest thereon to the
date of purchase (the "Change of Control Purchase Price"). Prior to the
mailing of the notice to First Union provided for in paragraph (b) below
but in any event within 30 days following any Change of Control, the
Borrowers hereby covenant to (i) repay in full all Indebtedness under the
Senior Credit Facility or to offer to repay in full all such Indebtedness
and to repay the Indebtedness of each lender under the Senior Credit
Facility who has accepted such offer or (ii) obtain the requisite consents
under the Senior Credit Facility to permit the payment of the Bridge Notes
as provided for in paragraph (d) below. The Borrowers shall first comply
with the covenant in the preceding sentence before it shall be required to
purchase the Bridge Notes pursuant to this Section 2.4A(iv).
(b) Within 30 days following any Change of Control the Borrowers
shall mail a notice to First Union that shall contain all instructions and
materials necessary to enable the Lenders to tender Bridge Notes and
stating:
(1) that the Change of Control Offer is being made pursuant to
this Section 2.4(A) (iv) and that all Bridge Notes validly tendered
will be accepted for payment;
(2) the Change of Control Purchase Price and the purchase date,
which shall be no earlier than 30 days nor later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date");
(3) that any Bridge Note not tendered will continue to accrue
interest;
(4) that any Bridge Note accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the
Change of Control
33
Payment Date unless the Borrowers shall default in the payment of the
Change of Control Purchase Price with respect to Bridge Notes tendered
for purchase;
(5) that if a Lender elects to have a Bridge Note purchased
pursuant to the Change of Control Offer it will be required to
surrender the Bridge Note, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Bridge Note completed, to the
Borrowers prior to 5:00 p.m. New York time on the third Business Day
prior to the Change of Control Payment Date;
(6) that a Lender will be entitled to withdraw its election if
the Company receives, not later than 5:00 p.m. New York time on the
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the principal
amount of Bridge Notes such Lender surrendered for purchase, and a
statement that such Lender is withdrawing its election to have such
Bridge Notes (or portions thereof) purchased; and
(7) that if Bridge Notes surrendered for purchase are purchased
only in part a new Bridge Note of the same type will be issued in
principal amount equal to the unpurchased portion of the Bridge Notes
surrendered.
(c) On or before the Change of Control Payment Date, the Borrowers
shall (i) accept for payment Bridge Notes or portions thereof which are to
be purchased in accordance with the above, and (ii) deposit at the Payment
Office U.S. Legal Tender sufficient to pay the Change of Control Purchase
Price of all Bridge Notes surrendered for purchase and not withdrawn
pursuant to clause (b)(6) of this Section 2.4(A)(iv). First Union shall
promptly mail to the Lenders whose Bridge Notes are so accepted payment in
an amount equal to the Change of Control Purchase Price for such Bridge
Notes unless such payment is prohibited pursuant to Section 8 or otherwise.
(d) The Borrowers shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in
connection with the purchase of Bridge Notes pursuant to a Change of
Control Offer. To the extent the provisions of any securities laws or
regulations conflict with the provisions under this Section, the Borrowers
shall comply with the applicable securities laws and regulations and shall
not be deemed to have breached its obligations under this Section by virtue
thereof.
B. Manner and Time of Payment. All payments of principal and interest
--------------------------
hereunder and under the Bridge Notes by the Borrowers shall be made without
defense, set-off or counterclaim and in same-day funds and delivered to First
Union, unless otherwise specified, not later than 12:00 Noon (New York time) on
the date due at the Payment Office for the account of the Lenders; funds
received by First Union after that time shall be deemed to have been paid by the
Borrowers on the next succeeding Business Day. The Borrowers hereby authorize
First Union to charge its account with First Union in order to cause timely
payment to be made of all principal, interest and fees due hereunder (subject to
sufficient funds being available in its account for that purpose).
34
C. Notation of Payment. Each Lender agrees that before disposing of any
-------------------
Bridge Note held by it, or any part thereof (other than by granting
participations therein), such Lender will make a notation thereon of all
principal payments previously made thereon and of the date to which interest
thereon has been paid and will notify the Borrowers and First Union (such notice
to First Union to be made to it at the Payment Office) of the name and address
of the transferee of that Bridge Note; provided that the failure to make (or any
--------
error in the making of) such a notation or to notify the Borrowers of the name
and address of such transferee shall not limit or otherwise affect the
obligation of the Borrowers hereunder or under such Bridge Notes with respect to
the Bridge Loan and payments of principal or interest on any such Bridge Note.
2.5 Use of Proceeds
---------------
The proceeds of the Bridge Loan shall be used by the Borrowers to fund the
Jefferson Distribution and the AGY Holdings Distribution.
SECTION 3 CONDITIONS
3.1 Conditions to Bridge Loan
-------------------------
The obligations of the Lenders to make the Bridge Loan hereunder are
subject to the satisfaction of, or waiver of, immediately prior to or concurrent
with the making of such Bridge Loan on the Closing Date, the following
conditions precedent:
(a) On or prior to the Closing Date, all corporate and other proceedings
taken or to be taken in connection with the transactions contemplated hereby and
all documents incidental thereto, not previously found acceptable to the Agents,
shall be acceptable to the Agents, and the Agents shall have received on behalf
of the Lenders the following items, each of which shall be in form and substance
satisfactory to the Agents and, unless otherwise noted, dated the Closing Date:
(1) a certified copy of each of the Company's and Capital's
certificate of formation or charter together with a certificate of
status, compliance, good standing or like certificate or its
equivalent dated within a reasonable time prior to the Closing Date
issued by the appropriate government officials of the respective
jurisdiction of incorporation of each of the foregoing and of each
jurisdiction in which each of the foregoing owns any material assets
or carries on any material business; and
(2) a copy of each of the Company's and Capital's operating
agreement or bylaws, certified by one of its Officers; and
(3) resolutions of each of the Company's and Capital's Board of
Directors approving and authorizing the execution, delivery and
performance of this Agreement, each of the other Loan Documents and
any other documents, instruments and certificates required to be
executed by the Company or Capital in connection herewith and
therewith and approving and authorizing the execution,
35
delivery and payment of the Bridge Notes and the consummation of the
Borrower Transactions, each certified by one of its Officers as being
in full force and effect without modification or amendment; and
(4) signature and incumbency certificates of the Borrower's
Officers executing this Agreement and the Bridge Notes; and
(5) executed copies of this Agreement and the Original Bridge
Notes substantially in the form of Exhibit I executed in accordance
---------
with Section 2.1D drawn to the order of the Lenders and with
appropriate insertions; and
(6) an originally executed Notice of Borrowing substantially in
the form of Exhibit III, signed by the President or a Vice President
-----------
of the Borrowers on behalf of the Borrowers delivered to the Agents;
and
(7) originally executed copies of one or more favorable written
opinions of (I) ▇▇▇▇▇▇ & Bird, counsel for the Borrowers,
substantially in the form of Exhibit V and addressed to the Lenders
---------
and (II) Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for the
Lenders, substantially in the form of Exhibit VI and addressed to the
----------
Lenders; and (III) such other opinions of counsel and such
certificates or opinions of accountants, appraisers or other
professionals as the Agents shall have reasonably requested,
including, without limitation, receipt of an environmental report and
technical reports from independent consultants in respect of the
Company and its Subsidiaries and their respective properties,
reasonably satisfactory to the Agents; and
(8) a certificate, delivered by the Company and signed by the
President or a Vice President and the Chief Financial or Accounting
Officer of the Company and addressed to the Lenders in form and
substance reasonably satisfactory to the Agents, with appropriate
attachments, stating that, after giving effect to the consummation of
the Borrower Transactions, the fair saleable value of the assets of
the Company and Capital will not be less than the probable liability
on their debts, that each of the Company and Capital will be able to
pay its debts as they mature and that each will not have unreasonably
small capital to conduct its business, and the Agents shall have
received such opinions of value, other appropriate factual information
and expert advice supporting the conclusions reached in such letter as
the Agents may reasonably request, all in form and substance
reasonably satisfactory to the Agents; and
(9) an Officers' Certificate from each of the Company and
Capital in form and substance satisfactory to the Agents to the effect
that (i) the representations and warranties in Section 4 hereof are
true, correct and complete on and as of the Closing Date to the same
extent as though made on and as of the Closing Date, (ii) the
Borrowers have performed and complied with all covenants and
agreements to be performed and observed by the Borrowers on or prior
to the Closing Date and (iii) all conditions to the consummation of
the Borrower
36
Transactions have been satisfied on the terms set forth therein and
have not been waived or amended without the Agents' prior written
consent; and
(10) executed or conformed copies of each of the JV Transaction
Documents and, with respect to each of the foregoing, a copy of each
legal opinion delivered in connection therewith, and all documents and
instruments relating thereto; and
(11) such further information, certificates and documents as the
Agents may reasonably request.
(b) The Borrowers shall have performed or complied with all covenants and
agreements which this Agreement provides shall be performed or complied with
prior to the Closing Date, except as otherwise disclosed to and agreed to in
writing by the Agents.
(c) The form, terms and substance of each of the JV Transaction Documents
shall be reasonably satisfactory to the Agents; all of the covenants and
agreements to be performed or observed in connection with each of the JV
Transaction Documents and any agreements or documents related thereto prior to
the Closing Date shall have been performed or complied with and all conditions
contained in each of the JV Transaction Documents shall have been satisfied and
not waived without the prior written consent of the Agents; and all of the
transactions contemplated by the JV Transaction Documents and any agreements or
documents related thereto to occur on or prior to the Closing Date shall have
been consummated in accordance with the terms thereof concurrently with the
transactions contemplated by this Agreement.
(d) All authorizations, consents and approvals necessary in connection
with the JV Transactions shall have been obtained and remain in full force and
effect and evidence of the receipt of such authorizations, consents and
approvals satisfactory to the Agents shall have been delivered to the Agents.
(e) There shall not be pending or, to the knowledge of the Borrowers,
threatened any action, suit, proceeding, governmental investigation or
arbitration which has not been settled, dismissed, vacated, discharged or
terminated, against or affecting the Company, any of its Subsidiaries or any of
their respective Affiliates or any property or asset of the Company, any of its
Subsidiaries or any of their respective Affiliates which has not been disclosed
by the Borrowers in writing to the Agents (and the Agents shall have received an
Officer's Certificate dated the Closing Date attesting to the same) and there
shall have occurred no development not so disclosed in any such action, suit,
proceeding, governmental investigation or arbitration so disclosed, which, in
each case, singly or in the aggregate, in the opinion of the Agents, could
reasonably be expected to have a Material Adverse Effect or a material adverse
effect on the JV Transactions. No injunction or other restraining order shall
have been issued and no hearing to cause an injunction or other restraining
order to be issued shall be pending or noticed with respect to any action, suit
or proceeding seeking to restrain, enjoin, delay, prohibit or otherwise prevent
the consummation of, or to recover any damages or obtain relief as a result of,
the JV Transactions. There shall not be threatened, instituted or pending any
action, suit, proceeding or application before or by any Tribunal, or any other
Person, domestic or foreign (i) challenging
37
the JV Transactions or seeking to restrain, delay or prohibit the consummation
thereof; (ii) seeking to prohibit or impose material limitations on the
Company's ownership or operation of all or any portion of the Company's business
or assets (including the business and assets of Capital) or to compel the
Company to dispose of or hold separate all or any portion of the Company's
business or assets (including the business and assets of Capital) as a result of
the JV Transactions; (iii) which, in any event, might materially adversely
affect the JV Transactions; or (iv) seeking to impose any materially adverse
conditions upon the JV Transactions.
(f) The Agents and their counsel shall be reasonably satisfied that the
consummation of the JV Transactions shall be in compliance with all Laws
(including, without limitation, all applicable U.S. securities and banking laws,
rules and regulations).
(g) All of the covenants and agreements to be performed or observed in
connection with the JV Transactions prior to the Closing Date shall have been
performed or complied with; all of the conditions to the consummation of the JV
Transactions shall have been satisfied and not waived without the prior written
consent of the Agents and the JV Transactions, and all other transactions
contemplated thereby, shall have been consummated on terms acceptable to the
Agents.
(h) No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of Borrowing which
would constitute an Event of Default or Potential Event of Default.
(i) There shall be no bankruptcy, insolvency, liquidation or other similar
proceeding affecting, in any manner, all or a portion of the Acquired Assets.
(j) The making of the Bridge Loan in the manner contemplated in this
Agreement shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other regulation of
the Federal Reserve Board.
(k) The Borrowers shall have complied with all agreements and obligations
under the Amended and Restated Commitment Letter including the payment to First
Union and its Affiliates of all fees payable pursuant to Section 2.3 hereof.
(l) Neither of the Borrowers shall have sustained any loss or interference
with respect to its businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding, which loss or
interference, in the sole judgment of First Union, has had or could reasonably
be expected to have a Material Adverse Effect or a material adverse effect on
the ability of either of the Borrowers to consummate the Borrower Transactions
and to execute, deliver and perform its obligations under the Loan Documents,
the Senior Credit Facility and each other document or instrument to be delivered
in connection with the Borrower Transactions executed or to be executed by it;
there shall not have been, in the reasonable judgment of First Union, any
Material Adverse Change, or any development involving a prospective Material
Adverse Change.
38
(m) There shall not have occurred (i) any general suspension of, or
limitation on times or prices for, trading in securities on the New York Stock
Exchange or American Stock Exchange or in the over-the-counter market in the
United States or minimum or maximum prices established on any such exchanges;
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of the banks in the United States or New York; or (iii) either (A) an
outbreak or escalation of hostilities between the United States and any foreign
power, or (B) an outbreak or escalation of any other insurrection or armed
conflict involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial markets of
the United States, which, in the case of clause (A), (B) or (C) of this
sentence, in the sole judgment of First Union, (x) makes it impractical or
inadvisable to proceed with the consummation of the Borrower Transactions or the
Bridge Loan or any of the other transactions contemplated hereby including,
without limitation, the issuance and sale of the Demand Take-Out Securities or
(y) would materially affect the ability to sell or syndicate the Bridge Loan.
(n) There shall not have been any disclosure of information relating to
conditions or events not previously disclosed to the Lenders, or new information
regarding previously disclosed matters, in the course of the Lenders' continuing
legal, financial, tax, environmental, business and accounting due diligence
review which the Lenders shall reasonably determine is material and adverse to
the Borrowers or any of their Subsidiaries.
(o) The Acquired Assets shall have generated a minimum EBITDA (as defined
in the Prior Commitment Letter (as defined in the Amended and Restated
Commitment Letter)) of at least $90.0 million for the 12 month period ending
August 31, 1998.
(p) The labor agreement for the Aiken, South Carolina facility shall have
been extended through at least April 30, 1999, and the labor agreement for the
Huntingdon, Pennsylvania facility shall have been extended through at least
October 31, 1999, each extension on terms and conditions satisfactory to the
Agents.
(q) The Agents shall be satisfied with management structure, legal
structure, voting control, liquidity, total leverage and total capitalization of
the Borrowers as of the Closing Date.
(r) The Agents shall be satisfied with all matters relating to the
Company's relationship with ▇▇▇▇▇ Corning and Jefferson, including, without
limitation, raw material supply agreements, the transfer and use of Intellectual
Property, the sharing of facilities, non-compete agreements, the sharing of
employees and real property associated with the Acquired Assets and all other
corporate services arrangements necessary for the Company to operate the
Acquired Assets in a manner consistent with the historical practices of ▇▇▇▇▇
Corning. The Agents shall have received a copy, certified by an Officer of the
Company as true and complete, of each of the JV Supply and Service Agreements as
originally executed and delivered, together with all exhibits and schedules
thereto, and each third-party consent required or necessary in connection with
the assignment of any of the JV Supply and Service Agreements to the Company.
39
(s) All matters relating to the relationship between ▇▇▇▇▇ Corning and
Glass Holdings and between ▇▇▇▇▇ Corning and AGY Holdings, including, without
limitation, matters of ownership, capital structure and voting control, shall be
satisfactory to the Agents.
(t) The Borrowers and ▇▇▇▇▇ Corning shall have entered into a transition
services agreement dated as of the date hereof providing for the orderly
transition of the Acquired Assets in connection with the transfer thereof from
▇▇▇▇▇ Corning to the Company, which plan shall be in form and substance
satisfactory to the Agents.
(u) ▇▇▇▇▇ Corning shall have agreed in writing to waive (in favor of the
lenders under the Senior Credit Facility) any right it may have to preclude a
merger or sale of the Acquired Assets upon the occurrence of an Event of Default
and the acceleration of the Bridge Loans and termination of the Bridge Loan
Commitments pursuant to Section 7. Such waiver letter shall be satisfactory to
the Agents.
(v) The management team and board of directors as described in the LLC
Operating Agreement shall have been appointed.
(w) The Agents shall have received the five-year strategic business plan
of the Borrowers covering the five-year period following the Closing Date,
approved by the ▇▇▇▇▇ Corning and AGY Holdings, which plan shall be in form and
substance satisfactory to the Agents.
(x) The Agents shall have received the seven year financial and
operational projections for the Company and its Subsidiaries for the fiscal
years 1998 through 2005, together with a detailed explanation of all management
assumptions contained therein, which projections shall be in form and substance
satisfactory to the Agents.
(y) The Agents shall have received the Borrowers' plan for becoming Year
2000 Compliant, which plan shall be in form and substance satisfactory to the
Agents.
(z) The Agents shall have received copies of all appraisals conducted on
the personal property of the Borrowers and their Subsidiaries.
(aa) Each of the Glass Marbles Supply Agreement, the Alloy Services
Agreement and the Borates Supply Agreement shall have been amended so that the
Company shall have the option to extend the duration of such agreements for a
period of at least seven years from the Closing Date.
(bb) The Company shall have had discussions with the Agents regarding the
Company's financial condition and results of operations for the month of
September 1998 based on the most current information reasonably available to the
management of the Company and which discussions shall not have disclosed any
information which the Agents shall reasonably determine is material and adverse
to the Company.
40
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE BORROWERS
In order to induce the Lenders to enter into this Agreement and to make the
Bridge Loan, the Borrowers jointly and severally represent and warrant to the
Lenders that, at the time of execution hereof the following statements are, and
on the Closing Date will be, true, correct and complete.
4.1 Organization and Good Standing; Capitalization
----------------------------------------------
(a) The Company and Capital are duly organized, validly existing and in
good standing under the laws of their respective jurisdiction of incorporation.
The Company and Capital have the full power and authority to own and operate
their respective properties and to carry on their respective businesses as now
conducted and as proposed to be conducted and are duly qualified as a foreign
corporation and in good standing in all jurisdictions in which they are doing
business, except where failure to be so qualified or in good standing, singly or
in the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect.
(b) Capital and AG Yarns are the only Subsidiaries of the Company in
existence on the date of this Agreement. The Capital Stock of each of Capital
and AG Yarns is duly authorized, validly issued, fully paid and nonassessable
and none of such Capital Stock constitutes Margin Stock. All of the outstanding
shares of Capital Stock of each of Capital and AG Yarns are beneficially owned
directly by the Company, free and clear of any perfected security interest or
any other security interests, claims, Liens or encumbrances other than Liens
granted to secure the Senior Credit Facility.
4.2 Authorization and Power
-----------------------
The Borrowers have the full power and requisite authority, and, to the
extent a party thereto, have taken all corporate action necessary, to consummate
the Borrower Transactions and to execute, deliver and perform their respective
obligations under the Loan Documents, the Senior Credit Facility and each other
document and instrument to be executed, delivered or performed by them in
connection with the Borrower Transactions.
4.3 No Conflicts or Consents
------------------------
(a) The execution, delivery and performance of the Loan Documents, the
Senior Credit Facility and each other document and instrument to be executed,
delivered or performed by the Borrowers in connection with the Borrower
Transactions, the consummation of each of the transactions herein or therein
contemplated and, the compliance with each of the terms and provisions hereof or
thereof, and the issuance, delivery and performance of the Bridge Notes and the
Senior Credit Facility do not and on the Closing Date will not (i) violate any
Law applicable to the Company or Capital or any judgment, order, writ,
injunction or decree of any Tribunal binding on the Company or Capital (ii)
conflict with, result in a breach or violation of or constitute a default under
the certificate of formation or incorporation or bylaws or operating agreement
of the Company or Capital or any Contractual Obligation of the Company or
Capital (iii) result in or require the creation or imposition of any Lien upon
any of the properties or assets
41
of the Company or Capital (other than any Liens created under the Senior Credit
Facility) or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of the Company or Capital
except for such approvals or consents which have been obtained and disclosed in
writing to First Union or which have been waived in writing by First Union on
behalf of the Lenders.
(b) No consent, approval, authorization or order of any Tribunal or other
Person is required in connection with the execution and delivery by the
Borrowers of the Loan Documents, the Senior Credit Facility or any other
document or instrument to be delivered, executed or performed by the Borrowers
in connection with the Borrower Transactions or the consummation of the
transactions contemplated hereby or thereby, other than any such consent,
approval, authorization or order that has been obtained and remains in full
force and effect or which has been waived in writing by First Union on behalf of
the Lenders.
4.4 Enforceable Obligations
-----------------------
Each of the Loan Documents the Senior Credit Facility and each other
document or instrument to be delivered in connection therewith has been duly
authorized by all necessary action of the Borrowers; each of the Loan Documents,
the Senior Credit Facility and each other document or instrument to be delivered
in connection therewith to be executed and delivered on or prior to the date
hereof has been duly executed and delivered by the Borrowers; and each of the
Loan Documents, the Senior Credit Facility and each other document or instrument
to be delivered in connection therewith to be executed and delivered on or prior
to the date hereof is, and each of the Loan Documents, the Senior Credit
Facility and each other document or instrument to be delivered in connection
therewith to be executed and delivered after the Closing Date, will be, upon
such execution and delivery, the legal, valid and binding obligations of the
Borrowers, enforceable against the Borrowers in accordance with their respective
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4.5 Properties; Liens
-----------------
The Borrowers own, lease or have sufficient rights to use such properties
and assets as are necessary to the conduct of their operations as presently
conducted and as contemplated to be conducted following consummation of the
Borrower Transactions, and the Borrowers are not, nor to the knowledge of the
Company, is any other party thereto, in default under any lease, except in each
case for such defects or defaults that, singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. None of the material
assets of the Borrowers is subject to any restriction which would prevent
continuation of the use currently made, or contemplated to be made, thereof or
which would materially adversely affect the value thereof.
42
4.6 Financial Condition
-------------------
(a) The Company has delivered copies of the following financial
statements to the Agents: (i) the audited statement of net assets as of December
31, 1996 and December 31, 1997 of the Company and the related statements of
operations, changes in net assets and cash flows of the Company for the three-
year period ended December 31, 1997, certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and (ii)
the unaudited statement of net assets of the Company at June 30, 1998 and the
related statements of operations, changes in net assets and cash flows for the
Company for the six-month period ended June 30, 1998. The foregoing financial
statements referred to in clauses (i) and (ii) were prepared in accordance with
GAAP, have been prepared from, and are consistent with, the books and records of
the Company, and fairly present in all material respects the consolidated
financial position of the Company, respectively, as at the respective dates
thereof and the consolidated results of operations and cash flows of the Company
for the periods then ended. The Company did not have at December 31, 1997 any
material contingent liabilities, liabilities for Taxes or long-term leases,
unusual forward or long-term commitments or unrealized or unanticipated losses
from any unfavorable commitments which are of a type required by GAAP to be
reflected in financial statements or the notes thereto which are not so
reflected. No events which have had or could reasonably be expected to have a
Material Adverse Effect have occurred since December 31, 1997 except as
reflected therein.
(b) Upon giving effect to the Borrower Transactions:
(i) The fair saleable value of the assets of the Company, Capital
and AG Yarns, on a stand-alone basis, exceeds the amount that will be
required to be paid on or in respect of the existing debts and other
liabilities (including contingent liabilities) of such Person as they
mature.
(ii) The assets of the Company, Capital and AG Yarns, on a stand-
alone basis, do not constitute unreasonably small capital for any such
Person to carry out its business as now conducted and as proposed to be
conducted including the capital needs of any such Person, taking into
account the particular capital requirements of the business conducted by
such Person, and projected capital requirements and capital availability
thereof.
(iii) The Borrowers do not intend to, and will not permit any of
their Subsidiaries to, Incur debts beyond such Person's ability to pay such
debts as they mature (taking into account the timing and amounts of cash to
be payable on or in respect of debt of each of such Person). The cash flow
of the Company and each of its Subsidiaries, after taking into account all
anticipated uses of the cash of each such Person, will at all times be
sufficient to pay all amounts on or in respect of debt of each such Person
when such amounts are required to be paid.
(iv) The Borrowers do not intend, and do not believe, that final
judgments against the Borrowers or any of their Subsidiaries in actions for
money damages will be rendered at a time when, or in an amount such that,
any such Person will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account
43
the maximum reasonable amount of such judgments in any such actions and the
earliest reasonable time at which such judgments might be rendered). The
cash flow of the Company, Capital and AG Yarns, on a stand-alone basis,
after taking into account all other anticipated uses of the cash of each
such Person (including the payments on or in respect of debt referred to in
paragraph (iii) of this Section 4.6(b)), will at all times be sufficient to
pay all such judgments promptly in accordance with their terms.
4.7 Full Disclosure
---------------
The financial projections (including, without limitation, the pro forma
financial statements included therewith) heretofore furnished to the Agents by
the Borrowers are complete, were prepared by or under the direction of an
officer of the Borrowers and were prepared in good faith on the basis of
information and assumptions that the Borrowers believed to be fair, complete and
reasonable as of the date of such information, and which assumptions are
believed to be fair, complete and reasonable as of the date hereof. All other
factual information heretofore or contemporaneously furnished in writing by or
on behalf of the Borrowers to the Agents or Lenders for purposes of or in
connection with the Loan Documents, the Senior Credit Facility and all exhibits
and appendices thereto does not contain any untrue statement by such party or,
to its knowledge, any other party of a material fact or omit to state any
material fact necessary to keep the statements made by such party or, to its
knowledge, any other party contained herein or therein from being misleading in
a material respect. No fact is known, no condition exists nor has any event
occurred which has not been disclosed herein or in any other document or
certificate furnished to the Agents or the Lenders for use in the transactions
contemplated hereby which, singly or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
4.8 No Default
----------
No event has occurred and is continuing which constitutes a Potential Event
of Default or an Event of Default.
4.9 Compliance with Contracts, Etc.
-------------------------------
Neither the Company nor Capital is in violation of its charter or
certificate of formation, by-laws or operating agreement or other organizational
documents, and no Event of Default or event that but for the giving of notice or
the lapse of time, or both, would constitute an Event of Default on the part of
the Borrowers exists under any Contractual Obligation of the Borrowers which
could reasonably be expected to have a Material Adverse Effect.
4.10 No Litigation
-------------
Except as disclosed on Schedule G, there is no Litigation pending or, to
the best knowledge of the Borrowers after due investigation, threatened, by,
against, or which may relate to or affect (a) any benefit plan or any fiduciary
or administrator thereof, (b) the JV Transactions, or (c) the Borrowers which
singly or in the aggregate, could reasonably be expected to have a Material
Adverse Effect or that could reasonably be expected to materially and adversely
affect
44
the ability of the Borrowers to consummate the Borrower Transactions in a timely
manner. There are no outstanding injunctions or restraining orders prohibiting
consummation of any of the JV Transactions or any other transactions
contemplated by the Loan Documents or the Senior Credit Facility. Neither of the
Borrowers is in default with respect to any judgment, order, writ, injunction or
decree of any Tribunal, and there are no unsatisfied judgments against the
Borrowers or their respective businesses or properties. Neither of the Borrowers
has been advised that there is a reasonable likelihood of an adverse
determination of any Litigation which adverse determination, should it occur,
could reasonably be expected to have a Material Adverse Effect.
4.11 Use of Proceeds; Margin Stock, Etc.
-----------------------------------
The proceeds of the Bridge Loan will be used solely to fund the Jefferson
Distribution and AGY Holdings Distribution. None of such proceeds will be used
in violation of Regulation T, U or X. Neither of the Borrowers has taken or will
take any action which might cause any of the Loan Documents to violate the
applicable provisions of Regulation T, U or X, or any other regulation of the
Board of Governors of the Federal Reserve System.
4.12 Taxes
-----
All material Tax Returns, foreign and domestic, required to be filed by or
on behalf of either of the Borrowers in any jurisdiction have been filed, and
all material Taxes for which they are directly or indirectly liable or to which
any of their respective properties or assets are subject have been paid prior to
the time that such Taxes could give rise to a Lien thereon other than Contested
Claims. There is no material proposed tax assessment with respect to Taxes due
by or on behalf of either of the Borrowers, and, to the best knowledge of the
Borrowers, there is no basis for such assessment, except for Contested Claims.
4.13 ERISA
-----
A. No ERISA Events have occurred or are reasonably expected to occur
which individually or in the aggregate resulted in or might reasonably be
expected to result in a liability of either of the Borrowers or any of their
respective ERISA Affiliates which could reasonably be expected to have a
Material Adverse Effect.
B. In accordance with the most recent actuarial valuations, the Amount
of Unfunded Benefit Liabilities individually or in the aggregate for all Pension
Plans (excluding for purposes of such computation any Pension Plans which have a
negative Amount of Unfunded Benefit Liabilities), is not an amount which would
reasonably be expected to have a Material Adverse Effect.
C. Neither of the Borrowers has incurred or is reasonably expected to
incur any liability with respect to any Foreign Plan or Foreign Plans which
individually or in the aggregate has or could reasonably be expected to have a
Material Adverse Effect.
45
4.14 Compliance with Law
-------------------
The Borrowers are in compliance with all Laws, except where the failure to
comply, singly or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
4.15 Government Regulation
---------------------
Neither of the Borrowers is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Investment Company Act
of 1940 (as any of the preceding acts have been amended) or other Law which
regulates the Incurrence by either of the Borrowers of Indebtedness, including,
but not limited to, Laws relating to common contract carriers or the sale of
electricity, gas, steam, water or other public utility services.
4.16 Intellectual Property
---------------------
A. Each of the Borrowers owns or is licensed to use all Intellectual
Property necessary to permit the operation of its businesses as currently
conducted except where the failure to own or license the use of such
Intellectual Property could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
B. To the Borrowers' knowledge, no material claim has been asserted by
any Person with respect to the use of any such Intellectual Property, or
challenging or questioning the validity or effectiveness of any such
Intellectual Property. To the Borrowers' knowledge, the use of such Intellectual
Property by the Borrowers does not infringe on the rights of any Person, subject
to such claims and infringements as could not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The consummation of
the Borrower Transactions will not impair the ownership of (or the license to
use, as the case may be) of such Intellectual Property by the Borrowers.
4.17 Environmental Matters
---------------------
(i) The operations of each of the Borrowers (including, without
limitation, as the term is used throughout this Section 4.17, all
operations and conditions at or in the Facilities) comply in all material
respects with all Environmental Laws except for any such noncompliance
which could not reasonably be expected to have a Material Adverse Effect;
(ii) Each of the Borrowers has obtained all Permits under
Environmental Laws necessary to their respective operations under currently
applicable law, and all such Permits are being maintained in good standing,
and each of the Borrowers is in compliance with all material terms and
conditions of such Permits except for any such failure to obtain, maintain
or comply which could not reasonably be expected to have a Material Adverse
Effect;
(iii) Neither of the Borrowers has received (a) any notice or claim
to the effect that it is or may be liable to any Person under any Environmental
Law, including without
46
limitation, any relating to any Hazardous Materials except as could not
reasonably be expected to have a Material Adverse Effect or (b) any letter
or request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S)
9604) or comparable foreign or state laws regarding any matter which could
reasonably be expected to result in a Material Adverse Effect, and, to the
best of the Borrowers' knowledge, neither of the Borrowers is involved in
any investigation, response or corrective action relating to or in
connection with any Hazardous Materials at any Facility or at any other
location except for such of the foregoing which could not reasonably be
expected to have a Material Adverse Effect;
(iv) Neither of the Borrowers is subject to any judicial or
administrative proceeding alleging the violation of or liability under any
Environmental Laws which if adversely determined could reasonably be
expected to have a Material Adverse Effect;
(v) Neither of the Borrowers or any of their respective Facilities
or operations are subject to any outstanding written order or agreement
with any governmental authority or private party relating to (a) any actual
or potential violation of or liability under Environmental Laws or (b) any
Environmental Claims except for such of the foregoing which would
reasonably be expected to have a Material Adverse Effect;
(vi) Neither of the Borrowers has any contingent liability in
connection with any Release or threatened Release of any Hazardous
Materials by any of the Company or its Subsidiaries except for such of the
foregoing which would not reasonably be expected to have a Material Adverse
Effect;
(vii) Except as disclosed on Schedule B, neither of the Borrowers or
any predecessor of any of the Company or its Subsidiaries has filed any
notice under any Environmental Law indicating past or present treatment,
storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts
260-270 or any state equivalent;
(viii) No Hazardous Materials exist on, under or about any Facility
in a manner that would reasonably be expected to give rise to an
Environmental Claim having a Material Adverse Effect, and neither of the
Borrowers has filed any notice or report of a Release of any Hazardous
Materials that would reasonably be expected to give rise to an
Environmental Claim having a Material Adverse Effect;
(ix) Neither of the Borrowers or, to the best of the Borrowers'
knowledge, any of their respective predecessors has disposed of any
Hazardous Materials in a manner that would reasonably be expected to give
rise to an Environmental Claim having a Material Adverse Effect;
(x) No unregistered or noncompliant underground storage tanks and
no unmonitored or otherwise noncompliant surface impoundments are on or at
any Facility; and
47
(xi) No Lien in favor of any Person relating to or in connection
with any Environmental Claim has been filed or has been attached to any
Facility or other assets of either of the Borrowers except for any such
Lien which would not reasonably be expected to have a Material Adverse
Effect.
Notwithstanding anything in this Section 4.17 to the contrary, no event or
condition has occurred which may interfere with present compliance by either of
the Borrowers with any Environmental Law, or which may give rise to any
liability under any Environmental Law, including, without limitation, any matter
disclosed on Schedule B which, individually or in the aggregate, has had a
----------
Material Adverse Effect.
4.18 Survival of Representations and Warranties
------------------------------------------
Subject to Section 12.10(B), all representations and warranties in the Loan
Documents shall survive delivery of the Bridge Notes and the making of the
Bridge Loan and shall continue until one year after repayment of the Bridge
Notes and the Obligations, and any investigation at any time made by or on
behalf of the Lenders shall not diminish the Lenders' right to rely thereon.
4.19 Permits
-------
Each of the Borrowers has, such certificates, permits, licenses,
franchises, consents, approvals, authorizations and clearances ("Permits"), and
is in compliance in all material respects with all Laws as are necessary to own,
lease or operate its properties and to conduct its businesses in the manner as
presently conducted and to be conducted immediately after the consummation of
the JV Transactions except where the failure to have such Permits or to comply
with such Laws could not, singly or in the aggregate, reasonably be expected to
have a Material Adverse Effect, and all such Permits are valid and in full force
and effect. Each of the Borrowers is in compliance in all material respects
with its obligations under such Permits and no event has occurred that allows,
or after notice or lapse of time would allow, revocation or termination of such
Permits, except for any such revocation or termination as could not, singly or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
4.20 Insurance
---------
Each of the Borrowers carry or are entitled to the benefits of insurance in
such amounts and covering such risks as is generally maintained by companies of
established repute engaged in the same or similar businesses, and all such
insurance is in full force and effect.
4.21 Labor Matters
-------------
No labor disturbance by the employees of either of the Borrowers exists or,
to the best knowledge of the Borrowers, is threatened and the Borrowers are not
aware of any existing or imminent labor disturbance by the employees of the
principal suppliers, manufacturers or customers of either of the Borrowers.
48
4.22 Guarantees
----------
Each Guarantor shall, on the date it executes and delivers a Guarantee
hereunder, have the full corporate power, authority and capacity to execute and
deliver such Guarantee and to perform all of its obligations to be performed
thereunder; all corporate and other acts, conditions and things required to be
done and performed or to have occurred prior to such execution and delivery to
constitute such Guarantee as a valid and legally binding obligation of such
Guarantor enforceable in accordance with its terms shall have been done and
performed and shall have occurred in due compliance with all Laws; on the date
of such execution and delivery, the execution, delivery and performance of such
Guarantee by such Guarantor will not (i) violate any Law or the charter or
bylaws of such Guarantor, or (ii) result in a breach of, a default under
(including, without limitation, any event which with notice or lapse of time, or
both, would constitute a breach of or a default under), or the creation of any
Lien on the properties or assets of such Guarantor, the Company or any other
Subsidiary of the Company under any Contractual Obligation of such Guarantor or
the Company or any other Subsidiary of the Company; on the date of such
execution and delivery, each Guarantee executed and delivered by a Guarantor
shall constitute legal, valid, binding and unconditional obligations of such
Guarantor, enforceable in accordance with its terms, except to the extent that
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws affecting the enforcement
of creditors' rights generally or by general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law); and
the foregoing representations and warranties of the Borrowers shall be deemed
for all purposes to have been made on each date when a Guarantee is delivered
hereunder with respect solely to that Guarantee and the Guarantor so issuing
such Guarantee.
4.23 Senior Subordinated Indenture; Etc.
-----------------------------------
The Borrowers and each Guarantor shall (to the extent such documents are
executed), on the date they execute and deliver the Senior Subordinated
Indenture and the Exchange Notes (or the guarantees related thereto, as the case
may be) and the Demand Take-Out Notes and the indenture governing the Demand
Take-Out Notes (or the guarantees related thereto, as the case may be), have the
full corporate power, authority and capacity to do so and to perform all of
their respective obligations to be performed thereunder; all corporate and other
acts, conditions and things required to be done and performed or to have
occurred prior to such execution and delivery to constitute them as valid and
legally binding obligations of the Borrowers and the Guarantors enforceable
against the Borrowers and the Guarantors in accordance with their respective
terms except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the enforcement of creditors' rights generally or by
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law), shall have been done and
performed and shall have occurred in due compliance with all applicable Laws; on
the date, if any, of such execution and delivery by the Borrowers and the
Guarantors, the Senior Subordinated Indenture and the Exchange Notes (and the
guarantees thereof) and the Demand Take-Out Notes and the indenture governing
the Demand Take-Out Notes (and the guarantees thereof) shall constitute legal,
valid, binding and unconditional obligations of the Borrowers and
49
the Guarantors, as the case may be, enforceable against the Borrowers and the
Guarantors, as the case may be, in accordance with their respective terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the enforcement of creditors' rights generally or by
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
4.24 Broker's or Finder's Fees
-------------------------
Other than as contemplated in the Amended and Restated Commitment Letter
and other than fees payable to First Union and its Affiliates in connection with
the Acquisition, no broker's or finder's fees or commissions will be payable by
the Borrowers or any of their Subsidiaries with respect to any transaction
contemplated by any of the Loan Documents or the Senior Credit Facility and no
similar fees or commissions will be payable by the Borrowers or any of their
Subsidiaries for any other services rendered to the Borrowers or any of their
Subsidiaries in connection with the transactions contemplated hereby and
thereby. The Borrowers represent, warrant, covenant and agree that the
Borrowers will indemnify the Lenders and the Agents against, and hold each of
them completely harmless from and against, any and all claims, demands or
liabilities for broker's or finder's fees or similar fees or commissions
asserted to have been incurred in connection with any of the Loan Documents or
the Senior Credit Facility or any of the transactions contemplated thereunder.
4.25 JV Supply and Service Agreements
--------------------------------
The agreements and contracts set forth on Schedule D (the "JV Supply and
Service Agreements") represent all of the agreements and contracts (i) entered
into between the Company and ▇▇▇▇▇ Corning (and such other Persons as may be
parties thereto) and (ii) that ▇▇▇▇▇ Corning is transferring or assigning to, or
otherwise conferring rights thereunder upon, the Company in connection with the
Acquisition.
4.26 Year 2000 Compliance
--------------------
Any reprogramming and related testing required to permit the proper
functioning of each of the Borrowers' computer systems in and following the year
2000 will be completed in all material respects prior to September 1, 1999 (that
is, each of the Borrowers will be "Year 2000 Compliant"), and the cost to each
of the Borrowers of such reprogramming and testing will not result in a Default
or Potential Event of Default or a Material Adverse Effect. Except for such
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of each of the Borrowers is and,
with ordinary course upgrading and maintenance, will continue for the term of
this Agreement to be, adequate for the conduct of its business.
4.27 Entire Business
---------------
The assets transferred and the rights and services made available to the
Company pursuant to the LLC Sale and Purchase Agreement, the Asset Contribution
and Sale Agreements
50
and the JV Supply and Service Agreements constitute all assets, properties and
rights necessary to conduct the Business following the Acquisition in all
material respects as currently conducted and as historically conducted by ▇▇▇▇▇
Corning.
4.28 Representations and Warranties in Other Agreements
--------------------------------------------------
As of the Closing Date, each representation and warranty made by the
Borrowers in any JV Transaction Document is true, correct and complete in all
material respects.
SECTION 5 AFFIRMATIVE COVENANTS
The Borrowers jointly and severally covenant and agree that, until the
satisfaction in full of the Bridge Loan and the Bridge Notes and all other
amounts due under this Agreement have been paid in full, they shall, and shall
cause each of their Subsidiaries to, fully and timely perform all covenants in
this Section 5.
5.1 Financial Statements and Other Reports
--------------------------------------
The Borrowers will maintain, and cause each of their Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of consolidated financial
statements in conformity with GAAP. The Company will deliver (or, in the case
of clause (i) below, make certain Officers available) to each Lender and the
Agents as follows:
(i) within 30 days after the end of each month ending after the
Closing Date, the Company will make available to the Lenders, Officers of
the Company who have responsibility for, or are knowledgeable with respect
to, financial and accounting matters of the Company and its Subsidiaries,
to discuss with the Lenders the Company's results of operations and
financial condition for each such month based on the most recent financial
information reasonably available to such Officers; provided, that the
--------
Company will not be required to comply with this clause (i) more than once
during each such 30 day period;
(ii) as soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year, (1) the
consolidated balance sheets of the Company and its Subsidiaries as at the
end of such fiscal quarter, (2) the related consolidated statements of
income, stockholders' equity and cash flows for such fiscal quarter and for
the period from the beginning of the then current fiscal year to the end of
such fiscal quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous fiscal
year and the corresponding figures from the consolidated plan and financial
forecast for the current fiscal year delivered pursuant to Section 5.1(x),
all in reasonable detail and certified by the chief financial officer or
the controller of the Company that they fairly present in all material
respects the financial condition of the Company and its Subsidiaries at the
dates indicated and the results of their operations and their cash flows
for the periods indicated, subject to changes resulting from audit and
normal year-end adjustments, (3) the Company's
51
quarterly report on Form 10-Q for such quarterly period, and (4) only if
the Company does not file quarterly reports on Form 10-Q with the
Commission, a narrative report describing the operations of the Company and
its Subsidiaries (in the form of management's discussion and analysis of
such operations which would comply with the disclosure requirements of the
Exchange Act and rules and regulations promulgated thereunder with respect
to management's discussion and analysis set forth in quarterly reports on
Form 10-Q) prepared for such fiscal quarter and for the period from the
beginning of the then current fiscal year to the end of such fiscal
quarter;
(iii) as soon as available, but in any event within ninety 90 days
after the end of (i) the fiscal year of the Company ending on December 31,
1998, a copy of the joint balance sheet of the Business and the Company and
its consolidated Subsidiaries as at the end of such fiscal year and the
related joint statements of income and retained earnings and of cash flows
of the Business and the Company and its consolidated Subsidiaries for such
year, audited by a firm of independent certified public accountants of
nationally recognized standing reasonably acceptable to the Agent, (x)
setting forth in comparative form the figures for the Business for the
previous year, reported on without a "going concern" or like qualification
or exception, or qualification indicating that the scope of the audit was
inadequate to permit such independent certified public accountants to
certify such financial statements without such qualification and (y)
prepared in a manner consistent with the annual audited financial
statements of the Business for the fiscal year ended on December 31, 1997
previously delivered to the Agents and the Lenders (giving effect to the
Acquisition as if it had occurred on January 1, 1998 and taking into
account expense adjustments, as applicable, for selling, general and
administrative expenses and for expenses incurred pursuant to the JV Supply
and Service Contracts); and (ii) each fiscal year of the Company
thereafter, (1) the consolidated balance sheets of the Company and its
Subsidiaries as at the end of such fiscal year, (2) the related
consolidated statements of income, stockholders' equity and cash flows for
such fiscal year, setting forth in each case in comparative form the
corresponding figures for the previous fiscal year and the corresponding
figures from the consolidated plan and financial forecast for the current
fiscal year delivered pursuant to section 5.l(x) for the fiscal year
covered by such financial statements, all in reasonable detail and
certified by the chief financial officer or the controller of the Company
that they fairly present in all material respects the financial condition
of the Company and its Subsidiaries, at the dates indicated and the results
of their operations and their cash flows for the periods indicated, (3) the
Company's annual report on Form 10-K for such year, (4) only if the Company
does not file annual reports on Form 10-K with the Commission, a narrative
report describing the operations of the Company and its Subsidiaries (in
the form of management's discussion and analysis of such operations which
would comply with the disclosure requirements of the Exchange Act and rules
and regulations promulgated thereunder with respect to management's
discussion and analysis set forth in annual reports on Form 10-K) prepared
for such fiscal year, and (5) in the case of such consolidated financial
statements, a report thereon of independent certified public accountants of
recognized national standing, which report shall be unqualified as to scope
of audit, shall express no doubts about the ability of the Company and its
Subsidiaries to continue as a going concern, and shall state
52
that such consolidated financial statements fairly present in all material
respects the consolidated financial position of the Company and its
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards;
(iv) together with each delivery of financial statements pursuant to
Sections 5.1(ii) and (iii) above, (a) an Officers' Certificate of the
Company stating that the signers have reviewed the terms of this Agreement
and the Bridge Notes and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and
condition of the Company and its Subsidiaries during the accounting period
covered by such financial statements and that such review has not disclosed
the existence during or at the end of such accounting period, and that the
signers do not have knowledge of the existence as of the date of the
Officers' Certificate, of any condition or event which constitutes an Event
of Default or Potential Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence
thereof and what action the Company has taken, is taking and proposes to
take with respect thereto and (b) a Compliance Certificate demonstrating in
reasonable detail compliance (as determined in accordance with GAAP) during
and at the end of such accounting periods with the restrictions contained
in Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.7, 6.8, 6.9 and 6.13;
(v) together with each delivery of consolidated financial statements
pursuant to Section 5.1(iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating whether,
in connection with their audit examination, any condition or event that
constitutes an Event of Default or Potential Event of Default that relates
to accounting matters has come to their attention and, if any such
condition or event has come to their attention, specifying the nature and
period of existence thereof; provided that such accountants shall not be
--------
liable by reason of any failure to obtain knowledge of any such Event of
Default or Potential Event of Default that would not be disclosed in the
course of their audit examination, and (b) stating that based on their
audit examination nothing has come to their attention that causes them to
believe that the information contained in the Compliance Certificates
delivered therewith is not correct;
(vi) promptly upon receipt thereof, copies of all reports in final
form (other than reports of a routine or ministerial nature which are not
material) submitted to the Company by independent certified public
accountants in connection with each annual, interim or special audit of the
financial statements of the Company and its Subsidiaries made by such
accountants, including, without limitation, any comment letter submitted by
such accountants to management in connection with their annual audit;
53
(vii) promptly upon the sending or filing thereof, copies of (a) all
financial statements, reports, notices and proxy statements sent or made
available generally by the Company to its public security holders or by any
Subsidiary of the Company to its public security holders other than the
Company or another Subsidiary of the Company, (b) all regular and periodic
reports and all registration statements (other than on Form S-8 or a
similar form) and prospectuses, if any, filed by the Company or any of its
Subsidiaries with any securities exchange or with the Commission or any
governmental authority (other than reports of a routine or ministerial
nature which are not material), and (c) all press releases and other
statements made available generally by the Company or any of its
Subsidiaries to the public concerning material developments in the business
of the Company or any of its Subsidiaries;
(viii) promptly upon any executive officer of either of the Borrowers
obtaining knowledge (a) of any condition or event which constitutes an
Event of Default or Potential Event of Default, or becoming aware that any
Lender or Agent has given any notice or taken any other action with respect
to a claimed Event of Default or Potential Event of Default under this
Agreement, (b) that any Person has given any notice to either of the
Borrowers or any Subsidiary of either of the Borrowers or taken any other
action with respect to a claimed default or event or condition which might
result in an Event of Default referred to in Section 7.2, (c) of any
condition or event which would be required to be disclosed in a current
report filed with the Commission on Form 8-K whether or not the Company is
required to file such reports under the Exchange Act, or (d) of the
occurrence of any event or change that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect, an Officers'
Certificate specifying the nature and period of existence of any such
condition or event, or specifying the notice given or action taken by such
Person and the nature of such claimed default, Event of Default, Potential
Event of Default, event or condition, and what action the Borrowers have
taken, are taking and propose to take with respect thereto;
(ix) promptly upon any executive officer of either of the Borrowers
obtaining knowledge of (X) the institution of, or non-frivolous threat of,
any action, suit, proceeding (whether administrative, judicial or
otherwise), Environmental Claim, governmental investigation or arbitration
against or affecting either of the Borrowers or any of their Subsidiaries
or any property of either of the Borrowers or any of their Subsidiaries not
previously disclosed in writing by either of the Borrowers to the Lenders
or (Y) any material development in any proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the JV
Transactions;
54
written notice thereof together with such other information as may be
reasonably available to either of the Borrowers or any of their
Subsidiaries to enable the Lenders and their counsel to evaluate such
matters;
(x) as soon as practicable but in any event no later than 45 days
following the first day of each fiscal year a forecast for each of the next
succeeding twelve months of the consolidated balance sheet and the
consolidated statements of income, cash flow and cash position of the
Company and its Subsidiaries, together with an outline of the major
assumptions upon which the forecast is based. Together with each delivery
of financial statements pursuant to Sections 5.1(ii) and (iii) above, the
Company shall deliver a comparison of the current year to date financial
results against the budget required to be submitted pursuant to this
Section 5.1(x);
(xi) in writing, promptly upon any Officer of either of the
Borrowers obtaining knowledge that the Company or any of its Subsidiaries
has received notice or otherwise learned of any Environmental Claim or
other claim, demand, action, event, condition, report or investigation
indicating any potential or actual liability arising in connection with (x)
the non-compliance with or violation of the requirements of any
Environmental Law which could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect, (y) the release, threatened
release or presence of any Hazardous Material in the environment which
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or which either of the Borrowers or any of their
Subsidiaries would have a duty to report to a Tribunal under an
Environmental Law, or (z) the existence of any Environmental Lien on any
properties or assets of either of the Borrowers or any of their
Subsidiaries;
(xii) promptly after the availability thereof, copies of all
material amendments to the certificate of incorporation or by-laws of the
Company or any of its Subsidiaries;
(xiii) promptly upon any Person becoming a Subsidiary of the
Company, a written notice setting forth with respect to such Person (a) the
date on which such Person became a Subsidiary of the Company and (b) the
ownership structure and jurisdiction of incorporation of such Person; and
(xiv) with reasonable promptness such other information and data
with respect to the Company or any of its Subsidiaries or any of their
respective properties, businesses or assets as from time to time may be
reasonably requested by any Lender; provided that no information or data
--------
shall be required to be delivered hereunder or under any other provision of
this Agreement if it would violate any applicable attorney-client or
accountant-client privilege.
5.2 Corporate Existence, Etc.
-------------------------
The Company will at all times preserve and keep in full force and effect
its (a) rights and franchises to its business and those of each of its
Subsidiaries, except as permitted by Section 6.6
55
or where the failure to so preserve or keep could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The Company will at all times preserve and keep in full force and
effect the corporate existence of Capital.
5.3 Payment of Taxes and Claims; Tax Consolidation
----------------------------------------------
A. Each of the Borrowers will, and will cause each of its Subsidiaries
to, pay all material Taxes, assessments and other governmental charges imposed
upon it or any of its Subsidiaries or any of its or their material properties or
assets or in respect of any of its or their franchises, business, income or
property before any material penalty accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
which have become due and payable and which by law have or may become a Lien
upon any of its or their properties or assets prior to the time when any
material penalty or fine shall be incurred with respect thereto; provided that
--------
no such charge or claim need be paid if the validity or amount of such charge or
claim is being diligently contested in good faith and if such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor.
B. Neither of the Borrowers will, nor permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income Tax Return with any
Person (other than the Borrowers or any of their Subsidiaries so long as the
filing of such consolidated income Tax Return is permitted by applicable law).
5.4 Maintenance of Properties; Insurance
------------------------------------
Each of the Borrowers will maintain or cause to be maintained in good
repair, working order and condition, ordinary wear and tear excepted, all
material properties used or useful in its business and the business of its
Subsidiaries and from time to time promptly will make or cause to be made all
necessary repairs, renewals and replacements thereof; provided that nothing in
--------
this Section 5.4 shall prevent either of the Borrowers or any of its
Subsidiaries from discontinuing the use, operation or maintenance of any such
properties, or disposing of any of them, if such action is in the ordinary
course of business or, in the reasonable good faith judgment of its Board of
Directors, necessary or desirable in the conduct of its business or otherwise
permitted by this Agreement. Each of the Borrowers will maintain or cause to be
maintained, with financially sound and reputable insurers to the extent
consistent with prudent business practices and customary in its industry,
insurance with respect to its properties and business and the properties and
businesses of its Subsidiaries against loss or damage of the kinds (including,
in any event, business interruption insurance) and in the amounts customarily
carried or maintained under similar circumstances by corporations of established
reputation engaged in similar businesses and owning similar properties in the
same general respective areas in which either of the Borrowers and its
Subsidiaries operate.
56
5.5 Inspection
----------
Each of the Borrowers shall permit any authorized representatives
designated by the Agents to visit and inspect any of the properties of it or its
Subsidiaries, including, without limitation, its and their financial and
accounting records, and to receive copies and extracts therefrom, and to discuss
its and their affairs, finances and accounts with its and their officers and
independent public accountants (provided that representatives of each of the
Borrowers or any of its Subsidiaries may, if it so chooses, be present at or
participate in any such discussion), all upon reasonable notice and at such
reasonable times during normal business hours and as often as may be reasonably
requested.
5.6 Equal Security for Bridge Loan
------------------------------
If either of the Borrowers or any of their Subsidiaries shall create,
assume or suffer to exist any Lien upon any of their respective properties or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of Section 6.2, the Borrowers shall make or cause to be made
effective provision whereby (i) the Obligations under this Agreement, in the
case of the Borrowers and (ii) the Guarantee Obligations of the Guarantors if
any, will be secured by such Lien equally and ratably with any and all other
Indebtedness thereby secured as long as any such Indebtedness shall be secured;
provided that this covenant shall not be construed as or deemed to be a consent
--------
by the Agents to any violation of the provisions of Section 6.2; and provided,
--------
further, that the Borrowers shall under no circumstances be required to make or
-------
cause to be made effective provision whereby the Obligations under this
Agreement will be secured, directly or indirectly, by Margin Stock.
5.7 Compliance with Laws, Etc.
--------------------------
The Borrowers shall and shall cause each of their Subsidiaries to comply
with the requirements of all Laws, to the extent noncompliance, singly or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
5.8 Maintenance of Accurate Records, Etc.
-------------------------------------
Each of the Borrowers shall, and shall cause each of its Subsidiaries to,
keep true books and records and accounts in which full and correct entries will
be made of all of its and their respective business transactions, and will
reflect, and cause each of its Subsidiaries to reflect, in its or their
respective financial statements adequate accruals and appropriations to reserves
all in accordance with GAAP and consistent with prior business practices.
5.9 Take-Out Financing
------------------
The Borrowers agree that upon request (a "Take-Out Request") from the Take-
Out Bank, the Borrowers will take all actions necessary or desirable, to the
extent within their power, so that the Take-Out Bank can, as soon as practicable
after such Take-Out Request, publicly sell or privately place the Demand Take-
Out Notes (the "Initial Request Date"). The Borrowers further agree that upon
notice by the Take-Out Bank, at any time and from time to time following the
57
Initial Request Date, the Borrowers will issue and sell Demand Take-Out Notes
upon such terms and conditions as specified in such notice; provided that (i)
--------
the interest rate thereon (whether fixed or floating) shall be determined by the
Take-Out Bank in light of the then prevailing market conditions but in no event
shall the Borrowers be required to accept either (a) a stated interest rate on
the Demand Take-Out Notes in excess of 13.0% per annum or (b) an issue price
--- -----
(after deducting the Take-Out Bank's selling or placement discount but before
deducting expenses) of less than 97.25% of par value; (ii) the Borrowers, in its
reasonable discretion after consultation with the Take-Out Bank, shall determine
whether the Demand Take-Out Notes shall be issued through a public offering or a
private placement and, if issued in a private placement, the Demand Take-Out
Notes will be accompanied by customary registration rights; (iii) the maturity
of any Demand Take-Out Notes shall not be earlier than the tenth anniversary of
the Closing Date; and (iv) all other arrangements with respect to the Demand
Take-Out Notes shall be reasonably satisfactory in all respects to the Take-Out
Bank and the Borrowers in light of the then prevailing market conditions. The
foregoing shall not limit the Borrowers' right to refinance the Bridge Loan by
any other means.
5.10 Exchange of Bridge Notes
------------------------
(a) The Borrowers will, at any time after the Exchange Date, on or prior
to the tenth Business Day following the written request of First Union or
Warburg (the "Initial Exchange Request"):
(i) Execute and deliver, cause each Guarantor, if any, to execute and
deliver, and cause a bank or trust company acting as trustee thereunder to
execute and deliver, the Senior Subordinated Indenture;
(ii) Notify each Lender that the Bridge Notes may be exchanged for
Exchange Notes (as defined below) and provide each Lender with a copy of
the Senior Subordinated Indenture.
(b) At any time after the receipt of the Initial Exchange Request, upon
receipt of a written request from any Lender to exchange an amount of Bridge
Notes permitted by clause (c) below, (a "Subsequent Exchange Request"), the
Borrowers shall, within 10 Business Days following any such receipt:
(i) Execute and deliver in accordance with the Senior Subordinated
Indenture to each Lender that delivered the Initial Exchange Request or a
Subsequent Exchange Request a note in the form attached to the Senior
Subordinated Indenture (the "Exchange Notes") in exchange for such Bridge
Notes dated the date of the issuance of such Exchange Note, payable to such
Lender in the same principal amount as such Bridge Notes (or portions
thereof) being exchanged, and cause each Guarantor to endorse its guarantee
thereon; and
(ii) Execute and deliver, and cause each Guarantor, if any, to
execute and deliver, to each holder or beneficial owner of Exchange Notes,
a Registration Rights Agreement containing terms as are generally set forth
in Exhibit IV hereto, if such
----------
58
Registration Rights Agreement has not previously been executed and
delivered or, if such Registration Rights Agreement has previously been
executed and delivered and such holder or owner is not already a party
thereto, permit such holder or owner to become a party thereto.
(c) A Subsequent Exchange Request shall specify the principal amount of
the Bridge Notes to be exchanged pursuant to this Section 5.10 which shall be at
least $5,000,000 and integral multiples of $10,000 in excess thereof. Bridge
Notes delivered to the Borrowers under this Section 6.10 in exchange for
Exchange Notes shall be canceled by the Borrowers and the corresponding amount
of the Bridge Loan deemed repaid and the Exchange Notes shall be governed by and
construed in accordance with the terms of the Senior Subordinated Indenture.
(d) The Exchange Notes shall (unless First Union otherwise elects by
providing the Borrowers with notice prior to the Exchange Date) bear interest at
a fixed rate per annum equal to the rate of interest borne by the Bridge Notes
on the Exchange Date and shall be subject to the PIK Interest Amount if
otherwise available to the Borrowers. The Exchange Notes will not be redeemable
by the Borrowers for a period of 5 years from the Closing Date and, subject to
Section 6.16, will be redeemable thereafter, in whole or in part, at a
redemption price equal to the principal amount thereof plus accrued and unpaid
interest thereon to the date of such redemption plus the Applicable Redemption
Premium; provided, however, that if First Union provides the notice described in
------- -------
the first sentence of this paragraph, but subject to Section 6.16, the Exchange
Notes will be redeemable at any time, in whole or in part, by the Borrowers upon
not less than 10 days written notice to the holders of such Exchange Notes at a
redemption price equal to the principal amount thereof plus accrued and unpaid
interest thereon to the date of such redemption.
(e) The bank or trust company acting as trustee under the Senior
Subordinated Indenture shall at all times be a corporation organized and doing
business under the laws of the United States of America or the State of New
York, in good standing and having its principal offices in the Borough of
Manhattan, in The City of New York, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
Federal or State authority and which has a combined capital and surplus of not
less than $50,000,000.
5.11 ERISA Compliance
----------------
The Borrowers and each of their Subsidiaries will notify the Lenders
promptly upon becoming aware of any fact arising in connection with any of the
Pension Plans or any Multiemployer Plans which have resulted in or could be
reasonably expected to constitute or result in an ERISA Event, together with a
statement as to the action, if any, proposed to be taken with respect thereto.
5.12 Payments in U.S. Dollars
------------------------
All payments of any Obligations to be made hereunder or under the Bridge
Notes by the Borrowers or any other obligor with respect thereto shall be made
solely in U.S. Dollars or such other currency as is then legal tender for public
and private debts in the United States of America.
59
5.13 Register
--------
The Borrowers hereby designate First Union to serve as the Borrower's
agent, solely for purposes of this Section 5.12, to maintain a register (the
"Register") on which it will record the Bridge Loan made by each of the Lenders
and each repayment in respect of the principal amount of the Bridge Loan of each
Lender. Failure to make any such recordation, or any error in such recordation
shall not affect the Borrowers' obligations in respect of such Bridge Loan. With
respect to any Lender, the transfer of the Bridge Loan Commitment of such Lender
and the rights to the principal of, and interest on, any Bridge Loan made
pursuant to such Bridge Loan Commitment shall not be effective until such
transfer is recorded on the Register maintained by First Union with respect to
ownership of such Bridge Loan Commitment and Bridge Loan and prior to such
recordation all amounts owing to the transferor with respect to such Bridge Loan
Commitment and Bridge Loan shall remain owing to the transferor. The
registration of assignment or transfer of all or part of any Bridge Loan
Commitment and Bridge Loan shall be recorded by First Union on the Register only
upon the receipt by First Union of a properly executed and delivered assignment
and assumption agreement pursuant to Section 12.2A. Coincident with the delivery
of such an assignment and assumption agreement to First Union for acceptance and
registration of assignment or transfer of all or part of a Bridge Loan, or as
soon thereafter as practicable, the assigning or transferor Lender shall
surrender the Bridge Note evidencing such Bridge Loan, and thereupon one or more
new Bridge Notes of the same type and in the same aggregate principal amount
shall be issued to the assigning or transferor Lender and/or the new Lender
5.14 Lenders Meeting
---------------
The Borrowers will participate in a meeting with the Lenders once during
each fiscal year during which any Obligations are outstanding hereunder to be
held at a location and a time selected by the Borrowers and reasonably
satisfactory to the Lenders.
5.15 Additional Guarantors
---------------------
The Borrowers will cause any Person that becomes a Wholly-Owned Subsidiary
of either Borrower that is organized under the laws of the United States or any
state or commonwealth thereof or under the laws of the District of Columbia
(whether by creation, acquisition or otherwise) to execute and deliver a
notation of guarantee substantially in the form of Exhibit VII, (and with such
-----------
documentation relating thereto as First Union shall require, including, without
limitation, a supplement or amendment to this Agreement and opinions of counsel
as to the enforceability of such guarantee) pursuant to which such Wholly-Owned
Subsidiary shall become a Guarantor under the Bridge Notes and this Agreement in
accordance with Section 10 with the same effect and to the same extent as if
such Person had been named herein as a Guarantor.
5.16 Marketing Take-Out Securities
-----------------------------
(a) If requested from time to time by First Union, the Borrowers will make
appropriate officers of the Borrowers and their Subsidiaries available to First
Union for meetings
60
with prospective purchasers of the Bridge Notes and preparing and presenting to
such prospective purchasers material in connection with such meetings.
(b) If requested by FUCM, the Borrowers will make appropriate officers
of the Borrowers and their Subsidiaries available to FUCM for road show meetings
with prospective purchasers of the Take-Out Securities and preparing and
presenting to potential investors road show material in a manner consistent with
other new issuances of high yield debt securities.
5.17 Environmental Matters
---------------------
(i) The Borrowers shall and shall cause each of their
Subsidiaries (including, without limitation, all operations and conditions
at or in the Facilities) to comply materially with all applicable
Environmental Laws and to maintain and comply materially with the terms of
all Permits under applicable Environmental Laws necessary to their
respective operations.
(ii) The Borrowers shall and shall cause each of their
Subsidiaries (including, without limitation, all operations and conditions
at or in the Facilities) promptly to conduct and complete all
notifications, investigations, studies, sampling and testing, and all
remedial, cleanup, removal and other actions, required under applicable
Environmental Laws.
(iii) The Borrowers shall and shall cause each of their
Subsidiaries (including, without limitation, all operations and conditions
at or in the Facilities) to limit the presence of Hazardous Materials to
those Hazardous Materials that are necessary to the normal operation of
their respective businesses.
SECTION 6 NEGATIVE COVENANTS
The Borrowers jointly and severally covenant and agree that until the
satisfaction in full of the Bridge Loan and the Bridge Notes and all other
amounts due under this Agreement have been paid in full, they shall, and shall
cause each of their Subsidiaries to, fully and timely perform all covenants in
this Section 6.
6.1 Indebtedness
------------
The Company shall not, and shall not cause or permit any of its
Subsidiaries, directly or indirectly, to Incur any Indebtedness, except for the
following ("Permitted Indebtedness"):
(i) Indebtedness under the Bridge Notes, the Exchange Notes, the
Guarantees and the Keep Well Agreement;
(ii) Indebtedness of up to $315,000,000 in the aggregate at any
one time outstanding under the Senior Credit Facility, reduced by any
required permanent repayments (which are accompanied by a corresponding
permanent commitment reduction) thereunder (it being understood that the
Senior Subordinated Indenture shall
61
provide that any borrowings under the Senior Credit Facility in excess of
$315,000,000, or such lesser amount resulting from any permanent commitment
reductions, must be made in accordance with the last paragraph of this
Section 6.1);
(iii) other Indebtedness of the Company and its Subsidiaries
existing on the Closing Date (as set forth in Schedule C) reduced by the
----------
amount of any scheduled amortization payments or mandatory prepayments when
actually paid or permanent reductions thereon;
(iv) Hedging Obligations of the Company and its Subsidiaries
entered into in the ordinary course of business and not for speculative
purposes;
(v) Contingent Obligations permitted by Section 6.5 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(vi) Indebtedness of a Subsidiary of the Company to the Company or
to a Subsidiary of the Company for so long as such Indebtedness is held by
the Company or a Subsidiary of the Company, in each case subject to no Lien
held by a Person other than the Company or a Subsidiary of the Company;
provided that if as of any date any Person other than the Company or a
--------
Subsidiary of the Company owns or holds any such Indebtedness or holds a
Lien (other than Permitted Liens) in respect of such Indebtedness, such
date shall be deemed the Incurrence of Indebtedness not constituting
Permitted Indebtedness by the issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly-Owned Subsidiary of
the Company for so long as such Indebtedness is held by a Wholly-Owned
Subsidiary of the Company and subject to no Lien; provided that (a) any
--------
Indebtedness of the Company to any Wholly-Owned Subsidiary of the Company
is unsecured and subordinated, pursuant to a written agreement, to the
Company's obligations under any Senior Indebtedness and under this
Agreement and the Bridge Notes and (b) if as of any date any Person other
than a Wholly-Owned Subsidiary of the Company owns or holds any such
Indebtedness or any Person holds a Lien (other than Permitted Liens) in
respect of such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
-------- -------
Indebtedness is extinguished within two Business Days of Incurrence;
(ix) Indebtedness of the Company or any of its Subsidiaries (other
than Capital) represented by letters of credit for the account of the
Company or such Subsidiary, as the case may be, in order to provide
security for workers' compensation
62
claims, payment obligations in connection with self-insurance or similar
requirements in the ordinary course of business;
(x) Permitted Refinancing Indebtedness; and
(xi) Additional Indebtedness of the Company and its Subsidiaries
(other than Capital) in an aggregate principal amount not to exceed
$2,000,000 at any one time outstanding for Capital Lease Obligations or for
purposes of financing the purchase price or construction cost of equipment,
fixtures or similar property.
In addition to the foregoing, the Senior Subordinated Indenture shall
provide that the Company and any Guarantors may Incur additional Indebtedness;
provided, that (a) no Potential Event of Default with respect to payment of
--------
principal of, or interest on, the Exchange Notes or Event of Default shall have
occurred and be continuing at the time of or as a consequence of the Incurrence
of any such Indebtedness and (b) immediately before and immediately after giving
effect to the Incurrence of such Indebtedness, the Consolidated Fixed Charge
Coverage Ratio of the Company would be greater than 3.0 to 1.0.
6.2 Liens
-----
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset (including any
document or instrument in respect of goods or accounts receivable) of the
Company or of any of its Subsidiaries, whether now owned or hereafter acquired,
or assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in effect, any
financing statement or other similar notice of any Lien with respect to any such
property, asset, income or profits under the Uniform Commercial Code of any
State or under any similar recording or notice statute, other than the following
(collectively, the "Permitted Liens"):
(i) Liens for Taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or any of its Subsidiaries shall
have set aside on its or their books such reserves as may be required
pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business in connection therewith,
or to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government performance and return-of-
63
money bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default and
Liens securing appeal or similar surety bonds therefor; provided, that (a)
no Event of Default exists with respect thereto and (b) the aggregate
amount secured by such Lien does not exceed $10,000,000 (exclusive of Liens
securing judgments covered by insurance in respect of which the carrier has
not contested coverage);
(v) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not interfering
in any material respect with the ordinary conduct of the business of the
Company or any of its Subsidiaries;
(vi) any interest or title of a lessor under any Capital Lease;
provided that such Liens do not extend to any property or assets which is
--------
not leased property subject to such Capital Lease;
(vii) purchase money Liens to finance property or assets of the
Company or a Subsidiary of the Company acquired in the ordinary course of
business; provided, however, that (A) the related purchase money
-------- -------
Indebtedness (x) is Incurred in accordance with Section 6.1, (y) shall not
exceed the cost of such property or assets and (z) shall not be secured by
any property or assets of the Company or any Subsidiary of the Company
other than the property and assets so acquired and (B) the Lien securing
such Indebtedness shall be created within 30 days of such acquisition;
(viii) Liens upon specific items of inventory or other goods and
proceeds of the Company or any of its Subsidiaries securing such
obligations of the Company or any of its Subsidiaries in respect of
bankers' acceptances issued or created for the account of the Company or
any of its Subsidiaries to facilitate the purchase, shipment or storage of
such inventory or other goods;
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of the
Company or any of its Subsidiaries, including rights of offset and set-off;
(xi) Liens securing Hedging Obligations which Hedging Obligations
relate to Indebtedness that is Incurred under this Agreement or the Senior
Credit Facility;
(xii) Liens upon all or substantially all of the assets of the
Company and its Subsidiaries, whether now owned or hereafter acquired,
granted to secure the Senior Credit Facility; and
64
(xiii) Liens existing on the Closing Date as set forth on Schedule A
----------
to the extent and in the manner such Liens are in effect on the Closing
Date and Liens to secure any Permitted Refinancing Indebtedness which is
Incurred to Refinance any Indebtedness which has been secured by a Lien
permitted under this Section 6.2 and which Indebtedness has been Incurred
in accordance with Section 6.1; provided that such new Lien shall not
--------
extend to any property or assets other than the property or assets securing
the Indebtedness being Refinanced by such Permitted Refinancing
Indebtedness.
6.3 Restricted Payments
-------------------
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly (i) declare or pay any dividend or make
any distribution, on any Capital Stock of the Company or its Subsidiaries (other
than dividends or distributions payable solely in Qualified Capital Stock of the
Company or dividends or distributions payable to the Company or any Wholly-Owned
Subsidiary of the Company), (ii) purchase, redeem or otherwise acquire or retire
for value any of the Capital Stock of the Company or any of its Subsidiaries, or
any warrants, rights or options to acquire shares of any class of such Capital
Stock, (iii) make any principal payment on, purchase, defease, redeem, prepay,
or otherwise acquire or retire for value, other than any scheduled final
maturity payment, scheduled repayment or scheduled sinking fund payment, any
Subordinated Indebtedness or Senior Subordinated Indebtedness of the Company or
any of its Subsidiaries or (iv) make any Investment other than Permitted
Investments (any such dividend, distribution, purchase, redemption, acquisition,
retirement, defeasance, prepayment or Investment set forth in clauses (i), (ii),
(iii) and (iv) above a "Restricted Payment").
The preceding paragraph will not prohibit (a) the making of distributions
in cash to Jefferson and AGY Holdings within 75 days after the end of each
taxable year of the Company in an amount equal to the greater of (i) the product
of (A) the sum of (x) the maximum federal corporate income tax rate in effect
during such taxable year and (y) six percent and (B) the sum of the items of
ordinary income and expense and net capital gain allocated to Jefferson or AGY
Holdings, as the case may be, for such taxable year (taking into account any
special allocations resulting from adjustments under section 743 of the Code,
referred to herein as "Special Allocations") and (ii) actual income taxes then
being assessed against Jefferson or AGY Holdings on items of ordinary income and
expense and net capital gain allocated to Jefferson or AGY Holdings so long as,
in each case, immediately both before and after giving effect to such payments
no Event of Default shall then exist; (b) the making of distributions to
Jefferson with respect to the purchase price under the LLC Sale and Purchase
Agreement for net asset value not to exceed $2.5 million and (c) the making by
the Company and its Subsidiaries of Restricted Payments not to exceed $4,000,000
in the aggregate; provided, that the Senior Subordinated Indenture shall omit
--------
this clause (c).
Notwithstanding the first paragraph of this Section 6.3, the Senior
Subordinated Indenture shall provide that the Company and its Subsidiaries may
make Restricted Payments if, at the time of making any such Restricted Payment
or immediately after giving effect thereto, (i) no Potential Event of Default or
Event of Default shall have occurred and be continuing, (ii) the
65
Company is able to incur at least $1.00 of additional Indebtedness pursuant to
the last paragraph of Section 6.1 and (iii) the aggregate amount of Restricted
Payments (including such proposed Restricted Payment) made subsequent to the
Closing Date (the amount expended for such purposes, if other than cash, being
the fair market value of such property) does not exceed: (A) 50% of cumulative
Consolidated Net Income (or if cumulative Consolidated Net Income shall be a
loss, minus 100% of such loss) accrued during the period (treated as one
accounting period) beginning on the first full fiscal quarter after the Closing
Date to the end of the most recent fiscal quarter for which consolidated
financial information of the Company is available; less (B) the amount of
----
Restricted Payments made pursuant to clause (c) of the preceding paragraph (it
being understood that clause (c) of the preceding paragraph will be omitted from
the Senior Subordinated Indenture); plus (C) without duplication of any amounts
----
included in clause (A) above, in the case of the disposition or repayment of, or
the receipt by the Company or any Subsidiary of the Company of any dividends or
distributions from, any Restricted Payment made pursuant to clause (c) of the
preceding paragraph that constituted an Investment, an amount equal to the
lesser of the amount of such Investment and the amount received by the Company
or any Subsidiary of the Company upon such disposition, repayment, dividend or
distribution. In determining the aggregate amount of Restricted Payments made
subsequent to the Closing Date in accordance with clause (iii) of this
paragraph, amounts expended pursuant to clauses (a) and (b) of the preceding
paragraph shall not be included in such calculation.
6.4 Contingent Obligations
----------------------
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:
(i) the Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations outstanding on the Closing Date
described in Schedule C.
----------
(ii) any Guarantors may become and remain liable with respect to
Contingent Obligations under the Guarantees;
(iii) the Company and its Subsidiaries (other than Capital) may
become and remain liable with respect to Contingent Obligations in respect
of customary indemnification and purchase price adjustment obligations
incurred in connection with additional acquisitions of assets or stock,
Asset Sales or other sales of assets; provided that the maximum assumable
--------
liability in respect of all such obligations shall at no time exceed the
gross proceeds actually received by the Company and its Subsidiaries in
connection with such Asset Sales and other sales;
(iv) the Company and its Subsidiaries (other than Capital) may
become and remain liable with respect to Contingent Obligations under
guarantees made under the Senior Credit Facility; and
66
(v) Hedging Obligations of the Company and its Subsidiaries entered
into in the ordinary course of business and not for speculative purposes.
6.5 Layering of Indebtedness
------------------------
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, Incur any Indebtedness that is by its terms (or by the terms of any
agreement governing such Indebtedness) subordinated in right of payment to any
other Indebtedness of the Company or of such Subsidiary unless such Indebtedness
is also by its terms (or by the terms of any agreement governing such
Indebtedness) made expressly subordinate to the Bridge Notes and the Guarantees
to the same extent and in the same manner as the Bridge Notes and the Guarantees
are subordinated to the Senior Credit Facility, except for Senior Subordinated
Indebtedness that is subordinate to the Senior Credit Facility to the same
extent and in the same manner as the Bridge Loan and the Guarantees.
6.6 Restriction on Fundamental Changes
----------------------------------
Subject to Section 5.2 and other than the sale of 100% of a Subsidiary of
the Company in accordance with Section 6.13 and Section 6.14, the Company shall
not, and shall not cause or permit any of its Subsidiaries to, directly or
indirectly, enter into any transaction, or series of related transactions, of
merger, amalgamation, consolidation or combination, or consolidate, or
liquidate, windup or dissolve itself (or suffer any liquidation or dissolution),
or convey, sell, lease, sublease, transfer or otherwise dispose of, in one
transaction or in a series of transactions, all or substantially all of its
business, property or assets, whether now owned or hereafter acquired, except
that any Subsidiary of the Company (other than Capital) may be merged,
amalgamated, consolidated or combined with or into the Company or any Guarantor
or be liquidated, wound up or dissolved, or all or substantially all of its
business, property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of, in one transaction or in a series of related
transactions, to the Company, any Guarantor or any Person which, as a result
thereof, shall (i) become a Wholly-Owned Subsidiary of the Company and (ii)
become a Guarantor in accordance with Section 10; provided that (A) no Potential
--------
Event of Default or Event of Default shall have occurred and be continuing or
would result therefrom, (B) in the case of such a merger, amalgamation,
consolidation or combination of the Company and a Subsidiary of the Company, the
Company shall be the continuing or surviving entity, (C) the surviving entity
(I) continues to be bound as such under this Agreement or the Guarantee of such
Guarantor, as the case may be, and (II) executes and delivers to First Union
immediately upon consummation of such transaction a written confirmation or
acknowledgment to such effect, in form and substance satisfactory to First
Union, together with evidence of appropriate corporate power, authority and
action and a written legal opinion in form and substance satisfactory to First
Union to the effect that this Agreement and such Guarantee continue to be a
legal, valid and binding obligation of such entity, enforceable against such
entity in accordance with its terms (subject to customary exceptions in respect
of bankruptcy, insolvency and other equitable remedies) and with respect to such
other matters as First Union may reasonably request and (D) immediately after
giving effect to any transaction contemplated by this Section 6.6, the Company
67
shall have a Consolidated Net Worth in an amount that is not less than the
Consolidated Net Worth of the Company prior to such transaction.
6.7 Limitation on Dividend and Other Payment Restrictions Affecting
---------------------------------------------------------------
Subsidiaries
------------
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary of the Company to (a) pay dividends or make any other
distributions on its Capital Stock or any other interest or participation in, or
measured by, such Subsidiary's profits; (b) make loans or advances or pay any
Indebtedness or other obligation owed to the Company or to any Subsidiary of the
Company; or (c) transfer any of its property or assets to the Company or to any
Subsidiary of the Company (any such restriction or encumbrance a "Payment
Restriction"), except for such encumbrances or restrictions existing under or by
reason of: (1) any restrictions contained in (i) the Loan Documents and any
instrument governing Take-Out Securities or Exchange Notes to the extent
Incurred in accordance with this Agreement; (ii) the Senior Credit Facility as
in effect on the Closing Date and any amendment or restatement thereof;
provided, however, that any such amendment or restatement is not materially more
-------- -------
restrictive with respect to such encumbrance or restriction than those in
existence on the Closing Date; (iii) any instrument governing Acquired
Indebtedness which encumbrances or restrictions do not apply to any Person, or
the properties of assets of any Person, other than the Subsidiary acquired and
such Acquired Indebtedness is otherwise permitted to be incurred pursuant to
Section 6.1; or (iv) secured Indebtedness otherwise permitted to be incurred
pursuant to Sections 6.1 and 6.2 that limits the right of the debtor to dispose
of the assets securing such Indebtedness; (2) customary non-assignment
provisions of any contract and customary provisions restricting assignment or
subletting in any lease governing a leasehold interest of any Subsidiary of the
Company, or any customary restriction on the ability of a Subsidiary of the
Company to dividend, distribute or otherwise transfer any asset which secures
Indebtedness Incurred by such Subsidiary pursuant to Section 6.1(xi); (3)
restrictions with respect to a Subsidiary of the Company imposed pursuant to a
binding agreement which has been entered into for the sale or disposition of
Capital Stock or assets of such Subsidiary; provided, however, that such
-------- -------
restrictions apply solely to the Capital Stock or assets of such Subsidiary
which are being sold; (4) customary restrictions imposed on the transfer of
copyrighted or patented materials; (5) applicable law; and (6) any instrument
that Refinances any Indebtedness effecting any such encumbrance or restriction
pursuant to clause (1) above; provided that the provisions relating to any such
--------
encumbrance or restriction in any such instrument are not more restrictive than
those contained in the agreements referred to in clause (1).
6.8 Transactions with Shareholders and Affiliates
---------------------------------------------
(a) The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, enter into any transaction or series of related
transactions (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (each an "Affiliate Transaction"), unless:
(i) the terms of such Affiliate Transaction are no less favorable than those
that could reasonably be
68
expected to be obtained in a comparable transaction at such time on an arm's-
length basis from a Person that is not an Affiliate of the Company; (ii) in the
event that such Affiliate Transaction involves aggregate payments, or transfers
of property or services with a fair market value in excess of $1.0 million, the
terms of such Affiliate Transaction shall be approved by a majority of the
disinterested members of the Board of Directors of the Company, such approval to
be evidenced by a resolution of the Board of Directors of the Company stating
that such members of the Board of Directors have determined that such
transaction complies with the foregoing provisions and (iii) in the event that
such Affiliate Transaction involves aggregate payments or transfers or services
with a fair market value in excess of $5.0 million, the Company shall, prior to
the consummation thereof, obtain the written approval of First Union with
respect to the terms thereof.
(b) The Senior Subordinated Indenture shall provide that in the event
that such Affiliate Transaction involves aggregate payments, or transfer of
property or services with a fair market value, in excess of $10.0 million, the
Company shall, prior to the consummation thereof, obtain a favorable opinion as
to the fairness of such transaction or series of related transactions to the
Company and the relevant Subsidiary (if any) from a financial point of view from
an Independent Financial Advisor and file the same with the trustee under the
Senior Subordinated Indenture.
(c) Notwithstanding the foregoing, the restrictions set forth in
paragraph (a) or (b) shall not apply to (i) transactions with or among the
Company and any Wholly-Owned Subsidiary of the Company or between or among
Wholly-Owned Subsidiaries; (ii) reasonable fees and compensation paid to, and
any indemnity provided on behalf of, officers, directors, employees, consultants
or agents of the Company or any Subsidiary of the Company as determined in good
faith by the Company's Board of Directors; (iii) any transactions undertaken
pursuant to any Contractual Obligations or rights set forth in Schedule E (as in
effect on the Closing Date) and any renewals thereof or amendments thereto;
provided, that such renewals or amendments do not materially change the rights
--------
and obligations of the Company or any of its Subsidiaries; (iv) any Investments
made in compliance with clause (iv) of the definition of Permitted Investments;
(v) loans and advances to officers, directors and employees of the Company or
any Subsidiary of the Company for travel, entertainment, moving and other
relocation expenses, in each case made in the ordinary course of business, (vi)
the entering into by the Company and any of its consolidated Subsidiaries of a
tax sharing or similar arrangement and (vii) any Restricted Payment permitted to
be made pursuant to Section 6.3.
6.9 Subsidiary Stock; Borrower Restrictions
---------------------------------------
(a) Except for any sale of 100% of the Capital Stock or other equity
securities of any of the Company's Subsidiaries in compliance with the
provisions of Section 6.6, the Company will not and will not permit any of its
Subsidiaries to directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of Capital Stock or other equity securities of
any of the Company's Subsidiaries, except (i) to qualify directors if required
by applicable law, (ii) to the Company's or to a Wholly-Owned Subsidiary of the
Company, and (iii) Liens in favor of the lenders under the Senior Credit
Facility; provided, that, notwithstanding the foregoing, Capital
--------
69
shall, at all times prior to the reorganization of the Company as a corporation,
remain a Wholly-Owned Subsidiary of the Company.
(b) The Company will not permit Capital to acquire or hold any
significant assets or other properties or engage in any business activities.
6.10 Business Activities
-------------------
The Company will not, nor will it permit any Subsidiary to engage in any
business other than a Permitted Business.
6.11 Amendment or Waivers of Certain Documents
-----------------------------------------
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, enter into any amendment, modification
supplement or waiver with respect to any JV Transaction Document to which it or
any of its Subsidiaries is a party as in effect on the date hereof or that would
modify any of the provisions thereof or any of the definitions relating thereof
in a manner adverse to the Lenders.
6.12 Amendment to Charter Documents
------------------------------
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, amend their respective certificates of incorporation or
formation or bylaws or operating agreements in any respect which could be
materially adverse to the interests of the Lenders.
6.13 Asset Sales
-----------
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, consummate any Asset Sale unless (1)
the Company or such Subsidiary, as the case may be, receives consideration
therefor at the time thereof at least equal to the fair market value (determined
at the time of such Asset Sale) of the property, assets or stock that is the
subject of such Asset Sale, (2) at least 85% of the consideration received
therefor by the Company or such Subsidiary is in the form of cash or Cash
Equivalents and (3) all of the Net Cash Proceeds in respect thereof are applied
by the Company or a Subsidiary of the Company in accordance with Section
2.4A(ii)(a); provided, that Capital shall not be permitted to consummate,
--------
directly or indirectly, any Asset Sales at any time; provided, further, that the
-------- -------
Company shall not, and shall not cause or permit any of its Subsidiaries to,
directly or indirectly, consummate any Asset Sale or series of related Asset
Sales involving, in each case, assets, stock or property with an aggregate fair
market value in excess of $10.0 million without the prior approval of First
Union.
Nothing in this covenant shall be deemed to prevent the exercise of
remedies by secured creditors of the Company or any Subsidiary of the Company.
6.14 Transfer of Assets to Subsidiaries
----------------------------------
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, transfer (other than in the ordinary
course of business and other than pursuant to a
70
Permitted Investment) any assets or property to any Subsidiary of the Company
that is not a Guarantor.
6.15 Sale and Leaseback Transactions
-------------------------------
The Company will not, nor will it permit any Subsidiary to, directly or
indirectly, become or remain liable as lessee or as guarantor or other surety
with respect to any Sale and Leaseback Transaction.
6.16 Refinancing of the Bridge Loan in Part
--------------------------------------
The Borrowers shall not, and shall not cause or permit any of their
Subsidiaries to, Incur any Indebtedness to Refinance the Bridge Loan in part
other than the Demand Take-Out Notes or the Exchange Notes, unless the terms,
conditions, covenants, events of default and other provisions in respect of the
instruments evidencing the Indebtedness Incurred to Refinance the Loans in part
shall have been approved in writing by First Union prior to the Incurrence of
any such Indebtedness; provided that no Refinancing in part shall result in the
--------
amount of the Bridge Loans outstanding being less than $75,000,000 and no
Refinancing in part shall occur at a time when the amount of the Bridge Loans
outstanding is less than $75,000,000.
SECTION 7 EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default") shall
occur and be continuing:
7.1 Failure to Make Payments When Due
---------------------------------
Failure to pay any installment of principal of the Bridge Loan when due,
whether at stated maturity, by acceleration, by notice of prepayment or
otherwise (whether or not such payment is prohibited by Section 8); or failure
to pay any interest on the Bridge Loan or any other amount due under this
Agreement within five days or more after the date due (whether or not such
payment is prohibited by Section 8); or
7.2 Default in Other Agreements
---------------------------
Failure of either of the Borrowers any of their Subsidiaries to pay at
final maturity principal on one or more issues of Indebtedness or Contingent
Obligations of either of the Borrowers or of any of their Subsidiaries (other
than Indebtedness referred to in Section 7.1) or (B) breach or default by either
of the Borrowers or any of their Subsidiaries with respect to any other term of
any one or more issues of Indebtedness or Contingent Obligations of either of
the Borrowers or of any of their Subsidiaries or any agreement or instrument
evidencing or securing such Indebtedness or Contingent Obligations and such
breach or default results in the acceleration of that Indebtedness or Contingent
Obligation prior to its stated maturity and, in any case of (A) or (B), the
principal amount of such Indebtedness or Contingent Obligation and all other
such Indebtedness or Contingent Obligations of either of the Borrowers and its
Subsidiaries
71
in respect of which there is such a failure to pay principal or which has been
so accelerated equals $5,000,000 or more; or
7.3 Breach of Certain Covenants
---------------------------
Failure of the Borrowers or any of their Subsidiaries to perform or comply
with any covenant, term or condition contained in (x) Section 2.4A(ii),
2.4A(iv), 5.2 or Section 6 or (y) in the Amended and Restated Commitment Letter;
or
7.4 Breach of Warranty
------------------
Any representation, warranty or certification made by either of the
Borrowers or any of their Subsidiaries in any Loan Document or in any statement
or certificate at any time given by either of the Borrowers or any of their
Subsidiaries in writing pursuant hereto or thereto or in connection herewith or
therewith shall be false or incorrect in any material respect on the date as of
which made or deemed made; or
7.5 Other Defaults Under Agreement or Loan Documents
------------------------------------------------
The Borrowers or any of their Subsidiaries shall default in the performance
of or compliance with any covenant, term or condition contained in this
Agreement or the other Loan Documents (other than those covered by Section 7.1,
7.3, 7.4, 7.10, or 7.13) and such default shall not have been remedied or waived
in accordance with this Agreement within 30 days after the date of written
notice from the holder or holders of not less than 25% in aggregate principal
amount of the Bridge Loan then outstanding of such default; or
7.6 Involuntary Bankruptcy; Appointment of Custodian, Etc.
------------------------------------------------------
A court of competent jurisdiction enters a Bankruptcy Order under any
Bankruptcy Law that:
(A) is for relief against either of the Borrowers or any of their
Subsidiaries in an involuntary case or proceeding, or
(B) appoints a Custodian of either of the Borrowers or any of their
Subsidiaries for all or substantially all of its properties, or
(C) orders the liquidation of either of the Borrowers or any of their
Subsidiaries,
and in each case the order or decree remains unstayed and in effect
for 60 days.
7.7 Voluntary Bankruptcy; Appointment of Custodian, Etc.
----------------------------------------------------
Either of the Borrowers or any of their Subsidiaries pursuant to or within
the meaning of any Bankruptcy Law:
72
(A) commences a voluntary case or proceeding, or
(B) consents to the entry of a Bankruptcy Order for relief against it
in an involuntary case or proceeding, or
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors or
files a proposal or scheme of arrangement involving the rescheduling or
composition of its indebtedness, or
(E) consents to the filing of a petition in bankruptcy against it, or
(F) shall generally not pay its debts when such debts become due or
shall admit in writing its inability to pay its debts generally.
7.8 Judgments and Attachments
-------------------------
Any money judgment, writ or warrant of attachment, or similar process
involving in any individual case or in the aggregate at any time an amount in
excess of $5,000,000 (to the extent not covered by third-party insurance as to
which the insurance company has acknowledged coverage) shall be entered or filed
against either of the Borrowers or any of their Subsidiaries or any of their
respective properties or assets and shall remain undischarged, unvacated,
unbonded or unstayed for a period of 60 days or in any event later than five
days prior to the date of any proposed sale thereunder; or
7.9 Dissolution
-----------
Any order, judgment or decree shall be entered against either of the
Borrowers or any of their Subsidiaries decreeing the dissolution or split-up of
either of the Borrowers or that Subsidiary and such order shall remain
undischarged or unstayed for a period in excess of 30 days; or
7.10 Guarantee
---------
(i) Any Guarantee or any provision thereof shall cease to be in full
force and effect (other than in accordance with its express terms and the terms
of this Agreement), or (ii) any Guarantor or any Person acting by or on behalf
of such Guarantor shall deny or disaffirm such Guarantor's obligations under its
Guarantee, or (iii) any Guarantor shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed, after giving effect to any applicable grace periods, pursuant to its
Guarantee; or
7.11 ERISA
-----
Any ERISA Event shall have occurred with respect to any Pension Plan or
Multiemployer Plan of either of the Borrowers, any of their Subsidiaries or
their respective
73
ERISA Affiliates; the Amount of Unfunded Benefit Liabilities, which, when added
to the aggregate Amount of Unfunded Benefit Liabilities with respect to all
other Pension Plans, exceeds the aggregate Amount of Unfunded Benefit
Liabilities that existed on the Closing Date; or any event shall have occurred
with respect to any Foreign Plan which results in a liability to either of the
Borrowers or any of their Subsidiaries; and there shall result from any such
event, events or underfunding described above the imposition of a Lien or a
liability or a material risk of incurring a liability which Lien or liability in
the opinion of First Union has had or could reasonably be expected to have a
Material Adverse Effect; or
7.12 Foreclosure
-----------
The agent under the Senior Credit Facility or any other party entitled to
act thereunder commences judicial proceedings to foreclose on the collateral
securing the Senior Credit Facility or exercises any right under applicable law
or any instrument evidencing a security interest or other encumbrance in respect
of such collateral to take ownership or effect the transfer of such collateral
in lieu of foreclosure; or
7.13 Termination of Certain Agreements
---------------------------------
Either (i) CSG becomes an Affiliate of the Company or (ii) the Company
transfers any Intellectual Property or tangible property incorporating any
Intellectual Property, and, as a result of either (i) or (ii), the various
Intellectual Property agreements between ▇▇▇▇▇ Corning and the Company are
terminated; or
7.14 Amendment of Keep Well Agreement
--------------------------------
The Keep Well Agreement is amended or modified without the prior consent of
the Agents or, with respect to the Exchange Notes, the Required Lenders.
THEN (i) upon the occurrence of any Event of Default described in the
foregoing Sections 7.6 or 7.7, all of the unpaid principal amount of and accrued
interest on the Bridge Loan and all other outstanding Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by the Borrowers, and the commitments of the Lenders hereunder shall,
thereupon terminate, and (ii) upon the occurrence of any other Event of Default,
any of First Union, Warburg or a representative of the Required Lenders shall
upon written notice of the holder or holders of a majority in aggregate
principal amount of the Bridge Loan then outstanding, by written notice to the
Borrowers and the agent under the Senior Credit Facility, declare all of the
unpaid principal amount of and accrued interest on the Bridge Loan and all other
outstanding Obligations to be, and the same shall forthwith become, due and
payable, and the obligations of the Lenders hereunder shall thereupon terminate;
provided that if any declaration of acceleration under this Agreement occurs
--------
solely because an Event of Default set forth in Section 7.2 has occurred and is
continuing, such declaration of acceleration shall be automatically annulled if
the holders of the Indebtedness which is the subject of such Event of Default
have rescinded their declaration of acceleration in respect of such Indebtedness
within thirty days of such acceleration of such Indebtedness and First Union and
Warburg have received
74
written notice thereof within such time and if no other Event of Default has
occurred during such thirty-day period which has not been cured or waived in
accordance with this Agreement. Nevertheless, if at any time after acceleration
of the maturity of the Bridge Loan, the Borrowers shall pay all arrears of
interest and all payments on account of the principal thereof which shall have
become due otherwise than by acceleration (with interest on principal and, to
the extent permitted by law, on overdue interest, at the rates specified in this
Agreement or the Bridge Notes) and all Events of Default and Potential Events of
Default (other than non-payment of principal of and accrued interest on the
Bridge Notes due and payable solely by virtue of such acceleration) shall be
remedied or waived pursuant to Section 12.6, then First Union shall, upon
written notice of the holders of a majority in aggregate principal amount of the
Bridge Loan then outstanding, by written notice to the Borrowers rescind and
annul the acceleration and its consequences; but such action shall not affect
any subsequent Event of Default or Potential Event of Default or impair any
right consequent thereon.
SECTION 8 SUBORDINATION
8.1 Obligations Subordinated to Senior Indebtedness of the Borrowers
----------------------------------------------------------------
The Lenders covenant and agree that payments in respect of the Obligations
by the Borrowers shall be subordinated in accordance with the provisions of this
Section 8 to the prior payment in full, in cash or Cash Equivalents, of all
amounts payable in respect of Senior Indebtedness of the Borrowers, whether now
outstanding or hereafter created (including any interest accruing subsequent to
an event specified in Section 7.6 or 7.7 whether or not such interest is an
allowed claim enforceable against the Borrowers), that the subordination is for
the benefit of the holders of Senior Indebtedness of the Borrowers, and that
each holder of Senior Indebtedness of the Borrowers whether now outstanding or
hereafter Incurred, shall be deemed to have acquired Senior Indebtedness of the
Borrowers in reliance upon the covenants and provisions contained in this
Agreement. Notwithstanding anything to the contrary contained herein, any
payment made by ▇▇▇▇▇ Corning pursuant to the Keep Well Agreement (whether paid
to the Company and applied to interest payments due under the Bridge Loan or the
Exchange Notes or paid to an assignee of the Company for such application) shall
not be subject to this paragraph.
8.2 Priority and Payment Over of Proceeds in Certain Events
-------------------------------------------------------
(a) Subordination on Dissolution, Liquidation or Reorganization of the
------------------------------------------------------------------
Borrowers. Upon any payment or distribution of assets or securities of either
---------
of the Borrowers of any kind or character, whether in cash, property or
securities, upon any dissolution or winding up or total or partial liquidation
or reorganization of either of the Borrowers, whether voluntary or involuntary
or in bankruptcy, insolvency, receivership or other proceedings, all Senior
Indebtedness of the Borrowers (including any interest accruing subsequent to an
event specified in Section 7.6 or 7.7 whether or not such interest is an allowed
claim enforceable against the Borrowers) shall first be paid in full in cash or
Cash Equivalents, before the Lenders shall be entitled to receive any payment by
the Borrowers in respect of any Obligations and upon any such dissolution or
winding up or liquidation or reorganization, any payment or distribution of
assets or securities of
75
either of the Borrowers of any kind or character, whether in cash, property or
securities, to which the Lenders would be entitled except for the provisions of
this Section 8 shall be made by the Borrowers or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, directly to the holders of the Senior Indebtedness of the
Borrowers or their representatives to the extent necessary to pay all of the
Senior Indebtedness of the Borrowers to the holders of such Senior Indebtedness
of the Borrowers.
(b) Subordination on Default on Senior Indebtedness. Upon the maturity
-----------------------------------------------
of any Senior Indebtedness of either of the Borrowers by lapse of time,
acceleration or otherwise, all Senior Indebtedness of the Borrowers then due and
payable shall first be paid in full in cash or Cash Equivalents, before any
payment is made by the Borrowers or any Person acting on behalf of the Borrowers
with respect to the Obligations. No direct or indirect payment by the Borrowers
or any Person acting on behalf of the Borrowers of any Obligations whether
pursuant to the terms of the Bridge Loan or upon acceleration or otherwise shall
be made, if at the time of such payment, there exists a default (as defined in
the document governing any Senior Indebtedness of the Borrowers) in the payment
of all or any portion of any principal, interest, fees, letter of credit
reimbursement obligations or other amounts payable in respect of any Senior
Indebtedness of the Borrowers and such default shall not have been cured or
waived or the benefits of this sentence waived by or on behalf of the holders of
such Senior Indebtedness. In addition, during the continuation of any other
Non-Payment Default with respect to the Senior Indebtedness of the Borrowers,
upon the (i) receipt by First Union of written notice from the agent or
representative of the holders of such Senior Indebtedness of such default or
(ii) if such Non-Payment Default results from the acceleration of the Bridge
Loan, the date of the acceleration of the Bridge Loan, no such payment may be
made by the Borrowers upon or in respect of the Obligations, for a period
("Payment Blockage Period") commencing on the date of receipt of such notice or
the date of such acceleration and ending 179 days after receipt of such notice
(unless such Payment Blockage Period shall be terminated by written notice to
First Union from such agent or representative) or 179 days after the date of
such acceleration, whichever is the earlier to occur (provided such Senior
Indebtedness shall theretofore not have been accelerated). Notwithstanding
anything herein to the contrary, (x) in no event will a Payment Blockage Period
or successive Payment Blockage Periods with respect to the same payment on the
Obligations extend beyond 179 days from the date the payment on the Obligations
was due and (y) there must be 180 consecutive days in any 365-day period during
which no Payment Blockage Period is in effect. For all purposes of this Section
8.2(b), no event of default which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Senior
Indebtedness of the Borrowers initiating such Payment Blockage Period shall be,
or be made, the basis for the commencement of a second Payment Blockage Period
by the holders or by the agent or other representative of such Senior
Indebtedness whether or not within a period of 365 consecutive days, unless such
event of default shall have been cured or waived for a period of not less than
90 consecutive days.
(c) Rights and Obligations of the Lenders. In the event that,
-------------------------------------
notwithstanding the foregoing provisions prohibiting such payment or
distribution, the Agents or any Lender shall have received any payment in
respect of any Obligation (other than as permitted by Sections (a) and (b) of
this Section 8.2) at a time when such payment is prohibited by this Section 8.2,
then
76
and in such event such payment or distribution shall be received and held in
trust for the holders of the Senior Indebtedness of the Borrowers and shall be
paid over or delivered to the holders of the Senior Indebtedness of the
Borrowers remaining unpaid to the extent necessary to pay in full in cash or
Cash Equivalents all Senior Indebtedness of the Borrowers in accordance with the
terms thereof after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness of the Borrowers.
If payment in respect of the Obligations is accelerated because of an
Event of Default, the Borrowers shall promptly notify the agent or other
representatives for Senior Indebtedness of the Borrowers of such acceleration.
Upon any payment or distribution of assets or securities referred to
in this Section 8, the Lenders (notwithstanding any other provision of this
Agreement) shall be entitled to rely upon any order or decree of a court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, and upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making any
such payment or distribution, delivered to the Lenders for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of Senior Indebtedness of the Borrowers, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Section 8.
The Borrowers shall promptly give written notice to each of the
Lenders of any default or event of default under any Senior Indebtedness of the
Borrowers or under any agreement pursuant to which Senior Indebtedness of the
Borrowers may have been issued, and, in the event of any such event of default,
shall provide to First Union the names and addresses of the trustees or other
representatives of holders of such Senior Indebtedness of the Borrowers.
With respect to the holders and owners of Senior Indebtedness of the
Borrowers, each Lender undertakes to perform only such obligations on the part
of such Lender as are specifically set forth in this Section 8, and no implied
covenants or obligations with respect to the holders or owners of Senior
Indebtedness of the Borrowers shall be read into this Agreement against the
Lenders. The Lenders shall not be deemed to owe any fiduciary duty to the
holders or owners of Senior Indebtedness of the Borrowers or to any agent under
the Senior Credit Facility or any other representative of the holders of the
Senior Indebtedness of the Borrowers.
8.3 Payments May Be Paid Prior to Dissolution
-----------------------------------------
Nothing contained in this Section 8 or elsewhere in this Agreement
shall prevent or delay (i) the Borrowers, except under the conditions described
in Section 8.2, from making payments at any time for the purpose of making
payments in respect of its Obligations, or from depositing with the Agents any
moneys for such payments, or (ii) subject to Section 8.2, the application by the
Agents of any moneys deposited with it for the purpose of making payments in
respect of Obligations.
77
8.4 Rights of Holders of Senior Indebtedness of the Borrowers Not To Be
-------------------------------------------------------------------
Impaired
--------
No right of any present or future holder of any Senior Indebtedness of the
Borrowers to enforce subordination as provided in this Section 8 shall at any
time in any way be prejudiced or impaired by any act or failure to act by any
such holder, or by any noncompliance by the Borrowers with the terms and
provisions and covenants herein, regardless of any knowledge thereof any such
holder may have or otherwise be charged with. Without in any way limiting the
generality of the foregoing Section, such holders of Senior Indebtedness of the
Borrowers may, at any time and from time to time without impairing or releasing
the subordination provided in this Section 8 or the obligations of the Lenders
hereunder to the holders of Senior Indebtedness of the Borrowers, do any one or
more of the following: (i) change the manner, place, terms or time of payment
of, or renew or alter, Senior Indebtedness of the Borrowers or otherwise amend
or supplement in any manner Senior Indebtedness of the Borrowers or any
instrument evidencing the same or any agreement under which any Senior
Indebtedness of the Borrowers is outstanding; (ii) sell, exchange, release, or
otherwise deal with any property pledged, mortgaged, or otherwise securing
Senior Indebtedness of the Borrowers or fail to perfect or delay in the
perfection of the security interest in such property; (iii) release any Person
liable in any manner for the collection of Senior Indebtedness of the Borrowers;
and (iv) exercise or refrain from exercising any rights against the Borrowers
and any other Person. Each Lender by purchasing or accepting a Bridge Note
waives any and all notice of the creation, modification, renewal, extension or
accrual of any Senior Indebtedness of the Borrowers and notice of or proof of
reliance by any holder or owner of Senior Indebtedness of the Borrowers upon
this Section 8 and the Senior Indebtedness of the Borrowers shall conclusively
be deemed to have been Incurred in reliance upon this Section 8, and all
dealings between the Borrowers and the holders and owners of the Senior
Indebtedness of the Borrowers shall be deemed to have been consummated in
reliance upon this Section 8.
The provisions of this Section 8 are intended to be for the benefit of, and
shall be enforceable directly by, the holders of the Senior Indebtedness of the
Borrowers.
8.5 Subrogation
-----------
Upon the payment in full in accordance with the terms of Section 8.2 of all
amounts payable under or in respect of the Senior Indebtedness of the Borrowers,
the Lenders shall be subrogated to the rights of the holders of such Senior
Indebtedness of the Borrowers to receive payments or distributions of assets of
the Borrowers made on such Senior Indebtedness of the Borrowers until the
Obligations shall be paid in full in cash or Cash Equivalents; and for purposes
of such subrogation no payments or distributions to holders of such Senior
Indebtedness of the Borrowers of any cash, property or securities to which the
Lenders would be entitled except for the provisions of this Section 8, and no
payment over pursuant to the provisions of this Section 8 to holders of such
Senior Indebtedness of the Borrowers by the Lenders, shall, as between the
Borrowers, its creditors other than holders of such Senior Indebtedness of the
Borrowers and the Lenders, be deemed to be a payment by the Borrowers to or on
account of such Senior Indebtedness of the Borrowers, it being understood that
the provisions of this Section 8 are solely for the purpose of defining the
relative rights of the holders
78
of such Senior Indebtedness of the Borrowers, on the one hand, and the Lenders,
on the other hand. A release of any claim by any holder of Senior Indebtedness
of the Borrowers shall not limit the Lenders' rights of subrogation under this
Section 8.5.
If any payment or distribution to which the Lenders would otherwise have
been entitled but for the provisions of this Section 8 shall have been applied,
pursuant to the provisions of this Section 8, to the payment of all amounts
payable under the Senior Indebtedness of the Borrowers, then and in such case,
the Lenders shall be entitled to receive from the holders of such Senior
Indebtedness of the Borrowers at the time outstanding the full amount of any
such payments or distributions received by such holders of Senior Indebtedness
of the Borrowers in excess of the amount sufficient to pay all Senior
Indebtedness of the Borrowers payable under or in respect of the Senior
Indebtedness of the Borrowers in full in cash or Cash Equivalents in accordance
with the terms of Section 8.2.
8.6 Obligations of the Borrowers Unconditional
------------------------------------------
Nothing contained in this Section 8 or elsewhere in this Agreement is
intended to or shall impair as between the Borrowers and the Lenders the
obligations of the Borrowers, which are absolute and unconditional, to pay to
the Lenders the Obligations as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Lenders and creditors of the Borrowers other than the holders of
the Senior Indebtedness of the Borrowers, nor shall anything herein or therein
prevent the Lenders from exercising all remedies otherwise permitted by
applicable law upon default under this Agreement, subject to the rights, if any,
under this Section 8 of the holders of such Senior Indebtedness of the Borrowers
in respect of cash, property or securities of the Borrowers received upon the
exercise of any such remedy.
The failure to make a payment in respect of Obligations by reason of any
provision of this Section 8 shall not prevent the occurrence of an Event of
Default under Section 8.
8.7 Lenders Authorize Agent to Effectuate Subordination
---------------------------------------------------
Each Lender hereby authorizes and expressly directs the Agents on its
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Section 8 and appoints the Agents its attorney in
fact for such purpose, including, without limitation, in the event of any
dissolution, winding up, liquidation or reorganization of the Borrowers (whether
in bankruptcy, insolvency, receivership, reorganization or similar proceedings
or upon an assignment for the benefit of creditors or any other similar remedy
or otherwise) tending towards liquidation of the business and assets of the
Borrowers, the immediate filing of a claim for the unpaid balance of the
Obligations in the form required in said proceedings and causing said claim to
be approved. If the Agents do not file proper claim or proof of debt in the form
required in such proceeding prior to 30 days before the expiration of the time
to file such claim or claims, then the holders of the Senior Indebtedness of the
Borrowers are hereby authorized to have the right to file and are hereby
authorized to file an appropriate claim for and on behalf of the Lenders. In the
event of any such proceeding, until the Senior Indebtedness of the Borrowers is
paid in full in cash or Cash Equivalents, without the consent of
79
the holders of a majority in principal amount outstanding of Senior Indebtedness
of the Borrowers, no Lender shall waive, settle or compromise any such claim or
claims relating to the Obligations that such Lender now or hereafter may have
against the Borrowers.
SECTION 9 THE AGENT
9.1 Appointment
-----------
Each Lender hereby irrevocably designates and appoints First Union as Agent
of such Lender to act as specified herein and in the other Loan Documents, and
each Lender hereby irrevocably authorizes First Union and Warburg as the Agents
to take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agents by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agents agree to act as such upon the express conditions contained
in this Section 9. Notwithstanding any provision to the contrary elsewhere in
this Agreement or in any other Loan Document, the Agents shall not have any
duties or responsibilities, except those expressly set forth herein or in the
other Loan Documents, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Agents. The provisions of this Section 9 are solely for the benefit of the
Agents and the Lenders, and neither of the Borrowers nor any of their
Subsidiaries shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Agents shall act solely as agent of the Lenders and the Agents do not assume
and shall not be deemed to have assumed any obligation or relationship of agent
or trust with or for the Borrowers or any of their Subsidiaries.
9.2 Delegation of Duties
--------------------
The Agents may execute any of their duties under this Agreement or any
other Loan Document by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agents shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care except to the
extent otherwise required by Section 9.3.
9.3 Exculpatory Provisions
----------------------
Neither of the Agents nor any of their officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or the other Loan 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 Borrowers, any of their Subsidiaries or any of their
respective officers contained in this Agreement, any other Loan Documents, or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for any failure of the Borrowers, any of their
80
Subsidiaries or any of their respective officers to perform its or their
obligations hereunder or thereunder. The Agents 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
Agreement or the other Loan Documents, or to inspect the properties, books or
records of the Borrowers or any of their Subsidiaries. The Agents shall not be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statement or in any
financial or other statements, instruments, reports, certificates or any other
documents in connection herewith or therewith furnished or made by the Agents to
the Lenders or by or on behalf of the Borrowers or any of their Subsidiaries to
the Agents or any Lender or be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained herein or therein or as to the use of the proceeds of
the Bridge Loan or of the existence or possible existence of any Potential Event
of Default or Event of Default.
9.4 Reliance by Agent
-----------------
The Agents shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, facsimile, telex or teletype message,
statement, order or other document or conversation believed by them 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 Borrowers or any of their Subsidiaries), independent
accountants and other experts selected by the Agents. The Agents shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless they shall first receive such advice as they deem
appropriate or they shall first be indemnified to their 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. As between the Agents
and the Lenders, the Agents shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders.
9.5 Notice of Default
-----------------
The Agent shall not be deemed to have knowledge or notice of the occurrence
of any Potential Event of Default or Event of Default hereunder unless the Agent
has actually received notice from a Lender or the Borrowers referring to this
Agreement, describing such Potential Event of Default or Event of Default and
stating that such notice is a "notice of default." In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the
Lenders. The Agent shall take such action with respect to such Potential Event
of Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided that, as between the Agent and the Lenders unless and until
--------
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Potential Event of Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
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9.6 Non-Reliance on Agent and Other Lenders
---------------------------------------
Each Lender expressly acknowledges that neither of the Agents nor any of
their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
the Agents hereinafter taken, including any review of the affairs of the
Borrowers or any of their Subsidiaries, shall be deemed to constitute any
representation or warranty by the Agents to any Lender. Each Lender represents
to the Agents that it has, independently and without reliance upon the Agents 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,
assets, operations, property, financial and other condition, prospects and
creditworthiness of the Borrowers and their Subsidiaries and made its own
decision to make its Bridge Loan hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Agents 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 this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, assets, operations, property, financial and other condition, prospects
and creditworthiness of the Borrowers and its Subsidiaries. The Agents shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, assets, property,
financial and other condition, prospects or creditworthiness of the Borrowers or
any of their Subsidiaries which may come into the possession of the Agent or any
of its officers, directors, employees, agents, attorneys-in-fact or affiliates.
9.7 Indemnification
---------------
The Lenders agree to indemnify the Agents in their capacity as such ratably
according to their respective "percentages" as used in determining the Required
Lenders at such time, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, reasonable
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment in full of the
Obligations) be imposed on, incurred by or asserted against the Agents in their
capacity as such in any way relating to or arising out of this Agreement or any
other Loan Document, or any documents contemplated by or referred to herein or
the transactions contemplated hereby or any action taken or omitted to be taken
by the Agents under or in connection with any of the foregoing, but only to the
extent that any of the foregoing is not paid by the Borrowers or any of their
Subsidiaries; provided that no Lender shall be liable to the Agents for the
--------
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from the gross negligence or willful misconduct of the Agents. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agents be insufficient or become impaired, the Agents may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section 9.7
shall survive the payment in full of all Obligations.
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9.8 Agents in Their Individual Capacity
-----------------------------------
The Agents and their affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrowers and their
Subsidiaries as though the Agents were not the Agents hereunder. With respect
to the Bridge Loan made by it and all Obligations owing to it, the Agents shall
have the same rights and powers under this Agreement as any Lender and may
exercise the same as though they were not the Agents and the terms "Lender" and
"Lenders" shall include the Agents in their individual capacity.
9.9 Resignation of the Agents; Successor Agents
-------------------------------------------
The Agents may resign as the Agents upon 20 days' notice to the Lenders and
the Borrowers. Upon the resignation of either of the Agents, the Required
Lenders shall appoint from among the Lenders a successor Agent which is a bank
or a trust company for the Lenders subject to prior approval by the Borrowers
(such approval not to be unreasonably withheld or delayed), whereupon such
successor agent shall succeed to the rights, powers and duties of such Agent,
and the term "Agents" shall include such successor agent effective upon its
appointment, and the resigning Agent's rights, powers and duties as an 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 Agreement. After the
resignation of an Agent hereunder, the provisions of this Section 9 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
SECTION 10 GUARANTEE
10.1 Unconditional Guarantee
-----------------------
Each Guarantor hereby unconditionally, jointly and severally, guarantees
(such guarantee to be referred to herein as the "Guarantee"), subject to Section
11, to each of the Lenders and to the Agents and their respective successors and
assigns that (i) the principal of and interest on the Bridge Loan will be
promptly paid in full when due, subject to any applicable grace period, whether
at the Maturity Date, by acceleration or otherwise and interest on the overdue
principal, if any, and interest on any interest, to the extent lawful, of the
Bridge Loan and all other obligations of the Borrowers to the Lenders or the
Agents hereunder or thereunder will be promptly paid in full or performed, all
in accordance with the terms hereof and thereof; and (ii) in case of any
extension of time of payment or renewal of any of the Bridge Loan or of any such
other obligations, the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, subject to any
applicable grace period, whether at stated maturity, by acceleration or
otherwise, subject, however, in the case of clauses (i) and (ii) above, to the
limitations set forth in Section 11.5. Each Guarantor hereby agrees that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Bridge Loan or this Agreement, the absence
of any action to enforce the same, any waiver or consent by any of the Lenders
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Borrowers, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
83
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Borrowers, any right to require a proceeding first against the Borrowers,
protest, notice and all demands whatsoever and covenants that this Guarantee
will not be discharged except by complete performance of the obligations
contained in the Bridge Loan, this Agreement and in this Guarantee. If any
Lender or the Agents are required by any court or otherwise to return to the
Borrowers, any Guarantor, or any custodian, trustee, liquidator or other similar
official acting in relation to the Borrowers or any Guarantor, any amount paid
by the Borrowers or any Guarantor to the Agents or such Lender, this Guarantee,
to the extent theretofore discharged, shall be reinstated in full force and
effect. Each Guarantor further agrees that, as between each Guarantor, on the
one hand, and the Lenders and the Agents, on the other hand, (x) the maturity of
the obligations guaranteed hereby may be accelerated as provided in Section 7
for the purposes of this Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Section 7, such obligations (whether or not due and payable)
shall forthwith become due and payable by each Guarantor for the purpose of this
Guarantee. In the event of a disposition of all of the assets or all of the
Capital Stock of any Guarantor, by way of sale, merger, consolidation or
otherwise, such Guarantor in the event of a disposition of all of the Capital
Stock or all of the assets of such Guarantor or the surviving entity (whether or
not such Guarantor) in the event of a merger or consolidation will be deemed
released and relieved of its obligations under its Guarantee and this Agreement
and the Person acquiring or owning the assets or Capital Stock of such Guarantor
(if not otherwise required to be a Guarantor pursuant to the provisions of this
Section 10.1) will not be required to enter into a Guarantee; provided, in each
--------
case, that such transaction is carried out pursuant to and in accordance with
Section 6.6, 6.9, 6.13 and 6.14.
10.2 Subordination of Guarantee
--------------------------
The obligations of each Guarantor to the Lenders and to the Agents pursuant
to the Guarantee of such Guarantor and this Agreement are expressly subordinate
and subject in right of payment to the prior payment in full of all Guarantor
Senior Indebtedness of such Guarantor, to the extent and in the manner provided
in Section 11.
10.3 Severability
------------
In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
10.4 Limitation of Guarantor's Liability
-----------------------------------
Each Guarantor and by its acceptance hereof each of the Lenders hereby
confirms that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law.
To effectuate the foregoing intention, the Lenders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under its Guarantee
shall be
84
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor (including, but not limited
to, the Guarantor Senior Indebtedness of such Guarantor) and after giving effect
to any collections from or payments made by or on behalf of any other Guarantor
in respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 10.6, result in the obligations of such Guarantor under its
Guarantee not constituting such fraudulent transfer or conveyance.
10.5 Guarantors May Consolidate, etc., on Certain Terms
--------------------------------------------------
(a) Nothing contained in this Agreement or in the Bridge Loan shall
prevent any consolidation or merger of a Guarantor with or into the Company or
another Guarantor or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety, to the Borrowers or
another Guarantor. Upon any such consolidation, merger, sale or conveyance, the
Guarantee given by such Guarantor shall no longer have any force or effect.
(b) Except as set forth in Section 6.6, nothing contained in this
Agreement or in the Bridge Loan shall prevent any consolidation or merger of a
Guarantor with or into a corporation or corporations other than the Borrowers or
another Guarantor (whether or not affiliated with the Guarantor); provided that,
--------
subject to Section 10.5(a), (i) immediately after such transaction, and giving
effect thereto, no Potential Event of Default or Event of Default shall have
occurred as a result of such transaction and be continuing, and (ii) upon any
such consolidation, merger, sale or conveyance, the Guarantee of such Guarantor
set forth in this Section 10, and the due and punctual performance and
observance of all of the covenants and conditions of this Agreement to be
performed by such Guarantor, shall be expressly assumed (in the event that the
Guarantor is not the surviving corporation in the merger), by supplemental
indenture satisfactory in form and substance to the Agents, executed and
delivered to the Agents, by the corporation formed by such consolidation, or
into which the Guarantor shall have merged, or by the corporation that shall
have acquired such property. In the case of any such consolidation, merger, sale
or conveyance and upon the assumption by the successor corporation, of the due
and punctual performance of all of the covenants and conditions of this
Agreement to be performed by the Guarantor, such successor corporation shall
succeed to and be substituted for the Guarantor with the same effect as if it
had been named herein as a Guarantor.
10.6 Contribution
------------
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
----- --
distribution is made by any Guarantor (a "Funding Guarantor") under its
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets (as
defined below) of each Guarantor (including the Funding Guarantor) for all
payments, damages and expenses incurred by that Funding Guarantor in discharging
the Borrowers' obligations with respect to the Obligations. "Adjusted Net
Assets" of such Guarantor at any date shall mean the lesser of (x) the amount by
which the fair value of the property of such Guarantor exceeds the total amount
of liabilities, including, without limitation, contingent liabilities (after
giving effect to all other fixed and contingent liabilities incurred or assumed
on such date (other
85
than liabilities of such Guarantor under Subordinated Indebtedness)), but
excluding liabilities under the Guarantee, of such Guarantor at such date and
(y) the amount by which the present fair salable value of the assets of such
Guarantor at such date exceeds the amount that will be required to pay the
probable liabilities of such Guarantor on its debts including, without
limitation, Guarantor Senior Indebtedness (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date and after
giving effect to any collection from any Subsidiary of such Guarantor in respect
of the obligations of such Subsidiary under the Guarantee), excluding debt in
respect of the Guarantee of such Guarantor, as they become absolute and matured.
10.7 Waiver of Subrogation
---------------------
Each Guarantor hereby irrevocably waives any claim or other rights which it
may now or hereafter acquire against the Borrowers that arise from the
existence, payment, performance or enforcement of such Guarantor's obligations
under its Guarantee and this Agreement, including, without limitation, any right
of subrogation, reimbursement, exoneration, indemnification, and any right to
participate in any claim or remedy of any Lender against the Borrowers, whether
or not such claim, remedy or right arises in equity, or under contract, statute
or common law, including, without limitation, the right to take or receive from
the Borrowers, directly or indirectly, in cash or other property or by set-off
or in any other manner, payment or security on account of such claim or other
rights. If any amount shall be paid to any Guarantor in violation of the
preceding sentence and the Bridge Loan shall not have been paid in full, such
amount shall be deemed to have been paid to such Guarantor for the benefit of,
and held in trust for the benefit of, the Lenders, and shall, subject to the
provisions of Section 8, Section 10.2 and Section 11, forthwith be paid to the
Agents for the benefit of such Lenders to be credited and applied upon the
Bridge Loan, whether matured or unmatured, in accordance with the terms of this
Agreement. Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Agreement and that
the waiver set forth in this Section 10.7 is knowingly made in contemplation of
such benefits.
10.8 Evidence Guarantee
------------------
To evidence their guarantees to the Lenders set forth in this Section 10,
each of the Guarantors hereby agrees to execute the notation of Guarantee in
substantially the form included in Exhibit VII. Each such notation of Guarantee
-----------
shall be signed on behalf of each Guarantor by two Officers, or an Officer and
an assistant Secretary or one Officer shall sign and one Officer or an assistant
Secretary (each of who shall, in each case, have been duly authorized by all
requisite corporate actions) shall attest to such notation of Guarantee.
10.9 Waiver of Stay, Extension or Usury Laws
---------------------------------------
Each Guarantor covenants that it will not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law or any usury law or other law that would prohibit or forgive
such Guarantor from performing its Guarantee as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Agreement; and each Guarantor hereby
expressly
86
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the Agents,
but will suffer and permit the execution of every such power as though no such
law had been enacted.
SECTION 11 SUBORDINATION OF GUARANTEE OBLIGATIONS
11.1 Guarantee Obligations Subordinated to Guarantor Senior Indebtedness
-------------------------------------------------------------------
The Lenders covenant and agree that payments in respect of the obligations
by a Guarantor in respect of its Guarantee (collectively, as to any Guarantor,
its "Guarantee Obligations") shall be subordinated in accordance with the
provisions of this Section 11 to the prior payment in full, in cash or Cash
Equivalents, of all amounts payable in respect of Guarantor Senior Indebtedness
of such Guarantor whether now outstanding or hereafter created (including any
interest accruing subsequent to an event specified in Section 7.6 or 7.7 whether
or not such interest is an allowed claim enforceable against such Guarantor),
that the subordination is for the benefit of the holders of Guarantor Senior
Indebtedness, and that each holder of Guarantor Senior Indebtedness whether now
outstanding or hereafter Incurred, shall be deemed to have acquired Guarantor
Senior Indebtedness in reliance upon the covenants and provisions contained in
this Agreement.
11.2 Priority and Payment Over of Proceeds in Certain Events
-------------------------------------------------------
(a) Subordination of Guarantee Obligations on Dissolution, Liquidation or
---------------------------------------------------------------------
Reorganization of Such Guarantor. Upon any payment or distribution of assets or
--------------------------------
securities of any Guarantor of any kind or character, whether in cash, property
or securities, upon any dissolution or winding up or total or partial
liquidation or reorganization of such Guarantor, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings
(other than a liquidation or dissolution of such Guarantor into the Company or
another Guarantor), all Guarantor Senior Indebtedness of such Guarantor
(including. any interest accruing subsequent to an event specified in Section
7.6 or 7.7 whether or not such interest is an allowed claim enforceable against
such Guarantor) shall first be paid in full in cash or Cash Equivalents, before
the Lenders shall be entitled to receive any payment with respect to any
Guarantee Obligations of such Guarantor and upon any such dissolution or winding
up or liquidation or reorganization, any payment or distribution of assets or
securities of such Guarantor of any kind or character, whether in cash, property
or securities, to which the Lenders would be entitled except for the provisions
of this Section 11 shall be made by such Guarantor or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, directly to the holders of the Guarantor Senior Indebtedness of
such Guarantor or their representatives to the extent necessary to pay all of
the Guarantor Senior Indebtedness of such Guarantor to the holders of such
Guarantor Senior Indebtedness.
(b) Subordination of Guarantee Obligations on Default on Senior
-----------------------------------------------------------
Indebtedness. Upon the maturity of any Guarantor Senior Indebtedness by lapse of
------------
time, acceleration or otherwise, all such Guarantor Senior Indebtedness then due
and payable shall first be paid in full in cash or Cash Equivalents, before any
payment is made by such Guarantor or any Person acting on behalf of such
Guarantor with respect to the Guarantee Obligations of such Guarantor. No
87
direct or indirect payment by any Guarantor or any Person acting on behalf of
such Guarantor of any Guarantee obligations of such Guarantor whether pursuant
to the terms of the Bridge Loan or upon acceleration or otherwise shall be made,
if at the time of such payment, there exists a default (as defined in the
document governing any such Guarantor Senior Indebtedness) in the payment of all
or any portion of any principal, interest, fees, letter of credit reimbursement
obligations or other amounts payable in respect of any such Guarantor Senior
Indebtedness and such default shall not have been cured or waived or the
benefits of this sentence waived by or on behalf of the holders of such
Guarantor Senior Indebtedness. In addition, during the continuation of any other
Non-Payment Default with respect to any such Guarantor Senior Indebtedness of
such Guarantor, upon the earlier of (i) receipt by the Agents of written notice
from the agent or representative of the holders of such Senior Indebtedness or
(ii) if such non-payment default results from the acceleration of the Bridge
Loan, the date of acceleration of the Bridge Loan, no such payment may be made
by such Guarantor under its Guarantee for a period ("Guarantor Payment Blockage
Period") commencing on the date of receipt of such notice or the date of the
acceleration referred to in clause (ii) above, as the case may be, and ending on
the earlier to occur of 179 days after receipt of such written notice by the
Agents (unless such Guarantor Payment Blockage Period shall be terminated by
written notice to the Agents from such agent) or 179 days after the date of such
acceleration, whichever is the earlier to occur (provided such Guarantor Senior
Indebtedness shall theretofore not have been accelerated). Notwithstanding
anything herein to the contrary, (x) in no event will a Guarantor Payment
Blockage Period or successive Guarantor Payment Blockage Periods with respect to
the same payment on such Guarantee extend beyond 179 days from the date the
payment on such Guarantee was due and (y) there must be 180 consecutive days in
any 365-day period during which no Guarantor Payment Blockage Period is in
effect. For all purposes of this Section 11.2(b), no event of default which
existed or was continuing on the date of the commencement of any Guarantor
Payment Blockage Period with respect to the Senior Indebtedness initiating such
Guarantor Payment Blockage Period shall be, or be made, the basis for the
commencement of a second Guarantor Payment Blockage Period by the holders or by
the agent or other representative of such Guarantor Senior Indebtedness whether
or not within a period of 365 consecutive days, unless such event of default
shall have been cured or waived for a period of not less than 90 consecutive
days.
(c) Rights and Obligations of the Lenders. In the event that,
-------------------------------------
notwithstanding the foregoing provisions prohibiting such payment or
distribution, the Agents or any Lender shall have received any payment in
respect of any Guarantee Obligation with respect to the Bridge Loan (other than
permitted by Sections (a) and (b) of this Section 11.2) at a time when such
payment is prohibited by this Section 11.2, then and in such event such payment
or distribution shall be received and held in trust for the holders of the
Guarantor Senior Indebtedness and shall be paid over or delivered to the holders
of the Guarantor Senior Indebtedness remaining unpaid to the extent necessary to
pay in full in cash or Cash Equivalents all Guarantor Senior Indebtedness in
accordance with the terms thereof after giving effect to any concurrent payment
or distribution to the holders of such Guarantor Senior Indebtedness.
Nothing contained in this Section 11 will limit the right of the Lenders to
take any action to accelerate the maturity of the Bridge Loan pursuant to
Section 7 or to pursue any rights or remedies hereunder or otherwise.
88
Upon any payment or distribution of assets or securities referred to in
this Section 11, the Lenders (notwithstanding any other provision of this
Agreement) shall be entitled to rely upon any order or decree of a court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, and upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making any
such payment or distribution, delivered to the Lender for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of Guarantor Senior Indebtedness, the amount thereof or payable thereon,
the amount or amounts paid or distributed hereon and all other facts pertinent
thereto or to this Section 11.
The Guarantors shall promptly give written notice to each of the Lenders of
any default or event of default under any Guarantor Senior Indebtedness or under
any agreement pursuant to which Guarantor Senior Indebtedness may have been
issued, and, in the event of any such event of default, shall provide to the
Agents the names and addresses of the trustees or other representatives of
holders of such Guarantor Senior Indebtedness.
With respect to the holders and owners of Guarantor Senior Indebtedness,
each Lender undertakes to perform only such obligations on the part of such
Lender as are specifically set forth in this Section 11, and no implied
covenants or obligations with respect to the holders or owners of Guarantor
Senior Indebtedness shall be read into this Agreement against the Lenders. The
Lenders shall not be deemed to owe any fiduciary duty to the holders or owners
of Guarantor Senior Indebtedness or to the agent under the Senior Credit
Facility or any other representative of the holders of the Guarantor Senior
Indebtedness.
11.3 Payments May Be Paid Prior to Dissolution
-----------------------------------------
Nothing contained in this Section 11 or elsewhere in this Agreement shall
prevent or delay (i) Guarantors, except under the conditions described in
Section 11.2, from making payments at any time for the purpose of making
payments in respect of their respective Guarantee Obligations, or from
depositing with the Agents any moneys for such payments, or (ii) subject to
Section 11.2, the application by the Agents of any moneys deposited with it for
the purpose of making payments in respect of Guarantee Obligations.
11.4 Rights of Holders of Guarantor Senior Indebtedness Not To Be Impaired
----------------------------------------------------------------------
No right of any present or future holder of any Guarantor Senior
Indebtedness to enforce subordination as provided in this Section 11 shall at
any time in any way be prejudiced or impaired by any act or failure to act by
any such holder, or by any noncompliance by the Guarantors with the terms and
provisions and covenants herein, regardless of any knowledge thereof any such
holder may have or otherwise be charged with. Without in any way limiting the
generality of the foregoing Section, such holders of Guarantor Senior
Indebtedness may, at any time and from time to time without impairing or
releasing the subordination provided in this Section 11 or the obligations of
the Lenders hereunder to the holders of Guarantor Senior Indebtedness, do any
one or more of the following: (i) change the manner, place, terms or time of
payment of, or renew or alter, Guarantor Senior Indebtedness or otherwise amend
or
89
supplement in any manner Guarantor Senior Indebtedness or any instrument
evidencing the same or any agreement under which any Guarantor Senior
Indebtedness is outstanding; (ii) sell, exchange, release, or otherwise deal
with any property pledged, mortgaged, or otherwise securing Guarantor Senior
Indebtedness or fail to perfect or delay in the perfection of the security
interest in such property; (iii) release any Person liable in any manner for the
collection of Guarantor Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Guarantors and any other Person. Each Lender
by purchasing or accepting a Bridge Note waives any and all notice of the
creation, modification, renewal, extension or accrual of any Guarantor Senior
Indebtedness and notice of or proof of reliance by any holder or owner of
Guarantor Senior Indebtedness upon this Section 11 and the Guarantor Senior
Indebtedness shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Section 11, and all dealings between the
Guarantors and the holders and owners of the Guarantor Senior Indebtedness shall
be deemed to have been consummated in reliance upon this Section 11.
The provisions of this Section 11 are intended to be for the benefit of,
and shall be enforceable directly by, the holders of the Guarantor Senior
Indebtedness.
11.5 Subrogation
-----------
Upon the payment in full in accordance with the terms of Section 11.2 of
all amounts payable under or in respect of Guarantor Senior Indebtedness, the
Lenders shall be subrogated to the rights of the holders of such Guarantor
Senior Indebtedness to receive payments or distributions of assets of the
Guarantors made on such Guarantor Senior Indebtedness until the Guarantee
Obligations shall be paid in full in cash or Cash Equivalents and for purposes
of such subrogation no payments or distributions to holders of such Guarantor
Senior Indebtedness of any cash, property or securities to which the Lenders
would be entitled except for the provisions of this Section 11, and no payment
over pursuant to the provisions of this Section 11 to holders of such Guarantor
Senior Indebtedness by the Lenders, shall, as between such Guarantor, its
creditors other than holders of such Guarantor Senior Indebtedness and the
Lenders, be deemed to be a payment by such Guarantor to or on account of such
Guarantor Senior Indebtedness, it being understood that the provisions of this
Section 11 are solely for the purpose of defining the relative rights of the
holders of such Guarantor Senior Indebtedness, on the one hand, and the Lenders,
on the other hand. A release of any claim by any holder of Guarantor Senior
Indebtedness shall not limit the Lenders' rights of subrogation under this
Section 11.5.
If any payment or distribution to which the Lenders would otherwise have
been entitled but for the provisions of this Section 11 shall have been applied,
pursuant to the provisions of this Section 11, to the payment of all amounts
payable under the Guarantor Senior Indebtedness, then and in such case, the
Lenders shall be entitled to receive from the holders of such Guarantor Senior
Indebtedness at the time outstanding the full amount of any payments or
distributions received by such holders of Guarantor Senior Indebtedness in
excess of the amount sufficient to pay all Guarantor Senior Indebtedness payable
under or in respect of the Guarantor Senior Indebtedness in full in cash or Cash
Equivalents in accordance with the terms of Section 11.2.
90
11.6 Obligations of the Guarantors Unconditional
-------------------------------------------
Nothing contained in this Section 11 or elsewhere in this Agreement or in
the Guarantees is intended to or shall impair as between the Guarantors and the
Lenders the obligations of the Guarantors, which are absolute and unconditional,
to pay to the Lenders the Guarantee Obligations as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Lenders and creditors of the Guarantors
other than the holders of the Guarantor Senior Indebtedness, nor shall anything
herein or therein prevent the Lenders from exercising all remedies otherwise
permitted by applicable law upon default under this Agreement, subject to the
rights, if any, under this Section 11 of the holders of such Guarantor Senior
Indebtedness in respect of cash, property or securities of the Guarantors
received upon the exercise of any such remedy.
The failure to make a payment in respect of Guarantee Obligations by reason
of any provision of this Section 11 shall not prevent the occurrence of an Event
of Default under Section 7.
11.7 Lenders Authorize Agent to Effectuate Subordination
---------------------------------------------------
Each Lender hereby authorizes and expressly directs the Agents on its
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Section 11 and appoints the Agents its attorney
in fact for such purpose including, without limitation, in the event of any
dissolution, winding up, liquidation or reorganization of any Guarantor (whether
in bankruptcy, insolvency, receivership, reorganization or similar proceedings
or upon an assignment for the benefit of creditors or any other similar remedy
or otherwise) tending towards liquidation of the business and assets of any
Guarantor, the immediate filing of a claim for the unpaid balance of the
Guarantee Obligations in the form required in said proceedings and causing said
claim to be approved. If the Agents do not file a proper claim or proof of debt
in the form required in such proceeding prior to 30 days before the expiration
of the time to file such claim or claims, then the holders of the Guarantor
Senior Indebtedness are hereby authorized to have the right to file and are
hereby authorized to file an appropriate claim for and on behalf of the Lenders
In the event of any such proceeding, until the Guarantor Senior Indebtedness is
paid in full in cash or Cash Equivalents, without the consent of the holders of
a majority in principal amount outstanding of Guarantor Senior Indebtedness, no
Lender shall waive, settle or compromise any such claim or claims relating to
the Guarantee Obligations that such Lender now or hereafter may have against the
Guarantors.
SECTION 12 MISCELLANEOUS
12.1 Representation of the Lenders
-----------------------------
Each Lender hereby represents that it is a commercial lender which makes
loans in the ordinary course of its business and that it will make the Bridge
Loan hereunder for its own account or the account of its affiliates in the
ordinary course of such business.
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12.2 Participations in and Assignments of Bridge Loan
------------------------------------------------
A. Each Lender shall have the right at any time to sell, assign, transfer
or negotiate all or any portion of its Bridge Notes or its Bridge Loan
Commitment in an aggregate amount of not less than $1,000,000 to any Eligible
Assignee. In the case of any sale, transfer or negotiation of all or part of the
Bridge Loan or any Bridge Loan Commitment authorized under this Section 12.2A,
the assignee, transferee or recipient shall become a party to this Agreement as
a Lender by execution of an assignment and assumption agreement substantially in
the form of Exhibit VIII hereto; provided that (i) at such time Section 2.1A
------------ --------
shall be deemed modified to reflect the Bridge Loan Commitment of such new
Lender and of the existing Lenders, (ii) upon surrender of the Bridge Notes, new
Bridge Notes will be issued, at the Borrowers' expense to such new Lender and to
the assigning Lender, such new Bridge Notes to be in conformity with the
requirements of Section 2.1D (with appropriate modifications) to the extent
needed to reflect the revised Bridge Loan Commitment, and (iii) First Union
shall receive at the time of each such assignment, from the assigning or
assignee Lender, the payment of a non-refundable assignment fee of $3,500; and
provided, further, that such transfer or assignment will not be effective until
-------- -------
recorded by First Union on the Register pursuant to Section 5.12. To the extent
of any assignment pursuant to this Section 12.2A, the assigning Lender shall be
relieved of its obligations hereunder with respect to its assigned Bridge Loan
Commitment, and the assignee, transferee or recipient shall have, to the extent
of such sale, assignment, transfer or negotiation, the same rights, benefits and
obligations as it would if it were a Lender with respect to such Bridge Notes or
Bridge Loan Commitment, including, without limitation, the right to approve or
disapprove actions which, in accordance with the terms hereof, require the
approval of a Lender. At the time of each assignment pursuant to this Section
12.2A to an Eligible Assignee which is not already a Lender hereunder and which
is not a United States Person (as such term is defined in Section 7701 (a) (30)
of the Internal Revenue Code) for Federal income tax purposes, the respective
Eligible Assignee shall provide to the Borrowers and the Agents the appropriate
Internal Revenue Service Forms (and, if applicable a Section 12.2E(ii)
Certificate) described in Section 12.2E.
B. Each Lender may grant participations in all or any part of its Bridge
Notes or its Bridge Loan Commitment in an aggregate amount of not less than
$1,000,000 to any Eligible Assignee.
C. The Borrowers shall, at their own cost and expense, provide such
certificates, acknowledgments and further assurances in respect of this
Agreement and the Bridge Loan as any Lender may reasonably require in connection
with any participation, transfer or assignment pursuant to this Section 12.2.
D. Nothing in this Agreement shall prevent or prohibit any Lender from
pledging its Bridge Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank.
E. Each Lender that is an assignee or transferee of an interest under
this Agreement pursuant to Section 12.2A (unless the respective Lender was
already a Lender hereunder
92
immediately prior to such assignment or transfer) and that is not a United
States Person (as such term is defined in Section 7701 (a) (30) of the Internal
Revenue Code) agrees to deliver to the Borrowers and the Agents, on the date of
such assignment or transfer to such Lender, (i) two accurate and complete
original signed copies of Internal Revenue Service Form 4224 or 1001 (or
successor forms) certifying to such Lender's entitlement to a complete exemption
from United States withholding tax with respect to payments to be made under
this Agreement and under any Bridge Note, or (ii) if the Lender is not a "bank"
within the meaning of Section 881(c) (3) (A) of the Internal Revenue Code and
cannot deliver either Internal Revenue Service Form 1001 or 4224 (or successor
forms) pursuant to clause (i) above, (X) a certificate substantially in the form
of Exhibit IX hereto (a "Section 12.2E(ii) Certificate") and (Y) two accurate
and complete original signed copies of Internal Revenue Service Form W-8 (or
successor form) certifying to such Lender's entitlement to a complete exemption
from United States withholding tax with respect to payments of interest to be
made under this Agreement and under any Bridge Note. In addition, each Lender
agrees that, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
deliver to the Borrowers and the Agents two new accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor
forms), or a Section 12.2E(ii) Certificate and Form W-8 (or successor form), as
the case may be, and such other forms as may be required in order to confirm or
establish the entitlement of such Lender to a continued exemption from or
reduction in United States withholding tax with respect to payments under this
Agreement and any Bridge Note, or it shall immediately notify the Borrowers and
the Agents of its inability to deliver any such form or certificate; provided,
--------
however, that the Lender shall not be obligated to complete and deliver any form
-------
requiring disclosure of information or statements that it considers to be
confidential or otherwise disadvantageous to disclose. Subject to the
immediately succeeding sentence, and notwithstanding Section 12.19, the
Borrowers shall be entitled, to the extent they are required to do so by law, to
deduct or withhold income or similar taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from interest,
fees or other amounts payable hereunder or made on any other Loan Document for
the account of any Lender which is not a United States Person (as such term is
defined in Section 7701 (a) (30) of the Internal Revenue Code) for U.S. Federal
income tax purposes to the extent that such Lender has not provided to the
Borrowers U.S. Internal Revenue Service Forms that establish a complete
exemption from such deduction or withholding. Notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this Section 12.2E,
the Borrowers agree to pay additional amounts and to indemnify and hold harmless
each Lender (without regard to the identity of the jurisdiction requiring the
deduction or withholding), and reimburse such Lender upon its written request,
in respect of any amounts deducted or withheld by it as described in the
immediately preceding sentence as a result of any changes after the date of any
assignment or transfer in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of income or similar Taxes.
12.3 Expenses
--------
Whether or not the transactions contemplated hereby shall be consummated,
the Borrowers agree to pay promptly (i) all the actual and reasonable costs and
expenses of
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preparation of the Loan Documents and all the costs of furnishing all opinions
by counsel for the Borrowers (including without limitation any opinions
requested by the Lenders as to any legal matters arising hereunder), and of the
Borrowers' performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with; (ii) the actual
and reasonable fees, expenses and disbursements of Cleary, Gottlieb, ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Bridge Loan hereunder, and any
amendments, modifications and waivers hereto or thereto and consents to
departures from the terms hereof and thereof; and (iii) after the occurrence of
an Event of Default, all actual and reasonable costs and expenses (including
actual and reasonable attorneys fees, including allocated costs of internal
counsel, and costs of settlement) incurred by the Lenders or the Agents in
enforcing any Obligations of or in collecting any payments due from the
Borrowers, ▇▇▇▇▇ Corning, any Guarantors hereunder or under the Bridge Notes by
reason of such Event of Default or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or of any insolvency or bankruptcy proceedings.
12.4 Indemnitee
----------
In addition to the payment of expenses pursuant to Section 12.3, whether or
not the transactions contemplated hereby shall be consummated, the Borrowers
agree to indemnify, pay and hold each of the Lenders and the Agents, and each of
their respective officers, directors, employees, agents, representatives and
affiliates (collectively called the "Indemnitees"), harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the actual and reasonable fees
and disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated as a party thereto), which
may be suffered by, imposed on, incurred by, or asserted against that
Indemnitee, in any manner resulting from, connected with, in respect of,
relating to or arising out of this Agreement, the other Loan Documents, the
Amended and Restated Commitment Letter, the Lenders' agreements to make the
Bridge Loan or the use or intended use of any of the proceeds of the Bridge Loan
hereunder or the issuance of the Exchange Notes or the Take-Out Securities
including, without limitation, any Environmental Liabilities and Costs or the
breach of any representation, warranty or covenant in this Agreement (the
"Indemnified Liabilities"); provided, that the Borrowers shall have no
--------
obligation to an Indemnitee hereunder with respect to Indemnified Liabilities
(i) to the extent such liabilities are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted primarily from
(A) the gross negligence or willful misconduct of that Indemnitee or (B) the
failure of such Indemnitee to perform its obligations under any Loan Document or
(C) such Indemnitee's violation of law or (ii) in connection with the
obligations of any Indemnitee under any Loan Document or for any transfer fees.
To the extent that the undertaking to indemnify, pay and hold harmless set forth
in the preceding sentence may be unenforceable because it is violative of any
law or public policy, the Borrowers shall contribute the maximum portion which
they are permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
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12.5 Setoff
------
Subject to Section 8, in addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default, each Lender, the
Agents and each subsequent holder of any Bridge Note is hereby authorized by the
Borrowers at any time or from time to time, without notice to the Borrowers, or
to any other Person, any such notice being hereby expressly waived, to set off
and to appropriate and to apply any and all deposits (general or special,
including, but not limited to, Indebtedness evidenced by certificates of
deposit, whether matured or unmatured but not including trust accounts or any
other accounts held for the benefit of another Person) and any other
Indebtedness at any time held or owing by such Person or any such subsequent
holder to or for the credit or the account of the Borrowers or the Borrowers
against and on account of the obligations and liabilities of the Borrowers to
such Person or such subsequent holder under this Agreement and the Bridge Notes,
including, but not limited to, all claims of any nature or description arising
out of or connected with this Agreement or the Bridge Notes, irrespective of
whether or not (a) such Person or such subsequent holder shall have made any
demand hereunder or (b) such Person or such subsequent holder shall have
declared the principal of or the interest on its portion of the Bridge Loan and
its Bridge Notes and other amounts due hereunder to be due and payable as
permitted by Section 8 and although said obligations and liabilities, or any of
them, may be contingent or unmatured.
12.6 Amendments and Waivers
----------------------
No amendment, modification, termination or waiver of any term or provision
of this Agreement, of the Bridge Notes, any Guarantee or, prior to the execution
and delivery thereof, of the form of Registration Rights Agreement, or the form
of the Senior Subordinated Indenture or consent to any departure by the
Borrowers or any Guarantor therefrom, shall in any event be effective without
the prior written concurrence of the Borrowers or such Guarantor, as the case
may be, and the Agents and the Required Lenders, and, upon the request of any
Lender, the receipt of a written opinion of counsel of the Borrowers addressed
to the Lenders to the effect that such amendment, modification, termination,
waiver or consent does not violate or conflict with any of the terms and
provisions of the Senior Credit Facility or any other Contractual Obligation of
the Borrowers in respect of Indebtedness for money borrowed or other material
agreement of the Borrowers otherwise known to such counsel after reasonable
inquiry; provided that, notwithstanding the third sentence of Section 12.15,
--------
without the prior written consent of each Lender affected, an amendment,
modification, termination or waiver of this Agreement, any Bridge Notes any
Guarantee or, prior to the execution and delivery thereof, of the form of
Registration Rights Agreement, or the form of the Senior Subordinated Indenture
or consent to departure from a term or provision hereof or thereof may not: (i)
reduce the principal amount of Bridge Notes whose holders must consent to any
such amendment, modification, termination, waiver or consent; (ii) reduce the
rate of or extend the time for payment of principal or interest on any Bridge
Note; (iii) reduce the principal amount of any Bridge Note; (iv) make any Bridge
Note payable in money other than that stated in the Bridge Note; (v) make any
change in Section 2.4A(iv) or in the definition of Change of Control (it being
understood that this clause (v), as such clause may appear in the Senior
Subordinated Indenture, shall omit references to
95
Section 2.4A(iv) and the definition of Change of Control (it being understood
that this clause (v), as it shall appear in the Senior Subordinated Indenture,
shall omit references to Section 2.4A(iv) hereto, as such as such Section shall
appear in the Senior Subordinated Indenture and Change of Control) in the last
paragraph of Section 7 or in Section 8.5, 11.5 or 12.6; (vi) reduce the rate or
extend the time of payment of fees or other compensation payable to the Lenders
hereunder; (vii) modify the provisions of Section 8 or any of the defined terms
related thereto in any manner adverse to the Lenders; or (viii) waive
performance by the Borrowers of their obligations under, or consent to any
departure from any of the terms and provisions of, Section 2.4A(iv) (it being
understood that this clause (viii) shall be omitted from the Senior Subordinated
Indenture); and provided, further, that without the consent of the Agents, no
-------- -------
such amendment, modification, termination or waiver may amend, modify, terminate
or waive any provision of Section 9 as the same applies to the Agents or any
other provision of this Agreement as it relates to the rights or obligations of
the Agents. No amendment, modification or waiver of any provision of this
Agreement, the Bridge Notes, any Guarantee or the form of the Senior
Subordinated Indenture shall adversely affect the rights of the holders of
Senior Indebtedness or the holders of Guarantor Senior Indebtedness without
their consent. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on the Borrowers in any case shall entitle the Borrowers to any further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 12.6
shall be binding upon each holder of the Bridge Notes at the time outstanding,
each further holder of the Bridge Notes, and, if signed by the Borrowers or a
Guarantor, on the Borrowers and such Guarantor.
12.7 Independence of Covenants
-------------------------
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the
limitation of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or condition
exists.
12.8 Entirety
--------
The Loan Documents and the Amended and Restated Commitment Letter embody
the entire agreement of the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof and thereof.
12.9 Notices
-------
Unless otherwise provided herein, any notice or other communications herein
required or permitted to be given shall be in writing and may be personally
served, telecopied, telexed or sent by mail and shall be deemed to have been
given when delivered in person, upon receipt of telecopy or telex against
receipt of answer back or four Business Days after depositing it in the mail,
registered or certified, with postage prepaid and properly addressed; provided
--------
that notices shall not be effective until received. For the purposes hereof,
the addresses of the parties hereto
96
(until notice of a change thereof is delivered as provided in this Section 14.9)
shall be set forth under each party's name on the signature pages hereto.
12.10 Survival of Warranties and Certain Agreements
---------------------------------------------
A. All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement and the Amended and
Restated Commitment Letter, the making of the Bridge Loan hereunder and the
execution and delivery of the Bridge Notes and, notwithstanding the making of
the Bridge Loan, the execution and delivery of the Bridge Notes or any
investigation made by or on behalf of any party, shall continue in full force
and effect. The closing of the transactions herein contemplated shall not
prejudice any right of one party against any other party in respect of anything
done or omitted hereunder or in respect of any right to damages or other
remedies.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of the Borrowers set forth in Sections 12.3, 12.4,
12.12, 12.15, 12.17, 12.19, 12.20, 12.22 and 12.23 shall survive the payment of
the Bridge Loan and the Bridge Notes and the termination of this Agreement.
12.11 Failure or Indulgence Not Waiver; Remedies Cumulative
-----------------------------------------------------
No failure or delay on the part of the Agents or any Lender or any holder
of any Bridge Note in the exercise of any power, right or privilege hereunder,
under a Guarantee or under the Bridge Notes shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege. All rights and remedies existing under this Agreement, under a
Guarantee or the Bridge Notes are cumulative to and not exclusive of any rights
or remedies otherwise available.
12.12 Severability
------------
In case any provision in or obligation under this Agreement, under a
Guarantee or the Bridge Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
12.13 Headings
--------
Section and Sub-section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
12.14 Applicable Law
--------------
THIS AGREEMENT, EACH GUARANTEE AND THE NOTES SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
97
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAW.
12.15 Successors and Assigns; Subsequent Holders of Bridge Notes
----------------------------------------------------------
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the Lenders. The terms and provisions
of this Agreement and each Guarantee shall inure to the benefit of any assignee
or transferee of the Bridge Notes pursuant to Section 12.2A, and in the event of
such transfer or assignment, the rights and privileges herein conferred upon the
Lenders shall automatically extend to and be vested in such transferee or
assignee which becomes a Lender pursuant to Section 12.2A, all subject to the
terms and conditions hereof. Except as provided in Section 12.6, in determining
whether the holders of a sufficient aggregate principal amount of the Bridge
Loan shall have consented to any action under this Agreement, any amount of the
Bridge Loan owned or held by the Borrowers any Guarantor or any of their
respective Affiliates shall be disregarded. The Borrowers' rights or any
interest therein hereunder may not be assigned without the prior express written
consent of each of the Lenders.
12.16 Counterparts; Effectiveness
---------------------------
This Agreement and any amendments, waivers, consents or supplements may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto, and delivery
thereof to the Agents or, in the case of the Lenders, written telex or facsimile
notice or telephonic notification (confirmed in writing) of such execution and
delivery. The Agents will give the Borrowers and each Lender prompt notice of
the effectiveness of this Agreement.
12.17 Consent to Jurisdiction; Venue; Waiver of Jury Trial
----------------------------------------------------
A. Any legal action or proceeding with respect to this Agreement, any
Bridge Note or any Guarantee may be brought in the courts of the State of New
York or of the United States for the Southern District of New York, and, by
execution and delivery of this Agreement, each of the parties to this Agreement
hereby irrevocably accepts for itself and in respect of its respective property,
generally and unconditionally, the jurisdiction of the aforesaid courts Each of
the parties to this Agreement hereby further irrevocably waives any claim that
any such courts lack jurisdiction over such party, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Agreement, the
Bridge Notes or the Guarantees brought in any of the aforesaid courts, that any
such court lacks jurisdiction over such party. Each of the parties to this
Agreement irrevocably consents to the service of process in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to such party, at its respective address for notices pursuant
to Section 14.9, such service to become effective 30 days after such mailing To
the extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any
98
Bridge Note or any Guarantee that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any party to this
Agreement to serve process in any other manner permitted by law or to commerce
legal proceedings or otherwise proceed against any party in any other
jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement, the Bridge Notes or the Guarantees brought in the courts referred to
in clause A above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
C. Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim arising out
of or relating to this Agreement, the Bridge Notes or the Guarantees or the
transactions contemplated hereby or thereby.
12.18 Payments Pro Rata
-----------------
A. The Agents agree that promptly after its receipt of each payment of any
interest or premium on or principal of the Bridge Notes from or on behalf of the
Borrowers or any Guarantor, it shall, except as otherwise provided in this
Agreement, distribute such payment to the Lenders (other than any Lender that
has consented in writing to waive its pro rata share of such payment) pro rata
based upon their respective pro rata shares, if any, of such payment.
B. Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of set-off or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Loan Documents, or otherwise)
which is applicable to the payment of the principal of, or interest on, the
Bridge Loan of a sum which with respect to the related sum or sums received by
other Lenders is in a greater proportion than the total of such Obligation then
owed and due to such Lender bears to the total of such Obligation then owed and
due to all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations of the Borrowers
to such Lenders in such amount as shall result in a proportional participation
by all of the Lenders in such amount; provided that, if all or any portion of
--------
such excess amount is thereafter recovered from such Lender, such purchase shall
be rescinded and the purchase price restored to the extent of such recovery, but
without interest.
12.19 Taxes
-----
A. Each payment by the Borrowers or a Guarantor under this Agreement or
under any of the other Loan Documents shall, except as required by law, be made
without withholding or deduction for or on account of any and all present or
future Taxes. If any Taxes are required to be withheld or deducted from any such
payment, the Borrowers (or, if the payment is made by a Guarantor, such
Guarantor) shall give notice to the Agents (which shall promptly provide a copy
to each Lender) and shall pay such additional amounts as may be necessary to
ensure that the net
99
amount actually received by each Lender and the Agents after such withholding or
deduction is equal to the amount that each Lender and the Agents would have
received had no such withholding or deduction been required, provided, however,
-------- -------
that no such additional amounts shall be payable in respect of (i) in the case
of each Lender and the Agents, any Taxes imposed on its net income and franchise
taxes imposed on it by the jurisdiction under the laws of which such Person is
organized (unless such Taxes are imposed solely because the payment was made by
a Guarantor and would not have been imposed had such payment instead been made
by the Borrowers) or (ii) any Taxes imposed on a payee by reason of such payee's
failure or inability to comply with the provisions of Section 12.2E of this
Agreement.
B. The Borrowers shall pay all Taxes referred to in Section 12.19A
before penalties are payable or interest accrues thereon, but if any such
penalties are payable or interest accrues, the Borrowers shall make payment
thereof when due to the appropriate governmental authority.
C. The Borrowers shall pay any present or future stamp, transfer or
documentary taxes or any other excise or property taxes, charges or similar
levies, and any penalties, additions to tax or interest due with respect
thereto, that may be imposed by any jurisdiction (or any political subdivision
or taxing authority thereof or therein) which arise from any payment made by the
Borrowers hereunder or under any of the other Loan Documents or in connection
with the execution, delivery or registration of this Agreement or any of the
other Loan Documents.
D. If any Lender or the Agents pay any Taxes or other amounts that the
Borrowers, ▇▇▇▇▇ Corning or a Guarantor are required to pay pursuant to this
Section 12.19, the Borrowers shall indemnify it on demand in full in the
currency in which such Taxes or other amounts are paid, whether or not such
Taxes were correctly or legally asserted, on an after-tax basis together with
interest thereon from and including the date of payment to but excluding the
date of reimbursement at a rate per annum determined in accordance with Section
2.2.
E. The Borrowers shall furnish to the Agents and each of the Lenders
the original or a certified copy of a receipt evidencing any payment of Taxes
made by the within 30 days after each such payment of taxes.
F. The provisions of this Section 12.19 shall survive the termination
of the Agreement and repayment of all Obligations.
12.20 Waiver of Stay, Extension or Usury Laws
---------------------------------------
The Borrowers covenant (to the extent that they may lawfully do so) that
they will not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law or any usury law
or other law that would prohibit or forgive the Borrowers from paying all or any
portion of the principal of or interest on the Bridge Loan as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Agreement; and (to the extent
that it may lawfully do so) the Borrowers hereby expressly waive all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to
100
the Agents, but will suffer and permit the execution of every such power as
though no such law had been enacted.
12.21 Requirements of Law
-------------------
(a) The Borrowers shall pay to the each Lender on demand the amount such
Lender reasonably determines to be necessary to compensate it fully for all
costs incurred and reductions in amounts received or receivable that are
attributable to the Bridge Loans made by such Lender hereunder or the
performance by such Lender of its obligations under this Agreement and that
occur by reason of the adoption of, or any change in, any law, regulation or
treaty or in the application or interpretation thereof or compliance by such
Lender with any direction, requirement or request of any governmental authority,
including, without limitation, any such cost or reduction resulting from (a) the
imposition, amendment or change in the application or basis of any Taxes other
than (i) any Taxes referred to in Section 12.19A required to be withheld or
deducted from payments by the Borrowers, ▇▇▇▇▇ Corning or a Guarantor or (ii)
any Taxes imposed on or measured by the net income of such Lender and imposed by
the jurisdiction in which such Lender's principal office is situated, (b) the
imposition or amendment of any reserve, special deposit or similar requirement
against assets of, liabilities of, deposits with or for the account of, or loans
by, such Lender or (c) the imposition or amendment of any capital requirements
that have the effect of reducing the rate of return on such Lender's capital as
a consequence of the Bridge Loan made by such Lender hereunder to a level below
that which it could have achieved but for such adoption, change or compliance.
(b) The Borrowers shall not be required to make any payments to any
Lender for any additional amounts pursuant to this Section 12.21 unless such
Lender has given written notice to the Borrowers, through the Agents, of its
intent to request such payments prior to or within 60 days after the date on
which such Lender became entitled to claim such amounts. If any Lender requests
compensation from the Borrowers under this Section 12.21, the Borrowers may, by
notice to such Lender (with a copy to the Agents), suspend the obligation of
such Lender thereafter to make or continue Bridge Loans, until the requirement
of law giving rise to such request ceases to be in effect; provided that such
--------
suspension shall not affect the right of such Lender to receive the compensation
so requested.
12.22 Confidentiality
---------------
Each Lender shall hold all non-public information obtained pursuant to the
requirements of or in connection with this Agreement which has been identified
as confidential by the Borrowers in accordance with such Lender's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, it being understood and agreed
by the Borrowers that (i) in any event a Lender may make disclosures reasonably
required by any bona fide assignee, transferee or participant in connection with
the contemplated assignment or transfer by such Lender of any Bridge Loan or any
participation therein or as required or requested by any governmental agency or
representative thereof or pursuant to legal process; provided, that unless
--------
specifically prohibited by applicable law or court order, each Lender shall
notify the Borrowers of any request by any governmental agency or
101
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information and (ii) a Lender may share with any of its Affiliates, and
such Affiliates may share with any Lender, any information related to the
Borrowers or any of their Affiliates (including information relating to
creditworthiness), the JV Transactions or the financing therefor; and provided,
--------
further, that in no event shall any Lender be obligated or required to return
-------
any materials furnished by the Borrowers or any of their Subsidiaries. In
connection with any sales, assignments or transfers referred to in Section
12.2A, a Lender shall obtain agreements from the purchasers, assignees or
transferees, as the case may be, reasonably satisfactory to the Borrowers, that
such parties will comply with this Section 12.22.
12.23 Compensation
------------
The Borrowers shall compensate each Lender, upon its written request (which
request shall set forth the basis for requesting such compensation), for all
reasonable losses, expenses and liabilities (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds required by such Lender to fund its Bridge Loan but
excluding loss of anticipated profit with respect to any Bridge Loan) which such
Lender may sustain: (i) if for any reason (other than a default by such Lender
or the Agents) a borrowing of the Bridge Loan does not occur on a date specified
therefor in a Notice of Borrowing (whether or not withdrawn by the Borrowers);
(ii) if any repayment of the Bridge Loan occurs on a date which is not the last
day of an Interest Period applicable thereto; (iii) if any prepayment of any
Bridge Loan is not made on any date specified in a notice of prepayment given by
the Borrowers; or (iv) as a consequence of any other default by the Borrowers to
repay its Bridge Loan when required by the terms of this Agreement. Calculation
of all amounts payable to a Lender under this Section 12.23 shall be made as
though that Lender had actually funded the Bridge Loan utilizing the Applicable
LIBOR Based Rate, through the purchase of a LIBOR rate deposit bearing interest
at the Applicable LIBOR Based Rate in an amount equal to the amount of that
Loan, having a maturity comparable to the relevant Interest Period.
102
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
BORROWERS:
ADVANCED GLASSFIBER YARNS LLC
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Notice Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
AGY CAPITAL CORP.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Notice Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CO-AGENT:
FIRST UNION INVESTORS, INC.
as co-agent
By:/s/ ▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Director
Notice Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
LENDER:
Commitment: FIRST UNION INVESTORS, INC.
By:/s/ ▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Director
Notice Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
LENDER:
WARBURG DILLON READ LLC
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
/s/ ▇. ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Title : Managing Director
Managing Director
Leveraged Finance
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
UBS AG Stamford Branch
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇. ▇. ▇▇▇▇▇▇ Title : Associate Director
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Loan Portfolio Support U1
Managing Director
Leveraged Finance
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CO-AGENT:
WARBURG DILLON READ LLC
as co-agent
/s/ ▇. ▇. ▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ -----------------------------------
Managing Director Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Leveraged Finance Title: Managing Director
Notice Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇