<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File No. 1-7170
IMCO RECYCLING INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
75-2008280
(I.R.S. Employer Identification No.)
5215 North O'Connor Blvd., Suite 940
Central Tower at Williams Square
Irving, Texas 75039
(Address of principal executive offices)
(972) 869-6575
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of business on November 4, 1997.
Common Stock, $0.10 par value, 14,855,824
-----------------------------------------
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IMCO RECYCLING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
--------- ---------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,753 $ 5,070
Accounts receivable 42,991 33,655
Inventories 14,669 11,847
Deferred income taxes 1,430 1,462
Other current assets 1,707 1,282
--------- ---------
Total current assets 64,550 53,316
Property and equipment, net 124,176 86,308
Intangible assets
Excess of acquisition cost over the fair value of net assets
acquired, net of accumulated amortization of $3,476 at
September 30, 1997 and $4,607 December 31, 1996 57,026 9,362
Patents, net 125 171
--------- ---------
Total intangible assets, net 57,151 9,533
Investments in joint ventures 14,639 14,187
Other assets, net 7,959 1,363
--------- ---------
$ 268,475 $ 164,707
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 18,642 $ 14,351
Accrued liabilities 10,048 2,192
Short-term debt -- 2,000
Current maturities of long-term debt 8,831 2,124
--------- ---------
Total current liabilities 37,521 20,667
Long-term debt 110,824 48,202
Other long-term liabilities 6,148 1,647
Deferred income taxes 5,508 5,856
Minority interests 5,951 --
STOCKHOLDERS' EQUITY
Preferred stock; par value $.10; 8,000,000 shares
authorized; none issued -- --
Common stock; par value $.10; 20,000,000 shares authorized;
12,641,744 issued at September 30, 1997; 12,017,914
issued at December 31, 1996 1,264 1,202
Additional paid-in capital 34,654 27,553
Retained earnings 67,801 61,021
Treasury stock, at cost; 98,401 shares at September 30,
1997; 118,551 shares at December 31, 1996 (1,196) (1,441)
--------- ---------
Total stockholders' equity 102,523 88,335
--------- ---------
$ 268,475 $ 164,707
========= =========
</TABLE>
Page 2
<PAGE> 3
IMCO RECYCLING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
----------------------- -------------------------
1997 1996 1997 1996
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 77,461 $ 53,689 $ 236,588 $ 154,872
Cost of sales 64,618 51,064 201,468 136,550
-------- -------- --------- ---------
Gross profit 12,843 2,625 35,120 18,322
Selling, general and administrative expense 4,293 2,695 13,092 8,564
Interest expense 1,937 969 5,596 2,559
Interest income (113) (137) (292) (519)
Equity in (earnings) loss of affiliates (272) 103 (362) (320)
-------- -------- --------- ---------
Earnings (loss) before provision for (benefit of)
income taxes, minority interests and
extraordinary item 6,998 (1,005) 17,086 8,038
Provision for (benefit of) income taxes 2,757 (207) 6,789 3,275
-------- -------- --------- ---------
Earnings (loss) before minority interests and
extraordinary item 4,241 (798) 10,297 4,763
Minority interests, net of provision for income taxes 110 -- 319 --
-------- -------- --------- ---------
Earnings (loss) before extraordinary item 4,131 (798) 9,978 4,763
Extraordinary item -- -- (1,318) --
-------- -------- --------- ---------
Net earnings (loss) $ 4,131 $ (798) $ 8,660 $ 4,763
======== ======== ========= =========
Net earnings (loss) per common share:
Earnings (loss) before extraordinary item $ 0.32 $ (0.07) $ 0.78 $ 0.39
Extraordinary item -- -- (0.10) --
-------- -------- --------- ---------
Net earnings (loss) $ 0.32 $ (0.07) $ 0.68 $ 0.39
======== ======== ========= =========
Dividends declared per common share $ 0.05 $ 0.05 $ 0.15 $ 0.15
======== ======== ========= =========
Weighted average common and common
equivalent shares outstanding 12,994 12,009 12,814 12,335
======== ======== ========= =========
</TABLE>
Page 3
<PAGE> 4
IMCO RECYCLING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1997 1996
--------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Earnings before extraordinary item $ 9,978 $ 4,763
Depreciation and amortization 11,673 8,591
Provision for (benefit of) deferred income taxes (315) 631
Equity in earnings of affiliates (362) (320)
Provision for doubtful accounts 635 23
Other noncash charges 649 9
Provision for plant closure -- 3,577
Changes in operating assets and liabilities (excluding
investing and financing transactions):
Accounts receivable 1,074 (2,911)
Inventories 1,959 (7,957)
Other current assets (55) (152)
Accounts payable and accrued liabilities 2,526 (3,793)
Accrued landfill closure costs 386 (200)
--------- --------
Net cash from operating activities 28,148 2,261
INVESTING ACTIVITIES
Payments for property and equipment (26,919) (9,105)
Acquisition of IMSAMET, Inc., net of cash acquired (57,732) --
Investment in VAW-IMCO joint venture (98) (13,301)
Other (1,051) 419
--------- --------
Net cash used by investing activities (85,800) (21,987)
FINANCING ACTIVITIES
Net repayments of short-term borrowings (8,351) --
Proceeds from issuance of long-term debt 121,591 20,475
Principal payments of long-term debt (55,460) (1,593)
Debt issuance costs (2,185) --
Dividends paid (1,881) (1,778)
Other 2,621 844
--------- --------
Net cash from financing activities 56,335 17,948
--------- --------
Net decrease in cash and cash equivalents (1,317) (1,778)
Cash and cash equivalents at January 1 5,070 8,678
--------- --------
Cash and cash equivalents at September 30 $ 3,753 $ 6,900
========= ========
SUPPLEMENTARY INFORMATION
Cash payments for interest $ 6,971 $ 1,466
Cash payments for income taxes $ 2,576 $ 7,440
</TABLE>
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IMCO RECYCLING INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1997
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. The accompanying financial
statements include the accounts of IMCO Recycling Inc. and all of its
subsidiaries (the "Company"). All significant intercompany accounts and
transactions have been eliminated. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
Certain reclassifications have been made to prior year statements to conform to
the current year presentation.
NOTE B - INVENTORIES
The components of inventories are:
(In thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
---------------- ---------------
<S> <C> <C>
Finished goods $ 9,440 $ 8,642
Raw materials 4,641 2,974
Supplies 588 231
---------------- ---------------
$ 14,669 $ 11,847
================ ===============
</TABLE>
NOTE C - ACQUISITIONS
In January 1997, the Company acquired all of the capital stock of IMSAMET, Inc.
("IMSAMET"), a wholly owned subsidiary of EnviroSource, Inc., for approximately
$58,000,000 in cash, not including acquisition costs. IMSAMET operates and owns
or has a majority interest in three aluminum recycling plants located in Post
Falls, Idaho; Wendover, Utah and Goodyear, Arizona. In addition, IMSAMET has a
50% interest in a joint venture facility adjacent to the Utah plant, which uses
a proprietary process to reclaim materials from salt cake. The acquisition was
accounted for using the purchase method of accounting. Accordingly, the purchase
price was allocated to the net assets acquired based on their estimated fair
values. The estimated excess of the purchase price over the fair value of net
assets acquired is $42,000,000 and is being amortized over forty years on a
straight-line basis. The Company's consolidated results include the operations
of IMSAMET since the date of acquisition.
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IMCO RECYCLING INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
SEPTEMBER 30, 1997
The preliminary allocation of the purchase price of IMSAMET is as follows (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Working capital $ 4,674
Property and equipment 19,852
Goodwill 41,976
Other noncurrent assets 914
Noncurrent liabilities (7,176)
-----------
Total $ 60,240
===========
</TABLE>
The following table sets forth pro forma results of operations of the combined
entities of the Company and IMSAMET for the three and nine month periods ended
September 30, 1996, assuming the acquisition had been consummated on January 1,
1996. The pro forma combined information is presented for comparative purposes
only and does not purport to represent the actual results which would have
occurred had the acquisition been consummated on such date or of future results
of the combined companies under the ownership and management of the Company (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
----------------------------
THREE MONTHS NINE MONTHS
ENDED ENDED
----------------------------
<S> <C> <C>
Revenues $62,411 $182,474
Gross profit $ 4,133 $ 23,289
Earnings before extraordinary item $ (877) $ 4,344
Earnings per common share before extraordinary item $ (0.07) $ 0.35
</TABLE>
The table above reflects certain pro forma adjustments including additional
depreciation expense as a result of the increased basis of the fixed assets
acquired, additional amortization expense related to the goodwill recorded, a
reduction in general and administrative expenses for the elimination of
duplicate corporate offices, additional interest expense related to debt
incurred on the IMSAMET acquisition (see NOTE D) and adjustments for related
income taxes and minority interest.
Also in January 1997, the Company acquired in a privately-negotiated transaction
all of the capital stock of Rock Creek Aluminum, Inc. ("Rock Creek") in exchange
for 618,137 shares of the Company's common stock. The acquisition was accounted
for using the purchase method of accounting. The estimated excess of the
purchase price over the fair value of net assets acquired is $6,000,000 and is
being amortized over forty years on a straight-line basis. Rock Creek owns and
operates two Ohio facilities located in Elyria and Rock Creek. These facilities
utilize
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IMCO RECYCLING INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
SEPTEMBER 30, 1997
milling, blending, testing and packaging equipment to process various types of
raw materials, including aluminum dross and scrap, various minerals and slags.
The historical results of operations of Rock Creek were not material compared to
the Company's historical results of operations.
On September 18, 1997, the Company announced that it had entered into a
non-binding letter of intent to acquire all of the capital stock of Alchem
Aluminum, Inc. ("Alchem") in exchange for cash and 1,208,339 shares of the
Company's common stock (the "Alchem Acquisition"). The shares of Common Stock to
be issued to the Alchem shareholders will be contractually restricted from
resale for periods of up to three years, and the Company plans to agree to grant
the Alchem shareholders certain registration rights with respect to such shares
of common stock. The amount of cash to be paid will be determined by deducting
the aggregate amount of Alchem's obligations for borrowed money outstanding as
of the closing date of the acquisition from $26,250,000. As of September 30,
1997, the amount of Alchem's indebtedness for borrowed money outstanding was
$12,115,000. The acquisition will be accounted for using the purchase method of
accounting.
Alchem is a producer of specification aluminum alloys for automotive
manufacturers and their suppliers and has been operating its facility located in
Coldwater, Michigan since 1972. Alchem and the Company have also been operating
under a joint venture agreement entered into in October 1995 to construct and
operate an aluminum recycling plant adjacent to Alchem's processing facility in
Coldwater. This joint venture plant began operating in the first quarter of 1997
and was fully completed in October 1997.
The closing of the Alchem Acquisition is subject to the conditions contained in
the letter of intent and in the definitive acquisition agreement to be entered
into in connection with the acquisition. Although the Company believes that such
conditions will be fully satisfied on or before the anticipated closing date of
the Alchem Acquisition (on or about November 14, 1997), many of these conditions
are beyond the control of the Company, and there can be no assurance of when or
whether the closing of the Alchem Acquisition will occur. Closing conditions
will include the satisfaction of usual and customary closing conditions,
including the absence of any injunction or other legal restraint, the consent of
third parties and governmental entities, the accuracy in all material respects
of the representations and warranties made in the definitive acquisition
agreement and the performance of pre-closing agreements.
NOTE D - LONG-TERM DEBT AND EXTRAORDINARY LOSS ON EARLY DEBT RETIREMENT
In connection with the January 1997 acquisitions (see NOTE C), the Company
entered into a new $125,000,000 syndicated credit agreement (the "Credit
Agreement") with certain lenders, including Merrill Lynch & Co. as syndication
agent and Texas Commerce Bank National Association as administrative agent
("TCB"). The Company received $110,000,000 at the closing and used approximately
$61,000,000 for the IMSAMET acquisition. The remaining
Page 7
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IMCO RECYCLING INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
SEPTEMBER 30, 1997
$49,000,000 of the proceeds was used to retire substantially all of the
Company's outstanding debt as of December 31, 1996. The early debt retirement
generated an extraordinary loss of $1,318,000 (net of income taxes) in the first
quarter of 1997.
The Credit Agreement provided for $125,000,000 of senior secured credit
facilities consisting of a $105,000,000 term loan, with a final maturity of
seven years, and a $20,000,000 revolving credit facility, with a final maturity
of five years. Of the $20,000,000 revolving credit facility, $4,000,000 was to
be used, as needed, by the Company for standby letters of credit. As of
September 30, 1997, the Company had $96,755,000 in total borrowings outstanding
under the term loan and $11,100,000 under the revolving credit facility.
On November 5, 1997, the Company amended and restated the terms of the Credit
Agreement with its lenders (the "Amended and Restated Credit Agreement"). The
Amended and Restated Credit Agreement provides for a reducing revolving credit
facility of up to $200,000,000, which allows the Company to consolidate the
unpaid amount of its then-outstanding indebtedness of $96,755,000 and
$15,100,000 under the original Credit Agreement's term loan and revolving credit
facilities, respectively, and will permit the company to acquire Alchem (see
NOTE C). The Company expects to fund the cash portion of the Alchem Acquisition
and repay a portion of Alchem's outstanding indebtedness from borrowings under
the Amended and Restated Credit Agreement. In addition, up to $12,000,000
available under the Amended and Restated Credit Agreement may be used, as
needed, by the Company for letters of credit. Indebtedness under the Amended and
Restated Credit Agreement will mature in December 2003. The Amended and Restated
Credit Agreement provides that the maximum amount of commitments under the
facility will be reduced on an annual basis beginning in December 1999, so that
by December 31, 2002, the maximum amount of aggregate commitments may not exceed
$100,000,000. As of November 11, 1997, the Company had $73,325,000 of
indebtedness outstanding under the Amended and Restated Credit Agreement.
Indebtedness under the Amended and Restated Credit Agreement bears interest, at
the Company's option, at fluctuating interest rates based upon an alternate base
rate (which may be the prime rate), or a rate based upon the applicable LIBOR
rate plus a credit margin which is based upon the Company's ratio of total debt
to total capitalization. In addition, the Company must pay a commitment fee for
unborrowed amounts available under the reducing revolving facility at a rate
based upon the Company's ratio of debt to total capitalization.
In order to reduce the fluctuating interest rate exposure on the term loan, the
Company entered into an interest rate cap transaction ("Rate Cap Transaction")
agreement with TCB on April 7, 1997. Under the terms of the Rate Cap Transaction
agreement, the floating interest rate for 40% of the term loan borrowings under
the Credit Agreement was capped at 8% per annum. The costs associated with this
Rate Cap Transaction will be amortized as interest expense over the four year
term of the agreement. As of November 11, 1997, the floating interest rate was
capped at 8% per annum for 55% of the total borrowings under the new Amended and
Restated Credit Agreement.
The Amended and Restated Credit Agreement imposes certain restrictions,
including: (i) a prohibition of certain additional indebtedness (ii) maintenance
of certain financial ratios, and (iii) limitations on investments, dividends,
capital expenditures, acquisitions of businesses and
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IMCO RECYCLING INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
SEPTEMBER 30, 1997
dispositions of assets. The annual limitations on cash dividends are as follows:
$4,000,000 for 1997, $5,000,000 for 1998, $6,000,000 per year for 1999 and 2000,
and $8,000,000 for each year after 2000. The indebtedness under the Amended and
Restated Credit Agreement is secured by substantially all of the Company's
assets, as well as a pledge of the capital stock of substantially all of the
Company's subsidiaries.
At September 30, 1997, the Company had standby letters of credit outstanding
with TCB and American National Bank and Trust Company in the amounts of
$1,221,000 and $1,044,000, respectively.
In April 1997, the Company borrowed $4,600,000 from the issuance of Solid Waste
Disposal Facilities Revenue Bonds (Series 1997) by the City of Morgantown,
Kentucky. These bonds were issued in connection with the Company's expansion of
its landfill in Morgantown and additional construction costs of its salt cake
processing facility in Morgantown. The bonds bear a 7.45% per annum interest
rate and mature on May 1, 2022.
NOTE E - LONG-TERM RECEIVABLE
On May 8, 1997, Harvard Industries, Inc. ("Harvard") announced that it and its
wholly-owned subsidiary, Doehler-Jarvis, Inc. ("Doehler-Jarvis"), had filed for
protection under Chapter 11 of the U.S. Bankruptcy Code. The Company sells
aluminum to Doehler-Jarvis. At September 30, 1997, the Company had $3,530,000 of
outstanding unsecured receivables from Doehler-Jarvis, net of related reserves.
While the Company currently believes that Harvard's bankruptcy will not have a
material adverse effect on the Company's financial position or results of
operations, no assurance can be given as to the amount and timing of the
Company's ultimate recovery, if any, of its claims. The Company's revenues from
Doehler-Jarvis totaled $17,490,000 and $12,350,000 for the year ended December
31, 1996 and the nine months ended September 30, 1997, respectively. The Company
believes that the loss of this customer will not have a material adverse effect
on the Company's financial position or results of operations.
NOTE F - COMMON STOCK OFFERING
On November 4, 1997, the Company issued and sold 2,300,000 shares of its Common
Stock through an underwritten public offering (the "Offering") at a price to
public of $18.00 per share. The Company received net proceeds of approximately
$38,830,000, after deducting underwriting discounts and commissions and Offering
expenses. The Company used the net proceeds to reduce outstanding indebtedness
originally incurred under the Credit Agreement in January 1997--see NOTES C and
D. On November 10, 1997, the underwriters exercised an option to purchase up to
345,000 additional shares of Common Stock solely to cover over-allotments in
connection with the Offering.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is a participant in the resource recovery industry and provides
recycling services for primary manufacturers of metal. The Company's principal
activity involves the recycling of aluminum and aluminum scrap and by-products.
The Company also recycles magnesium and zinc. The Company's financial
performance has historically been largely determined by the volume of metal it
processes. The largest portion of the Company's business is the processing of
customer-owned material for a fee (a service called "tolling"). In addition to
tolling, the Company also purchases material for processing and resale
("buy/sell business"). Tolling operations limit the Company's exposure to the
risk of commodity price fluctuations and impose relatively low working capital
demands, since the Company does not own the material being processed. Both the
Company's tolling fees per pound recycled and the selling price of metal it
owns, recycles and sells for its own account are included in revenues.
Variations in the mix between these two types of transactions can cause revenue
amounts to change significantly from period to period while generally not
significantly affecting total gross profit, because both types of transactions
have historically had approximately the same level of profitability.
The following table shows the total pounds of metal melted, the percentage of
total pounds melted represented by tolled metal, total revenues and total gross
profit.
In thousands, except percentages:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ ----------------------------------
1997 1996 1997 1996
-------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Pounds of metal melted 508,417 365,387 1,430,727 1,104,431
Percentage of pounds tolled 84% 82% 84% 84%
Revenues $77,461 $53,689 $236,588 $154,872
Gross profit $12,843 $ 2,625 $ 35,120 $ 18,322
</TABLE>
ACQUISITIONS
In January 1997, the Company completed the acquisitions of IMSAMET and Rock
Creek. See NOTES C and D of "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS" in ITEM
I. IMSAMET owns or has a majority interest in three aluminum recycling plants
located in Post Falls, Idaho; Wendover, Utah and Goodyear, Arizona, which
together have an annual melting capacity of approximately 420 million pounds. In
addition, IMSAMET owns a 50% interest in a joint venture facility adjacent to
the Utah plant, which uses a proprietary process to reclaim materials from salt
cake.
Rock Creek operates two Ohio facilities in Elyria and Rock Creek. These
facilities manufacture a variety of aluminum products that are eventually used
as metallurgical additions in the steel making process such as slag
conditioners, deoxidizers, steel desulfurizers and hot topping compounds. Rock
Creek utilizes milling, shredding, blending, testing and packaging equipment
Page 10
<PAGE> 11
to process various types of raw materials, including aluminum dross and scrap,
various minerals and slags. In addition, Rock Creek manufactures a wide range of
proprietary briquetted products and offers toll briquetting services. Rock
Creek's facilities have a total annual capacity of approximately 150 million
pounds.
On September 18, 1997, the Company announced that it had entered into a
non-binding letter of intent to acquire all of the capital stock of Alchem--see
NOTE C of "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS" in ITEM I. Alchem is a
producer of specification aluminum alloys for automotive manufacturers and their
suppliers and has been operating its facility located in Coldwater, Michigan
since 1972. Alchem and the Company have also been operating under a joint
venture agreement entered into in October 1995 to construct and operate an
aluminum recycling plant adjacent to Alchem's processing facility in Coldwater.
This joint venture plant began operating in the first quarter of 1997 and was
fully completed in October 1997. Alchem's facility has an annual melting
capacity of 180 million pounds; the joint venture facility with the Company has
an annual capacity of 150 million pounds. The Alchem Acquisition will permit the
Company to increase its participation in the automotive industry, broaden its
customer base and expand its product range to include specification alloys.
After giving effect to the Alchem Acquisition, the Company estimates that
approximately 30% of its annual domestic capacity will be dedicated to supplying
the transportation sector. The Alchem Acquisition is expected to increase the
Company's total annual processing capacity in 1998 to approximately 2.6 billion
pounds.
The closing of the Alchem Acquisition is subject to the conditions contained in
the letter of intent and in the definitive acquisition agreement to be entered
into in connection with the acquisition. Although the Company believes that such
conditions will be fully satisfied on or before the anticipated closing date of
the Alchem Acquisition (on or about November 14, 1997), many of these conditions
are beyond the control of the Company and there can be no assurance of when or
whether the closing of the Alchem Acquisition will occur. Closing conditions
will include the satisfaction of usual and customary closing conditions,
including the absence of any injunction or other legal restraint, the consent of
third parties and governmental entities, the accuracy in all material respects
of the representations and warranties made in the definitive acquisition
agreement and the performance of pre-closing agreements.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1996
PRODUCTION: For the three and nine month periods ended September 30, 1997, the
Company melted 39% and 30%, respectively, more metal than it did during the same
periods in 1996. Aluminum processing at the Company's newest plant in Coldwater,
Michigan (which began production in the first quarter of 1997) and the IMSAMET
facilities (which were acquired in January 1997) were the primary reasons for
the increased production. With the exception of its Loudon, Tennessee plant, the
Company's other aluminum facilities processed approximately the same amount of
material in the both the three and nine month periods ended September 30, 1997
as they did during the same periods of 1996. The Loudon facility had higher
volumes in both the
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<PAGE> 12
three and nine month periods ended September 30, 1997 primarily due to increased
customer demand.
REVENUES: In the first nine months of 1997, the Company's revenues totaled
$236,588,000 which was 53% higher than revenues of $154,872,000 for the same
period in 1996. For the three months ended September 30, 1997, revenues
increased 44% to $77,461,000 compared to $53,689,000 for the same period in
1996. The acquisitions of IMSAMET and Rock Creek and operations at the new
Coldwater, Michigan plant accounted for most of the increase in both the three
and nine month periods ended September 30, 1997. The remainder of the increase
was primarily due to the combination of higher aluminum selling prices and
higher levels of buy/sell business for the aluminum plants (exclusive of those
plants acquired or built in the first quarter of 1997). As discussed above,
increases in buy/sell business will generally result in a larger increase in
revenue than would an increase in tolling. The Company's buy/sell business
revenues include the cost of the metal, the processing cost, and the Company's
profit margin in the selling price, whereas revenues associated with tolling
only include the processing cost and the Company's profit margin. During 1997,
the Company has had additional metal for sale due to the operation of its salt
cake processing facilities in Morgantown, Kentucky (built in 1996) and Goodyear,
Arizona (acquired in 1997). These salt cake processing facilities process much
of the Company's salt cake generated from its aluminum recycling plants and
recover additional amounts of aluminum for resale. Tolling activity represented
84% of the Company's pounds melted for both the three and nine month periods
ending September 30, 1997, compared to 82% and 84% for the respective periods in
1996. Prior to 1997, materials processed for Rock Creek at the Company's
Uhrichsville, Ohio facility were classified as tolling business, but because the
Company acquired Rock Creek in January 1997, these pounds are now classified as
buy/sell business.
GROSS PROFIT: Gross profits were $35,120,000 for the nine months ended September
30, 1997, an increase of $16,798,000 or 92% over the same period of 1996. Gross
profits for the three month period ended September 30, 1997 were $12,843,000, an
increase of $10,218,000 or 389% over gross profits for the third quarter of
1996. The January 1997 acquisitions of IMSAMET and Rock Creek and operations at
the new Coldwater plant accounted for 31% and 52% of the increases in gross
profits for the three and nine month periods ended September 30, 1997 and 1996,
respectively. In addition, gross profits for the three and nine month periods
ended September 30, 1997 were higher due to (i) the elimination of the operating
loss from the Company's Corona, California plant, which was closed in the third
quarter of 1996, (ii) higher aluminum prices, which increased margins from the
Company's buy/sell business, and (iii) improved plant operating efficiencies.
SG&A EXPENSES: Selling, general and administrative expenses were $4,293,000 for
the three month period and $13,092,000 for the nine month period ended September
30, 1997 compared to $2,695,000 and $8,564,000, respectively, for the same
periods in 1996. The increases of $1,598,000 and $4,528,000, for the three and
nine month periods, respectively, were primarily due to higher employee,
professional, consulting and goodwill amortization expenses resulting from the
1997 acquisitions.
INTEREST: Interest expense was $5,596,000 for the first nine months of 1997, or
119% higher than $2,559,000 for the first nine months of 1996. Interest expense
for the three month periods ended September 30, 1997 and 1996 was $1,937,000 and
$969,000, respectively, an increase of 100%. The increases in interest expense
were primarily the result of additional debt outstanding
Page 12
<PAGE> 13
in the first nine months of 1997 (due to the borrowings in January 1997 to fund
the IMSAMET acquisition), compared to the same period of 1996. See "LIQUIDITY
AND CAPITAL RESOURCES" below and NOTE D of NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS in ITEM 1.
EXTRAORDINARY ITEM: In connection with the January 1997 acquisitions, the
Company borrowed funds under the Credit Agreement. See "LIQUIDITY AND CAPITAL
RESOURCES" below and NOTE D of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS in
ITEM 1. A portion of the sums borrowed under the Credit Agreement was used to
retire substantially all of the Company's then-outstanding indebtedness prior to
its stated maturity. The early debt retirement generated an extraordinary loss
of $1,318,000 (net of income taxes of $878,000) in the first quarter of 1997.
NET EARNINGS/(LOSS): Earnings before the provision for income taxes, minority
interests and extraordinary item increased to $6,998,000 for the three month
period ended September 30, 1997 compared to a loss of $1,005,000 for the same
period in 1996 and increased 113% to $17,086,000 for the first nine months of
1997 compared to $8,038,000 for the first nine months of 1996. The third quarter
1996 results reflected special charges of $4,177,000 in cost of sales, resulting
from the Company's decision to close its California facility and the closure of
the first cell of its solid waste landfill in Morgantown, Kentucky. Before these
charges, net earnings before the provision for income taxes, minority interests
and extraordinary item were $3,172,000 and $12,215,000, respectively, for the
three and nine months ended September 30, 1996.
These increases in earnings before the special charges were the result of higher
gross profits, which were partially offset by increases in selling, general and
administrative expenses and interest expense. The Company's effective income tax
rate was 40% for the nine months ended September 30, 1997 compared to 41% for
the same period in 1996. As a result, net earnings were $4,131,000 for the three
months ended September 30, 1997 compared to a net loss of $798,000 for the same
period in 1996. Net earnings were $8,660,000 for the first nine months of 1997
compared to $4,763,000 for the first nine months of 1996.
LIQUIDITY AND CAPITAL RESOURCES
Operations provided $28,148,000 of cash during the first nine months of 1997
compared to $2,261,000 of cash provided during the same period of 1996. Changes
in the components of operating assets and liabilities (excluding investing and
financing transactions) accounted for the majority of this difference. During
the nine months ended September 30, 1997, changes in operating assets and
liabilities generated $5,890,000 of cash, while in the first nine months of
1996, changes in operating assets and liabilities used $15,013,000 of cash. The
net change in operating assets and liabilities was primarily due to increased
buy/sell activities in 1996, which resulted in a significant use of cash during
the first nine months of 1996. Income before noncash charges increased
$5,215,000 during the first nine months of 1997 compared to the same period of
1996, which also had the effect of increasing net cash provided from operating
activities. In addition, the increase in depreciation and amortization charges
of $3,082,000 during the nine months ended September 30, 1997 compared to the
same period in 1996 contributed to the overall increase. At September 30, 1997,
the relationship of current assets to current liabilities, or current ratio, was
1.72 to 1, compared to 2.58 to 1 at December 31, 1996.
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<PAGE> 14
For the reasons discussed above, working capital fluctuates as the mix of
buy/sell business and tolling business changes. The Company's working capital
requirements are expected to increase for the remainder of 1997 and in 1998 due
to anticipated higher levels of buy/sell business and increased processing
volumes due to the acquisitions of IMSAMET and Rock Creek, the pending Alchem
Acquisition and the initial operation of the new plant in Swansea, Wales.
Nonetheless, the Company believes that its cash on hand, the availability of
funds under its amended and restated credit facilities and its anticipated
internally generated funds will be sufficient to fund its current needs and meet
its obligations for the foreseeable future.
During the nine months ended September 30, 1997, net cash used by investing
activities increased 290% to $85,800,000 compared to $21,987,000 for same period
in 1996. The increase was primarily a result of the first quarter 1997
acquisition of IMSAMET. In addition, the Company's total payments for property,
plant and equipment in the first nine months of 1997 increased 196% to
$26,919,000 compared to $9,105,000 spent in the same period of 1996. Capital
expenditures for property, plant and equipment in 1997 are expected to be
approximately $35,000,000. Major projects include the construction of new
aluminum recycling facilities in Coldwater, Michigan and Swansea, Wales, the
relocation of the Company's zinc recycling facility, the purchase of
environmental equipment and the expansion of an existing Company-owned landfill.
Net cash provided from financing activities increased 214% to $56,335,000 in the
first nine months of 1997 compared to $17,948,000 in the first nine months of
1996. In connection with its January 1997 acquisitions, the Company entered into
the Credit Agreement with certain lenders, borrowing $110,000,000 at the closing
and using approximately $61,000,000 for the IMSAMET acquisition and $49,000,000
to retire substantially all of the Company's outstanding debt as of December 31,
1996. Financing activities also included cash payments of $1,881,000 in
dividends during the first nine months of 1997.
On November 5, 1997, the Company renegotiated the terms of the Credit Agreement
with its lenders, entering into the Amended and Restated Credit Agreement. The
Amended and Restated Credit Agreement provides for a reducing revolving credit
facility of up to $200,000,000, which allows the Company to consolidate the
unpaid amount of the outstanding indebtedness of $96,755,000 and $15,100,000
under the original Credit Agreement's term loan and revolving credit facilities,
respectively, and will permit the company to acquire Alchem. The Company expects
to fund the cash portion of the consideration to acquire Alchem and repay a
portion of Alchem's outstanding indebtedness from borrowings under the Amended
and Restated Credit Agreement. Indebtedness under the Amended and Restated
Credit Agreement will mature in December 2003. The agreement provides that the
maximum amount of commitments under the facility will be reduced on an annual
basis beginning in December 1999, so that by December 31, 2002, the maximum
amount of aggregate commitments may not exceed $100,000,000. As of November 11,
1997, the Company had $73,325,000 in indebtedness outstanding under the Amended
and Restated Credit Agreement. The Amended and Restated Credit Agreement bears
interest, at the Company's option, at fluctuating interest rates based upon an
alternate base rate (which may be the prime rate), or a rate based upon the
applicable LIBOR rate plus a credit margin which is based upon the Company's
ratio of total debt to total capitalization. (In addition, the Company must pay
a commitment fee for unborrowed amounts available under the reducing revolving
facility, initially in the amount of 0.30% of the aggregate nonutilized
revolving credit commitments, and after March 31, 1998, an amount based upon the
Company's ratio of debt to total capitalization.)
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<PAGE> 15
At September 30, 1997, the Company had standby letters of credit outstanding
with TCB and American National Bank and Trust Company in the amounts of
$1,221,000 and $1,044,000, respectively.
In order to reduce the fluctuating interest rate exposure on the term loan, the
Company entered into an interest rate cap transaction ("Rate Cap Transaction")
agreement with TCB on April 7, 1997. Under the terms of the Rate Cap Transaction
agreement, the floating interest rate for 40% of the term loan borrowings under
the Credit Agreement was capped at 8% per annum. The costs associated with this
Rate Cap Transaction will be amortized as interest expense over the four year
term of the agreement. As of November 11, 1997, the floating interest rate was
capped at 8% per annum for 55% of the total borrowings under the new Amended and
Restated Credit Agreement.
The Amended and Restated Credit Agreement is secured by a first lien mortgage
and security interest on seven plant facilities owned by the Company, as well as
security interests in equipment, accounts receivable, inventories and certain
intellectual property and general intangibles. The facilities are additionally
secured by a pledge of the capital stock and equity interests of substantially
all of the Company's wholly-owned subsidiaries and certain joint ventures in
which the Company is directly or indirectly a joint venturer. Additionally,
substantially all of the Company's wholly-owned subsidiaries have guaranteed the
Company's obligations under the credit facilities. The Amended and Restated
Credit Agreement provides that if (i) the Company's senior unsecured long-term
indebtedness for borrowed money is rated at least BBB- or Baaa3 by Standard &
Poor's and Moody's, or (ii) during six consecutive fiscal quarters (or four
consecutive quarters if the total gross proceeds from the Offering are at least
$45,000,000) the Company's leverage ratio and debt to capitalization ratio meet
certain requirements, then the lenders' liens in the collateral may be released
upon the request and at the expense of the Company. See NOTE F of NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS in ITEM 1.
The Amended and Restated Credit Agreement contains certain covenants,
representations and warranties by the Company and its subsidiary guarantors,
including (i) limitations on the ability to dispose of assets of the Company and
its subsidiaries or equity interests of subsidiaries, (ii) limitations on
acquisitions of unaffiliated businesses other than certain scheduled specified
transactions, and additional unscheduled acquisitions and investments not to
exceed $75,000,000 in the aggregate (excluding the Alchem Acquisition), (iii)
restrictions on liens and indebtedness permitted to be incurred or assumed by
the Company and its subsidiaries, other than as otherwise scheduled or permitted
under the Amended and Restated Credit Agreement, and (iv) restrictions on
investments by the Company and its subsidiaries.
The Amended and Restated Credit Agreement also contains limitations on the
Company's ability to declare and pay dividends in cash or property; however, if
there is no default under the agreement, then the Company is permitted to make
cash dividend payments in an aggregate amount of up to $4,000,000 in 1997,
$5,000,000 in 1998, $6,000,000 in 1999 and in 2000, and $8,000,000 in any year
thereafter. No assurances can be given as to any future levels of dividends, if
any, which may be declared and paid; decisions concerning the declaration and
payment of dividends are made by the Company's Board of Directors and will be
based upon the Company's level of earnings, cash flow, financial requirements,
and economic and business conditions then prevailing, as well as other relevant
factors. The Amended and Restated Credit Agreement further contains provisions
restricting the amount of capital expenditures that the
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<PAGE> 16
Company and its subsidiaries may make in any fiscal year ($38,000,000 in fiscal
1997 and $35,000,000 for each fiscal year thereafter, not including capital
expenditures for the Alchem Acquisition and certain other permitted
acquisitions). Finally, the agreement requires the Company to maintain and
comply with certain financial covenants and ratios, including a maximum debt to
capitalization ratio, a minimum interest coverage ratio and a covenant requiring
that certain minimum net worth amounts be maintained.
On May 8, 1996, the Company borrowed $5,740,000 from the issuance of Solid Waste
Disposal Facilities Revenue Bonds (Series 1996) by the City of Morgantown,
Kentucky. These bonds were issued in connection with the Company's construction
of its salt cake processing plant in Morgantown, which was completed in January
1996. The indebtedness under the 1996 bonds bears interest at the rate of 7.65%
per annum and matures on May 1, 2016. On April 15, 1997, the Company borrowed an
additional $4,600,000 from the issuance of Solid Waste Disposal Facilities
Revenue Bonds (Series 1997) by the City of Morgantown, Kentucky. These bonds
were issued in connection with the Company's expansion of its second landfill
cell in Morgantown and additional construction costs of its salt cake processing
facility in Morgantown. The indebtedness under the 1997 bonds bears interest at
the rate of 7.45% per annum and matures on May 1, 2022.
From time to time, the Company has entered into forward sale contracts and a
series of put and call option contracts with metal brokers to cover the future
selling prices on a portion of the aluminum generated by the Company's salt cake
processing facility in Morgantown. These contracts are settled in the month of
the corresponding production. The contracts did not have a significant effect on
the Company's results of operations for the three and nine month periods ended
September 30, 1997.
On May 8, 1997, Harvard Industries, Inc. ("Harvard") announced that it and its
wholly-owned subsidiary, Doehler-Jarvis, Inc. ("Doehler-Jarvis"), had filed for
protection under Chapter 11 of the U.S. Bankruptcy Code. The Company sells
aluminum to Doehler-Jarvis. At September 30, 1997, the Company had $3,530,000 of
outstanding unsecured receivables from Doehler-Jarvis, net of related reserves.
While the Company currently believes that Harvard's bankruptcy will not have a
material adverse effect on the Company's financial position or results of
operations, no assurance can be given as to the amount and timing of the
Company's ultimate recovery, if any, of its claims. The Company's revenues from
Doehler-Jarvis totaled $17,490,000 and $12,350,000 for the year ended December
31, 1996 and the nine months ended September 30, 1997, respectively. The Company
believes that the loss of this customer will not have a material adverse effect
on the Company's financial position or results of operations.
On November 4, 1997, the Company issued and sold 2,300,000 shares of its Common
Stock through an underwritten public offering (the "Offering") at a price to
public of $18.00 per share. The Company received net proceeds of approximately
$38,830,000, after deducting underwriting discounts and commissions and Offering
expenses. The Company used the net proceeds to reduce outstanding indebtedness
originally incurred under the Credit Agreement in January 1997 to finance the
IMSAMET acquisition and to refinance outstanding indebtedness (see NOTES C and D
of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS in ITEM 1). On November 10, 1997,
the underwriters exercised an option to purchase up to 345,000 additional shares
of Common Stock solely to cover over-allotments in connection with the
Offering.
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NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share," which is
required to be adopted on December 31, 1997. At that time, the Company will be
required to change the method currently used to compute earnings per share and
to restate all prior periods. Under the new requirements for calculating primary
earnings per share, the dilutive effect of stock options will be excluded. The
impact of SFAS No. 128 on the calculation of earnings per share for the quarter
and nine month periods ended September 30, 1997 and 1996 is not expected to be
material.
CAUTIONARY STATEMENT FOR PURPOSES OF FORWARD-LOOKING STATEMENTS
Certain information contained in this ITEM 2--"MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" of this Quarterly
Report on Form 10-Q may be deemed to be forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 and is subject to
the "Safe Harbor" provisions of that section. This information includes, without
limitation, statements concerning future revenues, future earnings, future
costs, future margins and future expenses; pending or future acquisitions or
corporate combinations (including the Alchem Acquisition); expected effects
of the Alchem Acquisition, including percentages of total Company business
dedicated to the transportation sector and total processing capacities of the
Company; facility construction schedules and projected completion dates;
future levels of dividends (if any), the future mix of business, future asset
recoveries, and future demand, future industry conditions, future capital
expenditures, and future financial condition. These statements are based on
current expectations and involve a number of risks and uncertainties. Although
the Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations
will prove to be correct.
When used in or incorporated by reference into this Prospectus, the words
"anticipate," "estimate," "expect," "may," "project" and similar expressions are
intended to be among the statements that identify forward-looking statements.
Important factors that could affect the Company's actual results and cause
actual results to differ materially from those results that might be projected,
forecast, estimated or budgeted by the Company in such forward-looking
statements include, but are not limited to, the following: fluctuations in
operating levels at the Company's facilities, the mix of buy/sell business as
opposed to tolling business, retention and financial condition of major
customers, effects of future costs, collectibility of receivables, effects of
environmental and other governmental regulations, currency exchange
fluctuations, the price of and demand for aluminum on world markets and future
levels and timing of capital expenditures.
These statements are further qualified by the following: estimates of future
operating rates at the Company's plants are based on current expectations by
management of the Company of future levels of volumes and prices for the
Company's services or metal, and are subject to fluctuations in customer demand
for the Company's services and prevailing conditions in the metal markets, as
well as certain components of the Company's cost of operations, including energy
and labor costs. Many of the factors affecting revenues and costs are outside of
the control of the Company, including general economic and financial market
conditions, weather conditions and governmental regulation. The future mix of
buy/sell vs. tolling business is also dependent on
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<PAGE> 18
customers' needs and overall demand, world and U.S. market conditions then
prevailing in the respective metal markets, and the operating levels at the
Company's various facilities at the relevant time.
REVIEW BY INDEPENDENT ACCOUNTANTS
The Company's independent accountants, Ernst & Young LLP, have reviewed the
Company's consolidated financial statements at September 30, 1997, and for the
three and nine month periods then ended prior to filing, and their report is
included herein.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Company paid $627,167 in dividends during the third quarter of 1997.
During the three months ended September 30, 1997, the Company made no
unregistered sales of its equity securities.
On November 5, 1997, the Company amended and restated its senior credit
facilities with its lenders, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated as arranger and syndication agent, and TCB as
administrative agent for the lenders, pursuant to the terms of an Amended and
Restated Credit Agreement dated as of November 5, 1997. See NOTE D of NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS in ITEM 1 and ITEM 2--"MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--LIQUIDITY AND CAPITAL RESOURCES."
The Amended and Restated Credit Agreement contains certain covenants,
representations and warranties by the Company and its subsidiary guarantors,
including (i) limitations on the ability to dispose of assets of the Company
and its subsidiaries or equity interests of subsidiaries, (ii) limitations on
acquisitions of unaffiliated businesses other than certain scheduled specified
transactions, and additional unscheduled acquisitions not to exceed $75,000,000
in the aggregate (excluding the Alchem Acquisition), (iii) restrictions on
liens and indebtedness permitted to be incurred or assumed by the Company and
its subsidiaries, other than as otherwise
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scheduled or permitted under the Amended and Restated Credit Agreement, and (iv)
restrictions on investments by the Company and its subsidiaries.
The Amended and Restated Credit Agreement also contains limitations on the
Company's ability to declare and pay dividends in cash or property; however, if
there is no default under the agreement, then the Company is permitted to make
cash dividend payments in an aggregate amount of up to $4,000,000 in 1997,
$5,000,000 in 1998, $6,000,000 in 1999 and in 2000, and $8,000,000 in any year
thereafter. No assurances can be given as to future levels of dividends, if
any, which may be declared and paid; decisions concerning the declaration and
payment of dividends are made by the Company's Board of Directors and will be
based upon the Company's level of earnings, cash flow, financial requirements,
and economic and business conditions then prevailing, as well as other relevant
factors. The Amended and Restated Credit Agreement further contains provisions
restricting the amount of capital expenditures that the Company and its
subsidiaries may make in any fiscal year ($38,000,000 in fiscal 1997 and
$35,000,000 for each fiscal year thereafter, not including the Alchem
Acquisition and certain other permitted acquisitions). Finally, the agreement
requires the Company to maintain and comply with certain financial covenants and
ratios, including a maximum debt to capitalization ratio, a minimum interest
coverage ratio and a covenant requiring that certain minimum net worth amounts
be maintained.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
10.1 Amended and Restated Credit Agreement dated November 5, 1997 by and
among the Company, the Subsidiary Guarantors named therein, the
Lenders thereunder, Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Texas Commerce Bank National
Association
15.1 Acknowledgment letter regarding unaudited financial information from
Ernst & Young LLP
27 Financial Data Schedule
(b) Reports on Form 8-K:
(1) The Company filed a Current Report on Form 8-K dated October 1, 1997
under "Item 5--Other Events" reporting the Company's pending
acquisition of Alchem Aluminum, Inc. Such Current Report on Form 8-K
was amended by Form 8-K/A-1 dated October 9, 1997.
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<PAGE> 20
(2) The Company filed a Current Report on Form 8-K dated October 20, 1997
under "Item 5--Other Events" reporting the Company's press release
containing its earnings report for its fiscal quarter ended September
30, 1997.
(3) The Company filed a Current Report on Form 8-K dated November 6, 1997
under "Item 5--Other Events" reporting the Company's press release
concerning the amendment and restatement of the Credit Agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IMCO Recycling Inc.
(Registrant)
Date: November 12, 1997 By: /s/ Robert R. Holian
------------------------------------
Robert R. Holian
Vice President and Controller
(Principal Accounting Officer)
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<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.1 Amended and Restated Credit Agreement dated November 5, 1997 by and
among the Company, the Subsidiary Guarantors named therein, the
Lenders thereunder, Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Texas Commerce Bank National
Association
15.1 Acknowledgment letter regarding unaudited financial information from
Ernst & Young LLP
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.1
IMCO RECYCLING INC.,
as Borrower
and
SUBSIDIARY GUARANTORS
_____________________________
$200,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of January 21, 1997
______________________________
MERRILL LYNCH & CO.,
as Arranger and Syndication Agent
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent
AMENDED AND RESTATED AS OF NOVEMBER 5, 1997
<PAGE> 2
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience of reference only.
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Definitions and Accounting Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02. Accounting Terms and Determinations; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
1.03. Types of Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
1.04. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
1.05. Repayment of Outstanding Term Loans and Revolving Credit Loans; Payment of Administrative
Agent Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.06. Effect on Original Credit Agreement and Other Basic Documents . . . . . . . . . . . . . . . . . . . . 32
Section 2. Revolving Credit Commitments, Revolving Credit Loans, Notes, Revolving Credit Commitment
Reductions and Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.01. Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.02. Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.03. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.04. Scheduled Termination and Reductions of Revolving Credit Commitments . . . . . . . . . . . . . . . . 38
2.05. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.06. Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.07. Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.08. Notes; Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.09. Optional Prepayments and Conversions or Continuations of Revolving Credit Loans . . . . . . . . . . . 41
2.10. Mandatory Reductions of Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . . . . . 41
2.11. Replacement of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3. Payments of Principal and Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.01. Repayment of Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.02. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 4. Payments; Pro Rata Treatment; Computations; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.01. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.02. Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.03. Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.04. Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.05. Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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4.06. Non-Receipt of Funds by the Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.07. Right of Setoff; Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 5. Yield Protection, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.01. Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.02. Limitation on Types of Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.03. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.04. Treatment of Affected Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.05. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.06. Net Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6. Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.01. The Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.02. Obligations Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.03. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.04. Subrogation; Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.05. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
6.06. Instrument for the Payment of Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.07. Continuing Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
6.08. General Limitation on Guarantee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7. Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.01. Initial Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.02. Initial and Subsequent Extensions of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.03. Conditions to Effectiveness of Amended and Restated Credit Agreement. . . . . . . . . . . . . . . . . 62
7.04. Conditions to Consummation of the Alchem Acquisition. . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 8. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.01. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.02. Financial Condition; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.03. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.04. No Breach; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.05. Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.06. Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.07. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.08. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.09. Investment Company Act; Public Utility Holding Company Act; Other Restrictions . . . . . . . . . . . 70
8.10. No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.11. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.12. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.13. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.14. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.15. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
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8.16. Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.17. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.18. True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.19. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.20. Employee and Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.21. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.22. Representations and Warranties in Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9. Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.01. Financial Statements, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.02. Litigation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.03. Existence; Compliance with Law; Payment of Taxes; Inspection Rights; Performance of
Obligations; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.04. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
9.05. Issuance or Disposals of Capital Stock of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 79
9.06. Fundamental Changes; Acquisitions; Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
9.07. Liens and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
9.08. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
9.09. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.10. Dividend Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
9.11. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
9.12. Pledge of Additional Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
9.13. Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
9.14. Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
9.15. Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
9.16. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
9.17. Limitation on Accounting Changes; Limitation on Investment Company Status . . . . . . . . . . . . . . 93
9.18. Modifications of Certain Documents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.19. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.20. Limitation on Certain Restrictions Affecting Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 93
9.21. Additional Obligors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
9.22. Restriction on Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.23. Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.24. Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.25. [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
9.26. Post Amendment and Restatement Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 10. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 11. The Administrative Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
11.01. Appointment, Powers and Immunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99
11.02. Reliance by Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
11.03. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
11.04. Rights as a Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
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11.05. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
11.06. Non-Reliance on Administrative Agent, Arranger and Other Lenders . . . . . . . . . . . . . . . . . . 103
11.07. Failure to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
11.08. Resignation or Removal of Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
11.09. Consents Under Other Basic Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
11.10. Collateral Sub-Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
11.11. Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 12. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
12.01. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
12.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
12.03. Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
12.04. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
12.05. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
12.06. Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
12.07. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
12.08. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
12.09. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
12.10. Governing Law; Submission to Jurisdiction; Waivers; Etc. . . . . . . . . . . . . . . . . . . . . . . 112
12.11. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
12.12. Independence of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . 113
12.13. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
12.14. Prior Understandings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
12.15. Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
12.16. Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
12.17. Amendment to Security Documents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
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<PAGE> 6
ANNEX A - Revolving Credit Commitments
ANNEX B - Existing Letters of Credit
SCHEDULE 1.01(a) - Subsidiary Guarantors
SCHEDULE 1.01(b) - Mortgaged Real Property*
SCHEDULE 1.01(c) - Alchem Existing Letters of Credit
SCHEDULE 1.05(a) - Term Loans To Be Repaid on the Amendment and
Restatement Date
SCHEDULE 1.05(b) - Revolving Credit Loans To Be Repaid on the Amendment
and Restatement Date
SCHEDULE 7.01(i) - [Reserved]
SCHEDULE 8.02 - Certain Contingent Obligations
SCHEDULE 8.03 - Litigation*
SCHEDULE 8.06 - Certain Approvals*
SCHEDULE 8.12 - Environmental Matters*
SCHEDULE 8.14 - Subsidiaries of Borrower
SCHEDULE 8.20 - Labor Matters*
SCHEDULE 9.07 - Certain Existing Liens*
SCHEDULE 9.08 - Certain Indebtedness to Remain Outstanding*
SCHEDULE 9.08(m) - Indebtedness Incurred in Connection with the Alchem
Acquisition
SCHEDULE 9.09 - Investments*
SCHEDULE 9.24(i) - Contingent Obligations Incurred in Connection with
the Alchem Acquisition
EXHIBIT A-1 - Form of Note****
EXHIBIT A-2 - [Reserved]
EXHIBIT B - [Reserved]
EXHIBIT C - Form of Interest Rate Certificate****
EXHIBIT D - Form of Security Agreement**
EXHIBIT E-1 - Form of Opinion of Counsel to the Obligors**
EXHIBIT E-2 - Form of Local Counsel Opinion**
EXHIBIT E-3 - Form of Opinion of Counsel to the Obligors To Be
Delivered on the Amendment and Restatement Date
EXHIBIT F - Form of Notice of Assignment***
EXHIBIT G - Form of Mortgage***
EXHIBIT H - Form of Section 5.06 Certificate***
EXHIBIT I - Form of Notice of Borrowing***
EXHIBIT J - Form of Notice of Conversion/Continuation***
EXHIBIT K - Form of Joinder Agreement***
- --------------------
* See the Schedules to the Original Credit Agreement for the contents of
such schedule marked herein with the symbol "*".
** These documents were executed and delivered in connection with the
Original Credit Agreement.
*** The forms of these documents are the forms attached to the Original
Credit Agreement.
**** Amended and Restated in connection with the Amended and Restated
Credit Agreement.
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<PAGE> 7
AMENDED AND RESTATED CREDIT AGREEMENT dated as of January 21,
1997, amended and restated as of November 5, 1997, among: IMCO RECYCLING INC.,
a Delaware corporation ("Borrower," which term shall include its successors and
assigns); the Subsidiary Guarantors party hereto; each of the lenders that is a
signatory hereto identified under the caption "LENDERS" on the signature pages
hereto or that, pursuant to Section 12.06(b), shall become a "Lender" hereunder
(individually, a "Lender" and, collectively, the "Lenders"); MERRILL LYNCH &
CO., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as arranger and
syndication agent (in such capacities, together with its successors in such
capacities, the "Arranger"); and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as
administrative agent for the Lenders (in such capacity, together with its
successors in such capacity, the "Administrative Agent").
WHEREAS, Borrower has informed the Lenders that it has
effected a public offering of shares of its common stock pursuant to a
registration statement on Form S-3 filed under the Securities Act of 1933, as
amended, registration number 333-36833, for gross proceeds of at least $41.4
million (the "Public Offering");
WHEREAS, IMCO Recycling of Coldwater Inc., a wholly owned
subsidiary of Borrower, desires to acquire 100% of the capital stock of Alchem
Aluminum, Inc. ("Alchem") pursuant to the Alchem Acquisition Documents for
consideration totalling approximately $49.250 million (excluding fees and
expenses) which consideration shall include the issuance of 1,208,339 shares of
common stock of Borrower (in addition to the Public Offering), the assumption
of debt of Alchem not to exceed $2.0 million, the repayment of debt of Alchem
in an amount not to exceed $21.0 million and cash in an amount not to exceed
$9.0 million (which amount shall be calculated in accordance with Section 2.2
of the Alchem Acquisition Agreement) (the "Alchem Acquisition");
WHEREAS, Borrower, the Lenders, the Subsidiary Guarantors, the
Arranger and the Administrative Agent originally entered into that certain
Credit Agreement dated as of January 21, 1997 (the "Original Credit
Agreement"), and are entering into this Amended and Restated Credit Agreement
in order to amend and restate the Original Credit Agreement to provide for (a)
the consummation by Borrower of the Alchem Acquisition on the terms described
in the Alchem Acquisition Documents and the performance of any and all acts
incidental thereto or in connection therewith, (b) an increase in the Revolving
Credit Commitments to $200 million and such Revolving Credit Commitments being
subject to the scheduled reductions as herein set forth and cancellation of the
Term Loans, and (c) other changes to the Original Credit Agreement, as
evidenced hereby;
WHEREAS, Borrower, the Lenders, the Subsidiary Guarantors, the
Arranger and the Administrative Agent intend that (a) all obligations under the
Original Credit Agreement of the parties shall continue to exist under and be
evidenced by this Agreement and the other Basic Documents, and (b) except as
expressly stated herein or amended hereby, the Original Credit Agreement and
the other Basic Documents are ratified and confirmed
<PAGE> 8
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as remaining unmodified and in full force and effect with respect to all
Obligations.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree that the Original
Credit Agreement is hereby amended and restated in its entirety as follows:
Section 1. Definitions and Accounting Matters.
1.01. Certain Defined Terms. As used herein, the following
terms shall have the following meanings:
"Acquisition" means any transaction or series of related
transactions for the direct or indirect (a) acquisition of all or substantially
all of the Property of a Person, or of any business or division of a Person,
(b) acquisition of in excess of 50% of the capital stock, partnership
interests, membership interests or equity of any Person, or otherwise causing
any Person to become a Subsidiary, or (c) a merger or consolidation or any
other combination with another Person.
"Additional Collateral" see Section 9.12.
"Adjusted Net Income" shall mean, for any Measurement Period,
the consolidated net income (loss) of Borrower and its Consolidated
Subsidiaries calculated on a consolidated basis in accordance with GAAP,
adjusted by excluding (to the extent taken into account in the calculation of
such consolidated net income (loss)) the effect of (a) gains for such period
from Dispositions (including Excluded Dispositions), other than the Disposition
of inventory and equipment in the ordinary course of business, and the tax
consequences thereof, (b) any non-recurring or extraordinary items of income
and the non-cash portion of any extraordinary item of expense for such period,
(c) the portion of net income (loss) of any Person (other than a Subsidiary) in
which Borrower or any Subsidiary has an ownership interest, except to the
extent of the amount of cash dividends or other cash distributions actually
paid to Borrower or (subject to clause (e) below) any Subsidiary during such
period, (d) the net income (loss) of any Person combined with Borrower or any
Subsidiary on a "pooling of interests" basis attributable to any period prior
to the date of combination and (e) the net income of any Subsidiary to the
extent that the declaration or payment of dividends or similar distribution by
such Subsidiary was not for the relevant period permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Subsidiary or its stockholders.
"Administrative Agent" see the introduction to this Agreement.
"Administrative Agent's Fee Letter" shall mean the Fee Letter
dated January 1997, by and between Texas Commerce Bank National Association
<PAGE> 9
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and Borrower and any additional fee letter entered into by such parties in
connection with this Amended and Restated Credit Agreement.
"Advance Date" see Section 4.06.
"Affiliate" shall mean, with respect to any Person, any other
Person which directly or indirectly controls, or is under common control with,
or is controlled by, such Person and, if such Person is an individual, any
member of the immediate family (including parents, spouse and children) of such
individual and any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is controlled by
any such member or trust. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise); provided,
however, that, in any event, any Person which owns directly or indirectly 10%
or more of the securities having ordinary voting power for the election of
directors or other governing body of a corporation or 10% or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner or non-managing member of such other Person) will be deemed to
control such corporation or other Person. Notwithstanding the foregoing,
solely for purposes of Section 9.16, Borrower shall not be deemed an Affiliate
of any Subsidiary and no Wholly Owned Subsidiary shall be deemed an Affiliate
of any other Wholly Owned Subsidiary or Borrower.
"Affiliate Transaction" see Section 9.16.
"Agent" means any of the Arranger and the Administrative
Agent.
"Agreement" shall mean this Credit Agreement, as amended from
time to time.
"Alchem" see the introduction to this Agreement.
"Alchem Acquisition" see the introduction to this Agreement.
"Alchem Acquisition Agreement" shall mean the Agreement and
Plan of Merger dated or to be dated on or about November 15, 1997 to be
executed among Borrower, IMCO Recycling of Coldwater Inc., Alchem, William and
Louise Warshauer and Lawrence E. Donay, natural persons, substantially on the
terms set forth in the letter agreement dated as of September 15, 1997 between
Borrower and Bill and Louise Warshauer, as amended by the letter agreement
dated as of September 24, 1997 between the same parties and as amended and in
effect from time to time in accordance with its terms and this Agreement.
<PAGE> 10
-4-
"Alchem Acquisition Documents" shall mean the Alchem
Acquisition Agreement, and each of the Related Documents with respect thereto,
in each case, including all exhibits, appendices, annexes and attachments
thereto, in each case as amended and in effect from time to time in accordance
with its terms and this Agreement.
"Alchem Option" shall mean Sections 2.3, 2.4 and 2.5 of that
certain Operating Agreement among IMCO Recycling of Michigan L.L.C. and Alchem
dated as of October 26, 1995, as such agreement may be amended and in effect
from time to time in accordance with its terms and this Agreement.
"Alchem Closing Date" shall mean the date of the closing of
the Alchem Acquisition.
"Alchem Existing Letters of Credit" shall mean the letters of
credit of Alchem described in Schedule 1.01(c).
"Alternate Base Rate" shall mean for any day, a rate per annum
that is the higher of (i) the Federal Funds Rate, plus 0.50%, and (ii) the
Prime Rate.
"Alternate Base Rate Loans" shall mean Revolving Credit Loans
that bear interest at rates based upon the Alternate Base Rate.
"Amendment and Restatement Date" shall mean the date on which,
pursuant to the terms of this Agreement (including Sections 1.06 and 7.03), the
Original Credit Agreement shall have been amended and restated by this
Agreement.
"Applicable Revolving Credit Commitment Fee Percentage" shall
mean (i) upon the Amendment and Restatement Date and until the date (the
"Delivery Date") Interest Rate Certificates required by Section 9.01(e) are
delivered to the Lenders in respect of the fiscal quarter ended immediately
after the Amendment and Restatement Date, 0.300% per annum and (ii) thereafter
when the Debt to Capitalization Ratio at the later of the end of such fiscal
quarter or the end of the most recent fiscal quarter ending after the Delivery
Date is as set forth below, the percentage per annum set forth opposite such
Debt to Capitalization Ratio below (which Debt to Capitalization Ratio shall be
calculated pro forma for the Alchem Acquisition if it occurs after the end of
such fiscal quarter):
<PAGE> 11
-5-
<TABLE>
<CAPTION>
APPLICABLE
DEBT TO REVOLVING CREDIT
CAPITALIZATION RATIO COMMITMENT FEE PERCENTAGE
--------------------------- -------------------------
<S> <C>
> or equal to 0.45:1.0 0.300%
> or equal to 0.40:1.0 and
< 0.45:1.0 0.250%
> or equal to 0.35:1.0 and
< 0.40:1.0 0.250%
> or equal to 0.30:1.0 and 0.225%
< 0.35:1.0
< 0.30:1.0 0.1875%
</TABLE>
Any change in the Debt to Capitalization Ratio shall be effective to adjust the
Applicable Revolving Credit Commitment Fee Percentage as of the date of receipt
by the Administrative Agent of the Interest Rate Certificate delivered for any
period ending on or after December 31, 1997 and most recently delivered
pursuant to Section 9.01(e). If Borrower fails to deliver the Interest Rate
Certificates and financial statements after December 31, 1997 within the times
specified in Sections 9.01(a), (b) and (e), such ratio shall be deemed to be #
0.45 to 1.0 until Borrower delivers such Interest Rate Certificates and
financial statements.
"Applicable Lending Office" shall mean, for each Lender and
for each Type of Revolving Credit Loan, the "Lending Office" of such Lender (or
of an Affiliate of such Lender) designated for such Type of Revolving Credit
Loan on the signature pages hereof or such other office of such Lender (or of
an Affiliate of such Lender) as such Lender may from time to time specify to
the Administrative Agent and Borrower as the office by which its Revolving
Credit Loans of such Type are to be made and maintained.
"Applicable Margin" shall mean (i) upon the Amendment and
Restatement Date and until the Delivery Date, 1.000% per annum, and (ii)
thereafter when the Debt to Capitalization Ratio at the later of the end of
such fiscal quarter or the end of the most recent fiscal quarter ending after
the Delivery Date is as set forth below, the percentage per annum set forth
opposite such Debt to Capitalization Ratio below (which Debt to Capitalization
Ratio shall be calculated pro forma for the Alchem Acquisition if it occurs
after the end of such fiscal quarter):
<PAGE> 12
-6-
<TABLE>
<CAPTION>
DEBT TO ALTERNATE
CAPITALIZATION RATIO BASE RATE LOANS LIBOR LOANS
---------------------------- --------------- -----------
<S> <C> <C>
> or equal to 0.45:1.0 0.00% 1.00%
> or equal to 0.40:1.0 and 0.875%
< 0.45:1.0 0.00%
> or equal to 0.35:1.0 and 0.750%
< 0.40:1.0 0.00%
> or equal to 0.30:1.0 and 0.00% 0.625%
< 0.35:1.0
< 0.30:1.0 0.00% 0.500%
</TABLE>
Any change in the Debt to Capitalization Ratio shall be effective to adjust the
Applicable Margin as of the date of receipt by the Administrative Agent of the
Interest Rate Certificate delivered for any period ending on or after December
31, 1997 and most recently delivered pursuant to Section 9.01(e). If Borrower
fails to deliver the Interest Rate Certificates and financial statements after
December 31, 1997 within the times specified in Sections 9.01(a), (b) and (e),
such ratio shall be deemed to be # 0.45 to 1.0 until Borrower delivers such
Interest Rate Certificates and financial statements.
"Arranger" see the introduction to this Agreement.
"Bankruptcy Code" shall mean the Federal Bankruptcy Code of
1978.
"Barmet" see the definition of Barmet Option.
"Barmet Option" shall mean that certain right of Barmet
Aluminum Corporation, an Ohio Corporation (together with its successors and
assigns, "Barmet") to purchase up to a 49% interest in the aluminum recycling
facility (the "Facility") currently operated by IMCO Recycling of Ohio Inc., a
Subsidiary, pursuant to the terms and conditions of that certain Supply
Agreement dated March 2, 1992, by and between Borrower and Barmet (the "Barmet
Supply Agreement"), as such agreement may be amended and in effect from time to
time in accordance with its terms and this Agreement.
"Barmet Option Entity" means IMCO Recycling of Ohio Inc., a
Subsidiary, or, if pursuant to the exercise of the Barmet Option a new entity
is required to be formed, the legal entity formed pursuant to the terms of the
Barmet Option upon exercise by Barmet of its right to acquire up to a 49%
interest in the Facility.
"Barmet Right of First Refusal" shall mean the Right of First
Refusal dated as of March 2, 1992 by and between Borrower and Barmet, as
<PAGE> 13
-7-
such agreement may be amended and in effect from time to time in accordance
with its terms and this Agreement.
"Barmet Supply Agreement" see the definition of Barmet Option.
"Basic Documents" shall mean this Agreement, each Joinder
Agreement, the Notes, the Letter of Credit Documents, the Security Documents
and any Swap Contract with any Lender or any Affiliate of any Lender.
"Benefit Arrangement" shall mean at any time an employee
benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or
a Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" see the introduction to this Agreement.
"Business Day" shall mean any day (a) on which commercial
banks are not authorized or required to close in New York City or Houston,
Texas and (b) if such day relates to a borrowing of, a payment or prepayment of
principal of or interest on, a Continuation or Conversion of or into, or an
Interest Period for, a LIBOR Loan or a notice by Borrower with respect to any
such borrowing, payment, prepayment, Continuation, Conversion or Interest
Period, that is also a day on which dealings in Dollar deposits are carried out
in the London interbank market.
"Capital Expenditures" shall mean, for any period, any direct
or indirect (by way of acquisition of securities of a Person or the expenditure
of cash or the incurrences of Indebtedness) expenditures in respect of the
purchase or other acquisition of fixed or capital assets, excluding (i) normal
replacement and maintenance programs properly charged to current operations,
(ii) Acquisitions permitted pursuant to Section 9.09(k), (u) or (ee), and (iii)
expenditures in an amount not to exceed the Net Available Proceeds of any
Casualty Event or any Taking, Destruction or loss of title with respect to Real
Property in each case to the extent such Net Available Proceeds are not
required to be applied to the prepayment of the Revolving Credit Loans in
accordance with Section 2.10(a)(i) or Section 2.10(a)(v), as applicable.
"Capital Lease," as applied to any Person, shall mean any
lease of any Property by that Person as lessee which, in conformity with GAAP,
is required to be classified and accounted for as a capital lease on the
balance sheet of that Person.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a Capital Lease,
and, for purposes of this Agreement, the amount of such obligations shall be
the capitalized amount thereof, determined in accordance with GAAP.
<PAGE> 14
-8-
"Casualty Event" shall mean, with respect to any Property of
any Person, any loss of or damage to, or any condemnation or other taking of,
such Property for which such Person or any of its Subsidiaries receives
insurance proceeds or proceeds of a condemnation award or other compensation.
Casualty Event shall not include any Taking or Destruction or loss of title to
Real Property.
"CERCLA" see Section 8.12(a)(ii).
"Change in Law" shall mean the introduction of any law or
regulation, or any change in law or regulation, or the interpretation or
administration of any law.
"Change of Control" shall mean any transaction or event
(including, without limitation, an issuance, sale or exchange of capital stock,
a merger or consolidation, or a dissolution or liquidation) as a direct or
indirect result of which (i) any Person or any group shall (directly or
indirectly) beneficially own in the aggregate shares of capital stock of
Borrower having 33-1/3% or more of the aggregate voting power of all shares of
capital stock of Borrower at the time outstanding, or (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constituted the board of directors of Borrower (together with any new directors
whose election by such board of directors or whose nomination for election by
the shareholders of Borrower was approved by a vote of at least a majority of
the directors of Borrower then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
board of directors of Borrower then in office. For purposes of this
definition, the terms "beneficially own" and "group" shall have the respective
meanings ascribed to them pursuant to Section 13(d) of the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral" shall mean all of the Pledged Collateral and
Mortgaged Real Property.
"Collateral Account" see Section 4.01 of the Security
Agreement. After the Collateral Release Date, "Collateral Account" shall mean
an account established for purposes of utilizing the option available to
Borrower under the second paragraph of each of Sections 2.10(c) and (d)
according to documentation satisfactory to the Administrative Agent.
"Collateral Release Date" see Section 12.16.
<PAGE> 15
-9-
"Commitment Letter" shall mean that certain commitment letter
between Merrill Lynch Capital Corporation and Borrower dated December 5, 1996
together with Exhibit A thereto and incorporated therein.
"Consolidated EBITDA" shall mean, for any Measurement Period,
the remainder of (a) the sum (without duplication) of the amounts for such
period of (i) Adjusted Net Income, (ii) income tax expense (including reserves
for deferred taxes not payable currently) to the extent deducted in determining
Adjusted Net Income for such period, (iii) interest expense to the extent
deducted in determining Adjusted Net Income for such period, (iv) depreciation
expense and amortization expense (including, but not limited to, amortization
of intangibles and goodwill) to the extent deducted in determining Adjusted Net
Income for such period and (v) the non-cash component of any item of expense to
the extent deducted in determining Adjusted Net Income for such period, other
than to the extent requiring an accrual or reserve for future cash expenses,
minus (b) the amount for such period of interest income to the extent included
in determining Adjusted Net Income for such period, all as determined on a
consolidated basis for Borrower and its Consolidated Subsidiaries. Prior to
the first such time as there shall have been delivered pursuant to Section 9.01
financial statements of Borrower for (i) four full fiscal quarters of Borrower
after the date of consummation of any Acquisition, Consolidated EBITDA for any
Measurement Period shall be adjusted on a pro forma basis consistent with GAAP
to give effect to such Acquisition as if it had occurred on the first day of
such Measurement Period.
"Consolidated Interest Expense" shall mean, for any period,
for Borrower and its Consolidated Subsidiaries (determined on a consolidated
basis without duplication in accordance with GAAP) all cash interest expense in
respect of Indebtedness during such period (whether or not actually paid during
such period).
"Consolidated Net Worth" shall mean at a particular date, all
amounts which would be included under shareholders' equity on a consolidated
balance sheet of Borrower and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with GAAP as at such date.
"Consolidated Rental Payments" shall mean, for any period, the
aggregate amount of all rents paid or incurred under all operating leases of
Borrower and its Consolidated Subsidiaries as lessees (net of sublease income).
"Consolidated Subsidiary" shall mean, for any Person, each
Subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which shall be (or should have been)
consolidated with the financial statements of such Person in accordance with
GAAP.
<PAGE> 16
-10-
"Contingent Obligations" shall mean, as to any Person, without
duplication, (a) any obligation of such Person guaranteeing or expressly
intended to guarantee by its terms any Indebtedness, leases, dividends or other
obligations ("primary obligations") of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including any "keep-well" or
"make-well" agreement, guarantee of return on equity or other obligation of
such Person and including any obligation of such Person, whether or not
contingent, to (I) purchase any such primary obligation or any property
constituting direct or indirect security therefor, (II) advance or supply funds
(i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (III) purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation or (IV) otherwise assure or hold
harmless the owner of such primary obligation against loss in respect thereof;
or (b) any direct or indirect liability of such Person, whether or not
contingent, with or without recourse, (I) with respect to any Surety Instrument
(other than any Letter of Credit) issued for the account of such Person or as
to which such Person is otherwise liable for reimbursement of drawings or
payments, (II) to purchase any materials, supplies or other property from, or
to obtain the services of, another Person if the relevant contract or other
related document or obligation requires that payment for such materials,
supplies or other property, or for such services, shall be made regardless of
whether delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered, or (III) in respect
of any Swap Contract; provided, however, that the term Contingent Obligation
shall not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person reasonably and in good faith.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.09 of a LIBOR Loan from one Interest Period
to the next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a
conversion pursuant to Section 2.09 of one Type of Revolving Credit Loan into
another Type of Revolving Credit Loan, which may be accompanied by the transfer
by a Lender (at its sole discretion) of a Revolving Credit Loan from one
Applicable Lending Office to another.
"Covered Taxes" see Section 5.06(a).
<PAGE> 17
-11-
"Creditor" shall mean any Agent, the Issuing Lender or any
Lender.
"Debt Issuance" shall mean the incurrence by any Borrower or
any Subsidiary of any Indebtedness after the Original Closing Date (other than
as permitted by Section 9.08, except Section 9.08(l)).
"Debt to Capitalization Ratio" shall mean, at any date, the
ratio of Total Debt to Total Capitalization at such date.
"Default" shall mean an event that with notice or lapse of
time or both would become an Event of Default.
"Delivery Date" see the definition of Applicable Revolving
Credit Commitment Fee Percentage.
"Destruction" shall mean any material damage to, or loss or
destruction of, any Real Property or Mortgaged Real Property. Destruction
shall not include any Casualty Event.
"Disposition" shall mean any conveyance, sale, lease
assignment, transfer or other disposition (including by way of merger or
consolidation and including any sale-leaseback transaction) of any Property
(including shares of capital stock of any Subsidiary or joint venture of any
Person) (whether now owned or hereafter acquired) by Borrower or any Subsidiary
to any Person and any liquidating or other non-ordinary course dividend or
distribution received by Borrower or any Subsidiary in respect of any joint
venture or similar enterprise, excluding, however, any Excluded Disposition.
"Disposition Event" shall mean the receipt by Borrower or any
Subsidiary of cash proceeds or cash distributions of any kind from Property
received in consideration for a Disposition.
"Dividend Payment" shall mean dividends (in cash, Property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of Borrower or any Subsidiary, or of any Equity Rights, but
excluding dividends payable in respect of shares of common stock through the
issuance of additional shares of common stock and any redemption or exchange of
any capital stock for common stock.
"Document" shall mean each Alchem Acquisition Document, each
Related Document, the Barmet Option, the Alchem Option, and the Barmet Right of
First Refusal.
"Dollars" and "$" shall mean lawful money of the United States
of America.
<PAGE> 18
-12-
"Eligible Person" shall mean (i) a commercial bank organized
under the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $100.0 million; (ii) a commercial bank
organized under the laws of any other country that is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital and
surplus in a dollar equivalent amount of at least $100.0 million; provided,
however, that such bank is acting through a branch or agency located in the
country in which it is organized or another country that is also a member of
the OECD; (iii) a Person that is primarily engaged in the business of
commercial banking and that is (A) a Subsidiary of a Lender, (B) a Subsidiary
of a Person of which a Lender is a Subsidiary, or (C) a Person of which a
Lender is a Subsidiary; (iv) any Affiliate of a Lender; (v) an insurance
company, mutual fund or other financial institution organized under the laws of
the United States, any state thereof, any other country that is a member of the
OECD or a political subdivision of any such country with assets, or assets
under management, in a dollar equivalent amount of at least $100.0 million; and
(v) any other entity (other than a natural person) which is an "accredited
investor" (as defined in Regulation D under the Securities Act of 1933, as
amended) which extends credit or buys loans as one of its businesses including,
but not limited to, insurance companies, mutual funds, and investment funds.
With respect to any Lender that is a fund that invests in loans, any other fund
that invests in loans and is managed or advised by the same investment advisor
of such Lender or by an Affiliate of such investment advisor shall be treated
as a single Eligible Person.
"Environmental Claim" shall mean, with respect to any Person,
any written notice, claim, demand or other communication (collectively, a
"claim") by any other Person alleging such Person's liability for any costs,
cleanup costs, governmental response costs, damages to natural resources or
other Property, personal injuries, fines or penalties arising out of or
resulting from (i) the presence, or Release into the environment, of any
Hazardous Material at any location, whether or not owned by such Person, or
(ii) any violation of any Environmental Law. The term "Environmental Claim"
shall include any claim by any Person seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting
from the presence of Hazardous Materials or arising from alleged injury or
threat of injury to health, safety or the environment.
"Environmental Laws" shall mean any and all present and future
applicable Federal, state, local and foreign laws, rules or regulations, any
orders, decrees, judgments or injunctions and the common law in each case as
now or hereafter in effect, relating to pollution or protection of human
health, safety or the environment, including without limitation, ambient air,
indoor air, soil, surface water, ground water, wetlands, land or subsurface
strata, including, without limitation, those relating to Releases or threatened
Releases of Hazardous Materials into the environment, or otherwise relating to
the manufacture, processing, generation, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
<PAGE> 19
-13-
"Equity Issuance" shall mean any of (a) any issuance or sale
by Borrower or any Subsidiary after the Original Closing Date of (x) any
capital stock (including any capital stock issued upon exercise of any Equity
Rights) or any Equity Rights or (y) any other security or instrument
representing an equity interest (or the right to obtain any equity interest) in
the issuing or selling Person or (b) the receipt by Borrower or any Subsidiary
after the Original Closing Date of any capital contribution (whether or not
evidenced by any equity security issued by the recipient of such contribution).
"Equity Rights" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including any stockholders' or voting trust agreements)
for the issuance, sale, registration or voting of, or outstanding securities
convertible into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Group" shall mean Borrower, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with
Borrower or any Subsidiary, are treated as a single employer under Section 414
of the Code.
"Event of Default" see Section 10.
"Excess Cash Flow" shall mean, for any period, the difference,
if any, of (a) the sum of the following items for Borrower and its Consolidated
Subsidiaries on a consolidated basis for such period determined in accordance
with GAAP: (i) consolidated net income, adjusted by (1) excluding any gains
from any Disposition (including Excluded Disposition) (other than inventory or
equipment in the ordinary course of business), (2) adding back the non-cash
portion of all extraordinary or non-recurring items of expense and (3)
deducting the non-cash portion of all extraordinary or non-recurring items of
income, in each case to the extent taken into account in the calculation of
such net income, (ii) the non-cash portion of any other item of expense to the
extent deducted in determining such net income, other than to the extent
requiring an accrual or reserve for future cash expenses, (iii) depreciation
and amortization allowances to the extent deducted in determining such net
income and (iv) net decreases in Working Capital, minus (b) the sum of the
following items for Borrower and its Consolidated Subsidiaries on a
consolidated basis for such period: (i) Capital Expenditures (without regard
to the exclusions from the definition
<PAGE> 20
-14-
thereof) for such period (excluding those that are paid from the proceeds of
any Debt Issuance (without regard to the exclusions from the definition
thereof), any Equity Issuance, any Disposition Events or insurance or award
proceeds), (ii) principal payments in respect of Indebtedness, including
voluntary prepayments of Revolving Credit Loans (excluding (1) any payment
effected in connection with the refinancing of any Indebtedness, (2) any
voluntary prepayments of Revolving Credit Loans to the extent not accompanied
by a permanent reduction in the aggregate amount of Revolving Credit
Commitments and (3) any prepayment of Indebtedness (including the Revolving
Credit Loans) made with Excess Cash Flow from any prior period or the proceeds
of any Disposition, Equity Issuance or any Debt Issuance (without regard to the
exclusions from the definition thereof)), (iii) net increases in Working
Capital and (iv) non-cash credits to the extent added in determining such net
income.
"Excluded Dispositions" shall mean (i) Dispositions for fair
market value resulting in no more than $1.0 million in proceeds in any fiscal
year; (ii) an exchange of equipment or inventory for like equipment or
inventory, provided that the Person effecting such exchange receives
substantially equivalent value in such exchange for the Property disposed of;
(iii) any transaction permitted by Section 9.06 (other than clause (j), (k) or
(l) thereof), any Lien permitted by Section 9.07, any Investment permitted by
Section 9.09 and any Dividend Payment permitted by Section 9.10; (iv) any
issuance of capital stock by any Subsidiary to directors to qualify directors
if required by applicable law if resulting in de minimis proceeds; (v) the sale
of inventory in the ordinary course of business; and (vi) the transfer of all
Property of Borrower or any Subsidiary used at or in connection with the
Facility to the Barmet Option Entity (which at the time of such transfer and at
all times prior to the delivery of capital stock or other ownership interests
therein to Barmet pursuant to the exercise of the Barmet Option, shall be 100%
owned by Borrower or a Wholly Owned Subsidiary) in connection with the exercise
by Barmet of the Barmet Option.
"Existing Letters of Credit" see the definition of "Letter of
Credit" and Annex B.
"Facility" see the definition of Barmet Option.
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided, however, that (a) if the day for which such
rate is to be determined is not a Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Business Day
as so published on the next succeeding Business Day and (b) if such rate is not
so published for any Business Day,
<PAGE> 21
-15-
the Federal Funds Rate for such Business Day shall be the average rate quoted
to the Administrative Agent on such Business Day on such transactions by three
federal funds brokers of recognized standing, as determined by the
Administrative Agent.
"Fee Letter" shall mean the Fee Letter dated December 5, 1996
by and between Merrill Lynch Capital Corporation and Borrower.
"Fee Letters" shall mean the Administrative Agent's Fee Letter
and the Fee Letter.
"Foreign Pension Plan" shall mean any plan, fund (including,
without limitation, any superannuation fund) or other similar program
established or maintained outside the United States of America by Borrower or
any one or more Subsidiaries primarily for the benefit of employees of Borrower
or such Subsidiaries residing outside the United States of America, which plan,
fund or other similar program provides, or results in, retirement income, a
deferral of income in contemplation of retirement or payments to be made upon
termination of employment, and which plan is not subject to ERISA, or any such
plan as to which Borrower or any Subsidiary may have any liability.
"Foreign Subsidiary" shall mean any direct or indirect
Subsidiary organized outside of the United States as defined in Section
7701(a)(9) of the Code (or any successor provision).
"GAAP" shall mean generally accepted accounting principles set
forth as of the relevant date 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 agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to the
circumstances as of the date of determination.
"Governmental Authority" shall mean any government or
political subdivision or any agency, authority, board, bureau, central bank,
commission, department or instrumentality of either, or any court, tribunal,
grand jury or arbitrator, in each case whether foreign or domestic, or any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guarantee" shall mean the guarantee of each Subsidiary
Guarantor pursuant to Section 6.
"Guaranteed Obligations" see Section 6.01.
"Hazardous Material" shall mean any pollutant, contaminant,
toxic, hazardous or extremely hazardous substance, constituent or waste, or any
other constituent, waste, material, compound or substance including,
<PAGE> 22
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without limitation, petroleum including crude oil or any fraction thereof, or
any petroleum product, subject to regulation under any Environmental Law.
"IMSAMET" shall mean IMSAMET, Inc., a Delaware corporation.
"IMSAMET Acquisition" shall mean the acquisition by Borrower
of 100% of the capital stock of IMSAMET and all capital stock of its
Subsidiaries owned by IMSAMET as set forth in the IMSAMET Acquisition Documents
pursuant to the IMSAMET Acquisition Documents.
"IMSAMET Acquisition Agreement" shall mean the Stock Purchase
Agreement dated as of November 26, 1996 among Borrower, IMSAMET and
EnviroSource, Inc.
"Indebtedness" shall mean, for any Person, without
duplication, (a) all indebtedness for borrowed money of such Person; (b) all
obligations issued, undertaken or assumed by such Person as the deferred
purchase price of Property or services (other than trade payables and accrued
expenses not overdue by more than 60 days incurred in the ordinary course of
business on ordinary terms); (c) all non-contingent reimbursement or payment
obligations of such Person with respect to Surety Instruments (such as, for
example, unpaid reimbursement obligations in respect of a drawing under a
letter of credit); (d) all obligations of such Person evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of Property or businesses; (e) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement, or incurred as financing, in either case with
respect to Property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such Property); (f) all Capital Lease
Obligations of such Person; (g) all net obligations of such Person with respect
to Swap Contracts (such obligations to be equal at any time to the aggregate
net amount that would have been payable by such Person at the most recent
fiscal quarter end in connection with the termination of such Swap Contracts at
such fiscal quarter end); (h) all indebtedness of other Persons referred to in
clauses (a) through (g) above secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in Property (including accounts and contracts rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such indebtedness; and (j) all Contingent Obligations of such Person
in respect of indebtedness or obligations of others of the kinds referred to in
clauses (a) through (h) above. Indebtedness shall not include accounts
extended by suppliers in the ordinary course on normal trade terms in
connection with the purchase of goods and services. The Indebtedness of any
Person shall include any Indebtedness of any partnership in which such Person
is the general partner.
<PAGE> 23
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"Indemnitee" see Section 12.03.
"Index Debt" shall mean the senior, unsecured, non-externally
credit enhanced, long-term indebtedness for borrowed money of Borrower.
"Intellectual Property" see Section 8.21.
"Interest Coverage Ratio" shall mean, for any Measurement
Period, the ratio of (x) the remainder of Consolidated EBITDA for such period
less Capital Expenditures (without regard to the exclusions in clause (ii) of
the definition thereof (other than the IMSAMET Acquisition, the Rock Creek
Acquisition and the Alchem Acquisition)) for such period to (y) Consolidated
Interest Expense for such period.
"Interest Period" shall mean, with respect to any LIBOR Loan,
each period commencing on the date such LIBOR Loan is made or Converted from an
Alternate Base Rate Loan or the last day of the next preceding Interest Period
for such LIBOR Loan and (subject to the requirements of Sections 2.01(a),
2.01(b) and 2.09) ending on the numerically corresponding day in the first,
second, third or sixth calendar month thereafter, as Borrower may select as
provided in Section 4.05, except that each Interest Period that commences on
the last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar
month. Notwithstanding the foregoing: (i) if any Interest Period for any
Revolving Credit Loan would otherwise end after the Revolving Credit Commitment
Termination Date, such Interest Period shall end on the Revolving Credit
Commitment Termination Date; (ii) each Interest Period that would otherwise end
on a day that is not a Business Day shall end on the next succeeding Business
Day (or, if such next succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); and (iii) notwithstanding
clauses (i) and (ii) above, no Interest Period shall have a duration of less
than one month and, if the Interest Period for any LIBOR Loan would otherwise
be a shorter period, such LIBOR Loan shall not be available hereunder as a
LIBOR Loan for such period.
"Interest Rate Certificate" shall mean an Officers'
Certificate substantially in the form of Exhibit C, delivered pursuant to
Section 9.01(e), demonstrating in reasonable detail the calculation of the Debt
to Capitalization Ratio as of the last day of the subject period.
"Investment" shall mean, for any Person: (a) the acquisition
(whether for cash, Property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person; (b) the making of any deposit with, or
advance, loan or other extension of credit to, any other Person (including the
purchase of Property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such Property
<PAGE> 24
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to such Person); (c) any capital contribution to (by means of any transfer of
cash or other Property to others or any payment for Property or services for
the account or use of others) any other Person; (d) the entering into, or
direct or indirect incurrence, of any Contingent Obligation with respect to
Indebtedness or other liability of any other Person; (e) the entering into of
any Swap Contract; or (e) any agreement to make any Investment (including any
"short sale" or any sale of any securities at a time when such securities are
not owned by the Person entering into such sale).
"Investment Grade Date" shall mean the date on which Standard
& Poor's Corporation and Moody's Investors Services, Inc. (or their respective
successors) have given a rating for the Index Debt of at least BBB-/Baa3.
"Issuing Lender" shall mean Texas Commerce Bank National
Association or any of its Affiliates, or such other Lender or Lenders selected
by the Administrative Agent reasonably satisfactory to Borrower, as the issuer
of Letters of Credit under Section 2.03, together with its successors and
assigns in such capacity.
"Joinder Agreement" shall mean an agreement substantially in
the form of Exhibit K.
"Lease" shall mean any lease, sublease, franchise agreement,
license, occupancy or concession agreement.
"Lender" and "Lenders" see the introduction to this Agreement.
"Letter of Credit" shall mean (i) any letter of credit issued
pursuant to Section 2.03 after the Original Closing Date, and (ii) the standby
letters of credit issued prior to the Original Closing Date by Texas Commerce
Bank National Association for the account of Borrower (such Letters of Credit
which are described in Annex B being hereinafter referred to as the "Existing
Letters of Credit").
"Letter of Credit Documents" shall mean, with respect to any
Letter of Credit, collectively, any other agreements, instruments, guarantees
or other documents (whether general in application or applicable only to such
Letter of Credit) governing or providing for (a) the rights and obligations of
the parties concerned or at risk with respect to such Letter of Credit or (b)
any collateral security for any of such obligations, each as the same may be
modified and supplemented and in effect from time to time.
"Letter of Credit Interest" shall mean, for each Lender, such
Lender's participation interest (or, in the case of the Issuing Lender, the
Issuing Lender's retained interest) in the Issuing Lender's liability under
Letters of Credit and such Lender's rights and interests in Reimbursement
Obligations and fees, interest and other amounts payable in connection with
Letters of Credit and Reimbursement Obligations.
"Letter of Credit Liability" shall mean, without duplication,
at any time and in respect of any Letter of Credit, the sum of (a) the undrawn
face amount of such Letter of Credit, plus (b) the aggregate unpaid principal
amount of all Reimbursement
<PAGE> 25
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Obligations of Borrower at such time due and payable in respect of all drawings
made under such Letter of Credit.
"Leverage Ratio" shall mean, at any date, the ratio of (x)
Total Debt at such date to (y) Consolidated EBITDA for the Measurement Period
ended on or immediately prior to such date.
"LIBOR Base Rate" shall mean, with respect to any LIBOR Loan
for any Interest Period therefor, the rate per annum at which the Lender which
is the Administrative Agent is offered deposits in Dollars at approximately
11:00 a.m. London time (or as soon thereafter as practicable) on the date two
Business Days prior to its portion of the first day of such Interest Period in
the London interbank market for delivery on the first day of such Interest
Period, for the number of days comprised therein and in an amount comparable to
its portion of the amount of the LIBOR Loans to be outstanding during such
Interest Period.
"LIBOR Rate" shall mean, for any LIBOR Loan for any Interest
Period therefor, a rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by the Administrative Agent to be equal to the
LIBOR Base Rate for such LIBOR Loan for such Interest Period divided by 1 minus
the Reserve Requirement (if any) for such LIBOR Loan for such Interest Period.
"LIBOR Loans" shall mean Revolving Credit Loans that bear
interest at rates based on rates referred to in the definition of "LIBOR Rate".
"Lien" shall mean, with respect to any Property, any mortgage,
lien, pledge, claim, charge, security interest or encumbrance of any kind, or
any other type of preferential arrangement in respect of such Property,
including any easement, right-of-way or other encumbrance on title to Real
Property. For purposes of the Basic Documents, a Person shall be deemed to own
subject to a Lien any Property that it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement (other than an operating lease)
relating to such Property.
"Losses" of any Person shall mean the losses, liabilities,
claims (including those based upon negligence, strict or absolute liability and
liability in tort), damages, reasonable expenses, obligations, penalties,
actions, judgments, encumbrances, liens, penalties, fines, suits,
<PAGE> 26
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reasonable and documented costs or disbursements of any kind or nature
whatsoever (including reasonable fees and expenses of counsel in connection
with any Proceeding commenced or threatened in writing, whether or not such
Person shall be designated a party thereto) at any time (including following
the payment of the Obligations) incurred by, imposed on or asserted against
such Person.
"Majority Lenders" shall mean, subject to the last paragraph
of Section 12.04, (i) at any time prior to the Amendment and Restatement Date,
Lenders holding at least a majority of the aggregate amount of the Revolving
Credit Commitments and (ii) at any time after the Amendment and Restatement
Date, Lenders holding at least a majority of the sum of (without duplication)
(a) the aggregate principal amount of outstanding Revolving Credit Loans, plus
(b) the aggregate amount of all Letter of Credit Liabilities, plus (c) the
aggregate Unutilized Revolving Credit Commitments then in effect.
"Margin Stock" shall mean margin stock within the meaning of
Regulations G, T, U and X.
"Material Adverse Effect" shall mean any of (a) a material
adverse effect on the business, assets, properties, liabilities, results of
operations, condition (financial or otherwise), business prospects or solvency
of Borrower and the Subsidiaries taken as a whole or, prior to the consummation
of the Alchem Acquisition, Alchem and its Subsidiaries, taken as a whole, (b) a
material adverse effect on the ability of the Obligors to perform their
obligations under any Basic Document or (c) an adverse effect on the legality,
binding effect or enforceability of any provision of any Basic Document or
affecting the rights and remedies of the Lenders thereunder.
"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $1.0 million.
"Measurement Period" shall mean the most recent four full
fiscal quarters of Borrower for which financial statements have been provided
pursuant to Section 9.01.
"Mortgage" shall mean an agreement creating and evidencing a
Lien on a Mortgaged Real Property, which shall be substantially in the form of
Exhibit G, containing such schedules and including such additional provisions
and other deviations from such Exhibit as shall be necessary to conform such
document to applicable or local law or as shall be customary under local law,
as the same may at any time be amended, modified or supplemented in accordance
with the terms thereof and hereof.
"Mortgaged Real Property" shall mean each Real Property set
forth on Schedule 1.01(b) which is subject to a Mortgage delivered on or after
the Original Closing Date.
<PAGE> 27
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"Multiemployer Plan" shall mean at any time an employee
pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which
any member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the
ERISA Group during such five year period.
"NAIC" shall mean the National Association of Insurance
Commissioners.
"Net Available Proceeds" shall mean:
(i) in the case of any Disposition Event, the amount of
Net Cash Payments received by Borrower or any Subsidiary in connection
with such Disposition Event;
(ii) in the case of any Casualty Event, the aggregate
amount of proceeds of insurance, condemnation awards and other
compensation received by Borrower or any Subsidiary in respect of such
Casualty Event net of (A) reasonable expenses incurred by Borrower and
the Subsidiaries in connection therewith, (B) repayments of
Indebtedness (other than Indebtedness hereunder) to the extent secured
by a Lien on such Property and (C) any income and transfer taxes
payable by Borrower or any Subsidiary in respect of such Casualty
Event;
(iii) in the case of any Equity Issuance or any Debt
Issuance, the aggregate amount of all cash received by Borrower and
the Subsidiaries in respect thereof net of all reasonable investment
banking fees, discounts and commissions, legal fees, consulting fees,
accountants' fees, underwriting discounts and commissions and other
customary fees and expenses, actually incurred and satisfactorily
documented in connection therewith;
(iv) in the case of any Taking or Destruction, the Net
Award or Net Proceeds, as applicable, resulting therefrom; and
(v) with respect to any loss of title to all or any
portion of any Mortgaged Real Property or Real Property, any title
insurance proceeds resulting therefrom.
"Net Award" shall mean the proceeds, award or payment received
by any Obligor or any of its Subsidiaries in respect of any Taking, together
with any interest thereon, less the amount of any reasonable expenses incurred
in litigating, arbitrating, compromising or settling any claim arising out of
any such Taking.
"Net Cash Payments" shall mean, with respect to any
Disposition Event, the aggregate amount of all cash payments (including any
cash payments received by way of deferred payment of principal pursuant to a
note
<PAGE> 28
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or installment receivable or purchase price adjustment receivable or otherwise,
but only as and when received) received by Borrower or any Subsidiary directly
or indirectly in connection with such Disposition Event; provided, however,
that Net Cash Payments shall be net (without duplication) of (i) the amount of
all reasonable fees and expenses paid by Borrower and the Subsidiaries in
connection with such Disposition Event (the "Relevant Disposition"); (ii) any
taxes paid or estimated to be payable by Borrower and the Subsidiaries as a
result of the Relevant Disposition; (iii) any repayments by Borrower or any
Subsidiary of Indebtedness to the extent that (a) such Indebtedness is secured
by a Lien on the Property that is the subject of the Relevant Disposition and
(b) the transferee of (or holder of a Lien on) such Property requires that such
Indebtedness be repaid as a condition to the purchase of such Property; and
(iv) amounts required to be paid to any Person (other than Borrower and the
Subsidiaries) owning a beneficial interest in the assets subject to such
Relevant Disposition.
"Net Proceeds" shall mean the proceeds of any insurance or
other payment received by any Obligor or any of its Subsidiaries in connection
with any Destruction, together with any interest earned thereon, less the
amount of any reasonable expenses incurred in litigating, arbitrating,
compromising or settling any claim arising out of such Destruction.
"Notes" shall mean the promissory notes provided for by
Section 2.08(a) and all promissory notes delivered in substitution or exchange
therefor, in each case as the same shall be modified and supplemented and in
effect from time to time.
"Notice of Assignment" shall mean a notice of assignment
pursuant to Section 12.06 substantially in the form of Exhibit F.
"Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time existing,
owing to any Creditor pursuant to the terms of any Basic Document or secured by
any of the Security Documents.
"Obligors" shall mean Borrower and the Subsidiary Guarantors.
"Officers' Certificate" shall mean, as applied to any
corporation, a certificate executed on behalf of such corporation by its
Chairman of the Board (if an officer) or its Chief Executive Officer or one of
its Vice Presidents and by its Chief Financial Officer, Vice President-Finance
or its Treasurer or any Assistant Treasurer in their official (and not
individual) capacities; provided, however, that every Officers' Certificate
with respect to the compliance with a condition precedent to the making of any
Revolving Credit Loan or the taking of any other action hereunder shall include
(i) a statement that the officers making or giving such Officers' Certificate
have read such condition and any definitions or other provisions contained in
this Agreement relating thereto and (ii) a statement as
<PAGE> 29
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to whether, in the opinion of the signers, such condition has been complied
with.
"Original Credit Agreement" see the introduction to this
Agreement.
"Original Closing Date" shall mean the date upon which the
initial extension of credit under the Original Credit Agreement was made
(January 21, 1997).
"Original Lenders" shall mean the Lenders named on the
signature pages hereof.
"Other Taxes" see Section 5.06(c).
"Payor" see Section 4.06.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Permitted Investments" shall mean, for any Person: (a)
direct obligations of the United States of America, or of any agency thereof,
or obligations guaranteed as to principal and interest by the United States of
America, or by any agency thereof, in either case maturing not more than one
year from the date of acquisition thereof by such Person; (b) time deposits,
certificates of deposit, bankers' acceptances (including eurodollar deposits)
issued by any bank or trust company organized under the laws of the United
States of America or any state thereof and having capital, surplus and
undivided profits of at least $500.0 million and a deposit rating of investment
grade; (c) commercial paper rated A-1 or better by Standard & Poor's
Corporation or P-1 or better by Moody's Investors Service, Inc., respectively,
maturing not more than 180 days from the date of acquisition thereof by such
Person; and (d) money market mutual funds that invest primarily in the
foregoing items.
"Permitted Liens" see Section 9.07.
"Person" shall mean any individual, corporation, limited
liability company, company, voluntary association, partnership, joint venture,
trust, unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).
"Plan" shall mean at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by
<PAGE> 30
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any Person which was at such time a member of the ERISA Group for employees of
any Person which was at such time a member of the ERISA Group.
"Pledged Collateral" shall have the meaning set forth in the
Security Agreement.
"Post-Default Rate" shall mean, in respect of any principal of
any Revolving Credit Loan, any Reimbursement Obligation or any other amount
payable under this Agreement, any Note or any other Basic Document that is not
paid when due (whether at stated maturity, by acceleration, by optional or
mandatory prepayment or otherwise), a rate per annum during the period from and
including the due date to but excluding the date on which such amount is paid
in full equal to 2%, plus the Alternate Base Rate as in effect from time to
time, plus the Applicable Margin for Alternate Base Rate Loans; provided,
however, that, if the amount so in default is principal of a LIBOR Loan and the
due date thereof is a day other than the last day of the Interest Period
therefor, the "Post-Default Rate" for such principal shall be, for the period
from and including such due date to but excluding the last day of such Interest
Period, 2%, plus the interest rate for such LIBOR Loan as provided in Section
3.02(b) and, thereafter, the rate provided for above in this definition.
"Prime Rate" shall be the rate most recently announced by
Texas Commerce Bank National Association at its principal office in Houston,
Texas as its "Prime Rate." Prime Rate is one of Texas Commerce Bank National
Association's base rates and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto, and is
evidenced by the reporting thereof after its announcement in such internal
publication or publications as Texas Commerce Bank National Association may
designate. Any change in the interest rate resulting from a change in such
Prime Rate shall become effective on the Business Day on which each change in
Prime Rate is announced by Texas Commerce Bank National Association.
"Principal Office" shall mean the principal office of the
Administrative Agent, located on the date hereof in Houston, Texas.
"Prior Liens" shall mean Liens which, pursuant to the
provisions of any Security Document, are or may be superior to the Lien of such
Security Document.
"Proceeding" shall mean any claim, counterclaim, action,
judgment, suit, hearing, governmental investigation, arbitration or proceeding,
including by or before any Governmental Authority.
"Property" shall mean any right or interest in or to property
or assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible and including capital stock or other ownership interests
of any Person.
<PAGE> 31
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"Proposed Lender" see Section 2.11.
"Public Offering" see the introduction to this Agreement.
"Quarterly Dates" shall mean the last Business Day of March,
June, September and December in each year, commencing with the last Business
Day of March 1997.
"Real Property" shall mean all right, title and interest of
Borrower or any Subsidiary (including, without limitation, any leasehold
estate) in and to a parcel of real property owned or operated by Borrower or
any Subsidiary together with, in each case, all improvements and appurtenant
fixtures, equipment, personal property, easements and other property and rights
incidental to the ownership, lease or operation thereof.
"Register" see Section 2.08.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System (or any successor) as the same may be
modified and supplemented and in effect from time to time.
"Regulations G, T, U and X" shall mean, respectively,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System (or any successor), as the same may be modified and supplemented and in
effect from time to time.
"Regulatory Change" shall mean, with respect to any Lender,
any change after the Original Closing Date in Federal, state or foreign law or
regulations (including Regulation D) or the adoption or making after such date
of any interpretation, directive or request applying to a class of banks or
other financial institutions including such Lender of or under any Federal,
state or foreign law or regulations (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) by any court or
governmental or monetary authority or any other regulatory agency with proper
authority, including non-governmental agencies or bodies, charged with the
interpretation or administration thereof or by the NAIC.
"Reimbursement Obligations" shall mean, at any time, the
obligations of Borrower then outstanding, or that may thereafter arise in
respect of all Letters of Credit then outstanding, to reimburse amounts paid by
the Issuing Lender in respect of any drawings under a Letter of Credit.
"Related Documents" shall mean any agreement, document or
instrument entered into by any Obligor in connection with the Alchem
Acquisition Agreement, as any such agreement, document or instrument is amended
and in effect from time to time in accordance with its respective terms and
this Agreement.
<PAGE> 32
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"Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the environment.
"Relevant Parties" and "Relevant Party" see Section 10(b).
"Replaced Lender" see Section 2.11.
"Required Payment" see Section 4.06.
"Requirement of Law" as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.
"Reserve Requirement" shall mean, for any Interest Period for
any LIBOR Loan, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion Dollars
against "Eurocurrency liabilities" (as such term is used in Regulation D).
LIBOR Loans shall be deemed to constitute Eurocurrency liabilities and to be
subject to such reserve requirements without benefit of or credit for
proration, exceptions or offsets which may be available from time to time to
any Lender under Regulation D. Without limiting the effect of the foregoing,
the Reserve Requirement shall include any other reserves required to be
maintained by such member banks by reason of any Regulatory Change with respect
to (i) any category of liabilities that includes deposits by reference to which
the LIBOR Base Rate is to be determined as provided in the definition of "LIBOR
Base Rate" in this Section 1.01 or (ii) any category of extensions of credit or
other assets that includes LIBOR Loans.
"Restoration" see each Mortgage.
"Revolving Credit Commitment" shall mean, for each Lender, the
obligation of such Lender to make Revolving Credit Loans in an aggregate
principal amount at any one time outstanding up to but not exceeding the amount
set opposite the name of such Lender on Annex A under the caption "Revolving
Credit Commitment" (as the same may be reduced from time to time pursuant to
Section 2.04(b) or changed pursuant to Section 12.06(b)).
"Revolving Credit Commitment Percentage" shall mean, with
respect to any Lender, the ratio of (a) the amount of the Revolving Credit
Commitment of such Lender to (b) the aggregate amount of the Revolving Credit
Commitments of all of the Lenders.
<PAGE> 33
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"Revolving Credit Commitment Termination Date" shall mean the
last Business Day in December, 2003.
"Revolving Credit Commitments" shall mean the aggregate sum of
the Revolving Credit Commitment of all of the Lenders. The initial aggregate
principal amount of the Revolving Credit Commitments is $200.0 million.
"Revolving Credit Loans" see Section 2.01(a).
"Rock Creek" shall mean Rock Creek Aluminum, Inc., an Ohio
corporation.
"Rock Creek Acquisition" shall mean the Acquisition of Rock
Creek pursuant to the Rock Creek Acquisition Agreement.
"Rock Creek Acquisition Agreement" shall mean the Stock
Purchase Agreement dated as of January 21, 1997 among Borrower, James T. Skoch,
William T. Whitworth, William T. Beargie and Randy L. Collins, as amended and
in effect from time to time in accordance with its terms and this Agreement.
"Section 5.06 Certificate" see Section 5.06(b).
"Security Agreement" shall mean a Security Agreement
substantially in the form of Exhibit D among the Obligors and the
Administrative Agent, as the same may be amended, modified or supplemented in
accordance with the terms thereof and hereof.
"Security Documents" shall mean the Security Agreement, the
Mortgages and all Uniform Commercial Code financing statements required by this
Agreement, the Security Agreement or any Mortgage to be filed with respect to
the security interests in Property and fixtures created pursuant to the
Security Agreement or any Mortgage and any other document or instrument
utilized to pledge as Collateral for the Obligations on any property or assets
of whatever kind or nature.
"State and Local Real Property Disclosure Requirements" shall
mean any state or local laws requiring notification of the buyer of real
property, or notification, registration, or filing to or with any state or
local agency, prior to the sale of any real property or transfer of control of
an establishment, of the actual or threatened presence or release into the
environment, or the use, disposal, or handling of Hazardous Materials on, at,
under, or near the real property to be sold or the establishment for which
control is to be transferred.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
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voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening
of any contingency) is at the time directly or indirectly owned or controlled
by such Person or one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries of such Person. Unless the context clearly requires
otherwise, all references to any Subsidiary shall mean a Subsidiary of
Borrower.
"Subsidiary Guarantors" shall mean each of the Subsidiaries of
Borrower listed on Schedule 1.01(a) as of the Original Closing Date and each
other Wholly Owned Subsidiary that guarantees the payment of the Obligations of
Borrower hereunder pursuant to Section 9.21 and the other Basic Documents.
"Surety Instruments" shall mean all letters of credit
(including standby and commercial), bankers' acceptances, bank guarantees,
surety bonds and similar instruments.
"Survey" shall mean a survey of any Mortgaged Real Property
(and all improvements thereon): (i) prepared by a surveyor or engineer licensed
to perform surveys in the state, province or country where such Mortgaged Real
Property is located, (ii) dated (or redated) not earlier than six months prior
to the date of delivery thereof unless there shall have occurred within the six
months prior to such date of delivery any exterior construction on the site of
such Mortgaged Real Property, in which event such survey shall be dated (or
redated) after the completion of such construction or, if such construction
shall not have been completed as of such date of delivery, not earlier than 20
days prior to such date of delivery, (iii) certified by the surveyor (in a
manner acceptable to the Administrative Agent) to the Administrative Agent and
the Title Company and (iv) complying in all respects with the minimum detail
requirements of the American Land Title Association as such requirements are in
effect on the date of preparation of such survey.
"Swap Contract" means any agreement (including any master
agreement and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward rate
agreement, commodity swap, commodity option, equity or equity index swap or
option, bond option, interest rate option, foreign exchange agreement, rate
cap, collar or floor agreement, currency swap agreement, cross-currency rate
swap agreement, swaption, currency option or any other similar agreement
(including any option to enter into any of the foregoing).
"Taking" shall mean any taking of any Mortgaged Real Property
or Real Property of any Obligor or any of its Subsidiaries or any part
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thereof, in or by condemnation or other eminent domain proceedings pursuant to
any law, general or special, or by reason of the temporary requisition of the
use or occupancy of any Mortgaged Real Property or Real Property of any Obligor
or any of its Subsidiaries or any part thereof, by any Governmental Authority,
civil or military. Taking shall not include any Casualty Event.
"Total Capitalization" shall mean at any date the aggregate of
funded debt, capital stock, surplus (including retained earnings) and premium
on capital stock, as shown by a balance sheet of Borrower.
"Total Debt" shall mean at any date, the aggregate amount of
Indebtedness of Borrower and the Subsidiaries determined on a consolidated
basis in accordance with GAAP.
"Type" see Section 1.03.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York.
"Unfunded Liabilities" shall mean, with respect to any Plan at
any time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
I of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan.
"Unutilized Revolving Credit Commitment" shall mean, for any
Lender, at any time, the excess of such Lender's Revolving Credit Commitment at
such time over the sum of (i) the aggregate outstanding principal amount of
Revolving Credit Loans made by such Lender and (ii) such Lender's Revolving
Credit Commitment Percentage of the aggregate amount of Letter of Credit
Liabilities at such time.
"VAW-IMCO" shall mean the joint venture between Borrower and
VAW aluminium AG known as VAW-IMCO Gus und Recycling GmbH.
"Wholly Owned Subsidiary" shall mean, with respect to any
Person, any corporation, partnership or other entity of which all of the equity
securities or other ownership interests (other than, in the case of a
corporation, directors' qualifying shares) are directly or indirectly owned or
controlled by such Person or one or more Wholly Owned Subsidiaries of such
Person or by such Person and one or more Wholly Owned Subsidiaries of such
Person. Unless the context clearly requires otherwise, all references to any
Wholly Owned Subsidiary shall mean a Wholly Owned Subsidiary of Borrower.
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"Working Capital" shall mean an amount determined for Borrower
and the Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP) equal to the sum of all current assets (other than cash)
less the sum of all current liabilities (other than the current portion of
long-term indebtedness).
1.02. Accounting Terms and Determinations. Except as
otherwise provided in this Agreement, all computations and determinations as to
accounting or financial matters shall be made in accordance with GAAP, and all
accounting or financial terms shall have the meanings ascribed to such terms by
GAAP as in effect on the Amendment and Restatement Date. All financial
statements to be delivered pursuant to this Agreement shall be prepared in
accordance with GAAP. Unless otherwise required by applicable laws or
regulations, all financial covenants are to be calculated in accordance with
GAAP as in effect on the Amendment and Restatement Date unless such
modifications are agreed to by the parties hereto.
1.03. Types of Revolving Credit Loans. Revolving Credit
Loans hereunder are distinguished by "Type". The "Type" of a Revolving Credit
Loan refers to whether such Revolving Credit Loan is an Alternate Base Rate
Loan or a LIBOR Loan, each of which constitutes a Type.
1.04. Rules of Construction. (a) In this Agreement and each
other Basic Document, unless the context clearly requires otherwise (or such
other Basic Document clearly provides otherwise), references to (i) the plural
include the singular, the singular the plural and the part the whole; (ii)
Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; (iii) agreements (including this Agreement), promissory notes and
other contractual instruments include subsequent amendments, assignments, and
other modifications thereto, but only to the extent such amendments,
assignments or other modifications thereto are not prohibited by their terms or
the terms of any Basic Document; (iv) statutes and related regulations include
any amendments of same and any successor statutes and regulations; and (v) time
shall be a reference to New York City time. Where any provision herein refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
(b) In this Agreement and each other Basic Document, unless
the context clearly requires otherwise (or such other Basic Document clearly
provides otherwise) and except as set forth in the proviso hereto, (i) "amend"
shall mean "amend, amend and restate, supplement or modify"; and "amended" and
"amendment" shall have meanings correlative to the foregoing; (ii) in the
computation of periods of time from a specified date to a later specified date,
"from" shall mean "from and including"; "to" and "until" shall mean "to but
excluding"; and "through" shall mean "to and including"; (iii) "hereof,"
"herein" and "hereunder" (and similar terms) in
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this Agreement or any other Basic Document refer to this Agreement or such
other Basic Document, as the case may be, as a whole and not to any particular
provision of this Agreement or such other Basic Document; (iv) "including" (and
similar terms) shall mean "including without limitation" (and similarly for
similar terms); (v) "or" has the inclusive meaning represented by the phrase
"and/or"; (vi) "satisfactory to" any Creditor shall mean in form, scope and
substance and on terms and conditions reasonably satisfactory to such Creditor;
and (vii) references to "the date hereof" shall mean the Amendment and
Restatement Date; provided, however, that in the Basic Documents other than
this Agreement, unless the context clearly otherwise requires, such term means
the Original Closing Date.
(c) In this Agreement unless the context clearly requires
otherwise, any reference to (i) an Annex, Exhibit or Schedule is to an Annex,
Exhibit or Schedule, as the case may be, attached to this Agreement and
constituting a part hereof, and (ii) a Section or other subdivision is to a
Section or such other subdivision of this Agreement.
(d) No doctrine of construction of ambiguities in agreements
or instruments against the interests of the party controlling the drafting
thereof shall apply to any Basic Document.
1.05. Repayment of Outstanding Term Loans and Revolving
Credit Loans; Payment of Administrative Agent Fees. (a) All Term Loans (as
defined in the Original Credit Agreement) outstanding under the Original Credit
Agreement as of the Amendment and Restatement Date, and all accrued interest
thereon and expenses related thereto (including any expenses under Section 5 of
the Original Credit Agreement), shall be repaid in full on the Amendment and
Restatement Date in the amounts and to the Persons set forth on Schedule
1.05(a). The Lenders consent to Borrower's drawing under the Revolving Credit
Commitments in order to finance in part the repayment of such Term Loans.
(b) All Revolving Credit Loans outstanding under the Original
Credit Agreement as of the Amendment and Restatement Date, and all accrued
interest thereon and expenses related thereto (including any expenses under
Section 5 of the Original Credit Agreement), of certain Revolving Credit
Lenders set forth on Schedule 1.05(b) shall be repaid in full, and all
Revolving Credit Commitments outstanding under the Original Credit Agreement of
such Revolving Credit Lenders as of the Amendment and Restatement Date shall be
terminated, all on the Amendment and Restatement Date and in the amounts and to
the Persons set forth on Schedule 1.05(b). The Revolving Credit Lenders
consent to Borrower's drawing under the Revolving Credit Commitments in order
to finance in part (together with the proceeds of the Public Offering) the
repayment of such Revolving Credit Loans.
(c) All fees under the Administrative Agent's Fee Letter as
of the Amendment and Restatement Date shall be paid on such date.
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1.06. Effect on Original Credit Agreement and Other Basic
Documents. Upon the execution and delivery by the parties hereto of this
Agreement and the satisfaction (or waiver) of the conditions set forth in
Section 7.03, (a) this Agreement shall be deemed to amend, restate and
supersede the Original Credit Agreement, except that the grants of security
interests, mortgages and Liens under and pursuant to the Basic Documents shall
continue unaltered, and each other Basic Document shall continue in full force
and effect in accordance with its terms, and the parties hereto hereby ratify
and confirm the terms thereof as being in full force and effect and unaltered
by this Agreement; (b) all Obligations under the Original Credit Agreement and
the other Basic Documents shall continue to be outstanding except as expressly
modified by this Agreement and shall be governed in all respects by this
Agreement and the other Basic Documents, it being agreed and understood that
this Agreement does not constitute a novation, satisfaction, payment or
reborrowing of any Obligation under the Original Credit Agreement or any other
Basic Document except as expressly modified by the Agreement, nor does it
operate as a waiver of any right, power or remedy of any Lender under any Basic
Document (other than the Original Credit Agreement); and (c) all references to
the Original Credit Agreement in any Basic Document or other document or
instrument delivered in connection therewith shall be deemed to refer to this
Agreement and the provisions hereof.
Section 2. Revolving Credit Commitments, Revolving Credit
Loans, Notes, Revolving Credit Commitment Reductions and Prepayments.
2.01. Revolving Credit Loans.
(a) Revolving Credit Loans. Each Lender severally agrees, on
the terms and conditions of this Agreement, to make revolving credit loans (the
"Revolving Credit Loans") to Borrower in Dollars during the period from and
including the Amendment and Restatement Date to but not including the Revolving
Credit Commitment Termination Date in an aggregate principal amount at any one
time outstanding not exceeding the amount of the Revolving Credit Commitment of
such Lender as in effect from time to time; provided, however, that in no event
shall the sum of the aggregate principal amount of (without duplication) all
Revolving Credit Loans then outstanding, plus the aggregate amount of all
Letter of Credit Liabilities at any time exceed the aggregate amount of the
Revolving Credit Commitments as in effect at such time. Subject to the terms
and conditions of this Agreement, during such period Borrower may borrow, repay
and reborrow the amount of the Revolving Credit Commitments by means of
Alternate Base Rate Loans and LIBOR Loans and may Convert Revolving Credit
Loans of one Type into Revolving Credit Loans of another Type (as provided in
Section 2.09) or Continue Revolving Credit Loans of one Type as Revolving
Credit Loans of the same Type (as provided in Section 2.09).
(b) [Reserved]
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(c) Limit on LIBOR Loans. No more than ten separate Interest
Periods in respect of LIBOR Loans may be outstanding at any one time. No LIBOR
Loans shall be made on the Amendment and Restatement Date.
2.02. Borrowings. Borrower shall give the Administrative
Agent notice of each borrowing hereunder as provided in Section 4.05. The form
of such notice of borrowing shall be substantially in the form of Exhibit I.
Not later than 1:00 p.m. New York time on the date specified for each borrowing
hereunder, each Lender shall make available the amount of the Revolving Credit
Loan or Revolving Credit Loans to be made by it on such date to the
Administrative Agent, at an account specified by the Administrative Agent
maintained at the Principal Office, in immediately available funds, for account
of Borrower. Each borrowing of Revolving Credit Loans shall be made by each
Lender pro rata based on such Lender's Revolving Credit Commitment Percentage.
The amount so received by the Administrative Agent shall, subject to the terms
and conditions of this Agreement, be made available to Borrower by depositing
the same, in immediately available funds, in an account of Borrower maintained
with the Administrative Agent at the Principal Office designated by Borrower.
2.03. Letters of Credit. Subject to the terms and conditions
hereof, the Revolving Credit Commitments may be utilized, upon the request of
Borrower (which request, with respect to the Existing Letters of Credit, is
deemed given by virtue of the execution and delivery of this Agreement), in
addition to the Revolving Credit Loans provided for by Section 2.01(a), for
standby and commercial documentation letters of credit for the account of
Borrower; provided, however, that in no event shall (i) the aggregate amount of
all Letter of Credit Liabilities, plus the aggregate principal amount of the
Revolving Credit Loans then outstanding exceed at any time the aggregate
Revolving Credit Commitments as in effect at such time, (ii) the outstanding
aggregate amount of all Letter of Credit Liabilities exceed $12.0 million,
(iii) the face amount of any Letter of Credit be less than $5,000, (iv) the
expiration date of any Letter of Credit extend beyond the earlier of (x) the
fifth Business Day preceding the Revolving Credit Commitment Termination Date
and (y) the date twelve months following the date of such issuance for standby
Letters of Credit or 180 days after the date of such issuance for commercial
Letters of Credit, unless the Majority Lenders have approved such expiry date
in writing (however, no Letter of Credit may be extended beyond the Revolving
Credit Commitment Termination Date); provided, however, that any standby Letter
of Credit may be automatically extendible for periods of up to one year (but
never beyond the fifth Business Day preceding the Revolving Credit Commitment
Termination Date then in effect) so long as such Letter of Credit provides that
the Issuing Lender retains an option satisfactory to the Issuing Lender to
terminate such Letter of Credit prior to each extension date, unless all of the
Lenders have approved such expiry date in writing, or (v) the Issuing Lender
issue any Letter of Credit after it has received notice from Borrower or the
Majority Lenders stating that a Default or Event of Default exists until such
time as the Issuing Lender shall have received written
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notice of (x) rescission of such notice from the Majority Lenders or (y) waiver
of such Default or Event of Default in accordance with this Agreement. The
following additional provisions shall apply to Letters of Credit:
(a) Other than with respect to the Existing Letters of Credit
for the stated term thereof as of the Original Closing Date, Borrower
shall give the Administrative Agent at least three Business Days'
irrevocable prior notice (effective upon receipt) specifying the date
(which shall be no later than thirty days preceding the Revolving
Credit Commitment Termination Date) each Letter of Credit is to be
issued and describing in reasonable detail the proposed terms of such
Letter of Credit (including the beneficiary thereof) (including
whether such Letter of Credit is to be a commercial Letter of Credit
or a standby Letter of Credit). Upon receipt of any such notice, the
Administrative Agent shall advise the Issuing Lender of the contents
thereof.
(b) On each day during the period commencing with the
issuance by the Issuing Lender of any Letter of Credit and until such
Letter of Credit shall have expired or been terminated, the Revolving
Credit Commitment of each Lender shall be deemed to be utilized for
all purposes hereof in an amount equal to such Lender's Revolving
Credit Commitment Percentage of the then undrawn face amount of such
Letter of Credit. Each Lender (other than the Issuing Lender) agrees
that, upon the issuance of any Letter of Credit hereunder (which, with
respect to the Existing Letters of Credit shall be deemed the Original
Closing Date), it shall automatically acquire a participation in the
Issuing Lender's liability under such Letter of Credit in an amount
equal to such Lender's Revolving Credit Commitment Percentage of such
liability, and each Lender (other than the Issuing Lender) thereby
shall absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and shall be unconditionally obligated to
the Issuing Lender to pay and discharge when due, its Revolving Credit
Commitment Percentage of the Issuing Lender's liability under such
Letter of Credit. The Issuing Lender shall be deemed to hold a Letter
of Credit Liability in an amount equal to its retained interest in the
related Letter of Credit after giving effect to such acquisition by
the Lenders other than the Issuing Lender of their participation
interests.
(c) Upon receipt from the beneficiary of any Letter of Credit
of any demand for payment under such Letter of Credit, the Issuing
Lender shall promptly notify Borrower (through the Administrative
Agent) of the amount to be paid by the Issuing Lender as a result of
such demand and the date on which payment is to be made by the Issuing
Lender to such beneficiary in respect of such demand. Borrower hereby
unconditionally agrees to pay and reimburse the Issuing Lender for the
amount of each demand for payment under such Letter of Credit
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not later than the date on which the Issuing Lender notifies Borrower
that payment is to be made by the Issuing Lender to the beneficiary
thereunder (or the next Business Day if such notice is received after
12:00 noon (New York time)).
(d) Forthwith upon its receipt of a notice referred to in
clause (c) of this Section 2.03, Borrower shall advise the Issuing
Lender whether or not Borrower intends to borrow hereunder to finance
its obligation to reimburse the Issuing Lender for the amount of the
related demand for payment and, if it does, submit a notice of such
borrowing as provided in Section 4.05. In the event that Borrower
fails to so advise the Administrative Agent, or if Borrower fails to
reimburse the Issuing Lender for a demand for payment under a Letter
of Credit by the date of notice of such payment (or the next Business
Day if received after 12:00 noon (New York time) on such date), the
Administrative Agent shall give each Lender prompt notice of the
amount of the demand for payment, specifying such Lender's Revolving
Credit Commitment Percentage of the amount of the related demand for
payment, which, if received after 1:00 p.m. New York time will be
deemed received the next Business Day.
(e) Each Lender (other than the Issuing Lender) shall pay to
the Administrative Agent for account of the Issuing Lender at the
Principal Office in Dollars and in immediately available funds, the
amount of such Lender's Revolving Credit Commitment Percentage of any
payment under a Letter of Credit upon notice by the Issuing Lender
(through the Administrative Agent) to such Lender requesting such
payment and specifying such amount. Each such Lender's obligation to
make such payments to the Administrative Agent for account of the
Issuing Lender under this clause (e), and the Issuing Lender's right
to receive the same, shall be absolute and unconditional and shall not
be affected by any circumstance whatsoever, including (i) the failure
of any other Lender to make its payment under this clause (e), (ii)
the financial condition of Borrower or the existence of any Default or
Event of Default or (iii) the termination of the Revolving Credit
Commitments. Each such payment to the Issuing Lender shall be made
without any offset, abatement, withholding or reduction whatsoever.
Nothing in this clause (e) shall be deemed to prejudice the right of
any Lender to recover from the Issuing Lender in the event of a
wrongful payment of the type described in the proviso to the last
paragraph of this Section 2.03.
(f) Upon the making of each payment by a Lender to the
Issuing Lender pursuant to clause (e) above in respect of any Letter
of Credit, such Lender shall, automatically and without any further
action on the part of the Administrative Agent, the Issuing Lender or
such Lender, acquire (i) a participation in an amount equal to such
payment in the Reimbursement Obligation owing to the Issuing Lender by
Borrower hereunder and under the Letter of Credit Documents relating
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to such Letter of Credit and (ii) a participation in a percentage
equal to such Lender's Revolving Credit Commitment Percentage in any
interest or other amounts payable by Borrower hereunder and under such
Letter of Credit Documents in respect of such Reimbursement
Obligation. Upon receipt by the Issuing Lender from or for account of
Borrower of any payment in respect of any Reimbursement Obligation or
any such interest or other amounts (including by way of setoff or
application of proceeds of any collateral security) the Issuing Lender
shall promptly pay to the Administrative Agent for account of each
Lender entitled thereto, such Lender's Revolving Credit Commitment
Percentage of such payment, each such payment by the Issuing Lender to
be made in the same money and funds in which received by the Issuing
Lender. In the event any payment received by the Issuing Lender and
so paid to the Lenders hereunder is rescinded or must otherwise be
returned by the Issuing Lender, each Lender shall, upon the request of
the Issuing Lender (through the Administrative Agent), repay to the
Issuing Lender (through the Administrative Agent) the amount of such
payment paid to such Lender, with interest at the rate specified in
clause (i) of this Section 2.03.
(g) Borrower shall pay to the Administrative Agent for the
account of the Issuing Lender in respect of each Letter of Credit a
letter of credit commission in an amount equal to (x) the rate per
annum equal to the Applicable Margin for Revolving Credit Loans that
would be LIBOR Loans in effect at the time of issuance thereof (which
for the Existing Letters of Credit shall initially be deemed the
Original Closing Date), plus 0.25% per annum, multiplied by (y) the
daily average undrawn face amount of such Letter of Credit (but in no
event less than $500 per Letter of Credit on a per annum basis) for
the period from and including the date of issuance of such Letter of
Credit (which for the Existing Letters of Credit shall initially be
deemed the Original Closing Date) (i) in the case of a Letter of
Credit which expires in accordance with its terms, to and including
such expiration date and (ii) in the case of a Letter of Credit which
is drawn in full or is otherwise terminated other than on the stated
expiration date of such Letter of Credit, to but excluding the date
such Letter of Credit is drawn in full or is terminated, such fee to
be non-refundable and to be paid in arrears quarterly, on each
Quarterly Date (or such minimum $500 per annum fee to be paid on the
date of issuance of the applicable Letter of Credit), and on the
earlier of the Revolving Credit Commitment Termination Date or the
date of the termination of the Revolving Credit Commitments or the
date of such termination, expiration or the Business Day subsequent to
notice of a drawing. The Issuing Lender shall pay to the
Administrative Agent for account of each Lender (other than the
Issuing Lender), from time to time at reasonable intervals (but in any
event at least quarterly), but only to the extent actually received
from Borrower, an amount equal to such Lender's Revolving Credit
Commitment Percentage of all letter of credit commissions referred to
in the first sentence
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of this clause (g) received in respect of all periods after the
Original Closing Date. In addition, Borrower shall pay to the
Administrative Agent for account of the Issuing Lender only in respect
of each Letter of Credit (other than the Existing Letters of Credit
(unless renewed)) a letter of credit issuance fee in an amount equal
to 1/4% per annum multiplied by the original face amount from the
issue date through the expiry date of such Letter of Credit (but in no
event less than $500 per Letter of Credit), such amount to be payable
on the date of issuance of such Letter of Credit, plus all charges,
costs and expenses in the amounts customarily charged by the Issuing
Lender from time to time in like circumstances with respect to the
issuance of each Letter of Credit and drawings and other transactions
relating thereto.
(h) [Reserved]
(i) To the extent that any Lender fails to pay an amount
required to be paid pursuant to clause (e) or (f) of this Section 2.03
on the due date therefor, such Lender shall pay interest to the
Issuing Lender (through the Administrative Agent) on such amount from
and including such due date to but excluding the date such payment is
made (i) during the period from and including such due date to but
excluding the date three Business Days thereafter, at a rate per annum
equal to the Federal Funds Rate (as in effect from time to time) and
(ii) thereafter, at a rate per annum equal to the Post-Default Rate
(as in effect from time to time).
(j) The issuance by the Issuing Lender of any modification or
supplement to any Letter of Credit hereunder that would extend the
expiry date or increase the face amount thereof shall be subject to
the same conditions applicable under this Section 2.03 to the issuance
of new Letters of Credit, and no such modification or supplement shall
be issued hereunder unless either (x) the respective Letter of Credit
affected thereby would have complied with such conditions had it
originally been issued hereunder in such modified or supplemented form
or (y) each Lender shall have consented thereto.
(k) Notwithstanding the foregoing, the Issuing Lender shall
not be under any obligation to issue any Letter of Credit if at the
time of such issuance, any order, judgment or decree of any
governmental authority or arbitrator shall purport by its terms to
enjoin or restrain the Issuing Lender from issuing such Letter of
Credit or any requirement of law applicable to the Issuing Lender or
any request or directive (whether or not having the force of law) from
any Governmental Authority shall prohibit, or request that the Issuing
Lender refrain from, the issuance of letters of credit generally or
such Letter of Credit in particular or shall impose upon the Issuing
Lender with respect to such Letter of Credit any restriction or
reserve or capital requirement (for which the Issuing Lender is not
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otherwise compensated) not in effect on the Original Closing Date (or,
with respect to the Existing Letters of Credit, not in effect on the
date of issuance thereof (other than deemed issuance hereunder on the
Original Closing Date) if prior to the Original Closing Date).
The obligations of Borrower under this Agreement and any Letter of Credit
Document to reimburse the Issuing Lender for a drawing under a Letter of
Credit, and to repay any drawing under a Letter of Credit converted into
Revolving Credit Loans, shall be unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement and each such
other Letter of Credit Document under all circumstances, including the
following: (i) any lack of validity or enforceability of this Agreement or any
Letter of Credit Document; (ii) the existence of any claim, setoff, defense or
other right that Borrower may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any Person for whom any such beneficiary
or any such transferee may be acting), the Issuing Lender or any other Person,
whether in connection with this Agreement, the transactions contemplated hereby
or by the Letter of Credit Documents or any unrelated transaction; (iii) any
draft, demand, certificate or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; or any loss
or delay in the transmission or otherwise of any document required in order to
make a drawing under any Letter of Credit; or any defense based upon the
failure of any drawing under a Letter of Credit to conform to the terms of the
Letter of Credit or any non-application or misapplication by the beneficiary of
the proceeds of such drawing; or (iv) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, Borrower or a Subsidiary Guarantor; provided, however, that
Borrower shall not be obligated to reimburse the Issuing Lender for any
wrongful payment determined by a court of competent jurisdiction to have been
made by the Issuing Lender as a result of acts or omissions constituting
willful misconduct or gross negligence on the part of the Issuing Lender or
which is not in accordance with the standard of care specified in the Uniform
Commercial Code of the State of New York. To the extent that any provision of
any Letter of Credit Document is inconsistent with the provisions of this
Section 2.03, the provisions of this Section 2.03 shall control.
2.04. Scheduled Termination and Reductions of Revolving
Credit Commitments. (a) The aggregate amount of the Revolving Credit
Commitments shall be automatically and permanently reduced on each date as set
forth below by an amount equal to the lesser of (x) that dollar amount set
forth in the column entitled "Amount Reduction" or (y) that dollar amount of
the Revolving Credit Commitments such that immediately after giving effect
thereto the Revolving Credit Commitments would be not more than the dollar
amount of the Revolving Credit Commitments as set forth below in the column
entitled "Remaining Amount":
<PAGE> 45
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<TABLE>
<CAPTION>
Amount
Date Reduction Remaining Amount
----------------- ----------- ----------------
<S> <C> <C>
December 31, 1998 $0 $200 million
December 31, 1999 $20 million $180 million
December 31, 2000 $20 million $160 million
December 31, 2001 $25 million $135 million
December 31, 2002 $35 million $100 million
</TABLE>
Notwithstanding the foregoing, if on any date set forth in the
table above the then aggregate amount of the Revolving Credit Commitments are
equal to or less than the amount set forth opposite such date in the column
entitled "Remaining Amount," then the automatic reduction shall not be made.
Each such reduction shall apply pro rata to each Lender's
Revolving Credit Commitment. Concurrently with any such reduction, Borrower
shall comply with Section 2.10(c).
The aggregate amount of the Revolving Credit Commitments shall
be automatically and permanently reduced to zero on the Revolving Credit
Commitment Termination Date.
(b) Borrower shall have the right at any time or from time to
time (i) so long as no Revolving Credit Loans or Letter of Credit Liabilities
will be outstanding as of the date specified for termination, to terminate the
Revolving Credit Commitments or (ii) to reduce the aggregate amount of the
Unutilized Revolving Credit Commitments of all the Lenders; provided, however,
that (x) Borrower shall give notice of each such termination or reduction as
provided in Section 4.05 and (y) each partial reduction shall be in an
aggregate amount at least equal to $1.0 million (or a larger multiple of
$100,000).
(c) The Revolving Credit Commitments once terminated or
reduced may not be reinstated.
2.05. Fees. (a) Borrower shall pay to the Administrative
Agent for the account of each Lender a commitment fee on the daily average
amount of such Lender's Unutilized Revolving Credit Commitment, for the period
from and including the Amendment and Restatement Date to but not including the
earlier of the date such Revolving Credit Commitment is terminated and the
Revolving Credit Commitment Termination Date, at a rate per annum equal to the
Applicable Revolving Credit Commitment Fee Percentage. Any accrued commitment
fee under this Section 2.05(a) shall be payable in arrears on each Quarterly
Date and on the earlier of the date the Revolving Credit Commitments are
terminated and the Revolving Credit Commitment Termination Date.
<PAGE> 46
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(b) Borrower shall pay to the Administrative Agent for its
own account a nonrefundable administrative fee pursuant to the terms of the
Administrative Agent's Fee Letter.
2.06. Lending Offices. The Revolving Credit Loans of each
Type made by each Lender shall be made and maintained at such Lender's
Applicable Lending Office for Revolving Credit Loans of such Type.
2.07. Several Obligations. The failure of any Lender to make
any Revolving Credit Loan to be made by it on the date specified therefor shall
not relieve any other Lender of its obligation to make its Revolving Credit
Loan on such date, but neither any Lender nor the Administrative Agent shall be
responsible for the failure of any other Lender to make a Revolving Credit Loan
to be made by such other Lender, and (except as otherwise provided in Section
4.06) no Lender shall have any obligation to the Administrative Agent or any
other Lender for the failure by such Lender to make any Revolving Credit Loan
required to be made by such Lender.
2.08. Notes; Register. (a) In connection with the increase
in the Revolving Credit Commitments on the Amendment and Restatement Date as
part of the amendments to the Original Credit Agreement, each Lender shall
surrender its Notes issued in connection with its Revolving Credit Commitments
under the Original Credit Agreement and be issued new Notes pursuant to this
Section 2.08. In connection with the repayment of all Term Loans and certain
Revolving Credit Loans as described in Section 1.05, each Lender having Term
Loans as set forth on Schedule 1.05(a) or Revolving Credit Loans as set forth
on Schedule 1.05(b) shall surrender its old Notes issued in connection with its
extensions of credit under the Original Credit Agreement. If requested by any
Lender, the Revolving Credit Loans made by such Lender shall be evidenced by a
single promissory note of Borrower substantially in the form of Exhibit A-1,
dated the Amendment and Restatement Date, payable to such Lender and otherwise
duly completed.
(b) [Reserved]
(c) The date, amount, Type, interest rate and duration of
Interest Period (if applicable) of each Revolving Credit Loan made by each
Lender to Borrower, and each payment made on account of the principal thereof,
shall be recorded by such Lender on its books and, prior to any transfer of any
Note evidencing the Revolving Credit Loans held by it, endorsed by such Lender
on the schedule attached to such Note or any continuation thereof; provided,
however, that the failure of such Lender to make any such recordation or
endorsement shall not affect the obligations of Borrower to make a payment when
due of any amount owing hereunder or under such Note.
(d) Borrower hereby designates the Administrative Agent to
serve as Borrower's agent, solely for purposes of this Section 2.08, to
maintain a register (the "Register") on which it will record the Revolving
<PAGE> 47
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Credit Commitment from time to time of each of the Lenders, the Revolving
Credit Loans made by each of the Lenders and each repayment in respect of the
principal amount of the Revolving Credit Loans of each Lender. Failure to make
any such recordation or any error in such recordation shall not affect
Borrower's obligations in respect of such Revolving Credit Loans. The entries
in the Register shall be conclusive, in the absence of manifest error, and
Borrower, the Administrative Agent and the Lenders shall treat each Person
whose name is recorded in the Register as the owner of a Revolving Credit Loan
or other obligation hereunder as the owner thereof for all purposes of this
Agreement and the other Basic Documents, notwithstanding any notice to the
contrary. The Register shall be available for inspection by Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
2.09. Optional Prepayments and Conversions or Continuations
of Revolving Credit Loans. Subject to Section 4.04, Borrower shall have the
right to prepay Revolving Credit Loans, or to Convert Revolving Credit Loans of
one Type into Revolving Credit Loans of another Type or Continue Revolving
Credit Loans of one Type as Revolving Credit Loans of the same Type, at any
time or from time to time to be applied as specified by Borrower; provided,
however, that: (a) Borrower shall give the Administrative Agent notice of each
such prepayment, Conversion or Continuation as provided in Section 4.05 (and,
upon the date specified in any such notice of prepayment, the amount to be
prepaid shall become due and payable hereunder); and (b) LIBOR Loans may be
prepaid or Converted only on the last day of an Interest Period for such LIBOR
Loans. Each notice of Conversion or Continuation shall be substantially in the
form of Exhibit J.
Notwithstanding the foregoing, and without limiting the rights
and remedies of the Lenders under Section 10, in the event that any Event of
Default shall have occurred and be continuing, the Administrative Agent may
(and at the request of the Majority Lenders shall) suspend the right of
Borrower to Convert any Alternate Base Rate Loan into a LIBOR Loan, or to
Continue any LIBOR Loan as a LIBOR Loan, in which event all Revolving Credit
Loans shall be Converted (on the last day(s) of the respective Interest Periods
therefor) or Continued, as the case may be, as Alternate Base Rate Loans.
2.10. Mandatory Reductions of Revolving Credit Commitments.
(a) The Revolving Credit Commitments shall be automatically and permanently
reduced as follows (each such reduction to be effected in each case in the
manner and to the extent specified in subsection (b) below of this Section
2.10):
(i) Casualty Events. On the date on which Borrower or
any Subsidiary receives any Net Available Proceeds from any Casualty
Event, in an aggregate amount equal to 100% of such Net Available
Proceeds; provided, however, that (i) so long as no Default or Event
of Default then exists and such Net Available Proceeds do not exceed
<PAGE> 48
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$1.0 million, the Revolving Credit Commitments need not be reduced by
such amount of such Net Available Proceeds to the extent that Borrower
has delivered an Officers' Certificate to the Administrative Agent on
or prior to such date stating that such proceeds shall be used to (1)
repair, replace or restore any Property in respect of which such Net
Available Proceeds were paid or (2) fund the expansion or substitution
of other Property used or usable in the business of Borrower and the
Subsidiaries, in each case within 360 days following the date of the
receipt of such Net Available Proceeds and (ii) until the Collateral
Release Date an amount of such Net Available Proceeds equal to the
amount by which the Revolving Credit Loans outstanding at any time
prior to the end of such 360 day period would exceed the Revolving
Credit Commitments if the Revolving Credit Commitments had been
automatically reduced by the amount of such Net Available Proceeds
shall be held in the Collateral Account and released therefrom only in
accordance with the terms of the Security Agreement; provided,
further, however, that (subject to waiver of such condition by the
Majority Lenders) (i) if the amount of such Net Available Proceeds
exceeds $1.0 million, then the Revolving Credit Commitments shall be
reduced by an amount equal to the entire amount and not just the
portion in excess of $1.0 million and (ii) if all or any portion of
such Net Available Proceeds is not so used within 360 days after the
date of the receipt of such Net Available Proceeds, the Revolving
Credit Commitments shall be automatically and permanently reduced in
an amount equal to such remaining portion on the last day of such
period as specified in Section 2.10(b).
(ii) Equity Issuance; Debt Issuance. Upon any Equity
Issuance or any Debt Issuance after the Amendment and Restatement Date
(other than up to $6.21 million of gross proceeds from the Public
Offering which may be received upon exercise of the over-allotment
option granted to the underwriters in connection therewith), in an
aggregate principal amount equal to 50% of the Net Available Proceeds
of such Equity Issuance or 100% of the Net Available Proceeds of such
Debt Issuance, as the case may be; provided, however, that if at the
time of receipt of such Net Available Proceeds the Leverage Ratio is
less than 2.0:1.0 as evidenced in an Officers' Certificate delivered
to the Administrative Agent, the Revolving Credit Commitments need not
be so reduced.
(iii) Disposition Events. Upon the date of receipt of any
Net Available Proceeds from any Disposition Event, in an aggregate
principal amount equal to 100% of the Net Available Proceeds from such
Disposition Event; provided, however, that (i) the Revolving Credit
Commitments need not be reduced by such amount of the Net Available
Proceeds from any Disposition Event permitted by Section 9.06(j) or
(k) if and to the extent that (1) no Default or Event of Default then
exists and (2) Borrower delivers an Officers' Certificate to the
Administrative Agent on or prior to such date stating that such Net
<PAGE> 49
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Available Proceeds shall be reinvested in capital assets of Borrower
or any Subsidiary in each case within 360 days following the date of
such Disposition Event (which certificate shall set forth the
estimates of the proceeds to be so expended) and (ii) until the
Collateral Release Date an amount of such Net Available Proceeds equal
to the amount by which the Revolving Credit Loans outstanding at any
time prior to the end of such 360 day period would exceed the
Revolving Credit Commitments if the Revolving Credit Commitments had
been automatically reduced by the amount of such Net Available
Proceeds shall be held in the Collateral Account and released
therefrom only in accordance with the terms of the Security Agreement;
provided, further, however, that if all or any portion of the Net
Available Proceeds are not so used within such 360 day period, the
Revolving Credit Commitments shall be automatically and permanently
reduced in an amount equal to such remaining portion on the last day
of such period as specified in Section 2.10(b) (it being understood
that the foregoing shall in no way affect the obligation of Borrower
to obtain the consent of the Majority Lenders if required pursuant to
this Agreement).
(iv) Excess Cash Flow. Not later than 120 days after the
end of each fiscal year of Borrower commencing with the fiscal year
ended December 31, 1998, in an aggregate principal amount equal to 50%
of the Excess Cash Flow for such fiscal year; provided, however, that
if at the end of any fiscal year the Leverage Ratio is less than
2.0:1.0 as evidenced in an Officers' Certificate delivered to the
Administrative Agent, the Revolving Credit Commitment need not be so
reduced.
(v) Recovery Events. On the date on which Borrower or
any Subsidiary receives any Net Available Proceeds from any Taking or
Destruction or loss of title to any Mortgaged Real Property or Real
Property, in an aggregate principal amount equal to 100% of such Net
Available Proceeds; provided, however, that (i) so long as no Default
or Event of Default then exists and such Net Available Proceeds do not
exceed $25.0 million, the Revolving Credit Commitments need not be
reduced by the amount of such Net Available Proceeds to the extent
that Borrower has delivered an Officers' Certificate to the
Administrative Agent on or prior to such date stating that such
proceeds shall be used to (1) repair, replace or restore any Mortgaged
Real Property (or, if received in respect of Real Property which is
not Mortgaged Real Property, Real Property) in respect of which such
Net Available Proceeds were paid or (2) fund the purchase of
substitute or additional Mortgaged Real Property (or Real Property if
such Net Available Proceeds were received in respect of Real Property
which was not Mortgaged Real Property), in each case within 360 days
following the date of the receipt of such Net Available Proceeds and
(ii) until the Collateral Release Date an amount of such Net Available
Proceeds equal to the amount by which the Revolving Credit Loans
outstanding at any time prior to the end of such 360 day period would
<PAGE> 50
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exceed the Revolving Credit Commitments if the Revolving Credit
Commitments had been automatically reduced by the amount of such Net
Available Proceeds shall be held in the Collateral Account and
released therefrom only in accordance with the terms of the Security
Agreement; provided, further, however, that (subject to waiver of such
condition by the Majority Lenders) (i) if the amount of such Net
Available Proceeds exceeds $25.0 million, then the Revolving Credit
Commitments shall be reduced by an amount equal to the entire amount
and not just the portion in excess of $25.0 million and (ii) if all or
any portion of such Net Available Proceeds is not so used within 360
days after the date of the receipt of such Net Available Proceeds, the
Revolving Credit Commitments shall be automatically and permanently
reduced by an amount equal to such remaining portion on the last day
of such period as specified in Section 2.10(b).
(b) Application. The amount of any required reductions
described in Section 2.10(a) shall be made pro rata among the Revolving Credit
Commitments. Concurrently with any such reduction, Borrower shall comply with
Section 2.10(c).
(c) Revolving Credit Extension Reductions. Until the
Revolving Credit Commitment Termination Date, Borrower shall from time to time
immediately prepay the Revolving Credit Loans (and/or provide cover for Letter
of Credit Liabilities as specified in Section 2.10(d)) in such amounts as shall
be necessary so that at all times the aggregate outstanding amount of the
Revolving Credit Loans, plus the aggregate outstanding Letter of Credit
Liabilities shall not exceed the aggregate Revolving Credit Commitments, such
amount to be applied, first, to Revolving Credit Loans outstanding and, second,
as cover for Letter of Credit Liabilities outstanding as specified in Section
2.10(d).
Notwithstanding the foregoing, if the amount of any prepayment
of Revolving Credit Loans required under this Section 2.10 shall be in excess
of the amount of the Alternate Base Rate Loans at the time outstanding, only
the portion of the amount of such prepayment as is equal to the amount of such
outstanding Alternate Base Rate Loans shall be immediately prepaid and, at the
election of Borrower, the balance of such required prepayment shall be either
(i) deposited in the Collateral Account and applied to the prepayment of LIBOR
Loans on the last day of the then next- expiring Interest Period for LIBOR
Loans or (ii) prepaid immediately, together with any amounts owing to the
Lenders under Section 5.05. Notwithstanding any such deposit in the Collateral
Account, interest shall continue to accrue on such Revolving Credit Loans until
prepayment. If the Collateral Release Date occurs, Borrower must create a
Collateral Account pursuant to documentation satisfactory to the Administrative
Agent prior to electing the option described in clause (i) of the second
preceding sentence.
(d) Cover for Letter of Credit Liabilities. In the event
that Borrower shall be required pursuant to this Section 2.10 to provide cover
<PAGE> 51
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for Letter of Credit Liabilities, Borrower shall effect the same by paying to
the Administrative Agent immediately available funds in an amount equal to the
required amount, which funds shall be retained by the Administrative Agent in
the Collateral Account (as provided in the Security Agreement as collateral
security in the first instance for the Letter of Credit Liabilities) until such
time as all Letters of Credit shall have been terminated and all of the Letter
of Credit Liabilities paid in full. If the Collateral Release Date occurs,
Borrower shall create a Collateral Account which shall be pledged to the
Administrative Agent pursuant to documentation satisfactory to the
Administrative Agent into which amounts payable under this Section 2.10(d)
shall be deposited.
2.11. Replacement of Lenders. Upon the occurrence of any
event giving rise to the operation of Section 5.01, 5.03 or Section 5.06 with
respect to any Lender which results in such Lender charging to Borrower
increased costs in excess of those being generally charged by the other Lenders
or becoming incapable of making LIBOR Loans, and/or (y) as provided in Section
12.04(ii), in the case of a refusal by a Lender to consent to certain proposed
amendments, waivers or modifications with respect to this Agreement, Borrower
shall have the right, if no Default or Event of Default then exists, to replace
such Lender (the "Replaced Lender") with one or more other Eligible Persons
reasonably acceptable to the Administrative Agent (collectively, the "Proposed
Lender"); provided, however, that (i) at the time of any replacement pursuant
to this Section 2.11, the Proposed Lender shall enter into one or more
assignment agreements (and with all fees payable pursuant to said Section 12.06
to be paid by the Proposed Lender) pursuant to which the Proposed Lender shall
acquire all of the Revolving Credit Commitments and outstanding Revolving
Credit Loans of, and in each case Letter of Credit Interests by, the Replaced
Lender and, in connection therewith, shall pay to (x) the Replaced Lender, an
amount equal to the sum of (A) the principal of, and all accrued interest on,
all outstanding Revolving Credit Loans of the Replaced Lender, (B) all
Reimbursement Obligations owing to such Replaced Lender, together with all then
unpaid interest with respect thereto at such time, and (C) all accrued, but
theretofore unpaid, fees owing to the Replaced Lender pursuant to Section 2.05,
and (y) the Issuing Lender an amount equal to such Replaced Lender's Revolving
Credit Commitment Percentage of any Reimbursement Obligations (which at such
time remains a Reimbursement Obligation) to the extent such amount was not
theretofore funded by such Replaced Lender, and (ii) all obligations of
Borrower owing to the Replaced Lender (other than those specifically described
in clause (i) above in respect of which the assignment purchase price has been,
or is concurrently being, paid) shall be paid in full to such Replaced Lender
concurrently with such replacement. Upon the execution of the respective
assignment agreement, the payment of amounts referred to in clauses (i) and
(ii) above and, if so requested by the Proposed Lender, delivery to the
Proposed Lender of Notes executed by Borrower, the Proposed Lender shall become
a Lender hereunder and the Replaced Lender shall cease to constitute a Lender
hereunder and be released of all its obligations as a Lender, except with
respect to indemnification provisions applicable to the Replaced Lender under
this Agreement, which shall survive as to such Replaced Lender.
<PAGE> 52
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Section 3. Payments of Principal and Interest.
3.01. Repayment of Revolving Credit Loans.
(a) Revolving Credit Loans. Borrower hereby promises to pay
to the Administrative Agent for the account of each Lender the entire
outstanding principal amount of such Lender's Revolving Credit Loans, and each
Revolving Credit Loan shall mature, on the Revolving Credit Commitment
Termination Date.
3.02. Interest. Borrower hereby promises to pay to the
Administrative Agent for the account of each Lender interest on the unpaid
principal amount of each Revolving Credit Loan made by such Lender for the
period from and including the date of such Revolving Credit Loan to but
excluding the date such Revolving Credit Loan shall be paid in full, at the
following rates per annum:
(a) during such periods as such Revolving Credit Loan is an
Alternate Base Rate Loan, the Alternate Base Rate (as in effect from
time to time), plus the Applicable Margin and
(b) during such periods as such Revolving Credit Loan is a
LIBOR Loan, for each Interest Period relating thereto, the LIBOR Rate
for such Revolving Credit Loan for such Interest Period, plus the
Applicable Margin.
Notwithstanding the foregoing, Borrower hereby promises to pay
to the Administrative Agent for account of each Lender interest at the
applicable Post-Default Rate on any principal of any Revolving Credit Loan made
by such Lender, on any Reimbursement Obligation held by such Lender and on any
other amount payable by Borrower hereunder or under the Notes held by such
Lender to or for account of such Lender, that shall not be paid in full when
due (whether at stated maturity, by acceleration, by mandatory prepayment or
otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full.
Accrued interest on each Revolving Credit Loan shall be
payable (i) in the case of an Alternate Base Rate Loan, quarterly on the
Quarterly Dates, (ii) in the case of a LIBOR Loan, on the last day of each
Interest Period therefor and, if such Interest Period is longer than three
months, at three-month intervals following the first day of such Interest
Period and (iii) in the case of any LIBOR Loan, upon the payment or prepayment
thereof or the Conversion of such Revolving Credit Loan to a Revolving Credit
Loan of another Type (but only on the principal amount so paid, prepaid or
Converted), except that interest payable at the Post-Default Rate shall be
payable from time to time on demand. Promptly after the determination
<PAGE> 53
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of any interest rate provided for herein or any change therein, the
Administrative Agent shall give notice thereof to the Lenders to which such
interest is payable and to Borrower.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
4.01. Payments. (a) Except to the extent otherwise provided
herein, all payments of principal, interest, Reimbursement Obligations and
other amounts to be made by Borrower under this Agreement and the Notes, and,
except to the extent otherwise provided therein, all payments to be made by the
Obligors under any other Basic Document, shall be made in Dollars, in
immediately available funds, without deduction, set-off or counterclaim, to the
Administrative Agent at its account at the Principal Office, not later than
1:00 p.m. New York time on the date on which such payment shall become due
(each such payment made after such time on such due date to be deemed to have
been made on the next succeeding Business Day).
(b) Borrower shall, at the time of making each payment under
this Agreement or any Note for the account of any Lender, specify to the
Administrative Agent (which shall so notify the intended recipient(s) thereof)
the Revolving Credit Loans, Reimbursement Obligations or other amounts payable
by Borrower hereunder to which such payment is to be applied (and in the event
that Borrower fails to so specify, or if an Event of Default has occurred and
is continuing, the Administrative Agent may distribute such payment to the
Lenders for application in such manner as it or the Majority Lenders, subject
to Section 4.02, may determine to be appropriate).
(c) Except to the extent otherwise provided in the second
sentence of Section 2.03(g), each payment received by the Administrative Agent
under this Agreement or any Note for the account of any Lender shall be paid by
the Administrative Agent to such Lender, in immediately available funds, (x) if
the payment was actually received by the Administrative Agent prior to 1:00
p.m. (New York time) on any day, on such day and (y) if the payment was
actually received by the Administrative Agent after 1:00 p.m. (New York time)
on any day, on the following Business Day (it being understood that to the
extent that any such payment is not made in full by the Administrative Agent,
the Administrative Agent shall pay to such Lender, upon demand, interest at the
Federal Funds Rate from the date such amount was required to be paid to such
Lender pursuant to the foregoing clauses until the date the Administrative
Agent pays such Lender the amount).
(d) If the due date of any payment under this Agreement or
any Note would otherwise fall on a day that is not a Business Day, such date
shall be extended to the next succeeding Business Day, and interest shall be
payable for any principal so extended for the period of such extension.
4.02. Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each borrowing of Revolving Credit Loans from the Lenders
<PAGE> 54
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under Section 2.01 shall be made from the relevant Lenders, each payment of
commitment fee under Section 2.05 in respect of Revolving Credit Commitments
shall be made for account of the relevant Lenders, and each termination or
reduction of the amount of the Revolving Credit Commitments under Section 2.04
shall be applied to the respective Revolving Credit Commitments of the relevant
Lenders, pro rata according to the amounts of their respective Revolving Credit
Commitments; (b) except as otherwise provided in Section 5.04, LIBOR Loans
having the same Interest Period shall be allocated pro rata among the relevant
Lenders according to the amounts of their respective Revolving Credit
Commitments (in the case of the making of Revolving Credit Loans) or their
respective Revolving Credit Loans (in the case of Conversions and Continuations
of Revolving Credit Loans); (c) each payment or prepayment of principal of
Revolving Credit Loans by Borrower shall be made for account of the relevant
Lenders pro rata in accordance with the respective unpaid outstanding principal
amounts of the Revolving Credit Loans held by them; and (d) each payment of
interest on Revolving Credit Loans by Borrower shall be made for account of the
relevant Lenders pro rata in accordance with the amounts of interest on such
Revolving Credit Loans then due and payable to the respective Lenders.
4.03. Computations. Interest on LIBOR Loans and commitment
fees and letter of credit fees shall be computed on the basis of a year of 360
days and actual days elapsed (including the first day but excluding the last
day) occurring in the period for which payable and interest on Alternate Base
Rate Loans and Reimbursement Obligations shall be computed on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable. Notwithstanding the foregoing, for each day that the Alternate Base
Rate is calculated by reference to the Federal Funds Rate, interest on
Alternate Base Rate Loans and Reimbursement Obligations shall be computed on
the basis of a year of 360 days and actual days elapsed (including the first
day but excluding the last day).
4.04. Minimum Amounts. Except for mandatory prepayments made
pursuant to Section 2.10 and Conversions or prepayments made pursuant to
Section 5.04, each borrowing, Conversion and prepayment of principal of
Revolving Credit Loans shall be in an amount at least equal to $1.0 million
with respect to Alternate Base Rate Loans and $1.0 million with respect to
LIBOR Loans and in multiples of $100,000 in excess thereof (borrowings,
Conversions or prepayments of or into Revolving Credit Loans of different Types
or, in the case of LIBOR Loans, having different Interest Periods at the same
time hereunder to be deemed separate borrowings, Conversions and prepayments
for purposes of the foregoing, one for each Type or Interest Period). Anything
in this Agreement to the contrary notwithstanding, the aggregate principal
amount of LIBOR Loans having the same Interest Period shall be in an amount at
least equal to $10.0 million and in multiples of $500,000 in excess thereof
and, if any LIBOR Loans would otherwise be in a lesser principal amount for any
period, such Revolving Credit Loans shall be Alternate Base Rate Loans during
such period.
<PAGE> 55
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4.05. Certain Notices. Notices by Borrower to the
Administrative Agent of terminations or reductions of the Revolving Credit
Commitments, of borrowings, Conversions, Continuations and optional prepayments
of Revolving Credit Loans and of Types of Revolving Credit Loans and of the
duration of Interest Periods shall be irrevocable and shall be effective only
if received by the Administrative Agent not later than 11:00 a.m. New York time
on the number of Business Days prior to the date of the relevant termination,
reduction, borrowing, Conversion, Continuation or prepayment or the first day
of such Interest Period specified below:
<TABLE>
<CAPTION>
NUMBER OF BUSINESS
NOTICE DAYS PRIOR
------------------------------------------------ ------------------
<S> <C>
Termination or reduction of Revolving Credit 3
Commitments
Borrowing or optional prepayment of, or same day
Conversions into, Alternate Base Rate Loans
Borrowing or optional prepayment of, Conversions 3
into, Continuations as, or duration of Interest
Period for, LIBOR Loans
</TABLE>
Each such notice of termination or reduction shall specify the amount of the
Revolving Credit Commitments to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation or prepayment shall specify the amount
(subject to Section 4.04) and Type of each Revolving Credit Loan to be
borrowed, Converted, Continued or prepaid and the date of borrowing,
Conversion, Continuation or prepayment (which shall be a Business Day). Each
such notice of the duration of an Interest Period shall specify the Revolving
Credit Loans to which such Interest Period is to relate. The Administrative
Agent shall promptly notify the Lenders of the contents of each such notice.
In the event that Borrower fails to select the Type of Revolving Credit Loan,
or the duration of any Interest Period for any LIBOR Loan, within the time
period and otherwise as provided in this Section 4.05, such Revolving Credit
Loan (if outstanding as a LIBOR Loan) will be automatically Converted into an
Alternate Base Rate Loan on the last day of the then current Interest Period
for such LIBOR Loan or (if outstanding as an Alternate Base Rate Loan) will
remain as, or (if not then outstanding) will be made as, an Alternate Base Rate
Loan.
4.06. Non-Receipt of Funds by the Administrative Agent.
Unless the Administrative Agent shall have received written notice from a
Lender or Borrower (the "Payor") prior to the time on which the Payor is to
make payment to the Administrative Agent of (in the case of a Lender) the
proceeds of a Revolving Credit Loan to be made by such Lender hereunder or (in
the case of Borrower) a payment to the Administrative Agent for the account of
one or more of the Lenders hereunder (such payment being herein
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called the "Required Payment"), which notice shall be effective upon receipt,
that the Payor does not intend to make the Required Payment to the
Administrative Agent, the Administrative Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient(s)
on such date; and, if the Payor has not in fact made the Required Payment to
the Administrative Agent, the recipient(s) of such payment shall, on demand,
repay to the Administrative Agent the amount so made available together with
interest thereon in respect of each day during the period commencing on the
date (the "Advance Date") such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for such day and, if
such recipient(s) shall fail promptly to make such payment, the Administrative
Agent shall be entitled to recover such amount, on demand, from the Payor,
together with interest as aforesaid; provided, however, that if neither the
recipient(s) nor the Payor shall return the Required Payment to the
Administrative Agent within three Business Days of the Advance Date, then,
retroactively to the Advance Date, the Payor and the recipient(s) shall each be
obligated to pay interest on the Required Payment as follows (without double
recovery):
(i) if the Required Payment shall represent a payment to
be made by Borrower to the Lenders, Borrower and the recipient(s)
shall each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the Post-Default Rate
(without duplication of the obligation of Borrower under Section 3.02
to pay interest on the Required Payment at the Post-Default Rate), it
being understood that the return by the recipient(s) of the Required
Payment to the Administrative Agent shall not limit such obligation of
Borrower under Section 3.02 to pay interest at the Post-Default Rate
in respect of the Required Payment and
(ii) if the Required Payment shall represent proceeds of a
Revolving Credit Loan to be made by the Lenders to Borrower, the Payor
and Borrower shall each be obligated retroactively to the Advance Date
to pay interest in respect of the Required Payment pursuant to Section
3.02, it being understood that the return by Borrower of the Required
Payment to the Administrative Agent shall not limit any claim Borrower
may have against the Payor in respect of such Required Payment.
4.07. Right of Setoff; Sharing of Payments, Etc. (a) Each
Obligor agrees that, in addition to (and without limitation of) any right of
setoff, banker's lien or counterclaim a Lender may otherwise have, each Lender
shall be entitled, at its option (to the fullest extent permitted by law), to
set off and apply any deposit (general or special, time or demand, provisional
or final), or other indebtedness, held by it for the credit or account of such
Obligor at any of its offices, in Dollars or in any other currency, against any
principal of or interest on any of such Lender's
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Revolving Credit Loans, Reimbursement Obligations or any other amount payable
to such Lender hereunder that is not paid when due (regardless of whether such
deposit or other indebtedness is then due to such Obligor), in which case it
shall promptly notify such Obligor and the Administrative Agent thereof;
provided, however, that such Lender's failure to give such notice shall not
affect the validity thereof.
(b) Each of the Lenders agrees that, if it should receive
(other than pursuant to Section 5) any amount hereunder (whether by voluntary
payment, by realization upon security, by the exercise of the right of setoff
or banker's lien, by counterclaim or cross action, by the enforcement of any
right under the Basic Documents, or otherwise) which is applicable to the
payment of the principal of, or interest on, the Revolving Credit Loans,
Reimbursement Obligations or fees, 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 amounts then owed and due to such Lender bears to the total of such
amounts 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 respective Obligor to such Lenders in such amount as shall
result in a proportional participation by all of the Lenders in such amount;
provided, however, 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.
Borrower consents to the foregoing arrangements.
(c) Borrower agrees that any Lender so purchasing such a
participation may exercise all rights of setoff, banker's lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Revolving Credit Loans or other amounts (as the case
may be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise,
and retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of any Obligor. If, under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured
claim in lieu of a setoff to which this Section 4.07 applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section 4.07 to share in the benefits of any recovery on such
secured claim.
Section 5. Yield Protection, Etc.
5.01. Additional Costs. (a) If the adoption of, or any
change in, any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether
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or not having the force of law) from any central bank or other Governmental
Authority or the NAIC made subsequent to the Original Closing Date (or, with
respect to the Existing Letters of Credit, made subsequent to their date of
issuance (without regard to any deemed issuance on the Original Closing Date
for purposes of Section 2.03) if before the Original Closing Date.
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note, any Letter of
Credit or any Lender's participation therein, any Letter of Credit
Document or any LIBOR Loan made by it or change the basis of taxation
of payments to such Lender in respect thereof (except for taxes
covered by Section 5.06 and changes in the rate of tax on the overall
net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the LIBOR Rate hereunder,
including, without limitation, the imposition of any reserves with
respect to the Eurocurrency Liabilities under Regulation D; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining LIBOR Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof then, in any such case, Borrower shall promptly pay such Lender, upon
its demand, any additional amounts necessary to compensate such Lender for such
increased cost or reduced amount receivable. If any Lender becomes entitled to
claim any additional amounts pursuant to this subsection, it shall promptly
notify Borrower, through the Administrative Agent, of the event by reason of
which it has become so entitled. A certificate as to any additional amounts
pursuant to this Section 5.01 submitted by such Lender, through the
Administrative Agent, to Borrower shall be conclusive in the absence of clearly
demonstrable error. This covenant shall survive the termination of this
Agreement and the payment of the Notes all other amounts payable hereunder.
(b) In the event that any Lender shall have determined that
the adoption of any law, rule, regulation or guideline regarding capital
adequacy (or any change therein or in the interpretation or application
thereof) or compliance by any Lender or any corporation controlling such Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any central bank or Governmental Authority, including,
without limitation, the issuance of any final rule, regulation
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or guideline, does or shall have the effect of reducing the rate of return on
such Lender's or such corporation's capital as a consequence of its obligations
hereunder or under any Letter of Credit to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, after submission by such Lender to
Borrower (with a copy to the Administrative Agent) of a written request
therefor, Borrower shall promptly pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) Each Lender shall notify Borrower of any event occurring
after the date of this Agreement that will entitle such Lender to compensation
under paragraph (a) or (b) of this Section 5.01 as promptly as practicable, but
in any event within 120 days after such Lender obtains actual knowledge
thereof; provided, however, that if any Lender fails to give such notice within
120 days after it obtains actual knowledge of such an event, such Lender shall,
with respect to compensation payable pursuant to this Section 5.01 in respect
of any costs resulting from such event, only be entitled to payment under this
Section 5.01 for costs incurred from and after the date 120 days prior to the
date that such Lender does give such notice. Each Lender will furnish to
Borrower a certificate setting forth the basis, amount and reasonable detail of
computation of each request by such Lender for compensation under paragraph (a)
or (b) of this Section 5.01, which certificate shall, except for demonstrable
error, be final, conclusive and binding for all purposes.
5.02. Limitation on Types of Revolving Credit Loans.
Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any LIBOR Base Rate for any Interest Period:
(i) the Administrative Agent determines, which
determination shall be conclusive, that quotations of interest rates
for the relevant deposits referred to in the definition of "LIBOR Base
Rate" in Section 1.01 are not being provided in the relevant amounts
or for the relevant maturities for purposes of determining rates of
interest for LIBOR Loans as provided herein; or
(ii) the Majority Lenders determine, which determination
shall be conclusive, that the relevant rates of interest referred to
in the definition of "LIBOR Base Rate" in Section 1.01 upon the basis
of which the rate of interest for LIBOR Loans for such Interest Period
is to be determined are not likely adequately to cover the cost to the
applicable Lenders of making or maintaining LIBOR Loans for such
Interest Period,
then the Administrative Agent shall give Borrower and each Lender prompt notice
thereof, and so long as such condition remains in effect, the
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affected Lenders shall be under no obligation to make additional LIBOR Loans,
to Continue LIBOR Loans or to Convert Alternate Base Rate Loans into LIBOR
Loans and Borrower shall, on the last day(s) of the then current Interest
Period(s) for the outstanding LIBOR Loans, either prepay such Revolving Credit
Loans or Convert such Revolving Credit Loans into Alternate Base Rate Loans in
accordance with Section 2.09.
5.03. Illegality. Notwithstanding any other provision of
this Agreement, in the event that any change in any Requirement of Law or in
the interpretation or application thereof shall make it unlawful for any Lender
or its Applicable Lending Office to honor its obligation to make or maintain
LIBOR Loans hereunder (and, in the sole opinion of such Lender, the designation
of a different Applicable Lending Office would either not avoid such
unlawfulness or would be disadvantageous to such Lender), then such Lender
shall promptly notify Borrower thereof (with a copy to the Administrative
Agent) and such Lender's obligation to make or Continue, or to Convert Loans of
any other Type into, LIBOR Loans shall be suspended until such time as such
Lender may again make and maintain LIBOR Loans (in which case the provisions of
Section 5.04 shall be applicable).
5.04. Treatment of Affected Revolving Credit Loans. If the
obligation of any Lender to make LIBOR Loans or to Continue, or to Convert
Alternate Base Rate Loans into, LIBOR Loans shall be suspended pursuant to
Section 5.03, such Lender's LIBOR Loans shall be automatically Converted into
Alternate Base Rate Loans on the last day(s) of the then current Interest
Period(s) for such LIBOR Loans (or on such earlier date as such Lender may
specify to Borrower with a copy to the Administrative Agent as is required by
law) and, unless and until such Lender gives notice as provided below that the
circumstances specified in Section 5.03 which gave rise to such Conversion no
longer exist:
(i) to the extent that such Lender's LIBOR Loans have
been so Converted, all payments and prepayments of principal which
would otherwise be applied to such Lender's LIBOR Loans shall be
applied instead to its Alternate Base Rate Loans; and
(ii) all Revolving Credit Loans which would otherwise be
made or Continued by such Lender as LIBOR Loans shall be made or
Continued instead as Alternate Base Rate Loans and all Alternate Base
Rate Loans of such Lender which would otherwise be Converted into
LIBOR Loans shall remain as Alternate Base Rate Loans.
If such Lender gives notice to Borrower with a copy to the Administrative Agent
that the circumstances specified in Section 5.03 which gave rise to the
Conversion of such Lender's LIBOR Loans pursuant to this Section 5.04 no longer
exist (which such Lender agrees to do promptly upon such circumstances ceasing
to exist) at a time when LIBOR Loans are outstanding, such Lender's Alternate
Base Rate Loans shall be automatically Converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding
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LIBOR Loans, to the extent necessary so that, after giving effect thereto, all
Revolving Credit Loans held by the Lenders holding LIBOR Loans and by such
Lender are held pro rata (as to principal amounts, Types and Interest Periods)
in accordance with their respective Revolving Credit Commitments.
5.05. Compensation. (a) Borrower agrees to indemnify each
Lender and to hold each Lender harmless from any actual or direct loss or
expense which such Lender may sustain or incur as a consequence of (1) default
by Borrower in payment when due of the principal amount of or interest on any
LIBOR Loan, (2) default by Borrower in making a borrowing of, Conversion into
or Continuation of LIBOR Loans after Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, (3) default by
Borrower in making any prepayment after Borrower has given a notice thereof in
accordance with the provisions of the Agreement or (4) the making of a payment
or a prepayment of LIBOR Loans on a day which is not the last day of an
Interest Period with respect thereto, including in each case, any such loss
(including loss of margin) or expense arising from the reemployment of funds
obtained by it or from fees payable to terminate the deposits from which such
funds were obtained.
(b) For the purpose of calculation of all amounts payable to
a Lender under this Section 5.05 each Lender shall be deemed to have actually
funded its relevant LIBOR Loan through the purchase of a deposit bearing
interest at the LIBOR Rate in an amount equal to the amount of the LIBOR Loan
and having a maturity comparable to the relevant Interest Period; provided,
however, that each Lender may fund each of its LIBOR Loans in any manner it
seems fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. Any Lender requesting
compensation pursuant to this Section 5.05 will furnish to the Administrative
Agent and Borrower a certificate setting forth the basis and amount of such
request and such certificate, absent manifest error, shall be conclusive. This
covenant shall survive the termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder.
5.06. Net Payments. (a) All payments made by Borrower
hereunder or under any Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 5.06(b), all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein with respect to
such payments (but excluding, except as provided in the second succeeding
sentence, any tax imposed on or measured by the net income or net profits of a
Lender pursuant to the laws of the jurisdiction in which it is organized or the
jurisdiction in which the principal office or Applicable Lending Office of such
Lender is located or any subdivision thereof or therein) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as
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"Covered Taxes"). If any Covered Taxes are so levied or imposed, Borrower
agrees to pay the full amount of such Covered Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement or under any Note, after withholding or deduction for or on account
of any Covered Taxes, will not be less than the amount provided for herein or
in such Note. If any amounts are payable in respect of Covered Taxes pursuant
to the preceding sentence, Borrower agrees to reimburse each Lender, upon the
written request of such Lender, for taxes imposed on or measured by the net
income or net profits of such Lender pursuant to the laws of the jurisdiction
in which the principal office or Applicable Lending Office of such Lender is
located or under the laws of any political subdivision or taxing authority of
any such jurisdiction in which the principal office or Applicable Lending
Office of such Lender is located and for any withholding of taxes as such
Lender shall determine are payable by, or withheld from, such Lender in respect
of such amounts so paid to or on behalf of such Lender pursuant to the
preceding sentence and in respect of any amounts paid to or on behalf of such
Lender pursuant to this sentence. Borrower will furnish to the Administrative
Agent within 45 days after the date the payment of any Covered Taxes is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by Borrower. Borrower agrees to indemnify and hold harmless each
Lender, and reimburse such Lender upon its written request, for the amount of
any Covered Taxes so levied or imposed and paid by such Lender and any
liability (including penalties, additions to tax, interest and expenses)
arising therefrom or with respect thereto.
(b) Each Lender that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) agrees to deliver to
Borrower and the Administrative Agent on or prior to the Original Closing Date
(or, if a new Lender as of the Amendment and Restatement Date, on or prior to
the Amendment and Restatement Date) or in the case of a Lender that is an
assignee or transferee of an interest under this Agreement pursuant to Section
12.06 (unless the respective Lender was already a Lender hereunder immediately
prior to such assignment or transfer), 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 Note (or, with respect to any assignee Lender, at least as extensive
as the assigning Lender), or (ii) if the Lender is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit H (any such certificate, a
"Section 5.06 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 to be made under this Agreement and
under any Note (or, with respect to any assignee Lender, at least as extensive
as the assigning
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Lender). In addition, each Lender agrees that from time to time after the
Original Closing Date, when a lapse in time or change in circumstances renders
the previous certification obsolete or inaccurate in any material respect, it
will deliver to Borrower and the Administrative Agent two new accurate and
complete original signed copies of Internal Revenue Service Form 4224 or 1001,
or Form W-8 and a Section 5.06 Certificate, 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 Note, or
it shall immediately notify Borrower and the Administrative Agent of its
inability to deliver any such Form or Certificate. Notwithstanding anything to
the contrary contained in Section 5.06(a), but subject to Section 12.06(b) and
the immediately succeeding sentence, (x) Borrower shall be entitled, to the
extent it is 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 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 Code) for U.S. Federal
income tax purposes to the extent that such Lender has not provided to Borrower
U.S. Internal Revenue Service Forms that establish a complete exemption from
such deduction or withholding and (y) Borrower shall not be obligated pursuant
to Section 4.04(a) hereof to gross up payments to be made to a Lender in
respect of income or similar taxes imposed by the United States if (I) such
Lender has not provided to Borrower the Internal Revenue Service Forms required
to be provided to Borrower pursuant to this Section 5.06(b) or (II) in the case
of a payment, other than interest, to a Lender described in clause (ii) above,
to the extent that such Forms do not establish a complete exemption from
withholding of such taxes. Notwithstanding anything to the contrary contained
in the preceding sentence or elsewhere in this Section 5.06 and except as set
forth in Section 12.06(b), Borrower agrees to pay additional amounts and to
indemnify each Lender in the manner set forth in Section 5.06(a) (without
regard to the identity of the jurisdiction requiring the deduction or
withholding) 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
Original Closing Date 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 Covered Taxes.
(c) In addition, Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under the Note or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or the Notes (other than Oklahoma mortgage recording tax)
(hereinafter referred to as "Other Taxes").
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Section 6. Guarantee.
6.01. The Guarantee. The Subsidiary Guarantors hereby
jointly and severally guarantee as a primary obligor and not as a surety to
each Lender and the Administrative Agent and their respective successors and
assigns the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) of the principal of and interest on the Revolving
Credit Loans made by the Lenders to, and the Notes held by each Lender of,
Borrower and all other amounts from time to time owing to the Lenders or the
Administrative Agent by Borrower under this Agreement and under the Notes and
by any Obligor under any of the other Basic Documents, and all obligations of
Borrower or any Subsidiary to any Lender or any Affiliate of any Lender in
respect of any Swap Contract and all Obligations owing to the Issuing Lender
under the Letter of Credit Documents, in each case strictly in accordance with
the terms thereof (such obligations being herein collectively called the
"Guaranteed Obligations"). The Subsidiary Guarantors hereby further jointly
and severally agree that if Borrower shall fail to pay in full when due
(whether at stated maturity, by acceleration or otherwise) any of the
Guaranteed Obligations, the Subsidiary Guarantors will promptly pay the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Guaranteed Obligations, the same
will be promptly paid in full when due (whether at extended maturity, by
acceleration or otherwise) in accordance with the terms of such extension or
renewal.
6.02. Obligations Unconditional. The obligations of the
Subsidiary Guarantors under Section 6.01 are absolute, irrevocable and
unconditional, joint and several, irrespective of the value, genuineness,
validity, regularity or enforceability of the obligations of Borrower under
this Agreement, the Notes or any other agreement or instrument referred to
herein or therein, or any substitution, release or exchange of any other
guarantee of or security for any of the Guaranteed Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor (except for payment in full), it
being the intent of this Section 6.02 that the obligations of the Subsidiary
Guarantors hereunder shall be absolute, irrevocable and unconditional, joint
and several, under any and all circumstances. Without limiting the generality
of the foregoing, it is agreed that the occurrence of any one or more of the
following shall not alter or impair the liability of the Subsidiary Guarantors
hereunder which shall remain absolute, irrevocable and unconditional as
described above:
(i) at any time or from time to time, without notice to
the Subsidiary Guarantors, the time for any performance of or
compliance with any of the Guaranteed Obligations shall be extended,
or such performance or compliance shall be waived;
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(ii) any of the acts mentioned in any of the provisions of
this Agreement or the Notes or any other agreement or instrument
referred to herein or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations
shall be accelerated, or any of the Guaranteed Obligations shall be
modified, supplemented or amended in any respect, or any right under
this Agreement, the Notes or any other Basic Document or any other
agreement or instrument referred to herein or therein shall be
amended, modified or waived in any respect or any other guarantee of
any of the Guaranteed Obligations or any security therefor shall be
released or exchanged in whole or in part or otherwise dealt with;
(iv) any lien or security interest granted to, or in favor
of, the Administrative Agent or any Lender or Lenders as security for
any of the Guaranteed Obligations shall fail to be perfected; or
(v) the release of any other Subsidiary Guarantor.
The Subsidiary Guarantors hereby expressly waive diligence, presentment, demand
of payment, protest and all notices whatsoever, and any requirement that the
Administrative Agent or any Lender exhaust any right, power or remedy or
proceed against Borrower under this Agreement or the Notes or any other
agreement or instrument referred to herein or therein, or against any other
Person under any other guarantee of, or security for, any of the Guaranteed
Obligations. The Subsidiary Guarantors waive any and all notice of the
creation, renewal, extension, waiver, termination or accrual of any of the
Guaranteed Obligations and notice of or proof of reliance by any Lender upon
this guarantee or acceptance of this guarantee, and the Guaranteed Obligations,
and any of them, shall conclusively be deemed to have been created, contracted
or incurred in reliance upon this guarantee, and all dealings between Borrower
and the Lenders shall likewise be conclusively presumed to have been had or
consummated in reliance upon this guarantee. This guarantee shall be construed
as a continuing, absolute, irrevocable and unconditional guarantee of payment
without regard to any right of offset with respect to the Guaranteed
Obligations at any time or from time to time held by the Lenders, and the
obligations and liabilities of the Subsidiary Guarantors hereunder shall not be
conditioned or contingent upon the pursuit by the Lenders or any other Person
at any time of any right or remedy against Borrower or against any other Person
which may be or become liable in respect of all or any part of the Guaranteed
Obligations or against any collateral security or guarantee therefor or right
of offset with respect thereto. This guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon
the Subsidiary Guarantors and the successors and assigns thereof, and shall
inure to the benefit of the Lenders, and their respective successors and
assigns, notwithstanding that from time to time during the term of this
Agreement there may be no Guaranteed Obligations outstanding.
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6.03. Reinstatement. The obligations of the Subsidiary
Guarantors under this Section 6 shall be automatically reinstated if and to the
extent that for any reason any payment by or on behalf of Borrower in respect
of the Guaranteed Obligations is rescinded or must be otherwise restored by any
holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise and the Subsidiary
Guarantors jointly and severally agree that they will indemnify the
Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including reasonable fees of counsel) incurred by the Administrative
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law, other than any
costs or expenses resulting from the gross negligence or bad faith of such
Creditor.
6.04. Subrogation; Subordination. Each Subsidiary Guarantor
hereby agrees that until the indefeasible payment and satisfaction in full in
cash of all Guaranteed Obligations and the expiration and termination of the
Revolving Credit Commitments of the Lenders under this Agreement it shall not
exercise any right or remedy arising by reason of any performance by it of its
guarantee in Section 6.01, whether by subrogation or otherwise, against
Borrower or any other guarantor of any of the Guaranteed Obligations or any
security for any of the Guaranteed Obligations. The payment of any amounts due
with respect to any indebtedness of Borrower or any other Subsidiary Guarantor
now or hereafter owing to any Subsidiary Guarantor by reason of any payment by
such Subsidiary Guarantor under the Guarantee in this Section 6 is hereby
subordinated to the prior indefeasible payment in full in cash of the
Guaranteed Obligations. Each Subsidiary Guarantor agrees that it will not
demand, sue for or otherwise attempt to collect any such indebtedness of
Borrower to such Subsidiary Guarantor until the Obligations shall have been
indefeasibly paid in full in cash. If, notwithstanding the foregoing sentence,
any Subsidiary Guarantor shall prior to the indefeasible payment in full in
cash of the Guaranteed Obligations collect, enforce or receive any amounts in
respect of such indebtedness, such amounts shall be collected, enforced and
received by such Subsidiary Guarantor as trustee for the Administrative Agent
and the Lenders and be paid over to the Administrative Agent on account of the
Guaranteed Obligations without affecting in any manner the liability of such
Subsidiary Guarantor under the other provisions of the guaranty contained
herein.
6.05. Remedies. The Subsidiary Guarantors jointly and
severally agree that, as between the Subsidiary Guarantors and the Lenders, the
obligations of Borrower under this Agreement and the Notes may be declared to
be forthwith due and payable as provided in Section 10 (and shall be deemed to
have become automatically due and payable in the circumstances provided in said
Section 10) for purposes of Section 6.01 notwithstanding any stay, injunction
or other prohibition preventing such declaration (or such obligations from
becoming automatically due and payable) as against
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Borrower and that, in the event of such declaration (or such obligations being
deemed to have become automatically due and payable), such obligations (whether
or not due and payable by Borrower) shall forthwith become due and payable by
the Subsidiary Guarantors for purposes of Section 6.01.
6.06. Instrument for the Payment of Money. Each Subsidiary
Guarantor hereby acknowledges that the guarantee in this Section 6 constitutes
an instrument for the payment of money, and consents and agrees that any Lender
or the Administrative Agent, at its sole option, in the event of a dispute by
such Subsidiary Guarantor in the payment of any moneys due hereunder, shall
have the right to bring motion-action under New York CPLR Section 3213.
6.07. Continuing Guarantee. The guarantee in this Section 6
is a continuing guarantee, and shall apply to all Guaranteed Obligations
whenever arising.
6.08. General Limitation on Guarantee Obligations. In any
action or proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Subsidiary Guarantor under
Section 6.01 would otherwise be held or determined to be void, voidable,
invalid or unenforceable, or subordinated to the claims of any other creditors,
on account of the amount of its liability under Section 6.01, then,
notwithstanding any other provision to the contrary, the amount of such
liability shall, without any further action by such Subsidiary Guarantor, any
Lender, the Administrative Agent or any other Person, be automatically limited
and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.
Section 7. Conditions Precedent.
7.01. Initial Extension of Credit. The conditions precedent
to the extensions of credit made on the Original Closing Date have been
represented and warranted by Borrower in the Original Credit Agreement as
having been satisfied as of the Original Closing Date (other than any condition
to be satisfied to the satisfaction of any Creditor), and the text thereof is
deleted herein for economy of documentation; however, such representation and
warranty continues in full force and effect. Reference is made to the terms of
the Original Credit Agreement for the text of Section 7.01.
7.02. Initial and Subsequent Extensions of Credit. Except as
set forth in Section 2.03, the obligation of the Lenders to make any Revolving
Credit Loan or otherwise extend any credit to Borrower upon the occasion of
each borrowing or other extension of credit hereunder (including the initial
borrowing) is subject to the further conditions precedent that:
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(i) Both immediately prior to the making of such
Revolving Credit Loan or other extension of credit and also after
giving pro forma effect thereto and to the intended use thereof:
(a) no Default or Event of Default shall have
occurred and be continuing; and
(b) the representations and warranties made by
the Obligors in Section 8, and by each Obligor in each of the
other Basic Documents to which it is a party, shall be true
and complete on and as of the date of the making of such
Revolving Credit Loan or other extension of credit with the
same force and effect as if made on and as of such date (or,
if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific
date).
(ii) No material litigation, investigation or proceeding
before or by any arbitrator or Governmental Authority shall be
continuing or threatened against any Obligor or any of the officers or
directors of any thereof in connection with any Basic Document or any
of the transactions contemplated hereby or thereby.
(iii) The Revolving Credit Loans and the use of proceeds
thereof shall not contravene, violate or conflict with, nor involve
any Lender in a violation of, any law, rule, injunction, or regulation
or determination of any court of law or other Governmental Authority.
Each notice of borrowing or request for the issuance of a
Letter of Credit by Borrower hereunder shall constitute a certification by
Borrower to the effect set forth in clause (i) above (both as of the date of
such notice or request and, unless Borrower otherwise notifies the
Administrative Agent prior to the date of such borrowing or issuance, as of the
date of such borrowing or issuance).
Each notice submitted by Borrower hereunder for an extension
of credit hereunder shall constitute a representation and warranty by Borrower,
as of the date of such notice and as of the relevant borrowing date or date of
issuance of a Letter of Credit, as applicable, that the applicable conditions
in Sections 7.02 and 7.03 are satisfied.
7.03. Conditions to Effectiveness of Amended and Restated
Credit Agreement. The effectiveness of the Amended and Restated Credit
Agreement is subject to the satisfaction of the conditions precedent that:
(i) Amended and Restated Credit Agreement. On the
Amendment and Restatement Date, this Agreement shall have been duly
authorized, executed and delivered to the Lenders by each Obligor in
form and substance satisfactory to the Arranger, Administrative Agent
and the Lenders.
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(ii) Documentation and Evidence of Certain Matters. The
Arranger shall have received on the Amendment and Restatement Date the
following documents, each duly executed where appropriate (with
sufficient copies for each Lender), each of which shall be reasonably
satisfactory to the Arranger (and to the extent specified below, to
each Lender) in form and substance:
(1) Corporate Documents. Certified copies of all
corporate authority for each Obligor (including board of
directors resolutions and evidence of the incumbency,
including specimen signatures, of officers) with respect to
the execution, delivery and performance of this Agreement and
the Notes.
(2) Officers' Certificate. An Officers'
Certificate of Borrower, dated the Amendment and Restatement
Date, to the effect set forth in clauses (a) and (b) of
Section 7.02(i).
(3) Opinions of Counsel. (i) Opinion of Haynes
and Boone, L.L.P., special counsel to the Obligors,
substantially in the form of Exhibit E-3 and dated the
Amendment and Restatement Date (and each Obligor hereby
instructs such counsel to deliver such opinion to the Lenders,
the Arranger and the Administrative Agent) and (ii) opinion of
Cahill Gordon & Reindel, special New York counsel to the
Agents and the Lenders in form and substance satisfactory to
the Agents.
(4) Notes. The Notes, duly completed and
executed for each Lender.
(iii) Absence of Certain Proceedings. There shall not
exist any threatened, instituted or pending Proceeding (i) challenging
the consummation of the transactions to occur on the Amendment and
Restatement Date or (ii) seeking to obtain, or having resulted in the
entry of, any judgment, order, injunction or other restraint that (A)
would restrain or prohibit, or impose adverse conditions upon, the
ability of the Lenders to make the Revolving Credit Loans or the
consummation of the transactions to occur on the Amendment and
Restatement Date, (B) could be reasonably expected to have a Material
Adverse Effect or (C) could purport to affect the legality, validity
or enforceability of the Basic Documents or any document relating
thereto, and in the case of (i) and (ii) there is a reasonable
possibility that such action, proceeding or counterclaim would be
successful on the merits.
(iv) Certain Approvals. All governmental and other
third-party approvals necessary in connection with the transactions to
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occur on the Amendment and Restatement Date, the financing
contemplated hereby and the continuing operations of Borrower and the
Subsidiaries shall have been obtained and shall be in full force and
effect on the Amendment and Restatement Date.
(v) Absence of Certain Events. Since the Original
Closing Date, there shall not have occurred or become known any
change, event or circumstance, or any development involving a
prospective change, event or circumstance, which in any case in the
opinion of the Lenders could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The
Lenders' ongoing diligence investigation shall not have disclosed
information, and the Lenders shall not have otherwise discovered
information not previously disclosed to them, that the Lenders believe
has had or would have, individually or in the aggregate, a Material
Adverse Effect or a material adverse effect on the tax or accounting
consequences of any transactions contemplated hereby.
(vi) Accuracy of Representations and Warranties. The
representations and warranties in Section 8 shall be true and correct
in all material respects on and as of the Amendment and Restatement
Date with the same effect as if made on and as of such date (except to
the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct as of such
earlier date).
(vii) Public Offering. The Public Offering shall have been
consummated and shall have resulted in net proceeds of not less than
$36.0 million to Borrower.
(viii) Other Matters. The Lenders shall have received such
other legal opinions, corporate documents and other instruments and/or
certificates as they may reasonably request.
(ix) Borrower shall have paid such fees and expenses as
Borrower shall have agreed to pay to any Creditor in connection
herewith, including counsel fees and expenses.
7.04. Conditions to Consummation of the Alchem Acquisition.
The consummation of the Alchem Acquisition and the making of any extension of
credit in connection therewith is subject to the satisfaction of the conditions
precedent set forth in Sections 7.02 and 7.03 and to the satisfaction of the
additional conditions precedent that:
(i) Corporate Structure. The corporate and capital
structure, and documents and instruments related thereto, of the
Obligors and their Subsidiaries, after giving effect to the Alchem
Acquisition, shall be reasonably satisfactory to the Arranger in all
respects. Alchem shall have no Subsidiaries as of the Alchem Closing
Date.
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(ii) Documentation and Evidence of Certain Matters. The
Arranger shall have received the following documents, each duly
executed where appropriate (with sufficient copies for each Lender),
each of which shall be reasonably satisfactory to the Arranger (and,
to the extent specified below, to each Lender) in form and substance:
(1) Opinions of Counsel. Opinion of Haynes and
Boone, L.L.P., special counsel to Borrower.
(2) Security Agreement. (i) The annexes to the
Security Agreement shall have been amended to reflect the
pledge of all equity interests in IMCO Recycling of Michigan
L.L.C. and any other Subsidiary acquired in connection with
the Alchem Acquisition and (ii) evidence of perfection and
priority of the Administrative Agent's liens and security
interests with respect to the equity interests and all other
property pledged pursuant to the Security Agreement of IMCO
Recycling of Michigan L.L.C. and delivery of certificates for
all pledged stock or other ownership interests, accompanied by
undated stock powers executed in blank.
(3) Environmental Reports. Phase I environmental
assessments or their substantial equivalent from environmental
evaluation firms reasonably acceptable to the Arranger with
respect to material properties of Alchem.
(4) Joinder Agreement. Joinder Agreement (which
shall be in full force and effect) duly authorized, executed
and delivered by IMCO Recycling of Michigan L.L.C., and
expressly modifying the annexes to the Security Agreement to
include additional property to be pledged by IMCO Recycling of
Michigan L.L.C. and its Subsidiaries, including equity
interests.
(5) Security Agreement Papers. Borrower and each
Subsidiary owning interests in IMCO Recycling of Michigan
L.L.C. shall have delivered the documents required by Section
3(b) of the Security Agreement.
(6) Corporate Documents. Certified copies of all
corporate authority for Borrower (including board of directors
resolutions and evidence of the incumbency, including specimen
signatures, of officers) with respect to the execution,
delivery and performance of the Alchem Acquisition Documents.
(iii) Terms of Alchem Acquisition. The terms and
conditions of the Alchem Acquisition Documents shall be reasonably
satisfactory to
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the Arranger, and no provision thereof shall have been amended,
supplemented, waived or otherwise modified without the prior written
consent of the Arranger. The Alchem Acquisition shall have been
consummated for an aggregate purchase price not to exceed $49.250
million (excluding fees and expenses) on the terms set forth in the
Alchem Acquisition Agreement, which shall include the issuance of
1,208,339 shares of common stock of Borrower, the assumption of debt
of Alchem not to exceed $2.0 million, the repayment of debt of Alchem
not to exceed $21.0 million and cash in an amount not to exceed $9.0
million (which amount shall be calculated in accordance with Section
2.2 of the Alchem Acquisition Agreement). All indebtedness of Alchem
shall have been repaid or assumed on terms reasonably acceptable to
the Arranger. The Alchem Option shall have been terminated and the
Arranger shall have received satisfactory evidence of the same.
(iv) Hart-Scott-Rodino Compliance. The waiting period
required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules promulgated thereunder (such Act and rules
collectively, "Hart-Scott-Rodino"), together with any extensions of
such waiting period, shall have expired, and neither the Federal Trade
Commission (the "FTC") nor the Assistant Attorney General in charge of
the Antitrust Division of the Department of Justice shall have
instituted a proceeding alleging that the Alchem Acquisition violates
Section 7 of the Clayton Act or Section 5 of the Federal Trade
Commission Act, or the FTC shall have granted early termination of
such waiting period.
(v) Adverse Change, Etc. On or prior to the Alchem
Closing Date, there shall not have occurred or become known any
material adverse change or any condition or event that has had or
could reasonably be expected to result in a material adverse change in
the business, assets, liabilities (contingent or otherwise),
operations, condition (financial or otherwise) or solvency of Alchem
and its Subsidiaries, taken as a whole, in each case since the
financial statements of Alchem dated June 30, 1997, except for
additional indebtedness incurred by Alchem since that date (including
any indebtedness to declare and pay special cash dividends to Alchem
shareholders) in an amount which will be netted against the cash
portion of the purchase price of Alchem.
(vi) No Existing Default; No Violations of Law. No
Default or Event of Default shall exist or will result from the Alchem
Acquisition under this Agreement and the Basic Documents or any other
Agreement of any Obligor. 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 enjoin or
otherwise prevent the consummation of, or to recover any damages or
obtain relief
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as a result of, the Alchem Acquisition, and no violation of law shall
result therefrom.
Section 8. Representations and Warranties.
Each Obligor represents and warrants to the Creditors on the
Amendment and Restatement Date and on the date of each extension of credit
hereunder that (in the case of the Amendment and Restatement Date, immediately
before and immediately after giving effect to the transactions contemplated to
occur on such date):
8.01. Corporate Existence. Each of Borrower and each
Subsidiary: (a) is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization; (b) has all requisite corporate or other power and authority, and
has all material governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being conducted;
and (c) is qualified to transact business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure to be so qualified and in good
standing would reasonably be expected to (either individually or in the
aggregate) have a Material Adverse Effect.
8.02. Financial Condition; Etc. (a) Borrower has heretofore
delivered to the Lenders (A) the audited consolidated balance sheets of
Borrower and the Subsidiaries as of December 31, 1991, December 31, 1992,
December 31, 1993, December 31, 1994, December 31, 1995 and December 31, 1996,
and the related statements of earnings, changes in stockholders' equity and
cash flows for the fiscal years ended on those dates, together with reports
thereon by Ernst & Young LLP, certified public accountants, and (B) the
unaudited consolidated balance sheets of Borrower and the Subsidiaries as of
March 31, 1997 and June 30, 1997, and the related statements of earnings and
cash flows for the fiscal periods ended on March 31, 1997 and June 30, 1997,
respectively, together with review reports thereon by Ernst & Young LLP,
certified public accountants. All of said financial statements, including in
each case the related schedules and notes, are true, complete (in the case of
year-end financial statements) and correct in all material respects, have been
prepared in accordance with generally accepted accounting principles
consistently applied (except that no notes have been included in unaudited
financial statements) and present fairly the financial position of Borrower and
the Subsidiaries as of the respective dates of said balance sheets and the
results of their operations for the respective periods covered thereby, subject
(in the case of interim statements) to period-end audit adjustments.
(b) Except as set forth in Schedule 8.02 or in the financial
statements referred to in Section 8.02(a), neither Borrower nor any Subsidiary
has any material contingent liabilities, liabilities for taxes, unusual forward
or long-term commitments or anticipated losses from any unfavorable
commitments.
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(c) Except as set forth in the financial statements referred
to in Section 8.02(a), since December 31, 1996 there has been no Material
Adverse Effect, or any event, change or circumstance which could reasonably be
expected to cause or evidence, either individually or together with any other
events, changes or circumstances, a Material Adverse Effect.
(d) All pro forma financial information and projections
provided at any time by or on behalf of Borrower to the Lenders are accurate
and complete in all material respects as of the date of such information and
all pro forma adjustments given effect therein are based upon assumptions which
Borrower believes to be fair and reasonable.
(e) Borrower has heretofore delivered to the Lenders
financial statements of Alchem consisting of an income and retained earnings
statement and a cash flow statement for each of the two years ended October 31,
1995 and 1996 and for the eight months ended June 30, 1997 and balance sheets
as of October 31, 1995 and 1996 and as of June 30, 1997. To the best of
Borrower's knowledge, such financial statements present fairly, in all material
respects, the financial position of Alchem as of October 31, 1995 and 1996 and
June 30, 1997, and its results of operations and cash flows for each of the two
years in the period ended October 31, 1996 and for the eight months ended June
30, 1997 in conformity with GAAP. None of Borrower's Registration Statement on
Form S-3, Registration No. 333-36833 (as amended to the date hereof), Report on
Form 8-K dated October 1, 1997, and Report on Form 8-K/A-1 dated October 9,
1997 contains an untrue statement of material fact, or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
8.03. Litigation. Except as disclosed in Schedule 8.03,
there are no Proceedings or investigations now pending or (to the knowledge of
the Obligors) threatened against or directly affecting Borrower or any
Subsidiary that, if adversely determined could (either individually or in the
aggregate) be reasonably expected to have a Material Adverse Effect.
8.04. No Breach; No Default. (a) None of the execution,
delivery and performance by each Obligor of any Basic Document or any Document
to which it is a party and the consummation of the transactions herein and
therein contemplated will (i) conflict with or result in a breach of, or
require any consent (which has not been obtained and is in full force and
effect) under, the charter or by-laws of any Obligor, or any applicable law or
regulation, or any order, writ, injunction or decree of any Governmental
Authority binding on any Obligor, or any term or provision of any agreement or
instrument to which any Obligor or any of its Subsidiaries is a party or by
which any of them or any of their Property is bound or to which any of them is
subject, or (ii) constitute (with due notice or lapse
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of time or both) a default under any such agreement or instrument, or (iii)
result in the creation or imposition of any Lien (except for the Liens created
pursuant to the Security Documents) upon any Property of any Obligor or any of
its Subsidiaries pursuant to the terms of any such agreement or instrument,
except with respect to each of the foregoing which would not (either
individually or in the aggregate) reasonably be expected to have a Material
Adverse Effect.
(b) Neither Borrower nor any Subsidiary is in default under
or with respect to any contractual obligation or any order, award or decree of
any Governmental Authority or arbitrator binding upon it or any of its
properties in any respect which would have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
8.05. Action. Each Obligor has all necessary corporate
power, authority and legal right to execute, deliver and perform its
obligations under each Basic Document and each Document to which it is a party
and to consummate the transactions herein and therein contemplated; the
execution, delivery and performance by each Obligor of each Basic Document and
each Document to which it is a party and the consummation of the transactions
herein and therein contemplated have been duly authorized by all necessary
corporate action on its part; and this Agreement has been duly and validly
executed and delivered by each Obligor and constitutes, and each of the Notes,
the other Basic Documents and the Documents to which it is a party when
executed and delivered by such Obligor (in the case of the Notes, for value)
will constitute, its legal, valid and binding obligation, enforceable against
each Obligor in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws of general applicability from time to time in effect
affecting the enforcement of creditors' rights and remedies and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
8.06. Approvals. Except as set forth on Schedule 8.06, no
authorizations, approvals or consents of, and no filings or registrations with,
any Governmental Authority or any securities exchange are necessary for the
execution, delivery or performance by any Obligor of the Basic Documents or
Documents to which it is a party or for the legality, validity or
enforceability hereof or thereof or for the consummation of the transactions
herein and therein contemplated, except for filings and recordings in respect
of the Liens created pursuant to the Security Documents.
8.07. ERISA. Each member of the ERISA Group (x) has
fulfilled its obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and (y) is in compliance in all material
respects with the presently applicable provisions of ERISA and the Code with
respect to each Plan other than any failure to so comply that could not
reasonably be expected to have a Material Adverse Effect. No member of the
ERISA
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Group has (i) sought a waiver of the minimum funding standard under Section 412
of the Code in respect of any Plan, (ii) failed to make any contribution or
payment to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement, or made any amendment to any Plan or Benefit Arrangement, which
has resulted or could reasonably be expected to result in the imposition of a
Lien or the posting of a bond or other security under ERISA or the Code or
(iii) incurred or reasonably expects to incur any liability under Title IV of
ERISA that would have a Material Adverse Effect. Neither Borrower nor any
Subsidiary has incurred any material obligation in connection with the
termination of or withdrawal from any Foreign Pension Plan.
8.08. Taxes. Borrower and each Subsidiary has filed or
caused to be filed all tax returns which to the knowledge of Borrower are
required to be filed and has paid all Taxes shown to be due and payable on said
returns or on any assessments made against it or any of its Property and all
other Taxes, fees or other charges imposed on it or any of its Property
(including the Mortgaged Real Property) by any Governmental Authority (other
than those which, in the aggregate, are not substantial in amount or those the
amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of Borrower or the Subsidiaries, as the
case may be); and no tax lien has been filed and, to the knowledge of Borrower,
no claim is being asserted with respect to any such Tax, fee or other charge.
8.09. Investment Company Act; Public Utility Holding Company
Act; Other Restrictions. Neither Borrower nor any Subsidiary is an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended. Neither Borrower
nor any Subsidiary is a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended. No Obligor is
subject to regulation under any federal or state statute or regulation which
limits its ability to incur Indebtedness.
8.10. No Burdensome Restrictions. No contractual obligation
of Borrower or any Subsidiary and no requirement of law materially adversely
affects, or insofar as Borrower could reasonably foresee may so affect, the
business, operations, property or financial or other condition of Borrower and
the Subsidiaries taken as a whole.
8.11. Capitalization. As of the close of business on the
Business Day immediately preceding the Amendment and Restatement Date, the
authorized stock of Borrower consists of: 20,000,000 shares of Common Stock,
$0.10 par value, of which, including the shares of common stock issued in the
Public Offering, 14,943,744 shares are issued and outstanding; and 8,000,000
shares of Preferred Stock, $0.10 par value, of which no shares are issued and
outstanding.
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8.12. Environmental Matters. Except as disclosed in Schedule
8.12 and except as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect: (i) Borrower and the
Subsidiaries are in compliance with and in the last five years have been in
compliance with, and are not subject to liability under, any Environmental Laws
applicable to them and their business and operations and facilities and
properties owned, leased, operated or used by any of them; (ii) neither
Borrower nor any Subsidiary has received notice that it has been identified as
a potentially responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or any
comparable foreign or state law, nor has Borrower or any Subsidiary received
any written notification that any Hazardous Materials that it or any of their
respective predecessors in interest has used, generated, stored, treated,
handled, transported or disposed of, or arranged for disposal or treatment of,
have been found at any site at which any Person is conducting or plans to
conduct any action pursuant to any Environmental Law; (iii) no properties now
or formerly owned, leased or operated by Borrower or any Subsidiary or, to the
knowledge of Borrower or any Subsidiary, any of their respective predecessors
in interest, are (x) listed or proposed for listing on the National Priorities
List under CERCLA or (y) listed on the Comprehensive Environmental Response,
Compensation and Liability Information System List promulgated pursuant to
CERCLA or (z) included on any comparable lists maintained by any Governmental
Authority; (iv) there are no past or present events, conditions, activities,
practices or actions, or any agreements, judgments, decrees or orders by which
Borrower or any Subsidiary is bound, which would reasonably be expected to
prevent Borrower and the Subsidiaries' compliance with any Environmental Law,
or which would reasonably be expected to give rise to any liability of Borrower
or any Subsidiary under any Environmental Law, including, without limitation,
liability under CERCLA or similar state or foreign laws; (v) no Lien has been
asserted or recorded, or to the knowledge of Borrower and each Subsidiary
threatened, under any Environmental Law with respect to any asset, facility,
inventory or property currently owned, leased or operated by Borrower or any
Subsidiary; and (vi) there are no underground storage tanks or related piping
at any property owned, operated or leased by Borrower or any Subsidiary, and
any former underground tanks or related piping on any such property which has
been removed or closed has been removed or closed in accordance with any
applicable Environmental Law.
8.13. Use of Proceeds. Neither Borrower nor any Subsidiary
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose, whether immediate, incidental or ultimate,
of buying or carrying Margin Stock and no part of the proceeds of any extension
of credit hereunder will be used to purchase or carry any Margin Stock. On and
after the Amendment and Restatement Date, Borrower will use drawings under the
Revolving Credit Commitments for (i) repayment of all the Term Loans and
certain of the Revolving Credit Loans outstanding under the Original Credit
Agreement, and all accrued interest thereon and expenses related thereto; (ii)
payment of the cash portion of the Alchem
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Acquisition; (iii) payment of certain existing indebtedness of Alchem; (iv)
payment of certain fees and expenses related to the Alchem Acquisition and the
transactions to occur on the Amendment and Restatement Date; (v) ongoing
working capital and general corporate requirements of Borrower and its
Subsidiaries, including the issuance of Letters of Credit; and (vi) the
financing of permitted Acquisitions.
8.14. Subsidiaries. On the Amendment and Restatement Date
(after giving effect to the transactions that occurred on such date), Borrower
has no Subsidiaries or interest in partnerships, joint ventures or business
trusts other than the entities set forth in Schedule 8.14. Borrower owns, as
of the Original Closing Date, the percentage of the issued and outstanding
capital stock or other evidences of the ownership of each Subsidiary,
partnership or joint venture listed on Schedule 8.14 as set forth on such
Schedule. No such Subsidiary, partnership or joint venture has issued any
securities convertible into shares of its capital stock (or other evidence of
ownership) or any Equity Rights to acquire such shares or securities
convertible into such shares (or other evidence of ownership), and the
outstanding stock and securities (or other evidence of ownership) of such
Subsidiaries, partnerships or joint ventures are owned by Borrower and the
Subsidiaries free and clear of all Liens and Equity Rights of others of any
kind whatsoever, except (i) as set forth on Schedule 8.14, (ii) for Liens
pursuant to the Security Documents and (iii) for the right to acquire
additional interests pursuant to the Barmet Option.
8.15. Properties. Each of the Obligors has good and
marketable title to and beneficial ownership of all properties and assets owned
by it, including all property reflected in the most recent financial statements
delivered pursuant to this Agreement (except as sold or otherwise disposed of
since the date of such financial statements in the ordinary course of business
and in accordance with this Agreement). Title to each such property or asset
that is not Collateral is held by the Obligors and each of their respective
Subsidiaries free and clear of all Liens except for Permitted Liens. Title to
each such property or asset that constitutes Collateral is held by the Obligors
free and clear of all Liens other than Permitted Liens and Prior Liens.
8.16. Security Interest. The Security Documents, once
executed, delivered, filed and/or recorded will, until the Collateral Release
Date, create, in favor of the Administrative Agent for the benefit of the
Lenders, as security for the obligations purported to be secured thereby, a
valid and enforceable perfected first priority security interest in and Lien
upon all of the Collateral, superior to and prior to the rights of all third
persons and subject to no Liens except the Prior Liens applicable to such
Collateral.
8.17. Compliance with Laws. Each Obligor is in compliance in
all material respects with all applicable statutes, laws, ordinances, rules,
orders and regulations of any Governmental Authority in all jurisdictions
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in which it is presently doing business, and each Obligor will comply and cause
each of its Subsidiaries to comply in all material respects with all such laws
and regulations which may be imposed in the future in jurisdictions in which it
or such Subsidiary may then be doing business, in each case other than those
the non-compliance with which would not (individually or in the aggregate)
reasonably be expected to have a Material Adverse Effect. At the time of
consummation thereof, the Alchem Acquisition shall have been consummated
substantially in accordance with the terms of the Alchem Acquisition Documents
related thereto and all applicable requirements of law and all consents and
approvals of all Governmental Authorities required to consummate the Alchem
Acquisition shall have been obtained, given, filed or taken or waived and are
or will be in full force and effect (or effective judicial relief with respect
thereto shall have been obtained). Additionally, there does not exist any
judgment, order or injunction prohibiting or imposing material adverse
conditions upon the transactions contemplated to occur on the Amendment and
Restatement Date, or the performance by Borrower and the Subsidiaries of their
obligations under the Basic Documents and all applicable laws.
8.18. True and Complete Disclosure. The information,
reports, financial statements, exhibits and schedules furnished in writing by
any of the Obligors to any Creditor in connection with the negotiation,
preparation or delivery of this Agreement and the other Basic Documents or
included herein or therein or delivered pursuant hereto or thereto, whether
prior to or after the Original Closing Date, when taken as a whole, do not, as
of the date such information was furnished, contain any untrue statement of
material fact or omit to state a material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not materially misleading.
8.19. Solvency. As of the Original Closing Date, the
Amendment and Restatement Date and each other date of an extension of credit
hereunder: (i) the fair salable value of the Properties of the Obligors, on a
consolidated basis, exceeds and will, immediately following the making of each
Revolving Credit Loan or other extension of credit hereunder, exceed the amount
of all debt and liabilities (including all contingent, subordinated, unmatured
and unliquidated liabilities) of such Obligor; (ii) no Obligor has, or will
have, immediately following the making of each Revolving Credit Loan or other
extension of credit hereunder, unreasonably small capital to carry out its
business as conducted or as proposed to be conducted; and (iii) the Obligors do
not intend to, or believe that they will, incur debts beyond their ability to
pay such debts as they mature.
8.20. Employee and Labor Matters. Except as disclosed on
Schedule 8.20, there is (i) no unfair labor practice complaint pending against
Borrower or any Subsidiary or, to the knowledge of the Obligors, threatened
against any of them, before the National Labor Relations Board, and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against Borrower or any Subsidiary or, to
the knowledge of the Obligors, threatened against any of them, (ii) no strike,
labor dispute, slowdown or stoppage pending against Borrower or any Subsidiary
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or, to the knowledge of the Obligors, threatened against Borrower or any
Subsidiary and (iii) to the knowledge of the Obligors, no union representation
question existing with respect to the employees of Borrower or any Subsidiary
and, to the knowledge of the Obligors, no union organizing activities are
taking place, except (with respect to any matter specified in clause (i), (ii)
or (iii) above, either individually or in the aggregate) such as would not
reasonably be expected to have a Material Adverse Effect.
8.21. Intellectual Property. Borrower and each Subsidiary
owns, or is licensed to use, all patents, trademarks, tradenames, servicemarks,
copyrights, technology, trade secrets, know-how and processes necessary for the
conduct of its business as currently conducted (the "Intellectual Property"),
except for those the failure to own or license which could not, individually or
in the aggregate, have a Material Adverse Effect. No claim has been asserted
and is pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does Borrower know of any valid basis for any such claim. To the
knowledge of the Obligors, the use of such Intellectual Property by Borrower
and the Subsidiaries does not infringe the rights of any Person, except for
such claims and infringements that, in the aggregate, do not have a Material
Adverse Effect.
8.22. Representations and Warranties in Documents. All
representations and warranties of the Obligors set forth in the Original Credit
Agreement were true and correct in all material respects as of each time such
representations and warranties were made or deemed made.
Section 9. Covenants.
Each Obligor covenants and agrees with the Creditors that (and
each Obligor covenants and agrees that it shall not permit any Subsidiary to
take any action prohibited by any Subsidiary hereunder and shall cause each
Subsidiary to take all action required by Subsidiaries hereunder), so long as
any Revolving Credit Commitment, Revolving Credit Loan or Letter of Credit
Liability is outstanding and until payment in full of all amounts payable by
Borrower hereunder:
9.01. Financial Statements, Etc. Borrower (for itself and on
behalf of the Subsidiary Guarantors) shall deliver to each of the Lenders:
(a) as soon as available and in any event within 45 days
after the end of each of the first three quarterly fiscal periods of
each fiscal year, consolidated statements of income and cash flow of
Borrower and its Consolidated Subsidiaries for such period and for the
period from the beginning of the respective fiscal year to the end of
such period, and the related consolidated balance sheet of Borrower
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and its Consolidated Subsidiaries as at the end of such period,
setting forth in each case in comparative form the corresponding
consolidated statement of income for the corresponding period in the
preceding fiscal year, accompanied by a certificate of a senior
financial officer of Borrower, which certificate shall state that said
consolidated financial statements fairly present the consolidated
financial condition and results of operations of Borrower and its
Consolidated Subsidiaries in accordance with GAAP, consistently
applied, as at the end of, and for, such period (subject to normal
year-end audit adjustments);
(b) as soon as available and in any event within 120 days
after the end of each fiscal year, consolidated statements of income,
stockholders' equity and cash flow of Borrower and its Consolidated
Subsidiaries for such year and the related consolidated balance sheet
of Borrower and its Consolidated Subsidiaries as at the end of such
year, setting forth in each case in comparative form the corresponding
consolidated figures as of the end of and for the preceding fiscal
year, and accompanied by an opinion, without material qualification,
thereon of independent certified public accountants of recognized
national standing, which opinion shall state that said consolidated
financial statements fairly present the consolidated financial
condition and results of operations of Borrower and its Consolidated
Subsidiaries as at the end of, and for, such fiscal year in accordance
with GAAP, and a certificate of such accountants stating that, in
making the examination necessary for their opinion, they obtained no
knowledge of any Default;
(c) promptly upon delivery thereof to the shareholders of
Borrower or any Subsidiary generally, copies of all financial
statements and reports and proxy statements so delivered which
Borrower sends to all holders of securities of the same class and
within five days after the same are filed, copies of all financial
statements and reports which Borrower may make or file with the
Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(d) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given or
is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for
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premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer any Plan, a copy of such notice; (iv) applies
for a waiver of the minimum funding standard under Section 412 of the
Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of
such notice; or (vii) fails to make any payment or contribution to any
Plan or Multiemployer Plan or in respect of any Benefit Arrangement or
makes any amendment to any Plan or Benefit Arrangement which has
resulted or could reasonably be expected to result in the imposition
of a Lien or the posting of a bond or other security under ERISA or
the Code, an Officers' Certificate setting forth details as to such
occurrence and action, if any, which Borrower or the applicable member
of the ERISA Group is required or proposes to take;
(e) together with the financial statements delivered pursuant
to clause (a) or (b) of this Section 9.01 for any period ending on or
after December 31, 1997, an Interest Rate Certificate;
(f) promptly after Borrower or any Subsidiary knows or has
reason to believe that any Default has occurred, a notice of such
Default describing the same in reasonable detail and, together with
such notice or as soon thereafter as possible, a description of the
action that Borrower has taken and proposes to take with respect
thereto;
(g) written notice of any Environmental Claim materially
affecting Borrower and the Subsidiaries taken as a whole, any
Mortgaged Real Property or the operations of Borrower and the
Subsidiaries taken as a whole, and any notice from any Person of (i)
the occurrence of any release, spill or discharge of any Hazardous
Material that is reportable under any Environmental Law, (ii) the
commencement of any clean-up pursuant to or in accordance with any
Environmental Law of any Hazardous Material at, on, under or within
the Mortgaged Real Property or any part thereof or (iii) any other
condition, circumstance, occurrence or event, any of which could
reasonably be expected to result in a material liability of Borrower
or any Subsidiary under any Environmental Law;
(h) promptly upon receipt thereof, copies of all reports
submitted to Borrower by independent certified public accountants in
connection with each annual, interim or special audit of the books of
Borrower made by such accountants, including, without limitation, any
management letter commenting on Borrower's internal controls submitted
by such accountants to management in connection with their annual
audit;
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(i) an annual budget in reasonable detail within 60 days
after the end of each fiscal year of the Borrower;
(j) until the Collateral Release Date, written notice of (1)
the incurrence of any material Lien (other than Liens permitted
pursuant to Section 9.07) on, or claim asserted against any of the
collateral security in the Security Documents or (2) the occurrence of
any other event which could reasonably be expected to have a material
adverse effect on the aggregate value of the collateral under any
Security Document;
(k) written notice of a material adverse change in the
business, operations, property or financial or other condition of
Borrower and the Subsidiaries taken as a whole; and
(l) as promptly as is reasonably practicable, such financial
and other information as any Creditor may from time to time reasonably
request.
Borrower will furnish to the Administrative Agent, at the time it furnishes
each set of financial statements pursuant to paragraph (a) or (b) above (or,
with respect to clause (a) for the fiscal quarter ended September 30, 1997, no
later than December 15, 1997), a certificate of a senior financial officer of
Borrower (i) to the effect that no Default has occurred and is continuing (or,
if any Default has occurred and is continuing, describing the same in
reasonable detail and describing the action that Borrower has taken and
proposes to take with respect thereto) and (ii) setting forth in reasonable
detail the computations necessary to determine whether Borrower is in
compliance with Sections 9.07, 9.08, 9.09, 9.10 and 9.11 as of the end of the
respective quarterly fiscal period or fiscal year (calculated on a pro forma
basis to give effect to the Public Offering and the transactions contemplated
by this Agreement and the Alchem Acquisition Agreement as if they had occurred
during the fiscal quarter ended September 30, 1997). The Administrative Agent
shall forward such certificate and information to the Lenders.
9.02. Litigation, Etc. Borrower shall promptly give to the
Administrative Agent (which shall promptly provide a copy thereof to each
Lender) notice of all legal or arbitral proceedings, and of all proceedings by
or before any governmental or regulatory authority or agency, and any material
development in respect of such legal or other proceedings, affecting Borrower
or any Subsidiary, except proceedings which could not reasonably be expected to
have (individually or in the aggregate) a Material Adverse Effect.
9.03. Existence; Compliance with Law; Payment of Taxes;
Inspection Rights; Performance of Obligations; Etc. Borrower and each
Subsidiary shall, (i) preserve and maintain its legal existence and all of its
material rights, privileges and franchises (provided, however, that nothing
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in this Section 9.03 shall prohibit any transaction expressly permitted under
Section 9.06); (ii) comply with the requirements of all applicable laws
(including ERISA and the rules and regulations thereunder), rules, regulations
and orders of Governmental or Authorities if failure to comply with such
requirements would (individually or in the aggregate) have a Material Adverse
Effect; (iii) timely file true, accurate and complete tax returns required by
all Governmental Authorities and pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its income or profits or on
any of its Property prior to the date on which penalties attach thereto (except
for any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which adequate
reserves are being maintained) if such failure to pay and discharge would
(individually or in the aggregate) have a Material Adverse Effect; (iv)
maintain all of its Properties used or useful in its business in good working
order and condition, ordinary wear and tear excepted, except to the extent that
the failure to do so with respect to any such Property would not individually
or in the aggregate be reasonably likely to have a Material Adverse Effect; (v)
permit representatives of any Creditor, upon reasonable prior notice during
normal business hours, to examine, copy and make extracts from its books and
records, to inspect its Properties, and to discuss its business and affairs
with its officers, all to the extent reasonably requested by such Creditor;
(vi) perform in all material respects all of its obligations under the terms of
each mortgage, indenture, security agreement, other debt instrument and
material contract by which it is bound or to which it is a party, except where
such failure to so perform, singly or in the aggregate with all other such
failures, would not have a Material Adverse Effect; and (vii) keep proper books
of record and accounts, in which full and correct entries shall be made of all
financial transactions and the Property and business of each Obligor and its
Subsidiaries in accordance with generally accepted accounting principles in
effect from time to time or as otherwise required by applicable rules and
regulations of any Governmental Authority having jurisdiction over such Obligor
or its Subsidiaries, as relevant. Borrower will confer with the Lenders in
enforcing or waiving material rights of Borrower or any Subsidiary under any
Document.
9.04. Insurance. Borrower and each Subsidiary shall keep
insured by financially sound and reputable insurers all Property of a character
usually insured by corporations engaged in the same or similar business
similarly situated against loss or damage of the kinds and in the amounts
customarily insured against by such corporations and carry such other insurance
as is usually carried by such corporations, including, in any event, business
interruption insurance. Borrower shall deliver to the Administrative Agent a
certificate of insurance for each liability policy of insurance which shall
contain an endorsement showing the Administrative Agent as an additional
insured. Such endorsement shall provide for at least 30 days' prior notice to
the Administrative Agent of any proposed termination or cancellation of such
policy, whether on account of default or otherwise.
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9.05. Issuance or Disposals of Capital Stock of Subsidiaries.
No Subsidiary shall issue, sell, assign, transfer or otherwise dispose of any
shares (or other ownership interests) of any class of its capital stock or
equity ownership interests or of any Equity Rights to purchase its capital
stock or equity ownership interests or of other securities exchangeable for or
convertible into its capital stock or equity ownership interests, except (a) to
Borrower or a Wholly Owned Subsidiary, (b) directors' qualifying shares as
required by law and (c) pursuant to the Barmet Option or, until the Alchem
Closing Date, the Alchem Option. Except for any sale pursuant to the Barmet
Option or, until the Alchem Closing Date, the Alchem Option, neither Borrower
nor any Subsidiary shall effect the Disposition of any capital stock of any
Subsidiary unless all capital stock owned by Borrower and the Subsidiaries is
sold pursuant thereto and such sale is otherwise permitted herein.
9.06. Fundamental Changes; Acquisitions; Dispositions. No
Obligor or Subsidiary shall, directly or indirectly, (1) enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution), (2) acquire any
business or Property from, or capital stock of, or be a party to any
acquisition of, any Person, or effect any Acquisition, or (3) effect any
Disposition or convey, sell, lease, assign, transfer or otherwise dispose of,
in one transaction or a series of transactions, all or a substantial part of
its business or Property, whether now owned or hereafter acquired, including
receivables and leasehold interests. Notwithstanding the foregoing provisions
of this Section 9.06, (x) the consummation of the Alchem Acquisition in
accordance with the Alchem Acquisition Documents shall not be prohibited in any
respect, and (y) each of the following shall be permitted:
(a) purchases of inventory and other Property to be sold or
used in the ordinary course of business;
(b) Acquisitions permitted by Section 9.09(k), (u), (v) or
(ee) and other Investments permitted by Section 9.09;
(c) any Subsidiary (other than IMSAMET and its Subsidiaries
or any of their successors) may be merged or consolidated or dissolved
or liquidated with or into: (i) Borrower if Borrower shall be the
continuing or surviving corporation or (ii) any Wholly Owned
Subsidiary which is an Obligor; provided, however, that a Wholly Owned
Subsidiary which is an Obligor shall be the continuing or surviving
corporation;
(d) any Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its Property (upon voluntary liquidation or
otherwise) to Borrower or to any Wholly Owned Subsidiary which is an
Obligor (other than IMSAMET and its Subsidiaries or any of their
successors);
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(e) any Wholly Owned Subsidiary that is a Foreign Subsidiary
may sell, lease, transfer or otherwise dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to another Wholly
Owned Subsidiary that is a Foreign Subsidiary;
(f) Dispositions of used, worn out, obsolete or surplus
equipment or other Property by Borrower or any Subsidiary, all in the
ordinary course of business; provided, however, that the proceeds
thereof are reinvested in the business of Borrower or any Subsidiary
within one year of such Disposition;
(g) any Foreign Subsidiary may be merged or consolidated with
or into any one or more Wholly Owned Subsidiaries that are Foreign
Subsidiaries (provided that a Wholly Owned Subsidiary that is a
Foreign Subsidiary shall be the continuing or surviving corporation);
(h) Borrower or any Subsidiary may sell or discount, in each
case without recourse, accounts receivable arising in the ordinary
course of business, but only in connection with the compromise or
collection thereof;
(i) the sale by any Foreign Subsidiary of its accounts
receivable; provided, however, that the terms of each such sale are
satisfactory in form and substance to the Administrative Agent;
(j) Dispositions for fair market value not to exceed $15.0
million in the aggregate since the Original Closing Date; provided,
however, that the Net Available Proceeds therefrom are reinvested as
specified in Section 2.10(a)(iii) or applied to the prepayment of the
Revolving Credit Loans as specified in Section 2.10(a);
(k) the sale of all or substantially all of the capital stock
and/or equity interests in or assets of IMCO Recycling of California,
Inc., a Subsidiary, owned by Borrower or any Subsidiary; provided,
however, that the Net Available Proceeds therefrom are reinvested as
specified in Section 2.10(a)(iii) or applied to the prepayment of the
Revolving Credit Loans as specified in Section 2.10(a); and
(l) the sale of the capital stock of or other ownership
interests in the Barmet Option Entity pursuant to the terms of the
Barmet Option (but not to exceed a 49% interest therein) and (y) until
the Alchem Closing Date, IMCO Recycling of Michigan L.L.C., a
Subsidiary, pursuant to the Alchem Option (but not to exceed a 40%
interest therein); provided, however, that in each case the Net
Available Proceeds therefrom are applied to the prepayment of the
Revolving Credit Loans as specified in Section 2.10(a).
To the extent the Majority Lenders waive the provisions of this Section 9.06
with respect to the sale or other disposition of any Collateral, or
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any Collateral is sold or otherwise disposed of as permitted by this Section
9.06 (and such Collateral is released (or permitted to be released) from the
Liens created by the respective Security Document), such Collateral in each
case shall be sold or otherwise disposed of free and clear of the Liens created
by the Security Documents and the Administrative Agent shall take such actions
as are appropriate in connection therewith.
9.07. Liens and Related Matters. No Obligor or Subsidiary
shall, directly or indirectly, create, incur, assume or suffer to exist any
Lien upon or with respect to any of their respective Property (including
Collateral), whether now owned or hereafter acquired, or sell any such property
or assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets or assign any right to receive income, or
file or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute, except
the following, which are herein collectively referred to as "Permitted Liens":
(a) Liens created pursuant to or permitted by the Security
Documents;
(b) Liens in existence on the Original Closing Date and
identified in Schedule 9.07 (excluding, however, following the making
of the initial Revolving Credit Loans on the Original Closing Date,
Liens securing Indebtedness that was repaid with the proceeds of such
Revolving Credit Loans, as indicated on Schedule 7.01(i) to the
Original Credit Agreement);
(c) Liens imposed by any Governmental Authority for taxes,
assessments or charges not yet due or which are being contested in
good faith and by appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of Borrower or the
affected Subsidiary, as the case may be, in accordance with GAAP;
(d) Liens in respect of Property of Borrower or any
Subsidiary imposed by law which were incurred in the ordinary course
of business, such as carriers', warehousemen's, landlords' and
mechanics' Liens and other similar Liens arising in the ordinary
course of business, in each case for sums the payment of which is not
required by Section 9.03;
(e) pledges or deposits under worker's compensation,
unemployment insurance and other social security legislation or the
deposits securing the liability to insurance carriers;
(f) pledges or deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
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(g) easements, rights-of-way, restrictions or minor defects
or irregularities in title incurred in the ordinary course of business
and encumbrances consisting of zoning restrictions, easements,
licenses, restrictions on the use of Real Property or minor
imperfections in title thereto which, in the aggregate, are not
material in amount, and which do not in any case materially detract
from the value of the Real Property subject thereto or interfere with
the ordinary conduct of the business of Borrower or any Subsidiary;
(h) Liens upon tangible personal Property acquired after the
Original Closing Date by Borrower or any Subsidiary, each of which
Liens either (A) existed on such Property before the time of its
acquisition and was not created in anticipation thereof, or (B) was
created solely for the purpose of securing Indebtedness representing,
or incurred to finance, refinance or refund, the cost of such Property
or improvements thereon; provided, however, that (x) no such Lien
shall extend to or cover any Property of Borrower or such Subsidiary
other than the Property so acquired and improvements thereon and (y)
the principal amount of Indebtedness secured by any such Lien shall at
no time exceed 100% of the fair market value of such Property at the
time it was acquired;
(i) Liens existing on any Property of any Person at the time
such Person becomes a Subsidiary or is merged or consolidated with or
into a Subsidiary and, in each case, not created in contemplation of
or in connection with such event; provided, however, that such Liens
do not extend to any other Property of Borrower or the Subsidiaries;
(j) Liens (excluding Liens on Collateral) not otherwise
permitted hereunder securing obligations not at any time exceeding in
the aggregate $15.0 million;
(k) Liens securing obligations under Swap Contracts with any
Lender or any Affiliate of any Lender;
(l) Liens consisting of judgment or judicial attachment Liens
(including prejudgment attachment) the enforcement of which is
effectively stayed or payment of which is covered in full (subject to
a customary deductible) by insurance or which do not otherwise result
in an Event of Default under Section 10(h);
(m) Liens securing obligations in respect of Capital Leases
solely on Property subject to such Capital Leases;
(n) the Barmet Option and, until the Alchem Closing Date, the
Alchem Option, and the right of first refusal of Barmet to purchase
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the Facility upon a third party offer therefor pursuant to the terms
of the Barmet Supply Agreement and the Barmet Right of First Refusal,
each as in effect on the Original Closing Date;
(o) any extension, renewal or replacement of the foregoing;
provided, however, that the Liens permitted hereunder shall not cover
any additional Indebtedness (other than Indebtedness permitted to be
secured hereunder) or Property (other than like Property substituted
for Property covered by such Lien);
(p) Liens on the facility of Rock Creek securing Indebtedness
incurred pursuant to Section 9.08(i); provided, however, that such
Liens do not extend to or cover any Property of Borrower or any other
Subsidiary;
(q) [Reserved]; and
(r) Liens securing the Indebtedness assumed in the Alchem
Acquisition on the Property of Alchem securing such Indebtedness as of
the Alchem Closing Date; provided, however, that no such Lien extends
to or covers any other Property of Borrower or any other Subsidiary.
Except with respect to (i) specific Property encumbered
pursuant to a Lien permitted to be incurred pursuant to this Section 9.07 or
(ii) specific Property to be sold pursuant to an executed agreement with
respect to a Disposition consummated in accordance with this Agreement, no
Obligor will, nor will any of them permit any of their respective Subsidiaries
to, directly or indirectly, enter into any agreement after the Original Closing
Date (other than the Basic Documents) prohibiting or restricting in any manner
(directly or indirectly and including by way of covenant, representation or
warranty or event of default) the creation or assumption of any Lien upon its
Property, whether now owned or hereafter acquired.
9.08. Indebtedness. No Obligor or Subsidiary shall, directly
or indirectly, create, incur or suffer to exist or be or become liable for any
Indebtedness, except (each of which shall be given independent effect):
(a) Indebtedness under the Basic Documents;
(b) Indebtedness outstanding on the Original Closing Date and
listed in Schedule 9.08 and specified on Schedule 9.08 as to remain
outstanding after the Original Closing Date, and any refinancings,
refundings, renewals or extensions thereof on financial and other
terms, in the reasonable judgment of Borrower, no more onerous to
Borrower or any Subsidiary in the aggregate than the financial and
other terms of such Indebtedness; provided, however, that the amount
of such Indebtedness is not increased at the time of such refinancing,
refunding, renewal or extension and such Indebtedness shall not
<PAGE> 90
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have a stated maturity or an average life shorter than that of the
Indebtedness being refinanced;
(c) Indebtedness of Borrower or any Wholly Owned Subsidiary
(other than IMSAMET or any of its Subsidiaries or any of their
successors) owing to Borrower or any Wholly Owned Subsidiary which is
an Obligor; provided, however, that such Indebtedness shall not be
held by any Person other than Borrower or a Wholly Owned Subsidiary
which is an Obligor and shall not be subordinate to any other
Indebtedness or other obligation of the obligor other than the
Revolving Credit Loans;
(d) Indebtedness of Borrower and the Subsidiaries secured by
Liens permitted under Section 9.07(h) or (m) not exceeding in the
aggregate $15.0 million at any one time outstanding;
(e) Indebtedness arising from honoring a check, draft or
similar instrument against insufficient funds; provided, however, that
such Indebtedness is extinguished within two Business Days of its
incurrence;
(f) obligations under operating leases permitted by Section
9.22 and Contingent Obligations permitted by Section 9.24;
(g) unsecured Indebtedness incurred by any Foreign Subsidiary
not to exceed $15.0 million in the aggregate for all Foreign
Subsidiaries at any time outstanding;
(h) unsecured Indebtedness of Borrower or any Subsidiary
which is an Obligor in an aggregate principal amount not to exceed,
together with Contingent Obligations (without duplication) under
Section 9.24(d), $15.0 million for Borrower and the Subsidiaries
collectively at any time outstanding;
(i) Indebtedness assumed in connection with the Rock Creek
Acquisition not to exceed $1.8 million in the aggregate at any time
outstanding less all repayments and prepayments thereof;
(j) Indebtedness represented by amounts declared, payable as,
or set apart for, Dividends permitted by Section 9.10 and Swap
Contracts entered into in the ordinary course of business and designed
to protect the Obligors against fluctuations in interest rates,
currency exchange rates, commodity prices or similar risks;
(k) [Reserved];
(l) unsecured Indebtedness in an amount not to exceed $6.0
million incurred pursuant to revenue bonds that have been issued by
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the City of Morgantown, Kentucky and the proceeds of which were
applied as required by the Original Credit Agreement; and
(m) Indebtedness to be assumed in connection with the Alchem
Acquisition (including any reimbursement obligations with respect to
the Alchem Existing Letters of Credit) not to exceed $2.0 million in
the aggregate at any time outstanding as set forth in Schedule
9.08(m), less any prepayments or repayments of the principal thereof.
All intercompany debt shall be unsecured and subordinate in
right of payment to the Obligations.
9.09. Investments. No Obligor or Subsidiary shall, directly
or indirectly, make or permit to remain outstanding any Investments, except:
(a) operating deposit accounts and certificates of deposit
with banks in the ordinary course of business;
(b) Permitted Investments;
(c) Investments by Borrower or any Subsidiary (other than
IMSAMET or any of its Subsidiaries or any of their successors) in any
Wholly Owned Subsidiary that is an Obligor (other than IMSAMET or any
of its Subsidiaries or any of their successors) and Investments by any
Subsidiary (other than IMSAMET or any of its Subsidiaries or any of
their successors) in Borrower;
(d) Investments outstanding on the Original Closing Date and
identified with particularity in Schedule 9.09 and any renewals,
extensions, modifications and replacements thereof that do not
increase the amount thereof;
(e) Investments that constitute Indebtedness permitted under
Section 9.08 or Contingent Obligations permitted under Section 9.24;
(f) Investments by Borrower in Swap Contracts entered into as
bona fide hedges and not for speculative purposes;
(g) advances, loans or extensions of credit by Borrower or
any Subsidiary to employees of Borrower or any Subsidiary; provided,
however, that the aggregate amount of all such loans, advances and
extensions of credit shall not at any time exceed in the aggregate
$1.0 million (without giving effect to any write-down or write-off
thereof);
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(h) extensions of credit in the nature of accounts receivable
or notes receivable arising from the sale or lease of goods or
services in the ordinary course of business;
(i) pledges or deposits required in the ordinary course of
business in connection with workmen's compensation, unemployment
insurance and other social security or similar legislation;
(j) pledges or deposits in connection with (i) the
non-delinquent performance of bids, trade contracts (other than for
borrowed money), leases or statutory obligations, (ii) contingent
obligations on surety or appeal bonds, and (iii) other non-delinquent
obligations of a like nature, in each case incurred in the ordinary
course of business;
(k) Investments made in order to consummate Acquisitions;
provided, however, that (v) no Default or Event of Default exists or
will result therefrom, (w) on a pro forma basis, after giving effect
to such Acquisition(s), Borrower would have been in compliance with
Section 9.11 on the last day of the most recently completed fiscal
quarter (assuming, for purposes of Section 9.11, that such Acquisition
had occurred on the first day of the Measurement Period ending on such
last day) as evidenced in an Officers' Certificate delivered to the
Administrative Agent and each Lender at least 10 days prior to the
consummation thereof, (x) the aggregate amount of the consideration
(which for each Acquisition shall be measured at the date of
consummation thereof and which shall include debt incurred or assumed,
working capital deficits and deferred payments) paid for all
Acquisitions consummated after the Original Closing Date shall not
exceed $75.0 million (exclusive of the Alchem Acquisition), (y) such
Acquisition shall be effected through Borrower or a Wholly Owned
Subsidiary which is an Obligor (other than IMSAMET or any of its
Subsidiaries or any of their successors) (it being understood that
proceeds of Revolving Credit Loans shall not be used to finance
hostile acquisitions), and (z) with respect to the Alchem Acquisition,
the conditions set forth in Section 7.04 shall have been satisfied;
(l) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course
of business;
(m) Borrower and the Subsidiaries may hold additional
Investments in any non-Wholly Owned Subsidiary or Foreign Subsidiary
or IMSAMET or any of its Subsidiaries to the extent that such
Investments reflect an increase in Borrower's or any Subsidiary's
interest in the stockholders' equity of such Subsidiary resulting from
retained earnings of such Subsidiary;
<PAGE> 93
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(n) any Foreign Subsidiary may make Investments in or to any
other Foreign Subsidiary;
(o) Capital Expenditures permitted by Section 9.11(d);
(p) Investments by Borrower or any Subsidiary in any
non-Wholly Owned Subsidiary or any Subsidiary which is not an Obligor
or in IMSAMET or any of its Subsidiaries (including Foreign
Subsidiaries), in each case to the extent made in the ordinary course
to fund or support the ordinary course operations of such Subsidiary
so long as no Event of Default shall have occurred and be continuing;
provided, however, that (x) the amount of such Investments made
pursuant to this clause (p) shall not exceed $20.0 million in the
aggregate outstanding at any time (without giving effect to any
write-down or write-off thereof) and (y) until the Collateral Release
Date, upon the request of the Majority Lenders all such Investments
evidenced by Intercompany Notes shall be pledged to the Administrative
Agent pursuant to the Security Agreement;
(q) Investments for the creation of any Wholly Owned Foreign
Subsidiary which is a foreign sales corporation consisting of de
minimis capitalization;
(r) [Reserved];
(s) Investments consisting of non-cash consideration received
in the form of securities, notes or similar obligations in connection
with a Disposition permitted by Section 9.06(j); provided, however,
that (i) the aggregate amount of such non-cash consideration received
in connection with any such Disposition shall not exceed 10% of the
total consideration received in connection with such Disposition and
(ii) until the Collateral Release Date, such non-cash consideration is
pledged pursuant to the appropriate Security Document;
(t) Investments by Foreign Subsidiaries in high quality
investments of the type similar to Permitted Investments made outside
the United States;
(u) Investments made to consummate any Acquisition with the
Net Available Proceeds of any Disposition effected in accordance with
Section 9.06(j) to the extent such Net Available Proceeds have not
been used to effect Capital Expenditures pursuant to Section
9.11(d)(2) or otherwise expended by Borrower or any Subsidiary;
provided, however, that (x) no Default or Event of Default exists or
would result therefrom, (y) on a pro forma basis, immediately after
giving effect to any such Acquisition, Borrower would be in compliance
with the financial covenants set forth in Section 9.11 on the last day
of the most recently ended fiscal quarter (assuming, for purposes of
Section 9.11, that such Acquisition has occurred on the
<PAGE> 94
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first day of the Measurement Period ending on such last day) as
evidenced in an Officers' Certificate delivered to the Administrative
Agent and the Lenders at least 10 days prior to the consummation of
such Acquisition, and (z) such Acquisition shall be effected through
Borrower or a Wholly Owned Subsidiary which is an Obligor (other than
IMSAMET or any of its Subsidiaries);
(v) Investments made to consummate any Acquisition in an
amount in any fiscal year not to exceed the amount that would have
been permitted at the time of consummation of such Acquisition to be
made as a Capital Expenditure pursuant to Section 9.11(d)(1) (after
taking into account the then permitted amount thereunder and the
aggregate amount of Capital Expenditures made and the aggregate amount
expended for other Acquisitions effected pursuant to this Section
9.09(v), in each case on or prior to the date of consummation of such
Acquisition); provided, however, that (w) no Default or Event of
Default exists or would result therefrom, (x) on a pro forma basis,
immediately after giving effect to any such Acquisition, Borrower
would be in compliance with all financial covenants set forth in
Section 9.11 on the last day of the most recently ended fiscal quarter
(assuming, for purposes of Section 9.11, that such Acquisition had
occurred on the first day of the Measurement Period ending on such
last day) as evidenced in an Officers' Certificate delivered to the
Lenders at least 10 days prior to the consummation of such
Acquisition,
(y) such Acquisition shall be effected through Borrower
or a Wholly Owned Subsidiary which is an Obligor (other than IMSAMET
or any of its Subsidiaries), and (z) with respect to the Alchem
Acquisition, the conditions set forth in Section 7.04 shall have been
satisfied;
(w) additional Investments in VAW-IMCO in an aggregate
principal amount not to exceed $5.0 million outstanding at any time
(without giving effect to any write-down or write-off thereof);
(x) Borrower or any Subsidiary may hold the capital stock,
partnership interests or other ownership or equity interest therein of
any Subsidiary existing on the Original Closing Date or created or
acquired thereafter in accordance with the provisions hereof and any
additional capital stock, partnership interests or ownership or equity
interests issued in exchange therefor or as a dividend thereon;
(y) [Reserved];
(z) the making of a loan to the Atlanta Entity (as defined in
the Rock Creek Acquisition Agreement) in an amount not to exceed $1.0
million pursuant to the terms of the Rock Creek Acquisition Agreement;
(aa) Investments in IMCO Recycling (U.K.) Ltd., a Wholly
Owned Foreign Subsidiary, in an aggregate amount not exceeding $15.0
<PAGE> 95
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million outstanding at any time (without giving effect to write-down
or write-off thereof);
(bb) Investments in a joint venture between Borrower or a
Subsidiary and Alumatech, in an aggregate amount not exceeding $10.0
million outstanding at any time (without giving effect to any
write-down or write- off thereof);
(cc) [Reserved];
(dd) in addition to the foregoing, other Investments not
exceeding $20.0 million in the aggregate outstanding at any time
(without giving effect to any write-downs or write-offs thereof), net
of any returns of capital, cash dividends and distributions received
in respect thereof and net cash proceeds of sales thereof; and
(ee) the consummation of the Alchem Acquisition, so long as
Alchem remains a Subsidiary of Borrower and the conditions set forth
in Section 7.04 shall have been satisfied.
9.10. Dividend Payments. No Obligor or Subsidiary shall,
directly or indirectly, declare or make any Dividend Payment at any time,
except that:
(a) any Subsidiary may declare and make Dividend Payments to
the extent made pro rata to all holders of the capital stock thereof;
and
(b) so long as no Default or Event of Default shall have
occurred and be continuing, Borrower may declare and make cash
Dividend Payments on its capital stock not to exceed in the aggregate
$4.0 million in fiscal 1997; $5.0 million in fiscal 1998; $6.0 million
in each of fiscal 1999 and fiscal 2000; and $8.0 million in any fiscal
year thereafter.
9.11. Financial Covenants.
(a) Maximum Debt to Capitalization Ratio. Borrower shall not
permit the Debt to Capitalization Ratio for any Measurement Period ending
during any period set forth in the table below to be more than the ratio set
forth opposite such period in the table below:
<PAGE> 96
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<TABLE>
<CAPTION>
PERIOD RATIO
------ -----
<S> <C>
Amendment and Restatement Date through
12/31/1997 0.55:1.0
1/1/1998 through 12/31/1998 0.55:1.0
1/1/1999 through 12/31/1999 0.50:1.0
1/1/2000 through 12/31/2000 0.45:1.0
1/1/2001 and thereafter 0.40:1.0
</TABLE>
(b) Minimum Interest Coverage Ratio. Borrower shall not
permit the Interest Coverage Ratio for any Measurement Period ending during any
period set forth in the table below to be less than the ratio set forth
opposite such period in the table below:
<TABLE>
<CAPTION>
PERIOD RATIO
------ -----
<S> <C>
Amendment and Restatement Date through
12/31/1997 1.50:1.0
1/1/1998 through 12/31/1998 2.25:1.0
1/1/1999 through 12/31/1999 2.75:1.0
1/1/2000 and thereafter 3.00:1.0
</TABLE>
(c) Minimum Consolidated Net Worth. Borrower shall not
permit Consolidated Net Worth at any time after the Amendment and Restatement
Date to be less than $120.0 million (which amount shall be increased to $140.0
million upon the consummation of the Alchem Acquisition), plus the sum of (x)
50% of consolidated net income of Borrower determined in accordance with GAAP
for each such fiscal quarter (if positive) occurring after September 30, 1997
and (y) 100% of the net proceeds of all Equity Issuances (other than shares
issued in connection with the Alchem Acquisition) occurring after the Amendment
and Restatement Date.
(d) Capital Expenditures. (1) Borrower shall not permit the
aggregate amount of Capital Expenditures made by Borrower and the Subsidiaries
to exceed $38.0 million during fiscal 1997 and $35.0 million during any fiscal
year of Borrower thereafter; provided, however, that (x) if the aggregate
amount of Capital Expenditures for any fiscal year shall be less than the
amount permitted for such fiscal year (before giving effect to any carryover),
then the shortfall may be added to the amount of Capital Expenditures permitted
for the immediately succeeding (but not any other) fiscal year if the amount
expended in such fiscal year would not exceed 120% of the amount permitted for
such fiscal year (before any carryover) and (y) in determining whether any
amount is available for carryover, the amount expended in any fiscal year shall
first be deemed to be from the amount allocated to such year before any
carryover.
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(2) Notwithstanding anything herein to the contrary, (x)
neither the Alchem Acquisition nor Acquisitions permitted by Section 9.09(k)
shall count against any amount permitted by clause (d)(1) above, and (y) so
long as no Default or Event of Default shall have occurred and be continuing,
Borrower and the Subsidiaries may make Capital Expenditures with the Net
Available Proceeds of any Disposition effected in accordance with Section
9.06(j) to the extent that such Net Available Proceeds have not been used to
effect an Acquisition in accordance with Section 9.09(u) or otherwise expended
by Borrower or any Subsidiary.
(e) Measurement Dates. The covenants in clauses (a), (b) and
(c) of this Section 9.11 shall be measured as of the end of each fiscal
quarter, beginning with September 30, 1997 (calculated on a pro forma basis to
give effect to the Public Offering and the transactions contemplated by this
Agreement and the Alchem Acquisition Agreement as if they had occurred during
the fiscal quarter ended September 30, 1997).
9.12. Pledge of Additional Collateral. Promptly, and in any
event within 30 days, after the acquisition of any Property of the type that
would have constituted Collateral at the Original Closing Date (including the
capital stock of any Subsidiary hereafter created or acquired) other than Real
Property (the "Additional Collateral"), each Obligor and each Wholly Owned
Subsidiary (other than any Foreign Subsidiary) shall take all action necessary
or desirable, including the execution and delivery of all such agreements,
assignments, documents and instruments (including amendments to the Basic
Documents) and the filing of appropriate financing statements under the
provisions of the UCC or applicable governmental requirements in each of the
offices where such filing is necessary or appropriate, to grant the
Administrative Agent for the benefit of the Lenders a duly perfected first
priority Lien on such Property pursuant to and to the full extent required by
the Security Documents and this Agreement; provided, however, that (i) not more
than 65% of the capital stock of any "first tier" Foreign Subsidiary need be
pledged and no capital stock of any Foreign Subsidiary which is not a
"first-tier" Foreign Subsidiary need be pledged, (ii) no capital stock of the
Barmet Option Entity to be issued or sold to Barmet pursuant to the Barmet
Option need be pledged, and (iii) the foregoing provisions shall not apply from
and after the Collateral Release Date. The costs of all actions taken by the
parties in connection with the pledge of Additional Collateral or in connection
with any Mortgage, including reasonable costs of counsel for the Administrative
Agent, shall be paid by the Obligors promptly following written demand.
9.13. Security Interests. (a) Until the Collateral Release
Date, each Obligor and each Subsidiary shall, promptly, upon the reasonable
request of any Lender, at Borrower's expense, execute, acknowledge and deliver,
or cause the execution, acknowledgement and delivery of, and thereafter
register, file or record, or cause to be registered, filed or recorded, in an
appropriate governmental office, any document or instrument supplemental to or
confirmatory of the Security Documents or otherwise
<PAGE> 98
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deemed by the Administrative Agent necessary or desirable for the continued
validity, perfection and priority of the Liens on the collateral covered
thereby.
(b) Until the Collateral Release Date, each Obligor and each
Subsidiary shall deliver or cause to be delivered to the Administrative Agent
from time to time such other documentation, consents, authorizations, approvals
and orders in form and substance reasonably satisfactory to the Administrative
Agent as the Administrative Agent shall reasonably deem necessary to perfect or
maintain the Liens on the Collateral.
9.14. Compliance with Environmental Laws. (a) Each Obligor
and each Subsidiary shall comply with all Environmental Laws, and will keep or
cause all Real Property to be kept free of any Liens under Environmental Laws,
unless failure to do so would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect; (b) in the event of the
presence of any Hazardous Material at, on or under any Real Property which
would reasonably be expected to result in liability under or a violation of any
Environmental Law, in each case which would, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, each
Obligor and each Subsidiary shall undertake, and/or cause any of their
respective tenants or occupants to undertake, at their sole expense, any action
required pursuant to Environmental Laws to mitigate and eliminate any such
adverse effect; provided, however, that no Obligor or Subsidiary shall be
required to comply with any order or directive which is being contested in good
faith and by proper proceedings so long as it has maintained adequate reserves
with respect to such compliance to the extent required in accordance with GAAP;
and (c) each Obligor shall promptly notify the Administrative Agent of the
occurrence of any event specified in clause (b) of this Section 9.14 and shall
periodically thereafter keep the Administrative Agent informed of any material
actions taken in response to such event and the results of such actions.
9.15. Lines of Business. No Obligor or Subsidiary shall
directly or indirectly, engage to any substantial extent in any line or lines
of business activity other than the business of the type conducted by Borrower
and the Subsidiaries as of the Original Closing Date.
9.16. Transactions with Affiliates. No Obligor or Subsidiary
shall, directly or indirectly: enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
Property, the rendering of any service, or a merger or consolidation), with any
Affiliate (an "Affiliate Transaction") unless such Affiliate Transaction is
otherwise not prohibited under this Agreement, is in the ordinary course of the
Obligor's business and is on fair and reasonable terms that are not less
favorable to the Obligor than those that would be obtainable at the time in an
arm's-length transaction with a Person who is not such an Affiliate, except
that this covenant shall not limit or restrict Borrower from entering into and
performing its obligations under any
<PAGE> 99
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registration rights agreement entered into in connection with the Alchem
Acquisition so long as any such agreement is substantially the same as the form
thereof attached as an exhibit to (or executed contemporaneously with the
execution of) the Alchem Acquisition Agreement.
9.17. Limitation on Accounting Changes; Limitation on
Investment Company Status. No Obligor or Subsidiary shall make or permit, any
change in (i) accounting policies or reporting practices, except immaterial
changes and except as required by generally accepted accounting principles or
(ii) its fiscal year end (December 31 of each year). No Obligor shall be or
become an investment company subject to the registration requirements under the
Investment Company Act of 1940, as amended.
9.18. Modifications of Certain Documents, Etc. No Obligor or
Subsidiary shall, directly or indirectly, (a) consent to any modification,
supplement or waiver of any of the provisions of any Alchem Acquisition
Document where the effect of such modification, supplement or waiver would be
material and adverse to the interest of the Lenders without the prior written
approval of the Majority Lenders; and (b) amend, modify or change in any manner
which could be materially adverse to the Lenders its certificate of
incorporation or its by-laws (or any other organizational document), or any
agreement entered into with respect to its capital stock, or enter into any new
agreement with respect to its capital stock in any manner which would be
materially adverse to the Lenders.
9.19. [Reserved]
9.20. Limitation on Certain Restrictions Affecting
Subsidiaries. No Obligor or Subsidiary shall, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such Subsidiary to (a) pay dividends or make
any other distributions on such Subsidiary's capital stock or any other
interest or participation in its profits owned by Borrower or any Subsidiary,
or pay any Indebtedness or any other obligation owed to Borrower or any
Subsidiary, (b) make Investments in or to Borrower or any Subsidiary or (c)
transfer any of its Property to Borrower or any Subsidiary, except for such
encumbrances or restrictions existing under or by reason of (i) applicable law,
(ii) the Basic Documents, (iii) such restrictions with respect to the transfer
of those assets subject to a Lien permitted under Section 9.07, (iv) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of Borrower or any Subsidiary, (v) with respect to
restrictions described in clause (c) only, restrictions in any agreement
relating to any Disposition which is permitted under this Agreement and (vi)
the Barmet Option and, until the Alchem Closing Date, the Alchem Option.
9.21. Additional Obligors. Upon Borrower or any Wholly Owned
Subsidiary creating or acquiring a Wholly Owned Subsidiary (other than a
Foreign Subsidiary) after the Original Closing Date (each such Subsidiary
<PAGE> 100
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referred to herein as an "Additional Obligor" and collectively as the
"Additional Obligors"), Borrower shall cause such Wholly Owned Subsidiary to
execute and deliver a Joinder Agreement substantially in the Form of Exhibit K
and all such other agreements, guarantees, documents and certificates
(including any amendments to the Basic Documents) as the Administrative Agent
may reasonably request and do such other acts and things as the Administrative
Agent may reasonably request in order to have such Wholly Owned Subsidiary
guarantee the Obligations in accordance with the terms of the Basic Documents
and, until the Collateral Release Date, pledge all Property (other than Real
Property) pursuant to the Security Agreement.
9.22. Restriction on Leases. No Obligor or Subsidiary shall,
become liable in any way, whether, directly or by assignment or as a guarantor
or other surety, for the obligations of the lessee under any operating lease,
unless, immediately after giving effect to the incurrence of liability with
respect to such lease, the Consolidated Rental Payments of Borrower at the time
in effect shall not exceed $5.0 million per annum.
9.23. Sale or Discount of Receivables. No Obligor or
Subsidiary shall, directly or indirectly, sell, with or without recourse, or
discount, or otherwise sell for less than the face value thereof, notes or
accounts receivables, other than in connection with trade discounts in the
ordinary course of business or consistent with past practice and other than as
permitted by Section 9.06(h) or (i).
9.24. Contingent Obligations. No Obligor or Subsidiary
shall, directly or indirectly, create or become or be liable with respect to
any Contingent Obligation, except:
(a) pursuant to Section 6;
(b) Contingent Obligations in respect of operating leases to
the extent permitted under Section 9.22;
(c) Contingent Obligations of Borrower or any Subsidiary in
respect of Indebtedness or other liabilities of Borrower or any Wholly
Owned Subsidiary which is an Obligor (other than IMSAMET or any of its
Subsidiaries or any of their successors) to the extent that the
existence of such Indebtedness or other liabilities is not prohibited
under this Agreement;
(d) other Contingent Obligations which, together with the
amount of Indebtedness incurred under Section 9.08(h) (but without
duplication), does not exceed $15.0 million in the aggregate at any
time outstanding;
(e) endorsements for collection or deposit in the ordinary
course of business;
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(f) Contingent Obligations of Borrower and the Subsidiaries
existing as of the Original Closing Date and listed in Schedule 8.02
and renewals, extensions, modifications and replacements thereof that
do not increase the amount thereof or provide for terms materially
less favorable to any Obligor;
(g) Swap Contracts entered into in the ordinary course of
business and designed to protect the Obligors against fluctuations in
interest rates, currency exchange rates, commodity prices or similar
risks;
(h) Contingent Obligations in connection with Dispositions
permitted under Section 9.06, arising in connection with
indemnification and other agreements in respect of any contract
relating to such Disposition, not to exceed the consideration received
by Borrower or any Subsidiary in connection with such sale and
excluding in all cases any Contingent Obligation with respect to any
obligation of any third person incurred in connection with the
acquisition of the Property which is the subject of such Disposition;
and
(i) Contingent Obligations incurred in connection with the
Alchem Acquisition as set forth in Schedule 9.24(i).
9.25. [Reserved]
9.26. Post Amendment and Restatement Obligations. Borrower
shall, and shall cause each of the Subsidiaries to, as expeditiously as
possible but in no event later than 90 days after the Amendment and Restatement
Date, obtain and deliver to the Administrative Agent, the Arranger and counsel
to the Arranger each of the following with respect to each of (i) the real
property commonly known as 609 Gardner Camp Road, Highway 1468, Morgantown,
Kentucky 42261 (the "Kentucky Property") and (ii) the real property commonly
known as 1005 4th Street, Bedford, Indiana 47421:
(a) a current Survey (Kentucky Property only);
(b) a zoning endorsement or letter from the appropriate
Governmental Authority confirming that (x) the real property is in
compliance with or (y) such Governmental Authority is not aware of any
noncompliance with the applicable current zoning regulations (Kentucky
Property only); and
(c) updated endorsements to the title policy which shall omit
from such title insurance policy any and all Survey exceptions and any
other related exceptions which the Administrative Agent, in its
reasonable judgment, deems necessary.
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The post closing obligations set forth in Section 9.26 of the
Original Credit Agreement have been satisfied to the extent not set forth
above.
Section 10. Events of Default.
If one or more of the following events (herein called "Events
of Default") shall occur and be continuing:
(a) (i) Borrower shall default in the payment when due
(whether at stated maturity, upon prepayment or repayment or
acceleration or otherwise) of any principal of any Revolving Credit
Loan or (ii) Borrower shall default in the payment when due of
interest on any Revolving Credit Loan or any Reimbursement Obligation
or any fee or any other amount payable by it hereunder or under any
other Basic Document when due and such default under this clause (ii)
shall have continued unremedied for five or more Business Days; or
(b) Borrower or any Subsidiary (Borrower and such
Subsidiaries herein collectively called the "Relevant Parties" and
each, a "Relevant Party") shall default in the payment when due of any
principal of or interest on any of its Indebtedness (other than the
Revolving Credit Loans) aggregating $5.0 million or more, beyond the
period of grace, if any, provided in the instrument or agreement under
which such Indebtedness was created, after giving effect to any
consents or waivers relating thereto obtained before the expiration of
any such period of grace; or any event specified in any note,
agreement, indenture or other document evidencing or relating to any
Indebtedness aggregating $5.0 million or more if the effect of such
event (after giving effect to any consents or waivers relating thereto
obtained before the expiration of any such period of grace) is to
cause, or (with the giving of any notice or the lapse of time or both)
to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, such Indebtedness
to become due, or to be prepaid in full (whether by redemption,
purchase, offer to purchase or otherwise), prior to its stated
maturity; or any Relevant Party shall default in the payment when due
of any amount aggregating $500,000 or more under any Swap Contract; or
any event specified in any Swap Contract shall occur if the effect of
such event is to cause, or (with the giving of notice or the lapse of
time or both) to permit, termination or liquidation payments
aggregating $5.0 million or more to become due; or
(c) Any representation or warranty made or deemed made in any
Basic Document (or in any modification or supplement thereto) by any
Relevant Party, or in any certificate furnished to any Creditor
pursuant to the provisions thereof, shall prove to have been false or
misleading as of the time made, deemed made or furnished in any
material respect; or
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(d) Any Obligor or any Subsidiary shall default in the
performance of any of its obligations under any of Sections 9.05
through 9.26 (other than Section 9.14); or any Obligor or any
Subsidiary shall default in the performance of any of its obligations
under Section 9.14 and such default shall continue unremedied for 30
days or more after notice; or, until the Collateral Release Date, any
Obligor shall default in the performance of any of its obligations
under Section 5.02 of the Security Agreement and such default shall
continue unremedied for 10 days or more; or Borrower shall default in
the performance of its obligations under Section 9.01(e) and such
default shall continue unremedied for 10 Business Days or more after
notice to Borrower; or any Obligor or any Subsidiary shall default in
the performance of any of its other obligations in this Agreement, the
Security Documents (until the Collateral Release Date) or the Letter
of Credit Documents and such default shall continue unremedied for a
period of thirty days or more after written notice thereof to such
Obligor or Borrower by the Administrative Agent; or
(e) Any Relevant Party shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts become due;
or
(f) Any Relevant Party shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
Property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Bankruptcy Code
(as now or hereafter in effect), (iv) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts,
(v) fail to controvert within 60 days or in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Bankruptcy Code, or (vi) take any
corporate action for the purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the
application or consent of the affected Relevant Party, in any court of
competent jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its
debts, (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of such Relevant Party or of all or any
substantial part of its assets, or (iii) similar relief in respect of
such Relevant Party under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and
either (1) such proceeding shall not be actively contested by such
Relevant Party, or (2) such proceeding or case shall continue
undismissed, undischarged or unbonded, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of 60 or more days; or
an order for relief against any Relevant Party shall be entered in an
involuntary case under the Bankruptcy Code; or
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(h) A final judgment or judgments for the payment of money in
excess of $5.0 million in the aggregate (exclusive of judgment amounts
to the extent covered by insurance) shall be rendered by one or more
courts, administrative tribunals or other bodies having jurisdiction
against any Relevant Party and the same shall not be discharged (or
provision shall not be made for such discharge), vacated or bonded
pending appeal, or a stay of execution thereof shall not be procured,
within 45 days from the date of entry thereof and such Relevant Party
shall not, within said period of 45 days, or such longer period during
which execution of the same shall have been stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal; or
(i) Any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $5.0 million which it
shall have become liable to pay under Title IV of ERISA; or notice of
intent to terminate a Material Plan shall be filed under Title IV of
ERISA by any member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate, to impose liability (other than
for premiums under Section 4007 of ERISA) in respect of, or to cause a
trustee to be appointed to administer any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be
terminated; or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section 4219(c)(5) of ERISA,
with respect to, one or more Multiemployer Plans which could
reasonably be expected to cause one or more members of the ERISA Group
to incur a payment obligation in excess of $5.0 million; or
(j) Any Change of Control; or
(k) Until the Collateral Release Date, any Security Document
after delivery thereof at any time shall cease to be in full force and
effect or shall for any reason fail to create or cease to maintain a
valid and duly perfected first priority security interest in and Lien
upon a material portion of the Collateral; or
(l) Any Guarantee ceases to be in full force and effect or
any of the Subsidiary Guarantors repudiates, or attempts to repudiate,
any of its obligations under any of the Guarantees;
THEREUPON: (1) in the case of an Event of Default other than one referred to
in clause (f) or (g) of this Section 10, the Administrative Agent may, and upon
written direction of the Majority Lenders shall, by notice to Borrower,
terminate the Revolving Credit Commitments and/or declare the principal
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amount then outstanding of, and the accrued interest on, the Revolving Credit
Loans, the Reimbursement Obligations and all other amounts payable by Borrower
hereunder and under the Notes (including any amounts payable under Section 5.05
or 5.06) to be forthwith due and payable, whereupon such amounts shall be
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by Borrower,
reduce any claim to judgment, take any other action permitted by law and/or
take any action permitted to be taken by the Security Documents during the
existence of an Event of Default; and (2) in the case of the occurrence of an
Event of Default referred to in clause (f) or (g) of this Section 10, the
Revolving Credit Commitments shall automatically be terminated and the
principal amount then outstanding of, and the accrued interest on, the
Revolving Credit Loans, the Reimbursement Obligations and all other amounts
payable by Borrower hereunder and under the Notes (including any amounts
payable under Section 5.05 or 5.06) shall automatically become immediately due
and payable without presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by Borrower.
In addition, Borrower agrees, upon the occurrence and during
the continuance of any Event of Default if the Administrative Agent has
declared the principal amount then outstanding of, and accrued interest on, the
Revolving Credit Loans, and all other amounts payable to the Lenders hereunder
and under the Notes evidencing such Revolving Credit Loans to be due and
payable, it may and shall, if requested by the Majority Lenders through the
Administrative Agent (and, in the case of any Event of Default referred to in
clause (f) or (g) of this Section 10 with respect to any Relevant Party,
forthwith, without any demand or the taking of any other action by the
Administrative Agent or such Lenders) provide cover for the Letter of Credit
Liabilities by paying to the Administrative Agent immediately available funds
in an amount equal to the then aggregate undrawn face amount of all Letters of
Credit, which funds shall be held by the Administrative Agent in the Collateral
Account as collateral security in the first instance for the Letter of Credit
Liabilities and be subject to withdrawal only as provided in the Security
Agreement (or such other agreement evidencing the Collateral Account).
Section 11. The Administrative Agent.
11.01. Appointment, Powers and Immunities. Each Lender
hereby appoints and authorizes the Administrative Agent to act as its agent
under the Basic Documents with such powers as are specifically delegated to the
Administrative Agent by their terms, together with such other powers as are
reasonably incidental thereto. Neither the Administrative Agent nor the
Arranger (which term as used in this sentence and in Section 11.05 and the
first sentence of Section 11.06 shall include reference to their respective
Affiliates and their own and their respective Affiliates' officers, directors,
employees, attorneys and agents):
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(a) shall have any duties or responsibilities except those
expressly set forth in the Basic Documents, or shall by reason of any
Basic Document or the performance of its duties thereunder be a
trustee or fiduciary for any Lender or any Obligor;
(b) shall be responsible to the Lenders for any recitals,
statements, representations or warranties contained in any Basic
Document, or in any certificate or other document referred to or
provided for in, or received by any of them under, any Basic Document,
or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of any Basic Document or any other document referred to
or provided for herein or therein or for any failure by Borrower or
any other Person to perform any of its obligations thereunder;
(c) shall, except to the extent expressly instructed pursuant
to the provisions of this Agreement by the Majority Lenders with
respect to collateral security under the Security Documents, be
required to initiate or conduct any litigation or collection
proceedings under any Basic Document;
(d) shall be responsible or liable to any Lender for any
action taken or omitted to be taken by it hereunder or under any other
Basic Document or under any other document or instrument referred to
or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence or willful misconduct;
(e) in performing its functions and duties under the Credit
Documents, shall assume or shall be deemed to have assumed any
obligation towards or relationship of agency or trust with or for any
Obligor, other than with respect to the Register, (it being understood
that the provisions of this Section 11 are solely for the benefit of
the Creditors, and no Obligor shall have any rights as a third-party
beneficiary of any of the provisions hereof); or
(f) shall be under any obligation to take any action
hereunder or under any other Basic Document if the Administrative
Agent determines that taking such action may conflict with any law or
any provision of any Basic Document, or may require the Administrative
Agent to qualify to do business in any jurisdiction where it is not
then so qualified.
The Administrative Agent may employ and consult with agents, attorneys-in-fact,
independent public accountants, attorneys, and other experts and consultants
selected by it, and shall not be responsible or liable for the negligence,
gross negligence or misconduct of any such Person reasonably selected. The
Administrative Agent shall not be responsible or liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants, experts or other advisor.
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The Administrative Agent may deem and treat the payee of a Note as the holder
thereof for all purposes hereof unless and until a notice of the assignment or
transfer thereof shall have been filed with the Administrative Agent, together
with any necessary consents required by Section 12.06. The Arranger, as such,
shall not have any independent duties or obligations under any Basic Document.
11.02. Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telecopy, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons. As to any matters not expressly
provided for by this Agreement or any other Basic Document, the Administrative
Agent shall in all cases be fully protected insofar as the Lenders are
concerned in acting, or in refraining from acting, hereunder or thereunder in
accordance with instructions given by the Majority Lenders or, if provided
herein, in accordance with the instructions given by the Majority Lenders or
all of the Lenders as is required in such circumstance, and such instructions
of such Lenders and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders; provided, however, that the Administrative
Agent shall not be required to take any action which exposes the Administrative
Agent to any responsibility or liability or which is contrary to any Basic
Document or applicable law.
11.03. Defaults. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of a Default unless the
Administrative Agent has received notice from a Lender or Borrower specifying
such Default and stating that such notice is a "Notice of Default" under this
Agreement or another Basic Document. In the event that the Administrative
Agent receives such a notice of the occurrence of a Default, the Administrative
Agent shall give prompt notice thereof to the Lenders. The Administrative
Agent shall (subject to Sections 11.01, 11.02, 11.07, 12.03 and 12.04) take
such action with respect to such Default as shall be directed by the Majority
Lenders; provided, however, that, unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default as it shall deem advisable in the best interests of the
Lenders.
11.04. Rights as a Lender. With respect to its Revolving
Credit Commitments and the Revolving Credit Loans made by it, Texas Commerce
Bank National Association (and any successor acting as Administrative Agent) in
its capacity as a Lender hereunder shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as the Administrative Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include Texas Commerce Bank National
Association in its individual capacity. Texas Commerce Bank National
Association (and any successor acting as Administrative
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Agent) and its Affiliates may (without having to account therefor to any
Lender) accept deposits from, lend money to, act as trustee under indentures
of, provide merchant banking services to, own securities of, make investments
in and generally engage in any kind of banking, trust or other business with
the Obligors (and any of their Subsidiaries or Affiliates) as if it were not
acting as the Administrative Agent, and Texas Commerce Bank National
Association (and any such successor) and its Affiliates may accept fees and
other consideration from the Obligors for services in connection with this
Agreement or otherwise without having to account for the same to the Lenders.
Each Lender acknowledges the potential conflict of interest between Texas
Commerce Bank National Association (i) as a Lender which may hold
disproportionate interests in the various Revolving Credit Commitments and/or
Revolving Credit Loans and (ii) as the Administrative Agent under this
Agreement and each Lender expressly consents to, and waives any claim based
upon, such potential conflicts of interest.
11.05. Indemnification. Each Lender agrees to indemnify and
hold harmless the Administrative Agent and the Arranger (to the extent not
promptly reimbursed under Section 12.03, but without limiting the obligations
of Borrower under Section 12.03), ratably in accordance with the aggregate
principal amount of the Revolving Credit Loans and Reimbursement Obligations
held by the Lenders (or, if no Revolving Credit Loans or Reimbursement
Obligations are at the time outstanding, ratably in accordance with their
respective Revolving Credit Commitments), for any and all liabilities
(including pursuant to any Environmental Law), obligations, losses, damages,
penalties, actions, judgments, deficiencies, suits, costs, expenses (including
reasonable attorney's fees) or disbursements of any kind and nature whatsoever
that may be imposed on, incurred by or asserted against the Administrative
Agent or the Arranger (including by any Lender) arising out of or by reason of
any investigation in or in any way relating to or arising out of any Basic
Document or any other documents contemplated by or referred to therein for any
action taken or omitted to be taken by the Administrative Agent or the Arranger
under or in respect of any of the Basic Documents or other such documents or
the transactions contemplated thereby (including the costs and expenses that
Borrower is obligated to pay under Section 12.03, and including also any
payments under any indemnity that the Administrative Agent is required to issue
to any Lender referred to in Section 4.01(c) of the Security Agreement, or to
any bank referred to in Section 4.02 of the Security Agreement to which
remittances in respect of Accounts, as defined therein, are to be made, but
excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof or thereof or
of any such other documents; provided, however, that no Lender shall be liable
for any of the foregoing to the extent they are determined by a court of
competent jurisdiction in a final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of the party to be indemnified.
The agreements set forth in this Section 11.05 shall survive the payment of all
Revolving Credit Loans and other obligations hereunder and shall be in addition
to and not in lieu of any other indemnification agreements contained in any
other Basic Document.
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11.06. Non-Reliance on Administrative Agent, Arranger and
Other Lenders. Each Lender agrees that it has, independently and without
reliance on any other Creditor, and based on such documents and information as
it has deemed appropriate, made its own credit analysis of Borrower and the
Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon any other Creditor, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action under any
Basic Document. Neither the Administrative Agent nor the Arranger shall be
required to keep itself informed as to the performance or observance by any
Obligor of any of the Basic Documents or any other document referred to or
provided for therein or to inspect the Properties or books of Borrower or any
Subsidiary. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder or under the Security Documents, neither the Administrative Agent nor
the Arranger shall have any duty or responsibility to provide any Lender with
any credit or other information concerning the affairs, financial condition or
business of Borrower or any Subsidiary (or any of their Affiliates) that may
come into the possession of the Administrative Agent or the Arranger or any of
their respective Affiliates.
11.07. Failure to Act. The Administrative Agent shall in all
cases be fully justified in failing or refusing to act under any Basic Document
unless it shall receive further assurances to its satisfaction from the Lenders
of their indemnification obligations under Section 11.05 against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. In addition, the Administrative Agent
shall have no obligation whatsoever for any action which it reasonably and in
good faith believes may violate applicable law.
11.08. Resignation or Removal of Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative Agent
as provided below, the Administrative Agent may resign at any time by giving 30
days' notice thereof to the Lenders and Borrower, and the Administrative Agent
may be removed at any time with or without cause by the Majority Lenders, with
the consent of Borrower (not to be unreasonably withheld or delayed) absent an
Event of Default existing at such time (the determination of Majority Lenders
for purposes of this Section 11.08 to be made without reference to any
Revolving Credit Commitments, Revolving Credit Loans or Letter of Credit
Liabilities held by the Administrative Agent). Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from all of its
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duties, liabilities and obligations hereunder. After any retiring
Administrative Agent's resignation or removal hereunder as Administrative
Agent, the provisions of this Section 11, Section 12.03 and all other similar
provisions shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Administrative
Agent.
11.09. Consents Under Other Basic Documents. Except as
otherwise provided in Section 12.04 with respect to this Agreement and the
other Basic Documents, the Administrative Agent may, with the prior consent of
the Majority Lenders (but not otherwise), consent to any modification,
supplement or waiver under any of the other Basic Documents.
11.10. Collateral Sub-Agents. Each Lender by its execution
and delivery of this Agreement agrees, as contemplated by Section 4.03 of the
Security Agreement, that, in the event it shall hold any Permitted Investments
referred to therein, such Permitted Investments shall be held in the name and
under the control of such Lender, and such Lender shall hold such Permitted
Investments as a collateral sub-agent for the Administrative Agent thereunder.
Borrower by its execution and delivery of this Agreement hereby consents to the
foregoing.
11.11. Exculpatory Provisions. None of the Administrative
Agent, the Arranger or any of their respective officers, directors, employees,
representatives, agents, attorneys-in-fact or Affiliates shall be (i) liable to
any Lender for any waiver, consent or approval given or any action taken or
omitted to be taken by such Person under or in connection with any Basic
Document or be responsible for the consequences of any oversight or error in
judgment by such Person whatsoever, except to the extent that such action,
omission, oversight or error in judgment is determined by a court of competent
jurisdiction in a final non-appealable judgment to have resulted solely from
such Person's own gross negligence or bad faith or (ii) responsible in any
manner to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of any Basic Document or for any
representations, warranties, recitals or statements made 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 therewith furnished
or made by the Administrative Agent or the Arranger to the Lenders or by or on
behalf of any Obligor or any of their respective officers to any Creditor.
Section 12. Miscellaneous.
12.01. Waiver. No failure on the part of any Creditor to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under any Basic Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege under any Basic Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
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The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
12.02. Notices. All notices, requests and other
communications provided for herein and under the Security Documents (including
any modifications of, or waivers, requests or consents under, this Agreement)
shall be given or made in writing (including by facsimile) delivered to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof; or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have
been duly given when transmitted by facsimile or personally delivered or, in
the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
12.03. Expenses, Etc. The Obligors, jointly and severally,
agree: (a) to pay or reimburse the Arranger and the Administrative Agent for
all of their reasonable out-of-pocket costs and expenses (including the
reasonable fees and expenses of legal counsel) in connection with (i) the
negotiation, preparation, execution and delivery of the Basic Documents and the
extension of credit hereunder and (ii) the negotiation or preparation of any
modification, supplement or waiver of any of the terms of any Basic Document,
including this Agreement as amended and restated on the Amendment and
Restatement Date (whether or not consummated or effective); (b) to pay or
reimburse each of the Lenders and the Administrative Agent for all reasonable
out-of-pocket costs and expenses of the Lenders and the Administrative Agent
(including the reasonable fees and expenses of legal counsel) in connection
with (i) any Default and any enforcement or collection proceedings resulting
therefrom, including all manner of participation in or other involvement with
(x) bankruptcy, insolvency, receivership, foreclosure, winding up or
liquidation proceedings, (y) judicial or regulatory proceedings and (z)
workout, restructuring or other negotiations or proceedings (whether or not the
workout, restructuring or transaction contemplated thereby is consummated) and
(ii) the enforcement of this Section 12.03; and (c) to pay or reimburse each of
the Lenders and the Administrative Agent for all costs, expenses, taxes (except
for Oklahoma mortgage recording tax), assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated by any Basic Document or any other document
referred to therein.
The Obligors, jointly and severally, hereby agree to indemnify
each Creditor and their respective Affiliates, directors, trustees, officers,
employees and agents (each, an "Indemnitee") from, and hold each of them
harmless against, and that no Indemnitee will have any liability for, any and
all Losses incurred by any of them (including any and all Losses incurred by
the Administrative Agent, the Arranger or the Issuing Lender to any Lender,
whether or not any Creditor is a party thereto) directly or indirectly arising
out of or by reason of or relating to the negotiation, execution, delivery,
performance, administration or enforcement of any
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Basic Document, any of the transactions contemplated by the Basic Documents,
any breach by any Obligor of any representation, warranty, covenant or other
agreement contained in any of the Basic Documents, the use or proposed use of
any of the Revolving Credit Loans or Letters of Credit or the use of any
collateral security for the Revolving Credit Loans (including the exercise by
any Creditor of the rights and remedies or any power of attorney with respect
thereto and any action or inaction in respect thereof), but excluding any such
Losses to the extent finally determined to have arisen from the gross
negligence or bad faith of the Indemnitee. Without limiting the generality of
the foregoing, the Obligors, jointly and severally, will indemnify each
Creditor and each other Indemnitee from, and hold each Creditor and each other
Indemnitee harmless against, any Losses described in the preceding sentence
arising under any Environmental Law as a result of (A) the past, present or
future operations of Borrower or any Subsidiary (or any predecessor in interest
to Borrower or any Subsidiary), (B) the past, present or future condition of
any site or facility owned, operated or leased at any time by Borrower or any
Subsidiary (or any such predecessor in interest), or (C) any Release or
threatened Release of any Hazardous Materials at or from any such site or
facility, including any such Release or threatened Release that shall occur
during any period when any Creditor shall be in possession of any such site or
facility following the exercise by such Creditor of any of its rights and
remedies hereunder or under any of the Security Documents; provided, however,
that the indemnity hereunder shall be subject to the exclusions from
indemnification set forth in the preceding sentence. In case any action is
brought against any Indemnitee relating to Losses arising under any
Environmental Law as contemplated by the preceding sentence, Borrower will be
entitled to participate therein and, to the extent that it may wish, to assume
the defense thereof, with counsel reasonably satisfactory to such Indemnitee;
provided, however, that if (i) the use of counsel chosen by Borrower to
represent the Indemnitee would present such counsel with a conflict of
interest, (ii) the defendants in any such action include both the Indemnitee
and any Obligor and the Indemnitee shall have been advised by counsel that
there may be one or more legal defenses available to it and/or other
Indemnitees that are different from or additional to those available to any
Obligor, or (iii) Borrower shall not have employed counsel reasonably
satisfactory to the Indemnitee to represent the Indemnitee within a reasonable
time after receipt by the Obligors of notice of the institution of such action,
then, in each such case, Borrower shall not have the right to assume the
defense of such action on behalf of such Indemnitee and such Indemnitee shall
have the right to select separate counsel to defend such action on behalf of
such Indemnitee at the expense of Borrower.
To the extent that the undertaking to indemnify and hold
harmless set forth in this Section 12.03 or any other provision of any Basic
Document providing for indemnification is unenforceable because it is violative
of any law or public policy or otherwise, the Obligors, jointly and severally,
shall contribute the maximum portion that each of them is permitted to pay and
satisfy under applicable law to the payment and satisfaction of all indemnified
liabilities incurred by any of the Persons indemnified hereunder.
<PAGE> 113
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The Obligors also agree that no Indemnitee shall have any
liability (whether direct or indirect, in contract or tort or otherwise) for
any Losses to any Obligor or any Obligor's security holders or creditors
resulting from, arising out of, in any way related to or by reason of any
matter referred to in any indemnification or expense reimbursement provisions
set forth in this Agreement or any other Basic Document, except to the extent
that any Loss is determined by a court of competent jurisdiction in a final
nonappealable judgment to have resulted from the gross negligence or bad faith
of such Indemnitee.
The Obligors agree that, without the prior written consent of
the Administrative Agent, the Arranger and the Majority Lenders, no Obligor
will settle, compromise or consent to the entry of any judgment in any pending
or threatened Proceeding in respect of which indemnification is reasonably
likely to be sought under the indemnification provisions of this Section 12.03
(whether or not any Indemnitee is an actual or potential party to such
Proceeding), unless such settlement, compromise or consent includes an
unconditional written release of each Indemnitee from all liability arising out
of such Proceeding and does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of any Indemnitee and does
not involve any payment of money or other value by any Indemnitee or any
injunctive relief or factual findings or stipulations binding on any
Indemnitee.
12.04. Amendments, Etc. (i) Any provision of this Agreement
or any other Basic Document may be amended, modified or supplemented by an
instrument in writing signed by the Obligors and the Majority Lenders, or by
the Obligors and the Administrative Agent acting with the written consent of
the Majority Lenders, and any provision of this Agreement may be waived by an
instrument in writing signed by the Obligors and the Majority Lenders, or by
the Obligors and the Administrative Agent acting with the written consent of
the Majority Lenders and Borrower; provided, however, that:
(a) no amendment, modification, supplement or waiver shall,
unless by an instrument signed by all of the Lenders or by the
Administrative Agent acting with the written consent of each Lender
(with Obligations directly affected in the case of clause (I)): (I)
extend the scheduled final maturity of any Revolving Credit Loan or
Note, or extend the stated expiration date of any Letter of Credit
beyond the Revolving Credit Commitment Termination Date, or reduce the
rate of interest (other than any waiver of any increase in the
interest rate applicable to any of the Revolving Credit Loans pursuant
to Section 3.02 as a result of the applicability of the Post Default
Rate) or fees thereon, or extend the time of payment of interest or
fees thereon, or reduce the principal amount thereof, (II) modify or
<PAGE> 114
-108-
change any date or amount of scheduled reduction of Revolving Credit
Commitments or extend the final maturity of any of the Revolving
Credit Commitments (or reinstate any Revolving Credit Commitment
terminated pursuant to Section 10), (III) change the currency in which
any Obligation is payable, (IV) amend the terms of this Section 12.04
or Sections 4.07, 5 or 11.09, (V) reduce the percentages specified in
the definition of the term "Majority Lenders" or amend any provision
of any Credit Document requiring the consent of all the Lenders or
modify in any other manner the number or percentage of the Lenders
required to make any determinations or waive any rights hereunder or
to modify any provision hereof (it being understood that, with the
consent of the Majority Lenders, additional extensions of credit
pursuant to this Agreement may be included in the determination of the
Majority Lenders without notice to or consent of any other Lender or
Agent on substantially the same basis as the Revolving Credit
Commitments (and related extensions of credit) are included on the
Amendment and Restatement Date), (VI) release any Guarantor from its
obligations under Section 6 (unless permitted by this Agreement),
(VII) consent to the assignment or transfer by any Obligor of any of
its rights and obligations under any Basic Document, (VIII) release
all or substantially all the Collateral or terminate the Lien under
any Basic Document in respect of all or substantially all the
Collateral (except as permitted by the Basic Documents including
Section 12.16 hereof) or agree to additional obligations (other than
the Obligations) being secured by the Collateral, or (IX) amend
Section 12.03 or any other indemnification and expense reimbursement
provision set forth in any Basic Document;
(b) no such amendment, modification, supplement or waiver
shall increase the Revolving Credit Commitment of any Lender over the
amount thereof then in effect without the consent of such Lender (it
being understood that amendments, modifications or waivers of
conditions precedent, covenants, Default or Events of Default shall
not constitute an increase of the Revolving Credit Commitment of any
Lender);
(c) any modification or supplement of or waiver with respect
to Section 11 which affects the Administrative Agent or the Arranger
in their respective capacities as such shall require the consent of
the Administrative Agent or the Arranger, as the case may be;
(d) no consent of any Lender need be obtained, and the
Administrative Agent is hereby authorized, to release any Lien
securing the Obligations on Property which is the subject of any
Disposition permitted by this Agreement and the other Basic Documents;
and
(e) no amendment, modification or waiver shall affect the
rights or duties of the Issuing Lender in its capacity as such or
<PAGE> 115
-109-
alter the obligation of any Lender pursuant to Section 2.03(e) or
2.03(f) without the consent of the Issuing Lender.
(ii) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement as
contemplated by Section 12.04(i)(a) (other than clause (I) of such section),
the consent of the Majority Lenders is obtained but the consent of one or more
of such other Lenders whose consent is required is not obtained, then Borrower
shall have the right to replace each such non-consenting Lender or Lenders (so
long as all non-consenting Lenders are so replaced) with one or more
Replacement Lenders pursuant to Section 2.11 so long as at the time of such
replacement, each such Replacement Lender consents to the proposed change,
waiver, discharge or termination; provided, however, that Borrower shall not
have the right to replace a Lender solely as a result of the exercise of such
Lender's rights (and the withholding of any required consent by such Lender)
pursuant to clause (I) of Section 12.04(i)(a).
12.05. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
12.06. Assignments and Participations. (a) No Obligor may
assign its respective rights or obligations hereunder or under the Notes
without the prior consent of all of the Lenders.
(b) Each Lender may assign to any Eligible Person any of its
Revolving Credit Loans, its Notes, its Letter of Credit Interests and its
Revolving Credit Commitments (but only with the consent (which shall not be
unreasonably withheld or delayed) of Borrower, the Administrative Agent and the
Issuing Lender); provided, however, that (i) no such consent by Borrower, the
Issuing Lender or the Administrative Agent shall be required in the case of any
assignment to another Lender or to any Lender's Affiliate (in which case, the
assignee and assignor Lenders shall give notice of the assignment to the
Administrative Agent), and no consent of Borrower need be obtained if any
Default or Event of Default shall have occurred and be continuing; (ii) except
with respect to any assignment pursuant to Section 2.11, any such assignment
(other than to a Lender or any Lender's Affiliate) shall be in an aggregate
amount at least equal to $5.0 million (unless Borrower and the Administrative
Agent otherwise agree) (or, if less, the full amount of such assigning Lender's
Revolving Credit Loans, Letter of Credit Interests and Revolving Credit
Commitments); (iii) each such assignment by a Lender of its Revolving Credit
Loans, Note, Letter of Credit Interests and Revolving Credit Commitment shall
be made in such manner so that the same portion of its Revolving Credit Loans,
Note, Letter of Credit Interests and Revolving Credit Commitment is assigned to
the respective assignee; and (iv) in no event may any such assignment be made
to any Obligor or any of its Affiliates. Upon execution and delivery by the
assignee to Borrower and the Administrative Agent of an instrument in writing
substantially in the form of Exhibit F, and upon consent thereto by Borrower,
<PAGE> 116
-110-
the Administrative Agent and the Issuing Lender to the extent required above,
the assignee shall have, to the extent of such assignment (unless otherwise
provided in such assignment with the consent of the Administrative Agent), the
obligations, rights and benefits of a Lender hereunder holding the Revolving
Credit Commitment(s), Revolving Credit Loans (or portions thereof) and Letter
of Credit Interests assigned to it (in addition to the Revolving Credit
Commitment(s), Letter of Credit Interests and Revolving Credit Loans, if any,
theretofore held by such assignee) and the assigning Lender shall, to the
extent of such assignment, be released from the Revolving Credit Commitment(s)
(or portion(s) thereof) so assigned. At the time of each assignment pursuant
to this Section 12.06(b) to a Person which is not already a Lender hereunder
and which is not a United States person (as such term is defined in Section
7701(a)(3) of the Code) for Federal income tax purposes, the respective
assignee Lender shall provide to Borrower and the Administrative Agent the
appropriate Internal Revenue Service Forms (and, if applicable, a Section 5.06
Certificate) described in Section 5.06(b). Upon any such assignment the
assignee Lender shall pay a fee of $3,500 to the Administrative Agent.
(c) A Lender may sell or agree to sell to one or more other
Eligible Persons a participation in all or any part of the Revolving Credit
Loans and Letter of Credit Interests held by it, or in its Revolving Credit
Commitments, in which event each purchaser of a participation (a "Participant")
shall be entitled to the rights and benefits of the provisions of Section 5
(provided, however, that no Participant shall be entitled to receive any
greater amount pursuant to Section 5 than the transferor Lender would have been
entitled to receive in respect of the participation effected by such transferor
Lender had no participation occurred) with respect to its participation in such
Revolving Credit Loans, Letter of Credit Interests and Revolving Credit
Commitments as if such Participant were a "Lender" for purposes of said
Section, but, except as otherwise provided in Section 4.07(c), shall not have
any other rights or benefits under this Agreement or any Note or any other
Basic Document (the Participant's rights against such Lender in respect of such
participation to be those set forth in the agreements executed by such Lender
in favor of the Participant). All amounts payable by Borrower to any Lender
under Section 5 in respect of Revolving Credit Loans, Letter of Credit
Interests and its Revolving Credit Commitments, shall be determined as if such
Lender had not sold or agreed to sell any participation in such Revolving
Credit Loans, Letter of Credit Interests and Revolving Credit Commitments, and
as if such Lender were funding each of such Revolving Credit Loans, Letter of
Credit Interests and Revolving Credit Commitments in the same way that it is
funding the portion of such Revolving Credit Loan, Letter of Credit Interests
and Revolving Credit Commitments in which no participations have been sold. In
no event shall a Lender that sells a participation agree with the Participant
to take or refrain from taking any action hereunder or under any other Basic
Document, except that such Lender may agree with the Participant that it will
not, without the consent of the Participant, agree to (i) increase or extend
the final maturity, or extend the time or waive any requirement for
<PAGE> 117
-111-
the reduction or termination, of such Lender's related Revolving Credit
Commitment (it being understood that no Lender shall agree that a waiver of any
condition precedent, covenant or Event of Default or Default requires such
consent), (ii) extend the date fixed for any reduction of Revolving Credit
Commitments or interest on the related Revolving Credit Loan or Reimbursement
Obligations or any portion of any fee hereunder payable to the Participant
(through the subject Lender), (iii) reduce the amount of any such reduction of
Revolving Credit Commitments, (iv) reduce the rate at which interest is payable
thereon (other than as a result of waiving applicability of any post-default
increase in interest rates), or any fee hereunder payable to the Participant
(through the subject Lender), to a level below the rate at which the
Participant is entitled to receive such interest or fee, (v) release any
Subsidiary Guarantor from its obligations under Section 6 (unless permitted by
this Agreement), or (vi) release all or substantially all of the collateral
securing the Obligations (except as permitted by the Basic Documents, including
Section 12.15 hereof).
(d) In addition to the assignments and participations
permitted under the foregoing provisions of this Section 12.06, any Lender may
assign and pledge all or any portion of its Revolving Credit Loans and its
Notes to any Federal Reserve Bank as collateral security pursuant to Regulation
A and any Operating Circular issued by such Federal Reserve Bank and, in the
case of a Lender that is an investment fund, any such Lender may assign or
pledge any portion of its Revolving Credit Loans and its Notes to its trustee
in support of its obligations to its trustee, without notice to or consent of
Borrower and the Administrative Agent. No such assignment shall release the
assigning Lender from its obligations hereunder.
(e) A Lender may furnish any information concerning Borrower
or any Subsidiary in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants)
subject, however, to the provisions of Section 12.11. In addition, each of the
Administrative Agent and the Arranger may furnish any information concerning
any Obligor or any of its Affiliates in the Administrative Agent's or the
Arranger's possession to any Affiliate of the Administrative Agent or the
Arranger. The Obligors shall assist any Lender in effectuating any assignment
or participation pursuant to this Section 12.06 (including during syndication)
in whatever manner such Lender reasonably deems necessary, including the
participation in meetings with prospective transferees.
(f) Anything in this Section 12.06 to the contrary
notwithstanding, no Lender may assign or participate any interest in any
Revolving Credit Loan or Reimbursement Obligation or Revolving Credit
Commitment held by it hereunder to any Obligor or any of its Affiliates or
Subsidiaries without the prior written consent of each Lender.
12.07. Survival. The obligations of the Obligors under
Sections 5.01, 5.05, 5.06, 5.06 and 12.03, the obligations of each Subsidiary
Guarantor under Section 6.03, and the obligations of the Lenders under
<PAGE> 118
-112-
Sections 5.06 and 11.05, shall survive the repayment of the Revolving Credit
Loans and Reimbursement Obligations and the termination of the Revolving Credit
Commitments and, in the case of any Lender that may assign any interest in its
Revolving Credit Commitments, Revolving Credit Loans or Letter of Credit
Interest hereunder, shall (to the extent relating to such time as it was a
Lender) survive the making of such assignment, notwithstanding that such
assigning Lender may cease to be a "Lender" hereunder. In addition, each
representation and warranty made, or deemed to be made by a notice of any
extension of credit, herein or pursuant hereto shall survive the execution and
delivery of this Agreement and the Notes and the making of any extension of
credit hereunder.
12.08. Captions. The table of contents and captions and
section headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Agreement.
12.09. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement
by signing any such counterpart.
12.10. Governing Law; Submission to Jurisdiction; Waivers;
Etc. (a) Each Basic Document shall be governed by, and construed in
accordance with, the law of the State of New York, without regard to the
principles of conflicts of laws thereof (except in the case of the other Basic
Documents, to the extent otherwise expressly stated therein). Each Obligor
hereby irrevocably and unconditionally: (a) submits for itself and its
property in any Proceeding relating to any Basic Document to which it is a
party, or for recognition and enforcement of any judgment in respect thereof,
to the non-exclusive general jurisdiction of the courts of the State of New
York, the courts of the United States of America for the Southern District of
New York, and appellate courts from any thereof; (b) consents that any such
Proceeding may be brought in such courts and waives trial by jury and any
objection that it may now or hereafter have to the venue of any such Proceeding
in any such court or that such Proceeding was brought in an inconvenient court
and agrees not to plead or claim the same; (c) agrees that service of process
in any such Proceeding may be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail), postage prepaid,
to Borrower at its address set forth in Section 12.02 or at such other address
of which the Administrative Agent shall have been notified pursuant thereto;
and (d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction.
(b) Each Obligor hereby irrevocably appoints and designates
CT Corporation System, whose address is 1633 Broadway, New York, New York
<PAGE> 119
-113-
10019, as its true and lawful attorney and duly authorized agent for service of
legal process of such Obligor.
12.11. Confidentiality. Each Creditor agrees to take normal
and reasonable precautions to maintain the confidentiality of information
designated in writing as confidential and provided to it by Borrower or any
Subsidiary in connection with this Agreement; provided, however, that any
Creditor may disclose such information (a) at the request of any bank
regulatory authority or the NAIC or in connection with an examination of such
Creditor by any such authority or the NAIC, (b) pursuant to subpoena or other
court process, (c) when required to do so in accordance with the provisions of
any applicable law, (d) at the discretion of any other Governmental Authority,
(e) to such Creditor's Affiliates, independent auditors and other professional
advisors or (f) to any transferee or potential transferee; provided, however,
that such transferee agrees to comply with the provisions of this Section
12.11.
12.12. Independence of Representations, Warranties and
Covenants. The representations, warranties and covenants contained herein
shall be independent of each other and no exception to any representation,
warranty or covenant shall be deemed to be an exception to any other
representation, warranty or covenant contained herein unless expressly
provided, nor shall any such exception be deemed to permit any action or
omission that would be in contravention of applicable law.
12.13. Severability. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.
12.14. Prior Understandings. This Agreement and the other
Basic Documents supersede all prior and contemporaneous understandings and
agreements, whether written or oral, among the parties hereto relating to the
transactions provided for herein and therein, except that the following shall
continue to remain in effect: (a) Sections 6, 8, 11 and 14 of the Commitment
Letter (and only such sections thereof), (b) paragraphs 6 and 8 of the Fee
Letter (and only such paragraphs thereof) and (c) the Administrative Agent's
Fee Letter.
12.15. Acknowledgments. The Obligors hereby acknowledge
that: (a) each of them has been advised by counsel in connection with the
negotiation, execution and delivery of the Basic Documents; (b) no Creditor has
any fiduciary or similar relationships to any Obligor pursuant to the Basic
Documents and the relationship pursuant to the Basic Documents between the
Creditors on the one hand, and the Obligors, on the other hand, is solely
<PAGE> 120
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that of debtor and creditor; and (c) no joint venture exists among the
Creditors or among the Obligors and the Creditors.
12.16. Release of Collateral. If (i) the Investment Grade
Date has occurred, or (ii) at all times during any six consecutive fiscal
quarters of Borrower (provided, however, that if the gross proceeds from the
Public Offering are at least $45.0 million, then at all times during any four
consecutive fiscal quarters of Borrower), (A) the Leverage Ratio is less than
2.50:1.00 and (B) the Debt to Capitalization Ratio is less than 0.40:1.00, then
the Administrative Agent shall, at the request and sole expense of Borrower,
take any action and execute all documents and instruments to effect the release
of the Lien of the Basic Documents on the Collateral (the date of such release,
the "Collateral Release Date").
12.17. Amendment to Security Documents, etc. (a)
Notwithstanding any provision of this Agreement and the Basic Documents, the
definition of Secured Obligations under any of the Security Documents is
amended to include all obligations of any Obligor pursuant to Swap Contracts to
which such Obligor is a party with any Lender or Affiliate of any Lender, and
the definition of Secured Parties under any of the Security Documents is
amended to include any Lender or Affiliate of any Lender who is a party to such
Swap Contracts.
(b) Upon the consummation of any Acquisition, the annexes to
the Security Agreement shall be modified, pursuant to the Joinder Agreement
executed in connection therewith by adding thereto all the additional property
(including capital stock and other ownership interests) to be pledged in
connection with such Acquisition.
(c) Notwithstanding anything to the contrary in Section 5.07
of the Security Agreement, the Lenders hereby waive any default arising as a
result of, and consent to, the change of the name of IMCO Acquisition Inc. to
IMCO Recycling of Coldwater Inc. so long as by the earlier of 20 days after the
date hereof or the fifth Business Day after the Alchem Closing Date all
necessary UCC filings are made to reflect such name change in all appropriate
jurisdictions.
(d) Promptly following the Alchem Closing Date, Borrower
intends to change the name of IMCO Recycling of Coldwater Inc. to Alchem
Aluminum, Inc. The Lenders hereby consent and agree to such name change and
waive the 30- day notice requirement in Section 5.07 of the Security Agreement.
Borrower shall, promptly following the Alchem Closing Date, but not later than
the 10th Business Day after such name change, execute and file all appropriate
financing statements and amendments to ensure the continuing perfection of the
Liens covering the Collateral.
[Signature Pages Follow]
<PAGE> 121
S-1
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the Amendment and Restatement
Date.
IMCO RECYCLING INC.
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
5215 North O'Connor Blvd.
Suite 940
Irving, TX 75039
Attention:
Telecopier No.:
Telephone No.:
IMCO INVESTMENT COMPANY
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
<PAGE> 122
S-2
IMCO MANAGEMENT PARTNERSHIP L.P.
By IMCO Recycling Inc.,
its General Partner
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
IMCO ENERGY CORP.
By:
----------------------------
Name: James B. Walburg
Title: Vice President
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
<PAGE> 123
S-3
IMCO RECYCLING OF INDIANA INC.
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
IMCO INDIANA PARTNERSHIP L.P.
By IMCO Energy Corp., its General
Partner
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
<PAGE> 124
S-4
PHOENIX SMELTING CORPORATION
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
IMCO RECYCLING OF ILLINOIS INC.
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
<PAGE> 125
S-5
IMCO RECYCLING OF LOUDON INC.
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
METAL MARK, INC.
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
<PAGE> 126
S-6
PITTSBURG ALUMINUM, INC.
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
INTERAMERICAN ZINC, INC.
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
<PAGE> 127
S-7
IMCO RECYCLING OF CALIFORNIA, INC.
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
IMCO INTERNATIONAL, INC.
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
<PAGE> 128
S-8
IMCO RECYCLING OF OHIO INC.
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
IMCO RECYCLING OF COLDWATER INC.
By:
----------------------------
Name: James B. Walburg
Title: Vice President
Address for Notices:
See Schedule 8.14
Attention: See Schedule 8.14
Telecopier No.: See Schedule 8.14
Telephone No.: See Schedule 8.14
<PAGE> 129
S-9
IMSAMET, INC.
By:
----------------------------
Name:
Title:
Address for Notices:
Attention:
Telecopier No.:
Telephone No.:
IMSAMET OF IDAHO, INC.
By:
----------------------------
Name:
Title:
Address for Notices:
Attention:
Telecopier No.:
Telephone No.:
<PAGE> 130
S-10
IMSAMET OF UTAH, INC.
By:
----------------------------
Name:
Title:
Address for Notices:
Attention:
Telecopier No.:
Telephone No.:
ROCK CREEK ALUMINUM, INC.
By:
----------------------------
Name:
Title:
Address for Notices:
Attention:
Telecopier No.:
Telephone No.:
<PAGE> 131
S-11
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Administrative Agent
By:
----------------------------
Name:
Title:
Address for Notices:
Administrative Agent:
Texas Commerce Bank National
Association
Loan Syndicate Services
1111 Fannin, 9th Floor, MS46
Houston, Texas 77002
Attention: Gale Manning
Telecopier No.: (713) 750-2784
Telephone No.: (713) 750-3810
Wiring Instructions:
Texas Commerce Bank National Association
ABA #113000609
For Account Number: 7001-20730-7800
Attention: Gale Manning/Loan
Syndication Services
Reference: IMCO Recycling
<PAGE> 132
S-12
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED,
as Arranger and Syndication Agent
By:
----------------------------
Name: Christopher Birosak
Title: Managing Director
Address for Notices:
World Financial Center
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
South Tower
225 Liberty Street
New York, New York 10080-6114
Attention: Chris Reilly
Telecopier No.: (212) 236-7584
Telephone No.: (212) 236-7579
<PAGE> 133
S-13
LENDERS
MERRILL LYNCH CAPITAL CORPORATION,
as a Lender
By:
----------------------------
Name: Christopher Birosak
Title: Managing Director
Lending Office for all Revolving Credit
Loans:
World Financial Center
c/o Merrill Lynch & Co.
North Tower - 7th Floor
250 Vesey Street
New York, New York 10281-1307
Address for Notices:
World Financial Center
c/o Merrill Lynch & Co.
South Tower
225 Liberty Street
New York, New York 10080-6114
Attention: Chris Reilly
Telecopier No.: (212) 236-7584
Telephone No.: (212) 236-7579
<PAGE> 134
S-14
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as a Lender
By:
----------------------------
Name:
Title:
Address for Notices:
Texas Commerce Bank National
Association
Loan Syndicate Services
1111 Fannin, 9th Floor, MS46
Houston, Texas 77002
Attention: Gale Manning
Telecopier No.: (713) 750-2784
Telephone No.: (713) 750-3810
Wiring Instructions:
Texas Commerce Bank National
Association
ABA #113000609
For Account Number: 7001-20730-7800
Attention: Gale Manning/Loan
Syndication Services
Reference: IMCO Recycling
<PAGE> 135
ANNEX A
<TABLE>
<CAPTION>
Revolving
Credit
Institution Commitment
----------- ----------
<S> <C>
Merrill Lynch Capital Corporation 16,000,000
Texas Commerce Bank National Association 16,000,000
NationsBank 15,000,000
Bank of Tokyo & Mitsubishi 15,000,000
First Chicago/NBD 15,000,000
PNC Bank 15,000,000
DG Bank 15,000,000
Credit Agricole Indosuez 12,000,000
First American National Bank 12,000,000
National City Bank 12,000,000
Creditanstalt 12,000,000
AmSouth Bank 9,000,000
Mellon Bank 9,000,000
Comerica 9,000,000
Long Term Credit Bank of Japan, Ltd. 9,000,000
Wells Fargo Bank 9,000,000
-----------
Total 200,000,000
-----------
</TABLE>
<PAGE> 1
Exhibit 15.1
Stockholders and
Board of Directors
IMCO Recycling Inc.
We are aware of the incorporation by reference in the Registration Statements
(Form S-8 No. 33-26641, Form S-8 No. 33-34745, Form S-8 No. 33-76780, Form S-8
No. 333-00075, Form S-8 No. 333-07091, and Form S-3 No. 333-36833) pertaining
to the Nonqualified Stock Option Plan of IMCO Recycling Inc., the IMCO
Recycling Inc. Amended and Restated Stock Option Plan, the IMCO Recycling Inc.
1992 Stock Option Plan, the IMCO Recycling Inc. Amended and Restated 1992 Stock
Option Plan, and the IMCO Recycling Inc. Annual Incentive Plan of our report
dated October 20, 1997 relating to the unaudited condensed consolidated interim
financial statements of IMCO Recycling Inc. which are included in its Form 10-Q
for the quarter ended September 30, 1997.
Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a part
of the registration statements prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
ERNST & YOUNG LLP
Dallas, Texas
November 12, 1997
<PAGE> 2
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Stockholders and
Board of Directors
IMCO Recycling Inc.
We have reviewed the accompanying consolidated balance sheet of IMCO Recycling
Inc. as of September 30, 1997, and the related consolidated statements of
earnings for the three-month and nine-month periods ended September 30, 1997,
and 1996 and the consolidated statements of cash flows for the nine-month
periods ended September 30, 1997, and 1996. These financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, which will be
performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements referred
to above for them to be conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of IMCO Recycling Inc. as of December
31, 1996, and the related consolidated statements of earnings, stockholders'
equity, and cash flows for the year ended December 31, 1996, (not presented
herein), and in our report dated January 30, 1997, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
December 31, 1996, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.
ERNST & YOUNG LLP
Dallas, Texas
October 20, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,753
<SECURITIES> 0
<RECEIVABLES> 43,807
<ALLOWANCES> (816)
<INVENTORY> 14,669
<CURRENT-ASSETS> 64,550
<PP&E> 175,913
<DEPRECIATION> (51,737)
<TOTAL-ASSETS> 268,475
<CURRENT-LIABILITIES> 37,521
<BONDS> 110,824
0
0
<COMMON> 1,264
<OTHER-SE> 101,259
<TOTAL-LIABILITY-AND-EQUITY> 268,475
<SALES> 236,588
<TOTAL-REVENUES> 236,588
<CGS> 201,468
<TOTAL-COSTS> 201,468
<OTHER-EXPENSES> 13,092
<LOSS-PROVISION> 45
<INTEREST-EXPENSE> 5,596
<INCOME-PRETAX> 17,086
<INCOME-TAX> 6,789
<INCOME-CONTINUING> 9,978
<DISCONTINUED> 0
<EXTRAORDINARY> (1,318)
<CHANGES> 0
<NET-INCOME> 8,660
<EPS-PRIMARY> 0.68
<EPS-DILUTED> 0.68
</TABLE>
