FORM 10Q - QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended June 30, 1999
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number: 1-8676
FANSTEEL INC.
(Exact name of registrant as specified in its charter)
Delaware 36-1058780
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Number One Tantalum Place, North Chicago, IL 60064
(Address of principal executive offices) (Zip Code)
(847) 689-4900
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
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.
(X) Yes ( ) No
8,598,858
(Number of shares of $2.50 par value common stock outstanding
as of June 30, 1999)
PART 1 - FINANCIAL INFORMATION Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS Page 2
FANSTEEL INC.
CONSOLIDATED BALANCE SHEET
June 30, December 31,
1999 1998
(Unaudited) *
ASSETS
Current Assets
Cash and cash equivalents (including
securities purchased under agreement
to resell of $9,993,000 in 1998) $ 193,106 $ 2,031,835
Accounts receivable - net 21,375,327 22,148,457
Inventories
Raw material and supplies 4,627,793 5,341,512
Work-in-process 15,881,275 15,177,294
Finished goods 8,513,909 8,686,552
29,022,977 29,205,358
Less reserve to state certain
inventories at LIFO cost 6,763,841 6,763,841
Total inventories 22,259,136 22,441,517
Other assets - current
Deferred income taxes 2,518,902 2,575,684
Other 1,293,657 1,325,492
Total current assets 47,640,128 50,522,985
Net Assets of Discontinued Operations 19,386,722 13,668,396
Property, Plant and Equipment
Land 1,911,631 1,911,631
Buildings 13,046,957 13,046,957
Machinery and equipment 56,849,977 55,552,823
71,808,565 70,511,411
Less accumulated depreciation 51,157,302 50,055,789
Net Property, Plant and Equipment 20,651,263 20,455,622
Other Assets
Prepaid pension asset 343,627 -
Deferred income taxes 886,458 1,087,598
Goodwill 2,782,820 2,897,972
Other 82,087 84,799
Total Other Assets 4,094,992 4,070,369
Total Assets $91,773,105 $88,717,372
* - Derived from audited financial statements
(See Notes to Consolidated Financial Statements)
PART 1 - FINANCIAL INFORMATION Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS Page 3
FANSTEEL INC.
CONSOLIDATED BALANCE SHEET (Contd.)
June 30, December 31,
1999 1998
(Unaudited) *
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $10,160,911 $11,185,587
Accrued liabilities 12,205,383 10,733,582
Accrued income taxes 922,015 707,772
Current maturities of long-term debt 290,632 306,578
Total current liabilities 23,578,941 22,933,519
Long-term Debt 2,334,744 2,506,746
Other Liabilities
Discontinued operations and environmental
remediation 15,646,000 15,646,000
Pension liabilities - 84,017
Total other liabilities 15,646,000 15,730,017
Shareholders' Equity
Preferred stock without par value
Authorized and unissued 1,000,000 shares - -
Common stock, par value $2.50
Authorized 12,000,000 shares
Issued and outstanding 8,598,858 shares 21,747,145 21,497,145
Capital in excess of par value 316,000 -
Unamortized cost of restricted stock awards (486,971) -
Retained earnings 33,415,338 30,829,632
Other comprehensive income
Minimum pension liability (4,778,714) (4,778,714)
Foreign currency translation 622 (973)
Total other comprehensive income (4,778,092) (4,779,687)
Total Shareholder's Equity 50,213,420 47,547,090
Total Liabilities and Shareholders' Equity $91,773,105 $88,717,372
* - Derived from audited financial statements
(See Notes to Consolidated Financial Statements)
FANSTEEL INC. Form 10-Q
CONSOLIDATED STATEMENT OF INCOME Page 4
(UNAUDITED)
For the Three Months Ended
June 30, June 30,
1999 1998
Net sales $ 38,226,431 $ 39,643,710
Costs and expenses
Cost of products sold 31,222,580 32,761,600
Selling, general and administrative 4,606,228 4,531,455
35,828,808 37,293,055
Operating income 2,397,623 2,350,655
Other income (expense)
Interest income on investments 717 135,828
Interest expense (27,627) (22,219)
Other (34,217) 98,833
(61,127) 212,442
Income before income taxes 2,336,496 2,563,097
Income tax provision 763,000 942,000
Net income $ 1,573,496 $ 1,621,097
Weighted average number of common
shares outstanding 8,598,858 8,598,858
Basic and diluted net income per share $ .18 $0.19
Dividends per common share $ - $ -
(See Notes to Consolidated Financial Statements)
PART 1 - FINANCIAL INFORMATION Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS Page 5
FANSTEEL INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
For the Six Months Ended
June 30, June 30,
1999 1998
Net sales $ 75,271,591 $ 79,433,195
Costs and expenses
Cost of products sold 61,815,343 65,365,087
Selling, general and administrative 9,535,392 9,052,378
71,350,735 74,417,465
Operating income 3,920,856 5,015,730
Other income (expense)
Interest income on investments 14,729 292,146
Interest expense (55,126) (43,244)
Other (70,753) 64,153
(111,150) 313,055
Income before income taxes 3,809,706 5,328,785
Income tax provision 1,224,000 1,979,000
Net income $ 2,585,706 $ 3,349,785
Weighted average number of common
shares outstanding 8,598,858 8,598,858
Basic and diluted net income per share $0.30 $0.39
Dividends per common share $ - $ -
(See Notes to Consolidated Financial Statements)
PART 1 - FINANCIAL INFORMATION Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS Page 6
FANSTEEL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30,
1999 1998
Increase (decrease) in
cash and cash equivalents
Cash flows from operating activities:
Net income $ 2,585,706 $ 3,349,785
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,276,805 1,116,532
Amortization of unearned stock awards 79,029 -
Net pension (credit) (427,644) (334,511)
Deferred income tax charge 56,782 648,610
Gain from disposals of property, plant,
and equipment (4,847) (136,527)
Changes in assets and liabilities:
Decrease in marketable securities - 41,196
Decrease in accounts receivable 773,130 199,927
Decrease (increase) in inventories 182,381 (2,390,835)
Decrease in other assets-current 31,835 106,556
Increase (decrease) in accounts payable
and accruals 448,720 (518,686)
Increase in income taxes payable 214,243 186,966
Decrease (increase) in other assets 203,852 (182,580)
Net cash provided by operating activities 5,419,992 2,086,433
Cash flows from investing activities:
Additions to property, plant and equipment (1,363,447) (1,588,921)
Increase in net assets of discontinued
operations-design, engineering and
equipment for processing plant (5,718,326) (2,628,723)
Proceeds from disposition of marketable
securities - current - 5,000,000
Proceeds from sale of property, plant and
equipment 11,000 246,537
Net cash (used in) provided by investing
activities (7,070,773) 1,028,893
Cash flows from financing activities:
Proceeds from long-term debt - 828,774
Payments of long-term debt (187,948) (203,862)
Net cash (used in) provided by financing
activities (187,948) 624,912
Net (decrease) increase in cash and cash
equivalents (1,838,729) 3,740,238
Cash and cash equivalents at beginning of
period 2,031,835 8,038,229
Cash and cash equivalents at June 30 $ 193,106 $11,778,467
(See Notes to Consolidated Financial Statements)
PART 1 - FINANCIAL INFORMATION Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS Page 7
FANSTEEL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Consolidated Financial Statements
The consolidated balance sheet at June 30, 1999 and the consolidated
statements of income for the three months and six months ended June 30, 1999 and
1998, and the consolidated statements of cash flows for the six months ended
June 30, 1999 and 1998, are unaudited, but include all adjustments (consisting
only of normal and recurring accruals) which the Company considers necessary for
fair presentation.
The accompanying consolidated financial statements do not include all
disclosures normally provided in annual financial statements and, therefore,
should be read in conjunction with the year-end financial statements.
The Company's line of credit was increased to $33 million on May 20, 1999 to
fund the start-up of the reclamation processing plant in Muskogee, Oklahoma. The
revolving line of credit expires on May 20, 2002. The credit lines are currently
being used for letters of credit needed for funding assurance related to
environmental issues, insurance policies, and development loans. Total unused
lines of credit were $24.9 million as of June 30, 1999.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, Reporting Comprehensive Income. Statement 130 establishes new
rules for the reporting and display of comprehensive income and its components;
however, adoption of this Statement has no impact on net income or shareholders'
equity. Statement 130 requires unrealized gains or losses on available-for-sale
securities and foreign currency translation adjustments, which prior to adoption
were reported separately in shareholders' equity, to be included in other
comprehensive income. For the six months ended June 30, 1999 total comprehensive
income was $1,595 more than net income due to foreign currency translation
gains. For the six months ended June 30, 1998 total comprehensive income was
equal to net income.
In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which changes the way the Company reports
information about its operating segments in annual financial statements and also
requires selected segment information in interim reports to shareholders. The
information for 1998 has been restated from the prior years' presentation in
order to conform to the 1999 presentation. The Company's business units have
separate management teams and infrastructures that offer different products and
services.
PART 1 - FINANCIAL INFORMATION Form 10-Q
ITEM 1 - FINANCIAL STATEMENTS Page 8
FANSTEEL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
(UNAUDITED)
Business Segment Information
The Company is engaged in the manufacture of specialty metal products, which
it classifies into three business segments: Industrial Tools, Advanced
Structures and Industrial Metal Components. Net sales and operating income for
the second quarter and six months ended June 30, 1999 and 1998 for each of the
Company's business segments are summarized below:
Second Quarter Six Months
1999 1998 1999 1998
Net Sales:
Industrial Tools
Sales $14,366,298 $15,102,758 $28,026,529 $30,455,788
Intersegment sales (4,686) (579) (4,873) (4,807)
14,361,612 15,102,179 28,021,656 30,450,981
Advanced Structures
Sales 12,819,222 13,731,271 25,086,363 27,898,265
Intersegment sales - - - -
12,819,222 13,731,271 25,086,363 27,898,265
Industrial Metal Components
Sales 11,052,641 10,814,041 22,173,829 21,096,719
Intersegment sales (7,044) (3,781) (10,257) (12,770)
11,045,597 10,810,260 22,163,572 21,083,949
Total Net Sales $38,226,431 $39,643,710 $75,271,591 $79,433,195
Operating Income
(Expense):
Industrial Tools $ 1,175,101 $ 958,223 $ 2,345,466 $ 2,102,592
Advanced Structures 437,288 842,076 769,013 1,729,641
Industrial Metal
Components 798,087 561,816 1,324,686 1,210,727
Corporate (12,853) (11,460) (518,309) (27,230)
Total Operating
Income (Expense) $ 2,397,623 $ 2,350,655 $ 3,920,856 $ 5,015,730
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS Form 10-Q
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page 9
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations may contain various "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which can be
identified by the use of forward-looking terminology such as "believes",
"expects", "prospects", "estimated", "should", "may" or the negative thereof or
other variations thereon or comparable terminology indicating the Company's
expectations or beliefs concerning future events. The Company cautions that
such statements are qualified by important factors that could cause actual
results to differ materially from those in the forward-looking statements, a
number of which are identified in the discussion which follows. Other factors
could also cause actual results to differ materially from expected results
included in these statements.
The following discussion should be read in conjunction with the consolidated
financial statements of the Company and the related notes to the consolidated
financial statements.
Quarter Ended June 30, 1999 Compared to Quarter Ended June 30, 1998
Second quarter, 1999 net sales for Fansteel were $38,226,000, a decrease of
$1,418,000, or 3.6%, from the second quarter net sales of $39,644,000 for 1998.
Operating income for the Company was $2,398,000 for the second quarter of 1999
compared to $2,351,000 in the second quarter of 1998, an increase of $47,000.
Lower material costs, reduced manufacturing costs, and the full production of
the Fansteel de Mexico operation provided improvment to operating income despite
the lower sales volume.
The Company incurred other expenses of $61,000 in the second quarter of 1999
compared to other income of $212,000 in the second quarter of 1998. Interest
income in the current quarter was lower due to less cash being available for
investment due to expenditures for start-up of Fansteel de Mexico and the
reclamation plant in Muskogee, Oklahoma. Second quarter results in 1998 included
nonrecurring gains of $137,000 for the sale of excess land.
Net income for the second quarter of 1999 was $1,573,000, or $.18 per share,
compared to $1,621,000, or $.19 per share, for the same period of the prior
year. Net income as a percentage of sales of 4.1% for the second quarter of 1999
remained the same as the second quarter of 1998. The effective tax rate was
lower in the second quarter of 1999 compared to the second quarter of 1998 due
to the reduction in the valuation allowance for deferred taxes related to
environmental reserves which had a favorable impact on second quarter, 1999 net
income of $.01 per share.
Industrial Tools business segment net sales for the second quarter of 1999
were $14,362,000 compared to $15,102,000 in the second quarter of 1998, a
decrease of $740,000, or 4.9%. Most of this decline was due to lower tungsten
carbide cutting tool sales to the metalworking industry, which has experienced a
downturn since the third quarter of 1998. Sales of wear parts also declined,
mainly for downhole drilling products, due to the depressed oil industry.
Partially offsetting these declines were road construction tool sales, which
posted its highest quarter of the decade. Coal mining tools showed a slight
improvement in the second quarter of 1999 compared to the second quarter of
1998.
Industrial Tools operating income for the second quarter of 1999 was
$1,175,000 compared to $958,000 in the same period of 1998, an increase of
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS Form 10-Q
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page 10
$217,000. As a percentage of net sales, Industrial Tools operating income was
8.2% for the current quarter compared to 6.3% for the same period of the prior
year. Despite the sales decline in this segment, operating income benefited from
lower material costs and reduced manufacturing costs.
Advanced Structures business segment net sales for the second quarter of 1999
were $12,819,000, a decrease of 6.6%, from second quarter 1998 net sales of
$13,731,000. Forging sales declined as a result of reduced order rates, order
push-outs, and inefficiencies caused by downtime during necessary equipment
repairs. Sales of machined aircraft parts suffered from excess inventory at key
customers. Sales of sand castings improved for the second quarter of 1999
compared to the same period of the prior year as a result of increased orders
for tooling.
Advanced Structures operating income decreased by $405,000 from the second
quarter of 1998 to $437,000 in the second quarter of 1999. As a percentage of
net sales, operating income was 3.4% for the current quarter compared to 6.1% in
the same period last year. Operating income for the current quarter was lower
than last year as a result of lower sales volume and due to production
inefficiencies at the forging operation which resulted from downtime during
machine repairs and from capacity problems on the current steam delivery system.
The steam system is being upgraded and replaced concurrently with a new system
which is scheduled to be fully operational during the third quarter of 1999.
Industrial Metal Components business segment net sales for the second quarter
of 1999 were $11,046,000, an increase of 2.2% from second quarter, 1998 net
sales of $10,810,000. Increased capacity from the Fansteel de Mexico operation
allowed for increased investment castings sales to the medium-duty truck market
and the marine industry. Wire formed product sales declined over its record high
second quarter in 1998, with the decrease coming primarily from the lawn and
garden equipment market. The powdered metal market showed signs of
strengthening, and as a result, sales of powdered metal components increased in
the second quarter of 1999 compared to the same period in 1998.
Operating income for the Industrial Metal Components for the second quarter of
1999 was $798,000, an increase of $236,000 from $562,000 for the same period of
1998. As a percentage of net sales, operating income was 7.2% for the second
quarter of 1999 compared to 5.2% in the same period last year. Results in the
second quarter of 1998 were impacted by capacity constraints at the investment
casting facility caused by ramping up production quickly to meet escalating
demand while maintaining on-time deliveries. The capacity situation was
alleviated through the Fansteel de Mexico facility as full production was
achieved in the second quarter of 1999. This resulted in lower operating costs
in the current quarter compared to the same period of the prior year.
Six Months Ended June 30, 1999 Compared to the Six Months Ended June 30, 1998
The Company's net sales of $75,272,000 for the first half of 1999 decreased by
$4,161,000, or 5.2%, from the same period of 1998.
Operating income for Fansteel in the first half of 1999 was $3,921,000
compared to $5,016,000 in the first six months of 1998, a decrease of
$1,095,000, or 21.8%. The decrease resulted from the lower sales volume and a
one-time charge in the first quarter of 1999 related to management changes.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS Form 10-Q
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page 11
Other expenses of $111,000 for the Company were incurred in the first half
of 1999 compared to other income of $313,000 in the first half of 1998. Interest
income was lower in 1999 due to less cash being available for investment due to
expenditures for the start-up of Fansteel de Mexico and continued expenditures
for the reclamation plant in Muskogee, Oklahoma. Results in 1998 included
nonrecurring gains of $137,000 for the sale of excess land.
Net income for the first six months of 1999 was $2,586,000 or $.30 per share
compared to $3,350,000 or $.39 per share for the same period of 1998. One-time
charges related to management changes in the first quarter of 1999 decreased
earnings by $.04 per share for the first half of 1999. The effective tax rate
was lower in the first half of 1999 compared to the same period of the prior
year due to the reduction in the valuation allowance for deferred taxes related
to environmental reserves which had a favorable impact on net income in 1999 of
$.02 per share.
Net sales for the Industrial Tools business segment for the first six months
of 1999 were $28,022,000 compared to $30,451,000 for the same period of 1998, a
decrease of $2,429,000, or 8.0%. Tungsten carbide cutting tool sales slowed in
the second half of 1998 and have not regained their previous strength. Wear part
sales have also declined, particularly for downhole drilling products where the
oil industry has suffered from low oil prices. Construction tool sales improved
due to strong demand for the new pyramid-tipped construction tool and the high
level of activity in road construction programs. Coal mining tool sales
benefited from the addition of a key distributor at the end of the second
quarter of 1998.
Industrial Tools operating income for the first six months of 1999 was
$2,345,000, an increase of $242,000, or $11.5%, compared to the $2,103,000 for
the same period of 1998. As a percentage of net sales, operating income was 8.4%
for the first half of 1999 compared to 6.9% in the same period of the prior
year. Despite the decline in sales, operating income improved due to lower
material costs which were offset partially by higher selling and administrative
costs in relation to sales.
Advanced Structures business segment net sales for the first six months of
1999 were $25,086,000, a decrease of 10.1% compared to $27,898,000 in the first
half of 1998. Sales of forgings declined due to reduced order rates and order
push-outs from the major airline manufacturers. Sales of magnesium and aluminum
sand casting tooling products have improved, but casting product sales have
declined as customers have utilized their current inventories.
Advanced Structures operating income for the first half of 1999 was $769,000
compared to $1,730,000 for the same period of 1998. As a percentage of net
sales, operating income for the six months ended June 30, 1999 fell to 3.1%
compared to 6.2% for the same period of the prior year. Operating income as a
percentage of sales was negatively impacted by inefficiencies related to
equipment utilization.
Industrial Metal Components business segment net sales for the first six
months of 1999 were $22,164,000, an increase of 5.1% compared to $21,084,000 in
the first half of 1998. Additional capacity from Fansteel de Mexico allowed for
increased investment casting sales of engine components for the medium-duty
truck industry as well as the addition of parts for the marine industry. After
its two strongest quarters ever in the first half of 1998, wire formed product
sales declined in the first half of 1999, primarily in the lawn and garden
market. Sales of powdered metal components declined, with the effects of
customer inventory adjustments impacting the first quarter of 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS Form 10-Q
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page 12
Industrial Metal Components operating income for the first half of 1999 was
$1,325,000, an increase of $114,000 compared $1,211,000 in the same period of
1998. As a percentage of net sales, operating income for the first half of 1999
improved to 6.0% from 5.7% in the same period of the prior year. Improvement
to operating income resulted from lower operating costs associated with full
production at the Fansteel de Mexico facility.
Order backlog at June 30, 1999 was $51,431,000, a decrease of $8,720,000, or
14.5%, from June 30, 1998. Advanced Structures backlog was most negatively
impacted due to reduced orders for forgings from aircraft manufacturers. The
Industrial Tools backlog declined due to the continued effects of the slowdown
in the metal working industry. Order backlog for Industrial Metal Components
backlogs decreased primarily due a decline in orders from the lawn and garden
industry.
Outlook
Sales and order rates in a number of key markets including metalworking and
the commercial aircraft market experienced decreases in the last half of 1998
compared to the first half of 1998. In the first half of 1999, these markets
remained at the second half of 1998 level. Growth in 1999 compared to the second
half of 1998 will depend on opportunities from improvements in the Company's
production processes, new product development, and investment in capital
equipment. The Company is seeking increased share of current markets, as well as
new markets, through investment in current operating units, such as the 1998
Fansteel de Mexico start-up which began full production in 1999. Cost control
programs remain active in all operating plans throughout the Company.
Liquidity and Capital Resources
Cash and cash equivalents amounted to $193,000 at June 30, 1999, a decrease
of $1,839,000 from December 31, 1998. Investments in plant and equipment at
operating locations totaled $1,363,000, in accordance with management's program
to expand the operations of the Company. Engineering, equipment and start-up
costs of $5,718,000 were incurred for the processing plant being built for
reclamation and decommissioning purposes in Muskogee, Oklahoma.
In the fourth quarter of 1995, the Company announced the suspension of the
quarterly shareholder dividend for the purpose of conserving cash for capital
reinvestment, possible future acquisitions, and due to potential changes in
funding requirements for decommissioning at the Company's discontinued operation
in Muskogee, Oklahoma.
Cash, cash equivalents and marketable securities on hand have been sufficient
to date to meet the demands of increased working capital investments,
expenditures for machinery and equipment, environmental costs and other normal
operating requirements. However, the Company's line of credit was increased to
$33 million on May 20, 1999. This agreement expires May 20, 2002. As of June 30,
1999, there were no borrowings from the revolving line of credit, but $8.1
million was being used for letters of credit needed for funding assurance
related to environmental issues, self-insurance policies and development loans.
The Company expects to further use a portion of this unused credit during 1999
to fund the start-up of the reclamation processing plant in Muskogee.
Funding assistance by states and municipalities is investigated when any
significant expenditures are proposed. All of the Company's debt is related to
development loans obtained from various states.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS Form 10-Q
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page 13
Environmental Remediation and Discontinued Operations
The Company discontinued its Metal Products business segment in 1989.
Environmental reclamation and decommissioning is required for the segment's
primary plant that processed certain ores which are subject to regulations of
several government agencies. The residues from these processed ores were stored
on-site. Remaining assets were written down to estimated realizable value, and
provisions were made for the estimated costs for decommissioning. The Company,
in association with outside consultants, has developed a decommissioning plan
for the site involved, and has submitted that plan and a related decommissioning
funding plan to the Nuclear Regulatory Commission ("NRC") as required by law.
Prior to decommissioning, the Company will construct and operate for
approximately ten years a commercial plant to complete the processing of
residues currently contained in storage ponds at the site, which will materially
reduce the amount of radioactive materials to be disposed of during
decommissioning. In conjunction with construction of the processing plant, the
Company will modify the wastewater treatment plant at the site and install a
drainage system. Decommissioning would include construction of an engineered
on-site cell for containment of contaminated soils; consolidation and
stabilization of the contaminated soils in the containment cell; and the
performance of required plant surveys and characterizations after residue
processing ceases to determine whether additional contaminated soils exist which
may require remediation.
The Company has received an amendment to its current NRC license and a
revision to its current wastewater discharge permit to allow for the
construction and operation of the processing plant. Construction is nearly
completed on the processing plant which will extract commercially valuable
materials such as tantalum, columbium, scandium and other rare earth and rare
metal elements from the feedstock residues. The construction phase is in the
final stages and processing of residues had been scheduled to begin in the
second quarter of 1999. However, processing was delayed after the plant suffered
tornado damages in the beginning of June. All essential repairs, which were
covered by insurance, have been completed with initial product now expected to
be processed in the third quarter of 1999.
At June 30, 1999 the Company had recorded liabilities of $9.3 million for
discontinued operations including the estimated net costs of reclaiming and
decommissioning the site during and after the approximate ten years of
processing the residues described above. An additional provision for
discontinued operations of $7.1 million was recorded in 1997 to increase the
established liabilities for the estimated cost of additional studies which may
be required by regulatory agencies, higher start-up costs, and potentially
greater disposal costs after completion of the residue processing period, as
well as for cost estimates related to probable future environmental remediation
at a second site which had been part of the Metal Products business segment. The
second site is regulated under the Resource Conservation and Recovery Act and,
as a result of alleged migration of contaminants from this second site, the
Company also has been identified as a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) at
a neighboring third-party site.
The estimated net costs of reclaiming and decommissioning the first site
during the residue processing period include estimated annual revenues of
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS Form 10-Q
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page 14
approximately $8 million per year over the ten year processing period and
estimated annual operating costs, including depreciation, of approximately the
same amount, related to residue processing. The estimated value of materials to
be extracted is based on analysis of samples taken from the residues and a
valuation of such materials using current market prices discounted to reflect
possible price decreases, including those which could result from the increased
quantities of certain of these materials made available for sale. However, there
can be no assurance as to the level of demand for the extracted materials or the
actual prices which may be obtained for them, which could vary over time. The
estimated costs of residue processing were developed by Company personnel and
independent consultants using third-party evaluations based on the pilot testing
performed. Unforeseen production complications could cause processing costs to
increase from current estimates.
In October 1995 the NRC advised the Company that a decommissioning funding
plan cost estimate based upon on-site disposal of most of the radioactive wastes
at the site was appropriate to consider. The NRC cautioned the Company, however,
that on-site disposal may require preparation of an Environmental Impact
Statement and that, in addition to the required NRC approval, local and other
federal agencies may have to be satisfied that the Company's disposal plan is
sound. Such approval process can be expected to extend over a number of years.
Management believes that a decommissioning plan including on-site containment
will ultimately be acceptable to the appropriate regulatory authorities, based
on current NRC regulations or provisions of the Nuclear Waste Policy Act of
1982. However, there is no assurance that a plan providing for on-site
containment will ultimately be approved. Implementation of a decommissioning
plan for the Company's site which includes off-site disposal may not be
financially feasible.
The NRC decommissioning regulations require licensees to estimate the cost
for decommissioning and to assure in advance that adequate funds will be
available to cover those costs. NRC regulations identify a number of acceptable
methods for assuring funds for decommissioning, including surety instruments
such as letters of credit, cash deposits and combinations thereof. The NRC
October 1995 letter requested that the Company submit a decommissioning funding
plan contemplating on-site containment and stated that the cost of residue
processing should be included in the Company's cost estimate. In March 1996, the
Company submitted a revised decommissioning plan and related decommissioning
funding plan. The level of assurance for decommissioning is currently $4,456,000
provided through letters of credit. The amount does not include assurance for
costs of construction or operation of the residue processing facility. This
level of assurance, however, may be changed upon further review by the NRC. The
Company's available cash and/or borrowing capacity will be reduced by the amount
of funding assurance as required at any particular time. As the decommissioning
plan is implemented, deposited funds or the amount of any surety instruments may
be reduced, provided the Company can demonstrate the sufficiency of the
remaining funds or surety to assure the completion of decommissioning.
In addition to the two sites included in the discontinued operations, the
Company has a total of seven sites at other Company facilities where
environmental remediation is ongoing or will be undertaken. Certain of these
sites were identified as a result of environmental studies conducted by the
Company during 1997 at all of its owned sites, including testing of soil and
groundwater at selected sites as indicated by the environmental studies.
The Company has also been notified that it is a potentially responsible party
at six sites owned by third parties. The Company's participation at four
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS Form 10-Q
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page 15
sites is de minimis, and at the other two sites the Company is either being
defended by its insurance carriers or has meritorious defenses to liability.
At June 30, 1999 the Company had recorded liabilities of $8.2 million for
estimated environmental investigatory and remediation costs based upon an
evaluation of currently available facts with respect to each individual site,
including the results of environmental studies and testing conducted in 1997,
and considering existing technology, presently enacted laws and regulations, and
prior experience in remediation of contaminated sites. An additional provision
of $6,900,000 was recorded in 1997 for the estimated potential exposure for such
costs. Actual costs to be incurred in future periods at identified sites may
vary from the estimates, given the inherent uncertainties in evaluating
environmental exposures. Future information and developments will require the
Company to continually reassess the expected impact of these environmental
matters. The Company does not expect that any sums it may have to pay in
connection with these environmental liabilities would have a materially adverse
effect on its consolidated financial position.
Year 2000 Readiness Disclosure
Many existing information technology ("IT") products and systems and non-IT
products and systems containing embedded processor technology were originally
programmed to represent any date by using six digits (e.g., 12/31/99), as
opposed to eight digits (e.g., 12/31/1999). Accordingly, such products and
systems may experience miscalculations, malfunctions, or disruptions when
attempting to process information containing dates that fall after December 31,
1999 or other dates, such as September 9, 1999 (9/9/99), a date traditionally
used by computer programmers as a default. These potential problems are
collectively referred to as the "Year 2000" problem. The following comments
summarize the Company's overall approach and status with respect to Year 2000
issues.
The Company has been engaged in an ongoing, comprehensive project to assess
and remediate the impact on its computer systems and programs of the Year 2000
problem. The assessment process began in late 1996 with the inventory of all
potentially affected hardware and software, along with a determination as to
whether or not they may be impacted by the Year 2000. This assessment has been
completed. All affected hardware has been replaced. All software developed
in-house has been reviewed and necessary modifications or replacements are in
process with final testing to be completed by September 1, 1999. The Company has
identified software supplied by outside vendors which is not Year 2000
compliant. With respect to the critical applications, the Company has acquired
the most recent releases or purchased replacement software which is Year 2000
compliant. Implementation and testing of new releases and new software is
scheduled to be completed by the third quarter of 1999. Non-critical
applications are being reviewed on an on-going basis with revision or
replacement being made as needed.
The Company began an assessment in 1998 of non-IT products and systems which
may contain embedded processor technology which will not recognize the year 2000
properly. This assessment was completed during the second quarter of 1999. No
significant issues have been identified with non-IT products and systems. All
remedial actions will be completed before year-end.
The total Year 2000 costs are estimated at approximately $1.2 million, which
includes new hardware, new software and upgrades to existing computer
equipment, as well as training for these new systems. Three or four year
operating leases have been obtained for a majority of the new IT products and
systems, most of which would have been done through normal operations of the
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS Form 10-Q
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page 16
information systems. Approximately 20% of the total expenditures were made in
1997 with an additional 25% made in 1998, and 20% made in the first half of
1999. A portion of the remaining 35% will be expensed in 1999 with the remainder
being expensed in future years in relation to terms of applicable leases.
The Company initiated communications using questionnaires with key suppliers
and customers in 1998 to determine the extent to which the Company's interface
systems are vulnerable to those third parties' failure to remediate their own
Year 2000 problems. Key suppliers were determined based upon the amount of
business and the importance to the Company of the material or services provided.
The initial contacts were with financial institutions which provide banking and
employee benefit services. All of those financial institutions have responded by
identifying their plans to become Year 2000 compliant and now provide periodic
reports on their progress. All key suppliers and customers have also been
contacted using questionnaires. This process will be ongoing throughout the
remainder of 1999 by reviewing responses, obtaining updates, requesting
additional follow-up information, and identifying new key suppliers and
customers. To date, no negative responses have been received, but there is no
guarantee that systems of other companies on which the Company's systems rely
will be converted timely and would not have a material adverse effect on the
Company's systems.
The Year 2000 project is estimated to be completed in 1999 prior to any
anticipated impact on the Company's IT and non-IT products and systems. The
Company believes that with modifications to existing software and conversions to
new software, the Year 2000 issue will not pose significant operational problems
for its systems. However, if such modifications and conversions are not made or
are not completed in a timely manner, the Year 2000 issue could have a material
impact on the operations of the Company.
At this time, the Company is unable to determine its most reasonably likely
worst case scenarios as a result of the Year 2000 issue. The Company continues
to analyze possible scenarios as part of the Year 2000 project. An area of
concern which is considered low risk, but potentially high impact would be
widespread long-term utility failures resulting in a shut-down of the Company's
operations. The Company has little ability to correct such a utility failure. At
this time, the Company is unable to determine the impact or likelihood of such a
utility failure. Another area considered by the Company to be low risk and
potentially high impact is the foreign supply of raw materials. The Company has
developed contingency plans to address continued short-term supply of these
materials, but long-term shortages may result in price increases well into the
year 2000. The amount of these price increases and the Company's ability to pass
on such increases to our customers is not determinable at this time. The Company
continues to evaluate all key components of its operations and is developing
related contingency plans as more information becomes available. The Company
believes it will have developed its contingency plans by the fourth quarter of
1999.
The costs of the project and the date on which the Company believes it will
complete the Year 2000 project are based on management's best estimates, which
were derived utilizing numerous assumptions of future events, including the
continued availability of certain resources and other factors. However, there
can be no guarantee that these estimates will be achieved and actual results
could differ materially from those anticipated. Specific factors that might
cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant codes, and the level of compliance by key suppliers and
customers.
Form 10-Q
Page 17
Item 6. Exhibits and Reports on Form 8-K
The following items required by Item 601 of Regulation S-K are submitted as
follows:
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel,
Inc. and Northern Trust Company as of May 20, 1999 (filed herewith).
Exhibit 4b - Form of Note (filed herewith)
b) No reports on Form 8-K were filed during the quarter ended June 30, 1999.
Form 10-Q
Page 18
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.
Fansteel Inc.
(Registrant)
Date -8/13/99 /s/Gary L. Tessitore
Gary L. Tessitore
Chairman, President and Chief Executive Officer
Date -8/13/99 /s/R. Michael McEntee
R. Michael McEntee
Vice President and Chief Financial Officer
INDEX OF EXHIBITS
Exhibit No.
4a $30,000,000 Revolving Credit Agreement among
Fansteel, Inc. and Northern Trust Company as of
May 20, 1999 (filed herewith).
4b Form of Note (filed herewith)
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
$30,000,000
REVOLVING CREDIT AGREEMENT
among
FANSTEEL INC.,
as the Company
THE NORTHERN TRUST COMPANY,
as the Agent,
and the Banks named herein
as of May 20, 1999
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel,
Inc. and Northern Trust Company as of May 20, 1999
TABLE OF CONTENTS
Section 1...Definitions and Accounting
1.1....Defined Terms
1.2....Accounting
Section 2...The Loans
2.1....The Loans
2.2....Notice of Borrowings
2.3....Changes of Commitments
2.4....Fees
2.5....Lending Offices
2.6....Several Obligations; Remedies Independent
2.7....Notes
2.8....Voluntary Conversion or Continuation of Loans
Section 3...Letters of Credit
3.1....The Letter of Credit Subfacility
3.2....Issuance, Amendment and Renewal of Letters of Credit
3.3....Risk Participations, Drawings and Reimbursements
3.4....Repayment of Participation
3.5....Role of the Issuing Bank
3.6....Obligations Absolute
3.7....Cash Collateral Pledge
3.8....Letter of Credit Fees
3.9....Uniform Customs and Practice
Section 4...Payments of Principal and Interest
4.1....Repayment of Loans
4.2....Prepayments of Loans
4.3....Interest
Section 5...Payments; Pro Rata Treatment; Computations; Etc
5.1....Payments
5.2....Pro Rata Treatment
5.3....Computations
5.4....Minimum Amounts
5.5....Certain Notices
5.6....Non-Receipt of Funds by the Agent
5.7....Set-off and Sharing of Payments, Etc.
Section 6...Yield, Capital Maintenance and Taxes Provisions
6.1....Additional Costs
6.2....Limitation on Types of Loans
6.3....Illegality
6.4....Treatment of Affected Loans
6.5....Compensation
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
6.6....Responsibility of Affected Bank
6.7....Taxes
Section 7...Conditions Precedent
7.1....Initial Loan
7.2....Initial and Subsequent Loans and Letters of Credit
7.3....Withholding Tax Exemption
Section 8...Representations and Warranties
8.1....Corporate Existence and Related Matters
8.2....Financial Condition
8.3....Litigation
8.4....No Breach
8.5....Corporate Power and Action; Binding Effect
8.6....Approvals
8.7....Margin Stock
8.8....ERISA
8.9....Taxes
8.10...Investment Company Act; Public Utility Holding Company Act
8.11...Credit Agreements
8.12...Environmental Laws
8.13...Subsidiaries, Etc.
8.14...Liens
8.15...Purpose
8.16...Compliance
8.17...Year 2000 Compliance
Section 9...Covenants
9.1....Financial Statements and Other Information
9.2....Litigation
9.3....Corporate Existence, Etc.
9.4....Insurance
9.5....Business Combinations and Asset Dispositions
9.6....Limitation on Liens
9.7....Indebtedness
9.8....Lines of Business
9.9....Tangible Net Worth
9.10...Senior Funded Debt to EBITDA
9.11...Minimum Fixed Charge Coverage
9.12...Current Ratio
9.13...Sale of Stock of Subsidiaries
.
9.14...Restrictions on Transactions with Affiliates & Stockholders
9.15...Issuance of Stock by Subsidiaries
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
9.16...Compliance with ERISA
9.17...Investments and Loans
9.18...Capital Structure and Dividends
9.19...Environmental Indemnity
Section 10..Events of Default
Section 11..The Agent
11.1...Appointment, Powers and Immunities
11.2...Reliance by Agent
11.3...Defaults
11.4...Rights as a Bank
11.5...Indemnification
11.6...Non-Reliance on Agent and other Banks
11.7...Failure to Act
11.8...Resignation of Agent
Section 12..Miscellaneous
12.1...Waiver
12.2...Notices
12.3...Expenses, Etc.
12.4...Amendments, Etc.
12.5...Successors and Assigns
12.6...Assignments and Participations
12.7...Survival
12.8...Captions
12.9...Counterparts
12.10..Confidentiality
12.11..Governing Law
12.12..Waiver of Jury Trial
12.13..Consent To Jurisdiction
12.14..No Fiduciary Relationship
12.15..Cancellation
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
Schedule 1 - Commitments and Information Concerning Banks
Schedule 2 - Authorized Officers of the Company
Schedule 3 - Existing Credit and Refinanced Indebtedness Agreements
Schedule 4 - Subsidiaries
Schedule 8.3 - Litigation
Schedule 8.12 - Environmental Matters
Schedule 9.6 - Liens
Schedule 10 - Existing Northern Letters of Credit
Exhibit A - Form of Note
Exhibit B - Form of Notice of Eurodollar or Alternate Base Rate Borrowing
Exhibit C - Form of Notice of Conversion or Continuation
Exhibit D - Form of Opinion of Counsel to the Company
Exhibit E - Form of Assignment Agreement
EXHIBIT 4A - $30,000,000 REVOLVING CREDIT AGREEMENT AMONG FANSTEEL, INC. AND
NORTHERN TRUST COMPANY AS OF MAY 20, 1999
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (this "Agreement") dated as of May 20, 1999
among FANSTEEL INC., a Delaware corporation (the "Company"), each of the banks
named under the caption "Banks" on the signature pages hereof that is a
signatory hereto (individually, a "Bank" and, collectively, the "Banks") and THE
NORTHERN TRUST COMPANY, individually and as agent for the Banks (in such
capacity, together with its successors in such capacity, the "Agent").
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
Section 1. Definitions and Accounting.
1.1. Defined Terms. As used herein, the following terms shall have the
following meanings (terms defined in this Section 1.1 or in other provisions of
this Agreement in the singular to have correlative meanings when used in the
plural and vice versa):
"Acquisition" means any transaction or series of related transactions for
the purpose of, or resulting, directly or indirectly, in, (a) the acquisition of
all or substantially all the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of 50% of the capital stock,
partnership interest, membership interest or equity of any Person, or otherwise
causing any Person to become a Subsidiary, or (c) a merger or consolidation of,
or any other combination with, another Person (other than a Person that is a
Subsidiary), provided that the Company or a Subsidiary is the surviving entity.
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
A Person shall be deemed to control another Person if the controlling Person
owns 10% or more of the Voting Stock (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Alternate Base Rate" shall mean for each day such interest rate per annum
as shall be equal to the higher of (a) the Prime Rate on such day; or (b) the
sum of (i) one half of one percent and (ii) the Fed Funds Rate on such day.
"Alternate Base Rate Loan" shall mean any Loan which bears interest at a
rate determined with reference to the Alternate Base Rate.
"Applicable Lending Office" shall mean, for each Bank and for each type of
Loan, the lending office of such Bank designated for such type of Loan on
Schedule 1 hereto or such other office of such Bank as such Bank may from time
to time specify to the Agent and the Company as the office by which its Loans of
such type are to be made and maintained.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
"Authorized Officer" shall mean (a) in the case of the Company, its chief
executive officer, its chief operating officer, its chief financial officer, any
Person designated as an "Authorized Officer" of the Company in Schedule 2
attached hereto or any other Person designated as an "Authorized Officer" of the
Company for the purpose of this Agreement, the L/C Related Documents and the
documents delivered by the Company in connection herewith or therewith in an
officer's certificate executed by the Company's secretary, assistant secretary
or chief financial officer and delivered to the Agent; and (b) in the case of
each Bank, any officer of such Bank designated as its "Authorized Officer" in
Schedule 1 or any officer of such Bank designated as its "Authorized Officer"
for the purpose of this Agreement and the L/C Related Documents in a certificate
executed by one of its Authorized Officers. Any action taken under this
Agreement, the L/C Related Documents or the other documents to which it is party
in connection herewith, on behalf of the Company, by any individual who on or
after the date of this Agreement shall have been an Authorized Officer thereof,
and whom the Agent, Issuing Lender or any Bank in good faith believes to be a
Authorized Officer of the Company at the time of such action shall be binding on
the Company even though such individual shall have ceased to be an Authorized
Officer of the Company; and any action taken under this Agreement, the L/C
Related Documents or any other document to which it is a party on behalf the
Issuing Lender or any Bank by any individual who on or after the date of this
Agreement shall have been an Authorized Officer of such Person and whom the
Company in good faith believes to be an Authorized Officer of such Person at the
time of such action shall be binding on such Person even though such individual
shall have ceased to be an Authorized Officer of such Person.
"Borrowing" means a borrowing hereunder consisting of Loans made to the
Company at the same time by the Banks in accordance with Section 2.2.
"Business Day" shall mean any day on which commercial banks are not
authorized or required by law to close in Chicago, Illinois and, if such day
relates to a Borrowing, a repayment or a notice in respect of a Eurodollar Loan,
a day which is also a day on which dealings in Dollar deposits are carried out
in the London interbank market.
"Capital Lease Obligations" shall mean, as to any Person, the obligations
of such Person which are required to be accounted for as capital leases on a
balance sheet of such Person under GAAP and, for purposes of this Agreement, the
amount of such obligations shall be the capitalized amount thereof, determined
in accordance with GAAP.
"Cash Collateralize" means to pledge and deposit with or deliver to the
Agent, for the benefit of the Agent, the Issuing Lender and the Banks, as
collateral for the L/C Obligations, cash or deposit account balances pursuant to
documentation in form and substance satisfactory to the Agent and the Issuing
Lender (which documents are hereby consented to by the Banks). Derivatives of
such term shall have corresponding meaning.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
"Change in Control" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 20% or more of the outstanding shares of Voting Stock of the
Company, provided, however, the acquisition of Voting Stock of the Company by
the estate of Mr. Thomas Evans, Sr. or by the direct lineal descendants of Mr.
Thomas Evans, Sr. or transfers of such Voting Stock amongst such direct lineal
descendants shall be excluded from this definition.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Commitment" shall have the meaning set forth in Section 2.1.
"Consolidated Tangible Net Worth" shall mean, at any time, the total of
shareholders' equity (including capital stock, additional paid in capital and
retained earnings after deducting treasury stock) of the Company and its
consolidated Subsidiaries calculated in accordance with GAAP, less the sum of
the total amount of all intangible assets. Intangible assets shall include,
without limitation, unamortized debt discount and expense, unamortized deferred
charges and goodwill.
"Continue," "Continuation" and "Continued" shall refer to the continuation
pursuant to Section 2.8 hereof of a Eurodollar Loan as a Eurodollar Loan from
one Interest Period to the next Interest Period.
"Convert," "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.8 hereof of Alternate Base Rate Loans or Fed Funds Loans
into Eurodollar Loans, or of Eurodollar Loans into Alternate Base Rate Loans or
Fed Funds Loans.
"Current Assets" shall mean all current assets of the Company and its
Subsidiaries on a consolidated basis determined in accordance with GAAP.
"Current Liabilities" shall mean all current liabilities of the Company and
its Subsidiaries on a consolidated basis determined in accordance with GAAP.
"Default" shall mean an Event of Default or an event which with notice or
lapse of time or both would become an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of America.
"EBITDA" means, for any period, on a consolidated basis for the Company and
its consolidated Subsidiaries, the sum (without duplication) of the amounts for
such period of (a) Net Income, plus (b) charges against income for foreign,
federal, state and local taxes, plus (c) Interest Expense and interest expense
not payable in cash (including amortization of discount),
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
plus (d) depreciation, plus (e) amortization expense, including, without
limitation, amortization of goodwill and other intangible assets plus (f) other
non-cash charges classified as long term deferrals in accordance with GAAP, plus
(g) extraordinary losses in the Company's or such Subsidiary's business, minus
(h) interest income, minus (i) extraordinary gains in the Company's or such
Subsidiary's business.
"Environmental Laws" shall mean all federal, state and local laws,
including statutes, regulations, ordinances, codes, rules and other governmental
restrictions and requirements, relating to the discharge of air pollutants,
water pollutants or process waste water or otherwise relating to the environment
or hazardous substances or the treatment, processing, storage, disposal,
release, transport or other handling thereof, including, but not limited to, the
federal Solid Waste Disposal Act, the federal Clean Air Act, the federal Clean
Water Act, the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the federal Toxic Substances Control Act, regulations of
the Nuclear Regulatory Agency, and regulations of any state department of
natural resources or state environmental protection agency, in each case as now
or at any time hereafter in effect.
"Environmental Remediation Expenses" shall mean actual cash disbursed by
the Company or a Subsidiary during such fiscal quarter for the purpose of
complying with the requirements of Environmental Laws, which disbursements shall
be within the ranges previously disclosed to the Banks in writing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business which is
a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company or is under common control (within
the meaning of Section 414(c) of the Code) with the Company.
"Eurodollar Loan" shall mean any Loan which bears interest at a rate
determined with reference to the LIBOR Base Rate.
"Event of Default" shall have the meaning attributed to such term in
Section 10 hereof.
"Existing Northern Letters of Credit" shall mean the Letters of Credit
described on Schedule 10 hereof.
"Fed Funds Loan" shall mean any Loan which bears interest at a rate
determined with reference to the Fed Funds Rate.
"Fed Funds Rate" shall mean, for each day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th 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
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
published by the Federal Reserve Bank of New York in the Composite Closing
Quotation for U.S. Government Securities on such day, provided that (a) if the
day for which such rate is to be determined is not a Business Day, the Fed Funds
Rate for such day shall be such rate on such transaction for 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 date, the Fed Funds Rate for such day
shall be the average rate charged to the Agent on such day on such transactions
as determined by the Agent.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time.
"Guarantee" shall mean (a) a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be contingently liable with respect to, the Indebtedness, other
obligations, net worth, working capital or earnings of any Person, (b) a
guarantee of the payment of dividends or other distributions upon the stock of
any corporation, or (c) an agreement to purchase, sell or lease property or
services primarily to assure a creditor against loss, including causing a bank
to open a standby letter of credit for the benefit of another Person, but
excluding endorsements for collection or deposit in the ordinary course of
business. The terms "Guarantee" and "Guaranteed" shall have correlative
meanings.
"Honor Date" has the meaning specified in Section 3.3(b).
"Indebtedness" of any Person means, without duplication, (a) any obligation
of such Person for borrowed money, including, without limitation, (i) any
obligation of such Person evidenced by bonds, debentures, notes or similar debt
instruments, and (ii) any obligation for borrowed money which is non-recourse to
the credit of such Person but which is secured by a Lien on any asset of such
Person, (b) any obligation of such Person on account of deposits or advances,
(c) any obligation of such Person for the deferred purchase price of any
property or services, except trade accounts payable, (d) any Capital Lease
Obligation of such Person, (e) any Indebtedness of another Person secured by a
Lien on any asset of such first Person, whether or not such Indebtedness is
assumed by such first Person, (f) reimbursement obligations in connection with
commercial letters of credit or surety bonds, (g) Rate Hedging Obligations, and
(h) Guarantees issued by such Person. For all purposes of this Agreement, the
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture in which such Person is a general partner or a joint venturer.
"Insolvency Proceeding" means (a) any case, action or proceeding before any
court or other governmental authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors, undertaken under U.S. Federal, state or foreign law, including the
Bankruptcy Code.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
"Interest Expense" means, for any period, the total interest expense of the
Company and its consolidated Subsidiaries, whether paid or accrued, but without
duplication (including the interest component of Capital Lease Obligations), but
excluding interest expense not payable in cash (including amortization of
discount), all as determined in conformity with GAAP.
"Interest Period" shall mean, with respect to any Eurodollar Loan, each
period commencing on the date such Eurodollar Loan is made or Converted from an
Alternate Base Rate Loan or Fed Funds Loan or the last day of the next preceding
Interest Period for such Eurodollar Loan and ending on the numerically
corresponding day in the first, second or third calendar month thereafter, as
the Company may select, except that each Interest Period which 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;
provided, that (a) if any Interest Period for a Eurodollar Loan would otherwise
end after the Termination Date, such Interest Period shall end on the
Termination Date, and (b) each Interest Period which would otherwise end on a
day which 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.
"Issuing Lender" means The Northern Trust Company in its capacity as issuer
of one or more Letters of Credit hereunder, together with any replacement letter
of credit issuer arising under subsection 11.1.
"L/C Advance" means each Bank's participation in any L/C Borrowing in
accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for amendment of
outstanding standby or commercial documentary letters of credit as shall at any
time be in use at the Issuing Lender, as the Issuing Lender shall request.
"L/C Application" means an application form for issuances of standby or
commercial documentary letters of credit as shall at any time be in use at the
Issuing Lender, as the Issuing Lender shall request.
"L/C Borrowing" means an extension of credit resulting from a drawing under
any Letter of Credit which shall not have been reimbursed on the date when made
nor converted into a borrowing of Loans under subsection 3.3(d).
"L/C Commitment" means the commitment of the Issuing Lender to issue, and
the commitment of the Banks severally to participate in Letters of Credit,
including the Existing Northern Letters of Credit, from time to time issued or
outstanding under Section 3, in an aggregate amount not to exceed on any date
the amount of $10,000,000, as the same shall be reduced as a result of a
reduction in the L/C Commitment pursuant to Section 2.3; provided that the L/C
Commitment is a part of the combined Commitments, rather than a separate,
independent commitment.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
"L/C Obligations" means, at any time, the sum of the following obligations
of the Company (whether contingent or otherwise): (a) the aggregate undrawn
amount of all Letters of Credit then outstanding, plus (b) the amount of all
unreimbursed drawings under all Letters of Credit, including all outstanding L/C
Borrowings.
"L/C Related Documents" means the Letters of Credit, the L/C Applications,
the L/C Amendment Applications and any other document relating to any Letter of
Credit, including any of the Issuing Lender's standard form documents for letter
of credit issuances.
"Letters of Credit" means the Existing Northern Letters of Credit and any
letters of credit (whether standby letters of credit or commercial documentary
letters of credit) issued by the Issuing Lender pursuant to Section 3.
"LIBOR Base Rate" shall mean, with respect to any Eurodollar Loans to be
made or converted from Alternate Base Rate Loans or Fed Funds Loans on any day
for any Interest Period therefor, the applicable per annum London interbank
offered rate for deposits in U.S. Dollars appearing on Telerate Page 3750 as of
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, and having a maturity approximately equal to such Interest
Period. If no London interbank offered rate of such maturity then appears on
Telerate Page 3750, then the LIBOR Base Rate shall be equal to the London
interbank offered rate for deposits in U.S. Dollars maturing immediately before
or immediately after such maturity, whichever is higher, as determined by the
Agent from Telerate Page 3750. If Telerate Page 3750 is not available, the
applicable LIBOR Base Rate for the relevant Interest Period shall be the rate
determined by the Agent to be the rate at which The Northern Trust Company
offers to place deposits in U.S. Dollars with first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period, in the approximate amount of The
Northern Trust Company's relevant portion of the Eurodollar Loan to be made or
Converted and having a maturity approximately equal to such Interest Period.
"LIBOR Rate" shall mean, for any Eurodollar Loan for any Interest Period
therefor, a rate per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) determined by the Agent to be equal to (a) the LIBOR Base Rate for such
Loan for such Interest Period divided by (b) the remainder of 1 minus the
Reserve Requirement for such Loan for such Interest Period.
"Lien" shall mean, with respect to any property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect thereof,
including the interest of a vendor or lessor under any conditional sale, capital
lease or other title retention agreement.
"Loan" shall mean any Eurodollar Loan, Fed Funds Loan or Alternate Base
Rate Loan. A reference to a "type" of Loan refers to Eurodollar Loans as a
group, Fed Funds Loans as a group or Alternate Base Rate Loans as a group.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
"Majority Banks" shall mean Banks holding at least 75% of the aggregate
amount of the Commitments; provided that, if the Commitments shall have
terminated, Majority Banks shall mean Banks holding at least 75% of the
aggregate unpaid principal amount of the Loans.
"Margin Stock" shall mean margin stock within the meaning of Regulations U
and X.
"Multiemployer Plan" shall mean a Multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Company or
any ERISA Affiliate as a "contributing sponsor" (within the meaning of Section
4001(a)(13) of ERISA) and which is covered by Title IV of ERISA.
"Net Income" means, for any period, the net earnings (or loss) after taxes
of the Company and its Subsidiaries on a consolidated basis for such period
determined in accordance with GAAP.
"Net Mark-to-Market Exposure" of the Company and its Subsidiaries means as
of any date of determination, the excess (if any) of all unrealized losses over
all unrealized profits of the Company or such Subsidiary arising from Rate
Hedging Obligations. "Unrealized losses" means the fair market value of the
cost of the Company or such Subsidiary of replacing such Rate Hedging Obligation
as of the date of determination (assuming the Rate Hedging Obligation were to be
terminated as of that date), and "unrealized profits" means the fair market
value of the gain of the Company or such Subsidiary of replacing such Rate
Hedging Obligation as of the date of determination (assuming such Rate Hedging
Obligation were to be terminated as of that date).
"Note" shall mean a promissory note of the Company payable to a Bank in
substantially the form of Exhibit A hereto.
"Notice of Assignment" is defined in Section 12.6(f).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PEDFA Loans" means any and all loans or other financial obligations of the
Company evidenced by the PEDFA Note.
"PEDFA Note" means that certain Note dated April 22, 1998 (as amended,
restated, renewed or replaced) of the Company payable to the order of The
Northern Trust Company (the "Northern") in the original principal amount of
$1,127,124, issued pursuant to the PEDFA Reimbursement Agreement.
"PEDFA Reimbursement Agreement" means that certain Reimbursement Agreement
dated as of April 1, 1998 between the Company and the Northern as amended,
modified or supplemented from time to time, evidencing the Company's obligation
to reimburse the Northern for any draws made by Chase Manhattan Trust Company,
National Association, as trustee (including any successor trustee) under the
Trust Indenture dated as of April 1, 1998 relating to
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
Pennsylvania Economic Development Financing Authority Economic Development
Revenue Bonds, 1998 Series B-2 (Fansteel Inc. Project) as beneficiary of the
irrevocable letter of credit issued by PNC Bank, National Association for the
benefit of said Trustee for the account of the Northern pursuant to the PEDFA
Participation and Reimbursement Agreement.
"PEDFA Participation and Reimbursement Agreement" means that certain
Participation and Reimbursement Agreement dated as of April 1, 1998 between the
Northern and PNC Bank, National Association, as amended, modified, or
supplemented from time to time, pursuant to which the Northern is liable as
account party to PNC Bank for any draws under the letter of credit issued
thereunder.
"Pension Plan" shall mean a Plan which is a "defined benefit plan" within
the meaning of Section 3(35) of ERISA.
"Person" shall mean any individual, corporation, limited liability company,
voluntary association, partnership, trust, estate, unincorporated organization
or government (or any agency, instrumentality or political subdivision thereof).
"Plan" shall mean any plan, program or arrangement which constitutes an
"employee benefit plan" within the meaning of Section 3(3) of ERISA.
"Post-Default Rate" shall mean a rate per annum equal to 2% above the rate
applicable to such Loan, but in no event less than a rate per annum equal to 2%
above the Alternate Base Rate as in effect at the time of such default.
"Prime Rate" shall mean on any day the prime rate established by The
Northern Trust Company and in effect on such day. Each change in the Prime Rate
shall be effective from the date of the announcement by The Northern Trust
Company of a change in its prime rate. Neither the Prime Rate nor the prime
rate of The Northern Trust Company is intended to constitute the lowest rate of
interest charged by The Northern Trust Company or any Bank.
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Bank's Commitment divided by the Commitments of all Banks.
"Quarterly Dates" shall mean the last Business Day of each March, June,
September and December, commencing on June 30, 1999.
"Rate Hedging Obligations" means any and all obligations of the Company or
any Subsidiary whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
transactions, including, but not limited to dollar-denominated or cross-currency
interest rate exchange agreements, forward currency exchange agreements,
interest rate cap or collar protection agreements, forward rate currency or
interest rate options, puts and warrants, and (b) any and all cancellations, buy
backs, reversals, terminations or assignments of any of the foregoing.
"Regulations D, U and X" shall mean, respectively, Regulations D, U and X
of the Board of Governors of the Federal Reserve System (or any successor), as
the same may be amended or supplemented from time to time.
"Regulatory Change" shall mean any change after the date of this Agreement
in federal, state or foreign law or regulations (including, without limitation,
Regulation D) or the adoption or making after such date of any interpretation,
directive or request applying to a Bank (whether or not having the force of law)
by any court or governmental or monetary authority.
"Reserve Requirement" shall mean, for any Interest Period for any
Eurodollar Loan, the sum (expressed as a decimal) of (a) 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 against "Eurocurrency
liabilities" and (b) any other reserves required to be maintained by such member
banks by reason of any Regulatory Change against (i) any category of liabilities
which includes deposits by reference to which the LIBOR Base Rate is to be
determined or (ii) any category of extensions of credit or other assets which
includes a Eurodollar Loan.
"Senior Funded Debt" shall mean and include items (a)(i), (c), (d), (e) and
(h) of the definition of "Indebtedness" of the Company and any Subsidiary.
"Subsidiary" shall mean any Person of which or in which the Company and its
other Subsidiaries own directly or indirectly more than 50% or more of (a) the
combined voting power of all classes of stock having general voting power under
ordinary circumstances to elect a majority of the board of directors of such
Person, if it is a corporation, (b) the capital interest or profits interest of
such Person, if it is a partnership, joint venture or similar entity, or (c) the
beneficial interest of such Person, if it is a trust, association or other
unincorporated organization.
"Substantial Stockholder" shall mean (a) any Person owning, beneficially or
of record, directly or indirectly, either individually or together with all
other Persons to whom such Person is related by blood, adoption or marriage,
stock of the Company (of any class having ordinary voting power for the election
of directors) aggregating 5% or more of such voting power or (b) any Person
related by blood, adoption or marriage to any Person described or coming within
the provisions of clause (a) of this definition.
"Termination Date" shall mean May 20, 2002.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
"Voting Stock" shall mean, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
1.2. Accounting. Unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all determinations with respect to accounting
matters hereunder shall be made, and all financial statements and certificates
and reports as to financial matters required to be furnished to the Agent or the
Banks hereunder shall be prepared, in accordance with GAAP applied on a basis
consistent with the audited consolidated financial statements of the Company and
the Subsidiaries referred to in Section 8.2 hereof (except for changes concurred
in by the Company's independent public accountants).
Section 2. The Loans.
2.1. The Loans. (a) Each Bank severally agrees, on the terms of this
Agreement, to make Loans to the Company during the period from and including the
date hereof to but not including the Termination Date in an amount equal to such
Bank's Pro Rata Share of the aggregate amount of a Borrowing requested by the
Company; provided that the aggregate principal amount of all Loans which any
Bank shall be committed to have outstanding to the Company shall not exceed the
lesser of (i) the amount set forth opposite such Bank's name on Schedule 1 less
such Bank's Pro Rata Share of L/C Obligations and the PEDFA Loans and (ii) such
Bank's Pro Rata Share of the Commitments less its Pro Rata Share of L/C
Obligations and the PEDFA Loans. The aggregate principal amount of Loans which
all Banks shall be committed to have outstanding hereunder to the Company shall
not at any time exceed $30,000,000 less all L/C Obligations and the PEDFA Loans.
The Commitment of each Bank to make Loans described in this Section 2.1 is
referred to herein as its "Commitment" and collectively as to all the Banks as
the "Commitments." Subject to the terms of this Agreement, during such period
the Company may borrow, repay and reborrow the amount of the Commitments by
means of Alternate Base Rate Loans, Fed Funds Loans or Eurodollar Loans and may
Convert Loans of one type into Loans of the other type or Continue Eurodollar
Loans; provided, that no more than five (5) Eurodollar Loans may be outstanding
from each Bank at any one time.
(b) The Loans to be made in connection with a Borrowing shall be in an
aggregate amount not less than that specified in Section 5.4.
2.2. Notice of Borrowings. The Company shall give the Agent (which shall
promptly notify the Banks) notice of each Borrowing of Alternate Base Rate
Loans, Fed Funds Loans or Eurodollar Loans hereunder as provided in Section 5.5
hereof. Not later than 1:00 p.m., Chicago time, on the date specified for each
such Borrowing hereunder, each Bank shall make available the amount of the
Alternate Base Rate Loan, Fed Funds Loan or the Eurodollar
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
Loan to be made by it on such date to the Agent, at such account as it shall
specify, in immediately available funds, for the account of the Company. The
amount so received by the Agent shall, subject to the terms and conditions of
this Agreement, be made available to the Company by not later than 2:00 p.m.,
Chicago time, by depositing the same, in immediately available funds, in an
account of the Company maintained at the Agent.
2.3. Changes of Commitments.
(a) The Company shall have the right to terminate or reduce the
aggregate amount of the unused Commitments at the end of any fiscal quarter of
the Company, provided that: (i) the Company shall give notice of each such
termination or reduction as provided in Section 5.5 hereof; (ii) each partial
reduction shall be in an aggregate amount at least equal to $2,000,000 or
integral multiples of $100,000 in excess thereof; (iii) the Commitments less
outstanding L/C Obligations and PEDFA Loans shall not be reduced below the
outstanding principal amount of Loans, L/C Obligations and PEDFA Loans; and (iv)
no such reduction shall cause any Bank's Pro Rata Share of the Commitments less
its Pro Rata Share of L/C Obligations and PEDFA Loans to be reduced below the
outstanding principal amount of Loans made by such Bank and its participation in
the L/C Obligations and PEDFA Loans; and (iv) the L/C Obligations shall not
exceed the L/C Commitment.
(b) Commitments once terminated or reduced may not be reinstated.
2.4. Fees.
(a) The Company shall pay to the Agent, for the account of each Bank
(to be paid to each Bank based on its Pro Rata Share of the Commitments), an
annual non-use fee on the average daily amount of such Bank's unused Commitment,
for the period from and including the date of this Agreement to but not
including the earlier of the date such Commitment is terminated or the
Termination Date, at a rate per annum equal to .125%. The accrued non-use fee
in respect of the Commitments shall be payable in arrears on each Quarterly Date
and on the earlier of the date the Commitments are terminated or the Termination
Date.
(b) The Company shall pay to the Agent for the account of each Bank a
non-refundable fee in an amount equal to the product of .125% times the amount
of such Bank's Commitment on the date hereof. Such fee shall be payable on or
before the date of this Agreement.
(c) The Company shall pay to the Agent for the account of the Agent
such fees as shall be set forth in a letter agreement dated the date of this
Agreement between the Agent and the Company.
2.5. Lending Offices. The Loans of each type made by each Bank shall be
made and maintained at such Bank's Applicable Lending Office for Loans of such
type.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
2.6. Several Obligations; Remedies Independent. The failure of any Bank
to make any Loan to be made by it or fund its Pro Rata Share of any drawing
under a Letter of Credit on the date specified therefor shall not relieve any
other Bank of its obligation, if any, to make any Loan or fund such drawing on
such date, but neither any Bank nor the Agent shall be responsible for the
failure of any other Bank to make a Loan or fund such drawing to be made by such
other Bank. The amounts payable by the Company at any time hereunder, under the
Note and the L/C Obligations to each Bank shall be a separate and independent
debt, and each Bank shall be entitled to protect and enforce its rights arising
out of this Agreement, its Note and the L/C Obligations, and it shall not be
necessary for any other Bank or the Agent to consent to, or be joined as an
additional party in, any proceedings for such purposes.
2.7. Notes. The Loans made by each Bank shall be evidenced by a
promissory note of the Company in substantially the form of Exhibit A hereto.
The date, amount, and type of each Loan made by each Bank, and each payment made
on account of the principal thereof, shall be recorded by such Bank on its books
and, prior to any transfer of its Note evidencing such Loans held by it,
endorsed by such Bank on the schedule attached to such Note or any continuation
thereof; provided, however, that any failure to so record or any error in
recording shall not affect the Company's obligations under this Agreement or the
Notes.
2.8. Voluntary Conversion or Continuation of Loans. Subject to Section
5.4 hereof, the Company shall have the right to Convert Loans of one type into
Loans of another type or Continue Eurodollar Loans as such at any time, provided
that: (a) the Company shall give the Agent written notice of each such
Conversion or Continuation as provided in Section 5.5 hereof; and (b) Eurodollar
Loans may be Continued or Converted only on the last day of an Interest Period
for such Loans.
Section 3. Letters of Credit.
3.1. The Letter of Credit Subfacility. (a) On the terms and conditions
set forth herein (i) the Issuing Lender agrees, from time to time on any
Business Day during the period from the date hereof to the Termination Date to
issue Letters of Credit for the account of the Company, and to amend or renew
Letters of Credit previously issued by it, in accordance with subsections 3.2(b)
and (c) and to honor drafts under the Letters of Credit; and (ii) the Banks
severally agree to participate in Letters of Credit issued for the account of
the Company; provided, that the Issuing Lender shall not be obligated to issue,
and no Bank shall be obligated to participate in, any Letter of Credit if as of
the date of issuance of such Letter of Credit (the "Issuance Date") (A) the
amount of all L/C Obligations plus the amount of all Loans and PEDFA Loans
exceeds the Commitments, (B) the participation of any Bank in the amount of all
L/C Obligations plus the amount of the Loans and PEDFA Loans of such Bank
exceeds such Bank's Pro Rata Share of the Commitments, or (C) the amount of L/C
Obligations exceeds the L/C Commitment. Within the foregoing limits, and
subject to the other terms and conditions
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
hereof, the Company's ability to obtain Letters of Credit shall be fully
revolving, and, accordingly, the Company may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit which have expired or
which have been drawn upon and reimbursed.
(b) The Issuing Lender is under no obligation to issue any Letter of
Credit if:
(i) any order, judgment or decree of any governmental authority
or arbitrator shall by its terms purport 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 with jurisdiction over the Issuing Lender 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, reserve or capital requirement (for which the Issuing
Lender is not otherwise compensated hereunder) not in effect on the
date hereof, or shall impose upon the Issuing Lender any unreimbursed
loss, cost or expense which was not applicable on the date hereof and
which the Issuing Lender in good faith deems material to it;
(ii) the Issuing Lender has received written notice from any
Bank, the Agent or the Company, on or prior to the Business Day prior
to the requested date of issuance of such Letter of Credit, that one
or more of the applicable conditions contained in Section 7 is not
then satisfied;
(iii)the expiry date of any requested Letter of Credit is (1)
more than 360 days after the date of issuance, unless the Majority
Banks have approved such expiry date in writing, or (2) after the
Termination Date, unless all of the Banks have approved such expiry
date in writing;
(iv) the expiry date of any requested Letter of Credit is prior
to the maturity date of any financial obligation to be supported by
the requested Letter of Credit;
(v) any requested Letter of Credit does not provide for drafts,
or is not otherwise in form and substance acceptable to the Issuing
Lender, or the issuance of a Letter of Credit shall violate any
applicable policies of the Issuing Lender;
(vi) any standby Letter of Credit is for the purpose of
supporting the issuance of any letter of credit by any other Person;
or
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
(vii) such Letter of Credit is in a face amount less than
$250,000 or to be used for a purpose other than in connection with the
Company's existing lines of business or denominated in a currency
other than Dollars.
3.2. Issuance, Amendment and Renewal of Letters of Credit. (a) Each Letter
of Credit shall be issued upon the irrevocable written request of the Company
received by the Issuing Lender (with a copy sent by the Company to the Agent) at
least four days (or such shorter time as the Issuing Lender may agree in a
particular instance in its sole discretion) prior to the proposed date of
issuance. Each such request for issuance of a Letter of Credit shall be by
facsimile, confirmed immediately in an original writing, in the form of an L/C
Application, and shall specify in form and detail satisfactory to the Issuing
Lender: (i) the proposed date of issuance of the Letter of Credit (which shall
be a Business Day); (ii) the face amount of the Letter of Credit; (iii) the
expiry date of the Letter of Credit; (iv) the name and address of the
beneficiary thereof; (v) the documents to be presented by the beneficiary of the
Letter of Credit in case of any drawing thereunder; (vi) the full text of any
certificate to be presented by the beneficiary in case of any drawing
thereunder; and (vii) such other matters as the Issuing Lender may require.
(b) At least two Business Days prior to the issuance of any Letter of
Credit, the Issuing Lender will confirm with the Agent (by telephone or in
writing) that the Agent has received a copy of the L/C Application or L/C
Amendment Application from the Company and, if not, the Issuing Lender will
provide the Agent with a copy thereof. Unless the Issuing Lender has received
notice on or before the second Business Day immediately preceding the date the
Issuing Lender is to issue a requested Letter of Credit from the Agent directing
the Issuing Lender not to issue such Letter of Credit because such issuance is
not then permitted under subsection 3.1(a) as a result of the limitations set
forth in clauses (A) through (C) thereof or subsection 3.1(b)(ii), then, subject
to the terms and conditions hereof, the Issuing Lender shall, on the requested
date, issue a Letter of Credit for the account of the Company in accordance with
the Issuing Lender's usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Termination Date, the Issuing Lender will, upon the written request
of the Company received by the Issuing Lender (with a copy sent by the Company
to the Agent) at least five days (or such shorter time as the Issuing Lender may
agree in a particular instance in its sole discretion) prior to the proposed
date of amendment, amend any Letter of Credit issued by it. Each such request
for amendment of a Letter of Credit shall be made by facsimile, confirmed
immediately in an original writing, made in the form of an L/C Amendment
Application and shall specify in form and detail satisfactory to the Issuing
Lender: (i) the Letter of Credit to be amended; (ii) the proposed date of
amendment of the Letter of Credit (which shall be a Business Day); (iii) the
nature of the proposed amendment; and (iv) such other matters as the Issuing
Lender may require. The Issuing Lender shall be
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
under no obligation to amend any Letter of Credit if: (v) the Issuing Lender
would have no obligation at such time to issue such Letter of Credit in its
amended form under the terms of this Agreement; or (vi) the beneficiary of any
such Letter of Credit does not accept the proposed amendment to the Letter of
Credit. The Agent will promptly notify the Banks of the receipt by it of any
L/C Application or L/C Amendment Application.
(d) The Issuing Lender and the Banks agree that, while a Letter of
Credit is outstanding and prior to the Termination Date, at the option of the
Company and upon the written request of the Company received by the Issuing
Lender (with a copy sent by the Company to the Agent) at least five days (or
such shorter time as the Issuing Lender may agree in a particular instance in
its sole discretion) prior to the proposed date of notification of renewal, the
Issuing Lender shall be entitled to authorize the automatic renewal of any
Letter of Credit issued by it. Each such request for renewal of a Letter of
Credit shall be made by facsimile, confirmed immediately in an original writing,
in the form of an L/C Amendment Application, and shall specify in form and
detail satisfactory to the Issuing Lender: (i) the Letter of Credit to be
renewed; (ii) the proposed date of notification of renewal of the Letter of
Credit (which shall be a Business Day); (iii) the revised expiry date of the
Letter of Credit; and (iv) such other matters as the Issuing Lender may require.
The Issuing Lender shall be under no obligation so to renew any Letter of Credit
if: (v) the Issuing Lender would have no obligation at such time to issue or
amend such Letter of Credit in its renewed form under the terms of this
Agreement; or (vi) the beneficiary of any such Letter of Credit does not accept
the proposed renewal of the Letter of Credit. If any outstanding Letter of
Credit shall provide that it shall be automatically renewed unless the
beneficiary thereof receives notice from the Issuing Lender that such Letter of
Credit shall not be renewed, and if at the time of renewal the Issuing Lender
would be entitled to authorize the automatic renewal of such Letter of Credit in
accordance with this subsection 3.2(d) upon the request of the Company but the
Issuing Lender shall not have received any L/C Amendment Application from the
Company with respect to such renewal or other written direction by the Company
with respect thereto, the Issuing Lender shall nonetheless be permitted to allow
such Letter of Credit to renew, and the Company and the Banks hereby authorize
such renewal, and, accordingly, the Issuing Lender shall be deemed to have
received an L/C Amendment Application from the Company requesting such renewal.
(e) The Issuing Lender may, at its election (or as required by the
Agent at the direction of the Majority Banks), deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than the Termination Date.
(f) This Agreement shall control in the event of any conflict with
any L/C Related Document (other than any Letter of Credit).
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
(g) The Issuing Lender will also deliver to the Agent, concurrently
or promptly following its delivery of a Letter of Credit, or amendment to or
renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and
complete copy of each such Letter of Credit or amendment to or renewal of a
Letter of Credit.
3.3. Risk Participations, Drawings and Reimbursements. (a) On and after
the date hereof, the Existing Northern Letters of Credit shall be deemed for
purposes hereof, including for purposes of the fees to be collected pursuant to
subsections 3.8(a) and 3.8(c), and reimbursement of costs and expenses to the
extent provided herein, Letters of Credit outstanding under this Agreement and
entitled to the benefits of this Agreement, and shall be governed by the
applications and agreements pertaining thereto and by this Agreement. Each Bank
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Issuing Lender on the date hereof a participation in each
Existing Northern Letter of Credit and each drawing thereunder in an amount
equal to the product of (i) such Bank's Pro Rata Share times (ii) the maximum
amount available to be drawn under such Letter of Credit and the amount of such
drawing, respectively. For purposes of Section 2.1 and subsection 2.4(a), the
Existing Northern Letters of Credit shall be deemed to utilize pro rata the
Commitment of each Bank.
Immediately upon the issuance of each Letter of Credit, each Bank shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the Issuing Lender a participation in such Letter of Credit and each drawing
thereunder in an amount equal to the product of (i) the Pro Rata Share of such
Bank, times (ii) the maximum amount available to be drawn under such Letter of
Credit and the amount of such drawing, respectively. For purposes of Section
2.1(a), each issuance of a Letter of Credit shall be deemed to utilize the
Commitment of each Bank by an amount equal to the amount of such participation.
(b) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Lender will
promptly notify the Company and the Agent. The Company shall reimburse the
Issuing Lender prior to 10:00 a.m. Chicago time, on each date that any amount is
paid by the Issuing Lender under any Letter of Credit (or such later time or
date as provided in any reimbursement agreement entered in connection with an
Existing Northern Letter of Credit) (each such date, an "Honor Date"), in an
amount equal to the amount so paid by the Issuing Lender. In the event the
Company fails to reimburse the Issuing Lender for the full amount of any drawing
under any Letter of Credit by 10:00 a.m., Chicago time, on the Honor Date (or
such later time or date as provided in any reimbursement agreement entered in
connection with an Existing Northern Letter of Credit), the Issuing Lender will
promptly notify the Agent and the Agent will promptly notify each Bank thereof
and the Company shall be deemed to have requested Alternate Base Rate Loan(s) be
made by the Banks to be disbursed on the Honor Date under such Letter of Credit,
subject to the amount of the unutilized portion of the Commitment and subject to
the conditions set forth in Section 7. Any notice given by the Issuing Lender
or the Agent pursuant to this
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
subsection 3.3(b) may be oral if immediately confirmed in writing (including by
facsimile); provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.
(c) Each Bank shall upon any notice pursuant to subsection 3.3(b)
make available to the Agent for the account of the Issuing Lender an amount in
Dollars and in immediately available funds equal to its Pro Rata Share of the
amount of the drawing, whereupon the participating Banks shall (subject to
subsection 3.3(d)) each be deemed to have made a Loan consisting of an Alternate
Base Rate Loan to the Company in that amount. If any Bank so notified fails to
make available to the Agent for the account of the Issuing Lender the amount of
such Bank's Pro Rata Share of the amount of the drawing by no later than 12:00
noon, Chicago time, on the Honor Date, then interest shall accrue on such Bank's
obligation to make such payment, from the Honor Date to the date such Bank makes
such payment, at a rate per annum equal to the Federal Funds Rate in effect from
time to time during such period. The Agent will promptly give notice of the
occurrence of the Honor Date, but failure of the Agent to give any such notice
on the Honor Date or in sufficient time to enable any Bank to effect such
payment on such date shall not relieve such Bank from its obligations under this
Section 3.3(c).
(d) With respect to any unreimbursed drawing that is not converted
into Loans consisting of Alternate Base Rate Loans to the Company in whole or in
part, because of the Company's failure to satisfy the conditions set forth in
Section 7.2 or for any other reason, the Company shall be deemed to have
incurred from the Issuing Lender an L/C Borrowing in the amount of such drawing,
which L/C Borrowing shall be due and payable on demand (together with interest)
and shall bear interest at a rate per annum equal to the Alternate Base Rate
plus 2% per annum, and each Bank's payment to the Issuing Bank pursuant to
subsection 3.3(c) shall be deemed payment in respect of its participation in
such L/C Borrowing and shall constitute an L/C Advance from such Bank in
satisfaction of its participation obligation under this Section 3.3
(e) Each Bank's obligation in accordance with this Agreement to make
the Loans or L/C Advances, as contemplated by this Section 3.3, as a result of a
drawing under a Letter of Credit, shall be absolute and unconditional and
without recourse to the Issuing Lender and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment, defense or
other right which such Bank may have against the Issuing Lender, the Company or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default or an Event of Default or (iii) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing; provided,
however, that each Bank's obligation to make Loans under this Section 3.3 is
subject to the conditions set forth in Section 7.2.
3.4. Repayment of Participation. (a) Upon (and only upon) receipt by the
Agent for the account of the Issuing Lender of immediately available
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
funds from the Company (i) in reimbursement of any payment made by the Issuing
Lender under the Letter of Credit with respect to which any Bank has paid the
Agent for the account of the Issuing Lender for such Bank's participation in the
Letter of Credit pursuant to Section 3.3(c) or (ii) in payment of interest
thereon, the Agent will pay to each Bank, in the same funds as those received by
the Agent for the account of the Issuing Lender, the amount of such Bank's Pro
Rata Share of such funds, and the Issuing Lender shall receive the amount of the
Pro Rata Share of such funds of any Bank that did not so pay the Agent for the
account of the Issuing Lender.
(b) If the Agent or the Issuing Lender is required at any time to
return to the Company, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by the
Company to the Agent for the account of the Issuing Lender pursuant to
subsection 3.4 in reimbursement of a payment made under the Letter of Credit or
interest or fee thereon, each Bank shall, on demand of the Agent, forthwith
return to the Agent or the Issuing Lender the amount of its Pro Rata Share of
any amounts so returned by the Agent or the Issuing Lender plus interest thereon
from the date such demand is made to the date such amounts are returned by such
Bank to the Agent or the Issuing Lender, at a rate per annum equal to the
Federal Funds Rate in effect from time to time.
3.5. Role of the Issuing Bank. (a) Each Bank and the Company agree that,
in paying any drawing under a Letter of Credit, the Issuing Lender shall not
have any responsibility to obtain any document (other than any drafts,
certificates or other documents expressly required by the Letter of Credit) or
to ascertain or inquire as to the validity or accuracy of any such document or
the authority of the Person executing or delivering any such document.
(b) Neither the Agent nor the Issuing Lender or their respective
officers, directors, employees or agents, nor any of the respective
correspondents, participants or assignees of the Issuing Lender shall be liable
to any Bank for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Banks (including the Majority Banks, as
applicable); (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C Related Document.
(c) The Company hereby assumes all risks of the acts or omissions of
any beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
preclude the Company's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. Neither the
Agent nor the Issuing Lender or their respective officers, directors, employees
or agents, nor any of the respective correspondents, participants or assignees
of the Issuing Lender, shall be liable or responsible for any of the matters
described in clauses (a) through (g) of Section 3.6; provided, however, anything
in such clauses to the contrary
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
notwithstanding, that the Company may have a claim against the Issuing Lender,
and the Issuing Lender may be liable to the Company, to the extent, but only to
the extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Company which the Company proves were caused by the Issuing
Lender's willful misconduct or gross negligence or the Issuing Lender's willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing: (i) the Issuing Lender may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary; and (ii)
the Issuing Lender shall not be responsible for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.
3.6. Obligations Absolute. The obligations of the Company under this
Agreement and any L/C Related Document to reimburse the Issuing Lender for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing
under a Letter of Credit converted into Loans, shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C Related Document under all circumstances,
including the following:
(a) any lack of validity or enforceability of this Agreement or any
L/C Related Document;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of the Company in respect of any
Letter of Credit or any other amendment or waiver of or any consent to departure
from all or any of the L/C Related Documents;
(c) the existence of any claim, set-off, defense or other right that
the Company 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
L/C Related Documents or any unrelated transaction;
(d) 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;
(e) any payment by the Issuing Lender under any Letter of Credit
against presentation of a draft, certificate or other document that does not
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
strictly comply with the terms of any Letter of Credit; or any payment made by
the Issuing Lender under any Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of any Letter of Credit, including any arising in
connection with any Insolvency Proceeding;
(f) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the obligations of the Company in respect of any
Letter of Credit; or
(g) 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, the Company or a
guarantor.
3.7. Cash Collateral Pledge. Upon (a) the request of the Agent, (i) if
the Issuing Lender has honored any full or partial drawing request on any Letter
of Credit and such drawing has resulted in an L/C Borrowing hereunder, or (ii)
if, as of the Termination Date or upon an Event of Default which is continuing,
any Letters of Credit may for any reason remain outstanding and partially or
wholly undrawn, or (b) the occurrence of the circumstances described in
subsection 4.2(c) requiring the Company to Cash Collateralize Letters of Credit,
then, the Company shall immediately Cash Collateralize the L/C Obligations in an
amount equal to such L/C obligations. The Company hereby grants the Agent, for
the benefit of the Agent, the Issuing Lender and the Banks, a security interest
in all cash and deposit account balances from time to time pledged and delivered
to the Agent, on behalf of the Banks, as security for the L/C Obligations. Cash
collateral shall be maintained in blocked, non-interest bearing deposit accounts
at The Northern Trust Company.
3.8. Letter of Credit Fees. (a) The Company shall pay to the Agent for
the account of each of the Banks a letter of credit fee with respect to each
Letter of Credit equal to, in the case of standby letters of credit, .75% and,
in the case of trade letters of credit, the percentage from time to time
communicated to the Company by the Agent times the average daily maximum amount
available to be drawn on such Letter of Credit, computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter upon each Letter of
Credit outstanding for that quarter as calculated by the Agent. Such letter of
credit fees shall be due and payable quarterly in arrears on the Quarterly Dates
during which Letters of Credit are outstanding, commencing on the first such
Quarterly Date to occur after the issuance date, through the Termination Date
(or such later date upon which the outstanding Letters of Credit shall expire),
with the final payment to be made on the Termination Date (or such later
expiration date).
(b) (Reserved.)
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
(c) The Company shall pay to the Issuing Lender from time to time on
demand the normal issuance, presentation, amendment, evergreen, drawing and
other processing fees, and other standard costs and charges, of the Issuing
Lender relating to letters of credit as from time to time in effect.
3.9. Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit shall (unless otherwise
expressly provided in the Letters of Credit) apply to the Letters of Credit.
Section 4. Payments of Principal and Interest.
4.1. Repayment of Loans. The Company unconditionally promises to pay to
the Agent for the account of each Bank the principal of such Bank's Loans on the
Termination Date.
4.2 Prepayments of Loans.
(a) The Company shall have no right to prepay any principal amount of
any Alternate Base Rate Loans, Fed Funds Loans or Eurodollar Loans other than as
provided in subsection (b) below.
(b) The Company may, upon the giving of such notice as is specified
in Section 5.5 hereof, and if such notice is given the Company shall, prepay the
outstanding principal amounts of the Alternate Base Rate Loans, Fed Funds Loans
or Eurodollar Loans in whole or ratably (in accordance with the outstanding
principal amounts of Loans of such type then held by the Banks) in part,
together with accrued interest to the date of such prepayment on the principal
amount prepaid; provided, however, (i) partial prepayment shall be in an
aggregate principal amount not less than that specified in Section 5.4 and (ii)
Eurodollar Loans prepaid on a day other than the last day of an Interest Period
therefor shall be subject to Section 6.5.
(c) If on any date the amount of L/C Obligations exceeds the L/C
Commitment or an Event of Default occurs and is continuing, the Company shall
Cash Collateralize on such date the outstanding Letters of Credit in an amount
equal to the excess of the maximum amount then available to be drawn under the
Letters of Credit over the L/C Commitment. Subject to Section 6.5, if on any
date after giving effect to any Cash Collateralization made on such date
pursuant to the preceding sentence, the amount of all Loans then outstanding
plus the amount of all L/C Obligations exceeds the Commitments less all L/C
Obligations, the Company shall immediately, and without notice or demand, prepay
the outstanding principal amount of the Loans and L/C Advances by an amount
equal to the applicable excess.
4.3. Interest.
(a) The Company promises to pay to the Agent for the account of each
Bank interest on the unpaid principal amount of each Loan made by such
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
Bank for the period from and including the date of such Loan to but excluding
the date such Loan shall be paid in full, (i) while such Loan is an Alternate
Base Rate Loan, at a rate per annum equal to the Alternate Base Rate (as in
effect from time to time); (ii) while such Loan is a Eurodollar Loan, for each
Interest Period relating thereto, at a rate per annum equal to the LIBOR Rate
for such Loan for such Interest Period plus 50 basis points per annum; and (ii)
while such Loan is a Fed Funds Loan, at a rate per annum equal to the Fed Funds
Rate (as in effect from time to time) plus 75 basis points per annum.
(b) Notwithstanding the foregoing, the Company will pay to the Agent
for the account of each Bank interest at the Post-Default Rate on any principal
of any Loan made by such Bank, and (to the fullest extent permitted by law) on
any interest, any L/C Obligation or other amount payable by the Company
hereunder, under the Note held by such Bank or any L/C Related Documents which
shall not be paid in full when due (whether at stated maturity, by acceleration
or otherwise), for each day during the period from and including the due date
thereof to but excluding the date the same is paid in full.
(c) Accrued interest shall be payable (i) in the case of an Alternate
Base Rate Loan or Fed Funds Loan, quarterly on the Quarterly Dates, (ii) in the
case of a Eurodollar Loan, on the last day of each Interest Period therefor and
(iii) in the case of any Alternate Base Rate Loan, Fed Funds Loan or Eurodollar
Loan, upon the payment or prepayment thereof or the Conversion of such Loan to a
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 and interest on any Eurodollar Loan that is
Converted into an Alternate Base Rate Loan or Fed Funds Loan pursuant to Section
6.4 hereof shall be payable on the date of Conversion (but only to the extent so
Converted).
(d) Promptly after the determination of any interest rate provided
for herein or any change therein, the Agent shall give notice thereof to the
Banks and the Company.
Section 5. Payments; Pro Rata Treatment; Computations; Etc..
5.1. Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest, fees and other amounts to be made by the Company under this
Agreement, the Notes or L/C Related Documents shall be made in Dollars, in
immediately available funds, without deduction, set-off or counterclaim, to the
Agent at such account as it may specify, not later than 1:00 p.m., Chicago time,
on the date on which such payment shall become due. The failure of the Company
to make any such payment by such time shall not constitute a Default hereunder,
provided that such payment is received by the Agent in immediately available
funds by 4:00 p.m., Chicago time, on such due date, but any such payment after
1:00 p.m., Chicago time, on such due date
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
shall be deemed to have been made on the next Business Day for the purpose of
calculating interest on amounts outstanding on the Loans or L/C Obligations.
(b) The Agent may (but shall not be obligated to) debit the amount of
any payment which is required to be made by the Company under this Agreement,
any Note, any L/C Related Document or any other document delivered in connection
herewith to any ordinary deposit account of the Company with the Agent on or
after the due date of such payment.
(c) Each payment received by the Agent under this Agreement, any Note
or any L/C Related Document for the account of a Bank shall be paid promptly to
such Bank, in immediately available funds, for the account of such Bank's
Applicable Lending Office for the Loan or L/C Obligation in respect of which
such payment is made.
5.2. Pro Rata Treatment.
Except to the extent otherwise provided herein: (a) each Borrowing
from the Banks under Section 2.1 hereof shall be made from the Banks, each
payment of non-use fees under Section 2.4(a) hereof shall be made for the
account of the Banks, and each termination or reduction of the amount of the
Commitments under Section 2.3 hereof shall be applied to the Commitments of the
Banks, pro rata according to the amount of such Commitments; (b) the making,
Conversion and Continuation of Loans of a particular type (other than
Conversions provided for by Section 6.4 hereof) shall be made pro rata among the
Banks according to the amount of the Commitments, and the then current Interest
Period for each Loan of such type shall be coterminous; (c) each payment or
prepayment of principal of Loans by the Company shall be made for the account of
the Banks pro rata in accordance with the respective unpaid principal amounts of
the Loans of the relevant type held by the Banks; and (d) each payment of
interest on Loans by the Company shall be made for the account of the Banks pro
rata in accordance with the amounts of interest due and payable to the
respective Banks with respect to Loans of the relevant type.
5.3. Computations. Interest on Eurodollar Loans, Alternate Base Rate
Loans, Fed Funds Loans, non-use fees and any other fees shall be computed on the
basis of a year of 360 days for the actual number of days elapsed (including the
first day but excluding the last day) occurring in the period for which such
interest or fees are payable. Each determination by the Agent of an interest
rate hereunder shall be conclusive and binding for all purposes, absent manifest
error.
5.4. Minimum Amounts. Except for Conversions or prepayments made pursuant
to Section 6.4 hereof, each Borrowing, Conversion and prepayment (other than
prepayment in full) of principal of Loans shall be in an amount at least equal
to $500,000 or increments of $50,000 in excess thereof. Anything in this
Agreement to the contrary notwithstanding, the aggregate principal amount of
Eurodollar Loans having the same Interest Period shall be
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
at least equal to $500,000 and, if any Eurodollar Loans would otherwise be in a
lesser principal amount for any period, such Loans shall be Alternate Base Rate
Loans during such period.
5.5. Certain Notices.
(a) Notices by the Company to the Agent of terminations or reductions
of Commitments, of Borrowings, Conversions, Continuations and prepayments of
Loans, of the type of Loans and of the duration of Interest Periods shall be
irrevocable and shall be effective only if received by the Agent not later than
10:00 a.m., Chicago 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:
Number of
Business
Notice Days Prior
Termination or
reduction of Commitments 5
Borrowing or repayment of,
or Conversions into,
Alternate Base Rate Loans or Fed 0
Funds Loans
Borrowing or repayment of,
Conversions into, Continuations
as, or duration of Interest
Period for, Eurodollar Loans 3
(b) Each such notice of termination or reduction shall specify the
amount of the Commitments to be terminated or reduced. Each such notice of
Borrowing (which shall be in substantially the form of Exhibit B hereto),
Conversion or Continuation (which shall be in substantially the form of Exhibit
C hereto), or prepayment shall specify the Loans to be borrowed, Converted,
Continued or prepaid and the amount (subject to Section 5.4 hereof) and type of
the Loans 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
Loans to which such Interest Period is to relate. The Agent shall promptly
notify the Banks of the contents of each such notice.
(c) In the event that the Company fails to select the type of Loan,
or the duration of any Interest Period for any Eurodollar Loan within the time
period and otherwise as provided in this Section 5.5, such Loan (if outstanding
as a Eurodollar Loan) will be automatically Converted into an Alternate Base
Rate Loan on the last day of the then current Interest Period
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
for such Loan or (if outstanding as an Alternate Base Rate Loan or Fed Funds
Loan) will remain as such type of Loan, or (if not then outstanding) will be
made as, an Alternate Base Rate Loan.
5.6. Non-Receipt of Funds by the Agent. Unless the Agent shall have been
notified by a Bank or the Company (the "Payor") prior to the time by which the
Payor is scheduled to make a payment hereunder or any L/C Related Document to
the Agent (a "Required Payment"), which notice shall be effective upon receipt,
that the Payor does not intend to make the Required Payment to the Agent, the
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, except as otherwise
expressly provided herein, if the Payor has not in fact made the Required
Payment to the Agent, the recipient(s) of such payment shall, on demand, repay
to the Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount was so
made available by the Agent until the date the Agent recovers such amount at a
rate per annum equal to (a) in the case of the Company, the Alternate Base Rate
for such period or (b) in the case of a Bank, the Fed Funds Rate for such
period; and if such recipient(s) shall fail promptly to make such payment, the
Agent shall be entitled to recover such amount, on demand, from the Payor,
together with interest as aforesaid at (c) in the case of the Company, the
Alternate Base Rate, or (d) in the case of a Bank, the Fed Funds Rate.
5.7. Set-off and Sharing of Payments, Etc..
(a) The Company agrees that in addition to any right of set-off,
banker's lien or counterclaim a Bank may otherwise have, each Bank shall be
entitled to offset balances and other claims of the Company at any of such
Bank's or its Affiliate's offices, in Dollars or in any other currency, against
any amount payable to such Bank hereunder, any L/C Related Document or under any
other document delivered in connection herewith or therewith which is not paid
when due (regardless of whether such balances and other claims are then due).
(b) If any Bank shall obtain payment of any principal of or interest
on any Loan or any L/C Obligation through the exercise of any right of set-off,
banker's lien or counterclaim or similar right or otherwise and, as a result of
such payment, such Bank shall have received a greater percentage of the
principal or interest then due hereunder or any L/C Obligation by the Company to
such Bank than the percentage received by any other Banks, it shall promptly
purchase from such other Banks participations in the Loans made by such other
Banks or subparticipations in the L/C Obligations of such other Banks in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Banks shall share the benefit of such excess
payment pro rata in accordance with the unpaid principal and/or interest on the
Loans and L/C Obligations held by each of the Banks. To such end all the Banks
shall make appropriate adjustments among themselves (by the resale of
participations or
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
subparticipations sold or otherwise) if such payment is rescinded or must
otherwise be restored.
(c) The Company agrees that any Bank so purchasing a participation or
subparticipation may exercise all rights of set-off, banker's lien, counterclaim
or similar rights it may otherwise have with respect to such participation or
subparticipation as fully as if such Bank were a direct holder of Loans or L/C
Obligations in the amount of such participation.
(d) Nothing contained herein shall require any Bank to exercise any
such right or shall affect the right of any Bank to exercise, and retain the
benefits of exercising, any such right with respect to any other Indebtedness or
obligation of the Company.
Section 6. Yield, Capital Maintenance and Taxes Provisions.
6.1. Additional Costs.
(a) The Company shall pay directly to each Bank from time to time
such amounts as such Bank may determine to be necessary to compensate it for any
costs which such Bank determines are attributable to its making or maintaining
of any Eurodollar Loans or participating in any Letter of Credit or its
obligation to make any Eurodollar Loans hereunder or to participate in any
Letter of Credit, or any reduction in any amount receivable by such Bank
hereunder in respect of any of such Loans or such obligation or in the case of
the Issuing Lender, any increase in the cost to the Issuing Lender of agreeing
to issue, issuing or maintaining any Letter of Credit or agreeing to make or
making, funding or maintaining any unpaid drawing under any Letter of Credit
(such increases in costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts
payable to such Bank or the Issuing Lender under this
Agreement or its Note in respect of any of such Loans or
under any L/C Related Document in respect of its L/C
Obligations (other than taxes on the overall net income of
such Bank or the Issuing Lender or its Applicable Lending
Office imposed by the jurisdiction in which the Issuing
Lender or such Bank has its principal office or such
Applicable Lending Office);
(ii) imposes or modifies any reserve, special deposit
or similar requirements (other than the Reserve Requirement
utilized in the determination of the LIBOR Rate for such
Loan) relating to any extensions of credit (including
extensions under this Agreement and the Notes) or other
assets of, or any deposits with or other liabilities of,
such Bank or the Issuing Lender or any Commitment of such
Bank or the Issuing Lender; or
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
(iii) imposes any other condition affecting this Agreement,
its Note (or any of such extensions of credit or liabilities), any L/C
Related Document or Commitment.
(b) Without limiting the effect of the provisions of subsection 6.1(a)
hereof, the obligation of any Bank to make or Continue, or to Convert Alternate
Base Rate Loans or Fed Funds Loans into Eurodollar Loans hereunder shall be
suspended upon notice to the Company (with a copy to the Agent) until any
Regulatory Change ceases to be in effect (in which case the provisions of
Section 6.4 hereof shall be applicable), in the event that, by reason of such
Regulatory Change, such Bank either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Bank which includes deposits by reference
to which the interest rate on Eurodollar Loans is determined or (ii) becomes
subject to restrictions on the amount of such a category of liabilities or
assets which it may hold.
(c) Without limiting the effect of the foregoing provisions of this
Section 6.1 (but without duplication), if any Bank or the Issuing Lender
determines that compliance with any change in any law or regulation or any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by such Bank or the Issuing Lender
or any Person controlling such Bank or the Issuing Lender and that the amount of
such capital is increased by or based upon the existence of such Bank's
Commitment to lend hereunder or issue or participate in Letters of Credit and
other commitments of this type or any Loan or L/C Obligation, then, upon demand
by such Bank or the Issuing Lender (with a copy of such demand to the Agent),
the Company shall immediately pay to the Agent for the account of such Bank,
from time to time as specified by such Bank or the Issuing Lender, additional
amounts sufficient to compensate such Bank or the Issuing Lender or such Person
in the light of such circumstances, to the extent that such Bank or the Issuing
Lender determines such increase in capital to be allocable to the existence of
such Bank's Commitment to lend, issue or participate in Letters of Credit or
Loans or L/C Obligations hereunder.
(d) Each Bank will notify the Company of any event occurring after the
date of this Agreement that will entitle such Bank to compensation under
subsections (a) or (c) of this Section 6.1 as promptly as practicable. Each
Bank will furnish to the Company a certificate setting forth the basis and
amount of each request by such Bank for compensation under subsections (a) or
(c) of this Section 6.1, which certificate shall be conclusive and binding on
the Company in the absence of manifest error. Determinations and allocations by
any Bank for purposes of this Section 6.1 of the effect of any Regulatory
Change, law, regulation, guideline or request of any central bank or other
monetary authority shall be presumptively correct and binding on the Company
absent manifest error.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
(e) If the Company shall be required to make any payment or reimbursement
or to compensate any Bank under this Section 6.1, so long as no Default has
occurred and is continuing, the Company shall be free at any time within 180
days after the receipt of the certificate of the affected Bank, (i) to terminate
the affected Bank's Commitment and the affected Bank's entitlement to the fees
accruing after such termination and to prepay the Loans and PEDFA Loans of such
Bank in full together with accrued and unpaid interest on the amount thereof and
all other amounts payable hereunder and Cash Collateralize such Bank's Pro Rata
Share of the L/C Obligations, (ii) to prepay the affected portion of any Loan in
full, together with accrued and unpaid interest on the amount thereof and pay
all other amounts payable hereunder through the date of such prepayment or (iii)
to replace any such Bank with another bank reasonably acceptable to the Agent.
Upon any exercise of the rights described in clause (i), (ii) or (iii), above,
the company shall pay such affected Bank all amounts payable pursuant to Section
6.5 with respect to the cost of funds and subsection (a) or (c) of this Section
6.1 in order to compensate such affected Bank for Additional Costs or increases
in capital with respect to the period prior to termination, prepayment or
replacement, as the case may be.
6.2. Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any LIBOR Base Rate for
any Interest Period:
(a) the 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" are not being provided in the relevant amounts
or for the relevant maturities for purposes of determining rates of interest for
Eurodollar Loans as provided herein; or
(b) the Majority Banks determine (which determination shall be
conclusive) and notify the Agent that the relevant rates of interest referred to
in the definition of "LIBOR Base Rate" upon the basis of which the rate of
interest for Eurodollar Loans for such Interest Period is to be determined are
not likely adequately to cover the cost to such Banks of making or maintaining
such type of Loans for such Interest Period;
then the Agent shall give the Company and each Bank prompt notice thereof, and
so long as such condition remains in effect, the Banks shall be under no
obligation to make or Continue Eurodollar Loans or to Convert Alternate Base
Rate Loans or Fed Funds Loans into Eurodollar Loans and the Company shall, on
the last day(s) of the then current Interest Period(s) for the outstanding
Eurodollar Loans, either prepay such Loans or Convert such Loans into Alternate
Base Rate Loans in accordance with Section 2.8 hereof.
6.3. Illegality. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Bank or its Applicable Lending
Office to honor its obligation to make or maintain Eurodollar Loans hereunder,
then such Bank shall promptly notify the Company thereof (with a copy to the
Agent) and such Bank's obligation to make or
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
Continue, or to Convert Alternate Base Rate Loans or Fed Funds Loans into
Eurodollar Loans shall be suspended until such time as such Bank may again make
and maintain Eurodollar Loans (in which case the provisions of Section 6.4
hereof shall be applicable).
6.4. Treatment of Affected Loans.
(a) If the obligation of any Bank to make or Continue, or to Convert
Alternate Base Rate Loans or Fed Funds Loans into Eurodollar Loans is suspended
pursuant to Sections 6.1, 6.2 or 6.3 hereof, such Bank's Eurodollar Loans shall
be automatically Converted into Alternate Base Rate Loans on the last day(s) of
the then current Interest Period(s) for the Eurodollar Loans (or, in the case of
a Conversion required by Section 6.3 hereof, on such earlier date as such Bank
may specify to the Company with a copy to the Agent) and, unless and until such
Bank gives notice as provided below that the circumstances specified in Section
6.1, 6.2 or 6.3 hereof which gave rise to such Conversion no longer exist:
(i) to the extent that such Bank's Eurodollar Loans
have been so Converted, all payments and prepayments of
principal which would otherwise be applied to such Bank's
Eurodollar Loans shall be applied instead to its Alternate
Base Rate Loans; and
(ii) all Loans which would otherwise be made or
Continued by such Bank as Eurodollar Loans shall be made or
Continued instead as Alternate Base Rate Loans and all Loans
of such Bank which would otherwise be Converted into
Eurodollar Loans shall remain as Alternate Base Rate Loans.
(b) If such Bank gives notice to the Company (with a copy to the
Agent) that the circumstances specified in Section 6.1, 6.2 or 6.3 hereof which
gave rise to the Conversion of such Bank's Eurodollar Loans pursuant to this
Section 6.4 no longer exist (which such Bank agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Loans are outstanding,
such Bank's Alternate Base Rate Loans shall be automatically Converted, on the
first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Loans to the extent necessary so that, after giving effect thereto,
all Eurodollar Loans are held pro rata (as to principal amounts, types and
Interest Periods) in accordance with the Commitments.
6.5. Compensation.
(a) The Company shall pay to the Agent for the account of each Bank,
upon the immediately following Quarterly Date after the request of such Bank
through the Agent, such amount or amounts as shall be sufficient to compensate
it for any loss, cost or expense which such Bank determines are attributable to
(i) any payment, prepayment or Conversion of a Eurodollar
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
Loan made by such Bank for any reason (including, without limitation, the
acceleration of the Loans pursuant to Section 10 hereof or a prepayment pursuant
to Section 4.2 hereof) on a date other than the last day of the Interest Period
for such Loan; or (ii) any failure by the Company for any reason (including,
without limitation, the failure of any of the conditions precedent specified in
Section 7 hereof to be satisfied) to borrow a Eurodollar Loan from such Bank on
the date for such Borrowing specified in the relevant notice of Borrowing given
pursuant to Section 2.2 hereof but excluding any such failure that results from
the failure or refusal of a Bank to make such Loan if all of the conditions
precedent specified in Section 7 shall have been satisfied in respect thereof.
(b) Without limiting the effect of Section 6.5(a), such compensation
shall include an amount equal to the excess, if any, of (i) the amount of
interest which otherwise would have accrued on the principal amount so paid,
prepaid or Converted or not borrowed for the period from the date of such
payment, prepayment, Conversion or failure to borrow to the last day of the then
current Interest Period for such Loan (or, in the case of a failure to borrow,
the Interest Period for such Loan which would have commenced on the date
specified for such Borrowing) at the applicable rate of interest for such Loan
over (ii) the interest component of the amount such Bank would have bid in the
London interbank market for Dollar deposits of leading banks in amounts
comparable to such principal amount and with maturities comparable to such
period (as reasonably determined by such Bank) plus its margin or spread.
6.6. Responsibility of Affected Bank. Upon the occurrence of any change
in circumstances pursuant to Sections 6.1, 6.2 or 6.3 and subject to the
provisions of such Sections, the Bank affected by such change shall use its
reasonable efforts to conduct a review of alternative reasonable courses of
action which may mitigate or eliminate the increased cost to the Bank of making,
funding or maintaining any Loan made by it and its obligations in respect of its
Commitment hereunder or issuing or participating in any Letter of Credit and
shall engage in any such alternative course of action which is considered
reasonable under the circumstances as they shall exist at such time; provided
that such alternative course of action will not result in any increased costs or
reduction of the amount of any payment receivable hereunder by such Bank, cause
such Bank, in its good faith judgment, to violate one or more of its policies in
order to avoid such increased cost or reduction or otherwise materially
adversely affect such Loan, issuance or participation in such Letter of Credit
or such Bank.
6.7. Taxes.
(a) All payments by the Company hereunder, under any L/C Related
Document or under the Notes shall be made free and clear of and without
deduction or withholding (except for a Bank not complying with Section 7.3) for
or on account of all present or future taxes, deductions or withholdings,
excluding, in the case of each Bank (or its Applicable Lending Office) and the
Agent, taxes imposed on its income, and franchise taxes imposed on it, by
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
the jurisdiction under the laws of which such Bank (or its Applicable Lending
Office) or the Agent is organized or any political subdivision thereof (all such
non-excluded taxes, deductions and withholdings being hereinafter referred to as
"Taxes"). If the Company shall be required by law to deduct any Taxes from any
amount payable hereunder, under any L/C Obligations or under any Note, (i) the
amount payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional amounts
payable under this Section 6.7) the payee receives an amount equal to the amount
it would have received had no such deductions been made and (ii) the Company
shall pay the full amount deducted to the relevant authority in accordance with
applicable law. The Company shall have no obligation to gross up payments under
this Section 6.7 to any Bank failing to comply with Section 7.3.
(b) In addition, the Company agrees to pay any present or future
stamp, documentary, excise or property taxes, charges or similar levies which
arise from any payment made hereunder, under the Notes, under the L/C
Obligations or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement, the Notes or the L/C Obligations (hereinafter
referred to as "Other Taxes").
(c) The Company will indemnify each Bank and the Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
6.7) paid by such Bank or the Agent. This indemnification shall be made within
thirty (30) days from the date such Bank or the Agent (as the case may be) makes
written demand therefor.
(d) Within thirty (30) days after the date of any payment of Taxes,
the Company will furnish to the Agent the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of the
Company hereunder, the agreements and obligations of the Company contained in
this Section 6.7 shall survive the payment in full of principal and interest
hereunder and under the Notes and under any L/C Obligations.
Section 7. Conditions Precedent.
7.1. Initial Loan. The obligation of each Bank to make its initial Loan
and the Issuing Lender to issue its Letter of Credit hereunder is subject to the
receipt by the Agent of the following documents, each of which shall be
satisfactory to the Agent in form and substance:
(a) The Agreement. This Agreement duly completed any executed.
(b) Corporate Action. Certified copies of the articles of
incorporation and by-laws of the Company and all corporate action taken by the
Company approving this Agreement, the Notes, the L/C Related Documents and
borrowing by the Company hereunder (including a certificate of the
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
secretary or assistant secretary of the Company setting forth the resolutions of
the Board of Directors of the Company adopted in respect of the transactions
contemplated hereby and thereby).
(c) Incumbency. A certificate of the secretary or assistant
secretary of the Company naming and setting forth the specimen signature of each
of the officers and Authorized Officers of the Company (i) who is authorized to
sign on its behalf this Agreement, the Notes, the L/C Related Documents and (ii)
who will, until replaced by another officer or officers duly authorized for that
purpose, act as its representative for the purposes of signing documents and
giving notices and other communications in connection with this Agreement and
the transactions contemplated hereby or thereby.
(d) Officer's Certificate. A certificate of the chief financial
officer of the Company to the effect set forth in the first sentence of Section
7.2 hereof.
(e) Opinion of Counsel to the Company. An opinion of McBride, Baker
& Coles, counsel to the Company, substantially in the form of Exhibit D hereto.
(f) Notes. The Notes, duly completed and executed.
(g) Lien Searches. Satisfactory Lien search results conducted
against the Company and its Subsidiaries.
(h) Evidence of Insurance. Evidence of insurance as described in
Section 9.4.
(i) PEDFA Loans. A participation agreement in form and substance
satisfactory to the parties thereto, pursuant to which the Northern agrees to
sell and each Bank agrees to purchase a participation interest in the PEDFA
Loans.
(j) Amendment to PEDFA Reimbursement Agreement. An amendment to the
PEDFA Reimbursement Agreement reasonably satisfactory to the Northern.
(k) Consent. A consent to the amendment to the PEDFA Reimbursement
Agreement from PNC Bank.
(l) Other Documents. Such other documents as the Agent or any Bank
may reasonable request.
7.2. Initial and Subsequent Loans and Letters of Credit. The obligations
of the Banks to make any Loan (including the initial Loan but other than Loans
which would not increase the aggregate Dollar amount of Loans outstanding) and
the obligation of the Issuing Lender to issue or amend any Letter of Credit are
subject to the further conditions precedent that, both immediately prior to such
Loan or issuance or amendment of the Letter of
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
Credit and also after giving effect thereto: (a) no Default shall have occurred
and be continuing; (b) the representations and warranties in Section 8 hereof or
in any L/C Related Document shall be true and correct on and as of the date of
the making of such Loans or issuance of the Letter of Credit with the same force
and effect as if made on and as of such date except to the extent such
representations and warranties state that they relate solely to a specified
date; and (c) the Agent and the Issuing Lender shall have received an L/C
Application or L/C Amendment Application, as required by Section 3. Each notice
of Borrowing by the Company hereunder or request for a Letter of Credit or
amendment thereto shall constitute a certification by the Company to the effect
set forth in the preceding sentence.
7.3. Withholding Tax Exemption. At least five (5) Business Days prior to
the first date on which interest or fees are payable hereunder or under any L/C
Related Documents for the account of any Bank, each Bank that is not
incorporated under the laws of the United States of America, or a state thereof,
agrees that it will deliver to each of the Company and the Agent two duly
completed copies of the United States Internal Revenue Service From 1001 or
4224, certifying in either case that such Bank is entitled to receive payments
under this Agreement, the Notes or any L/C Related Document without deduction or
withholding of any United States federal income taxes. Each Bank which so
delivers a Form 1001 or 4224 further undertakes to deliver to each of the
Company and the Agent two additional copies of such form (or a successor form)
on or before the date that such form expires (currently, three successive
calendar years for Form 1001 and one calendar year for Form 4224) or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Bank or the Agent, in
each case certifying that such Bank is entitled to receive payments under this
Agreement, the Notes or any L/C Related Documents without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank from duly completing and delivering any such form with respect to it and
such Bank advises the Company and the Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal income
tax.
Section 8. Representations and Warranties.
The Company represents and warrants to the Banks that:
8.1. Corporate Existence and Related Matters. Each of the Company and its
Subsidiaries: (a) in the case of corporate Subsidiaries, is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation; (b) in the case of non-corporate Subsidiaries, are entities duly
organized, validly existing and in good standing under the laws of the
jurisdiction of their respective organization; (c) has all requisite power, and
has all material governmental licenses,
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
authorizations, consents and approvals, necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and (d) is qualified
to do business in each jurisdiction where, because of the value of its
respective activities or properties, such qualification is required.
8.2. Financial Condition.
(a) The consolidated balance sheet of the Company and its
Subsidiaries as at December 31, 1998 and the related consolidated statements of
income, stockholders' equity and cash flows of the Company and its Subsidiaries
for the fiscal year ended on said date, with the opinion thereon (in the case of
said consolidated balance sheet and statements) of Ernst & Young, heretofore
furnished to each of the Banks, have been prepared in conformity with GAAP
applied on basis consistent with the preceding fiscal year and fairly present in
all material respects the consolidated financial position of the Company and its
Subsidiaries as at said date, and the consolidated results of their operations
for the fiscal year ended on said date in accordance with GAAP.
(b) Neither the Company nor any of its Subsidiaries had on said date
any material contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments, or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in said balance
sheets or the notes thereto as at said dates.
(c) Since December 31, 1998, there has been no material adverse
change in the consolidated financial condition, operations, business or
prospects taken as a whole of the Company and its Subsidiaries from that set
forth in said financial statements as at said date.
8.3. Litigation. Except as disclosed on Schedule 8.3, there are no legal
or arbitral proceedings or any proceedings by or before any governmental or
regulatory authority or agency, now pending or (to the knowledge of the Company)
threatened against the Company or any of its Subsidiaries which would have a
material adverse effect on (i) the consolidated financial condition, operations,
business or prospects taken as a whole of the Company and its Subsidiaries or
(ii) the ability of the Company to perform its respective obligations under this
Agreement, the Notes or the L/C Related Documents.
8.4. No Breach. The execution, delivery and performance by the Company of
this Agreement, the Notes or the L/C Related Documents to which it is a party
will not conflict with or result in a breach of, or cause the creation of a Lien
(other than as contemplated by the L/C Related Documents) or require any consent
under, the articles of incorporation or by-laws of the Company or any applicable
law or regulation, or any order, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which any of them is bound.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
8.5. Corporate Power and Action; Binding Effect. The Company has all
necessary corporate power and authority to execute, deliver and perform its
respective obligations under this Agreement, the Notes and the L/C Related
Documents; the execution, delivery and performance by the Company of this
Agreement, the Notes and the L/C Related Documents have been duly authorized by
all necessary corporate action on its part; and this Agreement and the L/C
Related Documents have been duly and validly executed and delivered by the
Company, and constitute, and each of the Notes when executed and delivered for
value will constitute, legal, valid and binding obligations, enforceable in
accordance with its terms.
8.6. Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency are necessary for the execution, delivery or performance by the Company
of this Agreement, the Notes or the L/C Related Documents or for the validity or
enforceability thereof.
8.7. Margin Stock. Neither the Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of buying or carrying Margin Stock and no part
of the proceeds of any Loan hereunder will be used to buy or carry any Margin
Stock.
8.8. ERISA.
(a) The Company and the ERISA Affiliates and the plan administrator
of each Plan have fulfilled in all material respects their respective
obligations under ERISA and the Code with respect to each Plan and each Plan
complies in all material respects with all applicable statutes and governmental
rules and regulations.
(b) With respect to each Plan, there has been no (i) "reportable
event" within the meaning of Section 4043 of ERISA and the regulations
thereunder which is not subject to the provision for waiver of the 30-day notice
requirement to the PBGC; (ii) failure to make or properly accrue any
contribution which is due to any Plan; (iii) action under Section 4041 of ERISA
to terminate any Pension Plan; (iv) withdrawal from any Pension Plan with two or
more contributing sponsors or the termination of any such Pension Plan resulting
in liability pursuant to Section 4063 or 4064 of ERISA; (v) institution by the
PBGC of proceedings to terminate any Pension Plan, or the occurrence of any
event or condition which might constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan;
(vi) the imposition of liability pursuant to Section 4062(e), 4069 or 4212 of
ERISA; (vii) complete or partial withdrawal (within the meaning of Sections 4203
and 4205 of ERISA) from any Pension Plan which is a Multiemployer Plan that it
is in reorganization or insolvency pursuant to Sections 4241 or 4245 of ERISA,
or that it intends to terminate or has terminated under Sections 4041A or 4042
of ERISA; (viii) prohibited transaction described in Section 406 of ERISA or
4975 of the Code which could give rise to the imposition of any material fines,
penalties, taxes or
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
related charges; (xi) assertion of a material claim (other than routine claims
for benefits) against any Plan (other than a Multiemployer Plan) which could
reasonably be expected to be successful; (x) receipt from the Internal Revenue
Service of notice of the failure of any Plan to qualify under Section 401(a) of
the Code, or the failure of any trust forming part of any Plan to qualify for
exemption from taxation under Section 501(a) of the Code, if applicable; or (xi)
imposition of a lien pursuant to Section 401(a)(29) or 412(n) of the Code or
Section 302(f) of ERISA.
8.9. Taxes. United States federal income tax returns of the Company and
the Subsidiaries have been examined and closed through the fiscal year of the
Company ended December 31, 1994. The Company and its Subsidiaries have filed
all United States federal income tax returns and all other tax returns which are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Company or any of its
Subsidiaries. The charges, accruals and reserves on the books of the Company
and its Subsidiaries in respect of taxes and other governmental charges are, in
the opinion of the Company, adequate in all material respects.
8.10.Investment Company Act; Public Utility Holding Company Act. The
Company is not an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. The Company is not a "holding company" or a "subsidiary holding
company" of a "holding company" or an "affiliate" of a "holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
8.11. Credit Agreements. As of the date hereof, Schedule 3 hereto is a
complete and correct list of each credit, loan or purchase agreement, Guarantee
or other arrangement providing for any Indebtedness or any extension of credit
to, or Guarantee by, the Company or any of its Subsidiaries, and the aggregate
principal or face amount outstanding or which may become outstanding under each
such arrangement is correctly described in said Schedule 3. The agreements, if
any, identified on Schedule 3 under the caption "Refinanced Indebtedness
Agreements" will be terminated upon repayment of the Indebtedness thereunder
with the proceeds of the Loans.
8.12. Environmental Laws.
(a) Except as set forth on Schedule 8.12, the Company and each of its
Subsidiaries have obtained all permits, licenses and other authorizations which
are required under all Environmental Laws and are in compliance in all material
respects with any applicable Environmental Laws.
(b) Except as set forth on Schedule 8.12, each notice, demand,
request for information, citation, summons, order or complaint with respect to
any alleged failure of the Company or any of its Subsidiaries to comply in any
respect with any Environmental Laws on or prior to the date hereof has been
addressed, complied with, settled or dismissed in a manner which could not have
a material adverse effect on the consolidated financial condition,
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
operations, business or prospects taken as a whole of the Company and its
Subsidiaries or (ii) the ability of the Company to perform its respective
obligations under this Agreement, the Notes or the L/C Related Documents.
Except as set forth on Schedule 8.12, all penalties for violations of
Environmental Laws on or prior to the date hereof have been paid or adequate
reserves are being maintained against any unpaid penalties. Except as set forth
on Schedule 8.12, no investigation or review is pending or threatened by any
governmental or other entity or other Person with respect to any alleged failure
by the Company or any of its Subsidiaries to comply in any respect with any
Environmental Laws on or prior to the date hereof.
(c) Except as set forth on Schedule 8.12, currently, no notice,
demand, request for information, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed and no investigation or
review is pending or threatened by any governmental or other entity or other
Person with respect to any alleged failure by the Company or any of its
Subsidiaries to comply in any respect with any Environmental Laws which in each
case could have a material adverse effect on the consolidated financial
condition, operations, business or prospects taken as a whole of the Company and
its Subsidiaries, or (ii) the ability of the Company to perform its respective
obligations under this Agreement, the Notes or the L/C Related Documents to
which it is a party.
(d) There are no Liens arising under or pursuant to any Environmental
Laws on any of the property now or hereafter owned or leased or controlled by
the Company or any of its Subsidiaries (the "Premises").
(e) Except as set forth on Schedule 8.12, there are no conditions
existing currently or likely to exist during the term of this Agreement which
would subject the Company and its Subsidiaries or any Premises to any Lien,
damages, penalties, injunctive relief or cleanup costs under any Environmental
Laws or which require or are likely to require cleanup, removal, remedial action
or other response pursuant to Environmental Laws by the Company and its
Subsidiaries which in each case could have a material adverse effect on the
consolidated financial condition, operations, business or prospects taken as a
whole of the Company and its Subsidiaries, or the ability of the Company to
perform its respective obligations under this Agreement, the Notes or the L/C
Related Documents.
(f) Except as set forth on Schedule 8.12, neither the Company nor its
Subsidiaries is aware of any friable asbestos or regulated polychlorinated
biphenyls the presence of which could have a material adverse effect on (i) the
consolidated financial condition, operations, business or prospects taken as a
whole of the Company and its Subsidiaries, or (ii) the ability of the Company to
perform its respective obligations under this Agreement, the Notes or the L/C
Related Documents.
(g) Except as set forth on Schedule 8.12, no underground storage
tanks are or were located on the Premises and subsequently removed or filled.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
8.13. Subsidiaries, Etc. Set forth in Schedule 4 hereto is a complete
and correct list of all Subsidiaries of the Company and the respective
jurisdiction of organization of each such Subsidiary. The Company owns, free
and clear of all Liens, all outstanding shares or other ownership interests of
such Subsidiaries.
8.14. Liens. As of the date hereof, no property of the Company or any
Subsidiary is subject to any Lien, except Liens permitted pursuant to Section
9.6 hereof.
8.15. Purpose. The proceeds of the Loans will be used by the Company
for working capital and general corporate purposes and Acquisitions in
accordance with the terms hereof.
8.16. Compliance. The Company and its Subsidiaries are in material
compliance with all statutes and governmental rules and regulations applicable
to them.
8.17. Year 2000 Compliance.
(a) The Company and each Subsidiary has:
(i) conducted an analysis of all of its products,
services, business and operations, including without
limitation surveys of its Systems (as defined below) and
surveys of and discussions with customers, suppliers and
vendors, to determine the extent to which the Company or
such Subsidiary may be adversely affected by its failure to
be Year 2000 Compliant (as defined below);
(ii) developed a plan (the "Year 2000 Plan") to become
Year 2000 Compliant and remedy any material loss it may
suffer if it fails to be Year 2000 Compliant on a timely
basis; and
(iii) implemented and continues to proceed with the
Year 2000 Plan materially in accordance with its terms and
timetables.
(b) The Company and each Subsidiary reasonably believes that the Year
2000 Plan, if implemented in accordance with its terms, will result in it being
Year 2000 Complaint on a timely basis.
(c) The Company and each Subsidiary reasonably believes that each of
its customers, suppliers and vendors whose failure to be Year 2000 Compliant
would have a material and adverse effect on the Company or such Subsidiary, is
Year 2000 Compliant or has developed a plan to become Year 2000 Compliant and
remedy any material loss such person may suffer if it fails to be Year 2000
Compliant on a timely basis with respect to all of its own computer systems and
applications.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
The term "Year 2000 Compliant" means that all of such Person(s) computer
systems and applications, including without limitation software and hardware
("Systems"), will function prior to, during, and after the calendar year 2000,
and that no change in or to such calendar year will have a material effect on
the performance of the Systems or on the functioning of the Company's or such
Subsidiary's business.
The Company acknowledges and agrees that the foregoing representations and
any other representation, warranty, schedule, certificate, statement, report,
notice or other writing now or hereafter furnished by or on behalf of Company or
any Subsidiary to the Agent or any Bank in connection with being Year 2000
Compliant or its Year 2000 Plan is material to the Agent and the Banks and that
the Agent and the Banks have relied and will continue to rely thereon. The
Company agrees and shall cause each Subsidiary to provide such information,
financial, technical, or otherwise, concerning the Company's or such
Subsidiary's Year 2000 Plan as the Agent may reasonably request from time to
time.
Section 9. Covenants. The Company agrees that, so long as any
Commitment is in effect or any Letter of Credit is outstanding and until payment
in full of all Loans and all other amounts payable by the Company hereunder:
9.1. Financial Statements and Other Information. The Company shall
deliver to each of the Banks:
(a) within 45 days after the end of each of the first three fiscal
quarterly periods of each fiscal year of the Company, consolidated and
consolidating statements of income, stockholders' equity and cash flows of the
Company and its 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 and consolidating balance sheets as at the end of such
period, setting forth in respect of such statements in comparative form the
corresponding consolidated figures for the corresponding period in the preceding
fiscal year and setting forth in respect of such balance sheets the
corresponding consolidated figures for the end of the preceding fiscal year,
accompanied by a certificate of a senior financial officer of the Company which
shall state that said financial statements fairly present in all material
respects the consolidated financial position and results of operations of the
Company and its Subsidiaries in accordance with GAAP for such period;
(b) within 120 days after the end of each fiscal year of the Company,
consolidated and consolidating statements of income, stockholders' equity and
cash flows of the Company and its Subsidiaries for such year and the related
consolidated and consolidating balance sheets as at the end of such year,
setting forth in each case in comparative form the corresponding consolidated
figures for the preceding fiscal year, and accompanied (i) by an unqualified
opinion thereon of independent certified public accountants of recognized
national standing which shall state that said consolidated and
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
consolidating financial statements fairly present in all material respects the
consolidated and consolidating financial position and results of operations of
the Company and its Subsidiaries as at the end of, and for, such fiscal year,
and (ii) by a certificate of such accountants stating that, in making the
examination necessary for their opinion, they obtained no knowledge, except as
specifically stated, of any Default;
(c) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(d) promptly after the Company knows 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 the Company has taken and proposes to take with respect thereto;
(e) promptly upon receipt thereof, a copy of any notice, demand,
request for information, citation, summons, complaint, order or other
communication from any governmental or other entity or other Person with respect
to any alleged failure by the Company or a Subsidiary to materially comply with
any Environmental Laws or any assertion or allegation of any Lien or liability
thereunder;
(f) the occurrence of a material adverse change in the business,
operations or financial condition of the Company and the Subsidiaries taken as a
whole;
(g) promptly after the Company is aware thereof, notice of and the
dollar amount of any material increase in planned expenditures by the Company to
be in compliance with Environmental Laws above any previous estimates of such
expenditures delivered by the Company to the Banks in writing; and
(h) from time to time such other information regarding the business,
affairs or financial condition of the Company or any of its Subsidiaries as any
Bank or the Agent may reasonably request.
The Company will furnish to each Bank, at the time it furnishes each set of
financial statements pursuant to subsections (a) and (b) above, a certificate of
a senior financial officer of the Company, in his capacity as an officer of the
Company, (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 the Company has taken and proposes to take
with respect thereto) and (ii) setting forth in reasonable detail the
computations necessary to determine whether the Company is in compliance with
the financial covenants in this Section 9 as of the end of the respective fiscal
quarter or fiscal year, as applicable.
9.2. Litigation. The Company will within ten (10) days give to each Bank
notice of all material legal or arbitral proceedings, and of all
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
proceedings by or before any governmental or regulatory authority or agency, and
any material development in respect of such legal or other proceeding, affecting
the Company or any of its Subsidiaries, except proceedings which would not have
a material adverse effect on the consolidated financial condition, operations,
business or prospects of the Company and its Subsidiaries taken as a whole.
9.3. Corporate Existence, Etc. The Company will, and will cause each of
its Subsidiaries to: (a) preserve and maintain its existence as a corporation
and all of its material rights, privileges, franchises, patents, trademarks,
copyrights and all other intellectual property rights used or useful in the
business (provided that nothing in this Section 9.3 shall prohibit any
transaction permitted under Section 9.5 hereof); (b) comply in all material
respects with the requirements of all applicable laws, rules, regulations and
orders of governmental or regulatory authorities, including all Environmental
Laws; (c) pay, and cause any Subsidiaries to pay when due, all taxes,
assessments and other governmental charges or levies imposed upon it or its
Subsidiaries, its or its Subsidiaries' income or any of its or its Subsidiaries'
properties, franchises or assets, unless and only to the extent that such taxes,
assessments and other governmental charges or levies are being contested by the
Company or such Subsidiary in good faith and by appropriate proceedings and the
Company shall have set aside on its books adequate reserves therefor in
accordance with GAAP; (d) file its and cause any Subsidiaries to file their
federal income tax return for each taxable year not later than March 15th of the
next following calendar year or the date for any authorized extension; (e) not
change its fiscal year without the Agent's prior consent; (f) maintain all of
its properties used or useful in its business in good working order and
condition, ordinary wear and tear excepted, except that the Company and its
Subsidiaries may dispose of or not maintain worn out or obsolete property or
substitute other property of equivalent value for existing property; (g)
maintain complete and accurate books and records in which full and correct
entries in conformity with GAAP shall be made of all dealings and transactions
in relation to its respective business and activities; and (h) upon request,
permit representatives of any Bank or the Agent, during normal business hours,
to visit its premises, to examine, copy and make extracts from its books and
records, to inspect its properties, and to discuss its business and affairs with
its senior officers.
9.4. Insurance. The Company will, and will cause each of its Subsidiaries
to, keep all of its property adequately insured by financially sound and
reputable insurers in accordance with prudent business practices and will carry
such other insurance as is customarily maintained in accordance with prudent
business practices.
9.5. Business Combinations and Asset Dispositions. The Company will not,
nor will it permit any of its Subsidiaries to, in one or a related series of
transactions, liquidate, merge or consolidate with any other Person or sell,
lease or transfer or otherwise dispose of all or substantial part of the
consolidated assets of the Company and its Subsidiaries to any Person, except
that:
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
(a) any Subsidiary may merge or consolidate with the Company
(provided that the Company shall be the continuing or surviving corporation), or
with any one or more other wholly-owned Subsidiaries; and
(b) any Subsidiary may sell, lease, transfer or otherwise dispose of
any or all of its assets to (i) the Company or another Subsidiary or (ii) any
other Person, provided that, in the case of clause (ii), the assets of such
Subsidiary sold, leased, transferred or otherwise disposed of do not constitute
a substantial part of the consolidated total assets of the Company and its
Subsidiaries, and provided further that no Default has occurred and is
continuing at the time of such sale, lease, transfer or other disposition or
would occur after giving effect thereto.
For purposes of this Section 9.5, the assets sold, leased, transferred or
otherwise disposed of shall be deemed to constitute a "substantial part" of the
consolidated total assets of the Company and its Subsidiaries only if the
aggregate value of the assets disposed of in a single transaction or a series of
related transactions exceeds 20% of the consolidated total assets of the Company
and its Subsidiaries immediately prior to the commencement of such disposition.
As used in the preceding sentence, the term "value" shall mean, with respect to
any asset disposed of, the greater of such asset's book or fair market value as
of the date of disposition, with "book value" being the value of such asset as
would appear immediately prior to such disposition on a balance sheet of such
Subsidiary prepared in accordance with GAAP consistently applied.
9.6. Limitation on Liens. The Company will not, nor will it permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its property, whether now owned or hereafter acquired, except:
(a) Liens exiting on the date of this Agreement and identified on
Schedule 9.6;
(b) Liens of landlords, contractors, laborers or supplymen, tax
liens, or Liens securing performance or appeal bonds or other similar Liens or
charges arising out of the Company's business, provided that tax liens are
removed before related taxes become delinquent and other Liens are promptly
removed, in either case unless contested in good faith and by appropriate
proceedings, and as to which adequate reserves shall have been established;
(c) Liens securing borrowings or advances from the Company by
wholly-owned Subsidiaries;
(d) Liens in connection with the acquisition of property by the
Company or any Subsidiary after the date hereof in the ordinary course of its
business by way of purchase money mortgage, conditional sale or other title
retention agreement, capital lease or other deferred payment contract, and
attaching only to the property being acquired, if the Indebtedness secured
thereby does not exceed $2,500,000 in the aggregate for the Company and all
Subsidiaries at any one time outstanding;
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
(e) existing Liens securing Indebtedness of a corporation of other
entity outstanding on the date such corporation or other entity (i) first
becomes a Subsidiary of the Company, (ii) merges into the Company or any
Subsidiary, or (iii) is acquired by the purchase of all or substantially all of
such corporation's or other entity's assets (the "acquired assets") and the
assumption of such Indebtedness of such corporation or other entity, provided
that such Liens are not applicable to the Company or any other Subsidiary or the
assets (other than the acquired assets) of the Company or any Subsidiary, and
provided further that none of such Liens are created in contemplation of such
corporation or other entity becoming a Subsidiary or such merger or acquisition;
(f) the extension, renewal or replacement of any Lien specified in
the preceding clauses (a) through (e), provided that (i) no property shall
become subject to such extended, renewed or replacement Lien that was not
subject to the Lien extended, renewed or replaced, (ii) the principal amount of
Indebtedness secured by any such extended, renewed or replacement Lien shall not
be increased by such extension, renewal or replacement, (iii) the Indebtedness
secured by such lien could be incurred in compliance with this Agreement at the
time of such extension, renewal or replacement, and (iv) after giving effect
thereto, no Default shall have occurred and be continuing;
(g) the Lien provided in subsection 5.7(a) and other Liens in favor
of the Banks; and
(h) Liens, if any, contemplated by the L/C Related Documents.
9.7. Indebtedness. The Company will not, and will not permit any of its
Subsidiaries to, create, incur or suffer to exist any Indebtedness except:
(a) Indebtedness to the Banks hereunder;
(b) other Indebtedness for borrowed money identified on Schedule 3 in
the maximum principal amount stated on such schedule;
(c) other Senior Funded Debt, provided that no Default has occurred
and is continuing at the time of the incurrence or assumption thereof or would
occur after giving effect thereto, and provided further that the Agent and the
Banks are given prior written notice of the incurrence or assumption or any
Senior Funded Debt in a principal amount in excess of $750,000;
(d) Indebtedness hereafter incurred in connection with the Liens
permitted under subsection 9.6(d);
(e) Indebtedness of a corporation or other entity outstanding on the
date such corporation or other entity (i) first becomes a Subsidiary of the
Company, (ii) merges into the Company or any Subsidiary, or (iii) is
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
acquired by the purchase of all or substantially all of such corporation's or
other entity's assets and the assumption of such Indebtedness of such
corporation or other entity, provided that such Indebtedness is not incurred in
contemplation of such corporation or other entity becoming a Subsidiary or such
merger or acquisition, provided further that no Default has occurred and is
continuing at the time of the assumption of such Indebtedness or would occur
after giving effect thereto, and provided further that the Agent and the Banks
are given prior written notice of the assumption of such Indebtedness;
(f) renewals, extensions, refundings or refinancings of any
Indebtedness permitted by the preceding clauses (a) through (e), provided that
the principal amount of such Indebtedness is not increased and the terms
applicable to such Indebtedness as renewed, extended, refunded or refinanced are
no more onerous to the obligor with respect to such Indebtedness than those
applicable to the original Indebtedness; and
(g) Indebtedness arising under Rate Hedging Obligations having a
maximum notional amount of $10,000,000.
9.8. Lines of Business. The Company will not, nor will it permit any of
its Subsidiaries to, engage to any substantial extent in any line of business
other than the business engaged in on the date hereof.
9.9. Tangible Net Worth. The Company will maintain, as at the last day of
each fiscal quarter beginning with the fiscal quarter ending December 31, 1998,
a Consolidated Tangible Net Worth of not less than (a) $37,000,000 plus (b) 50%
of Net Income, if positive, for each fiscal quarter from and including the
fiscal quarter ending December 31, 1998 through and including the fiscal quarter
then ended plus (c) the net proceeds of the issuance of any capital stock of the
Company and its Subsidiaries, all calculated in accordance with GAAP.
9.10.Senior Funded Debt to EBITDA. The Company will not permit the ratio
of the consolidated Senior Funded Debt of the Company and its Subsidiaries for
the four-quarter period ending on the last day of each fiscal quarter of the
Company to the Company's and its Subsidiaries' EBITDA for the four-quarter
period ending on the last day of each fiscal quarter of the Company to be
greater than 2.5:1.0.
9.11.Minimum Fixed Charge Coverage. The Company will not permit the
ratio of EBITDA for the four-quarter period ending on the last day of each
fiscal quarter of the Company to current maturities (which for this purpose
shall mean all Indebtedness maturing during the four-quarter period in question,
together with all interest payable thereon during such period, as shown on the
Company's balance sheet) plus Environmental Remediation Expenses for the
four-quarter period ending on the last day of each fiscal quarter to be less
than 1.5:1.0.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
9.12.Current Ratio. The Company will not permit the ratio of the
Company's and all Subsidiaries' Current Assets to their Current Liabilities on
the last day of each fiscal quarter to be less than 1.50:1.0.
9.13. Sale of Stock of Subsidiaries. The Company will not, and will
not permit any Subsidiary to, sell or otherwise dispose of, or part with control
of, any shares of stock of any Subsidiary, except to (i) the Company or another
Subsidiary and (ii) except that the Company may sell all or any part of the
stock of any Subsidiary that is not a Significant Subsidiary, provided that no
Default has occurred and is continuing at the time of such sale or would occur
after giving effect thereto. As used herein, the term Significant Subsidiary"
shall mean any Subsidiary, including its Subsidiaries, which meets any of the
following conditions: (i) the Company's and its other Subsidiaries' investments
in and advances to such Subsidiary exceed 20% of the consolidated total assets
of the Company and its Subsidiaries as at the date of determination of such
Subsidiary's status as a Significant Subsidiary; (ii) the Company's and its
other Subsidiaries' proportionate share of the total assets (after intercompany
eliminations) of such Subsidiary exceeds 20% of the consolidated total assets of
the Company and its Subsidiaries as at such date of determination; or (iii) the
portion of the Company's consolidated Net Income for the period of four
consecutive fiscal quarters immediately preceding such date of determination
attributable to such Subsidiary exceeds 20%.
9.14. Restrictions on Transactions with Affiliates and Stockholders.
The Company will not, and will not permit any Subsidiary to, directly or
indirectly, purchase, acquire or lease any property from, or sell, transfer or
lease any property (other than shares of stock of the Company) to, or otherwise
deal with, in the ordinary course of business or otherwise (a) any Affiliate or
Substantial Stockholder, or (b) any Person in which an Affiliate, Substantial
Stockholder or the Company (either directly or through Subsidiaries) owns 5% or
more of the outstanding Voting Stock or other ownership interests, except that
(i) any such Affiliate or Substantial Stockholder may be a director, officer or
employee of the Company or any Subsidiary and may be paid reasonable
compensation in connection therewith and (ii) such acts and transactions
prohibited by this Section 9.14 may be performed or engaged in if (x) authorized
specifically or generally by the Company's Board of Directors (exclusive of any
Affiliate or Substantial Stockholder who is a director and who have a direct or
indirect interest in such transaction) and (y) upon terms not less favorable to
the Company or a Subsidiary (as the case may be) than if no such relationship
described in clauses (a) and (b) above existed.
9.15. Issuance of Stock by Subsidiaries. The Company will not permit
any Subsidiary (either directly, or indirectly by the issuance of rights or
options for, or securities convertible into, such shares) to issue, sell or
otherwise dispose of any shares of any class of its stock (other than directors'
qualifying shares) except to the Company or another Subsidiary.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
9.16. Compliance with ERISA. The Company will not, and will not permit
any Subsidiary to, engage in any transaction in connection with which the
Company or any Subsidiary could be subject to either a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Code, terminate or withdraw from any Plan (other than a Multiemployer Plan) in a
manner, or take any other action with respect to any such Plan (including,
without limitation, a substantial cessation of operations within the meaning of
Section 4062(f) of ERISA), which could result in any liability of the Company or
any Subsidiary to the PBGC, to a trust established pursuant to Section
4041(c)(3)(B)(ii) or (iii) or 4042(i) of ERISA, or to a trustee appointed under
Section 4042(b) or (c) of ERISA, incur any liability to the PBGC on account of a
termination of a Plan under Section 4064 of ERISA, fail to make full payment
when due of all amounts which, under the provisions of any Plan, the Company or
any Subsidiary is required to pay as contributions thereto, or permit to exist
any accumulated funding deficiency, whether or not waived, with respect to any
Plan (other than a Multiemployer Plan), if, in any such case, such penalty or
tax or such liability, or the failure to make such payment, or the existence of
such deficiency, as the case may be, could have a material adverse effect on the
Company and its Subsidiaries taken as a whole.
9.17. Investments and Loans. Neither the Company nor any Subsidiary
shall make any loan, advance, extension of credit or capital contribution to, or
purchase or otherwise acquire for a consideration, evidences of Indebtedness,
capital stock or other securities of any Person or make or commit to make
Acquisitions, except that the Company and any Subsidiary may:
(a) purchase or otherwise acquire and own short-term money market
items;
(b) extend credit upon customary terms to their customers in the
ordinary course of their business;
(c) extend credit to officers and employees in accordance with
policies in effect on the date of this Agreement of which the Agent and the
Banks have been advised in writing; and
(d) incur investments in order to consummate Acquisitions, provided
that, (i) after giving effect to each such Acquisition, the pro-forma
calculations of the financial ratios specified in Section 9 shall indicate
compliance with such Section for the applicable period, (ii) such Acquisitions
are undertaken in accordance with all applicable requirements of law, (iii) the
prior, effective written consent or approval to such Acquisition of the board of
directors or equivalent governing body of the acquiree is obtained, and (iv)
before and after giving effect to such Acquisition, no Default shall have
occurred and be continuing.
9.18. Capital Structure and Dividends. Neither the Company nor any
Subsidiary shall (i) purchase or redeem, or obligate itself to purchase or
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
redeem, any shares of the Company's capital stock, of any class, issued and
outstanding from time to time; (ii) declare or pay any dividend (other than a
dividend payable in its own common stock or to the Company); or (iii) make any
other distribution in respect of such shares; provided, however, that any
Subsidiary of the Company may pay dividends or otherwise make distributions on
its capital shares to the Company; and provided further that the Company may pay
dividends or otherwise make distributions on its capital shares so long as
before and after giving effect thereto no Default shall have occurred or be
continuing. Subject to Section 9.13, the Company shall continue to own,
directly or indirectly, the same (or greater) percentage of the stock of each
Subsidiary that it held on the date of this Agreement.
9.19. Environmental Indemnity.
(a) The Company agrees to indemnify, defend, and hold the Agent, the
Issuing Lender and the Banks (collectively, the "Bank Parties") harmless against
any: (i) loss, liability, damage, expense (including without limitation,
attorneys' fees, legal costs and expenses and time charges of attorneys who may
be employees of any Bank Party, whether in or out of court, in original or
appellate proceedings or in bankruptcy), claim or defect in title arising from
the imposition or recording of a Lien, the incurring of costs of required
repairs, clean up or detoxification and removal under any Environmental Law with
respect to the Premises, or liability to any third party arising out of any
violation of any Environmental Law; and (ii) other loss, liability, damage,
expense (including without limitation, attorneys' fees, legal costs and expenses
and time charges of attorneys who may be employees of any Bank Party, whether in
or out of court, in original or appellate proceedings or in bankruptcy) or claim
which may be incurred by or asserted against any Bank Party, directly or
indirectly resulting from the presence on or under, or the discharge, emission
or release from, the Premises into or upon the land, atmosphere, or any
watercourse, body of surface or subsurface water or wetland, arising from the
installation, use, generation, manufacture, treatment, handling, refining,
production, processing, storage, removal, clean up or disposal of any Hazardous
Material whether or not caused by the Company or any Subsidiary.
(b) The Company shall pay when due any judgments or claims for
damages, penalties or otherwise against any Bank Party. In the event that such
payment is not made, the Agent, at its sole discretion, may proceed to file suit
against the Company to compel such payment.
(c) This Section 9.19 shall apply to any claim, demand or charge
contemplated by this Section 9.19 made or asserted at any time, and, without
limitation, shall continue in full force and effect notwithstanding that all
obligations of the Company and any other Person or entity under or in connection
with this Agreement, the Loans, the Notes, the L/C Related Documents or any
other related document or matter have been paid, released or fulfilled in full.
Any claim, demand or charge asserted at any time relating to the period of time
set forth in this paragraph shall be subject to the terms and conditions of this
Section 9.19. Notwithstanding the above, this
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
Agreement shall not be construed to impose any liability on the Company for
divisible loss or damage resulting solely from Hazardous Material placed,
released or disposed on the Premises after foreclosure or sale of the Premises
by a Bank Party or acceptance by any Bank Party of a deed in lieu of
foreclosure.
(d) The Company shall immediately advise the Agent in writing of:
(i) any governmental or regulatory actions instituted or threatened under any
Environmental Law affecting the Premises or the matters indemnified under this
Section 9.19 including, without limitation, any notice of inspection, abatement
or noncompliance, (ii) all claims made or threatened by any third party against
the Company or the Premises relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous Material, (iii) the
Company's or any Subsidiary's discovery of any occurrence or condition on any
real property adjoining or in the vicinity of the Premises that could cause the
Premises or the Company to be subject to a type of claim described in clause (i)
or (ii) of this subsection 9.19(d), and (iv) the Company's or any Subsidiary's
discovery of any occurrence or condition on the Premises or any real property
adjoining or in the vicinity of the Premises which could subject the Company or
the Premises to any restrictions on ownership, occupancy, transferability or use
of the Premises under any Environmental Law. The Company shall immediately
deliver to the Agent any documentation or records as the Agent may reasonably
request in connection with all such notices, inquiries, and communications, and
shall advise the Agent promptly in writing of any subsequent developments.
(e) The Agent shall give written notice to the Company of any legal,
administrative or other action against any Bank Party which might give rise to a
claim by a Bank Party against the Company under this Section 9.19. If any
action is brought against any Bank Party, the Company, at the Agent's sole
option and the Company's expense, may be required to defend against such action
with counsel satisfactory to the Agent and such Bank and, with the Agent's sole
consent and approval, to settle and compromise any such action. However, such
Bank may elect to be represented by separate counsel, at such Bank's expense,
and, if the Agent and such Bank so elect, any settlement or compromise shall be
effected only with the consent of the Agent and such Bank. The Agent and such
Bank may elect to join and participate in any settlements, remedial actions,
legal proceedings or other actions included in connection with any claims under
this Section 9.19.
(f) If the Agent reasonably believes that retention of counsel or
consultants for advice or other representation is desirable (i) in any
litigation, contest, dispute, suit or proceeding (whether instituted by the
Agent, the Company, or any other party) in any way relating to this Section 9.19
and the indemnities described herein, or (ii) to enforce the Company's
obligations hereunder, then all of the attorneys' and consultant fees (including
without limitation, time charges of attorneys who may be employees of the Agent)
reasonably incurred by the Agent arising from such services and all related
expenses and court costs shall be payable on demand by the Company to the Agent.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
(g) The Company's liability hereunder shall not be subject to,
limited by or affected in any way by any Note or any other documents executed
and delivered in connection with the Loans. The Company agrees that these
indemnifications are separate, independent of and in addition to the Company's
undertakings under the this Agreement, the Notes and the L/C Related Documents.
The Company further agrees that a separate action may be brought to enforce the
provisions of this Section 9.19 which shall in no way be deemed to be an action
on the Notes.
Section 10. Events of Default. If one or more of the following events
(each, an "Event of Default") shall occur and be continuing:
(a) the Company shall default in the payment (other than a voluntary
prepayment) when due of any principal of or interest on any Loan or any
reimbursement obligation in connection with any L/C Obligation or any other
amount payable by it hereunder and such default (in the case of interest only)
shall continue for a period of three (3) days;
(b) the Company or any of its Subsidiaries shall default in the
payment when due of any principal of or interest on any of its other
Indebtedness having an aggregate principal amount in excess of $100,000; or any
event specified in any note, agreement, indenture or other document creating,
evidencing or securing any such Indebtedness shall occur if the effect of such
event is to cause, or 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, prior to its stated
maturity;
(c) any representation, warranty or certification made or deemed made
by the Company hereunder, under any L/C Related Document, or in any certificate
or other writing furnished to any Bank or the Agent pursuant to the provisions
hereof or any L/C Related Document, shall prove to have been false or misleading
as of the time made or furnished in any material respect;
(d) the Company shall default in the performance of any of its
obligations under Section 9.1(d), 9.3(a), (e), (f), or (h), 9.5, 9.6, 9.7, 9.9,
9.10, 9.11, 9.12, 9.13, 9.14, 9.15, 9.16, 9.17, 9.18, or 9.19 hereof;
(e) the Company shall default in the performance of any of its other
obligations in this Agreement and such default shall continue unremedied for a
period of ten (10) days after notice thereof to the Company by the Agent or any
Bank (through the Agent); or
(f) the Company or any of its Subsidiaries shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts become due;
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
(g) the Company or any of its Subsidiaries 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 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;
(h) a proceeding or case shall be commenced, without the application
or consent of the Company or any of its Subsidiaries, 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 the
Company or such Subsidiary or of all or any substantial part of its assets, or
(iii) similar relief in respect of the Company or such Subsidiary under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts; and such proceeding or case shall continue undismissed,
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 sixty (60) or
more days; or an order for relief against the Company or such Subsidiary shall
be entered in an involuntary case under the Bankruptcy Code;
(i) an suit, action or other proceeding (judicial or administrative)
commenced against the Company or any Subsidiary, or with respect to any assets
of the Company or any Subsidiary, shall threaten to have a material and adverse
effect on the future operations of the Company or any Subsidiary; a final
judgment or judgments in an amount in excess of $1,000,000 over insurance in the
aggregate is rendered against the Company or any Subsidiary and, within thirty
(30) days after the entry thereof, such judgment or judgment(s) are not
discharged or execution thereof stayed pending appeal, or within thirty (30)
days after the expiration of any such stay, such judgments are not discharged;
(j) an event or condition specified in Section 8.8(b) shall occur or
exist with respect to any Plan or Multiemployer Plan if as a result of such
event or condition, together with all other such events or conditions, the
Company or any ERISA Affiliate shall incur or in the opinion of the Majority
Banks shall be reasonably likely to incur a liability to a Plan, a Multiemployer
Plan or the PBGC (or any combination of the foregoing) which is, in the
determination of the Majority Banks, material in relation to the consolidated
financial condition, business or operations taken as a whole of the Company;
(k) a default shall occur with respect to the Company's performance
of any of its obligations under any L/C Related Document; any L/C
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
Related Document shall at any time and for any reason be discontinued or cease
to be in full force and effect; or the Lien, if any, purported to be created by
any L/C Related Document shall at any time and for any reason cease to be a duly
perfected first priority Lien on the "Collateral", as defined therein;
(l) a Change in Control shall occur;
(m) nonpayment by the Company or any Subsidiary of any Rate Hedging
Obligations within 5 days of the date when due or the breach by the Company or
any Subsidiary of any term, provision or condition contained in any Rate Hedging
Agreement; or
(n) a default or similar event shall have occurred and be continuing
under the PEDFA Loans, PEDFA Note, PEDFA Reimbursement Agreement, PEDFA
Participation and Reimbursement Agreement or any document delivered in
connection therewith and such default shall continue unremedied for any
applicable grace period.
THEREUPON: (i) in the case of an Event of Default (other than one referred
to in subsections (f), (g) or (h) of this Section 10), the Agent, upon request
of the Majority Banks, shall, by notice to the Company, cancel the Commitments,
declare any obligation of any Issuing Lender to issue Letters of Credit to be
terminated, declare the principal amount then outstanding of, and the accrued
interest on, the Loans and all other amounts payable by the Company hereunder
and under the Notes (including, without limitation, any amounts payable under
Section 6.5 hereof) to be forthwith due and payable and/or declare an amount
equal to the maximum aggregate amount that is or at any time thereafter may
become available for drawing under any outstanding Letters of Credit (whether or
not any beneficiary shall have presented, or shall be entitled at such time to
present, the drafts or other documents required to draw under such Letters of
Credit) to be immediately 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 the
Company; and (ii) in the case of the occurrence of an Event of Default referred
to in subsection (f), (g) or (h) of this Section 10, the Commitments shall
automatically be canceled, the obligation of any Issuing Lender to issue Letters
of Credit shall terminate automatically and the principal amount then
outstanding of, and the accrued interest on, the Loans and all other amounts
payable by the Company hereunder, under the Notes (including, without
limitation, any amounts payable under Section 6.5 hereof) and as aforesaid with
respect to Letters of Credit 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 the Company.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
Section 11. The Agent.
11.11. Appointment, Powers and Immunities. Each Bank hereby irrevocably
appoints and authorizes the Agent to act as its agent hereunder and under the
L/C Related Documents with such powers as are specifically delegated to the
Agent by the terms of this Agreement and the L/C Related Documents, together
with such other powers as are reasonably incidental thereto. The Agent: (a)
shall not have any duties or responsibilities except those expressly set forth
in this Agreement and the L/C Related Documents, and shall not by reason of this
Agreement and the L/C Related Documents be a trustee for any Bank; (b) shall not
be responsible to the Banks for any recitals, statements, representations or
warranties contained in this Agreement, the L/C Related Documents or in any
certificate or other documents referred to or provided for in, or received by
any of them under, this Agreement, the Notes or the L/C Related Documents or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement, any Note, any L/C Related Document or any other document
referred to or provided for herein or therein or for any failure by the Company
or any other Person to perform any of its obligations hereunder or thereunder;
(c) shall not be required to initiate or conduct any litigation or collection
proceedings hereunder or under any L/C Related Documents; and (d) shall not be
responsible for any action taken or omitted to be taken by it hereunder, any L/C
Related Documents 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. The Agent may employ agents
and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
The Agent may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until a written notice of the assignment or transfer
thereof shall have been consented to in accordance with Section 12.6.
The Issuing Lender shall act on behalf of Banks with respect to any Letters
of Credit issued by it and the documents associated therewith until such time
and except for so long as the Agent may agree at the request of the Majority
Banks to act for such Issuing Lender with respect thereto; provided, however,
that such Issuing Lender shall have all of the benefits and immunities (x)
provided to the Agent in this Section 11 with respect to any acts taken or
omissions suffered by such Issuing Lender in connection with Letters of Credit
issued by it or proposed to be issued by it and the application and agreements
for letters of credit pertaining to the Letters of Credit as fully as if the
term "Agent", as used in this Section 11, included such Issuing Lender with
respect to such acts or omissions, and (y) as additionally provided in this
Agreement with respect to the Issuing Lender.
11.2. Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by telephone
or telecopy) 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, and upon advice and
statements of legal counsel, independent accountants and other
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
experts selected by the Agent. As to any matters not expressly provided for by
this Agreement or the L/C Related Documents, the Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder in accordance
with instructions signed by the Majority Banks or all the Banks if required in
accordance with Section 12.4, and such instructions of the Majority Banks or all
the Banks, as applicable, and any action taken or failure to act pursuant
thereto shall be binding on all of the Banks.
11.3. Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default unless the Agent has received notice from
a Bank or the Company specifying such Default and stating that such notice is a
"Notice of Default." In the event that the Agent receives such a notice of the
occurrence of a Default, the Agent shall give prompt notice thereof to the
Banks. The Agent shall (subject to Section 11.1 and Section 11.7 hereof) take
such action with respect to such Default as shall be directed by the Majority
Banks, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable in the best interest of the Banks.
11.4. Rights as a Bank. With respect to its Commitment, the Loans made
by it and the Letters of Credit in which it participates, The Northern Trust
Company in its capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as though it were
not acting as the Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include The Northern Trust Company in its
individual capacity. The Northern Trust Company and its respective Affiliates
may (without having to account therefor to any Bank) accept deposits from, lend
money to and generally engage in any kind of banking, trust or other business
with the Company (and any of its Affiliates) as if it were not acting as the
Agent, and The Northern Trust Company and its respective Affiliates may accept
fees and other consideration from the Company for services in connection with
this Agreement, the L/C Related Documents or otherwise without having to account
for the same to the Banks.
11.5. Indemnification. The Banks agree to indemnify the Agent (to the
extent not reimbursed under Section 12.3 hereof, but without limiting the
obligations of the Company under said Section 12.3), ratably in accordance with
the aggregate principal amount of the Loans made by the Banks (or, if no Loans
are at the time outstanding, ratably in accordance with their respective
Commitments), for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement, the
Notes, the L/C Related Documents or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses which the Company is
obligated to pay under Section 12.3 hereof but excluding, unless a Default has
occurred and is continuing,
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or of any
such other documents, provided that no Bank shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Agent.
11.6. Non-Reliance on Agent and other Banks. Each Bank agrees that it
has, independently and without reliance on the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Company and its Subsidiaries and decision to enter
into this Agreement and any L/C Related Documents and that it will,
independently and without reliance upon the Agent or any other Bank, 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 this Agreement and any L/C Related Documents. The Agent shall not be
required to keep itself informed as to the performance or observance by the
Company of this Agreement, any L/C Related Document or any other document
referred to or provided for herein or to inspect the properties or books of the
Company or any of its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Banks by the
Agent hereunder, the Agent shall not have any duty or responsibility to provide
any Bank with any credit or other information concerning the affairs, financial
condition or business of the Company or any of its Subsidiaries (or any of their
Affiliates) which may come into the possession of the Agent or any of its
Affiliates.
11.7. Failure to Act. Except for action expressly required of the
Agent hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall receive further assurances to its
satisfaction from the Banks of their indemnification obligations under Section
11.5 hereof against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
11.8. Resignation of Agent. Subject to the appointment and acceptance
of a successor Agent as provided below, the Agent may resign at any time by
giving thirty (30) days' notice thereof to the Banks and the Company. Upon any
such resignation, the Majority Banks shall have the right to appoint a successor
to the resigning Agent from amongst the Banks, subject to the approval of the
Company which shall not be withheld unreasonably. If no successor to such Agent
shall have been so appointed by the Majority Banks and shall have accepted such
appointment within thirty (30) days after the Agent's giving of notice of
resignation, then the resigning Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a bank which has an office in Chicago, Illinois
and having capital and retained earnings of at least $100,000,000. Upon the
acceptance of any appointment as an Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Agent, and the resigning
Agent shall be discharged from its duties and obligations hereunder. After the
Agent's resignation hereunder, the provisions of this Section 11 shall continue
in effect for its benefit in
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.
Section 12. Miscellaneous.
12.1. Waiver. No failure on the part of the Agent or any Bank to
exercise, no delay in exercising, and no course of dealing with respect to, any
right, power or privilege under this Agreement, any Note or the L/C Related
Documents shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
12.2. Notices. All notices and other communications provided for
herein shall be given or made in writing and telecopied, mailed or delivered, in
the case of the Company or the Agent, to its respective address or telecopy
number set forth on the signature pages hereof, and in the case of a Bank, to
its notice address or telecopy number specified in Schedule 1 hereto 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 properly
transmitted by telecopier or personally delivered or, in the case of a mailed
notice, three Business Days after being deposited in the mail, first class
postage prepaid, in each case given or addressed as aforesaid; provided, that
notices to the Agent shall be effective only upon actual receipt.
12.3. Expenses, Etc. The Company agrees to pay or reimburse each of
the Banks (in the case of clauses (b) and (c) below) and the Agent and Issuing
Lender for: (a) all reasonable out-of-pocket costs and expenses of the Agent
(including, without limitation, the reasonable fees and expenses of Gardner,
Carton & Douglas, special counsel to the Agent) in connection with (i) whether
or not the transactions contemplated hereby are consummated, the negotiation,
preparation, execution and delivery of this Agreement, the Notes, the L/C
Related Documents and the making of the Loans hereunder, (ii) any amendment,
modification or waiver of any of the terms of this Agreement, any of the Notes,
the L/C Related Documents (unless unilaterally requested by the Agent or the
Banks), and (iii) any examination and inspection of the Company by the Agent
pursuant to Section 9.3(h) hereof; (b) all reasonable costs and expenses of the
Banks and the Agent (including reasonable counsels' fees) in connection with any
Default and any enforcement or collection proceedings resulting therefrom; and
(c) all transfer, stamp, documentary or other similar taxes, assessments or
charges levied by any governmental or revenue authority in respect of this
Agreement, the Notes, the L/C Related Documents or any other document referred
to herein or therein.
12.4. Amendments, Etc. Except as otherwise expressly provided in this
Agreement, any provision of this Agreement or L/C Related Document may be
waived, amended or modified only by an instrument in writing signed by the
Company, the Agent and the Majority Banks; provided that no amendment
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
modification or waiver shall, unless by an instrument signed by the Agent and
all of the Banks (a) increase or extend the term, or extend the time or waive
any requirement for the reduction or termination, of any of the Commitments, (b)
extend the date fixed for the payment of principal of or interest on any Loan or
L/C Obligation, (c) reduce the amount of any payment of principal thereof or the
rate at which interest is payable thereon or any fee payable hereunder or under
any L/C Related Document, (d) alter the terms of this Section 12.4, (e) amend
the definition of the term "Majority Banks," (f) waive any condition precedent
set forth in Section 7 hereof, or (g) release the "Collateral" referred to in
any L/C Related Documents from the Lien in favor of the Agent, on behalf of the
Banks; and provided further, that no amendment, waiver or consent shall, unless
in writing and signed by the Issuing Lender in addition to the Agent and the
Majority Banks or all the Banks, as the case may be, affect the rights or duties
of such Issuing Lender under this Agreement or any L/C Related Document relating
to any Letter of Credit issued or to be issued by it.
12.5. 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.
12.6. Assignments and Participations.
(a) The Company may not assign its rights or obligations hereunder,
the L/C Related Documents or under the Notes without the prior consent of all of
the Banks and the Agent.
(b) Any Bank may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("Participants") participating or subparticipating interests in any
Loan or L/C Obligation owing to such Bank, the Note held by such Bank, the
Commitment of such Bank or any other interest of such Bank. Each Bank shall
promptly provide notice of the identity of each Participant to the Company and
the Agent. In the event of any such sale by a Bank of participating or
subparticipating interests to a Participant, such Bank shall remain solely
responsible to the other parties hereto for the performance of such obligations,
such Bank shall remain the holder of its Note and L/C Obligations for all
purposes hereunder, all amounts payable by the Company under this Agreement or
any L/C Obligation shall be determined as if such Bank had not sold such
participating or subparticipating interest, and the Company and the Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations hereunder.
(c) Each Bank shall retain the sole right to approve, without the
consent of any Participant, any amendment, modification or waiver of any
provision hereunder other than any amendment, modification or waiver of any
provision hereunder with respect to any Loan, Commitment or L/C Obligation in
which such Participant has an interest which forgives principal, interest or
fees or reduces the interest rate or fees payable with respect to any such Loan,
Commitment or L/C Obligation, postpones any date fixed for any
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
regularly-scheduled payment of principal of, or interest or fees on, any such
Loan, Commitment or L/C Obligation, releases any guarantor, if any, of any such
Loan or L/C Obligation or releases any substantial portion of collateral, if
any, securing any such Loan or L/C Obligation.
(d) The Company agrees that each Participant shall be deemed to have
the right of setoff provided in Section 5.7 in respect of its participating or
subparticipating interest in amounts owing hereunder or under L/C Related
Documents to the same extent as if the amount of its participating or
subparticipating interest were owing directly to it as a Bank hereunder,
provided that each Bank shall retain the right of setoff provided in Section 5.7
with respect to the amount of participating or subparticipating interests sold
to each Participant. The Banks agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 5.7, agrees
to share with each Bank, any amount received pursuant to the exercise of its
right of setoff, such amounts to be shared in accordance with Section 5.7 as if
each Participant were a Bank.
(e) Any Bank may, in the ordinary course of its business and in
accordance with applicable law, at any time assign to one or more banks or other
entities ("Purchaser") all or any part of its rights and obligations hereunder,
under its Note or in any L/C Obligation. Such assignments shall be pursuant to
Assignment Agreements substantially in the form of Exhibit G hereto. The
consent of the Company and the Agent shall be required prior to any assignment
becoming effective with respect to the Purchaser which is not a Bank or an
Affiliate thereof; provided, however, that if a Default has occurred and is
continuing, the consent of the Company shall not be required. Such consent
shall not be unreasonably withheld or delayed. Each such assignment shall be in
an amount not less than the lesser of (i) $5,000,000 or (ii) the remaining
amount of the assigning Bank's Commitment (calculated as the date of such
assignment).
(f) Upon (i) the delivery to the Agent of a notice of assignment,
substantially in the form attached as Exhibit "I" to Exhibit G hereto (a "Notice
of Assignment"), together with any consents required by subsection (e) above,
and (ii) payment of a $2,500 fee to the Agent for processing such assignment,
such assignment shall become effective on the effective date specified in such
Notice of Assignment. The Notice of Assignment shall contain a representation
by the Purchaser to the effect that none of the consideration used to make the
purchase of the Commitment, L/C Obligations and Loans under the applicable
Assignment Agreement are "plan assets" as defined under ERISA and that the
rights and interests of the Purchaser in and under this Agreement will not be
"plan assets" under ERISA. On and after the effective date of such assignment,
such Purchaser shall for all purposes be a Bank party to this Agreement and
shall have all rights and obligations of a Bank hereunder, to the same extent as
if it were an original party hereto, and no further consent or action by the
Company, the Banks or the Agent shall be required to release the transferor Bank
with respect to the percentage of its Commitment, L/C Obligations and Loans
assigned to such Purchaser. Upon the consummation of any assignment to a
Purchaser pursuant to this Section
12.6, the transferor Bank, the Agent and the Company shall make appropriate
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
arrangements so that a replacement Note is issued to such transferor Bank and a
new Note or, as appropriate, a replacement Note, is issued to such Purchaser, in
each case in principal amounts reflecting their Commitment, as adjusted pursuant
to such assignment.
(g) The Company authorizes each Bank to disclose to any Participant
or Purchaser or any other Person acquiring an interest hereunder by operation of
law (each a "Transferee") and any prospective Transferee any and all information
in such Bank's possession concerning the creditworthiness of the Company and its
Subsidiaries; provided that each Transferee and prospective Transferee agrees to
be bound by Section 12.10 of this Agreement.
12.7. Survival. The obligations of the Company under Sections 6.1,
6.5, 9.19 and 12.3 hereof shall survive the repayment of the Loans and L/C
Obligation and the termination of the Commitments.
12.8. 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.
12.9. 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. Confidentiality. Each Bank and the Agent agree to use reasonable
precautions to keep confidential, in accordance with their customary procedures
for handling confidential information of this nature and in accordance with safe
and sound banking practices, any non-public information supplied to it by the
Company pursuant to this Agreement; provided that nothing herein shall limit the
disclosure of any such information (a) to the extent required by statute, rule,
regulation or judicial process, (b) to counsel for or other professional
advisors to any of the Banks or the Agent, (c) to bank examiners, auditors or
accountants, (d) to any other Bank, (e) in connection with any litigation to
which any one or more of the Agent or Banks is a party or (f) to any Affiliate
of the Agent or any Bank.
12.11. Governing Law. THIS AGREEMENT, AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF ILLINOIS.
12.12. Waiver of Jury Trial. THE COMPANY, THE AGENT AND THE BANKS
HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE L/C RELATED DOCUMENTS, THE NOTES OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
12.13. Consent To Jurisdiction. THE COMPANY HEREBY ABSOLUTELY AND
IRREVOCABLY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE
OF ILLINOIS OR THE UNITED STATES OF AMERICA HAVING SITUS IN COOK COUNTY,
ILLINOIS IN CONNECTION WITH ANY SUITS, ACTIONS OR PROCEEDINGS BROUGHT AGAINST
THE COMPANY BY THE AGENT OR ANY BANK ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE L/C RELATED DOCUMENTS, OR THE NOTES, AND IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT. THE COMPANY HEREBY WAIVES AND AGREES NOT TO
ASSERT IN SUCH SUIT, ACTION OR PROCEEDING, IN EACH CASE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) THE COMPANY IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF ANY SUCH COURT; (B) THE COMPANY IS IMMUNE FROM
SUIT OR ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR
TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH
RESPECT TO IT OR ITS PROPERTY; (C) ANY SUCH SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM; (D) THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING IS IMPROPER; OR (E) THIS AGREEMENT, THE L/C RELATED DOCUMENTS, OR THE
NOTES MAY NOT BE ENFORCED IN OR BY ANY SUCH COURT. NOTHING CONTAINED HEREIN
SHALL AFFECT ANY RIGHT THAT THE AGENT OR ANY BANK MAY HAVE TO BRING ANY SUIT,
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE L/C RELATED DOCUMENTS, OR
THE NOTES AGAINST THE COMPANY OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
12.14. No Fiduciary Relationship. The Company acknowledges and agrees
that the lending relationship hereby created with the Banks is and has been
conducted on an open and arm's-length basis in which no fiduciary relationship
exists between the Company and any Bank or the Agent and that the Company has
not relied and is not relying on any such fiduciary relationship in consummating
the transactions contemplated hereby.
12.15. Cancellation. The Company acknowledges and agrees that any and
all commitments to lend under that certain Credit Agreement with Term Loan
Conversion Options dated as of January 17, 1997, as amended, between the
Northern and the Company are hereby terminated as of the date hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FANSTEEL INC.
By: Name:
Title:
Address: Number One Tantalum Place
North Chicago, Illinois 60064
Attention: R. Michael McEntee
Chief Financial Officer
Exhibit 4a - $30,000,000 Revolving Credit Agreement among Fansteel, Inc.
and Northern Trust Company as of May 20, 1999
Telecopy No:
THE NORTHERN TRUST COMPANY, as Agent
By:
Name:
Title:
Address: 50 South LaSalle Street
Chicago, Illinois 60675
Telecopy No.: (312) 444-7028
Attention: Daniel Hintzen
BANKS:
THE NORTHERN TRUST COMPANY, individually
By:
Name:
Title:
Telecopy No.: (312) 444-7028
Attention: Daniel Hintzen
M&I MARSHALL & ILSLEY BANK, individually
By:
Name:
Title:
By:
Name:
Title:
Address: 770 North Water Street
P.O. Box 2035
Milwaukee, Wisconsin 53201-2035
Telecopy No.: (414) 765-7625
Attention: Errol D. Barnett
Exhibit 4b - Form of Note
EXHIBIT A
(Form of Note)
PROMISSORY NOTE
$ May 20, 1999
FOR VALUE RECEIVED, FANSTEEL INC., a Delaware corporation (the "Company"),
hereby promises to pay to ____________________ (the "Bank"), for account of its
respective Applicable Lending Offices provided for by the Revolving Credit
Agreement referred to below, at the principal office of The Northern Trust
Company at 50 South LaSalle Street, Chicago, Illinois, 60675, the principal sum
of ____________ Dollars (or such lesser amount as shall equal the aggregate
unpaid principal amount of the Loans made by the Bank to the Company under the
Revolving Credit Agreement), in lawful money of the United States of America and
in immediately available funds, on the dates and in the principal amounts
provided in the Revolving Credit Agreement, and to pay interest on the unpaid
principal amount of each such Loan, at such office, in like money and funds, for
the period commencing on the date of such Loan until such Loan shall be paid in
full, at the rates per annum and on the dates provided in the Revolving Credit
Agreement.
The date, amount, and type of each Loan made on account of the principal
thereof, shall be recorded by the Bank on its books and, prior to any transfer
of this Note, such information with respect to such Loans then outstanding shall
be endorsed by the Bank on the schedule attached hereto or any continuation
thereof.
This Note is one of the Notes referred to in the Revolving Credit Agreement
dated as of May 20, 1999 (as amended from time to time, the "Revolving Credit
Agreement") among the Company, The Northern Trust Company, as Agent, and the
Banks named therein, and evidences Loans made by the Bank thereunder.
Capitalized terms used in this Note have the respective meanings assigned to
them in the Revolving Credit Agreement.
The Revolving Credit Agreement provides for the acceleration of the maturity of
the Loans evidenced by this Note upon the occurrence of certain events and for
prepayments of such Loans upon the terms and conditions specified therein.
Except as permitted by Section 13.6 of the Revolving Credit Agreement, this Note
may not be assigned by the Bank.
Exhibit 4b - Form of Note
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAW OF THE STATE OF ILLINOIS.
PURSUANT TO THE REVOLVING CREDIT AGREEMENT, THE COMPANY HAS WAIVED ITS RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF THIS NOTE.
FANSTEEL INC.
By:
Name:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of Fansteel Inc. as of June 30, 1999 and the related
condolidated statement of income for the six months ended June 30, 1999 and is
qualified in its entirety by reference to the Company's Form 10Q filing for the
period ended June 30, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 193,106
<SECURITIES> 0
<RECEIVABLES> 21,628,627
<ALLOWANCES> 253,300
<INVENTORY> 22,259,136
<CURRENT-ASSETS> 47,640,128
<PP&E> 71,808,565
<DEPRECIATION> 51,157,302
<TOTAL-ASSETS> 91,773,105
<CURRENT-LIABILITIES> 23,578,941
<BONDS> 2,334,744
0
0
<COMMON> 21,747,145
<OTHER-SE> 28,466,275
<TOTAL-LIABILITY-AND-EQUITY> 91,773,105
<SALES> 75,271,591
<TOTAL-REVENUES> 75,271,591
<CGS> 61,815,343
<TOTAL-COSTS> 71,350,735
<OTHER-EXPENSES> 111,150
<LOSS-PROVISION> (14,058)
<INTEREST-EXPENSE> 55,126
<INCOME-PRETAX> 3,809,706
<INCOME-TAX> 1,224,000
<INCOME-CONTINUING> 2,585,706
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,585,706
<EPS-BASIC> 0.30
<EPS-DILUTED> 0.30
</TABLE>
