SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] 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 0-3855
LACLEDE STEEL COMPANY
(Exact name of Registrant as specified in its charter)
Delaware 43-0368310
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.
One Metropolitan Square, St. Louis, Missouri 63102
(Address of principal executive offices)
(Zip code)
314-425-1400
(Registrant's telephone number, including area code)
(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.
Yes X No
As of October 28, 1994 there were 4,056,140 shares of $13.33
par value common stock outstanding.<PAGE>
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS
(In Thousands Except Per Share Data)
Third Quarter EndedYear to Date
September 30, September 30,
1994 1993 1994 1993
Net sales 85,308 85,272 250,564 240,496
Costs and expenses:
Cost of products sold 77,153 78,029 227,224 218,618
Selling, general and administrative 3,241 3,597 9,791 9,855
Depreciation 1,918 1,858 5,771 5,560
Interest expense, net 1,724 1,312 4,858 3,440
Total costs and expenses 84,036 84,796 247,644 237,473
Earnings before income taxes and
cumulative effect of change in accounting
principle 1,272 476 2,920 3,023
Provision for income taxes 509 180 1,168 1,148
Earnings before cumulative effect
of change in accounting principle 763 296 1,752 1,875
Cumulative effect of change in accounting
principle for postretirement medical benefits,
net of taxes -- -- -- (46,543)
Net earnings (loss) 763 296 1,752 (44,668)
Retained earnings at beginning of period 4,349 1,832 3,360 46,796
Cash dividends -- -- -- --
Retained earnings at end of period 5,112 2,128 5,112 2,128
Per share data:
Earnings before cumulative effect
of change in accounting principle 0.19 0.07 0.43 0.46
Cumulative effect of change in accounting
principle for post retirement medical benefits,
net of taxes -- -- -- (11.48)
Net earnings (loss) per share 0.19 0.07 0.43 (11.02)
- 1 -
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands)
Sept.30, Dec. 31,
1994 1993
Current Assets:
Cash and cash equivalents 157 894
Bond funds in trust -- 9,700
Accounts receivable, less allowances 41,647 46,527
Prepaid expenses 510 351
Income taxes recoverable 116 596
Inventories:
Finished 47,522 50,165
Semi-finished 23,880 22,617
Raw materials 10,012 9,515
Supplies 15,489 15,129
Total inventories 96,903 97,426
Total Current Assets 139,333 155,494
Non-Current Assets:
Intangible assets 20,894 23,252
Bond funds in trust 3,819 5,474
Prepaid pension contributions 16,202 15,713
Deferred income taxes 26,484 27,083
Other 3,836 1,654
Total Non-Current Assets 71,235 73,176
Plant and Equipment, at cost 254,539 243,658
Less - accumulated depreciation 127,974 122,514
Net Plant and Equipment 126,565 121,144
Total Assets 337,133 349,814
- 2 -
LIABILITIES AND STOCKHOLDERS' EQUITY
Sept.30, Dec. 31,
1994 1993
Current Liabilities:
Accounts payable 29,368 25,421
Accrued compensation 6,185 8,788
Current portion of long-term debt 2,560 10,981
Notes payable to banks -- 7,500
Taxes, other than income taxes 502 733
Accrued costs of pension plans 7,790 9,963
Current portion of restructuring charges -- 622
Other current liabilities 684 2,653
Total Current Liabilities 47,089 66,661
Non-Current Liabilities:
Accrued costs of pension plans 51,977 54,287
Accrued postretirement medical benefits 79,001 77,801
Other non-current liabilities 7,043 7,549
Total Non-Current Liabilities 138,021 139,637
Long-Term Debt:
Bank agreement 81,181 75,000
Revenue bonds 26,500 25,926
Total Long-Term Debt 107,681 100,926
Stockholders' Equity:
Preferred stock, without par value, authorized
2,000,000 shares with none issued -- --
Common stock, $13.33 par value, authorized
5,000,000 shares with 4,056,140 shares issued 54,081 54,081
Capital in excess of par value 247 247
Retained earnings 5,112 3,360
Minimum pension liability adjustment (15,098) (15,098)
Total Stockholders' Equity 44,342 42,590
Total Liabilities and Stockholders' Equity 337,133 349,814
3
LACLEDE STEEL COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Nine Months Ended
September 30,
1994 1993
Cash flows from operating activities:
Net earnings (loss) 1,752 (44,668)
Adjustments to reconcile net earnings (loss) to
net cash provided by (used in) operating activities:
Cumulative effect of change in accounting for
postretirement medical benefits -- 46,543
Depreciation 5,771 5,560
Change in deferred income taxes 599 632
Changes in assets and liabilities that
provided (used) cash:
Accounts receivable 4,880 (6,023)
Inventories 523 (6,450)
Accounts payable and accrued expenses (1,663) (2,051)
Pension cost less than funding (2,722) (4,598)
Change in accrued postretirement medical benefits 1,200 2,049
Other assets and liabilities 26 278
Net cash provided by (used in) operating activities 10,366 (8,728)
Cash flows used in investing activities:
Capital expenditures (10,813) (10,122)
Cash flows from financing activities:
Net borrowings under bank agreement 110 16,000
Long-term bond payments (9,276) (862)
Bond funds in trust 11,355 (11,707)
Refund under contract for HTMR facility -- 13,600
Deferred financing costs (2,479) --
Net cash provided by (used in) financing activities (290) 17,031
Cash and cash equivalents:
Net decrease during the period (737) (1,819)
At beginning of year 894 1,958
At end of period 157 139
- - - 4 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The accompanying unaudited consolidated financial statements
include the accounts of Laclede Steel Company and its
wholly-owned subsidiaries. All inter-company accounts and
transactions have been eliminated. The consolidated financial
statements reflect all adjustments (such adjustments are of a
normal recurring nature unless otherwise disclosed in these
interim financial statements) which are in the opinion of the
Management necessary to a fair statement of the results for the
interim periods.
NOTE 2 - ACCOUNTING CHANGE - POSTRETIREMENT MEDICAL BENEFITS
Effective January 1, 1993 the Company adopted Statement of
Financial Accounting Standards No. 106 (Employers' Accounting for
Postretirement Benefits Other Than Pensions) which requires
accounting for the cost of retiree medical benefits other than
pensions on an accrual basis. Implementation of this new
standard also requires the recognition of a transition obligation
based on the aggregate amount that would have been accrued in
prior years had the new standard been in effect for those years.
In accordance with this new standard the Company elected to
recognize the entire transition obligation as of January 1, 1993
and accordingly recorded a non-cash charge of $46,543,000, after
recognition of $28,526,000 in deferred tax benefits.
NOTE 3 - STOCK APPRECIATION RIGHTS PLAN
In the first nine months of 1993 the Company incurred a net
charge of $870,000 for Stock Appreciation Rights Plans, which
reflected the increase in the price of its common stock since the
end of 1992. This charge reduced net earnings for the first nine
months of 1993 by $539,000, or $.13 per share, after recognition
of related tax benefits.
NOTE 4 - BANK AGREEMENT
On September 7, 1994, the Company entered into a new
five-year Loan and Security Agreement with three banks which
provides for a total availability of up to $95 million and $70
million of the proceeds was used to repay the prior Bank
Agreement. The Agreement includes a $10 million Term Loan,
payable monthly over five years, secured by certain fixed assets,
with interest at either prime plus 1% or a Eurodollar fixed rate,
at the Company's option. The Agreement also includes an $85
million Revolving Credit Loan secured by accounts receivable and
inventory, with interest at either prime plus .5% or a Eurodollar
fixed rate, also at the Company's option. The Agreement contains
various covenants including a fixed charge coverage ratio and a
minimum net worth requirement.
NOTE 5 - EARNINGS PER SHARE
Earnings per share amounts have been calculated based on
weighted average shares outstanding.
NOTE 6 - INCOME TAXES
The provision for income taxes represents an effective
combined federal and state tax rate of 40% and 38% for the nine
months ended September 30, 1994 and 1993, respectively.
- 5 -<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Earnings of $1.8 million plus $5.8 million in depreciation
charges and deferred income taxes of $.6 million generated cash
flow of $8.2 million in the first nine months of 1994. Operating
activities provided $10.4 million in cash during the period.
Working capital increased by $3.4 million in the first nine
months of 1994 and the ratio of current assets to current
liabilities was 3.0 to 1.0 at September 30, 1994. Capital
expenditures totaled $10.8 million in the first nine months of
1994.
The Company finalized an agreement for a new 5-year $95.0
million credit facility in September 1994, consisting of a $10.0
million, 5- year term loan and an $85 million revolving credit
facility. The new Agreement replaces an $80.0 Revolving Credit
Agreement that would have expired in September 1995.
Management believes that internally generated funds and its
new banking arrangements will be adequate to finance all planned
capital expenditures, which will be approximately $13.5 million
in 1994, including $5.0 million in expenditures to modify the
HTMR System. These modifications are being made using the Solid
Waste Disposal Revenue Bond funds held in trust. In September,
1994, $8.1 million of the remaining bond funds held in trust were
utilized to repay a portion of these bonds.
Results of Operations
Net sales increased slightly in the third quarter of 1994
compared to the third quarter of 1993, as a decline in shipments
was offset by higher sales prices. For the first nine months of
1994 net sales increased by $10.1 million or 4.2% over the first
nine months of 1993, reflecting an 8.4% increase in average
selling prices and a 2.7% decrease in shipping volume.
Cost of products sold decreased by $.9 million or 1.1% in
the third quarter of 1994 compared to the third quarter of 1993,
reflecting lower shipping volume.
Despite lower volume the cost of products sold for the first
nine months of 1994 increased by $8.6 million over the prior
year, mainly due to higher ferrous scrap costs. In late 1992 the
Company's average scrap cost was under $100 per gross ton, but by
the end of 1993 it had reached $140 per ton. After leveling off
to about $135 per ton in the summer months, scrap costs averaged
$139 in the third quarter of 1994. The Company has been able to
cover higher scrap costs through price increases for its
principal products and believes that additional price increases
planned in the next several months will continue to alleviate the
problem.
- 6 -<PAGE>
Production costs in the first half 1994 were adversely
affected by a number of operating problems in January and
February at the Company's new downstream facilities as well as
the Alton Plant. Severe weather, particularly in the East, also
played a role. In the third quarter the Company achieved
considerable improvement in overall production costs, which
management expects to sustain.
As discussed in Note 3 to the Consolidated Financial
Statements, cost of products sold in the first nine months of
1993 included a charge of $.9 million for the Company's Stock
Appreciation Rights Plans. In 1994 there were no comparable
charges.
The $46.5 million charge for postretirement medical benefits
in the first quarter of 1993 is net of $28.5 million in deferred
tax benefits. Non-current assets at September 30, 1994 includes
$26.5 million in net deferred income taxes. In recording these
deferred tax benefits, no valuation allowance was deemed
necessary as a result of management's evaluation of the
likelihood that all of the deferred tax assets will be realized.
In making this evaluation management considered historical
earnings trends and the impact which changes in operations are
expected to have on future earnings. Additionally, consideration
was given to the inherent long-term nature of the Company's most
significant deferred tax asset for the related postretirement
medical benefit obligations ($31.6 million at September 30,
1994), for which recovery upon payment is expected to be spread
over many future years. Excluding special charges in 1992
pre-tax accounting income for the most recent five fiscal years
averaged $4.1 million. Taxable income for the same period
averaged $2.6 million.
This general level of historical earnings and taxable
income, along with expected improvements in future earnings as a
result of actions taken by management to implement its strategic
plan for various cost reductions, is expected to be sufficient to
allow for utilization of all recorded net deferred income tax
assets, including net operating loss and minimum tax carryovers,
as they reverse or within the related expiration periods.
- 7 -<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(4)(a) Registrant's Loan and Security Agreement dated as
of September 7, 1994.
(10)(d) Employment Agreements dated August 3, 1994,
between the Registrant and Messrs. John B. McKinney, Michael H.
Lane, J. W. Hebenstreit, H. B. Nethington and L. J. Schnurbusch.
Instruments with respect to long-term debt issues have
been omitted where the amount of securities authorized under such
instruments does not exceed 10% of the total consolidated assets
of the Registrant. Registrant hereby agrees to furnish a copy of
any such instrument to the Commission upon its request.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the
quarter.
- 8 -<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.
LACLEDE STEEL COMPANY
(Registrant)
/s/ Michael H. Lane
Michael H. Lane
Vice President - Finance
Treasurer and Secretary
Duly Authorized Officer and
Principal Financial Officer
Date: November 3, 1994
Exhibit (10) (d) EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as
of the 3rd day of August 1994, by and between LACLEDE STEEL
COMPANY, a Delaware corporation ("Employer"), and
JOHN B. McKINNEY ("Employee").
WHEREAS, Employee desires to be employed by Employer
and Employer desires to employ Employee under the terms and
conditions set forth in this Agreement; and
WHEREAS, it is Employer's intention to employ Employee
upon the terms and conditions herein, which recognize and
compensate Employee for the obligations of Employee undertaken
hereunder, including specifically, but not by way of limitation,
the agreement of Employee not to compete with the business of
Employer, as provided in paragraph 8(a)(iii) (see page 13), for
the period provided in paragraph 8(a) upon the termination of
Employee's employment by Employer for any reason; it being
understood and agreed that Employee is employed by Employer to
protect and expand the business of Employer;
NOW, THEREFORE, in consideration of the foregoing and
the promises and agreements herein contained, the parties agree
as follows:
1. Employment. Employer hereby employs Employee, and
Employee hereby accepts such employment from Employer upon the
terms and conditions hereinafter set forth.
2. Term of Employment. The term of Employee's
employment under this Agreement shall be for the period
commencing August 3, 1994, and continuing through August 2, 1999,
or upon the earlier occurrence of any of the following events:
(a) Whenever Employer and Employee shall mutually
agree in writing to terminate Employee's employment by Employer;
(b) Upon the death of Employee;
(c) For "cause," which shall mean Employee's
dishonesty or unlawful acts committed in connection with the
business of Employer, and which results in substantial gain or
profit to Employee.
(d) At Employer's option and by action of
Employer's Board of Directors on thirty (30) days' written notice
in the event of Employee's Disability (defined as the failure
substantially to discharge Employee's duties as defined under
this Agreement for ninety (90) consecutive days or one hundred
twenty (120) days (whether or not consecutive) in any twelve (12)
month period, as a result of an injury, disease, sickness or
other physical or mental incapacity). A determination of
Employee's Disability shall be made by a qualified medical doctor
licensed to practice in the State of Missouri chosen by Employer
subject to Employee's approval, which approval shall not be
unreasonably withheld. Employee shall consent to be examined by
Employer's medical doctor and shall consent to allow Employee's
medical doctor to discuss Employee's medical condition with
Employer. Notwithstanding anything to the contrary contained
herein, Employee's Disability shall not be deemed to have
commenced until full coverage with respect to such Disability
shall have been approved by Employer's disability insurance
carrier and payment under Employer's group disability policy for
such Disability shall have commenced.
3. Duties of Employee. During Employee's employment
by Employer, Employee shall serve Employer to the best of
Employee's ability and shall perform such duties as are typically
performed by a president and chief executive officer of a steel
manufacturing corporation with operations similar to Employer.
Employee agrees to devote Employee's time and efforts to the
business of Employer (except for usual vacations and reasonable
time for attention to personal affairs so long as Employee's
performance hereunder is not adversely affected thereby), and to
be loyal and faithful at all times, constantly endeavoring to
improve Employee's ability and knowledge of the business of
Employer in an effort to increase the value of Employee's
services for the mutual benefit of Employee and Employer.
4. Compensation.
(a) Employer agrees to pay Employee for
Employee's services during the term of Employee's employment
hereunder. Employee's base salary shall be the greater of (i) an
annual rate of Three Hundred Thirty-One Thousand ($331,000.00) or
(ii) the highest annual base salary authorized by the Board of
Directors after the date hereof. Employee's base salary shall be
due and payable in twelve (12) equal monthly installments.
Additionally, during the term of Employee's employment by
Employer hereunder, Employee's compensation shall be reviewed and
may be increased and/or Employee may be paid additional or
special compensation including without limitation stock options,
stock appreciation rights and other incentive compensation, or
bonuses (based on the earnings of Employer, the performance of
Employee or otherwise) from time to time by the mutual agreement
of Employee and Employer, as determined by the Board of Directors
of Employer. In addition, during the term of this Agreement,
Employee shall receive such fringe benefits as are made available
by Employer from time to time to other employees of Employer at
Employee's level of employment.
(b) In the event of the termination of Employee's
employment either (i) by Employee for any reason including death
or Disability, or (ii) by Employer without "cause" (as defined in
paragraph 2 herein) or by Employer for any reason during the
"Change of Control Period" (as defined in paragraph 5(b) herein),
Employee shall be paid incentive compensation for the fiscal year
in which such termination occurred in an amount equal to the
product of (a) the amount of incentive compensation to which he
would have been entitled for such fiscal year had there been no
termination of employment and (b) a fraction, the numerator of
which is the number of days of such fiscal year in which Employee
remained in the employment of Employer and the denominator of
which is 365.
5. Life Insurance Benefits.
(a) During the term of this Agreement, Employer
shall be obligated to keep in force life insurance on the life of
Employee in the amount of One Million Seven Hundred Ten Thousand
Seven Hundred Twenty Dollars ($1,710,720.00), Five Hundred
Thousand Dollars ($500,000.00) of which will consist of permanent
insurance on the life of Employee owned by Employee or his
designee.
(b) In the event of the termination of Employee's
employment either (i) by Employee for any reason, or (ii) by
Employer without "cause" (as defined in paragraph 2 herein), or
by Employer for any reason during the period commencing with the
date of a Change of Control (as defined in Paragraph 6(a)) and
ending the earlier of (a) twenty-four months following the Change
of Control, or (b) August 2, 1999, (the "Change of Control
Period"), Employer agrees to keep in force the permanent life
insurance set forth in subparagraph (a) of this paragraph 5 for
the duration of Employee's life. Employer may fulfill this
obligation by satisfying the premium requirement so that such
permanent insurance is fully paid under the terms of such
permanent insurance policy. Employer's obligation to pay
permanent life insurance premiums under this subparagraph (b)
will survive the term of this Agreement.
(c) In the event of the termination of Employee's
employment by Employer for "cause" (as defined in paragraph 2
herein), other than during the Change of Control Period, then
Employer's obligation to pay premiums under this paragraph 5 will
cease.
(d) Employer agrees to reimburse Employee for any
tax due on the annual permanent insurance premium paid by
Employer.
(e) The amount of insurance described in
subparagraph (a) may be increased by the Board of Directors.
6. Termination.
(a) In the event of the termination of Employee's
employment by Employer, without "cause" (as defined in
paragraph 2 herein), then, in lieu of any further salary payment
pursuant to paragraph 4(a) herein, Employer agrees to pay
Employee for the remaining term of this Agreement at an annual
rate equal to the average of Employee's "compensation" for the
three fiscal years preceding the year of such termination. For
this purpose the term "compensation" means Employee's base
salary in effect for a particular year plus the incentive
compensation received by Employee with respect to services
rendered in such year whether or not such incentive compensation
is actually paid in such year. Amounts described above due
Employee under this paragraph 6(a) shall be due and payable for
the duration of the remaining term in equal monthly installments.
In addition to the foregoing, Employer shall continue, for the
duration of the remaining term, to provide Employee with such
additional fringe benefits to which Employee was entitled as of
the day immediately prior to the date of such termination.
(b) In the event of a Change of Control, (as
hereinafter defined) Employee may terminate his employment
hereunder at any time during the period commencing six months
following the Change of Control and ending the earlier of (a)
twenty-four months following the Change of Control or (b)
August 2, 1999. If (a) Employee shall terminate his employment
during such period for any reason other than death or Disability,
(b) Employer shall terminate Employee's employment during the
Change of Control Period for any reason, or (c) Employee
terminates his employment during the first six (6) months of the
Change of Control Period for Good Reason as hereinafter defined,
Employer shall pay to Employee upon such termination of
employment, in a single lump cash sum, an amount equal to the
lesser of (a) Two Million Nine Hundred Thousand Dollars
($2,900,000.00) or (b) One Dollar ($1.00) less than 300% of
Employee's Base Amount as hereinafter defined. Such payment
shall be in lieu of further salary payments under paragraph 4(a)
or payments (other than retirement and deferred compensation
payments) under paragraph 6(a). Notwithstanding anything to the
contrary contained herein, nothing in this Agreement shall
relieve Employer of its obligation of providing Employee with all
retirement benefits in accordance with the terms of all
retirement and deferred compensation plans in which Employee
participates including, without limitation, Employer's obligation
under Section IV of the Key Employee Retirement Agreement between
Employer and Employee maintained pursuant to the Laclede Steel
Company Key Employee Retirement Plan.
The term "Good Reason" shall mean the failure of
Employer to comply with the following requirement: During the
Change of Control Period, (i) Employee's base salary, position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held or exercised by or assigned to Employee at any time
during the 90-day period immediately preceding the date of the
Change of Control and (ii) Employee's services shall be performed
at the location where Employee was employed immediately preceding
the date of the Change of Control.
The term "Base Amount" shall mean Employee's average
annual compensation from Employer (as reported on Form W-2) for
the five consecutive calendar years ending with the calendar year
immediately preceding the Change of Control.
The term "Change of Control" shall mean a change of
control of a nature that would be required to be reported in
response to Item 1(a) of the Current Report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 ("Exchange Act"), or any
comparable successor provisions. Without limiting the foregoing,
a "Change of Control" also means for purposes of this Agreement,
regardless of its meaning under the provisions of the Exchange
Act:
(i) The purchase or other acquisition (other than from
Employer) by any person, entity or group of persons, within
the meaning of Section 13(d) or 14(d) of the Exchange Act
(excluding, for this purpose, Employer or its subsidiaries
or any employee benefit plan of Employer or its
subsidiaries), of beneficial ownership, (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 25% or
more of either the then outstanding shares of common stock
or the combined voting power of Employer's then outstanding
voting securities entitled to vote in the election of
directors; or
(ii) The receipt of proxies for the election of
directors of Employer in opposition to management's slate of
nominees which proxies aggregate more than 40% of the then
outstanding voting stock of Employer; or
(iii) Individuals who, as of the date hereof,
constitute the Board of Directors of Employer (as of the
date hereof the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board, provided that
any person (other than a person whose election or nomination
or whose initial assumption of office is in connection with
an actual or threatened election contest relating to the
election of directors of Employer, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) who becomes a director subsequent to the date hereof
whose election, or nomination for election by Employer's
shareholders, was approved by a vote of at least
three-quarters of the directors then comprising the
Incumbent Board shall be, for purposes of this Agreement,
considered as though such person were a member of the
Incumbent Board; or
(iv) Approval by the stockholders of Employer of a
reorganization, merger, or consolidation, in each case, with
respect to which persons who were the stockholders of
Employer immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than
50% of the combined power entitled to vote generally in the
election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities,
or a liquidation or dissolution of Employer or of the sale
of all or substantially all of the assets of Employer.
(c) In the event of a determination that payments
under paragraph 6(b), together with any other payments which
Employee has a right to receive from Employer constitute a
"payment" within the meaning of Section 280G(b)(2)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"), then
Employer shall pay to Employee, in a lump sum, an amount equal to
the sum of (i) any excise tax that would be imposed by
Section 4999 of the Code and payable by Employee, and (ii) an
additional amount which, when added to the amount of the excise
tax payable, equals an aggregate payment sufficient to pay all
federal, state and local income taxes due on the aggregate
payment, including interest and penalties, and leave a net amount
equal to the excise tax payable. For purposes of this paragraph,
the term "determination" means (i) a decision by the Tax Court
which has become final, as defined in Section 7481 of the Code or
(ii) a judgment, decree, or other order by any court of competent
jurisdiction which has become final. Employer shall pay all
reasonable legal fees incurred in connection with a determination
on this issue. If both Employer and Employee elect to forego a
court proceeding on this issue, Employer agrees to pay Employee
the amount set forth in this paragraph 6(c) without a
determination and to pay all reasonable legal fees incurred prior
to such election.
7. Extent of Services. Employee shall devote
Employee's time, attention and energy to the business of
Employer, and shall not during the term of this Agreement, or any
extension hereof, without Employer's consent, be engaged in any
other business activity whether or not such business activity is
pursued for gain, profit or other pecuniary advantage; but
nothing contained herein shall be construed as preventing
Employee from investing his assets in such form or manner as will
not require any service on the part of Employee in the operation
of the affairs of the corporations or other entities in which
Employee may invest his assets.
8. Covenants of Employee.
(a) During the term of Employee's employment with
Employer, and for a period of one (1) year after the termination
of such employment, for whatever reason, except for the
termination of Employee's employment under circumstances which
constitute a violation by Employer of the provisions of this
Agreement, Employee covenants and agrees that Employee will not
(except as required in Employee's duties to Employer), in any
manner directly or indirectly:
(i) Disclose or divulge to any person,
entity, firm or company whatsoever, or use for Employee's own
benefit or the benefit of any other person, entity, firm or
company directly or indirectly, in competition with the business
of Employer, as the same may exist at the date of such cessation,
any proprietary business methods, customer lists, supplier lists,
business plans or other information or data of Employer, without
regard to whether all of the foregoing matters will otherwise be
deemed confidential, material or important, the parties hereto
stipulating that as between them, the same are important,
material and confidential and greatly affect the effective and
successful conduct of the business and the goodwill of Employer,
and that any breach of the terms of this subparagraph (i) shall
be a material breach of this Agreement;
(ii) Solicit, divert, take away or interfere
with any of the customers, trade, business, patronage, employees
or agents of Employer;
(iii) Engage, directly or indirectly, either
personally or as an employee, partner, associate, officer,
manager, agent, advisor, consultant or otherwise, or by means of
any corporate or other entity or device, in any business
competitive with the business of Employer.
(b) For purposes hereof, a business will be
deemed competitive if (i) such business involves the manufacture
and sale of steel, or any other business which is competitive,
during or as of the date of cessation of Employee's employment,
with any business then being conducted by Employer or as to which
Employer has at such time formulated definitive plans to enter;
and (ii) such business makes substantial sales of products
competitive with those of Employer in any of the States of
Missouri, Illinois, Indiana, Iowa, Michigan and Ohio.
(c) All of the covenants on behalf of Employee
contained in this paragraph 8 shall be construed as agreements
independent of any other provision of this Agreement, and the
existence of any claim or cause of action against Employer,
whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of these
covenants.
(d) It is the intention of the parties to
restrict the activities of Employee under this paragraph 8 only
to the extent necessary for the protection of legitimate business
interests of Employer, and the parties specifically covenant and
agree that should any of the clauses or provisions set forth
herein, under any set of circumstances not now foreseen by the
parties, be held by a court of competent jurisdiction to be
illegal, invalid or unenforceable under present or future laws
effective during the term of this Agreement, then and in that
event, it is the intention of the parties hereto that, in lieu of
each such clause or provision of this paragraph 8, there shall be
substituted or added, and there is hereby substituted or added,
terms to such illegal, invalid or unenforceable clause or
provision as may be legal, valid and enforceable.
9. Expenses. In addition to compensation paid to
Employee under paragraph 4 hereof, during the period of
Employee's employment, Employer will pay directly or reimburse
Employee for reasonable and necessary expenses incurred by
Employee in the interest of the business of Employer. All such
expenses paid by Employee will be reimbursed by Employer upon
presentation by Employee, from time to time, of an itemized
account of such expenditures, accompanied by appropriate receipts
or other evidence of payment to the extent necessary to permit
the deductibility thereof for Federal income tax purposes.
10. Documents. Employee agrees that all documents,
instruments, drawings, plans, contracts, proposals, records,
notebooks, invoices, statements and correspondence, including all
copies thereof, relating to the business of Employer, other than
purely personal documents, shall be the property of Employer; and
upon the cessation of Employee's employment with Employer, for
whatever reason, all of the same then in Employee's possession,
whether prepared by Employee or others, will be left with or
immediately delivered to Employer.
11. Remedies. It is agreed that any material breach
or evasion of any of the terms of this Agreement by Employee will
result in immediate and irreparable injury to Employer and will
authorize recourse to injunction and/or specific performance as
well as to all other legal or equitable remedies to which
Employer may be entitled. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive
of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy whether
given hereunder or not or whether hereafter existing at law or in
equity, by statute or otherwise. The election of any one or more
remedies by Employer or Employee shall not constitute a waiver of
the right to pursue other available remedies at any time or
cumulatively from time-to-time.
12. Severability. All agreements and covenants herein
contained are severable, and in the event any of them shall be
held to be invalid or unenforceable by any court of competent
jurisdiction, this Agreement shall continue in full force and
effect and, subject to paragraph 8(d) hereof, shall be
interpreted as if such invalid agreement or covenant were not
contained herein.
13. Waiver or Modification. No amendment, waiver or
modification of this Agreement or of any covenant, condition or
limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith, and no
evidence of any amendment, waiver or modification shall be
offered or received in evidence in any proceeding, arbitration or
litigation between the parties hereto arising out of or affecting
this Agreement, or the rights or obligations of the parties
hereunder, unless such amendment, waiver or modification is in
writing, duly executed as aforesaid, and the parties further
agree that the provisions of this paragraph may not be waived or
modified except as herein set forth. Failure of Employee or
Employer to exercise or otherwise act with respect to any rights
granted hereunder in the event of a breach of any of the terms or
conditions hereof by the other party, shall not be construed as a
waiver of such breach, nor prevent Employee or Employer from
thereafter enforcing strict compliance with any and all of the
terms and conditions hereof.
14. Fees and Expenses. If Employee is the prevailing
party, Employer shall pay all of Employee's reasonable legal fees
and related expenses (including the costs of experts, evidence
and counsel) incurred by Employee as a result of (i) Employee's
termination of employment (including all such fees and expenses,
if any, incurred in contesting or disputing any such termination
of employment) or (ii) Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other
plan or arrangement maintained by Employer under which Employee
is or may be entitled to receive benefits.
15. Notices. All notices, requests, demands or other
communications hereunder ("Notice") shall be in writing and shall
be given by registered or certified mail, return receipt
requested:
if to Employer to:
Laclede Steel Company
Attn: Michael H. Lane
15th Floor
One Metropolitan Square
St. Louis, Missouri 63102
and, if to Employee, to:
John B. McKinney
19 Picardy
St. Louis, Missouri 63124
or to such other addresses as to which the parties hereto give
Notice in accordance with this paragraph 15.
16. Construction. This Agreement shall be governed by
and construed and interpreted according to the laws of the State
of Missouri, notwithstanding the place of execution hereof, nor
the performance of any acts in connection herewith or hereunder
in any other jurisdiction. For all purposes hereof, reference to
Employer shall include each and every subsidiary and affiliated
company of Employer.
17. Assignability. The services to be performed by
Employee hereunder are personal in nature and therefore Employee
shall not assign his rights or delegate his obligations under
this Agreement, and any attempted or purported assignment or
delegation not herein permitted shall be null and void.
18. Successors. Subject to the provisions of
paragraph 17, this Agreement shall be binding upon and shall
inure to the benefit of Employer and Employee and their
respective heirs, executors, administrators, legal
representatives, successors and assigns.
19. Prior Employment Agreements. Any prior Employment
Agreement between Employer and Employee is hereby terminated by
mutual agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
______________________________
JOHN B. McKINNEY
"Employee"
LACLEDE STEEL COMPANY
By____________________________
Michael H. Lane, Vice President,
Treasurer and Secretary
"Employer"
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as
of the 3rd day of August 1994, by and between LACLEDE STEEL
COMPANY, a Delaware corporation ("Employer"), and MICHAEL H. LANE
("Employee").
WHEREAS, Employee desires to be employed by Employer
and Employer desires to employ Employee under the terms and
conditions set forth in this Agreement; and
WHEREAS, it is Employer's intention to employ Employee
upon the terms and conditions herein, which recognize and
compensate Employee for the obligations of Employee undertaken
hereunder, including specifically, but not by way of limitation,
the agreement of Employee not to compete with the business of
Employer, as provided in paragraph 8(a)(iii) (see page 13), for
the period provided in paragraph 8(a) upon the termination of
Employee's employment by Employer for any reason; it being
understood and agreed that Employee is employed by Employer to
protect and expand the business of Employer;
NOW, THEREFORE, in consideration of the foregoing and
the promises and agreements herein contained, the parties agree
as follows:
1. Employment. Employer hereby employs Employee, and
Employee hereby accepts such employment from Employer upon the
terms and conditions hereinafter set forth.
2. Term of Employment. The term of Employee's
employment under this Agreement shall be for the period
commencing August 3, 1994, and continuing through August 2, 1999
or upon the earlier occurrence of any of the following events:
(a) Whenever Employer and Employee shall mutually
agree in writing to terminate Employee's employment by Employer;
(b) Upon the death of Employee;
(c) For "cause," which shall mean Employee's
dishonesty or unlawful acts committed in connection with the
business of Employer, and which results in substantial gain or
profit to Employee.
(d) At Employer's option and by action of
Employer's Board of Directors on thirty (30) days' written notice
in the event of Employee's Disability (defined as the failure
substantially to discharge Employee's duties as defined under
this Agreement for ninety (90) consecutive days or one hundred
twenty (120) days (whether or not consecutive) in any twelve (12)
month period, as a result of an injury, disease, sickness or
other physical or mental incapacity). A determination of
Employee's Disability shall be made by a qualified medical doctor
licensed to practice in the State of Missouri chosen by Employer
subject to Employee's approval, which approval shall not be
unreasonably withheld. Employee shall consent to be examined by
Employer's medical doctor and shall consent to allow Employee's
medical doctor to discuss Employee's medical condition with
Employer. Notwithstanding anything to the contrary contained
herein, Employee's Disability shall not be deemed to have
commenced until full coverage with respect to such Disability
shall have been approved by Employer's disability insurance
carrier and payment under Employer's group disability policy for
such Disability shall have commenced.
3. Duties of Employee. During Employee's employment
by Employer, Employee shall serve Employer to the best of
Employee's ability and shall perform such duties as are typically
performed by the Vice President/Finance and Chief Financial
Officer of Employer. Employee agrees to devote Employee's time
and efforts to the business of Employer (except for usual
vacations and reasonable time for attention to personal affairs
so long as Employee's performance hereunder is not adversely
affected thereby), and to be loyal and faithful at all times,
constantly endeavoring to improve Employee's ability and
knowledge of the business of Employer in an effort to increase
the value of Employee's services for the mutual benefit of
Employee and Employer.
4. Compensation.
(a) Employer agrees to pay Employee for
Employee's services during the term of Employee's employment
hereunder. Employee's base salary shall be the greater of (i) an
annual rate of Two Hundred Twenty-One Thousand Dollars
($221,000.00) or (ii) the highest annual base salary authorized
by the Board of Directors after the date hereof. Employee's base
salary shall be due and payable in twelve (12) equal monthly
installments. Additionally, during the term of Employee's
employment by Employer hereunder, Employee's compensation shall
be reviewed and may be increased and/or Employee may be paid
additional or special compensation including without limitation
stock options, stock appreciation rights and other incentive
compensation, or bonuses (based on the earnings of Employer, the
performance of Employee or otherwise) from time to time by the
mutual agreement of Employee and Employer, as determined by the
Board of Directors of Employer. In addition, during the term of
this Agreement, Employee shall receive such fringe benefits as
are made available by Employer from time to time to other
employees of Employer at Employee's level of employment.
(b) In the event of the termination of Employee's
employment either (i) by Employee for any reason including death
or Disability, or (ii) by Employer without "cause" (as defined in
paragraph 2 herein) or by Employer for any reason during the
"Change of Control Period" (as defined in paragraph 5(b) herein),
Employee shall be paid incentive compensation for the fiscal year
in which such termination occurred in an amount equal to the
product of (a) the amount of incentive compensation to which he
would have been entitled for such fiscal year had there been no
termination of employment and (b) a fraction, the numerator of
which is the number of days of such fiscal year in which Employee
remained in the employment of Employer and the denominator of
which is 365.
5. Life Insurance Benefits.
(a) During the term of this Agreement, Employer
shall be obligated to keep in force life insurance on the life of
Employee in the amount of One Million Fourteen Thousand Dollars
($1,014,000.00), Three Hundred Thousand Dollars ($300,000.00) of
which will consist of permanent insurance on the life of Employee
owned by Employee or his designee.
(b) In the event of the termination of Employee's
employment either (i) by Employee for any reason, or (ii) by
Employer without "cause" (as defined in paragraph 2 herein), or
by Employer for any reason during the period commencing with the
date of a Change of Control (as defined in Paragraph 6(a)) and
ending the earlier of (a) twenty-four months following the Change
of Control, or (b) August 2, 1999, (the "Change of Control
Period"), Employer agrees to keep in force the permanent life
insurance set forth in subparagraph (a) of this paragraph 5 for
the duration of Employee's life. Employer may fulfill this
obligation by satisfying the premium requirement so that such
permanent insurance is fully paid under the terms of such
permanent insurance policy. Employer's obligation to pay
permanent life insurance premiums under this subparagraph (b)
will survive the term of this Agreement.
(c) In the event of the termination of Employee's
employment by Employer for "cause" (as defined in paragraph 2
herein), other than during the Change of Control Period, then
Employer's obligation to pay premiums under this paragraph 5 will
cease.
(d) Employer agrees to reimburse Employee for any
tax due on the annual permanent insurance premium paid by
Employer.
(e) The amount of insurance described in
subparagraph (a) may be increased by the Board of Directors.
6. Termination.
(a) In the event of the termination of Employee's
employment by Employer, without "cause" (as defined in
paragraph 2 herein), then, in lieu of any further salary payment
pursuant to paragraph 4(a) herein, Employer agrees to pay
Employee for the remaining term of this Agreement at an annual
rate equal to the average of Employee's "compensation" for the
three fiscal years preceding the year of such termination. For
this purpose the term "compensation" means Employee's base salary
in effect for a particular year plus the incentive compensation
received by Employee with respect to services rendered in such
year whether or not such incentive compensation is actually paid
in such year. Amounts described above due Employee under this
paragraph 6(a) shall be due and payable for the duration of the
remaining term in equal monthly installments. In addition to the
foregoing, Employer shall continue, for the duration of the
remaining term, to provide Employee with such additional fringe
benefits to which Employee was entitled as of the day immediately
prior to the date of such termination.
(b) In the event of a Change of Control, (as
hereinafter defined) Employee may terminate his employment
hereunder at any time during the period commencing six months
following the Change of Control and ending the earlier of (a)
twenty-four months following the Change of Control or (b)
August 2, 1999. If (a) Employee shall terminate his employment
during such period for any reason other than death or Disability,
(b) Employer shall terminate Employee's employment during the
Change of Control Period for any reason, or (c) Employee
terminates his employment during the first six (6) months of the
Change of Control Period for Good Reason as hereinafter defined,
Employer shall pay to Employee upon such termination of
employment, in a single lump cash sum, an amount equal to the
lesser of (a) One Million Four Hundred Thousand Dollars
($1,400,000.00) or (b) One Dollar ($1.00) less than 300% of
Employee's Base Amount as hereinafter defined. Such payment
shall be in lieu of further salary payments under paragraph 4(a)
or payments (other than retirement and deferred compensation
payments) under paragraph 6(a). Notwithstanding anything to the
contrary contained herein, nothing in this Agreement shall
relieve Employer of its obligation of providing Employee with all
retirement benefits in accordance with the terms of all
retirement and deferred compensation plans in which Employee
participates including, without limitation, Employer's obligation
under Section IV of the Key Employee Retirement Agreement between
Employer and Employee maintained pursuant to the Laclede Steel
Company Key Employee Retirement Plan.
The term "Good Reason" shall mean the failure of
Employer to comply with the following requirement: During the
Change of Control Period, (i) Employee's base salary, position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held or exercised by or assigned to Employee at any time
during the 90-day period immediately preceding the date of the
Change of Control and (ii) Employee's services shall be performed
at the location where Employee was employed immediately preceding
the date of the Change of Control.
The term "Base Amount" shall mean Employee's average
annual compensation from Employer (as reported on Form W-2) for
the five consecutive calendar years ending with the calendar year
immediately preceding the Change of Control.
The term "Change of Control" shall mean a change of
control of a nature that would be required to be reported in
response to Item 1(a) of the Current Report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 ("Exchange Act"), or any
comparable successor provisions. Without limiting the foregoing,
a "Change of Control" also means for purposes of this Agreement,
regardless of its meaning under the provisions of the Exchange
Act:
(i) The purchase or other acquisition (other than from
Employer) by any person, entity or group of persons, within
the meaning of Section 13(d) or 14(d) of the Exchange Act
(excluding, for this purpose, Employer or its subsidiaries
or any employee benefit plan of Employer or its
subsidiaries), of beneficial ownership, (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 25% or
more of either the then outstanding shares of common stock
or the combined voting power of Employer's then outstanding
voting securities entitled to vote in the election of
directors; or
(ii) The receipt of proxies for the election of
directors of Employer in opposition to management's slate of
nominees which proxies aggregate more than 40% of the then
outstanding voting stock of Employer; or
(iii) Individuals who, as of the date hereof,
constitute the Board of Directors of Employer (as of the
date hereof the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board, provided that
any person (other than a person whose election or nomination
or whose initial assumption of office is in connection with
an actual or threatened election contest relating to the
election of directors of Employer, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) who becomes a director subsequent to the date hereof
whose election, or nomination for election by Employer's
shareholders, was approved by a vote of at least
three-quarters of the directors then comprising the
Incumbent Board shall be, for purposes of this Agreement,
considered as though such person were a member of the
Incumbent Board; or
(iv) Approval by the stockholders of Employer of a
reorganization, merger, or consolidation, in each case, with
respect to which persons who were the stockholders of
Employer immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than
50% of the combined power entitled to vote generally in the
election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities,
or a liquidation or dissolution of Employer or of the sale
of all or substantially all of the assets of Employer.
(c) In the event of a determination that payments
under paragraph 6(b), together with any other payments which
Employee has a right to receive from Employer constitute a
"payment" within the meaning of Section 280G(b)(2)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"), then
Employer shall pay to Employee, in a lump sum, an amount equal to
the sum of (i) any excise tax that would be imposed by
Section 4999 of the Code and payable by Employee, and (ii) an
additional amount which, when added to the amount of the excise
tax payable, equals an aggregate payment sufficient to pay all
federal, state and local income taxes due on the aggregate
payment, including interest and penalties, and leave a net amount
equal to the excise tax payable. For purposes of this paragraph,
the term "determination" means (i) a decision by the Tax Court
which has become final, as defined in Section 7481 of the Code or
(ii) a judgment, decree, or other order by any court of competent
jurisdiction which has become final. Employer shall pay all
reasonable legal fees incurred in connection with a determination
on this issue. If both Employer and Employee elect to forego a
court proceeding on this issue, Employer agrees to pay Employee
the amount set forth in this paragraph 6(c) without a
determination and to pay all reasonable legal fees incurred prior
to such election.
7. Extent of Services. Employee shall devote
Employee's time, attention and energy to the business of
Employer, and shall not during the term of this Agreement, or any
extension hereof, without Employer's consent, be engaged in any
other business activity whether or not such business activity is
pursued for gain, profit or other pecuniary advantage; but
nothing contained herein shall be construed as preventing
Employee from investing his assets in such form or manner as will
not require any service on the part of Employee in the operation
of the affairs of the corporations or other entities in which
Employee may invest his assets.
8. Covenants of Employee.
(a) During the term of Employee's employment with
Employer, and for a period of one (1) year after the termination
of such employment, for whatever reason, except for the
termination of Employee's employment under circumstances which
constitute a violation by Employer of the provisions of this
Agreement, Employee covenants and agrees that Employee will not
(except as required in Employee's duties to Employer), in any
manner directly or indirectly:
(i) Disclose or divulge to any person,
entity, firm or company whatsoever, or use for Employee's own
benefit or the benefit of any other person, entity, firm or
company directly or indirectly, in competition with the business
of Employer, as the same may exist at the date of such cessation,
any proprietary business methods, customer lists, supplier lists,
business plans or other information or data of Employer, without
regard to whether all of the foregoing matters will otherwise be
deemed confidential, material or important, the parties hereto
stipulating that as between them, the same are important,
material and confidential and greatly affect the effective and
successful conduct of the business and the goodwill of Employer,
and that any breach of the terms of this subparagraph (i) shall
be a material breach of this Agreement;
(ii) Solicit, divert, take away or interfere
with any of the customers, trade, business, patronage, employees
or agents of Employer;
(iii) Engage, directly or indirectly, either
personally or as an employee, partner, associate, officer,
manager, agent, advisor, consultant or otherwise, or by means of
any corporate or other entity or device, in any business
competitive with the business of Employer.
(b) For purposes hereof, a business will be
deemed competitive if (i) such business involves the manufacture
and sale of steel, or any other business which is competitive,
during or as of the date of cessation of Employee's employment,
with any business then being conducted by Employer or as to which
Employer has at such time formulated definitive plans to enter;
and (ii) such business makes substantial sales of products
competitive with those of Employer in any of the States of
Missouri, Illinois, Indiana, Iowa, Michigan and Ohio.
(c) All of the covenants on behalf of Employee
contained in this paragraph 8 shall be construed as agreements
independent of any other provision of this Agreement, and the
existence of any claim or cause of action against Employer,
whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of these
covenants.
(d) It is the intention of the parties to
restrict the activities of Employee under this paragraph 8 only
to the extent necessary for the protection of legitimate business
interests of Employer, and the parties specifically covenant and
agree that should any of the clauses or provisions set forth
herein, under any set of circumstances not now foreseen by the
parties, be held by a court of competent jurisdiction to be
illegal, invalid or unenforceable under present or future laws
effective during the term of this Agreement, then and in that
event, it is the intention of the parties hereto that, in lieu of
each such clause or provision of this paragraph 8, there shall be
substituted or added, and there is hereby substituted or added,
terms to such illegal, invalid or unenforceable clause or
provision as may be legal, valid and enforceable.
9. Expenses. In addition to compensation paid to
Employee under paragraph 4 hereof, during the period of
Employee's employment, Employer will pay directly or reimburse
Employee for reasonable and necessary expenses incurred by
Employee in the interest of the business of Employer. All such
expenses paid by Employee will be reimbursed by Employer upon
presentation by Employee, from time to time, of an itemized
account of such expenditures, accompanied by appropriate receipts
or other evidence of payment to the extent necessary to permit
the deductibility thereof for Federal income tax purposes.
10. Documents. Employee agrees that all documents,
instruments, drawings, plans, contracts, proposals, records,
notebooks, invoices, statements and correspondence, including all
copies thereof, relating to the business of Employer, other than
purely personal documents, shall be the property of Employer; and
upon the cessation of Employee's employment with Employer, for
whatever reason, all of the same then in Employee's possession,
whether prepared by Employee or others, will be left with or
immediately delivered to Employer.
11. Remedies. It is agreed that any material breach
or evasion of any of the terms of this Agreement by Employee will
result in immediate and irreparable injury to Employer and will
authorize recourse to injunction and/or specific performance as
well as to all other legal or equitable remedies to which
Employer may be entitled. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive
of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy whether
given hereunder or not or whether hereafter existing at law or in
equity, by statute or otherwise. The election of any one or more
remedies by Employer or Employee shall not constitute a waiver of
the right to pursue other available remedies at any time or
cumulatively from time-to-time.
12. Severability. All agreements and covenants herein
contained are severable, and in the event any of them shall be
held to be invalid or unenforceable by any court of competent
jurisdiction, this Agreement shall continue in full force and
effect and, subject to paragraph 8(d) hereof, shall be
interpreted as if such invalid agreement or covenant were not
contained herein.
13. Waiver or Modification. No amendment, waiver or
modification of this Agreement or of any covenant, condition or
limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith, and no
evidence of any amendment, waiver or modification shall be
offered or received in evidence in any proceeding, arbitration or
litigation between the parties hereto arising out of or affecting
this Agreement, or the rights or obligations of the parties
hereunder, unless such amendment, waiver or modification is in
writing, duly executed as aforesaid, and the parties further
agree that the provisions of this paragraph may not be waived or
modified except as herein set forth. Failure of Employee or
Employer to exercise or otherwise act with respect to any rights
granted hereunder in the event of a breach of any of the terms or
conditions hereof by the other party, shall not be construed as a
waiver of such breach, nor prevent Employee or Employer from
thereafter enforcing strict compliance with any and all of the
terms and conditions hereof.
14. Fees and Expenses. If Employee is the prevailing
party, Employer shall pay all of Employee's reasonable legal fees
and related expenses (including the costs of experts, evidence
and counsel) incurred by Employee as a result of (i) Employee's
termination of employment (including all such fees and expenses,
if any, incurred in contesting or disputing any such termination
of employment) or (ii) Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other
plan or arrangement maintained by Employer under which Employee
is or may be entitled to receive benefits.
15. Notices. All notices, requests, demands or other
communications hereunder ("Notice") shall be in writing and shall
be given by registered or certified mail, return receipt
requested:
if to Employer to:
Laclede Steel Company
Attn: John B. McKinney
15th Floor
One Metropolitan Square
St. Louis, Missouri 63102
and, if to Employee, to:
Michael H. Lane
7350 Westover Colonial Lane
St. Louis, Missouri 63119
or to such other addresses as to which the parties hereto give
Notice in accordance with this paragraph 15.
16. Construction. This Agreement shall be governed by
and construed and interpreted according to the laws of the State
of Missouri, notwithstanding the place of execution hereof, nor
the performance of any acts in connection herewith or hereunder
in any other jurisdiction. For all purposes hereof, reference to
Employer shall include each and every subsidiary and affiliated
company of Employer.
17. Assignability. The services to be performed by
Employee hereunder are personal in nature and therefore Employee
shall not assign his rights or delegate his obligations under
this Agreement, and any attempted or purported assignment or
delegation not herein permitted shall be null and void.
18. Successors. Subject to the provisions of
paragraph 17, this Agreement shall be binding upon and shall
inure to the benefit of Employer and Employee and their
respective heirs, executors, administrators, legal
representatives, successors and assigns.
19. Prior Employment Agreements. Any prior Employment
Agreement between Employer and Employee is hereby terminated by
mutual agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
______________________________
MICHAEL H. LANE
"Employee"
LACLEDE STEEL COMPANY
By____________________________
John B. McKinney, President
"Employer"
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as
of the 3rd day of August 1994, by and between LACLEDE STEEL
COMPANY, a Delaware corporation ("Employer"), and JOSEPH W.
HEBENSTREIT ("Employee").
WHEREAS, Employee desires to be employed by Employer
and Employer desires to employ Employee under the terms and
conditions set forth in this Agreement; and
WHEREAS, it is Employer's intention to employ Employee
upon the terms and conditions herein, which recognize and
compensate Employee for the obligations of Employee undertaken
hereunder, including specifically, but not by way of limitation,
the agreement of Employee not to compete with the business of
Employer, as provided in paragraph 8(a)(iii) (see page 12), for
the period provided in paragraph 8(a) upon the termination of
Employee's employment by Employer for any reason; it being
understood and agreed that Employee is employed by Employer to
protect and expand the business of Employer;
NOW, THEREFORE, in consideration of the foregoing and
the promises and agreements herein contained, the parties agree
as follows:
1. Employment. Employer hereby employs Employee, and
Employee hereby accepts such employment from Employer upon the
terms and conditions hereinafter set forth.
2. Term of Employment. The term of Employee's
employment under this Agreement shall be for the period
commencing August 3, 1994, and continuing through August 2, 1999,
or upon the earlier occurrence of any of the following events:
(a) Whenever Employer and Employee shall mutually
agree in writing to terminate Employee's employment by Employer;
(b) Upon the death of Employee;
(c) For "cause," which shall mean Employee's
dishonesty or unlawful acts committed in connection with the
business of Employer, and which results in substantial gain or
profit to Employee.
(d) At Employer's option and by action of
Employer's Board of Directors on thirty (30) days' written notice
in the event of Employee's Disability (defined as the failure
substantially to discharge Employee's duties as defined under
this Agreement for ninety (90) consecutive days or one hundred
twenty (120) days (whether or not consecutive) in any twelve (12)
month period, as a result of an injury, disease, sickness or
other physical or mental incapacity). A determination of
Employee's Disability shall be made by a qualified medical doctor
licensed to practice in the State of Missouri chosen by Employer
subject to Employee's approval, which approval shall not be
unreasonably withheld. Employee shall consent to be examined by
Employer's medical doctor and shall consent to allow Employee's
medical doctor to discuss Employee's medical condition with
Employer. Notwithstanding anything to the contrary contained
herein, Employee's Disability shall not be deemed to have
commenced until full coverage with respect to such Disability
shall have been approved by Employer's disability insurance
carrier and payment under Employer's group disability policy for
such Disability shall have commenced.
3. Duties of Employee. During Employee's employment
by Employer, Employee shall serve Employer to the best of
Employee's ability and shall perform such duties as are typically
performed by the Employer's executive officer with principal
responsibility of managing the Employer's manufacturing
operations. Employee agrees to devote Employee's time and
efforts to the business of Employer (except for usual vacations
and reasonable time for attention to personal affairs so long as
Employee's performance hereunder is not adversely affected
thereby), and to be loyal and faithful at all times, constantly
endeavoring to improve Employee's ability and knowledge of the
business of Employer in an effort to increase the value of
Employee's services for the mutual benefit of Employee and
Employer.
4. Compensation.
(a) Employer agrees to pay Employee for
Employee's services during the term of Employee's employment
hereunder. Employee's base salary shall be the greater of (i) an
annual rate of Two Hundred Twenty-One Thousand Dollars
($221,000.00) or (ii) the highest annual base salary authorized
by the Board of Directors after the date hereof. Employee's base
salary shall be due and payable in twelve (12) equal monthly
installments. Additionally, during the term of Employee's
employment by Employer hereunder, Employee's compensation shall
be reviewed and may be increased and/or Employee may be paid
additional or special compensation including without limitation
stock options, stock appreciation rights and other incentive
compensation, or bonuses (based on the earnings of Employer, the
performance of Employee or otherwise) from time to time by the
mutual agreement of Employee and Employer, as determined by the
Board of Directors of Employer. In addition, during the term of
this Agreement, Employee shall receive such fringe benefits as
are made available by Employer from time to time to other
employees of Employer at Employee's level of employment.
(b) In the event of the termination of Employee's
employment either (i) by Employee for any reason including death
or Disability, or (ii) by Employer without "cause" (as defined in
paragraph 2 herein) or by Employer for any reason during the
"Change of Control Period" (as defined in paragraph 5(b) herein),
Employee shall be paid incentive compensation for the fiscal year
in which such termination occurred in an amount equal to the
product of (a) the amount of incentive compensation to which he
would have been entitled for such fiscal year had there been no
termination of employment and (b) a fraction, the numerator of
which is the number of days of such fiscal year in which Employee
remained in the employment of Employer and the denominator of
which is 365.
5. Life Insurance Benefits.
(a) During the term of this Agreement, Employer
shall be obligated to keep in force life insurance on the life of
Employee in the amount of One Million Fourteen Thousand Dollars
($1,014,000.00), Three Hundred Thousand Dollars ($300,000.00) of
which will consist of permanent insurance on the life of Employee
owned by Employee or his designee.
(b) In the event of the termination of Employee's
employment either (i) by Employee for any reason, or (ii) by
Employer without "cause" (as defined in paragraph 2 herein), or
by Employer for any reason during the period commencing with the
date of a Change of Control (as defined in Paragraph 6(a)) and
ending the earlier of (a) twenty-four months following the Change
of Control, or (b) August 2, 1999 (the "Change of Control
Period") Employer agrees to keep in force the permanent life
insurance set forth in subparagraph (a) of this paragraph 5 for
the duration of Employee's life. Employer may fulfill this
obligation by satisfying the premium requirement so that such
permanent insurance is fully paid under the terms of such
permanent insurance policy. Employer's obligation to pay
permanent life insurance premiums under this subparagraph (b)
will survive the term of this Agreement.
(c) In the event of the termination of Employee's
employment by Employer for "cause" (as defined in paragraph 2
herein), other than during the Change of Control Period, then
Employer's obligation to pay premiums under this paragraph 5 will
cease.
(d) Employer agrees to reimburse Employee for any
tax due on the annual permanent insurance premium paid by
Employer.
(e) The amount of insurance described in
subparagraph (a) may be increased by the Board of Directors.
6. Termination.
(a) In the event of the termination of Employee's
employment by Employer, without "cause" (as defined in
paragraph 2 herein), then, in lieu of any further salary payment
pursuant to paragraph 4(a) herein, Employer agrees to pay
Employee for the remaining term of this Agreement at an annual
rate equal to the average of Employee's "compensation" for the
three fiscal years preceding the year of such termination. For
this purpose the term "compensation" means Employee's base salary
in effect for a particular year plus the incentive compensation
received by Employee with respect to services rendered in such
year whether or not such incentive compensation is actually paid
in such year. Amounts described above due Employee under this
paragraph 6(a) shall be due and payable for the duration of the
remaining term in equal monthly installments. In addition to the
foregoing, Employer shall continue, for the duration of the
remaining term, to provide Employee with such additional fringe
benefits to which Employee was entitled as of the day immediately
prior to the date of such termination.
(b) In the event of a Change of Control, (as
hereinafter defined) Employee may terminate his employment
hereunder at any time during the period commencing six months
following the Change of Control and ending the earlier of (a)
twenty-four months following the Change of Control or (b)
August 2, 1999. If (a) Employee shall terminate his employment
during such period for any reason other than death or Disability,
(b) Employer shall terminate Employee's employment during the
Change of Control Period for any reason, or (c) Employee
terminates his employment during the first six (6) months of the
Change of Control Period for Good Reason as hereinafter defined,
Employer shall pay to Employee upon such termination of
employment, in a single lump cash sum, an amount equal to the
lesser of (a) One Million Four Hundred Thousand Dollars
($1,400,000.00) or (b) One Dollar ($1.00) less than 300% of
Employee's Base Amount as hereinafter defined. Such payment
shall be in lieu of further salary payments under paragraph 4(a)
or payments (other than retirement and deferred compensation
payments) under paragraph 6(a). Notwithstanding anything to the
contrary contained herein, nothing in this Agreement shall
relieve Employer of its obligation of providing Employee with all
retirement benefits in accordance with the terms of all
retirement and deferred compensation plans in which Employee
participates including, without limitation, Employer's obligation
under Section IV of the Key Employee Retirement Agreement between
Employer and Employee maintained pursuant to the Laclede Steel
Company Key Employee Retirement Plan.
The term "Good Reason" shall mean the failure of
Employer to comply with the following requirement: During the
Change of Control Period, (i) Employee's base salary, position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held or exercised by or assigned to Employee at any time
during the 90-day period immediately preceding the date of the
Change of Control and (ii) Employee's services shall be performed
at the location where Employee was employed immediately preceding
the date of the Change of Control.
The term "Base Amount" shall mean Employee's average
annual compensation from Employer (as reported on Form W-2) for
the five consecutive calendar years ending with the calendar year
immediately preceding the Change of Control.
The term "Change of Control" shall mean a change of
control of a nature that would be required to be reported in
response to Item 1(a) of the Current Report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 ("Exchange Act"), or any
comparable successor provisions. Without limiting the foregoing,
a "Change of Control" also means for purposes of this Agreement,
regardless of its meaning under the provisions of the Exchange
Act:
(i) The purchase or other acquisition (other than from
Employer) by any person, entity or group of persons, within
the meaning of Section 13(d) or 14(d) of the Exchange Act
(excluding, for this purpose, Employer or its subsidiaries
or any employee benefit plan of Employer or its
subsidiaries), of beneficial ownership, (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 25% or
more of either the then outstanding shares of common stock
or the combined voting power of Employer's then outstanding
voting securities entitled to vote in the election of
directors; or
(ii) The receipt of proxies for the election of
directors of Employer in opposition to management's slate of
nominees which proxies aggregate more than 40% of the then
outstanding voting stock of Employer; or
(iii) Individuals who, as of the date hereof,
constitute the Board of Directors of Employer (as of the
date hereof the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board, provided that
any person (other than a person whose election or nomination
or whose initial assumption of office is in connection with
an actual or threatened election contest relating to the
election of directors of Employer, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) who becomes a director subsequent to the date hereof
whose election, or nomination for election by Employer's
shareholders, was approved by a vote of at least
three-quarters of the directors then comprising the
Incumbent Board shall be, for purposes of this Agreement,
considered as though such person were a member of the
Incumbent Board; or
(iv) Approval by the stockholders of Employer of a
reorganization, merger, or consolidation, in each case, with
respect to which persons who were the stockholders of
Employer immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than
50% of the combined power entitled to vote generally in the
election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities,
or a liquidation or dissolution of Employer or of the sale
of all or substantially all of the assets of Employer.
(c) In the event of a determination that payments
under paragraph 6(b), together with any other payments which
Employee has a right to receive from Employer constitute a
"payment" within the meaning of Section 280G(b)(2)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"), then
Employer shall pay to Employee, in a lump sum, an amount equal to
the sum of (i) any excise tax that would be imposed by
Section 4999 of the Code and payable by Employee, and (ii) an
additional amount which, when added to the amount of the excise
tax payable, equals an aggregate payment sufficient to pay all
federal, state and local income taxes due on the aggregate
payment, including interest and penalties, and leave a net amount
equal to the excise tax payable. For purposes of this paragraph,
the term "determination" means (i) a decision by the Tax Court
which has become final, as defined in Section 7481 of the Code or
(ii) a judgment, decree, or other order by any court of competent
jurisdiction which has become final. Employer shall pay all
reasonable legal fees incurred in connection with a determination
on this issue. If both Employer and Employee elect to forego a
court proceeding on this issue, Employer agrees to pay Employee
the amount set forth in this paragraph 6(c) without a
determination and to pay all reasonable legal fees incurred prior
to such election.
7. Extent of Services. Employee shall devote
Employee's time, attention and energy to the business of
Employer, and shall not during the term of this Agreement, or any
extension hereof, without Employer's consent, be engaged in any
other business activity whether or not such business activity is
pursued for gain, profit or other pecuniary advantage; but
nothing contained herein shall be construed as preventing
Employee from investing his assets in such form or manner as will
not require any service on the part of Employee in the operation
of the affairs of the corporations or other entities in which
Employee may invest his assets.
8. Covenants of Employee.
(a) During the term of Employee's employment with
Employer, and for a period of one (1) year after the termination
of such employment, for whatever reason, except for the
termination of Employee's employment under circumstances which
constitute a violation by Employer of the provisions of this
Agreement, Employee covenants and agrees that Employee will not
(except as required in Employee's duties to Employer), in any
manner directly or indirectly:
(i) Disclose or divulge to any person,
entity, firm or company whatsoever, or use for Employee's own
benefit or the benefit of any other person, entity, firm or
company directly or indirectly, in competition with the business
of Employer, as the same may exist at the date of such cessation,
any proprietary business methods, customer lists, supplier lists,
business plans or other information or data of Employer, without
regard to whether all of the foregoing matters will otherwise be
deemed confidential, material or important, the parties hereto
stipulating that as between them, the same are important,
material and confidential and greatly affect the effective and
successful conduct of the business and the goodwill of Employer,
and that any breach of the terms of this subparagraph (i) shall
be a material breach of this Agreement;
(ii) Solicit, divert, take away or interfere
with any of the customers, trade, business, patronage, employees
or agents of Employer;
(iii) Engage, directly or indirectly, either
personally or as an employee, partner, associate, officer,
manager, agent, advisor, consultant or otherwise, or by means of
any corporate or other entity or device, in any business
competitive with the business of Employer.
(b) For purposes hereof, a business will be
deemed competitive if (i) such business involves the manufacture
and sale of steel, or any other business which is competitive,
during or as of the date of cessation of Employee's employment,
with any business then being conducted by Employer or as to which
Employer has at such time formulated definitive plans to enter;
and (ii) such business makes substantial sales of products
competitive with those of Employer in any of the States of
Missouri, Illinois, Indiana, Iowa, Michigan and Ohio.
(c) All of the covenants on behalf of Employee
contained in this paragraph 8 shall be construed as agreements
independent of any other provision of this Agreement, and the
existence of any claim or cause of action against Employer,
whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of these
covenants.
(d) It is the intention of the parties to
restrict the activities of Employee under this paragraph 8 only
to the extent necessary for the protection of legitimate business
interests of Employer, and the parties specifically covenant and
agree that should any of the clauses or provisions set forth
herein, under any set of circumstances not now foreseen by the
parties, be held by a court of competent jurisdiction to be
illegal, invalid or unenforceable under present or future laws
effective during the term of this Agreement, then and in that
event, it is the intention of the parties hereto that, in lieu of
each such clause or provision of this paragraph 8, there shall be
substituted or added, and there is hereby substituted or added,
terms to such illegal, invalid or unenforceable clause or
provision as may be legal, valid and enforceable.
9. Expenses. In addition to compensation paid to
Employee under paragraph 4 hereof, during the period of
Employee's employment, Employer will pay directly or reimburse
Employee for reasonable and necessary expenses incurred by
Employee in the interest of the business of Employer. All such
expenses paid by Employee will be reimbursed by Employer upon
presentation by Employee, from time to time, of an itemized
account of such expenditures, accompanied by appropriate receipts
or other evidence of payment to the extent necessary to permit
the deductibility thereof for Federal income tax purposes.
10. Documents. Employee agrees that all documents,
instruments, drawings, plans, contracts, proposals, records,
notebooks, invoices, statements and correspondence, including all
copies thereof, relating to the business of Employer, other than
purely personal documents, shall be the property of Employer; and
upon the cessation of Employee's employment with Employer, for
whatever reason, all of the same then in Employee's possession,
whether prepared by Employee or others, will be left with or
immediately delivered to Employer.
11. Remedies. It is agreed that any material breach
or evasion of any of the terms of this Agreement by Employee will
result in immediate and irreparable injury to Employer and will
authorize recourse to injunction and/or specific performance as
well as to all other legal or equitable remedies to which
Employer may be entitled. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive
of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy whether
given hereunder or not or whether hereafter existing at law or in
equity, by statute or otherwise. The election of any one or more
remedies by Employer or Employee shall not constitute a waiver of
the right to pursue other available remedies at any time or
cumulatively from time-to-time.
12. Severability. All agreements and covenants herein
contained are severable, and in the event any of them shall be
held to be invalid or unenforceable by any court of competent
jurisdiction, this Agreement shall continue in full force and
effect and, subject to paragraph 8(d) hereof, shall be
interpreted as if such invalid agreement or covenant were not
contained herein.
13. Waiver or Modification. No amendment, waiver or
modification of this Agreement or of any covenant, condition or
limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith, and no
evidence of any amendment, waiver or modification shall be
offered or received in evidence in any proceeding, arbitration or
litigation between the parties hereto arising out of or affecting
this Agreement, or the rights or obligations of the parties
hereunder, unless such amendment, waiver or modification is in
writing, duly executed as aforesaid, and the parties further
agree that the provisions of this paragraph may not be waived or
modified except as herein set forth. Failure of Employee or
Employer to exercise or otherwise act with respect to any rights
granted hereunder in the event of a breach of any of the terms or
conditions hereof by the other party, shall not be construed as a
waiver of such breach, nor prevent Employee or Employer from
thereafter enforcing strict compliance with any and all of the
terms and conditions hereof.
14. Fees and Expenses. If Employee is the prevailing
party, Employer shall pay all of Employee's reasonable legal fees
and related expenses (including the costs of experts, evidence
and counsel) incurred by Employee as a result of (i) Employee's
termination of employment (including all such fees and expenses,
if any, incurred in contesting or disputing any such termination
of employment) or (ii) Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other
plan or arrangement maintained by Employer under which Employee
is or may be entitled to receive benefits.
15. Notices. All notices, requests, demands or other
communications hereunder ("Notice") shall be in writing and shall
be given by registered or certified mail, return receipt
requested:
if to Employer to:
Laclede Steel Company
Attn: John B. McKinney
15th Floor
One Metropolitan Square
St. Louis, Missouri 63102
and, if to Employee, to:
Joseph W. Hebenstreit
10 Hunter's Point
O'Fallon, Illinois 62269-0452
or to such other addresses as to which the parties hereto give
Notice in accordance with this paragraph 15.
16. Construction. This Agreement shall be governed by
and construed and interpreted according to the laws of the State
of Missouri, notwithstanding the place of execution hereof, nor
the performance of any acts in connection herewith or hereunder
in any other jurisdiction. For all purposes hereof, reference to
Employer shall include each and every subsidiary and affiliated
company of Employer.
17. Assignability. The services to be performed by
Employee hereunder are personal in nature and therefore Employee
shall not assign his rights or delegate his obligations under
this Agreement, and any attempted or purported assignment or
delegation not herein permitted shall be null and void.
18. Successors. Subject to the provisions of
paragraph 17, this Agreement shall be binding upon and shall
inure to the benefit of Employer and Employee and their
respective heirs, executors, administrators, legal
representatives, successors and assigns.
19. Prior Employment Agreements. Any prior Employment
Agreement between Employer and Employee is hereby terminated by
mutual agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
______________________________
JOSEPH W. HEBENSTREIT
"Employee"
LACLEDE STEEL COMPANY
By____________________________
John B. McKinney, President
"Employer"
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as
of the 3rd day of August 1994, by and between LACLEDE STEEL
COMPANY, a Delaware corporation ("Employer"), and LARRY J.
SCHNURBUSCH ("Employee").
WHEREAS, Employee desires to be employed by Employer
and Employer desires to employ Employee under the terms and
conditions set forth in this Agreement; and
WHEREAS, it is Employer's intention to employ Employee
upon the terms and conditions herein, which recognize and
compensate Employee for the obligations of Employee undertaken
hereunder, including specifically, but not by way of limitation,
the agreement of Employee not to compete with the business of
Employer, as provided in paragraph 7(a)(iii) (see page 11), for
the period provided in paragraph 7(a) upon the termination of
Employee's employment by Employer for any reason; it being
understood and agreed that Employee is employed by Employer to
protect and expand the business of Employer;
NOW, THEREFORE, in consideration of the foregoing and
the promises and agreements herein contained, the parties agree
as follows:
20. Employment. Employer hereby employs Employee, and
Employee hereby accepts such employment from Employer upon the
terms and conditions hereinafter set forth.
21. Term of Employment. The term of Employee's
employment under this Agreement shall be for the period
commencing August 3, 1994, and continuing through August 2, 1999,
or upon the earlier occurrence of any of the following events:
(a) Whenever Employer and Employee shall mutually
agree in writing to terminate Employee's employment by Employer;
(b) Upon the death of Employee;
(c) For "cause," which shall mean Employee's
dishonesty or unlawful acts committed in connection with the
business of Employer, and which results in substantial gain or
profit to Employee.
(d) At Employer's option and by action of
Employer's Board of Directors on thirty (30) days' written notice
in the event of Employee's Disability (defined as the failure
substantially to discharge Employee's duties as defined under
this Agreement for ninety (90) consecutive days or one hundred
twenty (120) days (whether or not consecutive) in any twelve (12)
month period, as a result of an injury, disease, sickness or
other physical or mental incapacity). A determination of
Employee's Disability shall be made by a qualified medical doctor
licensed to practice in the State of Missouri chosen by Employer
subject to Employee's approval, which approval shall not be
unreasonably withheld. Employee shall consent to be examined by
Employer's medical doctor and shall consent to allow Employee's
medical doctor to discuss Employee's medical condition with
Employer. Notwithstanding anything to the contrary contained
herein, Employee's Disability shall not be deemed to have
commenced until full coverage with respect to such Disability
shall have been approved by Employer's disability insurance
carrier and payment under Employer's group disability policy for
such Disability shall have commenced.
22. Duties of Employee. During Employee's employment
by Employer, Employee shall serve Employer to the best of
Employee's ability and shall perform such duties as are typically
performed by Employer's employee responsible for its engineering,
purchasing and energy policies. Employee agrees to devote
Employee's time and efforts to the business of Employer (except
for usual vacations and reasonable time for attention to personal
affairs so long as Employee's performance hereunder is not
adversely affected thereby), and to be loyal and faithful at all
times, constantly endeavoring to improve Employee's ability and
knowledge of the business of Employer in an effort to increase
the value of Employee's services for the mutual benefit of
Employee and Employer.
23. Compensation.
(a) Employer agrees to pay Employee for
Employee's services during the term of Employee's employment
hereunder. Employee's base salary shall be the greater of (i) an
annual rate of One Hundred Sixty-One Thousand Seven Hundred
Forty-Eight Dollars ($161,748.00) or (ii) the highest annual base
salary authorized by Employer for Employee after the date hereof.
Employee's base salary shall be due and payable in twelve (12)
equal monthly installments. Additionally, during the term of
Employee's employment by Employer hereunder, Employee's
compensation shall be reviewed and may be increased and/or
Employee may be paid additional or special compensation including
without limitation stock options, stock appreciation rights and
other incentive compensation, or bonuses (based on the earnings
of Employer, the performance of Employee or otherwise) from time
to time by the mutual agreement of Employee and Employer, as
determined by Employer. In addition, during the term of this
Agreement, Employee shall receive such fringe benefits as are
made available by Employer from time to time to other employees
of Employer at Employee's level of employment.
(b) In the event of the termination of Employee's
employment either (i) by Employee for any reason including death
or Disability, or (ii) by Employer without "cause" (as defined in
paragraph 2 herein) or by Employer for any reason during the
"Change of Control Period" (as defined in paragraph 5(b) herein),
Employee shall be paid incentive compensation for the fiscal year
in which such termination occurred in an amount equal to the
product of (a) the amount of incentive compensation to which he
would have been entitled for such fiscal year had there been no
termination of employment and (b) a fraction, the numerator of
which is the number of days of such fiscal year in which Employee
remained in the employment of Employer and the denominator of
which is 365.
24. Termination.
(a) In the event of the termination of Employee's
employment by Employer, without "cause" (as defined in paragraph
2 herein), then, in lieu of any further salary payment pursuant
to paragraph 4(a) herein, Employer agrees to pay Employee for the
remaining term of this Agreement at an annual rate equal to the
average of Employee's "compensation" for the three fiscal years
preceding the year of such termination. For this purpose the
term "compensation" means Employee's base salary in effect for a
particular year plus the incentive compensation received by the
Employee with respect to services rendered in such year whether
or not such incentive compensation is actually paid in such year.
Amounts described above due Employee under this paragraph 5(a)
shall be due and payable for the duration of the remaining term
in equal monthly installments. In addition to the foregoing,
Employer shall continue, for the duration of the remaining term,
to provide Employee with such additional fringe benefits to which
Employee was entitled as of the day immediately prior to the date
of such termination.
(b) If (a) Employer shall terminate Employee's
employment for any reason during the period commencing with the
date of a Change of Control (as hereinafter defined) and ending
the earlier of (i) twenty-four months after the Change of
Control, or (ii) August 2, 1999 (the "Change of Control Period"),
or (b) Employee shall terminate his employment during the Change
of Control Period for Good Reason as hereinafter defined,
Employer shall pay to Employee upon such termination of
employment, in a single lump cash sum, an amount equal to the
lesser of (a) Five Hundred Fifty Thousand Dollars ($550,000) or
(b) One Dollar ($1.00) less than 300% of Employee's Base Amount
as hereinafter defined. Such payment shall be in lieu of further
salary payments under paragraph 4(a) or payments (other than
retirement and deferred compensation payments) under paragraph
5(a). Notwithstanding anything to the contrary contained herein,
nothing in this Agreement shall relieve Employer of its
obligation of providing Employee with all retirement benefits in
accordance with the terms of all retirement and deferred
compensation plans in which Employee participates.
The term "Good Reason" shall mean the failure of
Employer to comply with the following requirement: During the
Change of Control Period, (i) Employee's base salary, position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held or exercised by or assigned to Employee at any time
during the 90-day period immediately preceding the date of the
Change of Control and (ii) Employee's services shall be performed
at the location where Employee was employed immediately preceding
the date of the Change of Control.
The term "Base Amount" shall mean Employee's average
annual compensation from Employer (as reported on Form W-2) for
the five consecutive calendar years ending with the calendar year
immediately preceding the Change of Control.
The term "Change of Control" shall mean a change of
control of a nature that would be required to be reported in
response to Item 1(a) of the Current Report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 ("Exchange Act"), or any
comparable successor provisions. Without limiting the foregoing,
a "Change of Control" also means for purposes of this Agreement,
regardless of its meaning under the provisions of the Exchange
Act:
(i) The purchase or other acquisition (other than from
Employer) by any person, entity or group of persons, within
the meaning of Section 13(d) or 14(d) of the Exchange Act
(excluding, for this purpose, Employer or its subsidiaries
or any employee benefit plan of Employer or its
subsidiaries), of beneficial ownership, (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 25% or
more of either the then outstanding shares of common stock
or the combined voting power of Employer's then outstanding
voting securities entitled to vote in the election of
directors; or
(ii) The receipt of proxies for the election of
directors of Employer in opposition to management's slate of
nominees which proxies aggregate more than 40% of the then
outstanding voting stock of Employer; or
(iii) Individuals who, as of the date hereof,
constitute the Board of Directors of Employer (as of the
date hereof the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board, provided that
any person (other than a person whose election or nomination
or whose initial assumption of office is in connection with
an actual or threatened election contest relating to the
election of directors of Employer, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) who becomes a director subsequent to the date hereof
whose election, or nomination for election by Employer's
shareholders, was approved by a vote of at least
three-quarters of the directors then comprising the
Incumbent Board shall be, for purposes of this Agreement,
considered as though such person were a member of the
Incumbent Board; or
(iv) Approval by the stockholders of Employer of a
reorganization, merger, or consolidation, in each case, with
respect to which persons who were the stockholders of
Employer immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than
50% of the combined power entitled to vote generally in the
election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities,
or a liquidation or dissolution of Employer or of the sale
of all or substantially all of the assets of Employer.
(c) In the event of a determination that payments
under paragraph 5(b), together with any other payments which
Employee has a right to receive from Employer constitute a
"payment" within the meaning of Section 280G(b)(2)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"), then
Employer shall pay to Employee, in a lump sum, an amount equal to
the sum of (i) any excise tax that would be imposed by
Section 4999 of the Code and payable by Employee, and (ii) an
additional amount which, when added to the amount of the excise
tax payable, equals an aggregate payment sufficient to pay all
federal, state and local income taxes due on the aggregate
payment, including interest and penalties, and leave a net amount
equal to the excise tax payable. For purposes of this paragraph,
the term "determination" means (i) a decision by the Tax Court
which has become final, as defined in Section 7481 of the Code or
(ii) a judgment, decree, or other order by any court of competent
jurisdiction which has become final. Employer shall pay all
reasonable legal fees incurred in connection with a determination
on this issue. If both Employer and Employee elect to forego a
court proceeding on this issue, Employer agrees to pay Employee
the amount set forth in this paragraph 5(c) without a
determination and to pay all reasonable legal fees incurred prior
to such election.
25. Extent of Services. Employee shall devote
Employee's time, attention and energy to the business of
Employer, and shall not during the term of this Agreement, or any
extension hereof, without Employer's consent, be engaged in any
other business activity whether or not such business activity is
pursued for gain, profit or other pecuniary advantage; but
nothing contained herein shall be construed as preventing
Employee from investing his assets in such form or manner as will
not require any service on the part of Employee in the operation
of the affairs of the corporations or other entities in which
Employee may invest his assets.
26. Covenants of Employee.
(a) During the term of Employee's employment with
Employer, and for a period of one (1) year after the termination
of such employment, for whatever reason, except for the
termination of Employee's employment under circumstances which
constitute a violation by Employer of the provisions of this
Agreement, Employee covenants and agrees that Employee will not
(except as required in Employee's duties to Employer), in any
manner directly or indirectly:
(i) Disclose or divulge to any person,
entity, firm or company whatsoever, or use for Employee's own
benefit or the benefit of any other person, entity, firm or
company directly or indirectly, in competition with the business
of Employer, as the same may exist at the date of such cessation,
any proprietary business methods, customer lists, supplier lists,
business plans or other information or data of Employer, without
regard to whether all of the foregoing matters will otherwise be
deemed confidential, material or important, the parties hereto
stipulating that as between them, the same are important,
material and confidential and greatly affect the effective and
successful conduct of the business and the goodwill of Employer,
and that any breach of the terms of this subparagraph (i) shall
be a material breach of this Agreement;
(ii) Solicit, divert, take away or interfere
with any of the customers, trade, business, patronage, employees
or agents of Employer;
(iii) Engage, directly or indirectly, either
personally or as an employee, partner, associate, officer,
manager, agent, advisor, consultant or otherwise, or by means of
any corporate or other entity or device, in any business
competitive with the business of Employer.
(b) For purposes hereof, a business will be
deemed competitive if (i) such business involves the manufacture
and sale of steel, or any other business which is competitive,
during or as of the date of cessation of Employee's employment,
with any business then being conducted by Employer or as to which
Employer has at such time formulated definitive plans to enter;
and (ii) such business makes substantial sales of products
competitive with those of Employer in any of the States of
Missouri, Illinois, Indiana, Iowa, Michigan and Ohio.
(c) All of the covenants on behalf of Employee
contained in this paragraph 7 shall be construed as agreements
independent of any other provision of this Agreement, and the
existence of any claim or cause of action against Employer,
whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of these
covenants.
(d) It is the intention of the parties to
restrict the activities of Employee under this paragraph 7 only
to the extent necessary for the protection of legitimate business
interests of Employer, and the parties specifically covenant and
agree that should any of the clauses or provisions set forth
herein, under any set of circumstances not now foreseen by the
parties, be held by a court of competent jurisdiction to be
illegal, invalid or unenforceable under present or future laws
effective during the term of this Agreement, then and in that
event, it is the intention of the parties hereto that, in lieu of
each such clause or provision of this paragraph 7, there shall be
substituted or added, and there is hereby substituted or added,
terms to such illegal, invalid or unenforceable clause or
provision as may be legal, valid and enforceable.
27. Expenses. In addition to compensation paid to
Employee under paragraph 4 hereof, during the period of
Employee's employment, Employer will pay directly or reimburse
Employee for reasonable and necessary expenses incurred by
Employee in the interest of the business of Employer. All such
expenses paid by Employee will be reimbursed by Employer upon
presentation by Employee, from time to time, of an itemized
account of such expenditures, accompanied by appropriate receipts
or other evidence of payment to the extent necessary to permit
the deductibility thereof for Federal income tax purposes.
28. Documents. Employee agrees that all documents,
instruments, drawings, plans, contracts, proposals, records,
notebooks, invoices, statements and correspondence, including all
copies thereof, relating to the business of Employer, other than
purely personal documents, shall be the property of Employer; and
upon the cessation of Employee's employment with Employer, for
whatever reason, all of the same then in Employee's possession,
whether prepared by Employee or others, will be left with or
immediately delivered to Employer.
29. Remedies. It is agreed that any material breach
or evasion of any of the terms of this Agreement by Employee will
result in immediate and irreparable injury to Employer and will
authorize recourse to injunction and/or specific performance as
well as to all other legal or equitable remedies to which
Employer may be entitled. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive
of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy whether
given hereunder or not or whether hereafter existing at law or in
equity, by statute or otherwise. The election of any one or more
remedies by Employer or Employee shall not constitute a waiver of
the right to pursue other available remedies at any time or
cumulatively from time-to-time.
30. Severability. All agreements and covenants herein
contained are severable, and in the event any of them shall be
held to be invalid or unenforceable by any court of competent
jurisdiction, this Agreement shall continue in full force and
effect and, subject to paragraph 7(d) hereof, shall be
interpreted as if such invalid agreement or covenant were not
contained herein.
31. Waiver or Modification. No amendment, waiver or
modification of this Agreement or of any covenant, condition or
limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith, and no
evidence of any amendment, waiver or modification shall be
offered or received in evidence in any proceeding, arbitration or
litigation between the parties hereto arising out of or affecting
this Agreement, or the rights or obligations of the parties
hereunder, unless such amendment, waiver or modification is in
writing, duly executed as aforesaid, and the parties further
agree that the provisions of this paragraph may not be waived or
modified except as herein set forth. Failure of Employee or
Employer to exercise or otherwise act with respect to any rights
granted hereunder in the event of a breach of any of the terms or
conditions hereof by the other party, shall not be construed as a
waiver of such breach, nor prevent Employee or Employer from
thereafter enforcing strict compliance with any and all of the
terms and conditions hereof.
32. Fees and Expenses. If Employee is the prevailing
party, Employer shall pay all of Employee's reasonable legal fees
and related expenses (including the costs of experts, evidence
and counsel) incurred by Employee as a result of (i) Employee's
termination of employment (including all such fees and expenses,
if any, incurred in contesting or disputing any such termination
of employment) or (ii) Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other
plan or arrangement maintained by Employer under which Employee
is or may be entitled to receive benefits.
33. Notices. All notices, requests, demands or other
communications hereunder ("Notice") shall be in writing and shall
be given by registered or certified mail, return receipt
requested:
if to Employer to:
Laclede Steel Company
Attn: John B. McKinney
15th Floor
One Metropolitan Square
St. Louis, Missouri 63102
and, if to Employee, to:
Larry J. Schnurbusch
12248 Winrock
St. Louis, Missouri 63141
or to such other addresses as to which the parties hereto give
Notice in accordance with this paragraph 14.
34. Construction. This Agreement shall be governed by
and construed and interpreted according to the laws of the State
of Missouri, notwithstanding the place of execution hereof, nor
the performance of any acts in connection herewith or hereunder
in any other jurisdiction. For all purposes hereof, reference to
Employer shall include each and every subsidiary and affiliated
company of Employer.
35. Assignability. The services to be performed by
Employee hereunder are personal in nature and therefore Employee
shall not assign his rights or delegate his obligations under
this Agreement, and any attempted or purported assignment or
delegation not herein permitted shall be null and void.
36. Successors. Subject to the provisions of
paragraph 16, this Agreement shall be binding upon and shall
inure to the benefit of Employer and Employee and their
respective heirs, executors, administrators, legal
representatives, successors and assigns.
37. Prior Employment Agreements. Any prior Employment
Agreement between Employer and Employee is hereby terminated by
mutual agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
______________________________
LARRY J. SCHNURBUSCH
"Employee"
LACLEDE STEEL COMPANY
By____________________________
John B. McKinney, President
"Employer"
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as
of the 3rd day of August 1994, by and between LACLEDE STEEL
COMPANY, a Delaware corporation ("Employer"), and H. BRUCE
NETHINGTON ("Employee").
WHEREAS, Employee desires to be employed by Employer
and Employer desires to employ Employee under the terms and
conditions set forth in this Agreement; and
WHEREAS, it is Employer's intention to employ Employee
upon the terms and conditions herein, which recognize and
compensate Employee for the obligations of Employee undertaken
hereunder, including specifically, but not by way of limitation,
the agreement of Employee not to compete with the business of
Employer, as provided in paragraph 7(a)(iii) (see page 11), for
the period provided in paragraph 7(a) upon the termination of
Employee's employment by Employer for any reason; it being
understood and agreed that Employee is employed by Employer to
protect and expand the business of Employer;
NOW, THEREFORE, in consideration of the foregoing and
the promises and agreements herein contained, the parties agree
as follows:
38. Employment. Employer hereby employs Employee, and
Employee hereby accepts such employment from Employer upon the
terms and conditions hereinafter set forth.
39. Term of Employment. The term of Employee's
employment under this Agreement shall be for the period
commencing August 3, 1994, and continuing through August 2, 1999,
or upon the earlier occurrence of any of the following events:
(a) Whenever Employer and Employee shall mutually
agree in writing to terminate Employee's employment by Employer;
(b) Upon the death of Employee;
(c) For "cause," which shall mean Employee's
dishonesty or unlawful acts committed in connection with the
business of Employer, and which results in substantial gain or
profit to Employee.
(d) At Employer's option and by action of
Employer's Board of Directors on thirty (30) days' written notice
in the event of Employee's Disability (defined as the failure
substantially to discharge Employee's duties as defined under
this Agreement for ninety (90) consecutive days or one hundred
twenty (120) days (whether or not consecutive) in any twelve (12)
month period, as a result of an injury, disease, sickness or
other physical or mental incapacity). A determination of
Employee's Disability shall be made by a qualified medical doctor
licensed to practice in the State of Missouri chosen by Employer
subject to Employee's approval, which approval shall not be
unreasonably withheld. Employee shall consent to be examined by
Employer's medical doctor and shall consent to allow Employee's
medical doctor to discuss Employee's medical condition with
Employer. Notwithstanding anything to the contrary contained
herein, Employee's Disability shall not be deemed to have
commenced until full coverage with respect to such Disability
shall have been approved by Employer's disability insurance
carrier and payment under Employer's group disability policy for
such Disability shall have commenced.
40. Duties of Employee. During Employee's employment
by Employer, Employee shall serve Employer to the best of
Employee's ability and shall perform such duties as are typically
performed by Employer's employee responsible for Human Resources,
Collective Bargaining and Labor Relations. Employee agrees to
devote Employee's time and efforts to the business of Employer
(except for usual vacations and reasonable time for attention to
personal affairs so long as Employee's performance hereunder is
not adversely affected thereby), and to be loyal and faithful at
all times, constantly endeavoring to improve Employee's ability
and knowledge of the business of Employer in an effort to
increase the value of Employee's services for the mutual benefit
of Employee and Employer.
41. Compensation.
(a) Employer agrees to pay Employee for
Employee's services during the term of Employee's employment
hereunder. Employee's base salary shall be the greater of (i) an
annual rate of One Hundred Fifty-Two Thousand One Hundred Ninety-
Six Dollars ($152,196.00) (ii) the highest annual base salary
authorized by Employer for Employee after the date hereof.
Employee's base salary shall be due and payable in twelve (12)
equal monthly installments. Additionally, during the term of
Employee's employment by Employer hereunder, Employee's
compensation shall be reviewed and may be increased and/or
Employee may be paid additional or special compensation including
without limitation stock options, stock appreciation rights and
other incentive compensation, or bonuses (based on the earnings
of Employer, the performance of Employee or otherwise) from time
to time by the mutual agreement of Employee and Employer, as
determined by Employer. In addition, during the term of this
Agreement, Employee shall receive such fringe benefits as are
made available by Employer from time to time to other employees
of Employer at Employee's level of employment.
(b) In the event of the termination of Employee's
employment either (i) by Employee for any reason including death
or Disability, or (ii) by Employer without "cause" (as defined in
paragraph 2 herein) or by Employer for any reason during the
"Change of Control Period" (as defined in paragraph 5(b) herein),
Employee shall be paid incentive compensation for the fiscal year
in which such termination occurred in an amount equal to the
product of (a) the amount of incentive compensation to which he
would have been entitled for such fiscal year had there been no
termination of employment and (b) a fraction, the numerator of
which is the number of days of such fiscal year in which Employee
remained in the employment of Employer and the denominator of
which is 365.
42. Termination.
(a) In the event of the termination of Employee's
employment by Employer, without "cause" (as defined in paragraph
2 herein), then, in lieu of any further salary payment pursuant
to paragraph 4(a) herein, Employer agrees to pay Employee for the
remaining term of this Agreement at an annual rate equal to the
average of Employee's "compensation" for the three fiscal years
preceding the year of such termination. For this purpose the
term "compensation" means Employee's base salary in effect for a
particular year plus the incentive compensation received by the
Employee with respect to services rendered in such year whether
or not such incentive compensation is actually paid in such year.
Amounts described above due Employee under this paragraph 5(a)
shall be due and payable for the duration of the remaining term
in equal monthly installments. In addition to the foregoing,
Employer shall continue, for the duration of the remaining term,
to provide Employee with such additional fringe benefits to which
Employee was entitled as of the day immediately prior to the date
of such termination.
(b) If (a) Employer shall terminate Employee's
employment for any reason during the period commencing with the
date of a Change of Control (as hereinafter defined) and ending
the earlier of (i) twenty-four months after the Change of
Control, or (ii) August 2, 1999 (the "Change of Control Period"),
or (b) Employee shall terminate his employment during the Change
of Control Period for Good Reason as hereinafter defined,
Employer shall pay to Employee upon such termination of
employment, in a single lump cash sum, an amount equal to the
lesser of (a) Three Hundred Fifty Thousand Dollars ($350,000) or
(b) One Dollar ($1.00) less than 300% of Employee's Base Amount
as hereinafter defined. Such payment shall be in lieu of further
salary payments under paragraph 4(a) or payments (other than
retirement and deferred compensation payments) under paragraph
5(a). Notwithstanding anything to the contrary contained herein,
nothing in this Agreement shall relieve Employer of its
obligation of providing Employee with all retirement benefits in
accordance with the terms of all retirement and deferred
compensation plans in which Employee participates.
The term "Good Reason" shall mean the failure of
Employer to comply with the following requirement: During the
Change of Control Period, (i) Employee's base salary, position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held or exercised by or assigned to Employee at any time
during the 90-day period immediately preceding the date of the
Change of Control and (ii) Employee's services shall be performed
at the location where Employee was employed immediately preceding
the date of the Change of Control.
The term "Base Amount" shall mean Employee's average
annual compensation from Employer (as reported on Form W-2) for
the five consecutive calendar years ending with the calendar year
immediately preceding the Change of Control.
The term "Change of Control" shall mean a change of
control of a nature that would be required to be reported in
response to Item 1(a) of the Current Report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 ("Exchange Act"), or any
comparable successor provisions. Without limiting the foregoing,
a "Change of Control" also means for purposes of this Agreement,
regardless of its meaning under the provisions of the Exchange
Act:
(i) The purchase or other acquisition (other than from
Employer) by any person, entity or group of persons, within
the meaning of Section 13(d) or 14(d) of the Exchange Act
(excluding, for this purpose, Employer or its subsidiaries
or any employee benefit plan of Employer or its
subsidiaries), of beneficial ownership, (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 25% or
more of either the then outstanding shares of common stock
or the combined voting power of Employer's then outstanding
voting securities entitled to vote in the election of
directors; or
(ii) The receipt of proxies for the election of
directors of Employer in opposition to management's slate of
nominees which proxies aggregate more than 40% of the then
outstanding voting stock of Employer; or
(iii) Individuals who, as of the date hereof,
constitute the Board of Directors of Employer (as of the
date hereof the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board, provided that
any person (other than a person whose election or nomination
or whose initial assumption of office is in connection with
an actual or threatened election contest relating to the
election of directors of Employer, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) who becomes a director subsequent to the date hereof
whose election, or nomination for election by Employer's
shareholders, was approved by a vote of at least
three-quarters of the directors then comprising the
Incumbent Board shall be, for purposes of this Agreement,
considered as though such person were a member of the
Incumbent Board; or
(iv) Approval by the stockholders of Employer of a
reorganization, merger, or consolidation, in each case, with
respect to which persons who were the stockholders of
Employer immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than
50% of the combined power entitled to vote generally in the
election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities,
or a liquidation or dissolution of Employer or of the sale
of all or substantially all of the assets of Employer.
(c) In the event of a determination that payments
under paragraph 5(b), together with any other payments which
Employee has a right to receive from Employer constitute a
"payment" within the meaning of Section 280G(b)(2)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"), then
Employer shall pay to Employee, in a lump sum, an amount equal to
the sum of (i) any excise tax that would be imposed by
Section 4999 of the Code and payable by Employee, and (ii) an
additional amount which, when added to the amount of the excise
tax payable, equals an aggregate payment sufficient to pay all
federal, state and local income taxes due on the aggregate
payment, including interest and penalties, and leave a net amount
equal to the excise tax payable. For purposes of this paragraph,
the term "determination" means (i) a decision by the Tax Court
which has become final, as defined in Section 7481 of the Code or
(ii) a judgment, decree, or other order by any court of competent
jurisdiction which has become final. Employer shall pay all
reasonable legal fees incurred in connection with a determination
on this issue. If both Employer and Employee elect to forego a
court proceeding on this issue, Employer agrees to pay Employee
the amount set forth in this paragraph 5(c) without a
determination and to pay all reasonable legal fees incurred prior
to such election.
43. Extent of Services. Employee shall devote
Employee's time, attention and energy to the business of
Employer, and shall not during the term of this Agreement, or any
extension hereof, without Employer's consent, be engaged in any
other business activity whether or not such business activity is
pursued for gain, profit or other pecuniary advantage; but
nothing contained herein shall be construed as preventing
Employee from investing his assets in such form or manner as will
not require any service on the part of Employee in the operation
of the affairs of the corporations or other entities in which
Employee may invest his assets.
44. Covenants of Employee.
(a) During the term of Employee's employment with
Employer, and for a period of one (1) year after the termination
of such employment, for whatever reason, except for the
termination of Employee's employment under circumstances which
constitute a violation by Employer of the provisions of this
Agreement, Employee covenants and agrees that Employee will not
(except as required in Employee's duties to Employer), in any
manner directly or indirectly:
(i) Disclose or divulge to any person,
entity, firm or company whatsoever, or use for Employee's own
benefit or the benefit of any other person, entity, firm or
company directly or indirectly, in competition with the business
of Employer, as the same may exist at the date of such cessation,
any proprietary business methods, customer lists, supplier lists,
business plans or other information or data of Employer, without
regard to whether all of the foregoing matters will otherwise be
deemed confidential, material or important, the parties hereto
stipulating that as between them, the same are important,
material and confidential and greatly affect the effective and
successful conduct of the business and the goodwill of Employer,
and that any breach of the terms of this subparagraph (i) shall
be a material breach of this Agreement;
(ii) Solicit, divert, take away or interfere
with any of the customers, trade, business, patronage, employees
or agents of Employer;
(iii) Engage, directly or indirectly, either
personally or as an employee, partner, associate, officer,
manager, agent, advisor, consultant or otherwise, or by means of
any corporate or other entity or device, in any business
competitive with the business of Employer.
(b) For purposes hereof, a business will be
deemed competitive if (i) such business involves the manufacture
and sale of steel, or any other business which is competitive,
during or as of the date of cessation of Employee's employment,
with any business then being conducted by Employer or as to which
Employer has at such time formulated definitive plans to enter;
and (ii) such business makes substantial sales of products
competitive with those of Employer in any of the States of
Missouri, Illinois, Indiana, Iowa, Michigan and Ohio.
(c) All of the covenants on behalf of Employee
contained in this paragraph 7 shall be construed as agreements
independent of any other provision of this Agreement, and the
existence of any claim or cause of action against Employer,
whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of these
covenants.
(d) It is the intention of the parties to
restrict the activities of Employee under this paragraph 7 only
to the extent necessary for the protection of legitimate business
interests of Employer, and the parties specifically covenant and
agree that should any of the clauses or provisions set forth
herein, under any set of circumstances not now foreseen by the
parties, be held by a court of competent jurisdiction to be
illegal, invalid or unenforceable under present or future laws
effective during the term of this Agreement, then and in that
event, it is the intention of the parties hereto that, in lieu of
each such clause or provision of this paragraph 7, there shall be
substituted or added, and there is hereby substituted or added,
terms to such illegal, invalid or unenforceable clause or
provision as may be legal, valid and enforceable.
45. Expenses. In addition to compensation paid to
Employee under paragraph 4 hereof, during the period of
Employee's employment, Employer will pay directly or reimburse
Employee for reasonable and necessary expenses incurred by
Employee in the interest of the business of Employer. All such
expenses paid by Employee will be reimbursed by Employer upon
presentation by Employee, from time to time, of an itemized
account of such expenditures, accompanied by appropriate receipts
or other evidence of payment to the extent necessary to permit
the deductibility thereof for Federal income tax purposes.
46. Documents. Employee agrees that all documents,
instruments, drawings, plans, contracts, proposals, records,
notebooks, invoices, statements and correspondence, including all
copies thereof, relating to the business of Employer, other than
purely personal documents, shall be the property of Employer; and
upon the cessation of Employee's employment with Employer, for
whatever reason, all of the same then in Employee's possession,
whether prepared by Employee or others, will be left with or
immediately delivered to Employer.
47. Remedies. It is agreed that any material breach
or evasion of any of the terms of this Agreement by Employee will
result in immediate and irreparable injury to Employer and will
authorize recourse to injunction and/or specific performance as
well as to all other legal or equitable remedies to which
Employer may be entitled. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive
of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy whether
given hereunder or not or whether hereafter existing at law or in
equity, by statute or otherwise. The election of any one or more
remedies by Employer or Employee shall not constitute a waiver of
the right to pursue other available remedies at any time or
cumulatively from time-to-time.
48. Severability. All agreements and covenants herein
contained are severable, and in the event any of them shall be
held to be invalid or unenforceable by any court of competent
jurisdiction, this Agreement shall continue in full force and
effect and, subject to paragraph 7(d) hereof, shall be
interpreted as if such invalid agreement or covenant were not
contained herein.
49. Waiver or Modification. No amendment, waiver or
modification of this Agreement or of any covenant, condition or
limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith, and no
evidence of any amendment, waiver or modification shall be
offered or received in evidence in any proceeding, arbitration or
litigation between the parties hereto arising out of or affecting
this Agreement, or the rights or obligations of the parties
hereunder, unless such amendment, waiver or modification is in
writing, duly executed as aforesaid, and the parties further
agree that the provisions of this paragraph may not be waived or
modified except as herein set forth. Failure of Employee or
Employer to exercise or otherwise act with respect to any rights
granted hereunder in the event of a breach of any of the terms or
conditions hereof by the other party, shall not be construed as a
waiver of such breach, nor prevent Employee or Employer from
thereafter enforcing strict compliance with any and all of the
terms and conditions hereof.
50. Fees and Expenses. If Employee is the prevailing
party, Employer shall pay all of Employee's reasonable legal fees
and related expenses (including the costs of experts, evidence
and counsel) incurred by Employee as a result of (i) Employee's
termination of employment (including all such fees and expenses,
if any, incurred in contesting or disputing any such termination
of employment) or (ii) Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other
plan or arrangement maintained by Employer under which Employee
is or may be entitled to receive benefits.
51. Notices. All notices, requests, demands or other
communications hereunder ("Notice") shall be in writing and shall
be given by registered or certified mail, return receipt
requested:
if to Employer to:
Laclede Steel Company
Attn: John B. McKinney
15th Floor
One Metropolitan Square
St. Louis, Missouri 63102
and, if to Employee, to:
H. Bruce Nethington
1130 South Geyer Road
St. Louis, Missouri 63122
or to such other addresses as to which the parties hereto give
Notice in accordance with this paragraph 14.
52. Construction. This Agreement shall be governed by
and construed and interpreted according to the laws of the State
of Missouri, notwithstanding the place of execution hereof, nor
the performance of any acts in connection herewith or hereunder
in any other jurisdiction. For all purposes hereof, reference to
Employer shall include each and every subsidiary and affiliated
company of Employer.
53. Assignability. The services to be performed by
Employee hereunder are personal in nature and therefore Employee
shall not assign his rights or delegate his obligations under
this Agreement, and any attempted or purported assignment or
delegation not herein permitted shall be null and void.
54. Successors. Subject to the provisions of
paragraph 16, this Agreement shall be binding upon and shall
inure to the benefit of Employer and Employee and their
respective heirs, executors, administrators, legal
representatives, successors and assigns.
55. Prior Employment Agreements. Any prior Employment
Agreement between Employer and Employee is hereby terminated by
mutual agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
______________________________
H. BRUCE NETHINGTON
"Employee"
LACLEDE STEEL COMPANY
By____________________________
John B. McKinney, President
"Employer"
Exhibit (4) (a) LOAN AND SECURITY AGREEMENT
Dated as of September 7, 1994
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
and
BANKAMERICA BUSINESS CREDIT, INC.
as the Agent
and
LACLEDE STEEL COMPANY
and
LACLEDE CHAIN MANUFACTURING COMPANY
and
LACLEDE MID AMERICA INC.
as the Borrowers
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . 30
1.3 Other Terms. . . . . . . . . . . . . . . . . . . . . 30
1.4 Computation of Time Periods. . . . . . . . . . . . . 31
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Total Facility . . . . . . . . . . . . . . . . . . . 31
2.2 Revolving Loans. . . . . . . . . . . . . . . . . . . 31
2.3 Term Loans . . . . . . . . . . . . . . . . . . . . . 37
2.4 Letters of Credit. . . . . . . . . . . . . . . . . . 38
ARTICLE 3
INTEREST AND FEES
3.1 Interest . . . . . . . . . . . . . . . . . . . . . . 45
3.2 Conversion or Continuation . . . . . . . . . . . . . 46
3.3 Special Provisions Governing LIBO Rate Loans . . . . 48
3.4 Maximum Interest Rate. . . . . . . . . . . . . . . . 51
3.5 Closing Fee. . . . . . . . . . . . . . . . . . . . . 52
3.6 Facility Fee . . . . . . . . . . . . . . . . . . . . 52
3.7 Servicing Fee. . . . . . . . . . . . . . . . . . . . 52
3.8 Letter of Credit Fee . . . . . . . . . . . . . . . . 52
3.9 Audit Fees . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans. . . . . . . . . . . . . . . . . . . 53
4.2 Termination of Revolver Facility . . . . . . . . . . 54
4.3 Repayment of the Term Loans. . . . . . . . . . . . . 54
4.4 Voluntary Prepayments of the Term Loans. . . . . . . 54
4.5 Mandatory Prepayments of the Term Loans. . . . . . . 55
4.6 Place and Form of Payments; Extension of Time. . . . 55
4.7 Payments as Revolving Loans. . . . . . . . . . . . . 55
4.8 Apportionment, Application and Reversal of
Payments . . . . . . . . . . . . . . . . . . . . . . 56
4.9 Indemnity for Returned Payments. . . . . . . . . . . 56
4.10 Increased Capital. . . . . . . . . . . . . . . . . . 57
4.11 Register; Agent's and Lenders' Books and Records;
Monthly Statements . . . . . . . . . . . . . . . . . 57
ARTICLE 5
COLLATERAL
5.1 Grant of Security Interest . . . . . . . . . . . . . 58
5.2 Perfection and Protection of Security Interest . . . 62
5.3 Location of Collateral . . . . . . . . . . . . . . . 63
5.4 Title to, Liens on, and Sale and Use of
Collateral . . . . . . . . . . . . . . . . . . . . . 64
5.5 Appraisals . . . . . . . . . . . . . . . . . . . . . 64
5.6 Access and Examination; Confidentiality. . . . . . . 64
5.7 Collateral Reporting . . . . . . . . . . . . . . . . 65
5.8 Accounts . . . . . . . . . . . . . . . . . . . . . . 66
5.9 Collection of Accounts; Payments . . . . . . . . . . 68
5.10 Inventory. . . . . . . . . . . . . . . . . . . . . . 69
5.11 Equipment. . . . . . . . . . . . . . . . . . . . . . 69
5.12 Assigned Contracts . . . . . . . . . . . . . . . . . 71
5.13 Documents, Instruments, and Chattel Paper. . . . . . 72
5.14 Right to Cure. . . . . . . . . . . . . . . . . . . . 72
5.15 Power of Attorney. . . . . . . . . . . . . . . . . . 72
5.16 The Agent's and Lenders' Rights, Duties and
Liabilities. . . . . . . . . . . . . . . . . . . . . 73
ARTICLE 6
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
6.1 Books and Records. . . . . . . . . . . . . . . . . . 74
6.2 Financial Information. . . . . . . . . . . . . . . . 74
6.3 Notices to the Lenders . . . . . . . . . . . . . . . 77
ARTICLE 7
GENERAL WARRANTIES AND REPRESENTATIONS
7.1 Authorization, Validity, and Enforceability of
this Agreement and the Loan Documents. . . . . . . . 80
7.2 Validity and Priority of Security Interest . . . . . 80
7.3 Organization and Qualification . . . . . . . . . . . 80
7.4 Corporate Name; Prior Transactions . . . . . . . . . 81
7.5 Subsidiaries and Affiliates. . . . . . . . . . . . . 81
7.6 Financial Statements and Projections . . . . . . . . 81
7.7 Capitalization . . . . . . . . . . . . . . . . . . . 82
7.8 Solvency . . . . . . . . . . . . . . . . . . . . . . 82
7.9 Debt . . . . . . . . . . . . . . . . . . . . . . . . 82
7.10 Distributions. . . . . . . . . . . . . . . . . . . . 82
7.11 Title to Property. . . . . . . . . . . . . . . . . . 82
7.12 Real Estate; Leases. . . . . . . . . . . . . . . . . 82
7.13 Proprietary Rights . . . . . . . . . . . . . . . . . 83
7.14 Trade Names and Terms of Sale. . . . . . . . . . . . 83
7.15 Litigation . . . . . . . . . . . . . . . . . . . . . 83
7.16 Restrictive Agreements . . . . . . . . . . . . . . . 83
7.17 Labor Disputes . . . . . . . . . . . . . . . . . . . 83
7.18 Environmental Laws . . . . . . . . . . . . . . . . . 84
7.19 No Violation of Law. . . . . . . . . . . . . . . . . 86
7.20 No Default . . . . . . . . . . . . . . . . . . . . . 86
7.21 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 86
7.22 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 88
7.23 Investment Act, etc. . . . . . . . . . . . . . . . . 88
7.24 Public Utility Holding Company . . . . . . . . . . . 88
7.25 Margin Securities. . . . . . . . . . . . . . . . . . 88
7.26 Broker's Fees. . . . . . . . . . . . . . . . . . . . 89
7.27 No Material Adverse Change . . . . . . . . . . . . . 89
7.28 Disclosure . . . . . . . . . . . . . . . . . . . . . 89
7.29 Bank Accounts. . . . . . . . . . . . . . . . . . . . 89
ARTICLE 8
AFFIRMATIVE AND NEGATIVE COVENANTS
8.1 Taxes and Other Obligations. . . . . . . . . . . . . 89
8.2 Corporate Existence and Good Standing. . . . . . . . 90
8.3 Compliance with Law and Agreements . . . . . . . . . 90
8.4 Maintenance of Property. . . . . . . . . . . . . . . 90
8.5 Insurance. . . . . . . . . . . . . . . . . . . . . . 90
8.6 Condemnation . . . . . . . . . . . . . . . . . . . . 92
8.7 Environmental Laws . . . . . . . . . . . . . . . . . 93
8.8 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 94
8.9 Mergers, Consolidations or Sales . . . . . . . . . . 95
8.10 Distributions; Capital Change; Restricted
Investments; Permitted Acquisitions. . . . . . . . . 96
8.11 Transactions Affecting Collateral or Obligations . . 97
8.12 Guaranties . . . . . . . . . . . . . . . . . . . . . 97
8.13 Debt . . . . . . . . . . . . . . . . . . . . . . . . 97
8.14 Prepayment . . . . . . . . . . . . . . . . . . . . . 98
8.15 IRB Debt . . . . . . . . . . . . . . . . . . . . . . 98
8.16 Transactions with Affiliates . . . . . . . . . . . . 98
8.17 Investment Banking and Finder's Fees . . . . . . . . 99
8.18 Business Conducted . . . . . . . . . . . . . . . . . 99
8.19 Liens. . . . . . . . . . . . . . . . . . . . . . . . 99
8.20 Sale and Leaseback Transactions. . . . . . . . . . . 99
8.21 New Subsidiaries . . . . . . . . . . . . . . . . . . 99
8.22 Capital Expenditures . . . . . . . . . . . . . . . .100
8.23 Operating Lease Obligations. . . . . . . . . . . . .100
8.24 Consolidated Fixed Charge Coverage Ratio . . . . . .100
8.25 Consolidated Adjusted Net Worth. . . . . . . . . . .100
8.26 Fiscal Year. . . . . . . . . . . . . . . . . . . . .100
8.27 Further Assurances . . . . . . . . . . . . . . . . .100
ARTICLE 9
CONDITIONS OF LENDING
9.1 Conditions Precedent to Making of Loans on the
Closing Date . . . . . . . . . . . . . . . . . . . .101
9.2 Conditions Precedent to Each Loan. . . . . . . . . .102
ARTICLE 10
DEFAULT; REMEDIES
10.1 Events of Default . . . . . . . . . . . . . . . . .103
10.2 Remedies. . . . . . . . . . . . . . . . . . . . . .108
ARTICLE 11
TERM AND TERMINATION
11.1 Term and Termination. . . . . . . . . . . . . . . .110
ARTICLE 12
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
12.1 No Implied Waivers. . . . . . . . . . . . . . . . .110
12.2 Amendments and Waivers. . . . . . . . . . . . . . .110
12.3 Assignments; Participations . . . . . . . . . . . .111
12.4 Binding Effect; Assignment. . . . . . . . . . . . .114
ARTICLE 13
THE AGENT
13.1 Appointment . . . . . . . . . . . . . . . . . . . .115
13.2 Nature of Duties. . . . . . . . . . . . . . . . . .115
13.3 Rights, Exculpation, Etc. . . . . . . . . . . . . .116
13.4 Reliance. . . . . . . . . . . . . . . . . . . . . .117
13.5 Indemnification of the Agent by the Lenders . . . .117
13.6 Agent in Individual Capacity. . . . . . . . . . . .117
13.7 Successor Agent . . . . . . . . . . . . . . . . . .118
13.8 Collateral Matters. . . . . . . . . . . . . . . . .118
13.9 Restrictions on Actions by Lenders; Sharing of
Payments. . . . . . . . . . . . . . . . . . . . . .120
13.10 Agency for Perfection . . . . . . . . . . . . . . .121
13.11 Payments by Agent to Lenders. . . . . . . . . . . .121
13.12 Concerning the Collateral and the Related Loan
Documents . . . . . . . . . . . . . . . . . . . . .121
ARTICLE 14
MISCELLANEOUS
14.1 Cumulative Remedies; No Prior Recourse to
Collateral. . . . . . . . . . . . . . . . . . . . .122
14.2 Severability. . . . . . . . . . . . . . . . . . . .122
14.3 Governing Law; Choice of Forum; Service of
Process; Jury Trial Waiver. . . . . . . . . . . . .122
14.4 Survival of Representations and Warranties. . . . .123
14.5 Other Security and Guaranties . . . . . . . . . . .123
14.6 Fees and Expenses . . . . . . . . . . . . . . . . .124
14.7 Notices . . . . . . . . . . . . . . . . . . . . . .125
14.8 Indemnity of the Agent and the Lenders by the
Borrowers . . . . . . . . . . . . . . . . . . . . .127
14.9 Waiver of Notices . . . . . . . . . . . . . . . . .128
14.10 Final Agreement . . . . . . . . . . . . . . . . . .128
14.11 Counterparts. . . . . . . . . . . . . . . . . . . .128
14.12 Captions. . . . . . . . . . . . . . . . . . . . . .128
14.13 Right of Setoff . . . . . . . . . . . . . . . . . .128
14.14 Taxes . . . . . . . . . . . . . . . . . . . . . . .129
14.15 Joint and Several Liability . . . . . . . . . . . .130
14.16 Contribution and Indemnification among the
Borrowers . . . . . . . . . . . . . . . . . . . . .131
14.17 Agency of the Parent for each other Borrower. . . .132
<PAGE>
EXHIBITS AND SCHEDULES
EXHIBIT A - Form of Term Loan Note (Sections 2.3(c), 12.3(d))
EXHIBIT B - Form of Borrowing Base Certificate (Defs.)
EXHIBIT C - Financial Statements (Defs., Section 7.6(a))
EXHIBIT D - List of Closing Documents (Section 9.1(h))
EXHIBIT E - Form of Notice of Borrowing (Section 2.2(b))
EXHIBIT F - Form of Notice of Conversion/Continuation
(Section 3.2(b))
EXHIBIT G - Form of Assignment and Acceptance (Section 12.3(a)
and (d))
SCHEDULE 2.4 - Existing Letters of Credit (Sections 2.4(a),
2.4(f))
SCHEDULE 5.3 - Locations of Collateral (Section 5.3)
SCHEDULE 7.2 - Permitted Liens (Defs., Sections 5.4, 7.2)
SCHEDULE 7.4 - Trade Names (Sections 7.4, 7.14)
SCHEDULE 7.5 - Subsidiaries and Affiliates (Sections 7.5, 8.21)
SCHEDULE 7.9 - Debt (Section 7.9)
SCHEDULE 7.12 - Real Property and Leases; Permitted Sales
(Defs., Sections 7.11, 7.12)
SCHEDULE 7.13 - Proprietary Rights (Defs., Section 7.13)
SCHEDULE 7.15 - Litigation (Section 7.15)
SCHEDULE 7.17 - Labor Contracts and Disputes (Section 7.17)
SCHEDULE 7.18 - Environmental Matters (Sections 7.18, 8.7)
SCHEDULE 7.21 - Employee Benefit Plans (Section 7.21)
SCHEDULE 7.29 - Bank Accounts (Section 7.29)
SCHEDULE 8.10 - Restricted Investments (Defs.)
<PAGE>
This LOAN AND SECURITY AGREEMENT (the "Agreement") is
dated as of September 7, 1994 among BANKAMERICA BUSINESS CREDIT,
INC., a Delaware corporation ("BABC"), THE BANK OF NEW YORK
COMMERCIAL CORPORATION, a New York corporation ("BNYCC"), THE
BOATMEN'S NATIONAL BANK OF ST. LOUIS, a national banking
association ("Boatmen's") (BABC, BNYCC and Boatmen's and their
respective successors and assigns being sometimes hereinafter
referred to collectively as the "Lenders" and each of BABC, BNYCC
and Boatmen's and its successors and assigns being sometimes
hereinafter referred to individually as a "Lender"), BANKAMERICA
BUSINESS CREDIT, INC., a Delaware corporation, as agent for the
Lenders (in such capacity as agent, the "Agent"), LACLEDE STEEL
COMPANY, a Delaware corporation (the "Parent"), with an office at
One Metropolitan Square, 211 North Broadway, St. Louis, Missouri
63102-2750, and LACLEDE CHAIN MANUFACTURING COMPANY, a Delaware
corporation ("Laclede Chain"), with an office at One Metropolitan
Square, 211 North Broadway, St. Louis, Missouri 63102-2750, and
LACLEDE MID AMERICA INC., an Indiana corporation ("Laclede Mid
America"), with an office at One Metropolitan Square, 211 North
Broadway, St. Louis, Missouri 63102-2750 (the Parent, Laclede
Chain and Laclede Mid America being sometimes hereinafter
referred to collectively as the "Borrowers" and each of the
Parent, Laclede Chain and Laclede Mid America being sometimes
hereinafter referred to individually as a "Borrower"). In
consideration of the mutual conditions and agreements set forth
in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the Lenders, the Agent
and the Borrowers hereby agree as follows:
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
"Accounts" means all of each Borrower's now owned or
hereafter acquired or arising accounts, and any other rights to
payment for the sale or lease of goods or rendition of services,
whether or not they have been earned by performance.
"Account Debtor" means each Person obligated in any way
on or in connection with an Account.
"Affiliate" means: (a) any Person which, directly or
indirectly, controls, is controlled by or is under common control
with, any Borrower; (b) any Person which beneficially owns or
holds, directly or indirectly, five percent (5.0%) or more of any
class of Voting Stock of any Borrower; or (c) any Person, five
percent (5.0%) or more of any class of the Voting Stock (or if
such Person is not a corporation, five percent (5.0%) or more of
the equity interest) of which is beneficially owned or held,
directly or indirectly, by any Borrower. Control (including,
with correlative meanings, the terms "controlled by" and "under
common control with"), as used herein, means the possession,
directly or indirectly, of the power in any form to direct or
cause the direction of the management and policies of the Person
in question.
"Agent" means BankAmerica Business Credit, Inc., in its
capacity as agent for the Lenders, and shall include any
successor Agent appointed pursuant to Section 13.7.
"Agent Advances" has the meaning specified in Section
2.2(j).
"Agent's Liens" means the Liens granted to the Agent,
for the ratable benefit of the Secured Creditors, pursuant to
this Agreement and the other Loan Documents.
"Anniversary Date" means each anniversary of the
Closing Date.
"Assigned Contracts" means, collectively, all of each
Borrower's rights and remedies under, and all moneys and claims
for money due or to become due to such Borrower under any
material contracts and any and all amendments, supplements,
extensions, and renewals thereof including, without limitation,
all rights and claims of such Borrower now or hereafter existing:
(i) under any insurance, indemnities, warranties, and guarantees
provided for or arising out of or in connection with any of the
foregoing agreements; (ii) for any damages arising out of or for
breach or default under or in connection with any of the
foregoing agreements; (iii) to all other amounts from time to
time paid or payable under or in connection with any of the
foregoing agreements; or (iv) to exercise or enforce any and all
covenants, remedies, powers and privileges thereunder.
"Assignment and Acceptance" has the meaning specified
in Section 12.3(a).
"Availability" means, at any time, (a) the Maximum
Revolver Amount minus (b) the sum of (i) the unpaid balance of
Revolving Loans at that time, (ii) the aggregate amount of
Pending Revolving Loans at such time, (iii) the aggregate undrawn
amount of all outstanding Letters of Credit, and (iv) the
aggregate amount of any unpaid reimbursement obligations in
respect of the Letters of Credit. In determining pursuant to
Section 2.2(a), 2.2(g), 2.2(h) or 2.2(j) whether Revolving Loans
to be made on any date would exceed Availability on such date,
such proposed Revolving Loans shall be counted as either
Revolving Loans or Pending Revolving Loans for purposes of
calculating Availability on such date, but shall not be counted
as both Revolving Loans and Pending Revolving Loans.
"Bank of America" means Bank of America National Trust
and Savings Association, a national banking association, or any
successor entity thereto.
"Bankruptcy Code" means Title 11 of the United States
Code (11 U.S.C. Section 101 et seq.).
"Base LIBO Rate" means the rate of interest per annum
determined by the Agent to be the arithmetic mean (rounded upward
to the next 1/16th of 1.0%) of the rates of interest per annum
notified to the Agent by each Lender as the rate of interest at
which Dollar deposits in the approximate amount of the Loans to
be made or continued as, or converted into, LIBO Rate Loans by
such Lender and having a maturity comparable to such Interest
Period would be offered to major banks in the London interbank
market at their request at approximately 11:00 a.m. (London time)
two (2) Business Days prior to the commencement of such Interest
Period.
"Base Rate" means, for any day, the higher of:
(a) the rate of interest in effect for such day as
publicly announced from time to time by Bank of America in
San Francisco, California, as its "reference rate." (The
"reference rate" is a rate set by Bank of America based upon
various factors including Bank of America's costs and
desired return, general economic conditions and other
factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such
announced rate.)
(b) 0.50% per annum above the latest Federal Funds
Rate.
Any change in the reference rate announced by Bank of America
shall take effect at the opening of business on the day specified
in the public announcement of such change. Each Interest Rate
based upon the Base Rate shall be adjusted simultaneously with
any change in the Base Rate.
"Base Rate Loans" means, collectively, the Base Rate
Revolving Loans and the Base Rate Term Loans.
"Base Rate Revolving Loan" means a Revolving Loan
during any period in which it bears interest at the rate provided
in Section 3.1(a)(i).
"Base Rate Revolving Margin" has the meaning specified
in Section 3.1(a)(i).
"Base Rate Term Loan" means any portion of a Term Loan
during any period in which such portion bears interest at the
rate provided in Section 3.1(a)(i).
"Base Rate Term Margin" has the meaning specified in
Section 3.1(a)(i).
"Benefit Plan" means a defined benefit plan as defined
in Section 3(35) of ERISA (other than a Multiemployer Plan) in
respect of which any Borrower or an ERISA Affiliate is, or within
the immediately preceding six (6) years was, an "employer" as
defined in Section 3(5) of ERISA.
"Borrowing" means a borrowing consisting of Revolving
Loans made on the same day by the Lenders (or by BABC in the case
of a Borrowing funded by Settlement Loans) or by the Agent in the
case of a Borrowing consisting of an Agent Advance.
"Borrowing Base Certificate" means a certificate of the
chief financial officers of the Borrowers substantially in the
form of Exhibit B (or another form mutually acceptable to the
Agent and the Borrowers) setting forth calculations of
Availability and Individual Availability with respect to each
Borrower, including a calculation of each component thereof, (a)
with respect to Accounts, as of the close of business on a day no
more than five (5) Business Days prior to the date of such
certificate, and (b) with respect to Inventory, (i) prior to the
twenty-fifth (25th) day of any month, as of the close of business
on the last Business Day of the second preceding month, and (ii)
on or after the twenty-fifth (25th) day of any month, as of the
close of business on the last Business Day of the immediately
preceding month, all in such detail as shall be satisfactory to
the Agent. All calculations of Availability and Individual
Availability in connection with the preparation of any Borrowing
Base Certificate shall originally be made by the Borrowers and
certified to the Agent; provided, that the Agent shall have the
right to review and adjust, in the exercise of its reasonable
credit judgment, any such calculation (1) to reflect its
reasonable estimate of declines with respect to the Collateral
described therein, and (2) to the extent that such calculation is
not in accordance with this Agreement.
"Business Day" means (a) any day that is not a
Saturday, Sunday, or a day on which banks in San Francisco,
California are required or permitted to be closed, and (b) with
respect to all notices, determinations, fundings and payments in
connection with the LIBO Rate or LIBO Rate Loans, any day that is
a Business Day pursuant to clause (a) above and that is also a
day on which trading is carried on by and between banks in the
London interbank market.
"Capital Expenditures" means, for any fiscal period,
(a) the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, acquired during such period
and having a useful life of more than one year, including,
without limitation, those costs arising in connection with the
direct or indirect acquisition of such assets by way of increased
product or service charges or offset items or in connection with
a Capital Lease plus (b) the amount of any cash expended during
such period in consummating any Quasi Asset Acquisition;
provided, that Capital Expenditures shall be deemed not to
include (i) the cost of purchasing and implementing a new ladle
furnace and related melt shop and rolling mill Equipment for the
Parent's Alton steel mill plant located in Alton, Illinois,
provided such purchase and implementation are financed in whole
by Debt other than the Obligations or by the proceeds of a
substantially concurrent sale of any class of capital stock of
the Parent, and are otherwise permitted hereunder, (ii) the cost
of acquiring the Fairless Hills Equipment, and (iii) any
expenditure in connection with the High Temperature Metals
Recovery System Facility located at the Parent's Alton steel mill
plant located in Alton, Illinois, to the extent such expenditure
is financed in whole by funds derived from the Solid Waste
Disposal Bonds.
"Capital Lease" means any lease of property by the
Parent or any of its consolidated Subsidiaries which, in
accordance with GAAP, is or should be capitalized on the lessee's
balance sheet or for which the amount of the asset and liability
thereunder, as if so capitalized should be disclosed in a
footnote to such balance sheet.
"Cash Available for Fixed Charges" means, with respect
to any fiscal period of the Parent and its consolidated
Subsidiaries, net earnings for such period, determined in
accordance with GAAP (but excluding gain or loss arising from
extraordinary items) and reported on the Financial Statements for
such fiscal period, plus, to the extent deducted in computing net
earnings, (a) interest expense, (b) any provision for income
taxes, (c) depreciation expense, and (d) amortization expense,
minus, to the extent included in computing net earnings, gain
arising from any other noncash non-recurring transaction.
"Closing Date" means the date on which the initial
Revolving Loans and the Term Loans are made hereunder.
"Closing Fee" has the meaning specified in Section 3.5.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute.
"Collateral" means, collectively, the Parent
Collateral, the Laclede Chain Collateral and the Laclede Mid
America Collateral.
"Commitment" means, at any time with respect to a
Lender, the principal amount set forth beside such Lender's name
under the heading "Commitment" on the signature pages of this
Agreement or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 12.3, as
such Commitment may be adjusted from time to time in accordance
with the provisions of Section 12.3, and "Commitments" means,
collectively, the aggregate amount of the commitments of all of
the Lenders.
"Consolidated Adjusted Net Worth" means, at any date,
(a) the amount at which Consolidated Stockholder's Equity,
preferred stock and minority interests would be shown on a
balance sheet of the Parent and its consolidated Subsidiaries at
such date prepared in accordance with GAAP; less (b) the amount
at which goodwill and other intangible assets would be shown on
such balance sheet.
"Consolidated Current Liabilities" means at any date
the amount at which the current liabilities of the Parent and its
consolidated Subsidiaries would be shown on a balance sheet of
the Parent and its consolidated Subsidiaries as at such date,
prepared in accordance with GAAP, and shall include the current
portion of Funded Debt but shall not include the outstanding
balance of the Revolving Loans on such date.
"Consolidated Fixed Charge Coverage Ratio" means, for
each twelve month period ending on the last day of each fiscal
quarter of the Parent and its consolidated Subsidiaries, the
ratio of (a) Cash Available for Fixed Charges for such twelve
month period minus (A) Capital Expenditures made during such
twelve month period, and (B) for any twelve month period ending
on the last day of any fiscal quarter ending after December 31,
1995, income taxes paid in cash during such twelve month period,
to (b) the sum of principal payments which the Parent or any of
its Subsidiaries was required to make with respect to Funded Debt
during such twelve month period (other than such principal
payments made with respect to the Revolving Loans), and capital
lease amortization, cash interest expense and cash dividend
payments for or made in such twelve month period.
"Consolidated Net Earnings" means, for any fiscal
period of the Parent and its consolidated Subsidiaries, the net
earnings of the Parent and its consolidated Subsidiaries for such
period, determined in accordance with GAAP (but excluding gain or
loss arising from extraordinary items) and reported on the
Financial Statements for such fiscal period, less (a) gain
arising from any other noncash non-recurring transaction, and (b)
any equity interest of the Parent or any of its consolidated
Subsidiaries in the earnings of any Person which is not a
Subsidiary to the extent not distributed to the Parent as a cash
dividend.
"Consolidated Stockholder's Equity" means, at any date,
the amount at which the total equity capitalization of the Parent
and its consolidated Subsidiaries would be shown on a balance
sheet of the Parent and its consolidated Subsidiaries at such
date prepared in accordance with GAAP; provided, that the amount
included on such balance sheet for minimum pension liability
adjustment to stockholders equity shall be $15,098,000.
"Contaminant" means any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special waste,
petroleum or petroleum-derived substance or waste, asbestos in
any form or condition, polychlorinated biphenyls ("PCBs"), or any
constituent of any such substance or waste.
"Dated Account" means an Account owing to Laclede Chain
and containing terms permitting payment to be made more than
thirty (30) days after the date of the original invoice issued by
Laclede Chain with respect to the sale giving rise thereto but
requiring payment within two hundred ten (210) days after such
date.
"Debt" means all liabilities, obligations and indebted-
ness of the Parent and its Subsidiaries to any Person, of any
kind or nature, now or hereafter owing, arising, due or payable,
howsoever evidenced, created, incurred, acquired or owing,
whether primary, secondary, direct, fixed or otherwise, and
including, without in any way limiting the generality of the
foregoing: (i) the Parent's or any Subsidiary's liabilities and
obligations to trade creditors; (ii) all of the Obligations;
(iii) all of each Borrower's obligations for borrowed money,
including, but not limited to, the IRB Debt; (iv) all obligations
and liabilities of any Person secured by any Lien on the Parent's
or any Subsidiary's property, even though the Parent or such
Subsidiary shall not have assumed or become liable for the
payment thereof; provided, however, that all such obligations and
liabilities which are limited in recourse to such property shall
be included in Debt only to the extent of the value of such
property as shown on a balance sheet of the Parent and its
consolidated Subsidiaries prepared in accordance with GAAP;
(v) all obligations or liabilities created or arising under any
Capital Lease or conditional sale or other title retention
agreement with respect to property used or acquired by the Parent
or any Subsidiary, even if the rights and remedies of the lessor,
seller or lender thereunder are limited to repossession of such
property; provided, however, that all such obligations and
liabilities which are limited in recourse to such property shall
be included in Debt only to the extent of the value of such
property as shown on a balance sheet of the Parent and its
consolidated Subsidiaries prepared in accordance with GAAP; (vi)
all obligations and liabilities under Guaranties; and (vii) the
Parent's or any Subsidiary's liabilities and obligations arising
as a result of the issuance of letters of credit.
"Default" means any event or condition which, with
notice, the passage of time, the happening of any other condition
or event, or any combination thereof, would constitute an Event
of Default.
"Default Rate" means a fluctuating per annum interest
rate at all times equal to the sum of (a) the otherwise
applicable Interest Rate plus (b) two percent (2.00%). Each
Default Rate shall be adjusted simultaneously with any change in
the applicable Interest Rate.
"Distribution" means, in respect of any corporation:
(a) the payment or making of any dividend or other distribution
of property in respect of capital stock (or any options or
warrants for such stock) of such corporation, other than
distributions in capital stock (or any options or warrants for
such stock) of the same class; or (b) the redemption or other
acquisition of any capital stock (or any options or warrants for
such stock) of such corporation.
"DOL" means the United States Department of Labor or
any successor department or agency.
"Dollar" and "$" means dollars in the lawful currency
of the United States.
"Eligible Accounts" means at any time, those Accounts
which when scheduled to the Lenders and at all times thereafter,
do not violate the negative covenants and other provisions of
this Agreement and do satisfy the affirmative covenants and other
provisions of this Agreement and which the Agent deems eligible
(based on criteria which the Agent establishes), in the exercise
of its reasonable credit judgment, as the basis for Revolving
Loans; provided, however, upon the reasonable request of the
applicable Borrower, the Agent will notify such Borrower of the
reason for deeming an Account not to be an Eligible Account.
Without limiting the foregoing, no Account shall be an Eligible
Account if:
(1) Such Account is (a) due or unpaid more than
one hundred twenty (120) days after the date of the
original invoice issued by the applicable Borrower with
respect to the sale giving rise thereto, in the case of
an Account owing to the Parent or Laclede Mid America
or an Account owing to Laclede Chain other than a Dated
Account, or (b) past due, in the case of a Dated
Account; or
(2) Such Account is owed by an Account Debtor
which is obligated to any Borrower on Accounts more
than fifty percent (50.0%) of the aggregate unpaid
balance of which are (a) due or unpaid more than one
hundred twenty (120) days after the date of the
original invoice issued by the applicable Borrower with
respect to the sale giving rise thereto, in the case of
an Account owing to the Parent or Laclede Mid America
or an Account owing to Laclede Chain other than a Dated
Account, or (b) past due, in the case of a Dated
Account, unless in either case the Majority Lenders
have approved the continued eligibility thereof; or
(3) Such Account arises out of a sale not made in
the ordinary course of the applicable Borrower's
business or out of a sale to a Person which is an
Affiliate of the applicable Borrower or controlled by
an Affiliate of the applicable Borrower, unless the
Majority Lenders have approved the eligibility of
Accounts attributable to such sales, provided that no
Account with respect to which Ivaco or any of its
affiliates is the Account Debtor shall be rendered
ineligible solely as a result of the terms of this
clause (3), except to the extent that the sum of the
unpaid balances of all such Accounts with respect to
which Ivaco or any of its affiliates is the Account
Debtor exceeds $250,000 (but any such Accounts owing
from Ivaco or any of its affiliates may be rendered
ineligible as a result of the terms of the next
succeeding clause (4) or as a result of the application
of any other ineligibility criteria provided for
herein); or
(4) Such Account is subject to any right of
setoff by the Account Debtor and such Account Debtor
has not entered into an agreement with the Agent which
is acceptable to the Agent with respect to the waiver
of rights of setoff; or such Account Debtor has
disputed liability or made any claim with respect to
any other Account due from such Account Debtor to the
applicable Borrower; or
(5) Such Account arises out of a sale to an
Account Debtor which (i) has filed or has had filed
against it a petition for bankruptcy or any other
petition for relief under the Bankruptcy Code or any
other bankruptcy or insolvency law, has made an
assignment for the benefit of creditors, has suffered a
receiver or trustee to be appointed with respect to its
affairs or with respect to all or any material portion
of its assets, or, in the case of an Account Debtor
which is an individual, has been adjudicated mentally
incompetent, to the extent, in the case of any such
event described in this clause (i), that the relevant
proceeding is continuing on the date of the applicable
eligibility determination, (ii) has suspended its
business operations or become insolvent, to the extent
that such suspension or insolvency is continuing on the
date of the applicable eligibility determination, or
(iii) in the case of any Account Debtor which is an
individual, is deceased; or
(6) Such Account arises out of a sale to an
Account Debtor having its chief executive office or
principal place of business outside the United States
or Canada, unless the sale is on letter of credit or
acceptance terms satisfactory to the Agent; or
(7) Such Account arises out of a sale to a
customer on a bill-and-hold, guaranteed sale, sale-and-
return, sale on approval, consignment or any other
repurchase or return basis; or
(8) The Agent believes in good faith and in the
exercise of its reasonable judgment, that the prospect
of collection of such Account is materially impaired;
or
(9) The Account Debtor is the United States of
America or any department, agency or instrumentality
thereof, unless the applicable Borrower assigns its
right to payment of such Account to the Agent in
accordance with the terms of the Assignment of Claims
Act of 1940, as amended (31 U.S.C. Section 3727 et seq.); or
(10) The goods giving rise to such Account have
not been shipped and delivered to and accepted by the
Account Debtor or the services giving rise to such
Account have not been performed by the applicable
Borrower, and, if applicable, accepted by the Account
Debtor, or the Account Debtor revokes its acceptance of
such goods or services; or
(11) Such Account is owed by an Account Debtor
which is obligated to the applicable Borrower
respecting Accounts the aggregate unpaid balance of
which exceeds five percent (5.0%) of the aggregate
unpaid balance of all Accounts owed to the Borrowers at
such time by all of the Borrowers' Account Debtors, to
the extent that the Majority Lenders have not approved
the eligibility of such Accounts; or
(12) Such Account is an Account with respect to
which the Account Debtor is located in any state
requiring the filing of a Notice of Business Activities
Report or similar report in order to permit the
applicable Borrower to seek judicial enforcement in
such state of payment of such Account, unless such
Borrower has qualified to do business in such state or
has filed a Notice of Business Activities Report or
similar report for the then current year; or
(13) Such Account is evidenced by chattel paper or
instruments; or
(14) Such Account arises out of a contract or order
which, by its terms, forbids, restricts or makes void or
unenforceable the granting of a Lien by the applicable
Borrower to the Agent with respect to such Account; or
(15) With respect to such Account, a check or other
instrument for the payment of money, tendered in full or
partial satisfaction of such Account, has been presented for
payment and returned uncollected more than two (2) times for
any reason; or
(16) With respect to a Dated Account, the applicable
Borrower has extended the time for payment of such Account
without the consent of the Agent; or
(17) The perfection, enforceability or validity of the
Agent's Lien on such Account, or, except as set forth in
clause (9) above, the Agent's or the Lenders' ability to
obtain direct payment of the proceeds of such Account, is
governed by any federal, state or local statutory
requirements other than those of the UCC; or
(18) The Account Debtor is any state, municipality or
other political subdivision of the United States of America
or any department, agency, public corporation or other
instrumentality thereof and as to which the Agent determines
that its Lien therein is not or cannot be perfected; or
(19) Such Account is not subject to a first priority
and perfected security interest in favor of the Agent; or
(20) Such Account is owed by an Account Debtor which
is an employee of the applicable Borrower; or
(21) Any representation or warranty contained in
this Agreement with respect to such Account is at any
time determined to have been false or misleading in any
material respect when made or deemed to have been made.
If any Account at any time ceases to be an Eligible
Account by reason of any of the foregoing exclusions or any
failure to meet any other eligibility criteria established by the
Agent in the exercise of its reasonable credit judgment upon
notice to the applicable Borrower, such Account shall promptly be
excluded from the calculation of Eligible Accounts.
"Eligible Inventory" means Inventory, valued at the
lower of cost or market value, with cost determined under the
weighted moving average cost method, which the Agent deems
eligible (based on criteria which the Agent establishes), in the
exercise of its reasonable credit judgment, as the basis for
Revolving Loans; provided, however, upon the reasonable request
of the applicable Borrower, the Agent will notify such Borrower
of the reason for deeming Inventory not to be Eligible Inventory.
Without limiting the foregoing, no Inventory shall be Eligible
Inventory if: (a) it is obsolete or unmerchantable; (b) it is
located outside the United States; (c) it is located at premises
not owned by the applicable Borrower, unless the owner of such
premises, and any mortgagee with respect thereto, shall have
executed and delivered to the Agent such agreements, instruments
and documents as the Agent, in the exercise of its reasonable
discretion, shall request in connection with the maintenance by
such Borrower of Inventory on such premises; (d) it is not
subject to a first priority and perfected security interest in
favor of the Agent; (e) it is repair parts or material handling,
packaging or shipping materials; (f) it is bill-and-hold or
defective Inventory or Inventory delivered to the applicable
Borrower on consignment; or (g) it is Inventory which in any way
fails to meet or violates any applicable representation, warranty
or covenant contained in this Agreement relating directly or
indirectly to such Inventory.
If any Inventory at any time ceases to be Eligible
Inventory by reason of any of the foregoing exclusions or any
failure to meet any other eligibility criteria established by the
Agent in the exercise of its reasonable credit judgment upon
notice to the applicable Borrower, such Inventory shall promptly
be excluded from the calculation of Eligible Inventory.
"Environmental Compliance Reserve" means any reserves
which the Agent from time to time establishes for amounts that
are reasonably likely to be expended in order for any Borrower
and its operations and property (a) to comply with any notice
from a Public Authority asserting material non-compliance with
any Environmental Law, or (b) to correct any such material non-
compliance identified in a report delivered to the Agent and the
Lenders pursuant to Section 8.7.
"Environmental Laws" means all federal, state and local
laws, rules, regulations, ordinances, programs, permits,
guidance, orders and consent decrees or other binding
determination of any Public Authority relating to occupational
health and safety, the handling, use, storage, discharge or
disposal of Contaminants and other environmental matters
applicable to any Borrower and/or its business and facilities
(whether or not owned by such Borrower). Such laws and
regulations include but are not limited to the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., as
amended; the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Section 9601 et seq., as amended; the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., as
amended; the Clean Water Act, 42 U.S.C. Section 466 et seq., as
amended; the Clean Air Act, 46 U.S.C. Section 7401 et seq., as amended;
state and federal lien and environmental cleanup programs; the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.; and
U.S. Department of Transportation regulations, each as from time
to time hereafter in effect.
"Environmental Lien" means a Lien in favor of any
Public Authority for (1) any liability under any Environmental
Laws, or (2) damages arising from, or costs incurred by such
Public Authority in response to, a Release or threatened Release
of a Contaminant into the environment.
"Environmental Property Transfer Act" means any
applicable requirement of law that conditions, restricts,
prohibits or requires any notification or disclosure triggered by
the closure of any property or the transfer, sale or lease of any
property or deed or title for any property for environmental
reasons, including, but not limited to, any so-called
"Environmental Cleanup Responsibility Acts" or "Responsible
Property Transfer Acts."
"Equipment" means all of each Borrower's now owned and
hereafter acquired machinery, equipment, furniture, furnishings,
fixtures, and other tangible personal property (except Inven-
tory), other than motor vehicles with respect to which a
certificate of title has been issued, including, without
limitation, aircraft, dies, tools, jigs, and office equipment, as
well as all of such types of property leased by such Borrower and
all of such Borrower's rights and interests with respect thereto
under such leases (including, without limitation, options to
purchase); together with all present and future additions and
accessions thereto, replacements therefor, component and
auxiliary parts and supplies used or to be used in connection
therewith, and all substitutes for any of the foregoing, and all
manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and any successor
statute.
"ERISA Affiliate" means (i) any corporation which is a
member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as any Borrower; (ii) a
partnership or other trade or business (whether or not
incorporated) under common control (within the meaning of Section
414(c) of the Code) with any Borrower; or (iii) a member of the
same affiliated service group (within the meaning of Section
414(m) of the Code) as any Borrower, any corporation described in
clause (i) above or any partnership, trade or business described
in clause (ii) above.
"Eurocurrency Liabilities" has the meaning assigned to
that term in Regulation D of the Federal Reserve Board, as in
effect from time to time.
"Event of Default" has the meaning specified in Sec-
tion 10.1.
"Fairless Hills Equipment" means that certain Equipment
located in the Parent's Fairless Hills, Pennsylvania production
facility, which Equipment was subject to a purchase option
contained in the USX Agreement exercised by the Parent on or
prior to the Closing Date.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal for each day during
such period to the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three (3) federal funds
brokers of recognized standing selected by the Agent.
"Federal Reserve Board" means the Board of Governors of
the Federal Reserve System or any successor thereto.
"Financial Statements" means, according to the context
in which it is used, the financial statements attached hereto as
Exhibit C, or any financial statements required to be given to
the Lenders pursuant to Sections 6.2(a) or (b), or any
combination thereof.
"Fiscal Year" means the fiscal years of the Parent and
its Subsidiaries for financial accounting purposes, which fiscal
years are based upon a calendar year.
"Fixed Asset Reserve" has the meaning specified in
Section 8.9(b).
"Fixed Assets" means Equipment and Real Estate of any
Borrower.
"Funded Debt" means all Debt which would, in accordance
with GAAP, constitute long term Debt, including (a) Debt having a
maturity of more than one (1) year after the creation thereof,
(b) Debt outstanding under a revolving credit or similar
agreement providing for borrowings (and renewals and extensions
thereof) which, pursuant to its terms, would constitute long term
Debt in accordance with GAAP, (c) all obligations or liabilities
(determined in accordance with GAAP) created or arising under any
Capital Lease, and (d) any Guaranty with respect to debt of any
other Person of the type described in clauses (a), (b) or (c)
above. Funded Debt shall not be deemed to include the current
portion of Funded Debt included in Consolidated Current
Liabilities.
"Funding Date" means the date any Revolving Loans
(including Settlement Loans and Agent Advances) are to be made
hereunder.
"GAAP" means at any particular time with respect to the
Parent and its Subsidiaries, generally accepted accounting
principles as in effect at such time, consistently applied.
"General Intangibles" means all of each Borrower's now
owned or hereafter acquired general intangibles, choses in action
and causes of action and all other intangible personal property
of such Borrower of every kind and nature (other than Accounts),
including, without limitation, all contract rights, Proprietary
Rights, corporate or other business records, inventions, designs,
blueprints, plans, specifications, patents, patent applications,
trademarks, service marks, trade names, trade secrets, goodwill,
copyrights, computer software, customer lists, registrations,
licenses, franchises, tax refund claims, any funds which may
become due to such Borrower in connection with the termination of
any Plan or other employee benefit plan or any rights thereto and
any other amounts payable to such Borrower from any Plan or other
employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption
insurance and proceeds thereof, property, casualty or any similar
type of insurance and any proceeds thereof, proceeds of insurance
covering the lives of key employees on which such Borrower is
beneficiary, and any letter of credit, guarantee, claim, security
interest or other security held by or granted to such Borrower to
secure payment by an account debtor of any of the Accounts.
"Guaranty" means, with respect to any Person, all
obligations of such Person which in any manner directly or
indirectly guarantee or assure, or in effect guarantee or assure,
the payment or performance of any indebtedness, dividend or other
obligation of any other Person (the "guaranteed obligations"), or
assure or in effect assure the holder of the guaranteed obli-
gations against loss in respect thereof, including, without
limitation, any such obligations incurred through an agreement,
contingent or otherwise: (a) to purchase the guaranteed obliga-
tions or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other
balance sheet condition; or (c) to lease property or to purchase
any debt or equity Securities or other property or services.
"Individual Availability" means, at any time with
respect to any Borrower, (a) the Individual Maximum Revolver
Amount with respect to such Borrower minus (b) the sum of (i) the
unpaid balance of Revolving Loans to such Borrower at such time,
(ii) the aggregate amount of Pending Revolving Loans to such
Borrower at such time, (iii) the aggregate undrawn amount of all
outstanding Letters of Credit issued for the account of such
Borrower, and (iv) the aggregate amount of any unpaid
reimbursement obligations in respect of the Letters of Credit
issued for the account of such Borrower. In determining pursuant
to Section 2.2(a), 2.2(g), 2.2(h) or 2.2(j) whether Revolving
Loans to be made on any date would exceed Individual Availability
on such date, such proposed Revolving Loans shall be counted as
either Revolving Loans or Pending Revolving Loans for purposes of
calculating Individual Availability on such date, but shall not
be counted as both Revolving Loans and Pending Revolving Loans.
"Individual Maximum Revolver Amount" means
(1) at any time with respect to the Parent
(a) the lesser of
(i) the Revolver Facility; or
(ii) the sum of
(A) eighty-five percent (85.0%) of the
Net Amount of Eligible Accounts of the
Parent; plus (B) the sum of (x) sixty-five
percent (65.0%) (as such percentage may be
reduced pursuant to Section 5.10) of the
value of Eligible Inventory of the Parent
consisting of raw material or semi-finished
or finished goods plus (y) fifty (50.0%) (as
such percentage may be reduced pursuant to
Section 5.10) of the value of Eligible
Inventory of the Parent consisting of
supplies; minus (C) $901,283; provided, that
at no time shall the sum of outstanding
Revolving Loans to the Parent based upon the
value of Eligible Inventory exceed
$55,000,000
minus
(b) the sum of
(i) reserves for accrued interest on the
Obligations owing by the Parent;
(ii) any Fixed Asset Reserve with respect to the
Parent; and
(iii) all other reserves which the Agent deems
necessary in the exercise of reasonable credit judgment
to maintain with respect to the Parent's account, and
which are reasonably related to the preservation or
protection of the value of the Collateral or the
business value of the Parent, including, without
limitation, any Environmental Compliance Reserve with
respect to the Parent and reserves for any amounts
which the Agent or any Lender may be obligated to pay
in the future for the account of the Parent;
(2) at any time with respect to Laclede Chain,
(a) the lesser of
(i) the Revolver Facility; or
(ii) the sum of
(A) eighty-five percent (85.0%) of the
Net Amount of Eligible Accounts of Laclede
Chain, plus (B) the sum of (x) sixty-five
percent (65.0%) (as such percentage may be
reduced pursuant to Section 5.10) of the
value of Eligible Inventory of Laclede Chain
consisting of raw material or semi-finished
or finished goods plus (y) fifty (50.0%) (as
such percentage may be reduced pursuant to
Section 5.10) of the value of Eligible
Inventory of Laclede Chain consisting of
supplies; provided, that at no time shall the
sum of outstanding Revolving Loans to Laclede
Chain based upon the value of Eligible
Inventory exceed $55,000,000
minus
(b) the sum of
(i) reserves for accrued interest on the
Obligations owing by Laclede Chain;
(ii) any Fixed Asset Reserve with respect to
Laclede Chain; and
(iii) all other reserves which the Agent deems
necessary in the exercise of reasonable credit judgment
to maintain with respect to Laclede Chain's account,
and which are reasonably related to the preservation or
protection of the value of the Collateral or the
business value of Laclede Chain, including, without
limitation, any Environmental Compliance Reserve with
respect to Laclede Chain and reserves for any amounts
which the Agent or any Lender may be obligated to pay
in the future for the account of Laclede Chain; and
(3) at any time with respect to Laclede Mid America,
(a) the lesser of
(i) the Revolver Facility; or
(ii) the sum of
(A) eighty-five percent (85.0%) of the
Net Amount of Eligible Accounts of Laclede
Mid America, plus (B) the sum of (x) sixty-
five percent (65.0%) (as such percentage may
be reduced pursuant to Section 5.10) of the
value of Eligible Inventory of Laclede Mid
America consisting of raw material or semi-
finished or finished goods plus (y) fifty
(50.0%) (as such percentage may be reduced
pursuant to Section 5.10) of the value of
Eligible Inventory of Laclede Mid America
consisting of supplies; provided, that at no
time shall the sum of outstanding Revolving
Loans to Laclede Mid America based upon the
value of Eligible Inventory exceed
$55,000,000
minus
(b) the sum of
(i) reserves for accrued interest on the
Obligations owing by Laclede Mid America;
(ii) any Fixed Asset Reserve with respect to
Laclede Mid America; and
(iii) all other reserves which the Agent deems
necessary in the exercise of reasonable credit judgment
to maintain with respect to Laclede Mid America's
account, and which are reasonably related to the
preservation or protection of the value of the
Collateral or the business value of Laclede Mid
America, including, without limitation, any
Environmental Compliance Reserve with respect to
Laclede Mid America and reserves for any amounts which
the Agent or any Lender may be obligated to pay in the
future for the account of Laclede Mid America.
"Intercompany Notes" means, collectively, the Laclede
Chain Intercompany Note and the Laclede Mid America Intercompany
Note.
"Interest Period" means, with respect to each LIBO Rate
Loan, the interest period applicable to such LIBO Rate Loan as
determined pursuant to Section 3.3(b).
"Interest Rate" means each or any of the interest
rates, including the Default Rate, set forth in Section 3.1.
"Inventory" means all of each Borrower's now owned and
hereafter acquired inventory, goods, merchandise, and other
personal property, wherever located, to be furnished under any
contract of service or held for sale or lease, all returned
goods, raw materials, other materials and supplies of any kind,
nature or description which are or might be consumed in such
Borrower's business or used in connection with the packing,
shipping, advertising, selling or finishing of such goods,
merchandise and such other personal property, and all documents
of title or other documents representing them.
"ID Note" means that certain $2,059,000 Promissory Note
of Presidents Island Steel & Wire, Inc., dated June 1, 1983,
payable to the order of The Industrial Development Board of the
City of Memphis and County of Shelby, Tennessee.
"IDR Bonds" means those certain Industrial Development
Revenue Bonds (Laclede Steel Company Project) Series 1976 issued
pursuant to a certain Indenture of Trust dated as of October 1,
1976, between the City of Alton, Illinois, and St. Louis Union
Trust Company, as Trustee.
"IRB Debt" means Debt of the Parent evidenced by the
Solid Waste Disposal Bonds, the Pollution Control Bonds, the IDR
Bonds and the ID Note, or any of them.
"IRB Debt Payment" means any payment or prepayment of
principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance, sinking fund or similar payment
with respect to, any of the IRB Debt, or any payment of a claim,
for the rescission of the purchase or sale of, or for material
damage arising from the purchase or sale of, any of the IRB Debt
or a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or
rescission.
"IRS" means the Internal Revenue Service or any
successor agency.
"Ivaco" means Ivaco Inc., a corporation organized and
existing under the federal laws of Canada.
"Laclede Chain" has the meaning specified in the
introductory paragraph hereof.
"Laclede Chain Collateral" has the meaning specified in
Section 5.1(b).
"Laclede Chain Intercompany Note" means that certain
promissory note dated the Closing Date in the maximum principal
amount of $15,000,000, executed by Laclede Chain, payable to the
Parent and pledged and endorsed to the Agent, in a manner
satisfactory to the Agent, evidencing amounts outstanding from
time to time as a result of certain loans and other advances made
by the Parent to Laclede Chain.
"Laclede Consulting" means Laclede Consulting Services
Limited, a Missouri corporation which merged with and into the
Parent on or prior to the Closing Date.
"Laclede Mid America" has the meaning specified in the
introductory paragraph hereof.
"Laclede Mid America Collateral" has the meaning
specified in Section 5.1(c).
"Laclede Mid America Intercompany Note" means that
certain promissory note dated the Closing Date in the maximum
principal amount of $10,000,000, executed by Laclede Mid America,
payable to the Parent and pledged and endorsed to the Agent, in a
manner satisfactory to the Agent, evidencing amounts outstanding
from time to time as a result of certain loans and other advances
made by the Parent to Laclede Chain.
"Laclede Pipe" means Laclede Pipe Company, a West
Virginia corporation which merged with and into the Parent on or
prior to the Closing Date.
"Latest Projections" means: (a) on the Closing Date
and thereafter until the Lenders receive new projections pursuant
to Section 6.2(e), the projections of the Parent's and its
consolidated Subsidiaries' combined financial condition, results
of operations, and cash flow, for the period commencing on June
1, 1994 and ending on December 31, 1998 and delivered to the
Lenders prior to the Closing Date; and (b) thereafter, the pro-
jections most recently received by the Lenders pursuant to
Section 6.2(e).
"Lender" and "Lenders" have the meanings specified in
the introductory paragraph hereof.
"Letter of Credit" has the meaning specified in Sec-
tion 2.4(a).
"Letter of Credit Fee" has the meaning specified in
Section 3.8.
"LIBO Rate" means, for any Interest Period with respect
to LIBO Rate Loans comprising part of the same Borrowing, the
rate of interest per annum (rounded upward to the next 1/16th of
1.0%) determined by the Agent as follows:
LIBO Rate = Base LIBO Rate
1.00 - Eurodollar Reserve Percentage
"LIBO Rate Loans" means, collectively, the LIBOR
Revolving Loans and the LIBOR Term Loans.
"LIBO Rate Taxes" has the meaning specified in Section
3.3(i).
"LIBOR Interest Payment Date" means, with respect to a
LIBO Rate Loan, the last day of each Interest Period applicable
to such Loan, and, if such Interest Period has a duration of more
than three months, on each day which occurs during such Interest
Period every three months from the first day of such Interest
Period.
"LIBOR Interest Rate Determination Date" means each
date of calculating the LIBO Rate for purposes of determining the
interest rate with respect to an Interest Period. The LIBOR
Interest Rate Determination Date for any LIBO Rate Loan shall be
the second Business Day prior to the first day of the related
Interest Period for such LIBO Rate Loan.
"LIBOR Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1.0%) in effect on
such day (whether or not applicable to any Lender) under
regulations issued from time to time by the Federal Reserve Board
for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency Liabilities having a term comparable
to such Interest Period.
"LIBOR Revolving Loan" means a Revolving Loan during
any period in which it bears interest at the rate provided in
Section 3.1(a)(ii).
"LIBOR Revolving Margin" has the meaning specified in
Section 3.1(a)(ii).
"LIBOR Term Loan" means any portion of a Term Loan
during any period in which such portion bears interest at the
rate provided in Section 3.1(a)(ii).
"LIBOR Term Margin" has the meaning specified in
Section 3.1(a)(ii).
"Lien" means: (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner
of the property, whether such interest is based on the common
law, statute, or contract, and including without limitation, a
security interest, charge, claim, or lien arising from a mort-
gage, deed of trust, encumbrance, pledge, hypothecation, assign-
ment, deposit arrangement, agreement, security agreement, condi-
tional sale or trust receipt or a lease, consignment or bailment
for security purposes; and (b) to the extent not included under
clause (a), any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease or other
title exception or encumbrance affecting property.
"Loan Documents" means this Agreement, the Term Loan
Notes, the Patent and Trademark Agreements, the Mortgage and any
other agreements, instruments, and documents heretofore, now or
hereafter evidencing, securing, guaranteeing or otherwise
relating to the Obligations, the Collateral, or any other aspect
of the transactions contemplated by this Agreement.
"Loans" means, collectively, all loans and advances
provided for in Article 2.
"Majority Lenders" means, at such time as (a) the
aggregate Pro Rata Share of BABC and its affiliates shall be
equal to or greater than forty-five percent (45.0%), Lenders
whose Pro Rata Shares aggregate at least seventy percent (70.0%),
and (b) the aggregate Pro Rata Share of BABC and its affiliates
shall be less than forty-five percent (45.0%), Lenders whose Pro
Rata Shares aggregate at least seventy-five percent (75.0%).
"Margins" means, collectively, the LIBOR Revolving
Margin, LIBOR Term Margin, Base Rate Revolving Margin and Base
Rate Term Margin.
"Maximum Revolver Amount" means, at any time,
(a) the lesser of
(i) the Revolver Facility; or
(ii) the sum of
(A) eighty-five percent (85.0%) of the
Net Amount of Eligible Accounts; plus (B) the
sum of (x) sixty-five percent (65.0%) (as
such percentage may be reduced pursuant to
Section 5.10) of the value of Eligible
Inventory consisting of raw material or semi-
finished or finished goods plus (y) fifty
(50.0%) (as such percentage may be reduced
pursuant to Section 5.10) of the value of
Eligible Inventory consisting of supplies;
minus (C) $901,283; provided, that at no time
shall the sum of outstanding Revolving Loans
based upon the value of Eligible Inventory
exceed $55,000,000;
minus
(b) the sum of
(i) reserves for accrued interest on the
Obligations;
(ii) any Fixed Asset Reserve with respect to any
Borrower; and
(ii) all other reserves which the Agent deems
necessary in the exercise of reasonable credit judgment
to maintain with respect to any Borrower's account, and
which are reasonably related to the preservation or
protection of the value of the Collateral or the
business value of such Borrower, including, without
limitation, any Environmental Compliance Reserve and
reserves for any amounts which the Agent or any Lender
may be obligated to pay in the future for the account
of such Borrower.
"Mortgage" means that certain Mortgage, Security
Agreement, Financing Statement and Assignment of Rents and Leases
of even date herewith executed by the Parent in favor of the
Agent, pursuant to which the Parent has granted to the Agent, for
the ratable benefit of the Secured Creditors, a mortgage Lien on
its Real Estate located in Vandalia, Illinois and identified
therein.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA which is or was at any
time during the current year or the immediately preceding six (6)
years contributed to by any Borrower or any ERISA Affiliate.
"Net Amount of Eligible Accounts" means, at any time,
the gross amount of Eligible Accounts less sales, excise or
similar taxes, and less returns, discounts, claims, credits and
allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed.
"Net Proceeds" means, with respect to any sale or
disposition of Fixed Assets, the face amount of the sale or
disposition price, whether paid in cash or otherwise, minus the
applicable Borrower's reasonable expenses of sale or disposition
and any sales or other conveyance taxes incurred by any Borrower
in connection therewith.
"Notice of Borrowing" has the meaning specified in
Section 2.2(b).
"Notice of Conversion/Continuation" has the meaning
specified in Section 3.2(b).
"Obligations" means all present and future loans,
advances, liabilities, obligations, covenants, duties, and debts
owing by each Borrower to the Agent and/or any Lender, arising
under or pursuant to this Agreement or any of the other Loan
Documents, whether or not evidenced by any note, or other
instrument or document, whether arising from an extension of
credit, opening of a letter of credit, acceptance, loan,
guaranty, indemnification or otherwise, whether direct or
indirect (including, without limitation, those acquired by
assignment from others, and any participation by the Agent and/or
any Lender in such Borrower's debts owing to others), absolute or
contingent, due or to become due, primary or secondary, as
principal or guarantor, and including, without limitation, all
principal, interest, charges, expenses, fees, attorneys' fees,
filing fees and any other sums chargeable to such Borrower
hereunder or under any of the other Loan Documents.
"Obligations" includes, without limitation, all debts,
liabilities, and obligations now or hereafter owing from each
Borrower to the Agent and/or any Lender under or in connection
with the Letters of Credit.
"OCC" means the Office of the Comptroller of the
Currency.
"Parent" has the meaning specified in the introductory
paragraph hereof.
"Parent Collateral" has the meaning specified in
Section 5.1(a).
"Participating Lender" means any Person who shall have
been granted the right by any Lender to participate in the
financing provided by such Lender under this Agreement pursuant
to Section 12.3(e), and who shall have entered into a
participation agreement in form and substance satisfactory to
such Lender.
"Patent and Trademark Agreements" means the Patent
Security Agreement and the Trademark Security Agreement, each
dated as of the date hereof, executed and delivered by the
Borrowers to the Agent pursuant to Section 5.2 to evidence and
perfect the Agent's security interest in each Borrower's present
and future patents, trademarks, and related licenses and rights,
for the benefit of the Secured Creditors.
"Payment Account" means each blocked bank account
established pursuant to Section 5.9, to which the funds of any
Borrower (including, without limitation, proceeds of Accounts and
other Collateral) are deposited or credited, and which is main-
tained in the name of the Agent or such Borrower, as the Agent
may determine, on terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation
or any Person succeeding to the functions thereof.
"Pending Revolving Loans" means, at any time, the
aggregate principal amount of all Revolving Loans requested in
any Notice(s) of Borrowing received by the Agent which have not
yet been advanced.
"Permitted Acquisitions" means acquisitions by any
Borrower of one hundred percent (100.0%) of the capital stock of
any Person.
"Permitted Liens" means:
(a) Liens for taxes not yet payable or statutory Liens
for taxes in an amount not to exceed $100,000, provided that the
payment of such taxes which are due and payable is being con-
tested in good faith and by proper proceedings diligently
pursued, and that reserves or other appropriate provision, if
any, as shall be required by GAAP shall have been made therefor
and that a stay of enforcement of any such Lien is in effect;
(b) the Agent's Liens;
(c) Liens upon Equipment granted in connection with
the acquisition of such Equipment by the applicable Borrower
after the Closing Date (including, without limitation, pursuant
to Capital Leases), provided that (i) except with respect to
expenditures in connection with the implementation of a new ladle
furnace and related melt shop and rolling mill Equipment for the
Parent's Alton steel mill plant located in Alton, Illinois, the
cost of each such acquisition constitutes a Capital Expenditure
permitted by Section 8.22, (ii) the Debt incurred to finance each
such acquisition is permitted by Section 8.13, and (iii) each
such Lien attaches only to the Equipment acquired with the Debt
secured thereby;
(d) deposits under worker's compensation, unemployment
insurance, social security and other similar laws, or to secure
the performance of bids, tenders or contracts (other than for the
repayment of borrowed money) or to secure indemnity, performance
or other similar bonds for the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to
secure statutory obligations (other than liens arising under
ERISA or Environmental Liens) or surety or appeal bonds, or to
secure indemnity, performance or other similar bonds in the
ordinary course of business;
(e) Liens which arise by operation of law under Arti-
cle 2 of the Uniform Commercial Code in favor of unpaid sellers
of goods or prepaying buyers of goods, or liens in items of any
accompanying documents or proceeds of either arising by operation
of law under Article 4 of the Uniform Commercial Code in favor of
a collecting bank;
(f) Liens securing the claims or demands of material-
men, mechanics, carriers, warehousemen, landlords and other like
Persons, provided that the payment thereof is not at the time
required by Section 8.1;
(g) Reservations, exceptions, encroachments, ease-
ments, rights of way, covenants running with the land, and other
similar title exceptions or encumbrances affecting any Real
Estate; provided that they do not in the aggregate materially
detract from the value of the Real Estate or materially interfere
with its use in the ordinary conduct of the Parent's or any
Subsidiary's business;
(h) Liens in existence on the Closing Date and
reflected on Schedule 7.2; and
(i) Judgment and other similar Liens arising in
connection with court proceedings, provided that (A) the
existence of such Liens is being contested in good faith and by
proper proceedings diligently pursued, (B) reserves or other
appropriate provision, if any, as are required by GAAP have been
made therefor, (C) a stay of enforcement of any such Liens is in
effect, (D) the priority of any such Liens is subordinate to that
of the Agent's Liens, and (E) the existence of any judgment or
court proceedings upon which such Liens are based does not
otherwise constitute an Event of Default under this Agreement.
"Permitted Rentals" has the meaning specified in Sec-
tion 8.23.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, Public Authority, or any other entity.
"Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA in respect of which any Borrower or any
ERISA Affiliate is, or within the immediately preceding six (6)
years was, an "employer" as defined in Section 3(5) of ERISA.
"Pollution Control Bonds" means those certain Pollution
Control Revenue Bonds (Laclede Steel Company Project) Series 1976
issued pursuant to a certain Indenture of Trust dated as of
October 1, 1976, between the City of Alton, Illinois, and St.
Louis Union Trust Company, as Trustee.
"Premises" means the land identified by addresses on
Schedule 7.12, together with all buildings, improvements, and
fixtures thereon and all tenements, hereditament, and appur-
tenances belonging or in any way appertaining thereto, and which
constitutes all of the real property in which any Borrower has
any interests on the Closing Date.
"Pro Rata Share" means, with respect to a Lender, a
fraction (expressed as a percentage), the numerator of which is
the amount of such Lender's Commitment and the denominator of
which is the sum of the amounts of all of the Lenders'
Commitments.
"Proprietary Rights" means all of each Borrower's now
owned and hereafter arising or acquired: licenses, franchises,
permits, patents, patent rights, copyrights, works which are the
subject matter of copyrights, trademarks, service marks, trade
names, trade styles, patent, trademark and service mark applica-
tions, and all licenses and rights related to any of the fore-
going, including, without limitation, those patents, trademarks,
service marks and copyrights set forth on Schedule 7.13 hereto,
and all other rights under any of the foregoing, all extensions,
renewals, reissues, divisions, continuations, and continuations-
in-part of any of the foregoing, and all rights to sue for past,
present and future infringement of any of the foregoing.
"Public Authority" means the government of any country
or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or any department, agency,
public corporation or other instrumentality of any of the fore-
going.
"Quasi Asset Acquisition" means any acquisition by any
Borrower of the Securities of any Person, which Securities are
being acquired in lieu of the assets of such Person.
"Real Estate" means all of the present and future
interests of any Borrower, as owner, lessee, or otherwise, in the
Premises, including, without limitation, any interest arising
from an option to purchase or lease the Premises or any portion
thereof.
"Register" has the meaning specified in Section
12.3(c).
"Release" means a release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration of a Contaminant into the indoor or outdoor
environment or into or out of any Real Estate or other property,
including the movement of Contaminants through or in the air,
soil, surface water, groundwater or Real Estate or other
property.
"Rentals" has the meaning specified in Section 8.23.
"Replacement Assets" means Fixed Assets acquired by any
Borrower after a sale or other disposition of Fixed Assets.
"Reportable Event" means any of the events described in
Section 4043 of ERISA.
"Restricted Investment" means any acquisition of pro-
perty by the Parent or any of its Subsidiaries in exchange for
cash or other property, whether in the form of an acquisition of
stock, debt Security, or other indebtedness or obligation, or the
purchase or acquisition of any other property, or a loan,
advance, capital contribution, or subscription, except acquisi-
tions of the following: (a) the Fairless Hills Equipment, on or
prior to the Closing Date; (b) a new ladle furnace and related
melt shop and rolling mill Equipment for the Parent's Alton steel
mill plant located in Alton, Illinois, to the extent otherwise
permitted hereunder; (c) Equipment associated with the High
Temperature Metals Recovery System Facility located at the
Parent's Alton steel mill plant located in Alton, Illinois, to
the extent acquired with proceeds of the Solid Waste Disposal
Bonds and otherwise permitted hereunder; (d) Fixed Assets to be
used in the business of the Parent or such Subsidiary, so long as
the acquisition costs thereof constitute Capital Expenditures
permitted hereunder; (e) goods held for sale or lease or to be
used in the provision of services by the Parent or such
Subsidiary in the ordinary course of business; (f) current assets
arising from the sale or lease of goods or the rendition of
services in the ordinary course of business of the Parent or such
Subsidiary; (g) direct obligations of the United States of
America, or any agency thereof, or obligations guaranteed by the
United States of America, provided that such obligations mature
within one year from the date of acquisition thereof; (h)
certificates of deposit maturing within one year from the date of
acquisition, bankers' acceptances, Eurodollar bank deposits, or
overnight bank deposits, in each case issued by, created by, or
with a bank or trust company organized under the laws of the
United States or any state thereof having capital and surplus
aggregating at least $100,000,000; (i) commercial paper given a
rating of "A2" or better by Standard & Poor's Corporation or "P2"
or better by Moody's Investors Service, Inc. and maturing not
more than 90 days from the date of creation thereof; (j) money
market preferred capital stock given a rating of "A" or better by
Standard & Poor's Corporation or Moody's Investors Service, Inc.;
(k) tax exempt floating rate option tender bonds backed by a
letter of credit issued by a bank given a rating of "AA" or
better by Standard & Poor's Corporation or "Aa" or better by
Moody's Investors Service, Inc. and having a maturity of one year
or less; and (l) investments in existence on the Closing Date and
described on Schedule 8.10.
"Revolver Facility" means $85,000,000 or the agreement
by the Lenders and the Agent to provide Revolving Loans and
Letters of Credit up to such amount subject to the terms of this
Agreement, as the context may require.
"Revolving Loans" has the meaning specified in Sec-
tion 2.2.
"Secured Creditors" means the Agent and the Lenders.
"Security" has the meaning specified in Section 2(1) of
the Securities Act of 1933, as amended.
"Settlement Loan" and "Settlement Loans" have the
meanings specified in Section 2.2(h).
"Solid Waste Bond Loan Agreement" means that certain
Loan Agreement dated as of September 1, 1990 between Southwestern
Illinois Development Authority and the Parent, together with all
amendments thereto.
"Solid Waste Disposal Bonds" means those certain Solid
Waste Disposal Revenue Bonds (Laclede Steel Company Project)
Series 1990 issued pursuant to a certain Indenture of Trust dated
as of September 1, 1990, between Southwestern Illinois
Development Authority and Boatmen's Trust Company, as Trustee.
"Solvent" means when used with respect to any Person
that (a) the fair value of all its assets is in excess of the
total amount of its debts (including contingent liabilities); (b)
it is able to pay its debts as they mature; (c) it does not have
unreasonably small capital for the business in which it is
engaged or for any business or transaction in which it is about
to engage; and (d) it is not "insolvent" as such term is defined
in Section 101(32) of the Bankruptcy Code.
"Subsidiary" means any corporation of which more than
fifty percent (50.0%) of the outstanding Securities of any class
or classes, the holders of which are ordinarily, in the absence
of contingencies, entitled to elect a majority of the corporate
directors (or Persons performing similar functions), is at the
time, directly or indirectly through one or more intermediaries,
owned by the applicable Borrower and/or one or more of its
Subsidiaries.
"Supporting Letter of Credit" has the meaning specified
in Section 2.4(j).
"Term Loan" and "Term Loans" have the meanings
specified in Section 2.3(a).
"Term Loan Note" and "Term Loan Notes" have the
meanings specified in Section 2.3(c).
"Termination Date" means the earliest to occur of (i)
the fifth Anniversary Date, (ii) the date the Revolver Facility
is terminated either by the Borrowers pursuant to Section 4.2 or
by the Majority Lenders pursuant to Section 10.2, and (iii) the
date this Agreement is otherwise terminated for any reason
whatsoever.
"Termination Event" means: (1) a Reportable Event with
respect to any Benefit Plan ; (2) the withdrawal of any Borrower
or any ERISA Affiliate from a Benefit Plan during a plan year in
which such Borrower or such ERISA Affiliate was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA; (3) the
imposition of an obligation on any Borrower or any ERISA
Affiliate under Section 4041 of ERISA to provide affected parties
written notice of intent to terminate a Benefit Plan in a
distress termination described in Section 4041(c) of ERISA; (4)
the institution by the PBGC of proceedings to terminate a Benefit
Plan; (5) any event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan; (6) the
partial or complete withdrawal of any Borrower or any ERISA
Affiliate from a Multiemployer Plan; or (7) the cessation of
operations which results in the termination of employment of
twenty percent (20.0%) of Benefit Plan participants who are
employees of any Borrower and its ERISA Affiliates.
"Total Facility" has the meaning specified in Sec-
tion 2.1.
"UCC" means the Uniform Commercial Code (or any
successor statute) of the State of Illinois or of any other state
the laws of which are required by Section 9-103 thereof to be
applied in connection with the issue of perfection of security
interests.
"Unused Letter of Credit Subfacility" means an amount
equal to $10,000,000 minus the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit plus (b) the
aggregate unpaid reimbursement obligations with respect to all
Letters of Credit.
"USX Agreement" means that certain Agreement to
Purchase Inventory and Lease Real and Personal Property, dated
October 15, 1991, between USX Corporation, a Delaware
corporation, and the Parent.
"Voting Stock" means Securities of any class or classes
of a corporation, the holders of which are ordinarily, in the
absence of contingencies, entitled to elect a majority of the
corporate directors (or Persons performing similar functions).
1.2 Accounting Terms. Any accounting term used in
this Agreement shall have, unless otherwise specifically provided
herein, the meaning customarily given in accordance with GAAP,
and all financial computations hereunder shall be computed,
unless otherwise specifically provided herein, in accordance with
GAAP as consistently applied and using the same method for inven-
tory valuation as used in the preparation of the Financial State-
ments.
1.3 Other Terms. All other undefined terms contained
in this Agreement shall, unless the context indicates otherwise,
have the meanings provided for by the UCC to the extent the same
are used or defined therein. Any references herein to exhibits,
schedules, sections or articles are references to exhibits,
schedules, sections or articles of this Agreement, unless
otherwise specified. Wherever appropriate in the context, terms
used herein in the singular also include the plural, and vice
versa, and each masculine, feminine, or neuter pronoun shall also
include the other genders.
1.4 Computation of Time Periods. In this Agreement,
in the computation of periods of time from a specified date to a
later specified date, the word "from" shall mean "from and
including" and the words "to" and "until" shall each mean "to but
excluding". Periods of days referred to in this Agreement shall
be counted in calendar days unless Business Days are expressly
prescribed and references in this Agreement to months and years
shall be to calendar months and calendar years unless otherwise
specified.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Total Facility. Subject to all of the terms and
conditions of this Agreement, the Lenders severally agree to make
available a total credit facility of up to $95,000,000 (the
"Total Facility") for the Borrowers' use from time to time during
the term of this Agreement. The Total Facility shall be com-
prised of: (a) a revolving line of credit consisting of revolving
loans and letters of credit up to the Maximum Revolver Amount, as
described in Sections 2.2 and 2.4; and (b) the Term Loans
described in Section 2.3.
2.2 Revolving Loans. (a) Amounts. Subject to the
satisfaction of the conditions precedent set forth in Article 9,
each Lender severally agrees, upon any Borrower's request from
time to time, to make revolving loans (the "Revolving Loans") to
such Borrower, in amounts not to exceed (except with respect to
Agent Advances) such Lender's Pro Rata Share of the lesser of
Individual Availability for such Borrower or Availability in the
aggregate at such time. The Lenders, however, in their
discretion, may elect to make Revolving Loans or participate (as
provided for in Section 2.4(f)) in the credit support or
enhancement provided through the Agent to the issuers of Letters
of Credit in excess of the lesser of Individual Availability or
Availability on one or more occasions, but if they do so, neither
the Agent nor the Lenders shall be deemed thereby to have changed
the limits of the Maximum Revolver Amount or the Individual
Maximum Revolver Amounts or to be obligated to exceed such limits
on any other occasion. If the sum of outstanding Revolving
Loans, the aggregate amount of Pending Revolving Loans, the
undrawn amount of outstanding Letters of Credit and any unpaid
reimbursement obligations in respect of Letters of Credit exceeds
the Maximum Revolver Amount, the Lenders, or any of them, may
refuse to make or otherwise restrict the making of Revolving
Loans on such terms as the Lenders, or such Lender, may determine
until such excess has been eliminated. Similarly, if the sum of
outstanding Revolving Loans to any Borrower, the aggregate amount
of Pending Revolving Loans to such Borrower, the undrawn amount
of outstanding Letters of Credit issued for the account of such
Borrower and any unpaid reimbursement obligations in respect of
Letters of Credit issued for the account of such Borrower exceeds
the Individual Maximum Revolver Amount with respect to such
Borrower, the Lenders, or any of them, may refuse to make or
otherwise restrict the making of Revolving Loans to such Borrower
on such terms as the Lenders, or such Lender, may determine until
such excess has been eliminated.
(b) Notice of Borrowing. Whenever any Borrower
desires to borrow Revolving Loans under this Section 2.2, the
Parent, for itself or on behalf of either or both of the other
Borrowers, shall deliver to the Agent a written request
substantially in the form of Exhibit E hereto (a "Notice of
Borrowing") signed by an authorized officer of the Parent, no
later than (i) 11:00 a.m. (San Francisco, California time) on the
requested Funding Date, in the case of requests for Base Rate
Revolving Loans, or (ii) 11:00 a.m. (San Francisco, California
time) four (4) Business Days in advance of the requested Funding
Date, in the case of requests for LIBOR Revolving Loans. The
Notice of Borrowing shall, with respect to any Revolving Loans
requested, specify (i) the Borrower requesting the Revolving
Loans, (ii) the requested Funding Date (which shall be a Business
Day), (iii) the aggregate amount of the requested Revolving
Loans, (iv) whether the Revolving Loans requested are to be Base
Rate Revolving Loans or LIBOR Revolving Loans, and (v) if the
requested Revolving Loans are to be LIBOR Revolving Loans, the
requested Interest Period. With respect to any request for Base
Rate Revolving Loans, in lieu of delivering the above-described
Notice of Borrowing the Parent, for itself or on behalf of either
or both of the other Borrowers, may give the Agent telephonic
notice of such request by the required time; provided, however,
that such telephonic notice shall be confirmed in writing by
delivery to the Agent (A) immediately of a telecopy of a Notice
of Borrowing which has been signed by an authorized officer of
the Parent, for itself or on behalf of either or both of the
other Borrowers, and (B) promptly of a Notice of Borrowing
containing the original signature of an authorized officer of the
Parent mailed by the applicable Borrower to the Agent via United
States mail on the date such notice is given. In the event that
the terms of any confirmatory Notice of Borrowing referred to in
the proviso contained in the immediately preceding sentence shall
conflict with the telephonic notice with respect to which it was
delivered, the terms of such telephonic notice shall govern.
Notwithstanding anything in this Section 2.2(b) to the contrary,
any Revolving Loans to be made to any Borrower on the Closing
Date shall initially be Base Rate Revolving Loans.
(c) Reliance upon Authority. On or prior to the
Closing Date and thereafter prior to any change with respect to
any of the information contained in the following clauses (i) and
(ii), each Borrower shall deliver to the Agent a writing setting
forth (i) the account of such Borrower to which the Agent is
authorized to transfer the proceeds of the Revolving Loans
requested pursuant to this Section 2.2, and (ii) the names of the
officers authorized to request Revolving Loans on behalf of such
Borrower, and shall provide the Agent with a specimen signature
of each such officer. The Agent shall be entitled to rely
conclusively on such officer's authority to request Revolving
Loans on behalf of such Borrower, the proceeds of which are to be
transferred to any of the accounts specified by such Borrower
pursuant to the immediately preceding sentence, until the Agent
receives written notice to the contrary. The Agent shall have no
duty to verify the identity of any individual representing
himself as one of the officers authorized by such Borrower to
make such requests on its behalf.
(d) No Liability. The Agent shall not incur any
liability to any Borrower as a result of acting upon any notice
referred to in Sections 2.2(b) and (c), which notice the Agent
believes in good faith to have been given by an officer duly
authorized by the applicable Borrower to request Revolving Loans
on its behalf or for otherwise acting in good faith under this
Section 2.2, and the crediting of Revolving Loans to the
applicable Borrower's deposit account, or transmittal to such
Person as such Borrower shall direct, shall conclusively
establish the obligation of the applicable Borrower to repay such
Revolving Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or
telephonic notice in lieu thereof) made pursuant to
Section 2.2(b) shall be irrevocable and the applicable Borrower
shall be bound to borrow the funds requested therein in
accordance therewith.
(f) Agent's Election. Promptly after receipt of a
Notice of Borrowing pursuant to Section 2.2(b), the Agent shall
elect, in its discretion, (i) to have the terms of Section 2.2(g)
apply to such requested Borrowing, or (ii) to request BABC to
make a Settlement Loan pursuant to the terms of Section 2.2(h) in
the amount of the requested Borrowing; provided, however, that if
BABC declines in its sole discretion to make a Settlement Loan
pursuant to Section 2.2(h), the Agent shall elect to have the
terms of Section 2.2(g) apply to such requested Borrowing.
(g) Making of Revolving Loans. (i) In the event that
the Agent shall elect to have the terms of Section 2.2(g) apply
to a requested Borrowing as described in Section 2.2(f), then
promptly after receipt of a Notice of Borrowing pursuant to
Section 2.2(b), the Agent shall notify the Lenders, not later
than noon (San Francisco, California time) on the Funding Date
applicable thereto, by telecopy, telephone or other similar form
of transmission, of the requested Borrowing. Each Lender shall
make the amount of such Lender's Pro Rata Share of the requested
Borrowing available to the Agent in same day funds, to such
account of the Agent as the Agent may designate, not later than
1:00 p.m. (San Francisco, California time) on the Funding Date
applicable thereto. After the Agent's receipt of the proceeds of
such Revolving Loans, upon satisfaction of the applicable
conditions precedent set forth in Article 9, the Agent shall make
the proceeds of such Revolving Loans available to the applicable
Borrower on the applicable Funding Date by transferring same day
funds equal to the proceeds of such Revolving Loans received by
the Agent to the account of such Borrower, designated in writing
by such Borrower; provided, however, that the amount of Revolving
Loans so made on any date shall in no event exceed the lesser of
Availability or Individual Availability with respect to such
Borrower on such date.
(ii) On any Funding Date in respect of a Borrowing,
the Agent shall be entitled to assume that each Lender has made
the amount of such Lender's Revolving Loan available to the Agent
on such Funding Date, unless such Lender shall have notified the
Agent to the contrary. The Agent, in its sole discretion, based
upon such assumption, may make available to the applicable
Borrower a corresponding amount on such Funding Date. If such
corresponding amount had not in fact been made available to the
Agent by any Lender, such Lender and the applicable Borrower
severally agree to repay to the Agent forthwith, on demand, such
corresponding amount, together with interest thereon for each day
during the period commencing on the date such amount is made
available to the applicable Borrower and ending on the date such
amount is repaid to the Agent, at (1) in the case of such
Borrower, the interest rate applicable from time to time to such
Borrowing, and (2) in the case of a Lender, the Federal Funds
Rate. If such Lender repays to the Agent such corresponding
amount, such amount so repaid shall constitute a Revolving Loan,
and if both such Lender and such Borrower shall have repaid such
corresponding amount, the Agent shall promptly return to such
Borrower such corresponding amount in same day funds. Nothing in
this Section 2.2(g)(ii) shall be deemed to relieve any Lender of
its obligation, if any, hereunder to make a Revolving Loan on any
Funding Date.
(h) Making of Settlement Loans. In the event the
Agent shall elect, with the consent of BABC, to have the terms of
this Section 2.2(h) apply to a requested Borrowing as described
in Section 2.2(f), BABC shall make a Revolving Loan in the amount
of such Borrowing (any such Revolving Loan made solely by BABC
pursuant to this Section 2.2(h) being referred to as a
"Settlement Loan" and such Revolving Loans being referred to
collectively as "Settlement Loans") available to the applicable
Borrower on the Funding Date applicable thereto by transferring
same day funds to an account of such Borrower, designated in
writing by such Borrower; provided, that at no time shall the sum
of the principal amounts of all outstanding Settlement Loans
exceed $5,000,000. Each Settlement Loan is a Revolving Loan
hereunder and shall be subject to all the terms and conditions
applicable to other Revolving Loans except that all payments
thereon shall be payable to BABC solely for its own account (and
for the account of the holder of any participation interest with
respect to such Revolving Loan created pursuant to subsection
(ii) of Section 2.2(k)). The Agent shall not request BABC to
make any Settlement Loan if (i) the Agent shall have received
written notice from any Lender, or otherwise has actual
knowledge, that one or more of the applicable conditions
precedent set forth in Article 9 will not be satisfied on the
requested Funding Date for the applicable Borrowing, or (ii) the
requested Borrowing would exceed the lesser of Availability or
Individual Availability with respect to the applicable Borrower
on such Funding Date. BABC shall not otherwise be required to
determine whether the applicable conditions precedent set forth
in Article 9 have been satisfied or the requested Borrowing would
exceed the lesser of Availability or Individual Availability with
respect to the applicable Borrower on the Funding Date applicable
thereto prior to making, in its sole discretion, any Settlement
Loan.
(i) [Intentionally left blank]
(j) Agent Advances. (i) Subject to the limitations
set forth in the provisos contained in this Section 2.2(j)(i),
the Agent is hereby authorized by the Borrowers and the Lenders,
from time to time in the Agent's discretion, (1) after the
occurrence of a Default or an Event of Default, or (2) at any
time that any of the other applicable conditions precedent set
forth in Article 9 have not been satisfied, to make Revolving
Loans to the Borrowers on behalf of the Lenders which the Agent,
in its reasonable business judgment, deems necessary or desirable
(A) to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of, or maximize the amount
of, repayment of the Loans and other Obligations, or (C) to pay
any other amount chargeable to any Borrower pursuant to the terms
of this Agreement, including, without limitation, costs, fees and
expenses as described in Section 14.6 (any of the advances
described in this Section 2.2(j)(i) being hereinafter referred to
as "Agent Advances"); provided, that the Agent shall not make any
Agent Advance to any Borrower if the amount thereof would exceed
the lesser of Availability or Individual Availability with
respect to such Borrower on the Funding Date applicable thereto;
and provided, further, that the Majority Lenders may at any time
revoke the Agent's authorization contained in this Section
2.2(j)(i) to make Agent Advances, any such revocation to be in
writing and to become effective upon the Agent's receipt thereof.
(ii) The Agent Advances shall be repayable on demand
and secured by the Collateral, shall constitute Revolving Loans
and Obligations hereunder, and shall bear interest at the rate
applicable to the Revolving Loans from time to time. The Agent
shall notify each Lender and the applicable Borrower in writing
of each such Agent Advance, which notice shall include a
description of the purpose of such Agent Advance.
(k) Settlement. (i) The Agent shall request
settlement ("Settlement") with the Lenders on a weekly basis, or
on a more frequent basis if so determined by the Agent, (1) on
behalf of BABC, with respect to each outstanding Settlement Loan,
and (2) for itself, with respect to each Agent Advance, by
notifying the other Lenders by telecopy, telephone or other
similar form of transmission, of such requested Settlement, no
later than 11:00 a.m. (San Francisco, California time) on the
date of such requested Settlement (the "Settlement Date"). Each
Lender (other than BABC, in the case of Settlement Loans) shall
make the amount of such Lender's Pro Rata Share of the
outstanding principal amount of the Settlement Loans and Agent
Advances with respect to which Settlement is requested available
to the Agent, for itself or for the account of BABC, in same day
funds, to such account of the Agent as the Agent may designate,
not later than 1:00 p.m. (San Francisco, California time), on the
Settlement Date applicable thereto, regardless of whether the
applicable conditions precedent set forth in Article 9 have then
been satisfied. Such amounts made available to the Agent shall
be applied against the amounts of the applicable Settlement Loan
or Agent Advance and, together with the portion of such
Settlement Loan or Agent Advance representing BABC's Pro Rata
Share thereof, shall constitute Revolving Loans of such Lenders.
If any such amount is not made available to the Agent by any
Lender on the Settlement Date applicable thereto, the Agent shall
be entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Rate for the
first three (3) days from and after the Settlement Date and
thereafter at the Interest Rate then applicable to the Revolving
Loans.
(ii) Notwithstanding the foregoing, not more than one
(1) Business Day after demand is made by the Agent (whether
before or after the occurrence of a Default or an Event of
Default and regardless of whether the Agent has requested a
Settlement with respect to a Settlement Loan or Agent Advance),
each other Lender shall irrevocably and unconditionally purchase
and receive from BABC or the Agent, as applicable, without
recourse or warranty, an undivided interest and participation in
such Settlement Loan or Agent Advance to the extent of such
Lender's Pro Rata Share thereof by paying to the Agent, in same
day funds, an amount equal to such Lender's Pro Rata Share of
such Settlement Loan or Agent Advance. If such amount is not in
fact made available to the Agent by any Lender, the Agent shall
be entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Rate for the
first three (3) days from and after such demand and thereafter at
the Interest Rate then applicable to the Revolving Loans.
(iii) From and after the date, if any, on which any
Lender purchases an undivided interest and participation in any
Settlement Loan or Agent Advance pursuant to subsection (ii)
above, the Agent shall promptly distribute to such Lender at such
address as such Lender may request in writing, such Lender's Pro
Rata Share of all payments of principal and interest and all
proceeds of collateral received by the Agent in respect of such
Settlement Loan or Agent Advance.
(l) Notation. The Agent shall record in the Register
the principal amount of the Revolving Loans owing to each Lender,
including the Settlement Loans owing to BABC, and the Agent
Advances owing to the Agent, from time to time. In addition,
each Lender is authorized, at such Lender's option, to note the
date and amount of each payment or prepayment of principal of
such Lender's Revolving Loans in its books and records, including
computer records, such books and records constituting rebuttably
presumptive evidence, absent manifest error, of the accuracy of
the information contained therein.
(m) Lenders' Failure to Perform. All Loans (other
than Settlement Loans and Agent Advances) shall be made by the
Lenders simultaneously and in accordance with their Pro Rata
Shares. It is understood that (a) no Lender shall be responsible
for any failure by any other Lender to perform its obligation to
make any Loans hereunder, nor shall any Commitment of any Lender
be increased or decreased as a result of any failure by any other
Lender to perform its obligation to make any Loans hereunder, and
(b) no failure by any Lender to perform its obligation to make
any Loans hereunder shall excuse any other Lender from its
obligation to make any Loans hereunder.
2.3 Term Loans.
(a) Amounts of Term Loans. Each Lender severally
agrees to make a term loan (any such term loan being referred to
as a "Term Loan" and such term loans being referred to
collectively as the "Term Loans") to the Parent on the Closing
Date, upon the satisfaction of the conditions precedent set forth
in Article 9, in an amount equal to such Lender's Pro Rata Share
of $10,000,000. The Term Loans shall initially be Base Rate Term
Loans.
(b) Making of Term Loans. Each Lender shall make the
amount of such Lender's Term Loan available to the Agent in same
day funds, to such account of the Agent as the Agent may
designate, not later than 1:00 p.m. (San Francisco, California
time) on the Closing Date. After the Agent's receipt of the
proceeds of such Term Loans, upon satisfaction of the conditions
precedent set forth in Article 9, the Agent shall make the
proceeds of such Term Loans available to the Parent on such
Funding Date by transferring same day funds equal to the proceeds
of such Term Loans received by the Agent to an account of the
Parent designated in writing by the Parent or as the Parent shall
otherwise instruct in writing.
(c) Term Loan Notes. The Parent shall execute and
deliver to the Agent on behalf of each Lender, on the Closing
Date, a promissory note, substantially in the form of Exhibit A
attached hereto and made a part hereof (such promissory notes,
together with any new notes issued pursuant to Section 12.3(d)
upon the assignment of any portion of any Lender's Term Loan,
being hereinafter referred to collectively as the "Term Loan
Notes" and each of such promissory notes being hereinafter
referred to individually as a "Term Loan Note"), to evidence such
Lender's Term Loan, in an original principal amount equal to the
amount of such Lender's Pro Rata Share of $10,000,000 and with
other appropriate insertions. The principal amount of the Term
Loan Notes delivered to the Agent on behalf of each Lender shall
be dated the Closing Date and stated to mature in sixty (60)
monthly installments. Each of the first fifty-nine (59)
installments of principal shall be in an amount equal to such
Lender's Pro Rata Share of $119,048 and shall be payable on the
first day of each month, commencing on October 1, 1994 and ending
on August 1, 1999, and the final installment of principal shall
be in an amount equal to such Lender's Pro Rata Share of the then
remaining principal balance of the Term Loan Notes, and shall be
payable on September 1, 1999. Each such installment shall be
payable to the Agent for the account of the applicable Lender.
(d) Notation and Endorsement. The Agent shall record
in the Register the principal amount of the Term Loans owing to
each Lender from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount
of each payment or prepayment of principal of such Lender's Term
Loans in its books and records, such books and records
constituting rebuttably presumptive evidence, absent manifest
error, of the accuracy of the information contained therein.
Prior to the transfer of a Term Loan Note, the applicable Lender
shall endorse on the reverse side thereof the outstanding
principal balance of the Term Loan evidenced thereby. Failure by
such Lender to make such notation or endorsement shall not affect
the obligations of the Parent under such Term Loan Note or any of
the other Loan Documents.
2.4 Letters of Credit.
(a) Agreement to Cause Issuance. Subject to the terms
and conditions of this Agreement, and in reliance upon the
representations and warranties of the Borrowers herein set forth,
the Agent agrees to take reasonable steps to cause to be issued
for the account of any Borrower one or more stand-by or
documentary letters of credit (each such letter of credit,
together with those letters of credit previously issued by
Boatmen's and reflected on Schedule 2.4, a "Letter of Credit" and
such letters of credit, collectively, the "Letters of Credit") in
accordance with this Section 2.4 from time to time during the
term of this Agreement.
(b) Amounts; Outside Expiration Date. The Agent shall
not have any obligation to take steps to cause to be issued any
Letter of Credit at any time: (1) if the maximum undrawn amount
of the requested Letter of Credit is greater than the Unused
Letter of Credit Subfacility at such time; (2) if the maximum
undrawn amount of the requested Letter of Credit and all
commissions, fees, and charges due from the applicable Borrower
in connection with the opening thereof, exceed the lesser of
Availability or Individual Availability applicable to such
Borrower at such time; or (3) which has an expiration date later
than the fifth Anniversary Date or more than one (1) year from
the date of issuance.
(c) Other Conditions. In addition to being subject to
the satisfaction of the applicable conditions precedent contained
in Article 9, the obligation of the Agent to take reasonable
steps to cause to be issued any Letter of Credit is subject to
the following conditions precedent having been satisfied in a
manner satisfactory to the Agent:
(1) the applicable Borrower shall have delivered to
the proposed issuer of such Letter of Credit, at such times
and in such manner as such proposed issuer may prescribe, an
application in form and substance satisfactory to such
proposed issuer for the issuance of the Letter of Credit and
such other documents as may be required pursuant to the
terms thereof, and the form and terms of the proposed Letter
of Credit shall be satisfactory to the Agent and such
proposed issuer; and
(2) as of the date of issuance, no order of any court,
arbitrator or Public Authority shall purport by its terms to
enjoin or restrain money center banks generally from issuing
letters of credit of the type and in the amount of the
proposed Letter of Credit, and no law, rule or regulation
applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any
Public Authority with jurisdiction over money center banks
generally shall prohibit, or request that the proposed
issuer of such Letter of Credit refrain from, the issuance
of letters of credit generally or the issuance of such
Letters of Credit.
(d) Issuance of Letters of Credit.
(1) Request for Issuance. The Parent, for itself or
on behalf of either or both of the other Borrowers, shall
give the Agent seven (7) Business Days' prior written
notice, containing the original signature of an authorized
officer of the Parent, of the applicable Borrower's request
for the issuance of a Letter of Credit. Such notice shall
be irrevocable and shall specify the Borrower requesting the
Letter of Credit, the original face amount of the Letter of
Credit requested, the effective date (which date shall be a
Business Day) of issuance of such requested Letter of
Credit, whether such Letter of Credit may be drawn in a
single or in partial draws, the date on which such requested
Letter of Credit is to expire (which date shall be a
Business Day), the purpose for which such Letter of Credit
is to be issued, and the beneficiary of the requested Letter
of Credit. The Parent shall attach to such notice the
proposed form of the Letter of Credit that the Agent is
requested to cause to be issued.
(2) Responsibilities of the Agent; Issuance. The
Agent shall determine, as of the Business Day immediately
preceding the requested effective date of issuance of the
Letter of Credit set forth in the notice from the Parent
pursuant to Section 2.4(d)(1), (i) the amount of the
applicable Unused Letter of Credit Subfacility and (ii) the
lesser of Availability and Individual Availability with
respect to the applicable Borrower as of such date. If (A)
(i) the undrawn amount of the requested Letter of Credit is
not greater than the applicable Unused Letter of Credit
Subfacility and (ii) the issuance of such requested Letter
of Credit and all commissions, fees, and charges due from
the applicable Borrower in connection with the opening
thereof would not exceed the lesser of Availability or
Individual Availability with respect to such Borrower, and
(B) the Agent has received a certificate from the Parent or
such Borrower stating that the applicable conditions set
forth in Article 9 have been satisfied, the Agent shall take
reasonable steps to cause such issuer to issue the requested
Letter of Credit on such requested effective date of
issuance.
(3) Notice of Issuance. Promptly after the issuance
of any Letter of Credit, the Agent shall give each Lender
written notice, or telephonic notice confirmed promptly
thereafter in writing, of the issuance of such Letter of
Credit.
(4) No Extensions or Amendment. The Agent shall not
cause any Letter of Credit to be extended or amended unless
the requirements of this Section 2.4(d) are met as though a
new Letter of Credit were being requested and issued.
(e) Payments Pursuant to Letters of Credit.
(1) Payment of Letter of Credit Obligations. The
Borrowers agree to reimburse the issuer for any draw under
any Letter of Credit immediately upon demand, and to pay the
issuer of the Letter of Credit the amount of all other
Obligations and other amounts payable to such issuer under
or in connection with any Letter of Credit immediately when
due, irrespective of any claim, setoff, defense or other
right which any Borrower may have at any time against such
issuer or any other Person.
(2) Revolving Loans to Satisfy Reimbursement
Obligations. In the event that the issuer of any Letter of
Credit honors a draw under such Letter of Credit and the
applicable Borrower shall not have repaid such amount to the
issuer of such Letter of Credit pursuant to
Section 2.4(e)(1), the Agent shall, upon receiving notice of
such failure, notify each Lender of such failure, and each
Lender shall unconditionally pay to the Agent, for the
account of such issuer, as and when provided hereinbelow, an
amount equal to such Lender's Pro Rata Share of the amount
of such payment in Dollars and in same day funds. If the
Agent so notifies the Lenders prior to 11:00 a.m. (San
Francisco, California time) on any Business Day, each Lender
shall make available to the Agent the amount of such
payment, as provided in the immediately preceding sentence,
on such Business Day. Such amounts paid by the Lenders to
the Agent shall constitute Revolving Loans which shall be
deemed to have been requested by the applicable Borrower
pursuant to Section 2.2 as set forth in Section 4.7.
(f) Participations.
(1) Purchase of Participations. Immediately upon
issuance of any Letter of Credit in accordance with Section
2.4(d), and on the Closing Date for the Letters of Credit
reflected on Schedule 2.4, each Lender shall be deemed to
have irrevocably and unconditionally purchased and received
without recourse or warranty, an undivided interest and
participation in the credit support or enhancement provided
through the Agent to such issuer in connection with the
issuance of such Letter of Credit, equal to such Lender's
Pro Rata Share of the face amount of such Letter of Credit
(including, without limitation, all obligations of the
applicable Borrower with respect thereto, and any security
therefor or guaranty pertaining thereto).
(2) Sharing of Reimbursement Obligation Payments.
Whenever the Agent receives a payment from a Borrower on
account of reimbursement obligations in respect of a Letter
of Credit as to which the Agent has previously received for
the account of the issuer thereof payment from a Lender
pursuant to this Section 2.4(f)(2), the Agent shall promptly
pay to such Lender such Lender's Pro Rata Share of such
payment from such Borrower in Dollars. Each such payment
shall be made by the Agent on the Business Day on which the
Agent receives immediately available funds paid to such
Person pursuant to the immediately preceding sentence, if
received prior to 1:00 p.m. (San Francisco, California time)
on such Business Day and otherwise on the next succeeding
Business Day.
(3) Documentation. Upon the request of any Lender,
the Agent shall furnish to such Lender copies of any Letter
of Credit, reimbursement agreement executed in connection
therewith, application for any Letter of Credit and credit
support or enhancement provided through the Agent in
connection with the issuance of any Letter of Credit, and
such other documentation as may reasonably by requested by
such Lender.
(4) Obligations Irrevocable. The obligations of each
Lender to make payments to the Agent with respect to any
Letter of Credit or with respect to any credit support or
enhancement provided through the Agent with respect to a
Letter of Credit, and the obligations of the Borrowers to
make payments to the Agent, for the account of the Lenders,
shall be irrevocable, not subject to any qualification or
exception whatsoever and shall be made in accordance with
the terms and conditions of this Agreement (assuming, in the
case of the obligations of the Lenders to make such
payments, that the Agent has caused such Letter of Credit to
be issued in accordance with Section 2.4(d)), including,
without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of
this Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense
or other right which any Borrower may have at any time
against a beneficiary named in a Letter of Credit or
any transferee of any Letter of Credit (or any Person
for whom any such transferee may be acting), any
Lender, the Agent, the issuer of such Letter of Credit,
or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions
(including any underlying transactions between any
Borrower or any other Person and the beneficiary named
in any Letter of Credit);
(iii) any draft, certificate or any other
document presented under the Letter of Credit proving
to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms
of any of the Loan Documents; or
(v) the occurrence of any Default or Event of
Default.
(g) Recovery or Avoidance of Payments. In the event
any payment by or on behalf of a Borrower received by the Agent
with respect to any Letter of Credit (or any guaranty by a
Borrower or reimbursement obligation of a Borrower relating
thereto) and distributed by the Agent to the Lenders on account
of their respective participations therein is thereafter set
aside, avoided or recovered from the Agent in connection with any
receivership, liquidation or bankruptcy proceeding, the Lenders
shall, upon demand by the Agent, pay to the Agent their
respective Pro Rata Shares of such amount set aside, avoided or
recovered, together with interest at the rate required to be paid
by the Agent upon the amount required to be repaid by it.
(h) Compensation for Letters of Credit.
(1) Letter of Credit Fee. The Borrowers agree to pay
to the Agent with respect to each Letter of Credit, for the
account of the Lenders, the Letter of Credit Fee specified
in, and in accordance with the terms of, Section 3.8.
(2) Issuer Fees and Charges. The Borrowers shall pay
to the issuer of any Letter of Credit, or to the Agent, for
the account of the issuer of any such Letter of Credit,
solely for such issuer's account, such fees and other
charges as are charged by such issuer for letters of credit
issued by it, including, without limitation, its standard
fees for issuing, administering, amending, renewing, paying
and cancelling letters of credit and all other fees
associated with issuing or servicing letters of credit, as
and when assessed.
(i) Indemnification; Exoneration.
(1) Indemnification. In addition to amounts payable
as elsewhere provided in this Section 2.4, each Borrower
hereby agrees to protect, indemnify, pay and save the
Lenders and the Agent harmless from and against any and all
claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees)
which any Lender or the Agent may incur or be subject to as
a consequence, direct or indirect, of the issuance of any
Letter of Credit or the provision of any credit support or
enhancement in connection therewith.
(2) Assumption of Risk by the Borrowers. As among the
Borrowers, the Lenders and the Agent, the Borrowers assume
all risks of the acts and omissions of, or misuse of any of
the Letters of Credit by, the respective beneficiaries of
such Letters of Credit. In furtherance and not in
limitation of the foregoing, subject to the provisions of
the applications for the issuance of Letters of Credit, the
Lenders and the Agent shall not be responsible for: (A) the
form, validity, sufficiency, accuracy, genuineness or legal
effect of any document submitted by any Person in connection
with the application for and issuance of and presentation of
drafts with respect to any of the Letters of Credit, even if
it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any 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; (C) the failure of the
beneficiary of any Letter of Credit to comply duly with
conditions required in order to draw upon such Letter of
Credit; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in
cipher; (E) errors in interpretation of technical terms; (F)
any loss or delay in the transmission or otherwise of any
document required in order make a drawing under any Letter
of Credit or of the proceeds thereof; (G) the misapplication
by the beneficiary of any Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (H) any
consequences arising from causes beyond the control of the
Lenders or the Agent, including, without limitation, any act
or omission, whether rightful or wrongful, of any present or
future de jure or de facto Public Authority. None of the
foregoing shall affect, impair or prevent the vesting of any
rights or powers of the Agent or any Lender under this
Section 2.4(i).
(3) Exoneration. In furtherance and extension, and
not in limitation, of the specific provisions set forth
above, any action taken or omitted by the Agent or any
Lender under or in connection with any of the Letters of
Credit or any related certificates, if taken or omitted in
good faith and without gross negligence, shall not put the
Agent or any Lender under any resulting liability to any
Borrower or relieve any Borrower of any of its obligations
hereunder to any such Person.
(j) Supporting Letter of Credit; Cash Collateral.
(i) If, notwithstanding the provisions of Section
2.4(b) any Letter of Credit is outstanding upon the termination
of this Agreement, then upon such termination the Borrowers shall
deposit with the Agent, for the ratable benefit of the Secured
Creditors, with respect to each Letter of Credit then
outstanding, as the Agent shall specify, either (A) a standby
letter of credit (a "Supporting Letter of Credit") in form and
substance satisfactory to the Agent, issued by an issuer
satisfactory to the Agent in an amount equal to the greatest
amount for which such Letter of Credit may be drawn, under which
Supporting Letter of Credit the Agent is entitled to draw amounts
necessary to reimburse the Agent and the Lenders for payments
made by the Agent and the Lenders under such Letter of Credit or
under any credit support or enhancement provided through the
Agent with respect thereto, or (B) cash in amounts necessary to
reimburse the Agent and the Lenders for payments made by the
Agent or the Lenders under such Letter of Credit or under any
credit support or enhancement provided through the Agent with
respect thereto. Such Supporting Letter of Credit or deposit of
cash shall be held by the Agent, for the ratable benefit of the
Secured Creditors, as security for, and to provide for the
payment of, the aggregate undrawn amount of such Letters of
Credit remaining outstanding.
(ii) The Borrowers shall, upon the request of the
Agent, which may be made at any time that (A) an Event of Default
has occurred and is continuing, or (B) Availability is less than
zero, deliver to the Agent cash collateral for any Letter of
Credit outstanding.
ARTICLE 3
INTEREST AND FEES
3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall
bear interest on the unpaid principal amount thereof (including,
to the extent permitted by law, on interest thereon not paid when
due) from the date made until paid in full in cash at a rate
determined by reference to the Base Rate or the LIBO Rate and
Sections 3.1(a)(i) or (ii), as applicable, but not to exceed the
Maximum Rate described in Section 3.4. Subject to the provisions
of Section 3.2, any of the Loans may be converted into, or
continued as, Base Rate Loans or LIBO Rate Loans in the manner
provided in Section 3.2. If at any time Loans are outstanding
with respect to which notice has not been delivered to the Agent
in accordance with the terms of this Agreement specifying the
basis for determining the interest rate applicable thereto, then
those Loans shall be Base Rate Loans and shall bear interest at a
rate determined by reference to the Base Rate until notice to the
contrary has been given to the Agent and such notice has become
effective. Except as otherwise provided herein, the outstanding
Obligations shall bear interest as follows:
(i) For all Term Loans which are not LIBOR Term Loans,
then at a fluctuating per annum rate equal to one percent
(1.0%) (the "Base Rate Term Margin") plus the Base Rate, and
for all Revolving Loans and other Obligations, other than
Term Loans, which are not LIBOR Revolving Loans, then at a
fluctuating per annum rate equal to one-half of one percent
(0.50%) (the "Base Rate Revolving Margin") plus the Base
Rate; and
(ii) For all Term Loans which are LIBOR Term
Loans, then at a per annum rate equal to two and three-
quarters percent (2.75%) (the "LIBOR Term Margin") plus
the LIBO Rate determined for the applicable Interest
Period, and for all Revolving Loans and other
Obligations, other than Term Loans, which are LIBOR
Revolving Loans, then at a per annum rate equal to two
and one-half percent (2.50%) (the "LIBOR Revolving
Margin") plus the LIBO Rate determined for the
applicable Interest Period.
Each change in the Base Rate shall be reflected in the interest
rate described in (i) above as of the effective date of such
change. All interest charges shall be computed on the basis of a
year of 360 days and actual days elapsed. Except as otherwise
provided herein, (a) interest accrued on each LIBO Rate Loan
shall be payable in arrears on each LIBOR Interest Payment Date
applicable to such LIBO Rate Loan and upon payment thereof in
full, and (b) interest accrued on the Base Rate Loans will be
payable in arrears on the first day of each month hereafter.
(b) Default Rate. Without limiting any of the
foregoing, (i) if any of the Obligations owed hereunder are not
paid when due (whether by acceleration or otherwise), then all of
the Obligations shall bear interest at the Default Rate
applicable thereto until so paid; and (ii) if any other Default
or Event of Default occurs and the Majority Lenders in their
discretion so elect, then, while any such Default or Event of
Default is outstanding, all of the Obligations shall bear
interest at the Default Rate applicable thereto.
(c) Margin Increase. In the event that the
Consolidated Fixed Charge Coverage Ratio shall be less than 1.5
to 1.0, determined as of March 31, 1995 and as of the last day of
each fiscal quarter thereafter, in each case for the four fiscal
quarter period ending on such date, each of the Margins shall be
increased by one-half of one percent (.50%) commencing on the
date of such determination and shall remain at such level for so
long as such Consolidated Fixed Charge Coverage Ratio as so
computed at the end of each fiscal quarter shall be less than 1.5
to 1.0 as reported on the Financial Statements.
3.2 Conversion or Continuation. (a) Subject to the
provisions of Section 3.3, (i) the Parent shall have the option
to convert all or any part of the outstanding Term Loans, and
each Borrower shall have the option to convert all or any part of
the outstanding Revolving Loans to such Borrower, in either case
in a minimum amount of $5,000,000 and integral multiples of
$5,000,000 in excess of that amount, from Base Rate Term Loans or
Base Rate Revolving Loans to LIBOR Term Loans or LIBOR Revolving
Loans, as the case may be, at any time; (ii) the Parent shall
have the option to convert all or any part of the outstanding
Term Loans, and each Borrower shall have the option to convert
all or any part of the outstanding Revolving Loans to such
Borrower, from LIBOR Term Loans or LIBOR Revolving Loans to Base
Rate Term Loans or Base Rate Revolving Loans, as the case may be,
on the expiration of the Interest Period applicable thereto; and
(iii) the Parent shall have the option, on the expiration of the
Interest Period applicable to any outstanding LIBOR Term Loan,
and each Borrower shall have the option, on the expiration of the
Interest Period applicable to any outstanding LIBOR Revolving
Loan to such Borrower, to continue all of such LIBOR Term Loan or
all or any portion of such LIBOR Revolving Loan equal to
$5,000,000 and integral multiples of $5,000,000 in excess of that
amount, as a LIBOR Term Loan or LIBOR Revolving Loan, as
applicable; provided, however, that no outstanding Loans may be
converted into or continued as LIBO Rate Loans when any Default
or Event of Default has occurred and is continuing. Any
conversion or continuation made with respect to less than the
entire outstanding balance of the Revolving Loans or Term Loans
must be applied pro rata to the Revolving Loans or Term Loans, as
applicable, according to the outstanding principal balance of
each Revolving Loan or Term Loan.
(b) Whenever any Borrower elects to convert or con-
tinue Loans under this Section 3.2, the Parent, for itself or as
agent for either or both of the other Borrowers, shall deliver to
the Agent a written notice substantially in the form of that
attached hereto as Exhibit F (a "Notice of Conversion/
Continuation"), signed by an authorized officer of the Parent (i)
no later than 11:00 a.m. (San Francisco, California time) two (2)
Business Days in advance of the requested conversion date, in the
case of a conversion into Base Rate Loans, and (ii) no later than
11:00 a.m (San Francisco, California time) four (4) Business Days
in advance of the requested conversion or continuation date, in
the case of a conversion into, or continuation of, LIBO Rate
Loans. The Notice of Conversion/Continuation shall specify (1)
the applicable Borrower, (2) the conversion or continuation date
(which shall be a Business Day), (3) the amount and type of the
Loans to be converted or continued, (4) the nature of the
requested conversion or continuation, and (5) in the case of a
conversion into, or continuation of, LIBO Rate Loans, the
requested Interest Period. Promptly after receipt of a Notice of
Conversion/Continuation pursuant to this Section 3.2(b), the
Agent shall notify the Lenders by telecopy, telephone or other
similar form of transmission, of the requested conversion or
continuation. In the event that the Parent should fail to
provide a Notice of Conversion/Continuation with respect to any
LIBO Rate Loans as provided above, such Loans shall, on the last
day of the Interest Period with respect to such Loans, convert to
Base Rate Loans.
(c) The officers of the Parent authorized to request
Revolving Loans for the Parent or on behalf of either or both of
the other Borrowers shall also be authorized to request a
conversion or continuation for the Parent or on behalf of either
or both of the other Borrowers. The Agent shall be entitled to
rely on such officers' authority until the Agent is notified to
the contrary in writing pursuant to Section 2.2(c). The Agent
shall have no duty to verify the identity of any individual
representing himself as one of the officers authorized to make
such request on behalf of any Borrower. The Agent shall incur no
liability to any Borrower in acting upon any notice referred to
in this Section 3.2, which notice the Agent believes in good
faith to have been given by an officer authorized to make such
requests on behalf of such Borrower, or for otherwise acting in
good faith under this Section 3.2 and, upon such conversion or
continuation by the Agent and the Lenders in accordance with this
Agreement, the applicable Borrower shall have effected the
conversion or continuation of the applicable Loans hereunder.
(d) Any Notice of Conversion/Continuation for
conversion to, or continuation of, Loans made pursuant to this
Section 3.2 shall be irrevocable and the applicable Borrower
shall be bound to convert or continue in accordance therewith.
3.3 Special Provisions Governing LIBO Rate Loans.
Notwithstanding any other provisions to the contrary contained in
this Agreement, the following provisions shall govern with
respect to LIBO Rate Loans as to the matters covered:
(a) Amount of LIBO Rate Loans. Each continuation of
or conversion to LIBOR Term Loans, and each election of,
continuation of or conversion to LIBOR Revolving Loans, shall be
in a minimum amount of $5,000,000 and in integral multiples of
$5,000,000 in excess of that amount.
(b) Determination of Interest Period. By giving
notice as set forth in Section 3.2(b), the Parent, for itself or
on behalf of either or both of the other Borrowers, shall have
the option, subject to the other provisions of this Section 3.3,
to specify whether the Interest Period for such LIBO Rate Loan
shall be a period of one, two, three or four months (or, if
available, as determined by all of the Lenders, six or twelve
months). The determination of Interest Periods shall be subject
to the following provisions:
(i) In the case of immediately successive
Interest Periods, each successive Interest Period shall
commence on the day on which the next preceding
Interest Period expires.
(ii) If any Interest Period would otherwise
expire on a day which is not a Business Day, the
Interest Period shall be extended to expire on the next
succeeding Business Day; provided, however, that if the
next succeeding Business Day occurs in the following
calendar month, then such Interest Period shall expire
on the immediately preceding Business Day.
(iii) No Borrower may select an Interest Period
for any LIBO Rate Loan, which Interest Period expires
later than the fifth Anniversary Date.
(iv) No Borrower may select an Interest Period
with respect to any portion of the Term Loans which
extends beyond an installment payment date for the Term
Loans unless, after giving effect to such election, the
portion of the Term Loans not subject to Interest
Periods ending after such installment payment date is
equal to or greater than the principal due on such
installment payment date.
(v) There shall be no more than five (5) Interest
Periods in effect at any one time.
(c) Determination of Interest Rate. As soon as prac-
ticable after 11:00 a.m. (San Francisco, California time) on the
LIBOR Interest Rate Determination Date, the Agent shall determine
(which determination shall, absent manifest error, be presump-
tively correct) the Interest Rate for the LIBO Rate Loans for
which an Interest Rate is then being determined and shall
promptly give notice thereof (in writing or by telephone
confirmed in writing) to the applicable Borrower. In the event
that on any LIBOR Interest Rate Determination Date the Agent
shall have determined (which determination shall, absent manifest
error, be presumptively correct and binding upon all parties)
that:
(i) adequate and fair means do not exist for
ascertaining the applicable interest rates by reference
to which the LIBO Rate then being determined is to be
fixed; or
(ii) the LIBO Rate for any Interest Period for
such Loans will not adequately reflect the cost to any
Lender of making, funding or maintaining its LIBO Rate
Loan for such Interest Period, the Agent shall
forthwith so notify the Borrowers and the Lenders,
whereupon:
(A) each LIBO Rate Loan will automatically, on the
last day of the then existing Interest Period
therefor, convert into a Base Rate Loan; and
(B) the obligation of the Lenders to make, or to
convert Loans into, LIBO Rate Loans shall be
suspended until the Agent shall notify the
Borrowers and the Lenders that the circumstances
causing such suspension no longer exist.
(d) Illegality. Notwithstanding any other provision
of this Agreement, if any Lender shall notify the Agent that the
introduction of or any change in or in the interpretation of any
law or regulation makes it unlawful, or any central bank or other
Public Authority asserts that it is unlawful, for any Lender to
perform its obligations hereunder to make LIBO Rate Loans or to
fund or maintain LIBO Rate Loans hereunder, (i) the obligation of
the Lenders to make, or to convert Loans into or to continue
Loans as, LIBO Rate Loans shall be suspended until the Agent
shall notify the Borrowers and the Lenders that the circumstances
causing such suspension no longer exist and (ii) the Borrowers
shall on the termination of the Interest Period than applicable
thereto, or on such earlier date required by law, prepay in full
all LIBO Rate Loans then outstanding together with accrued
interest thereon, or convert all such LIBO Rate Loans into Base
Rate Loans in accordance with Section 3.2.
(e) Increased Costs. If, due to either (i) the intro-
duction of or any change (other than any change by way of
imposition or increase of reserve requirements included in the
LIBOR Reserve Percentage) in or in the interpretation of any law
or regulation or (ii) the compliance with any guideline or
request from any central bank or other Public Authority (whether
or not having the force of law), there shall be any increase in
the cost to any Lender of agreeing to make or making, funding or
maintaining LIBO Rate Loans, then the Borrowers agree that they
shall, from time to time, upon demand by such Lender, pay to such
Lender additional amounts sufficient to compensate such Lender
for such increased cost. A certificate as to the amount of such
increased cost, submitted to the Borrowers by such Lender, shall,
absent manifest error, be rebuttably presumptive evidence of the
correctness of such amount.
(f) Compensation. In addition to such amounts as are
required to be paid by the Borrowers pursuant to the other
Sections of this Article 3, each Borrower agrees to compensate
any Lender for all losses, expenses and liabilities, including,
without limitation, any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by such Lender to fund or maintain such Lender's LIBO Rate Loans
to the Borrowers, which such Lender may sustain (i) if for any
reason a funding of any LIBO Rate Loans does not occur on a date
specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation, or a successive Interest Period does not
commence after notice therefor is given pursuant to Section 3.2,
(ii) if any voluntary or mandatory prepayment of any LIBO Rate
Loans occurs for any reason on a date which is not the last
scheduled day of an Interest Period, (iii) as a consequence of
any required conversion of LIBO Rate Loans to Base Rate Loans as
a result of any of the events indicated in Section 3.3(d), or
(iv) as a consequence of any other failure by any Borrower to
repay LIBO Rate Loans when required by the terms of this
Agreement.
(g) Booking of LIBO Rate Loans. The Lenders may make,
carry or transfer LIBO Rate Loans at, to, or for the account of,
any of their respective branch offices or the office of any of
their respective affiliates.
(h) LIBO Rate Loans After Event of Default. Unless
the Majority Lenders shall otherwise agree, after the occurrence
of and during the continuance of any Event of Default, no
Borrower may borrow Revolving Loans as LIBO Rate Loans or elect
to have any Loans continued as, or converted to, LIBO Rate Loans
after the expiration of any Interest Period then in effect for
such Loans.
3.4 Maximum Interest Rate. In no event shall any
interest rate provided for hereunder exceed the maximum rate
permissible for corporate borrowers under applicable law for
loans of the type provided for hereunder (the "Maximum Rate").
If, in any month, any interest rate, absent such limitation,
would have exceeded the Maximum Rate, then the interest rate for
that month shall be the Maximum Rate, and, if in future months,
that interest rate would otherwise be less than the Maximum Rate,
then that interest rate shall remain at the Maximum Rate until
such time as the amount of interest paid hereunder equals the
amount of interest which would have been paid if the same had not
been limited by the Maximum Rate. In the event that, upon payment
in full of the Obligations under this Agreement, the total amount
of interest paid or accrued under the terms of this Agreement is
less than the total amount of interest which would, but for this
Section 3.4, have been paid or accrued if the interest rates
otherwise set forth in this Agreement had at all times been in
effect, then the Borrowers shall, to the extent permitted by
applicable law, pay the Agent, for the account of the Lenders, an
amount equal to the difference between (a) the lesser of (i) the
amount of interest which would have been charged if the Maximum
Rate had, at all times, been in effect or (ii) the amount of
interest which would have accrued had the interest rates
otherwise set forth in this Agreement, at all times, been in
effect and (b) the amount of interest actually paid or accrued
under this Agreement. In the event that a court determines that
the Agent and/or any Lender has received interest and other
charges hereunder in excess of the Maximum Rate, such excess
shall be deemed received on account of, and shall automatically
be applied to reduce, the Obligations other than interest, in the
inverse order of maturity, and if there are no Obligations
outstanding, the Agent and/or such Lender shall refund to the
Borrowers such excess.
3.5 Closing Fee. The Borrowers agree, on a joint and
several basis, to pay the Agent, for the ratable account of the
Lenders, on the Closing Date a closing fee (the "Closing Fee") in
the amount of $950,000, which Closing Fee shall be fully earned
by the Lenders on the Closing Date. The Agent, the Lenders and
the Borrowers agree that the Closing Fee shall be financed by the
Lenders as Revolving Loans.
3.6 Facility Fee. The Borrowers agree, on a joint and
several basis, to pay to the Agent, for the ratable account of
the Lenders, a facility fee equal to one-half of one percent
(0.50%) per annum on the average daily amount by which the
Revolver Facility exceeded the sum of outstanding Revolving Loans
and the undrawn amount of all outstanding Letters of Credit,
payable on the first day of each month for the immediately
preceding month and on the Termination Date for the period from
the last date for which the facility fee was paid to and
including the Termination Date. The facility fee shall be
computed on the basis of a 360-day year for the actual number of
days elapsed. As provided for in Section 5.9(c), all payments
received by the Agent on account of Accounts or as proceeds of
other Collateral shall be deemed to be credited to the applicable
Borrower's loan account immediately upon receipt for purposes of
calculating the facility fee pursuant to this Section 3.6.
3.7 Servicing Fee. The Borrowers shall pay to the
Agent, solely for its own account, a servicing fee in accordance
with that certain Fee Agreement among the Agent and the Borrowers
of even date herewith.
3.8 Letter of Credit Fee. The Borrowers agree, on a
joint and several basis, to pay to the Agent, for the ratable
account of the Lenders, for each Letter of Credit, a fee (the
"Letter of Credit Fee") equal to two percent (2.0%) per annum of
the undrawn amount of each Letter of Credit issued for any
Borrower's account at such Borrower's request, plus all out-of-
pocket costs, fees and expenses incurred by the Agent in
connection with the application for, issuance of, or amendment to
any Letter of Credit, which costs, fees and expenses could
include a "fronting fee" required to be paid by the Agent to such
issuer for the assumption of the settlement risk in connection
with the issuance of such Letter of Credit; provided, that the
Borrowers shall not be required to pay to the Agent the amount of
any "fronting fee" charged with respect to any trade or
documentary Letter of Credit having an expiration date less than
ninety (90) days from the date of issuance. Solely by way of
information, the "fronting fee" charged by Bank of America as of
the Closing Date in connection with letters of credit issued by
it at the request of BABC is one-half of one percent (.50%) per
annum of the undrawn amount of the applicable letter of credit,
and the amount of such "fronting fee" is subject to change at any
time. The Letter of Credit Fee shall be payable in advance
(1) upon the issuance of each Letter of Credit for the number of
days remaining in the month during which such Letter of Credit
was issued and (2) thereafter, monthly, on the first day of each
month during which each such Letter of Credit remains
outstanding. The Letter of Credit Fee shall be computed on the
basis of a 360-day year for the actual number of days elapsed.
3.9 Audit Fees. The Borrowers agree, on a joint and
several basis, to pay to (a) BNYCC, solely for its own account,
and (b) the Agent, solely for its own account, all costs and fees
reasonably incurred by BNYCC's and the Agent's respective
internal auditors in connection with audits of the Borrowers
performed by such auditors during the term of this Agreement;
provided, that prior to the occurrence of an Event of Default,
neither BNYCC nor the Agent shall be entitled to reimbursement
for any such costs and fees incurred in connection with audits in
excess of four (4) per year, and BNYCC shall be entitled to
reimbursement for not more than one (1) auditor per day and only
in the event that such auditor accompanied the Agent on the
applicable audit. Each auditor of BNYCC and of the Agent shall
be billed at a rate of $500 per day plus reasonably incurred
out-of-pocket expenses (including travel expenses).
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans. The Borrowers shall repay the
outstanding principal balance of the Revolving Loans, plus all
accrued but unpaid interest thereon, on the Termination Date.
The Borrowers may prepay Revolving Loans at any time, and
reborrow subject to the terms of this Agreement; provided,
however, that with respect to any LIBOR Revolving Loans prepaid
by any Borrower prior to the expiration date of the Interest
Period applicable thereto, such Borrower agrees to pay to the
Lenders the amounts described in Section 3.3(f). In addition,
and without limiting the generality of the foregoing, the
Borrowers shall pay to the Agent, for the account of the Lenders,
(a) the amount by which the sum of outstanding Revolving Loans,
the aggregate amount of Pending Revolving Loans, the aggregate
undrawn amounts of all outstanding Letters of Credit and the
amount of all unpaid reimbursement obligations with respect to
the Letters of Credit exceeds the Maximum Revolver Amount (but
without duplication), and (b) the amount by which the sum of
outstanding Revolving Loans to a Borrower, the aggregate amount
of Pending Revolving Loans to such Borrower, the aggregate
undrawn amounts of all outstanding Letters of Credit issued for
the account of such Borrower and the amount of all unpaid
reimbursement obligations with respect to the Letters of Credit
issued for the account of such Borrower exceeds the Individual
Maximum Revolver Amount with respect to such Borrower, any such
amount described in the foregoing clause (a) or (b) to be payable
upon demand.
4.2 Termination of Revolver Facility. The Borrowers
may terminate the Revolver Facility in whole, but not in part,
upon at least five (5) Business Days' notice to the Agent and the
Lenders, upon (a) the payment in full of all outstanding
Revolving Loans, together with accrued interest thereon, and the
cancellation of all outstanding Letters of Credit, (b) the
prepayment in full of the Term Loans, together with accrued
interest thereon, (c) the payment of the early termination fee
set forth in the next sentence, and (d) with respect to any LIBO
Rate Loans prepaid in connection with such termination prior to
the expiration date of the Interest Period applicable thereto,
the payment of the amounts described in Section 3.3(f). If the
Revolver Facility is terminated at any time prior to the fourth
Anniversary Date, whether pursuant to this Section or pursuant to
Section 10.2, the Borrowers shall pay to the Agent, for the
account of the Lenders, an early termination fee determined in
accordance with the following table:
Period during which Early
early termination Termination
occurs Fee
On or prior to second
Anniversary Date $1,900,000
After second Anni-
versary Date but on
or prior to third
Anniversary Date $ 950,000
After third Anni-
versary Date but
prior to fourth
Anniversary Date $ 712,500
4.3 Repayment of the Term Loans. The Parent agrees to
repay the principal of the Term Loans to the Agent, for the
account of the Lenders, in accordance with the terms of the Term
Loan Notes.
4.4 Voluntary Prepayments of the Term Loans. The
Parent may prepay the principal of the Term Loans in whole or in
part, at any time and from time to time upon (a) at least five
(5) Business Days' prior written notice to the Agent and the
Lenders, and (b) payment of, with respect to any LIBOR Term Loans
to be prepaid prior to the expiration date of the Interest Period
applicable thereto, the amounts described in Section 3.3(f). All
voluntary prepayments of the principal of the Term Loans shall be
accompanied by the payment of all accrued but unpaid interest on
the Term Loans to the date of prepayment. Any voluntary pre-
payment under this Section 4.4 of less than all of the out-
standing principal of the Term Loans shall be applied to the
installments of principal of the Term Loans in the inverse order
of maturity.
4.5 Mandatory Prepayments of the Term Loans. (a) The
Parent shall prepay the entire unpaid principal balance of the
Term Loans, and all accrued but unpaid interest thereon, upon the
termination of this Agreement or the Revolver Facility for any
reason. Prepayments on the Term Loans shall also be required to
be made as provided in Sections 8.5 and 8.6.
(b) Any prepayment under this Section 4.5 of less than
all of the outstanding principal amount of the Term Loans shall
be applied, based upon the Pro Rata Shares of the Lenders, to the
installments of principal of the Term Loans in the inverse order
of maturity. In connection with any such prepayment, if any
LIBOR Term Loans are prepaid prior to the expiration date of the
Interest Period applicable thereto, the Parent shall pay to the
Lenders the amounts described in Section 3.3(f).
4.6 Place and Form of Payments; Extension of Time.
All payments of principal, interest, premium, and other sums due
to the Agent or the Lenders shall be made at the Agent's address
set forth in or specified pursuant to Section 14.7. Except for
proceeds received directly by the Agent, all such payments shall
be made in immediately available funds. If any payment of
principal, interest, premium, or other sum to be made hereunder
becomes due and payable on a day other than a Business Day, the
due date of such payment shall be extended to the next succeeding
Business Day and interest thereon shall be payable at the
applicable Interest Rate during such extension.
4.7 Payments as Revolving Loans. All payments of
principal, interest, reimbursement obligations in connection with
Letters of Credit, fees, premiums and other sums payable
hereunder, including all reimbursement for expenses pursuant to
Section 14.6, may, at the option of the Agent, in its sole
discretion, subject only to the terms of this Section 4.7, be
paid from the proceeds of Revolving Loans made hereunder, whether
made following a request by a Borrower pursuant to Section 2.2 or
a deemed request as provided in this Section 4.7. Each Borrower
hereby irrevocably authorizes the Lenders to make Revolving Loans
(including Settlement Loans by BABC or Agent Advances by the
Agent), upon notice from the Agent as described in the next
succeeding sentence, for the purpose of paying principal,
interest, reimbursement obligations in connection with Letters of
Credit, fees, premiums and other sums payable hereunder,
including reimbursing expenses pursuant to Section 14.6, and
agrees that all such Revolving Loans so made shall be deemed to
have been requested by it pursuant to Section 2.2, as of the date
of the aforementioned notice. The Agent shall request Revolving
Loans on behalf of any Borrower as described in the immediately
preceding sentence by notifying the Lenders (or BABC, in the case
of a Settlement Loan) and the Parent, by telecopy, telephone or
other similar form of transmission, of the amount and Funding
Date of the requested Borrowing and that such Borrowing is being
requested on the applicable Borrower's behalf pursuant to this
Section 4.7. On the requested Funding Date, as applicable, the
Lenders will make the requested Revolving Loans in accordance
with the procedures and subject to the conditions specified in
Section 2.2.
4.8 Apportionment, Application and Reversal of
Payments. Aggregate principal and interest payments shall be
apportioned ratably among the Lenders (according to the unpaid
principal balance of the Loans to which such payments relate held
by each Lender) and payments of the fees shall, as applicable, be
apportioned ratably among the Lenders. All payments shall be
remitted to the Agent and all such payments not relating to
principal or interest of specific Loans, or not constituting
payment of specific fees, and all proceeds of Accounts or other
Collateral received by the Agent, shall be applied, ratably,
subject to the provisions of this Agreement, first, to pay any
fees, expense reimbursements or indemnities then due to the Agent
or the Lenders from any Borrower; second, to pay interest due in
respect of all Revolving Loans, including Settlement Loans and
Agent Advances, and all unpaid reimbursement obligations in
respect of Letters of Credit; third, to pay or prepay principal
of the Settlement Loans and Agent Advances; fourth, to pay or
prepay principal of the Revolving Loans (other than Settlement
Loans and Agent Advances) and to pay, prepay or provide cash
collateral in respect of outstanding Letters of Credit or any
unpaid reimbursement obligations in respect thereof, as
applicable; fifth, to pay or prepay principal of the Term Loans;
and sixth, to the payment of any other Obligation due to the
Agent or any Lender by any Borrower. Notwithstanding anything to
the contrary contained in this Agreement, unless so directed by a
Borrower, or unless an Event of Default is outstanding, neither
the Agent nor any Lender shall apply any payments which it
receives to any LIBOR Revolving Loan or LIBOR Term Loan, except
(a) on the expiration date of the Interest Period applicable to
any such LIBO Rate Loan, or (b) in the event, and only to the
extent, that there are no outstanding Base Rate Revolving Loans
or Base Rate Term Loans. The Agent shall promptly distribute to
each Lender, pursuant to the applicable wire transfer
instructions set forth in Section 13.11, or pursuant to such
other instructions as such Lender may deliver to the Agent in
writing, such funds as it may be entitled to receive. The Agent
and the Lenders shall have the continuing and exclusive right to
apply and reverse and reapply any and all such proceeds and pay-
ments to any portion of the Obligations.
4.9 Indemnity for Returned Payments. If after receipt
of any payment of, or proceeds applied to the payment of, all or
any part of the Obligations, the Agent or any Lender is for any
reason compelled to surrender such payment or proceeds to any
Person, because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be
void or voidable as a preference, impermissible setoff, or a
diversion of trust funds, or for any other reason, then the
Obligations or part thereof intended to be satisfied shall be
revived and continue and this Agreement shall continue in full
force as if such payment or proceeds had not been received by the
Agent or such Lender, and the Borrowers shall be liable to pay to
the Agent, and hereby does indemnify the Agent and the Lenders
and hold the Agent and the Lenders harmless for, the amount of
such payment or proceeds surrendered. The provisions of this
Section 4.9 shall be and remain effective notwithstanding any
contrary action which may have been taken by the Agent or any
Lender in reliance upon such payment or application of proceeds,
and any such contrary action so taken shall be without prejudice
to the Agent's and the Lenders' rights under this Agreement and
shall be deemed to have been conditioned upon such payment or
application of proceeds having become final and irrevocable. The
provisions of this Section 4.9 shall survive the termination of
this Agreement.
4.10 Increased Capital. If any Lender determines that
compliance by such Lender with any guideline or request from any
central bank or other Public 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 Lender, or any
corporation controlling such Lender, and such Lender reasonably
determines that the amount of such capital is increased by or
based upon its Commitment or its making or maintaining Loans
hereunder, or its commitment to participate (as provided for in
Section 2.4(f)) in any credit support or enhancement provided
through the Agent in connection with the issuance of any Letter
of Credit or to otherwise extend credit to the Borrowers
hereunder, and other commitments of this type, then, upon demand
by such Lender, the Borrowers agree to immediately pay to such
Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender in the light of such
circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to such
Lender's commitment to participate (as provided for in Section
2.4(f)) in any credit support or enhancement provided through the
Agent in connection with Letters of Credit or commitment to make
Loans hereunder. A certificate as to the amount of such
increased cost, submitted to the Borrowers by the applicable
Lender shall, absent manifest error, be conclusive and binding on
the Borrowers for all purposes.
4.11 Register; Agent's and Lenders' Books and Records;
Monthly Statements. Each Borrower agrees that the Register and
each Lender's books and records showing the Obligations and the
transactions pursuant to this Agreement and the other Loan
Documents shall be admissible in any action or proceeding arising
therefrom, and shall, absent manifest error, constitute
rebuttably presumptive proof thereof, irrespective of whether any
Obligation is also evidenced by a promissory note or other
instrument. The Agent will provide to the Borrowers a monthly
statement of Loans, payments, and other transactions pursuant to
this Agreement. Such statement shall be deemed correct,
accurate, and binding on the Borrowers and an account stated
(except for reversals and reapplications of payments made as
provided in Section 4.8 and corrections of errors discovered by
the Agent), unless the Borrowers notify the Agent in writing to
the contrary within thirty (30) days after such statement is
rendered. In the event a timely written notice of objections is
given by the Borrowers, only the items to which exception is
expressly made will be considered to be disputed by the
Borrowers.
ARTICLE 5
COLLATERAL
5.1 Grant of Security Interest. (a) As security for
all Obligations, the Parent hereby grants to the Agent, for the
ratable benefit of the Secured Creditors, a continuing security
interest in, lien on, and right of set-off against, all of the
following property of the Parent, whether now owned or existing
(subject to the qualifications and restrictions set forth below)
or hereafter acquired or arising, regardless of where located:
(i) Accounts;
(ii) Inventory;
(iii) to the extent acquired or arising after
October 16, 1990, all of the following
property of the Parent and interests in
property of the Parent:
(A) contract rights, letters of credit,
Assigned Contracts, chattel paper,
instruments, notes, documents, and
documents of title;
(B) General Intangibles;
(C) Equipment;
(D) money, Securities and other prop-
erty of any kind of the Parent in
the possession or under the control
of the Agent or any Lender, any
assignee of or participant in the
Obligations, or a bailee of any
such party or such party's
affiliates;
(E) deposit accounts, credits and
balances with and other claims
against the Agent or any Lender or
any of its affiliates or any other
financial institution in which the
Parent maintains deposits; and
(F) books, records and other property
related to or referring to any of
the foregoing, including, without
limitation, books, records, account
ledgers, data processing records,
computer software and other
property and General Intangibles at
any time evidencing or relating to
any of the foregoing; and
(iv) accessions to, substitutions for and
replacements, products and proceeds of
any of the foregoing, including, but not
limited to, proceeds of any insurance
policies, claims against third parties,
and condemnation or requisition payments
with respect to all or any of the
foregoing.
All of the foregoing, together with the Real Estate covered by
the Mortgage, and all other property of the Parent in which the
Agent or any Lender may at any time be granted a Lien, is herein
collectively referred to as the "Parent Collateral".
(b) As security for all Obligations, Laclede Chain
hereby grants to the Agent, for the ratable benefit of the
Secured Creditors, a continuing security interest in, lien on,
and right of set-off against, all of the following property of
Laclede Chain, whether now owned or existing or hereafter
acquired or arising, regardless of where located:
(i) Accounts;
(ii) Inventory;
(iii) contract rights, letters of credit,
Assigned Contracts, chattel paper,
instruments, notes, documents, and
documents of title;
(iv) General Intangibles;
(v) Equipment;
(vi) money, Securities and other property of
any kind of Laclede Chain in the
possession or under the control of the
Agent or any Lender, any assignee of or
participant in the Obligations, or a
bailee of any such party or such party's
affiliates;
(vii) deposit accounts, credits and balances
with and other claims against the Agent
or any Lender or any of its affiliates
or any other financial institution in
which Laclede Chain maintains deposits;
(viii) books, records and other property
related to or referring to any of the
foregoing, including, without
limitation, books, records, account
ledgers, data processing records, com-
puter software and other property and
General Intangibles at any time
evidencing or relating to any of the
foregoing; and
(ix) accessions to, substitutions for and
replacements, products and proceeds of
any of the foregoing, including, but not
limited to, proceeds of any insurance
policies, claims against third parties,
and condemnation or requisition payments
with respect to all or any of the
foregoing.
All of the foregoing, together with all other property of Laclede
Chain in which the Agent or any Lender may at any time be granted
a Lien, is herein collectively referred to as the "Laclede Chain
Collateral".
(c) As security for all Obligations, Laclede Mid
America hereby grants to the Agent, for the ratable benefit of
the Secured Creditors, a continuing security interest in, lien
on, and right of set-off against, all of the following property
of Laclede Mid America, whether now owned or existing (subject to
the qualifications and restrictions set forth below) or hereafter
acquired or arising, regardless of where located:
(i) Accounts;
(ii) Inventory;
(iii) contract rights, letters of credit,
Assigned Contracts, chattel paper,
instruments, notes, documents, and
documents of title;
(iv) General Intangibles;
(v) Equipment of Laclede Mid America, to the
extent acquired or arising on or after
September 1, 1994;
(vi) money, Securities and other property of
any kind of Laclede Mid America in the
possession or under the control of the
Agent or any Lender, any assignee of or
participant in the Obligations, or a
bailee of any such party or such party's
affiliates;
(vii) deposit accounts, credits and balances
with and other claims against the Agent
or any Lender or any of its affiliates
or any other financial institution in
which Laclede Mid America maintains
deposits;
(viii) books, records and other property
related to or referring to any of the
foregoing, including, without
limitation, books, records, account
ledgers, data processing records, com-
puter software and other property and
General Intangibles at any time
evidencing or relating to any of the
foregoing; and
(ix) accessions to, substitutions for and
replacements, products and proceeds of
any of the foregoing, including, but not
limited to, proceeds of any insurance
policies, claims against third parties,
and condemnation or requisition payments
with respect to all or any of the
foregoing.
All of the foregoing, together with all other property of Laclede
Mid America in which the Agent or any Lender may at any time be
granted a Lien, is herein collectively referred to as the
"Laclede Mid America Collateral".
(d) As security for all Obligations, the Parent shall
simultaneously herewith execute and deliver to the Agent the
Mortgage to grant to the Agent, for the ratable benefit of the
Secured Creditors, a continuing mortgage lien on the Real Estate
located in Vandalia, Illinois and identified therein.
(e) The Agent and the Lenders agree that the Agent
shall execute and deliver such documentation as is required in
order to effectuate the release of its Lien on any Equipment or
Real Estate (including, without limitation, accessories to,
substitutions or replacements for, and products or proceeds
thereof) acquired by the Parent, Laclede Chain or Laclede Mid
America after the Closing Date and (i) financed in whole with the
proceeds of a substantially concurrent sale of any class of
capital stock of the Parent or Laclede Mid America, provided,
that any such sale of any capital stock of Laclede Mid America
shall be limited to an amount not to exceed 10% of all capital
stock of Laclede Mid America, as applicable; or (ii) financed by
Debt secured by purchase money Liens encumbering such Equipment
or Real Estate, provided, that such Debt is permitted by Section
8.13, the cost of the acquisition of such Equipment or Real
Estate constitutes a Capital Expenditure permitted by
Section 8.22, and the principal amount of Debt incurred for any
such purchase of Equipment is not less than one hundred percent
(100.0%) of the purchase price of such Equipment.
(f) All of the Obligations shall be secured by all of
the Collateral. The Agent may, subject to the provisions of
Articles 12 and 13, in its sole discretion, (i) exchange, waive,
or release any of the Collateral, (ii) apply Collateral and
direct the order or manner of sale thereof as the Agent may
determine, and (iii) settle, compromise, collect, or otherwise
liquidate any Collateral in any manner, all without affecting the
Obligations or the Agent's or any Lender's right to take any
other action with respect to any other Collateral.
5.2 Perfection and Protection of Security Interest.
Each Borrower shall, at its expense, perform all steps requested
by the Agent at any time to perfect, maintain, protect, and
enforce the Agent's Liens, including, without limitation:
(a) executing and recording of the Mortgage and the Patent and
Trademark Agreements and executing and filing financing or
continuation statements, and amendments thereof, in form and
substance satisfactory to the Agent; (b) delivering to the Agent
the originals of all instruments, documents, and chattel paper,
and all other Collateral of which the Agent determines it should
have physical possession in order to perfect and protect the
Agent's security interest therein, including the Intercompany
Notes, duly pledged, endorsed or assigned to the Agent without
restriction; (c) delivering to the Agent warehouse receipts
covering any portion of the Collateral located in warehouses and
for which warehouse receipts are issued; (d) when an Event of
Default exists, transferring Inventory to warehouses designated
by the Agent; (e) placing notations on such Borrower's books of
account to disclose the Agent's security interest; (f) delivering
to the Agent all letters of credit on which such Borrower is
named beneficiary; and (g) taking such other steps as are deemed
necessary or desirable by the Agent to maintain and protect the
Agent's Liens. To the extent permitted by applicable law, the
Agent may file, without the applicable Borrower's signature, one
or more financing statements disclosing the Agent's Liens. Each
Borrower agrees that a carbon, photographic, photostatic, or
other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement.
If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of a Borrower's agents
or processors, then such Borrower shall notify the Agent thereof
and shall notify such Person of the Agent's security interest in
such Collateral and, upon the Agent's request, instruct such
Person to hold all such Collateral for the Agent's account
subject to the Agent's instructions. If at any time any
Collateral is located on any operating facility of a Borrower
which is not owned by such Borrower, then such Borrower shall
obtain written waivers, in form and substance satisfactory to the
Agent, of all present and future Liens to which the owner or
lessor or any mortgagee of such premises may be entitled to
assert against the Collateral.
From time to time, each Borrower shall, upon the
Agent's request, execute and deliver confirmatory written
instruments pledging to the Agent, for the ratable benefit of the
Secured Creditors, the Collateral with respect to such Borrower,
but any Borrower's failure to do so shall not affect or limit the
Agent's security interest or the Agent's other rights in and to
the Collateral with respect to such Borrower. So long as this
Agreement is in effect and until all Obligations have been fully
satisfied, the Agent's Liens shall continue in full force and
effect in all Collateral (whether or not deemed eligible for the
purpose of calculating the Maximum Revolver Amount or as the
basis for any advance, loan, extension of credit, or other finan-
cial accommodation).
5.3 Location of Collateral. Each Borrower represents
and warrants to the Agent and the Lenders that: (a) Schedule 5.3
is a correct and complete list of such Borrower's chief executive
office, the location of its books and records, the locations of
the Collateral with respect to such Borrower, and the locations
of all of its other places of business; and (b) Schedule 5.3
correctly identifies any of such facilities and locations that
are not owned by such Borrower and sets forth the names of the
owners and lessors or sublessors of, and, to the best of such
Borrower's knowledge, the holders of any mortgages on, such
facilities and locations. Each Borrower covenants and agrees
that it will not (i) maintain any Collateral with respect to such
Borrower at any location other than those locations listed for
such Borrower on Schedule 5.3, (ii) otherwise change or add to
any of such locations, or (iii) change the location of its chief
executive office from the location identified in Schedule 5.3,
unless it gives the Agent at least thirty (30) days' prior
written notice thereof and executes any and all financing
statements and other documents that the Agent requests in
connection therewith. Without limiting the foregoing, each
Borrower represents that all of its Inventory is, and covenants
that all of its Inventory will be, located either (a) on premises
owned by such Borrower, (b) on premises leased by such Borrower,
provided that the Agent has received an executed landlord waiver
from the landlord of such premises in form and substance
satisfactory to the Agent, or (c) in a public warehouse, provided
that the Agent has received an executed bailee letter from the
applicable public warehouseman in form and substance satisfactory
to the Agent.
5.4 Title to, Liens on, and Sale and Use of
Collateral. Each Borrower represents and warrants to the Agent
and the Lenders and agrees with the Agent and the Lenders that:
(a) all of the Collateral with respect to such Borrower is and
will continue to be owned by such Borrower free and clear of all
Liens whatsoever, except for Permitted Liens; (b) the Agent's
Liens in the Collateral with respect to such Borrower will not be
subject to any prior Lien except for those Permitted Liens, if
any, specifically identified on Schedule 7.2; (c) such Borrower
will use, store, and maintain the Collateral with respect to such
Borrower with all reasonable care and will use such Collateral
for lawful purposes only; and (d) such Borrower will not, without
the Agent's prior written approval, sell, or dispose of or permit
the sale or disposition of any of the Collateral with respect to
such Borrower except for sales of Inventory in the ordinary
course of business and sales of Equipment as permitted by
Sections 5.11(c) or 8.9. The inclusion of proceeds in the
Collateral shall not be deemed to constitute the Agent's or any
Lender's consent to any sale or other disposition of the
Collateral except as expressly permitted herein.
5.5 Appraisals. Whenever a Default or Event of
Default exists, and at such other times not more frequently than
once a year as the Agent requests, each Borrower shall, at its
expense and upon the Agent's request, provide the Agent with
appraisals or updates thereof of any or all of the Collateral
with respect to such Borrower from an appraiser, and prepared on
a basis, satisfactory to the Agent.
5.6 Access and Examination; Confidentiality. (a) The
Agent, accompanied by any Lender which so elects, may at all
reasonable times (and at any time when a Default or Event of
Default exists) have access to, examine, audit, make extracts
from or copies of and inspect any or all of each Borrower's
records, files, and books of account and the Collateral, and
discuss each Borrower's affairs with such Borrower's officers and
management. Each Borrower will deliver to the Agent any
instrument necessary for the Agent to obtain records from any
service bureau maintaining records for such Borrower. The Agent
may, and at the direction of the Majority Lenders shall, at any
time when a Default or Event of Default exists, and at the
Borrowers' expense, make copies of all of each Borrower's books
and records, or require the Borrowers to deliver such copies to
the Agent. The Agent may, without expense to the Agent, use such
of the Borrowers' respective personnel, supplies, and premises as
may be reasonably necessary for maintaining or enforcing the
Agent's Liens.
(b) The Agent and each Lender agree to take normal and
reasonable precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential"
or "secret" by any Borrower and provided to the Agent or such
Lender by or on behalf of such Borrower, under this Agreement or
any other Loan Document, and neither the Agent, nor such Lender
nor any of their respective affiliates shall use any such
information other than in connection with or in enforcement of
this Agreement and the other Loan Documents, except to the extent
that such information (i) was or becomes generally available to
the public other than as a result of disclosure by the Agent or
such Lender, or (ii) was or becomes available on a
nonconfidential basis from a source other than such Borrower,
provided that such source is not bound by a confidentiality
agreement with such Borrower known to the Agent or such Lender;
provided, however, that the Agent and any Lender may disclose
such information (A) at the request or pursuant to any
requirement of any Public Authority to which the Agent or such
Lender is subject or in connection with an examination of the
Agent or such Lender by any such Public Authority; (B) pursuant
to subpoena or other court process; (C) when required to do so in
accordance with the provisions of any applicable requirement of
law; (D) to the extent reasonably required in connection with any
litigation or proceeding to which the Agent, any Lender or their
respective affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder
or under any other Loan Document; (F) to the Agent's or such
Lender's independent auditors, accountants, attorneys and other
professional advisors; (G) to any affiliate of the Agent or such
Lender, or to any Participating Lender or assignee under any
Assignment and Acceptance, actual or potential, provided that
such affiliate, Participating Lender or assignee agrees to keep
such information confidential to the same extent required of the
Agent and the Lenders hereunder; and (H) as expressly permitted
under the terms of any other document or agreement regarding
confidentiality to which such Borrower is party or is deemed
party with the Agent or such Lender.
5.7 Collateral Reporting. Each Borrower will provide
the Agent with the following documents at the following times in
form satisfactory to the Agent: (a) on a weekly basis, or more
frequently if requested by the Agent, a schedule of such
Borrower's Accounts created since the last such schedule,
prepared as of a date no more than five (5) Business Days prior
to the delivery date of such schedule and accompanied by a
current Borrowing Base Certificate; (b) within two (2) Business
Days following the receipt of remittances into such Borrower's
lock-box or Payment Account, sufficient information to enable the
Agent to properly apply remittances to the appropriate Borrower's
account in the correct amount; (c) on a monthly basis, by the
fifteenth (15th) day of each month for the immediately preceding
calendar month, an aging of such Borrower's Accounts, together
with a reconciliation to the previous month's aging of such
Borrower's Accounts and to such Borrower's general ledger; (d)
upon request, an aging of such Borrower's accounts payable; (e)
on a monthly basis by the twenty-fifth (25th) day of each month
for the immediately preceding calendar month (or more frequently
if requested by the Agent), Inventory reports by category, with
additional detail showing additions to and deletions from the
Inventory; (f) upon request, copies of invoices in connection
with such Borrower's Accounts, customer statements, credit memos,
remittance advices and reports, deposit slips, shipping and
delivery documents in connection with such Borrower's Accounts
and for Inventory and Equipment acquired by such Borrower,
purchase orders and invoices; (g) on a monthly basis, by the
twenty-fifth (25th) day of each month, a statement of the balance
of each of the Intercompany Notes as of the last day of the
immediately preceding calendar month; (h) such other reports as
to the Collateral of such Borrower as the Agent or any Lender
shall reasonably request from time to time; and (i) with the
delivery of each of the foregoing, a certificate of an officer of
such Borrower certifying as to the accuracy and completeness of
the foregoing. If any of any Borrower's records or reports of
the Collateral are prepared by an accounting service or other
agent, each Borrower hereby authorizes such service or agent to
deliver such records, reports, and related documents to the
Agent, for distribution to the Lenders.
5.8 Accounts. (a) Each Borrower hereby represents and
warrants to the Agent and the Lenders, with respect to such
Borrower's Accounts, that: (i) each existing Account represents,
and each future Account will represent, a bona fide sale or lease
and delivery of goods by such Borrower, or rendition of services
by such Borrower, in the ordinary course of such Borrower's
business; (ii) each existing Account is, and each future Account
will be, for a liquidated amount payable by the Account Debtor
thereon on the terms set forth in the invoice therefor or in the
schedule thereof delivered to the Agent, without any offset,
deduction, defense, or counterclaim except those known to such
Borrower and disclosed to the Agent and the Lenders pursuant to
this Agreement; (iii) no payment will be received with respect to
any Account, and no credit, discount, or extension, or agreement
therefor will be granted on any Account, except as reported to
the Agent and the Lenders in accordance with this Agreement; (iv)
each copy of an invoice delivered to the Agent by a Borrower will
be a genuine copy of the original invoice sent to the Account
Debtor named therein; and (v) all goods described in each invoice
will have been delivered to the Account Debtor and all services
of such Borrower described in each invoice will have been
performed.
(b) No Borrower shall re-date any invoice or sale or
make sales on extended dating beyond that customary in such
Borrower's business or extend or modify any Account. If any
Borrower becomes aware of any matter which may materially affect
the collectibility of any Account, including information
regarding the Account Debtor's creditworthiness, such Borrower
will promptly so advise the Agent.
(c) No Borrower shall accept any note or other
instrument (except a check or other instrument for the immediate
payment of money) with respect to any Account without the Agent's
written consent. If the Agent consents to the acceptance of any
such instrument, it shall be considered as evidence of the
Account and not payment thereof and the applicable Borrower will
promptly deliver such instrument to the Agent, endorsed by such
Borrower to the Agent in a manner satisfactory in form and
substance to the Agent.
(d) Each Borrower shall notify the Agent promptly of
any dispute or claim with an Account Debtor respecting an
Eligible Account as to which the amount in dispute exceeds
$250,000, and agrees to settle or adjust such dispute or claim at
no expense to the Agent or any Lender. No discount, credit or
allowance shall be granted to any such Account Debtor without the
Agent's prior written consent, except for discounts, credits and
allowances made or given in the ordinary course of such
Borrower's business when no Event of Default exists hereunder.
Each Borrower shall send the Agent a copy of each credit
memorandum in excess of $50,000 as soon as issued. The Agent
may, and at the direction of the Majority Lenders shall, at all
times when an Event of Default exists hereunder, settle or adjust
disputes and claims directly with Account Debtors for amounts and
upon terms which the Agent or the Majority Lenders, as
applicable, shall consider advisable and, in all cases, the Agent
will credit the applicable Borrower's loan account with only the
net amounts received by the Agent in payment of any Accounts.
(e) If an Account Debtor returns any Inventory to any
Borrower, then such Borrower shall promptly determine the reason
for such return and shall issue a credit memorandum to the
Account Debtor in the appropriate amount. Each Borrower shall
immediately report to the Agent any return involving an amount in
excess of $50,000. Each such report shall indicate the reasons
for the returns and the locations and condition of the returned
Inventory. In the event any Account Debtor returns Inventory to
any Borrower when an Event of Default exists, such Borrower
shall: (i) hold the returned Inventory in trust for the Agent;
(ii) segregate all returned Inventory from all of its other
property; (iii) dispose of the returned Inventory solely
according to the Agent's written instructions; and (iv) not issue
any credits or allowances with respect thereto without the
Agent's prior written consent. All returned Inventory shall be
subject to the Agent's Liens thereon. Whenever any Inventory is
returned, the related Account shall be deemed ineligible to the
extent of the return and the Maximum Revolver Amount shall be
adjusted accordingly.
5.9 Collection of Accounts; Payments. (a) Each
Borrower shall establish a lock-box service for collections of
Accounts at a bank or banks mutually acceptable to the Agent and
such Borrower and pursuant to documentation satisfactory to the
Agent. The applicable Borrower shall instruct all Account
Debtors to make all payments directly to the address or addresses
established for such service. If, notwithstanding such
instructions, the applicable Borrower receives any proceeds of
Accounts, it shall receive such payments as the Agent's and the
Lenders' trustee, and shall immediately deliver such payments to
the Agent in their original form duly endorsed in blank or
deposit them into a Payment Account, as the Agent may direct.
All collections received in any such lock-box or Payment Account
or directly by such Borrower, the Agent or any Lender, and all
funds in any Payment Account or other account to which such
collections are deposited, shall be the sole property of the
Agent and the Lenders and subject to the Agent's and the Lenders'
sole control. Laclede Mid America shall not be required to
maintain a lock-box service or Payment Account separate from that
of the Parent, until such time as the Agent may, in its
discretion, so direct Laclede Mid America. The Agent or the
Agent's designee may, at any time, notify obligors that the
Accounts have been assigned to the Agent and of the Agent's
security interest therein, and may collect them directly and
charge the collection costs and expenses to the applicable
Borrower's loan account as a Revolving Loan as described in
Section 4.7. At the Agent's request, each Borrower shall execute
and deliver to the Agent such documents as the Agent shall
require to grant the Agent access to any post office box in which
collections of Accounts are received.
(b) If sales of Inventory are made for cash, the
applicable Borrower shall immediately deliver to the Agent or
deposit into a Payment Account of such Borrower the identical
checks, cash, or other forms of payment which such Borrower
receives.
(c) All payments received by the Agent on account of
Accounts or as proceeds of other Collateral will be the Agent's
sole property and will be credited to the applicable Borrower's
loan account (conditional upon final collection) after allowing
one (1) Business Day for collection; provided, however, that such
payments shall be deemed to be credited to the applicable
Borrower's loan account immediately upon receipt for purposes of
(i) determining Availability and Individual Availability, (ii)
calculating the facility fee pursuant to Section 3.6, and (iii)
calculating the amount of interest accrued thereon solely for
purposes of determining the amount of interest to be distributed
by the Agent to the Lenders.
5.10 Inventory. (a) Each Borrower represents and
warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that all of the Inventory owned by such Borrower
is and will be held for sale or lease, or to be furnished in
connection with the rendition of services, in the ordinary course
of such Borrower's business, and is and will be fit for such
purposes. Each Borrower will keep its Inventory in good and
marketable condition, at its own expense. No Borrower will,
without the prior written consent of the Agent, acquire or accept
any Inventory on consignment or approval. Each Borrower agrees
that all Inventory will be produced in accordance with the
Federal Fair Labor Standards Act of 1938, as amended, and all
rules, regulations, and orders thereunder. No Borrower will sell
any Inventory on a bill-and-hold, guaranteed sale, sale and
return, sale on approval, consignment, or other repurchase or
return basis.
(b) Each Borrower agrees to work diligently following
the Closing Date to implement, and to have in place no later than
eighteen (18) months following the Closing Date, an inventory
control system with respect to all of its steel Inventory, which
system shall be acceptable to the Agent and the Majority Lenders.
During the implementation period for such system, each Borrower
agrees to report to the Lenders on the status of such project not
less frequently than once every six (6) months, beginning not
later than March 31, 1995. In the event that such system shall
not be in place within eighteen (18) months following the Closing
Date, or in the event that prior thereto the Agent or the
Majority Lenders determine, in their reasonable judgment, that
the implementation of such system is not proceeding substantially
in accordance with the Parent's contract with KPMG The Alliance
Group relating thereto (except to the extent that an
extraordinary and unforeseen event out of the control of any
Borrower shall have prevented such implementation from
occurring), the Agent may, in its discretion, or shall, at the
direction of the Majority Lenders, decrease the advance rates
used in computing the Maximum Revolver Amount or Individual
Maximum Revolver Amount as applied to Eligible Inventory of such
Borrower, by one percent (1.0%) for each month thereafter until
such system shall be in place. Prior to the completion of such
inventory control system, each Borrower will conduct a physical
count of its Inventory constituting pipe not less frequently than
once every four (4) months, and shall promptly supply the Agent,
in sufficient copies for distribution by the Agent to each
Lender, with a copy of such count accompanied by a report of the
value of such inventory (valued at the lower of cost or market
value). Each Borrower will maintain such perpetual inventory
reporting systems as are in place on the Closing Date.
5.11 Equipment. (a) The Parent represents and
warrants to the Agent and the Lenders that it has delivered to
the Agent and the Lenders, prior to the Closing Date, a complete
and accurate list of the Parent's Equipment owned by the Parent
on the Closing Date, accurately identifying thereon such
Equipment acquired by the Parent after December 31, 1990. The
Parent shall, upon the Agent's request from time to time after
the Closing Date, provide to the Agent and the Lenders an update
of such list, and each of the other Borrowers shall, upon the
Agent's request from time to time after the Closing Date, provide
to the Agent and the Lenders a list with respect to its
Equipment, in a similar format to that described in the
immediately preceding sentence. Each Borrower represents and
warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that all of the Equipment owned by such Borrower
is and will be used or held for use in such Borrower's business,
and is and will be fit for such purposes. Each Borrower shall
keep and maintain its Equipment in good operating condition and
repair (ordinary wear and tear excepted) and shall make all
necessary replacements thereof.
(b) Each Borrower shall promptly inform the Agent of
any material additions to or deletions from the Equipment. No
Borrower shall permit any Equipment (i) consisting of Collateral
to become a fixture with respect to real property or to become an
accession with respect to other personal property with respect to
which real or personal property the Agent does not have a Lien,
(ii) not consisting of Collateral to become a fixture with
respect to real property or to become an accession with respect
to other personal property with respect to which real or personal
property the Agent has a Lien. No Borrower will, without the
Agent's prior written consent, alter or remove any identifying
symbol or number on any of such Borrower's Equipment consisting
of Collateral.
(c) No Borrower shall, without the Agent's prior
written consent, sell, lease as a lessor, or otherwise dispose of
any of such Borrower's Equipment, except as permitted in Section
8.9; provided, however, that the Parent and its Subsidiaries may
dispose of obsolete or unusable Equipment having an orderly
liquidation value no greater than $500,000 in the aggregate in
any Fiscal Year, or $1,500,000 in the aggregate during the term
of this Agreement, without the Agent's consent, subject to the
conditions set forth in the next sentence. In the event any of
such Equipment is sold, transferred or otherwise disposed
pursuant to the proviso contained in the immediately preceding
sentence, (1) if such sale, transfer or disposition is effected
without replacement of such Equipment, or such Equipment is
replaced by Equipment leased by the applicable Borrower or by
Equipment purchased by such Borrower subject to a Lien, then such
Borrower shall deliver all of the cash proceeds of any such sale,
transfer or disposition to the Agent, which proceeds shall be
applied, ratably, to the reduction of the Term Loans (applying
such proceeds ratably to the installments of the Term Loans in
the inverse order of maturity), or (2) if such sale, transfer or
disposition is made in connection with the purchase by the
applicable Borrower of replacement Equipment (other than
Equipment subject to a Lien), then such Borrower shall use the
proceeds of such sale, transfer or disposition to finance the
purchase by such Borrower of such replacement Equipment and shall
deliver to the Agent written evidence of the use of the proceeds
for such purchase. All replacement Equipment purchased by the
applicable Borrower shall be free and clear of all Liens, claims
and encumbrances.
5.12 Assigned Contracts. Each Borrower shall fully
perform all of its obligations under each of such Borrower's
Assigned Contracts, and shall enforce all of its rights and
remedies thereunder as it deems appropriate in its business
judgment; provided, however, that no Borrower shall take any
action or fail to take any action with respect to its Assigned
Contracts which would result in a waiver or other loss of any
material right or remedy of such Borrower thereunder. Without
limiting the generality of the foregoing, each Borrower shall
take all action necessary or appropriate to permit, and shall not
take any action which would have any materially adverse effect
upon, the full enforcement of all indemnification rights under
its Assigned Contracts. No Borrower shall, without the Agent's
prior written consent, modify, amend, supplement, compromise,
satisfy, release, or discharge any of its Assigned Contracts, any
collateral securing the same, any Person liable directly or
indirectly with respect thereto, or any agreement relating to any
of its Assigned Contracts or the collateral therefor. Each
Borrower shall notify the Agent in writing, promptly after such
Borrower becomes aware thereof, of any event or fact which could
give rise to a claim by it for indemnification under any of its
Assigned Contracts, and shall diligently pursue such right and
report to the Agent on all further developments with respect
thereto. Each Borrower shall remit directly to the Agent for
application to the Obligations in such order as the Majority
Lenders shall determine, all amounts received by such Borrower as
indemnification or otherwise pursuant to its Assigned Contracts.
If any Borrower shall fail after the Agent's demand to pursue
diligently any right under its Assigned Contracts, or if an Event
of Default then exists, the Agent may, and at the direction of
the Majority Lenders shall, directly enforce such right in its
own or such Borrower's name and may enter into such settlements
or other agreements with respect thereto as the Agent or the
Majority Lenders, as applicable, shall determine. In any suit,
proceeding or action brought by the Agent under any Assigned
Contract for any sum owing thereunder or to enforce any provision
thereof, the Borrowers shall indemnify and hold the Agent
harmless from and against all expense, loss or damage suffered by
reason of any defense, setoff, counterclaims, recoupment, or
reduction of liability whatsoever of the obligor thereunder
arising out of a breach by the applicable Borrower of any
obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing from such Borrower to
or in favor of such obligor or its successors. All such
obligations of the applicable Borrower shall be and remain
enforceable only against such Borrower and shall not be
enforceable against the Agent. Notwithstanding any provision
hereof to the contrary, each Borrower shall at all times remain
liable to observe and perform all of its duties and obligations
under its Assigned Contracts, and the Agent's or any Lender's
exercise of any of their respective rights with respect to the
Collateral shall not release such Borrower from any of such
duties and obligations. Neither the Agent nor any Lender shall
be obligated to perform or fulfill any of any Borrower's duties
or obligations under its Assigned Contracts or to make any
payment thereunder, or to make any inquiry as to the nature or
sufficiency of any payment or property received by it thereunder
or the sufficiency of performance by any party thereunder, or to
present or file any claim, or to take any action to collect or
enforce any performance, any payment of any amounts, or any
delivery of any property.
5.13 Documents, Instruments, and Chattel Paper. Each
Borrower represents and warrants to the Agent and the Lenders and
agrees with the Agent and the Lenders that (a) all documents,
instruments, and chattel paper describing, evidencing, or
constituting Collateral with respect to such Borrower, and all
signatures and endorsements thereon, are and will be complete,
valid, and genuine and (b) all goods evidenced by such documents,
instruments, and chattel paper are and will be owned by such
Borrower free and clear of all Liens other than Permitted Liens.
5.14 Right to Cure. The Agent may, in its discretion
and at any time, and shall, at the direction of the Majority
Lenders, for the Borrowers' account and at the Borrowers'
expense, pay any amount or do any act required of any Borrower
hereunder or requested by the Agent to preserve, protect, main-
tain or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which such Borrower fails to pay or do,
including, without limitation, payment of any judgment against
such Borrower, any insurance premium, any warehouse charge, any
finishing or processing charge, any landlord's claim, and any
other Lien upon or with respect to the Collateral. All payments
that the Agent makes under this Section 5.14 and all out-of-
pocket costs and expenses that the Agent pays or incurs in
connection with any action taken by it hereunder shall be charged
to the applicable Borrower's loan account as a Revolving Loan as
described in Section 4.7. Any payment made or other action taken
by the Agent under this Section 5.14 shall be without prejudice
to any right to assert an Event of Default hereunder and to
proceed thereafter as herein provided.
5.15 Power of Attorney. Each Borrower hereby appoints
the Agent and the Agent's designees as such Borrower's attorney,
with power: (a) to endorse such Borrower's name on any checks,
notes, acceptances, money orders, or other forms of payment or
security that come into the Agent's or any Lender's possession;
(b) to sign such Borrower's name on any invoice, bill of lading,
warehouse receipt or other document of title relating to any
Collateral, on drafts against customers, on assignments of
Accounts, on notices of assignment, financing statements and
other public records; (c) to notify the post office authorities,
when an Event of Default exists, to change the address for
delivery of such Borrower's mail to an address designated by the
Agent and to receive, open and dispose of all mail addressed to
the such Borrower; (d) to send requests for verification of
accounts to customers or account debtors; (e) to clear Inventory,
the purchase of which was financed with Letters of Credit,
through customs in such Borrower's name, the Agent's name or the
name of the Agent's designee, and to sign and deliver to customs
officials powers of attorney in such Borrower's name for such
purpose; and (f) to do all things necessary to carry out this
Agreement. Each Borrower ratifies and approves all acts of such
attorney. None of the Lenders or the Agent nor the attorneys
will be liable for any acts or omissions or for any error of
judgment or mistake of fact or law. This power, being coupled
with an interest, is irrevocable until this Agreement has been
terminated and the Obligations have been fully satisfied.
5.16 The Agent's and Lenders' Rights, Duties and
Liabilities. Each Borrower assumes all responsibility and
liability arising from or relating to the use, sale or other
disposition of the Collateral. Neither the Agent, nor any
Lender, nor any of their respective officers, directors,
employees or agents shall be liable or responsible in any way for
the safekeeping of any of the Collateral, or for any loss or
damage thereto, or for any diminution in the value thereof, or
for any act of default of any warehouseman, carrier, forwarding
agency or other person whomsoever, all of which shall be at the
Borrowers' sole risk. The Obligations shall not be affected by
any failure of the Agent or any Lender to take any steps to
perfect the Agent's Liens or to collect or realize upon the
Collateral, nor shall loss of or damage to the Collateral release
any Borrower from any of the Obligations. The Agent may, and at
the direction of the Majority Lenders shall, without notice to or
consent from any Borrower, sue upon or otherwise collect, extend
the time for payment of, modify or amend the terms of, compromise
or settle for cash, credit, or otherwise upon any terms, grant
other indulgences, extensions, renewals, compositions, or
releases, and take or omit to take any other action with respect
to the Collateral, any security therefor, any agreement relating
thereto, any insurance applicable thereto, or any Person liable
directly or indirectly in connection with any of the foregoing,
without discharging or otherwise affecting the liability of any
Borrower for the Obligations or under this Agreement or any other
agreement now or hereafter existing between the Agent and/or any
Lender and any Borrower.
ARTICLE 6
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
6.1 Books and Records. Each Borrower shall maintain,
at all times, correct and complete books, records and accounts in
which complete, correct and timely entries are made of its trans-
actions in accordance with GAAP applied consistently with the
audited Financial Statements required to be delivered pursuant to
Section 6.2(a). Each Borrower shall, by means of appropriate
entries, reflect in such accounts and in all Financial Statements
proper liabilities and reserves for all taxes and proper provi-
sion for depreciation and amortization of property and bad debts,
all in accordance with GAAP. Each Borrower shall maintain at all
times books and records pertaining to the Collateral in such
detail, form and scope as the Agent or any Lender shall
reasonably require, including, but not limited to, records of (a)
all payments received and all credits and extensions granted with
respect to the Accounts; (b) the return, rejections,
repossession, stoppage in transit, loss, damage, or destruction
of any Inventory; and (c) all other dealings affecting the
Collateral.
6.2 Financial Information. The Borrowers shall
promptly furnish to the Agent, in sufficient copies for
distribution by the Agent to each Lender, all such financial
information as the Agent or any Lender shall reasonably request,
and notify its auditors and accountants that the Agent, on behalf
of the Lenders, is authorized to obtain such information directly
from them. Without limiting the foregoing, the Borrowers will
furnish to the Agent, in sufficient copies for distribution by
the Agent to each Lender, in such detail as the Agent or the
Lenders shall request, the following:
(a) As soon as available, but in any event not
later than ninety (90) days after the close of each
Fiscal Year, consolidated audited and consolidating
unaudited balance sheets, and statements of income and
expense, cash flow and of stockholders' equity for the
Parent and its consolidated Subsidiaries for such
Fiscal Year, and the accompanying notes thereto,
setting forth in each case in comparative form figures
for the previous Fiscal Year, all in reasonable detail,
fairly presenting the financial position and the
results of operations of the Parent and its consoli-
dated Subsidiaries as at the date thereof and for the
Fiscal Year then ended, and prepared in accordance with
GAAP. Such statements shall be examined in accordance
with generally accepted auditing standards by and, in
the case of such statements performed on a consolidated
basis, accompanied by a report thereon unqualified as
to scope of independent certified public accountants
selected by the Borrowers and reasonably satisfactory
to the Agent. The Borrowers, simultaneously with
retaining such independent public accountants to
conduct such annual audit, shall send a letter to such
accountants, with a copy to the Agent and the Lenders,
notifying such accountants that one of the primary
purposes for retaining such accountants' services and
having audited financial statements prepared by them is
for use by the Agent and the Lenders.
(b) As soon as available, but in any event not
later than forty-five (45) days after the end of each
month, consolidated and consolidating unaudited balance
sheets of the Parent and its consolidated Subsidiaries
as at the end of such month, and consolidated and
consolidating unaudited statements of income and
expense and cash flow for the Parent and its con-
solidated Subsidiaries for such month and for the
period from the beginning of the Fiscal Year to the end
of such month, all in reasonable detail, fairly
presenting the financial position and results of opera-
tions of the Parent and its consolidated Subsidiaries
as at the date thereof and for such periods, and pre-
pared in accordance with GAAP applied consistently with
the audited Financial Statements required to be
delivered pursuant to Section 6.2(a). Such statements
shall be certified to be correct by the chief financial
or accounting officer of the Parent, subject to normal
year-end adjustments.
(c) With each of the audited Financial Statements
delivered pursuant to Section 6.2(a), a certificate of
the independent certified public accountants that exam-
ined such statement to the effect that they have re-
viewed and are familiar with this Agreement and that,
in examining such Financial Statements, they did not
become aware of any fact or condition which then con-
stituted a Default or Event of Default, except for
those, if any, described in reasonable detail in such
certificate.
(d) With each of the annual audited Financial
Statements delivered pursuant to Section 6.2(a), and
within forty-five (45) days after the end of each
fiscal quarter, a certificate of the chief financial
officer of the Parent (i) setting forth in reasonable
detail the calculations required to establish that the
Borrowers were in compliance with the covenants set
forth in Sections 8.22 through 8.25 during the period
covered in such Financial Statements and as at the end
thereof, and (ii) stating that, except as explained in
reasonable detail in such certificate, (A) all of the
representations and warranties of the Borrowers
contained in this Agreement and the other Loan
Documents are correct and complete in all material
respects as at the date of such certificate as if made
at such time, (B) the Borrowers are, at the date of
such certificate, in compliance in all material
respects with all of their respective covenants and
agreements in this Agreement and the other Loan
Documents, and (C) no Default or Event of Default then
exists or existed during the period covered by such
Financial Statements. If such certificate discloses
that a representation or warranty is not correct or
complete in all material respects, or that a covenant
has not been complied with in all material respects, or
that a Default or Event of Default existed or exists,
such certificate shall set forth what action the
applicable Borrower has taken or proposes to take with
respect thereto.
(e) Within forty-five (45) days after the end of
each fiscal quarter, consolidated and consolidating
projected balance sheets, statements of income and
expense, and statements of cash flow for the Parent and
its consolidated Subsidiaries as at the end of and for
the then current fiscal quarter and as at the end of
and for each of the succeeding three (3) fiscal
quarters.
(f) Within forty-five (45) days after the end of
each fiscal quarter, a report of the Capital Expendi-
tures of the Parent and its consolidated Subsidiaries
for such quarter and a statement of cash flow for the
Parent and its consolidated Subsidiaries for the period
from the beginning of the then current Fiscal Year to
the end of such quarter, prepared in accordance with
GAAP applied consistently with the audited Financial
Statements required to be delivered pursuant to
Section 6.2(a).
(g) Promptly after their preparation, copies of
any all proxy statements, financial statements, and
reports which any Borrower makes available to its
stockholders.
(h) Promptly after filing with the IRS, a copy of
each tax return filed by the Parent or by any of its
Subsidiaries.
(i) As soon as available, and in any event at least
thirty (30) days prior to the consummation of any Permitted
Acquisition, written notice, and a description in reasonable
detail, of such proposed Permitted Acquisition, together
with all drafts of purchase agreements and related
agreements, instruments and documents, and computations in
form and substance satisfactory to the Agent and the Lenders
demonstrating compliance, on a pro forma basis as if such
Permitted Acquisition had been consummated as of the date
one year prior to the end of the fiscal quarter ending
immediately preceding the anticipated closing date for such
Permitted Acquisition, with each financial covenant set
forth in Sections 8.22 through 8.25.
(j) Such additional information as the Agent
and/or any Lender may from time to time reasonably
request regarding the financial and business affairs of
the Parent or any Subsidiary, including, without
limitation, projections of future operations on both a
consolidated and consolidating basis.
6.3 Notices to the Lenders. The Borrowers shall
notify the Agent, in writing, in sufficient copies for
distribution by the Agent to each Lender, of the following
matters at the following times:
(a) Immediately after becoming aware thereof, any
Default or Event of Default.
(b) Immediately after becoming aware thereof, the
assertion by the holder of any capital stock of any
Borrower or of any Debt in an outstanding principal
amount in excess of $100,000 that a default exists with
respect thereto or that such Borrower is not in com-
pliance with the terms thereof, or the threat or com-
mencement by such holder of any enforcement action
because of such asserted default or non-compliance.
(c) Immediately after becoming aware thereof, any
material adverse change in the Parent's or any
Subsidiary's property, business, operations, or
condition (financial or otherwise).
(d) Immediately after becoming aware thereof, any
pending or threatened action, suit, proceeding, or
counterclaim by any Person, or any pending or
threatened investigation by a Public Authority, which
action, suit, proceeding, counterclaim or investigation
seeks damages in excess of $500,000 (which amount shall
not be fully covered by insurance), or which may
otherwise materially and adversely affect the
Collateral, the repayment of the Obligations, the
Agent's or any Lender's rights under the Loan
Documents, or the Parent's or any Subsidiary's
property, business, operations, or condition (financial
or otherwise).
(e) Immediately after becoming aware thereof, any
pending or threatened strike, work stoppage, material
unfair labor practice claim, or other material labor
dispute affecting any Borrower.
(f) Immediately after receipt thereof, any
written notice of any violation by the Parent or any of
its Subsidiaries of any Environmental Law, or written
notice that its compliance with any Environmental Law
is being investigated by a Public Authority, where such
violation or alleged non-compliance is reasonably
likely to give rise to fines, penalties or liability in
excess of $100,000.
(g) Immediately after receipt thereof, any written
notice that the Parent or any of its Subsidiaries is or
may be liable to any Person as a result of the Release
or threatened Release of any Contaminant or that the
Parent or any Subsidiary is subject to investigation by
any Public Authority evaluating whether any remedial
action is needed to respond to the Release or
threatened Release of any Contaminant which, in either
case, is reasonably likely to give rise to liability in
excess of $100,000.
(h) Immediately after receipt thereof, any
written notice of the imposition of any Environmental
Lien against any property of the Parent or any of its
Subsidiaries.
(i) Any change in any Borrower's name, state of
incorporation, or form of organization, trade names or
styles under which such Borrower will sell Inventory or
create Accounts, or to which instruments in payment of
Accounts may be made payable, in each case at least
thirty (30) days prior thereto.
(j) Within ten (10) Business Days after any
Borrower or any ERISA Affiliate knows or has reason to
know, that a Termination Event or a prohibited
transaction (as defined in Sections 406 of ERISA and
4975 of the Code) has occurred, and, when known, any
action taken or threatened by the IRS, the DOL or the
PBGC with respect thereto.
(k) Upon request, or, in the event that such
filing reflects a significant change with respect to
the matters covered thereby, within three (3) Business
Days after the filing thereof with the PBGC, the DOL or
the IRS, as applicable, copies of the following: (i)
each annual report (form 5500 series), including
Schedule B thereto, filed with the PBGC, the DOL or the
IRS with respect to each Benefit Plan, (ii) a copy of
each funding waiver request filed with the PBGC, the
DOL or the IRS with respect to any Benefit Plan and all
communications received by any Borrower or any ERISA
Affiliate from the PBGC, the DOL or the IRS with
respect to such request, and (iii) a copy of each other
filing or notice filed with the PBGC, the DOL or the
IRS, with respect to each Plan of either Borrower or
any ERISA Affiliate.
(l) Upon request, copies of each actuarial report
for any Benefit Plan or Multiemployer Plan and annual
report for any Multiemployer Plan; and within three (3)
Business Days after receipt thereof by any Borrower or
any ERISA Affiliate, copies of the following: (i) any
notices of the PBGC's intention to terminate a Benefit
Plan or to have a trustee appointed to administer such
Benefit Plan; (ii) any favorable or unfavorable
determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the
Code; or (iii) any notice from a Multiemployer Plan
regarding the imposition of withdrawal liability.
(m) Within three (3) Business Days upon the
occurrence thereof: (i) any changes in the benefits of
any existing Plan which increase the Borrowers' annual
costs with respect thereto by an amount in excess of
$250,000, or the establishment of any new Plan or the
commencement of contributions to any Plan to which any
Borrower or any ERISA Affiliate was not previously
contributing; or (ii) any failure by any Borrower or
any ERISA Affiliate to make a required installment or
any other required payment under Section 412 of the
Code on or before the due date for such installment or
payment.
(n) Within three (3) Business Days after any
Borrower or any ERISA Affiliate knows or has reason to
know that any of the following events has or will
occur: (i) a Multiemployer Plan has been or will be
terminated; (ii) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer
Plan; or (iii) the PBGC has instituted or will
institute proceedings under Section 4042 of ERISA to
terminate a Multiemployer Plan.
For purposes of subsections (j) through (n) above, each Borrower
and any ERISA Affiliate shall be deemed to know all facts known
by the Administrator of any Plan of which such Borrower or any
ERISA Affiliate is the plan sponsor.
Each notice given under this Section shall describe the
subject matter thereof in reasonable detail, and shall set forth
the action that the Parent, its Subsidiary or any ERISA
Affiliate, as applicable, has taken or proposes to take with
respect thereto.
ARTICLE 7
GENERAL WARRANTIES AND REPRESENTATIONS
Each Borrower warrants and represents to the Agent and
the Lenders that:
7.1 Authorization, Validity, and Enforceability of
this Agreement and the Loan Documents. Such Borrower has the
corporate power and authority to execute, deliver and perform
this Agreement and the other Loan Documents, to incur the Obliga-
tions, and to grant to the Agent Liens upon and security
interests in the Collateral with respect to such Borrower. Such
Borrower has taken all necessary corporate action to authorize
its execution, delivery, and performance of this Agreement and
the other Loan Documents. No consent, approval, or authorization
of, or declaration or filing with, any Public Authority, and no
consent of any other Person, is required in connection with such
Borrower's execution, delivery and performance of this Agreement
and the other Loan Documents, except for those already duly
obtained. Each of this Agreement and the other Loan Documents to
which such Borrower is a party has been duly executed and
delivered by such Borrower, and constitutes the legal, valid and
binding obligation of such Borrower, enforceable against it in
accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency
and other similar laws affecting creditors' rights generally.
Such Borrower's execution, delivery, and performance of this
Agreement and the other Loan Documents do not and will not
conflict with, or constitute a violation or breach of, or
constitute a default under, or result in the creation or
imposition of any Lien upon the property of such Borrower by
reason of the terms of (a) any contract, mortgage, Lien, lease,
agreement, indenture, or instrument to which such Borrower is a
party or which is binding upon it, (b) any judgment, law,
statute, rule or governmental regulation applicable to such
Borrower, or (c) the Certificate or Articles of Incorporation or
By-laws of such Borrower.
7.2 Validity and Priority of Security Interest. The
provisions of this Agreement, the Mortgage, and the other Loan
Documents create legal and valid Liens on all the Collateral in
favor of the Agent, for the ratable benefit of the Secured
Creditors, and such Liens constitute perfected and continuing
Liens on all the Collateral, having priority over all other Liens
on the Collateral except those Permitted Liens specifically
identified on Schedule 7.2, securing all the Obligations, and
enforceable against the applicable Borrower and all third
parties.
7.3 Organization and Qualification. Such Borrower
(a) is duly incorporated and organized and validly existing in
good standing under the laws of, in the case of the Parent or
Laclede Chain, the State of Delaware, and, in the case of Laclede
Mid America, the State of Indiana, (b) is qualified to do
business as a foreign corporation and is in good standing in the
States of, in the case of the Parent, Illinois, Michigan,
Missouri, Pennsylvania, Tennessee and West Virginia, and, in the
case of Laclede Chain, California, Colorado, Missouri, New York,
North Carolina and Oregon, and, in the case of Laclede Mid
America, Missouri, which are the only states in which
qualification is necessary in order for it to own or lease its
property and conduct its business, and (c) has all requisite
power and authority to conduct its business and to own its
property.
7.4 Corporate Name; Prior Transactions. Such Borrower
has not, during the past five (5) years, been known by or used
any other corporate or fictitious name, or been a party to any
merger or consolidation, or acquired all or substantially all of
the assets of any Person, or acquired any of its property outside
of the ordinary course of business, except as set forth on
Schedule 7.4.
7.5 Subsidiaries and Affiliates. Laclede Consulting
and Laclede Pipe have been merged with and into the Parent in
accordance with applicable laws. Schedule 7.5 is a correct and
complete list of the name and relationship to the Parent of each
and all of the Parent's Subsidiaries and other Affiliates. Each
Subsidiary is (a) duly incorporated and organized and validly
existing in good standing under the laws of its state of
incorporation set forth on Schedule 7.5, and (b) qualified to do
business as a foreign corporation and in good standing in the
states set forth opposite its name on Schedule 7.5, which are the
only states in which such qualification is necessary in order for
it to own or lease its property and conduct its business.
7.6 Financial Statements and Projections. (a) The
Borrowers have delivered to the Agent and the Lenders the audited
balance sheet and related statements of income, retained
earnings, changes in financial position, and changes in
stockholders equity for the Parent and its consolidated
Subsidiaries as of December 31, 1993, and for the Fiscal Year
then ended, accompanied by the report thereon of the Parent's
independent certified public accountants, Deloitte & Touche. The
Borrowers have also delivered to the Agent and the Lenders the
unaudited balance sheet and related statements of income and
changes in financial position for the Parent and its consolidated
Subsidiaries as of June 30, 1994 and for the second quarter and
six-month period then ended. Such financial statements are
attached hereto as Exhibit C. All such financial statements have
been prepared in accordance with GAAP and present accurately and
fairly the financial position of the Parent and its consolidated
Subsidiaries as at the dates thereof and their results of
operations for the periods then ended.
(b) The Latest Projections represent the Borrowers'
best estimate of the future financial performance of the Parent
and its consolidated Subsidiaries for the periods set forth
therein. The Latest Projections have been prepared on the basis
of the assumptions set forth therein, which the Borrowers believe
are fair and reasonable in light of current and reasonably fore-
seeable business conditions.
7.7 Capitalization. The Parent's authorized capital
stock consists of 5,000,000 shares of common stock, par value
$13.33 per share, of which 4,056,140 shares are validly issued
and outstanding, fully paid and non-assessable. Laclede Chain's
authorized capital stock consists of 3000 shares of common stock,
par value $1.00 per share, of which 100 shares are validly issued
and outstanding, fully paid and non-assessable, and are owned
beneficially and of record by the Parent. Laclede Mid America's
authorized capital stock consists of 1000 shares of common stock,
par value $1.00 per share, of which 100 shares are validly issued
and outstanding, fully paid and non-assessable, and are owned
beneficially and of record by the Parent.
7.8 Solvency. Each Borrower is Solvent prior to and
after giving effect to the making of the Term Loans and the
Revolving Loans to be made on the Closing Date and the issuance
of the Letters of Credit to be issued on the Closing Date, and
shall remain Solvent during the term of this Agreement.
7.9 Debt. After giving effect to the making of the
Term Loans and the Revolving Loans to be made on the Closing
Date, the Parent and its consolidated Subsidiaries have no Debt,
except (a) the Obligations, (b) Debt described on Schedule 7.9,
and (c) trade payables and other contractual obligations arising
in the ordinary course of business since June 30, 1994.
7.10 Distributions. Since December 31, 1993, no
Distribution has been declared, paid, or made upon or in respect
of any capital stock or other Securities of the Parent or any of
its Subsidiaries, except as expressly permitted by Section 8.10.
7.11 Title to Property. With respect to those loca-
tions listed as Premises owned by such Borrower on Schedule 7.12,
such Borrower has good and marketable title in fee simple to such
Premises, and such Borrower has good, indefeasible, and merchant-
able title to all of its other property (including, without
limitation, the assets reflected on the June 30, 1994 Financial
Statements delivered to the Agent and the Lenders, except as
disposed of in the ordinary course of business since the date
thereof or as otherwise expressly permitted hereby), free of all
Liens except Permitted Liens.
7.12 Real Estate; Leases. Schedule 7.12 sets forth a
correct and complete list of all Real Estate owned by the Parent
or any of its Subsidiaries, all leases and subleases of real or
personal property by the Parent or its Subsidiaries as lessee or
sublessee, and all leases and subleases of real or personal
property by the Parent or its Subsidiaries as lessor, lessee,
sublessor or sublessee. Each of such leases and subleases is
valid and enforceable in accordance with its terms and is in full
force and effect, and no default by any party to any such lease
or sublease exists.
7.13 Proprietary Rights. Schedule 7.13 sets forth a
correct and complete list of all of the Proprietary Rights. None
of the Proprietary Rights is subject to any licensing agreement
or similar arrangement except as set forth on Schedule 7.13. To
the best of such Borrower's knowledge, none of the Proprietary
Rights infringes on or conflicts with any other Person's
property, and no other Person's property infringes on or
conflicts with the Proprietary Rights. The Proprietary Rights
described on Schedule 7.13 constitute all of the property of such
type necessary to the current and anticipated future conduct of
such Borrower's business.
7.14 Trade Names and Terms of Sale. All trade names
or styles under which the Parent or any of its Subsidiaries will
sell Inventory or create Accounts, or to which instruments in
payment of Accounts may be made payable, are listed on
Schedule 7.4.
7.15 Litigation. Except as set forth on Schedule
7.15, there is no pending or (to the best of such Borrower's
knowledge) threatened, action, suit, proceeding, or counterclaim
by any Person, or investigation by any Public Authority, or any
basis for any of the foregoing, which may materially and
adversely affect the Collateral, the repayment of the Obli-
gations, the Agent's or any Lender's rights under the Loan
Documents, or the property, business, operations, or condition
(financial or otherwise) of the Parent or any of its
Subsidiaries.
7.16 Restrictive Agreements. Neither the Parent nor
any of its Subsidiaries is a party to any contract or agreement,
or subject to any charter or other corporate restriction, which
affects its ability to execute, deliver, and perform the Loan
Documents and repay the Obligations or which materially and
adversely affects or, insofar as any Borrower can reasonably
foresee, could materially and adversely affect, the property,
business, operations, or condition (financial or otherwise) of
the Parent or such Subsidiary, or would in any respect materially
and adversely affect the Collateral, the repayment of the
Obligations, the Agent's or any Lender's rights under the Loan
Documents, or the property, business, operations, or condition
(financial or otherwise) of the Parent or such Subsidiary.
7.17 Labor Disputes. Except as set forth on Schedule
7.17, (a) there is no collective bargaining agreement or other
labor contract covering employees of the Parent or any of its
Subsidiaries, (b) no such collective bargaining agreement or
other labor contract is scheduled to expire during the term of
this Agreement and (c) no union or other labor organization is
seeking to organize, or to be recognized as, a collective bar-
gaining unit of employees of the Parent or any of its
Subsidiaries or for any similar purpose, and (d) there is no
pending or (to the best of such Borrower's knowledge) threatened,
strike, work stoppage, material unfair labor practice claim, or
other material labor dispute against or affecting the Parent or
its Subsidiaries or their employees.
7.18 Environmental Laws. Except as otherwise
disclosed on Schedule 7.18:
(a) Each of the Parent and its Subsidiaries is
currently in material compliance with, and, to the best of
its knowledge, has complied in all material respects with,
all Environmental Laws applicable to its Premises and
business, and neither the Parent nor any such Subsidiary nor
any of its present Premises or operations, or to the best of
such Borrower's knowledge, its past property or operations,
are subject to any enforcement order from or liability
agreement with any Public Authority or private Person
respecting (i) material non-compliance with any
Environmental Law or (ii) any material liabilities and costs
or remedial action arising from the Release or threatened
Release of a Contaminant.
(b) Each of the Parent and its Subsidiaries has
obtained all permits necessary for its current operation
under Environmental Laws, and all such permits are in good
standing and the Parent is and such Subsidiaries are in
compliance in all material respects with all terms and
conditions of such permits.
(c) Neither the Parent nor any of its Subsidiaries,
nor, to the best of such Borrower's knowledge, any of its
predecessors in interest, has stored, treated or disposed of
any hazardous waste on any Premises, as defined pursuant to
40 CFR Part 261 or any equivalent Environmental Law, so as
to require issuance of a permit.
(d) Neither the Parent nor any of its Subsidiaries has
any contingent liability with respect to non-compliance with
any Environmental Laws or any Release or threatened Release
of a Contaminant or the generation, handling, use, storage,
or disposal of any Contaminant, which contingent liability
is reasonably likely to give rise to a violation of either
of the covenants contained in Sections 8.24 or 8.25.
(e) Neither the Parent nor any of its Subsidiaries has
received any summons, complaint, order or similar written
notice that it is not currently in compliance with, or that
any Public Authority is investigating its compliance with,
any Environmental Laws or that it is or may be liable to any
other Person as a result of a Release or threatened Release
of a Contaminant.
(f) To the best of the Borrowers' knowledge, none of
the present or past operations of the Parent and its
Subsidiaries is the subject of any investigation by any
Public Authority evaluating whether any material remedial
action is needed to respond to a Release or threatened
Release of a Contaminant.
(g) There is not now, nor to the best of such
Borrower's knowledge has there ever been on or in the
Premises:
(i) any underground storage tanks or surface
impoundments,
(ii) any asbestos containing material, or
(iii) any polychlorinated biphenyls (PCB) used in
hydraulic oils, electrical transformers or other equip-
ment.
(h) Within the last six (6) years, neither the Parent
nor any of its Subsidiaries has filed any notice under any
requirement of Environmental Law reporting a spill or
accidental and unpermitted release or discharge of a
Contaminant into the environment, which is reasonably likely
to lead to material liabilities and costs.
(i) Neither the Parent nor any of its Subsidiaries has
entered into any negotiations or settlement agreements with
any Person (including, without limitation, the prior owner
of its property) imposing material obligations or
liabilities on the Parent or any of its Subsidiaries with
respect to any remedial action in response to the Release of
a Contaminant or environmentally related claim.
(j) None of the products manufactured, distributed or
sold by the Parent or any of its Subsidiaries contain
asbestos containing material.
(k) No Environmental Lien has attached to any Premises
of the Parent or any of its Subsidiaries.
(l) For purposes of this Section 7.18 "material" shall
mean costs or liabilities which could reasonably exceed
$750,000.
7.19 No Violation of Law. Neither the Parent nor any
of its Subsidiaries is in violation of any law, statute,
regulation, ordinance, judgment, order, or decree applicable to
it which violation would in any respect materially and adversely
affect the Collateral, the repayment of the Obligations, the
Agent's or any Lender's rights under the Loan Documents, or the
property, business, operations, or condition (financial or
otherwise) of the Parent or any of its Subsidiaries.
7.20 No Default. Neither the Parent nor any of its
Subsidiaries is in default with respect to any note, indenture,
loan agreement, mortgage, lease, deed, or other agreement to
which the Parent or such Subsidiary is a party or by which it is
bound, which default would materially and adversely affect the
Collateral, the repayment of the Obligations, the Agent's or any
Lender's rights under the Loan Documents, or the property,
business, operations, or condition (financial or otherwise) of
the Parent or any of its Subsidiaries. The Parent is in
compliance with the terms, covenants, representations, warranties
and conditions contained in Section 6.6 of the Solid Waste Bond
Loan Agreement, and none of the Agent's Liens are of the type
that would require, in accordance with clauses (vi) or (viii) of
subsection (a) of such Section 6.6, or any other provision
contained in the Solid Waste Bond Loan Agreement, that the Parent
grant Liens on any of the Collateral on an equal basis to the
"Issuer" (as such term is defined therein).
7.21 ERISA. (a) Neither the Parent nor any of its
Subsidiaries nor any ERISA Affiliate maintains or contributes to
any Plan other than those listed on Schedule 7.21.
(b) No Plan has been terminated or partially termi-
nated or is insolvent or in reorganization, nor have any proceed-
ings been instituted to terminate or reorganize any Plan.
(c) Neither the Parent nor any of its Subsidiaries nor
any ERISA Affiliate has any withdrawal liability, including
contingent withdrawal liability, to any Benefit Plan pursuant to
Title IV of ERISA.
(d) Neither the Parent nor any of its Subsidiaries nor
any ERISA Affiliate has incurred any liability to the PBGC which
remains outstanding other than the payment of premiums, and there
are no premium payments which have become due which are unpaid.
(e) No Benefit Plan has incurred any accumulated
funding deficiency (as defined in Sections 302(a)(2) of ERISA and
412(a) of the Code), whether or not waived.
(f) Neither the Parent nor any of its Subsidiaries nor
any ERISA Affiliate has breached any of the responsibilities,
obligations or duties imposed on it by ERISA or regulations
promulgated thereunder with respect to any Plan. Each Plan is in
substantial compliance with ERISA, and neither the Parent nor any
Subsidiary nor any ERISA Affiliate has received any notice
asserting that a Plan is not in compliance with ERISA.
(g) Each Plan which is intended to be a qualified Plan
has been determined by the IRS to be qualified under Sec-
tion 401(a) of the Code as currently in effect and each trust
related to such Plan has been determined to be exempt from
federal income tax under Section 501(a) of the Code.
(h) Except as provided on Schedule 7.21, neither the
Parent nor any of its Subsidiaries nor any ERISA Affiliate
maintains or contributes to any employer welfare benefit plan
within the meaning of Section 3(1) of ERISA which provides
benefits to employees after termination of employment other than
as required by Section 601 of ERISA.
(i) Schedule B to the most recent annual report filed
with the IRS with respect to each Benefit Plan and furnished to
the Lenders is complete and accurate. Since the date of each
such Schedule B, there has been no adverse change in funding
status or financial condition of the Benefit Plan relating to
such Schedule B.
(j) Neither the Parent nor any of its Subsidiaries nor
any ERISA Affiliate has failed to make a required installment
under subsection (m) of Section 412 of the Code or any other
payment required under Section 412 of the Code on or before the
due date for such installment or other payment.
(k) Neither the Parent nor any of its Subsidiaries nor
any ERISA Affiliate is required to provide security to a Plan
under Section 401(a)(29) of the Code due to a Plan amendment that
results in an increase in current liability for the plan year.
(l) Neither the Parent nor any of its Subsidiaries nor
any ERISA Affiliate or fiduciary of any Plan which is not a
Multiemployer Plan (i) has engaged in a nonexempt prohibited
transaction described in Sections 406 of ERISA or 4975 of the
Code or (ii) has taken or failed to take any action which would
constitute or result in a Termination Event.
(m) Neither the Parent nor any of its Subsidiaries nor
any ERISA Affiliate has failed to make a required contribution or
payment to a Multiemployer Plan, nor has the Parent, any
Subsidiary or any ERISA Affiliate made a complete or partial
withdrawal under Sections 4203 or 4205 of ERISA from a
Multiemployer Plan.
(n) The Borrowers have given to the Agent and the
Lenders copies of all of the following: each Benefit Plan and
related trust agreement (including all amendments to such Plan
and trust) in existence or committed to as of the date hereof and
the most recent summary plan description, actuarial report,
determination letter issued by the IRS and Form 5500 filed in
respect of each such Benefit Plan in existence; a listing of all
of the Multiemployer Plans with the aggregate amount of the most
recent annual contributions required to be made by the Parent or
any of its Subsidiaries or any ERISA Affiliate to each such
Multiemployer Plan, any information which has been provided to
either or an ERISA Affiliate regarding withdrawal liability under
any Multiemployer Plan and the collective bargaining agreement
pursuant to which such contribution is required to be made; each
employee welfare benefit plan within the meaning of Section 3(1)
of ERISA which provides benefits to employees after termination
of employment other than as required by Section 601 of ERISA, the
most recent summary plan description for such plan and the
aggregate amount of the most recent annual payments made to
terminated employees under each such Plan.
(o) Neither the Parent, nor any of its Subsidiaries
nor any ERISA Affiliate has, or would reasonably be expected to
have, any liability under Sections 4063, 4064, 4069, 4204 or
4212(c) of ERISA.
7.22 Taxes. Each of the Parent and each of its
Subsidiaries has filed all tax returns and other reports which it
was required by law to file on or prior to the date hereof and
has paid all taxes, assessments, fees, and other governmental
charges, and penalties and interest, if any, against it or its
property, income, or franchise, that are due and payable.
7.23 Investment Act, etc. Neither the Parent nor any
of its Subsidiaries is an "investment company" nor an "affiliated
person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment
Company Act of 1940, as amended (15 U.S.C. Section 80(a)(l), et seq.),
nor is the Parent or any Subsidiary subject to any other state or
federal regulation limiting its ability to incur Debt. The
making of the Revolving Loans, the Term Loans, and other
financial accommodations hereunder by the Agent and the Lenders,
the application of the proceeds and repayment thereof by the
Borrowers and the consummation of the other transactions
contemplated by this Agreement and the Loan Documents do not
violate any provisions of such laws or any rule, regulation or
order issued by the Securities and Exchange Commission or other
Public Authority thereunder.
7.24 Public Utility Holding Company. Neither the
Parent nor any of its Subsidiaries is a "holding company" or a
"subsidiary 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.
7.25 Margin Securities. Neither the Parent nor any of
its Subsidiaries owns any "margin security," as that term is
defined in Regulations G and U of the Federal Reserve Board, and
the proceeds of the Revolving Loans, the Term Loans, and the
other financial accommodations made pursuant to this Agreement
will be used only for the purposes contemplated hereunder. None
of the Revolving Loans, the Term Loans, or the other financial
accommodations hereunder will be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security,
for the purpose of reducing or retiring any Debt or other
Person's indebtedness which was originally incurred to purchase
or carry any margin security, or for any other purpose which
might cause any such loan or other financial accommodation to be
considered a "purpose credit" within the meaning of Regulation G,
U or X of the Federal Reserve Board. Such Borrower will neither
take nor permit any agent acting on its behalf to take any action
which might cause any transaction, obligation or right created by
this Agreement, or any document or instrument delivered pursuant
hereto, to violate any regulation of the Federal Reserve Board.
7.26 Broker's Fees. No broker or finder is entitled
to receive compensation for services rendered with respect to the
transactions described in this Agreement, except a private
placement fee in an amount not to exceed $1,356,250 payable by
the Borrowers to SPP Hambro & Co.
7.27 No Material Adverse Change. No material adverse
change has occurred in property, business operations, or
conditions (financial or otherwise) of the Parent or any of its
Subsidiaries since December 31, 1993.
7.28 Disclosure. Neither this Agreement nor any
document or statement furnished to the Agent or any Lender by or
on behalf of such Borrower hereunder contains any untrue
statement of a material fact or omits to state any material fact
necessary in order to make the statements contained herein or
therein not misleading.
7.29 Bank Accounts. Schedule 7.29 contains a complete
and accurate list of all bank accounts maintained by such
Borrower with any bank or other financial institution.
ARTICLE 8
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Borrower covenants to the Agent and each Lender
that, so long as any of the Obligations remain outstanding or
this Agreement is in effect:
8.1 Taxes and Other Obligations. Such Borrower shall,
and shall cause each of its Subsidiaries to, (a) file when due
all tax returns and other reports which it is required to file,
(b) pay, or provide for the payment, when due, of all taxes,
fees, assessments and other governmental charges against it or
upon its property, income and franchises, make all required
withholding and other tax deposits, and establish adequate
reserves for the payment of all such items, and provide to the
Agent and the Lenders, upon request, satisfactory evidence of its
timely compliance with the foregoing and (c) pay when due all
claims of materialmen, mechanics, carriers, warehousemen,
landlords and other like Persons, and all other indebtedness owed
by it and perform and discharge in a timely manner all other
obligations undertaken by it; provided, however, that neither the
Parent nor any of its Subsidiaries need pay any tax, fee,
assessment, governmental charge, or Debt, or discharge any other
obligation, that it is contesting in good faith by appropriate
proceedings diligently pursued, and for which adequate reserves
are maintained, so long as no Lien, other than a Permitted Lien,
results from such non-payment.
8.2 Corporate Existence and Good Standing. Such
Borrower shall maintain its corporate existence and its
qualification and good standing in all states necessary to
conduct its business and own its property, and shall obtain and
maintain all licenses, permits, franchises and governmental
authorizations necessary to conduct its business and own its
property.
8.3 Compliance with Law and Agreements. Such Borrower
shall, and shall cause each of its Subsidiaries to, comply in all
material respects with each judgment, law, statute, rule, and
governmental regulation applicable to it and each contract,
mortgage, lien, lease, indenture, order, instrument, agreement,
or document to which it is a party or by which it is bound.
8.4 Maintenance of Property. Such Borrower shall, and
shall cause each of its Subsidiaries to, maintain all of its
property necessary and useful, in the judgment of such Borrower,
in the conduct of its business, in good operating condition and
repair, ordinary wear and tear excepted.
8.5 Insurance. (a) Such Borrower shall maintain, and
shall cause each of its Subsidiaries to maintain, with finan-
cially sound and reputable insurers, insurance against loss or
damage by fire with extended coverage; theft, burglary, pilferage
and loss in transit; public liability and third party property
damage; larceny, embezzlement or other criminal liability; busi-
ness interruption; public liability and third party property
damage; and such other hazards or of such other types as is
customary for Persons engaged in the same or similar business, as
the Agent, in its discretion, or acting at the direction of the
Majority Lenders, shall specify, in amounts, and under policies
acceptable to the Agent and the Majority Lenders. Without
limiting the foregoing, such Borrower shall also maintain, and
shall cause each of its Subsidiaries to maintain, flood
insurance, in the event of a designation of the area in which any
Real Estate is located as "flood prone" or a "flood risk area,"
as defined by the Flood Disaster Protection Act of 1973, in an
amount to be reasonably determined by the Agent, and shall comply
with the additional requirements of the National Flood Insurance
Program as set forth in said Act.
(b) Such Borrower shall cause the Agent, for the
ratable benefit of the Secured Creditors, to be named in each
such policy as secured party or mortgagee and loss payee or addi-
tional insured, in a manner acceptable to the Agent. Each policy
of insurance shall contain a clause or endorsement requiring the
insurer to give not less than thirty (30) days' prior written
notice to the Agent in the event of cancellation of the policy
for any reason whatsoever and a clause or endorsement stating
that the interest of the Agent shall not be impaired or
invalidated by any act or neglect of the Parent or any of its
Subsidiaries or the owner of any premises for purposes more
hazardous than are permitted by such policy. All premiums for
such insurance shall be paid by the Borrowers when due, and
certificates of insurance and, if requested by the Agent or any
Lender, photocopies of the policies, shall be delivered to the
Agent, in each case in sufficient quantity for distribution by
the Agent to each of the Lenders. If such Borrower fails to
procure such insurance or to pay the premiums therefor when due,
the Agent may, and at the direction of the Majority Lenders
shall, do so from the proceeds of Revolving Loans as described in
Section 4.7.
(c) Such Borrower shall promptly notify the Agent and
the Lenders of any loss, damage, or destruction to the Collateral
with respect to such Borrower or arising from its use, whether or
not covered by insurance. The Agent is hereby authorized to
collect all insurance proceeds directly, and to apply or remit
them as follows:
(i) With respect to insurance proceeds relating to
property other than Collateral, after deducting from such
proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall
promptly remit to such Borrower such proceeds.
(ii) With respect to insurance proceeds relating to
Collateral other than Fixed Assets, after deducting from
such proceeds the reasonable expenses, if any, incurred by
the Agent in the collection or handling thereof, the Agent
shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 4.8.
(iii) With respect to insurance proceeds relating to
Collateral consisting of Fixed Assets, after deducting from
such proceeds the reasonable expenses, if any, incurred by
the Agent in the collection or handling thereof, the Agent
shall apply such proceeds, ratably, to the reduction of the
Term Loans (applying such proceeds ratably to the
installments of the Term Loans in the inverse order of
maturity), or at the option of the Majority Lenders, may
permit or require the applicable Borrower to use such money,
or any part thereof, to replace, repair, restore or rebuild
the relevant Fixed Assets in a diligent and expeditious
manner with materials and workmanship of substantially the
same quality as existed before the loss, damage or
destruction; provided, however, that so long as there does
not then exist any Default or Event of Default, such
Borrower shall be permitted to use insurance proceeds
relating to Collateral consisting of Fixed Assets in an
aggregate amount not to exceed $500,000 with respect to any
occurrence, to replace, repair, restore or rebuild the
relevant Fixed Assets, in the manner set forth in this
sentence; and provided, further, that plans and specifi-
cations for any such repair or restoration shall be
reasonably satisfactory to the Agent and the Majority
Lenders, and shall be submitted to the Agent, in sufficient
quantity for distribution by the Agent to the Lenders, prior
to commencement of the work and shall be subject to the
reasonable approval of the Agent and the Majority Lenders.
8.6 Condemnation. (a) Such Borrower shall,
immediately upon learning of the institution of any proceeding
for the condemnation or other taking of any of its property,
notify the Agent and the Lenders of the pendency of such
proceeding, and agrees that the Agent may participate in any such
proceeding, and such Borrower from time to time will deliver to
the Agent all instruments reasonably requested by the Agent to
permit such participation.
(b) The Agent is hereby authorized to collect the
proceeds of any condemnation claim or award directly, and to
apply or remit them as follows:
(i) With respect to condemnation proceeds relating to
property other than Collateral, after deducting from such
proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall
remit to such Borrower such proceeds.
(ii) With respect to condemnation proceeds relating to
Collateral other than Fixed Assets, after deducting from
such proceeds the reasonable expenses, if any, incurred by
the Agent in the collection or handling thereof, the Agent
shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 4.8.
(iii) With respect to condemnation proceeds relating
to Collateral consisting of Fixed Assets, after deducting
from such proceeds the reasonable expenses, if any, incurred
by the Agent in the collection or handling thereof, the
Agent shall apply such proceeds, ratably, to the reduction
of the Term Loans (applying such proceeds ratably to the
installments of the Term Loans in the inverse order of
maturity), or at the option of the Majority Lenders, may
permit or require the applicable Borrower to use such money,
or any part thereof, to replace, repair, restore or rebuild
the relevant Fixed Assets in a diligent and expeditious
manner with materials and workmanship of substantially the
same quality as existed before the condemnation; provided,
however, that so long as there does not then exist any
Default or Event of Default, such Borrower shall be
permitted to use proceeds relating to Collateral consisting
of Fixed Assets in an aggregate amount not to exceed
$100,000 with respect to any occurrence, to replace, repair,
restore or rebuild the relevant Fixed Assets, in the manner
set forth in this sentence; and provided, further, that
plans and specifications for any such repair or restoration
shall be reasonably satisfactory to the Agent and the
Majority Lenders, and shall be submitted to the Agent, in
sufficient quantity for distribution by the Agent to the
Lenders, prior to commencement of the work and shall be
subject to the reasonable approval of the Agent and the
Majority Lenders.
8.7 Environmental Laws. (a) Such Borrower shall, and
shall cause each of its Subsidiaries to, conduct its business in
material compliance with all Environmental Laws applicable to it,
including, without limitation, those relating to the generation,
handling, use, storage, and disposal of any Contaminant. Such
Borrower shall, and shall cause each of its Subsidiaries to, take
prompt and appropriate action to respond to any material non-
compliance with Environmental Laws and shall regularly report to
the Agent on such response.
(b) Without limiting the generality of the foregoing,
each Borrower shall submit to the Agent and the Lenders annually,
commencing on the first Anniversary Date, and on each Anniversary
Date thereafter, an update of the status of each environmental
compliance or liability issue: (i) identified on Schedule 7.18;
and/or (ii) identified in any notification provided pursuant to
Sections 6.3(f) or (g). To the extent that any matter reported
pursuant to Sections 6.3(f) or (g) is reasonably likely to give
rise to liabilities or costs in excess of $500,000, the Agent or
any Lender may request copies of technical reports prepared by
the applicable Borrower and its communications with any Public
Authority, subject to the confidentiality provisions contained in
Section 5.6, to determine whether such Borrower or any of its
Subsidiaries is proceeding reasonably to correct, cure or contest
in good faith any alleged non-compliance or environmental
liability. If, in the reasonable determination of the Agent or
the Majority Lenders, the applicable Borrower or any of its
Subsidiaries is not proceeding reasonably, such Borrower shall,
at the Agent's or the Majority Lenders' request and at such
Borrower's expense, subject to the confidentiality provisions
contained in Section 5.6: (a) cause such Borrower to retain an
independent environmental engineer acceptable to the Agent or the
Majority Lenders (which acceptance shall not be unreasonably
withheld) to evaluate the site, including tests if appropriate,
where the non-compliance or alleged non-compliance with
Environmental Laws has occurred and prepare and deliver to the
Agent, in sufficient quantity for distribution by the Agent to
the Lenders, a report setting forth the results of such
evaluation, a proposed plan for responding to any environmental
problems described therein, and an estimate of the costs thereof,
and (b) provide to the Agent and the Lenders a supplemental
report of such engineer whenever the scope of the environmental
problems, or the response thereto or the estimated costs thereof,
shall change in any material respect.
8.8 ERISA. (a) Such Borrower shall, and shall cause
each of its ERISA Affiliates to, establish, maintain and operate
all Plans to comply in all material respects with the provisions
of ERISA, the Code, all regulations and interpretations
promulgated thereunder, and all other applicable laws and
regulations.
(b) Such Borrower shall not, and shall not permit any
ERISA Affiliate, to:
(i) Engage in any prohibited transaction
described in Sections 406 of ERISA or 4975 of the Code
for which a statutory or class exemption is not
available or a private exemption has not been
previously been obtained from the DOL;
(ii) Permit to exist any accumulated funding
deficiency (as defined in Section 302 of ERISA and Sec-
tion 412 of the Code) whether or not waived;
(iii) Fail to pay timely required contributions
or annual installments due with respect to any waived
funding deficiency to any Benefit Plan;
(iv) Terminate any Benefit Plan which would
result in any liability of such Borrower or an ERISA
Affiliate under Title IV of ERISA;
(v) Fail to make any contribution or payment to
any Multiemployer Plan which such Borrower or any ERISA
Affiliate may be required to make under any agreement
relating to such Multiemployer Plan, or any law
pertaining thereto;
(vi) Fail to pay any required installment under
section (m) of Section 412 of the Code or any other
payment required under Section 412 of the Code on or
before the due date for such installment or other
payment; or
(vii) Amend a Plan resulting in an increase in
current liability for the plan year such that such
Borrower or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the
Code.
8.9 Mergers, Consolidations or Sales. (a) Neither
the Parent nor any of its Subsidiaries shall enter into any
transaction of merger, reorganization, or consolidation, or
transfer, sell, assign, lease, or otherwise dispose of all or any
part of its property, or wind up, liquidate or dissolve, or agree
to do any of the foregoing, except (i) for sales of Inventory in
the ordinary course of its business, (ii) for transfers, sales,
assignment or leases by any Subsidiary of the Parent, other than
Laclede Chain and Laclede Mid America, to any Borrower, of all or
any part of its property, consented to in writing by the Majority
Lenders, (iii) for mergers by any Subsidiary of the Parent with
and into any Borrower, consented to in writing by the Majority
Lenders, (iv) for sales by the Parent of its capital stock, (v)
for sales by Laclede Mid America of its newly-issued capital
stock in an amount not to exceed ten percent (10.0%) of all
capital stock of Laclede Mid America outstanding after giving
effect to such issuance, (vi) for sales by the Parent or any of
its Subsidiaries of Fixed Assets, subject to compliance with the
provisions of Section 8.9(b), and (vii) as otherwise expressly
permitted under this Agreement.
(b) Other than as provided in Section 8.9(c) and in
the proviso in Section 5.11(c), no sale or other disposition of
Fixed Assets shall be permitted except a sale or other
disposition complying with the terms of this Section 8.9(b). In
the event that any Borrower intends to sell or otherwise dispose
of any Fixed Asset consisting of Collateral, such Borrower shall
give the Agent and the Lenders at least ten (10) Business Days'
prior written notice of such sale. The Borrowers shall make
prepayments of the Loans upon any sale or disposition, as set
forth in this Section 8.9(b). Upon any such sale or other
disposition, the entire amount of Net Proceeds shall be applied
on the date of such sale or disposition to the repayment of
Revolving Loans then outstanding. Upon such payment, a reserve
shall automatically be created against the Maximum Revolver
Amount and Individual Maximum Revolver Amount with respect to
such Borrower (a "Fixed Asset Reserve") in an amount equal to
such Net Proceeds. On any date on which the applicable Borrower
shall have (i) acquired Replacement Assets, (ii) granted the
Agent a valid perfected and first priority Lien on such
Replacement Assets, and (iii) obtained an appraisal of the fair
market value of such Replacement Assets (such appraised fair
market value being referred to as the "Replacement Value") from
an appraiser satisfactory to the Agent and the Lenders, such
Fixed Asset Reserve shall be reduced (but not to below zero) by
the Replacement Value of such Replacement Assets. On the first
to occur of (A) the reduction of such Fixed Asset Reserve to zero
pursuant to the preceding sentence, (B) the expiration of twelve
(12) months from the date of the sale or disposition of such
Fixed Assets, and (C) such earlier date as the applicable
Borrower determines to terminate such Fixed Asset Reserve, the
applicable Borrower shall make a prepayment on the Term Loans to
the extent of the then existing Fixed Asset Reserve, to be
applied to the principal installments of the Term Loans in the
inverse order of their maturity.
(c) The Borrowers agrees not to sell or otherwise
dispose of Fixed Assets which do not consist of Collateral except
pursuant to transactions which do not generate in excess of
$5,000,000 of net sale proceeds per transaction or in excess of
$15,000,000 of net sale proceeds in the aggregate as to all such
transactions during the term of this Agreement.
8.10 Distributions; Capital Change; Restricted
Investments; Permitted Acquisitions. (a) Neither the Parent nor
any of its Subsidiaries shall (A) directly or indirectly declare
or make, or incur any liability to make, any Distribution, except
Distributions to the Parent by its Subsidiaries, (B) make any
change in its capital structure which could materially and
adversely affect the repayment of the Obligations, or (C) make
any Restricted Investment; provided, that the Parent and its
Subsidiaries may make Distributions and Restricted Investments
constituting Permitted Acquisitions, provided there does not then
exist any Default or Event of Default, in an amount not to exceed
(i) fifty percent (50.0%) of the positive amount, if any, of
Consolidated Net Earnings for any fiscal quarter, commencing with
the fiscal quarter ending March 31, 1994, on a cumulative basis,
minus one hundred percent (100.0%) of the negative amount, if
any, of Consolidated Net Earnings for any fiscal quarter,
commencing with the fiscal quarter ending March 31, 1994, on a
cumulative basis, plus (ii) the sum of amounts received by the
Parent or any of its Subsidiaries from and after the Closing
Date, consisting of proceeds from the sale of shares of its
capital stock or otherwise as contributions to the capital of the
Parent or such Subsidiary, plus (iii) the sum of amounts received
by the Parent or any of its Subsidiaries, on a cumulative basis
from and after the Closing Date, consisting of proceeds arising
from the maturation, sale or disposition of investments
consisting of Restricted Investments, minus (iv) the sum of
Distributions and Restricted Investments made by the Parent or
any of its Subsidiaries from and after the Closing Date pursuant
to this proviso.
(b) Notwithstanding anything contained in this
Agreement to the contrary, Permitted Acquisitions shall (i) not
be hostile acquisitions, (ii) be made in accordance with all
applicable laws and pursuant to agreements, instruments and
documents of which copies shall have been delivered to the Agent
and each Lender prior to such acquisition and which shall be
acceptable in form and substance to the Agent and each Lender,
and (iii) be of businesses with product lines that are (1)
complementary to those of the Borrowers, or (2) sold through
distribution channels similar to those through which the
Borrowers' product lines are distributed. In addition, the
Borrowers shall be in full compliance with all of the terms,
conditions and covenants contained in this Agreement, and no
Default or Event of Default shall have occurred and be continuing
on the date of any proposed acquisition or would exist
immediately after giving effect thereto. The Agent shall be
granted a Lien on all capital stock acquired by any Borrower in
connection with Permitted Acquisitions, pursuant to a pledge
agreement in form and substance satisfactory to the Agent and the
Lenders. In addition, any such Subsidiary of any Borrower
acquired in connection with a Permitted Acquisition of capital
stock shall execute and deliver to the Agent and the Lenders a
guaranty and security agreement in form and substance
satisfactory to the Agent and the Lenders, pursuant to which such
Subsidiary shall guaranty the payment and performance of all of
the Obligations and grant Liens on all of its assets to secure
such guaranty.
8.11 Transactions Affecting Collateral or Obligations.
Neither the Parent nor any of its Subsidiaries shall enter into
any transaction which materially and adversely affects the
Collateral or any Borrower's ability to repay the Obligations.
8.12 Guaranties. Neither the Parent nor any of its
Subsidiaries shall make, issue, or become liable on any Guaranty,
except Guaranties in favor of the Agent.
8.13 Debt. Neither the Parent nor any of its Sub-
sidiaries shall incur or maintain any Debt, other than: (a) the
Obligations; (b) trade payables and contractual obligations to
suppliers and customers, and non-interest bearing current
operating liabilities (as determined in accordance with GAAP), in
each case incurred in the ordinary course of business; (c) Debt
in a principal amount not to exceed $10,000,000 incurred to
finance the purchase and implementation by the Parent of
Equipment consisting of a new ladle furnace and related melt shop
and rolling mill Equipment for the Parent's Alton steel mill
plant located in Alton, Illinois, provided, that such Debt shall
(i) have a final maturity not less than that of the Term Loans,
(ii) have an average life of at least three years, (iii) contain
covenants, including financial covenants, no more restrictive
than those contained in this Agreement, and (iv) be incurred
pursuant to documentation in form and substance otherwise
satisfactory to the Majority Lenders; (d) Debt incurred to
finance the purchase of additional Equipment or Real Estate
constituting Capital Expenditures permitted by Section 8.22, so
long as the aggregate amount of scheduled principal installments
on such Debt in any Fiscal Year does not exceed fifty percent
(50.0%) of the Capital Expenditures for such Fiscal Year; (e)
Debt evidenced by the Intercompany Notes; (f) Debt subordinated,
on terms satisfactory in form and substance to the Agent and the
Lenders, to the Obligations; and (g) other Debt existing on the
Closing Date and reflected in the Financial Statements attached
hereto as Exhibit C.
8.14 Prepayment. Neither the Parent nor any of its
Subsidiaries shall voluntarily prepay any Debt, except the
Obligations in accordance with the terms hereof.
8.15 IRB Debt.
(a) The Parent shall not amend or otherwise change the
terms applicable to any IRB Debt in any manner adversely
affecting the interests of the Lenders without the prior written
consent of the Majority Lenders. The Parent shall not make any
payment which would not have been made in the absence of an
amendment or change of terms applicable to any IRB Debt unless
such amendment or change has been approved by the Majority
Lenders as provided in the preceding sentence.
(b) The Parent shall deliver to the Lenders (i) a copy
of each notice or other communication delivered by it or on its
behalf to any trustee under any indenture for any IRB Debt, such
delivery to be made at the same time and by the same means as
such notice or other communication is delivered to such trustee,
and (ii) a copy of each notice or other communication received by
the Parent from any such trustee, such delivery to be made
promptly after such notice or other communication is received by
the Parent.
8.16 Transactions with Affiliates. Except as set
forth below, neither the Parent nor any of its Subsidiaries
shall, sell, transfer, distribute, or pay any money or property,
including, but not limited to, any fees or expenses of any nature
(including, but not limited to, any fees or expenses for
management services), except actual expenses incurred and
approved in advance in writing by the Agent and the Majority
Lenders, to any Affiliate, or lend or advance money or property
to any Affiliate, or invest in (by capital contribution or
otherwise) or purchase or repurchase any stock or indebtedness,
or any property, of any Affiliate, or become liable on any
Guaranty of the indebtedness, dividends, or other obligations of
any Affiliate. Notwithstanding the foregoing, the Borrowers may
pay reasonable compensation to employees who are Affiliates, and,
if no Event of Default has occurred and is continuing, the Parent
and its Subsidiaries may engage in transactions in the ordinary
course of business, in amounts and upon terms fully disclosed to
the Agent and the Lenders, and no less favorable to the Parent or
such Subsidiary than would obtain in a comparable arm's-length
transaction with a third party who is not an Affiliate; provided,
that with respect to (i) sales of Inventory by any Borrower to
Ivaco or any of its affiliates, the amount owing with respect to
which sales does not exceed, in the aggregate at any time
outstanding, $250,000, or (ii) purchases of Inventory by any
Borrower from Ivaco or any of its affiliates, the amount owing
with respect to which purchases does not exceed, in the aggregate
at any time outstanding, $100,000, the Borrowers shall not be
required so to disclose such amounts or terms, so long as such
transactions are engaged in in the ordinary course of business
and on such arm's-length basis. In addition, (a) the Parent may
make or maintain outstanding certain loans or other advances to
Laclede Chain and to Laclede Mid America under the Intercompany
Notes, and (b) the Borrowers may permit Ivaco or any of its
affiliates to obtain insurance on their respective behalf by
virtue of their relationship as Affiliates of Ivaco in order to
obtain more favorable rates and coverage from the relevant
insurance carriers.
8.17 Investment Banking and Finder's Fees. Neither
the Parent nor any of its Subsidiaries shall pay or agree to pay,
or reimburse any other party with respect to, any investment
banking or similar or related fee, underwriter's fee, finder's
fee, or broker's fee to any Person in connection with this Agree-
ment, except a private placement fee in an amount not to exceed
$1,356,250 payable by the Borrowers to SPP Hambro & Co. Each
Borrower shall defend and indemnify the Agent and the Lenders
against and hold them harmless from all claims of any Person for
any such fees, and all costs and expenses (including without
limitation, attorneys' fees) incurred by the Agent and/or any
Lender in connection therewith.
8.18 Business Conducted. Such Borrower shall not
engage, directly or indirectly, in any line of business other
than the businesses in which such Borrower is engaged on the
Closing Date.
8.19 Liens. Neither the Parent nor any of its
Subsidiaries shall create, incur, assume, or permit to exist any
Lien on any property now owned or hereafter acquired by any of
them, except Permitted Liens.
8.20 Sale and Leaseback Transactions. Except with
respect to Fixed Assets which do not consist of Collateral,
neither the Parent nor any of its Subsidiaries shall, directly or
indirectly, enter into any arrangement with any Person providing
for the Parent or such Subsidiary to lease or rent property that
the Parent or such Subsidiary has sold or will sell or otherwise
transfer to such Person.
8.21 New Subsidiaries. Such Borrower shall not,
directly or indirectly, organize, create, acquire or permit to
exist any Subsidiary other than those listed on Schedule 7.5,
except as a result of a Permitted Acquisition by such Borrower of
one hundred percent (100.0%) of the capital stock of any Person.
8.22 Capital Expenditures. Neither the Parent nor any
of its Subsidiaries shall make or incur any Capital Expenditure
if, after giving effect thereto, the aggregate amount of all
Capital Expenditures by the Parent and its Subsidiaries on a
consolidated basis would exceed (a) with respect to the Fiscal
Year beginning January 1, 1995, $10,000,000, or (b) with respect
to any subsequent Fiscal Year, the sum of (i) $10,000,000, plus
(ii) the amount by which $10,000,000 exceeds all Capital
Expenditures by the Parent and its Subsidiaries during the then
immediately preceding Fiscal Year.
8.23 Operating Lease Obligations. Neither the Parent
nor any of its Subsidiaries shall enter into any lease of real or
personal property as lessee or sublessee (other than a Capital
Lease), if, after giving effect thereto, the aggregate amount of
Rentals (as hereinafter defined) payable by the Parent and its
Subsidiaries on a consolidated basis in any Fiscal Year in
respect of such lease and all such leases would exceed $4,000,000
(such amount being referred to herein as "Permitted Rentals").
The term "Rentals" means all payments due from the lessee or
sublessee under a lease, including, without limitation, basic
rent, percentage rent, property taxes, utility or maintenance
costs, and insurance premiums.
8.24 Consolidated Fixed Charge Coverage Ratio. The
Borrowers will maintain a Consolidated Fixed Charge Coverage
Ratio, determined as of the end of each fiscal quarter for the
four fiscal quarter period ending on such date, of (a) not less
than 1.0 to 1.0 for the periods ending September 30, 1994 and
December 31, 1994, and (b) not less than 1.1 to 1.0 as of the end
of each fiscal quarter thereafter.
8.25 Consolidated Adjusted Net Worth. The Borrowers
will maintain Consolidated Adjusted Net Worth, determined as of
the last day of each calendar month, of not less than the sum of
(a) $18,614,000 plus (b) an amount (to the extent greater than
zero) equal to fifty percent (50.0%) of Consolidated Net Earnings
calculated on a cumulative basis for the period commencing on the
Closing Date and ending on the last day of the Fiscal Year ending
most recently prior to the date of such determination. In
addition, Consolidated Adjusted Net Worth as of December 31, 1994
shall be at least $22,899,000.
8.26 Fiscal Year. The Parent and its Subsidiaries
will maintain a Fiscal Year based upon a calendar year.
8.27 Further Assurances. Such Borrower shall execute
and deliver, or cause to be executed and delivered, to the Agent
and/or the Lenders such documents and agreements, and shall take
or cause to be taken such actions, as the Agent may, from time to
time, request to carry out the terms and conditions of this
Agreement and the other Loan Documents.
ARTICLE 9
CONDITIONS OF LENDING
9.1 Conditions Precedent to Making of Loans on the
Closing Date. The obligation of the Lenders to make the initial
Revolving Loans on the Closing Date and to make the Term Loans,
and the obligation of the Agent to cause to be issued any Letter
of Credit on the Closing Date and the obligation of the Lenders
to participate in Letters of Credit issued on the Closing Date,
are subject to the following conditions precedent having been
satisfied in a manner satisfactory to the Agent and the Lenders:
(a) Each Borrower shall have performed and
complied with all covenants, agreements and conditions
contained herein which are required to be performed or
complied with by such Borrower before or on such
Closing Date.
(b) After making the Revolving Loans on the
Closing Date (including such Revolving Loans made to
finance the Closing Fee or otherwise pursuant to
Section 4.7 as reimbursement for fees, costs and
expenses then payable under this Agreement), the
Borrowers would have Availability in an amount no less
than $10,000,000.
(c) Laclede Consulting and Laclede Pipe shall have
been merged with and into the Parent in accordance with
applicable laws.
(d) All representations and warranties made
hereunder shall be true and correct as of the Closing
Date as if made on such date.
(e) No Default or Event of Default shall exist on
the Closing Date, or would exist after giving effect to
the Loans to be made on such date.
(f) The Agent and the Lenders shall have received
a certificate dated such Closing Date and signed by the
President or a Vice President and the Chief Financial
Officer or Treasurer of each Borrower certifying that
the conditions specified in Sections 9.1(a) - (e) have
been fulfilled.
(g) The Agent and the Lenders shall have received
a favorable opinion from Bryan Cave, counsel to the
Borrowers, in form and substance satisfactory to the
Agent and the Lenders.
(h) The Agent and the Lenders shall have received
all items on the List of Closing Documents attached
hereto as Exhibit D which are not elsewhere identified
in this Article 9, such items to be in form and
substance satisfactory to the Agent and the Lenders,
and to be executed by all parties thereto when the
nature of such items so requires.
(i) All proceedings taken in connection with the
execution of this Agreement, the Term Loan Notes, all
other Loan Documents and all documents and papers
relating thereto shall be satisfactory to the Agent and
the Lenders. The Agent and the Lenders shall have
received copies of such documents and papers as the
Agent and the Lenders may reasonably request in
connection therewith, all in form and substance
satisfactory to the Agent and the Lenders.
The acceptance by a Borrower of any Loans made on the Closing
Date shall be deemed to be a representation and warranty made by
such Borrower to the effect that all of the conditions to the
making of such Loans set forth in Sections 9.1(a) - (e) have been
satisfied, with the same effect as delivery to the Agent and the
Lenders of a certificate signed by the president and chief
financial officer of such Borrower, dated the Closing Date, to
such effect.
9.2 Conditions Precedent to Each Loan. The obligation
of the Lenders to make each Loan, including the initial Revolving
Loans on the Closing Date and the Term Loans, and the obligation
of the Agent to cause to be issued any Letter of Credit and the
obligation of the Lenders to participate in Letters of Credit,
shall be subject to the further conditions precedent that on the
date of any such extension of credit:
(a) the following statements shall be true, and
the acceptance by a Borrower of any extension of credit
shall be deemed to be a statement to the effect set
forth in clauses (i) and (ii), with the same effect as
the delivery to the Agent and the Lenders of a
certificate signed by the president and chief financial
officer of such Borrower, dated the date of such
extension of credit, stating that:
(i) The representations and warranties
contained in this Agreement and the other
Loan Documents are correct in all material
respects on and as of the date of such exten-
sion of credit as though made on and as of
such date, except to the extent the Agent and
the Lenders have been notified by any
Borrower that any representation or warranty
is not correct and the Majority Lenders have
explicitly waived in writing compliance with
such representation or warranty; and
(ii) No event has occurred and is con-
tinuing, or would result from such extension
of credit, which constitutes a Default or an
Event of Default; and
(b) the Agent and the Lenders shall have received
such other approvals, opinions or documents as they may
reasonably request;
(c) no order, judgment or decree of any Public
Authority and no law, rule or regulation applicable to
Lender shall purport by its terms to enjoin, restrain or
otherwise prohibit the making of such Loan; and
(d) Since December 31, 1993, no material adverse
change shall have occurred with respect to the business,
operations, assets or condition (financial or otherwise) of
the Parent or any of its Subsidiaries;
provided, however, that the foregoing conditions precedent are
not conditions to each Lender participating in or reimbursing
BABC or the Agent for such Lenders' Pro Rata Share of any
Settlement Loan or Agent Advance as provided in Sections 2.2(h),
(j) and (k).
ARTICLE 10
DEFAULT; REMEDIES
10.1 Events of Default. It shall constitute an event
of default ("Event of Default") if any one or more of the
following shall occur for any reason:
(a)
(i) any failure to pay the principal of or premium
on any of the Obligations when due, whether upon demand
or otherwise, other than such obligation arising under
Section 4.1 as a result of the sum of outstanding
Revolving Loans, the aggregate amount of Pending
Revolving Loans, the undrawn amount of outstanding
Letters of Credit and any unpaid reimbursement
obligations in respect of Letters of Credit exceeding
the Maximum Revolver Amount;
(ii) any failure to pay the principal of or
premium on any of the Obligations within ten (10)
Business Days following the date such principal is due,
whether upon demand or otherwise, in the case of such
obligation arising under Section 4.1 as a result of the
sum of outstanding Revolving Loans, the aggregate
amount of Pending Revolving Loans, the undrawn amount
of outstanding Letters of Credit and any unpaid
reimbursement obligations in respect of Letters of
Credit exceeding the Maximum Revolver Amount; or
(iii) any failure to pay interest on any of the
Obligations, fees, expenses or any of the Obligations
not otherwise specified in the foregoing clauses (i) or
(ii), within five (5) Business Days following the date
such interest or item is due, whether upon demand or
otherwise;
(b) any representation or warranty made by any
Borrower in this Agreement or by the Parent or any of
its Subsidiaries in any of the other Loan Documents,
any Financial Statement, or any certificate furnished
by the Parent or any of its Subsidiaries at any time to
the Agent or any Lender shall prove to be untrue in any
material respect as of the date on which made;
(c)
(i) any failure by the Borrowers to comply with
the covenant contained in Section 8.24 as of the end of
any fiscal quarter, or the covenant contained in
Section 8.25 as of the end of any calendar month, to
the extent that the Borrowers shall not obtain from the
Agent and the Majority Lenders, within eighty-five (85)
days following the last day of the period covered by
the Financial Statement which disclosed such failure, a
waiver of their right to deem such failure an Event of
Default hereunder;
(ii) any failure by any Borrower to comply with
any of the covenants contained in Sections 8.9, 8.10,
8.11, 8.13, 8.14, 8.15, 8.17, 8.19, 8.20, 8.21, 8.22
and 8.23;
(iii) any failure by any Borrower to comply with
any of the other covenants and agreements contained in
Article 8, for more than ten (10) days after the
earlier of (i) notice of such failure by the Agent to
such Borrower and (ii) the date that such Borrower
discovers, or reasonably should have discovered, such
failure; provided, however, that no such grace period
shall apply, and an Event of Default shall exist
promptly upon such failure to comply, if such failure
to comply may not, in the Majority Lenders' reasonable
determination, be cured by the applicable Borrower
during such grace period; or if any such agreement,
instrument or document shall terminate (other than in
accordance with its terms or the terms hereof or with
the written consent of the Majority Lenders) or become
void or unenforceable without the written consent of
the Majority Lenders;
(d) any failure by any Borrower to comply with
any of the other covenants and agreements contained in
this Agreement, the Term Loan Notes, the Mortgage, the
other Loan Documents, or any other agreement entered
into at any time to which any Borrower and the Agent
and/or any Lender are party, for more than thirty (30)
days after the earlier of (i) notice of such failure by
the Agent to such Borrower and (ii) the date that such
Borrower discovers, or reasonably should have
discovered, such failure; provided, however, that no
such grace period shall apply, and an Event of Default
shall exist promptly upon such failure to comply, if
such failure to comply may not, in the Majority
Lenders' reasonable determination, be cured by the
applicable Borrower during such grace period; or if any
such agreement, instrument or document shall terminate
(other than in accordance with its terms or the terms
hereof or with the written consent of the Majority
Lenders) or become void or unenforceable without the
written consent of the Majority Lenders;
(e) default shall occur with respect to any Debt
for borrowed money (other than the Obligations) in an
outstanding principal amount which exceeds, in the
aggregate for all such Debt with respect to which
default shall have occurred, $500,000, or under any
agreement or instrument under or pursuant to which any
such Debt or indebtedness may have been issued,
created, assumed, or guaranteed by the Parent or any of
its Subsidiaries, and such default shall continue for
more than the period of grace, if any, therein speci-
fied, if the effect thereof (with or without the giving
of notice or further lapse of time or both) is to
accelerate, or to permit the holders of any such Debt
or indebtedness to accelerate, the maturity of any such
Debt; or any such Debt or indebtedness shall be
declared due and payable or be required to be prepaid
(other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof;
(f) the Parent or any of its Subsidiaries shall
(i) file a voluntary petition in bankruptcy or file a
voluntary petition or an answer or otherwise commence
any action or proceeding seeking reorganization,
arrangement or readjustment of its debts or for any
other relief under the federal Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency
act or law, state or federal, now or hereafter
existing, or consent to, approve of, or acquiesce in,
any such petition, action or proceeding; (ii) apply for
or acquiesce in the appointment of a receiver,
assignee, liquidator, sequestrator, custodian, trustee
or similar officer for it or for all or any part of its
property; (iii) make an assignment for the benefit of
creditors; or (iv) be unable generally to pay its debts
as they become due;
(g) an involuntary petition shall be filed or an
action or proceeding otherwise commenced seeking
reorganization, arrangement or readjustment of the
debts of the Parent or any of its Subsidiaries or for
any other relief under the federal Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency
act or law, state or federal, now or hereafter existing
and either (i) such petition, action or proceeding
shall not have been dismissed within a period of sixty
(60) days after its commencement or (ii) an order for
relief against the Parent or such Subsidiary shall have
been entered in such proceeding;
(h) a receiver, assignee, liquidator, seque-
strator, custodian, trustee or similar officer for the
Parent or any of its Subsidiaries or for all or any
part of its property shall be appointed; or a warrant
of attachment, execution or similar process shall be
issued against any part of the property of the Parent
or any of its Subsidiaries;
(i) the Parent or any of its Subsidiaries shall
file a certificate of dissolution under applicable
state law or shall be liquidated, dissolved or wound-up
or shall commence or have commenced against it any
action or proceeding for dissolution, winding-up or
liquidation, or shall take any corporate action in
furtherance thereof;
(j) all or any material part of the property of
the Parent or any of its Subsidiaries shall be
nationalized, expropriated or condemned, seized or
otherwise appropriated, or custody or control of such
property or of the Parent or such Subsidiary shall be
assumed by any Public Authority or any court of
competent jurisdiction at the instance of any Public
Authority, except where contested in good faith by
proper proceedings diligently pursued where a stay of
enforcement is in effect;
(k) any guaranty of the Obligations shall be
terminated, revoked or declared void or invalid;
(l) one or more judgments or orders for the pay-
ment of money aggregating in excess of $500,000, which
amount shall not be fully covered by insurance, shall
be rendered against the Parent or any of its
Subsidiaries, and either (i) enforcement proceedings
shall have been commenced by any creditor upon any such
judgment or order, or (ii) there shall be any period of
45 consecutive days during which such judgment remains
unpaid or a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise,
shall not be in effect;
(m) any loss, theft, damage or destruction of any
item or items of Collateral occurs which (i) materially
and adversely affects the operation of the business of
the Parent or any of its Subsidiaries, taken as a
whole; or (ii) is material in amount and is not
adequately covered by insurance;
(n) there occurs any material adverse change in
the property, business, operation, or condition
(financial or otherwise) of the Parent or any of its
Subsidiaries, taken as a whole;
(o) Any Termination Event occurs which the Agent
believes could subject any Borrower or any ERISA
Affiliate to a liability in excess of $500,000;
(p) The plan administrator of any Plan applies
under Section 412(d) of the Code for a waiver of the
minimum funding standards of Section 412(a) of the Code
and the Agent believes that the substantial business
hardship upon which the application for such waiver is
based could subject any Borrower or any ERISA Affiliate
to a liability in excess of $500,000;
(q) there is filed against the Parent or any of
its Subsidiaries any civil or criminal action, suit or
proceeding under any federal or state racketeering
statute (including, without limitation, the Racketeer
Influenced and Corrupt Organization Act of 1970), which
action, suit or proceeding (1) is not dismissed within
one hundred twenty (120) days, and (2) could result in
the confiscation or forfeiture of any material portion
of the Collateral;
(r) for any reason other than the failure of the
Agent to take any action available to it to maintain
perfection of the Agent's Liens, pursuant to the Loan
Documents, any Loan Document ceases to be in full force
and effect or any Lien with respect to any material
portion of the Collateral intended to be secured
thereby ceases to be, or is not, valid, perfected and
prior to all other Liens (other than Permitted Liens)
or is terminated, revoked or declared void; or
(s) the Parent shall cease to own (i) at least 90%
of the capital stock of Laclede Mid America, or (ii)
100% of the capital stock of Laclede Chain or any
Subsidiary of the Parent acquired as a result of a
Permitted Acquisition by the Parent of one hundred
percent (100.0%) of the capital stock of any Person.
10.2 Remedies. (a) If a Default or an Event of
Default exists, the Agent may, in its discretion, or, at the
direction of the Majority Lenders, shall, do one or more of the
following at any time or times and in any order, without notice
to or demand on any Borrower: (i) reduce the Maximum Revolver
Amount, or the amount of the Revolver Facility, or the advance
rates against Eligible Accounts and/or Eligible Inventory used in
computing the Maximum Revolver Amount, or reduce or increase one
or more of the other elements used in computing the Maximum
Revolver Amount; (ii) restrict the amount of or refuse to make
Revolving Loans; and (iii) restrict or refuse to arrange for
Letters of Credit. If an Event of Default exists, the Agent may,
in its discretion, or shall, at the direction of the Majority
Lenders, do one or more of the following, in addition to the
actions described in the preceding sentence, at any time or times
and in any order, without notice to or demand on any Borrower:
(i) terminate the Commitments and this Agreement; and
(ii) declare any or all Obligations to be immediately due and
payable; provided, however, that upon the occurrence of any Event
of Default described in Sections 10.1(f), 10.1(g), 10.1(h), or
10.1(i), the Commitments shall automatically and immediately
expire and all Obligations shall automatically become immediately
due and payable without notice or demand of any kind.
(b) If an Event of Default exists: (i) the Agent
shall have, in addition to all other rights, the rights and
remedies of a secured party under the UCC; (ii) the Agent may, at
any time, take possession of the Collateral and keep it on the
applicable Borrower's premises, at no cost to the Agent or any
Lender, or remove any part of it to such other place or places as
the Agent may desire, or each Borrower shall, upon the Agent's
demand, at such Borrower's cost, assemble the Collateral and make
it available to the Agent at a place reasonably convenient to the
Agent; and (iii) the Agent may sell and deliver any Collateral at
public or private sales, for cash, upon credit or otherwise, at
such prices and upon such terms as the Agent deems advisable, in
its sole discretion, and may, if the Agent deems it reasonable,
postpone or adjourn any sale of the Collateral by an announcement
at the time and place of sale or of such postponed or adjourned
sale without giving a new notice of sale. Without in any way
requiring notice to be given in the following manner, each
Borrower agrees that any notice by the Agent of sale, disposition
or other intended action hereunder or in connection herewith,
whether required by the UCC or otherwise, shall constitute
reasonable notice to such Borrower if such notice is mailed by
registered or certified mail, return receipt requested, postage
prepaid, or is delivered personally against receipt, at least
five (5) Business Days prior to such action to such Borrower's
address specified in or pursuant to Section 14.7. If any
Collateral is sold on terms other than payment in full at the
time of sale, no credit shall be given against the Obligations
until the Agent or the Lenders receive payment, and if the buyer
defaults in payment, the Agent may resell the Collateral without
further notice to any Borrower. In the event the Agent seeks to
take possession of all or any portion of the Collateral by
judicial process, each Borrower irrevocably waives: (a) the
posting of any bond, surety or security with respect thereto
which might otherwise be required; (b) any demand for possession
prior to the commencement of any suit or action to recover the
Collateral; and (c) any requirement that the Agent retain
possession and not dispose of any Collateral until after trial or
final judgment. The Borrowers agree that the Agent has no
obligation to preserve rights to the Collateral or marshal any
Collateral for the benefit of any Person. The Agent is hereby
granted a license or other right to use, without charge, each
Borrower's labels, patents, copyrights, name, trade secrets,
trade names, trademarks, and advertising matter, or any similar
property, in completing production of, advertising or selling any
Collateral, and each Borrower's rights under all licenses and all
franchise agreements shall inure to the Agent's benefit. The
proceeds of sale shall be applied first to all expenses of sale,
including attorneys' fees, and then, in the case of a sale of
Collateral consisting of Fixed Assets, ratably, to the reduction
of the Term Loans (applying such proceeds ratably to the
installments of the Term Loans in the inverse order of maturity),
or, in the case of a sale of Collateral other than Fixed Assets,
ratably, to the reduction of the Obligations in the order
provided for in Section 4.8. The Agent will return any excess to
the applicable Borrower or such other Person as shall be legally
entitled thereto and such Borrower shall remain liable for any
deficiency.
(c) If an Event of Default occurs, each Borrower
hereby waives all rights to notice and hearing prior to the
exercise by the Agent of the Agent's rights to repossess the
Collateral without judicial process or to replevy, attach or levy
upon the Collateral without notice or hearing.
(d) If Agent, in its discretion or at the direction of
the Majority Lenders, terminates this Agreement upon an Event of
Default, the Borrowers shall pay the Agent, for the account of
the Lenders, immediately upon termination, an early termination
penalty equal to the early termination fee that would have been
payable under Article 4 if this Agreement had been terminated on
that date pursuant to the Borrowers' election.
ARTICLE 11
TERM AND TERMINATION
11.1 Term and Termination. The term of this Agreement
shall end on the fifth Anniversary Date. The Majority Lenders
may terminate this Agreement without notice upon the occurrence
of an Event of Default. Upon the effective date of termination
of this Agreement for any reason whatsoever, all Obligations
(including, without limitation, all unpaid principal of, accrued
interest on and prepayment penalties, if any, with respect to the
Term Loans) shall become immediately due and payable.
Notwithstanding the termination of this Agreement, until all
Obligations are paid and performed in full in cash, each Borrower
shall remain bound by the terms of this Agreement and shall not
be relieved of any of its obligations hereunder, and the Agent
and the Lenders shall retain all their rights and remedies
hereunder (including, without limitation, the security interest
of the Agent, for the ratable benefit of the Secured Creditors,
in and all rights and remedies with respect to all then existing
and after-arising Collateral).
ARTICLE 12
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
12.1 No Implied Waivers. No act, failure or delay by
the Agent or the Lenders shall constitute a waiver of any of
their rights and remedies. No single or partial waiver by the
Agent or the Lenders of any provision of this Agreement or any
other Loan Document, or of breach or default hereunder or
thereunder, or of any right or remedy which the Agent or the
Lenders may have, shall operate as a waiver of any other
provision, breach, default, right or remedy or of the same
provisions, breach, default, right or remedy on a future
occasion. No waiver by the Agent or the Lenders shall affect
their rights to require strict performance of this Agreement.
12.2 Amendments and Waivers. No amendment or
modification of any provision of this Agreement shall be
effective without the written agreement of the Majority Lenders
and the Borrowers, and no termination or waiver of any provision
of this Agreement, or consent to any departure by any Borrower
therefrom, shall in any event be effective without the written
concurrence of the Majority Lenders, which concurrence the
Majority Lenders shall have the right to grant or withhold at
their sole discretion. Notwithstanding the immediately preceding
sentence, any amendment, modification or waiver (i) of any
provision of Articles 2, 3 or 4, which amendment, modification or
waiver relates solely to any increase of the Commitments, any
increase in the principal amount of the Term Loans or in the
average life or extension of the maturity of any installment of
the Term Loans, the reduction of the interest rates applicable to
any Loans and/or the amount of fees payable hereunder (other than
fees payable solely to the Agent or an issuing bank), (ii)
effectuating the discharge of any Guaranty of any of the
Obligations, or (iii) of the definitions of "Majority Lenders,"
"Pro Rata Share," "Maximum Revolver Amount" or "Individual
Maximum Revolver Amount" (or any term affecting the calculation
of the Maximum Revolver Amount or Individual Maximum Revolver
Amount in any material respect) and the provisions contained in
this Section 12.2, shall be effective if, and only if, evidenced
by a writing agreed to and signed by all Lenders. No amendment,
modification, termination, or waiver of any provision of
Article 13 or any other provision referring to the Agent shall be
effective without the written concurrence of the Agent. The
Agent may, but shall have no obligation to, with the written
concurrence of any Lender, execute amendments, modifications,
waivers or consents as attorney-in-fact for such Lender. Any
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No
notice to or demand on a Borrower in any case shall entitle such
Borrower to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, waiver or
consent effected in accordance with this Section 12.2 shall be
binding on each Secured Creditor, each future Secured Creditor,
and, if signed by each Borrower, on the Borrowers.
12.3 Assignments; Participations.
(a) Each Lender shall have the right, with the Agent's
consent, at any time to assign to one or more commercial banks or
other financial institutions all, or portions in minimum amounts
of $25,000,000, of its Commitment, the Loans owing to it and Term
Loan Notes held by it and its rights and obligations with respect
to Letters of Credit; provided, that BABC is hereby granted a
right of first refusal in connection with any such assignment;
and provided, further, that the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance entered
into with respect to such assignment by the assigning Lender and
the assignee, and accepted by the Agent, in substantially the
form of Exhibit G ("Assignment and Acceptance"), together with
the Term Loan Notes subject to such assignment and with a
processing and recordation fee of $3,500. Upon such execution,
delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, which effective
date shall be at least two (2) Business Days after the execution
thereof, the assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, (A)
have the rights and obligations (including, but not limited to,
the obligation to participate in Letters of Credit pursuant to
Section 2.4(f)) of a Lender hereunder and (B) the assigning
Lender thereunder shall cease to be a party hereto.
(b) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the assignee
thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in
or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of
this Agreement or any other Loan Document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the
financial condition of any Borrower or the performance or
observance by any Borrower of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as
it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Agent,
such assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under this Agreement; (v) such assignee appoints
and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are
delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vi) such
assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement
are required to be performed by it as a Lender.
(c) The Agent shall maintain at its address set forth
in Section 14.7 a copy of each Assignment and Acceptance
delivered to and accepted by it and books and records, including
computer records, in which it shall record the names and
addresses of the Lenders and the Commitment of, and principal
amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall constitute
rebuttably presumptive evidence, absent manifest error, of the
accuracy of the information contained therein, and the Borrowers,
the Agent and the Lenders may treat each Person the name of which
is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for
inspection by any Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee, together with
the Term Loan Notes subject to such assignment, the Agent shall,
if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit G, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in
the Register, and (iii) give prompt written notice thereof to the
Borrowers. Within five (5) Business Days after the Borrowers'
receipt of such notice, the Parent, at its own expense, will
execute and deliver to the Agent in exchange for the surrendered
Term Loan Notes, new Term Loan Notes to the order of such
assignee in amounts corresponding to the interest in the
assigning Lender's rights and obligations under this Agreement
acquired by such assignee pursuant to such Assignment and
Acceptance. Such new Term Loan Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such
surrendered Term Loan Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in
substantially the forms of Exhibit A. Upon delivery of such new
Term Loan Notes, the surrendered Term Loan Notes shall be
cancelled by the Agent and returned to the applicable Borrower.
(e) Each Lender may sell participations in all or any
part of its rights and obligations under this Agreement (includ-
ing, without limitation, all or any part of its Commitment, the
Loans or its rights in connection with Letters of Credit, as
applicable) to one or more other Persons; provided, however, that
(i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of its Term Loan Note
for all purposes under this Agreement, and (iv) the Agent, the
Borrowers and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights
and obligations under this Agreement. BABC agrees not to sell
participations in its rights and obligations under this Agreement
to the extent that such sales reduce that portion of its
Commitment which is not subject to participation interests below
$25,000,000 unless, at the option of BNYCC, such sales are made
in conjunction with sales by BNYCC, on a pari passu basis, of
participations in BNYCC's rights and obligations under this
Agreement. Notwithstanding anything to the contrary contained in
the first sentence of this Section 12.3(e), any Participating
Lender may be given the right to require the Lender granting such
Participating Lender's participation to vote against (1) the
release of all or substantially all of the Collateral, (2) any
amendment, modification or waiver of any provision of Articles 2,
3 or 4 relating to the principal amount of the Loans or Letters
of Credit, the maturity dates of the Loans, the interest rates
borne by the Loans and the amounts of any fees payable to such
Lender under Sections 3.5, 3.6 and 3.8. No Participating Lender
shall be a "Lender" for any purpose under this Agreement;
provided, however, that each Participating Lender shall have the
rights and obligations of a Lender (including any right to
receive payment) under Sections 3.3(f), 3.5, 3.6, 3.8, 4.2, 4.9,
4.10, 13.5, 14.8, 13.9 and 12.3(f); provided, further, that all
requests for any such payments shall be made by any Participating
Lender through the Lender granting such participation. The right
of each Participating Lender to receive payment pursuant to the
immediately preceding sentence shall be limited to the lesser of
(i) the amounts actually incurred by such Participating Lender
for which payment is provided under such Sections and (ii) the
amounts that would have been payable under such Sections to the
Lender granting the participation had such participation not been
granted. It is expressly agreed that, in connection with any
participation pursuant to this Section 12.3(e), any Lender may
provide, on a confidential basis, to any prospective
Participating Lender, such information pertaining to any Borrower
or any guarantor of any of the Obligations as such Lender may
deem appropriate.
(f) If a Participating Lender shall at any time with
the Borrowers' knowledge participate with any Lender in the
Loans, each Borrower hereby grants to such Participating Lender,
and such Lender and such Participating Lender shall have and are
hereby given, a continuing Lien on and security interest in any
money, Securities and other property of such Borrower in the
custody or possession of the Participating Lender, including the
right of setoff, to the extent of the Participating Lender's
participation in the Obligations, and such Participating Lender
shall be deemed to have the same right of setoff to the extent of
Participating Lender's participation in the Obligations under
this Agreement as it would have if it were a direct lender.
(g) Notwithstanding any other provision in this
Agreement, any Lender may at any time create a security interest
in, or pledge, all or any portion of its rights under and
interest in this Agreement and any Term Loan Note held by such
Lender, in favor of any Federal Reserve Bank, in accordance with
Regulation A of the Federal Reserve Board or U.S. Treasury
Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted
under applicable law.
12.4 Binding Effect; Assignment. The provisions of
this Agreement shall be binding upon and inure to the benefit of
the respective representatives, successors and assigns of the
parties hereto; provided, however, that no interest herein may be
assigned by any Borrower without the prior written consent of the
Agent and the Lenders. With respect to a Borrower, successors
and assigns shall include, without limitation, any receiver,
trustee or debtor-in-possession of or for such Borrower. The
rights and benefits of any Lender hereunder shall, if such Lender
so agrees, inure to any party acquiring any interest in the
Obligations or any part thereof, subject to the provisions of
Section 12.3.
ARTICLE 13
THE AGENT
13.1 Appointment. Each Lender hereby designates and
appoints BankAmerica Business Credit, Inc. as its Agent under
this Agreement and the other Loan Documents, and each Lender
hereby irrevocably authorizes the Agent to take such action on
its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers as are set forth
herein or therein, together with such other powers as are
reasonably incidental thereto. The Agent agrees to act as such
on the express conditions contained in this Article 13. The
provisions of this Article 13 are solely for the benefit of the
Agent and the Lenders, and no Borrower shall have any rights as a
third party beneficiary of any of the provisions hereof (other
than as expressly set forth in Section 13.7). In performing its
functions and duties under this Agreement, the Agent shall act
solely as agent of the Lenders and does not assume and shall not
be deemed to have assumed any obligation toward or relationship
of agency or trust with or for any Borrower. The Agent may
perform any of its duties under this Agreement, or under the
other Loan Documents, by or through its agents or employees.
13.2 Nature of Duties. The Agent shall have no duties
or responsibilities except those expressly set forth in this
Agreement or in the other Loan Documents. Except as expressly
otherwise provided in this Agreement, the Agent shall have and
may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or
refraining from taking any actions which the Agent is expressly
entitled to take or assert under this Agreement and the other
Loan Documents, including, without limitation, (a) the
determination of the applicability of ineligibility criteria with
respect to the calculation of the Maximum Revolver Amount, (b)
the making of Agent Advances pursuant to Section 2.2(j), and (c)
the exercise of remedies pursuant to Section 10.2, and any action
so taken or not taken shall be deemed consented to by the
Lenders. The Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender. Nothing in this
Agreement or any of the other Loan Documents, express or implied,
is intended to or shall be construed to impose upon the Agent any
obligations in respect of this Agreement or any of the other Loan
Documents except as expressly set forth herein or therein. Each
Lender shall make its own independent investigation of the
financial condition and affairs of each Borrower in connection
with the making and the continuance of the Loans hereunder, and
shall make its own appraisal of the creditworthiness of each
Borrower, and the Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto,
whether coming into its possession before the date of this
Agreement or at any time or times thereafter; provided, that at
the request of any Lender, the Agent shall request information of
any Borrower on behalf of such Lender, to the extent that such
Lender does not independently have the right to make such request
of the Borrower. If the Agent seeks the consent or approval of
the Majority Lenders to the taking or refraining from taking any
action hereunder, the Agent shall send notice thereof to each
Lender. The Agent shall promptly notify each Lender (i) any time
that the Agent becomes aware that an Event of Default has
occurred and is continuing and (ii) any time that the Majority
Lenders have instructed the Agent to act or refrain from acting
pursuant hereto. The Agent may employ agents, co-agents and
attorneys-in-fact and shall not be responsible to the Lenders or
any Borrower, except as to money or securities received by it or
its authorized agents, for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable
care.
13.3 Rights, Exculpation, Etc. Neither the Agent nor
any of its officers, directors, employees or agents shall be
liable to any Lender for any action taken or omitted by it or any
of them under this Agreement or under any of the other Loan Docu-
ments, or in connection herewith or therewith, except that (i)
the Agent shall be obligated on the terms set forth herein for
performance of its express obligations under this Agreement; (ii)
the Agent shall not be entitled to exercise any of the powers
granted to it under this Agreement or the other Loan Documents in
any way inconsistent with its express obligations to the Lenders
under this Agreement; and (iii) no Person shall be relieved of
any liability imposed by law for willful misconduct, intentional
tort or gross (but not mere) negligence. The Agent shall not be
liable for any apportionment or distribution of payments made by
it in good faith pursuant to Section 4.8, and if any such
apportionment or distribution is subsequently determined to have
been made in error, the sole recourse of any Secured Creditor to
whom payment was due but not made shall be to recover from other
Secured Creditors any payment in excess of the amount to which it
is determined to have been entitled. The Agent shall not be
responsible to any Lender for any recitals, statements, repre-
sentations or warranties contained in this Agreement or for the
execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the
other Loan Documents or any of the transactions contemplated
thereby, or for the financial condition of any Borrower. The
Agent shall not be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or
conditions of this Agreement or any of the other Loan Documents
or the financial condition of any Borrower, or the existence or
possible existence of any Default or Event of Default; provided,
that at the request of any Lender, the Agent shall make such
inquiry of a Borrower on behalf of such Lender, to the extent
that such Lender does not independently have the right to make
such inquiry of such Borrower. The Agent may at any time request
instructions from the Lenders or Majority Lenders with respect to
any actions or approvals which by the terms of this Agreement or
of any of the other Loan Documents the Agent is permitted or
required to take or to grant, and if such instructions are
promptly requested, the Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and
shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any
of the Loan Documents until it shall have received such
instructions from the Lenders or Majority Lenders, as applicable.
Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent
acting or refraining from acting under this Agreement or any of
the other Loan Documents in accordance with the instructions of
the Lenders or Majority Lenders, as applicable.
13.4 Reliance. The Agent shall be entitled to rely
upon any written notices, statements, certificates, orders or
other documents or any telephone message believed by it in good
faith to be genuine and correct and to have been signed, sent or
made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the other Loan Documents
and its duties hereunder or thereunder, upon advice of counsel
selected by it.
13.5 Indemnification of the Agent by the Lenders. To
the extent that the Agent is not reimbursed and indemnified by
any Borrower, the Lenders will reimburse and indemnify the Agent
for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses,
advances or disbursements of any kind or 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 or any of
the other Loan Documents or any action taken or omitted by the
Agent under this Agreement or any of the other Loan Documents, in
proportion to each Lender's Pro Rata Share, including, without
limitation, Agent Advances; provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements resulting from the Agent's
recklessness or willful misconduct. The obligations of the
Lenders under this Section 13.5 shall survive the resignation of
an Agent pursuant to Section 13.7, the payment in full of the
Loans and reimbursement obligations with respect to Letters of
Credit, the termination of all outstanding Letters of Credit and
the termination of this Agreement.
13.6 Agent in Individual Capacity. BABC and its
affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with the Parent and any
of its Subsidiaries and Affiliates as though BABC were not the
Agent hereunder, and without notice to or the consent of the
other Lenders. The Lenders acknowledge that, pursuant to such
activities, BABC or its affiliates may receive information
regarding the Parent or its Subsidiaries or Affiliates (including
information that may be subject to confidentiality obligations in
favor of the Company or any such Subsidiary or Affiliate) and
acknowledge that the Agent shall be under no obligation to
provide such information to them; provided, that in the event
that BABC receives any such information which is not subject to
such confidentiality obligations, and while BABC is the Agent
hereunder, and the Lenders are not otherwise provided with such
information, then the Agent shall provide such information to the
Lenders. With respect to its Commitment and the Loans made by it
and the Letters of Credit in connection with which it has
purchased a participation interest, BABC shall have the same
rights and powers under this Agreement as any other Lender and
may exercise the same as though it were not the Agent.
13.7 Successor Agent.
(a) The Agent may resign from the performance of all
of its functions and duties under this Agreement at any time by
giving thirty (30) Business Days' prior written notice to each
Borrower and each Lender. Such resignation shall take effect
upon the earlier of (i) the acceptance by a successor Agent of
its appointment pursuant to clause (b) or (c) below, and (ii)
thirty (30) Business Days following the date of written notice by
the Agent to each Borrower and each Lender pursuant to the
immediately preceding sentence.
(b) Upon any notice of resignation, the Majority
Lenders shall appoint from among the Lenders a successor Agent.
If a successor Agent shall not have been so appointed within such
thirty (30) Business Day period, the retiring Agent, with the
consent of the Borrowers, shall then appoint a successor Agent
who shall serve as Agent until such time, if any, as the Majority
Lenders shall appoint a successor Agent as provided above. If
the Borrowers shall not have consented to the appointment by the
retiring Agent of a successor Agent pursuant to the immediately
preceding sentence, the retiring Agent's resignation shall
nevertheless become effective and the Lenders shall perform all
of the duties of the Agent hereunder until such time, if any, as
the Majority Banks shall appoint a successor Agent.
13.8 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the
Agent, at its option and in its reasonable business judgment, to
release any Agent's Lien upon any Collateral (i) upon the
termination of the Commitments, payment and satisfaction of all
Loans and reimbursement obligations in respect of Letters of
Credit, and the termination of all outstanding Letters of Credit
(whether or not any of such obligations are due) and all other
Obligations which have matured and which the Agent has been
notified in writing are then due and payable; (ii) constituting
property being sold or disposed of if the applicable Borrower
certifies to the Agent that the sale or disposition is made in
compliance with Section 5.11 or 8.9 (and the Agent may rely
conclusively on any such certificate, without further inquiry);
(iii) constituting property in which the applicable Borrower
owned no interest at the time the Lien was granted or at any time
thereafter; (iv) constituting property leased to the applicable
Borrower under a lease which has expired or been terminated in a
transaction permitted under this Agreement or which will expire
imminently and which has not been, and is not intended by such
Borrower to be, renewed or extended; or (v) in accordance with
the terms of Section 5.1(e). Except as provided above, the Agent
will not release any of the Agent's Liens without the prior
written authorization of the Majority Lenders; provided that the
Agent may not release the Agent's Liens on Collateral valued in
the aggregate in excess of $500,000 without the prior written
authorization of all of the Lenders. Upon request by the Agent
or a Borrower at any time, the Lenders will confirm in writing
the Agent's authority to release any Agent's Liens upon
particular types or items of Collateral pursuant to this Section
13.8(a).
(b) Upon receipt by the Agent of any authorization
required pursuant to Section 13.8(a) from the Majority Lenders or
Lenders, as applicable, of the Agent's authority to release any
Agent's Liens upon particular types or items of Collateral, and
upon at least five (5) Business Days' prior written request by a
Borrower, and provided that no Event of Default has occurred and
is then continuing, the Agent shall (and is hereby irrevocably
authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Agent's Liens upon such
Collateral; provided, however, that (i) the Agent shall not be
required to execute any such document on terms which, in the
Agent's opinion, would expose the Agent to liability or create
any obligation or entail any consequence other than the release
of such Liens without recourse or warranty, and (ii) such release
shall not in any manner discharge, affect or impair the
Obligations or any Liens (other than those expressly being
released) upon (or obligations of any Borrower in respect of) all
interests retained by such Borrower, including (without limita-
tion) the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to
any of the Lenders to assure that the Collateral exists or is
owned by the applicable Borrower or is cared for, protected or
insured or has been encumbered, or, other than a duty to act
without recklessness, willful misconduct or gross (but not mere)
negligence, that the Agent's Liens have been properly or
sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of
care, disclosure or fidelity, or to continue exercising, any of
the rights, authorities and powers granted or available to the
pursuant to this Section 13.8 or pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the
Agent may act in any manner it may deem appropriate, in its
reasonable business judgment, given the Agent's own interest in
the Collateral in its capacity as one of the Lenders and that the
Agent shall have no other duty or liability whatsoever to any
Secured Creditor as to any of the foregoing.
13.9 Restrictions on Actions by Lenders; Sharing of
Payments. (a) Each of the Lenders agrees that it shall not,
without the express consent of the Agent, and that it shall, to
the extent it is lawfully entitled to do so, upon the request of
the Agent, set off against the Obligations, any amounts owing by
such Lender to any Borrower or any accounts of any Borrower now
or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested
to do so by the Agent, take or cause to be taken any action,
including, without limitation, the commencement of any legal or
equitable proceedings, to foreclose any Lien on, or otherwise
enforce any security interest in, any of the Collateral, the
purpose of which is, or could be, to give such Lender any
preference or priority against the other Lenders with respect to
the Collateral.
(b) Subject to Section 4.8, if, at any time or times
any Lender shall receive (i) by payment, foreclosure, setoff or
otherwise, any proceeds of Collateral or any payments with
respect to the Obligations of any Borrower to such Lender arising
under, or relating to, this Agreement or the other Loan
Documents, except for any such proceeds or payments received by
such Lender from the Agent pursuant to the terms of this Agree-
ment, or (ii) payments from the Agent in excess of such Lender's
ratable portion of all such distributions by the Agent, such
Lender shall promptly (1) turn the same over to the Agent, in
kind, and with such endorsements as may be required to negotiate
the same to the Agent, or in same day funds, as applicable, for
the account of all of the Secured Creditors and for application
to the Obligations in accordance with the applicable provisions
of this Agreement, or (2) purchase, without recourse or warranty,
an undivided interest and participation in the Obligations owed
to the other Lenders so that such excess payment received shall
be applied ratably as among the Lenders in accordance with their
Pro Rata Shares; provided, however, that if all or part of such
excess payment received by the purchasing party is thereafter
recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable
portion of the purchase price paid therefor shall be returned to
such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
13.10 Agency for Perfection. Each Lender hereby
appoints each other Lender as agent for the purpose of perfecting
the Lenders' security interest in assets which, in accordance
with Article 9 of the UCC can be perfected only by possession.
Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and,
promptly upon the Agent's request therefor shall deliver such
Collateral to the Agent.
13.11 Payments by Agent to Lenders. All payments to
be made by the Agent to the Lenders on or in respect of the Term
Loan Notes or otherwise under this Agreement shall be made by
bank wire transfer or internal transfer of immediately available
funds to:
if to BABC: BankAmerica Business Credit, Inc.
ABA #121000358
To: Bank of America, San Francisco
BankAmerica Business Credit, Inc.
Account No. 1257503561, reference
Laclede
if to BNYCC: The Bank of New York Commercial
Corporation
ABA #0211000018, for The Bank of
New York Commercial Corporation,
Account No. 0000016608, reference
Laclede Steel
if to Boatmen's: The Boatmen's National Bank
of St. Louis
ABA #081 0000 32
or pursuant to such other wire transfer instructions as each
party may designate for itself by written notice to the Agent.
Concurrently with each such payment, the Agent shall identify
whether such payment (or any portion thereof) represents
principal, premium or interest on the Revolving Loans, Term Loans
or otherwise.
13.12 Concerning the Collateral and the Related Loan
Documents. Each Lender authorizes and directs the Agent to enter
into this Agreement and the other Loan Documents relating to the
Collateral, for the ratable benefit of the Secured Creditors.
Each Lender agrees that any action taken by the Agent or Majority
Lenders in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral, and the exercise
by the Agent or the Majority Lenders of their respective powers
set forth therein or herein, together with such other powers that
are reasonably incidental thereto, shall be binding upon all of
the Lenders.
ARTICLE 14
MISCELLANEOUS
14.1 Cumulative Remedies; No Prior Recourse to
Collateral. The enumeration herein of the Agent's and each
Lender's rights and remedies is not intended to be exclusive, and
such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies that the Agent and the
Lenders may have under the UCC or other applicable law. The
Agent and the Lenders shall have the right, in their sole
discretion, to determine which rights and remedies are to be
exercised and in which order. The exercise of one right or
remedy shall not preclude the exercise of any others, all of
which shall be cumulative. The Agent and the Lenders may,
without limitation, proceed directly against any Borrower to
collect the Obligations without any prior recourse to the
Collateral.
14.2 Severability. If any provision of this Agreement
shall be prohibited or invalid, under applicable law, it shall be
is ineffective only to such extent, without invalidating the
remainder of this Agreement.
14.3 Governing Law; Choice of Forum; Service of
Process; Jury Trial Waiver. (a) THIS AGREEMENT SHALL BE
INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS.
(b) SUBJECT ONLY TO THE EXCEPTION IN THE NEXT
SENTENCE, THE BORROWERS, THE AGENT AND THE LENDERS HEREBY AGREE
TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL COURT OF THE
SOUTHERN DISTRICT OF ILLINOIS AND THE STATE COURTS OF ILLINOIS
LOCATED IN MADISON COUNTY, ILLINOIS AND WAIVE ANY OBJECTION BASED
ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION
INSTITUTED THEREIN. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT
AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY BORROWER OR ITS PROPERTY IN THE COURTS OF
ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL, REAL ESTATE,
OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES
HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN
THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
(c) EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO SUCH BORROWER AT ITS ADDRESS SET FORTH IN
SECTION 14.7 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE
U.S. MAILS, OR, AT THE AGENT'S AND/OR THE LENDERS' OPTION, BY
SERVICE UPON THE CORPORATION TRUST COMPANY, 208 SOUTH LASALLE
STREET, CHICAGO, ILLINOIS 60604, WHICH SUCH BORROWER IRREVOCABLY
APPOINTS AS SUCH BORROWER'S AGENT FOR THE PURPOSE OF ACCEPTING
SERVICE OF PROCESS WITHIN THE STATE OF ILLINOIS. IN ADDITION,
THE AGENT AND THE LENDERS AGREE TO PROMPTLY FORWARD BY REGISTERED
MAIL ANY PROCESS SO SERVED UPON SAID AGENT TO THE APPLICABLE
BORROWER AT ITS ADDRESS SET FORTH IN SECTION 14.7. EACH BORROWER
HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID.
(d) THE BORROWERS, THE AGENT AND THE LENDERS HEREBY
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR (ii) IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR EITHER OF
THEM IN RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED, IN CONNECTION
HEREWITH OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE. THE BORROWERS, THE AGENT AND THE
LENDERS HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(e) NOTHING IN THIS SECTION 14.3 SHALL AFFECT THE
RIGHT OF THE AGENT OR THE LENDERS TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE AGENT OR
THE LENDERS TO BRING ANY ACTION OR PROCEEDING AGAINST ANY
BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
(f) EACH BORROWER AGREES THAT IT WILL NOT ASSERT
AGAINST AGENT OR ANY LENDER ANY CLAIM FOR CONSEQUENTIAL,
INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
14.4 Survival of Representations and Warranties. All
of each Borrower's representations, and warranties contained in
this Agreement shall survive the execution, delivery, and accept-
ance thereof by the parties, notwithstanding any investigation by
the Agent or the Lenders or their respective agents.
14.5 Other Security and Guaranties. The Agent, in its
sole discretion, subject to the other terms and provisions
contained in this Agreement, may, without notice or demand and
without affecting any Borrower's obligations hereunder, from time
to time: (a) take from any Person and hold collateral (other
than the Collateral) for the payment of all or any part of the
Obligations and exchange, enforce or release such collateral or
any part thereof; and (b) accept and hold any endorsement or
guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any
Person who has given any Lien in any other collateral as security
for the payment of all or any part of the Obligations, or any
other Person in any way obligated to pay all or any part of the
Obligations.
14.6 Fees and Expenses. The Borrowers agree, on a
joint and several basis, to pay to BNYCC and to Boatmen's, on
demand, the lesser of (a) in the case of BNYCC, $10,000.00, and
in the case of Boatmen's, $3500.00, and (b) the amount of
attorneys' and paralegals' fees (including allocated in-house
counsel fees) and disbursements of counsel to such Lender in
connection with the negotiation, preparation and consummation of
this Agreement and the other Loan Documents. Each Borrower shall
pay to the Agent, on demand, all costs and expenses that the
Agent pays or incurs in connection with the negotiation, prepara-
tion, consummation, administration, enforcement, and termination
of this Agreement and the other Loan Documents, including,
without limitation: (a) attorneys' and paralegals' fees
(including allocated in-house counsel fees) and disbursements of
counsel to the Agent; (b) costs and expenses (including
attorneys' and paralegals' fees and disbursements) for any
amendment, supplement, waiver, consent, or subsequent closing in
connection with the Loan Documents and the transactions
contemplated thereby; (c) costs and expenses of lien and title
searches and title insurance; (d) taxes, fees and other charges
for recording the Mortgage, filing financing statements and
continuations, and other actions to perfect, protect, and
continue the Agent's Liens; (e) sums paid or incurred to pay any
amount or take any action required of any Borrower under the Loan
Documents that such Borrower fails to pay or take; (f) costs of
appraisals, inspections, and verifications of the Collateral,
including, without limitation, travel, lodging, and meals for
inspections of the Collateral and each Borrower's operations by
the Agent's agents up to four (4) times per year and whenever an
Event of Default exists; (g) costs and expenses of forwarding
loan proceeds, collecting checks and other items of payment, and
establishing and maintaining Payment Accounts; (h) costs and
expenses of preserving and protecting the Collateral; and
(i) costs and expenses (including attorneys' and paralegals' fees
and disbursements) paid or incurred to obtain payment of the
Obligations, enforce the Agent's Liens, sell or otherwise realize
upon the Collateral, and otherwise enforce the provisions of the
Loan Documents, or to defend any claims made or threatened
against the Agent or any Lender arising out of the transactions
contemplated hereby (including without limitation, preparations
for and consultations concerning any such matters). The fore-
going shall not be construed to limit any other provisions of the
Loan Documents regarding costs and expenses to be paid by any
Borrower. All of the foregoing costs and expenses shall be
charged to the applicable Borrower's loan account as Revolving
Loans as described in Section 4.7.
14.7 Notices. Except as otherwise provided herein,
all notices, demands and requests that any party is required or
elects to give to any other shall be in writing, or by a
telecommunications device capable of creating a written record,
and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by
overnight mail and courier service, (b) four (4) days after it
shall have been mailed by United States mail, first class, cer-
tified or registered, with postage prepaid, or (c) in the case of
notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified
as follows:
If to the Agent or to BABC:
BankAmerica Business Credit, Inc.
2 North Lake Avenue
Suite 400
Pasadena, California 91101
Attention: Vice President
Telecopy No. (818) 397-1876
with copies to:
BankAmerica Business Credit, Inc.
10124 Old Grove Road
San Diego, California 92131
Attention: General Counsel
Telecopy No. (619) 549-7518
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: James R. Looman
Telecopy No. (312) 853-7036
If to BNYCC:
The Bank of New York Commercial Corporation
1290 Sixth Avenue
New York, New York 10104
Attention: Robert Love
Telecopy No. (212) 408-4317
If to Boatmen's:
The Boatmen's National Bank of St. Louis
One Boatmen's Plaza
800 Market Street
P.O. Box 236
St. Louis, Missouri 63160-0236
Attention: Erick S. Miller
Telecopy No. (314) 466-7783
If to any Borrower:
Laclede Steel Company
or
Laclede Chain Manufacturing Company
c/o Laclede Steel Company
or
Laclede Mid America Inc.
c/o Laclede Steel Company
One Metropolitan Square
211 North Broadway
St. Louis, Missouri 63102-2750
Attention: Michael H. Lane
Telecopy No. (314) 425-1561
with a copy to:
Bryan Cave
One Metropolitan Square
211 North Broadway, Suite 3600
St. Louis, Missouri 63102-2750
Attention: Frank P. Wolff, Jr.
Telecopy No. (314) 259-2020
or to such other address as each party may designate for itself
by like notice. Failure or delay in delivering copies of any
notice, demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies
shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other com-
munication.
14.8 Indemnity of the Agent and the Lenders by the
Borrowers. Each Borrower agrees to (i) reimburse the Agent and
the Lenders for any costs and expenses (including, without
limitation, attorneys' and paralegals' fees and expenses,
including allocated in-house counsel fees) incurred by the Agent
or any Lender in defending any suit brought against it by any
Borrower or any other Person in connection with the transactions
contemplated by this Agreement, and (ii) indemnify and hold the
Agent and the Lenders and their respective officers, directors,
employees, attorneys and agents (collectively, the "Indemnitees")
harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever
incurred by the Indemnitees, whether direct, indirect or
consequential, as a result of or arising from or relating to any
proceeding by any Person, whether threatened or initiated,
asserting any claim for legal or equitable remedy against any
Person under any statute or regulation (including, without
limitation, any federal or state securities or commercial laws or
under any common law or equitable cause or otherwise, including
any liability and costs under Environmental Laws or common law
principles arising from or in connection with the past, present
or future operations of any Borrower or its predecessors in
interest, or the past, present or future environmental condition
of any Borrower's property, the presence of asbestos-containing
materials at or on such property, or the Release or threatened
Release of any Contaminant from such property), in any way
arising from or in connection with the negotiation, preparation,
execution, delivery, enforcement, performance and administration
of this Agreement or any other document executed in connection
herewith, provided that no Borrower shall have any obligation
hereunder with respect to indemnified liabilities arising from
the gross negligence or willful misconduct of any Indemnitee
seeking such indemnification. To the extent that the indemnity
set forth in this Section may be unenforceable because it is
violative of any law or public policy, each Borrower shall pay
the maximum portion which it is permitted to pay under applicable
law. Any Indemnitee will promptly notify each Borrower of the
commencement of any legal proceeding which may give rise to any
indemnified liability under the foregoing indemnity and shall
permit such Borrower to participate in the defense of such
Indemnitee in any such proceeding. The foregoing indemnity shall
survive the resignation of an Agent pursuant to Section 13.7, the
payment of the Obligations and the termination of this Agreement.
All of the foregoing fees, costs and expenses shall be part of
the Obligations, payable upon demand, and secured by the
Collateral.
14.9 Waiver of Notices. Unless otherwise expressly
provided herein, each Borrower waives presentment, protest and
notice of demand or dishonor and protest as to any instrument, as
well as any and all other notices to which it might otherwise be
entitled. No notice to or demand on any Borrower which the Agent
or any Lender may elect to give shall entitle such Borrower to
any or further notice or demand in the same, similar or other
circumstances.
14.10 Final Agreement. This Agreement is intended by
the Borrowers, the Agent and the Lenders to be the final,
complete, and exclusive expression of the agreement between them.
This Agreement supersedes any and all prior oral or written
agreements relating to the subject matter hereof.
14.11 Counterparts. This Agreement may be executed in
any number of counterparts, and by the Agent, each Lender and
each Borrower in separate counterparts, each of which shall be an
original, but all of which shall together constitute one and the
same agreement.
14.12 Captions. The captions contained in this Agree-
ment are for convenience of reference only, are without
substantive meaning and should not be construed to modify,
enlarge, or restrict any provision.
14.13 Right of Setoff. Whenever an Event of Default
exists, the Agent and each Lender are hereby authorized at any
time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held
and other indebtedness at any time owing by the Agent or such
Lender or any affiliate of the Agent or such Lender to or for the
credit or the account of any Borrower against any and all of the
Obligations, whether or not then due and payable. The Agent and
each Lender agree promptly to notify the applicable Borrower
after any such setoff and application made by the Agent or such
Lender, as applicable, provided that the failure to give such
notice shall not affect the validity of such setoff and
application.
14.14 Taxes.
(a) Any and all payments by the Borrowers hereunder
shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, taxes
imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender or the Agent (as
the case may be) is organized or any political subdivision
thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If any Borrower shall be
required by law to deduct any Taxes from or in respect of any sum
payable hereunder to any Lender or the Agent, (i) the sum payable
shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to
additional sums payable under this Section 14.14) such Lender or
the Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii)
such Borrower shall make such deductions and (iii) such Borrower
shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Borrowers agree to pay any
present or future stamp or documentary taxes or any other excise
or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or
any other Loan Documents (hereinafter referred to as "Other
Taxes").
(c) The Borrowers will indemnify each Lender 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 14.14) paid by
such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. This indemnification shall
be made within 30 days from the date such Lender or the Agent (as
the case may be) makes written demand therefor. Each Lender
shall, at the time of any written demand for indemnification
under this subsection (c), provide to the Borrowers a receipt
for, or other evidence of the payment of, the Taxes or Other
Taxes for which indemnification is sought.
(d) Within 30 days after the date of any payment of
Taxes, the Borrowers will furnish to the Agent, at its address
referred to in Section 14.7, the original or a certified copy of
a receipt evidencing payment thereof. If no Taxes are payable in
respect of any payment hereunder with respect to which a claim
for indemnity has been made hereunder, the Borrowers will furnish
to the Agent, at such address, a certificate from each
appropriate taxing authority, or an opinion of counsel acceptable
to the Agent, in either case stating that such payment is exempt
from or not subject to Taxes.
(e) Without prejudice to the survival of any other
agreement of any Borrower hereunder, the agreements and
obligations of the Borrowers contained in this Section 14.14
shall survive the payment in full of principal and interest
hereunder.
14.15 Joint and Several Liability. Each Borrower
shall be liable, on a joint and several basis, for all amounts
due to the Agent and/or any Lender under this Agreement,
regardless of which Borrower actually receives Loans or other
extensions of credit hereunder or the amount of such Loans
received or the manner in which the Agent and/or such Lender
accounts for such Loans or other extensions of credit on its
books and records. Each Borrower's Obligations with respect to
Loans made to it, and each Borrower's Obligations arising as a
result of the joint and several liability of the Borrowers
hereunder, with respect to Loans made to the other Borrowers
hereunder, shall be separate and distinct obligations, but all
such Obligations shall be primary obligations of each Borrower.
Each Borrower's Obligations arising as a result of the
joint and several liability of the Borrowers hereunder with
respect to Loans or other extensions of credit made to the other
Borrowers hereunder shall, to the fullest extent permitted by
law, be unconditional irrespective of (i) the validity or
enforceability, avoidance or subordination of the Obligations of
the other Borrowers or of any promissory note or other document
evidencing all or any part of the Obligations of the other
Borrowers, (ii) the absence of any attempt to collect the
Obligations from the other Borrowers, any other guarantor, or any
other security therefor, or the absence of any other action to
enforce the same, (iii) the waiver, consent, extension,
forbearance or granting of any indulgence by the Agent and/or any
Lender with respect to any provision of any instrument evidencing
the Obligations of the other Borrowers, or any part thereof, or
any other agreement now or hereafter executed by the other
Borrowers and delivered to the Agent and/or any Lender, (iv) the
failure by the Agent and/or any Lender to take any steps to
perfect and maintain its security interest in, or to preserve its
rights to, any security or collateral for the Obligations of the
other Borrowers, (v) the Agent's and/or any Lender's election, in
any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code, (vi)
any borrowing or grant of a security interest by the other
Borrowers, as debtor-in-possession under Section 364 of the
Bankruptcy Code, (vii) the disallowance of all or any portion of
the Agent's and/or any Lender's claim(s) for the repayment of the
Obligations of the other Borrowers under Section 502 of the
Bankruptcy Code, or (viii) any other circumstances which might
constitute a legal or equitable discharge or defense of a
guarantor or of the other Borrowers. With respect to each
Borrower's Obligations arising as a result of the joint and
several liability of the Borrowers hereunder with respect to
Loans or other extensions of credit made to either of the other
Borrowers hereunder, such Borrower waives, until the Obligations
shall have been paid in full and the Loan Agreement shall have
been terminated, any right to enforce any right of subrogation or
any remedy which the Agent and/or any Lender now has or may
hereafter have against any Borrower, any endorser or any
guarantor of all or any part of the Obligations, and any benefit
of, and any right to participate in, any security or collateral
given to the Agent and/or any Lender to secure payment of the
Obligations or any other liability of the Borrowers to the Agent
and/or any Lender.
Upon any Event of Default, the Agent and the Lenders
may proceed directly and at once, without notice, against any
Borrower to collect and recover the full amount, or any portion
of the Obligations, without first proceeding against the other
Borrowers or any other Person, or against any security or
collateral for the Obligations. Each Borrower consents and
agrees that the Agent and the Lenders shall be under no
obligation to marshal any assets in favor of such Borrower or
against or in payment of any or all of the Obligations.
14.16 Contribution and Indemnification among the
Borrowers. Each Borrower is obligated to repay the Obligations
as joint and several obligors under this Agreement. To the
extent that any Borrower shall, under this Agreement as a joint
and several obligor, repay any of the Obligations constituting
Loans made to another Borrower hereunder or other Obligations
incurred directly and primarily by any other Borrower (an
"Accommodation Payment"), then the Borrower making such
Accommodation Payment shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other
Borrowers in an amount, for each of such other Borrowers, equal
to a fraction of such Accommodation Payment, the numerator of
which fraction is such other Borrower's "Allocable Amount" (as
defined below) and the denominator of which is the sum of the
Allocable Amounts of all of the Borrowers. As of any date of
determination, the "Allocable Amount" of each Borrower shall be
equal to the maximum amount of liability for Accommodation
Payments which could be asserted against such Borrower hereunder
without (a) rendering such Borrower "insolvent" within the
meaning of Section 101(31) of the Bankruptcy Code , Section 2 of
the Uniform Fraudulent Transfer Act (the "UFTA") or Section 2 of
the Uniform Fraudulent Conveyance Act (the "UFCA"), (ii) leaving
such Borrower with unreasonably small capital or assets, within
the meaning of Section 548 of the Bankruptcy Code, Section 4 of
the UFTA, or Section 5 of the UFCA, or (iii) leaving such
Borrower unable to pay its debts as they become due within the
meaning of Section 548 of the Bankruptcy Code or Section 4 of the
UFTA, or Section 5 of the UFCA. All rights and claims of
contribution, indemnification and reimbursement under this
section shall be subordinate in right of payment to the prior
payment in full of the Obligations. The provisions of this
section shall, to the extent expressly inconsistent with any
provision in any Loan Document, supersede such inconsistent
provision.
14.17 Agency of the Parent for each other Borrower.
Each of the other Borrowers appoints the Parent as its agent for
all purposes relevant to this Agreement, including (without
limitation) the giving and receipt of notices and the execution
and delivery of all documents, instruments and certificates
contemplated herein and all modifications hereto. Any
acknowledgment, consent, direction, certification or other action
which might otherwise be valid or effective only if given or
taken by all of the Borrowers or by Laclede Chain or Laclede Mid
America, acting singly, shall be valid and effective if given or
taken only by the Parent, whether or not either of the other
Borrowers joins therein.
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
LACLEDE STEEL COMPANY
By:________________________________
Title:
LACLEDE CHAIN MANUFACTURING COMPANY
By:________________________________
Title:
LACLEDE MID AMERICA INC.
By:________________________________
Title:
BANKAMERICA BUSINESS CREDIT, INC.,
as the Agent
By:________________________________
Vice President
<PAGE>
Commitment: $65,000,000 BANKAMERICA BUSINESS CREDIT, INC.,
as a Lender
By:________________________________
Vice President
Commitment: $25,000,000 THE BANK OF NEW YORK COMMERCIAL
CORPORATION, as a Lender
By:________________________________
Vice President
Commitment: $ 5,000,000 THE BOATMEN'S NATIONAL BANK OF ST.
LOUIS, as a Lender
By:________________________________
Vice President
<TABLE> <S> <C>
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<MULTIPLIER> 1,000
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-1-1994
<PERIOD-END> SEP-30-1994
<PERIOD-TYPE> 9-MOS
<CASH> 157
<SECURITIES> 0
<RECEIVABLES> 43,864
<ALLOWANCES> 2,217
<INVENTORY> 96,903
<CURRENT-ASSETS> 139,333
<PP&E> 254,539
<DEPRECIATION> 127,974
<TOTAL-ASSETS> 337,133
<CURRENT-LIABILITIES> 47,089
<BONDS> 107,681
0
0
<COMMON> 54,081
<OTHER-SE> (9,739)
<TOTAL-LIABILITY-AND-EQUITY> 337,133
<SALES> 250,564
<TOTAL-REVENUES> 250,564
<CGS> 227,224
<TOTAL-COSTS> 232,995
<OTHER-EXPENSES> 9,791
<LOSS-PROVISION> 114
<INTEREST-EXPENSE> 4,858
<INCOME-PRETAX> 2,920
<INCOME-TAX> 1,168
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,752
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
</TABLE>
